LL and Anor & MR and Anor - [2006] FamCA 690

[2006] FamCA 690

FAMILY LAW ACT 1975

IN THE FULL COURT OF
THE FAMILY COURT OF AUSTRALIA
AT SYDNEY

Appeal No. EA 60 of 2005

File No. SYF 6709 of 2000

IN THE MATTER OF:

First Applicant

- and -

PK PTY LTD

Second Applicant

- and -

First Respondent

- and -

Second Respondent

REASONS FOR JUDGMENT

BEFORE:Finn, Coleman and Boland JJ
HEARD:8 September 2005; and by way of written submissions 11 October 2005 and 9 November 2005

JUDGMENT: 21 July 2006

APPEARANCES:

Mr Broun QC and Mr Gramelis of Counsel (instructed by Tsavdaridis Lawyers, Level 1, 181 Enmore Road, Enmore NSW 2042) appeared on behalf of the Appellants.
Mr Whittemore, solicitor (of Coyne & Whittemore Solicitors, 7/17-19 Mooramba Road, Dee Why NSW 2099) appeared on behalf of the First Respondent.
Mr Russo, solicitor (of Russo & Partners, Solicitors, 12 Smalls Road Arcadia NSW 2159) appeared on behalf of the Second Respondent.

APPEAL SUMMARY

MATTER:LL and PK Pty Ltd and MR and CR
APPEAL NUMBER: EA 60 of 2005; SYF 6709 of 2000
CORAM:Finn, Coleman and Boland JJ
DATE OF HEARING: 8 September 2005; and by way of written submissions 11 October 2005 and 9 November 2005

DATE OF JUDGMENT: 21 July 2006

CATCHWORDS:

APPLICATION – For leave to appeal interlocutory orders in property proceedings

(a)dismissing application of third parties to bring proceedings under the Corporations Act 2001 (Cth), and in reliance on accrued jurisdiction at same time as s 79 proceedings between husband and wife;
(b)costs orders; and
(c)subsequent orders made which were asserted to affect third parties’ interests

Consideration of proposed grounds of appeal in determination of application – Application dismissed.

CORPORATIONS ACT / ACCRUED JURISDICTION

Per Finn J:

Whether trial Judge erred in holding claims of appellants did not fall within the accrued jurisdiction of the Family Court - Whether trial Judge erred in declining to exercise his power under the Corporations Act 2001 (Cth) – Appellants’ proposed grounds of appeal met by trial Judge’s conclusion that even if he was wrong on the accrued jurisdiction or Corporations Act grounds, he would transfer the proceedings to the Supreme Court pursuant to s 1337J of the Corporations Act, his Honour’s reasoning having been based on the assumption that the appellants had been granted leave to intervene - His Honour’s reasoning also proceeded on the basis that s 1337J is not discretionary – No error by trial Judge in making the orders that he did.

Per Coleman and Boland JJ:

Corporations Act - Whether the trial Judge erred in exercise of discretion in rejecting the appellants’ statutory claims under the Corporations Act 2001 (Cth) – Consideration of whether appellants sufficiently identified their case before the trial Judge –Whether matters contended by appellants formed a different case than that presented to the trial Judge.

Whether the fact that the trial Judge was aware of, and referred to, the transitional provisions and s 124 of the Companies Act 1961 (NSW) negatived or derogated from general principles applicable to cases where an issue not raised before the trial Judge is raised at the appeal – Trial Judge correctly identified the claim asserted before him was not specifically pleaded under s 124 of the Companies Act.

Whether, to determine jurisdiction issues was it necessary for the trial Judge to determine whether relief was available under s 1324(10) of the Corporations Act – Appellants relied on s 1324(10) to ground relief in damages – Conflicting principles in relation to whether damages can be awarded independently of the granting of an injunction or application for an injunction under s 1324 not argued before the trial Judge.

Whether, if the Corporations Act claims were maintainable, in the interests of justice would it have been appropriate to transfer the proceedings to the Federal Court of Australia or the Supreme Court of New South Wales –Trial Judge addressed the factors relevant to transfer between courts, as set out by Mason P in James Hardie & Company Pty Ltd v Barry (2000) 50 NSWLR 357 – Trial Judge’s determination that if the appellants were permitted to intervene then, of his own motion, he would have transferred the proceedings to the Supreme Court of New South Wales was not outside the reasonable ambit of his discretion.

Accrued jurisdiction - Whether trial Judge in error in finding no single justiciable controversy which could be determined by the Family Court – Consideration of principles in relation to accrued jurisdiction of federal courts – Not suggested at any time that the accrued jurisdiction claims could or should be maintained independently of the Corporations Act claims – As trial Judge not in error in rejecting appellants’ claims under the Corporations Act, unnecessary to consider exercise of discretion in respect of accrued jurisdiction grounds.

ORDER MADE IN ABSENCE OF PARTY AFFECTED

Per Finn, Coleman and Boland JJ:

Whether trial Judge erred in making subsequent orders – Appellants contended orders made without notice to them and without reasonable opportunity for them to be heard, amounting to denial of natural justice - Appellants further contended orders placed wife in position of conflict of interest – Appropriate procedure to have been implemented was that in Wilkes and Wilkes (1981) FLC 91-060 – No evidence appellants sought a stay of the orders – No evidence appellants sought to have matter relisted before trial Judge – No merit in these proposed grounds of appeal.

COSTS

Per Finn, Coleman and Boland JJ:

Whether trial Judge erred in ordering one of the appellants pay husband’s costs from May 2004 – As challenge to his Honour’s orders in respect of the jurisdictional application unsuccessful, scant basis for appellate interference in his Honour’s costs orders – Trial Judge’s orders based on fact that appellant wholly unsuccessful – No appealable error in trial Judge’s orders.

APPLICATION FOR LEAVE TO APPEAL

Per Finn, Coleman and Boland JJ:

No error by trial Judge in determination of jurisdiction issue – Tests relevant to grant of leave not satisfied – Application dismissed.

Legislation considered

Family Law Act 1975 (Cth) ss 79, 94AA, 117(2A)(e)
Corporations Act 2001 (Cth) ss 180, 181, 182, 183, 184, 1337C, 1317E, 1317H, 1317J, 1337J, 1337L, 1337M, 1337R, 1324, 1370, 1371, 1400, 1401, 1402, 1406 and 1408
Corporations Law, s 233
Companies Act 1981 (Cth)
Companies (Application of Laws) Act 1981 (NSW), ss 17, 20 and 21
Companies Act 1961 (NSW), s 124
Companies Act 1981 (Cth), s 1362CD
Corporations Act 1989, ss 74 to 81
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW)
Family Law Regulations 1984 (Cth), reg 15A
Family Law Rules 2004 r 22.14

Cases considered
Aarons, GWP & Co v Knowles,CE (1995) FLC 92-627
Acton Engineering Pty Ltd v Campbell & Ors (1991) 103 ALR 437
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559
Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343
Bishop and Bishop (2003) FLC 93-144
Broken Hill Proprietary Co Ltd v Bell Resources Ltd (1984) 8 ACLR 609
Coulton v Holcombe (1986) 162 CLR 1
Executor Trustee v Deloitte Haskins & Sells (1996) 14 ACLC 1,789
Fencott and Muller (1983) 152 CLR 570
Finlayson and Finlayson and Gillam (2002) FLC 93-121
House v The King (1936) 55 CLR 499
James Hardie & Company Pty Ltd v Barry (2000) 50 NSWLR 357
Maxwell v Murphy (1957) 96 CLR 261
Metwally (No 2) v University of Wollongong (1985) 60 ALR 68
Panayotides v Panayotides (1997) FLC 92-733
Penfold v Penfold (1980) 144 CLR 311; FLC 90-800
Perpetual Trustee Australia Ltd & Anor v Perpetual Trustee Co Ltd (1995) 13 ACLC 66
Re Wakim; Ex parte McNally & Ors (1999) 198 CLR 511
Rutherford and Rutherford (1991) FLC 92-255
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
The State of Queensland and Anor v J L Holdings Pty Ltd (1997) 189 CLR 146
Warby and Warby (2002) FLC 93-091
Wilkes and Wilkes (1981) FLC 91-060
Waterhouse v Waterhouse and Ors (1999) 46 NSWLR 449

Application dismissed.

Finn J

This is an application by LL and PK Pty Ltd for leave to appeal orders made by O’Ryan J on 8 March, 11 May and 16 May 2005.
It is important to remember that even though the hearing (or perhaps more correctly - given that this matter was determined on the basis of written submissions - the determination) of the application for leave to appeal was consolidated with the hearing (determination) of the appeal (should leave be granted), the matter before this Full Court was primarily an application for leave to appeal the orders made on 8 March 2005.

The orders of 8 March 2005

By his orders of 8 March 2005 O’Ryan J refused leave to LL and to PK Pty Ltd to intervene in proceedings for property settlement which are pending in this Court between CR and MR. His Honour also dismissed an application (filed on 15 February 2005) by LL and PK Pty Ltd seeking various declarations and orders.
LL is the adult daughter of CR by her first husband, JL. The origins of the company, PK Pty Ltd, can be traced to a company of which CR and JL were originally directors and shareholders.
O’Ryan J explained in paragraph 2 of his judgment of 8 March 2005 that LL and PK Pty Ltd were seeking to intervene in the property settlement proceedings between CR and MR in order to prosecute applications relying on
s 1337C of the Corporations Act 2001 and the accrued jurisdiction of the Family Court (s 1337C of the Corporations Act provides that jurisdiction is conferred on the Family Court with respect to civil matters arising under the Corporations legislation).
His Honour further explained that the basis of such applications was a claim by LL and PK Pty Ltd that CR had for many years acted in breach of her duties as a director of PK Pty Ltd and as the trustee of a trust (which was allegedly established at the time of the breakdown of the marriage of CR and JL, if not earlier), and that as a consequence of those alleged breaches, LL and PK Pty Ltd were entitled to have the Family Court make orders which might result in their being very little, if any, property for consideration in the property settlement proceedings between CR and MR.
There had been a long history of proceedings in this Court and also in the Equity Division of the Supreme Court of New South Wales between all four parties so far mentioned. At one time such proceedings also involved PL, who is the son of CR and brother of LL. O’Ryan J set out at paragraphs 13 to 120 of his judgment the long history of the proceedings in both Courts; it is unnecessary to repeat any of that history here.
The essential question which O’Ryan J had to determine in his judgment of 8 March 2005 was whether this Court had the jurisdiction to determine the claims made by LL and PK Pty Ltd in the application filed on 15 February 2005.
When his Honour came to consider that question, he acknowledged at the outset (paragraph 122) that s 1337C of the Corporations Act expressly confers jurisdiction on the Family Court in relation to civil matters arising under that legislation. But he went on to explain that to the extent that the claims by the third parties (notably the breach of trust claims) were based on general equitable principles, it would be necessary to rely on the accrued jurisdiction of this Court (see in particular paragraphs 123 and 132 of his judgment).
In relation to the claims under the Corporations Act his Honour explained that LL and PK Pty Ltd were relying upon s 1324 of that Act, and that that section gave power to grant injunctions on the application of any person whose interests have been, are, or would be affected by certain conduct of specified types, and to order the contravener to pay damages. Having referred briefly to the submissions made by both sides concerning this matter, his Honour concluded that relief under that section was not available in this case because of the date of the alleged breaches.
In relation to the accrued jurisdiction, his Honour examined the matters in issue between the various parties in order to determine whether there existed the necessary single justiciable controversy. He determined (at paragraph 146) that in the circumstances of the case, there was no single justiciable controversy and that the claims by the third parties were severable and disparate from the claims in the family law proceedings. In his Honour’s opinion, there was no common substratum of facts and that the facts of this case did not support the accrued jurisdiction.
Significantly for present purposes, his Honour then said at paragraph 147 that even if there was a basis for a claim for relief under s 1324 of the Corporations Act and/or a basis for the exercise of the accrued jurisdiction of the Family Court, he “would transfer the proceedings to the Supreme Court of New South Wales”.
In my view, his Honour must be understood as there saying that if LL and PK Pty Ltd had been given leave (either by his Honour, or by virtue of earlier orders made in this Court) to intervene in the proceedings between CR and MR in order to seek the relief sought in their application filed 15 February 2005 (if indeed such relief was available to them either in equity or under statute), then his Honour would have transferred the proceedings to the Supreme Court.
Further, as I understand his Honour’s reasons, he did not conclude that the proceedings should be transferred to the Supreme Court because he considered that he would have a discretion as to whether or not to exercise the accrued jurisdiction, but rather because of the mandatory provisions of s 1337J of the Corporations Act and the application of that section to the facts of this case as his Honour found them.
To avoid any misunderstanding, I will now quote in full his Honour’s reasoning as to why s 1337J would require a transfer of the proceedings to the Supreme Court (if such proceedings were on foot in this Court) and as to why he would not therefore grant leave to the third parties to intervene, or if they already had leave to intervene, he would nevertheless dismiss their application (filed 15 February 2005) for relief in this Court (emphasis added):
“147.I should add that in this case even if there was a basis for a claim for relief under s 1342 [sic] of the Corporations Act and or a basis for the exercise of the accrued jurisdiction of the Family Court I would transfer the proceedings to the Supreme Court of New South Wales.
148.Section 1337J of the Corporations Act provides for the transfer of proceedings in respect of civil matters arising under the Corporation legislation which are instituted in the Family Court. In appropriate circumstances the matter must be transferred from the Family Court to the Federal Court or a State of [sic] Territory Supreme Court. If it appears to the Family Court:
‘(a)that the relevant proceeding arises out of, or is related to, another proceeding pending in:
(i)the Federal Court; or
(ii)another State or Territory court;
and that the court in which the other proceeding is pending is the most appropriate court to determine the relevant proceeding; or
(b)that having regard to:
(i)whether, in the transferor court's opinion, apart from this Division, the relevant proceeding, or a substantial part of it, would have been incapable of being instituted in the transferor court; and
(ii)the extent to which, in the transferor court's opinion, the matters for determination in the relevant proceeding are matters not within the transferor court's jurisdiction apart from this Division; and
(iii)the interests of justice;
the Federal Court, or another State or Territory court, is the most appropriate court to determine the relevant proceeding; or
(c)that it is otherwise in the interests of justice that the Federal Court, or another State or Territory court, determine the relevant proceeding;
the transferor court must transfer the relevant proceeding to the Federal Court or to that other court.’
149.The transfer of a proceeding under s1337J may be made on the application of a party to the proceeding, at any stage of the proceeding or on the court’s own motion: sec1337M.
150.Pursuant to s1337L of the Corporations Act when deciding whether to transfer a proceeding or application a court must have regard to:
‘(a)the principal place of business of any body corporate concerned in the proceeding or application; and
(b)the place or places where the events that are the subject of the proceeding or application took place; and
(c)the other courts that have jurisdiction to deal with the proceeding or application.’
151.I accept that there will probably be two sets of proceedings and two sets of costs in two separate courts. There may be an advantage in keeping all matters together and the capacity of the court to take account of the whole situation of parties. Further, that there would be further delay.
152.However, I also take into account that the family law proceedings commenced in August 2000 and it could be said that the claims by the third parties have only been clarified in mid February 2005. The earlier proceedings that were transferred from the Supreme Court were abandoned or discontinued. As well for reasons I have given, the claims by the third parties are not ready to proceed. On more than one occasion, Senior Counsel for the third parties said that the matter was not or was unlikely to ready for hearing.
153.The claims by the third parties do involve an expertise in corporate law and equitable doctrine and there is no special advantage in the Family Court hearing the matter.
154.Finally, the submission that the resolution of the third party claims could result in contemporaneously nullifying the property settlement issues is significant - this would act to in effect remove any matrimonial cause.
155.In all the circumstances of this case it would be in the interests of justice that the claims by the third parties be transferred to the Federal Court or the Supreme Court of New South Wales.”
No submissions specifically addressing the established criteria for the grant of leave to appeal were made on behalf of LL or PK Pty Ltd. Rather, it appeared that the applicants relied on the substance of the complaints contained in their proposed grounds of appeal. Those proposed grounds are as follows:
“1.The trial judge erred in holding that the claims of the Appellants did not fall within the accrued jurisdiction of the Family Court of Australia.
2.The trial judge erred in holding that the leave granted to the Appellants to intervene in the Family Court proceedings had been of a limited kind and that the purpose of that leave had expired or ceased to be of any effect, and that accordingly the Appellants had to apply for leave to intervene in the Family Court proceedings afresh.
3.In the alternative to the ground specified in paragraph 2 above, the trial judge erred in declining to grant leave to the Appellants to pursue their claims in the Family Court proceedings.
4.The trial judge erred in holding that in the exercise of his discretion, even if the claims of the Appellants fell within the accrued jurisdiction, he would exercise his discretion to decline to hear the Appellants’ claims.
5.The trial judge erred in declining to exercise his power under the Corporations Act 2001 (Cth) and its predecessor legislation in respect of the Appellants’ claims.”
In my view, all complaints contained in the proposed grounds of appeal are met by the conclusion reached by his Honour in paragraph 147 of his judgment, being that even if he was wrong concerning the availability of relief under the Corporations Act (Ground 5) or of the accrued jurisdiction (Ground 1), he would transfer the proceedings to the Supreme Court. It is clear from his Honour’s reasoning which then followed in paragraphs 148 to 155 that such a transfer would be made pursuant to s 1337J of the Corporations Act.

As I indicated above, his Honour’s reasoning must be understood as being based on the assumption that LL and PK Pty Ltd had been granted leave to intervene in the Family Court (Grounds 2 and 3). Further, his reasoning can be seen as proceeding on the basis that s 1337J is not discretionary, but rather mandates a transfer once the Court is satisfied of the matters referred to in that section (Ground 4).
I am therefore not persuaded that O’Ryan J erred in principle in making the orders which he did. Nor am I persuaded that any substantial injustice would be suffered by LL or PK Pty Ltd as a result of his Honour’s orders, particularly when regard is had to the matters referred to by his Honour in the above quoted passage from his judgment.
Accordingly I would not grant LL or PK Pty Ltd leave to appeal the orders of 8 March 2005.

The orders of 11 May 2005

On 10 May 2005 O’Ryan J heard competing applications for costs in relation to the proceedings which culminated in the orders made on 8 March 2005.
On the following day (11 May 2005), his Honour delivered reasons for judgment and made orders dismissing the application by LL that MR pay her costs, and requiring LL to pay the costs of MR incurred since May 2004.
The reasons for his Honour’s orders were, in summary, that LL had failed to establish a justifying circumstance for a costs order in her favour, and that so far as MR was concerned, the lack of success on the part of LL in the proceedings in question, would justify a costs order in his favour.
LL now seeks to appeal his Honour’s orders with respect to costs.
Given that I would not grant LL leave to appeal the orders of 8 March and given that the orders in relation to the costs of the proceedings which resulted in the orders of 8 March were based on success or lack of success in those proceedings, it follows that I would not interfere with the costs orders.

The orders of 16 May 2005

On 16 May 2005 O’Ryan J delivered further reasons for judgment apparently following further hearings on 10, 12 and 13 May 2005. The cover sheet of his Honour’s judgment records appearances only by the legal representatives of the husband, MR and the wife CR, although the transcript reveals an appearance by Counsel for LL and PK Pty Ltd on the first day.
The eleven orders made at the conclusion of his Honour’s judgment are all (save for Order 2) directed either to the husband, or to the wife, or to both of them. Nevertheless, the application for leave to appeal filed by LL and PK Pty Ltd seeks also to appeal the orders made on 16 May 2005, and their draft notice of appeal indicates that all orders made on that day are appealed.
However, the affidavit filed by LL in support of the application for leave to appeal suggests that it is only Order 10 of the orders of 16 May 2005 which is of concern to her. Order 10 provides as follows:
“10.For the purposes of giving effect to these orders the wife, as the holder of all of the shares in the capital of [PK Pty Ltd] conferring rights to vote at General Meetings of the members of [PK Pty Ltd] forthwith do all acts and things and execute all deeds, documents, instruments and writings as are necessary to cause [PK Pty Ltd] to withdraw Caveat number [ ] lodged by it against the land in Folio Identifier [ ] owned by [S] Pty Ltd and, without limiting the generality of the foregoing for the purpose of causing [PK Pty Ltd] to withdraw that Caveat, the wife:
10.1As such shareholder, forthwith resolve to remove the present Directors of [PK Pty Ltd] from office as such and to appoint herself as its sole Director in their stead; and
10.2As such Director, forthwith resolve that [PK Pty Ltd] execute and lodge a Withdrawal of the Caveat in the prescribed form and cause [PK Pty Ltd] so to do.”
In her affidavit in support of the application for leave to appeal, LL states as follows in relation to Order 10:
“50.I say that neither I nor [PK Pty Ltd], nor my solicitors received any notice that [MR] would be seeking Orders to the effect of paragraph 10 of the Orders made by the Family Court on 16 May 2005. The letter comprised in exhibit “LAKL 21” gave notice of an application seeking Orders of a different kind. At the time of the application by [MR], neither [PK Pty Ltd] nor I were parties to the proceedings in the Family Court and were not afforded any, or any adequate, notice of the Orders sought by [MR] nor an opportunity to be heard.
51.If [CR] were permitted to carry out the acts referred to in paragraph 10 of the Orders made by the Family Court on 16 May 2005, I hold grave concerns that further breaches of trust and directorial duties would occur in that:-
(a)[CR] would be in a position of conflict in any proceedings as an officer of [PK Pty Ltd] in effect litigating against herself.
(b)By the removal or withdrawal of the Caveat, the interest of [PK Pty Ltd] and I would be eroded as this will allow the dissipation of assets by [CR], [MR] and [S Pty Ltd] as it is the intention of the said Orders to allow the raising of funds by [CR], [MR] and [S Pty Ltd] to pay for legal costs in the Family Court proceedings using, amongst other properties, the subject property of the Caveat as security.
(c)[PK Pty Ltd] would be prevented from effectively pursuing its rights and claims.”
The proposed grounds of appeal directed to the orders of 16 May 2005 are as follows:
“7.The Orders made without notice to the Appellants of the nature of the Orders to be sought and without giving to the Appellants any reasonable opportunity to be heard.
8.The Appellants were denied natural justice in respect of the Orders.
9.The Orders create a manifest conflict of interest on the part of the Wife, erode the rights and claims of the Appellants, prejudice the ability of the Appellants to pursue their claims and are otherwise unjust in all the circumstances.”
Again the established criteria for the grant of leave to appeal do not appear to have been addressed in the submissions made on behalf of LL or PK Pty Ltd in relation to the orders of 16 May 2005. However, it is clear that their essential complaint is that they were denied natural justice in that the actual orders which were made, were made without notice to them.
If as is asserted in the passage from LL’s affidavit quoted above, orders were sought by the husband and made by his Honour in terms which were materially different from those which LL or her legal representatives had been informed by the husband or his legal representatives were to be sought, then the appropriate course to be taken was, in my view, by way of further application to his Honour (see in this regard the observations in the separate judgments of Emery, Fogarty and Strauss JJ in Wilkes and Wilkes (1981) FLC 91-060). No explanation appears to have been provided as to why that course was not adopted. In these circumstances I consider that leave should not be granted to appeal the orders of 16 May 2005.
I note that the wife also sought to appeal the orders of 16 May 2005, but she has not so far chosen to prosecute that application.

Conclusion

For the reasons I have given I would not grant LL or PK Pty Ltd leave to appeal the orders of 8 March, 11 May or 16 May 2005. All parties should have leave to make further submissions in relation to the costs of their application for leave to appeal.

Coleman and Boland JJ

Introduction

This application arises out of interlocutory hearings before O’Ryan J in property proceedings under s 79 of the Family Law Act 1975 (Cth) (“the Act”) which, for case management purposes, are designated as “complex ”. The applicants seek leave to appeal, and if successful, to appeal against orders of O’Ryan J made on 8 March, 11 May and 16 May 2005.
The applicants are LL and a company, PK Pty Ltd . For convenience, we will refer to them collectively as “the appellants”.
The parties to the s 79 proceedings, which were instigated on 28 August 2000, are MR (“the husband”) and CR (“the wife”). There have been numerous appearances by the husband and wife, and subsequently other parties, by reason of various interlocutory applications, and for case management purposes, the latter caused on many occasions as a result of default in compliance with directions and orders of the Court.
A separate application for leave to appeal the interlocutory orders made by O’Ryan J on 16 May 2005 has been filed by the wife. That application was listed to be heard immediately after this application, and the appeal books in this application were to be relied on in that application. On 8 September 2005 the wife’s counsel advised us that the wife would abide by any decision made in this application, and sought her application be stood over pending our determination.
The course of the litigation has been complicated by the instigation in 2000 of contemporaneous proceedings in the Supreme Court of New South Wales. Some understanding of the history of the litigation in that Court and this Court is a prerequisite to the determination of the present application which, at its core, challenges the trial Judge’s decision that the appellants’ applications are not ones which should fall to be determined by the Court in its jurisdiction under the Corporations Act 2001 (Cth) (“the Corporations Act”) and in reliance on the Court’s accrued jurisdiction, with the s 79 proceedings.
The status of the appellants in the proceedings is also in issue, the trial Judge having dismissed an application by them to intervene in the proceedings. Also subject of challenge, is a subsequent costs order made on 11 May 2005 requiring LL to pay the husband’s costs from May 2004. Further, orders made after LL’s application to intervene was dismissed, are the subject of challenge on the basis that those orders, which are said to affect LL and/or PK Pty Ltd, were made without notice to them, and cause a conflict of interest to the wife.

Brief history of LL and PK Pty Ltd’s role in the proceedings

LL and her brother PL are the two adult children of the marriage of the wife and her late husband, JL.
The wife and JL were divorced in February 1975. We later discuss in detail the arrangements made as a result of their divorce for their children, which arrangements are asserted to support the appellants’ claims in these proceedings.
In December 2000, LL and PL as plaintiffs commenced proceedings in the Supreme Court of New South Wales against the wife seeking relief under s 233 of the then Corporations Law, and for declarations that certain property of the husband and wife was at all times the property of PK Pty Ltd (“the first Supreme Court proceedings”). We will set out in greater detail the history of PK Pty Ltd, and the relief sought in the Supreme Court of New South Wales later in our reasons.
Later in December 2000, further proceedings were commenced in the Supreme Court of New South Wales by the wife as plaintiff against the husband, S Pty Ltd, a company controlled by the husband, and the Registrar General as defendants (“the second Supreme Court proceedings”). In these proceedings the wife, as an alleged secured creditor of S Pty Ltd, sought the winding up of that company, and appointment of a manager.
The husband subsequently sought an anti-suit injunction in this Court restraining the wife and PL and LL from continuing each of the Supreme Court proceedings. It appears that, prior to any determination of the husband’s application, by 15 January 2001 orders had been made by consent that PL and the appellants be granted leave to intervene in the proceedings in this Court. There is a dispute as to whether the leave to intervene was to dispute the Court’s jurisdiction, or was leave to intervene in the s 79 proceedings between the husband and wife.
Later in 2001, orders were made in the Supreme Court of New South Wales transferring the first and second Supreme Court proceedings to this Court. During the same period LL swore an affidavit in which, after referring to the first Supreme Court proceedings, she said “I therefore wish to discontinue my application as set out in Supreme Court proceedings … other than to support my mother as set out above”.
On 23 April 2001 the Court noted that PL and LL withdrew their objections to the Court hearing the s 79 proceedings commenced by the husband. On the same day an order was made that issues relevant to jurisdiction raised by the wife and PK Pty Ltd were listed for hearing on 17 and 18 May 2001.
On 7 May 2002 a Notice of Ceasing to Act was filed by the solicitors for PK Pty Ltd, and on 16 May 2002 a Notice of Ceasing to Act was filed on behalf of
LL’s solicitors. LL did not thereafter participate in the proceedings until mid 2004. At that time she filed a Reply in which she sought to intervene in the proceedings, and also sought a declaration under s 78 of the Act.
PL filed a Response in this Court dated 24 July 2002 in which he also sought declarations under s 78 of the Act.
On 30 July 2002 orders were made by consent. The trial Judge noted “[a]t this time the parties to the proceedings were the husband, the wife, PL and [IAL]”. His Honour also noted “[t]here was no appearance by or on behalf of or any participation by [LL] or [PK Pty Ltd]”.
In October 2002, at a directions hearing, Moore J is said to have noted that no party contended the Court would not have jurisdiction to dispose of the entirety of the proceedings.
In July 2003 the proceedings between PL and the wife were resolved. Final orders were made which provided on payment made to PL by the wife he would transfer to her his shares in PK Pty Ltd. PL withdrew from the proceedings.
When the proceedings came before the trial Judge in December 2004 for determination of an application for interim costs, his Honour noted at the conclusion of his orders that the first and second Supreme Court proceedings “are discontinued”, and that, in each case, Notices of Discontinuance were to be filed.
In January 2005 solicitors filed an appearance in the proceedings on behalf of LL, and shortly thereafter, the trial Judge ordered LL to file an amended application annexing a Statement of Claim. The legal representatives of the husband, wife, and the appellants agreed there was a serious question to be decided about jurisdiction, and that question could be determined, as a discrete issue, prior to the final hearing. It is the determination made in that application and its sequelae which is in issue before us.

Respondent’s preliminary objections to determination of the application for leave to appeal

(a) An overview of the respondent’s complaints

We have received written submissions prepared on behalf of the husband by his solicitor. The written submissions raise a number of complaints about procedural fairness and non-compliance with various provisions of the Family Law Rules 2004 (“the Rules”). We discuss the complaints below.
(i) The procedural history
This application was listed for hearing following a procedural hearing conducted by Boland J on 1 August 2005 at the same time as the procedural hearing for the wife’s appeal in which the following orders were made:
“2. That the appeal be listed immediately after appeal No EA 60 of 2005.
3. It is noted that the wife through her Counsel concedes that she will be bound by the orders of the Full Court in EA 60 of 2005 insofar as the appeal is against order 10 of the orders of the Honourable Justice O’Ryan of 16 May 2005. It is further noted that the husband neither concedes or denies he will be bound by the orders the [sic] Full Court in EA 60 of 2005.”
At the procedural hearing the appellants were represented by counsel, and the husband was represented by his solicitor.
The application was listed for hearing before us on 8 and 9 September 2005, being dates suitable to the husband’s then senior counsel. On 5 September 2005 the solicitors for the husband wrote to the Appeals Registrar requesting vacation of those dates.
An application seeking vacation of the hearing dates filed on 6 September 2005, an affidavit of the husband sworn 6 September 2005 and an affidavit of Mr SR, the wife’s solicitor, sworn 7 September 2005, were before us at the commencement of the hearing. The husband’s affidavit set out the facts relied on to support the adjournment. He asserted that the appeal books and outline of argument were served two days after the due date, and because his application for further interim costs was part-heard before Le Poer Trench J, he did not have the funds to brief counsel to prepare and appear on his behalf in this application. Following discussion with senior counsel for the appellants and the husband’s solicitor, Mr W, we ordered that the application proceed by way of written submissions and provided a timetable for filing of submissions.
(ii) The husband’s complaints
The husband’s solicitor’s written submissions raised, as threshold issues, a number of complaints. He submitted:
·   that the applicants had not filed any submissions in respect of the question of leave to appeal;
·   that the judgment of O’Ryan J of 23 December 2004 was not included in the appeal books;
·   that the husband had been denied procedural fairness because of truncation of the normal procedural steps for an appeal, there being dispensation from the requirement to file a Pre-Argument Statement (“PAS”) (r 22.14), and shortening of time in which to file summaries of argument and lists of authorities;
·   that the outline of submissions filed on behalf of the appellants exceeded the number of pages prescribed in r 22.26(2) and the outline did not link each argument to a ground of appeal (r 22.26(2)(a)); and
·   that large portions of the appellants’ submissions set out disputed material which was either untested, contrary to the findings of the trial Judge, or raised points which were not raised at the hearing before the trial Judge.

(b) The manner in which the application/appeal is to be determined

In his written submissions, the husband’s solicitor set out alternate bases on which he asserted this matter should be determined. First, he asserted that we should dismiss all of the appellants’ submissions, or those parts of the submissions which contain allegations of fact. Second, in the event we did not accede to that course, and allow reliance on the appellants’ submissions in whole or part, we should permit the husband to rely on Part B of his submissions.

(c) Failure of appellant to address issue of leave to appeal from interlocutory orders

We accept that the appellants have failed to address in their principal submissions any material on the principles to be applied in respect of the leave application, or relevant facts to be applied to those principles. We do not however consider this failure should result in dismissal of the leave application, which application we will consider on its merits later in these reasons.

(d) Asserted omissions from the appeal books

We are satisfied this complaint is without substance. The husband was represented by his solicitor at the procedural hearing before Boland J when the index to the appeal books was settled. A draft index was served on the husband’s solicitor. The husband’s solicitor had the opportunity to seek to have the judgment of 23 December 2004 included in the appeal books if it was considered relevant. Further, Boland J’s orders provided either party had liberty to apply for further directions before her on 5 days notice. The husband could have applied to relist the matter for amendment of the appeal book index. No such application was made even after the appeal books were served on 25 August 2005.

(e) Asserted failure of the appellants to comply with the Rules

The husband’s next complaint is directed to the dispensation of the requirement to file a PAS. The explanatory statement to the Rules describing r 22.14 states:
“[r 22.14.5] Purpose of pre-argument statement The ES [Explanatory Statement] says: ‘This rule aims to minimise resources wasted on appeals started for tactical or other reasons where the appellant does not intend to proceed.’”

In this case, the parties had appeared before Boland J on an application to extend time to file the application for leave to appeal on 1 August 2005. The husband’s counsel successfully opposed a stay application before Boland J. On both applications the husband was represented by counsel. Her Honour had the benefit of reading substantial affidavit material and hearing oral submissions before she conducted the procedural hearing. The issues the subject of this application were ventilated by each party’s counsel. It was against this background her Honour dispensed with the necessity to file a PAS. Accordingly, we find there can be no prejudice caused to the husband by the dispensation from the rule requiring the filing of a PAS.
We turn to the question of the appellants’ submissions. We accept those submissions substantially exceed ten pages. They were filed in the Appeals Registry on 24 August 2005 under cover of a letter of the appellants’ solicitors dated 22 August 2005 which letter has now been brought to our attention by the Appeals Registrar. The letter discloses:
“We enclose written submissions on behalf of the Appellants for filing in the Appeal Registry.

These submissions exceed 10 pages as stipulated by Rule 22.26(2)(c) of the Family Law Rules 2004 (Cth).

Leave is sought to exceed that limitation on the following grounds:-

1.The complexity of the facts and the history of the matter.
2.The number of different legal issues involved.
3.The number of authorities to be considered.
4.The fact that the appeal relates to three (3) different sets of Orders.
5.Based on these factors and the length of time that would be taken in oral argument to present all of these issues, more extensive written submissions are hoped to shorten the length of hearing and to be of greater assistance to the Full Court.”

It appears a copy of the appellants solicitors’ letter was not forwarded to the husband’s solicitors.
At the hearing the husband’s solicitors had been in possession of the appellants’ written submissions for approximately two weeks. No issue about the length of the submissions was raised before us.
We are conscious that generally dealing with an appeal, or an application for leave to appeal, without the benefit of oral argument is unsatisfactory. However, in this case, the husband was, in the event we had acceded to his application for an adjournment, unable to give any indication when the application could be heard other than after a part-heard application before Le Poer Trench J on 31 January 2006 for further interim costs orders, and subject to the proviso that such application was successful.
The litigation has been ongoing since 2000. The husband, wife and appellants have incurred substantial legal costs. The appellants’ senior counsel referred to total legal costs of $2 million with outstanding costs of approximately $300,000. Any further adjournment would have potentially increased those costs, may have prejudiced the rights of the appellant, and have further delayed the s 79 proceedings prejudicing the husband and the wife.
Before us on 8 September 2005 senior counsel for the appellants said:
“[APPELLANTS’ SENIOR COUNSEL]: Well I put forward this offer but – this proposal. Our submissions, your Honours, have been very extensive and we’ve done that because of the complexity of the issues, the detail involved and, indeed, frankly, because of my own visual problems which makes it much easier for me to put things before the Court in writing, rather than reading my own notes.
FINN J: Yes.
[APPELLANTS’ SENIOR COUNSEL]: So our submissions – we apologise for the length but they are very widely spaced and we’ve got a lot of references.
FINN J: I must say for myself, they are useful, yes.
[APPELLANTS’ SENIOR COUNSEL]: They are complete, this is say your Honours – unless there were questions your Honours wanted to put to us, they provide our total argument. Now we would respectfully submit that a solicitor has a full right of audience in this Court. [Mr W] can appear for his client, make submissions. [MR] himself is a solicitor who still has a practising certificate of some 40 years experience; that presumably, [Mr W] and [MR] between them can put together the written submissions as to what they - - -
FINN J: The written response.
[APPELLANTS’ SENIOR COUNSEL]: - - - oppose, what they agree with, what are the principles of law or authorities they wish to refer to. Now that, in our submission - - -
FINN J: And we could determine – endeavour anyway, to determine it on the papers?
[APPELLANTS’ SENIOR COUNSEL]: Yes, your Honours, that’s exactly right.”
The husband’s solicitor at this time raised no objection to the length of the submissions, and later agreed he could prepare written submissions in response, but said fourteen days was insufficient time for him to do so. We made orders that the husband have a period of 28 days in which to file his written submissions, that is by 5 October 2005 and the appellants have 21 days thereafter to file any submissions in reply.
The husband’s solicitor annexed a schedule to his submissions being the appellant's submissions with various paragraphs marked with a “X”. It is asserted that the Court should not deal with submissions so marked because they are “disputed and/or misleading statements/allegations which:- … Are contrary to a determination of the trial judge and/or … Based on inadmissible/untested claims, and/or … Relate to points/claims which had not been taken/made at the trial ...”. In submissions in reply, senior counsel for the appellants noted “...it is impossible to answer them individually. There is no indication of which ones are disputed, which ones are misleading, which ones are alleged to be contrary to a determination of the trial Judge (if that mattered) for the purpose of the appeal and which are based on inadmissible claims”. We accept the general thrust of the appellants’ submissions. We have however attempted to address issues of controversy which were identified by the husband’s solicitor’s particular submissions.
We are satisfied the complaints made by the husband’s solicitor in respect of non compliance with, or dispensation from compliance with the Rules, are technical complaints, and do not affect the husband’s substantive rights. Further, for the reasons outlined above, we conclude dealing with the application by written submissions, rather than oral argument, provides a practical solution to the timely and cost effective disposition of the application and does not work an injustice on any party (see The State of Queensland and Anor v J L Holdings Pty Ltd (1997) 189 CLR 146 at 172).
Balancing the rights of the appellants and the husband, we determine it is appropriate to permit the appellants to rely on their amended submissions filed at the hearing, and their submissions in reply filed 9 November 2005, and permit the husband to rely on his Response Part B.

Background

The appellants do not dispute the factual background history set out in the trial Judge’s reasons, although they do take issue with a number of conclusions drawn by the trial Judge.
The trial Judge’s reasons set out a detailed chronology of the events relevant to the parties, other affected persons and entities, and the background history of this litigation. It is unnecessary for us to repeat the whole of the detailed chronology set out in his Honour’s comprehensive reasons, which include details of many procedural orders made during his Honour’s case management of the matter.

(a) Chronology relevant to PK Pty Ltd and asserted trust

In or about August 1962 the company KH Pty Ltd was incorporated. The husband and the wife were the original shareholders each holding one “A” and “B” class share respectively. The wife became a director and secretary of the company in August 1968. The memorandum and articles of the company provided for various classes of shares (“A”, “B”, “D”, and “E”). A further class of shares (the “F” class shares) were issued in May 1978 or in May 1979 to the wife purportedly on trust for the child of the husband and wife’s marriage, namely MER. We refer to the wife’s evidence about these shares shortly. The “A” and “B” class shares carry voting rights, but no entitlement to receive dividends, and the holders of those shares are only entitled to repayment of their paid up capital on a winding up. The “D”, “E”, and “F” class shares have no voting rights, but carry an entitlement to the distribution of income and capital on a winding up of the company.
PL asserted he was issued 2,499 “D” class shares in 1976. This assertion seems to be an error, and appears to have been based on the company’s capital, rather than actual issued shares. It is asserted by the husband that PL was issued with 20 “D” class shares at that time.
The wife asserted in about May 1979 she decided to issue herself with 20 “F” class shares. She deposed “That was to protect myself if [KH Pty Ltd] was wound up while I was alive or I sold the [Lower North Shore] property”. The wife also said, somewhat in contradiction to this statement, that on the birth of MER she discussed with the husband and the late JL the issue of shares in KH Pty Ltd to MER so that she would be in an identical position to PL and LL on her death. She said the husband “did all the paperwork for [MER]’s shares.”
KH Pty Ltd purchased vacant land on the Lower North Shore in 1962 (“the Lower North Shore property”) and subsequently the late JL and the wife caused a home to be constructed on the land which was completed in about 1969. The Lower North Shore property was occupied by the wife, the late JL, PL and LL until the wife’s divorce whereafter PL no longer lived in the home. After the wife’s remarriage to the husband, they lived in the home initially with PL and LL.
By deed dated 5 December 1963 ES as settlor settled a trust (“the PL trust”). The original trustee named in the trust deed is AP, a solicitor, whose address is recorded as being in Sydney. The deed noted the trust fund comprised the settled sum of twenty pounds, and all moneys, investments and property thereafter paid or transferred to and accepted by the trustee as additions to the trust fund. The beneficiary named in the deed is PL, and the default beneficiary is LL and any child of hers, and in default of such beneficiary or beneficiaries the trust fund is to be held for the wife.
The wife asserted in 1964 20 “D” class shares in KH Pty Ltd were allotted, and transferred to AP who held them as trustee for PL and 20 “E” class shares were transferred to AP pursuant to a trust established for LL. It is asserted by the wife a similar trust to that settled for the benefit of PL was settled for LL. No such trust deed has been located.
FM deposed to having become a director of KH Pty Ltd in 1975.
At the time of the wife and JL’s divorce, orders were made in the Supreme Court of New South Wales, Family Law Division on 13 February 1976 which provided for JL to resign as a director of KH Pty Ltd and to transfer his shares to the wife.
The wife asserted no arrangements were entered into at the time of the divorce to deal with the Lower North Shore property as arrangements had been concluded many years before about that property, other than that the late JL would resign his directorship of KH Pty Ltd, and that further shares in KH Pty Ltd would be allotted by the wife as and when any grandchildren were born. A minute of proposed orders signed by the wife, the late JL and their solicitors dated 13 February 1976 noted, as a condition of the wife having custody of the two children of the marriage, that she “will maintain a proper home for the children and in particular, will not take any step to jeopardise their continued occupation of the home [on the Lower North Shore property]”.
Pursuant to the orders of 13 February 1976, the wife was required to discharge the mortgage then secured over the Lower North Shore property. It was noted one of the purposes of such discharge was to make the continued occupation of the home by the children more secure. Additionally, orders 7 and 8 of the orders provided as follows:
“7.The wife is ordered to execute a covenant binding on her estate that she will, by her testamentary disposition, devise to or for the benefit of the children property or assets at least to the value of the benefits conferred pursuant to the agreement herein approved.
8.Order that [AP] Solicitor be removed as Trustee for the children of the shares held by her in [KH Pty Ltd] and that the Wife be appointed Trustee in lieu of her.”
The following notations were recorded on the file by Woodward J’s associate:
“H.H noted the undertaking of sols for Petnr to advise the Commissioner of Stamp Duties of the existence of the agreement between [JL] and [CR] dated 13.2.76 and if necessary provide copy to Commissioner and pay such duty as may be properly and legally payable. H.H. also noted undertaking of Mr. [B] on behalf of instructing solicitor Mr. [V] to forthwith advise [AP] of the making of this order. H.H. made findings and orders set out in document ‘PROPOSED ORDERS’.”
The Annual Return for KH Pty Ltd lodged with the then Corporate Affairs Commission in October 1979 disclosed the issued shares of the company to be 1 “A” and 1 “B” class share held by the wife, 20 “D” class shares held by FM and 20 “E” class shares held by the wife. The balance sheet for the year ending 30 June 1977 disclosed the company had assets of $58,435 and the company owed the wife $73,248.
In November 1980 the wife caused the Lower North Shore property to be transferred from the name of KH Pty Ltd to her own name. The wife asserted the husband, who is a practising solicitor, advised her to transfer the Lower North Shore property into her sole name, as she had a life tenancy in the property, and by reason of holding the property in her own name land tax would not be payable. The husband’s name is shown as the lodging party and witness on the Memorandum of Transfer. The husband disputed the wife’s assertions, and said the wife advised counsel he retained on her behalf to provide advice about the proposed transaction, that as governing director of the company, she could deal with its assets as she saw fit. The husband deposed to providing funds for extensive renovations to the Lower North Shore property.
The wife asserted throughout her marriage to the husband he retained KH Pty Ltd records, and that after their marriage company returns were prepared by the husband’s accountant. Accounts rendered by the company’s accountants were forwarded to the husband in 1979 and 1980.
On 2 September 1986 KH Pty Ltd was deregistered for failing to file annual returns.
In 1988 the Lower North Shore property burnt down and the wife ultimately received the proceeds of an insurance claim of approximately $2,000,000 with the final payment being received in 1991. The wife asserted $800,000 of the insurance payout was used to pay out debts of S Pty Ltd. The husband is presently the sole director of S Pty Ltd. S Pty Ltd is the registered proprietor of properties located in the Inner West. The wife asserted the husband executed a deed on 29 May 1992 in which he acknowledged the payments made on behalf of S Pty Ltd, that he subsequently provided to the wife a Memorandum of Mortgage executed by S Pty Ltd, but she was unable to register the mortgage because of objections raised by the husband with the Registrar-General.
It is asserted other funds from the insurance payout were used by the wife to purchase a property on the Central Coast (“the Central Coast property”) for a purchase price of $610,000.
On 21 January 1998 the wife borrowed $800,000 from Citibank secured against the Lower North Shore property to replace the insurance monies loaned to S Pty Ltd. Some of the funds borrowed were used to re-build the home on the Lower North Shore property.
In August 1999 the husband asserted S Pty Ltd borrowed $150,000, which it advanced to the wife, to complete building works on the Lower North Shore property.
The wife asserted she was obliged to re-finance the Citibank loan by borrowing $1,320,000 from HF Group secured on the Lower North Shore property and the Central Coast property. The wife asserted the Central Coast property was purchased in her name, rather than the name of KH Pty Ltd because she did not wish to incur a land tax liability. She also asserted she did not know at the time of the purchase that KH Pty Ltd had been deregistered. PL presently resides at the Central Coast property.
On 8 May 2000 the wife executed a “deed of trust”. The relevant parts of the trust deed are as follows:
“WHEREAS the trustee was the holder of (a) class and (b) class shares in a company known as [KH Pty Ltd] (herein called the company) which shares entitled her to all the voting rights at shareholders meetings but to no capital or dividend distributions.
AND WHEREAS the company owned [the Lower North Shore property].
WHEREAS the trustee married one [MR] (herein called the Husband) [in] November 1977.
AND WHEREAS the [Lower North Shore property] was at the date of the marriage occupied by the trustee as her home and the husband joined her in the occupation of same.
AND WHEREAS the husband was then and still is a Solicitor of the Supreme Court of New South Wales.
AND WHEREAS the children of Trustee’s previous marriage to [JL] hereis namely [PL] and [LL] were the holders of all shares in the company which were entitled to any capital and dividend distributions.
AND WHEREAS on the advice of her husband [MR] who is a solicitor, the trustee transferred the [Lower North Shore property] into her name to avoid the liability of Land Tax without paying any money to the company in regards to her acquisition of the property.
AND WHEREAS on the advice of her husband, the trustee allowed the company to be struck off the register.
AND WHEREAS since transferring [the Lower North Shore property] into her name the trustee received funds owned by the company being insurance monies with which she has (a) lent the sum of $800,000.00 to [S Pty Ltd] and purchased [the Central Coast property].
AND WHEREAS the trustee, jointly with her husband, commenced proceedings against [the Lower North Shore] Municipal Council partly relating to losses of asset value of the [Lower North Shore] property, which money if recovered should have belonged to [KH Pty Ltd].
AND WHEREAS the trustee has been advised that she holds all such property namely [the Lower North Shore property], [the Central Coast property] the Mortgage monies due from [S Pty Ltd], in trust for the company and any proceeds of the said Court proceedings against [the Lower North Shore] Council.
NOW THIS DEED WITNESSETH in consideration of the premises the trustee hereby declares she holds the following assets in trust for the company once it is restored to the register.
1.[The Lower North Shore property]
2.[The Central Coast property]
3.Mortgage to [S Pty Ltd]
4.Any proceeds recovered relating to a case against [the Lower North Shore] Municipal Council which may relate to property (if any) beneficially owned by the company.”
In November 2000 LL caused $211,000 to be borrowed by a company JCL, controlled by her, and which owned the home she occupied in South West Sydney, and advanced to the wife. The loan monies were secured by way of a mortgage registered over the Lower North Shore property. The borrowed funds were placed in a special account and drawn on by the wife, who asserted she was the sole signatory on the account, and that she also paid funds into the account for LL and her children’s expenses from time to time.
On 4 December 2000 an order was made by the Supreme Court of New South Wales reinstating [KH Pty Ltd], which, at the time of its reinstatement, was renamed PK Pty Ltd.

In 2001 the wife was approached by her financier to purchase an old timber ferry named “BMM” as an investment. BMM was eventually purchased by a company LJ Pty Ltd. One of the shareholders of LJ Pty Ltd is MER. The wife deposed to borrowing on the security of the Lower North Shore property the sum of $200,000 which she advanced to LJ Pty Ltd to acquire BMM.
In July 2001 the wife refinanced borrowings secured against the Lower North Shore property and obtained new borrowings from IAL. As she was unable to meet mortgage repayments, the wife listed the Lower North Shore property for sale in December 2001, and asserted it was eventually sold at a sale price of $4.3 million.
An ASIC search dated 1 February 2005 of PK Pty Ltd filed in the proceedings revealed that the directors at that time were LL, who was appointed on 30 April 2003 following FM’s resignation, and the wife. The wife is recorded as the beneficial holder of all shares (1 “A” class share, 1 “B” class share, 20 “C” class shares, 20 “D” class shares, 20 “E” class shares and 20 “F” class shares). There was no evidence before the trial Judge about the issue of the “C” class shares.
On 11 February 2005, the wife resigned as director of PK Pty Ltd and LL and her son were appointed as directors.
At a meeting of PK Pty Ltd on 14 February 2005, the company resolved to instruct solicitors in these proceedings.

Leave to appeal application

In his submissions in reply, senior counsel for the appellants noted:
“It is correct that no separate submissions were addressed to the question of leave, but the overall background of the matter and the questions involved reveal the importance and significance of the issue and the affidavit material provides the full factual and documentary background of the issue. Although the appeal is interlocutory in nature, and that is accepted, in fact it finally determines which court is going to decide which issues and particularly finally decides that the Applicants for leave to appeal have no right to be heard in the Family Court proceedings even though the Applicants for leave maintain that all of the property or perhaps the vast bulk of it being disputed between [MR] and [CR] [ ] is ultimately beneficially the property of the Applicant for leave, [LL].”

(a)Act and Regulations

The leave of the court is required in order to proceed with an appeal from an interlocutory order (s 94AA of the Act, Regulation 15A of the Family Law Regulations (1984) (Cth)). An exception exists if the interlocutory order is in relation to a “child welfare matter”.

(b)Relevant law

An applicant seeking leave to appeal from interlocutory orders must demonstrate that there has been an error of principle and/or a substantial injustice to one of the parties (Rutherford and Rutherford (1991) FLC 92-255) or that the issue is one of general importance: Aarons, GWP & Co v Knowles,CE (1995) FLC 92-627. See also Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 where Murphy J said:
“A distinction was sought to be made between those matters and ones in which the exercise of discretion determined substantive rights. The supposed distinction is inappropriate. There is no mutual exclusion. Sometimes exercise of discretion in practice or procedure effectively determines substantive rights.
However when substantive rights are not effectively determined, an appellate court should be extremely reluctant to interfere (see Sir Frederick Jordan in In re the Will of F. B. Gilbert (dec.)) (1946) 46 SR (NSW) 318, at p 323.”

(c)Absence of submissions

We have already referred to submissions of counsel for the appellants in reply about the question of leave to appeal. We accept the broad thrust of those submissions.

(d)Conclusions

We are satisfied in this case that it is appropriate we should consider in full the merits of the proposed grounds of appeal, and if those grounds disclose an error of principle and/or a substantial injustice to one of the parties, we determine that it would be appropriate to grant leave, and then determine the appeal.

Proposed Notice of Grounds of Appeal

(a)Grounds as set out in LL’s Affidavit
“As to the Refusal to Entertain Claims by the Appellants
1.   The trial judge erred in holding that the claims of the Appellants did not fall within the accrued jurisdiction of the Family Court of Australia.
2.   The trial judge erred in holding that the leave granted to the Appellants to intervene in the Family Court proceedings had been of a limited kind and that the purpose of that leave had expired or ceased to be of any effect, and that accordingly the Appellants had to apply for leave to intervene in the Family Court proceedings afresh.
3.   In the alternative to the ground specified in paragraph 2 above, the trial judge erred in declining to grant leave to the Appellants to pursue their claims in the Family Court proceedings.
4.   The trial judge erred in holding that in the exercise of his discretion, even if the claims of the Appellants fell within the accrued jurisdiction, he would exercise his discretion to decline to hear the Appellants’ claims.
5.   The trial judge erred in declining to exercise his power under the Corporations Act 2001 (Cth) and its predecessor legislation in respect of the Appellants’ claims.
As to the Order for Costs
6.   The trial judge erred both in principle and in the exercise of his discretion in ordering the Appellants to pay costs of the Husband.
As to the Orders of 16 May 2005
7.   The Orders were made without notice to the Appellants of the nature of the Orders to be sought and without giving to the Appellants any reasonable opportunity to be heard.
8.   The Appellants were denied natural justice in respect of the Orders.
9.   The Orders create a manifest conflict of interest on the part of the Wife, erode the rights and claims of the Appellants, prejudice the ability of the Appellants to pursue their claims and are otherwise unjust in all the circumstances.”

(b)Manner of dealing with grounds

As will become apparent from our reasons, we find it convenient after recording the submissions made in respect of the accrued jurisdiction grounds, to deal firstly with the grounds directed to the Court’s jurisdiction under the Corporations Act 2001. Our discussion of that ground will of necessity involve a consideration of LL’s status in the proceedings. We propose thereafter to consider the remaining grounds, so far as they are relevant, seriatim.

The accrued jurisdiction grounds

(a)The facts relied on to support reliance on accrued jurisdiction

The appellants’ counsel in his submissions set out the facts which are asserted constitute the common substratum of facts relevant to the appellants’ claim, and those of the husband and the wife. In summary it is asserted:
It is asserted the use of the insurance funds for the purposes set out above was a further breach of trust.

(b)The trial Judge’s findings on accrued jurisdiction and exercise of discretion

The trial Judge noted the husband submitted that for the Court to entertain the claims of the appellants it must be satisfied “that it has jurisdiction over the claims and secondly, that the claims are at least arguable”.
His Honour commenced his consideration of the jurisdiction question by referring to the second asserted basis of jurisdiction relied on by the appellants namely the Corporations Act. His Honour noted that s 1337C(1) of the Corporations Act “expressly confers jurisdiction upon the Family Court in relation to civil matters arising under the Corporations legislation”. He said that, accordingly, there was no need to rely on the associated jurisdiction of the Court pursuant to s 33 of the Act by reason of the Court having express jurisdiction.
The trial Judge noted the further submission made on behalf of the husband that “in relation to the claim which is based on general equitable doctrine the jurisdiction and power of the Family Court to deal with these claims could only arise under the accrued jurisdiction of the Court in s 31 of the Family Law Act”.
In turning to the question of the “accrued jurisdiction” claim his Honour said:
“In Warby v Warby (2002) FLC 93-091 the Full Court (Nicholson CJ., Finn and Strickland JJ.) held that the Family Court does have an accrued jurisdiction and that it extends to the determination of an issue against a third party. It follows that the Family Court is not restricted to the determination of a family law claim and it may exercise accrued jurisdiction to determine the non-federal aspects of a justiciable controversy of which the family law claim forms a part. The Full Court said at 88,790: ‘The factual circumstances of the case will determine whether the jurisdiction arises and whether it is appropriate to exercise the jurisdiction’.”
Having set out passages from Warby and Warby (2002) FLC 93-091 and Bishop and Bishop (2003) FLC 93-144, his Honour noted the submission of senior counsel for the appellants that if such claims were successful “there may be very little, if any, property of the parties to the marriage remaining and available to be dealt with in the family law proceedings”.
After reciting the identity of the parties in the application before him, his Honour recorded that the present directors of PK Pty Ltd were LL and her son and that the only shareholder of PK Pty Ltd was the wife. He also noted the wife was a director of PK Pty Ltd until early February 2005.
His Honour made the following findings:
· if the appellants successfully prosecuted their claims this would have a significant bearing on the outcome of the s 79 proceedings;
·     there was a close connection between the parties;
·     adequate notice of the proposed claim by the appellants and the basis of it was only given in February 2005;
·     earlier proceedings by LL were effectively discontinued in November 2001;
·     PK Pty Ltd participated in the proceedings in 2001 but thereafter had no involvement until February 2005, and on 23 December 2004 he had noted the earlier Supreme Court proceedings “are discontinued”;
·     the appellants’ claims were for damages for breaches of trust by the wife in November 1980 and that likely defences to be raised included laches and acquiescence in the purported wrongdoing;
·     the proceedings may not fully resolve claims because of the issue of the ownership of the “F” class shares; and
·     because the funds to be provided pursuant to the consent orders of 9 July 2003 between the wife and PL were sourced from the Lower North Shore property the wife should not be the beneficial owner of the “D” class shares and PL may also have to participate.
His Honour then said:
“142. This is not a case where, as in Warby, there is a single property that is central to the parties’ controversy. It is not a case where the parties to the marriage or one of them is claiming an interest in an item of property in which a third party also claims an interest. It is also not a case such as in Bishop where the financial affairs of the parties to the family law claims are and were intimately interwoven into the financial affairs of the third parties and it is impossible to determine the issue as to the parties [sic] financial affairs without unravelling them.
143. In this case the financial affairs of the parties are separate from those of the third parties and they are not intimately interwoven. There are significant issues between the parties to the marriage in the family law proceedings about whether each of them has made a full and frank disclosure of his/her financial circumstances and what has happened to various amounts from earnings, borrowings and the proceeds of sale of property. There are also valuation issues. However, these matters are discrete and have nothing to do with the claims of the third parties.
144. There will also be significant issues between the parties to the marriage in the family law proceedings about matters of contribution including what assets each party had at the commencement of the relationship and the source of funds during the relationship to acquire and maintain assets and pay expenses. As part of this exercise the wife will contend that a significant source of funds was the proceeds of the insurance claim when the house [on the Lower North Shore property] burnt down and later the proceeds of sale of this property. The wife now admits that she should not have used these funds as she did and thus she is guilty of gross wrongdoing. However, again I fail to see how this matter can be said to be intermingled with the issues as between the husband and the wife in the s 79 proceedings. In my view the issues in both claims are not the same.
145. It may be that if the third parties are able to prosecute their claims to a successful conclusion before the family law proceedings are determined then there will be very little, if any equity in the assets of the parties to the marriage and thus there is no purpose in the proceedings. It may be that there is a determination and conclusion of the family law proceedings and the third parties are then successful in obtaining a verdict against either the wife or both the wife and the husband. However, I do not accept that it follows that there is a single justiciable controversy. As the Full Court said in Bishop at 78,407:
‘On the other hand the dispute that clouds the extent of a party’s wealth may be an arms length commercial one between that party and a public lending authority such as [a] bank. The Family Court may be an entirely inappropriate forum to decide the dispute.’
146. In conclusion, I am of the opinion that in the circumstances of this case, there is no single justiciable controversy and that the claims by the third parties are severable and disparate from the claims in the family law proceedings. In my opinion, there is no common substratum of facts. I am of the opinion that the facts in this case do not support the accrued jurisdiction and it should not be exercised.”

(c)The parties’ submissions – accrued jurisdiction grounds

The thrust of the submissions made by the appellants is that the trial Judge was in error in finding there was not a single justiciable controversy which could be determined by this Court. In summary, senior counsel for the appellants submitted:
·the evidence in the appellants’ case and the s 79 proceedings will be substantially the same;
·that it is necessary to determine the appellants' claims to determine “the pool” in the s 79 proceedings;
·the parties were before the Court, and PL’s claims were resolved in this Court;
·the parties are part of the one family;
·that the claims were not severable and arise out of a common substratum of facts; and
·that the Court had the power to grant the relief sought.
The husband’s senior counsel in his oral submissions before the trial Judge referred to the appellants’ claim being essentially a claim that the wife had defrauded LL. He said such a claim was analogous to a claim in defamation. The claim, if successful, could reduce the pool available for distribution in the
s 79 proceedings, but was an entirely separate and disparate cause of action.

(d)Relevant law - accrued jurisdiction

The principles concerning what, in earlier cases and academic writings, are referred to as the “accrued jurisdiction” of the federal courts were first enunciated in decisions of the High Court not long after the establishment of the two federal superior courts. The ability of litigants to have one court determine, on a final basis, a controversy which involved both a federal claim, and a claim under a law of a State or the common law, was embraced as a practical, cost effective way of disposing of a dispute. The use of the accrued jurisdiction as a means of resolving such disputes fell into limbo with the introduction by the Parliaments of the various States and the Commonwealth of a statutory scheme of cross-vesting legislation, as a result of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) and in New South Wales, the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW).
This Court thereafter amended its rules and forms to make provision for dealing with claims which, in addition to a claim under the Act, relied on a cross-vested claim. This changed dramatically with the decision of the High Court in Re Wakim; Ex parte McNally & Ors (1999) 198 CLR 511.In that case the High Court held that the statutory scheme, insofar as it involved the conferral by the various States of jurisdiction on the Commonwealth, was an invalid law. As a consequence, the jurisdiction of federal courts to hear and determine a federal claim and also determine an issue involving state law and/or the common law once again had relevance. The Full Court of this Court has determined, in appropriate cases, the Court should exercise the jurisdiction, see Warby; Finlayson and Finlayson and Gillam (2002) FLC 93-121 and Bishop.
The core principles enunciated in the early cases establish the basis of the jurisdiction. Those principles have been clarified and expanded by subsequent decisions of the High Court particularly in Re Wakim and ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559.
The nature of the jurisdiction is referred to by Allsop J writing extrajudicially in his article “Federal Jurisdiction and the jurisdiction of the Federal Court of Australia in 2002”, Australian Bar Review (2002) 23(1) at 29. See also Zines L, “Federal, Associated and Accrued Jurisdiction”, in Opeskin B and Wheeler F, eds, The Australian Federal Judicial System, (Melbourne: Melbourne University Press, 2000). Allsop J, in describing and comparing accrued jurisdiction and associated jurisdiction said, at 19:
“These terms denote different concepts, which it is important not to confuse. ‘Accrued jurisdiction’ is that part of the matter which is not specifically federal. It is probably a term best avoided. The whole matter is federal if it arises under a federal law. It is apt to mislead if one thinks of State or common law jurisdiction clamping on to federal jurisdiction. It is all federal jurisdiction, if it is one controversy. The old notion of there perhaps being some ‘discretion’ as to whether the court will accept this ‘accrued’ jurisdiction may well be wrong (or at the very least, unreliable) in the light of recent statements in the High Court in Re Wakim, Edensor and Austral Pacific.” [footnotes omitted]

The trial Judge carefully analysed the appellants’ claim brought in reliance on the accrued jurisdiction as well as the Corporations Act grounds.
It appears to us, however, that the determinative factor for the trial Judge in dismissing the appellants’ application to intervene in the proceedings was his conclusion that if such leave was granted, and if the appellants sought to proceed with their substantive application, in which they relied not only on the accrued jurisdiction, but also the claims under the Corporations Act in this Court, that in the interests of justice the proceedings should be transferred to the Supreme Court of New South Wales because of the nature of the claims the appellants sought to agitate in the Court.
There is no doubt that if leave had been granted to the appellants to intervene that either the husband, or the Court on its own motion, could at any stage of the proceedings have transferred the proceedings to the Supreme Court of New South Wales, and no appeal would lie against such transfer.
The appellants’ case is, however, predicated on the assumption that the trial Judge failed to transfer the Amended Response to an Application with annexed Statement of Claim filed by the appellants on 15 February 2005 to the Supreme Court of New South Wales. That position is prima facie understandable as the Amended Response does not formally seek orders that the appellants be granted leave to intervene, but rather seeks declaratory and other financial relief.
The trial Judge at paragraph 147 of his reasons said:
“I should add that in this case even if there was a basis for a claim for relief under s 1342 [sic] of the Corporations Act and or a basis for the exercise of the accrued jurisdiction of the Family Court I would transfer the proceedings to the Supreme Court of New South Wales.”
We discern that the trial Judge’s refusal of the appellants’ application to intervene, and dismissal of their application, meant there was no application before the Court to transfer to the Supreme Court of New South Wales. What his Honour in fact did was to consider the transfer criteria in the Corporations Act assuming the intervention had been permitted. That consideration informed his Honour's overall exercise of his discretion in determining the jurisdictional issue in respect of the Corporations Act.
His Honour’s determination that it was not appropriate for the appellants’ claims to proceed in this Court is pivotal to his exercise of discretion. We consider the exercise of that discretion must be assessed and weighed having regard to both the merits of the Corporations Act claims and to the transfer provisions of the Corporations Act.
We discern from his Honour’s reasoning, the implication that if he had been dealing with the transfer application he would have made such a transfer in reliance on s 1337J(2)(b)(iii) of the Corporations Act. The criteria to be considered by courts in transferring proceedings in respect of the cross-vesting scheme and earlier corporations legislation are apposite to our consideration of his Honour’s determination. In Acton Engineering Pty Ltd v Campbell & Ors (1991) 103 ALR 437; 9 ACLC 1466 Black CJ said:

Section 44Section 44s 44s 44Section 44

“6. (2) will allow a wide range of considerations to be taken into account in deciding whether it is more appropriate for a proceeding to be determined in another court. The expression ‘the interests of justice’ is a broad one. (3) requires a court to have regard to the matters it specifies but it does not thereby limit the range of matters that fall for consideration under (2). Rather, (3) recognises that, Australia being a large country with widely dispersed main centres of population, it is necessary to have regard to practical connections between a proceeding, or an application in a proceeding, and a particular part or parts of Australia to see where the interests of justice lie when deciding whether another court is a more appropriate court to determine the matter. certainly does not deny the relevance of existing proceedings in other courts in the same or a related matter. These may, depending upon the circumstances, be of great importance in determining whether or not to transfer, but the section does not single out such considerations for special treatment.”

Also relevant are the comments of Davies J who said:
“5.The term ‘interests of justice’ is a broad term which enables all relevant factors to be taken into account. Those factors include matters relating to the efficiency, including the economy and expedition, of litigation and matters of convenience having regard to the location of witnesses and records. The term would also encompass matters of policy relating to the administration of justice by the Federal Court and the State and Territory Supreme Courts.”
Lockhart J referred to the transfer provisions as follows:
“This wide power of transfer ensures that administration of matters arising out of the Corporations Law is conducted sensibly and that applications or proceedings are not brought in courts with which they have no real connection or which are otherwise inappropriate as the forum for the particular proceeding or application. In practice, of course, the good sense of parties and their advisers should ensure in the vast majority of cases that proceedings are commenced or continued in the appropriate court.”
James Hardie & Company Pty Ltd v Barry (2000) 50 NSWLR 357 contains a comprehensive summary of the case law relevant to transfers between courts on “interests of justice” grounds. Mason P referred to earlier cases which provided “a useful checklist of factors relevant to the decision to order a transfer” on the basis of “interests of justice”. Those factors are:
·     application of substantive law;
·     forensic advantage or detriment conferred by procedural law;
·     the choice made by a plaintiff of a forum and the reasons for that choice;
·     substantive connections with the forum;
·     balance of convenience to parties and witnesses; and
·     convenience to the court system.
The trial Judge’s substantive reasoning on this issue appears in paragraph 153 of the judgment where his Honour said “[t]he claims by the third parties do involve an expertise in corporate law and equitable doctrine and there is no special advantage in the Family Court hearing the matter”. We are satisfied his Honour weighed this significant finding against the costs of two sets of proceedings and potential delay by all claims not being heard at the same time. We are also satisfied his Honour carefully considered the history of the proceedings, including the first Supreme Court proceedings. In short, we are satisfied his Honour addressed himself to the relevant factors identified by Mason P set out above.

Conclusions – Corporations Act grounds

Whilst we have found the trial Judge made some factual errors particularised above, which errors are readily understandable having regard to the manner in which the interlocutory proceedings were conducted before him, we are satisfied the factual errors were not fundamental to the exercise of his Honour’s discretion.
We are conscious that generally the Corporations Act and its predecessor legislation, which is designed to protect the public, should be afforded a wide interpretation (see Broken Hill Proprietary Co Ltd v Bell Resources Ltd (1984) 8 ACLR 609 at 613).
In summary we conclude:
·the usual remedy for breach of a director’s duties is an action relying on equitable principles brought by the company itself;
·rights and obligations created by s 124 of the Companies Act have been preserved by reason of transitional provisions between intermediate legislation and the Corporations Act and generally a liberal interpretation should be given to construing the legislation.
·sections 180 - 184 of the Corporations Act do not precisely replicate
s 124 of the Companies Act, but contain an expanded exposition of duties of company directors;
·there are significant differences between the provisions of s 124(3) of the Companies Act and s 1324 of the Corporations Act;
·proceedings for a declaration that ss 180-184 of the Corporations Act have been contravened are brought at the suit of ASIC, although others may intervene in such proceedings;
·no submissions were addressed to the trial Judge about limitation provisions under any relevant corporations legislation;
·no pleadings, or submissions were addressed to the trial Judge identifying identical or near identical rights and obligations, or breaches of such rights and obligations to those created by s 124 in intermediate legislation;
·the appellants relied on s 1324(10) of the Corporations Act to ground relief in damages and not compensation under s 1317H of that Act;
·there are conflicting single instance judgments as to whether damages can be awarded independently of the granting of an injunction or an application for an injunction under s 1324 of the Corporations Act (see Perpetual Trustee Australia Ltd & Anor v Perpetual Trustee Co Ltd (1995) 13 ACLC 66; Executor Trustee v Deloitte Haskins & Sells (1996) 14 ACLC 1,789 and Waterhouse v Waterhouse). The principles enunciated in these judgments were not argued before the trial Judge;
·no specific claim was made before the trial Judge that rights and obligations under s 124 could be traced via transitional provisions to
ss 180-184 and s 1324(10);
·the case which the appellants seek to rely on in this application is significantly different to the case conducted before the trial Judge;
·the trial Judge’s determination that if the appellants were permitted to intervene then, in the interests of justice, of his own motion he would have transferred the proceedings to the Supreme Court of New South Wales was in our view not outside the reasonable ambit of his discretion; and
·the trial Judge did not err in the exercise of his discretion in determining the Corporations Act issues having regard to the manner in which the case was conducted before him.
It follows we are not satisfied that proposed ground 5 has been established.

Conclusions - the accrued jurisdiction grounds

A significant part of the appellants’ submissions is directed to Ground 1.
We note that the trial Judge said in paragraph 147 of his reasons that even if there was a claim under s 1324 of Corporations Act and/or a basis for the exercise of the accrued jurisdiction, he would transfer the matter to the Supreme Court. At no time before the trial Judge, or before us, was it suggested that the accrued jurisdiction claims could or should be maintained independently of the Corporations Act claims. The intertwining of, and interdependence of the claims, is apparent from the relief sought by the appellants’ Statement of Claim.
In these circumstances, we do not consider it is necessary to examine in any detail the appellants’ submissions in respect of Ground 1. In so determining we note the appellants’ senior counsel’s submissions cited a number of authorities in this Court, and earlier decisions of the High Court determined prior to the introduction of the cross-vesting legislation in support of his contention that the trial Judge erred in the exercise of his discretion in saying he would, if he found the Court had accrued jurisdiction, transfer the proceedings to the Supreme Court of New South Wales. As we are satisfied the trial Judge was not in error in rejecting the claim which the appellants sought to agitate under the Corporations Act, we do not find it necessary to consider the issue of the exercise of discretion in respect of the accrued jurisdiction grounds. In passing, we note on the question of the exercise of discretion, once jurisdiction is found, the relevance of ASIC v Edensor Nominees and the views expressed extrajudicially by Allsop J in his article “Federal Jurisdiction and the Federal Court of Australia”.

The costs order 11 May 2005

On 11 May 2005 the trial Judge delivered an ex tempore judgment dealing with costs of the interlocutory proceedings on the jurisdiction issue. LL sought an order that the husband pay her costs. The husband sought an order that LL pay his costs and the wife pay the costs of LL including any amount LL was ordered by the trial Judge to pay to the husband. The trial Judge noted LL’s costs exceeded $90,000 and that she sought an order for indemnity costs.
The trial Judge noted and rejected the husband’s submission that costs should follow the event, but accepted his submission that LL had been wholly unsuccessful on the issues he had been asked to determine. His Honour repeated his earlier findings in the jurisdiction judgment about LL’s participation in the proceedings, or more accurately her lack of participation from 2001, and determined her application for costs should be dismissed.
Relying on s 117(2A)(e) the trial Judge determined LL had been wholly unsuccessful in the proceedings from the time she chose to “re-surface” and should pay the husband’s costs from May 2004.
The appellants’ submissions essentially fall into three areas. First, it is asserted if the appeal succeeds to any extent the costs order should be reversed. Second, it is submitted that it was the husband who instigated LL and PK Pty Ltd coming to the Court by reason of his actions and that until February 2005 he had “consented and cooperated with them being there”. Third, it is submitted that the appellants’ action in resisting expulsion from the proceedings could hardly be seen as unreasonable or inappropriate.
We accept the wide discretion available to a trial Judge in making an order for costs (see Penfold v Penfold (1980) 144 CLR 311; FLC 90-800). We also accept that, absent a successful challenge to his Honour’s orders in the jurisdictional application, there is scant basis for appellate interference in his Honour’s decision.
The result of our determination is that the appellants’ appeal in respect of the orders of 8 March 2005 should be dismissed. It follows that the trial Judge’s orders for costs, which were based on LL’s conduct in the proceedings and application being wholly unsuccessful, do not disclose appealable error.

Grounds relating to orders of 16 May 2005

The proceedings between the husband and the wife were relisted before the trial Judge on 10, 12 and 13 May 2005 and his Honour delivered reasons for judgment on 16 May 2005. For the purposes of this appeal it is not necessary for us to consider the totality of the competing applications then before the trial Judge. His Honour made the following orders which are particularly relevant to this appeal:
“1.The husband and the wife do all acts and things and execute all deeds, documents, instruments and writings necessary to enable the borrowing by [S Pty Ltd] or by the wife the sum of $280,000 and borrowing costs and interest for a period of 18 months in respect of the said $280,000 on the security of the following assets of [S Pty Ltd] being Lot 4 [ ], Lot 5 [ ] and Lot 6 [ ] and for the payment of that amount to the wife and the wife is authorised to pay from the amount borrowed her legal costs of proceedings in this court identified in the affidavit of [Mr SR] of 31 January 2005.
2.Order 2.2 made on 23 December 2004 be amended by the addition of the words “and monies required with respect to the legal costs of [S Pty Ltd] and the husband in relation to the Supreme Court of New South Wales Equity Division matter number 2564 of 2005 between [PK Pty Ltd] and [LL], Plaintiffs, and the husband, [S Pty Ltd] and the wife, Defendants.
…
10. For the purposes of giving effect to these orders the wife, as the holder of all of the shares in the capital of [PK Pty Ltd] conferring rights to vote at General Meetings of the members of [PK Pty Ltd] forthwith do all acts and things as are necessary to cause [PK Pty Ltd] to withdraw Caveat number [ ] lodged by it against the land [ ] owned by [S Pty Ltd] and, without limiting the generality of the foregoing for the purpose of causing [PK Pty Ltd] to withdraw that Caveat, the wife:
10.1As such shareholder, forthwith resolve to remove the present Directors of [PK Pty Ltd] from office as such and to appoint herself as its sole Director in their stead; and
10.2As such Director, forthwith resolve that [PK Pty Ltd] execute and lodge a Withdrawal of the Caveat in the prescribed form and cause [PK Pty Ltd] so to do.”
The orders sought immediately prior to the hearing by the husband were particularised in paragraph 1 of the trial Judge’s reasons. Amongst the relevant orders sought were:
“1.     The applicant husband is authorised to arrange for [S Pty Ltd] to borrow such sums of money on a security of its assets as it shall require in the ordinary course of business including monies required with respect to the company’s and the applicant husband’s legal costs in relation to the Supreme Court of NSW Equity Division matter number 2564 of 2005 between [PK Pty Ltd] and [LL], Plaintiffs, and the applicant husband, [S Pty Ltd] and the respondent wife, defendants.
2.       The respondent wife shall promptly do all acts and things and sign all documents necessary on her part to facilitate the borrowings referred to in Order 3 and, in particular, shall be restrained from lodging any Caveats against the titles of [S Pty Ltd’s] assets.
…
11.    That the wife forthwith execute a Withdrawal of Caveat Number [ ] lodged by her on the Titles of [S Pty Ltd] and deliver that withdrawal to the husband’s solicitors.
12.    That the applicant husband is authorised to pay the following amounts from the amounts being borrowed pursuant to the Orders of the 23 December 2004 on the security of the assets of [S Pty Ltd]:

Land Tax $26,271:88

Council Rates  $8,333:56
Water Rates  $1,084:21
Insurance Premium (approx)        $5,000:00
TOTAL$40,689:64

13. The husband is authorised to borrow an additional sum of $40,689:64 on the security of the assets of [S Pty Ltd].”

The wife sought a number of interim costs orders and in particular sought the following relief:
“8.     That the husband cause [S Pty Ltd] to do all acts and things and secure all deeds, documents, instruments and writings necessary to     enable the wife to obtain a further borrowing against the assets of [S Pty Ltd] namely (“the [S Pty Ltd] properties”)
a.[the first Inner West property];
b.[the second Inner West property];
c.[the third Inner West property];
d.[the fourth Inner West property].
to raise a further amount by way of loan in the sum of $380,000.00.
9.       That upon the said loan referred to in Order (8) hereof being obtained, the whole of the amount less an amount equivalent to meet the ongoing and continuing repayment of interest for the loan for a period of six (6) months be paid to the wife.
10.     That in the event the husband refuses to do all acts and things referred to in Order (8) hereof or the Respondent Wife is unable to raise finance against the [S Pty Ltd] properties then the husband shall cause the [S Pty Ltd] properties to be immediately listed for sale by private treaty for an amount greater than the sum of $6.5 million dollars.
11.     That upon the sale referred to in Order (10) hereof, the proceeds of the sale shall be applied as follows:
a.In adjustment of Council rates on settlement;
b.The payment of all outstanding statutory levies and fees;
c.In payment of agents [sic] commission on sale;
d.In payment of legal and all proper costs of sale;
e.In payment of all registered mortgages secured over the properties as follows;
f.The wife to received [sic] the sum of $380,000.00;
g.The husband to receive the sum of $100,000.00;
h.The net balance of the proceeds to be placed into a Controlled Money Account with the solicitor for the wife and husband to be joint signatories to the said account.”

The trial Judge noted:
“4.After the hearing of the applications the husband filed a further application in which he sought the following:
‘The wife, as the holder of all of the shares in the capital of [PK Pty Ltd] (‘the company’) conferring rights to vote at General Meetings of the members of the Company forthwith do all acts and things as are necessary to cause the Company to withdraw Caveat number [ ] (‘the Caveat’) lodged by it against the land in Folio Identifier [ ] and, without limiting the generality of the foregoing for the purpose of causing the Company to withdraw that Caveat, order that the respondent wife:
(a) As such shareholder, forthwith resolve to remove the present Directors of the Company from office as such and to appoint herself as its sole Director in their stead; and
(b) As such Director, forthwith resolve that the Company execute and lodge a Withdrawal of the Caveat in the prescribed form and cause the Company so to do.’
I heard this application on 13 May 2005.”
Not surprisingly, the trial Judge said:
“28. I had some difficulty understanding what the wife is now contending given that she was opposing what the husband was seeking and yet was seeking to borrow funds on the security of the assets of [S Pty Ltd] to pay her costs. I inferred that notwithstanding what she previously said about the insolvency of [S Pty Ltd] she accepted that there is sufficient equity in the assets to meet the orders sought. This was confirmed when I was told during the recent hearings that there is some equity in three of the [Inner West property] lots over which [PK Pty Ltd] has not lodged a caveat and that the wife proposes that any borrowings to pay her costs be secured on the titles of these three properties. However, the orders of 23 December 2004 enable security on all of the assets of [S Pty Ltd].”
At paragraph 45 of his reasons the trial Judge said:
“45. I am not prepared to make Orders 9 to 14. The husband will have to comply with any order I make. Secondly, I am not prepared, pending the hearing of the applications for final orders, to put the assets of [S Pty Ltd] at risk of being sold. I have concerns that the wife would seek, if she could, to engineer or manipulate a situation whereby the underlying assets of [S Pty Ltd] are sold before the final hearing. This is what she seeks as final orders. This means that any borrowing by the wife on the security of such assets should be on terms that any default within say a period of 18 months would not put the assets at risk. The borrowing therefore may have to be inclusive of interest and costs for least a period of 12–18 months. As well, the borrowing can only be on the three properties owned by [S Pty Ltd] that are not the subject of the [PK Pty Ltd] caveat. As well, the borrowing will be subordinate to any borrowing by the husband pursuant to the orders of 23 December 2004 and any further orders I make in relation to the application by the husband.”
His Honour also noted that he proposed to make an order to permit the husband to borrow funds to defray the costs of the fresh Supreme Court proceedings which by this time had been commenced by the appellants. He thereafter said:
“49. I am also going to make an order that the wife do all acts and things to ensure that the orders made in December 2004 are complied with and are not frustrated because the wife has since ceased to be a director of [PK Pty Ltd]. The wife was a director and the directors are now her daughter and grandson. The wife remains the owner of the issued capital and thus has the power to do what the order will require her to do. Further, I am of the view that I have the power to make the order under s 114(3) of the Act. The wife did not seek to review the December order.”
The appellants contended that the orders were made on 16 May 2005 without notice to them, and without reasonable opportunity for them to be heard. They submitted that they were denied natural justice. They finally contended that the orders placed the wife in a position of a conflict of interest, and that the orders, if and when they were put into effect, “reduce or erode” the rights of the appellants.
It is clear that the appellants were no longer parties to the proceedings by reason of the trial Judge’s orders of 8 March 2005.
The appellants submitted that when the husband and the wife were before the trial Judge on 11 May 2005 the appellants were still represented by counsel. At that time Ms C, who appeared for the husband, sought to raise the issue of the caveat which PK Pty Ltd had lodged after instituting further Supreme Court proceedings. The transcript discloses an “unidentified speaker” who is clearly counsel appearing on behalf of the appellants, asserting that the proper place to agitate the question of the new caveat was the Supreme Court of New South Wales. Having noted the trial Judge said he proposed to continue the matter the next day, counsel for the appellants said “I suppose we want some notice too, if we’re going to effectively be called back into these proceedings”. The following exchange took place between his Honour and counsel:
“HIS HONOUR: Well, that’s a matter for those advising the husband and the wife because I’m hearing you and I’m happy for your assistance, but at the moment, you’ve got no standing.
UNIDENTIFIED SPEAKER: Exactly. That’s exactly my point. That’s exactly the point I’m trying to make, your Honour, that we are no longer a party to these proceedings, and if they want to seek some order against us, well, it’s up to them to bring us back.
HIS HONOUR: I understand that.”
Subsequently the solicitors for the husband wrote to the appellants’ solicitors giving notice of the orders to be sought which were as follows:
“1.That the respondent wife will do all acts and things necessary and sign all necessary documents to enable the applicant husband to borrow the sum of $200,000:00 on the security of [the North West Sydney property], [the Central Coast property], the vessel “[WW]” and the contents of safe deposit box number [ ] in the name of the wife and [LL] at the Commonwealth Bank of Australia, [ ].
2.The respondent wife be injuncted from borrowing any monies on the security of [the North West Sydney property], [the Central Coast property], the vessel “[WW]” and the contents of safe deposit box number [ ] in the name of the wife and [LL] at the Commonwealth Bank of Australia, [ ], without giving the applicant husband at least two [2] weeks notice in writing.”
The appellants’ submissions in respect of order 10 made by the trial Judge are wide ranging and refer to matters not included in the Appeal Books. Amongst the submissions is a submission that the wife was, by reason of being required to remove the directors of PK Pty Ltd, in a position of conflict of interest having resigned from that position in February 2005.
There was no evidence before us that the appellants sought a stay of the trial Judge’s orders of 16 May 2005, nor was there any evidence that they sought to relist the matter before the trial Judge to bring to his attention the orders made without notice to them. Whilst the right of a person, or corporate or other entity, who is not a party to proceedings, but who has an interest in orders made, to appeal such order as a matter of natural justice is not in doubt (Panayotides v Panayotides (1997) FLC 92-733) it appears to us the procedure referred to by the Full Court in Wilkes and Wilkes (1981) FLC 91-060 was the appropriate procedure to have been implemented in this case prior to proceeding with the appeal against the orders of 16 May 2005, notwithstanding that the appellants were not parties to the proceedings. We are fortified in this approach in the circumstances of this case by reference to the transcript of the proceedings of 11 May 2005 which we have set out above. There it was apparent the trial Judge did hear submissions from counsel on behalf of the appellants notwithstanding they had at that time no status in the proceedings. We accept if the trial judge had refused to hear the appellants after 16 May 2005 on application to him, in those circumstances, we could have heard the appeal against the orders of that date. There is simply no evidence before us the matter came back before the trial Judge after he made orders on 16 May 2005. Accordingly we find no merit in grounds 7, 8 and 9.

The leave to appeal application - conclusions

This application for leave to appeal involves an examination of the exercise of discretion by a trial Judge. The limits on interference by an appellate court with the exercise of discretion are well known (see Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343 at 345 per Asquith LJ and House v The King (1936) 55 CLR 499).
We discern no error of principle by the trial Judge in his determination of the jurisdiction issue, and significant merit in his findings that the expertise to deal with claims sought to be litigated in this case could be more appropriately determined in the Supreme Court of New South Wales. Accordingly, we are satisfied the relevant tests to grant leave are not satisfied, and the appellants’ application should accordingly be dismissed.

ORDERS

That the application for leave to appeal the orders made on 8 March 2005, 11 May 2005 and 16 May 2005 is dismissed.
The parties are at liberty to file written submissions with regard to the costs of the application for leave to appeal and the appeal in accordance with the following timetable:
(a)on behalf of the appellants within 21 days of the date hereof;
(b)on behalf of the respondent in response thereto within 21 days thereafter;
(c)on behalf of the appellants in reply thereto within seven days thereafter; and
(d)that each submission have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.

I certify that the preceding 224 paragraphs
are a true copy of the reasons
for judgment delivered by
this Honourable Full Court.

Associate