Ruane and Bachmann-Ruane and Ors (Accrued Jurisdiction)
[2012] FamCA 369
•22 May 2012
FAMILY COURT OF AUSTRALIA
| RUANE & BACHMANN-RUANE AND ORS (ACCRUED JURISDICTION) | [2012] FamCA 369 |
| FAMILY LAW – JURISDICTION – accrued jurisdiction – where a financial agreement entered into by the husband and wife was found to be not binding within the meaning of s 90G – where the wife now seeks damages for negligence and/or breach of contract and/or breach of fiduciary duty against the second respondent solicitors and third respondent counsel who advised her with respect to the agreement – whether this Court has the jurisdiction to hear the wife’s claims against the solicitors and counsel – consideration of the scope of the Court’s accrued jurisdiction – whether the claims are part of a single justiciable controversy – where the facts and circumstances relevant to whether the agreement was “binding” are directly relevant to establishing negligence and/or breach of contract and/or breach of fiduciary duty – where there is a common substratum of facts – where the Court has accrued jurisdiction to hear the wife’s claims against the solicitors and counsel. |
| Family Law Act 1975 (Cth) |
| Australian Securities and Investment Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 Justice Allsop ‘Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002’ (2002) 23 Australian Bar Review 29 |
| APPLICANT: | Mr Ruane |
| RESPONDENT: | Ms Bachmann-Ruane |
| SECOND RESPONDENT: | F Firm |
| THIRD RESPONDENT: | Mr Curtis |
| FILE NUMBER: | SYC | 1991 | of | 2009 |
| DATE DELIVERED: | 22 May 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | 5 December 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Shand |
| SOLICITOR FOR THE APPLICANT: | Slater and Gordon |
| COUNSEL FOR THE RESPONDENT: | Mr North SC with Dr Ingleby |
| SOLICITOR FOR THE RESPONDENT: | Gadens Lawyers |
| COUNSEL FOR THE SECOND RESPONDENT: | Mr Williams with Mr Fary |
| SOLICITOR FOR THE SECOND RESPONDENT: | Wotton and Kearney |
| COUNSEL FOR THE THIRD RESPONDENT: | Ms Rozner |
| SOLICITOR FOR THE THIRD RESPONDENT: | Norton Rose Australia |
Orders
IT IS ORDERED:
That the Application in a Case filed 11 May 2011 be dismissed.
That this matter be listed before a Registrar or Cronin J as Cronin J may direct at a date and time to be advised for the making of all directions necessary for its further progress.
Any application for costs by either party in relation to this application be made by way of written submissions, within 21 days of the date of these orders, including a precise minute of the order/s sought being forwarded via e-mail to …@familycourt.gov.au and contemporaneously sent to the legal practitioners for the other party, with such submissions to indicate whether that party agrees with any application for costs being dealt with on the basis of those submissions in chambers without the necessity of further appearance.
Should either or both parties require oral submissions in respect of any application for costs they be listed before Murphy J by way of video or telephone link at a date and time to be advised.
In the event that the parties reach agreement about any orders or directions to be made in respect of these proceedings, they be at liberty to communicate that agreement, via an agreed joint e-mail communication, to …@familycourt.gov.au in which event, orders or directions as the case may be shall, if appropriate, be made in chambers without the necessity of further appearance.
IT IS FURTHER ORDERED
So as to remove doubt:
(a)The Application in a Case filed by the Wife on 27 May 2011 is dismissed;
(b)The Application in a Case filed by the Husband on 2 February 2010 is adjourned for the fixing of a date for hearing.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Ruane & Bachmann-Ruane (Accrued Jurisdiction) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: SYC1991/2009
| Mr Ruane |
Applicant
And
| Ms Bachmann-Ruane |
Respondent
And
| F Firm |
2nd Respondent
And
| Mr Curtis |
3rd Respondent
REASONS FOR JUDGMENT
These proceedings commenced in June 2009 by way of Initiating Application filed by the husband seeking orders effecting a property settlement between him and the wife. A live issue in those proceedings was the validity of a s 90C financial agreement entered into between the parties following separation. The husband sought to have the agreement set aside; the wife resisted the application.
The issue of the validity of the agreement was complicated somewhat by the, then imminent, amendments to the Family Law Act 1975 (Cth) (“the Act”). On the eve of the delivery of the substantive judgment, the wife filed an application seeking to reopen the argument about the validity of the financial agreement in light of, inter alia, those impending amendments. Cronin J received submissions from the parties regarding the effect, if any, of the amendments.
Ultimately, his Honour dismissed the wife’s application to reopen and found, in the substantive proceedings, that the agreement was not binding as a result of non-compliance with s 90G. In particular, Cronin J found the certificate for the husband, which was signed by an English lawyer, was not signed by a “legal practitioner” as that term is used in s 90G[1]. Cronin J subsequently made an order that the wife pay the husband’s costs.
[1] Ruane & Bachmann-Ruane [2009] FamCA 1100 at [70] – [83].
In the wife’s Response to the husband’s Initiating Application filed 4 August 2009, the wife sought alternative orders that the second respondent law firm, who had been retained by the wife to prepare the agreement:
a)Pay the Wife’s costs of and incidental to the Response;
b)Indemnify the Wife in relation to any loss caused by the Husband’s application; and
c)Alternatively, pay to the Wife damages for breach of contract and/or negligence together with interest and costs.
These orders were restated by the wife in two Amended Responses filed 13 August 2009 and 3 March 2010. In a further Amended Response filed by the wife on 16 May 2011, the wife joined Mr Curtis as the third respondent; The third respondent had been retained by the second respondent to provide advice to the wife regarding the agreement. The wife extended the orders previously sought against the second respondent to the third respondent. The wife annexed to her 16 May 2011 Response, a Statement of Claim against the second and third respondents.
The wife relies on the accrued jurisdiction of the Family Court to bring her claim against both the second and third respondents. The second and third respondents each resist the orders sought by the wife on the basis that the Family Court lacks the jurisdiction to make those orders.
What is centrally at issue in the current proceedings, then, is the nature, or ambit, of this Court’s accrued jurisdiction and, in turn, whether that accrued jurisdiction encompasses the facts of this case.
The husband did not wish to be heard in these proceedings and was granted leave to withdraw. As the wife is the applicant for the current relief, for convenience I refer to her as such in these reasons.
The Wife’s Statement of Claim
In the Statement of Claim annexed to the wife’s Response (filed 16 May 2011), the wife claims that:
24.In breach of the [second respondent’s] retainer [with the wife] and/or [the second respondent’s] duty of care and/or [the second respondent’s] fiduciary duty, the [second respondent]:
(a)failed to advise [the wife] to ensure [the husband] obtains a Certificate of Independent Legal Advice from an Australian Lawyer;
(b)failed to advise [the wife] to ensure [the husband] executed the Binding Financial Agreement before an Australian lawyer;
(c)failed to advise [the wife] to ensure that [the husband] executed the Binding Financial Agreement in Australia;
(d)failed to cease to act for [the wife] and/or [the wife] and [husband] as at July 2008 when…[the second respondent] was in a position of conflict of interest and continuing to act for [the wife] and/or [the wife] and [the husband];
(e)failing to have a solicitor who was not in a position of conflict provide the Certificate of Independent Legal Advice in relation to [the wife] and the Binding Financial Agreement;
(f)failing, upon being given a copy of the executed Binding Financial Agreement on 24 November 2008, to advise [the wife] that:
(i)the Binding Financial Agreement was not binding because the Certificate of Independent Legal Advice was not provided by an Australian Lawyer; and
(ii)[the wife] should have [the husband] execute a Binding Financial Agreement again and provide a Certificate of Independent Legal Advice by an Australian Lawyer.
25.As at 26 August 2008 [the third respondent] knew or ought to have known:
(a)as provided by s 90G of the Family Law Act 1975 for the Binding Financial Agreement to be binding on [the wife] and [the husband], the Certificate of Independent Legal Advice provided in respect of [the husband] must be executed by an Australian lawyer;
(b)that the Certificate of Independent Legal Advice provided in respect of [the wife] and [the husband] should be provided by an Australian lawyer who does not suffer a conflict of interest between acting for either [the wife] or [the husband].
(c)that if the Binding Financial Agreement is signed by [the husband] without a Certificate of Independent Legal Advice or Certificate of Independent Legal Advice purportedly given by a lawyer who is not an Australian lawyer, this would render the Binding Financial Agreement non-binding on [the wife] and [the husband];
(d)that [the wife] was intending on delivering the Binding Financial Agreement to [the husband] in London and having him execute the document in London.
…
AND [THE WIFE] CLAIMS THE FOLLOWING RELIEF AGAINST [THE SECOND RESPONDENT]
A.Damages;
B.Alternatively equitable compensation;
C.Disgorge all fees previously paid to [the second respondent] in relation to the Family Law Matters, property settlement and the Binding Financial Agreement;
D.Interest;
E.Costs;
F.Such further or other order or orders as the Court deems appropriate.
AND [THE WIFE] CLAIMS THE FOLLOWING RELIEF AGAINST [THE THIRD RESPONDENT]
G.Damages;
H.Alternatively equitable compensation;
I.Disgorge all fees previously paid to [the third respondent];
J.Interest;
K.Costs.
The Arguments in this Case
The facts necessary to the determination of the instant dispute are essentially uncontroversial.
Counsel for each of the parties have all prepared careful and cogent submissions, supplemented by helpful oral submissions. It will be important to refer to each of those submissions in some detail as it will to the authorities referred to and analysed by counsel.
The positions of the second respondent and third respondent can be seen to be largely identical, although separate submissions were received from each. Counsel for the second respondent, Mr Williams, addressed most of the issues pertaining to each of the second and third respondents and Ms Rozner, counsel for the third respondent, adopted those submissions and made some additional submissions of her own. The arguments of each can, then, largely be dealt with together.
The Second Respondent’s “Reserved Position”
Counsel for the second respondent made what he called a “formal submission” which effectively “reserved his position” should this matter proceed on appeal and, in particular, proceed further than the Full Court of this Court. Counsel submitted that “Warby[2] is not correctly decided insofar as it finds that accrued jurisdiction is available to the Family Court in the same way as it is to the Federal Court”.
[2] Warby &Warby (2002) FLC 93-091.
In reserving his position in that way, counsel nevertheless acknowledged that the decision just referred to binds me insofar as it authoritatively determines, for the purposes of the proceedings before me, that accrued jurisdiction is “available to the Family Court in the same way as it is to the Federal Court”.[3] Should it be necessary for me to expressly so find, I record with respect that, in my view, this Court does indeed have accrued jurisdiction in the same manner in which the Federal Court has that jurisdiction.[4]
[3] Transcript, 5 December 2011, p 13, lines 24 – 25.
[4] I refer to, and with the greatest respect adopt, the reasoning of Brereton J in Valceski & Valceski (2007) FLC 93-312.
The Prior Determination by Cronin J
In relation to Cronin J’s determination that the financial agreement signed by each of the parties was not binding within the meaning of s 90G of the Act, counsel for the second respondent contends that:
It is not an essential part of our case that there has been a determination of the preliminary issue; in other words, [the] notion of abatement that my learned friend addressed your Honour on, we don’t suggest there is any legal significance to the question of accrued jurisdiction that arises from the fact that the preliminary issue has been determined.[5]
[5] Transcript, 5 December 2011, p 60, lines 31 – 35.
In my view, caution should attend the use of the expression “preliminary issue” or expressions like it in the context of the issue under discussion. The delineation of the matter in that manner, or into discrete “causes of action”, has potential ramifications for the determination of the issue at hand. For example, writing extra-curially, Allsop J has said:
It is not the cause of action or the causes of action brought by the plaintiff. A justiciable controversy is identifiable independently of proceedings brought for its determination. It is not characterised by the form of proceedings.…[6]
[6] Justice Allsop ‘Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002’ (2002) 23 Australian Bar Review 29 at 35, citing Fencott v Muller (1983) 152 CLR 570 at 603-8; Crouch v Commissioner for Railways (Qld) (1985) 159 CLR 22 at 37; Australian Securities and Investment Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559; Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 583-8.
That matter will be addressed further, later in these Reasons. Otherwise, the concession is, in my view, properly made. The determination by Cronin J does not bear on the issue at hand, although, as will be seen, the issues joined between the parties and the facts supporting them are, in my view, fundamental to ascertaining the “matter” with which these proceedings are concerned.
Discretion?
Counsel for the second respondent indicated that he was:
… not going to be submitting … that if [the Court] finds that there is jurisdiction, then as a matter of discretion it shouldn’t be exercised. We do, however, say that some of the Warby factors that were analysed in terms more to do with discretion remain important considerations in the inquiry as to jurisdiction.[7]
[7] Transcript, 5 December 2011, p 60, lines 43 – 46.
Again, I consider the concession there made to be both appropriate and correct. As the submission recognises, some of the so-called “Warby factors” to which reference will also be made below, might be seen to suggest the existence of such a discretion – at least as far as this Court’s jurisdiction is concerned.
Those statements, and statements to like effect, might be seen to emanate from the judgment of Barwick CJ in Philip Morris.[8] Similarly, the Full Federal Court in Johnson Tiles[9] held:
The discretionary character of the accrued jurisdiction was the subject of observation by Gummow and Hayne JJ in Re Wakim; Ex parte McNally when they noted the alignment of the processes for defining the accrued jurisdiction and for deciding whether or not to exercise it which had emerged from the joint judgment in Stack. Their Honours said:
“It is not clear what principles or criteria would inform the exercise of a discretion of this kind. It may be that the better view is that the references to “discretion” are not intended to convey more than that difficult questions of fact and degree will arise in such issues – questions about which reasonable minds may well differ. It is, however, not necessary to decide what is meant by the references to discretion in this context.”
As a matter of logic, it is an evaluative rather than discretionary approach which must be applied in determining the content of the court’s accrued jurisdiction. No doubt there is a functional, as distinct from conceptual, convergence as assessment of the scope of the jurisdiction will involve consideration of matters of convenience particularly when deciding whether the federal claim is to be regarded as a substantial part of the controversy … but as a matter of language the process of definition of the content of the jurisdiction logically precedes the discretion about whether to exercise the jurisdiction properly defined. And in my opinion that is how this court, consistently with the language used by the High Court should continue to treat discretion. In doing so, it would be bound to take the functional approach indicated in the judgments of the High Court to which reference has been made.
[8] Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd; United States Surgical Corp v Hospital Products International Pty Ltd (1981) 148 CLR 457 at 475.
[9]Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564 at [92] (French J, Beaumont & Finkelstein JJ agreeing). Citations omitted.
In Bergman[10] the Full Court of this Court said:
We observe here that it must now be accepted that once it is determined that accrued jurisdiction is available in a particular matter there is, at least as a general rule, no discretion not to exercise such jurisdiction.
[10] Bergman & Bergman (2009) FLC 93-395 at [27] citing Australian Securities and Investment Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559; Houghton v Arms (2006) 225 CLR 553.
In Houghton[11] the High Court held that:
The expression “accrued jurisdiction” appears in authorities including Fencott v Muller and Australian Securities and Investment Commission v Edensor Nominees Pty Ltd. In Edensor, the court saw no harm in the continued use of the term “accrued jurisdiction” provided that it be born in mind that, whilst there might be several claims made in litigation, there is but one “matter”, and the jurisdiction conferred with respect to the matter is not “discretionary” and ordinarily it is to be exercised by the court concerned.
[11]Houghton v Arms (2006) 225 CLR 553 at [27], per Gleeson CJ, Gummow, Hayne, Hayden and Crennan JJ.
In my respectful view, a suggestion that the exercise of accrued jurisdiction by this court is discretionary, save, perhaps, in rare or extraordinary circumstances, is not supported by the weight of authority.
Arguments Denying Accrued Jurisdiction in this Case
The central arguments raised by the second respondent might all be seen to be linked to an essential proposition that, even if, for the purposes of argument, it is accepted that this Court has accrued jurisdiction, it is of a narrow ambit. That narrow ambit arises, it is said, by reference to a number of specific matters.
The first is the limited ambit of the original jurisdiction of the Family Court. In that respect, the Federal Court is contrasted. It is said to be important that, in contra-distinction to this Court, the Federal Court is given original jurisdiction by a multiplicity of statutes. Secondly, and allied to that, it is said that the Federal Court has, as a result, a range of remedies available to it including, for example, the power to award damages. Again, a distinction is drawn with this Court. It is said, that in this Court there is no specific power to award damages and that the ambit of remedies available to this Court is narrow, and confined by one, or at least a very limited number, of statutes.
Thirdly, it is said that the specific conferrals of jurisdiction in “matrimonial causes”, insofar as they relate to a financial agreement, underscore the limited and narrow range of any accrued jurisdiction which this Court has. It is submitted:
… [S]ection 4 [of the Family Law Act1975 (Cth)] deals with the financial agreement but section 4B gives … jurisdiction in relation to third party proceedings to set aside part of the financial agreement. We submit that the limited nature of the third party jurisdiction granted in connection with financial agreements is relevant when considering whether or not, as part of the accrued jurisdiction, there should be something over and above that matter. In other words, Parliament has spoken as to the nature of the jurisdiction extending beyond the immediate parties to the marriage that can occur in relation to such matters.[12]
[12] Transcript, 5 December 2011, p 10, lines 40 – 46.
The oral submissions made on behalf of the second respondent in respect of the central propositions proceed:
… given that one is ultimately determining whether there is a single justiciable issue, one looks first at the nature of the jurisdiction expressly invested in the particular court, because it marks out the meets and bounds of what can conceivably be the judicial controversy. Given that the Family Court in … the context with which we are dealing, is talking about an adjustment of property interests as between husband and wife, the accrued jurisdiction is a narrow one because there will not be that many types of matters that are capable of being part of that single justiciable controversy.
…
… Because the ambit of the justiciable controversy with which the Family Court is concerned before one considers accrued jurisdiction is of itself limited and only relates to particular … causes … [u]ltimately, if one looks at it in terms of remedies it’s a useful way of looking at it. What is ultimately the court given jurisdiction to do, so far as the parties to the marriage is concerned in the property context to divide the property in a fair way according to the statute and according to the common law that’s grown up about it. Because in the type of issue with which we are concerned that is a relatively narrow field of inquiry, by definition one can’t have a very large number of width of matters that … can be considered to be part of that same justiciable controversy.
It’s different, for instance, if you’ve got a trade practices jurisdiction, a s 52 “Thou shalt not mislead or deceive”, one can readily understand how many matters could … come within a single justiciable controversy because at the heart of commercial disputes one frequently has that type of conduct albeit that … the facts surrounding that sort of conduct can also give rise to duties of care and considerations of that nature.[13]
[13] Transcript, 5 December 2011, p 20, line 33 – p 21, line 34.
The argument by the second respondent that the remedies available to the Court confines its accrued jurisdiction might be seen to receive some force from comments made by the Full Court of this court in Warby[14], in particular, for example, the last of the “factors” enumerated by the Full Court in that case. It is convenient to quote the well-known passage from that case here:
[14] Warby &Warby (2002) FLC 93-091.
The husband in his submissions has correctly identified from the authorities the matters appropriate to be taken into account in determining whether the Family Court of Australia will exercise its accrued jurisdiction. We agree those matters are the relevant indicia, criteria, factors and considerations. They are as follows:
1.What the parties have done;
2.The relationships between or among them;
3.The laws which attach rights or liabilities to their conduct and relationships;
4.Whether the claims are part of a single justiciable controversy and determining that question whether the claims are “attached” and not “severable” or “disparate”;
5.Whether the claims are non-severable from the matrimonial cause and arise out of a common sub-stratum of facts.
We consider that a court’s assessment of these matters will allow it to determine whether it should exercise its accrued jurisdiction. [15]
[15] Warby &Warby (2002) FLC 93-091at [90].
As has been seen, to the extent that this passage (or the decision more generally) is to be interpreted as being indicative of the Court possessing a broad discretion as to whether to exercise accrued jurisdiction, in my respectful view, the weight of authority is now to the contrary. For present purposes, however, it is the last of those “factors” which is said to add particular weight to the argument by the respondents (together with what was said at paragraph [70] of that decision).
Counsel for the second respondent submits that:
Ultimately, the Full Court in Warby found that the structure and form of the Act whilst not sufficient to mean that there was no accrued jurisdiction, still felt that it was relevant in terms of a consideration of its ambit.[16]
[16] Transcript, 5 December 2011, p 19, lines 20 – 22.
I am not persuaded that the decision of the Full Court in Warby[17] is to be interpreted in that manner. In my view, such an interpretation admits of a conclusion that the Full Court confuses jurisdiction and power; a conclusion I am not prepared to draw. As the High Court has pointed out, for example in Harris v Caladine[18] care should be taken not to confuse jurisdiction with power. For example, Toohey J held:
The distinction between jurisdiction and power is often blurred, particularly in the context of “inherent jurisdiction”. But the distinction may at times be important. Jurisdiction is the authority which a court has to decide the range of matters that can be litigated before it; in the exercise of that jurisdiction a court has powers expressly or impliedly conferred by the legislation governing the court and “such powers as are incidental and necessary to the exercise of the powers so conferred”. [19]
[17] Warby &Warby (2002) FLC 93-091.
[18] Harris v Caladine (1991) 172 CLR 84
[19] Harris v Caladine (1991) 172 CLR 84 at 136 citing Parsons v Martin (1984) 5 FCR 235 at 241; Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 630-631.
Secondly, the weight of authority – notably from the High Court – does not, in my view, admit of the conclusion sought to be drawn by counsel. In my view, the words of Gibbs J (as the former Chief Justice then was) in R v Ross-Jones[20] are particularly apposite:
Once a proceeding is within the jurisdiction of the Family Court, the power of that Court to make suitable orders for the disposition of the matter is very wide. It is hardly an exaggeration to say that if the Court has jurisdiction in the present case, it can make whatever orders it requires as appropriate, see s 34(1) and s 80(k) [of the Family Law Act1975 (Cth)]. Of course the fact that the Court has wide powers when exercising its jurisdiction does not mean that its jurisdiction is wide.
[20] R v Ross-Jones; Ex parte Beaumont (1979) 141 CLR 504 at 509.
Brereton J in Valceski[21] held:
It has also been suggested that, if the Family Court has an accrued jurisdiction it is a narrow one. With respect, it is difficult to understand what this means. The scope of the accrued jurisdiction depends upon the scope of the single justiciable controversy. If the same sub-stratum of facts gives rise to a wide range of disputes, some Federal and some not, they are all within the accrued jurisdiction…
…
… if a court has jurisdiction (by way of accrued jurisdiction) in a non-federal aspect of a matter, that carries with it the power to grant the appropriate remedies given by state law in that matter; one does not have to find the remedy within the Family Law Act (Cth)…And even if the power to grant appropriate remedies had to be found in the Court’s own governing statute, the Family Law Act (Cth), s 34, confers ample power to grant all appropriate remedies in a matter in which the Court has jurisdiction.
[21] Valceski & Valceski (2007) FLC 93-312 at [52], [54]. His Honour goes on to refer to the decision of the High Court in Australian Securities and Investment Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 and, in particular, references in that case to the power conferred by s 79 of Judiciary Act 1903 (Cth).
I am not persuaded that, as a matter of principle, it is correct to classify the Court’s accrued jurisdiction as “narrow” or, indeed, to apply any other such qualification. This Court has the accrued jurisdiction which it has in any “matter” by reference to the substratum of facts underlying the issues joined between the parties such that, by reference to those facts and issues, there can be seen to be a “single justiciable controversy”.
The submissions just outlined – central to the second respondent’s position in this case – do not, in my view, capture the essential nature of the accrued jurisdiction of this Court, nor, specifically, the nature of the justiciable controversy before the Court.
“Matters” and The Family Court’s Accrued Jurisdiction
It is plain that the jurisdiction given to this Court is not a jurisdiction in respect of “matrimonial causes”, but, rather, a jurisdiction in respect of “matters”.
Section 31(1)(a) of the Act provides, relevantly:
31(1) Jurisdiction is conferred on the Family Court with respect to:
(a)matters arising under this Act or under the repealed Act in respect of which matrimonial causes are instituted or continued under this Act…
“Matrimonial cause” is defined to include, relevantly:
matrimonial cause means:
…
(ca) proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them …
…
(eaa) without limiting any of the preceding paragraphs, proceedings with respect to a financial agreement that are between any combination of:
(i) the parties to that agreement;
…
(eab) third party proceedings (as defined in section 4A) to set aside a financial agreement;
…
Allsop J writes that the word “matter”:
… is a word basal to an understanding of Federal jurisdiction. The word has a wide meaning and is of particular relevance to understanding the width of Federal jurisdiction as exercised by any relevant court and to understanding what is referred to as the accrued jurisdiction of any Federal court, including the Federal Court.
The “matter” is the justiciable controversy between the actors to it comprised of the substratum of facts and claims representing or amounting to the disputed controversy between or amongst them. It is not the cause of action or the causes of action brought by the plaintiff. A justiciable controversy is identifiable independently of proceedings brought for its determination.[22]
[22] Allsop J, above n 3, p 36, citing Fencott v Muller (1983) 152 CLR 570; Australian Securities and Investment Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559; Hooper v Kirella (1999) 96 FCR 1 at [41] – [55]. Emphasis added.
His Honour continues:
As a general guide, the substantial commonality and interconnection of facts and legal issues is the basis for the identification of a matter. In any given case identifying the outer limit of the controversy may be a matter for judgment.[23]
[23] Allsop J, above n 3, p 36.
In opening his oral argument for the Applicant wife, Mr North SC quoted from Windeyer J in Felton[24]: “[t]he existence of federal jurisdiction depends upon the grant of an authority to adjudicate rather than upon the law to be applied or the subject of adjudication.” To the same effect, some 35 years later, in Valceski[25] Brereton J held:
When a federal law confers jurisdiction on a court in respect of a “matter” arising under the Constitution or a federal statute, the jurisdiction extends to authorise the determination of the whole “matter”. It has long been established that a matter is a “justiciable controversy”, the determination of which may involve both federal and state law.
[24] Felton v Mulligan (1971) 124 CLR 367 at 393.
[25] Valceski & Valceski (2007) FLC 93-312 at [38] citing Adam Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; Fencott v Muller (1983) 152 CLR 570; Stack v Coast Securities (No. 9) Pty Ltd (1983) 154 CLR 261; Smith & Smith (No. 2) (1985) FLC 91-604 at 79,893-894.
“Single Justiciable Controversy”
The extra-curial statements by Allsop J, the comments of Brereton J, and the (much-earlier) statement by Windeyer J are supported by recent High Court authority, for example in Fencott[26] and the later decision of Re Wakim[27].
[26] Fencott v Muller (1983) 152 CLR 570.
[27] Re Wakim; Ex parte McNally (1999) 198 CLR 511.
In the latter case Gummow and Hayne JJ held[28]:
The central task is to identify the justiciable controversy. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim.
In Fencott [(1983) 152 CLR 570 at 608 per Mason, Murphy, Brennan and Deane JJ] it was said that “in the end, it is a matter of impression and of practical judgment whether a non-Federal claim and a Federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.” The reference to “impression” and “practical judgment” cannot be understood, however, by stating a test that is to be applied. Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete. Necessarily, then, the question will have to be decided on limited information. But the question is not at large. What is a single controversy “depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships” [Fencott v Muller (1983) 152 CLR 570 at 608] there is but a single matter if different claims arise out of “common transactions and facts” or a “common sub-stratum of facts” [Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd; United States Surgical Corp v Hospital Products International Pty Ltd (1981) 148 CLR 457 at 512, per Mason J], notwithstanding that the facts upon which the claims depend “do not wholly coincide” [Fencott v Muller (1983) 152 CLR 570 at 607]. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other [Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd; United States Surgical Corp v Hospital Products International Pty Ltd (1981) 148 CLR 457 at 512] as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will render the other otiose or necessitate its determination.
[28] Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585 – 586.
Brereton J put it this way in Valceski[29]:
…The identification of the justiciable controversy was not to be determined only by the consideration of there being separate proceedings and different parties in the one court. The central task was to identify the justiciable controversy, which will ordinarily require close attention to the pleadings and the factual basis of each claim. In and since Re Wakim, an expansive view of the accrued jurisdiction has prevailed [see, for example, Cheers v Entercorp Financial Pty Ltd [1999] FCA 1475].
[29] Valceski & Valceski (2007) FLC 93-312 at [40].
By way of contradistinction, it has been held that there will not be a single justiciable controversy where the substratum of facts or transactions pertain to claims which are “completely disparate”, “completely separate and distinct” or “distinct and unrelated”.[30]
[30] See Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585.
Counsel for the second respondent, in reference to the statement by the High Court in Fencott[31] that a resolution of the question is “a matter of impression and of practical judgment”, submits that “…ultimately one does come to impression and judgment but when one comes to impression and judgment one starts from the proposition what is this court given express jurisdiction to do. Then one looks at what one drafts on to it as being part of that single justiciable issue[32].”
[31] Fencott v Muller (1983) 152 CLR 570 at 608.
[32] Transcript, 5 December 2011, p 21, line 45 – p 22, line 2. Emphasis added.
For reasons already advanced, that submission, and in particular the passage emphasised, points, in my view, to an erroneous view of the nature of the accrued jurisdiction possessed by this Court.
Allsop J writes under the heading “Accrued and Associated Jurisdiction”:
… “Accrued Jurisdiction” is that part of the matter which is not specifically Federal. It is probably a term best avoided. The whole matter is Federal if it arises under a Federal law. It is apt to mislead if one thinks of State or Common law jurisdiction clamping on to Federal jurisdiction. It is all Federal jurisdiction, if it is one controversy …[33]
[33] Allsop J, above n 3, p 47. Emphasis added.
In a similar vein, I consider that the exposition of “the controversy” by counsel for the second respondent is also erroneous in that it does not encapsulate the true ambit of the controversy and, as a result, the true ambit of the “substratum of facts” which informs the controversy.
Counsel expresses the controversy in a number of different ways:
The gravamen of our submissions … is that in the conventional language used in the authority it is not correct to describe a professional negligence case against a solicitor and barrister as part of a single justiciable controversy involving on the other hand an application for division of property between parties to a marriage. Nor it is appropriate to describe the professional negligence case as being attached to or inseparable from. Rather, it is severable or disparate from the property dispute between the parties to the marriage or using the third description that one sees in the authorities, “it is not part of the same matter”.[34]
…
… [T]he Federal core that we have, that is the essential family nature of … the jurisdiction is something that is like chalk and cheese from a claim for professional negligence. So when one is talking about severability, one bears in mind the core nature of the jurisdiction.[35]
[34] Transcript, 5 December 2011, p 9, lines 40 – 47.
[35] Transcript, 5 December 2011, p 14, line 45 – p 15, line 2.
Again, those two statements, expressed in that manner, are important. In my view, the statements substitute a description of the “causes of action” for an analysis of the underlying facts within the controversy and use the former rather than the latter to reach a conclusion about commonality.
Ms Rozner, counsel for the third respondent expresses a similar argument in this form.
… The task to be undertaken by the court in deciding the question of whether accrued jurisdiction should attract must be prefaced by an answer to the question of what is the single justiciable controversy before the court. Nowhere in their outline does the wife set out an exact formulation of that question. There are simply assertions that the question includes the issue of whether or not the binding financial agreement was enforceable. … the question of whether or not the binding financial agreement was enforceable is a question that forms part of the justiciable controversy and that justiciable controversy can only be an alteration or what the appropriate alteration in property interests between the husband and wife can be. And whilst, had the binding financial agreement between [sic] found to be enforceable it might have informed that primary matter.[36]
[36] Transcript, 5 December 2011, p 35, lines 33 – 44.
Mr North SC, counsel for the applicant, expresses “the controversy” in this way:
We say that there is a matter that encompasses both the proceedings under s 79 and the claims for relief brought by our client against the second and third respondents. The controversy might be described as follows:
Is the financial agreement between the husband and wife binding and enforceable and, if not, what rights and liabilities arise in consequence of it not being so binding in favour of either party as against the other or any other person, including those who advise with respect to it or drew it.[37]
[37] Transcript, 5 December 2011, p 40, lines 39 – 45.
Counsel for the second respondent contends in response:
… One can’t go and redefine the matter so that it’s a nice big long matter with many – my friend would call them limbs, the fact of many matters, not many matters but more than one matter in order to bring everything under the umbrella.[38]
[38] Transcript, 5 December 2011, p 62, lines 3 – 6.
It seems to me that the resolution of whether there is a single justiciable controversy does not depend (or at least does not solely depend) on a description of the controversy. Rather, a “single justiciable controversy” is the end result, or finding, emanating from conclusions drawn about whether the various facts joined in issue between the parties can be said to form a sufficiently common substratum of facts so as to be “interconnected” or “inseparable” rather than being “completely disparate” or “completely separate and distinct” or “distinct and unrelated”.
This Court is not, generally speaking, a court of pleadings and the expression “causes of action” can be used only loosely in respect of the matters with which it is concerned. In s 31 terms, the “matter” (or “matters”) arising from the matrimonial causes called in aid by each of the respective parties arise, as it seems to me, from a consideration of the various factual assertions and counter-assertions made by each.
The issues joined between these parties include: those that emanate from an agreement into which they each entered; whether that agreement is binding; if so, what rights and remedies as between them flow from that agreement; and, if not, what rights and remedies flow from the agreement not being binding; and, consequently, those which might flow pursuant to Part VIII of the Act.
In looking at those issues, the words of the majority in Fencott[39] have particular resonance:
A judicial power which is not exercised to determine the whole of a controversy is, generally speaking, not appropriately and conveniently exercised. Not appropriately, because the controversy is not quelled; not conveniently because the parties – the principle beneficiaries of the exercise of judicial power – must litigate anew to have the outstanding questions and issues determined. The reference by Barwick CJ in Philip Morris to what is necessary or convenient for the resolution of a federal claim is perhaps too restricted a limitation on the ambit of “matter”. Such a test would be unexceptionable if the primary purpose of the exercise of federal judicial power in a s 76(ii) matter where the judicial administration of the federal law; that is, if the primary purpose were to ensure that the federal law applicable to a particular claim was correctly applied in resolving it. But the primary purpose of exercising judicial power is not the maintenance of legal principle: that is incidental to the determination of the dispute in hand.
The power judicially to determine the whole of a dispute is inconsistent with a limitation which would restrict the court to resolving only the federal claim and what is necessary for that purpose. To adopt a more restrictive approach to the ascertainment of the ambit of a matter is to ensure that the obstacles of arid jurisdictional dispute will beset the path of a party who must invoke federal jurisdiction, especially federal jurisdiction exclusively vested in a federal court pursuant to s 77(ii). The judicial ascertainment of facts in a particular controversy would be bedevilled by the possibility of divergent findings or by unseemly attempts to secure a first finding from one court rather than other. The judicial award of effective remedies in resolution of a controversy would be impaired, especially in cases where remedies are discretionary or reciprocal. The judicial power of the Commonwealth would at once prove insufficient to accomplish its purpose and productive of inefficiency in the exercise of the judicial power of the states. These consequences cannot be accepted unless they follow from the language of the constitution, and they do not. As Mason J said in Philip Morris:
In deciding whether to attribute either a broad or a narrow content to “matter”, we should take into account that the adoption of the broad meaning will lead to the speedier determination of entire controversies between parties without undue duplication of proceedings. Perhaps the adoption of this view will have some adverse consequences for State courts, though this is by no means self-evident, but even if this be so, it is a consideration which is secondary to the interests of litigants. This circumstance is an additional reason for giving the word [“matter”] a broad rather than a narrow meaning.
[39] Fencott v Muller (1983) 152 CLR 570 at 608 – 609, per Mason, Murphy, Brennan and Deane JJ. References omitted.
“Common Sub-stratum of Facts”?
There appears to me to be an underlying premise, or “theme” to the contentions by the respondents. It is exemplified by the reference to “drafts on to” in the passage from the submissions earlier quoted. The premise, or “theme”, appears to me to commence with a classification of the “causes of action”, as distinct from commencing with an analysis of the facts which underlie the issues joined between the parties. Yet, in my judgment, it is precisely this cart before this horse that the High Court seeks to expose in the authorities earlier referred to and which is exemplified in the passage from Fencott v Muller [40] earlier referred to.
[40] Fencott v Muller (1983) 152 CLR 570 at 608 – 609.
A combination of facts may lead to different causes of action, but the inquiry in respect of accrued jurisdiction is directed to the facts independent, as it were, of the causes of action. If the requisite commonality or “substratum” of facts exists – judged as a matter of “impression and practical judgment”[41] – the Court has jurisdiction however disparate the causes of action may appear by reference to their description.
[41] Fencott v Muller (1983) 152 CLR 570 at 608.
The “matter” in the instant case can be seen as comprising a number of matrimonial causes instituted by the husband and wife. As has been pointed out, the second respondent concedes that the determination of a statutory question (whether the parties’ financial agreement is “binding” within the meaning of s 90G) in respect of one matrimonial cause does not preclude a finding that this Court has the jurisdiction asserted by the applicant wife.
The “matter” consists, factually, of the facts and circumstances relevant to the agreement and its formation and aftermath, and, in particular, for example what was said or not said, or done or not done, by the parties and their legal advisers in and about that agreement. The “matter” concerns facts relevant to a determination of whether the financial agreement is “binding”. Those same facts plainly underpin the s 79 claim; they are determinative of its existence.[42]
[42] Section 71A, Family Law Act 1975 (Cth).
It is argued that, until the s 79 proceedings are “completed”, damage cannot be ascertained and that the damages to be received by the aggrieved party (here the wife) are, until received, an inchoate right and therefore not “property” within the meaning of the Act and s 79 in particular. Ms Rozner submits that “the court does not have power to make the damages award against the third respondent” because, once the husband’s s 79 application has been determined, “the questions remaining to be determined on the wife’s claims against the second and third respondents in the proceedings no longer comprise a matrimonial cause”.
As I have earlier sought to make plain, in my view the latter part of that submission begs the question; if the Court has accrued jurisdiction, it arises because the underlying facts constitute the “matter”. If so, there is no impediment to all questions being determined together (or, indeed as separate questions in the same proceedings). As an example, the Court has (in broad terms) no power to vary or amend substantively a s 79 order unless a relevant provision of s 79A is satisfied, but that is no bar to hearing the “threshold question” under the latter section and the consequential s 79 claim together. Indeed, authority suggests that this should usually occur.[43]
[43] Oastler & Oastler (1993) FLC 92-390 at 80,006.
I do not accept that the facts and circumstances pertaining to the issue of the damages potentially awarded to the “aggrieved party” (here the wife) are, insofar as they coincide with the s 79 claim, related only to the issue of whether those damages are “property” for the purposes of that section. Further, I reject the submission that the damages sought by the wife against the third respondent “are personal to her and will not lead to a further adjustment of property rights between her and the husband”. The ascertainment of the “property of the parties or either of them” is but a part of what is required of the Court by s 79. For example, the Court is also mandatorily required to consider s 79(4)(e), that is, “the matters referred to in s 75(2) so far as they are relevant”. The receipt, and the amount, of damages paid or payable to the wife from a party not the husband is, in my view, directly relevant to s 79(4)(e).
The Court is obliged to consider the relevant s 75(2) matters consequent upon an assessment of contributions. Once that assessment of contributions is made, it falls to consider, relevantly, for example, “the income, property and financial resources of each of the parties…”[44] and, “any [other] fact or circumstance…”.[45] In the absence of a “potential or crystallised” amount of damages, the wife needs to meet her s 79 obligation as assessed from her own assets and resources (i.e. without recourse to any damages). The availability of funds through an award of damages, both generally and as a means of wholly or partially meeting any s 79 order, is, as it seems to me, strongly arguable as an important and directly relevant s 75(2)(o) consideration.
[44] Section 75(2)(b), Family Law Act 1975 (Cth).
[45] Section 75(2)(o), Family Law Act 1975 (Cth).
So, too, in my view, is the extent, if any, to which the parties may have altered their position in reliance upon the financial agreement being enforceable – and binding. Those facts and circumstances might be relevant not only to s 75(2)(o), but also to an earlier part of the s 79 inquiry. For example, the inquiry might embrace a consideration of the manner in which the nature, form and characteristics of contributions (of all types) that have (or have not) been made as a result of the assumption that the agreement would govern any future property and/or maintenance entitlement of the other party. Again, the position that existed with respect to the precursors of financial agreements (i.e. s 87 agreements) needs to be contrasted. In the case of the latter type of agreement, parties knew from at, or shortly after, the agreement was signed whether it could be relied upon because those agreements required Court approval which involved a Court decision that their terms were “proper”.
Further examples of the commonality of the facts to the issues joined between the parties can be seen by reference to how facts pertaining to the financial agreement and alleged breaches of contract or duty relating to it intersect with other parts of the process required of a Court by s 79.
The facts and circumstances directly relevant to whether the agreement is “binding” within the meaning of s 90G of the Act are directly relevant to the establishment of negligence (or breach of contract or fiduciary duty). If the agreement is binding it is difficult to see how negligence (or the other claims) is established; the facts and circumstances by which an agreement is not binding are the same facts and circumstances (or, at least, part of the same facts and circumstances) by which negligence, breach of contract or breach of fiduciary duty will be, potentially, established.
Central to a determination of whether the financial agreement is binding is its status as an enforceable contract.[46] The enforceability of such an agreement, its terms, and the circumstances in which it was negotiated and a bargain subsequently struck, are relevant to a proper consideration of the s 79 claim; they are, potentially, evidence of the parties’ own view as to what is just and equitable, and the reasons for them so concluding, which is relevant to the s 79 inquiry.[47] (By reason of the circumstance earlier referred to, the case for relevance is, in my view, stronger than in the case of a s 87 agreement where the Full Court has specifically held it to be so).[48]
[46] Senior v Anderson (2011) FLC 93-470 at [88] – [97], per Strickland J.
[47] Burgoyne & Burgoyne (1978) FLC 90-467 at 77,393; Candlish & Pratt (1980) FLC 90-819 at 75,170 – 75,171; Woodland & Todd (2005) FLC 93-217 at [38] – [39].
[48] Burgoyne & Burgoyne (1978) FLC 90-467 at 77,393; Candlish & Pratt (1980) FLC 90-819 at 75,170 – 75,171; Woodland & Todd (2005) FLC 93-217 at [38] – [39].
Finally, and importantly as it seems to me, it should not be forgotten that the inquiry as to accrued jurisdiction is, ultimately, directed to a question of justice; in my respectful view, that was the point being made by Mason J in Philip Morris.[49]
[49] Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd; United States Surgical Corp v Hospital Products International Pty Ltd (1981) 148 CLR 457 at 508-509.
Conclusion
In my view, the court in this case is seized of a “matter” in which, “notwithstanding that the facts upon which the claims depend do not wholly coincide”, those same facts and the issues to which they relate are sufficiently interlinked or intertwined such that it can be said that there is a common substratum of facts relevant to the issues joined.
In my view, notwithstanding the differences in the “causes of action”, there can be said to be “a single justiciable controversy” involving those parties.
Accordingly, in my judgment, this court has jurisdiction to hear and determine those claims.
There are no particular or extraordinary circumstances pertaining to this case such that it can be said that this court is permitted to, or should, decline jurisdiction.
Accordingly, in my judgment, this court should proceed to hear and determine the claims joined between the parties.
I order accordingly.
Delay
I recognise that it will be cold comfort to the parties should I seek to explain (but not excuse) the delay in the delivery of these Orders and Reasons by reference to the need to service North Queensland as the result of the retirement of a Judge, and the need to sit in other registries in Australia. Nevertheless I extend my apologies for the delay which I very much regret.
I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 22 May 2012.
Associate:
Date: 22 May 2012
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