Case: The Queen v Ross-Jones; Ex parte Green [1984] HCA 82 ; (1984) 156 CLR 185
Outcome: referred to
On 18 May 2006, Mrs Edge issued proceedings in the Family Court of Australia against the trustee and the bankrupt seeking certain orders under the Family Law Act 1975 (Cth) ('the Family Law Act '). During the course of the submissions on the application, counsel for Mrs Edge indicated that the orders sought in the proceedings in the Family Court may need to be amended. After the submissions, a member of the firm of solicitors acting for Mrs Edge filed an affidavit in which it is said that Mrs Edge has amended the application in the proceedings in the Family Court in terms of the orders sought. Subject to the question of costs, I am prepared to decide this application on the basis of the orders sought in the amended application. Those orders are as follows: '1. That pursuant to section 44(3) of the Family Law Act 1975 , leave of the Court be granted to institute proceedings for the orders applied for hereinafter. 2. That pursuant to section 78 of the Family Law Act 1975 a declaration be made that: 2.1 Pursuant to section 90KA of the Family Law Act 1975 , the Binding Financial Agreement entered into between the husband and wife on 22 May 2003 is valid and binding, and 2.2 The transfers executed on 18 and 19 September 2002 respectively pursuant to the Binding Financial Agreement entered into between the husband and wife on 22 May 2003 are valid and binding. 2.3 In the alternative to 2.2, that the transfers effected on 18 and 19 September 2002 respectively were in contemplation of the Binding Financial Agreement entered into between the husband and wife on 22 May 2003 and thus valid and binding. 2.4 As a consequence thereof the wife is entitled to be and remain registered as the sole proprietor both at law and in equity of the properties situate at and known as 68 Range Road North, Upper Hermitage in the State of South Australia being all the land comprised in Certificate of Title Volume 5711 Folio 494 and 32 &amp; 33 Pelican Point, Morgan in the State of South Australia being all the land comprised in Certificate of Title Volume 5203 folio 799. 3. In the alternative, that if the Transfers referred to in paragraphs 2.2 and 2.3 above are void against the first respondent by reason of the operation of either or both of sections 120 and 121 of the Bankruptcy Act 1966 : - 3.1 An order pursuant to sub-sections 90K(1)(b) and (c) of the Family Law Act terminating the binding financial agreement entered into between the husband and wife on 22 May 2003. 3.2 Such order as is just and equitable pursuant to section 90K(3) of the Family Law Act 1975 preserving or adjusting the rights of the wife in relation to the property the subject of the terminated binding financial agreement. 4 In the further alternative to 2 and 3, that pursuant to section 79 of the Family Law Act 1975 , the net matrimonial assets of the parties be divided as to 75% to the applicant wife and 25% to the respondent husband. 5 That the husband's Trustee in Bankruptcy PETER IVAN MACKS be substituted as the Respondent in these proceedings in respect of the husband's property that may vest in the Trustee in Bankruptcy.' 15 The trustee submits that, insofar as an order is sought under s 79(1) of the Family Law Act , the application is out of time, and it will be necessary for Mrs Edge to obtain an extension of time. I have no information before me as to whether an extension of time will be granted, and I think it is appropriate to proceed on the basis that it may be granted. 16 Significant amendments were made to the Bankruptcy Act and Family Law Act by the Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth). I will refer to this Act as 'the Amending Act'. In terms of the issues in this case, it was not suggested that the relevant provisions of the Amending Act did not apply by reason of the fact that the relevant provisions came into effect during the course of 2005. I note that the amendments in Schedule 1 came into operation on 18 September 2005, those in Schedule 2 on 18 March 2005 and the balance on 15 April 2005. 17 In order to explain the effect of the Amending Act on the legal rights and interests between a non-bankrupt spouse and the trustee in bankruptcy of a bankrupt spouse, it is necessary to briefly examine the position before that Act. For present purposes, the previous position may be summarised as follows. 18 First, s 120(2) excludes from the operation of subsection (1) (among other things) a transfer to meet all or part of a liability under a maintenance agreement. Before 15 April 2005, 'maintenance agreement' was defined to include a financial agreement within the meaning of the Family Law Act . A similar exclusion or exception applied in relation to other provisions in the Bankruptcy Act , but it was not an exclusion or exception in the case of the operation of s 121 where the main purpose of the transfer was to prevent the transferred property from becoming divisible among the transferor's creditors or to hinder or delay the process of making property available for division among the transferor's creditors (s 123(6)). Before the introduction of the Amending Act, Mrs Edge could have raised as a defence or exception to the trustee's claim under s 120, but not s 121, an allegation that the transfers were to meet liabilities under a financial agreement. 23 In The Queen v Ross-Jones; Ex parte Green [1984] HCA 82 ; (1984) 156 CLR 185, Wilson and Dawson JJ said (at 211) (footnotes omitted): 'We should add that even if those proceedings were a matrimonial cause, the Family Court would nevertheless lack the power to grant the relief sought. Apart from any constitutional limitation, it is now authoritatively established that as a matter of construction the general powers of the Family Court are to be understood in the context of the Family Law Act which confers jurisdiction upon the Court in matrimonial causes and associated matters. Those powers, which include the power to grant injunctive relief under s. 114 , are not to be construed so as to confer jurisdiction to defeat the rights, or enlarge the obligations, of persons who are not parties to the marriage involved in the relevant matrimonial cause: Ascot Investments Pty. Ltd. v. Harper .' The principle referred to in the above passages has been applied in a number of cases in this Court and, in particular, it was applied in a context involving the provisions of the Bankruptcy Act in Deputy Commissioner of Taxation v Swain (1988) 20 FCR 507. Davies, Lockhart and Burchett JJ said (at 514): 'A sequestration order reflects a right of a creditor, and creates rights as between a debtor and his creditors and trustee. The Family Court, in the pursuit of its duty (in an appropriate case) to adjust rights as between the parties to a marriage, has no power to deprive other parties of their rights. Its power to deal with the property of the parties over whom it has jurisdiction must start with the property that is theirs, not with property that the law (whether the Bankruptcy Act or some other law) has vested in another.'