Bloomfield and Grainger and Anor
[2018] FamCA 36
•31 January 2018
FAMILY COURT OF AUSTRALIA
| BLOOMFIELD & GRAINGER AND ANOR | [2018] FamCA 36 |
| FAMILY LAW – JURISDICTION – Initiating Application filed by creditor in 2014, seeking to set aside asserted financial agreement entered into between First Respondent and wife – in November 2017, First Respondent asserts that the agreement is not a financial agreement as that term is defined in the Family Law Act1975 Mr S and seeks declaration that the agreement is not a financial agreement as defined by the terms of s 90C of the Act, that the Initiating Application is dismissed and that the Applicant creditor pay costs – Applicant seeks leave to amend Initiating Application to add alternative claim pursuant to s 228 of the Property Law Act1974 (Qld) – Application for leave to amend Initiating Application refused – Initiating Application dismissed for want of jurisdiction. |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) Property Law Act 1974 (Qld) |
| Buck v Comcare (1996) 66 FCR 359 Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 Carlton & United Breweries Ltd v Castlemaine Tooheys Ltd (1986) 161 CLR 543 DMW v CGW (1982) 151 CLR 491 Federated Engine Drivers’ and Firemen's Association of Australasia v Broken Hill Proprietary Co Ltd (1911) 12 CLR 398 Hooper v Kirella Pty Ltd (1999) 96 FCR 1 Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 Khatri v Price (1999) 95 FCR 287 Klewer v Dutch (2000) 99 FCR 217 Norton & Locke (2013) 284 FLR 51 PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 247 CLR 240 Public Service Association of South Australia Incorporated v Industrial Relations Commission of South Australia and Anor (2012) 249 CLR 398 R v Ross-Jones; Ex Parte Green (1984) 156 CLR 185 Rana v Google Inc [2017] FCAFC 156 Unilan Holdings Pty Ltd v Kerin (1993) 44 FCR 481 Vietnam Veterans’ Affairs Association of Australia New South Wales Branch Inc v Cohen (1996) 70 FCR 419 Yunghanns v Yunghanns (1999) FLC 92-836 |
| APPLICANT: | Ms Bloomfield |
| 1st RESPONDENT: | Mr Grainger |
| 2nd RESPONDENT: | The Bankrupt Estate of Ms Grainger |
| FILE NUMBER: | BRC | 89 | of | 2014 |
| DATE DELIVERED: | 31 January 2018 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Hogan J |
| HEARING DATE: | 12 December 2017 and by receipt of submissions filed by the Applicant on 21 December 2017 and the First Respondent on 9 January 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Jones |
| SOLICITOR FOR THE APPLICANT: | Tucker & Cowen Solicitors |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr Looney QC |
| SOLICITOR FOR THE 1ST RESPONDENT: | Morgan Conley Solicitors |
| COUNSEL FOR THE 2ND RESPONDENT: | No Appearance |
| SOLICITOR FOR THE 2ND RESPONDENT: | No Appearance |
Orders
IT IS ORDERED THAT
The Applicant’s application for leave to amend the Initiating Application filed 7 January 2014 is dismissed.
The Initiating Application filed 7 January 2014 is dismissed for want of jurisdiction.
In the event that a party seeks an order that another party pay the costs of and incidental to the Initiating Application filed 7 January 2014:
(a)any further affidavit material to be relied upon shall be filed and served within fourteen (14) days of today; and
(b)the party seeking an order for costs shall file and serve brief written submissions in support of such application for costs within fourteen (14) days of today; and
(c)the party from whom costs are sought shall file and serve any brief written submissions in answer to the submissions filed and served by the party seeking costs within a further fourteen (14) days thereafter; and
(d)the party seeking costs shall file and serve any brief further written submissions, strictly in reply to the submissions served by the party from whom costs are sought, within seven (7) days of its service,
and any such application for costs shall be determined in Chambers.
In the event that any party wishes to be heard in relation to whether an order should be made granting the Applicant leave to provide a copy of the Reasons for Judgment delivered 31 January 2018 to the Office of State Revenue (Qld) or directing a Registrar of the Court to provide a copy of the Reasons for Judgment delivered 31 January 2018 to the Office of State Revenue (Qld), that party shall file and serve written submissions outlining their position within fourteen (14) days of today and the issue shall thereafter be considered in Chambers.
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 Bloomfield & Grainger and Anor 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 BRISBANE |
FILE NUMBER: BRC 89 of 2014
| Ms Bloomfield |
Applicant
And
| Mr Grainger |
First Respondent
And
| The Bankrupt Estate of Ms Grainger |
Second Respondent
REASONS FOR JUDGMENT
By Application in a Case filed 8 November 2017, the First Respondent seeks:
a)a declaration that the Agreement he entered into with his wife, Ms Grainger, dated 1 November 2012[1] (the Agreement) is not a “financial agreement” as defined in s 90C of the Family Law Act 1975 (Cth) (‘the Act’); and
b)that, pursuant to Rule 10.12 of the Family Law Rules 2004 (Cth), the Initiating Application filed 7 January 2014 (by which the Applicant seeks an order that the Agreement be set aside on the basis that the First Respondent and Ms Grainger entered into it for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors)[2] be dismissed on the ground that the Family Court of Australia has no jurisdiction; and
c)that the Applicant pay his costs (including any reserved costs) of and incidental to the Initiating Application filed 7 January 2014 and the Application in a Case filed 8 November 2017, with such costs to be “taxed”.
[1]Paragraph 2 of the Application in a Case filed 8 November 2017 was amended at the hearing to correct the erroneous reference to “1 November 2011”.
[2] Section 90K(1)(aa)(i) of the Family Law Act1975 (Cth).
The First Respondent’s contention that the Agreement is not a “financial agreement” was expressed in correspondence dated 7 November 2017 wherein it was asserted that, during the preparation of the First Respondent’s trial material, Counsel had concluded that the Agreement did not appear to be a “financial agreement” because, contrary to the terms of s 90C(1)(a) of the Act, on its proper construction it is not an agreement with respect to any of the matters mentioned in s 90C(2) of the Act.
The Applicant does not accept that contention and seeks that the Application in a Case be dismissed.
These Reasons deal with the first two aspects (and issues associated with them) of this Application. The First Respondent’s Application for an order for costs will be determined in Chambers once the parties are afforded the opportunity to file any further evidence relevant to the same and to be heard via the provision of written submissions.
Relevant background
The identified aspects of the current Application in a Case fall to be determined in circumstances where the occasions and contexts in which it has previously been positively accepted and/or asserted on the First Respondent’s behalf that the Agreement is in fact a financial agreement, entered into under s 90C (“Financial agreements during marriage”) of the Act and which is binding on the parties to it include:
a)in pleadings filed pursuant to Order made by Judge Cassidy of the Federal Circuit Court on 18 March 2014;[3] and
b)in an Outline of Argument filed in the Federal Circuit Court on 20 June 2014; and
c)in submissions filed in support of an appeal to the Full Court of this Court (an appeal which was heard on 17 February 2015); and
d)in a Summary of Argument filed in the High Court on about 15 December 2015 in support of an application for special leave to appeal to that Court the orders made by the Full Court on 18 November 2015.
[3]The Applicant filed a Statement of Claim on 8 April 2014 and a Further Particulars of the Statement of Claim on 24 April 2014; the First Respondent filed an Application in a Case on 1 May 2014 seeking orders that: pursuant to Rule 16.21(e) of the Federal Court Rules 2011 the Statement of Claim filed on 8 April 2014 be struck out either as a whole or in respect of the following parts: a) paragraphs 9, 10, 11, 12, 13, 14, 18, 19, 47, 48 and 49; and/or b) paragraphs 35, 36, 37, 38, 43, 44, 45 and 46, without leave to replead; further, and that pursuant to Rule 13.10(b) the proceedings be dismissed either as a whole, or alternatively dismissed in respect of one or more of the claims for relief sought in paragraphs 2, 3, 4 and/or 5 of the Initiating Application filed 7 January 2014; that the Applicant pay the Respondent’s costs of and incidental to this Application in a Case.
Further, at no time before the correspondence dated 7 November 2017 was it ever asserted in correspondence authored on behalf of the First Respondent that the Agreement is not a “financial agreement” as that term is defined by s 90C of the Act. Rather, all documents prepared on behalf of the First Respondent and all arguments advanced on his behalf between when the proceedings commenced on 7 January 2014 and 7 November 2017 proceeded on the basis that the Agreement is, in fact, a “financial agreement” as that term is defined in the relevant provisions of the Act.
That is, until the correspondence dated 7 November 2017 was authored, it was uncontentious in these proceedings (which have been on foot since January 2014) that the Agreement is a “financial agreement”. It was also uncontentious that the proceedings were within jurisdiction.
However, this is no longer the case. Instead, the issue of the Court’s jurisdiction to adjudicate the proceedings commenced by the Applicant is now hotly contested.
Of course, it is trite to observe that the fact that parties have proceeded on the basis that a Court has jurisdiction to hear and determine proceedings does not bestow such jurisdiction on a Court.
What are the associated issues adverted to above?
In written submissions filed on 8 December 2017, the Applicant adverted to an Application for leave to amend the Initiating Application (and Statement of Claim) so as to prosecute, in reliance on the same facts as pleaded in support of the relief sought pursuant to s 90K of the Act, an alternative claim for relief pursuant to s 228 of the Property Law Act1974 (Qld). This section is entitled “Voluntary conveyances to defraud creditors voidable” and provides (amongst other things) that, subject to it, every alienation of property, made whether before or after the commencement of that Act, with intent to defraud creditors, shall be voidable, at the instance of any person prejudiced by the alienation of property.[4]
[4] Section 228(1) of the Property Law Act 1974 (Qld).
The Applicant’s 8 December 2017 submissions also contain the suggestion that, in the event leave to amend is granted, the proceedings should then be transferred to the Supreme Court of Queensland.
By Application in a Case filed on 21 December 2017, the Applicant sought that leave be granted to her to file an Amended Initiating Application and an amended Statement of Claim in the terms of documents exhibited to the affidavit of her solicitor, Mr S, also filed 21 December 2017. Reference to the documents containing the proposed amendments[5] makes it clear that the Applicant seeks to raise, as an alternative to the relief sought pursuant to s 90K(3) of the Family Law Act 1975 (Cth), that the transfer by Ms Grainger to Mr Grainger of the real property at T Street was an alienation of property with the intent to defraud creditors of Ms Grainger, with the meaning of s 228 of the Property Law Act 1974 (Cth).
[5] Affidavit of Mr S filed 21 December 2017, Annexure “PDA-6”.
The First Respondent opposes the Applicant being granted leave to amend the Initiating Application (and the Statement of Claim) in the manner described.
The amendment in respect of which leave is sought clearly relies upon what has historically been described by the term “accrued jurisdiction”.
Given that authority establishes that there can be no accrued jurisdiction unless there are federal issues which this Court has jurisdiction to entertain[6] and that if a Court has no statutory jurisdiction it cannot have accrued jurisdiction,[7] it is appropriate first to determine the contention that the circumstances in this case do not enliven the federal jurisdiction bestowed on this Court.
[6] Carlton & United Breweries Ltd v Castlemaine Tooheys Ltd (1986) 161 CLR 543 at 553.
[7]See for example: Vietnam Veterans’ Affairs Association of Australia New South Wales Branch Inc v Cohen (1996) 70 FCR 419; Buck v Comcare (1996) 66 FCR 359, both of which were referred to by French J (as he then was and with whom Beaumont and Finkelstein JJ agreed) in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564.
The relevant jurisdiction of the Family Court of Australia
The Court’s jurisdiction (being its authority to adjudicate) is derived from statutes enacted within the limits of constitutional power. In the present circumstances, the scope and limits of jurisdiction are discerned by reference to the Family Law Act 1975 (Cth) which sets out the subject matters with which the Court may deal, the relief it may grant and the parties to whom it may grant relief.[8]
[8] R v Ross-Jones; Ex Parte Green (1984) 156 CLR 185 per Wilson and Dawson JJ at 213.
The Act relevantly confers on the Court jurisdiction with respect to matters[9] arising under the Act in respect of which matrimonial causes are instituted under the Act.[10]
[9] Being the justiciable controversy between parties.
[10] Section 31(1)(a) of the Family Law Act 1975 (Cth).
The term "matrimonial cause” is relevantly defined to mean: third party proceedings (as defined in section 4A) to set aside a financial agreement.[11]
[11]Clause (eab) of the definition of “matrimonial cause” contained in s 4 of the Family Law Act 1975 (Cth).
The term “third party proceedings”, for the purpose of paragraph (eab) of the definition of “matrimonial cause” in s 4(1) of the Act, relevantly means proceedings between any combination of parties to a financial agreement and a “creditor” (itself defined to mean “creditor of a party to the financial agreement”[12]), being proceedings for the setting aside of a financial agreement on the ground specified in s 90K(1)(aa) of the Act.[13]
[12] Section 4A(2) of the Family Law Act 1975 (Cth).
[13] Section 4A(1)(a)(i) and (b)(i) of the Family Law Act 1975 (Cth).
The ground specified in s 90K(1)(aa) of the Act is that a party to the financial agreement entered into it for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors of the party or with reckless disregard of the interests of a creditor or creditors of the party.
The consistent use and prominence of the term “financial agreement” is immediately apparent. That term is relevantly defined to mean “an agreement that is a financial agreement under s 90B, s 90C or s 90D, but does not include an ante-nuptial or post-nuptial settlement to which s 85A applies”.[14]
[14] Section 4 of the Family Law Act 1975 (Cth).
In DMW v CGW[15] Gibbs CJ said, at 501 – 503:
“..… the jurisdiction of the Family Court, so far as the custody of children is concerned, is limited to children of a marriage. Clearly that Court has jurisdiction to determine the existence of the fact on which its jurisdiction depends - e.g., whether a child is a child of a marriage.
[…]
It follows that when an application is made to the Family Court for an order for the custody of a child, and the question arises whether that child is the child of a marriage, the Family Court has the power and duty to decide whether the child is a child of the marriage. However, it cannot give itself jurisdiction by erroneously determining that question in the affirmative or deprive itself of jurisdiction by erroneously determining that question in the negative; … it is only if the proceeding is in truth a matrimonial cause that the Supreme Court is deprived of jurisdiction.
[…]
As a matter of law, each court must consider and decide the preliminary question whether it has jurisdiction. That means that in a case such as the present, each court must decide whether the child is a child of a marriage.”
[15] (1982) 151 CLR 491.
Applying this statement to the present situation, it seems to me that the existence of a financial agreement (relevantly) under s 90C of the Act is a condition of jurisdiction: that is, the existence of the same is something on which the Court’s jurisdiction in third party proceedings depends and it is only if the current proceedings are in truth a matrimonial cause that this Court has jurisdiction to determine them.
It follows from the above that there is no matrimonial cause (as constituted by third party proceedings to set aside a financial agreement) unless it is established that there is a “financial agreement”. That is, as was the case in Norton & Locke[16] (wherein the Full Court concluded that there is no “de facto financial cause” until a de facto relationship is established and the additional conditions prescribed by ss 90SK and 90SB of the Act met), there is no jurisdiction unless this is established by satisfaction of the relevant jurisdictional fact: here, the existence of a financial agreement.
[16] (2013) 284 FLR 51 at [18].
The proceedings by which the Applicant seeks to set aside the Agreement require satisfaction of the jurisdictional fact that such Agreement is a “financial agreement”. The existence of a financial agreement is "a condition of jurisdiction" (the determination of which is required and which is determinative of the existence of jurisdiction). It is a criteria on which jurisdiction depends.[17] It is a matter which the Court has jurisdiction to decide as an “essential preliminary” to the exercise of jurisdiction.[18]
Should the Applicant have leave to amend the Initiating Application and the Statement of Claim in the manner foreshadowed?
[17]Public Service Association of South Australia Incorporated v Industrial Relations Commission of South Australia and Anor (2012) 249 CLR 398 per the majority (Gummow, Hayne, Crennan, Kiefel and Bell JJ) at [47].
[18]Public Service Association of South Australia Incorporated v Industrial Relations Commission of South Australia and Anor (2012) 249 CLR 398 per French CJ at [31].
Rule 11.10(1) of the Family Law Rules 2004 (Cth) relevantly provides that the Applicant may amend the Initiating Application at any time before the procedural hearing at which the case is allocated the first day before a Judge or, at a later time if the Court gives permission. Rule 11.10(2) provides that a party who has filed an Initiating Application and seeks to add another cause of action must amend the Form in accordance with Division 11.2.2 of the Rules.
As noted, the Applicant seeks leave to amend the Initiating Application by adding a cause of action: namely, the alternative relief sought in reliance on s 228 of the Property Law Act1974 (Qld).
The First Respondent opposes the grant of leave.
The extent of the jurisdiction to determine jurisdiction
As already adverted to, it is well established that the Court has the “…authority and duty to decide whether a controversy brought before it lies within the limits of its jurisdiction…”.[19] That is, the Court has jurisdiction to determine if it has the authority to adjudicate a particular controversy and, therefore, jurisdiction to embark upon proceedings which seek to establish or deny the relevant jurisdictional facts:[20] in the present case, the existence of a “financial agreement”.
[19]Norton & Locke (2013) 284 FLR 51at [22] where the Court referred to R v Ross-Jones; Ex Parte Green (1984) 156 CLR 185 per Gibbs CJ at 193, wherein Reg. v Federal Court of Australia; Ex parte W.A. National Football League (1979) 143 CLR 190 was cited; PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 247 CLR 240 at [16]; Khatri v Price (1999) 95 FCR 287 per Katz J at [14] & [15]; Federated Engine Drivers’ and Firemen's Association of Australasia v Broken Hill Proprietary Co Ltd (1911) 12 CLR 398 per Griffith CJ at 415.
[20] Norton & Locke (2013) 284 FLR 51at [43].
In exercising this jurisdiction to determine jurisdiction, the Court has the power to make orders that are necessary for the determination of issues relevant to that jurisdiction[21] (being the jurisdiction to determine jurisdiction).
[21] Norton & Locke (2013) 284 FLR 51at [43].
In Yunghanns v Yunghanns,[22] the Full Court said, at [109]:
(8)The only circumstance in which the [Family] court may proceed to make orders, despite a challenge to its jurisdiction and before it has found the existence of the jurisdictional facts, is that referred to by Gibbs CJ [in Ex parte Green quoted above], namely when it is considered necessary to make holding orders to maintain the status quo pending its determination (with “the utmost urgency”) of whether it does have jurisdiction.
[22] (1999) FLC 92-836.
Can it be concluded that an order permitting the Applicant to amend the Initiating Application to plead an alternative claim for relief in reliance on s 228 of the Property Law Act1974 (Qld) is “necessary to maintain the status quo pending a determination of whether the Court has jurisdiction” or “necessary” for the determination of the issue of whether the Agreement is a “financial agreement” as defined by s 90C of the Family Law Act 1975 (Cth)?
I think not.
Consequently, I decline to accede to the Applicant’s application for leave to amend the Initiating Application in the manner proposed.
Is the Agreement dated 1 November 2012 a “financial agreement” pursuant to s 90C of the Family Law Act1975 (Cth)?
The First Respondent submits the Agreement is not a financial agreement within the meaning of s 90C of the Act, whereas the Applicant submits that, when properly construed, it is.
Reference to the Agreement itself establishes that it is expressed to be made under s 90C of the Act.[23] As no issue has been taken about the following in the submissions filed on behalf of the First Respondent in support of the current Application, I proceed on the basis that it is accepted that the First Respondent and Ms Grainger are parties to a marriage,[24] who made a written agreement[25] (namely, the Agreement dated 1 November 2012) and that, at the time the written agreement was made, they were not the spouse parties to any other binding agreement.[26]
[23] Section 90C(1)(b) of the Family Law Act 1975 (Cth).
[24] Section 90C(1)(a) of the Family Law Act 1975 (Cth).
[25] Section 90C(1)(a) of the Family Law Act 1975 (Cth).
[26] Section 90C(1)(aa) of the Family Law Act 1975 (Cth).
It is submitted, on behalf of the First Respondent, that the Agreement is not a financial agreement (as defined by the terms of s 90C of the Act) because it is not “with respect to” any of the matters particularised in s 90C(2) of the Act, which is in the following terms:
(2) The matters referred to in paragraph (1)(a) are the following:
(a) how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of the spouse parties at the time when the agreement is made, or at a later time and during the marriage, is to be dealt with;
(b) the maintenance of either of the spouse parties:
(i) during the marriage; or
(ii) after divorce; or
(iii) both during the marriage and after divorce.
It follows that, for an agreement to be a “financial agreement”, it must, by its terms, provide how, in the event of a breakdown of the marriage (a limitation the purpose of which is likely to ensure that the section does not exceed constitutional power[27]), all or any of the property or financial resources of either of the spouse parties[28] is to be dealt with[29] and/or the maintenance of either of the spouse parties during the marriage[30] or after divorce[31] or both during the marriage and after divorce.[32]
[27]See: R v Ross-Jones; Ex Parte Green (1984) 156 CLR 185 per Gibbs CJ at 200, as quoted in Norton & Locke (2013) 284 FLR 5 at [34].
[28]At the time when the agreement is made, or at a later time and during the marriage.
[29] Section 90C(2)(a) of the Family Law Act 1975 (Cth).
[30] Section 90C(2)(b)(i) of the Family Law Act 1975 (Cth).
[31] Section 90C(2)(b)(ii) of the Family Law Act 1975 (Cth).
[32] Section 90C(2)(b)(iii) of the Family Law Act 1975 (Cth).
Whilst the Agreement may also contain matters ancillary to these and other matters,[33] without the “matters” referred to in s 90C(2), the Agreement is not a “financial agreement”.
[33] Section 90C(3) of the Family Law Act 1975 (Cth).
I accept that, for the requirements of s 90C(2) of the Act to be satisfied, the operative terms of an agreement must prescribe how property is to be dealt with in the event of the breakdown of the marriage or such terms must deal with the maintenance of one of the spouse parties to the agreement.
The Agreement
The Agreement is constituted by clauses grouped under the heading “Recitals” and clauses grouped under the heading “Operative Terms”.[34] There is no dispute that the clauses following the heading “Recitals” form part of the Agreement and can be used as an aid in the construction of its operative provisions.
[34] See definition of “Agreement” in Clauses 1.1 (a).
In the present case, I consider that any distinction between the clauses which follow after the heading “Recitals” and those which follow after the heading “Operative Terms” is meaningless because Clause 1.2d of the Agreement (which is found under the heading “Operative Terms”) provides that “headings are for convenience only and do not form part of this Agreement or affect its interpretation”.
That being the case, I consider that, in this case, nothing in particular follows from the fact that the parties chose to place certain clauses under the headings “Recitals” and certain clauses under the heading “Operative Terms”.
Consequently, I approach my consideration of whether the Agreement (as constituted by all of its clauses wherever found) constitutes a “financial agreement” pursuant to s 90C of the Act, by considering whether the clauses are in fact operative in their terms or merely recordative.
I accept that Clauses A, B, C, F are assertions of stated facts; that Clauses D and E are, in a sense, admissions that each of the First Respondent and Ms Grainger had made financial contributions to the “property of the marriage” during the marriage; that Clause H is an assertion of Ms Grainger’s ostensible “wish”; that Clauses I, J, K, L, N, O, P, Q and R are in the nature of admissions by the parties to the Agreement of asserted states of affairs; that Clause M is a statement of desire/wish (albeit one which, in its expression, seems to me to be arguably inconsistent with that asserted in Clause H).
Is the Agreement with respect to how, in the event of the breakdown of the marriage between the First Respondent and Ms Grainger, all or any of the property or financial resources of each or either of them at 1 November 2012 or later, is to be dealt with?
As already noted, I accept that what is required for the Agreement to be a “financial agreement” is that, by its terms, it provides how, in the event of the breakdown of the marriage between the First Respondent and Ms Grainger, their property or the property of either of them is to be dealt with.
The phrase “in the event of the breakdown of the marriage” is used only in Clauses S and 3.1c of the Agreement. These Clauses purport that neither the First Respondent nor Ms Grainger are precluded from further exercising any rights available to them under the Family Law Act 1975 (Cth) in relation to how any or all of “the property of the marriage” is dealt with “in the event of the breakdown of the marriage” “in circumstances where either the property (or “the property pool”) of the marriage or the needs of the parties’ children have materially changed”.
Save for these two Clauses, no other clause of the Agreement refers to the concept of the “breakdown of the marriage” between the First Respondent and Ms Grainger. In fact, other clauses use the phrase “in the event of separation”,[35] a term which is not itself the subject of definition anywhere in the Agreement.
[35] See: Clause H, M.
Mr Looney QC for the First Respondent submitted that, whilst Clause 3.1 of the Agreement provides for how the real property located at T Street, Suburb B is to be dealt with (namely, by Ms Grainger transferring her legal and beneficial interest in it to Mr Grainger, to be held for the maintenance of the children during the marriage and in the event of separation and that, in consideration of receiving the transfer of the property Mr Grainger shall accept the liability to J Bank under the mortgage (registered on the title to the property) and indemnify Ms Grainger for any amounts claimed by J Bank against her pursuant to the mortgage), the transfer (the relevant ‘dealing’) is not predicated on the breakdown of the marriage between the First Respondent and Ms Grainger and, consequently, the requirement imposed by the phrase “in the event of a breakdown of the marriage” is not satisfied.
In the circumstances, I accept the tenor of the submissions made by Mr Looney QC that, whilst the Agreement deals with how specific property of the First Respondent and Ms Grainger was to be dealt with when the Agreement was made, it does not deal with how that property is to be dealt with in the event of the breakdown of their marriage. Rather, the evident intention leading to, and the purpose of, the Agreement seems to me to have been immediately to transfer the T Street property from Ms Grainger to the First Respondent in anticipation of Ms Grainger’s imminent bankruptcy.
Whether, as Mr Looney QC submitted, provided the terms of an agreement pursuant to s 90C of the Act outline how, in the event of the breakdown of the marriage, property[36] owned by one or either of the parties to the marriage is to be dealt with, any subsequent conduct by the parties in relation to that particular item of property is irrelevant is not something necessary to the disposition of the current application. This is because, whilst the parties almost immediately implemented the transfer of Ms Grainger’s interest in the T Street property to the First Respondent in reliance on what was held out to be an agreement pursuant to s 90C of the Act, the Agreement does not in fact provide for how they intended by it to deal with their property (or the property of each of them) or their financial resources (or the financial resources of each of them) in the event of a breakdown of their marriage.
[36] Or financial resources.
For the reasons expressed, I consider that the Agreement does not satisfy the terms of s 90C(2)(a) of the Act.
Is the Agreement with respect to the maintenance of either of the First Respondent or Ms Grainger during the marriage or after divorce or both during the marriage and after divorce?
Mr Looney QC for the First Respondent submitted that the operative terms of the Agreement do not deal with the maintenance of either of the spouse parties and, consequently, the Agreement does not satisfy the requirement that it be with respect to the same.
The concept of “maintenance” is considered in a number of clauses of the Agreement.
Clause H provides as follows:
The Wife[37] wishes to transfer her interest in the Property[38] to the Husband, for the benefit of the Husband and the Children’s maintenance during the marriage and in the event of separation. The value of the Property to be transferred to the Husband for his and the Children’s maintenance is $2,250,000.
[37] Ms Grainger.
[38] The T Street property.
Clause I provides as follows:
The parties agree that the Husband has an earning capacity which he desires to exercise and does not seek any maintenance or further property other than provided by the terms of this Agreement, and that his earning capacity is not affected by the terms hereof.
Clause J provides as follows:
The parties agree that the Wife has an earning capacity which she desires to exercise and does not seek any maintenance or further property other than provided by the terms of this Agreement, and that her earning capacity is not affected by the terms hereof.
Clause M provides as follows:
The parties desire to enter into a binding financial agreement under Section 90C of the Family Law Act 1975, as amended, in order to inter alia, to agree on terms that would provide for the Wife and the Children’s maintenance during the marriage and in the event of separation.
Clause 3.1a provides as follows:
By this Agreement and in consideration of the mutual promises contained herein, the Husband and Wife agree that the Wife will transfer her legal and beneficial interest in the Property to the Husband, to be held for the maintenance of the Children during the marriage and in the event of separation.
I consider, as was submitted by Mr Looney QC, that Clause 3.1a of the Agreement deals only with the maintenance of the children. Even if it is considered that Clauses H and 3.1a of the Agreement (either considered individually or in combination) provide for the maintenance of the First Respondent and the children, I consider that the lack of specificity in each about the extent of the maintenance provided to each child and the First Respondent is such that, by virtue of the application of s 90E of the Act, such clauses are void.
Consequently, for the reasons expressed, I consider that the Agreement does not satisfy the terms of s 90C(2)(b) of the Act.
Further discussion and conclusions
For the reasons outlined above, I have concluded that the Agreement is not a “financial agreement” as that term is defined in s 90C of the Act because:
a)it is not with respect to how, in the event of the breakdown of the marriage between the First Respondent and Ms Grainger, their property or financial resources (or the property of each of them and their respective financial resources) are to be dealt with; and
b)it is not with respect to the maintenance of the First Respondent or Ms Grainger.
The requirement to be satisfied of the existence of a jurisdictional fact (here, that an agreement is a “financial agreement” as relevantly defined in the Act) seems to me to distinguish this case from the circumstances found in cases like Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation,[39] Unilan Holdings Pty Ltd v Kerin,[40] Hooper v Kirella Pty Ltd,[41] Klewer v Dutch[42] and Rana v Google Inc.[43]
[39] (1987) 18 FCR 212.
[40] (1993) 44 FCR 481.
[41] (1999) 96 FCR 1.
[42] (2000) 99 FCR 217.
[43] [2017] FCAFC 156.
Further, it seems to me that until the necessary jurisdictional fact of the existence of a “financial agreement” (as defined by the relevant provisions of the Act) is established, the only matter within federal jurisdiction is whether there is jurisdiction: that is, whilst it has been held that, generally, a non-colourable assertion of a federal issue is enough to attract federal jurisdiction, the federal jurisdiction attracted in circumstances where the establishment of a jurisdictional fact is a prerequisite to the conferral of jurisdiction is limited to the authority to decide whether there is a authority to decide and all claims within the scope of that controversy.
It also seems to me that the principle that a matter remains within federal jurisdiction regardless of how the federal issue or issues within it are resolved (whether by summary or other dismissal or abandonment) rests upon the existence of federal jurisdiction being established: here, that requires satisfaction of the jurisdictional fact that an agreement is a “financial agreement” as that term is defined in the Act.
I do not accept that whether the First Respondent and Ms Grainger made a “serious attempt” to enter into a “financial agreement” (as defined in s 90C of the Act) is relevant to the determination of whether the Agreement is in fact a “financial agreement”. That they held the Agreement out to be a financial agreement entered into pursuant to s 90C of the Act does not transform it into such agreement if, as I have concluded, the necessary statutory prerequisites have not been met.
Whilst it appears that the parties intended to enter into a “financial agreement” as defined by s 90C of the Act, the Agreement into which they entered is not such an agreement. Whilst the transfer of the T Street property appears to have been effected on the basis that the Agreement is a “financial agreement” as defined by s 90C of the Act, that this occurred does not (obviously) make the Agreement into something which it is not.
However, given that the First Respondent and Ms Grainger held the Agreement out as a “financial agreement” and appear to have taken the benefit of the exemption from stamp duty accorded to such agreements by the operation of s 90L of the Family Law Act 1975 (Cth), it seems to me to be appropriate that I afford the parties the opportunity to be heard about whether the Applicant should be permitted by order to provide a copy of these Reasons for Judgment to the Office for State Revenue and/or whether a Registrar of this Court should be directed to do the same.
In order to minimise the cost to the parties, I will order that each have the opportunity to provide written submissions about this issue and that it is then considered in Chambers. In the event a party determines not to take the opportunity to be heard about this issue, I will proceed on the basis that that party does not oppose the making of orders in the terms adverted to.
For the reasons set out above, I make orders in the terms outlined at the commencement of these Reasons.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 31 January 2018.
Associate:
Date: 31 January 2018
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