Andrews & Anor v Andrews & Ors [2008] NSWSC 687

New South Wales Supreme Court

CITATION : Andrews & Anor v Andrews & Ors [2008] NSWSC 687

HEARING DATE(S) : 3 July 2008

JUDGMENT DATE : 3 July 2008

JURISDICTION : Equity Division

JUDGMENT OF : Palmer J

EX TEMPORE JUDGMENT DATE : 3 July 2008

DECISION : Cross vesting order made.

CATCHWORDS : PRACTICE AND PROCEDURE – CROSS VESTING - Whether in the interests of justice that proceedings by father against son and daughter-in-law affecting their joint assets be transferred to Family Court to be heard concurrently with property adjustment proceedings between son and daughter-in-law in which son admits, but daughter-in-law denies, father's claim.

LEGISLATION CITED : Jurisdiction of Courts (Cross vesting) Act 1987 (Cth) – s 5(1)(b)(ii)(C)

CATEGORY : Procedural and other rulings

Nicholas Andrews (First Plaintiff) Rozene Pty Ltd atf Nicholas Andrews Family Trust (Second Plaintiff) PARTIES : Anthony Nicholas Andrews (First Defendant) Michele Olga Andrews (Second Defendant) Maison de Provence Pty Ltd atf The Maison de Provence Family Trust (Third Defendant)

FILE NUMBER(S) : SC 3134/07

M.R. Elliott (Plaintiffs) COUNSEL : W.B. Beilby (Sol) (First Defendant) J.J. Millar (Second Defendant)

Barkus Edwards Doolan (Plaintiffs) SOLICITORS : Beilby Poulden Costello (First Defendant) Brian Samuel & Associates (Second Defendant)

3134/07 Andrews & Anor v Andrews & Ors

JUDGMENT – Ex tempore 3 July, 2008

1 The Second Defendant in these proceedings applies for the transfer of the proceedings into the Family Court pursuant to s 5(1)(b)(ii)(C) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) on the ground that it is in the interests of justice that the issues in this case be determined in the Family Court because of a necessary dependence between the issues in this case and the issues in the Family Court. The facts briefly are as follows. 2 The First and Second Defendants in these proceedings were formerly married. They separated on 15 May 2005. Their marriage was dissolved by order made on 5 August 2006. 3 The First Defendant, to whom I will refer as the husband, commenced proceedings in the Family Court on 7 July 2006 for adjustment of property rights between himself and the Second Defendant ("the wife"). 4 On 12 June 2007 proceedings were commenced by the husband's father and his company in this Court against both the husband and the wife. The Plaintiffs in these proceedings (to whom I will collectively refer for brevity as "the father") seek a declaration that sums of money paid by the father over the course of years towards the purchase of various properties by the husband and the wife were advanced by him as loans to them and are repayable as such. He seeks declarations to that effect rather than commencing debt recovery proceedings because he says the terms of the loan agreements were that the loans would be repaid when various pieces of real estate were sold, and the real estate has not yet been sold. 5 The husband does not intend to contest his father's claim. Indeed, he supports the contention of his father that the various sums of money paid over the years were loans. However, the wife says that those payments were not loans at all but, rather, were gifts. If one were to look, therefore, solely at the issues for determination in these proceedings, they would simply be whether or not various payments made by the father to his son and then daughter-in-law were by way of loan or by way of gift. 6 The position is complicated, however, by reason of the property proceedings between the husband and the wife in the Family Court. There the husband is seeking an adjustment of property rights as between himself and the wife on the basis that both he and she are indebted to his father for the sums of money which the father now claims in these proceedings. He says, therefore, that the assets of the marriage available for adjustment and distribution between the parties to the marriage must be reduced by the liabilities to the father which both partners to the marriage had. 7 However, the wife, as I have recounted, says that neither she nor the husband were indebted to the father in the sums claimed by him so that the assets of the marriage available for distribution are correspondingly greater. Alternatively, she wishes to say that even if it is established by the father that the payments made by him were loans, the Family Court may take into account the distinct probability that the father would not enforce a judgment debt for those loans against his own son and that property adjustments can be made by the Family Court accordingly. 8 Because the adjustment of property rights in the Family Court depends upon a determination as to whether the payments made by the father to the husband and the wife are gifts or loans, the wife now seeks the transfer of these proceedings into the Family Court so that one court can determine, firstly, what are the liabilities, if any, of the husband and wife to the father and, having made that determination, what net assets are available for apportionment as between the parties to the marriage. 9 The father resists an order for transfer on seven grounds, which Mr Elliott of Counsel has very helpfully and clearly explained. I will deal with each of them in turn. 10 Mr Elliott says, firstly, that this Court should not order the transfer of the Equity proceedings because the issue in these proceedings is simply whether or not a contract debt exists between the Plaintiffs and the Defendants. He says that this Court is better able to deal with that issue than is the Family Court because, in this Court, the issues will not be clouded by considerations affecting property adjustments between the husband and the wife. 11 I am unable to accept that submission. The Judges of the Family Court are equally cognisant of the law of contract as the Judges of any other court and I cannot accept that there is any risk that the contractual issues affecting the father's claim, being a claim by a third party, will be dealt with there any differently from the way they would be dealt with in this Court. Accordingly, I do not think that any weight can be given to the first point which Mr Elliott raises. 12 The second point which Mr Elliott makes is that there is nothing in the evidence which shows that the Family Court proceedings would come on for hearing more quickly than the trial of the Equity Division proceedings, if they were to remain in this Court. However, Mr Elliott concedes that, as far as the state of readiness of both sets of proceedings is concerned, there is nothing to show that the Family Court proceedings are more advanced than the Equity Division proceedings or vice versa, or that one set of proceedings has any better prospect of coming on earlier for hearing than the other set of proceedings. It seems to me that the state of readiness in both sets of proceedings is exactly the same. I do not think, therefore, that there is any decisive weight to be given to this consideration. 13 The third point Mr Elliott makes is that there is nothing in the evidence to show that the wife would incur a greater cost if the trial of the issue in the Equity proceedings occurred in this Court rather than in the Family Court. However, he says, it is probable that if the Equity Division proceedings are transferred to the Family Court, the father will incur greater cost because he will, of necessity, have to participate in the trial of issues as between husband and wife which do not concern him and it would be difficult for any costs incurred by the father in relation to issues concerning him alone to be segregated out from costs relating to issues in which the father may be an unwilling and unnecessary participant. 14 I do not think that there is great weight in this point. The Family Court will be just as concerned as this Court to manage the proceedings before it effectively with the least expenditure of unnecessary cost by any party. The Family Court will give directions as to how the issues between the father and the wife, and as between the husband and the wife, can be determined without unnecessary cost to the father and may make, at the end of the case, such costs orders as are appropriate to protect the position of the father. 15 The fourth point that Mr Elliott makes is that a plaintiff in a civil case has the right to determine what evidence to call in his case. However, he says, if the Equity Division proceedings are transferred to the Family Court, the father will lose that right. He says that if the proceedings were to continue in this Court, the father could determine that the only evidence to be called in his case in chief would be that given by himself. The husband has not filed a Defence and it is clear from the evidence that he has filed in the Family Court proceedings that he supports the father's case. Therefore, in this Court the father would be contradicted only by the evidence of the wife. However, Mr Elliott says, if the proceedings were transferred into the Family Court, the husband will give evidence on issues affecting property adjustments and the wife would be able to cross examine him as to the existence of the loan, an advantage she would not have in this Court. 16 I am unable to attach great weight to this consideration. It will be a matter for the wife to decide whether she wishes to cross examine the husband as to the evidence he gives in the Family Court proceedings as to the existence of the loan. It would have been open to the wife to make a submission to this Court, if the husband gave no evidence at all, that the father had failed to call the husband in support of his case, as would have been expected, leading to the inference that the husband's evidence would not have assisted his father's case. There are all sorts of tactical considerations which can arise as to who calls what evidence and it is not possible at this stage of the proceedings to say what course the strategy of the contest will take. 17 The fifth point that Mr Elliott makes is that if the Equity Division proceedings are determined in this Court, all parties will be bound by an issue estoppel as to the existence or otherwise of a debt as between the father and the husband and wife and this issue estoppel will be the foundation of property adjustments in the Family Court. This is doubtless true but the same position will be reached if the Family Court itself first decides whether not the husband and the wife are indebted to the father or whether the payments were gifts. 18 The sixth point Mr Elliott makes is that it should not carry weight in this application that the wife intends to make a submission to the Family Court that, even if the payments by the father were loans, property adjustments can be made between the husband and the wife in the light of the probability that the father will not pursue his son for a judgment debt. 19 I agree. I do not know that that ground is advanced by the wife in support of the cross vesting application but, if it were, I would give it no weight. There are other factors which militate in favour of the transfer apart from this point. 20 The seventh point is that the wife has made an election that the Equity Division proceedings should proceed first and that the Family Court proceedings should await determination of the Equity Division proceedings. Mr Elliott refers to an affidavit filed in the Family Court by the wife in which she seeks an adjournment of the Family Court proceedings until after determination of the Equity Division proceedings. The wife in her affidavit in support of this application says that this order was sought only by way of protection in case her application to transfer the Equity Division proceedings was not successful. 21 In my view, this consideration is of no weight. The ultimate question for the Court is where do the interests of justice lie, having regard to the requirement that the issues between the parties should be determined as quickly, cheaply and as conveniently as possible. 22 The husband, who appears on the Motion by Mr Beilby, solicitor, takes the position that he neither consents to nor opposes the wife's application. However, he suggests that costs issues would be more contained if the Equity Division proceedings were to continue in this Court rather than be transferred. 23 In my view, the interests of justice favour the transfer of the proceedings. For the reasons which I have enumerated in answer to Mr Elliott's points, it seems to me that it would promote the cheap, efficient and just resolution of all issues between the three sets of parties if one court could control the determination of all those issues. 24 The issues arising in the Equity Division proceedings must be determined in order that the Family Court may make property adjustments as between the parties to the marriage. The Family Court can segregate such issues as relate only to the father and have those determined in the best way appropriate and then can move on to determine with least delay and expense what flows therefrom as far as property adjustments between the parties of the marriage are concerned. It would be a waste of time and money for two sets of proceedings to be fought in two Courts when there is such a degree of interdependency between them. For those reasons I consider it to be in the interests of justice to make the order sought in the Motion. 25 I order that these proceedings be transferred to the Family Court of Australia, Sydney Registry, pursuant to s 5(1)(b)(ii)(C) of the Jurisdiction of Courts (Cross-vesting) Act . 26 The question on this Motion was whether there was such a relationship between the two sets of proceedings as to require, in the interests of justice, that the one Court deal with both sets of proceedings. It is a discrete issue, such that the costs of the Motion should be dealt with separately, regardless of the outcome of the substantive claims as between the parties in the proceeding. 27 For that reason, I order that the Plaintiffs pay the costs of the Second Defendant of this motion. – oOo –