Vaughan v Frost

Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) LEGISLATION CITED : Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) Family Law Act 1975 (Cth)

CASES CITED : Valceski v Valceski [2007] NSWSC 440; (2007) 70 NSWLR 36 Young v Lalic [2006] NSWSC 18; [2006] 197 FLR 27

Raymond Bruce Vaughan & 1 Or v John Frost & 1 Or 1st Plaintiff: Raymond Bruce Vaughan PARTIES : 2nd Plaintiff: Eleanor Jill Vaughan 1st Defendant: John Frost 2nd Defendant: Jennifer Sue Vaughan

Plaintiffs: D E Grieve QC with C J Bevan COUNSEL : 1st Defendant: J M Ireland QC with M Kearney 2nd Defendant: M K Condon

Plaintiffs: Turner Freeman SOLICITORS : 1st Defendant: Gayle Meredith & Associates 2nd Defendant: Greg Alfonzetti Lawyers

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2009/291782 Raymond Bruce Vaughan & 1 Or v John Frost & 1 Or JUDGMENT 1 HIS HONOUR: This is an application under s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) and s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) for these proceedings to be transferred to the Family Court. 2 The case is very similar to Valceski v Valceski [2007] NSWSC 440; (2007) 70 NSWLR 36 decided by Brereton J. The first and second defendants are husband and wife. The plaintiffs are the parents of the wife, namely the second defendant. The defendants separated in October or November 2008. In 2009 the defendants participated in attempted dispute resolution procedures and exchanged financial information as required by the family law rules prior to a party's instituting proceedings in that Court. 3 On 16 December 2009, and before those procedures were completed, the plaintiffs filed their statement of claim in this Court. They claimed that various items of property principally held in the name of their daughter, the second defendant, are held on trust for them, having been purchased with the plaintiffs' money which the plaintiffs say were not advanced by way of gift or loan. The plaintiffs say that the properties were to be held by the second defendant as trustee for them. 4 The claim that the second defendant, or in one case, the first and second defendants, hold property on trust for the plaintiffs is put in various ways, which is not necessary to refer in detail. 5 The first defendant denies the existence of the trust. He says that the property in question is his wife's property and should be subject to an order under s 79 of the Family Law Act 1975 (Cth). 6 The value of the various items of property whose beneficial ownership is in dispute, principally land and listed shares, is substantial. The plaintiffs say that the property is worth about $12 million. The first defendant says that it is worth more. 7 On 7 January 2010, the first defendant instituted proceedings in the Family Court seeking orders under s 79 of the Family Law Act for division of property. On 10 May 2010 he filed an amended application in that Court joining the plaintiffs as respondents in that Court. 8 There is no dispute as to the jurisdiction of either this Court or the Family Court to determine the plaintiffs' claim to be the beneficial owners of the property. But for the age of the plaintiffs and concerns as to the health of the second plaintiff, the interests of justice would overwhelmingly favour an order for transfer. 9 The plaintiffs' claim is part of a single wider controversy. It is inevitable, in my view, that there will be overlapping matters of primary fact that will need to be determined in the matrimonial cause between the defendants and in the present suit. 10 Whilst findings that property of the second defendant, or of the first and second defendants, is or is not held on trust for the plaintiffs would create issue estoppels binding all parties, there will be significant potential for conflicting findings of primary fact if the proceedings continue separately. 11 It is almost always preferable that a controversy be determined in a single proceeding to avoid potentially conflicting findings and ultimately to reduce the costs for all parties. 12 The plaintiffs say that their costs will be increased if they are compelled to participate in the wider matrimonial cause in the Family Court. That is so partly because the proceedings between the defendants will raise issues with which the plaintiffs are not concerned, and also because even issues concerning the property of which they claim beneficial ownership will be dealt with in ways which the plaintiffs say will increase costs. In particular, valuations of the properties in question will be required in the Family Court, whereas such valuations would be irrelevant to their claim to be the beneficial owner of the property. 13 However, when the position of all parties is taken into account the general principle is, and experience teaches, that a single proceeding dealing with all issues is likely to minimise the overall burden of costs for all parties. If proceedings continue separately the defendants will be required to incur costs on matters of which there will be duplication. 14 In saying that findings in this Court will create issue estoppels binding on all parties, I proceed on the assumption that if the present proceedings were not transferred, it is likely that the proceedings will be heard and determined before the Family Court proceedings. The evidence on this application suggests that that is very likely to be the position, unless orders were made by the Family Court restraining the plaintiffs from continuing with these proceedings. 15 In Valceski v Valceski, Brereton J said (at [76]) that it is usually inappropriate, if not vexatious, that the same issue be litigated in two different courts, and the fact that one court can resolve the whole of a controversy and the other cannot will usually indicate that the former is the more appropriate court.

16 If the current suit is not transferred but proceeds in this Court, the likely result is that the hearing of the proceeding in the Family Court will have to await the determination of issues in this Court including the determination of any appeal. 17 The plaintiffs and the second defendant submit that that is not a significant consideration in this case because unless the Family Court proceeding is expedited, it is unlikely, in the usual course, that it will be heard in less than two or three years. They say that the likely period before hearing is three years rather than two. The plaintiffs' claim and any appeal should be heard and determined in this Court before then. That submission is supported by the evidence as to the current state of the lists in the Family Court. Nonetheless, there would still be disruption and delay in the preparation of the proceedings in the Family Court if the proceedings remain pending in this Court. 18 In Valceski v Valceski, Brereton J said (at [85]), (and to the same effect at [77]): " [85] ... If as a matter of principle the effect of this decision is that third parties who, in the context of a marriage breakdown, assert rights against matrimonial property, should join in existing matrimonial proceedings rather than commence separate litigation, then the beneficial result is that all issues are litigated only once and only in one court, the risks and costs of duplication and inconsistency are avoided, and forum-shopping and collateral litigation is discouraged. Third parties - especially associates, such as parents or children or private companies, of one or other of the spouses - who use the occasion of the demise of a marriage to assert a right against the property of one or other (or both) of them, cannot reasonably complain if their claim is treated as part of the larger matrimonial dispute in the context of which it arises. " 19 Mr Grieve QC, who appeared with Mr Bevan for the plaintiffs, submitted that as his Honour's decision involved the exercise of a discretion that has to be applied to the circumstances of a particular case, it cannot create any such general principle. Whether or not that is so does not detract from the force of his Honour's observations. 20 The distinguishing features upon which the plaintiffs rely in this case concern the need for expedition, the age of the plaintiffs, and the second plaintiff's health. The first plaintiff is 82; his wife, the second plaintiff, will shortly turn 80. She suffered a stroke in 2007 and suffered a fall in 2008. There is no medical evidence as to her current condition, but I assume that her health is fragile. 21 The plaintiffs have not served their affidavits, but it is clear from the nature of the claims that the evidence of at least the first plaintiff, and probably both plaintiffs, will be essential for the just determination of their claims. For example, the first of the plaintiffs' claims is that from 1987 they purchased shares in the names of their children, including the second defendant, with the intention that the shares be held on trust for them and that the share portfolio act as a source of superannuation after the first plaintiff's retirement and that the shares were purchased without the intention of advancement. The plaintiffs' evidence would seem to be critical if such a case were to be established. 22 The plaintiffs seek an order that the proceedings in this Court be expedited as they are concerned that if either of them dies, or the health of either of them deteriorates, the case will not be able to be heard fairly. 23 Were the matter to remain in this Court, I would order expedition. 24 The current best estimate of the parties' legal representatives made before evidence has been served is that the hearing might take three to four days. If the matter remains in this Court it should receive a hearing date later this year. If the proceeding is transferred to the Family Court and is heard as a part of a single controversy, which would be the point of the transfer, the hearing will take longer. More issues will be involved. 25 It is open to the plaintiffs, now respondents in the Family Court, to seek expedition in the Family Court. The first defendant says he will support such an application, and I understand that would also be the second defendant's position. 26 Whilst I consider that the proceedings appropriate for expedition, I cannot assume that an order for expedition will be made in the Family Court. Partly that is so because the case in the Family Court will have a larger dimension. Partly it is because the making for orders for expedition involves weighing competing claims of other cases for an urgent hearing and the availability of court time. 27 The evidence on this application is to the effect that if expedition were ordered in the Family Court, the matter could be expected to be heard in that Court up to about six months later than it could be heard in this Court. But if expedition were refused, it could be expected that there would be some two to three years before hearing. 28 I do not regard the delay of some months, if the proceeding is expedited in the Family Court, as a sufficient reason for not transferring the proceedings to that Court. Such a delay would not outweigh the desirability of the whole controversy being determined in a single proceeding. Moreover, the plaintiffs waited until there was a breakdown in the defendants' matrimonial relationship before bringing their claim. The plaintiffs' counsel submits that it was not until late in 2009, after the marriage broke down, that the plaintiffs became aware that the first defendant disputed the existence of the trust. I was not referred to any evidence that the plaintiffs had asserted the existence of the trust to the first defendant, except in the context in the negotiations to a property settlement and the disclosure of assets after the breakdown of the marriage. That is to say, the plaintiffs ran the risk that they might die without a determination of their asserted property rights and apparently without documentary evidence of those rights. 29 I would be more concerned by a delay of up to three years in the determination of the plaintiffs' claim. But if the Family Court did not expedite the proceeding, it would be open to the plaintiffs to apply to that Court for an order to transfer the whole proceedings to this Court. This Court would have cross-vested jurisdiction to deal with the application under the Family Law Act (Young v Lalic [2006] NSWSC 18; [2006] 197 FLR 27 at [37]-[38]). Without binding another expedition judge, it would appear to me that the entire controversy would have the same claims to expedition as the present suit. 30 Turning then to matters raised by s 5(1)(b)(ii) of the Jurisdiction of Courts (Cross-vesting) Act, the matters in s 5(1)(b)(ii)(A) and (B) are indications that the proceedings are appropriate to be maintained in this Court. But the interests of justice to be considered under s 5(1)(b)(ii)(C) are in favour of transfer as the present suit is but part of the wider controversy. 31 As in Valceski v Valceski (at [85]) justice is best done by one court resolving the whole justiciable controversy in order to avoid duplication and inconsistency. That consideration is not outweighed by the evidence of anticipated delays in the Family Court. 32 For these reasons I make order 1 in the first defendant's notice of motion filed 2 March 2010.

[The parties addressed on costs.] 33 The costs of the first defendant's notice of motion of 2 March 2010 will be the first defendant's costs in the proceedings.

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