Armstrong v Armstrong
[2004] WASC 121
ARMSTRONG -v- ARMSTRONG & ANOR [2004] WASC 121
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2004] WASC 121 | |
| Case No: | CIV:1995/2003 | 18 MAY 2004 | |
| Coram: | BARKER J | 3/06/04 | |
| 22 | Judgment Part: | 1 of 1 | |
| Result: | Caveats extended Amendment of statement of claim permitted Proceedings transferred to Family Court of Western Australia | ||
| B | |||
| PDF Version |
| Parties: | DEBRA ANN ARMSTRONG BRIAN ARTHUR ARMSTRONG YVONNE ROSE ARMSTRONG |
Catchwords: | Application for extension of caveats, amendment of statement of claim and crossvesting of proceedings Whether caveator's claim has substance Whether balance of convenience favours removal of caveats Whether amendment permissible Related proceedings Whether "more appropriate" and "in the interests of justice" to transfer proceedings Turns on own facts |
Legislation: | Family Law Act 1975 (Cth), s 117 Jurisdiction of Courts (Cross-Vesting) Act 1987 (WA), s 5(4) Transfer of Land Act 1893 (WA), s 138B, s 138C |
Case References: | Baumgartner v Baumgartner (1987) 164 CLR 137 Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 Fox Enterprises Pty Ltd v Fox (1995) 123 FLR 445 Guimelli v Guimelli (1999) 196 CLR 101 His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated [2003] WASC 15 Hoddell v Hoddell Pty Ltd [1999] WASC 156 Kais v Turvey (1994) 11 WAR 357 Leithead v Leithead (1991) 109 FLR 177 Miller v Miller, unreported; SCt of WA; Library No 980340; 19 June 1998 Muschinski v Dodds (1985) 160 CLR 583 Pindan Pty Ltd v Sunny's Redevelopment Pty Ltd [2001] WASC 104; [2002] ANZ Conv R 51 Re Hamilton-Irvine and the Companies Act 1985 (1990) 94 ALR 428 Seymour v Devine [2003] WASC 260 Finlayson v Finlayson and Gillan (2002) FLC 93121 George Bevan Pty Ltd v Robert Patrick Pty Ltd [1987] NSW Conv R 55363 Green v Green (1989) 17 NSWLR 343 Lambert v Dean (1989) 97 FLR 352 Miller v Sutherland (1990) 14 Fam LR 416 Milne Feeds Pty Ltd v Bride (1993) 10 WAR 542 Mullins Investments Pty Ltd v Elliott Exploration Co Pty Ltd (1990) 1 WAR 531 Porter v McDonald [1984] WAR 271 R & I Bank of Western Australia Ltd v Lavery, unreported; SCt of WA; Library No 930636; 24 November 1993 Warby v Warby (2002) FLC 93091 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
BRIAN ARTHUR ARMSTRONG
First Defendant
YVONNE ROSE ARMSTRONG
Second Defendant
Catchwords:
Application for extension of caveats, amendment of statement of claim and crossvesting of proceedings - Whether caveator's claim has substance - Whether balance of convenience favours removal of caveats - Whether amendment permissible - Related proceedings - Whether "more appropriate" and "in the interests of justice" to transfer proceedings - Turns on own facts
Legislation:
Family Law Act 1975 (Cth), s 117
Jurisdiction of Courts (Cross-Vesting) Act 1987 (WA), s 5(4)
Transfer of Land Act 1893 (WA), s 138B, s 138C
(Page 2)
Result:
Caveats extended
Amendment of statement of claim permitted
Proceedings transferred to Family Court of Western Australia
Category: B
Representation:
Counsel:
Plaintiff : Ms W F Buckley
First Defendant : Mr R E Keen
Second Defendant : Mr P Mendelow
Solicitors:
Plaintiff : Ball & Co
First Defendant : O'Sullivan Davies
Second Defendant : Taylor Smart
Case(s) referred to in judgment(s):
Baumgartner v Baumgartner (1987) 164 CLR 137
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Fox Enterprises Pty Ltd v Fox (1995) 123 FLR 445
Guimelli v Guimelli (1999) 196 CLR 101
His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated [2003] WASC 15
Hoddell v Hoddell Pty Ltd [1999] WASC 156
Kais v Turvey (1994) 11 WAR 357
Leithead v Leithead (1991) 109 FLR 177
Miller v Miller, unreported; SCt of WA; Library No 980340; 19 June 1998
Muschinski v Dodds (1985) 160 CLR 583
Pindan Pty Ltd v Sunny's Redevelopment Pty Ltd [2001] WASC 104; [2002] ANZ Conv R 51
Re Hamilton-Irvine and the Companies Act 1985 (1990) 94 ALR 428
Seymour v Devine [2003] WASC 260
(Page 3)
Case(s) also cited:
Finlayson v Finlayson and Gillan (2002) FLC 93121
George Bevan Pty Ltd v Robert Patrick Pty Ltd [1987] NSW Conv R 55363
Green v Green (1989) 17 NSWLR 343
Lambert v Dean (1989) 97 FLR 352
Miller v Sutherland (1990) 14 Fam LR 416
Milne Feeds Pty Ltd v Bride (1993) 10 WAR 542
Mullins Investments Pty Ltd v Elliott Exploration Co Pty Ltd (1990) 1 WAR 531
Porter v McDonald [1984] WAR 271
R & I Bank of Western Australia Ltd v Lavery, unreported; SCt of WA; Library No 930636; 24 November 1993
Warby v Warby (2002) FLC 93091
(Page 4)
- BARKER J:
Introduction
1 On 13 August 2003, the plaintiff commenced this action by writ of summons against the first defendant and the second defendant in which she claimed, amongst other things, a declaration that the second defendant held certain farming property near Northcliffe in the south-west of the State of Western Australia on a constructive trust for the plaintiff and the first defendant in equal shares; or in the alternative a declaration that the second defendant held that land subject to an equitable charge in favour of the plaintiff and the first defendant for the value of certain improvements made to the land. The plaintiff also sought an order for the sale of the land and distribution of the proceeds in accordance with the constructive trust or equitable charge, as the case may be. In October 2003, the plaintiff filed a statement of claim against each of these defendants. In December 2003, each of the first defendant and the second defendant filed a defence in the action.
2 Prior to commencing the action, the plaintiff in May 2003 lodged two caveats to protect the interest she claimed in the farming land, being caveats I474242 and I484831. In each, she claimed an estate or interest as to the estate or interest of the second defendant in the land "as beneficiary of a constructive trust and as equitable chargee by virtue of (a) constructive trust arising out of the common intention of the … the caveator and [the first defendant] that the caveator and [the first defendant] would jointly have an interest in the land described in return for their labour and financial contributions to the improvement of the land; and (b) equitable chargee for the recovery of financial contributions and other contributions that improved the land."
3 The statement of claim initially filed sought to plead out the material facts upon which the interests supporting the caveats were claimed.
4 Earlier again, on 21 November 2002, the plaintiff commenced Family Court proceedings in the Court of Petty Sessions at Bunbury, which proceedings were later transferred to the Family Court of Western Australia. The Family Court proceedings concern matrimonial property issues and, in particular, the distribution of net matrimonial assets between the plaintiff and the second defendant. In the course of the Family Court proceedings, the plaintiff filed a Financial statement as required by the Family Law Rule. In her statement dated 17 June 2003, the plaintiff stated she had an "Interest in Location 12262 Flanagan Road, Northcliffe and interest in part Nelson locations 9923, 9925, 9926 and
(Page 5)
- 9929". The land so described includes the farming land the subject of the two caveats.
5 In his Financial statement filed in the Family Court proceedings, the first defendant did not disclose any interest in the farming land and he has otherwise denied that he has any interest in that land, contrary to the claim made by the plaintiff in her caveats and in this action as well as in the Family Court proceedings.
6 By summons for directions dated 13 February 2004, the plaintiff then applied for further orders and directions in this action. As a consequence, on 19 February 2004, Roberts-Smith J ordered, amongst other things, that the Registrar of Titles be joined as a third defendant, the operation of the two caveats be extended until the hearing of a special appointment, or until further order, and that the summons so far as it sought orders for the extension of the operation of the caveats and an order transferring this action to the Family Court of Western Australia held at Bunbury be adjourned for hearing at a special appointment.
7 It was the hearing of the application that was adjourned to a special appointment that then came on before me for hearing on 18 May 2004.
8 At the special appointment, the plaintiff sought three substantive orders:
(1) An order extending the operation of the two caveats pursuant to s 138C of the Transfer of Land Act1893 (WA);
(2) an order that the plaintiff have leave to amend the statement of claim in the terms of the minute of amended statement of claim dated 5 April 2004 (as further amended on the day of the hearing by the substitution of a new page 12 thereto);
(3) a cross-vesting order that the action be transferred to the Family Court of Western Australia.
The question of extension of the caveats
9 The minute of amended statement of claim dated 5 April 2004 (as the existing statement of claim) pleads material facts upon which the claim for equitable relief is made in this action. In short, the plaintiff pleads that she and the first defendant were married on 4 July 1988 and remained married at all material times. She pleads that, at material times prior to
(Page 6)
- her marriage to the first defendant, the first defendant and the second defendant and her late husband (the father of the first defendant) had the "mutual intention" that the first defendant would work in the farming business conducted on the various farming lands, that the first defendant would live in his parents' house on the Armstrong Road land, that the first defendant would be paid "minimal wages" and that the Flanagan Road property would eventually pass to the ownership of the first defendant. The plaintiff would plead, if the proposed amendments to the statement of claim are allowed, that, at all material times between 1979 and February 1990, pursuant to that mutual intention "and to his detriment" the first defendant worked in the farming business for minimal wages.
10 The plaintiff further pleads that, at all material times between May 1988 and February 1990, she and the first defendant lived in a house on the Flanagan Road property and worked for the farming business operated by the G & Y R Armstrong Family Trust, the plaintiff for no wages and the first defendant for minimal wages.
11 The plaintiff further pleads that, after the brother (Michael) of the first defendant commenced working in the farming business in or about February 1990, the plaintiff, the first defendant, the second defendant, the first defendant's late father and the brother reached the "common intention" that:
(a) they would clear a further 550 acres of the land then available for farming on the Flanagan Road property, the Muirillup Road property and the Armstrong Road property;
(b) they would divide the land into two roughly equal areas, one part consisting of the Flanagan Road property and part of the Armstrong Road property (Brian's property) and the other part consisting of the Muirillup Road property and the rest of the Armstrong Road property (Michael's property);
(c) the G & Y R Armstrong Family Trust would continue to operate the farming business on Brian's property and Michael's property, but:
(i) the plaintiff and the first defendant would farm Brian's property, the plaintiff for no wages and the first defendant for minimal wages;
(Page 7)
- (ii) Michael and the first defendant's late father and the second defendant would farm Michael's property;
(d) the second defendant and her late husband would live in their home on the Armstrong Road property and the plaintiff and first defendant would live in the house on the Flanagan Road property;
(e) the plaintiff and first defendant would by their work be entitled to Brian's property and Michael would by his work be entitled to Michael's property on either the death of the first defendant's father and the second defendant or when the first defendant's father and the second defendant ceased the farming business and transferred the land.
12 The plaintiff pleads that, pursuant to that last pleaded common intention, 550 extra acres of land was cleared, fences were erected separating Brian's property from Michael's property and cattle and some other chattels owned by the farming business were distributed between Michael's property and Brian's property and not thereafter mixed.
13 The plaintiff would further plead, with the amendment she proposes to the statement of claim, that, pursuant to that common intention "and to their detriment" the plaintiff and the first defendant farmed Brian's property "for none or minimal wages and undertook various improvements to Brian's property over and above those required for the farming operations". Particulars of improvements are given.
14 The plaintiff then pleads that the first defendant's father died in March 1996 and that the second defendant then became the primary interest holder of Brian's property and Michael's property by survivorship or by virtue of the terms of the Will of her deceased husband.
15 The plaintiff further pleads that, between March 1996 and October 1996, the plaintiff, first defendant, second defendant and Michael in discussions at the Flanagan Road property reached a "fresh common intention" whereby:
(a) the second defendant would cease the farming business through the G & Y R Armstrong Family Trust;
(b) the plaintiff and the first defendant would commence farming Brian's property in their own right;
(c) Michael would commence farming Michael's property in his own right;
(Page 8)
- (d) the plaintiff and first defendant would be entitled to the profits of the farming of Brian's property and Michael would be entitled to the profits of farming Michael's property, but they would provide an income to the second defendant by paying rent for Brian's property and Michael's property respectively and meeting any necessary expenses incurred by the second defendant and the tax debts of the second defendant and any debts of the G & Y R Armstrong Family Trust;
(e) the rent paid was fixed by reference to the financial needs of the second defendant and not by market rent;
(f) the plaintiff and the first defendant would be entitled to Brian's property and Michael would be entitled to Michael's property either on the death of the second defendant or when the second defendant transferred the land; and
(g) the second defendant would continue to live in her home on the Flanagan Road property.
16 The plaintiff then pleads that, pursuant to "the new common intention":
(a) the plaintiff and the first defendant commenced farming on Brian's property through a company, B A & D A Armstrong Pty Ltd "trading as B A & D A Armstrong Family Trust ('the Family Trust')";
(b) the first defendant entered into a lease of Brian's property for five years at an annual rent of $15,000 per annum payable to the second defendant;
(c) the milk quota was transferred by the second defendant to the plaintiff and first defendant and Michael.
17 By a proposed amendment to the statement of claim (par 15A), the plaintiff would further plead that:
"The Plaintiff and the First Defendant at all material times were directors of BA & DA Armstrong Pty Ltd and operated the Family Trust for their joint benefit."
18 Further, the plaintiff pleads that, pursuant to the new common intention, the plaintiff and the first defendant caused the Family Trust to make the various payments to the second defendant or on account of the
(Page 9)
- second defendant referred to. The plaintiff would further plead, if the proposed amendments to the statement of claim are allowed, that pursuant to the new common intention "and to their detriment" the plaintiff and the first defendant performed "most of the labour required to operate a farm on Brian's property".
19 The plaintiff would also plead, if amendments to par 16 of the statement of claim were permitted, that pursuant to the new common intention and "to their detriment" the plaintiff and the first defendant:
(a) expended their labour and caused the Family Trust to pay for commenced improvements on Brian's property over and above those required for the operation of a farm on Brian's property; and
(b) in or about 1998 borrowed money against the security of the milk quota and built a marital home on Brian's property.
20 The plaintiff pleads that, at the cessation of the five-year lease of Brian's property in 2001, the plaintiff and first defendant continued farming on Brian's property "through the Family Trust" and improving the property, although the rent was increased to $18,000 per annum.
21 Then the plaintiff pleads that, in June 2002, she and the first defendant separated and that she left Brian's property and has not lived there since.
22 The plaintiff would further plead, if the amendments are allowed, that thereafter the first defendant left Brian's property and ceased farming it either personally or through the Family Trust and the second defendant took possession of Brian's property and denies that either the plaintiff or the first defendant have any interest in Brian's property as a consequence of their contributions to its improvement.
23 In those circumstances, the plaintiff pleads that the second defendant holds Brian's property as a constructive trustee arising out of the mutual intention, common intention and fresh common intention, and her unconscionable retention of the plaintiff and first defendant's contributions to the improvement of Brian's property and the operation of the farming business in support of the mutual intention, the common intention and the new common intention.
24 The plaintiff claims, as noted earlier, a declaration that the second defendant holds the property, Brian's property, on a constructive trust for
(Page 10)
- the plaintiff and the first defendant in equal shares or in the alternative a declaration that the second defendant holds Brian's property subject to an equitable charge in favour of the plaintiff and the first defendant to the value of improvements made to the property. The plaintiff also seeks an extension of the two caveats as a form of final relief.
25 As noted above, in the summons now before me, the plaintiff seeks interlocutory relief, including the extension of the two caveats until trial or further order. That order is sought pursuant to s 138C of the Transfer of Land Act1893 (WA). Section 138C(1) provides that a caveator who is served with a notice under s 138B(1) may apply to the Supreme Court for an order extending the operation of the caveat. It is not entirely clear to me that the plaintiff as caveator has been served with a notice under s 138B, but neither of the first and second defendant, who each appear separately represented by counsel, takes issue with the power of the Court to make an order extending the operation of the caveat in these circumstances and so I assume the preconditions to exercise of power by the Court under s 138C have been met.
26 Under s 138C(2), the Court "if satisfied that the caveator's claim has or may have substance" may make an order extending the operation of the caveat for such period as is specified in the order; make an order extending the operation of the caveat until further order of the Court or make such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged.
27 The plaintiff accepts that she has the onus of establishing that her claim has or may have substance. She says that, in circumstances where a party makes contributions to the acquisition of property pursuant to a joint endeavour which fails in circumstances in which it was not intended that the other party should enjoy them absolutely or unconditionally, equity will provide relief to that party whether in the form of a constructive trust or in some other appropriate form of relief: Baumgartner v Baumgartner (1987) 164 CLR 137; Muschinski v Dodds (1985) 160 CLR 583; Kais v Turvey (1994) 11 WAR 357; Guimelli v Guimelli (1999) 196 CLR 101.
28 The first defendant does not make any submissions concerning the question whether the plaintiff's claim has or may have substance, but the second defendant joins issue in that regard. The second defendant says that the two caveats absolutely prohibit the registration of dealings against not only the Flanagan Road property, but also against a portion of, but not the whole of, the Armstrong Road property. The second defendant says that the value of the Flanagan Road property alone substantially exceeds
(Page 11)
- the value of the plaintiff's claim, and so at the very least the caveat lodged against the Armstrong Road property, or a portion thereof, should not be maintained, both as a matter of principle and convenience.
29 The second defendant draws attention to the primary relief sought by the plaintiff in the prayer for relief in the statement of claim, namely, that the second defendant holds the farming land concerned, as identified in the plans attached to each caveat, on a constructive trust for the plaintiff and the first defendant "in equal shares" and says that this suggests the plaintiff is claiming a distinct one-half interest in the land the subject of the caveat.
30 While I agree that there is some ambiguity in the way the primary relief is fashioned in the statement of claim, it is tolerably clear from the terms of the caveatable interest claimed in each caveat, as set out above, that the plaintiff makes her claim for such primary relief on the basis that she and the first defendant are the holders of a joint beneficial interest in the land claimed. On that basis, I do not think it is proper to say that the plaintiff has made a claim for a distinct one-half share in the property. Thus, it is not correct to say that the plaintiff's claim is for a particular "value" in respect of the Armstrong Road property, which value is "exceeded" by the value of the Flanagan Road property.
31 In my view, having regard to the plaintiff's pleaded case, it is arguable, or to put it another way there is a serious issue to be tried, in respect of the plaintiff's claim that she has with the first defendant a joint beneficial interest in the land the subject of the caveats.
32 A further question that arises is whether the Court should refuse to extend the caveats on the basis that the balance of convenience militates against the plaintiff and favours the second defendant. The second defendant says that, amongst other things, by reason of the caveat over the Armstrong Road property she is unable to use that property as security for the raising of funds to enable her to meet legal fees and other expenses. She does not, however, suggest in any affidavit material before me that the other farming properties in respect of which she is the primary interest-holder cannot be used as security for this purpose.
33 There is no doubt, in my view, that the balance of convenience may well, in an appropriate case, cause a Court to decline to extend a caveat under s 138C: see His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated [2003] WASC 15 at [28] - [34]; Pindan Pty Ltd v Sunny's Redevelopment Pty Ltd [2001]
(Page 12)
- WASC 104; [2002] ANZ Conv R 51; Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42.
34 In these circumstances, however, I am not at all satisfied that the natural reluctance the Court should have to remove a caveat where a triable issue has been made out is overwhelmed by considerations of detriment or inconvenience so far as the position of the second defendant is concerned. This is not one of those "unusual cases", as Owen J called them in Ravi Nominees (supra) at 62, where the balance of convenience favours removal.
35 In these circumstances, I would make an order that the operation of caveats I474242 and I484831 be extended until trial or further order.
The question of the proposed amendment of the statement of claim
36 As noted above, the plaintiff has filed a minute of amended statement of claim dated 5 April 2004. The first defendant does not oppose the amendment and, indeed, has prepared its own minute of amended defence in anticipation of the statement of claim being so amended. However, the second defendant opposes some of the proposed amendments set out in the minute.
37 In the course of submissions, I effectively ruled on the objections to the amendments proposed by the plaintiff and I repeat here in summary form the rulings I made on each objection.
38 In proposed par 6A, the plaintiff pleads that, at all material times between 1979 and February 1990, pursuant to the mutual intention pleaded in par 6 "and to his detriment", the first defendant worked in the farming business for minimal wages. The second defendant says that the "detriment" needs to be particularised. In the course of argument, it became quite clear that the "detriment" referred to was the simple act of "working in the farming business for minimal wages". I thereby disallowed the objection on the basis that the context and the grammatical formulation employed by the plaintiff is not particularly ambiguous or embarrassing in the strict sense.
39 In proposed par 11A, the plaintiff pleads that further, pursuant to that common intention (that is to say the common intention pleaded in par 10), "and to their detriment" the plaintiff and the first defendant farmed Brian's property for none or minimal wages and undertook various improvements to Brian's property over and above those required for the farming operations. Particulars of those improvements are then given. The second
(Page 13)
- defendant says it cannot be ascertained whether the particulars are those improvements "over and above those required for the farming operations" or are, in any event, particulars of improvements regardless. I consider it is tolerably clear that the improvements said to be "over and above those required for the farming operations" are those of which the particulars are given. This was confirmed by counsel for the plaintiff. I disallowed that objection.
40 In proposed par 15A, the plaintiff would, for the first time, plead that the plaintiff and the first defendant at all material times were directors of B A & D A Armstrong Pty Ltd and operated the Family Trust for their joint benefit. This plea is objected to by the second defendant on the basis that it is embarrassing, especially as it is later alleged that the trustee company paid for improvements to the property allegedly subject to a constructive trust in favour of the plaintiff. The entitlement to operate the Family Trust "for their joint benefit" needs to be pleaded, according to the second defendant.
41 Proposed par 15A needs to be read in the context of the plea in par 15(a) where the plaintiff pleads that, pursuant to the "new common intention" (being that pleaded in par 14) the plaintiff and the first defendant commenced farming on Brian's property "through a company B A & D A Armstrong Pty Ltd trading as B A & D A Armstrong Family Trust ('the Family Trust')". There is some ambiguity here, which may well lead to difficulties in pleading and subsequent proof, as to whether the plaintiff is saying that the company in effect used the "Family Trust" as a business name or whether it is in fact being said that the company was a trustee of a trust established independently of it. The second defendant had understood the position to be the latter and this is perhaps implied by other parts of the statement of claim, for example par 15B. In any event, it is clear that the plaintiff should tidy up that aspect of its pleading and make clear whether it says the company was or is the corporate trustee of a trust and, if so, whether the trust is or was established by deed and for what purposes, including those persons who are beneficiaries under the trust. If this were to be done, then some other objections taken to par 15B(b) - (f) of the proposed amendments to the statement of claim would dissolve. In those latter amendments, the plaintiff pleads that the plaintiff and the first defendant "caused the Family Trust" to do certain things.
42 For these reasons, it seems to me that the proposed pars 15A and 15B(b) - (f) should be disallowed, but with leave to the plaintiff to replead those paragraphs to ensure that the pleading so far as it concerns the
(Page 14)
- Family Trust and actions taken by it are properly pleaded out. In the course of doing this, any detriment to the plaintiff and the first defendant, through the conduct of the Family Trust, may then also be pleaded out. It seems at least arguable that if it is the case that the plaintiff and the first defendant are beneficiaries under the Family Trust, then a direction by them through the corporate trustee that the Family Trust make certain payments in accordance with the "new common intention" may have caused the plaintiff and the first defendant personally some detriment on the basis that, by reason of the Family Trust making such payments, the Family Trust was no longer in a position to make a distribution of such moneys to the plaintiff and the first defendant personally under the trust, assuming they may individually benefit from distributions made by the Trust. Possibly, other considerations concerning the plaintiff's detriment may also exist.
43 In proposed par 15B(a), the plaintiff further proposed an amendment whereby it would be pleaded that, pursuant to the new common intention "and to their detriment" the plaintiff and the first defendant performed "most of the labour required to operate a farm on Brian's property". The question of what labour they performed was the basis of the objection to that paragraph taken by the second defendant. I agree that it would be appropriate for particulars of this plea to be given, but I do not think it is necessary to disallow the amendment in the form of par 15B(a).
44 However, in proposed par 16(a), the plaintiff proposes to plead that, pursuant to the new common intention "and to their detriment", the plaintiff and the first defendant expended their labour and caused the Family Trust to pay for commenced improvements to Brian's property "over and above those required for the operation of a farm on Brian's property". The second defendant says the term "over and above" is embarrassing. I tend to agree. The expression "over and above" has been used in relation to improvements in other parts of the pleading. In the context of those other paragraphs, there is sufficient lack of ambiguity to permit the expression to be used. But in the context of par 16(a), and in particular because of the use of the expression "required for the operation of a farm", it is not clear whether the reference to "a farm" is a reference to a hypothetical farm that might be operated on Brian's property in respect of which the actual improvements particularised are considered to be "over and above" those necessary, or whether the "farm" referred to is the state of the farm as it existed at a particular point in time when the "new common intention" was formulated. In any event, because questions arise as to exactly what is meant by the use of the expression "over and above" in this particular context, the paragraph should be considered
(Page 15)
- ambiguous and embarrassing in that sense. It is presently difficult to know how to respond to it, from the defendants' point of view. I would not allow the proposed amendment to par 16(a), but would give leave to replead in respect of it.
45 An earlier objection by the second defendant to par 19 of the statement of claim was withdrawn in the light of clarifications to par 6 of the statement of claim.
46 In the event, I would allow the amendments to the statement of claim in terms of the minute of amended statement of claim dated 6 April 2004, save in respect of amendments proposed to pars 15A, 15B(b) - (f) and 16(a). The plaintiff should, however, have leave to further amend the statement of claim as so amended in respect of those paragraphs. The plaintiff indicated that she would seek to propose suitable amendments in place of those proposed amendments I have disallowed and to agree them between counsel at an early date.
The question of the transfer of the action to the Family Court
47 Because of the pending Family Court proceedings between the plaintiff and the first defendant, and because if the plaintiff were successful in this action, the pool of property that might be considered in the Family Court proceedings would be enlarged, the plaintiff says this is an appropriate case in which to transfer the action to the Family Court so that the matters the subject of the action can be considered in conjunction with the matters that arise in the Family Court proceedings. Each of the first defendant and the second defendant strongly oppose the making of any such order.
48 Questions such as the transfer of proceedings to a Family Court in circumstances similar to those before me arise not infrequently. Under s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (WA) this Court must transfer a relevant proceeding to a State Family Court if it appears to this Court that:
"(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the other of the courts referred to in paragraph (a) and it is more appropriate that the relevant proceeding be determined by that other court;
(ii) having regard to ¾
(Page 16)
- (A) whether, in the opinion of the first court, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in that other court; and
(B) the interests of justice,
- it is more appropriate that the relevant proceeding be determined by that other court; or
(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by that other court."
49 In this case, the parties agree that if there is to be any order transferring the proceedings from this Court to the Family Court, it will be because the criteria mentioned in s 5(4)(b)(i) or (iii) have been satisfied. It is accepted that if one or other of those criteria is made out, then this Court must order the transfer of the proceedings and has no further discretion in the matter. That certainly follows as a matter of the direction provided in the subsection: see Hoddell v Hoddell Pty Ltd [1999] WASC 156 per Murray J at [17].
50 However, it is clear that within the relevant criteria there is, in effect, a broad discretion to decide if a transfer should occur. For example, in the case of the criteria spelt out in (i) of the provision, the Court must determine, if the matter is a related proceeding, whether "it is appropriate" to effect a transfer; and in the case of the criteria spelt out in (iii) of the provision, the Court must determine what the dictates of "the interests of justice" are in a particular case.
51 The first defendant and the second defendant in opposing the order for transfer of proceedings first argue that the action in this Court does not "arise out of" and is not "related to" the proceedings in the Family Court. That this action does not "arise out of" the Family Court proceedings is clear enough. The question really is whether it is "related to" the action. The meaning of the expression "related to" in this particular statutory context has been considered in a number of cases.
52 In Re Hamilton-Irvine and the Companies Act 1985 (1990) 94 ALR 428, Beaumont J in the Supreme Court of Norfolk Island did not
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- consider it appropriate to transfer proceedings in the Supreme Court of Norfolk Island whereby a husband had sought leave to be appointed as a director and secretary of a company to the Family Court where the wife had commenced proceedings seeking orders altering the interests of the parties of the marriage with respect to their property. Beaumont J, at 432 - 433 held that it could not be said that the proceeding before him "arises out of" the proceeding in the Family Court. Similarly, he did not consider that the two proceedings were "related". His Honour accepted that the primary meaning of "related" was "associated; connected". He considered that, in the case before him, there needed to be a nexus or association between the two sets of proceedings in order to show that they were "related".
53 In Leithead v Leithead (1991) 109 FLR 177, Murray J in this Court accepted and applied the meanings ascribed to these phrases by Beaumont J in Re Hamilton-Irvine and took the view in respect of proceedings in this Court by the plaintiff wife for a declaration of trust in relation to a home unit owned by her former husband and proceedings in the Family Court, which were an application for spousal maintenance, but not to establish the nature of the matrimonial property or to alter the proprietary interests of the husband and wife under the Family Law Act, that they were not sufficiently related. Accordingly, his Honour was not prepared to make an order for transfer of proceedings.
54 In Hoddell v Hoddell Pty Ltd (supra), Murray J again referred to the meaning of the expressions adopted by Beaumont J in Re Hamilton-Irvine and again accepted them as apposite. On this occasion, his Honour, however, took the contrary view on the material facts before him concerning the relatedness of proceedings. In Hoddell, the plaintiff sought a declaration that she had an equitable interest in the former matrimonial home which was built on land registered in the name of the first defendant company. Murray J considered that the two sets of proceedings were related in the relevant sense.
55 Similarly, in Fox Enterprises Pty Ltd v Fox (1995) 123 FLR 445, Family Court proceedings were brought by the wife in which she claimed she was the joint owner of a residential property which was the former matrimonial home. In the Supreme Court, a company claimed an interest by way of constructive trust as a result of contributions it alleged it had made for improvements to that property. The wife was a shareholder in the company. The other shareholders and directors were her husband and his present de facto spouse. Williams J, at 449, considered:
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- "The issues to be determined primarily relate to the matrimonial affairs of the parties and involve the question as to what extent the interests of the former husband and wife in the subject property are diminished because of an interest held by a company in which at all material times they were the sole directors and shareholders."
56 In my view, there is no difficulty in concluding that the Family Court proceedings for property settlement and the action of the wife as plaintiff in the present Supreme Court action are "related". The question is whether it is "appropriate" to order transfer of the Supreme Court proceedings or otherwise "in the interests of justice" to do so.
57 In Hoddell (supra), Murray J having found that the Supreme Court action and the Family Court proceedings were "related", nonetheless was not satisfied that it was "appropriate" or "in the interests of justice" to order transfer of the proceedings. His Honour, at [32], rejected a submission that there would be a multiplicity of proceedings if he did not transfer the Supreme Court action to the Family Court. He thought that judgment of the Supreme Court would resolve the nature of the interests of the husband or the wife in the land and thus resolve matters in issue in the Family Court. He considered, and with respect this must be so, that the matter having been decided in the Supreme Court, the matter would be res judicata in the Family Court: see [33]. However, in apparent response to a submission that the determination of equitable interests is something best made in the Supreme Court, Murray J noted, at [33], that:
"However, I place little weight upon the consideration that the resolution of claims for equitable interests in property is a traditional and central aspect of the equitable jurisdiction of this Court."
58 In the result, though, Murray J, at [34], found:
"On the other hand it seems clear that if this action is transferred to the Family Court, the first and second defendants would necessarily become involved in the resolution of the wider questions about the respective proprietary interests of the plaintiff and third defendant, even if that aspect of the proceedings in that Court can be separated from the resolution of any other contested matter, such as access to children. Further, the defendants all oppose the present application. They consider that in this case they may derive an advantage from the
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- pleading process in this Court, from the capacity to proceed to have the plaintiff's claim summarily dismissed and from the fact that in this Court, although awards of costs are discretionary, they ordinarily follow the event. On the other hand, under the Family Court Act 1997 (WA), s 237, in that Court the ordinary rule is that each party shall bear its own costs, although there is a limited discretion to award costs."
59 Having regard to those matters, Murray J found that it was not "more appropriate" that the action commenced in the Supreme Court be determined in the Family Court: see [35].
60 Before me, counsel for the plaintiff submitted that Murray J's observation concerning the ordinary rule as to costs in the Supreme Court not being applicable in proceedings in the Family Court if the proceedings were to be transferred, was not correct, or at least not necessarily the position. As I understood the submission made, it is suggested that the usual Supreme Court cost regime would continue to apply in respect of the proceedings when transferred to the Family Court. In other words, the cost regime under the Family Law Act 1975 (Cth) would not necessarily apply to the transferred proceedings. On the face of it, s 117 of the Family Law Act governing costs would appear to give the Family Court a broad discretion concerning the making of a costs order such that the Family Court would appear to have a discretion to make an order on the basis that costs follow the event: see s 117(2) and s 117(2A)(g). However, it may be observed that it does not by any means follow that the Family Court would be bound to make a costs order of the same type that might be made in the Supreme Court in relation to such proceedings.
61 The first defendant and the second defendant rely on the decision in Hoddell as strongly supporting their submissions that no transfer order should be made.
62 The plaintiff, however, while acknowledging the outcome of the decision in Hoddell refers also to other decisions which suggest that, in cases such as the present, a transfer order is appropriate. Counsel refers, in particular, to Seymour v Devine [2003] WASC 260. In that case, the plaintiff had filed an application in the Family Court seeking orders for property settlement and spousal maintenance. A few days before those proceedings were commenced, the plaintiff commenced proceedings in this Court against the first defendants for declarations that they held certain property on constructive trust for her and the second defendant.
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- The plaintiff sought transfer of the Supreme Court proceedings to the Family Court.
63 Pullin J, at [7], noted the outcome in cases such as Hoddell, but considered he did not need to refer to them in any respect "because they provide, in my view, merely examples of the outcomes on different facts" and that, at [8], the "principles are clear enough".
64 Before his Honour, a number of arguments were advanced by the defendants as to why the Supreme Court proceedings should not be transferred. They argued that the substantial issue in the Family Court would be the appropriate order concerning the second defendant's major asset, which is an amount arising from an award of damages in the sum of $800,000. Pullin J noted that, while that was the major asset, the facts concerning it were unlikely to be contentious, other than the issue about how one breaks up $800,000 into its various components.
65 Pullin J also noted as true the defendants' submission that transferring the matter to the Family Court would mean that the first defendants would because entangled in the proceedings in that Court. While a relevant aspect, Pullin J, at [12], did not consider it to be a reason "standing alone to refuse to make an order under the Cross-vesting Act".
66 Pullin J also noted, at [13], the defendants' further submission that the plaintiff's case "is tenuous and shadowy", but considered that it was not necessary for him to make an assessment about the strength of the case in circumstances where the first defendants "concede that some contribution has been made by the plaintiff and the second defendant to the property in question".
67 In the event, Pullin J, at [15], considered the proceedings were related to the Family Court proceedings and it was more appropriate that the proceedings be determined in the Family Court. His Honour said:
"This is because the issues concerning the contribution of the plaintiff and the second defendant and the first defendants to the real estate are intertwined and should be dealt with in the one place."
68 Pullin J also considered in the alternative, at [16], that it was in the interests of justice that the proceedings be transferred. His Honour stated:
" … I say this because, first, the contributions which have been made by the parties; that is, by the plaintiff and the second
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- defendant and by the first defendants in relation to this property; are all issues which have to be determined. It would be, in my view, not in the interests of justice to have some of those issues about contribution dealt with in the Family Court; that is, the contributions as between the plaintiff and the second defendant; and to have a separate consideration of those issues in this Court in relation to the title to the property. In a sense, the title to the property which has to be decided in the proceedings in this court depends upon an analysis of the contributions which have been made by the parties in the two sets of proceedings."
69 Finally, Pullin J, at [17], considered another factor that supported the making of the order for transfer of proceedings was that the dispute before him was a "true family dispute" involving the financial relations between the plaintiff, the second defendant and the parents of the second defendant in relation to not only the real estate, but also other property. For all of those reasons, his Honour considered the making of the order appropriate.
70 Similarly, in Miller v Miller, unreported; SCt of WA; Library No 980340; 19 June 1998, Heenan J ordered the transfer of proceedings from the Supreme Court to the Family Court. In that case, the plaintiff in the Supreme Court was the wife of the second defendant. The plaintiff and the second defendant had for some time lived on a farm owned by the first defendant, who was the second defendant's father. The relationship of the plaintiff and the first defendant broke down and she commenced proceedings in the Family Court, including for property settlement. She also commenced proceedings against the first defendant in the Supreme Court seeking a declaration that he held the farm on constructive trust to leave it to the plaintiff and the second defendant upon his death. The plaintiff alleged that her husband's father had represented that if she and the second defendant continued improving the farm by their own hard work, the second defendant would inherit the farm, which would also belong to her. Both the first and second defendants filed a defence denying the plaintiff's entitlement to the relief sought, or any relief. It was agreed all round that the Family Court proceedings for property settlement were dependent in substance on the plaintiff as wife succeeding and establishing the interest she claimed in the Supreme Court action.
71 Heenan J, in deciding that it was more appropriate to have the Supreme Court proceedings determined in conjunction with the Family Court proceedings, observed:
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- "The evidence relating to that issue, in my opinion, is likely to be much the same as that to be considered in deciding the property application pursuant to s 79(1) of the Family Law Act1975. I find that the proceedings are related because there is a substantial and common question arising in both … it is in the interests of justice for both proceedings to be dealt with by the Family Court."
72 In the event, whilst it is a reasonably finely balanced decision that must be made in this case, I consider it appropriate and otherwise in the interests of justice that the action in the Supreme Court should be transferred to the Family Court so that all matters relating to the settlement of property between the plaintiff and first defendant, as husband and wife in the Family Court proceedings, can be determined at the same time. While I recognise that the second defendant in the action in this Court is not a party to the marriage, or otherwise involved in the Family Court proceedings, and there is no particular reason why the Supreme Court action could not properly and effectually be determined in this Court, in the end if the plaintiff is successful in her action, there will need to be a final resolution of the property settlement proceedings in the Family Court by reference to the interest that the plaintiff has succeeded in establishing. The resolution of those Family Court proceedings may well need to have regard to the evidence adduced in the primary proceedings currently in this Court. It is more sensible in those circumstances that one court hear all the evidence at the one time. The alternative involves some prospect of the action in this Court being determined in this Court and then the Family Court being required, in effect, to take and consider afresh some of that evidence.
73 In those circumstances, I am satisfied that it is both more appropriate and in the interests of justice that the proceedings in this Court should be transferred to the Family Court of Western Australia. An order in those terms should be made.
Conclusion and orders
74 I would extend the caveats, permit amendment of the statement of claim subject to the objections allowed (with liberty to replead as noted) and order transfer of the proceedings in this Court to the Family Court of Western Australia. I will hear from counsel as to the appropriate terms of orders to this effect.
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