FDM v MD [2012] QDC 52

DISTRICT COURT OF QUEENSLAND CITATION: FDM v MD [2012] QDC 52 PARTIES: FDM (Applicant) v MD (Respondent) FILE NO/S: D92/12 PROCEEDING: Originating Application ORIGINATING COURT: District Court, Southport DELIVERED ON: 26 March 2012 DELIVERED AT: Southport HEARING DATE: 19 March 2012 JUDGE: Newton DCJ ORDER: The Originating Application be stayed pending the conclusion of the appeal proceedings in the Family Court of Australia. COUNSEL: B. Curran on behalf of the applicant P. Morrow on behalf of the respondent SOLICITORS: Browns Lawyers on behalf of the applicant Craig Ray & Associates on behalf of the respondent [1] By way of an Originating Application the applicant seeks the following orders: 1. A declaration that the beneficial interest in real property situated at XYZ (“the XYZ property”) pursuant to a trust, resides with the applicant and respondent as tenants in common in equal shares. 2. An order that the Registrar of Titles, Queensland note on the title to the XYZ property the declaration in paragraph 1 of these orders. 3. An order that the XYZ property vest in JHC (“the trustee”) as trustee to be held by the trustee on a statutory trust for sale pursuant to the provisions of section 38 of the Property Law Act 1974. 4. That the trustee pay the net proceeds of sale of the XYZ property to each of the applicant and respondent in equal shares. 5. The respondent pay the applicant’s costs of and incidental to the application to be assessed. 6. For such further or other orders as the Court may deem meet. [2] The respondent is the former de facto partner of the applicant. The duration of that relationship remains in dispute. The applicant deposes to the relationship existing -- 1 of 5 -- 2 “off and on” from March 1999 to August 2009 with the parties being separated and living apart for some periods of time during that period. [3] In June 2005 the applicant commenced proceedings in the Supreme Court for property adjustment orders under Part 19 of the Property Law Act 1974 particularly with respect to the XYZ property. [4] On 9 March 2005 the applicant lodged a caveat upon the title to the XYZ property claiming an estate or interest in the property. [5] In or around September 2005 the parties, according to the applicant, reconciled their relationship and resumed co-habiting. Discussions continued between them concerning the Supreme Court proceedings culminating in the signing, on 9 February 2006, of a Deed of Release and Declaration of Trust which purported to settle the Supreme Court proceedings by the granting to the applicant of a one half share in the XYZ property. [6] The applicant claims that the Declaration of Trust, which was attached to the Deed of Release, was not provided to him and that he has only an unsigned copy. The original Deed of Release and Declaration of Trust remain in the possession of the respondent. [7] The applicant claims that he made substantial contributions to the acquisition, maintenance and improvement of the XYZ property. The parties maintained a joint bank account into which rents from the property were deposited and from which outgoings in respect of the property were paid. The parties are said to have lived together and separately in the property from time to time until July 2010 when the applicant vacated the property. Since then the respondent has resided in the property to the exclusion of the applicant. [8] On 8 April 2010 the applicant received an email from the respondent’s solicitors demanding the withdrawal of the caveat over the XYZ property and indicating the respondent’s intention to sell the property and divide the proceeds of sale equally between the parties in accordance with their agreement. [9] On 15 June 2010 the applicant commenced proceedings in the Federal Magistrates Court seeking property settlement orders in respect of property including the XYZ property. This action was dismissed by order of Federal Magistrate Coates on 16 December 2011 who declared pursuant to s.90RD(1) of the Family Law Act 1975 that a de facto relationship had never existed between the parties for the purpose of the proceeding. In particular, Federal Magistrate Coates found that the Federal Magistrates Court of Australia had no jurisdiction to make property settlement orders as no de facto relationship between the parties existed as at 1 March 2007, which was the relevant date to establish jurisdiction. [10] On 9 January 2012 the applicant filed a Notice of Appeal to the Full Court of the Family Court of Australia against the decision of the Federal Magistrates Court. The appeal is yet to be determined by the Full Court of the Family Court. [11] As a result of enquiries made with valuers and real estate agents, the applicant values the XYZ property at approximately $625,000 to $650,000. As at 10 February 2012 the mortgage to the St George Bank was $294,500. However, in his -- 2 of 5 -- 3 affidavit sworn on 16 March 2012 and filed by leave at the hearing of this application, the applicant states that he has recently discovered “that the respondent has breached her undertaking to the Federal Magistrates Court dated 21 June 2010 and increased the mortgage upon the XYZ property by discharging the St George Bank mortgage [re] financing… with the Commonwealth Bank of Australia in the amount of $425,000”. [12] The evidence of the respondent is contained partly in her affidavit sworn on 19 March 2012 and filed by leave at the hearing of this application and partly in her affidavit filed on 16 February 2012 the respondent states that the parties were in a de facto relationship which ended in December 2001. Her friendship with the applicant continued after the de facto relationship ended. [13] The respondent states that the applicant lodged caveats on a property owned by her and her sons at CAC on 9 March 2004. The applicant then prepared a Deed of Release which was signed in February 2006. According to the respondent, she felt blackmailed into signing the deed at that time “as I had to refinance the loan on the CAC property and the applicant knew that”. Her signature to the deed has never been witnessed. The applicant would not withdraw the caveats until the deed had been signed. [14] With respect to the Supreme Court proceedings that were commenced in 2005, the respondent states that she simply refused to get involved in any court action. At that time her relationship with the applicant was such that she had to obtain a “Domestic Violence Ouster Order” against him. [15] Apart from an initial loan of $23,000 in 1999 and a small amount of physical work performed by the applicant at both the CAC and XYZ properties, the applicant has not, according to the respondent, substantially contributed anything to her assets. [16] The applicant submits that the declaration made in the Federal Magistrates Court that the de facto relationship did not exist at or after 1 March 2009 means that the applicant has no other rights than under the Deed of Release. Although an appeal has been lodged to the Full Court of the Family Court, the appeal books have not yet been settled and the date of the appeal hearing remains unknown. [17] A significant delaying factor is the failure to proclaim the legislation under which the Federal Magistrate acted to be in force as at 2011. [18] The applicant asserts that in the circumstances the only certain rights he has with respect to the XYZ property are those claimed by him pursuant to the Deed of Release, namely that he is the beneficial owner of half the property and the respondent as registered owner is the beneficial owner of the other half. [19] A number of difficult and expensive hurdles have been identified for the applicant to overcome if he is to acquire rights in addition to those conferred by the Deed of Release – (a) the Commonwealth Parliament must pass enabling retrospective legislation validating the decision of the Federal Magistrate of 16 December 2011; (b) the appeal by the applicant against that decision must proceed and be successful by obtaining an order for a new trial; -- 3 of 5 -- 4 (c) the applicant at any new trial must succeed in obtaining a declaration that a de facto relationship existed on and after 1 March 2009; (d) there would then have to be a trial on the merits to assess the respective contributions and other factors in order to determine any entitlement of the applicant under a property settlement application; and (e) the applicant would have to establish that his entitlements exceed his half interest in the XYZ property. [20] Of particular concern, even if the applicant is successful in relation to all these steps, is that in the meantime the property rights of the applicant with respect to the XYZ property remain unprotected. This would also be the situation if this Court should proceed to determine the matter after hearing evidence. [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 -- 4 of 5 -- 5 proceed with the Originating Application without the impediment of the s.39A impediment without further delay. [25] The Order of the Court is that the Originating Application be stayed pending the conclusion of the appeal proceedings in the Family Court of Australia. [26] If required I will hear the parties on the question of costs. -- 5 of 5 --