Woods, J.J. v Rogers, P.D

[1994] FCA 881

JUDGMENT NO. ........ ........ . -n % % l

JN THE FEDI2Wi.L COURT OF AUSTRALIA ) U P X Y DISTRICT OF THE STATE ) No. NB 491 of 1994

Pp NEW SOUTH WALES 1

JOHN JEFFERSON WOODS

Bankrupt

Ex Parte:  PETER DAVID ROGERS as the Trustee of the B s t a t e o f J m aFFERSON WOODS

Applicant

And :  pNNe DENISE WOO%

Respondent

REASONS FOR JUDGMENT

SYDNEY 3 0 SEPTEMBER

The bankrupt's estranged wife (the respondent to the principal proceedings) seeks the transfer to the Family Court under the cross-vesting legislation of an application by the trustee (the applicant in the principal proceedings) for the invalidation of certain property dealings between them. Section 5(5)(b)(i) of Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) (the Cross- Vesting Act) makes provision for such a proceeding to be transferred from one court to another if:

'-.

t h e r e l e v a n t proceeding a r i s e s out o f , or is r e l a t e d

t o , another proceeding pending i n t h e o t h e r

c o u r t s r e f e r r e d t o ....

22 NOV ~ 9 4

AUSTRALIA

In the context of this case, this provision means that this Court has to find that the application by the trustee arises out of or is related to proceedings in the Family Court for the dissolution of the marriage of the bankrupt and his former wife. As I understand the position, the Family Court made consent orders in January of this year for the transfer of the bankrupt's interest in two properties of the parties from him to the respondent. The trustee's application to this Court is in effect that the transferred half interest of the bankrupt husband should be either invalidated under sections 120 and 121 of the Bankruptcy Act or declared to be the property of the trustee as part of the bankrupt estate.

From what I have been told from the bar table, the Family Court's consent orders in January finally disposed of the propertyissues between the parties so that the only matter left to be litigated in the Family Court is the actual application for dissolution of marriage. It therefore does not seem to me that the present proceeding in the Federal Court can be said to arise out of, or

be related to, a pending proceeding in the Family Court. Hence,

there does not seem to be any legal basis under section 5(5) (b) (i) of the Cross-Vesting Act for the transfer of the case to the Family Court.

However, under section 5(5)(b)(ii) there is an alternative provision that this Court may transfer a matter to the Family Court if "it is otherwise in the interests of justice" that the matter before this Court be determined by the Family Court. The question arising under this provision is not entirely free from doubt. The Family Court's orders were made by a Registrar by consent and did not involve any hearing by that Court. Hence it cannot be said to have been a considered judgment of the Family Court that the property he treated as provided for in the consent orders. On the other hand, the intent of the application to this Court is that the transfer of the husband's interest to the wife in the Family Court he declared to have been done, at the very least, with intent to defraud his creditors. As has been pointed out, the other issues requiring to be dealt with under sections 120 and 121, such as the need for good faith and valuable consideration, are in many senses subsidiary to the question of intent to defraud the creditors. Thus the question would arise in the Family Court whether its consent orders were procured by

that fraud.

There does not seem to be anything much to choose between the respective courts in this regard. The issues to be determined will be the issues raised under the Bankruptcy Act, but they do

have, and could have, effect on other cases arising in the Family

Court because the circumstances alleged in this case could be

reasonably common. This Court has quite often considered problems arising in relation to the transfer of property between husbands and wives, including the provisions of section 123(6) which have been considered by this Court on a number of occasions.

To determine which forum would better cater for the interests of justice, I think I should take into consideration two particular

facts:

(a)	that the law to be applied in determining this matter is
the Bankruptcy Act which is administered primarily by this Court, and
(b)	that the Family Court at the present time does not have any

proceeding before it which would naturally embrace this dispute or any way conflict with the exercise by this Court of the clear jurisdiction it has to deal with the application.

If the Family Court had given considered judgment on the matters contained in the consent orders, it would in my opinion have been invidious of this Court to then engage in what would amount to

a review of what the Family Court had done. In those

circumstances I would undoubtedly have transferred the matter to

under this provision of the cross-vesting legislation should be

the Family Court. On the other hand, a person making application

able to make out some sort of case that it is in the interests of justice that the transfer take place. No such case was really advanced. In the circumstance where the parties have opted to use a consent procedure which did not need a consideration of the matter in the Family Court, it seems to me that there is not very much to say in favour of transferring the matter out of this Court. I think that if I am left in considerable doubt as to why the interests of justice would demand the transfer, I should resolve the matter in accordance with ordinary principles and find that a case has not been made out as to why the interests of justice would require the transfer. What is described as the motion for transfer but is probably an application under the Cross-Vesting Act is refused.