DC Thomas Pty Ltd & Ors, Ex parte Re Forbes

[2000] HCATrans 547

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry  
  Adelaide  No A36 of 2000

In the matter of -

An application for a Writ of Certiorari and Prohibition against ANDREW ALDERMAN FORBES (A Judicial Registrar of the Family Court of Australia)

First Respondent

ALASTAIR BOTHWICK NICHOLSON (The Chief Justice of the Family Court of Australia)

Second Respondent

THE JUDGES AND REGISTRARS OF THE FAMILY COURT OF AUSTRALIA

Third Respondents

CHRISTINE THOMAS

Fourth Respondent

DEAN THOMAS

Fifth Respondent

Ex parte –

DC THOMAS PTY LTD, ANTHONY DEAN THOMAS and CYNTHIA ANNE THOMAS

Applicants

CALLINAN J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON WEDNESDAY, 6 DECEMBER 2000, AT 9.16 AM

Copyright in the High Court of Australia

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MR J.P. KEEN:   If it pleases your Honour, I appear for the applicants.  (instructed by Camatta Lempens)

MR C.J. KOURAKIS, QC:   I appear with my learned friend, MR S.H. LINDSAY, for the wife, Christine Anne Thomas, the fourth respondent.  (instructed by Thomson Playford)

MR D.G. PEACOCK:   I appear for the husband, the fifth respondent.  (instructed by David Peacock)

HIS HONOUR:   Mr Keen, what stage is this matter at in the Family Court?

MR KEEN:   It really has not gone much further than being joined and an injunction granted.  We have also applied for a stay in the Family Court and have been refused that stay.

HIS HONOUR:   You were refused a stay in the Supreme Court as well, is that right?

MR KEEN:   No, we did not apply – the wife applied for a stay in the Supreme Court and she obtained that on appeal.  We have tried to obtain a stay in the Family Court and were refused that stay.

HIS HONOUR:   Yes.  Now, the transfer of the share in the trustee company, was that effected after an order had been made in the Family Court?

MR KEEN:   That is right, your Honour.

HIS HONOUR:   So if the Family Court had jurisdiction to grant the injunction that it did, Mr Peacock’s client is in contempt of Court, is that right?

MR KEEN:   Yes, there are contempt proceedings against Mr Thomas.  It is a separate issue from my clients.

HIS HONOUR:   Are those proceedings in the Family Court, the contempt proceedings?  The contempt proceedings, have they been instituted in the Family Court?

MR KEEN:   Yes, they have.  I understand from my friend, Mr Kourakis, that Mr Thomas has in fact pleaded guilty to those contempt proceedings.  The penalty has been adjourned.

HIS HONOUR:   One of the principal issues in the Family Court will be whether Mr Peacock’s client effected the transfer in order to defeat Mr Kourakis’ client’s interest or rights or claim, is that right?

MR KEEN:   Yes, your Honour.

HIS HONOUR:   When will that matter come on for hearing?

MR KEEN:   Dates of May next year have been bandied about, but I cannot tell you any more than that.

HIS HONOUR:   You want me to make two orders.  You want me to remove which proceedings to this Court?

MR KEEN:   The stay application which has been issued in the Family Court.  That is not presently before your Honour, from what I understood.  I only thought the order nisi was before your Honour.

HIS HONOUR:   All right, that is really what I was trying to clarify. What you are seeking today are orders under section 75 of the Constitution, is that right?

MR KEEN:   That is right.

HIS HONOUR:   Which prerogative writs are you seeking?

MR KEEN:   Certiorari and prohibition.

HIS HONOUR:   You want to prohibit any further proceedings in the Family Court, is that right?

MR KEEN:   Yes, in excess of jurisdiction.

HIS HONOUR:   You are acting for the two sons, is that right, Mr Keen?

MR KEEN:   No, a son and a daughter and a trustee company as well.

HIS HONOUR:   Mr Keen, I have to tell you that it strikes me as being totally unsatisfactory to remove the proceedings at this stage when we have no findings of fact.  If your contentions turn out to be correct, how would you in any way be prejudiced, your clients?  We are talking about property; the real property is not going to go away, is it?

MR KEEN:   Well, the property is presently vested in my clients.  That could be undone, and so we would be detrimentally affected.

HIS HONOUR:   But if, in fact, you turn out to be right; if, in fact, your clients were entitled to take a transfer of the property, then that will be the order of the Court.  That is the way in which the matter will ultimately be resolved and you will not be any worse off.

MR KEEN:   But, with respect, your Honour, is that the real question?  Is not the real question whether the ‑ ‑ ‑

HIS HONOUR:   Well, it is because we are talking about preliminary orders and I have a discretion with respect to the constitutional writs.  If there are alternative remedies or if, in fact, the proceedings are not ripe for this Court to deal with them, then in the exercise of my discretion I can refuse to grant them at this stage.  I can either refuse to grant them by dismissing the application, or perhaps I could adjourn it.  But, I am just suggesting to you, Mr Keen, that without any findings of fact, without any trials in respect of any of these matters, it strikes me that it would be very unsatisfactory to bring the proceedings up to this Court.  Now, you have to dissuade me that I am wrong about that.  It is a tentative view I have.

MR KEEN:   Yes.  Well, we say the facts are clear enough in this case.  The directorships and the shareholdings are agreed facts and there are findings by his Honour to the fact that the husband did not have control of the trustee company.  In page 2 of his Honour’s decision, which is SCG8 to the affidavit, in paragraph 6, he makes the findings of who were the directors and who were the shareholders.

HIS HONOUR:   Are you talking about Justice Lander’s decision now?

MR KEEN:   No, Judicial Registrar Forbe’s decision; the decision which we are really – not appealing from, but we are seeking relief from.

HIS HONOUR:   Yes.

MR KEEN:   Page 2 of that decision ‑ ‑ ‑

HIS HONOUR:   Well, why do you not appeal?  You have appealed against that decision, have you?

MR KEEN:   We reserved our rights and tried to appeal – well, we did issue an appeal, but we were forced to choose, basically, between going to the High Court and having a review, and we chose to come to the High Court because there is no point, we say, in going to the Full Family Court because of the decision in Re Gould.  Re Gould has decided that section 85 is constitutional in all aspects and we say that has to be questioned. In doing so, we rely upon the comment of the High Court in Loder v Aysom (1988) FLC, which your Honour has been referred to.  That was a special leave application and they refused special leave, but the Court said that there was no:

doubt that the question of the citation of persons not parties to the marriage in proceedings under sec. 85 of the Family Law Act and the scope and operation of sec. 85 are questions of general public importance.

We say that is why this matter should be taken up now.

HIS HONOUR:   Was the application for special leave granted in that case?

MR KEEN:   No, it was refused, because they say it was not the right vehicle, because they had not questioned the validity of section 85 in that case and the High Court there said that they would like the comments of the Full Family Court on section 85 before they looked at the issue. Here, since that time - that was 1988 – in 1993 the Full Family Court in Re Gould has looked at section 85. It had an argument there by the counsel for the third parties in that case that Ascot Investments – the restrictions in that case applied to section 85 and that was rejected by the Full Family Court. We say that argument, that Ascot Investments ‑ the restriction in that case applies to section 85 should be examined by the High Court and this is the case to do it in because the facts are clear enough. There are the directorships, the shareholdings, the fact that we are adult children and we have worked on the farm and that we had the legitimate expectation that we would take over the farm ‑ ‑ ‑

HIS HONOUR:   Well, you may or may not have the legitimate expectation, that was the matter that Justice Lander said.  He doubted, he doubted whether the people, the representations which your clients, the children, purported to rely upon, whether those representations could have had the effect for which they contended, because they were not made by the owner of the property.  Did not Justice Lander say that?

MR KEEN:   He made that comment, your Honour, but I think ‑ ‑ ‑

HIS HONOUR:   And did not Justice Lander also say, in paragraph 61, “If, in due course, it is decided that the resolutions and transactions were not entered into for that purpose” – and he was talking about the purpose of defeating the applicant wife’s claim – “and the property has vested in the plaintiffs, then these proceedings will not need to be determined”.  That is the Supreme Court proceedings.  And furthermore, if you succeed in the Family Court, because you have been joined there, your clients, then the matters that you are asking me to determine or asking the High Court to determine will not need to be determined here.  Is that not right?

MR KEEN:   Yes, that may well be right, your Honour, but the question is, on the present state of the law, the Family Court will proceed on the basis of Re Gould, ie, that section 85 extends beyond puppets and shams, whereas we say ‑ ‑ ‑

HIS HONOUR:   Yes, and we will have a neat set of facts which may or may not make this an appropriate vehicle for the Court to determine the issue that you want determined, and if in fact the Family Court does not have the jurisdiction that it has been held to have in Re Gould, then your right to come to this Court for prerogative writs will remain and you will be able to get that issue determined either that way or on an application for special leave from the Full Family Court, after all of the relevant facts have been ventilated and finding have been made on them.

MR KEEN:   That is, I think, where we differ and I would say that the facts are clear enough for a determination of this issue.  But the other point I would like to make ‑ ‑ ‑

HIS HONOUR:   They are not, Mr Keen.  If you would listen to me, they are not, because the purpose and intention behind the transfer have not been found by any court and that is a relevant matter.  It only may become an irrelevant matter if you succeed on all the issues, but if you do not succeed that will be a relevant matter that this Court will not decide for itself, will not try as a fact, and it will be a matter which this Court will have established before it one way or another if and when it takes hold of the issues that you want us to take hold of.

MR KEEN:   The only other point I can make on this issue is that, perhaps, the validity or otherwise of legislation should not really depend upon the particular intention in one case.  It should rely upon whether the legislation is within power or not within power.

HIS HONOUR:   Has Gould been followed or applied in subsequent decisions?

MR KEEN:   Yes, it is being applied by other Family Court decisions. My other point is that section 85 and its predecessor, section 120, have not been considered by the High Court. That is an important section and it really deals with the outer limits of the Family Court’s jurisdiction. In all honesty, Justice Gibbs’ decision in Ascot Investments was not just a case of statutory construction.  It really dealt with the ambit of the Commonwealth’s power to legislate in respect of divorce.

HIS HONOUR:   Yes, but, it seems to me, you may have read that decision far too narrowly.  You cannot read a number of paragraphs in a judgment as if they were a statute.  Now, I do not know whether it necessarily follows ‑ it is a matter for argument ‑ that it necessarily follows that his Honour’s statement of principle is as narrow as you have put it.  I am not saying you are wrong about that, Mr Keen, but his Honour, it seemed to me, selected as a clear example one type of case only, without necessarily excluding the possibility of other cases within the jurisdiction of the Court.

MR KEEN:   Yes, I agree with your Honour that he may not have shut the gate.

HIS HONOUR:   Yes.

MR KEEN:   My other point is that Loder was decided 12 years ago. Special leave was rejected 12 years ago and if the High Court refuses an order nisi here, section 85 would still be under that cloud which the High Court said then for another 10 or whatever years and that is unsatisfactory given that the cross‑vesting legislation has been struck down and which applies to this sort of issue. If the order nisi is not granted today, then there may well be many other orders which are made in the future without jurisdiction because of the problems with section 85.

I think your Honour understands the main arguments we have in relation to section 85 and how it has been exercised and will be exercised beyond constitutional power, firstly, that it is limited by the Ascot Investments restriction; secondly, if section 85 is wider than the Ascot Investments restriction, we say it cannot set aside transactions which merely have the incidental effect of defeating proposed orders.  In that case the section is wide enough that you do not need an intention to defeat the orders, and that is where it differs from the predecessor, section 120.

We say if the intention is not required any longer, there is really an insufficient connection with the divorce power because then it would really be a battle between a party to the marriage and a third party and, basically, matrimonial causes are fights between the parties to the marriage.  There is also that other issue of retrospective operation which was alluded to by the High Court in Loder and Gibbs, of course, made the comments in Ascot Investments that you take the property as you find it.

Here, we say that the wife is not even saying that this trust is property of the parties.  The wife is merely asserting it is a financial resource which can be taken into account in property and maintenance proceedings.  Your Honour can see that from the form of her property application.  There is a distinction between property of the parties and this asset.

The other issue, the third issue, is whether the applicants in the Family Court can join third parties as respondents.  The wind has been knocked out of my sails a bit by the new rules which came into force on 1 July 2000 which has been referred to in my friend’s outline.  I am not a full‑time practitioner in the Family Court, so I was in error there.  But, in many ways, the new rules do not cure the problem.  In many ways they beg the question because are those rules within the power of the Act?  The Act, which is the Commonwealth legislature, has not provided for applicants to join third parties to matrimonial issues.  There is the right to intervene but there is nothing in the Act about proceedings other than proceedings between parties to the marriage.

So we say, the new rule 15 is a procedural rule, is not a substantive power, and affects the question.  I admit, I concede, that the practice proposed in Re Gould of joining third parties is a practical solution.  But the questions remains, where does the power come from and that, we say, this case is analogous to the decision in the The Queen v Metal Trade Employees, which is in paragraph 20 of my supplementary outline, and there, in that case, the court looked at the statute, saw that there were various penalty provisions for breaches of orders, and they said, from that, it was not necessary or incidental for there to be a power of contempt in the arbitration court.

We say that sort of analogy applies here because the Family Court does not have an inherent jurisdiction and you must look at the statute to see whether it has the power to join third parties.  As I said, it is not necessary or incidental to the court’s power because parties can intervene under section 92 – that is provided for in the Act – and we say, overall, the new rules do not cure the problem. 

My friend’s outline refers to the judgment of Wilson and Dawson in Green’s Case as approving the validity of section 85. We say there was no approval of section 85 and they did not really consider the issue. We say that Loder v Aysom was really more a considered examination of the validity of section 85 and that should be the guiding point.

Also, the respondents rely upon Green’s Case to assert that jurisdiction has not been exercised yet and that an interlocutory injunction can be granted whilst jurisdiction is determined and that there is no likelihood of jurisdiction will be exceeded. Well, the applicants refute those arguments as follows: firstly, jurisdiction under section 85 has been exercised, because an injunction under section 114 cannot be granted in a vacuum; it must be granted in reliance upon another power in the Act and this is what the wife and the court relied upon in its decision. Secondly, the interlocutory injunction that Chief Justice Gibbs was talking about in Green whilst determining jurisdiction was a short interim nature, which was granted in this case as well, while they have an urgent hearing.  We have had an urgent hearing here, we have had affidavit evidence, and a learned judicial registrar determined that there is jurisdiction in this case to join the parties and to grant the injunction.

Thirdly, the learned Judicial Registrar has acted beyond power and has injuncted the company and children who are not puppets or shams and the court intends or has the power to set aside the vesting order in our clients, and we say that prohibition should issue.

In summary, your Honour, we say that there is an arguable case that the Family Court has acted, and will act, beyond power.  The applicants are not a puppet or a sham, they are not in control of a party to the marriage.  Also, in future, the court is intending to set aside the vesting of the property which will affect our rights detrimentally.  Finally, the applicants also argue that there is no power to join them as third parties and, finally, again, the granting of the order is not premature because of the decision in Re Gould and this is where we differ, the facts are certain enough to determine the issue.  Has your Honour any other questions?

HIS HONOUR:   No, thank you, Mr Keen.

MR KEEN:   Thank you, your Honour.

HIS HONOUR:   Mr Kourakis?

MR KOURAKIS:   If your Honour pleases, in paragraph 22 of the affidavit of Ms Graham, it is conceded that the question of the underlying intention behind these transactions is yet to be determined.  Indeed, at page 5 of the first decision of the Judicial Registrar, he points out that there are a number of other matters that still remain to be determined.  Those matters include the knowledge of the son and the daughter of the pre‑existing injunctive order and the effect on the interests of the wife.  All those matters ‑ ‑ ‑

HIS HONOUR:   Mr Kourakis, what exactly was transferred?  It was a share in the trustee company, was it?

MR KOURAKIS:   That is right, followed by – sorry, there was a removal by vote of shareholders of Mr Thomas, the husband, as director, followed by a transfer of his shareholding.  The trustee company then moved to vest the property of the trust in the children.

HIS HONOUR:   So, he ceased to be a director of the trustee company and when he did I think he surrendered his share, is that right?  He had a share in the trustee company?

MR KOURAKIS:   Yes.

HIS HONOUR:   What happened to that share?  It was transferred?

MR KOURAKIS:   He transferred that as between the two children.

HIS HONOUR:   To the two children.

MR KOURAKIS:   They shared, yes.  They took his share, jointly.

HIS HONOUR:   Yes.  All right.  Look, I do not think I need to hear you any more, Mr Kourakis.  What about Mr Peacock, do you want to say anything?

MR PEACOCK:   No, thank you, your Honour.

HIS HONOUR:   Mr Keen, do you want to add anything?

MR KEEN:   No, your Honour.

HIS HONOUR:   Thank you.  I would appreciate it if you would correct me if I misstate any of the facts, please.

This is an application for prohibition under section 75 of the Constitution and certiorari directed to the Family Court. The purpose of the application is to prevent the Family Court from dealing (in part) with an application to that court by a wife for maintenance and settlement of property. I put the matter that way because this application before me relates in particular to a share in a trustee company which held the legal estate in a “family” property worked by the children of the marriage.

After the wife instituted proceedings in the Family Court, a share which was held by the husband in the trustee company, was transferred to the children of the marriage.  That transfer was effected in defiance of an injunction granted by the Family Court.  I was told that the husband has pleaded guilty to contempt proceedings in the Family Court.  There are also pending proceedings in the Supreme Court of South Australia which have been stayed pending the resolution of issues in the Family Court.

I am not prepared to grant orders nisi at this stage of the proceedings. There are numerous factual matters which still need to be decided, which remain undecided, which would make it inappropriate for this Court to decide the particular issues which the applicants here seek to have the Court decide, the ambit of the jurisdiction of the Family Court with respect to third parties, and the reach of section 85 of the Family Law Act.

It seems to me that Mr Keen’s clients will not be prejudiced if the matter proceeds in an orderly way in the Family Court.  If his arguments are correct, then it may be that he will be able to persuade the Family Court that that is so, notwithstanding a decision of the Full Court of the Family Court in Re Gould, which seems to stand in his way.  If Mr Keen’s arguments, either as to the facts or as to the law succeed, then the matters he seeks to raise will not have to be determined at all by this Court.  If, on the other hand, his arguments do not prevail in the Family Court, then this Court would have before it findings of fact on essential matters if it were minded or obliged to deal with the issues he wishes to raise.

Until those findings of fact are made, that is, until all of the relevant factual questions are answered, it would be premature and inappropriate for this Court to embark upon a hearing of the issues that Mr Keen seeks to raise.  In the circumstances, I would refuse the applications for prerogative writs.

Gentlemen, I will revise those reasons, but I thought I should tell you the basis upon which I have decided to reject the applications.  Have you any applications, Mr Kourakis or Mr Peacock?

MR KOURAKIS:   Your Honour, I apply for costs.  Although, in a sense, our presence is voluntary in that we can choose to be heard, an applicant for an order nisi must appreciate that the provision for the proposed respondent to be heard exists and that the Court may be assisted by the submissions that a proposed respondent has.

HIS HONOUR:   Were you served?

MR KOURAKIS:   Yes, we were served.

HIS HONOUR:   Yes.

MR KOURAKIS:   But the service did not require our attendance.  We have a right to be heard.  In this case we were advised that the Court would be assisted by submissions from us and by taking part in the procedure we, in fact, become liable to a costs order against us if our participation had protracted the hearing so, in those circumstances, I seek an order for costs.

HIS HONOUR:   Yes.  Mr Peacock, you have no application?

MR PEACOCK:   No orders are sought, your Honour.  Thank you.

HIS HONOUR:   Mr Keen?

MR KEEN:   Yes, I am not sure what the usual practice here in this Court is on what was really an ex parte application.  In many ways I am ‑ ‑ ‑

HIS HONOUR:   It is a little unclear, I think, Mr Keen.  I know respondents do customarily appear and I am impressed by Mr Kourakis’ submission that he ran the risk, as it were, by representing his clients here.

MR KEEN:   I admit that we have lost our application and costs normally follow that event, but normally we would be by ourselves so no order as to costs may be appropriate.

HIS HONOUR:   Yes.  Look, I think I should make an order as to costs.  I think the application was premature.  I would order that the applicants today pay Mr Kourakis’ client’s costs.  Is there anything further?

MR KOURAKIS:   No, thank you, your Honour.

MR PEACOCK:   No, thank you, your Honour.

HIS HONOUR:   Thank you.  All right.  Gentlemen, I think I should certify for counsel.  I think the Rules require that.  I do certify.

MR KEEN:   Yes, your Honour.

HIS HONOUR:   Yes.  All right.  Thank you.

AT 9.47 AM THE MATTER WAS CONCLUDED