Allen and Cortez

[2016] FamCA 320

FAMILY COURT OF AUSTRALIA

ALLEN & CORTEZ [2016] FamCA 320

FAMILY LAW – PRACTICE AND PROCEDURE – Stay of proceedings – where the husband is an Australian citizen living in the United States – where the wife is a dual citizen of Country C and Australia living in the United States – where the husband initiated property proceedings in Australia in August 2014 – where the wife subsequently issued proceedings in the United States in October 2015 – where the wife issued an Application in a Case for the Australian proceedings to be stayed pending determination of the proceedings in the United States – where the husband filed a response opposing the wife’s application and seeking an anti-suit  injunction against the wife – “clearly inappropriate forum” test applied – orders made that the wife’s application for a stay of the Australian proceedings be dismissed and she be restrained from continuing any proceedings in any other jurisdiction including the United States.

Family Law Act 1975 (Cth)
Evidence Act 1995 (Cth)

CSR Limited v Cigna Insurance Australia Limited & Ors (1997) 189 CLR 345
Deslandes & Deslandes [2015] FamCA 913
Henry v Henry (1996) 185 CLR 571
Skinner & Alfonso-Skinner [2010] FamCA 329
Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55

APPLICANT: Mr Allen

RESPONDENT: Ms Cortez

FILE NUMBER: MLC 7415 of 2014

DATE DELIVERED: 6 May 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 24 March 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Geddes QC

SOLICITOR FOR THE APPLICANT: Clancy & Triado

COUNSEL FOR THE RESPONDENT: Mr North SC

SOLICITOR FOR THE RESPONDENT: Kennedy Partners

Orders

IT IS ORDERED THAT

1. The wife be restrained by injunction from commencing or continuing any matrimonial proceedings in any other jurisdiction, including the State of P in the United States of America (save as required to seek recognition and/or enforcement of orders made by this Honourable Court).

2. The wife’s Amended Application in a Case filed 25 February 2016 and the husband’s Amended Response to an Application in a Case filed 10 March 2016 be otherwise dismissed and removed from the list of cases awaiting hearing.

3. The question of costs arising out of or incidental to the wife’s Amended Application in a Case filed 25 February 2016 be reserved for determination.

4. On or before 4.00 pm on 30 May 2016 the parties file and serve any written submissions in support of any application for costs arising out of or incidental to the wife’s Amended Application in a Case filed 25 February 2016.

5. On or before 4.00 pm on 13 June 2016 the parties file and serve any reply to any written submissions in support of any application for costs arising out of or incidental to the wife’s Amended Application in a Case filed 25 February 2016.

6. All extant applications be adjourned for mention before Justice Macmillan at 9.00 am on 8 July 2016.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Allen & Cortez has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 7415  of 2014

Mr Allen

Applicant

And

Ms Cortez

Respondent

REASONS FOR JUDGMENT

1. On 22 August 2014 the husband filed an Initiating Application for final orders in this Court at Melbourne seeking orders for property settlement but that he be excused from particularising his claim pending full financial disclosure and all necessary valuations being completed and accounting advice obtained. On 1 October 2014 the wife filed a Response to Initiating Application seeking orders for property settlement but similarly sought that she be excused from particularising her claim pending full financial disclosure, and all necessary valuations being completed and upon the necessary accounting and tax advice being obtained.  

2. On 25 February 2016 the wife filed an Amended Application in a Case seeking a stay of the proceedings in this Court pending the determination of proceedings between the husband and the wife in California and that the husband do all acts and things and sign all such documents that may be required to facilitate the registration and domestication of the divorce orders made by the Federal Circuit Court of Australia in the Superior Court of California, County of B, USA (the “Californian Court”).

3. On 10 March 2016 the husband filed an Amended Response to an Application in a Case opposing the wife’s application and seeking an order that the wife be restrained by injunction from commencing or continuing any matrimonial proceedings in any other jurisdiction, including the State of P, save as required to seek recognition and/or enforcement of orders made by this Court.

4. The matter has been allocated to my docket and having been listed for a first day of hearing before me on 5 August 2015 these interim applications were subsequently filed and on 7 December 2015 were listed for hearing before me.

Background

1. The husband was born in and raised in Melbourne in 1957 and is 58 years of age. He is an Australian citizen who lives in the United States of America (“the United States”) and is in the process of applying for residency in the United States but currently living there on a two-year non-immigrant visa.

2. The wife was born in Country C in 1961 and is 55 years of age. She holds both Country C and Australian citizenship. She also lives in the United States and is applying for United States citizenship. 

3. The parties met in Country D in September 2001 and were married in Australia in 2002. They separated in the United States in August 2013.

4. The parties spent the first two and a half years or thereabouts of their marriage living in City E, the following seven years or thereabouts living in Australia and the last six months of their marriage or thereabouts in California. The parties spent the time between leaving Australia and taking up residence in California travelling. 

5. Both the husband and the wife have previously been married and have adult children of those marriages. The husband’s two daughters of his previous marriage live in Queensland as does the wife’s son of her previous marriage. The wife’s daughter lives in City E, State F.

6. The husband has remarried and lives with his new wife in California. The wife does not have a new partner.

Procedural History

1. It is common ground in this case that the parties attempted to resolve their financial issues throughout early 2014 without engaging the services of solicitors and although they did not reach any formal agreement the emails annexed to the wife’s second affidavit filed 25 February 2016 (her “second affidavit”) suggest that there may have been at least some tentative agreement.

2. On 10 June 2014 the wife advised the husband, through his solicitor that Ms Gillian Coote of Coote Family Lawyers would be representing her “on the divorce” and on 12 June 2014 Ms Coote advised the solicitors for the husband that she had received instructions to act on behalf of the wife.  

3. As previously referred to, on 22 August 2014, some 12 months after separation, and in circumstances where the parties had not reached an agreement, the husband filed an Initiating Application for final orders in this Court seeking orders for property settlement. The husband did not particularise the orders that he sought. His application was listed for a Case Assessment Conference on 7 October 2014.

4. On 9 September 2014 Coote Family Lawyers filed a Notice of Address for Service on behalf of the wife.  On that same date the solicitors for both the husband and the wife wrote to Registrar Mestrovic seeking an adjournment of the Case Assessment Conference fixed for 7 October 2014 “for the purposes of further settlement discussions.” This request was granted and the matter was administratively adjourned by Registrar Mestrovic to 17 November 2014.

5. On 10 September 2014 the husband filed an Application for Divorce in the Federal Circuit Court of Australia at Melbourne.

6. On 1 October 2014 the wife filed a Response to Initiating Application to the husband’s application for final orders. She similarly did not particularise the orders she sought.

7. On 24 September 2014 the solicitors for the wife filed on her behalf an Acknowledgement of Service in relation to the husband’s Application for Divorce and a Notice of Address for Service.

8. On 6 November 2015 the Federal Circuit Court of Australia at Melbourne made a divorce order. Neither party attended that hearing.

9. At the Case Assessment Conference on 17 November 2014 Registrar Mestrovic made orders dispensing with the requirement for a conciliation conference, noting the parties intended to convene a private mediation and placing the matter in the list of cases awaiting allocation to a judicial docket. The parties were represented by their respective solicitors but did not attend the Case Assessment Conference.

10. On 5 July 2015 I made orders in chambers listing the matter for a first day of hearing. I also made orders with respect to the completion of discovery and requiring both parties to file a summary of the issues in dispute by 3 August 2015.

11. On 22 July 2015 the husband filed an Amended Initiating Application for final orders particularising the orders he seeks in compliance with my order made in chambers on 10 July 2015. The wife did not file any amended response to that application for final orders, despite being ordered to do so. Both the husband and the wife filed a Brief Summary of the Issues in Dispute in compliance with the order made on 10 July 2015, the wife raising for the first time in that summary the issues of whether Australia was the appropriate forum stating

    The Wife lives in the United States, as does the Husband (he having relocated there since separation). The Husband is unable to travel out of the United States for some months, for reasons related to his residency plans. While the parties lived in Australia for part of their 11 year marriage (which commenced on … 2002 and concluded on 7 August 2013), they also lived in the United States for periods and both have departed Australia permanently.

12. The other issues raised by the wife were as follows:

    2.         The asset pool is significant (in the region of $30m). However, there are significant taxation issues arising out of:

(a)The incorrect filing of joint taxation returns in the US (which will bring about substantial back taxes and penalties (ranging from 5 % to 50% of assets) from 2006 to 2012; and

(b)Uncertainty as to the tax credits available to the Husband arising from the tax paid by him in Australia upon his relocation to the US.

While the Australian tax will be payable on the Husband lodging his return for the year ending 30 June 2015 (the unilateral sales of Australian share assets by him having taken place in that year), the position with the US taxes is less clear.

3.         In the event that the Court determines that Australian (sic) is the appropriate forum, the matrimonial asset pool remains unclear and cannot be quantified with precision at this stage.

4.         The other issues in dispute between the parties include the following:

(a)The value of the assets held by the Husband at the commencement of the parties’ relationship and the adjustment to the Husband for such initial contribution;

(b)The history  of financial and non-financial contributions by each of the parties during the marriage;

(c)whether tax liabilities incurred by the Husband post-separation, arising from his decision to become a US tax resident following separation, should be included in determining the matrimonial asset pool for division;

(d)how the parties’ self-managed superannuation fund should be divided.

1. On 5 August 2015 I made the following orders by consent:

   1.         The parties do all things and sign all documents to file amended US Joint Taxation Returns (or the US equivalent) as required for the US financial years 2006 to 2012 inclusive, and for the purpose of the preparation of such returns, the parties instruct their accountants to confer as to the form and content of such returns.

   2.         Within 21 days each party serve upon the other a list of documents of which discovery is sought and the receiving party within 21 days thereafter make available for inspection and copying such of the specified documents as are within their possession, power or control.

   3.         The matter be listed for mention before Justice Macmillan at 9.00 am on 7 December 2015.

   4.         In the event the Wife proposes to bring any application regarding jurisdiction/venue she is to file any such application by 1 December 2015 and it is to be returnable at first instance on the mention date.

   IT IS NOTED THAT

   A.       The parties intend to convene settlement conference(s) in or about October/November 2015.

2. On 17 September 2015 the wife instructed her United States attorneys (her “US attorneys”) to write to the husband’s solicitors in Melbourne indicating that as she and the husband were both residing in the United States she intended to file a Petition in the Californian Court and seek a stay of the Australian proceedings.

3. The husband then engaged lawyers in the United States and on 25 September 2015 instructed them to write to the wife’s US attorneys advising that he did not agree to the wife filing proceedings in the Californian Court or to a stay of the Australian proceedings and that if the wife filed a Petition in the Californian Court he would be forced to file a Motion to Quash, and seek sanctions which he hoped would not be necessary. It is the wife’s evidence that this letter was not received by either her US attorneys or her Australian solicitors until a copy of the letter was forwarded to the wife’s Australian solicitors under cover of a letter dated 27 October 2015 from the husband’s Australian solicitors.

4. On 1 October 2015 the wife filed a Petition in the Californian Court. The husband was served with the wife’s Petition on 16 October 2015 and on 16 November 2015 the husband filed a Motion to Quash the wife’s Petition.

5. As previously referred to the husband’s Australian solicitors wrote to the wife’s solicitors on 27 October 2015 amongst other things addressing the fact that despite the notation to the orders made by me on 5 August 2015 that the parties intended to convene a mediation in around October/ November 2015 no response had been received from the wife’s Australian solicitors despite their “best efforts” to attempt to convene that mediation.

6. On 23 November 2015 the wife filed an Application in a Case seeking a stay of the proceedings in this Court pending the determination of her Petition in the Californian Court.

7. On 7 December 2015 I made orders by consent listing the wife’s Application in a Case for hearing before me on 24 March 2016 and for the filing of documents in anticipation of that hearing. There was a notation to those orders as follows:

   Each of the parties has agreed to take no further steps in their respective Californian proceedings, on the basis they agree the question of forum should be determined in Australia.

8. On 6 January 2016 the wife’s US attorneys wrote to the husband’s US attorneys advising that the wife did not agree to the adjournment of the husband’s application for a Motion to Quash to a date after 24 March 2016. The husband deposed to the content of this letter in his Trial Affidavit filed 11 February 2016 (“his trial affidavit”) which stated “We see no reason to continue [i.e. adjourn] the hearing on your motion…” and “Further, our client did not agree to stay the proceedings in California”.

9. The husband’s application for a Motion to Quash the wife’s Petition was heard and determined by Judge Takaichi. Although there was some dispute as to the form of the orders Judge Takaichi ultimately made the following orders:

   1. Respondent [Mr Allen’s] Motion to Quash Petitioner’s Petition for Recognition of Foreign Judgment is GRANTED.

   2. Petitioner shall be allowed to file a revised Petition for Domestication of Foreign Judgment in the family court; the revised Petition shall only include language seeking to recognise that the Australian court has entered a Judgment for divorce (akin to a Status Only Judgment in California).

   3. The Petition for Domestication of Foreign Judgment shall not include any information related to affirmative relief, including but not limited to requests for, or reservation of, spousal support, property division and/or mediation.

   4. The revised Petition shall be filed on or before February 16, 2016

10. On 2 February 2016 the wife filed a further Petition seeking recognition and domestication of the Australian Divorce order. On 4 March 2016 the husband then filed a further Motion to Quash, which is listed for hearing on 27 April 2016.

Legal Principles

1. Section 39(4) of the Family Law Act 1975 (Cth) (“the Act”) provides that property proceedings between parties to a marriage may be instituted in this Court pursuant to the Act if either party to that marriage is an Australian citizen, is ordinarily resident in Australia or is present in Australia at the relevant date, being the date upon which the application is filed. There is no issue in this case that the husband was entitled to issue his application for property settlement or that this Court has jurisdiction to hear that application. The question is one of forum rather than jurisdiction.

2. The legal principles governing disputes with respect to forum are well settled. In Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55 (“Voth”), the High Court held that a party who has properly instituted proceedings in a court of competent jurisdiction in Australia has a prima facie right to have those proceedings determined by that Australian court. The test that governs whether the court should grant or refuse an application for a stay of those proceedings is the “clearly inappropriate forum” test. Voth also makes clear that the fact that a court in some other country would be a more appropriate or convenient forum for the particular proceeding does not necessarily mean that the Australian court is a “clearly inappropriate forum”. The High Court said at  paragraph 36 as follows:

   The “clearly inappropriate forum” test is similar and, for that reason, is likely to yield the same result as the "more appropriate forum" test in the majority of cases. The difference between the two tests will be of critical significance only in those cases - probably rare - in which it is held that an available foreign tribunal is the natural or more appropriate forum but in which it cannot be said that the local tribunal is a clearly inappropriate one. But the question which the former test presents is slightly different in that it focuses on the advantages and disadvantages arising from a continuation of the proceedings in the selected forum rather than on the need to make a comparative judgment between the two forums. That is not to deny that considerations relating to the suitability of the alternative forum are relevant to the examination of the appropriateness or inappropriateness of the selected forum. The important point is that, in those cases in which the ascertainment of the natural forum is a complex and finely balanced question, the court may more readily conclude that it is not a clearly inappropriate forum. 

3. In Henry v Henry (1996) 185 CLR 571 (“Henry”), the High Court held that the “clearly inappropriate forum” test in Voth is the test the court should apply in proceedings in this Court for a stay of proceedings. The High Court in Henry identified the following principles:

   (a)the party seeking a stay of Australian proceedings bears the onus of establishing that the Australian jurisdiction is “clearly inappropriate”; and

   (b)the determination of  whether Australia is a “clearly inappropriate forum” is based  upon the general circumstances of the case, taking into account the true nature and full extent of the issues involved.

1. Reaffirming the test in Voth  the majority in Henry said at page 587 as follows:

   … a stay should be granted if the local court is a clearly inappropriate forum, which will be the case if continuation of the proceedings in that court would be oppressive, in the sense of “seriously and unfairly burdensome, prejudicial or damaging”, or, vexatious, in the sense of “productive of serious and unjustified trouble and harassment”. It was also held in Voth that, in determining whether the local court is a clearly inappropriate forum, “ the discussion by Lord Goff in Spiliada of relevant ‘connecting factors’ and a ‘legitimate personal or juridical advantage’ provides valuable assistance”. In this last regard, Lord Goff or Chieveley expressed the view that legitimate personal or juridical advantage is a relevant but not decisive consideration, the fundamental question being “where the case may be tried ‘suitably for the interests of all the parties and for the ends of justice’”. (citations omitted)

2. The majority went on to say at pages 589 - 590:

   There is one other matter that should be observed with respect to the decision in Gilmore, a case involving proceedings both in Australia and in New Zealand.  In their separate judgments, Fogarty J, with whom Finn J agreed, and Lindenmayer J criticised the “clearly inappropriate forum test” in its application to proceedings in the Family Court.  Fogarty J expressed the view that the test might “lead to inconvenience, in that it will create the risk of parallel proceedings”.  Lindenmayer J stated his belief that the clearly inappropriate forum test was “bound to lead to increased forum shopping and jurisdictional conflict” between the Courts of Australia and New Zealand …

   There appears to be an assumption in Gilmore that the duplication of proceedings in another country is not, of itself, relevant to the question of whether Australia is a clearly inappropriate forum …

   Foreign proceedings usually fall for consideration in a context in which they involve the same or related factual issues as those involved in the local proceedings, but not the same legal issue and, perhaps, not the same parties.  Even in cases of that kind it may sometimes be appropriate to grant a temporary stay of the local proceedings to allow for the factual issues to be determined in the other jurisdiction.  There are more compelling considerations in favour of a stay of the local proceedings if, as can happen, there are proceedings in another country which has jurisdiction to entertain those proceedings and the proceedings are between the same parties and with respect to the same issue or controversy.

   Parallel proceedings in another country with respect to the same issue may be compared with multiple proceedings with respect to the same subject matter in different courts in Australia. In Union Steamship Co of New Zealand Ltd v The “Caradale”, Dixon J observed of that latter situation that “[t]he inconvenience and embarrassment of allowing two independent actions involving the same question of liability to proceed contemporaneously in different courts needs no elaboration”. From the parties’ point of view, there is no less – perhaps, considerably more – inconvenience and embarrassment if the same issue is to be fought in the courts of different countries according to different regimes, very likely permitting of entirely different outcomes.

   It is prima facie vexatious and oppressive, in the strict sense of those terms, to commence a second or subsequent action in the courts of this country if an action is already pending with respect to the matter in issue.  And although there are cases in which it has been held that it is not prima facie vexatious, in the strict sense of that word, to bring proceedings in different countries, the problems which arise if the identical issue or the same controversy is to be litigated in different countries which have jurisdiction with respect to the matter are such, in our view, that, prima facie, the continuation of one or the other should be seen as vexatious or oppressive within the Voth sense of those words.

   It does not follow that, because one or other of the proceedings is prima facie vexatious or oppressive within the Voth sense of those words, the local proceedings should be stayed.  However, it does follow that the fact that there are or, even, that there may be simultaneous proceedings in different countries with respect to the same controversy is highly relevant to the question whether the local proceedings are oppressive in the sense of “seriously and unfairly burdensome, prejudicial or damaging”, or, vexatious in the sense of “productive of serious and unjustified trouble and harassment”.  And it also follows that courts should strive, to the extent that Voth permits, to avoid that situation.

3. In Skinner & Alfonso-Skinner [2010] FamCA 329 (“Skinnner”), Murphy J at paragraph 69 summarised what he described as the “non-exhaustive list of matters relevant to the application of the “clearly inappropriate forum test” identified in Henry as follows:

   (a)whether each court will recognise the other’s orders and decrees;

   (b)which forum can provide more effectively for complete resolution of the matters involved in the parties’ controversy;

   (c)the order in which the proceedings were instituted;

   (d)the stage at which the proceedings have each reached;

   (e)the costs that have been incurred by the parties;

   (f)the connection with the parties and their marriage with each of the jurisdictions;

   (g)the issues on which relief might depend in each of the jurisdictions; and

   (h)the resources of the parties and their understanding of language enabling the parties to participate in the respective proceedings on an equal footing.

4. Murphy J emphasizing, as the majority in Henry had done, the non-exhaustive nature of the relevant matters said that “…the question whether Australia is a clearly inappropriate forum is one that depends on the general circumstances of the case, taking into account the true nature and full extent of the issues involved.”

5. Counsel for the wife also referred to Kent J’s summary of the matters to be considered in Deslandes & Deslandes [2015] FamCA 913 (“Deslandes”) which although in slightly different term reiterate the matters referred to by the High Court in Henry.

Evidence

1. The standard of proof is the balance of probabilities. In applying the relevant standard of proof the Court must take into account the nature of the cause of action or defence, the nature of the subject matter of the proceedings and the gravity of the matters alleged (s 140 Evidence Act 1995 (Cth)).

2. The evidence of the husband and the wife is contained in the affidavits filed on their behalf pursuant to the orders made on 7 December 2015 and those additional affidavits they were granted leave to file at the commencement of the hearing.  The parties were not cross-examined and the matter proceeded on the basis of those affidavits and submissions of their counsel. On that basis the Court must adopt a cautious approach in terms of making findings of fact based on contested evidence focusing instead on the uncontested and/or unchallenged evidence. Significantly in this case there was very little evidence that was contested and I will refer to that disputed evidence where it is material to the determination I must make.

Discussion

1. Counsel for the wife submitted in summary that an Australian court is a “clearly inappropriate forum” based upon the following circumstances:

   (a)the parties were living in the United States at the time of their separation;

   (b)the parties reside in the United States and intend to continue to reside there;

   (c)the wife is a permanent resident of the United States, is applying for citizenship and the husband is applying for permanent residency. The husband is also a resident in the United States for taxation purposes;

   (d)the parties have purchased real property in the United States since their separation, where they each live;

   (e)the majority of the marital assets which require expert evidence are largely located within the United States; and

   (f)the husband is in a financially superior position to that of the wife.

2. Addressing those matters in the context of the non-exhaustive list of matters referred to in Henry as summarised by both Murphy J in Skinner and Kent J in Deslandes and without intending to give greater weight to any one factor based upon the order in which they are addressed it is clear as a starting point that this Court has jurisdiction to deal with the proceedings for property settlement. There also appears to be no dispute that the Californian Courts offer an alternative forum to hear property proceedings between the husband and the wife although I accept as submitted by counsel for the husband that there is no evidence as to the governing law of the dispute in the event that there were to be property proceedings in the United States and in particular evidence as to the Californian Courts’ ability to deal with the parties’ interests in the Allen Superannuation Fund. I will address this issue in more detail later in these reasons. There is also no evidence of any juridical advantage to either the husband or the wife of proceedings in either Australia or the United States.

3. I am satisfied that the husband and the wife have a clear connection with both Australia and the United States. They are each Australian citizens, they were married in Australia, they lived for some seven years or thereabouts in Australia during the marriage and each have children living in Australia. The fact that they separated in California and now both live in California on a permanent basis, whilst relevant considerations, are not in my view determinative of the matter given that they also have a connection to Australia.

4. There is no dispute that the parties own real estate and have cash and investments in both Australia and the United States. The husband set out in his trial affidavit a summary of the parties Australian and United States assets and liabilities. The wife was in general agreement with that summary save and except that it was her evidence that many of the assets in Australia are held by way of investment in US dollars. She also disagreed with some of the values attributed by the husband to the assets and liabilities in the United States. The husband’s summary was as follows:

Assets		Owner	Approximate Value ($USD)	Approximate Value ($AUD)
Australian Assets/Liabilities
1.	G Street, H Town, Queensland	H	253,000	360,000
2.	Company P Portfolio	H	7.6 m	10.8 m
3.	Allen Superannuation Fund	H and W	6.4 m	9.1 m
4.	ANZ bank accounts	H	E21,000	30,000
5.	Capital gains tax payable	H	NK	NK
TOTAL:			USD$14.3 m	AUD$20.3 m
US Assets/ Liabilities
6.	Equity in I Street, J Town, California	W	$225,000	319,000
7.	K Street, L Town California	H	2.9 m	4.1 m
8.	Wells Fargo Investments	W	5.4 m	7.7 m
9.	Equity in Company Q	W	146,250	207,632
10.	M Investment	W	52,572	74,636
11.	Bank accounts	W	14,500	20,585
12.	Credit cards	W	NK	NK
13.	Bank accounts	H	E50,000	E70,000
14.	Home contents, cars, car loans etc	H	E50,000	71,000
15.	Home contents, cars, car loans etc	W	E50,000	71,000
16.	Family Eats LLC	Joint	Nil	Nil
17.	US Federal Tax and penalties payable	Joint	NK	NK
TOTAL:			USD$8.9m	AUD$12.6 m
TOTAL COMBINED NET ASSETS			USD$23.2 m	AUD$32.9 m

1. It is the wife’s evidence that she does not agree with the values that have been attributed to the real property they each own in California. However, it is the husband’s evidence that they have each had their properties valued by the same valuer and that he accepts the wife’s valuation of her property. Even if the wife does not accept the husband’s valuation as submitted by counsel for the husband it is not uncommon for there to be disputes in this Court in relation to the value of properties overseas and I am satisfied that there would be no reason why the parties could not appoint a single expert to value the California properties and give evidence in the proceedings in this Court.

2. Although the wife in her Financial Statement filed 1 October 2014 estimated the value of her equity in the Company Q (“Company Q”) and the M Investment (“M”) to be $87,225 and $16,483 respectively, in the course of discovery she produced letters from both Company Q and M which valued her capital contribution to Company Q at US$127,364 and M at US$52,572. These letters were annexed to the Affidavit of Ms N filed on 10 March 2016 on behalf of the husband.

3. Counsel for the wife submitted that although the husband’s case was that he would accept the value of her equity in Company Q and M based upon those annexures, this gave the wife little comfort as these investments were neither straight forward or passive investments. The wife in her Affidavit sworn 22 March 2016 annexed to the Affidavit of Mr O filed on 23 March 2016 deposed at paragraph 7.4 that “There is no ready market for such investments. I also say that in the above circumstances the market value of the investments themselves can only be ascertained by expert evidence, in the form of valuation of the various business or companies in which I have invested funds. I anticipate (given the recent and start–up nature of the business referred to), that the market value is likely to be currently less than the sums invested by me in the short term...” I am not satisfied that I can make any finding in the absence of further evidence as to what might be required to value these investments in circumstances where it is asserted by one party that all that is necessary in order to value these investments is a letter from the investment company and the other party asserts that each of the businesses or companies in which she has invested need to be individually valued.

4. Counsel for the husband further submitted that whether the wife’s investments are worth more or less than the figures in the statements from the two companies they are in any event likely to make up a very small proportion of the assets of the parties. Whilst that does not necessarily mean that they will not need to be valued it is frequently the case that parties must weigh up the cost as against the benefits of an expensive valuation process in the context of the litigation in which they are engaged, particularly where the property in question is of limited value.  However I am also satisfied that even if it were necessary to value them that the parties could engage a single expert based in the United States to carry out that valuation and that if necessary that expert could give evidence in this Court by electronic means.

5. Counsel for the wife also submitted that the parties’ tax liability in the United States, which is currently uncertain, is a significant issue in this case. It is her case that there would need to be expert evidence in relation to this issue and that the source of that evidence would be the United States. I am satisfied that the parties have by agreement adopted a common approach to this issue jointly appointing a United States tax attorney, who is dealing on their behalf with the Unites States Inland Revenue Service (“IRS”)  and a United States accountant to prepare the necessary returns for refiling. There is also no dispute that on 3 November 2015 the parties were accepted into the Offshore Voluntary Disclosure Program (“OVDP”) process which required them to re-file joint United States returns for the years 2007 to 2012 by 29 March 2016 but that their United States tax attorney has sought an extension on their behalf. The parties’ joint accountant is in the process of preparing those joint returns. The husband deposes at paragraph 86 of his trial affidavit that “The input for the re-filings (which includes all Australian taxation returns and financial institution statements) emanates from Australia and relates, in the vast majority, to my tax information.” I note that the wife does not directly take issue with the husband’s assertion. 

6. It appears to be common ground that the IRS process could take some time and as submitted by the husband “what will be, will be’. Perhaps of more significance for the purposes of the issue I must determine and any hearing in this Court, is that it is clear from the emails from the parties’ United States tax attorney and accountant that they would expect to be better placed to provide an estimate of the taxation, penalties and costs once the amended returns have been prepared. It is also the case as submitted by counsel for the husband that this Court frequently deals with cases where liabilities, including tax liabilities have not crystallised putting in place mechanisms for payment of the liability when that liability is crystallised. In so far as evidence might be required in relation to the tax liability the parties have jointly engaged both a United States tax attorney and an accountant who one would expect would be in a position to give that evidence. Arguably based upon the current state of the evidence that evidence would be unlikely to be controversial.

7. I am not satisfied that the location of the expert witnesses or the cost of adducing evidence from the United States based expert witnesses in relation to either this issue or the value of real property or the wife’s United States based investments would be likely to significantly add to the costs of the case or that this Court would be a clearly inappropriate forum for dealing with these issues in the context of all of the other issues in this case.

8. Irrespective of the dispute as to some of the valuations it is clear from the husband’s summary that a greater proportion of the parties’ wealth is based in Australia. I say based in Australia as I am satisfied that even if some of the investments are as the wife says in US dollars those investments are held and managed in an Australian based investment. Whilst valuation of these assets may be relatively straight forward and it would be possible for these assets to be valued for the purposes of litigation in the United States the wife’s evidence suggests that there is likely to be a dispute as to the way in which the husband has managed his Company Q Portfolio and the Allen Superannuation Fund as well as tax implications in relation to both the investment portfolio and the superannuation fund. It also appears based upon the evidence before me that there is likely to be dispute as to both initial contributions if not contributions generally, including the inheritance the husband received from his mother. I am satisfied that evidence in relation to these issues is evidence that is likely to be more readily available to this Court.

9. It is also the case that as submitted by counsel for the husband that although the wife has not particularised the orders she seeks by way of property settlement that in circumstances where she already holds a significant proportion of the assets in the United States in her name it is more likely than not that any adjustment would need to be made out of assets that are located in Australia. It was submitted on behalf of the wife that as the husband has not sought a splitting order it cannot be asserted that this Court is better placed to deal with the superannuation because it has the power to make a splitting order. However in circumstances where the wife has not particularised her claim in my view the option of the Court being called upon to make a splitting order remains a possibility.

10. Although there are valuation and taxation issues which arise in the United States these are in my view evidentiary issues rather than issues with respect to the courts power to resolve the dispute between these parties. I am satisfied that this Court can effectively provide for a complete resolution of this matter whereas that may not be possible in the Californian Court.  Although both this Court and the Californian Court can make orders in personam with respect to property in the other country, orders made by the Californian Court with respect to the husband’s not insignificant superannuation entitlements would not be likely to be binding upon the trustees of that fund. Although the husband has not sought a superannuation splitting order it is also the case that he does not know what orders the wife will be seeking and it is not to say that he might not consider that as an option once he has that information. I am also satisfied that the issues in dispute and the evidence required to address these issues is more closely connected to Australia.

1. There will undoubtedly be some inconvenience and expense to the parties in having to travel to Australia in the event that the proceedings are not stayed and the matter proceeds in this Court in circumstances where they both reside in the United States. However in this case both parties have lived for significant periods in Australia, there is no language barrier which would disadvantage either the husband or the wife and they each have the financial resources to travel to Australia for the purposes of the proceedings. I am satisfied that both the husband and the wife have travelled to Australia in the last 12 months for purposes unrelated to these proceedings. I do not accept that the wife is at a disadvantage viz-a-viz the husband with respect to the matter proceeding in Australia because he is in a financially superior position to the wife in circumstances where the wife on her own evidence deposes at paragraph 99(e) of her second affidavit to having US$4,900,000 in an account in her own name.

2. The wife also deposes to having to assist her elderly parents which she submits would make it extremely difficult for her to travel to Australia for the purposes of these proceedings. The wife’s evidence at paragraph 99(j)(iv) of her second affidavit is that her father is almost fully blind, is deaf and has medical conditions that require several daily treatments. It is her evidence that her mother has had two operations one in 2014 and one in 2015. She also deposed that her parents live about an hour from her home and that she spends one to two days a week with them. The wife annexed to her second affidavit health summaries prepared by Kaiser Permanente for both her father and her mother printed on 12 February 2016. They list a number of what may well be significant health issues.  Counsel for the husband submitted that each of those conditions has a corresponding date under the heading of “Data noted” which he said demonstrated that there had been no treatment received in the case of the wife’s father since August 2015 and in the case of her mother since September 2015. I am not satisfied that I can conclude that the date relates to when the wife’s parents were last treated as submitted by counsel for the husband. However these documents also do not assist me to determine whether or not it is possible for the wife to leave her parents to travel to Australia for a hearing.

3. The husband disputes that it would be difficult for the wife to leave her parents for the purposes of travelling to Australia to attend a mediation or for the final hearing of this matter. He deposes at paragraph 171 of his trial affidavit that the wife not only travelled to Australia to visit her son and new grandchild in June 2015 but that she has also travelled to City E to visit her daughter at least nine times since separation. He further deposes at paragraph 146 of his trial affidavit that the wife has four siblings in the United States, including one who lives approximately 10 kilometres from their parents’ home. As submitted by counsel for the husband although the wife sought to file and rely upon the Affidavit of Mr O annexing her Affidavit sworn 22 March 2016 which responded to some of the matters in the husband’s trial affidavit she did not take issue with the husband’s evidence in relation to this issue.

4. Although the wife says that since she travelled to Australia last June her parents’ health has deteriorated, I cannot be satisfied on the balance of probabilities on the evidence before me that that is the case.  Even on the wife’s own evidence she does not care for her parents on a daily basis and if there were to be a hearing in Australia that would be of limited duration and not likely to require her to be absent for anything like the time she spent in Australia last year.

5. As counsel for the wife submitted, although the husband filed his Initiating Application for final orders in this Court prior to the wife’s institution of proceedings in the United States that is not determinative of this application. However in my view the length of time between the husband filing his Initiating Application for final orders and the wife both objecting to the forum and initiating proceedings in the United States is a significant factor as a consequence of the stage the proceedings in this Court have reached and the cost of those proceedings to date. Whereas the proceedings in Australia are well advanced that is not the case with the proceedings in the United States.

6. The wife has now issued a further Petition for Domestication of Foreign Judgment for registration of the divorce order made by the Federal Circuit Court of Australia on 6 November 2015. Even if the husband’s Motion to Quash does not succeed, this is just the first step. The wife’s own evidence is that it is a two step process and that it is only after she domesticates the divorce that she can initiate proceedings for property settlement. The husband’s evidence at paragraph 164(n) of his trial affidavit is that those proceedings once instituted would take “at least 1 – 1 ½ years but likely in excess of 2 years to complete”. The wife at paragraph 99(n) of her second affidavit does not admit the husband’s assertion. There is no evidence to support the husband’s assertion or the wife’s denial thereof as to the likely length of the proceedings in the United States or what might be involved in those proceedings. I am satisfied however on the balance of probabilities that the proceedings initiated by the wife in the United States are in their infancy at best.

7. In contrast this matter has now been listed for a first day of hearing before me in anticipation of being listed for trial before me. There are dates available commencing in August of this year. Had the wife not brought this application the matter would almost certainly have already been heard and determined.

8. It is a significant feature of this case that these parties have been involved in a lengthy process of negotiation both before and after the husband filed his Initiating Application for final orders on 22 August 2014 and three hearings to date. In order to negotiate and for the purposes of the proceedings there has been extensive discovery. Although the wife asserted in response to the husband’s complaint that she had ignored his requests that a mediation be convened that the husband had not met his obligation to provide full and frank disclosure I note as submitted by counsel that it was her evidence that she had suggested that the parties convene a mediation in California. This would appear to contradict her assertion that she did not want to convene a mediation in Australia because of the husband’s lack of disclosure.

9. The husband’s solicitor in her Affidavit filed 10 March 2016 deposes that the husband has been billed $171,865.35 to date and that as at 9 March 2016 he had $14,883.50 of work in progress excluding disbursements. The wife did not take issue with these figures nor did she depose, although I am satisfied that she had the opportunity to do so, as to the amount of her legal costs. Although I cannot guess at what that figure might be I am satisfied based upon the husband’s costs to date that her costs are also likely to have been significant.

10. Counsel for the wife submitted that these costs particularly those incurred with respect to the discovery process will not be wasted. Although I agree in part with that submission it is also the case however that if I were to accede to the wife’s application that any attorney engaged by either the husband or the wife in the United States would have to familiarise himself or herself with the detail of the matter, including familiarising themselves with the documents discovered by the parties for the purposes of the negotiations to date and the proceedings in this Court. Although there is no evidence before me as to the likely cost of the proceedings in the United States as compared to the cost of the proceedings in Australia I am satisfied that the cost of that process of familiarisation with the matter is likely to be not insignificant. I am satisfied that there would be a significant prejudice to the husband both in relation to the delay in the determination of the matter if I were to grant the wife’s application for a stay and the costs thrown away and further costs of having to engage new solicitors.

11. This analysis leads me to conclude that Australia and in particular in this case this Court is an appropriate forum for the conduct of the property proceedings commenced by the husband and it follows it cannot be said to be a clearly inappropriate forum. On that basis I propose to dismiss the wife’s application for a stay.

Anti-Suit Injunction

1. It is the husband’s case that not only should the wife’s application for a stay be dismissed but that this Court should make an order restraining the wife from commencing or continuing any proceedings in any other jurisdiction including the proceedings in California. 

2. There is no dispute that this Court can make what is referred to as an anti-suit injunction restraining a party from initiating or continuing proceedings in another jurisdiction if it is satisfied that such proceedings would interfere with the current Australian proceedings. The principles governing the grant of such an injunction are well settled.

3. In CSR Limited v Cigna Insurance Australia Limited & Ors (1997) 189 CLR 345 (“CSR Limited”) the High Court identified two sources of power to grant injunctions restraining parties from seeking relief in another court. The first source of that power being the court’s inherent power to prevent its processes being abused and to protect the integrity of those processes once set in motion. The second source of power is the power “deriving from the Chancery, [to] make orders in restraint of unconscionable conduct or the unconscientious exercise of legal rights”.[1] The High Court (Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ) said at page 392 with respect to that source of power that “[i]f the bringing of legal proceedings involves unconscionable conduct or the unconscientious exercise of a legal right, an injunction may be granted by a court in exercise of its equitable jurisdiction in restraint of those proceedings no matter where they are brought”.

4. Their Honours went on to say at page 392 as follows:

   In some cases, the equitable jurisdiction to restrain unconscionable conduct may be exercised in aid of legal rights.  Thus, as the respondents correctly contend, if there is a contract not to sue, an injunction may be granted to restrain proceedings brought in breach of that contract, whether brought here or abroad. Similarly, an injunction may be granted in aid of a promise not to sue in a foreign jurisdiction constituted, for example, by an agreement to submit to the exclusive jurisdiction of the courts of the forum.

5. Counsel for both the husband and the wife acknowledged that, as the  High Court said in CSR Limited, the Court’s power to grant an anti-suit injunction is not limited to “defined and closed” categories.

6. Although, as the High Court said in Henry at page 580, it is not necessarily vexatious or oppressive to bring proceedings in another jurisdiction “the problems which arise if the identical issue or the same controversy is to be litigated in different countries which have jurisdiction with respect to the matter are such, in our view, that, prima facie, the continuation of one or the other should be seen as vexatious or oppressive within the Voth sense of those words.”.

7. I have found that this Court is not a clearly inappropriate forum. I am however also satisfied that for the wife to either continue or initiate further proceedings in California or any other jurisdiction in relation to the same controversy and issues, particularly at this late stage of the proceedings in this Court, and given the costs that would be incurred in her doing so is both oppressive and vexatious.

8. I am not in a position to make findings in relation to whether the wife did or did not consent to the notation to the orders made 7 December 2015 which noted that the parties would effectively await the outcome of this application before proceeding further in California. However, there is no doubt that the wife knew and I am satisfied would have understood the issue when she filed her second Petition on 2 February 2016. In those circumstances there is a significant likelihood in my view that even after this Court has dismissed her application for a stay she will continue her proceedings in the Californian Court putting the husband to the further expense of defending those proceedings.

9. To allow the wife to do so would in my view be likely to interfere with the processes of this Court and would have the potential to cause a significant injustice to the husband. In all of the circumstances I propose to accede to the husband’s application.

I certify that the preceding seventy seven (77) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 6 May 2016.

Associate: 

Date:  6 May 2016