Slazenger & Ors v Hunt & Ors

[2006] HCATrans 473

[2006] HCATrans 473

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S108 of 2006

B e t w e e n -

RICHARD SLAZENGER (AS EXECUTOR OF THE ESTATE OF ANDREW LEDERER)

First Applicant

DOUGLAS HAMILTON (AS EXECUTOR OF THE ESTATE OF ANDREW LEDERER)

Second Applicant

PAUL LEDERER (AS EXECUTOR OF THE ESTATE OF ANDREW LEDERER)

Third Applicant

and

MARIE THERESE HUNT

First Respondent

JOHN WILLIAM HUNT

Second Respondent

PAUL LEDERER

Third Respondent

PRIMO MEATS PTY LTD

Fourth Respondent

Office of the Registry
  Sydney  No S109 of 2006

B e t w e e n -

PAUL LEDERER

First Applicant

PRIMO MEATS PTY LIMITED

Second Applicant

and

MARIE THERESE HUNT

First Respondent

JOHN WILLIAM HUNT

Second Respondent

PAUL LEDERER (AS EXECUTOR OF THE ESTATE OF ANDREW LEDERER), RICHARD SLAZENGER (AS EXECUTOR OF THE ESTATE OF ANDREW LEDERER), DOUGLAS HAMILTON (AS EXECUTOR OF THE ESTATE OF ANDREW LEDERER)

Third Respondents

Applications for special leave to appeal

GLEESON CJ
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 1 SEPTEMBER 2006, AT 11.30 AM

Copyright in the High Court of Australia

__________________

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR N. PERRAM, for the applicants in the first and the third respondent in the second.  (instructed by Barkus Edwards Doolan)

MR D.J. HAMMERSCHLAG, SC:   May it please the Court, I appear with my learned friend, MR P.J. LIVINGSTONE, for the applicants in matter S109 of 2006.  (instructed by Landerer & Co)

GLEESON CJ:   Mr Hammerschlag – so you are putting an argument to the same effect as Mr Walker?

MR HAMMERSCHLAG:   I do not anticipate I will have anything to add except maybe one thing I would like to say to what Mr Walker will say.

GLEESON CJ:   One question of fact, Mr Walker.  The papers refer to the fact that there is an alternative claim, 50 million I think actually, but an alternative claim actually made that would, if accepted, eliminate this ‑ ‑ ‑

MR WALKER:   This is the lump sum?

GLEESON CJ:   Yes.  Has anything happened about that?

MR WALKER:   It has been, I think the word is, refined.  It used to be the plain, simple claim for $50 million, which your Honour will see at the bundle of proposed materials at page 6.  It is now a rather more complicated set of orders which has $50 million as a default order after a number of property transactions which the wife

asks the former husband to perform in her favour.  One sees that at the bundle of materials at page 10, prayer 6.

GLEESON CJ:   The merits have not been dealt with.

MR WALKER:   No, and we have tried to confront in our written submission the fact that it is in theory possible that the valuable shares according to the wife’s…..application that my clients in fact have properly administered the estate by transmitting, that that will cease to be of any interest because there will be, as it were, this more direct route via financial settlement.

In our submission, that is quite theoretical and in terms of the effect on the administration of the estate, what we are presently facing is a claim of an extremely broad kind of very far reaching ramifications and the availability of a direct financial route is not one which even on the wife’s own application can be seen now as either preferred or, for that matter, as more or less likely to be granted.  It is all in the bucket of…..

Your Honours are also aware that this is an attempt on our part to come to this Court directly without the Full Court intervening.  We have addressed that in our written submission by relying in particular upon the fact that properly below it was accepted on our behalf that the decision of the Full Court of the Family Court in Gould simply made it untenable ‑ ‑ ‑

GLEESON CJ:   That affects only one of three statutory provisions, does it not?

MR WALKER:   That affects section 106B, but of course if section 106B survives, then the full ramifications in question, about which I have already made reference, are equally marshalled against us. It only affects one of them. However, it has to be said by parity of argument the passage that one finds for example in the reasons of Mr Justice Fogarty in the authorities book at pages 124 to 127, but particularly in 115 FLR 371 at 394 – that is 126 of the booklet – it is quite clear that the approach which is cited, I think I have to say, with implied approval by his Honour there from Fisher v Fisher, the reasons of Justices Mason and Deane, would appear to amount to the Full Court of the Family Court stepping around, if I might put it that way, the ratio of Gazzo’s Case.

The ratio of Gazzo’s Case was that the laws there in question were beyond power because they lacked what was called unequivocally a close connection, not some other kind of connection; a close connection.  In Fisher v Fisher Justices Mason and Deane quite plainly regarded that as the aspect of Gazzo which their Honours described, not authoritatively, but their Honours described as “fundamentally unsound”.  That is an approach which transcends simply an examination of 106B.  That will certainly deeply affect the way in which we proceed in an argument in the Full Court, were that to be had, about sections 90AE and 90AF as well.

The close connection test is just as or perhaps even more keenly applicable to 90AE and 90AF as they are to 106B.  It is for those reasons that, though the Full Court would be a more or less formal exercise for us in 106B, it will also be precedentially a very difficult exercise in relation to comity at the Full Court level in relation to the other two as well.

Your Honours, could I briefly isolate what it is in 90AE(2) and 90AF(2) – I will just use the first as an example – by going to the booklet at page 236.  In the booklet one sees that:

In proceedings under section 79 –

so that is the husband/wife property proceedings in question:

the court may make –

and I am selecting the words obviously:

any other order that . . . 

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

It is said in the case against us as executors that that is a power which would permit what I will call the undoing or unravelling or reversal of the dispositions and dealings which followed the non‑exercise by the husband of the pre‑emption right under the articles of association which came to be exercisable, according to the allegations, by reason of the death of our deceased.

Now, in fact the dealings which followed because of the non‑exercise of that right by the husband was of course the transfer to my learned friend Mr Hammerschlag’s client.  In our submission, if that is in relation to the marriage, there is a real prospect that the proper legal understanding of that expression includes property, the narrative about which will include reference to the marriage of persons or some player being married, with all that that brings in its train potentially under the Family Law Act and particularly under section 79 in the event of divorce.

In our submission, if the law has reached that state, then it is no longer possible to say that Gazzo, which remains binding authority in this Court and which even Justices Mason and Deane were not prepared to seek to overrule, is simply no longer being applied, because to call that close connection is, in our submission, to make it a work of very imaginative fiction to understand what might be too remote.

In this case, the husband had certain rights of a contention kind.  He was not only a husband; he was a shareholder, in effect, businessman, and in the guise as shareholder/businessman he had certain contingent rights, possibilities.  My client had nothing in relation to the property in question which was affected to any degree by what I will call the matrimonial relations, happy or otherwise, between his business colleague and his business colleague’s wife.  This is not an alter ego case.  This is not a collusion case.  This is not a fraud case.

Now, the second point which, in our submission, is one which deserves the attention of this Court and deserves it immediately rather than in an application brought after the Full Court has pronounced, is the point that we have in particular touched upon in paragraph 19 of our written submissions that your Honours will find at page 57 of the application book.  Could I ask your Honours in page 236 of the booklet of authorities to look at section 90AE(3) where in paragraph (a) the limitation on power apparently enacted by Parliament has been done by words which are not coincidentally words which describe the nexus necessary in order for the incidental power under section 51 or generally to be available to the Commonwealth Parliament:

the making of the order is reasonably necessary, or reasonably appropriate and adapted, to effect –

et cetera; that is, treating as obviously at the core of the power the effecting of a division of property between the parties to the marriage and then saying to the court, “Your power to do other things, including alter the property interests of third parties ‘in relation to the marriage’, that power goes as far as, but no further than, that which in any event is the requirement of the Constitution when we, the Parliament, legislate”.

We have submitted and respectfully offer as a point of great importance in the interpretation of statutes which appear on their face as creating very arguable categories of indeterminate reference that there is an argument that that is simply beyond legislative power to give all the content making work to the Court.  That is the Parliament saying to the Court, “We won’t chance our arm on an actual stipulation which will lend itself to orthodox judicial interpretation of the limits of this power we are giving you.  We will simply express it in terms which apply to us, the Parliament, and described the limit of our power to lay down what you can do to third parties outside a marriage in relation to property division within a marriage”.  In our submission, that is a second independent and very important constitutional question that ought to be addressed by this Court sooner rather than later.

Your Honours have seen as well that in relation to section 106B, the way in which we would wish to put the constitutional argument emerges from selecting the words of arguably widest or broadest connection.  If I can take your Honours to page 241, selecting the words from subsection (1), it is:

In proceedings under this Act, the court may set aside . . . disposition . . . in the interest of, a party –

and we would interpolate that presumably means made in the interest of a party -

which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.

So we have the fraudulent or collusive case about which we have no concern whatever and do not wish to be heard on it, and then we have as an alternative, irrespective of intention, no collusion, no alter ego, no sham, no fraud, “is likely to defeat any such order”, a form of words which, in our submission, notwithstanding what has been said by the Full Court of the Family Court in Gould, defies the possibility of describing it as showing a close connection with the outcome of the application of such an order with the relation of marriage or with matrimonial cause for the purposes of 51(xxi) and (xxii) of the Constitution.

It is for those reasons, in our submission, that this is not only an appropriate time for this application to be granted, but that this is an application which ought to be granted so as to have not only this litigation, but litigation of this kind put on a constitutionally sound basis.

Finally, of course, it appears necessarily from the case law to which I have already drawn your attention in relation to Gazzo and in particular in connection with what might be called developments otherwise than in relation to the Family Law Act, that it is time, we submit, for the Court to revisit the approach which one can see in Gazzo itself, for example, in relation to Chief Justice Gibbs’ reference to the continued relevance of whether or not a purported Commonwealth law would invade States’ rights.  May it please your Honours.

GLEESON CJ:   Thank you, Mr Walker.  Yes, Mr Hammerschlag.

MR HAMMERSCHLAG:   As your Honour pleases.  I wish just to make one point which is in paragraph 10 of our outline at page 85 of the book, and that is that the resolution of these questions, the ones raised by this application in favour of my clients, that is, Mr Paul Lederer and the company, will dispose of the proceedings entirely, so far as we are concerned.

GLEESON CJ:   We will adjourn for a couple of minutes to consider the course we will take in that matter.

AT 11.46 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.47 AM:

GLEESON CJ:   I will ask Justice Heydon to give the judgment in this matter.

HEYDON J:   These two applications for special leave to appeal rest on a challenge to the constitutional validity of section 90AE(2), section 90AF(2) and section 106B of the Family Law Act 1975 (Cth). The challenge arises out of a former wife’s application for orders relating to shares in a company over which her husband had rights of pre‑emption which he did not exercise.

Justice O’Ryan rejected the challenge and dismissed the corresponding objections to jurisdiction.  The losing parties have sought leave to appeal to a Full Court of the Family Court of Australia.  That court is likely to follow one of its own earlier decisions, Gould v Gould (1993) 115 FLR 371, holding that section 106B is constitutional. It was also submitted that that decision, while not binding on the Full Court in relation to the other provisions, was strongly suggestive of a particular answer.

The questions of constitutional validity are important.  They are also questions which are fairly arguable both ways.  None of the respondents to the special leave applications have advanced contrary argument and all appearances are submitting appearances on their part.

It is true that if the challenges to validity were upheld now, this would dispose of the proceedings in their entirety against persons other than the former husband.  However, the application should be dismissed without prejudice to the applicant’s rights to make further applications once proceedings before Justice O’Ryan are concluded and an appeal to the Full Court is decided.

That is so for the following reasons.  First, Justice O’Ryan has not decided whether the orders claimed should be made.  It is possible that he may decide the former wife’s claims by granting her relief which does not depend on the impugned provisions.  To grant special leave now would be to entertain points which may turn out to have been moot.

Secondly, so far as the Full Court is not faced with earlier decisions of its own, its opinions would be valuable.  Family law is a specialised field in which the experience of the Family Court is much greater than that of this Court, particularly so far as consideration of the constitutionality of the impugned provisions would be assisted by considering their potential practical operation.

Accordingly, the applications are dismissed.

AT 11.50 AM THE MATTERS WERE CONCLUDED