Finlayson v Finlayson and Gillam
[2002] FamCA 898
•24 October 2002
[2002] FamCA 898
FAMILY LAW ACT 1975
IN THE FULL COURT OF THE
FAMILY COURT OF AUSTRALIAAT ADELAIDE Appeal Nos. SA76(i) & (ii) of 1997
File No. AD3311 of 1994
IN THE MATTER OF: FINLAYSON
G
Appellant/Husband
AND: FINLAYSON
C
Respondent/Wife
AND: GILLAM
G & H
Other Parties
CORAM: LINDENMAYER, FINN & BOLAND JJ
DATES OF HEARING: 14 & 15 MAY, 2001
DATE OF JUDGMENT: 24 OCTOBER, 2002
JUDGMENT OF THE COURT
Appearances: The Appellant/Husband of 21 Danby Street, Torrensville, SA, 5031 appeared in person
Mr Mellows of Counsel (instructed by Lesley Hastwell & Associates, Solicitors, 29 Sudholz Place, Adelaide, SA, 5000) for the respondent/wife
Mr Kourakis of Queens Counsel (instructed by Floreani Coates & Co, Solicitors, 58 King William Road, Goodwood, SA, 5034) for the other parties.
JURISDICTION OF FAMILY COURT OF AUSTRALIA – Accrued - Proceedings between husband and wife under s.79 of Family Law Act 1975 – Proceedings in State Supreme Court between wife’s parents and husband for declaration of rights in relation to real property the subject of a contract for sale from parents to husband and wife – Transferred to Family Court under cross-vesting legislation, and consolidated with s.79 proceedings, prior to Re.Wakim – Finding by trial Judge that land contract and associated loan agreement frustrated by breakdown of marriage – Declarations made that parents have legal and equitable interest in property, and only property of husband and wife is chose-in-action for recovery of deposit paid – Appeal by husband – Whether, in light of Re. Wakim, trial Judge’s order was one capable of being made within the Court’s accrued jurisdiction and, if so, was properly made as a matter of discretion – Whether dispute between husband and parents was “attached to” and not “severable” or “disparate” from s.79 proceedings between husband and wife or arose out of a common sub-stratum of facts so as to form part of a “matter” within the jurisdiction of the court – Whether Court has power to grant declaration of third parties’ rights in property – Whether power to grant remedy a pre-requisite to existence of accrued jurisdiction or merely relevant to discretion to invoke or exercise that jurisdiction.
APPEAL – Appeal to Full Court of Family Court of Australia – Procedure – Whether leave to intervene to wife’s parents necessary to regularise proceedings dealt with under cross-vesting legislation before Re.Wakim, but within Court’s accrued jurisdiction – Leave to intervene nunc pro tunc.
CONTRACT – Frustration - Whether trial Judge erred in concluding that land contract was frustrated – Whether land contract and loan agreement “interdependent” - Common mistaken assumption of parties to contract - Whether continuation of marriage was essential to performance of either contract – Whether subsequent failure of marriage rendered either contract a thing radically different from that which was contemplated by the contract.
CONTRACT - Inability to complete – Evidence of express termination – Whether party to contract “wholly and finally disabled” from performing obligations - Whether trial Judge erred by holding that contract was terminated.
CONTRACT – Right to terminate – Anticipatory breach - Implied notice of intention to terminate - Whether purported repudiation by only one of two joint-contractors would entitle other party to contract to terminate contract as against both joint-contractors – Whether joint-contractor purporting to repudiate contract had authority to bind the other joint-contractor - Actual Authority – Implied Authority – Specific Performance – Whether joint-contractor adopted purported repudiation.
CONTRACT – Specific performance – Whether husband ready and willing to perform his obligations under contracts.
REAL PROPERTY – Legal effect of caveat – Registered instrument – Whether mere lodgment and registration of caveat sufficient to make caveator registered proprietor of estate claimed and establish indefeasible title thereto.
Family Law Act 1975 (Cth) ss31(1)(a), 34, 38(2), 72, 74, 75(1), 79.
Jurisdiction of Courts (Cross- Vesting) Act 1987 (SA)
Jurisdiction of Courts (Cross- Vesting) Act 1987 (Cth)
Real Property Act 1886 (SA) ss3,49, 68, 69, 191.
Evidence Act 1995 (Cth) ss 43, 64(2), 69(1), 106.Warby and Warby (2002) FLC 93-091 and Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 41 ALR 367; 149 CLR 337 cited, discussed, applied and followed.
Ridley v Whipp (1916) 22 CLR 381; Water Board v Moustakas (1988) 180 CLR 491 at 497; Shevill v Builders Licensing Board (1982) 149 CLR 620; Associated Newspapers Ltd v Bancks (1951) 83 CLR 322; Thors & Ors v Weeks & Ors (1989) 92 ALR 131; Foran v Wight (1989) 88 ALR 413 at 424; De Winter v De Winter (1979) FLC 90-605 at 78,091-2 per Gibbs J; Re. F: Litigants in person guidelines (2001) FLC 93-072 at 88,279; Johnson v Johnson (1997) FLC 92-764 at 84,421; Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145; Muin v Refugee Review Tribunal; Lie v Refugee Review Tribunal [2002] HCA 30; 76 ALJR 966 at 992 and Nardo and Nardo (unreported – Appeal No.SA41 of 1994 – judgment delivered 21 July, 1995) cited and applied.
Jennings & Chapman Ltd v Woodman Matthews & Co. [1952] 2 TLR 409 cited, discussed and not followed
Re Wakim; Ex parte McNally (1999) 198 CLR 511;Philip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457; Friis v Friis & Ors (2000) FLC 93-009; Wade-Ferrell and Wade-Ferrell and Read (2001) FLC 93-069; Fencott & Ors v Muller & Anor (1983) 152 CLR 570 ; Stack v Coast Securities (No 9) Proprietary Limited and Ors (1983) 154 CLR 261; Smith v Smith (No 3) (1986) 161 CLR 217; FLC 91-732; Smith v Smith (No 2) (1985) FLC 91-604; McKay and McKay (1984) FLC 91-573; Ireland and Ireland (1986) FLC 91-731; C and C and C: Accrued Jurisdiction (2001) FLC 93-076; Ferrall and McTaggart (trustees for Sapphire Trust) & Ors v Blyton (2000) FLC 93-054; Nguyen and Nguyen (1990) 169 CLR245; FLC 92-171; Pastrikos and Pastrikos (1980) FLC 90-897; (1979) 6 FamLR; Clauson and Clauson (1995) FLC 92-595; 18 FamLR 693; Dare v Pulham (1982) 148 CLR 658 at 664; Emanuele & Anor v Australian Securities Commission and Ors (1997) 188 CLR 114; Caska and Caska (2002) FLC 93-092 at 88,818-20 (per Lindenmayer J); Davis Contractors Ltd v Fareham Urban District Council [1965] AC 696; Brisbane City Council v Group Project Pty Ltd (1979) 145 CLR 143; Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; University of Wollongong v Metwally [No2] (1985) 59 ALJR 481 at 483; Coulton v Holcombe (1986) 162 CLR 1 at 7-8; O’Brien v Komesaroff (1982) 150 CLR 310 at 319; Debenham v Mellon (1880) 6 App. Cas. 24; Mersey Steel & Iron Co. Ltd v Naylor, Benzon & Co. (1884) 9 App Cas at 438-9; Tito v Waddell (No. 2) (1977) Ch 106 at 323-5; Cullen v Knowles [1898] 2 QB 380; Johnson v Stephens and Carter Ltd and Golding [1923] 2 KB 857; In re. Clay (1919) 1 Ch 66 at 78; Tansell v Tansell (1977) FLC 90-280 and 90-307; Lanceley and Lanceley (1994) FLC 92-491 at 81,105-109; Coles KMA Ltd v Sword Nominees Pty Ltd & Ors (1986) 44 SASR 120 at 121 per Jacobs J; Larringa & Co v Societe Franco-Americane [1923] KB 455; Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293-4; R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 258-635; Re JRL; Ex parte CJL (1986) 161 CLR 342 at 349, 352 and 368; Grassby v R (1989) 168 CLR 1 at 20; Webb v R (1994) 181 CLR 41 at 47; Johnson v Johnson (2000) 201 CLR 488 at 492-3; Browne v Dunn (1893) 6 R 67; Farnell and Farnell (1996) FLC 92-681; Fisher & Fisher (1990) 13 FamLR 806; Townsend and Townsend (1995) FLC 92-569; Watson and Watson (2002) FLC 93-094; Mullen v Hackney London Borough Council [1997] 2 ALL ER 906; Brown v Pedersen (1992) FLC 92-271; Croser and Attrill (1990) FLC 92-100; Crowe and Crowe (1988) FLC 91-983; and Kessey and Kessey (1994) FLC 92-495 cited.
This matter consisted of two appeals brought by the husband against orders made by Murray J on 12 November, 1997. The first respondent in this matter, who was the respondent to the first appeal, was the wife. (The husband and wife will be referred to collectively as “the spouses”). The second and third respondents in this matter, who were respondents to the second appeal, were the wife’s parents (“the other parties”).
The first appeal related to orders made by Murray J concerning property settlement and maintenance proceedings between the husband and wife. The second appeal related to disputes concerning real property and contractual arrangements involving the husband and the other parties.
The background
In June, 1990 the other parties purchased a property at Dulwich, South Australia (“the property”). The husband and wife cohabited in the property for a period before they were married in 1992.
In 1993 an agreement for sale of the property was entered into between the other parties and the spouses (“the land contract”). The spouses paid a substantial deposit funded by a bank loan secured by a mortgage over the property. After the agreement for sale was entered into, the other parties and spouses entered into a further agreement. This agreement provided for the loan of $150 000 from the other parties to the spouses “on settlement” of the purchase of the property (“the loan agreement”). The terms of the land contract provided for settlement to occur not later than 2 years after the exchange of contracts, but up to the date of the completion of the hearing before the trial Judge, neither party to the contract had given any unequivocal notice calling for settlement of the contract.
In January, 1994 the spouses separated. Shortly afterwards, the husband lodged a caveat over the property.
On 8 June, 1994 the wife commenced proceedings for property settlement in the Family Court at Adelaide.
On 27 November, 1995 the matter came before Murray J for hearing. Both spouses were represented at this hearing and the wife gave some evidence. On 29 November, 1995 counsel advised her Honour that the matter had been settled. Terms of settlement were read on to the record and the matter adjourned.
Subsequently, the settlement reached on 29 November, 1995 broke down.
On 17 January, 1996 the other parties commenced proceedings against the husband in the Supreme Court of South Australia seeking a declaration with respect to the title to the property. Pursuant to the now largely defunct cross-vesting legislation, this matter was transferred to the Family Court, and consolidated with the part-heard proceedings between the husband and the wife.
On 8 October, 1996 the consolidated matter resumed before Murray J. The hearing of the matter continued for a number of days before the husband lodged an appeal to the Full Court relating, inter alia, to Murray J’s refusal to disqualify herself. The Full Court dismissed this appeal and the husband subsequently lodged an application for special leave to appeal to the High Court. After the High Court had refused the husband’s application for special leave, Murray J delivered her reasons for judgment and made orders on 12 November, 1997.
The trial Judge declared the other parties to be the legal and equitable owners of the Dulwich property, and found that the only property of the husband and wife arising from the agreements between them and the other parties was a chose-in-action for the return of their deposit (less the amount still owing under the mortgage to secure the bank loan they took to provide it) paid under the land contract which she calculated at about $66 000. Her Honour proceeded to make orders in the s.79 proceedings between the husband and wife on this basis.
The husband appealed, asserting that the trial Judge erred in holding the land contract was frustrated by the break-down of the marriage, and that the parties had no equitable interest in the property.
Held, allowing the appeals, setting aside the trial Judge’s orders, remitting the matter for re-hearing (without prejudicing the other parties rights to intervene), making orders for costs and orders for the issue of a costs certificate under the Federal Proceedings (Costs) Act 1981:
1.Notwithstanding the agreement of the parties as to the sound jurisdictional basis of the trial Judge’s orders the Full Court found it was necessary to determine, given the authority in Ridley v Whipp (1916) 22 CLR 381, whether, as a matter of law, the trial Judge had jurisdiction to determine the proceedings brought by the other parties.
2.Despite the fact that the order was made by the trial Judge pursuant to a purported exercise of jurisdiction which the Court did not, as we now know, then have, the order was jurisdictionally sustainable, pursuant to the Court’s accrued jurisdiction, because:
(i)there was a dispute in the family law proceedings between the spouses as to whether or not they had an equitable interest in the property, arising from the agreements that the spouses had entered into with the other parties;
(ii)the resolution of that issue was central to the identification and evaluation of the spouses property, and thus the resolution of the family law proceedings between the spouses; and
(iii)the resolution of that same issue was also a question for determination in the cross-vested proceedings between the husband and the other parties.
Subject only to the question of the Family Court’s power to grant appropriate remedies (in this case a declaration), the claims of the husband and the other parties in the cross-vested proceedings were “attached” to and not “severable” or “disparate” from the claims of the spouses in the s.79 proceedings and the two sets of claims arose out of a “common sub-stratum of facts”.
Warby and Warby (2002) FLC 93-091 cited, discussed, applied and followed.
3.Whether the power of the Court to grant an appropriate remedy in the non-matrimonial proceedings was an essential pre-requisite to the existence of the Court’s accrued jurisdiction in those proceedings, or merely relevant to whether accrued jurisdiction should, in the exercise of discretion, be invoked, the power to make a declaration between the other parties and the husband as to the title to the former matrimonial home was to be found in s.34 or s.80(1)(k) of the Act.
Warby and Warby (2002) FLC 93-091 cited, discussed, applied and followed.
4.The mere fact that the other parties had not been granted leave to intervene in the s.79 proceedings was no impediment to the existence and exercise of the Court’s accrued jurisdiction since it was conceded that it would be open to the Court to grant leave nunc pro tunc.
Emanuele & Anor v Australian Securities Commission and Ors (1997) 188 CLR 114 and Caska and Caska (2002) FLC 93-092 at 88,818-20 (per Lindenmayer J) cited and applied.
5.The trial Judge erred in holding that the land contract was frustrated because:
(a)The land contract and the loan agreement were not “interdependent”. Although the loan agreement was dependent upon the land contract, in the sense that it was conditional upon the settlement of the latter occurring, there was nothing in the land contract to indicate that it was in any way dependent or conditional upon the formation or completion of the loan agreement.
(b)There was no common mistaken assumption of the parties to the land contract that the marriage of the spouses would endure. The wife’s mother, at the time the contract was entered into, contemplated the possibility that the marriage would not endure. Accordingly, the land contract was not frustrated by the breakdown of the spouses’ marriage.
Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 41 ALR 367 per Mason at 379- 380 and Aickin JJ at 398-9
(c)Although the property was meant to be the matrimonial home this did not lead to a conclusion that the continuation of the marriage was essential to the performance of the contract or that the subsequent failure of the marriage rendered the contract a thing radically different from that which was contemplated by the contract.
Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 41 ALR 367 per Mason J at 379.
(d)The comments of Somervell LJ in Jennings & Chapman Ltd v Woodman Matthews & Co. [1952] 2 TLR 409 relied upon by the trial Judge were obiter dicta only and therefore were not binding on her Honour.
6.The trial Judge erred in law by holding, in the alternative, that the other parties terminated the land contract on the basis of the husband’s inability to complete. Although there was no evidence of any express termination of the land contract by the other parties, the Court was prepared to assume that the institution of proceedings in the Supreme Court amounted to an implied termination, but the question remained whether the husband was “wholly and finally disabled” from completing the land contract at that date. The evidence before the trial Judge was insufficient to establish that the husband was “wholly and finally disabled” from completing the land contract at the relevant time. Given that the loan agreement was not frustrated by the breakdown of the marriage, that loan agreement was still binding on the other parties and, thus, the spouses jointly were not “wholly and finally disabled” from performing their obligations under both agreements, their ability to perform under the land contract being greatly enhanced by their right to funding under the loan agreement.
7.No conduct of the husband or wife up to 17 January, 1996 provided a proper basis for the termination of either the loan agreement or the land contract by the other parties. In holding that the other parties had, at that time, a right against the husband to terminate either agreement and that the institution of proceedings in the Supreme Court of South Australia amounted to implied notice of their intention to terminate both agreements, the trial Judge erred in law because:
(a) in the absence of authority to bind his or her co-contractor, purported repudiation by one joint contractor would not amount to anticipatory breach and thus entitle the other parties to the contract to terminate that contract as against both joint contractors:
(i)the wife had no express actual authority to bind the husband in her dealings with the other parties (her parents) in relation to the two agreements that the spouses had entered into jointly; and
(ii)in circumstances were the spouses were separated and involved in property settlement litigation the wife clearly had no apparent authority to bind the husband.
(b) neither the husband or the wife could enforce the land contract for his or her sole benefit, but only for the joint benefit of both spouses;
(c) as the wife could not, by her purported repudiation, bind the husband and provide a valid basis for termination of the land contract by the other parties, as against the husband, it was open to the husband to seek specific performance by the other parties and, if the wife, after being offered an indemnity as to costs, had refused to join him in such a suit he would have been obliged to join her as a defendant; and
(d) the conduct of the husband, thorough his Counsel, did not evince a repudiation by him of the agreements with the other parties (the husband did not adopt the wife’s purported repudiation).
Shevill v Builders Licensing Board (1982) 149 CLR 620; and Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 applied.
8.Although it was submitted that the trial Judge’s judgment was supportable by reference to the doctrine of specific performance (a ground upon which her Honour did not rely) the evidence in this case did not establish that the husband was not ready and willing to perform his obligations under the land contract and loan agreement. The evidence did not establish that the other parties would have had a good defence to a properly constituted suit for specific performance of both contracts. Therefore, her Honour’s conclusion that the spouses had no equitable interest in the property was erroneous.
Thors & Ors v Weeks & Ors (1989) 92 ALR 131 cited and applied.
9.It would be an absurd result if the lodging of a caveat claiming an interest in land, adverse to the title of the registered proprietor, and a notation on the Certificate of Title of the fact and time of the lodgment of that caveat, could have the effect of creating the very interest which the caveat claims. The words of the relevant provisions of the Real Property Act 1886 (SA) do not demand the adoption of a construction that would produce an absurd result.
REPORTABLE
THE COURT
INTRODUCTION
1. For reasons that will be explained later in this judgment, this matter consists of two appeals by [G] Finlayson against orders made by Murray J on 12 November, 1997.
2. The first respondent in this matter, who is the respondent to the first of these appeals (SA76(i) of 1997), is [C] Finlayson. Although [G] Finlayson and [C] Finlayson were divorced on 29 November, 1995 we shall refer to them throughout this judgment, for convenience only, as “the husband” and “the wife”, respectively. The husband and wife will be referred to collectively throughout this judgment as “the spouses”.
3. The second and third respondents in this matter, who are respondents to the second appeal (SA76(ii) of 1997), are [G] Gillam and [H] Gillam (hereafter referred to collectively, as “the other parties,” and individually, as either “Mr Gillam” or Mrs Gillam” as the case requires). The other parties are the wife’s parents.
4. Broadly speaking, the husband’s first appeal relates to the orders made by Murray J in proceedings for property settlement and maintenance between the spouses, pursuant to ss.79 and 74 of the Family Law Act 1975 (Cth) (“the Act”). The second appeal relates to the orders of Murray J in proceedings between the other parties and the husband arising out of real property and other contractual arrangements entered into between the spouses and the other parties. We shall explain how the latter proceedings came to be before her Honour for determination later in this judgment.
5. Although the orders made by the trial Judge in the two sets of proceedings were (no doubt because the proceedings had been amalgamated) incorporated into a single formal order issued by the Court and dated 12 November, 1997, it is convenient, because there are two appeals, to separately identify the orders made in the two proceedings. This is most conveniently done by reproducing the trial Judge’s enunciation of the orders she proposed to make as set out at the end of her judgment delivered on 12 November, 1997 (but at the same time incorporating an amendment of one of those orders which was made by her Honour, by consent of the parties, on 22 December, 1997). In her Honour’s enunciation of the orders, which follows, the expression “the Supreme Court Proceedings” refers to the proceedings between the other parties and the husband, and the orders in the proceedings between the spouses are introduced by the words “By way of settlement of property”. Those orders were as follows:-
“In the Supreme Court Proceedings
(1)I Declare that the other parties are the legal and equitable owners of the property situated at [ ] Dulwich being the whole of the land comprised in Certificate of Title Register Book [ ].
(2) I order
(a)That the husband do within 14 days execute all such documents and take all such steps at his own expense as may be necessary to withdraw Caveat number [] from the said Certificate of Title and in default of him so doing then I appoint a Registrar of this Court to execute the same and to do all such acts and things as may be necessary to give validity and operation to such documents.
(b)That the other parties do indemnify and keep indemnified the husband against all liability that he may have in respect of Memorandum of Mortgage [ ] to Westpac Banking Corporation Ltd.
(c)That the other parties do pay to the spouses the value of the chose in action fixed in the sum of $66,000 in the proportions hereinafter set out in the orders for property settlement.
By way of settlement of property -
I order –
(1) That of the moneys due by the other parties to the spouses
(a) The husband do receive $8,508.
(b) The wife do receive $57,492.(2)That the superannuation entitlements of each of them do vest absolutely in that party at present entitled thereto.
(3)That the property in the shares registered in the name of the husband viz. two shares in Fauldings Ltd and seventy shares in Pacific Dunlop Ltd vest in the husband absolutely.
(4)That the wife do indemnify and keep indemnified the husband against any liability he jointly with the wife may have to repay Mrs [H] Gillam in the sum of $8,000.
(5)That each party retain as his or her property all items of personalty in the possession of that party respectively.
(6) That the husband’s application for spousal maintenance do stand dismissed.”
HISTORICAL BACKGROUND TO THE DISPUTE
6. This matter has a lengthy and complex history, and it is necessary to set out that background in some detail.
7. The husband was born 24 October, 1964 and is thus currently aged 37 years. The wife was born on 2 August, 1966 and is thus currently aged 36 years. There are no children of the spouses’ relationship.
8. The spouses commenced cohabitation in or about May, 1990. They first lived together in premises rented by the husband at Prospect, South Australia. Subsequently, they moved to a property owned by the wife’s uncle at Aldgate, South Australia where they paid a nominal rent of approximately $15 per week. The spouses resided at the Aldgate property from May until July, 1990.
9. Whilst cohabiting the spouses kept separate bank accounts, but each could access the other’s cheque account. They agreed that they would share their food costs equally.
10. At the time of cohabitation the wife was employed by a company that ran a business called NSB. At the time of trial NSB’s business involved the placement of specialist nursing staff in the community and hospitals throughout South Australia and the Northern Territory. NSB was solely owned by the other parties. It was not disputed at the trial that the wife had savings of approximately $11,600 prior to cohabitation. The wife brought these funds into the relationship.
11. The husband was unemployed when he met the wife, and had at that stage done 4 years of tertiary study, including 3 years of a medical degree and then a year of medical science. The husband had limited property at the time of cohabitation.
12. In June, 1990 the other parties purchased the property at Dulwich in the State of South Australia, (hereafter “the Dulwich property”). The purchase price of the Dulwich property was $260,000. Her Honour found that the property is spacious and is divided into two living areas. The property is registered in the joint names of the other parties.
13. In or about June, 1990 the spouses moved into the Dulwich property with the wife’s brother [C] Gillam and the wife’s maternal grandparents. The parties paid a nominal rent to live in the property. Approximately, 3 months after moving into the Dulwich property the wife’s maternal grandparents left the property. The spouses advertised for another tenant to share the rent. It is not clear from the trial Judge’s judgment when [C] Gillam ceased residing in the property, but we note that in paragraph 1 of his afffidavit sworn on 23 May, 1995[1] he claims to have vacated the property “in approximately June of 1993”. By contrast, the wife swore (in paragraph 26 of her affidavit sworn on 9 May, 1995[2]) that [C] vacated the property in January, 1993.
[1] Appeal Book SA76(i) at p.185
[2] Appeal Book SA76(i) at p.102
14. In or about the middle of 1990, the wife approached her mother and requested that NSB employ the husband in some capacity. Following this request, the husband was employed by NSB on a casual basis for a short period. Subsequent to this period of casual employment, the husband was involved with running a computer system for NSB and did some training in industrial law that appears to have been paid for by NSB. On 10 October, 1990 the husband commenced employment with NSB on a full time basis.
15. The spouses travelled to Thailand in November, 1990. The wife paid the approximate cost of $3,000 of this holiday from her savings.
16. In 1991, the other parties commenced renovations to the Dulwich property. They spent something in the order of $120,000 on the installation of a swimming pool and landscaping and the renovation of the kitchen and sunroom. The wife contributed approximately $1,100 of her own money to the renovation. The wife assisted in re-designing the kitchen and the husband’s wishes were considered with respect to some of the renovations, which were completed in January, 1992.
17. The spouses were married at Adelaide, South Australia on 25 January, 1992.
18. Following the marriage the other parties paid for the spouses to travel to Europe for 6 weeks. The spouses travelled to Europe via Saudi Arabia to continue some business negotiations there on behalf of NSB. These negotiations concerned the placement of nursing personnel in Saudi Arabia by NSB and had commenced prior to the spouses’ marriage.
19. The spouses returned to live in the Dulwich property after their overseas travels. They shared the property with the wife’s brother [C] Gillam and other tenants. They continued to pay a nominal rent to the other parties.
20. At some stage after returning from overseas, the husband had the side garden of the property altered to suit his specifications. He assisted in paying for this landscaping, to the extent of about $300.
21. At a date that is not identified in the judgment of the trial Judge, the spouses took out a variable rate personal loan with Westpac for the sum of $20,000 (hereafter “the spouses’ personal loan”). Together with $10,000 in savings, the borrowed $20,000 was applied toward the purchase of various shares. The spouses traded successfully in these shares, reducing the personal loan by $12,000.
22. It was agreed at trial that the husband ceased to be employed by NSB in January, 1993. The husband proposed, and the wife’s mother agreed, that the husband would leave NSB and work as a consultant.
23. In or about February, 1993, the spouses borrowed $8,000 from the wife’s mother to pay out their personal loan. The wife’s mother drew the $8,000 from her loan account with NSB. At some stage, again on a date that is not identified by the trial Judge, the wife paid her mother about $1,600 by way of partial repayment of the $8,000 loaned to her and the husband.
24. At some stage toward the end of 1992, NSB considered commencing another business enterprise that was to be operated by a new corporate entity. Prior to February, 1993 the husband had purchased a shelf company. It was determined that the husband’s shelf company would be used to operate the intended business enterprise. The name of the shelf company was changed from Duck’s Personnel Pty Ltd to NSB Carers Pty Ltd (hereafter “Carers”). To enable Carers to run the new business the husband agreed to transfer his share in Carers, for $1.00, to the wife’s sister Anna Gillam. This transfer was effected in February, 1993. The wife became a shareholder and director of Carers, as too did Anna Gillam. NSB advanced money to Carers to enable it to commence the business.
25. By August, 1993 Carers had ceased trading. As at that date it had trading losses of $22,000 and owed $33,171 to NSB. At a date that is not identified by the trial Judge, NSB agreed to allow Carers to charge NSB a management fee of $18,195, so that Carers’ indebtedness to NSB was reduced to $14,976.
26. Also during 1993, the husband set up another company known as Integrand Pty Ltd (hereafter “Integrand”). It was agreed at the hearing before Murray J that this company was the corporate vehicle for the husband’s consultancy services to NSB. The husband and his mother were directors of Integrand. Ninety percent of the issued shares in Integrand appear to be held by Yooringa Pty Ltd, as trustee for the Gillam Family Trust. At the date of the trial, the other parties controlled Yooringa Pty Ltd.
27. Although Integrand was intended to be the husband’s vehicle for his consultancy services to NSB, no formal arrangement to this effect was initially put in place. At the urging of the husband, on 7 July, 1993 Mrs Gillam and the husband signed an agreement for the provision of services by Integrand to NSB. The husband continued to draw the same salary, being approximately $35,000, from Integrand that he had received from NSB.
28. In the early part of 1993, the spouses had discussions between themselves regarding the possibility of purchasing the Dulwich property from the other parties. Following this, a considerable period of negotiations between the spouses and the other parties commenced. A purchase price of $285,000 was agreed, with the assistance of a valuer. On 25 June, 1993 the spouses signed a loan agreement with Westpac to borrow $135,000. The funds borrowed from Westpac were secured by a second mortgage over the Dulwich property, granted by the other parties. Notwithstanding this, all parties regarded the loan from Westpac as the responsibility of the spouses. On 8 July, 1993 an agreement for the sale of the Dulwich property was entered into between the spouses and the other parties (hereafter “the land contract”). The funds borrowed from Westpac were to be applied by the spouses toward the deposit of $135,000 payable under the land contract. The terms of the land contract are of importance to this appeal, and are set out later in this judgment. After paying the deposit the spouses paid the income derived from the tenants, who occupied part of the property, towards the second mortgage and outgoings in respect of the property. The spouses themselves ceased paying rent to the other parties, but they assumed responsibility for the maintenance of the property, excluding state land tax.
29. On 9 July, 1993, the day after the land contract was entered into, the spouses and the other parties entered into a further contract. This agreement (hereafter “the loan agreement”) provided for a loan of $150,000 from the other parties to the spouses, “on settlement” of the purchase of the Dulwich property. As will be discussed later, the terms of the land contract provided for settlement to occur not later than 2 years after the exchange of contracts. The terms of the loan agreement are also relevant to this appeal and will be discussed later in this judgment. The wife’s brother [C] Gillam, who is a solicitor, drew up both the loan agreement and the land contract. At the time these contracts were entered into the wife’s mother had serious concerns about the husband’s stability and the prospects of the marriage lasting. The wife deposed that although she perceived difficulties with the husband at the time of negotiating the land contract and loan agreement she was anxious to complete the transaction before leaving the country on a holiday.
30. In July, 1993, the spouses sold the bulk of their share holdings referred to in paragraph 21 hereof for approximately $60,000. Of these proceeds, approximately $51,000 was paid towards the reduction of the bank loan secured by the second mortgage over the Dulwich property. The husband retained a number of shares, some of which he later sold for $2,825. The husband applied the proceeds of sale of the additional shares toward his living costs.
31. The parties separated on 25 January, 1994. The husband appears to have moved to a separate part of the Dulwich property, and to have remained in the Dulwich property for some time. The rent book for March and April, 1994 shows that the spouses paid rent for those periods. It would appear that the husband left the Dulwich property some time in early April, 1994. On 7 April, 1994 the husband lodged a caveat over the Dulwich property and the trial Judge found that his relationship with the wife and other parties deteriorated soon after this time. Her Honour also found that the husband had not financially contributed to the Dulwich property since he left that property. At the date of separation the balance of the spouses’ debt to the bank, (originally $135,000) secured by the second mortgage over the property, stood at $68,664 including accrued interest.
32. On 16 February, 1994 the husband wrote to the other parties. In that letter (Exhibit H11) the husband stated the following:
“I would however appreciate if you could confirm that I have an equitable interest in the property and that my previous and future contributions toward the repayment of the mortgage and outgoings on the property will be treated as such.
…
Also I notice that the agreement provides that at settlement you will pay out and discharge all mortgages on the property. Of course one of the mortgages is the one that [C] and I are repaying. I do not believe that it was our intention that you should also repay and discharge this mortgage.”
33. On 8 June, 1994 the wife commenced proceedings for property settlement in the Family Court at Adelaide.
34. On 18 July, 1995, 2 years and 11 days after the date of the land contract, the husband sent a letter (Exhibit H12) to the other parties’ solicitor and son, [C] Gillam, which, inter alia, stated:
“Please provide me forthwith with any information which you have or be [sic.] aware of which you may have been provided by either [H] or [G] or [C]. This would include any details you may have of the current occupants and the [sic.] attitudes or any and all statements made by the other parties to the transaction.
I note that clear title and vacant possession should now be provided to me and [C]. Please bring this to the attention of [H] and [C] as their failure to respond will leave them liable to action for breach, although I am prepared to meet with all parties to discuss the transaction.”
[C] Gillam was overseas when his office received this letter. The husband was informed of this by [C] Gillam’s office.
35. On 6 March, 1995 the husband filed an amended answer and cross application in the proceedings instituted by the wife, in which, in addition to seeking orders for property settlement and maintenance, he sought damages against the wife for “inducing breach of contract”; aggravated and exemplary damages arising out of the same breach; and damages in respect of an alleged conspiracy against him. No reliance was made on any cross–vesting legislation, and the claims for damages were eventually abandoned by the husband. By notice of discontinuance filed on 7 January, 1997 the husband discontinued all claims in tort alleged by him against the wife.
36. On 27 November, 1995 the matter came before Murray J for hearing. At this date the wife was still resident in the Dulwich property and was still employed by NSB. At this date the balance of the spouses’ bank loan in respect of the Dulwich property stood at $68,948. Both the spouses were represented by Counsel at the initial hearing of this matter. During the hearing the wife gave some evidence.
37. On 29 November, 1995 Counsel advised her Honour that the matter had been settled. The terms of settlement were read onto the record and the matter was adjourned to allow formal terms of settlement to be prepared.
38. The trial Judge also pronounced a decree nisi for the dissolution of the spouses’ marriage on 29 November, 1995.
39. For reasons unknown to us, the settlement reached on 29 November, 1995 broke down, and the proceedings between the spouses were later reactivated.
40. In December, 1995 the wife left the Dulwich property. Although no longer residing in the property the wife continued to manage it.
41. On 17 January, 1996 the other parties commenced proceedings against the husband in the South Australian Supreme Court seeking a declaration with respect to the title to the Dulwich property. We shall refer to the terms of the declaration sought at a later point in this judgment.
42. On 15 March, 1996 Olsson J of the South Australian Supreme Court ordered that the proceedings instituted by the other parties in that Court be transferred to the Family Court pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (SA).
43. In May, 1996 the wife left for overseas. At that date she was no longer employed by NSB. After her daughter’s departure the wife’s mother took over the management of the Dulwich property.
44. On 8 October, 1996 the trial before Murray J resumed. At this date the balance of the spouses’ bank loan regarding the Dulwich property stood at $67,886.08.
45. As a result of a consolidation order made by another judge after the transfer to this Court of the Supreme Court proceedings, the trial Judge was effectively dealing with two sets of proceedings when the matter came back before her on the 8 October, 1996. The first of these proceedings was constituted by the cross-applications of the spouses for property settlement and maintenance, under ss. 79 and 74 of the Act. The second set of proceedings was the contractual/real property matter initiated by the other parties in the South Australian Supreme Court, but transferred to the Family Court pursuant to the now largely defunct cross-vesting legislation. It is presumably a result of there being two sets of proceedings before Murray J that the husband has instituted two appeals before us. Essentially, the husband appeals from the orders made by Murray J in each of the two matters before her.
46. The hearing of the matter continued before her Honour on 9 and 10 October, 1996, and on 5, 6, 7 and 8 November, 1996, with the husband then being unrepresented. On the latter date her Honour reserved her judgment.
47. On 8 November, 1996 the husband lodged an appeal to the Full Court relating, inter alia, to Murray J’s refusal to disqualify herself from hearing the cross-vested proceedings at the resumption of the hearing. The husband alleged possible perceived bias and sought that the consolidated proceedings be remitted for hearing before another judge. The Full Court heard this appeal in the week commencing 9 December, 1996 and judgment was handed down on 31 January, 1997 dismissing the husband’s appeal.
48. Following the dismissal of his appeal to the Full Court the husband lodged an application for special leave to appeal to the High Court. We are not aware on what day the High Court heard this matter. However, Murray J received notification on 24 October, 1997 that the High Court had refused the husband’s application for special leave, and on 12 November, 1997, she delivered her judgment and made the orders the subject of these appeals.
THE TRIAL JUDGE’S JUDGMENT
49. Her Honour began her reasons for judgment by noting the issues for determination by her. Specifically, Murray J noted that there were two broad matters consolidated before her for determination. As was noted above, these were the cross-applications for property and maintenance between the spouses and the proceedings transferred from the Supreme Court of South Australia between the husband and the other parties. In the introduction to her judgment her Honour set out what each of the spouses and the other parties were seeking at trial. We have not repeated those positions here, but shall have occasion to refer to aspects of the relevant claims later in this judgment.
50. Following her introduction, the trial Judge proceeded to summarise the, as she described it, “extraordinarily lengthy history” of the trial of this matter. Following the history of the trial her Honour set out the factual background and history of the matter, including the purchase of the Dulwich property. Given that we have discussed these issues in detail above, we do not propose to repeat her Honour’s comments on these points here.
51. At p.18 of her judgment, her Honour turned her attention to whether the property available for division between the spouses included the Dulwich property or any interest in it. Given that we discuss this issue in detail below, we have only briefly set out her Honour’s conclusions with respect to this matter here.
52. Murray J stated that the other parties:
“…seek a declaration that they are the legal and equitable owners of the [ Dulwich] property, but concede that the spouses have a chose in action for recovery of the deposit paid pursuant to the Land Contract.”
Her Honour stated that her preliminary view was that if the land contract and loan agreement were at an end, then the spouses were entitled to the return of the deposit money, subject to the repayment of the second mortgage.
53. At p.19 of her judgment, the trial judge dealt with, and ultimately rejected, two of the husband’s submissions, these being that the cross-vested proceedings were misconceived and vexatious; and were improperly constituted. As these issues were only briefly touched on in the appeal, and were the subject of only one ground of appeal (to which we shall subsequently refer) we find it unnecessary to refer further to her Honour’s treatment of them at this point.
54. After summarising the orders sought by the husband, and noting the difficulties of discerning the husband’s position, given that he was self-represented, her Honour turned her attention, at p.20 of her judgment, to the issue of the lapse of the land contract. Although the 2 years allowed for settlement in the land contract had long passed by the date of trial, her Honour concluded that this did not mean that the land contract had lapsed on that date. As her Honour correctly stated, time not being of the essence of the contract in this respect, failure to complete within the stipulated period could not bring the contract to an end in the absence of an unequivocal notice to complete by one party to the other making time of the essence. Her Honour correctly concluded that neither party had given such a notice.
55. Murray J then turned her attention, from p.22 of her judgment onwards, to whether the land contract had been frustrated, as asserted by the other parties. After considering various authorities her Honour concluded:
“I find therefore that the irretrievable breakdown of the marriage between the parties frustrated the completion of the loan agreement which in turn left all parties in a fundamentally different situation thereby frustrating the Land Contract.”
56. At p.24 of her judgment, her Honour went on to state alternative conclusions regarding the status of the land contract. The implications of those alternative conclusions will be discussed later in this judgment. For present purposes it will suffice to say that her Honour held that the husband, “without the benefit of the loan agreement is simply unable on his own evidence to complete the Land Contract” and that the other parties had validly terminated that contract. Accordingly, she found that neither the husband nor the wife had any proprietary interest in the Dulwich property, but that jointly and severally they had a chose in action to recover the moneys paid by them towards the purchase of that property, the amount of which she had previously set at $66,346.
57. In the next section of her judgment, Murray J turned her attention to an assessment of the witnesses before her. Her Honour found the wife, her mother and brother were, subject to some limited qualifications, reliable and truthful witnesses. On the other hand, at p.27 of her judgment her Honour made the following finding about the husband's credibility:
“I find the husband to be an unsatisfactory and mostly unreliable witness. I reject almost entirely the evidence he gave concerning his relationship with Integrand after separation. I do not believe him. My findings reflect those parts of his other evidence which I accept. They are few. Where there is any conflict of evidence between Mrs Gillam and the husband, I prefer the evidence of Mrs Gillam”.
58. The husband had two further witnesses at trial. Dr Prodea, the husband’s psychiatrist, gave evidence regarding the husband’s bouts of depression. Her Honour considered the value of Dr Prodea’s evidence was “diminished”, given that Dr Prodea thought the husband credible, which her Honour did not. Her Honour rejected entirely, Dr Prodea’s evidence concerning the wife, a person Dr Prodea had never met, his assessment of her being based solely on what the husband had told him. In relation to Mr Priori, a self described “Entertainment Production Manager”, Murray J gave little weight to his evidence, and said that where it conflicted with that of the wife, she preferred the latter.
59. From p.28 of her judgment onwards, the trial Judge turned her attention to the application and cross-application for property settlement. Her Honour commenced her discussion on this point by referring to the orders as sought by the husband by way of property settlement and spousal maintenance both in his final address and in his opening address. In the course of so doing, her Honour noted that “during the period encompassed by the husband’s present claim for lump sum maintenance … Registrar McMahon dismissed [his] claim for interim periodic maintenance”. The trial judge then briefly noted the submissions of Counsel for the wife in respect of these issues.
60. Turning to a consideration of the wife’s property and income, her Honour found that the wife was financially independent and supported herself as a medical receptionist on the equivalent of $300 per week in Spain, where she was then residing. Although the husband alleged that the wife had an interest in the Gillam Family Trust, the trial Judge found that the wife was only a potential beneficiary of the trust, with no vested interest in the trust’s property, just as the husband was “in a range of potential beneficiaries” when he was married to the wife, but that no distributions had been made prior to trial to either the husband or wife. Accordingly, her Honour found that the wife had the following property:
(a)jewellery, estimated value $1,000;
(b)her share in the chose in action for the return of the deposit paid in respect of the Dulwich property;
(c)some savings, estimated value between $464 and $1,244; and
(d)joint share (with the husband) in their credit loan account in Integrand, valued in June, 1993 at $30,977.
61. The trial Judge found that the wife had only one financial resource, this being a Prudential insurance policy that was worth $2,827 at the date of separation. Following this, her Honour turned her attention to the liabilities of the wife. The only liabilities that the wife was found to have were to her mother and NSB (which her honour found to be “the creature of the other parties”). She found that Mrs Gillam “through NSB” is unlikely to demand payment of the wife’s debt of $7,500 to that company, but that “Mrs Gillam will require repayment from the wife of legal costs [of $35,000] advanced to her from [the wife’s] share of the chose in action, as well as the $6,400 [found to be owing to Mrs Gillam by the spouses jointly] the obligation to pay which I am transferring to the wife”.
62. In the next section of her judgment, the trial Judge turned her attention to the property of the husband. After noting certain financial details relating to the husband’s company, Integrand, her Honour concluded that that company was “a shell” and was “worthless”. At p.31 of her judgment, her Honour found that the husband, like the wife, was entitled to half the value of the chose in action for the return of the deposit paid in respect of the Dulwich property.
63. As a result of a Deed of Settlement entered into by, among others, the husband, Integrand and NSB on 30 June, 1994, the sum of $64,000 was paid by NSB to Integrand for purported outstanding consulting services provided by the husband through Integrand to NSB up to the date of separation of the spouses. After detailing how the husband deposed as to his disposition of this $64,000, her Honour found, at p.32 of her judgment, that the husband had spent $12,100 of the $64,000, (not the $10,800 deposed to by the husband), on his own personal expenses. Her Honour noted that the husband had been unemployed since May, 1994, was in receipt of unemployment benefits as at July, 1994 and was indebted to his mother in the sum of $6,600.
64. Following this, at p.33 of her judgment, her Honour turned her consideration to the travels to South East Asia of the husband and Mr Priori, a “supposed” employee of Integrand, of which the husband claimed to have ceased to be a director in June, 1994, and to have been replaced by his two friends, a Mr Crowe and a Mr Pfitzner. We do not propose to set out in full her Honour’s findings in relation to this issue here. Rather, it is sufficient to note that her Honour found Mr Priori an unimpressive witness and, interspersed with her Honour’s discussion of the travels, are various findings that are challenged in this appeal. These include:
“I have no difficulty in finding that Integrand has been the alter ego of the husband since June 1994.”
“I make an adverse inference on his [the husband’s] failure to call either his mother or Mr Crowe or Mr Pfitzner to corroborate his assertions on their role as independent directors.”
“….I formed the view that he [the husband] had wasted his and Integrand’s time and money.”
65. At p.34 of her judgment the trial Judge noted that the husband had commenced litigation, either personally or through Integrand, against various software companies and the wife’s sister, and that the Court file “with the large number of applications” demonstrated that the husband had “considerable expertise in the area of litigation”.
66. Regarding the $5,000 that the husband purported to have paid from Integrand to his Hesta Superannuation fund the trial Judge found, at p.35 of her judgment, that this money was ultimately used by the husband as his own money and not applied towards his superannuation.
67. Finally, on this point, her Honour summarised the various sums of money which she held was property that would have formed part of the asset pool had the husband not spent it. The total of these amounts was $27,582, to which her Honour then added $203 in respect of some shares retained by the husband to reach a total of $27,785 which she said she would take into account “as notional property, properly belonging to the asset pool but spent or retained by him”. That total included a sub-total of $23,024 in respect of amounts which her Honour had previously found the husband applied to his own use from the $64,000 paid to Integrand by NSB under the Deed of Settlement referred to above. In relation to that component of the “notional property” her Honour said this:
“I have already referred to the joint Loan Account in Integrand of the spouses in the sum of $30,997. I find that the husband could have used the $23,024 with some of his tax refund he appropriated to himself from his alter ego to pay off that loan which would in theory have re-imbursed the wife over $12,000.”
68. At pp.36 and 37 of her judgment, the trial Judge dealt with the liabilities of the husband. In particular, the trial judge discussed the husband’s Diners Club debt. She found that at the date of separation the liabilities on this credit card stood at $818.64. By the time of the husband’s cross-examination in the hearing before her, the trial Judge noted that the liability in respect to this card had risen to about $10,000. Her Honour concluded, at p.37 of her judgment, that the husband had been financially irresponsible. After rejecting the husband’s evidence of “a loan due by him to Integrand in the sum of $22,718” her Honour found the husband’s liabilities “nearly all incurred since separation” totalled $31,218.
69. The husband’s only financial resource was found to be a policy with Westpac that the husband estimated to be worth $ 915. Given that the trial Judge found that the husband was comparatively young at the trial, she accorded this financial resource little weight.
70. From pp.37 to 38 of her judgment, the trial Judge turned her attention to the income of the husband. After finding that the husband’s only income at the date of trial was social security, her Honour considered the husband’s employment prospects. Her Honour found that he had some computer skills and held himself out as an “International Business consultant”. Her Honour gave little weight to evidence that the husband’s health, in particular his depression, prevented him from earning an income. Rather, her Honour found that the husband had an ability to earn an income. She found that if he did suffer depression (which she declined to find) “those wounds have been largely self-inflicted”, and she added a reference to “the extensive litigation he has launched”. Her Honour concluded this section of her judgment by noting previous employment of the husband, unsubstantiated allegations made by the husband to the effect that his employment prospects were diminished by the hostility towards him of the wife’s mother, and a vocational assessment of the husband performed by the Commonwealth Rehabilitation Service.
71. At the bottom of p.38 of her judgment, her Honour began to assess the contributions made by the spouses, as required by s.79(4)(a), (b) and (c) of the Act. After noting that the period of cohabitation was a short one, her Honour stated that neither party had made much of a contribution as a homemaker. Turning to financial contributions, the trial Judge considered the wife’s initial financial contribution to the marriage, the joint management of the share portfolio and the numerous benefits bestowed upon each of the spouses by the other parties. In light of the other parties’ contributions, the trial Judge awarded the wife an additional 10% of the chose-in-action relating to the deposit paid on the Dulwich property, for the contributions made by her family. Accordingly, her Honour assessed the contributions of the husband to the chose in action at 40% and the wife’s in respect of this asset at 60%. Her Honour concluded that the spouses had contributed equally to the notional assets previously identified by her and the shares retained by the husband. Her Honour then proceeded to apply these assessments to the property of the parties. After noting the outstanding liability of the parties to the wife’s mother (the onus of repaying which the trial Judge attributed solely to the wife) and that no evidence of the sale price of the shares had been presented, her Honour concluded that the wife should receive $57,492 and the husband $8,508 of the $66,000 (in round figures) representing the chose in action.
72. Following the discussion of contributions, her Honour turned her attention to a discussion of the relevant matters referred to in s.75(2) of the Act, as required by s.79(4)(e). After considering each paragraph of s.75(2) the trial Judge declined to adjust her assessment of the spouses’ entitlements, based on contributions, on account of any of those matters.
73. Finally, under the heading “Spousal Maintenance”, at p.41 of her judgment, her Honour summarised her conclusions in relation to that issue. Ultimately, the trial Judge found that the husband had no entitlement to lump sum spousal maintenance past or present given his then age and physical/mental capacity for employment. Her Honour then proceeded to announce the orders she proposed to make in the terms set out in paragraph 5 hereof.
THE APPEALS
74. In each appeal, the husband filed at least one, and possibly more than one, Amended Notice of Appeal. In each case, the latest Amended Notice of Appeal, upon the basis of which the appeal proceeded, was that filed on 10 May, 2001. It is convenient at this point to set out the grounds of appeal, and the orders sought, in each appeal, as disclosed by those Amended Notices of Appeal.
Appeal SA76(i) of 1997 (in the proceedings between the spouses)
75. In this appeal (from the orders made by Murray J in the proceedings between the spouses) the grounds of appeal and the orders sought are as follows:-
“Grounds of Appeal
[Grounds 1 –31 omitted]
The conduct of the trial as a whole
[Ground 32 omitted]
33.The trial judge had no power to make a declaration in the proceedings.
34. The trial judge erred in law in holding the contracts or either of them have been frustrated.
[Grounds 35 and 36 omitted. No ground 37]
38. The trial judge erred in going behind the certificate of title, and not recognizing the interest of the husband noted on the caveat.”
“Orders sought
1.That the orders of Murray J dated 12 November 1997 by way of settlement of property and dismissing the husband’s application for spousal maintenance be quashed and the matter remitted for expedited hearing according to law before Murray J or another Justice of the Family Court of Australia.
2.Costs.”
Appeal SA76(ii) of 1997 (in the proceedings between the husband and the other parties)
76. In this appeal (from the orders made by Murray J in the proceedings between the other parties and the husband) the grounds of appeal and the orders sought are as follows:-
“Grounds of Appeal
[Grounds 1 and 2 omitted]
3. The trial judge erred in holding the loan agreement to have been frustrated.
4. The trial judge erred in holding the contract for the purchase of the land and buildings to have been frustrated.
5. There was no jurisdiction to deal with the cross-vested application.
6. The trial judge had no power to make a declaration in the proceedings.
[Grounds 7 and 8 omitted]
9. The trial judge erred in going behind the certificate of title, and not recognizing the interest of the husband noted on the caveat.
Orders Sought
1.That the orders appealed be set aside and in place the application of the respondents be dismissed on the merits. Or
2.That the orders appealed be set aside and in place the application of the respondents be dismissed for want of jurisdiction. Or
3.That the orders appealed be set aside and in place the application of the respondents be remitted for rehearing by a single judge.
4.Costs on appeal and at trial to be paid by the respondents.”
77. It will be seen that a number of grounds of appeal are common to, or raise similar issues in relation to, both appeals. It is convenient to deal with those common grounds or those common issues together, before dealing separately with grounds which relate to one or other appeal, but not the other.
Jurisdiction (Appeal No.SA76(i), Ground 33 and Appeal No.SA76(ii), Grounds 5 and 6)
5. There was no jurisdiction to deal with the cross-vested application.
6.[33.] The trial judge had no power to make a declaration in the proceedings.
78. These grounds, which challenge the jurisdiction of the Family Court to determine the proceedings between the husband and the other parties and to make the declaration which her Honour made in those proceedings (as set out in paragraph 5 hereof), were not pressed by the husband upon the hearing of the appeals. Indeed, the husband expressly abandoned any grounds and withdrew any submissions in his summary of argument which challenged Murray J’s jurisdiction to make the declaration which she made in the proceedings between the husband and the other parties. He conceded that, although purportedly dealt with by the trial Judge under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) (de[C]d invalid, insofar as it purported to confer jurisdiction in state matters on federal courts, by the High Court in Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511) these proceedings fell within the Family Court’s “accrued jurisdiction”, conferred by s.31(1)(a) of the Act, as expounded by the High Court in a series of cases commencing with Philip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457.
79. Accordingly, the husband effectively conceded that the trial Judge’s order in those proceedings could be sustained, jurisdictionally, notwithstanding that it purported to be made in the exercise of a jurisdiction since held not to exist: c.f. Friis v Friis & Ors (2000) FLC 93-009 and Wade-Ferrell and Wade-Ferrell and Read [2001] FamCA 138; (2001) FLC 93-069. He therefore invited this Court to deal with both of his appeals on their substantive merits, and to make such orders as would effectively dispose of both sets of proceedings having regard to those merits, as found by us, so as to obviate any necessity for the proceedings between him and the other parties to be re-litigated in another (State) Court.
80. On the hearing of the appeals, Senior Counsel for the other parties similarly contended that the order made by the trial Judge in the proceedings between his clients and the husband was one within the “accrued jurisdiction” of the Court, and therefore supportable as a proper exercise of jurisdiction by her Honour notwithstanding that it was made in purported exercise of a jurisdiction (under the Cross-Vesting legislation) which the Court did not then truly have. He supported that contention with submissions (albeit brief ones, given the absence of any contest on the issue of jurisdiction) in support of this Court’s having an “accrued jurisdiction” and that this was an appropriate case for the exercise of that jurisdiction. He, too, invited this Court to deal with the substantive merits of the husband’s appeal in those proceedings and eschewed any desire on the part of his clients to have those proceedings re-litigated in another court.
81. Counsel for the wife on the appeal adopted a similar stance on the jurisdiction question to that ultimately adopted by the husband and the other parties.
82. Notwithstanding the ultimate agreement of the parties as to the existence of a sound jurisdictional basis for the trial Judge’s orders in the proceedings between the husband and the other parties, it was acknowledged by all that jurisdiction cannot be conferred on the Court by consent of the parties, where none is conferred by the law: Ridley v Whipp (1916) 22 CLR 381 at 386. Accordingly, it is necessary for us to satisfy ourselves that such jurisdiction as the parties contend the trial Judge had to determine those proceedings existed, as a matter of law.
83. At the time of the hearing of this appeal it had not been authoritatively decided by this Court, or by the High Court, that the Family Court of Australia has “accrued jurisdiction”, as has the Federal Court of Australia, according to the decisions of the High Court in Philip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (supra), Fencott & Ors v Muller & Anor (1983) 152 CLR 570, Stack v Coast Securities (No.9) Proprietary Limited and Ors (1983) 154 CLR 261, Smith v Smith (No.3) (1986) 161 CLR 217; FLC 91-732, and Re Wakim; Ex parte McNally & Ors (supra). Conflicting views had been expressed on this issue by various judges of the Family Court, either in first instance judgments or as members of the Full Court. Amongst those judges expressing an affirmative view of the existence of that jurisdiction were Evatt CJ (as a member of the Full Court) in Smith and Smith (No.2) (1985) FLC 91-604; Nygh J (as a member of the Full Court) in McKay and McKay (1984) FLC 91-573; Lindenmayer J (as a single judge) in Ireland and Ireland (1986) FLC 91-731; and Jerrard J (as a single judge) in C and C and C: Accrued Jurisdiction (2001) FLC 93-076. Amongst those who had expressed a negative view as to the existence of “accrued jurisdiction” in this court were Fogarty J (as a member of the Full Court) in Smith and Smith (No.2) (supra) and Strauss J (as a member of the Full Court) in McKay and McKay (supra). Although the Full Court had been asked to decide the issue in Ferrall and McTaggart (trustees for Sapphire Trust) & Ors v Blyton (2000) FLC 93-054, it had found it unnecessary to do so, as had the Full Court in Wade-Ferrell and Wade-Ferrell and Read (supra).
84. However, since the hearing of these appeals, the Full Court (Nicholson CJ, Finn and Strickland JJ) has published its judgment in Warby and Warby [2001] FamCA 1469; (2002) FLC 93-091. In that judgment the Full Court, after an exhaustive review of the relevant decisions of the High Court and of this Court, concluded that the Family Court of Australia does have “accrued jurisdiction” which enables it, in proceedings between the parties to a marriage under s.79 of the Act (which constitute a “matrimonial cause”, within paragraph (ca) of the definition in s.4(1) of the Act) to resolve a justiciable controversy under State law or pursuant to common law or equity between a party to the marriage and a third party which is attached to and not severable or disparate from the matrimonial cause. The Court further held that “the indicia, criteria, factors or considerations that will invoke the exercise of the Court’s accrued jurisdiction” in a given case are:-
“1. what the parties have done;
2. the relationships between or among them;
3.the laws which attach rights or liabilities to their conduct and relationships;
4.whether the claims are part of a single justiciable controversy and in determining that question whether the claims are ‘attached’ and not ‘severable’ or ‘disparate’;
5.whether the claims are non-severable from a matrimonial cause and arise out of a common sub-stratum of facts; and
6.whether the court has the power to grant appropriate remedies in respect of the ‘attached’ claims.”
85. Had there been any issue between the parties in these appeals as to the existence of “accrued jurisdiction” in this Court, we would have felt obliged to either re-list the appeals for further argument, or give the parties an opportunity to make further submissions in writing on the issue, in light of the publication of the Full Court’s judgment in Warby and Warby (supra), since one or other of the parties may have wished to invite the Court to reconsider the correctness of that decision, in accordance with the principles identified in Nguyen v Nguyen (1990) 169 CLR 245; FLC 92-171. However, as no party in these appeals ultimately sought to deny the existence of accrued jurisdiction, an existence affirmed by the decision in Warby, it is unnecessary for us to follow that course. It is also unnecessary for us to do more than to adopt and follow the decision of the Full Court in that case, and thus to hold that the trial Judge had accrued jurisdiction to resolve the controversy between the husband and the other parties provided we are satisfied that it formed part of a “matter” which included the claims of the spouses under s.79 of the Act. In other words, if we are satisfied that the claim of the other parties against the husband for a declaration as to his entitlement in respect of the Dulwich property was “attached” to and not “severable” or “disparate” from the claims of the husband and/or the wife in the s.79 proceedings, and that the claims in the two sets of proceedings arose out of “a common sub-stratum of facts”, then provided the trial Judge had power to grant relief in the form of a declaration, as sought by the other parties, we may safely conclude that her Honour had jurisdiction to make the order which she made in the proceedings between the husband and the other parties.
86. We have already set out briefly in this judgment (and will do so in more detail later) the circumstances surrounding the formation of a contractual relationship between the spouses on the one hand and the other parties on the other in relation to the acquisition by the former, from the latter, of the Dulwich property which was to become the matrimonial home of the former, and in relation to the partial financing of that acquisition by the other parties through the loan agreement. Neither the land contract nor the loan agreement had been completed at the time of the breakdown of the marriage of the spouses, or at the time of the commencement of the s.79 proceedings in this Court. Nor had any clear or unequivocal steps been taken by either the spouses, as purchasers, or the other parties, as vendors, under the land contract, to bring about completion of that agreement, up to the conclusion of the hearing before the trial Judge.
87.In her original Application dated 6 June, 1994, the orders sought by the wife in “final settlement of all claims that either party may have against the other for property settlement or spousal maintenance”, included the following[3]:-
[3] Appeal Book SA76(i) of 1997, p.59
“(1)That the husband do transfer to the wife his equitable interest in the property situated at [ ] Dulwich in the State of South Australia, such that thereafter she is solely entitled to the beneficial interest in the said property.
(2)That the wife pay to the husband such sum at is adjudged fair and equitable by the Court when due consideration is given to:
(a)the wife’s financial contribution at the date the marriage commenced;
(b)the parties [sic.] respective superannuation entitlements;
(c)such other factors as the Court is required to consider under the Family Law Act.”
88. Amongst the facts pleaded by the wife in that Application, in support of her application, were the following[4]:-
[4] Application para.9.7 at Appeal Book SA76(i) of 1997, pp.66-67
“(iv)The parties entered into an agreement with the other parties in July 1993 whereby they purchased a property from the other parties for the sum of $285,000.
(v)The purchase price was contributed by the parties borrowing $135,000 from the Westpac Banking Corporation and interest free vendor finance was provided by the other parties in the sum of $150,000.
(vi)The parties would have been unable to purchase this property without the assistance of the other parties.
(vii)The parties resided in the said property and sometimes had tenants or lodgers in the property throughout the period of their relationship and marriage.
(ix)As a result of the wife’s request that he do so the husband left the matrimonial home in April of this year and the wife continues to reside in the home.
(x)The wife is desirous of retaining the home as part of the property settlement with the husband.”
89. In his Amended Answer and Cross-Application dated 16 March, 1995 the orders sought by the husband “in full and final settlement of all claims that either party may have against the other for property settlement” included the following[5]:-
[5] Appeal Book SA76(i) of 1997, p.83
“1.That the husband do transfer to the wife his equitable interest in the property situated at [ ] Dulwich in the State of South Australia, such that thereafter she is solely entitled to the beneficial interest in the said property.
2.That the husband be released from any liabilities with respect to a debt owing to Westpac Banking Corporation with respect to the said property.
3.That the wife pay to the husband such sum as is adjudged fair and equitable … .”
90. Neither the wife nor the husband had amended those parts of their respective pleadings prior to the commencement of the hearing of the proceedings between them by the trial Judge on 27 November, 1995, nor did either of them formally amend those pleadings thereafter. Thus, at the commencement of the hearing of those proceedings by her Honour, the spouses were both seeking an order that the former transfer to the latter “his equitable interest” in the Dulwich property in exchange for the payment of a sum of money to be determined by the Court. The only issue between them at that point in relation to that property was as to the quantum of that sum of money to be paid to the husband by the wife.
91. However, in the course of the proceedings before the trial Judge it became clear that the wife’s attitude in respect of the Dulwich property had changed from that apparently adopted in her pleading. On the first day of the hearing (27 November, 1995) the wife’s Counsel, Ms Pyke, in the course of her opening of the wife’s case to the trial Judge, first said [6], in response to a question by the trial Judge:-
“Well, the wife would want to – well, the wife would like to make an arrangement to pay out the husband such sum as is due and owing to the husband. But if I can say this, and my friend will correct me if I am misrepresenting what the husband’s position is. The husband’s position is two-fold. One, he alleges that the value to be taken into account for the value of the property is the agreed figure that I have just given your Honour. In essence the husband is saying: look, notwithstanding we haven’t actually exercised our rights under the agreement, I want your Honour to actually say that we have an interest in this property, the value of which is $297,500.”
[6] Transcript of 27.11.95, p.7, at Appeal Book p.T7, l.27
92. However, a little later on the same day, after some further discussion with the trial Judge (in the course of which her Honour had voiced the tentative view that all the spouses might be entitled to in respect of the sale agreement was a return of their deposit of $135,000), the following exchange took place between Counsel for the wife, Ms Pyke, and the trial Judge[7]:-
[7] Transcript of 27.11.95 pp.9-10, at Appeal Book T.9-10.
“MS PYKE: End of story, but they have not done that and of course, putting it really bluntly, my client’s position is that she does not want jointly with the husband to call upon that contract to be executed in the sense of the property being transferred into their joint names and a joint indebtedness to her parents for the $150,000. She does not want to create a legal obligation for herself and the husband by pursuing the term of the agreement.
HER HONOUR: The other parties have not intervened, I notice.
MS PYKE: No, because, I mean, it really is all quite clear. They are the registered proprietors.
HER HONOUR: Yes.
MS PYKE: There has not been any application to join the other parties. It really, from our point of view, is this, that there is an agreement there. We do not want to act upon the agreement and enter into a legal obligation with the husband, whom we are in the process of divorcing, to acquire a property from my [sic.] parents, pay all of the stamp duties and legal fees associated with that - - -
249. In relation to Appeal SA76(i) of 1997 against the trial Judge’s orders in the proceedings between the spouses, it follows from our conclusion as to the outcome of the other appeal that the trial Judge erred in holding, in those proceedings, that the spouses had no equitable interest in the Dulwich property, and that their only “property” arising from their dealings with the other parties was a chose in action for the return of their deposit, less the balance outstanding under the Westpac loan secured by second mortgage over the property, to which her Honour ultimately assigned a value of $66,000. The integrity of her Honour’s ultimate orders in those proceedings is undermined by that fundamental error in her identification and evaluation of the property of the spouses, and the husband’s appeal against her Honour’s orders in those proceedings must therefore succeed.
250. However, the trial Judge made no finding as to the value of the spouses’ equitable interest in the Dulwich property in the event that she was wrong in concluding that they had no such interest. Although the husband had attempted to adduce some evidence as to the value of that interest (in the form of an affidavit by an actuary, Mr Brett, as to the present value of the loan agreement), it was effectively decided by her Honour, in the course of the hearing before her (and apparently accepted by all parties) that she would proceed to determine the issue of whether the spouses had an equitable interest in the property as a preliminary matter, and that if she concluded that they did, then there would be some further hearing for the purpose of determining the value of that interest, before her Honour could determine the family law proceedings between the spouses.96 As her Honour ultimately concluded that the spouses had no such interest, it became unnecessary for her to embark upon the second instalment of the hearing in order for her to determine the value of such an interest, if it existed. The result of that, however, is that not only is there no finding by her Honour as to the value of that interest but also there is no evidence from which this Court could reach a conclusion about that value.
96 See transcript of 5.11.96 pp.8-11 at Appeal Book pp.T283-286
251. In any event, even if there were evidence from which this Court might make a finding as to the value of the spouses’ equitable interest in the property at the date of the hearing before the trial Judge, it is almost inevitable that such evidence would be very much out of date now, some five years later, and it would be at least necessary for this Court to provide an opportunity for the parties to adduce up-to-date evidence of value before it could attempt to re-exercise the discretion of the trial Judge in the s.79 proceedings.
252. It follows that the only course available to us in respect of the Appeal SA76(i) of 1997 is to set aside the trial Judge’s orders and remit the proceedings between the spouses for re-hearing by a Judge other than her Honour, however regrettable that course may be in the light of the unfortunate history of this case. As these proceedings will thus remain pending, our orders will make it clear that the limited leave granted to the other parties to intervene in these proceedings, as foreshadowed in paragraph 248 hereof, is without prejudice to their rights to seek a more general leave to intervene in those proceedings for such other purposes as they may be advised, or to the right of the husband or the wife to seek their joinder as respondents to these proceedings.
253. Having reached that conclusion in relation to the grounds of appeal with which we have dealt, it may not be strictly necessary for us to proceed to consider the remaining grounds in either appeal. However, it is highly desirable that we do so, since it is possible that the other parties may seek a review by the High Court of our decision in Appeal SA76(ii) of 1997. If that were to occur, and the High Court were to hold that we were wrong in concluding that the spouses have an equitable interest in the Dulwich property, in the absence of a determination by us of the other issues raised by the other grounds in both appeals, the High Court would be obliged to remit the appeals to us for such a determination, and by that time it may not be possible to re-constitute this Court as presently constituted. Accordingly, although it will further delay the delivery of this judgment and may prove to be academic, we propose to proceed to consider and express our conclusions upon the remaining [reportable] ground[] of appeal in both appeals, before making the orders which are foreshadowed above.
[Paragraphs 254 to 258 omitted]
The legal effect of a caveat (Appeal SA76(i) ground 38, and Appeal SA76(ii) ground 9)
9.[38] The trial judge erred in going behind the certificate of title, and not recognizing the interest of the husband noted on the caveat.
259. The husband’s argument in support of this ground is contained in his Supplementary Summary of Argument98. This is essentially a repetition of an argument which was addressed by the husband to the trial Judge in his written submissions to her99 and the essence of his complaint would seem to be that her Honour failed to deal with the point. The husband developed this argument a little further in the course of his oral submissions at the appeal hearing.
98 Supplementary Summary of Argument of Appellant filed 7 May, 2001, p.2
99 Submissions in answer to other parties’ application for declaration (undated), pp.7-8 at Appeal Book SA76(ii) pp.132-3
260. The argument arises from the fact that on 7 April, 1994, the husband lodged, in the Land Titles Registration Office of South Australia, a caveat, under s.191 of the Real Property Act 1886 (SA) (“the Real Property Act”), claiming an estate or interest in the Dulwich property as purchaser under the land contract, and a memorandum of the date and hour of receipt of that caveat was entered by the Registrar-General on the Certificate of Title of the land in the Register Book kept pursuant to that Act. In essence, the husband’s argument is that the registration of his caveat claiming an interest in the land has the effect, under the provisions of the Real Property Act, of making him the registered proprietor of that interest, thus creating in him an interest in the land.
261. This is a most novel argument, and one which, as far as our researches have disclosed, has never been advanced, in relation to any Torrens system of land title registration in operation in Australia, or canvassed in any reported judgment of any Court in Australia charged with the interpretation and application of a piece of legislation establishing and regulating such a system. Nor does the argument find any clear indirect support in any reported decision of any Court to which we have been referred, or which our researches have been able to discover, in which the relevant provisions of the Real Property Act have been considered. However, the mere novelty of an argument does not render it untenable or fallacious, and whether the relevant provisions of the Real Property Act have the effect contended for by the husband is essentially a question of construction of that Act. But the very novelty of the notion that, merely by claiming an interest in land and lodging and obtaining the registration of a caveat to protect that claimed interest against defeasance by the registration of subsequent dealings affecting the land, the claimant obtains, temporarily, the very interest which he claims, is such as to require very close scrutiny of the provisions of the legislation relied upon to support the notion and the rejection of it unless the clear words of the statute demand the adoption of that interpretation.
262. The provisions of the Real Property Act relied upon by the husband to support this argument are ss.191(II), 68 and 69 coupled with the definition of “instrument” in s.3. It is convenient to set out these, and some other arguably relevant provisions of that Act, before further examining the submissions of the husband based thereon. The relevant provisions seem to us to be the following:
3. In the construction and for the purposes of this Act, and in all instruments made or purporting to be made thereunder, the following terms shall, so far as not inconsistent with the context or subject, and except when such context or subject or the other provisions hereof require a different construction, have the respective meanings hereinafter assigned to them, that is to say –
…
“caveator” shall mean any person lodging a caveat;
“certificate” shall mean a certificate of title issued under any of the Real Property Acts … and shall extend to and include all plans and entries thereon;
…
“instrument” shall mean and include every document capable of registration under the provisions of any of the Real Property Acts, or in respect of which any entry is by any of the Real Property Acts directed, required, or permitted to be made in the Register Book;
“instrument of title” shall mean and include every instrument evidencing or relating to the title to any land under the provisions of any of the Real Property Acts;
“proprietor” shall mean any person seized or possessed of, or entitled to land;
“registered proprietor” shall mean any person appearing by the Register Book or by any registered instrument of title to be the proprietor of any land.
…
48. Every certificate shall be in duplicate, and the Registrar-General shall file in the Register Book one part of every certificate, hereinafter called the original, and shall deliver the other, hereinafter called the duplicate, to the registered proprietor of the land.
49. Each original certificate shall constitute a separate folium of the Register Book, and the Registrar-General shall record thereon distinctly all memorials affecting the land included in each certificate.
…
51. Every memorial entered in the Register Book shall be sealed with the seal of the Registrar-General, and shall state the nature of the instrument to which it relates and such other particulars as the Registrar-General directs, and shall refer by number or symbol to such instrument.
…
56A. A certificate of title will be taken to be registered upon the Registrar-General allotting a volume and folio number in respect of the certificate of title.
57. Every instrument shall, when registered, be deemed part of the Register Book, and shall have the effect of and be deemed and taken to be a deed duly executed by the parties who have signed the same.
…
67. No instrument shall be effectual to pass any land or to render any land liable as security for the payment of any money, but upon the registration of any instrument in manner herein prescribed, the estate or interest specified in such instrument shall pass, or, as the case may be, the land shall become liable as security in manner and subject to the covenants, conditions, and contingencies set forth and specified in such instrument or by this Act de[C]d to be implied in instruments of a like nature.
68. The person named in or appearing by any certificate or other registered instrument as seized of or taking any estate or interest in land shall be the registered proprietor thereof.
69. The title of every registered proprietor of land shall, subject to such encumbrances, liens, estates, or interests as may be notified on the original certificate of such land, be absolute and indefeasible, subject only to the following qualifications.
…
191. Any settlor of land …, or any person claiming to be interested at law or in equity, whether under any agreement, … or otherwise howsoever in any land, may lodge a caveat with the Registrar-General forbidding the registration of any dealing with such land, either absolutely or unless such dealing shall be expressed to be subject to the claim of the caveator, or to any conditions conformable to law expressed therein;
II. Upon the receipt of a caveat the Registrar-General shall make a memorandum thereon of the date and hour of the receipt thereof, and shall enter a memorandum thereof in the Register Book … :
III. So long as any caveat shall remain in force the Registrar-General shall not, contrary to the requirements thereof, register any dealing with the land in respect of which such caveat shall have been lodged: …
263. The husband submitted that his caveat, lodged on 7 April, 1994 (a memorandum in respect of which has been entered by the Registrar-General in the Register Book on the original certificate of title relating to the property pursuant to placitum II of s.191 of the Real Property Act) is a “registered instrument”, within the meaning of s.68 of that Act, and that he is therefore, by force of that section the “registered proprietor” of the interest referred to in his caveat. Further, he submitted, by virtue of s.69 of that Act, that interest is “absolute and indefeasible”, whilst the caveat remains registered on the certificate of title.
264. We reject those submissions. It would certainly be an absurd result if the mere lodgment of a caveat claiming an interest in land adverse to the title of the registered proprietor of an estate in fee simple in that land (which the other parties are of this land, as appears by the photo-copy of the relevant Certificate of Title which is part of Annexure “H” to the affidavit of the wife sworn on 9 May, 1995100), and the notation on the Certificate of Title of the fact and time of that lodgment, could have the effect of creating the very interest which the caveat claims. In our view, the words of the relevant provisions of the Real Property Act do not demand the adoption of a construction which would produce that absurd result.
100 Appeal Book SA76(i) of 1997 pp.143-4
265. In the first place, the clear purpose of s.191 of the Real Property Act, to be gleaned from the portions of the section quoted above (and subsequent parts which we have not felt it necessary to quote) is to provide a process whereby a person claiming a legal or equitable interest in real property, which interest is not itself registered on the Certificate of Title in respect of that land, may prevent the registration of further dealings with that land (either absolutely or permissibly – i.e. only subject to the interest claimed by the caveator) until such time as the interest claimed is either admitted by the registered proprietor (and registered by the production of some registrable instrument conveying or creating the interest) or established by an order or declaration of a Court of competent jurisdiction.
266. Next, although a caveat lodged by a caveator may be an “instrument”, within the definition of that term contained in s.3 of the Real Property Act (being arguably a document “in respect of which [an] entry is [by s.191, II of the Act] required to be made in the Register Book”) we are of the view that it never becomes (and in this case has not become) a “registered instrument”, within the meaning of s.68 of that Act. In our view, s.191, placitum II does not provide for the registration of a caveat. It provides for the entry in the Register Book, not of a memorandum of the caveat, but of a memorandum of “the date and hour of receipt” of the caveat. In our view, the word “thereof” where second appearing in that placitum of s.191 refers back to the memorandum of the date and hour of the receipt of the caveat (which the section requires the Registrar-General to “make” on the caveat), and not to the caveat itself. This interpretation is consistent with the form of the “memorandum” entered in the Register Book by the Registrar-General in this case, which reads:
“CAVEAT [ ] LODGED BY [G] Finlayson
OVER THE WITHIN LAND. PRODUCED 7.4 1994 AT 15:55.”
267. That interpretation is also consistent with the concept of a caveat as a notice to the world that there is outstanding a claim to an interest in the land, to which the Certificate of Title relates, which is not disclosed by an inspection of that Certificate, rather than as an instrument which is itself intended to create such an interest.
268. Furthermore, the form of the notation on the Certificate as to the lodgment of the caveat may be contrasted with the form of the notations thereon recording other “memorials” affecting the land, as required by s.49 of the Real Property Act. In order to understand these notations, it should first be noted that the Certificate of Title, on its face, records that a named person “is the proprietor of an estate in fee simple subject nevertheless to such encumbrances liens and interests as are notified by memorial underwritten or endorsed hereon in” the land whose Real Property description is then set out [emphasis added]. A series of notations of “memorials affecting the land” then appears, beginning on the face of the Certificate and continuing on the back of it.
269. The first such notation records the “TRANSFER [with a dealing number] FROM [the person named on the face of the Certificate as the proprietor of an estate in fee simple in the land] TO [two other named persons] OF AN ESTATE IN FEE SIMPLE IN THE WITHIN LAND [which was] PRODUCED FOR REGISTRATION [on a stated date at a stated time]”.
270. Later notations of transfers, leases and mortgages affecting the land are in a more abbreviated form, but all transfer notations include the words “TRANSFER TO [a named person or persons] OF THE WITHIN LAND”, with the date and time of production; the only notation of a lease contains the words “LEASE TO [a named company] of portion OF THE WITHIN" land; all mortgage notations include the words “MORTGAGE TO [a named person or corporation]”; and all release of mortgage notations include the words “THE WITHIN LAND IS DISCHARGED FROM” a particular mortgage identified by its dealing number.
271. The words thus used in each of those notations are apt, albeit in a brief way, to record the fact of either the transfer of an estate in fee simple in the land, the creation of a lease over part of it, the mortgage of the land or the release of the land from a mortgage. By contrast, the wording of the notation in respect of the caveat is, in conformity with placitum II of s.191 of the Real Property Act, and the concept of a caveat to which we have referred above, apt only to record the fact that a caveat was lodged and the date and time of its lodgment.
272. Reference to the form and content of the caveat itself (a photocopy of which was Exhibit H10 in the proceedings before the trial Judge101) supports that interpretation of s.191 which we have adopted, above. After requiring to be set out the “CERTIFICATE(S) OF TITLE BEING CAVEATED” and the name and address of both the “CAVEATOR – PERSON LODGING CAVEAT” and the “CAVEATEE – REGISTERED PROPRIETOR”, the form has a section containing the words: THE CAVEATOR CLAIMING”, followed by a blank space, beside which is the instruction “(See Note 4)”, and then the words: “FORBIDS THE REGISTRATION OF ANY DEALING WITH THE ESTATE OR INTEREST OF THE ABOVENAMED CAVEATEE IN THE SAID LAND”, beside which is the instruction “(See Note 5)”. Then, after requiring the insertion of an “ADDRESS FOR SERVICE OF NOTICES AND PROCEEDINGS”, and a date, the document requires the signature of the Caveator, or his/her agent, followed by a declaration to be completed by the caveator “THAT THE ALLEGATIONS IN THE ABOVE CAVEAT ARE TRUE IN SUBSTANCE AND IN FACT”.
101 See Appeal Book SA76(ii) of 1997 pp.122-122A
273. The “Note 4” and “Note 5” referred to in the instructions referred to above appear on the back of the Caveat document, and are in the following terms:-
“4.State the nature of the estate or interest claimed and the grounds on which the claim is made. State also the quantum of the interest claimed, e.g. whole, moiety etc.
5.If the caveat is required to be permissive add – ‘unless such dealing is made subject to my claim’.”
274. In the space on the caveat form following the words: “THE CAVEATOR CLAIMING”, and to which “Note 4” applies, the husband has inserted, firstly, adjacent to those words, the words “AS PURCHASER”, and then, below that, the following words:-
“That I am a party to an agreement dated 9th July 1993 to purchase the property in fee simple, such transfer not yet effected.
Further that I have been occupying the said premises and maintaining the said premises since that date.”
275. Even if our view, expressed above, that the caveat is not a “registered instrument” within the meaning of s.68 of the Real Property Act, is incorrect, we are also of the view that the husband does not “appear” by that caveat “as seized of or taking any estate or interest in the land”, within the meaning of that section. Rather, he appears by that instrument as “claiming” an estate or interest in the land as purchaser under an as yet executory contract. Moreover, the caveat does not purport to “pass”, in any “manner” therein “specified”, the estate or interest in the land which it claims, so as to have, by its registration, the effect specified by s.67 of that Act.
276. Additionally to everything stated above, the estate or interest in the land claimed by the husband in his caveat is clearly an equitable, not a legal interest, and the Real Property Act simply does not permit the registration of equitable estates or interests on the Certificate of Title: Coles KMA Ltd v Sword Nominees Pty Ltd & Ors (1986) 44 SASR 120 at 121, per Jacobs J. What it does, as Jacobs J also said in that case, at the reference given, is to “provide a machinery or procedure for the protection of equitable estates or interests, namely by the registration of a caveat” [emphasis added].
277. In that case, the issue for determination by the Full Court of the Supreme Court of South Australia was the effect of the registration, under the Real Property Act, of a transfer of land to purchasers expressed to be “subject to” the claim of the plaintiff contained in a “permissive” caveat which it had lodged with the Land Titles Registration Office, and a memorandum of which had been entered by the Registrar-General on the Certificate of Title to the subject land, prior to the lodgment and registration of the transfer to the defendants. The caveat claimed an interest by the plaintiff under an unregistered lease of the land from the vendor, a claim of which the purchasers had notice, not only by way of the memorandum of the caveat appearing on the Certificate of Title, but also independently of that memorandum. The caveat prohibited the registration of any dealings with the vendor’s interest in the land unless expressed to be subject to the plaintiff’s claim which, as we have already noted, the transfer to the defendants was.
278. The Full Court of South Australia, upon a Special Case referred to it by a Master of the Court, held that the effect of the registration of the transfer was to preserve, as against the purchasers, the plaintiff’s claim as lessee under the unregistered lease from the vendor. In so holding, Jacobs J, after making the statements to which we have already referred in paragraph 276 hereof, and noting that s.119 of the Real Property Act speaks of “protection by caveat” of certain rights, said this102:-
102 (1986) 44 SASR 120 at 121-2
“The caveat itself affords protection by enabling any person claiming ‘to be interested at law or in equity … under an unregistered instrument’ to forbid the registration of any dealing in the land ‘either absolutely or unless such dealings shall be expressed to be subject to the claim of the caveator’ … If the argument for the defendant [sic.] were to prevail, a permissive caveat would be quite meaningless and futile; … It is sufficient to say that the only title of the transferee ‘duly registered’ under the Act was a title subject to the claim of the caveator, for unless it was so subject, it could not have been lawfully registered at all.”
279. In the same case, Bollen J, speaking of the permissive caveat lodged by the plaintiff and “noted on the original certificate pursuant to s.191(ii) [sic.]”, said this103:-
103 (1986) 44 SASR 120 at 127
“It is something notified on the original certificate. But it is not an encumbrance lien estate or interest nor a memorial of any of those things.”
280. That case is clearly distinguishable from this case, since it concerned the effect of a “permissive” caveat and the registration of a transfer “subject to” the claim of the caveatee made in such a caveat. However, the dicta quoted above offer support for our conclusion that the lodgment and registration of a caveat (even if, contrary to our opinion expressed above, the entry on the certificate of title of a memorandum of the date and time of its receipt constitutes “registration” of the caveat) does not create the estate or interest claimed in it. There is nothing in any of the judgments in that case to support the husband’s contention to the contrary.
281. For all of the above reasons, this ground of appeal is rejected.
[Paragraphs 282-470 omitted]
SUMMARY OF CONCLUSIONS
471. In summary, we have concluded that Appeal No.SA76(i) of 1997 should be upheld, on grounds 1.1, 2.1, 2.2, 20, 22, 25, 30 and 34 of the Amended Notice of Appeal filed on 10 May, 2001, and that Appeal No.SA76(ii) of 1997 should be upheld on grounds 3 and 4 of the Amended Notice of Appeal filed on the same date. Further, for the reasons explained in paragraphs 247 to 251 hereof, we have concluded that the orders of the trial Judge in the proceedings between the husband and the other parties should be set aside, and an order made in lieu thereof for the dismissal of the other parties’ application, after granting them leave to intervene in the proceedings between the spouses for the limited purpose of making that application, whilst the proceedings between the spouses should be remitted for rehearing by a judge other than the trial Judge.
COSTS
472. At the conclusion of the appeal hearing we invited and received submissions from the parties on the costs of the appeal. Those submissions were presented on the alternative hypotheses that the appeals succeeded or failed. As the appeals have succeeded, we need consider only the submissions made on that hypothesis.
473. The husband seeks an order for costs against the other parties in the sum of $3,500, such sum being to cover the costs of his obtaining the transcript, preparing the appeal books and obtaining some legal advice. He sought no order for costs against the wife, having no knowledge of her current financial circumstances. Senior Counsel for the other parties, whilst opposing an order for costs against his clients, had “no complaint” about the quantum of the order sought by the husband215.
215 Appeal Transcript of 15.5.01 p.92, l.16
474. Senior Counsel for the other parties also sought, irrespective of the outcome of the appeals, an order for costs against the husband “for costs thrown away, because of the changed position taken on the jurisdiction point”216.
216 Appeal Transcript of 15.5.01 p.92, l.25
475. Senior Counsel for the other parties made no substantive submissions against a costs order in the husband’s favour in the event of the appeals being successful, and it appears to us that there are circumstances which justify the making of such an order in this case. Of the matters referred to in s.117(2A) of the Act, those referred to in paragraphs (a) (the financial circumstances of each of the parties) and (e) (whether any party to the proceedings has been wholly unsuccessful) are most relevant and significant in leading us to that conclusion. We therefore propose to accede to the husband’s application.
476. As for the application of the other parties referred to in paragraph 474 hereof, we are not satisfied that there are circumstances justifying the making of such an order. Again, a matter particularly relevant in leading us to that conclusion is the financial circumstances of the parties which, as best we can judge from the appeal records, significantly favour the other parties over the husband. Moreover, we think that although some of the other parties’ costs may have been thrown away by the husband’s late decision to abandon his grounds challenging the Court’s jurisdiction in the proceedings between him and the other parties, the overall costs of the appeals would have been reduced, rather than increased, by that abandonment, and even if the husband had pursued these grounds and lost on them, there is no certainty that he would have been ordered to pay the other parties’ costs of that issue, given his success on the merits of the appeal. That application will therefore be rejected.
477. Counsel for the wife sought an order granting his client a cost certificate, under s.6 of the Federal Proceedings (Costs) Act 1981 (“the Costs Act”) in respect of her costs of the appeal to which she was a party. Similarly, Senior Counsel for the other parties sought an order granting his clients a costs certificate under that section, both in respect of their own costs of the appeal to which they were a party (pursuant to sub-s.(3)(a) of that section) and in respect of any costs they may be ordered to pay to the appellant husband (pursuant to sub-s.3(b) of that section). The husband did not make any application for a costs certificate, and under s 9 of the Costs Act, in relation to his costs of appeal No. SA76(i) of 1997.
478. As regards the application of the wife, we are of the view that she should receive a certificate as sought. The appeal in the family law proceedings has certainly succeeded on a question of law. The wife appears to be in what could best be described as only modest financial circumstances. The appeals were quite complex, and the hearing extended over the best part of two full sitting days. The maximum amount payable under such a certificate ($4,000) would doubtless meet only a fraction of her actual costs of the appeal, and she was legally represented throughout the proceedings before the trial Judge. Those substantial costs incurred by her will be effectively thrown away.
479. As regards the application of the other parties, we are minded to grant them a certificate in respect of their own costs of the appeal (under s.6(3)(a) of the Costs Act) and in respect of the costs which they will be required to pay to the husband (under s,6(2)(b) of that Act. From what we are able to glean from the Appeal Books, the other parties are in significantly better financial circumstances than either of the spouses. Apart from that, all that we have said in the immediately preceding paragraph in relation to the wife applies to them, and the appeal to which they were parties also succeeded on a question of law. In the exercise of our discretion, we propose to grant them such a certificate.
ORDERS
480. For the foregoing reasons, the orders of the Court are as follows:-
1. Appeal No.SA76(ii) of 1997 is allowed.
2.The declaration, and orders 1 to 3 of the orders of The Honourable Justice Murray made herein on 12 November, 1997, are set aside.
3.In lieu of that declaration and orders, it is ordered:
(a) [G] Gillam and [H]Gillam (”the other parties”) are granted leave, nunc pro tunc, to intervene in the proceedings for property settlement between [G] Finlayson (“the husband”) and [C] Finlayson (“the wife”) for the limited purpose of seeking a declaration that the husband has no legal or equitable interest in the property at Dulwich, in the State of South Australia.
(b) The said application of the other parties is dismissed.
4.Appeal No.SA76(i) of 1997 is allowed.
5.Orders 4 to 9 of the orders of The Hon Justice Murray made herein on 12 November, 1997, are set aside.
6.The proceedings for property settlement and spousal maintenance between the spouses are remitted for rehearing by a single Judge of the Adelaide Registry of this Court, other than The Hon Justice Murray.
7.The grant of leave to the other parties, by order 3(a) hereof, to intervene in the proceedings for property settlement between the spouses, is without prejudice to the other parties’ rights to seek a more general leave to intervene in those proceedings for such other purposes as they may be advised, or to the right of the husband or the wife to seek or cause the joinder of the other parties as respondents to those proceedings.
8.The other parties are to pay to the husband his costs of and incidental to appeal No. SA76(ii) of 1997, fixed in the sum of $3,500.
9.The Court grants to the respondent wife a costs certificate, pursuant to s.6 of the Federal Proceedings (Costs) Act 1981 (“the Costs Act”), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the wife in respect of the costs incurred by her in relation to appeal No. SA 76(i) of 1997.
10.The Court grants to the respondent other parties a costs certificate, pursuant to s.6 of the Costs Act, being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the other parties in respect of the costs incurred by them in relation to appeal No. SA76(ii) of 1997, and in relation to the costs incurred by the appellant husband that are required to be paid by the other parties in pursuance of order 8 hereof.
I certify that the preceding 478 paragraphs are a true copy of the reasons for judgment delivered by this
Honourable Full Court.
Sgnd: G. MitchellAssociate
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