WENTWORTH and Hamilton & Anor
[2014] FamCA 533
FAMILY COURT OF AUSTRALIA
| WENTWORTH & HAMILTON AND ANOR | [2014] FamCA 533 |
| FAMILY LAW – PROPERTY – Where the Applicant and First Respondent previously agreed for an order to be made by consent that the binding financial agreement was non-binding – Where the First Respondent seeks to re-agitate that the agreement is binding – Where the nature of the agreement has already been determined by the Court as non-binding – De facto relationship – Where the Applicant and the First Respondent seek orders for property division FAMILY LAW – ACCRUED JURISDICTION – Whether the Family Court should exercise its accrued jurisdiction power – Whether a negligence claim against a solicitor acting for the Applicant and the First Respondent when they entered into the agreement is part of the single justiciable controversy between the Applicant and First Respondent – Considerations of relevant case authorities – No single justiciable issue found –Second Respondent removed as a party to the proceedings |
| Family Law Act 1975 (Cth) ss 90SM, 90UC, 90UJ |
Fencott v Muller (1983) 152 CLR 570
Noll& Noll & Anor [2013] FamCAFC 24
Ruane & Bachman-Ruaneand Ors (Accrued Jurisdiction) [2012] FamCA 369
Valceski v Valceski [2007] NSWSC 440
Re Wakim; Ex parte McNally (1999) 198 CLR 511
Warby & Warby [2001] FamCA 1469
| APPLICANT: | Mr Wentworth |
| 1st RESPONDENT: | Mr Hamilton |
| 2nd RESPONDENT: | L Law Firm |
| FILE NUMBER: | PAC | 4531 | of | 2012 |
| DATE DELIVERED: | 18 July 2014 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 9 May 2014 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: COUNSEL FOR THE 1ST RESPONDENT: | Matthews Folbigg Pty Ltd Mr Lethbridge SC & |
| SOLICITOR FOR THE 1ST RESPONDENT: | Warren McKeon Dickson Lawyers |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Batey |
| SOLICITOR FOR THE 2ND RESPONDENT: | Mullane & Lindsay |
Orders
That the Second Respondent, L Law Firm, be removed as a party to these proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Wentworth & Hamilton and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 4531 of 2012
| Mr Wentworth |
Applicant
And
| Mr Hamilton |
First Respondent
And
L Law Firm
Second Respondent
REASONS FOR JUDGMENT
The substantive proceedings before the Court relate to a same sex de facto property issue.
The Applicant, Mr Wentworth and the First Respondent, Mr Hamilton cohabited from 1999 until their separation in late 2011.
On 7 June 2011 the parties signed a purported Binding Financial Agreement (“BFA”) under section 90UC of the Family Law Act 1975 (Cth) (“the Act”) that makes provision for parties to a de facto relationship to enter into a BFA during the continuance of their relationship.
The BFA recited that the parties were in a de facto relationship and that the parties were purchasing as tenants in common a property at Locality A as to one third for Mr Wentworth and as to two thirds for Mr Hamilton. The BFA provided that in the event of a breakdown of the relationship between the parties then Mr Hamilton could acquire Mr Wentworth’s interest in the property for a price agreed or a price determined by a valuer appointed pursuant to the provisions of the agreement. Under the agreement Mr Hamilton was not bound to acquire Mr Wentworth’s interest in the property.
The BFA was prepared by the Second Respondent in these proceedings, L Law Firm. It is common ground that the certificates of independent legal advice provided to the parties to the agreement were provided by either a member of or an employee of L Law Firm and thus did not comply with the requirements of section 90UJ(1)(b) of the Act.
On 12 October 2012 Mr Wentworth filed an application commencing proceedings seeking, in summary, the following orders:
a)that there be a declaration that the BFA dated 7 June 2011 is not binding; and
b)that, in the event that the previous order was made by the Court, that Mr Hamilton pay to Mr Wentworth by way of property settlement an amount equal to 50 per cent of the matrimonial assets.
In his Response filed on 12 November 2012 Mr Hamilton sought, in summary, the following orders:
a)that the BFA dated 7 June 2011 be declared binding and enforceable;
b)in the alternative, that Mr Wentworth be declared solely entitled to the property at Location A and other assets in his entitlement or possession; and
c)that Mr Hamilton be declared solely entitled to properties at Suburb B and Locality C in NSW, his professional practice and other assets in his entitlement or possession.
In his Amended Response filed on 20 December 2013 Mr Hamilton:
a)no longer sought the order to the effect that the BFA be declared binding and enforceable;
b)joined L Law Firm, seeking an order for damages against that firm to “recompense him for the whole of his loss and damages however incurred with respect to the applicant’s claim”; and
c)sought an order that L Law Firm pay Mr Hamilton’s costs of and incidental to the proceedings.
The proceedings were listed on 28 January 2014 and on that date it was noted that L Law Firm had been served with the Amended Response. It was ordered that L Law Firm file and serve a response by 21 February 2014 and the matter was adjourned for a case management hearing to 5 March 2014.
On 5 March 2014 all parties were represented before the Court. Upon application made to the Court by the solicitor for Mr Wentworth and the solicitor for Mr Hamilton for a declaration by consent that the BFA signed by the parties and dated 7 June 2011 is not binding on the parties, such declaration was made.
On the same day the Court made directions for the further conduct of the matter in the following terms:
a)that L Law Firm file and serve an Application in a Case seeking to be removed as a party to these proceedings, together with any affidavit in support of that application by 28 March 2014;
b)that the Application in a Case be returnable on 9 May 2014, half a day being allocated for argument, noting that the issue will be determined on submissions;
c)that Mr Hamilton file and serve written submissions as to the exercise of accrued jurisdiction by the Court in the context of these proceedings by 28 March 2014;
d)that L Law Firm file and serve submissions in response thereto by no later than 17 April 2014; and
e)that Mr Hamilton file and serve submissions in response by 3 May 2014.
On 7 May 2014 Mr Hamilton filed a Further Amended Response. That response it was conceded did not need leave. That response sought the following additional orders:
a)a declaration pursuant to section 90UJ(1)(b) of the Act that the financial agreement signed by the parties on 7 June 2011 and made or purported to have been made pursuant to section 90UC of the Act is binding on the parties (on the basis that the elements of section 90UJ(1)(a) of the Act have been satisfied);
b)that Mr Wentworth pay Mr Hamilton’s costs;
c)that, in the alternative, in the event that the Court does not make order a) above, that:
i)the Court declare that it has no jurisdiction to make orders pursuant to section 90SM of the Act (on the basis that it cannot be satisfied that, in all the circumstances, it would be just and equitable to make such an order);
ii)that Mr Wentworth’s application be dismissed;
iii)that Mr Wentworth pay Mr Hamilton’s costs.
Proposed order (a) sought by Mr Hamilton in the Further Amended Response was sought notwithstanding the issue as to the non-binding nature of the BFA having already been determined by the Court by consent. There has been no appeal from that order. It was contended by senior counsel for Mr Hamilton that the agreement as to the non-binding nature of the BFA carried with it an implicit concession as to the negligence of L Law Firm. That contention is rejected. L Law Firm was not a party to the consent Order specifically made on the application of Mr Wentworth and Mr Hamilton.
The matter was heard by way of submissions on 9 May 2014 and, at the conclusion of those submissions, L Law Firm was ordered to file and serve any further supplementary written submissions in response to the oral submissions of Mr Hamilton within 14 days and Mr Hamilton and Mr Wentworth file and serve any further short submissions in response within a further 14 days. The matter was adjourned to a date to be advised for delivery of reserved Judgment.
The primary issue
The primary issue for determination, as a consequence of the BFA being declared non-binding by agreement between the parties, is the entitlements of the parties in relation to alteration of property interests pursuant to section 90SM of the Act.
That determination will of course involve a determination of the threshold issue as to whether in the circumstances it would be just and equitable to make any order at all. This issue is encompassed in the Further Amended Response filed by the Applicant (see order (c) referred to above).
The “accrued” issue
In joining L Law Firm, Mr Hamilton seeks an order for damages and/or compensation in relation to any loss suffered by Mr Hamilton, presumably in the event that the entitlement of Mr Wentworth to property settlement is in excess of that provided for in the BFA and in relation to costs incurred by Mr Hamilton in the proceedings.
As a necessary preliminary issue to the determination of damages is, of course, a finding that in all of the circumstances of the agreement being entered into that there was negligence on behalf of L Law Firm such as would render L Law Firm liable in damages to Mr Hamilton. As a consequence of that determination it would be the necessity to quantify the loss or damages suffered by Mr Hamilton.
These are completely different issues as to the primary issue for determination and would require the Court to hear and finally determine the parties’ respective rights under section 90SM of the Act and then if Mr Hamilton seeks to proceed against L Law Firm in negligence, to hear and determine that cause of action and determine damages, if any, payable by L Law Firm to Mr Hamilton.
It is readily apparent that the final determination of the parties’ rights under section 90SM will be necessary before Mr Hamilton can determine whether he wishes to proceed in negligence against L Law Firm, having regard to the nature of the orders made by the Court as to the property entitlements of Mr Wentworth and Mr Hamilton under section 90SM of the Act.
Accrued Jurisdiction
The question of “accrued jurisdiction” has recently been the subject of consideration by the Family Court in Noll& Noll & Anor [2013] FamCAFC 24 where the Full Court considered the general principles and said at [26]:
It is important to emphasise at this point that there was no challenge before us to the proposition that in an appropriate case the Family Court does have the accrued jurisdiction (and it is difficult to see how there can be such a challenge having regard to what was said by Gummow and Hayne JJ in Re Wakim; Ex parte McNally (1999) 198 CLR 511 in a passage which we later set out). Rather the issue before us was, as it was before Le Poer Trench J, and as he described it at [32] of his reasons, “whether the facts of the case attract the Court’s accrued jurisdiction.”
In Re Wakim; Ex parte McNally (1999) 198 CLR 511 the High Court said::
135. 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 Parliament is not “restricted to the determination of the federal claim or cause of action in the proceeding, but extend[s] beyond that to the litigious or justiciable controversy between parties of which the federal claim or cause of action forms part”. …
...
138. It must be taken to follow from the Court's decisions in Philip Morris, Fencott and Stack, however, that the identification of the justiciable controversy between parties is not determined only by the considerations of there being separate proceedings and different parties in the one court. And in some circumstances a single matter can proceed through more than one court. ...
139. The central task is to identify the justiciable controversy. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim.
140. In Fencott it was said that … :
“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.”
The references to “impression” and “practical judgment” cannot be understood, however, as stating a test that is to be applied. Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete. Necessarily, then, the question will have to be decided on limited information. But the question is not at large. What is a single 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”. There is but a single matter if different claims arise out of “common transactions and facts” or “a common substratum of facts”, notwithstanding that the facts upon which the claims depend “do not wholly coincide”. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are “completely disparate”, "completely separate and distinct" or "distinct and unrelated" are not part of the same matter. [footnotes omitted]
141. Often, the conclusion that, if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter.
...
145. As we have said, the bringing of separate proceedings and the joining of different parties will often be important facts in deciding whether there is a single justiciable controversy for the purposes of Ch III of the Australian Constitution. But there is no basis in principle for concluding that there can never be accrued jurisdiction where a new party is joined. To adopt such a rule would mean that third party proceedings could never be brought in a federal court unless those third party proceedings were founded in some federal claim. And that points to the underlying difficulty in principle. If the "matter" is to be identified from what the parties allege and how they conduct the proceeding (as Fencott and Stack hold) and if the "justiciable controversy" refers (in part, at least) to the factual dispute between them, there is no warrant for holding that federal jurisdiction ends as soon as a new party (against whom no federal claim is made) is added.
146. Each of these proceedings brought by Mr Wakim centres upon the making of claims and bringing of action against Mrs Nader and the prosecution and settlement of those claims and that action. Mr Wakim alleges against the Official Trustee that it was negligent and guilty of breach of duty in not continuing the action against Mrs Nader; he alleges against the solicitors that they negligently failed to advise the Official Trustee of its rights against her; he alleges against [counsel] that he negligently failed to advise the Official Trustee of its rights against her. It may be noted that nowhere in the Official Trustee's defence to Mr Wakim's claim does it allege that it acted in reliance on the advice of the solicitors or counsel and it makes no cross-claims against them. Indeed, the pleadings in the proceeding between Mr Wakim and the Official Trustee say nothing whatever about the role of the solicitors or counsel in the matter.
147. The cases arise out of one set of events. Of most significance is the fact that the damage which Mr Wakim alleges he has suffered as a result of what he says are the various breaches of duty by the Official Trustee, the solicitors and [counsel] is, in each case, the loss of what he might have recovered in the bankruptcy had the claims against Mrs Nader been prosecuted differently. There is, then, but a single claim for damages that he seeks to pursue against each of the parties he has sued. And judgment and recovery against one will diminish the amount that may be recovered from the others. There is, in these circumstances, that common substratum of facts in each proceeding of which Mason J spoke in Philip Morris [footnote omitted]. And it is the existence of that common substratum that leads to the conclusion that the three proceedings raise a single justiciable controversy. Accordingly, the proceedings against the solicitors and [counsel] are within the jurisdiction of the Federal Court.
In these proceedings the primary cause of action before the Court is for property adjustment under section 90SM of the Act. Mr Hamilton seeks to “accrue” his action for damages in negligence, the viability of which must await the determination of the parties’ rights under section 90SM.
The Full Court said in Noll (supra):
44. We therefore turn to the issue of whether the claims in this case are, in the words of Gummow and Hayne JJ in Wakim at [140], “so related that the determination of one is essential to the determination of the other” (italics added). In support of this particular indicia of the accrued jurisdiction, Gummow and Hayne JJ relied on a statement by Mason J in Philip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457. It is instructive for present purposes to consider precisely what was said in this regard by Mason J in Philip Morris at 512:
The classification of a claim as “non-severable” does not necessarily mean that it is, or must be, united to the federal claim by a single claim for relief, though this is a common illustration of a non-severable claim. The non-severable character of the attached claim may emerge from other aspects of the relationship between the federal and the attached claim. For example, it may appear that the resolution of the attached claim is essential to a determination of the federal question. Likewise, it may appear that the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. (italics added) In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction.
45. It will thus be seen that Mason J identified that the issue for determination was whether it was the “attached” claim that was essential to the determination of the “federal” claim.
46. It is instructive to note that in those cases in which, to date, the Full Court has upheld, or sanctioned, the use of the accrued jurisdiction such as Wade-Ferrell & Wade-Ferrell (2001) FLC 93-069, Warby & Warby (2001) FLC 93-091 and Bishop & Bishop (2003) FLC 93-144, it has been the determination under state law of what is the property of the parties that has been essential for the purposes of the Family Court’s jurisdiction under s 79 of the Act and thus has been the subject of the accrued jurisdiction.
47. Applying what was said by Mason J in Philip Morris to the present case, the “federal” matter is of course constituted by the wife’s claim in relation to the financial agreement and would include the property settlement proceedings which would follow if the agreement is held to be non-binding or set aside, while the matter sought to be “attached” is the husband’s claim against the solicitors.
48. It appears, at least prima facie, that in this case the determination of the federal claim does not require the determination of the claim sought to be attached. Indeed it might well be said that the attached claim will not even arise until the proceedings relating to the financial agreement are determined, and are determined adversely to the husband, and on a basis which could provide him with a claim against Law Firm A. Furthermore, the measure of damages that could be sought in the attached claim would only be known if and when an order was made for property settlement under s 79 of the Act.
…
51. Returning to Grounds 2 and 3, we acknowledge in relation to Ground 2 that the primary judge’s statement that “[t]he most compelling argument against the Court hearing the claim sought to be mounted by the husband against [Law Firm A] is that no crystallisation of a damages figure could occur until the Court has exhausted the entirety of its jurisdiction under section 79” could be said to be in the nature of an over-simplification of the relevant issues as we have discussed them. However, it is certainly not a matter that would cause us to interfere with his Honour’s decision.
52. Ground 3 is directed to his Honour’s conclusion in [40] of his reasons, that there was no single justiciable controversy in this case. His Honour gave as his reasons for this conclusion the following:
[40] ... It is not necessary to determine the action against [Law Firm A] in order to determine what property the parties have for distribution by court order pursuant to section 79 or otherwise.
53. We have undertaken a fuller analysis than his Honour of the indicia for the existence of the accrued jurisdiction as explained by Gummow and Hayne JJ in Wakim, and also of the issue or indicia of the necessary essential relationship between a federal claim and a state claim which is sought to be attached to the federal claim, as was explained by Mason J in Philip Morris. On the basis of that analysis, and particularly of the last mentioned issue or indicia, we too have concluded that there is no single justiciable controversy in this case that would attract the accrued jurisdiction. Thus Ground 3 has not been established.
As was submitted by senior counsel for Mr Hamilton (echoing Mason J in Philip Morris (supra)):
… to speak of different causes of action as a basis for distinguishing between aspects of the same controversy is a mistake. The question of jurisdiction is not directed to how a controversial issue may be framed but what the facts of the controversy are”.
This submission reflects the indicia or factors indicative of accrued jurisdiction enumerated by the Full Court in Warby & Warby [2001] FamCA 1469 at [90]:
a)what the parties have done;
b)the relationships between or among them;
c)the laws which attach rights or liabilities to their conduct and relationships;
d)whether the claims are part of a single justiciable controversy and in determining that question whether the claims are “attached” and not “severable” or “disparate”; and
e)whether the claims are non-severable from a matrimonial cause and arise out of a common sub-stratum of facts.
In Valceski v Valceski [2007] NSWSC 440 at [40] Brereton J said:
... 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 will 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 Financial Pty Ltd [1999] FCA 1475].
In the present matter there is no interdependency such as would prevent the determination of the federal claim as to property under s 90SM of the Act without determining the non-federal attached claim. No issue arises as to the BFA, it having been dealt with conclusively by consent between Mr Wentworth and Mr Hamilton.
The non-federal attached claim is not part of the justiciable issue between Mr Wentworth and Mr Hamilton as it must await the final determination of the property claim under s 90SM. Submissions by senior counsel for Mr Hamilton seem to be predicated on the assumption that there remains an issue as to the efficacy of the purported BFA by way of “statutory estoppel” arising from the facts and circumstances going to the entry into the agreement, as to the parties’ own views as to the agreement and the circumstances it was entered into. Yet no relief has been sought by Mr Hamilton to such effect and the evidence of the matters contended by senior counsel for Mr Hamilton will, it appears, come from the parties.
It is contended that such matters may impact on the Court’s determination as to whether it is just and equitable to make an order at all in considering s 90SM(3) of the Act. They may have relevance to that issue. These are, it is to be inferred, matters that will arise from the evidence of the parties to the relationship as to the history of that relationship.
At present L Law Firm is a stranger to the primary proceedings between Mr Wentworth and Mr Hamilton. In their contest, any issue relating to L Law Firm is of no consequence. An issue may arise between Mr Hamilton and L Law Firm after the determination of the contest between Mr Wentworth and Mr Hamilton.
There are no common transactions and facts in that they arise out of a common substratum of facts. The considerations for determination of the federal claim are set out comprehensively in s 90SM and s 90SF(3) of the Act and factual issues relating to the non-federal claim sought to be attached would be irrelevancies to the Court’s primary determination. Thus, there would be little prospect of possible inconsistent factual findings in the event that Mr Hamilton commences proceedings against L Law Firm in a state court.
The fact that there had been a previous agreement between the parties in respect to which they have agreed should be no longer binding is a matter of historical significance only in the overall context of their relationship. The nature of that history will fall from the evidence of the parties, as submitted by senior counsel for Mr Hamilton.
During submissions senior counsel for Mr Hamilton referred to Ruane & Bachman-Ruaneand Ors (Accrued Jurisdiction) [2012] FamCA 369 (Murphy J). In that matter the subject BFA had been declared non-binding within the meaning of s 90G of the Act following a hearing (Ruane & Bachman-Ruane [2009] FamCA 1101 - Cronin J). Thus, the factual matrix leading to the agreement being entered into was the subject of findings in contested proceedings between the husband and wife, to which the wife had joined F Firm of lawyers, against whom she sought damages for an asserted breach of duty of care in the event that the agreement was declared non-binding, dependant on the outcome of the then ensuing s 79 determination as to the property entitlements of the parties.
Murphy J identified the issues joined between the parties in the matter before him, at [57], as:
… those that emanate from an agreement into which they each entered; whether that agreement is binding; if so, what rights and remedies as between them flow from that agreement; and, if not, what rights and remedies flow from the agreement not being binding; and, consequently, those which might flow pursuant to Part VIII of the Act. (italics added)
He went on at [62]:
The “matter” consists, factually, of the facts and circumstances relevant to the agreement and its formation and aftermath, and, in particular, for example what was said or not said, or done or not done, by the parties and their legal advisers in and about that agreement. The “matter” concerns facts relevant to a determination of whether the financial agreement is “binding”. Those same facts plainly underpin the s 79 claim; they are determinative of its existence.
As was said in Fencott v Muller (1983) 152 CLR 570 at [30]:
… 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.
The references to “impression” and “practical judgment” cannot be understood, however, as stating a test that is to be applied. Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete. Necessarily, then, the question will have to be decided on limited information.”
On the facts before him, His Honour considered there to be a single justiciable controversy.
That is not the case here. There is no issue before the Court as to whether the agreement is binding for the purposes of the Act. The parties have agreed to the contrary.
For the reasons given, there is no single justiciable controversy in this matter that would attract the accrued jurisdiction as sought by Mr Hamilton, and orders will therefore be made accordingly removing L Law Firm as a party to these proceedings.
I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 18 July 2014.
Legal Associate:
Date: 18 July 2014
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