This is the Court's second judgment in these proceedings. In the Court's first judgment given on 27 October 2017, the Court made an order allowing the first defendant and the second cross-claimant, Mr Minty to withdraw the maximum sum of $50,000 from the funds of $375,000 paid into Court on 2 April 2015: Elford v Minty [2017] NSWSC 1455 ("the principal judgment").
But the principal judgment did not deal with questions of costs, nor with the question whether the proceedings should be transferred to the Family Court of Australia. The Court granted liberty to apply in respect of both of those issues. This judgment deals with both.
This second judgment does not recite full history of these proceedings. That is already set out in the principal judgment. People, matters and events are referred to in both judgments in the same way. Both judgments should be read together.
Mr T. Boyle appeared for the first defendant, Mr Minty in the proceedings, and Mr S.A. Wells continues to appear for the plaintiff, Mr Elford. The Court further notes that in a communication with my Associate, the second and third defendants and the first cross-claimant have indicated to the Court that they would submit to whatever orders the Court may make in relation to this application for transfer.
The costs issue has been resolved. Neither party wished to argue against the suggested outcome on costs that the Court raised in the principal judgment (at [52]). There the Court said that, "The costs result which may suggest itself in this case is that the costs of the motion be the successful party's costs in the cause". That is the order which the Court will now make in the proceedings.
But the parties did not agree upon what should happen in relation to the transfer of the proceedings to the Family Court of Australia. Mr Minty argued that the proceedings should be transferred. Mr Elford argued that they should not.
There was no issue between the parties that both this Court and the Family Court have the jurisdiction to determine all issues in these proceedings, both the issue of whether or not a de facto relationship exists between Mr Minty and Mr Elford and all the other partnership, winding up, accounting and loan recovery issues.
The issue about the transfer of the proceedings to the Family Court was identified in the principal judgment in the following terms:
"29. Mr Marcus Minty's Cross-claim in the proceedings contends that he and Mr Elford were a de facto couple and the proceedings are a "matrimonial cause" under the Family Law Act 1975 (Cth). He seeks an order for the settlement of property under the provisions of Family Law Act, s 90SM. At the conclusion of this motion the Court will raise with the parties whether or not this matter should be referred to the Family Court of Australia under the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth)."
The various claims and cross-claims in the proceedings have been fully summarised in the principal judgment under the heading "The current status of proceedings": principal judgment at [26] - [30]. They do not need to be repeated here. As there is consensus at the Bar table about this Court and the Family Court having jurisdiction in respect of all matters to be decided in the proceedings, it is not necessary to elaborate upon the legal basis for that jurisdiction other than in the most basic terms.
This Court has jurisdiction in respect of issues where jurisdiction has been conferred on the Family Court of Australia by virtue of s 4(1)(b) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) ("Cross-vesting Act"). As a result of an agreement between the Commonwealth and the states, reflected in the Commonwealth Powers (De Facto Relationships) Act 2003, this Court's jurisdiction under the Property (Relationships) Act 1984 was transferred to the Family Court of Australia. The legal basis for this transfer is comprehensively described in the Court of Appeal's judgment in Jensen v Pearce [2013] NSWCA 247 at [13]-[14].
It is clear that in this case, where there was an allegation of a de facto relationship that may have commenced in 2009 and may have concluded in 2014, the Commonwealth legislation would be applicable to the financial aspects of such a relationship. I should note that the existence of such a relationship between Mr Minty and Mr Elford is in contest in these proceedings. But that does not in any way inhibit the jurisdiction of either this Court or the Family Court to deal with the issues in contest here. The existence, or otherwise, of such a relationship is a matter within the jurisdiction of the courts to determine. This Court also has the capacity to transfer these proceedings to the Family Court under Jurisdiction of Courts (Cross-vesting) Act, s 5(1) (b). It is not necessary for the Court to set out this familiar legislation.
[2]
The Parties' Arguments
Mr Minty's arguments in favour of the transfer of the whole of the proceedings to the Family Court under the Cross-vesting Act, s 5(1)(b) are extracted below from the written submissions propounded on his behalf:
"20. Also relevant, in a similar manner, is s 39A(5) of the Act, which provides that "A de facto financial cause that may be instituted under this Act must not, after the commencement of this section, be instituted otherwise than under this Act". It is submitted that s 39A(5) should be given its full meaning and effect by declining to further proceed to determine the proceedings in this Court. While one means of achieving that result would be to transfer the First Defendant's Cross-Claim to the Family Court and stay the First Plaintiff's proceedings pending that Court's determination on the Cross-Claim (see, for example, Farrall v Money [2012] QCA 262), it is submitted that it would better accord with s 56 of the Civil Procedure Act 2005 (NSW) if the entirety of the proceedings were transferred to the Family Court as that would avoid fragmentation and prolongation of the litigation.
21. It is relevant that, if a de facto relationship and hence a de facto financial cause are found to exist, then by s 90RC of the Act state law will be displaced.
22. It follows, in the First Defendant's submission, an order should be made under s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) to transfer the proceedings to the Family Court because, for the reasons outlined above:
a. apart from the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) and 'any law of a State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in [this] court John de Mestre & Co Pty Ltd and [only] capable of being instituted in …. the Family Court': see s 5(1)(b)(ii)(A) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth);
b. 'the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation … of a law of the Commonwealth', being the Act: see s 5(1)(b)(ii)(B) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth); and
c. it would otherwise be in the interests of justice that the Family Court resolve the issues as it is a matter rightly within that Court's jurisdiction and the legislative scheme reveals an intention on the part of both Commonwealth and State legislatures (the latter evidenced by the referral of power to legislate in respect of de facto relationships) that proceedings like the present be determined in the Family Court alone."
Mr Wells of counsel argued for Mr Elford that the structure of these proceedings weight against a transfer. He points out it involves a contest on Mr Elford's statement of claim, as to: whether there was a partnership or a joint venture for the development of two properties; whether there were breaches of fiduciary duty in relation to that joint venture; whether partnership accounts should be undertaken; and where some accounts have already been taken on the reference being conducted by Dr Ferrier, whether the appropriate course is for the proceedings to stay in this Court.
Mr Wells submits that the desirability of retaining the proceedings in this Court is supported by the second and third defendants bringing the first cross-claim for a winding up of the joint venture vehicle, Locums, and for Mr Elford to repay the moneys to the first cross-claimants.
Mr Wells submits that all those matters raise wider issues, than Mr Minty's disputed second cross-claim against Mr Elford that they were in a de facto relationship.
But the parties have reacted in the same way to certain aspects of this contest. Neither party submits that the second cross-claim should be split from the rest of the case, and rightly so. It would be quite inappropriate for the Court to order that issues on the second cross-claim about whether there was a de facto relationship on the second cross-claim be transferred to the Family Court but to leave everything else here.
The result must be that all issues in the proceedings are to be determined in one Court or the other. The only questions remaining are in which Court and if there is a transfer, when it should take place.
The Court is of the view that the proceedings should be transferred to the Family Court, for the following main reasons.
This Court is well equipped to decide whether or not the parties here were in a de facto relationship, a question of mixed fact and law. This Court often decides partnership disputes. But the inter-relationship between the issues of the alleged personal relationship and the alleged joint venture is so close here and covers more or less the same period between 2009 and 2014, that the separate nature of the partnership dispute, that Mr Wells emphasises, is more superficial than real.
The contest about whether there has been a de facto relationship will not be a minor or peripheral matter. Whatever the nature of the evidence on the subject, it will, in my view, be an important lens through which the partnership issues will need to be viewed. Thus, any weight in favour of a hearing in this Court due to the presence of the partnership and winding up issues, is considerably lessened.
But secondly, if a de facto relationship is found, the powers which the Family Court routinely exercises to make adjustments to the property of the parties to finalise the property aspects of their relationship are so broad and can be so transformative that the Court deciding these issues will have to take into account findings on partnership issues but then those findings will be subsumed by other contests about adjustment of property. This seems to be a sound reason why the proceedings should be transferred to the Family Court, a court which more commonly exercises that jurisdiction than this Court.
Thirdly, the matters referred to in Mr Boyle's submission (paragraph 22) including the overall legislative scheme in which the intention of both Commonwealth and State legislatures is that proceedings such as this would be determined in the Family Court.
For those reasons the Court will make the order for transfer.
But Mr Wells raises a timing issue. Mr Wells puts the unfinished reference to Dr Ferrier, as a reason why transfer should not take place. The Court has found that is not a complete obstacle to transfer. But it is an important timing issue. In my view, transfer should not take place until the reference out to Dr Ferrier is concluded.
Mr Wells argued that the debate about transfer should be adjourned until Dr Ferrier's report is in. But, in my view, the parties need to know now where they are going next. To accede to his submission, inviting further debate after Dr Ferrier's report, would simply have duplicated argument. The parties would have had to come back and expend further costs in a case where the amount in issue is not large. That is why I have determined the matter now.
But the argument has force to an extent: it is highly desirable that Mr Ferrier report back to this Court and a decision be made about adoption of his report before the transfer to the Family Court is ultimately effected. Otherwise the adoption of Dr Ferrier's report would be unmanaged during the transfer. I will make the order but stay it until the delivery of Dr Ferrier's report and a decision made about its adoption by this Court. Upon adoption or otherwise of Dr Ferrier's report by this Court, the stay of the transfer order will be lifted.
Mr Minty applies for the costs of this application. Mr Wells says they should, like the previous costs order, be an order for costs in the cause. But in my view, as Mr Minty has been successful on this application, which need not have been opposed, costs should follow the event.
[3]
Conclusion and Orders
Accordingly, the Court makes the following orders and directions:
1. Order that the costs of the application determined on 27 October 2017 will be the successful party's costs in the cause.
2. Order that the whole of these proceedings be transferred to the Family Court of Australia under the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), s 5(1)(b).
3. Stay Order 2 until the Court decides whether or not to adopt Dr Ferrier's referee's report.
4. Order that the plaintiff pay the first defendant's costs of this contested application of today.
5. Liberty to apply.
[4]
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Decision last updated: 30 November 2017