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Transfer of proceeding from the Supreme Court of QLD to the Federal Circuit Court of Australia

Not too long ago, in early 2019, we made submissions to the Supreme Court of Queensland on whether a proceeding should be transferred to the Federal Circuit Court of Australia (an independent Federal Court under the Australian Constitution) under s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987?


We were successful on the fruits of our labour.


It all started in or about October of 2018 when our client, Mrs “X”, (“the Caveator”) caused to be lodged a series of four (4) caveats against the interest in land of “Y Pty Ltd” (“the Caveatee”) claiming a constructive trust and/or an equitable interest in same as a result of a constructive trust stemming from contributions of the Caveator and her husband, Mr “Z” (a director of the Caveatee), from their matrimonial pool towards the acquisition of the said land.


In very early November of 2018, the Caveator caused to be sent by unregistered post a notice to the Caveatee under s 126(2) of the Land Titles Act 1975 (Qld) (“the Land Titles Act”).


That same month, the Caveator caused to be lodged by way of general request with the Registrar of Titles Queensland the issuing of the said notice.


The solicitors for the Caveatee duly received that said notice.


Shortly thereafter, the Caveatee caused to be filed an amended proceeding in the Federal Circuit Court of Australia seeking, amongst other things, joinder of the Caveatee and a declaration of an equitable interest in the properties, which at that time, was the subject of an Originating Application to the Supreme Court of Queensland.


As stated, the Caveatee commenced a proceeding in  by Originating Application against the Caveator in the Supreme Court of Queensland in which it claimed, amongst other things, that the four (4) caveats had been lodged or continued without reasonable cause and therefore the caveats should be removed under s 127 of the Land Titles Act together with an Order for compensation under s 130 of that Act.   


In response, the Caveator caused us to file an Application seeking interlocutory relief in the Supreme Court of Queensland, namely that the proceeding be transferred and that question be decided before trial pursuant to rule 483 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”).


TRANSFER OF PROCEEDING


The pending proceeding in the Federal Circuit Court of Australia between the Caveator, her husband and the Caveatee as a third party raised the question of contributions from a matrimonial pool towards acquisition of land held in the name of the Caveatee. In turn, that question would likely result in the pool of property to be considered as forming part of the matrimonial pool between the Caveator and her husband to be enlarged and therefore it was submitted that it was appropriate to transfer the action to the Federal Circuit Court of Australia (a Federal Court under the Australian Constitution) so that the subject of the action could be considered in conjunction with the matters that were likely to be raised (and duly were) in that family law dispute.


Pursuant to s 5 of the Jurisdiction of Courts (Cross-vesting) Act 1987, the Supreme Court of Queensland must transfer a relevant proceeding to a State Family Court (or Federal Court vested with such jurisdiction) if it appears that:

(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court or the Family Court and it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court; (ii) having regard to: (A) whether, in the opinion of the first court, apart from this Act and any law of a 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 first court and capable of being instituted in the Federal Court or the Family Court; (B) the extent to which, in the opinion of the first 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 first court apart from this Act and any law of a State relating to cross-vesting of jurisdiction; and (C) in 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; or (iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Family Court...

In the present case which we were dealing with, it was accepted that the criteria must be established in s 5(i), (ii) and (iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987. If satisfied, it would result in the requirement that the Supreme Court of Queensland must Order the transfer of the proceeding to a Federal Court (in this case the Federal Circuit Court of Australia) or a Family Court.[1]


It was further submitted by us that irrespective of the requirement above, there is board discretion in the criterion to decide if the transfer should take place, which is:[2]


(a) set out in (i) of the provision, which requires this Court to determine if the matter is a “related proceeding” and whether “it is appropriate” to effect the transfer;


(b) set out in (ii) of the provision, which requires this Court to look at whether the proceeding was incapable of being brought into this Court including matters arising under the Commonwealth and therefore not within the jurisdiction of this Court and the subsequent “interest of justice”;


(c) set out in (iii) of the provisions, which requires this Court to determine the ambit of “in the interest of justice” in a particular case.


If you are not already aware or your curiosity is getting the better of you, the principles espoused by the Jurisdiction of Courts (Cross-vesting) Act 1987 require the party seeking a transfer to evidence that the proceeding is “related to” a present course of action. This principle has been discussed in several cases. In Re Hamilton-Irvine and the Companies Act 1985,[3] Beaumont J in the Supreme Court of Norfolk Island (at page 17) accepted that the primary meaning of "related" was "associated; connected". He considered that, in the case before him, there needed to be a nexus or association between the two sets of proceedings in order to show that they were "related".


In Hoddell v Hoddell Pty Ltd,[4] Murray J referred to the meaning of the expressions adopted by Beaumont J in Re Hamilton-Irvine and again accepted them as apposite. On this occasion, his Honour, however, took the contrary view on the material facts before him concerning the relatedness of proceedings. In Hoddell, the plaintiff sought a declaration that she had an equitable interest in the former matrimonial home which was built on land registered in the name of the first defendant company. Murray J considered that the two sets of proceedings were subsequently related in the relevant sense. Perhaps something similar to the case we had before us.


Similarly, in Fox Enterprises Pty Ltd v Fox,[5] a Family Court proceeding was brought by a wife in which she claimed to be joint owner of residential property. In the Supreme Court, a company claimed an interest by way of constructive trust as a result of its contributions, which it alleged it had made for improvements to that property. The wife was a shareholder in the said company. The other shareholders and directors were her husband and his then de facto spouse. Williams J, at 449, found:

The issues to be determined primarily relate to the matrimonial affairs of the parties and involve the question as to what extent the interests of the former husband and wife in the subject property are diminished because of an interest held by a company in which at all material times they were the sole directors and shareholders.

In Valceski v Valceski,[6] Brereton J considered the application the Jurisdiction of Court Cross-vesting Act 1987 to matters involving dispute about matrimonial property. Brereton’s J considerations, which were also summarised in Jackson v Mylan[7] and Manson v Della -Bosca & Anor[8] included (footnotes removed):


(a)  when a Federal law confers jurisdiction on a court in respect of a matter, the jurisdiction extends to authorise the determination of the whole matter;


(b)  a matter is a "justiciable controversy" which may involve the determination of both Federal and State law, once federal jurisdiction is attracted, a federal court is armed with full authority essential for the complete adjudication of the "matter" and not merely the federal aspect of it. This is the origin of "accrued jurisdiction";


(c)  the authority to determine non-federal aspects of a justiciable controversy requires that "non-federal aspects" of the controversy form an integral part of it; the last requirement will be satisfied where the different claims, federal and non-federal 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";


(d) an important consideration is whether different claims are so related that the determination of one is essential to the determination of the other;


(e) likewise 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;


(f) the jurisdiction of the Federal Court extends beyond the determination of the federal claim to the litigious or justiciable controversy between the parties, of which the federal claim or cause action forms a part


The final requirement in (f) above is satisfied where different claims, Federal and non-Federal arise out of common transactions or fact or common substratum of facts.[9]


In Manson v Della -Bosca & Anor[10] Campbell J considered State jurisdiction and Federal Court accrued jurisdiction, citing Jackson v Mylan:[11]

... the Federal Court has accrued jurisdiction to determine the State proceeding. It follows from what I have said, about the closely interwoven matrix of fact from which the proceedings arise that there is but a single "justiciable controversy". Although the claims are different because they are sourced from State and Federal law respectively, they arise out of "common transactions and facts" or a common "substratum of facts". The determination of the facts essential to decide one claim necessarily decides the other. And as there is an identity, at the factual level, of office holders, membership, funding and assets of the State Union and the Federal Branch the risk of conflicting findings, and accordingly inconsistent judgements, if the State and Federal claims are determined separately, is real. For the reasons I have expressed, it matters not that the State proceeding involves the State Union as a party bringing a claim based wholly on a State Act. ... The present plaintiff's proceedings seek different relief, but the issues raised and the facts necessary to be established will overlap, in my judgment, to a high degree with those to be established in the other proceedings.

In Seymour v Devine,[12] the plaintiff had filed an application in the Family Court seeking orders for property settlement and spousal maintenance. A few days before those proceedings were commenced, the plaintiff commenced proceedings in the Supreme Court of Western Australia against the first defendants for declarations that they held certain property on constructive trust for her and the second defendant. It followed that the plaintiff sought transfer of the Supreme Court proceedings to the Family Court. Pullin J, at [7], noted the outcome in cases such as Hoddell, but considered he did not need to refer to them in any respect:

… because they provide, in my view, merely examples of the outcomes on different facts… the principles are clear enough.

In Seymour, Pullen J referred to the defendants’ submission to the effect that the transferring of the matter to the Family Court would result in the first defendant (a separate party) being entangled in that proceeding. Although relevant, Pullen J at [12] stated he did not consider it to be a reason:

… standing alone to refuse to make an order under the Cross-vesting Act.’

Further, Pullen J considered at [13] that the defendants’ other submission that the plaintiff’s case was “tenuous and shadowy”. Pullen J considered this as unnecessary to make an assessment in terms of the strength of that case in circumstances when the defendants in that case:

… concede that some contribution has been made… to the property in question.

In considering the relevancy of the Supreme Court action, Pullen J at [15] considered the question of relevancy to the Family Court proceeding and also the “interests of justice”. He stated:

… the issues concerning the contribution of the plaintiff and the second defendant and the first defendants to the real estate are intertwined and should be dealt with in the one place. … first, the contribution which have been made by the parties… in relation to this property; are all issues which have to be determined. It would be… not in the interests of justice to have some of those issues about contribution dealt with in the Family Court; that is, the contributions as between the plaintiff and the second defendant; and to have a separate consideration of those issues in this Court in relation to the title to the property. In a sense, the title to the property which has to be decided in the proceeding in this court depends upon an analysis of the contributions which have been made by the parties in the two sets of proceedings.

In reaching his conclusion, Pullen J at [17] determined the dispute before him was a “true family dispute” involving financial relations between the parties in relation to not only the real estate, but also other property. He therefore decided the transfer was appropriate in all the circumstances. 


In Miller v Miller[13] Heenan J ordered a transfer of the proceeding from the Supreme Court of Western Australia to the Family Court. In that matter, the wife commenced proceedings in the Family Court upon the breakdown of her marriage. The wife then commenced proceedings in the Supreme Court seeking declaratory relief that the husband held a family farm owned by her husband’s father by way of constructive trust due to representations in relation to maintenance, improvement and conservation. Heenan J stated [at page 22]:

The evidence relating to that issue, in my opinion, is likely to be much the same as that to be considered in deciding the property application pursuant to s 79(1) of the Family Law Act 1975. I find that the proceedings are related because there is a substantial and common question arising in both… it is in the interests of justice for both proceedings to be dealt with by the Family Court.

In Armstrong v Armstrong[14] the plaintiff and wife issued proceedings which were ultimately heard in the Family Court. The wife later commenced a proceeding in the Supreme Court out of facts not dissimilar to her claims in the family law proceeding in relation to declaratory relief in relation to property due to alleged constructive trust or an equitable charge due to improvements to the said property. Barker J considered the issue of transfer of the proceeding back to the Family Court under the s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987. In that case, Barker J in reaching the conclusion to transfer the proceeding remarked at 72-73:

… I consider it appropriate and otherwise in the interests of justice that the action in the Supreme Court should be transferred to the Family Court so that all matters relating to the settlement of property between the plaintiff and first defendant, as husband and wife in the Family Court proceedings, can be determined at the same time. While I recognise that the second defendant in the action in this Court is not a party to the marriage, or otherwise involved in the Family Court proceedings, and there is no particular reason why the Supreme Court action could not properly and effectually be determined in this Court, in the end if the plaintiff is successful in her action, there will need to be a final resolution of the property settlement proceedings in the Family Court by reference to the interest that the plaintiff has succeeded in establishing. The resolution of those Family Court proceedings may well need to have regard to the evidence adduced in the primary proceedings currently in this Court. It is more sensible in those circumstances that one court hear all the evidence at the one time. The alternative involves some prospect of the action in this Court being determined in this Court and then the Family Court being required, in effect, to take and consider afresh some of that evidence. In those circumstances, I am satisfied that it is both more appropriate and in the interests of justice that the proceedings in this Court should be transferred to the Family Court of Western Australia. An order in those terms should be made.

In the case which was before us, we strenuously submitted that:


(a)  a proceeding was filed in the Federal Circuit Court of Australia seeking, amongst other injunctions, a declaration of an equitable interest in property of a third party because of contributions from the matrimonial pool of a husband and wife towards the acquisition of the said property; and


(b)  the facts of the case enliven triable questions to be properly decided by the Federal Circuit Court of Australia in respect of an action, should it be successful, which could result in final resolution of the property settlement proceeding in respect of the interest claimed in the land (ultimately in the name of the Caveatee) between the Caveator and her husband; and


(c)  the evidence and the substantive proceeding before the Supreme Court of Queensland is substantially the same as that originating in the Federal Circuit Court of Australia out of the same set facts and was likely to raise the same or common questions to be tried; and


(d)  in those circumstances, there were significant prospects that any hearing of the matter in the Supreme Court of Queensland would result in the same issues being heard in the Federal Circuit Court of Australia proceeding and hearing, afresh, the same evidence i.e. matters likely to be much the same as that to be considered in deciding the property application pursuant to s 79(1) of the Family Law Act 1975; and


(e)  the questions in relation to the validity of the caveats were matters which fall within the incidental jurisdiction of Federal Circuit Court of Australia[15] and arose out of the same substratum of facts and are within the accrued or pendant jurisdiction of that Court; and


(f)   the issues to be determined primarily related to the matrimonial affairs of a husband and wife and involved the question as to what extent those interests in the subject properties are as against that of an interest held by a company in which at all material times was an entity to which the husband was a director;


(g) in these circumstances, the proceeding is / was a related proceeding and it was more appropriate and in the interest of justice that the proceeding in the Supreme Court of Queensland be transferred to the Federal Circuit Court of Australia.


CONCLUSION


Of course, with our many years of experience, we were successful. That’s why you should trust us; we have your back and understand the nature and extent of family law and all the complexities you can face.


If you have a client that is embroiled in a family law dispute where the financial affairs are a spider-web that must be untangled, trust us to help.


Disclaimer: This publication is not intended to be comprehensive nor does it constitute legal advice. We are unable to ensure the information is current and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication.


References:


[1] Hoddell v Hoddell Pty Ltd [1999] WASC 156 per Murray J at [17] and the wording found in the JCCV Act “the first court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be”.


[2] Armstrong -v- Armstrong & Anor [2004] WASC 121.


[3] (1990) 94 ALR 428.


[4] [1999] WASC 156.


[5] (1995) 123 FLR 445.


[6] (2007) 70 NSWLR 36.


[7] (2012) 263 FLR 148 at 156 [34].


[8] [2014] NSWSC 1232 at 24.


[9] [2014] NSWSC 1232 at 24.


[10] [2014] NSWSC 1232 at 29.


[11] (2012) 263 FLR 148 at 41-24.


[12] [2003] WASC 260.


[13] Unreported; SCt of WA; Library No 980340; 19 June 1998.


[14] [2004] WASC 121.


[15] Auricchio & Auricchio and Ors (No. 2) [2014] FamCA 240 at 60 where Forrest J states “I am also of the view that I could have simply made an order, such as is made by the Supreme Court when it determines that a caveat should be removed pursuant to an application brought pursuant to s 127 of the Land Title Act, namely that the caveat “be removed”.


© Scott A. Green, Associate Solicitor

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