Macclean and Macclean and Anor
[2011] FamCAFC 148
•30 June 2011
FAMILY COURT OF AUSTRALIA
| MACCLEAN & MACCLEAN AND ANOR | [2011] FamCAFC 148 |
| FAMILY LAW - APPEAL – Summary dismissal – Appeal against orders dismissing the wife’s claim for a declaration that the property which was registered in the name of her brother in law be declared an asset of the wife and the husband, either by constructive trust or other equitable remedies – Where the wife’s application was opposed by the husband and the brother in law – Where there was found to be no reasonable prospect of success – Where the wife was unable to prove any agreement in writing or orally for the transfer of the land, any financial contribution to the purchase, mortgage payments or expenses associated with the property, any expenditure in relation to the property, or any claim during the marriage that the brother in law held the land as the wife asserts – Where it was found that the husband and wife leased the land from the brother in law and that the brother in law objected to the husband and wife building fixtures on the property – Where it was found the Federal Magistrate made no error – Appeal dismissed. FAMILY LAW - COSTS – Where the brother in law was put to the expense of defending the unmeritorious appeal – Wife to pay the costs of the brother in law – Where there are no circumstances justifying an order that the wife pay the husband’s costs – Each party to pay their own costs. FAMILY LAW - APPEAL – Appeal against the dismissal of the wife’s application for property settlement – Where the husband and the brother in law agreed that the appeal should be allowed so the wife’s application for property settlement, if any, can be heard – Appeal allowed. FAMILY LAW - COSTS – Where the error could have been corrected earlier, either by application or consent without unnecessary expenses being incurred by the parties – Wife is not entitled to an order for costs – Wife to pay the costs of the brother in law – No circumstances to justify the husband having an order for costs made in his favour. |
| Family Law Act 1975 (Cth) Federal Court of Australia Act 1979 (Cth) |
| Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 Jacobs & Vale [2008] FMCAfam 641 Spencer v Commonwealth of Australia (2010) 241 CLR 118 Vivid Entertainment LLC v Digital Sinema Australia Pty Ltd [2007] FMCA 157 |
| APPELLANT: | Mrs Macclean |
| 1ST RESPONDENT: | Mr K Macclean |
| 2ND RESPONDENT: | Mr L Macclean |
| FILE NUMBER: | BRC | 7891 | of | 2009 |
| FIRST APPEAL NUMBER: | NA | 100 | of | 2010 |
| SECOND APPEAL NUMBER: | NA | 101 | of | 2010 |
| DATE DELIVERED: | 30 June 2011 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | May J |
| HEARING DATE: | 8 March 2011 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 16 August 2010 & 26 August 2010 |
| LOWER COURT MNC: | [2010] FMCAfam 939 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr M Foley |
| SOLICITOR FOR THE APPELLANT: | North Coast Law |
| SOLICITOR FOR THE 1ST RESPONDENT: | Adrian Hawkes Lawyers |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr White |
| SOLICITOR FOR THE 2ND RESPONDENT: | Andrew Burrows & Associates |
Orders
The appeal NA 100 of 2010 is dismissed.
The appeal NA 101 of 2010 is allowed.
The hearing of the wife’s applications for property settlement be remitted for hearing before a Federal Magistrate other than Federal Magistrate Cassidy.
The wife pay the costs of the second respondent of NA 100 of 2010 and NA 101 of 2010 to be agreed or assessed and otherwise each party pay their own costs.
IT IS NOTED that publication of this judgment under the pseudonym Macclean & Macclean and Anor is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 100 of 2010; NA 101 of 2010
File Number: BRC 7891 of 2009
| Mrs Macclean |
Appellant
And
| Mr K Macclean |
First Respondent
And
| Mr L Macclean |
Second Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings concern two appeals, both of which were filed by the wife on 9 September 2010. The appeals were heard by me as a single Judge by direction of the Chief Justice pursuant to s 94AAA(3) of the Family Law Act 1975 (Cth) (“the Act”).
The first appeal, NA 100 of 2010 is from orders made by Federal Magistrate Cassidy on 16 August 2010 when the wife’s application in relation to her brother in law, the second respondent, was dismissed. The second appeal, NA 101 of 2010 is from the orders made by her Honour on 26 August 2010 having the effect that the wife’s application for property settlement against her husband was dismissed. The appeals relate to the parties’ property proceedings, in particular a claim, by the wife against her brother in law, Mr L Mcclean, that he holds a property beneficially for the wife and her husband.
History
The wife and husband were married in July 1999, after a period of living together for approximately five years. The wife asserts that they separated on or about 1 August 2008 and that she continued to reside with the husband until January 2009. The husband claims that the parties separated in December 2008.
The wife filed an initiating application on 7 September 2009, nominating her husband as the first respondent and her brother in law as the second respondent.
The wife’s application for final relief sought an order that the property which is registered in the name of Mr L Mcclean, her brother in law, and located at L (“the property”) be declared an asset of the wife and the husband.
To this end, the wife sought that either a constructive trust be declared or that other equitable remedies be invoked so that the property be included in the matrimonial pool for division between the wife and the husband.
The husband and his brother opposed the declaration sought by the wife. The brother in law sought that the application be dismissed on a summary basis, or that security for costs be paid.
The Federal Magistrate dismissed the wife’s application, finding that there were no reasonable prospects of success in the claim. The transcript of the hearing before the Federal Magistrate reveals that the application was heard by her with counsel appearing for the wife and second respondent. The matter proceeded without evidence, it was heard by reference to the affidavits, written and oral submissions.
Subsequent to the orders made dismissing the wife’s application against the brother in law, her Honour made an order in chambers “that all outstanding applications be dismissed”. This, in effect, can be seen to dismiss “the wife’s application for a property order dividing the net assets between herself and her husband”.
The wife appeals against both the order dismissing the claim for a declaration (“the first appeal”) and against the dismissal of her property application (“the second appeal”).
An important element in dealing with the summary dismissal claim was if the wife’s case, seen in its best light, against the brother in law had a reasonable prospect of success.
It is not controversial that at the time the brother in law purchased the property in 2002 the husband was bankrupt. The wife owned horses that required acreage as they had nowhere to live. The wife conceded that her brother in law “paid for all of the acquisition costs of the property and became the registered owner of it”, he having borrowed $110,000 to purchase the property.
The wife and the husband moved onto the property on or around 23 December 2002. The wife resided there until the husband and wife’s separation. The wife’s first assertion of her claim occurred when she filed her proceedings in September 2009. The fact that there was no prior demand for the property was regarded as a positive feature of the case of the brother in law. The trial judge also considered this “to be a very relevant fact, given the dates when the demand should have, and would have, been made”.
The accepted principles in relation to such a summary dismissal application were described by the High Court in Spencer v The Commonwealth (2010) 241 CLR 118 to which reference will later be made.
Reference will also be made to the particular rules of the Federal Magistrates Court.
Statement of Claim
As this matter was conducted with pleadings it is essential to set out the wife’s claim and statement of claim filed 25 March 2010:
CLAIM
The Applicant’s claim is for:
1.A declaration that the Second Respondent holds the property situated at [L] described as … (“the property”) wholly on trust for the Applicant and the Respondent in equal shares by way of constructive trust in favour of the Applicant and the First Respondent.
2.An order that the Second Respondent transfer the property unencumbered to the Applicant and to the First Respondent in exchange for payment to the Second Respondent of (a) an amount which would have been required to discharge the mortgage granted in favour of National Australia Bank in January 2003 had that mortgage still existed at the time of the order; and (b) all costs and expenses of the Second Respondent incurred in the acquisition and holding of the property.
3.In the alternative an order that the Second Respondent account to the Applicant and the Respondent equally for an amount which represents the current market value of the property under deduction of:-
a.All sums expended by the Second Respondent in the acquisition and holding of the property; and
b.The amount that would have bene (sic) required to discharge the mortgage in favour of National Australia Bank granted in January 2003 had that mortgage still existed at the time of the order,
4.That the Second Respondent pay the costs of the Applicant.
STATEMENT OF CLAIM
1.In or about late October 2001 or early November 2002 the Applicant and the First Respondent and the Second Respondent made a verbal agreement that the Second Respondent would acquire real property on behalf of and to be held for and subsequently to be transferred to the First Respondent and Applicant.
PARTICULARS:
The agreement was made during the course of telephone conversations between the First Respondent on his own behalf and as agent for the Applicant, and the Second Respondent which took place in late October 2002 and early November 2002. The Applicant is unable to provide detailed particulars of the contents of those conversations because she was not a party to the conversations other than being present with the First Respondent during those conversations.
2.The reliance upon the agreement referred to in paragraph 1 the First Respondent and the Applicant located, viewed and agreed terms for the purchase of the property.
PARTICULARS:
On or about 9 and 10 November 2002 the First Respondent and the Applicant held two meetings with ]Mr R], the seller of the property. During the course of the second of such meetings an agreement was reached as to the terms of the contract to be entered into by the Second Respondent and [Mr R] for the purchase of the property. The price was to be $110,000 and the date for settlement to be in January 2003.
3.On or about 21 November 2002 a meeting was held between the First Respondent, the Applicant and the Second Respondent at which meeting the Second Respondent agreed (“the agreement”) to purchase the property on behalf of and to hold the property on behalf of the Applicant and the First Respondent and subsequently to reconvey the property to the First Respondent and Applicant.
PARTICULARS:
a.The meeting took place in a vehicle owned by or used by the Second respondent;
b.The vehicle was parked in a shopping centre car park on the north side of Brisbane but otherwise the Applicant is unable to identify the location,
c.The meeting took place at approximately 4:00pm.
d.The Second Respondent said words to the effect that he wanted nothing to do with the property and that it was the property of the First Respondent and Applicant.
e.The parties agreed that the First Respondent and Applicant would pay and discharge the mortgage payments, the rates and any other outgoings and improvements for the property.
f.It was agreed that the property would be transferred to the First Respondent and Applicant upon the release of the First Respondent from bankruptcy.
g.The parties agreed that the Second Respondent would fund the deposit, the legal costs and other costs of acquisition and that this would be a debt repayable by the First Respondent and Applicant to the Second Respondent repayable no later than the release of the First Respondent from bankruptcy.
h.It was agreed that the Second Respondent would obtain a loan from National Australia Bank to be secured upon the property and that the First Respondent and Applicant would make payments and repayments in respect of that loan and would be responsible for the repayment of that loan in full upon the transfer if the property to the First Respondent and Applicant.
4.The Second Respondent entered into a contract to acquire the property and settled that contract on or about 10 January 2003.
5.The Second respondent paid the sum of $10,000 towards the purchase of the property and expended costs of approximately $3,500 in the purchase of the property.
6.The Second Respondent borrowed the sum of $100,000 or thereby from National Australia Bank and applied that to the purchase of the property.
7.The Applicant and the First Respondent moved onto the property on or about 23 December 2002.
8.In reliance upon the agreement the First Respondent and Applicant from their own funds made payments in reduction of the mortgage secured upon the property.
Particulars .
The Applicant is unable to provide particulars of the payment since the records in relation to the payments are held by the Second respondent and/or the First Respondent.
9.In reliance upon the agreement the First Respondent and the Applicant from their own funds made payment for rates in respect of the property.
Particulars
The Applicant is unable to provide particulars of the payment since the records in relation to the payments are held by the Second respondent and/or the First Respondent.
10.In reliance upon the agreement the First Respondent and the Applicant from their own funds made payment for earthworks and other improvements to the property.
Particulars
Between 15 January 2003 and 21 June 2007 the sum of $26,372.45 was expended.
11.The Second Respondent without the consent of the Applicant caused the property to be refinanced in about October 2005.
Particulars
The Second respondent borrowed the additional sum of $20,000 for the purpose of carrying out improvement upon the property.
12.The Second Respondent did not utilise the additional finance referred to in par 11 for improvements to the property.
13.The First Respondent was released from Bankruptcy in or about early 2005.
14.The Second Respondent reuses or delays to implement the agreement.
15.Following the separation of the Applicant and the First Respondent on or about 1 August 2008. The First Respondent has continued to reside at the property.
For the reasons stated the Applicant is entitled to the orders set forth in the Claim.
…
Judgment of the Federal Magistrate
The reasons for judgment commence with an introduction and a reference to the materials upon which the trial judge relied. Her Honour referred to the law in respect of such applications, about which both counsel for the wife and the second respondent agreed was correct and unchallenged in the appeal.
Reference was made to the affidavits of the wife filed 7 September 2009, 9 November 2009 and 25 March 2010. Her Honour accepted the submissions made on behalf of the brother in law, Mr L Macclean, about the wife’s evidence. These observations, as contained in paragraph 16 of the reasons for judgment are:
“At paragraph 15, in the affidavit filed on 7 September 2009 the wife swears that the “arrangement” was “about five years after purchase we ought to have the title transferred to us.” This would mean a transfer was to occur in 2007 since the property was purchased in 2002. (Version 1)
At paragraph 3(f) of the Statement of Claim, the allegation is that the property would be transferred to the husband and the wife “upon release of the first respondent from bankruptcy”. Of course the bankruptcy period is three years not five years. The husband was made a bankrupt in 2002. That would require a transfer in 2005. (Version 2)
At paragraph 7 of the affidavit sworn 5 November 2009 the wife swore that the property would be transferred “within a couple of years when we are on our feet and the first respondent released from bankruptcy”. These are different conditions again for the transfer which she says was promised by [Mr L Macclean]. (Version 3)
At 3(g) of the Statement of Claim she pleads that the parties agreed at a meeting on 21 November 2002 that “he ([Mr L Macclean]) would fund the deposit, legal costs and other costs of acquisition and this would be a debt repayable by the first respondent and the applicant/second respondent no later than the release of the first respondent from bankruptcy”. That is nowhere to be found in her first affidavit. Her affidavit on 9 November 2009 at paragraph 8 swears the agreement was to repay the deposit “when we could manage it”. Her final affidavit at para 18 makes no mention of when these monies were to be repaid at all. (Version 4)
The representations and expectations said to be created in the wife’s mind (but not the husband!) are uncertain, to put it kindly. There needs to be precision in the promises and there isn’t any in her material.
At paragraph 2 of the wife’s affidavit filed on 25 March 2010 she resiles from paragraph 5 of her affidavit filed on 9 November 2009. She swears that she “regrets misleading the court” but it was due to “her failure to adequately recollect the facts and my relative ignorance of the details of the owning of the property”. (original emphasis)
The trial judge made reference to other inconsistencies in the wife’s material. These included; that there were no documents to support the wife’s claim or evidence a demand for the transfer of the property, the discrepancies between the accounts of a telephone call in October 2002, the affirmation of a “clear agreement” about the transfer of the property in the wife’s third affidavit, with no reference to such in the first or second affidavit, and the lack of detailed particulars about the content of conversations.
Her Honour then set out various submissions made by counsel for the wife:
28. Mr Foley submits, at paragraph 13 of his submissions:
“[13] The evidence in the present case indicates that there are substantial grounds for a remedial constructive trust or, alternatively an account based on doctrines of unconscionability and/or unjust enrichment.”
29.Mr Foley sets out the principles that are acceptable in a claim for a constructive trust, and I accept that the summary accurately represents the law. They are contained at paragraph 11 of his submissions (filed 8 July 2010):
“[11] The principles giving rise to a constructive trust are discussed by the learned author D. Ong in “Trusts Law in Australia” Federation Press 1999) at 394:
“A constructive trust is a trust judicially imposed on the owner of the property, to the extent that it would be unconscionable, notwithstanding the absence of any relevant express or resulting trust of that property, for that owner to enjoy the property beneficially in relation to the person or persons for whose benefit the trust is imposed. A constructive trust is imposed “simply on the principle that an individual shall not be benefited by his own personal fraud”. More recently, in Muschinski v Dodds, Deane J has observed:
Viewed in its modern context, the constructive trust can properly be described as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle.
…
30. Mr Foley submits, at paragraph 26 of his submissions that:
“The Applicant makes out a case on the pleadings and on the evidence for the equitable remedies of constructive trust and/or account based on unconscionability and/or unjust enrichment.”
31. He says, at paragraph 28 that:
“The Second Respondent’s asserted grounds for summary disposal summarised above deal with disputes on the evidence which are properly matters for a trial.” (footnotes omitted)
In paragraph 32 the trial judge explained she did not accept that submission. Rather, she was of the view that she had “to consider the issue of summary dismissal on the evidence, as presented” and ensure that the present case is not one where she “should have regard to the possibility of an amendment, or additional evidence, in considering whether the only conclusion that is reasonable is that the wife’s proceeding has no reasonable prospect of succeeding”.
In concluding the reasons for the judgment her Honour said:
33.The wife has had four opportunities to set out her claim. Hence I do not consider, on her evidence as presented in the case, that she has a reasonable prospect of succeeding, because she has sworn to three versions of the material facts that support the claim and pleaded a fourth version.
34.Firstly, none of these versions provide any corroborating evidence of the wife asserting any demand for that transfer, as and when that transfer would have been due.
35.Secondly, the money that she has allegedly expended on the property is equivocal as to a trust existing and is contradicted by the documentary evidence of the third party, in relation to at least the Pondbex costs.
36.I am fortified in this conclusion, upon considering the evidence of the first and second respondents. Both respondents deny the agreement, and I accept the submissions of Mr White, with respect to ]Mr Macclean’s] affidavit, as set out in paragraph 25 of his outline of submissions. And he says that:
“…He swears that he spent $17,000 plus borrowed $110,000 to buy the property: para.35 of his affidavit filed 14 May 2010. He paid for all the acquisition costs and she does not dispute this. …”
37. He points out that the wife:
“…does not say that she acted in reliance on the alleged promises made by the applicant when she made the alleged expenditures on “improving” the property. …”
38.He makes the submission that the tenancy tends to rebut an argument of an agreement to transfer the property as described by the wife.
39.Although I note that the tenancy was signed by the husband and not the wife, who would have been the proper officer of the company to sign the tenancy, it is nonetheless a tenancy agreement that predates the separation.
40.I also have, from the husband’s evidence ([Mr Macclean] annexing to his affidavit a form 12 notice as annexure LM9) which was issued to give notice to the husband and wife to leave the property on 20 September 2007. It was a notice that was issued against [C Pty Ltd] and related to unpaid rent.
41.In considering those documents, in conjunction with the admissions the wife has made, and the variations on her case that she has set out, I am persuaded that it is appropriate to make an order that the wife’s application in relation to the second respondent be dismissed.
As a consequence of the summary dismissal there was no need for the trial judge to consider the question of security costs.
As will later be explained there are no reasons for the order the subject of the second appeal.
The first appeal
On 16 August 2010 the Federal Magistrate ordered that the wife’s application in relation to the second respondent be dismissed. This order is the subject of the first appeal.
An amended notice of appeal was filed on 19 November 2010.
The four grounds of appeal relied on in respect of this appeal are:
1.The learned Federal Magistrate erred in finding that the appellant had no reasonable prospect of successfully prosecuting her claim.
2.The learned Federal Magistrate wrongly prejudiced disputes of fact which were properly matters for a trial, including:
(a)the alleged agreement regarding the purchase of the land in question;
(b)the reliance by the appellant on the said agreement to her detriment;
(c)the appellant’s payment for earthworks and other improvements to the land (in the sum of $26,372.45 on the appellant’s case);
(d)the inconsistencies in the appellant’s affidavit material;
(e)the significance of the time of the proposed land transfer and demand for same;
(f)the significance of the alleged “Tenancy Agreement” to which the appellant was not a party;
(g)the circumstances surrounding the payment of an invoice from Pondbex for land clearing.
3.The learned Federal Magistrate failed to have regard to admissions in the second respondent’s case tending to corroborate the appellant’s case (paragraphs 21 to 25 of the appellant’s outline of submissions of 8 July 2010).
4.In considering the application for summary dismissal, the learned Federal Magistrate failed to have proper regard to the appellant’s Statement of Claim despite having ordered its filing and to the deemed admissions therein arising from the Second Respondent’s failure to file a Defence. (original emphasis)
The wife asks that the orders made on 16 August 2010 be set aside, that the summary dismissal application be dismissed, and that the husband and the second respondents pay the wife’s costs of and incidental to the appeal. It is also asked that the matter be remitted for further hearing to a Federal Magistrate other than Federal Magistrate Cassidy.
Relevant law
Apart from general principle there is statutory provision in the Federal Magistrates Act 1999 (Cth) governing summary dismissal of matters in that court. Section s 17A of the Federal Magistrates Act 1999 (Cth) provides:
(1)The Federal Magistrates Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2) The Federal Magistrates Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4) This section does not limit any powers that the Federal Magistrates Court has apart from this section.
(own emphasis)
Federal Magistrates Court Rule 13.10 provides as follows:
The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
(a) the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or
(b) the proceeding or claim for relief is frivolous or vexatious; or
(c) the proceeding or claim for relief is an abuse of the process of the Court.
The High Court in Spencer v Commonwealth of Australia (2010) 241 CLR 118 considered a summary judgment order made in the Federal Court. Section 31A of the Federal Court of Australia Act 1979 (Cth) is in similar terms to s 17A of the Federal Magistrates Act 1999 (Cth). After a discussion in relation to the background to the legislation French CJ and Gummow J said:
22.In the Federal Court and in the Court of Appeal of Queensland, the criterion of a “reasonable prospect” of success has been understood in analogous statutory settings to mean a “real” rather than “fanciful” prospect. This exegesis adds little to the words of s 31A. The section authorises summary disposition of proceedings on a variety of bases under its general rubric. It will apply to the case in which the pleadings disclose no reasonable cause of action and their deficiency is incurable. It will include the case in which there is unanswerable or unanswered evidence of a fact fatal to the pleaded case and any case which might be propounded by permissible amendment. It will include the class of case in the longstanding category of cases which are “frivolous or vexatious or an abuse of process”. The application of s 31A is not, in terms, limited to those categories. (footnotes omitted)
Reference was made to the earlier decision Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 where at 99 of that decision it was said:
… The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried. …
It was then said:
25.Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a “fanciful” prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the court has formed the view that the applicant is unlikely to succeed on the factual issue. …
The provision was also considered by Hayne, Crennan, Kiefel & Bell JJ where their Honours said:
50. … Two aspects of these provisions are to be noted.
51. First, the central idea about which the provisions pivot is “no reasonable prospect” (emphasis added). The choice of the word “reasonable” is important. If s 31A is to be seen as deriving from r 24.2 of the Civil Procedure Rules 1998 of England and Wales, its provisions underwent an important change in the course of their translation from that jurisdiction to this. The English rule speaks of “no real prospect”; s 31A speaks of “no reasonable prospect”. The two phrases convey very different meanings.
52. Secondly, effect must be given to the negative admonition in sub-s (3) that a defence, a proceeding, or a part of a proceeding may be found to have no reasonable prospect of successful prosecution even if it cannot be said that it is “hopeless” or “bound to fail”. It will be necessary to examine further the notion of “no reasonable prospect”. But before undertaking that task, it is important to begin by recognising that the combined effect of sub-ss (2) and (3) is that the inquiry required in this case is whether there is a “reasonable” prospect of prosecuting the proceeding, not an inquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail.
53. In this respect, s 31A departs radically from the basis upon which earlier forms of provision permitting the entry of summary judgment have been understood and administered. Those earlier provisions were understood as requiring formation of a certain and concluded determination that a proceeding would necessarily fail. That this was the basis of earlier decisions may be illustrated by reference to two decisions of this Court often cited in connection with questions of summary judgment: Dey v Victorian Railways Commissioners and General Steel Industries Inc v Commissioner for Railways (NSW).
…
56. Because s 31A(3) provides that certainty of failure (“hopeless” or “bound to fail”) need not be demonstrated in order to show that a plaintiff has no reasonable prospect of prosecuting an action, it is evident that s 31A is to be understood as requiring a different inquiry from that which had to be made under earlier procedural regimes. It follows, of course, that it is dangerous to seek to elucidate the meaning of the statutory expression “no reasonable prospect of successfully prosecuting the proceeding” by reference to what is said in those earlier cases.
…
58. How then should the expression “no reasonable prospect” be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is “no reasonable prospect”. The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase like “no reasonable prospect” is to be avoided. Consideration of the difficulties that bedevilled the proviso to common form criminal appeal statutes, as a result of judicial glossing of the relevant statutory expression, provides the clearest example of the dangers that attend any such attempt.
59. In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like “clearly”, “manifestly” or “obviously”) as “frivolous”, “untenable”, “groundless” or “faulty”. But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word “reasonable”, in the phrase “no reasonable prospect”, be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a “frivolous”, “untenable”, “groundless” or “faulty” claim.
60. Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is “no reasonable prospect” of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to “no reasonable prospect” can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase “just and equitable” when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.
(original emphasis) (footnotes omitted)
Submissions of the wife
It is submitted on behalf of the wife that although the Federal Magistrate purported to follow a “cautious approach” at the outset of her judgment, her Honour’s judgment “descended into specific findings of fact despite the deemed admission in the pleadings and despite disputes on the evidence among the parties”.
Under the section characterised as “Deemed Admissions of Allegations in Wife’s Statement of Claim” counsel for the wife submits that the second respondent did not file a Defence to the Claim and Statement of Claim of the wife, despite being ordered to do so by the Federal Magistrate.
As a consequence of this failure, it is argued that all allegations in the wife’s pleadings can be deemed to be admitted. It is said in the wife’s written submissions that:
16.The Federal Magistrates Court Rules and Family Law Rules are silent on this but it is an axiomatic principle of pleadings that an allegation of fact in a pleading is deemed to be admitted by the opposite party unless it is traversed by that party in his/her pleading or a joinder of issue operates as a denial of it.
17.The deemed admissions of the allegations in the wife’s Statement of Claim filed 25 March 2010 constitute a sound basis for declaration of a constructive trust as sought by the wife.
There are three obvious answers to this submission. The first is that the consideration of the case for a summary dismissal of the application does not require a consideration of that of the husband. The second is that this submission ignores the internal inconsistencies in the wife’s case itself. Third, it will be seen from the submissions on behalf of the husband and the second respondent that the defence was not required to be filed for the summary dismissal proceedings.
It is further submitted that her Honour did not particularise any alleged inconsistencies in the wife’s material. It is asserted that her Honour failed to consider the concession made by the wife at paragraph 2 of her affidavit filed 25 March 2010, which sought to correct an error in paragraph 5 of her affidavit filed 9 November 2009. The concession read:
I very much regret having misled this Court which was due to my failure to adequately recollect the facts and my relative ignorance of the details of owning of property and my misunderstanding of differences between loans, ownership and the like.
Counsel submits that “[a] finding that certain evidence is equivocal as to a trust existing may be a good reason for resisting any summary judgment application brought by the wife but it is hardly a proper basis for founding a summary dismissal case against her”.
It is argued that “[h]er Honour’s reasoning blithely disregards the concession made by the [second respondent] about the wife’s improvements to the property”. Other evidence of the husband and the brother in law which is said to “corroborate aspects of the wife’s case” is also said to be ignored.
This evidence concerns the concession made by the brother in law that the husband and wife were looking in the L area for property and that they had found a parcel they were keen to purchase, that the husband asked his brother to purchase the land, and that Mr L Macclean had discussions with the husband with regard to the wife and/or the husband acquiring the property.
It is submitted that her Honour failed to rely on the evidence of the husband and his brother about the agreement.
The answer to this submission is contained in the written submission of the husband to the Federal Magistrate dated 28 July 2010 where he explains that it was a hope but never an expectation that the husband and wife could buy the land from his brother. The wife is unable to demonstrate otherwise.
Counsel submits that her Honour was in error in inferring a tenancy agreement with C Pty Ltd binding the wife with the company. It is argued that the “agreement” is void and of no effect as the wife, who would have been the appropriate representative of the company, is not a signatory. It is said at paragraph 29 of the wife’s written submissions:
It is difficult to see the logical basis for the Federal Magistrate’s reliance upon a notice to leave the property issued against [C Pty Ltd] … based presumably upon an alleged tenancy not signed by a proper office (sic) of the Company.
It is argued that in the assessment of the wife’s claim for a declaration of a constructive trust that the submissions of the wife were disregarded and that findings were made on untested evidence.
In concluding the wife’s written submissions it is submitted:
45.The Federal Magistrates Court erred in finding that the [wife] had no reasonable prospects of successfully prosecuting her claim for declaration of a constructive trust. The wife has thus been denied the opportunity of a fair trial in regard to her claim over the land on which she and her husband lived and contributed improvements.
Submissions of the husband
The husband in his written submissions states that he “concurs with” the submissions of the second respondent “in every respect”.
Submissions of the second respondent
The second respondent explains that no defence to the wife’s claim and statement of claim was required to be filed. The second respondent filed an application for security costs and for summary dismissal and by reason of order 4 made 9 March 2010 there was no need to file a defence.
It is submitted that the Federal Magistrate correctly regarded the statement of claim to be considered with the rest of the evidence, an approach consistent with Jacobs & Vale [2008] FMCAfam 641 and Vivid Entertainment LLC v Digital Sinema Australia Pty Ltd [2007] FMCA 157.
It is submitted that the wife was unable to produce any documents evidencing that she paid for the various improvements on the property. The brother in law did however annex to his affidavit, two documents relating to the wife’s claimed expenditure. These documents showed that the he paid for the improvements. It is said that the wife “had absolutely no documents to support her expansive allegations” and that the available “documents contradict her”.
Counsel submits that the wife has been “unable to frame a consistent case” and that “[s]he had several different and conflicting factual scenarios in her case”, despite the wife and her solicitor having the proceedings “on foot for about 9 months on 9 March 2010”.
It is said that her Honour “correctly identified that the tenancy agreement was signed by the husband on behalf of the [wife’s] company. The company is wholly controlled by the [wife] on the evidence. She is the sole director and shareholder. Although Her Honour did not find it was the “killer point” … it was still a matter that she took into account in the overall assessment of the evidence”.
The husband submits that there is “an air of adamantine desperation” concerning the wife’s case. It is said that there is “effectively no asset pool between the husband and the wife unless she managed to bring the Second Respondent’s house into the property pool”.
Counsel explains that the evidence revealed that the second respondent paid for the property in 2002. He provided accommodation for both the husband and the wife and their various livestock, in circumstances were the husband was bankrupt and when the couple where under financial strain. There was a rental agreement, the husband and wife paid some rent but rent was often in arrears.
Conclusion
In the evidence placed before the court and by reference to the pleading the wife was unable to prove:
· Any agreement in writing or orally for the transfer of land.
· Any financial contribution to the purchase, subsequent mortgage payments or payments towards the maintenance and expenses associated with the property.
· Expenditure in relation to the property - the allegations in the wife’s affidavit filed 25 March 2010 asserting expenditure by her of $26,372.45 is not linked with any agreement nor were documents provided to substantiate the claim, other than those equivocal assertions as asserted by the wife’s lawyers, and conceded by the brother in law at paragraph 46 of his affidavit.
· Any claim or assertion during the marriage that the brother in law held the land as the wife now claims
On the contrary the evidence showed:
· The husband and wife leased the land from the brother in law, a tenancy agreement was produced. The wife denied the agreement and relied on its date being 4 years after the purchase of the property.
· The husband and wife commenced building a slab with a view to erecting a shed. The brother in law objected and work ceased.
In the circumstances it has not been demonstrated that any error was made by the Federal Magistrate. The Federal Magistrate was correct in concluding that the wife had no reasonable prospects of success in prosecuting the claim against the second respondent.
Costs
Despite the wife’s poor financial circumstances she should pay the costs of the second respondent who has been put to the expense of defending this unmeritorious appeal.
As to the husband’s application for costs, the circumstances justifying such an order are not as clear. Each party should pay their own costs.
The second appeal
The second appeal concerns orders made on 26 August 2010 which were:
1. That there be no order as to costs.
2. That all outstanding applications be dismissed.
The three grounds of appeal in relation to the second appeal are:
1.The learned Federal Magistrate denied procedural fairness to the appellant by giving no notice to the appellant of the proposed orders and by denying the appellant her right to be heard.
2. The learned Federal Magistrate gave no reasons for her decision.
3.The learned Federal Magistrate erred in dismissing the appellant’s initiating application for property orders filed 7 September 2009 without any hearing in relation to the second of the final orders sought by the appellant.
The wife seeks that the orders be set aside, that the husband and the second respondent pay the wife’s costs of and incidental to the appeal, and that the matter be remitted for further hearing before a different Federal Magistrate.
It is apparent that the order was made in error, however, it is necessary to deal with the appeal.
Submissions of the wife
As the wife explains the orders made by her Honour on 26 August 2010 had the effect of dismissing her initiating application filed 7 September 2009.
The orders sought in this application were “that there be an accounting of the net assets of the Applicant and Respondent and orders be made to the effect of dividing these equally between the Applicant and Respondent”.
The following notation appears as a preface to the orders:
UPON APPLICATION MADE TO THE COURT in Chambers
(original emphasis)
Counsel for the wife explains that no notice was given that any matter was to be considered in Chambers or in court. Consequently, it is argued that the wife was not provided with an opportunity to be heard and that she had been “denied natural justice in a peremptory and unfair way”. It is said that as a result of the order the wife has been “deprived of her right to seek a property order for half the net assets of herself and her husband”.
It is submitted that given the absence of any reasons for judgment the wife is left to speculate as to the rationale behind the decision of the Federal Magistrate.
The wife submits that the order dismissing all applications is “neither equitable nor just” and contrary to s 79(2) of the Act.
Submissions of the husband
As in the first appeal the husband has considered the written submissions of his brother and “concurs with those submissions in every respect”.
The husband opposes a costs order being made against him. On 14 October 2010 the husband agreed that the order to dismiss the wife’s s 79 application was an error. The husband’s solicitors wrote to the solicitor for the wife and invited them to prepare an application by consent to either have the orders set aside under the slip rule, or in the alternative, file an application for consent orders on the appeal.
It is explained that the husband made no application to have the s 79 proceedings dismissed when he appeared in person on 26 August 2010.
The husband correctly submits that he in no way contributed to the situation where the wife was required to file and prosecute the appeal.
The husband seeks costs against the wife on the basis that the wife’s solicitors should have sought clarification from her Honour in court on 26 August 2010, and that the solicitors could have resolved the matter by responding to the invitation from the husband’s solicitors soon after 14 October 2010.
Submissions of the second respondent
The second respondent concedes that “[t]here is obvious error” in the orders of 26 August 2010, as they “no doubt amount to a breach of procedural fairness”. It is submitted that the orders should be set aside under the slip rule, or alternatively, that consent orders should be made disposing of the appeal. It is said that this concession was made “promptly” by the second respondent.
No party to the proceedings sought to dismiss the s 79 proceedings between the wife and the husband. It is also said that “[n]o one led the Magistrate into error”.
An explanation for the error of the trial judge is offered by the second respondent. It is explained that her Honour may have been intending to dismiss her previous order made on 16 August 2010, providing for the filing of written submissions in respect of costs.
Conclusion
Given the circumstances of this appeal, particularly given the concessions made by the husband and the second respondent, the appeal should be allowed. The wife’s application for property settlement, if any, can then be heard.
Costs
The wife seeks her costs of this appeal from both the husband and the second respondent. Such an order is opposed by both respondents. It seems the error could have been corrected earlier, either by way of application to the Federal Magistrate or if necessary by consent. The wife is not entitled to an order for costs.
The second respondent should have his costs met by the wife, the error could easily have been remedied without causing him this unnecessary expense.
There are no circumstances to justify the husband having an order for costs in his favour.
I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of the Honourable Justice May delivered on 30 June 2011.
Associate:
Date: 30 June 2011
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