Clayton v Bant [2020] HCA 44 (2 December 2020)
In Clayton & Bant the High Court highlighted that when dealing with applications under the FLA between parties who have also litigated with respect to their marriage in other jurisdictions, careful examination of the rights dealt with in the earlier proceedings is required.
Background:
Mr Bant is a citizen of UAE. Ms Clayton is a citizen of Australia. The couple met in 2006 in Dubai, and married in 2007 in Sharia Court in Dubai under a marriage contract providing for a dowry of 100,000 Dirhams and a deferred dowry of 100,000 Dirhams upon death or divorce.
The parties separated in Australia in July 2013 with one child (born 2009), having lived periodically between Australia and Dubai. Ms Clayton lives in Australia with the child since separation. Both parties own real property in Australia, though Mr Bant holds more extensive property interests elsewhere on an international scale.
In July 2014, Mr Bant commenced divorce proceedings in Dubai. In September 2014, Ms Clayton filed for divorce in Australia. Ms Clayton disputed that Dubai was the appropriate forum, as there was substantial property owned by both parties in Australia which the Dubai Court held no jurisdiction or enforcement power over.
After several adjournments in both forums, in February 2015, the Dubai court ultimately executed the divorce of the parties by way of “irrevocable fault-based divorce”, with 100,000 Dirhams payable by Ms Clayton to Mr Bant, plus costs (Federal Law No.28 of 2005 – PSL 54). The Court found it unnecessary to make any decision regarding alimony, as Ms Clayton did not seek it.
At First Instance | The Family Court of Australia (FamCA 736)
The Final Hearing in the Australian proceedings for property settlement and spousal maintenance was heard before Hogan J in August 2015. The Respondent, Mr Bant, made an Application for a permanent stay of these proceedings on the basis that Judgement and Orders made in a Dubai Court in February 2015 amounted to a bar on proceedings by virtue of the operation of res judicata/cause of action estoppel.
It was accepted by the judge at first instance that the divorce of the Dubai Court was effected in accordance with the law of Dubai, and that this divorce is a divorce for the purposes of s104(3) of the Family Law Act 1975 (Cth). It was found that Ms Clayton was not denied natural justice (by way of inadequate, effective, or competent opportunity to participate) in respect of the Dubai proceedings, and thus the divorce is valid in Australia under s104(4)(3).
Whilst the divorce proceedings in Dubai were valid and final, they did not address issues of property settlement and adjustment upon divorce, because such rights do not exist in Dubai as they do under s79 of the Family Law Act 1975 (Cth). It was noted at first instance that had the court in Dubai dealt with alimony payments, Ms Claytons right to seek spousal maintenance would have been barred under the concepts of estoppel and res judicata, though this was considered differently in the High Court proceedings.
The divorce was found to be valid in Dubai and Australia, and Mr Bant’s application for a permanent stay was dismissed.
On Appeal | The Family Court of Australia | Full Court (FamCAFC 200)
On appeal of the decision of Hogan J, and was heard before the Full Court of the Family Court (Strickland, Ainslie-Wallace, and Ryan JJ).
The Full Court concurred that Hogan J erred in concluding that the law of Dubai did not allow for the redistribution of parties assets, and thus erroneously concluded that the Dubai proceedings left open the question of adjustment of property interests for consideration in Australian proceedings. They contended that Hogan J erred in seeking an exact analogy between s79 of the Family Law Act 1975 (Cth) and the law of Dubai, and that Dubai law did provide for a claim on the property of a spouse following divorce. This was supported with reference to Federal Law No.28 of 2005 – PSL 62.1, which rules that a woman with the age of capacity and her husband hold independent financial assets, and it is only if they participate together in the development of these that they may claim a share from the other upon divorce or death.
It was posed that Ms Clayton was offered the remedy to seek property adjustment under this provision and did not seek it, and by way of the ‘Henderson Extension’ was prevented from making such a claim in the Family Court of Australia. The same challenge was applied to the finding at first instance that a claim for spousal maintenance remained open due to the Dubai Courts lack of determination in the matter of alimony.
The Full Court found that the issue was important and relevant enough to grant leave to appeal, and that substantial injustice would result were leave to be refused, as there was sufficient doubt over the decision at first instance. They considered that the cause of action is the financial consequence to the parties arising from the breakdown of the matrimonial relationship, and that the issue of whether the cause of action adjudicated in the Dubai Court under Federal Law No.28 of 2005 – PSL 62 is sufficiently analogous to give rise to a res judicata estoppel.
It was ordered that leave to appeal be granted, the orders at first instance be set aside, and that the Third Amending Initiating Application of Ms Clayton be stayed insofar as it related to interim and final spouse maintenance and property settlement orders.
The High Court Decision (HCA 44)
Representation
- D F Jackson QC with A-M McDiarmid and S F Gaussen for the appellant (instructed by Ferguson Legal Solicitors)
- B W Walker SC with M W Todd for the respondent (instructed by Watts McCray Lawyers)
On appeal in the High Court of Australia before Kiefel CJ, Bell, Gageler, Gordon, and Edelman JJ in September 2020, it was found that the Dubai proceedings did not preclude the wife from pursuing property settlement and spousal maintenance proceedings under the Family Law Act 1975 (Cth).
- The only claim made and determined in the Dubai Proceedings was the divorce of the parties and return of the advanced dowry from Ms Clayton to Mr Bant. Neither party asked, or could have asked, the Dubai Court to alter the property interests held by the parties.
- The rulings of the Dubai court raised no res judicata or cause of action estoppel. No Issue estoppel arises as the issues of property settlement could not be raised in the Dubai Court either specifically or generally. No Anshun estoppel arises as neither party could have asked the Dubai Court to alter their interests in property external to the UAE, and it was therefore not unreasonable of the wife not to have made such a claim in this court.
- None of these also apply to the spousal maintenance claim, as this claim is of a kind that was not made in the Dubai Court. The Dubai Court made no decision with any bearing upon spousal maintenance.
The jurisdiction of the Family Court to hear and determine proceedings is that conferred by ss31 (1) (a) and s39 (5) (a) of the Family Law Act 1975 (Cth) if either party to a marriage is an Australian citizen, ordinarily resident in Australia, or is present in Australia at the time of institution. By force of s31 (2), the jurisdiction of the Family Court extends to persons and things outside of Australia. The right in issue in the property settlement proceedings is that of s79(1), and the right in issue in the spousal maintenance proceedings is that of s74(1).
Res Judicata:
As these rights arise from Australian statute, the ruling of the Dubai Court cannot give rise to res judicata as the rights cannot “merge” in any judicial orders other than final orders of a court having jurisdiction under the Family Law Act 1975 (Cth) to make orders under those sections. The right to seek orders under those sections continues to have separate existence unless and until the power to make those orders is exercised on a final basis and thereby exhausted.
With regard to estoppel, both “Anshun” estoppel (also known as the Henderson extension) and cause of action estoppel were discussed.
Anshun estoppel:
This would operate to preclude the assertion by the wife of any right which she could have asserted in the Dubai proceedings but which she chose to refrain from asserting in the circumstances, which made that choice unreasonable in the context of the Dubai proceedings. Mr Bant’s contention that Ms Clayton demonstrated unreasonableness simply by not exercising a right available to her contains fundamental error, as in “Anshun” it was noted that there are many circumstances under which a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings.
Cause of action estoppel:
This would operate to preclude the assertion by the wife of any right non-existence of which was asserted by the husband in the Dubai proceedings and finally determined by ruling in the Dubai Court. Mr Bant failed to establish correspondence between rights asserted by the wife in the Australian proceedings and any right in existence or non-existence which was or might have been asserted in the Dubai proceedings. Absent this correspondence of rights, all estoppel fails. The contentions of the Full Court fail on the same grounds.
The High Court finds that the rights decided in the Dubai proceedings were not in any degree equivalent in nature to the right to seek the discretionary alteration of property interests, and substantially different with regard to the right seek a provision for maintenance. The Court had regard to the substantial difference in the coverage of rights in alimony and maintenance, with the former not being available to be claimed beyond the period that the divorce took effect, and the latter being available to be claimed beyond that date. Ms Clayton’s choice not to claim alimony in the Dubai proceedings cannot then provide a foundation for Anshun estoppel even if her choice not to claim this alimony was unreasonable.
The property settlement and spousal maintenance proceedings were to continue with ‘appropriate expedition’. It was ordered that the orders (2, 3, and 4) of the Full Court be set aside, and in their place ordered that the appeal be dismissed.
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Photo source: The High Court of Australia. Photo: Wikimedia Commons, John O’Neill