Nadao Stott v Lyons and Stott

PROCEDURE - COURTS AND JUDGES - COURTS - CONCURRENT JURISDICTION OF DIFFERENT COURTS - TRANSFER OF PROCEEDINGS UNDER CROSS-VESTING LEGISLATION - TRANSFER OF PROCEEDINGS BETWEEN FAMILY COURT OF AUSTRALIA AND OTHER COURTS - where the applicants are the executors of the deceased's will - where the second wife has an application for family provision in the Supreme Court of Queensland - where the executors are the respondents to an application in the Family Court of Australia for property orders by the first wife - where the application in Family Court of Australia and the application in the Supreme Court of Queensland materially concerns the same property - whether the Family Court of Australia has accrued jurisdiction - whether an application ought to be made to the Family Court of Australia for the transfer of the Family Court proceedings to the Supreme Court of Queensland to allow proceedings to be adjudicated in the same forum.

EQUITY - TRUSTS AND TRUSTEES - APPLICATIONS TO THE COURT FOR ADVICE AND AUTHORITY - PETITIONS OR SUMMONS FOR ADVICE - where the applicants executors seeks directions under s 96 Trusts Act 1973 - whether the applicants should apply for leave to transfer proceedings from the Family Court of Australia to the Supreme Court of Queensland

Family Law Act 1975 (Cth), s 75(2), 79

Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth)

Trusts Act 1973 (Qld), s 96

Succession Act 1981 (Qld), ss 6, 41

Uniform Civil Procedure Rules (Qld), r 640, 668(1)(b)

Re Atkinson deceased [1971] VicRp 73; [1971] VR 612 cited

ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 applied

Bishop v Bishop [2003] FamCA 240; (2003) 175 FLR 10 cited

Finlayson v Finlayson (2002) 147 FLR 165 cited

Loughlan v McConnel [2006] QSC 359 cited

Smith v Smith (No 3) [1986] HCA 36; (1986) 161 CLR 217 considered

Re Wakim; Ex parte McNally (1999) 198 CLR 511 applied

Warby v Warby [2001] FamCA 1469; (2001) 166 FLR 319 cited

Young v Lalic [2006] NSWSC 18 cited

Nicol Robinson Halletts for Prudence Stott/respondent

[1] The applicants as executors of the will and codicil of Patrick John Stott, who died on 7 October 2005, and to whom probate was granted on 5 December 2005 have applied to the court for directions pursuant to s 96 of the Trusts Act 1973 and s 6 of the Succession Act 1981 concerning aspects of the administration of the estate.

[2] The deceased was first married to Prudence Stott on 30 September 1978 and divorced on 3 May 2005. They had separated on 12 March 2003. There were four children of the marriage, Fern aged 26, Summer aged 22, Skye aged almost 20 and Willow aged almost 10 years. The deceased married Nadao Stott on 7 August 2005 after meeting her in 2001. She had a daughter from a previous relationship, Prin, aged 10 who resided with her father in Thailand.

[3] The executors are the deceased's brother and solicitor. The deceased executed a will on 15 September 2005, that is, after the divorce from his first wife and after the marriage to the second wife and executed a codicil on 29 September 2005 appointing his brother as co-executor and co-trustee.

[4] The first wife commenced proceedings in the Family Court of Australia for orders about financial matters against the husband on 17 December 2004. The husband filed his response on 15 February 2005. Orders about the further conduct of the Family Court proceedings were made and on 31 March 2006 the Family Court ordered that the executors be substituted as the personal representatives of the deceased husband. Mediation conferences have been held without success. The Family Court proceedings have been adjourned to enable a mediation conference to occur on 27 May 2007.

[5] By his will dated 15 September 2005 the deceased left his estate on trust for the benefit of his four daughters. The quantum of his estate is not agreed. Mr G Page SC for the first wife tendered a schedule of alleged assets which indicated a net asset pool before tax of nearly $7 million, almost $4.5 million of which is allocated to the husband, exhibit 1, while the executors have filed a statement of assets and liabilities for the estate estimating the estate at approximately $450,000.

[6] The second wife commenced proceedings in this court for orders that the will be proved in solemn form of law pursuant to rule 640 of the Uniform Civil Procedure Rules. She contended that there were grounds for believing that the will could not be so proved because of the deceased's want of capacity due to the medication he was taking for what proved to be a terminal illness. The second wife contended that she had an interest in such a proceeding because she would take on an intestacy. The deceased had, however, executed a will in August 2005 after his marriage to the second wife. The difference between the August and September wills seems to be that the deceased left his estate outright to his four daughters in the August will and in trust in the September will. On 16 May 2006 Fryberg J concluded that the second wife did not have reasonable prospects of proving want of capacity with respect to the August will and dismissed her application.

[7] The second wife then brought an application on 29 May 2006 pursuant to rule 668(1)(b) of the UCPR that the order made by Fryberg J be set aside on the basis that evidence from a solicitor, not before Fryberg J, would cause a different order to be made. That application was unsuccessful, Stott v Lyons [2006] QSC 228, per Mullins J, decision of 30 August 2006.

[8] The second wife had commenced proceedings on 24 November 2005 pursuant to s 41 of the Succession Act 1981 for adequate provision from the deceased's estate. The four children of the deceased, as well as the second wife's daughter, have joined in that application. The second wife is the litigation guardian of her daughter. The second wife received real property and a business from the deceased or at his direction in or about October 2005 prior to his death.

[9] The executors by their application seek a direction from the court pursuant to s 96 of the Trusts Act 1973 and s 6 of the Succession Act 1989 respecting the further management and administration of the estate and in particular whether they ought to make application to the Family Court of Australia for transfer of the Family Court proceedings into this court so that those proceedings and the Succession Act proceedings might be adjudicated upon in the same forum. The application is couched in other alternatives - an application to this court to transfer the Succession Act proceedings to the Family Court or to seek a stay of the Succession Act proceedings pending disposition of the Family Court proceedings, but the focus is on an application to the Family Court.

[10] The first wife's position is that the Succession Act proceedings ought to be stayed pending the hearing and determination of her application in the Family Court. That course is opposed by the second wife who wishes to have the Family Court proceedings transferred to this court. The four daughters were not heard at this hearing but indicated through their solicitor that they do not oppose the first wife's proceedings in the Family Court being determined in priority to the Succession Act proceedings in this court.

[11] It is accepted that the Succession Act proceedings would very likely obtain a hearing date prior to a final hearing of the wife's application in the Family Court.

[12] Counsel for all parties are agreed that since the decision in Re Wakim: Ex parte McNally (1999) 198 CLR 511 which held that the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth) which purported to confer State jurisdiction on federal courts was invalid, the Family Court of Australia could not have transferred to it the Succession Act proceedings commenced by the second wife. Mr Quinn for the executors conceded that the experience of the Family Court and the specialised nature of matrimonial property matters would make the Family Court the more appropriate venue for determining both proceedings had transfer been possible. Nothing in Wakim derogates from the conferral of federal jurisdiction on State Supreme Courts by the Jurisdiction of Courts (Cross Vesting) Act 1987 so that this court may exercise the jurisdiction of the Family Court of Australia (save for "special federal matters" not here relevant). See the discussion by Brereton J in Young v Lalic [2006] NSWSC 18.

[13] No party submitted that the Family Court could determine the Succession Act proceedings as part of its so called accrued jurisdiction. There was no elaboration of this submission yet the executors deposed through their solicitors that:

"...there will be common issues and evidence concerning the extent of the property of the deceased and of various family members and trusts and property values in both the [Succession Act] proceedings and the Family Court proceedings. There has already been reference by the first wife in the Family Court proceedings to the position of the second wife and property which the deceased's husband had caused to be transferred to her, the value of that property, the liability of the second wife arising with respect to some of that property being shares in a company operating a restaurant and to the [Succession Act] proceedings themselves."

Affidavit of Andrew Geoffrey Thomas filed 15 February 2007.

[14] The ambit of the jurisdiction of a federal court to entertain non-federal claims was discussed by Gummow and Hayne JJ, who wrote the principal majority judgment in Wakim, at paras 129 and following. They said at para 135:

"It must now be regarded as established that the jurisdiction of a federal court having jurisdiction in a matter arising under a law made by the Parliament is not "restricted to the determination of the federal claim or cause of action in the proceeding, but extend[s] beyond that to the litigious or justiciable controversy between parties of which the federal claim or cause of action forms part".

[15] Their Honours made clear at paras 138-9 that the jurisdiction to entertain non-federal claims was not confined to such claims being made in the one proceeding.

"It must be taken to follow from the Court's decisions in Philip Morris, Fencott and Stack, however, that the identification of the justiciable controversy between parties is not determined only by the considerations of there being separate proceedings and different parties in the one Court. And in some circumstances a single matter can proceed through more than one Court. ...

The central task is to identify the justiciable controversy. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim".

[16] The Family Court of Australia has power to make declarations about property interests including of third parties, s 78 (1). In Warby v Warby [2001] FamCA 1469; (2001) 166 FLR 319 the Full Family Court, in a case stated, analysed the jurisdiction of the Family Court in respect of non-federal claims after Wakim. In that case there was a single property central to the controversy about the respective rights of the husband, the wife and the wife's father. The Full Family Court set out at para 95 the indicia, criteria, factors or considerations relevant to the Family Court holding that it has accrued jurisdiction in the circumstances of the subject dispute

2. the relationships between or among them;

3. the laws which attach rights or liabilities to their conduct and relationships;

4. whether the claims are part of a single justiciable controversy and in determining that question whether the claims are 'attached' and not 'severable' or 'desperate';

5. whether the claims are non-severable from a matrimonial cause and arise out of a common sub-stratum of acts; and

6. whether the Court has the power to grant appropriate remedies in respect of the "attached" claims".

[17] The Full Family Court applied Warby in Finlayson v Finlayson (2002) 147 FLR 165 and Bishop v Bishop [2003] FamCA 240; (2003) 175 FLR 10 and analysed the accrued jurisdiction again in Lewis v Rayhill [2006] FamCA 690; (2006) FLC 93-278 at para 124-201 and 203 per Coleman and Boland JJ. Whilst Smith v Smith (No 3) [1986] HCA 36; (1986) 161 CLR 217 might appear to conclude that the nature of the s 79 jurisdiction under the Family Law Act and that exercised by virtue of the Family Provision Act 1982 (NSW) were quite disparate and not apt to be "accrued" to the Family Court, the explanation of that decision in ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 suggests that the decision is to be closely confined, per Gleeson CJ, Gaudron and Gummow JJ, with whom Hayne and Callinan JJ agreed, at para 59, McHugh J at para 138. It is, of course, a matter entirely for the Family Court to decided if it has, on the facts presented to it, jurisdiction to entertain the claim by the second wife and the children of the first marriage as well as the second wife's child, as part of its jurisdiction in relevant non-federal matters, . But it is a matter of serious concern to lawyers advising their clients that there is a serious risk that a federal court will not assume jurisdiction after the litigation has been run or that on an appeal be found to have been assumed jurisdiction erroneously.

[18] It seems to me desirable in the interests of cost savings, convenience, and coherence of decision making that proceedings by the first wife and by the applicants pursuant to s 41 of the Succession Act be heard and determined in one court. It may also make mediation more likely to be successful if all parties are connected in this way. The court seized of the proceedings will need to determine what comprises the pool of assets of the first marriage and of the deceased estate and what comprises the assets of the second marriage. It would not be the case, might I suggest with respect, that the Family Court would embark on a hearing under s 79 of the Family Law Act and make orders against the husband's estate in favour of the first wife without reference to his will and the interests and claims of the children of the marriage and of the husband's step-child and his second wife, as seems to be the contention of the first wife. That much seems to be clear by virtue of s 79(2) of the Family Law Act which provides

"The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order."

In addition the court would have regard to s 75(2)(o)

"...any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account".

And s 79(8)(b)(ii)

"Where, before property settlement proceedings are completed, a party to the marriage dies:

...

(b) if the court is of the opinion:

(ii) that it is still appropriate to make an order with respect to property;

The court may make such order as it considers appropriate."

[19] As I have said, it is not for this court to express any view about how the Family Court might approach an application by the executors to have the first wife's proceedings transferred to this court, but it is clear that the executors are correct to seek the court's guidance on the matter, see Re Atkinson deceased [1971] VicRp 73; [1971] VR 612 at 615-616 per Gillard J and Loughlan v McConnel [2006] QSC 359 per Atkinson J at paras 7-10 and paras 53-55. The first step is to make an application to the Family Court.

[20] Accordingly, the executors can and ought commence proceedings in the Family Court of Australia at its Brisbane registry seeking the transfer of proceedings BRF 3761/2004 to the Supreme Court of Queensland to be heard and determined with proceedings BS 10019/05.

[21] There was some disagreement about the costs of the respondents on this application but I am persuaded that on this difficult issue of jurisdiction it was of assistance to have both positions argued. The respondents, as well as the executors, should have their costs out of the estate on the indemnity basis.