WATERS & DURRANT
[2015] FCCA 2419
•4 August 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WATERS & DURRANT | [2015] FCCA 2419 |
| Catchwords: FAMILY LAW – Property – caveat against title – consideration of the jurisdiction of the Federal Circuit Court of Australia – exercise of accrued jurisdiction. |
| Legislation: Family Law Act 1975, Part VIIIAA, Part VIIIAB Transfer of Land Act 1958 (VIC) |
| Valceski v Valceski [2007] NSWSC 440 Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR Wakim; Ex Parte McNally and Ors (1999) 163 ALR 270 Warby & Warby [2002] FLC 93-091 Bishop & Bishop (2003) FLC 93-144 Correy & Correy & Ors [2014] FCCA 1939 Scobie & Dudley & Anor [2014] FCCA 816 Dobbie & Bolden [2014] FCCA 1911 Talbot & Talbot [2014] FamCA 128 D & D [2009] FMCAfam 1444 Fencott v Muller (1983) 152 CLR 570 Stack v Coast Securities (No.9)Pty Ltd (1983) 154 CLR 261 Prince & Prince (1984) FLC 91-501 Smith & Smith (No.3) (1986) FLC 91-732 Surfers Paradise Coaches (Qld) Proprietary Limited v Tsu Chan Lin [2007] NSWSC 475 Chan v Cresdon (1989) 168 CLR 242 Dunecar Proprietary Limited (in liq) v Colbron [2001] NSWSC 1181 Marinkovic v Pat McGrath Engineering Pty Limited [2004] NSWSC 571 Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260 |
| Applicant: | MR WATERS |
| Respondent: | MS DURRANT |
| File Number: | AYC 310 of 2014 |
| Judgment of: | Judge Harman |
| Hearing date: | 4 August 2015 |
| Date of Last Submission: | 4 August 2015 |
| Delivered at: | Albury |
| Delivered on: | 4 August 2015 |
REPRESENTATION
| The Applicant appeared in person |
| Counsel for the Respondent: | Ms Southey |
| Solicitors for the Respondent: | Loretta Terrill Family Lawyer |
ORDERS
I declare that I am satisfied that the Federal Circuit Court of Australia is sufficiently vested with accrued jurisdiction and that it is appropriate for that jurisdiction to be exercised so as to deal with, hear and determine any claim by the parties jointly or severally, under the Transfer of Land Act 1958 (VIC) and as might deal with or address the caveat recorded against title of their property recorded by (omitted) Pty Ltd.
The matter is adjourned for further mention and directions to 1 October 2015 at 9:30am.
Within 14 days Ms Durrant shall file and serve upon each of Mr Waters and the solicitors for (omitted) Pty Ltd an Application in a Case setting out the precise Orders which she seeks together with an Affidavit in support thereof, with respect to:
(a)The manner in which she and Mr Waters hold title to the property Property L, in the State of Victoria being all that parcel contained in certificate of title Volume (omitted) Folio (omitted);
(b)The caveat recorded against title of the above property by (omitted) Pty Ltd and claiming an estate in fee simple in that property as a consequence of the deed of guarantee and indemnity entered into between (omitted) Pty Ltd and Mr Waters;
(c)Joinder of (omitted) Pty Ltd as a party to the proceedings as regards any plea for relief under the Transfer of Land Act 1958 (VIC) and/or Part VIIIAA of the Family Law Act 1975;
(d)The solicitors for Ms Durrant shall, in addition to service of the above Application in a Case and Affidavit, provide to (omitted) Pty Ltd or their attorneys a copy of these Orders and reasons for Judgment delivered today (upon them becoming available);
(e)The solicitors for Ms Durrant shall be at liberty to provide a copy of these Orders, reasons for Judgment (upon them becoming available) together with any Application in a Case and Affidavit filed as directed above to the Registrar of Titles Victoria.
Reserve the costs of both parties with respect to today’s proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Waters & Durrant is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ALBURY |
AYC 310 of 2014
| MR WATERS |
Applicant
And
| MS DURRANT |
Respondent
REASONS FOR JUDGMENT
These are proceedings which relate to issues of property division as between a husband, Mr Waters, (the Applicant in the proceedings) and the wife, Ms Durrant, (the Respondent in the proceedings).
The matter has an unfortunately lengthy history before the Court, although not as lengthy as some.
The matter was commenced by an Application Initiating Proceedings filed 3 July 2014. A Response thereto was filed 18 September 2014. Since that time, the relief sought by one or both parties has been amended.
The matter was listed for hearing 22 July 2015. The matter could not be reached at that time due to the Court’s work pressures and other business before the Court. In any event the matter could not realistically have proceeded at that time. On 22 July, 2015 the parties put some significant effort into negotiating an in-principle agreement. That agreement was, however, contingent upon resolution of an issue which had arisen, namely, the existence of a caveat against Title being a caveat recorded by (omitted) Pty Ltd. I will return to and deal with that issue shortly.
The in-principle agreement between the parties has now fallen by the wayside. That is not a criticism of either party. The Court is not aware of either the terms of the in-principle agreement or the circumstances that have led to its demise. The Court need not know those details.
The significant issue which has created delay and difficulty at this point is the issue of the caveat. The caveat that is recorded against title is Exhibit R2. It claims an estate in fee simple with respect to a property owned by the parties as joint tenants.
The grounds of the claim are expressed as:
…as per the deed of guarantee and indemnity entered into between (omitted) Pty Ltd and Mr Waters.
The caveat purports to absolutely prohibit any dealing with Title of the property. Clearly, the wife cannot be impeded in making Application for severance of joint tenancy so as to render the parties, pending determination of these proceedings and any adjustment of interests in property that may result therefrom, tenants in common and equal shares.
The significant issue that is presented to the Court today relates solely and squarely to the caveat and, in particular, whether the Court should exercise accrued jurisdiction so as to entertain an Application under the Transfer of Land Act 1958 (VIC) and so as to compel removal of the caveat or at least restrict its operation, it presently being recorded against Title of the entire property and purporting to affect the interests of both parties.
Accrued jurisdiction
In dealing with the proceedings today, I have received a substantial Case Outline document on behalf of the wife, which is of considerable assistance. The Case Outline document recited the history of the proceedings, notice given to (omitted) Pty Ltd as a third party whose interest might be affected by Orders sought in the proceedings, as well as the production of material by them.
Three Exhibits are before the Court comprising:
a)Exhibit R1, certain correspondence as between the wife’s attorneys and the attorneys for (omitted) Pty Ltd;
b)Exhibit R2, the caveat against title; and
c)Exhibit A1, a bundle of documents including a document headed “Application for Commercial Credit” and being, in effect, the very deed of “guarantee and indemnity” referred to in the caveat.
Counsel for Ms Durrant urges the Court to accept that the Federal Circuit Court of Australia has, and is entitled to exercise accrued jurisdiction sufficient to determine that issue. It is urged that this Court would adopt the jurisdiction of the County Court of Victoria so as to make Orders under the Transfer of Land Act 1958.
In support of the wife’s case submissions are put in skeletal form at paragraphs 19 to 43 of her Counsel’s Case Outline document, which paragraphs I incorporate herein:
S90(3) of the Act
19. In Piroshenko v Grojsman (2010) VLR 489, Warren CJ opined as follows:
“Caveats under the Torrens system are treated by the courts as analogous to applications for interlocutory injunctive relief. In so far as their registration is an administrative act, it is when application is made for their removal that the onus falls on the caveator to satisfy the two-stage test used by the court when deciding whether to exercise its discretion to grant interlocutory injunctive relief….This two stage approach requires the caveator to establish that there is a serious question to be tried that they have the estate or interest which they claim in the land in question, and having done so, to establish that the balance of convenience favours the maintenance of the caveat on the Registrar of Titles until trial.
Therefore, consistently, in order for a caveator to satisfy the first limb of the test applied by the courts when deciding applications under s90(3) of the Act, he or she must satisfy the court that:
1. There is a probability on the evidence before the court that he or she will be found to have the asserted equitable rights or interest; and
2. That probability is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietor to deal with the property in question in accordance with their normal proprietary rights.”
20. The High Court of Australia said in Leros Pty Ltd v Terar Pty Ltd (1992) 174 CLR 407 at 422 as follows:
“It has been said that the purpose of requiring the caveator to “specify” the estate or interest claimed is to enable the registered proprietor to know, or find out, the claim which he or she will have to meet. It has also been said that another purpose is to enable the Registrar-General to determine whether a dealing lodged for registration is inconsistent with the estate or interest claimed by the caveator.
In the ultimately analysis, it seems to use that “specify” should be understood in the sense of “mention definitely or explicitly”.
21. (omitted) has asserted that it has an “estate in fee simple” over the whole of the Property L property.
22. It is submitted on behalf of the De Facto Wife that:
a. The interest as asserted by (omitted) is not supported by the evidence
b. The correct interest asserted should have been along the lines of “an equitable interest over the De Facto Husband’s equal undivided share.”
c. The wording of the caveat renders it invalid.
23. S90(3) of the Act provides the Honourable Court with the power to amend the caveat.
24. In Midwarren Estates v Retek [1975] VR 575 at 576-7 the court would not permit an amendment which would result in the substitution of an entirely inconsistent estate or interest.
25. It is submitted on behalf of the De Facto Wife that any amendment to the caveat to reflect the correct estate claimed falls directly within this definition, and as such no such amendment should be permitted.
Accrued jurisdiction
26. The question of whether the Federal Circuit Court of Australia has jurisdiction to determine the Respondent De Facto Wife’s claim in relation to the caveat has been raised by the Honourable Court.
27. In Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457, Barwick CJ explained as follows:
“It is settled doctrine in Australia that when a Court which can exercise Federal jurisdiction has its jurisdiction attracted in relation to a matter, that jurisdiction extends to the resolution of the whole matter. This accrued Federal jurisdiction is not limited to matters incidental to that aspect of the matter which has in the first place attracted Federal jurisdiction. It extends in my opinion to the resolution of the whole matter between the parties…”
28. In Warby and Warby (2002) FLC 93-091 the Full Court of the Family Court of Australia stated:
“As explained by the High Court, a non-severable, non-federal claim may arise as part of a matter arising under the Family Law Act. The requirement that a matrimonial cause must have been instituted in respect of a “matter” cannot be taken to mean that the matter can only consist of a “matrimonial cause.”
29. In Bishop and Bishop (2003) FLC 93-144 the Full Court of the Family Court of Australia opined:
“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 to exercise it when dealing with the 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 very important and a necessary part of the Court’s power.”
30. In Correy & Correy & Ors [2014] FCCA 1939, Turner J transferred the proceedings to the Family Court of Australia at Melbourne. In that case, the Wife asserted that the Husband improperly drew down $354,000 from the mortgage secured over the former matrimonial home and disbursed the money to persons other than the Wife. The Wife argued that the funds were held in a constructive or resulting trust.
31. His Honour found that “there must be a genuine family law proceeding in existence in the Court before a state issue can be attracted.” His Honour also referred to Item 8 of the Protocol between the Federal Circuit Court of Australia at the Family Court of Australia whereby matters in excess of four days of final hearing primarily should be heard in the Family Court.
32. At Paragraph 17, His Honour says “The resources of this Court are therefore not sufficient to determine the proceedings.” At Paragraph 18 His Honour says “the interests of the administration of justice will be served better by having a decision of the Family Court on the issues.”
33. His Honour also refers at Paragraph 10 to “….it is desirable for there to be a decision by the Family Court on whether a claim for money under the accrued jurisdiction can be considered as part of the property of the parties so that the matter of alteration of property interests is properly before the Court under the FL Act.”
34. At no time in the Judgment does His Honour explicitly find that the Federal Circuit Court of Australia does not have jurisdiction to deal with the accrued jurisdiction issue. It is unclear whether the transfer to the Family Court of Australia relates to this issue, the fact that there were complex questions of jurisdiction and law to be tried, the Protocol in relation to hearing time or all three of these factors.
35. In Dobbie & Bolden [2014] FCCA 1911, in an application for division of chattels and spousal maintenance, the Applicant De Facto Wife also sought payment for alleged unpaid annual leave and salary pursuant to the Fair Work Act 2009 (Cth).
36. Burchardt J indicated at Paragraph 240 “there is no doubt that the Court has power within its accrued jurisdiction to hear matters that arise out of the single federal controversy.” He ordered the joinder of the Respondent De Facto Husband’s company to the proceedings along with an order for the company to pay the Applicant De Facto Wife the annual leave claimed.
37. In Talbot & Talbot [2014] FamCA 128, the Husband sought various orders under the Corporations Act 2001 (Cth). The question in that matter was whether the Federal Circuit Court of Australia has jurisdiction to determine the dispute under the Corporations Act.
38. Benjamin J noted at Paragraph 9 that if the proceedings had have been commenced in the Federal Circuit Court, there is “doubt as to whether the Federal Circuit Court had jurisdiction.” In making such a statement, His Honour noted that the Federal Circuit Court does not derive original jurisdiction pursuant to s58AA of the Corporations Act.
39. Section 58AA of the Corporations Act defines the meaning of a court as being any of the Federal Court, the Supreme Court of a State or Territory, the Family Court of Australia or a court to which section 41 of the Family Law Act 1975 applies because of a proclamation under subsection 41(2) of that Act.
40. His Honour noted further in that Paragraph that “it may have been that a Federal Circuit Court judge could exercise jurisdiction under the accrued jurisdiction of that court, however that is dependent on a number of factors which I will not elucidate here but which the Courts and the professional are clearly aware.”
41. His Honour transferred the proceedings to the Federal Circuit Court of Australia. His Honour took the view that in doing so, “the entire jurisdiction of the Family Court travels with the proceeding to the Federal Circuit Court.”
42. It is submitted on behalf of the Respondent De Facto Wife that His Honour in Talbot did not conclusively determine that the Federal Circuit Court does not have the accrued jurisdiction necessary to determine the Corporations Act claim.
43. It is further submitted on behalf of the De Facto Wife that in the absence of clear authority indicating that the Federal Circuit Court does not have the requisite accrued jurisdiction to determine the De Facto Wife’s application in relation to the caveat, that matter should be determined by the Honourable Court.
The various decisions that are referred to within that submission are of some assistance.
As is expressed by Brereton J in Valceski v Valceski [2007] NSWSC 440:
Whilst 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.
I am satisfied that since the High Court’s decision in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR the investiture of Federal Courts with accrued jurisdiction by Federal Courts is accepted. Some question had arisen as a consequence of Wakim; Ex Parte McNally and Ors (1999) 163 ALR 270, but that would appear to be resolved in favour of the exercise of accrued jurisdiction, at least as regards the Family Court of Australia, by subsequent authorities, such as Warby & Warby [2002] FLC 93-091 and Bishop & Bishop (2003) FLC 93-144, (as referred to in the above submissions).
I am referred to a number of decisions of my fellow Judges of the Federal Circuit Court of Australia wherein the accrued jurisdiction of the Federal Circuit Court of Australia was accepted.
In the decision of Correy & Correy & Ors [2014] FCCA 1939, Judge Turner had accepted that accrued jurisdiction was vested in the Court but, for reasons relating to particular facts and circumstances of that case ultimately transferred the proceedings to the Family Court of Australia.
Similarly, in Scobie & Dudley & Anor [2014] FCCA 816, Judge Kemp, on the same basis, accepted the existence of an accrued jurisdiction in the Federal Circuit Court of Australia and again, for reasons relating to the complexity of the proceedings, and particularly noting that the jurisdiction which would be exercised was the jurisdiction of the Supreme Court of New South Wales, transferred the proceedings to the Family Court of Australia.
I am entirely in agreement with Judge Kemp’s rationale for such transfer. If, in these proceedings, the original jurisdiction to make the Orders sought by the wife under the Transfer of Land Act 1958 was resident within the Supreme Court of Victoria only, I would take the same step. On the basis that the jurisdiction I am asked to exercise vests also in the County Court of Victoria, a Court of equivalent hierarchy and jurisdiction as this Court, I am satisfied that the exercise of accrued jurisdiction would be appropriate.
I am also referred by Ms Durrant's Counsel to the decision of Dobbie & Bolden [2014] FCCA 1911, in which Judge Burchardt was satisfied:
There is no doubt that the Court has power within its accrued jurisdiction to hear matters that arise out of the single federal controversy.
In that case, his Honour was dealing with a plea for relief under the Fair Work Act 2009, which may or may not have fallen within this Court’s original jurisdiction.
In Talbot & Talbot [2014] FamCA 128, Judge Benjamin noted, with respect to proceedings having been transferred to the Family Court of Australia from the Federal Circuit Court of Australia, that accrued jurisdiction may well have been exercised by this Court under portions of the Corporations Act 2001, which were not original jurisdiction of the Federal Circuit Court of Australia.
I am ultimately, however, indebted to my former colleague, Judge Lindsay, in his discussion of the aetiology of the jurisdiction in D & D [2009] FMCAfam 1444, and I incorporate, from that decision, paragraphs 6 to 20 of that decision:
6. The wife contends that the court does have such a jurisdiction, in that it arises as a result of the so-called “accrued” or “pendant” jurisdiction of the Court. Section 76 of the Commonwealth Constitution gives Federal Courts jurisdiction in respect of the matters described in that section, and it has been accepted for many years now that the Federal Court has an accrued or pendant jurisdiction to determine non-severable non-federal aspects of a claim. The existence of the accrued jurisdiction in the Federal Court has never been a matter of serious dispute since at least decisions such as Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR, Fencott & Muller (1983) 152 CLR 570, and Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 in the mid-1980s.
7. Whether the Family Court itself had an accrued jurisdiction is a matter that is somewhat more controversial and the argument as to whether or not the Family Court have jurisdiction went into abeyance, as it were, during the period of time when the cross-vesting legislation was in operation, but following the finding by the High Court in Wakim; Ex Parte McNally and Ors (1999) 163 ALR 270 that it was unconstitutional for the Commonwealth Parliament to vest in Federal Courts, state jurisdiction, the matter of whether or not the Family Court had an accrued jurisdiction was agitated once again.
8. The case of Warby & Warby [2002] FLC 93-091 traces these developments and the Full Court of the Family Court in that case came to the conclusion that the Family Court did indeed have an accrued or pendant jurisdiction to determine such claims. It might be thought that the matters that made controversial that issue, that is, whether the Family Court had such an accrued jurisdiction would not maintain or not maintain to the same degree in relation to a court such as the Federal Magistrates Court, which has like the Federal Court, has a variety of jurisdictions, (see the discussion of the Family Court and accrued jurisdiction in the earlier Full Court decision of Prince & Prince (1984) FLC 91-501).
9. In Prince (supra), the specialist nature of the Family Court’s jurisdiction has thought to be significant and that might be thought to be a factor absent in the case of the Federal Magistrates Court. Section 10 of the Federal Magistrates Act provides that:
The Federal Magistrates Court has such original jurisdiction as is vested in it by laws made by the Parliament.
10. The jurisdiction of the court under the Family Law Act arises from section 39 of the Family Law Act, which provides :
Subject to this Part, a matrimonial cause…
(Then two exceptions are mentioned in relation to nullity and decrees of validity)
....may be instituted under this Act in the Federal Magistrates Court.
11. Then significantly, subsection 5AA of section 39 provides:
Subject to this Part and to section 111AA, the Federal Magistrates Court has, and is taken always to have had, jurisdiction with respect to matters arising under this Act in respect of which matrimonial causes are instituted under this Act.
12. That expression of “matters arising under this Act” was the change to the provisions of the Family Law Act granting jurisdiction to the Family Court, introduced in 1983, which the Full Court in Warby (supra) and in an earlier Full Court decision of Smith & Smith (No 3) (1986) FLC 91-732 thought to be so significant.
13. The other legislative provision that should be mentioned is section 90AE of the Act, which provides in subsection 2 that:
In proceedings under section 79 the court may make any other order that:
(a) directs a third party to do a thing in relation to the property of a party to the marriage; or
(b) alters the rights, liabilities or property interests of a third party in relation to the marriage.
14. Subsection 3 goes on to say that:
The court may only make an order under subsection (1) or (2) if:
(a) the making of the order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage.
15. Then relevantly:
(c) the third party has been accorded procedural fairness in relation to the making of the order; and
(d) the court is satisfied that in all of the circumstances it is just and equitable to make the order; and
(e) the court is satisfied that, the order takes into account the matters mentioned in subsection (4).
16. A number of matters are mentioned in subsection 4(b). The view I take of that section and I will come to this in a moment is that it is a provision that gives the court power to make orders rather than grants a jurisdiction as such. In other words, it is a power that only arises if the court otherwise has a jurisdiction under the accrued jurisdiction to make the order and so it is a matter that may arise in relation to the discretion the court has as to whether or not to assume the accrued jurisdiction.
17. Now, in terms of the circumstances in which the accrued jurisdiction of the court arises, as I say, these are summarised in the decision of Warby (supra), and paragraph 31 of the decision in Warby (supra) picks up the explanation of the accrued jurisdiction provided by Barwick CJ in the case of Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (supra):
It is settled doctrine in Australia that when a court which can exercise federal jurisdiction has its jurisdiction attracted in relation to a matter, that jurisdiction extends to the resolution of the whole matter. This accrued federal jurisdiction is not limited to matters incidental to that aspect of the matter which has in the first place attracted federal jurisdiction. It extends, in my opinion, to the resolution of the whole matter between the parties. This accrued jurisdiction carries with it the authority to make such remedial orders as are necessary or convenient for or in consequence of that resolution. For this purpose, the court exercising federal jurisdiction may enforce rights which derive from a non-federal source. This exercise of this jurisdiction, which for want of a better term I shall call 'accrued' jurisdiction, is discretionary and not mandatory, though it will be obligatory to exercise the federal jurisdiction which has been attracted in relation to the matter.
18. In paragraph 43 of that same judgment of Warby (supra), the Full Court referred to the decision of the majority in Fencott & Muller (supra) at page 608:
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 relationships. 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 judgement 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.
19. Now, the resolution of property proceedings is a four step process. The first step is the ascertainment of the asset pool and the contention of the wife is that that first step cannot be completed unless we can identify whether or not this property, the legal title to which is held by a person other than the party to the marriage, is to be included in the asset pool. And, therefore, the matter requiring resolution, so it is said, is the ascertainment of the asset pool, and that requires the resolution of this issue between the parties to the marriage and the third party. I consider, however, there has to be something more than that for the accrued jurisdiction to be attracted. If it were otherwise, we would have a situation where, for example, a party to a marriage was instituting proceedings for damages for breach of copyright against a corporation and, let us say, those proceedings were instituted or about to be instituted when the parties separated. It could be said that, in one sense, the resolution of that dispute, that is, whether the funds available from the award of damages would form part of the asset pool of the parties, would call for the exercise of the accrued jurisdiction to resolve that issue with the third party upon the basis that we were engaged in the exercise of ascertaining an asset pool. I think there has clearly to be something more than that circumstance. What there is in this case that, in my view, attracts the accrued jurisdiction is that the claim to the property is coincident with the duration of the marriage, that is, the claim to the property arises out of the circumstances that the parties were married. The relationship between the third party, the parents of one of the spouses of the parties, clearly has a connection to the marriage and, here, we also have the circumstance that the subject property was occupied by the parties, allegedly, during the entirety of the marriage.
20. Both of the parties have a relationship with the third party as a function of their spousal relationship and I think those connections, if I may use that expression, between the parties and between the spousal relationship and the subject property are the matters that, in my view, make it an appropriate case to exercise the accrued jurisdiction. So, in one sense, we are engaged in the ascertainment of an asset pool and that is the first step in the determination of the section 79 proceedings but, it is more than that. The occasion for the ascertainment of the asset pool and the issue as to whether or not it includes this particular property is something which, in my view, is integrally associated with the marriage relationship.
I am satisfied that:
a)This Court has an inherent accrued jurisdiction;
b)It is appropriate in the circumstances of this case for that jurisdiction to be exercised, having regard to:
i)The reality that the proceedings cannot be properly heard and determined to finality without the exercise of that jurisdiction or at least a determination by a Court under the Transfer of Land Act 1958;
ii)The Court is asked to determine whether the debt purportedly secured by the caveat, (being a debt in the name of a third party company of which the husband was the sole director and the debt being guaranteed by the husband in his personal capacity) should be included as a debt of the parties or of the relationship;
iii)The Court to make that determination should be this Court in its accrued jurisdiction so as to minimise cost and inconvenience to the parties and that issue being inextricably connected to the subject matter of the controversy under the Family Law Act 1958; and
iv)As the jurisdiction which is sought to be exercised in the Court’s accrued jurisdiction is a jurisdiction otherwise vested in the County Court of Victoria, an equivalent Court to this Court that it is appropriate that an exercise of jurisdiction occur.
I am further persuaded in that regard by regard to the relevant provisions of the Federal Circuit Court of Australia Act 1999, in particular section 18, to which Counsel for Ms Durrant has referred me. It provides:
To the extent that the Constitution permits, jurisdiction is conferred on the Federal Circuit Court of Australia in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Federal Circuit Court of Australia is invoked.
The exercise of such jurisdiction would be consistent with the authorities referred to above.
Section 14 of the Federal Circuit Court of Australia Act 1999 requires that the Court determine matters completely and finally. To achieve that end the Court must hear and determine all of the necessary issues that are before the Court, including that within the Court’s accrued jurisdiction.
Rule 11.01 of the Federal Circuit Court Rules 2001 requires that the Court join all parties whose joinder must be undertaken to ensure that the controversy can be finally determined. That would require, on its face, and subject to hearing submissions from (omitted) Pty Ltd, a joinder of the caveator (omitted) Pty Ltd. If accrued jurisdiction is to be exercised (omitted) Pty Ltd would be a party as of right to such an Application.
As a consequence of the Orders that are sought by Ms Durrant, (to exclude the debt secured by (omitted)’s caveat), there is real potential that the rights of (omitted) Pty Ltd might be affected, directly or indirectly. (omitted) Pty Ltd would need notice of that sought by the wife and would potentially have a right to be heard.
The relief that is sought by Ms Durrant may well need to be expressed within terms of Part VIIIAA of the Family Law Act 1975, dependent upon the quantum of the debt secured by the caveat presently recorded against title. The determination of the rights and interests as between Ms Durrant and Mr Waters, by reference to the Part VIIIAB of the Act might reduce Mr Waters’ share in the property insufficient to discharge the debt.
On the face of the caveat, Exhibit R2, there was some real issue as to whether (omitted) Pty Ltd might have a legitimate caveatable interest. What would appear to be asserted by that set out in the caveat is an interest in rem which, by and of itself, would not be nor found a caveatable interest. An interest in rem does not create an interest, equitable or legal, in the land affected by the caveat being that sought and protected by the caveat.
A contractual right might, consistent with Surfers Paradise Coaches (Qld) Proprietary Limited v Tsu Chan Lin [2007] NSWSC 475, create a caveatable interest. It would be dependent upon the terms and conditions of the agreement. So much was addressed by the High Court in Chan v Cresdon (1989) 168 CLR 242, wherein their Honours forming the plurality – Mason C.J., Brennan, Deane and McHugh JJ – opined at paragraph 257:
Though the unregistered instrument is itself ineffective to create a legal or equitable estate or interest in the land, before registration, the section does not avoid contracts or render them inoperative. So an antecedent agreement will be effective, in accordance with the principles of equity, to bring into existence an equitable estate or interest in the land. But it is that antecedent agreement, evidenced by the unregistered instrument, not the instrument itself, which creates the equitable estate or interest. In this way no violence is done to the statutory command...
The interpretation of such agreements is addressed in a number of decisions, including Dunecar Proprietary Limited (in liq) & Colbron [2001] NSWSC 1181 and Marinkovic v Pat McGrath Engineering Pty Limited [2004] NSWSC 571 to name but two.
In New South Wales jurisprudence and assuming its equivalency in Victoria, the Supreme Court in Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260 found that a caveatable interest comprising an interest in land, an estate in fee simple, can be created by a collateral agreement within a document otherwise not registered against Title by way of mortgage or otherwise.
There would thus appear to be a judiciable controversy which requires attention and which would of necessity require adjournment of the proceedings to enable (omitted) Pty Ltd to participate therein.
When the proceedings were last before the Court, the material comprising Exhibit A1 was not available. The documents comprising Exhibit A1 now before the Court make clear that the nature of the guarantee and security advanced by Mr Waters is in the nature of an unregistered mortgage. If the land were Old System Title this would by and of itself create an interest in the land.
The non-registration of the mortgage by reference to the High Court dicta referred to above would give rise to a judiciable controversy as to whether an interest in fee simple as alleged within the caveat is created. I cannot deal authoratively with that issue today as (omitted) must have the opportunity to participate and due process must be afforded to them. Appropriately, Orders are sought by Counsel for Ms Durrant to facilitate that very end.
Orders are sought at paragraph 47 of the Case Outline and in the event that the Court determines that it is appropriate to entertain the accrued jurisdiction claim to have the wife file an Application in a Case and Affidavit setting out the precise Orders that are sought with respect to the caveat. At this point, it is suggested that Orders would be sought for a declaration that the caveat is invalid. Whether that is so or not can’t be determined when all appropriate and necessary evidence is not yet before the Court.
Relief in relation to the caveat will be required as it is presently expressed to be recorded against and prohibit dealings with the totality of the land. There is no suggestion on the face of the documents comprising Exhibit A1 that Ms Durrant has, at any time, been asked to provide guarantee or security for the borrowing which has been undertaken by Mr Waters or, more correctly, the company of which he was director namely, (omitted).
In those circumstances, it is difficult to apprehend what claim could possibly be made by (omitted) Pty Ltd as against any interest in the property or any other asset owned by Ms Durrant. However, determination of the controversy as between Mr Waters and Ms Durrant will have implications for the repayment of the (omitted) debt, its security and fundamentally the interests of (omitted) Pty Ltd, thus the matter must be adjourned so (omitted) can be heard.
I certify that the preceding forty one (41) paragraphs are a true copy of the reasons for judgment of Judge Harman
Associate:
Date: 3 September 2015
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