Keeping it in the Family: Third party family companies and the Family Court

In the recent case Camden Pty Ltd & Laue Ors [2018] FamCAFC 91 (Camden decision) the Full Court of the Family Court of Australian FamCAFC (Full Court), allowed an appeal whereby a declaration that a farm (Property B) which was owned by a company controlled by the husband’s mother was held on trust for the wife(pursuant to a family agreement) was set aside.

The Camden decision was an appeal from a decision of the Family Court of Western Australia (FCWA) in Laue & Laue (Deceased) by his Legal Personal Representative Daniel Fellon [2016] FCWA 91.

The trial concerned a complex, long running and bitterly contested family dispute.  The parties comprised of the wife, the estate of the husband and various family companies controlled by members of the family.  The parties claimed competing legal and equitable interests in two large pastoral properties.  According to the Full Court, the companies had functioned as extensions of individuals within the family. 

At trial the FCWA made orders relating to the distribution of property.  On appeal, the Full Court was asked to consider 24 grounds of appeal, categorised into 4 groups, namely:

• Whether the FCWA lacked jurisdiction and power to determine claims involving a third party and to make a declaration pursuant to Part VIIIAA of the Family Law Act 1975 (Cth);
• Whether the trial judge’s conclusions regarding Property B and the existence of a family agreement were correct;
• Whether the trial judge failed to account for material considerations in making orders as to Property A;  and

Whether the trial judge was biased in his assertions with respect to the adverse credit findings of the mother in law.

Jurisdiction of the FCWA

Camden Pty Ltd was the appellant on appeal and was not a party to the marriage.  The appellant argued that while the FCWA is invested with powers pursuant to Commonwealth legislation, the relief sought by the appellant did not fall within the part of the Federal Court of Australia Act 1976 (Cth) which gives the Court powers to deal with third parties.¹

Following the decision in Rizeq v Western Australia ² which was handed down by the High Court after the filing of the Notice of Appeal, the ppellant then abandoned this argument.

Single justiciable controversy

The appellants ultimately appealed largely on the ground that the decision did not constitute a ‘single justiciable controversy ³

The appellants suggested that the dispute between the wife and the estate of the husband was distinct from the argument between the various companies which were also parties.  In their view, the matters which related to the company were too remote from the dispute between the estate of the husband and the wife to be determined by the FCWA..

However, the Full Court noted that it was not possible to determine the property rights between the companies without first determining the property settlement to be reached between the wife and the estate of the husband.  As a result, the matter comprised a single justiciable issue.  This meant that it was not a separate issue from the family law matter, and that the trial judge’s orders relating to the company were valid.⁴

Finding

On appeal the Full Court found that:

• The appellant’s status as a corporation, rather than a party to the marriage did not preclude them from the jurisdiction of the FCWA.
• There was no error demonstrated by the trial judge in finding that there was a  ‘single justiciable controversy’;
• As a result, the FCWA had the power to determine the matters in question,
• That the issue, described as a ‘matrimonial one'⁵ fell into the jurisdiction of the FCWA because the court has ‘accrued jurisdiction to finalise all matters which attracted the FCWA’s attention. 

The decision reinforced earlier authorities to the effect that

• The powers of the FCWA stem from both state and Commonwealth Law; and
• Entities which function as extensions of the parties and are involved in the same dispute are subject to the jurisdiction of the FCWA despite not being parties to the marriage. 

Lavan Comment

The FCWA, despite its status as a State court largely operates under powers created by Commonwealth legislation.  The powers of the FCWA extend beyond those explicitly delegated to it.  This can extend to making rulings directed to parties other than those directly involved in the dispute.

The broad definition repeatedly adopted of ‘justiciable issue’ may mean that the consequences of a family law judgment may spread well beyond the parties themselves. Those involved in family disputes should note the broad reach of the FCWA in dealing with entities not directly involved in the family law dispute.