M v L - [2017] SASC 39

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
M v L & ANOR
[2017] SASC 39
Judgment of The Honourable Justice Hinton
22 March 2017
FAMILY LAW AND CHILD WELFARE - THE FAMILY LAW ACT 1975 (CTH) AND RELATED LEGISLATION - JURISDICTION - EFFECT OF CROSS-VESTING LEGISLATION - PARTICULAR CASES - WHEN TRANSFER GRANTED
FAMILY LAW AND CHILD WELFARE - THE FAMILY LAW ACT 1975 (CTH) AND RELATED LEGISLATION - JURISDICTION - PROCEEDINGS IN RELATION TO CONCURRENT, PENDING OR COMPLETED PROCEEDINGS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PARTIES AND REPRESENTATION - PERSONS UNDER LEGAL INCAPACITY OTHER THAN CHILDREN
EQUITY - TRUSTS AND TRUSTEES - APPOINTMENT, REMOVAL AND ESTATE OF TRUSTEES - APPOINTMENT OF NEW TRUSTEES - BY THE COURT - JURISDICTION
M and her former husband L are the sole directors of and sole shareholders in JPH Pty Ltd (the company), a company that is the trustee of the JPH Trust (the Trust). M and L are also the sole beneficiaries of the Trust.
M has instituted proceedings in this Court seeking an order under s 36 of the Trustee Act 1936 (SA) (Trustee Act) appointing a fresh trustee of the Trust in substitution for JPH Pty Ltd. M and L are also embroiled in property proceedings in the Family Court of Australia.
L contends that this Court has no power to entertain M’s application as it falls within the exclusive jurisdiction of the Family Court. In the alternative, he makes an application for the transfer of these proceedings to the Family Court pursuant to s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (Cross-vesting Act).
L also makes an application that this Court should conduct an inquiry as to whether M is a person under a disability within the meaning of rule 78 of the Supreme Court Civil Rules 2006 (SA).
Held:
1. The evidence does not support the making of an inquiry as to whether M is a person under disability. The evidence does not raise an apprehension that M is incapable of making rational decisions about taking, defending or settling proceedings (or to communicate decisions to others). Further, it does not raise an apprehension that she is a person who is not capable of managing her own affairs.
2. The application made by M under the Trustee Act is a matrimonial cause within the definition of the Family Law Act 1975 (Cth). The Supreme Court therefore has jurisdiction to hear the proceedings pursuant to the Cross-vesting Act.
4. In the interests of justice the Family Court is the more appropriate forum to hear and determine M’s application under the Trustee Act. L’s application under the Cross-vesting Act is granted and M’s application under the Trustee Act is transferred to the Family Court.
Trustee Act 1936 (SA) s 36; Family Law Act 1975 (Cth) s 4, s 39, s 40, s 78, s 79, s 80; Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) s 4, s 5; Supreme Court Civil Rules 2006 (SA) r 78, referred to.
Slaveski v State of Victoria (2009) 25 VR 160; Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511; Kennon v Spry (2008) 238 CLR 366; Manning v Russell & Anor (2015) 123 SASR 135; Lansell v Lansell (1964) 110 CLR 353; BHP Billiton Ltd v Schultz (2004) 221 CLR 400; Cini v Pets Paradise Franchising (SA) Pty Ltd (2008) 102 SASR 177, discussed.
Goddard Elliott v Fritsch [2012] VSC 87; Owners of Strata Plan No 23007 v Cross (2006) 153 FCR 398; Kowalski v Kowalski (1992) 109 FLR 193; Kavan v Mallery (2015) 295 FLR 326; In the Marriage of Davidson (1994) 117 FLR 335; Jamine v Jamine [2012] FamCAFC 104; Valceski v Valceski (2007) 70 NSWLR 36 , considered.

M v L & ANOR
[2017] SASC 39
Civil
HINTON J.
Overview

M and her former husband L are the sole directors of and sole shareholders in JPH Pty Ltd (the company), a company that is the trustee of the JPH Trust (the Trust). M and L are also the sole beneficiaries of the Trust.
In 2013 the Trust purchased a business. Since then L has, in effect, run that business without any input from M. M is concerned that the business is not being run properly by L and the Trustee. She has been unsuccessful in her attempts to gain access to the books and records of the business sufficient to satisfy her to the contrary. M is concerned to protect her beneficial interest. To do so she has instituted proceedings in this Court seeking an order under s 36 of the Trustee Act 1936 (SA) (Trustee Act) appointing a fresh trustee of the Trust in substitution for the company.
M and L are also embroiled in property proceedings in the Family Court of Australia.[1] It is L’s contention that this Court has no power to entertain M’s application under the Trustee Act as that application constitutes a matrimonial cause and falls within the jurisdiction of the Family Court of Australia which he says is exclusive. In the alternative, L contends that all of M’s concerns can and should be addressed in the Family Court proceedings. Consequently, he has made an application in this Court seeking an order that M’s application be transferred to the Family Court pursuant to s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (Cross-vesting Act). In reply M challenges the characterisation of her application as a matrimonial cause, challenges the assertion that the jurisdiction of the Family Court is exclusive, and contends that in any event it is not the case that her beneficial interest nor that of L will necessarily be considered by the Family Court and that this Court should act to protect her beneficial interest under the Trustee Act.
[1] Their names and details surrounding the proceedings are suppressed pursuant to s 121 of the Family Law Act 1975 (Cth).
As an adjunct to his application L challenges M’s fitness to pursue her application. He contends that this Court should conduct an inquiry as to whether she is a person under a disability within the meaning of rule 78 of the Supreme Court Civil Rules 2006 (SA) (SCR). If L was successful in his application, it would mean that counsel for M would be in a position that he is instructed by someone who is unfit to do so. He could not, therefore, proceed with M’s application. I proceeded to hear this application first for the obvious reason that if it succeeded I could not proceed to hear M’s application under the Trustee Act nor the cross-vesting application until a litigation guardian was appointed.
On 29 September 2016 I dismissed L’s application that an inquiry be conducted as to whether M was a person under a disability.
Thereafter submissions on the remaining applications were heard on 10 October 2016. I reserved judgment on M’s application under the Trustee Act and L’s cross-vesting application. I then made the following orders with the consent of the parties:
1.   Fortnightly from Monday 10 October 2016 the defendants shall serve upon the plaintiff a profit and loss statement and a balance sheet for the previous two week period of the operation of [JPH Pty Ltd].
2.   The trustees of the [Trust] are prohibited from in any way making any distribution of trust property to the beneficiaries of the [Trust] or drawing down on any such property for the benefit of the said beneficiaries.
3.   The trustees of the [Trust] be at liberty to pay the first defendant a wage in the amount of $2,000.00 per fortnight in respect of work done by him at [JPH Pty Ltd].
The intent of these orders was to provide M with a measure of protection from any inappropriate conduct on the part of L.
For the following reasons, I grant L’s application under the Cross-vesting Act and order that M’s application under the Trustee Act be transferred to the Family Court of Australia. Accordingly, I do not consider the merits of M’s application under the Trustee Act.
Should an inquiry into the appointment of a litigation guardian for M be undertaken?
a. Introduction
In Goddard Elliott v Fritsch Bell J explained:[2]
The common law treats human individuals as having legal personality and thus the capacity for legal rights and obligations. The individual is taken to have legal personality because ‘rights and duties involve choice’ and individuals ‘naturally … enjoy the ability to choose’. For people, legal personality is thus a birthright. This foundational principle of the common law is also an international human right which, in Victoria, is protected by the Charter of Human Rights and Responsibilities Act 2006 (Vic).
Legal personality and the capacity for legal rights and obligations imply individual autonomy. That a person has the mental capacity to make decisions for themselves is implicitly asserted every time someone takes a legal step, including that of commencing or defending a legal proceeding. The assertion is afforded respect and not challenged unless capacity is made a legitimate issue. There is a presumption that everybody of full age has the mental capacity to manage their own affairs, including the commencement and defence of legal proceedings. That a party to legal proceedings has that capacity is the working assumption of the courts until the contrary is proven. The burden of proving to the contrary rests with those asserting incapacity.
It has been held that ‘juristic acts … can only be done by persons having the necessary mental capacity’ and that the ‘law requires that a person must have the necessary mental capacity if he is to do a legally effective act or make a legally effective decision for himself’. This expresses in the negative the principle expressed in the positive which I have been discussing. This negative principle is for the protection of the legal process and all of the parties to legal proceedings. For the purposes of the present case, one aspect of the principle needs to be emphasised: it is just as much an interference with the individual autonomy which the law respects for a legal consequence to be imposed on someone lacking mental capacity as it is to deny the right to take such a step to someone who has it.
(footnotes omitted).
[2] [2012] VSC 87 at [545]-[547].
The appointment of a litigation guardian is an exception to the foundational principle of the common law to which Bell J refers. As an interference with individual autonomy it is not a step to be taken lightly. Ultimately whether such step be taken is a matter for the Court. It is a step taken to protect the party under a disability. In addition it assures all other parties that a competent person instructs counsel on how the proceedings are conducted, that a competent person is responsible for costs, and that a competent person is responsible for seeing that any eventual judgment is obeyed. Further, the appointment of a litigation guardian protects the processes of the Court from abuse.
The power to appoint a litigation guardian to stand in place of a person under a disability is derived from the inherent power of this Court being a power to do all necessary to the effective exercise of jurisdiction granted[3] in addition to this Court’s parens patriae jurisdiction.[4] SCR 78 and 79 may be seen as made pursuant to the rule-making power supported by the inherent and parens patriae powers.
[3] NH v Director of Public Prosecutions (SA) (2016) 90 ALJR 978 at [67]-[68] (French CJ, Kiefel and Bell JJ); Keramianakis v Regional Publishers Pty Ltd (2009) 237 CLR 268 at [36] (French CJ).
[4] Under s 17(2) of the Supreme Court Act 1935 (SA) this Court enjoys the same jurisdiction to act as parens patriae as did the High Court of Chancery; Children, Youth and Women’s Health Services Inc v YJL, MHL and TL (2010) 107 SASR 343 at 348 (White J); Chignola v Chignola (1974) 9 SASR 479 at 480 (Bray CJ), 487 (Wells J), 489-92 (Sangster J); Re Eve [1986] 2 SCR 388. That jurisdiction was described by Lord Eldon LC in Wellesley v Duke of Beaufort (1827) 2 Russ 1 at 20; 38 ER 236 at 243 as follows:
[I]t belongs to the King, as parens patriae having the care of those who are not able to take care of themselves, and is founded on the obvious necessity that the law place somewhere the care of individuals who cannot take care of themselves, particularly in cases where it is clear that some care should be thrown around them.
See also, Secretary, Department of Health and Community Services v JWB (1992) 175 CLR 218 at 258 (Mason CJ, Dawson, Toohey and Gaudron JJ); Human Rights and Equal Opportunity Commission (2006) 233 ALR 432 at [23]-[24] (Black CJ, Moore and Finkelstein JJ); Howell v Lewis (1891) 61 LJ Ch 89 at 89 (Kekewich J).
SCR 78 provides:
78—Representation of party under disability
(1)As a general rule, a person under a disability (a protected person) may only take or defend proceedings through a guardian who has authority to represent the interests of the protected person (a litigation guardian).
Exception—
The Court may, however, permit a protected person to act personally in bringing, or taking any step in, proceedings.
(2)The litigation guardian is responsible for the conduct of the proceedings on behalf of the protected person and may take any step in the proceedings and do anything else that the protected person might have done if of full age and capacity.
(3)A party who becomes aware that another party is a protected person and is not represented by a litigation guardian as required by this rule must inform the Court of that fact.
(4)A judgment or proceeding of the Court is not invalid because a party was not represented by a litigation guardian as required by this rule, but the Court may set aside the judgment or proceeding if satisfied that the party has been substantially prejudiced through the lack of such representation.
SCR 4 defines a person under a disability as, relevantly, a person who is not physically or mentally able to manage his or her own affairs, or, to make rational decisions about taking, defending or settling proceedings (or to communicate decisions to others).
The possible consequence to which SCR 78(4) refers makes plain the interest that a party has in raising with the Court the possibility that the opposing party is a person under a disability. That consequence also highlights the responsibility of counsel and those that instruct them to raise with the Court the possibility that a party is a person under a disability.[5] Indeed the Court has a responsibility to act of its own motion if it detects reason to question that a party is under a disability.[6] The importance of the parties being competent and the consequence if one or other is not explains the duty imposed by SCR 78(3).
[5] Goddard Elliott v Fritsch [2012] VSC 87 at [568]-[569] (Bell J).
[6] As much is implicit in SCR 79(3).
Once there is raised a question as to whether a party is under a disability, the Court is duty bound to decide whether an inquiry into the issue should be undertaken.[7]
[7] Allregal Enterprises Pty Ltd v Carpaolo Nominees Pty Ltd [2009] WASCA 33 at [8] (Pullin JA).
In Goddard Elliott v Fritsch Bell J noted:[8]
[8] [2012] VSC 87 at [563].
When the issue is properly raised, it is the duty of the court at the earliest opportunity to examine whether the person has the mental capacity which is required. The principle is of long standing and was applied in the nineteenth century in Howell v Lewis. Faced with conflicting evidence about the state of mind of a party, Kekewich J (a judge of considerable authority) proceeded in this manner:
I have some evidence of weakness of intellect which I cannot disregard, and that evidence includes medical evidence; and I think I should be doing wrong if I were to say that the presumption which I have mentioned should prevail. I think I must regard it as if there were a dispute, and I think that that dispute must be decisively settled before we can get on any further.
The same course was adopted in Allregal Enterprises Pty Ltd v Carpaolo Nominees Pty Ltd. Faced with an unrepresented person who appeared to be mentally ill, Pullin JA referred her to the Public Advocate for a capacity assessment and report. His Honour stated (or understated) this to be the applicable principle:
[I]f the court is put on notice by evidence that a person may not have the capacity to manage his or her own affairs, then in my opinion, the court is duty bound to decide whether the person does have capacity. To proceed without determining the issue means that the court is participating in what may be irregular proceedings.
(footnotes omitted).
Bell J considered that the inherent jurisdiction enjoyed by the Supreme Courts would support any order that the person thought to be under a disability be examined by medical practitioner and a report provided to the Court.[9] In my view the parens patriae jurisdiction would also support such action.
[9] Goddard Elliott v Fritsch [2012] VSC 87 at [564] (Bell J) citing In re WM (1903) 3 SR (NSW) 552 at 567-8 (Owen J, Walker and Pring JJ agreeing); Re Magavalis [1983] 1 Qd R 59 at 63-4 (McPherson J).
In this matter L does not contend that M is a person under a disability, rather he submits that the evidential material filed in support of M’s application under the Trustee Act and by her in the Family Court gives rise to sufficient reason to inquire into the issue.
On L’s application the question to be answered is drawn from SCR 4 and the definition of a person under a disability, namely, whether sufficient reason arises to inquire into whether M is not physically or mentally able to manage her own affairs, or, to make rational decisions about taking, defending or settling the proceedings under the Trustee Act and L’s cross-vesting application (or to communicate decisions to others). SCR 4 is framed in conclusory terms. It does not purport to state a test for determining when a person is not physically or mentally able to manage his or her own affairs, or when a person is not physically or mentally able to make rational decisions about taking, defending or settling the proceedings or communicating decisions to others.
As to the relevant test, in Slaveski v State of Victoria Kyrou J said with respect to the relevant Victorian rules of court:[10]
There is no universal test for determining whether a person is capable of managing his or her affairs. Lack of capacity is usually denoted by a person’s inability to understand the nature of an event or transaction when it is explained. In relation to litigation in which a person is a party, the person must be able to understand the nature of the litigation, its purpose and its possible outcomes, including the risks in costs.
The words “in relation to the proceeding” in r 15.01 are important because they focus on the person’s ability to bring or defend a particular proceeding rather than on whether the person is able to manage his or her affairs generally or in relation to some other transaction. As Chadwick LJ observed in Masterman-Lister v Brutton & Co: “The test is issue specific; and, when applied to different issues, it may yield different answers.” Accordingly, the fact that a person has been involuntarily admitted to a psychiatric facility under mental health legislation is not conclusive proof of incapacity under r 15.01, but it may be relevant to an assessment of such incapacity.
The question of incapacity in relation to litigation must be examined against the facts and subject matter of the particular litigation, the number and complexity of the issues involved and the identity, number and interests of the other parties, particularly opposing parties. A person can have the requisite capacity for one proceeding and lack it for another.
Where a person is a party to a proceeding and is legally represented, he or she will be incapable of managing his or her affairs in relation to the proceeding if he or she does not have the mental capacity to understand the nature of the acts or transactions in respect of which he or she needs to give instructions to the lawyer.
(footnotes omitted).
[10] (2009) 25 VR 160 at 183. See also, Manning v Russell (2015) 123 SASR 135; Hollidge v Pomeroy [2014] SASC 45.

In my view these considerations apply generally to SCR 78 where one is dealing with a disability arising from mental incapacity.
I pause to note that a person under a disability for the purposes of the law and SCR 78, is not necessarily a person under a disability generally. A person can be under a disability and yet be capable of attending to his or her daily needs and activities. It is not the case then that, for example, a person under a disability is to be equated with a person suffering from a severe mental illness. The law prescribes no fixed standard of capacity. In Goddard Elliott v Fritsch Bell J observed:[11]
To examine whether a person has mental capacity for specific legal purposes is not to examine whether they should be subjected to involuntary medical treatment under mental health legislation or have an administrator or guardian appointed to manage their property and personal affairs under guardianship and administration legislation. A person can lack the mental capacity to participate in legal proceedings yet be capable of performing the usual activities of daily life. It is therefore not a requirement for the appointment of a litigation guardian or someone else with representative responsibility for the person that the person is proved to be of general unsound mind or a ‘lunatic’. The responsibility of the lawyer to be reasonably satisfied of the client’s capacity to instruct is to be understood on the same basis.
The standard of capacity which is required for a person to participate in legal proceedings is the same standard of capacity which is required for a person to enter into legal transactions. That required standard of capacity was stipulated by Dixon CJ, Kitto and Taylor JJ in Gibbons v Wright in these terms:
The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation.
As you can see, the standard is based on the subjective understanding of the person. The understanding which is required is contextual and relates to the nature of what the person is doing. The question is not whether the person can do the legal act intentionally, as by putting their signature to a deed; it is whether they can understand the nature of the legal consequences which will be brought about. On the facts, these principles are important in the present case.
(footnotes omitted).
[11] [2012] VSC 87 at [554]-[555].
Bell J then referred to the English authority of Masterman-Lister v Brutton & Co (Nos 1 and 2).[12] In that case Kennedy LJ also referred to the standard as being issue specific. He emphasised:[13]
… the issue-specific nature of the test; that is to say the requirement to consider the question of capacity in relation to the particular transaction (its nature and complexity) in respect of which the decisions as to capacity fall to be made.
[12] [2003] 1 WLR 1511.
[13] Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511 at [27].
To similar effect in that same case Chadwick LJ held:[14]
The authorities are unanimous in support of two broad propositions. First, that the mental capacity required by the law is capacity in relation to the transaction which is to be effected. Second, that what is required is the capacity to understand the nature of that transaction when it is explained.
[14] Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511 at [58].
In my view SCR 78 requires no less.
In his judgment Kennedy LJ quotes from the unreported judgment of Boreham J in White v Fell.[15] Boreham J said:[16]
The expression 'incapable of managing her own affairs and property' must be construed in a common sense way as a whole. It does not call for proof of complete incapacity. On the other hand, it is not enough to prove that the plaintiff is now substantially less capable of managing her own affairs and property than she would have been had the accident not occurred. I have no doubt that the plaintiff is quite incapable of managing unaided a large sum of money such as the sort of sum that would be appropriate compensation for her injuries. That, however, is not conclusive. Few people have the capacity to manage all their affairs unaided ... It may be that she would have chosen, and would choose now, not to take advice, but that is not the question. The question is: is she capable of doing so? To have that capacity she requires first the insight and understanding of the fact that she has a problem in respect of which she needs advice ... Secondly, having identified the problem, it will be necessary for her to seek an appropriate adviser and to instruct him with sufficient clarity to enable him to understand the problem and to advise her appropriately ... Finally, she needs sufficient mental capacity to understand and to make decisions based upon, or otherwise give effect to, such advice as she may receive.
[15] Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511 at [18] citing White v Fell (unreported) 12 November 1987, Boreham J.
[16] Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511 at [18].
Clearly Boreham J is dealing with rules of court differently expressed to SCR 4 and 78. However, in my view Boreham J’s approach resonates with both limbs of the definition of a person under a disability contained in SCR 4.
The same approach is also evident in Kyrou J’s judgment in Slaveski v State of Victoria[17] and in Edmonds J’s judgment in Owners of Strata Plan No 23007 v Cross.[18]
[17] (2009) 25 VR 160 at [32].
[18] (2006) 153 FCR 398 at [61].
It must be recalled that in this case I am not, as yet, asked to determine whether M is a person under a disability, just whether an inquiry into that question should be undertaken. In Manning v Russell[19] Nicholson J was in the same position. He observed:[20]
I am at the stage, not of embarking on any such inquiry but, of determining whether, following the second defendant’s request, an order for such an inquiry should be made. No authority has been drawn to or has come to my attention which sets out the appropriate test for this threshold issue. It cannot be the case that such an inquiry should be embarked upon merely upon the request of another party who, ordinarily, will be opposed to the interests of the party into whose capacity they want the Court to inquire. By too readily acquiescing in any such request the Court will risk arming an adversary with an unwarranted forensic opportunity which might serve to unfairly increase the expense and complexity of the litigation for their opponent.
(footnote omitted).
[19] (2015) 123 SASR 135.
[20] (2015) 123 SASR 135 at [16].
After referring to Slaveski and Owners of Strata Plan No 23007 Nicholson J determined:[21]
The question before me is not that which was before Kyrou J in Slaveski, that is, whether or not to make the order but only whether or not I should exercise the discretion open to me, either under the Rules or pursuant to the inherent jurisdiction of this Court, to order that an inquiry into this question be undertaken. I take the view that before exercising this discretion, I need to be persuaded by the second defendant that in the context of this matter and on the basis of such evidence available and relied upon, I have a real apprehension that the plaintiff may be a “person under a disability”, as defined.
[21] Manning v Russell & Anor (2015) 123 SASR 135 at [20].
Bearing in mind the foundational principle to which Bell J refers in Goddard Elliott and the caution to be exercised before an individual’s personal autonomy is interfered with, I agree with Nicholson J’s approach and adopt the same here. That said, I do not disregard Kyrou J’s approach in Slaveski nor, for that matter, Edmonds J’s and Boreham J’s in Owners of Strata Plan No 23007 and White v Fell respectively. The factors that each identified, relevant as they are to the ultimate question, are also relevant to the antecedent question of whether there arises real apprehension that the plaintiff may be a “person under a disability”.
b. The medical evidence concerning M’s mental health
In her first affidavit, sworn 1 August 2016 and filed in support of her application under the Trustee Act, M deposed as follows:
29.   In January 2005 there was an incident which caused me to suffer stroke-like symptoms and which left me with cerebral damage.
30.   I was hospitalised from January 2005 until March 2005 or thereabouts.
31.   Based on medical notes and photographs I have seen, I was covered with cuts and bruises. I was found by [L] … on my bed at home in an unconscious or semi-conscious state. I was taken to hospital the next day.
…
33.   I have undertaken rehabilitation since my hospitalisation for the incident, and my medical condition has improved in many respects.
34.   Nonetheless, it was appropriate (because of the enduring effects of the incident on my health and mental condition) for me to appoint [JI] as my Power of Attorney in September 2015.
35.   The most significant enduring impact of the injury has been the impact on my speech and some of my motor skills.
36.   After my medical incident, and because of my condition, [L] took over the control of my finances and he put in place various corporate structures with trusts. He took control of my bank accounts and financial affairs.
37.   I am unaware of what has happened to the very substantial assets I once owned.
L did not adduce any additional evidence in support of his application that this Court investigate whether M is a person under a disability within the meaning of SCR 4 and 78.[22] Rather he elected to rely upon the content of M’s affidavit as quoted above in addition to the medical reports she exhibited to her affidavit.
[22] The affidavit of Andrew Jordan sworn 4 August 2016 filed by L exhibits the same material.
The medical reports exhibited by M were all prepared in 2005. Tracking through the content of each is of no utility. It is enough to observe that M was admitted to the Royal Adelaide Hospital on 24 January 2005 and discharged on 10 February 2005. Upon admission M was found to suffer from dysarthria and ataxia. She was diagnosed as having suffered an hypoxic brain injury. Upon discharge it was recorded that:
M was cognitively impaired and her calculation, abstraction, executive function was poor. She had impulsivity, poor planning and organization and some short term memory loss. She was significantly dysarthic. She had in coordination more on the right side, past pointing, dysmetria etc. [M] was ataxic and was ambulating with a frame.
She was assessed by the rehabilitation team including neuropsychology and neuropsychiatry assessment. [M] did not have any major medical issues during her stay in rehabilitation. She regained much of her ability through multidisciplinary rehabilitation. Although [M] made gains in her language and speech function, there were still some residual problems. A referral was made to Brain Injury Rehabilitation Community and Home for ongoing therapy (sic).
Upon her discharge from the Royal Adelaide Hospital M was admitted to the Brain Injury Clinic for ongoing rehabilitation.
On 12 September 2005 Dr Peter Anastassiadis from the Brain Injury Rehabilitation Unit reviewed M. This is the most recent report provided to the Court. Dr Anastassiadis noted that M had persisting dysarthria for which she attended upon a speech pathologist once a week. She had some difficulty with movement in her right upper limb and shoulder. She was undertaking driver training and was looking after her children. She was not taking any medication. He reported:
On examination she has slurred speech with right upper and lower limb hypokinesis as previously. She appears to be more confident and capable with her general activities and abilities. Her right shoulder had reduced range of motion at 75% of normal for abduction, flexion and rotation.
He planned to review her in four months’ time.
c. Consideration
The evidence before me establishes that as a consequence of the 2005 incident M continues to suffer a degree of cognitive impairment manifest in a persisting speech impediment and impetuosity in decision-making particularly when she is tired. There is some possibility, but it cannot be put any higher, of M’s cognitive impairment including poor calculation, abstraction and executive functioning. That conclusion, some possibility, is drawn from medical reports that are now over 10 years old.
L contended that the proper course would be to set the terms of reference for an inquiry into whether M was a person under a disability by commissioning more up to date medical or psychiatric reports. He referred to M’s affidavit filed in the Family Court proceedings ADC 465 of 2008 and in this Court which contains the same information as quoted above at [32].
L also referred to the first affidavit of JI, sworn 22 July 2016, where, in particular, he deposed:
Since my appointment as Power of Attorney (“my appointment”) I have spent many hours conferring with [M] about her financial circumstances.
I have been told that [M] suffered a brain injury in 2005 which (I am told by [M] and her solicitor David Starke) still occasions a level of disability. The disability manifests itself, on my observation, in some occasional speech impediment and on occasions in impetuosity in [M]’s decision-making, especially when she is tired.
L placed some reliance on the fact that as recently as 2015, and despite the progress she had made since 2005, on account of the enduring effects of the 2005 medical incident on her health and medical condition, M considered it appropriate to appoint JI as her power of attorney. His point was that her own actions suggested that M was under a disability.
Despite JI’s appointment, M brought the proceedings under the Trustee Act in her own name. There was no explanation as to why JI did not do so. Of course, merely vesting power of attorney in a person does not mean that the person in relation to whom the power of attorney may be exercised loses the right, whilst they have capacity, to make decisions and exercise such rights as they have for themselves. Nonetheless, L contended it should be inferred that on M’s own assessment the proceedings ought to have been brought in her attorney’s name.
Counsel for M submitted that L had not demonstrated that M is or might be considered a person under a disability and that there is no substance or evidence to support the application. Counsel pointed out that L has had extensive and recent dealings with M in the Family Court proceedings without suggesting the need for the appointment of a litigation guardian. He submitted that L is motivated by delay to avoid the Trustee Act application and settlement in the Family Court proceedings.
M referred to JI’s third affidavit, sworn 24 September 2016, where he states:
In acting as Power of Attorney on [M]’s behalf since September 2015 I have spent a lot of time with [M] discussing her affairs, which has included her briefing me on the history of her relationship with [L] and the various business activities she has been involved with, whether on her own or jointly with [L].
I have some experience in assessing mental incapacity in my role as a sessional member of the South Australian Civil and Administrative Tribunal hearing Guardianship and Administration applications.
I had no hesitation in accepting the Power of Attorney from [M] and I have not observed anything since that has changed my assessment about that.
Soon after my appointment as power of attorney I attended with [M] and her psychologist, Dr Sue Upton. I asked her about [M]’s capacity to appoint under a Power of Attorney and Dr Upton told me that in her view [M] probably had that capacity. She suggested a further assessment could be sought if needed.
I have observed [M]’s conduct in the 12 months since my appointment and during which time we have been working together and can say that she has impressed me as an intelligent woman with awareness and insight. She understands that her capacities have been reduced since her accident but I have no doubt that she understands the business issues we have discussed, around the management of the [company], the sale of the Aldinga property and the Trust structure for the [company].
In my First Affidavit I referred to [M] in the following terms… “The disability manifests itself, on my observation, in some occasional speech impediment and on occasions in impetuosity in [M]’s decision-making, especially when she is tired.” In my observation [M]’s condition has not deteriorated over the last 12 months. [M] still gets tired in the afternoons and so we generally meet in the mornings when she is refreshed.
L challenged M’s reliance upon this affidavit on the basis that it contains hearsay and inadmissible opinion. I disregard the report of Dr Upton’s opinion. I have had regard to JI’s perception of M as explaining why he considers he has not had reason to act pursuant to the power conferred upon him independent of M and her wishes or instructions and for no other purpose.
M also referred to the second and third affidavits of David Ashley Starke, both sworn 27 September 2016, in which Mr Starke described the history of the Family Court proceedings stemming back to 2008 and his involvement with M since 2014. Two points were made; first, at no time during those proceedings has it been suggested by L that M required the assistance of a litigation guardian. Second, Mr Starke describes his attendance at a settlement conference in 2015 at which he and M spent in excess of two and a half hours with L and his counsel negotiating a settlement. There was no suggestion throughout that process that there was a need for any investigation as to whether M was under a disability.
The applications before me are not conceptually complex. The protection M seeks against the possible misuse of trust funds and property by her former husband by the replacement of the trustee is, assuming M’s assertions of impropriety are accepted, plain. Similarly, L’s application that the matter be transferred to the Family Court so that the one court deal with all property related matters that arise out of and are connected to the former marriage is not conceptually difficult to understand. There is nothing to suggest that M is in any way incapable of understanding the proceedings at the conceptual level. True it is that once one descends to the legal intricacies of the applications complexity is introduced, but the law does not demand that every litigant have a perfect command of the legal issues in dispute and the arguments raised in support and against the positions taken. I do not overlook that M is not unrepresented and that the proceedings involve matters personal to her and therefore easier to follow and understand, and that there is only, in effect, one other party involved who is her former husband.
During the course of submissions I inquired as to whether I could take any comfort in the fact that counsel for M did not report any difficulty to the Court in the discharge of his professional duties on behalf of M, bearing in mind the duty that counsel had to inform the Court of any reason to think that his or her client was a person under a disability. Counsel for M contended that I could have regard to such factor. Counsel for L did not dispute this. I accept that this factor does not carry the day, but it attracts some weight. So too the inference to be drawn from L’s dealings with M in business and in the Family Court to date suggests that his own experience is not that she is relevantly under a disability. In this regard, I also bear in mind that L did not choose to put before me any positive evidence of his involvement with M suggesting that his dealings with her personally, in business and legally had been impeded in any way by any perceived disability.

There is no doubt that M is aware of her need to take advice. As much may be inferred from her having taken the initiative of instructing solicitors and appointing a power of attorney. Equally there is nothing to suggest that those who represent M including JI, have experienced any difficulty in understanding her wishes, offering her advice, explaining the advice to her, and taking rational instructions from her in the light thereof. There is nothing to suggest that she cannot capably and adequately manage her affairs. Both JI’s and Mr Starke’s experience is consistent with M not being under a disability.
M’s appointment of JI does not cause me concern. In the light of the incident in 2005 which had the effect described above and which remains unexplained, the conferral on JI of power of attorney strikes me as a rational and prudent precautionary step to take.
M’s persisting speech impediment and impetuosity in decision-making do not cause me to apprehend that she might be a person under a disability. Neither deficit is inconsistent with her being capable of managing her affairs or being able to make rational decisions about the proceedings. The evidence of other possible cognitive deficiencies is dated and cannot stand in the wake of the experience of her professional advisors. I accept that they are indicative of a residual incapacity caused by the 2005 incident, but they do not rise to the level where of themselves they cause me to apprehend that M is a person under a disability.
The material before me does not cause me to apprehend that M is incapable of making rational decisions about taking, defending or settling proceedings (or to communicate decisions to others). Further, it does not cause me to apprehend that she is a person who is not capable of managing her own affairs.
For these reasons I dismissed L’s application for an order that this Court conduct an inquiry into whether M is a person under a disability.
The cross-vesting application
a. The issues
As mentioned above L contends that M’s application for the removal of the company as trustee and the appointment of an alternative is incompetent on the grounds that, the application comprising a matrimonial cause, jurisdiction to determine such cause is vested exclusively in those courts vested with jurisdiction under the Family Law Act 1975 (Cth) (FLA) of which this Court is not one. In the alternative, L contends that this Court should decline to exercise any jurisdiction it does have and should transfer the proceedings to the Family Court of Australia to be heard with the property proceedings ADC 465 of 2008 in which the parties are already embroiled. In reply M contests L’s characterisation of her application as a matrimonial cause. If it is, M contends that this Court nonetheless has jurisdiction and as the Court primarily responsible for actions taken under the Trustee Act, should exercise its power and grant the application.
Thus the following questions arise for consideration:
i.Is the application made by M under the Trustee Act a matrimonial cause?
ii.If it is, does this Court have jurisdiction to determine the application?
iii.If this Court does have jurisdiction to determine the application, should it nonetheless order the transfer of the application under the Cross-vesting Act or proceed to determine the application?
b. Is the application made by M under the Trustee Act a matrimonial cause?
Matrimonial cause is defined in s 4 FLA relevantly as follows:
“matrimonial cause” means:
…
(ca) proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings:
(i)arising out of the marital relationship;
(ii)in relation to concurrent, pending or completed divorce or validity of marriage proceedings between those parties; or
…
In that same section property is defined as follows:
“property” means:
(a) in relation to the parties to a marriage or either of them—means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion; or
…
M and L were married in January 1994. They divorced in March 2008. Subsequently M and L reconciled and resumed cohabiting in a domestic relationship in late 2008/early 2009. They did not remarry. The Trust purchased the business in June 2013. In January 2014 M and L separated and M left the matrimonial home. In May 2014 M instituted proceedings in the Family Court for the settlement of property. Those proceedings were discontinued in July 2015. In July 2016 L applied to the Family Court for orders settling the property interests of himself and M in addition to leave to proceed in that Court out of time. L’s application to proceed with his application out of time was granted in August 2016.
The power of the Family Court engaged by L’s application is contained in s 79(1) FLA. It provides:
79 Alteration of property interests
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii)the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
In Kennon v Spry French CJ observed:[23]
Section 79 confers a wide discretionary power to vary the legal interests in any property of the parties to a marriage or either of them and to make orders for a settlement of property in substitution for any interest in the property. It is subject to the limitation that it validly applies only with respect to a claim based on circumstances arising out of the marriage relationship. The word “property”, appearing in the section, construed by reference to its ancestry in matrimonial causes statutes, has been given a wide meaning. In 1977 the Full Court of the Family Court said:
The word has also been comprehensively defined in statutes both State and Imperial relating to married women’s property. We do not propose to instance those definitions here, but in Jones v Skinner Langdale MR said: ‘Property is the most comprehensive of all terms which can be used inasmuch as it is indicative and descriptive of every possible interest which the party can have.’ This is a definition which commends itself to us as being descriptive of the nature of the concept of ‘property’ to which it is intended that the Family Law Act 1975 should relate and over which the Family Court of Australia should have jurisdiction to intervene when disputes arise in relation to the property of spouses as between themselves or when the court is asked to exercise the powers conferred upon it under Pt VIII or its injunctive powers under s 114 so far as they are expressed to relate to a property of the party to a marriage.
(footnotes omitted).
[23] (2008) 238 CLR 366 at [54].
It is readily apparent from the affidavits sworn by M and L in the Family Court proceedings which have been tendered in these proceedings that the property interests of each are and have long been intertwined. The same affidavits make plain that that position did not cease upon M and L’s divorce or prior to the purchase of the business. The material before me indicates that one cannot begin to consider any question of the alteration of interests without having regard to the history of the joint estate of M and L during the course of the marriage and after and any dissemination and disposal of interests that occurred during the marriage and after. That will include consideration of the creation of the Trust, the company and the purchase by the Trust of the business. Bearing this in mind, I reject the contention that simply because the business was purchased by the Trust after the divorce, it may be considered as not falling within the ambit of M and L’s property holdings for the purposes of any orders made by the Family Court settling property interests including the alteration of interests in property. There is nothing to suggest that M and L’s beneficial interests in the Trust can be quarantined from their history as a married couple. In my view there remains a very strong matrimonial character to the proceedings despite the divorce occurring some time ago.
Consistent with these observations, I note that in Kowalski v Kowalski the Full Court of the Family Court said:[24]
…once a marriage has been celebrated between the parties, the entire relationship between the parties whether arising out of contributions before, during or after the formal tie of marriage was entered into or dissolved, falls within the ambit of Pt VIII of the Family Law Act. … It is also consistent with the proposition that post-separation and post-divorce contributions continue to be taken into account. These parties are before the Family Court because they were once married and hence the proceedings can be said to arise out of the marital relationship, even if the property, the subject of such proceedings, does not. As Ross-Jones J remarked in In Marriage of Dadic (supra) at 76,214:
A resumption of cohabitation between parties who have previously been married to each other is clearly distinguishable from a de facto relationship as such where the parties have never been married to each other.
…
Once it is determined that the proceedings fall within par (ca) of the definition of “Matrimonial Cause” … the whole of the relationship can be taken into consideration…
[24] (1992) 109 FLR 193 at 201.
The question remains, however, is M’s application under the Trustee Act a matrimonial cause? Paragraph (ca)(i) of the definition of matrimonial cause in s 4 FLA captures proceedings between the parties to a marriage with respect to the property of the parties to the marriage, being proceedings arising out of the marital relationship. The phrase, “arising out of”, postulates the existence of a link between the proceedings between the parties to a marriage with respect to their property and the marital relationship. That same phrase does not require a causal connection but something less proximate – a connection which cannot be described as fanciful or tenuous. In my view M’s application under the Trustee Act can properly be said to arise out of the marital relationship because M’s beneficial interest, shareholding, and status as a director can all be traced to and derive from the marital relationship and the accrual of property by M and L during that relationship. In my view, M’s application is a matrimonial cause within the meaning of paragraph (ca)(i) of the definition of matrimonial cause.
If I am wrong, I consider that the proceedings under the Trustee Act also fall within paragraph (ca)(ii) of the definition.
In Lansell v Lansell,[25] the High Court considered the meaning of the phrase “in relation to” in the context of a constitutional challenge to s 86 of the Matrimonial Causes Act 1959 (Cth), which permitted settlements to be made in respect of property. Taylor J, with whom Windeyer and Owen JJ agreed, said:[26]
The phrase, "in relation to" and the succeeding words of par. (c) of the definition of "matrimonial cause" indicate the limits which are set to the jurisdiction conferred by s. 86 (1). It is a jurisdiction which is exercisable only where the application bears an appropriate relationship to substantive proceedings which admittedly constitute a matrimonial cause, that is to say, where the application can fairly be said to be incidental to the relief obtainable or already obtained in the substantive proceedings.
[25] (1964) 110 CLR 353.
[26] Lansell v Lansell (1964) 110 CLR 353 at 367.
Here the proceedings are, at least in part, between the parties to a marriage, they are with respect to property alleged to be of them or either of them (namely, beneficial interests in the company and the Trust), and they relate to completed divorce proceedings between them in that the application is to protect M’s beneficial interest in property that, due to the breakdown of the marriage and consequent divorce, will be distributed according to the orders of the Family Court.[27] The Trustee Act application can fairly be said to be incidental to the relief obtainable in the Family Court proceedings.
c. If the Trustee Act application is a matrimonial cause, does this Court have jurisdiction to determine the application?
[27] Young v Lalic (2006) 197 FLR 27 at [32] (Brereton J).
Section 39 FLA relevantly provides:
39 Jurisdiction in matrimonial causes
(1) Subject to this Part, a matrimonial cause may be instituted under this Act:
(a)in the Family Court; or
(b)in the Supreme Court of a State or a Territory.
…
(5) Subject to this Part and to section 111AA, the Supreme Court of each State is invested with federal jurisdiction, and jurisdiction is conferred on the Family Court and on the Supreme Court of each Territory, with respect to matters arising under this Act in respect of which:
(a)matrimonial causes are instituted under this Act; or
(b)matrimonial causes are continued in accordance with section 9; or
(d)proceedings are instituted under regulations made for the purposes of section 109, 110, 111, 111A or 111B or of paragraph 125(1)(f) or (g) or under Rules of Court made for the purposes of paragraph 123(1)(r); or
(da)proceedings are instituted under Division 4 of Part XIIIAA or under regulations made for the purposes of section 111CZ; or
(e)proceedings are instituted under section 117A.
…
Section 39(5) FLA vests federal jurisdiction in this Court to hear and determine matrimonial causes pursuant to s 77(iii) of the Constitution. That said, s 40(3) FLA empowered the Governor-General to fix by proclamation a date from which matrimonial causes and other proceedings referred to in s 39(5) could no longer be instituted in or transferred to a State or Territory Supreme Court. Two such proclamations have been made by the Governor-General, the first on 27 May 1976 and the second on 23 November 1983. The effect of these proclamations was to render jurisdiction in relation to matrimonial causes exclusive to the Family Court.[28]
[28] Kavan v Mallery (2015) 295 FLR 326 at [25]-[27] (Bryant CJ, Finn and Strickland JJ); Young v Lalic (2006) 197 FLR 27 at [38]-[39] (Brereton J).
Subsequently the Commonwealth Cross-vesting Act was enacted. Section 4(1) of that Act provides:
4 Additional jurisdiction of certain courts
(1)Where:
(a)   the Federal Court or the Family Court has jurisdiction with respect to a civil matter, whether that jurisdiction was or is conferred before or after the commencement of this Act; and
(b)   the Supreme Court of a State or Territory would not, apart from this section, have jurisdiction with respect to that matter;
then:
(c)   in the case of the Supreme Court of a State (other than the Supreme Court of the Australian Capital Territory and the Supreme Court of the Northern Territory)—that court is invested with federal jurisdiction with respect to that matter; or
(d)   in the case of the Supreme Court of a Territory (including the Australian Capital Territory and the Northern Territory) — jurisdiction is conferred on that court with respect to that matter.
Relevantly, this section vests federal jurisdiction in this Court with respect to a civil matter in relation to which the Family Court has jurisdiction, whether that jurisdiction was or is conferred before or after the commencement of the Cross-vesting Act.[29] In Kavan v Mallery Bryant CJ, Finn and Strickland JJ said:[30]
This jurisdiction included proceedings between parties to a marriage with respect to property because such proceedings are within the definition of “matrimonial cause” in relation to which the Family Court has jurisdiction under ss 31 and 39 of the Family Law Act.
[29] Re Wakim; Ex parte McNally (1999) 198 CLR 511 left the conferral of federal jurisdiction by s 4(1) of the Cross-vesting Act unaffected.
[30] Kavan v Mallery (2015) 295 FLR 326 at [27].
Accordingly, if M’s application under the Trustee Act is a matrimonial cause, this Court is vested with federal jurisdiction by the Cross-vesting Act to hear and determine that application. If it is not a matrimonial cause then the Court has power to hear and determine the application in the exercise of State jurisdiction under the Trustee Act. Such conclusion suggests that it may have been unnecessary to decide the first question posed above. However, as will be seen, the question of whether this Court is exercising power to determine a matrimonial cause is in any event relevant to the question of whether M’s application should be transferred to the Family Court under the Cross-vesting Act.
d. If this Court does have jurisdiction to determine the application, should it nonetheless order the transfer of the application under the Cross-vesting Act?
The power to transfer proceedings commenced in this Court is contained in s 5(1) of the Cross-vesting Act. It provides:
5 Transfer of proceedings
(1) Where:
(a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court of a State or Territory (in this subsection referred to as the first court); and
(b)it appears to the first court that:
(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court or the Family Court and it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court;
(ii) having regard to:
(A) whether, in the opinion of the first court, apart from this Act and any law of a State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Federal Court or the Family Court;
(B) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the first court apart from this Act and any law of a State relating to cross‑vesting of jurisdiction; and
(C) the interests of justice;
it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be; or
(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Family Court;
the first court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.
The Cross-vesting Act was enacted as part of a scheme involving the enactment in each of the States and Territories and by the Commonwealth of complementary legislation. The consequence is that most of the Acts are in the same terms. The scheme came into operation on 1 July 1988. One group of commentators has said:[31]
The essence of cross-vesting is that the jurisdiction of any one court forming part of the cross-vesting scheme is vested in every other court forming part of the scheme. In this way, no proceeding within the compass of the scheme can fail for want of jurisdiction, though proceedings commenced in an inappropriate court can be transferred in accordance with the detailed criteria set out in the legislation. Within the compass of the scheme, it will not be necessary for a court to determine whether it is truly exercising its ordinary federal, State or Territory jurisdiction, or whether it is exercising some cross-vested jurisdiction. It will only need to form opinions on these demarcation issues for limited purposes and to a limited extent [for example for purposes of deciding transfer applications or decisions under s 11(1)(c) of the Cross-vesting Acts].
(emphasis in original).
[31] G Griffith, D Rose and S Gageler, ‘Choice of Law in Cross-vested Jurisdiction: A Reply to Kelly and Crawford’ (1988) 62 The Australian Law Journal 698.

In BHP Billiton Ltd v Schultz Gleeson CJ, McHugh and Heydon JJ said of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW):[32]
The national scheme of legislation, of which the Cross-vesting Act is a part, was intended to operate, and to be applied, in a different juridical context. This was clearly stated in the first case to come before the Court of Appeal of New South Wales under the Cross-vesting Act, Bankinvest AG v Seabrook. It has been recognised by the Court of Appeal in later cases in which jurisdiction of one kind or the other has been invoked.
In Bankinvest, Street CJ said:
The cross-vesting legislation passed by the Commonwealth, the States and the Territories both conferred on each of the ten courts Australia-wide jurisdiction and set up the mechanism regulating the transferring of proceedings from one of these ten courts to another. In relation to transfer, the common policy reflected in each of the individual enactments is that there must be a judicial determination by the court in which proceedings are commenced either to transfer or not to transfer the proceedings to one of the other nine based, broadly speaking, upon consideration of the interests of justice . . . It calls for what I might describe as a ‘nuts and bolts’ management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute.
In the context of the Cross-vesting Act, one is not concerned with the problem of a court, with a prima facie duty to exercise a jurisdiction that has been regularly invoked, asking whether it is justified in refusing to perform that duty. Rather, the court is required by statute to ensure that cases are heard in the forum dictated by the interests of justice. An application for transfer under s 5 of the Cross-vesting Act is brought upon the hypothesis that the jurisdiction of the court to which the application is made has been regularly invoked. If it appears to that court that it is in the interests of justice that the proceedings be determined by another designated court, then the first court ‘‘shall transfer’’ the proceedings to that other court. There is a statutory requirement to exercise the power of transfer whenever it appears that it is in the interests of justice that it should be exercised. It is not necessary that it should appear that the first court is a ‘‘clearly inappropriate’’ forum. It is both necessary and sufficient that, in the interests of justice, the second court is more appropriate.
(footnotes omitted).
[32] (2004) 221 CLR 400 at [12]-[14].
These observations apply equally to s 5(1) of the Cross-vesting Act. In Cini v Pets Paradise Franchising (SA) Pty Ltd Bleby J distilled the following propositions from BHP Billiton Ltd v Shultz:[33]
·   It is not relevant to ask whether this Court is justified in refusing to exercise the jurisdiction conferred on it. Rather, it must ensure that the case is heard in the forum dictated by the interests of justice.[34]
·   The question is not whether this Court is an inappropriate forum. It is both necessary and sufficient that, in the interests of justice, the other court is more appropriate.[35]
·   The court is required to ensure that cases are heard in the forum dictated by the interests of justice. It is not a question of the exercise of a discretion.[36]
·   The interests of justice are not necessarily the same as the interests of any one party.[37]
·   Because it is necessary to identify the more appropriate forum, no specific emphasis can be given in favour of the choice of forum made by the plaintiff.[38]
·   It is inapt to speak of the applicant for an order for transfer as bearing a burden of persuasion analogous to an onus of proof.[39]
[33] (2008) 102 SASR 177 at 183-4.
[34] BHP Billiton Ltd v Shultz (2004) 221 CLR 400 at [14].
[35] BHP Billiton Ltd v Shultz (2004) 221 CLR 400 at [14], [69].
[36] BHP Billiton Ltd v Shultz (2004) 221 CLR 400 at [14], [63].
[37] BHP Billiton Ltd v Shultz (2004) 221 CLR 400 at [15].
[38] BHP Billiton Ltd v Shultz (2004) 221 CLR 400 at [15]-[16], [77], [168]-[169], [258].
[39] BHP Billiton Ltd v Shultz (2004) 221 CLR 400 at [71].
Further, here, bearing in mind my conclusion that M’s application is a matrimonial cause within the meaning of the FLA, sub-subparagraphs (A) and (B) of s 5(1)(b)(ii) of the Cross-vesting Act require that consideration be given to which court ordinarily exercises the jurisdiction subject of the proceeding, to this Court’s familiarity with the applicable body of law, and to the appropriateness of this Court considering the application, interpretation or validity of a law of the Commonwealth in a proceeding in relation to which it would not have jurisdiction but for the Cross-vesting Act. The ultimate question is, however, which is the more appropriate forum upon a fair balancing of all the factors defining the relevant “interests of justice”.[40]
[40] BHP Billiton Ltd v Shultz (2004) 221 CLR 400 at 424 (Gleeson CJ, McHugh and Heydon JJ).
M was opposed to the transfer of the proceedings to the Family Court. She submitted that it would be contrary to the interests of the Trust and herself to permit L to be involved in carrying on the Trust business, or controlling it for a moment longer. The orders I made on 10 October 2016 address this fear to some extent.
M referred to the delay in the Family Court proceedings, which she said had been on foot for seven and a half years. That does not accord with my understanding of the progress of the matter as recanted above in that the parties do not appear to have prosecuted those proceedings to trial expeditiously. In any event L’s application for property settlement orders was only granted leave to proceed out of time mid-way through last year and I am told a trial of the matter may be heard in the second half of this year.
M submitted that it was more appropriate for the question of the operation of the Trust and replacement of the trustee to be resolved in this Court, due to the uncertainty as to whether the Family Court will regard trust assets to be property within the meaning of s 4 FLA, and within the issues to be determined in the matrimonial cause. Further, M also submitted that the Trust was created and the business purchased after the divorce of M from L so the trust assets could not be property within reach of the powers of the Family Court. I have already rejected this latter submission. The former submission is addressed below.
L contends that in any event, the Family Court has a range of powers enabling it to regulate the conduct of the Trust, including s 80(1)(e) FLA to appoint or remove trustees, s 114 FLA to injunct, and the broad jurisdiction with respect to civil matters contained in s 1137C of the Corporations Act 2001 (Cth). With respect to the power conferred by s 80 FLA and its ambit, I note that in In the Marriage of Davidson, the Full Court of the Family Court observed:[41]
[41] (1994) 117 FLR 335 at 346-7 (The Court).
[I]n Re Ross-Jones; Ex parte Beaumont (1979) 141 CLR 504 where Gibbs J said (at 509-510):
Once a proceeding is within the jurisdiction of the Family Court, the power of that Court to make suitable orders for the disposition of the matter is very wide. It is hardly an exaggeration to say that if the court has jurisdiction in the present case, it can make whatever orders it regards as appropriate: see s 34(1) and s 80(k). Of course the fact that a court has wide powers when exercising its jurisdiction does not mean that its jurisdiction is wide. Nevertheless the nature of the powers of a Court may sometimes provide a clue to the extent of its jurisdiction. … By s 80, the court, in exercising its powers under Pt VIII (which deals with maintenance and property), may appoint or remove trustees (par (e)), and may ‘make any other order … which it thinks it is necessary to make to do justice’ (par (k)).
He then noted however that:
These sections are expressed to confer powers which the court may exercise if it has jurisdiction, rather than to confer or expand jurisdiction, and I do not regard them as throwing any light on the extent of the court’s jurisdiction.
…
Section 80(1) is limited by its introductory words, namely that “the Court, in exercising its powers under this Part, may do any or all of the following …”. That is, s 80(1) is activated by the exercise by the Court of some other of the powers in Pt VIII.
And in Jamine v Jamine (No 2), Thackray, Strickland and Ainslie-Wallace JJ stated:[42]
In considering whether the power to make an order for the removal of a trustee under s 80(1) of the Act has been enlivened we respectfully agree with Ellis J in Davidson (at 80,875) that it is not sufficient that the court is exercising, or has exercised, one or more of the other powers in Part VIII of the Act, but that instead “a relevant connection or relationship is required between a primary power within Part VIII and the exercise of any of the powers in s. 80(1)”.
[42] [2012] FamCAFC 104 at [39].
In addition, the accrued jurisdiction of the Family Court should not be overlooked and, in any event, like any court the Family Court possesses incidental power to protect its processes and ensure the effective exercise of its jurisdiction.
M further submitted that there is no proprietary interest held by either M or L in the property of the Trust as it is a discretionary trust. The only right that either M or L has is to be considered by the trustee regarding any distribution of trust property. Whilst it is an interest that the courts will protect, it is a question that arises in equity and is not a property question.
In reply to this contention L relied upon the High Court decision of Kennon v Spry.[43] That case required consideration of the definition of property in the FLA and, in particular, whether the right of the wife to the due administration of a trust and the discretionary power of the husband to distribute the whole of trust assets to the wife constituted property of the parties to the marriage. French CJ recognised that the interest of an object of a discretionary trust is property for the purposes of the FLA. He said:[44]
Gummow and Hayne JJ, in their joint reasons, characterise Mrs Spry’s right with respect to the due administration of the Trust as part of her property for the purposes of the Family Law Act. I respectfully agree with their Honours that prior to the 1998 Instrument the equitable right to due administration of the Trust fund could be taken into account as part of the property of Mrs Spry as a party to the marriage. So too could her equitable entitlement to due consideration in relation to the application of the income and capital. In so agreeing, however, I acknowledge, consistently with the observations of the Full Court in Hauff and Evans, that it is difficult to put a value on either of these rights though a valuation might not be beyond the actuarial arts in relation to the right to due consideration.
…In so far as Gummow and Hayne JJ rely upon the property comprised by Dr Spry’s power as trustee and Mrs Spry’s equitable rights prior to 1998, I agree that these property rights were capable of providing a basis for the orders which Strickland J made. I do so, as already indicated, by considering that power and the equitable rights, in conjunction with Dr Spry’s legal title to the Trust assets, without which the power and the rights were meaningless.
[43] (2008) 238 CLR 366.
[44] Kennon v Spry (2008) 238 CLR 366 at [78]-[79].
Gummow and Hayne JJ held:[45]
…The right of the wife with respect to the due administration of the Trust was included in her property for the purposes of the Act. The submissions by Mr Gleeson to this effect should be accepted. The submissions to the contrary by Mr Myers should not be accepted. And in considering what is the property of the parties to the marriage (as distinct from what might be identified as the property of the husband) it is important to recognise not only that the right of the wife was accompanied at least by the fiduciary duty of the husband to consider whether and in what way the power should be exercised, but also that, during the marriage, the power could have been exercised by appointing the whole of the Trust assets to the wife. Observing that the husband could not have conferred the same benefit on himself as he could on his wife denies only that he had property in the assets of the Trust, it does not deny that part of the property of the parties to the marriage, within the meaning of the Act, was his power to appoint the whole of the property to his wife and her right to a due administration of the Trust.
(emphasis in original).
[45] Kennon v Spry (2008) 238 CLR 366 at [126].
L also noted that in 2014 the Family Court had dealt with the husband’s application for an interim order requiring the wife to execute lease documents for poker machines in the business. The presiding judge ordered M to execute those lease documents. L contended that the judge could not have done so unless he was first satisfied that it was a matrimonial cause.
Clearly there is extant in the Family Court a proceeding in relation to which M’s Trustee Act application is, for the reasons I have given, related. Accepting this, M’s Trustee Act application must be transferred if it is more appropriate that the application be determined by the Family Court having regard to s 5(1)(b)(ii) and (iii) of the Cross-vesting Act.
I bear in mind that the consequence of my conclusion that M’s application is a matrimonial cause is that the application is not one that could be instituted in this Court but for s 4 of the Cross-vesting Act.
In Valceski v Valceski, Brereton J commented on the Family Court being the more appropriate forum for proceedings arising out of the marital relationship:[46]
While the matrimonial dispute is a more extensive one, covering considerably wider ground, than the dispute in the equity suit, with the consequence that a transfer would require Mick and Angelina to be involved in a much larger piece of litigation than would be the case if the equity suit were to remain in this court, nonetheless the natural forum for the equity suit in the context of this case is the Family Court, because:
•the factual context of both proceedings significantly overlaps, and there would be much duplication of evidence, and some of issues for determination, unless both proceedings are determined by the one court;
•for practical purposes, only the Family Court can resolve the whole controversy;
•the equity suit arises out of the breakdown of the marriage, and the resolution of the issues in the equity suit is a necessary incident to the resolution of issues in the matrimonial proceedings.
In my opinion, justice can best be done by one court resolving the whole justiciable controversy, in order to avoid both duplication and inconsistency. In the present context, the Family Court is the more appropriate court for that purpose, because the larger controversy, of which the smaller forms part, is a matter properly and primarily in the jurisdiction of the Family Court. It follows that the proceedings must be transferred to the Family Court. If as a matter of principle the effect of this decision is that third parties who, in the context of a marriage breakdown, assert rights against matrimonial property, should join in existing matrimonial proceedings rather than commence separate litigation, then the beneficial result is that all issues are litigated only once and only in one court, the risks and costs of duplication and inconsistency are avoided, and forum-shopping and collateral litigation is discouraged. Third parties — especially associates, such as parents or children or private companies, of one or other of the spouses — who use the occasion of the demise of a marriage to assert a right against the property of one or other (or both) of them, cannot reasonably complain if their claim is treated as part of the larger matrimonial dispute in the context of which it arises.
[46] (2007) 70 NSWLR 36 at [84]-[85].
Here too the Trustee Act application is connected with the breakdown of the marriage. Further, it can be expected that the Family Court will be called upon to deal with the Trust and M and L’s beneficial interests in it as an incident of the broader property settlement proceedings. Further again, the Family Court’s jurisdiction having been engaged, it can be expected that that Court, if moved, will take whatever action is within power and is appropriate to protect the property subject of the proceedings pending the resolution of the proceedings. It is also likely that the larger dispute may deal with the ongoing conduct of the Trust. I am fortified in these conclusions by the arguments raised on the application for interim orders heard by Cronin J and his Honour’s approach.[47]
[47] [2014] FamCA 518.
Obviously there is much to be said for the one court dealing with all aspects of, essentially, the one controversy in terms of the saving of time, expense and inconvenience that would be attendant upon separate but related proceedings being conducted in two courts. The resolution of the wider controversy in which M’s application under the Trustee Act arises is one that ordinarily would be resolved in the Family Court. I bear in mind the specialist nature of the jurisdiction conferred upon the Family Court. Whilst this Court in its equitable jurisdiction and under the Trustee Act is no stranger to applications such as that made by M, it cannot be overlooked that M’s application arises in a broader context that is embraced by the property settlement proceedings in the Family Court.
I am satisfied that in the interests of justice the Family Court is the more appropriate forum to hear and determine M’s application under the Trustee Act.
Lastly, if I am wrong and the matters under the Trustee Act are not considered a matrimonial cause, for the reasons given above, I would nonetheless order the transfer of the proceedings pursuant to s 5 of the Cross-Vesting Act and s 5 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (SA).
Conclusion
For the reasons given above, on 29 September 2016 I dismissed L’s application for an order that I conduct an inquiry into the question of whether M is a person under a disability.
I would grant L’s application under the Cross-vesting Act and order that M’s application under the Trustee Act be transferred to the Family Court, to be heard with the proceedings ADC 465 of 2008.
I will hear the parties further as to the question of costs and as to whether the orders I made on 10 October 2016 should continue.