Zhang v Levingson

Common Issues in Both Proceedings

1. There are common legal and factual issues in both proceedings. There are both legal and factual issues thrown up, in both the family law and these proceedings, about whether any debt exists and if so how much is owed on the deed by Mr Levingson to Mrs Zhang. The legal issue of that debt obligation is a defence to these proceedings. It is also a precondition to the division of joint matrimonial property in the Family Law proceedings. Whether that debt is to be subtracted from Mr Levingson's property or not, is one of the determinants of the size of that joint matrimonial property.
2. But underpinning those legal questions, determinations of factual issues such as whether or not any representations were made to Mr Levingson by Ms Wang or Mrs Zhang that, if he gave advice and assistance to Ms Wang and undertook the renovations alleged, the money would not be due under the deed. Whether he relied upon those representations, whether he suffered any detriment, and whether he did the work in question, are relevant to whether he made a non-financial contribution to the alleged de facto relationship. In these respects the issues in the proceedings overlap.

Submissions and Conclusions

1. Mr Bennett, in proposing the motion, submits that the transfer should take place under section 5 of the Cross-Vesting Act. He submits that the Court has power so to do, and that the Court should exercise its discretion to make the transfer.
2. But the real contest on the motion was generated by Mr Epstein SC's submissions in reply. These are adequately summarised in paragraphs 4 to 13 of Mr Epstein SC's written submissions, which provide as follows: "4. An order for the transfer of these proceedings to the FCFCA could not properly be made, unless it is clearly the case that the FCFCA has jurisdiction which allows it to make a final determination of the current Supreme Court proceedings. That is not here the case. 5. In terms of s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), neither (A) not (B) of s 5(1)(b)(ii) is satisfied, leaving only (C) as having possible application, so that it is only if it appears to this Court, having regard to '(C) the interests of justice' that 'it is more appropriate' that this proceeding be determined by the FCFCA that the relief sought in the defendant's Notice of Motion could be granted. 6. There is controversy about whether criteria (C) can even be a 'stand-alone ground empowering the Supreme Court to transfer a proceeding to the Federal Court [here, the FCFCA]'. In Tucker v State of Victoria [2018] VSC 389, McDonald J accepted a submission that the Supreme Court's jurisdiction to transfer is only enlivened if the proceedings fall within sub-paragraph (A) or (B). 7. A contrary view was taken by Lansdowne AsJ in S Pty Ltd v BV (No. 2) [2019] VSC 814 at [90]-[107]. 8. While the plaintiff contends that the view taken by McDonald J is the correct one, she relies primarily on the principle also accepted and applied by Lansdowne AsL at [107] that 'the interests of justice will not permit transfer unless the federal court will have jurisdiction to determine the transferred proceeding'. 9. It could not be in the interests of justice to transfer these proceedings to the FCFCA, unless that Court demonstrably possesses jurisdiction to make a final determination of these Supreme Court proceedings. 10. If it is seriously arguable that the FCFCA does not have jurisdiction to determine the proceedings sought to be transferred to it, it would be pointless and wrong to make an order for transfer: Elias & Elias Pty Ltd atf the Elias Family Trust v Antoun Toufic Chidiac & Ors [2010] NSWSC 1364 (Brereton J) at [28]. 11. It may be noted that s 5(9) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) provides, presumably out of abundance of caution, 'Nothing in this section confers on a court jurisdiction that the court would not otherwise have'. 12. Further, in the circumstances of this case, particularly includes the defendant's delay in instituting his FCFCA proceedings and in making the present application, it is not 'more appropriate' that these proceedings be determined in the FCFCA, assuming even that that Court indeed possessed jurisdiction so to do. 13. Likewise, it would not be consistent with the facilitation of the real issues in these proceedings being resolved in a manner which is 'just, quick and cheap' (in terms of s 56 Civil Procedure Act 2005), to allow the delay in the resolution of these proceedings which a transfer to the FCFCA would occasion."
3. Mr Epstein SC directs two points to the question of the Court's capability of transferring these proceedings to the Federal Circuit and Family Court of Australia and to two points in relation to the Court's exercise of discretion as to whether it should transfer the proceedings.
4. The Court will deal with each of these in turn. Mr Epstein SC argues first that it is necessary for Mr Levingson to satisfy the Cross-Vesting Act, s 5(1)(b)(ii)(A), (B) and (C) requirements cumulatively. It is not necessary to set out the whole of s 5 of the Cross Vesting Act here. But s 5(1) provides: "5 Transfer of proceedings (1) Where-- (a) a proceeding (in this subsection referred to as the "relevant proceeding") is pending in the Supreme Court, and (b) it appears to the Supreme Court that-- (ii) having regard to-- (A) whether, in the opinion of the Supreme Court, apart from any law of the Commonwealth or another State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Federal Circuit and Family Court of Australia, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Federal Court or the Federal Circuit and Family Court of Australia, (B) the extent to which, in the opinion of the Supreme 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 Supreme Court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, and (C) the interests of justice, it is more appropriate that the relevant proceeding be determined by the Federal Court or the Federal Circuit and Family Court of Australia, as the case may be, the Supreme Court shall transfer the relevant proceeding to the Federal Court or the Federal Circuit and Family Court of Australia, as the case may be."
5. He submits the Court can only consider the third integer of the "interests of justice" if the other integers, (A) and (B) are first satisfied. He cites Tucker v The State of Victoria [2018] VSC 389 ("Tucker") as authority for the proposition that factor (C) cannot be considered as a standalone ground empowering the transfer of proceedings.
6. A review of the available authority in the course of today, gives several answers to this point. First, as Lansdowne AsJ said in S Pty Limited v BV (No 2) [2019] VSC 814 at 97, the reasoning in Tucker is somewhat in conflict with the text of the Cross-Vesting Act, s 51(b)(2), which only requires the Court to "have regard to" those various factors. On this his Honour said at [97] as follows: "97 The first reason for my disagreement with the reasoning in Tucker in this regard is textual analysis. In my view, the use of the opening phrase 'where...it appears to the Supreme Court that...having regard to' in s 5(1)(b)(ii) of the State and Commonwealth Acts, followed by the use of the conjunction 'and' between sub-paragraphs (B) and (C), requires the Court to have regard to all three of those sub-paragraphs before reaching the conclusion as to whether or not it is 'more appropriate' that the proceeding be determined by the federal court in question. If the Court reaches the conclusion that it is so 'more appropriate', then the Court is required to transfer the proceeding. The sub-section does not in terms give pre-eminence to any one of the three sub-paragraphs, and does not require any one of them to be 'satisfied', as opposed to considered."
7. The preponderance of authority on the operation of section 5(1)(b)(ii) is that the Court is required to consider all three paragraphs (A), (B) and (C) and that it is not necessary for one or other paragraph to be satisfied before another can be considered. This has been the approach taken in many cases: Vucic v Belosevic [2003] SASC 296; Caltex Australia Petroleum Pty Ltd v Calypso Haulage Pty Ltd [2003] VSC 359 ("Caltex"); Valceski v Valceski (2007) 70 NSWLR 36 ("Valceski"); Jane v Jane [2008] VSC 341; Kosmopoulos v Kosmopoulos [2008] VSC 402 (Warren CJ), following Valceski and distinguishing Jane v Jane on the facts ("Kosmopoulos"); Lew v Priester [2012] VSC 57 (Pagone J), applying the principles of Valceski, Jane v Jane and Kosmopoulos but distinguishing the first two on the facts; Aspinall v Aqua Sports Pty Ltd [2018] NSWSC 706 (Ward CJ in Eq as her Honour then was), applying the principles in Valceski but distinguishing it on the facts; Bob Jane Corporation Pty Ltd v Jane [2014] VSC 27 (Judd J) applying the principles in Valceski, but distinguishing it on the facts; Burman v Zillman [2017] NSWSC 229 (Darke J at [13]) and Hurst v Koszewski [2019] SASC 67, (Parker J) applying the principles in Valceski but distinguishing it on the facts.
8. In other words, notwithstanding that the Court might find, as it does here, that subparagraphs (A) and (B) are not satisfied, the Court may nevertheless, in consideration of subparagraph (C), the interests of justice, find that it is "more appropriate" for the proceedings to be determined by the Federal Circuit and Family Court of Australia and heard with the Family Law proceedings.
9. Mr Epstein SC's second point is that it cannot be in the interests of justice to transfer these proceedings to the Federal Circuit and Family Court of Australia unless that Court demonstrably possesses jurisdiction to make the final determination of the Supreme Court proceedings. Mr Epstein SC argues that the Federal Circuit and Family Court did not demonstrably have that jurisdiction.
10. In the Court's view, this argument is answered by the observations of Henry J in Wurz bht NSW Trustee & Guardian v Elawaad [2022] NSWSC 1404 ("Wurz") at [50-53] and Brereton J's decision in Valceski at [36]. These decisions explain that the jurisdiction of the Federal Circuit and Family Court of Australia should, on the authorities, not be narrowly confined. This contention is supported by the decisions of the High Court in Re Wakim; Ex parte McNally (1999) 198 CLR 511; (1999) 163 ALR 270; (1999) 73 ALJR 839, [1999] HCA 27; see especially [89], and [39] and [81]. There the High Court has made clear that the Court has power to determine non-Federal aspects of a controversy involving the exercise of Federal jurisdiction, and there is but a single matter and non-Federal claims are within accrued jurisdiction "where the different claims arise out of a common transaction and facts or a common substratum of facts."
11. In Valceski, Brereton J found that there was such a common substratum of facts where parents had loaned moneys to a divorcing couple. This was sufficient for Brereton J to be satisfied that the Family Court had jurisdiction to accept the proceedings being transferred under the Cross-Vesting Act.
12. Mr Epstein SC says that cases such as Valceski and Wurz and others are dependent upon the Court, finding a closer connection between the claim made by the third party and the family law dispute, such as a claim to exercise the Family Law Act, s 106B jurisdiction to set aside the third party's transaction. In such cases it can be said the claim by the third parties was being used to defeat the contest between the matrimonial parties.
13. But Valceski does not bear this out. The reasoning in Valceski shows there was a contest with the third party which bore directly upon the size of the matrimonial asset pool. The contest there had other overlapping factual and legal issues, as it does here, in relation to the renovation work done on the properties. Here there is one common substratum of facts amounting to one controversy. And in the Family Law proceedings the Court has under Family Law Act, ss 90TA and 9AE, in its de facto relationship jurisdiction, capacity to make broad orders binding third parties.
14. The last question then is whether the Court should exercise its discretion to transfer these proceedings.
15. In its discretion the Court will transfer these proceedings. The principal discretionary arguments that Mr Epstein SC has advanced are that there has been delay leading up to the present time, which has not been adequately explained, and that in the future the transfer will not be consistent with the objective of this Court to have these proceedings decided consistently with the dictates of Civil Procedure Act 2005, Part 6. Those arguments have force. There has been delay. The transfer would conjoin these proceedings to a proceeding which has barely commenced and is unlikely to be determined, in the first half of next year. They are weighty factors against the transfer. But the following countervailing factors are stronger.
16. First, Ms Zhang is not suggesting that the Family Law proceedings should be cross-vested here. Even if they were, they would still have to be prepared and there would be delay. An inevitable result of not transferring the proceedings as now requested is that there will be both duplication of effort and an increase of costs by both these parties, and there will be two judgments. These outcomes are not in the public interest. Moreover, many of the factors to which Mr Epstein SC points that weigh against the transfer can be neutralised by the Court.
17. First, as a condition of the transfer, the Court will order that at the first directions hearing in the Family Law proceedings after the transfer that Mr Levingson undertake directly to the Federal Circuit and Family Court of Australia to conduct the proceedings with all due diligence and expedition.
18. The Court will note that these proceedings are ready for hearing. When the matter arrives, the receiving Court will be aware that this proceeding is ready.
19. Although the defendant has been successful on a contested motion, partly because of the delay and the circumstances outlined above, the Court is not inclined to make an order for costs other than they be costs in the cause. Mr Levingson has conceded to that being the appropriate course.
20. There are two other matters to be considered in balancing the rights of the parties here. First, Mr Levingson acknowledges for the purposes of the proceedings so transferred, that in the event that the loan allegedly due from him under the deed of loan, executed on 29 November 2019, is held to be recoverable, that that loan will carry interest at the rate prescribed under the Civil Procedure Act, s 100, from 1 January 2023, up to a date of judgment. Mr Levinson will not argue to the contrary. This acknowledgement will prevent him from taking advantage of his delay in these proceedings. Such an argument is open but this acknowledgement, eliminates the possibility that such an argument will be deployed.
21. The final matter is that the Court is loath to transfer proceedings where there are outstanding unassessed costs orders which are not payable. It is most important that cost issues get resolved before the matter is transferred.
22. There are orders in place for the defendant to pay the plaintiff's costs of the directions hearings on 28 April and 8 May 2023. These were ordered to be paid on 8 May 2023. There is an order for costs against the defendant made on 18 August 2023. There have been some 11 directions hearings in this matter which have incurred some considerable costs already, and to the extent there are defaults, it is important that the defendant be brought to account for them. The Court will order that those costs be payable forthwith.
23. The question then arises as to what is the best way for the parties to deal with those orders. It is unsatisfactory for costs incurred in the Supreme Court under Supreme Court regimes to then be assessed in the Family Court under a different costs assessment system. It is therefore desirable for the Court to take advantage of the ever-useful provisions of the Civil Procedure Act, s 98(4)(c). The Court will make an order in the nature of a specified gross sum instead of assessed costs in respect of the existing costs orders.
24. Mr Epstein SC has claimed a sum of $9,000 for these costs orders. No documentation in support of that is presently provided. An opportunity will be allowed for him to supply memoranda of fees before the Court makes a s 98(4)(c) order.

Conclusion and Orders

1. Therefore, the Court will make the following orders and directions: 1. Order pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987, s 5(1) that these proceedings be transferred to the Federal Circuit and Family Court of Australia with the intention that they be heard together with proceedings CYC858/2023. 2. Order that, if an undertaking is not given and it might otherwise be given to proceed with all due diligence in the expedition of the conduct of the proceedings in the Federal Circuit Court, the defendant should agree that his undertaking to this Court may be treated by the Federal Circuit and Family Court of Australia as an undertaking to that court. 3. Note that immediately before their transfer pursuant to Order 1 these proceedings are now ready for hearing in this Court. And the Court requests they be given hearing priority in the Family Court that is commensurate with that readiness. 4. Subject to Order (5), Order that each party's costs of and associated with this application will be that party's costs in the cause. 5. Order the defendant to pay the plaintiff's costs of the directions hearings on 28 April, 8 May and 18 August 2023 and that such costs are ordered to be payable forthwith. 6. Note that the Court is minded to fix a specified gross sum instead of assessed costs pursuant to Civil Procedure Act 2005, s 98(4)(c) with respect to the order for costs in (5), and to that intent makes the following further directions. 7. Direct Mr Epstein SC on behalf of the plaintiff to file with the Court all memoranda of fees justifying the costs and fees claimed on behalf of the plaintiff associated with the appearances of 28 April, 8 May and 18 August 2023, to justify the fee claimed of $9,000. 8. Upon receipt the Court will review the memoranda of fees provided pursuant to Direction (7) in chambers and will make a specified gross sum determination of $9,000, or some other figure in its discretion.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 December 2023