Scozzari and Scozzari and Ors

[2014] FamCA 812

FAMILY COURT OF AUSTRALIA

SCOZZARI & SCOZZARI AND ORS [2014] FamCA 812

FAMILY LAW – JURISDICTION – Accrued – Where the Court has jurisdiction to continue to hear these proceedings – Where adequate notice has been given to third parties – Where the court may appropriately make a determination under accrued jurisdiction or part VIIIAA of the Act effecting the rights and interests of third parties.
FAMILY LAW – INJUNCTIONS – Rights of third parties – Where the Court does not have power to prevent a third party from continuing legal proceedings already commenced in a different court.
FAMILY LAW – COSTS – Discretion – Where each party will bear his or her own costs.

Family Law Act 1975 (Cth)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW)

Christie & Christie [2007] FamCA 125
Vella & Buchanan and Ors [2011] FamCA 483
Voth v Manildra Flour Mills Pty Ltd 1998 HCA 55 (1990) 171 CLR 538
Re Wakim (1999) 198 CLR 511

APPLICANT: Ms R Scozzari

RESPONDENT:

SECOND RESPONDENT:

THIRD RESPONDENT:

Mr Scozzari

Ms M Scozzari

Scozzari Pty Limited

FILE NUMBER: CAC 210 of 2013

DATE DELIVERED: 24 September 2014

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Faulks DCJ

HEARING DATE: 18 September 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wong

SOLICITOR FOR THE APPLICANT:	Farrar Gesini Dunn
SOLICITOR FOR THE RESPONDENT:	Ms Lyndon, Watts McCray

COUNSEL FOR THE SECOND AND THIRD

RESPONDENTS:  Mr Levet

SOLICITOR FOR THE SECOND AND THIRD

RESPONDENTS:  United Legal

Orders

1. The applicant wife’s application filed 16 June 2014 that the husband’s mother, Ms M Scozzari, and the company, Scozzari Pty Limited, be restrained from taking any further proceedings in the District Court and related matters is dismissed. 

2. The dispute between the applicant and the respondent about the division of property will proceed in the Family Court of Australia and as a consequence orders may be made pursuant to part VIIIAA of the Family Law Act 1975 and in particular under s 90AE in relation to the debt alleged to be due from the husband and the wife to Ms M Scozzari and or Scozzari Pty Limited. The determination of that issue may invoke the accrued jurisdiction of the Family Court of Australia.

3. Ms M Scozzari’s application for costs through her counsel Mr Levet is dismissed. 

IT IS NOTED that publication of this judgment by this Court under the pseudonym Scozzari & Scozzari and Ors 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 CANBERRA

FILE NUMBER: CAC 210 of 2013

Ms R Scozzari

Applicant

And

Mr Scozzari

Respondent

And

Ms M Scozzari
Second Respondent)

And

Scozzari Pty Limited
Third Respondent

REASONS FOR JUDGMENT

1. I indicated to the parties in Court what my decision was in relation to this matter and further indicated that if requested I would give written reasons for my decisions.  The request to provide those reasons was made. 

2. The proceedings before me were commenced by an Application in a Case filed on 16 June 2014.  The orders sought in those proceedings were as follows:

   Joining Parties

   1.That [Ms M Scozzari] be joined as the Second Respondent to these proceedings.

   2.That [Scozzari Pty Ltd] be joined as the Third Respondent to these proceedings.

   District Court Proceedings

   3.That, until further order, [Ms M Scozzari] be restrained from taking any further step in NSW District Court proceedings number [1], except for the purposes of staying or discontinuing those proceedings. 

   4.That, until further order, [Ms M Scozzari] be restrained from commencing any proceedings to recover any monies asserted to be owing to her by the Applicant or Respondent.

   5.That, until further order, [Scozzari Pty Ltd] be restrained from taking any further step in NSW District Court proceedings number [2], except to discontinue those proceedings.

   6.That, until further order, [Scozzari Pty Ltd] be restrained from commencing any proceedings to recover any monies asserted to be owing to it by the Applicant or Respondent.

   Costs

   7.That [Ms M Scozzari] and [Scozzari Pty Ltd] pay the Applicant’s costs of and incidental to this Application. 

3. The primary proceedings between the husband and the wife began in this Court with an Initiating Application filed by the wife on 19 April 2013.  In that application the wife sought certain orders in relation to property settlement and some child support departure orders.  An Amended Initiating Application was filed on 22 October 2013 in which property orders were still being sought and further orders relating to child support.  The primary orders in each case dealt with the payment by the respondent to the applicant of a lump sum and his indemnity of the applicant against both bank loans and also any “liability for any sum owing by the parties or either of them to the Respondent’s mother”.[1]  It is in relation to that later matter that the current proceedings arise. 

   [1] Amended Initiating Application filed 22 October 2013

4. When it became clear during the course of preliminary directions that the rights of third parties might be involved, notice was given by my order[2] to the second and third respondents, that is the mother of the respondent and a company associated with her, that there were proceedings before the Court in which Ms M Scozzari’s rights might be effected and that she should obtain independent legal advice as to “whether she ought, or would be otherwise well advised, to participate in these proceedings or to be joined as a party to these proceedings”. 

   [2] Order 8 - 5 November 2013

5. For a time the second respondent did participate, but then withdrew. 

6. It appears that she subsequently, in April 2014, commenced proceedings in the District Court effectively seeking payment of sums alleged to be due pursuant to an agreement of loan.  The company similarly claimed money allegedly lent.

7. The amounts involved are substantial and would have the effect, if the loans were to be proved as due and owing, of substantially if not completely eliminating the asset pool between the husband and wife for division.   In the course of proceedings before the Court, I drew the attention of counsel for each of the parties to the provisions of Part VIIIAA of the Family Law Act 1975, which were introduced in 2003, becoming operative in 2004.  Part VIIIAA provides that certain orders might be made pursuant to s 79 and s 114.  The relevant sections are set out as an appendix to this judgment.

8. Prior to the introduction of this part of the Act, the Family Court had in common with other Federal Courts, recognised that it could determine matters which were not covered by the jurisdiction of the Family Court in the exercise of its accrued jurisdiction.  In essence, a Federal Court might, if engaged on a federal matter, determine matters which were not within the jurisdiction of the Commonwealth of Australia, if the resolution of the matters under the law which was not of the Commonwealth was necessary to resolve the dispute which was under federal law.  This is the concept of a single justiciable dispute. 

9. Under the Jurisdiction of Courts (Cross-Vesting) Act (in this case relevantly of the Commonwealth and of the state of New South Wales) this Court could transfer to the Supreme Court of New South Wales the part of the dispute relating to family law to enable that Court to deal with both matters under that legislation.  Since the decision of ReWakim[3] however a similar transfer is not available from the State Court to the Federal Court. 

   [3] (1999) 198 CLR 511

10. In any event, in this matter as the proceedings about debt had been commenced in the District Court, even if I believed it was appropriate to do so, I could not transfer the Family Court proceedings to the District Court to be dealt with conjointly with the debt proceedings. 

11. By way of summary, the current interlocutory proceedings were designed to prevent the continuation of the proceedings in the District Court and to require in effect, that the issue about debt be resolved in this Court as part of the matrimonial proceedings under the accrued jurisdiction of the Family Court. 

12. Prior to 2003 an anti-suit injunction might have issued from the Federal Court in respect of state court proceedings either to prevent the commencement of proceedings or their continuation.[4]

    [4] Voth v. Manildra Flour Mills Pty Ltd 1998 HCA 55 (1990) 171 CLR 538

13. However, curiously when Part VIIIAA came into existence in 2003/2004, the wording of the Act, in s 90AF, provided that an injunction might issue to prevent the commencement of proceedings.  It would have been a simple matter for the legislature to have added “or continuation”.  It did not. 

14. In accordance with normal statutory interpretation, the plain wording of the Act ought to apply.  Any ambiguity might be resolved in accordance with a purposive approach to the legislation.  It was urged on me by counsel for the wife, that two of my colleagues at first instance interpreted s 90AF(1)(b) as including the continuation of proceedings.[5]

    [5] Christie & Christie [2007] FamCA 125 and Vella & Buchanan and Ors [2011] FamCA 483

15. Applying a purposive construction to s 90AF(1)(b) it could be seen that proceedings already commenced in one court before proceedings were commenced in another might not be appropriately interrupted by an injunction from the second court.  In this case however, the situation is reversed. The proceedings were commenced in the Family Court and the debt proceedings only subsequently commenced in the District Court. 

16. In any event, the legislature might be presumed only to overrule a common law doctrine if it does so explicitly.  The simplicity of adding the words “or continue” would suggest that the deliberate inclusion of the words “commencing legal proceedings” confirms that the legislature did not intend to allow an anti-suit injunction after the commencement of proceedings. 

17. For these reasons, in my opinion, notwithstanding the helpful and well-thought out submissions on behalf of the wife, this is not a matter in which an injunction should issue in relation to the District Court proceedings. 

18. That however, is but one half of the situation because it seems to me in any event that this Court can and should proceed to deal with the issue between the husband and wife, and possibly in the determination of those proceedings make orders either in the accrued jurisdiction of the Court or alternatively pursuant to Part VIIIAA of the Family Law Act1975.  I indicated as much to the parties in Court.  These proceedings could be brought on for finalisation before me in March 2015, which as I understand it is an advance of any likely hearing date for the proceedings in the District Court.

19. Both the husband’s mother and Scozzari Pty Ltd have adequate notice of these proceedings and cannot complain that they have not been afforded natural justice.  In the orders I made dismissing the application for the injunction I reiterated implicitly an invitation to each of Ms M Scozzari and the company to intervene in the proceedings. 

20. If they choose not to intervene and not to take part in the proceedings they are of course free to adopt such a course of action.  However, they cannot reasonably thereafter complain that the result might have been different if they were part of the proceedings.  Accordingly, in the orders I made I gave directions to enable the matter to be concluded in March 2015 and indicated specifically that if there were to be interventions on behalf of Ms M Scozzari or the company, that they were to be also bound by the same orders. 

21. Mr Levet, on behalf of the second and third respondents sought costs in the proceedings. I declined to make such an order. The application falls for consideration under s 117 of the Family Law Act 1975 which provides that the primary rule in relation to proceedings under the Family Law Act 1975 is that each party will bear his or her own costs. 

22. Notwithstanding that primary provision, if in proceedings under the Act the Court is of the opinion that there are circumstances that justify it in doing so, the Court may “subject to subsections (2A)… and the applicable Rules of Court, make such order as to costs… as the court considers just”.[6] 

    [6] S 117(2)

23. Section 117(2A) provides that the Court must mandatorily have regard to the financial circumstances of each of the parties to the proceedings. In this matter I have little information about the financial circumstances of the second and third respondents and no suggestion was made that such information might be put before me.

24. The Court is also obliged to consider whether either party is in receipt of legal aid.  I have no information that is so, but believe that is not the case in relation to any of the parties.

25. In relation to the conduct of the proceedings, the proceedings were brought on with expedition and without undue preliminaries or unreasonable argument. 

26. Section 117(2A)(d) is not applicable.

27. It might be argued that the applicant was wholly unsuccessful in the proceedings because she sought an injunction and that application was refused.  I indicated to Mr Levet during the course of his submissions about this matter that it seemed to me that while that application may have been refused, in the end the proceedings would continue in this Court as was sought by the applicant and opposed by his client. 

28. There does not appear to have been any offer to settle the proceedings of which I have been made aware.

29. I do consider that it is relevant in these proceedings that, notwithstanding her earlier participation in the proceedings, the second respondent (and vicariously the third respondent) chose to commence proceedings in another court.  It was not as if they had commenced those proceedings before the proceedings in this Court had been commenced. 

30. Convenience to the parties in having the issues resolved in one place at one time and more expeditiously, suggests that in the proper exercise of my discretion I should refuse the application for costs and I do so. 

I certify that the preceding Thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks delivered on 24 September 2014.

Associate: 

Date:  24 September 2014

Appendix

90AE Court may make an order under section 79 binding a third party

(1) In proceedings under section 79, the court may make any of the following orders:

(a) an order directed to a creditor of the parties to the marriage to substitute one party for both parties in relation to the debt owed to the creditor;

(b) an order directed to a creditor of one party to a marriage to substitute the other party, or both parties, to the marriage for that party in relation to the debt owed to the creditor;

(c) an order directed to a creditor of the parties to the marriage that the parties be liable for a different proportion of the debt owed to the creditor than the proportion the parties are liable to before the order is made;

(d) an order directed to a director of a company or to a company to register a transfer of shares from one party to the marriage to the other party.

(2) In proceedings under section 79, the court may make any other order that:

(a) directs a third party to do a thing in relation to the property of a party to the marriage; or

(b) alters the rights, liabilities or property interests of a third party in relation to the marriage.

(3) The court may only make an order under subsection (1) or (2) if:

(a) the making of the order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and

(b) if the order concerns a debt of a party to the marriage—it is not foreseeable at the time that the order is made that to make the order would result in the debt not being paid in full; and

(c) the third party has been accorded procedural fairness in relation to the making of the order; and

(d) the court is satisfied that, in all the circumstances, it is just and equitable to make the order; and

(e) the court is satisfied that the order takes into account the matters mentioned in subsection (4).

(4) The matters are as follows:

(a) the taxation effect (if any) of the order on the parties to the marriage;

(b) the taxation effect (if any) of the order on the third party;

(c) the social security effect (if any) of the order on the parties to the marriage;

(d) the third party’s administrative costs in relation to the order;

(e) if the order concerns a debt of a party to the marriage—the capacity of a party to the marriage to repay the debt after the order is made;

Note: See paragraph (3)(b) for requirements for making the order in these circumstances.

Example: The capacity of a party to the marriage to repay the debt would be affected by that party’s ability to repay the debt without undue hardship.

(f) the economic, legal or other capacity of the third party to comply with the order;

Example: The legal capacity of the third party to comply with the order could be affected by the terms of a trust deed. However, after taking the third party’s legal capacity into account, the court may make the order despite the terms of the trust deed. If the court does so, the order will have effect despite those terms (see section 90AC).

(g) if, as a result of the third party being accorded procedural fairness in relation to the making of the order, the third party raises any other matters—those matters;

Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party.

(h) any other matter that the court considers relevant.

90AF Court may make an order or injunction under section 114 binding a third party

(1) In proceedings under section 114, the court may:

(a) make an order restraining a person from repossessing property of a party to a marriage; or

(b) grant an injunction restraining a person from commencing legal proceedings against a party to a marriage.

(2) In proceedings under section 114, the court may make any other order, or grant any other injunction that:

(a) directs a third party to do a thing in relation to the property of a party to the marriage; or

(b) alters the rights, liabilities or property interests of a third party in relation to the marriage.

(3) The court may only make an order or grant an injunction under subsection (1) or (2) if:

(a) the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and

(b) if the order or injunction concerns a debt of a party to the marriage—it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and

(c) the third party has been accorded procedural fairness in relation to the making of the order or injunction; and

(d) for an injunction or order under subsection 114(1)—the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and

(e) for an injunction under subsection 114(3)—the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and

(f) the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4).

(4) The matters are as follows:

(a) the taxation effect (if any) of the order or injunction on the parties to the marriage;

(b) the taxation effect (if any) of the order or injunction on the third party;

(c) the social security effect (if any) of the order or injunction on the parties to the marriage;

(d) the third party’s administrative costs in relation to the order or injunction;

(e) if the order or injunction concerns a debt of a party to the marriage—the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted;

Note: See paragraph (3)(b) for requirements for making the order or granting the injunction in these circumstances.

Example: The capacity of a party to the marriage to repay the debt would be affected by that party’s ability to repay the debt without undue hardship.

(f) the economic, legal or other capacity of the third party to comply with the order or injunction;

Example: The legal capacity of the third party to comply with the order or injunction could be affected by the terms of a trust deed. However, after taking the third party’s legal capacity into account, the court may make the order or grant the injunction despite the terms of the trust deed. If the court does so, the order or injunction will have effect despite those terms (see section 90AC).

(g) if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters—those matters;

Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party.

(h) any other matter that the court considers relevant.