Australian and New Zealand Banking Group Limited v Bechara

The earlier decisions given in the proceedings

1. On 16 August 2013, Harrison J granted Mr Bechara leave to file an amended defence and cross-claim, but ordered that they both be struck out, after Mr Bechara conceded that he had no basis on which to contest the Bank's application (see Australian and New Zealand Banking Group Limited v Bechara [2013] NSWSC 1125).
2. His Honour directed that judgment for possession of the property be entered in favour of the Bank, which was granted leave forthwith to apply for the issue of a writ of possession. It later took possession of the property, which was sold.
3. Harrison J also gave Mr Bechara leave to file a further amended cross-claim within 7 days. His Honour noted that in the Family Court proceedings, Mr and Mrs Bechara had been ordered to do all such things that may be necessary to sell the property, where Mrs Bechara then lived under orders entitling her to occupy the property, to the exclusion of Mr Bechara. In those proceedings Fowler J had also ordered that after discharge of the Bank's mortgage and payment of nominated costs and expenses, the net proceeds should be paid 55% to Mrs Bechara and 45% to Mr Bechara.
4. Mr Bechara had refused to co-operate in the sale and had appealed Fowler J's judgment. Mrs Bechara had ceased making mortgage repayments, as she had been ordered to do, claiming that she had insufficient funds and was anxious for the property to be sold. An interested purchaser had been located, at a price at which Mr Bechara was also willing to pay.
5. Mr Bechara pressed his cross-claim, which Harrison J concluded was "a document beset with obvious difficulties". Mr Bechara had not provided particulars of his claim, which his Honour regarded to be novel. His Honour, nevertheless, granted Mr Bechara leave to amend, observing at [24]: "The first defendant may in fact upon further reflection and with good advice decide that the cross-claim is not worth pursuing. That is not a matter to which I need to refer. It is evident to me that the cross-claim is the very real bi-product of the breakdown of the relationship between the defendants and that as is so often the case, the economics of conducting litigation are either intentionally or unintentionally ignored or masked by other emotions more powerful than financial self preservation. The costs incurred in this litigation are undoubtedly disproportionate to the merits of the competing claims."
6. Mr Bechara did not avail himself of the leave granted. Under Rule 19.3 of the Uniform Civil Procedure Rules 2005 (NSW), Harrison J's order then ceased to have effect. The Court, however, has a discretion to extend the time of such an order.
7. Before Harrison AsJ, Mr Bechara later sought the exercise of that discretion, in respect of a further amended cross-claim which he filed in December 2013. Her Honour refused that leave.
8. Her Honour noted that in Mr Bechara's proposed further cross-claim damages were sought in respect of two agreements, which it was claimed that Mr and Mrs Bechara had entered during their marriage. The first, that after the birth of their child, Mrs Bechara would return to work and Mr Bechara would give up paid employment to be the child's full-time carer, while Mrs Bechara met all mortgage repayments to the Bank, or under any subsequent refinancing, out of her income, while Mr Bechara remained their child's primary care giver.
9. Mr Bechara claimed that Mrs Bechara had breached this agreement, when she unilaterally ceased making payments on the loan, which went into default.
10. Mrs Bechara defended this claim on the basis that no such agreement had come into existence, there never having been any contractual promise made, nor any intention ever to enter legal relations, nor any consideration given by either she or her former husband. She also claimed that an estoppel arose from the proceedings in the Family Court, which had finally dealt with the property, its sale and the division of the proceeds. Further, this Court could not make the orders which Mr Bechara sought, because they would interfere with those made by the Family Court.
11. Harrison AsJ considered that she did not have to decide all of these matters, but took the tentative view that it was most unlikely for any such agreements, if made, could have amounted to a binding contract and that in any event, Mr Bechara's claims ought to have been litigated in the Family Court proceedings.
12. As to the second agreement on which Mr Bechara relied, her Honour noted that he claimed that in mid-2006, he and Mrs Bechara had agreed to refinance their loan from the NAB with the plaintiff, as a residential domestic home loan. He claimed that Mrs Bechara had breached this agreement, when refinancing with the plaintiff at an interest rate 0.45% higher than the NAB rate, also incurring additional lender mortgage insurance. He sought damages for the breach of this agreement.
13. Mrs Bechara defended this claim on a similar basis to her defence in relation to the alleged breach of the first agreement She also claimed that it was statute barred under s 14(1)(a) of the Limitation Act 1969 (NSW). Mr Bechara argued that should not be decided at an interlocutory stage of the proceedings and that, in any event, questions of fraud and deceit arose, as well as s 55 of the Limitation Act.
14. Harrison AsJ agreed with Harrison's J's observations quoted above and took the view that these claims ought also to have been pursued in the Family Court proceedings. Those considerations and Mr Bechara's failure to provide a satisfactory explanation for the delay in filing his amended cross-claim, led her Honour to refuse the leave he sought, with an order for costs in Mrs Bechara's favour.

Adjournment applications

1. The matter came on for hearing on 26 February 2015. On 2 December 2014, the Registrar had given directions for the filing and service of further affidavits and submissions. Those directions had not been complied with by Mr Bechara, even though Mrs Bechara's written submissions had been served. Attention was drawn to the omission before the hearing, with the result, an application at the commencement of the hearing by Mr Bechara, that the hearing be stood down until 3pm, to allow counsel briefed in the matter then to appear.
2. It emerged that Mr Hiramanek, Mr Bechara's solicitor, had been in Court when the Registrar's orders were made and the matter listed for hearing in February. By oversight, the orders and listing had been overlooked. That oversight had not been attended to, even when Mrs Bechara's submissions were served.
3. The adjournment Mr Bechara sought was opposed, but granted, I taking the view that was what justice demanded in the face of this representative error and the obligations imposed by s 56 of the Civil Procedure Act 2005 (NSW). No outline had been served by Mr Bechara, but Mr Hiramanek had provided a copy of the transcript of the proceedings before Harrison AsJ, indicating that Mr Bechara wished to advance similar submissions on this application. The point lying between the parties and the submissions were short and could be accommodated in the time available, if the adjournment was granted. Affidavit evidence was relied on, with no cross-examination required. In the result, I granted the adjournment, with a costs thrown away order.
4. At 3pm, Mr Allen of counsel, appeared for Mr Bechara and made a second adjournment application on the basis that while he had appeared for Mr Bechara before Harrison AsJ, he had been briefed only that morning and was not ready to deal with Mrs Bechara's estoppel and abuse of process submissions. That application was also opposed in circumstances where the written submissions were in similar terms to those Mrs Bechara had advanced before Harrison AsJ and where they had been met at the earlier hearing, on the basis of the oral submissions then made for Mr Bechara.
5. I refused to grant a further adjournment, taking the view that Mr Bechara, in the circumstances, had been granted a fair opportunity to present his case and that justice required that Mrs Bechara's position not be overlooked. Both parties were represented by counsel, who had already put the same arguments to Harrison AsJ. The earlier adjournment had been granted on the basis that Mr Bechara wished to advance the same arguments he had advanced to her Honour. In the result, I concluded that justice required that a further adjournment be refused.

The applicable principles

1. Under s 75A(5) of the Supreme Court Act this appeal proceeds by way of rehearing. Its resolution does thus not depend on error being established, although error is plainly not an irrelevant consideration (see Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 at 180 [23]). I can see no error in Harrison AsJ's conclusions.
2. There was no issue between the parties as to the circumstances in which the discretion to extend time could be exercised, namely, whenever it is appropriate to do so, to avoid injustice (see FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268 at 283-4). It was not suggested that her Honour had erred in her approach to the exercise of the discretion. It was the result of its exercise, which was challenged.
3. The discretion must be exercised in light of the overriding purpose specified in s 56 of the Civil Procedure Act, the just, quick and cheap resolution of the real issues in the proceedings.
4. As discussed in Arthur Anderson Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104 at [36], regard must also be paid to the matters specified in s 57 to s 60. Relevant matters to consider include the need to act in accordance with the dictates of justice, having regard to the matters specified in s 58(2); to eliminate delay and to ensure that costs are proportionate to the importance and complexity of the subject-matter in dispute. As there observed at [43]: "Accordingly, the Court should consider, when exercising a discretion such as that under UCPR r 1.12, the attempts that have been made at service, the length of the delay, the reasons for the delay, whether the delay was deliberate, whether notice was given to the defendant, the conduct of the parties generally, and the hardship or prejudice caused to the plaintiff by refusing the renewal or to the defendant by granting it."

Delay

1. The onus fell on Mr Bechara to convince her Honour that the Court's discretion should be exercised in his favour, despite his delay. This, he failed to do.
2. Her Honour had regard to the procedural history of the matter, explained by Mrs Bechara's solicitor in an affidavit.
3. The further amended cross-claim should have been filed by 23 August 2013. It was not served until 16 October, when Mr Bechara sought Mrs Bechara's consent to an extension of time. That was not forthcoming. Her solicitors advised on 21 October, that they disputed that it disclosed a reasonable cause of action. On 5 December, the request for the extension of time was renewed. There was no explanation for the delay. The application for leave was not filed until 6 December, after the Family Court proceedings were finalised. On 12 December, the Registrar ordered Mr Bechara to file and serve any reply evidence and an outline of submissions by 31 January 2015. Those directions were also not complied with, as I have explained.
4. Before Harrison AsJ there was no explanation as to why Harrison J's orders had not been complied with. Mr Bechara's case was that even so, the discretion would be exercised in his favour.
5. There was no further explanation advanced on this application by Mr Bechara, as to his delay in filing the further amended cross-claim. In the result, there is simply no explanation for the delay, but it is relevant to note that the application for leave was not made until after the Family Court proceedings were concluded.
6. These proceedings were concerned with Mr and Mrs Bechara's matrimonial home. It was the subject not only of the orders made in the Family Court in 2012, but also the orders made by Harrison J in August 2013. The result was that the property was to be sold. That was why Harrison J gave Mr Bechara a short period to amend his cross-claim, before the property was sold and the proceeds dealt with, in the way that Fowler J had earlier ordered.
7. As was conceded for Mr Bechara before me, there was no reasonable explanation for his delay. It was properly accepted that this was one factor which weighed against the exercise of the discretion in his favour.
8. In the circumstances of this case, it was a powerful one.

Other matters relevant to the exercise of discretion

1. Mrs Bechara resisted the leave sought on the basis that the claims, as framed, are hopeless, doomed to failure, frivolous and vexatious and did not disclose a reasonable cause of action.
2. The case advanced for Mr Bechara was that Harrison AsJ had erred in coming to the view, without hearing all of the evidence or actually deciding, that his case in relation to the two agreements on which his claims rested, was a weak one, given the arguments advanced for Mr Bechara as to the Family Court's jurisdiction, the question of whether there had been any intention to create legal relations and estoppel.
3. It was argued that her Honour's discretion to grant the leave sought, miscarried in circumstances where the claims which Mr Bechara wished to advance, could have been brought by filing a fresh statement of claim, they did not depend on leave to file the cross-claim being granted. The evidence disclosed an arguable cause of action, to which Mrs Bechara had an arguable defence. In the result, justice required that Mr Bechara be granted the leave which he sought.
4. It was also submitted that the Family Court had jurisdiction to determine matrimonial causes lying between Mr and Mrs Bechara, including in relation to their assets, but it could not deal with the contractual rights in relation to the matrimonial home which Mr Bechara here sought to pursue. The orders which he sought did not cut across the Family Court's orders.
5. For Mrs Bechara, it was conceded that the particular issues sought to be raised in the proposed further amended cross-claim had not been advanced by Mr Bechara in the Family Court proceedings, even though the respective contribution to its acquisition and maintenance had been. She contended, however, that the Family Court did have jurisdiction to deal with these claims, which ought to have been pursued in the Family Court proceedings. In the circumstances, Mr Bechara was estopped from pursuing the claim he wished to advance.
6. Mr Bechara advanced the same argument on estoppel as he had advanced before Harrison J, namely: "For the estoppel argument to be made good, your Honour has to be satisfied the Family Court had jurisdiction to settle this particular dispute between the parties. Without your Honour being satisfied that the Court had that jurisdiction, your Honour cannot say that there was an estoppel. Where this "problem" often arises is in allegations whether a husband has during the course of the marriage assaulted his wife."

The Family Court's jurisdiction

1. The Family Court has jurisdiction under s 39 of the Family Law Act 1975 (Cth) in relation to "matrimonial causes", defined in s 4 to include proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings, arising out of the marital relationship.
2. In the Family Court at issue were claims for spousal maintenance, the family home and claims that Mr Bechara held an equitable interest in properties registered in the names of Mrs Bechara's parents.
3. Section 78 empowered the Family Court to declare the title or rights, if any, that either Mr or Mrs Bechara had to the matrimonial home. Section 79 empowered it to alter their interests in the home. In making orders under s 79, the Court was obliged to take into account: "(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and (b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and (c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and (d) the effect of any proposed order upon the earning capacity of either party to the marriage; and (e) the matters referred to in subsection 75(2) so far as they are relevant; and (f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and (g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage."
4. The parties joined issue over the orders to be made in relation to the matrimonial home in the Family Court. The claims which Mr Bechara now seeks to advance in these proceedings, were unarguably relevant to the exercise of the Family Court's discretion in respect of that property and what order was just and equitable in the circumstances, given the nature of the two agreements he claims that he and his former wife made in relation to the family home and the care of their child.
5. Even if not legally binding, those agreements, if made, were plainly relevant to what the Family Court had to decide. The fact that Mr Bechara did not raise or rely on these claimed agreements in the Family Court proceedings and did not seek leave to file his further amended cross-claim until after the Family Court proceedings were resolved, raises obvious questions as to the strength of the claims which now he wishes to pursue in this Court.
6. What is now sought to be pursued includes not only a claim in relation to the loan repayments made in respect of the family home, but also a claim that Mrs Bechara indemnify Mr Bechara for moneys payable by him to the Bank in these proceedings, including the costs he incurred in defending them. Mr Bechara seeks that Mrs Bechara be responsible for all liabilities in relation to the matrimonial home.
7. That claim is clearly inconsistent with the orders made by the Family Court, which included that the net proceeds of the sale be distributed as between Mr and Mrs Bechara on the basis of 45% to 55%. Even if orders were crafted which were not directly inconsistent with the Family Court's orders, as to how the net proceedings of the property after sale were to be divided between them, what Mr Bechara seeks is not consistent with what the Family Court intended to achieve by its order, namely finally settling their rights as between Mr and Mrs Bechara to the property.
8. Mr Bechara's cross-claim is sought to be advanced against Mrs Bechara on the basis of claimed agreements, considered to be novel, by both Harrison J and Harrison AsJ. That is, that the arrangements which Mr and Mrs Bechara, a husband and wife, made between themselves as to the care of their child and how their family would be supported, by Mrs Bechara pursuing paid employment, and meeting mortgage payments out of her earnings, while Mr Bechara ceased work, in order to look after their child, amounted to a legally enforceable contract, which included terms as to who would bear the burden of repaying loans by which the home was acquired and later refinanced.
9. That such arrangements were entered by a husband and wife, each intending legally to be bound by their mutual promises, with the result that for whatever reason these arrangements were departed from by one of them, including for example ill health, a breach would result, for which he or she would be liable to the other in damages, is simply implausible and contrary to authority (see, for example, Balfour v Balfour [1919] 2 KB 571 at 579). The test is an objective one, not dependant on the subjective intentions of the husband and wife, but on what would objectively be conveyed by what was said or done by both Mr and Mrs Bechara, having regard to the circumstances in which their statements and actions happened (see Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 at [25]).
10. Even if Mr Bechara's claims be accepted as arguable and not time barred, as at least one appears to be, the result would be the same. These are claims which ought unquestionably to have been brought and decided in the Family law proceedings, concerned as they are with a claim that Mrs Bechara ought to have the entire responsibility for payment of the mortgage and associated costs and that she should keep Mr Bechara indemnified for such costs, even when they are the result of actions he has himself taken, in refusing to co-operate with the sale of the property ordered by the Family Court and resisting the plaintiff's claims in those proceedings.
11. To grant the leave sought would be contrary to the approach discussed in Port of Melbourne Authority v Ashun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 at 598, citing with approval Sir James Wigram V.C. in Henderson v. Henderson (1843) 3 Hare, at p 115 (67 ER, at p 319): "where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time..
12. There is, to my mind, no question that Mr Bechara's claims could and should have been pursued in the Family Law proceedings. That the Family Court possessed jurisdiction to deal with the claim follows directly from the broad powers conferred upon it by s 78 and s 79 of the Family Law Act.
13. Even if that is not correct, the Family Court could unarguably have dealt with the claims under its accrued jurisdiction. While that was not conceded for Mr Bechara, as Brereton J explained in Valceski v Valceski [2007] NSWSC 440; (2007) 70 NSWLR 36 at [59]: "...[T]he Family Court has accrued jurisdiction, just as does the Federal Court and the High Court, to determine the whole of a justiciable controversy, even though some aspects of it may involve State and not federal law. So long as the controversy arises under the Family Law Act, it need not be limited to it. Once seized of jurisdiction in respect of a matter arising under the Family Law Act - pursuant to Family Law Act s 31(1)(a) - the jurisdiction of the Court extends to the whole of the matter, that is to say, the justiciable controversy, even though its determination requires the application of State law. While there may be a discretion to decline to exercise accrued jurisdiction, it will be an exceptional case in which that discretion can properly be exercised so that the whole of a justiciable controversy is not resolved in the one court."
14. The issues which Mr Bechara now seeks to pursue in these proceedings form part of a single justiciable controversy, concerned as they are with Mr and Mrs Bechara's matrimonial home and their rights and interests in that property. To the extent that the Family Court had powers to deal with an aspect of that controversy, it possessed the accrued jurisdiction to determine the entire matter, including (but not limited to) the issues Mr Bechara now seeks leave to pursue (see further Re Wakim; Ex Parte McNally [199] HCA 27; (1999) 198 CLR 511 and Kowalski v Kowalski [1993] FLC 92-342).
15. In the result, the leave sought must be refused with an order for costs in favour of Mrs Bechara. The usual order would be that Mr Bechara pay Mrs Bechara's costs as agreed or assessed. If the parties do not approach within 7 days, that will be the Court's order.

Order

1. For the reasons given, I make the following orders: 1. The orders sought in the notice of motion filed by Mr Bechara on 8 July 2014, is refused. 2. Unless the parties approach to be heard on costs within 7 days the order as to costs will be that Mr Bechara pay Mrs Bechara's costs, as agreed or assessed.

Amendments 02 April 2015 - Coversheet amended DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 April 2015