C and C and C : Accrued Jurisdiction
[2001] FamCA 459
•16 May 2001
[2001] FamCA 459
FAMILY LAW ACT 1975
IN THE FAMILY COURT
OF AUSTRALIA
AT BRISBANE No. BR 9820 of 1999
BETWEEN:
C
Husband
AND:
C
Wife
AND:
C
Third Party [Accrued Jurisdiction]
R E A S O N S F O R J U D G M E N T
BEFORE THE HONOURABLE JUSTICE JERRARD
Date of Hearing : 16 May 2001.
Date of Judgment : 16 May 2001.
Appearances: The Husband appeared in person.
Mrs. Cassidy of Counsel, instructed by McDonald Brown, Solicitors of 37 Connor Street, Burleigh Heads, Q. 4220, appeared for the Wife.
Mr. Slack of Counsel, instructed by Forde Lawyers, Solicitors of Level 9, North Point, 231 North Quay, Brisbane, Q. 4000, appeared for the Third Party.
JURISIDCTION OF FAMILY COURT OF AUSTRALIA – Accrued –Whether an accrued jurisdiction exists for exercise in the Family Court.
JURISIDCTION OF FAMILY COURT OF AUSTRALIA – Accrued – Whether there is jurisdiction to make orders binding a third party, who is not a party to the marriage, with respect to property jointly owned by the third party and a party to the marriage.
The husband and wife began cohabitation in or about 1974, married on 6 October, 1979, and separated on 3 November, 1994.
From about 1976, the husband and wife lived on a property situated at Springwood which was registered in the names of the husband and the third party, as joint tenants. The Springwood property was the only significant property in which either of the married parties had or claimed an interest.
Based on the premise that she had a beneficial interest in the property, on 20 November, 2000, the wife filed an amended application in which she sought orders that the third party receive, from the proceeds of an ordered sale, 20 per cent/one-fifth of those net proceeds of sale, and that the remaining 80 per cent be divided between the married parties, with 65 per cent thereof awarded in favour of the wife and the remaining 35 per cent thereof to the husband.
In response, the husband sought orders that he and the wife each receive 40 per cent of the net proceeds of the sale of the property, and the third party 20 per cent.
In an application filed 20 April, 2001, the third party sought orders which provided, firstly, for 50 per cent of the net value of the sale go to him, secondly, for a specified further sum to be paid to him (for a debt owed to him by the husband), thirdly, for all encumbrances to be discharged and then finally, for whatever remained to be paid to the husband and wife.
The husband supported the wife’s claim to a beneficial entitlement in the property and maintained that there was an agreement between himself, the wife and the third party which provided as much. The third party denied the agreement and asserted that at all times the husband and third party were both the sole beneficial owners and the sole legal owners.
The primary issue before his Honour concerned the jurisdiction of the Family Court to make orders binding a third party, not married to any other party, when those orders were made with respect to property jointly owned by the third party and the husband.
A subsidiary issue before his Honour concerned the value of the property at Springwood.
Held: in finding that an accrued jurisdiction exists for exercise in the Family Court:
There was a statutory jurisdiction in the Family Court to make orders in any matrimonial cause, and the definition of a matrimonial cause included proceedings between parties to a marriage, with respect to the property of those parties. The third party had no such relationship with either the husband or wife, but on all accounts had at least a 20 per cent beneficial interest in the property, the subject of the dispute, and contended that he had a 50 per cent beneficial interest in the property. In determining the issue between the husband and the wife, the Court was obliged to enter into the question of the extent to which the husband had a beneficial interest in the property and the extent to which the wife had a beneficial interest in the property. Likewise, the Court had to determine the extent to which the third party had a beneficial interest in the property.
Given that this was a case in which the husband's only asset of value was his interest in the property, the wife's only asset of value was her claimed interest in the property, and the third party's only asset of value was his claimed interest in the property, there was one justiciable controversy between those three people, namely who it was who had the beneficial ownership of the property at Springwood and in what proportions. The question of whether or not the husband and wife's claims that they possessed up to 80 per cent of the beneficial interest in the real property were accurate, had a common substratum of fact in determining the assertion by the third party that he had at all times had a 50 per cent legal and beneficial interest in that property, unaffected by any promises or actions of others. Not only was there a common substratum of fact in the claims made by each of the husband and wife of the allegedly less interest that the third party had than either of them and those claims by the third party to the contrary, but it was necessary to establish what were the beneficial interests in that property, to determine what property there was for division between the husband and wife. Accordingly, it was necessary to determine the non-federal dispute between the husband and wife on the one hand and the third party on the other, when determining the federal dispute between the husband and wife as to the division of their property between them. Re Wakim; Ex parte McNally 163 ALR 270 and Stack v Coast Securities (No. 9) Pty. Ltd. (1983) 154 CLR 261 cited and applied.
Accrued jurisdiction exists for exercise in the Family Court. There was no reason for distinguishing the federal Family Court from any other federal Court, insofar as the exercise of an accrued jurisdiction was concerned. On the facts of the case, there was one piece of property in which it was necessary to determine the beneficial interests held respectively by the parties before the Court, and it was not possible to exercise the matrimonial jurisdiction of the Court without doing that. In the Marriage ofIreland (1986) FLC 91-731; In the Marriage ofSmith (1985) FLC 91-604 and In the Marriage ofMckay (1984) FLC 91-573 followed.
In making the consent orders sought by the parties, it was declared that the third party and the husband held legal and beneficial interests as tenants in common in equal shares.
The reserve price on the first auction should be fixed at $200 000, at $170 000 on the second auction and that no reserve price should be fixed on the third auction.
REPORTABLE
HIS HONOUR: This matter has been the hearing of various applications filed in this Court. The parties are the wife, the husband, and the third party. The husband and wife began cohabitation in or about 1974, married on 6 October 1979, and separated on 3 November 1994. They have three children, of whom two are now self-supporting adults and of whom the third, their younger son, , lives with the wife.
The two married parties have lived since about 1976 on a property situated at Springwood. That property is registered in the names of the husband and the third party, and as I understand it they are actually registered as joint tenants of that property. The third party lived for some time on that property after it was purchased, but for the majority of the time since the date of purchase and until today has lived elsewhere. The married parties have occupied the property at least until their own separation, and one or other of them, as I understand the evidence, has occupied it ever since it was first purchased in the names of the husband and third party back in 1976.
The other property of the married parties is very limited in amount, and no orders specifically have been sought changing the current ownership and possession of that other property. It is described in the affidavit material as furniture and household effects worth perhaps $3000, and jewellery worth perhaps less. There is also a Toyota car, also worth perhaps less than $3000. The only significant property in which either of the married parties has or claims any interest is the property at Springwood.
The applications that have been filed in this Court in respect of that are as follows. The wife filed an application on 21 June 2000 in Form 7 seeking orders for the sale of that property, and for the division of the net proceeds of sale between each of the three parties as to one-third each. She filed an amended application on 20 November 2000, which I interpret as seeking orders that the third party receive from the proceeds of an ordered sale 20 per cent or one-fifth of those net proceeds of sale, and that of the remaining 80 per cent they be divided as to 65 per cent thereof to the wife, and the effect of her other applications are that the husband receives the benefit of the remaining 35 per cent of that 80 per cent.
For his part, the husband's application in Form 7A filed 18 July 2000 asked for orders that he and the wife each receive 40 per cent of the net proceeds of the sale of the property, and the third party 20 per cent. The third party, in his application filed on 20 April 2001, asked for orders that 50 per cent of the net value of the sale go to him and a specified further sum be paid to him (apparently a debt owed to him by the husband), that all encumbrances be discharged, and whatever remain to be paid to the husband and wife.
It will be apparent from these applications, as indeed the affidavit material filed shows, that the wife has claimed in her material a beneficial interest in the property. The husband's affidavit material supports her claim to a beneficial entitlement in the property, and supports her affidavit claim that at the time the property was purchased in 1976 there was an agreement between himself and the third party, which agreement involved the wife, that although the property would be registered in the name of the husband and the third party, it would in truth be beneficially owned as to one-third equal shares between the three present parties. The affidavit filed on behalf of the third party denies any such agreement ever having been entered into, and asserts that at all times the husband and third party were both the sole beneficial owners and the sole legal owners.
I am mentioning this material because there is a question which must be resolved as to the jurisdiction of the Court to make orders binding a third party, not married to any other party, when those orders are made with respect to property. There is a statutory jurisdiction in this Court to make orders in any matrimonial cause, and the definition of a matrimonial cause includes proceedings between parties to a marriage, with respect to the property of those parties. The third party has no such relationship with either the husband or wife, but on all accounts has at least a 20 per cent beneficial interest in the property, the subject of the dispute; and contends that he has a 50 per cent beneficial interest in the property.
The obligation of the Court in determining the application by the wife for the orders that she seeks, namely, that the majority or a significant portion of the husband's beneficial interest in that property go to her and, further, that a beneficial interest she claims be recognised, requires that the Court do determine who it is who is the beneficial owner of this property, and in what proportions that beneficial ownership is held. In determining the issue solely between the husband and the wife, the Court is obliged to hear evidence and make findings as to the fact of who it is holds the beneficial entitlement to this property at Springwood; then, having made those findings, the Court is required to make the orders that the Court considers appropriate, just and equitable, if any, changing or altering the respective interests of either of the husband or the wife in that property, according to matters specified in the Family Law Act and in authoritative decisions of this Court.
Put simply, those matters that the Court is required to consider include the contributions each of the married parties has made to the property over the years of their cohabitation and marriage, being contributions of a direct or indirect financial nature, and to consider the contributions each of those married parties has made to the conservation, improvement or acquisition of any property during the period of their marriage and cohabitation. Likewise, the Court has to consider the contribution made to their family unit by each of the married parties.
In determining the contribution made by each of the married parties, the Court is taking a second step. The first step has to be, of course, to determine what that property is. To that extent, in determining the issue between the husband and wife, the Court is obliged to enter into the question of the extent to which the husband has a beneficial interest in this property and the extent to which the wife has, as claimed, a beneficial interest in this property. Likewise, the Court has to determine the extent to which the third party has a beneficial interest in this property.
It follows, in my judgment, that in this case in which the husband's only asset of value is his interest in that property, the wife's only asset of value is her claimed interest in that property, and the third party's only asset of value is his claimed interest in that property, there is one justiciable controversy between these three people, namely who it is who has the beneficial ownership of this property at Springwood and in what proportions. It is necessary to make findings of fact about that to determine the matrimonial cause which is being heard, and I am asked in addition and by consent to make orders that bind the third party. I repeat that the husband and wife each claim in their affidavit and their applications that the third party has a lesser beneficial interest than either of them, namely a 20 per cent or one-fifth interest, and that in toto between them they have about an 80 per cent beneficial interest. The third party claims a very different situation.
It has been authoritatively held that:
“A Court exercising federal jurisdiction has jurisdiction to determine matters arising under a law made by the Parliament investing the Court with that federal jurisdiction, and that jurisdiction is not restricted to the determination of the federal claim but extends beyond that to the litigation of any justiciable controversy between parties of which the federal claim or cause of action forms part. “
I am quoting there from the majority judgment in Re Wakim; Ex parte McNally 163 ALR 270 at paragraph 135, which portion of that judgment was itself a citation from the judgment in Stack v Coast Securities (No. 9) Proprietary Limited (1983) 154 CLR 261, and the citation comes from page 290 of the CLR report. The High Court said (in Stack v Coast Securities), and the majority said by way of repetition in Re Wakim, as follows, and I quote:
“What is and what is not part of the one 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. The scope of a controversy which constitutes a matter is not ascertained merely by reference to proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. 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 majority judgment in Re Wakim went on, at paragraph 140, to observe in part that what is a single controversy is sometimes determined by asking whether or not if proceedings were tried in different Courts there could be conflicting findings made on one or more issues common to the two proceedings. If so, that would indicate there is but a single matter. There is also but a single matter if different claims arise out of a common substratum of fact.
Here, in my opinion, determining the question of whether or not the husband and wife's claims that they possess up to 80 per cent of the beneficial interest in this real property are accurate, has a common substratum of fact in determining the assertion by the third party that he has at all times had a 50 per cent legal and beneficial interest in that property, unaffected by any promises or actions of others. Not only do I think there is a common substratum of fact in the claims made by each of the husband and wife of the allegedly less interest that the third party has than either of them and those claims by the third party to the contrary, but I also think, as I have said, that it is necessary to establish what are the beneficial interests in that property, to determine what property there is for division between the husband and wife. Accordingly, I am satisfied that it is necessary to determine the non-federal dispute between the husband and wife on the one hand and the third party on the other, when determining the federal dispute between the husband and wife as to the division of their property between them.
I am satisfied, therefore, that in those circumstances, if this Court has a capacity to exercise an accrued jurisdiction, this is an appropriate case in which to do it. The circumstances I have described in my judgment are a description of facts which do make the determination of a non-federal issue an essential step in litigation on a federal matter. The Court is certainly asked to make orders in the federal matter which must reflect the findings necessarily made in determining both the federal and non-federal issues. I am satisfied it is just and convenient to all parties to make orders in these proceedings, if I have an accrued jurisdiction.
On the question of whether there is an accrued jurisdiction in this court, opinion is divided both at single-judge level and appellate level. Perhaps I should say opinion is divided at single-judge level, and the matter has never been determined at appellate level. The most recent decision of which I am aware on this matter is that of the Full Court of this Court in a matter of Wade-Ferell, published on 22 March 2001. In that case, the Full Court left open, as have earlier Full Courts, the issue of whether or not this Court has an accrued jurisdiction, but my reading of the judgment satisfies me that the Court leaned towards the view that this Court does.
I note that the issue was left open by the Full Court of this Court in the judgment in the matter of Friis, published on 7 July 2000, although the Full Court of this Court had been extended an invitation to make a final ruling on the matter by the Queensland Court of Appeal, in a judgment published relevantly in 26 Fam LR 205. Lindenmayer J in a matter of In the Marriage of Ireland (1986) FLC 91-731, Evatt CJ in a matter of In the Marriage of Smith (1985) FLC 91-604, and Nygh in a matter of In the Marriage of Mckay (1984) FLC 91-573, have all expressed the opinion that an accrued jurisdiction does exist for exercise in this Court. Contrary views have been expressed by Fogarty and Strauss JJ respectively in the matters of Smith and Mckay respectively.
I prefer, with respect, the views of Lindenmayer J, Evatt CJ, and Nygh J, and I am satisfied that there was no reason for distinguishing this federal Court from any other federal Court, insofar as the exercise of an accrued jurisdiction is concerned. Here, there is the one piece of property in which it is necessary to determine the beneficial interests held respectively by the parties before the Court, and it is not possible to exercise the matrimonial jurisdiction of the Court without doing that.
I am satisfied that, in the circumstances, it is appropriate to exercise the jurisdiction obviously needed to be exercised; and that that jurisdiction includes the jurisdiction to make findings, and orders based on those findings, in the controversy between the married parties and the third party as to the extent of his interest. Accordingly, I am satisfied that I have the capacity to do that and that I should.
Fortunately, the parties have made this considerably easier by coming to an agreement as to the extent of their respective interests in this property, and the agreement that they have come to is reflected in the orders that they ask the Court to make by consent. Those orders include an application for a declaration that, in truth, the third party and the husband hold legal and beneficial interests as tenants in common in equal shares, which order, having read the affidavits, I am prepared to make. They ask for orders for the sale of the property, upon terms largely agreed between the parties; and certain other orders with respect to the property exclusively in the possession of each of the married parties.
The one matter on which the parties are not in agreement is the reserve prices which should be set for the auctions agreed by order to be conducted. The parties envisage at least two such auctions, but are in disagreement as to the reserve price. Valuations have been obtained and those of the wife suggest that the property might achieve, on a good day, $210,000, and those of the third party that it might achieve a price of $190,000. The third party's valuer expresses the view that, without extensive marketing, it probably will not do better, or may not do better, than about $170,000.
The wife is anxious that there be no "fire sale" of the property and that no party be able to obtain the property at an under-value, it being the case that all parties are agreed that all may bid for it. In the circumstances, I think it is appropriate to be cautious about the matter on the first ordered auction, bolder about it on the second one, and make provision for a third auction in which there will be no reserve price.
Accordingly, I will order that the reserve price on the first auction be fixed at $200,000, on the second $170,000, and the order that will issue will make provision for a third auction at which there will be no reserve price. Draft orders have been prepared. I propose to make orders that will follow the drafting of those.
RECORDED : NOT TRANSCRIBED
HIS HONOUR: I make the following orders:
IT IS ORDERED BY CONSENT:
In accordance with the Minutes of the Proposed Orders signed by myself and dated with today's date.
IT IS DIRECTED:
That the said Minutes remain upon the Court file.
IT IS FURTHER ORDERED:That subject to agreement to the contrary between all parties the reserve price fixed for the auction ordered in paragraph 2(a) of the said Minutes be $200,000.00 and the reserve price fixed for the auction ordered in paragraph 2(f) of the said Minutes be $170,000.00.
That if the property situate at Springbrook in the State of Queensland not be sold by auction at the auction ordered in paragraph 2(f) of the said Minutes then subject to agreement to the contrary between all parties the property be offered for sale by the same auctioneers and subject to the same conditions in the September auction period save that there be no reserve price.
That all applications be removed from the Pending Cases List.
RECORDED : NOT TRANSCRIBED