Mercer and Mercer and Anor
[2010] FMCAfam 269
•25 March 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MERCER & MERCER & ANOR | [2010] FMCAfam 269 |
| FAMILY LAW – Practice and procedure – stay – dissolution of stay – whether appeal required. FAMILY LAW – Practice and procedure – joinder of the husband’s current wife – general claims of equitable interest – joinder for discovery an abuse of process. |
| Family Law Act 1975, s.44 Federal Magistrate Court Rules 2001, r.16.05 Federal Court Rules, O.35, r.7(5) |
| Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137 Cairns, Australian Civil Procedure, (8th ed.) |
| Applicant: | MS M MERCER |
| First Respondent: | MR MERCER |
| Proposed Second Respondent: | MS A MERCER |
| File Number: | MLC 489 of 2007 |
| Judgment of: | Riethmuller FM |
| Hearing date: | 27 January 2010 |
| Date of Last Submission: | 27 January 2010 |
| Delivered at: | Melbourne |
| Delivered on: | 25 March 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Kiernan of Counsel |
| Solicitors for the Applicant: | South East Lawyers |
| Solicitors for the First Respondent: | Mr Darmos |
| Solicitors for the First Respondent: | Kiatos & Co. |
| Counsel for the Proposed Second Respondent: | Mr Dickson of Counsel |
| Solicitors for the Proposed Second Respondent: | R & G Lawyers |
ORDERS
The stay order made 2 December 2008 be dissolved.
The application to join the husband’s wife Ms A Mercer (formerly
Ms O) to the proceedings be dismissed.
The matter be listed for directions on 16 June 2010 at 9.45a.m.
Costs of the parties be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Mercer & Mercer is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 489 of 2007
| MS M MERCER |
Applicant
And
| MR MERCER |
First Respondent
| MS A MERCER |
Proposed Second Respondent
REASONS FOR JUDGMENT
This is an application for parenting orders and a response seeking financial orders. The matter came before me in 2008, at which time I stayed the proceedings in Australia for the reasons set out in my judgment of 2 December 2008.
As set out in the previous judgment, the matter involves a situation where the mother and children are now in Scotland (by agreement), and the father remains in Australia. The orders with respect to contact have not been able to be enforced, despite the father travelling to Scotland to see the children. Attempts to enforce the Australian orders in Scotland were unsuccessful. It became apparent that the issues raised with respect to the children required a family report and that, given the location of the children, it was simply unrealistic for the matter to continue in Australia. As the parties’ property is a relatively small pool, the ultimate outcome of the children’s case could significantly impact upon the property matter.
When the matter was before me on the previous occasion, there was no proper evidence to show that the property proceedings could not be dealt with in Scotland, together with the children’s proceedings.
I therefore stayed the whole of the proceedings in Australia.
Since that time, the mother has obtained advice and an affidavit from a member of counsel in Scotland, clearly setting out that the court in Scotland does not have jurisdiction to deal with the property dispute between the parties as a result of the jurisdictional provisions of the local matrimonial statute law, and the undisputed circumstances of this case with respect to the place of marriage, separation and location of property.
On a practical level, it appears clear that the property issues can only be litigated in Australia as a result of the jurisdictional issues in Scotland, which, on the evidence now before me, are not disputed.
Counsel for the mother submitted that the stay should be dissolved. Counsel for the mother said that he was unable to locate any authorities with respect to the dissolution of a stay, or to assist in determining whether or not I had power to dissolve a stay, or whether the matter would have to be the subject of an appeal.
The solicitor for the father submitted that the stay should remain in place until such time as the mother had her proceedings in Scotland dismissed. Thereafter, the solicitor for the husband says that the wife could apply to the court to have the stay dissolved. As with counsel for the wife, he was unable to refer to any authorities on the issue.
The starting point, in deciding this application, is Part 16 of the Federal Magistrates Court Rules, which deals with judgments and orders. Rule 16.05 sets out the circumstances in which the court may vary or set aside its judgment or order after it has been entered. That rule relevantly provides:
16.05 Setting aside
…
(2) The Court may vary or set aside its judgment or order after it has been entered if:
(a) the order is made in the absence of a party; or
(b) the order is obtained by fraud; or
(c) the order is interlocutory; or
(d) the order is an injunction or for the appointment of a receiver; or
(e) the order does not reflect the intention of the Court; or
(f) the party in whose favour the order is made consents.
(3) This rule does not affect the power of the Court to vary or terminate the operation of an order by a further order.
Rule 16.05(2) is in substantially the same terms as O.35 r.7(2) of the Federal Court Rules, (although r.16.05(3) appears to be a wider ambit than the equivalent in the Federal Court Rules: see O.35 r.7(4).).
In this case, the matters set out in r.16.05(2)(a), (b), (e) or (f) do not apply. The three bases upon which the order could be set aside are:
a)that the order is interlocutory;
b)that the order is an injunction; or
c)pursuant to r.16.05(3).
The test for determining whether an order is interlocutory or final is whether or not it finally disposes of the relevant rights of the parties. There have been a number of High Court decisions considering this test: see, for example, Licul v Corney [1976] HCA 6; (1976) 180 CLR at 213, Hall v The Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423 and Port of Melbourne Authority v Anshun Proprietary Limited (No. 1) [1980] HCA 41; (1980) 147 CLR 35. See also Carr v Finance Corporation of Australia Limited No. 1 (1981) 147 CLR 246. The issues also receive extended discussion in Cairns, Australian Civil Procedure, (8th ed.), at 515 under the heading “Meaning of Interlocutory Matter.”
In the previous judgment, the test set out in Henry v Henry [1996] HCA 51; (1996) 185 CLR 571 was referred to. Quotes from Henry & Henry (in paragraph 17 of the previous decision in this matter) include references to both Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55 (1990); 171 CLR 538 and Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197. A perusal of each of these two earlier High Court authorities makes clear that an order for a stay on the basis of proceedings being in an inappropriate forum is an interlocutory order (in Voth see the majority, Mason CJ, Deane, Dawson and Gaudron JJ at [35], and Oceanic Sun where, in the very first paragraph of the judgment, Wilson and Toohey JJ state “the decision is interlocutory in character”).
A similar situation arises with respect to stays granted in cases where arbitration clauses are enforced, which have also been found to be interlocutory in character: see Hi‑Fert Pty Ltd v Kiukiang Maritime Carriers Inc [1998] FCA 558.
As a result, it appears clear that the order is interlocutory in character, and can therefore be set aside or varied by the court without requiring the parties to appeal.
To the extent that it appears that a stay is an order in the nature of an injunction, it would also be alterable pursuant to the relevant rule, just as an injunction that may have issued to restrain the conduct of proceedings in another court (see Spry, Equitable Remedies, (7th ed.), at 335). As Dr. Spry points out at page 407:
If after an injunction is granted it becomes clear that it cannot be complied with or else is futile it may in an appropriate case be either dissolved or suspended; and in deciding whether the balance of justice inclines towards the grant of relief the court may take into account not only its powers to suspend or discharge its orders subsequently, but also its powers to make the material order conditional on either the occurrence or non‑occurrence of particular events.
At page 382 the author states:
The accepted antithesis to a perpetual injunction is an interlocutory or interim injunction, which is granted in order that the position of the parties may be preserved either in status quo or in some other appropriate manner until a further adjudication by the court of their rights subsequently takes place. Both perpetual and also interlocutory and interim injunctions may at any time be dissolved by the court by which they were granted, should it subsequently become appropriate to do so. [emphasis added]
In support of the proposition, the author refers to Commonwealth Scientific and Industrial Research Organisation v Perry (1988) 92 FLR 182, Cretanor Maritime Co Limited v Irish Marine Management Limited (1978) 1 WLR 966 and RB Harbottle (Mercantile) Limited v National Westminster Bank Limited [1978] QB 146.
It therefore appears that on the basis of r.16.05(2)(d) the court has power to dissolve the stay.
Given that it is clear that there is abundant power for the court to revisit the question of the stay on the material currently before it, I do not need to explore the complexities of the power under r.16.05(3).
In this case it is accepted by all parties that the proceedings with respect to property cannot continue in Scotland. In the circumstances, to allow the stay to remain in force would thwart any hearing of the issue between the parties in this case. This is a strong consideration in favour of dissolving the stay.
Balanced against this must be the fact that there have been proceedings argued before me during which it was open to the wife to bring appropriate evidence on a previous occasion, and she failed to do so. This can be largely dealt with by a costs order. There has also been a significant delay in coming back to the court to seek to have the stay lifted.
The husband’s solicitor argued that the wife should commence proceedings in Scotland and upon being struck out that she could then proceed with this application. On the evidence it is inevitable that she could not sustain proceedings in Scotland with respect to property. I proceed on that basis without requiring pointless proceedings in Scotland. It was not argued that there should be conditions, such as requiring the wife to bring parenting proceedings in Scotland to resolve the terms of contact orders so that the costs of contact can be ascertained with precision.
The underlying issues between the parties demonstrate a prima facie case that is arguable.
I note that the parties in this matter were divorced on 6 June 2006. Section 44(3) of the Family Law Act 1975 limits the time in which property proceedings may be commenced to 12 months from the date the divorce order takes effect unless leave is granted by the court. However, as the wife’s application is contained in a response the wife relies upon s.44(2). I am bound by the Family Court decision in Hedley & Hedley [2009] FamCAFC 179 to find that s.44(2) overcomes the wife’s difficulty under s.44(3).
On balance, I find that it is appropriate to dissolve the stay.
A further matter argued by counsel for the wife is an application to have the husband’s current spouse joined to the proceedings if the proceedings are able to continue on a dissolution of the stay.
It was argued that the husband’s current wife should be joined on the basis that the husband has an equitable interest in the home in which they reside, pursuant to a resulting or constructive trust. Unfortunately counsel provided no authorities on the operation of resulting or constructive trusts. Nor was he able to clearly articulate the basis of the claim. Indeed, aside from orders for discovery, the only order sought with respect to the proposed second respondent is:
2. That the Respondent Wife have leave to join as a party to these proceedings the Applicant Husband’s current wife [the 2nd respondent].
The home is registered in the proposed second respondent’s name. It is not alleged that the husband contributed to the purchase price. The relevant allegations and evidence is in the affidavit of the wife and the husband’s admissions in an affidavit. The wife alleges:
[29] That I verily believe that the Husband has invested these monies either in improvements to the Current Wife’s home or in payment of the mortgage thereon in a deliberate endeavour to place these funds beyond my reach and to defeat my entitlements to property settlement.
[30] That following separation the Husband received the sum of approximately $15,000.00 from the sale proceeds of our business, [O] and also received the sum of 472,587.00 from the sale proceeds of our former matrimonial home.
…
[53] That in light of the aforedetailed I have had no option but to seek the assistance of this Honourable Court and seek that Orders be made providing for the Current Wife to be joined as a party to these proceedings and for both the Husband and the Current Wife to provide full and frank disclosure and proper discovery in order to determine how the Husband has disposed of the matrimonial funds received by him and in the event those funds have in fact been invested into the Current Wife’s property at [WP] that an Adjustment Order be made in my favour enabling me to obtain my proper property settlement entitlements from the equity in this property.
The husband admits:
[15] I did subsequently borrow further monies against the investment property. These funds were applied towards various legal bills and debts including my second visit to Scotland. In reference to the pool at my wife’s home I did contribute $20,000 but this was in December 2005. I used the funds from the matrimonial property settlement and not the funds from the extension of the mortgage as alleged. I did this as a result of my step-daughter being diagnosed with a bone condition known as crondolysis which required various operations and follow up water physiotherapy. The pool was an essential aid in the ongoing treatment and continues to aid in the rehabilitation process.
[16] In regards to paragraph 9 I say that I have no equity in the home and it belongs to my wife. The home is heavily mortgaged to the ANZ for $273,000. I am assisting in the mortgage repayments as my wife cannot meet this commitment. The house does have 5 bedrooms but all are in use as there are 4 step-children with individual bedrooms.
The circumstances in which a resulting trust may operate were clearly summarized by Campbell J in Black Uhlans Incorporated v New South Wales Crime Commission and Ors [2002] NSWSC 1060:
[129] A presumption of a resulting trust can operate in, broadly, three different types of factual situation. The first is where property is conveyed at law, but the entire beneficial interest in that property is not disposed of. The second is where property has been conveyed at law, on a basis which, initially, disposes of the entire beneficial interest, but at a later time equitable obligations attaching to the property fail or are set aside. The third situation is that a presumption of resulting trust arises where one person provides the purchase price of property, which is conveyed into the name of another person.
None of those circumstances appears to be alleged in this case. To the extent that it is suggested that contributions to the mortgage may give rise to a resulting trust alleged to arise based upon Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 (at 263), his Honour pointed out that:
[189] [The] basis upon which the payment of mortgage instalments might have conferred an equitable interest in the property upon the person who paid them [in Calverly v Green] was available only because both the man and the woman were liable to pay the instalments, but the man had made all the payments – he could assert an equity of contributions against her, and possibly have the amount payable pursuant to that equity of contribution secured by an equitable charge.
Similarly, in Rush v Keogh [2000] NSWSC 624 the person making the payments already held an interest in the land (a life estate).
The law relating to constructive trusts is more complex. In this case it is not suggested that there was any fiduciary relationship breached by the payments made by the husband. There is no evidence of a common intention that the property be held for the benefit of the husband, which the payments may evidence (as occurred in Sivritas v Sivritas & Anor [2008] VSC 374). It seems that the basis of the claim must be for a remedial constructive trust of the type described in Muschinski v Dodds (1985) 160 CLR 583 and Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137. It is clear that a constructive trust will be imposed when necessary where a failure to recognize an interest amounts to unconscionable conduct. The unconscionable conduct referred to in Muschinski and Baumgartner was described in Baumgartner as:
32. [In Muschinski v. Dodds] Deane J. (with whom Mason J. agreed) reached this result by applying the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them. His Honour said (at
p 620):
"... the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do: cf. Atwood v. Maude (1868) LR 3 Ch App 369, at pp 374-375 and per Jessel M.R., Lyon v. Tweddell (1881) 17 ChD 529, at p 531."
33. His Honour pointed out (at p 614) that the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention "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". See also p 617. In rejecting the notion that a constructive trust will be imposed in accordance with idiosyncratic notions of what is just and fair his Honour acknowledged (at p 616) that general notions of fairness and justice are relevant to the traditional concept of unconscionable conduct, this being a concept which underlies fundamental equitable concepts and doctrines, including the constructive trust
34. In the present case the parties pooled their earnings with a view to meeting all the expenses and outgoings arising from their living together as a family. … The land at Leumeah was acquired and the house on it was built in the context and for the purposes of that relationship. Together they planned the building of the house. Together they inspected it in the course of its construction. Together they moved out into it and made it their home after it was built.
…
36. The case is accordingly one in which the parties have pooled their earnings for the purposes of their joint relationship, one of the purposes of that relationship being to secure accommodation for themselves and their child. Their contributions, financial and otherwise, to the acquisition of the land, the building of the house, the purchase of furniture and the making of their home, were on the basis of, and for the purposes of, that joint relationship. In this situation the appellant's assertion, after the relationship had failed, that the Leumeah property, which was financed in part through the pooled funds, is his sole property, is his property beneficially to the exclusion of any interest at all on the part of the respondent, amounts to unconscionable conduct which attracts the intervention of equity and the imposition of a constructive trust at the suit of the respondent.
The difficulty in the present case is that there is no evidence of unconscionability in the arrangement between the husband and his current wife. No remedial trust is required – there is no evidence that the husband is receiving less than he expected, or is discontented with the arrangement. This is not a tracing claim, as there is no proprietary interest that the wife claims in the funds the husband paid, nor is it alleged that he owed the wife some form of fiduciary duty. There are no claims to set aside transactions.
That the husband may obtain a property interest in the future pursuant to a court exercising a discretion under s.79 of the Family Law Act is nothing more than a mere possibility, and does not give him an equitable proprietary interest now.
On the present material the wife has not established an arguable case that the husband has a proprietary equitable interest in the land owned by his current wife. As a result there is no basis to join the husband’s current wife to the proceedings on the current material. There are no orders sought against her other than for discovery. It is an abuse of process to join a party merely to obtain discovery.
I therefore dissolve the stay, and refuse the application to join the proposed second respondent.
In the circumstances, I will list the matter for a further mention on
16 June 2010 in the next duty list for directions as to the further conduct of the matter.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
Associate: Katherine Sudholz
Date: 24 March 2010
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