Farro and Goff and Ors
[2019] FamCA 959
•12 December 2019
FAMILY COURT OF AUSTRALIA
| FARRO & GOFF AND ORS | [2019] FamCA 959 |
| FAMILY LAW – PROPERTY – PRACTICE AND PROCEDURE – Whether the Family Court should exercise its accrued jurisdiction power – Whether a claim of negligence against the fourth, fifth and sixth respondents for their role in enabling the first respondent to fraudulently appropriate the identity of the applicant to give effect to various property purchases and the establishment of finance facilities is part of the single justiciable controversy between the applicant and first respondent – Consideration of relevant case authorities – No single justiciable issue found – fourth, fifth and sixth respondents removed as parties to the proceedings |
| Family Law Act 1975 (Cth) ss 90SF, 90SM Limitation Act 1969 (NSW) s 14 |
| Noll& Noll & Anor [2013] FamCAFC 24 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 Re Wakim; Ex parte McNally (1999) 198 CLR 511 |
| APPLICANT: | Ms Farro |
| FIRST RESPONDENT: | Ms Goff |
| SECOND RESPONDENT: | Mr Cabler as Trustee in Bankruptcy of Ms Goff |
| THIRD RESPONDENT: | B Pty Ltd (ABN …) |
| FOURTH RESPONDENT: | Mr C trading as ‘C Firm’ |
| FIFTH RESPONDENT: | Mr D |
| SIXTH RESPONDENT: | E Pty Ltd trading as ‘F Business’ (ABN …) |
| FILE NUMBER: | PAC | 4297 | of | 2013 |
| DATE DELIVERED: | 12 December 2019 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 12 August 2019 and by way of written submissions last received on 4 October 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Coleman SC |
| SOLICITOR FOR THE APPLICANT: | Malcolm McDonald & Co |
| SOLICITOR FOR THE FIRST RESPONDENT: | No appearance |
| SOLICITOR FOR THE SECOND RESPONDENT: | No appearance |
| SOLICITOR FOR THE THIRD RESPONDENT: | No appearance |
| COUNSEL FOR THE FOURTH RESPONDENT: | Mr Othen |
| SOLICITOR FOR THE FOURTH RESPONDENT: | Mullane & Lindsay Solicitors |
| COUNSEL FOR THE FIFTH RESPONDENT: | Ms Eldershaw |
| SOLICITOR FOR THE FIFTH RESPONDENT: | Colin Biggers & Paisley |
| COUNSEL FOR THE SIXTH RESPONDENT: | Ms Eldershaw |
| SOLICITOR FOR THE SIXTH RESPONDENT: | Colin Biggers & Paisley |
Orders
That the Fourth, Fifth and Sixth Respondents be removed from these proceedings as parties.
That any application for costs arising from the above order be made by way of written submissions filed and served within one month from this date with any submissions in response to be filed and served within 14 days thereafter and upon completion of submissions judgment as to costs be reserved to chambers.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Farro & Goffe has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 4297 of 2013
| Ms Farro |
Applicant
And
| Ms Goff |
First Respondent
And
| Mr Cabler as Trustee in Bankruptcy of Ms Goff |
Second Respondent
And
| B Pty Ltd (ABN …) |
Third Respondent
And
| Mr C trading as ‘C Firm’ |
Fourth Respondent
And
| Mr D |
Fifth Respondent
And
| E Pty Ltd trading as ‘F Business’ (ABN …) |
Sixth Respondent
REASONS FOR JUDGMENT
The substantive proceedings before the Court relate to a same sex de facto property matter between the applicant Ms Farro and the first respondent, Ms Goff.
Proceedings were commenced by the applicant against the first respondent only on 8 October 2013.
On 25 June 2018, the applicant filed an Amended Initiating Application in which she added the second and third respondents namely Mr Cabler as Trustee in Bankruptcy of the first respondent Ms Goff, and B Pty Ltd an entity that conducted the business of the first respondent.
On 5 September 2018, the applicant filed a Further Amended Initiating Application adding the fourth, fifth and sixth respondents, namely Mr C trading as ‘C Firm’, Mr D and E Pty Ltd trading as ‘F Business’.
In an Application in a Case filed 26 September 2018 the fourth respondent, Mr C, trading as C Firm, sought to be removed as a party to these proceedings and that the applicant, Ms Farro, pay the fourth respondent’s costs of that application.
In an Application in a Case filed 30 November 2018 the fifth and sixth respondents sought to be removed as parties to the proceedings, and that the applicant, Ms Farro, pay their costs in relation to that application.
Although the applicant did not file a Response to these Applications in a Case, the applicant opposed such applications.
Both Applications in a Case were listed for hearing on 12 August 2019.
Documents Relied on
The applicant relied upon the following documents:
a)Her affidavit filed 20 August 2018;
b)The affidavits of her solicitor filed 16 February 2019 and 19 February 2019; and
c)Her Financial Statement filed 8 October 2013.
The fourth respondent relied upon the following documents:
a)the Application in a Case filed 26 September 2018; and
b)the affidavit of Ms G filed 26 September 2018.
The fifth and sixth respondents relied upon the following documents:
a)the Application in a Case filed 30 November 2018; and
b)the affidavit of Ms H filed 30 November 2018.
The applications were heard and the fourth, fifth and sixth respondents were ordered to file and serve any further supplementary submissions to be relied upon by no later than 13 September 2019, with the applicant to file and serve any submissions in response to such submissions by no later than 4 October 2019. Upon receipt of the submissions from the parties, judgment was reserved on 15 October 2019.
The primary issue
The ambit of the primary issue for determination is the entitlements of the parties to the de facto relationship in relation to altercation of property interests pursuant to s 90SM of the Family Law Act 1975 (Cth) (“the Act”).
The “accrued” issue
In joining the fourth, fifth and sixth respondents to the proceedings, the applicant seeks relief by way of damages for negligence against such respondents for their role, jointly and severally, in enabling the first respondent to fraudulently appropriate the identity of the applicant to give effect to various property purchases and the establishment of finance facilities jointly in the names of the applicant and first respondent without the applicant’s knowledge or permission.
The applicant seeks an order for damages for loss suffered by her arising out of the asserted negligence of the respective respondents.
The fourth respondent contends that it should be removed as a party to the proceedings as the Court should not exercise its accrued jurisdiction in hearing the applicant’s claim against the fourth respondent. It is the fourth respondent’s case that none of the factual questions requiring determination in these proceedings overlap with the negligence claim involving the fourth respondent, and that there would be little to no duplication of evidence as to contested facts.
Similarly, it is the position of the fifth and sixth respondents that there are two separate and distinct causes of action arising from the applicant’s case such that the damages claim against the fifth and sixth respondents should precede the s 90SM proceedings. The fifth and sixth respondents further assert that in the event the applicant’s damages claim was successful, the first respondent would not have any entitlement to such damages potentially payable to the applicant. By inference then any damages claim is not necessary to be resolved so as to determine the asset pool as between the applicant and first respondent.
A necessary preliminary issue to the determination of damages is a finding that in all of the circumstances there was negligence on behalf of the additional respondents in giving effect to various property purchases and establishment of finance facilities such that would render the respective respondents liable in damages to the applicant.
As a consequence of that determination the Court would then be required to quantify the loss suffered by the applicant. Such determinations are completely different issues to the primary issue for determination and would require the Court to hear and finally determine the parties’ respective rights under s 90SM of the Act having regard to the property, if any, that now exists, then separately hear and determine the cause of actions as against the additional respondents and determine damages, if any, payable by those respondents to the applicant.
Accrued Jurisdiction: The Law
The question of “accrued jurisdiction” was the subject of consideration in Noll & Noll & Anor [2013] FamCAFC 24 where the Full Court considered the general principles and said at [26]:
It is important to emphasise at this point that there was no challenge before us to the proposition that in an appropriate case the Family Court does have the accrued jurisdiction (and it is difficult to see how there can be such a challenge having regard to what was said by Gummow and Hayne JJ in Re Wakim; Ex parte McNally (1999) 198 CLR 511 in a passage which we later set out). Rather the issue before us was, as it was before Le Poer Trench J, and as he described it at [32] of his reasons, “whether the facts of the case attract the Court’s accrued jurisdiction.”
In Re Wakim; Ex parte McNally (1999) 198 CLR 511 the High Court said:
135.It must now be regarded as established that the jurisdiction of a federal court having jurisdiction in a matter arising under a law made by the Parliament is not “restricted to the determination of the federal claim or cause of action in the proceeding, but extend[s] beyond that to the litigious or justiciable controversy between parties of which the federal claim or cause of action forms part”. …
...
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. ...
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.
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]
141.Often, the conclusion that, if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, 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.
...
145.As we have said, the bringing of separate proceedings and the joining of different parties will often be important facts in deciding whether there is a single justiciable controversy for the purposes of Ch III of the Australian Constitution. But there is no basis in principle for concluding that there can never be accrued jurisdiction where a new party is joined. To adopt such a rule would mean that third party proceedings could never be brought in a federal court unless those third party proceedings were founded in some federal claim. And that points to the underlying difficulty in principle. If the "matter" is to be identified from what the parties allege and how they conduct the proceeding (as Fencott and Stack hold) and if the "justiciable controversy" refers (in part, at least) to the factual dispute between them, there is no warrant for holding that federal jurisdiction ends as soon as a new party (against whom no federal claim is made) is added.
146.Each of these proceedings brought by Mr Wakim centres upon the making of claims and bringing of action against Mrs Nader and the prosecution and settlement of those claims and that action. Mr Wakim alleges against the Official Trustee that it was negligent and guilty of breach of duty in not continuing the action against Mrs Nader; he alleges against the solicitors that they negligently failed to advise the Official Trustee of its rights against her; he alleges against [counsel] that he negligently failed to advise the Official Trustee of its rights against her. It may be noted that nowhere in the Official Trustee's defence to Mr Wakim's claim does it allege that it acted in reliance on the advice of the solicitors or counsel and it makes no cross-claims against them. Indeed, the pleadings in the proceeding between Mr Wakim and the Official Trustee say nothing whatever about the role of the solicitors or counsel in the matter.
147.The cases arise out of one set of events. Of most significance is the fact that the damage which Mr Wakim alleges he has suffered as a result of what he says are the various breaches of duty by the Official Trustee, the solicitors and [counsel] is, in each case, the loss of what he might have recovered in the bankruptcy had the claims against Mrs Nader been prosecuted differently. There is, then, but a single claim for damages that he seeks to pursue against each of the parties he has sued. And judgment and recovery against one will diminish the amount that may be recovered from the others. There is, in these circumstances, that common substratum of facts in each proceeding of which Mason J spoke in Philip Morris [footnote omitted]. And it is the existence of that common substratum that leads to the conclusion that the three proceedings raise a single justiciable controversy. Accordingly, the proceedings against the solicitors and [counsel] are within the jurisdiction of the Federal Court.
In these proceedings the primary cause of action before the Court is for property adjustment pursuant to s 90SM of the Act and the applicant seeks to “accrue” her action for damages in negligence into the same proceedings.
The Full Court said in Noll (supra):
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” (italics added). 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 P. Brown 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. (italics added) 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.
…
51.Returning to Grounds 2 and 3, we acknowledge in relation to Ground 2 that the primary judge’s statement that “[t]he most compelling argument against the Court hearing the claim sought to be mounted by the husband against [Law Firm A] is that no crystallisation of a damages figure could occur until the Court has exhausted the entirety of its jurisdiction under section 79” could be said to be in the nature of an over-simplification of the relevant issues as we have discussed them. However, it is certainly not a matter that would cause us to interfere with his Honour’s decision.
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.
It is contended by Senior Counsel for the applicant in referring to Ruane & Bachman-Ruane and Ors (Accrued Jurisdiction) [2012] FamCA 369 (Murphy J) that it is necessary to complete the s 90SM proceedings in order to ascertain the damages to which the applicant might be entitled to under her claim.
The applicant also asserts, however, that in order to complete the s 90SM proceedings, the damages need to be ascertained. However, again relying on Ruane (supra), it is contended that it is not possible to first determine the s 90SM proceedings, then determine the action in negligence and ascertain the damages, and then look to reopen the s 79 proceedings because they would be at an end. To this end, counsel for the wife asserts that there are substantial difficulties in hearing the proceedings separately and to do so would be inconsistent with the objective of the achievement of just and efficient judicial business and delivery of justice.
The applicant further contends that if the third party proceedings were disjoined, the question of res judicata estoppel may arise. The first and most significant for the applicant is that she may be estopped, in reliance upon Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 or Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28, from pursuing those remedies because she is seeking to raise those causes of action in these proceedings. However, senior counsel for the applicant in submissions contended that if the applicant is unsuccessful and the additional respondents are disjoined, and thus excused from further participation in these proceedings, then such an order would preclude any assertion in any other proceedings that the applicant was precluded from pursuing her common law applications against the additional respondents. Senior Counsel for the applicant contends that this is the opportunity for the additional respondents to participate in these proceedings. The reality is, however, that they do not wish to do so.
The applicant then contends that there is a real possibility of inconsistent factual findings being made if the proceedings are disjoined and argues that the same issues are going to arise in both sets of proceedings. Yet it is difficult to see where such possibility arises. The action sought to be brought against the additional respondents are discrete as to the allegations of fact and negligence is established then damages will need to be assessed. The quantification of damages will in all probability be assisted by any final s90SM orders made in the present primary proceedings.
In the present matter there is no interdependency such as would prevent the determination of the federal claim as to property under s 90SM of the Act without determining the non-federal claim sought to be attached. Any damages verdict claim would be solely referrable to the present applicant who seeks her damages not damages referrable to both herself and the first respondent such that they should be included in any property pool for adjustment.
The non-federal claims sought to be attached are not part of the single federal justiciable issue as between the applicant and first respondent.
The considerations for determination of the federal claim as between the applicant and first respondent are contained in s 90SM and s 90SF (3) of the Act whereas the factual issues relevant to the non-federal claim would not be relevant to the Court’s primary determination. Thus there is no common substratum of facts and hence no risk of inconsistent factual finding if the proceedings are heard separately.
For the reasons given, there is no single justiciable controversy in this matter such as would require the engagement of the further respondents save for the first respondent’s Trustee in Bankruptcy and the third respondent as parties to these proceedings.
The fourth, fifth and sixth respondents will be removed as parties to these proceedings.
The Issue of the Limitation period
It is the fourth respondent’s position that the applicant’s claim in negligence is statute barred and by reason of this such joinder application is futile.
The fourth respondent submitted that refusing the joinder because the claim is statute barred rests on the futility of permitting the joinder in such circumstance.
The uncontested facts are that the fourth respondent acted as solicitor on the purchase of two properties: J Street, K Town and L Street, K Town, the purchases of which settled in May 2012. The application seeking damages for negligence against the fourth respondent was filed 5 August 2018.
Section 14 of the Limitation Act 1969 (NSW) provides that the limitation period for a claim in negligence is six years. As to the fourth respondent, time commences running when the applicant suffers damage caused by breach of duty. It is not necessary that the applicant knows that the damage has been suffered for the limitation period to commence.
The fourth respondent may have a good limitation defence against the applicant’s proposed cause of action given the proceedings were commenced after the expiration of the limitation period.
However, for the reasons set out above and as the additional respondents are to be removed as parties, it is not necessary to determine the issue as to the limitation defence.
I certify that the preceding thirty eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 12 December 2019.
Associate:
Date: 12 December 2019
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