Downard and Downard & Anor
[2014] FamCA 1122
•15 December 2014
FAMILY COURT OF AUSTRALIA
| DOWNARD & DOWNARD AND ANOR | [2014] FamCA 1122 |
| FAMILY LAW – JURISDICTION – Accrued – where wife seeks a declaration that the interests of the husband and wife in a farming property is held on trust for their adult son – where husband had entered into contract for sale with third party – where wife seeks to litigate in the Family Court but the respondents seek to pursue the matter in another jurisdiction – s 78 does not raise questions of accrued jurisdiction. FAMILY LAW – INJUNCTIONS – Jurisdiction and Generally – anti-suit injunction – where wife sought an injunction restraining the respondents from pursuing their claims in another jurisdiction – where wife not a party to the proceedings – wife’s application dismissed – where son sought an injunction restraining first respondent from pursuing his claim in another jurisdiction – son’s application dismissed. |
| Evidence Act 1995 (Cth) s 131(2) Family Law Act 1975 (Cth) s 78, 79, 106B Real Property Act 1886 (SA) s 191 |
| Antman & Antman (1980) FLC 90-908 Balnaves & Balnaves (1988) 12 Fam LR 488 Beecham (Australia) Pty Ltd v Roque Pty Ltd (1987) 11 NSWLR 1 Bigg & Suzi (1998) FLC 92-799 CSR Limited v Signa Insurance Australia Limited (1977) 189 CLR 345 Dempsy & Dempsyand Ors [2008] FamCA 1065 Deputy Federal Commission of Taxation v Swain (1988) FLC 91-976 Esmore v Esmore (1979) FLC 90-711 Giumelli v Giumelli (1999) 196 CLR 101 Henry v Henry (1996) 185 CLR 571 Hilton v Guyot 159 U.S. 113 (1895) Lederer & Hunt (2007) FLC 93-311 McCarney v McCarney (1977) FLC 90-200 R v Ross-Jones and Anor; Ex-parte Beaumont (1979) 23 ALR 179 Silver Fox Co Pty Ltd v Lenard’s Pty Ltd(No 3) (2004) 214 ALR 62; [2004] FCA 1570; Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871 Stanford v Stanford (2012) 247 CLR 108 Valceski v Valceski [2007] NSWSC 440; (2007) FLC 93-312 Voth v Milandra Flour Mills Pty Ltd (1990) 171 CLR 538 Warby v Warby (2001) 28 Fam LR 443 |
| APPLICANT: | Ms Downard |
| FIRST RESPONDENT: | Mr Downard Snr |
| SECOND RESPONDENT: | Mr Downard Jnr |
| FILE NUMBER: | ADC | 1178 | Of | 2014 |
| DATE DELIVERED: | 15 December 2014 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 21 August 2014, 15 & 31 October 2014, 20 November 2014, 3 December 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr McGinn |
| SOLICITOR FOR THE APPLICANT: | Catherine Hicks & Co |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Besanko |
| SOLICITOR FOR THE FIRST RESPONDENT: | Coates Lawyers |
| COUNSEL FOR THE SECOND RESPONDENT: | Mr Birchall |
| SOLICITOR FOR THE SECOND RESPONDENT | Armour Allen |
Orders
That the interim proceedings do otherwise stand dismissed.
That any application for costs be filed on or before 4pm on 16 January 2015.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Downard & Downard and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 1178 of 2014
| Ms Downard |
Applicant
And
| Mr Downard Snr |
First Respondent
And
| Mr Downard Jnr |
Second Respondent
REASONS FOR JUDGMENT
INTRODUCTION
By an Amended Initiating Application filed 10 July 2014, the wife Ms Downard (“the applicant”) seeks declaratory relief pursuant to s 78 of the Family Law Act 1975 (Cth) (“FLA”) that the interests of the husband Mr Downard Snr (“the first respondent”) in land comprised and described in Certificate of Title Register Book Volume … Folio … (“the farm”) is held on trust for their son, Mr Downard Jnr (“the second respondent”) or in such proportion as the Court may deem proper.
The applicant also seeks an order pursuant to s 79 of the FLA that save as to any interest that the second respondent may have in the farm, the first respondent shall transfer his interest in the farm (if any) to the applicant, or in the alternative, that there be an alteration of property interests as between the husband and the wife.
Further, the applicant sought an order pursuant to s 106B of the FLA that a contract for the sale of the farm dated 14 November 2013 between the first respondent and a purchaser, Mr H, be set aside.
By way of interim relief and now at least in part the subject of the interim proceedings, the applicant sought the following orders:
1. Until further or other order, the first respondent husband and the third respondent each be restrained and an injunction granted restraining each of them from:
(a)Doing anything, or taking any steps, to cause or permit the settlement upon the contract of the sale of the farm;
(b)Doing anything, or taking any steps necessary, to cause or permit the warning or removal of the registered caveats numbered …08 and …93; and
(c)Doing anything, or taking any steps, to transfer, sell, encumber or deal with the husband’s interest in the farm.
2. Or in the alternative, the first respondent husband is restrained and an injunction be granted restraining him from dissipating the net proceeds of sale which will be retained in an interest bearing account in the parties’ joint names requiring joint signatures.
3. That until further or other order, the first respondent husband and the second respondent be restrained and an injunction be granted restraining them from taking any steps in the prosecution of the proceedings No. … in the District Court of South Australia.
4. Pursuant to s 64 of the Real Property Act 1886 (SA) that the Registrar General of South Australia be directed to make an entry of these orders in Certificate of Title Register Book Volume … Folio ….
The amendment that required the filing of the Amended Initiating Application is the additional reference in paragraph 3 of the interim orders sought, namely - “and the second respondent”.
By Response filed 16 May 2014, the first respondent sought the following principal order:
1. That the applicant’s application be dismissed.
No orders are formally sought by the first respondent in respect of interim or procedural orders. By reference to the Outline of Argument filed on behalf of the first respondent, the husband’s position is better particularised in that he seeks the dismissal of the interim orders sought by the wife, namely:
1. To restrain settlement on the contract for the sale of the farm taking place.
2. To prevent the warning of the caveats lodged by the wife and son.
The initial position of the husband is that the settlement on the contract for the sale of the farm should have taken place and if it had, he concedes that the proceeds of sale should be paid into a joint bank account pending agreement between the parties and the settlement of the proceedings, or at the very least, a resolution of any claim that the second respondent has against the property of the parties or consequent upon a resolution of the District Court proceedings in Action No. … between Mr Downard Jnr, plaintiff and Mr Downard Snr, defendant (“the District Court Proceedings”).
Notwithstanding the first respondent holds the legal interest in the farm, he concedes that the wife holds an equitable interest and by necessary implication, it is the husband’s position that it is just and equitable to adjust the existing property interests of the parties in circumstances where the husband and wife were together for 43 years (1968 – 2012) and have been separated for more than 2 years. In Stanford v Stanford (2012) 247 CLR 108 at para 42, the majority said:-
… the husband and wife are no longer living in a marital relationship … [and] … there is not, and will not thereafter, be the common use of property by the husband and the wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship.
Whilst the first respondent does not set out with any detail the orders that he seeks upon a final determination, it is reasonable to assume that on his case the wife has a substantial entitlement. That would not be so on the primary case of the applicant in circumstances where the balance of the property interests of the parties is modest if the farm is not included.
By Amended Response filed 2 June 2014, the second respondent sought the following final order:-
1. That pursuant to s.78 of the Family Law Act, a declaration that the interest of both the applicant and the first respondent in the farm is held on trust for the second respondent pursuant to the District Court judgment in Action No. …
Initially the second respondent sought orders in significantly the same terms as sought by the applicant. Following the Amended Response, the second respondent sought relief pursuant to s 78 of the FLA dependant on and subject to the outcome of proceedings in the District Court proceedings.
Principal argument was heard by me on 15 October 2014. However, upon an indication that judgment was to be delivered, I was asked to refrain from doing so on the basis that there were some discussions taking place between the parties and their legal representatives. I considered that it was appropriate to allow the parties an opportunity to explore a resolution.
On 31 October 2014, I made orders by consent that discontinued the proceedings both as to final and interim relief against the then third respondent Mr H, noting that the contract that had been entered into between the first respondent as vendor and the third respondent as purchaser had been terminated.
Whilst it did not resolve the proceedings it had the effect of limiting the orders sought by the wife to paragraph 3 of her interim application namely, to restrain the first respondent and the second respondent by injunction from taking any steps in the prosecution of the District Court proceedings.
The interim application was then adjourned to 20 November 2014 to enable the first and second respondents to consider their position and to explore the relief that the second respondent sought either by a continuation of the District Court proceedings or whether those proceedings would be abandoned (and therefore consent to the orders sought by the applicant) and pursue his relief in this Court.
Initially the second respondent did not seek relief pursuant to s 79 as to adjustment of property interests. During the course of the submissions, counsel for the second respondent conceded that the District Court proceedings were able to be heard and determined. It was his position that there was no efficacy left in respect of the relief that he sought pursuant to s 78 of the FLA. Whilst I was not necessarily convinced that this was the case, it was likely to be a distinction without a difference. Clearly, the second respondent sought to have his claim determined in the District Court proceedings and not in the Family Court. Following what he hoped would be a successful outcome in those proceedings, that judgment would be given proper recognition by the farm being removed from the property interests of the husband.
Presently the second respondent is the plaintiff in the District Court proceedings and the first respondent is the defendant. In order to determine whether it is just and equitable to make an order under s 79 of the FLA a consideration of the legal and equitable interests of the parties in their separate and joint property is an essential first step. The District Court proceedings, if allowed to run their course, and in circumstances where the first and second respondents to these proceedings would be parties in the District Court proceedings, a resolution in that Court would comprehensively crystalize the interests that each of the husband and wife have to their joint and separate property.
Prior to the adjourned date of 20 November 2014, the second respondent filed and now relies upon a Further Amended Response filed 18 November 2014. He seeks the following final orders:-
1.That pursuant to section 78 of the Family Law Act the Declaration that the first respondent holds his interest in the whole of the land comprised and described in C/T Register Book Volume … Folio … (farm) upon trust for the second respondent in such proportion as this Honourable Court deems appropriate.
2.That pursuant to section 79 of the Act the first respondent do transfer to the second respondent any interest in the farm which is declared by this Honourable Court to be held by the first respondent upon trust for the second respondent.
Accordingly, the second respondent persists with his principal relief namely, that he seeks a declaration pursuant to s 78 but now relies upon s 79 to enable the Court the power to give effect to any declaration so made. That is a different focus than the orders sought by the wife or originally sought by the second respondent namely, that he is entitled to relief pursuant to s 79 of the Act.
On 3 December 2014, I considered further submissions by counsel as to whether the applicant still persisted with the orders that she sought and perhaps more importantly, whether the position of the second respondent had now changed since the disjoinder of the third respondent namely, that he would discontinue the District Court proceedings and in effect consent to the applicant’s orders.
The first respondent is entirely dependent upon the actions of the second respondent. If the District Court proceedings are discontinued, that would not be opposed. The submission of counsel was that the second respondent was not prepared to consent to the orders sought by his mother and he seemed to be saying that until he was satisfied the remedy and relief sought by him would be dealt with in this Court, he was not prepared to discontinue the District Court proceedings.
Given the principal relief sought by the second respondent is a declaration pursuant to s 78 of the Act, it is difficult to see why this Court would not deal with that claim. That of course says nothing about the merits of the claim. It would be heard. The second respondent’s position is difficult to reconcile.
BACKGROUND
The husband was born in 1944. He describes himself as a retired farmer. The wife was born in 1951 and has as her usual occupation the duties of a case manager. The second respondent son was born in 1969 and is a farmer.
The parties were married in 1968 and were separated in February 2012.
As at the date of marriage, the husband’s father was the registered owner of the farm but the property was subsequently transferred into the husband’s name in or around 1984.
There are three children of the marriage but it is only the second respondent who is involved in the proceedings. The wife alleges that the second respondent at age 15 years worked on the farm on a full-time basis. The assertion is that the farm would not have been viable without the son’s involvement or at the very least he was of invaluable assistance up to the time that the husband retired in 1997. It is said by the wife that “for many years, the second respondent worked on the farm for essentially food and lodging but for no fixed wage or other financial remuneration”. This contention is to be read together with the assertion by the wife that on numerous occasions over the years the husband had made representations that the farm would ultimately be transferred to the son. This culminated in a speech made by the husband at the second respondent’s 21st birthday confirming the alleged previous representations, namely that the son would take over the farm. In 1997, the husband retired and left the farm.
It would not seem controversial that the position adopted by the son is supported by the wife.
For his part, the husband denies that the farm was ever the subject of any representation in favour of the son and at paragraph 8 of his affidavit filed 16 May 2014, he says:-
I deny that I have ever unconditionally promised the farm to the second respondent, and deny that the second respondent worked on the farm ….
He goes further and says at paragraph 10:-
The second respondent was lazy, abusive and regularly failed to adequately perform the most basic of farm duties – often requiring me to do again what he had failed to do. Threats of violence, and acts of aggression were regular occurrences.
And further at paragraph 11:-
Since leaving the farm in 1997, the second respondent has had the full benefit of farm income without honouring his promise to pay the rent as agreed.
Far from there being any consensus between the parties, the husband alleges that the son owes him and the wife $170,000 in unpaid rental.
Following separation in July 2012, it is common ground that the parties attempted to reach a settlement. Whilst each of them has a different understanding of why the settlement discussions were unsuccessful, they both acknowledge that agreement could not be reached.
In late 2012, the wife instructed Jenkins Anderson Solicitors and the husband instructed Coates Lawyers to represent each of them.
On 5 April 2013, the wife caused a caveat to be registered on the farm title claiming:-
To be beneficially entitled to an estate or interest in fee simple in some at present indefinable share or shares in the land above described by virtue of having contributed to the acquisition, maintenance, conservation and improvement of the said land.
In April or May 2013, the husband appears to have placed the farm on the market for sale with X Real Estate.
Whatever other interest there may have been in the property, from an early stage in the marketing of the farm, Mr H showed interest in purchasing the property. The wife alleges that in May of 2013 she contacted Mr H and advised him of the separation of the parties, that there was a dispute in relation to the farm, but that in any event it was her position that the farm should be retained within the family.
The second respondent lodged his own caveat on the farm title claiming the following:-
To be beneficially entitled to an estate in fee simple in some (at present) indefinable share in the land above described having contributed towards the purchase and maintenance of the said land.
By letter dated 26 July 2013, the husband’s solicitors advised the wife’s solicitors that there was an offer to purchase the farm (made by the third respondent) at $1,150,000 but that the husband was prepared to transfer the farm to the son subject to certain conditions but essentially requiring that the son match the offer and that such a transfer be part of an overall matrimonial property settlement. The letter also provides notice of any intention to warn the caveat registered by each of the applicant and second respondent.
On 17 October 2013, X Real Estate forwarded a draft rural contract in respect of the sale and purchase of the farm at $1,150,000 with a settlement date of 3 January 2014. The correspondence refers to the second respondent having received a contract for the purchase of the farm in the following terms:-
A contract has now been issued to [Mr Downard Jnr] and we will now need to await his response in regards to having finance approved by 30 November 2013.
The husband argues that he would have been prepared to transfer the property for valuable consideration to the second respondent but as foreshadowed, a backup contract with Mr H would be put in place.
The husband then refers to correspondence dated 6 November 2013 being annexure LSD 6 of the affidavit of the husband filed 16 May 2014, being a letter from Mellor Olsson to Coates Lawyers in the following terms:-
We refer to your letter dated 21 October 2013.
We understand that our client’s son [Mr Downard Jnr] has elected not to execute a contract for the purchase of the farm to match the offer made by [Mr H] at $1,150,000.
On that basis, we presume that the [H] contract will proceed and the net sale proceeds will comprise a significant part of the matrimonial asset pool.
If final settlement as between our clients has not been agreed by the date for settlement for the farm sale, our client will agree to the withdrawal of the caveat in exchange for an undertaking from you and your client that the net sale proceeds will remain in your trust account until such agreement is reached.
On 14 November, the son received advice that his caveat had been warned and would be withdrawn within 21 days unless an order was served on the Registrar General pursuant to s 191(g) of the Real Property Act 1886 (SA).
The contract between the husband and Mr H was subsequently entered into.
On 27 November 2013, the second respondent issued an application in the District Court of South Australia in Action No. … seeking an extension of time for the removal of the caveat lodged by him.
The District Court proceedings are ongoing and the most recent order made by the District Court judge notes that the parties were negotiating and that by consent of the parties, the matter was adjourned until further order.
At paragraph 67 of the wife’s affidavit filed 2 April 2014, the asset pool available for distribution between the parties is set out which provides total assets in the sum of $1,493,824 and superannuation between the parties totalling $118,349. The wife includes the farm at $1,100,000 were as the husband asserts the farm value should be consistent with the signed contract, namely $1,150,000 less agent’s commission. For the purposes of these proceedings, the parties are in effective agreement in respect of the pool generally which highlights that if the farm property is excluded from the pool the balance remaining is modest with the assets and superannuation entitlement of the parties totalling slightly more than $500,000. The status of the farm in terms of its inclusion or otherwise in the pool of property available for division of the parties is pivotal.
DISTRICT COURT PROCEEDINGS
By summons dated 27 November 2013, the second respondent, Mr Downard Jnr, as plaintiff applied for orders that the time for removal of caveat number …93 lodged by the second respondent over the farm title be extended until further order. That application was supported by an affidavit of the second respondent and the applicant wife.
The second respondent asserted a claim by way of an equitable interest in the farm summarised as follows:-
[6]For the reasons set out in this affidavit I say that for many years I acted in reliance upon promises which the defendant (my father) made, and repeated on many occasions, that if I worked on the farm under his direction, I would have the farm on his retirement.
[7]I worked on the farm until my father’s retirement and believe that I have fully and faithfully discharged all requirements. However, now that he has retired he proposes to resile from his said promises and to sell the farm. The farm is my home. I seek relief in terms of the said promises.
The position of the wife in her support of the son’s claim is simply put. At paragraph 2.1 of her affidavit filed in the District Court proceedings she says:-
To say that since [Mr Downard Jnr] was born it was agreed between the defendant and I that the whole of the land comprised in Certificate of Title Register Book Volume … Folio … (the farm) would be transferred to [Mr Downard Jnr] once the defendant and I retired;
The affidavit of the wife does not suggest that there is any equivocation or uncertainty on her part namely that the entirety of the husband’s interest in the farm should be transferred to the son for no consideration.
The husband, as the defendant in the proceedings, trenchantly denies that there was any promise or representation in respect of the farm and his position is summarised in paragraph 15 of his affidavit filed in the District Court proceedings, but as annexure LSD 3 to his affidavit of 16 May 2014, as follows:-
[15]In relation to paragraph 6 of the affidavit of the plaintiff ([Mr Downard Jnr) and I deny that I made the promises as represented but I have had at various times indicated that if [Mr Downard Jnr] wanted to be a farmer, that he would have that opportunity providing he came to proper arrangements for the retirement of myself and my wife, like I had with my parents, and that he work for it by working hard on the farm and supporting my endeavours to provide for the family.
In summary, the husband’s position is that the son “never fully and faithfully discharged his requirements”.
The summons filed on 27 November 2013 seeks orders summarised as follows:-
1.A declaration that the defendant holds the whole of the farm on trust for the plaintiff.
2.The time for the removal of the caveat be extended until further order.
3.That the defendant be restrained whether by himself or his agents or servants from selling or otherwise dealing with the land without the plaintiff’s expressed consent.
4.That the defendant transfer the farm to the plaintiff forthwith for his sole use and benefit absolutely.
It is reasonable to find that the wife by her affidavit supports the orders sought in the summons.
At present, the District Court proceedings involve only the second respondent as plaintiff and the first respondent as defendant.
Mr H asserted that he has a right to seek orders that there be specific performance of the contract for sale in a Court of competent jurisdiction. At an early stage in the proceedings in this Court, his solicitor foreshadowed an intention to make application to join the District Court proceedings but would forebear that action pending the resolution of these interim proceedings.
At present, the applicant argues that she is not a party to the District Court proceedings and has no intention of becoming involved save as to the giving of evidence in support of her son’s contentions.
Further it is argued that the basis by which the applicant asserts a caveatable interest, namely a beneficial entitlement in some at present indefinable share or shares in the farming land by virtue of her contribution to the acquisition maintenance, conservation and improvement of the farm would appear to be inconsistent with the affidavit filed in support of the plaintiff son’s summons and the orders sought pursuant to s 78 of the FLA by way of a declaration that the first respondent holds his entire interest in the farm on trust for the second respondent.
The second respondent opposes the order sought by the applicant namely:-
[3]That until further or other order, the first respondent husband and the second respondent be restrained and an injunction be granted restraining him from taking any steps in the prosecution of the proceedings in the District Court.
As discussed, counsel for the second respondent conceded that it was either inconsistent with his primary position, namely that the entirety of his claim should be determined in the District Court proceedings or at the very least it was unnecessary in circumstances where the declaratory relief as sought in the District Court proceedings would be comprehensive.
The orders sought by the applicant wife and second respondent son at first filing were almost identical. The only difference reflected in the Amended Initiating Application is the inclusion in paragraph 3 of the interim orders widening the injunction sought to include the second respondent.
Notwithstanding the equivocation by the second respondent, I am left with the finding that the second respondent does not wish to discontinue the District Court proceedings, but in terms of the interim orders sought, he now abandons his application for a stay of the Family Court proceedings pending the resolution of the District Court proceedings.
He seeks the following interim order:-
1.That until further or other order the first respondent be restrained and an injunction be granted restraining him from taking any steps in the prosecution of the proceedings in the District Court of South Australia Action Number ...
Whilst the District Court proceedings are in their infancy, nonetheless it is the second respondent who is properly adjudged to be the plaintiff and it is for him to clearly state his position. It is also noted that the first respondent through counsel have given an open undertaking not to sell or dispose of his interest in the farm property. It is therefore difficult to divine the strategy of the second respondent in circumstances where his counsel asserts that he would wish his relief to be sought in this Court, but does not choose to discontinue the District Court proceedings notwithstanding the open offer of an undertaking by the husband and the clear position of his mother. A possible explanation might be a recognition that the relief available is different between the two Courts.
JURISDICTION
The first respondent promoted an application for summary dismissal of final and interim orders sought by the applicant.
It is argued that the declaration she seeks pursuant to s 78 by its very terms “disclaims any equitable interest in the farm” in favour of the son. It is then suggested on behalf of the first respondent that whilst the son could seek to intervene in the proceedings and assert his own interest, the Court has no jurisdiction to entertain an application that seeks a declaration for the sole benefit of another.
The High Court in R v Ross-Jones and Anor; Ex-parte Beaumont (1979) 23 ALR 179 considered the scope of the declaratory powers of the Family Court pursuant to s 78 and in particular per Murphy J at paragraph 195:-
I agree with the view expressed by my brother Jacobs that the Family Court could, in the exercise of powers with respect to property settlements, make declarations as to the respective existing interests of parties in particular property and make orders requiring the transfer of interests in property (including an interest in a partnership from one party to another), and in appropriate cases for the appointment of a receiver to preserve or protect particular items of property of either party.
In the case of Antmann & Antmann (1980) FLC 90-908 at [75], the Full Court held:-
However a finding that the property belongs to a third party is not the same as a declaration under s.78(1). A “declaration” is a formal order which settles the issue of ownership as between the parties to a marriage and that declaration can be implemented by consequential orders under s.78(2). A finding that certain property belongs to a third party is no more than a convenient way of saying that the property does not belong to either of the parties and consequently the Court has no jurisdiction in respect of it under s.78(1).
The issue was again considered by the Full Court in the matter of Balnaves & Balnaves (1988) 12 Fam LR 488 at 493:-
In many cases a precise determination of the actual ownership of individual items of furniture would not be important in financial proceedings in this Court because of the power under s.79 to make a settlement of property including items of this type between the parties if the Court considers it to be just and equitable to do so. The critical aspect of this case is that for the reasons previously explained, the proceedings with which the trial judge and we are concerned, are proceedings under s.78 which empowers the Court in proceedings between the parties to a marriage “with respect to existing title or rights in respect of property” to “declare the title or rights, if any, that a party has in respect of the property”. Consequently, it is a question of determining the actual legal and beneficial interest of the parties to the property in question.
In the current proceedings, the second respondent is a party to the proceedings. He seeks relief in his own right pursuant to s 78 notwithstanding his acknowledgement that a resolution of the District Court proceedings would see a comprehensive resolution of his claim.
I consider that a declaration sought pursuant to s 78 can be directed to the beneficial interest and entitlement of a third party. The intervention or joinder of a third party does not change the status of the proceedings from that of a “matrimonial cause”. See also the decision of Murphy J in Dempsy & Dempsy& Ors [2008] FamCA 1065 at paragraph 30 and his Honour’s reference to the decision of Brereton J in Valceski v Valceski [2007] NSWSC 440; (2007) FLC 93-312.
No issue of accrued jurisdiction arises. Relief in respect of s 78 is an exercise of the inherent federal jurisdiction of this Court (See Warby v Warby (2001) 28 Fam LR 443 at [87], and Valceski (supra) at [33]). That issue was raised on behalf of the second respondent namely, that this Court was being asked to extend its jurisdiction to enable the resolution of the whole matter. Whilst properly setting out the circumstances where the Court will be required to invoke its accrued jurisdiction, in the present case, the second respondent argues that his claim will “necessarily involve substantial evidence as to his contributions to the farm over many decades” and that this claim is “an entirely separate (and protracted) dispute between him and his father as opposed to the resolution of any dispute as between the applicant and the first respondent as to their contributions to a lengthy marriage”.
In summary, the second respondent asserts that his purported equitable interest is an entirely different dispute than that that exists between his parents and that it could not be said there is a single justiciable controversy and a common substratum of facts.
It is however conceded by the applicant and first respondent that a consideration of s 78 does not invoke a consideration of the Court’s accrued or ancillary jurisdiction.
Whilst not therefore having any resonance in terms of any arguments directed to the issue of jurisdiction, the matters raised by the second respondent may well have relevance to the consideration of the injunctive relief sought.
The first respondent further submits that in the circumstances of the case, it is unlikely that a Court “would impose a constructive trust over the farm in favour of the son pursuant to principles of equitable estoppel”. Counsel for the first respondent opines that a lesser relief is likely namely, equitable compensation. See Giumelli v Giumelli (1999) 196 CLR 101.
The factors relevant to an application to strikeout or summarily dismiss have been the subject of considerable but now well settled judicial reflection and is best encapsulated in the decision of Bigg & Suzi (1998) FLC 92-799 at [510] but summarised as follows:
[1]That relief for summary dismissal is rarely and sparingly provided.
[2]It is only available if it is clear on the face of the documents of the person asserting a cause of action that there is no reasonable cause of action or that it is a frivolous or vexatious one.
[3]It is not enough to attain summary dismissal to show that it is a weak case.
[4]If there is a defect in the pleadings and it appears that the party still has a reasonable cause of action, the Court will allow the party to reframe its proceedings.
[5]One only will summarily dismiss an application if it is clear that the case is doomed to fail.”
The wife’s counsel makes the pertinent point that these proceedings are interlocutory and that the evidence currently presented is in a summary form and not able to be tested. That position must be correct and irrespective of the forceful submissions made by each counsel, I do not consider that the final orders sought by the applicant wife are doomed to fail. Certainly on the first respondent’s case, there is a concession that the farm (or its proceeds) would form property in the proceedings to which the wife will have a significant entitlement. Accordingly, it is not the totality of the orders sought by the wife that the husband considers to be without merit but only the relief sought by the wife pursuant to s 78.
ANTI-SUIT INJUNCTION
The applicant seeks that the first and second respondents be restrained from continuing with proceedings in the District Court. The order made by the District Court judge on 11 December 2013 has the matter adjourned until further order with liberty to the parties to apply at short notice.
The wife argues that the power to restrain the respondents is available pursuant to s 34 and ss 114(1) and 114(3).
The first respondent argues that the Court should not grant injunctive relief until the applicant establishes that there is “a serious question to be tried”. It is asserted that the orders sought by the wife, namely that the farm be transferred either to the son or to her has “insufficient prospects of success” to justify the granting of an injunction.
The first respondent submits that the orders sought by the wife are unlikely to be made based on the evidence that has been presented, in that neither the husband nor the wife would be able to retain the farm taking into account the size of the pool and the significant proportion represented by its value.
That submission would require a significant leap of faith in terms of the evidence that may be presented at a final hearing. I am not able to speculate on what financial resources may be available to the wife in terms of her desire to acquire the farm in circumstances where the son’s claim is unsuccessful.
In CSR Limited v Signa Insurance Australia Limited (1977) 189 CLR 345, the High Court considered whether an anti-suit injunction made by a judge at trial and left in place by an appeal court should remain.
A parent company brought proceedings in the Supreme Court of New South Wales seeking an anti-suit injunction to restrain the continuation of proceedings in the United States. The trial judge granted the anti-suit injunction and dismissed the application for a stay. The majority considered that the trial judge had erred in making the anti-suit injunction and considered that a stay of the proceedings should have been granted. As part of the Court’s determination, consideration of any difference or distinction between a stay order and an anti-suit injunction was considered. At page 390, the Court approved of the consideration by the Privy Council in Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871:-
… although stay orders and anti-suit injunctions are not governed by the same principles, it will later become apparent that, in some cases, the power to grant anti-suit injunctions is an aspect of the power which authorises a Court to stay its own proceedings. And will also become apparent that, in other cases, the power to grant anti-suit injunctions should not be exercised without the Court concerned first considering whether its own proceedings should be stayed.
In Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538, the High Court restated the position in Australia namely that the Court has adopted an “inappropriate forum test” rather than the “more appropriate forum test”. A stay is therefore to be granted only if the Australian Court is considered to be a clearly inappropriate forum.
In CSR Limited v Signa Insurance Australia Limited (supra) the Court said at [392]:-
The inherent power to grant anti-suit injunctions is not confined to the examples just given. As with other aspects of that power, it is not to be restricted to defined and closed categories. Rather, it is to be exercised when the administration of justice so demands or, in the context of ante-suit injunctions, when necessary for the protection of the Court’s own proceedings or processes (references omitted).
Further at pages 395 – 396 the Court considered the appropriate practice with respect to interlocutory anti-suit injunctions and summarised the position as follows:-
The cases concerned with injunctions in the restraint of proceedings in foreign courts recognise that, although an injunction of that kind operates in personam, it nevertheless interferes with the processes of the foreign court and may well be perceived as a breach of comity by that Court.
Comity, relevantly, was explained by the Supreme Court of the United States in Hilton v Guyot 159 U.S. 113 (1895) in the following terms:-
Comity, in the legal sense, is neither a matter of absolute obligation, on the one hand nor of mere courtesy and goodwill, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or other persons who are under the protection of its laws.
For this reason, the cases also emphasise that the power to grant injunctions in restraint of foreign proceedings should be exercised with caution and that is so whether the injunction is sought in the exercise of the inherent or equitable jurisdiction.
In Beecham (Australia) Pty Ltd v Roque Pty Ltd (1987) 11 NSWLR 1 at [3] said that such an order:-
… should rarely, if ever, be granted to restrain a party not otherwise controlled by statute or clear contractual obligation, from proceeding in the appropriate court of another State of Australia.
This decision found favour with the court’s in Lederer & Hunt (2007) FLC 93-311 at [35]-[36] and Yen & Yen [2010] FamCA 1 at [40].
In Esmore & Esmore (1979) FLC 90-711 Nygh J at pages 78,796-797 considered what fell from the Full Court in McCarney v McCarney (1977) FLC ¶90-200 at page 76,058 in the following terms:
… but we consider it undesirable that an injunction should ever be framed to restrain a person from proceeding in another Court of competent jurisdiction to seek relief to which he is entitled by law. While at all times prepared to assist applicants in proper circumstances and within the scope of the Act, this Court should avoid making orders in terms which may give the impression of a jurisdictional conflict between judicial bodies.
His Honour did however qualify his consideration at page 78,797:-
… whilst I would agree respectively with the Full Court [in McCarney supra] in respect of the passage quoted above, as to the desirability of such an action, I do not read the statement as implying that such orders cannot be made as a matter of law or as indicating that they should never be made under any circumstances. Where, as here, the exercise of jurisdiction by a State Court would defeat the rights of the parties under the Family Law Act, I feel that this Court should act.
The proceedings in the District Court are on foot. Whilst a Statement of Claim has not yet been lodged, the issues are well understood, the orders sought have been enunciated and the defendant’s response is made clear.
The wife’s position by her affidavit filed in support of the son’s claim is without equivocation.
The second respondent is now open as to the order that he seeks being heard and determined in the Family Court, but is not prepared to discontinue his claim in the District Court proceedings.
It seems to me that the difficulty for the wife is that she seeks to restrain proceedings in another Court in circumstances where she is not a party to those proceedings. The wife’s application is against the wishes of the second respondent
As the plurality in Voth (supra) found at 558, reinforced by the majority in Henry v Henry (1996) 185 CLR 571, Australian Courts should not concern themselves with “an assessment of the comparative procedural or other claims of foreign forum but really the question is whether the Australian Court (the Family Court) is a clearly inappropriate forum that is whether the Court is inappropriate, not by way of comparison with the foreign or other forum.”
The second respondent does not seek to expand the parameters of his claim in the Family Court by application to invoke accrued jurisdiction. No Statement of Claim or Contention document setting out the particularity of his claim is sought to be relied upon by him.
Taking into account the support of the applicant in the District Court proceedings, there is frankly little or no matrimonial flavour or cause in respect of the dispute between the respondents. The wife is wholly supportive of the second respondent’s claim, namely that he should be entitled to the entirety of the interest in the farm which if established, would see the balance of the pool reduced to a modest value.
I propose to refuse the wife’s application seeking an anti-suit injunction.
STAY OF PROCEEDINGS
The dismissal of the applicant’s order seeking an anti-suit injunction enables the principal participants to those proceedings to make application for the matter to be re-listed and to now proceed to a final hearing.
I am obliged to consider whether there should be a stay of the Family Court proceedings pending a resolution in the District Court.
As is obvious, both the applicant and the first respondent agree that without the farm forming part of the property of the parties, the balance of the pool is modest. Moreover, it would be reasonable to assume that a resolution of the dispute as to who holds the interest in the farm would likely enable the parties to consider a resolution of their differences.
That alone however, is not sufficient to justify a stay. A determination of the District Court proceedings will have the advantage of determining the legal and equitable interests of the parties for the purposes of property settlement. There is however, other property that may be the subject of further proceedings and it would seem that there is little prejudice to be caused to the parties if a stay is not granted. At present, the wife is not a party to the District Court proceedings.
There would seem to be no reason why the proceedings in the District Court and the Family Court could not both continue. They are not inconsistent with each other, save and except that for obvious reasons final determination of the interests of the husband and the wife pursuant to s 79 of the Act may not be able to be resolved to finality until their separate legal and equitable interests are determined and therefore dependent upon a resolution of the District Court proceedings.
That however can be considered if and when the matter is to be listed for trial.
I am not obliged as a matter of law to stay the proceedings and it is a matter of the exercise of discretion taking into account the individual and separate circumstances of each case as presented. In Deputy Federal Commission of Taxation v Swain (1988) FLC 91-976 the Full Court found at page 77059:-
The power to adjourn is a power which is inherent in the constitution of a Court (see Pfitzner v Pfitzner (1988) 62 ALJR 323), and it is a discretionary power, the exercise of which will not readily be disturbed upon appeal. This remains true when the question whether a matter should be adjourned involves an argument that another proceeding in another court should be accorded priority, though in such a case it has been said that there is an onus on the applicant for adjournment which is “not a light burden”. … While it will happen only rarely, there are cases where a decision upon an adjournment application may be seen to result in serious injustice and an appellant court has both the power and the duty to review the exercise of discretion.
In the circumstances of this case, I decline to stay the Family Court proceedings.
LETTERS – s.131 OF EVIDENCE ACT 1995 (CTH)
At the commencement of the hearing, legal professional privilege was claimed in relation to the file maintained by the wife’s former solicitors namely, Mellor Olsson Lawyers. The file was the subject of a subpoena which sought documents that would record and set out the instructions of the wife to her solicitors leading up to the correspondence of 6 November 2013. Whilst maintaining the objection, no privilege was claimed in relation to the following documents:-
(a)Letter Coates Lawyers to Jenkins Anderson date 26 July 2013;
(b)Letter Jenkins Anderson to Coates Lawyers dated 2 August 2013;
(c)Letter Coates Lawyers to Jenkins Anderson dated 15 August 2013;
(d)Letter Jenkins Anderson to Coates Lawyers dated 6 November 2013.
In addition, and by reference to correspondence forming annexure LSD4 to the affidavit of the husband filed 16 May 2014, objection was taken to the inspection of letters from Jenkins Anderson to the husband dated 22 October 2012, from Coates Lawyers to Jenkins Anderson dated 7 December 2012 and the last paragraph of the letter from Jenkins Anderson to Coates Lawyers dated 18 April 2013. In addition, whilst no objection was taken to the letter from Coates Lawyers to Jenkins Anderson dated 26 July 2013 on the basis of legal professional privilege, objection was taken to the portion of that letter commencing with the words “however, our client is prepared to allow your client…”.
The basis of the objection is by reference to s 131 of the Evidence Act1995 (Cth) namely:-
(1)Evidence is not to be adduced of:-
(a)a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or
(b)a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
The purpose of s 131 (1) can be better understood by reference to the explanation of Mansfield J in Silver Fox Co Pty Ltd v Lenard’s Pty Ltd(No 3) [2004] FCA 1570; 214 ALR 621 at [36]:-
Section 131(1), subject to its exceptions, gives effect to the policy of ensuring the course of negotiations – whether private or by mediation – are not adduced into evidence for the purpose of influencing the outcome of the primary matters in issue. Clearly, it is in the public interests that negotiations to explore a resolution of proceedings should not be inhibited by the risk of such negotiations influencing the outcome on those primary issues. It is equally in the public interest that negotiations should be conducted genuinely and realistically.
There are exceptions to the prohibition in s 131(1) and it is submitted that the documents have a use and application that would satisfy the exceptions as set out in s 131 (2), in particular:-
(c)The substance of the evidence has been partly disclosed with the express or implied consent of the persons in the dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced;
(e)The evidence tends to contradict or qualify evidence that has already been admitted about the course of an attempt to settle the dispute; or
(g)Evidence that has been adduced in the proceedings, or inference from evidence that has been adduced in the proceedings, is likely to mislead the Court unless evidence of the communication or document is adduced to contradict or to qualify that evidence;
It should be stated that the contents of the documents to which objection has been maintained have not been relied upon for the purpose of these reasons.
It does seem to me however that the chain of documents which provide the factual matrix upon which ultimately the husband says he was entitled to enter into a contract for the sale of the farm with the third respondent are a necessary precursor to better understand the actions of the parties.
The wife by her affidavit filed 8 August 2014 refers to the “various correspondence” annexed to the affidavit of the first respondent filed 16 May 2014 and the affidavit of the solicitor for the third respondent, filed 16 May 2014.
It is the wife’s contention that she did not provide instructions for the letter of 6 November 2013 to be provided, nor did she provide instructions for the sale of the farm or the withdrawal of the caveat over the farm title.
The focus of s 131 is to promote parties to litigation entering into negotiations with a view to exploring a resolution of the conflict. What is important in the current proceedings is not the extent of the settlement discussions and the respective proposals of the parties, but rather, the very fact of the negotiations, the chronology of the correspondence and the manner in which the various items of correspondence may have resonance in the resolution of the main areas of contention namely. They are the extent to which the husband was entitled to enter into settlement discussions with the third respondent, the extent to which the third respondent had notice if any of the position of the wife and the second respondent, the purported reliance by the husband and the third respondent on the Jenkins Anderson letter dated 6 November 2013, the reasonableness of their actions in doing so and the consequences of the wife’s position namely, that Jenkins Anderson acted without her express instructions.
Accordingly, whilst a determination of the wife’s objection is not necessary in terms of my determination of the interim proceedings, I consider that the documents under consideration are properly admissible by reference to s 131 (2) (c), (e) and (g).
INTERIM ORDERS SOUGHT BY SECOND RESPONDENT
The second respondent seeks an injunction be granted restraining the first respondent from taking any steps in the prosecution of the District Court proceedings. It is difficult to understand the thrust of the argument in circumstances where the second respondent has brought the proceedings and has filed documents which whilst not constituting a statement of claim, nonetheless asserts a clear cause of action. There is no good reason why the first respondent should be restrained from prosecution of the District Court proceedings in circumstances where the second respondent seeks that they continue. The interim orders sought on behalf of the second respondent cannot be reconciled.
CONCLUSION
I propose to dismiss the interim application (and response) of the applicant and the second respondent.
I make orders as they appear at the commencement of these reasons.
I certify that the preceding one hundred and twenty five (125) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 15 December 2014.
Associate:
Date: 15 December 2014.
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