Jess & Jess (No 7)
[2023] FedCFamC1F 291
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Jess & Jess (No 7) [2023] FedCFamC1F 291
File number MLF 3444 of 2006 Judgment of WILSON J Date of judgment 27 April 2023 Catchwords FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – JURISDICTION – application by represented third parties to summarily dismiss the intervenors’ cross claim on the basis that Division 1 of the Federal Circuit and Family Court of Australia has no jurisdiction to entertain it by reason of the fact that the represented third parties assert that units transferred from the bankrupt husband to his son are not “vested bankruptcy property” presently in the hands of the trustees-in-bankruptcy – whether paragraphs (cb) and (f) of the definition of “matrimonial cause” are engaged.
FAMILY LAW – JURISDICTION – court having jurisdiction to determine disputed questions of fact which ground the court’s jurisdiction – jurisdictional facts as distinct from adjudicative facts considered – validity, enforceability and efficacy of deed of settlement, deed of declaration of trust and instrument of transfer of 98 units hotly disputed – need to determine validity of three instruments in order for this court’s jurisdiction to be engaged – represented third parties seeking perfunctory dismissal of intervenors’ cross claim before a determination is made about the validity and efficacy of those three instruments – held, represented third parties’ summary dismissal application is dismissed.
FAMILY LAW – PRACTICE & PROCEDURE – represented third parties’ application to dismiss the intervenors’ cross claim on the basis that it has no reasonable prospect of success – test espoused in Spencer v Commonwealth and Lindon v Commonwealth applied – cross claim arguable – no basis shown for dismissal on the ground that it has no reasonable prospect of success.
FAMILY LAW – PRACTICE & PROCEDURE – DISCLOSURE – represented third parties’ application to limit disclosure to events not later than 2009 when deed of settlement, deed of declaration of trust and instrument of transfer were executed – that application counterintuitive to the overarching purpose of litigation in Division 1 of the Federal Circuit and Family Court of Australia – such an approach would serve to delay and prolong the litigation – held, application refused.
Legislation Administrative Appeals Tribunal Act 1975 (Cth) s 44(1)
Bankruptcy Act 1966 (Cth) ss 5(1), 58(1)(a) and 116(1)(a)
Child Support (Assessment) Act 1989 (Cth)
Child Support (Registration and Collection) Act 1988 (Cth)
Family Law Act 1975 (Cth) ss 4, 4(1)(cb), 4(1)(f), 31, 39, 45A(2), 45A(4), 78, 79, 79A, 80(1)(d) and 106B
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 25, 26, 29, 46(2), 51, 132 and 149
Federal Court of Australia Act 1976 (Cth) s 31A
Trade Practices Act 1974 (Cth) s 80
Industrial Relations Act 1996 (NSW) s 106
Cases cited Amalgamated Society of Carpenters & Joiners, Australian District v The Haberfield Pty Ltd (1907) 5 CLR 33
American Cyanamid v Ethicon Ltd [1975] AC 396
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337
Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board (Qld) (No 1) (1982) 57 ALJR 425.
Barnes v Addy (1874) LR 9 Ch App 244
Beckham v Drake (1849) 9 ER 1213
Benjamin v Benjamin (1976) 11 ALR 211
Bigg v Suzi (1998) 22 Fam LR 700
Black v Black (2008) 38 Fam LR 503
Bride v Peak Marwick Mitchell [1989] WAR 383
Bryson & Pember [2013] FamCA 43
Bunbury v Fuller (1853) 156 ER 47
Camden Pty Ltd v Laue (2018) 58 Fam LR 97
Chen v Chen (No. 3) (2020) 63 Fam LR 448
Cummings v Claremont Petroleum NL (1996) 185 CLR 124
Dalton & Nagle [2021] FamCA 376
Decker & Decker [2022] FedCFamC1F 563
Deputy Commissioner of Taxation v Swain (1988) 20 FCR 507
DMW v CGW (1982) 151 CLR 491
Epitoma Pty Ltd v Australian Meat Industry Employees' Union (No 2) (1984) 3 FCR 55
Federated Engine-Drivers and Fireman’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398
Fencott v Muller (1983) 152 CLR 570
Fuller v Beach Petroleum NL (1993) 43 FCR 60
Gong & Zao (2021) 363 FLR 1
Griffiths v Civil Aviation Authority (1996) 67 FCR 301
Hadwick v Scaddon (2020) 61 Fam LR 202
Halabi v Artillaga (1993) 17 Fam LR 675
Harford & Spalding [2021] FamCA 636
Hazeldell Ltd v The Commonwealth (1924) 34 CLR 442
Herbert & Herbert [2021] FamCAFC 108
Herbert & Herbert (No 3) [2020] FamCA 603
In the Marriage of Audet; Official Trustee in Bankruptcy (Intervener) (1994) 19 Fam LR 291
In the Marriage of Aysom (1987) 93 FLR 22
In the Marriage of Beck (2004) 31 Fam LR 467
In the Marriage of Collins (1987) 11 Fam LR 382
In the Marriage of Gould (1993) 17 Fam LR 156
In the Marriage of Reed; Grellman (Intervener) (1989) 13 Fam LR 566
In the Marriage of Whitaker (1980) 5 Fam LR 769
Jaynes & Rundle [2020] FamCAFC 292
Jess & Jess (No 4) [2022] FedCFamC1F 530
Jess & Jess (No 3) [2023] FedCFamC1A 2
Kanelos & Kanelos [2018] FamCA 524
Kennon v Spry (2008) 238 CLR 366
Kramer v Ward (2017) 57 Fam LR 200
Krischell Pty Ltd v Nilant (2006) 32 WAR 540
Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541
Loder v Aysom (1987) 12 Fam LR 644
Loxton v Moir (1914) 18 CLR 360
Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27
Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443
Marsden v Winch (2013) 50 Fam LR 409
McLeod v Johns [1981] 1 NSWLR 347
Meriton Apartments Pty Ltd v Industrial Court of New South Wales (2008) 171 FCR 380
Min & Orton [2021] FamCA 502
Mohsen & Collings (No 2) [2021] FamCA 170
Munnings v Australian Government Solicitors (1994) 68 ALJR 169
Needham & Trustees of Bankrupt Estate of Needham [2017] FamCAFC 94
Norton v Locke (2013) 50 Fam LR 517
Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306
Official Trustee in Bankruptcy v Nedlands Pty Ltd(In liq) (2000) 99 FCR 554
Old UGC Inc v Industrial Relations Commission of New South Wales (2006) 225 CLR 274
Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369
Peacock v Bell and Kendal (1666) 85 ER 84
Peacock v Newtown Marrickville and General Co-operative Building Society No 4 Ltd (1943) 67 CLR 25
Pelerman v Pelerman (2000) 26 Fam LR 505
Perlman v Perlman (1984) 155 CLR 474
Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457
PMT Partners Pty Ltd (In liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301
Porter & Porter [2022] FedCFamC1F 102
Public Service Association of South Australia Inc v Industrial Relations Commission (SA) (2012) 249 CLR 398
R v Cook; ex parte Twigg (1980) 147 CLR 15
R v Dovey; ex parte Ross (1979) 141 CLR 526
R v Federal Court of Australia; ex parte Pilkington ACI (Operations) Pty Ltd (1978) 142 CLR 113
R v Federal Court of Australia; ex parte The Western Australian Football League Inc (1979) 143 CLR 191
R v Gray; ex parte Marsh (1985) 157 CLR 351
R v Ross-Jones; ex parte Beaumont (1979) 141 CLR 504
R v Ross-Jones; ex parte Green (1984) 156 CLR 185
R v Watson; ex parte Armstrong (1976) 136 CLR 248
Randall v Deputy Commissioner of Taxation (2008) 174 FCR 441
R v Baker and Wilkie; Ex parte Johnston (1980) 55 ALJR 191
Re Macks; ex parte Saint (2000) 204 CLR 158
Re Pevsner; ex parte Official Trustee in Bankruptcy (1983) 68 FLR 254
Re Wakim; ex parte McNally (1999) 198 CLR 511
Ritter & Ritter [2020] FamCAFC 86
RnD Funding Pty Limited v Roncane Pty Limited [2023] FCAFC 28
Robins v Incentive Dynamics Pty Ltd (1999) 91 FCR 423
Spencer v The Commonwealth of Australia (2010) 241 CLR 118
Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261
Stanford v Stanford (2012) 247 CLR 108
Stativa & Stativa [2015] FamCAFC 170
Strahan v Strahan (2009) 42 Fam LR 203
Swain v Hillman [2001] 1 All ER 91
Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 58 ALJR 283
The Mayor and Aldermen Of The City Of London v Richard Henry Cox (1867) LR 2 HL 239
Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1
Walton v ACN 004 410 833 Ltd (formerly Arrium Ltd) (In liq) (2022) 96 ALJR 166
Warder v Saunders (1882) 10 QBD 114
Webster v Lampard (1993) 177 CLR 598
Willocks v Anderson (1971) 124 CLR 293
Woodcock v Woodcock (No 2) (2022) 65 Fam LR 333
Yanner v Eaton (1999) 201 CLR 351
YunghannsvYunghanns (1999) 24 Fam LR 400
Zhang v Zemin (2010) 79 NSWLR 513
Division Division 1 First Instance Number of paragraphs 147 Date of last submission 23 March 2023 Date of hearing 23 March 2023 Place Melbourne Counsel for the applicant Mr G. Dickson KC with Ms R. Matson Solicitor for the applicant Kenna Teasdale Lawyers Legal personal representative of the first respondent Mr W. P. Howard Counsel for the represented third parties Mr A. J. Myers AC KC with Mr I. G. Waller KC and Mr J. Mereine Solicitor for the represented third parties HWL Ebsworth Lawyers Counsel for the intervenors Mr H. Austin KC with Ms E. N. Madlin Solicitor for the intervenors Lander & Rogers ORDERS
MLF 3444 of 2006 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS JESS
Applicant
AND
MR J AS LEGAL PERSONAL REPRESENTATIVE OF MR JESS SNR (DECEASED)
First Respondent
MR JESS JNR AND OTHERS
Represented Third Parties
AND MR K AND MR L AS TRUSTEES OF THE BANKRUPT ESTATE OF MR JESS SNR
Intervenors
order made by
WILSON J
DATE OF ORDER
27 April 2023
THE COURT ORDERS THAT –
1.The application made by the represented third parties in paragraph 1 of their application in a proceeding dated 20 January 2023 for the summary dismissal of the intervenors’ cross claim dated 11 November 2022 is dismissed.
2.The application made by the represented third parties in paragraph 2 of their application in a proceeding dated 20 January 2023 for the dismissal of the intervenors’ cross claim on the basis that it has no reasonable prospect of success is dismissed.
3.The application by the represented third parties for the dismissal of the intervenors’ cross claim made in paragraph 3 of their application in a proceeding dated 20 January 2023 under s 45A of the Family Law Act on the basis that it is an abuse of process is dismissed.
4.I direct that on or before 4:00pm on 12 May 2023 the parties bring in an agreed minute in relation to discovery as between all parties subsequent to the year 2009.
5.The represented third parties’ application for orders suspending the obligation of the represented third parties to give disclosure in respect of documents subsequent to 2009 is refused.
6.Leave to the intervenors to amend their cross claim in the form of exhibit AK1 to the affidavit of Mr AK sworn on 17 February 2023 is granted.
7.I direct that on or before 4:00pm on 12 May 2023 the parties must bring in an agreed minute in relation to pleadings on the intervenors’ amended cross claim.
8.I adjourn the further hearing of this proceeding to 10:00am on 26 May 2023.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Jess & Jess has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
These reasons address several applications brought subsequent to the dismissal of the appeal in Jess & Jess (No 3)[1] following my decision in Jess & Jess (No 4).[2]
[1] [2023] FedCFamC1A 2.
[2] [2022] FedCFamC1F 530.
The represented third parties have applied to summarily dismiss the intervenors’ participation in this litigation.
The wife sought an array of documentation from the represented third parties.
The intervenors sought leave to amend their claims in this litigation, assuming they survive the summary dismissal application brought against them by the represented third parties.
As these reasons disclose, in my judgment –
(a)the application made by the represented third parties in paragraph 1 of their application in a proceeding dated 20 January 2023 for the summary dismissal of the intervenors’ cross claim dated 11 November 2022 is dismissed;
(b)the application made by the represented third parties in paragraph 2 of their application in a proceeding dated 20 January 2023 for the dismissal of the intervenors’ cross claim on the basis that it has no reasonable prospect of success is dismissed;
(c)the application by the represented third parties for the dismissal of the intervenors’ cross claim made in paragraph 3 of their application in a proceeding dated 20 January 2023 under s 45A of the Family Law Act on the basis that it is an abuse of process is dismissed;
(d)I direct that on or before 4:00pm on 12 May 2023 the parties bring in an agreed minute in relation to discovery as between all parties subsequent to the year 2009;
(e)the represented third parties’ application for orders suspending the obligation of the represented third parties to give disclosure in respect of documents subsequent to 2009 is refused;
(f)leave to the intervenors to amend their cross claim in the form of exhibit AK1 to the affidavit of Mr AK sworn on 17 February 2023 is granted;
(g)I direct that on or before 4:00pm on 12 May 2023 the parties must bring in an agreed minute in relation to pleadings on the intervenors’ amended cross claim.
THE JURISDICTIONAL CHALLENGE
The parties agreed that the represented third parties’ jurisdictional challenges to the intervenors’ cross claims should be heard first.
In its current unamended form, the statement of claim on which the intervenors relied was as appears as annexure A to these reasons. Expressed most basically, the represented third parties contended that at all relevant times Mr Jess Jnr was the holder of the units in the Jess Retail Unit Trust (“JRUT”). The represented third parties further contended that the intervenors do not presently assert that the applicant’s former husband, Mr Jess Snr, immediately prior his death, held any units in the JRUT in his own name. The represented third parties argued that the intervenors, in their capacity as the trustee-in-bankruptcy of the late Mr Jess Snr, were unable to demonstrate that at this precise point in time, the intervenors are seized of property formerly owned by the bankrupt, which by virtue of Mr Jess Snr’s bankruptcy, vested in the trustees. The represented third parties argued that this court has no jurisdiction to hear and determine (or for that matter, entertain in any shape or form) the intervenors’ claims in this property adjustment proceeding unless and until the intervenors can demonstrate that their cross claim is a “matrimonial cause” within the meaning of s 4(1)(cb) of the Family Law Act which relevantly involves “any vested bankruptcy property” and as the units are vested in Mr Jess Jnr, not the bankrupt, the jurisdiction conferred by s 79(1)(b) of the Family Law Act is not enlivened.
By way of overview, the intervenors contended that they seek in this litigation orders setting aside the deed of settlement dated 20 September 2009 as well as the deed of declaration of trust plus the instrument of transfer of units of 98 ordinary units executed in September 2009. They argued that the trustees’ application related to the “husband’s unitholding property” which included choses in action which, relevantly, were “property” that took the form of a right to have the unitholding property revested in or retransferred to the husband. The represented third parties contended that such an entitlement would, at best, amount to a bare right which could not properly support the concept of “property”, whether for the purposes of the Family Law Act or for the purposes of the Bankruptcy Act. At all events, the trustees argued that the proposition argued by the represented third parties involved a matter of mixed fact and law and that the trustees should not be shut out from pursuing a claim which they are under a statutory duty to pursue in the interests of the general body of unsecured creditors whose interests they are bound to advance.
This being a threshold argument about the jurisdiction of this court, it is utile to commence with some propositions about jurisdiction.
JURISDICTION GENERALLY
The very first duty of any court approaching a cause before it is to consider its jurisdiction.[3]
[3] Hazeldell Ltd v The Commonwealth (1924) 34 CLR 442, Federated Engine-Drivers and Fireman’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398, Old UGC Inc v Industrial Relations Commission of New South Wales (2006) 225 CLR 274, Robins v Incentive Dynamics Pty Ltd (1999) 91 FCR 423 and Zhang v Zemin (2010) 79 NSWLR 513.
Even if parties do not raise any issue about the court’s jurisdiction, it is competent and proper for the court to do so of its own motion.[4]
[4] Official Trustee in Bankruptcy v Nedlands Pty Ltd(In liq) (2000) 99 FCR 554.
Parties cannot consent to jurisdiction if jurisdiction does not exist.[5]
[5] Bunbury v Fuller (1853) 156 ER 47.
Where highly contested questions of fact arise upon which the court’s authority depends, the grant of jurisdiction carries with it the power to determine facts upon which the jurisdiction of the court depends.[6]
[6] DMW v CGW (1982) 151 CLR 491, R v Gray; ex parte Marsh (1985) 157 CLR 351, Re Macks; ex parte Saint (2000) 204 CLR 158, Kennon v Spry (2008) 238 CLR 366 and Public Service Association of South Australia Inc v Industrial Relations Commission (SA) (2012) 249 CLR 398.
Even if a court determines that it has no jurisdiction to determine the controversy presented in the contested application before it, then in the exercise of its implied jurisdiction it has authority to stay or dismiss the proceeding for want of jurisdiction and to go on to make a costs order.[7]
[7] Peacock v Newtown Marrickville and General Co-operative Building Society No 4 Ltd (1943) 67 CLR 25 and Willocks v Anderson (1971) 124 CLR 293.
Authority of the Full Court of the Family Court of Australia is to like effect as is the proposition in the immediately preceding paragraph.[8]
[8] Yunghanns v Yunghanns (1999) 24 Fam LR 400, Black v Black (2008) 38 Fam LR 503 and Norton v Locke (2013) 50 Fam LR 517.
In the course of debate, Mr Myers AC KC relied on the observations in the Full Court decision in Yunghanns v Yunghanns in which a distinction was drawn between jurisdictional facts as opposed to adjudicational facts. The difference was explained in seven propositions[9] which drew on the observations of the High Court in DMW v CGW[10] as well as in R v Ross-Jones; ex parte Green[11] in the following terms –
[9] Yunghanns v Yunghanns (1999) 24 Fam LR 400, 432-3.
[10] (1982) 151 CLR 491.
[11] (1984) 156 CLR 185.
(1)Before making orders in proceedings (including interlocutory orders) the Family Court of Australia, as a court of limited jurisdiction, must be satisfied:
(a) that it has jurisdiction to make those orders in the proceedings; and
(b)that it is appropriate to exercise that jurisdiction by making those orders on the facts of the case as then known to it.
(2)The Court always has jurisdiction to entertain proceedings for the purpose of and up to the point of deciding whether it has jurisdiction to make the orders sought in the proceedings.
(3)In carrying out that limited exercise of jurisdiction, the Court is required to determine any essential facts upon which the existence of its jurisdiction to make the orders sought ultimately depends (the jurisdictional facts). That determination is a function which is incidental to the exercise of the jurisdiction referred to in (2) above.
(4)Where, from the very nature of the proceedings and the relief claimed, the substantive proceedings prima facie fall within the definition of ‘matrimonial cause’ in s 4(1) of the Act, the jurisdiction to determine the jurisdictional facts, as an incident of determining whether it has jurisdiction to make the orders, is itself a matrimonial cause, and therefore within the exclusive jurisdiction of the Court.
(5)There is a distinction between the jurisdictional facts, as defined under (3), above, and the facts the existence of which it is necessary to establish in order to entitle the applicant (subject to discretionary considerations) to an exercise in his or her favour of the jurisdiction which the Court has (the adjudicational facts).
(6)Once a respondent challenges the Court's jurisdiction to make the orders sought, the Court, before considering the adjudicational facts, must find the existence of the jurisdictional facts, on the balance of probabilities.
(7)However, once that threshold of jurisdiction is crossed, in the case of interlocutory proceedings (at least where what is sought is an injunction in the same or similar terms to the permanent injunction sought in the substantive proceedings) the Court, before making an order, does not need to find the existence of the adjudicational facts, but only that there is a serious issue to be tried as to their existence, and that the balance of convenience supports the making of the order: American Cyanamid v Ethicon Ltd,[12] Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board (Qld) (No 1),[13] Tableland Peanuts Pty Ltd v Peanut Marketing Board[14] and Epitoma Pty Ltd v Australian Meat Industry Employees' Union (No 2).[15]
[12] [1975] AC 396.
[13] (1982) 57 ALJR 425.
[14] (1984) 58 ALJR 283.
[15] (1984) 3 FCR 55.
In this application, the represented third parties placed heavy reliance on the concept adumbrated in proposition 6 above, namely –
(6)Once a respondent challenges the Court's jurisdiction to make the orders sought, the Court, before considering the adjudicational facts, must find the existence of the jurisdictional facts, on the balance of probabilities.
It was said that the statement of principle there encapsulated answered completely the trustees’ contentions that where a matter of mixed fact and law is involved in the determination of jurisdiction, the court must first find such facts as ground its jurisdiction. To my mind, the point is better encapsulated by emphasising that jurisdictional facts must be found ahead of finding adjudicational facts, although the finding of adjudicational facts may take place immediately following the finding of jurisdictional facts in a contested debate. That may even be at trial.
THE JURISDICTION DEBATE
As long ago as 1907, Isaacs J held as follows in Amalgamated Society of Carpenters & Joiners, Australian District v The Haberfield Pty Ltd[16] –
… everything depends upon ascertaining in any particular case whether the matter in contention is collateral or preliminary, or is part of the subject matter, which, if true, is within the Court’s jurisdiction.
[16] (1907) 5 CLR 33, 53.
The consequence of there being no jurisdiction is that the judgment or order is void.[17]
[17] Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369, 391 and R v Federal Court of Australia; ex parte Pilkington ACI (Operations) Pty Ltd (1978) 142 CLR 113, 125 (Mason J).
Questions of the jurisdiction of what was the Family Court of Australia occupied the High Court for the better part of a decade.[18]
[18] Those cases included but are not limited to R v Watson; ex parte Armstrong (1976) 136 CLR 248, R v Ross- Jones; ex parte Beaumont (1979) 141 CLR 504, R v Dovey; ex parte Ross (1979) 141 CLR 526, Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337, R v Cook; ex parte Twigg (1980) 147 CLR 15, R v Wilkie; ex parte Johnson (1980) 55 ALJR 191, DMW v CGW (1982) 151 CLR 491, Perlman v Perlman (1984) 155 CLR 474 and R v Ross-Jones; ex parte Green (1984) 156 CLR 185. There are others.
A substantial body of jurisprudence has evolved about orders being made in the context of the prerogative writ of prohibition where the question of jurisdiction turned on questions of law. An equally substantial body of jurisprudence is revealed in cases where the question of jurisdiction turned on a question of fact or of mixed fact and law. Mason J analysed that in R v Federal Court of Australia; ex parte Pilkington ACI (Operations) Pty Ltd[19] albeit in the different context of the jurisdiction of the Federal Court of Australia to decide whether the applicant was a person who possessed the requisite locus standii to institute a proceeding for relief under s 80 of the Trade Practices Act. Mason J held[20] that the firmly established rule is that prohibition will not issue unless it appears that there is an absence, or an excess, of jurisdiction.
[19] (1978) 142 CLR 113.
[20] Ibid, 127.
Of course, the current application with which I am concerned does not involve any relief in the nature of prohibition even though it is beyond debate that prohibition lies to the judges of the Family Court[21] and, it must now follow, prohibition also lies to judges of Division 1 of the Federal Circuit and Family Court of Australia (“FCFCOA”).
[21] R v Federal Court of Australia; ex parte The Western Australian Football League Inc (1979) 143 CLR 191, R v Cook; ex parte Twigg (1980) 147 CLR 15 and R v Ross-Jones; ex parte Green (1984) 156 CLR 185.
It is also beyond doubt that what was once the Family Court was a superior court of record possessed of limited jurisdiction.[22]
[22] R v Ross-Jones; ex parte Green (1984) 156 CLR 185, 193 (Gibbs CJ).
If the jurisdiction of the tribunal to which prohibition is sought to be directed depends on the existence of particular facts which are in dispute, High Court authority has held that it will often appear desirable to let that tribunal proceed to determine those facts in the first place and that a court of limited jurisdiction has power to determine the existence or otherwise of facts on which its jurisdiction depends.[23]
[23] DMW v CGW (1982) 151 CLR 491, 505 and R v Ross-Jones; ex parte Green (1984) 156 CLR 185, 194.
The jurisdiction of what is now the FCFCOA is original (s 25 of the Federal Circuit and Family Court of Australia Act 2021) (“FCFCOA Act”), appellate (s 26 of the FCFCOA Act) or associated (s 29 of the FCFCOA Act).
Section 31 of the Family Law Act was located in Part IV which was repealed by Act No 13 of 2021. Since September 2021 the jurisdiction of Division 1 of the FCFCOA has been recorded in Part V which relevantly provides that a “matrimonial cause” may be instituted in Division 2 of the FCFCOA. A proceeding is then transferred, when instituted in Division 2 of the FCFCOA to Division 1 of the FCFCOA pursuant to s 51 or s 149 of the FCFCOA Act.
Section 132(1)(a) of the FCFCOA Act defines the jurisdiction of Division 2 of the FCFCOA as being original “with respect to matters in respect of which proceedings may be instituted under the Family Law Act”.
Section 39(1) of the Family Law Act provides that a “matrimonial cause” may be instituted under the Family Law Act. Aside from questions of the division of the FCFCOA which hears and determines that matrimonial cause, the definition of “matrimonial cause” remains pivotal in the ascertainment of jurisdiction of Division 1 of the FCFCOA. It is necessary to descend to the exquisite particularity of the definition of “matrimonial cause” in order to better understand whether Division 1 of the FCFCOA has jurisdiction to hear and determine the trustees’ cross claim. Even a cursory reading of the definition in s 4 of the Family Law Act of the phrase “matrimonial cause” causes a reader to remark about its breadth. In this case subparagraph (cb) was invoked. Relevantly paraphrased, the definition of “matrimonial cause” was as follows –
matrimonial cause means:
...
(cb) proceedings between:
(i) a party to a marriage; and
(ii) the bankruptcy trustee of a bankrupt party to the marriage;
with respect to any vested bankruptcy property in relation to the bankrupt party, being proceedings:
(iii) arising out of the marital relationship; or
(iv)in relation to concurrent, pending or completed divorce or validity of marriage proceedings between the parties to the marriage; or
(v)in relation to the divorce of the parties to the marriage, the annulment of the marriage or the legal separation of the parties to the marriage, being a divorce, annulment or legal separation effected in accordance with the law of an overseas jurisdiction, where that divorce, annulment or legal separation is recognised as valid in Australia under section 104;
It will at once be observed that unlike several other subparagraphs of the definition of “matrimonial cause” which begin with “proceedings between the parties to a marriage”, subparagraph (cb) commences with the words “proceedings between” and then enumerates several separate categories of proceedings. In subparagraphs (caa) and (cb), the relevant persons involved in the proceeding are a party to the marriage (here, the wife) and the other party to the proceeding is the bankruptcy trustee of a bankrupt party to the marriage. The matrimonial cause mentioned in subparagraph (caa) relates to a proceeding between a party to the marriage and the trustee of a bankrupt party “with respect to the maintenance of the first-mentioned party”. That is not the situation in this proceeding. However, the matrimonial cause mentioned in subparagraph (cb) has relevance only if the proceeding between the party to the marriage and the bankruptcy trustee of a bankrupt party to the marriage is “with respect to any vested bankruptcy property in relation to the bankrupt party, being proceedings … (iii) arising out of the marital relationship.”
Debate focused on whether the trustees’ claim in relation to the deed of declaration of trust, the settlement deed and the instrument of transfer were “with respect to any vested bankrupt property … arising out of the marital relationship” and if so whether that properly met the elements of “matrimonial cause” so as to enliven the jurisdiction of this court.
It is relevant to observe that the several definitions of “matrimonial cause” use the word “proceedings”, a defined term.[24] In s 4 –
proceedings means a proceeding in a court, whether between parties or not, and includes cross‑proceedings or an incidental proceeding in the course of or in connexion with a proceeding.
[24] Wilson and Dawson JJ in R v Ross-Jones; ex parte Green (1984) 156 CLR 185, 208 regarded the defined terms “proceeding” and “court” as being important.
It is also relevant to observe that in the definition of “proceeding” the word “court” appears, itself also a defined term. However, the definition of “court” in relation to any proceeding means the court exercising jurisdiction in that proceeding by virtue of the Family Law Act, the FCFCOA Act, the Child Support (Assessment) Act or the Child Support (Registration and Collection) Act. In R v Ross-Jones; ex parte Green[25] Wilson and Dawson JJ observed that the inquiry into the jurisdiction of the Family Court is confined to the relevant paragraphs of the definition of “matrimonial cause” and associated matters.
[25] (1984) 156 CLR 185, 211.
Where the limits of the Family Court’s jurisdiction as marked out by the Family Law Act are not so clearly defined, there may be times when it is necessary for a court to determine, though not conclusively, the existence or otherwise of facts upon which its jurisdiction depends. Various statements of principle exist to that effect. In R v Federal Court of Australia; ex parte The Western Australian Football League Inc[26] Mason J spoke of the jurisdiction in the Federal Court to determine whether the relevant football league’s members were corporations or trading corporations for the purposes of the Trade Practices Act and for the Federal Court to determine whether the league’s members were relevantly engaged in interstate trade or commerce to which matters Mason J ascribed the appellation “constitutional facts”. However, any such determination is not conclusive.[27]
[26] (1979) 143 CLR 191, 225.
[27] DMW v CGW (1982) 151 CLR 491, 510.
Where an interim application is brought, premised on the existence of jurisdiction in circumstances where jurisdiction is contested, a decision about jurisdiction should not be postponed. Of that circumstance Wilson and Dawson JJ[28] said the following –
The power to determine the existence of jurisdictional facts is not a power which is any way extends the jurisdiction of the court. If a matter is beyond the jurisdiction of a court, it cannot be brought within jurisdiction for the purpose of granting interlocutory relief. That proposition appears to us, with all respect, to be self-evident and decisive.
Of course, there may be times when it is necessary for a court to determine, though not conclusively, the existence or otherwise of facts upon which its jurisdiction depends: D.M.W. v C.G.W.[29]; Reg. v Federal Court of Australia; Ex parte W.A. National Football League[30]. In such cases, there may be times when a court concludes on the material available and often upon an ex parte application that prima facie there is jurisdiction and that the circumstances point compellingly to a need to preserve the status quo as an interim measure pending a hearing to determine whether interlocutory relief should be granted. But even then an interim order, subject to the usual undertaking as to damages, should only be made against a third party, in respect of whom the court's jurisdiction may be in question, for such limited time as is necessary to enable that question to be determined, even if it means an alteration in the court's ordinary arrangements. It is only then that the granting of an interim injunction prior to the hearing and determination of the question of jurisdiction could be justified. And this limited possibility must not be allowed to obscure the basic principle that a decision concerning jurisdiction cannot be postponed at the same time as the very jurisdiction which is in question is exercised by the granting of an interlocutory injunction.
[28] R v Ross-Jones; ex parte Green (1984) 156 CLR 185, 213.
[29] (1982) 151 CLR 491, 501, 507 and 510.
[30] (1979) 143 CLR 191.
In the same case Brennan J spoke of the High Court possessing final authority to address the constitutional limits of a superior federal court. Yet prohibition does not lie to prevent the court from entering upon the preliminary assessment of such facts as ground its jurisdiction. His Honour held as follows,[31] applying DMW v CGW –
The Family Court is a superior court of record (Family Law Act 1975 (Cth), s. 21(2)), though it is a court of limited jurisdiction. The two characters are not inconsistent, as McTiernan J. pointed out in Cameron v Cole[32]. It has jurisdiction to determine — and to determine judicially — whether it has the jurisdiction to entertain a particular application or to make a particular order. Where the substantive jurisdiction of the court depends upon facts, the court may find the facts — and find them judicially — in the exercise of its jurisdiction to determine the extent of its substantive jurisdiction: D.M.W. v C.G.W.[33]. Prohibition does not lie to prevent the court from entering upon the preliminary inquiry: Reg. v Federal Court of Australia; Ex parte W.A. National Football League (Adamson's Case)[34]. If the court makes an order on the application before it, it is implicit in the order that the court has determined that it has the jurisdiction to do so: Peacock v Bell and Kendal[35]. Unlike a decision by an inferior court or a quasi-judicial tribunal, a judgment of a superior court of record “is conclusive as to all relevant matters thereby decided” (Mayor of London v Cox[36]) but, in the case of superior federal courts, subject to a qualification which is required by the Constitution.
[31] R v Ross-Jones; ex parte Green (1984) 156 CLR 185, 215-216.
[32] (1944) 68 CLR 571, 599.
[33] (1982) 151 CLR 491, 507.
[34] (1979) 143 CLR 190, 203, 215-216 and 225.
[35] (1666) 85 ER 84.
[36] (1867) LR 2 HL 239, 262.
Brennan J went to some lengths to point out that the High Court should not be called upon prematurely or unnecessarily by the issue of prohibition. His Honour held as follows –
Although In re Baker and Wilkie; Ex parte Johnston[37] appears to have turned on questions of fact, so that the issue of prohibition would have been discretionary at common law, the observations as to prematurity of applications are directed more to the orderly administration of justice than to a common law distinction between patent and latent defects of jurisdiction. It is clear that prematurity in applying for prohibition under s. 75(v) may be established when the questions in issue ought, for reasons of curial convenience, to be litigated first in the Family Court. There is no reason to distinguish between cases where jurisdiction turns on a question of law and cases where it turns on a question of fact or of mixed law and fact; there is no reason to distinguish between cases where the absence of jurisdiction appears on the face of the proceedings and cases where it does not. That view reflects what Mason J. said in Reg. v Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty Ltd[38], though his Honour was there concerned with inquiries into jurisdictional facts. In that case [39], his Honour pointed out that there are the strongest reasons why this Court should insist upon a strict application of the rule that prohibition will not issue unless it appears that there is an absence, or an excess, of jurisdiction and that cases in which an award of prohibition was made before an inferior tribunal had decided the issue on which its jurisdiction depended are, for the most part, cases in which there was some reason for thinking that the tribunal would decide the issue erroneously or would otherwise exceed the jurisdiction conferred upon it. A fortiori, prohibition ought not to go to a superior court if it has not decided the issue on which its jurisdiction depends unless it appears that it is likely that that court will decide that issue erroneously or that it will exceed the true constitutional limits of its substantive jurisdiction. It is premature and unnecessary to invoke the jurisdiction of this Court to issue prohibition to a superior federal court on a ground which that court has not considered or been called on to consider even though an absence of jurisdiction appears on the face of the proceedings before it.
[37] R v Baker and Wilkie; Ex parte Johnston (1980) 55 ALJR 191.
[38] (1978) 142 CLR 113.
[39] (1978) 142 CLR 113, 126-127.
Deane J in R v Ross-Jones; ex parte Green[40] described it as a court’s duty to decide the question of its jurisdiction. Again in reference to any premature consideration of the prerogative process of prohibition, Deane J held that a powerful reason existed in relation specifically to the Family Court. It was as follows –
A second reason is related to the first. It is that a writ of prohibition precluding the Family Court from dealing with a matter effectively deprives this Court of the benefit of the views of the members of the Full Court of that Court on the particular case. The Family Court’s jurisdiction is a specialist one. The judges of that Court possess specialist experience and knowledge of the content and administration of family law and of the Family Court’s own practice and procedures. Where questions of constitutional power are not involved, it is undesirable that a substantive question which has arisen in the Family Court should be determined in this Court without the benefit of the views of the Full Court of the Family Court on the particular case. The position is, of course, a fortiori in a case where prohibition is sought before even the primary judge has had an opportunity of dealing with the question which it is sought to raise in this Court.
[40] (1984) 156 CLR 185, 222.
Of course, the constitutional writ of prohibition was not involved in this case and instead the represented third parties challenged jurisdiction by means less constitutionally formulaic.
Mr Myers AC KC placed heavy emphasis on the immediacy required in the determination of jurisdiction. He relied on proposition 6 of Yunghanns to contend that the court (me, in this instance) must find the existence of jurisdictional facts on the balance of probabilities before the court considers adjudicational facts. That contention seemed to clash with, to contradict or to be inconsistent with certain propositions of the High Court, especially –
(a)the statements of Mason J in R v Federal Court of Australia; ex parte The Western Australian Football League Inc[41] where his Honour held that there may be times when it is necessary for a court to determine, although not conclusively, the existence or otherwise of facts upon which its jurisdiction depends;
(b)statements in DMW v CGW[42] to the effect that the court may sometimes need to determine facts upon which its jurisdiction depends;
(c)statements of Brennan J in R v Ross-Jones; ex parte Green[43] to the effect that the court has jurisdiction to determine whether it has jurisdiction to entertain a particular application or to make a particular order; and
(d)statements in such cases as DMW v CGW,[44] R v Gray; ex parte Marsh,[45] Re Macks; ex parte Saint,[46] Kennon v Spry[47] and Public Service Association of South Australia Inc v Industrial Relations Commission (SA)[48] to the effect that where highly contested questions of fact arise upon which the court’s authority depends, the conferral of jurisdiction carries with it the power to determine facts upon which the jurisdiction of the court depends.
[41] (1979) 143 CLR 191, 225.
[42] (1982) 151 CLR 491, 501, 507 and 510.
[43] (1984) 156 CLR 185, 215-216.
[44] (1982) 151 CLR 491.
[45] (1985) 157 CLR 351.
[46] (2000) 204 CLR 158.
[47] (2008) 238 CLR 366.
[48] (2012) 249 CLR 398.
One of the more important issues for my determination in this application is reconciling the statement in paragraph 6 of Yunghanns with the propositions recorded in sub-paragraphs (a) – (d) of the immediately preceding paragraph. In other words, while I am bound to find the existence of jurisdictional facts as a first task before embarking upon any consideration of adjudicational facts, where those jurisdictional facts are comprised of disputed facts, then the court (me, in this instance) must determine facts upon which the court’s jurisdiction depends. When must that be done, according to the authorities? Mr Myers AC KC contended that in this case there is and can be no relevant dispute over the critical facts because, so he submitted, the incontrovertible fact remained that the trustees-in-bankruptcy are not possessed of “vested bankruptcy property” of Mr Jess Snr. That was for the simple reason that prior to his bankruptcy, Mr Jess Snr transferred the relevant units to his son Mr Jess Jnr. The wife and the trustees contest the legitimacy of the transfer as between Mr Jess Snr and Mr Jess Jnr. If they are correct, then the 98 units in the JRUT may well assume the status of being “vested bankruptcy property”. To my mind, it is by no means a foregone conclusion that the units are not vested bankruptcy property. Whether or not the units are properly “vested bankruptcy property” is a contested fact. It must be determined. According to conventional orthodoxy, contested facts are determined at trial. Mr Myers resisted that notion, arguing that I must at once determine the jurisdictional facts of this case well prior to the determination of adjudicational facts. He submitted that there was nothing in dispute because the units are presently held by Mr Jess Jnr.
It would seem peculiar that I should deal with this summary dismissal application on the basis that the status of the transfer of the units is a contested fact yet that I accept concurrently and unreservedly the represented third parties’ primary contention that the units have been validly transferred from Mr Jess Snr to Mr Jess Jnr in circumstances where the legitimacy of that transfer is a fact in issue.
THE WIFE’S PRESENT CLAIMS IN THIS LITIGATION
On 31 October 2022 the wife made wholesale amendments to her application in this proceeding. She did so pursuant to a document styled “second further amended initiating application”. Substantial deletions were made and a small number of replacement statutory claims were advanced. Those included the following –
(a)application pursuant to s 106B of the Family Law Act for orders setting aside the deed of declaration of trust, the instrument for transfer of units and the deed of settlement;
(b)application for orders under s 80(1)(d) of the Family Law Act requiring X Pty Ltd (or the current trustee of the JRUT) to execute any necessary document so that ownership of the husband’s unitholding was recorded in the name of the husband (or intervenors) with retrospective effect;
(c)alternatively, declaratory relief to the effect that if any of the husband’s unitholdings or the traceable proceeds thereof was held by Mr Jess Jnr, that unitholding or the proceeds thereof were held by Mr Jess Jnr’s corporate interests on a constructive trust in favour of the husband;
(d)alternatively, the taking of accounts as to Mr Jess Jnr’s and Mr Jess Jnr’s corporate interests in relation to the husband’s unitholding or the traceable proceeds thereof together with any proceeds from the investment of such assets or proceeds; and
(e)an application for orders for property adjustment between the wife, the legal personal representative of the husband and the intervenors.
In accordance with orders made by me on 17 August 2022, the wife filed and served her amended statement of claim dated 13 October 2022. That is a composite, although succinct, document of some complexity. I have incorporated it as annexure B to these reasons. The relief sought in it mirrors the details in the wife’s second further amended initiating application.
The represented third parties filed and served their defence dated 10 November 2022. In it they asserted that –
(a)the wife knew of the existence of the deed of declaration of trust from at least 30 March 2007;
(b)the allegations which Mr Jess Jnr made in the Supreme Court proceeding commenced in mid-2007 remain true;
(c)the wife is barred from bringing claims that are the subject of her amended statement of claim by reason of the operation of the deed of settlement made on 20 September 2009;
(d)the wife delayed in bringing her claim to seek orders setting aside the deed of declaration of trust, the deed of settlement and the transfer of units pursuant to s 106B of the Family Law Act;
(e)the deed of declaration of trust is not liable to be set aside;
(f)the deed of settlement, the deed of declaration of trust and the transfer of units remain valid and effective;
(g)the transfer of units was not made so as to and did not defeat any anticipated order;
(h)the deed of settlement to which the wife was a party was entered into after all parties had the opportunity to, and did, receive legal advice about it;
(i)pursuant to the deed of settlement the wife received or retained assets of in excess of $29,000,000;
(j)the deed of settlement was not made to defeat an anticipated property adjustment order;
(k)the wife delayed in bringing her claim under s 106B for orders setting aside the deed of settlement;
(l)the deed of settlement is not liable to be set aside;
(m)the wife has released Mr Jess Jnr and the represented third parties from all claims based upon any fact and circumstance existing as at the date of the deed of settlement;
(n)the wife is barred from bringing the claims in her amended statement of claim;
(o)Mr Jess Jnr did not and still does not hold the units or any income derived from the units held on trust for the husband or the intervenors; and
(p)alternatively, if Mr Jess Jnr holds the units or any income derived from the units on trust for the husband or the intervenors (which is denied) he is entitled to due allowance for any increase in value of the units and income derived from the units by reason of the fact that the increases and income were generated by his expense, skill, expertise, property resources and capital and the risks he has taken, such that it would be inequitable to order that Mr Jess Jnr holds the units and any income derived therefrom on trust for the husband or intervenors.
The wife squarely put in issue for determination in this litigation several matters in respect of the deed of declaration of trust and the husband's unitholding. Those include the following –
(a)by reason of factual findings made by Bennett J in her Honour's reasons for judgment made in 2018, the represented third parties are estopped from asserting that the deed of declaration of trust was executed on the date it bears, that it was fraudulently created and that Mr Jess Jnr and the represented third parties acted fraudulently and dishonestly intending to mislead the wife and the court;
(b)it is the case that the deed of declaration of trust was not in fact created on the date it bears but rather on some later date;
(c)the deed of declaration of trust is not a valid and enforceable document and is instead of no legal effect;
(d)the husband’s unitholding did not vest in Mr Jess Jnr;
(e)the husband or his trustees continue to own the husband’s unitholding; and
(f)the allegations made by Mr Jess Jnr in the Supreme Court of Victoria litigation were false.
It will be evident from that much of the narration of the background leading to this application made by the represented third parties against the intervenors that even as between the wife and the represented third parties, the status of the deed of declaration of trust, the instrument of transfer of units and the deed of settlement remain highly contentious documents, as to not only the circumstances of the creation and entry into each but also as to their legal effect and validity. Whether at the suit of the wife or at the suit of the trustees, the represented third parties contest the efficacy of those three documents. After trial, only if the represented third parties successfully demonstrate that each of those three documents remain valid and subsisting will those three documents take effect according to their terms. On the other hand, if the wife succeeds in her challenge in relation to each document she will become entitled to an order setting those documents aside with whatever consequential orders flow from the setting aside of the three documents. If that were to occur, the units held by the husband in JRUT prior to the execution of the deed of settlement, the deed of declaration of trust and the instrument of unit transfer will repatriate.
In that eventuality, where would that leave the trustees? According to the submissions of the represented third parties, only upon the setting aside of the three impugned documents will the husband’s unitholding repatriate to the legal personal representative of the deceased and only then might the husband’s unitholding attract the operation of the Bankruptcy Act. By then, the trial will have taken place and if the represented third parties are successful in their summary dismissal application the trustees will have been denied the opportunity to participate in that trial. That outcome seems to me to be irregular.
THE SUBMISSIONS OF THE REPRESENTED THIRD PARTIES
By application filed 28 November 2022 the represented third parties sought orders dismissing the trustees’ cross claim on the basis that the cross claim has no reasonable prospect of success or on the basis that the cross claim was an abuse of process.
They argued that Division 1 of the FCFCOA does not have jurisdiction in this case to entertain the trustees’ claims because the units that are the subject of the trustees’ cross claim are not “vested bankruptcy property” for the purposes of s 4(1)(cb) of the Family Law Act and for the purposes of s 79(1)(b) of the Family Law Act.
The represented third parties contended that “vested bankruptcy property” was defined in s 4(1) of the Family Law Act to mean property of the bankrupt that has vested in the bankruptcy trustee under the Bankruptcy Act. They submitted that s 58(1)(a) of the Bankruptcy Act controls the circumstances when property of the bankrupt vests in the official receiver, that is to say, forthwith upon the debtor becoming a bankrupt. They argued that for the purposes of property division among creditors, s 116(1)(a) of the Bankruptcy Act applied. That section was as follows –
(a)all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge; and
…
is property divisible amongst the creditors of the bankrupt.
In this case Mr Jess Snr became a bankrupt in mid-2016 on which date his property vested in the trustees.
The represented third parties relied on the observations of the Full Court in Jess & Jess (No 3)[49] where the court held that Mr Jess Jnr remains the holder of the units in JRUT.
[49] [2023] FedCFamC1A 2 (at [9]).
Embedded in the submissions of the represented third parties is an implied contention (it was not made expressly) that the transfer of the units in JRUT from Mr Jess Snr to Mr Jess Jnr preceded the date of the instrument of transfer of units which, according to Bennett J, was not executed on the date it bears. In other words, the cornerstone of their contentions about vested bankruptcy property is the notion that Mr Jess Snr had divested himself of the units by mid‑2016 when he presented his own petition in bankruptcy and therefore the units were not his property that vested in his trustees in bankruptcy. That proposition is the precise point challenged by the wife. The trustees likewise challenge that proposition. The point has not yet been judicially determined. Until judicially determined adversely to the represented third parties, they say the units have not vested in the trustees in bankruptcy and only will so vest upon this court making declarations to that effect.
The represented third parties placed heavy reliance upon the trustees’ pleading pursuant to which the trustees seek orders that the units vest “with retrospective effect” and that ownership of the units “be recorded to be held in the names of the trustees, with retrospective effect.” The represented third parties submitted that the trustees’ pleas to recording their ownership retrospectively, effectively amounted to a concession that the trustees do not presently have vested property in the units. Before addressing the contentions of the represented third parties in relation to summary dismissal of the trustees’ cross claim and abuse of process, it is utile to record the trustees’ contentions on the vested bankrupt property issue. In précis form, the trustees in undated written submissions from their counsel submitted as follows –
(a)pursuant to s 4(1) of the Family Law Act and particularly the definition of “matrimonial cause”, a proceeding is included if it is in relation to concurrent, pending or completed proceedings of a kind referred to in any of paragraphs (a) to (eb);
(b)s 78 empowers the court to make declaratory orders;
(c)s 80(1)(k) empowers the court, when exercising powers under Part VIII, to make such orders it thinks fit to do justice;
(d)s 106B(1) empowers the court to make orders setting aside an instrument or disposition by, on behalf of or at the direction of a party, which is made to defeat an anticipated order;
(e)s 106B(1A), applies if a party to the marriage is a bankrupt and the bankruptcy trustee is a party to a proceeding under the Family Law Act (as here) such that the court has power to set aside, or restrain the making of, an instrument made by or at the direction of the bankrupt and which is made to defeat an anticipated order in the proceeding;
(f)s 106B(4AA) provides that a party to the proceeding may bring a s 106B application; and
(g)s 106B(4A) provides that the court may do all things enumerated in, among other things, s 80(1) in a s 106B application.
Those contentions seemed to address the scope of the court’s powers under s 106B. But those contentions did not meet the represented third parties’ contentions about “vested bankruptcy property”. In a separate segment of their written submissions, Mr Austin KC and Ms Papaleo did in fact address the contentions of the represented third parties that the units were allegedly not Mr Jess Snr’s property before or during his bankruptcy. In essence, counsel for the trustees advanced the following propositions –
(a)the argument of the represented third parties about the units having passed from Mr Jess Snr’s ownership prior to his bankruptcy with the consequence that the units were not vested bankruptcy property should be rejected;
(b)the trustees’ application related to not only the husband’s units but also to “the husband’s unitholdings and all rights (including choses in action) related to them including the income derived therefrom”;
(c)the word “property” in s 4(1) of the Family Law Act has a largely similar meaning as the word “property” in the Bankruptcy Act and under s 5(1) of the Bankruptcy Act, “property” is defined as follows –
property means real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property.
(d)the concept of “property” under the Bankruptcy Act encompasses a chose in action;[50]
(e)the concept of chose in action also includes any rights of a proprietary kind;[51]
(f)upon Mr Jess Snr becoming a bankrupt and during his bankruptcy he possessed “property” in the form of a right to have the husband’s unitholding property revested or retransferred to him;[52] and
(g)on 3 September 2013, prior to the commencement of the bankruptcy of Mr Jess Snr the wife commenced her proceeding under s 106B of the Family Law Act.
[50] Fuller v Beach Petroleum NL (1993) 43 FCR 60, 70, Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306, Re Pevsner; ex parte Official Trustee in Bankruptcy (1983) 68 FLR 254 and Bride v Peak Marwick Mitchell [1989] WAR 383, 393. Counsel for the husband argued that a chose in action is best understood as a right, or a right of property, enforceable by an action: Loxton v Moir (1914) 18 CLR 360, 379 (Rich J) and Krischell Pty Ltd v Nilant (2006) 32 WAR 540, 557 (McLure JA). In Bryson & Pember [2013] FamCA 43, it was held that a bankrupt husband’s right to bring a proceeding under s 79 did not vest in his trustee in bankruptcy because it did not seek to enforce or claim an existing corporeal or incorporeal interest (an outcome consistent with the position that a bankruptcy trustee cannot be an applicant under s 79.
[51] Fuller v Beach Petroleum NL (1993) 43 FCR 60, 70. Counsel for the trustees argued that the term “property” does not necessarily mean full, exclusive or beneficial ownership, but rather a description of a legal relationship with a thing, usually treated as a bundle of rights as was held in Yanner v Eaton (1999) 201 CLR 351, [17], Woodcock v Woodcock (No 2) (2022) 65 Fam LR 333, Kennon v Spry (2008) 238 CLR 366 and Stanford v Stanford (2012) 247 CLR 108.
[52] In the Marriage of Aysom (1987) 93 FLR 22, 27 (Nygh J), Benjamin v Benjamin (1976) 11 ALR 211, 216 and In the Marriage of Collins (1987) 11 Fam LR 382.
The trustees placed heavy reliance upon their contention that at all relevant times prior to and during the bankruptcy of Mr Jess Snr, he possessed a chose in action under s 106B of the Family Law Act which chose in action was squarely “property” within the meaning of the Bankruptcy Act. The trustees cited in support two decisions of the Federal Court of Australia, the first being Griffiths v Civil Aviation Authority[53] and the second being Meriton Apartments Pty Ltd v Industrial Court of New South Wales.[54]
[53] (1996) 67 FCR 301.
[54] (2008) 171 FCR 380.
Taking first Griffiths v Civil Aviation Authority, the facts of the case were quite different to those of concern in this case. Each member of the the Full Court[55] handed down separate reasons, although general agreement was expressed by Spender J with the separate reasons of Einfeld J and Cooper J. The question on the appeal was whether the exercise of a right of appeal to the Federal Court conferred by the provisions of the Administrative Appeals Tribunal Act on a question of law was part of the “property of the bankrupt” which, pursuant to s 58(1) of the Bankruptcy Act, vested on bankruptcy in the trustee of the bankrupt’s estate. Spender J held that the proceeding concerned a statutory right to bring a proceeding in the Federal Court to challenge a decision imposing conditions on which a pilot’s commercial licence might be used. The relevant right of appeal in that case arose subsequent to the bankruptcy and so, if the right to appeal was properly to be characterised as “property of the bankrupt”, the relevant property was “after-acquired property of the bankrupt”.
[55] Spender, Einfeld and Cooper JJ.
Spender J held that the right to bring a proceeding pursuant to s 44(1) of the Administrative Appeals Tribunal Act to challenge a decision of the tribunal in respect of Mr Griffiths’s two licences did not vest in the trustee when the tribunal’s decision was given. It followed that Mr Griffiths was entitled to challenge those decisions in the Federal Court.
Einfeld J held that the relevant pilot’s licenses were personal to the licensee and therefore they could not be considered as “property” vesting in the trustee upon Mr Griffiths’s bankruptcy.
In this application, counsel for the trustees focused on the reasons for judgment of Cooper J to demonstrate the holding that property which vested in a trustee in bankruptcy included a right of action which was either one of a proprietorial nature, one affecting property of the bankrupt or one affecting the due administration of the bankrupt estate. It seemed to me that care needed be taken not to extract that observation out of context. Cooper J was there making an observation about the property which passed to the trustee. Cooper J commenced the passage extracted by counsel for the intervenors from paragraph 28 of their written submissions in reference to what was said to be a wide view always taken by the courts about property which passes to the trustee. Cooper J cited in support of that proposition the holdings to like effect by Erle J in Beckham v Drake.[56] There, Erle J held that the general principle is that all rights of the bankrupt which can be exercised beneficially for the creditors do pass and the right to recover damages may pass though those damages are unliquidated. Cooper J in Griffiths then considered the observations of Baron Parke in Beckham v Drake in which his Lordship held that the bankruptcy statute transfers not all rights of actions but those would-be assets in the hands of executors for payment of debts all of which could be turned to profit. Then Cooper J interpolated as follows –
What was required was that the right was (sic) either one of a proprietorial nature, one affecting property of the bankrupt, or one affecting the due administration of the estate.
[56] (1849) 9 ER 1213.
Cooper J explained the rationale of such an approach by reference to the reasons of North J in the 1882 decision of the Queen’s Bench Division in Warder v Saunders.[57] There, North J held as follows –
…I quite agree with the Master of the Rolls that the bankrupt cannot continue the action as plaintiff. It is said that this is a hardship, for that if the plaintiff were allowed to proceed he might recover a large sum for his creditors and a surplus for himself. But, on the other hand, he might not, and we must look at the case practically. The trustee has to get in the assets, and to distribute them amongst the creditors. It is impossible that he can do so when an action affecting the amount of the assets is pending under the control of the bankrupt. I think the trustee has a right to say that a claim which is good shall be enforced, and a claim which is not good shall be abandoned, and the estate wound up on that footing. The balance of convenience is not in favour of keeping the action open if the trustee declines to proceed, and I think that practically it is best not to give the plaintiff the opportunity of keeping it open.
[57] (1882) 10 QBD 114, 117.
Personal injuries claims and claims in respect of the bankrupt’s reputation do not affect the bankrupt’s estate. Cooper J held that a person’s right to lodge a caveat for example, is no more than a naked right to litigate and one which did not pass to the Official Receiver under the Bankruptcy Act. To that end, Cooper J recorded an extensive array of decisions in which a bare right to sue does not pass to the trustee-in-bankruptcy by reason of the fact that such a right to sue is not based on the existence of an underlying property right or claim.[58]
[58] McLeod v Johns [1981] 1 NSWLR 347, 349, Deputy Commissioner of Taxation v Swain (1988) 20 FCR 507, 514, In the Marriage of Reed; Grellman (Intervener) (1989) 13 Fam LR 566, 569 and In the Marriage of Audet; Official Trustee in Bankruptcy (Intervener) (1994) 19 Fam LR 291, 298.
Cooper J, as with Spender J and Einfeld J, held that “property” did not include an appeal under s 44 of the Administrative Appeals Tribunal Act.
The trustees in this case did not cite or rely on the decision in Randall v Deputy Commissioner of Taxation.[59] There Lander J relied on the decision in Griffiths v Civil Aviation Authority as well as the decision of the High Court in Cummings v Claremont Petroleum NL[60] where Brennan CJ , Gaudron and McHugh JJ held that a chose in action may be the property of the person entitled to enforce it. Lander J held as follows in reference to the intrinsic nature of property capable of vesting in the bankrupt’s estate –
In order therefore for property of the bankrupt (including after-acquired property) to vest in the bankrupt’s estate the property must be of a character which is divisible among the bankrupt’s creditors or be of a character of a right or power in relation to that property that would otherwise have been exercisable by the bankrupt but for the bankruptcy. Any other property does not vest.
[59] (2008) 174 FCR 441.
[60] (1996) 185 CLR 124, 133.
In this case the trustees also relied on the decision of the Full Court of the Federal Court in Meriton Apartments Pty Ltd v Industrial Court of New South Wales.[61] The facts of the case have next to no parallel with those with which I am concerned in this application. However, the trustees derived support from certain observations in the reasons for judgment of Perram J especially at paragraphs 224 and 225 of his Honour’s reasons.
[61] (2008) 171 FCR 380 (Branson, Greenwood and Perram JJ).
It is necessary to set in some brief context the passages of the reasons of Perram J on which the trustees rely. In Meriton Mr Rose purchased 10 apartments in an apartment complex in Sydney called Regis Tower, developed by Meriton. In April 1999, a company in which Rose was a shareholder and of which he was a director, in reliance upon representations made by Meriton, entered into a deed with Meriton pursuant to which Rose’s company would provide caretaker services to the owner’s corporation. Rose asserted that contrary to Meriton’s representations the apartment complex did not comply with the relevant building code and so the remuneration payable by the owner’s corporation under the caretaker agreement was insufficient to enable the developer of the complex to discharge its management obligations, leading to the appointment of an administrator to the developer. The developer later commenced litigation against Meriton and the owner’s corporation, seeking among other things declaratory relief that the contractual regime between the developer and Meriton was unconscionable, unfair or harsh pursuant to s 106 of the Industrial Relations Act 1996 (NSW). That relief was exercisable in the Industrial Relations Court pursuant to s 106 of the Industrial Relations Act. Perram J held that Mr Rose had no underlying chose in action which a proceeding under s 106 was to vindicate but rather, under s 106 Rose had a bare right to bring an application for orders under s 106, citing the decision of the Court of Appeal of the Supreme Court of New South Wales in Majik Markets Pty Ltd v Brake & Service Centre Drummoyne Pty Ltd.[62]
[62] (1991) 28 NSWLR 443, 461.
The existence of a bare right seemed to me to be relevant to the question whether vested bankruptcy property existed in the hands of the trustees in this case. The decision of the Court of Appeal in Majik Markets Pty Ltd v Brake & Service Centre Drummoyne Pty Ltd[63] held it did.
[63] Ibid.
It is important to keep in mind that the represented third parties challenge the jurisdiction of the FCFCOA to hear and determine the trustees’ claims in this litigation. The trustees rely on s 106B of the Family Law Act. Conversely, the wife relies on different legal bases to agitate the very same propositions, namely, that the deed of declaration of trust, the deed of settlement and the instrument of transfer of units should be set aside for fraud. The wife squarely puts in issue all legal and factual propositions upon which she relies to seek orders for the setting aside of those three documents. If successful in her quest, the illegitimacy of the purported transfer of ownership in the units will be shown with the likely consequence that the units will be taken to form part of the property of the late Mr Jess Snr in respect of which an adjustment of property interests will be made in pursuance of s 79 of the Family Law Act.
In order to arrive at a determination of the wife’s challenge in respect of the three documents, it will be necessary to hear viva voce evidence and read documents tendered in evidence. If the represented third parties are correct in their present contentions about the invalidity of the trustees’ claim, then the trustees will not be permitted in this litigation to agitate the trustees’ claims about the very same documents and the very same circumstances as the wife agitates in the same litigation. That would leave the trustees, who have expended significant sums thus far on this litigation, with a claim they may not be able to pursue in this case but which they may be able to pursue in another forum yet in reliance upon a legislative provision other than s 106B of the Family Law Act. If forced to do that they may additionally be forced to wait until the hearing and determination of the litigation in Division 1 in this court is concluded. Whether they would be confronted with some form of estoppel by doing that also remains to be seen.
By the same token, it must be acknowledged that the trustees are pursuing relief against the represented third parties for the benefit of the general body of unsecured creditors. Yet that, in and of itself, does not alter the character of the challenge that the trustees launch against the validity of the impugned deed of settlement, the deed of declaration of trust and the instrument of transfer. In those circumstances, if the trustees are shut out of this litigation they are likely to be required to await the outcome of this litigation before they can pursue an application in some other court for orders impugning the same documents as are in issue at the suit of the wife in this litigation. They may not face an Anshun estoppel but the witnesses to give evidence about the three documents will probably be the same whether the claim to impugn the documents is brought by the wife or by the trustees.
In debate I raised with counsel whether that state of affairs sufficiently or adequately promoted the overarching objectives set out in the FCFCOA Act. I also enquired whether that state of affairs was consistent with the observations of the High Court in Aon Risk Services Australia Ltd v Australian National University.[64] Unsurprisingly, Mr Dickson KC and Mr Austin KC submitted that such a state of affairs was anathema to modern principles governing case management. Equally unsurprisingly, Mr Myers AC KC submitted that the entire dispute over the trustees’ participation in this litigation was premised on jurisdiction which, so Mr Myers contended, did not exist.
[64] (2009) 239 CLR 175.
In debate with Mr Myers I enquired whether, on his contentions, the trustees may well rely on the associated or accrued jurisdiction of the court.[65] He said no point had been taken to that effect by any of the other parties so he declined to make submissions on point.[66]
[65] Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457, Fencott v Muller (1983) 152 CLR 570, Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 and Re Wakim; ex parte McNally (1999) 198 CLR 511.
[66] Transcript 23 March 2023 T 72 L 20 -22.
Mr Myers AC KC also contended that a claim that relied exclusively on s 106B of the Family Law Act did not invoke any of the subparagraphs of the definition of “matrimonial cause”.[67] In reply Mr Austin KC submitted[68] –
Now, the second issue that has been put against us about the want of jurisdiction is whether the court has jurisdiction even absent vested bankruptcy property by reference to subparagraph (f) of section – of the section which defines “matrimonial cause”. That subsection, of course – subparagraph, I should say, refers to completed – concurrent, pending or completed proceedings, and we say we have that in the sense that there was – there have been completed proceedings, and then there are existing proceedings. So there plainly are proceedings to which we can be attached to or parasitic to brought in this court. So that’s why we say section – subparagraph (f) is a sufficient jurisdictional hook for us to be here.
…
We say the nexus that is required by subparagraph (f) isn’t so confined and the claim – provided our claim under 106B has a connection with either the original property proceeding or the wife’s current property proceeding, that either is sufficient.
[67] Transcript 23 March 2023 T 17 L 34.
[68] Transcript 23 March 2023 T 47 L 20-30 and T 49.
CONSIDERATION OF JURISDICTIONAL ISSUE
Accepting that the trustees’ cross claim depended on an affirmative response to the question whether the vested bankruptcy property is presently held by the trustees, it seemed to me that this court can only give that answer once it makes findings of fact or addresses issues of mixed fact and law in order to determine its own jurisdiction. That approach is consistent with conventional orthodoxy in R v Federal Court of Australia; ex parte WA National Football League,[69] DMW v CGW[70] and R v Ross-Jones; ex parte Green.[71]
[69] (1979) 143 CLR 190.
[70] (1982) 151 CLR 491.
[71] (1984) 156 CLR 185.
To my mind, it does not lie in the mouths of the represented third parties to contend that the court has no jurisdiction to entertain the trustees’ claims on the basis that bankrupt property did not vest in the trustees, in circumstances where –
(a)the events leading up to and including the execution of the three impugned documents is contested; and
(b)a legal argument exists to the effect that Mr Jess Snr retained a bare right which passed to the trustees and which bare right has been construed in the authorities as being property.
In addition, as Deane J held in R v Ross-Jones; ex parte Green,[72] the court is under a duty to decide facts on which its jurisdiction depends.
[72] (1984) 156 CLR 185, 222.
In this case I am unable to reach a conclusion upon a preliminary examination of the facts that there is no jurisdiction. It would be most peculiar, to say nothing of inequitable, contrary to public policy and an affront to justice, that jurisdiction was denied to a party (the trustees) where the alleged want of jurisdiction was occasioned by acts described elsewhere as being fraudulently committed by one or more of the parties asserting the want of jurisdiction.
In my view I am duty bound to enquire into and make findings of fact on which jurisdiction in this case is based.
I am not willing to conclude on untested evidence that there is no jurisdiction in Division 1 of the FCFCOA to permit the trustees’ cross claim to proceed.
I dismiss the represented third parties’ contention that Division 1 of the FCFCOA lacks jurisdiction to hear and determine the trustees’ cross claim.
DISMISSAL APPLICATION
Paragraph 2 of the represented third parties’ amended application in a proceeding contained their application made under s 46(2) of the FCFCOA Act for the dismissal of the trustees’ cross claim filed 11 November 2022 on the basis that it has no reasonable prospect of success.
Before going to the learning on equivalent legislation, it is utile to set out the terms of s 46(2) of the FCFCOA Act.
Section 46(2) provides as follows –
(2)The Federal Circuit and Family Court of Australia (Division 1) may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is defending the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
The touchstone for enlivening the relief sought by the represented third parties under s 46(2) of the FCFCOA Act is my satisfaction that (here) the trustees have no reasonable prospect of success in their prosecution of the cross claim (s 46(2)(b)).
Section 46(3) provides that the proceeding itself need not be hopeless or bound to fail for it to have no reasonable prospect of success.
Section 45A(2) of the Family Law Act is in largely similar terms to s 46(2) of the FCFCOA Act. One wonders why the federal legislature considered it necessary to enact in two different statutes identical provisions, although that issue is immaterial in my present consideration of the point.
The incorporation of the adjective “reasonable” in relation to “prospect of success” has been the subject of considerable judicial attention since 2010. Although in reference to different legislation (there, s 31A of the Federal Court of Australia Act) the High Court in Spencer v The Commonwealth of Australia[73] addressed the phrase “reasonable prospect of success”. There,[74] Hayne, Crennan, Kiefel and Bell JJ held as follows –
Secondly, effect must be given to the negative admonition in sub-s (3) that a defence, a proceeding, or a part of a proceeding may be found to have no reasonable prospect of successful prosecution even if it cannot be said that it is “hopeless” or “bound to fail”. It will be necessary to examine further the notion of “no reasonable prospect”. But before undertaking that task, it is important to begin by recognising that the combined effect of sub-ss (2) and (3) is that the inquiry required in this case is whether there is a “reasonable” prospect of prosecuting the proceeding, not an inquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail.
[73] (2010) 241 CLR 118.
[74] (2010) 241 CLR 118 (at [52]).
In the United Kingdom, the practical ramifications of summary judgment applications were the subject of pronouncements in Swain v Hillman[75] and in Three Rivers District Council v Governor and Company of the Bank of England (No 3).[76] In the second of those two decisions, Lord Hope of Craighead said the following, upon which in Spencer v The Commonwealth of Australia French CJ and Gummow J placed heavy reliance in the following terms –
The method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well-recognised exceptions. For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman, … that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all.[77]
[75] [2001] 1 All ER 91, 92 (Lord Woolf MR).
[76] [2003] 2 AC 1, 260 (at [94]-[95], Lord Hope of Craighead).
[77] Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1, 260 (at [92]-[93], Lord Hope of Craighead).
The review of the wife’s amended statement of claim, lengthy as is was, revealed that the wife’s main claims in this litigation concerned acts, facts and circumstances relating to the deed of settlement, the deed of declaration of trust and the transfer of units and, more specifically, the setting aside of those documents under s 106B of the Family Law Act.
I have carefully considered whether the wife’s application for orders consequential upon orders being made for the setting aside of the deed of declaration of trust, the deed of settlement and the transfer of units are very much secondary to the application for orders setting aside those documents under s 106B of the Family Law Act. To my mind they are not. To the contrary, the real sting of the wife’s claims lay in steps subsequent to orders setting aside the three instruments. Put slightly differently, if the wife succeeds in obtaining orders for the setting aside of the deed of settlement, the deed of declaration of trust and the instrument of transfer of the 98 units, she will achieve part only (and by no means the major part) of the remedies available to her as sought by her. Her claim to tracing may well be very considerable in monetary terms. After all, it spans a significant number of years. And while the task of tracing is complicated, time consuming and labour intensive, that is no reason why an order for disclosure about it should not be made if tracing is an otherwise available remedy in equity.
To my mind several practical issues must be weighed in the balance. Acceding to Mr Waller’s submissions about taking this proceeding no further than to a trial in relation to the three instruments and their efficacy is likely to produce unacceptable delay and expense which is not warranted in the context of litigation that has been on foot for as long as this litigation has been on foot. Further, now that the consent orders of Cronin J have been set aside and an appeal from the orders setting aside Cronin’ J’s orders dismissed, this case should be advanced through its interlocutory phases with expedition. The approach taken by the represented third parties is inconsistent with expedition. It promotes the notion of a trial on the three instruments then, if the wife is successful, another trial with a focus on monetary consequences of the setting aside of the three instruments. There is no valid reason why those two concepts should not be undertaken at the one time. In doing so the risk of inconsistent verdicts is ameliorated, all witnesses on all issues are heard once and the trial (while likely long and complex) will start and it will run to conclusion. To my mind that is the most expeditious, cost effective and time effective way to manage this piece of litigation. By contrast, in adopting the approach urged by Mr Waller, a proliferation of appeals might fairly be anticipated thereby imposing more delays and costs consequences to the parties.
The case should not be further bifurcated.
Discovery on all issues sought by the wife subsequent to 2009 should be produced.
I require the parties to bring in an agreed minute to give effect to these reasons in relation to ongoing interlocutory stages and for the minute to be before me by Friday 12 May 2023.
I certify that the preceding one hundred and forty-seven numbered paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson. Associate:
Dated:27 April 2023
Annexure A
THE INTERVENORS’ CROSS-CLAIM
[Filed pursuant to order 1 of the orders of the Honourable Justice Wilson on 26 October 2022]
Parties
1. The Wife was married to Mr Jess Snr (Husband) from 1988 to 2008.
2. The First Respondent is the legal personal representative of the Husband, who died 2018.
3. The Second Respondent (Mr Jess Jnr) is the Husband’s son from another relationship.
4. At all relevant times, the Fifth to Twenty-eighth Respondents (Mr Jess Jnr Corporate Interests) are, and were:
(a)are, and were, companies incorporated by law; and
(b)subject to the control of Mr Jess Jnr.
4A. They say further that:
(a)on 8 July 2016, the Trustees were appointed as joint and several trustees in bankruptcy of the bankrupt estate of the Husband on the Husband’s own petition;
Particulars
The Husband’s Debtor’s Petition was in writing and dated 7 July 2016. A copy is in the possession of the Trustees’ solicitors and may be inspected by appointment.
(b)on their appointment:
(i)all property of the bankrupt, not being after-acquired property of the bankrupt, vested in the Trustees pursuant to section 58(1)(a) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act); and
(ii)after-acquired property of the bankrupt vested and will vest, as soon as it is acquired by, or devolves on, the Husband, in the Trustees pursuant to sections 58(1)(b) and 58(6) of the Bankruptcy Act; and
(iii)the Trustees became, and are, empowered to bring any action or legal proceedings relating to the administration of the Husband’s bankrupt estate pursuant to section 134(1)(j) of the Bankruptcy Act.
The Alleged Deed of Declaration of Trust
5. On 18 December 2006, the Wife commenced this proceeding naming the Husband as the Respondent, seeking a division of property pursuant to the Family Law Act 1975 (Cth) (Family Law Act).
6. As at 18 December 2006:
(a)the business known as “Y Business” was owned by the Seventeenth Respondent as trustee for the Jess Retail Unit Trust (JRUT); and
(b)the Husband was the legal and beneficial owner of various units in the JRUT.
7. On 18 June 2007, in the context of those property proceedings in this Court, the Husband asserted for the first time to the effect that:
(a)on 28 February 2002, he had executed a document entitled “Deed of Declaration of Trust” (DODT);
(b)there were terms of the DODT that:
(i)as and from 28 February 2002, the Husband would act as trustee for Mr Jess Jnr for each of his units in the JRUT, including any future units to which the Husband may become entitled (Husband’s Unitholding) (clause 1); and
(ii)the DODT would vest and the Husband’s Unitholding would be fully transferred to Mr Jess Jnr immediately upon the Thirteenth Respondent (BJC), with Mr Jess Jnr as CEO, making, “as determined in its Management accounts Earnings Before Interest and Tax (EBIT)” of or in excess of $10,000,000 in any one financial year, within seven years of 28 February 2002 (clause 6a of the DODT);
(c)the DODT had vested; and
(d)the Husband had no beneficial interest in the Husband’s Unitholding; and
(e)the Husband’s Unitholding did not form part of his property interests for the purposes of section 79 of the Family Law Act,
(Husband’s Assertions).
Particulars
The DODT is Annexure Ms Jess-4 to the Wife’s affidavit sworn 3 September 2013.
The Trustees refer to:
(i) paragraphs 72, 92 and 95 of the Husband’s affidavit sworn 18 June 2007; and
(ii) Jess v Jess [2018] FamCA 1179, [829]-[832].
8. Until 31 May 2010, the Husband:
(a)continued to maintain the Husband’s Assertions; and
(b)continued to maintain that the Husband’s Assertions were true.
9. During this period, until 31 May 2010, the Husband’s Assertions were made fraudulently and dishonestly by the Husband, with him knowing that each was false and was calculated and intended to mislead each of:
(a)the Family Court of Australia;
(b)the Supreme Court of Victoria; and
(c)the Wife.
Particulars
The Trustees refer to paragraphs 13 and 14 below and the particulars sub-joined thereto.
In the context of the litigation then on foot, it is the natural inference from the making of the Husband’s Assertions that they were calculated and intended to mislead this Court, the Supreme Court of Victoria and the Wife.
10. Further, in mid-2007, Mr Jess Jnr commenced a proceeding in the Supreme Court of Victoria (VSC Proceeding), to which the Husband and the Wife were joined, wherein Mr Jess Jnr asserted that:
(a)the DODT was executed by the Husband to his knowledge on 28 February 2002;
(b)the DODT was a valid and enforceable document;
(c)the DODT had vested and Mr Jess Jnr was beneficially entitled to the Husband’s Unitholding;
(d)the Husband had no interest in the Husband’s Unitholding; an
(e)he was entitled to declaratory relief to that effect,
(Mr Jess Jnr's Assertions).
Particulars
The Trustees refer to the documents filed for and on behalf of [Mr Jess Jnr] in Supreme Court of Victoria Proceeding No. […] of 2007 and Jess v Jess [2018] FamCA 1179, [10], [12].
11. Until 17 February 2022, Mr Jess Jnr:
(a)continued to maintain Mr Jess Jnr's Assertions; and
(b)continued to maintain that Mr Jess Jnr's Assertions were true.
Particulars
[In early] 2022, [Mr Jess Jnr’s] application for special leave to appeal to the High Court of Australia from the decision of the Full Court of the Family Court of Australia was dismissed.
12. Between 24 July 2007 and 17 February 2022, Mr Jess Jnr's Assertions were made fraudulently and dishonestly by Mr Jess Jnr, with him knowing that each was false and was calculated and intended to mislead each of this Court, the Supreme Court of Victoria and the Wife.
Particulars
The Trustees refer to paragraphs 13 and 14 below and the particulars sub-joined thereto.
In the context of the litigation then on foot, it is the natural inference from the making of [Mr Jess Jnr's] Assertions that they were calculated and intended to mislead this Court, the Supreme Court of Victoria and the Wife.
13. In truth and in fact:
(a)the DODT was not executed on 28 February 2002;
(b)the DODT was not a valid and enforceable document;
(c)the DODT had not vested, because it was fraudulent and of no legal effect;
(d)the Husband’s Unitholding was not transferred to Mr Jess Jnr pursuant to either, or both, of the DODT or the Transfer as defined in paragraph 19(a) below;
(e)the Husband retained his interest in the Husband’s Unitholding; and
(f)the DODT was part of a scheme entered into between the Husband and Mr Jess Jnr designed to mislead this Court, the Supreme Court of Victoria and the Wife.
Particulars
The Trustees refer to:
(i)the declaration by Bennett J that the DODT was not executed on the date it bears (order 2 dated 15 November 2019);
(ii)the observation by the Full Court that “[i]t is tolerably clear when the 2018 reasons are read as a whole that the primary judge recorded findings that the DODT was fraudulent”: Jess v Jess (2021) 361 FLR 126 [73], see also [77]-[79], [81];
(iii)Bennett J’s finding that “[Mr Jess Jnr] and [the Fourth Respondent] were the drivers of creating the fraudulent DODT”: Jess v Jess [2018] FamCA 1179, [808];
(iv)Bennett J’s finding that “[t]he fact that [Mr Jess Jnr] and [the Fourth Respondent] were so deeply involved in the early 2007 period in instructions to the divorce lawyers and preparing the Form 13 goes to the point that the DODT was fraudulently manufactured at some point significant after 2002”: Jess v Jess [2018] FamCA 1179, [809];
(v)Bennett J’s description of that relevant conduct as “unscrupulous and dishonest conduct which, on balance, [her Honour was] satisfied gave rise to the DODT”: Jess v Jess [2018] FamCA 1179, [968]; and
(vi)the observation of the Full Court that “[t]he wife was required to prove fraud and the primary judge was satisfied that she proved that allegation for all of the reasons set out in the 2018 reasons”: Jess v Jess (2021) 361 FLR 126, [143].
14. By reason of the matters set out at paragraph 13, each of the Husband’s Assertions and Mr Jess Jnr's Assertions was false.
Particulars
The Trustees refer to:
(i)the particulars to paragraph 13 above; and
(ii)the fact that, the DODT being fraudulent, none of the consequences said to have arisen thereunder (namely that it had vested, or that it had any impact on the legal and beneficial ownership of the Husband’s Unitholding) were true.
15. At all relevant times, the Husband and Mr Jess Jnr knew that each of the Husband’s Assertions and Mr Jess Jnr's Assertions was false.
Particulars
The Trustees refer to paragraphs 13 and 14 above and the particulars sub-joined thereto.
As to the “relevant times”, the Trustees refer to:
(a) in respect of the Husband, paragraphs 7 and 8 above; and
(b) in respect of [Mr Jess Jnr], paragraphs 10 and 11 above.
16. Each of the Husband’s Assertions and Mr Jess Jnr's Assertions, and the fraudulent creation of the DODT:
(a)was part of a dishonest and fraudulent design or scheme;
(b)had the purpose and/or effect, or likely effect, of placing the Husband’s Unitholding beyond the reach of an order for the division of property as may be made in this proceeding; and
(c)was calculated to cause the Wife to believe or fear that that she would be at significant risk of being unable to prove, to the satisfaction of this Court and the Supreme Court of Victoria, that the DODT was a sham and that the Transfer (as defined at sub-paragraph 19(a) below) was entered into to give effect to the sham.
Particulars
The Trustees refer to the particulars sub-joined to paragraph 13 above.
17. In the circumstances, the DODT was made by the Husband to defeat an anticipated order in this proceeding or was likely to defeat any such order.
17A. The effect of the DODT is that the Husband otherwise lacks the capacity to satisfy orders for the alteration of property interests pursuant to the Wife’s application in this proceeding.
Particulars
The Husband became bankrupt prior to his death. Absent the setting aside of the DODT and the recovery of the Husband’s Unitholding Property as defined in paragraph 31 below, there will be no, alternatively insufficient, assets available to satisfy any order now made in favour of the Wife.
18. Further to paragraphs 17 and 17A above, the DODT ought be set aside pursuant to section 106B(1) of the Family Law Act.
Transfer of Units in the JRUT
19. On or about 20 September 2009, the Husband:
(a)signed a document entitled “Jess Retail Unit Trust: Transfer of Units” (Transfer); and
(b)purported to transfer the Husband’s Unitholding to Mr Jess Jnr, purportedly pursuant to the DODT.
Particulars
The Transfer is available for inspection at the offices of the Trustees’ solicitors by prior appointment.
20. The Transfer provided that the Husband, pursuant to the DODT he had executed on 28 February 2002, transferred to Mr Jess Jnr 98 Ordinary Units in the JRUT (viz the Husband’s Unitholding).
21. The DODT was entered into fraudulently and the Transfer was entered into to effect the dishonest and fraudulent design.
22. The DODT, pursuant to which was the Transfer was sought to be effected, was fraudulent and of no legal effect and the Transfer was itself of no legal effect and did not effect the transfer of the Husband’s Unitholding.
23. In the circumstances of paragraphs 7 to 18 and 19 to 22 above, the Transfer was made to defeat an anticipated order in this proceeding or is likely to defeat any such order.
Particulars
The anticipated order was an order that would take into account the Husband’s Unitholding (viz the units the subject of the Transfer) as property of the Husband and thus capable of alteration pursuant to section 79 of the Act.
23A. The effect of the Transfer is that the Husband otherwise lacks the capacity to satisfy orders for the alteration of property interests pursuant to the Wife’s application in this proceeding.
Particulars
The Husband became bankrupt prior to his death. Absent the setting aside of the DODT and the recovery of the Husband’s Unitholding Property, there will be no, alternatively insufficient, assets available to satisfy any order now made in favour of the Wife.
24. Further to paragraphs 23 and 23A above, the Transfer ought to be set aside pursuant to section 106B(1) of the Family Law Act.
24A. Further, in circumstances in which the DODT is set aside, then pursuant to sections 106B(1), 106B(4A) and/or 80(1)(k) of the Family Law Act, there should also be an order that the Husband’s Unitholding vest in the Trustees, with retrospective effect.
25. Further and alternatively, in the circumstances, pursuant to section 80(1)(d) of the Family Law Act, the Seventeenth Respondent (alternatively, the current trustee of the JRUT) ought to execute any necessary instruments or documents such that the ownership of the Husband’s Unitholding be recorded to be held in the name of the Trustees, with retrospective effect.
Setting aside the Deed of Settlement
26. On or about 20 September 2009, the Husband and the Wife entered into a deed of settlement to seek to resolve the proceedings in this Court between them, the VSC Proceeding and all disputes between them at that time (Deed of Settlement).
27. The Wife entered into the Deed of Settlement believing that she would be at significant risk of being unable to prove, to the satisfaction of this Court and the Supreme Court of Victoria, that the DODT was a sham and that the Transfer was entered into to give effect to the sham, and thereby compromised her entitlement to a significantly higher just and equitable adjustment of the property of the Husband and the Wife.
27A. The effect of the Deed of Settlement (together with the DODT and the Transfer) is that the Husband otherwise lacks the capacity to satisfy orders for the alteration of property interests pursuant to the Wife’s application in this proceeding.
Particulars
The Husband became bankrupt prior to his death. Absent the setting aside of the DODT and the recovery of the Husband’s Unitholding Property, there will be no, alternatively insufficient, assets available to satisfy any order now made in favour of the Wife.
28. The Deed of Settlement was entered into by the Husband to defeat an anticipated order in this proceeding or is likely to defeat any such order.
Particulars
The anticipated order was an order that would take into account the Husband’s Unitholding (viz the units the subject of the Transfer) as property of the Husband and thus capable of alteration pursuant to s 79 of the Act.
29. In the circumstances described in paragraphs 26 to 28 above, the Deed of Settlement ought to be set aside pursuant to section 106B(1) of the Family Law Act.
29A. Further, in circumstances in which the DODT is set aside, then pursuant to sections 106B(1), 106B(4A) and/or 80(1)(k) of the Family Law Act, there should also be an order that the Deed of Settlement be set aside.
Further dispositions of assets
30. Each of the Wife and the Trustees does not know:
(a)whether Mr Jess Jnr remains the legal and/or beneficial owner of all, or, if not, how many, of the Husband’s Unitholding, purportedly transferred by the Husband to Mr Jess Jnr pursuant to the fraudulent Transfer;
(b)whether Mr Jess Jnr has transferred any of the Husband’s Unitholding to Mr Jess Jnr Corporate Interests, or any other person, by sale or otherwise, and, if so on what terms; and
(c)in the event that Mr Jess Jnr has transferred those units, the identity and location of the traceable proceeds of any such transfers.
Particulars
Neither [Mr Jess Jnr], nor [Mr Jess Jnr Corporate Interests], have provided discovery of documents to enable these matters to be further pleaded.
Further particulars, including of paragraphs 31-33 below, will be provided after discovery is made in accordance with order 5 made by Wilson J on 26 October 2022.
31. By reason of the matters set out above, upon:
(a)the DODT; and
(b)the Transfer,
being set aside, then upon the operative date of the setting aside, vesting and/or re-transfer, the Husband’s Unitholding and all rights (including choses in action) related to them, including the income derived therefrom (Husband’s Unitholding Property), is and has been at all material times beneficially owned by the Husband and thereby:
(c)“property” within the meaning of section 5(1) of the Bankruptcy Act and vested in the Trustees pursuant to section 58(1)(a) of that Act;
(d)alternatively to sub-paragraph (c) above, after-acquired property of the bankrupt vested and/or which will vest, as soon as it is acquired by, or devolves on, the bankrupt in the Trustees upon the operative date of the setting aside and/or re-transfer, pursuant to sections 58(1)(b) and 58(6) of the Bankruptcy Act; and
(e)“vested bankruptcy property” within the meaning of section 4 of the Family Law Act and the interests therein of the Trustees ought to be the subject of alteration pursuant to section 79(1)(b) of that Act.
31A. Further and alternatively, by reason of the matters set out in paragraphs 24 to 25 above, upon the operative date of the setting aside, vesting and/or re-transfer, any Husband’s Unitholding Property still held by Mr Jess Jnr or any other person (whether one or other of Mr Jess Jnr Corporate Interests or not) is “vested bankruptcy property” of the Trustees for the purposes of this proceeding and the Wife’s claim for relief under section 79(1)(b) of the Family Law Act.
31B. Further and alternatively, by reason of the matters set out in paragraphs 24 to 25 above, upon the operative date of the setting aside, Mr Jess Jnr, Mr Jess Jnr Corporate Interests or any person to whom any Husband’s Unitholding Property has been transferred, holds the Husband’s Unitholding Property on trust for the Trustees and is required to complete all necessary acts to revest the Husband’s Unitholding Property in the Trustees.
31C. By reason of the matters set out in paragraph 31B, the Trustees are entitled to trace the Husband’s Unitholding Property into the hands of any transferee
AND THE TRUSTEES CROSS-CLAIM:
A. The relief sought in the Wife’s Statement of Claim in paragraphs A to D of the prayers for relief.
B. Pursuant to section 78(1) of the Family Law Act, a declaration that the Husband’s Unitholding and all rights (including choses in action) related to them, including the income derived therefrom (Husband’s Unitholding Property), is and at all material times has been beneficially owned by him and thereby “vested bankruptcy property” within the meaning of section 79(1)(b) of the Family Law Act.
C. Pursuant to sections 106B(1), 106B(4A) and/or 80(1)(k) of the Family Law Act, an order vesting the Husband’s Unitholding Property in the Trustees, with retrospective effect.
D. Further and alternatively, pursuant to sections 106B(1), 106B(4A) and/or 80(1)(d) of the Family Law AcI, an order that the Seventeenth Respondent (alternatively, the current trustee of the JRUT) execute any necessary instruments or documents such that the ownership of the Husband’s Unitholding be recorded to be held in the name of the Trustees, with retrospective effect.
E. All orders pursuant to sections 106B(1), 106B(4A) and/or 80(1)(k) of the Family Law Act as may be necessary to enable the Trustees to identify and take control of the Husband’s Unitholding Property and/or its traceable proceeds.
F. An order that the Trustees are entitled to trace the Husband’s Unitholding Property.
F. An order for the taking of any necessary accounts upon the tracing of the Husband’s Unitholding Property and/or its traceable proceeds.
G. There be an alteration of the interests of the Trustees in the vested bankruptcy property pursuant to the Wife’s Second Further Amended Initiating Application dated 13 October 2022 pursuant to section 79(1)(b) of the Family Law Act.
H. Interest.
I. Costs on an indemnity basis as against the Second Respondent.
J. Such further or other order as the Court considers appropriate.
H N G Austin
N L Papaleo
Lander & Rogers
Solicitors for the Intervenors
10 November 2022
Annexure B
AMENDED STATEMENT OF CLAIM
(Filed pursuant to order 1 of the Orders of the Honourable Justice Wilson on 17 August 2022)
Parties
1.The Wife was married to
theMr Jess Snr (the Husband) from 1988 to 2008.2.The First Respondent is the legal personal representative of the Husband, who died in2018.
3.The Second Respondent (Mr Jess Jnr) is the Husband’s son from another relationship.
4.At all relevant times, the Fifth to Twenty-eighth Respondents (Mr Jess Jnr Corporate Interests):
(a)are, and were, companies incorporated by law; and
(b)subject to the control of Mr Jess Jnr.
The Alleged Deed of Declaration of Trust
5.On 18 December 2006, the Wife commenced this proceeding naming the Husband as the Respondent, seeking a division of property pursuant to the Family Law Act 1975 (Cth) (the Act).
6.As at 18 December 2006:
(a)the business known as “Y Business” was owned by the Seventeenth Respondent as trustee for the Jess Retail Unit Trust (the JRUT); and
(b)the Husband was the legal and beneficial owner of various units in the JRUT.
7.On 18 June 2007, in the context of those property proceedings in this Court, the Husband asserted for the first time that:
(a)on 28 February 2002, he had executed a document entitled “Deed of Declaration of Trust” (the DODT);
(b)there were terms of the DODT that:
(i)as and from 28 February 2002, the Husband would act as trustee for Mr Jess Jnr for his each of his units in the JRUT, including any future units to which the Husband may become entitled (the Husband’s Unitholding) (clause 1); and
(ii)(ii) Mr Jess Jnr would be entitled to the Husband’s Unitholding upon the Thirteenth Respondent (BJC), with Mr Jess Jnr as CEO, making, as determined in its Management accounts Earnings Before Interest and Tax (EBIT) of or in excess of $10,000,000 in any one financial year, within seven years of 28 February 2002 (clause 6)
(c)the DODT had vested;
(d)the Husband had no beneficial interest in the Husband’s Unitholding; and
(e)the Husband’s Unitholding did not form part of his property interests for the purposes of s 79 of the Act,
(the Husband’s Assertions).
Particulars
The DODT is Annexure [[AJ-4] to the Wife’s affidavit sworn 3 September 2013.
The Wife refers to:
(i) paragraphs 72 and 92 of the Husband’s affidavit sworn 18 June 2007; and
(ii) the 2018 Reasons, [829]-[832].
8.Until 31 May 2010, the Husband:
(a)continued to maintain the Husband’s Assertions; and
(b)continued to maintain that the Husband’s Assertions were true.
9.During this period, until 31 May 2010, the Husband’s Assertions were made fraudulently and dishonestly by the Husband, knowing that each was false and was calculated and intended to mislead each of:
(a)the Family Court of Australia;
(b)the Supreme Court of Victoria; and
(c)the Wife.
Particulars
The Wife refers to paragraphs 13 and 14 below and the particulars sub-joined thereto.
In the context of the litigation then on foot, it is the natural inference from the making of the Husband’s Assertions that they were calculated and intended to mislead this Court, the Supreme Court of Victoria and the Wife.
10.Further, on 24 July 2007, Mr Jess Jnr commenced a proceeding in the Supreme Court of Victoria (the VSC Proceeding), to which the Husband and the Wife were joined, wherein Mr Jess Jnr asserted that:
(a)the DODT was executed by the Husband to his knowledge on 28 February 2002;
(b)the DODT was a valid and enforceable document;
(c)the DODT had vested and Mr Jess Jnr was beneficially entitled to the Husband’s Unitholding;
(d)the Husband had no interest in the Husband’s Unitholding;
(e)he was entitled to declaratory relief to that effect,
(Mr Jess Jnr's Assertions).
Particulars
The Wife refers to the documents filed for and on behalf of [Mr Jess Jnr] in Supreme Court of Victoria Proceeding No. […] of 2007 and the 2018 Reasons, [10], [12].
11.Until 17 February 2022, Mr Jess Jnr:
(a)continued to maintain Mr Jess Jnr's Assertions; and
(b)continued to maintain that Mr Jess Jnr's Assertions were true.
Particulars
On 17 February 2022, [Mr Jess Jnr’s application for special leave to appeal to the High Court of Australia from the decision of the Full Court of the Family Court of Australia was dismissed.
12.During this period, Mr Jess Jnr's] Assertions were made fraudulently and dishonestly by [Mr Jess Jnr], knowing that each was false and was calculated and intended to mislead each of this Court, the Supreme Court of Victoria and the Wife.
Particulars
The Wife refers to paragraphs 13 and 14 below and the particulars sub-joined thereto.
In the context of the litigation then on foot, it is the natural inference from the making of [Mr Jess Jnr's] Assertions that they were calculated and intended to mislead this Court, the Supreme Court of Victoria and the Wife.
13.In truth and in fact:
(a)the DODT was not executed on 28 February 2002;
(b)the DODT was not a valid and enforceable document;
(c)the DODT had not vested, because it was fraudulent and of no legal effect;
(d)the Husband’s Unitholding was not transferred to Mr Jess Jnr pursuant to either, or both, of the DODT or the Transfer of Units;
(e)the Husband retained his interest in the Husband’s Unitholding; and
(f)the DODT was part of a scheme entered into between the Husband and Mr Jess Jnr designed to mislead this Court, the Supreme Court of Victoria and the Wife.
Particulars
The Wife refers to:
(a) the declaration by Bennett J that the DODT was not executed on the date it bears (order 2 dated 15 November 2019);
(b) the observation by the Full Court that “[i]t is tolerably clear that when the 2018 reasons are read as a whole that the primary judge recorded findings that the DODT was fraudulent (Full Court Reasons, [73], see also, [81]);
(c) Bennett J’s finding that “[Mr Jess Jnr] and [the Fourth Respondent] were the drivers of creating the fraudulent DODT” (2018 Reasons, [809]);
(d) Bennett J’s finding that “[t]he fact that [Mr Jess Jnr] and [the Fourth Respondent] were so deeply involved in the early 2007 period in instructions to the divorce lawyers and preparing the Form 13 goes to the point that the DODT was fraudulently manufactured at some point significant after 2002 (2018 Reasons, [809]); and
(e) the description of that relevant conduct as “unscrupulous and dishonest conduct which, on balance, I am satisfied gave rise to the DODT” (2018 Reasons, [968]);
(f) the observation of the Full Court that “[t]he wife was required to prove fraud and the primary judge was satisfied that she proved that allegation for all the reasons set out in the 2018 reasons” (Full Court Reasons, [143]); and
(g) the evidence of the Husband and [Mr Jess Jnr] led before Bennett J.
14.By reason of the matters set out at paragraph 13, each of the Husband’s Assertions and Mr Jess Jnr's Assertions was false.
Particulars
The Wife refers:
(i) the declaration by Bennett J that the DODT was not executed on the date it bears (order 2 dated 15 November 2019);
(ii) the observation by the Full Court that “[i]t is tolerably clear that when the 2018 reasons are read as a whole that the primary judge recorded findings that the DODT was fraudulent (Full Court Reasons, [73], see also, [81]); and
(iii) the DODT being fraudulent, none of the consequences said to have arisen thereunder, namely that it had vested, or that it had any impact on legal and beneficial ownership of the Husband’s Unitholding, was true.
15.At all relevant times, the Husband and Mr Jess Jnr knew that each of the Husband’s Assertions and Mr Jess Jnr's Assertions was false.
Particulars
The Wife refers to paragraphs 13 and 14 above and the particulars sub-joined thereto.
As to the “relevant times”, the Wife refers to:
(a) in respect of the Husband, paragraphs 7 and 8 above; and
(b) in respect of Mr Jess Jnr, paragraphs 10 and 11 above.
16.Each of the Husband’s Assertions and Mr Jess Jnr's Assertions was:
(a)part of a dishonest and fraudulent design or scheme; and
(b)calculated to cause the Wife to believe or fear that that she would be at significant risk of being unable to prove, to the satisfaction of this Court and the Supreme Court of Victoria, that the DODT was a sham and that the Transfer (as defined at sub-paragraph 19(a) below) was entered into to give effect to the sham.
Particulars
The Wife refers to the particulars sub-joined to paragraphs 9, 12 and 13 above.
17.In the circumstances, the DODT was made by the Husband to defeat an anticipated order in this proceeding or was likely to defeat any such order.
18.Further to paragraph 17 above, the DODT ought be set aside pursuant to s 106B(1) of the Act.
Transfer of Units in the BJMUT
19.On or about 20 September 2009, the Husband:
(a)signed a document entitled “Jess Retail Unit Trust: Transfer of Units” (the Transfer); and
(b)purported to transfer the Husband’s Unitholding to Mr Jess Jnr, purportedly pursuant to the DODT.
Particulars
The Transfer of Units is available for inspection at the offices of the Wife’s solicitors by prior appointment.
20.The Transfer provided that the Husband, pursuant to the DODT he had executed on 28 February 2002, transferred to Mr Jess Jnr 98 Ordinary Units in the JRUT (viz the Husband’s Unitholding).
21.The DODT was entered into fraudulently and the Transfer was entered into to effect the dishonest and fraudulent design.
22.The DODT pursuant to which was the Transfer was sought to be effected was fraudulent and of no legal effect and the Transfer was itself of no legal effect and did not effect the transfer of the Husband’s Unitholding.
23.In the circumstances of paragraphs 10-16 above, the Transfer of Units was made to defeat an anticipated order in this proceeding or is likely to defeat any such order.
Particulars
The anticipated order was an order that takes into account the Husband’s Unitholding (viz the units the subject of the transfer) as property of the Husband and thus capable of alteration pursuant to s 79 of the Act.
24.Further to paragraph 23 above, the Transfer of Units ought be set aside pursuant to s 106B(1) of the Act.
25.In the circumstances, pursuant to s 80(1)(d) of the Act, the Seventeenth Respondent (alternatively, the current trustee of the JRUT) ought execute any necessary instruments or documents such that the ownership of the Husband’s Unitholding be recorded to be held in the name of the Interveners, with retrospective effect.
Setting aside the Deed of Settlement
26.On or about 20 September 2009, the Husband and the Wife entered into a deed of settlement to seek to resolve this proceeding (the Deed of Settlement).
27.In so doing, the Wife entered into the Deed of Settlement believing that she would be at significant risk of being unable to prove, to the satisfaction of this Court and the Supreme Court of Victoria, that the DODT was a sham and that the Transfer of Units was entered into to give effect to the sham, thereby compromised her entitlement to a significantly higher just and equitable adjustment of the property of the Husband and the Wife.
28.The Deed of Settlement was entered into by the Husband to defeat an anticipated order in this proceeding or is likely to defeat any such order.
Particulars
The anticipated order was an order that takes into account the Husband’s Unitholding (viz the units the subject of the transfer) as property of the Husband and thus capable of alteration pursuant to s 79 of the Act.
29.In the circumstances described in paragraph 23 above, the Deed of Settlement ought be set aside pursuant to s 106B(1) of the Act.
Further dispositions of assets
30.The Wife does not know:
(a)whether Mr Jess Jnr remains the legal and/or beneficial owner of all, or, if not, how many, of the Husband’s Unitholding, purportedly transferred by the Husband to Mr Jess Jnr pursuant to the fraudulent Transfer of Units;
(b)whether Mr Jess Jnr has transferred any of the Husband’s Unitholding to Mr Jess Jnr Corporate Interests, or any other person, by sale or otherwise, and, if so on what terms; and
(c)in event that Mr Jess Jnr has transferred those units, the identity of the traceable proceeds of any such transfers.
Particulars
Neither [Mr Jess Jnr], nor [Mr Jess Jnr Corporate Interests], have provided discovery of documents to enable these matters to be further pleaded.
Further particulars, including of paragraphs 31-33 below will be provided after discovery is made in accordance with order 7 made by Wilson J on 17 August 2022.
31.By reason of the matters set out above, any units still held by Mr Jess Jnr, and the income derived therefrom, are held pursuant to a constructive trust in favour of the Husband (alternatively, the Interveners).
32.In the event that Mr Jess Jnr has transferred the Husband’s Unitholding or the income derived therefrom, to Mr Jess Jnr Corporate Interests, or otherwise:
(a)Mr Jess Jnr has acted in breach of trust; and
(b)Mr Jess Jnr Corporate Interests have received any such assets with knowledge of that breach of trust.
33.In circumstances where the traceable proceeds of the Husband’s Unitholding or the income derived therefrom, are held by Mr Jess Jnr or Mr Jess Jnr Corporate Interests, they are held on constructive trust for the Husband (alternatively, the Interveners).
AND THE APPLICANT / WIFE CLAIMS:
A. Pursuant to s 106B of the Act, each of:
(1) the DODT;
(2) the Transfer of Units; and
(3) the Deed of Settlement,
be set aside.
B. Pursuant to s 80(1)(d) of the Act, the Seventeenth Respondent (alternatively, the current trustee of the JRUT) execute any necessary instruments or documents such that the ownership of the Husband’s Unitholding be recorded to be held in the name of the Husband (alternatively, the Interveners), with retrospective effect.
C. Further or alternatively, a declaration that:
(1) to the extent any of the Husband’s Unitholding or the traceable proceeds thereof are held by Mr Jess Jnr, they are held pursuant to a constructive trust in favour of the Husband (alternatively the Interveners); and
(2) to the extent any of the Husband’s Unitholding or the traceable proceeds thereof are held by Mr Jess Jnr Corporate Interests, they are held pursuant on constructive trust in favour of the Husband (alternatively, the Interveners).
D. Further or alternatively, a taking of accounts as to Mr Jess Jnr and Mr Jess Jnr Corporate Interests as to:
(1) the Husband’s Unitholding or the traceable proceeds thereof; and
(2) any proceeds from the investment of such assets or proceeds.
E. Interest.
F. Costs on an indemnity basis as against the Second Respondent.
G. Such further or other order as the Court considers appropriate.
Dated: 13
3October 2022.L GLICK
A M DINELLI
L JOHNSTONKenna Teasdale Lawyers
……………………………………………..
KENNA TEASDALE LAWYERS
Solicitors for the Applicant / Wife
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