Bergman & Bergman - [2009] FamCAFC 27

FAMILY COURT OF AUSTRALIA

BERGMAN & BERGMAN

[2009] FamCAFC 27

FAMILY LAW - APPEAL – Application for leave to appeal – appeal against the trial Judge’s refusal to grant the husband (through his case guardian) leave to join third parties in the property proceedings between the husband and the wife and leave to amend a response to seek orders pursuant to Part VIIIA of the Family Law Act 1975 and the accrued jurisdiction against the third parties – whether the trial Judge failed to give separate and proper consideration to the husband’s claim under Part VIIIAA of the Family Law Act 1975 – whether the trial Judge erred in his approach to the exercise of the accrued jurisdiction – whether the trial Judge erred in making erroneous and unnecessary findings of fact – application for leave to appeal dismissed.

FAMILY LAW - APPEAL – COSTS – appellant to pay respondent wife and third respondent’s costs of and incidental to the application for leave to appeal.

Family Law Act 1975 (Cth), Part VIIIAA, ss 90AE and 90AF

ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559
B Pty Ltd and Ors & K and Anor (2008) FLC 93-380
Bishop & Bishop (2003) FLC 93-144
Fencott v Muller (1984) 152 CLR 570
H & H (2007) 36 Fam LR 64; [2006] FamCA 167 [110]
Houghton & Ors v Arms (2006) 225 CLR 553
Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457
Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
Re Wakim; Ex Parte McNally (1999) 198 CLR 511
Warby & Warby (2001) FLC 93-091

APPELLANT:

Mr Bergman

RESPONDENT:

Ms Bergman

SECOND RESPONDENT:

Mr Sarinsson

THIRD RESPONDENT:

Mr Porter

FILE NUMBER:

MLF

5245

2003

APPEAL NUMBER:

2008

DATE DELIVERED:

27 February 2009

PLACE DELIVERED:

Canberra

PLACE HEARD:

Melbourne

JUDGMENT OF:

Bryant CJ, Finn and Warnick JJ

HEARING DATE:

6 and 7 October 2008

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

4 August 2008

LOWER COURT MNC:

[2008] FamCA 710

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr North SC

SOLICITOR FOR THE APPELLANT:

Caroline Counsel Family Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Geddes QC and Ms Johns

SOLICITOR FOR THE RESPONDENT:

Marshalls & Dent

COUNSEL FOR THE SECOND RESPONDENT:

In person

COUNSEL FOR THE THIRD RESPONDENT:

Ms Nikou SC and Mr Mort

SOLICITOR FOR THE THIRD RESPONDENT:

Carew Counsel Pty Ltd

Orders

That the application for leave to appeal the orders of the Honourable Justice Young made on 4 August 2008 be dismissed.
That the appellant pay the costs of the respondent wife and of the third respondent of and incidental to the application for leave to appeal with such costs to be assessed in default of agreement.

IT IS NOTED that publication of this judgment under the pseudonym Bergman & Bergman is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE

Appeal Number: SA 64 of 2008
File Number: MLF 5245 of 2003

Mr Bergman

Appellant

And

Ms Bergman

Respondent

REASONS FOR JUDGMENT

Since 21 August 2003 there have been pending in the Family Court of Australia proceedings for property settlement under s 79 of the Family Law Act 1975 (Cth) (“the Act”) between Mr Bergman, the husband, and Ms Bergman, the wife. These proceedings were initiated by the wife. Since 27 October 2005 the husband’s daughter from a previous marriage, Ms J, has conducted the proceedings on behalf of the husband as his case guardian.
On 11 July 2007 an amended application in a case (in other words, an interlocutory application) was filed on behalf of the husband seeking leave to file an “amended Form 1A Response” in terms of an annexed draft. Relevantly for present purposes, the draft response sought various orders “pursuant to Part VIIIAA of the Family Law Act 1975 and/or in the exercise of the accrued jurisdiction of the Court” against Mr Porter and Mr Sarinsson, both of whom had been business associates of the husband – although Mr Sarinsson also happened to be the wife’s brother. The precise terms of the orders sought against Messrs Porter and Sarinsson will be set out shortly.
On 22 May 2008 a further application in a case was filed on behalf of the husband seeking, relevantly for present purposes, that Messrs Porter and Sarinsson and W Corporation (“WC”), a corporation in which the husband and Messrs Porter and Sarinsson all held, or had held, shares, should be joined as parties to the property proceedings between the husband and the wife.
On 4 August 2008 Young J delivered reasons for judgment and made orders dismissing both of the above-mentioned applications for amendment and joinder.
On 8 August 2008 an application was filed by the case guardian seeking leave to appeal Young J’s orders of 4 August 2008 dismissing the applications in question. These reasons for judgment are concerned with that application for leave to appeal.
The application for leave to appeal is opposed by the wife as first respondent, by Mr Sarinsson as second respondent (and who was self-represented before us), and by Mr Porter as third respondent.
It will be convenient in these reasons to refer where appropriate to the husband/case guardian as “the appellant” (as was for the most part done by all counsel before us).
In the event that leave to appeal is granted and the appeal allowed, the appellant seeks that in addition to the discharge of the orders appealed, leave be granted to the appellant “to file an Amended Response to an Application for Final Orders joining [Messrs Sarinsson, Porter and WC] seeking orders against them pursuant to part 8AA of [the Act] and in the accrued jurisdiction of the court”.
In addition, a further order is sought by the appellant which was described in the following terms in the Outline of Argument filed on the appellant’s behalf:
16.…if … granted leave to file and serve a further amended response in Form 1A seeking such relief as the Appellant may be advised against the Second and Third Respondents and [WC] and directing the Appellant to file as an annexure to that further amended response in Form 1A a statement of material facts and legal contentions relied upon by the Appellant as giving rise to his entitlement to the relief as claimed against all Respondents other than the First Respondent.

The case for joining the third parties and the relief proposed to be sought against them

The case of the husband (or his case guardian) for joining Messrs Porter and Sarinsson and WC in the property proceedings between the husband and the wife and the relief sought against those third parties is conveniently explained in the following paragraphs from the affidavit of their solicitor which was filed on 8 August 2008 in support of the application for leave to appeal the orders of 4 August 2008 (emphasis added):
10.One of the central issues and principal assets in the property proceedings between the husband and the wife … is the husband’s one-third shareholding in … WC, a company incorporated …, the principal asset of which is …[an island] in Fiji. [WC] is developing [the] [i]sland for residential and resort accommodation (“the … [i]sland development”). Upon completion it was intended that the island be sold.
11.Until recent times, the two other shareholders, each of whom also owned one-third of the shares in [WC], were [Sarinsson] (the wife’s brother) and [Porter] (hereinafter collectively referred to as “the other shareholders”).
12.It was common ground in the proceedings before Young, J. that the relationship between the husband and the other shareholders has entirely broken down.
13.In affidavits filed by the Case Guardian concerns of the Husband were advanced that (inter alia):
(a)[WC] and the development of [the] [i]sland is being and/or has been conducted by the other shareholders without regard to his interests;
(b)there has been little communication between the other shareholders and the husband;
(c)funds of [WC] may have been used to fund another development on … Fiji associated with [Sarinsson] and [Porter] but not associated with [WC];
(d)the other shareholders have authorised payment of invoices allegedly relating to work done on the … [i]sland development when, in fact, no such work has been done;
(e)[Porter] had forged the husband’s signature for the purpose of [Porter] obtaining payment of management fees he alleged were owed to him by [WC];
(f)documents and records of [WC] had been removed by one or both of the other shareholders and the husband had been refused access to them;
(g)[Porter], in response to requests by the husband to have the accounts of [WC] audited, has stated that he “would rather burn the company records than have them audited” (or words to such effect);
(h)[Sarinsson] has previously instituted (and subsequently discontinued) proceedings in Fiji seeking to wind up [WC] on the ground that there in [sic] no longer a relationship of trust and confidence between the shareholders;
(i)[Sarinsson] has subsequently purported to transfer his one-third shareholding in [WC] to [Porter] without proper compliance with the agreed arrangements between the three shareholders, thereby reducing the husband from an equal to a minority shareholder.
14.It is impossible to proceed to a final alteration of interests in property between the husband and the wife in a situation where the husband’s interest in [WC] is of unclear value and, by reason of the attitude of the other shareholder(s), potentially impossible to realize or to realize at a realistic value.
15.The assets of [WC] continue to be dealt with, or seemingly so, to the detriment of the husband. Whilst there have been various peripheral proceedings between the husband and the other shareholders concerning the provision of documents, the financial obligations of the three shareholders to [WC] and a proceeding instituted by [Sarinsson] in Fiji (subsequently discontinued) seeking the winding up of [WC], there have been no proceedings in Australia or elsewhere seeking the winding up of [WC], there have been no proceedings in Australia or elsewhere seeking to determine the position of the husband in [WC] and between the other shareholder(s) or which otherwise have the prospect of the husband realizing the value of his shareholding.
The solicitor then summarised in her affidavit the relief which the appellant had sought against the third parties in the draft Form 1A Response (which was the subject of his Amended Application in a Case filed 11 July 2007). Rather than repeat that summary, we will here set out the precise terms of the orders which the appellant sought leave to seek against the third parties in the application filed on 11 July 2007:
1.That, pursuant to Part VIIIAA of the Family Law Act 1975 and/or in the exercise of the accrued jurisdiction of this Honourable Court, as between the first respondent/husband, the second respondent and the third respondent, there be a taking of accounts in relation to their dealings with, benefits from and entitlements in [WC] ...
2.That, pursuant to Part VIIIAA of the Family Law Act 1975 and/or in the exercise of the accrued jurisdiction of this Honourable Court, the second respondent and the third respondent join with the first respondent/husband to sign all such documents and do all such acts and things as may be required to:
(a)sell the shares held by each of them in [WC] upon such terms and conditions as may be ordered by this Honourable Court and to divide the proceeds of sale between them in equal shares after adjustment upon the taking of accounts;
(b)alternatively, sell the assets of [WC] upon such terms and conditions as may be ordered by this Honourable Court and to divide the proceeds of sale between them in equal shares after adjustment upon the taking of accounts.
3.Alternatively, that the second respondent and the third respondent each acquire one half of the shares held by the first respondent/husband for such amount and otherwise upon such terms and conditions as may be ordered by this Honourable Court.
It should also be explained that in an Outline of Submissions in support of the joinder application filed on 22 May 2008, the appellant foreshadowed proposed causes of action against Mr Porter (pursuant to the accrued jurisdiction) for breach of fiduciary duty and for breach of a shareholders’ agreement entered into between the husband and Messrs Porter and Sarinsson and WC (which proceedings, it was asserted, would require the joinder of Mr Sarinsson and WC as well as Mr Porter), with the precise terms of the relief to be sought being described in the Outline of Submissions as follows (footnotes omitted):
19.The Court, in the exercise of its accrued jurisdiction, and in particular its equitable jurisdiction, can mould appropriate orders consequent upon a finding of breach of fiduciary duty, which are sought in the final orders including:
(a)    declaration that the conduct was in breach of fiduciary duty;
(b)    payment of equitable compensation;
(c)    the holding of accounts and inquiries;
(d)    the appointment of a receiver and manager to, inter alia, sell the assets and undertaking of [WC];
(e)    requiring [Porter] purchase the Applicant’s shares at fair value.
…
31.The final relief sought against [Porter] in respect of breaches of the Shareholders Agreement is:
(a)    a declaration that the transfer of shares in [WC] from [Sarinsson] to [Porter] in about May 2007 was invalid;
(b)    a declaration that the conduct identified in paragraph 17 above was in breach of clause 1.6 of the Shareholder Agreement;
(c)    damages for breach of the Shareholders Agreement;
(d)    a declaration that the resolutions made at the directors’ meetings of [WC] on 29 February 2008 and 9 May 2008 are invalid;
(e)    a declaration that in default of compliance with a call on the Husband’s shares, [WC] is not entitled pursuant to Article 32 of its Articles of Association, or otherwise, to sell the Applicant’s shares;
(f)     all necessary accounts and inquiries, to determine the proper amounts owed by [WC] to each of its shareholder [sic] upon their respective loan accounts.
…
33.Whilst all its shareholders and directors are parties or proposed parties to the litigation, [WC] ought be additionally joined because it is a necessary party. It is a party to the Shareholder’s Agreement and submits to the jurisdiction. Final relief is sought against it, including orders to:
(a)    declare the transfer of shares in [WC] from [Sarinsson] to [Porter] invalid;
(b)    require [WC] to follow the pre-emptive rights regime in the Shareholder’s Agreement;
(c)    declare the resolutions made at the meetings of 29 February and 9 May 2008 invalid;
(d)    declare that [WC] is not entitled to sell the Husband’s shares pursuant to Article 32 or otherwise;
(e)    take accounts and inquiries in order to determine amounts owed by [WC] on the loan accounts;
(f)     appoint a receiver and manager to sell the assets and undertaking of [WC].
In her affidavit in support of the application for leave to appeal and after summarising the relief proposed to be sought against the third parties (at least in the proposed amended response), the solicitor for the appellant explained her client’s case for orders against the third parties in the following way:
17.In circumstances where the husband’s one-third shareholding in [WC] comprises the substantial asset of the marriage, the realisation thereof, whether by purchase by the other shareholder(s) or the sale of all of the shares in – or the assets of – [WC], after a taking of accounts between the shareholders in relation to their dealings with, benefits from and entitlements in [WC], is likely to be reasonably necessary to effect a division of property between the husband and the wife.
18.Further, the claims between the husband and the wife and the husband and the other shareholder(s) are part of a single justiciable controversy, namely, the value (after a taking of accounts) and realisation of the husband’s one-third shareholding in [WC], and substantially arise out of a common sub-stratum of facts.

Young J’s reasons for the orders of 4 August 2008 in summary

As already mentioned, Young J made orders on 4 August 2008 dismissing the applications for leave to amend the husband’s response to seek relief against the third parties and for joinder of those parties.
His Honour began his reasons for his orders by explaining that the issue before him was whether he should permit the husband’s case guardian to file an amended application seeking orders “pursuant to the court’s accrued jurisdiction and s 90AE and s 90AF and require the joining of [Messrs Porter and Sarinsson and WC] to property proceedings between [the husband and the wife]”.
His Honour then described “the facts and evidence before the court” as presenting this case “as a highly complex property, financial, business valuation and commercial dispute”, which he defined as “the commercial dispute”.
Having outlined the course of the proceedings before him (paragraphs 3-5), his Honour explained at some length (paragraphs 6-18) that Messrs Porter and Sarinsson opposed their joinder, and the joinder of WC, to the Family Court proceedings, and the reasons for that opposition. He also explained that the wife opposed the joining of Mr Sarinsson, but that she ultimately neither opposed nor consented to the joining of Mr Porter and WC. His Honour observed in relation to the wife’s position:
18.The Wife, for her part and save for her submissions to assist her brother, has no active involvement in these current interlocutory proceedings. She could politely be described as a bystander awaiting identification and quantification of the Husband’s financial interest in [WC] on the basis that that will be a (perhaps) substantial asset available in the property proceedings.
His Honour then explained that what he had so far said was “by way of outline only” and that he would “now evaluate” the background factual history and the applications and submissions before the Court but:
19. …in the context…, on the particular relevant facts of this case and given the reasons I have provided below, I find that it is over-simplistic and inaccurate to identify a factual matrix from which a single justiciable controversy could be said to arise.
Under the heading “Background Facts” his Honour set out (in paragraph 20) a number of paragraphs from an earlier judgment delivered by him (on 30 May 2008) and which contained “relevant background facts” which he considered “fundamental to a proper identification and understanding of the issues now before [him]”.
Given the factual background which we have already provided, it is unnecessary to refer to any of the background facts set out by his Honour, other than to note that his Honour referred to various proceedings which had already been conducted between the husband and the third parties in the courts of Victoria, and in relation to which, his Honour concluded:
21.I highlight therefore that the Case Guardian, or previously the Husband, and other potential parties have selectively issued related proceedings in other Courts as a matter of choice and convenience. The Family Court was not the primary venue of choice by the Husband. It was more likely a court of personal convenience or alternate choice to him and the Case Guardian.
His Honour then set out (at paragraphs 22-24) the terms of the husband’s application for leave to file an amended response and the terms of the orders which would be sought in such an amended response, and which we have set out above. He also referred to relevant provisions of the Family Law Rules 2004 (paragraphs 27-36).

Before listing the extensive material relied on by the parties before him, his Honour explained (in paragraph 38) that there had been no oral evidence or cross-examination of witnesses, and that he had “made required findings of fact only where necessary and when proved to the required level in interlocutory proceedings”.
Apparently in light of the husband’s challenge to Mr Sarinsson’s transfer of his one-third shareholding in WC to Mr Porter (which had had the effect of reducing the husband from an equal to minority shareholder in WC) and/or in light of the husband’s application that Messrs Sarinsson and Porter acquire his one-third shareholding, his Honour then discussed at considerable length (paragraphs 44-52) the terms of the shareholders’ agreement which had been drawn by a solicitor, Mr R, and entered into on 1 October 2002 by the husband and Messrs Sarinsson and Porter, and in particular the pre-emption provisions in that agreement. In relation to these matters his Honour concluded:
52.On the basis of the current affidavit evidence of [Mr R], and the supporting documents and the evidence of [Porter] and [Sarinsson] I reject in this interlocutory hearing any issue, concern or position that otherwise might be adopted by the Case Guardian on behalf of the Husband as to [Sarinsson’s] exit as a shareholder and director of both overseas incorporated companies. I conclude that this qualified interlocutory finding is open and appropriate on the evidence now before me, but in any event I have concluded on all of the facts and evidence in this case that there is no single justiciable controversy and on that basis I am not persuaded to apply any accrued jurisdiction or make any other extended orders. I would not join [Sarinsson] as a party in these substantial proceedings.
After again referring to the protracted course of the proceedings before him and to the need for further written submissions before the conclusion of those proceedings, his Honour outlined in some detail the submissions of all parties, indicating in some instances whether he accepted or rejected a particular submission. Notably, he rejected (at paragraph 64) the submissions of the case guardian that the commercial dispute “is properly incidental to the dispute between the husband and the wife”.
Then under the heading “Accrued Jurisdiction” his Honour referred to various decisions of the High Court relevant to the issue of accrued jurisdiction and to the decisions of the Full Court of this Court in Warby & Warby (“Warby”) (2001) FLC 93-091 and Bishop & Bishop (“Bishop”) (2003) FLC 93-144.
In relation to the decision in Warby, his Honour set out (at paragraph 87) the factors which the Full Court in that case held a court should have regard to when deciding if it has and should therefore exercise accrued jurisdiction. His Honour then endeavoured to apply those factors to this case, ultimately concluding that there was no single justiciable controversy such as would attract the accrued jurisdiction.
But he also concluded that if he was wrong in that conclusion, he would not as a matter of discretion exercise the accrued jurisdiction. We observe here that it must now be accepted that once it is determined that accrued jurisdiction is available in a particular matter there is, at least as a general rule, no discretion not to exercise such jurisdiction (ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559; Houghton & Ors v Arms (2006) 225 CLR 553). However, any error on the part of Young J in this regard is of no consequence given his ultimate decision and the view we take of the application to appeal that decision.
His Honour can then be read as considering and rejecting the availability of any relief against the third parties under various sections of Part VIIIAA of the Act.

The case for leave to appeal and the proposed grounds of appeal

The affidavit of the appellant’s solicitor in support of the application for leave to appeal the orders of 4 August 2008 asserted only that in “refusing the Case Guardian leave to amend the extant application for final property Orders there has been a failure by [his Honour] to apply appropriate legal principle(s) and/or a substantial injustice visited upon the Case Guardian/husband”.
The case for leave to appeal was then expanded upon by Senior Counsel for the appellant in his written submissions, where having expressly recognised that in order to obtain leave to appeal it was necessary to demonstrate that there had been an error of principle or a substantial injustice occasioned to a party, he continued:
33.The effect of his Honour’s Orders was to deny the Appellant the opportunity to join three further Respondents to these proceedings and to claim relief against two of them under Part VIIIAA of the Act and against three of them under this Court’s accrued jurisdiction.
34.In the event that the Appellant demonstrates that any part of the relief sought to be claimed is and was fairly arguable then in the circumstances of this case a substantial injustice to the Appellant will have been demonstrated [See Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146].
The draft notice of appeal (annexed to the solicitor’s affidavit in support of the application for leave to appeal) contained forty-five grounds of appeal. However in his submissions to us, Senior Counsel for the appellant was able to group these many grounds into the following four categories of asserted errors on the part of his Honour:

a failure to give separate and proper consideration to the claim under Part VIIIAA of the Act (Grounds 1, 39, 43 and 44);
erroneous and unnecessary fact-finding (Grounds 3, 5, 9, 10, 12, 13-15(a)-(k)) ;
an erroneous approach to the exercise of the accrued jurisdiction (Grounds 1, 29, 30-39, 41 and 42);
error in dispensing with Rule 6.02 of the Family Law Rules (Grounds 15(l), and 16-20).

It is unnecessary for us to say anything in relation to the last-mentioned of the above categories, because it was conceded in the appellant’s written outline of argument that his Honour’s “dispensation” with Rule 6.02 (which concerns the joining of necessary parties) “in the circumstance of this case, in light of his Honour’s determination to dismiss the appellant’s application has no practical consequence”. Presumably in view of that concession, no oral submissions were directed to the proposed grounds directed to the dispensation with the requirements of Rule 6.02.
However in the context of the Rules it should be pointed out that the case proceeded before his Honour on the basis that given the stage which it had reached, the leave of the Court was necessary (in the absence of consent) for any amendment by a party of an application or response. (See paragraphs 28 and 122 of his Honour’s reasons).

The assertion of erroneous and unnecessary fact-finding

Although it was the first matter on which Senior Counsel for the appellant addressed us in support of the application for leave to appeal, little need be said concerning the second above-mentioned categories, being erroneous and unnecessary fact-finding in his Honour’s reasons for judgment.
Essentially the argument in relation to this matter was that findings made in the earlier part of his reasons (paragraphs 45, 50, 51 and 52) in relation to the shareholders’ agreement and the dispute concerning its pre-emption provisions, had “infected” his Honour’s findings as to the availability of accrued jurisdiction made later in the judgment (notably in paragraphs 79, 96 and 99), and that it was an error of principle to have made findings in relation to disputed facts when the authorities (such as Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146) require that for purposes of an application to amend a pleading, it should only be determined if a fairly arguable claim had been established.
It was further submitted that his Honour’s determination of matters of fact relating to the terms of the shareholders’ agreement for purposes of dismissing the joinder and amendment applications had resulted in an injustice to the husband.
We are satisfied from various statements made by his Honour in paragraphs 50, 51 and 52 of his reasons and also earlier in paragraph 38 of his reasons (to which we referred in our summary of his reasons) that he was making the findings of fact now complained of, purely for the purposes of determining the interlocutory applications which were before him. He made it abundantly clear that different findings could be made following cross-examination and in a defended hearing.
While we have some reservations as to whether it was necessary for his Honour to make the various findings complained of in order to determine the interlocutory proceedings which were before him, we do not regard those findings as having influenced the determination of the applications in the way contended for by the appellant, or as having led to an injustice to the husband. We would certainly not be persuaded to grant leave to appeal on the basis of this complaint concerning findings of fact.

The proposed application for orders under Part VIIIAA

The second group of proposed grounds of appeal on which Senior Counsel for the appellant relied in his submissions in support of the application for leave to appeal, were those which would assert a failure on the part of his Honour to give separate and proper consideration to the claims under Part VIIIAA of the Act. The complaint in this regard appears to be best encapsulated in proposed Ground 43, which is in the following terms:
The Trial Judge considered the application for leave to amend to seek Orders pursuant to Sections 90AE & 90AF of the Act only in the context of his consideration of the application to amend to pursue the accrued jurisdiction claims and failed to give separate or otherwise proper consideration to the proposed Sections 90AE & 90AF application.
While his Honour clearly identified early in his reasons (at paragraphs 1, 9 and 22-24) the proposed applications under Part VIIIAA of the Act, it has to be acknowledged that he discussed in detail and rejected (in paragraphs 80 to 118) the availability in this case of the accrued jurisdiction (essentially on the basis that there was no single justiciable basis) before he discussed and also rejected (in paragraphs 119 to 129) the availability to the appellant of relief against the third parties under ss 90AE and 90AF of the Act. In this regard, we consider that there is some force in the submission made by Senior Counsel for the appellant that his Honour should first have identified each of the available claims under federal law which may or may not form part of a larger controversy, together with claims arising under other laws. But we do not consider that that approach by his Honour was necessarily fatal to his decision, as we will shortly explain.
Before doing so, however, it is important to emphasise, in view of the apparent content of certain of the appellant’s submissions, that the powers under s 90AE to make orders under s 79 binding on third parties (or under s 90AF to make orders or injunctions under s 114 binding on third parties) are not independent heads of power in the sense that they can be exercised outside of proceedings between parties to a marriage under s 79 (or s 114). The Part VIIIAA powers can only be exercised as part of the exercise of what can be termed the wider provisions of ss 79 and 114; in other words, in proceedings under those sections.
This is clear, in our view, from s 90AA which is the “Objects” provision for Part VIIIAA, and also from s 90AE(3)(a) and s 90AF(3)(a) which limit the circumstances in which orders directed to third parties can be made:
s 90AA The object of this Part is to allow the court, in relation to the property of a party to a marriage, to:
(a) make an order under section 79 or 114; or
(b) grant an injunction under section 114;
that is directed to, or alters the rights, liabilities or property interests of a third party.
…
s 90AE(3) The court may only make an order under subsection (1) or if:
(a) the making of the order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
…
s90AF(3) The court may only make an order or grant an injunction under subsection (1) or (2) if:
(a) the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
Thus any criticism of his Honour to the effect that he only considered a possible exercise of the Part VIIIAA powers as part of the exercise of the s 79 power would be wrong. (See also the observations of the Full Court in B Pty Ltd and Ors & K and Anor (2008) FLC 93-380 at paragraphs 21 and 28 and of O’Ryan J in H & H (2007) 36 Fam LR 64; [2006] FamCA 167 at paragraph 110).
Although it might well have been preferable had his Honour considered the making of orders pursuant to Part VIIIAA before he considered the availability of the accrued jurisdiction, it cannot be said that he did not also ultimately give the necessary, separate consideration to the availability of Part VIIIAA orders and that he did not correctly decide that issue.
In order to demonstrate that his Honour did give separate and, we consider, proper consideration to the proposed claim for relief under Part VIIIAA, we will now set out that consideration as it is to be found in the following paragraphs of his Honour’s reasons (emphasis in original):
119.Given that submissions were initially made on behalf of the parties as to the availability of orders of the kind sought in the Case Guardian’s amended Form 1A pursuant to the provisions of ss90AE and 90AF of the Act I record that I have reflected upon and evaluated those arguments. I have concluded that the issues arising from those submissions are unnecessary or unable to be decided in this interlocutory hearing given what has been found by the rejection of any accrued jurisdiction. Should a valuation of the husband’s shareholding in [WC] be ascertained or agreed it may perhaps then be argued and be (but I do not decide) that this court could then entertain making an order of the kind foreshadowed by the Case Guardian in the amended response. For the purposes of this interlocutory hearing and on the facts hereof the scope and impact of ss90AE and 90AF have not otherwise been fully considered as it is not possible to make the final orders contemplated without the broader commercial disputes being finally resolved.
…
124.[Senior Counsel for Mr Porter] drew attention to paragraph 113 in H & H (2007) 36 Fam LR 64; [2006] FamCA 167 where O’Ryan J upheld the constitutionality of Part VIIIAA and in doing so made the following remarks in relation to the operation of s90AE:
“When s 90AE(2) is read in conjunction with s 90AE(3), s 79, and Part VIIIAA generally, it is clear that what is contemplated is not some arbitrary invasion of the rights of a third party but an alteration of those rights where they are sufficiently connected to the division of the property between parties to a marriage”
125.I find that the alteration of such rights on the facts now before me is not sufficiently connected to s79 proceedings.
126.The joinder of third parties is here primarily for a purpose somewhat separate and apart to property discussion [sic] and sub-ss90AE(1) and (2) are operative within what I regard to be only the true and genuine ambit of s79 proceedings. Such is not the situation on the facts now before me. In response to paragraph 5 of the supplementary submissions of the Case Guardian (document 258 in the court index) I can and do refuse such leave to join the respondents.
…
129.I conclude on all of the evidence now before me that it is not reasonably necessary, appropriate nor convenient to allow the extension of the s79 proceedings and for the commercial dispute to be heard and determined in this Court. I clearly distinguish each of the above reported decisions from the facts of this case.
It should also be said in connection with the challenge to his Honour’s conclusion regarding the availability of relief under Part VIIIAA, that earlier in his consideration of the availability of accrued jurisdiction, his Honour had (in paragraphs 103-104) raised the issue of whether all the relief sought by the appellant against the third parties would indeed be available under Part VIIIAA, and concluded that it would not necessarily be. Before setting out his Honour’s observations in this regard, we set out the range of powers available in ss 90AE(1) and (2) and ss 90AF(1) and (2):
90AE(1) In proceedings under section 79, the court may make any of the following orders:
(a)    an order directed to a creditor of the parties to the marriage to substitute one party for both parties in relation to the debt owed to the creditor;
(b)    an order directed to a creditor of one party to a marriage to substitute the other party, or both parties, to the marriage for that party in relation to the debt owed to the creditor;
(c)    an order directed to a creditor of the parties to the marriage that the parties be liable for a different proportion of the debt owed to the creditor than the proportion the parties are liable to before the order is made;
(d)    an order directed to a director of a company or to a company to register a transfer of shares from one party to the marriage to the other party.
(2) In proceedings under section 79, the court may make any other order that:
(a)     directs a third party to do a thing in relation to the property of a party to the marriage; or
(b)     alters the rights, liabilities or property interests of a third party in relation to the marriage.
…
90AF(1) In proceedings under section 114, the court may:
(a)    make an order restraining a person from repossessing property of a party to a marriage; or
(b)    grant an injunction restraining a person from commencing legal proceedings against a party to a marriage.
(2) In proceedings under section 114, the court may make any other order, or grant any other injunction that:
(a)      directs a third party to do a thing in relation to the property of a party to the marriage; or
(b)      alters the rights, liabilities or property interests of a third party in relation to the marriage.
Against the background of the actual powers provided in ss 90AE and 90AF, his Honour’s observations regarding their availability in the present case were as follows:
103.… In accordance with the numerous allegations the Case Guardian ultimately sought (inter alia) the following orders:
(i) Declaration that the conduct was in breach of fiduciary duty;
(ii) Payment of equitable compensation;
(iii) The holding of accounts and inquiries;
(iv) The appointment of a receiver and manager to, inter alia, sell the assets and undertaking of [WC]; and
(v) Requiring [Porter] purchase the Applicant’s shares at a fair value.
104.Of these five orders sought none is clearly or uncontroversial [sic] within the powers of the Family Court. Arguably s90AE of the Family Court has been extended to enable the court to make the order contemplated in (v) above, however, this order could only be made upon ascertaining the value of the husband’s [WC] shareholding, which would require the determination of a myriad of other commercial disputes and controversies unrelated to the s79 proceedings.
Notwithstanding our reservations as to the order in which his Honour addressed the potential claims sought to be brought by the appellant, we are not persuaded that there was any error of principle on his Honour’s part in addressing the potential claims under Part VIIIAA such as would warrant a grant of leave to appeal the order refusing leave to amend to include those claims.
Similarly, we do not consider any substantial injustice has been occasioned to the appellant on account of this matter given, as his Honour himself recognised (in paragraph 119 of his reasons), it could well be possible for the appellant to renew such claims at a later time after aspects of the commercial dispute which could not be resolved in proceedings under Part VIIIAA, had been resolved elsewhere.

The asserted erroneous approach to the exercise of the accrued jurisdiction

In addition to the complaint (which we have earlier upheld) that his Honour erred in considering that there remains a discretion in a court as to whether or not to exercise the accrued jurisdiction if it is found to be available, the appellant also complains in relation to his Honour’s approach to the accrued jurisdiction, that his approach demonstrated “a reluctance, a reticence and a resistance to accepting its invocation”. It was submitted that such an approach was “entirely at odds” with the expansive meaning of “matter” adopted by the High Court majority in Fencott v Muller (“Fencott”) (1984) 152 CLR 570, and by Gummow and Hayne JJ in Re Wakim; Ex Parte McNally (“Wakim”) (1999) 198 CLR 511.
In this regard particular reliance was placed by Senior Counsel for the appellant on the following passage from the joint judgment in Wakim (footnotes omitted):
139.The central task is to identify the justiciable controversy. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim.
140. In Fencott it was said that ‘‘in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.’’
The references to ‘‘impression’’ and ‘‘practical judgment’’ cannot be understood, however, as stating a test that is to be applied. Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete. Necessarily, then, the question will have to be decided on limited information. But the question is not at large. What is a single controversy ‘‘depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships’’. There is but a single matter if different claims arise out of ‘‘common transactions and facts’’ or ‘‘a common substratum of facts’’, notwithstanding that the facts upon which the claims depend ‘‘do not wholly coincide’’. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are ‘‘completely disparate’’, ‘‘completely separate and distinct’’ or ‘‘distinct and unrelated’’ are not part of the same matter.
141.Often, the conclusion that, if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter.
142.Here, the three proceedings could have been joined in one. The fact that those advising Mr Wakim chose to issue separate proceedings at different times does not mean that the scope of the controversy is limited to the matters raised in the first proceeding. Had the Official Trustee brought a cross-claim against both the solicitors and Mr Darvall immediately after Mr Wakim commenced his proceeding against it and if Mr Wakim had then joined the cross-respondents as respondents to his principal claim, the existence of a single controversy involving several parties would be more apparent than it may be in the present circumstances. But neither the differences in the present procedural history nor the absence of any claim by the Official Trustee against the solicitors and Mr Darvall determines the question whether there is a single controversy.
As Senior Counsel for the appellant also sought to demonstrate what might be termed the potential breadth of the accrued jurisdiction by reference to the various claims in Wakim, it is useful also to set out here the following paragraph from Wakim which summarises those claims:
147.The cases arise out of one set of events. Of most significance is the fact that the damage which Mr Wakim alleges he has suffered as a result of what he says are the various breaches of duty by the Official Trustee, the solicitors and Mr Darvall is, in each case, the loss of what he might have recovered in the bankruptcy had the claims against Mrs Nader been prosecuted differently. There is, then, but a single claim for damages that he seeks to pursue against each of the parties he has sued. And judgment and recovery against one will diminish the amount that may be recovered from the others. There is, in these circumstances, that common substratum of facts in each proceeding of which Mason J spoke in Philip Morris [v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457]. And it is the existence of that common substratum that leads to the conclusion that the three proceedings raise a single justiciable controversy. Accordingly, the proceedings against the solicitors and Mr Darvall are within the jurisdiction of the Federal Court.
In the present case, when his Honour considered the issue of accrued jurisdiction, he referred to various decisions of the High Court including Fencott and Wakim and to decisions of the Full Court of this Court, including Warby and the six factors there referred to.
Then under the heading “Is there a single justiciable controversy?” his Honour said:
90.[Senior Counsel for the case guardian], in his submissions on each of the headings suggested that the application of these factors in this case uncontroversially lead to the conclusion that accrued jurisdiction was available and should be exercised. That was a somewhat bold and very forthright submission with which I do not agree. Even on the original facts and the extent of the commercial dispute detailed to this court in October 2007 that was a most unlikely scenario. Even more so now with the filing of the amended applications and further interim and interlocutory orders sought and with the contents of the subsequent affidavits and annexures, the commercial and property disputes now before the court are far broader and both commercially and legally far more extensive than originally foreshadowed. As an example there are now specific complaints alleging a breach of fiduciary obligations, manipulation of loan accounts, diversional payments of monies to other entities associated with [Porter] and ongoing payment(s) of unreasonable and exorbitant management fees.
His Honour then referred briefly to the facts in the Full Court decisions of Warby (supra) and of Bishop (supra) before considering the application to this case of the factors which the Full Court in Warby held should be considered when determining the availability of the accrued jurisdiction. Those factors are:
(i)what the parties have done;
(ii)the relationships between or among them;
(iii)the laws which attach rights or liabilities to their conduct and relationships;
(iv)whether the claims are part of a single justiciable controversy and in determining that question whether the claims are “attached” and not “severable” or “disparate”;
(v)whether the claims are non-severable from a matrimonial cause and arise out of a common sub-stratum of facts; and
(vi)whether the Court has the power to grant appropriate remedies in respect of the “attached” claims.
It is unnecessary to record all of his Honour’s findings or conclusions in relation to the factors identified in Warby. For present purposes and having regard to the above-cited observations of Gummow and Hayne JJ in Wakim which were relied on before us by Senior Counsel for the appellant, it is only necessary to set out the passages from his Honour’s reasons where he set out the submissions of the case guardian which sought to establish the existence of a single justiciable controversy and his Honour’s own conclusions in relation to that matter:
100.Under the fourth factor the Case Guardian submitted that the narrow test espoused by Wilson J in PhilipMorris of whether “it may be that the nature of the federal law is such that in some cases the grant of relief under it will be dependent upon the resolution of non-federal questions” was of significant guidance. It was submitted that the federal question of the property division between parties to a marriage cannot be resolved without the determination of the non-federal question, the commercial issues which need to be determined in order to value the Husband’s shareholding. It was therefore submitted that the s79 proceedings between the Husband and Wife cannot be finally determined without a full investigation and court determination of the allegations made by the Husband affecting his shares and interests in [WC]. It is to this extent that it was submitted that the non-Federal claims form part of a single justiciable controversy and are part of the factual matrix of the property proceedings.
101.Again [counsel for Mr Porter] emphasised that the relationship among the [WC] shareholders and directors was that of an “arms length commercial dealing” and therefore was completely separated from s79 proceedings between the Husband and Wife. It is clear on the current evidence and the Wife’s relative silence on this issue that her role, if any, in the hearing of the disputes between the Case Guardian, [WC] and [Porter] will be of no significance. She can give no account of their commercial and other actions and therefore those disputes and the facts from which they have arisen are both severable and disparate.
…
105.It was argued that on a broad and overly simplistic view of the facts of this case that the single justiciable controversy is the Husband’s and Wife’s interests or entitlements in various assets or properties, including in [WC] through the Husband’s one third shareholding. I do not agree. I find that the proper and intended approach to the understanding of the single justiciable controversy is not to simply broaden the issues and disputes so as to fall under one umbrella, as arguably this could be done for every contentious matter before the Family Court. If this were the correct approach it could enable the absurd result of allowing a Husband or Wife in s79 proceedings who may also be a director in a commercial entity (for example BHP Billiton was an extreme example raised by [counsel for Mr Porter] during her submissions) to then bring into this jurisdiction allegations of corporate impropriety, mismanagement, criminality and breaches of equitable duties for judicial determination under the single justiciable controversy of a matrimonial property division. Such a result is clearly not and should not be the intended result and purpose of attracting of accrued jurisdiction.
…
109.As a further guide to the question of whether or not there is a single justiciable controversy I was assisted by the judgment of Gummow and Hayne JJ in Re Wakim; Ex Parte McNally where they said:
“Often, the conclusion that, if proceedings were tried in different court there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. But contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter”.
110.As the Wife was not said to be involved in any of the issues in conflict with [Porter] and the commercial dealings of [WC], there should be no possibility of inconsistent findings of fact if these issues were to be decided in their appropriate jurisdictions. They are clearly two, or many more, distinct controversies. There is clearly no common substratum of facts to the federal and non federal claims.
111. On an overview of all of the factors in Warby and having individually considered and evaluated each of them I conclude that the financial affairs of the husband and wife and s79 issues are largely, if not completely, separate from those of the commercial dispute involving the Husband, [Porter, Sarinsson and WC]. They are therefore in no way intimately or otherwise interwoven so as to justify the finding of a single justiciable controversy. There are no common transactions between the husband and wife and the husband, [Porter, Sarinsson and WC]. I find that it would not do justice to any of the persons appearing in this interlocutory hearing to litigate all the commercial dispute and any other issues in the Family Court.
112. Finally on the question of whether or not there is a single justiciable controversy, in addition to the Warby factors the majority in Fencott said that:
“in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter”.
113. Here as a matter of impression and practical judgment I find that the commercial disputes between the Husband and [Porter] and/or [Sarinsson] and/or [WC] are not within the ambit of the matter to be determined in the proceedings presently before this court, that being the division of property pursuant to s79 of the Act...
When regard is had to these passages from his Honour’s reasons and to the authorities on which he relied (which were also relied on on behalf of the appellant), we do not think that it can fairly be said that his Honour adopted an approach which could be described as reluctant, or reticent, or resistant. But however his Honour’s approach might be described, we are not persuaded that the conclusion which he reached concerning the non-existence of a single justiciable controversy – the existence of which according to the majority in Wakim is “the central task” – was wrong. We take this view for the following reasons.
It is well recognised that the first step in the determination of property settlement proceedings under s 79 of the Act is the identification and, if possible, valuation of each item of property of the parties and also (at least as a general rule) the identification and valuation of all liabilities. Sometimes the existence and/or value of a particular item or items or of all items, or of a particular liability may be a matter of dispute; sometimes not.
It is also well recognised that a particular item of property may well be impossible to value on the evidence then available to the court, and that in such circumstances the solution will be the sale of that item with a distribution of proceeds between the parties either in particular proportions or according to a particular formula. In some cases the parties will be in agreement on the need for a sale of a particular item; in other cases there will be no such agreement.
In the present case there appears to be no controversy or dispute between the husband and the wife either as to the existence of his one-third shareholding in WC, or as to the uncertainty of the value of that shareholding and of the husband’s other entitlements and/or liabilities in relation to the company because of the dispute with Mr Sarinsson and Mr Porter. As his Honour indicated more than once in his reasons for judgment, the wife has no involvement in the commercial dispute. (See, for example, paragraphs 2 and 18 of his Honour’s reasons for judgment.)
There is, of course, clearly some dispute between the husband and the wife about their property otherwise there would be no proceedings pending between them. But it is not apparent that that dispute in any way relates to the existence or value, or indeed future disposition of the husband’s interest in WC. It cannot, therefore, be said that the property settlement dispute between the parties and the husband’s dispute with the third parties concerning the value of his shareholding in WC constitute a single justiciable controversy such as would attract accrued jurisdiction. His Honour was therefore not in error in reaching that conclusion.

Conclusion

For the reasons given therefore we would not grant the appellant leave to appeal the orders dismissing the applications for leave to amend an application and for joinder.

Costs of the application for leave to appeal

Having regard to the submissions made in relation to the costs of this application for leave to appeal at the conclusion of the hearing of the application, we consider that the circumstances justify an order that the appellant pay the costs of the respondent wife and of the third respondent, Mr Porter. The second respondent, Mr Sarinsson confirmed to us that he had incurred no costs which could be the subject of an order.

I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court

Associate: Vicki Mallon

Date: 27 February 2009