Hadid v Sabouh

[2023] NSWSC 483

Supreme Court

New South Wales

Medium Neutral Citation:

Hadid v Sabouh [2023] NSWSC 483

Hearing dates:

5 May 2023

Date of orders:

10 May 2023

Decision date:

10 May 2023

Jurisdiction:

Equity

Before:

Meek J

Decision:

Order made for transfer of proceedings to Federal Circuit and Family Court of Australia (Division 1)

Catchwords:

JURISDICTION — Equity proceedings brought by applicant (the former wife of the second respondent) involving claims of a trust over a property held by a third party (the first respondent), and allegations of a sham transfer of the property involving the second respondent in arranging with the third defendant for transfer of the property to the first respondent — Applicant’s claims are disputed by the respondents raising various statutory defences including indefeasibility of title, lack of writing and limitation period provisions — Responses by the applicant seeking to circumvent the statutory defences by equitable principles — Applicant seeks transfer of proceedings to Federal Circuit and Family Court of Australia (Division 1) — Transfer opposed

JURISDICTION — Transfer of proceedings to Federal Circuit and Family Court of Australia (Division 1) sought pursuant to s 5(1) Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) (NSW Act) and/or s 5(1) Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (Cth Act) — Transfer determined by reference to s 5(1)(b)(ii) of the NSW Act and whether it is more appropriate that the equity proceedings be determined by the Federal Circuit and Family Court of Australia (Division 1) — Discussion regarding considerations relevant to the “interests of justice” in determining whether it is more appropriate that the equity proceedings be determined by the Federal Circuit and Family Court of Australia (Division 1)

STATUTORY CONSTRUCTION — Analysis of s 5(1)(b)(ii) of the NSW Act — The reference to the “Family Court” is a reference to the “Federal Circuit and Family Court of Australia (Division 1)” — Analysis of the construction of the provisions which the Court has regard to in s 5(1)(b)(ii)(A),(B),(C) — The “interests of justice” provision in s 5(1)(b)(ii) of the NSW Act is not a “residual provision” in the same terms as the expression “otherwise in the interests of justice” in s 5(1)(b)(iii) of the Cth Act.

LAW REFORM — Law reform agencies should give consideration to amendment of s 5(1)(b)(ii) of the NSW Act to update the reference to the “Family Court” to be a reference to the “Federal Circuit and Family Court of Australia (Division 1)”

COSTS — Orders made addressing costs of the transfer motion and the costs of the equity proceedings

Legislation Cited:

Acts Interpretation Act 1901 (Cth)

Conveyancing Act1919 (NSW)

Federal Circuit and Family Court of Australia Act 2021 (Cth)

Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Act 2021 (Cth)

Federal Courts (Consequential Provisions) Act 2000 (NSW)

Interpretation Act 1987 (NSW)

Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth)

Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW)

Limitation Act1969 (NSW)

Real Property Act1900 (NSW)

Supreme Court Act1970 (NSW)

Trade Practices Act1974 (Cth)

Cases Cited:

Application of Doolan [2023] NSWSC 320

Aviani v Loh(No 2) [2022] NSWSC 1148; (2022) 405 ALR 337

Bankinvest AG v Seabrook (1988) 14 NSWLR 711

Barnes v Addy (1874) LR 9 Ch App 244

BHP Billiton Ltd v Shultz (2004) 221 CLR 400; [2004] HCA 61

British American Tobacco Australia Ltd v Gordon [2007] NSWSC 230

Brown v Anstis(No 2) [2013] NSWSC 1488

Chaudhary v Chaudhary [2017] NSWCA 222

Comino v Kremetis [2023] NSWSC 32

ECC Lighting Ltd v McGurk (Supreme Court (NSW), Santow J, 15 June 1995, unrep)

Fencott v Muller (1983) 152 CLR 570; [1983] HCA 12

Goyal v Chandra (2006) 68 NSWLR 313; [2006] NSWSC 239

James Hardie & Company Pty Ltd v Barry (2000) 50 NSWLR 357; [2000] NSWCA 353

Kurzyp v Kurzyp [2021] NSWSC 851

Lamshed v Lamshed (1992) 35 FCR 111

Lewis v Condon; Condon v Lewis (2013) 85 NSWLR 99; [2013] NSWCA 204

Mallitt v Gow [2022] NSWSC 1012

Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40

Olliver v Olliver (1978) 4 Fam LR 360

Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; [1981] HCA 7

Scott v Briggs (1991) 14 Fam LR 661

Spiliada Maritime Corporation v Cansulex Ltd (The Spiliada) [1987] AC 460

Valceski v Valceski (2007) 70 NSWLR 36; [2007] NSWSC 440

Wickstead v Browne (1992) 30 NSWLR 1; [1992] NSWCA 272

Wurzbht NSW Trustee & Guardian v Elawaad [2022] NSWSC 1404

Wurzbht NSW Trustee & Guardian v Elawaad(No 2) [2022] NSWSC 1486

Xue v Xue; Xue v Xue [2020] NSWSC 501

Texts Cited:

Federal Courts (Consequential Provisions) Bill 2000 (NSW)

New South Wales Legislative Assembly, Parliamentary Debates (Hansard)

Category:

Principal judgment

Parties:

Awsaf Hadid (Plaintiff / Applicant)
Yehia Sabouh (First Defendant / First Respondent)
Ibrahim Sabouh (Second Defendant / Second Respondent)
Mahmoud Abouschmiess (Third Defendant / Third Respondent)

Representation:

Counsel:
Self-represented (Plaintiff / Applicant)
A Jordan (First and Second Defendants / First and Second Respondents)

Solicitors:
Self-represented (Plaintiff / Applicant)
Birchgrove Legal (First and Second Defendants / First and Second Respondents)

File Number(s):

2020/120471

JUDGMENT

1. HIS HONOUR: The application before the Court is the plaintiff’s notice of motion filed on 30 March 2023 seeking orders pursuant to s 5(1) Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) (NSW Act) and/or s 5(1) Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (Cth Act) that these proceedings (equity proceedings) be transferred to the Federal Circuit and Family Court of Australia (FCFCOA) (Division 1) (Division 1 Court).

2. There are proceedings which are currently pending in the Division 1 Court (family law proceedings) in the Sydney Registry.

3. The application for transfer is opposed.

Party details

4. The plaintiff (applicant) married the second defendant (Ibrahim) in July 1998. The applicant indicates that she and Ibrahim were both legally and Islamically married.

5. The first defendant (Yehia) is Ibrahim’s brother. The third defendant (Mahmoud) is a friend of Ibrahim’s and a former director of Sheriff Developments Pty Ltd (Sheriff Developments).

6. The plaintiff is currently self-represented in the equity proceedings although in the past in the equity proceedings has had legal representation.

7. Ibrahim and Yehia are represented by the same lawyers. Mahmoud has not filed any appearance. Ibrahim and Yehia are the active defendants. I will refer to them as the “respondents”.

8. The applicant and Ibrahim have seven children between the ages of 5 and 22. The first child was born in February 2001 and the last child born in February 2018.

9. The applicant asserts that for in excess of 12 years from September 2005 to 26 December 2017, at the coercive control of Ibrahim, she resided in Lebanon (with the exception of a period of couple of weeks in 2010 when she travelled to Australia). She states that she and Ibrahim separated in about October 2017 and on 26 December 2017, when she was eight months pregnant, she fled Lebanon to live in Australia.

10. The applicant asserts that, notwithstanding the fact of legal marriage, Ibrahim married a second wife in Lebanon in 2018 and has two children from that marriage or relationship.

11. On 9 November 2022, the applicant filed in the FCFCOA for divorce. On 5 April 2023, a divorce was granted, and a certificate of divorce is expected to issue on or after 6 May 2023.

Application for transfer

12. The application for transfer is supported by an affidavit of the applicant dated 15 April 2023, an Exhibit AH-1 to that affidavit (April 2023 affidavit) and an affidavit of the applicant dated 1 May 2023.

13. The applicant provided an outline of written submissions dated 29 April 2023.

14. The respondents relied upon an affidavit of the respondents’ solicitor Hamza Alameddine dated 1 May 2023 and certain additional documents including the caveat, correspondence, a notice of listing and a chronology which documents are located under Tabs 6-12 in the Court Book. On the hearing of the application the applicant sought to adduce certain additional materials including several recordings. Following discussion with the representatives that material was tendered without objection in written form (including relevantly an extract of a transcript of WhatsApp written and voice messages) and added to the Court Book being numbered as pages 260-271.

15. Counsel for the respondents, Mr Andrew Jordan, provided written submissions dated 3 May 2023.

FCFCOA proceedings

16. On 7 March 2023, the applicant commenced property proceedings in the FCFCOA (Division 2) (Division 2 Court).

17. On 8 April 2023, the applicant made an urgent application to transfer the family law proceedings to the Division 1 Court. On 24 April 2023, orders were made by Judicial Registrar Bistolaridis to transfer the family law proceedings from the Division 2 Court, Parramatta Registry to the Division 1 Court, Sydney Registry.

18. The family law proceedings are now listed in the Division 1 Court and the next mention of the proceedings is a listing on 18 May 2023 before Senior Judicial Registrar McNamara which the applicant describes as an “Interim Defended Hearing”.

19. Relevantly, the final relief sought in the family law proceedings is set out in an annexure to the initiating application under the heading “Final Orders” and the subheading “Financial Orders”. That relief is as follows:

1. Pursuant to section 79, Family Law Act 1975 (FLA), the Court affect division of the matrimonial pool by making the following orders.

2. Pursuant to section 78(1), FLA, that a declaration be made that the Second Respondent holds full interest and ownership of the property known as 6/40-42 Sheriff Street, Ashcroft NSW 2168 (Folio Identifier: 6/SP77970) (Property) on constructive trust for the Applicant.

3. Pursuant to the application of the equitable principles of the presumption of advancement and promissory estoppel, that the Applicant have sole ownership of the Property.

4. In the further alternative, that leave be granted to join Mr Mahmoud Abouschmiess to these proceedings.

5. Pursuant to section 106B, FLA, that the transfer to the Second Respondent set [sic] aside.

6. Pursuant to section 90AE, FLA, that within 42 days from the date of these orders, the Second Respondent and Applicant are to do all things, consent and sign all documents to transfer full title and interest in the Property to the Applicant for Nil consideration.

7. That the First and Second Respondent are to pay all costs relating to the transfer of the Property to the Applicant including, but not limited to, the conveyance, costs of registration, or any other associate costs that may apply, and otherwise indemnify the Applicant against these costs.

8. That a declaration be made that the transfer of title and interest in the Property is made pursuant to section 68(1), Duties Act 1997.

9. Pursuant to section 79, FLA, that the parties are to do all things, consent and sign all documents to transfer full title and interest in the following properties to the First Respondent:

9.1. Unit 1, Asmar Building, Marj Al Akhdor Street, Abee Samra, Lebanon;

9.2. 1,200 of 2,400 shares held in land in [Bqarsouneh], Lebanon; and

9.3. 800 shares in Lot 2078 of land in Abee Samra, Lebanon.

10. Pursuant to section 78, FLA, a declaration be made that the parties shall each respectively retain all interest in and entitlement to:

10.1. All real property in their name whether solely or jointly (both in Australia and internationally);

10.2. All personal property now in their possession or control other than as stated above;

10.3. Savings or monies in their possession, custody or control other than as stated above;

10.4. All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in their sole name respectively;

10.5. All entitlements with respect to or arising from membership in any superannuation fund; and

10.6. Employment related entitlements, including but not limited to annual leave, sick leave, and long-service leave.

11. That all parties shall pay and keep all other parties indemnified in respect of any claims relating to any debts held by the parties which are due or accruing, both incurred prior to the date of these Orders and in the future.

12. That the parties do all acts and things and give consent and execute all documents and writings necessary to give effect to the Orders made therein.

13. Pursuant to Section 106A(4), FLA, if any of the parties refuse or neglect to execute any deed or instrument in fulfilment of the orders contained herein, the Registrar of the Court is appointed to execute such deed or instrument in the name of the party and to do all acts and things necessary to give validity to the operation of the deed or instrument in execution of the orders herein.

14. Pursuant to section 117, FLA, that the First and Second Respondents be ordered to pay the Applicant’s costs (jointly and severally).

15. Such further Orders as the Court sees fit.

Equity proceedings

20. The applicant claims an interest in a property at Ashcroft (Lot 6).

21. The primary relief sought by the applicant is a declaration that Lot 6 is held on trust for the applicant and an order that Yehia transfer the property to her. An alternative form of relief is sought that Yehia holds on trust for the applicant a sum representing the proceeds of sale of what I describe below as the “initial Ashcroft property”. Other relief is sought including accounting for a sum said to be due to the applicant for rent for use and occupation of Lot 6, equitable compensation and or an account of profits.

22. In late February 2020, the applicant lodged a caveat over Lot 6 claiming an interest pursuant to a trust said to arise on various bases and an assertion that Lot 6 was transferred by Mahmoud to Yehia by way of a sham transaction without consideration.

23. On 3 April 2020, Yehia served on the applicant a notice to lapse the caveat.

24. On 22 April 2020, the applicant commenced these equity proceedings by way of summons seeking orders in relation to an extension of the operation of the caveat.

25. On 8 May 2020, Yehia consented to an extension of the operation of the caveat without admissions.

26. On 20 October 2020, the applicant was granted leave to proceed against Ibrahim (leave being required as he resided in Lebanon at that time). He still resides there.

27. On 21 December 2020, the plaintiff filed a statement of claim and there has been an extensive array of pleadings and amendments in pleadings since that time.

28. The extent of the contentious factual dispute between the parties in the equity proceedings is reflected by the fact that exceptionally, the applicant has filed a reply to defences by the respondents and the respondents have filed a rejoinder to that reply.

29. There have been many case management orders made in these equity proceedings including orders for the filing and serving of evidence, discovery, interrogatories and the issue of subpoenas including subpoenas to the National Australia Bank and Commonwealth Securities Limited.

30. The applicant’s pleadings recite the history said to be relevant to her claiming an interest in Lot 6 which history dates back to August 2001.

31. The applicant asserts that a property in Ashcroft (initial Ashcroft property) was purchased in her name essentially for her benefit.

32. It appears undisputed that in or about August 2003, the initial Ashcroft property was sold and the proceeds used at least in part by Ibrahim to purchase another property in Ashcroft (property number 40).

33. Mahmoud purchased an adjacent property (property number 42) and pursuant to a joint venture or at least some arrangement as between Ibrahim and Mahmoud and some other parties those two adjoining properties were developed by the building of seven townhouses (developed property).

34. Certain of those townhouses (Lots 1-4) are claimed to have been registered in in Ibrahim’s name and the balance (Lots 5-7) in Mahmoud’s name.

35. The applicant claims that Lot 6 of the developed property was Ibrahim’s property although it was registered in Mahmoud’s name.

36. The townhouses and the registered titles to the developed property have been transferred to other parties.

37. Relevantly, Lot 6 was transferred from Mahmoud to Yehia by transfer dated 2 November 2007 purportedly for a sum of $200,000.

38. The applicant claims that the terms of that transfer were not known to her until January 2019.

39. She asserts that the transfer of Lot 6 to Yehia was done on instructions of Ibrahim rather than on the instructions of Mahmoud.

40. The applicant states that she did not commence proceedings immediately in the FCFCOA because when she discovered in late January 2019 that the transfer had been earlier made, it appeared to be an arm’s length transfer from Mahmoud to Yehia and she did not have documents or other evidence (which she subsequently obtained) which she asserts underpinned her claim that she has an interest in Lot 6. The other materials include records relating to directions to pay for the sale and purchase of the various properties and rental payments regarding Lot 6.

41. Without exhaustively reciting the applicant’s claims, I note that the applicant claims that:

1. she contributed from the transfer amount ($308,500) of the initial Ashcroft property sums towards the purchase of property number 40 and stamp duty for property number 42;

2. there was an express oral agreement between herself, Ibrahim and Mahmoud for her to be provided with a townhouse in return for the consideration she provided and contribution she made to the purchase of property number 40 and property number 42.

42. The respondents dispute the applicant’s claims. Without being exhaustive of their defences I note that they:

1. claim that Ibrahim paid for the initial Ashcroft property and is the beneficial owner of that property and accordingly entitled to the proceeds of that property;

2. deny that the transfer was a sham and deny that Lot 6 is held on trust for the applicant;

3. deny that Mahmoud was acting on Ibrahim’s instructions when Lot 6 was transferred to Yehia;

4. assert that the $200,000 consideration (as described below) was paid (though in part by instalments);

5. raise statutory defences seeking to defeat the trust pleaded including defences pursuant to s 23C Conveyancing Act1919 (NSW) (Conveyancing Act);

6. claim that Yehia has an indefensible title to Lot 6 pursuant to s 42 Real Property Act1900 (NSW) (Real Property Act); and

7. plead limitation defences pursuant to the provisions of, inter alia, s 48 Limitation Act1969 (NSW) (Limitation Act).

43. The applicant in reply has pleaded a raft of matters which are said to overcome the above-mentioned defences. Without being exhaustive, I note that the applicant pleads in reply:

1. she is entitled to the presumption of advancement;

2. Yehia is not a bona fide purchaser for value and exceptions to indefeasibility of title apply;

3. Ibrahim engaged in a sham transaction with Yehia and Mahmoud characterised by an alleged dishonest and fraudulent design said to fall within the second limb of Barnes v Addy (1874) LR 9 Ch App 244;

4. there is part performance for the purposes of s 54A(2) Conveyancing Act; and

5. an equitable or promissory estoppel arises in her favour.

44. The applicant also refers to claims of duress and undue influence.

45. Apart from the above claims, the applicant asserts that there are matrimonial assets in Lebanon including property and all the proceeds of sale of such property.

Transfer provisions

The provisions of section 5(1) NSW Act

46. The provisions of section 5(1) NSW Act are as follows:

5 Transfer of proceedings

(1) Where:

(a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court, and

(b) it appears to the Supreme Court that:

(i) (Repealed)

(ii) having regard to:

(A) whether, in the opinion of the Supreme Court, apart from any law of the Commonwealth or another State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Federal Court or the Family Court,

(B)  the extent to which, in the opinion of the Supreme Court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the Supreme Court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, and

(C) the interests of justice,

it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be,

(iii) (Repealed)

the Supreme Court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.

47. As originally enacted, s 5(1) provided as follows:

5 Transfer of proceedings

(1) Where—

(a) a proceeding (in this subsection referred to as the "relevant proceeding") is pending in the Supreme Court; and

(b) it appears to the Supreme Court that—

(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court or the Family Court and it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court;

(ii) having regard to—

(A) whether, in the opinion of the Supreme Court, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Federal Court or the Family Court;

(B) the extent to which, in the opinion of the Supreme Court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the Supreme Court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction; and

(C) the interests of justice,

it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be; or

(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Family Court, the Supreme Court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.

48. Clearly, then, as originally enacted s 5(1) contained a “residual provision” in s 5(1)(b)(iii) to transfer proceedings if it was “otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Family Court”.

49. Section 5 of the NSW Act was amended by sch 1 (paragraph 3) of the Federal Courts (Consequential Provisions) Act 2000 (NSW) (Federal Courts Act) so that s 5(1)(b)(i) & (iii) (the latter being the “residual provision”) were repealed.

50. Pursuant to s 2 of the Federal Courts Act, the amendments commenced from the date of assent (23 November 2000): Government Gazette No. 155 of 1.12.2000, p 12071.

51. The explanatory note for the Federal Courts (Consequential Provisions) Bill 2000 (NSW) states the following:

Overview of Bill

The High Court held in 1999 that the schemes for cross-vesting jurisdiction between federal and State courts were constitutionally invalid (Re Wakim, Ex parte McNally [(1999) 198 CLR 511; [1999] HCA 27]). As a consequence of that decision, the Federal Courts (State Jurisdiction) Act 1999 was enacted to enable State courts to deal with applications under the schemes that would otherwise have been dealt with by a federal court, and to provide:

(a) that the rights and liabilities of persons under ineffective judgments of a federal court in the purported exercise of State jurisdiction were taken to be rights and liabilities under judgments of the Supreme Court, and

(b) for the transfer of proceedings before a federal court in relation to State matters to the Supreme Court.

The objects of this Bill are as follows:

(a) to remove from State Acts any provisions that purport to confer jurisdiction on a federal court,

…

(c) to make changes to the State cross-vesting schemes that are complementary to amendments to Commonwealth legislation proposed by the Jurisdiction of Courts Legislation Amendment Bill 2000 that was assented to on 30 May 2000,

…

(e) to make other changes to State Acts of a minor, consequential or ancillary nature.

52. The Second Reading Speeches do not shed much further light than the above other than general comments regarding the objectives of the Act. In his Second Reading Speech on behalf of the Attorney General Bob Debus, Ian McManus, Parliamentary Secretary stated that:

Attention is now being directed to those provisions in State Acts which are inoperative because of Re Wakim. This bill will amend the State Acts which established schemes to confer State jurisdiction on Federal courts. It will remove or amend those inoperative provisions: New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 11 October 2000 at 9105.

The provisions of section 5(1) Cth Act

53. The provisions of section 5(1) Cth Act are as follows:

5 Transfer of proceedings

(1) Where:

(a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court of a State or Territory (in this subsection referred to as the first court); and

(b) it appears to the first court that:

(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court or the Federal Circuit and Family Court of Australia (Division 1) and it is more appropriate that the relevant proceeding be determined by the Federal Court or the Federal Circuit and Family Court of Australia (Division 1);

(ii) having regard to:

(A) whether, in the opinion of the first court, apart from this Act and any law of a State relating to cross‑vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Federal Circuit and Family Court of Australia (Division 1), the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Federal Court or the Federal Circuit and Family Court of Australia (Division 1);

(B) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the first court apart from this Act and any law of a State relating to cross‑vesting of jurisdiction; and

(C) the interests of justice;

it is more appropriate that the relevant proceeding be determined by the Federal Court or the Federal Circuit and Family Court of Australia (Division 1), as the case may be; or

(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Federal Circuit and Family Court of Australia (Division 1);

the first court shall transfer the relevant proceeding to the Federal Court or the Federal Circuit and Family Court of Australia (Division 1), as the case may be.

Differences between s 5(1) NSW Act and s 5(1) Cth Act

54. There are differences between s 5(1) NSW Act and s 5(1) Cth Act.

55. Leaving aside some wording in relation to description of the Courts which I will come to, one of the differences is in the use of the phrase “interests of justice”.

s 5(1) Cth Act

56. Section 5(1)(b) Cth Act uses the expression “interests of justice” in two different parts of that provision.

57. First, the expression “interests of justice” appears in s 5(1)(b)(ii)(C). Secondly, the expression “otherwise in the interests of justice” appears in s 5(1)(b)(iii). Where the expression “otherwise interests of justice” appears in s 5(1)(b)(iii) it is sometimes in caselaw described as a “residual provision”. However, use of the expression “residual provision” has not been consistently used in caselaw. On occasion it has been used to describe the expression “interests of justice” in s 5(1)(b)(ii)(C) of each of the Cth Act and the NSW Act.

58. I consider that any reference to the “interests of justice” as a “residual provision” should not be extended to describe it as such in s 5(1)(b)(ii)(C) of each of the Cth Act and the NSW Act. That is because where the phrase “interests of justice” appears in s 5(1)(b)(ii)(C) of those Acts it is used as one of three identified criteria (A), (B) and (C) which the “first court” is to have regard to within a specific statutory test as to whether it is “more appropriate” that the relevant proceedings be determined by the Division 1 Court (rather than remain to be determined by the Supreme Court of NSW).

59. That reference to the “interests of justice” is different to use of the phrase “interests of justice” where it appears in the second occasion in s 5(1)(b) Cth Act in the expression “otherwise in the interests of justice” in s 5(1)(b)(iii). There it is used in the provision as a separate statutory test regarding transfer - rather than as one of a number of specified matters that the Court has regard to in applying the test of whether it is “more appropriate” that the relevant proceeding be determined by (in this case relevantly) the “Division 1 Court”.

60. It is conceptually possible that within the provisions of s 5(1)(b) Cth Act that the sort of considerations that might arise in relation to the “interests of justice” in s 5(1)(b)(ii)(C) might differ from the “otherwise in the interests of justice” provisions of s 5(1)(b)(iii).

61. Whether different sorts of considerations may arise between the use of the phrase “interests of justice” in 5(1)(b)(ii)(C) and “otherwise in the interests of justice” in s 5(1)(b)(iii) in the Cth Act is not something that I have found necessary to determine. Further, I would be reluctant to make any such determination in the absence of specific submissions addressing the issue and I note that the applicant did not address any submissions to such differences.

s 5(1) NSW Act

62. The current form of s 5(1)(b) NSW Act no longer contains s 5(1)(b)(i) and (iii), as it originally did. In particular, apart from precise wording (e.g. in relation to the description of the applicable courts), s 5(1)(b)(ii)(C) of the NSW Act reflects the same structure and essentially the same statutory test for transfer as s 5(1)(b)(ii)(C) of the Cth Act.

63. However, as is evident, the NSW Act no longer contains the alternate statutory test for the transfer in the “residual” “otherwise interests of justice” provision in s 5(1)(b)(iii) Cth Act.

Which test for transfer should be applied?

64. The applicant, in invoking reliance upon upon s 5(1) of each of the Cth Act and the NSW Act, as I have noted, did not address submissions as to the different statutory tests which apply under those provisions.

65. In particular, the applicant did not distinguish between the different tests (for want of better description) namely:

1. the “having regard to [matters] it is more appropriate that the relevant proceeding be determined by the [Division 1 Court]” test for transfer under each of the provisions of s 5(1)(b)(ii) of the NSW Act and Cth Act; and

2. the “it is otherwise in the interests of justice that the relevant proceeding be determined by the [Division 1 Court]” test for transfer in s 5(1)(b)(iii) Cth Act.

66. She suggested that it was ultimately a matter for me to determine which was appropriate. I noted to the applicant that in a sense it was not for me to choose whether either or both of the NSW Act and Cth Act provisions would be advanced by her. Ultimately, that was her choice.

67. As the case was argued, essentially, the matter was principally addressed by reference to the provisions of s 5(1)(b)(ii) of the NSW Act (i.e. the “it is more appropriate…” test) rather than s 5(1)(b)(iii) Cth Act (i.e. “otherwise in the interests of justice…” test).

68. Both the applicant and the respondents made reference in their written and oral submissions to particular matters that they said were relevant to a consideration of the interests of justice in s 5(1)(b)(ii) of the NSW Act.

69. In those circumstances, it is appropriate that I primarily address the matter by reference to those provisions. Ultimately, as will be seen below, I consider that a transfer ought to be made pursuant to s 5(1)(b)(ii) NSW Act (relevantly similar to s 5(1)(b)(ii) of the Cth Act), making it unnecessary for me to specifically consider a transfer pursuant to s 5(1)(b)(iii) of the Cth Act.

Analysis of the transfer provisions pursuant to s 5(1)(b)(ii) NSW Act

70. The respondents did not assert that the provisions of s 5(1) NSW Act do not provide a source of jurisdiction for transfer of the equity proceedings.

71. Clearly, the equity proceedings are a “relevant proceeding” pending in the Supreme Court: s 5(1)(a) NSW Act. That is not disputed.

72. No particular submissions were addressed to the construction of s 5(1)(b)(ii) in the prehearing outline of submissions. Nonetheless, several construction issues arise in relation to those provisions.

Is the “Family Court” properly construed a reference to the “Division 1 Court”?

73. First, subsection (1) refers to the “Family Court” and not to the “Division 1 Court”.

74. On the hearing of the application, Mr Jordan accepted that the reference in s 5(1) to the “Family Court” is properly construed as being a reference to the “Division 1 Court”.

75. That concession obviated the need for any particular debate about the matter.

76. Nonetheless, because the question is one of jurisdiction, it is appropriate that I briefly address the issue.

77. In Aviani v Loh (No 2) [2022] NSWSC 1148; (2022) 405 ALR 337 (Aviani v Loh (No 2)) at [221]-[222], I expressed the view (obiter) that the reference to the “Family Court” in s 5(1) NSW Act must by reference to a number of statutory provisions (s 8(1) Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCOA Act), s 53(1) Interpretation Act 1987 (NSW), s 25B(1) of the Acts Interpretation Act 1901 (Cth), cll 1 & 6 of Sch 5 to the Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Act 2021 (Cth)) be read as a reference to the “Division 1 Court”.

78. In Wurz bht NSW Trustee & Guardian v Elawaad [2022] NSWSC 1404 (Wurz), Henry J at [40] referred to my decision in Aviani v Loh (No 2) and accepted that proposition.

79. Further, in Comino v Kremetis [2023] NSWSC 32 (Comino v Kremetis), Chen J also referred to my decision in Aviani v Loh (No 2) and independently dealt with a specific argument that the reference to the “Family Court” is a different Court to the former Family Court of Australia: at [25].

80. Chen J concluded both independently and by reference to the passages I have referred to above in Aviani v Loh (No 2) and Wurz (applying judicial comity principles) that s 8(1) of the FCFCOA Act effects a change of name of the Family Court of Australia, but otherwise the Family Court was preserved, albeit, through other provisions, the original jurisdiction of that Court differs: at [28].

Law Reform

81. The fact that the reference in s 5(1) NSW Act to the “Family Court” has not been amended to reflect the enactment of the FCFCOA Act, which took effect on 1 September 2021, is apt to cause some confusion.

82. The fact that at least several cases have now referred to the outdated reference to “Family Court” and have addressed the question of whether the “Family Court” is indeed a reference to the “Division 1 Court” demonstrates the potentiality at least for some confusion.

83. The matter should be drawn to the attention of the authorities in this state who have a role in law reform to give consideration to regularising what is currently an outdated reference to the “Family Court” in s 5(1) of the NSW Act.

Are the three matters (A), (B) & (C) in s 5(1)(b)(ii)(A)-(C) cumulative?

84. Secondly, there is a question as to whether the three matters (A), (B) & (C) in s 5(1)(b)(ii)(A)-(C) are cumulative such that each of those matters must be satisfied before the jurisdiction to transfer arises or whether they are simply separate matters which must be considered such that, for example, affirmative findings on (A) and (B) (which would point against transfer of the proceedings) would not necessarily preclude an overall finding the proceeding should be transferred.

85. Ultimately, the question as to whether matters (A), (B) and (C) are cumulative or not is a matter of statutory construction.

86. I addressed and adhere to what I stated regarding the principles relevant to approaching the task of statutory construction in Application of Doolan [2023] NSWSC 320 at [335]-[342].

87. As a matter of grammar there is no particular suggestion that each of the matters (A), (B) and (C) must necessarily be read as being cumulative.

88. Some insight to the matter might be derived from the legislative history of s 5(1) NSW Act. However, it is not necessary to speculate on that.

89. In my assessment, as a matter of grammar, the natural way of reading the provisions of s 5(1)(b)(ii)(A)-(C) is that the matters stated there are not matters that must be cumulatively satisfied before jurisdiction to transfer is enlivened. Rather, the (A),(B) and (C) provisions are matters which in light of the introductory words in (ii) (“having regard to”) are each to be considered for the purpose of the Court making a decision about the appropriateness of the relevant proceedings being determined by the other Court, in this case, relevantly, the Division 1 Court.

90. Apart from the grammar and textual construction of s 5(1), this is the way that s 5(1)(b) has been construed in this Court in particular in the seminal decision of Brereton J (as his Honour then was) in Valceski v Valceski (2007) 70 NSWLR 36; [2007] NSWSC 440 (Valceski) at [19], [67]-[68].

91. In Xue v Xue; Xue v Xue [2020] NSWSC 501 (Xue), Adamson J (as her Honour then was) appears to have proceeded on the same basis as Brereton J in Valceski: see at [52] (her Honour noting that it was common ground that the proceedings in the Supreme Court would not have been capable of being instituted in the Family Court but for any cross-vesting law or the Family Court’s accrued jurisdiction and also common ground that the proceedings in the Supreme Court did not give rise to any question relating to Commonwealth law and that the parties accepted that the motion ought to be determined by reference to the interests of justice consideration in s 5(1)(b)(ii)(C) of the NSW Act).

92. Chen J in Comino v Kremetis expressly picked up and relied upon the approach to the construction of s 5(1)(b)(ii)(A),(B),(C) taken by Brereton J in Valceski: at [18], [73].

The weighting to be attributed to matters (A), (B) & (C) in s 5(1)(b)(ii)(A)-(C)

93. Having found that each of the matters or considerations in (A)-(C) of s 5(1)(b)(ii) are mandatory but not cumulative considerations it may be observed that there is nothing in the section which stipulates the priority or relative weight to be forwarded to those three considerations inter se, merely that they are relevant considerations to be taken into account. Absent any statutory indication of the weight to be given to those various considerations it would appear that it is for the Court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power. That appears to me to be an appropriate construction of the statutory provisions.

93. Ultimately, it will be a matter for the Court in any given case to determine the weight to be accorded to those considerations, which will necessarily depend upon the facts of the particular case in question, in making a determination as to whether it is (relevantly) more appropriate that the “relevant proceeding” be determined by the Division 1 Court or not: see, eg, (albeit in the realm of administrative law) Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40 at 41 per Mason J and (in family provision proceedings comments made on the operation of s 60(2) Succession Act 2006 (NSW) and the scheme of that legislation) Mallitt v Gow [2022] NSWSC 1012 at [222]-[224] per Hallen J.

94. Finally, I note that if it appears that one Court is more appropriate than the other, however so slightly, then a transfer to the more appropriate Court is mandatory and no question of discretion arises: Valceski at [70]; Comino v Kremetis at [70(6)].

95. The three matters to be considered under the s 5(1)(b)(ii) provisions in an application to transfer proceedings from this Court to the Division 1 Court are, in summary:

1. whether the relevant proceedings (but for cross-vesting and accrued jurisdiction) would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Division 1 Court (capability consideration);

2. the extent to which matters for determination arise under a law of the Commonwealth and are not otherwise within the jurisdiction of the Supreme Court (Commonwealth law consideration); and

3. the interests of justice (interests of justice consideration): Valceski at [19].

97. I proceed to address these matters below.

Capability consideration

98. The equity proceedings clearly would have been capable of being instituted in the Supreme Court.

99. At least the relief in the equity proceedings would not have been capable of being instituted in the Division 1 Court other than by reference to cross-vesting and accrued jurisdiction: see, e.g., Valceski at [67].

100. The applicant did not submit otherwise.

Commonwealth law consideration

101. The equity proceedings per se did not arise under or involve questions as to the application or validity of a Commonwealth law. The equity proceedings essentially involve questions of general law provisions in relation to trusts and sham transactions and statutory provisions under New South Wales law and, in particular, under the provisions of the Real Property Act, the Conveyancing Act and the Limitation Act.

102. The applicant did not submit otherwise.

Interests of justice consideration

103. There is considerable authority both at state and federal level regarding matters relevant to the interests of justice.

104. Some cases that particularly deal with s 5(1) NSW Act indicate that the “interests of justice” are to be judged by objective factors to facilitate identification of the “natural forum” in which it might be expected that the dispute would fall to be resolved with its concomitant juridical advantages and disadvantages for each party: Valceski at [69].

105. Decisions of justices of this Court have approached transfer applications pursuant to s 5(1) NSW Act in that way: see, eg, Brown v Anstis(No 2) [2013] NSWSC 1488 at [56] per Bellew J; Xue at [54]; Comino v Kremetis at [70].

106. In Comino v Kremetis, Chen J noted that the interests of justice include a range of matters such as the governing law, forensic advantages and disadvantages, balance of convenience to the parties and the witnesses and convenience to the Court system: at [70(5)] citing James Hardie & Company Pty Ltd v Barry (2000) 50 NSWLR 357; [2000] NSWCA 353 (James Hardie v Barry) at [95] per Mason P.

107. James Hardie v Barry involved a transfer application particularly by reference to the “otherwise in the interests of justice” provisions of s 5(2)(b)(iii) NSW Act.

108. As I have observed above there are differences between the expressions “interests of justice” in s 5(1)(b)(ii)(C) Cth Act and NSW Act and “otherwise in the interests of justice” provisions of s 5(1)(b)(iii) Cth Act and also s 5(2)(b)(iii) NSW Act. I do not propose to explore those differences. Rather, as I have noted above in light of the way that the case was presented, I propose to proceed on the basis of addressing the matters raised by the parties as reflecting on the interests of justice, by reference to submissions made by the parties.

109. The matters that the parties drew my attention to in the course of submissions included as being appropriate considerations the following:

1. Which Court is the natural forum?

2. What is the significance of the applicant’s choice of forum?

3. Is the applicant’s allegation of a sham transaction genuine?

4. What is the significance of any delay in the applicant commencing the family law proceedings?

5. Is the Valceski decision distinguishable?

6. Are the family law proceedings a relevantly identical controversy to the equity proceeding?

110. I now address those factors.

111. Whilst I will address those factors separately having regard to them being raised as particular submissions, it is evident that to some extent there is a degree of overlap in the considerations raised by the parties in addressing the question of the interests of justice and the ultimate question of whether it is more appropriate that the equity proceedings be determined by the Division 1 Court.

(1) Which Court is the natural forum?

112. In certain cases dealing with transfer applications pursuant to cross-vesting legislation, reference is made to one forum or another being the “natural forum”: BHP Billiton Ltd v Shultz (2004) 221 CLR 400; [2004] HCA 61 (BHP v Shultz) at [18]-[20] per Gleeson CJ, McHugh and Heydon JJ, at [109], [163], [170] per Kirby J, and at [259] per Callinan J.

113. Callinan J understood that expression (in the context of BHP v Shultz) to mean “in most cases the forum of the jurisdiction in which the tort was committed”: at [259].

114. Gleeson CJ, McHugh and Heydon JJ made reference to that expression as being a description usually based upon a consideration of “connecting factors” described by Lord Goff (Lord Keith and Lord Mackay agreeing) in Spiliada Maritime Corporation v Cansulex Ltd (The Spiliada) [1987] AC 460 (Spiliada) at 478 and as including matters of convenience and expense, such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law governing the relevant transaction. Their Honours noted that Lord Templeman described such factors as “legion” and said that it was difficult to find clear guidance as to how they are to be weighed in a particular case: at [18] citing Spiliada at 465.

115. In British American Tobacco Australia Ltd v Gordon [2007] NSWSC 230, Brereton J dealt with an application pursuant to the provisions of s 5(2)(b)(iii) NSW Act: at [42]. His Honour referred to the decision of the High Court in BHP v Shultz and also the Court of Appeal in Bankinvest AG v Seabrook (1988) 14 NSWLR 711: at [43].

116. His Honour noted that the High Court’s decision in BHP v Shultz made it clear that when it came to juridical advantage and disadvantage, the interests of justice concerned those of both parties, and not the selection of the most advantageous, or least disadvantageous, forum for one of them. His Honour observed that the “interests of justice” should be judged by more objective factors and it is for that reason that identification of the “natural forum” – in which objectively judged it might be expected that the dispute would fall to be resolved with its concomitant juridical advantages and disadvantages for each party – is important: at [47].

117. His Honour repeated those remarks in Valceski (a case for transfer pursuant to s 5(1)(b)(ii) NSW Act) at [69] in a slightly different form. Adamson J in Xue at [54] referred to Brereton J’s remarks regarding the “natural forum”.

118. While I do not doubt that consideration of what are described as “connecting factors” and consideration of a “natural forum” may in any given case play a part in determining the interests of justice in s 5(1)(b)(ii) NSW Act cases, it needs to be borne in mind that the test regarding transfer is not a test as to which Court is the “natural forum”. Rather, the test is, having regard to certain criteria, whether “it is more appropriate that the relevant proceedings be determined” by the Division 1 Court.

119. For the purposes of s 5(1)(b)(ii), the “interests of justice” is one of the considerations that the Supreme Court has regard to. As I have noted above, the parties identified in their submissions various factors which were said to bear upon the “interests of justice”.

120. The applicant submitted that the Division 1 Court as a specialist court is the natural forum to deal with the entire division of matrimonial assets between the parties.

121. Mr Jordan on the other hand submitted that the equity proceedings fall within the equitable and legal jurisdiction of the Supreme Court and that the Supreme Court is the natural forum for the equity proceedings.

122. In seeking to understand and make a determination as to whether it is more appropriate that the equity proceedings be determined by the Division 1 Court, it seemed to me important to understand and make an assessment of what issues were likely to be the real issues in dispute between the parties on a hearing of the respective proceedings.

123. For that reason, I spent some time on the hearing engaging the applicant and Mr Jordan in discussion regarding that matter.

124. At first blush, the first three orders sought by the applicant in the family law proceedings as Final Financial Orders are suggestive that the Division 1 Court is being asked to provide relief through provisions of the Family Law Act1975 (Cth) (FLA) but by reference to equitable principles (constructive trust, presumption of advancement and promissory estoppel: see Orders 2, 3).

125. However, the affidavit which the applicant has sworn in support of the family law proceedings refers to the property that each of Ibrahim and the applicant had at the commencement of the marriage under the heading “Initial Contributions”: CB 55-56[20]-[22]. Further, the applicant refers to contributions she made throughout the duration of the marriage as the “primary homemaker and caretaker for the children” under the general heading “Contributions towards the Welfare of the Family”: CB 59-61[47]-[63].

126. The applicant confirmed that she would be seeking to have the Division 1 Court take into account the contributions she referred to in asking the Division 1 Court to identify Lot 6 as matrimonial property: CB 32-34; T 34.14-22. Further, Mr Jordan confirmed that that is the way that he understood the applicant’s claim: T 34.24-26.

127. Further, the applicant confirmed that despite the existing wording of the proposed Final Financial Orders sought in the family law proceedings (CB 48) impressionistically being tied to equitable relief, that part of the applicant’s case in the Division 1 Court will be simply relying upon the provisions of s 79 and whatever may be applicable under s 106B FLA in relation to Lot 6 being matrimonial property and contributions to it: T 34.45-35.5.

128. Both the applicant and Mr Jordan confirmed that neither the applicant nor the respondents propose seeking for the family law proceedings to be transferred to the Supreme Court: T 36.18-35.

129. At one point on the hearing of the application, Mr Jordan suggested that the issues in the equity proceedings essentially had to be determined before a determination can be made in the family law proceedings as to what property was matrimonial property: T 36.46-48. However, following discussion the submission was refined and I understood that Mr Jordan accepted that the approach of the Division 1 Court would not be different from the way Brereton J had described the then Family Court’s operation in relation to determining claims under s 79 FLA: T 36.50-37.45.

130. In Goyal v Chandra (2006) 68 NSWLR 313; [2006] NSWSC 239, Brereton J (as his Honour then was) at [48] addressed the basic way in which a Court dealing with jurisdiction under s 79 addresses relief in family law proceedings. His Honour noted that once proceedings are commenced which invoke jurisdiction under the FLA, it is not necessary first to determine the existing beneficial interests of the parties. Whichever is the starting point makes not the slightest difference to the outcome of the s 79 proceedings, which depend not on any starting point, but on identifying the pool of property available for division and the respective contributions and means and needs of the parties citing Olliver v Olliver (1978) 4 Fam LR 360 at 365 per Asche and Wood SJJ and Strauss J and Scott v Briggs (1991) 14 Fam LR 661 at 670 per Kirby P and Clarke JA.

131. I raised with the parties whether there were relevant differences between the equitable relief and the relief under the FLA.

132. Whilst I cannot be absolutely certain as to how the parties will progress the respective proceedings, I made the observation during the hearing that the applicant’s responses to my questions describing the relief to be sought by her in the family law proceedings were suggestive that the applicant’s claim to entitlement in or a share of Lot 6 might at a final hearing primarily be advanced by invoking jurisdiction under ss 79 and 106B FLA (and perhaps other FLA provisions) rather than relying upon equitable principles.

133. I further indicated that relief in reliance upon those FLA provisions and by reference to “contributions” was very arguably a simpler path to relief rather than a path of some complexity in light of the issues raised in the equity proceedings: T 38.21-43.

134. In substance, that additional or supplementary way the applicant’s case may be put in the family law proceedings would be for want of a better description a cleaner and simpler path to an outcome in respect of the applicant’s claims regarding Lot 6 as distinct from the somewhat complex trust, sham and statutory defence claims in the equity proceedings. Mr Jordan for his part appeared to frankly concede that that was the position: T 38.33-40.2.

135. A determination in the family law proceedings pursuant to s 79 FLA would, having regard to the matters I have noted as discussed with the applicant and Mr Jordan on the hearing of the application, be determined by reference to the contributions of the parties.

136. The claim in relation to setting aside the transfer of Lot 6 pursuant to the provisions of s 106B FLA certainly on one view (without at the moment commenting on the strength or weakness of any such claim) is a less complex claim than that in the equity proceedings and at least in the terms of provisions of s 106B it may be arguable irrespective of the intention of the parties if a disposition which was made was likely to defeat an anticipated order.

137. In saying that, I am not attempting to suggest that the provisions of s 106B will necessarily be able to be invoked by the applicant nor that she may not be able to point to other statutory provisions under the FLA or other provisions which may facilitate relief setting aside the transfer.

138. If a transfer order was made, subject to any particular case management orders made by the Division 1 Court, it seems likely that both the equity proceedings and family law proceedings would be heard together and, subject to questions of relevance and any just objections, evidence in one proceeding would be evidence in the other.

139. In light of the above matters, my sense of the matter is that in what the applicant and respondents have submitted and accepted in respect of the consideration of a more natural forum that the fact that relief principally under the FLA appears a cleaner and clearer path to ultimate relief than the complexity that I have described in respect of the equity proceedings is a relatively powerful consideration in favour of finding that the Division 1 Court is the more appropriate Court to deal with the equity proceedings. Mr Jordan frankly accepted that and noted that if a transfer order were made there ought to be cost consequences against the applicant if she were abandoning the equitable relief in favour of relief under the FLA: T 38.5-39.13.

140. However, I pause to note that whilst on enquiry the applicant did indicate that there would be what I have described as an additional or supplemental aspect to her claim in relation to Lot 6 under the FLA, she did not go so far as to indicate that she was abandoning the equitable relief: T 38.5-43. Rather, in light of what was described to me and my assessment of how the issues in both proceedings might ultimately be progressed at a final hearing, it seemed to me that it is more likely that the applicant’s path to a claim in relation to Lot 6 would be pressed ultimately in terms of FLA relief. Mr Jordan later during the hearing acknowledged that what I have just said about those matters did not reflect the fact that the applicant was abandoning, at least at the moment, the trust case or sham case but rather that she had the option of running might be described as a “cleaner” case by pursuit of relief under the FLA: T 42.38-45.

(2) What is the significance of the applicant’s choice of forum?

141. Mr Jordan submitted that the applicant had made a choice of forum and that such choice was relevant to the interests of justice citing my decision in Aviani v Loh(No 2) at [168].

142. Whilst I accept that this is a relevant consideration, I do not regard it as being a strong consideration against transfer.

143. The applicant asserts that from an early time of the commencement of the equity proceedings she foreshadowed an intention to transfer the matter to the FCFCOA. Mr Jordan referred to the fact that the applicant was legally advised and represented prior to commencing the equity proceedings and that she ought to have chosen a forum where a “cleaner” case could be run: T 43.5-9.

144. The mere fact that the equity proceedings were commenced prior to the family law proceedings does not per se dictate which Court is the more appropriate Court to deal with both proceedings once the second set of proceedings were commenced.

145. I did not understand Mr Jordan to suggest that the fact that family law proceedings had now been commenced meant that the applicant was somehow estopped from pursuing such proceedings or had in some way made an irrevocable choice to litigate principally the equity relief.

146. I accept the applicant’s argument that having commenced the family law proceedings the issue really becomes whether both proceedings should be determined by separate courts or one proceeding should be transferred to the other. As noted above, there is no appetite on the part of either the applicant or the respondents to transfer the family law proceedings to this Court.

147. The applicant points to a number of matters which are relevant to a transfer order being made as opposed to no transfer order being made and the two proceedings continuing to be dealt with by separate Courts.

148. First, the applicant notes that if proceedings remained in two separate Courts there could be inconsistent findings on relevant facts.

149. Secondly, the applicant reiterates the matter that I discussed with the applicant and Mr Jordan during the hearing namely the fact that the Division 1 Court’s powers under s 79 FLA provide a cleaner or broader scope to deal with the applicant’s claims against the defendants and, in particular, against Ibrahim in respect of the asset pool of the parties.

150. Thirdly, the applicant submits that a transfer will avoid duplication of evidence and the parties will have the benefit of subpoenaed materials, evidence and pleadings made in this Court.

151. It seems to me that it is right to say that a risk of potentially inconsistent findings would potentially be obviated, and I did not hear Mr Jordan to submit otherwise.

152. If a transfer order is made the extent to which there may be an avoidance of duplication of evidence and the extent to which the parties in the family law proceedings may benefit from subpoenaed materials, evidence and pleadings in this Court is a little hard to judge at this point. Nonetheless, I accept that such a benefit might well occur if both proceedings are listed for hearing together with evidence in one (subject to relevance and any just objections) being evidence in the other.

(3) Is the applicant’s allegation of a sham transaction genuine?

153. Mr Jordan submitted that there is no genuine allegation by the applicant that the transfer of Lot 6 was a sham transaction. He submits that a sham transaction is one where there is an intention that the true transaction is different from that which would ordinarily be attributed to the transaction on the face of the documents and that a transaction is not a sham merely because it is entered into with an improper motive and that an intent to deceive, even if deception occurred in fact, does not suffice to conclude that a transaction is a sham citing Lewis v Condon; Condon v Lewis (2013) 85 NSWLR 99; [2013] NSWCA 204 at [59], [68], [71] per Leeming JA (McColl JA and Sackville AJA agreeing).

154. Mr Jordan essentially submitted that there is little or no evidence of sham and that the only way the Division 1 Court would actually have jurisdiction would be if there was a genuine allegation of a sham transaction citing Xue at [53]; Chaudhary v Chaudhary [2017] NSWCA 222 at [110] per Emmett AJA (Payne JA and Sackville AJA agreeing).

155. I do not accept that there is no genuine allegation on behalf of the applicant that the transfer of the property was a sham transaction.

156. The applicant at [58]-[69] of her April 2023 affidavit makes reference to a number of matters in particular by reference to the evidence of Ibrahim and Yehia regarding the alleged payment of $200,000 for Lot 6. Some of the material the applicant relies upon includes bank statements and inferences that might arise from the absence of records and information.

157. Indeed, during the hearing of the application the applicant drew attention to Yehia’s amended defence pleading that in 2005 Yehia and Ibrahim entered into an agreement whereby Ibrahim agreed to contribute $100,000 to the development of the townhouses on the basis that Yehia would receive a share of Ibrahim’s profits from the proceeds of sale of Lots 2 and 6, that Yehia contributed $100,000 to the development on that basis and that in late May or early June 2007, Yehia and Ibrahim entered into an agreement whereby Ibrahim agreed to sell Lot 6 to Yehia for $200,000 which sum was comprised of the sum of $100,000 that Yehia had contributed to the development in May 2005 and a contractual obligation to pay $100,000 to Ibrahim in future instalments: T 46.

158. The hearing of a transfer application is not the occasion to make concluded findings regarding the genuineness of allegations in pleadings.

159. I do not regard the reference to the decision of Adamson J (as her Honour then was) in Xue as supporting the proposition that the Division 1 Court would not have jurisdiction to deal with the claims here. Ultimately, each case depends upon its own facts.

160. As matters presently stand, the applicant has put forward a contention partly in pleadings and partly in the above-mentioned paragraphs of her April 2023 affidavit that there is property which might be held to be matrimonial property and a jurisdictional basis is identified by her on which the transfer of Lot 6 is sought to be set aside. In the equity proceedings, the respondents have not taken any steps to strike out the applicant’s pleadings in relation to the sham transaction case nor have they sought summary judgment in relation to it. Even if they were to seek summary judgment, conceptually there remains the possibility that a sham may be able to be proved from evidence of the respondents if they go into evidence: e.g. Wickstead v Browne (1992) 30 NSWLR 1; [1992] NSWCA 272 at 11G-12C per Handley and Cripps JJA.

(4) What is the significance of any delay in the applicant in commencing the family law proceedings?

161. Mr Jordan asserts that the applicant’s explanation for the delay in commencing family law proceedings is that to do so she required evidence that the transfer was a sham. He says that she points to no such evidence of a sham. For the reasons set out above, I do not consider that is the case.

162. Further, Mr Jordan submits that the applicant’s delay in bringing the present application is unexplained and that is a “highly relevant matter” to be considered given the present state of the equity proceedings. In this regard he cites Lamshed v Lamshed (1992) 35 FCR 111 (Lamshed) and ECC Lighting Ltd v McGurk (Supreme Court (NSW), Santow J, 15 June 1995, unrep) (McGurk). The decision of O’Loughlin J in Lamshed (at 114) suggests that unexplained delays are a relevant consideration.

163. However, ultimately, the assessment of the impact of any delay will vary from proceeding to proceeding.

164. The decision of Santow J (as his Honour then was) in McGurk demonstrates that.

165. In that case proceedings had been commenced in the Supreme Court in August 1993.

166. The matter had reached a point at which the pleadings and affidavits had been exchanged. The question of liability in respect of the claims had, following an initially contested application, been referred by consent to a referee with that hearing scheduled to commence barely 4 days after Santow J dealt with a transfer application.

167. There had been a change of counsel in the proceedings, and, in May 1995, the applicant had instituted proceedings in the Industrial Court of New South Wales seeking relief. Further, on 2 June 1995, the applicant had commenced proceedings in the Federal Court raising for the first time the claim under the provisions of s 52 Trade Practices Act1974 (Cth).

168. Santow J refused to transfer the proceedings from the Industrial Court to the Supreme Court with a view to the proceedings being then transferred to the Federal Court.

169. His Honour did not find that the delay in making the application was unexplained. His Honour referred to the change of counsel and the change of advice which led to the institution of the Industrial Court proceedings.

170. A reading of the reasons for judgment suggests that the reasons for refusal of the cross-vesting application were certainly not limited to those of delay: at 8. His Honour attributed considerable weight in refusing the application to the fact that it was conceded that the Federal Court proceedings had been brought simply to facilitate the cross-vesting and it had been conceded that the representations on which those proceedings were founded could equally have been pleaded or made the subject of a cross-claim in the Supreme Court under identical legislation. His Honour noted in that context that it must be an abuse of process to commence proceedings purely to facilitate cross-vesting: at 4.

171. The situation in the equity proceedings here are different. Whilst Mr Jordan states that the proceedings are close to the point where they might be set down for hearing, they have not been fixed for hearing.

172. My assessment of the matter overall is that there is no aspect of the applicant’s conduct of the equity proceedings or any objective assessment of the matter which would be a sufficiently decisive consideration such as to warrant refusal of the application to transfer the proceedings to the Division 1 Court based on alleged delay.

173. I do not consider that Mr Jordan’s submission referring to the comments of Rees J in Kurzyp v Kurzyp [2021] NSWSC 851 at [154] warrants any different view.

(5) Is the Valceski decision distinguishable?

174. Mr Jordan notes that the applicant in her submissions refers to the decision of Brereton J in Valceski. He sought to distinguish that case on the facts noting that in the present case the applicant had commenced proceedings to assert a right against the property of a stranger to the marriage (Yehia) that had been owned by that stranger for thirteen years and that three years after commencing the equity proceedings the applicant decided to change forum to run a case that is relevantly identical to the case run by her in the equity proceedings.

175. First, I do not regard the applicant’s reasons for seeking a transfer to be as starkly belated as Mr Jordan suggests. In her affidavit in support of the application the applicant sets the degree of difficulty that she had in ultimately returning to Australia and then obtaining information regarding what had happened in relation to the proceeds of sale of the initial Ashcroft property.

176. Secondly, for the reasons that I have outlined above my assessment of the matter is that family law proceedings will not just be a “relevantly identical” case to the case run by the applicant in the equity proceedings.

177. That matter is relevant to the last matter raised by the parties which I now address.

(6) Are the family law proceedings a relevantly identical controversy to the equity proceedings?

178. Mr Jordan in the prehearing submissions disputed the applicant’s contention that the family law proceedings are a “greater” controversy than the equity proceedings. He submitted that the only additional relief sought in the family law proceedings is that “all things” be done to transfer three properties in Lebanon from the applicant to Ibrahim.

179. For the reasons I have addressed above and as was frankly accepted by Mr Jordan on the actual hearing of the application, there is an additional supplemental case advanced by the applicant based on the provisions of ss 79, 106B FLA separate from purely equitable relief.

180. Such a case would involve some degree of additional evidence. For example, in relation to non-financial “contributions” relevant under s 79 FLA.

Is the Division 1 Court the more appropriate court to determine the equity proceedings?

181. For the reasons outlined above, I consider that the likelihood is that if the proceedings were dealt with together the applicant’s claim would be principally based on a cleaner and less complex path to relief via the provisions of the FLA rather than the equity case as propounded. Mr Jordan, as I have noted, accepted that.

182. There is no suggestion that there would be any application made to the Division 1 Court to transfer the family law proceedings to this Court. Thus, there exists proceedings in both Courts. As I observed in Aviani v Loh (No 2) at [267]-[269], it is ordinarily undesirable for a Court to determine only a portion of a dispute and it is highly inconvenient and an ineffective use of judicial power to fragment disputes between parties by determining different issues in different Courts: see, generally, Fencott v Muller (1983) 152 CLR 570; [1983] HCA 12 at 608 per Mason, Murphy, Brennan and Dean JJ; Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; [1981] HCA 7 at 519 per Murphy J.

183. The policy of avoiding multiplicity of suits has been entrenched in statutory provisions both in this Court (s 63 Supreme Court Act1970 (NSW)) and in the Division 1 Court: s 43 FCFCOA Act. I consider that it is ultimately more appropriate that the equity proceedings be determined by the Division 1 Court. In those circumstances, the legislative mandate is that the Supreme Court shall transfer the relevant proceedings to the Division 1 Court. That is the order that I make.

184. The capability consideration and the Commonwealth law consideration, as matters currently stand, favour the equity proceedings being heard by the Supreme Court.

185. However, the litigious landscape between the parties has changed by reference to the family law proceedings.

186. In particular, having regard to the matters argued by the parties under the interests of justice consideration, I consider that, overall, in light of the factors that I have discussed above the Division 1 Court is a more appropriate Court to determine the equity proceedings, which I expect would in all likelihood be heard together with the family law proceedings with a concomitant order that evidence in each proceedings be evidence in the other (subject to relevance and any just objection).

Transfer pursuant to s 5(1) of the Cth Act

187. Although according to an alternative case the transfer was raised pursuant to s 5(1) of the Cth Act, the case was pressed principally pursuant to the provisions of the NSW Act and having regard to the fact that I consider that a transfer order ought to be made pursuant to s 5(1)(b)(ii) of the NSW Act, it is unnecessary for me to consider further the alternate application for transfer pursuant to s 5(1) of the Cth Act.

Costs

188. Two issues arose regarding the costs of the application.

189. The applicant sought orders in relation to (a) the costs of the notice of motion and (b) the costs of the parties in the equity proceedings.

Costs of the transfer motion

190. In relation to the costs of the notice of motion, the applicant sought an order that the costs of the motion be “costs in the cause (or otherwise as appropriate)”.

191. The applicant has been successful in relation to the application for transfer. The application was opposed.

192. However, it was opposed in a context in which, on one view, the relief being sought by the applicant in the initiating application in the family law proceedings is relief based primarily on equitable principles albeit through provisions of the FLA.

193. On the hearing of the application, it was clarified that there is in fact an additional or supplementary case being propounded by the applicant in relation to the claims regarding Lot 6 which simply relies upon the provisions of the FLA and contributions made by her during the marriage separately from the claims in the equity proceedings regarding trusts and a sham transaction. It is that case which I have above described as the “cleaner” less complex case.

194. Whilst I have taken into account all the arguments advanced by the applicant and Mr Jordan in making an assessment of which Court is the “more appropriate” Court to determine the equity proceedings, a significant consideration in my finding that it is appropriate to transfer the proceedings was how the applicant’s claims for relief to Lot 6 might eventually be based on the “cleaner” less complex FLA case.

195. That consideration really only became evident during the actual hearing of the notice of motion. In light of that and the fact that when it was revealed Mr Jordan acknowledged the force of it, I do not think that the respondents’ opposition to the transfer application prior to the hearing of the application was unreasonable.

196. Overall, I consider that the order that is sought by the applicant that costs of the motion for transfer be costs in the cause is the appropriate order to make.

Costs of the equity proceedings

197. The applicant sought an order that the costs of the parties “in this Court” (i.e. of the equity proceedings) be reserved to the Division 1 Court.

198. It appeared that the applicant’s basis for seeking that order was founded in the order made by Chen J in Comino v Kremetis: see [94(2)]. A similar order has been made in other transfer proceedings: see e.g. Wurz bht NSW Trustee & Guardian v Elawaad (No 2) [2022] NSWSC 1486 at [19(2)] per Henry J.

199. There was some debate on the hearing as to whether it was necessary for me to make any order for the costs of the equity proceedings because if the proceedings are transferred to the Division 1 Court, that Court would have power to work out what orders for costs should be made in both sets of proceedings that are before it. Mr Jordan submitted that it was not strictly necessary for an order to be made: T 48.7-40.

200. Nonetheless, Mr Jordan also has submitted that having regard to the debate regarding the relief to be pursued by the applicant in the Division 1 Court and the “cleaner” less complex claim (available without necessarily relying upon serious allegations), there ought to be costs consequences flowing from what he described as “three years of costs and time” being effectively abandoned: T 38.5-7, 39.1-8, 44.22-27, 45.9.

201. In relation to assertions regarding “wasted” costs I noted that one possibility was that if it could be truly said that the equity claim was being abandoned that the applicant should bear the costs of what has happened to date. Another possibility is that the costs should be reserved to the Division 1 Court: T 44.

202. As I have stated above, I consider that the announced additional or supplementary case being propounded by the applicant in relation to the claims regarding Lot 6 (which rely upon the provisions of the FLA and contributions made by her during the marriage separately from the claims in the equity proceedings regarding trusts and a sham transaction) is a “cleaner” less complex case and is, from where matters stand at the moment, perhaps more likely to be the claim that is ultimately pressed.

203. However, even if a claim relying upon provisions of the FLA and contributions is the principal claim ultimately pressed that does not necessarily mean that the steps taken in these equity proceedings to date and the materials obtained either from a process of pleadings, production of documents or interrogatories is ultimately wasted. My assessment of the matter is that the judge that ultimately hears the equity proceedings and the family law proceedings, which as noted above I expect would likely be heard together, will be better placed to make that determination.

204. Section 12 of the NSW Act provides:

12 Orders as to costs

Where a proceeding is transferred or removed to a court, that court may make an order as to costs that relate to the conduct of the proceeding before the transfer or removal if those costs have not already been dealt with by another court.

205. Whilst that provision suggests that the Division 1 Court has power to address the question of costs it seems to me appropriate to formalise the position so that the question of the costs of the equity proceedings to date is expressly addressed.

Orders

206. I make the following orders:

1. Order, pursuant to s 5(1)(b)(ii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), that these proceedings (2020/120471) be transferred to the Federal Circuit and Family Court of Australia (Division 1), Sydney Registry.

2. Order that the costs of the parties in this Court, other than the costs of the applicant’s notice of motion, be reserved to the Federal Circuit and Family Court of Australia (Division 1).

3. Order that the costs of, and incidental to, the applicant’s notice of motion be costs in the cause of these proceedings.

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Decision last updated: 11 May 2023