Johnson & Johnson & Johnson

[2000] FamCA 164

[2000] FamCA 164

FAMILY LAW ACT 1975

IN THE FAMILY COURT
OF AUSTRALIA
AT BRISBANE  No. BR 4689 of 1998

BETWEEN:
  JOHNSON
  ANDREW JOHN
   Husband

AND:  

JOHNSON
  CORALIE JOY LAVINIA
   Wife

AND:

JOHNSON
  GRACIE DELL
  Husband's Mother

R E A S O N S  F O R  J U D G M E N T

BEFORE THE HONOURABLE JUSTICE WARNICK

Date of Hearing      :          27 January 2000

Date of Judgment  :          9 February 2000

APPEARANCES:               Mr Goodwin of Counsel instructed by Don McMillan Solicitor 61 Roderick Street, Ipswich, appeared for the HUSBAND and HUSBAND'S MOTHER.

Ms Khushal, Town Agent for Wonderley & Hall, 33 Neil Street, Toowoomba, appeared for the WIFE.

JURISDICTION OF THE FAMILY COURT OF AUSTRALIA – Matrimonial Cause – Property – Transaction to defeat claims -The Court has power under s.85 to set aside dispositions of property made prior to a marriage – Skoflek and Baftirovsky [1998] FLC 91-906, Kowalski and Kowalski [1993] FLC 92-342 AND Pflugradt and Pflugradt [1981] FLC 91-052 considered.

The wife filed an application seeking, in conjunction with an order for property division an order that the husband’s mother re-convey to the husband a property at Birkwood Road, Mutdapilly.  On 14 October, 1999, a response filed on behalf of the husband and the mother asserted that the Court did not have the requisite jurisdiction to hear the wife's application.

In 1993, the husband’s parents had transferred the Birkwood Road property to the husband for “love and affection”.  The husband commenced building a house on the land, and on the weekends (from 1994) the wife would work on the home as well.

The parties were married on 14 April 1996, and moved to Toowoomba.  On 4 April 1996, the husband had transferred the Birkwood Road property to his mother for a consideration of $46,000 (allegedly) because, given his changed circumstances (residence in Toowoomba, temporary unemployment and marriage), he was unable to repay his parents for money lent to build the house.  At no time before or during the marriage was the wife informed of the transfer to the husband’s mother.

After 7 months of marriage, the parties separated in November 1996.

The husband challenged the jurisdiction of the Court by advocating that:

(a)property that had not been owned by a party during a marriage or subsequently, could not be “property” within the terms of Section 4(1) of the Family Law Act

(b)Section 85 of the Family Law Act could have no application to a disposition of property before a marriage, as it could not be said, objectively, that such a disposition did, or was likely to, defeat an anticipated order.

Held:

1. The first question, answered in the affirmative, was whether there were afoot valid “proceedings under this Act” (as referred to in s.85).

1. Valid proceedings seeking property settlement could exist, notwithstanding that there was no property of the parties or either of them, unless s.85 was successfully invoked in relation to a disposition.

1. In the instant case, not only was there an invocation of s.85, but there was other property (chattels) in respect of which division was sought.

1. There is nothing in the terms of s.85(1) to place temporal limits in respect of the dispositions to which it might be applied.

1. It was not impossible that, prior to a marriage, a person transferred a property to avoid it being subject to division if the intended marriage broke down.

1. Section 85(1) was concerned with actual intention (and therefore, actual anticipation) as well as consequences, irrespective of intention. The consideration of the term “anticipated order” in Pflugradt and Pflugradt [1981] FLC 91-052 was directed to circumstances in which actual intention was not the issue.

1. On 1 June 1999, Coralie Joy Lavinia Johnson (hereinafter called "the wife") filed an application in Form 7.  To that application, Andrew John Johnson (hereinafter called "the husband") and his mother, Gracie Dell Johnson (hereinafter called "the husband's mother") were first and second respondents respectively..  The first order sought by the wife was:

"That the 2^nd Respondent take all necessary steps to re-convey to the 1^st Respondent all her right, title and interest in and to the property situated at Birkwood Road, Mutdapilly, .... free of encumberance (sic);"

1. Next, the wife sought:

"That by way of settlement of property the house and land situated at Birkwood Road, Mutdapilly be sold and the proceeds of sale be disbursed as to 40% to the Applicant and 60% to the1st Respondent."

1. The wife also sought an order in respect of certain chattels. 

1. On 13 July 1999, a Response in Form 7A was filed by the husband's mother (acting for herself).  Under the heading "final orders sought" there simply read:

"As the Property at 3 Birkwood Rd. Mutdapilly is in my name and I don't believe the Applicant is entitled to any part of it."

1. On 14 July 1999, a Response in Form 7A was filed by the husband (acting for himself).  Under the heading "The Final Orders by Respondent" the first paragraph read:

"I would ask that the applicant withdraws her unfounded claim to my mothers home."

1. On 20 September 1999, an application in Form 8 was filed on behalf of the wife, in which the first order sought was identical to the first order sought in the wife's Form 7.

1. On 14 October 1999, a "Response objecting to jurisdiction" was filed on behalf of the husband and the husband's mother.  The first paragraph of the Response read:

"The First and Second Respondent submit the Court has no jurisdiction to hear the Form 7 Application, paragraphs 1 and 2, filed on the 1^st June 1999 and the Form 8 Application, filed on the 20^th September 1999."

1. It is that "jurisdictional" argument which came before me for hearing on 13 January 2000. 

FACTS

1. It was not suggested by either legal representative that any issues of fact required determination.  Some facts are common ground.  In the circumstances, I do not resolve any issues of fact, but rather note the assertions of the parties.

1. In 1993, the husband's mother and father (Donald John Johnson) transferred a parcel of land at Birkwood Road, Mutdapilly, ("Birkwood Road") to the husband for "love and affection". 

1. The husband, then apprenticed as a carpenter, commenced building a house.  The wife says that she and the husband commenced "going out together" in about June 1994 and that, at that time, stumps and floor bearers for the house had been constructed on the land.  She says that she assisted the husband on many Sundays doing work on the home, and that, on occasions, she and the husband were assisted by her brother and by the husband's brother. 

1. The wife says that she was informed by the husband at the time, that Birkwood Road was his, to do with as he wished.

1. The husband says, in an affidavit filed by him on 14 July 1999, that during the time he was building the house he had no money, so money was borrowed from his mother.

1. The husband and wife became engaged in December 1994.

1. The wife deposes that she ceased part-time employment as a nurse in April 1996, i.e. the month in which the parties married, to live temporarily in Toowoomba to continue her nursing studies. 

1. The husband says that he made the house livable before he was married, but:

".... as I had paid less than $2,000 back to my parents from the initial $40,000 we agreed that the deeds should be signed back to my mother as she owned 98% of it.  As I was moving to Toowoomba to live, I had no job for many weeks so paying my mother back while I was married was not an option."

1. The transfer of Birkwood Road, from the husband to the husband's mother, for a consideration of $46,000, is dated 4 April 1996. 

1. The wife says that the husband did not inform her, or give her any indication, that he intended to transfer Birkwood Road to his mother.

1. The parties married on 14 April 1996.

1. The wife says that after the marriage she asked the husband and his father what the "financial situation" was, as she wanted to know how much she and the husband had to repay the husband's parents.  She says she was told that she would be informed, but was never given any information. 

1. The parties never lived in the Birkwood Road house. 

1. The parties separated, after but seven months of marriage, in November 1996. 

1. The wife says that she was unaware of the ownership of Birkwood Road by the husband's mother, until the wife had searches conducted in mid-1998. The marriage was dissolved by decree nisi made 13 July 1998. 

THE ARGUMENTS

1. In written submissions on behalf of the husband and husband's mother, it is submitted that the Court "does not have jurisdiction to entertain the application in any respect relating to Blackwood Road (sic), as the proceedings do not relate to '.... proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them....' (Section 4(1) Family Law Act) and is therefore not a Matrimonial Cause as defined in the Act". 

1. Reference was also made to the definition of the term "property" in Section 4(1) of the Family Law Act ("the Act"), that definition being as follows:

"'Property', in relation to the parties to a marriage or either of them, means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion;"

1. It was then submitted that "Birkwood Road is not now and never has been the property of either of the parties to this marriage, and therefore cannot be subject to the jurisdiction of this Honourable Court to make any orders in relation thereto".

1. This submission, taken literally, is of course not factually accurate, because Birkwood road was once owned by the husband.

1. At the hearing, Counsel for the husband and the husband's mother, orally supplemented the written submissions.   It became apparent that the submission was not so much that Birkwood Road was not currently the property of one of the parties to the marriage, nor that it had never been property of the husband before marriage, but rather, that Birkwood Road had not been property of either of the parties at any time during the existence of the marriage or subsequently, and therefore "cannot be subject to the jurisdiction of this Honourable Court to make any orders in relation thereto....".  

1. Pursuant to Section 4(1) of the Family Law Act, "Matrimonial Cause" includes:

"(ca)    Proceedings between the parties to a marriage with respect to the property of the parties to a marriage or either of them being proceedings -

(i)        arising out of the marital relationship; ...."

1. Counsel for the husband and the husband's mother referred to the decision of the Full Court of the Family Court in Kowalski and Kowalski (1993) FLC 92-342. The legal representative for the wife also relied on Kowalski and, indeed, it is a case which, in the judgment and in the cases referred to in the judgment, passages which might offer support for the contentions of each party, can be found. Kowalski was a case in which a marriage had been dissolved but subsequently the parties resumed cohabitation, though they did not remarry. The wife then instituted proceedings under the Family Law Act for leave to institute proceedings for property settlement.  The Full Court described the main issue in the case as:

"... whether the proposed proceedings for property settlement will be proceedings arising out of the marital relationship within the meaning of paragraph (ca)(i) of the definition of Matrimonial Cause in Section 4(1)".

1. The Full Court in Kowalski considered statements made by earlier Full Courts in B and B (1985) FLC 91-610, in the "Leibinger" cases - Leibinger and Leibinger (1) (1986) FLC 91-727 and Leibinger and Leibinger (2) (1986) FLC 91-775, and in Skoflek and Baftirovsky (1998) FLC 91-906.. These cases were particularly concerned with circumstances in which it was argued that events (relied upon in litigation) occurring after dissolution of marriage, could be so far removed from events surrounding cohabitation pursuant to marriage or dissolution of marriage, that they lost any nexus with the original marital relationship.

1. I would not assume that such arguments are identical with the arguments in this case.   Nonetheless, passages from Kowalski and from the cases considered in Kowalski are of some assistance in considering the questions in this case. 

1. At page 76, 629, the Court in Kowalski quoted from the judgment in Skoflek and Baftirovsky (supra), where it was said (at page 76, 576):

"... since para (ca) relates to proceedings with respect to the property of the parties, it is those proceedings which must arise out of the marital relationship ...

This is not to say that the Court may not consider contributions made before the commencement or after the termination of a marital relationship, or include in its orders assets acquired after separation or even dissolution. Once the Court has jurisdiction, there are many matters which it can consider pursuant to Sec.79 and 75(2).

However, the origin of the claim to adjustment of property rights must arise from the property relationship of the parties during marital cohabitation.  Where all claims have been disposed of by virtue of an order as in B and B, or no claim could have arisen in the absence of any assets as in the present case, it is difficult to see how the proceedings under Sec.79 can be said to have arisen out of the marital relationship."

(and at p 76, 577):

”The reasoning in Leibinger (No. 2) is clearly consistent with our own conclusion that the proceedings must arise out of the property relationship of the parties during the marital relationship, although consideration is not to be confined to property existing at that time or to events which occurred at that time ... "

1. The Full Court in Kowalski said, of the decision in Skoflek and Baftirovski, (page 79, 630):

"The test adopted by the Full Court in Skoflek and Baftirovski appears to be whether at the time of the divorce and prior to the resumption of cohabitation, all claims for property settlement have either been disposed of by order or could not have arisen for lack of property or lack of contributions.  But such a principle, at least in cases where no assets were in existence at the time of dissolution, conflicts with the proposition that contributions made during cohabitation can be rewarded out of assets which came into the hands of a party after separation:  ...

A more logical and consistent approach is one which is based on the proposition that once a marriage has been celebrated between the parties, the entire relationship between the parties whether arising out of contributions before, during or after the formal tie of marriage was entered into or dissolved, falls within the ambit of Part VIII of the Family Law Act 1975. ... These parties are before the Family Court because they were once married and hence the proceedings can be said to arise out of the marital relationship, even if the property, the subject of such proceedings, does not. ...."

(and at page 79, 631):

”The decision and the reasoning of the Full Court in Skoflek and Baftirovski is inconsistent with the principle we have arrived at in this case, and must be regarded as overruled."

1. In my view, even on the statements in Skoflek and Baftirovski, in proceedings arising in respect of the current property of parties, being proceedings arising out of the marital relationship, consideration of contributions to, and ownership of, property prior to marriage, including consideration of attacks on disposition of ownership of property prior to marriage, can be given, but even if this view of the statements in Skoflek and Baftirovski is incorrect, the view is much more strongly supported by the statements of the Court in Kowalski.

1. In the instant case, on the argument of counsel for the husband and husband's mother, no attack on the disposition of Birkwood Road prior to marriage can be entertained, though he does not argue that contributions made by the wife to Birkwood Road could not be taken into account in proceedings seeking orders about other property of the parties.

1. Co-existence of this suggested limitation on dealing with a pre-marriage action in respect of property, with the ability to act on other pre-marriage actions, with respect to the same property, would be at least an unusual position, and perhaps an inconsistent one.

1. It is not suggested that the property settlement proceedings as between husband and wife are not, per se, a Matrimonial Cause.

1. The wife filed a Statement of Financial Circumstances on 1 June 1999, in which she indicated property, in the nature of chattels, valued at some $21,600 and liabilities of $19,500 approximately.  The husband filed a Statement of Financial Circumstances on 14 July 1999 in which he indicated property, mostly in the nature of chattels, valued at some $38,060 and liabilities amounting to $6,700 approximately.  

1. Thus, albeit of minor nature, there is other property of the parties in this case apart from the Birkwood Road property.  

1. The attack upon proceedings is limited to the extent to which orders are sought in relation to Birkwood Road.

1. Though it is not the position here, it is perhaps helpful in conceptualising the arguments in this case, to contemplate a situation in which there was currently no property of either party in existence, but an exercise of power under Section 85 of the Act was sought in relation to property that had been held during the marriage by a party to it, but which was currently held by a third party. A question would then arise whether there was any property, as defined in Section 4(1) of the Act,

1. I consider that the property settlement proceedings in such an instance would still constitute a valid Matrimonial Cause, on the basis that the effect of the applicant's position would in essence be that property of a party to the marriage did exist, albeit an exercise of the powers under Section 85 would be required before it vested in a party.

1. In Holly and Holly [1982] FLC 91-257, there was an application for an exercise of power under Section 85 in proceedings instituted by the wife for property settlement. The husband had entered into a Deed of Assignment under Part X of the Bankruptcy Act 1966. Unless the Deed of Assignment was set aside pursuant to Section 85, there would be no property. No argument that the Section 79 proceedings were, per se, beyond jurisdiction seems to have been raised, at first instance or on appeal.

1. The Full Court expressly recognised the absence of property other than that attacked in reliance upon Section 85 when it said (p 77, 438):

   "In any event, no question under Section 79 of the Act can arise unless and until an order is made setting aside the Deed of Assignment. Unless this is done, the husband's property vests in the Trustee, and he has no property in respect of which an alteration of interest can be ordered ..."

2. There is no indication in the judgment that the Full Court was concerned by any question of the validity, per se, of the application seeking orders pursuant to Section 79 of the Act.

1. Accordingly, subject to questions about the "reach" of Section 85(1) of the Act, there would be valid proceedings, ie a valid Matrimonial Cause in which were sought orders pursuant to Section 79 of the Act, even if Birkwood Road was the only property in contention. As noted earlier, however, there is also other existing property of the parties.

1. It is an important base to further consideration, in my view, to recognise that there are, unchallenged as to jurisdiction, "proceedings under the Act", afoot, because Section 85(1) of the Family Law Act provides:

"In proceedings under this Act, the Court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interests of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention is likely to defeat any such order."    (my underlining).

1. Proceedings under Section 85(1) may themselves constitute a Matrimonial Cause. This is because paragraph (f) in the definition of "Matrimonial Cause" in Section 4(1) of the Act provides that the term includes:

"Any other proceedings (including proceedings with respect to the enforcement of a decree or the service of process) in relation to concurrent, pending or completed proceedings of a kind referred to in any of paragraphs (a) to (eb), ...."

1. Thus, there is a valid Matrimonial Cause (the property settlement proceedings, per se), in which there is a request for an exercise of power pursuant to Section 85(1), also, on its face, a Matrimonial Cause.

1. The challenge to jurisdiction in this matter then crystallises as, not whether the proceedings under Section 79, even if only insofar as they seek orders affecting Birkwood Road, or the proceedings under Section 85, constitute a Matrimonial Cause, but whether the Court has power, pursuant to Section 85(1), on the request of one party to a marriage, to set aside a transfer of property by a person who only later became the other party to the marriage.

1. This aspect was only alluded to in the written submissions of counsel for the husband and husband's mother. . It was submitted that such a transfer could not possibly " defeat an existing or anticipated order in (these) proceedings" or be one which "... irrespective of intention, is likely to defeat any such order".   Again, the argument was expanded in oral submissions.

1. The challenge to the proposition that an exercise of power pursuant to Section 85(1) could "reach back" to a transaction or disposition effected prior to a marriage was, at least implicitly, placed on two bases:

(a)That it could not be argued that a person about to be married could anticipate an order in proceedings which, as the subsequent passage of time might disclose, followed the breakdown of the planned marriage.

(b)That the section should not be construed so as to permit an exercise of power reaching back to set aside a pre-marriage transaction.

1. The latter submission was put with a sense of horror that a transaction entered into by a party ahead of a then anticipated marriage could be the subject of subsequent attack in circumstances such as these, but the argument did not (otherwise) address any principles of statutory interpretation.

1. In Section 85(1), there is no temporal limitation bearing upon the making of the instrument or disposition which might be set aside or restrained. In particular, the court's powers are not limited in their exercise to dispositions or instruments made after a marriage has taken place.

1. In my view, there is no ambiguity about the absence of temporal limitations upon the "reach" of the power granted by Section 85(1).

1. Further, in my view, there is nothing so bizarre or abhorrent, that a "reading down" or other restrictive approach to the ordinary meaning of the words in Section 85(1) is required, about the prospect that, (for example, if the wife's assertions here were accepted), a secret disposition by the husband, of property previously asserted to be his, and in respect of which the wife made contributions, be set aside, upon a finding that, at the time of disposition, the husband had in mind quarantining the property against any claims by the wife following upon a possible breakdown of the planned marriage.

1. As to the first aspect of the submissions on behalf of the husband and husband's mother, and as to the power contained in Section 85, in Pflugradt and Pflugradt [1981] FLC 91-052 a disposition was set aside by Elliott J, notwithstanding that proceedings, which were likely to lead to an order defeated by the disposition, were not, at the time of the disposition, commenced. Although there had been other proceedings between the parties in which orders for maintenance had been made, the relevance of these, in His Honour's view, was to the question of whether the disposition attacked was likely to defeat an anticipated order in the proceedings later instituted.

1. At pages 76,429 - 76,430, His Honour Justice Elliott said:

"....I consider that it is in this sense of expected or foreseen as being likely or reasonably probable that the word "anticipated" has been used in sec. 85. ....

As in the law of torts, I consider that the elements of expectation or foreseeability in an "anticipated order" must be considered on an objective rather than a subjective basis ....  It is therefore descriptive of the order referred to.  It requires the order to have the quality of being "anticipated". ....

In the instant matter before me, it is not a question of whether the husband expected or foresaw a subsequent property application by the wife and "anticipated" an order being made, but whether considering all of the circumstances at the time of the disposition such an application by her at some time, with a consequent order, was objectively to be foreseen or to be expected by him as being likely or reasonably probable. I consider that it was. .... It should be noted that sec. 85 requires an order to be "anticipated" - not merely a claim.

The husband's trust disposition, irrespective of intention, was likely to defeat any such orders and in such circumstances I consider that it must be set aside."

1. Further, as to the argument in Pflugradt on behalf of the recipient of the disposition, relying on the fact that the wife's application for property settlement was made some nine months after the trust disposition, His Honour said (at page 76,430):

"....In Hadley v. Hadley [1967] 10 F.L.R. 459, Begg J., in an application under the similar provisions of sec. 120 of the repealed Act, rejected the submission that the Court had no power to set aside a transaction entered into before the commencement of the proceedings.  This construction has not been departed from since. ....  Hadley's case (supra) was followed as recently as in Menz and Menz [1980] FLC 90-852 where Marshall S.J. set aside a mortgage executed nine months prior to a wife's property application being filed."

1. It will not of course be possible that the making of an instrument or disposition, prior to a marriage, defeats an existing order in proceedings arising out of that marriage or relationship.   But it might not be impossible that, notwithstanding that a marriage has not yet taken place, a disposition may be made by a party to the proposed marriage, fearful of the breakdown of that marriage and wishing, in that event, to preserve the property for some other person (such as a parent or a child of a previous marriage) rather than retain the property, with the possibility that it might be the subject of proceedings by the intended spouse.

1. In my view, Pflugradt was a case which concentrated on the meaning to be given to the term "anticipated order", irrespective of intention, and it was in respect of the approach to be taken in those circumstances, that His Honour Justice Elliott said an objective test was to be used. 

1. The submissions of counsel for the husband and husband's mother also focus on the use of an objective test in respect of the term "anticipated order" and, in that context, argue that, objectively, an order in proceedings following breakdown of marriage could not be anticipated before the marriage takes place.  

1. S 85(1) is, however, also operative in respect of actual intention, ie subjectively, and in circumstances in which actual intention is proved, even if the intention was held pre-marriage, as a fact, the order will have been anticipated.

1. Even if it was argued that an "objective" test applied to cases of actual intention, as well as to those in which an order was defeated irrespective of intention, one could say that any objective observer, being aware of the actual intention to defeat an actually anticipated order, would have to find that the order had “the quality of being anticipated”.

1. In this case, it is not yet known whether the wife will assert that, in transferring Birkwood Road to his mother, the husband had an actual intention to defeat an anticipated order, or whether she will rely upon an objective test, or seek findings in the alternative.

1. While, in respect of the application of an objective test, the fact that the transfer was prior to marriage, the existence of the debt of the husband to the husband's parents, the question of whether the husband's anticipated financial circumstances provided no opportunity for re-payment to the husband's parents, the husband's apparent attitude to the permanence of marriage and perhaps in that context the circumstances in which the marriage broke down, may well all be highly relevant to the ultimate prospects, or lack of prospects, of success of the wife's claim and indeed in any current assessment of those prospects, (or to an application for security for costs), a suspect or apparently suspect factual basis for a particular claim will not see that claim fail for want of jurisdiction, so long as facts essential to attract an exercise of jurisdiction are asserted (or, if tried, established). 

1. For the aforegoing reasons, I conclude that the Court has jurisdiction to entertain the proceedings for property settlement and, within those proceedings, the claim for an exercise of power pursuant to Section 85, notwithstanding that the disposition attacked occurred prior to marriage.

ORDERS

In my view, the appropriate order is that the Response Objecting to Jurisdiction filed 14 October 1999 be dismissed.