La Starza & La Starza v La Starza No. Scgrg-98-123 Judgment No. S6583

[1998] SASC 6583

LA STARZA and LA STARZA  v  LA STARZA

Chamber Application

Bleby J

This action was commenced in the District Court of South Australia and on 12 December 1997 it was transferred by order of the District Court to this Court for the purpose of considering this present application.  The application is by the defendant to transfer the action to the Family Court of Australia pursuant to the provisions of the Jurisdiction of Courts (Cross‑Vesting) Act 1987 (SA).

The plaintiffs are the parents of the defendant’s estranged husband.  In their statement of claim they allege that they made two loans to the defendant and her husband.  The first such loan was to enable them to purchase their matrimonial home.  They allege that the second loan was made to the defendant and her husband in connection with the conduct of a partnership business allegedly run by them.  It is alleged in relation to the second loan, although not expressly in relation to the first, that the defendant is jointly liable with her husband for repayment of the loan.  They claim one half of the total debt from the defendant, pleading that the defendant’s husband acknowledges liability for half of both loans, by way of alternative, “where the defendant joins her husband as a party to these proceedings”, then the plaintiffs claim the full amount of the loans.

By her defence the defendant denies that any loans were made to her.  She pleads that the first loan was made to her husband alone.  She does not admit the second loan but alleges that if it was made, it was made to her husband without her authority, in circumstances where there were no legally binding relations between the parties and in circumstances where the plaintiffs are now estopped from claiming the monies.

The defendant has joined her husband as a third party in the proceedings claiming full indemnity, or alternatively contribution in respect of any liability that she may have to the plaintiffs.  These claims are made on various bases consistent with the various matters of defence she has pleaded against the plaintiffs.  By way of alternative she claims contribution from her husband on the ground that such contribution is a proper provision for the maintenance of her in accordance with Part VIII of the Family Law Act 1975 (Cth). That claim is not a claim which could have been maintained in the District Court, but is a claim which could be entertained by this Court: s4(1) Jurisdiction of Courts (Cross‑Vesting) Act 1987 (Cth).

By his defence to the third party claim, the defendant’s husband pleads that he has always acknowledged the plaintiffs’ claim against himself and his wife, and he is content to contribute to the extent of one half of the plaintiffs’ claim.

It appears that the defendant and the third party were separated on 28 September 1996. On 15 October 1996 proceedings were commenced by the defendant in the Family Court of Australia for a property settlement pursuant to s79 of the Family Law Act 1975 and for spousal maintenance pursuant to s74 of that Act. The plaintiffs commenced these proceedings in the District Court on 5 February 1997.

By virtue of s5 of the Jurisdiction of Courts (Cross‑Vesting) Act 1987 (SA) the proceeding must be transferred to the Family Court if it “arises out of, or is related to” the proceedings in the Family Court “and it is more appropriate that the relevant proceedings be determined by the... Family Court”. Alternatively it must be transferred if it appears to this Court that it is otherwise in the interests of justice that the proceeding be determined by the Family Court. Considerations as to what is “more appropriate” will generally be dictated by the interests of justice: Bankinvest AG v Seabrook (1988) 14 NSWLR 711; Mourd v Atlantis Nominees Pty Ltd (1990) 14 FamLR 222.

In opposing the application it was put by counsel for the third party that in considering a property settlement between the defendant and the third party, the Family Court would merely be concerned to ascertain the combined net assets of the parties and then to make an appropriate division between them.  The function of this Court, it was submitted, was to determine the defendant’s liability for the loan on ordinary legal principles.  This could be achieved quite independently of the Family Court proceedings, and the result would merely determine the net assets available for distribution by the Family Court.  That argument might gain some strength if, indeed, that were the position.  However, it is not.

The argument for the third party is akin to what was decided by Olsson J in Skaventzos v Tirimon (1991) 162 LSJS 53. In that case the parents of one of the parties to a marriage sued both the husband and wife for monies said to have been lent by the plaintiffs to both defendants. By their separate defences both parties denied the existence of circumstances whereby they were liable to pay any monies to the plaintiffs. There were Family Law Act proceedings current between the two defendants in the Family Court of Australia. The finding by Olsson J was that the only nexus between the two proceedings was that the decision of the Supreme Court action would affect the net asset position of the defendants, and would therefore impact on the nature of any order of property settlement which might be made. However, it was held that the Supreme Court proceedings had no other logical relationship with the property settlement proceedings. The action was treated as if it were parties to the marriage being sued by a major trade creditor - there were different and separate issues arising from those in the Family Law Act proceedings.  The application to transfer the proceedings to the Family Court was therefore refused.

The circumstances of that decision can be contrasted with the rather different circumstances surrounding a later application to transfer the same proceedings to the Family Court.  In Skaventzos v Tirimon (1993) 61 SASR 103 the pleadings and interlocutory proceedings in the Supreme Court action had developed to a point where the plaintiffs then had a claim, by way of alternative, that the monies were advanced in pursuance of a common arrangement or understanding, presumably between all the parties, whereby they would be beneficially entitled to an interest in the former matrimonial home of the defendants to the extent of the payments, the total of which appeared to exceed the then market value of the property. Mullighan J was satisfied that both the criteria of s5(1)(b)(i) had been met. He considered that whether the plaintiffs had an equitable interest in the former matrimonial home was a crucial question which had to be resolved before an order for settlement of property could be made, and that it would be unreasonable to expect the defendants to have to litigate both proceedings. He ordered a transfer of the action to the Family Court.

If the sole question in these proceedings concerned the existence or terms of a loan as being in the nature of an arm’s length transaction between the plaintiffs and the defendant so that the result of these proceedings would merely determine the value or extent of the combined assets of the husband and wife, on which the Family Court proceedings for property settlement could then operate, there might be good cause for not transferring the proceeding, although even in that case there might be other factors which could require such a transfer.  However, in this case the existence of the first loan is not denied by the defendant or the third party.  The existence of the second loan is not denied by the third party and is merely not admitted by the defendant, her case being that it was not made to her, but that if it was there are other good reasons in law why she should not have to repay it.  Furthermore, there are substantial issues of contribution and indemnity arising on the defendant’s claim against the third party.  It therefore appears that the more significant questions to be litigated in these proceedings relate not so much to the existence of the loan but to which of two competing parties it was made, and the liability of those respective parties between themselves to repay the loan.  While the outcome of the proceedings will affect the value of the combined net assets of the defendant and the third party for the purpose of the property settlement proceedings, the pleadings in these proceedings also raise issues as to how that liability should be adjusted between the defendant and the third party.  These are the very questions that arise in the property settlement proceedings in the Family Court.  These proceedings are therefore related in a very direct sense to the proceedings in the Family Court.  Both proceedings will require an analysis of the same facts with the risk, if they were to continue, of conflicting findings of fact and exposure of both defendant and third party to two sets of proceedings involving similar issues.  The interests of justice would not be served by allowing that to continue.

In my opinion it is also more appropriate that the proceeding be determined by the Family Court.  If the matter proceeds in this Court, it may result in some adjustment of rights and interests between the defendant and  the third party.  That consideration, however, will form but part of a much wider adjustment of the rights and interests of the parties in the Family Court proceedings.  It is more appropriate that the issues raised in these proceedings should be allowed to be decided as part of the totality of the adjustment of the rights of the parties in the Family Court proceedings, particularly as one of the issues raised in the third party proceedings raises considerations which arise only under the Family Law Act 1975. In respect of those issues, the Family Court is the specialist tribunal created to determine such issues.

Are there any other considerations which, in the interest of justice, might suggest that the matter should not be transferred?  Questions of delay in the Family Court were raised.  It appears, however, from information jointly supplied to me by the parties, that the relevant Family Court proceedings are to be reviewed, along with many other proceedings, later this month.  Of those cases not resolved, they are likely to be listed for trial between July and October 1998, with an expectation of a trial date for this matter by September or October.  Any differences in timing between a trial date in this Court and a trial date in the Family Court are not sufficient to warrant any departure from the more appropriate course which I consider should be followed.

It is put that the plaintiffs will suffer the expense of having to be represented in the Family Court proceedings on issues in which they have no direct interest.  However, it would appear from the pleadings in these proceedings that one way or another they are likely to have some involvement in the Family Court proceedings in any event, even if only as witnesses.  As against that position, however, if the proceedings were not transferred, both the defendant and the third party would be subjected to the costs of two sets of proceedings instead of one.  Furthermore, the plaintiffs appear to acknowledge some link between the two proceedings, as the affidavit in support of the application refers to the fact that on three occasions the plaintiffs consented to an adjournment of the proceedings in the District Court on the ground that settlement negotiations were then on foot between the defendant and the third party.

I am therefore satisfied on the whole of the material before me that this proceeding is related to the proceeding in the Family Court and that it is more appropriate that this proceeding be determined by the Family Court.  Accordingly, I order that the action be transferred to the Family Court of Australia at the Adelaide Registry.