Moretti & Moretti (No 2)
[2024] FedCFamC1F 570
•28 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Moretti & Moretti (No 2) [2024] FedCFamC1F 570
File number(s): MLC 3989 of 2020 Judgment of: STRUM J Date of judgment: 28 August 2024 Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – JURISDICTION –whether the Court has jurisdiction to entertain claim by intervenor – where non-monetary orders have been made in VCAT for rehabilitation of land by spouse parties – whether intervenor is a creditor or person entitled to become a party pursuant to s 79(10) of the Family Law Act 1975 – whether intervenor is entitled to seek orders by virtue of s 92(3) of the Family Law Act 1975 – whether claim is within Court’s accrued jurisdiction – where it is held that the Court does not have jurisdiction – intervenor removed as a party to the proceedings and interlocutory orders previously made in its favour discharged Legislation: Family Law Act 1975 (Cth), Part VIII, ss 75(2)(ha), 78, 79, 79A, 80, 90AE, 90AF, 92(3), 106B (previously s 85)
Family Law Rules 2004 (Cth), r 6.05 and r 6.06
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), r 10.09
Planning and Environment Act 1987 (Vic), s 114 and s 123
Victorian Civil and Administrative Tribunal Act 1990 (Vic), Div 9, ss 3, 121, 122
Cases cited: Akbar v Gandega [2023] FedCFamC1A 174
Barro & Barro (1983) FLC 91-300
Bevan & Bevan (2013) FLC 93-545
Biltoft and Biltoft (1995) FLC 92-614
Bishop and Bishop [2003] FamCA 240
Camden v Laue [2018] FamCAFC 91
Cao & Trong [2018] FamCA 460
Colburn & Cleese [2022] FedCFamC1A 147
D Pty Ltd and Ors & Sadler and Ors (2016) FLC 93-736
Davidson and Davidson (No 2) (1984) FLC 92-469
Deputy Commissioner of Taxation (WA) v Spanjich [1988] FLC 91-974
Deputy Commissioner of Taxation v Kliman & Kliman [2002] FLC 93-113
Dougherty v Dougherty (1987) 163 CLR 278
Ex parte Catholic Bishops Conference (2002) CLR 372
F Firm & Ruane (2014) FLC 93-611
Fencott v Muller (1983) 152 CLR 570
Harris v Caladine (1991) 172 CLR 84
Malloy and Ors & Stopford Malloy [2017] FamCAFC 204
Marriage of Shewring (1987) 12 Fam LR 139
Martin & Newton (2011) FLC 93-490
Moira SC v Sidebottom Group Pty Ltd [2015] VSC 577
Moretti & Moretti [2020] FamCA 1104
Prince and Prince (1984) FLC 91,501
Puddy & Grossvard [2010] FamCAFC 54
Re McBain; Ex parte Catholic Bishops Conference (2002) CLR 372
Re Ross-Jones; Ex parte Beaumont (1979) 141 CLR 504
Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR
Rizeq v Western Australia (2017) 262 CLR 1
Rowell and Rowell; DFC of T (Intervener) (1989) FLC 92-026
Stanford v Stanford (2012) FLC 93-518
Tomaras & Tomaras and Anor and Commissioner of Taxation [2017] FamCAFC 216
Valder & Saklani (2021) FLC 94-042
Victoria v Tymbook Pty Ltd & Anor [2010] VCAT 418
Warby and Warby (2002) FLC 93-091
Yong & Weng [2024] FedCFamC1F 440
Zdravkovic and Zdravkovic (1982) FLC 91-220
Australian Law Dictionary (Oxford University Press, 3rd edition, 2018)
Black’s Law Dictionary (12th edition, 2024)
Macquarie Dictionary (Pan Macmillan Australia, 2024)
Division: Division 1 First Instance Number of paragraphs: 170 Date of hearing: 20 May 2024 and 7 June 2024 Place: Melbourne Counsel for the Applicant: Dr Matta Solicitor for the Applicant: Kenna Teasdale Lawyers Counsel for the Respondent: Ms Tulloch and Mr Gray Solicitor for the Respondent: Fair Family Law Counsel for the Intervener: Mr Fuller Solicitor for the Intervener: Hunt & Hunt ORDERS
MLC 3989 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MORETTI
Applicant
AND: MR MORETTI
Respondent
B ORGANISATION
Intervener
ORDER MADE BY:
STRUM J
DATE OF ORDER:
20 AUGUST 2024
THE COURT ORDERS THAT:
1.The Response to Amended Initiating Application filed on 12 March 2024 by the first intervenor, B Organisation, be dismissed for want of jurisdiction.
2.Paragraph 3 of the Orders made by the Honourable Justice Wilson on 21 September 2020 be discharged and B Organisation be removed as a party to these proceedings.
3.The funds held upon trust by Hunt & Hunt, solicitors for B Organisation, for the husband, the wife and B Organisation, pursuant to paragraph 1 of the Orders made by the Honourable Justice McEvoy on 14 December 2020, be forthwith paid to the husband's solicitors, Fair Family Law, and held by them in an interest-bearing controlled monies account on behalf of the husband and the wife pending further order of the Court.
4.The proceedings be listed for mention and the making of any necessary further Orders, as well as trial directions, arising from the making of these Orders, on a date to be fixed before the Honourable Justice Strum as soon as practicable.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Strum J
INTRODUCTION
There is little in these proceedings, at least to date, upon which the applicant wife and the respondent husband agree. However, one thing upon which they now agree is their contention that the Court does not have jurisdiction, in this case, to entertain the claim against them brought by the first intervener, namely, the B Organisation. Other parties have also intervened in the proceedings, with different claims; however, they are not germane to the discrete issue the subject of these reasons for judgment.
For the reasons which follow, I accept the contention of the husband and the wife and, accordingly, B Organisation’s claim against them in this Court will be dismissed; B Organisation will be removed as a party to the proceedings; and the funds held upon trust for the husband, the wife and B Organisation, by the solicitors for B Organisation, will be forthwith paid to the husband's solicitors, as sought by him, and held by those solicitors in an interest-bearing controlled monies account on behalf of the husband and the wife pending further order of the Court.
BACKGROUND
In late 2014, the husband and the wife purchased a property situate at K Street, Suburb S in the State of Victoria (“Suburb S”). Suburb S was registered in the name of G Pty Ltd as trustee for their self-managed superannuation fund, Superannuation Fund 1. They are the only members of the fund and directors of G Pty Ltd.
Through another corporate entity controlled and owned by the husband and the wife, P Company, they operated a business in Suburb S.
In 2015, B Organisation commenced proceedings in the Victorian Civil and Administrative Tribunal (“VCAT”) in respect of a facility conducted at Suburb S without a permit.
In late 2016, a permit was issued to use and develop Suburb S for a facility, in respect of particular materials, subject to a number of conditions (“Permit”). Relevantly, condition 10 of the Permit provided that:
Prior to the commencement of the use, the owner must provide an unconditional bank guarantee (or other form of security that is to the satisfaction of the Responsible Authority) in favour of [B Organisation]. The bank guarantee will allow [B Organisation], if it desires, to rehabilitate the land in the event the owner is unwilling or unable to do so, or if the [B Organisation] cannot compel the owner to do so. Prior to providing a guarantee, the owner must provide a detailed scope of rehabilitation works (including costings) by a suitably qualified person. The scope of rehabilitation must return the land to its state prior to the use commencing (including activities that occurred prior to the grant of a planning permit). The costings must include reasonable contingencies that account for the life of the permit. The [B Organisation] will return the bank guarantee to the owner upon the owner rehabilitating the land.
See the relevant VCAT proceedings at Appendix A.
It is common ground that, in the ensuing eight years, no guarantees have been provided.
On 6 March 2019, the husband and the wife separated.
In early 2019, B Organisation applied to VCAT for an enforcement order against G Pty Ltd, the husband and the wife in relation to alleged contraventions of the Permit (“VCAT Proceedings”). None of the respondents to the VCAT Proceedings denied the contravention.
In late 2019, VCAT found the contraventions proven and made orders requiring G Pty Ltd, the husband and the wife to comply with the Permit, which included undertaking rehabilitation works on Suburb S (“VCAT Order”). The VCAT Order also relevantly provided that:
7.By no later than [late] 2019, the respondents must give the responsible authority an unconditional bank guarantee or bank guarantees in the sum of $1,195,000 in accordance with condition 10 of the permit for the full cost of rehabilitating the subject land.
8.If the responsible authority serves of peer review on the respondents on or before [early] 2020, the respondents must give the responsible authority an additional bank guarantee for any additional amount that the actual cost in the peer review exceeds the bank guarantee given in accordance with order 7.
I observe, parenthetically, that an order to provide a bank guarantee for an unspecified amount, such as in paragraph 8 of the VCAT Order, appears unusual and must be dependent upon the willingness of a bank to provide same, dependent in turn upon the security that can be provided for it. Presumably, even the richest person in Australia would not be able to procure a bank guarantee for an unlimited amount; it would be limited by the extent of the security available and acceptable to be provided for it. Nearly four decades ago, in Marriage of Shewring (1987) 12 Fam LR 139 at 141, Nygh J, in the context of the assessment of contributions pursuant to s 79(4) of Family Law Act 1975 (Cth) (“FLA”), referred to “the Holmes à Court’s [sic] of this world”. It is unnecessary, for present purposes, to name an equivalent in the third decade of the 21st century.
In the course of these proceedings to date, B Organisation initially contended that the cost of rehabilitating Suburb S might be as high as $14.4 million and, more recently, as high as $19.4 million. That quantum is disputed by the husband and the wife.
On 23 April 2020, the wife instituted proceedings in this Court (then called the Family Court of Australia), by Initiating Application, invoking the Court’s jurisdiction under Part VIII of the FLA for an alteration of the husband’s and her interests in property.
On 18 September 2020, before the husband had even filed a Response to Initiating Application, B Organisation filed an Application in a Case seeking that:
·B Organisation be joined as a party to the proceedings;
·the husband and the wife, in their capacity as directors of G Pty Ltd or otherwise, be restrained from entering into final orders without B Organisation being heard in relation to the making of any such orders; and
·the Court exercise accrued jurisdiction to enforce the VCAT Order.
Insofar as B Organisation sought to be “joined as a party to the proceedings” (sic), on 21 September 2020, the Honourable Justice Wilson granted leave for B Organisation to intervene in these proceedings and restrained the husband and the wife from entering into final orders without B Organisation being heard in relation to the making thereof. Those orders do not state that they were made by consent; however, reasons for judgment do not appear to have been given. That may be due to a misapprehension as to whether or not B Organisation was a person entitled as of right, or who required leave, to intervene in the proceedings. The Family Law Rules 2004 (Cth) (“2004 Rules”), then in force distinguished been a person who “seeks to intervene in the case to become a party” (in r 6.05) and a person who is “entitled under the [Family Law] Act to [intervene in the proceeding] without the court’s permission” (in r 6.06). However, shortly thereafter, at a hearing before the Honourable Justice McEvoy, to which I refer below, his Honour noted that “both the husband and the wife … conceded before Wilson J, that the Court had jurisdiction to make the orders sought by” B Organisation. Nevertheless, as the Full Court restated in Akbar v Gandega [2023] FedCFamC1A 174 at [4], “the parties could not consensually invest the Court with jurisdiction or power it did not possess”, referring to Harris v Caladine (1991) 172 CLR 84 at 133.
The following day, on 22 September 2020, B Organisation filed a Notice of Intervention by Person Entitled to Intervene [emphasis added]. That is unusual, in circumstances where, only a few days earlier, it sought leave to intervene. If it were entitled to intervene, the application for joinder and the grant of leave to intervene were otiose.
As referred to below, notwithstanding that grant of leave to intervene and/or the Notice of Intervention, it was not until 12 March 2024, some three and a half years later, and after non‑compliance with various orders that it do so, that B Organisation finally particularised the relief it seeks in these proceedings, in what was styled an “amended” Response to Amended Initiating Application. However, it was no amendment at all; no Response to Initiating Application (amended or otherwise) had ever been filed by B Organisation. That particularised relief is set out and considered below.
Three days after granting leave to B Organisation to intervene, on 24 September 2020, the Honourable Justice Wilson ordered that, on or before 4 pm on 23 October 2020, the husband and the wife remove prohibited material, as defined in the VCAT Order, to the satisfaction of the responsible authority under the Planning and Environment Act 1987 (Vic) (“Planning and Environment Act”) (namely, B Organisation).
On 27 October 2020, the Husband filed a Response to Initiating Application also seeking final orders under Part VIII of the FLA for an alteration of interests in property.
On 14 December 2020, upon application by B Organisation, the Honourable Justice McEvoy made orders authorising it to sell properties at C Street, Suburb D, New South Wales; E Street, Suburb D, New South Wales; and F Street, Suburb R, New South Wales owned by the spouse parties or companies controlled by them. His Honour further ordered, in summary, that the net proceeds of each sale be held in the trust account of the solicitors for B Organisation and applied to the removal of combustible material; maintenance reasonably required to reduce risk of combustible material; and/or the provision by the husband and the wife of a security deposit or bank guarantee in relation to the obligations of the husband, the wife and G Pty Ltd pursuant to the VCAT orders to effect the said removal and maintenance. I observe that both the Permit and the VCAT Order required only the provision of bank guarantees, and not a security deposit. However, no point was (or has been) taken in this regard.
In his Reasons for Judgment (Moretti & Moretti [2020] FamCA 1104), McEvoy J said (at [3]):
… It is said on behalf of the intervener that the application which is made for the orders in the intervener’s application in a case is made having regard to the court’s accrued jurisdiction and that, to date, it has been conceded by both the husband and the wife, and was so conceded before Wilson J, that the Court had jurisdiction to make the orders sought by the intervener.
His Honour further said (at [12]):
I accept the submissions of [Mr Y] on behalf of the intervener that the orders sought by the intervener the only reasonably practicable option to remedy long-standing breaches of the permit issued by the intervener under the Planning and Environment Act 1987 (Vic) and the VCAT orders which were made [in late] 2019. Put simply, the wife and the husband have now had in excess of 12 months to comply with those orders and they have not done so. They have now had almost 2 months to comply with the orders made by Wilson J on 24 September 2020 that on or before 4 pm on 23 October 2020 they remove the prohibited material is defined in the VCAT orders which require that access be granted as between the applicant and the respondent to enable these orders to be performed.
The wife now contends that, insofar as McEvoy J said that the orders sought by B Organisation were “the only reasonable practicable option” to remedy long-standing breaches of the Permit and the VCAT order, it was not reasonably open to his Honour to so conclude and that there were other enforcement options open to it. However, as noted above, it appears that neither she nor the husband opposed the application by B Organisation for leave to intervene, and there was no appeal, or application for leave to appeal, the grant of leave by Wilson J on 21 September 2020. Even so, that is in no way determinative of, or even relevant to, the issue presently for determination; either this Court has jurisdiction to determine B Organisation’s claim or it does not.
On 19 May 2023, I made orders by consent (inter alia) listing the proceedings for trial before me on 19 February 2024 and for the filing of trial material by all parties. Relevantly, B Organisation was required to file and serve “any Amended or Further Amended Response to Initiating Application setting out with precision the orders sought at trial” by 4 pm on 27 October 2023. It was not brought to the attention of the Court that, in fact, B Organisation had never hitherto filed a Response to Initiating Application, such that there was nothing to amend or further amend.
By this stage, B Organisation had been a party to the proceedings for over three years and yet it had never specified, with any particularity, the final relief it sought.
On 22 September 2023, a Senior Judicial Registrar ordered, inter alia, that the filing time for B Organisation be extended to 28 November 2023.
On 10 November 2023, the wife filed her amended Initiating Application. Relevantly, she seeks (inter alia), that she retain Superannuation Fund 1 (and, by implication Suburb S); she have the sole conduct of the rehabilitation of Suburb S; and the funds held upon trust by the solicitors for B Organisation be applied towards the costs thereof.
On 14 November 2023, I made further orders which, inter alia, extended the time for B Organisation to file and serve its documents to 11 December 2023. Notwithstanding the two extensions of time, inexplicably, it did not do so.
On 13 December 2023, the husband filed his amended Response to Initiating Application. Relevantly, he seeks, as against B Organisation, the following orders:
3.Pending compliance with the [late] 2019 orders made by VCAT in relation to the Wife, the Husband and [G Pty Ltd] operation of the said orders be stayed to the extent that they create any obligation or liability for the Husband.
4.The Wife indemnify the Husband and keep him indemnified in relation to all liability arising from her obligations pursuant to the [late] 2019 orders made by VCAT.
5.The First Intervenor be and is hereby restrained from commencing any further proceedings in VCAT, this court or any other court against the Husband personally or in his capacity as a director of [G Pty Ltd] arising from any alleged contravention of Planning Permit no. […] issued [in late] 2016.
6.The First Intervenor pay to the Husband and/or the Wife a sum equivalent to the loss suffered by the Husband and/or the Wife due to the failure of the First Intervenor to undertake in a timely manner the acts and things set out in orders 1 and 2 made on 14 December 2020.
7.All extant applications filed by the First Intervenor be otherwise dismissed.
…
21.The Wife to within 60 days of the date of these orders pay to the husband an amount calculated as 75% of the value of the property at [K Street, Suburb S] (“the Super payment”).
22Upon the husband receiving the Super payment, the Husband and the Wife each do all things necessary to transfer to the Wife all of the Husband’s interest in the [Superannuation Fund 1].
23.The Wife to forthwith do all things necessary to comply with the [late] 2019 orders made by VCAT in relation to the property at [K Street, Suburb S] with any future costs of such compliance to be paid by the Husband and the Wife as follows:
(a)The said costs up to an amount of $1,195,000 to be paid in the proportions of 75% by the Husband and 25% by the Wife; and
(b) All costs over $1,195,000 to be paid by the Wife.
However, at that stage, no issue of jurisdiction in respect of the claim of B Organisation had been yet taken; that claim remained unparticularised and, in fact, unknown. Thereafter, insofar as proposed orders 3, 5 and 6 are concerned, his counsel have made it clear, both in their written and their orals submissions, that he does not seek or pursue any relief against B Organisation pursuant to Part VIIIAA (for example, ss 90AE and 90AF) of the FLA. Insofar as proposed Order 4 is concerned, such an order, if made, would be inter partes as between spouse parties only, and could not affect or vary their joint and several liability to B Organisation pursuant to the VCAT Order. Indeed, annexed to the husband’s Case Outline filed on 26 March 2023, is a proposed (but as of yet unfiled) further amended Response to Initiating Application in which no relief is proposed by him against B Organisation in relation to Suburb S. Insofar as relief is proposed in relation to B Organisation, it is for the removal of caveats lodged by it over other real properties (presumably pursuant to paragraph 2 of the Orders made by Wilson J on 30 October 2020 authorising it to do so) and costs. Further, he propose orders in relation to the remediation of Suburb S as between the wife and him, but which do not affect their joint and several liability to B Organisation pursuant to the VCAT Order.
On 7 February 2024, less than a fortnight before the date on which the proceedings were listed for trial, B Organisation filed an Application in a Proceeding seeking, inter alia, an adjournment of the trial until May 2024 and a further extension of time for the filing of its documents until 5 April 2024.
On 14 February 2024, the wife filed a Response to an Application in a Proceeding relevantly seeking the dismissal of B Organisation's Application in a Proceeding.
That day, the husband also filed a Response to an Application in a Proceeding seeking, inter alia, that B Organisation be removed as a party to the proceedings and that, in summary, the monies held upon trust for B Organisation, the wife and him thereafter be held upon trust solely for the wife and him pending agreement between them or further order of the Court.
In the circumstances of default by B Organisation, on 19 February 2024, the question arose as to whether the juridical basis had been established for the relief sought by B Organisation to date, namely, in its Application in a Case filed on 18 September 2020, merely being that the Court “exercise accrued jurisdiction to enforce the orders made in Victorian Civil and Administrative Tribunal proceeding […]”. The trial was adjourned and, inter alia, B Organisation was ordered to file a Response to Initiating Application and written submissions specifically addressing the juridical basis for the relief sought by it therein by 8 March 2024.
Yet again, B Organisation failed to comply with orders, inexplicably only filing those documents on 12 March 2024. In its Response to Amended Initiating Application, for the first time, B Organisation particularised the relief it seeks in these proceedings. The relief sought (albeit inelegantly drafted) is as follows:
1.The funds currently held on Trust by the solicitors for the First Intervenor be applied as follows:
(a)The amount of $1,195,000 be allocated for or toward the purpose of remediation of the property at [K Street, Suburb S], Victoria ([K Street])] in accordance with the conditions of the First Intervenor's planning permit […] and the Orders made by the Victorian Civil and Administrative Tribunal in its proceeding […] [in late] 2019, such amount to be held by the solicitors for the First Intervenor (‘[K Street] Property Remediation Fund’);
(b)Upon the issue of the Sampling & Analytical Quality Plan (SAQP) Testing Report by [Mr L] of [T Pty Ltd] ([Mr L’s] report), a further amount be allocated to the [K Street] Property Remediation Fund, such being equal to the amount estimated in the report as required for remediation less $1,195,000.
(c)The balance (if any) to be divided between the husband and the wife as the Court considers just and equitable.
2.In the event that there remains a shortfall between the amount estimated in the [Mr L’s] report required for remediation (remediation estimate) and the [K Street] Property Remediation Fund, the net proceeds of sale of the Husband's property at [C Street, Suburb D], NSW ([Suburb D]) be applied as follows:
(a)the amount of the costs and expenses incurred by the First Intervenor in relation to [ Suburb D] under Interim Orders made 14 December 2020; and
(b)an amount equal to the shortfall between the estimate and the [K Street] Property Remediation Fund be paid to the the [sic] solicitors for the First Intervenor to be held as part of the [K Street] Property Remediation Fund;
(c)The balance (if any) to be divided between the husband and the wife as the Court considers just and equitable.
3. In the event that, after compliance with order 2 herein:
(a)there remains a shortfall between the remediation estimate and the amount held in the [K Street] Property Remediation Fund, and
(b)the Wife's property at [F Street, Suburb R], NSW ([ F Street]) has not been transferred to the Second Intervenor,
the net proceeds of sale of [F Street] be applied as follows:
(c)the amount of the costs and expenses incurred by the First Intervenor in relation to [F Street] under Interim Orders made 14 December 2020; and
(d)an amount equal to the shortfall between the remediation estimate and the amount held in the [K Street] Property Remediation Fund be paid to the solicitors for the First Intervenor to be held on Trust in the [K Street] Property Remediation Fund,
(e)The balance (if any) to be divided between the husband and the wife as the Court considers just and equitable.
4.Within 28 days of the issue of the [Mr L] report, the Husband and the Wife jointly engage [Mr L] of [T Pty Ltd] (or in the absence of his availability, an environmental consultant chosen by the Husband and the Wife jointly from a shortlist prepared by the First Intervenor based on criteria provided by [Mr L], or by [Mr U] of [V Pty Ltd] or by [Mr W] of [X Pty Ltd]) (the supervising consultant) to prepare a shortlist of suitable contractors to be engaged as a head works contractor to conduct works required for the remediation purpose (the contractor shortlist) (the remediation works), and to supervise the remediation works (the head works contractor).
5.Within 28 days of the issue of the contractor shortlist, the Husband and the Wife jointly engage a head works contractor chosen by the Husband and the Wife jointly from the contractor shortlist, to conduct the remediation works under the direction and supervision of the supervising consultant.
6.The costs of—
(a) the First Intervenor of and in relation to the Proceeding,
(b) [Mr U] of [V Pty Ltd],
(c) [Mr L] of [T Pty Ltd],
(d) the supervising consultant,
(e) the head works contractor, and
(f)any subcontractor for works whose costs have been pre-approved by the supervising consultant and the head works contractor,
be paid from the [K Street] Remediation Fund.
7.If, following the application of funds pursuant to paragraph 6 above, surplus funds are held, the surplus funds be divided between the husband and the wife as determined just and equitable by the Court.
8.Costs.
9.Liberty to apply with respect to the enforcement of these Orders in the event of default or the inability of a non-party to undertake any steps referred to in these Orders.
In its Outline of Case, B Organisation sets out what it contends to be three jurisdictional basis for the relief sought by it, being:
·as a party entitled to intervene and seek its own orders pursuant to s 79(10) of the FLA;
·as a party granted leave to intervene to seek its own orders pursuant to s 79, by virtue of s 92(3) of the FLA; and
·pursuant to the Court's accrued jurisdiction.
The wife, supported by the husband, contends that each of the three bases identified by B Organisation is fundamentally flawed and that its amended Response to Amended Initiating Application filed 12 March 2024 should be dismissed for want of jurisdiction pursuant to r 10.09(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ("Rules").
VCAT ORDERS
It is necessary, first, to consider the VCAT Orders and, in particular, the status thereof.
The VCAT Proceedings were instituted by B Organisation pursuant to s 114 of the Planning and Environment Act, naming each of the husband, the wife and G Pty Ltd as respondents to its application, seeking an enforcement order. Section 114 provides:
(1)A responsible authority or any person may apply to the Tribunal for an enforcement order against any person specified in subsection (3) if a use or development of land contravenes or has contravened, or, unless prevented by the enforcement order, will contravene this Act, a planning scheme, a condition of a permit or an agreement under section 173.
(3)An enforcement order may be made against one or more of the following persons—
(a) the owner of the land;
(b) the occupier of the land;
(c) any other person who has an interest in the land;
(d)any other person by whom or on whose behalf the use or development was, is being, or is to be carried out.
It is not, and never has been, in contention that any of the husband, the wife or G Pty Ltd did not fall within the purview of s 114(3) of the Planning and Environment Act.
The enforcement order sought by B Organisation in the VCAT Proceedings was, in summary, that the husband, the wife and G Pty Ltd:
·Immediately stop accepting material until the contraventions had ceased or been rectified.
·Remove prohibited material within two months (if in sorted piles) or four months (if an unsorted piles).
·Provide the bank guarantee required by condition 10 of the Permit or an additional guarantee for any higher amount contained in reports to be commissioned by B Organisation.
·Remove all material within six months and rehabilitate the land within 12 months if the prohibited material was not removed by the specified dates.
See B Organisation v G Pty Ltd VCAT proceedings at [14].
It is contended by B Organisation, in these proceedings, and it does not appear to be in dispute, that each of the husband, the wife and G Pty Ltd has failed to comply with the VCAT Order.
Division 9 of the Victorian Civil and Administrative Tribunal Act 1990 (Vic) ("VCAT Act") deals with orders made by VCAT. Sections 121 and 122 respectively address the process of enforcing a monetary order and a non-monetary order. Those sections provide as follows:
121 Enforcement of monetary orders
(1) A person in whose favour a monetary order is made may enforce the order in—
(a)if the amount owing under the order is within the jurisdictional limit of the Magistrates' Court, the Magistrates' Court; or
(b)otherwise, either the County Court or the Supreme Court.
(2)For the purposes of the enforcement of a monetary order under subsection (1), the order is taken to be an order of the court in which it is to be enforced.
122 Enforcement of non-monetary orders
(1)A person in whose favour a non-monetary order is made may enforce the order in the Supreme Court.
(2)For the purposes of the enforcement of a nonmonetary order under subsection (1), the order is taken to be an order of the Supreme Court.
Section 3 of the VCAT Act defines a “monetary order” as:
“an order of the Tribunal requiring the payment of money, including a fine or penalty”.
Section 3 of the VCAT Act also defines a “non-monetary order” as:
“an order of the Tribunal other than a monetary order”.
The VCAT Order, inter alia, merely requires the husband and the wife (as well as G Pty Ltd) to “give [B Organisation] an unconditional bank guarantee or bank guarantees in the sum of $1,195,000 in accordance with condition 10 of the permit for the full cost of rehabilitating the subject land”.
It is contended by the husband and the wife, and it is not disputed by B Organisation, that the VCAT Order falls into the category of a non-monetary order, within the meaning of s 122 of the VCAT Act.
In her Outline of Submissions and Contentions filed on 25 March 2024, the wife points to the fact that, as at that date, more than four years after it was made, B Organisation took no steps to register the VCAT Order. Presumably by reason of having been so put on notice, in early 2024, the VCAT Order was filed by B Organisation in the Supreme Court of Victoria and that order, sealed by that Court, was tendered by B Organisation in evidence in this Court. Thus, it appears that B Organisation has taken at least the first step towards enforcing the VCAT Order in the Supreme Court.
On filing an order of VCAT in the Supreme Court, any application for further orders relating to the order in question, such as orders relating to the implementation of that order, must be made in the Supreme Court of Victoria, and not in VCAT.
In Victoria v Tymbook Pty Ltd & Anor [2010] VCAT 418, a non-monetary order made by VCAT was filed in the Supreme Court of Victoria, pursuant to s 122(3) of the VCAT Act. Although that section has since been amended, those amendments are not presently germane. Section 122 then provided:
122 Enforcement of non-monetary orders
(1) A person may enforce a non-monetary order by filing in the Supreme Court—
(a)a copy of the order certified by a presidential member or the principal registrar to be a true copy; and
(b)that person's affidavit as to the non-compliance with the order; and
(c)a certificate from a judicial member stating that the order is appropriate for filing in the Supreme Court.
…
(3)On filing, the order must be taken to be an order of the Supreme Court, and may be enforced accordingly.
Senior Member Walker said in that case, at [25]:
Once the certificate is filed in the Supreme Court, it must be taken to be an order of the Supreme Court and may be enforced accordingly (s.122(3)). That would apply to the whole of the order and so, once filed, I think that any application such as this would have to be brought in the Supreme Court.
See also, generally, Moira SC v Sidebottom Group Pty Ltd [2015] VSC 577 per Zammit J (sic).
Lastly, I note that s 123 of the Planning and Environment Act, to which counsel for the husband refer in their written submissions at [37], provides:
(1)The responsible authority, or, with the consent of the Tribunal, any other person may—
(a)carry out any work which an enforcement order or interim enforcement order required to be carried out and which was not carried out within the period specified in the order; and
(b)recover the costs of the work from the person in default in any court of competent jurisdiction as a debt.
(2)The responsible authority or other person carrying out any work under subsection (1) may sell any building, equipment or other materials salvaged in carrying out that work if the authority or person is satisfied that the building equipment or materials is or are the property of the land owner or the person against whom the order is made and apply the proceeds of the sale toward payment of the expenses incurred in carrying out the work.
(3)Subsection (2) does not authorise the sale of Crown property including Crown land.
Thus, pursuant to that section, B Organisation could itself have carried out the rehabilitation works required to be carried out by the VCAT Order and then recovered the costs thereof from the husband, the wife and/or G Pty Ltd in the Supreme Court of Victoria. It has not done so; rather, it seeks (inter alia) bank guarantees “for the full cost of rehabilitating” Suburb S pursuant to the VCAT Order.
FIRST CONTENDED JURISDICTIONAL BASIS: SECTION 79(10)
The first basis upon which B Organisation contends that this Court’s jurisdiction is enlivened to make the final orders sought by it is pursuant to s 79(10) of the FLA, which relevantly provides:
(10)The following are entitled to become a party to proceedings in which an application is made for an order under this section by a party to a marriage (the subject marriage):
(a)a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the order were made;
…
(b)any other person whose interests would be affected by the making of the order.
B Organisation contends that it is a person entitled, as of right, to intervene in these proceedings pursuant to those paragraphs of that sub-section, and that it seeks orders with respect to these proceedings.
Section 79(10)(a)
Insofar as B Organisation contends it is a creditor of the husband and the wife, for the purposes of paragraph (a) I do not agree. B Organisation does not dispute the submission against it that the VCAT Order is a non-monetary order, within the meaning of s 122 of the VCAT Act. In its outline of case, B Organisation merely raised, but did not answer, the question “whether the outstanding bank guarantee(s) are sufficient to give rise to a conclusion that the First Intervener is a ‘creditor’ for the purposes of s 79(10)(a)”. In oral submissions, counsel for B Organisation valiantly but, in the result, for the reasons hereafter, unsuccessfully to my mind, endeavoured to make out that his client is a creditor of the spouse parties.
The wife contends, supported by the husband, that they are not indebted to B Organisation for any sum; rather, they are required to provide security, by way of a bank guarantee, to ensure they, and G Pty Ltd, comply with the Permit and the VCAT Order. Accordingly, it is contended that they are not creditors of B Organisation. In the circumstances, it is further contended that the phrase in s 79(10)(a), namely, “if the creditor may not be able to recover his or her debt if the order were made” is constrained by the preceding phrase, namely, “a creditor of a party to the proceedings”.
Counsel for B Organisation referred in oral submissions to two authorities in an endeavour to establish that it is a creditor of the husband and the wife: Cao & Trong [2018] FamCA 460 (Cronin J) and Tomaras & Tomaras and Anor and Commissioner of Taxation [2017] FamCAFC 216 (Full Court).
Insofar as Cao & Trong is concerned, it adds nothing to the issue before me for determination. In that case, the husband had a taxation liability, asserted to be in excess of $16.5 million, which he had failed to pay. The Commissioner of Taxation was clearly a creditor of the husband (albeit that he had lodged an objection to the notice of assessment) and, unlike in the present case, the wife was not legally liable for that liability. Relevantly to the present case, Cronin J referred at [62] to the decision of the Full Court in Puddy & Grossvard [2010] FamCAFC 54, where Coleman J (with whom Warnick and Boland JJ agreed), said at [60] that s 79(10)(a) and (b) “appear to refer to a debt which is not controversial … and to interests which are not controversial”. Coleman J continued at [61] – [62]:
[61]However, I am not convinced that the combination of these sections provides a jurisdictional basis for entertaining the liquidator’s claim. These provisions enable a creditor to intervene in proceedings in the circumstances referred to in s 79(10)(a), and oblige the court in such circumstances to have regard to the matter identified in s 75(2)(ha). There is a material distinction between being a “creditor” and asserting an indebtedness which is disputed. A jurisdictional basis other than s 79 thus needs to be enlivened in order for the court to entertain disputed debt claims.
[62]There has never been any real doubt that the court could order one party to a marriage to indemnify the other party to the marriage with respect to a liability to a third party. Subsequent to the 2003 amendments, and subject to compliance with the relevant provisions of the Act, the court may be able to order that a creditor be limited to its rights against one party to the marriage, notwithstanding that both parties to the marriage were indebted to it. As has been earlier noted it is less than clear that s 90AE provides an independent jurisdictional basis for the court to entertain a claim such as that of the liquidator in this case.
Puddy & Grossvard was a case decided in the exercise of the Court’s accrued jurisdiction and not pursuant to s 79(10)(a) or (b), which jurisdiction was doubted by the Full Court on the facts of that case.
Cronin J in Cao & Trong continued at [63] that, insofar as the Commissioner relied upon Puddy & Grossvard in support of his proposition that he had an independent right to seek orders under s 79, by virtue of his position under s 79(10) (and s 75(2)(ha)):
… There is some doubt as to whether the debt due to the Commissioner is a settled sum but in my view, that does not affect the fact that there is an acknowledged debt. Both husband and wife set out clearly in their respective court documents in 2016 that there was an unpaid liability to the Commissioner even if it was the subject of a dispute as to quantum. Thus, in my view, the debt to the Commissioner is either a sum certain or alternatively, if any party so desired, any objection could be determined by the Court. …
In the present case, not only is there not a “debt which is not controversial” or an “acknowledged debt” but, in my view, there is no debt at all; rather, there is merely an order for the provision of security, by way of bank guarantee(s), for compliance with rehabilitation and an order therefor. Indeed, paragraph 7 of the VCAT Order requires the husband and the wife (as well as G Pty Ltd) to give B Organisation a bank guarantee “in accordance with condition 10 of the permit for the full cost of rehabilitating the subject land” and condition 10 requires the provision of such guarantee in order to “allow [B Organisation], if its desires, to rehabilitate the land in the event the owner is unwilling or unable to do so, or if B Organisation cannot compel the owner to do so” (emphasis added). It is not so much a question of whether the husband and/or the wife are unwilling or unable to rehabilitate Suburb S; rather, there is, first, a dispute between B Organisation and them as to the work involved and the cost thereof and, secondly, a dispute between the spouse parties as to by liability between them therefor. However, neither of them seeks to interfere with their joint and several liability to B Organisation under Part VIIIAA of the FLA.
Insofar as Cronin J in Cao & Trong said at [67] that, in his Honour’s view, “the Commissioner has the right to seek an alteration of the property interests of the husband and the wife if it can be shown that he may not be able to recover the debt otherwise”, that was predicated upon the Commissioner being a creditor of those spouse parties. However, his Honour’s decision does not stand for the proposition that, in this case, B Organisation is a creditor of the husband and/or the wife for the purposes of s 79(10)(a). I consider there to be a fundamental qualitative difference at law between, on the one hand, a person with a monetary liability, for example, to the Commissioner of Taxation, the quantum of which is disputed, and, on the other hand, a person required to provide a bank guarantee to secure, for example, the performance of certain works, the cost of which is not even known.
Tomaras & Tomarasand Anor and Commissioner of Taxation, to which counsel for B Organisation also referred, involved a case stated to the Full Court as to whether s 90AE of the FLA confers power to make an order substituting one party to a marriage for the other in relation to a taxation debt, which was answered in the affirmative. There is no such application in the present case; the parties are jointly and severally liable to B Organisation to remediate the land and to provide a bank guarantee(s) to secure same. In support of his contention that his client is a “creditor of a party to the proceedings” for the purposes of s 79(10)(a), counsel for B Organisation pointed to [12], where Thackray and Strickland JJ said that s 90AE “provides no definition for ‘debtor’ or ‘creditor’ and that those words may therefore be taken as having their everyday meaning”. However, counsel could point to no authority to support his contention that, in this case, the position of the husband and the wife, on the one hand, and the corresponding position of B Organisation, on the other, fall within the “everyday meaning” of the words “debtor” and “creditor” respectively. Rather, he referred to Valder & Saklani (2021) FLC 94-042, where the Full Court said at [17] – [23]:
17.We commence with the general observation that the word “creditor” is used throughout the Act and the Bankruptcy Act. Whilst it is a general principle of statutory construction that a word should be understood to have the same meaning throughout a section or part of an Act, and ideally the whole of an Act, that is not always the case. The precise meaning of a word may vary according to the proper construction of the particular provision in question (Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355).
18.For example, the word “creditor” may not always describe a person who has all of the rights of a creditor which the law attributes to them. It is well established that once a person becomes a bankrupt, his or her creditors lose “the remedies against the person and property formerly available” for which there is “substituted a right to prove against the estate” (Clyne v Deputy Commissioner Of Taxation (1984) 154 CLR 589 at 594). Further, “the bankrupt is divested of both his interest in his property and liability for his provable debts” (Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at 138).
19.A discharge from bankruptcy operates to release the bankrupt “from all debts (including secured debts) provable in the bankruptcy” as per s 153(1) of the Bankruptcy Act.
20.However, in each case, the Bankruptcy Act continues to refer to the person who simply has a right to prove as a creditor. The Bankruptcy Act goes on to provide such creditors (who are described in that way) with various rights and entitlements including rights to lodge proofs of debt and to receive dividends which continue after any discharge of the bankrupt from his or her bankruptcy. It follows that, for some purposes at least, a reference to a creditor in the Bankruptcy Act includes a creditor whose debt has been released by the operation of s 153 of the Bankruptcy Act. They continue to be described as a creditor.
21.It follows that the release of a debt, by way of the bankrupt being discharged from his or her bankruptcy, does not mean that his or her creditors cease to be “creditors” for all purposes, especially where the relevant statute points in a different direction.
22.Again, the meaning of the word “creditor” in the Bankruptcy Act is governed by the particular context in which it appears, which may or may not be the same as the meaning of that word in the various provisions of the Bankruptcy Act.
23.Since 2005, s 79A(4) of the Act has provided that a creditor of a party is taken to be a person whose interests are affected by the order if the creditor may not be able to recover his or her debt because the order has been made. This is a statutory acknowledgment of the well-established principle that a person whose right to recover a debt has been affected by the transfer of property by a property settlement consent order, is a person affected by that order (Semmens v Commonwealth of Australia and Collector of Customs (S.A.) (1990) FLC 92-116 (“Semmens”); see also Cantrell & North and Anor (2020) FLC 93-976).
However, notwithstanding that the precise meaning of the word “creditor” may vary according to the proper construction of the particular provision in which it appears, I do not accept that a person who is not, on any view, a creditor can somehow transmogrify into that which it is not.
In particular, as s 79(10)(a) only refers to a “creditor” and a “debt”, it is salient to note the definition thereof in the Macquarie Dictionary (Pan Macmillan Australia, 2024) (to which counsel for the husband point in their written submissions) which defines a creditor to mean “someone to whom money is due”, and a debt to be “a liability or obligation to pay or render something”.
Black’s Law Dictionary (12th edition, 2024) defines a creditor to include, relevantly: “One to whom a debt is owed; one who gives credit for money or goods … A person or entity with a definite claim against another, esp[ecially] a claim that is capable of adjustment or liquidation”. Further, it defines a debt to include, relevantly: “Liability on a claim; a specific sum of money due by agreement or otherwise”.
The Australian Law Dictionary (Oxford University Press, 3rd edition, 2018) defines a debt to be a “sum of money owed by a debtor to a creditor”.
In all the circumstances, I consider that there is no debt owed by the spouse parties to B Organisation, such that it is not a creditor of theirs, in particular, as the VCAT Order is a non-monetary order.
If I be wrong in my conclusion that the husband and the wife are not creditors of B Organisation, I find that, contrary to the requirement of s 79(10)(a), there is no risk that B Organisation “may not be able to recover” any debt owed to it if a s 79(1) order is made as between the husband and the wife. That is because, in this case, the husband and the wife, together with G Pty Ltd, are jointly and severally liable pursuant to the VCAT Order. There is no suggestion that if, for example, Suburb S were transferred to the wife, as she seeks, the husband’s liability to B Organisation would, in any way, be discharged, although as between the two of them, he might have or be granted by this Court a right of indemnity against her.
As I have noted above, neither of them seeks an order pursuant to s 90AE(1) of the FLA, which provides:
(1)In proceedings under section 79, the court may make any of the following orders:
(a)an order directed to a creditor of the parties to the marriage to substitute one party for both parties in relation to the debt owed to the creditor;
(b)an order directed to a creditor of one party to a marriage to substitute the other party, or both parties, to the marriage for that party in relation to the debt owed to the creditor;
(c)an order directed to a creditor of the parties to the marriage that the parties be liable for a different proportion of the debt owed to the creditor than the proportion the parties are liable to before the order is made;
…
Similarly, neither of the spouse parties seeks an order pursuant to s 90AE(2) which provides:
(2) In proceedings under section 79, the court may make any other order that:
(a)directs a third party to do a thing in relation to the property of a party to the marriage; or
(b)alters the rights, liabilities or property interests of a third party in relation to the marriage.
Even if an order is made pursuant to s 79(1) of the FLA altering the interests of the husband and the wife in the property of one or the other or both of them, the effect thereof will merely be to move the proverbial eggs around in the same basket. At the end of the day, they will remain jointly and severally liable (together with G Pty Ltd) to B Organisation. It is no answer to submit, as counsel for B Organisation did, that it may elect only to pursue one of the spouse parties, who may have less assets by reason of the s 79 alteration between them. If that be the case, it will only be by reason of the election of B Organisation.
In the circumstances, I find that B Organisation is not a creditor of the spouse parties (or either of them) and, even if it were a creditor, it cannot be said that it might not be able to recover its debt (if any) if an order were made pursuant to s 79(1) altering the interests of the husband and the wife in their property.
Section 79(10)(b)
B Organisation alternatively contends that it is a person (other than a creditor) whose interests would be affected by the making of a s 79(1) order between the husband and the wife, within the meaning of s 79(10)(b). By way of authority, it relies upon Deputy Commissioner of Taxation (WA) v Spanjich [1988] FLC 91-974, where the Full Court said at 77,049, albeit in relation to s 79A of the FLA:
In our opinion the ‘affect’ may have relation to something more than strict legal rights and include the practical effect of the order on the recovery of moneys due and owing in the circumstances of this case. If the order has the effect of so reducing the property of the husband that the Deputy Commissioner is thereby unable to recover tax owing then it seems to us that he is a person affected by that order. …
However, this does not assist B Organisation as, unlike in that case, in the present case, if the s 79(1) order has the effect of reducing the property of the husband, it will correspondingly have the effect of increasing the property of the wife, in circumstances where they are, and will remain, jointly and severally liable to B Organisation for the rehabilitation (and the provision of security therefor). Accordingly, the submission on behalf of B Organisation that, on either spouse party’s case, the amount required to meet the VCAT orders would far exceed the balance of the property interests of the parties, is not to the point.
Further, insofar as the husband and the wife might seek competing orders against each other in relation to the rehabilitation of Suburb S, any orders of this Court, absent resort to s 90AE, could not affect their joint and several liability to B Organisation.
Insofar as B Organisation points to orders sought by each of the husband and the wife against it, the wife merely seeks orders for the removal of a caveat lodged by it and in relation to the funds held upon trust for all three parties by its solicitors. Both the caveat and the funds held upon trust are pursuant to other orders made by Wilson J on 30 October 2020 and those made by McEvoy J on 14 December 2020 respectively. The somewhat more extensive relief sought by the husband is canvassed above. As I have noted, since then, his counsel have made it clear, both in their written and their oral submissions, as well as in the proposed amended Response to Initiating Application annexed to his written submissions, that he does not seek or pursue any relief against B Organisation pursuant to Part VIIIAA of the FLA. Further, insofar as he seeks that the wife indemnify him in relation to all liability arising pursuant to the VCAT Order, such an order, if made, would be inter partes as between spouse parties only, and could not affect or vary their joint and several liability to B Organisation pursuant to that Order. In either case, that relief was sought after (indeed, long after) B Organisation intervened in, and became a party to, these proceedings. If the recently formulated claim of B Organisation against them in this Court is struck out and it is removed as a party, any substantive claims of the husband and the wife against it must similarly fall away, certainly absent any relief sought by either of them under Part VIIIAA
In circumstances where B Organisation has already filed the VCAT Order in the Supreme Court of Victoria, presumably for the purposes of enforcement, as provided by s 122 of the VCAT Act, nothing would stop B Organisation from applying to that court for an injunction restraining each of the husband and the wife from dealing with any orders made by this Court in favour of each of them respectively pursuant to s 79(1) of the FLA.
Accordingly, I reject the first jurisdictional basis contended by B Organisation.
SECOND CONTENDED JURISDICTIONAL BASIS: GRANT OF LEAVE TO INTERVENE
Secondly, B Organisation relies upon the grant of leave to it by Wilson J, on 21 September 2020, to intervene in the proceedings, pursuant to s 92(3) of the FLA. That sub-section provides:
Where a person intervenes in any proceedings by leave of the court the person shall, unless the court otherwise orders, be deemed to be a party to the proceedings with all the rights, duties and liabilities of a party.
However, that sub-section does not confer jurisdiction upon the Court to make orders in favour of B Organisation that it is not otherwise empowered to make as a matter of substantive law.
In Akbar v Gandega, Austin J (with whom McClelland DCJ and Wilson J agreed) saliently, and succinctly, commenced his judgment, to which I refer further below, as follows:
[1]The first duty of every court is to ensure it has jurisdiction to entertain the proceedings before it.
[2]For that purpose, every court has jurisdiction to decide whether it is seized of jurisdiction.
[3]Here, there was no enquiry about the existence of jurisdiction to entertain the causes of action at common law and in equity asserted by and on behalf of the husband against the appellant, appurtenant to the determination of the matrimonial cause for financial relief contested between the spouses under Pt VIII of the Family Law Act 1975 (Cth) (the Act).
[4]There was none. Jurisdiction was mistakenly assumed, induced by the manner in which the causes of action were instituted and prosecuted by the spouses without any objection by the appellant. But the parties could not consensually invest the Court with jurisdiction or power it did not possess.
[5]As a consequence, the orders made by the primary judge on 21 April 2023 to remedy the husband’s grievance against the appellant were ultra vires and must be set aside. The appeal must be allowed on that basis.
(Citations omitted)
Intervention in proceedings need not always be to seek relief, whether under the FLA or, in an appropriate case, in the exercise of the Court’s accrued jurisdiction. In Barro & Barro (1983) FLC 91-300 at 78,056-78,057, the Full Court said that the Court has a discretion –
(a)to permit [a] person to be heard without applying for leave to intervene under sec. 92;
(b)to grant to [a] person leave to intervene limited to the issue in question;
(c)to grant to [a] person leave to intervene generally in the proceedings between the parties,
in each case subject to such terms as to costs or otherwise as may be appropriate.
In reliance upon s 92(3), B Organisation submits that it has all the same powers, duties and liabilities of a spouse party to property settlement litigation, including the power to seek its own orders pursuant to s 79, independent of the spouse parties. However, as Austin J said in Akbar v Gandega, so too, in this case, it appears that “there was no inquiry about the existence of jurisdiction to entertain the causes of action” of B Organisation by either Wilson J or McEvoy J in September or December 2020. That may, in part, be explicable by the fact that B Organisation had not specified, in any (meaningful way) the orders it sought.
Rule 6.05(b) of the 2004 Rules then provided that a person who was not a party to a case, who sought to intervene in the case, was required to file an affidavit:
(i)setting out the facts relied on to support the application, including a statement of the person’s relationship (if any) to the parties; and
(ii)attaching a schedule setting out any orders that the person seeks if the court grants permission to intervene.
Rule 6.06(2)(b) of the 2004 Rules then provided that a person entitled under the FLA to intervene without the Court’s permission was required to file an affidavit:
(i) stating the facts relied on in support of the intervention; and
(ii) attaching a schedule setting out the orders sought.
The Application in a Case filed by B Organisation on 21 September 2020 was accompanied by an affidavit of Mr J, a professional of B Organisation, similarly filed by its lawyers on that date. Neither that professional at B Organisation, nor the external lawyers retained by it, saw fit to comply with the relevant requirements of the 2004 Rules. In his affidavit, Mr J deposed at [16] – [18] to the “purpose of intervention”, as opposed to the orders sought, namely:
16.[Mr J] seeks to intervene in this proceeding for 2 purposes.
17.The first purpose of intervention is to restrain the Applicant and Respondent from adjusting their interests against each other in any way that might compromise their capacity to satisfy the [late] 2019 Orders.
18.The second purpose of intervention is for the Court to exercise its accrued jurisdiction to enforce the [late] 2019 orders.
Insofar as, within the body of his affidavit, as opposed to a schedule there to, Mr J set out the orders sought by B Organisation, he merely reiterated, verbatim, the orders sought in its Application in a Case, rather than the orders to be sought if leave to intervene were granted.
I consider that, in the absence of particularisation of the final relief sought, the Court was not then in a position to conduct an “inquiry about the existence of jurisdiction to entertain the causes of action” of B Organisation because those causes of action, whether under the FLA or pursuant to the Court’s accrued jurisdiction, were unknown to it.
Nevertheless, in support of its submission now that it has all the same powers, duties and liabilities of a spouse party to property settlement litigation, including the power to seek its own orders pursuant to s 79, independent of the spouse parties, B Organisation relies upon the decision of the High Court in Dougherty v Dougherty (1987) 163 CLR 278 at 296, where Brennan J said:
15.Parliament has provided for applications to be made by persons intervening in proceedings under s.92. Section 92(3) deems a person who intervenes in proceedings to be a party to the proceedings, and such a person is therefore entitled to apply in those proceedings for any order which the Court is empowered to make in those proceedings. In Ascot Investments Pty.Ltd. v. Harper (1981) 148 CLR 337, Gibbs J. said (at p 357):
"Section 92(3) enables the court to make an order either in favour of or against an intervener if such order is one that can properly be made as a matter of substantive law; the sub-section removes a possible procedural obstacle, but does not alter substantive rights and duties."
As Michael was given leave to intervene, he is entitled to apply in the proceeding between his parents for any order which the Court might make in that proceeding under s.79(1).
16.An order which might be made in the proceeding between the husband and the wife without Michael's intervention could provide for the transfer of property to him or the settlement of property upon him. The fact that he has intervened does not affect the power or the discretion of the Court, but it does allow him to apply for an order in his favour and to be heard in support of his application. I would declare that Michael was entitled to make an application for an order in his favour under s.79(1) in the proceeding current between the husband and wife and that he is entitled to be heard on that application. I would remit the matter to the Family Court of Australia to proceed in conformity with that declaration.
(Emphasis added)
Reliance by B Organisation on Dougherty is misplaced. It overlooks the critical words at the conclusion of [15], namely, that because the child of the marriage in that case was given leave to intervene, he was “entitled to apply in the proceedings between his parents for any order which the Court might make in that proceeding under s. 79(1)” (emphasis added).
Section 79(1), by its terms, specifically envisages alterations of interests in the property of the parties to a marriage in favour of a child of the marriage, rare as such orders may be. That sub‑section relevantly provides:
In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property;
…
including:
…
(d) an order requiring:
(i) either or both of the parties to the marriage;
…
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
I have already concluded that s79(10)(a) and (b) are not available to B Organisation. However, B Organisation also relies upon the power of the Court, in exercising its powers under Part VIII (including s 79), to "do any or all" of the matters specified in s 80 (1). Those matters include:
·in paragraph (f), the power to "order that payments be made direct to a party to the marriage, to a trustee to be appointed or into court or to a public authority for the benefit of a party to the marriage";
·in paragraph (k), the power to "make any other order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks it is necessary to make to do justice".
The words in s 80(1)(k), namely, an order which the Court thinks is necessary to make “to do justice” do not appear to have been the subject of much judicial consideration, insofar as whether they refer only to justice between the spouse parties or may permit consideration of third parties, whether parties to the proceedings or not. In Zdravkovic and Zdravkovic (1982) FLC 91-220, to which I refer below, the Full Court said at 77,205:
If his Honour meant to convey that sec. 80(k) enabled the Court to make financial orders which do justice to persons in whose favour or against whom no orders could otherwise be made under Pt. VIII, he was in error. Anderson’s case [(1981) FLC 91-104] appears to suggest that the Court cannot make any orders for the payment of money to other persons, particularly where such persons have not intervened to seek such an order, because such an order would be “a settlement of property”. However, Anderson’s case should be seen as resting on its particular facts.
Further, at 77,206, the Full Court said that –
… the doing of justice may require that a party should be ordered to pay a debt or part of a debt, and that the other party should be relieved from any possible risk of having to pay that debt or part of it (sec. 80(k)).
Thus, it would appear that the doing of justice, to which s 80(1)(k) refers, is justice between spouse parties and not between spouse parties, on the one hand, and third parties to the proceedings between them, on the other hand.
In Deputy Commissioner of Taxation v Kliman & Kliman [2002] FLC 93-113 (Full Court), the husband owed a tax debt. The Deputy Commissioner of Taxation (“DCT”) intervened in the proceedings instituted by the husband against the wife in the Family Court for property settlement orders. Subsequently, whilst the property settlement proceedings were pending in this Court, the DCT obtained judgement against the husband in the Supreme Court of Victoria for a sum in excess of $1.3 million. The DCT then applied for a final order to include provision for the payment of the judgement debt to it. The husband filed a response objecting to jurisdiction.
Coleman J, with whom Ellis ACJ and Finn J agreed, said at [98]:
… while s 92(3) operates to deem an intervener to be a party to the proceedings with all the rights, duties and liabilities of a party, that sub-section does not confer on the intervener the right to seek any substantive relief which is not otherwise available to the intervener under some other provision of the Act.
Coleman J further said [103]:
…it must of course be accepted that when the DCT was granted leave to intervene in the property settlement proceedings pending between the husband and the wife, the intervention was in those proceedings, and the DCT became a party to those proceedings. Those proceedings were proceedings within para (ca) of the definition of “matrimonial cause”. That paragraph is as follows:
(ca)proceedings between the parties to a marriage with respect to the property of the parties to the marriage of either of them, being proceedings —
(i)arising out of the marital relationship;
(ii)in relation to concurrent, pending or completed proceedings between those parties for principal relief; or
(iii)in relation to the dissolution or annulment of that marriage or the legal separation of the parties to that marriage, being a dissolution, annulment or legal separation effected in accordance with the law of an overseas jurisdiction, where that dissolution, annulment or legal separation is recognized as valid in Australia under section 104;
At [121], Coleman J said:
It has long been recognised that in the exercise of its jurisdiction to make property settlement orders, the Family Court must first determine what are the assets and liabilities of the parties to the marriage, and in so doing, have regard to the interests of third party creditors. …
His Honour then referred at [122] and [125] to a number of cases in support of that proposition, namely, Prince and Prince (1984) FLC 91,501; Rowell and Rowell; DFC of T (Intervener) (1989) FLC 92-026; Biltoft and Biltoft (1995) FLC 92-614; and Zdravkovic. His Honour therefore agreed at [127] that “the husband could be ordered by the Court in the exercise of its property settlement jurisdiction to pay to the DCT the monies owed under the judgment against him in favour of the DCT, prior to any division of property between himself and the wife”.
However, unlike in that case, as well as the cases to which his Honour referred, there is no liability of the spouse parties to B Organisation for a monetary amount and it is not a creditor of theirs.
Ellis ACJ and Finn J, in agreeing with Coleman J, similarly said at [21]:
It is thus clear that while s 92(3) operates to deem an intervener to be a party to the proceedings with all the rights, duties and liabilities of a party, the sub-section does not confer on the intervener the right to seek any substantive relief which is not otherwise available to the intervener under some other provision of the Act. …
Their Honours continued at [22] that it therefore became necessary to consider what (if any) other provision in the FLA conferred on the DCT a right to seek the substantive relief which he sought (be it by way of interlocutory or final relief). In so doing, their Honours referred to Dougherty and said at [28] – [30]:
[28]It must of course be remembered that the facts in Dougherty, above, were that an adult child had intervened in property settlement proceedings between his parents under s 79 of the Act and also that s 79(1) expressly provides that in proceedings with respect to the property of the parties to the marriage
… the court may make such order as it considers appropriate altering the interests of the parties in the property … including an order requiring either or both of the parties to make, for the benefit of … a child of the marriage, such settlement or transfer of property as the court determines.
[29]However, we are not persuaded that the express reference in s 79(1) to the powers to make an order for the benefit of a child to the marriage, would limit the application of what was said by the High Court in Dougherty, above, concerning the effect of intervention, to cases in which the intervener is a child of the marriage. In exercising jurisdiction in property settlement proceedings between parties to a marriage, the court has available a range of powers which can be exercised as part of that jurisdiction. In addition, the court in exercising its powers under Pt VIII (which includes s 79), may make any of the orders set out in s 80.
[30]Moreover, the court has long recognised that as an essential first step in the exercise of its jurisdiction under s 79, it must first determine the property of the parties to a marriage, and it does this by deducting from the value of their assets the value of their liabilities. In this context, the court generally always has regard to the position of significant creditors.
Again, reference in [30] is to quantified “liabilities” and to “creditors”.
Like Coleman J, Ellis ACJ and Finn J referred to Zdravkovic at [32], saying:
Furthermore, there is some authority (albeit by way of obiter dicta only) in the decision of the Full Court (Pawley SJ, Strauss and Treyvaud JJ) in In the Marriage of Zdravkovic (1982) 8 Fam LR 97 at 101 ; (1982) FLC 91–220 at 77,205–6 , that the court can, as part of its jurisdiction under s 79, order the discharge of a debt to a third party (whether or not that party has intervened):
We are, however, of opinion that in an appropriate case, as part of the adjustment of the financial rights of the parties, the court may in proceedings under s 79 order the discharge of a debt to a third person, whether such person is an intervener or not. Once it is clear and beyond doubt that a debt is owing to a third person and that all the probabilities are that it will be enforced unless it is discharged by payment, then the court is not precluded from ordering its discharge by the parties or one of them as a condition or as part of the overall readjustment of the parties’ financial rights, if such a course is convenient or just. Situations, where such orders have been appropriate and where they have been made, are numerous. Amongst the almost innumerable examples which come to mind are the discharge of a debt due under some credit facility granted to both or one of the parties, the payment of existing liabilities of one or both of the parties to a store or for medical or like accounts, or for rates or income tax liabilities or motor car registration or insurances. The mere fact that a debt is owed to a relative does not prevent the court from ordering its discharge by payment as a term or condition of an order under s 79, provided it is recognized by all concerned that it is a debt then due and owing, and likely to be enforced, if it is not repaid.
The court is not precluded from ordering the discharge of such a debt merely because the creditor has not obtained judgment or has not made a claim in the proceedings for repayment, nor is the court limited to making a finding binding on the parties as to what the debt is and then “to determine in what proportions the parties should be responsible for the debt … and then order that they indemnify each other against liability … in those respective proportions'’: cf Anderson's case at FLC 76,771.
An order requiring the discharge by payment of a debt owing by the parties or one of them to a third person is not a settlement of property on such third person if such an order is made as a condition or a term of an alteration of the parties’ interests in their property or the property of either of them: see s 80(i). Further, the doing of justice between the parties may require that a party should be ordered to pay a debt or part of a debt, and that the other party should be relieved from any possible risk of having to pay that debt or that part of it: s 80(k). It is difficult to understand why the court's powers should be limited to fixing proportions of contributions towards payment of a debt and to the granting of indemnities. Indemnities may turn out to be worthless and a party may have to meet commitments which the court intended the other to meet. There is no good reason precluding the court from granting the more efficacious remedy, namely discharge by payment in the appropriate proportions which eliminates unnecessary risks.
I note the reference in those passages from Zdravkovic to a debt (including a “debt then due and owing”), and to the payment thereof.
Their Honours referred at [33] to s 80(1) and relevantly said, in this regard, at [34]:
In our view, therefore, the protection of third party creditors can be said to be a part of the exercise of the jurisdiction under s 79 where it is in the interests of one or both of the parties to a marriage that there be such protection. Accordingly, we are satisfied (having regard to the approach of the High Court in Dougherty, above), that the DCT is to be regarded as having intervened in the property settlement proceedings between the husband and the wife, that is, in proceedings within para (ca) of the definition of “matrimonial cause”. In other words, there were no separate or new proceedings instituted by the intervention of the DCT.
Their Honours concluded at [52] that:
… this this Court, in exercising jurisdiction in property settlement proceedings, may take into account the interests of significant third-party creditors and can certainly, pursuant at least to the provisions of s 80(1)(f) (if not elsewhere), make an order for the payment of a debt owed by one of the parties to a marriage to “a public authority” (into which category the DCT must come) for the benefit of a party to the marriage. …
In Re Ross-Jones; Ex parte Beaumont (1979) 141 CLR 504 Gibbs J said (at 509-510):
Once a proceeding is within the jurisdiction of the Family Court, the power of that Court to make suitable orders for the disposition of the matter is very wide. It is hardly an exaggeration to say that if the court has jurisdiction in the present case, it can make whatever orders it regards as appropriate: see s 34(1) and s 80(k). Of course the fact that a court has wide powers when exercising its jurisdiction does not mean that its jurisdiction is wide. Nevertheless the nature of the powers of a Court may sometimes provide a clue to the extent of its jurisdiction. … By s 80, the court, in exercising its powers under Pt VIII (which deals with maintenance and property), may appoint or remove trustees (par (e)), and may ‘make any other order … which it thinks it is necessary to make to do justice’ (par (k)).
(Emphasis added)
The metes and bounds of the breadth of s 80(1) were considered in Davidson and Davidson (No 2) (1984) FLC 92-469, where the Full Court said at 80,873:
Some of the paragraphs of s 80(1) are couched in very wide terms (for example, paras. (e), (i) and (k)). Some limitations may need to be read into those paragraphs in order to be consistent with the purposes and provisions of the Act itself. In addition, some limitations may need to be read into some of those paragraphs in order to be within constitutional limits. …
Further, at 80,875, the Full Court further said:
A relevant connection or relationship is required between a primary power within Part VIII and the exercise of any of the powers in s 80(1). That is, it is not sufficient in order to attract the powers under s 80(1) that the Court is exercising or has exercised one or more of the other powers in Part VIII; there must be some connection or relationship between those two circumstances.
In Malloy and Ors & Stopford Malloy [2017] FamCAFC 204, the primary judge had ordered the appointment of receivers of the property and income of the husband “so as give effect” to orders for spousal maintenance. On appeal, the Full Court said at [74] that s 80(1)(k) has been held to permit the appointment of receivers, referring at [85] to its earlier decision in D Pty Ltd and Ors & Sadler and Ors (2016) FLC 93-736 at [23].
What the connection or relationship will be between the primary power within Part VIII (in this case, s 79) and the exercise of any of the powers in s 80(1), and the sufficient degree thereof, will vary from case to case. In Davidson (No 2), it was argued that once the powers under then s 85 (now s106B) to set aside a deed of variation of trust were exhausted, it did not then enliven or justify the exercise of any of the powers under s 80(1) and that resort thereafter to that section was to employ impermissibly it as an independent primary power. In this regard, the Full Court said at 80,875 as follows:
But the proper exercise of the powers under s. 85 is not confined simply to setting aside the instrument in question. It necessarily extends to the making of such further orders as are ancillary to or necessary to give effect to the primary order and that may attract other provisions of the Act, including one or more of the powers in s. 80(1).
For example, and in this particular case, it would be an appropriate exercise of the s. 85 power for the Court to ensure that these steps were not repeated the following day by the directors of the trustee company again executing the same or a similar deed of variation. Senior counsel for the husband conceded that it would have been appropriate, as ancillary to the s. 85 exercise, for the Court to have restrained the directors by injunction from such a course. However, senior counsel submitted that the order for the appointment of a new appointor pursuant to s. 80(1) or otherwise was neither ancillary to nor necessary for the proper exercise of the s. 85 power or otherwise justified.
It could readily be understood that the trial Judge may have concluded that if he simply restored the status quo that would be no more than to provide the husband, the trustees and their advisers with an invitation to repeat the process and/or take other like steps, and that in those circumstances it was preferable, perhaps necessary, to appoint a new appointor, that being in reality the only effective course. In the unusual circumstances of this case and having regard to its particular history, we think that such an approach would have been a legitimate exercise of the powers in s. 80(1). That section gives a very wide discretion once resort is had to it, and this approach would, we feel, fall within a legitimate exercise of that power.
In F Firm & Ruane (2014) FLC 93-611 at [140], the Full Court said:
It was argued on behalf of the third respondent that until the s 79 proceedings were completed, damages could not be ascertained or received by the wife, meaning they would remain an inchoate right and not “property” within the meaning of ss 4 and 79 of the Act. Counsel for the third respondent also submitted that the court did not have the power to award damages because, once the husband’s s 79 application was determined, the questions remaining to be determined on the wife’s claims no longer comprised a matrimonial cause. However, his Honour was of the view there was no impediment to all questions being determined together, particularly as damages paid or payable to the wife by a third party were relevant to ss 79(4)(e) and 75(2)(o) of the Act. His Honour also noted that the facts and circumstances directly relevant to whether the agreement was “binding” within the meaning of s 90G were directly relevant to the establishment of negligence, breach of contract or breach of fiduciary duty.
In Colburn & Cleese [2022] FedCFamC1A 147 at [64], the Full Court said:
When properly seized of a “matter” arising under the Act, a federal court has jurisdiction and power to grant relief between the parties as is necessary to quell the justiciable controversy, even if the remedy is available under a State statute giving jurisdiction to only a State court. That is because s 79 of the Judiciary Act 1903 (Cth) picks up the provisions of the State statute and empowers the federal court to make orders under it. The High Court (ASIC v Edensor Nominees Pty Ltd at [59]–[60]) and Brereton J (Valceski v Valceski at [43]) explained how the circumstances in Smith v Smith may be distinguished.
(Citations omitted)
In Akbar v Gandega, proceedings for financial relief pursuant to Part VIII of the FLA were instituted by the wife against the husband in 2016. As the Full Court said on appeal at [10] and, it would appear, not dissimilar to the present case, “apparently without any forethought as to her lack of standing to do so”, she joined a third party, the husband’s former business partner as a party, purporting to sue him for damages for breach of an agreement between the husband and him. Evidently, the wife’s objective was to recover damages for the husband, which money would then form part of his property and hence be amendable to financial adjustment orders between the spouse parties in the matrimonial dispute.
By the time the proceedings reached trial in 2022, both spouses contended for the husband’s right to financial remedies against the third party by reliance upon multiple causes of action, pleaded both at common law and in equity. The third party denied liability on any basis. The trial ran for eight days and focused almost entirely upon the third party’s alleged liability to the husband, and the quantification thereof. The matrimonial dispute between the spouses was but a small part of the contest. The primary judge ordered the third party to pay to the husband the sum of $2.456 million, which sum was included within the table of the spouses’ assets and liabilities for the purpose of the ultimate determination of the matrimonial cause. The third party appealed.
The Full Court said at [15] that the jurisdiction of the Court to entertain the common law and equity causes of action against the third-party could only have possibly existed in one of two ways: first, by the invocation of s 78 of the FLA, or, secondly, by finding the causes of action were an inherent part of the federal “matter” litigated between the spouses. In this regard, the Full Court said at [16]:
Rather than enquiring into those alternatives, the primary judge said only this on the subject of jurisdiction:
3.There is no claim by the wife that the [appellant] has any obligation directly to her. Instead, the wife’s claim is for a property settlement pursuant to s 79 of the Act and, as an incident of that claim, she pursues a case against the [appellant] to establish that the husband is entitled to a significant sum as a result of the business dealings between them.
…
19.There is no dispute that the issues between the husband and the [appellant] must first be determined in order to determine the husband’s assets for the purpose of the property settlement proceedings between the husband and wife, nor is there any dispute that it is just and equitable to make property settlement orders as between the husband and the wife in the circumstances of this case.
In relation to the federal “matter”, the Full Court said at [28] – [32]:
[28]Claims grounded solely in contract, tort, equity, or some other form of non-matrimonial relationship (such as partnership or corporation shareholdings) are not likely to attract jurisdiction as a matrimonial cause when the spouses’ marriage is purely coincidental to the dispute (Dougherty v Dougherty & Anor (1987) 163 CLR 278 at 286–287, 295 and 299–300). The connection of such common law, equity or statutory causes of action to matrimonial causes is even more tenuous when vested in and asserted by one spouse against third party strangers to the marriage or family unit.
[29]However, when federal law, like the Act, confers original jurisdiction on a federal court in respect of a “matter” – such as the matrimonial cause concerning the adjustment of spouses’ property interests – the jurisdiction extends to authorise the determination of the whole “matter”, the entire resolution of which controversy may entail the consideration and application of both federal and State law (Valceski v Valceski at [38]).
[30]Nevertheless, the authority to decide the non-federal aspects of the justiciable dispute only arises when such non-federal aspects are an integral part of the same controversy. Perhaps the best known statement collating the principles about the need for coincidence between the federal and non-federal aspects of the matter was expressed this way in Re Wakim; Ex parte McNally; Re Wakim; Ex parte Darvall; Re Brown; Ex parte Amann (1999) 198 CLR 511:
140.In Fencott it was said that ‘‘in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.’’ The references to ‘‘impression’’ and ‘‘practical judgment’’ cannot be understood, however, as stating a test that is to be applied. Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete. Necessarily, then, the question will have to be decided on limited information. But the question is not at large. What is a single controversy ‘‘depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships’’. There is but a single matter if different claims arise out of ‘‘common transactions and facts’’ or ‘‘a common substratum of facts’’, notwithstanding that the facts upon which the claims depend ‘‘do not wholly coincide’’. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are ‘‘completely disparate’’, ‘‘completely separate and distinct’’ or ‘‘distinct and unrelated’’ are not part of the same matter.
(Emphasis added) (Footnotes omitted)
[31]The High Court there referred approvingly to Fencott v Muller (1983) 152 CLR 570, in which it was earlier recognised that federal judicial power is attracted to the whole of the controversy only if the federal claim constitutes the substantial aspect of the controversy (at 609–610). As already mentioned, in this instance, the reverse was true. The federal dispute between the spouses was merely an adjunct to the non-federal claims against the appellant.
[32]More recently, the High Court has emphasised the need to determine the ambit of the federal “matter” by advertence to the conduct of the parties, the relationships between them, and the laws which attach rights or liabilities to such conduct and relationships (AZC20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs at [52]).
The Full Court continued at [33] – [35]:
[33]In this instance, there was no relationship at all between the wife and the appellant. The relationship between the husband and appellant arose exclusively out of their mutual business activities and their commercial conduct affected only their individual rights and interests. The husband’s legal grievance with the appellant could easily have been litigated independently from his legal dispute with the wife. There was no common substratum of facts between the spouses’ matrimonial cause and the husband’s civil suits against the appellant at common law and in equity. No fact or issue determinable between the husband and the appellant in the common law and equity causes of action is able to be identified as a “common transaction or fact” within the matrimonial cause between the spouses. The federal and non-federal suits are not “so related that the determination of one is essential to the determination of the other”. In the end, as the High Court observed, it is a matter of impression and of practical judgment. However, the common law and equity causes of action brought against the appellant in this case seem “distinct [from] and unrelated [to]” the matrimonial cause between the spouses.
[34]Merely because the anterior determination of the non-federal causes of action between the husband and the appellant would influence the identity and value of the property owned by the husband, then amenable to adjustment orders within the matrimonial cause, does not bring the non-federal causes within the purview of the federal matter. The convenience of first determining whether or not the husband should have judgment for a certain sum of money entered in his favour against the appellant on any of the common law or equity causes of action is not the same as the essentiality of determining those causes for the purpose of then determining the matrimonial cause. So much has been recognised by the Full Court in another similar situation (Bergman & Bergman (2009) FLC 93-395 at [57]–[61]).
[35]The respondents’ contrary argument is rejected. An example, starker than the present situation, will ably demonstrate why. Suppose the husband was instead a member of a civil class action brought by many against a large corporation or polity in another superior court of record. Jurisdiction to hear and determine the class action litigation would not accrue to the matrimonial cause litigated between the spouses merely because it might be helpful to know the quantum of damages the husband could eventually receive as his share of the class action remedy. For the non-federal dispute to form part of the federal “matter”, the nexus must be clear and close. The corollary of acceptance of the respondent’s submissions would be that any cause of action at common law, in equity, or under statute asserted by a spouse against a third party could be heard and determined as part of the matrimonial dispute.
The Full Court in Akbar v Gandega concluded at [36] that, in the circumstances of that case, the primary judge did not accrue jurisdiction to determine the common law and equity causes of action as an integral part of the determination of the matrimonial cause under Part VIII of the FLA. Accordingly, the appeal was allowed and the orders made against the third-party were set aside.
In support of its third contended jurisdictional basis, B Organisation relies upon the decision of the Full Court in Puddy & Grossvard, to which reference has already been made above. Coleman J held in that case at [63] that the Court had accrued jurisdiction to determine a liquidator’s claim, notwithstanding that the quantum was in dispute.
B Organisation, in its written submissions submits at [45] – [52]:
45.The First Intervenor contends that the treatment of the funds in the Hunt & Hunt trust account, and the treatment of the orders of VCAT, form part of a single controversy upon which the Court accrues the Victorian State jurisdiction.
46.In Puddy & Grossvard and Anor (2010) FLC 93-432, Coleman J held (with whom Warnick and Boland JJ agreed) that the Court had jurisdiction to determine a liquidator’s claim notwithstanding that quantum was in dispute. Justice Coleman held (with emphasis added):
63.To the extent that, at least inferentially, the trial judge relied upon the Court’s accrued jurisdiction as the basis upon which the liquidator’s claim could be entertained, nothing to which this Court has been referred persuades me that so doing was erroneous. As earlier noted, the “first step” in determining the property settlement proceedings before her required the trial judge to determine the property of the parties to the marriage. So doing involved identifying and quantifying the parties’ assets and liabilities. It could not be successfully asserted that the liquidator’s claim lacked the requisite justiciable connection with the proceedings before the trial judge. Indeed, so far as the determination of the property of the parties was concerned, that was the most significant issue, and was not severable or disparate from the property settlement proceedings between the husband and wife.
64.I am persuaded that the trial judge had jurisdiction to determine the liquidator’s claim in the exercise of accrued jurisdiction. Given the matters to which reference has been made with respect to the course the trial took before her, the trial judge’s reasons were adequate. There was never any suggestion before the trial judge, on behalf of the husband, that she lacked the jurisdiction to entertain the liquidator’s claim. To provide reasons for not accepting arguments which were never put is not a requirement recognised by the authorities relating to the adequacy of reasons for judicial decisions.
65.I am thus not persuaded by anything to which we have been referred that the trial judge lacked the jurisdiction to hear and determine the liquidator’s claim, or that her Honour failed to give adequate reasons for concluding that she had such jurisdiction. In reliance upon the Court’s accrued jurisdiction, her Honour was able to entertain the liquidator’s claim on the basis she indicated in the passages of her judgment which have earlier been chronicled.
47.It is trite law that when exercising power pursuant to s 79 of the Family Law Act, the usual practice is to identify that property, value it, and deduct from the total value the liabilities of the spouse parties or either of them.
48.In the present case, the value of the clean-up and rehabilitation costs for the [K Street] Property and how such costs are to be met and apportioned are clear issues in dispute.
49.That the clean-up and rehabilitation costs for the [K Street] Property are a necessary determination is the matter is conceded by the wife in her ‘asset pool’ sheet found at para 54 of her trial affidavit, wherein she expressly lists those costs at para (ee) as a [sic] item to be taken into consideration, and lists the amount as ‘Not known’. Similarly, at para 49 under the heading of [K Street] Remediation, the husband asserts that the net pool of property available for division is presently in a matter of dispute. At paras 50 and 51, the husband sets out that the cost of those works is in dispute as between the First Intervenor and the husband and the wife.
50.Both spouse parties seek orders against the First Intervenor directly. Similarly, when determining whether the orders to be made are ‘just and equitable’, the Court must have regard to the form and effect of the orders themselves. That is, the orders that both spouse parties seek with respect to the treatment and implementation of the VCAT orders.
51.This puts the enforcement and enactment of the VCAT orders directly into issue.
52.As such, the orders sought by the First Intervenor fall within the Court’s accrued jurisdiction (if not otherwise within the ambit of ss 79 and/or 92 of the Family Law Act).
Insofar as B Organisation submits that it is “trite law” that, when exercising power pursuant to s 79 of the FLA, the “usual practice” is to identify and value property and then deduct from the total value the liabilities of the spouse parties or either of them, it is also trite to observe that each case turns upon its own facts. Like fingerprints, no two cases are the same.
Further, whilst it is the usual practice, when exercising power pursuant to s 79, to undertake the steps to which B Organisation refers, it is not invariably so, as the Full Court observed in Biltoft. In the present case, the spouse parties are jointly and severally liable pursuant to the VCAT order and neither of them seeks to vary that liability pursuant to s 90AE or to have the rehabilitation costs taken into account as a liability. Accordingly, contrary to the submission of B Organisation, in the circumstances, it is not the case that the value of the clean-up and rehabilitation costs with respect to Suburb S, and how such costs are to be met and apportioned, are “clear issues in dispute” (emphasis added).
Similarly, contrary to the submissions of B Organisation, in the circumstances, on their cases as outlined to the Court, in opposition to B Organisation, I do not accept that either of the spouse parties concede that the clean-up and rehabilitation costs is a matter necessary for determination of their competing s 79 applications. Whilst they each refer to the costs thereof in their affidavits filed for the trial that was listed on 19 February 2024, and the issue is raised in their amended Initiating Application and amended Response to Initiating Application respectively, both filed in late 2023, that was prior to them taking the jurisdictional point. As referred to above, they could not consensually invest the Court with jurisdiction or power it did not possess, nor could any issue estoppel arise in the circumstances. Further, insofar as the spouse parties may each seek certain orders against B Organisation, that can only be on the basis that there is jurisdiction to make such orders.
B Organisation correctly submits, as a general principle, that when determining whether orders to be made by it are “just and equitable”, the Court must have regard to the form and effect of the orders themselves. So much was made clear by the Full Court in Martin & Newton (2011) FLC 93-490 at [305] – [306] and Bevan & Bevan (2013) FLC 93-545 at [81], referring to Stanford v Stanford (2012) FLC 93-518 (at [40]). As observed above, it is unnecessary, in the present case, to determine whether the requirement in s 79(2) of the FLA that the Court not make an order under that section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order, permits consideration of the justice and equity thereof vis-à-vis third parties, whether parties to the s 79 proceedings or not. In this case, by reason of the spouse parties being jointly and severally liable under the VCAT Order, and neither of them seeking to alter that liability, I do not agree with the submission on behalf of B Organisation that the “enforcement and enactment [sic]” of the VCAT Order is put directly (or, indeed, at all) into issue in the s 79 proceedings. In the absence of orders being sought by the spouse parties, or either of them, pursuant to s 90AE, orders pursuant to s 79 altering property interests between them would not affect any rights of B Organisation.
I find that there is no single justiciable controversy, or single “matter”, between the claim as between the husband and the wife under the FLA, on the one hand, and claim as between the husband, the wife and B Organisation under the VCAT Order, on the other. The resolution of neither of those claims is “essential” (per Akbar v Gandega at [34]) for that of the other. Indeed, I consider the justiciable controversy between the B Organisation and the spouse parties, which gave rise to the VCAT Proceedings, to have been quelled by the VCAT Order. All that remains, in that regard, is compliance by the spouse parties therewith, in respect of which the VCAT Orders have already been filed by B Organisation in the Supreme Court of Victoria for the purposes of enforcement.
In addition to, and consistent with, the authorities referred to above, in Re McBain; Ex parte Catholic Bishops Conference (2002) CLR 372 at [62], the plurality in the High Court relevantly said that the task of identification of the “matter” said to be the subject the litigation is to be approached as a tripartite inquiry: first, the identification of the subject matter for determination in each proceeding; secondly, the identification of the right, duty or liability to be established in each proceeding; and, thirdly, the identification of the controversy between the parties to each proceeding for the quelling of which the judicial power of the Commonwealth is invoked. The High Court further said at [62] that, whilst each of these inquiries may be pursued separately, all are related aspects of the basal question: is there a “matter” in the sense required by Chapter III of the Constitution? Indeed, I consider that these inquiries are so related, especially in the present case, that there is a considerable overlap between them.
As to first of these inquiries, the subject matter for determination between the spouse parties in the proceedings under s 79 of the (Commonwealth) FLA is whether it is just and equitable to adjust their legal and equitable interests in property, as required by sub-s (2), and, if so, what order should be made, taking into account the matters set out in sub-s (4). There is no immutable requirement to take into account their liability under the VCAT Order, in circumstances where neither spouse party seeks (nor is there any absolute requirement at law) that it be taken into account, or that their joint and several liability therefor to B Organisation be in any way interfered with. In relation to the VCAT Order, it arose from the application by B Organisation to VCAT in early 2019 for an enforcement order pursuant to the (State) Planning and Environment Act against G Pty Ltd, the husband and the wife by reason of their (then alleged) failure to comply with the Permit. Indeed, the justiciable controversy in VCAT was concluded by the making of the VCAT Order; all that remains is compliance with and/or enforcement of that order, which has been filed in the Supreme Court of Victoria for the latter purpose.
As to second of the inquiries, I consider the rights, duties and liabilities to be established in each proceeding to be entirely disparate. In the Part VIII proceedings, neither of the spouse parties seeks to quantify, as against the other (as opposed to as against B Organisation) the cost of the rehabilitation works or, as observed above, to vary their joint and several liability to B Organisation. The enforcement of the VCAT Order which B Organisation seeks in this Court is entirely irrelevant to the Part VIII proceedings. The VCAT proceeding related to (then alleged) failure of G Pty Ltd, the husband and the wife to comply with the Permit, which was ultimately conceded by them. B Organisation was successful in its claim against them and the VCAT Order was made against them in late 2019, quelling that justiciable controversy. It is common ground that they have not complied with that order, including by not undertaking rehabilitation works on Suburb S and not providing bank guarantees to secure the cost of same. However, that is merely a question of enforcement and, to that end, B Organisation has filed the VCAT Order in the Supreme Court of Victoria, for the purposes of enforcement pursuant to s 122 of the VCAT Act.
As to the third of the inquiries, namely, identification of the controversy between the parties to each proceeding for the quelling of which the judicial power of the Commonwealth is invoked, the controversy depends upon “what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct or relationships”: Fencott v Muller (1983) 152 CLR 570 at 608. For the reasons set out in relation to the preceding two inter-related and overlapping inquiries prescribed by the High Court, I consider the controversy between the husband and the wife in the Part VIII proceedings and that between B Organisation and them (as well as G Pty Ltd) culminating in the VCAT Order and the enforcement thereof by reason of registration in the Supreme Court of Victoria, to be entirely disparate. As is correctly submitted on behalf of the wife, the former controversy relates to the adjustment of the legal and equitable interests of the spouse parties in property, on the one hand, and the latter controversy relates to the enforcement of the VCAT order on the other. The thread between the husband, the wife and B Organisation is indeed very thin; when stretched by rigorous analysis, that thread snaps, making manifest the lack of commonality. The thread is merely the requirement to undertake rehabilitation works on Suburb S and to provide bank guarantees to secure the cost of same, with which neither spouse party seeks to interfere, and which neither of them seek to avoid, in the Part VIII proceedings. Any rights owed to B Organisation under the Permit, the VCAT Order or any enforcement order, by reason of the registration of the VCAT Order in the Supreme Court of Victoria pursuant to s 122 of the VCAT Act, are not in any, or any relevant, way affected by any order sought by either the husband or the wife under s 79.
The wife submits, correctly in my view that, as the Full Court held in Akbarv Gandega at [34], merely because the anterior determination of the non-federal causes of action between the spouse parties and B Organisation could (depending on how the cases of the spouse parties might otherwise be put at trial) influence the identity and value of the property owned by the husband and the wife, then amenable to adjustment orders within the matrimonial cause, does not bring the non-federal causes within the purview of the federal matter. Any possible convenience of determining, whether first or at all, the claim of B Organisation against the spouse parties, arising out of the VCAT Order, is not the same as the essentiality of so doing for the purpose of then determining the matrimonial cause.
None of the matters referred to on behalf of B Organisation are non-severable from the federal matter under Part VIII, nor are they essential to quell the federal claim. To the contrary, they are wholly disparate and severable from the federal claim and thus the non-federal matter does not fall within the accrued jurisdiction of this federal court.
Lastly, I note that the Full Court in Warby said that also “[r]elevant to whether the Family Court of Australia will exercise the Court’s accrued jurisdiction” is “whether the Court has the power to grant appropriate remedies in respect of the ‘attached’ claims”. Counsel for the husband, in their written submissions, submit that the present case differs from one in which an intervening third party seeks payment of a disputed debt from the parties to the marriage. In that instance, this Court is able to determine the existence and quantum of the debt under the power that “accrues to it” (sic) in respect of claims at common law or under other relevant Commonwealth or State statutes. In this case, however, B Organisation possesses rights under the VCAT Order, which quelled the controversy between the spouse parties and it, which it is entitled to enforce pursuant to s 122 of the VCAT Act and/or s 123 of the Planning and Environment Act irrespective of these proceedings and the outcome thereof.
In the circumstances, I reject the third jurisdictional basis contended on behalf of B Organisation and find that this Court does not have jurisdiction on this basis either.
DISPOSITION
Having found that this Court does not have jurisdiction, the Response to Amended Initiating Application filed on 12 March 2024 by B Organisation must, and shall be, dismissed for want of jurisdiction. That, in turn, necessitates the discharge of paragraph 3 of the Orders made by Wilson J on 21 September 2020, granting leave to B Organisation to intervene in the proceeding, as well as (at least) the unexecuted obligations arising under paragraph 1 of the Orders consequently made by McEvoy J on 14 December 2020. Indeed, by his Response to Application in a Proceeding filed on 14 February 2024, the husband seeks, inter alia, that B Organisation be removed as a party to the proceedings and that, in summary, the monies held upon trust for B Organisation, the wife and him, by the solicitors for B Organisation (pursuant to paragraph 1 of the Orders of McEvoy J) thereafter be held upon trust solely for the wife and him by his solicitors, pending agreement between them or further order of the Court.
However, by reason of the said orders made by Wilson and McEvoy JJ, other orders have been made in these proceedings since late 2020 which may be required to be discharged for want of jurisdiction or which are no longer necessary. For example:
·Paragraph 4 of the Orders made by Wilson J on 21 September 2020 also provides that:
The applicant and respondent, in their capacity as directors of [G Pty Ltd] are restrained from entering into final orders without the [B Organisation] being heard in relation to the making of any such orders.
·Paragraph 1 of the Orders made by Wilson J on 24 September 2020 provides that:
On or before 4pm on 23 October 2020 the applicant and respondent must remove prohibited material as defined in the orders made on 14 November 2019 by the Victorian Civil and Administrative Tribunal in proceeding P601 of 2019 to the satisfaction of the responsible authority under the Planning & Environment Act 1987 (Vic).
·Paragraphs 1 and 2 of the Orders made by Wilson J on 30 October 2020 provide that:
1.the husband and the wife are restrained from resigning any position or diminishing the value of their interest in any of the following entities –
(a) [P Company]; and
(b) [G Pty Ltd]
2.the intervener is authorised to lodge caveats over any or all of the properties of the husband and the wife or either of them, and of any of their companies, including but not limited to the properties situated and known as –
(a) [C Street, Suburb D], New South Wales;
(b) [E Street, Suburb D], New South Wales; and
(c) [F Street, Suburb R], New South Wales;
prohibiting or restricting (at the election of the intervener) dealings in or borrowings secured over any of the properties;
As Gibbs CJ said in Re Ross-Jones; Ex parte Green (1984) FLC 91-555 at 79,488, once it appears that jurisdiction is lacking, an order made without jurisdiction must be dissolved, “however inconvenient that course might appear”.
It does not appear in dispute between the parties that the husband and the wife have not complied with paragraph 1 of the orders made on 24 September 2020. The husband and the wife will need to consider which orders, including the ones referred to in paragraph 162, they contend must or should be discharged. For example, the orders made in the course of these proceedings for the appointment of a single expert to identify the works necessary for the rehabilitation of Suburb S and to quantify the likely cost thereof may need to be discharged.
The husband and the wife will also need to consider which of the orders sought in their amended Initiating Application and amended Response to Initiating Application (and, in the case of the husband, proposed further amended Response to Initiating Application) are or can no longer be pursued by reason of this judgment. Accordingly, I will list the matter for mention as soon as practicable, in circumstances where the proceedings are listed for trial on 7 October 2024.
There are also other interlocutory orders which are sought by the husband and the wife, as against each other, in their respective Responses to an Application in a Proceeding, both filed on 14 February 2024. For example, the wife seeks that, from the monies held to date upon trust by the solicitors for B Organisation (and, hereafter, by the solicitors for the husband), the sum of $759,000 be paid to her solicitors’ trust account. In circumstances where the matter is listed for trial shortly, it may be that those matters, or some of them, are not, or do not need to be, pressed.
Given my dismissal of B Organisation's Response to Amended Initiating Application, discharge of the order granting it leave to intervene, removal of it as a party to these proceedings and/or order that the funds held upon trust for the husband, the wife and B Organisation by its lawyers be forthwith paid to the husband’s solicitors, I cannot discount the possibility that it will file a Notice of Appeal. In the circumstances, at this stage, I will only order that those funds be held upon trust for the husband and the wife pending further order of this court and not, in the alternative, pending agreement of those spouse parties.
Each of the parties has foreshadowed a costs application arising out of my determination of the jurisdictional challenge. If costs are pressed by any party, directions will need to be made in relation to the filing of brief written submissions and that issue will be determined, upon the papers, in Chambers in due course.
I certify that the preceding one hundred and seventy (170) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Strum. Associate:
Dated: 28 August 2024
20
5