Bailey v Oswald

[1990] HCATrans 14

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl00 of 1989

B e t w e e n -

MARJORIE JOCELYN BAILEY

Applicant

and

DOROTHEA OSWALD

First Respondent

and

MAXWELL DUNCAN CRAWFORD

Second Respondent

Application for special

leave to appeal

Bailey

MASON CJ
DEANE J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 16 FEBRUARY 1990, AT 2.25 PM

Copyright in the High Court of Australia

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MR P.L.G. BRERETON:  May it please the Court, I appear for

the applicant. (instructed by Duncan Barron & Co)

MR P.J. LANIGAN:  May it please the Court, I appear for the

first respondent. (instructed by Anthony Malouf & Co)

MR P.W.R. PARKERj ~C:  If the Court pleases, I appear with my

learne riend, MR P. BATES, for the second

respondent, Crawford. (instructed by Teakle,

Ormsby & Associates)

MR BRERETON:  May it please the Court, could I hand to the

Court a small bundle of material to which I

trust I will not have to turn in any great detail.

MASON CJ:  Thank you.

•

MR BRERETON: There are copies for my_learned friends.

The submissions in written form upon which I

propose to rely are set out in the appeal book

in the supporting affidavit and it would be an

unnecessary waste of paper to reduplicate them
in the form of submissions when they appear in the

supporting affidavit.

In this Court's recent or relatively recent

decision in OCEANIC SUN LINE SPECIAL SHIPPING

COMPANY V FAY, (1987) 165 CLR 197, Justice Brennan

at page 233, said this:

The grounds on which the court is

justified in refusing to exercise its

jurisdiction when it is regularly

invoked are, and in my opinion, should be

grave and narrowly confined.

And Your Honour Justice Deane, at page 241, said

this:

A party who has regularly invoked the

prima facie right to insist upon its

jurisdiction of a competent court has a

exercise and to have his claim heard

and determined.

Your Honour, also, at page 243, in dealing with an

application for a stay of an action, said:

The starting point of the determination

of such an application in accordance with

traditional principle must be the prima

facie right of a plaintiff to insist upon

which he has regularly invoked. That	the exercise of competent jurisdiction
prima facie right of a plaintiff is not to be lightly displaced or denied.

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McHUGH J:  But those statements were made in respect of a case

where the plaintiff was being turned away from the

jurisdiction. That is not this case though,

Mr Brereton, is it?

MR BRERETON:  But similar statements have been made by courts

in the past in respect of proceedings where

applications have been made for stays to give

priority to other proceedings in different courts,

albeit within the same jurisdiction. An example of

that is one of the decisions included in the bundle

which I have handed to Your Honours, that of the

Court of Appeal in New South Wales in ROCHFORT V

JOHN FAIRFAX & SONS LIMITED. It cotmnences at page 4

of the bundle and the relevant passage is at page 7

of the bundle, page 19 of the report.

MASON CJ: Well, Mr Brereton, Justice.Deane and I seem to be

without this small bundle - - -

McHUGH J: No, no, here it is.

MASON CJ:  I see, I am sorry. I thought there was one judgment.

I had not realized it answered the description of

"a small bundle".

MR BRERETON:  "A small bundle" I was using to describe an

extract of a number of judgments. ROCKFORT V JOHN

FAIRFAX & SONS was a case in which a stay of civil

proceedings was sought to permit priority to be
given to criminal proceedings. His Honour

Mr Justice Sugerman,then sitting as the Acting Chief

Justice, said at page 19 of the judgment, which is

page 7 of the bundle at the paragraph commencing

before the letter B - His Honour referred to

ST PIERRE V SOUTH AMERICAN STORES which was a forum

conveniens case, if that description can still be

used, and that was an instance of a case in which

the same principles were applied to circumstances

where priority was sought for other proceedings.

McHUGH J:  But it was a very different case, was it not,

because ROCHFORT was a case where Mr Justice Isaacs

had stayed several defamation proceedings pending

the outcome of a criminal trial but in this

particular case your application is being stayed

pending the outcome of a claim in other proceedings

by '·' a creditor" .

MR BRERETON:  By a contingent creditor whose claim has not yet been established.

McHUGH J: Well, that is so.

MR BRERETON:  In my submission, there is no difference in the

principle which is to be applied to considering a

stay. When a plaintiff commences an action he or she

is entitled to have those proceedings heard where

they do not amount to a vexation or an abuse of process.

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Another instance, a more recent one, and closer to
the present circumstances is the decision of the

Federal Court of Australia in DEPUTY COMM:ISSION OF

TAXATION V SWAIN, which is extracted at the commencement

of the bundle. That was a case - - -

DEANE J:	Mr Brereton, what is the alternate objective of the
proceedings in view of the fact that, as I understand
it, your client is the sole beneficiary of the estate?
MR BRERETON:	- - - of the estate. The ultimate objective of the proceedings is this: under the FAMILY LAW ACT
certain privileges or rights are conferred upon
parties to a marriage. Those rights are higher
rights than those conferred upon beneficiaries under
the estate.  So much was recognized in -

DEANE J: Well, in a nutshell, is it the hope that if she gets

an order she will take in priority to the

respondents if they turn out to be creditors. Is

that what it is about? I mean, if you are saying

she is getting higher rights, it can only be relevant

if they are going to defeat somebody.

MR BRERETON:  If she obtains rights as a wife under

section 79 of the FAMILY LAW ACT she will stand in

a better position vis-a-vis the creditors than she

will as a mere beneficiary of the estate.

DEANE J: Well, the answer is it is the hope that if she gets

an order she will defeat the creditors?

MR BRERETON:  Or be able to share with them on a more favourable

basis than she could as a beneficiary because as

a beneficiary, if the creditors were to succeed, she

would not share at all.

DEANE J: Well then, would it not be critical for the Family

Court to know, if you be right - and it seems a

strong proposition to me - whether there are creditors

who would be defeated by an order?

MR BRERETON:  No, because the Family Court has proceeded

on a misinterpretation of what His Honour

Mr Justice Gibbs said in ASCOT INVESTMENTS V HARPER

and because the Family Court is well equipped to take

into account the fact that there are claims against

the estate which may or may not result in the estate

being liable to those creditors.

DEANE J:	It is a bit of a catch position though, is it not?
I mean, I can understand your complaint about the Family Law Court if you be wrong and if the Family
Law Court simply cannot defeat creditors by an order under the section but if you be right, surely the
Family Court is entitled to say, "Well, we want to
know what the position is before we deal with this".

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MR BRERETON: First of all, with the greatest of respect, there

is no authority for that proposition other than the

Court's decision in this case.

DEANE J: Well, there is a little bit of coIIm1on sense to support

it though, is there not?

MR BRERETON: With great respect, Your Honour, no, because the

Family Court every day has to deal with both contingent

assets and contingent liabilities; contingent assets
in the sense of parties who have pending claims for

before it decides what the available property is.

damages for personal injury in other jurisdictions.

Often times there are cases in which there are pending

claims against a party in the Family Court and the

Family Court does not necess~rily wait until those

claims are determined, nor is there any reason for

which it should because it can, for itself, make an

assessment and take into account the existence of those contingent claims just as it can of contingent

assets.

As was said by Her Honour the then Chief Judge

Justice Evatt, in PRINCE's case in a passage which
was extracted by the Full Court in its'jud~t, and it appears

at page 32 of the application book - the passage

extracted at the top of that page from Her Honour's

judgment - it was, it is true, a dissenting judgment -

was to this effect:

"The assessment of debts and liabilities

is not necessarily arrived at by a strictly

mathematical or accountancy approach -

and the following paragraph:

While some liabilities are charges upon the

property which can be accurately assessed at

a certain date, others are at large, or have

not been precisely determined. In some cases

the amount of the liability can only be

estimated generally. The Court can make an

allowance for a particular liability if

appropriate to do so. In some cases there
are sufficient uncertainties ...•. to disregard

it entirely or partly.

In my submission, it is clear that the court does not

have to decide affirmatively that there is a

liability or how great the liability is before it

proceeds to deal with the case.

McHUGH J: No, but it can even on this passage and why should

not a court prefer fact to prophesy by waiting until

the outcome of the third party proceedings?

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MR BRERETON:	Because before granting a stay the court must be satisfied, at least, that justice can better be
done with a stay than without and that the requirements
of justice are such as to warrant the prima facie right to proceed to a hearing being prevented.

McHUGH J: Well, this is a different point to the point you

opened the appeal with. The first point was a

jurisdictional argument, that your client was

entitled to have the jurisdiction invoked.

MR BRERETON:  Yes, Your Honour.

McHUGH J: Is this a second point?

MR BRERETON: Well, I am endeavouring to address the question

which Your Honour put to me. My first proposition is

that the wife in these proceedings is entitled to

have the jurisdiction invoked except where the

proceedings are such as to amount to vexation or oppression in the traditional sense. The second point is that if there be - well, there is,

admittedly, power to grant a stay in the appropriate

case and that is a case of vexation and oppression.

Whether or not a stay should be granted, it is my

submission, is to be determined by the requirements

of justice. That requires._ first of all,

that the court be satisfied that it will be possible
to do justice better with a stay than without and

that the requirements of justice are such that the

prima facie right to proceed to a hearing should

be interrupted or postponed.

Now, there is nothing in this case - let me

put it this way:  justice must mean, on the facts

of this case, justice to the third party claimants

because they are the only people otherwise affected

by the proceedings. It does not mean justice to the wife. Justice to the third party claimants does not require that the wife's application be stayed. They

can appear on the hearing as they have intervened in

it and they can argue on the hearing of the wife's

proceedings, if they went ahead tomorrow,

what share should be apportioned to the wife and what share should be apportioned to the husband.

McHUGH J: But that, in a practical sense, can only be done by

running their case, their negligence case, could

it not? The Family Law Court would not want to be

taking up its time determining what sort of damages

Mrs Oswald is likely to get.

MR BRERETON: Absent cross-vesting, perhaps no, but the Family

Court would not need to explore the facts of the negligence case. The court has found in the proceedings to date that the third party claimants are bona fide and they have real cases. That is all

the court needs to be satisfied. In doing that, it

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can take into account that the husband or his

estate are at least likely to have liabilities

to the third party creditors. Having made that

finding, the Family Court can still proceed to
make an order altering interests in favour of
the wife. Even if the court were to assume that
each of the third party interveners were to
succeed to the full extent of the amount which

has been used for the sake of argument of, I think,

$300,000 each and that resulted in debts of the

estate of $600,000, the court could, making that

assumption, still proceed to make a property order

in the wife's favour, leaving the residual share

of the estate to bear the whole of the liability
to the creditors. Now, the court does not need
to decide the third party proceedings to reach that

conclusion.

appears at page 10, line 11 of the application book, Mr Justice Nygh, -at first instance - and this

held that there ought to be a stay because, in His Honour's view, if the matter came to a question of

priorities -

there is little doubt that the priority

lies with the claims of those third

parties.

In my submission, that was not a correct holding

and the correct holding should have been that neither

party was entitled to any priority. The wife has a

cause of action under section 79 of the FAMILY LAW

ACT. That cause of action is not subject to the

rights of any other person to bring proceedings at

conunon law. Likewise, the interveners had a right

to bring proceedings at conunon law for damages.

That right is not subject to the wife's right under

the FAMILY LAW ACT.

The question of priorities arises if, and only

if, the estate be insolvent. The estate would be

succeed. Then there would arise a question of	insolvent if either of the interveners were to
priorities but it does not need the Family Court to
decide in advance where the priority is going to lie.
There is a perfectly good BANKRUPTCY ACT to administer the law of insolvency in respect of insolvent estates
and it is not necessary for the Family Court to
decide where that priority should lie.

If the Family Court were to proceed to a hearing

of the wife's case tomorrow and, for example, decide

that on the contributions and the needs factors

the wife should receive half of the estate and

apportion that to her and alter the interests in the

estate to that effect, then she would - - -

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DEANE J: But why would they do that when she has already got

the whole estate; unless it appeared that there were

creditors and they were trying to defeat creditors?

MR BRERETON:  I suppose that is one way of putting it,

Your Honour. With respect, the way that it might

be put is that Parliament has recognized in the

FAMILY LAW ACT that spouses are to have, if I can use the words again, "higher rights" than mere

beneficiaries under the will and the court would

alter the interests to allow the wife to take

advantage of her status as a spouse rather than her

status as a beneficiary and thereby give effect

to what Parliament intended.

The Full Court did not adopt His Honour's

finding on the question of priorities but decided

the case essentially on the.view that a third

party's rights, namely, the intervenor's, would

be adversely affected if the matter proceeded to a

hearing without the intervener's claims first being

decided. That, in my submission, was a misconception

of what was held by this Court in ASCOT V HARPER

INVESTMENTS. The relevant passage of that case is

conveniently extracted by the Full Court at page 32

of the application book. The first sentence is

one of the two critical parts where His Honour

Mr Justice Gibbs said:

"The authorities to which I have referred

establish that in some circumstances the

Family Court has power to make an order or

injunction which is directed to a third

party or which will indirectly affect the

position of a third party.

Likewise, on the following page of the application

book at line 24, His Honour said:

It is one thing to order a party to a

marriage to do whatever is within his power

to comply with an order of the court, even if what he does may have some effect on	the position of third parties, but it is
quite another to order third parties to do
what they are not legally bound to do.

What ASCOT INVESTMENTS and the line of cases that

follow it in this Court establish is that the

court may not make orders which operate directly on the interests of third parties. Those cases do not

decide that by making orders husbands or wives, the

position of third parties may not incidentally be

adversely affected. In every single case in which

there is an adjustment of property interests, the
property of one party is reduced by that order and

to that extent potential claimants against that party

are adversely affected. With respect, it has never

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been suggested that there is no jurisdiction to make an order altering property interests in that type of

situation because of the line of authority that

descends from ASCOT V HARPER INVESTMENTS nor could

it be suggested because clearly there is power to

alter interests in those circumstances notwithstanding that the assets to which a claimant against one of the

parties could have recourse were thereby reduced.

I have already referred to the cases which

support the proposition that a stay in order to give priority to other proceedings will only be ordered in the most exceptional circumstances. I

think I only touched on DEPUTY COMMISSION OF TAXATION

V SWAIN. Could I refer, in particular, to page 3

of the bundle in the joint judgment of the Full

Federal Court where Their Honours say at about the

sixth line:..

When the question is put in that way,

and free of any notion of impending conflict

with the Family Court, there is in the present

case only one answer that is open. As was

emphasised by this court in the MUDGINBERRI
case, an applicant for an adjournment in

order to give priority to another proceeding

bears a heavy onus. Prima facie, a party

who approaches the court is entitled to as

prompt a hearing as the nature of the case

and the exigencies of the administration of

the court permit.

That, in my submission, applies with equal force here.

The practical effect of the circumstances can

be analysed in this way. There are four alternatives:

the first is assume there is a stay of proceeding -
"four alternatives" is a corruption of the English

language. There are four possibilities. If the

wife's proceedings are stayed but the common law

claim proceeds to judgment then the estate will be

insolvent and there will be no net property out of

which provision could thereafter be made for the wife.

If the common law proceedings are unsuccessful, the

only person who will have been prejudiced will be the

wife by being delayed in being brought to hearing.

If, on the other hand, there is no stay ,but,_.~

the common law proceedings fail, again, no one suffers

any detriment or prejudice. But if there is no stay

and the common law proceedings succeed then one has

a wife with an order of the Family Court; the common

law claimants with judgments at common law; an
insolvent estate; competing priorities; a BANKRUPTCY

ACT and a Federal Court to resolve the questions of the competing priorities which then arise.

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That was the view that was taken at first

instance in the Family Court - - -

DEANE J: There probably would not be anything left by that

time.

MR BRERETON:	That is the other real question of utility.
DEANE J:	I mean, it would have all gone in the costs of
litigation.

MR BRERETON: Precisely, Your Honour. That is the other real

question of utility in granting a stay in these

proceedings. The judgment of the Full Court shows

that there were, I think, at least at the relevant time, eight common law proceedings on foot against the estate. There have already been proceedings
that have come as far as this Court in litigation

between the present interveners, the estate

and the Medical Defence Union. There are the common

law proceedings to go to trial and there is an

estate of a mere $230,000 to satisfy all of that.

Can I take Your Honours, as an illustration of

the fact, first, that this type of issue will arise
again in the Family Court and, secondly, of the

alternative approach which can be taken to it, to

the last case which appears in the bundle, HANNAH AND

HANNAH: TOZER AND TOZER, (1989) FLC 92-052, a

decision of His Honour Mr Justice Elliott. The

relevant passage commences at the foot of page 10 of

the bundle. This was a case in which the interveners

were not only claimants at common law but had

proceeded to judgment and had issued a writ of

execution so that they were far more advanced than

is either of the interveners in the present case.

His Honour said, in the second-last paragraph

at the foot of the second column of that page:

It is the case of the intervener that

it has its judgment and its writ of	execution, and thus a right to have that
judgment satisfied against the property
of the husband in priority to any claim of the wife under sec. 79. It complains that the making of the consent order has reversed
that priority, and it thus seeks that the
order be set aside.

And His Honour saw nothing to warrant that assertion

and continued:

An unsecured creditor, even one who has proceeded to judgment and execution, remains

unsecured. A judgment satisfied by

execution may have to be forgone and the

proceeds of the execution paid over to a

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trustee in bankruptcy should there be

other unsatisfied creditors who seek

their remedy through insolvency law.

All ~laimants have a right to pursue

their claim against the husband in an

appropriate court, and that general

right includes the right of the wife

to seek and obtain in this Court a
settlement in her favour in respect of

property in the name of the husband.

What constitutes the intervener's "just

rights" in a case such as this should

not be confused with what may amount to

no more than a question of priorities.

His Honour then refers, a little lower down the page,

to the judgment of Chief Jus_tice Evatt in PRINCE and
points to the conclusion that if it comes to a question
of priorities that is to be resolved by the law
of insolvency.

In my submission, the wife suffers a substantial injustice in this case by having her application

stayed because she stands to lose the higher right

which Parliament intended to confer upon her by the
provisions of section 79 of the FAMILY LAW ACT, a right

which was recognized in this Court in its judgment in

FISHER V FISHER in which Justice Brennan said

Section 79(8) provides machinery for

the discharge of those moral obligations -

that is obligations to a spouse -

in priority to any rights in the property

of a party to a marriage which arise by

testamentary dispositionof that party's

property or by any other devolution of

that property on that party's death.

The wife is deprived of that benefit by the stay

which has been imposed. Secondly, no injustice is

done to any of the interveners by there not being a

stay because to the extent that they recover a

judgment, their rights in that regard will be

regulated by the law of bankruptcy.

Finally, the wife suffers the further difficulty

that if all of that litigation is allowed to proceed

before her section 79 claim is determined, as

Your Honour Justice Deane, with respect, correctly

points out, there is liable to be nothing left for

anyone. There is no utility in a stay; there is no

justice in a stay and a stay is contrary to principle

on the decided cases. Unless there are any other

matters, those are my submissions.

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MASON CJ:  Yes, thank you, Mr Brereton. The Court need not

trouble counsel for the respondents.

The Court is of opinion that the actual decision
of the Full Court of the Family Court is not attended

with sufficient doubt to justify the grant of special leave to appeal. The application is therefore

refused.

MR LANIGAN: Will the Court order costs?

MASON CJ:	Yes.
MR LANIGAN:	Thank you, Your Honour.
MR PARKER:	Your Honour, I also ask for costs on behalf of the

• second respondent?

MASON CJ: Yes. I should ask you, Mr Brereton, do you wish

to make any submission why an order for costs

should not be made?

MR BRERETON:  Only to this extent, Your Honour, that they

should be limited to one set of costs. Both the

respondents are in the same interest. There

is no reason why they could not have been represented

by one set of counsel.

MASON CJ: Very well. The application will be dismissed with

costs but there will be one set of costs only as

between the respondents.

MR LANIGAN: If the Court pleases.

MR PARKER: If the Court pleases.

AT 3.01 PM THE MATTER WAS ADJOURNED SINE DIE

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