Grainger v Bloomfield & Anor - [2015] FamCAFC 221

FAMILY COURT OF AUSTRALIA

GRAINGER & BLOOMFIELD AND ANOR

[2015] FamCAFC 221

FAMILY LAW – APPEAL – whether where a party to a financial agreement has become bankrupt, a creditor of that party retains standing as a creditor to apply to set aside the financial agreement under s 90K(1)(aa) of the Family Law Act 1975 (Cth) or to apply for ancillary orders under s 90K(3) – where the Full Court held that the creditor in such circumstances retained such standing – where the Full Court was asked to determine the extent of the preservation and adjustment powers under s 90K(3) of the Family Law Act 1975 (Cth) and the Full Court found that the primary judge was correct in refusing, in the context of a summary dismissal application, to determine the scope of the powers in s 90K(3) of the Family Law Act 1975 (Cth) – appeal dismissed – costs orders made.

FAMILY LAW – CROSS APPEAL – where the cross appellant contended that once the court’s jurisdiction has been invoked by a creditor pursuant to s 90K(1)(aa), the creditor was entitled to rely on other grounds under s 90K(1) to set aside the financial agreement – where the Full Court found that the primary judge did not err in concluding that the creditor was only entitled to rely on the ground in s 90K(1)(aa) as the basis of the application to set aside the financial agreement – cross appeal dismissed – costs orders made.

Acts Interpretation Act 1901 (Cth)
Bankruptcy Act 1966 (Cth)
Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth)
Family Law Act 1975 (Cth)
Family Law Amendment (De Facto Financial Matters and Other Measures Act) 2008 (Cth)
Family Law Amendment Act 2003 (Cth)
Family Law Amendment Act 2005 (Cth)
Federal Circuit Court of Australia Act 1999 (Cth)

Federal Court of Australia Act 1976 (Cth)

Revised Explanatory Memorandum Family Law Amendment Bill 2005 (Cth)

Supplementary Explanatory Memorandum to the Family Law Amendment Bill 2003(Cth)

Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589
Fraser v Deputy Commissioner of Taxation (1996) 69 FCR 99
Griffiths v Falck and Ors (2008) 220 FLR 278
Re Chemaisse; Federal Commissioner of Taxation (Intervener) (1990) FLC 92-133
Reamy & Milne (2012) 47 Fam LR 470
Spencer v Commonwealth (2010) 241 CLR 118
Trustee for the Bankrupt Estate of N Lasic v Lasic (2009) 41 Fam LR 369
Zaravinos v Houvardas (2004) 32 Fam LR 490

APPELLANT AND CROSS RESPONDENT:

Mr Grainger

RESPONDENT AND CROSS APPELLANT:

Ms Bloomfield

SECOND RESPONDENT AND SECOND

CROSS RESPONDENT:

Bankrupt Estate of Mrs Grainger

FILE NUMBER:

BRC

2014

APPEAL NUMBER:

2014

DATE DELIVERED:

18 November 2015

PLACE DELIVERED:

Canberra

PLACE HEARD:

Brisbane

JUDGMENT OF:

Finn, Strickland & Hogan JJ

HEARING DATE:

17 February 2015

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

24 September 2014

LOWER COURT MNC:

[2014] FCCA 2074

REPRESENTATION

COUNSEL FOR THE APPELLANT AND

CROSS RESPONDENT:

Mr Walker SC with Dr Greinke

SOLICITOR FOR THE APPELLANT AND

CROSS RESPODENT:

Morgan Conley Solicitors

COUNSEL FOR THE RESPONDENT

AND CROSS APPELLANT:

Mr Jones

SOLICITOR FOR THE RESPONDENT

AND CROSS RESPONDENT:

Tucker Cowen Solicitors

COUNSEL FOR THE SECOND

RESPONDENT AND SECOND

CROSS RESPONDENT:

No appearance

SOLICITOR FOR THE SECOND

RESPONDENT AND

SECOND CROSS RESPONDENT:

No appearance

Orders

There be leave to appeal and to cross appeal.
The appeal be dismissed.
The cross appeal be dismissed.
The appellant pay the respondent’s costs of and incidental to the appeal as agreed or assessed.
The cross appellant pay the appellant’s costs of and incidental to the

cross appeal as agreed or assessed.

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 57 of 2014
File Number: BRC 89 of 2014

Mr Grainger

Appellant and Cross-respondent

And

Ms Bloomfield

Respondent and Cross-appellant

And

Bankrupt Estate of Mrs Grainger

Second respondent and second cross-respondent

REASONS FOR JUDGMENT

Introduction and background

Mrs Grainger purchased an unencumbered property at E in Queensland in 2007 with funds provided by her husband, Mr Grainger. From 2008

Mrs Grainger borrowed amounts totalling $2.6 million from a bank. The loan was secured by a mortgage over the E property.
As a result of proceedings in the Queensland Supreme Court between

Mrs Grainger and a Ms Bloomfield (arising out of business arrangements between them), Mrs Grainger became a judgment debtor to Ms Bloomfield in the sum of $2,100,000 in late 2011. On or about 14 October 2012 a bankruptcy notice was served on Mrs Grainger in respect of that judgment debt.
On 1 November 2012 Mr and Mrs Grainger entered into a financial
agreement under s 90C (“Financial agreements during marriage”) of the
Family Law Act 1975 (Cth) (“the Family Law Act”). The effect of the agreement was that Mrs Grainger transferred her interest in the E property to Mr Grainger subject to the mortgage. Mr Grainger was to indemnify Mrs Grainger in respect of the mortgage.
On 28 November 2012 Ms Bloomfield filed a creditor’s petition in the
Federal Circuit Court which was served on Mrs Grainger on or about
12 December 2012.
Mrs Grainger became a bankrupt on a debtor’s petition on 7 January 2013. On a date prior to 4 February 2013, Ms Bloomfield lodged a proof of debt in respect of her judgment debt with Mrs Grainger’s trustee in bankruptcy.
On 7 January 2014 Ms Bloomfield filed an initiating application in the
Federal Circuit Court naming Mr Grainger and Mrs Grainger as respondents and in which she sought orders under certain subsections of s 90K (which will later be set out) of the Family Law Act to the effect that:
·under s 90K(1)(aa)(i) the financial agreement between Mr and Mrs Grainger be set aside;
·under s 90K(3) Mr Grainger transfer the E property (free of the mortgage) to the bankrupt estate of Mrs Grainger, or alternatively pay to that estate a sum equal to the market value of the property as at the date of transfer.
Ms Bloomfield also sought declarations to the effect that:
·pursuant to s 90G of the Family Law Act the financial agreement was not binding;
·Mr Grainger was liable to exonerate Mrs Grainger’s estate “in respect of any mortgage, encumbrance, lien or other charge or liability secured over or connected to the [E property]” (although the claim for this declaration appears to have subsequently been abandoned in correspondence in April 2014 between the solicitors for Ms Bloomfield and for Mr Grainger).
On 1 May 2014 Mr Grainger filed an application in a case seeking the striking out of all, or parts, of the statement of claim (which Ms Bloomfield had filed in support of her initiating application), or alternatively that the proceedings be dismissed (in whole or in part).
On 24 September 2014 Judge Cassidy of the Federal Circuit Court, apparently exercising the summary judgment power in s 17A in the Federal Circuit Court of Australia Act 1999 (Cth), made orders striking out certain paragraphs of the statement of claim (being those in support of the claim for the declaration that the financial agreement was not binding pursuant to s 90G of the
Family Law Act) and also striking out the paragraph of the initiating application in which that declaration was sought.
Otherwise, Mr Grainger’s application in a case was dismissed. Thus,
Ms Bloomfield’s initiating application to the extent that it sought orders under
s 90K(1)(aa) and s 90K(3) remained on foot.
Judge Cassidy also provided for the matter to be transferred to the
Family Court in the absence of any opposition from the parties.
Mr Grainger has now sought leave to appeal her Honour’s order (Order 3) whereby the balance of his application in a case was dismissed, and Ms Bloomfield has sought leave to cross appeal her Honour’s orders (Orders 1 and 2) whereby the paragraphs of the statement of claim directed to the claim for a declaration that the financial agreement was not binding pursuant to s 90G of the Family Law Act, and also the paragraph of the initiating application in which that declaration was sought, were struck out.
These reasons for judgment are concerned with those applications for leave to appeal and to cross appeal, and given that we propose to grant such leave, with the appeal and the cross appeal.
It needs to be explained at the outset that although Mrs Grainger was named as a respondent to Ms Bloomfield’s initiating application, and her estate was named as the “other party” in Mr Grainger’s application in a case, neither
Mrs Grainger, or perhaps more importantly, her trustee in bankruptcy have taken any part in the proceedings before Judge Cassidy or in the appellate proceedings before this court.

Leave to appeal and to cross appeal

Both the appellant, Mr Grainger, and the respondent/cross appellant,
Ms Bloomfield, agree that leave to appeal and to cross appeal should be granted because of the matters of general importance which arise in this case, and also because of the need for such certainty as to the future of the proceedings as can, at this stage, be provided to the parties.
For similar reasons we agree that leave should be granted to appeal and to
cross appeal, and will therefore grant such leave.

The issues raised by the appeal and the cross appeal

In the written submissions on behalf of the appellant, the following three questions are said to be raised by the appeal and the cross appeal
(emphasis added):
Q1Where a party to a financial agreement has become bankrupt, does a creditor of the bankrupt have standing to apply to set aside a financial agreement or seek relief under s 90K(3)?
[Notice of Appeal – grounds 1, 2 and 3: …]
Q2Does the power in s 90K(3) to make orders adjusting the rights of persons extend to adjustments other than for the purpose of substantially restoring the position existing before the financial agreement? [Notice of Appeal – grounds 4, 5 and 6: …]
Q3In seeking to set aside a financial agreement under s 90K may a creditor rely on any grounds other than the ground specified in s 90K(1)(aa)? [Notice of Cross Appeal – grounds 1 and 2: …]
The same three questions were provided to the primary judge in written submissions to her from the appellant (as first respondent before her), and according to the appellant’s written submissions (at [12]) to us, were answered:
Q1 as yes; Q3 as no; and [her Honour] refused to determine Q2.
In summarising the appellant’s case before us, his counsel stated in his written outline:
13. If the answer to Q1 is no, then the appeal should be allowed and the proceeding should be dismissed as incompetent.
14. If the answer to Q2 is no, then paragraphs 3, 4 and 5 of the Initiating Application ought be struck out along with paragraphs 9, 10, 11, 12, 13, 14, 18 , 19, 47, 48 and 49 of the Statement of Claim. The question as to whether the proceeding should be dismissed for frivolity should be remitted to the Family Court.
15. If the answer to Q3 is no, then the cross-appeal should be dismissed.
(Footnote omitted)
In the respondent/cross appellant’s written submissions to us, the three questions said to arise on the appeal and cross appeal while similar in substance were slightly differently phrased, and thus we will set them out also:
Q1Whether the reference to a “creditor” at section 4A of the
Family Law Act 1974 [sic] (“FLA”), being a person entitled to commence a third party proceeding, means a “creditor” in the broad or ordinary meaning of that word or whether it is limited to a creditor of a party to a financial agreement only before the making of a sequestration order against that party;
Q2The scope of the power at section 90K(3) of the FLA to make orders for the purpose of preserving or adjusting the rights of persons, in particular whether that power is restricted by analogous common law or equitable principles to restoring the parties to particular legal relationships existing at the time of the financial agreement;
Q3 Whether, once jurisdiction for a third party proceeding is found to have been established by a claim brought under section 90K(1)(aa) of the FLA, the Federal Circuit Court may, in exercising their accrued jurisdiction, in order to determine the whole of the matter between the parties, also hear and determine the question of whether the financial agreement should be set aside on another ground, in this case pursuant to section 90G of the FLA.

Relevant statutory provisions concerning financial agreements

It will have been seen that all three questions arising in this matter (as least as formulated by the appellant) refer to s 90K of the Family Law Act. That section is contained in Part VIIIA of the Family Law Act. That part is concerned with financial agreements between married or formerly married persons, and it provides for financial agreements which can be entered into before marriage
(s 90B), during marriage (s 90C), or after a divorce order is made (s 90D).
Such a financial agreement will only be binding on the parties to it if the conditions specified in s 90G(1) or s 90G(1A) are satisfied. Once a financial agreement is binding, the property and spousal maintenance jurisdiction of the courts (under Part VIII of the Family Law Act) is excluded in relation to the financial matters which are the subject of the agreement.
Section 90K provides for the setting aside of a financial agreement, and it does so in the following presently relevant terms:
(1) A court may make an order setting aside a financial agreement … if, and only if, the court is satisfied that:
(a) the agreement was obtained by fraud (including non‑disclosure of a material matter); or
(aa) a party to the agreement entered into the agreement:
(i) for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors of the party; or
(ii) with reckless disregard of the interests of a creditor or creditors of the party; or
(ab)a party (the agreement party) to the agreement entered into the agreement:
(i) for the purpose, or for purposes that included the purpose, of defrauding another person who is a party to a de facto relationship with a spouse party; or
(ii) for the purpose, or for purposes that included the purpose, of defeating the interests of that other person in relation to any possible or pending application for an order under section 90SM, or a declaration under section 90SL, in relation to the de facto relationship; or
(iii) with reckless disregard of those interests of that other person; or
(b) the agreement is void, voidable or unenforceable; or
(c) in the circumstances that have arisen since the agreement was made it is impracticable for the agreement or a part of the agreement to be carried out; or
(d) since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (2)), a party to the agreement will suffer hardship if the court does not set the agreement aside; or
(e) in respect of the making of a financial agreement—a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable; or
(f) a payment flag is operating under Part VIIIB on a superannuation interest covered by the agreement and there is no reasonable likelihood that the operation of the flag will be terminated by a flag lifting agreement under that Part; or
(g) the agreement covers at least one superannuation interest that is an unsplittable interest for the purposes of Part VIIIB.
(1A) For the purposes of paragraph (1)(aa), creditor, in relation to a party to the agreement, includes a person who could reasonably have been foreseen by the party as being reasonably likely to become a creditor of the party.
…
(3) A court may, on an application by a person who was a party to the financial agreement that has been set aside, or by any other interested person, make such order or orders (including an order for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of persons who were parties to that financial agreement and any other interested persons.
…
(6)The court must not make an order under this section if the order would:
(a) result in the acquisition of property from a person otherwise than on just terms; and
(b) be invalid because of paragraph 51(xxxi) of the Constitution.
For this purpose, acquisition of property and just terms have the same meanings as in paragraph 51(xxxi) of the Constitution.
(Original emphasis)
It needs also to be explained in this context that jurisdiction in relation to what can broadly be described as financial proceedings between married or formerly married persons is conferred on courts exercising jurisdiction under the Family Law Act by means of the concept of “matrimonial cause” (s 31(1)(a) and s 39).
The definition of “matrimonial cause” in s 4(1) of the Family Law Act contains reference to some thirteen types of proceedings, and relevantly for present purposes includes the following:
(eab) third party proceedings (as defined in section 4A) to set aside a financial agreement; or
The definition of “third party proceedings” in s 4A is in the following presently relevant terms:
(1)For the purposes of paragraph (eab) of the definition of
matrimonial cause in subsection 4(1), third party proceedings means proceedings between:
(a)       any combination of:
(i)       the parties to a financial agreement; and
(ii)      the legal personal representatives of any of those parties who have died;
(including a combination consisting solely of parties or consisting solely of representatives); and
(b)       any of the following:
(i)      a creditor;
(ii) if a creditor is an individual who has died—the legal personal representative of the creditor;
(iii)     a government body acting in the interests of a creditor;
being proceedings for the setting aside of the financial agreement on the ground specified in paragraph 90K(1)(aa).
…
(2)      In this section:
creditor means:
(a)      a creditor of a party to the financial agreement; or
(b)a person who, at the commencement of the proceedings, could reasonably have been foreseen by the court as being reasonably likely to become a creditor of a party to the financial agreement.
government body means:
(a)      the Commonwealth, a State or a Territory; or
(b) an official or authority of the Commonwealth, a State or a Territory.
(Original emphasis)
Thus, for there to be jurisdiction for courts (exercising jurisdiction under the Family Law Act) in proceedings to set aside a financial agreement between married, or formerly married persons on the ground specified in s 90K(1)(aa) (being that the agreement was entered into for the purpose of defeating or defrauding, or with reckless disregard for the interests of, a creditor), the proceedings must be between on the one hand, the parties to the agreement or their legal personal representatives, and on the other hand, a creditor of one of those parties or the legal personal representatives of the creditor or
“a government body acting in the interests of a creditor”.

It is important to note that it was not contended before us that a trustee in bankruptcy would come within the definition in s 4A(2) for purposes of the expression “a government body acting in the interests of a creditor” in s 4A(1).
Given the arguments to be considered later in these reasons as to the interpretation of s90K(1)(aa) and s 90K(3), it will be useful at this point (having regard to the provisions of s 15AB of the Acts Interpretation Act 1901 (Cth)) to set out, notwithstanding their length, the relevant paragraphs of the Notes on Clauses in the Supplementary Explanatory Memorandum to the Family Law Amendment Bill 2003; this was the amending legislation which (by Schedule 4A) inserted into the Family Law Act s 90K(1)(aa) and s 90K(3) (and related s 4A and new paragraph 4(a)(eab) of the definition of “matrimonial cause”):
7. Schedule 4A amends the Act to overcome the problems raised in the Family Court judgment of ASIC and Rich and Rich (No. SY 5067 of 2002) (ASIC and Rich) in relation to the binding financial agreement provisions.
Item 1 – Subsection 4(1) (after paragraph (eaa) of the definition of matrimonial cause)
8. New paragraph 4(1)(eab) of the definition of ‘matrimonial cause’ expands the jurisdiction of the court to enable it to deal with ‘third party proceedings’ to set aside a binding financial agreement entered into pursuant to the Act. The term ‘third party proceedings’ is defined in new section 4A.
Item 2 - After section 4
Section 4A – Third party proceedings to set aside financial agreement
9.Item 2 inserts a new section 4A to provide a definition of
‘third party proceedings’ for the purposes of new paragraph 4(1)(eab) of the definition of ‘matrimonial cause’.
10. Subsection 4A(1) provides that the court will have the jurisdiction to hear proceedings for the setting aside of a financial agreement on the new ground specified in paragraph 90K(1)(aa) where such proceedings are between either or both of the parties to the agreement and a creditor or government agency acting in the interests of a creditor.
11. Subsection 4A(2) defines ‘creditor’ for the purposes of subsection 4A(1) to mean one of two groups of people. Firstly, a ‘creditor’ can be a creditor, in the normal commercial sense of the word, of either of the parties to the financial agreement. Or secondly, a ‘creditor’ can be a person who, at the commencement of the proceedings, could reasonably have been forseen by the court as being reasonably likely to become a creditor of either of the parties to the financial agreement. This is intended to cover situations, such as those that existed in the ASIC and Rich case, where there is the possibility that someone is reasonably likely to become a creditor of either of the parties to the financial agreement but is not yet a creditor, for example as a result of other pending court proceedings. The relevant time for the court to determine the existence of this reasonable foreseeability and likelihood is at the time that the creditor files the proceedings.
12.The reason why the provision requires the court to determine the standing of the person at the time the proceedings commence is to ensure that only those who fall within the definition of ‘creditor’ at the time of the proceedings are able to bring an action. It may be that during the time of a financial agreement many people may possibly fall within the definition. It is not intended that simply because a person came within the definition at some stage that they could commence proceedings.
13.Subsection 4A(2) also defines ‘government body’ to broadly mean the Commonwealth, a State or a Territory, or an official or authority of the Commonwealth, a State or a Territory. This will ensure that a party such as ASIC in the ASIC and Rich case can apply to the court to set aside a financial agreement on the basis of the new ground in paragraph 90K(1)(aa).
Item 3 – After paragraph 90K(1)(a)
14. New paragraph 90K(1)(aa) inserts a new ground on which a court may make an order setting aside a financial agreement or a termination agreement. Subparagraph 90K(1)(aa)(i) provides that the court may make a setting aside order if either party to the agreement entered into the agreement for the purpose, or for purposes that included the purpose, of defrauding or defeating the interests of a creditor or creditors of the party.
15.Subparagraph 90K(1)(aa)(ii) provides that the court may also make an order setting aside a financial agreement if either party to the agreement entered the agreement with reckless disregard of the interests of a creditor or creditors of the party. The purpose of this subparagraph is to ensure that even in situations where the court may not be able to find that a party intended that an action would have a particular effect, that it may make an order setting aside a financial agreement if the actions of either of the parties can be characterised as being made with reckless disregard for the interests of a creditor or creditors.
16.‘Creditor’ for the purposes of new paragraph 90K(1)(aa) is defined in new subsection 90K(1A).
Item 4 – After subsection 90K(1)
17. New subsection 90K(1A) provides that for the purposes of setting aside a financial agreement under the new ground in paragraph 90K(1)(aa), the term ‘creditor’, in relation to a party to the agreement, includes a person who could reasonably have been foreseen by the party, at the time the agreement was entered into, as being reasonably likely to become a creditor of the party.
Item 5 – At the end of section 90K
18. This amendment inserts new subsections 90K(3), (4), (5) and (6).
19.New subsection 90K(3) provides a power for the court to make ancillary orders after an order has been made setting aside a financial agreement pursuant to section 90K, for the purpose of preserving or adjusting the rights of parties to the agreement or any other interested person. ‘Any other interested person’ includes a creditor of either of the parties to the agreement or any other affected third party. Subsection 90K(3) specifically states that such orders include an order for the transfer of property. For example, the court may make an order requiring the retransfer of a house or a car or shares by the receiving spouse to the other spouse.
20.An application for ancillary orders may be made by a party to the agreement or by any other interested person, including a creditor of either of the parties to the agreement or any other affected third party.
21.Subsection 90K(3) is based on the existing subsection 90J(3) of the Act, which deals with the making of orders preserving or adjusting rights on the termination of a financial agreement. It should be noted that the termination of an agreement pursuant to section 90J can only be by the parties to the agreement, and not a third party. Subsection 90J(3) thus ensures that the court has power, where an agreement has been terminated, to protect the rights of both parties to the agreement and any third parties who may have had dealings in relation to property that was the subject of the agreement.
(Original emphasis)

The appeal

Question 1: Does a creditor of a bankrupt have standing under
s 90K(1)(aa) or s 90K(3)?

The first important and apparently novel question, which this appeal raises, is whether where a party to a financial agreement has become bankrupt
(as has Mrs Grainger in this case), a creditor of that party (in this case Ms Bloomfield) remains “a creditor” for the purpose of s 90K(1)(aa) or an
“interested person” for the purpose of s 90K(3), and thus can apply for a relief respectively under those sub-sections.
We understood it to be uncontroversial that where a person does have standing as a creditor to apply to set aside a financial agreement under s 90K(1)(aa) that person would also be an “interested person” who would be entitled to apply for orders under s 90K(3). (See the Supplementary Explanatory Memorandum to the Family Law Amendment Bill 2003: Notes on Clauses [19] earlier set out.)
It was contended for the appellant, Mr Grainger, that on Mrs Grainger’s bankruptcy and the consequent vesting of her estate in her trustee in bankruptcy, Ms Bloomfield ceased to be a “creditor” within the meaning of s 4A or an “interested person” within the meaning of s 90K(3), and accordingly ceased to have standing for the purposes of an application under either
s 90K(1)(aa) or s 90K(3).
In support of this contention senior counsel for the appellant relied on both the specific provisions of the Bankruptcy Act 1966 (Cth) and the public policy considerations underlying that Act, with his essential submission being that once bankruptcy intervenes, no action can be taken by a creditor against the debtor to enforce the creditor’s debt; rather the creditor’s rights are confined to proving the debt in the bankruptcy, to sharing in the distribution of the bankrupt’s estate, and to ensuring the proper administration of the estate by the trustee, with it being for the trustee to take action, where appropriate, to recover property disposed of by the bankrupt prior to the bankruptcy.
Thus, it was submitted for the appellant that when Mrs Grainger became bankrupt, Ms Bloomfield ceased to be a “creditor” within the meaning of s 4A of the Family Law Act because she could no longer take action as a creditor to enforce her judgment debt. Neither would Ms Bloomfield, it was further submitted, be an “interested person” for the purposes of s 90K(3) because any relief that might be obtained on the setting aside of the financial agreement, could not be for her private benefit, but would have to be for the benefit of the whole of the bankrupt estate.
The response on behalf of the respondent, Ms Bloomfield, to these submissions on behalf of the appellant was that on the bankruptcy of the debtor the status of a creditor as a creditor does not change; rather only the remedies available to the creditor to enforce the debt change by virtue of the provisions of the Bankruptcy Act, and thus a creditor remained a creditor for purposes of
s 90K(1)(aa) and an “interested person” for the purposes of s 90K(3) of the Family Law Act.
It will have been seen that the definitions of “creditor” in s 4A(2) and in
s 90K(1A) do not assist in answering this first question of the status of a creditor for the purposes of those subsections following the bankruptcy of the debtor party to a financial agreement.
It is unfortunate that the legislature did not see fit to clarify expressly the position in relation to the standing of a creditor to apply to set aside a financial agreement under s 90K(1)(aa) once the debtor party to the agreement has become bankrupt. This is particularly so given that subsequent to the insertion of s 90K(1)(aa) (and of the related s 4A and paragraph (eab) of the definition of the “matrimonial cause”) into the Family Law Act by the Family Law Amendment Act 2003 (Cth), further amendments have been made to the principal Act to provide that the entitlement of a creditor of a party to a marriage (or as will shortly be seen, of a party to a de facto relationship) to become a party in property settlement proceedings between the parties to a marriage under s 79 of that Act (or between parties to a de facto relationship under s 90SM of that Act) will cease if the party to the proceedings, who is the debtor, becomes bankrupt, with that party’s trustee in bankruptcy then being entitled to apply to become a party in the proceedings.
Details of these subsequent further amendments concerning the cessation of a creditor’s entitlement to participate in certain financial proceedings under the Family Law Act, and certain of which were relied on before us by counsel for the respondent are as follows.
The Bankruptcy andFamily Law Legislation Amendment Act 2005 (Cth) inserted into s 79 the following new subsection, which relevantly provides:
(10)The following are entitled to become a party to proceedings in which an application is made for an order under this section by a party to a marriage (the subject marriage):
(a)a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the order were made;
(Original emphasis)
Later in 2005, the Family Law Amendment Act 2005 (Cth) inserted into s 79 the following further new subsection:
(10A)Subsection (10) does not apply to a creditor of a party to the proceedings:
(a)if the party is a bankrupt to the extent to which the debt is a provable debt (within the meaning of the Bankruptcy Act 1966); or
(b)if the party is a debtor subject to a personal insolvency agreement to the extent to which the debt is covered by the personal insolvency agreement.
The revised Explanatory Memorandum to the Family Law Amendment Bill 2005 (Cth) contained the following explanation in relation to the proposed new s 79(10A):
168. This item inserts subsection 79(10A) after subsection 79(10) in the Family Law Act 1975. Subsection 79(10) was inserted by the Bankruptcy and Family Law Legislation Amendment Act2005, providing that certain persons are entitled to become a party to family property proceedings - in particular, a creditor of a party to the proceedings if the creditor would not be able to recover his or her debt if the order were made, and any other person whose interests would be affected by the making of the order.
169. Subsection 79(10A) qualifies the operation of subsection 79(10) so that subsection 79(10) will not apply to allow a creditor to be a party to family property proceedings if a party to the proceedings is a bankrupt (to the extent to which the creditor's debt is a provable debt under the Bankruptcy Act 1966) or is a debtor subject to a personal insolvency agreement (to the extent to which the creditor's debt is covered by the personal insolvency agreement).
170. This amendment supports the aims of the reforms in the
Bankruptcy and Family Law Legislation Amendment Act 2005, ensuring that the trustee in bankruptcy represents the interests of all creditors in family law property proceedings where a party is a bankrupt or is the subject of a personal insolvency agreement.
The second reading speech in relation to the Bill contained a statement by the Attorney-General in virtually identical terms to paragraph 170 of the revised Explanatory Memorandum
When Part VIIIAB, which concerns financial matters relating to de facto relationships, was inserted into the Family Law Act by the Family Law Amendment (De Facto Financial Matters and Other Measures Act) 2008 (Cth), it contained provision in s 90SM(10) for a creditor of a party to a de facto relationship to become a party to property settlement proceedings under
s 90SM between the parties to the de facto relationship, and also provision in
s 90SM(11) that a creditor could not do so (but the trustee in bankruptcy could) if the debtor party was bankrupt. Subsections 90SM(10) and (11) are relevantly as follows:
(10)The following are entitled to become a party to proceedings in which an application is made for an order under this section by a party to a de facto relationship (the subject de facto relationship):
(a)a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the order were made;
…
(11)Subsection (10) does not apply to a creditor of a party to the proceedings:
(a)if the party is a bankrupt to the extent to which the debt is a provable debt (within the meaning of the Bankruptcy Act 1966); or
(b)if the party is a debtor subject to a personal insolvency agreement to the extent to which the debt is covered by the personal insolvency agreement.
(Original emphasis)
Part VIIIAB also contained provision for financial agreements between persons in de facto relationships, which were of virtually identical effect to the provisions of Part VIIIA (which is concerned with financial agreements between married persons). In Part VIIIAB there is a section, s 90UM, which provides for the setting aside of financial agreements in identical circumstances as those contained in s 90K:
(1) A court may make an order setting aside, for the purposes of this Act, a Part VIIIAB financial agreement … if, and only if, the court is satisfied that:
…
(b) a party to the agreement entered into the agreement:
(i)for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors of the party; or
(ii)with reckless disregard of the interests of a creditor or creditors of the party; or
…
Again, however, as with s 90K, there is no provision in s 90UM to alter the standing of the creditor to apply to set aside the financial agreement in the event that the debtor party to the agreement becomes bankrupt.
Given these various legislative initiatives, the better view must be that it is the legislative intention that, unlike the position of a creditor in relation to property settlement proceedings, the entitlement of a creditor to apply to set aside a financial agreement under s 90K(1)(aa) or s 90UM(1)(b) does not cease on the bankruptcy of the debtor, who is a party to the agreement.
Support for the conclusion that it is possible for a creditor to commence or continue proceedings against a bankrupt in respect of a provable debt can also, in our view, be found in s 58(3) of the Bankruptcy Act which provides:
(3) Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
…
(b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
We recognise, of course, that the Court’s leave would be necessary for a creditor to commence proceedings to set aside a financial agreement under
s 90K(1)(aa) (or s 90UM(1)(b)), but that consideration does not detract from the conclusion that the Bankruptcy Act itself envisages a creditor commencing or continuing litigation against a bankrupt in respect of a provable debt.
(We note that the issue of leave under s 58(3) of the Bankruptcy Act was the subject of correspondence between the solicitors for Ms Bloomfield and for
Mr Grainger in early 2014, but as this issue was not raised before us, we say no more about it.)
Before reaching a final conclusion on this first question, it is necessary to refer to three authorities relied on by the appellant in support of his contention that once bankruptcy has intervened, a creditor has no standing to apply under
s 90K(1)(aa) of the Family Law Act to set aside a financial agreement to which the debtor was a party, or to seek ancillary or consequential relief under
s 90K(3) as an “interested person”.
The first authority relied on by the appellant was the High Court decision in Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589 and the principle emerging from that decision being, as summarised in the appellant’s written submissions (at [23]), that “upon sequestration all provable debts owing by the bankrupt are converted from rights of action into a right to share in the distribution of the bankrupt’s estate.” However, we agree with the submission made on behalf of the respondent to the effect that the decision in Clyne does not affect the status or description of a creditor, and we would add, for the purposes of other legislative provisions, such as the provisions of the Family Law Act to which we have earlier referred.
A second authority relied on by the appellant is the decision of the Full Court of this court in Trustee for the Bankrupt Estate of N Lasic v Lasic (2009)
41 Fam LR 369. The facts of that case were complicated and gave rise to a number of issues, including the standing of a trustee in bankruptcy of a party to a marriage to apply as “ a person affected by an order” to set aside a property settlement order made by consent between the parties to a marriage
under s 79A of the Family Law Act (as that section stood prior to the
Bankruptcy Act 2005 (Cth)), and the issue of whether there was power in the primary judge to order that the non-bankrupt spouse make a direct payment to a third party judgment creditor of the bankrupt spouse. Again, we agree with the submissions for the respondent to the effect that nothing in the decision in Lasic is of assistance in the determination of the present case.

The third authority relied on in this context by the appellant is the decision of the New South Wales Supreme Court in Griffiths v Falck and Ors (2008)
220 FLR 278. That decision concerned s 37A of the Conveyancing Act 1919 (NSW) which relevantly provided:
(1) Save as provided in this section, every alienation of property … with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced.
(2) This section does not affect the law of bankruptcy for the time being in force.
Young CJ in Eq held that the creditor of a bankrupt debtor was not in the circumstances of that case, a person “prejudiced” for purposes of as 37A of the Conveyancing Act.
However, and again as submitted by the respondent before us, that decision turned on its own facts as emerges from the following paragraphs of the decision:
23.In the instant case, at all material times, at the commencement of the bankruptcy and during the bankruptcy, the property belonged to, or was vested in, a person other than the bankrupt. When the election was made, if it was made, then, if the election was in order, the effect of s 37A would be to vest the title back in [the bankrupt’s] name. The property would not be after-acquired property.
24. Accordingly, the vesting could not at that date benefit the appellant and accordingly the appellant is not a person prejudiced by the alienation.
Thus, Griffiths v Falck is also of no assistance to the present appellant’s case. However, in that decision there is reference to the decision of the New South Wales Court of Appeal in Zaravinos v Houvardas (2004) 32 Fam LR 490, where it was held that a creditor of a bankrupt debtor could proceed (subject to s 58(3) of the Bankruptcy Act) as a person “prejudiced” for the purposes of
s 37A of the Conveyancing Act in circumstances where the trustee in bankruptcy had taken no steps to avoid the transfer of property in question.
Importantly for present purposes, it was recognised in Zaravinos (at 63-64) by Sheller JA (with whom the other two members of the Court agreed) that even though the trustee in bankruptcy would be entitled to the benefit of any order obtained by a creditor under s 37A, that creditor and the “creditors as a whole” were persons “prejudiced”. We consider that this is a useful analogy which assists in the conclusion that a creditor in the situation of the present respondent, Ms Bloomfield, can be an “interested” person for the purposes of
s 90K(3) of the Family Law Act. (See also the decision of the Full Court of the Federal Court in Fraser v Deputy Commissioner of Taxation (1996) 69 FCR 99; 20 Fam LR 914).

Conclusion in relation to question 1

For the reasons given, we conclude that the respondent, Ms Bloomfield, has standing as a creditor to apply under s 90K(1)(aa) of the Family Law Act to set aside the financial agreement, and also under s 90K(3) of the Act to seek ancillary orders (subject to a grant of leave under s 58(3)(b) of the Bankruptcy Act).
Accordingly, Grounds 1, 2 and 3 of the appeal cannot succeed.

Question 2: The extent of the power in s 90K(3)

The second question for our determination relates to the extent of the power under s 90K(3) of the Family Law Act. The terms of that sub-section, which for convenience we here repeat, are:
(3) A court may, on an application by a person who was a party to the financial agreement that has been set aside, or by any other interested person, make such order or orders (including an order for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of persons who were parties to that financial agreement and any other interested persons.
Put simply, the appellant contends that the power in s 90K(3) “is consequential on the setting aside of a financial agreement, in order to reverse transactions affected under that agreement, or to make adjustments to achieve a restoration in substance”; it “does not permit a creditor to prosecute other causes of action as between the husband and wife or third parties” (Appellant’s summary of argument in reply [20]).
Again put simply, the respondent contends that the power in s 90K(3) is a power “to make such orders as it considers just and equitable for the purpose of preserving or adjusting the rights of the parties to the financial agreement or other interested persons” and “is not limited in the way the appellant contends” (Respondent’s Summary of Argument [25]).
In support of the more restrictive interpretation of s 90K(3), the appellant
relies on the decision of Burnett FM (as his Honour then was) in
Reamy & Milne (2012) 47 Fam LR 470. In that case certain judgment creditors of a party to a de facto relationship sought to set aside a financial agreement between the parties to the de facto relationship (entered into at the time of the trial which resulted in the judgment debt) pursuant to the provisions of
s 90UM(1)(b) of the Family Law Act. As we have earlier explained
s 90UM(1)(b) is in virtually identical terms to s 90K(1)(aa) save that the latter provision concerns parties to a marriage, or a former marriage. Similarly,
s 90UM(6) is in virtually identical terms to s 90K(3) in that it provides:
(6) A court may, on an application by a person who was a party to the Part VIIIAB financial agreement that has been set aside, or by any other interested person, make such order or orders (including an order for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of persons who were parties to that financial agreement and any other interested persons.
The appellant contends that his Honour can be read (at [21]-[23] of his reasons), as holding, correctly in the appellant’s opinion, that the power in
s 90UM(6) is a “discretionary power for restoring the parties to the former status quo”, while the respondent contends that if his Honour did so hold, he was wrong in law and his decision should be overturned.
The relevant paragraphs ([18] - [24]) from Burnett FM’s decision are set out in [34] of Judge Cassidy’s reasons for judgment in the present case, and it is not necessary for us to repeat them in these reasons. It is, however, necessary that we set out her Honour’s reasons for apparently departing from the approach taken by Burnett FM in Reamy. Her Honour’s reasons were:
35. The first respondent [Mr Grainger] submits that setting aside this agreement would return the parties to a status quo where the wife’s trustee in bankruptcy would take the [E] property encumbered with a mortgage and that the utility of proceeding is not obvious in terms of a remedy for the creditor.
36. The creditor [Ms Bloomfield] argues, through her counsel, that s.90K(3) is of a broader nature. I consider, while Burnett FM’s reasoning is attractive and, unless it was clearly wrong it is likely to be applied by other judges in relation to s.90UM(6), the section that is now under consideration is s.90K(3). The analysis set out in
Reamy (supra) is not determinative of the matter in this case. It is a trial-able issue that, in my view, should be taken to a hearing to fully explore submissions on the extent of the power under s.90K(3).
37. The first respondent argues that the applicant has no prospects of obtaining the relief sought at paragraphs 3, 4 and 5 of the final orders sought in the initiating application:
“[3] An order pursuant to section 90K(3) of the Family Law Act 1975 that [Mr Grainger] transfer to the estate of
[Mrs Grainger] (a bankrupt) the real property located at…, [E property] in the State of Queensland, … free from mortgage or other encumbrance.
[4] In the alternative, an order prusuant (sic) to section 90K(3) of the Family Law Act 1975 that [Mr Grainger] pay to the estate of [Mrs Grainger] (a bankrupt) an amount of money being the market value of the [E] Property as at the date of transfer of that property, in an amount to be assessed.
[5] Further, or in the alternative, a declaration that [Mr Grainger] is liable to exonerate the estate of [Mrs Grainger] (a bankrupt) in respect of any mortgage, encumbrance, lien or other charge or liability secured over or connected to the [E] Property.”
38. In the present case the extent of the s.90K(3) power is not authoritively defined and the issue is a trial-able issue. Furthermore the trustee in bankruptcy is still a party to the proceeding even though he has elected not to participate in this part of the proceeding. He may decide that it is appropriate to participate in the hearing once the summary judgment matter has been finalised.
39. I do not consider that this is a matter where I can give summary judgment on the basis that s.90K(3) is a power limited to returning the parties to their positions prior to the agreement and therefore the orders the applicant seeks would not be available.
40. In relation to “Q2”:
“… Does the power in s 90K(3) to make orders adjusting the rights of persons extend to adjustments other than for the purpose of substantially restoring the position existing before the financial agreement?”
41. I consider this is a matter where the applicant is entitled to argue the extent of the s.90K(3) power at the trial.
(Original emphasis)
To the extent that her Honour considered that there was some difference between s 90UM(6) and s 90K(3), she was in error. Those sub-sections are in virtually identical terms save for their terms which indicate whether they have application to a financial agreement between parties to a marriage or to parties to a de facto relationship.
Apart from that matter, we do not consider that her Honour erred in the approach she took to s 90K(3). Earlier in her reasons, she had cited the following passage from the reasons of French CJ and Gummow J in Spencer v Commonwealth (2010) 241 CLR 118, where their Honours were considering s 31A(2) of the Federal Court of Australia Act 1976 (Cth), which is in similar terms to s 17A of the Federal Circuit Court of Australia Act 1999 (Cth), which her Honour was applying:
“[24] The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action (51) or on the basis that the action is frivolous or vexatious or an abuse of process (52). The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd [(1983) 154 CLR 87 at 99] said:
“The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.”
More recently, in Batistatos v Roads and Traffıc Authority (NSW) (54) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde (55) which included the following:
“Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways (56), but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.”
There would seem to be little distinction between those approaches and the requirement of a “real” as distinct from “fanciful” prospect of success contemplated by s 31A (57). That proposition, however, is not inconsistent with the proposition that the criterion in s 31A may be satisfied upon grounds wider than those contained in pre-existing Rules of Court authorising summary dispositions.”
[Footnotes omitted.]
Having regard to these observations by members of the High Court, the primary judge could not be said to have been wrong in permitting, in the exercise of her discretion, the s 90K(3) issue to go to trial.
It may, however, be useful for us to make some further observations regarding
s 90K(3) (and its counterpart s 90UM(6)).
It will have been seen from the paragraph 21 of the Supplementary Explanatory Memorandum to the Family Law Amendment Bill 2003 (Cth) that s 90K(3) is described as being “based on” s 90J(3); that sub-section is concerned with the preservation or adjustment of rights on the termination of a financial agreement by parties to such an agreement. It appears that to date there has been no decision of any court in relation to the scope of the powers in s 90J(3).
However, it is also to be observed that the terms of s 90K(3) have some similarities to those of s 87(9)(b) of the Family Law Act; that sub-section is concerned with a court’s powers when it revokes the previous approval by a court under s 87(3) of a maintenance agreement:
(9) Where the approval of a maintenance agreement under this section is revoked by a court:
(a) the agreement ceases, for all purposes, to be in force; and
(b) the court may, in proceedings for the revocation of the approval or on application by a party to the agreement or any other interested person, make such order or orders (including an order for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of the parties to the agreement and any other interested persons;
and, in exercising its powers under paragraph (b), the court shall have regard to the ground on which it revoked the approval of the agreement.
Again there has been little exploration of s 87(9), with the only authority of any assistance apparently being the decision of the Full Court of this Court (Fogarty, Nygh and Maxwell JJ) in Re Chemaisse; Federal Commissioner of Taxation (Intervener) (1990) FLC 92-133 where the following observations were made:
Before us senior counsel for the wife submitted that a Judge has a wide discretion under sec. 87(9)(b) to make such orders as are ''just and equitable'' and that the exercise was akin to the exercise of power under sec. 79. He submitted that although no formal application had been made by the wife under sec. 79 either such an application was implicit in the way in which the proceedings had been conducted or the discretion under sec. 87(9)(b) was wide enough to encompass such an exercise. Accordingly, in effect he sought orders which would have the effect of dividing in some way between the wife and the Commissioner this three-quarter interest in the home.
It appears to us that there are really two answers to these submissions.
Fundamental to the wife's case is the contention that a party to a marriage builds up over the duration of the marriage an interest in the property of the parties to that marriage. Counsel submitted that such a spouse has a presently vested interest of an ''inchoate'' kind which exists prior to the institution of proceedings under sec. 79 or the making of any order under that section and which is capable of recognition and enforcement in appropriate circumstances. Relevantly to this particular case he submitted that the wife, after 40 years of marriage and having regard to the significant contributions which she had made to the family, had a vested interest in this property which it was proper to take into account and evaluate against the rights of the Commissioner …
In our view that does not represent the law in Australia. Rights arising under sec. 79 come into existence when an order is made under that section. Neither that section nor any other provisions of the Family Law Act establish rights, however described, in a party to a marriage over the property of the other spouse either arising from the existence of the marriage or the activities of the parties during that marriage or the institution of proceedings under sec. 79, where those rights do not otherwise exist under the laws in Australia.
…
The second answer to the wife's overall submission lies in the application of sec. 87(9)(b) to the particular circumstances of this case. As counsel for the Commissioner of Taxation correctly submitted, whatever may be the appropriate exercise of the discretion under para. (b) in other cases, here, once the finding of fraud by the husband and the level of involvement of the wife referred to above were made, there was really no other proper exercise of discretion open to the trial Judge. The subsection specifically obliges the Court to have regard to the ground upon which the approval is revoked. Having regard to the findings which the trial Judge made and the ground upon which he acted he was clearly within the exercise of his discretion to make the orders which he did [being that the wife reconvey to the husband the three quarter interest in the property which he had transferred to her pursuant to the agreement]; indeed we think no other exercise of discretion would legitimately have been open to him on those facts.
Accordingly it is unnecessary to consider the wider questions raised by senior counsel for the wife relating to the interpretation of sec. 87(9)(b). Nor would it be appropriate for us to do so. The facts of this case are particular, arising as they do out of a fraud perpetrated upon the Court. Section 87(8) empowers the Court to revoke the approval on a number of quite diverse grounds including that the parties desire the approval to be revoked, that the agreement is void, voidable or unenforceable, or that subsequent circumstances have rendered it impractical to carry the agreement into effect. Obviously the way in which the discretion given under sec. 87(9)(b) will be exercised will be significantly influenced by those factors amongst others. The above comments should not be taken as any endorsement of the wide submissions made on behalf of the wife as to the correct interpretation of this provision; those issues do not arise in this case.
These observations of the Full Court in Chemaisse can be read as cautioning against an over-expansive application of a provision such as s 87(9)(b) or
s 90K(3). But they also suggest that the application of such a provision will depend on the particular facts of the case in which the provision is to be applied.
In the present case the facts have yet to be found, and therefore despite the urgings of the appellant to the contrary, we do not consider it appropriate to say more regarding the operation of s 90K(3) in the context of this appeal against a refusal of a summary dismissal order.

Conclusion in relation to Question 2 and the appeal

Thus we agree that the primary judge was correct in refusing in the context of a summary dismissal application, to determine the scope of the preservation and adjustment powers in s 90K(3).
Grounds 4, 5 and 6 being the remaining grounds of appeal do not therefore have merit, and thus the appeal will be dismissed.

The cross appeal

Question 3: In seeking to set aside a financial agreement is a creditor limited to the s 90K(1)(aa) Ground?

Both before the primary judge and before this Court, the respondent/cross appellant, Ms Bloomfield, has contended that once she had invoked the court’s jurisdiction pursuant to s 90K(1)(aa) to set aside the financial agreement, she was entitled to rely on other grounds in s 90K(1) as a basis for her application to set aside the agreement, in particular the ground contained in s 90K(1)(b), being that “the agreement is void, voidable or unenforceable”.
The basis on which Ms Bloomfield claims that the agreement is “unenforceable” pursuant to the provisions of s 90K(1)(b), is that it allegedly does not comply with the requirement in s 90G(1)(b) of the Family Law Act for each party to the agreement to have had independent legal advice about certain matters before entering the agreement, because of an alleged lack of independence on the part of a solicitor, Mr P, who provided advice to Mrs Grainger before she entered into the agreement. Section 90G(1) is in the following terms:
(1) Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b)before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
(c)either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
(ca)a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and
(d)the agreement has not been terminated and has not been set aside by a court.
Note:For the manner in which the contents of a financial agreement may be proved, see section 48 of the
Evidence Act 1995.

Again both before the primary judge and before this Court, the appellant,

Mr Grainger, has contended that the challenge that a creditor can make to a financial agreement is restricted to the grounds set out in s 90K(1)(aa) because of the content of the definition of “third party proceedings” in s 4A of the Act and the reference to that definition in paragraph (eab) of the definition of “matrimonial cause” in s 4(1) of the Act.
We have earlier set out paragraph (eab) of the definition of “matrimonial cause” and also the definition of “third party proceedings” in s 4A, but it will be convenient to repeat those definition provisions here:
(eab) third party proceedings (as defined in section 4A) to set aside a financial agreement; or
…
(1)For the purposes of paragraph (eab) of the definition of
matrimonial cause in subsection 4(1), third party proceedings means proceedings between:
(a)       any combination of:
(i)       the parties to a financial agreement; and
(ii) the legal personal representatives of any of those parties who have died;
(including a combination consisting solely of parties or consisting solely of representatives); and
(b)      any of the following:
(i)      a creditor;
(ii) if a creditor is an individual who has died—the legal personal representative of the creditor;
(iii) a government body acting in the interests of a creditor;
being proceedings for the setting aside of the financial agreement on the ground specified in paragraph 90K(1)(aa).
…
(2)      In this section:
creditor means:
(a)      a creditor of a party to the financial agreement; or
(b)a person who, at the commencement of the proceedings, could reasonably have been foreseen by the court as being reasonably likely to become a creditor of a party to the financial agreement.
government body means:
(a)      the Commonwealth, a State or a Territory; or
(b) an official or authority of the Commonwealth, a State or a Territory.
(Original emphasis)
It will be seen that an essential element of the definition of “third party proceedings” (which through the definition of “matrimonial cause” is the mechanism for the conferral of jurisdiction on courts in such proceedings as earlier explained at [24] of these reasons) is that the subject proceedings are “proceedings for the setting aside of the financial agreement on the ground specified in paragraph 90K(1)(aa)”.
The primary judge (in [47] of her reasons) accepted the submission of Mr Grainger that:
…the scope of the Court’s jurisdiction is circumscribed by the definition of “matrimonial cause” and the definition in s.4A of the Act restricts the challenge a creditor can make to the agreement to the grounds set out in s.90K(1)(aa) of the Act.
Thus, her Honour concluded (at [50]), correctly in our view, that the creditor was “only entitled to rely on s 90K(1)(aa) in seeking to set aside a financial agreement”, and she accordingly, struck out the paragraph in Ms Bloomfield’s initiating application seeking a declaration pursuant to s 90G of the Family Law Act as well as the relevant paragraphs of the statement of claim.
Before us, however, it was submitted for Ms Bloomfield that her Honour had erred in reaching her conclusion on this third question by failing to consider the availability of the accrued jurisdiction, which was apparently also relied on before her.
We can only say that we are at a loss to understand how it can be asserted in circumstances where the statute permits a creditor of a party to a financial agreement to apply to set aside the financial agreement on one specified ground, that the accrued jurisdiction (or indeed, the associated jurisdiction which was also pressed, albeit faintly, before us) would permit the creditor to apply to set aside the financial agreement on any other ground provided in the Act.
Put simply, the purpose of the accrued jurisdiction is to permit a party, or parties, to obtain all remedies available to that party, or parties, in the one proceeding in relation to a particular matter. It cannot confer on a party additional remedies under a statute that are not otherwise conferred by that statute on that party.

Conclusion in relation to Question 3 and the cross appeal

As we have earlier indicated, the primary judge did not err in concluding that Ms Bloomfield was only entitled to rely on the ground in s 90K(1)(aa) as the basis for her application to set aside the financial agreement, and in accordingly striking out those parts of the initiating application and of the supporting statement of claim, which she did.
The cross appeal must therefore also be dismissed.

Costs of the appeal and the cross appeal

At the conclusion of the hearing of the appeal and the cross appeal, we received brief oral submissions in relation to the costs of the appeal and the cross appeal.
It would be fair to say that counsel for neither party sought that the general rule in s 117(1) of the Family Law Act, being that each party should pay their own costs, should apply. Rather the consensus was that costs should follow the event in respect of both the appeal and the cross appeal.
Given that both the appeal and the cross appeal are to be dismissed, our orders will be that the appellant pay the respondent’s costs of the appeal and that the cross appellant/ respondent pay the appellant’s costs of the cross appeal.

I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, Strickland and Hogan JJ) delivered on 18 November 2015

Associate:

Date: