F Firm & Ruane and Ors

[2014] FamCAFC 189

FAMILY COURT OF AUSTRALIA

F FIRM & RUANE AND ORS [2014] FamCAFC 189

FAMILY LAW – APPEAL – LEAVE TO APPEAL – ACCRUED JURISDICTION – FINANCIAL AGREEMENT – Claim for damages against solicitors and counsel – Where the trial judge determined that the Family Court had the jurisdiction to hear and determine all of the claims joined between the parties – Leave to appeal granted – Where intermediate courts of appeal may depart from their own earlier decisions – Where no merit found in any of the grounds of appeal – Appeal dismissed.

Australian Constitution – ss 51(i), 75 and 76
Family Law Act 1975 (Cth) – ss 4, 31(1)(a), 33, 39, 75(2), 79, 79A, 90C, 90G(1A) and 117(1)

Judiciary Act 1903 (Cth) – ss 39B(1A)(c), 78B, 79 and 80

Jurisdiction of Courts (Cross‑vesting) Act 1987 (Cth) – ss 4(1) and 5(4)(b)(iii)

A v GS (2004) FLC 93-199
Abebe v The Commonwealth (1999) 197 CLR 510
ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559
Australian Solar Mesh Sales Pty Ltd v Anderson (2000) 175 ALR 566
Bergman & Bergman (2009) FLC 93-395
Bryant and Bryant (1996) FLC 92-690
Commonwealth v Hospital Contribution Fund (1982) 150 CLR 49
Commonwealth v Tasmania (Tasmanian Dams Case) (1983) 158 CLR 1
Crouch v Commissioner of Railways (1985) 159 CLR 22
Davys Burton v Thom [2009] 1 NZLR 437
Edwards v Santos Ltd (2011) 242 CLR 421
Farnell and Farnell (1996) FLC 92-681
Felton v Mulligan (1971) 124 CLR 367
Fencott v Muller (1983) 152 CLR 570
Gett v Tabet (2009) 254 ALR 504
Green v The Queen; Quinn v The Queen (2011) 244 CLR 462
Houghton v Arms (2006) 225 CLR 553
Ivanovic and Ivanovic (1996) FLC 92-689
Izzard v Dunbier Marine Products (NSW) Pty Ltd [2012] NSWCA 132
John v Commissioner of Taxation (1989) 166 CLR 417
LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575
Macteldir Pty Ltd v Dimovski (2005) 226 ALR 773
Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457
Nguyen v Nguyen (1990) 169 CLR 245
Noll & Noll and Anor (2013) FLC 93-529
Noll & Noll and Anor [2011] FamCA 872
PCS Operations Pty Ltd v Maritime Union of Australia (1998) 153 ALR 520
Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457
Re Wakim; Ex parte McNally (1999) 198 CLR 511
RJE v Secretary to the Department of Justice (2008) 21 VR 526
Schacht v Staunton & Thompson Lawyers (No 3) [2013] NSWSC 316
Smith v Smith (No 3) (1986) 161 CLR 217
Stack v Coast Securities (No. 9) Pty Ltd (1983) 154 CLR 261
Transcript of Proceedings, Elders Limited v Swinbank (High Court of Australia, No. A43 of 2000, Gleeson CJ, Gaudron, McHugh, Kirby & Hayne JJ, 13 August 2001)
Turner v Owen (1990) 96 ALR 119
Valceski and Valceski (2007) FLC 93-312
Warby and Warby (2002) FLC 93-091
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
Whitehouse & Whitehouse (2009) FLC 93-415
Young v Lalic (2006) 197 FLR 27

APPELLANT: F Firm

FIRST RESPONDENT: Mr Ruane

SECOND RESPONDENT:	Ms Bachmann-Ruane
THIRD RESPONDENT:	Mr Curtis

FILE NUMBER: SYC 1991 of 2009

APPEAL NUMBER: SOA 48 of 2012

DATE DELIVERED: 2 October 2014

PLACE DELIVERED: Brisbane

PLACE HEARD: Melbourne

JUDGMENT OF: May, Thackray & Strickland JJ

HEARING DATE: 17 October 2013

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 22 May 2012

LOWER COURT MNC: [2012] FamCA 369

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Williams with
Mr Fary

SOLICITOR FOR THE APPELLANT: Curwoods Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Ms Rose

SOLICITOR FOR THE FIRST RESPONDENT: Slater & Gordon

COUNSEL FOR THE SECOND RESPONDENT: Mr North SC with
Ms Nichols

SOLICITOR FOR THE SECOND RESPONDENT: Croxford Partners

COUNSEL FOR THE THIRD RESPONDENT: Ms Ritchie

SOLICITOR FOR THE THIRD RESPONDENT: Norton Rose Fulbright

Orders

1. Leave to appeal the orders made by Murphy J on 22 May 2012 be granted.

2. The appeal be dismissed.

3. Within 21 days of the date hereof each party be at liberty to file and serve any written submissions in support of any application for costs in relation to the appeal.

4. Each party have a further 14 days in which to file and serve any written submissions in response to any submissions filed by the other party.

5. Each submission have endorsed on the cover sheet the date on which a copy of that submission is served on the other party.

IT IS NOTED that publication of this judgment by this Court under the pseudonym
F Firm & Ruane and Ors has been approved by the Chief Justice pursuant to
s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE

Appeal Number: SOA 48 of 2012
File Number: SYC 1991 of 2009

F Firm 

Appellant

And

Mr Ruane

First respondent

And

Ms Bachmann-Ruane 

Second respondent

And

Mr Curtis

Third respondent

REASONS FOR JUDGMENT

May J

1. I have the considerable benefit of reading the reasons in draft of Thackray and Strickand JJ.  I agree that leave to appeal should be granted, but the appeal should be dismissed.

2. The primary judge was correct that the Family Court of Australia had jurisdiction to determine the claim by the wife against her former solicitors.

3. The relevant facts and circumstances, together with the reasons of the primary judge which gave rise to the appeal, are explained in the reasons of

   
   

   Strickland J.

4. In view of the reasons of Strickland J dealing in detail with each ground of appeal and those of Thackray J, I need only add a few comments.

The decision in Noll – ground 3

1. I agree with Strickland J that a factual difference between Noll & Noll and Anor (2013) FLC 93-529 and the present matter is the claim available to the wife. It is a claim by the wife against her own former solicitors, which in my view is the relevant legal significance of the factual difference between the two cases. This fact highlights the impression that the issue is within the scope of one justiciable controversy.

2. Whilst I do not disagree with the opinion of Strickland J in [174] of his reasons that this court is able to depart from Noll by reason of the factual difference identified by him, I am also of the opinion that there are aspects of principle espoused in Noll with which there can be more than reasonable disagreement.  That is not to say that the decision reached on the facts in Noll is “plainly wrong”.

3. Before dealing with those matters I would also note that I do not share the apprehension of Strickland J in relation to how the wife’s claim against the solicitors might be heard at the same time as the property settlement claim. The wife has already suffered some loss, at the least arising from the husband successfully seeking that the agreement between them be set aside. I also agree with the reasons of the primary judge in [65] – [66] that the receipt of damages payable to the wife is relevant to the considerations contained in s 79(4)(e) of the Family Law Act 1975 (Cth) (“the Act”).

4. Returning to the decision in Noll, in [45] their Honours said after lengthy reference to Re Wakim; Ex parte McNally (1999) 198 CLR 511 and Philip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457:

   It will thus be seen that Mason J identified that the issue for determination was whether it was the “attached” claim that was essential to the determination of the “federal” claim.

5. If their Honours intended to suggest that the determination of the non-Federal claim was “essential” to the determination of the Family Court claim that would be an error.  To that extent I agree with the reasoning of Thackray J ultimately contained in [64] of his reasons and that the court in Noll made an error in this respect.

6. As did Thackray J, I agree with Strickland J that issues of accrued jurisdiction may depend on the facts of each case.  It is in my opinion, unnecessary to determine whether Noll was “plainly wrong” for a number of reasons including that it is not necessary for the determination of the matter before the court.

7. Finally, I agree that it is unnecessary to discuss the argument that s 33 of the Act provides an alternate basis for jurisdiction as the appeal is to be dismissed.

Thackray J

1. I have had the advantage of reading Strickland J’s judgment in draft.  I agree that leave to appeal should be granted but the appeal should be dismissed.  Subject to what I say below, I also agree generally with his Honour’s reasons.

2. In agreeing the appeal should be dismissed, I would also respectfully adopt the trial judge’s reasoning by which he found the Family Court had jurisdiction to determine a claim for damages against solicitors relating to an agreement under Part VIIIA of the Family Law Act 1975 (Cth) (“the Act”).

3. Much of the argument in this appeal was directed to the proposition that we should depart from the decision in Noll & Noll (2013) FLC 93-529 (“Noll”), in which the Full Court upheld a decision that the Family Court did not have jurisdiction to determine a damages claim by a party to a Part VIIIA agreement against the solicitors who acted for the other party.  Strickland J has concluded we should not depart from Noll, but, with respect to his Honour, I do not agree with all of the views he has expressed in coming to his decision. 

Departure from an earlier decision

1. The wife argues that we should depart from Noll because it is “plainly wrong”.  In the absence of full argument, I would leave for another occasion the question whether this is the test in this court, given that the (arguably) less stringent test stated in Farnell and Farnell (1996) FLC 92-681 at 83,071 has often been approved: see for example, Ivanovic and Ivanovic (1996) FLC 92-689; Bryant and Bryant (1996) FLC 92-690; and A v GS (2004) FLC 93-199.

2. Ultimately, little may turn on the words used to formulate the test: Green v The Queen; Quinn v The Queen (2011) 244 CLR 462 at 490 [84]. Importantly, the High Court has said that while the extent to which an intermediate appellate court is free to depart from an earlier decision is a matter for the court itself to determine, it should do so cautiously and only when compelled to the view that the decision is wrong: Nguyen & Nguyen (1990) 169 CLR 245 at 269.

3. Whatever test is used, it must be recognised that Noll was the first time the Full Court considered the scope of the Family Court’s accrued jurisdiction in dealing with Part VIIIA – and this is the first time we have been asked to consider the issue again.  This novelty is important because some excuse can be made for departing from an earlier decision if that decision did not “rest upon a principle that has been carefully worked out in a significant succession of cases”: Commonwealth v Hospital Contribution Fund (1982) 150 CLR 49 at 56-58 per Gibbs CJ, with whom Stephen and Aickin JJ agreed at 59 and 66.

4. Strickland J points out that even having a strong conviction that a decision was erroneous does not necessarily lead to departure from it.  As there is discretion involved, it is important to say that Noll could not have been “independently acted on in a manner which militate[s] against reconsideration”: John v Commissioner of Taxation (1989) 166 CLR 417 at 438. Had that been so, we would need to be especially cautious before taking a different path.

5. However, the most that could have happened, following Noll, is that a party who might have brought a damages claim in the Family Court would instead have taken proceedings in a State court.  If such proceedings are pending, and we find Noll was wrongly decided, then issues could arise as to where the claims should be heard.  We do not know how many cases might be affected, but the inconvenience associated with resolving any difficulty is not such as to militate against reconsidering Noll, especially given the remedy available under the cross-vesting legislation: Valceski & Valceski (2007) FLC 93-312.

Factual differences between Noll and this case

1. As Strickland J has observed, it would be unnecessary to determine whether Noll was wrong if we find a factual difference that has legal significance.  One clear distinction is that the validity of the Part VIIIA agreement had not been determined in Noll, whereas here it had already been found not binding when Murphy J found that the court had jurisdiction to hear the damages claim.  The Full Court in Noll referred to this distinction in the postscript to its reasons; however, it was conceded before us that this difference is not material.  (The concession relied on Elders Limited v Swinbank (Transcript of Proceedings, High Court of Australia, No. A43 of 2000, 13 August 2001) and see also Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 477.)

2. Another difference was that the solicitors in Noll did not oppose being joined – the objection having been advanced only by the wife.  I accept this is not of direct relevance, since the court must itself be satisfied it has jurisdiction.  However, it can be understood why solicitors, or their insurers, may be willing, if not anxious, to participate in proceedings where one party challenges an agreement in which they had involvement, given their pecuniary interest in the outcome.  The fact solicitors would have such an interest is, in my view, of significance in deciding whether there is one “matter”, and hence whether the court has jurisdiction.

3. A further point of distinction is that in Noll it was not “strongly pressed” that the claim for damages might constitute property to be taken into account under s 79 of the Act “and therefore require resolution before the [s 79] proceedings” (at [49]), whereas counsel for the solicitors in the present matter conceded that “[t]here seems to be a fair body of authority that one would describe this sort of claim as part of the matrimonial property”.

4. Furthermore, Murphy J has found here that “[t]he receipt, and the amount, of damages paid or payable to the wife from a party not the husband is … directly relevant to s 79(4)(e)”. In my view, there is force in this unchallenged finding, even if it leads to difficult questions about the order in which issues are to be determined if there is indeed one “matter”. Thus, for example, in s 79 proceedings which might otherwise result in a party being left with property of only minor value, the court may well be asked to take into account the prospect of that party becoming entitled to a large award of damages. As Murphy J pointed out at [66], this could impact on the s 75(2) “adjustment”.

5. This significant issue was not addressed in the first instance judgment in Noll, where the linkage was discussed only in the context of whether the damages could be treated “as property for the purposes of s 79 orders”: Noll & Noll [2011] FamCA 872 at [35]. As Murphy J has stressed at [65], to focus only on the property fails to take account of the fact that identifying the assets is only one part of the s 79 process. However, I accept that this fact was recognised by the Full Court in Noll when it said at [49] that “it is not unknown in property settlement proceedings for the Court to take into account the outcome of a damages claim by one of the parties that is pending in another court”.

6. In any event, senior counsel for the wife did not seek to rely on any of the differences I have mentioned.  He relied solely on the fact that, in Noll, it was the husband who sought to bring a claim against the wife’s solicitors, whereas here it is the wife who joined her own solicitors.  I accept this is a point of difference, although naturally, in both cases, it was the party who wanted the agreement upheld who sought damages if it was found not to be binding.

7. Counsel for the solicitors submitted, with justification, that the wife had but “faintly raised” this one difference.  He further submitted that while the facts of the two cases were not “on all fours, they’re not of any different legal significance in terms of the analysis of the jurisdictional question”.

8. I agree this distinction from Noll is irrelevant.  It seems to me that it cannot be right that the court has accrued jurisdiction to determine a claim for damages by one party against their own solicitor, while not having jurisdiction to determine a damages claim against the other party’s solicitors, in circumstances where both claims arise out of a Part VIIIA agreement.  The fact the claims are differently based, that different defences may be pleaded, and that entitlements may “crystallise” at different times seems to me to be irrelevant to jurisdiction.  My reasons for so concluding can be seen from the authorities discussed later.

9. Although we heard some argument about the point at which various claims “crystallise”, I do not consider it necessary to engage with the issue here.  It is sufficient to say that the topic may require scrutiny in a more appropriate case to decide whether the law in Australia relating to the time at which the cause of action in negligence accrues in the case of a binding financial agreement is the same as in New Zealand – see Davys Burton v Thom [2009] 1 NZLR 437; see also Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514.

10. Putting that question to one side, I respectfully agree with Murphy J that the focus should be on deciding whether there is one controversy.  Any approach which shifts the focus to differences between the causes of action that arise within the context of that controversy is, in my respectful view, erroneous. 

11. It follows that if Noll was correctly decided, Murphy J was wrong to conclude he had jurisdiction to determine the damages claim against the solicitors.  

Should we depart from the decision in Noll?

1. The wife asserts four errors were made in Noll.  I will discuss each in turn.

The first alleged error

1. The first asserted error appears at [38], where the Full Court said (emphasis added):

   38.Nevertheless, even if the facts upon which the claims depend “do not wholly coincide”, there can still be a sufficiently common substratum of facts existing between the wife’s claim and the husband’s cross-claim, as was made clear in Wakim at [140]. But even if a common substratum of facts exists in this case, there remains the need to identify one justiciable controversy, or matter, in order to attract the accrued jurisdiction, and that identification, as Gummow and Hayne JJ emphasised at [139] of Wakim, is “[t]he central task”. 

2. The wife takes issue with the highlighted part of the citation.  She contends that the Full Court in Noll should have recognised that once a “common substratum of facts” is found to exist, then there is one controversy and accrued jurisdiction is thereby attracted.

3. This argument finds firm foundation in pronouncements in the High Court such as the following from Fencott v Muller (1983) 152 CLR 570 at 607, approving what was said by Mason J (with whom Stephen J agreed) in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 512, which in turn relied on what had been said in Moorgate Tobacco (citations omitted):

   It follows also that, though the facts upon which a non-federal claim arises do not wholly coincide with the facts upon which a federal claim arises, it is nevertheless possible that both may be aspects of a single matter arising under a federal law. Mason J in Philip Morris, following what was said in Moorgate Tobacco, gave an indication of a non-federal claim which would not be severable:

   “Likewise, it may appear that the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction.”

4. However, it should be observed that the majority of the High Court in Fencott v Muller went on to say at 607:

   Perhaps it is not possible to devise so precise a formula that its application to the facts of any controversy would determine accurately what claims are disparate and what claims are not.  Whatever formula be adopted as a guide – and the formula of “common transactions and facts” is a sound guide for the purpose – it must result in leaving outside the ambit of a matter a “completely disparate claim constituting in substance a separate proceeding” … or “some distinct and unrelated non-federal claim”.

1. It seems to me that perhaps all the Full Court was doing at [38] in Noll was saying that even if there was a “common substratum of facts”, it was still necessary to show that the claims so depended on those facts as to constitute one controversy.  In other words, while their Honours accepted the “common substratum of facts” formula as a “guide”, they still felt it necessary to decide whether the claims were “completely disparate” or “distinct and unrelated”.

2. An argument could be made that this approach is orthodox.  I acknowledge the majority of the High Court in Moorgate Tobacco said, at 482, that if “the two claims arise out of common facts and transactions, they cannot be described as distinct and unrelated and, accordingly, they are non-severable”. But the majority might be seen as having refined that proposition when they went on to hold, at 483, that federal jurisdiction was attracted because both “the federal and non-federal cases … rested on what was a common substratum of transactions involving a plurality of issues of fact giving rise to questions of law some of which were common in both cases” (emphasis added).  The Full Court in Noll might therefore be seen as doing no more than accepting that jurisdiction is attracted not so much because of a commonality of facts, but because of the impact that commonality has on the questions to be determined. 

3. I accept that the weight of authority favours the proposition that the existence of a common substratum of facts leads to a conclusion that there is a single “matter”.  However, as Brereton J observed in Valceski& Valceski at [39], “it must always be borne in mind that the ultimate question is not the existence of each of the several suggested indicia, but whether there is in substance a single justiciable controversy”. The court in Noll ultimately stated the test correctly, namely “the need to identify one justiciable controversy, or matter”.  In my view, if the court fell into error, it was not because of the way it formulated the test, but because it did not recognise that the claims depended on a common substratum of facts which gave rise to questions common to both cases.

The second alleged error

1. The second asserted error in Noll arises from what was said at [43]:

   43.In the present case the claim by the wife for a declaration that the financial agreement is not binding, or that it should be set aside, is an entirely different claim to the potential claim that the husband may have against the solicitors for damages if the wife’s claim in relation to the financial agreement is successful and then only if subsequent property settlement orders leave the husband in a worse position than had the agreement been found to be binding.  In the language used at the end of [140] of Wakim, the husband’s cross-claim could well be described as “completely disparate” or “completely separate and distinct”, although perhaps not necessarily “unrelated”.

2. Senior counsel for the wife criticises what he asserts was the erroneous reliance by the Full Court in this paragraph on the fact that the damages claim was “an entirely different claim” from the claim for a declaration about the validity of the Part VIIIA agreement.

3. In dealing with this complaint, Strickland J makes the important point that each paragraph in a judgment must be read in the context of the rest of the judgment.  In particular, his Honour draws attention to the fact that earlier, at [41], the Full Court had made reference to the judgment of Gummow and Hayne JJ in Re Wakim; Ex parte McNally (1999) 198 CLR 511, where it was said that “… if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter”.

4. With respect, I am not sure how this observation by Gummow and Hayne JJ was seen in Noll at [41] as “defeat[ing] the argument for attracting the accrued jurisdiction”. The husband’s claim against the wife’s solicitors in Noll was, in fact, joined with his defence to the wife’s claim.  Procedurally, there was no impediment to this occurring, any more than there was any impediment in the present matter where the wife’s claim against her solicitors was joined with her defence to the husband’s application.  

5. In my view, the language used at [43] in Noll can be read as suggesting that the Full Court first asked itself whether the claims were “entirely different”, and then, having answered in the affirmative, concluded they were therefore “completely disparate” or “completely separate and distinct”, while still allowing for the possibility they were not “unrelated”. 

6. Although I accept that ordinarily the expression “entirely different” would convey much the same meaning as “completely disparate” or “completely separate and distinct”, there is an important nuance when the expressions are used in analysis of accrued jurisdiction.  Thus, for example, some claims in Fencott v Muller were properly described by Gibbs CJ at 593 as “entirely different” from others, but they were nevertheless not found by the majority to be “completely disparate” or “completely separate and distinct”.

7. I accept that the husband’s claim for damages in Noll was “entirely different” from that made concerning the validity of the agreement and the s 79 claim.  However, that fact should not have been influential.  I respectfully suggest that the question that should have been posed was whether the claim came within the “scope of the controversy” which is “identifiable independently of the proceedings … brought for its determination”: Fencott v Muller at 603.

8. As was said in ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 586, citing Crouch v Commissioner of Railways (1985) 159 CLR 22 at 37, the focus in this context should be on “the substance of the dispute” and “the substantial subject matter of the controversy’’. Importantly, the scope of the controversy is not limited to matters incidental to that which attracted federal jurisdiction in the first place: Philip Morris at 475 per Barwick CJ, cited with approval in Fencott v Muller at 603.

9. The substance of the dispute in Noll, as in the present case, was the status of the agreement and the legal consequences if it was found not binding.  Central to the entire dispute were facts pertaining to the agreement.  The ensuing damages claims depended on facts relevant to the validity of the agreement itself.  The preliminary question common to both parts of the controversy was whether the requirements of Part VIIIA had been met.  If they had not been met, other questions would arise, the answers to which could impact on the other part of the controversy.  Chief amongst these would be the entitlements under s 79.  In Noll, there was the added complication of the existence of the wife’s own claim for damages against the husband, arising out of the same agreement in relation to which the husband was seeking damages against the wife’s solicitors.  It would seem to me there was real potential for the claims to become entangled.  

10. Accordingly, in my view, the claims were not “severable”, in the sense that word is used in the authorities, especially as each was “incidental, if not essential, to [the determination of the other] and because the … various claims for relief necessarily arose out of common transactions and facts”:  Philip Morris per Mason J at 512 cited in Fencottv Muller at 605.

11. A secondary error said to be have been made in Noll at [43] (and see also [48]) is the apparent reliance on the fact that the damages claim would fall away if the agreement was found to be valid, or no damage was proven. There is no doubt there would be no entitlement to damages in such circumstances. However, I consider any reliance on this fact in denying the existence of jurisdiction would be inconsistent with authority – see again Fencott v Muller, where some of the claims were, to use the expression of senior counsel for the wife, “attended with the same degree of uncertainty and dependence as was the claim considered in Noll”.

12. In accepting the wife’s submissions on this point, I have in mind this often repeated statement from Fencott v Muller at 608:

    A judicial power which is not exercised to determine the whole of a controversy is, generally speaking, not appropriately and conveniently exercised. Not appropriately, because the controversy is not quelled; not conveniently, because the parties — the principal beneficiaries of the exercise of judicial power — must litigate anew to have the outstanding questions and issues determined.

13. I accept that claims for damages such as the one in Noll are capable of being heard independently of s 79 proceedings.  Schacht v Staunton & Thompson Lawyers (No 3) [2013] NSWSC 316 (“Schacht”) is an example.  However, the fact that parts of the controversy are capable, in the forensic sense, of being severed, does not mean they are “severable” in the sense used in the authorities, unless they are also “distinct and unrelated”.  Any argument to the contrary is inconsistent with what Brereton J, in Valceski& Valceski at [40], called the “expansive view” of accrued jurisdiction that has prevailed since Re Wakim.    

14. I also accept, as Gibbs CJ said in Fencottv Muller at 593, that “whether one claim is inseverable from another, so that both are part of one matter, is a question of fact and degree”. While reasonable minds can therefore differ as to whether federal jurisdiction is attracted, questions (or indicia) that can be determinative, as Gummow and Hayne JJ explained in Re Wakim at [140] are:

    ·whether the claims arise out of “common transactions and facts” or “a common substratum of facts” (which they can do even if the facts do not “wholly coincide”); 

    ·whether the different claims are so related that the determination of one is essential to the determination of the other;

    ·whether, if the proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings; or

    ·conversely, whether the claims are “completely disparate”, “completely separate and distinct” or “distinct and unrelated”.

15. In my view, all of these indicia point toward the conclusion that the damages claim in Noll was part of one wider controversy.  One of the most telling of these indicia is the possibility of conflicting findings if all issues were not heard together.  If the solicitors were not parties in the Family Court (because no claim was made against them in that court) there would be no res judicata or issue estoppel to bar them asserting in a State court that a finding that an agreement was invalid was made in error – as occurred in Australian Solar Mesh Sales Pty Ltd v Anderson (2000) 175 ALR 566 at 569 [9].

16. Thus, for example, in the present matter, the solicitors might convince the State court that, on the proper construction of the Act, an English solicitor could give advice and sign a certificate relating to a Part VIIIA agreement, even though a judge in the Family Court found otherwise. Many other scenarios can be imagined where the same issue could be fought over a second time in a State court, perhaps with the advantage of more evidence or better argument. The potential for disagreement in this area (even on the same facts and with the benefit of the same argument) is highlighted by reference to the unusually high proportion of cases involving Part VIIIA agreements which have come before the Full Court in which there has either been a dissenting judgment or in which each member of the court has felt it necessary to deliver separate reasons.

The third alleged error

1. It is next asserted that the Full Court in Noll erroneously relied on the fact that determination of the federal claim did not require determination of the claim sought to be attached.

2. Senior counsel for the wife submitted that:

   Essentially, as we understand the reasons for judgment in Noll, it stands for a proposition that there is no single justiciable controversy where the determination of the federal claim does not require the determination of the claim sought to be attached, whereas there is a recognition in Noll that there will be one controversy if the determination of the attached claim is necessary for the determination of the federal claim.

3. In contending that this was the approach taken, senior counsel took us to the following paragraphs of the Full Court’s reasons in Noll (original emphasis):

   44.We therefore turn to the issue of whether the claims in this case are, in the words of Gummow and Hayne JJ in Wakim at [140], “so related that the determination of one is essential to the determination of the other”. In support of this particular indicia of the accrued jurisdiction, Gummow and Hayne JJ relied on a statement by Mason J in Philip Morris Inc v Adam PBrown Male Fashions Pty Ltd (1981) 148 CLR 457. It is instructive for present purposes to consider precisely what was said in this regard by Mason J in Philip Morris at 512:

   The classification of a claim as “non-severable” does not necessarily mean that it is, or must be, united to the federal claim by a single claim for relief, though this is a common illustration of a non-severable claim. The non-severable character of the attached claim may emerge from other aspects of the relationship between the federal and the attached claim. For example, it may appear that the resolution of the attached claim is essential to a determination of the federal question. Likewise, it may appear that the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction. …

   45.It will thus be seen that Mason J identified that the issue for determination was whether it was the “attached” claim that was essential to the determination of the “federal” claim.

   46.It is instructive to note that in those cases in which, to date, the Full Court has upheld, or sanctioned, the use of the accrued jurisdiction such as Wade-Ferrell & Wade-Ferrell (2001) FLC 93-069, Warby & Warby (2001) FLC 93-091 and Bishop & Bishop (2003) FLC 93-144, it has been the determination under state law of what is the property of the parties that has been essential for the purposes of the Family Court's jurisdiction under s 79 of the Act and thus has been the subject of the accrued jurisdiction.

   47.Applying what was said by Mason J in Philip Morris to the present case, the “federal” matter is of course constituted by the wife's claim in relation to the financial agreement and would include the property settlement proceedings which would follow if the agreement is held to be non-binding or set aside, while the matter sought to be “attached” is the husband's claim against the solicitors.

   48.It appears, at least prima facie, that in this case the determination of the federal claim does not require the determination of the claim sought to be attached. Indeed it might well be said that the attached claim will not even arise until the proceedings relating to the financial agreement are determined, and are determined adversely to the husband, and on a basis which could provide him with a claim against Law Firm A. Furthermore, the measure of damages that could be sought in the attached claim would only be known if and when an order was made for property settlement under s 79 of the Act.

   49.There was some discussion before us as to whether the husband's potential claim for damages might constitute an item of property on the part of the husband which would need to be taken into account in any s 79 property proceedings between the husband and the wife, and therefore require resolution before the property settlement proceedings. But this was not a matter strongly pressed before us. In any event it is not unknown in property settlement proceedings for the Court to take into account the outcome of a damages claim by one of the parties that is pending in another court.

   …

   52.Ground 3 is directed to his Honour’s conclusion in [40] of his reasons, that there was no single justiciable controversy in this case. His Honour gave as his reasons for this conclusion the following:

   [40] ... It is not necessary to determine the action against [Law Firm A] in order to determine what property the parties have for distribution by court order pursuant to section 79 or otherwise.

   53.We have undertaken a fuller analysis than his Honour of the indicia for the existence of the accrued jurisdiction as explained by Gummow and Hayne JJ in Wakim, and also of the issue or indicia of the necessary essential relationship between a federal claim and a state claim which is sought to be attached to the federal claim, as was explained by Mason J in Philip Morris. On the basis of that analysis, and particularly of the last mentioned issue or indicia, we too have concluded that there is no single justiciable controversy in this case that would attract the accrued jurisdiction. Thus Ground 3 has not been established.        

4. It was argued that the proposition emerging from these paragraphs was based on an erroneous analysis of the reasons of Gummow and Hayne JJ in Re Wakim, and was contrary to the principle stated by the majority in Fencott v Muller, where their Honours said at 609:

   The power judicially to determine the whole of the dispute is inconsistent with the limitation which would restrict the Court to resolving only the federal claim and what is necessary for that purpose.

5. It was submitted that the proposition was also “entirely inconsistent with a critical treatment given by the majority in Fencott v Muller to similar references by Barwick CJ in Philip Morris to ‘what is necessary’ for the resolution of the federal claim”. 

6. As the majority of the High Court said in Fencott v Muller at 609, a test of “what is necessary”

   … would be unexceptionable if the primary purpose of the exercise of federal judicial power in a s 76(ii) matter were the judicial administration of the federal law; that is, if the primary purpose were to ensure that the federal law applicable to a particular claim was correctly applied in resolving it. But the primary purpose of exercising judicial power is not the maintenance of legal principle: that is incidental to the determination of the dispute in hand.

7. And their Honours went on immediately to say (emphasis added):

   The power judicially to determine the whole of a dispute is inconsistent with a limitation which would restrict the Court to resolving only the federal claim and what is necessary for that purpose. To adopt a more restrictive approach to the ascertainment of the ambit of a matter is to ensure that the obstacles of arid jurisdictional dispute will beset the path of a party who must invoke federal jurisdiction, especially federal jurisdiction exclusively vested in a federal court pursuant to s 77(ii). The judicial ascertainment of facts in a particular controversy would be bedevilled by the possibility of divergent findings or by unseemly attempts to secure a first finding from one court rather than another. The judicial award of effective remedies in resolution of a controversy would be impaired, especially in cases where remedies are discretionary or reciprocal. The judicial power of the Commonwealth would at once prove insufficient to accomplish its purpose and productive of inefficiency in the exercise of the judicial power of the States. These consequences cannot be accepted unless they follow from the language of the Constitution, and they do not.

8. In rejecting the wife’s argument, Strickland J has accepted that Mason J in Philip Morris was providing no more than an example of a case in which federal jurisdiction would be attracted.  Strickland J also properly says that the Full Court in Noll could not be said to have “erred by using that example to address whether on the facts of that case there was one matter or not”.  His Honour goes on to refute the proposition that the Full Court was “indicating that although there can be one matter when the resolution of the attached claim is essential to a determination of the federal question, there are two matters where the reverse is the case”.  His Honour also rejects any suggestion that the decision was reached “solely because the determination of the federal claim does not require the determination of the claim sought to be attached”.

1. Strickland J enjoys an advantage in that he was a member of the bench in Noll. Nevertheless, it is my duty to attempt to interpret the reasoning of the Full Court independently, by reference to the language used in the judgment. In doing so, I cannot ignore what was said at [45] where the question of whether one claim was “essential” to the other appears not to have been treated as an “example” of a case where federal jurisdiction would be attracted, but rather was expressly identified as “the issue for determination”. That it was so treated seems to me to be reinforced by what their Honours went on to say at [53], where the “indicia of the necessary essential relationship between a federal claim and a state claim” was expressed to be “particularly” relevant in determining that there was not a single justiciable controversy.

2. For these reasons, I respectfully consider that the court in Noll erred in its apparent reliance on the fact that determination of the husband’s claim for damages was not essential to the determination of the clearly federal element of the dispute.  Such reliance was in conflict with the ratio of Fencott v Muller. 

The fourth alleged error

1. The fourth error asserted is that the Full Court proceeded on the basis that the claims made by the husband were other than “federal claims”.  It should be said at the outset that the argument in support of this complaint was not advanced before the Full Court in Noll, and the failure of the court to recognise any merit in the argument therefore cannot fairly be called an error. 

2. It must also be said that an argument along these lines seems not to have been advanced at first instance in the present matter, although that omission is not an impediment to it being raised, as a point of law, to provide an alternative basis for upholding the decision of the trial judge.  However, if that was the purpose of the argument, a Notice of Contention should arguably have been provided (even though the relevant Rules do not make express provision for this).    

3. Notwithstanding the matters just mentioned, I propose to deal with the argument, as it seems to me that no examination of the important issues raised in this appeal could be complete without reference to it.  It is also predictable that the argument will be mounted again, no doubt with the benefit of a Notice of Contention, in the event these proceedings are taken to a higher place.

4. The argument proceeds on the basis that a necessary first step for the husband’s claims to succeed in Noll was for the court to determine the validity of the Part VIIIA agreement.  It was therefore said that the claims “arise under federal law … because questions under federal law are to be determined as steps along the way in one way of vindicating the position of the parties involved in the controversy”.  Accordingly, it was argued that it was wrong for the Full Court to have assumed that the jurisdiction to be invoked was other than federal.    

5. In support of this proposition, reliance was placed on the highlighted portion of the following passage from Moorgate Tobacco at 476:

   The cases establish that federal jurisdiction is attracted if the right or duty based in a federal statute is directly asserted by the plaintiff or defendant, but not if the federal question arises only in some incidental fashion. So too federal jurisdiction is attracted if the court finds it necessary to decide whether or not a right or duty based in federal law exists, even if that matter has not been pleaded by the parties. But the converse is not true. If a federal matter is raised on the pleadings federal jurisdiction is exercised, notwithstanding that the court finds it unnecessary to decide the federal question because the case can be disposed of on other grounds.

6. In response, counsel for the solicitors submitted that:

   … we’re not talking about a case that involves a decision about whether a right or duty based in federal law exists.  The rights and duties that we’re talking about here, so far as the solicitors’ claim is concerned are common law rights and duties. 

7. With respect to counsel, drawing attention to the fact that the claims may relate to “common law rights and duties” does not advance the discussion, since that is commonly the position in cases where federal jurisdiction has been found to be attracted: Edwards v Santos Ltd (2011) 242 CLR 421 at 438 [45]. There is also danger here of conflating “federal jurisdiction” with the jurisdiction that a court exercises when a matter “originally in State jurisdiction … becomes metamorphosed into a federal matter”: Australian Solar Mesh Sales Pty Ltd v Anderson at 571 [12].

8. Depending on the sense in which the word is used, designation of a question as “federal” may mean nothing more than it would answer one or other of the descriptions contained in s 75 or s 76 of the Constitution: Smith v Smith (No 3) (1986) 161 CLR 217 at 237. Accordingly, discussion of whether an issue is itself “federal” is apt to mislead, when the real question is whether a court of limited jurisdiction, such as the Family Court, has authority to adjudicate: see Fencott v Muller at 581 per Gibbs CJ.

9. For the reasons I have given earlier, I consider that the claim for damages in Noll did fall within the jurisdiction of the Family Court as it formed part of a controversy of which an “integral” element, or “substantial aspect” is itself undoubtedly within the jurisdiction conferred by statute: StackvCoast Securities (No 9) Pty Ltd (1983) 154 CLR 261 at 293; Fencott v Muller at 609.

10. However, the argument advanced here is that there was another, more direct, basis upon which the damages claim fell within the court’s jurisdiction.  The argument can be illustrated by reference to Australian Solar Mesh Sales Pty Ltd v Anderson, which is a decision of the Full Court of the Federal Court. In order to understand that decision it is necessary first to mention that s 39B(1A)(c) of the Judiciary Act1903 (Cth) provides that “the original jurisdiction of the Federal Court of Australia also includes jurisdiction in any matter … arising under any laws made by the Parliament …”

11. In Australian Solar Mesh Sales Pty Ltd v Anderson, Burchett J, with whom Wilcox and Tamberlin JJ agreed, said at 569 [10]:

    … Causes of action in contract and negligence undoubtedly do not, in themselves, generally attract the jurisdiction of this court. However, here, … questions were raised involving the operation of the patents legislation of the Commonwealth. The appellant, in its own claim, relied on the revocation of the petty patent for failure to comply with a provision … of the Patents Act 1952 as an event caused by the negligence of the respondents. It is difficult to see why that allegation did not involve a claim of rights under the legislation and of a loss of those rights by a failure to comply with the requirements of the legislation. Similarly, the claim, added by amendment at the hearing, that the patent attorneys had negligently failed to identify a further patentable invention seems necessarily to involve an assertion of rights under the legislation, and that the patent which did issue did not cover those rights, that is to say, an assertion concerning the scope and nature of rights obtained pursuant to the legislation. Quite apart from the implications of the statement of claim, in its final form, the respondents’ defence directly raised the validity of the petty patent, that is to say, it raised a question of the existence of an important right under the legislation, both in respect of the ground of non-compliance with s 40 of the Patents Act 1952 and in respect of the alleged lack of novelty and obviousness.

12. Burchett J went on to say at 570 [11]:

    … s 39B(1A) confers on the Federal Court the precise jurisdiction within the gift of the parliament under s 76(i) and (ii) of the Constitution. It is apparent, therefore, that the words “arising under any laws made by the Parliament” have the same meaning that they have in the Constitution. There are two considerations which, in particular, affect that meaning. On the one hand, s 76(ii) is to be contrasted with s 76(i); the omission of the words “or involving its interpretation” from subs (ii) narrows the jurisdictional test. On the other hand, the test must still be given the full breadth its language will allow, both on general constitutional principle and also on the principle affirmed in Knight v FP Special Assets Ltd at CLR 205; Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc at CLR 420-1; PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service at CLR 313; Oshlack v Richmond River Council at CLR 81; and Australasian Memory Pty Ltd v Brien at [17]. In an expansive statement, which carefully avoided drawing firm boundaries, the joint judgment of Stephen, Mason, Aickin and Wilson JJ in Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 480; 31 ALR 161 at 172-3 declared:

    Although the word “matter” in s 76(ii), as we have seen, has often been translated as embracing “right” “title”, “duty”, “privilege”, “protection”, “immunity” and “defence”, its content should not be confined to these terms and to what they denote. “Matter” is the subject matter for determination in a legal proceeding (Re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265; Carter v Egg and Egg Pulp Marketing Board (Vict) (1942) 66 CLR 557 at 586-7); in our opinion it extends to a claim that a party satisfies or does not satisfy a statutory description, whether it be a qualification or a condition, when conformity with that description is made essential to the grant of a right for which the federal statute makes provision.

13. Burchett J therefore concluded that the claims against the solicitors in that case were “aimed at the securing of a right which was the creation of federal law”.  As his Honour, importantly, went on to point out at 574 [17] (emphasis added):

    This result depends on the view that the issues raised in the action fell within s 39B(1A)(c) of the Judiciary Act, not upon the doctrine of accrued jurisdiction, although, once it is held the action raised federal issues, it follows that the whole matter may be determined by the Federal Court, including any issues falling within the accrued jurisdiction.

14. The jurisdiction conferred on the Federal Court by the Judiciary Act 1903 (Cth) is far wider than that conferred on the Family Court. Subparagraph 31(1)(a) of the Act relevantly confers jurisdiction on the Family Court “with respect to … matters arising under this Act … in respect of which matrimonial causes are instituted … under this Act”. Self-evidently, this brings within the jurisdiction of the court disputes which, in their own right are matters arising under the Act, provided they are matters in respect of which matrimonial causes are instituted.

15. In determining whether the damages claims in Noll and those in the present matter come within the jurisdiction of the Family Court (other than by way of accrued jurisdiction) the first question is whether they “arise” under the Act.

16. In understanding what is meant by “arising under this Act”, it is instructive to consider what was said by the High Court in LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581:

    When it is said that a matter will arise under a law of the Parliament only if the right or duty in question in the matter owes its existence to a law of the Parliament that does not mean that the question depends on the form of the relief sought and on whether that relief depends on federal law. A claim for damages for breach or for specific performance of a contract, or a claim for relief for breach of trust, is a claim for relief of a kind which is available under State law, but if the contract or trust is in respect of a right or property which is the creation of federal law, the claim arises under federal law. The subject matter of the contract or trust in such a case exists as a result of the federal law.

17. To like effect, in Edwards v Santos Ltd, French CJ, Gummow, Crennan, Kiefel and Bell JJ all agreed with Heydon J, who said at 438 [45]:

    While a claim to damages or breach of contract is a claim for relief under State law, if the contract is in respect of a right which is a creature of federal law, the claim arises under the federal law.

18. There is, of course, a distinction between a matter “arising” under an Act and a matter which merely requires an Act to be construed.  This point was stressed by Barwick CJ in Felton v Mulligan (1971) 124 CLR 367 at 374:

    The critical question in the case is whether the defence did involve the exercise of federal jurisdiction by the Supreme Court. It would do so if the matter before the Supreme Court became or involved by reason of the defence raised to the applicant's claim, either wholly or partly a matter arising under a law made by the Parliament, in this case the Matrimonial Causes Act: see Constitution s 76 (ii) and Judiciary Act s 39 (2). Further the matter arising under a law of the Parliament will have arisen if the suit could have been disposed of by deciding the matter, whether or not the suit was so disposed of: cf Nelungaloo Pty Ltd v The Commonwealth[1952] HCA 11; (1952) 85 CLR 545 ; The Commonwealth v Bank of New South Wales[1949] HCA 47; (1949) 79 CLR 497 . It is of course not enough that a law made by the Parliament must be construed in the course of the decision of the case. There must be a matter arising under a law of the Parliament. The contrast between the language of s 76 (i) and 76 (ii) is relevant in this connexion. The point at which interpretation of the federal statute, prima facie an apparently incidental consideration, may give rise to a matter arising under the statute is not readily expressed in universally valid terms. But the distinction between the two situations must be maintained.

19. The resolution of the damages claims does not merely require the Act to be construed. The claims give rise to a question of the existence of an important right arising under the Act, namely an entitlement to the fruits of a Part VIIIA agreement and the associated protection against s 79 claims. This is not a case where the Act is merely “lurking in the background”, to use the expression of Windeyer J in Felton v Mulligan at 391. It follows that the claims “arise” under the Act. See also Abebe v Commonwealth (1999) 197 CLR 510 at 561 [140] and Macteldir Pty Ltd v Dimovski (2005) 226 ALR 773 at 796 [95].

20. However, the fact that a claim arises under the Act is not, in itself, sufficient to give the Family Court jurisdiction to determine claims for damages. As Gibbs CJ, Wilson and Dawson JJ said in Smith v Smith (No 3) at 238, “a matter within [s 31(1)(a)] must satisfy two criteria; it must arise under the Family Law Act and it must be a matter in respect of which a matrimonial cause was instituted under that Act”.

21. Subsection 4(1) defines the various “matrimonial causes” that may be instituted under the Act. Amongst these are “proceedings with respect to a [Part VIIIA] financial agreement”. Such proceedings are confined, by the definition, to proceedings between the parties to the agreement or their legal personal representatives. However, as senior counsel for the wife stressed, the jurisdiction conferred by s 31(1)(a) is not with respect to the matrimonial cause, but with respect to the “matter”. Thus, provided the damages claim comes within the ambit of the “matter”, it will come within the jurisdiction of the Family Court so long as the matter itself is one “in respect of which matrimonial causes are instituted under [the] Act” (emphasis added).

22. The words “in respect of”, which are used in s 31(1)(a) to confine the jurisdiction conferred on the Family Court, are presumably intended to convey much the same meaning as the words “with respect to”, which are used in s 51(i) of the Constitution to confine the power conferred by that provision. In Commonwealth v Tasmania (Tasmanian Dams Case) (1983) 158 CLR 1, Deane J said at 275 (original emphasis):

    The question remains whether the provisions … are within the scope of the grant of the legislative power to make laws with respect to the people of any race. In approaching that question, one should bear in mind the well-known words of Dixon CJ, McTiernan, Webb and Kitto JJ in Grannall v Marrickville Margarine Pty Ltd [1955] HCA 6; (1955), 93 CLR 55, at p 77, where, speaking of the grant of legislative power contained in s 51(i) of the Constitution, their Honours remarked that the words “with respect to” should never be neglected in considering the extent of legislative power conferred by s 51 for the reason that “what they require is a relevance to or connexion with the subject assigned to the Commonwealth Parliament”.

23. Although not the subject of submissions before us, it seems arguable that not only do the damages claims arise under the Act but they also have the required “relevance to or connexion with” the relevant matrimonial cause, namely “proceedings with respect to a [Part VIIIA] financial agreement”.

24. If this reasoning is correct, the husband in Noll, and the wife here, did not need to rely on the doctrine of accrued jurisdiction to bring their damages claims within the jurisdiction of the court.  I repeat, however, that this argument was not advanced in Noll, nor did we receive full argument on the topic.  Accordingly, I would not wish to be seen as having come to a concluded view.  

Conclusion concerning Noll

1. Strickland J correctly stresses that issues of accrued jurisdiction turn on the facts of each case.  He is also right in saying that mere repetition of the reasons given in Noll, or citation of what has been said by the High Court about accrued jurisdiction, cannot alone lead to the conclusion that Noll was wrongly decided.  However, if some of the reasons given by the Full Court in Noll for arriving at its decision are contrary to principle, it would be unsafe to proceed as if they did not impact on the result. 

2. With the benefit of the argument we have had in the present matter, and with the advantage of being asked to examine the linkage between the various claims much more closely, I consider there is merit in the argument that part of the reasoning of the Full Court in Noll is inconsistent with authority.  If it were necessary for the determination of this appeal to say that Noll was “plainly wrong” then I may have been inclined to say so, as I have difficulty in reconciling the dismissal of this appeal with the dismissal of the appeal in Noll (notwithstanding that both are against an exercise of discretion).  

3. Fortunately, however, there is enough common ground on the bench in the present appeal to make it unnecessary to determine whether Noll was “plainly wrong”.  As the authorities make clear, such a decision should be made only with caution, and should therefore only be made where necessary for determination of the matter before the court.  This is not such a case.

The present appeal and some practical issues

1. Although I agree with Strickland J about the outcome of the present appeal, I wish to add some remarks to explain why I consider that proceedings concerning the validity of Part VIIIA agreements, and the damages claims and s 79 proceedings that can ensue, all form part of one controversy.

2. In doing so, I note that the Full Court in Noll said at [48] that “the measure of damages that could be sought in the attached claim would only be known if and when an order was made for property settlement under s 79 of the Act”. While this may be the way in which the full measure of damages becomes known, it ought not to be assumed this is how damage will crystallise in all cases.

3. Three examples will illustrate the point:

   ·Both parties to the impugned agreement may die during the proceedings, in which case the s 79 claim would abate but the damages claim may be continued on behalf of the estate.  (If Whitehouse & Whitehouse (2009) FLC 93-415 is read as suggesting the claim would then revert to state jurisdiction, it may respectfully be doubted: Moorgate Tobacco at 477.)

   ·The parties might compromise their s 79 claim by another Part VIIIA agreement, as occurred in Schacht, or by some other form of agreement – in which case no judicial determination of the s 79 entitlement would be made.  (This is a quite predictable outcome given the high rate of settlement in such disputes.)

   ·During the proceedings, a party may accept an offer for payment of damages from solicitors/insurers who are anxious not to be caught up in matrimonial litigation, or who wish to avoid having the court publish reasons describing their negligence.  This compromise might form part of a global settlement, but equally it might not – thereby leaving the s 79 claim to be completed after the size of the damages award is known.

1. In all three examples, one of the issues remains alive, but determination of that issue in the first two examples will require consideration of the same matters that would have been at stake in the issue which no longer needs judicial determination. 

2. In the first example, the damages would presumably be calculated on the basis of an assessment of the settlement that would have been achieved had the s 79 claim been able to be pursued.  Similarly, in the second example, it would be open to the solicitors to insist that the assessment be undertaken on the basis of the settlement that would have been achieved had the s 79 claim been pursued, rather than what was agreed between the parties in their private compromise.

3. In the third example, the resolution of the s 79 claim would necessarily proceed on the basis of a “pool” of assets which has been enhanced in value because of the payment of damages from the solicitors. This, in turn, might give rise to issues about how the additional asset should be taken into account. Arguments about “contributions” can be safely predicted, and Murphy J has highlighted the possibility of argument about how the damages could impact on s 79(4)(e).

4. Resolution of these arguments might, in turn, require consideration of matters that were relevant to the threshold dispute about the validity of the agreement. For example, although the agreement may have been found to be not binding on the basis of an error made by the solicitors, the party seeking to impugn the agreement may also have run arguments concerning fraud and non-disclosure. These arguments may have relevance to issues that fall to be determined under s 79 (for example, the value of “initial contributions”). However, they might also be relevant to the damages claim, for example in cases where an agreement was sought to be impugned not only on some basis which was the fault of the solicitor but also on a basis attributable to the client. Sorting out disputes about apportionment of responsibility in such matters could be complicated by virtue of the fact that there is a discretionary remedial provision (s 90G(1A) of the Act) designed to “save” agreements that are attended by some technical defect for which solicitors have usually been responsible.

5. It is important to observe also that assessment of the quantum of damages would never be as simple as working out the difference between the entitlement under the Part VIIIA agreement and the entitlement, or predicted entitlement, under s 79. Other issues could come into the equation – for example, the costs that would have been incurred if the s 79 claim had been pursued; the likelihood of recovering those costs given the terms of s 117(1) of the Act; the risks of being ordered to pay the other party’s costs; and the likely delay in awaiting trial and judgment in the registry in which the matter would have been heard. All of these matters would potentially have to be considered in deciding, for example, if the terms of a compromise reached between the husband and wife were “commercial”, rather than the result of, say, further negligence on the part of advisors or perhaps even collusion between parties designed to maximise a damages claim against a common enemy.

6. The point of referring to these matters is to demonstrate that, in some cases, it will be necessary to adopt a process which has been described as a “trial within a trial … that proceeds on a hypothetical basis”: per Barrett JA in Izzard v Dunbier Marine Products (NSW) Pty Ltd [2012] NSWCA 132 at [141] (a case where damages had to be reduced by the amount of an entitlement under a statutory scheme that had not been pursued). The fact such a “trial within a trial” might be necessary demonstrates what I suggest are the close linkages between the various disputes involved in such controversies and highlights the way in which resolution of one can impact on the resolution of another.

7. Schacht is an instructive example of how a “trial within a trial” concerning a Part VIIIA agreement might be dealt with in a court that does not ordinarily exercise jurisdiction under the Act. In that case, the agreement had been found not binding in the Federal Magistrates Court and the parties later entered into another agreement, much less favourable to one of them. In the subsequent damages claim, heard in the Supreme Court of New South Wales, the solicitors and their former client each relied on the expert evidence of practising solicitors on liability and on the evidence of retired Family Court judges on quantum. Together, the experts provided 10 reports. Fortunately, the retired judges reached sufficient common ground to avoid going into the witness box. It is doubtful all of that evidence would have been required had the claim been heard in the court that determined the validity of the agreement.

8. I do not underestimate the legal, practical and resource issues that will arise if we are correct in holding that courts exercising matrimonial jurisdiction can determine not only the validity of a Part VIIIA agreement, but also – at least in some cases – the damages claims that may arise if the agreement is found not binding.  Some of the legal issues have already been touched on.  Other more practical issues will also arise.  For example, to what extent will solicitors be able to participate in s 79 proceedings to ensure their loss is minimised (for example by attempting to stop parties colluding to maximize the damages)? 

9. Although Strickland J has expressed understandable concern about how the various strands of the controversy will be managed in the one set of proceedings, I have confidence in the ability of trial judges to devise means of dealing with such concerns in a way that does justice to all parties, including the solicitors caught up in the dispute.  I have such confidence even if counsel for the solicitors is correct in predicting that taking on this new work could “involve the court in developing a whole new set of jurisprudence”. 

10. It is not our task in this appeal to provide guidance about how these legal and practical issues can be resolved.  What can be said, however, is that courts exercising matrimonial jurisdiction may need to become familiar with a jurisdiction they traditionally have not exercised.  Alternatively, there may be need to resort to the cross-vesting regime when it is in the interests of justice for the controversy, or part thereof, to be determined by another court (noting that this option would not be directly available to the Federal Circuit Court):  Jurisdiction of Courts (Cross‑vesting) Act 1987 (Cth), s 5(4)(b)(iii). Finally, there is potential, depending on how the parties allow a dispute to unfold, for s 4(1) of the Jurisdiction of Courts (Cross‑vesting) Act 1987 (Cth) to assume importance: Young v Lalic (2006) 197 FLR 27.

11. It must be stressed that many of the troubling practical issues discussed above do not have relevance to jurisdiction.  As Gibbs CJ said in Fencott v Muller at 591, even if a “conclusion leads to results which are inconvenient, that is not a reason to blur distinctions that the Constitution insists should be drawn”.

The associated jurisdiction argument

1. I agree with Strickland J that it is unnecessary to discuss the argument that s 33 of the Act provides an alternative basis for jurisdiction. I also concur with his Honour’s criticism of the way this part of the argument emerged. I will, however, make two short points.

2. First, the argument is expressly founded on the proposition that the wife’s claim arises under the Act. If that be so, for reasons earlier discussed, it is arguable it falls within the jurisdiction conferred by s 31(1)(a). There would accordingly be no need to call on s 33, which is directed only to expanding the court’s authority to decide matters: Smith v Smith (No 3) at 240; Turner v Owen (1990) 96 ALR 119 at 129; and PCS Operations Pty Ltd v Maritime Union of Australia (1998) 153 ALR 520 at 525 [12].

3. Secondly, by the terms of s 33 itself, the argument involves a matter arising under the Constitution. Although notice was given under the Judiciary Act1903 (Cth), the Attorneys-General were not alerted to this contention, which was only belatedly raised in the appeal.

Strickland J

Introduction

1. By Notice of Appeal filed on 19 June 2012, F Firm (“the appellant”) seeks leave to appeal, and if leave is granted, to appeal against orders made by Murphy J on 22 May 2012. The first respondent in the appeal is Mr Ruane (“the husband”), the second respondent is Ms Bachmann-Ruane (“the wife”) and the third respondent is the wife’s former barrister, Mr Curtis (“the third respondent”). The appellant was the firm of solicitors formerly retained by the wife to prepare a financial agreement under s 90C of the Family Law Act 1975 (Cth) (“the Act”) after the wife and husband separated. The third respondent was the barrister instructed by the appellant to advise the wife.

2. In summary, the orders of 22 May 2012 dismissed the Application in a Case filed by the appellant on 11 May 2011 seeking that the proceedings by the wife against the appellant and the third respondent be dismissed and that they both be removed as parties to the case.  In making those orders Murphy J found there was accrued jurisdiction to hear the wife’s claims against the appellant and the third respondent for breach of contract, negligence, breach of duty of care or breach of fiduciary duty.  On appeal, the appellant seeks that those orders be set aside and the claims against the appellant and the third respondent be dismissed.  However, during the hearing before us, it was conceded by counsel for the appellant that if the appeal succeeds, because we would not be determining the merits of the claims, they should not be dismissed, but rather, they should be struck out.

3. The third respondent also filed a Notice of Cross-Appeal on 19 June 2012 in almost the same terms as the Notice of Appeal.  However, at the commencement of the appeal hearing, counsel for the wife informed us that a minute of consent orders had been agreed by the wife and the third respondent, disposing of all matters between those parties, including the cross-appeal.  This was subsequently confirmed by the third respondent’s solicitor.  We, of course, were not able to make any order other than to dismiss the cross-appeal, and thus that is the order that we made, together with an order that there be no order as to costs.  As to any applications by the wife against the third respondent, it was left for those parties to file a consent order with the Registrar dismissing those applications.

4. I also note that at the commencement of the hearing, we granted the husband’s solicitor leave to withdraw on the basis that the husband had no interest in these proceedings.  The husband had not taken part in the hearing before the trial judge.

5. At the commencement of the appeal hearing, counsel for the appellant referred to paragraph 12 of the wife’s summary of argument, where it was said the meaning of the word “matter” as used in the Constitution was central to the appeal. We granted leave to counsel to file two affidavits indicating that the Attorneys-General of the Commonwealth and all States and Territories had been served with a Notice under s 78B of the Judiciary Act 1903 (Cth) and that all had acknowledged receipt and indicated they did not seek to participate in the proceedings.

6. Although the application for leave to appeal is opposed by the wife, given that the proposed appeal raises important questions, I consider it appropriate to grant the appellant leave to appeal and to proceed to determine the appeal.

Background

1. The husband commenced property settlement proceedings in June 2009. A live issue in those proceedings was the validity of a s 90C financial agreement entered into by the husband and wife following separation. The husband sought to have the agreement set aside and the wife resisted that application.

2. On the eve of delivery of the substantive reasons for judgment by Cronin J in relation to that matter, the wife filed an application seeking to reopen the hearing and argue the validity of the financial agreement in light of the impending amendments to the Act.

3. Ultimately, on 20 November 2009, Cronin J dismissed the wife’s application to reopen and found in the substantive proceedings that the agreement was not binding as a result of non-compliance with s 90G of the Act. In particular, his Honour found that the certificate for the husband had been signed by an English lawyer who was not a “legal practitioner” for the purposes of s 90G.

4. Cronin J subsequently ordered that the wife pay the husband’s costs of the proceedings. 

5. In the wife’s Response to the husband’s Initiating Application filed on

   
   

   4 August 2009, the wife sought alternative orders that the appellant pay the wife’s costs of and incidental to the Response, indemnify the wife in relation to any loss caused by the husband’s application, or pay the wife damages for breach of contract and/or negligence, together with interest and costs. 

6. The wife again sought such orders in two Amended Responses filed respectively on 13 August 2009 and 3 March 2010. 

7. In her Further Amended Response filed on 16 May 2011 the wife joined

   
   

   the third respondent, who, to repeat, had been retained by the appellant to provide advice to the wife regarding the agreement, and extended the orders previously sought against the appellant to the third respondent.

8. In making these claims the wife relied on the accrued jurisdiction of the Family Court, and the appellant and third respondent both resisted those claims on the basis that the Family Court lacked jurisdiction. 

9. Murphy J heard the matter on 5 December 2011, and made orders and delivered his reasons for judgment on 22 May 2012.

Reasons for judgment of the trial judge

1. The trial judge commenced his reasons for judgment by outlining the wife’s application, as set out in her Further Amended Response filed on 16 May 2011.  Annexed to that Response was a Statement of Claim in which the wife contended the appellant had breached their retainer with her and/or their duty of care and/or their fiduciary duty by:

   ·Failing to advise the wife to ensure the husband obtained a certificate of independent legal advice from an Australian lawyer and executed the agreement before an Australian lawyer in Australia.

   ·Failing to cease to act for the wife and/or the wife and husband as at July 2008 when the appellant was in a position of conflict of interest.

   ·Upon being given a copy of the executed agreement on 24 November 2008, failing to advise the wife that the agreement was not binding because the certificate of independent legal advice was not provided by an Australian lawyer and that the agreement should be executed again. 

   The wife also argued that, as at 26 August 2008, the third respondent knew or ought to have known the certificate needed to be executed by an Australian lawyer who did not suffer a conflict of interest, that not doing so would render the agreement non-binding, and that the wife was intending to deliver the agreement to the husband in England and have him execute it there.

2. In terms of relief, the wife sought from both the appellant and the third respondent damages, all fees previously paid (in the case of the appellant those fees paid in relation to the family law matters, namely property settlement and the binding financial agreement), interest, costs and in the alternative, equitable compensation. 

3. His Honour noted that the submissions made on behalf of the appellant and the third respondent were “largely identical” and could “largely be dealt with together” (at [12]).  His Honour also noted that counsel for the appellant made a “formal submission” effectively reserving his position should the matter proceed to appeal on the basis that Warby and Warby (2002) FLC 93-091 was not correctly decided, insofar as it found that accrued jurisdiction was available to the Family Court in the same way it was available to the Federal Court. The trial judge was of the view the court did have accrued jurisdiction in the same manner as the Federal Court.

4. In relation to Cronin J’s earlier determination that the agreement was not binding within the meaning of s 90G of the Act, Murphy J was of the view that it did “not bear on the issue at hand, although … the issues joined between the parties and the facts supporting them are … fundamental to ascertaining the ‘matter’ with which these proceedings are concerned” (at [17]).

5. The trial judge noted counsel for the appellant’s concession that some of the “Warby factors” might be seen to suggest the existence of a discretion as to whether accrued jurisdiction should be exercised. His Honour referred to a number of subsequent authorities as to the discretionary nature of accrued jurisdiction and concluded that “a suggestion that the exercise of accrued jurisdiction by this court is discretionary, save, perhaps, in rare or extraordinary circumstances, is not supported by the weight of authority” (at [23]).

6. Next his Honour considered the “arguments denying accrued jurisdiction in this case”.  In summary, it was the appellant’s principal submission that even if the court had accrued jurisdiction, it was of narrow ambit because:

   ·of the limited ambit of the original jurisdiction of the Family Court in contrast to the Federal Court;

   ·compared to the Family Court, the Federal Court had a range of remedies available to it including the power to award damages; and

   ·the specific conferrals of jurisdiction in “matrimonial causes” underscored the limited and narrow range of any accrued jurisdiction of the Family Court.

7. The trial judge then recited a passage from the decision in Warby containing all but one of the factors the Full Court ultimately found in that case should be taken into account in determining whether a court has accrued jurisdiction to determine a dispute.  The factor his Honour omitted (but which he proceeded to discuss as if it had been included in the list of factors he recited) was “whether the Court has the power to grant appropriate remedies in respect of the ‘attached’ claims”.  (The full list of the factors said to be relevant can be found at [95] of the judgment in Warby).

8. His Honour recorded that “it is the last of those ‘factors’ which is said to add particular weight to the argument by the [appellant and third respondent]”… (at [29]).  The “last” factor to which his Honour was clearly referring is the one omitted from his citation from Warby, namely whether the Court has power to grant appropriate remedies. 

9. The trial judge then recorded that it was counsel for the appellant’s submission that “the Full Court in Warby found that the structure and form of the Act whilst not sufficient to mean that there was no accrued jurisdiction, still felt that it was relevant in terms of a consideration of its ambit” (at [30]). The trial judge was not persuaded Warby was to be interpreted in that manner, as such an interpretation would mean the Full Court had confused jurisdiction and power.  His Honour cited authority to the effect that if a court has accrued jurisdiction in a non-federal aspect of a matter, that jurisdiction carries with it the power to grant the appropriate remedies given by state law.

10. His Honour concluded that the court had “the accrued jurisdiction which it has in any ‘matter’ by reference to the substratum of facts underlying the issues joined between the parties such that, by reference to those facts and issues, there can be seen to be a ‘single justiciable controversy’” (at [34]).

11. The trial judge further held, by reference to 31(1)(a) of the Act, that “the jurisdiction given to this Court is not a jurisdiction in respect of ‘matrimonial causes’, but, rather, a jurisdiction in respect of ‘matters’” (at [36]).

12. His Honour referred to the discussion of the meaning of “matter” by Allsop J (as his Honour then was) writing extra-curially (Justice Allsop, ‘Federal jurisdiction and the jurisdiction of the Federal Court of Australia in 2002’ (2002) 23 Australian Bar Review 29, 35-6).  Citing, inter alia, Fencott v Muller (1983) 152 CLR 570, Allsop J said a “matter” was “the justiciable controversy between the actors to it comprised of the substratum of facts and claims representing or amounting to the disputed controversy between or amongst them”, and which was “identifiable independently of proceedings brought for its determination”.

1. Turning then to the first question, namely, whether there are any legally relevant factual differences between the two cases.

2. Senior counsel for the wife has suggested that there are two factual differences, but it must be appreciated that the wife did not rely on either.  Indeed, they were both eschewed by senior counsel in his oral submissions because of course it was the wife’s position that Noll was wrongly decided, and to be able to argue that there could not be a legally relevant factual distinction.  In any event, the first suggested factual distinction identified was that  in the case at bar, before the proceedings came before his Honour, another judge, Cronin J, had declared that the financial agreement entered into between the husband and the wife was not binding.  In Noll, that issue had yet to be decided.

3. Although integral to the issues raised in the claims in Noll between the husband and the wife’s solicitors, it is apparent that that circumstance was not material to whether the Family Court had the necessary jurisdiction to determine all of the claims that were before the court.  Indeed, that was the common position of the parties before this court.

4. I note that following the hearing of the appeal in Noll, the Full Court was provided with a copy of the decision of the trial judge here. As to that, the Full Court said this (at [55]):

   Following the hearing of the appeal the appellant’s solicitor forwarded to the Court and to the respondent’s solicitors a copy of Murphy J’s judgment in Ruane & Bachman – Ruane & Ors …, in which his Honour permitted a claim for negligence against solicitors to be joined with proceedings for property settlement between a husband and wife.  The factual difference between that case and the present is that in that case a financial agreement between the parties had already been declared to be non-binding.  We make no comment as to the correctness or otherwise of his Honour’s decision, other than to observe that whether or not accrued jurisdiction is attracted in a particular case, will very much depend on the facts of that case.

5. The factual difference identified in that paragraph is of course the very difference that I have been addressing.  Although the Full Court identified it as the factual difference between the cases, it must be noted that his Honour’s decision in this case was simply forwarded to the court after the hearing, and the Full Court heard no argument directed to the relevant legal significance or otherwise of that obvious factual distinction.  Thus, nothing turns on that in relation to the discussion at hand.

6. The second factual distinction identified by senior counsel for the wife is of more moment.  In Noll, the claim by the husband was not against his solicitors, but against the solicitors who acted for the wife in advising her and in drawing the financial agreement between the wife and the husband.  On the other hand, in this case, the wife’s claims in relation to the financial agreement are against her own solicitors and counsel.  Thus, the respective claims are differently based; for example, the husband in Noll could not plead breach of retainer (contract), breach of duty of care (to the wife), or breach of a fiduciary duty, and instead he had to rely on misrepresentation, and/or misleading or deceptive conduct under the Fair Trading Act 1999 (Vic), breach of warranty, or breach of duty (to himself). Further, a consequence of there being different bases is that the claims crystallise at different times.

7. Clearly then there are different causes of action, but as will be seen, it is not the cause of action per se which is relevant to whether the jurisdiction is attracted; it is whether there is a single justiciable controversy involving a common

   
   

   sub-stratum of facts.  Importantly though, whether that is the case or not entails consideration of whether the claims are “completely disparate”, “completely separate and distinct”, or “distinct and unrelated” (see the joint judgment of Gummow and Hayne JJ in Re Wakim at [140]; and Fencott v Muller, at 607-608). In Noll, the claims were found to fit those categories (for example see [43]), and it is at least arguable that the nature of the claims made by the husband against the wife’s solicitors was relevant to that finding.  Thus, it can be said that the difference in the nature of the claims made in Noll, as compared with the nature of the claims here, have relevant legal significance. 

8. That proposition is also supported by what was said by Mason, Murphy, Brennan and Deane JJ in Fencott v Muller (at 608), and adopted by Gummow and Hayne JJ in Re Wakim (at [140]), namely, that what is a single controversy “depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships”.  In Fencott v Muller their Honours continued, “[t]he scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues and controversy are defined and the claims for relief are set out”

   
   

   (at 608). 

9. The factual distinction identified here is certainly relevant in addressing those questions in this case and in Noll.  Furthermore, given this analysis, it is not an answer to the relevance of this distinction to suggest that whether there is the jurisdiction or not cannot depend simply on against whom the damages are sought.

10. Finally, as was also said by their Honours in Fencott v Muller (at 607) and adopted in Re Wakim (at [140]), “in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter”.  That is because “the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete”, and thus, “the question will have to be decided on limited information”.  Again, this certainly was the case in both Noll and this matter, and I can well understand how the difference identified would be legally relevant and significant in forming the necessary impression of whether there is one justiciable controversy, or whether the claims are separate, distinct and unrelated.

11. Thus, in my view, this court is able to depart from the Full Court decision in Noll, and it is not the case that that decision dictates the result of this appeal.

12. For completeness, and because this issue was the subject of a significant part of the arguments in this appeal, I turn to the question of whether the decision in Noll was “plainly” or “clearly wrong”, or rather whether this court can have a “strong conviction that the decision in Noll was ‘erroneous’”.  Of course, that is not to overlook that if that view is formed it is still only a necessary, but not sufficient, condition to justify a departure from the previous decision (Gett v Tabet at [296]).

13. The wife submits that four errors were made in Noll, and I will discuss each in turn.

14. The first aspect said to be “wrong” by the wife is what the Full Court said at [38], namely:

    Nevertheless, even if the facts upon which the claims depend “do not wholly coincide”, there can still be a sufficiently common substratum of facts existing between the wife’s claim and the husband’s cross-claim, as was made clear in Wakim (at [140]).  But even if a common substratum of facts exists in this case, there remains the need to identify one justiciable controversy, or matter, in order to attract the accrued jurisdiction, and that identification, as Gummow and Hayne JJ emphasised at [139] of Wakim, is “[t]he central task”.

    (Emphasis added)

15. It is argued that this is a misstatement of principle in that what Gummow and Hayne JJ were saying in Re Wakim was that “a determination that different claims arise out of a common source is determinative of the existence of a single matter”.  However, that is not how I read what Gummow and Hayne JJ said in Re Wakim, and I do not accept that there was any misstatement of principle by the Full Court in Noll.

16. The relevant statement in Re Wakim at [140] is as follows:

    … There is but a single matter if different claims arise out of “common transactions and facts” or “a common substratum of facts”, notwithstanding that the facts upon which the claims depend “do not wholly coincide” …

17. However, to put that into context it is not only necessary to have regard to all of what was said in that paragraph, but also to have regard to what their Honours said in the three preceding paragraphs of their Honours’ reasons for judgment, namely:

    137     The bringing of three separate proceedings and the joining of different parties in each of those proceedings would ordinarily suggest (and perhaps suggest very strongly) that there is more than one matter.  If that were so, it would follow that the question of jurisdiction would have to be resolved separately in each proceeding and without regard to the existence of the other proceedings.  Jurisdiction for each proceeding would then depend upon it being shown to be in a matter arising under a law made by the Parliament.

    138     It must be taken to follow from the Court's decisions in Philip Morris, Fencott and Stack, however, that the identification of the justiciable controversy between parties is not determined only by the considerations of there being separate proceedings and different parties in the one court.  And in some circumstances a single matter can proceed through more than one court.  That follows from the Court's decision in R v Murphy.  There, committal proceedings in one court and the trial of indictable offence in another court (there having been an order for committal and the presentation of an indictment) were held to be the curial process for determination of a single matter:  the matter which the trial would ultimately determine.

    139     The central task is to identify the justiciable controversy.  In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim.

    (Footnotes omitted)

    Then there follows [140]:

    In Fencott it was said that “in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter”.  The references to “impression” and “practical judgment” cannot be understood, however, as stating a test that is to be applied.  Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete.  Necessarily, then, the question will have to be decided on limited information.  But the question is not at large.  What is a single controversy “depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships”.  There is but a single matter if different claims arise out of “common transactions and facts” or “a common substratum of facts”, notwithstanding that the facts upon which the claims depend “do not wholly coincide”.  So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination.  Conversely, claims which are “completely disparate”, “completely separate and distinct” or “distinct and unrelated” are not part of the same matter.

    (Footnotes omitted)

18. Although at [140] their Honours make the statement emphasised by the wife, it does not necessarily follow that where there is a “common sub-stratum of facts” there will always be a single justiciable controversy.  As explained at [139] the “central task is to identify the justiciable controversy”, and “that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim” (emphasis added).  Then, as their Honours said at [140] “[w]hat is a single controversy ‘depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships’”.  Finally, as is made clear at [140], “in the end, it is a matter of impression and of practical judgment”.  Thus, I see nothing wrong with what the Full Court in Noll said at [38]. Crucially, the Full Court recognised that the task is to identify one justiciable controversy in order to attach the accrued jurisdiction, and in my view the Full Court then applied that test in addressing whether the trial judge had erred.

19. In any event, it is all well and good to highlight one statement by the Full Court and suggest that that statement is wrong.  What needs to be plainly wrong is the decision of the Full Court, and there has been no articulation by the wife of how any alleged “misstatement of principle” has rendered the decision “plainly wrong”, or provides a compelling reason to depart from that decision.

20. The second aspect of the decision said to be “wrong” is what the Full Court in Noll said at [43], namely:

    In the present case the claim by the wife for a declaration that the financial agreement is not binding, or that it should be set aside, is an entirely different claim to the potential claim that the husband may have against the solicitors for damages if the wife’s claim in relation to the financial agreement is successful and then only if subsequent property settlement orders leave the husband in a worse position than had the agreement been found to be binding.  In the language used at the end of [140] of Wakim, the husband’s cross-claim could well be described as “completely disparate” or “completely separate and distinct”, although perhaps not necessarily “unrelated”.

21. It is argued that this “is a determination that is inconsistent with the reasons for judgment of the High Court and the outcomes” in Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 and Fencott v Muller. 

22. In Moorgate, the High Court held that the non-federal claims raised in the proceedings were not distinct from or unrelated to the claims under federal jurisdiction, and therefore were not severable from them. Stephen, Mason, Aickin and Wilson JJ said this (at 483):

    In this case many of the questions arising on the pleadings have been relevant to the proprietorship issues and therefore incidental to the determination of them.  It is true that the applicant’s case for damages and an account of profits had its genesis in contract, fiduciary obligation and unfair competition.  It was therefore non-federal in character.  However, both the federal and non-federal cases presented by the applicant rested on what was a common substratum of transactions involving a plurality of issues of fact giving rise to questions of law some of which were common to both cases.  So inextricably mixed and interwoven were the two cases that it would be a task of overwhelming difficulty to identify with precision the extent to which, and the respects in which, the Supreme Court was exercising non-federal jurisdiction, that is, jurisdiction in respect of issues that were not incidental to matters arising under the Trade Marks Act.  The applicant’s non-federal claim was not distinct from and unrelated to the federal claim; in the words of Barwick C.J in Felton v Mulligan, the applicant’s non-federal case was not a ‘completely disparate claim constituting in substance a separate proceeding’.

    (Footnotes omitted)

23. There can be no argument about the outcome in that case, and the reasons for it, but to simply repeat the reasons, as senior counsel for the wife does, does not demonstrate that the decision in Noll was plainly wrong and certainly does not leave me with a strong conviction that the decision was erroneous. I need do no more than refer again to what Gummow and Hayne JJ said at [140] of Re Wakim and emphasise, as the Full Court in Noll did, that each case must depend on its own facts.  I make the same comment about the wife’s reliance on Fencott v Muller.  Accordingly, I am not persuaded by this argument.

24. As was recognised in Fencott v Muller (e.g. at 593) there are many questions or indicia that can be influential in whether federal jurisdiction is attracted. At [43] the Full Court in Noll of course referred to [140] in Re Wakim.  There (as well as in [141]) a number of questions or indicia were identified, all of which the Full Court in Noll addressed.  The one that was identified in [141] requires further comment though as having particular relevance here, namely, “whether if the proceedings were tried in differing courts there could be conflicting findings made on one or more issues common to the two proceedings”.  The issue is that if this was the case here, and the appellant was not a party to the proceedings in the Family Court, there could be no res judicata or issue estoppel to prevent them from pleading in the State court that the Family Court had erred in finding that the agreement was invalid (Australian Solar Mesh Sales Pty Ltd v Anderson (2000) 175 ALR 566 at [9]). There can be no dispute about that proposition, although of course Australian Solar Mesh Sales Pty Ltd v Anderson did not involve claims of the nature under consideration here, but I agree entirely with what the Full Court in Noll said in relation to this at [50], namely that the “risk of conflicting findings if the claims in question are heard in different courts … is more hypothetical than real, and could be overcome by access to the transcript of proceedings heard in the other court”. Frankly, I cannot conceive of a situation where there would be conflicting findings. Thus, as their Honours conclude, this is “not a consideration which would, of itself, attract the accrued jurisdiction …” (Noll at [50]).

25. Again, in order to appreciate what the Full Court in Noll was saying, it is necessary to consider the entirety of the reasons for judgment and in particular for this purpose, the paragraphs preceding [43], as well as the subsequent paragraphs.  The Full Court there cited relevant passages from the joint judgment of Gummow and Hayne JJ in Re Wakim, highlighted what their Honours said at [141], namely, that “if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter”, and then addressed that proposition in the case at hand at [43]. As I explain later in my reasons (and arising from Ground 5) there is clear doubt as to whether claims for damages can procedurally be joined to claims for property settlement under s 79 of the Act, and if that is correct then that plainly affects whether there can be one justiciable controversy. This is also touched on at [48] and [49] of the reasons in Noll, and can clearly be influential.

26. It also must not be forgotten that there cannot be a claim in negligence if there is no damage.

27. Upon finding that “[i]n the language used at the end of [140] of Wakim, the husband’s cross-claim could well be described as ‘completely disparate’ or ‘completely separate and distinct’, although perhaps not necessarily ‘unrelated’”, their Honours in Noll moved to consider at [44] “the issue of whether the claims in this case are, in the words of Gummow and Hayne JJ in Wakim at [140], ‘so related that the determination of one is essential to the determination of the other’”.  As is plain, their Honours answered this question in the negative, and no compelling reason emerges therefrom to allow departure from the decision.

28. This leads into the third aspect of the decision in Noll which is said to be “wrong”, namely  that “insofar as the decision … is based upon there being no single justiciable controversy because the determination of the federal claim does not require the determination of the claim sought to be attached”, it “proceeds upon an erroneous analysis of the reasons for judgment of Gummow and Hayne JJ (in Re Wakim), and is directly contrary to the statement of principle in the reasons for judgment of Mason, Murphy, Brennan and Deane JJ in Fencott v Muller where their Honours said (at 609):

    The power judicially to determine the whole of the dispute is inconsistent with a limitation which would restrict the Court to resolving only the federal claim and what is necessary for that purpose.

1. The first comment that I make is that it is not correct to suggest that the finding in Noll that there was no single justiciable controversy was solely because the determination of the federal claim does not require the determination of the claim sought to be attached.  That certainly was the case with the judgment below, and it was the subject of one of the grounds of appeal before the Full Court in Noll, but it is not the case that the Full Court simply adopted that position.  At [53] of the judgment in Noll, after referring to Ground 3 of the grounds of appeal, and the reasons for the trial judge’s conclusion, the Full Court said this:

   We have undertaken a fuller analysis than his Honour of the indicia for the existence of the accrued jurisdiction as explained by Gummow and Hayne JJ in Wakim¸ and also of the issue or indicia of the necessary essential relationship between a federal claim and a state claim which is sought to be attached to the federal claim, as was explained by Mason J in Philip Morris.  On the basis of that analysis, and particularly of the last mentioned issue or indicia, we too have concluded that there is no single justiciable controversy in this case that would attract the accrued jurisdiction.  Thus Ground 3 has not been established.

   (Original emphasis)

2. Secondly, I do not accept that that conclusion proceeds upon “an erroneous analysis of the reasons for judgment of Gummow and Hayne JJ (in

   
   Re Wakim)

   ”.  Indeed, the approach of their Honours can be traced back to what was said by Gummow and Hayne JJ at [140], and which their Honours quoted earlier in their reasons for judgment, and referred to in their discussion of the issues (as I have explained above).

3. Addressing though their Honours’ reliance on the claims being unrelated because the determination of one was not essential to the determination of the other (in other words, taking up what Gummow and Hayne JJ said at [140] in Re Wakim), I find nothing inconsistent between that and the quoted extract from the reasons for judgment of Mason, Murphy, Brennan and Deane JJ in Fencott v Muller.

4. In Fencott v Muller, it was clearly accepted by their Honours (at 607-608) that claims which are “completely separate and distinct from the matter which attracted the federal jurisdiction … cannot be determined by exercise of the judicial power referred to in s 71 of the Constitution”.  Thus, although their Honours went on to make the quoted comment at 609, it was in the context of having earlier stated, at 608, that “[a] judicial power which is not exercised to determine the whole of a controversy is, generally speaking, not appropriately and conveniently exercised”.  However, that context cannot bring in unrelated non-federal claims, and one indicia of a claim that is unrelated is whether it is essential to a determination of the federal question.

5. I perceive then that that is all that Mason J was saying in Philip Morris (at 512), and in turn that is all that the Full Court was saying in Noll (at [44] and [45]) when referring to and relying on what Mason J said.

6. Thus I do not accept the submission of the wife that “[t]he reasoning of the Full Court with respect to this aspect is erroneous because the Full Court wrongly asserts [at [45]] that Mason J in Philip Morris identified an issue for determination.”  It is argued that all Mason J was doing was identifying one “example” of where there is one matter.

7. That his Honour was providing an example is plain, but that does not mean the Full Court in Noll erred by using that example to address whether on the facts of that case there was one matter or not.

8. In her written submissions the wife also suggested that the Full Court, in saying what it did about this, is indicating that although there can be one matter when the resolution of the attached claim is essential to a determination of the federal question, there are two matters where the reverse is the case.  I do not understand that the Full Court is suggesting any such thing, and accordingly I reject any suggestion that that demonstrates the decision in Noll is “plainly wrong”. I also again emphasise what I said at [182] above, that it is insufficient to highlight a statement made by the Full Court and suggest that it is erroneous, yet not articulate why that renders the decision of the Full Court wrong, and provides a compelling reason to depart therefrom.

9. The fourth and final aspect of the decision in Noll which is said to be “wrong” is that the “judgment … proceeds on the assumption … that the claims made by the husband in that case were other than ‘federal claims’”.

10. I confess that I am unable to see where the Full Court in describing the claims of the husband has done so on any different basis than in every other case where the issue of the accrued jurisdiction of the court has arisen.

11. Further, and more importantly, it is simply not open to the wife to suggest that this was an error by the Full Court in Noll, and provides a basis for this court to hold itself free to depart from the decision in that case.  The plain fact of the matter is that the argument now put was not an argument addressed before the Full Court in Noll, and as such it cannot be said that the Full Court in Noll has erred in failing to recognise merit in the argument.

12. I also observe that the argument advanced here was not put at first instance, and although that does not prevent it being raised as a point of law in support of the decision of the trial judge, that is not the basis on which it is being advanced (as is also apparent from the absence of any Notice of Contention); the basis of it being advanced was to demonstrate that the decision in Noll was “plainly wrong” and need not be followed.  To repeat though, it cannot be promoted as such, and thus I do not propose to address this argument.

13. I also observe that the proposition at [48] in Noll, that, “the measure of damages that could be sought in the attached claim would only be known if and when an order was made for property settlement under s 79 of the Act”, was not the subject of any complaint by the wife and thus I do not propose to engage in any discussion in relation to the same. In particular, in those circumstances it would be inappropriate for me, without having any submissions on the topic, to address other possible ways in which damages may crystallise just to hypothesise as to what might be the result.

14. In summary then, I am  not satisfied that the decision in Noll was “plainly” or “clearly wrong”.  Certainly there is no compelling reason that has been established for departing from Noll.  However,  I reiterate that I consider there is in any event at least one sufficient legally relevant factual distinction between that case and the case at bar to conclude that the trial judge here was not bound to follow the decision in Noll.  Thus, there is no merit in Ground 3.

Grounds 1, 4 and 5

1. It is well to commence this discussion with what has been taken to be the most classic exposition of “the matter”, namely in the joint judgment of Gummow and Hayne JJ in Re Wakim (at [140]), where their Honours drew on statements from a variety of previous decisions. I have set out that paragraph at [180] above and I need not repeat it here.

2. The trial judge was alive to the principles emanating from that joint judgment and to how the relevant concepts had been interpreted and applied in various decisions of the High Court and other courts, including the Federal Court, the Family Court and the Supreme Court of New South Wales (for example in Valceski).

3. In particular, his Honour duly recognised that the task is to identify the justiciable controversy, and his Honour appropriately referred to what the relevant authorities have said about how that is to be determined.

4. His Honour, correctly I would say, approached the task in this way (at [55]):

   It seems to me that the resolution of whether there is a single justiciable controversy does not depend (or at least does not solely depend) on a description of the controversy. Rather, a “single justiciable controversy” is the end result, or finding, emanating from conclusions drawn about whether the various facts joined in issue between the parties can be said to form a sufficiently common substratum of facts so as to be “interconnected” or “inseparable” rather than being “completely disparate” or “completely separate and distinct” or “distinct and unrelated”.

5. His Honour then identified the issues joined between the parties as follows

   
   

   (at [57]):

   The issues joined between these parties include: those that emanate from an agreement into which they each entered; whether that agreement is binding; if so, what rights and remedies as between them flow from that agreement; and, if not, what rights and remedies flow from the agreement not being binding; and, consequently, those which might flow pursuant to Part VIII of the Act.

6. That assessment is not challenged in this appeal. 

7. His Honour then identified the “matter” before the court as follows (at [62]):

   The “matter” consists, factually, of the facts and circumstances relevant to the agreement and its formation and aftermath, and, in particular, for example what was said or not said, or done or not done, by the parties and their legal advisers in and about that agreement.  The “matter” concerns facts relevant to a determination of whether the financial agreement is “binding”. Those same facts plainly underpin the s 79 claim; they are determinative of its existence.

8. It can be seen that his Honour applied an orthodox approach in finding that the court had jurisdiction to hear and determine the wife’s claims against her solicitors as part of his Honour’s jurisdiction to hear the federal claims.

9. At this point I pause to say that I do have one concern though, and it is a practical issue arising from how the Family Court might attempt to hear and determine the federal and the non-federal claims involved.  The question is, given the nature of those claims, how can they be managed (including from a resource perspective) in the one proceeding, and as will be seen that is in effect the subject of Ground 5.

10. On the one hand, it is necessary to “complete” the s 79 proceedings (on the basis that the financial agreement is not binding, as has been found to be the case here) in order to ascertain the damages to which the wife might be entitled under her claims against her solicitors.  However, in order to “complete” the

    
    

    s 79 proceedings, the damages need to be ascertained because, although it is unlikely, they may be considered “property” for the purposes of the s 79 proceedings, or, far more likely, they would be relevant to be taken into account under s 75(2) of the Act.

11. It is of course not possible to first determine the s 79 proceedings, then determine the actions in contract or negligence and ascertain the damages, and then look to “reopen” the s 79 proceedings, because they would be at an end.

12. As counsel for the appellant submitted, this “rather focuses the mind on whether we’ve got one justiciable controversy or not”.  Indeed, as counsel added, it “rather sounds like something that is the antithesis of a single justiciable controversy”.  And again I note that in Re Wakim at [141] Gummow and Hayne JJ said that “if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter”.  Thus, these issues can be highly relevant to jurisdiction.

13. In Ground 5, the appellant complains that his Honour failed to have “sufficient regard” to this issue when “determining whether there was a single justiciable controversy”. However, his Honour did address this in his reasons for judgment (at [63]-[67]) and his Honour concluded that “there is no impediment to all questions being determined together, or, indeed, as separate questions in the same proceedings”. In support of this proposition his Honour instances how the court is able to address an application under s 79A of the Act and the consequential s 79 claim together.

14. Although I am not entirely convinced of the ability of this court to properly manage such a hearing (for example, because, unlike a s 79A hearing followed by a s 79 hearing, here the parties are not just the parties to the marriage) I am not persuaded that his Honour “failed to have sufficient regard” to this. Indeed, this is a weight challenge and it has not been established that his Honour was plainly wrong, or that there has been no proper exercise of his Honour’s wide discretion.

15. To return to the complaints raised in Grounds 1 and 4 at this point, and recognising that in determining whether there was one matter such as to attract the accrued jurisdiction his Honour is also exercising a discretion, it is well to remember the words of Mason, Murphy, Brennan and Deane JJ in Fencott v Muller (at 608), namely:

    But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.

16. I find no merit in Grounds 1, 4 and 5.

Conclusion

1. Having found no merit in any of the grounds of appeal, the appeal must be dismissed.

2. Given that outcome, it is unnecessary to consider the submissions made by the wife as to the applicability of the associated jurisdiction under s 33 of the Act in support of the decision of the trial judge. I do however express my concern as to how those submissions arose. They should have been the subject of a formal Notice of Contention if they were going to be raised at all, but that was not done here. Instead, they appeared in five brief paragraphs at the conclusion of the second respondent’s written submissions. In that form, it rendered it impossible for the appellant to respond appropriately, and to further compound the difficulty, at the hearing senior counsel for the wife presented detailed written submissions in relation to this topic. The appellant had no opportunity to address these, and accordingly, although reluctant to do so, we were persuaded to receive the further written submissions of the wife and we made orders for the appellant to provide written submissions in response and for the wife to reply if necessary.

Costs

1. At the conclusion of the hearing we sought submissions from the parties as to costs depending on the result of the appeal.

2. Both parties sought that they have the opportunity to present written submissions as to the question of costs, and I am content to provide for this in the orders that I propose.

I certify that the preceding two hundred and twenty-five (225) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Thackray & Strickland JJ) delivered on 2 October 2014.

Associate: 

Date:  2 October 2014