Condren v The Queen

[1989] HCATrans 277

';~~

•

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl9 of 1989

B e t w e e n -

JULIA JOHNSON

Appellant

and

LUCJAN RZETELSKI

Respondent

{

MASON CJ
BRENNAN J
TOOHEY J
GAUDRON J

McHUGH J

Johnson(2)

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 15 NOVEMBER 1989, AT 1O.19.AM

Copyright in the High Court of Australia

C 1T2/1 /ND 1 15/11/89

MR M.D. BROUN, QC:  In that matter, if the Court pleases,

I appear with my learned friend, MR H. BLEICHER, for the appellant. (instructed by John R. Quinn

& Co)

MR P.I. ROSE, QC: If the Court pleases, I appear with my

learned friend, MR S.R. O'RYAN, for the respondent.

(instructed by Graham M. Cole & Co)

MASON CJ: 

Yes, Mr Broun.

MR BROUN: 

Your Honours, I hand up copies	of our contentions,
a summary of our contentions.	Perhaps at the same

time it might be easiest if I	handed up some
legislation also that we will	be referring to,
that is the relevant sections	of the FAMILY LAW

ACT.

Your Honours, I propose to refer briefly to the facts then to go through the contentions that

we would make and then to refer in then a short

form to what the original trial judge
Mr Justice Nygh did and to what the Full Court

of the Family Court of Australia did.

The facts, really, that are relevant before

Your Honours are relatively simple.

MASON CJ: Mr Broun, it has been suggested that it would be

advisable for us to read your outline of argument.

MR BROUN:	Thank you, Your Honours, yes, certainly. The facts are relatively simple, the husband was
ordered by the original orders to transfer a half
interest he held in a parcel of real estate which
was a block of flats.  He was also ordered to transfer
to the wife shares that he held in his name in
a company which had originally been the wife's
company where he had become the second shareholder.

Those two orders, on being complied with,

would have made her, effectively, the sole owne~

of that block of flats.

(Continued on page 3)

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Johnson(2)

MR BROUN (continuing): It was in contemnlation at the

original hearing and the hearing before

Mr Justice Nygh that leads to this appeal

that as soon as the wife became the proprietor

she would proceed to obtain the registration

of the strata plan of the block of flats and

sell some one ~r two of them to discharge a

mortgage obligation. The relevant orders

which set out those obligations are at the

appeal book pages 2 and 3. The result of

the orders was that the wife was to become responsible for a mortgage on the property

which she was going to discharge by selling

off one or more of the units. The reference

to that discharge or the expectation that that

mortgage would be discharged is referred to

again in the appeal book at page 6, lines 19

to 20 and the approval of the strata plan

is expressly referred to in Mr Justice Nygh's

judgment at the appeal book 7, lines 6 to 9.

So that in effect everybody is contemplating

transfer of the property to the wife pursuant

to the orders, strata plan, discharge of

mortgage obligations.

The wife also by a separate order was

ordered to pay to the husband a sum of

$131,000 with interest in the event of any

default of payment, and that is appeal book

page 3. The husband breached the orders for

the transfer of the pronerty by refusing to

sign the transfers, and that is set out at

appeal boqk page 5. Ultimately the registrar

was appointed to sign on his behalf, that is

appeal book page 6. The delay in getting

the property transferred from the husband to

the wife as the result of the husband's

default led to the wife suffering a loss in

that the amount secured by the mortgage increased

during that intervening period when she had no

control over the property. The mortgage debt

simply went up by accumulated interest.

Mr Justice Nygh in his original judgment

attributed a part of that interest to the

husband's default and part of it to the fact
that the wife had not in effect agreed to what

amounted to a stay of proceedings pending the

original appeal to the Full Court, that is the
original appeal from the original substantive

orders as distinct from the appeal to the

Full Court from which this appeal is brou?ht.

BRENNAJ\T J:  ·who derived the income during the ~eriod of the non-transfer?

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Johnson(2)

MR BROUN (continuing) :  Ji.st offhrd, I cannot tell Your Honour the answer

to that. I will check that. I think that it went in accordance

- we will have this checked - but Mr Bleicher's recollection is that it went in accordance with

the legal title pending the event; namely, half to
the husband and half to the company because that
was the existing legal title, the transfer not
having been made. There was no attornment

to the tenants and the tenants kept paying the

pre-existing arrangement.	We will have that
checked but I believe that was the position.	So,
in effect, it went half each, the rent, in the
meantime.

Now, Mr Justice Nygh then calculated a figure

which he said was causally connected to the husband's

breach. That figure was not the subject of any
appeal to the Full Court by the husband and it was

not argued before the Full Court that the figure was

wrong so we proceed on the basis that Mr Justice Nygh's

figures are accepted; the question is whether there

is a proper basis for the court to have awarded them.

Now, what the wife sought before Mr Justice Nygh on the present application was to be indemnified for

the loss that she had suffered as the result of the

delay leading to the accumulation of interest on that

mortgage.	The Full Court in its judgment refers at
a number of points to the wife seeking damages.	In

a sense, I suppose, they are damages but essentially

what we were seeking was an indemnification for the

loss which had arisen. Mr Justice Nygh refers to

the precise form of order we were seeking at appeal

book page 2 as being an indemnification.

Now, Mr Justice Nygh set out the issues thAt he was to determine that are relevant to the present

case and which seemed to be, indeed, a very succinct

and suitable summary of it and if I may take

Your Honours to that, which is at appeal book, page 8.

His Honour divided the problems into three; the first

one is:

whether an action can lie at all in respect

of the breach of an order of the court other

than by way of enforcement of such order;

That is sometimes expressed as saying, "Well, is

there authority for the order sought? Is there a

legal principle which justifies the order sought?"

That is, as it seems to us, the main matter upon which the Full Court judgment turned and, indeed,

perhaps, presents the most important question. The

second question that His Honour raised that if the

answer was that there was some authority for the order,

some principle of law which would justify the making

of the order, did the Family Court have jurisdiction

to deal with that claim and, thirdly, if the answer

ClT4/l/SH	4	15/11/89
Johnson(2)

to both of those was in the affirmative, was there
actually a power in the Family Court to exercise
that iurisdiction and to make an order in accordance

with that authority or principle.

(Continued on page 6)

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Johnson(2)

MR BROUN (continuing): Well, then if I may turn to our

contentions before going to what Mr Justice Nygh

in the Full Court did. We would seek first of

all to put a submission to Your Honours which is

a sort of submission, really, that could only be

put to Your Honours I suppose that, really, the

law has developed to a point where Your Honours

may recognize some general principle of liability

applicable in all areas of law of which we would

say this is an obvious example.

We would submit that looking at the myriad

examples to be found in our text books on torts;
books on contracts; cases decided on statutory

obligations, there is to be discerned a general

principle that if there is an obligation and that

obligation may arise from tort, trust,

contract or, in this case, a court order and

the person who is under that obligation knows

that the damage will arise, or some loss will

arise, in the event of a breach of that obligation,

then a breach is capable of being compensated or

is compensable at the suit of the party to whom

the obligation is owed.

Now, that endeavours to put into even more

general terms principles from tort, contract and

other areas of law. We would submit that that
is a unifying principle to be found and if

Your Honours did not rely upon it as a sole basis

for the orders we have sought in this case, it

would, in our submission, be a touchstone with

which Your Honours would test the alternative

bases of the principle	authority that we would
advance.	One would look at a general question

and say, "Does this case fit that? Do the other

principles also appear to follow along a similar

line?"

But we would invite Your Honours, in this

case, to adopt some such totally general principle

applicable to all areas of law. A tort law,

of course, is one where, traditionally, there has

been a debate as to whether there is a general

unifying principle; whether there is a law of tort or a law of torts; whether there is a multiplicity of individual types of legal obligation or whether there is some general obligations.

McHUGH J:  To whom is the obligation owed under an order? Is

it owed to the court or is it owed to the

beneficiary?

MR BROUN:  It is owed to both, I would submit, Your Honour.

It is an obligation that Mr Rzetelski had to

Miss Johnson. It is also an obligation that

Mr Rzetelski had to the court to obey its orders.

But the - - -

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Johnson(2)

McHUGH J: Is there any authority which supports the view

it is an obligation owed to Mrs Johnson?

MR BROUN:  Your Honour,I have not researched that question,

frankly. I would submit that it is a necessary

implication.If an order is made that a piece of

property be transferred to her and she is the

person who is going to get the benefit of that and

the obligation is to do it within a specified period
of time, the person who is ordered to transfer

the property within that specified period of time

has an obligation to the beneficiary, I would submit.

McHUGH J:  Why does that follow? Take the case of a contract

between A and B where A agrees with B to transfer

property to C. There is no obligation to C.

MR BROUN:  Your Honour, certainly in the law of contract that

has developed out of the doctrines of privity of

contract which in turn seem to have developed

originally from questions of pleading and who could

be parties to actions, but, in my submission, where

you have a court order applied for by the wife,

made for her benefit pursuant to legislation which

is directed to adjusting property rights between

husband and wife in a fair and just manner, the

whole purpose of the whole proceeding was to make

an order for her benefit. She is, I would submit,

the primary person to whom the obligation under the

order is owed. It is she who in -

McHUGH J: It may be made for a benefit but it does not mean

there is a corresponding obligation to her, does it?

That was the only point I was asking.

MR BROUN:  Yes, well, Your Honour,I am afraid I cannot assist

Your Honour with any authority at the moment.	If
any occur to me in	the course of submissions or

if Mr Bleicher solves the problem for me, but I

cannot refer Your Honour to any precise authority

in that,I could only rely on what we would submit

is the more general or obvious principle.

Your Honours we then in the contentions

look to some alternative ways of justifying the

order made or seeking an authority or legal principle

upon which the order could have been made, apart

from our general propositio~ The first O1e we

put forward, which is contention 2 is that the

orders in the present case imposed a trust on the

resppnd.ent and that re breached his. obligations as trustee

and he is liable to compensate the cestui que trust.

(Continued on page 8)

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Johnson(2)

MR BROUN (continuing):  Now, perhaps this touches on the

matter that Your Honour Mr Justice McHugh has raised

with me, namely, these authorities seem to suggest

that there is an obligation owed to the beneficiary

of the order. I would refer firstly to HARRIS V

WALKER - most of these decisions where these problems

have arisen have been single judge decisions,

unfortunately. HARRIS V WALKER, a decision of the

older Mr Justice McLelland, who was Chief Judge in

Equity in New South Wales, and not the present

Mr Justice McLelland of that division. It arose

out of an order made that the wife should transfer
property to the husband, made in family law
proceedings: an order made by Mr Justice Begg in the

matrimonial causes division of the supreme court as it then was. Before the property had actually been

transferred, the husband died, and the question arose

whether the whole proceedings had abated or that

there was some enforceable right that the beneficiary
of the order had to obtain the transfer of the

property pursuant to the V..ATRIMONIAL CAUSES ACT order.

The Chief Judge in Equity referred to a number

of authorities which had dealt with the question,

and if I may take Your Honours to page 173 of

HARRIS V WALKER, His Honour says:

The question then is, what is the effect of

an order made pursuant to s. 86(1) of the

MATRIMONIAL CAUSES ACT -

that was the previous section about property orders,

the equivalent to the one under which this order was

made -

requiring a party to a marriage to make
a settlement of property for the benefit of
the other party to the marriage where that

other party has died and the order has not

been complied with? I am of the opinion that the situation

is governed by the established in three English
decisions, namely MACLURCAN ..... HYDE ..... and

RE RICHARDSON.

(Continued on page 9)

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Johnson(2)

HR BROUN (continuing): And those cases are set out.

MACLURCAN, the Master of the Rolls Lord Lindley

said - and this is quoted about three-quarters

of the way down the fB.ge:

the moment this order was made the wife

had an equitable charge on the property

which could be enforced at once.

Lord Justice Chitty said:

Then, the order having been made, that terminates

the jurisdiction of the Court except as to

the form of deed to carry out the order. The

charge is given by the order and the deed is only

for the purpose of carrying out the order.

HYDE was the next one referred to and perhaps if

I may take Your Honours to the middle of page 174

where there is a reference to Justice Barnard.

Justice Barnard, after referring to what was said by

Lord Justice Chitty in MACLURCAN, said:

I therefore find that by the joint effect of the order and the subsequent agreement the petitioner acquired a charge on specific

assets of the respondent, viz. on the

above-mentioned 15,000 shares.

His Honour Mr Justice McLelland said, at the top of page 176:

In the circumstances I have come to the conclusion that I should follow the English

cases to which I have referred and hold that

the effect of the orders made by Begg J and
by the Court of Appeal in tr.e present case was
to vest in the husband an equitable estate

in fee simple in the Scotland Island property.

(Continued on page 10)

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Johnson(2)

MR BROUN (continuing): Relying on that case, Your Honours,

we would say that the effect of Mr Justice Nygh's

original order was to vest in Mrs Johnson an

equitable estate in the half interest of the
property owned in the husband's name and also the

shares in th~ company which owned the other half

of the property so that, in effect, it created

an obligation due to her by reason of that equity.

MASON CJ: But how would it give rise to a right to an

indemnity against loss?

MR BROUN:  That is the next step. I refer also there in our

contentions to RICHARDSON and the other estates

which have followed it but the right to the - - -

BRENNAN J: Before you leave that, Mr Broun, could we just

come back to HARRIS V WALKER for a moment? What

is it that gives rise to an equitable interest?

MR BROUN:	The making of the order, it seems.
BRENNAN J:	How?
MR BROUN:	HARRIS V WALKER, following on those English
authorities, seems to say, "The moment an order
is made the wife, in effect, or the beneficiary of the order, in effect, becomes a sort of equitable
owner on the spot." and they - - -
BRENNAN J:	OF the order in that case was an order to settle

and it was regarded as equivalent to an order

specifically performing the settlement which was

to be effected?

MR BROUN:	Your Honour, in the 1959 Act, section 86, the word
"settlement" was used, the court may order the husband to make a settlement, or a party to make
a settlement. "Settlement", however, was held
by a large number of authorities, including some
in this Court, as I recall, it was just a general
generic term for any sort of disposition, whether
it be by simple transfer or by the settling or
establishing of trusts or estates in succession
or estates for limited periods and that included
in what was called a settlement, under section 86,
was an.order for a simple transfer from one owner
to another.

(Continued on page 11)

C 1T9/l /ND 10 15/11/89

Johnson(2)

MR BROUN (continuing):  Now what happened in HARRIS V WALKER.

was that the court had ordered, under that nower

to make a settlement, had simply ordered that

the wife transfer to the husband a piece of real

estate which was held in her name on Scotland

Island, the history having been that in fact

the husband had purchased it, she had made no

contribution to it, it had been olaced in her

name during the course of the marriage and it

was held by the original trial judge in that one

that it was just that the wife should give it back. But the	fact that the 1959 Act used in section 86 the term
"settlement" is not perhaps significant in view of the interpretation given by all the authorities
as to what a settlement was. I can look up
the authorities on that point for Your Honours
and perhaps send in the reference.

BRENNAN J:  I am curious to discover how it was that

courts of equity der~ved a jurisdiction to

give effect to orders of this kind.

MR BROUN:  Your Honour, Mr Justice McLelland's decision

is the decision of a single judge but he did

have three English cases where a similar

thing was done - - -

BRENNAN J:  Yes.

MR BROUN: - :.. - to hold that on the making of an order in

a family law matter, or matrimonial matter,

or divorce division matter, that created an
equity for the benefit of the recipient of the
order, that equity then surviving, in the case
of HARRIS V WAtKER and, I think, MACLURCAf.J, surviving
death. Just before I 80 on to answer Your Honour the

Chief Justice's question, the other case which perhaps deals with that question very strongly

is IN RE RICHARDSON's WILL TRUSTS, (1958) 1 Ch,

where again - no, that was a Court of Anpeal

decision. No, I think again, it was a·· -

single-judge decision, Justice Danckwerts,

sitting in the chancery division. Again,

looking at the headnote towards the bottom:

(Continued on page 12)

ClTl0/1/JM	11	15/11/89
Johnson(2)
MR BROUN (continuing):

Held, that on the footing that the order was

not completed by the execution of a deed, its effect
was to create an equitable charge on the bankrupt's

interest, and accordingly there was a forfeiture

of the interest under the express terms of the will,

and the trustee of the will held the property

during the rest of the bankrupt's life on the

discretionary trusts.

Now, there was no death in that one to complicate

the matter, because death has always been a complicating

factor because of the authorities which say that where

a property order is made as an ancillary to the
dissolution of the marriage and the marriage is dissolved

by death, then the jurisdiction of the court goes.

Now, that has all been cured in the present

legislation which makes it quite clear that resolving

property issues between husband and wife is not

dependent upon the continuation of the marriage

that the court may dissolve and that those proceedings

survive death. But it did lead to problems in earlier
cases and that was why, in HARRIS V WALKER, unless
there was able to be established a trust, the beneficiary
of the order may have lost his benefit by the effect

of the death abating the proceedings.

Now, RICHARDSON'S WILL TRUSTS is quite a strong

case because the order had required the husband to charge an interest he had under another trust with

the payment of money to the wife. The terms of the

original trust provided that if his interest was

charged or disposed of or assigned, he lost it. So

the question, in effect, of whether it created an equity

in this case was 8reatly to the disadvantage of the

wife. So that it is quite a strong case. And it was

held that it did create a trust for the benefit of the

wife, created an existing present equity. It was

therefore an equitable charge upon the husband's interest

in the previous estate, and therefore operated to
lose him that interest.	So that the wife, by getting
the equity, lost.

The particular passages I would refer to are

beginning at the foot of page 510, the beginning of

Justice Danckwerts's judgment.

MASON GJ:	Was it held that there was a trust?
MR BROUN:	Yes, that an equitable charge was created.

NASON CJ: Well, that is not a trust.

MR BROUN:  I use trust in the sense there as somebody who holds

an asset legally which is subject to an equitable

charge, has that fiduciary obligation in respect

of it. Justice Danckwerts begins his judgment at

ClTll/1/LR	12	15/11/89
Johnson(2)

the foot of page 510:

In considering whether there has been a

forfeiture, the first question is: What was

the effect of the order of June 3, 1955, on

the footing that it was never completed by the execution of any deed? The matter has

been very well argued before me, and I have

been taken through a number of cases. I am

satisfied, upon three decisions, that clearly

the effect of that order in itself was to

create an equitable charge, if that were

possible - - -

MASON CJ:  An equitable charge does not give rise to a fiduciary

obligation, does it?

MR BROUN: Well, the person who holds thep:-operty subject to

that equitable charge has, it would seem, obligations

in respect of it.

~..A.SON CJ: Yes, and they are obligations that are enforceable

in equity.

MR BROUN:	Yes.
~.ASON CJ:	But that does not mean there is a fiduciary

obligation.

MR BROUN:  Yes, Your Honour is quite right. I have put that

wrongly.

McHUGH J: Can I just stop you? At what point of time did this

equitable charge arise in the present case?

MR BROUN:  In the present case we put it beyond an equitable

charge because it was actually an order for a transfer.

McHUGH J: Yes.

MR BROUN:  In RICHARDSON it was an order to create a charge.

was an equity created in the whole of the property	So in effect we say that in the present case there
and the husband thereafter was just a bare trustee,
as it were. That is to say he had a bare legal
title but no equity.

McHUGH J:  I must say I find some difficulty with the concept

that, here in Australia under a federal system, that

upon making this order in some way the courts of

equity could act in relation to it. No doubt they

would act in personam but it strikes me as somewhat

odd that, by reason of the making of this order, the
equity court has then got jurisdiction before the

order had been executed.

ClTll/2/LR	13	15/11/89
Johnson(2)

MR BROUN: Well, Your Honour, I can tell Your Honour there is - - -

McHUGH J:  You see, in England, I mean you are dealing with

one supreme court.

MR BROUN:  That is so. HARRIS V WALKER, Your Honour, has been

doubted once, and, as far as I can see, has only

been doubted the once and that was in a decision
of Mr Justice Lucas of the Supreme Court of Queensland.

But in a later decision His Honour expressly adopted it. The one in which Mr Justice Lucas adopted it, I

have referred to in the contentions: that is RE JOHNSTONE'S

ESTATE. The one in which His Honour doubted it was a

case called KING V KING, which is referred to in

Mr Justice Nygh's judgment and that is in 24 FLR 269,

but it does seem that KING V KING turned rather upon

a question of the order there having been made before

the decree became absolute, and the effect of the

death before the decree absolute being more total in

its effect on abatement than an order made some time

after decree absolute, or which had survived the decree

becoming absolute. So that it does seem that KING

depended upon that special fact that the marriage was

ultimately dissolved by death and not by divorce.

But even so, that case seems to be inconsistent with

HARRIS V WALKER, but in RE JOHNSTONE'S ESTATE, the

same judge followed HARRIS V WALKER. So, Your Honour,

although there is certainly, I would admit, there is the

difficulty that Your Honour may feel in a federal

system, none the less there does seem to be a lot of

single judge authority for it. POLLARD is, I think, a

decision of Mr Justice Selby, also following - - -

MASON CJ:  Mr Broun, we seem to be descending into a wilderness

of single instances, and - - -

MR BROUN:  Indeed, Your Honour, I merely give Your Honour the

reference to those - - -

MASON CJ:  - - - you have not really faced up to the question

put to you earlier by Justice Brennan.

justify this step, which seems on the face of it How do you

to be a very significant leap,in asserting that

equitable rights arise under a court order? Now the

entire basis of equitable rights, as we know them up

to date, arises out of transactions inta:" partes.

MR BROUN:	Yes.
MASON CJ:	Now, what is the legal foundation for the assertion

by these judges of the existence or creation of

equitable rights arising from court orders?

MR BROUN: Well, Your Honour, as I tried to understand it myself,

unfortunately none of the judges make it clear, but

as I - - -

MASON CJ:  That is why we are relying on you to make it clear to us.

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Johnson(2)

MR BROUNE: Well, Your Honours, I give Your Honours my

answer to the difficult problem, which is that,

in effect, a court order - a court proceeds on

the basis that its orders are going to be obeyed.

All courts of other jurisdictions and other

courts will assume that an order is going to be

obeyed and the parties will obey an order, that

therefore, at the moment the order is made, it

is to be assumed that the legal owner intends to

obey the order; intends to transfer, and that

that intention of his to obey the order which is
a proper inference, is enough to create the
equity in the intended beneficiary; an intention
in this case which is not documented by deed of

gift, but documented by court order, which is as

complete and as total a record of the intention

as any other form.

MASON CJ:  You say it is a trust. What form of trust is it?

MR BROUN: It is a bare trust, and so, in our submission - - -

MASON CJ: Well, maybe it is a bare trust, but is it an

express trust; a constructive trust?

(Continued on page 16)

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Johnson(2)

MR BROUN: Well, Your Honour, in some cases, for example

POLLARD, it has been referred to as a constructive

trust. I would have thought, for my part, it is an

express trust; that one can see in the express

document, namely the court order, what the

intention to be imputed to the person who has made

the order is.

:MASON CJ:  But an express trust exists on the foundation that

there is an intention to create a trust on the

part of the settlor, the person holding the legal

estate. Now, that cannot be so in these cases.

MR BROUN: Well, Your Honour, had the husband, instead of

being subjected to a court order, had he executed a

deed of gift saying "I hereby transfer, or convey,

or make a gift to my wife of this property and to
give effect to this gift I will execute a memorandum
of transfer.", as from the moment of the execution

of that deed the beneficiary of his intention, in

my submission, acquires an interest and there is an

express trust under which he holds the property,

namely, it is hers from that moment forward.

:MASON CJ: Well, not from the moment of execution of the

deed, if you are talking about common law title,

but from the moment of the delivery of the deed.

MR BROUN:  The deed would have to be delivered. Delivery of

the deed, yes, Your Honour is quite right. The

execution and delivery of the deed, thereafter there needs to have the intention perfected in that there has to be a transfer and it has to be

put on to the legal title but if there is delay

in that and if, during the period of the delay,

the donor does something inconsistent with his

deed of gift he is in breach of, I would submit,

an express trust and that he illegally holds that

property as bare trustee for the donee.

TOOHEY J:  Why do you describe it as a gift in those

circumstances, Mr Broun? Is was a3 a result of some

negotiation and settlement of the claim ·and

counter-claims of the parties in regard to

matrimonial property.

MR BROUN: No, I was merely using the example of a gift as a parallel to the court order or an example of the

theory being applied, namely, the court order is

then to be seen as imposing upon the husband an

obligation which the law would infer that he intends

to comply with and intends to act in accordance

with it and we have it documented in the form of a

court order and it is express, in my submission,

although it is called in POLLARD V POLLARD a

constructive trust. But, I would submit that the

order must be seen to create a trust at least in

that way.

C1Tl3/l/DR	16	15/11/89
Johnson(2)

Now, there may be better ways or that may not

have been the reasoning that the judges in the

single instances had in mind but we would submit that that is at least a way in which it could be

seen and that is the way that has occurred to me

that, in effect, it creates a trust by imposing

upon somebody an imputed intention but that

imputed intention, having been imposed, it is to be

seen as an express trust not a constructive one.

BRENNAN J:  The difficulty that perhaps underlies this

theory, Mr Broun, is that before equity could regard

its remedies or its interests as being available

when founded upon the court order, it must be
regarded as unconscionable for the person against
whom the order is made not to comply with it. Yet
the whole history of enforcement or execution of
court orders has not been based upon notions of
unconscionability but on notions of the exercise

of duress by the curial power, be it committal or

sequestration or whatever.

MR BROUN: The reliance on that other remedy

which is perhaps more effective and more immediate

and more drastic,· to enforce an order, is what

has perhaps kept these questions of an equity
created in the background and it is really only

arisen in cases where the enforcement procedure

had no relevance.

(Continued on page 18)

C1Tl3/2/DR	17	15/11/89
Johnson(2)

MR BROUN (continuing):  In HARRIS V WALKER it had no relevance

because death had abated the matrimonial causes proceeding and there was no enforcement in that

jurisdiction apparently available or, at least,
that was the received theory in the time. It is

not longer so under the present legislation but it was then apparently the view that once there was death you could not enforce the order in the

matrimonial causes jurisdiction.

In RE RICHARDSON, it came to a question of whether there was an equity because the question

again was not enforcing against the husband but
whether the effect of the order amounted to a breach

of the condition in the old trust which, then, lost

h i m the be n e f i t o f the o 1 d tr us t on w h i ch ~ ITBtr:irrrnial

causes jurisdiction had sought to operate, that is to
say, again, it was not any question of enforcement;

one had to look at these other issues. S:) the question

of whether there is anything else other than enforcement

has arisen relatively seldom because the enforcement is

normally the best and cheapest and quickest method.

So that there is, in our submission, to be found in
the authorities over a long period this acceptance
of an order creating an equity and, Your Honours,
in our submission, whether it be based upon an

express trust in imputing the intention or whether

it is seen perhaps as being a constructive trust

imposed to prevent unconscionable conduct which

may be, perhaps, an alternative, whichever it was,

there is an equity of some kind created which may

then be protected.

Now, the next part of my contentions,

Your Honours, goes to the question that Your Honour

the Chief Justice asked me, namely, how does the

breach of the trust give rise to the obligation to

compensation or indemnity and there I would refer

particularly to RE DAWSON (DECEASED), (1966) 2 NSWR 211.

In that case there was a breach of trust of an entirely

different kind but the question arose what was the
compensation payable to the - or what indemnity should

the cestui que trust receive or should the trust

receive from the defaulting trustee?

If I may take Your Honours firstly to page 214,

again, a single judge decision, where at the last

paragraph on that page, the trial judge there refers

to the arguments that had been presented to him. He

says, in the third line going to the fourth:

The obligation of a defaulting trustee is

essentially one of effecting a restitution

to the estate. The obligation is of a

personal character and its extent is not to

C lTl 4/1 /SH	18	15/11/89
Johnson(2)

be limited by common law principles

governing remoteness of damage.

Then, various authorities are discussed by His Honour.

Then, at page 215, summarizing CAFFREY V DARBY, at

about line 9, the judge there said:

CAFFREY V DARBY, SUPRA, is consistent

with the proposition that if a breach has

been committed then the trustee is liable

to place the trust estate in the same

position as it would have been in if no breach

had been committed. Considerations of

causation, foreseeability and remoteness do

not readily enter into the matter.

Then, CLOUGH V BOND is discussed.

(Continued on page 20)

C1T14/2/SH	19	15/11/89
Johnson(2)

MR BROUN (continuing):  Then if I may take Your Honours

across to page 216 at about line 6:

The cases to which I have referred

demonstrate that the obligation to make

restitution, which courts of equity have

from very early times imnosed on

defaulting trustees and other fiduciaries

is of a more absolute nature than the

common law obligation to pay damages for

tort or breach of contract.

And, in effect, to make restitution. That case

is perhaps a good illustration that what the

court is doing is looking at putting the trust

property back into the condition that it should

have been in.

MASON CJ: That was a case where the defaulting trustee

paid away trust moneys.

MR BROUN: That is so, Your Honour, there was a breach.

MASON CJ:  And restitution was ordered, but that is

not this case.

MR BROUN:  The facts are very different, certainly,

Your Honour. We merely say that if we have

the obligation of a trust and there is a
breach, and in this case Mr Rzetelski breached
it by not transferring the property at the

date he was ordered to transfer it, then

the proper consequences to put the property,

the subject of the trust, back into the
condition that it would have been in had the

order been complied with, that is to say,

had the terms of what we would say is

the trust been carried out, in this case,

putting the mortgage back into the nosition

that it would have been had the intention of

the court imputed to the husband been carried

out.

GAUDRON J:  Mr Broun, I have some difficulty with your

notion of breach of trust. You seem to be

running breach of trust and breach of the order

together. It is the breach of the order which

you assert brings about the trust relationship,

is it not, or simply the making of the order?

MR BROUN:  The making of the order brings about the

equity. The equitable right of the recipient

of the order, in our submission, imposes a

trust upon the bare trustee who is the legal

owner not to damage the benefit of the property.

GAUDRON J:  Where is the mere failure to convey? How

has that constituted a breach of trust?

CIT15/1/JM	20	15/11/89
Johnson(2)

MR BROUN:  Because the terms of the order, and hence we

would argue the terms of the trust, required

the transfer by a particular date, it being

the purpose of that and being a contemplation

of everyone, that if it was not transferred then the mortgage liability on the property

on which interest was accumulating would

continue to accumulate further interest

obligations and there would be an accretion

to the liability. So that a failure to transfer

by the particular date diminshed the value of

the benefit intended to be transferred because

the amount of the mortgage debt went up so

that the mortgage secured over the nroperty

and which the order, and hence the trust,

intended should be the responsibility of the

recipient of the transfer of the property.

So she gets the property, subject to a mortgage;

the delay in the transfer means that the mortgage

goes up and the delay in the transfer means that
she has no means of discharging that mortgage

debt in this case because she could not strata

the property and sell off one or two of the units.

GAUDRON J: Yes, I - - -

~.A.SON CJ: That would only entitle her to an account in

relation to the income that would have been

received had the transfer been executed in

accordance with the order. Itwould not say

anything at all about the mortgage debt.

MR BROUN:  In our submission it would, Your Honour, because

in this particular case the exnress terms of the
order, and hence, we would say: the trust,

required the wife to attend to that mortgage

debt and because there was in the contemplation

of everybody how that debt was to be dealt with and what would happen if it was not dealt with.

(Continued on page 22)

CIT15/2/JM	21	15/11/89
Johnson(2)

MASON CJ:  But if you be right in that a trust came into

existence on the making of the order, under which

the wife was the beneficiary, then in those

circumstances she would be entitled, as beneficiary,

to the income yielded by the property, the subject

of the trust.

MR BROUN:  Yes, Your Honour. I must say that Your Honour is

obviously right about the entitlement, but that is

not in fact apparently what happened.	Would
Your Honour just pardon me.	No, I am sorry,
Your Honour,	I was wrong in what I had told

Your Honour earlier and I have now been corrected.

This case has an even longer history that may appear.

Mr Justice Nygh was not the first judge to deal
with this case. There had been an original hearing

before Mr Justice Pawley; that had gone to the

Full Court; a retrial had been ordered;

Mr Justice Nygh did the retrial and in fact the

wife had been receiving the whole of the rents of
the eight flats in the block as a result of a

separate order since February 1983, before the

hearing before Mr Justice Nygh. So that the

disposition of the income of the flats had all

gone to her pursuant to quite a separate order.	I
am sorry that I had the facts wrong earlier.	I find

that, in case my friend wishes to check it, in the

original judgment of Mr Justice Nygh on the hearing,

not the judgment which has led to this appeal. It
is not in the appeal book. It is the original
judgment on the property issue which led to the

making of the orders. It is not included in the

appeal book because it was thoughtto be of no great

relevance and it is some 45 pages long. It was a

very complicated matter, but in fact rental income

was being received entirely by the wife anyway from

a much earlier date.

MASON CJ: What income was she not getting that she would have

got had the transfer been executed in accordance with

the order of the court?

MR BROUN:  No additional income, Your Honour. What the loss

was as the result of the delay was that the mortgage

continued to accumulate further interest, the

mortgage debt being, I have forgotton the exact

amount of it, a fairly substantial sum, which was

envisaged as being paid by the sale of one or more of the units in the block. So it was not a matter

of being deprived of income. She had the income

already under a separate earlier order. In fact an

order made by reference or in relation to a

maintenance provision for her, it appearing also

that that was the appropriate way to do it because

it had been her money which had originally provided

that block of flats.

CIT16/l/CM	22	15/11/89
Johnson(2)

TOOHEY J: I am not sure that I follow that, Mr Broun. If

the order had been complied with, the property would

have been transferred within one month of the order,

would it not?

MR BROUN:	That is so, Your Honour. Yes.
TOOHEY J:	And the wife would have thereafter been subject

to the mortgage debt?

MR BROUN:  True. And what had been envisaged before

Mr Justice Nygh in the original hearing and in the

hearing the subject of this appeal was that the

way that that mortgage was going to be discharged
was to lodge a strata plan for the eight units;sell

• off one of the units or two of the units and pay

the mortgage out and thereby bring the continuing

obligation for interest to an end. Now

Mr Justice Nygh held in this particular case, now leading to the present appeal, that a certain part

of the interest that had accumulated between the
date of the order and the date upon which he made
his judgment in the present application, was
caus~tively referable to the breach by the husband;

That the husband's failure to transfer had caused,

in effect, the accumulation of an amount which

His Honour specified of the interest liability.

TOOHEY J:  I understand that, but in terms of the orders that

were made, had those orders been complied with, the
wife would have been in exactly the same position

as she ultimately found herself, so far as the

terms of the orders were concerned.

(Continued on page 24)

CIT16/2/CM	23	15/11/89
Johnson(2)

MR BROUN:  Except that the amount due and secured by the

mortgage over the pro2erty had increased in the

meantime, quite significantly - some $25,000, or

something of that order - of which His Honour then

apportioned a part as the responsibility of the

husband as having arisen from his breach of the

orders in not transferring at the time that he was

directed to do so and having refused to transfer.

TOOHEY J: Yes, but it would have been some action which you

say was envisaged by the judge, although not

incorporated in any formal order of the court,

namely the selling off of one unit, that would have

prevented the interest accumulating.

MR BROUN:  Yes. I refer to that merely as showing - - -

TOOHEY J: It is not in itself the failure to transfer within

one month, but rather the fact that the failure to

transfer meant that the wife was not in a position to

dispose of any of the property had she wished to

prevent the interest debt accumulating.

MR BROUN:  Yes. I had referred to those facts, Your Honour, to

indicate the basis upon which Mr Justice Nygh came

to the factual conclusion, which has not been the

subject of any appeal, that it was caused by - - -

TOOHEY J: Yes, I understand that, but it may have some

implications for the general argument as to what

was involved in the breach of the order.

MR BROUN:  Yes. Certainly, Your Honour, what we rely upon

as the1 consequences of the breach is that increase

in the mortgage obligation which we say otherwise,

had there not been the breach, could have been

avoided.

GAUDRON J:	And do we not take into account by way of offset that one of the consequences of the breach is that
your client had eight units with a mortgage as distinct
from six or seven without a mortgage?

MR BROUN: Well, Your Honour, Mr Justice Nygh was asked to

take into account the fact that the units had increased

in value during the period, and he held that that

was - - -

GAUDRON J:	Yes, but the number is different.
MR BROUN:	Certainly, Your Honour. The order in effect said,

"Transfer it to her, she to be responsible for a

mortgage debt." At the date of that transfer the

mortgage debt stood at X dollars. By reason of

the husband's breach of the order, when it was

ultimately transferred the mortgage stood at

X dollars plus Y, and it is that Y to which we

are looking.

C1T17/1/LR	24	15/11/89
Johnson(2)

GAUDRON J:  By reason - but only of the husband's breach.

By reason of the husband's breach and the non-sale

to pay out the mortgage debt. But it is still

the fact, is it not, if one proceeds on your

hypothesis, your client had eight units with an

increased mortgage as distinct from six or seven without

a mortgage?

MR BROUN: That is so, Your Honour, yes.

McHUGH J: Well, what loss did she suffer? I mean, she was

getting the income from the two units whichis to

be offset against the interest.	Maybe she was
better off.

MR BROUN:  Your Honour is assuming that the income was to

be offset against the interest. In our submission,

the order originally made back in 1983 for her to

receive that income was also designed in effect to

provide for her maintenance, she having no income

by reason of the fact that her property was all tied

up in this litigation.

McHUGH J:  But be that as it may, if the property had been

transferred earlier she would have had less income,
so what was her loss? At its highest the loss was

the extra interest that had to be paid less the

benefit she got from having the income from an

additional two units.

MR BROUN: Well, Your Honour, in our submission, no, because

the income from the units was intended as, in part

at any event, a provision to provide for her support

and that had been a part of a court order. We rely,

in effect, upon the findings of Mr Justice Nygh in this

matter that the result of the husband's default was

that she suffered a loss in the sense that she had

$25,000 more due on the mortgage than she would have

had had the order been complied with.

(Continued on page 26)

ClT17/2/LR	25	15/11/89
Johnson(2)

BRENNAN J:  Mr Broun, if the order had been complied with,

the position of your client would have been, on
the date of compliance, she was in possession of
the property, subject to a mortgage, and entitled
to the receipt of the income. It would matter
not whether she was entitled to the receipt of

the income as at that date, by reference to the

earlier order, or simply by reference to her

proprietary interest in the whole of the units.

It would then have been up to her to decide whether

she wanted to keep the interest down by selling

some of the flats or not. The proposition that

you are contending for, as I understand it, is

that the expense of keeping the interest down on

the mortgage is to be borne by the husband without
any account being taken of the increase in the

value of the flats or with respect to the income

that was derived from them?

MR BROUN:	Your Honour, I would put our contention a little
differently, that we say simply that by reason
of the breach there was this accretion to the
mortgage debt but, Your Honour, perhaps I might
also say the matter that Your Honour very correctly puts to me was not raised at the original hearing
in this present application before Mr Justice Nygh,
nor was it debated or adumbrated at all before
the Full Court.

BRENNAN J: That is something which perhaps - no~ I take it,

before the Court on the application for special

leave?

MR BROUN:  No.

BRENNAN J: If the argument is now to be put on the footing

of an analogy to a trustee who is in default in

performing the duties of his trust -

MR BROUN:	That is one of the alternatives we put, Your Honour,
yes.

BRENNAN J: If it is, then these material facts not being

before the courts below or before this Court on

its special leave is an appropriate case for the

revocation of special leave.

MR BROUN:	I hope Your Honour would not think so and that it would be rather a matter - - -
MASON CJ:	I think it is a matter that you ought to give careful
attention to, Mr Broun.
MR BROUN:	Your Honour, it was not something raised below
but if Your Honours were ultimately of the view that the trust argument was entitled to succeed

ClT18/1/ND	26	15/11/89
Johnson(2)

then, in my submission, Your Honours would refer

the matter back to the Full Court to make appropriate

directions to clarify these matters which

Your Honours have raised as to the proper method

of taking of accounts.

TOOHEY J:	But that does not bear upon the trust argument,
it bears upon your first proposition, as I
understand it, that there was damage arising from
breach of an order of the court - although you
have some difficulty in formulating quite how that
cause of action arises - but as it is now emerging, the damage did not result from the failure to comply with an order of the court.
-MR BROUN:	In our submission, it does, directly, Your Honour,
yes.
TOOHEY J:	But had the order been complied with, your client would have - - -
MR BROUN:	Presumably lost some income as well.
TOOHEY J:	That is right. I mean, she would have acquired
the property in the sense of the legal title to the property, which under ordinary circumstances would carry the mortgage debt until that debt was
finally discharged. It was to be discharged, you
tell us, by selling one or more than one of the
units and that would necessarily carry with it
a reduction in income. It is not merely an
accounting exercise, it seems to me it bears upon the very cause of action that you are seeking to construct.
MR BROUN:	Your Honour, the consequence would be, in my submission, if Your Honours were of that view,
that the trust was the appropriate way to look at it, the consequence would be, in my submission,
that Your Honours would refer it back to the
Full Court to make appropriate consequential orders
or to direct the appropriate inquiry as to what the damages were. But, certainly, that was not the basis on which Mr Justice Nygh approached the
matter or the Full Court approached the matter
so that they did not get to consider that accounting
question.

TOOHEY J: Is there any authority, Mr Broun, outside the

matrimonial field bearing upon the cause of action

that arises by reason of a party's failure to

comply with an order of the court?

ClT18/2/ND	2 7	15/11/89
Johnson(2)
MR BROUN:	I have not found one, Your Honour.	We have

searched as well as we can, but we have not found

one, and we would infer that that is because it is

only in this odd family law situation that you get
these strange facts occurring of the effect of death upon an order, or the effect of an order

upon another trust, in this sort of family situation.

It may be that the reason we cannot find it is

just because it is only in the very rare family law

matter that it is going to crop up as a set of facts.

So, we have not - in fact, to answer Your Honour's question, I cannot refer Your Honour to any authority

in other jurisdictions.

GAUDRON J:  I have a further problem with your submissions,

contained in paragraph 1, Mr Broun. It seems to me

that if there were any damage or loss, it is a lost

opportunity; that is to say, the opportunity to

strata title at a particular time and pay out the

mortgage; and that really is, it seems to me, to be the

loss and how you reduce that to money terms, I would

not know.

MR BROUN: Well, Your Honour, the way we put it to Mr Justice Nygh

initially, was that you can work out what the damage

is fairly simply by saying, "There is the liability

as it existed at the date the property was supposed to

be transferred; there is the liability now".

GAUDRON J: But that is - yes; well - - -

MR BROUN:  And that that - whatever other income or a loss of

income the wife may or may not have suffered as a

result of the orders, one could say, "Well, that

increase in the mortgage debt is something that

arises because the husband did not transfer - during

the period that he was holding the property when he

should not have been holding the property.

McHUGH J: That cannot be right, can it? That cannot be the

loss, because you have got the benefit of not having

to pay the mortgage debt now.

MR BROUN: Well, Your Honour, that is really, as we see it, the

importance of RE DAWSON, to which we have referred,

namely that one does not, in respect of a breach of

trust, look to foreseeability; look to other factors,
try to assess damages as if one was looking at a

tort -

McHUGH J:  I was really thinking in terms of your first

proposition.

MR BROUN:  Indeed, Your Honour, in respect of my first

proposition I would have to accept that we then go to

the question of taking an account as to what the

total loss has been. We would have to look at questions

C1Tl9/l/FK	28	15/11/89
Johnson(2)

that have never been so far looked at as to the

calculation of the figure, and it may be that

there needs to be some further reduction on that

figure.

BRENNAN J:  Mr Broun, I suppose, looking whether at

RE DAWSON or at paragraph 1, if one approaches it

from the viewpoint that Justice McHugh just put to

you, money has a value at a point of time. It has

a different value at a different point of time.

MR BROUN:  Yes.

BRENNAN J: Well, in this case there were X dollars owing

on mortgage at the time fixed for the compliance with

the order: X plus Y at a later time. What is the

difference between X dollars at this time and

X plus lat the later time? Is it Y?

MR BROUN: Well, Your Honour, in a number of cases where this

sort of problem has arisen, the consumer price index

has been resorted to to compare the value of money at

different times, and the loss has been assessed in
that way. In this case however, in this original

application before Mr Justice Nygh, there was no

submission put to him to look at the different

values of money at the different dates. It may be

that it should have been put, but I did not put it and

Mr Rsetelski was in person at that hearing, and he did not put it.

GAUDRON J: Well, Mr Rsetelski did try to put a submission,

did he not at that stage, as to the changed value,

at least of the real estate?

MR BROUN:  Yes, which His Honour rejected as inappropriate to

bring into account, so that it was endeavoured to
be - in that sense it was raised, but not the question

of the change in value of the actual mortgage amount.

(Continued on page 30)

ClT19/2/FK	29	15/11/89
Johnson(2)

MR BROUN (continuing): Perhaps the way it arose, particularly

in this case, it perhaps need not have been taken
into account because, as Your Honours will see

when looking at the detail of the judgment, there

were, in effect, two lots of interest that

Mr Justice Nygh dealt with. He awarded to the

husband the interest in accordance with rules of

court on the amount that she was to pay him and

awarded to the wife the accumulation on the mortgage

on the property that he was to transfer to her

and then offset them against one another.

Now, if one did a value of money calculation

of one, one would have done it on the other and
the consequences may not have been so great when
one sees the two sums of money passing back and

forth. Certainly, Your Honours, it was never done

and never attempted to be done or even submitted

that it should be done.

BRENNAN J: The problem remains, does it not, that whether one

approaches it on the first basis, or on the basis of

a trust, the case was never put in the courts

below in such a way as would, in accordance with

any principle, lead to a proper assessment of

whether or not damage had been suffered, for the

reasons of the omission of the factors that have

been referred to?

MR BROUN:  I think I must concede that but that, in my

submission, once the principle has been established,

then it would be simple for Your Honours to refer

it back to the Full Court who would, no doubt,

refer it to the trial judge for the purposes of

the calculation of what the appropriate figure is.

The question is, and what has been the subject
so far debated, is: what is the relevant principle
and how is that problem to be approached? The

calculation of what flows from it will, no doubt,

be something that one would hope would be readily	agreed· ·between the parties once we know what
the method is and what the principle is. The rest
then becomes a matter of, perhaps, arithmetic.

GAUDRON J: Maybe in your client's favour. Are you going to

give it back?

MR BROUN:  Your Honour, I hope it is in my client's favour

but that - - -

GAUDRON J: But, really, it might be that when you do the

sums your client has been advantaged rather than

disadvantaged.

ClT20/l/DR	30	15/11/89
Johnson(2)

MR BROUN: Well, in that case, Your Honour, the effect of

Mr Justice Nygh's original orders will be that

the offset that he awarded to the wife will go and

the amount that the wife was ordered to pay the

husband, in respect of the order and in respect

of which she was in breach, that will stand. So,

the husband will get, in effect, what was intended

for him. So that there will be, in effect, an

adjustment, whatever is the appropriate adjustment,

if we can work out on what basis the principles are

to be applied to the facts of this case.

BRENNAN J: But, if at the end of the day, it is found that

there is no damage, or no loss of a kind that a

trustee might be required to refund to an estate,
then it would be a terrible thing, would it not,
to send this back to the Full Court and from there

back to the single judge to engage in further and

further litigation for an uncertain result?

MR BROUN:  Your Honour, I suppose it can be said that this

litigation has had the very characters to which

Your Honour refers:  two trials; two appeals;

two applications for special leave to the High Court.

It has had a very unhappy history but, in my

submission, what the parties have been seeking for

is, in effect, an answer as to how this last

problem is to be dealt with and we come here to

ask Your Honours - to submit, Your Honours, that

the Full Court has gone wrong; that Mr Justice Nygh

may, perhaps, have gone wrong with the calculations

as well; but we ask this Court to indicate how the

figures should be done.	How do we go about working
out who owes who what?

MASON J: It looks to me, Mr Broun, as if the only beneficiaries

in the quest for an answer to this question have been

the members of the legal profession. I have no

doubt that very considerable legal costs have been

incurred in these proceedings so far and yet it seems at

this stage that there has not been a proper investigation

of whether your client suffered any actual loss at

all.

(Continued on page 32)

ClT20/2/DR	31	15/11/89
Johnson(2)

:MR. BROUN:  Your Honour, certainly as to the matters that

have been advanced in relation to my submission

here about the trust situation I have to
concede that there has not been the taking
of an account in the calculations of all

these various factors in the ways that

Your Honours raise. Perhaps that is to be

laid at the door of counsel who appeared before

Mr Justice Nygh,who is in fact myself, on

this anplicaiton. We put up what we thought

was a fairly simple proposition; His Honour

treated it as a fairly sir:mle Tff01Josition.	He were
awarded a sum of money to offset against the
money due to the husband.	We alternatively

advanced the argument, "Well, we both are

in default. Neit~er party pay anything to

anybody and we all go our own way as a matter

of discretion." But that did not find favour

before Mr Justice Nygh or before the Full Court,

so we were left with the Full Court with what

appeared to be a very unfair result of the

wife having to compensate the husband in

respect of the money that she did not transfer

to him. The reason she had not transferred

money to him being, of course, that he was

refusing to transfer the property to her.

TOOHEY J:  But when you say that, Mr Broun, you leave out

of account the additional factor, namely that
the accumulation of interest at a particular

rate ignores the fact that once the property

was sold to meet that debt there was a corresponding

diminution of income. It seems hard to imagine

how that could not have surfaced at some stage

during the litigation.

:MR. BROUN:  It was not a topic that was specifically

addressed anywhere.

McHUGH J: In addition to that, all rates of interest

have got a large component for infJ.ation.

The true rate of interest is probably about

three or four per cent historically, and

probably still is today. So the value of

the property would have increased, one would

assume, which offsets the payment for the

additional amount of interest in any event. I mean, if the order had been complied with

when it was supposed to have been, you would
have got a ~roperty with a particular mortgage

subject to a mortgage debt; at a later time

you got another property - you got the same

property subject to a mortgage debt with

different quantification; in the meantime you

had the use of the receipts from that property.

I mean, it is by no means certain you have

suffered any loss.

ClT21/l/JM	32	15/11/89
Johnson(2)

MR BROUN:  Your Honour, we rely, of course, on the

finding of Mr Justice Nygh that we did, which

was not the subject of any appeal to the

Full Court.	Mr Justice Nygh assessed what
our damage was.	The quantification of that

damage was never argued before the Full Court
or made the subject of appeal to the Full

Court, not even referred to in the Full Court judgment. What was argued before the Full

Court was simply the question of princinle

whether the wife was entitled to anything

at all, not what the quantum of it was.

McHUGH J: If she suffered no damage, she would not

have been entitled to anything at all, would

she.

MR BROUN:  Your Honour, that was not advanced as a reason

for saying she was not entitled to any award.

What was advanced were the matters going to

jurisdiction and power that are developed or

referred to in the Full Court's judgment.

So that, Your Honours, certainly, I would

concede that Your Honours may, as a matter

of Your Honours' orders, if Your Honours come

to the view along the lines discussed, it would

be appropriate to say that somebody should work

it all out as to what the appropriate figure is,

but at this stage the order of the Full Court,

in our submission, is wrong in principle and

produces an injustice to the wife because it

means she has to pay him and the question of

what loss she has suffered, if any, is not

looked at at all because the Full Court says

there is no power to look at it, or there is

no jurisdiction, or there is no principle of law which would enable them to look at it. So that,

in effect, we say there is a severe injustice

in what the Full Court has done.

(Continued on page 33)

ClT21/2/JM	33	15/11/89
Johnson(2)

MR BROUN (continuing):  Now, it may be that Mr Justice Nygh

got the figures wrong and it may be that it is within

Your Honours' powers to ask him to look at the

appropriate principles and try to get the figures

right.

TOOHEY J:  But it is not a matter of Mr Justice Nygh getting

the figures wrong, is it? There is nothing to

indicate that on the way the matter was presented

the figures are not entirely accurate.

MR BROUN:	That is how I would certainly put it, Your Honour.
TOOHEY J:	And there would be nothing to be gained and

everything to be lost by sending it back for what

you tend to describe as an accounting exercise but

which may, in fact, reveal that there was no loss

at all suffered.

MR BROUN:  That is possibly so, Your Honour, but at the moment

we are left in the situation that the wife has to

compensate the husband for her delay and there is

not even an inquiry into whether she herself had

suffered damage or not. So that, in our submission,

the present Full Court result ought not to be

oermitted to stand. The wife, of course, will

~bviously, in view of what Your Honours have said,

be very well advised to consider carefully what

the quantification is and whether the game is worth
the candle before she does anything further but,
in our submission, the Full Court has said that,

as a matter of principle, the question of whether

she has suffered damage or not cannot even be looked

at. Now, we would ask Your Honours to say, "Well,

it can be looked at" and it may be, on looking at

it, it is going to be pretty small or it may be that

it is going to be nothing at all but none the less we would ask this Court to say that the Full Court

erred and that it is a matter that can be examined

and it is then a matter for this Court whether it

says, "We 11, the matter should be further examined" or

that the Court just draws a line.

It does still seem to me that - it has always been the submission we have put that the practical

answer is simply as a matter of discretion not to

enforce the husband's interest because of the late

payment by him and not to calculate at all but simply

to say, "Well, both parties were in default of the

orders. The orders were not expressly linked by the

orders themselves", although that was the way, in

fact, the parties treated them, "Leave everybody

with no compensation for the breaches on both sides

and not further investigate it." Now, that has been

something we have put up but as Your Honours will see.

at the end of the Full Court judgment, they just

ClT22/1/SH	34	15/11/89
Johnson(2)

simply said that they thought such an exercise of

discretion would be inappropriate. The husband was

entitled to interest for the non-payment of the sum

of money on time but the wife was not entitled to

any recognition of the consequences to her of the

non-transfer of the property on time and, in our

submission, that cannot be a just result.

Your Honours, in the rest of our contentions

we have endeavoured to put forward some other

alternative ways of looking at it. Perhaps I should

refer before leaving this trust question, to MADJERIC V

MADJERIC, (1984) FLC 91-552 at page 79,461, which is

the sort of factual situation that occurs more often.

A husband is order to transfer some piece of personalty

to the wife and, prior to transferring it or delivering

it, he damages it. The typical one is he chops the

furniture up with an axe - I am not sure whether that

actually happened in MADJERIC but that is the one that

has very commonly happened. One celebrated case -

the husband was ordered to transfer some property

and he put a bulldozer thrbugh half the house before

he transferred it. So, those are the sort of facts

that arose in MADJERIC.

Now, His Honour Mr Justice Elliott seems, in

that case, to have proceeded on the basis that the

wife had a beneficial interest in the property, the

assets, immediately the order was made and he also

seems to have assumed a passing of the beneficial

interest upon the making of the order because he

then says, "Well, the principle that entitles the

court to award damages for the damage to thiB property

is either trespass to goods or it is a breach of care

by a bailee". So, he says that we can find the

principle or the authority for compensation readily

here by saying that the wife is the beneficial owner

the minute the order is made.

(Continued on page 36)

C1T22/2/SH	35	15/11/89
Johnson(2)

MR BROUN (continuing):  I will come back to MADJERIC on other

questions but that seems to be the basis of the

decision. That reference to -

wrongful interference with property or

breach of duty of care as a bailee -

is to be found on page 79,461 in the left-hand

column, about a third of the way down and it is there

that he seems to find a principle. Your Honours,

the other alternatives we put up again as to

provide a principle or a legal basis or authority

for the making of the order for whatever damages

are appropriate, is nextly to see this as a sort

of tort and I have referred there in the contentions

to the well-known passage from DONOGHUE V STEVENSON,

which, although it is ordinarily applied and thought

of as only relating to negligence, is a principle of more general application. The famous passage,

Your Honour, appears in (1932) AC 580 where Lord Atkin

said at about a third of the way down the page, about

point 4:

At present I content myself with pointing

out that in English law there must be, and is,
some general conception of relations giving

rise to a duty of care, of which the particular

cases found in the books are but instances. The

liability for negligence, whether you style it

such or treat it as in other systems as a

species of "culpa," is no doubt based upon a general public sentiment of moral wrongdoing

for which the offender must pay. But acts or

omissions which any moral code would censure cannot in a practical world be treated so as

to give a right to every person injured by them

to demand relief. In this way rules of law

arise which limit the range of complainants and

are to love your neighbour becomes in law, you

the extent of their remedy. The rule that you

must not injure your neighbour; and the

lawyer's question, Who is my neighbour?

receives a restricted reply. You must take

reasonable care to avoid acts or omissions which

you can reasonably foresee would be likely to

injure your neighbour. Who, then in law is

my neighbour? The answer seems to be - persons

who are so closely and directly affected by my

act that I ought reasonably to have them in

contemplation as being so affected when I am

directing my mind to the acts or omissions which

are called in question.

CIT23/l/CM	36	15/11/89
Johnson(2)

We would submit, Your Honour, that with no

straining of the language at all, the present
facts fit in with that sort of a principle also.

It is clear that the husband and the wife were in

a position that the wife was going to be so

closely and directly	affected by his acts that
he ought,	indeed necessarily must - indeed the

whole purpose of his act was directed at her, namely

refusing to sign the transfer - he must have had

the appellant in contemplation as being affected by

his acts. There would have been no point in the acts

had she not been affected by them.

McHUGH J:  But the doctrine of negligence is concerned with

damage done to a person and - - -

MR BROUN: Again I have the damage problem, of course,

Your Honour, yes.

McHUGH J:	You have got the damage problem.
MR BROUN:	Yes, and if Your Honours were persuaded by this

alternative, again the answer would be that there

should be some assessment of the damage and indeed

His Honour did not attempt to assess it on the

question of what has flown from the wrong done to

the wife.

McHUGH J:  But it is more than that. You have got to show

the invasion of an interest. What interest of

your client's was invaded by the failure to

transfer the property at the appropriate date?

MR BROUN:	Her right to deal with it, in my submission.
McHUGH J:	But that is not a right, is it?  I mean, she did

not have a right. It was not her property at that

stage.

(Continued on page 38)

CIT23/2/CM	37	15/11/89
Johnson(2)

MR BROUN:	She had a right to deal with it as from the date of its transfer and the order specifically fixed the time of transfer so that she had a right to
deal with it as from a specified date and ultimately
she did not get the benefit of that right because
she did not get that property on that specified
date. So her right was postponed and we would
rely upon that as the general description of the
damage; the calculation of the damage that flowed
from that deprivation or postponement of her right
seems indeed, in the discussion, to be much more difficult, perhaps, than had been contemplated but none the less there is, in our submission,
a right of _which she was deprived which it appears there may well have been damage flowing from - there may not on some calculations perhaps, we do not at this stage know not having attempted
those calculations.
BRENNAN J:	Had she applied for an order that the registrar should execute a transfer, would that order have
been made?

MR BROUN: It was made. Ultimately, the husband still did

not transfer the property or the shares.	The
registrar ultimately signed on his behalf.

BRENNAN J: Is there contributory negligence in not applying

earlier?

MR BROUN:	Your Honour, if we were under the heading of
negligence - I was endeavouring to say that this
is a tort of a somewhat different character but
if we were under the heading of negligence then
there would be a question of whether there had
been a contribution and, in fact, that was what
Mr Justice Nygh did by saying, "Well, of the total
delay, I am not going to attribute it all to the
husband.", and he ordered only a part of the
accumulated interest to be compensated and a part
the wife had to bear herself.

BRENNAN J: Is not the execution of necessary instruments

by the registrar the way in which these orders

are ordinarily effected?

MR BROUN:	They are a common method of enforcement but, of
course, in the vast bulk of cases, having been
ordered to transfer a property, the respondent
does so and he signs on the dotted line, particularly
where he has got some money coming to him when he does and, in this case, the husband was to receive
$130,000 at the same time or a time - I am not
sure, exactly, whether it was exactly the same
time but he was to receive $131,000 within the same
general time frame.

ClT24/1/ND	38	15/11/89
Johnson(2)

BRENNAN J: Is that provided for under the FAMILY LAW ACT?

MR BROUN:	The appointment of the registrar to sign?
BRENNAN J:	Yes.

MR BROUN:  Yes, Your Honour, it is section 84. I think it

is still 84 - yes, it is still section 84.

BRENNAN J:  Why should there be any remedy other than that

provided for the enforcement of orders for the transfer

of property? And if you are given a statutory

right, as you are by section 79, attended by

specific statutory provisions for its enforcement,

as you are you say by section 84, is that not the

nature of the right?

MR BROUN:  Your Honour, except that there was, in this case,

and there commonly is, a time gap between applying

for that order and getting it, particularly where

the order is opposed.

BRENNAN J: That may be.

MR BROUN:  And the respondent said, and Mr Justice Nygh held

wrongly, that there reasons why the registrar should

not have been appointed to sign but Mr Justice Nygh

ultimately ordered.the registrar to sign.

BRENNAN J: Is the scheme of the Act not such that when orders

are made under section 79 for the transfer of property the enforcement against recalcitrant respondents is effected by making an order under

section 84?

MR BROUN:  That is so, Your Honour, but there can be a time

delay if the order under section 84 is opposed

by the person who is obliged to transfer under

the order.

BRENNAN J: That might simply be that the statutory right

which is created under section 79 does not provide

for as full a remedy as one might wish, but is

there any other kind of remedy than that which

is provided in section 84?

MR BROUN:  Your Honour, that is the thrust of my arguments,

in effect, to try to convince Your Honours that although there is no other statutory remedy the

law is not bereft of principle to give some aid

to somebody who has suffered - if they have suffered -

as the result of a default in compliance with

the order.

C1T24/2/ND	39	15/11/89
Johnson(2)

TOOHEY J: Well, in terms of legal principle, Mr Broun, would

it be any different if a court had made an order for

specific performance of a contract for the sale of land

and the defendant vendor delayed in complying with
the order to the point where the protonotary

or other appropriate officer executed the transfer, or

executed a transfer. Would nat the same question arise?

MR BROUN:  Your Honour, that is exactly one of the arguments

I advanced before Mr Justice Nygh and was the one

which found favour with him. Namely, that we have

here a precise analogy with an order for specific performan

TOOHEY J:  I was not offering it as a support for your argument

but rather to go on to say that it would be

• surprising, if such a right exists, that it has not

been aired in the standard vendor/purchaser dispute.

MR BROUN: Well, it has been aired, Your Honour. There have been

some cases, to which Mr Justice Nygh referred and

which I will come to, in which, an order for specific

performance having been made, there having been

default in the carrying out of that order, there is

then a further amount of an award, sometimes called

damages, to compensate the person who obtained the

order £or the transfer of property for the delay.

TOOHEY J: But deriving from some particular provision in an

Act or rules?

MR BROUN:  It seems not, Your Honour. The English authorities

which have done it do not draw on any Act or rules

empowering them to do so. They have simply awarded

damages for the breach of the order for non-compliance

with the order for specific performance.

McHUGH J: Well, does it really flow from the order or because

the contract is still on foot between the parties?

MR BROUN: Well, that was the point that the Full Court raised,

Your Honour, but we would submit that in fact it
flows from the order.	Of course, what Mr Justice Nygh

is doing there is relying on an analogy, not by any

means a perfect analogy, but if one looks at the

authorities where that had occurred it does seem that

the damage was not referable back to the original

contract. Your Honours, this is covered, in effect,

in my submission number 4 which simply says that

Mr Justice Nygh was right, so if I may just pass to that

one.

Mr Justice Nygh deals with that at page 9 of the appeal book, beginning at about line 20, where

His Honour says:

The courts have awarded damages in respect of

costs incurred as a result of a refusal by a

party to comply with an order for specific

performance in respect of the period between

ClT25/l/LR	40	15/11/89
Johnson(2)

the date of the decree for specific performance

and the date of the execution by the Master

of the relevant documents in the name of the

defaulting respondent.

And His Honour referred particularly to

FORD-HUNT V RAGHBIR SINGH. Now, FORD-HUNT V RAGHBIR SINGH,

if I may take Your Honour to that - that is

(1973) 2 All ER - itself arguably depends upon the

continuation of the original contractual obligation

between the vendor and the purchaser, but the main

authority upon which the judge relied in

FORD-HUNT V RAGHBIR SINGH was a case called SCOWBY

which dealt with the power to make supplemental orders

in such situations and was not a case of enforcement of

a contractual obligation.	So there was no reference
back to a contract.

(Continued on page 42)

ClT25/2/LR	41	15/11/89
Johnson(2)
MR BROUN (continuing):	Now,	SCOWBY is discussed at page 702

beginning at about line 10 or so:

The facts in RE SCOWBY, SCOWBY V SCOWBY were shortly as follows.

And the facts are set out. In fact obligations there arose from orders which had nothing to do with any contract but, again, arose in the trust

situation. And, about line 20-odd, the judge

in FORD-HUNT says:

Kekewich J held that he had not jurisdiction

to vary the 1892 orders, but .that he could make
a supplemental order directing the present

trustees not to make any payment to -

one of the parties -

pursuant to the 1892 orders until the money

directed by the 1887 order to be paid into

court should have been duly lodged.	Coward
appealed.	The jurisdiction to make such a

supplemental order was upheld, as it was

grounded upon facts not available at the time

when the 1892 orders were made, and did not

alter the 1892 orders.

So, FORD-HUNT V RAGHBIR SINGH, itself, may

stand on the existence of a contract but the

authority on which it draws does not seem to be so
based and there seems to be an acceptance that
SCOWBY was the basis. At page 703, where, right

in the middle of the page, Justice Brightman says: In my view RE SCOWBY, is an authority which

would justify my making the order which is

desired in the present case if and so far

as such orjer is ~ught on r.ew facts.

So that SCOWBY is relied on and His Honour then,

in the next paragraph:

In my judgment I am entitled to, and should,

direct an enquiry as to damages sustained

by reason for the delay, limited to damage

which arose after 21st July 1972, the date

of the decree for specific performance. Any

such damage would be a new fact sufficient to

ground a supplemental order.

So that FORD-HUNT V RAGHBIR SINGH derives from a

case which has nothing to do with a continuing

contract and seems to be based on some other

principle although the Full Court, in its judgment,

attached great significance to the continuation of

a contractual obligation as a basis for that

judgment.

ClT26/l/DR	42	15/11/89
Johnson(2)

We would submit that Mr Justice Nygh had a

very good analogy there in the order for specific

performance and the power to award, in effect,

compensation or by way of a supplemental order to
compensate for a damage that may be suffered by

delay in the compliance with the order. Now, if it

can be done in relation to an order for specific

performance then, in our submission, it can be

done elsewhere and it does not matter that there is

a contract continuing.

McHUGH J:  But you cannot make supplemental orders

universally, can you, just because new facts emerge

after the making of an order? Supposing in an
action for compensation to relatives, it turns out that
after the damages were awarded that the wife
remarried the next day - the widow remarried the

next day - the court could not then make a

supplemental order changing its quantum

of damages, could it?

(Continued on page 44)

ClT26/2/DR	43	15/11/89
Johnson(2)

MR BROUN:  Unless it could show that the court had been

deceived in some way, or that there had been false

evidence. I mean, if the engagement - - -

McHUGH J: It has been held that the appellate court can take

notice of the facts.

MR BROUN:  Yes, that is so.

McHUGH J: That is the original court.

MR BROUN: Well, Your Honour, unfortunately, in our legislation,

THE FAMILY LAW ACT, there is a section which specifically seems to direct this sort of supplementary order in a

situation where it arises as the result of a default

by one of the parties. We handed up the copies of

the legislation, if I might take Your Honours to that.

The relevant one is 79A, which, in fact, includes the power to make - it is headed:

Setting aside of orders altering property interests -

but, in fact, it includes something akin to a

supplemental order:

79A(l) Where, on application by a person

affected by an order made by a court under

section 79 in proceedings with respect to

the property of the parties to a marriage or either of them, the court is satisfied

that - .....

(c) a person has defaulted in carrying out

an obligation imposed on him by the order

and, in the circumstances that have arisen

as a result of that default, it is just

and equitable to vary the order or to set the order aside and make another order in

substitution for the order; or -

et cetera. Then, at the end: 

The court may, in its discretion, vary the

order or set the order aside.

So, in fact here we have, in respective property

matters, just such a legislative authority for the sort of principle that Mr Justice Nygh was looking for, but, in effect, what Mr Justice Nygh was

looking for in the reference to the specific

performance cases was the principle or authority

of law for the making of such an order, or the

granting of such compensation, then section 79A(l)

empowers him to do it as a sort of supplementary

order of the very type that was made in RAGHBIR SINGH

or in SCOWBY.

ClT27/1/FK	44	15/11/89
Johnson(2)

McHUGH J:  Why is not 79A the source to remedy the sort of

problem that you say has arisen in this case?

MR BROUN: Well, Your Honour, before Mr Justice Nygh and

before the Ful_l Court, there were separate

questions of what is the legal principle on which

a court would act, and secondly, where is the power

to do i-c? Well now, 79A(l) (c), I ·ilould submit, provides

the power,.. but it would seem that in exercising that

power one has to have some principle to look at, and
presumably, if one does not look at something such

as the - - -

McHUGH J: Well, the principle is just and equitable, to make

another order.

MR BROUN: Well, Your Honour, presumably being just and

equitable has to be guided by some sort of a principle

of law or justice. Perhaps, Your Honour, I should

embrace what Your Honour puts as a very simple answer

to all my dilemmas.

TOOHEY J: Well, it would be much easier to bring yourself under

the notion of just and equitable, would it not, than

to try to spell out some right of action hitherto

unknown, or found yourself in some notion of equity?

MR BROUN:  I suppose, Your Honour, the question is - indeed, I

have perhaps approached the problem from the wrong

end. I have been looking at the wrong end of the

telescope.

(Continued on page 46)

ClT27/2/FK	45	15/11/89
Johnson(2)
MR BROUN (continuing):	We would rely upon the other	matters

that I have advanced,in the alternative to

everything I have put, as simply something	showing
that an order under section 79A(l)(c) may
have been just and equitable. There were

TOOHEY J: If that section were to be applied, how

would it be applied in the present case? I

mean, it has to be by way of variation of the existing

order or substitution of a fresh order.

MR BROUN: That is so, Your Honour.

TOOHEY J:  And presumably you would not be wanting to

disturb the basic orders made by way of

transfer of property and transfer of shares.

MR BROUN:  That is so, Your Honour, yes. We would just

simply be wanting a variation to add to all

the clauses of the order about property,

an order for the payment of the further sum

of money which, after the set-offs one way and

the other, came to a mere $7000 that the

husband paid the wife.

Then, Your Honours, the other question that

I come to is the one that occupied the Full Court for the prime relief, the question of power

and jurisdiction and the Full Court particularly

said there was no jurisdiction because this was

not a matrimonial cause. The Full Court first

of all said it did not come under - there was

not any principle of law to support it,although

certainly the Full Court was not specifically

asked to say it is just a matter of justice and

equity under section 79A(l)(c). The passage

in which the Full Court rejected all the other

heads of support is on page 27 of the appeal book,

beginning at about line 7, where the Full Court

held:  There is no statutory basis for the

proceedings instituted by the wife.

We would submit, Your Honours, that that is not

right. There is"no inherent power of the Court

to award damages in the circumstances of this

case "and we would submit that there must be an

inherent power to amend the order and to add

the financial compensation, whether it is

called "damage" or not. ·

GAUDRON J:	But if you are right about section 79A, why would the Full Court not be right in all these
answers? Why, if you give section 79A its
full effect, would you look - - -

CIT28/l/JM	46	15/11/89
Johnson(2)

MR BROUN:  To anything else?

GAUDRON J: To anything else - not only why would you look

to anything else, why would not section 79A,

as a matter of construction in the context of

the Act as a whole, exclude all these

considerations?

MR BROUN:  Your Honour, I think Your Honour is right in

what Your Honour puts to me, except in the sense

that one would need to find some basis for saving

that there was justice and equity in making this

further order.

McHUGH J:  But you cannot make an order under section 79

unless it is just and equitable to do so.

It is just - - -

MR BROUN:  Yes, but section 79 then sets out in subsection (4)

a whole list of factors that are to be taken into

account and the broad discretion is very much

limited.

McHUGH J: Yes, I know, but that only means that you have

just got an unparallel discretion, you have got

an unlimited discretion under section 79A.	I mean,
you can look at any factor.	I know of plenty

of statutes which talk about making orders:

winding up companies on the ground that it is

just and equitable to do so.

BROUN J:	Your Honours, I would put - a further thought from what Your Honours have put to me - I would
put that argument to the forefront then and
put everything else as very subsidiary to it
and I am sorry to have taken up Your Honours' time
by dealing with the more complicated and perha~s unnecessary matters.

(Continued on page 48)

CIT28/2/JM	47	15/11/89
Johnson(2)

TOOHEY J: But, if vou view the compensation, to look for a neutral

term, as in some way separate from and independent of

the orders that have aiready been made, then

jurisdiction must depend upon that claim somehow

answering the description of the matrimonial cause,

must it?

MR BROUN: That is so, Your Honour. That is the problem

that the Full Court faced.

TOOHEY J: It is not a question of power at that stage,

it is a question of jurisdiction.

MR BROUN: Jurisdiction, yes.

TOOHEY J:  The further, as it were, you remove this claim

from its association with the order itself, the

more difficult it is, perhaps, to spell it out

as a matrimonial cause.

MR BROUN:	Yes. Well, Your Honour, I have three and three separate answers which I hope would answer what Your Honour
puts to me.  The first one, of course, is that
section 79A(l)(c) - I adjust my thoughts to put
that one first now - is an express statutory power
and it says the court may do this - - -

TOOHEY J: No, I was mt casting any doubt on section 79A; I

was asking you, in terms of the way in which the

argument has been presented, that this is some

right which is separate from any particular provision

in the statute.

MR BRO:JN:  Your Honour, if it is entirely separate from,

then,we would submit,it is, first of all, matrimonial

cause (f). If we may take you to the definition

of "matrimonial cause", which is in section 4(1)

and it is the second page, I think, of the bundle

of extracts we handed up, (f) is:

Any other proceedings (including proceedings

with respect to the enforcement of a decree

of the service of process) in relation to
concurrent, pending or completed proceedings
of a kind referred to in any of paragraphs

(a) to (eb) -

and (a) to (eb) includes (ca) which is:

Proceedings between the parties to a marriage with respect to the property -

which, of course, was the orders made here for

the transfer of the half interest in the block of flats and the transfer of the shares in the

company so that, in our submission, one must be

ClT29/l/SH	48	15/11/89
Johnson(2)

seen as having something "with respect to" or "in

relation to" those property orders if one is saying

something has flown from the breach of those orders.

There has been an order; there has been a breach of

them; we claim a loss in respect of which we seek
indemnity; we, then, would say that that is a

proceeding which is in relation to that order,

namely, it is wholly derived from that order. The

order provides the whole basis of it and, accordingly,
we say it is a matrimonial cause and it is within the
exclusive jurisdiction of the Family Court as being a
matrimonial cause - I am sorry, exclusive jurisdiction

of courts exercising jurisdiction under that Act, which

includes, of course, some courts other than the

Family Court of Australia but it clearly includes

magistrates' courts.

Alternatively to that, again, we would rely

upon the conclusion of Mr Justice Elliott in MADJERIC

where he said, "It's a matrimonial cause (ca)";

namely, it is:

Proceedings between the parties to a marriage -

in this case, these proceedings certainly are just

between the husband and the wife - and it relates

to the property of those proceedings and it is in

relation to either:

(i) arising out of the marital relationshiip;

or, it is:

(ii) in relation to concurrent, pending or

completed proceedings for -

divorce.

(Continued on page 50)

C1T29/2/SH	49	15/11/89
Johnson(2)

MR BROUN·(continuing):  We would say, alternatively, that

Mr Justice Elliott is right and that one can see that, perhaps, most obviously, by looking at

79A(l)(c) which, in effect, under the general powers

of the court about property matters between husband

and wife, directs attention to the possibility

of there being a need for some variation of orders

by reason of default.

That very section, being one of the court's

powers as to property, in dealing with property
between husband and wife, suggests strongly that

Mr Justice Elliott was correct in MADJERIC in attributing it to matrimonial cause (ca), that

is to say property proceedings between the husband

and the wife.

BRENNAN J:  Your ground of appeal now is that the Full Court

erred in failing to apply 79A(l)(c)?

MR BROUN:  Your Honour, we would put that perhaps first,

now, amongst our grounds, yes.

BRENNAN J: That being a point that was never argued before

the Full Court?

MR BROUN:  The table was not thumped with it, Your Honour,

bu~ as I recalL the section was referred to but at

page 27 of the appeal book, at line 7, Your Honours

will see that the Full Court expressly held that

was:

no statutory basis for the proceedings - - -

TOOHEY J:  But that was because it was proffered as a claim

for damages, was it not?

MR BROUN:  No, Your Honour. We never called it damages,

we called it an indemnity for the loss we had suffered
which is similar.

TOOHEY J: Is that quite right?
MR BROUN:	Yes, that is to be found at page 2 of the appeal

book, Your Honour, where Mr Justice Nygh, on the

first page of his judgment refers to it as the

seeking of an indemnity.

TOOHEY J: If you look at the order on page 19, and it is

true it uses the word "indemnifying", but the appeal

was against an order:

That the husband by way of indemnifying the

wife in respect of damage suffered -

ClT3O/l/ND	so	15/11/89
Johnson(2)

That may have taken the Full Court's attention

away from section 79A because no variation was

sought of any of the existing orders.

MR BROUN:  Your Honour, that is certainly so. We did not

express it in a way that was perhaps appropriately

clear. The actual application that was before Mr Justice Nygh on this point is in the appeal papers. It is on page 40, at line 7:

That the husband by way of indemnifying the wife in respect of interest accumulated by reason of his breach of Orders No 1 and 2,

pay to the wife the sum of -

24,000 et cetera -

or in the minimal alternative that the wife

be discharged from the obligation to pay

him -

interest -

I do not know that, in the way I have presented

my submissions, I have been as much help to

Your Honours as I should but if there is other matter

I may assist Your Honours, otherwise those would

be our submissions.

MASON CJ:  Yes, thank you, Mr Broun. Yes, Mr Rose.

MR ROSE:	If the Court pleases, might I hand up to Your Honours
copies of the outline of submissions on behalf of the respondent and also for Your Honours'
assistance we have taken out copies of the engrossed
orders that were made on 12 March 1984 which were
the subject of the application before
Mr Justice Nygh.

(Continued on page 52)

C1T30/2/ND	51	15/11/89
Johnson(2)

MASON CJ: Thank you. Yes, Mr Rose.

MR ROSE:	If Your Honours please. Your Honours, the orders made on 12 March 1984 required, so far as the
husband was concerned, to first of all transfer
to his former wife his right, title and interest
in the property at Cronulla, subject to existing
arrears of rates and debts to the Corrrrnonwealth Bank.
Secondly, to transfer to the wife her shares in
a company called Gemline Pty Ltd which was the
registered proprietor as to one half of the interest
in that property.  For her part the wife was
required to, first of all, indemnify the husband in respect of the liability to the Corrrrnonwealth Bank
in respect of a fully drawn loan account. Secondly,
to cause the Bank to release its security on a property at Strathfield, which was owned by the
husband.  The wife also, by orders made on that day,
was required to pay to the husband $131,000 within
three months and in that regard when my learned friend referred to "simultaneous payment with the transfer", that was not quite accurate, because the
transfer was to be within one month; the lump sum
within three months. Secondly, she was also to pay any interest on that sum should payment not be made
in accordance with that particular period of time.
Those orders -
TOOHEY J:	Mr Rose, was  that difference in the dates in
contemplation of a sale that would produce the
$131,000 or is it for some other reason?
MR ROSE:	I do not know, Your Honour, because I have not seen the judgment which my friend said was given by
Mr Justice Pawley on the hearing of the property
settlement proceedings.  I am told by my friend that
Mr Justice Nygh gave the second judgment on the
property settlement matter.  I have not seen it so
I do not know whether it was in contemplation or not.
power contained in section 79 of the FAMILY LAW ACT, Those orders, in any event,were made pursuant to the
which gives the Court power to alter the interests of the parties.or either of them, in property. And that power is exercised only if the Court considers
it just and equitible to do so and in order to arrive
at that conclusion, the Court considers the evidence and makes findings of fact in relation to the matters
set out in section 79(4). It is our respectful
submission, that the orders made at the conclusion of the property settlement proceedings on 12 March 1984, copies of which Your Honours now have, are clear and
unambiguous in their terms. It is also respectfully
submitted that the general powers of the Family
Court of Australia are established by the provisions of the FAMILY LAW ACT.

CIT31/l/CM	52	15/11/89
Johnson(2)

:MR ROSE (continuing): That was reiterated by this Court

in REG V ROSS-JONES EX PARTE GREEN, (1984)

156 CLR 185 at 211 in ~~e third paragraph,

second sentence, where it was held that:

Apart from any constitutional limitation,

it is now authoritatively established that

as a matter of construction the general

powers of the Family Court are to be understood

in the context of the FAMILY LAW ACT which

confers jurisdiction upon the Court in

matrimonial causes and associated matters.

Now, Your Honours, it is our respectful submission,

if one looks at the question of power, if I might

make my submissions on that before returning to the

question of the fundamental basis for any application

namely whether it is a matrimonial cause, that the

Act contains an extensive code by way of powers for

enforcement of orders. They are, first of all - and

not necessarily in this order of priority - a section

which Your Honour Mr Justice Brennan inquired about, namely

section 84 which gives the court power to appoint a

person, whether it is a registrar or somebody else, to

execute documents in the name of the person who has

refused or neglected to comply with an order or for

any other reason; so there is a very wide power there.

There is injunctive relief that might be sought in

section 114(3), because the words
expressed are "in aid of the enforcement of a decree".

Subsection (4) of the same section specifies penalties that might be imposed for non-compliance

with that injunction. Part XIII of the Act is a

Part which is specifically directed, as its title

says, to enforcement of decrees; and section 105,

which is the first section in that Part, commences

with the statement that:

Subject to this Part, to the regulations

and ~---·tha Rules of Court, all decrees

made under this Act may be enforced.

That fart contains the contempt power, found in these proceedings which are contained in sections 109 to lllB of the Act relating to overseas orders
section 108 and in subsection (3) of that section
the power to impose imprisonment or fine or both.

and matters of that sort.

So far as the rules are concerned, order 33 of the Family Law Rules again sets out P.Xtensive

powers for enforcement, they being "garnishment;

seizure and sale of personal property; sequestration

of an. ·estaee ~- sale of real property" and in rule 3,

an examination summons might be issued.

ClT32/l/LR	53	15/11/89
Johnson(2)

But in addition, if one is seeking to redress a

perceived liability that has arisen because of default

under an order then of course, as my friend referred

to towards the end of his submission, there is now

specific power given to do so under section 79A(l)(c).

(Continued on page 55)

ClT32/2/LR	54	15/11/89
Johnson(2)

MR ROSE (continuing): Now, when my friend submitted to

Your Honours, as he did in the court below and on the

special leave application, that there is just no
other remedy which his client could look to, in my

respectful submission, that is clearly wrong because

that power enables an order to be sought to vary

or set aside the section 79 order and, in this

case, there were orders under section 79. The next

element which must be demonstrated is whether or

not there has been default and, again, it is the

forefront of the appellant's case throughout that

there had been default although there had been

default on her part as well.

Then it is a question of adducing evidence to

persuade the trial judge that it is just and equitable

to vary or set aside the order. Now, no such

application was ever made and, indeed, one only has
to turn to the application itself which is found

on pages 38 to 40 of the appeal book and which is

headed "Application for Costs and Enforcement Orders"

and, with respect, our submission is that while

costs were certainly sought, enforcement orders is

perhaps a misdescription because costs were sought

and an order under section 84,and that is clearly

by way of enforcement, but the order which is the

subject of the litigation that is sought is found

in paragraph 4 on page 40 where, what is sought,

is an indemnity for interest accumulated.

Now, no order is sought to vary or set aside

all or any of the section 79 orders that were made

on 12 March 1984 and my friend, apparently,

settled this application as well as appearing

throughout in the proceedings at first instance

and before the Full Court. So that, Your Honours,

it is our respectful submission that, so far as

the trial judge is concerned as well as the Full Court,

they just did not have any application before them

which was directed to and seeking to attract the
provisions of section 79A(l)(c)	and it is apparent

from the reasons for judgment that it was not a

matter that was argued nor fell for consideration

as part of Their Honours' reasons for judgment.

McHUGH J:  But wpy was it not referred to on the special leave

application, because the existence of that provision

may have been a powerful reason for refusing

leave to appeal?

MR ROSE:  Yes. Your Honour, so far as that matter is concerned,

what was argued before the Court on the special

leave application was that, first of all, the

Full Court had erred in concluding that the application

was not a matrimonial cause and, in that regard,

ClT33/l/DR	55	15/11/89
Johnson(2)

reference was made to section ~(l)(ca)(i) and.Cf) as far
as power was concerned, it was submitted to the Court on the

special leave application - - -

McHUGH J: Yes, I know, I have read the transcript of the

special leave application but all I am putting to

you is that - I mean, no doubt one of the reasons

leave was granted was because there was a question

of general public importance as to whether or not

what might appear to be an apparent injustice was

without a remedy. But if section 79A(l)(c) had

been brought to the Court's attention it might

have been the end of the application.

MR ROSE:	Yes, but the answer to Your Honour is this, that
during the argument before Their Honours, so far as
power was concerned, the submission made to
Their Honours was that power was to be found in the inherent jurisdiction of the Court and that is the way the matter proceeded and in answer to
that submission it was submitted to Their Honours that the question of inherent jurisdiction had
already been the subject of decisions in this
Court such as TAYLOR V TAYLOR and, therefore, the
question of general importance no longer arose
because it had already been decided but
Your Honour, that is the best of my recollection
on that matter.

(Continued on page 57)

C2T33/2/DR	56	15/11/89
Johnson(2)

:MR ROSE (continuing): Now, Your Honours, of course,

apart from the wife's application seeking an

indemnity or damages, the husband himself, of

course, had made a similar application and

that is found at page 78 of the appeal book.

So far as the question of whether the

application filed on behalf of my friend's

client is concerned is a matrimonial cause,

my friend, as I understood him, did not
address Your Honours on whether or not the

Full Court had indeed erred in concluding that

it was not a matrimonial cause within the

provisions of paragraph (ca)(i) which is the

provision that says that to be a matrimonial cause

there must be:

proceedings between the parties with
respect to the property ..... (i) arising

out of the marital relationship.

So that, Your Honours, I will proceed to address

Your Honours because it seems to be still in the

grounds of appeal, but I am only raising that

because apparently no submissions were made and

I am not sure whether Your Honours really wish

me to proceed on that matter or not. But,

Your Honours, our submissions briefly on that

paragraph which is the basis of a matrimonial

cause is that first of all the application to

which I referred Your Honours was not an

application which instituted proceedings with

respect to the property of the parties. Secondly,

they are not proceedings arising out of the

marital relationship. What they appear to be

are proceedings in respect of the financial

consequences said to flow from the breach of an

order and, Your Honours, in our respectful

submission, paragraph (ca) enables the matrimonial cause to be brought for the purpose of seeking the

exercise of the court's power to alter the

interests of parties in property pursuant to

section 79. That matter has already been the

subject of decision of this Court in DOUGHERTY V

DOUGHERTY, (1987) 72 ALR 550 at 554, line 25.

That is part of the joint judgment of Your Honour

the Chief Justice, Mr Justice Wilson and

Mr Justice Dawson. At line 25 it was held that:

This paragraph -

that is the "matrimonial cause" paragraph on which

I have been making submissions -

requires that proceedings between the parties to a marriage with respect to property should

arise out of the marital relationship ..... a

limit is imposed upon the jurisdiction of the

CIT34/l/JM	57	15/11/89
Johnson(2)

Family Court to make an order under s 79. Then, if I may pass down to line 35:

In any event, whether the exercise is undertaken for the purpose of applying para (ca) or reading downs 79, it should

be comparatively easy to ascertain whether
or not a claim by a party to a marriage

for an alteration of property interests

is based upon circumstances arising out

of the marital relationship.

(Continued on page 59)

CIT34/2/JM	58	15/11/89
MR ROSE (continuing):

Johnson(2)

Claims grounded solely in contract or tort or equity or otherwise arising by reason of

a relationship, for example of partnership,

where the marriage relationship is purely

coincidental are not likely to attract the

power.

Then, the judgment proceeds on page 555 to also

refer to an earlier decision; that is in the second

paragraph, about line 6, REG V DOVEY EX PARTE ROSS,

where the phrase was the subject of construction again and His Honour Mr Justice Gibbs as he then

was, said that:

"The words 1 circumstances arising out of the

marital relationship' appear to be wide, but

it is not necessary in the present case to

attempt to give a comprehensive statement - "

Then, about three lines further down:

'the mere fact that something happens between

a husband and wife does not fuean that it

involves "circumstancces arising out of the

marital relationship"' -

and then, various examples were given. So that,

Your Honours, this matter was also the subject of

submissions again in PERLMAN V PERLMAN, (1983-84)

155 CLR 474, and that was a case in which an order

had been made by the Family Court of Australia under

section 87 approving a maintenance agreement. It

was then alleged by one of the parties that the

other party was in default in performing the

obligations contained in the covenants in that

agreement and enforcement proceedings so far as

those covenants were concerned were instituted in

the Supreme Court of New South Wales.	The question
arose as to whether or not those proceedings were

a matrimonial cause and, therefore, exclusively

within the jurisdiction of the Family Court of

Australia. There had been conflicting judgments

on that matter in the Family Court and, ultimately,

therefore, that issue arose for determination by

this Court. At page 486, in the final paragraph
on that page, at about point 8, after the reference

to REG V DOVEY EX PARTE ROSS, Mr Justice Gibbs as

he then was, said:

I indicated my opinion that the mere fact

that the circumstances of the case involve

the parties to a marriage does not mean that

the proceedings arise out of the marital

relationship. It is unnecessary for present

ClT35/l/SH	59	15/11/89
Johnson(2)

purposes to consider whether a temporal

limitations is provided by the words '''in

circumstances' arising out of the marital

relationship" ..... The proceedings in the

present case clearly do not arise out of

a marital relationship they arise from the

fact that the divorced husband has failed

to fulfil his obligations under the deed.

(Continued on page 61)

C1T35/2/SH	60	15/11/89
Johnson(2)

MR ROSE (continuing): Your Honours, in our respectful submission,

in this case an application is made; there are

proceedings between divorced parties; the allegations
are that not only had he been in breach of certain

orders, but there were certain financial consquences

flowing from that, and, in our respectful submission,
consistent with the principles enunciated by this

Court in the cases to which I have made reference, the

Full Court was correct in stating on page 29 of the

appeal book at line 20, that these:

proceedings ..... are so far removed from

events surrounding cohabitation pursuant

to the marriage or its dissolution that

they have lost any nexus with the original

marital relationship.

Your Honours, the alternative basis contended for

to establish jurisdiction is paragraph (f) of

section 4(1). That paragraph enables, for the

purpose of there being a matrimonial cause, proceedi~~s

to be instituted:

..

with respect to the enforcement of a decree -

and:

in relation to ..... completed proceedings of a

kind referred to in -

earlier paragraphs. And, so far as the earlier

paragraphs are concerned, in this particular case, it is

paragraph (ca), because that is the foundation for the

matrimonial cause in order to bring proceedings for

alteration of property interests. So far as that part

of paragraph (f) is concerned which relates to

"enforcement of a decree", it is our respectful submissions

to Your Honours that the decree is first of all clear in

its terms; secondly, the order sought in paragraph 4 of

the wife's application, appeal book 40, line 7, does

not seek enforcement. That is, it is not directed to

any of the elements in orders 1 and or 2 made on

12 March 1984, they being a transfer by the husband of

his right title and interest in the Cronulla property,

or transfer of his shares in the other registered

proprietor, Gemline Proprietry Limited. The application

itself seeks by way of damages, payment of a fixed sum

of money relating to discharge of bank indebtedness.

(Continued on page 62)

ClT36/l/FK	61	15/11/89
Johnson(2)

MR ROSE (continuing): In any event, there subsequently was

a successful application for enforcement, when

the wife successfully applied for an order to

be made under section 84, requiring the registrar

to sign doc~ents on behalf of the husband and that
order was made on 12 February 1987. This paragraph (f)

is also the subject of the reasons for judgment in

PERLMAN's case and in particular at page 488 in the

second-last sentence on that page, where His Honour the

former Chief Justice,Mr Justice Gibbs said:

In any case, an order for specific performance,

or an award of damages, is not a mode of

execution of the order of a court.

Your Honours, the other matter that must be addressed

so far as paragraph (f) is concerned is whether

or not the application in respect of which

submissions have been made, was indeed in relation

to completed proceedings, being completed proceedings

of the type that had taken place in 1984.

That phrase has also been the subject of construction

in a number of cases. Mr Justice Taylor in

LANSELL V LANSELL,(1964) 110 CLR 353 at page 367,

considered the meaning of that phrase and at about

half-way down that page His Honour said:

(Continued at page 63)

CIT37/l/CM	62	15/11/89
Johnson(2)
MR ROSE (continuing):

The phrase "in relation to" and the succeeding

words of par (c) -

His Honour is referring there to the MATRIMONIAL

CAUSES ACT -

of the definition of "matrimonial cause" indicate the limits which are set to the jurisdiction conferred bys 86(1).

86(1) was the power given to the court under the

repealed Act to make orders for settlement of

property.

It is a jurisdiction which is exercisable

only where the application bears an

appropriate relationship to substantive

proceedings which admittedly constitute a

matrimonial cause, that is to say, where the

application can fairly be said to be incidental

to the relief obtainable or already obtained

in the substantive proceedings.

That phrase, again, was the subject of consideration

in PERLMAN's case at page 484. It commences at the commencement of the paragraph about a third

of the way down:

The words "in relation to" import the

existence of a connection or association

between the two proceedings, or in other words

that the proceedings in question must bear

an appropriate relationship to completed

proceedings of the requisite kind. An

appropriate relationship may exist if the

order sought in the proceedings in question

is consequential on or incidental to a decree

and then His Honour refers to the decision of REG made in the completed proceedings - V ROSS-JONES; EX PARTE BEAUMONT in which proceeding

an order had been sought for appointment of a

receiver and it was held that that was beyond the

court's jurisdiction.

It may exist if the order sought in the later

proceedings would reverse or vary the effect

of the order made in the former -

and then His Honour refers to DOWAL V MURRAY where

orders were sought in relation to custody of children

who in turn had been the subject of an existing

order.

63   15/11/89

Johnson(2)

MR ROSE (continuing): Continuing on, His Honour also refers

to section 87(6) and that is the subsection relating

to approval of the maintenance agreement, and then

His Honour says:

However, an application to enforce the

maintenance agreement in the present case

(ie, the deed) was not consequential on or incidental to the order approving of the maintenance agreement and it did not

vary, reverse or otherwise affect the order
giving the approval.

Then, on page 485, the commencement of the first sentence on line 5, His Honour, having referred

to the order that had been made which approved

a maintenance agreement in the PERLMAN case, said:

The present proceedings do not affect that

position - whetherthe present proceedings

succeed or fail, the approval remains valid,

and the deed remains effective; the deed

continues to oust the jurisdiction of courts

under the Act to make orders with respect

to financial matters -

Then, in the next sentence, His Honour says:

Although a grant of approval was a condition

of the efficacy of the maintenance agreement,

the subject of the present proceedings is

not the approval but the agreement. There
is a connexion between the present proceedings

and the deed, since the present proceedings

are brought to enforce the deed; there is

none, except of a remote and indirect kind,
between the present proceedings and the

proceedings brought to obtain the approval -

Now, that part of His Honour's judgment was further

referred to and the subject of further statements by

His Honour in REG V ROSS-JONES EX PARTE GREEN,

(1984-85) 156 CLR at page 197, to which I referred

earlier. On that page, His Honour the former

Chief Justice refers to that passage from

PERLMAN's case which I read to Your Honours a

few moments ago in relation to the meaning of the

words "in relation to" and then, at the commencement

of the last paragraph, about half-way down the page,

His Honour says:

As the words of par. (f) show, and as

PERLMAN V PERLMAN indicates, the relationship

must exist between the proceedings themselves.

It is not enough that what is done in one of

the proceedings would indirectly affect the

practical outcome of the other proceedings.

ClT39/l/SH	64	15/11/89
Johnson(2)

Therefore, it is our respectful submission to

Your Honours that no order was sought in this case

to vary, reverse or otherwise affect the orders made

on 12 March 1984 which required transfers of the

type that we have already addressed Your Honours on. There is no connection, except perhaps a remote one, between the section 79 proceedings which produced

those orders, and the application before the trial

judge seeking damages. It may well have been, and it

must have been different, had there been an application

seeking an order to vary or set aside those orders

pursuant to section 79A(l)(c). However, no such

application was made.

(Continued on page 66)

ClT39/2/LR	65	15/11/89
Johnson(2)

TOOHEY J:  Mr Rose, could I just ask you this question

so that there is no misunderstanding? Had

an application been made under section 79A(l) (c)

and had the court been satisfied that having

regard to the accretion in the mortgage debt,
the continuance of income from the units
and any other relevant circumstances,that it

was just and equitable to vary the order

previously made, do you accept that it would

have been within power to make an order in

money terms compensating the wife for any loss

that she had suffered by reason of the delay

in the execution of the transfer?

MR ROSE:  Your Honour, I would have to accept that if

the practical effect of the order was to do

that, the answer must be yes.

TOOHEY J:  Yes, thank you.

MR ROSE:  Because, Your Honour, the question of the

mortgage debt on any property is a matter which

is not a question of discretion, it must be before the court if it is going to properly

determine any proceedings under section 79.

TOOHEY J: Yes, I am not suggesting that such an application

would succeed, but merely to test that there is

a concession in terms of power.

MR ROSE:  Yes. Why I was seeking to refer to that,

Your Honour, was only this: that if

for argument sake the ~ortgage debt
~ad been in arrears when the

section 79 proceedings 1:-Jere determined,. or if

the trial judge had considered that a certain

part of the mortgage debt should be met by

one party irrespective of the transfer of the

equity in that property to the other party, then

it would have been open to that trial judge to

make an appropriate order. So that where, if

he is considering the exercise of power under

section 79A(l)(c) and having considered all

of the circumstances and, as His Honour

Mr Justice McHugh pointed out to my friend, there

appears to be a very wide discretion in that

section, then it must follow if he considers it

just and equitable to do so that the sum could

have been paid and likewise, my client's

cross-application in which he sought, using

the wrong word, "compensation" because he had

to pay interest on some indebtedness and he did

not have the $131,000 in the meantime to help
him meet that commitment, the result mi~ht well

be that an order is made in his favour but I

wboulg hc~rtainly have to concede that it would

e wit in power to make such an order.

CIT40/l/JM	66	15/11/89
Johnson(2)

TOOHEY J:	Yes, thank you.
MR ROSE:	Now, Your Honours, the only other matters appear

to relate to the question of inherent jurisdiction

and that question fell for determination in TAYLOR V

TAYLOR, (1978-79) 143 CLR 1 and, in our respectful

submission, that case is authority for these

propositions: that, first of all, the Family Court

of Australia is a court of limited jurisdiction;

secondly, the limits of its inherent jurisdiction

are protecting its function as a court and, thirdly,

that the inherent jurisdiction ensures that all of

the elements of natural justice so far as the

parties are concerned have been met and that appears,

with respect, from page 6, where His Honour

Mr Justice Gibbs as he then was considers this

question, His Honour having referred to REG V FORBES

EX PARTE BEVAN at the foot of the preceding page

and that part of that judgment which His Honour

refers to makes it clear, in our submission, that

first of all, inherent jurisdiction is not derived

from the implication of statutory provisions contained

in the Act which founds a court of limited jurisdiction

because if that was the case that power by implication

arises from the statutory provisions, not from any

inherent jurisdiction and then went on to consider,

therefore, inherent jurisdiction so far as the

Industrial Court was concerned and, in the middle of the page, referred to the passage which says:

T41	"Such inherent jurisdiction as the Court may have, could not go beyond
protecting its function as a Court
constituted with the limited jurisdiction
afforded by the Act."

Then, at the top of page 7 there is the reference

to ensuring that essential requirements of natural

justice are met. There is a reference in the judgment

to CAMERON V COLE, which had to consider the inherent

jurisdiction of the Federal Court of Bankruptcy and

Their Honours concluded that the Family Court being

a superior court of record but with limited jurisdiction

in the same way as those courts were, is in the same

position in terms of conclusions to be reached as to

the limits of its inherent jurisdiction and that is

found on page 8 at about point 7; that is, towards

the end of the main paragraph where Mr Justice Gibbs,

as he then was, says:

It is declared by s.21(2) of the FAMILY LAW

ACT to be a superior court of record, but it

is of course a superior court of limited

jurisdiction. In that respect it occupies

C1T42/l/SH	67	15/11/89
Johnson(2)

a similar position to the Federal Court of

Bankruptcy considered in CAMERON V COLE.

Therefore, if Your Honours please, our submissions

are that the Full Court was correct in law in

concluding that the subject application was not

a matrimonial cause and was beyond power and had

fashioned its approach consistent with the principle

T42	set out in the authorities to which I have referred.
There was some reference in the notice of appeal to section 34 of the FAMILY LAW ACT; that
was also a matter on which my friend did not address
any submissions and our only submissions on that
section are that it is not an independent head
of power and the power to issue writs and make
orders are limited to the court's exercise of its
jurisdiction, if Your Honours please.

MASON CJ:  Yes. Now, Mr Rose, one thing you have not addressed

is the possibility raised in argument with Mr Broun

that the Court might rescind the grant of special

leave. You have presented your submissions on

the footing that the appeal should be dismissed.

Do you want to say anything about the possible

rescission of special leave?

MR ROSE:  Could Your Honour pardon me a moment? Your Honours,

our respectful submission is that at the forefront

of my friend's submissions was the question of

a trust and breach of trust in turn related to

the creation of it by an order of the court. That

was a matter which was never argued in either of

the courts below, nor was it a matter relied on

in support of the application for special leave

and, in our submission, therefore, we would

respectfully submit that special leave should be

revoked.

MASON CJ:  The Court will now adjourn until 2. 15 pm

AT 12.53 PM LUNCHEON ADJOURNMENT

C1T43/1/SH	68	15/11/89
Johnson(2)
UPON RESUMING AT 2.22 PM:
MASON CJ: Yes, Mr Broun.

Amongst other things you better direct your attention

to the possibility that the grant of special leave

might be revoked, not merely because of the matters

put to you earlier, the uncertainty as to the
existence of any loss on the part of the appellant,
but also the absence of any consideration of
section 79A(l)(c) in the course of the proceedings

before the courts below.

MR BROUN:  Your Honours, I think the only matter I would add

on that topic is that I would submit that the

Court, having heard the argument should not leave

standing a judgment of the Full Court which we

would submit is certainly erroneous on the question

of whether there was a matrimonial cause or not,

and that was essentially the point, although, of

course, how the problem arose has attracted a lot of

attention, Essentially that is the point in the

Full Court's decision as to whether there was the

· appropriate - some category of matrimonial cause and

the Full Court, we would submit, has fallen into error

there. Your Honours, I think otherwise in reply

all I want to do is to answer a couple of problems

that have arisen in Mr Rose's submission. It was

asked as to why there was the small difference in

time; one month as against three months in the

time for compliance with the orders. That was in

fact expressly because of the intention by

Mr Justice Nygh that the transfer was to be effected

prior to the payment of the $131,000 largely to

enable the wife to make arrangements for the payment

of the $131,000 by mortgaging or selling the .

property transferred. And I am quoting there from

page 41 of Mr Justice Nygh's judgment in the

substantive property application, which is not in

the appeal book, because it was thought not to relate.

So that there was, actually, that differential of one month for the transfer of the property, three

months for the payment of the money to give the

wife the opportunity to sell or to remortgage to

raise the money.

(Continued on page 70)

CIT44/l/CM	69	15/11/89
Johnson(2)

MR BROUN (continuing):  Mr Rose advanced some criticism of

the form of our application as not referring to

any particular section of the Act. In my

submission, it is not necessary that an application

should refer to the statutory basis and, indeed,

it is normal - perhaps I should say common that

the section relied upon is not referred to, so

for example, one may ask for orders as to settlement

of property or alteration of property interests without

specifically referring to section 79 and that is

commonly done. So that it is not a matter of practice

that one could say that the section relied on is

necessarily referred to.

TOOHEY J: What is involved in that proposition, Mr Broun,

that, in fact, the application was made under

section 79A?

MR BROUN:  No, I was merely intending to answer the suggestion

of Mr Rose that one would ordinarily expect that

there would be a section referred to.

TOOHEY J:  But it was not just a matter of nomenclature,

as it were, but the proposition was that

section 79A had not been invoked and that would

seem to be common ground between the parties.

MR BROUN:  I think that is fair to say, Your Honour, that

neither side invoked 79A(l)(c). The husband's

application set out at pages 78 and 79 of the appeal

book has exactly the same feature. He asked - apart

from the interest, he also asked, in order sought

(c), on page 78 of the appeal book:

The the Wife by way of compensating the

Husband in respect of interest paid by him

on loans by reason of the failure of the Wife

to comply with Order 6A ..... pay to the

Husband an amount of $2,785.15.

He did not succeed in that application but he,

in effect - his application had exactly the same

feature of seeking compensation for what was

alleged to arise from the breach without specifically

or in fact relying on 79A(l)(c).

(Continued on page 71)

ClT45/1/ND	70	15/11/89
Johnson(2)

MR BROUN (continuing): Your Honours, a reference was mad<? by Mr Rose

to PERLMAN - heavy reliance placed upon ic - as to

whether the matter fell within definition (f) of

a matrimonial cause; now the important point about

PERLMAN, of course, that what was being sought to

be relied upon was an agreement, not a court order,

rr:d as 1·m correctly pointed out in the judgment of the

then Chief Justice at page 485, the proceedings

in PERLMAN could not have brought about a modification

or variation of the order actually made by the court

at all. The order made by the court in PERL~.AN was

simply to approve an agreement. That order approving

the agreement was going to continue whatever the

variation made was. So that, there was no alteration

to the impact or content of the orders in PERLMAN.

In the present case, or course, as to the

total impact of the totality, or adding up all the

bits of the property orders, there is a change in that

the time is varied; the amount of money is varied, so there is, whether it is called a variation or not, in the total effect of the orders made as to property

by the original orders, the effect of Mr Justice Nygh's
order, the subject of this appeal was to achieve a

variation in the totality, though we would put merely

to give to the wife the benefit it was envisaged that

the order originally made would give to her. So that

she was being, as it were, put back into the position
that she would have been in had the orders been

complied with precisely.

Another matter, and perhaps, Your Honours, it

would be fair to place some emphasis on, is that all

of the problems arose in this matter, all the

difficulties everybody has had and the application

before Mr Justice Nygh and so on, all arose ultimately
because, simply, the husband's refusal to transfer

those assets: the half interest in the block of flats

and the shares.	Mr Justice Nygh refers specifically
to his refusal to transfer at appeal book page 5,

line 5, where he just simply records the fact that

the husband refus~d to sign the transfers of the share

and the block of flats.

(Continued on page 72)

ClT46/l/FK	71	15/11/89
Johnson(2)

MR BROUN (continuing): Your Honours, in respect of the

suggestion of Mr Justice Nygh that there was

inherent jurisdiction, we would submit that

His Honour must be right about that apart from

any other ju;risdictions, that inherent .iurisdiction
must be there because it is necessary for a court

to be able to ensure that the person in whose

favour an order has been made does, in fact,

receive the benefit of that order and does not lose the benefit by breach of the orders or by other variations.

The only other matter, perhaps, that I think I should put to Your Honours is: if Your Honours were ultimately minded to dispose of the matter

by revoking special leave, the question of costs

would then arise. It does seem that neither side

placed what now appears to be the appropriate

emphasis on section 79A(l)(c) in the special leave

application and, in so far as there was a

shortcoming on that matter, we are perhaps to be

seen in pari delicto. I think those are the

submissions we would make in reply wnless there is

anything else I can assist Your Honuurs with.

MASON CJ: Yes, thank you, Mr Broun. Mr Rose, do you wish to

say anything on the matter of costs? We have just

heard a submission from Mr Broun that there should

be no order for costs in the event that the Court
decides to rescind the grant of special leave to

appeal.

MR ROSE:	Yes, Your Honour, we would be respectfully seeking
an order for costs. First of all, the matters
which you have heard my friend and I address Your Honours on in large part, so far as the appellant's contentions were concerned, were never
raised either before the trial judge or the
Full Court or, indeed, on the application for
special leave.

McHUGH J: Yes, but if you had raised the question of

section 79A(l)(c), special leave may never have

been granted.

MR ROSE:	Yes, T would have to concede that, Your Honour. When Your Honour asked me about that before I made submissions about it and I have got nothing
further to add.
MASON CJ:	The Court will take a short adjournment in order

to consider the course it will take in this matter.

AT 2.31 PM SHORT ADJOURNMENT

ClT47/l/DR	72	15/11/89
Johnson(2)
UPON RESUMING AT 2.33 PH:

MASON CJ: Special leave to appeal was granted in this case with a view to determining the important question

whether a party to litigation who suffers loss as a

result of another party's failure to transfer property
to the first party in accordance with an order of a

court is entitled to an indemnity or compensation

in respect of that loss. If that question were

answered in the affirmative, then in this case the

further question for decision was whether the Family

Court had jurisdiction to deal with the claim of

the party suffering such loss in consequence of a

failure to transfer property in conformity with an

order of the Family Court.

On 12 March 1984, Justice Nygh made orders

under section 79 of the FAMILY LAW ACT 1975 (Cth)

requiring the respondent to transfer within one month

to the appellant all his right, title and interest

in a property known as 20 Seaforth Avenue, Cronulla,

subject to arrears of rates and a mortgage debt,

and his shares in Gemline Pty Ltd which was the

owner of the property already mentioned as tenant

in common with the respondent in equal shares.

The intended effect of the orders was to vest in

the appellant the whole of the block of flats

comprising the property in Seaforth Avenue. The

respondent failed to comply with the orders within

the time specified and for a long time thereafter.

One consequence was that the mortgage debt on the

property increased as a result of the accumulation

of interest, from $34,193.60 at the date of the

hearing to $58,692 at the date on which the property

T48 was transferred.

The appellant sought an order against the

respondent indemnifying her against the loss of

$24,424.20. On 12 October 1987 Justice Nygh made

the order sought, but in the sum of $15,782,being

an amount referable to interest charges on the

mortgage debt for the period from 15 March 1985 to

5 March 1987 when the property was transferred. The parties had agreed that the orders made on 12 March 1984 should be treated as operating from

15 February 1985. His Honour made another order, that

the appellant pay a sum of $8,470 interest to the

respondent. Off-setting the second order against

the first, his Honour ordered the respondent to pay
the appellant the sum of $7,312 within one month

of the date of the order.

CIT49/l/CM	73	15/11/89
Johnson(2)

On appeal the Full Court of the Family Court

set aside various orders made by Justice Nygh

on 12 October 1987, including the two orders in

favour of the appellant to which we have just

referred. The Full Court concluded that the

Family Court had no jurisdiction to grant relief

of the kind sought by the appellant.

On the hearing of the appeal in this Court

it emerged that in the courts below there had not

been any actual ascertainment of the loss, if any,

sustained by the appellant in consequence of the

respondent's failure to transfer the property

which was the subject of the orders made on

12 March 1984. The case seems to have proceeded

on the footing that, by reason of the delayed

transfer of the property, the appellant was

unable to sell part of the property and thus pay

off the mortgage to which it was subject. The

loss alleged was said to consist of increased

interest charges arising during the period of

the respondent's non-compliance with the orders.

It now appears that benefits, including rent,

which accrued to the appellant before the

transfer took place should be taken into account

in ascertaining whether the appellant suffered

T49 any relevant loss.

Mr Broun, QC, for the appellant, submits that

this Court should determine the questions of

principle and refer to the Family Court the question

of assessment of the appellant's loss, if any.

However, there are strong reasons why this Court

should not embark upon the determination of questions

which, in the light of what we now know, may prove

to be academic or hypothetical, the more so as

the proceedings between these parties have been

numerous and protracted.	In view of what we have
now been told, we cannot proceed in the confident

expectation that the appellant did sustain any significant loss by reason of the respondent's failure to comply with the order of the Family Court.

What is of even more importance is that

section 79A(l)(c) of the FAMILY LAW ACT empowers the
Family Court to vary or set aside an order made

under section 79 and make another order in

substitution for the order set aside where:

"a person has defaulted in carrying out an

obligation imposed on the person by the

order and, in the circumstances that have

arisen as a result of that default, it is

just and equitable to vary the order or to

set the order aside and make another order

in substitution for the order."

CITS0/1/CM	74	15/11/89
Johnson(2)

That provision appears to confer ample power on

TSO	the Family Court to deal with a situation of the kind that arose in this case. Yet it is now
cormnon ground that the appellant did not at any
stage ask the court to exercise its power under that subsection. In the result, the case has been dealt with in the courts below otherwise than by reference to the critical statutory provision.

In the circumstances, it is appropriate that

we rescind the grant of special leave to appeal

and that we make no order as to costs.	The order
of the Court, therefore, is:

Order granting special leave to appeal made

on 17 February 1989 be rescinded. No order

as to costs.

The Court will now adjourn.

AT 2.40 PM THE MATTER WAS ADJOURNED SINE DIE

CITS0/2/CM	75	15/11/89
Johnson(2)