Massel and Hope

[2018] FamCA 877

FAMILY COURT OF AUSTRALIA

MASSEL & HOPE [2018] FamCA 877

FAMILY LAW – PRACTICE AND PROCEDURE – Stay of Proceedings – Where the parties have filed competing applications for anti-suit injunctions – Where the wife seeks to prevent the husband from continuing with property proceedings in the United States of America and the husband seeks to prevent the wife from continuing her proceedings in Australia – Where the parties executed a Financial Agreement in Australia during the relationship – Where the overseas court is satisfied that it has jurisdiction to hear the contentious matters, including in respect of the enforceability and validity of the Financial Agreement and intends to determine all such issues – Where the Family Court of Australia has the power to make orders staying proceedings before it on forum non conveniens grounds and conversely, issue anti-suit injunctions restraining a person from prosecuting in a foreign jurisdiction – Where the Court is satisfied that Australia is a “clearly inappropriate forum” and the proceedings in this Court will be stayed pending the outcome of the proceedings being conducted overseas – Where the Court makes no other orders as sought by the wife.

Family Law Act 1975 (Cth)

Chen & Tan [2012] FamCA 225
Henry v Henry (1996) 185 CLR 571
Kemeny v Kemeny (1998) FLC 92-806
Kent & Kent (2017) FLC 93-792
Navarro v Jurado (2010) 44 Fam LR 310
Voth and Manildra Flour Mills Pty Ltd (1990) 171 CLR 538

APPLICANT: Ms Massel

RESPONDENT: Mr Hope

FILE NUMBER: BRC 2508 of 2018

DATE DELIVERED: 17 October 2018

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 17 October 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: The Hon M. Foley

SOLICITOR FOR THE APPLICANT: Bruce Legal

COUNSEL FOR THE RESPONDENT: Mr Jordan

SOLICITOR FOR THE RESPONDENT: Damien Greer Lawyers

Orders

1. That these proceedings BRC2508 of 2018 be stayed pending the outcome of proceedings number … in the City B, State C in the United States of America.

2. That the applications for orders sought in the Application in a Case filed by the wife herein on 28 September 2018 are dismissed.

3. That the matter be adjourned for hearing before a Registrar on a date to be fixed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Massel & Hope has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 2508 of 2018

Ms Massel

Applicant

And

Mr Hope

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. For determination today are competing applications for anti-suit injunctions, effectively, at least. The wife seeks to prevent the husband from proceeding further with property settlement proceedings currently underway in a State C Court in the United States of America and the husband seeks to prevent the wife from proceeding further with these proceedings that she has underway in this Court.

2. The wife seeks other orders, too, but they would only be considered, in my judgment, if the husband is unsuccessful with his application for a stay of these proceedings and she is successful with her application for the anti-suit injunction against the husband.

Some Factual Background

1. The parties married in the USA in 1994. They separated in State C in August 2017. They have two adult sons who live in the United States. The wife is a health professional and lives in State D and the husband is an academic and lives in State C.  

2. The husband holds citizenship of the United Kingdom, Australia and the USA. The wife holds citizenship of Australia and the USA. The wife is an American by birth. The husband is a UK citizen by birth.

3. The husband moved to Australia and took up an academic position here in Queensland in 1994. The wife joined him with their first son in 1996, after completing some training in the US. Their second son was born soon after and in 1998 the wife returned to the United States with the boys for some more training. They returned to Australia to live in 2000 and the wife was working here as well. The family moved back to the US in 2008 and they have been living there ever since.

4. The wife comes from a family of origin in which she is the third generation of health professionals. Her grandparents and parents were apparently wealthy. They set up various trust funds in the United States from which the wife has been receiving financial benefit from the time before she met the husband. The husband had been working in the United Kingdom before they met and he had some retirement pension benefits accrued there that he transferred to Australia when he came here. He rolled those into the superannuation fund that his university employer compulsorily contributed to on his behalf whilst he was in its employ between 1996 and 2008.

5. In 2007, whilst still living in Australia, the parties executed a Financial Agreement purportedly pursuant to s 90C of the Family Law Act 1975. They did that as part of some estate planning prior to a planned return to the United States of America. By that Financial Agreement, they agreed that each would retain as his and her separate property, including, in particular, in the event of separation and divorce, their own membership benefit entitlements in the superannuation funds in Australia and in their retirement accounts in the USA, their own entitlements as beneficiaries of trusts established by other than the two of them during their marriage, as well as some other listed interests in property.

6. Since 2008, they have lived and worked in the USA and in August last year they separated and the husband immediately filed proceedings in a State C court, situated in the County in which they had been living and in which he continues to live, seeking divorce and orders relating to property settlement. The relief he sought from the State C court included orders upholding the validity of the Financial Agreement that they had executed ten years earlier in Australia.

7. Soon after the husband commenced the proceedings in the State C court, the wife filed documents joining the proceedings there. The documents she filed included a document raising questions about the Financial Agreement, apparently putting the husband and the State C court on notice that rulings of the Australian court had relevance and had to be respected. There is no evidence before me that allows me to find that she thereby put the husband and the State C Court on notice however, that she intended to file proceedings in an Australian court.

8. Over the following months, the wife and her American lawyers apparently engaged in the State C Court proceedings.

9. In early March this year, the wife sought further orders in the State C court, apparently seeking to have that Court sever the question of the validity of the Financial Agreement executed by the parties in Australia from those proceedings and seeking to have the State C court not to deal with the question of the financial agreement’s validity and enforceability at all, but rather leave it to an Australian court to determine. A few days later, on 8 March 2018, she filed an Initiating Application in the Federal Circuit Court here in Australia seeking final orders setting aside the ten year old Financial Agreement. This Court was told at the hearing of this matter earlier today that on filing that Application in March this year, the Federal Circuit Court was asked to list it for the first available date. For some reason that is unknown to me, the wife’s Application was given a first return date before a Federal Circuit Court Judge on 7 September 2018, six months after it was first filed. I do not know the reason for that and there is no evidence explaining why the wife and her lawyers did nothing about getting the matter listed in the Federal Circuit Court earlier than that.

10. Of note, the wife seeks, in her Australian proceedings, to have the Financial Agreement set aside pursuant to s 90K of the Family Law Act. Though no pleading or points of claim document has been filed by her in the Australian proceedings, the Court is told she is alleging that the Financial Agreement should be set aside for fraudulent misrepresentation and non-disclosure of a material matter. The evidence is that she has filed pleadings, which she has amended several times, in the State C proceedings, though none of those were in evidence before me. Of further note, the wife did not and still has not sought any substantive relief in her Australian proceedings in the form of property adjustment orders pursuant to s 79 of the Family Law Act in the event that her application to have the Financial Agreement set aside is successful. Indeed, I apprehended from the oral submissions of counsel who appeared for her before me that at this point in time the wife probably only seeks the particular relief in respect of the Financial Agreement from this Court and would be content for the balance of the property adjustment proceedings thereafter to continue to be heard in the State C court. 

11. In one of her affidavits, the wife deposes to her explanation for what the husband describes as a delay in her commencing the Australian proceedings. She attributed it to two things, essentially. The first was the emotional turmoil she experienced around the separation and commencement of divorce proceedings by the husband. The second was the fact that she only learned after disclosure by the husband of the matters upon which she bases her assertions that the Financial Agreement should be set aside for fraud.

12. The wife apparently failed in her attempt to have the State C court determine that it would not continue to hear that part of the proceedings dealing with the validity and enforceability of the Financial Agreement. Indeed, the evidence supports a finding that she has applied unsuccessfully to the court in the State C proceedings on at least two occasions, the latest being as recently as 10 October 2018, to have that part of the proceedings there in State C stayed. There does not seem to be any dispute that the State C court is satisfied that it has jurisdiction over these two parties and to hear the matters of contention between them, including in respect of the enforceability and validity of the Financial Agreement executed by them in Australia and that the court in State C intends to try and determine all of these issues.

13. Furthermore, after the wife filed her application in the Federal Circuit Court in Australia, the husband sought and obtained summary judgment in the State C court in favour of the Financial Agreement being valid and applicable. The wife appealed or reviewed that and was successful, that decision being reversed in August. It is, however, a matter about which there is no dispute, that the proceedings in the State C court have been bifurcated (divided into two separate parts) – one part being the separate determination by trial of the question of the validity and enforceability of the Financial Agreement, even though, it is agreed, the State C court will be considering and applying Australian law in doing so; the other part being the separate determination of the property adjustment that is thereafter to occur.

14. It is also a matter of agreement that the proceedings in which the validity and enforceability of the Financial Agreement are to be determined is already listed for trial by judge and jury in the State C Court commencing on 29 October, 2018. As a matter of logic, the decision of the judge reviewing and overturning the original decision to grant the husband’s summary judgment application in respect to declaring the validity of the Financial Agreement having been handed down on 10 August 2018, the matter was probably only listed for trial commencing on those dates on or after that date, being 10 August 2018. That might form part of an explanation for the lack of any previous application for expedition having been brought by the wife in these proceedings in Australia before the matter was transferred to this Court by the Federal Circuit Court Judge on 7 September 2018.  

15. The husband only filed his response in the Federal Circuit Court on 24 August 2018, seeking to have the wife’s application dismissed and seeking, on an interim basis, to have these proceedings stayed pending the outcome of the proceedings in the State C court. The matter was heard for the first time in the Federal Circuit Court at the Gold Coast on 7 September 2018, and the Judge transferred the matter to this Court with a request for the matter to be listed with some priority, although it had been six months between filing and the first return date in the Federal Circuit Court.

16. On 28 September 2018, the wife filed the Application in a Case which includes her application for the anti-suit injunction in respect of the State C proceedings. That was brought to my attention and as the evidence is that the State C proceedings are listed for a trial on 29 October 2018, I determined that the competing interim applications pending in this Court had to be listed and determined prior to that date.

17. The affidavit evidence of the husband is that the trial is expected to run for a week and that he intends to call three witnesses, including an Australian family law expert who has already provided two reports that are being relied upon as to the applicable Australian law.  The other two witnesses are in the USA. The same evidence refers to an apparent intention on the part of the wife to call seven witnesses, six of whom are in the USA and one of whom is another Australian family law expert who is being relied upon by the wife as to the applicable Australian law. The husband deposed to being advised by his State C lawyers that they are confident that that the matter will proceed to a hearing on 29 October 2018 and that a judgment could be expected to issue within one to two weeks of the conclusion of the trial. Certainly the husband’s evidence in respect to the witnesses intended to be called at the trial in State C in less than two weeks’ time was not disputed by the wife.

18. The husband says he has spent approximately USD$260,000 on legal fees and expenses to date in connection with the State C proceedings. He deposed to the belief that the wife has spent approximately USD$90,000 to this point in time.

The Principles by which these competing Applications are to be determined

1. This Court has the power to make orders staying proceedings before it on forum non conveniens grounds and, conversely, to issue anti-suit injunctions restraining a person from prosecuting proceedings in a foreign jurisdiction. Voth and Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; Henry v Henry (1996) 185 CLR 571; Kemeny v Kemeny (1998) FLC 92-806 and Navarro v Jurado (2010) 44 Fam LR 310.

2. Where there are proceedings underway in a foreign jurisdiction in respect of divorce and property orders arising out of the breakdown of the parties’ marriage, a party may apply to this Court for a stay of similar proceedings brought in this jurisdiction that pertain to the same subject matter. The party who commenced the proceedings here may resist that application and ask this Court to grant an anti-suit injunction against the other party, restraining him or her from taking any further steps in the foreign proceedings.

3. The test to be applied in determining whether to stay the local proceedings is whether or not this Court is a “clearly inappropriate forum” and the party seeking the stay of these proceedings bears the onus of establishing that it is.

4. This Court is to determine the question by determining whether a continuation of the proceedings in this Court would be “vexatious” in the sense discussed in Voth, namely that they would be “seriously and unfairly burdensome, prejudicial or damaging” or indeed “oppressive” in the sense also discussed in Voth, namely that they would be “…productive of serious and unjustified trouble and harassment...”.

5. There are a number of matters authoritatively stated to be matters properly to be taken into account when determining whether the local Court (that is, this Court) is a “clearly inappropriate forum”. In Kent & Kent (2017) FLC 93-792 the Full Court, adopting a list provided to them by Senior Counsel in that appeal, noted with approval that the following was a non-exhaustive list of such matters:

   1.         No question arises unless the courts of the respective countries have jurisdiction with respect to the parties and their marriage.

   2.        If both have jurisdiction, it will be relevant to consider whether each will recognise the other’s orders and decrees. If the orders of the foreign court will not be recognised in Australia, that will ordinarily dispose of any suggestion that the local proceedings should not continue. However, if the orders of the foreign court will be recognised in Australia, it will be relevant to consider whether any orders may need to be enforced in other countries and, if so, the relative ease with which that can be done.

   3.       It will be relevant to consider which forum can provide more effectively for complete resolution of the matters involved in the parties’ controversy.

   4.        Other considerations include the order in which the proceedings were instituted.

   5.         Other considerations include the stage which the proceedings have reached.

   6.         Other considerations including the costs that have been incurred.

   7.         It will be relevant to consider the connection of the parties and their marriage with each of the jurisdictions and to have regard to the issues on which relief might depend in those jurisdictions.

   8.        It will be relevant to consider whether, having regard to their resources and their understanding of language, the parties are able to participate in the respective proceedings on an equal footing.

   9.         It will be relevant to consider “the general circumstances of the case”, taking into account “the true nature and full extent of the issues involved.”

   (Emphasis in original)

6. I also note, respectfully, that Justice Kent wrote in Chen & Tan [2012] FamCA 225 at [38] the following:

   Whether or not Australia is a clearly inappropriate forum depends on an assessment of the following (non-exhaustive) factors (derived from Lord Goff’s factors in Spiliada Maritime Corporation v Cansulex Ltd[1] as approved of in Voth and as added to by Henry at 592-593):

   [1] [1987] AC 460.

   i)Factors of convenience and expense, such as the location of witnesses;

   ii)Whether, having regard to their resources and understanding of language, the parties are able to participate in the respective proceedings on an equal footing;

   iii)The connection of the parties and their marriage with each of the potential jurisdictions and the issues on which relief may depend in those jurisdictions;

   iv)Whether the other potential forum will recognise Australian Orders and vice versa and the ease of enforcement in each country;

   v)Which forum may provide more effectively for a complete resolution of the matters involved in the parties’ controversy;

   vi)The order in which each of the proceedings were instituted, the stage which they have reached and the costs incurred in each jurisdiction;

   vii)The governing law of the dispute;

   viii)The place of residence of the parties;

   ix)The availability of an alternative forum; and

   x)Any legitimate juridical advantage to litigating in either jurisdiction.

   I respectfully agree with his Honour’s observations that include acknowledgment that those are relevant factors in determining the question of whether the Australian court is a clearly inappropriate forum.

My Assessment of the Relevant Factors

1. At this point, the wife seeks to only have the validity of the Financial Agreement determined in this jurisdiction. It is submitted on her behalf that is appropriate as there is a clause in the Agreement that states that the applicable law for the interpretation of the Agreement is the law of Queensland and Australia. As is pointed out for the husband though, that clause is not a choice of forum clause, but merely an applicable law clause. Australian experts have already been engaged by the parties in the State C proceedings to give evidence about the Australian and Queensland law and the State C Court has the power to determine its applicability to the factual findings it makes in the proceedings over there. Although this Financial Agreement was executed in Australia and the parties agreed in it for Australian law to apply to questions of its interpretation and validity, I do not consider that this Court has any particularly special advantage when compared to a State C Court in determining the factual issues that might or might not govern whether the Financial Agreement the parties executed should be set aside.

2. The husband and the wife both live in the USA. They are each capable of travel to Australia and have, I am satisfied, sufficient resources to travel here for proceedings here whenever they might be conducted. However, I accept that their place of residence and work simply confirms the greater convenience for each of them and their respective American legal representatives offered by the proceedings in State C. It is also the more convenient forum for the witnesses they intend to call to give evidence on their behalf. Of course, if the proceedings were to continue in Australia, expert witnesses from Australia giving expert evidence about Australian law would not be required here and there would be that saving for the parties, but it would be a significant expense for the parties to have to travel to Australia and to pay for their witnesses to come to Australia as well. That expense would be saved by the parties if the matter proceeds to trial in the USA as currently planned.

3. There is little, if any, language or cultural impediment to the parties participating in proceedings in State C or Australia on an equal footing.

4. The parties married in the USA in 1994. For approximately half of the twenty four years since then, they lived in Australia. For the other half, they lived in the USA, though that includes the last ten years, including the nine years up to their separation. They are both American citizens. They have property and superannuation/retirement benefit interests in both the USA and Australia.

5. There was no evidence put before me as to the issue of whether Australia and State C will recognise each other’s orders and determinations. When I raised this issue with counsel for the wife, I apprehended him to concede that if the State C Court were to proceed to hear and determine the question of validity and enforceability of the Financial Agreement, this Court would most likely respect and recognise that Court’s decision and vice versa. I apprehended him to go further and to submit that the principle of res judicata may indeed apply in such circumstances. I respectfully consider there is merit in those effective concessions.

6. Although the governing law to be applied to the determination of the validity and enforceability of the Financial Agreement is the law of Australia and Queensland, more particularly, as I have already observed, the State C court and American lawyers accept that and they have been preparing their respective cases to date on that basis. The proceedings were commenced by the husband in State C six months before the proceedings were commenced by the wife in this country. That alone is clearly not determinative of the “clearly inappropriate forum” issue, but it is one of the matters to consider along with the stage which the proceedings have reached. Clearly, the proceedings, particularly that part dealing with the validity and enforceability of the Financial Agreement are far advanced in the State C court, virtually prepared and ready to go to trial in under two weeks from now.  They are not nearly ready to go to trial here, though I expect with the right amount of determination and discipline in terms of case management, they could be made ready within several weeks.

7. However, I am acutely conscious of the fact that none of the trial judges of the Brisbane registry of this Court have any availability to hear a week-long trial to determine the validity of the Financial Agreement until sometime in 2019.

8. Another of the matters that I have mentioned already that I consider very relevant, is the fact that the wife’s proceedings in Australia only seek to deal with one aspect of the dispute between the parties, namely the validity and enforceability of the Financial Agreement, whereas the State C proceedings in which both parties are engaged will, to use the language quoted above, “provide more effectively for a complete resolution of the matters involved in the parties’ controversy”.

9. In all the circumstances, but particularly having regard to the fact that the validity and enforceability of the Financial Agreement according to Australian law is ready to be heard and determined over a week in State C starting in less than two weeks’ time, I am satisfied that a continuation of the proceedings commenced by the wife in this Court, including by her seeking to have matters pertaining to subpoenas and the preparation and filing by the husband of a Financial Statement, would be “seriously and unfairly burdensome, prejudicial or damaging” or “oppressive” in that such continuation would be “productive of serious and unjustified trouble and harassment” for the husband who has been legitimately pursuing his rights in the State C court for just on twelve months. As such, I am satisfied that Australia is a “clearly inappropriate forum” in the sense in which that term is used in Voth and I will stay the proceedings in this Court pending the outcome of the State C proceedings.

10. Counsel for the wife informed me, when asked, that the applications of the wife for the husband’s objection to the release of material obtained on subpoena to be dismissed and for an order that the husband file a Financial Statement forthwith were pressed even if the stay the husband seeks is granted. I respectfully do not consider that to be appropriate. As I have said, I consider that to constitute part of the oppressive, vexatious nature of the proceedings continuing here when all matters involved in the parties’ dispute are before the Court in State C. The stay I have decided to grant applies to all aspects of the proceedings in this Court. I will not make the other orders sought by the wife.

11. Having determined to grant the stay sought by the husband, I am satisfied that it would not be appropriate to grant the anti-suit injunction the wife seeks and I will dismiss that application also.

12. I make the orders set out at the commencement of these written reasons.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 17 October 2018.

Associate: 

Date:  30 October 2018