Pagliotti & Hartner
[2009] FamCAFC 18
•6 February 2009
FAMILY COURT OF AUSTRALIA
| PAGLIOTTI & HARTNER | [2009] FamCAFC 18 |
| FAMILY LAW - APPEAL – PROPERTY SETTLEMENT - Application for leave to appeal, and if leave be granted, to appeal against orders made by the trial Judge dismissing the husband’s application for a permanent stay of the wife’s section 79 application for property settlement – Where the husband sought maintain his section 78 application but exclude section 79 from the determination of proceedings with respect to the property of the parties – Where Italian proceedings in relation to the breakdown of the marriage also on foot – Whether the trial Judge erred in failing to find that the wife’s section 79 application was res judicata or subject to Anshun estoppel Not established that the trial Judge erred in declining to conclude that the determination by the Roman Tribunal constituted a res judicata estopping the wife from pursuing her claim under section 79 – Not established that the trial Judge erred in law in failing to appreciate the subject matter or legal bases upon which the husband’s and wife’s respective Australian proceedings were framed – Not established that the trial Judge erred in finding that the Roman Tribunal did not, and could not, purport to determine the beneficial ownership of the Australian property or the proceeds of its sale where proceedings in this country with respect to the beneficial entitlements of the parties in the Australian property or the proceeds of its sale will be necessary – Not established that the substance of the matters determined by the Roman Tribunal and the issues likely to be agitated in this Court, whether pursuant to section 78 or section 79, reveal a common substratum of judicial controversy Not established that the trial Judge erred in failing to follow and apply the decision of this Court in Kemeny v Kemeny (1998) FLC 92-806 – Kemeny does not establish that issue estoppel in relation to one cause of action necessarily gives rise to issue estoppel in relation to all causes of action. Nor does it establish that concluding that Australia is a clearly inappropriate forum for the determination of one category of matrimonial cause necessarily renders Australia a clearly inappropriate forum for all other categories of matrimonial cause – Not established that the trial Judge erred in failing to find that orders of this Court with respect to the Australian property would be futile, in circumstances where enforceability does not necessarily assumes great significance, the significance of any decision of this Court being for an Italian court to determine within the context of Italian proceedings – Not established that Australia would be a clearly inappropriate forum for the determination of the parties’ entitlements to the Australian property, whereas it would be so far as the maintenance rights of the parties were concerned (whether using that term in the narrow sense by which it is understood in Australian law, or the broad sense in which it is understood in Italian law), or the beneficial ownership of the parties’ Italian assets. Not established that the trial Judge erred in concluding that, jurisdiction having been enlivened under section 39, the powers conferred by both section 78 and section 79 of the Act were able to and should be exercised by the Court – Not established that the proceedings in this Court should be limited to the husband’s application for relief pursuant to section 78 – Not established that the husband’s section 78 application, if it were confined to that section, with respect to the Australian property should be determined according to Italian law. No proposed ground of appeal having been established – Application for leave to appeal and/or allowing the husband’s proposed appeal dismissed and the wife awarded her costs of the application. |
| Family Law Act 1975 (Cth) Section 79 Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 |
| APPELLANT: | Mr PAGLIOTTI |
| RESPONDENT: | Mrs HARTNER |
| FILE NUMBER: | SYC | 1883 | of | 2007 |
| APPEAL NUMBER: | EA | 84 | of | 2008 |
| DATE DELIVERED: | 6 February 2009 |
| PLACE DELIVERED: | Parramatta |
| JUDGMENT OF: | COLEMAN, BOLAND & O'RYAN JJ |
| HEARING DATE: | 13 November 2008 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 20 June 2008 |
| LOWER COURT MNC: | [2008] FamCA 1037 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Grieve QC with Mr Oliver |
| SOLICITOR FOR THE APPELLANT: | David Begg & Associates |
| COUNSEL FOR THE RESPONDENT: | Ms Cohen |
| SOLICITOR FOR THE RESPONDENT: | Broun Abrahams Burreket |
Orders
That the application filed 17 July 2008 be dismissed.
That the husband pay the wife's costs incidental to the application as agreed or assessed on a party and party basis.
IT IS NOTED that publication of this judgment under the pseudonym Pagliotti & Hartner is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 84 of 2008
File Number: SYC 1883 of 2007
| Mr PAGLIOTTI |
Appellant
And
| Mrs HARTNER |
Respondent
REASONS FOR JUDGMENT
On 17 July 2008 Mr Pagliotti (“the husband”) applied for leave to appeal, and if leave be granted, to appeal against orders made by Stevenson J on 20 June 2008 in proceedings between the husband and Mrs Hartner (“the wife”).
On 20 June 2008 Stevenson J dismissed an application by the husband filed in the proceedings on 28 September 2007 and amended on 21 November 2007 seeking an order that the proceedings then pending in this Court “save insofar as they continue proceedings … commenced in the Supreme Court of New South Wales on … August 2006 and transferred to the Family Court of Australia by order of the Supreme Court pursuant to section 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act [1987] Cth on … April 2007, be permanently stayed”.
The effect of her Honour’s order was that there remained pending in this Court the husband’s application for declaratory relief pursuant to section 78 of the Family Law Act 1975 (Cth) (“the Act”) in the following terms:
1.A declaration that the defendant holds the title to [B property] (the subject property) in trust for the plaintiff and the defendant as joint tenants.
2. Alternatively, a declaration that the defendant holds the title to the subject property in trust for the plaintiff and the defendant as tenants in common in equal shares.
3.An order that the defendant do all things necessary to cause the plaintiff and the defendant as joint tenants to become registered proprietor of the subject property.
4.Alternatively, an order that the defendant do all things necessary to cause the plaintiff and the defendant as tenants in common in equal shares to become registered proprietor of the subject property.
The wife’s application for relief pursuant to section 79 of the Act originally filed on 15 March 2007 also remained pending in this Court. By that application the wife sought orders that:
1.1That within 30 days from the date of these Orders the husband shall pay to the wife the sum of $5,000,000.
1.1[sic] That within 14 days from the date of the Order the husband take all steps necessary and sign all documentation necessary to cause to be removed Caveat No. … placed by him on the title of the property [B property] being the and [sic] in Certificate of Title Folio Identifier …..
On 27 July 2007 the husband filed a response to the wife’s application. On 27 November 2007 the response was amended and sought:
1.An order that these proceedings, save in so far as they
seek orders in relation to land situate at [B] (“the B property”)continue proceedings … commenced in the Supreme Court of New South Wales on … August 2006 and transferred to the Family Court of Australia by order of the Supreme Court pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) on …April 2007, be permanently stayed.By their pleadings, both parties sought that the other party pay the costs of the proceedings.
In essence, the application of the husband which Stevenson J determined sought to confine the determination of proceedings with respect to the property referred to by both parties in their applications to section 78 of the Act (albeit by the time of the hearing the property comprised a new home unit registered in the wife’s name and the balance of the proceeds of sale of B property). The wife, resisting the husband’s application, sought to have the competing claims determined on the broader basis provided by section 79 of the Act.
Background
The wife was 73 years of age at the date of her Honour’s Judgment. The husband was then aged 64 years. The parties married in 1972 in Australia and separated in 2002 in Rome. There were no children of the marriage. Subsequent to their separation, the parties were engaged in extensive litigation in Italian courts. That litigation began in 2003.
The property at B (“the B property”), which gave rise to the proceedings before Stevenson J, had been acquired in the sole name of the wife who occupied the property after returning to Sydney in September 2004.
On 6 April 2006 the husband lodged a caveat against the title to the B property claiming “an equitable interest of the caveator arising out of financial and non-financial contributions to the maintenance of the property”.
By agreement between the parties, and after the proceedings which we have identified commenced in Australia, the B property was sold in August 2007 for $3 005 000. From proceeds of sale, the wife then purchased a property at H for $1 800 000.
The history of the Italian proceedings
As will be seen, the proceedings in which the parties have been engaged in Italy assume great significance for present purposes, as was the case before the trial Judge. As there is no suggestion that her Honour’s recording of the history of the Italian proceedings is other than accurate, it is convenient to recount that history by way of additional background to the current proceedings.
In May 2003 the husband commenced proceedings in the Ordinary Tribunal of Rome (“the Italian proceedings”) in which he sought an order for judicial separation and the attribution of matrimonial fault to the wife. The husband also sought an order, the effect of which was that each party be responsible for his or her own maintenance.
On 22 July 2003 the wife filed a counter-claim in the Italian proceedings by which, inter alia, she sought to attribute fault to the husband, and claimed periodic spouse maintenance.
Neither in 2003 nor at any subsequent time did the wife dispute the jurisdiction of the Italian courts or the validity of the Italian proceedings.
On 14 October 2003 the Roman Tribunal made orders authorising the parties to live apart and requiring the husband to pay to the wife interim maintenance of €6 000 per month. That obligation was reduced to €4 800 per month by the Tribunal on 14 June 2004.
Over the following two years there were a number of further appearances by both parties in the Italian proceedings.
In October 2006 the Roman Tribunal reserved its final decision, delivering its judgment on 11 January 2008. The orders then made provided:
- it declares the personal separation of the spouses [Mr Pagliotti], aka [Mr Pagliotti] born in [P] on …1944 and [Mrs Hartner] or [Mrs Hartner] born in [H] on …1935 (as per registry entry …);
-it orders that an original copy of this judgment be forwarded to the Civil Registry of the Municipalty of [C] for recording purposes;
- it rejects the application that either party be declared at fault;
-whilst previous orders issued by the Chief Judge have been applicable to date, it orders that as of the month of February 2008, the plaintiff be required to pay €4,800.00 as maintenance in favour of the respondent on the 5th day of each month at the domicile of the spouse, subject to yearly indexing, commencing February 2009, in accordance with the consumer price index adjustments for the families of process and clerical workers;
-it declares the offset between the parties of all court costs.
Although lengthy, as it assists in understanding the matters in issue in this appeal, we reproduce below part of the reasons of the Roman Tribunal:
As for the application for maintenance, it is generally an established fact that an essential requirement for a right to maintenance arising (apart from the separation not being due to either party’s fault) is firstly that the beneficiary lack adequate income of their own, and secondly that there exist a financial disparity between the spouses and finally that the maintenance amount be materially determined in relation to the circumstances and the income of the other spouse, however taking into account the circumstances of the beneficiary spouse. To this end, it should be noted that the lack of adequate income exists when the alleged beneficiary does not possess personal income that allows them to maintain a standard of living similar to the one they enjoyed during the conjugal life, Moreover, the spouse required to pay maintenance should have an income higher than the beneficiary, because in the case of equivalent or similar financial circumstances either spouse cannot be required to pay maintenance to the other. Finally, it should be noted that the burden of proof as to the existence of the circumstances for receiving maintenance, as requisites for the claim, is entirely the responsibility of the party claiming maintenance.
Indeed, in the case under examination, it is likely and (subject to lack of any claim to the contrary) certain that in the thirty two years of marriage, the standard of living of the couple was extremely high also considering the husband’s occupation ([the husband’s profession]). It has also been established that the wife, who is over sixty years of age and who is in poor health condition (as evidenced by the medical reports included in the exhibits and not disputed by the wife and by the letter dated 09.05.2001, similarly not disputed, sent by the husband to a trusted health professional), is incapable of finding a job that may close the gap between her financial situation and the husband’s financial circumstances. Indeed, the wife is the joint owner of the family home in Rome, has sold two of the three real estate properties that she owned in Australia, receiving 1,244,600 Australian dollars and, as regards the third real estate property, the share of ownership is yet to be established given that the husband is claiming a 50% share of ownership; conversely, the husband owns a farm in [S], namely in [C], another farm named “[G]”, a marble quarry, lots of grazing land and 50% of the family home in Rome. Furthermore, he is currently [the husband’s profession] and this position earns him € 16,637.40 as allowance for service abroad (and this amount —as per the decision of the Court of Cassation No. …- even though it is not considered remuneration for social security and taxation purposes and is paid to meet possible greater costs arising from service being performed abroad and representation expenses consistent with the duties performed, produces better living conditions from a financial point of view and as such cannot be excluded from the assessment of the adequacy of the spouse’s financial circumstances compared to the previous situation for the purpose of pursuing the goal of restoring, as far as possible, some balance) as well as the sum of € 1000.00-3,900.00 per month as ‘metropolitan’ wages.
Based on the above findings, conservatively assessed by the Panel of Judges also in view of common experience rules, it is deemed equitable to confirm a maintenance amount of € 4,800.00 per month, to be paid by the plaintiff in these proceedings as a contribution to the other party’s maintenance.
It is also helpful to refer to the history of the proceedings in Australia. As there is no suggestion that Stevenson J’s recording of that history is other than accurate, it is from her Honour’s Reasons for Judgment that we derive the history which follows.
The history of the Australian proceedings
On 6 April 2006 the husband lodged a caveat against the title to the B property claiming an equitable interest in the property in the terms earlier recorded.
On 26 July 2006 a lapsing notice in respect of the caveat was served on the husband.
On 16 August 2006, after correspondence between the attorneys for the parties, the husband commenced proceedings in the Supreme Court of New South Wales seeking a declaration with respect to the B property in the terms earlier identified.
There followed other developments which are not relevant for present purposes, and on 19 March 2007 a defence to the husband’s claim was filed in the Supreme Court. Such defence sought the dismissal of the husband’s claim with costs.
On 15 March 2007 the wife filed an application in this Court seeking relief pursuant to Section 79 of the Act, in the terms earlier identified. The wife also filed an interim application seeking the removal of the caveat which the husband had lodged against the title of the B property.
On 30 April 2007 the Supreme Court proceedings were transferred to this Court on the application of the husband to which the wife consented.
On 1 May 2007 the husband filed a response to the wife’s interim application in this Court with respect to the caveat against the B property, essentially agreeing to the sale of the B property and purchase of another property on certain conditions. On 1 May 2007 a Judicial Registrar made orders and noted undertakings to give effect to that agreement.
On 27 July 2007 the husband filed a response to the wife’s application for relief pursuant to Section 79 of the Act and sought a permanent stay of such application. As earlier noted, that response was amended on 27 November 2007 in the terms which we have earlier recorded.
The trial Judge’s Reasons for Judgment
Having recorded the matters of background, and the history of the Italian and Australian proceedings, the trial Judge traversed the issues agitated before her.
Under the heading “The arguments in support of the application for a permanent stay of [Ms Hartner]’s section 79 proceedings”, her Honour referred, although not exhaustively, to the submissions on behalf of the husband in support of his application for a permanent stay of the wife’s section 79 claim.
Her Honour recorded, and correctly so, that the husband proposed amending his Supreme Court claim, albeit to seek relief in identical terms, but pursuant to section 78 of the Act. This Court having no power to grant relief in the terms of the husband’s Supreme Court claim pursuant to the laws of New South Wales (See Re Wakim;Ex Parte McNally (1999) 198 CLR 511), so amendment was necessary.
The trial Judge also recorded, again accurately, that whilst wishing to pursue his own section 78 application, the husband sought a permanent stay of the wife’s section 79 application.
Reference was then made to the decision of the majority in the High Court in Henry v Henry (1996) 185 CLR 571. Her Honour recorded that on behalf of the husband it was asserted that the wife’s section 79 application was either “oppressive, in the sense of ‘seriously and unfairly burdensome, prejudicial or damaging to the husband; and/or, vexatious, in the sense of ‘productive of serious and unjustified trouble and harassment’ to him.”.
Her Honour recorded that the wife’s section 79 application should be permanently stayed if the evidence fulfilled either or both of the criteria to which she had been referred in reliance upon Henry (supra).
Reference was then made to the submission on behalf of the husband that the wife’s “application must be regarded either as res judicata or such as would constitute an abuse of process, which would be restrained on the basis of the principles enunciated in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589”.
Under the heading “The ‘Clearly Inappropriate Forum’ Submissions” the trial Judge recorded:
22.The submissions then referred to the decision of the majority of the High Court in Henry and Henry, where their Honours indicated what factors are relevant to the determination of a “clearly inappropriate forum” issue. This list, which is not exhaustive, was as follows:
1.No question arises unless the courts of the respective countries each have jurisdiction.
2.Whether the courts of each country will recognise the other’s orders and decrees.
3.The order in which proceedings were instituted, the stage reached and the costs incurred.
4.The connection of the parties and their marriage with each of the jurisdictions and the issues on which relief may depend in those jurisdictions.
5.Which forum may provide more effectively for a complete resolution of the matters involved in the parties’ controversy.
6.Whether having regard to their resources and understanding of language, the parties are able to participate in the respective proceedings on an equal footing.
Their Honours stated that a determination as to a “clearly inappropriate forum” issue will “depend on the general circumstances of the case, taking into account the true nature and full extent of the issues involved”. The submissions then proceeded to examine the evidence relevant to this list of considerations.
The trial Judge then considered “Whether the Courts of the Respective Countries have Jurisdiction with Respect to the Parties and the Marriage”. Her Honour recorded, correctly there is no doubt, that the Italian courts lacked “jurisdiction to determine beneficial ownership of the B property or the proceeds of its sale”.
The concession on behalf of the husband that the wife’s application constituted a “matrimonial cause” for the purposes of Australian Law, thereby enlivening this Court’s jurisdiction to make orders in the terms of such application was also recorded.
The trial Judge observed that it was:
24.…necessary, however, for personal jurisdiction over the parties to be established. Mr [Pagliotti’s] appearances before this court have always been conditional, so it was said, and he has never submitted to its jurisdiction in respect of any dispute which is a “matrimonial cause”. His appearance on 1 May 2007 was for the sole purpose of preserving his rights pending a determination as to jurisdiction. He has not waived the prior Italian jurisdiction.
For reasons which she articulated, the trial Judge concluded that, although not originally asserted to be pursuant to section 78 of the Act, the relief sought by the husband in his transferred Supreme Court claim “would fall within paragraph (ca) of section 4(1)” of the Act, and thus constitute a matrimonial cause. The Court thus had jurisdiction to entertain the claims of both parties.
The trial Judge reiterated, that there was “no mechanism in Italian Law for the determination of beneficial interests in the B property or the proceeds of its sale”.
The question of “whether both courts will recognise each other’s orders and decrees” was then considered. Her Honour referred to the expert opinion evidence of Professor Giuseppe Ruffini upon which the husband relied and Professor Modestino Acone upon whom the wife relied. Her Honour recorded:
28.Mr [Pagliotti’s] assets are all located in Italy, apart from any beneficial interest which he may have in the [B] property or the proceeds of its sale. It was said that he has disputed jurisdiction in this court and so he would not be expected to comply with an order in personam, requiring that he pay money to Ms [Hartner] or transfer property to her in specie.
Her Honour referred to the opinion of Professor Ruffini that there were:
29.…substantial, if not total, barriers to enforcement by an Italian Court of an order for payment of money by Mr [Pagliotti] to Ms [Hartner] or for a transfer of property in specie.
Her Honour then referred to the opinion of the wife’s expert and said:
Professor Acone formulated an argument to the effect that there was some prospect of enforcement of an Australian order for payment of money in Italy.
The husband’s assertion that for this Court to exercise jurisdiction under section 79 of the Act “would be largely futile” and thus the Court should “refrain from exercising jurisdiction” was then considered.
The “Order in Which the Proceedings were Instituted, the Stage Reached and the Costs Incurred” were considered. Her Honour noted, accurately in our view, that the Italian proceedings were commenced in 2003 and concluded in January 2008. The wife commenced proceedings in Australia on 15 March 2007.
The trial Judge recorded that, given the husband’s intention to proceed with his application in respect of the proceeds of sale of the B property, which relief he could only pursue in Australia, it was “inevitable that litigation will proceed in Australia and that both parties will incur further costs”.
The connections of the parties and their marriage with the competing jurisdictions were then addressed. Reference was made to the husband’s Italian citizenship, and the reality that his employment as a [professional] meant that he had “lived outside Italy periodically, although he has always maintained a permanent home in that country”.
Reference was also made to the wife’s residence in Australia from 1949, when the wife migrated from [H], to 1975, at which time she moved to [W] with the husband. During the wife’s time in Australia she “bought and sold several pieces of real estate”.
The trial Judge recorded that:
35.The parties have maintained a matrimonial home in Rome since 1985 and they lived in Italy from 1979 until 1982 and from 1999 until their separation. There was no evidence of any assets which could be utilised to satisfy an order of an Australian Court outside of Italy, other than the [B] property in which Mr [Pagliotti] claims a beneficial interest.
The wife had “declared her place of residence to be Rome in the Italian proceedings in 2003” and was shown by the “official records of the Municipality of Rome” to have “emigrated” to Australia in 2007.
The trial Judge concluded that:
37.…the parties and their marriage have close connections to both Italy and Australia. Most significantly for present purposes, however, the property in which Mr [Pagliotti] claims a beneficial interest is located in Australia and Ms [Hartner], the owner at law of that property, is a permanent resident of this country. Mr [Pagliotti] can only pursue his claim in this jurisdiction.
For reasons which she briefly detailed, the trial Judge concluded under the heading “Whether … the Parties are Able to Participate in the Respective Proceedings on an Equal Footing” that they were able to effectively do so.
There followed a consideration of “Which Forum can Provide More Effectively for Complete Resolution of the Matters Involved in the Parties’ Controversy”. Having referred to the submissions made on behalf of each of the parties, her Honour concluded as “significant”, “that the judgment of the Roman Tribunal recorded that ownership of the [B] property is yet to be determined” and that such statement “was a clear recognition that proceedings in Australia were necessary to resolve that issue” as that aspect of the parties’ dispute “remained undetermined at the end of the Italian proceedings”.
It is common ground in this Court that there will be proceedings in Australia with respect to the proceeds of sale of the B property. The issues in that regard, as they crystallised before this Court, were whether the proceedings would be governed by section 78 and section 79 of the Act (the wife’s contention), or solely by reference to section 78, the relevant law for which purposes was Italian law (the husband’s contention).
The trial Judge then considered the submissions made to her with respect to “Res Judicata and Anshun Estoppel”. Her Honour referred to the submission on behalf of the husband in reliance upon Henry (supra) that “the correct approach is to focus on the substance of the two proceedings, as distinct from their form, in order to determine whether they are brought in the same cause of action”. She concluded that “the High Court majority implicitly confirmed that this is the correct approach when what falls for determination is whether the proceedings sought to be agitated as a ‘matrimonial cause’, in accordance with the definition in the Family Law Act, are either res judicata or precluded by issue estoppel or 'abusive’ or ‘oppressive’ in the Anshun sense or have been commenced in a clearly inappropriate forum and are hence liable to a discretionary stay”.
Having considered the competing submissions, her Honour rejected any categorisation of the outcome of the Italian proceedings as “a bare order for spouse maintenance, rather than a financial adjustment consequent upon the breakdown of the parties’ marriage and having regard to the totality of their assets and liabilities”. Her Honour considered that it was inappropriate for an Australian court to determine the wife’s section 79 application by merely having regard to the determination of the Italian Court with respect to spousal maintenance “as a factor to be taken into account in the adjustment of the parties’ property rights”.
The trial Judge also rejected the “alternative” approach whereby an Australian Court would “ignore the determination of the foreign tribunal and proceed to redetermine in its entirety a matrimonial cause which is res judicata in the foreign jurisdiction”. Her Honour observed that “[a]ny judgment of an Australian court arrived at in these circumstances may well prove to be “a mere brutum fulmen” or “an ineffective act, an empty threat” (The Oxford Essential Dictionary of Foreign Terms in English, Berkley Edition, Oxford University Press, 1999).
Then followed consideration of the submission on behalf of the husband that “the real practical effect of permitting Ms [Hartner] to re-agitate matters already the subject of judicial assessment by a foreign court would be allow her to re-open her election to submit to the jurisdiction of the Roman Tribunal. She chose to submit her dispute to the Tribunal, thus any rights she may have had to pursue relief in an Australian court must have merged in the Italian proceeding”.
Her Honour also recorded the submission on behalf of the husband that the wife had been “content to submit to the determination of an Italian court at every stage until Mr [Pagliotti] commenced his application in Australia. As such, it is reasonable to view her application as retaliatory and a procedure designed to “shake off” his claim to the [B] property. Ms [Hartner’s] application pursuant to section 79 is thus ‘manifestly vexatious’”.
Against that background, her Honour considered “Is Australia a ‘Clearly Inappropriate Forum’ Within the Henry and Henry Test?” she recorded, correctly there is no doubt, that both the Italian and Australian courts had jurisdiction. Her Honour further recorded that the husband had invoked the jurisdiction of the Family Court of Australia, and conceded that this Court has jurisdiction in respect of (the wife’s) proceedings pursuant to section 79.
The trial Judge concluded that the Court had personal jurisdiction over the husband. She reasoned that “[h]e has invoked its jurisdiction and is actively pursuing relief. He cannot seek orders for his own benefit, on the one hand, and claim that his appearances have always been conditional on the other hand. In other words, he cannot make a conditional appearance to seek his own relief”.
For reasons which she detailed, the trial Judge rejected the contention of the husband that the exercise of jurisdiction by this Court pursuant to Section 79 would be “largely futile”. Her Honour rejected legal costs (paragraph 55), connection with Australia (paragraph 56) and language difference (paragraph 57) as reasons for concluding that Australia was a clearly inappropriate forum.
Her Honour re-iterated that there was “no mechanism by which the parties respective interests” in the B property could be determined pursuant to Italian law and that “[t]he only forum in which such interests can be determined is Australia and, in fact, this is the very relief which [the husband] seeks”.
The trial Judge concluded that:
59.It can hardly be said that Ms [Hartner’s] application pursuant to section 79 has been brought in a clearly inappropriate forum if Mr [Pagliotti’s] proceedings are properly in this court. There are available to this court powers which extend beyond section 78 and can be utilised to determine the beneficial interests of the parties in the proceeds of sale of the [B] property. Mr [Pagliotti] seeks a declaration that he holds a beneficial interest of 50% and, implicitly, Ms [Hartner’s] application means that she asserts that she holds a beneficial interest of 100% in the net sale proceeds. I do not see how the section 79 application could be categorised as “oppressive” or “vexatious” to Mr [Pagliotti], as those terms were used by the majority in Henry and Henry.
The “clearly inappropriate forum” issue having “been overtaken by recent events, specifically the final orders of the Roman Tribunal”, her Honour concluded that there were “no longer two parallel sets of proceedings” and thus the issue became whether the wife’s application should be regarded as res judicata or “an abuse of process such that [sic] should be restrained by Anshun estoppel”. Her Honour then turned her attention to that issue.
Having expressed her misgivings as to why, if the wife’s section 79 application should be considered res judicata the husband’s section 78 application should not be viewed similarly (paragraph 61) her Honour summarised her understanding of the effect of the Italian proceedings in the following terms:
62.It seems to be true that the Italian proceedings culminated in orders which dealt with the whole of the financial consequences of the breakdown of the parties’ marriage. It was common ground that an order for spouse maintenance is the vehicle by which an Italian court deals with financial adjustment between parties, following on the breakdown of their marriage. There is no provision in Italian law for distribution of property in specie, other than by agreement of the parties.
After re-stating, accurately, the competing claims of the parties with respect to the proceeds of sale of the B property, her Honour observed, also accurately, that such controversy “was not agitated nor resolved in the Italian proceedings as, the Tribunal was without jurisdiction in this regard”, concluding that “Ms [Hartner’s] section 79 application is not res judicata”.
For reasons which she then detailed, the trial Judge did not accept that the High Court’s decision in Anshun assisted the husband’s application for a permanent stay. She reasoned in that regard:
65.It could not be considered unreasonable that the issue of beneficial ownership of the [B] property, or the proceeds of its sale, was not raised in the Italian proceedings. As noted, the Roman Tribunal lacked jurisdiction to determine that question. That issue is raised in the Australian proceedings directly by Mr [Pagliotti] and, by necessary implication by Ms [Hartner]. In other words, it was not open to either party to agitate this issue in the Italian proceedings.
Ultimately, her Honour concluded:
66.In my view, a judgment in the Australian proceedings would not conflict with the orders of the Roman Tribunal. I do not agree with the submission on behalf of Ms [Hartner] that the Italian proceedings dealt only with the issue of spouse maintenance. At the same time, those proceedings could and did not deal with the question of beneficial ownership of the [B] property, which is now squarely before this court.
The proceedings in this Court
Although not the subject of any specific written or oral submissions before this Court, and sensibly so, the application for leave to appeal and, if leave be granted the appeal, have been heard together. We approach the matter on the basis that, in the circumstances of this case, if the husband establishes an entitlement to a grant of leave to appeal, once such leave were granted his appeal would be upheld. Conversely, unless the husband establishes a ground or grounds for appellate intervention, leave to appeal would be refused (see Rutherford and Rutherford (1991) FLC 92-255; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170).
Following the decision of the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (supra), the Full Court of the Family Court in Rutherford and Rutherford (supra) said:
As counsel for the husband rightly remarked there is not as yet any reported authority on the principles to be applied in granting leave under section 94AA(1). However, there are a number of authorities dealing with equivalent provisions in relation to the Federal Court of Australia and the Supreme Courts of the States. In our view, counsel rightly invited us to seek guidance in the remarks of the High Court in Adam P Brown Male Fashions Pty. Ltd. v. Philip Morris Inc. (1981) 148 CLR 170 at 177 per Gibbs CJ, Aickin, Wilson and Brennan JJ as follows:-
“…
Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively. Cases can be cited in support of both views: for example, on the one hand, Niemann v Electronic Industries Ltd [[1978] VR 431 at 440]; on the other hand, De Mestre v A D Hunter Pty Ltd [(1952) 77 WN (NSW) 143 at 146]. For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various.”
Realistically, if appealable error is established pursuant to any of the proposed grounds of appeal upon which the husband relies, this Court could find either that there has been an error of principle, or that the decision appealed works “a substantial injustice to one of the parties” (Rutherford and Rutherford (supra)).
The proposed grounds of appeal
Before us, Senior Counsel for the husband focused his principal challenge to the trial Judge’s order on the basis of the doctrine of res judicata and/or the principles of Anshun estoppel.
The res judicata estoppel challenges
Grounds 1 and 6 of the Notice of Appeal were argued conjointly by learned Senior Counsel for the husband. Those grounds provided:
1.Having correctly found (in paragraphs [39], [40] and [46] of her reasons) that the Tribunal of Rome (to whose jurisdiction the wife had voluntary [sic] submitted) had completely determined the whole controversy between the parties, namely the manner in which their respective financial rights and obligations should be adjusted following the breakdown of her marriage (save for their dispute over the proceeds of the sale of the property known as [B property]), the primary judge erred in failing to find that that determination constituted a res judicata and that the respondent-wife was thereby estopped from prosecuting her application under section 79 of the Family Law Act.
6.The primary judge erred in failing to follow and apply the decision of the Full Court of the Family Court of Australia in In the Marriage of A V and P Kemeny 23 Fam LR 105.
Senior Counsel for the husband submitted that the husband’s “primary submission” before the trial Judge was:
1.…[T]hat the final orders of the Roman Tribunal rendered the wife’s Australian proceedings, either res judicata or, alternatively, an abuse of process of the kind identified by Brennan J in Port of Melbourne Authority v Anshun 147 CLR 589 at 611-612.
The Court was referred to the judgment of Brennan J in Anshun in which his Honour said (at CLR 610-613):
There is an imprecision in the meaning of the term cause of action, which is sometimes used to mean the facts which support a right to judgment (see per Williams J in Carter v Egg and Egg Pulp Marketing Board (Vict.) [(1942) 66 CLR 557 at 600–1)]; sometimes to mean a right which has been infringed (see Serrao v. Noel [(1885) 15 QBD 549]), and sometimes to mean the substance of an action as distinct from its form (see Krishna Behari Roy v. Brojeswari Chowdranee [(1875) LR 2 Ind App 283]). Imprecision in the meaning of cause of action tends to uncertainty in defining the ambit of the rule that a judgment bars subsequent proceedings between the same parties on the same cause of action. The foundation of the rule, whether it be termed res judicata, or cause of action estoppel or judgment recovered, is the merging of the cause of action in the judgment. In reference to res judicata, Dixon J. said in Blair v. Curran [(1939) 62 CLR 464 at 532]: “…the very right or cause of action claimed or put in suit has … passed into judgment, so that it is merged and has no longer an independent existence…”
If cause of action is taken to mean a right, the rule is stated in terms of the passing of the right into judgment, and the rule precludes a party bound by the judgment from maintaining against another party bound by it any subsequent proceeding to recover a judgment giving a remedy to enforce or to compensate for an infringement of that right. The rule does not preclude litigation seeking a remedy to which a party is entitled in virtue of a different right from that which was first put in suit provided that the facts which support the right sued upon in the second action are not the same facts as those supporting the right which passed into the first judgment: thus in Brunsden v. Humphrey [(1884) 14 QBD 141] where the same act of negligence caused damage to the plaintiff's property and injury to the plaintiff's person, it was held that different rights were infringed and that an action for damages for personal injury was not barred by recovery of a judgment for damage to property.
If cause of action is taken to mean the facts which support a right to judgment, the rule of res judicata bars an action for relief founded upon the same facts as those upon which an earlier judgment was recovered, though the right sued upon in the second action is different from the right which passed into or was negated by the earlier judgment. Thus in Lemm v. Mitchell [[1912] AC 400], a plaintiff in Hong Kong who failed in an action for criminal conversation because that right of action had been abolished by Ordinance could not sue when that right of action was retrospectively revived by a subsequent Ordinance.
When the same facts support rights to different remedies against the same defendant, the plaintiff cannot recover a judgment giving a remedy in respect of more than one right (United Australia Ltd v. Barclays Bank Ltd [[1941] AC 1]; Mahesan v. Malaysia Housing Society [[1979] AC 374]). He may pursue his remedies concurrently in the same action, but he is put to his election before judgment as to which remedy he shall have. And when judgment is entered, all of the rights which he might have claimed in that litigation are merged in the judgment. Lord Atkin in United Australia Ltd v. Barclays Bank Ltd [(supra, at p 30)], defined the effect of a judgment upon alternative remedies:
“Up to that stage the plaintiff may pursue both remedies together, or pursuing one may amend and pursue the other: but he can take judgment only for the one, and his cause of action on both will then be merged in the one.”
The party entitled to relief cannot improve his position by bringing separate actions. Though he may elect between inconsistent remedies pursued in the one action, or between the actions to be pursued in order to recover a judgment giving the remedy he chooses, the merger in the judgment first recovered of a right to another remedy takes effect by operation of law. When those rights (or causes of action) are extinguished, no further litigation may be pursued to recover a second judgment upon them.
Accordingly, inconsistency between judgments against the same defendant is avoided by the merger in the judgment first recovered of the right to the remedy thereby given and of all other rights which arise on the same facts. Thus, a plaintiff who recovers a judgment for damages in assumpsit is precluded from recovering a judgment for damages in tort arising out of the same facts (per Lord Atkin in United Australia Ltd v. Barclays Bank Ltd [supra at p 28]); a principal who recovers a judgment for damages in fraud against his bribed agent is precluded from recovering a judgment in the amount of the bribe as moneys had and received to his use (Mahesan v. Malaysia Housing Society [supra]); and a party whose goods have been wrongfully seized and who recovers in replevin, is precluded from recovering a judgment for damages in trespass to goods (Gibbs v. Cruikshank [(1873) LR 8 CP 454]). A passage from the judgment of Willes J. in Nelson v. Couch [(1863) 15 CB (NS) 99 at 108–9 ; 143 ER 721 at 724–5] reveals the breadth of the rule and a limitation upon its application:
“The plea sets up the exception of res judicata and therefore must shew either an actual merger or that the same point has already been decided between the same parties … Where the cause of action is the same, and the plaintiff has had an opportunity in the former suit of recovering that which he seeks to recover in the second, the former recovery is a bar to the latter action. To constitute such former recovery a bar, however, it must be shewn that the plaintiff had an opportunity of recovering, and but for his own fault might have recovered, in the former suit that which he seeks to recover in the second action.
Senior Counsel for the husband then referred the Court to the judgment of Gummow J in Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 36 FCR 406, and particularly at 409-12 where his Honour said:
No question of merger arises because as plaintiff Trawl failed rather than succeeded in the Supreme Court: see Thoday v Thoday [1964] P 181 at 197-198, per Diplock LJ; S L Phipson, The Law of Evidence (14th ed, 1990), pp 862-867. In the passage to which I have referred Diplock LJ said:
“[Cause of action estoppel] is that which prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non-existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties. If the cause of action was determined to exist, ie, judgment was given upon it, it is said to be merged in the judgment ... If it was determined not to exist, the unsuccessful plaintiff can no longer assert that it does; he is estopped per rem judicatam.”
Estoppel has been described as “a label which covers a complex array of rules spanning various categories”: see Commonwealth v Verwayen (1990) 170 CLR 394 at 409, per Mason CJ. …
…
Estoppel or preclusion and federal jurisdiction
…
Accordingly, the questions of estoppel which arise on this motion concern two proceedings, each being a matter wholly within federal jurisdiction. A threshold question arises as to the applicable body of principles to resolve what the applicant on the motion says is the successive exercise of federal judicial power upon the one controversy, or overlapping controversies. An essential characteristic and function of the judicial power of the Commonwealth is the quelling of disputes, so that the making of final orders should have at least the potential effect of precluding relitigation of the same claims and issues: see Fencott v Muller (1983) 152 CLR 570 at 608. In my view, the Constitution of the Commonwealth brings with it, as an element in the judicial power, rules of preclusion to effectuate the quelling of such disputes. There is thus no scope for the “picking up” of State law by the Judiciary Act 1903 (Cth), s 79. In Australia, the federal judicial power, whilst limited, is, within its sphere, paramount: see R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 268.
In the United States, the view has been taken that the establishment of the federal judicial power carried with it recognition of judicial authority to develop rules of “preclusion” with similar content to the rules developed over a long period by the common law courts; those rules have been taken as an appropriate guide for the federal courts: Wright, Miller and Cooper, Federal Practice and Procedure, Vol 18, par 4466; Degnan, “Federalized Res Judicata” (1976) 85 Yale LJ 741 at 768 ff. As those learned authors point out, the supremacy of federal judicial power may require more than the simple application of the common law rules where what is involved is the effect upon State courts exercising non-federal jurisdiction of a prior decision of a court exercising federal jurisdiction, or the effect upon a court exercising federal jurisdiction of a prior decision of a court exercising purely non-federal jurisdiction: see also Wright, Federal Courts (4th ed, 1983), pp 694-696, E Chemerinsky, Federal Jurisdiction (1989), par 8.10.
The present controversy arises from two proceedings, each in federal jurisdiction, so these latter questions do not arise. Nor is it necessary to consider the applicability of doctrines of res judicata, issue estoppel and the Anshun estoppel in situations where the first proceeding was of an administrative nature and did not involve the exercise of the judicial power of the Commonwealth: see Wiest v Director of Public Prosecutions (1988) 23 FCR 472 at 521-528; Minister for Immigration, Local Government and Ethnic Affairs v Kurtovic (1990) 21 FCR 193; Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 17-19; Haoucher v Minister for Immigration and Ethnic Affairs (1990) 169 CLR 648 at 678-679.
The correct approach in a case such as the present, in my view, is to treat as applicable in federal jurisdiction the principles which have been developed at general law. This is to be supported either as an adoption from the common law to resolve an issue as to a characteristic of the federal judicial power, an issue which thus springs from the Constitution itself (cf Breavington v Godleman (1988) 169 CLR 41 at 120-121, per Deane J), or as an illustration of the role of the common law as the foundation of the legal systems of every part of the Commonwealth and as an ultimate constitutional foundation (cf Breavington v Godleman (supra) (at 107), per Brennan J; Sir Owen Dixon, “The Common Law as an Ultimate Constitutional Foundation” (1957) 31 ALJ 240 and Judiciary Act, s 80). Before me both sides accepted that the issues were to be resolved by reference to the common law of Australia.
But when comparing what was at stake in successive proceedings in federal jurisdiction, for such purposes as the application of the general law principles of preclusion, the distinctive characteristics of that jurisdiction are of particular importance. The “matter” in respect of which federal jurisdiction is exercised in such cases will be the subject matter for determination, the substantial subject matter of the controversy; the Constitution itself thus directs attention to substance rather than merely to the form in which a legal proceeding happens to be framed: see Crouch v Commissioner for Railways (Qld) (1985) 159 CLR 22 at 37. The relevant general law principles are, as will appear, consistent with that basic constitutional doctrine.
and (at 418-419):
However, as indicated above, for the law of Australia it is most suitable to focus upon the substance of the two proceedings as distinct from their form. This reflects the constitutional basis of federal jurisdiction, to which I have referred earlier in these reasons. Also, it allows for the very many controversies which now come before superior courts, federal and state, without pleadings. And even where pleadings are necessary or are ordered, the effect of the judicature system of pleading, now in general operation in Australia, is as described by Barwick CJ:
“[T]here is no necessity to assert or identify a legal category of action …It is sufficient in matters in the Federal Court to assert the facts on which the plaintiff or applicant party relies and to nominate the remedies which he seeks as a consequence of the occurrence of those facts.”
See Philip Morris Incorp v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 473; 33 ALR 465. Further, characterisation by regard to substance rather than form assists in cases where the first action was brought in a foreign forum, for the doctrine applies in such circumstances, as Carl Zeiss and House of Spring Gardens show.
Having referred to the decision of the High Court in Henry v Henry (1996) 185 CLR 571, and in particular to the following passage (at 591-592):
If separate proceedings are commenced between husband and wife in different countries, differences in procedure, in available remedies and in the substantive law with respect to marriage and divorce will ordinarily ensure that the proceedings are different in significant respects. However, the proceedings will ordinarily be concerned with the same controversy. And that will be so even if the initiating party is not the same and even if the proceedings seek inconsistent remedies or outcomes. The marital relationship lies at the heart of all proceedings between husband and wife with respect to their marital status, especially proceedings for the dissolution of marriage. In such cases, it is the marital relationship itself which is the subject of controversy. And if the marriage is still subsisting, disputes with respect to property, maintenance and the custody of children will ordinarily be but aspects of an underlying controversy with respect to the marital relationship.
and to the decision of this Court in Kemeny v Kemeny (1998) FLC 92-806; in particular to the following passage (at FLC 85,067):
We respectfully adopt the approach of the learned trial judge that any orders made after the decision of the Appellate Division were made in consequence of the infringement by the wife of the husband's final rights so obtained and constituted a separate cause of action. The first cause of action, namely the adjustment of the property rights of the parties occurring by reason of the breakdown of their marital relationship, had been fully determined in the earlier New Jersey proceedings.
it was submitted that:
5.…The approach articulated in Henryv Henry strongly suggests that, to determine whether a proceeding brought in this Court is brought on the same ‘cause of action’ as a proceeding already determined in a foreign court, it is (to adopt the language of Gummow J in Effem Foods) “most suitable to focus upon the substance of the two proceedings as distinct from their form”. (footnotes omitted)
On behalf of the husband it was submitted that, in the ways earlier particularised (paragraph 7, 8, 9, 10) of Senior Counsel’s written submissions, the trial Judge “appears to have accepted most of the premises of the husband’s argument, but not its conclusion”.
The steps in her Honour’s reasoning process were suggested to have been:
(a)“[T]he issue of beneficial ownership of the [B] property was not raised in the Italian proceedings” [Paragraph 65 (Appeal Book Vol 1 page 33)] or, if raised, was in any event “not determined in the Italian proceedings, as the [Roman] Tribunal lacked jurisdiction to do so” [Paragraph 63 (Appeal Book Vol 1 page 33)] and hence “it was not open to either party to agitate this issue in the Italian proceedings” [Paragraph 65 (Appeal Book Vol 1 page 33)].
(b)That issue (i.e. as to beneficial ownership of the [B] property or its proceeds) was and remains “distinct from the subject matter of the Italian proceedings” [Paragraph 63 (Appeal Book Vol 1 page 33)].
(c)The issue of beneficial ownership of the [B] property or its proceeds is the issue that the husband seeks to agitate in the husband’s Australian proceedings, whereunder “Mr [Pagliotti] seeks a declaration that he holds a 50% beneficial interest” [Paragraph 63 (Appeal Book Vol 1 page 33)].
(d)“An integral part of Ms [Hartner’s] application pursuant to section 79 is that she retain 100% of legal and beneficial entitlement to the proceeds of sale of the [B] property” [Paragraph 63 (Appeal Book Vol 1 page 33)].
Senior Counsel for the husband did not dispute the correctness of the suggested first three steps in her Honour’s reasoning process but asserted that “legal error” arose in the fourth and final suggested step in such reasoning process and in her Honour’s “generic reference to ‘the Australian proceedings’”.
It was submitted in this context that the trial Judge failed “to appreciate that the legal bases upon which the husband’s and wife’s respective Australian proceedings have been framed are different and not commensurate”. The significance of that was asserted to be that, rather than the issue being whether the “orders sought” in the proceedings would “conflict with the orders of the Roman Tribunal in the sense of creating direct inconsistency”, the issue was whether “the determinations necessary to support the making of those Australian orders would be re-determinations of issues already finally determined in the Roman proceedings”.
It was thus submitted that her Honour erroneously assumed “that the husband’s and the wife’s Australian proceedings were both ultimately concerned with the same subject matter, and will turn upon the same questions”.
It was submitted that, to the contrary:
14.The legal basis upon which a result favourable to either party would be reached in the husband’s Australian proceedings would be entirely different from that upon which an equally favourable result would be reached in the wife’s Australian proceedings. …
It was further submitted that was asserted to be:
14.…because the precise legal basis upon which the result ultimately desired is to be claimed and proved will determine the scope of the issues which this Court will consider in order to arrive at that result. It will therefore also determine whether those issues are, or are not to be, in substance, issues that have already been the subject of determination in the Roman Tribunal.
Thus, it was submitted that:
14.…Where the only proceedings before the Court are proceedings for relief under s 78, the question to be determined by the Court is limited to the determination of title under established principles of the law of contract, gift or trust (i.e. the very question that the Roman Tribunal was and is unable to determine), and do not extend to consideration of any claim that one spouse may have upon the assets of another merely by reason of his or her status as a spouse (i.e. the very question that has, as a matter of substance, been determined by the Roman Tribunal). [footnotes omitted]
Senior Counsel referred to paragraph 61 of the trial Judge’s Reasons for Judgment as evidence of the error thus asserted on behalf of the husband. That paragraph of her Honour’s judgment recorded:
61.The next question is whether the judgment of the Roman Tribunal renders Ms [Hartner’s] application pursuant to section 79 res judicata. Again, I am not sure why the same should not be said of Mr [Pagliotti’s] application pursuant to section 78, if the initial proposition is correct.
The answer to the trial Judge’s suggested “incomprehension” was suggested to lie in the distinction between:
(a)jurisdiction to determine whether or not any beneficial interest that a party may have in a particular asset should be extinguished or renounced as part of a financial adjustment consequential upon the breakdown of marriage (“section 79 jurisdiction”); and
(b)jurisdiction to determine whether or not the interest sought to be extinguished or renounced is in fact vested in the relevant party (“section 78 jurisdiction”).
In amplification of these challenges, and the application generally, Senior Counsel for the husband, in the course of oral submissions, referred the Court to the expert evidence before the trial Judge in his endeavour to establish that the Italian proceedings encompassed matters which were potentially, and impermissibly, likely to be re-visited in the event of the wife being permitted to pursue her section 79 application in this Court.
Reference was made to the affidavit of Mr Roberto Folchitto, the husband’s counsel in the Italian proceedings, in which it was said:
10.I refer to article 708 of the CPC. Under the procedures of Italian law, where an application is made to the Court for judicial separation, the Presiding Judge may, if reconciliation between the spouses is not feasible, make such provisional and urgent orders as are considered by the Presiding Judge to be appropriate in the interests of the spouses.
11.I refer to article 3(1)(2)(b) of the dissolution of marriage statute. Under Italian law, either party to a marriage may apply for dissolution of a marriage following judicial separation, or judicial ratification of personal separation, if and when 3 years has elapsed from the date of the parties’ first appearance before the Court in the proceedings for judicial separation.
12.I refer to articles 150 and 158 of the Civil Code and to article 711 of the CPC. Under the principles and procedures of Italian law, consensual separation of spouses may be authorised, but does not effect any change in their legal marital status unless and until it is ratified by the Court.
13.I refer to article 151 of the Civil Code and to article 709-bis of the CPC. Under the principles and procedures of Italian law, in a case where there is dispute between the spouses as to the party at fault, or as to the financial consequences of separation, the Court delivers only an interim judgment and refers the matter to an instructing judge for hearing.
14.I refer to Article 156 of the Civil Code. Under the principles of Italian law the Italian Court is empowered, when decreeing separation, to provide for the right of the party to whom separation is not imputable, and whose income is otherwise inadequate, to receive spousal maintenance from the other party. The Court is also empowered to order a party who is required to pay spousal maintenance to give security for an obligation to pay spousal maintenance, or to order sequestration of property for the better securing of that obligation.
15.I refer to article 5(6) and article 5(7) of the dissolution of marriage statute. Under the principles of Italian law, the Court is similarly empowered when decreeing dissolution of marriage to require one spouse to pay maintenance to the other, and to index that obligation for currency inflation. I also refer to article 8 of the dissolution of marriage statute, which empowers the Court to order the spouse who is required to pay spousal maintenance to give security for, or to order sequestration of property for the better securing of, the obligation to pay that maintenance.
16.I refer to article 9-bis of the dissolution of marriage statute. Under the principles of Italian law, in cases where a spouse has been ordered to pay maintenance upon dissolution of marriage, the Court may continue to charge the deceased estate of that spouse with the obligation after death.
17.I refer to article 9(2) of the dissolution of marriage statute. Under the principles of Italian law, an obligation to pay maintenance may be discharged by payment of a lump sum, but only by the agreement of the parties. Under Italian law, the Court has no power to compel an unwilling spouse, either as a consequence of judicial separation or of dissolution of marriage, to pay a lump sum to the other for future maintenance. Nevertheless, the individual and common property of the spouses is declared to, and valued by, the judge for the purpose of determining what, if any, maintenance is payable.
18.I refer to article 710 of the CPC. Under the principles and procedures of Italian law, the Court’s determination in respect of spousal maintenance is a decision that the judge takes based upon the principle rebus sic stantibus, that is, based upon the financial evidence adduced during the trial. In the event that those elements change in the course of time, the spouse concerned can ask the judge for a modification of the amount of the benefit.
That evidence was not the subject of cross-examination before the trial Judge.
Senior Counsel then referred to a number of portions of the evidence of Professor Giuseppe Ruffini. That evidence was also not the subject of cross-examination before the trial Judge.
On behalf of the husband, Senior Counsel also referred to the following paragraph from Professor Ruffini’s affidavit regarding the recognition of foreign judgments in Italy:
8.In the first question I am asked whether “1) Based on Italian legislation governing Italian jurisdiction and the enforcement of foreign judgments in Italy, may an Australian judgment delivered as per section 79 of the Family Law Act, whereby the husband is ordered to pay an amount of money to the wife (“monetary settlement judgment”) and/or to transfer real estate property located in Italy to the wife (“property settlement judgment”) be recognised in Italy?”
9.On this issue it should be stated as a premise that, pursuant to article 64 of Law No. 218 of 31 May 1995 “a foreign judgment is recognised in Italy without requiring any ad hoc proceedings if:
a)the court that delivered it was competent to hear the case according to the principles of jurisdictional competence in force in the Italian legal system;
b)the initial appearance was notified to the respondent in accordance with the provisions of the law of the place where the proceedings were conducted and the essential rights of the defence were not breached;
c)the parties made an appearance according to the law of the place where the proceedings were conducted or the absence of either party was declared in accordance with the above law;
d)the judgment has become absolute in accordance with the law of the place where it was delivered;
e)the judgment is not contrary to another judgment delivered by an Italian court that has become absolute;
f)proceedings on the same subject matter or between the same parties that were commenced before the commencement of the foreign proceedings are not pending before an Italian court;
g)its orders do not produce effects that are contrary to public order”.
And to the following passages in the evidence of Professor Ruffini:
46.On this subject, the Italian legal system states that “marriage produces a mutual obligation of loyalty, moral and material support, cooperation in the interest of the family and cohabitation. Both spouses are required, each in proportion to their own resources and capacity to perform occupational or domestic duties, to contribute to meeting the family’s needs” (article 143, paragraphs 2 and 3, Civil Code). Irrespective of this, each spouse is required, in the case of need, to provide “alimony” to the other spouse, as per article 433 of the Civil Code.
47.Such obligations, that the parties may not waive except for pre-existing credits, remain in force both after the personal separation and the dissolution of marriage, with the exceptions outlined hereinafter.
48.During the marriage, in the Italian legal system, the court may not interfere with the financial arrangements between the spouses, unless this is jointly sought by both parties (article 145 of the Civil Code) or it is required for the purpose of managing assets included in the communion of property (article 181 of the Civil Code). This principle may be waived only for expenses required for the maintenance, education and upbringing of the children (article 147 of the Civil Code) and for the obligation to provide alimony as per article 433 of the Civil Code, whose compliance may be sought from the court irrespective of a personal separation or a divorce.
49.As soon as the personal separation is sought, the court’s powers are more direct, as the court is called upon to determine “the right of the party not responsible for the separation to receive from the other spouse that which is needed for his/her maintenance, if he/she does not possess adequate income. The extent of the maintenance is determined in relation to the circumstances and income of the obliged party” (article 156 of the Civil Code).
50.The obligation to pay “maintenance” which derives from the personal separation is in addition to the mere obligation to “provide alimony” and has a wider scope. Whilst through the obligation to provide alimony, the law aims at ensuring a benefit, either in kind or monetary in nature, that ensures the mere survival of the person entitled to alimony, “maintenance” should instead ensure a living standard equivalent to that he/she could rely on before the separation, within the limits of both spouses’ resources and income [A Trabucchi, Institutions of Civil Law, 42nd edition; Padua, 2005, pages 371 and following].
51.The extent of the maintenance, that in practice is determined as an amount of money to be paid monthly to the other spouse, is subject to the income and assets of both spouses, so that each of them may, at any time, seek that it be amended by the court (Article 710 Code of Civil Procedure).
52.In conclusion, the Italian legal system does not have any provision similar to that which in common law systems is defined as a “clean break settlement”, during a marriage or personal separation of the spouses.
53.Only after the delivery of a divorce judgment, the court may, if both spouses so seek, determine that the obligation to pay maintenance for the future is met through the payment of a one-off sum of money, whose amount shall be mutually agreed by the parties and considered as fair by the court (article 5 of Law No. 898 of 1 December 1970). If such a request is filed and accepted by the court, both parties are no longer bound by any obligation to pay maintenance or provide alimony.
54.Instead, up to the delivery of the divorce judgment it is not possible to exempt either spouse from the obligation to pay future maintenance through the payment of a sum of money, not even if this is agreed by the parties, because this would irreparably in [sic] conflict with the obligations of mutual support deriving from the marriage and that are essential principles of the Italian legal system and that can never be waived before the dissolution of the marriage.
55.Therefore, where the judgment of the Australian court had the effect of relieving either or both spouses from their obligation to pay maintenance, as a result of one spouse being ordered to pay an amount of money or transfer another asset to the other spouse, this could likely be in conflict with the Italian public order if this effect is produced before the dissolution or termination of the civil effects of the marriage.
56.It should also be highlighted that a further and independent element of conflict with the Italian public order could be the determination of the amount of money the spouse is ordered to pay.
57.The obligation to pay “maintenance” as per the Italian legal system is not in any way aimed at restoring the balance between the spouses’ assets, but rather its main aim is to ensure that, after the separation and upon the dissolution of the marriage, each of the spouses have the possibility of maintaining a living standard that is equal to that which existed before the “family crisis”, or – if this materially unfeasible – not excessively lower than that of the other spouse.
58.Therefore the determination of the monthly maintenance amount is made by the court taking into account both the current and potential income capacity of the spouses and their needs (availability of real estate properties or need to rent a home, dependants, etc.). This decision, in particular, is made not by assessing the overall assets of the spouses, which may not be distributed by the court, but rather by taking into account the respective incomes and respective needs, with special focus on the needs of dependant children.
59.There could be a conflict with the principles of public order where the determination of the sum of money one spouse is ordered to pay by the Australian court were based on radically different criteria, which did not take into account the material living needs of the spouses, thus being considered, according to the Italian legal system, a transfer of assets without just cause.
60.On this issue and with reference to the case I am examining, it could also be important, for the purpose of assessing whether the Australian judgment is not contrary to the Italian principles of public order, to quantify the sum of money paid to [Mrs Hartner] and that she sought in the amount of $5,000,000.00 (equal to € 3,031,368.60 at the exchange rate as at 21.12.2007).
61.In assessing the above quantification, there is a need to take into particular account [Mrs Hartner]’s age, born on … 1933, the extent of the monthly maintenance she sought from the Italian court (€ 12,000.00), the provisional maintenance amount set by the Rome Civil Courts (€ 4,800.00) and finally the amount of the monthly maintenance that will be finally determined by the Rome Civil Courts based on the outcome of the separation proceedings.
62.On this issue, albeit the subject matters were different, a number of Italian judicial rulings have declared as non recognisable judgments of foreign courts that contained “exemplary or punitive damages”, because the extent of the damages had been determined, in their respective legal systems, not on the basis of the extent [sic] the financial damage suffered but rather of other criteria that have no place in the Italian legal system, thus being considered by the Italian legal system as a transfer of assets without just cause [Court of Cassation, III Division, 19 January 2007, No. 1183 in New Civil Jurisdiction, 2007, I, page 981; in Italian Jurisdiction, 2007, I, page 1498].
The evidence of Mr Folchitto was also relied upon in support of his assertion that the wife willingly participated in the Italian proceedings. We do not understand there to be any suggestion that the wife has ever been other than a willing participant in the Italian proceedings.
Senior Counsel for the husband referred the Court to the following passage of Mr Folchitto’s affidavit as “showing how the Italian courts take property into account”:
31.I refer to the minutes, which evidence, among other things, that on 14 June 2004 the instructing judge, considering that the property declared by the wife in Australia appeared to be underutilized, varied the husband’s monthly obligation to pay spousal maintenance by reducing it to 4,800 Euros per month.
Reference was then made to the basis of the husband’s claim in this Court expressed in the affidavit of the husband’s solicitor on 30 April 2007 in the following terms:
6.The property known as [B property] ([the [B] property]) was purchased by the wife in December 1990 with part of the proceeds of the sale of immovable property situate at [R] (the first [R] property).
7.The purchase consideration for the first Rome property was provided by the husband from the proceeds of sale of the husband’s 1982 inheritance of immovable property situate in [P] (the [P] property).
It was further submitted by Senior Counsel for the husband that the B property, or the proceeds of its sale, form part of the communion of property to which Professor Ruffini referred to in the following terms:
72.For the purpose of an exhaustive assessment, it should be specified that a change to the spouses’ rights to real estate properties may occur as a result of the dissolution of the legal communion between the spouses, which, as per article 159 of the Civil Code, represents the “standard legal property regime for families, in the absence of a contrary agreement entered into in accordance with article 162”, i.e. in the absence of any other matrimonial conventions aimed at adopting other regimes. The distribution of individual assets covered by the communion of property regime may be sought by either spouse at any time and, in the absence of different agreements between the parties, the distribution will necessarily occur in equal shares, as each of the spouses is the owner of half of the common assets covered by the communion of property regime. Furthermore, the distribution of assets covered by the communion of property regime does not occur during personal separation or divorce proceedings, as such a distribution may be arranged out-of-court by the spouses or in an ordinary ad hoc proceedings, where, once an outcome is reached, in the absence of the parties’ agreement covering the distribution or if it is not feasible to make a distribution in kind, the assets covered by the communion of property regime will be sold at auction and the proceeds of the sale shared among the parties. There is no issue as regards assets owned individually by each spouse, not included in the communion of property, which in all cases remain the property of the spouse that owned them. However, the ownership of such assets falls outside the subject of any “matrimonial” proceedings as such an ownership may be considered by the court as an element for the determination of the amount of the abovementioned maintenance.
On behalf of the husband Senior Counsel referred the Court to the judgment of the Italian court in January 2008 parts of which we have earlier set out and in particular to the passage in which the Roman Tribunal referred to the property of the parties and noted that “as regards the third real estate property, the share of ownership is yet to be established given that the husband is claiming a 50% share of ownership.”
Thus, it was submitted that the judgment of the Roman Tribunal supported the assertion that the determination by an Australian Court with respect to B property envisaged by the Tribunal was limited in the way suggested earlier in Senior Counsel’s submissions which we have recorded.
Before us the wife relied on a Notice of Contention filed in accordance with rule 42.08.5 of the High Court Rules 2004. On behalf of the wife it was submitted that notwithstanding that the trial Judge had correctly rejected the husband’s application, she had done so in reliance upon a number of errors of fact favourable to the husband’s case:
The errors of fact were asserted to have been:-
1.Under Italian Law “The expert evidence indicated that orders for spouse maintenance are, fundamentally, the means by which an Italian Court adjusts the financial positions of parties following a marriage breakdown. There is no provision for distribution of property in specie or for the payment of lump sums other than by agreement” AB 1 p23 para 5, and
2.The Tribunal of Rome had completely determined the whole controversy between the parties AB 1 p29 Para 39-4 and p.63 Paras 62, and.
3.The Orders of the Tribunal of Rome made … January 2008 were a “financial adjustment consequent upon the breakdown of the parties’ marriage …having regard to the total of their assets and liabilities” AB1 p 30 para46.
The Roman Tribunal having not made a “determination” with respect to the B property, this Court cannot be bound in the manner asserted by this submission.
It was further submitted on behalf of the husband that:
22.For the purpose of determining the financial consequences of the breakdown of the parties’ marriage the Roman Tribunal has acted on the basis that the wife’s legal title prevails in the absence of any contrary determination by a court of competent jurisdiction. If this Court should determine that the facts are contrary to those assumed by the Roman Tribunal then there is no dispute between the parties that the Roman orders can be adjusted in accordance with the rebus sic stantibus principle.
With respect to learned Senior Counsel for the husband, we are unable to discern what, if any, significance the Roman Tribunal attached to the B property. Nothing to which we have been referred supports the proposition that the Tribunal reached its determination on the basis asserted in this submission.
In support of his learned Senior Counsel’s contention that the Court’s only power was to “declare existing rights pursuant to section 78 of the Act” it was submitted on behalf of the husband that:
23.The only question in dispute between the present parties that has not been finally determined in Rome is the question of beneficial ownership of the [B] property or its proceeds. That outstanding question is emphatically not a question of who should own the property, but a question of who does own it. Hence, the power of this Court to declare existing rights pursuant to s 78 of the Act is plainly the only power that this Court need exercise for the purpose of determining the outstanding question.
In the alternative it was submitted that:
24.… even if that broad question is not strictly res judicata, the fact that the wife submitted to the judgment of the Roman Tribunal in respect of it, renders her attempt to re-agitate the question in this Court an abuse of process, and the power under s 78 is the only power that this Court should as a matter of discretion exercise.
Senior Counsel for the husband asserted that the trial Judge’s “observation at paragraph [51] of the reasons for judgment that ‘[t]he court has available to it all of the jurisdiction and powers conferred by the Family Law Act 1975’ is simply not correct. No occasion for the exercise of any power under s 79 can arise unless it is both lawful and, as a matter of discretion, proper for this Court to assume jurisdiction of a dispute to which s 79 powers may properly be applied.”
Again, it is convenient to record what her Honour said in that paragraph:
51.Mr [Pagliotti] has invoked the jurisdiction of this court and seeks relief pursuant to section 78 of the Act. Ms [Hartner] seeks relief pursuant to section 79. The court has available to it all of the jurisdiction and powers conferred by the Family Law Act 1975. It is then necessary to consider whether Ms [Hartner’s] application should be permanently stayed, on any basis argued on behalf of Mr [Pagliotti]. I am not sure why the same considerations would not apply to his application pursuant to section 78 but there was no such argument before me.
As learned Senior Counsel for the husband correctly reminded the Court, section 78 and section 79 confer power on the court once the Court’s jurisdiction is properly enlivened. Unless there is a “matrimonial cause” there is no jurisdiction to exercise. There is little doubt that both parties’ applications for this Court constitute matrimonial causes. That is so because both constitute “proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them” being proceedings “arising out of the marital relationship” (section 4(1)(ca)(i)) or “in relation to the divorce of the parties to that marriage, the annulment of that marriage or the legal separation of the parties to that marriage, being a divorce, annulment or legal separation effected in accordance with the law of an overseas jurisdiction” (section 4(1)(ca)(iii)).
Senior Counsel for the husband submitted that the Court could exercise jurisdiction under s 31(1)(d) rather than s 31(1)(a) but did not develop this argument. The claim was not agitated in reliance on the accrued or associated jurisdiction, but in any event in our view is a matrimonial cause even if the husband relied on s 4(1)(f) of the definition of matrimonial cause. We need say no more about this complaint.
In essence, though not perhaps so crudely expressed, the contention of Senior Counsel for the husband is that, in circumstances where the Court’s jurisdiction under Part VIII is enlivened, as it undoubtedly was in this case, one party can limit the powers available to the Court in the exercise of that jurisdiction.
Nothing to which we have been referred by senior Counsel for the husband supports such a conclusion. Commonsense renders that unsurprising. It would be extraordinary if, for example, a party seeking an order that a child reside with him or her pursuant to the parenting powers of the Court conferred by Part VII of the Act could successfully prevent the other party to the proceedings seeking other kinds of parenting orders pursuant to Part VII of the Act.
The Court referred counsel for the parties to the decision of Good v Good (1982) FLC 91-249; in which the Full Court held that, the husband having made an application pursuant to section 78 of the Act, which proceedings constituted a matrimonial cause within section 41(ca) of the Act as it then was, it was open to either party to seek relief, or amend to seek relief pursuant to section 79 of the Act.
Learned Senior Counsel for the husband suggested that Good (supra) was probably distinguishable from the present case insofar in Good as there had not been a previous determination of the issues contrasted with this case which he suggested the Roman Tribunal had determined by its judgment of 11 January 2008. Given that we have rejected the husband’s contention that the determination of the Roman Tribunal constituted a res judicata estopping the wife from prosecuting her section 79 application, Good is not distinguishable on the basis asserted by Senior Counsel for the husband.
In our view, once, as clearly it was in this case, the Court’s jurisdiction under section 39 was enlivened to determine a matrimonial cause, it was open to the parties to seek relief pursuant to section 78 and/or section 79 of the Act. Though not present here, there may be discretionary or other reasons for not exercising the jurisdiction, but that is a separate issue. In our view, her Honour correctly, for reasons which she detailed, concluded that, jurisdiction having been enlivened, the powers conferred by both section 78 and section 79 of the Act were able to and should be exercised by the Court. We accordingly do not accept that her Honour “conflated” power with jurisdiction.
It was finally submitted in support of these challenges that:
26.If the Roman Tribunal has already determined “the whole of the financial consequences of the breakdown of the parties’ marriage” then there is no dispute in respect of which the assumption of such jurisdiction would be proper or (it is submitted) even lawful. The only question that the Roman Tribunal has not conclusively determined is a dispute as to the vested beneficial ownership of a specific item of property situate in Australia. That is not a dispute to which any power the exercise of which is required to be guided by the considerations identified in s 79(4) and s 75(2) of the Act may properly be applied. But it is the only dispute of which this Court may, in the face of the decision of the Roman Tribunal, properly assume jurisdiction.
Although perhaps not expressly raised by the submission, the question of how the Court’s powers under section 79 might properly be exercised does arise for consideration in the light of a number of passages in the expert evidence to which we have been referred.
Without expressing, or needing to express a concluded view, the nature of “maintenance” proceedings under Italian law, and matters which appear to have been influential in the Roman Tribunal’s determination of 11 January 2008, including the Tribunal’s consideration of the parties’ respective incomes, and property including property held in both individual and common ownership, do have potential significance for this Court in the exercise of the power conferred by section 79 of the Act.
In the context of discussing the recognition in Italy of an order of an Australian Court Professor Ruffini said:
98.On the other hand, different conclusions would be reached if the orders of the Australian court were aimed at regulating the financial arrangements between the spouses and were absolutely independent from the obligations to pay maintenance or provide alimony as a result of the marriage, i.e. in the case where the delivery of such orders does not rule out the obligation of each spouse to provide support, in the case of need, to the other spouse. In that case, the compatibility of the orders of the Australian court could indeed be compatible [sic] with those of the Italian court and the resulting satisfaction of the requirement mentioned under letter f), article 64 of Law No. 218/95, subject to the other aspects examined in connection with the first query.
Whilst, for reasons which we have articulated, we do not accept that the entitlements of the parties with respect to the B property must be determined by reference to section 78, and not section 79 of the Act, the judgment of the Roman Tribunal, the provisions of Italian law to which we have been referred, the expert evidence of Professor Ruffini we have set out above and commonsense suggest that, in the circumstances of this case, the exercise of the discretionary powers conferred by section 79 may, in this case, be circumvented in ways which would be inappropriate in other cases.
Although we are unable to accept the broad thrust of the submissions of learned Senior Counsel for the husband as to the availability of the power conferred by section 79 of the Act, there is logical force, reinforced by the expert opinion evidence of Professor Ruffini, that the utility of an Australian Court in the exercise of power under section 79 considering, or revisiting, a number of issues potentially arising pursuant to section 75(2) would be questionable. Beyond recording the need for caution in relation to such matters, we need do no more than record that we do not find these proposed challenges to have substance.
The clearly inappropriate forum and abuse of power challenges
Proposed Grounds 2 and 3 were argued conjointly under the heading “Clearly inappropriate forum and abuse of power”. We have earlier set out the terms of proposed Ground 2. Proposed Ground 3 provided:
3.Further, or alternatively, having so found the primary judge erred in declining to order that the wife’s application under section 79 be permanently stayed on the ground that its prosecution is oppressive and vexatious having regard to the principles expressed in Henry (above).
On behalf of the husband it was contended that:
30.Her Honour sidestepped the preponderance of evidence that any judgment in the wife’s Australian proceedings would be unenforceable in Italy on the basis that the potential availability of the interest claimed in the [B] property meant that, even if the judgment were indeed unenforceable in Italy, the orders sought by the wife would not be wholly futile [Paragraph 54 (Appeal Book Vol 5 page 31)].
At the outset, and with all due respect to learned Senior Counsel for the husband, we observe that it is difficult to see how this Court could be a “clearly inappropriate forum” in which the dispute relating to the B property could be determined when it is acknowledged that it is the only Court in which that dispute could be determined.
Whilst the issue of enforceability assumed significance before the trial Judge, we do not consider that it necessarily assumes such significance. Objectively, any order made by an Australian court, whether pursuant to section 78 or section 79, would be enforceable, and in force in this country on the evidence in this case.
In reality, the significance of any decision of an Australian Court, whether pursuant to section 78 or section 79, would be for an Italian court to determine within the context of what Australian law would know as “division of property”, if Italian law in fact recognises that concept or, as Italian law clearly does, within the concept of “maintenance” as that term is understood in Italian law.
Given that the Roman Tribunal could not alter the determination of an Australian Court of the parties’ entitlements, whether pursuant to section 78 or section 79 of the Act, “recognition” of the determination of Australian proceedings in the usual sense in which that term is understood could not become an issue. Quite simply, the Roman Tribunal could not change the Australian determination and it would be a matter over which the Italian courts could have no influence. Conversely, what significance the Australian determination had within the context of proceedings under Italian law would be entirely a matter for the Italian courts over which the Australian courts have no influence.
It is suggested in Senior Counsel’s submissions that the trial Judge “side-stepped” the preponderance of evidence that any judgment in the wife's Australian proceedings would be unenforceable in Italy. He disputed the trial Judge’s finding that the husband had conceded the jurisdiction of the Court under s 79 and submitted that the concession was that the wife’s application under s 79 was a “matrimonial cause”.
We have already considered and rejected Senior Counsel’s arguments in respect of jurisdiction and power. The trial Judge did consider the expert evidence on this topic, although she did not consider it necessary, in the exercise of her discretion, to make findings as to the prospects of success of enforcement in Italy of an Australian order, but rather found there was a “possibility of enforcement” (paragraph 31). Later in her reasons the trial Judge found the husband’s appearance to seek relief precluded him from relying on a conditional appearance and that he would be bound in personam and took into account any interest he may be awarded from the proceeds of sale of the B property would be property available to the wife against which to enforce any s 79 order. Thus her Honour concluded the making of an order under s 79 would not be, as asserted on the husband's behalf “largely futile”. We discern no error in the exercise of discretion by her Honour in so concluding.
On behalf of the husband it was complained that “the effect, and manifest purpose, of the wife’s Australian proceedings is to sidestep any inquiry as to what the beneficial interests in the [B] property or its proceeds actually are, by subsuming that inquiry within the wider question of how, regardless of the vested rights of the parties, their respective financial positions ought to be adjusted as a consequence of the breakdown of their marriage.”
With respect to learned Senior Counsel for the husband, we do not accept, whatever her motivation, that the wife could “side-step”, or otherwise avoid any of the matters to which reference has been made.
As is clear, section 79 proceedings essentially relate to contributions, and, to the extent that they are relevant, the provisions of section 75(2) of the Act. Over-arching those provisions is the requirement of justice and equity imposed by s 79(2). As we have earlier intimated, in the circumstances of this case, particularly where, in Italian proceedings in which both parties willingly participated, and which commenced years prior to any litigation in this country, “maintenance” rights of the parties have been determined, and are capable of being re-determined, any adjustment to contribution based entitlements pursuant to section 75(2) of the Act may, as a matter of discretion, be held to be inappropriate. Even if an Australian Court did adjust the respective financial positions of the parties in the manner asserted by learned Senior Counsel for the husband, that would be a matter to which Italian courts could have regard in any proceedings to vary the current “maintenance” orders or, if Italian law provides for such proceedings, in proceedings for division of the parties’ assets.
Without referring to them in detail, the submissions (paragraph 32 and 33) in further support of these challenges, if successful, would in our view deprive the Court of jurisdiction to exercise the power conferred by section 78 of the Act upon which the husband’s claim depends.
Nor can we accept that, if the Court has “jurisdiction to adjust compulsorily any part of the financial arrangements between the present parties then it necessarily has also the jurisdiction, and under Australian law the duty, to make that adjustment a final one on the basis of a complete consideration of all the parties’ assets in all parts of the world”.
In some cases whilst the Court may have the “jurisdiction” to act as Senior Counsel for the husband describes, it is improbable that the Court would exercise its powers to do so in that manner in a case such as this. It is quite clear that the Roman Tribunal determined “maintenance” proceedings between the parties in accordance with Italian law. It expressly declined, for reasons which it gave, to purport to determine the beneficial entitlements of the parties to B, deferring to the Australian court in which that issue was being litigated.
For an Australian court to determine the entitlements of the parties to B pursuant to the power conferred by section 79 would, subject to the possible limitations which we have suggested, in our view be entirely “in accordance with the established understanding of the requirements of international comity”.
With respect to learned Senior Counsel for the husband, the balance of the assertions in support of these challenges, if accepted, would in our view arguably operate equally effectively to render Australia a clearly inappropriate forum for the husband’s claim under section 78 as for that of the wife under section 79.
Nor can we accept the submission on behalf of the husband that:
40.…even if litigation as to the title to one Australian asset at some further cost to the parties were inevitable, its inevitability would not be a justification for permitting re-litigation, at even greater cost to the parties, of the entirety of the financial consequences of the breakdown of the parties’ marriage. …
As we have earlier indicated, we do not accept that, whatever the wife might contend, a judge hearing the wife’s section 79 application would in the circumstances of this case, and mindful of the determination of the Roman Tribunal, the nature of “maintenance” in Italian law and the provisions of Italian matrimonial law, with expert guidance as to its meaning and effect, automatically revisit, or allow to be re-visited, issues which are the subject of determination by the Roman Tribunal or capable of being the subject of further determination by that Tribunal.
The beneficial ownership of the B property challenge
It remains to consider proposed Ground 5. That ground provided:
5.The primary judge erred in finding (in paragraph [59] of her reasons) that the wife’s application under section 79 was not brought in an inappropriate forum by reason of the fact that the husband has claimed a declaration as to the beneficial ownership of the proceeds of the sale of the [B] property under section 78.
It was submitted in support of this challenge that:
27.Contrary to what was held by her Honour (at paragraph [65] of the reasons for judgment) the question of the beneficial ownership of the [B] property or its proceeds is not a question that is raised “by necessary implication” in the wife’s Australian proceedings. If the wife genuinely wishes to have that question determined she need do no more than file in this Court a response to the husband’s Australian proceedings. Prior to the transfer of the husband’s Australian proceedings to this Court, if the wife had wished to resolve the question of beneficial ownership of the [B] property she could have brought that question to a prompt resolution by doing no more than filing (as in fact she did) a defence to the husband’s equity proceedings.
It is to be remembered that the husband’s application in this Court arose from a consensual transfer pursuant to s 5(1) of the cross vesting legislation of the husband’s original claim in the Equity Division of the Supreme Court of New South Wales and, consequent upon its transfer to this Court, the husband’s necessary amendment to seek relief pursuant to section 78 of the Act.
We perceive that the trial Judge did not err by recording as she did in paragraph 65 of her judgment:
65.It could not be considered unreasonable that the issue of beneficial ownership of the [B] property, or the proceeds of its sale, was not raised in the Italian proceedings. As noted, the Roman Tribunal lacked jurisdiction to determine that question. That issue is raised in the Australian proceedings directly by Mr [Pagliotti] and, by necessary implication by Ms [Hartner]. In other words, it was not open to either party to agitate this issue in the Italian proceedings.
It was further submitted by Senior Counsel for the husband:
28.In fact, the wife’s Australian proceedings are calculated precisely to avoid having any Court determine the question of beneficial ownership of the [B] property. It is certainly true that if the relief claimed in the wife’s Australian proceedings were granted by this Court the wife would retain 100% of the legal title to the proceeds of the [B] property. But her 100% legal title is not in issue. What the husband’s Australian proceeding has put in issue is whether or not the legal title correctly reflects the beneficial interests of the parties in that particular item of property. The wife’s Australian proceedings seek, not to have this outstanding question judicially determined, but to sidestep it entirely with a claim that, regardless of whether the legal and beneficial interests do correspond, they should correspond and this Court should make an order necessary to effectuate that claim. In other words, the wife asks this Court, not to determine the only question in respect of which, in the face of the judgment of the Roman Tribunal, it may properly assume jurisdiction, but rather to treat that question as irrelevant and assume jurisdiction of a much wider dispute in respect of which its adjustment powers under s 79 of the Act would be enlivened.
With respect to learned Senior Counsel for the husband, proceedings pursuant to section 79 of the Act involve the determination of the beneficial ownership of the B property, whatever the wife’s proceedings are “calculated” to avoid. Nothing emerging from this submission advances the husband’s application.
The application of Italian law to the proceedings in Australia.
Although not the subject of a specific proposed ground of appeal, learned Senior Counsel for the husband submitted that his client’s section 78 application with respect to the B property would be determined according to Italian law as if it were an Italian asset held by the parties in Italy. Given our conclusion that the Court’s powers with respect to the B property are not limited to section 78 of the Act, and encompass section 79 of the Act, it is probably unnecessary to deal with this contention.
We record however that nothing to which we have been referred provides support for Senior Counsel’s proposition. It would be surprising if an Australian court determining title to domestic real estate would do so according to the laws of a another country, particularly in circumstances where that country has expressly disavowed any entitlement to seek to determine that issue.
Learned Senior Counsel for the husband’s proposition is inconsistent with the decision in British South Africa Co v Companhia de Mocambique [1893] AC 602 (“Mocambiquie Rule case”) which is regarded as setting down the modern rule denying jurisdiction in respect of title to, or possession of, land situated within a foreign jurisdiction. The Mocambiquie Rule case is “based on the sensible principle that only the court of the place where the land is situated can effectively enforce an order as to title and/or possession” (Nygh, P. E., Conflict of Laws in Australia, 7th ed., Butterworths, Sydney, 2002 at [7.31]). The Mocambiquie Rule case was approved by the High Court of Australia in Potter v Broken Hill Pty Co Ltd (1906) 3 CLR 479. Whether mindful of that decision or not, the determination of the Roman Tribunal is consistent with the “Rule” and its rationale.
This proposed challenge lacks substance.
Conclusion
No proposed ground of appeal having been established, neither of the bases for granting leave to appeal and/or allowing the husband’s proposed appeal has been established. The application will accordingly be dismissed.
Costs
It was fairly, and sensibly in our view, conceded by learned Senior Counsel for the husband that if his client’s application failed the wife should be awarded her costs of the application and we will so order.
I certify that the preceding one hundred and eighty four (184) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 6 February 2009
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