Valceski v Valceski

[2007] NSWSC 440

Reported Decision: 210 FLR 387
70 NSWLR 36

New South Wales

Supreme Court

CITATION:	Valceski v Valceski [2007] NSWSC 440
HEARING DATE(S):	23 March 2007
JUDGMENT DATE :	4 May 2007
JURISDICTION:	Equity Division Duty Judge List
JUDGMENT OF:	Brereton J
DECISION:	Pursuant to (NSW) Jurisdiction of Courts (Cross-Vesting) Act 1987, s 5(1)(b), order that proceedings be transferred to Family Court of Australia, Sydney Registry. Plaintiffs and first defendant to pay second defendant’s costs of motion.
CATCHWORDS:	JURISDICTION OF COURTS – Transfer of proceedings – from Supreme Court to Family Court – whether seriously arguable that Family Court would not have jurisdiction – jurisdiction of Family Court under Family Law Act, s 78 - accrued jurisdiction of Family Court – where claim brought by third party against property of party to marriage after matrimonial proceedings instituted – relevant considerations on transfer application – third parties who in context of marriage breakdown assert rights against matrimonial property should join in existing matrimonial proceedings rather than commence separate litigation. - FAMILY LAW – Jurisdiction – third parties – jurisdiction of Family Court under Family Law Act, s 78 - accrued jurisdiction of Family Court
LEGISLATION CITED:	Australian Constitution 1900 (CTH) Bankruptcy Act 1966 (CTH) Copyright Act 1968 (CTH) Corporations Act 2001 (CTH) Family Law Act 1975 ss 4, 31, 75, 78, 79, 80, 85, 90AE, 106B (CTH) Law and Justice Legislation Amendment Act 1988, s 39 (CTH) Judiciary Act 1903, s79 (CTH) Trade Practices Act 1974 (NSW) Contracts Review Act 1980 (NSW) Family Provision Act 1982, s 31 (NSW) Jurisdiction of Courts (Cross-Vesting) Act 1987, preamble, s 5
CASES CITED:	Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 Balnaves & Balnaves (1988) 12 Fam LR 488; FLC 91-952 Benlair Pty Ltd v Terrigal Grosvenor Lodge Pty Ltd [2006] NSWSC 339 Bankinvest AG v Seabrook (1988) 14 NSWLR 711 Baumgartner v Baumgartner (1987) 164 CLR 137 BHP Billiton Ltd v Schultz (2004) 221 CLR 400 Bishop & Bishop (2003) 30 Fam LR 108; FLC 93-144 Bourke v State Bank of New South Wales (1988) 22 FCR 378 British American Tobacco Australia Ltd v Gordon [2007] NSWSC 230 C & C: C (Accrued Jurisdiction) (2001) 28 Fam LR 253; FLC 93-076 Cheers v Entercorp Finance Pty Ltd [1999] FCA 1475 CSR Limited v Cigna Insurance Australia Ltd (1997) 189 CLR 345 Dibeek Holdings Pty Ltd v Notaras (1997) 141 FLR 364 Fencott v Muller (1983) 152 CLR 570; 57 ALJR 317 Gould & Gould (1993) 17 Fam LR 156; FLC 92-434 Global Technology Australasia Ltd v Bank of Queensland Ltd [2001] VSC 230 Ireland & Ireland; Collier (1986) 11 Fam LR 104; FLC 91-731 Johnson Tiles Pty Ltd v Esso Australia Ltd (200) 104 FCR 564 Kenda v Johnson (1992) 15 Fam LR 369; (1993) FLC 92-331 Lawson & Lawson; Wallmans (1999) FLC 92-874 Lederer & Hunt [2007] FamCA 55 Lye & Lye (1983) 8 Fam LR 999; FLC 91-324 Mackay & Mackay (1984) 9 Fam LR 850; FLC 91-573 Moran & Moran (1994) 18 Fam LR 534; FLC 92-559 Oceanic Sun Line Special Shipping Co v Fay (1988) 165 CLR 197 Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 403 Pegasus Leasing Ltd v Cadoroll Pty Ltd (1996) 59 FCR 152 Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 Prince & Prince (1984) 9 Fam LR 481; FLC 91-501 R v Bevan; Ex parte Elias & Gordon (1942) 66 CLR 452 R v Ross-Jones; Ex parte Beaumont (1979) 141 CLR 504; FLC 90-606 Rayhill & Lewis (Family Court of Australia, O’Ryan J, 8 March 2005, unreported) Re Chapman & Jansen (1990) 13 Fam LR 853; FLC 92-139 Re Wakim; Ex Parte McNally (1999) 198 CLR 511 Smith & Smith (No 2) (1985) 10 Fam LR 283; FLC 91-604 Smith v Smith (No 3) (1986) 161 CLR 217; (1986) FLC 91-732 Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261; 57 ALJR 731 Wade-Ferrell & Wade-Ferrell; Read (2001) 27 Fam LR 484; FLC 93-069 Warby & Warby (2001) 28 Fam LR 443; (2002) FLC 93-091 Young v Lalic (2006) 197 FLR 27; [2006] NSWSC 18 (CTH) House of Representatives, Second Reading Speech (Hansard), vol. 163, 10 November 1988, at p2840
PARTIES:	Micko Valceski (first plaintiff/first respondent) Angelina Valceska (second plaintiff/second respondent) Boban Valceski (first defendant/third respondent) Beti Valceska (second defendant/applicant)
FILE NUMBER(S):	SC 6133/06
COUNSEL:	Mr S Hughes (plaintiffs/first & second respondents) Ms B Britt (first defendant/third respondent) Mr G Foster (second defendant/applicant)
SOLICITORS:	Kristofferson Legal Services (plaintiffs/first & second respondents) Lough Wells Duncan (first defendant/third respondent) Johnson Horsley (second defendant/applicant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY LIST

BRERETON J

Friday, 4 May 2007

6133/06 Micko Valceski & Anor v Boban Valceski & Anor

JUDGMENT

1 HIS HONOUR: The defendants Boban Valceski (“Bobby”) and Beti Valceska (“Betty”) are estranged husband and wife, and consequent upon the breakdown of their marriage, Betty instituted proceedings between them in the Family Court of Australia, for parenting orders and financial adjustment. The property the subject of those proceedings includes their former matrimonial home at 10A McArthur Parade, Mangerton, of which Bobby has since 26 February 2004 been the sole registered proprietor, as a result of a transfer pursuant to a deed of that date between his father the first plaintiff Micko Valceski (“Mick”), Bobby and Betty, whereby Mick agreed to transfer to Bobby all Mick’s right, title and interest in McArthur Parade (of which Mick and Bobby were previously registered proprietors as joint tenants), in consideration of which Betty agreed that she would continue to acknowledge the contributions made to the home by Mick and would treat Bobby as beneficially owning only a just and equitable share of the home proportionate to his actual contributions. In this equity suit, Mick and his wife Angelina Valceska claim orders setting aside the February 2004 deed and transfer – on the grounds of non est factum, misrepresentation, mistake, unconscionability, undue influence and (NSW) Contracts Review Act 1980 – and a declaration as to the equitable interests of the various parties in the property, arising from their respective contributions to the purchase price and improvements. Betty seeks an order that the equity suit be transferred to the Family Court of Australia, to be consolidated with the matrimonial proceedings between her and Bobby in that court.

2 The following background is based on the present state of the evidence, and is not intended to represent final findings of fact.

3 According to the recitals of the February 2004 deed, Bobby and Mick purchased McArthur Parade as joint tenants in 1982, for a price of $32,000, using funds contributed jointly. However, in a statutory declaration made by Mick and Bobby, also on 26 February 2004, apparently for stamp duty purposes, they declared that the property was initially purchased by them as vacant land in 1982 for $32,000, financed with a loan of $20,000 from the Commonwealth Bank, the bank requiring Mick to appear on the title as it refused to lend money to Bobby alone; but that the loan was repaid in full over many years by Bobby from his own funds, and that at the time of acquiring the property and at all other times, it was the intention of both that the property would be beneficially owned by Bobby alone. Nonetheless in these proceedings, Mick apparently contends that he paid for the block, with $12,000 savings and $20,000 borrowed from the Commonwealth Bank, but that it was placed in joint names because Bobby agreed that he would help pay for construction of a house on it. The scope for dispute as to the initial beneficial interests in the property is manifest.

4 The property remained vacant until building work for the home commenced in January 1986. Bobby constructed the home under an owner/builder’s licence over about four and a half years, until final completion on about 15 June 1990. The deed recites that Bobby alone funded the improvements; similarly, the statutory declaration states that all building costs were fully paid by Bobby. However, in these proceedings, Mick asserts that Angelina won Lotto and contributed $50,000 towards the construction of the house, with the rest of the construction costs being paid by Bobby. Again, the scope for dispute as to the contributions to the improvements is manifest.

5 Bobby and Betty commenced to cohabit in December 1991, in McArthur Parade. The property was then unencumbered. They married on 23 February 1992, and thereafter continued to occupy McArthur Parade as their matrimonial home. They paid all expenses in connection with the property, and never paid any rent or occupation fee to Mick, although the property remained in the names of Mick and Bobby as joint tenants.

6 During 1992, Mick, Angelina and Bobby purchased, for a total price of $220,000, a property comprising two units at Lutana Place, Coniston. Mick and Bobby held the title as to a one-half share each. Bobby borrowed $100,000 to assist with the purchase of his share. Mick and Angelina occupied the upper unit as their home, and the lower was let for rent.

7 By the February 2004 deed, Mick agreed to transfer to Bobby all Mick’s right, title and interest in McArthur Parade (clause 1); all parties acknowledged that, as a consequence of the transfer, upon Bobby’s death the whole of the property would pass to Bobby’s estate in accordance with his Will or intestacy, as long as the home remained in his sole name (clause 2); and Betty agreed that in consideration of the transfer of the home to Bobby, in all circumstances other than Bobby’s death she would continue to acknowledge the contributions made to the home by Mick, and would treat Bobby as beneficially owning only a just and equitable share of the home proportionate to his actual contributions, with all direct financial contributions made by Betty being deemed to be contributions by Bobby for that purpose (clause 3). However, according to the statutory declaration, Mick now wished to transfer his joint interest in the property to Bobby, in order to give effect to the parties’ original intentions that Bobby alone be beneficially entitled. Pursuant to the deed, a transfer of Mick’s share in McArthur Parade to Bobby, dated 26 February 2004, was stamped on 14 May and registered on 25 May 2004.

8 On 2 January 1996, Bobby transferred one-half of his half share in Lutana Place to his brother Mile, who assumed responsibility for half of Bobby’s mortgage loan of $100,000.

9 Bobby and Betty separated a month later, on 7 February 2006. Six weeks after their separation, on 28 March 2006, Betty lodged caveats in respect of both McArthur Parade and Lutana Place, claiming an “equitable interest arising from both financial and non-financial contributions to the acquisition and conservation of the land”. [Given that McArthur Parade was purchased and the home on it constructed long before their marriage, it is unlikely that the caveat could be sustained by a trust of the type described in Baumgartner v Baumgartner (1987) 164 CLR 137, and Betty would probably be dependent upon the adjustive property jurisdiction of the Family Court under (CTH) Family Law Act 1975, s 79, for any interest in the property]. Although signed on 28 March 2006, the caveats were apparently not lodged until 3 April 2006, and meanwhile, by transfer dated 27 March 2006 and apparently registered on 3 April 2006, before the caveat was registered later on the same day, Bobby transferred a half of his remaining quarter-interest in Lutana Place to Mile, thereby depleting his assets to the potential prejudice of any claim against them by Betty.

10 On or about 4 April 2006, Betty filed her application for parenting orders and financial adjustment in the Family Court. For present purposes, Betty contends that the joint matrimonial estate comprises:

· McArthur Parade;

· Bobby’s interest in Lutana Place;

· Two motor vehicles;

· Bobby’s shares in Bluescope Steel;

· Bobby’s bank accounts;

· Bobby’s superannuation with Bluescope Steel Superannuation Fund;

· Betty’s superannuation entitlement with ARF Superannuation Fund.

11 Bobby filed a response and financial statement on 29 May 2006. A conciliation conference on 8 August 2006 was unsuccessful, and directions were made for the preparation of the matter for hearing, with a pre-trial conference being appointed for 29 November 2006, and Bobby and Betty agreeing to the appointment of a single expert to value both the McArthur Parade and the Lutana Place properties. Bobby has made default in compliance with the directions, which required that both parties file their affidavits by 14 November. But at least up to that point, no issue appears to have been raised by Bobby that he was not beneficially entitled to the whole of McArthur Parade.

12 On 13 November 2006, however, Kristofferson Legal Services, solicitors acting on behalf of Mile, wrote to Bobby’s solicitors, Lough Wells Duncan (who on 15 November forwarded a copy to Betty’s solicitors, Johnson Horsley), indicating that they acted for Mile and were instructed to commence proceedings in the Supreme Court to set aside the February 2004 deed and transfer. Johnson Horsley responded to Kristoffersons on 16 November 2006, that if Mile asserted an interest in McArthur Parade, then the obvious course was for him to be joined as a party in the matrimonial proceedings, and that if he filed an application in the Supreme Court, Betty would seek to have those proceedings transferred to the Family Court. Kristoffersons responded on 17 November, arguing the merits of the case but not addressing the question of forum. Johnson Horsley replied on 20 November, asserting that there were proceedings pending in the Family Court, and that if Mile wished to canvass the issues he was raising, he would need to join in those proceedings.

13 On 21 November 2006, Lough Wells Duncan, on behalf of Bobby, served lapsing notices in respect of Betty’s caveats. By an interlocutory application filed in the matrimonial proceedings on 29 November, Betty sought injunctions restraining Bobby from dealing with McArthur Parade and requiring him to lodge the certificate of title for safekeeping. On 5 December 2006, by consent, the Family Court made an order that Bobby forthwith lodge the title document for McArthur Parade with his solicitors for safekeeping, pending the resolution of Betty’s application for financial adjustment. Also on 5 December 2006, Mick and Angelina instituted the present equity suit.

14 Subsequently, on 13 February 2007, Betty filed an amended application in the Family Court, joining Mick, Angelina and Mile as respondents and seeking, as well as parenting orders:

3. A declaration that Micko Valceski, Angelina Valceska and Mile Valceski being the second, third and fourth named respondents have no legal or equitable interest in the property situate in and known as 10A McArthur Parade, Mangerton being the whole of the land comprised in Folio Identifier 100/619844 (“the matrimonial home”).
4. That the husband within twenty-eight days transfer to the wife all of his right, title and interest in the property situate at and known as 10A McArthur Parade, Mangerton being the whole of the land comprised in Folio Identifier 100/619844 (“the matrimonial home”).

15 Betty also claims a splitting order in respect of Bobby’s superannuation, orders in respect of one of the motor vehicles, and that each party otherwise retain any asset in that party’s name or possession. Betty has not so far formally sought an order pursuant to Family Law Act, s 106B setting aside the transfer of 3 April 2006 to Mile of a one-eighth interest in Lutana Place, nor any order under s 90AE affecting or altering the property interests of Mick and Angelina.

16 On 12 March 2007, a Registrar of the Family Court made directions for the filing of responses to the amended application. In a letter to Johnson Horsley dated 13 March 2007, Kristoffersons asserted that the equity suit had been initiated prior to the joinder of Mick and Angelina to the matrimonial proceedings, and that the taking of that step in the Family Court when the equity suit was already on foot was a tactical choice. Kristoffersons also expressed doubt that they could adequately represent their clients in the Family Court, due to lack of familiarity with that jurisdiction. It was in those circumstances that Betty, on 13 February 2007, filed her motion claiming a transfer of these proceedings to the Family Court.

Transfer of proceedings

17 The present application is brought pursuant to (NSW) Jurisdiction of Courts (Cross-Vesting) Act 1987, the preamble of which includes amongst the purposes of the Act:

(b) to structure the system in such a way as to ensure as far as practicable that proceedings concerning matters which, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, would be entirely or substantially within the jurisdiction (other than any accrued jurisdiction) of the Federal Court or the Family Court or the jurisdiction of a Supreme Court of a State or Territory are instituted and determined in that court, whilst providing for the determination by one court of federal and State matters in appropriate cases, and
(c) if a proceeding is instituted in a court that is not the appropriate court, to provide a system under which the proceeding will be transferred to the appropriate court.

18 Provision is made for the transfer of proceedings between courts by s 5, which includes:

5 Transfer of proceedings

(1) Where:

(a) a proceeding (in this subsection referred to as the relevant proceeding ) is pending in the Supreme Court, and

(b) it appears to the Supreme Court that:
(i) [Repealed]

(ii) having regard to:

(A) whether, in the opinion of the Supreme Court, apart from any law of the Commonwealth or another State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Federal Court or the Family Court,

(B) the extent to which, in the opinion of the Supreme Court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the Supreme Court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, and

(C) the interests of justice,
it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be,
(iii) [Repealed]

the Supreme Court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.
…

(9) Nothing in this section confers on a court jurisdiction that the court would not otherwise have.

19 Accordingly, in an application for transfer of proceedings from the Supreme Court to the Family Court, section 5(1)(b)(ii) specifies three relevant considerations, namely:

· Whether (but for cross-vesting and accrued jurisdiction) the relevant proceeding would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Family Court;

· The extent to which the matters for determination in the relevant proceeding arise under a law of the Commonwealth and are not otherwise within the jurisdiction of the Supreme Court;

· The interests of justice.

20 However, because of s 5(9), and as Re Wakim; Ex Parte McNally (1999) 198 CLR 511 held constitutionally invalid the former provisions that purported to confer on the Federal and Family Courts jurisdiction in State matters, it is a pre-requisite to a transfer order that the transferee court have jurisdiction in respect of the relevant matter. It will not be more appropriate that the relevant proceeding be determined by the proposed transferee court if it does not have jurisdiction to do so.

21 Moreover, it may well not be more appropriate that the relevant proceeding be determined by the proposed transferee court if it is seriously arguable that it does not have jurisdiction to do so, when the transferor court undoubtedly has jurisdiction. In Benlair Pty Ltd v Terrigal Grosvenor Lodge Pty Ltd [2006] NSWSC 339, Nicholas J considered an application to transfer proceedings to the Family Court under s 5(1). Benlair’s sole director and shareholder was Mrs Klumper. Her husband Mr Klumper had been a director of Terrigal Lodge, and its current directors were his children of a previous marriage, who – together with a trustee for the children of his marriage to Mrs Klumper – were the shareholders. Mr Klumper had, on 2 April 2003, commenced proceedings for financial adjustment against Mrs Klumper in the Family Court. Benlair commenced the Supreme Court proceedings on 23 December 2005, claiming a declaration that Terrigal Lodge held certain land on trust for, or subject to an equitable charge in favour of, Benlair. By a response filed in the Family Court proceedings on 10 March 2006, Mrs Klumper joined Terrigal Lodge, Mr Klumper’s children, and two other companies. Benlair was not a party to the Family Court proceedings, although Mrs Klumper proposed to join it as a party should the Supreme Court proceeding be transferred to the Family Court. Accordingly, the Supreme Court proceeding was not one between the parties to a marriage, nor one between a party to a marriage and a third party (although it might be said that it was practically that, because the plaintiff was the wife’s “alter ego”, she being its sole shareholder and director).

22 Benlair argued that there was a substantial commonality of issues in both sets of proceedings, and that having regard to the interests of justice they should all appropriately be dealt with by the Family Court. Terrigal Lodge submitted that the Supreme Court proceeding concerned only Benlair’s claim for equitable relief against it, to which the Family Law Act had no application and in respect of which the Family Court had no jurisdiction. Nicholas J held that it was not in the interests of justice to transfer the proceeding from a court, the jurisdiction of which was not in doubt, to a court whose jurisdiction was arguable and uncertain, and which, if jurisdiction were found to be lacking, would have to return it to the Supreme Court:

[56] The defendant has argued that the Family Court has no jurisdiction to determine the proceeding. The plaintiff submitted that there is jurisdiction, but if there is a dispute it should be left to the Family Court to decide. Presumably, if the Family Court found that it had no jurisdiction to deal with the plaintiff’s claims it would remit the proceeding back to this Court.
[57] As the matter presently stands, I find it highly likely that if the proceeding is transferred a contested issue of jurisdiction will be raised for determination. Although I express no view as to the probable outcome, at present I am unpersuaded of the Family Court’s jurisdiction to determine the proceeding. I find it difficult to accept that this Court would readily conclude that it was in the interests of justice to transfer a proceeding from a court whose jurisdiction was agreed to one whose jurisdiction would be challenged and would have to be decided.
[58] Accordingly, in my opinion considerations of the interests of justice preclude the finding that it is more appropriate that the proceeding be determined by the Family Court. It is presently in an appropriate court, the jurisdiction of which is not in doubt. It cannot be in the interests of justice to transfer the proceeding to a court whose jurisdiction is arguable and uncertain, and which, if jurisdiction is found to be lacking, will remit it back to this Court. To make a transfer order in these circumstances would be inconsistent with the statutory purpose to ensure that proceedings are always dealt with by the most appropriate court. In my opinion the proceeding may be tried more suitably for the interests of the parties to it and the ends of justice in this Court rather than the Family Court.

An illustration of the difficulties which can arise in such circumstances is provided by Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 403. Mr and Mrs Rayhill had separated and were engaged in proceedings in the Family Court. Children of Mrs Rayhill’s previous marriage (to Mr Lewis) (and a company in which they claimed to hold, or be beneficially entitled to shares, and of which their mother was a director) initiated proceedings in the Supreme Court for equitable relief, claiming that they were beneficially entitled to property acquired by their mother in her own name or applied for her own benefit, allegedly in breach of trusts said to have been originally established by her and their father Mr Lewis, or in breach of her director’s duties, and that Mr Rayhill had aided, abetted, counselled or procured those breaches. The Supreme Court proceedings were transferred to the Family Court, to proceed with the matrimonial proceedings, but eventually the husband took an objection to jurisdiction. O’Ryan J held that the Family Court did not have jurisdiction to entertain the transferred proceedings, on the basis that they were neither proceedings under the (CTH) Corporations Act 2001, nor fell within the accrued jurisdiction of the Family Court, and alternatively that even if the court had jurisdiction, it would have been appropriate to transfer them to the Supreme Court [Rayhill & Rayhill; Lewis (Family Court of Australia, O’Ryan J, 8 March 2005, unreported)]. Eventually, all proceedings, including the matrimonial proceedings, were transferred to the Supreme Court, as the court which unquestionably had jurisdiction.

23 However, this case is distinguishable from Benlair and from Paris King, in at least two respects. First, unlike Benlair, the present equity suit is between the parties to a marriage and third parties, both parties to the marriage being parties to the equity suit. Secondly, in the matrimonial proceedings, Betty seeks a declaration that Mick and Angelina have no legal or equitable interest in McArthur Parade – presumably under Family Law Act, s 78, which gives that court power, in proceedings between parties to a marriage, to declare the existing rights and title of a party vis-à-vis a third party in property – which is the mirror image of the relief that Mick and Angelina seek in this Court.

24 Accordingly, the first issue on this application pertains to the jurisdiction of the Family Court. Is it seriously arguable that the Family Court does not have jurisdiction to entertain the equity suit in the circumstances of this case? If so, it will not be a more appropriate court to hear the equity suit than this court, which indisputably has jurisdiction. To answer this question requires some understanding of the issues that will arise in the equity suit, and those that will arise in the matrimonial proceedings.

The issues in the equity suit

25 Although these proceedings were instituted on behalf of Mick and Angelina by their son Mile as their tutor, all accept that there is no reason why they should have a tutor, and the tutor should be removed. Mick and Angelina contend that McArthur Parade was always intended to be a family home until they died. Mick says that he wanted his share upon his death to go to his grandson Justin, and believed that that was the effect of the deed and transfer when he signed them. They contend that the February 2004 deed and transfer should be set aside on the following grounds: first, non est factum, founded on the alleged absence of any proper comprehension of the content, nature and effect of the deed and transfer, including Mick’s poor English and the absence of an interpreter; secondly, misrepresentation as to the content, nature and effect of the deed and transfer, it being alleged that Bobby represented to Mick that the transaction was to ensure that the property passed to Justin on his death; thirdly, mistake as to the content, nature and effect of the deed and transfer, on the same basis; and fourthly, unconscionability, undue influence and Contracts Review Act, founded on the representations said to have been made by Bobby to Mick, and Mick’s deteriorating health, poor English, the absence of an interpreter, the relationship between the parties, and the absence of proper independent advice. They also claim a declaration as to the respective equitable interests of the parties in the property, arising from their respective contributions to the acquisition and improvement of McArthur Parade – in particular, those of Mick and Bobby to the purchase price and improvements, and the contribution of $50,000 said to have made by Angelina. This will require examination of the respective financial contributions of the parties to McArthur Parade.

26 If Mick and Angelina succeed, then the probable outcome would be that Bobby’s legal interest will be reduced from 100% to 50%, and Mick will resume a 50% legal and beneficial interest in the property (in which Angelina may have some beneficial interest). If they fail and the deed stands, then Bobby’s 100% legal interest will stand, but his equitable interest may be limited to a proportion reflecting his contributions vis-à-vis those of Mick (and Angelina) – although, if the statutory declaration is accepted as accurate, there may be no outstanding equitable interest in Mick, and Bobby may be the only person beneficially interested. Accordingly, the outcome of the equity suit will directly impact on the quantum of Bobby’s estate.

The issues in the matrimonial proceedings

27 In the matrimonial proceedings, so far as they relate to financial matters, the ultimate issue is what if any alteration should be made to the interests of Bobby and Betty in their property. It is well established that in such proceedings a three stage approach is applicable: first, the identification and valuation of the pool of property of the parties; secondly, the identification, evaluation and balancing of the parties’ respective contributions of the types referred to in s 79(4), being financial and non-financial, direct and indirect contributions to the acquisition, conservation and improvement of their property, and contributions to the welfare of their family (including in the capacity as homemaker and parent); and thirdly, the determination of what adjustment is required to the contribution-based assessment having regard to the matters referred to in Family Law Act, s 75(2) – which relate generally to the respective means and needs of the parties – to produce a just and equitable result.

28 Accordingly, the first step in property adjustment under Family Law Act, s 79, is the identification and valuation of the property of the parties. This necessarily involves determining the extent of any interest which either of the matrimonial parties has in property vis-à-vis a third party, or whether a matrimonial party is indebted to (or is a creditor of) a third party. Thus in the present case, in order to identify and value the net matrimonial estate, it will be necessary to determine the extent of Bobby’s (and Betty’s) beneficial interest in McArthur Parade – the obverse of which is the extent of any beneficial interest of Mick and Angelina in that property. As has been seen, the issues in the equity suit impinge directly on the quantum of Bobby’s estate; accordingly, the net matrimonial estate – and the quantum of any property adjustment – will be affected by whether the February 2004 deed and transfer are valid and effective, and (whether or not the deed is valid) by whether (as the statutory declaration suggests) the property was always Bobby’s beneficial property exclusively, and by the extent of any equitable interest that subsists in Mick.

29 Thus, as in many cases under Family Law Act, s 79, it will be necessary to determine if property held by a third party is beneficially property of a party, or if property held by a spouse is not beneficially that party’s property. In such cases there is no reason why - if, in the context of a dispute between husband and wife as to property, an issue arises as to whether the parties or either of them have a beneficial interest in property legally owned by a third party, or do not have a beneficial interest in property held in their own names, or as to the extent of any such interest - the Family Court cannot resolve that issue. It frequently must, and does. It is part of the process of identifying the pool of property of the parties to the marriage, which is available for division between them.

30 Moreover, beyond merely resolving the issue for the purpose of the s 79 proceedings, the Family Court may, under s 78, make a declaration as to the existing title or rights, if any, that a party has in respect of property [Moran & Moran (1994) 18 Fam LR 534; (1995) FLC ¶92-559]. The declaration sought in par 3 of Betty’s Amended Application in the Family Proceedings is presumably sought pursuant to s 78. Section 78(1) authorises that Court, in proceedings between the parties to a marriage with respect to existing title or rights in respect of property, to declare the title or rights, if any, that a party has in respect of property. On its face, this is not limited to the rights of each matrimonial party vis-à-vis the other, but embraces the rights of one (or both) spouses vis-à-vis a third party. Section 78(2) then authorises consequential orders to give effect to the declaration. Formerly, s 78(3) provided that such a declaration was binding on the parties to a marriage but not on any other person [Balnaves & Balnaves (1988) 12 Fam LR 488; FLC ¶91-952]. However, s 78(3) was repealed by the (CTH) Law and Justice Legislation Amendment Act 1988, s 39, in respect of proceedings instituted after its commencement. In the Second Reading Speech [Representatives (Hansard), 10 November 1988, p2840], the Attorney-General said that its repeal would enable the Court, in appropriate cases, to make orders that are binding on third parties as well as the parties to a marriage. The Attorney pointed to the fact that many family law property disputes involved adjudication of the rights of parties to a marriage as between themselves and third parties, who could intervene, but might not be bound because of s 78(3), the repeal of which would overcome the frustration for the Court and the third parties in being unable to make binding determinations about the existence and extent of the rights and liabilities of the third parties. An additional reason for its repeal – but not the prime, let alone only, reason – was to ensure that the cross-vesting scheme in its then form had full effect in relation to the Family Court.

31 There is no constitutional objection to orders being made under the Family Law Act which affect or bind third parties, so long as the proceedings in which they are made are a matrimonial cause. The power to legislate with respect to matrimonial causes includes matters incidental thereto. That power does not depend on any accrued jurisdiction, but is part of the ordinary (matrimonial causes) jurisdiction of the Family Court. The source of jurisdiction is Family Law Act, s 31(1)(a): “matters arising under this Act ... in respect or which matrimonial causes are instituted ...”. “Matrimonial causes” include “proceedings between the parties to a marriage with respect to property of the parties to the marriage or either of them” [s 4(1), par (ca)], and “any other proceedings ... in relation to concurrent, pending or completed proceedings ...” [par (f)]. Section 106B (formerly s 85) is an example of how such a matrimonial cause can affect and bind third parties, as it authorises the setting aside of transactions that defeat claims under the Act – for example, transfers of property by a spouse to a third party – so as to bind the third party, and it is settled that s 106B is constitutionally valid [Gould & Gould (1993) 17 Fam LR 156; FLC ¶92-434].

32 Similarly, there is no constitutional reason why, pursuant to s 78 and in aid of or ancillary to proceedings under s 79, a declaration cannot be made that property held by a third party is the beneficial property of a party. Insofar as s 78 authorises such a declaration, it is a law with respect to matrimonial causes, just as is s 106B; and a proceeding for such a declaration, like a proceeding under s 106B, is within par (f) of the definition of “matrimonial cause”. If the third party intervenes to place its position before the Family Court, or is joined so as to be bound, that does not deprive the proceeding of the quality of a matrimonial cause. And just because the result can be made binding on the third party similarly does not mean that the proceedings lose their quality of being a matrimonial cause. In Warby & Warby (2001) 28 Fam LR 443; (2002) FLC ¶93-091, 88,792 at [87], the Full Family Court said:

…Section 78 of the Family Law Act confers the power to make a declaration with respect to existing title or rights. Since the amendment of the Act in 1988, the provision is not expressly confined to the property of the parties to the marriage or either of them and there is no authority which says that such a declaration may not bind a third party. Relevantly too, the ratio decidendi of Gould & Gould; Swire Investments Ltd (1993) FLC ¶92-434 makes clear that this is within the constitutional power of the Commonwealth Parliament insofar as s 85 (as it then was) of the Family Law Act is concerned and, by way of obiter dicta , such validity should be assumed with respect to the exercise of other powers conferred by Part VIII of that Act.

33 Thus relief can be granted under s 106B and s 78 against third parties, as part of the ordinary federal jurisdiction of the Family Court, being within matrimonial cause (f), without involving any question of accrued jurisdiction. Accordingly, the Family Court has ordinary federal jurisdiction in some circumstances to make orders against and affecting third parties under the Family Law Act.

34 For the foregoing reasons, in my opinion it is not seriously arguable that, in proceedings between parties to a marriage, the Family Court cannot declare the rights and title of a spouse party vis-à-vis a third party so as to bind the third party. It follows that it is not seriously arguable that the Family Court does not have jurisdiction to entertain and determine Betty’s application for a declaration as to the extent of Bobby’s interest, if any, in McArthur Parade, which in substance if not in form is what claim 3 in her Amended Application seeks.

35 The conclusion that the Family Court plainly has jurisdiction to entertain and determine that claim is important, because the relief that Mick and Angelina seek in the equity suit is simply the reverse of the declaration that Betty seeks against them in the matrimonial proceedings. Accordingly, in the matrimonial proceedings, the Family Court will be required to consider and determine exactly the same issues that affect the extent of Bobby’s interest in McArthur Parade as arise in the equity suit, namely the validity or voidability of the February 2004 deed and transfer, and the equitable interests arising from contributions to its acquisition and improvement (although of course there will be other, additional issues in the matrimonial proceedings).

36 However, s 78 does not of itself confer jurisdiction to declare void the February 2004 deed and transfer void, or to set them aside, or to compel a retransfer to Mick, at general law or under the Contracts Review Act. Such relief could be granted by the Family Court only if state jurisdiction accrues to it in the circumstances of this case.

Accrued jurisdiction of the Family Court

37 With the demise of that part of the cross-vesting scheme that purported to confer on the Federal and Family Courts the jurisdiction of the state Supreme Courts, the accrued jurisdiction of federal Courts has assumed renewed significance. In the context of the Family Court, there has admittedly been some controversy in the past as to whether it has an “accrued jurisdiction”. For the reasons that follow, in my opinion it is not seriously arguable that it does not.

38 When a federal law confers jurisdiction on a court in respect of a “matter” arising under the Constitution or a federal statute, the jurisdiction extends to authorise determination of the whole “matter”. It has long been established that a matter is a “justiciable controversy”, the determination of which may involve both federal and state law [Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; Fencott v Muller (1983) 152 CLR 570; 57 ALJR 317, 331; Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261; 57 ALJR 731, 735; Smith & Smith (No 2) (1985) 10 Fam LR 283; FLC ¶91-604, 79,893-79,894]. The accrual of state jurisdiction to the High Court, so that it could determine non-federal parts of a “matter” arising under the Constitution or a federal law has been recognised for many years [R v Bevan; Ex parte Elias & Gordon (1942) 66 CLR 452]. This means that once the jurisdiction of the High Court is attracted by reason of the matter arising under a federal law, the Court is clothed with full authority essential for the complete adjudication of the “matter”, and not merely the federal aspect of it. Subsequently, it was recognised that other courts exercising federal jurisdiction also had accrued jurisdiction (sometimes called dependent, collateral, ancillary, attached, or pendent jurisdiction). In respect of the Federal Court, this was first recognised in Philip Morris, and further considered in Fencott v Muller and Stack v Coast Securities.

39 Thus, when a federal court is invested with federal jurisdiction, it is also invested with the power to determine non-federal aspects of a justiciable controversy which involves the exercise of its federal jurisdiction, provided that the non-federal aspects of the controversy form an integral part of the same controversy [Stack v Coast Securities]. The scope of the “matter” in respect of which a federal court has jurisdiction is described by the ambit of the justiciable controversy. There is but a single matter, and the non-federal claims are within the accrued jurisdiction, where the different claims arise out of “common transactions and facts” or “a common substratum of facts” [Philip Morris, 512 (Mason J)], notwithstanding that the facts upon which the claims depend “do not wholly coincide” [Fencott v Muller, 607 (Mason, Murphy, Brennan and Deane JJ); Re Wakim, 586 [141]]; or where different claims are so related that the determination of one is essential to the determination of the other [Philip Morris, 512 (Mason J)]; or where, if the proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings [Re Wakim, 586 [141]]. However, it must always be borne in mind that the ultimate question is not the existence of each of the several suggested indicia, but whether there is in substance a single justiciable controversy. In Stack v Coast Securities (at 294), it was put in the following terms:

In this, as in other cases, the recurrent problem is to identify what it is that falls within the Federal Court’s accrued jurisdiction. The majority judgment in Fencott v Muller provides assistance in reaching an answer: What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationship. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.

40 The accrued jurisdiction of federal courts was revisited by the High Court in Re Wakim, the case in which the cross-vesting of State jurisdiction to federal courts was held constitutionally invalid. Gummow and Hayne JJ said that it must now be regarded as established that the jurisdiction of a federal court having jurisdiction in a matter arising under a law made by the Commonwealth Parliament was not “restricted to the determination of the federal claim or cause of action in the proceedings, but extends beyond that to the litigious or justiciable controversy between parties, of which the federal claim or cause of action forms a part”. After referring to the passage in Stack v Coast Securities cited above (at [39]), their Honours continued that the question was whether there was, in the circumstances, a single justiciable controversy, because, if there was, the Federal Court had jurisdiction in the whole matter (notwithstanding that parts of it involved claims for damages at common law for negligence). The identification of the justiciable controversy was not to be determined only by the consideration of there being separate proceedings and different parties in the one court. The central task was to identify the justiciable controversy, which would ordinarily require close attention to the pleadings and the factual basis of each claim. In and since Re Wakim, an expansive view of the accrued jurisdiction has prevailed [see, for example, Cheers v Entercorp Finance Pty Ltd [1999] FCA 1475].

41 Although some doubt has been expressed as to whether the Family Court has accrued jurisdiction, there is no sound basis for this doubt. The statements of principle in Stack v Coast Securities and Re Wakim, referred to above, do not depend on any special characteristic of the Federal Court. The essential principle is that when a federal court is invested with jurisdiction in respect of a “matter” that arises under a federal law, then it has jurisdiction in respect of the whole “matter” – that is to say, the whole justiciable controversy – even though some aspects depend on state and not federal law. That principle applies just as readily to the Family Court as it does to the Federal Court.

42 Before cross-vesting, the accrued jurisdiction of the Family Court was considered in a number of cases [see Lye & Lye (1983) 8 Fam LR 999; FLC ¶91-324, 78,211 (Elliott J); Prince & Prince (1984) 9 Fam LR 481; FLC ¶91-501, 79,078, 79,086 (Evatt CJ, Pawley and Fogarty JJ); Mackay & Mackay (1984) 9 Fam LR 850; FLC ¶91-573, 79,629, 79,639 (Nygh, Strauss and Fogarty JJ); Smith & Smith (No 2), 79,891-79,898, 79,902 (Evatt CJ, Pawley and Fogarty JJ); Ireland & Ireland; Collier (1986) 11 Fam LR 104; FLC ¶91-731, 75,313 (Lindenmayer J)]. Although some judges (Fogarty J and Strauss J) expressed doubt, and there was no binding Full Court decision, the balance of authority favoured the view that the Family Court had accrued jurisdiction [Ireland & Ireland; Collier, 75,313 (Lindenmayer J)].

43 In my respectful view, the doubts expressed as to the existence of accrued jurisdiction in the Family Court are not sustainable. In Smith v Smith (No 3) (1986) 161 CLR 217; (1986) FLC ¶91-732, which was said by some to be inconsistent with the existence of accrued jurisdiction in the Family Court, the High Court considered whether the Family Court had accrued jurisdiction to approve a release under (NSW) Family Provision Act 1982, s 31, and held that it did not, because the question of such approval was quite distinct and severable from that of the approval of a s 87 maintenance agreement; that question was not part of the same “matter” as an application for approval of a maintenance agreement contained in the same deed under Family Law Act, s 87; and the power to approve it was expressly conferred only on the Supreme Court of New South Wales. However, the case does not suggest that the Family Court did not otherwise have accrued jurisdiction: as explained by the High Court in Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 (at [59], [138]), its point was that the approval of the Supreme Court was made a condition precedent to the efficacy of an agreement, and an application for such an approval was not a justiciable controversy, but a condition precedent to a binding contract which could not be satsfied by an approval of any court other than the Supreme Court. Smith is not inconsistent with the Family Court having accrued jurisdiction.

44 Another matter which caused doubt as to whether the Family Court had accrued jurisdiction, was the thought that the decision of the High Court in R v Ross-Jones; Ex parte Beaumont (1979) 141 CLR 504; FLC ¶90-606 was inconsistent with the notion that the Family Court had accrued jurisdiction [see Prince & Prince, 79,086; Smith & Smith (No 2)]. But R v Ross-Jones was concerned simply with the extent to which the Family Court could exercise jurisdiction in respect of partnerships (or in equity), and the question of accrued jurisdiction did not arise – unsurprisingly, as R v Ross-Jones was decided two years before Philip Morris, which first addressed the notion of accrued jurisdiction in federal courts other than the High Court. R v Ross-Jones is therefore not a reason to doubt that the Family Court has accrued jurisdiction.

45 Next, it was suggested that while accrued jurisdiction is consistent with the broad jurisdiction vested in the Federal Court of Australia, it is not consistent with the limited and specialised jurisdiction of the Family Court [see Mackay & Mackay, 79,629-79,634; Smith & Smith (No 2), 79,908-79,909]. This is not an adequate distinction. Each of the Federal Court and the Family Court depend for their jurisdiction on laws of the Parliament which vest in them jurisdiction in respect of specified classes of “matters”. The accrual of jurisdiction depends upon the scope of the justiciable controversy which constitutes the matter in respect of which jurisdiction is invoked. It can make no difference in the application of that principle whether a Court is invested with jurisdiction in respect of matters arising under only one law (such as the Family Law Act), or under multiple laws (such as the (CTH) Bankruptcy Act 1966, the (CTH) Copyright Act 1968 and the (CTH) Trade Practices Act 1974). In this respect it is essential to note that the Family Court is given jurisdiction in matters arising under the Family Law Act, in respect of which matrimonial causes are instituted – as distinct from simply being given jurisdiction in matrimonial causes: s 31(1)(a). With respect to those – including Strauss J – who have suggested otherwise, the suggestion that the meaning of “matter” is affected by the context in which it appears is wrong. The context is that of a Commonwealth Act conferring jurisdiction on a federal court, using a term which in that context is taken from the Constitution, is well-known, is the subject of extensive judicial consideration in the High Court, and is well understood. It has been used repeatedly by the Commonwealth Parliament in statutes to confer jurisdiction on federal courts. Its meaning is plain and well-established – a “justiciable controversy”. To think that Parliament meant something different in using that term in the Family Law Act is just not tenable.

46 Finally, some doubts about accrued jurisdiction were founded on (former) Family Law Act, s 78(3) – but since its repeal, that can no longer provide any cause for reservation. But even when it survived, it governed only the exercise of power under s 78, and not otherwise. It did not have the consequence that an order made in the accrued jurisdiction would not bind a properly joined third party.

47 It has also been suggested that, if the Family Court has an accrued jurisdiction, it is a narrow one. With respect, it is difficult to understand what this means. The scope of the accrued jurisdiction depends upon the scope of the single justiciable controversy. If the same substratum of facts gives rise to a wide range of disputes, some federal and some not, they are all within the accrued jurisdiction.

48 Since Re Wakim, the question whether the Family Court has accrued jurisdiction has been resolved in the affirmative. The issue was considered by Lindenmayer J in Lawson & Lawson; Wallmans (1999) FLC ¶92-874, in which his Honour was content to accept that the Court had an accrued jurisdiction, but found in the circumstances no relevant common substratum of fact. In Wade-Ferrell & Wade-Ferrell; Read (2001) 27 Fam LR 484; FLC ¶93-069, the Full Court said that it was certainly at least arguable that the court had accrued jurisdiction, although the question was left open.

49 In C & C; C (Accrued Jurisdiction) (2001) 28 Fam LR 253; FLC ¶93-076, the husband and wife commenced to cohabit in 1974, married in 1979, and separated in 1994. From about 1976, they lived on a property of which the registered proprietors were the husband and the third party as joint tenants. Neither of the spouses nor the third party had any other property of significance. The wife, claiming a beneficial interest in the property, applied for orders that the property be sold and that from the proceeds the third party receive one-fifth, and the remaining four-fifths be divided 65% to the wife and 35% to the husband. In response, the husband sought orders that he and the wife each receive 40% of the net proceeds, and the third party 20%. The third party sought orders that he receive 50% of the proceeds, plus a further sum representing a debt owed to him by the husband, and that the remainder be paid to the husband and the wife. The husband supported the wife’s claim to a beneficial interest in the property and maintained that there was an agreement between himself, the wife and the third party to that effect; the third party denied any such agreement and asserted that at all times he and the husband were the sole legal and beneficial owners. In holding that these issues could be resolved in the accrued jurisdiction of the Family Court, Jerrard J reasoned as follows. First, as the third party on any account had at least a 20% beneficial interest in the property and on his account a 50% beneficial interest, in determining the matrimonial cause between the husband and the wife, the court was obliged to enter into the question of the extent to which each of them had a beneficial interest in the property, and accordingly the extent to which the third party had such an interest. Secondly – given that the husband’s only asset of value was his interest in the property, the wife’s only asset of value was her claimed interest in the property, and the third party’s only asset of value was his claimed interest in the property – that there was one justiciable controversy between those three people, namely who it was who had the beneficial ownership of the property and in what proportions; that the claims of the husband and wife that they had 80% of the beneficial interest between them had a common sub-stratum of fact with the third party’s claim that he had at all times a 50% interest; and, moreover, that it was necessary to establish what were the beneficial interests in the property in order to determine what property there was for division between the husband and the wife, so it could be said that it was necessary to determine the non-federal dispute (between the husband and the wife on the one hand, and the third party on the other) in determining the federal dispute (being the matrimonial cause between the husband and the wife as to division of their property). On the authority of Re Wakim and Stack v Coast Securities, the non-federal claim therefore fell within the accrued jurisdiction of the court. Thirdly, insofar as the existence and exercise of accrued jurisdiction was concerned, there was no reason for distinguishing the federal Family Court from any other federal court. In my respectful view, that reasoning is compelling and correct.

50 In Warby, the Full Family Court held that the Family Court had an accrued jurisdiction. The matter came before the Full Court by way of a case stated which directly raised the question whether the Family Court had an accrued jurisdiction and if so its extent and the circumstances in which it should be exercised. The facts bear some resemblance to those of the present case. In about 1982, the wife had purchased a property with her father as tenants-in-common. The wife and her father made contributions to the purchase price, in amounts which were disputed by the husband, and there was a mortgage to a bank. Subsequently, in about 1984 or 1985, the husband and the wife commenced cohabitation in the property. In the late 1980s, the wife’s father paid a sum of money to the bank which discharged the mortgage. At about the same time, there was an agreement entered into (a) according to the wife, between the wife and the wife’s father for repayment to the him of the sum paid to discharge the mortgage, or (b) according to the husband, between the parties and the wife’s father for repayment to him of an amount by periodic payments to extinguish his equity in the property. The parties were married in 1989, and in about 1992 the repayments pursuant to the agreement were completed. The husband asserted, and the wife denied, that he assisted the wife in making them. The husband also claimed to have made various improvements to the property, and to have contributed his earnings from employment towards the mortgage and in reduction of the debt to the wife’s father pursuant to the agreement, which the wife also denied. The parties separated in about 1994 and the marriage was dissolved in 1998. The wife’s father and the wife remained the registered proprietors as tenants-in-common. The husband sought a declaration that the wife’s father held his interest in the property upon trust for the husband and/or wife, or alternatively subject to an equitable charge in their favour, or alternatively recovery of the amounts paid to discharge the mortgage and under the agreement. He also sought orders pursuant to s 79 against the wife. He filed an interlocutory application seeking an order joining the wife’s father (and, somewhat curiously, but presumably to flag the basis for the application) a declaration that such proceedings were within the accrued jurisdiction of the Court. Upon case stated, the Full Court held:

· That the Family Court’s jurisdiction is not restricted to the determination of the family law claim but (by way of accrued jurisdiction) extends beyond to the whole litigious and justiciable controversy of which the family law claim forms part – including those parts of it that arise under or are governed by State law, common law or equity, and whether between the parties to a marriage or between a spouse (or spouses) and a third party.

· That relevant to whether the Family Court would exercise the court’s accrued jurisdiction were what the parties had done, the relationships between or among them, the laws which attach rights or liabilities to their conduct and relationships, whether the claims are part of a single justiciable question (and in determining that question, whether the claims are “attached” and not “severable” or “disparate”), whether the claims are non-severable from a matrimonial cause and arise out of a common substratum of facts, and whether the court has the power to grant appropriate remedies in respect of the “attached” claims.

· The accrued jurisdiction extends to the determination of an issue against a third party which refuses to take part in the proceedings, if it has proper notice and has been afforded a proper opportunity to be heard.

51 In concluding that the Family Court may exercise accrued jurisdiction to determine the non-federal aspects of a justiciable controversy of which a matrimonial claim forms part, the court reasoned as follows. First, there was no constitutional basis for not applying to the Family Court the High Court’s analysis in Phillip Morris of how and why the Federal Court had and may exercise accrued jurisdiction. Secondly, the applicability of Phillip Morris, Fencott v Muller and Stack v Coast Securities to “federal courts” – a category which necessarily includes the Family Court – was expressly recognised in Re Wakim, and suggested in Smith & Smith (No 3). Previous decisions that the Family Court did not have accrued jurisdiction were based on the factual claim failing to attract the jurisdiction, rather than that the jurisdiction was not available. Thirdly, as both the Federal Court and the Family Court were creatures of statute and courts of limited jurisdiction, the fact that the Family Court’s jurisdiction was more specialised than that of the Federal Court did not provide a basis for doubting the availability of accrued jurisdiction in the Family Court. Fourthly, the current conferral of jurisdiction by s 31 of the Family Law Act in “matters arising” under the Act “in respect of which matrimonial causes are instituted or continued” is distinguishable from the earlier conferral of jurisdiction in “matrimonial causes” only. Fifthly, the circumstance that the Family Court’s powers and remedies were limited had led to a blurring of the distinction between the existence of accrued jurisdiction and the power to grant a remedy if accrued jurisdiction is exercised. The lack of power to grant an appropriate remedy does not demonstrate a lack of jurisdiction, but is relevant to whether the available accrued jurisdiction should, as a matter of discretion, be invoked. Sixthly, in any event, s 80 of the Act and s 34 of the Act conferred power to grant all kinds of remedies.

52 Warby accepted the view - first espoused by Barwick CJ in Philip Morris (at 475) – that the exercise of accrued jurisdiction is discretionary, and the Court went to some length to specify factors relevant as to when that discretion should be exercised. In this respect, one of the relevant factors mentioned by the Full Court in Warby was the availability of appropriate remedies. However, if a court has jurisdiction (by way of accrued jurisdiction) in a non-federal aspect of a matter, that carries with it the power to grant the appropriate remedies given by State law in that matter; one does not have to find the remedy within the Family Law Act. In ASIC v Edensor Nominees, the High Court considered the jurisdiction and power of the Federal Court, when properly seised of a matter, to grant additional relief between the same parties that was available under a state law that gave jurisdiction to a state court. Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ (Kirby J dissenting) held that (CTH) Judiciary Act 1903, s 79 – which provides that the laws of each State or Territory, including those relating to procedure, evidence, and the competency of witnesses, should be binding on all courts exercising federal jurisdiction in that State or Territory, in all cases to which they are applicable – picked up provisions of a law of the State so as to empower the Federal Court to make orders under those provisions; it is clear from their Honours’ reasoning (especially at [54]-[55]) that this included the common law of a State. And even if the power to grant appropriate remedies had to be found in the Court’s own governing statute, Family Law Act, s 34, confers ample power to grant all appropriate remedies in a matter in which the court has jurisdiction.

53 In Re Wakim, Gummow and Hayne JJ cast doubt on the existence of any discretion to decline to exercise accrued jurisdiction. That is consistent with the general duty of courts to exercise jurisdiction when it is regularly invoked [see, for example, Oceanic Sun Line Special Shipping Co v Fay (1988) 165 CLR 197]. However, in Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564, the Full Federal Court (French J, with whom Beaumont and Finkelstein JJ agreed), in a passage with which the Full Family Court expressed agreement in Bishop & Bishop (2003) 30 Fam LR 108; FLC ¶93-144, 78,404-78,406, accepted that the Court had a discretion to decline to exercise accrued jurisdiction, but explained (at 600-601):

90 … As Lindell comments in Lee and Winterton (op cit) at 221, the existence of a duty to exercise jurisdiction does not preclude the existence of exceptions based on the availability of a more appropriate alternative court as it does not deprive a litigant of access to a court altogether. While Voth and Oceanic Sun Line were concerned with the exercise of jurisdiction by an Australian domestic court in the case where a foreign court would also have jurisdiction, the propositions for which Voth is now authority grow out of the general principle recognised in both cases that a court having jurisdiction has an obligation to exercise it. The circumstances in which it may decline that obligation are exceptional. That is also consistent with the approach taken by Barwick CJ in the passage already cited from his judgment in Philip Morris.

91 The application of the discretion in relation to accrued jurisdiction is complicated by a functional overlap, apparent from the cases, between definition of the content of the jurisdiction and the discretion whether to exercise it. The joint judgment of Mason, Brennan and Deane JJ in Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 at 294, discussed the approach to the definition of accrued jurisdiction enunciated in Fencott v Muller at 608. That approach involved the application of ‘impression and practical judgment’ in deciding whether a federal and non-federal claim are within the ambit of the one controversy or matter before the Court. The joint judgment in Stack commented at 294:
Barwick CJ in Philip Morris had expressed a similar idea, stating that the exercise of the accrued jurisdiction “is discretionary and not mandatory”. In expressing this opinion, Barwick CJ expressly acknowledged that the Federal Court had a discretion to allow the non-federal claim to be determined in a State court.

Their Honours seemed to treat the evaluative assessment of the scope of the accrued jurisdiction in a particular case as overlapping with the determination whether it should or should not be exercised in that case. This appearance is reinforced by the subsequent proposition, in the joint judgment, that in exercising the discretion the Federal Court will have regard to the considerations mentioned in Fencott v Muller . The latter case had to do with the scope of the accrued jurisdiction.

92 The discretionary character of the accrued jurisdiction was the subject of observation by Gummow and Hayne JJ in Re Wakim; Ex parte McNally when they noted the alignment of the processes for defining the accrued jurisdiction and for deciding whether or not to exercise it which had emerged from the joint judgment in Stack . Their Honours said:
It is not clear what principles or criteria would inform the exercise of a discretion of this kind. It may be that the better view is that the references to “discretion” are not intended to convey more than that difficult questions of fact and degree will arise in such issues – questions about which reasonable minds may well differ. It is, however, not necessary to decide what is meant by the references to discretion in this context. (588)
As a matter of logic, it is an evaluative rather than discretionary approach which must be applied in determining the content of the Court’s accrued jurisdiction. No doubt there is a functional, as distinct from conceptual, convergence as assessment of the scope of the jurisdiction will involve consideration of matters of convenience particularly when deciding whether the federal claim is to be regarded as a substantial part of the controversy – Fencott v Muller at 609 quoted above. But as a matter of language the process of definition of the content of the jurisdiction logically precedes the discretion about whether to exercise the jurisdiction properly defined. And in my opinion that is how this Court, consistently with the language used by the High Court should continue to treat discretion. In doing so, it would be bound to take the functional approach indicated in the judgments of the High Court to which reference has been made.

54 In Australian Securities and Investments Commission v Edensor Nominees Pty Ltd, in the context of whether there was a discretion to refuse to entertain the State claim, Gleeson CJ, Gaudron and Gummow JJ, with whom Hayne and Callinan JJ generally agreed, said (at 585-586), in a passage also cited by the Full Family Court in Bishop:

52. ... First, while there are various claims, in these cases there is but one ‘matter’ in the constitutional sense and the court in question either does or does not have jurisdiction in respect of it. Moreover, in Re Wakim , Gummow and Hayne JJ (with whom Gleeson CJ and Gaudron J agreed generally) expressed doubts as to what was meant by statements in some of the cases that the ‘accrued jurisdiction’ was ‘discretionary’ rather than ‘mandatory’. Ordinarily, questions of abuse of process, forum non conveniens and the like aside, jurisdiction conferred upon a court is to be exercised.

55 Kirby J said (at 218):

As Gleeson CJ, Gaudron and Gummow JJ point out, reference to ‘accrued jurisdiction’ in a case where federal jurisdiction is attracted because of the identity of a party may distract attention from the central question, which is to identify the relevant ‘matter’: the controversy which is to be quelled. As their Honours say, ordinarily, questions of abuse of process, forum non conveniens and the like aside, jurisdiction conferred upon a court is to be exercised. References to ‘accrued jurisdiction’ being ‘discretionary’ are apt to mislead.

56 Nonetheless, in Bishop, the Full Family Court concluded:

31. The cases frequently seen in this Court are more likely to require the determination of “State” issues involving third parties than issues between the parties themselves. Sections 78, 79 and 114 of the Family Law Act provide the Court with a very wide jurisdiction to determine property disputes between parties to a marriage arising out of their marital relationship. There is rarely need to approach the matter by adopting any additional jurisdiction to resolve such disputes. Frequently however, as in this case, the extent of the parties’ wealth and the pool of assets and financial resources, net of liabilities, cannot be ascertained without determination of disputes involving third parties.
…
33. We think some caution and a very careful examination of the facts needs to be exercised before applying the general notion that if a court has jurisdiction it ought exercise it when dealing with claims involving third parties in family law cases. That caution having been said, if, as in this case, the facts support the exercise of accrued jurisdiction, the Court ought not to shy away from it. It is a very important and necessary part of the Court’s powers.

57 It is in any event difficult to conceive of proper grounds for declining to exercise jurisdiction in respect of part of a single justiciable controversy. As Barwick CJ added in Philip Morris (at 475-476):

But, I would add that there would need to be very good reasons why a court which could resolve the whole matter should refuse or fail to do so. Generally speaking, one would expect that a court, once its federal jurisdiction is excited or attracted, would proceed to resolve the whole matter in relation to which federal jurisdiction had been attracted.

58 In Bishop, the Full Family Court, applying Warby, allowed an appeal from a primary judge’s discretionary refusal to exercise accrued jurisdiction:

35. As indicated by that Full Court, the Family Court of Australia has accrued jurisdiction. The issues to be determined as to whether or not it is appropriate to exercise the jurisdiction generally would involve the consideration of six issues listed above. We read her Honour’s reasons for judgment as having paid considerable attention to the fourth and fifth of the issues to be determined, but having neglected to consider properly and evaluate issues one, two, three and six, all of which are appropriate to bring to bear in determining whether or not to allow the joinder of parties to enable the accrued jurisdiction claims to go forth.
36. In this case there can be no doubt that the financial affairs of the husband and the wife are and have been intimately interwoven into the financial affairs of the parties sought to be joined. It is impossible to determine the issues as to the parties’ financial affairs without unravelling them.
37. The purpose of exercising accrued jurisdiction is to enable the Court to deal with a single justiciable controversy. This does not mean a single justiciable issue. The present case makes it obvious that there may be many issues but one broad controversy, that being as to what part of the assets of all of the parties is subject to the making of orders of this Court under s 79. The reason why the jurisdiction is exercised is to enable the real issues to be determined between the parties, the underlying purpose being to do justice between them. In applying the tests laid down in Warby, these matters should be borne in mind by judges who are called upon to exercise the jurisdiction.
38. In cases where all that is sought is the joinder of parties, particularly where there is no opposition to it, a judge hearing an application for joinder should be very slow to refuse it. When it comes to the making of final orders different considerations obviously apply, as by that time it will be much clearer as to which issues need to be determined to make appropriate orders under s 79. The reason and purpose for making orders involving third parties should nevertheless be kept firmly in mind.

59 Accordingly, the Family Court has accrued jurisdiction, just as does the Federal Court and the High Court, to determine the whole of a justiciable controversy, even though some aspects of it may involve State and not federal law. So long as the controversy arises under the Family Law Act, it need not be limited to it. Once seized of jurisdiction in respect of a matter arising under the Family Law Act – pursuant to Family Law Act s 31(1)(a) – the jurisdiction of the Court extends to the whole of the matter, that is to say, the justiciable controversy, even though its determination requires the application of State law. While there may be a discretion to decline to exercise accrued jurisdiction, it will be an exceptional case in which that discretion can properly be exercised so that the whole of a justiciable controversy is not resolved in the one court.

There is accrued jurisdiction in this case

60 The equity suit and the matrimonial proceedings share a common substratum of facts, notwithstanding that the underlying facts of each do not wholly coincide – in that while the matrimonial proceedings involve wider and additional issues, the facts that underlie the equity suit are a subset of those that underlie the matrimonial proceedings. The issues of the validity of the February 2004 deed and transfer, and the beneficial interests in McArthur Parade as between Bobby on the one hand and Mick (and possibly Angelina) on the other, are common to both proceedings. Those issues would arise in the s 79 proceedings even if they were not directly raised by order 3 sought in the Wife’s Amended Application: their resolution is an essential step in the first stage of the s 79 exercise. C & C, Wade-Ferrell, Warby and Bishop show that where it is necessary in the exercise of its s 79 jurisdiction for the Family Court to decide whether property is that of a party to the marriage or of a third party, the Court may in its accrued jurisdiction determine that issue so as to bind that third party. In this case the position is all the stronger, because Betty’s claim in the matrimonial proceedings for a declaration under s 78 is the mirror image of the relief claimed by Mick and Angelina in the equity suit. It is obvious on the face of the declaration sought in par 3 of her Amended Application that it is the antithesis of what Mick and Angelina seek in the Supreme Court. Betty’s s 78 claim in the Family Court shares an identical substratum with Mick and Angelina’s claim in the equity suit.

61 Further, the two proceedings are also related in the sense that the determination of one is essential to the determination of the other: the ascertainment of the beneficial interests in McArthur Parade as between Bobby on the one hand and Mick (and possibly Angelina) on the other is the ultimate issue in the equity suit; and it is also an essential aspect of determining the pool of divisible property, and thus the resolution of the matrimonial proceedings, and has to be determined before the matrimonial proceedings can be resolved. The Family Court cannot identify and value the property available for division without first establishing the extent of Bobby’s beneficial interest in McArthur Parade, and the factual and legal considerations relevant to that issue are those which Mick and Angelina seek to agitate in the equity suit. The fact that the extent of Bobby’s beneficial interest in McArthur Parade is common to both proceedings is more than the coincidence of one factual element. It is the ultimate issue in the Supreme Court Proceedings; and it is a fundamental element of the first step in the Family Court Proceedings. Determination of the extent of Bobby’s beneficial interest in McArthur Parade is fundamental to the determination of the Betty’s claim for property adjustment against Bobby, because it is essential to the identification and valuation of the property of the matrimonial parties for division.

62 If the two proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings: the Supreme Court could find (as Mick and Angelina, and presumably Bobby, contend in the equity suit) that the February 2004 deed and transfer are void and that Bobby has no more than a 50% beneficial interest in McArthur Parade, whereas the Family Court could find (as Betty contends in the matrimonial proceedings) that the deed and Transfer are valid and that Bobby is beneficially entitled to the whole of McArthur Parade. While the risk of inconsistent findings is reduced in the present case - because, with Betty and Bobby being parties in both proceedings, its determination in one proceeding would probably result in an issue estoppel in the other - that does not deny that the same issues arise in both proceedings.

63 Thus, while the proceedings in the Family Court involve far more extensive issues (including, for example, parenting issues, as well as contributions other than financial and to property other than McArthur Parade), the issues in the equity suit are a subset of those in the matrimonial proceedings; they are substantially identical to one element of the matrimonial proceedings (the claim for a s 78 declaration); Mick and Angelina’s claim in respect of McArthur Parade must be resolved in order to ascertain the pool of property available for division between the matrimonial parties; and if the proceedings were in two separate courts there could be inconsistent findings, but for the potential operation of issue estoppels.

64 In Warby, the Full Family Court said:

93. 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.

65 That statement is equally apposite here. The claim in the equity suit forms part of the justiciable controversy in respect of which the matrimonial proceedings have been brought. Accordingly, there is but one justiciable controversy; and the Family Court has accrued jurisdiction in respect of so much of that controversy as does not fall within its ordinary jurisdiction.

The relevant considerations for transfer

66 I therefore turn to the relevant considerations under s 5(1)(b)(ii).

67 As to the first – whether the relevant proceeding would but for cross-vesting and accrued jurisdiction have been incapable of being instituted in the Supreme Court and capable of being instituted in the Family Court – the equity suit was plainly capable of being instituted in the Supreme Court. The jurisdiction of the Supreme Court to entertain it does not depend on any law relating to cross-vesting. But for the pendency of Betty’s application in the Family Court, no question of the proceedings being brought in the Family Court would have arisen. As the matrimonial proceedings were already pending when the equity suit were instituted, the proceedings could also have been instituted in the Family Court, but only in reliance on accrued jurisdiction. Accordingly, this factor suggests that the Supreme Court is more appropriate.

68 As to the second – the extent to which the matters for determination in the relevant proceeding arise under a law of the Commonwealth and are not otherwise within the jurisdiction of the Supreme Court – the matters for determination in the equity suit do not arise under or involve questions as to the application or validity of a Commonwealth law, and are within the jurisdiction of the Supreme Court in any event. This factor therefore also suggests that the Supreme Court is the more appropriate.

69 That leaves to the third factor, the interests of justice. The question is simply whether, assuming that the jurisdiction of the transferor court has been regularly invoked, it is in the interests of justice that the proceedings be heard and determined in the transferee court, there being a statutory obligation to transfer the proceedings to that court whenever it appears to be in the interests of justice to do so – for which purpose it is both necessary and sufficient that the transferee court be the “more appropriate” forum [BHP Billiton Ltd v Schultz (2004) 221 CLR 400, 421 [14], 434-5 [63]]. In identifying the “more appropriate forum”, relevant considerations include the cost and efficiency of proceedings in the respective jurisdictions, and the “connecting factors” described by Lord Goff in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460, 478 – including matters of convenience and expense such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law governing the relevant transaction [BHP v Schultz, 422 [18]]. Consideration of relevant connecting factors may identify a “natural forum” [BHP v Schultz, 423 [19]; cf British American Tobacco Australia Ltd v Gordon [2007] NSWSC 230, [44]]. As Schultz makes clear, the interests of justice concern those of both parties, and rather than the selection of the most advantageous, or least disadvantageous, forum for one of them, the “interests of justice” are to be judged by more objective factors, such as facilitate identification of the “natural forum”, in which objectively judged it might be expected that the dispute would fall to be resolved, with its concomitant juridical advantages and disadvantages for each party, whatever they may be [cf British American Tobacco v Gordon, [47]].

70 I reject the submission, advanced on behalf of Bobby, that the applicant for a transfer bears some onus or has to show some good reason for disturbing the plaintiffs’ initial choice of venue, or that the plaintiff’s choice of court is to be given weight; despite earlier suggestions to that effect [Global Technology Australasia Limitedv Bank of Queensland [2001] VSC 230; Bourke v State Bank of New South Wales (1988) 22 FCR 378; Kenda v Johnson (1992) 15 Fam LR 369, (1993) FLC ¶92-331, 79,505; Re Chapman & Jansen (1990) 13 Fam LR 853, FLC 92-139; Bankinvest AG v Seabrook (1988) 14 NSWLR 711], it is now established that an applicant for a transfer bears no burden of persuasion or onus of proof [BHP v Schultz at 437 [71]; Bankinvest AG v Seabrook, 727], and no particular significance attends the plaintiff’s original choice of forum [BHP v Schultz, 425-6 [26]-[27], 439 [77]; British American Tobacco v Gordon, [43]]. It is only if both courts are equally appropriate that the initial choice will have significance; if one is more appropriate than the other, however so slightly, a transfer to the more appropriate court is mandatory.

71 The present is not a case in which geographical or local connection or the availability and convenience of witnesses is of significance; whether in the Supreme Court or the Family Court, the proceedings would likely be heard in Sydney, or possibly in Wollongong; neither court offers any advantage over the other in this respect.

72 Contrary to the submissions for Bobby, I do not accept that in the circumstances of this case the provision of the February 2004 deed, that it shall be governed by the laws of New South Wales, is significant: it relates to choice of law and not choice of court, and either court can equally apply the law of New South Wales. Insofar as it applies the general law, the Family Court sitting in New South Wales will apply the general law of New South Wales. This provision does not assist in identifying, in the present context, which court is the natural or more appropriate forum.

73 Nor is the professed inexpertise of Mick and Angelina’s lawyers in the Family Court a matter of moment, particularly since the appropriateness of the Family Court as the forum had been raised from the outset of their intervention, and that they will be required to respond to Betty’s amended application in the matrimonial proceedings in any event. A party cannot dictate the appropriateness of a forum by selection of particular lawyers.

74 Nor is the expected time to hearing a factor that favours retaining the equity suit in this court in this case, though it may be influential in some. There is evidence that, if transferred to the Family Court, the consolidated proceedings are not likely to be allocated a hearing date before about November 2007. If I could be confident that the equity suit could be heard and determined before then, without disrupting the preparation and progress of the matrimonial proceedings, then there might be more to be said in favour of determining them in this Court, although considerations of duplication would still point in the other direction. But the equity suit is unlikely to be heard in this court significantly before November 2007, and if the Family Court did not restrain their prosecution, it would probably adjourn the matrimonial proceedings until after their determination, further delaying the ultimate resolution of issues in the matrimonial proceedings between Bobby and Betty.

75 However, it is significant, in identifying the “more appropriate forum” for the equity suit, that the factual context for both proceedings significantly overlaps: the relief claimed by Mick and Angelina in these proceedings involves not only an examination of the circumstances of the 24 February 2004 transactions, but also of the respective contributions of the parties to the acquisition and improvement of McArthur Parade, which will also be an issue in the matrimonial proceedings. Were Mick and Angelina’s claim limited to one to set aside the 2004 transactions, the evidence and issues would be within a relatively narrow compass which could be addressed without being revisited in the matrimonial proceedings. However, their claim for a declaration as to the beneficial interests in McArthur Parade will require an examination of the respective contributions of the parties to McArthur Parade, which will inevitably overlap the second stage of the property adjustment proceedings in the Family Court. No issue estoppel would preclude the revisitation of this matter in the matrimonial proceedings, because, if this court were to resolve the beneficial interests in McArthur Parade between Mick (and Angelina) and Bobby, by reference to their contributions to its acquisition and improvement, the Family Court would nonetheless have to consider and evaluate the contributions made by and on behalf of Bobby and Betty to the acquisition ,conservation and improvement of all their property, including but not limited to McArthur Parade, and taking into account contributions (including to other properties, and to the welfare of the family), which would not be relevant to the equity suit, in addition to those which this court would consider in the equity suit. This would result in much duplication of evidence, and some of issues for determination, which would be avoided if both proceedings were determined by the one court.

76 Only the Family Court can resolve the whole controversy without duplication of evidence and issues. The issues in the equity suit are a subset of those in the matrimonial proceedings: they are an aspect of the larger dispute already being litigated in the Family Court to which Mick and Angelina are now parties. The involvement of Mick and Angelina in the matrimonial proceedings is now inevitable as they have been joined, and would in any event be witnesses; and unless transferred by the Family Court – which no party has proposed – the s 78 application will remain part of the matrimonial proceedings and will be litigated in the Family Court. Declining to transfer the equity suit to the Family Court will not alter that position – although the Family Court might in those circumstances (but might not) adjourn the matrimonial proceedings until the equity suit has been resolved in this court, or transfer the whole of the matrimonial proceedings to this court. While both courts could (as a matter of jurisdiction) entertain and determine the whole justiciable controversy – as the Supreme Court has cross-vested jurisdiction in matters under the Family Law Act [Young v Lalic (2006) 197 FLR 27; [2006] NSWSC 18, [37]-[48]] – nonetheless no party has suggested or proposed that in this case this Court exercise its cross-vested family law jurisdiction: Betty proposes that the whole controversy be heard and determined in the Family Court, whereas Bobby, Mick and Angelina wish the equity suit to be determined in this court, and the matrimonial proceeding in the Family Court. This has the practical consequence that the larger controversy must be determined in the Family Court, because it is not open to this Court to make an order compelling the transfer of the Family proceeding to this Court, and assuming (without deciding) that this Court could – in pursuance of its implied power to protect its own processes and proceedings, and/or in exercise of equitable jurisdiction to restrain proceedings which are, according to principles of equity, vexatious or oppressive – restrain a party from prosecuting proceedings in a federal court [cf CSR Limited v Cigna Insurance Australia Ltd (1997) 189 CLR 345], no question of doing so could arise in this case, where Betty’s proceedings were instituted first in time, in a clearly appropriate forum, which can resolve the whole controversy. On the other hand, it would be open to the Family Court to restrain Mick and Angelina from prosecuting the equity suit in this Court, although the power to do so would not lightly be exercised [cf Lederer & Hunt [2007] FamCA 55]. Such anti-suit injunctions are more readily granted within the confines of the federal system, than where proceedings have been issued in a foreign court and a local court [Dibeek Holdings Pty Ltd v Notaras (1997) 141 FLR 364, 373-374]. The present is a case where exactly the same issue will be litigated in two local courts: one of federal and one of State jurisdiction. It is usually inappropriate, if not vexatious, that the same issue be litigated in two different courts, and, within the federal system, it is sufficient to support an injunction that the test of inappropriateness be satisfied [Dibeek Holdings Pty Ltd v Notaras, 373, 374]. Pegasus Leasing Ltd v Cadoroll Pty Ltd (1996) 59 FCR 152 would support the grant of an injunction in the context of the instant case: in order to determine the respective extent of Bobby’s and Mick’s beneficial interests in the property, the evidence will be duplicated in each proceeding, and there is a real possibility that the two courts might reach different conclusions on that very question. Accordingly, in the present case, for practical purposes only the Family Court can resolve the whole controversy. The fact that one court can resolve the whole justiciable controversy and the other cannot will usually indicate that the former is the more appropriate court, although there may be exceptional cases – corresponding with those in which the federal court would as a matter of discretion decline to exercise accrued jurisdiction – in which that might not be so.

77 Moreover, the equity suit arises in the context of the breakdown of the marriage of Bobby and Betty. The occasion for the dispute that underlies the equity suit appears to have been the breakdown of that marriage, which triggered the matrimonial proceedings. Mick and Angelina have raised the issue which underlies the equity suit during the pendency of the matrimonial proceedings, and if they prevail it will be to the detriment of Betty in those proceedings. In that way, they have effectively intervened in the matrimonial dispute. That is not to suggest that they are not entitled to do so, but where strangers to a marriage use the occasion of its demise to assert a right against the property of one or other (or both) of the spouses, they cannot reasonably complain if they become entwined in the matrimonial dispute. Third parties who intervene in matrimonial disputes in this way – especially associates, such as parents and private companies, of one or other of the spouses - cannot complain if their dispute is treated as part of the larger matrimonial dispute which it normally is. Where third parties who assert rights against matrimonial property do so concurrently with pending matrimonial property proceedings, it will ordinarily be appropriate for those issues to be resolved in the matrimonial proceedings, and for the third party to join in those proceedings for that purpose, rather than to commence separate litigation, in another court, which almost inevitably results in duplication of evidence, issues, time and costs. Here, prior to the institution of the equity suit, Mick and Angelina knew of the proceedings in the Family Court, and indeed had been invited to join in them should they wish to assert an interest in the matrimonial property, but they chose to commence proceedings in this court notwithstanding that knowledge and invitation.

78 Accordingly, while the matrimonial dispute is a more extensive one, which will cover considerably more ground, than the dispute in the equity suit – including children’s matters, and property in addition to McArthur Parade – so that, unless the exceptional course of determining a separate question were adopted in the Family Court, Mick and Angelina would be involved in a much larger piece of litigation than would be the case if the equity suit were to remain in this court, nonetheless the natural forum for the equity suit in the present context is the Family Court, because:

· the factual context of both proceedings significantly overlaps: there would be much duplication of evidence, and some of issues for determination, which would be avoided by both proceedings being determined by the one court;

· for practical purposes, only the Family Court can resolve the whole controversy: the s 78 application will remain part of the matrimonial proceedings and will be litigated in the Family Court, whether or not the equity suit is transferred to the Family Court; this court cannot compel the parties to litigate the matrimonial proceeding here, and no party has proposed that the matrimonial proceeding be transferred to it; whereas it would be open to the Family Court to ensure that all issues were litigated in that Court, by restraining the prosecution of the equity proceedings in this court;

· the equity suit arises in the context of the breakdown of the marriage of Bobby and Betty: the occasion for the dispute which underlies the equity suit appears to have been the breakdown of that marriage, which triggered the matrimonial proceedings. Where strangers to a marriage use the occasion of its demise to assert a right against the property of one or other (or both) of the spouses, they cannot reasonably complain if they become entwined in the matrimonial dispute.

Conclusion

79 My conclusions may be summarised as follows.

80 By reason of matrimonial cause (f) and s 78 of the Family Law Act, the Family Court has jurisdiction and power, in aid of or ancillary to proceedings under s 79, to make a declaration under s 78 that a spouse is beneficially entitled to property held by a third party, or that a spouse is not beneficially entitled to property in his or her name, so as to bind the third party. That is the jurisdiction primarily invoked by order 3 sought in the wife’s amended application. It is part of the ordinary federal (matrimonial causes) jurisdiction of the Family Court, and does not depend on any question of accrued jurisdiction.

81 It is now established that the Family Court has accrued jurisdiction, so that where there is a single justiciable controversy which includes (but extends beyond) a matrimonial cause, that court has jurisdiction in respect of the whole matter including those aspects which fall to be determined under State law. This is typically so where in the course of s 79 proceedings, an issue arises as to the entitlement of a spouse to property, vis-à-vis a third party.

82 Here, a fundamental issue in the s 79 proceedings (accentuated by the wife’s application for a s 78 declaration, although it would arise anyway) is the extent of Bobby’s beneficial interest in McArthur Parade (which necessarily includes the validity and effect of the February 2004 deed and transfer). Resolution of that question is a necessary step in determining the nature and value of the assets of the matrimonial parties available for division under s 79. The s 79 proceedings cannot be determined without the resolution of that question. Exactly the same question is the ultimate issue in the equity suit, in which the relief claimed is the mirror image of the s 78 declaration claimed by Betty in the matrimonial proceedings. The equity suit comprises a subset of the issues in the matrimonial proceedings. There is a risk of conflicting findings (but for any issue estoppel) if the proceedings are determined in separate courts. Accordingly, there is but one justiciable controversy; and the Family Court has accrued jurisdiction in respect of so much of that controversy as does not fall within its ordinary jurisdiction.

83 In those circumstances, it is not seriously open to doubt that the Family Court has jurisdiction to determine and declare the beneficial interests in McArthur Parade, and incidental thereto the validity of the February 2004 deed and transfer.

84 While the matrimonial dispute is a more extensive one, covering considerably wider ground, than the dispute in the equity suit, with the consequence that a transfer would require Mick and Angelina to be involved in a much larger piece of litigation than would be the case if the equity suit were to remain in this court, nonetheless the natural forum for the equity suit in the context of this case is the Family Court, because:

· the factual context of both proceedings significantly overlaps, and there would be much duplication of evidence, and some of issues for determination, unless both proceedings are determined by the one court;

· for practical purposes, only the Family Court can resolve the whole controversy;

· the equity suit arises out of the breakdown of the marriage, and the resolution of the issues in the equity suit is a necessary incident to the resolution of issues in the matrimonial proceedings.

85 In my opinion, justice can best be done by the one court resolving the whole justiciable controversy, in order to avoid both duplication and inconsistency. In the present context, the Family Court is the more appropriate court for that purpose, because the larger controversy, of which the smaller forms part, is a matter properly and primarily in the jurisdiction of the Family Court. It follows that the proceedings must be transferred to the Family Court. If as a matter of principle the effect of this decision is that third parties who, in the context of a marriage breakdown, assert rights against matrimonial property, should join in existing matrimonial proceedings rather than commence separate litigation, then the beneficial result is that all issues are litigated only once and only in one court, the risks and costs of duplication and inconsistency are avoided, and forum-shopping and collateral litigation is discouraged. Third parties – especially associates, such as parents or children or private companies, of one or other of the spouses - who use the occasion of the demise of a marriage to assert a right against the property of one or other (or both) of them, cannot reasonably complain if their claim is treated as part of the larger matrimonial dispute in the context of which it arises.

86 My orders are:

(1) Pursuant to Jurisdiction of Courts (Cross-Vesting) Act , s 5(1)(b), order that the proceedings be transferred to the Family Court of Australia, Sydney Registry.

(2) Order that the plaintiffs and the first defendant pay the second defendant’s costs of the motion.

(3) Reserve leave to the parties to apply either forthwith or by arrangement with my Associate within three days to vary or set aside the costs order, at the risk as to costs of the party making such application.

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