Brown and anor v Anstis anor

Supreme Court of NSW|2013-09-18|Before: Bellew J, Mr J, Mr P

INTRODUCTION 1By an amended notice of motion filed on 22 August 2013 the second defendant seeks an order that proceedings brought in this court by the plaintiffs against herself and the first defendant ("the possession proceedings") be transferred to the Family Court of Australia ("the Family Court") pursuant to s. 5(1)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 ("the CVA") 2The order sought has been opposed by the plaintiffs and by the first defendant. 3The following affidavits were read by the second defendant in support of the motion: (i)an affidavit of Debra Ann Anstis-Bollinger sworn 24 June 2013; (ii)a further affidavit of Debra Ann Anstis-Bollinger sworn 16 September 2013. 4The plaintiffs read the following affidavits: (i)an affidavit of Sandra Brown (the first plaintiff) sworn 29 August 2013; and (ii)an affidavit of Scott William Stierli sworn 12 September 2013. 5The first defendant sought to rely on an affidavit he had sworn on 17 September 2013. The vast majority of that affidavit was objected to and I reached the conclusion that apart from paragraphs 1, 21 and 22, its contents were inadmissible.

THE FACTS 6The affidavit evidence establishes the following facts. 7The first and second defendants were married in December 2002. They separated on 4 June 2010. An order dissolving their marriage was subsequently made in the Federal Magistrates Court (as it was then known). 8The first defendant is a beneficiary of a trust of which the plaintiffs are the trustees. The relevant trust deed was entered into on 23 March 1938. The plaintiffs are the trustees of that trust. 9On 5 September 2001 the plaintiffs entered into an agreement ("the loan agreement") with the first defendant pursuant to which a sum of money, payable on demand but without interest, was advanced to the first defendant to assist in the purchase of a property. The obligations of the first defendant pursuant to the loan agreement were guaranteed by the second defendant. 10Following the execution of the loan agreement, the first and second defendants purchased a property at 326 Duckenfield Road, Berry Park New South Wales ("the property"). The property became the matrimonial home of the first and second defendants during their marriage. Apart from the guarantee, the loan advanced to the first defendant was secured by a mortgage over the property in favour of the plaintiffs. 11At the time of their separation on 4 June 2010, the first and second defendants were both directors of Mandala Financial Group Pty Limited ("Mandala"), a company which provided financial planning advice. 12On 28 July 2010, following their separation, the first and second defendants entered into a Binding Financial Agreement ("the BFA") pursuant to the provisions of s. 90C of the Family Law Act 1975 ("the FLA"). 13The BFA provided (inter alia) as follows: "3 That within twenty eight (28) days of the date of this Agreement; (a) Charles and Debra do all acts and things to and sign all documents necessary to cause the business known as Mandala Financial Group Pty Limited [hereinafter referred to as "the business"] to be listed for sale at a price that is nominated by Charles and then to be sold in a reasonable timeframe thereafter for the best price reasonably obtained after the reasonable commercial process. (b) That Charles have the conduct of the said sale on behalf of the parties and instruct solicitors and agents to act on behalf of the parties. 4. That the parties do all acts and execute all documents to cause the proceeds of the sale of the business to be used as follows: (1) to pay the reasonable expenses of the sale including agents commission and legal costs and disbursements; (2) to discharge the mortgage and business loan secured on the property at 326 Duckenfield Road Berry Park in the state of New South Wales to Commonwealth Bank of Australia (loan Number 141627); (3) to pay the remainder to Charles. 5. That simultaneously with the settlement of the sale of the business; (a) Debra to pay Charles sum of $80,000.00. (b) That if the said sum is not paid within the period specified Debra pay to Charles interest thereon at the rate as provided by the Family Court Rules calculated from the due date on so much thereof as is from time to time outstanding. (c) That in consideration as payment of the said sum and any interest payable thereon pursuant to clause 5(a) and 5(b) Charles do all acts and execute all documents to cause to be transferred to Debra all of the right, title and interest of the parties in the land known as 326 Duckenfield Road Berry Park in the State of New South Wales being the whole of the land in Certificate of Title Folio Identifiers 110/1075518 and 2/782984 (herein and after referred to as "the property"). (d) That subject to the terms of this agreement Debra indemnify Charles and keep Charles indemnified in relation to all liabilities of the property however they arise. (e) That upon compliance by Debra with clause 5(a) Charles indemnify and keep indemnified Debra in relation to all liabilities of the business however they arise that may be owing after the sale of the business. (f) That forthwith upon the payment pursuant to clause 5(a) Charles repay all monies owed by him at the time of this agreement to the C.Anstis and W C Anstis and V M Anstis Settlement Trust ("the trust") and do all acts and things to indemnify and keep indemnified Debra in relation to the loan to C Anstis and V M Anstis Settlement Trust. (g) That the parties sign all documents necessary to discharge the mortgage secured by "the property" to Sandra Brown and Mark Woodward." 14There was default under the terms of the BFA. In particular, the second defendant did not, within the stipulated time, comply with clause 5(a) (although she has since tendered the sum in question to the first defendant). 15On 13 June 2012 the first defendant brought an application in the Federal Magistrate's Court ("the family law proceedings") seeking an order that the BFA be set aside. He also sought a number of other orders, including an order to the effect that he and the second defendant do all acts and things necessary to effect a sale of the property, as well as an order that on completion of the sale, the proceeds be applied as follows: (1)to the payment of costs, commissions and expenses of the sale and to pay outstanding rates and levies; (2)to discharge the mortgage to the trust; and thereafter (3)equally between the first and the second defendants. 16On 27 November 2012 the plaintiffs demanded repayment of the money advanced to the first defendant under the loan agreement. That demand was not met. 17On 6 December 2012 the plaintiffs demanded repayment, from the second defendant, of a sum of £123,266.00, being the amount which they contend was secured by the guarantee. That demand was similarly not met. 18In early 2013 the second defendant was served with a notice pursuant to s. 57(2)(b) of the Real Property Act 1900 which contained a demand by the plaintiffs that she pay a sum of $AUD189,569.42 by 2 March 2013. The second defendant did not pay that amount. 19On 24 May 2013, the plaintiffs commenced the possession proceedings in this court against the first and second defendants, seeking (inter alia) orders for possession of the property. The first defendant subsequently consented to the entry of an order for possession against him. No orders have been made against the second defendant, who is yet to file a defence in the proceedings. 20On 1 July 2013 the second defendant filed an amended response to the first defendant's application in the family law proceedings. In doing so, she sought (inter alia) orders that: (i)the first defendant's application be dismissed; (ii)the plaintiffs be restrained from taking any steps in relation to the possession proceedings and that they be restrained from enforcing the guarantee against her; (iii)the plaintiffs be entitled to enforce the loan agreement only as against the first defendant; and (iv)in accordance with clause 5(f) of the BFA, the first defendant pay all monies outstanding under the loan agreement. 21Importantly, the second defendant also sought a declaration as to her entitlement to the property. 22On 11 July 2013 the second defendant brought an application in the family law proceedings seeking orders that the plaintiffs: (i)be joined as respondents in those proceedings; and (ii)be restrained from continuing the possession proceedings. 23On that day his Honour Judge Walker made orders in the Federal Circuit Court that: (i)the family law proceedings be transferred to the Family Court; and (ii)leave be granted for the plaintiffs to be joined in the family law proceedings as the second and third respondents. 24The plaintiffs did not oppose the making of the order in (ii) above. The family law proceedings are presently listed for directions before the Registrar on 21 October 2013.

THE RELEVANT LEGISLATION 25Section 5(1) of the CVA, pursuant to which the present application has been brought, is in the following terms: 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.

THE ISSUES 26Having regard to the facts as I have outlined them, the issues arising for determination are as follows: (i)does the Family Court have jurisdiction to deal with the possession proceedings? ("the first issue"); (ii)but for cross-vesting and accrued jurisdiction, would the possession proceedings have been incapable of being instituted in this court and capable of being instituted in the Family Court? ("the second issue"); (iii)to what extent do the matters for determination in the possession proceedings arise under a law of the Commonwealth, and to what extent are they not within the jurisdiction of this court? ("the third issue"); and (iv)is it in the interests of justice to transfer the possession proceedings to the Family Court? ("the fourth issue").

THE FIRST ISSUE 27The first issue is whether or not the Family Court has jurisdiction to deal with the possession proceedings.

The submissions of the parties 28Counsel for the second defendant submitted firstly that the Family Court had jurisdiction to deal with the possession proceedings by virtue of various provisions of the FLA. He pointed, in particular, to ss. 79 and 90AE. 29Counsel further submitted that leaving aside these specific provisions, the Family Court had accrued jurisdiction to determine the possession proceedings. In this regard, it was submitted that the issues in those proceedings were sufficiently related or attached to the issues arising in the family law proceedings so as to confer accrued jurisdiction upon the Family Court. Counsel submitted that as long as the disputes in the respective proceedings arose out of the same substratum of facts, such that they were properly viewed as parts of a single justiciable controversy, accrued jurisdiction arose such that the entirety of the issues could be determined by the Family Court. 30Counsel for the plaintiffs (whose submissions were supported by counsel for the first defendant) submitted that the controversy in the family law proceedings necessarily centred upon the application to set aside the BFA, and that none of the issues raised by the second defendant in her amended response involved the plaintiffs in any way. In these circumstances, counsel submitted that the Family Court had no jurisdiction, accrued or otherwise, to determine the issues in the possession proceedings. In particular, he submitted that this was not a case in which the issues arising in the possession proceedings formed a smaller part of the overall controversy which was being litigated before the Family Court. 31Counsel for the plaintiffs also pointed to the fact that no defence had been filed by the second defendant in the possession proceedings. In these circumstances he submitted that it was not possible to determine what the issues in those proceedings really were. In this regard he placed some reliance on the fact that on the basis of the evidence which had been adduced thus far, there did not appear to be any suggestion made by the second defendant that the loan agreement, mortgage or guarantee were not properly enforceable.

Consideration of the first issue 32It is a pre-requisite to an order for transfer under the CVA that the transferee court (in this case the Family Court) have jurisdiction in respect of the proceedings which are sought to be transferred (in this case, the possession proceedings) (see Valceski v Valceski (2007) 70 NSWLR 36; [2007] NSWSC 440 at 42-43; [20]-[21] per Brereton J). In Valceski his Honour had earlier observed (at [24]) that the resolution of the issue of jurisdiction requires that consideration be given to the issues which are likely to arise in the respective sets of proceedings. 33In the family law proceedings, the first defendant seeks an order setting aside the BFA. In the event that such order is granted, he also seeks a series of consequential orders relating to (inter alia) the disposal of the property and the distribution of the proceeds of sale. By her amended response, the second defendant seeks (inter alia) a declaration as to her entitlement to the property which is the subject of the possession proceedings. 34In circumstances where no defence has been filed in the possession proceedings it is obviously difficult to determine what the issues are likely to be. Counsel for the second defendant indicated in submissions that equitable relief would be sought by his client against the plaintiffs in the possession proceedings. 35However, the subject matter of the possession proceedings is the same property in respect of which the second defendant seeks declaratory relief in the family law proceedings. In that sense, the property, and more specifically the rights and liabilities of the first and second defendants in relation to it, are matters which are central to both proceedings. 36Section 79 of the FLA provides (inter alia) as follows: 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. 37Importantly, s. 90AE provides (inter alia) as follows: 90AE Court may make an order under section 79 binding a third party (1) In proceedings under section 79, the court may make any of the following orders: (a) an order directed to a creditor of the parties to the marriage to substitute one party for both parties in relation to the debt owed to the creditor; (b) an order directed to a creditor of one party to a marriage to substitute the other party, or both parties, to the marriage for that party in relation to the debt owed to the creditor; (c) an order directed to a creditor of the parties to the marriage that the parties be liable for a different proportion of the debt owed to the creditor than the proportion the parties are liable to before the order is made; (d) an order directed to a director of a company or to a company to register a transfer of shares from one party to the marriage to the other party. (2) In proceedings under section 79, the court may make any other order that: (a) directs a third party to do a thing in relation to the property of a party to the marriage; or (b) alters the rights, liabilities or property interests of a third party in relation to the marriage. 38In view of these provisions, it could not, in my view, be seriously argued that the Family Court does not have jurisdiction to make orders in relation to the property which would bind the plaintiffs. This is particularly so where the plaintiffs are now respondents in those proceedings. 39However as I have noted, the precise basis upon which the second defendant may resist orders being made against her in the possession proceedings has not been made clear. The second defendant has not filed a defence in those proceedings. Further, as pointed out by counsel for the first defendant, there does not appear to be any suggestion that the second defendant is seeking to set aside the mortgage or guarantee. It may well be that the second defendant will seek some form of equitable relief in the possession proceedings but as matters presently stand, she makes no allegation at all against the plaintiffs. 40In these circumstances, and without knowing the precise basis upon which the second defendant will resist an order for possession being made against her in the possession proceedings, it is my view that the Family Court would have jurisdiction to deal with the issues in those proceedings only if that jurisdiction accrued to it having regard to the particular circumstances of this case. 41In Olsen v Olsen [2012] NSWSC 540 Campbell J helpfully summarised (at [34]) some of the principles concerning accrued jurisdiction which had been distilled by Brereton J in Valceski. In particular, Campbell J observed that: (a)when a Federal law confers jurisdiction on a Court in respect of a matter, the jurisdiction extends to authorise the determination of the whole matter; (b)a matter is a 'justiciable controversy' which may involve the determination of both Federal and State law, and once federal jurisdiction is attracted, a federal court is armed with full authority essential for the complete adjudication of the "matter" and not merely the federal aspect, this being the origin of "accrued jurisdiction"; (c)the authority to determine non-federal aspects of a justiciable controversy requires that non-federal aspects form an integral part of it. This requirement will be satisfied where the different claims, federal and non-federal, arise out of common transactions and facts or a common substratum of facts notwithstanding that the facts upon which the claims depend do not wholly coincide; (d)an important consideration is whether the different claims are so related that the determination of one is essential to the determination of the other; and (e)the jurisdiction of the Federal Court extends beyond the determination of the federal claim to the litigious or justiciable controversy between the parties, of which the federal claim forms a part. 42Campbell J also made reference to the decision in Fencott v Muller (1983) 152 CLR 570 where Mason, Murphy, Brennan and Deane JJ said (at 608): "What is and what is not part of the one controversy depends on what the parties have done, the relationship between or among them, and the laws which attach rights or liabilities to their conduct and relationship. The scope of the 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 one proceeding are within the scope of one controversy and thus within the ambit of a matter". 43In my view, as a matter of impression and practical judgment, the possession proceedings form part of a larger controversy which is encompassed in the family law proceedings. 44The fundamental question of whether or not the plaintiffs are entitled to an order for possession against the second defendant in the possession proceedings is inextricably linked to the question of whether or not the second defendant is entitled to (inter alia) the declaratory relief she seeks in the family law proceedings. In reality, the declaratory relief sought by the second defendant against the plaintiffs in the family law proceedings is the reverse of one of the orders sought by the plaintiffs against the second defendant in the possession proceedings. Further, the facts that underpin the possession proceedings, which include the execution of the loan agreement, the guarantee and the mortgage necessarily relate to the subject matter of the BFA which is sought to be set aside in the family law proceedings. 45In this sense, even though the facts in each case are not identical, there is nevertheless a common substratum of facts as between the possession proceedings and the family law proceedings. Fundamentally, both proceedings involve questions as to the second defendant's entitlement to the one property (see Warby, In the Marriage of (2001) 166 FLR 319 at 357; [93]). 46For these reasons I am satisfied that the Family Court has accrued jurisdiction to deal with the matters arising in the possession proceedings.

The second issue 47The second issue is whether, but for cross-vesting and accrued jurisdiction, the possession proceedings would have been incapable of being instituted in this court and capable of being instituted in the Family Court. 48The possession proceedings were obviously capable of being instituted in this court. They could also have been instituted in the Family Court, although only in reliance upon that court's accrued jurisdiction. These matters suggest that this court is the more appropriate jurisdiction in which to hear and determine the possession proceedings (see Valceski (at [67]).

The third issue 49The third issue is the extent to which the matters for determination in the possession proceedings arise under a law of the Commonwealth, and to what extent they are not within the jurisdiction of this court. 50The matters in the possession proceedings do not arise under a law of the Commonwealth. This also suggests that this court is the more appropriate jurisdiction in which to hear and determine the possession proceedings (see Valceski at [68]). The fourth issue 51The fourth issue is whether it is in the interests of justice to transfer the proceedings to the Family Court.

The submissions of the parties 52Counsel for the second defendant submitted that it was in the interests of justice that the proceedings be heard and determined in the Family Court having regard to the connecting factors between them. He submitted, in particular, that the Family Court was the natural forum for the determination of a dispute about the dominant asset of a marriage, notwithstanding that in the present case the dispute involved third parties. 53Counsel for the second defendant also pointed to the fact that the plaintiffs had consented to be joined as respondents in the family law proceedings, and that they had specifically indicated that they had no need for expeditious relief. He also relied upon the provisions in the rules applicable to proceedings in the Family Court which governed the holding of compulsory conferences. 54Counsel for the plaintiffs (whose submissions were again supported by counsel for the first defendant) submitted that the issues in the possession proceedings were not part of the controversy in the family law proceedings. He submitted that in these circumstances, it was in the interests of justice for the plaintiffs' rights to be determined in the possession proceedings in this court first. This, he submitted, was particularly so in circumstances where there did not appear to be any issue in the possession proceedings concerning the validity of the loan agreement, the mortgage or the guarantee.

Consideration and conclusion 55The determination of whether or not an order for transfer should be made is not one which is made according to whether one party has discharged an onus of proving that it is appropriate to do so. If the relevant statutory conditions for transfer are satisfied, the court has a duty to so order (see BHP Billiton Limited v Schulz (2004) 221 CLR 400 at 421;434-5;437;[14];[63];[71] per Gummow J). 56In Valceski Brereton J, in considering the question of whether or not it was in the interests of justice to make an order transferring proceedings, observed (at [69]): "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 421 [14], 434 [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 422 [18]). Consideration of relevant connecting factors may identify a "natural forum": BHP v Schultz (at 423 [19]); cf British American Tobacco Australia Ltd v Gordon [2007] NSWSC 230 at [44]. As BHP v 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, whateverthey may be: cf British American Tobacco v Gordon (at [47])". 57In my view, the submission that the issues in the possession proceedings do not overlap with those in the family law proceedings is one which reflects a somewhat artificial approach and should be rejected. There is, as I have pointed out, a fundamental question which is common to both sets of proceedings concerning the second defendant's entitlement to possession of the property. 58Moreover, the plaintiffs raised no objection to being joined as respondents in the family law proceedings. As a result, the Family Court is able to determine all matters in dispute, thereby avoiding any unnecessary duplication of evidence and importantly, duplication of costs. 59Finally, as I have previously pointed out, the possession proceedings necessarily involve a claim for possession of the property against the second defendant, in circumstances where she seeks declaratory relief in relation to that same property in the family law proceedings. That property appears to have been the principal asset of the marriage. In these circumstances there is, in my view, merit in the submission advanced by counsel for the second defendant that where entitlement to the primary asset of the marriage is central to each proceeding, the natural forum for the determination of such an issue is the Family Court. The overarching controversy is that which arises in the family law proceedings. The controversy in the possession proceedings is a smaller part of that larger controversy. In these circumstances, the Family Court is the more appropriate forum (see Valceski at [78]; [85]; Elias & Elias Pty Ltd atf the Elias Family Trust v Antoun Toufic Chidiac and ors [2010] NSWSC 1364 at [34]. ORDERS 60In view of the foregoing, I make the following order: (1)Pursuant to the provisions of s. 5(1)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987, the proceedings numbered 2013/00151335 commenced in the Common Law Division (Possession List) of this court are transferred to the Family Court of Australia. 61I will hear the parties as to the question of costs. 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: 15 October 2013

At a glance

Court

Decision date

Before

Source

Judgment (11 paragraphs)

Parties

Cases Cited (8)

Cited By (2)