Does a foreign divorce preclude an application for property settlement or spousal maintenance in Australia?
This question may arise more often in practice these days, when so many Australians have connections overseas.
In the recent High Court case of Clayton v Bant [2020] HCA 44, the High Court granted special leave to appeal on this question.
In its unanimous decision on appeal, the High Court explained the operation of the doctrines of res judicata and common law estoppel. Those statements apply to all areas of law.
The wife and husband married in Dubai and lived partly in the United Arab Emirates and partly in Australia. They separated in Australia and the wife commenced proceedings for property settlement and spousal maintenance in the Family Court. The husband subsequently commenced proceedings for divorce in Dubai and obtained final judgment there.
The husband then argued that a ruling in the Dubai proceedings precluded the wife from pursuing her property settlement and spousal maintenance proceedings under the Family Law Act 1975 (Cth) (the Act) in Australia.
The High Court found that the Dubai ruling did not have that preclusive effect.
The property rights legally capable of being put in issue in the Dubai proceedings were limited to the entitlement of the wife to obtain deferred dowry from the husband and the entitlement of either party to a share in such property in Dubai as she or he might have participated with the other in developing. [40]
In the majority judgment of Kiefel CJ, Bell and Gageler JJ, their Honours took the approach that, before considering the issue of preclusion, it was necessary to identify the jurisdiction of the Family Court to hear and determine property settlement and spousal maintenance proceedings in order to be clear about the source and nature of the rights in issue in those proceedings. [21]
They identified the source of power as that conferred and defined by sections 4, 31(1)(a) and 39(5)(a) of the Act. [22]
The right in issue in property proceedings instituted by the wife is that conferred upon her as a party to the marriage by s79(1) of the Act to obtain an order altering the interests of both parties to the marriage in all property to which either of them are entitled, taking into account the various matters referred to in s79(4). [23] The discretion of the Family Court is wide.
The right in issue in the spousal maintenance proceedings instituted by the wife is that conferred upon her as a party to the marriage by s74(1) of the Act to obtain such order for the provision of maintenance by the husband as the court considers proper having regard to the various matters referred to in s75(2). [24] Again, the discretion is wide.
The right in issue in each of the property settlement and spousal maintenance proceedings is that created by sections 79 and 75(2) of the Act, which confer a discretionary power on the Family Court to make orders of the kind that is sought. The justiciable controversy as to whether such an order should be made constitutes the matter defining the jurisdiction of the Family Court. [25]
The majority referred to the strict sense in which the term res judicata continues to be used in Australia1 and held that the statutory rights created by ss79(1) and 74(1) of the Act cannot ‘merge’ in any judicial orders other than final orders of a court having jurisdiction under the Act. [26] The doctrine of res judicata could not and did not apply to preclude the wife pursuing those rights.
Next, the High Court said that common law doctrine of estoppel could be the only way preclusion could occur, if at all. [27]
In this case, two forms of estoppel were potentially applicable – firstly ‘cause of action’ estoppel, better referred to here as ‘claim estoppel’ and, secondly, ‘Anshun2 estoppel’ or the ‘Henderson extension’. [28]3
For the wife’s Australian family law proceedings, the majority found that:
- claim estoppel would operate to preclude the wife pursuing any right the non-existence of which was asserted by the husband in the Dubai proceedings and finally determined by the ruling of the Dubai Court [29],4 and
- Anshun estoppel would preclude 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 circumstances which made that choice unreasonable in the context of the Dubai proceedings. [29]5
The husband failed to establish the requisite correspondence between the rights which were either finally determined or could have been asserted in the Dubai proceedings and those asserted in the Australian proceedings, so that neither form of estoppel could have any operation. [32]
The common law doctrine of estoppel looks for substantial but not absolute identity between the sources and incidents of rights capable of being asserted in consecutive proceedings. It is enough if those rights are of a substantially equivalent nature and cover substantially the same subject matter. [34]
In her separate judgment, Gordon J approached the matter from the opposite direction when her Honour said, in relation to res judicata, that where the decision of a foreign court is relied on as precluding the prosecution of claims made in an Australian court, it is always necessary for the party asserting preclusion to identify what claim was made in, or issue determined by, the foreign court [53]6 and that the preclusive effect of a foreign judgment is fixed by what was decided in the foreign court and only once that is identified does it become necessary or appropriate to consider what claims are made in the Australian court. [54]
Gordon J found that, since issues about altering the interests which the parties had in property outside the UAE could not be raised there, the ruling of the Dubai court raised no res judicata or estoppel of any kind, [56] and since the Dubai court did not decide any controversy bearing upon spousal maintenance, again no res judicata or estoppel arose.
In his separate judgment, Edelman J reduced the controversy to a simple question of characterisation. Characterisation must proceed by reference to substance rather than form. [68,76]
His Honour found that the proper characterisation of the husband’s claim which was resolved by the Dubai court was only for the dissolution of the marriage and therefore the wife could maintain proceedings in Australia under the Actfor property settlement and spousal maintenance. [64,79]
Conclusion
The essence of this decision is that, where a claim is statute-based in Australia, res judicata could never apply if the decision relied upon for preclusion was not made under the Australian statute.
Common law estoppel could apply to preclude a second proceeding if there is substantial identity between the rights capable of being asserted in each jurisdiction. The party asserting the preclusion must prove what was determined in the first set of proceedings as part of proving substantial compliance.
While specific to family law, the principles discussed in this case have a broader application, since the preclusive principles of res judicata and common law estoppel have been applied in a variety of contexts. For example, the Anshun principle has been applied in a succession law context.7
Footnotes
1 [26] by reference to its earlier decision in Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at 516 [20].
2 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
3 Henderson v Henderson (1843) 3 Hare 100 at 115 [67 ER 313 at 319].
4 Applying Tomlinson, see note 1 above.
5 Ibid.
6 Citing authority referred to in that paragraph.
7 See Weller v Phipps [2010] NSWCA 323), which was discussed in the March 2011 edition of Proctor – ‘Is it an FPA? The Anshun principle’.
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