Plaintiff v Defendants

Supreme Court of Victoria|2008-09-05|Before: HANSEN J

1 By amended summons[1] filed 21 July 2008, the first defendant Laree Madonna Jane (who I will call "Laree") sought an order pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) ("the Act") that the proceeding be transferred to the Family Court of Australia at Melbourne for hearing and determination. The application was opposed by the plaintiff Rodney Bruce Jane (who I will call "Rodney"), the second defendant Robert Frederick Jane (who I will call "Bob"), and Bob Jane Corporation Pty Ltd ("BJC").

2 I heard the application in the Practice Court on 21 July 2008, together with a summons filed by Rodney on 17 July 2008 which sought leave to amend the statement of claim by substituting Bob Jane Pty Ltd for BJC as third defendant. The application to amend was not opposed and I granted Rodney leave, pursuant to which he filed an amended writ and statement of claim on 30 July 2008.

3 In November 2006 Laree and Bob separated after almost 20 years of marriage. On 18 December 2006 Laree commenced a proceeding in the Family Court seeking orders in relation to the three children of the marriage, and an adjustment of property as between her and Bob. Laree's Application for Final Orders did not particularise the financial orders sought, instead seeking that "the wife be excused from particularising any further orders sought by her until such time as the husband files and serves a Form 13 Financial Statement and provides a full and frank disclosure of all his assets, liabilities and financial resources to the wife".

4 As to Bob's financial position, counsel for Laree said that Bob and Laree have "acquired considerable wealth through the operations of BJC and other related entities". I note that Bob was the founding director and is currently the Executive Chairman of BJC. Rodney, who is Bob's son from a previous relationship, is currently a director and the Chief Executive Officer of BJC. BJC is the franchisor of a national franchise system for the sale and supply of car tyres, wheels, batteries and car products. The franchise business is known as Bob Jane T-Marts. The issued capital of BJC is held by Bob Jane Pty Ltd which is the trustee of the Bob Jane Unit Trust. Bob is recorded as the holder of all the units in the Bob Jane Unit Trust. Rodney claims, however, that Bob holds those units on trust for him.

5 Rodney commenced a proceeding in this Court on 24 July 2007 in essence seeking a declaration that he is the beneficial owner of the units in the Bob Jane Unit Trust pursuant to a declaration of trust made on 28 February 2002, and that the trust has vested. Counsel for Laree stated that the effect of the declaration (if made) would be that Bob holds most of his wealth on trust for Rodney. I do not know and cannot speculate as to the effect of the declaration in terms of Bob's assets, but for present purposes I assume that if Rodney's claim is upheld, there will be a substantial reduction in the pool of matrimonial assets in respect of which the Family Court could make orders altering property interests as between Bob and Laree.

6 Laree disputes the validity and bona fides of the alleged declaration of trust. Her amended defence filed 20 March 2008 alleges (at paragraph 4) that the document purporting to be a declaration of trust is a sham and is void for illegality in that its execution was obtained by Rodney and Bob for the purpose of defeating any claim that she may have to Bob's assets by reason of their marriage. Paragraph 7 alleges, further and in the alternative, that the declaration of trust "was made so as to defeat an existing or anticipated Order or likely to defeat such an Order by the Family Court of Australia in anticipation of [Laree's] entitlements as against [Bob] pursuant to the Family Law Act 1975".

7 On 14 September 2007 Laree filed in the Family Court an Amended Application for Final Orders seeking, among other things, an order that the declaration of trust be set aside. On the same day, Laree filed a Further Amended Application seeking orders that Rodney, BJC, and Bob Jane Pty Ltd be joined as respondents, and that Rodney be restrained from continuing his proceeding in the Supreme Court. A Further Further Amended Application was filed by Laree on 15 October 2007 seeking an order to the effect that Rodney do such things necessary to transfer the Supreme Court proceeding to the Family Court.

8 Laree's applications were heard on 19 October 2007 by Brown J who reserved her decision and delivered reasons on 30 January 2008. In refusing Laree's applications, Brown J said the following:

"59. To turn briefly to the arguments relating to transfer (if an application were made) there is no doubt that the Supreme Court has jurisdiction to entertain the proceedings brought by Rodney Jane. An applicant for transfer of them to this Court would have to convince the Supreme Court that this is the appropriate forum in which the dispute should be determined, having regard to the provisions of s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) [sic]. As there were proceedings between the husband and wife in this Court when the Supreme Court proceedings were instituted, the proceedings could also have been instituted in this Court, but only in reliance on accrued jurisdiction. That might be said to suggest that the Supreme Court is the more appropriate forum. The matters for determination in the Supreme Court proceedings do not arise under, or involve questions as to the application or validity of, the Commonwealth law; they are squarely within the jurisdiction of the Supreme Court. That may also suggest that the Supreme Court is the appropriate forum.

[Then after setting out the law relating to an application to transfer under the Act, Brown J continued:]

The Supreme Court proceedings relate to a discrete point, going only to the efficacy of the 2002 Declaration. It is not put in these proceedings that Rodney Jane has contributed in any way to the acquisition, conservation or improvement of property of the parties (as was the case in Valceski).
Conversely, the extent of the husband's interest in BJT (if any) is only one aspect of the proceedings in this Court, proceedings which are far from ready for trial."

Brown J described the various interlocutory steps still required in the Family Court, and concluded that the case was "not close to being ready for trial". Balancing all factors, her Honour concluded that it was not appropriate to require Rodney to make an application in the Supreme Court for the transfer of the proceeding, nor was it appropriate to restrain Rodney from prosecuting the Supreme Court proceeding. Her Honour noted, however, that Laree retained the right to bring an application in the Supreme Court for transfer of the proceeding under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth).

9 Laree has now brought such application under s 5(1) of the Act.

10 Section 5(1) of the Act provides that:

(a) a proceeding (in this subsection referred to as the relevant proceeding ) is pending in the Supreme Court of a State or Territory (in this subsection referred to as the first court ); and

(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court or the Family Court and it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court;

(A) whether, in the opinion of the first court, apart from this Act and any law of a 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 first court and capable of being instituted in the Federal Court or the Family Court;

(B) the extent to which, in the opinion of the first 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 first court apart from this Act and any law of a State relating to cross-vesting of jurisdiction; and

it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be; or

(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Family Court;

the first court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.

11 It was common ground that the Family Court has jurisdiction to hear Rodney's proceeding, hence the parties identified the critical question as being whether the interests of justice make it more appropriate that the proceeding be determined by the Family Court. As to the meaning and application of the term "interests of justice", as it appears in s 5(1)(b)(ii)(C), it was common ground that the relevant principles were correctly stated by Brereton J in Valceski v Valceski[2] as follows[3]:

"That leaves [sic] 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 ; 211 ALR 523 ; [2004] HCA 61 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]; compare 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 (compare British American Tobacco v Gordon at [47])."

12 Counsel submitted that the interests of justice favoured transferring Rodney's proceeding to the Family Court. First, the issues in Rodney's proceeding arise out of and involve questions arising under the Family Law Act 1975 (Cth) in the context of the broader dispute between Laree and Bob, involving the ultimate allocation of assets as between Bob and Laree, and their children. The Family Court proceeding will inevitably involve a consideration of the value of Bob's interest in BJC, and who is entitled to the units in the trust. If the units have been effectively disposed of by the declaration of trust, then that matter must be considered by the Family Court together with any relevant considerations under ss 78 and 106B of the Family Law Act. I interpolate that s 78 concerns the Family Court's power to make declarations as to the parties' rights and title to matrimonial property, while s 106B provides that in a proceeding under the Family Law Act, the Family Court may set aside a disposition of a party which is made to defeat an existing or anticipated order in the proceeding or which, irrespective of intention, is likely to defeat any such order.

13 Secondly, the issues in Rodney's proceeding will involve the same evidence and witnesses as the Family Court proceeding. Bob and Rodney's evidence as to the declaration of trust will be relevant, and Laree will be entitled to cross-examine both of them as to their intent and the validity of the declaration of trust, and whether their subsequent conduct was consistent with the existence of the trust. If Rodney's proceeding remains in the Supreme Court, there will be unnecessary duplication and additional costs, as well as the possibility of inconsistent findings. In short, the Family Court is the only venue that could resolve the whole controversy without duplication of evidence and controversies. And although the Family Court proceeding is not yet ready for trial (a trial in the first half of 2009 may be possible) nor is Rodney's proceeding, as to which further discovery will be required.

14 Thirdly, Laree might be able to obtain an order in the Family Court for an interim property settlement to assist with her costs of the litigation.

15 Counsel relied on the decision of Brown J, adopting her Honour's observations quoted above as submissions in opposing the application. He submitted that Rodney's proceeding relates to a discrete point, going only to the efficacy of the declaration of trust. This Court will decide whether the declaration of trust is valid, or whether it is a sham, and the Family Court will proceed on the basis of the answer given by the Supreme Court. The same issue will not be determined twice.

16 Counsel also sought to distinguish Valceski, where Brereton J did transfer the Supreme Court proceeding to the Family Court. He submitted that the transfer in that case was appropriate, because the Supreme Court case involved a claim by the father of the husband (the father was not a party to the Family Court proceeding between the husband and wife) for an equitable interest based on contributions to property, in circumstances where the respective contributions to the property by the father and the parties to the marriage would, regardless of the result in the Supreme Court, still need to be determined in the Family Court proceeding. In contrast, Rodney's proceeding has nothing to do with contributions. It is simply raises the validity of an instrument, and the answer given by this Court will bind the parties.

17 As to Laree's submission about an interim property settlement, counsel submitted that the Family Court could still make such an order, even if Rodney's proceeding was not transferred. It is convenient to state at this point that I accept counsel's submission on this point. In my view, the jurisdiction of the Family Court to make an interim property order is of minimal, if any, relevance to Laree's application and I thus say nothing more about it.

18 Finally, I note that the solicitor for the second and third defendants adopted the submissions made by Rodney's counsel.

19 It is convenient to begin by reference to the factors to be considered under s 5(1)(b)(ii) of the Act.

20 As to s 5(1)(b)(ii)(A), I note that Rodney's proceeding was clearly capable of being instituted in the Supreme Court and, as Brown J correctly stated, the proceeding was capable of being instituted in the Family Court but only in reliance on that Court's accrued jurisdiction. I have regard to these matters.

21 As to s 5(1)(b)(ii)(B), Brown J considered that the matters for determination in Rodney's proceeding do not arise under, or involve questions as to the application or validity of the Commonwealth law, but rather are "squarely within the jurisdiction of the Supreme Court". In my view, Rodney's proceeding does raise the application or interpretation of a Commonwealth law - in that paragraph 7 of Laree's amended defence, while not expressly invoking s 106B of the Family Law Act 1975 (Cth), follows the wording of that section - but the matters raised fall within the equitable jurisdiction of the Court, in that the relief sought by Rodney is discretionary, and in exercising that discretion, any rights Laree might have under s 106B would be a relevant factor for the Court to consider. Thus it cannot be said that Rodney's proceeding raises matters of Commonwealth law which are only in this Court because of cross-vesting legislation. I agree with Brown J that the matters raised are squarely within the jurisdiction of the Supreme Court.

22 As to s 5(1)(b)(ii)(C), the following matters are relevant to the interests of justice.

23 Rodney's proceeding will involve the calling of evidence from Bob, Rodney, and Chung (a director of BJC) and cross-examination of those witnesses by Laree's counsel. However, I do not accept that there will be any substantial duplication if Rodney's proceeding remains in the Supreme Court. That is because, in my view, Rodney's proceeding involves a relatively limited enquiry as to the validity of the declaration of trust. I reject Laree's submission that there is a possibility of inconsistent findings. If the Supreme Court makes the declaration sought, then the units will be excluded from the pool of matrimonial assets. If the declaration is not made, then the units will be included in the pool of matrimonial assets. Either way, the Family Court will proceed on the basis that the Supreme Court's answer to the question binds all relevant parties. In those circumstances, I do not accept that witnesses will be required to give evidence about the same matters in two different proceedings. To the extent that the same witnesses are called in the two proceedings, there is always a possibility that there will be some overlap in evidence they give, and there may be some duplication of cost in terms of separate witness statements being prepared for each proceeding, nevertheless I consider that any such overlap or duplication is incidental rather than substantial. That is all the more so given that the Supreme Court's determination of one issue will effectively remove that issue from the matters in respect of which evidence needs to be given in the Family Court proceeding.

24 Another matter to note is Laree's delay in bringing her application. As to this, counsel told me that between January 2008 (when Brown J refused the applications for anti-suit injunctions to prevent Rodney from prosecuting his claim in the Supreme Court) and June 2008 (when Laree finally brought her application to transfer the proceeding), Laree was focusing on other proceedings in this Court in respect of franchise agreements, and thus did not bring her application earlier. That may be so, yet the plaintiff has taken steps in the proceeding (such as discovery) in that period and thus incurred costs which may not have been required had the application been made earlier. In short, delay is a relevant factor to which I have regard in assessing the interests of justice overall.

25 I also note that counsel for Laree mentioned in her oral reply that, due to the publicity surrounding the case, there was a non-publication order in place in the Family Court and, given that children were involved in the case, it was desirable that the issues be ventilated in the private forum of the Family Court rather than the public forum that is the Supreme Court.

26 I accept Rodney's counsel's contention that Rodney should not be forced to litigate his claim in the Family Court proceeding in circumstances where (a) there is a relatively discrete point which can be determined in this Court and which will bind the parties; (b) the proceeding in this Court, while perhaps requiring further discovery, should be able to be fixed for trial more quickly than the Family Court proceeding; (c) Laree has not yet particularised the grounds for her relief in the Family Court, and that proceeding is still a long way off being ready for trial; and (d) the costs of the parties to Rodney's proceeding (other than Laree) might well be increased if they were forced into the Family Court litigation which encompasses a broader range of issues than Rodney's proceeding. I would also observe that in light of the parties' wish to mediate the Family Court proceeding, there would seem to be a better chance of resolving that proceeding at mediation if this Court had already determined Rodney's proceeding. That is because there would be greater certainty as to what was included in the pool of matrimonial assets.

27 Having regard to the matters in s 5(1)(b)(ii)(A), s 5(1)(b)(ii)(B), and all of the above matters going to the interests of justice in s 5(1)(b)(ii)(C), and to everything that counsel submitted, I am not satisfied that it is more appropriate that Rodney's proceeding be determined by the Family Court. In all the circumstances the interests of justice favour the proceeding remaining in the Supreme Court. The parties' lawyers should work together and with the Court in order to have the case fixed for trial as soon as possible.

[1] The summons was amended to correct the erroneous statement in the original summons filed 13 June 2008 that the order was sought under s 5(2) of the Act.

Courts (Cross-Vesting) Act 1987

(2007) 36 Fam LR 620

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