Gao v Perry

Judgment

1. BELL P: I agree with the reasons and orders proposed by Leeming JA.
2. LEEMING JA: In a pending appeal from the decision of a judge in the Equity Division, the appellant has filed a notice of motion seeking orders confirming that the Court of Appeal has jurisdiction or alternatively transferring the proceeding to the Family Court of Australia. The motion gives rise to a question of general application. For that reason, it was listed for hearing before a court comprising three Judges of Appeal.
3. The appellant served notice upon the Commonwealth and State Attorney-Generals, with the latter providing written submissions on whether the pending appeal was a "special federal matter" which might nonetheless be heard by this Court. However, that was neither party's primary submission, nor was it supported by the Attorney-General. On the view I take, the point does not arise.
4. The background is relevantly in short compass. The appellant, Ms Min Gao and the respondent, Mr Graham Perry, had been in a de facto relationship. Ms Gao is the registered proprietor of property at Parramatta. Mr Perry claimed that he was entitled in equity to an interest of 50% in that property, primarily based on undue influence and unconscionable conduct, but in the alternative pursuant to s 90SM of the Family Law Act 1975 (Cth), which authorises the court when determining property settlement proceedings to alter the interests of the parties in the property. One aspect of his alternative claim involved setting aside a financial agreement the couple had entered into in 2009 dealing with ownership of a property previously owned by Mr Perry, the proceeds of the sale of which were used to acquire the Parramatta property. It was accepted that the financial agreement was one which engaged s 90UB of the Family Law Act and which could be set aside pursuant to s 90SM of the Family Law Act.
5. Mr Perry succeeded in his claims in equity. He obtained declarations to that effect and orders for the sale of the property pursuant to s 66G of the Conveyancing Act 1919 (NSW): Perry v Gao [2019] NSWSC 1022. The primary judge also addressed, at [49]-[71], Mr Perry's alternative claim under the Family Law Act and concluded that it would also have led to substantially the same outcome. His Honour commenced that analysis as follows: "In the light of my conclusions on the issue of undue influence and unconscionable conduct, I do not need to consider the issues arising under the FLA. Against the possibility that those conclusions are erroneous, I shall however express my views on this aspect of the case, and what follows is on the assumption that the Plaintiff does not have an interest in the Parramatta Property."
6. His Honour expressed his conclusion thus: "It follows that if I had not found that the Plaintiff was entitled to 50% of the Parramatta property on the basis of equitable principles, I would have reached the same conclusion under s 90SM."
7. Ms Gao's appeal from the final orders made at first instance is as of right, having regard to the value of the Parramatta property. The notice of appeal, filed on 29 October 2019, asserts error in the conclusions reached by the primary judge based on undue influence and unconscionable conduct.
8. A notice of contention dated 2 December 2019 seeks to uphold the orders made on the basis of the primary judge's contingent findings on Mr Perry's claim under s 90SM.
9. There is a question which may be more complex than it first appears whether Ms Gao was correct to confine her challenge to the dispositive reasoning based on undue influence and unconscionability. Ms Gao maintains that she was correct to take that course. She said that appeals lie from orders, that the orders actually made were not supported by any reasoning based on the alternative claim under the Family Law Act, and indeed that additional orders (including one setting aside the financial agreement) would have been made had the primary judge relied on the alternative claim.
10. The primary judge made it plain that the substance of his orders would have been supported by his reasoning under the Family Law Act. Even if Ms Gao were wholly successful in her challenge to the dispositive reasoning of the primary judge in equity, it would not without more follow that this Court on appeal would set aside the orders, allow the appeal and dismiss Mr Perry's claim. It would be necessary also to address the contingent findings made by the primary judge on the claim under the Family Law Act. Contrary to Ms Gao's submission, it is not to the point that, had his Honour grounded the orders made under the Family Law Act claim, there would have been further orders setting aside the financial agreement. The question which would arise as to the appropriate orders to be made on appeal is one of substance, and this Court would not disregard the unchallenged reasoning and findings in relation to the alternative claim under the Family Law Act.
11. However, it may be accepted that in principle, Mr Perry might have responded to the appeal on the basis that if he failed in his defence of the reasoning in equity, the appeal should be allowed and his statement of claim should be dismissed. It is not uncommon for parties to an appeal to confirm that they do not seek to defend one or more aspects of the reasoning of a judge at first instance, and to concede that if certain grounds of appeal are made out, then certain orders will follow.
12. Both parties' preference is for the appeal (including the notice of contention) to be heard and determined by the New South Wales Court of Appeal. A date in March 2020 for the hearing of the appeal was allocated when the matter first came before the Registrar last November. Mr Perry is elderly, suffers from dementia, and it is common ground that an appeal in the Family Court would not be heard nearly so promptly. Alternatively, the parties submit that the proceedings should be transferred to the Family Court.
13. Both parties accepted during oral argument that the critical provisions were found in s 7 of the Jurisdiction of Court (Cross-vesting) Act 1987 (Cth). That section needs to be borne in mind whenever consideration is being given to an appeal from litigation in a State court involving a matter arising under one of the statutes listed in the Schedule to that Act, including the Family Law Act 1975 (Cth).
14. Subsections 7(3) and (5) are drafted in complementary terms. They relevantly provide as follows: "(3) Where it appears that the only matters for determination in a proceeding by way of an appeal from a decision of a single judge of the Supreme Court are matters other than matters arising under an Act specified in the Schedule, that proceeding shall be instituted only in, and shall be determined only by, the Full Court of the Supreme Court … ... (5) Subject to subsections (7) and (8), where it appears that a matter for determination in a proceeding by way of an appeal from a decision of a single judge of the Supreme Court … (not being a proceeding to which subsection (6) applies) is a matter arising under an Act specified in the Schedule, that proceeding shall be instituted only in, and shall be determined only by: (a) the Full Court of the Federal Court or of the Family Court, as the case requires, or (b) with special leave of the High Court, the High Court."
15. Both those subsections ask whether there is a "matter for determination in a proceeding by way of an appeal" which is a "matter arising under an Act specified in the Schedule".
16. If Ms Gao's appeal had directly challenged the contingent reasoning based on the Family Law Act, then it would be clear beyond argument that her appeal was required to be filed in the Family Court of Australia. There would have been from the outset a right or duty which owed its existence to the Family Law Act which was part of the controversy to be resolved on appeal. It has been consistently held that in such cases s 7(5) of the Jurisdiction of Court (Cross-vesting) Act 1987 (Cth) ordinarily requires an appeal to be commenced in the Family Court: see Grace v Grace (2014) 85 NSWLR 688; [2014] NSWCA 86, Eberstaller v Poulos (2014) 87 NSWLR 394; [2014] NSWCA 211 and Corbett v Nguyen [2019] NSWCA 191. All three of those appeals extended to claims under the Family Law Act 1975 and were dismissed.
17. It is not necessary to explore the full width of s 7(5). Nor is it necessary to express a view whether Ms Gao's notice of appeal when instituted included a matter arising under the Family Law Act. Let it be assumed, in accordance with her submission, that it did not. It was common ground that, no later than the filing of the notice of contention, there was a matter for determination in Ms Gao's appeal which was a matter arising under the Family Law Act.
18. Both subsections 7(3) and (5) include the words "that proceeding shall be instituted only in, and shall be determined only by" a specified class of courts.
19. Mr Bedrossian, who appeared for Ms Gao, said that those words required one to consider the position at the time proceedings were instituted, namely, by the filing of the notice of appeal. He submitted that Ms Gao was required by s 7(3) to file her appeal in this Court, and that the same subsection provided that this Court was required to determine that proceeding. He explained that the words "shall be instituted only in" and "shall be determined only by" were obligations imposed by reference to the position at the commencement of the appeal, which led to the result that this Court should hear the appeal, including the issues arising on the notice of contention.
20. Subsection (5) is to be read with subsections (7) and (8), which qualify it, and which provide as follows: "(7) Where: (a) the Full Court of the Supreme Court of a State or Territory commences to hear a proceeding by way of an appeal; and (b) before the Court determines the proceeding, it appears to the Court that the proceeding is a proceeding to which subsection (5) applies; the Court shall, unless the interests of justice require that the Court proceed to determine the proceeding, transfer the proceeding to the Full Court of the Federal Court or of the Family Court, as the case requires. (8) Where the Full Court of the Supreme Court of a State or Territory: (a) determines a proceeding to which subsection (5) applies as mentioned in subsection (7); or (b) through inadvertence, determines a proceeding to which subsection (5) applies; nothing in this section invalidates the decision of that court."
21. Mr Bedrossian fairly acknowledged that on one view s 7(7)(b) and s 7(8)(b) told against his construction. If the words "a proceeding to which subsection (5) applies" were to be read in an ambulatory fashion, to be assessed at the time the appeal was being heard or determined, as opposed to when it was instituted, that would support a construction that subsection (5) imposed two requirements, to be considered at the time proceedings were instituted and at the time they were determined. However, he contended that on its proper construction, subsection (5) either applied or did not apply at the time the appeal was filed, and that was how the references in subsections (7) and (8) should be read.
22. Everything that could properly be put in support of Ms Gao's submission was put, and put capably. Understandably, in light of Mr Perry's shared preference for the appeal to be heard in this Court, his submissions did not oppose those of Ms Gao. However, this Court no differently from the parties is bound by s 7(5), and that provision on its proper construction prohibits this Court from determining the appeal in the form it now takes.
23. First, the ordinary meaning of s 7(3) and s 7(5) is that they impose two separate prohibitions. The first, which is upon instituting appeals, applies to the appellant and is assessed at the time an originating process is filed. The second is directed to the court whose jurisdiction has been invoked by the filing of an appeal. It calls for an assessment of what will ultimately be determined in the appeal when heard.
24. Textually, that conclusion is reinforced by the repetition of the word "only" in both s 7(3) and s 7(5). The force of "only" is not merely that there is an obligation for something to occur in a particular court, but also that there is a prohibition on that thing occurring in any other court. This presents a difficulty for a construction that holds that the test is applied only once, when proceedings are instituted, with the appellate court thereafter being required to hear and determine the appeal.
25. An appeal, when instituted, may meet the description in s 7(3) (or appear to do so) but may lose that character by reason of an amendment of the grounds of appeal or orders sought on appeal, or when a notice of cross appeal or notice of contention is filed. Then the appeal may have (or appear to have) the character described in s 7(5). It follows that if the State court in which the appeal has been instituted has not commenced to hear the appeal, then s 7(5) operates and dictates that it should not proceed to hear and determine it. If, however, and for whatever reason, the court has commenced to hear the appeal, for example because the jurisdictional question has not been adverted to or fully emerged or appreciated, then s 7(7) applies. That subsection, insofar as it preserves the possibility of the matter being determined in the State appellate court notwithstanding that it has the characteristics identified in s 7(5), where the interests of justice so require, is informed by a commonsense pragmatism but the thrust of the legislation is that appeals having s 7(5) characteristics be heard in the Full Court of the Federal Court or of the Family Court.
26. Further, the natural meaning of s 7(7) is that the court which has commenced hearing an appeal comes to appreciate that the issues about to be determined include a matter arising under an Act listed in the Schedule. It would be most unnatural to construe s 7(7) to apply to the notice of appeal as originally filed, when the issues which the appellate court has commenced to hear are determined by an amended notice of appeal, or a cross-appeal, or a notice of contention. Why would s 7(7) require the appellate court to disregard the issues actually being determined on any amended notice of appeal, or cross-appeal or notice of contention and require it to have regard to the original, superseded notice of appeal?
27. Secondly, authority favours the same construction. It was said in Eberstaller v Poulos at [21], that s 7(5) imposed two prohibitions: a prohibition on instituting, and a prohibition on determining, certain classes of appeals. The same point was made in Boensch v Pascoe [2016] NSWCA 191; 349 ALR 193 at [11] by reference to the "dual prohibitions" in s 7(5): "The appellant is prohibited from instituting an appeal other than in an appropriate federal court, and a State or Territory court is prohibited from determining an appeal, should an appeal be instituted in a non-federal court in contravention of the first prohibition." Subsection 7(3) has materially the same text and structure and must be to the same effect.
28. Thirdly, the point of these provisions is to bring about the result that, in the main, appellate decisions in matters arising under a select group of federal statutes are determined by particular appellate courts. That purpose would not be effectuated by a construction which requires State and Territory courts to determine appeals involving matters arising under those statutes merely because the statute is only invoked by an amendment, cross-appeal or notice of contention. The Legislature is taken to have been aware that the issues falling for determination in a proceeding by way of an appeal may and regularly do expand and contract from time to time. They will expand or contract every time the notice of appeal is amended, every time a cross-appeal is filed, and every time a notice of contention is filed.
29. For those reasons, it is no answer for Ms Gao to say that she was correct to, and indeed required to, commence her appeal in this Court. The issue which must be confronted is the second aspect of the prohibition in s 7(5).
30. Even if Ms Gao's notice of appeal did not give rise to a matter arising under the Family Law Act, it is plain that the issues now confirmed by the notice of contention extend to Mr Perry's claims under that federal statute. No longer is this proceeding one where "the only matters for determination" are "matters other than matters arising under an Act specified in the Schedule", such that the appeal must be determined by the New South Wales Court of Appeal. There is "a matter for determination in [Ms Gao's] proceeding by way of appeal [which] is a matter arising under an Act specified in the Schedule", namely, the Family Law Act. Subsection 7(5) provides that such proceedings shall be determined only by the Full Court of the Family Court. The position would have been identical if, in the absence of a notice of contention, Ms Gao had filed an amended notice of appeal extending to the contingent findings under the Family Law Act.
31. The prohibition in s 7(5) is qualified, in that the New South Wales Court of Appeal may determine the appeal if the exceptions in s 7(7) or (8) are satisfied. But it is clear that this Court has not "commenced to hear" Ms Gao's appeal within the meaning of s 7(7). The appeal is set down for hearing in March. The submissions in support of the appeal seem not to have been filed but, even if they had been, that would not mean that the Court had commenced to hear the appeal. It is also clear that s 7(8), which deals with cases where the appeal which a State court is prohibited from hearing is inadvertently determined, is inapplicable. Here the parties have very properly and constructively raised the issue promptly after the appeal was commenced.
32. Appeals which have been commenced contrary to the prohibitions in s 7 of the Jurisdiction of Courts (Cross-vesting) Act are ordinarily dismissed for want of jurisdiction; see for example Grace v Grace at [27]. However, the present is a case where both parties maintain that the prohibition upon institution of the appeal was not contravened, and both request that if this Court cannot hear and determine the appeal, it be transferred to the Family Court.
33. The cross-vesting regime confers a power upon the State court to transfer an appeal to the Family Court if the State court has "commences to hear" the appeal: s 7(7). A proceeding which has been commenced in the State court contrary to the prohibition upon instituting proceedings is liable to be dismissed. On one view there is a gap in s 7 of the cross-vesting legislation to deal with the transfer of a pending appeal the institution of which did not contravene any prohibition, but the determination of which must take place in another court. (That may or may not be the present case, but clear cases may readily be contemplated.) But there is no difficulty in finding an implication in the statute to transfer an appeal which was required to be commenced in one court but, because the issues have expanded, cannot be determined by that court. Once it is appreciated that whether or not an appeal falls within s 7(3) or s 7(5) may depend on steps (such as amendment, cross-appeal or notice of contention) subsequent to its institution, there is the possibility that an appellant may have been required to commence in a court which is prohibited from determining the appeal. There must be power to transfer the appeal in such a case. Where as here the parties consent to that course, it is appropriate so to order.
34. In light of the parties' attitude there should be no order as to costs. There is nothing in this judgment which will inhibit an order being made by the Family Court, in light of the outcome of the appeal, which extends to some or all of a party's costs in this Court.
35. Further submissions were made, including by the Attorney-General, as to whether there was a "special federal matter" arising for determination in the appeal, and the interrelationship between s 6 and s 7. As to the latter, it has been held that the specific provisions in s 7 prevail to the exclusion of the general provisions of s 5: Eberstaller v Poulos at [30]. It may be that the provisions regulating the transfer of "special federal matters" in s 6 are likewise outside the scope of s 7, which contains its own provision for transfer (in s 7(7)). But it is not necessary to express a concluded view on that point.
36. I propose that the appeal be transferred to the Family Court of Australia. The balance of the notice of motion filed 4 December 2019 should be dismissed. I note that the notice of motion also sought a stay of the orders made at first instance. Those orders have already been made, by consent, and remain in place.
37. SIMPSON AJA: I agree with Leeming JA.

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