Stuart and Stuart
[2011] FMCAfam 1228
•17 November 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| STUART & STUART | [2011] FMCAfam 1228 |
| FAMILY LAW – Joinder of third party – accrued jurisdiction. |
| Family Law Act 1975, ss.106B, 90AA, 90AE(1), 90AF(1)(2)(3)(4) Federal Magistrates Court Act 1999, s.18 Federal Court Act 1976, s.32 |
| Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570 at 591 Warby and Warby (2002) FLC 93-091 Bergman [2009] FamCAFC 27 |
| Applicant: | MS B STUART |
| Respondent: | MR STUART |
| File Number: | ADC 1609 of 2009 |
| Judgment of: | Mead FM |
| Hearing date: | 9 September 2011 |
| Date of Last Submission: | 9 September 2011 |
| Delivered at: | Adelaide |
| Delivered on: | 17 November 2011 |
REPRESENTATION
| Counsel for the Applicant: | Ms Pyke, QC |
| Solicitors for the Applicant: | Belperio Clark |
| Counsel for the Respondent: | Ms Kari |
| Solicitors for the Respondent: | Tindall Gask Bentley |
| Counsel for the Second Respondent: | Mr Richards |
| Solicitors for the Second Respondent: | Starke Lawyers |
ORDERS
That pursuant to Rule 11.01 of the Federal Magistrates Court Rules Mrs I Stuart be joined as a party to proceedings between Mr Stuart and Ms B Stuart being Action Number ADC 1609 of 2009, with the said Mrs I Stuart to be described as the second respondent in those proceedings.
That the court exercise its accrued jurisdiction and join proceedings currently pending in the District Court of South Australia bearing Action Number 2297 of 2010 to be heard concurrently with these property settlement proceedings.
That directions be adjourned to 9.30am on 2 December 2011.
IT IS NOTED that publication of this judgment under the pseudonym Stuart & Stuart is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 1609 of 2009
| MS B STUART |
Applicant
And
| MR STUART |
Respondent
REASONS FOR JUDGMENT
This interim judgment relates to the wife’s application to join the husband’s mother Mrs I Stuart to these proceedings, such that in determining issues of property settlement as between the parties, the court exercise its accrued jurisdiction in respect of proceedings pending in the District Court of South Australia being Action Number 2297 of 2010. The wife seeks that those proceedings be heard concurrently with the property settlement proceedings as between the parties, or in the alternative that the deed of acknowledgement executed by the husband dated 3 August 2009 be set aside pursuant to Section 106B of the Family Law Act.
It was further submitted by counsel for the wife, Ms Pyke QC, that notice had been given to the husband’s solicitors and the solicitors for Mrs I Stuart that a further order would be sought by the wife pursuant to Part VIIIAA of the Family Law Act to substitute the husband for the wife in any debt alleged to be owed jointly or severally by the wife to Mrs I Stuart.
Background
Proceedings commenced in this court between the husband and the wife in April of 2009. On 29 April 2009 the wife filed an application wherein she sought orders in respect of children’s issues. The husband filed a response to that application on 26 May 2009, and on
7 December 2010 the husband and the wife entered into consent orders on a final basis with respect to all outstanding children’s issues.
On 17 July 2009 the wife filed an amended application wherein on a final basis she sought an order for settlement of property, alteration of property interest and costs, such that the nett asset pool of the parties be divided between them as to 65 percent thereof to the wife and
35 percent thereof to the husband. The wife filed an affidavit in support of that application. In paragraph 25 of that affidavit the wife deposed to living in a house at [M] with the husband until that property was sold in 1999, whereupon the parties moved to a property they purchased at Property S being the former matrimonial home. She deposed to the Property S property costing $210,000 with the deposit of $25,000 coming from monies she had received as a payout for a personal injury claim. She said that the [M] property later sold for $125,000 and that those funds went directly towards the purchase of the Property S property.
She deposed to a property at Property H being sold some five months after the purchase of the Property S property. This property was owned in the joint names of the husband and his mother. She said the profits of $90,000 from the Property H sale were received by the parties and used to reduce the mortgage on the Property S property.
She said the Property H property was purchased around Christmas in 1995, some six or seven months prior to her marriage to Mr Stuart and the death of the husband’s father. She said that at the time the property was purchased the husband’s name was placed on the title to the property together with his parents as joint tenants. The husband made no financial contribution to that property and she said that when it was sold the entire proceeds were given to her and the husband for the purpose of reducing the mortgage on the Property S property.
The wife deposed in paragraph 26 of her affidavit to the husband’s mother indicating to the parties at the time that there was no reason for her share of the property to be paid back to her and that it was a gift to the parties. There was no further reference in the wife’s affidavit filed 17 June 2009 to the issue of the funds advanced by the husband’s mother.
On 11 September 2009 the husband filed an amended response, including issues as to property settlement. The husband sought orders by way of property settlement on a final basis that the nett asset pool be divided between the husband and wife as the Honourable Court deemed just and equitable and that the wife pay the husband’s costs of and incidental to the application. The husband filed an affidavit on
11 September 2009 in response to the wife’s previous affidavit and by way of evidence in respect of his amended response.
In paragraphs 31 and following the husband deposed to the purchase of the Property S property. He said it was purchased in 1999 for $292,000, with a deposit of $10,000 loaned to the parties by his mother in December 1998. He denied the wife used monies from an injury claim for the purposes of the deposit on the Property S property. He agreed that the proceeds from the sale of the property at [M] were applied directly toward the purchase of the Property S property.
In paragraph 33 of his affidavit the husband deposed to his mother selling the Property H property in approximately May 1999 and loaning the proceeds of sale of that property to he and the wife. He deposed to he and the wife applying $79,000 of those funds towards the mortgage and using a further $7,216.14 towards the purchase of the wife’s Ford Laser motor vehicle. In paragraph 33 of his affidavit the husband said “the wife and I both understood that those monies were loaned to us and that we would be required to repay my mother.”
In paragraph 47 of his affidavit the husband deposed to his mother providing considerable financial support to he and the wife during the marriage, with them both always understanding that the monies provided by his mother were loans and not gifts. He also said that he and the wife had always understood that the monies advanced by his mother were to be repaid.
In paragraph 48 he deposed to his mother loaning he and the wife a total sum of $118,216.14 throughout the marriage. Those monies included the $10,000 deposit on the Property S property, $86,216.14 from the proceeds of sale of the Property H property (which proceeds were used to reduce the Property S mortgage and purchase the Laser motor vehicle) and a further $22,000 of this amount, $14,000 was applied to further reduce the Property S property mortgage, $4,000 was utilised for maintenance and improvement of the Property S property and $4,000 used to purchase a caravan.
He deposed to his mother lodging a caveat over the former matrimonial home (on or about 3 August 2009) in order to protect her interest. This is set out in paragraph 49 of his affidavit. Annexure “ARS-10” to the husband’s affidavit filed 11 September 2009 was a copy of the caveat. The document, naming Mrs I Stuart as the Caveator, set out the Caveators claim as follows:
“…an equitable estate or interest as chargee pursuant to an agreement partly oral and partly in writing made between the Caveator and the Caveatee and acknowledged in writing dated 3 August 2009 between the Caveator and Cavatee the Caveator’s loans in the sum of $118,216.14 to the Caveatee of which $107,000 being money advanced for the initial purchase and subsequent maintenance and repairs of Property S with the Caveatee orally agreeing to charge his estate or interest in favour of the Caveator.”
The document named the Caveatees as Mr Stuart and Ms B Stuart as joint tenants of the property at Property S, South Australia and was dated 3 August 2009.
On 24 August 2009, prior to the husband filing his response and his affidavit in support with respect to property settlement issues, the court ordered, inter alia, mutual informal discovery, inspection, valuations and for the parties to attend at a Conciliation Conference with a Registrar on 15 December 2009. The matter was adjourned to
17 December 2009.
The parties did not reach agreement at the conference on 15 December 2009. On 17 December 2009, there were consent orders entered into by the parties in respect of interim children’s issues and an order was made for a further Conciliation Conference with respect to settlement of property on 26 March 2010.
As at the date of the order of 17 December 2009, the wife had not responded to the affidavit of the husband filed 11 September 2009. On 26 March 2010 the parties attended at a further Conciliation Conference with Registrar Brown. The Conciliation Conference report noted that all matters were resolved on the basis of being settled in principle, and that the applicant’s solicitor was preparing a consent order with respect to property settlement and children’s issues.
On 8 April 2010 directions were adjourned to 20 May 2010 with notations as to the agreements in principle. On 20 May 2010 it appeared that there were still issues in dispute between the parties. Orders were made for the filing of trial affidavits (the trial was previously listed for 3 March 2010, that date having been vacated) and the matter was relisted for trial on 11 August 2010. On 20 May 2010 the court noted that the parties were continuing to exchange financial information and were agreed that the process would be complete upon production by the parties of certain specified documentation. Paragraph 4 of the orders of 20 May 2010 stated that neither party was to file trial affidavits exceeding eight pages in length noting the limited areas of dispute with respect to both children’s issues and settlement of property.
On 1 July 2010 at a further directions hearing the court noted, upon receiving advice from the parties legal representatives, that the parties remained in dispute as to both children’s issues and settlement of property, that the issues had become more complex and that accordingly the limitations previously placed on the length of trial affidavits could not be complied with.
The trial date of 11 August 2010 was vacated, the matter was listed for trial with priority at 10.00 am on 7 December 2010 with three days allowed, and trial directions were adjourned to 28 September 2010 at 11.45 am with either Counsel or the file Principals to attend on that directions hearing. At that time neither party had filed any documents since 18 December 2009, at which time the wife’s solicitor filed an affidavit annexing a report relating to children’s issues and some relevant valuations.
On 17 September 2010 two subpoenas were issued on behalf of the husband to ACCU and BankSA, and on 28 September 2010 orders were made with respect to inspection and copying of subpoenaed material and amended orders made with respect to the filing by each party of trial affidavits. At that time one of the issues that added to the complexity of the matter was the husband’s extant motor vehicle accident claim referred to in paragraph seven of the order of
28 September 2010.
On 29 October 2010 the wife filed her trial affidavit. In paragraphs 21, 22 and 23 of her trial affidavit the wife set out her evidence with respect to the history of the purchase of the former matrimonial home.
In paragraphs 24, 25, 26 and 27 of that affidavit the wife deposed to the issue of the funds provided to the parties by the husband’s mother during the course of the marriage as follows:
24. The husband’s parents gifted us the sum of $92,000 throughout the marriage made up as follows:
24.1 The sum of $79,000 from the sale of their property at Property H was deposited to reduce the line of credit on the former matrimonial home on 31 May 1999 by way of credit transfer. The husband owned a one third share of this property with his parents although he made no financial contribution toward it. The husband alleges he received a further $7,000 and that it was used to purchase my Laser motor vehicle. I deny this and say the Laser vehicle had already been purchased. The husband has disclosed a receipt dated 28 May 1999 showing a direct deposit of three cheques in his name totalling $86,216.14. Annexed hereto and marked with the letters “BMS9” is a copy of that receipt. I do not know what happened to the remaining money. Though deposited into the joint account he treated the account as his own and did as he pleased. I did not see or have the benefit of (sic) use of this money or was aware of the additional funds received by the husband until these proceedings. I deny the husband purchased my current motor vehicle. I have had this vehicle since living in [M].
24.2 The purchase of a caravan for $3,000 which is registered in my name.
24.3 The deposit for the purchase of the former matrimonial home of $10,000. This was part of our wedding gift. The husband’s mother gave similar financial assistance to the husband’s sister. She has always said what she does for one child she will do for the other.
25. The husband has produced a deed of acknowledgement of debt which was signed and stamped on 4 August 2010 after the date of separation alleging that his mother Mrs I Stuart had advanced a loan to the husband and I of $118,216.14. Any debts owing to Mrs I Stuart are denied. Annexed hereto and marked with the letters “BMS10” is a copy of the deed. It is witnessed by the husband and his sister.
26. Ms Stuart has since lodged a caveat over the property at Property S, a copy of which is annexed and marked “BMS11”. I was never served with a copy of the caveat. I caused my solicitor to write to Ms Stuart’s solicitor seeking further disclosure about the caveat but no response was even received. Annexed and marked “BMS12” is a copy of my solicitors letter to Mr Starke dated 28 September 2009.
27. I received further correspondence from Mr Starke in respect of the alleged debt on 27 August 2010. Annexed hereto and marked with the letters “BMS13” is a true copy of same.
The caveat was lodged over the property on or about 3 August 2009. By correspondence to the husband and the wife dated 27 August 2010 (annexure “BMS13” to the wife’s trial affidavit filed 29 October 2010) Starke Lawyers, acting for Mrs I Stuart, sought on behalf of their client repayment on or before 13 September 2010 of principal of $118,216.14 plus interest on the money advanced. Starke Lawyers advised the parties that in the event that payment was not received their client had no alternative but to institute legal proceedings at the cost of the parties.
On 23 November 2010 the husband filed his trial affidavit. In paragraph 58 of his trial affidavit he deposed to his mother selling her Property H property in or about May of 1999 and loaning the proceeds of sale to he and the wife. He deposed to the funds being applied towards the mortgage in respect of the Property S property, and to he and the wife both understanding the monies were a loan and would be required to be repaid to his mother.
In paragraph 70.17 of his trial affidavit the husband deposed to his mother advancing loans to he and the wife during the marriage in the combined sum of $118,216.14, and to his mother having filed proceedings in the District Court of South Australia seeking payment of the principal amount outstanding together with interest at the rate of 3.5 percent per annum. Annexure “RAS-22” to his affidavit was deposed to be a true and correct copy of the summons and statement of claim filed in the District Court by Starke Lawyers on behalf of Mrs I Stuart on 1 November 2010.
On 24 November 2010 there was a further directions hearing. The trial listing of 7 December 2010 remained in place but was confined to children’s issues only, with directions in respect of property settlement issues being listed at 10.00 am on the first day of that trial. There was a further order providing that any urgent application filed by either party on or before 3 December 2010 should be made returnable on
7 December 2010. Children’s issues were finalised by consent on
7 December 2010.
Property matters were relisted for trial on 7 September 2011, directions were adjourned to 19 April 2011 at 9.30 am with Counsel to attend and any application filed by either party on or before 5 January 2011 was directed to be listed before me at 10.00 am on any of 10 January 2011, or at 9.30 am on any day as and from 18 January 2011.
On 31 January 2011 the wife filed an application in a case. She sought therein:
·an urgent listing before me on or before 2 February 2011;
·an order that the husband’s mother Mrs I Stuart be joined as a party to the proceedings before the court;
·that the husband’s mother be directed to withdraw the caveat registered over the Property S property contemporaneously with settlement of the sale of the former matrimonial home;
·that the nett proceeds of sale be deposited into an interest bearing account with the [omitted] Bank in the joint names of the husband and the wife and;
·Mrs I Stuart Senior to pay the wife’s costs of the application.
The wife filed an affidavit in support of that application. She deposed to the Property S property being sold at auction on 4 December 2010 with settlement due on 3 February 2011. She deposed to Mrs I Stuart registering a caveat over the property on 4 August 2009 alleging a debt owed to her by the husband and the wife and to her solicitor writing to the solicitors for Mrs I Stuart on 28 September 2009 requesting full particulars of the alleged debt and receiving no response from those solicitors until 27 August 2010.
She further deposed to having been served personally on 2 November 2010 with the District Court summons and statement of claim filed on 1 November 2010 by Starke Lawyers for and on behalf of the husband’s mother. She deposed to a joint letter being forwarded by the solicitors for the husband and the wife to Mr Starke dated 19 November 2010 inviting Mrs I Stuart Snr to withdraw the proceedings in the District Court and intervene in the proceedings in this court. The offer was declined by the husband’s mother by correspondence to the wife’s solicitors from Starke Lawyers dated 23 November 2010.
The wife went on in her affidavit to depose to various correspondence flowing between the offices of the solicitors for each of the parties and Mr Starke, wherein Mr Starke was quite clear that his instructions were to proceed in the District Court despite what appeared to be a common position of the husband and the wife in respect of wanting all matters to be determined in this court.
By the time the application in a case came on for hearing on 2 February 2011, settlement in respect of the sale of the property was set for the following day. Mr Richards of Counsel appeared as a courtesy on instructions from Mr Starke for Mrs I Stuart. Mrs I Stuart Snr had not been served personally with the application or the affidavit. The documents had been sent by facsimile to Mr Starke’s office at 9.33 am on 2 February 2011 by a secretary from the offices of the wife’s solicitor. In the circumstances the court declined to accede to the submissions of the wife’s Counsel to grant the relief sought and adjourned the application to 10 March 2011.
On that occasion the court was advised by Counsel for the wife that settlement had proceeded, a certain proportion of the settlement funds were placed into a solicitor’s trust account and a further amount placed in the suitors fund in the District Court. The court was further advised that application was to be made by the wife to stay the proceedings in the District Court, and that an amended application in respect of the proceedings before this court had been prepared naming Mrs I Stuart as a respondent, but apparently had not been filed and served.
After hearing submissions of Counsel for the wife, Counsel for the husband and Mr Richards, the wife’s application filed on 31 January 2011 was adjourned to 19 April 2011. It was noted that the court did not require the attendance of Mrs I Stuart Snr at the hearing which would only be concerned with directions, and further it was ordered that the wife pay the costs of Mrs I Stuart Snr’s Counsel on an indemnity basis with the amount to be fixed on a date to be fixed but subsequent to 19 April 2011. There was a further order that the wife pay the costs of the husband’s Counsel in the same terms.
By way of joint correspondence to the court from the solicitors for the husband and the wife dated 7 June 2011, the court was advised that the parties were awaiting a judgment in the District Court in respect of the wife’s application to stay those proceedings pending a determination of proceedings in this court, and seeking that the adjourned hearing of
9 June 2011, which was an adjourned date obtained by way of an administrative adjournment, be further adjourned. The matter was administratively adjourned to 15 August 2011 at 3.45 pm.
On 19 July 2011 subpoenas were issued by the husband directed to [bank omitted] and [insurance provider omitted]. On 1 August 2011 the wife’s solicitor filed an affidavit annexing the reasons delivered by Master Rice in the District Court proceedings on 5 July 2011. In those reasons His Honour ordered that the District Court proceedings be stayed until the finalisation of the wife’s application for leave to join Mrs I Stuart Snr to the proceedings in this court, with liberty to apply. The question of costs was reserved by His Honour, with a notation as to costs that the husband and the wife jointly agreed to deal with
Mrs I Stuart Snr’s claim in the proceedings in this court and requested her to consent to that order. His Honour ordered that he would hear the parties as to costs on the adjourned date which was notionally the
3 August 2011 but with liberty to apply at short notice. This court understands that as of the date of this judgment the proceedings in the District Court remain stayed.
On 4 August 2011 a further amended application was filed on behalf of the wife. The amendment to the final orders sought in the wife’s original application for settlement of property were in the following terms:-
(a)That the husband do indemnify the wife in relation to any and all monies owed (if any) to his mother Mrs I Stuart and,
(b)That the husband do pay the wife’s costs of and incidental to this application.
That amended application was made returnable for 15 August 2011 at 3.45pm.
On 15 August 2011 the question of joinder of the husband’s mother to these proceedings was adjourned for argument to 24 August 2011 at 10.30am. On 22 August 2011 an amended application in a case was filed on behalf of the wife. The further amended orders sought on an interim basis by the wife in that application were as follows:
1. The leave of this Honourable Court be granted for the hearing within application,
2. That the court exercise its accrued jurisdiction and join proceedings currently pending in the District Court of South Australia bearing Action Number 2297 of 2010 to be heard concurrently with these property settlement proceedings,
3. Further and/or in the alternative that the Deed of Acknowledgment between Mrs I Stuart and Mr Stuart dated 3 August 2009 be set aside pursuant to Section 106B of the Family Law Act 1975 (this order amended with the leave of the court on 24 August 2011 to delete the words “between Mrs I Stuart and” and insert the words “executed by” in lieu thereof).
4. Further and or in the alternative that Mrs I Stuart is restrained and an injunction is granted restraining her from proceeding further with the proceedings currently pending in the District Court of South Australia bearing Action Number 2297 of 2010 or any other proceedings that seek to rely on the Deed of Acknowledgement between Mrs I Stuart and Mr Stuart dated 3 August 2009 pending the determination of a decision in this Honourable Court on the within application to set aside the Deed of Acknowledgement.
5. Further and/or in the alternative that Mrs I Stuart of [address omitted] in the state of South Australia be joined as a party to the proceedings before this Honourable Court ACC 1609 of 2009.
6. That the parties be directed to do all such acts and things as is necessary in order for the proceeds of sale of the former matrimonial home currently held in the trust account of Grope Hamilton Lawyers for and on behalf of the husband and wife to be deposited into an interest bearing account with the [omitted] Bank in the joint names of the husband and wife.
7. That upon determination by this court as to the issue of the joinder of Mrs I Stuart the parties be directed to do all such acts and things as is necessary in order for the proceeds of sale of the former matrimonial home currently held in the District Court Suitors Fund to be deposited into an interest bearing account with the [omitted] Bank in either the joint names of the husband and the wife or in the names of the husband, wife and third party as is dependent upon the outcome of the joinder application.
8. That the husband and the husband’s mother Mrs I Stuart pay the wife’s costs of and incidental to this application.
9. Any further or other such orders as this Honourable Court deems just and equitable.
On the same date the wife filed a second further amended application. She also filed a further affidavit in support of her second further amended application and her amended application in a case. In paragraphs 7 to 20 inclusive of that affidavit she set out further evidence on which she relied in respect to the dispute between the husband, the wife and Mrs I Stuart Snr.
The effect of the wife’s evidence is that she considered the funds to have been gifted to she and the husband. It is her evidence that nothing in the conduct of the husband’s mother prior to the parties separation gave rise to any contrary position. The second further amended application was in substantially different terms to the further amended application filed on 4 August 2011 and was filed on short notice prior to the listed hearing on 24 August 2011. On the basis of it being unreasonable to expect Counsel for either the husband or the husband’s mother to respond to such a substantial alteration in the wife’s pleadings at such short notice the hearing was further adjourned to
8 September 2011.
The trial date of 7 September 2011 was vacated. Interim issues were adjourned to 8 September 2011 at 10.00 am, with orders being made preventing the wife from filing further affidavits or applications without the court’s leave during the period of the adjournment and with the husband and the husband’s mother being at liberty to file one further affidavit only during the period of the adjournment, provided it was filed and served by 4.00 pm on 6 September 2011. The husband filed an affidavit on 6 September 2011. No affidavit was filed by
Mrs I Stuart. The husband deposed in that affidavit to his understanding that all monies advanced to he and the wife by his mother during the marriage were by way of loans, which he deposed to believing was a shared understanding on the part of he and the wife.
At the hearing on 8 September 2011 it was the position of the husband and Mrs I Stuart Snr that it was a matter for the court to determine whether or not to exercise its discretion and hear the entirety of the dispute between the husband, the wife and Mrs I Stuart Snr by invoking the accrued jurisdiction of the court.
Counsel for Mrs I Stuart Snr, in written submissions, confirmed that the wife’s second further amended application filed 22 August 2011 and the wife’s amended application in a case filed 22 August 2011 had been served on the solicitors for Mrs I Stuart Snr and further, that her solicitors had been advised by letter from the wife’s solicitors of the wife’s intention to seek to further amend the proceedings to seek orders pursuant to Part VIIIAA of the Family Law Act.
Mr Richards submitted that as Mrs I Stuart Snr would be directly affected by the making of orders it would be appropriate that she be joined to the proceedings, but made no submission to the court on the application of the wife for the court to exercise its accrued jurisdiction to determine matters in paragraphs 1 to 4 of the orders sought in the wife’s second further amended application filed 22 August 2011. He further submitted that in the event that the court determined it would exercise its accrued jurisdiction and that Mrs I Stuart was joined to the proceedings as the second respondent, she would then be in a position to take advice as to any formal orders she may seek. Counsel for the husband did not seek to be heard in respect of the wife’s application but also took the view that it was a matter for the court to determine whether or not to exercise its discretion.
The parties to the proceedings in the District Court are the husband, the wife and the husband’s mother. The husband’s mother is claiming that:
·the husband, with the wife’s knowledge, approached her for a loan in or about November 1998, and that she advanced to the parties $10,000 in 1998 at their request on the basis that they pay interest on those monies of 3.5 percent per annum,
·that the husband and wife advised her that they had money becoming available and would attend to repayment of the loan of those monies to her,
·that in May 1999 the husband and the wife again asked her for an advance of money on the same terms, being 3.5 percent per annum, after which she advanced to the husband and the wife the further sum of $86,216.14,
·that in or about January of 2003 the husband and the wife again asked her for an advance of money and that she agreed to advance the further sum of $22,000 to the husband and the wife on the same terms, namely interest at 3.5 percent per annum,
·that the husband and the wife are jointly and severably liable for the monies she advanced to them,
·that they have failed to repay to her the principal sum of $118,216.14 and,
·that they have failed to pay interest on the principal sum advanced.
The remedies sought by the plaintiff in those proceedings are payment of the principal sum of $118,216.14 by the husband and the wife, payment of a further sum of $44,277.10 being interest calculated to
31 October 2010, a further sum by way of interest payable from
1 November 2010 until payment of the principal sum and costs.
Mrs I Stuart Snr claims that the majority of the funds advanced to the husband and the wife by her were used by way of deposit for the purchase of the parties’ former matrimonial home at Property S and a significant lump sum reduction of the mortgage on that property. On or about 4 August 2009 Mrs I Stuart Snr lodged a caveat over that property.
Following upon settlement of the sale of the former matrimonial home which was registered in the joint names of the husband and the wife, and as a consequence of the caveat placed over the property by the plaintiff, the sum of $221,000 from the nett proceeds of sale of the Property S property was deposited in the District Court suitors fund. The balance of the nett proceeds of sale in the sum of $123,828.28 is currently held in the trust account of Grope Hamilton Lawyers on behalf of the husband and wife pending resolution of the proceedings between the husband and wife in this court in respect of settlement of property.
The husband and wife are in dispute as to whether any monies are owed to the husband’s mother. In the husband’s response filed 11 September 2009 he sought orders by way of property settlement on a final basis as to the nett asset pool being divided between the husband and the wife as the court deemed just and equitable. In paragraph 38 of the husband’s affidavit in support of that response he deposed to the liabilities of the marriage including monies owing to his mother by way of loan in the sum of $118,216.14.
The first step the court must undertake when determining a division of assets as between parties to a marriage or defacto relationship is to make finding as to the asset pool. This process includes making findings as to the parties’ assets and liabilities. It is clear that in the circumstances of this case such a calculation would necessarily involve findings as to the circumstances of the alleged liability of the husband and the wife to the husband’s mother for the sums advanced to the parties during the course of the marriage. This may alter the rights, liabilities or property interests of a third party, namely the husband’s mother.
The wife in her second further amended application filed on 22 August 2011 has sought orders pursuant to s.106B of the Family Law Act and under Part VIIIAA of the Family Law Act. Pursuant to s.106B of the Family Law Act 1975, the wife seeks an order that the Deed of Acknowledgement executed by Mr Stuart dated 3 August 2009 be set aside. The Deed of Acknowledgement executed by the husband and his mother and dated 3 August 2009 forms part of the case of
Mrs I Stuart Snr against the parties in the District Court. It is the wife’s case that the document is a sham. A finding in favour of the wife would order the rights and property interests of Mrs I Stuart Snr.
Part VIIIAA of the Family Law Act commences with s.90AA of the Act which is in the following terms:
“The object of this part is to allow the court, in relation to the property of a party to a marriage, to
(a) make an order under s 79 or 114; or
(b) grant an injunction under s114;
that is directed to, or alters the rights, liabilities or property interests of a third party”.
The wife seeks further and/or in the alternative that Mrs I Stuart Snr be restrained from proceeding further with her pending claim against the parties in the District Court or any other proceedings that seek to rely on the deed of acknowledgement between her and the husband dated
3 August 2009, pending a determination of this court to set aside the Deed of Acknowledgment. The wife further seeks an order that the husband indemnify the wife in relation to any and all monies owed (if any) to his mother Mrs I Stuart.
Section 90AE(1) is in the following terms:
“In proceedings under s 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’.
Section 90AF(1) of the Family Law Act is in the following terms:
“In proceedings under s 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.”
Section 90AF(2) of the said Act provides that the court may make any other order or grant any other injunction that directs a third party to do a thing in relation to the property of a party to the marriage or alters the rights, liabilities or property interests of a third party in relation to the marriage.
Prior to making such injunctive orders or other orders under s.90AF(1) or s.90AF(2), s.90AF(3) states that the court must be satisfied that the making of the order or granting of the injunction is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage. If the order or injunction concerns a debt, it must not be foreseeable at the time of making the order or injunction that to do so would result in the debt not being paid in full. The section also provides that the third party must be accorded procedural fairness in relation to the order and further, the court must be satisfied that it is proper to make the order or grant the injunction in all of the circumstances. It must also be just or convenient to grant the injunction and the court must take into account the capacity of the party to the marriage to repay the debt after the order is made or the injunction is granted (s.90AF(4)).
The orders sought by the wife are orders that may alter the rights or property interests of Mrs I Stuart Snr. The District Court has no jurisdiction to determine the property interests of the parties to the marriage. For this court to do so, it must make findings as to the parties’ assets and liabilities. It is not possible to do so without making a finding as to the parties’ liability to Mrs I Stuart Snr. To do so she must be afforded procedural fairness.
I am satisfied that such procedural fairness is best accorded to her by way of joining her to these proceedings. Her inclusion in the proceedings is necessary for the court to completely and finally determine all matters in dispute between the parties.[1] On 7 September 2011 Counsel for Mrs I Stuart Snr conceded that she will be directly affected by the making of orders such as sought by the wife it would be appropriate that she be joined to the proceedings. No submissions were made however on her behalf or by Counsel for the husband as to whether or not the court should exercise its accrued jurisdiction to determine the dispute between the parties to the proceedings in this court and the husband’s mother, such that the proceedings instituted by the husband’s mother in the District Court be dismissed or discontinued.
[1] Rule 11.01 Federal Magistrates Court Rules
Counsel for the wife submitted that the court should exercise its accrued jurisdiction and determine the dispute concerning the alleged debt, clearly a non Federal dispute, in the course of determining the dispute between the parties to the marriage.
Section 18 of the Federal Magistrates Court Act 1999 confers jurisdiction on the court in respect of matters not otherwise within its jurisdiction in the following terms
“To the extent that the Constitution permits, jurisdiction is conferred on the Federal Magistrate Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Federal Magistrates Court is invoked.”
This section is in virtually identical terms of s.32 of the Federal Court Act, in respect of which Barwick CJ said
“Thus, there may be circumstances in which the matter does not in substance itself attract Federal jurisdiction, though that which attracts Federal jurisdiction must in some way relate to the matter. Once Federal jurisdiction is attracted, it is not lost because the claim or assertion which attracted it has not been substantiated or has been displaced by some counterveiling fact. Once attracted, by whatever path attracted, the jurisdiction persist to enable the court to resolve the matter”.[2]
[2] Phillip Morris Incorporated and Another v Adam P Brown Male Fashions Pty Ltd; United States Surgical Corporation against Hospital Products International Pty Ltd and Anor [1981] HCA 7; (1981) 148CLR 457 at 474.
In Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570 at 591, His Honour Justice Gibbs said
“It is now established by Phillip Morris v Brown that once a Federal Court is invested with jurisdiction with respect to a matter, it may determine all the questions which form part of that matter, even though they are questions which it would have no jurisdiction to entertain if they arose in separate proceedings”.
His Honour went on to say at 593:
“The question whether one claim is inseverable from another, so that both are part of one matter, is a question of fact and degree. The Constitution, however, makes it clear that the attached claim must be part of the matter that attracts jurisdiction, Closeness of association is not enough.”
In Warby and Warby (2002) FLC 93-091, the Full Court considered the question of the “indicia, criteria, factors or considerations that will invoke the exercise of the courts accrued jurisdiction…”
The court said at paragraphs 90 and 91:
“90. 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 justicable controversy and in determining that question whether the claims are “attached” and are not “severable” or “dispirit”; and
5) whether the claims are non severable from a matrimonial cause and arise out of a common substratum of facts.
91. We consider that a courts assessment of these matters will allow it to determine whether it should exercise its accrued jurisdiction. As the authorities indicate, a rigid filter is difficult to define without close inspection of the particular facts and we would not wish to create an exhaustive definition which must be applied beyond the circumstances posited in this case.”
Their Honours went on to say in paragraph 93 of that same case:
“In the present case there is a single property that is central to the parties’ controversy. The Family Court cannot determine and settle the property of the parties without determining the relative beneficial interests of the parties to the marriage and the wife’s father in the property. It is not to the point that a state court could make orders as to the dispute between the parties to the marriage and the wife’s father, and that the Family Court of Australia could then determine the family law dispute between the parties to the marriage. It is enough to say that even taking the narrow view of accrued jurisdiction represented by Wilson J’s judgment in Phillip Morris, in this case “the Federal question could not be resolved without the determination of the non Federal question. The Family Court of Australia must ascertain as a first step the property pool of the parties available for distribution.”
I am satisfied that the proceedings in this court between the husband and the wife and the proceedings in the District Court between the husband and the wife and the husband’s mother arise out of a common set of facts.
I find, adopting the words used by the Full Court in the case of Warby to which I have referred, that the federal question cannot be resolved without the determination of the non federal question. This is so because the court must determine the asset pool available for distribution between the parties.
It is common ground that the parties to the marriage utilised funds advanced to them by the husband’s mother. The dispute between the parties in this court is whether or not the funds were advanced by way of gift, or loan repayable with interest. The dispute between all parties with respect to the question of the funds advanced to the parties by the husband’s mother is a single justicable controversy which arises out of a common substratum of facts. The court has power to grant appropriate remedies in respect of the attached claims, provided procedural fairness is effected to the proposed third party, the husband’s mother.
In the case of Bergman [2009] FamCAFC 27 the Full Court of the Family Court said at paragraph 27:
“…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 (ASIC v Edensor Nominees Pty Ltd (2001) 204CLR559; Houghton and Ors v Arms (2006) 225CLR553)…”
I am satisfied that in the circumstances of this case the court should both join Mrs I Stuart to the proceedings as a third party and further, that it should exercise its accrued jurisdiction in determining the dispute as between the parties and Mrs I Stuart Snr in the process of determining the dispute as between the parties with respect to their property.
In Master Rice’s reasons for his decision in respect of the wife’s application that the District Court action brought by the husband’s mother be stayed pending finalisation of matrimonial proceedings in the Federal Magistrates Court, His Honour ordered that the District Court proceedings be stayed until finalisation of the wife’s application for leave to join Mrs I Stuart to the proceedings in this court. In those circumstances, I do not consider that it is necessary at this time to make the injunctive orders sought by the wife in respect of Mrs I Stuart Snr proceeding with further action in the District Court, which orders in any event should only be made after hearing argument by Counsel for all parties.
For those reasons I make the following order.
I certify that the preceding seventy-three (73) paragraphs are a true copy of the reasons for judgment of Mead FM
Date: 17th November 2011
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