BLIGH & JAMES

[2018] FamCA 187

FAMILY COURT OF AUSTRALIA

BLIGH & JAMES [2018] FamCA 187

FAMILY LAW – JURISDICTION – Where the respondent seeks that the property settlement proceedings be stayed on the grounds that New Zealand is the more appropriate forum – Where the parties reside in Australia – Where the parties are the trustees of a Trust which owns property in New Zealand – Where the law that governs the Trust is the law of New Zealand – Where New Zealand is the more appropriate forum to determine the property proceedings.

FAMILY LAW – PRACTICE AND PROCEDURE – Stay of proceedings – Where New Zealand is found to be the more appropriate forum – Where the property proceedings should be stayed pursuant to the Trans‑Tasman Proceedings Act 2010 (Cth).

Convention on the Law Applicable to Trusts and on their Recognition (1985) art 6, 7, 8
Family Law Act 1975 (Cth) ss 80, 90AC
Trans‑Tasman Proceedings Act 2010 (Cth) ss 19, 19(2), 21
Trans-Tasman Proceedings Act 2010 (NZ) s 61(2)(c)
Trusts (Hague Convention) Act 1991 (Cth) sch 1

Kennon v Spry (2008) 238 CLR 366
Nevill & Nevill [2015] FamCA 876
Nevill & Nevill (2016) FLC 93-694

APPLICANT: Ms Bligh

RESPONDENT: Mr James

FILE NUMBER: SYC 5661 of 2017

DATE DELIVERED: 28 March 2018

PLACE DELIVERED: Parramatta

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 13 March 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Bridger

SOLICITOR FOR THE APPLICANT: Warren & Warren

SENIOR COUNSEL FOR THE RESPONDENT: Mr Lethbridge SC

JUNIOR COUNSEL FOR THE RESPONDENT: Dr Barnett

SOLICITOR FOR THE RESPONDENT: Pearson Emerson Meyer Family Lawyers

Orders

1. That the proceedings for property settlement commenced by the Applicant be permanently stayed on the grounds that a New Zealand court is the more appropriate court to determine the dispute. 

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5661 of 2017

Ms Bligh

Applicant

And

Mr James

Respondent

REASONS FOR JUDGMENT

1. Ms Bligh (“the applicant”) and Mr James (“the respondent”) lived in a de facto relationship between about February or April 2008 and September 2016.

2. They were both born in New Zealand and commenced their relationship in New Zealand. They are both citizens of New Zealand.

3. There is a child of their relationship who is five years old.

4. The only substantial asset of the parties is located in New Zealand.

5. The applicant and the respondent are the settlors, appointors and trustees of the B Trust (“the Trust”).

6. There is a third trustee, Mr C, who is a solicitor in New Zealand.

7. The discretionary beneficiaries of the Trust are the applicant, the respondent and their child.

8. The Trust owns an unencumbered property at D Town in New Zealand. The value of that property is about $NZ1,000,000, according to the applicant, or $NZ900,000 according to the respondent.

9. Neither the applicant nor the respondent has real property in Australia.

10. They each have money in bank accounts and they each have entitlements to superannuation, both in New Zealand and in Australia.

11. In January 2015, they moved to Australia for the purpose of the respondent’s employment. The applicant has since acquired Australian citizenship. The respondent has not.

12. They separated in September 2016.

13. In On 8 March 2018 the applicant filed a Further Amended Initiating Application (“the substantive application”) seeking final orders in relation to parenting, child support, spousal maintenance and division of property.

14. The orders sought in relation to property settlement, relevantly are:

    19.Order that the parties do all acts and things and execute all deeds, documents, instruments and writings including but not limited to an amending deed, to remove [Mr C] as trustee of [the Trust].

    20.Order that the parties as trustees of the Trust exercise their powers pursuant to the Trust Deed, including an amending Deed, to forthwith vest the Trust.

    21.Order that the parties as trustees of the Trust distribute the capital and income of the Trust as to [70 per cent to the applicant and 30 per cent to the respondent].

15. On 9 March 2018, the respondent filed a Further Amended Response seeking, inter alia, a permanent stay of the proceedings in Australia in relation to property settlement only, on the basis that New Zealand is the more appropriate forum for the dispute. That application now comes before the Court for determination. To make it clear, if the respondent is successful in his application, the proceedings will be split so that the property proceedings will be determined in New Zealand and the proceedings in relation to parenting, spousal maintenance and child support will continue in Australia.

16. In late 2017, the respondent was retrenched from his employment in Australia.

17. On 9 March 2018, the respondent filed proceedings in the Family Court of New Zealand, despite the fact that this application had not yet been heard or determined.

18. There is no issue that each of the parties is resident in Australia.

19. There is no issue that the Family Court of Australia has jurisdiction to hear and determine the substantive issues.

THE TRUST

1. The Trust Deed was executed on 11 February 2008.

2. Senior Counsel for the Respondent drew the attention of the Court to a number of the provisions of the Trust Deed.

3. Clause 8.1 provides:

   If any Trustee is a Discretionary Beneficiary entitled or potentially entitled to benefit from the Trust Fund that Trustee shall not join with the other Trustees in the exercise in favour of that Trustee of any discretion and the remaining Trustees shall have the sole and absolute right of exercising those discretions.

4. Thus neither the applicant nor the respondent can exercise discretion to distribute the corpus of the Trust to himself or herself and it follows that they cannot jointly exercise their discretion in favour of both of them.

5. Clause 9.2 provides that, in the event that the parties separate, the Trustees must resettle the Trust into two new trusts, one including the applicant as trustee and beneficiary and the other including the respondent as trustee and beneficiary, in equal shares.

6. Clause 16 sets out the power of the trustees to modify or vary the Deed in a manner which is “not materially prejudicial to the interests of any of the Discretionary Beneficiaries or any potential Discretionary Beneficiaries”. 

7. Clause 17 provides that the Deed shall be “governed by and construed in accordance with the laws of New Zealand”.

8. Thus it is apparent, on the reading of the Trust Deed, that the substantive application which is set out above requires the parties to do things which are not contemplated by the Trust Deed and which are contrary to its provisions.

9. The scheme contemplated in the substantive application requires the trustees to exercise their discretion to amend the Trust Deed in a way that must be prejudicial to the interests of the respondent. Further, the scheme requires the trustees to act in contravention of the provisions of Clause 9.2 which provides that, in separation, the trustees are to divide the Trust property in equal shares. Again, this requires the trustees to breach Clause 16.

10. Counsel for the Applicant submitted that the provisions of the Family Law Act 1975 (Cth) (“the Act”), particularly ss 80 and 90AC, would apply to the Trust in the present case. Counsel relied on statements made by French CJ in Kennon v Spry (2008) 238 CLR 366 where His Honour said:

    64.The word “property” in s 79 is to be read as part of the collocation
    “property of the parties to the marriage”. It is to be read widely and conformably with the purposes of the Family Law Act. In the case of a non-exhaustive discretionary trust with an open class of beneficiaries, there is no obligation to apply the assets or income of the trust to anyone. Their application may serve a wide range of purposes. In the present case, prior to the 1998 Instrument those purposes could have included the maintenance or enrichment of Mrs Spry.

    65.Where property is held under such a trust by a party to a marriage and the property has been acquired by or through the efforts of that party or his or her spouse, whether before or during the marriage, it does not, in my opinion, necessarily lose its character as “property of the parties to the marriage” because the party has declared a trust of which he or she is trustee and can, under the terms of that trust, give the property away to other family or extended family members at his or her discretion.

11. On behalf of the applicant, it was submitted that the statements of French CJ are applicable to trusts created and in existence outside Australia and are authority for the proposition that the Family Court, exercising power under the Act, can alter the trustees and the terms of a trust in New Zealand.

12. I do not accept that proposition.

13. Articles 6 to 8 of the Convention on the Law Applicable to Trusts and on their Recognition assented on 1 July 1985 (as reproduced in Schedule 1 of the Trusts (Hague Convention) Act 1991 (Cth)) provide:

    Article 6

    A trust shall be governed by the law chosen by the settlor.

    The choice must be express or be implied in the terms of the instrument creating or the writing evidencing the trust, interpreted, if necessary, in the light of the circumstances of the case.

    Where the law chosen under the previous paragraph does not provide for trusts or the category of trust involved, the choice shall not be effective and the law specified in Article 7 shall apply.

    Article 7

    Where no applicable law has been chosen, a trust shall be governed by the law with which it is most closely connected.

    In ascertaining the law with which a trust is most closely connected reference shall be made in particular to—

    a)   the place of administration of the trust designated by the settlor;

    b)   the situs of the assets of the trust;

    c)   the place of residence or business of the trustee;

    d)   the objects of the trust and the places where they are to be fulfilled.

    Article 8

    The law specified by Article 6 or 7 shall govern the validity of the trust, its construction, its effects, and the administration of the trust.

    In particular that law shall govern—

    a)   the appointment, resignation and removal of trustees, the capacity to act as a trustee, and the devolution of the office of trustee;

    b)   the rights and duties of trustees among themselves;

    c)   the right of trustees to delegate in whole or in part the discharge of their duties or the exercise of their powers;

    d)   the power of trustees to administer or to dispose of trust assets, to create security interests in the trust assets, or to acquire new assets;

    e)   the powers of investment of trustees;

    f)    restrictions upon the duration of the trust, and upon the power to accumulate the income of the trust;

    g)   the relationships between the trustees and the beneficiaries including the personal liability of the trustees to the beneficiaries;

    h)   the variation or termination of the trust;

    i) the distribution of the trust assets;

    j)    the duty of trustees to account for their administration.

14. It is not controversial that the law which governs the Trust is the law of New Zealand.

15. I am satisfied that the effect of the Trusts (Hague Convention) Act 1991 (Cth) is to mandate that the present application in relation to the Trust must be determined according to the law of New Zealand.

16. Senior Counsel for the respondent also referred the Court to the provisions of the Trans-Tasman Proceedings Act 2010 (NZ) (“the NZ Act”) which specifies which judgments of an Australian court may be registered and enforced in New Zealand.

17. Section 61(2)(c) of the NZ Act provides that the registration of a judgment may be set aside if:

(i)       the judgment was given in a proceeding the subject matter of which was immovable property, or was given in a proceeding in rem the subject matter of which was movable property; and

(ii)      that property was, at the time of the proceeding in the original court or tribunal, not situated in Australia.

1. It is arguable that the registration of any Australian judgment relating to the disposition of the property of the Trust in New Zealand would be set aside on the basis that the subject matter was real property in New Zealand.

THE STAY APPLICATION

1. The matter falls to be determined pursuant to the provisions of the Trans‑Tasman Proceedings Act 2010 (Cth) (“the TTP Act”). The provisions of the TTP Act apply to civil proceedings which are defined as proceedings that are not criminal.

2. The TTP Act does not apply to “excluded family law proceedings” which are defined as proceedings under the Convention on the Civil Aspects of International Child Abduction, commonly known as the Hague Convention, and proceedings relating to the status or property of a person who is not able to manage his or her own affairs.

3. There is a further exclusion relating to an “excluded matter” which is defined as an application for dissolution of a marriage; enforcement of spousal maintenance; enforcement of an obligation under New Zealand law to maintain a spouse or de facto spouse; or enforcement of a child support obligation.

4. Section 19 of the TTP Act provides that:

   (1)On application under section 17, the Australian court may, by order, stay the proceeding if it is satisfied that a New Zealand court:

   (a)has jurisdiction to determine the matters in issue between the parties to the proceeding; and

   (b)      is the more appropriate court to determine those matters.

   (2)In determining whether a New Zealand court is the more appropriate court to determine those matters, the Australian court must take into account the following matters:

   (a)the places of residence of the parties or, if a party is not an individual, its principal place of business;

   (b)the places of residence of the witnesses likely to be called in the proceeding;

   (c)the place where the subject matter of the proceeding is situated;

   (d)any agreement between the parties about the court or place in which those matters should be determined or the proceeding should be commenced (other than an exclusive choice of court agreement to which subsection 20(1) applies);

   (e)the law that it would be most appropriate to apply in the proceeding;

   (f)whether a related or similar proceeding has been commenced against the defendant or another person in a court in New Zealand;

   (g)the financial circumstances of the parties, so far as the Australian court is aware of them;

   (h)      any matter that is prescribed by the regulations;

   (i)any other matter that the Australian court considers relevant;

   and must not take into account the fact that the proceeding was commenced in Australia.

   (3)An order under subsection (1) may be made subject to any conditions the Australian court considers are appropriate in order to facilitate, without delay or undue expense, the determination of the matters in issue between the parties to the proceeding.

5. Section 21 of the TTP Act provides that an Australian Court cannot stay a civil proceeding, on forum grounds, otherwise than in accordance with the TTP Act.

6. The Full Court in Nevill & Nevill (2016) FLC 93-694 set out the principles to be considered in an application as to competing fora between Australia and New Zealand as follows:

   2. On 24 July 2008 the Australian and New Zealand governments signed an agreement that has since found reflection in the legislation of each of those countries; in Australia, in the TTP Act. Part 3 of that Act concerns when an Australian court may stay a proceeding “on the grounds that a New Zealand court is the more appropriate forum”. Section 17 provides, relevantly:

   (1) A defendant in a civil proceeding in an Australian court may apply to the court for an order staying the proceeding on the grounds that a New Zealand court is the more appropriate court to determine the matters in issue.

   3. Section 19(1) provides:

   On application under section 17, the Australian court may, by order, stay the proceeding if it is satisfied that a New Zealand court:

   (a) has jurisdiction to determine the matters in issue between the parties to the proceeding; and

   (b) is the more appropriate court to determine those matters.

   4.It was not controversial before his Honour that a New Zealand court has jurisdiction to determine all the matters in dispute between the instant parties.  Accordingly the only issue before his Honour was whether a New Zealand court is “the more appropriate court” to determine the matters in issue between the parties.

   5.In answering that question, the Australian court is given a discretion that is constrained by two matters. First, the court must take into account a number of matters prescribed in s 19(2). Secondly, the court must not take into account “the fact that the proceeding was commenced in Australia”. Otherwise, the discretion is at large. …

7. I will consider each of the matters set out in s 19(2) of the TTP Act.

The places of residence of the parties or, if a party is not an individual, its principal place of business;

1. Both parties and the child reside in Australia. Thus if the matter proceeds in Australia, they will both be spared the expenses of travel and accommodation which would necessarily attend upon their litigating in New Zealand.

The places of residence of the witnesses likely to be called in the proceeding;

1. The substantive application seeks an order that Mr C be removed as a trustee of the Trust. Procedural fairness would mandate that Mr C must be accorded the opportunity to be heard and participate in the proceedings if he opposes that application.

2. Further, there is, on the papers, a dispute about the value of the D Town property which would need to be addressed by the appointment of a single expert. It may be, although it is unlikely, that an adversarial expert would be instructed. Any expert valuer would be a New Zealand valuer.

3. The superannuation interests of the respondent are held in two funds. One is a “locked” New Zealand superannuation fund which has a value of $115,899. It would be necessary for there to be evidence from a single expert about the manner in which that superannuation fund can be dealt with according to New Zealand law.

4. In the event that a Court in Australia were required to determine the issues relating to the Trust by the application of New Zealand law, it would be necessary for there to be extensive expert evidence as to the law and likely to be adversarial evidence.

The place where the subject matter of the proceeding is situated;

1. The significant subject matter of the proceedings is the D Town property and the Trust which owns that property. Both are situated in New Zealand.

Any agreement between the parties about the court or place in which those matters should be determined or the proceeding should be commenced (other than an exclusive choice of court agreement to which subsection 20(1) applies);

1. There is no agreement.

2. The parties entered negotiations after their separation and there was a draft Separation Agreement prepared which refers to its being subject to New Zealand law. The document was never finalised and never signed.

3. I do not accept the submission on behalf of the respondent that, because the parties reached an agreement to do one or more of the things contemplated in their negotiations, that constituted an agreement that the law of New Zealand would govern their dispute.

The law that it would be most appropriate to apply in the proceeding;

1. As was explained earlier in these reasons, the terms of the substantive application presently on foot require the Court to make orders dealing with the Trust, in particular the removal of a trustee and the amendment of the terms of the Trust. For the reasons which have been explained, any application in the terms of the substantive application must be dealt with in accordance with the law of New Zealand.

Whether a related or similar proceeding has been commenced against the defendant or another person in a court in New Zealand;

1. The respondent, on 9 March 2018, commenced proceedings in New Zealand in relation to the same issues.

The financial circumstances of the parties, so far as the Australian court is aware of them;

1. The Applicant’s income is modest. She has before the Court an application for spousal maintenance which has not yet been determined. In her Financial Statement, she deposed that her income from employment is $560 per week and she receives $224 per week by way of child support. For the purposes of this application I disregard the income she receives by way of Family Tax Benefits and Parenting Payments. Her expenses, including the expenses of the child, are $1,500 per week.

2. However, the Applicant has superannuation in New Zealand which is “unlocked” to which she can have access if she chooses and her fund has a value of $283,241. Although it was submitted that she did not want to use that fund for the present purposes, it was conceded that it is available to her.  She also has a further $24,870 in other superannuation funds.

3. The Respondent’s income from employment is $5,223 per week. His income exceeds his expenses.

4. However, the Respondent’s income ceases on 5 April 2018 when his notice period expires. His circumstances after that date are uncertain.

5. I accept that the Applicant would be significantly disadvantaged if she were obliged to litigate in New Zealand when her home and her employment are in Australia.

6. The respondent may not be disadvantaged depending on where he chooses to live and where he is able to find employment after 5 April 2018.

Any matter that is prescribed by the regulations;

1. My attention has not been drawn to any matter prescribed by the Regulations.

Any other matter that the Australian court considers relevant;

1. The effect of granting a stay of the property proceedings in Australia is to require that the litigation be bifurcated and that the parties litigate in two different jurisdictions.

2. In Nevill & Nevill [2015] FamCA 876, Kent J at first instance, dealing with an application pursuant to the TTP Act, said:

   59.As a starting point it ought be observed that the need to treat issues between husband and wife arising out of the matrimonial relationship and its breakdown as a single controversy, is a principle of central importance.

   60.Thus in a case where, consequent upon marriage breakdown, there are parenting issues; or child support issues; or spousal maintenance issues joined in the proceedings instituted in Australia (which also may include property settlement proceedings) where the parties and the child of the marriage are living, the above principle may assume determinative significance.  That is, that principle may render the conclusion that irrespective of the jurisdiction in which the parties lived for the greater part of their married life; and irrespective of the location of their assets; the proper law to apply is Australian law given the imperative of there being some determination of urgent or pressing parenting or maintenance issues as part of the single controversy. [Citations omitted]

3. I respectfully adopt His Honour’s statement.

4. In the present proceedings, both parties agree that the parenting, spousal maintenance and child support proceedings should be heard and determined in Australia and that position is reasonable having regard to their present living arrangements and those of their child.

5. However, for the reasons I have outlined, the significant issue in their property proceedings, which is the disposition of the real property held in the Trust, must be determined according to New Zealand law. A court in New Zealand is best positioned to determine how that law should be applied. Further there is a  real doubt that any judgment of an Australian court in relation to that property could be registered and enforced.

6. For all of those reasons, I conclude that a New Zealand court is the more appropriate court to determine those matters. 

I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 28 March 2018.

Associate:

Date:  28 March 2018