[2004] HCA 61
Brown v Anstis (No 2) [2013] NSWSC 1488
Fencott v Muller (1983) 152 CLR 570
[1983] HCA 12
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 403
Re Wakim
Ex parte McNally (1999) 198 CLR 511
[1999] HCA 27
Valceski v Valceski (2007) 70 NSWLR 36
Source
Original judgment source is linked above.
Catchwords
[2004] HCA 61
Brown v Anstis (No 2) [2013] NSWSC 1488
Fencott v Muller (1983) 152 CLR 570[1983] HCA 12
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 403
Re WakimEx parte McNally (1999) 198 CLR 511[1999] HCA 27
Valceski v Valceski (2007) 70 NSWLR 36
Judgment (11 paragraphs)
[1]
Judgment
HER HONOUR: By notice of motion filed on 14 January 2020, the defendant (Jennifer Ballard) seeks an order pursuant to s 5 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) (Cross-Vesting Act) for the transfer of these proceedings to the Family Court of Australia. That application is opposed by the plaintiff (Timothy Ballard), Ms Ballard's ex-husband.
[2]
Background
The background to the present application may be summarised by reference to the evidence relied upon by the respective parties. However, for the avoidance of doubt, I note that what follows is not here to be taken as any finding on disputed issues of fact.
Ms Ballard has sworn an affidavit on 12 January 2020 in support of her application and has put before the Court for the purposes of the motion only: that affidavit; the affidavit sworn by Mr Ballard in these proceedings on 18 November 2019; the initiating application filed by Ms Ballard in the Family Court of Australia, Newcastle Registry on 19 December 2019 (the Initiating Application); and Ms Ballard's affidavit filed with the Initiating Application made 19 December 2019.
From that material, it appears that the parties: were married on 7 December 1996 and divorced on 29 August 2019; have three children who subsequently became beneficiaries of testamentary trusts created under the Will of their paternal grandmother (the JLB Testamentary Trust, the CLB Testamentary Trust and the JAB Testamentary Trust), of which testamentary trusts their father (Mr Ballard) became trustee on 11 April 2012; and purchased a property at Anna Bay (the Anna Bay property) (the former matrimonial home) as joint tenants on or about 5 April 2007, which purchase was financed by a loan from the National Australia Bank.
It appears that neither Mr Ballard nor Ms Ballard is a beneficiary of any of the testamentary trusts.
Mr Ballard has deposed that in late 2011 he was diagnosed with stage 3 bowel cancer; that at the time of his initial diagnosis and treatment he was worried that if he died Ms Ballard would be left as a single mother in a small home not suitable for her and three growing teenagers to live in; and that he discussed with Ms Ballard extending and renovating the matrimonial home by using the funds from the testamentary trusts. (I interpolate to note that Ms Ballard makes clear in her submissions that she disputes this but submits that the fact that Mr Ballard has deposed to this is relevant in determining the justiciable matter).
Mr Ballard has further deposed that, in about June 2013, he and Ms Ballard arranged for building plans to be drawn up, a Development Application to be lodged and a builder engaged; and that, between June 2013 and November 2014, improvements were carried out to the Anna Bay property.
Ms Ballard says that, on Mr Ballard's evidence, the precise scope of payments made and works undertaken on the matrimonial home is unclear, as is what payments it is contended by him were legitimate payments in accordance with the trusts and what payments were "not authorised by the terms of the trusts". In this respect, it is noted by Ms Ballard that the cash position of the trusts has decreased from $716,748.10 in June 2013 to $406,320.19 at 31 May 2019 (a decrease of $310,427.91). It is noted by Ms Ballard that, in his statement of claim, Mr Ballard has alleged (at [4]) that funds of "not less than $290,361.49" belonging to the trusts were expended "on the repair, renovation, extension and improvement of" the dwelling at the Anna Bay property.
Ms Ballard says that the issue of what was expended, how it was expended and where it came from is complicated, noting that: between June 2013 and 31 May 2019 the cash at bank for the trusts has reduced by $310,427.91; it appears the costs of the works is made up of 193 transactions for a total of $290,361.49, although there is a further handwritten sheet that seems to indicate the costs are $269,221.36 (referring to tab 5 of the exhibit to Mr Ballard's affidavit); and it is asserted that in the period from 13 June 2013 to 23 February 2015 by a series of 79 transactions, the sum of $320,956 was transferred out of the trusts bank account to the joint account of the parties and applied for the works to the matrimonial home (referring to tab 7 of the exhibit to Mr Ballard's affidavit).
[3]
Proceedings commenced by Mr Ballard in this Court
Mr Ballard commenced proceedings in this Court by way of statement of claim filed on 1 August 2019, seeking a declaration that he and Ms Ballard hold the Anna Bay property subject to equitable charges in favour of Mr Ballard, in his capacity as trustee of the three separate testamentary trusts referred to above, in the varying amounts there specified (see prayer 1 of the statement of claim); and orders for sale of the Anna Bay property (including, as an alternative to an order for sale, an order pursuant to s 66G of the Conveyancing Act 1919 (NSW) for the appointment of trustees for the sale of the property) (see prayers 2 and 3 of the statement of claim).
By that statement of claim, an order is also sought for the payment of various amounts out of the net proceeds of sale of the Anna Bay property to Mr Ballard in his capacity as trustee of the various testamentary trusts (see prayer 4 the statement of claim). Further, an order is sought pursuant to s 85 of the Trustee Act 1925 (NSW) that Mr Ballard be relieved from any personal liability arising out of the expenditure by Mr Ballard of the funds of the various testamentary trusts on the repair, renovation, extension and improvement of the dwelling at the Anna Bay property between June 2013 and December 2014 (see prayer 5 of the statement of claim). I interpolate to note that, in this regard, Ms Ballard maintains that, since the testamentary trusts were established in Queensland and Mr Ballard was appointed trustee by the Supreme Court of Queensland, the application by Mr Ballard for exoneration from personal liability as trustee ought to be brought under s 76 of the Trusts Act 1973 (Qld).
Mr Ballard no longer presses his claim for relief in prayers 2, 3, 4 and 5 (having given notice of this on 29 January 2020). (Although Mr Ballard in submissions also said he did not press the claim for relief in prayer 7, costs, he does in fact seek costs inter partes.) Therefore, the only relief now sought by Mr Ballard (other than costs inter partes) in the present proceedings is the declaratory relief sought in respect of the equitable charges that Mr Ballard seeks for the benefit of the testamentary trusts.
As noted above, the present application for the transfer of the proceedings to the Family Court was brought by notice of motion filed on 14 January 2020. The parties agreed that it could be dealt with on the papers and have filed written submissions in relation to the application.
The timetable for written submissions included provision for any submissions in reply by 16 June 2020. Following requests from my associate, those submissions were belatedly received today (19 June 2020) (noting that submissions-in-chief were also received late following requests from my associate).
[4]
Proceedings commenced by Ms Ballard in the Family Court of Australia
Ms Ballard commenced proceedings in the Family Court of Australia on 19 December 2019, by way of the Initiating Application, seeking interim financial and property orders (i.e., an adjustment of their property interests), including, inter alia, orders that: Mr Ballard transfer his entire interest in the matrimonial home to Ms Ballard; Ms Ballard be declared the sole beneficial owner of the matrimonial home subject to equitable charges over 42% of the property (being 14% to each of the respective testamentary trusts); and, pursuant to s 80(1)(e) of the Family Law Act 1975 (Cth) (Family Law Act), that Mr Ballard be removed as trustee of the respective testamentary trusts and replaced with Ms Ballard as trustee.
At the time of filing the Initiating Application, Ms Ballard filed her "Financial Affidavit". That affidavit deposes that, at the time of the marriage, neither party had any significant assets but that at the end of marriage the parties had assets of approximately $1,052,500 of which the matrimonial home is approximately 64% of the asset pool. The issue of the contribution to the works on the matrimonial home is dealt with in that affidavit. Ms Ballard has commissioned a valuation to determine the increase in value to the matrimonial home from the funds applied from the trusts (the evidence as to that valuation is included in that affidavit). Ms Ballard desires to stay in the matrimonial home.
[5]
Relevant provisions and principles
Section 5 of the Cross-Vesting Act relevantly provides that:
5 Transfer of proceedings
(1) Where:
(a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court, and
(b) it appears to the Supreme Court that:
…
(ii) having regard to:
(A) whether, in the opinion of the Supreme Court, apart from any law of the Commonwealth or another State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Federal Court or the Family Court,
(B) the extent to which, in the opinion of the Supreme Court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the Supreme Court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, and
(C) the interests of justice,
it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be,
…
the Supreme Court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.
In Brown v Anstis (No 2) [2013] NSWSC 1488 (Brown v Anstis), Bellew J summarised (at [26]) the relevant issues as to whether there should be a transfer as follows: first, whether the Family Court has jurisdiction to deal with the proceedings; second, whether, but for cross-vesting and accrued jurisdiction, the proceedings would have been incapable of being instituted in this Court and capable of being instituted in the Family Court; third, to what extent do the matters for determination arise under a law of the Commonwealth and to what extent are they not within the jurisdiction of this Court; and fourth, whether it is in the interests of justice to transfer the proceedings to the Family Court.
As to the issue of jurisdiction, in Valceski v Valceski (2007) 70 NSWLR 36; [2007] NSWSC 440 (Valceski), Brereton J (as his Honour then was), having identified three relevant factors (though in substance covering the same matters as in Brown v Anstis) (see at [19]), considered the accrued jurisdiction of the Family Court and said that such jurisdiction (in accordance with authorities after the decision of the High Court in Re Wakim; Ex parte McNally (1999) 198 CLR 511; [1999] HCA 27) was not to be narrowly confined or restrictive.
His Honour stated (at [39]):
39 Thus, when a federal court is invested with federal jurisdiction, it is also invested with the power to determine non-federal aspects of a justiciable controversy which involves the exercise of its federal jurisdiction, provided that the non-federal aspects of the controversy form an integral part of the same controversy [Stack v Coast Securities (No 9)]. The scope of the "matter" in respect of which a federal court has jurisdiction is described by the ambit of the justiciable controversy. There is but a single matter, and the non-federal claims are within the accrued jurisdiction, where the different claims arise out of "common transactions and facts" or "a common substratum of facts" [Philip Morris at 512 per Mason J], notwithstanding that the facts upon which the claims depend "do not wholly coincide" [Fencott v Muller at 607 per Mason, Murphy, Brennan and Deane JJ; Re Wakim at [141]; or where different claims are so related that the determination of one is essential to the determination of the other [Philip Morris at 512 per Mason J]; or where, if the proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings [Re Wakim at [141]. However, it must always be borne in mind that the ultimate question is not the existence of each of the several suggested indicia, but whether there is in substance a single justiciable controversy. In Stack v Coast Securities (No 9) (at 294), it was put in the following terms:
"In this, as in other cases, the recurrent problem-is to identify what it is that falls within the Federal Court's accrued jurisdiction. The majority judgment in Fencott v Muller provides assistance in reaching an answer:
'What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationship. The scope of a controversy which constitutes a matter is not ascertained merely by, reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.'"
As to the interests of justice, Brereton J said the following (at [69]):
69 That leaves to the third factor, the interests of justice. The question is simply whether, assuming that the jurisdiction of the transferor court has been regularly invoked, it is in the interests of justice that the proceedings be heard and determined in the transferee court, there being a statutory obligation to transfer the proceedings to that court whenever it appears to be in the interests of justice to do so - for which purpose it is both necessary and sufficient that the transferee court be the "more appropriate" forum [BHP Billiton Ltd v Schultz (2004) 221 CLR 400 at [14], [63]]. In identifying the "more appropriate forum", relevant considerations include the cost and efficiency of proceedings in the respective jurisdictions, and the "connecting factors" described by Lord Goff in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 478 - including matters of convenience and expense such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law governing the relevant transaction [BHP v Schultz at [18]]. Consideration of relevant connecting factors may identify a "natural forum" [BHP v Schultz at [19]; cf British American Tobacco Australia Ltd v Gordon [2007] NSWSC 230 at [44]]. As Schultz makes clear, the interests of justice concern those of both parties, and rather than the selection of the most advantageous, or least disadvantageous, forum for one of them, the "interests of justice" are to be judged by more objective factors, such as facilitate identification of the "natural forum", in which objectively judged it might be expected that the dispute would fall to be resolved, with its concomitant juridical advantages and disadvantages for each party, whatever they may be [cf British American Tobacco v Gordon at [47]].
[6]
Ms Ballard's submissions
Ms Ballard says that there is "no doubt" that these proceedings were brought in contemplation of family law proceedings "and were designed to obtain orders prior to any such family law proceedings". In this regard, Ms Ballard points to the following paragraphs of Mr Ballard's affidavit of 18 November 2019:
50. Since my separation from the defendant I have sought advice in relation to my rights and entitlements under the Family Law Act in relation to the assets of myself and the defendant.
51. To date neither I nor the defendant has commenced any proceedings for adjustment of our property interests under the Family Law Act. Nor have we engaged in negotiations for adjustment of our property interests.
52. As a result of further advice I have received in relation to the trusts I now understand that the spending of the trusts' money on the extensions to [the Anna Bay property] may have been in breach of the trusts and I ought to take steps to protect the assets of the trusts, prior to and part [sic; scil apart] from any adjustment of property interest under the Family Law Act between me and the defendant.
…
54. I wish to have the rights of the trusts in relation to expenditure on extensions for [the Anna Bay property] determined and secured before any consideration of property adjustment between me and the defendant. That is why I have commenced these proceedings. I do not wish to have the trusts' rights determined as part of any family law property adjustment between me and the defendant because, if I were to leave all matters to Family Law Act proceedings, beneficiaries of the trust [sic] could rightly be concerned that I have a conflict between my personal interest and my obligations as trustee. I want to avoid as much as I can being placed in such a position of conflict. I want to avoid having to resign as trustee and or appointing an independent trustee due to the likely cost of an independent trustee taking the same action I am now taking in these proceedings. As the facts relating to the extensions and expenditure of the trusts' money are within my personal knowledge I believe the costs of my taking these proceedings will be significantly less than if an independent trustee were to do so.
Ms Ballard submits that none of the justifications proffered by Mr Ballard for commencing these proceedings "bare [sic] scrutiny". It is submitted that at least the same level of candour, probity and disclosure is required of him as trustee in this Court as in the Family Court in respect of his role as trustee of the trusts (including as to any exoneration in respect of his conduct). It is said that it is "hard to see how" the beneficiaries cannot see that Mr Ballard has a clear conflict in either forum, especially where the beneficiaries are not joined to these proceedings.
As to costs, it is submitted that conducting two sets of proceedings could not be cheaper than conducting only one set of proceedings. It is also submitted that it cannot be assumed that the beneficiaries would bear the costs of these proceedings (or Ms Ballard's case) in circumstances where the trustee has acted outside the terms of the trusts.
Further, it is submitted that, while this Court routinely deals with matters such as in respect of the expenditures spent on such works, the Family Court determines assessments of contributions to matrimonial property (including, not just from parties to a marriage but also from children and third parties) and is a specialist court in this respect. It is submitted that, in that respect, the Family Court is better positioned to deal with all the issues and that, as adverted to above, the conducting of one proceeding instead of two would be cheaper.
Ms Ballard says that the issues that arise for determination in the proceedings brought by Mr Ballard in this Court, on his pleadings and evidence, are: what was expended on the matrimonial home for the works; what was expended from the trusts for the purposes of payment of the works on the matrimonial home; what was Ms Ballard's involvement, if any, in the expenditure of the trusts' moneys in respect of the works on the matrimonial home; whether the expenditure by Mr Ballard as trustee should entitle the beneficiaries to have their interest elevated from a claim in personam against Mr Ballard (as an errant trustee) to an equitable interest in rem in respect of the matrimonial property; what is the effect of the expenditure of trust moneys on the matrimonial home vis-a-vis the parties' beneficial interests in the matrimonial home, including whether or not their interests should be adjusted to reflect any equitable interest of the beneficiaries; whether or not the matrimonial home should be sold and, if so, what should happen with the proceeds of sale; and whether Mr Ballard should be exonerated for his breaches of the trusts. (I interpolate to note that, as adverted to, those issues have been narrowed considerably by the position now taken by Mr Ballard as to the relief he seeks in these proceedings - which I address further below.)
On the pleading as it was initially framed, however, Ms Ballard submits that all the issues raised in the present proceedings (other than what she terms the "Exoneration Issue", namely whether Mr Ballard should be exonerated from personal liability for breaches of trust) form part of the issues before the Family Court in her proceedings; and, hence, that Mr Ballard's case (save for the Exoneration Issue) is part of the factual substratum of Ms Ballard's case. It is said that the relief available is substantially different, reflecting the wider ambit of considerations between the parties under the Family Law Act (a factor which, it is said, militates toward the Family Court dealing with all issues).
As to the four issues raised in Brown v Anstis, as extracted above, Ms Ballard submits as follows.
As to the first of those issues, it is submitted that the Family Court has jurisdiction to determine all the issues in these proceedings. Specifically, including that part dealing with the beneficial and equitable rights between the parties to a marriage and among their children (including with respect to the order for sale and distribution of the proceeds of such sale), in its ordinary jurisdiction under the Family Law Act 1975 (Cth), and that part with respect to the Exoneration Issue, in its accrued jurisdiction.
It is noted that s 78 of the Family Law Act provides that:
78 Declaration of interests in property
(1) In proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property.
(2) Where a court makes a declaration under subsection (1), it may make consequential orders to give effect to the declaration, including orders as to sale or partition and interim or permanent orders as to possession.
It is noted that s 79 of the Family Law Act provides that
79 Alteration of property interests
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property; or .
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage - altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
Further, it is noted that s 80 of the Family Law Act relevantly provides that:
80 General powers of court
(1) The court, in exercising its powers under this Part, may do any or all of the following:
…
(e) appoint or remove trustees; …
Ms Ballard also notes that Brereton J held in Valceski (at [60]-[61]) that:
[60] The equity suit and the matrimonial proceedings share a common substratum of facts, notwithstanding that the underlying facts of each do not wholly coincide - in that while the matrimonial proceedings involve wider and additional issues, the facts that underlie the equity suit are a subset of those that underlie the matrimonial proceedings…
[61] Further, the two proceedings are also related in the sense that the determination of one is essential to the determination of the other…
Ms Ballard submits that the same can be said in the present case. Although Counsel for Ms Ballard has candidly informed me that he has been unable to find an authority where the Family Court has considered the issue of exoneration under s 85 of the Trustee Act (or other similar state legislation), it is noted that the Federal Court routinely determines such matters under various state legislation dealing with exoneration in terms similar to s 85 of the Trustee Act and it is submitted that there is no reason why the accrued jurisdiction of the Family Court would be any less than that of the accrued jurisdiction of the Federal Court. It is said that the justiciable issues in Mr Ballard's case and the nature of the contributions to matrimonial property, including whether funds came from the trusts, are the same justiciable matters as those in Ms Ballard's case. Further, it is said that the Exoneration Issue is not a discrete issue (pointing to the nature, amount and confusion surrounding the trusts contribution to the matrimonial home).
Therefore, it is submitted that the Family Court has jurisdiction.
As to the second issue, it is noted that, at the time of commencement of these proceedings, there were no Family Court proceedings on foot. It is said that these proceedings are plainly capable of being instituted in this Court and the jurisdiction of this Court does not rely on any law relating to cross-vesting. Accordingly, Ms Ballard accepts that this factor suggests that this Court is the more appropriate.
As to the third issue, It is accepted that the matters in these proceedings do not arise under a law of the Commonwealth and do not involve the application or validity of Commonwealth law. Ms Ballard again accepts that this factor suggests that this Court is the more appropriate.
As to the fourth issue, that is a consideration of where the interests of justice lie, Ms Ballard points to the geographical connection with respect to her case, noting that her proceedings were commenced in the Newcastle Registry of the Family Court of Australia and will be determined in Newcastle, where the parties and the beneficiaries of the testamentary trusts (being their children, one of whom is still of school age) reside. It is submitted that this factor militates towards a transfer of the proceedings, given proximity and the likely cost savings of not having to travel to Sydney for a hearing. It is noted that there is no evidence at this time as to likely hearing dates in either set of proceedings.
Ms Ballard argues that the evidence in the respective cases significantly overlaps (if not, it is suggested, that Mr Ballard's case is subsumed in Ms Ballard's case). In this connection, emphasis is placed on the fact that, in Valceski, Brereton J (at [75]-[76]) noted that determination of the contributions from the trusts and adjustment of equitable interests in the matrimonial property in the proceedings would be undertaken by considering a narrow subset of the evidence that the Family Court would consider in adjusting the interests of the assets of the parties in the marriage, including the matrimonial home. It is said that the two proceedings would result in duplication of evidence and that issues as to estoppels might arise; and, again, that this tells in favour of making the transfer order.
It is further submitted that Mr Ballard's case has arisen in the context of the marriage breakdown and the attempts at property settlement between the parties, which commenced with an attempted mediation in 2018, before commencement of these proceedings; and that, as adverted to, Ms Ballard's case is more extensive and will deal with all the issues raised in these proceedings as well as additional issues under the Family Law Act. It is said that both Mr Ballard and the children have an interest in both proceedings; and that Ms Ballard has indicated that she will join the children in her proceedings (there being no little surprise expressed that Mr Ballard has not joined the child beneficiaries to this application - that being described as "bizarrely").
Ms Ballard thus submits that the interests of justice favour making the transfer order.
[7]
Mr Ballard's submissions
As noted above, Mr Ballard now presses only the claim for declaratory relief in relation to the alleged equitable charges over the parties' interests in the Anna Bay property.
Mr Ballard says that the trusts' claims are not incapable of being instituted in this Court nor do they require the application of a law of the Commonwealth or involve a "special" federal matter.
Reference is made to BHP Billiton Ltd v Schultz (2004) 221 CLR 400; [2004] HCA 61 at [14] and [163] for the proposition that consideration of what is in the interests of justice in the present context is assisted by determining what is the more appropriate or natural forum. Mr Ballard says that the trust claims in the present proceedings are "straightforward", that they are to be determined according to "orthodox" equitable principles and thus fall within this Court's usual jurisdiction. Following, Mr Ballard contends that this Court is the "natural forum".
Mr Ballard also makes reference to Valceski at [39], where Brereton J said:
39. Thus, when a federal court is invested with federal jurisdiction, it is also invested with the power to determine non-federal aspects of a justiciable controversy which involves the exercise of its federal jurisdiction, provided that the non-federal aspects of the controversy form an integral part of the same controversy … However, it must always be borne in mind that the ultimate question is not the existence of each of the several suggested indicia, but whether there is in substance a single justiciable controversy...
It is noted that in Fencott v Muller (1983) 152 CLR 570; [1983] HCA 12, Mason, Murphy, Brennan and Deane JJ said in a joint judgment (at 608):
What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.
Mr Ballard submits that, while it might well have been accurate to characterise the trust claims as forming an integral part of the family law property settlement or the present matter as involving a single justiciable controversy had it been asserted that there existed an equitable interest in the Anna Bay property which was disputed by the plaintiff and/or the defendant, in the present case (on examination of the respective claims for the trusts and by Ms Ballard, insofar as they relate to the expenditure of the trust funds and the relief which should be granted) there is in fact no element of dispute or controversy. It is said that, in her defence, Ms Ballard "offers no contest" to the imposition of equitable charges; rather, her argument is about the sale of the property and other matters not now pressed by Mr Ballard.
It is submitted that the relief sought by Mr Ballard in this Court and the relief sought by Ms Ballard in the Family Court, arising out of the expenditure of the trust funds, is one and the same: that both parties are actively seeking the imposition of equitable charges for the benefit of the trusts. Mr Ballard accepts that there are slight differences in the proposed method of quantifying the sums to be secured by the charges but says that these are not material.
Similarly, it is said that the parties' evidence of the expenditure of trust funds is neither controversial nor in dispute. It is noted that Mr Ballard relies on a record of expenditure (referring to his affidavit at [42]) that Ms Ballard admits she maintained (referring to Ms Ballard's affidavit at [26]) and that this is supported by bank statements. It is noted that Ms Ballard has sworn (referring to Ms Ballard's affidavit at [22]) that, between June 2013 and December 2014, Mr Ballard used funds from the children's trust accounts to finance renovations to the family home and (referring to Ms Ballard's affidavit [23]) that he used approximately $96,753 from each of the children's trust accounts for the renovations.
Mr Ballard accepts that there is a justiciable controversy between the parties as to how their matrimonial property should be adjusted under s 79 of the Family Law Act but says that both parties have eliminated from that controversy any possibility of a contest over trust interests by their "virtually identical" claims in favour of the trusts and the evidence that they will adduce as it relates to the expenditure of trust funds on the renovations. It is said that the non-federal aspects of this matter do not form an integral part of the Family Court matter and that the trusts' claims will not require findings on disputed facts or give rise to a risk of conflicting findings.
Mr Ballard submits that the existence or otherwise of accrued jurisdiction is not the dispositive factor, noting that many applications to transfer are not granted even though the Family Court has (or may arguably have) accrued jurisdiction (referring by way of example to Aspinall v Aqua Sports Pty Ltd [2018] NSWSC 706; (2018) 57 Fam LR 594 (Aspinall); Xue v Xue [2020] NSWSC 501 (Xue v Xue)).
It is said that the absence of a genuine basis for a spouse to dispute claims in equity by third parties and the strength of the evidence supporting those claims provide reasons against a transfer of proceedings to the Family Court (citing Xue v Xue at [55]-[57] per Adamson J) and that the absence of any contest (as in the present case) provides even greater reason against a transfer.
It is further noted that determination of what is the more appropriate forum is also assisted by considering the cost and efficiency of the proceedings in the respective jurisdictions (citing Valceski at [69]).
Further, it is said for Mr Ballard that if his claims on behalf of the trusts are transferred to the Family Court then he will become a party in that Court in two mutually exclusive capacities; and, in the conduct of the Family Court matter, he will have a conflict between his obligations as a trustee and his personal interests. It is submitted that it will become impossible for him to continue to maintain claims on behalf of the trusts and, therefore, it would be inevitable that an independent trustee would have to be appointed (which may result in delays, further cost and the possibility of further dispute as to whom the trustee should be and how they are appointed). It is noted that, once appointed, the independent trustee would have to become a party and these matters would visit further costs on the trusts.
It is said that it may be that the children will also become parties in the Family Court (with a litigation guardian having to be appointed for the youngest child). It is said that it remains unclear, absent the trusts vesting, whether the children alone can "speak for the trusts" (and it is noted that the youngest is a minor). It is said that if the children become parties it will "pit them directly in litigation against their parents".
It is submitted that the costs consequences of an independent trustee or the children becoming parties will be incurred in the context of claims on behalf of the trusts in respect of which there is not only no contest but which Ms Ballard actively supports in her Family Court application. It is said that, absent any contest, none of these consequences can be in the interests of justice.
Mr Ballard further says that an independent trustee or the children as parties in the Family Court proceedings will be required to engage representation and have their lawyers participate in proceedings where the majority of the time effort and cost will involve matters between husband and wife unrelated to the trusts (again, in the context of claims on behalf of the trusts which are not contested).
Mr Ballard says that, in contrast, the trust claims in this Court are ready to be allocated a hearing date and, given the absence of a contest, a hearing is likely to take less than one day. It is said that the parties can then proceed to have their Family Court matter progress (without Mr Ballard being placed in a position of conflict, with the trust interests having been formalised and without the need for an independent trustee or the children to be joined and without cost to the trusts). Mr Ballard says that Ms Ballard's submission that one case is less expensive than two fails to appreciate these difficulties. It is submitted that two, simple two-party cases will in all likelihood be no more expensive than one multi-party case in the Family Court.
[8]
Ms Ballard's submissions in reply
In reply, Ms Ballard emphasises that Mr Ballard has "abandoned his case" but for "one discrete point".
Ms Ballard records her agreement with Mr Ballard's submission that "[Mr Ballard] acted in breach of trust using the trusts' money on works to the [Anna Bay property]".
As to specific points made in reply, Ms Ballard makes the following submissions.
First, Ms Ballard cavils with Mr Ballard's assertion, "at least impliedly", that Ms Ballard was party to the breach of trust in the expenditure of funds.
Second, Ms Ballard cavils with Mr Ballard's submission that notice of the abandonment of prayers 2, 3, 4, 5 and 7 was given on 29 January 2020. Rather, it is said that what was provided on 29 January 2020 were two letters of offer (an open letter and a without prejudice letter) and that the open offer was an offer to withdraw those prayers of relief (contra conveying that Mr Ballard had abandoned those parts of his claim).
Third, Ms Ballard cavils with the submission that she commenced the Family Court proceedings after pleadings had closed in these proceedings. It is said that, while "strictly true", this submission "is apt to mislead" (because the informal steps, including mediation, had been attempted).
More generally, Ms Ballard submits that neither party is disputing that the beneficiaries of the trusts should be protected in some manner by way of equitable charge. However, it is said that "[h]ow that charge works in terms of contribution, value, and amount of the matrimonial home" is a matter that should be determined by the Family Court because, it is submitted, that Court has power to do so and is the natural forum to do so.
In this regard, it is submitted that there is no urgency requiring the making of the order sought because neither party now seeks the sale of the matrimonial home (such that the equitable interest can be protected by way of caveat until all issues are determined).
As to Mr Ballard's assertion that there is no justiciable controversy because the parties are in agreement, it is said that, although the parties are in "general agreement", Mr Ballard seeks a declaration for an interest of $96,753.83 while Ms Ballard in her family court proceedings seeks 14% (such that the determination of contribution, and how that should be recorded as between the trusts and the parties, are in issue). It is said that this type of controversy is "the very wheelhouse of the Family Court".
Furthermore, it is submitted that Mr Ballard on his own case comes "with dirty hands seeking equity" in circumstances where the resolution of issues as to imposition of the equitable charge involves issues that clearly intersect with the issues in the proceeding in the Family Court. It is said that "[j]ust working out the contribution alone is a task that would take significant judicial resources" (in this regard, Ms Ballard here seeks to distinguish the cases of Aspinall and Xue v Xue).
Finally, it is submitted that the abandonment of the Mr Ballard's case (save for prayer 1) does not remove those issues from the controversy; rather, "It just transfers them to their natural forum, the Family Court". In this respect, it is said that the only consequence of the determination of prayer 1 in this Court would be to remove a potential outcome from the Family Court in circumstances where the Family Court will have to determine all other issues relating to the orders if made in this Court. It is said that this "is cherry-picking and the Court should not allow it".
[9]
Determination
As referred to by both parties on the present application, Brereton J (as his Honour then was) in Valceski identified (at [19]) the relevant considerations under s 5(1)(b)(ii) of the Cross-Vesting Act as being (and see also, as extracted above, the judgment of Bellew J in Brown v Anstis): one, whether (but for cross-vesting and accrued jurisdiction) the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Family Court; two, the extent to which the matters for determination in the relevant proceeding arise under a law of the Commonwealth and are not otherwise (but for the cross-vesting legislation) within the jurisdiction of the Supreme Court; and the interests of justice. I have noted above the explanation given by his Honour as to the factor in respect of the "interests of justice" (at [69] as extracted at [21] above).
I considered these issues in Aspinall (to which, as noted above, Mr Ballard has referred and Ms Ballard, in reply, has sought to distinguish). There, I referred (at [41]) to Austec Wagga Wagga Pty Ltd v Rarebreed Wagga Pty Ltd [2012] NSWSC 343, where Stevenson J considered an application brought in this Court in the context where there were Family Court proceedings also on foot and his Honour there concluded that the issue in this Court (being the question of the identity of the trustee) was a discrete issue that could be disposed of by this Court in a quick and efficient manner. Similarly, in the present case, the fact that Mr Ballard is now pressing only for the declaratory relief as to the existence of the equitable charges (about which there is no relevant contest) means that there is a discrete issue (of a kind routinely dealt with in this Division) that can be disposed of in a quick and efficient way.
In Valceski, Brereton J, referring to Benlair Pty Ltd v Terrigal Grosvenor Lodge Pty Ltd [2006] NSWSC 339 per Nicholas J and Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 403, noted (at [21]) that:
21 … it may well not be more appropriate that the relevant proceeding be determined by the proposed transferee court if it is seriously arguable that it does not have jurisdiction to do so, when the transferor court undoubtedly has jurisdiction…
In Aspinall, I considered (see at [52]) that it was not necessary to consider any debate as to the accrued jurisdiction of the Family Court (or the likelihood, or otherwise, that the Family Court would accept that it had jurisdiction in this matter or decline in the exercise of its discretion to exercise that jurisdiction to consider the removal of the trustee in that case). Similarly, in the present case, I accept for the purposes of the argument that the Family Court would have accrued jurisdiction to deal with the so-called "Exoneration Issue" that had been raised initially in the present proceedings. However, nothing turns on this as Mr Ballard is not now seeking exoneration from personal liability as a trustee in these proceedings.
To my mind, the determinative factor here, as it was in Aspinall, is where the interests of justice lie. The jurisdiction here invoked by Mr Ballard falls clearly within that which is routinely exercised by this Division of the Court and, in my opinion, it is in the interests of justice here to exercise it. This is for the following reasons.
As now confined, the present proceedings involve a discrete issue (about which the present parties are not relevantly in contest), namely the declaratory relief sought in respect of the equitable charges in favour of the testamentary trusts. Mr Ballard has raised not unfounded concerns as to the potential conflict on his part (and consequential need to involve an independent trustee or representative for the beneficiaries) if the issue in respect of which declaratory relief is sought is to be determined in the context of the family law dispute with Ms Ballard. Whether, ultimately, such a conflict would necessitate separate or independent representation for the beneficiaries is an issue that does not need here to be determined. It is sufficient to note that there is such a risk that it will and that this would lead to further cost and delay.
Furthermore, the issue as to equitable charges dealt with as a discrete issue in this Court can be determined expeditiously (and without the concern, which I have just adverted to, of additional costs arising from a potential conflict of interest on the part of Mr Ballard appearing in two capacities in the one proceeding). Of course, I am not in a position to comment on the likely hearing date for the Family Court proceedings but it seems to me not unreasonable to think that a one day hearing in this Court on a discrete (and not contested) issue about the existence of equitable charges is likely to be heard and determined more quickly than a contested family law dispute involving a multiplicity of other issues (and, no doubt, contentious issues of fact).
In this respect, I bear in mind Ms Ballard's concern that "[j]ust working out the contribution alone is a task that would take significant judicial resources". However, for the reasons here indicated, I consider that this submission overstates the position and is otherwise not dispositive.
I can readily accept that two sets of proceedings would ordinarily be more expensive than one. However, in this regard, it is to be noted that the expense of filing fees has already been incurred. Further, the expense of the hearing of a discrete issue in this Court is likely to have the consequence of reducing at least some of the expense of the Family Court proceedings (by removing that issue from argument in that Court and by removing the prospect of any debate over accrued jurisdiction and whether it should there be exercised).
Meanwhile, I do accept that the usual residence of the parties would make the Family Court proceedings in Newcastle more convenient to Ms Ballard. However, it is not obvious that Ms Ballard would need physically to be present in Court for the hearing of a non-contested application for declaratory relief solely as to the equitable charges claimed by Mr Ballard in his capacity as trustee of the testamentary trusts. Moreover, in the current COVID-19 pandemic, face-to-face hearings have only just begun to resume in this Court. In that regard, it is certainly by no means unprecedented in the current climate (indeed it is, in fact, now commonplace) for matters in the virtual court room to be conducted wholly by audiovisual or telephone hearing - the cost of which would presumably be the same whether Ms Ballard was in Sydney or in the Newcastle region.
Accordingly, I have concluded that the proceedings would have been capable of being instituted in this Court; the matters here for determination do not arise under a law of the Commonwealth and do fall within the ordinary jurisdiction of this Court; and, balancing the matters raised by both parties, it is not in the interests of justice to transfer the proceedings to the Family Court. In this respect, I do not accept Ms Ballard's submission that none of the justifications proffered by Mr Ballard for commencing these proceedings "bare [sic] scrutiny".
Accordingly, I will dismiss the application for a transfer of the proceedings to the Family Court and will list the matter for directions next Tuesday with a view to fixing an early hearing date for the now confined issue to be determined by this Court. I will reserve the question of costs to be dealt with as part of the proceedings as a whole.
[10]
Orders
For the above reasons, I make the following orders:
1. Dismiss the defendant's notice of motion filed 14 January 2020.
2. Reserve the question of costs.
3. Stand over for directions at 8.30am on 23 June 2020.
[11]
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Decision last updated: 19 June 2020