Farrall v Money[2012] QCA 262

SUPREME COURT OF QUEENSLAND

[1] HOLMES JA:  I agree with the reasons of Gotterson JA and with the orders his Honour proposes.

[2] GOTTERSON JA: The appellant commenced proceedings by way of an originating application filed in the District Court at Southport on 16 February 2012.  The relief sought in the proceedings concerns a residential property at 45 Skyline Terrace, Burleigh Heads of which the respondent is currently the registered proprietor.  In addition to a declaration that beneficial ownership is shared by the appellant and the respondent as tenants in common in equal shares, the substantive relief sought by the appellant in the proceedings is the appointment of statutory trustees for sale of the property under Part 5 of the Property Law Act 1974 (“PL Act”) and the payment by the trustees of the net proceeds of sale to the appellant and the respondent in equal shares.

[3] The appellant’s claim to co-ownership of the Burleigh Heads property arises from the terms of a Deed of Release dated 9 February 2006 (“Deed”) executed by the appellant and the respondent in settlement of property adjustment proceedings which the appellant had commenced against the respondent under Part 19 of the PL Act in the Supreme Court of Queensland on 8 June 2005.  The Deed provided that in consideration of the respondent holding one half of the Burleigh Heads property in trust for the appellant, he released her from all his claims to certain properties, including that property.

[4] On the 14 March 2012, the respondent filed an application in the District Court proceedings seeking an order that they be stayed pending the conclusion of the appellant’s appeal in matter NA3 of 2012 pending in the Family Court of Australia.  Section 69(2)(c) of the District Court of Queensland Act 1967 would empower that court to make such an order.  The respondent’s application also sought an order that the appellant pay the costs of the application on an indemnity basis.

The Federal Magistrates Court Proceedings and Family Court Appeal

[5] On 15 June 2010, the appellant commenced proceedings in the Federal Magistrates Court against the respondent for a property settlement in reliance upon the de facto relationship provisions in Part VIIIAB of the Family Law Act 1975 (“FL Act”).  At the hearing of this appeal, the Court was informed that, in those proceedings, the appellant seeks a declaration of the existence of a de facto relationship between himself and the respondent as would enliven the jurisdiction of the Federal Magistrates Court pursuant to Part VIIIAB.  I note that, at all times, it has been common ground that in order for that jurisdiction to be enlivened, it is necessary that there have existed at 1 March 2009 a de facto relationship between those two parties. 

[6] In those proceedings the appellant also seeks further relief from the Federal Magistrates Court upon the footing that the declaration sought from it is made.  That relief includes an equal division of assets.  The pool of assets of which equal division is sought includes the Burleigh Heads property, another property at New Brighton in New South Wales, possibly the proceeds of sale of a further property at Ashgrove, furniture, several motor vehicles and the respondent’s superannuation and share portfolio, all of which, with the exception of one of the motor vehicles, is in the respondent’s name. 

[7] The appellant and respondent are in dispute over whether or not a de facto relationship existed between them at 1 March 2009.  In short, the appellant claims that one did exist and that it had continued until about August 2009.  The respondent claims that such de facto relationship as had existed between them, endured from March 1999 to December 2001 only.  The respondent has cross claimed for a declaration to that effect.

[8] The issue of the duration of the existence of the de facto relationship was tried separately by Federal Magistrate Coates over three days in May and June 2011.  In reasons for judgment delivered on 16 December 2011, his Honour held that he was unable to find that a de facto relationship had existed between the appellant and the respondent at 1 March 2009.  Consistently with that, it was declared pursuant s 90RD(1) of the FL Act that a de facto relationship never existed between the appellant and the respondent for the purposes of the proceedings in that Court.  Federal Magistrate Coates ordered that the appellant’s application be dismissed.

[9] On 6 January 2012, the appellant commenced matter NA 3 of 2012 by filing in the Family Court of Australia a notice of appeal against the decision and order.  The grounds of appeal in that document contend that Federal Magistrate Coates erred in failing to find that a de facto relationship existed at 1 March 2009.  By amendment, an additional ground of appeal based upon an oversight in proclaiming the commencement of the legislation that enacted Part VIIIAB was raised.  This latter ground appears to have been addressed by the enactment of the Family Law Amendment (Validation of Certain Orders and Other Measures) Act 2012 to which assent was given on 10 April 2012.

[10] This appeal will be heard by the Full Court of the Family Court of Australia.  A date for hearing the appeal has not yet been set.

The order appealed and reasons

[11] The stay application was heard at Southport on 19 March 2012.  On 26 March, the Court ordered that the originating application be stayed pending the conclusion of the appeal proceedings in the Family Court of Australia.  The appellant was ordered to pay costs but not on the indemnity basis.

[12] The following paragraphs from the reasons published on 26 March 2012 disclose the reasoning towards the conclusion that the learned judge reached that a stay should be granted.  His Honour said:[1]

“[21]The respondent submits that the applicant is prohibited by s.39A(5) of the Family Law Act 1975 from bringing this Originating Application. That sub-section provides as follows:

‘(5) PROCEEDINGS ONLY TO BE INSTITUTED UNDER THIS ACT

A de facto financial cause that may be instituted under this Act must not, after the commencement of this section, be instituted otherwise than under this Act.

Section 4 of the Family Law Act 1975 relevantly provides as follows:

‘DE FACTO FINANCIAL CAUSE MEANS:

... (c) proceedings between the parties to a de facto relationship with respect to the distribution, after the breakdown of the de facto relationships, of the property of the parties or either of them; or

... (g) any other proceedings (including proceedings with respect to the enforcement of a decree or the service of process) in relation to concurrent, pending or completed proceedings of a kind referred to in any of the preceding paragraphs.’

[22]The respondent contends that the appeal to the Full Court of the Family Court is either the continuation of the Federal Magistrates Court proceedings, a fresh proceeding or ‘other proceedings ... in relation to ... completed proceedings’ and accordingly, the applicant is included in the prohibition contained within s.39A of the Family Law Act 1975.

[23]In my view it is clear that this Originating Application concerns the distribution of property which forms part of the property pool of the de facto financial cause commenced by the applicant in the Federal Magistrates Court and now subject to an appeal to the Full Court of the Family Court. Until those proceedings have concluded this Court should accord the provisions of s.39A(5) of the Family Law Act 1975 their full meaning and effect by declining to further proceed to determine the application.

[24]The applicant, of course, may decide to withdraw his appeal in the light of his counsel’s pessimism as to his chances of success in the Full Court of the Family Court. In those circumstances the appeal proceedings would conclude at a far earlier stage than would otherwise occur, and this Court would be in a position to proceed with the Originating Application without the impediment of the s.39A impediment without further delay.”

[13] The appellant has appealed to this Court by notice of appeal filed on 19 April 2012.  The notice of appeal seeks orders that the orders made on 26 March 2012 be set aside and that the respondent pay the costs of the appellant of the appeal and of the proceedings below.  At the hearing of the appeal, the appellant’s counsel provided the Court with a draft order which expanded the relief sought from this Court to include an order for the appointment of statutory trustees for sale of the Burleigh Heads property with provision that the net proceeds of sale be held by them pending further order of the Court.

Grounds of appeal

[14] Although the Notice of Appeal lists some six grounds of appeal, the central thesis in the appellant’s written submissions is that the learned judge determined that the application before him was a de facto financial cause and that to have so found was wrong for three reasons.  The appellant’s oral submissions focussed upon that thesis and those reasons.  Together they constitute the appellant’s principal ground of appeal.

Analysis of principal ground of appeal

[15] For the central thesis, the appellant relies upon paragraph 23 in the learned judge’s reasons.  The appellant maintains that that paragraph embodies a conclusive finding that the originating application proceeding is a de facto financial cause for the purposes of the FL Act which had been commenced by the appellant after the commencement of s 39A of the FL Act.  It was upon that footing, the appellant further maintains, that the learned judge gave effect to s 39A(5) of that Act by making the order he made.

[16] I do not read paragraph 23 as expressing a conclusive finding that the originating application proceeding is a de facto financial cause which had been commenced in contravention of s 39A(5).  Had he meant to have made such a finding, then, in order to give full effect to that section, the learned judge would have taken steps to terminate the proceeding, rather than to stay it.  Furthermore, the form of stay ordered is counter-indicative of such a finding.  Once the appeal has concluded, the stay will lapse but the fate of the proceeding will not otherwise be affected by the orders under appeal to this Court.  However, above all others, the circumstance that tells most against such a finding having been intended is that it was not necessary for the learned judge to make it in order to decide whether or not to grant the stay that had been requested. 

[17] My understanding of the reasons of the learned judge is that the order that the proceeding be stayed pending conclusion of the Family Court appeal was based upon the following circumstances and considerations.  The appellant had commenced proceedings in the Federal Magistrates Court on the footing that his claim for a property settlement is a de facto financial cause and hence within the jurisdiction of that Court under s 39A(1)(b) of the FL Act.  Whether it is a de facto financial cause is dependent upon whether or not there was a subsisting de facto relationship at 1 March 2009.  That issue was determined adversely to the appellant.  The appellant has appealed to the Family Court.  In the event that the appeal succeeds and a favourable determination for him is made on that issue, the Federal Magistrates Court’s jurisdiction to deal with his application will be authoratively affirmed.  In exercising jurisdiction under Part VIIIAB, the Federal Magistrates Court would have wide powers with respect to each item of property within the property pool, including the Burleigh Heads property.  The jurisdiction would include power to alter the interests of the parties to any such item of property as it considers appropriate, provided the court considers it just and equitable to do so.[2]  Significantly, in relation to the Burleigh Heads property, the Federal Magistrates Court would have the power not only to declare existing interests in it, but also to alter them.  Thus, even if it be that under the Deed the appellant is beneficially entitled to one half of the Burleigh Heads property, that interest could be altered by the exercise by the Federal Magistrates Court of the jurisdiction which he seeks to invoke there.

[18] Evidently, the learned judge was concerned that there should not be running concurrently in different courts litigation over the same property which could yield different outcomes.  In the proceedings before him, the appellant was seeking appointment of trustees for sale and equal division of the net proceeds of sale; whereas, in the proceedings in the Federal Magistrates Court, it is quite possible that interests in the Burleigh Heads property would be so altered that that property is not sold.

[19] In the foregoing circumstances, the learned judge considered it appropriate to stay the proceedings before him until it is known whether the impediment to continuation of the Federal Magistrates Court proceedings arising from the decision of Federal Magistrate Coates is known.  In my view, that was the sensible course to take.  It was a course open to the learned judge under s 69(2) of the District Court of Queensland Act 1967 and in taking it; he did not commit any error of law.

[20] I would add that, for an additional reason, the learned judge acted correctly in not making an order which would have appointed trustees for sale who would hold the net proceeds of sale pending further order.  The reason is that the respondent has foreshadowed a claim that her execution of the Deed was secured by duress on the part of the appellant and that it does not bind her.  Such a claim would put in issue the appellant’s status as a co-owner of the Burleigh Heads property and, in consequence, his entitlement to apply for relief under Part 5 of the PL Act.

[21] As noted, the appellant advanced three reasons why the conclusive finding he maintained the learned judge had made, was wrong.  Given that the learned judge did not make, or act upon, such a finding, those reasons are of diminished significance for this appeal.  It is unnecessary to discuss them.  None of them of themselves would have constituted a viable ground of appeal. 

[22] None of the other grounds of appeal listed in the Notice of Appeal was advanced in the written submissions or oral argument.  It is unnecessary to consider them.  I note in passing that at the hearing of the appeal, counsel for the appellant pressed the Court with submissions that the jurisdiction to grant relief under Part 5 of the PL Act to co-owner was rarely refused.  That may be so; but that relief was not refused by the learned judge.  What motivated the stay order were the circumstances of the appellant himself having first sought to enliven another jurisdiction where different relief might be granted in respect of the Burleigh Heads property.

Conclusion

[23] For these reasons, I consider that this appeal should be dismissed.

Orders

[24] I would propose the following orders:

1. Appeal dismissed.

2. Order the appellant to pay the respondent’s costs of the appeal on the standard basis.

[25] PHILIP McMURDO J:  I agree that the appeal should be dismissed with costs, substantially for the reasons given by Gotterson JA.  I wish to discuss one consideration, which was important for the primary judge and remains so here. 

[26] In his proceedings in the Federal Magistrates Court, now under appeal to the Family Court, the appellant contends that the parties were in a de facto relationship as at 1 March 2009.  If he is right about that, so that his appeal to the Family Court succeeds, then as the primary judge said at paragraph [23] of his reasons, the appellant’s case in the District Court is “with respect to the distribution, after the breakdown of the de facto relationship, of the property of the parties or either of them”.  Therefore the proceedings in the District Court would be within paragraph (c) of the definition of “de facto financial cause”, which is within s 4 of the Family Law Act 1975.  If so, then as the primary judge recognised in that part of his judgment which has been quoted by Gotterson JA, s 39A(5) of the Family Law Act 1975 would be engaged, with the consequence that the District Court would not have jurisdiction.[3]

[27] The appellant does not challenge that interpretation of the Family Law Act.  But he says that, as matters presently stand, it has been determined that there was no de facto relationship at the relevant date, so that the primary judge should have held that it was the District Court, and only that court, which had jurisdiction, and there was no basis for a stay. 

[28] The appellant’s argument overlooks the potential impact of his own appeal to the Family Court.  The primary judge was clearly correct to grant the stay until the outcome of that appeal was known.