Spellson v Spellson

[1989] HCATrans 302

...

.

• ~

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S83 of 1989

B e t w e e n -

JAMES THOMAS SPELLSON

Applicant

and

DIANE SV.1ARO SPELLSON

Respondent

and

LADY RENEE GEORGE and

JANANGO PTY LIMITED

Intervenors

Application for special
leave to appeal

BRENNAN J GAUDRON J

Spellson

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 8 DECEMBER 1989, AT 3.43 PM

Copyright in the High Court of Australia

S1Tl6/l/RB 1 8/12/89

MR G.K. DOWNES, QC: If the Court pleases, in this matter I appear

with my learned friend, MR F.P. CARNOVALE, for the

applicant. (instructed by Gillis Delaney)

MR M. BROUN, QC: If the Court pleases, I appear with

MR P.L.P. BRERETON, for the first respondent, the

wife. (instructed by Westgarth Middletons) At our

end of the bar table, it is agreed that Mr Bennett

should go first.

MR D.M.J. BENNETT, QC: If Your Honours please, I appear with

my learned friend, MR P.L.P. BRERETON, for the second

and third respondents who were the intervenors below.

(instructed by Westgarth Middletons)

•	BRENNAN J :	Mr Downes .
MR DOWNES:	Your Honours, the affidavit in support of the

application for special leave to appeal begins at

page 83. Pages 84 and following, together with

pages 91 to 94 of a further affidavit in support of

an application for special leave in effect contain the

written submissions that we would wish to rely upon

before Your Honours.

BRENNAN J: A further affidavit, did you say?

MR DOWNES:  Yes, a further affidavit in the appeal book, Your Honour, beginning at page 91.

BRENNAN J: Yes; I misunderstood what you were saying.

MR DOWNES: The early paragraphs of that affidavit draw

attention to the question - to the fact that a

constitutional issue did arise originally in the

matter, namely the legislative power relating to

section 85A but in the way the matter was dealt with

by Mr Justice Nygh, Mr Justice Nygh did not consider

that the issue ultimately arose, but that issue remains

so to speak in the wings and paragraph 7 and following

on pages 93 and 94 of the affidavit contain some further

short submissions or paragraphs in the nature of

submissions relating to the issues which we respectfully

submit arise.

Your Honours, the applicant and the respondent

as described in the application were formerly married.
These proceedings relate to an outstanding property

claim between them. The other respondents, called the

intervenors in the application book, are the trustees

respectively of two trusts called the Thomas George

Settlement and the Sir Arthur George Family Trust in the material before Your Honours.

The former trust, that is the Thomas George

Settlement, was held by the Family Court - that is in
the form of Mr Justice Nygh - to be a marriage

settlement within section 85A of the FAMILY LAW ACT.

SlT16/2/RB	2	8/12/89
Spellson

Mr Justice Nygh held the latter settlement, that is

the Sir Arthur George Family Trust, not to be such

a marriage settlement. There was no appeal or cross

appeal relating to the finding of Mr Justice Nygh

that the Thomas George Settlement was a marriage
settlement. There was an appeal by my client to the

Full Court of the Family Court from the decision of

Mr Justice Nygh that the Sir Arthur George Family Trust

was not a marriage settlement within the section.

The question which arises and which we respectfully

submit justifies the grant of special leave to this

Court is the determination of the question of whether

the Sir Arthur George Family Trust is or might be a marriage settlement. The question of general - - -

BRENNAN J:	Why might be?
MR DOWNES:	Because at this point, Your Honour, the parties are

only at an early stage in the proceedings. There is

an application before the Family Court for settlement of

property in which my client is the applicant and his

former wife is, or was, the original respondent. The

trustees of the two trusts sought leave to intervene
and were joined as respondents. In that application a
number of orders are sought for settlement of property
under section 79 of the FAMILY LAW ACT.

A combination of the respondents as to different

parts of the application sought the whole of the
application to be dismissed or stayed permanently; in
other words, as to some paragraphs in the application

it was the intervenors who sought that it be dismissed

or permanently stayed; as to other parts of the

application it was the wife who sought that it be

dismissed or permanently stayed.

Before Mr Justice Nygh the only application that

was successful was the application which gives rise to

the issue which is now before the Court. In other

words, His Honour Mr Justice Nygh made an order staying

permanently that part of the application which depended

upon a claim that the Sir Arthur George Family Trust was

a marriage settlement within section 85A. He left on

foot claims at large relating to settlement of property,

notwithstanding applications that they should be

dismissed or permanently stayed. He left at large a

claim under section 85A relating to the Thomas George

Settlement. He left at large a claim by the husband

on behalf of an adult son, Leon, although there was

an application that that also should be stayed

permanently or dismissed.

The combination of applications, as I think I have

said to Your Honours, on the part of all of the

respondents, if successful, would have meant that the

whole proceeding disappeared but the only part that

was successful before His Honour Mr Justice Nygh was

SlT16/3/RB	3	8/12/89
Spellson

the application relating to the claim based on the

allegation that the Sir Arthur George Family Trust was

a marriage settlement.

The husband appealed from that decision -

BRENNAN J:  Can I come back to the question I asked you before.

Why is it that it is relevant to consider whether

it might be a marriage settlement as distinct from

whether it is a marriage settlement?

MR DOWNES:  Your Honour, I am sorry, there are two possibilities:

the possibilities are that the material presently before the Court sufficiently enables a determination that the

Sir Arthur George Family Trust is a marriage settlement,

or alternatively, the question of whether the Sir Arthur

George Family Trust is a marriage settlement should be

left to be determined by the judge hearing the

application on all the material which is ultimately

before the court.

Now, Mr Justice Nygh and the Full Court took the

view that the question of whether section BSA applied

involved a question of - they used the word

"construction" but we would respectfully submit did not

approach the matter as if what they were doing was

construing the settlement. What they said was, "We

are confined to the four walls of the document. We will

look at the document and nothing else and if, on the

document and nothing else, we come to the conclusion

that this is a marriage settlement, then the matter

will go forward. If, on the document and nothing else

we conclude that it is not a marriage settlement, then

the claim should be stayed or dismissed."

GAUDRON J: If they were correct in the latter, they are correct

in the result, are they not? There is a gap in those

propositions, but it relates to the first, not the

second proposition, does it not?

MR DOWNES: 

Your Honour, they might have said, "The determination

of whether the Sir Arthur George Family Trust is a
marriage settlement or not involves a question of
construction. That question of construction in turn

should be determined in the light of the surrounding

circumstances." and in so doing they would have been

taking into account a deal of authority, including

cases such as the CODELFA case in this Court. · In those
circumstances, it is appropriate that the matter should
go to trial so, given that it is going to trial on other

issues, after the hearing, in the light of all the

material, a determination can be made in the context as

to whether this is a marriage settlement or not.	They
not only did not take that view but they took the
positive view that because they could not glean a

nexus, to use their words, or a sufficient nexus within

the document, that it followed - and we would

SlT16/4/RB	4	8/12/89
Spellson

respectfully submit there is an error in logic as well

as in law in this reasoning - it followed from the

fact that they could not glean - perhaps I should put

it this way:  it does not follow from the fact that

one cannot glean a nexus from the document that there

necessarily is no nexus.

BRENNAN J: What are we looking for when we are speaking about

a marriage settlement?

MR DOWNES:  What one is looking for is a nexus, unquestionably,

Your Honour, with the marriage. And one can find that from the words of the document or from the words of

the document together with the setting in which the

marriage settlement was entered into. In particular

in the present case, two particular facts: one was

that at the time the settlement was established part

of its assets was the matrimonial home of the two

parties. We would respectfully submit that was a

pertinent matter to be taken into account. Yet the

Full Court said they could not look outside the

document itself and the judgments, with respect, support

that proposition.

The second pertinent matter that we particularly refer to that we suggest should have been taken into

account was the fact that the assets which became the assets of the Sir Arthur George Family Trust de facto

amounted to a resettlement of the assets of the Thomas

George Settlement, and Your Honours will recollect that

the Thomas George Settlement is the subject of this
application in other respects and is the subject of a

finding, not challenged, that it was a marriage

settlement. So the fact that - - -

BRENNAN J:	Can you come back to the elements thus far that you have referred to. Has there ever been a marriage
settlement held to be such when the objects of the settlement are the subject of a discretionary exercise of power by the trustees and number amongst them those
who are strangers to the marriage?
MR DOWNES:	Your Honour, there is under the English law which, as Your Honours will have noticed, is different to the
Australian law, there is at least one decision referred to by the trial judge, namely PRINSEP V PRINSEP, in
which it·was held that there was a marriage settlement
in circumstances in which the objects of the marriage settlement - sorry, in circumstances in which the
trust was a discretionary trust. I cannot answer
Your Honour's question as to whether there were objects outside, apart from the parties to the marriage.

BRENNAN J: PRINSEP V PRINSEP has been followed in a long line

of English cases, has it not?

MR DOWNES: Yes, Your Honour.

SlT16/5/RB	5	8/12/89
Spellson

BRENNAN J: And in none of them, so far as I am aware, have the

objects of the settlement ever included those who are strangers to the marriage, for the very simple reason

that once you have such a discretionary

trust, the trustees may appoint in favour of those who

are strangers to the marriage.

MR DOWNES:  Your Honour, one of the bases upon which we would

respectfully submit that this is a matter which is

appropriate for this Court's grant of special leave is

the very fact that the subject-matter of the

present _ trust is a discretionary trust. It is an

undeniable fact of life in the late 1980s that

discretionary trusts are very frequently found in

domestic arrangements. That was not so when the line

of cases to which Your Honour refers, going back to the

1920s, were first decided. We would respectfully submit that it would be a very surprising result if a trust - if a circumstance in which a settlor settled funds on

two trusts, one of which had as its only discretionary

objectsparties to a marriage or their children and the
other of which had as the discretionary objects third

parties, one would have the situation in which the

first trust was unquestionably a marriage settlement.

But assuming that, for example, he chose the same

trustee, and assuming he decided that to give the

trustee an added discretion he would deal with both

trusts in the same document, that that which when done

one way created a marriage settlement did not, when done

another way, not create a marriage settlement. We would

respectfully submit that if the mere presence of a third

party as a discretionary object causes that which would

otherwise be a marriage settlement to cease to be a

marriage settlement, that that is a surprising view,with

respect, of the way in which the law should grapple with

the question of what section 85A is directed to, when one

has a situation nowadays in which one has discretionary

trusts very frequently used, very frequently used in

family situations, and in which very frequently one must

find discretionary objects who are not parties to the

marriage.

So we would respectfully submit, one, that the fact that one has not seen such a case in the past, if that be

the fact, is not a matter which, in 1989, would have the

conclusion that it is not appropriate that the law in

1989 is to the contrary- - -

BRENNAN J:  Perhaps you could favour us with the first steps towards

establishing that this is a marriage settlement.

MR DOWNES:  Yes. Could I just then put some matters to Your Honour.

The Sir Arthur George Family Trust was settled by one
David Doberer on 23 May 1980. It is set out at page 100
and following and the eligible beneficiaries appear,

Your Honour, at page 100 and they are, in the order in

SlT16/6/RB	6	8/12/89
Spellson

whicllthey appear: Category A, Diane Spellson;

Category B, her children; Category C, grand-children;

Category D, great grand-children; Category E, the spouse,

widow or widower and Category F, James Thomas Spellson,

who was the husband and is the applicant here.

Category G, H, I and J are then Lady George, Jimdi Pty

Limited, Nick George and John George. The way the

trust operates is that in default of the exercise of

a discretion, the income is applied in accordance with

the order of category, so that it goes first to Diane

Spellson.

In the event of, on the vesting day, there being

no taker, then the Arthur T. George Foundation, as

appears at page 104, takes by default.

Now, Your Honours, the relevant decision on the

part of the Full Court of the Family Court on this

question is the decision of Justice Murray in whose

reasons the other members of the court agreed. She
appears to have held as follows, at pages 47 and

following of the application book, and if I could

identify the propositions and give Your Honours the

reference. Firstly:

the character of the settlement must be

determined upon a consideration of the

deed of settlement itself.

That is at page 47, line 20.	The second proposition is
that:

"the words 'in relation to' -

the marriage in section 85A -

impart ..... a relationship between the

settlement and the marriage -

that is at page 48, line 20. Thirdly, the nexus between
the settlement and the marriage must be clear and

substantial. That is at page 49, line 8. Fourthly,

when there are objects who are not parties to the

marriage the nexus must be diminished and may be fatally

flawed. That is at page 49 line 15. Fifthly,

the determination depends upon a matter of degree, a

question of construction. That is 49 line 18.

Sixthly, the parol evidence rule precludes regard to external matters where the words of the deed are clear

and unambiguous. That is page 49 line 21.

And we will be separately putting a submission to

Your Honours which we would respectfully submit would

justify, in itself, the grant of special leave, that

the Full Court of the Family Court misunderstood what

was the purpose and object of the parol evidence rule

or its relevance to the question that was before them,

having regard to that statement in the judgment.

SlT16/7/RB	7	8/12/89
Spellson

Seventhly, extrinsic evidence is admissible to show

illegality or in case of ambiguity, that something

is within the jurisdiction of the court, but never to

show subjective intention, page 49 line 25, a

proposition which we would submit is irrelevant to

the matters that arose for the consideration of

Their Honours.

Eighthly, the terms of the present trust are clear

and unambiguous so that it is not permissible to look

at anything outside the words of the trust itself.

That is at page 50 point 3, and lastly, Your Honours,

the words of the trust do not establish a sufficient

nexus, therefore there is no sufficient nexus, page 50

point 15. And that is one of the matters that I

criticized in anticipation a little while ago.

Now, if Your Honours go to what Her Honour did

at page 50, Your Honours will see what she did look
at for the purpose of determining whether this was a

marriage settlement or not. Your Honours will see that

she did not look at anything other than the four walls,

if you like, of the document itself. Although the

evidence was, firstly, that the matrimonial home of the

parties was an asset of the trust from the time it was constituted, that is at page 4 point 3 of the judgment

of Mr Justice Nygh; secondly, that although the assets

of the trust amounted to a resettlement of an admitted

marriage settlement, that is at 6 point 25; thirdly,

that although the trust was a substantial source of the

income of the wife, that is at page 6 point 28 and

8 point 20; and lastly, although the assets of the trust were very substantial, that is at point 7.8, all matters

which we would respectfully submit, having regard to

the ordinary approach of courts to the construction of

written documents were relevant surrounding circumstances

to be taken into account.

BRENNAN J:	To show what?
MR DOWNES:

To aid, Your Honour, in the question of construction

of the document with a view to ultimately determining

whether it is properly categorized as a document falling
within section 85A of the FAMILY LAW ACT.

BRENNAN J: What light did it throw on the document to which

the terms of the document did not itself throw on it?

MR DOWNES:  Your Honour, it threw such light as is gleaned from

time to time in many cases from looking at circumstances

surrounding the execution of a document, with a view

to forming a conclusion as to what is its construction

and what is its character and we would respectfully

submit those circumstances are material to answering

the ultimate question: is this a·"post-nuptial
settlement made in relation to the marriage", which are
the exact words of section 85A, and I was proposing

to take Your Honours in a moment to those words.

S1Tl6/8/RB	8	8/12/89
Spellson

BRENNAN J:  I still do not understand what light it sheds as

a matter of construction on this document. Does it

change in any way the nature of the trustee's powers?

MR DOWNES:	No, Your Honour.
BRENNAN J:	Or the identity of the objects?
MR DOWNES:	No, Your Honour.

BRENNAN J: Or the assets which are the subject of the trust?

MR DOWNES: Well, the assets which are the subject of the trust,

Your Honour, inevitably require one to look outside the

trust to determine what they are. I mean, as is not

unusual with these things, one fairly readily draws

the inference that David Doberer did not really have a

lot to do with this - I withdraw that, Your Honour.

BRENNAN J: Be it so, the assets - - -

MR DOWNES:  But one has to look at extrinsic evidence to see

what the assets are.

BRENNAN J:  Then you discover what the assets are; you know who

the trustees of the assets are; you know the trusts on which they are held; you know the objects of the

trust. What else do you want? What else can you get,

I should ask, rather1

MR DOWNES: But, Your Honour, the very first of those propositions,

which we respectfully submit is important, is one of the

things which the court said, in effect, it could not do.

One of our arguments is that it is relevant to look at

what were the assets of the trust. One of the assets of

the trust was the matrimonial home. Your Honour, what

one is looking at is signs to indicate whether one puts

a label on this document "post-nuptial settlement made

in relation to the marriage". And what one is entitled

to do to answer that question is to look at the words

of the trust, and I suppose if it said in a recital,

"This is intended to be a marriage settlement", the

point would be, in effect, against marriage

settlement unarguable really.

But this document does not say that and so one

is entitled to look at other things, including the fact
that amongst the discretionary objects were the
husband and wife; that they were amongst the first of
the discretionary objects; that the children and

remoter issue were other discretionary objects; that

they were all in order preceding the other discretionary

objects. All of those are things which we would
respectfully submit are pertinent for a court to look
at to determine whether, as a matter of the construction

of the document, this is a marriage settlement.

S1Tl6/9/RB	9	8/12/89
Spellson

But so, also, Your Honour, is what were the

assets of it? We would go so far as to say how the

way in which the parties carried it into effect demonstrated what their original intention was.

BRENNAN J: Which parties are we speaking of?

MR DOWNES:  The way in which the discretion was subsequently

exercised by the trustee we would say is relevant

to a determination, but that is by no means a necessary

part of the argument I put to Your Honour. If I need

to go no further than the assets of the trust, the way

in which the Full Court approached the matter was to

say that they really could not even look at that matter.

They could only look at what they could glean from the words. And we would respectfully submit that, Your Honour,

in a time in which - and discretionary trusts are

becoming very frequent - the question of whether and

the circumstances in which discretionary trusts are
appropriately capable of being labeled as marriage

settlements within section 85A is a matter of general

importance which would justify this Court's intervention

to consider the matter so that the Family Court for the

future will proceed with some definition or some

assistance from this Court as to how precisely to

approach what must be a problem arising out of the fact

that one now does frequently see discretionary trusts

and marriage settlements.

One starts with the propsition that section 85A

enlarges the jurisdiction of the Family Court, may
have enlarged that jurisdiction in response to - or
purported to enlarge that jurisdiction in response to
this Court's judgment in ASCOT INVESTMENTS in which this

Court indicated that there was no power to deal with the

assets of a third party.

Your Honours, there will be many times when

questions will arise before the Family Court in the

future as to whether particular trusts, particular

discretionary trusts, are marriage settlements. If the

Tl6	position is that a discretionary trust which has an
object which is a third party -we would respectfully
submit that that is an unlikely result of this Court's
consideration of the matter - but if that be the result,
then it would be appropriate that that result should appear and guide the Family Court. But the consequence
of that would be that a trust which, on the face of if,
had all the hallmarks of a marriage settlement could cease to be a marriage settlement simply because some
default beneficiary of no real consequence was dealt
with in the marriage settlement.

Your Honours, could I take Your Honours to one

particular aspect of Her Honour Justice Murray's

judgment where she deals with the cases and what she

calls a long line of cases. We would respectfully

SlT17/l/RB	10	8/12/89
Spellson

submit that Her Honour was not justified in
describing what she did as a long line of cases and
certainly was not justified in concluding that the
result of them was that she was confined to the four

walls of the documents.

Oddly enough, Her Honour begins at page 47 by

referring to the decision of Lord Hanworth - I think

there is a transcription error there - in MELVILL V

MELVILL. However, the reference that appears at

page 47 is not the reference to MELVILL V MELVILL

at all but the reference to a different decision. And

the decision to which Her Honour cites the reference

is the decision of Mr Justice Pearce in the Probate Divorce and Admiralty Division of the High Court in

PARRINGTON V PARRINGTON. I wonder if I could hand up

to Your Honours - I have four copies, maybe that is

more than I need - but I will hand up copies to

Your Honours.

If I could just go immediately to the note at the

bottom of the headnote and then take Your Honours

briefly to part of the judgment. This judgment is,

according to the writer of the headnote, authority for,

inter alia, the_proposition:

to determine whether a document was a post-
nuptial settlement, the court was entitled to
take into consideration the relevant facts

to find out what was the substance of the

transaction.

We would respectfully submit if that is justified

by the reasoning, that is quite contrary to the
findings which Her Honour made. The reference she,

in fact, gives, suggesting it is a reference to the

judgment of Lord Hanworth in MELVILL V MELVILL, is to

page 919. And Your Honours will see that indeed there

is a reference to Lord Hanworth in MELVILL v MELVILL

at the top of page 919 but the passage quoted is not

the passage quoted by Her Honour. Could I just

briefly take Your Honours back - I do not want to take

too much time with this - but I think this half a page,

Your Honours, succinctly puts the proposition we want

to put about where the long line of authority stands.

At the bottom, about line Hof page 918:

Counsel for the husband relies on PRINSEP V PRINSEP

and MELVILL V MELVILL & WOODWARD as showing that

I must not take account of the admitted facts of the agreement to separate or of the

circumstances in which the hotel was bought,

which circumstances admittedly bring the

purchase of the hotel within the definition of

a post-nuptial settlement ..... In PRINSEP V PRINSEP

Hill, J., said:

S1Tl7/2/RB	11	8/12/89
Spellson

"on the question whether a settlement is a

settlement within s.192 the motive of the

settler seems to be immaterial, except so

far as it is given effect to by the terms

of the deed."

So that what the PRINSEP V PRINSEP passage is concerned

with, and it is set out by Her Honour, is not the

question of whether you can look at extrinsic

circumstances at all but whether you can look at motive.

In MELVILL V MELVILL & WOODWARD Lord Hanworth,

M.R., said:

"I do not think it possible to accept the view

that one must ascertain the intention of the

lady from exterior circumstances. I think one

ought to look at the terms of the settlement

itself."

So again the context is subjective intention. Then
a quote from Lord Justice Romer I will not read. Then

His Lordship goes on:

Those three dicta were directed to arguments of

counsel in the cases in question that in the

particular circumstances it was unlikely that

the respective settlors wished to benefit the

petitioners.

I will miss the next sentence:

I do not think the dicta were intended to lay down the principle that in ascertaining whether any transaction is a post-nuptial

settlement under this section the court must
shut its eyes to the surrounding circumstances.

So to hold would be in strange contrast with

the policy of the court, so clearly laid down

in the cases, that the words of the section must

be construed liberally. In JOSS V JOSS Henn Collins, J. said:

"There are no such indications expressed

on the face of this settlement. But does

that conclude the matter? I think not. It is

the ·substance and not the form which must be
regarded, and for the purpose of construing

the settlement, I must put myself in the

position of the settlor, and take as, in effect,

recited, the relevant facts, including his

then existing marriage and the existing issue

of that marriage."

I will not read further to Your Honours, but we would

respectfully submit that for Her Honour to suggest that

S1Tl7/3/RB	12	8/12/89
Spellson

there is a long line of cases which lead to the

conclusion that one cannot go outside the terms of

the document itself is to misstate what the cases

in fact said. We would go further, Your Honours, and

say that in any event Her Honour misunderstood what

she was doing,with great respect, in any event because

she then, as I pointed out to Your Honours a little

while ago, became involved with the question of the

parol evidence rule. Now, that rather suggests that

Her Honour was thinking that what the issue she had

to determine was was whether some argument was being

presented which said that the marriage settlement was
not wholly contained in the document and what was sought

to be done was to add to or vary the terms of that

document. And of course no such argument was presented

to her.

Once she made, we would respectfully submit, the

error of thinking that what she was concerned with was

the parol evidence rule, with the consequence that she

was thinking about whether she could add to or vary

the terms of the document, she necessarily precluded

herself from something that she was entitled to do,

namely to look at the surrounding circumstances,

including the matters that I have referred Your Honours

to, including what were the assets of the marriage

settlement, and Your Honours, with respect, she would,

if she had done that, have come to a different

conclusion. She would either have decided that the

relevant settlement was indeed a marriage settlement

or, alternatively, she would have decided that that

issue should be left for determination along with a

number of other issues at the trial of the matter.

Now, Your Honours, I have said that the questions

ultimately of general importance which we say are thrown
up by this matter are firstly, the construction of
section 85A of the FAMILY LAW ACT and I think

Your Honours have, from observations that were made earlier, copies of the Act on the Bench. I have an

extract but perhaps if Your Honours have the Act I need

not hand it up. Section 85A provides:

(1) The court may, in proceedings under this

Act, make such order as the court considers
just and , equitable with respect to the
application, for the benefit of all or any of
the parties to, and the children of, the

marriage, of the whole or part of property

dealt with -

and now the critical words -

by ante-nuptial or post-nuptial settlements

made in relation to the marriage.

S1T17/4/RB	13	8/12/89
Spellson

We would respectfully submit that one matter of

construction which was not given sufficient attention by the court below, and which would in itself lead to the admissibility and relevance of external

circumstances, are the words in that critical phrase

"made in". The word "made", we would respectfully

submit, draws attention to and makes relevant the

circumstances of the making of the settlement. We would

respectfully submit that that phrase would permit even

wider examination of extrinsic circumstances than merely

the argument based upon cases such as PRENN V SIMMONDS

and the CODELFA decision in this Court.

So we would respectfully submit there is a real

question of general importance which arises here as

to the construction of the section as to the

question of how it is to be applied to discretionary

trusts, given that a commonplace is a multiplicity of

beneficiaries in those trusts, given that they are

regularly associated with marriages.

We next would respectfully submit that the question of the relevance of principles such as the parol

evidence rule or like principles to section 85A also

arises in the present case and is a basis upon which
Your Honours would grant leave.

Thirdly, we submit that Your Honours would grant

leave in this case to enable Your Honours to give
consideration to the question of whether the court

below has adopted an appropriate practice in determining

finally in an application which will inevitably go

forward to a hearing, in which there will be substantial

evidence as to facts, in which there will be issues

relating to another marriage settlement, in which there

will be issues relating to the relationship between

these parties to the marriage generally, as to whether

it is appropriate for the Family Court, in a kind of

piecemeal. way, to grant applications for permanent

stays which have the consequence that particular parts

of larger claims are so to speak cut off at the outset	and before all of the evidence and all of the evidence
relevant, even, to the determination of whether the
settlement is a marriage settlement or not, if one
accepts that surrounding circumstances are relevant,
is before the court.

Your Honours, there is one other matter which was

dealt with in the court below and which is the subject
of this application for special leave. Section 79

of the FAMILY LAW ACT permits an application to be made by

a party on behalf of a child 'of the marriage. One of the

applications that was before the court in this matter

was an application on behalf of the child Leon

Spellson. It is in paragraph (2) on page 10.

Mr Leon Spellson is now an adult. He was not and is

not a party to the proceedings and is not appropriately

S1T17/5/RB	14	8/12/89
Spellson

a party to the proceedings when application is made

under section 79.

At the hearing before Mr Justice Nygh a legal

representative announced he appeared on behalf of
Mr Leon Spellson and indicated that Mr Leon Spellson

did not support the application. On the strength of

that matter, application was made by the respondent
to the proceedings for the dismissal of the claim

against the adult child who, although not a party by

a legal representataive, had announced to the court

that he did not wish to pursue the application.

Mr Justice Nygh, and his reasoning is at page 22,

dismissed that application. His reasoning which we

rely upon is at page 23 and following.

On the appeal, and in this respect the judgment

is the judgment of Mr Justice Lindenmayer, and at

page 71 and following it was found - His Honour
concluded that even although Mr Leon Spellson was not

a party to the proceedings, if a legal representative

on his behalf announced that he did not wish the claim

on his behalf to be pursued, then the claim should be

dismissed aa in effect vexatious, having regard to the
son taking the view that he did not wish to support it.

Your Honours, we would respectfully submit that

that issue itself raises another matter which, in
conjunction with the first matter, would justify the
grant of special leave and we would respectfully support

the reasoning of Mr Justice Nygh at pages 22 to 24 on

that issue.

BRENNAN J:	But what issue has your client got in agitating that point'?
MR DOWNES:	He has the interest of a parent, Your Honour, of an

adult child.

BRENNAN J: Yes.

MR DOWNES: The reality is, I suppose, that parents do not

necessarily regard the attaining of the age of

majority as the coming to an end of their parental

obligations. Those are our submissions, Your Honours.

BRENNAN J:  We ne·ed not trouble you, Mr Bennett, nor you,

Mr Broun.

There is no reason to doubt the correctness of the decision that the husband's application for

orders in favour of the adult son, Leon, should be

permanently stayed. There is insufficient reason

to doubt the correctness of the view of the Full Court

that the Sir Arthur Thomas George Family Trust is not

a post-nuptial settlement falling within section 85A

S1Tl7/6/RB	15	8/12/89
Spellson

of the FAMILY LAW ACT. Accordingly, this is not a

case in which special leave should be granted.

Special leave will accordingly be refused.

MR BENNETT:  If the Court pleases. Might I seek an order

for costs?

MR BROUN: So do we, Your Honour.

MR DOWNES:  Your Honour, we would oppose that order. I do not

wish to take a deal of time but we simply draw

Your Honours' attention to the fact that prima facie,

pursuant to section 117 of the FAMILY LAW ACT:

each party to proceedings under this Act

shall bear his -

or her -

own costs.

And we would suggest, in the alternative, that one

set of costs would be appropriate in the circumstances.

BRENNAN J: Are the intervenors, as they are called, parties to

the proceedings?

MR DOWNES:  Yes, Your Honour, they were made parties to the

proceedings at their own application.

BRENNAN J: What do you have to say to that, Mr Bennett?

MR BENNETT:  First of all, that section of the FAMILY LAW ACT

does not bind this Court and,indeed, earlier today

an order for costs was made in an appeal from the

Family Court.

Secondly, whatever reasons of policy there are

as between husbands and wives for not making orders

outsiders to the marriage who, even though they	for costs, those reasons can have no application to
become parties of their own application, do so in
defence of their assets. Here, there were orders
sought against the trustees as trustees of trust funds,
orders which would have had the effect or might have the
effect, might still have the effect, of divesting them
of some of their assets. They have a duty to defend those assets and, in my respectful submission, there
is no reason for not applying the ordinary rules as to
costs, both for and against them, in that situation.
The policy reasons simply do not apply.
Thirdly, of course, it is not suggested this is a case of indigent parties. Again, for that reason,
it is a case where the ordinary rule should apply.

S1T17/7/TB	16	8/12/89
Spellson

So far as separate costs are concerned, the

trustees have a different interest to the wife. It

certainly cannot be assumed that on all the numerous

issues which were raised in these proceedings that

the issues of the wife and the trustees are identical.

In my respectful submission, it would be inappropriate

for them to be jointly represented and they are

entitled to defend themselves separately.

I am reminded, Your Honour, that even under

section 117, the rule in subsection (1) is merely

a prima facie rule because the court has power, where

circumstances justify it, to make such order for costs

as it considers just. And there are a list of matters

which are relevant, one of which is that:

any party to the proceedings has been wholly

unsuccessful in the proceedings;

And here, of course, the applicant has been	wholly
unsuccessful. That is section 117(2A)(e).	For all
those reasons, I would submit the order for	costs
should be made.

MR BROUN:  Your Honours may be assisted slightly further.

There is a decision of this Court in the matter of

PENFOLD V PENFOLD which said that as 117(1) does

not give any prima facie rule, that 117(1) and 117(2)

are equal, that one does not come before the other, it

is a matter for the Court to consider whether orders

should be made. I would also tell Your Honours that

in the Full Court of the Family Court it has now become

the practice to make orders for costs in respect of

unsuccessful appeals and indeed, although in this

Court from my long experience of these applications, it

was at one time thought several years ago that 117(1)

suggested there should not be orders for costs, in my
experience in the last several years it has been the

normal practice of this Court to make orders for costs

where an application for special leave has been

unsuccessful, even in cases of somewhat indigent parties.

BRENNAN J: Have you anything to say in reply, Mr Downes?

MR DOWNES: There is nothing I wish to say in reply, Your Honour.

BRENNAN J: It will be with costs.

AT 4.40 PM THE MATTER WAS ADJOURNED SINE DIE

SlT17/8/RB	17	8/12/89
Spellson