Nunis v Do
[2021] WASC 115
•19 APRIL 2021
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: NUNIS -v- DO [2021] WASC 115
CORAM: SMITH J
HEARD: 6 APRIL 2021
DELIVERED : 6 APRIL 2021
PUBLISHED : 19 APRIL 2021
FILE NO/S: CIV 3077 of 2019
BETWEEN: RALPH MARCEL NUNIS
Plaintiff
AND
LEE LEE DO
First Defendant
ROSEWAY INVESTMENTS PTY LTD (in liq)
Second Defendant
Catchwords:
Cross-vesting jurisdiction - Application to remove action against first defendant for damages to the Family Court of Western Australia - Action related to proceedings pending in the Family Court - More appropriate that the action be determined by the Family Court - Turns on own facts
Legislation:
Family Law Act 1975 (Cth), s 4(1), s 75(2), s 78, s 79, s 80, s 90AE
Jurisdiction of Courts (Cross-vesting) Act 1987 (WA), s 5(4)
Result:
Proceedings transferred to the Family Court
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr L Hager |
| First Defendant | : | Mr C S Williams |
| Second Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Hager Grubb & Partners Lawyers |
| First Defendant | : | Solomon Brothers |
| Second Defendant | : | No appearance |
Case(s) referred to in decision(s):
Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109
Bankinvest AG v Seabrook (1988) 14 NSWLR 711
Barnes v Addy (1874) LR 9 Ch App 244
BHP Billiton Ltd v Schultz (2004) 221 CLR 400
Camden Pty Ltd v Lane [2018] FamCAFC 91; (2018) 333 FLR 15
Coley v Danae [2020] WASCA 13
Fell v Fell [2007] WASC 157
H v D [2012] WASC 291
Hayim v Citibank NA [1987] AC 730
Kennon v Spry [2008] HCA 56; (2008) 238 CLR 366
Lidden v Composite Buyers Ltd (1996) 139 ALR 549
TAL Life Ltd v Shuetrim [2016] NSWCA 68; (2016) 91 NSWLR 439
SMITH J:
The application and the result
The first defendant, Ms Lee Lee Do, applies for orders that these proceedings be: struck out; or summarily dismissed; or permanently stayed; or transferred to the Family Court of Western Australia (Family Court) pursuant to s 5(4) of the Jurisdiction of Courts (Cross‑vesting) Act 1987 (WA).
On 6 April 2021, after hearing counsel for the plaintiff, Ralph Marcel Nunis, and counsel for the first defendant, I made orders that:
(1)the second defendant, Roseway Investments Pty Ltd (in liquidation), be removed as a party to the proceedings;[1] and
(2)the proceedings be transferred to the Family Court, pursuant to s 5(4) of the Jurisdiction of Courts (Cross-vesting) Act.
[1] At the outset of the hearing of this application, Mr Nunis and the first defendant Ms Lee Lee Do agreed that an order should be made by the court that Roseway Investments be removed as a party to the proceedings in light of the request made by the liquidator of Roseway Investments by letter dated 19 March 2021, and the fact that no application had been made for leave pursuant to s 471B of the Corporations Act 2001 (Cth); affidavit of Maha Abweh, sworn on 29 March 2021, Attachment MA‑1.
The reasons why the orders were made are as follows.
The matters pleaded in the action and matters raised by the plaintiff in his application for the alteration of interest in the property of the marriage in the Family Court of Western Australia
Mr Nunis and Ms Do are married. On or about December 2017, or no earlier than 27 May 2018, their marriage irretrievably broke down.[2]
[2] Amended statement of claim, filed on 28 August 2020, [1.2]; defence, filed on 30 June 2020, [2.2].
On 8 March 2019, Mr Nunis filed an initiating application in the Family Court seeking final property orders, which included an order that the property of the marriage be split between himself and Ms Do 80/20% in his favour, for orders presumably sought pursuant to s 79 of the Family Law Act 1975 (Cth) altering the interests in the property of the marriage.
Mr Nunis instituted the action by filing a writ of summons on 4 December 2019. At that time he was self-represented.
On 19 March 2020, Hager Grubb & Partners Lawyers filed a notice of representation for Mr Nunis, and by consent on 23 March 2020 an order was made requiring the plaintiff to file an amended writ of summons and statement of claim by 6 April 2020. On 17 April 2020, an amended writ of summons and statement of claim were filed. On 30 June 2020, Ms Do filed her defence.
Mr Nunis brings this action of breach of trust as the trustee and as a beneficiary of the Bateman Road Trust,[3] and claims:
(a)in January 2018, Roseway Investments breached its fiduciary duty, breached its duty as trustee, and engaged in fraudulent, dishonest and bad faith conduct as the former trustee of the Bateman Road Trust, by reason of the sale of 105 shares in Marvel Investments Pty Ltd under market value. Mr Nunis pleads that the 105 shares were sold for $515,000 when the market value of the shares was $3,234,000.[4] Mr Nunis, however, pleads no relief against Roseway Investments; and
(b)Ms Do is liable for Roseway Investments' conduct under the second limb of Barnes v Addy[5] for the breaches, as she procured or induced the breaches, or the breaches amounted to a dishonest and fraudulent design to cause financial harm to Mr Nunis and his children, and Ms Do had knowledge of, and assisted to implement, that design.
[3] There is a factual dispute as to whether Mr Nunis is a trustee of the Bateman Road Trust; amended statement of claim, filed on 28 August 2020, [4.1]; defence, filed on 30 June 2020, [5.2]. If Mr Nunis is not the trustee of the Bateman Road Trust, there is a legal issue as to whether he has standing to bring the application as a beneficiary. It is noted, however, equity permits a beneficiary to sue in their own capacity, joining as defendants the trustee and any other beneficiaries, but only where there are 'special circumstances'. 'Special circumstances' arise where there has been a failure, excusable or inexcusable, by the trustee in the performance of the duty owed by the trustee to the beneficiary to protect the trust estate or to protect the interests of the beneficiaries in the trust estate; Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109 [55] - [56] (Gleeson CJ, Gummow & Hayne JJ), [163] (Callinan J); TAL Life Ltd v Shuetrim [2016] NSWCA 68; (2016) 91 NSWLR 439 [54] (Emmett AJA); applying Hayim v Citibank NA [1987] AC 730, 748 (Lord Templeman). It is an exceptional course of action. Lidden v Composite Buyers Ltd (1996) 139 ALR 549, 553 (Finn J).
[4] Amended statement of claim, filed on 28 August 2020, [17.8 (3)].
[5] Barnes v Addy (1874) LR 9 Ch App 244.
In the amended statement of claim, filed on 28 August 2020, Mr Nunis pleads in the alternative, that the true consideration for the transfer of 105 shares was more than the amount of $515,000, and Ms Do caused the true consideration for the transfer to be paid into a bank account that was not held by the Bateman Road Trust.[6]
[6] Amended statement of claim, filed on 28 August 2020, [17.3A].
Until 23 January 2018, the second defendant, Roseway Investments Pty Ltd, was the trustee of the Bateman Road Trust. Mr Nunis pleads that he was appointed Trustee of the Bateman Road Trust between 23 January 2018 and 17 April 2020.
Mr Nunis has one adult daughter from a previous marriage, and Mr Nunis and Ms Do have three children from their marriage who are respectively 9, 8 and 5 years old. Mr Nunis, Ms Do, their children, and Mr Nunis' daughter from his previous marriage are beneficiaries of the Bateman Road Trust.
In support of the initiating application for final property orders in the Family Court proceedings the appellant filed an affidavit in the Family Court, sworn by him on 8 March 2019, in which he deposes:[7]
[7] Affidavit of Lee Lee Do, sworn 17 October 2020, Annexure LLD‑3, 21 ‑ 28.
(1)He met Ms Do on 10 January 2004, they married on 11 January 2009, and separated on 27 May 2018.
(2)From the start of his relationship with Ms Do until just before their separation he administered all of their financial matters.
(3)Roseway Investments was a company established to be a corporate trustee for various trusts, including the Bateman Road Trust, the Drew Road Unit Trust and the Denston Trust. The Bateman Road Trust acquired either property assets or shares in company/property assets over the years.
(4)In or about 2012, Roseway Investments, in its capacity as trustee for the Bateman Road Trust, acquired a 43.75% share (105 shares) in Marvel Investments Pty Ltd. To purchase the shares, Roseway Investments obtained funds through a loan from Sunfire Asset Pty Ltd. Sunfire Asset is a business specialising in finance, project management, investments and property development, managed and operated by Mr Nunis. Initially, Ms Do was a director and shareholder of Sunfire Asset. Later, Ms Do resigned and Mr Nunis became a director and secretary of Sunfire Asset.
(5)After Roseway Investments purchased the Marvel Investments shares, Mr Nunis became a director of Marvel Investments. Marvel Investments, through its joint venture company 186 Wickham Street (Residential) Pty Ltd, acquired 67% of shares in vacant land at 186 Wickham Street in Fortitude Valley, Queensland. The other shareholder (33%) (of the venture company) was owned by three Singapore public companies. Marvel Investments acquired finance of $1.3 million security from three foreign companies (referred to as 'Japanese loans') against its shares to develop apartments, but a dispute occurred between the shareholders.
(6)Roseway Investments' shareholding in Marvel Investments was valued at $3,095,313 in October 2016.[8]
[8] Marvel had a change in shareholdings in 2016. A shareholding of 43.75% (105 shares) held by Stapleton Jones Developments Pty Ltd were transferred to NJLH Investments Pty Ltd.
(7)Based upon a valuation by a licensed valuer, on or about 12 July 2017, of the Fortitude Valley land, Roseway Investments' shares in Marvel Investments were valued at $3,224,375 (also being its net asset value before tax).
(8)Roseway Investments lent a total of $1,444,985.73 to Marvel Investments.
(9)In or about 28 July 2017, Marvel wanted to extinguish the Japanese loans by paying them out through Marvel shareholder loans. Roseway Investments was unable to meet its portion of the Japanese loans and sought a loan from Marvel's other two shareholders, NJLH Investments Pty Ltd and Toyo Keito Australia Pty Ltd for a total of $460,000, secured against Roseway Investments' shares in Marvel Investments. The loan was for a term ending on 31 December 2017.
(10)NJLH and Toyo Keito Australia issued a creditors statutory demand to Roseway Investments on 2 January 2018 for default of the loan. At the time, Ms Do was sole shareholder of Roseway Investments.[9]
(11)On or about 23 January 2018, Ms Do removed Mr Nunis as director of Roseway Investments, appointed herself as a director of Roseway Investments, and sold the 105 Marvel shares owned by Roseway Investments (to NJLH and Toyo Keito Australia).[10] Under the Marvel Investments' shareholders agreement, he was then removed as a director of Marvel.
(12)On 23 January 2018, in his capacity as appointor/guardian of the Bateman Road Trust, he removed Roseway Investments as trustee of the Bateman Road Trust.
(13)By selling the Roseway Investments' Marvel shares for $515,000, the Roseway Investments' loans of $460,000 to NJLH and Toyo Keito Australia were extinguished. Roseway Investments should have received $55,000 to complete the share transfer. Legal action was taken to pursue the balance owed. Following the execution of a deed of settlement and release, the claim was settled for $47,500, being a loss of the $7,500 in capital, plus legal costs of $20,020.
(14)Roseway Investments required its loan to Marvel Investments to be repaid. At that time, it was estimated the loan was $856,370.75, but after further investigation it amounted to $1,444,985.73.
(15)At the time of transfer of the 105 shares in January 2018, Roseway Investments' asset in Marvel Investments was $1,444,985.73 in loan value, and $3,224,375 in share value, being a total gross asset value of $4,669,360.73.
(16)In or about 7 June 2018, Ms Do, as sole director, placed Roseway Investments into liquidation without Mr Nunis' knowledge.
(17)Ms Do's actions destroyed the Bateman Road Trust assets when she signed away its shares in Marvel Investments for less than 10% of its asset value, and destroyed the future of the primary beneficiaries, which include the children of the marriage.
[9] Mr Nunis was at that time the director of Roseway Investments.
[10] In an affidavit affirmed by Lee Lee Do on 16 October 2019, filed in the Family Court proceedings, Ms Do deposes that she removed Mr Nunis as a director of Roseway Investments on or about 22 January 2018, [125]; affidavit of Lee Lee Do, sworn 17 October 2020, Annexure LLD‑4, 61.
In his affidavit sworn on 8 March 2019, in support of the application to alter the interests in the property of the family, Mr Nunis summarised his claim in respect of the sale of the Marvel Investments shares and other claims of breach of trust involving other trusts and other losses that he claims were caused by the conduct or transactions of Ms Do during their marriage as follows:[11]
[11] Affidavit of Lee Lee Do, sworn on 17 October 2020, Annexure LLD‑3, 34 ‑ 35.
6.Lee Lee signed over shares in a business that she had little or no knowledge of.
7.Lee Lee failed to obtain independent financial advice regarding Roseway shares in Marvel.
8.Lee Lee failed to obtain independent legal advice concerning Roseway shares in Marvel.
9.Lee Lee sold shares that were valued at $3 224 375 for $505 000.
10.Lee Lee failed to obtain $55 000 as the net balance of the sale of Roseway shares.
11.She caused a legal matter between BRT, NJLH and Toyo. The matter was settled for $47 500 at a legal cost of $20 020. The net loss was $27 520.
12.Lee Lee failed to retrieve the Roseway loan of $1 444 985.73.
13.Lee Lee failed to obtain independent financial advice prior to placing Roseway into liquidation.
14.Lee Lee failed to obtain independent legal advice prior to placing Roseway into liquidation.
15.Lee Lee failed to obtain independent financial advice concerning the BRT asset at 1/880 Canning Highway Applecross.
16.Lee Lee failed to obtain independent legal advice concerning the BRT asset at 1/880 Canning Highway Applecross.
17.Lee Lee caused a legal matter which cost the BRT $10 487.96 to have a caveat removed that was lodged by the liquidator appointed by Lee Lee.
18.Lee Lee failed to obtain independent financial advice concerning the DT asset at 7 Denston Way Girrawheen.
19.Lee Lee failed to obtain independent legal advice concerning the DT asset at 7 Denston Way Girrawheen.
20.The DT is now likely to suffer substantial loss caused by Lee Lee.
21.Sunfire lent funds to DT to service the mortgage. This amount is yet to be quantified.
22.Sunfire stands to lose its capital due to Roseway being unnecessarily placed into Liquidation.
23.Lee Lee failed to obtain independent financial advice concerning the Drew Road asset at 44 Drew Road Ardross.
24.Lee Lee failed to obtain independent legal advice concerning the Drew Road asset at 44 Drew Road Ardross.
25.Sunfire lent funds to Drew Road in order to service the mortgage. This amount is yet to be quantified.
26.Sunfire stands to lose its capital as a result of Roseway being unnecessarily placed into liquidation.
27.The unit holders of Drew Road will suffer substantial loss.
28.Lee Lee's interaction and hand in Young's case caused considerable damage to Spiral worth in-excess of $ 1 000 000.
29.Lee Lee by not responding to Sunfire's letter of demand and her intent to keep the Deposit Sum to be received from settlement of the matter has caused a loss of $53 568.97.
30.The total quantifiable loss is $4 760 937.66 plus the damages to Drew Road unit holders, DT and Spiral which is likely to be in excess of $3 000 000.
31.Lee Lee caused a massive diminution of family assets, which is to be seriously considered when assessing the financial settlement
The first defendant's application
Other than the allegation that the true consideration for the transfer of the 105 shares was paid into a bank account not held by the Bateman Road Trust, the facts, circumstances and allegations raised in the action are matters that Mr Nunis has raised in the Family Court proceedings in his affidavit sworn on 8 March 2019.
Subsequent to the filing of the application to strike out, stay or transfer the action, in what was an attempt to remove an argument that there are now no concurrent overlapping proceedings on foot, on 30 October 2020, Mr Nunis filed an undertaking as to jurisdiction in the following terms:
Subject this Court ordering that I can continue to prosecute this action (Supreme Court CIV 3077 of 2019) in this Court, I hereby undertake to this Court that I will not prosecute a claim or lead evidence in the Family Court in respect of the facts, matters, circumstances, allegations and relief pleaded in paragraphs 2 to 20 of the amended statement of claim filed 28 August 2020 or any subsequent amended statement of claim that I file in this action.
I consent to this undertaking being tendered in the Family Court in any action to which I am a party.
Irrespective of the undertaking, Ms Do argues that:
(a)the subject matter of the action falls within the exclusive jurisdiction of the Family Court, on grounds that the proceedings instituted by Mr Nunis in this Court constitute a 'matrimonial cause' within the meaning of subpar (ca)(i) of the definition of 'matrimonial cause' in s 4(1) of the Family Law Act, (being proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them arising out of the marital relationship);
(b)alternatively, the commencement and continued pursuit of this action should be stayed because:
(i)it constitutes an abuse of process, on grounds that the undertaking as to jurisdiction (even if accepted by this court) cannot have a practical effect in the Family Court proceedings; and
(ii)it is an abuse of process to commence a concurrent overlapping proceeding when there is already a pre‑existing extant proceeding in which a complete remedy could be obtained; or
(c)alternatively, it is more appropriate that the proceedings be determined by the Family Court pursuant to s 5(4)(b)(i) and/or s 5(4)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act and it is in the interests of justice for the proceedings to be determined by the Family Court.
Disposition ‑ it is more appropriate that the relevant proceeding be determined by the Family Court or is it otherwise in the interests of justice to transfer the action
Section 5(4) of the Jurisdiction of Courts(Cross-vesting) Act provides:
(4)Where ‑
(a)a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court or the State Family Court (in this subsection referred to as the first court); and
(b)it appears to the first court that ‑
(i)the relevant proceeding arises out of, or is related to, another proceeding pending in the other of the courts referred to in paragraph (a) and it is more appropriate that the relevant proceeding be determined by that other court;
(ii)having regard to ‑
(A)whether, in the opinion of the first court, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in that other court; and
(B)the interests of justice,
it is more appropriate that the relevant proceeding be determined by that other court; or
(iii)it is otherwise in the interests of justice that the relevant proceeding be determined by that other court,
the first court shall transfer the relevant proceeding to that other court.
Section 5(4)(b) provides three alternative paths to the grant of a transfer of proceedings pending in this court to the Family Court.[12]
[12] Fell v Fell [2007] WASC 157 [1] ‑ [3] (Beech J).
In this matter, the preconditions for the exercise of the power to transfer are relevantly s 5(4)(a) and either s 5(4)(b)(i) or s 5(4)(b)(iii). There is no issue that s 5(4)(a) is met. If either s 5(4)(b)(i) or s 5(4)(b)(iii) are met, then the court must order the transfer of the action, and has no further discretion in the matter.[13]
[13] BHP Billiton Ltd v Schultz (2004) 221 CLR 400 [14] (Gleeson CJ, McHugh & Heydon JJ), [62] (Gummow J) (Hayne J agreeing), [222] (Callinan J).
In considering whether the preconditions for transfer are met the first precondition in s 5(4)(b)(i) is whether the action is 'related' to the Family Court proceedings.
In H v D, Pritchard J rejected an argument that a direct relationship must arise between the two set of proceedings for the proceedings to be related and pointed out:[14]
The authorities do not suggest that a direct relationship between the two sets of proceedings is required. The expression 'related to' should be given a wide, rather than a restricted, meaning: Seymour v Devine and Ors [9] (Pullin J, citing Carey v Carey (Unreported, SCt of WA, Lib No 8307, 14 June 1990 (Franklyn J)).
The term 'related' means 'associated' or 'connected' and in order to be 'related' there needs to be some nexus or association between the two sets of proceedings in order that the conclusion can be drawn that they are related: Fell v John Fell [2007] WASC 157 [12] (Beech J); Armstrong v Armstrong [2004] WASC 121 [52] (Barker J); Re Hamilton-Irvine and the Companies Act 1985 (1990) 94 ALR 428, 432 ‑ 433 (Beaumont J); Leithead v Leithead (1991) 109 FLR 177 and Hoddell v Hoddell Pty Ltd [1999] WASC 156 [21] (Murray J).
[14] H v D [2012] WASC 291 [31] ‑ [32].
Whilst in some matters the determination as to whether two sets of proceedings are associated or connected (that is whether there is a nexus or association between the two proceedings) may be difficult to apply if the association or connection between the proceedings is tenuous or the strands connecting them are remote, this is not the case in this matter.
The factual connection between the action and Family Court proceedings exists to an overwhelmingly sufficient degree that it must necessarily follow that the two sets of proceedings are related. This is because not only are the same parties parties to both proceedings, but the subject matter of the action forms a significant part of the subject matter of the Family Court proceedings, and there is a significant overlap between the issues raised in both sets of proceedings.
Consequently, the first precondition in s 5(4)(b)(i) is met in that the action is related to the proceedings that are pending in the Family Court.
Turning to the second precondition in s 5(4)(b)(i), that is whether it is more appropriate that the action be determined by the Family Court, I have also considered at the same time whether it is in the interests of justice that the action be determined by the Family Court. This is because the questions of whether it is more appropriate that the action be determined by the Family Court and whether it is in the interests of justice that the proceedings be determined by the Family Court are closely aligned concepts.[15]
[15] H v D [2012] WASC 291 [37] (Pritchard J), citing Fell v Fell [2007] WASC 157 [13] (Beech J) and BHP Billiton Ltd v Schultz (2004) 221 CLR 400 [14] (Gleeson CJ, McHugh & Heydon JJ).
To determine whether the second precondition is met, the court must engage in an evaluative judgment of all the circumstances of the particular case.[16] Where the interests of justice lie and which court is more appropriate will depend upon an analysis of all the circumstances of each case.[17]
[16] Fell v Fell [2007] WASC 157 [7] - [8] (Beech J); H v D [2012] WASC 291 [19] (Pritchard J).
[17] Fell v Fell [2007] WASC 157 [17] (Beech J).
What is involved is a 'nuts and bolts' management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to deal with the action.[18]
[18] BHP Billiton Ltd v Schultz (2004) 221 CLR 400 [13] (Gleeson CJ, McHugh & Heydon JJ, citing Bankinvest AG v Seabrook (1988) 14 NSWLR 711, 713 ‑ 714 (Street CJ)).
As counsel for Ms Do points out, what Mr Nunis seeks in the action by giving the undertaking as to jurisdiction is that one particular dispute be excised from the division of interest in the property of the marriage in the Family Court proceedings, and be separately determined by this court in the action, in parallel with the continuation of the Family Court proceedings.
However, the effect of what Mr Nunis claims in the Family Court proceedings is that:
(a)Ms Do has made a negative contribution to the conservation or improvement of the property of the parties to the marriage on grounds that she substantially diminished the asset pool available for division by order of the Family Court by selling a major asset of the marriage for less than its true value; and
(b)this should be taken into account by the Family Court when deciding the orders to be made for division of property under s 79 and s 80 of the Family Law Act.
Consequently, it is not practicable to excise from the Family Court proceedings the factual issues pleaded in the action.
It is argued on behalf of Mr Nunis that it is not appropriate, nor is it in the interests of justice, that the action be transferred to the Family Court for reasons that:[19]
(a)the claim is grounded in the law of equity. The claim does not concern the respective contributions each party made to the marriage;
(b)Mr Nunis brings the action on behalf of, and for the benefit of, the beneficiaries of the Bateman Road Trust who are not 'parties to a marriage'. The primary beneficiaries of the trust are Mr Nunis' eldest daughter from a previous marriage and Mr Nunis and Ms Do's three children (all minors). The children, in particular the eldest adult daughter of Mr Nunis, must be given an opportunity to join the action; and
(c)the fruits of any judgment will need to be paid back into the Bateman Road Trust for the benefit of the trust's beneficiaries. The beneficiaries' entitlement to any judgment will need to be determined before any part of the judgment could be 'property of the parties to the marriage'.
[19] Although these points are put in support of a submission that the action is not an abuse of process on grounds that the action is a separate, and not overlapping, action from the proceedings in the Family Court, these points necessarily require consideration in a determination as to whether it is more appropriate or in the interests of justice that the proceedings in this court be determined by the Family Court.
The points sought to be made on behalf of Mr Nunis are not correct at law.
The Family Court does have jurisdiction to determine claims that arise in equity. In Fell v Fell, the plaintiff had commenced proceedings in the Family Court of Western Australia against her former husband for a division of property of the marriage under s 79 of the Family Law Act, and had also commenced proceedings in the Supreme Court claiming an interest by way of a constructive trust over property held by three defendants (one of whom was her former husband) who held the property in their capacity as trustees of a trust.[20] The claim in the proceedings in the court was for a constructive trust founded upon an equity arising by estoppel.[21] After hearing counsel for the parties, Beech J made an order that the proceedings in the court be transferred to the Family Court.[22]
[20] Fell v Fell [2007] WASC 157 [9] ‑ [10] (Beech J).
[21] Fell v Fell [2007] WASC 157 [11] (Beech J).
[22] Fell v Fell [2007] WASC 157 [38] (Beech J).
Section 79(4) of the Family Law Act provides:
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Section 75(2) of the Family Law Act sets out a number of matters that may be relevant including:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
…
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
…
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
…
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
…
Having read the affidavit of Mr Nunis dated 8 March 2019 (filed in the Family Court proceedings), and the facts and issues pleaded in the action, it is clear that the heart of the breakdown of the marriage and one of the central issues in dispute in the division of property proceedings is the matters pleaded in the action.
Even if the undertaking as to jurisdiction was to be accepted by this court, it is difficult to contemplate how it practically could have an operative effect. If the proceedings in this court were to be heard and determined prior to the proceedings in the Family Court and judgment entered in favour of Mr Nunis, requiring an award of damages to be paid to the Bateman Road Trust, the division of the trust property is an issue that could only be determined in the Family Court proceedings. In the division of the property, regard may be had by the Family Court to the conduct of each of the parties to the action, and the conduct of any other relevant person, together with the matters to be taken into account pursuant to s 79(4) and to the extent they are relevant the matters in s 75(2) of the Family Law Act. To do so, it will be necessary for the Family Court to consider the matters pleaded in the action, in particular which party has control of the assets of the trust, and importantly it will be required, by s 79(4) of the Family Law Act, to make findings about the financial contributions made directly or indirectly by each party and the acquisition, conservation or improvement of any part of the property.
Contrary to the submission made on behalf of Mr Nunis, even though the Bateman Road Trust is a discretionary trust, the assets of the Bateman Road Trust constitute property of the parties to the marriage, which the Family Court is likely to make orders in respect of, or take into account when making orders under s 79 of the Family Law Act. This is because on the facts pleaded by the parties in the action and set out in the affidavits filed in the Family Court proceedings by Mr Nunis and Ms Do, the Bateman Road Trust was created before the marriage but after their relationship commenced for the purpose of accumulating assets for the family, through property developments, and at law either Mr Nunis or Ms Do have control over the assets of the trust.
In Coley v Danae, the Court of Appeal recently summarised the decision of the High Court in Kennon v Spry[23] on this point as follows:[24]
[23] Kennon v Spry [2008] HCA 56; (2008) 238 CLR 366.
[24] Coley v Danae [2020] WASCA 13 [71] ‑ [75], [79] ‑ [81] (footnotes omitted).
In Kennon v Spry, which concerned s 79 of the Family Law Act 1975 (Cth) (the equivalent provision to s 205ZG), it was held by a majority of the Court that assets held in a trust, in relation to which one party to the marriage (the husband) was the sole trustee and the other party to the marriage (the wife) was a beneficiary, could properly be characterised in the circumstances of that case as 'property of the parties to the marriage' within the meaning of s 79 of the Family Law Act 1975 (Cth), even though the husband had no power to apply the assets of the trust to or for himself.
In reaching this conclusion in the circumstances of that case, the majority in Kennon v Spry referred to the husband's legal title as trustee of the assets of the trust and the absence of any equitable interest in the assets, the trustee's power to appoint the whole of the fund to the wife, the husband's fiduciary duty to consider whether and in what way the power should be exercised, and the wife's interest in the due administration of the trust.
The circumstances of that case were that the discretionary trust was a creature of the husband, created before the marriage, which had been used to accumulate assets for the family, including the family home. French CJ placed significance on the origin and nature of the assets of the trust. His Honour said:
'Where property is held under such a trust by a party to a marriage and the property has been acquired by or through the efforts of that party or his or her spouse, whether before or during the marriage, it does not, in my opinion, necessarily lose its character as "property of the parties to the marriage" because the party has declared a trust of which he or she is trustee and can, under the terms of that trust, give the property away to other family or extended family members at his or her discretion.
For so long as Dr Spry retained the legal title to the Trust fund coupled with the power to appoint the whole of the fund to his wife and her equitable right, it remained, in my opinion, property of the parties to the marriage for the purposes of the power conferred on the Family Court by s 79. The assets would have been unarguably property of the marriage absent subjection to the Trust. (emphasis added)'
His Honour continued:
'An exercise of the power under s 79 requiring the application of the assets of the Trust in whole or in part in favour of Mrs Spry would, prior to the 1998 Instrument, have been consistent with the proper exercise of Dr Spry's powers as trustee and would have involved no breach by him of his duty to the other beneficiaries.
…
The characterisation of the assets of the Trust, coupled with Dr Spry's power to appoint them to his wife and her equitable right to due consideration, as property of the parties to the marriage is supported by particular factors. It is supported by his legal title to the assets, the origins of their greater part as property acquired during the marriage, the absence of any equitable interest in them in any other party, the absence of any obligation on his part to apply all or any of the assets to any beneficiary and the contingent character of the interests of those who might be entitled to take upon a default distribution at the distribution date. (emphasis added)'
French CJ also considered the position of the other beneficiaries, and said:
'[I]t has long been accepted that in some circumstances the Family Court has power to make an order which will indirectly affect the position of a third party. That acceptance, which predated the enactment of Pt VIIIAA of the Family Law Act, is reflected in the judgment of Gibbs J in Ascot Investments Pty Ltd v Harper [(1981) 148 CLR 337 at 354] …
"Except in the case of shams, and companies that are mere puppets of a party to the marriage, the Family Court must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it."
… Giving full effect to the generality of the passage quoted from the judgment of Gibbs J, the case does not stand against the proposition that s 79 would apply in the circumstances of this case where the only property interests are those of the trustee who is a party to the marriage, and where no other beneficiary has any legal or equitable interest apart from a right to due consideration and administration. That, of course, is a right which is a relevant consideration informing the exercise of the Court's discretion as is any indirect effect upon a third party's rights[.] (emphasis added)'
…
In the circumstances of that case, it was the combination of one party having control of the trust as trustee and the other party being a beneficiary for the benefit of whom the entirety of the trust assets could have been applied during the marriage, which led to the result that the trust assets were 'property' for the purposes of s 79 of the Family Law Act 1975 (Cth). Such a result would, a fortiori, be expected to follow in those circumstances where the same party to the marriage (or, in the case of s 205ZG, the de facto relationship) had both control of the trust as trustee and was a beneficiary for the benefit of whom the entirety of the trust assets could be applied.
So much is implicit in the reasoning of Gummow and Hayne JJ, and is reflected in French CJ's conclusion, in Kennon v Spry in relation to the position that prevailed at a time when Dr Spry was also a beneficiary of the trust in that case:
'Prior to the 1983 Deed Dr Spry as sole trustee had the "absolute discretion" to apply all or any part of the income and/or capital of the fund to himself as one of the "beneficiaries". On the basis of that power, and consistently with authority including the decisions of the Full Court referred to above, the assets of the Trust would properly have been regarded as his property as a party to the marriage for the purposes of s 79.'
The Full Court decisions referred to by French CJ included cases where the relevant party was not a trustee but, as a matter of fact, had full control over the trustee entity. It is not necessary for present purposes to examine those cases in this context, but it should be noted that there is an important difference between a situation of 'de facto control' and a 'false front'. A person may, in fact, be in control of a trust (by reason of the relevant facts and circumstances) without the trust being a 'counterfeit, a façade or a false front'.
Pursuant to cl 4.1.1 of the Bateman Road Trust, the trustee is empowered at any time prior to the expiration of any accounting period (ending on 30 June in each year) with respect to all or any part or parts of the net income of the trust fund for such accounting period (and if there is a guardian in office at that time then, with the consent of the guardian) to pay the same for any one or more of the general beneficiaries living or in existence at the time of the determination in such proportions and in such manner as the trustee in its absolute discretion thinks fit, or to accumulate the same.[25]
[25] Affidavit of Lee Lee Do, sworn on 17 October 2020, Annexure LLD-10, 203.
When the Bateman Road Trust was first constituted, Roseway Investments was appointed trustee, and Ms Do was appointed guardian and appointor.[26]
[26] Affidavit of Lee Lee Do, sworn on 17 October 2020, Annexure LLD-10, 236.
On 2 April 2014, by a deed of variation, Mr Nunis was appointed guardian and appointor of the Bateman Road Trust, and Roseway Investments continued as the trustee.[27]
[27] Affidavit of Lee Lee Do, sworn on 17 October 2020, Annexure LLD-11, 239 ‑ 241.
On 23 January 2018, by a deed of variation, Roseway Investments was removed as trustee of the Bateman Road Trust and Mr Nunis was appointed as the trustee.[28] Mr Nunis remained the appointor and guardian. Both Mr Nunis and Ms Do remain general beneficiaries together with any person who is related by blood or marriage to either of them.[29]
[28] Affidavit of Lee Lee Do, sworn on 17 October 2020, Annexure LLD-12, 242 ‑ 245.
[29] Affidavit of Lee Lee Do, sworn on 17 October 2020, Annexure LLD-10, 235.
Pursuant to cl 7.1 of the Bateman Road Trust, the trustee may in his or her absolute discretion, subject to cl 11 (the consent of the guardian) at any time assign, convey or transfer the whole or any part of the trust fund or out of the capital of the trust fund (except for monies invested in a special trust) and pay any sum or sums to any beneficiary for the beneficiaries own use and benefit absolutely.[30]
[30] Affidavit of Lee Lee Do, sworn on 17 October 2020, Annexure LLD-10, 210.
If it is accepted that the variation to the trust deed appointing Mr Nunis as trustee, guardian and appointor was validly made,[31] then it is clear that the terms of the Bateman Road Trust enable Mr Nunis as trustee to have control of the trust by applying the income of the trust to either himself as a beneficiary or Ms Do in any accounting period, pursuant to cl 4.1.1, or make payments of capital to himself or Ms Do, pursuant to cl 7.1.
[31] It is noted that cl 16.1.1. and cl 16.1.3 of the Bateman Road Trust vests in the appointor the power to remove any trustee in writing at any time and from time to time and appoint a new Trustee; affidavit of Lee Lee Do, sworn on 17 October 2020, Annexure LLD-10, 228.
When regard is had to these provisions, together with the fact that Mr Nunis and Ms Do are general beneficiaries of the trust, the effect of these provisions is that the trust assets are to be regarded as property for the purposes of s 79 of the Family Law Act.
However, if, as it appears to be contended by Ms Do, the deed of variation of trust executed on 2 April 2014, or the deed of variation of trust executed on 23 January 2018 are invalid, the likely consequence is that Ms Do remained the appointor and guardian, and it follows that Roseway Investments has vacated the office of trustee ipso facto by being liquidated, pursuant to cl 16.3.[32] In these circumstances, Ms Do in the capacity of appointor could appoint a new trustee, pursuant to cl 16.1.3. In these circumstances, Ms Do would be the person who has control of the trust and, as a party to the marriage, the trust property is part of the property to be divided by the Family Court.
[32] Affidavit of Lee Lee Do, sworn on 17 October 2020, Annexure LLD-10, 229.
As to the other beneficiaries of the Bateman Road Trust, if the adult daughter of Mr Nunis is concerned that she will be affected by orders made by the Family Court, she has a right to make an application for leave to intervene in the Family Court proceedings and be heard pursuant to s 92 of the Family Law Act. Pursuant to s 92(3) of the Family Law Act, 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.
It is argued on behalf of Mr Nunis that the delay in making an application for transfer should be fatal to the application. It is contended by Mr Nunis that:
(a)on 13 December 2019, Ms Do's lawyers filed an unconditional appearance submitting to the jurisdiction of this court. Between 13 December 2019 and 4 September 2020 (being 266 days), Ms Do took no issue with the jurisdiction of the Supreme Court to determine the action;
(b)during this period there were considerable steps taken in the action. Registrar Whitby made case management directions on nine occasions before 4 September 2020, and on 2 September 2020 the court issued a subpoena at the request of Mr Nunis to Mr Randal Humich. On 19 October 2020, Mr Nunis filed an application for discovery, and Ms Do filed the application for orders that included an order that the action be transferred to the Family Court; and
(c)Ms Do's application is dilatory, and has caused Mr Nunis prejudice.
It is pointed out on behalf of Ms Do that any delay did not arise until after the statement of claim and the amended writ had been filed on 17 April 2020, because the matters endorsed on the writ fell short of what was necessary for a satisfactory pleading. Further, conferral about bringing the application commenced on 4 September 2020, the day after an order was obtained from the Family Court dispensing with the need to comply with the implied undertaking that would otherwise have attached to the affidavit material filed in the Family Court.
Ms Do also points out that during the period between 17 April 2020 and 3 September 2020, little occurred in the action. Ms Do filed a defence on 30 June 2020 and requested further and better particulars of the statement of claim on 1 July 2020 (which request has not been answered). Mr Nunis amended his statement of claim on 28 August 2020, and on 2 September 2020 caused a subpoena directed to Mr Humich to be issued by the court. Some case management directions were made by consent. There were no appearances at any court hearings during this period.
Having regard to the procedural history of steps taken to progress the action, I find that the delay in bringing the application was four and a half months. I also find that the action had not progressed to a substantial degree.
Mr Nunis in an affidavit sworn on 9 February 2021 deposes that:
(a)the application to transfer this action to the Family Court has caused him prejudice as it has delayed him prosecuting the action, and:
(i)but for the application, it is his expectation that he would have obtained documents sought by his targeted request for discovery to Ms Do on 28 August 2020 and the subpoena to produce documents issued by the court to Mr Humich;
(ii)with the benefit of the documents he could have updated and expanded the matters pleaded in the amended statement of claim filed 28 August 2020, including [17.3A];
(iii)with the benefit of the documents he could have applied for leave to join to the action any other parties to the fraudulent design pleaded in the amended statement of claim; and
(iv)but for the application, there would not have been a four to five month delay to the action.
Mr Nunis also deposes in his affidavit, sworn on 9 February 2021, that if an order is made to transfer the action to the Family Court, he will be denied an opportunity to join to the action any other parties to the fraudulent design, that his time and money will have been wasted in prosecuting the action, including the legal fees that he has incurred with Hager Grubb & Partners because they are not family law lawyers and the time and costs of prosecuting this action in the Family Court will be more than if this action is allowed to proceed in the Supreme Court.
As to wasted costs incurred in prosecuting the action, it is clear that not all work carried out by the parties will be wasted because much of the work would be required to be done in the Family Court proceedings in any event. On transfer to the Family Court, the application for discovery and inspection of the subpoenaed documents can be pursued. In any event, I have ordered that I will hear further from the parties as to the costs not only of this application, but also as to whether there should be any orders made by the court as to any wasted costs of the action.
As to joinder of third parties to the Family Court proceedings:
(1)Section 78 of the Family Law Act provides that in proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property, and make consequential orders to give effect to any such declaration.
(2)Section 79 of the Family Law Act provides that in property settlement proceedings between the parties to a marriage, the court can make such order as it considers appropriate altering the interests of the parties to the marriage in the property.
(3)Part VIIIAA empowers the Family Court to make certain types of orders in proceedings under s 79 which include a power under s 90AE(2) of the Family Law Act to make any other order that directs a third party to do a thing in relation to the property of a party to the marriage. Pursuant to s 90AE(3) an order may only be made under s 90AE(2) if:
(a)the making of the order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
(b)if the order concerns a debt of a party to the marriage ‑ it is not foreseeable at the time that the order is made that to make the order would result in the debt not being paid in full; and
(c)the third party has been accorded procedural fairness in relation to the making of the order; and
(d)the court is satisfied that, in all the circumstances, it is just and equitable to make the order; and
(e)the court is satisfied that the order takes into account the matters mentioned in subsection (4).
(4)Section 90AE(4) provides the matters are as follows:
(a)the taxation effect (if any) of the order on the parties to the marriage;
(b)the taxation effect (if any) of the order on the third party;
(c)the social security effect (if any) of the order on the parties to the marriage;
(d)the third party's administrative costs in relation to the order;
(e)if the order concerns a debt of a party to the marriage ‑ the capacity of a party to the marriage to repay the debt after the order is made;
Note:See paragraph (3)(b) for requirements for making the order in these circumstances.
Example: The capacity of a party to the marriage to repay the debt would be affected by that party's ability to repay the debt without undue hardship.
(f)the economic, legal or other capacity of the third party to comply with the order;
Example: The legal capacity of the third party to comply with the order could be affected by the terms of a trust deed. However, after taking the third party's legal capacity into account, the court may make the order despite the terms of the trust deed. If the court does so, the order will have effect despite those terms (see section 90AC).
(g)if, as a result of the third party being accorded procedural fairness in relation to the making of the order, the third party raises any other matters ‑ those matters;
Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party.
(h)any other matter that the court considers relevant.
(5)If there is a single justiciable controversy, the consequence is that the Family Court is able to exercise federal jurisdiction to quell all controversies joined in the matter, including where equitable remedies are sought, and has the power to invoke remedies within the ordinary statutory and common law of Western Australia.[33]
[33] Camden Pty Ltd v Lane [2018] FamCAFC 91; (2018) 333 FLR 15 [182] ‑ [188].
In the event of any doubt as to whether it would be open to Mr Nunis to join any other person to the Family Court proceedings if it is to be claimed there are other parties to the fraudulent design and which relief is sought on behalf of the Bateman Road Trust by way of damages, the effect of transfer of the action is that the jurisdiction of this court to hear and determine the action is expressly conferred on the Family Court pursuant to s 5 of the Jurisdiction of Courts (Cross‑vesting) Act (which would include the power to join parties to the fraudulent design).
As to the delay in bringing the application generally, this factor must be given little weight against the factor that there is no realistic benefit of having one single issue relating to the financial dealings of the parties to the marriage and the Bateman Road Trust litigated in the action in circumstances where, irrespective of the undertaking, the factual issues raised in the action, even if determined in this court, are likely to be revisited in the Family Court proceedings.
It is generally desirable for matters in dispute between parties to be determined in one place, and in one proceeding, for the obvious reasons of efficiency and case management. This is particularly because of the potential overlap in the issues and evidence that are relevant in each proceeding, the potential for duplication in relation to evidence and the cost and inconvenience that necessarily flows from duplication.
In circumstances where the Family Court can deal with the issues between Mr Nunis and Ms Do in respect of the Bateman Road Trust in their entirety, I am satisfied that it is more appropriate, and in the interests of justice, that the action be determined by the Family Court.
After hearing counsel for Ms Do and Mr Nunis, it was conceded by counsel on behalf of Ms Do that, if I formed the opinion that it was more appropriate that the action in this court be determined by the Family Court or formed the view that it was otherwise in the interests of justice that the action be determined by the Family Court, a transfer order should be made, it would not be necessary for the court to determine the summary judgment exclusive jurisdiction point, nor would it be necessary for the court to consider whether it should strike out or permanently stay the action on grounds that it constitutes an abuse of process.
In light of this concession, I did not find it necessary:
(a)to consider the arguments put by the parties as to whether this court's jurisdiction to hear and determine the action is excluded pursuant to s 8(1) of the Family Law Act,[34] on grounds that the subject of the claim in the action are proceedings by way of a matrimonial cause as defined in s 4(1) of the Family Law Act; or
[34] Section 8(1) of the Family Law Act 1975 (Cth) provides that proceedings by way of a matrimonial cause shall not be instituted except under this Act.
(b)consider whether the action should be struck out on grounds of an abuse of process.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
VV
Associate to the Honourable Justice Smith
19 APRIL 2021
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NUNIS -v- DO [2021] WASC 115 (S)
CORAM: SMITH J
HEARD: ON THE PAPERS
DELIVERED : 22 JUNE 2021
FILE NO/S: CIV 3077 of 2019
BETWEEN: RALPH MARCEL NUNIS
Plaintiff
AND
LEE LEE DO
First Defendant
Catchwords:
Practice and procedure - Orders for costs following transfer of action to Family Court pursuant to Jurisdiction of Courts (Cross-vesting) Act 1987 - Jurisdiction and powers of Family Court to make orders as to costs of action, including unresolved interlocutory applications following transfer from Supreme Court considered
Legislation:
Family Law Act 1975 (Cth), s 117(1)
Family Law Rules 2004 (Cth), pt 19.5, sch 3
Jurisdiction of Courts (Cross-vesting) Act 1987 (WA), s 4(6), s 5(4), s 12
Rules of the Supreme Court 1971 (WA), O 66 r 1(3)
Supreme Court Act 1935 (WA), s 37(1)
Result:
Plaintiff pay the first defendant's costs of application to be assessed, if not agreed in the Supreme Court
Any costs thrown away by the plaintiff by reason of the first defendant's delay in bringing transfer application reserved to the Family Court
Costs of the action reserved to the Family Court
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| First Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Hager Grubb & Partners Lawyers |
| First Defendant | : | Solomon Brothers |
Case(s) referred to in decision(s):
Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S)
Beaman v Bond [2013] FCA 534; (2013) 299 ALR 167
Dye v Commonwealth Bank of Australia [2012] NSWCA 220
Frigger v Lean [2012] WASCA 66
Hamex Corporation Pty Ltd v Latrobe Street Ventures Pty Ltd [No 2] [2020] FCA 199
Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [No 2] [2003] VSC 212
McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 (S)
Nunis v Do [2021] WASC 115
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578
Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96
Yeo v Whiteman [2020] FCA 849
SMITH J:
The application for costs, following the application for summary judgment, alternatively strike out or stay, or transfer under Jurisdiction of Courts (Cross–vesting) Act1987 (WA)
Background
On 19 October 2020, the first defendant, Ms Lee Lee Do, applied for orders that the proceedings be: struck out; or summarily dismissed; or permanently stayed; or transferred to the Family Court of Western Australia (Family Court).
On 6 April 2021, by consent, the second defendant, Roseway Investments Pty Ltd (in liq), was removed as a party to the proceedings and after hearing counsel for the plaintiff, Mr Ralph Marcel Nunis, and counsel for Ms Do, I made orders that the proceedings be transferred to the Family Court pursuant to s 5(4) of the Jurisdiction of Courts (Cross‑vesting) Act 1987 (WA). I also made:
(a)an order providing for Mr Nunis to file and serve any submission and supporting affidavit as to the costs of the application, and whether any orders should be made as to costs thrown away within 14 days; and
(b)an order providing for Ms Do to file and serve any submission and affidavit in response within 14 days of the filing and service of Mr Nunis' submission and supporting affidavit.
Reasons for the decision for making the orders were published on 19 April 2021.[35]
[35] Nunis v Do [2021] WASC 115.
On 28 April 2021, an outline of submissions on costs was filed on behalf of Mr Nunis, and a responsive outline was filed on behalf of Ms Do on 5 May 2021. Neither party filed any affidavit in support of their submissions as to costs.
The action and the Family Court proceedings
Mr Nunis and Ms Do are married. On or about December 2017, or no earlier than 27 May 2018, their marriage irretrievably broke down.
On 8 March 2019, Mr Nunis filed an initiating application in the Family Court seeking final property orders (which included an order that the property of the marriage be split between himself and Ms Do 80/20% in his favour) presumably sought pursuant to s 79 of the Family Law Act 1975 (Cth) altering the interests in the property of the marriage.
Mr Nunis instituted the action by filing a writ of summons on 4 December 2019.
Prior to the hearing of the application filed by Ms Do on 19 October 2020, the parties filed outlines of submissions in which they addressed each of the alternative applications made by Ms Do.
In the reasons for decision published on 19 April 2021, a finding was made that the action should be transferred to the Family Court on grounds that the factual connection between the action and the Family Court proceeding was overwhelmingly sufficient to find that the two sets of proceedings were related, and that there was a significant overlap between the issues raised in each proceeding.[36] It was also found that it was in the interests of justice, and more appropriate that the action be determined by the Family Court, on grounds that the factual issues raised in the action, even if determined in this court, were likely to be revisited in the Family Court proceedings, and it is generally desirable for matters in dispute between parties to be determined in one place, and in one proceeding, for the obvious reasons of efficiency and case management.[37]
[36] Nunis v Do [2021] WASC 115 [23] ‑ [24].
[37] Nunis v Do [2021] WASC 115 [58] ‑ [60], see also generally [25] ‑ [57].
In light of the decision that it was more appropriate, and it was in the interests of justice, that the action be determined by the Family Court, it was not necessary to consider the alternative orders sought in the application filed on 19 October 2020, that is whether the action should be summarily dismissed, struck out, or permanently stayed on grounds that the action constituted an abuse of process.
The submissions as to consequential costs orders following an order to transfer the action to the Family Court
Mr Nunis submits that Ms Do pressed three applications: (1) an application for summary judgment; (2) an application for strike out and stay of the action; and (3) an application for transfer of the proceedings to the Family Court. On this basis Mr Nunis argues that orders should be made that:
(1)Mr Nunis should pay Ms Do one third of the costs of the three applications, and Ms Do should pay Mr Nunis the balance of the costs, both on a party-party basis, to be assessed if not agreed in the Family Court; and
(2)Ms Do should pay Mr Nunis' costs thrown away by the 4.5 month delay in bringing the transfer application, on a party‑party basis, to be assessed if not agreed in the Family Court.
It should be noted, however, that only one application was made by Ms Do on 19 October 2020. The application when filed sought four alternative orders in par 1 and they were: the proceedings be struck out; or alternatively summarily dismissed; or alternatively permanently stayed; or alternatively transferred to the Family Court. By a consent order made on 10 December 2020, the application, insofar as it sought the orders in par 1, was adjourned to a special appointment, and an alternative order sought in par 2 of the application was adjourned sine die.
Ms Do argues that the costs of the application ought to follow the event. Consequently, Ms Do claims an order should be made that Mr Nunis should pay her costs of the application in respect of the orders in par 1 of the application, to be assessed if not agreed. Ms Do submits that no order should be made providing for the Family Court to undertake assessment of any costs. Ms Do also opposes any order being made in favour of Mr Nunis in respect of any costs thrown away by him as a result of her delay in making her application.
Ms Do also submits that an order should be made by this court that there be no order as to costs of the balance of the costs of, and incidental to, the action, and it is not appropriate for an order to be made reserving any of the costs of the action to the Family Court.
The issues as to costs raised by the parties
The issues raised by the parties in their submissions are as follows:
(1)whether O 66 r 1(3) of the Rules of the Supreme Court 1971 (WA) can be relied upon by Mr Nunis for a reduction of costs payable by him for the costs of the application;
(2)the jurisdiction of the Family Court of Western Australia to make orders as to costs, and to assess costs of proceedings transferred to it; and
(3)whether any orders should be made by this court as to the balance of the costs of the action, and any costs thrown away, as a result of the application to transfer the action.
Disposition
Should costs of the application be apportioned?
The usual rule as to costs is that costs are to follow the event, that is, the successful party to an action (or application) is entitled to recover their costs.
Although costs will normally follow the event, this principle will not necessarily be applied where a party, although generally successful in the matter has, by the introduction of some issue or issues on which they failed, increased the costs of the proceedings. In this event, pursuant to O 66 r 1(3) of the Rules of the Supreme Court 1971 (WA), the court may order the successful party to pay the costs of the issues on which they failed.
An 'issue' in O 66 r 1(3) does not mean a precise issue in the technical pleading sense, but means any disputed question of fact or law.
Order 66 r 1(3) only applies where the failed issue has increased costs.
It is to be expected that a generally successful party will fail on some issues.[38] In a case in which the generally successful party has failed on only a minor issue, which did not materially add to the costs of the conduct of the proceedings, it would not ordinarily be appropriate to depart from the general rule, unless the conduct of the generally successful party in relation to that issue had been unreasonable. In the event of unreasonableness, different considerations may apply.[39]
[38] McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 (S) [179] (Beech J).
[39] Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S) [7] (Martin CJ, Steytler P & McLure JA); Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96 [48] - [52] (Murphy, Mitchell & Pritchard JJA).
In this matter, O 66 r 1(3) cannot be invoked. Ms Do did not fail on any issue raised in the application. This is because having found that it would be more appropriate, and in the interests of justice, that the proceedings in this court be determined by the Family Court, it was not necessary for the alternative orders sought by Ms Do in the application to be considered.[40] In particular, I gave no consideration as to whether any of the points raised in the written submissions of the parties, in respect of the other orders sought by Ms Do in the application, had any merit.
[40] Nunis v Do [2021] WASC 115 [60] ‑ [62].
For these reasons, I am of the opinion that there is no basis to find that the usual rule as to costs should not be applied. Accordingly, Mr Nunis should pay Ms Do the costs of par 1 of the application, filed on 19 October 2020.
The next question is whether an order should be made that if the parties are unable to agree the quantum of costs (on the basis of party‑party costs) of the application, those costs should be assessed by the Family Court.
The jurisdiction and powers of the Family Court to make orders as to costs of transferred proceedings
Section 12 of the Jurisdiction of Courts (Cross-vesting) Act provides that where a proceeding is transferred or removed to a court, that court may make an order as to costs that relate to the conduct of the proceeding before the transfer or removal, if those costs have not already been dealt with by another court. The effect of this provision is that when a proceeding is transferred to a court, that court may make an order as to the costs that relate to the proceeding prior to the transfer. This provision also expressly contemplates that the court that transferred the proceeding may make an order as to the costs that relate to the proceeding up to and prior to the date of transfer.[41]
[41] See the observations of Gillard J in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [No 2] [2003] VSC 212 [88].
The source of this court's jurisdiction to make costs orders relating to a proceeding up to and prior to the date of transfer is not conferred by s 12 of the Jurisdiction of Courts (Cross-vesting) Act. Section 12 confers such a power only on the court to which the proceedings are transferred.[42] The power conferred on this court to make orders as to costs is uncontroversial, and is found in s 37(1) of the Supreme Court Act 1935 (WA). The discretion to make an award of costs is unfettered but must be exercised judicially.[43]
[42] Dye v Commonwealth Bank of Australia [2012] NSWCA 220 [38] and [51] (Sackville AJA) (Preston CJ of LEC).
[43] Frigger v Lean [2012] WASCA 66 [53] (Allanson J) (Newnes and Murphy JJA agreeing); Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96 [48] (Murphy, Mitchell and Pritchard JJA).
Where the substantive issues in dispute about the proceeding that is transferred (including any undetermined interlocutory application) have yet to be determined, the usual order made about costs of the proceeding incurred prior to transfer, and any order for costs thrown away as a result of the order for transfer, is that costs be reserved to the court to which the proceeding is transferred.[44]
The orders as to costs that should be made by this court
[44] See for example Beaman v Bond [2013] FCA 534; (2013) 299 ALR 167 (McKerracher J); Hamex Corporation Pty Ltd v Latrobe Street Ventures Pty Ltd [No 2] [2020] FCA 199 (Anderson J); Yeo v Whiteman [2020] FCA 849 (Anderson J).
For the reasons given in [24], [25] and [29] of these reasons, I am of the opinion that an order should be made that Mr Nunis pay Ms Do's costs of, and incidental to, the application made by her on 19 October 2020, insofar as the application sought the orders set out in par 1 of the minute of proposed orders filed on 19 October 2020, to be assessed by a registrar of the Supreme Court, if not agreed.
I am not persuaded that there should be no order as to the costs of the action (the transferred proceeding). The only appropriate order is that the costs of the action be reserved to the Family Court. I am also of the opinion that an order should be made that any costs thrown away by Mr Nunis by reason of the 4.5 month delay in Ms Do bringing the transfer application be reserved to the Family Court.
I agree with the submission put on behalf of Ms Do that it is impracticable for the Family Court to assess the proper quantum of costs of a cost order made by this court in respect of any interlocutory application heard and determined by this court. As set out above, this court retains jurisdiction to make an order as to costs in respect of interlocutory applications finally determined prior to the order for transfer. However, it is clear that the decision made by this court to transfer the proceeding to the Family Court is an interlocutory application that was finally determined by this court and related to the conduct of the action prior to transfer.
The reason why I am of the opinion that orders should be made that the balance of the costs of, and incidental to, the action, including the costs of the other interlocutory applications relating to discovery and objections to a subpoena be reserved to the Family Court, is that the action and other interlocutory applications have not yet been determined. In these circumstances, this court is deprived of any basis for determining whether either party should obtain an order for costs of the action or of any of the unresolved interlocutory applications.
I do not accept that the Family Court will be confined to making costs orders in respect of the action before transfer to the Family Court by s 117(1) of the Family Law Act 1975 (Cth) or be calculated pursuant to pt 19.5 of the Family Law Rules 2004 (Cth) and sch 3 of the Family Law Rules 2004 (Cth). However, I do not express a final view on this point. It is a matter for the Family Court to determine. I note, however, pursuant to s 4(6) of the Jurisdiction of Courts (Cross‑vesting) Act on transfer of a proceeding in this court the Family Court is conferred with the jurisdiction of this court with respect to the matters raised in the action.[45] Consequently, it is arguable that in making and assessing a costs order in respect of the action before transfer, the Family Court is vested by s 4(6) of the Jurisdiction of Courts (Cross-vesting) Act with the powers of the Supreme Court to make a costs order, and to assess costs by applying the relevant Legal Profession (Supreme and District Courts) (Contentious Business) Determination (WA).
[45] See for example the decision of Brereton J in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 [29] ‑ [52] in which his Honour assessed the costs of family law proceedings transferred from the Family Court to the Supreme Court of New South Wales by applying the juridical bases for an order for litigation costs in matrimonial proceedings under Family Law Act.
I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.
VV
Associate to the Honourable Justice Smith
22 JUNE 2021
21
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