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Cross-jurisdictional Property Settlement Challenges

The recent High Court decision of Clayton v Bant [2020] HCA 44 highlights the complexities involved in cross-jurisdictional property settlement proceedings and the various legal rules and principles concerned regarding the finality of litigation. Careful consideration is required when deciding when and in which jurisdiction family law proceedings should be commenced. 

The husband (United Arab Emirates (“UAE”) citizen) and wife (Australian citizen) married in a Sharia court in 2007. The parties separated in 2013. Since separation the wife and child of the parties lived in Australia. The wife instituted proceedings in the Family Court of Australia initially seeking parenting orders, later amending her application to include property settlement and spousal maintenance orders.  

In 2014 the husband instituted proceedings in the Dubai Court seeking divorce and the ‘dropping’, in the sense of extinguishment, of all of the wife’s marital rights that are associated with that divorce in terms of all types of alimony, deferred dowry and others. The wife did not appear at the Dubai proceedings and in 2015 the Dubai Court made a ruling granting the husband an ‘irrevocable fault-based divorce’, dissolving the marriage, as well as ordering the wife to pay AED 100,000 to the husband (the amount of her advanced dowry). 

The Personal Status Law of the UAE makes no provision for the alteration of property interests of the parties to a marriage in the event of divorce, save for a provision which limits a party to a claim in a share of real property which they had participated with the other in developing. Further, the Dubai Court has no jurisdiction in relation to property located outside the UAE.

The husband applied to the Family Court for a permanent stay of the property settlement proceedings and spousal maintenance proceedings in Australia on the basis that the ruling of the Dubai Court ‘operates as a bar’ to those proceedings ‘by virtue of the operation of the principles of res judicata/cause of action (claim) estoppel’.

Hogan J dismissed the application at first instance on the basis that the Dubai proceedings involved no issue of the wife’s right to claim property of the husband, given that the UAE law does not confer any such right other than ‘in relation to property within the jurisdiction in which each have invested’ and that the wife’s right to alimony was not considered, but rather described as ‘untimely’.

On appeal the Full Court ordered a permanent stay of the property and spousal maintenance proceedings, on the basis that the Dubai proceedings had determined the same cause of action being sought with respect to property settlement and so gave rise to what the Full Court referred to as ‘res judicata estoppel’. It was accepted that the Henderson extension applied to the property settlement claim by the wife, as she had the ability to claim a share in the real property located in UAE that she and the husband had developed together, as well as the spousal maintenance claim, as she had failed to press the claim for alimony. 

On appeal to the High Court, Keifel CJ, Bell and Gageler JJ outline that as the property settlement and spousal maintenance proceedings’ rights in issue are statutory rights of the wife to seek orders under sections 79(1) and 74(1) of the Family Law Act 1975 (Cth), the ruling made by the Dubai Court could not give rise to a res judicata in the strict sense in which that term continues to be used in Australia. The rights created by the above sections cannot ‘merge’ in any judicial orders other than final orders of a court having jurisdiction under the Act to make orders under those sections. Thus the appeal was allowed and the permanent stay of Australian proceedings was set aside.

Keifel CJ, Bell and Gageler JJ outline the potentially applicable forms of estoppel in this case. Their Honours state that in these proceedings, claim estoppel would operate to preclude assertion by the wife of any right non-existence of which was asserted by the husband in the Dubai proceedings and finally determined by the ruling of the Dubai Court. Anshun estoppel would preclude assertion by the wife of any right which she could have asserted in the Dubai proceedings but which she chose not to assert in circumstances which made that choice unreasonable in the context of the Dubai proceedings.

The husband not only did not engage with the unreasonablenesselement of Anshun estoppel, but he more importantly failed to establish the requisite correspondence between the rights asserted by the wife in the property settlement and spousal maintenance proceedings and any right the existence or non-existence of which was or might have been asserted in the Dubai proceedings and finally determined by the Dubai Court. The error of the Full Court lay in failing to look to the actual rights existence or non-existence of which were or might have been asserted in the Dubai proceedings and finally determined by the Dubai Court, and then to look for correspondence between those rights and the statutory right asserted by the wife in the property settlement proceedings. The High Court found that neither form of estoppel can have any operation absence such a correspondence.

Gordon J clearly concluded that the only claim made in, and determined by the Dubai Court was the divorce of the parties and return by the wife of the advanced dowry. Neither party could have or did ask the Dubai Court to alter the property interests for property outside the UAE. Therefore the ruling of the Dubai Court raised no res judicata or cause of action estoppel. It was also not unreasonable for the wife not to have made such a claim in the Dubai Court and therefore no Anshun estoppel arises.

By Nicholes Family Lawyers

 

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