Southwell v Bennett

Civil Procedure Act 2005 LEGISLATION CITED : Property (Relationships) Act 1984 Uniform Civil Procedure Rules 2005

ABB v Freight Rail [1999] NSWSC 1037 Allen v Gulf Oil [1981] AC 1001 Bailey v Director-General Department of Energy Climate Change and Water [2010] NSWSC 979 Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 Century Medical v THLD (NSWSC, 27 August 1996, unreported) City of Swan v Lehman Brothers Australia Ltd [2009] FCA 784; (2009) 73 ACSR 86 Commonwealth Bank v Clune [2008] NSWSC 1125 Dunstan v Simmie & Co Pty Ltd [1978] VR 669 CASES CITED : Energy Australia v Australian Energy Limited [2001] FCA 1049 Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 Jacobson v Ross [1995] 1 VR 337 Owners Corporation Sp 70672 v Trustees of Roman Catholic Church [2010] NSWSC 946 Parramatta Stadium Trust v Civil and Civic Pty Ltd (NSWSC, 27 August 1996 unreported) Perre v Apand Pty Ltd [1999] HCA 36 Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd [2006] FCA 14 Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 Tepko Pty Limited v The Water Board [2001] HCA 19 TVW Enterprises Limited v Duffy (Federal Court of Australia, 28 March 1985, unreported)

PARTIES : Garry Allan Southwell (Plaintiff) Jennifer Lynette Bennett (Defendant)

COUNSEL : Mr G Foster (Plaintiff/Respondent) Mr D Dura (Defendant/Applicant)

SOLICITORS : Phillip A. Wilkins & Associates (Plaintiff/Respondent) Watts McCray (Defendant/Applicant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2010/65584 SOUTHWELL v BENNETT JUDGMENT The Nature of the Proceedings 1 HIS HONOUR: The Plaintiff has brought proceedings, by Statement of Claim, filed on 12 March 2010, seeking property adjustment orders, pursuant to s 20 Property (Relationships) Act 1984 ("the Act"). He asserts that the parties were in a de facto relationship between April 1995 and March 2008. 2 A defence was filed on 8 June 2010. In that defence, relevantly, the Defendant denies that the parties were in a de facto relationship within the meaning of s 4 of the Act. 3 One matter that is not in dispute between the parties is that there is one child of the parties, who was born on 19 March 1997. 4 On 29 October 2010, the Defendant filed a notice of motion in which she seeks: "that the matter be listed for hearing before a trial judge to determine the discrete issue as to whether the parties lived together as a de facto couple for a period of more than 2 years, having regard to s 4 of the Property (Relationships) Act 1984". 5 In addition, in the motion, the Defendant seeks directions as to the filing of further evidence. 6 In support of the notice of motion, the Defendant has sworn an affidavit on 29 October 2010, in which she: (a) denies that she and the Plaintiff lived together in a de facto relationship; (b) asserts that she has been advised by her legal representatives, and believes, that a hearing on the discrete issue whether the Plaintiff and she were in a de facto relationship within the meaning of the Act, would take approximately 2 days in total, including submissions, given the nature of the evidence filed to date: (c) asserts that she has been advised by her legal representatives, and believes, that a hearing for the entirety of the relief claimed by the Plaintiff would take between 4 and 5 days in total, including submissions, made on behalf of both parties; (d) asserts that there are significant issues in dispute that have been filed on the pleadings to date in relation to the s 20 issues, which will require expert evidence; and (e) asserts that she has been advised by her legal representatives as to the estimate of the costs which would be incurred should a hearing be set down to hear the discrete issue in relation to s 4 of the Act, or if a hearing were set down to hear the entirety of the plaintiff's relief claimed. (A letter dated 27 October 2010 from her solicitors states that the costs of a determination of a separate issue will be in the order of $54,000, whereas the costs of a hearing in entirety will be slightly more than double that amount.) 7 Although the Plaintiff did not file any evidence in opposition to the relief sought in the notice of motion, I was informed from the bar table, without objection, that the Plaintiff opposes the application for a separate determination of the issue whether a de facto relationship existed. 8 The notice of motion was referred to me on Friday, 5 November 2010. Due to the length of the list on that day, it was only possible to have the submissions made, in a most abbreviated way. Accordingly, I gave the parties an opportunity to file and serve a written outline of submissions. 9 I have now received written submissions from each counsel. I shall leave each set of submissions with the court papers. 10 Mr D Dura, counsel for the Defendant, whilst accepting that the "general practice" of the court was that all issues should be tried at the same time, submitted that there was a general discretion to order separate determination of "any question" in an appropriate case. He accepted that the Defendant bears the burden of satisfying the court that such an order is appropriate, but said that she does not have to establish "special circumstances". 11 Mr Dura then submitted that the particular circumstances of this case warranted the court exercising its discretion to order a separate determination for the following reasons: (a) The determination of the question whether the parties were in a de facto relationship would determine the whole proceedings if the court found that they were not. (b) There would be a significant saving of costs, because it would be unnecessary for the parties to lead evidence of their financial circumstances or financial contributions; there would also be no need to provide evidence of value of the property of the parties or either of them. (c) The separate determination would aid the parties to reach an early resolution of the proceedings. (d) If the Plaintiff failed, he would be unable to meet any order for the Defendant's costs of the proceedings. (e) If the Defendant did not succeed, there would be no prejudice to the Plaintiff that could not be remedied by an order for costs of the proceedings for a separate determination. 12 Mr G Foster, counsel for the Plaintiff, submitted that the hearing would canvas at least two questions: (a) whether the parties were living in a de facto relationship as defined in the Act; and, if so, (b) whether the Plaintiff made contributions that should be recognised by way of a property adjustment order. 13 He submitted, then, that there would be common matters of fact that were relevant to both questions. He provided examples, which are not necessary to repeat in this judgment. Legal Principles 14 Rule 28.2 of the Uniform Civil Procedure Rules 2005 states: "28.2 Order for decision The court may make orders for the decision of any question separately from any other question, whether before, at, or after, any trial or further trial in the proceedings." 15 I take the principles that apply in determining whether to make an order for the separate determination of a question under the rule to be: (a) The rule speaks of "questions" and not "issues" and does not differentiate between questions of fact, or law, or partly of fact and partly of law. (b) The judicial determination of a "question" must involve a conclusive, or final, decision based on concrete and established, or agreed, facts, for the purpose of quelling a controversy between the parties: Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334, at [45] and [51]. (c) The rule permits the Court to hear and determine the separate question at any point before, at, or after, any trial or further trial in the proceedings, rather than only as a preliminary question. (d) Whether such an order should be made is a matter for the court's discretion, which discretion must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VR 669, at 670; Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7]. (e) As a general rule, the discretionary power to order separate determination of a question should be approached with caution: Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180 at [436], per Callinan J; Tepko Pty Limited v The Water Board [2001] HCA 19; (2001) 206 CLR 1, at [168]-[170] per Kirby and Callinan JJ: Commonwealth Bank v Clune [2008] NSWSC 1125 at [6], per Johnson J; Bailey and Bailey v Director-General Department of Energy Climate Change and Water and Ors [2010] NSWSC 979 at [4] per Studdert AJ. (f) In exercising its discretion, the overriding purpose of the Civil Procedure Act 2005, namely the just, quick and cheap resolution of the real issues in the proceedings (s 56) must be given effect. (g) Generally, all questions of fact and law should be determined at the one time: Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141-42; SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd [2006] FCA 14. If the Court is to depart from that position, the party seeking the separate determination of a question must satisfy the Court that it would be 'just and convenient' for that order to be made: Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 at [8]-[9], see also Energy Australia v Australian Energy Limited [2001] FCA 1049. (h) While it may appear attractive, superficially, to order the trial of a separate question, experience often shows that it will not be so, for example, because of the complications that can arise in relation to appeals, or to overlapping factual issues, or to questions of credit, if the same witnesses have to give evidence in relation to a question that is separated and those questions that are not: Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7(6)] per Einstein J.; Owners Corporation Sp 70672 v Trustees of Roman Catholic Church [2010] NSWSC 946 at [16] per Ball J. (i) The experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings, but often has the reverse effect. It sometimes happens that it turns out to be productive of the disadvantages of delay, extra expense, appeals and uncertainty of outcome which it is intended to avoid: Idoport Pty Ltd v National Australia Bank Ltd; Tepko Pty Limited v The Water Board at [168]. (j) Before a question is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd at 142, per Giles CJ in Comm D; Parramatta Stadium Trust v Civil and Civic Pty Ltd; Century Medical v THLD (NSWSC, 27 August 1996, unreported). (k) Where findings as to the credit of a witness is, or of witnesses are, or may be, involved in the consideration of the evidence relevant to the question, it is inappropriate to order a separate trial: ABB v Freight Rail [1999] NSWSC 1037. (l) Often, a separate question is heard on the basis of: (i) agreed statements of fact; (ii) a narrow point to be determined; and (iii) a hearing that is able to be conducted within a short time (or a short time relative to the total length if the hearing of the separate question were not to be dealt with).

(m) Factors that tend to support the making of an order, include that the separate determination of the question may: (i) contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the proceedings: Tallglen v Pay TV Holdings; (ii) contribute to the settlement of the litigation (CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 602 per Kirby P at 607). (n) It may be appropriate to determine a separate question, even if it will not resolve all the issues, provided that there is a strong prospect that the parties will agree upon the result when the core of the dispute has been decided, or if the decision will obviate unnecessary and expensive hearings of other questions: City of Swan v Lehman Brothers Australia Ltd [2009] FCA 784; (2009) 73 ACSR 86 at [27] per Rares J. The determination of the one question should enable a sensible reassessment of litigation risks, which is generally likely to encourage some form of settlement discussions. (o) Relevantly, one factor that may tell against the making of an order would be where there is likely to be a significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding: Reading Australia Pty Ltd v Australian Mutual Provident Society at [8]. There is always a risk of inconsistent findings arising from determination of separate questions. (p) Whilst the decision is ultimately one for the court to determine, it will have regard to the attitude of the parties: TVW Enterprises Limited v Duffy (Federal Court of Australia, 28 March 1985, unreported) Toohey J. (q) It is a relevant consideration to weigh the time likely to be taken in the hearing of a separate question and the availability of hearing dates for that purpose, against the time and expense of a substantive hearing and the length of time likely to elapse before such a hearing will take place: TVW Enterprises Limited v Duffy at pp 4-5. (r) Each case will have its own dynamics that dictate the relative importance of various factors to be considered in exercising the discretion conferred. (s) It is necessary that there be precision, both in formulating the question, and in specifying the facts upon which it is to be decided: Jacobson v Ross [1995] 1 VR 337 at 341 16 Finally, I should refer to Allen v Gulf Oil [1981] AC 1001, which seems to me, in the circumstances of the present case, to be not only sensible, but essential, to remember. Lord Wilberforce said, at p1010H: "... My Lords, I and other of your Lordships have often protested against the procedure of bringing, except in clear and simple cases, points of law for preliminary decision. The procedure indeed exists and is sometimes useful. In other cases, and this is frequently so where they reach this House, they do not serve the cause of justice. The present is such an example. The question as originally framed was clearly inept. It was recast by Kerr J. into an improved form. But both judges in the Court of Appeal found it either unintelligible or unanswerable: so I believe do some at least of your Lordships. The fact is that the result of the case must depend upon the impact of detailed and complex findings of fact upon principles of law which are themselves flexible. There are too many variables to admit of a clear-cut solution in advance." 17 Lord Roskill said at p1022A: " ... The preliminary point procedure can in certain classes of case be invoked to achieve the desirable aim both of economy and simplicity. But cases in which such invocation is desirable are few. Sometimes a single issue of law can be isolated from the other issues in a particular case whether of fact or of law, and its decision may be finally determinative of the case as a whole. Sometimes facts can be agreed and the sole issue is one of law. But the present is not a case in which this procedure ought ever to have been adopted for the reasons stated by my noble and learned friend ...

... But I hope that your Lordships' agreement so to treat it will not encourage others to invoke the preliminary point procedure in unsuitable cases, or lead those whose task it is to decide whether or not the trial of preliminary points should be ordered, to be other than extremely cautious before acceding to pleas for the making of such orders as a result of attractively advanced submissions founded upon pleas of supposed economy."

Determination 18 In one sense, the question sought to be separately determined is misconceived. Section 17 of the Act provides: "17 Prerequisites for making of order - length of relationship etc

(1) Except as provided by subsection (2), a court shall not make an order under this Part unless it is satisfied that the parties to the application have lived together in a domestic relationship for a period of not less than 2 years.

(2) A court may make an order under this Part where it is satisfied:

(a) that there is a child of the parties to the application, or

(i) has made substantial contributions of the kind referred to in section 20 (1) (a) or (b) for which the applicant would otherwise not be adequately compensated if the order were not made, or

(ii) has the care and control of a child of the respondent, and that the failure to make the order would result in serious injustice to the applicant." 19 To enable an adjustment order to be made under the Act, therefore, the Plaintiff must satisfy only one of the prerequisites in s 17. The first, in s 17(1), is that the parties "have lived together in a domestic relationship for a period of not less than 2 years." The second, in s 17(2)(a), is "that there is a child of the parties to the application". The third is that Plaintiff "has made substantial contributions ... for which [he] would otherwise not be adequately compensated if the order were not made and that the failure to make the order would result in serious injustice to the [Plaintiff]". 20 It follows, in the circumstances of the present case, that the answer to the question posed would not determine the proceedings. The Plaintiff might be relying on any one, or more, of the prerequisites in s 17, to found jurisdiction. For this reason, alone, the notice of motion could be dismissed. 21 However, because neither party referred to s 17 in submissions, and because costs have been incurred on the motion, I shall proceed upon the basis that the real question the Defendant wants to be answered separately, is whether the parties were living together in a de facto relationship at all. 22 What the true question really seeks to determine is the nature of the relationship of the parties. This, in reality, is only one of the various issues in the proceedings between the parties. That question could not be described as in the nature of a conventional separate question. If that question were answered unfavourably to the Defendant, there would have to be a hearing of the Plaintiff's case against her. Realistically, in my view, what the Defendant seeks is the splitting of the hearing, not a hearing of a separate question. 23 Of course, if the parties are found to have been in a de facto relationship, a negotiated settlement on an adjustive property order may be possible, with consequent savings. However, it is by no means certain that this would occur and I cannot assume that it would. In this regard, there is no consensus that adopting the proposed procedure might render a substantive hearing unnecessary. Another hearing would then be required. 24 I accept, however, that if the court found that the parties were not in a de facto relationship, it would be unnecessary to determine contributions made by either one of them to the property, financial resources of the parties, or either of them or to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties. 25 Despite that, I am of the view, in this case, that what I have treated as the real question for separate determination should not occur because: (a) The parties have not reached agreement as to the facts of the case and there remain important factual disputes between them on many aspects. (b) There is a real risk of overlapping evidence being called on the hearing of what is sought to be determined as a separate question, and at a later hearing, if that question is determined against the Defendant. (c) There may be one, or more, witnesses, including the parties, whose credit may be in issue, who may have to be called in both the hearings. If that occurred, the trial judge would be placed in an impossible position if, for example, adverse credit findings against one of the parties are made, since he, or she, will be an important witness on the remaining question of contribution. (d) There is also the potential of an appeal by the party who is unsuccessful on the separate question. (e) I do not accept the Defendant's submission that it will be unnecessary to lead evidence in relation to the financial circumstances of the parties, or the quantum of any financial contributions on the question whether the parties were in a de facto relationship. In s 4(2) of the Act, which provides a number of criteria to be considered in determining whether two persons are in a de facto relationship, ss (d) provides the circumstance of "the degree of financial interdependence and arrangements for financial support between the parties". Sub-section (e) refers to the ownership, use and acquisition of property. Self-evidently, the same facts will be relevant to contribution of one, or other, of the parties. (f) I also do not accept the Defendant's submissions regarding the Plaintiff's inability to pay costs in the event that he is unsuccessful. If anything, the financial position of the Plaintiff, if it is as submitted, justifies a modest increase in the weight that should be attributed to the perception of a more efficient overall course of preparation, and subsequent determination, of the questions to be determined in the proceedings at one time. (g) In relation to savings of costs, by avoiding the valuation of assets, if the parties adopt a co-operative approach, there should be little difficulty in obtaining informal kerbside valuations, which should not be costly. Alternatively, single experts could be appointed. This course would also save hearing time. (h) This then leads to the question of the length of the hearing. I am conscious that there are numerous components in the speculative attempt to compare lengths of separate, or combined, hearings, and that this makes prediction unreliable. Therefore, I give less weight, in the overall assessment, than I would be comfortable placing on it were predictions of hearing times able to be made more accurately. (i) A further practical factor is the actual availability of Court time and the delay that might be caused by the question being decided separately. 26 I am not persuaded it is just and convenient, in all the circumstances of this case, that there ought to be a departure from the general principle that all questions in an action should be tried at the same time. I am of the view that the just, cheap and quick determination, of the questions in the proceedings is better served by one hearing rather than two separate hearings. I am also of the view that to grant the Defendant's motion might prolong, rather than shorten, the litigation. 27 In the exercise of my discretion, I therefore decline to make the order sought. 28 The Defendant submitted that I should leave the determination of the costs of this application to the trial Judge. There is no reason to do so. 29 I dismiss the Defendant's notice of motion with costs. At the request of the parties, I stand the proceedings over to the Registrar's List for further directions, on 14 December 2010. **********

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