Cheiban and Cheiban

[2010] FamCA 1075

FAMILY COURT OF AUSTRALIA

CHEIBAN & CHEIBAN [2010] FamCA 1075

FAMILY LAW – INTERVENTION – Third party
FAMILY LAW – JURISDICTION – Accrued – Cross vesting – Transferred proceedings
FAMILY LAW – PRACTICE AND PROCEDURE – Transfer of proceedings
FAMILY LAW – PROPERTY SETTLEMENT – Contribution by third party

Family Law Act 1975 (Cth)
Conveyancing Act 1919 (NSW)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth)
Jurisdiction of Courts Legislation Amendment Act 2000 (Cth)

Re Wakem ex parte McNally (1998) 198 CLR 511
Warby & Warby (2002) FLC 93-091

APPLICANT: Ms Cheiban

RESPONDENT: Mr Cheiban

THIRD PARTY: E Pty Limited

FILE NUMBER: PAC 703 of 2010

DATE DELIVERED: 9 November 2010

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Collier J

HEARING DATE: 9 November 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr McAuley

SOLICITOR FOR THE APPLICANT: Sid Hawach & Associates

COUNSEL FOR THE RESPONDENT: Ms Younes

SOLICITOR FOR THE RESPONDENT: Lewarne & Goldsmith

COUNSEL FOR THE THIRD PARTY: Ms Young

SOLICITOR FOR THE THIRD PARTY: JT Law

Orders

1. That leave be granted to E Pty Limited to intervene in these proceedings.

2. Noting the undertaking given to the Court this day by Mr S, who is not party to these proceedings, to be involved in all steps required to achieve a sale of the property at V Street, it is ordered that the husband, either in his own name or as a director of T Holdings Pty Limited, in conjunction with Mr S, do all acts and execute all documents necessary to procure and complete the sale of the property at V Street by private treaty.

3. That the parties cooperate with the agent as may be required to enable the agent to effectively list the property, advertise it for sale, and arrange and permit inspections of the premises by prospective purchasers.

4. Noted that the parties agree that the listing agent is to be P Realty and accordingly it is ordered that that agent is to have the conduct of the sale of the said property.

5. Note the parties have agreed that Michael Jokovic, solicitor, in Parramatta shall have carriage of sale of the said property.

6. The property is to be sold at a price agreed between the registered proprietors of the property and the wife.  In the event agreement cannot be reached as to price, the parties shall obtain from the nominated agent an appraisal for the selling price of the property and the parties shall list the property at one-hundred-and-five percent (105%) of the nominated price. 

7. That the husband, the wife and Mr S shall accept any offer to purchase that property at ninety-five percent (95%) of the nominated appraisal or any amount in excess thereof. 

8. That upon completion of the sale of the property, the proceeds of sale then received shall be dealt with as follows:

9. In payment of all agent’s commissions, legal fees and disbursements and other selling costs properly incurred in relation to such sale;

10. In payment of all amounts required to discharge the loan secured over the property in favour of National Australia Bank being the mortgage secured thereon and a bill facility which has been secured over the property; and

11. Any surplus then remaining to be divided as follows:

12. As to one half paid to Mr S or as he shall otherwise, prior to the time and date of settlement, direct in writing; and

13. As to the other half to be held in a controlled money account in the names of the respective solicitors for each of the husband and the wife on trust for the parties.

14. That Family Court of Australia proceedings number PAC 703 of 2010 be transferred to the Supreme Court of NSW to be heard as part of proceedings number … of 2010.

15. Requested that the matter be listed in the Supreme Court of NSW as soon as can be arranged following receipt of this Court’s file for mention before either a Judge or Registrar as the case may be.

16. That the wife pay to the legal representatives of E Pty Limited, or as they may otherwise in writing direct, the sum of $1,500 no later than twenty-eight days after the wife’s application for property settlement has been disposed of in either the Supreme Court of NSW or, if necessary, this Court.

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

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 703  of 2010

MS CHEIBAN

Applicant

And

MR CHEIBAN

Respondent

And

E PTY LTD

Third Party

REASONS FOR JUDGMENT

Introduction  

1. This matter comes before the Court today having been previously adjourned on 10 September 2010.  On that occasion the matter was stood over largely, if not solely, to enable a hearing in the Supreme Court to proceed the following Monday.  The subject matter of that hearing in the Supreme Court, as I understood it, was an application for stay of proceedings commenced by E Property Limited in the Equity Division of the Supreme Court of New South Wales.  The issue of the stay was heard by the Supreme Court. I understand His Honour has reserved judgment.

The Applications

1. Before me today I identify, as applications requiring determination first, an amended response filed on 24 September 2010 on behalf of the husband which seeks to deal with a property at V Street.

2. There is also an application by E Pty Limited that this matter be transferred to the Supreme Court of New South Wales, to be heard with proceedings already commenced in that Court.  That application for transfer is contained in an application in a case filed on 30 September 2010.

3. The husband relied upon his affidavit sworn 2 September 2009. 

4. The wife had filed an application, sworn by her on 27 August 2010 and filed that same day. 

5. E Pty Limited relied upon the affidavit of Mr E sworn 29 September 2009.

The Parties Before Me

1. In the matter this day in addition to the husband, the wife, and E Pty Limited, who were each represented by counsel or solicitor, there were in Court Mr S, who is a business associate of the husband and the husband’s brother-in-law and sister Mr and Mrs K. Neither Mr S or the Ks were represented.

Discussion

1. In addition to the Order sought for transfer of proceedings, E Pty Limited had sought leave to intervene in the present Family Court proceedings. These proceedings are, of course, the current proceedings between the husband and the wife. There appears to be some question as to whether or not leave to intervene has previously been granted. So that there can be no misunderstanding, I grant leave to E Pty Limited to intervene in the Family Court proceedings.

2. The involvement of Mr and Mrs K relates to a property which has been mentioned in documents in these proceedings. The property B Street.  The registered proprietor of that property is A Pty Limited.  The husband owns all shares in, and controls, that company.

3. The assertion of the wife is that the property is registered in the name of a company controlled by the husband and is therefore in reality his property.  She asserts that it is therefore to be taken into account in determining the assets and liabilities of she and the husband, and thus brought into account in their property dispute. 

4. The husband and Mr and Mrs K say that this is not so.  The husband, as I understand his position in respect of the B Street property, is that he arranged to purchase that property (which had previously been in the names of Mr and Mrs K) by means of the company A Pty Limited, when the B Street property was sold by a bank exercising its power of sale under a mortgage.

5. The husband asserts he arranged to borrow money which enabled the property to be acquired in the name of the company.  He was thus able to allow his brother-in-law and sister to remain in that property.  Mr K asserts, although not on oath, that he has made significant payments in respect of that property.

6. Mr and Mrs K have not filed any material nor sought any orders in respect of that property.  Notwithstanding that, it seems to me that this is an issue that will require determination at a subsequent time.  

7. So far as Mr S is concerned he and the husband arranged for a property, V Street, to be purchased in the names of two trustee companies for their respective family trusts. The trustee for the husband’s trust is T Holdings Pty Limited. The trustee of the S family trust is S Corp Pty Limited.  It is agreed by the husband and wife and Mr S that the sale of the V Street property is inevitable.

8. If the registered proprietors cannot arrange and effect such a sale in a timely manner, there is little doubt that the National Australian Bank, holding mortgages secured over the property, will step in and sell the property. The bank’s obligation in respect of such a sale would be to obtain the best price that can be obtained by selling the property at public auction.

9. I am informed that notices pursuant to the Conveyancing Act (NSW) have been served particularly on T Pty Limited and the husband. I have been informed that the bank is waiting to see the outcome of today’s proceedings before they determine what action will be taken.

10. The parties have reached a basic understanding between themselves - I should be careful to say that “parties” in this case means i) the husband; ii) the wife; iii) Mr S; and iv) the husband and Mr S on behalf of their respective companies. The agreement is that the property should be sold by the registered proprietors by way of private treaty.  There will be a formula for fixing a price at which the property is to be offered and a further formula which would deal with the minimum price at which the parties would actually sell the property.  It seems to me that the net proceeds of sale, after deduction of all proper selling expenses and discharge of the loan to the National Australia Bank must then be divided equally between the registered proprietors 

11. I intend to make orders for that sale to be effected. I have been handed a minute by the solicitor for the husband. That document will form in part the basis of the orders which I will make dealing with the V Street property.

The Application for Transfer to the Supreme Court of New South Wales

1. That leaves me to deal with the outstanding application of E Pty Limited for an order that the Family Court proceedings between the wife and the husband be transferred to the Supreme Court of New South Wales. The husband consents to such a transfer and the wife opposes the transfer. I have heard submissions from the legal representatives of each of the intervener, the husband and the wife in this respect.

The Law to be Applied

1. By virtue of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) and equivalent legislation of the States and Territories, a scheme of cross-vesting came into effect in Australia. It was possible pursuant to that legislation for the Court of a State to transfer a matter to the Family Court of Australia. The validity of that Act was challenged before the High Court in Re Wakem ex parte McNally[1].  Their Honours held that the part of the scheme which allowed cross-vesting of state jurisdiction to Federal Courts was unconstitutional.

   [1] (1998) 198 CLR 511

2. I am satisfied, however, having regard to that decision and to the Jurisdiction of Courts Legislation Amendment Act 2000 (Cth) that the cross-vesting scheme still permits the cross-vesting of the jurisdiction of the Family Court to the Supreme Court of a State. In this case I am, therefore, satisfied that I have the power, should I choose to exercise it, to transfer or cross-vest the matter to the Supreme Court of New South Wales. Of course the Supreme Court is already seized of some part of the matter, and I have already made reference to that in these reasons for judgment.

3. Whilst the Family Court cannot have cross-vested to it the jurisdiction of a State Supreme Court, the Family Court does have an accrued jurisdiction. The basis of jurisdiction in such cases was discussed in detail by Their Honours of the Full Court in Warby & Warby[2].  It was made clear in that judgment from particularly paragraph 55 and onwards that the matter of Warby had come before The Full Court by way of a case stated. The Full Court had held that on the facts of the particular case the Court did not have accrued jurisdiction to determine the whole of the matter. Their Honours found, however, that the Family Court of Australia may exercise an accrued jurisdiction, noting that there were prerequisites to be satisfied.

   [2] (2002) FLC 93-091

4. What is required is that there is a sufficiently close connection between the two sets of controversies. There must be a common substratum of facts and involve, effectively, the same parties.  I am satisfied that these conditions are met in the present case, that is to say that the various disputes have a common element such as to ensure that there is a sufficiently close connection between the parties and the disputes actually involved in the various interlocked pieces of litigation.

Discussion

1. To my mind, it is highly desirable that all outstanding issues be heard and determined in the one trial.

2. In my view, in this case there are two Courts which can assume jurisdiction for, and determine, the totality of the disputes in this matter.  I am satisfied that all of the matters can go to the Supreme Court of New South Wales. Alternatively, all of the matters could remain in this Court and reliance could be placed upon this Court’s accrued jurisdiction to determine all outstanding issues.

3. It has been put to me with real force by counsel for the wife that the matter should remain in this Court because this Court is seized of what might be called quite sensitive matters and matters that may not be readily apparent. He asserts if the matter were to go before a Judge of the Supreme Court that the matter would need be restarted.

4. That proposition seems to assume that the matter remain before me in this Court.  A difficulty with that argument is that if the matter does remain in this Court, it is not by no means certain that it will be heard by me.  It is not a matter in my docket.  It came before me as a duty matter on the last occasion because of urgent applications, and I dealt with it on that basis.  If the matter remains in this Court, it could be allocated to any Judge available to hear it.

5. Contrary to that, his Honour in the Supreme Court has dealt with the matter for two days.  It seems to me from what I am told by Ms Young, and I accept what she says, that the matter, if it were transferred, will probably come before the Chief Judge in Equity in chambers, at which stage her Honour would decide to which Judge in that Division the matter was to be allocated.  It would seem that his previous involvement in the matter may indicate that the Judge who has previously heard the matter is the appropriate Judge. 

6. Let me say here; I apologise to His Honour if it may be seen that I am in any way trying to circumvent his Honour’s decision in the stay application.  That is not my intention.  My intention is to have this matter proceed as quickly, as efficiently, and as cost-effectively as can be achieved.  To my mind, there are advantages to the matter being heard, particularly by his Honour who is seized of the matter, in the Supreme Court.

7. His Honour was an eminent practitioner in this field of Family Law and has continued his interest in Family Law since his appointment.  For myself, I wish that I could claim the same degree of learning or knowledge in matters that might be seen to be equitable in nature, such as the claim for equitable relief sought by E Pty Limited, in respect of the husband and Mr S, and their associated companies, and also what I perceive will be a claim for equitable relief by Mr and Mrs K in respect of the B Street property.

8. I am satisfied that having considered these matters that the Family Court matter ought go to the Supreme Court. I propose to order that the matter will be transferred (once I have made other orders concerning the disposal of the V Street property) to be heard in proceedings clearly on foot in the Supreme Court of New South Wales in its Equity Division.  Again, I make a profuse apology to His Honour and assure him, again, that I am in no way endeavouring to second guess or in any way interfere with his decision.

9. The parties have talked about mediation.  The wife’s counsel indicates I should not make an order, or that I should specify that an order for transfer not take effect until the parties have attempted mediation.  He suggests that if the transfer were immediate, this may have some adverse effect on the parties engaging in meaningful mediation.  I am not satisfied that this would be so.  I intend to make my order for transfer immediately effective.  I do not propose to stay or postpone the effect of the order for transfer into the Supreme Court.

10. That will mean that the order will take effect immediately and as quickly as the papers can be transferred from this court to the Supreme Court.  It will mean that it is a matter for the parties – and by that I mean the wider parties in these proceedings rather than just the husband and wife – to arrange and engage in such mediation as they see fit.  The wife’s counsel has indicated that he has no great faith in the service of mediation provided by Registrars of the Supreme Court and, certainly, that is not something in which I propose to become involved nor in respect of which I will comment. 

11. In my view, the situation will be that the parties can, if they choose, attend private mediation.  If that is successful, then clearly that will be the best outcome possible for everyone concerned.  If no mediation occurs or if mediation is unsuccessful then the matter can be brought on as quickly as can be properly arranged in the Supreme Court.  It will of course be a matter for the Supreme Court to case manage the matter in accordance with its own requirements.  However I will request that the matter be listed before a Judge or Registrar for mention at the earliest opportunity. 

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Collier delivered on 9 November 2010.

Associate:

Date:  30 November 2010