Jess & Jess (No 4)

Case [2023] FedCFamC1A 189

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Jess & Jess (No 4) [2023] FedCFamC1A 189

Appeal from:

Jess & Jess(No 7) [2023] FedCFamC1F 291

Jess & Jess(No 8) [2023] FedCFamC1F 395
Appeal numbers: NAA 123 of 2023
NAA 143 of 2023
File number: MLF 3444 of 2006
Judgment of: ALDRIDGE, RIETHMULLER & SCHONELL JJ
Date of judgment: 3 November 2023
Catchwords:

FAMILY LAW – APPEAL – Application to appeal from orders dismissing an application for summary dismissal – Where the husband’s trustee in bankruptcy made claims pursuant to s 106B of the Family Law Act 1975 (Cth) to recover the husband’s business interests, held as units in a Unit Trust – Units originally held by the husband who allegedly declared that he held the Units on trust for his son – Where the declaration of trust was determined to be fraudulent – Where the trustee in bankruptcy and the wife seek to restore the Units to the husband (now the husband’s estate) for the Units to form part of the property of the parties pursuant to s 79 – Where the trustee in bankruptcy seeks to set aside the transfer of the Units to the son as at the time of transfer to ensure the Units were held by the husband at the time of bankruptcy, so as to vest in the bankruptcy trustee – Leave to appeal required – Leave to appeal refused – Appeal dismissed – Applicants to pay costs of first respondent wife and intervener in fixed sum.

FAMILY LAW – APPEAL – Application to appeal decision of primary judge with respect to discovery – Reasons given but orders not yet made – Necessity of orders as the basis for an appeal – Leave to appeal refused – Appeal dismissed – Applicants to pay costs of first respondent wife and intervener in fixed sum.

FAMILY LAW – APPEAL – Application to appeal decision of primary judge to refuse a stay application with respect to discovery – Leave to appeal refused – Appeal dismissed – Applicants to pay costs of first respondent wife and intervener in fixed sum.
Legislation:

Bankruptcy Act 1966 (Cth) ss 58, 116

Family Law Act 1975 (Cth) ss 4, 79, 79A, 90AE, 90K, 106B

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 28, 46, 67

Federal Court and Federal Circuit and Family Court Regulations 2012 (Cth) reg 4.02

Cases cited:

Aitken & Aitken (2023) FLC 94-142; [2023] FedCFamC1A 69

Barre & Barre [2021] FamCA 101

BCBC Singapore Pte Ltd v PT Bayan Resources TBK (No 2) [2012] WASC 321

Bray v F Hoffman-La Roche Ltd (2002) 118 FCR 1; [2002] FCA 243

Civil Air Operations Officers Association of Australia v Airservices Australia [2020] FCA 1665

Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45; [1968] HCA 91

Federated Engine-Drivers and Firemen’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398; [1911] HCA 31

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AGLC
Jess & Jess (No 4) [2023] FedCFamC1A 189
Case
[2023] FedCFamC1A 189
Decision Date

CaseChat Overview and Summary

In the matter of Jess & Jess (No 4), the applicants sought leave to appeal against interlocutory orders made by the primary judge on 27 April 2023, dismissing an application for summary dismissal of claims made by the husband's trustee in bankruptcy, and against the decision of the primary judge on 19 May 2023, refusing a stay application with respect to discovery sought by the wife. The applicants were the husband's estate, his trustee in bankruptcy, and a third party. The respondents were the wife, the husband's estate, and the bankruptcy trustee. The primary issues were whether the applicants should be granted leave to appeal the primary judge's decisions and whether they should be ordered to pay costs to the wife and the bankruptcy trustee.

The court found that the applicants had not satisfied either limb of the Medlow test with respect to any of the proposed grounds of appeal, and therefore, the applications for leave to appeal must be refused. The court held that the primary judge was appropriately managing the litigation towards a final hearing in accordance with the overarching purpose of the practice and procedure provisions. The court also noted that the litigation had been pending for a considerable number of years, and the complex issues were appropriately dealt with after a trial where the relevant facts were determined. The court ordered that the applicants pay the wife's costs of the appeal fixed at $30,000 and the intervener's costs fixed at $30,000.

This case highlights the importance of managing complex litigation and the need to determine facts at trial before making any interlocutory orders. The court refused the applicants' leave to appeal and ordered them to pay costs to the wife and the bankruptcy trustee. The decision emphasises the need to manage litigation effectively and to avoid unnecessary appeals that could further delay the resolution of the underlying issues. The court's refusal of leave to appeal and the imposition of costs orders demonstrate the importance of adhering to the overarching purpose of the practice and procedure provisions and managing litigation towards a final hearing.

Orders

Orders of the court

NAA 123 of 2023

NAA 143 of 2023

MLF 3444 of 2006

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

DIVISION 1 APPELLATE JURISDICTION

BETWEEN:

MR JESS JNR

First Applicant

MR BAN

Second Applicant

AAA PTY LTD AS TRUSTEE OF THE BBB TRUST (and others named in the Schedule)

Third Applicant

AND:

MS JESS

First Respondent

MR J IN HIS CAPACITY AS THE LEGAL PERSONAL REPRESENTATIVE OF THE LATE MR JESS SNR

Second Respondent

PPP INVESTMENTS PTY LTD (and others named in the Schedule)

Third Respondent

MR K AND MR L AS TRUSTEES OF THE BANKRUPT ESTATE OF MR JESS SNR

Intervener

ORDER MADE BY:

ALDRIDGE, RIETHMULLER & SCHONELL JJ

DATE OF ORDER:

3 NOVEMBER 2023

THE COURT ORDERS THAT:

1. Leave to appeal in appeal number NAA 123 of 2023 is refused.

2. Leave to appeal in appeal number NAA 143 of 2023 is refused.

3. Appeal number NAA 123 of 2023 is dismissed.

4. Appeal number NAA 143 of 2023 is dismissed.

5. The applicants pay the first respondent wife’s costs of the appeal fixed at $30,000.

6. The applicants pay the intervener’s costs fixed at $30,000.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Background

Background to the litigation

The applicants seek leave to appeal against interlocutory orders made by the primary judge refusing to summarily dismiss claims made by the husband’s trustee in bankruptcy and a decision with respect to discovery sought by the wife made on 27 April 2023 (NAA 123 of 2023). The applicants also seek leave to appeal against the decision of the primary judge to refuse a stay application (on 19 May 2023) with respect to the discovery decision (NAA 143 of 2023).BACKGROUND In 2006, the husband and wife separated after having lived together for 20 years, having had three children (who are now adults). The parties divorced in 2008. The relevant circumstances that led to the current proceedings can be briefly summarised:(a)On 18 December 2006, the wife commenced property settlement proceedings against the husband pursuant to the Family Law Act 1975 (Cth) (“the FLA”). A major asset of the husband was a retail business. The husband’s business interests were structured such that they were ultimately held by a company as trustee of a unit trust, units of which were held by the husband (the “Units”).(b)In 2007, the husband’s son from a previous relationship commenced proceedings in the Supreme Court of Victoria seeking orders confirming that the husband’s Units had vested in the son, relying upon a trust deed purportedly signed by the husband in 2002. (c)On 24 September 2009, property settlement orders pursuant to s 79 of the FLA were made by consent. Four days earlier, the wife had entered into a deed of settlement with the husband and the son foregoing any claim on the Units which the husband purported to hold for the benefit of the son pursuant to the alleged 2002 trust deed. At the time that the wife entered into the settlement she says that she was unable to prove that the trust deed was a fraudulent document. The Units were transferred to the son on that day.(d)On 31 May 2010, the husband confessed to the wife that the trust deed was fraudulent, leading her and the husband to apply to set aside the trust deed and consequential transactions (including the 2009 settlement) relying upon s 106B of the FLA.(e)In 2013, the wife applied for orders pursuant to s 79A of the FLA to set aside the property settlement orders entered into by consent in 2009.(f)In 2016, the husband was declared bankrupt (on a debtor’s petition). The third respondent to the proposed appeal (the “bankruptcy trustee”) was appointed trustee of the husband’s estate in bankruptcy. (g)On 22 August 2016, Bennett J made orders by consent joining the bankruptcy trustee as an intervener in the proceedings. (h)In 2018, the husband died and was replaced in the litigation by the legal personal representative of his deceased estate (the “husband’s estate”) (the second respondent).(i)In mid 2019, the husband’s estate was discharged from bankruptcy.(j)On 15 November 2019, Bennett J, after finding that the declaration of trust was fraudulent (as explained by the Full Court in Jess & Jess (2021) FLC 94-055 at [73]–[79] and [143]), made a declaration that the trust deed “was not executed on the date that it bears”. An application for leave to appeal that order was dismissed (Jess & Jess [2022] HCASL 24) and an application for special leave to appeal to the High Court was refused. (k)On 29 July 2022, the property settlement orders between the husband and wife (made on 20 September 2009) were set aside pursuant to s 79A of the FLA with the consent of the husband’s estate and the bankruptcy trustee. An appeal by the son and related parties against the orders setting aside the original property settlement orders was dismissed (Jess & Jess (No 3) (2023) 374 FLR 344).

Evidence

Evidence Before The Court

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Decision

Reasons for decision

MR J
As a result, we are not persuaded that the applicants should be granted leave to appeal from the refusal of the primary judge to grant a stay.CONCLUSION As we are not persuaded that the applicants have satisfied either limb of the Medlow test with respect to any of the proposed grounds of appeal, the applications for leave to appeal must be refused. We take this opportunity to note that this litigation has been pending for a considerable number of years. Whilst there are many complex issues that may arise, these are, in our view, appropriately dealt with after a trial where the relevant facts are determined. It is clear that the primary judge is appropriately focussed upon managing the litigation toward a final hearing at the first reasonable opportunity in accordance with the overarching purpose of the practice and procedure provisions (see s 67 of the FCFCOA Act). In the context of this case, the statement of Sir Frederick Jordan in Re the Will of Gilbert (cited above at [5]) is particularly apt. Costs The parties agreed that should the applications for leave to appeal be refused, the applicants should bear the costs of the wife and the bankruptcy trustee. The parties requested that the Court determine lump sum costs orders rather than referring the costs for assessment pursuant to the rules. The costs incurred by the parties (only with respect to the appeal) were claimed as follows:(a)The applicants incurred costs which they estimated to be $302,490.64 at scale. (b)The bankruptcy trustee incurred costs which they estimated at $125,028.91 if assessed at scale. (c)The wife incurred costs estimated at $40,919 if assessed at scale. We note that the matter concerns significant underlying assets and complex long running litigation. The applicants were represented by two senior counsel and a junior counsel. However, the issues were limited and the relevant material in the appeal book was not large. We are not persuaded that the parties’ costs estimates, with respect to party/party costs, are reasonable. It was accepted that a significant part of the costs incurred by the applicants related to the reliance of the bankruptcy trustee on sub-paragraph (f) of the definition of “matrimonial causes” in s 4 of the FLA, which argument was abandoned shortly before the hearing of the appeal. We also note that the wife took no part in the appeal with respect to the bankruptcy trustee and that the bankruptcy trustee took no part in the appeal with respect to the disclosure findings. We are persuaded that the applicants should pay the costs of the wife fixed at $30,000, and part of the bankruptcy trustee’s costs fixed at $30,000.

Ratio Decidendi

Legal Principle Established

Established by: MR J

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