Jones v Daniel

[2005] HCATrans 554

[2005] HCATrans 554

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S458 of 2004

B e t w e e n -

MICHAEL GREGORY JONES (AS TRUSTEE IN BANKRUPTCY OF THE ESTATE OF TONY DANIEL)

Applicant

and

TINA DANIEL

Respondent

Application for special leave to appeal

GLEESON CJ
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 5 AUGUST 2005, AT 11.20 AM

Copyright in the High Court of Australia

MR M.R. ALDRIDGE, SC:   May it please the Court, I appear for the applicant with my learned friend, MR S.M. GOLLEDGE.  (instructed by Turner Freeman)

MR S.Y. REUBEN:   May it please the Court, I appear for the respondent with my learned friend, MR D. DURA.  (instructed by Browns The Family Lawyers)

GLEESON CJ:   Yes, Mr Aldridge.

MR ALDRIDGE: Your Honours, section 79 of the Family Law Act gives the Family Court wide‑ranging powers to alter the interest of parties in their property. Included in the orders that the court may make under section 79 is an order for the transfer of property. It seems clear from the wide‑ranging powers of section 79 that the Family Court can make an order that effects an immediate alteration of property interest or an order that effects an alteration of property interests in the future.

The present order that was made by Justice Coleman can be found at page 43 of the application book.  Order 1 deals with two pieces of land and some other items of property and requires:

the husband transfer to the wife, on or before 1 February 2004, the whole of his right, title and interest in the -

two properties set out, his interest -

in the Daniel Family Trust, and any credit loan account balance or other entitlement he may have in the said Trust.

The issue that was before the courts was whether that order effected an immediate disposition in equity of the husband’s interests in that property or whether it did only upon the actual transfer of that property as envisaged by the order.

GLEESON CJ:   I think Justice Branson thought that there was an alterative possibility and that was that it stripped the property of its value, or stripped the interest in the property ‑ ‑ ‑

MR ALDRIDGE:   Yes.  Her Honour was, of course, dealing with a different statutory context because her Honour said under section 121 of the Bankruptcy Act the court had to find that the property would have probably formed part of the divisible estate of the bankrupt and her Honour said it probably would not have because either it would have been transferred by Mr Mateo, or in default by him, the registrar of the court would have executed a transfer.

But her Honour’s reasoning does seem to suggest that there was a right in personam against Mr Mateo that would give rise to enforcement of the order and that the order itself could probably be registered on the title to prevent other people dealing with it, but both those things, we submit, fall short of finding an interest in the property was created by the order itself.  We say that it appears that his Honour Justice Emmett is precisely saying so.  He had some difficulty with the reasoning processes of Justices Wilcox and Merkel in Mateo who found there was such an immediate disposition.  In fact, Justice Wilcox in Mateo found that there was an immediate vesting of the beneficial interest.

The order in Mateo was very similar.  It was the order that within 28 days the husband transfer his interest in the home, but the second order was upon transfer of the husband’s interest the wife to be responsible for all outgoings, including mortgage repayments.  So in Mateo what had the odd proposition that the order meant that the beneficial interests in the property immediately vested but that the wife’s obligations, such as in relation to mortgages and other outgoings, only occurred on transfer, which seems an odd combination.

The submission that we wish to put to your Honours is that because it is the order itself of the Family Court that alters the property one must look to the order to see what the order intended.  Where the order uses the language of transfer by registration of the title, one would expect in the ordinary event that it is that system that would apply in relation to the alteration of property so that the alteration would take effect, on registration, in the ordinary course.

If the Court wished to make an order for immediate disposition, in equity, if it wished to use that language, it could do so but did not.  What the courts below have really done is inferred the making of such an order by reference to equitable concepts.  We wish to say two things about that.  One, it is not apt to infer in such a significant order that an order altering property rights infer an order to give what other courts might presume to be what they think the order should have been.

GLEESON CJ:   Is one of the relevant equitable concepts that equity regards as done what ought to be done?

MR ALDRIDGE:   Yes, that seems to be one of the considerations that may have played a part in it.  The difficulty, as Justice Emmett pointed out, there has never been a detailed discussion of the impact of equitable doctrines like that because it was dealt with fairly quickly in Mateo and in our case in the court below the Full Court simply found themselves obliged to follow Mateo without reconsidering.  So there never has been a detailed examination of how those concepts apply.

The second point I was going to make, your Honours, is that whether or not there is in fact any scope for equity to play in the working out of orders made under a statutory scheme, it may be that there is a statutory interest or a statutory interest that arises, but the question is whether the notions of equity should have any part in working out how the orders of the Family Court under section 79 apply is itself an issue that should be considered.

GLEESON CJ:   When was Mateo decided?

MR ALDRIDGE:   Mateo was decided in February 2003, your Honours, so in itself is a fairly recent authority.  The answer, as we put to the Full Court that Mateo was not as critical in that case because Mateo was a case where the transfer at law had been completed by the time Mr Mateo became a bankrupt and the action was an action under section 121 of the Bankruptcy Act seeking to set aside the transfer.  So it was but a step in a reasoning process which we said was not ultimately essential but the Full Court disagreed with us, but it is not a satisfactory authority because it did not consider in detail the issues.

HEYDON J:   One problem in your argument, though, on 15 December the Family Court makes it order against Mr Tony Daniel.  On 16 December Mr Tony Daniel presented a debtor’s petition which had the instant result of defeating that order.

MR ALDRIDGE:   Yes, it did.

HEYDON J:   It does not seem a very satisfactory chain of reasoning that leads to the conclusion you want.

MR ALDRIDGE:   Yes, I accept that result, your Honour, but that result could have been avoided by another order being made by the trial judge.  If Justice Coleman had made an order, for example, an order that from this moment Mr Daniel holds his interest in the property beneficially for Mrs Daniel, then made the order for transfer, it would be a different thing.  What has happened is, for the understandable reason that your Honours raise, we say judges have striven to try and avoid what they perceive to be the injustice of that result but without really looking at a satisfactory doctrinal basis for doing so.

GLEESON CJ:   What about the reasoning of Justice Allsop on pages 83 and 84?

MR ALDRIDGE:   We say the reasoning of Justice Allsop does give rise to a – what his Honour is really saying there is that you can imply an immediate vesting order.  We again say, why, because why for transfer by a certain date was put in why would you imply an order.  It was not even an order that Mr Daniel forthwith transfer, it was an order at a date two months in the future.  One can understand, for practical reasons, why ‑ ‑ ‑

GLEESON CJ:   How do you say the order should have been framed if it had been intended to achieve the effect that the Federal Court held it had?

MR ALDRIDGE:   There could be a number of ways that it could be done.  There could be an order that Mr Daniel forthwith hold his interest in the property in trust for Mrs Daniel.  There could be simply an order simply saying ‑ ‑ ‑

GLEESON CJ:   Just a moment.  An order?

MR ALDRIDGE:   That he hold his interest in that property in trust for Mrs Daniel.

GLEESON CJ:   An order that – is that “holds” or “hold”?

MR ALDRIDGE:   “Hold”.  In future hold, or from the moment of this order hold, or it could simply be perhaps done by altering the interest - I order that from this moment this property is beneficially owned as to 100 per cent by Mrs Daniel.

GLEESON CJ:   Or, pursuant to the power given to the court to alter legal and equitable interests in the parties, I order as follows, and then the orders that were made.

MR ALDRIDGE:   Yes.

GLEESON CJ:   Were not the orders that were made made pursuant to that power?

MR ALDRIDGE:   Yes, they were, your Honour, but with respect, that begs the question of when the alteration takes effect because if one orders a mechanism at law, which is a transfer in registration as a means of changing the ownership of a property one would ordinarily think that would be the time of registration that the alteration in fact took place.  If one intended to do something else the order should have been made to do something else.

GLEESON CJ:   What might be the reason why you would intend to postpone the effect of the alteration of the ‑ ‑ ‑

MR ALDRIDGE:   In this case – it seems to be the usual case – this is no doubt – I am speculating, your Honours, but presumably simply to arrange the mechanical steps of registration and transfer, there was a mortgage on one of these properties.  It may mean you would need the consent of the mortgagee to effect an alteration in the title.  It is the mechanical steps like that.

GLEESON CJ:   I understand why the procedures might take some time, but what would be the motivation of a trial judge for making an order pursuant to a power to alter interest in properties which was an order that only took effect at some future date?

MR ALDRIDGE:   Can I try and give two examples, your Honour, of other cases.  It is not, as I understand it, an uncommon order for an order to be made in the alternative such as a spouse pay a specified sum of money by a certain date or transfer a property.  So in that case one has a right to either of things but not an interest until either of them occurs.  Secondly, one might have an order that because a person is looking after one of the children to the marriage that the property should be held by the person looking after them until that child attains a certain age and then transfers to the other party.

GLEESON CJ:   Is this really a case about the construction of the order that was made?

MR ALDRIDGE:   Ultimately, your Honour, it is because ‑ ‑ ‑

GLEESON CJ:   Why does that raise a question of general principle?

MR ALDRIDGE:   Because it is an order that is commonly made and  ‑ ‑ ‑

GLEESON CJ:   And it could easily commonly be fixed up.

MR ALDRIDGE:   Yes, it could, your Honour, but it is also, as Justice Wilcox pointed out in Mateo, a common occurrence that you have this clash between bankruptcy and family law which remains unresolved by the legislature as to when property vests and it is ‑ ‑ ‑

GLEESON CJ:   A clash that would be very easy to manufacture.

MR ALDRIDGE:   Yes, it is, and if we are right, your Honour, it means that the clash can be avoided in future by proper orders being made in the Family Court that are clear in the intention as to when the alteration is to take effect if leave is not granted so that the uncertainty continues because

of the unsound doctrinal basis of which the courts below have dealt with it.  They are my submissions.

GLEESON CJ:   We do not need to hear you, Mr Reuben.

We are of the view that there are insufficient prospects of success of an appeal to warrant a grant of special leave in this matter.  The application is dismissed with costs.

AT 11.33 AM THE MATTER WAS CONCLUDED