Kennon v Spry
[2008] HCA 56(Judgment by: Kiefel J)
Kennon
v.Spry
Judges:
French CJ
Gummow J
Hayne J
Heydon J
Kiefel J
Legislative References:
Family Law Act 1975 - s 4(1); s 79(1); s 85A; s 106B
Matrimonial Causes Act 1959 - s 86(1)
Matrimonial Causes Act 1857 (UK) - s 45
Bankruptcy Act 1966 - The Act
Matrimonial Causes Act 1859 (Eng) - s 5
Finance Act 1940 (UK) - s 43
Corporations Act 2001 - The Act
Duties Act 1997 (NSW) - s 163U(1)
Land Tax Assessment Act 1910 - The Act
Matrimonial Causes Act 1859 - s 5
Judgment date: 3 December 2008
Canberra
Judgment by:
Kiefel J
[189] The issues on these appeals concern the inclusion by the primary judge (Strickland J) [151] of the property of the ICF Spry Trust (the trust) in the "net asset pool" to which the parties to the marriage had contributed and the treatment of it as property available to Dr Spry (the husband) to meet an order for payment of a sum of money to Mrs Spry (the wife) in settlement of her claims to property consequent upon the parties' divorce.
[190] The trust was created in 1968. The parties were married in 1978. His Honour found that the husband made all the financial contributions to the trust but the wife made indirect contributions to the trust assets through her efforts in the marriage. His Honour did not make a finding as to the extent of the husband's contribution to the trust prior to the marriage. The husband's evidence did not suggest that it was substantial. He said that only some small parcels of shares had been acquired by the trust prior to the marriage. His Honour recorded the purchase of a house property by the trust, after the marriage and in December 1979, from savings accumulated by the husband prior to the marriage. This subsequently became the matrimonial home. Additions later made to the trust assets, mostly in the form of investments, were the product of the parties' direct and indirect contributions. His Honour found that the trust was maintained to allow the parties to accumulate assets for the benefit of the family in the most tax-effective way.
[191] The "net asset pool", to which the primary judge had regard in assessing the parties' contributions, included the trust assets. His Honour found that the parties' contributions were 52% by the husband and 48% by the wife. The net result was that the husband was entitled to $5,105,435 and the wife $4,712,709. After taking account of the assets of which the wife had the benefit, the husband was ordered to pay the wife $2,182,302. [152] Although his Honour said "[w]here that will come from though is entirely up to the husband", he clearly had in mind the trust assets, which he considered could be treated as the property of the husband. His Honour had found that the trust was at all times subject to the control of the husband.
[192] The husband's evidence, that the trust was created by him, orally, in June 1968, was not challenged and the primary judge accepted that it had occurred. On 15 October 1981 the husband executed an instrument of the trust earlier declared. In it he appears as settlor and trustee. The description of "the beneficiaries" included the husband and any future wife, for it referred to all the issue of his father and all persons married to such issue. The trustee had an absolute discretion to apply the capital and income of the trust fund. By a deed executed on 4 March 1983 (the 1983 deed) it was said that the husband as settlor "releases and abandons" any beneficial interest or rights held by him under the trust instrument or in the trust fund and "confirms that by reason hereof he ceases to be a beneficiary of the trust or a person to whom or for whose benefit all or any part of the trust fund and income thereof may be applied" (cl 2). It further provided that "any variation of the trusts of the said instrument shall be invalid to the extent to which it purports to confer directly or indirectly any right or benefit upon the settlor": cl 3. The purpose of the 1983 deed, which both the husband and wife signed, was to prevent the trust property being aggregated with other properties, held in the name of the husband, for land tax purposes. The wife remained a beneficiary as to capital and income.
[193] On 7 December 1998 the husband executed an instrument of variation of the trust which excluded both the husband and the wife from benefiting from a distribution of capital from the trust. The instrument was said to be irrevocable. The husband's explanation as to the need for these changes was not accepted by the primary judge, who found that it was done without notice to the wife and when the marriage was already in difficulty. The parties separated on 30 October 2001. On 18 January 2002 the husband, again without notice to the wife, set up trusts for each of the four children of the marriage and on the same day executed a document providing for the forgiveness and release of all amounts owing to the husband and the wife by the trust and applying one quarter of the income and capital of the trust to each of the trusts set up for the children. At the time of these appeals, Mr Kennon was a trustee of three of those trusts.
[194] The primary judge found that the husband's actions with respect to the distribution of the trust property to the children and the steps he had taken in December 1998 were attempts to ensure that that property was beyond the reach of the wife and the Family Court. His Honour made orders setting aside the instrument of variation of 7 December 1998 and the dispositions made on 18 January 2002. [153] In doing so his Honour considered the position of the children, but observed that the assets had been accumulated by their parents. Contrary to the husband's assertion, it had not been their intention to benefit the children in their lifetime.
[195] In the course of his reasons the primary judge considered the courses open with respect to the trust property, on the basis that the property would be returned to the trust. His Honour said that an order directing the trustee to distribute the assets of the trust, or part of them, directly to the wife would be "just and equitable". [154] His Honour considered treating them as a "financial resource" of the husband [155] but determined to proceed upon the basis that they be treated as the property of the husband and as available to meet an order for the settlement of property.
[196] A Full Court of the Family Court dismissed the husband's appeal (Bryant CJ and Warnick J, Finn J dissenting). [156] The majority did not consider that the orders setting aside the 1998 instrument of variation and the dispositions from the trust were the result of a wrong exercise of discretion. [157] Attention then focused upon whether it was possible for the husband to be re-established as a beneficiary, despite his release and renunciation in the 1983 deed, in order that effect could be given to the primary judge's orders. Warnick J held that the husband was able to rescind the release. [158] Bryant CJ did not agree with this conclusion, but considered that it remained open to the husband and wife, as parties to the 1983 deed, to cancel it. [159] In her dissent Finn J held that neither rescission nor variation of the 1983 deed or of the trust by the husband was possible so that he could be reinstated as a beneficiary. In her Honour's view the release contained in cl 2 of the 1983 deed was effective upon execution and could not now be withdrawn. [160] The power of variation contained in the trust instrument was referable to the trust as constituted from time to time [161] and must therefore be applied to the situation which applied after the execution of the 1983 deed. In these conclusions her Honour was correct, with respect. The deed was effective in its terms. A later cancellation by the parties to the deed could not alter the effectiveness of the release.
[197] Finn J concluded that his Honour the primary judge was in error when he said, at one point, that there was nothing to prevent the husband from revoking the 1983 deed, or part of it. [162] But, as her Honour observed, that possibility was not integral to his Honour's reasoning. The approach which his Honour took, in determining to make the order for the payment of the moneys to the wife, was to leave it to the husband to determine how to find the payment of the net amount, although his Honour clearly had in mind that the husband controlled the trust. Finn J did not consider control, absent the potential for the husband to benefit from the trust, to be a sufficient foundation for the order. Her Honour noted that no authority in that court had gone that far. [163] It followed, in her Honour's view, that there was no utility to the orders made under s 106B of the Act, setting aside the dispositions of the trust property to the children's trusts. [164] In arriving at that view, her Honour expressed agreement with the submission that, because a divorce order had been made, the wife no longer qualified as a beneficiary. [165] It would follow that neither the husband nor the wife could receive any benefit from the trust.
[198] The wife applied to the Family Court (the court), for orders by way of lump sum maintenance and property settlement, on 19 April 2002. While that application was pending, she filed an application for a divorce order in December 2002, in the Federal Magistrates Court. That court granted a decree nisi on 16 January 2003, which became absolute on 17 February 2003.
[199] The proceedings below were conducted upon the basis that the wife was disqualified as an object of the trust, following upon the termination of the marriage and the loss of her status as a spouse, but prior to the determination of her claim to property. It may be inferred that the primary judge and the Full Court considered that the reference to "spouse" in the trust instrument is intended to refer to persons having a marital relationship to the issue identified. If it be correct, the provisions of the Act, which do not postpone the making of a divorce order to the resolution of property claims, [166] may have a consequence with respect to some rights. This may have been unintended. Alternatively the timing of orders may have been a matter left to the parties.
[200] The primary judge made a number of orders with respect to the parties' property interests. The order with which these appeals are concerned was made under s 80(1)(a) of the Act, namely an order for payment by the husband of a lump sum. It is an order made by the court in the exercise of its powers under Pt VIII of the Act. Those powers extend to orders for the maintenance of a party to the marriage (s 74(1)), and for the settlement of property in proceedings between the parties to the marriage with respect to the property of the parties to the marriage (s 79(1)).
[201] Jurisdiction is given to the court [167] and to the Federal Magistrates Court, [168] subject to Pt V of the Act, with respect to a "matrimonial cause". That term is defined in s 4(1) to include (a) proceedings between the parties to a marriage for a divorce order in relation to the marriage; (c) proceedings between those parties with respect to the maintenance of one of the parties; and (ca) proceedings between the parties with respect to the property of the parties to the marriage. The proceedings concerning property are relevantly those "(i) arising out of the marital relationship; (ii) in relation to concurrent, pending or completed divorce or validity of marriage proceedings between those parties".
[202] It is evident from these provisions that the court's powers are directed to persons and their property as "parties to the marriage" regardless of whether a divorce order has been made. The power of the court is not affected by whether proceedings for a divorce order, "proceedings for principal relief", [169] have been determined. The Act makes provision for adjournment of property settlement proceedings, [170] including where the court is of the opinion that there may be a significant change in the financial circumstances of the parties. This may allow the court to treat the parties as if they continued to be parties to the marriage for the purpose of finalising proceedings concerning property. But it may not prevent some legal effects flowing from the dissolution of the marriage. At least this will be so where the court is unable itself to deal with property because the interests of a party to the marriage, or their ability to benefit from it, depend upon their status as a party to the marriage. The Act does not deem persons to remain parties to the marriage for all purposes relating to property interests.
[203] Courts exercising matrimonial jurisdiction have for some time had the power with respect to property which was the subject of a settlement upon one or other of the parties to the marriage, or which made provision for the parties, to apply some or all of it to the benefit of a party to the marriage following upon the termination of the marriage. And the courts have been able to do so despite the loss of status of that party, where it appeared as a condition of the settlement. So long as a settlement remained in existence the courts, if necessary, would vary the condition. The need to do so would most commonly arise where the settlement made continuing provision for that party.
[204] Section 5 of the Matrimonial Causes Act 1859 (UK) provided that, after a decree of nullity or dissolution of marriage, the court could inquire into the existence of ante-nuptial or post-nuptial settlements of property "made on the parties whose marriage is the subject of the decree" and make orders with respect to the application of the property settled. That provision has been maintained in successive legislation. In Dormer v Ward [171] a settlement was made in consideration of a marriage which was subsequently declared a nullity. The settlement was read as varied and extending to "parties whose marriage" was no marriage. The Court of Appeal held that it had power to vary the settlement so long as the settlement was in existence at the time of the decree. [172] That is to say, for the purpose of its inquiry into the settlement, the court could have regard to a state of affairs which existed before the order was pronounced and vary it.
[205] Dormer was followed in Jacobs v Jacobs. [173] There the settlement was of covenants to pay annuities to the wife after the husband's death, so long as she remained a widow. The parties were divorced at the time of the husband's death and the wife did not acquire the status of a widow. It was contended that the covenants terminated upon the husband's death. The Court of Appeal upheld the decision of the judge below which omitted the words "a widow" from the condition. [174] More recently, in C v C (Ancillary Relief: Nuptial Settlement) [175] it was held that where the husband and wife were removed as beneficiaries from a settlement prior to their divorce, orders of variation could be made. [176] The settlement was held to have continued in existence at the date of the orders, notwithstanding that the features which made it nuptial had been removed. [177]
[206] In each of these cases the statute provided the court with the power to deal with property the subject of a nuptial settlement. The continuing status of a party to the marriage did not affect the exercise of that power. In the Act such a provision is found in s 85A, which provides:
- (1)
- The court may, in proceedings under this Act, make such order as the court considers just and equitable with respect to the application, for the benefit of all or any of the parties to, and the children of, the marriage, of the whole or part of property dealt with by ante-nuptial or post-nuptial settlements made in relation to the marriage.
- (2)
- In considering what order (if any) should be made under subsection (1), the court shall take into account the matters referred to in subsection 79(4) so far as they are relevant.
- (3)
- A court cannot make an order under this section in respect of matters that are included in a financial agreement.
[207] The section was introduced by the Family Law Amendment Act 1983 (Cth). Neither the explanatory memorandum nor the second reading speech concerning that Act discuss the reason for its inclusion. The explanatory memorandum says that the provision which became s 85A is similar in terms to s 86(2) of the Matrimonial Causes Act 1959 (Cth). Section 86(2) was not in the same terms. It provided that the court could make such orders as it considers just and equitable with respect to the application for the benefit of the parties to and children of the marriage of property dealt with by ante-nuptial or post-nuptial settlements "on the parties to the marriage, or either of them". In this latter respect it followed the English provision. Section 85A refers to "settlements made in relation to the marriage".
[208] It is not apparent why a provision in similar terms to s 86(2) of the 1959 Act did not appear in the Act of 1975 as passed. It may have been assumed that the reference to the "property of the parties to the marriage" in s 79(1), the interests in which the court could alter, was wide enough to extend to settlements. But s 79 is limited by the definition in s 4(1) of "property", in relation to the parties to a marriage, as being property to which they are entitled in possession or reversion. In the present case the wife sought to rely upon the husband's entitlement as trustee to possession of the trust property, but that would be in his capacity as trustee and not as a party to the marriage.
[209] The report of the joint select committee on the Family Law Act, [178] which predated the 1983 amendment, discussed the need for powers to be given to the court with respect to family trust or company arrangements. It followed upon the receipt of submissions, including submissions from the Family Court. [179] It is not difficult to infer that s 85A was directed to the use of discretionary family trusts and other structures used for holding assets acquired in the course of a marriage, for tax-related and other purposes. Vehicles such as these had been in common use for some time prior to 1983. It is apparent that s 85A was intended to give the court power to deal with property which could not be the subject of an order under s 79, but which accorded with current conceptions of what was a "settlement" of property in matrimonial law.
[210] A nuptial "settlement" of property does not equate with the term as conveyancers would understand it. [180] It may have in common with such settlements a disposition of property for the purposes of regulating the enjoyment of the settled property and it may provide for succession. [181] It limits the alienation and transferability of the property. [182] It cannot involve an absolute interest in property, given that the statutory provisions referred to give the courts power to vary it. [183] The form that a settlement takes has not been regarded as of importance; rather it is necessary that it provide for the financial benefit of one or other of the spouses. [184] It may imply some kind of continuing provision for them. [185] Beyond these characteristics, no definition of a settlement is possible.
[211] Necessarily the settlement spoken of must have the "essential character" of being nuptial. [186] In the past, settlements made in consideration of a marriage were commonly made by others, such as a member of the families concerned, upon one of the parties to the marriage. This may account for the language employed by the English provision which refers to a settlement "on the parties whose marriage is the subject of the decree". [187] In more recent times a settlement has been applied to a wide variety of dealings with property by the parties to the marriage in making provision for their or their family's benefit. The provision respecting the parties and their family may provide a "nuptial" element.
[212] Although the term "settlement" in this area of law may defy definition, much is to be gained from the context in which it appears and the statutory purpose. In Brooks [188] the width of the meaning given to the term by the authorities was considered to accord with its statutory purpose, which is to provide the court with power to deal with the changed situation brought about by divorce, where it is desirable that the court have power to alter the terms of a settlement. This object does not suggest any narrow meaning should be given to the term. [189] The liberal meaning given to "settlement", having regard to the purposes of the legislation, has been stated on many occasions in English authority. [190] In Dewar v Dewar, [191] it was observed by Dixon CJ, Kitto and Menzies JJ that "the conception of 'settlement' had been carried to lengths which might seem a little surprising". [192] But, their Honours said, "it must be borne in mind that the essential purpose of [the provision] [193] is to enable the court to inquire into post-nuptial and ante-nuptial dispositions of property in favour of one or other or both of the parties to the marriage" which should be reconsidered because of the dissolution of the marriage.
[213] In Dewar a transfer of land into the names of a husband and wife as joint tenants was held to be a settlement to which the section referred. There were no trusts, no successive interests and no express limitations. It was considered sufficient that joint ownership was itself a fetter upon alienation and it involved survivorship. Their Honours said that the surrounding circumstances showed that the land was bought and the house was built as a future or continued provision for the husband and wife and that "joint ownership was adopted as the appropriate expression for the provision". [194] On those facts, it was not to go too far to regard the transfer to joint ownership as a post-nuptial settlement. [195]
[214] The case for the wife has not sought to rely upon the court's power under s 85A of the Act until this point. The trustees submit that she should not be permitted to ventilate an issue not raised below. In addition to matters of policy, about the due administration of justice, [196] it is said that the wife should be held to the conduct of the proceedings below, [197] having regard to the position of the other parties, including her husband as trustee of the trust and the children. In particular it is said that the other parties may have conducted their case on a different basis, or called other or additional evidence. It is further put that leave to amend the notices of contention, or special leave to cross-appeal, should be refused because the wife's reliance upon s 85A is misplaced. It is submitted that the trust predated the marriage but it is neither an ante-nuptial nor a post-nuptial settlement and that s 85A can have no application. It is convenient first to consider this contention.
[215] The point made by the trustees is that it is not sufficient that Dr Spry had in mind the prospect of his future marriage and children of that marriage, as he did, when he settled the trust orally in 1968. Cases dealing with the English provisions have made it plain that the settlor must have in mind the marriage in question for the settlement to qualify as ante-nuptial. [198] In Joss v Joss [199] it was explained that a settlement made before the marriage, but not in relation to the particular marriage, is not within the section because the particular marriage must be a fact of which a settlor takes account in making the settlement. [200]
[216] One of the differences between the English provisions and s 85A of the Act, as earlier noted, is that the former refer to settlements of property "made on the parties whose marriage is the subject of the decree", whereas s 85A provides power with respect to property dealt with by ante-nuptial settlements (or post-nuptial settlements) "made in relation to the marriage". These words [201] may require a less direct connection between a settlement and the marriage. It cannot be doubted that the connection required by "in relation to" must be as between the settlement and the particular marriage, that which is the subject of the divorce (or nullity) proceedings, for the purposes of s 85A. The Act has as its subject marriage and s 85A has application in proceedings under the Act. [202] That leaves the question of the degree of association which is necessary and its relevance to the question of the temporal relationship between settlement and marriage, which arises in the present case.
[217] The expression "in relation to" is of wide and general import and should not be read down in the absence of some compelling reason for doing so. [203] As Toohey and Gummow JJ said in PMT Partners, [204] the words are prima facie broad and designed to catch things which have a sufficient nexus to the subject. The question of nexus is dependent upon statutory context. Among the examples given by their Honours was the consideration given by Gibbs CJ, in Perlman, to the meaning of the words "in relation to" in the Act with reference to two sets of proceedings. His Honour said that they "import the existence of a connection or association between the two proceedings, or in other words that the proceedings in question must bear an appropriate relationship to completed proceedings of the requisite kind". [205]
[218] The process of construing s 85A, in order to determine its intended operation and the degree of connection necessary between settled property and the marriage, requires consideration of the language and purpose of the Act. [206] The process of construction should begin with examining the context of the provision in question. [207] "Context" includes the existing state of the law and the problem that the statute was intended to remedy. [208] It has earlier been observed that s 85A was intended to extend the court's powers to property which did not fall within s 79, but which nevertheless fell within the conception of a nuptial settlement of property.
[219] There is another feature of the Act introduced in 1975 which informs a reading of s 85A and which reflects the focus of the section as being on the property dealt with by the settlement. An important aspect of the Act, so far as concerns settlements of property, is that it requires the court to make orders respecting property by reference to the contributions of the parties to the marriage to property which is accumulated in the course of the marriage. And as s 85A(2) shows, the relevance of the parties' contributions is not limited to "property" of the parties as strictly defined in s 4. This policy, which facilitates a distribution and settlement of property, was not present in the 1959 Act or in the English legislation.
[220] Section 86(1) of the Matrimonial Causes Act 1959 (Cth) provided that the court could require a party to the marriage to make such a settlement of property to which they are entitled (in possession or reversion) as the court considers just and equitable in the circumstances of the case. Section 86(2) dealt with ante-nuptial and post-nuptial settlements, as earlier mentioned. "Settlement", in s 86(1), had a wider meaning than in s 86(2). Toose, Watson and Benjafield [209] observed that the view which prevailed until 1965 was that the court's jurisdiction under s 86(1), to make an order that was just and equitable, was at large. This was partly arrested by the decision in Smee v Smee, [210] where Sugerman J explained that the purpose of s 86 was to provide for the settlement and adjustment of all matters arising out of the marital relationship; proprietary relationships "whether in relation to free property of the spouses or to settled property" were to be adjusted and dealt with. [211] The 1959 Act did not require the court to take account of the parties' contributions to property acquired during the marriage. However, in Smee, Sugerman J said that the "material consideration affecting the property itself would commonly be that the claiming spouse has assisted in its acquisition or accumulation, not necessarily by monetary contribution ... and not necessarily so as to give rise to a proprietary interest in the strict sense". [212]
[221] The Act passed in 1975 contains express and detailed provisions for the assessment of contribution to property in s 79(4). [213] It requires the court, in proceedings with respect to the settlement of property, to take into account the contributions, financial and otherwise, direct and indirect, which a party has made to the acquisition, conservation or improvement of the property, [214] among other matters. The court is not to make an order altering the interests of the parties in their property unless satisfied that it is just and equitable to do so. [215]
[222] More recent English legislation [216] introduced a reference to contributions by the parties to the welfare of the family as relevant to property proceedings. [217] It was thought to shift the emphasis from the previous concept of the maintenance of a spouse and children to the redistribution of assets, [218] but does not go so far as the Australian legislation in the latter's concentration upon the parties' contributions to property. [219]
[223] Of particular importance for present purposes is the requirement that the court consider the parties' contributions in exercising its power under s 85A(1). Section 85A(2) requires that the matters referred to in s (4) be taken into account "so far as they are relevant" in the court's consideration as to what (if any) order should be made under subs (1). It must be taken as intended that the court consider any contributions, direct or indirect, to the property the subject of a nuptial settlement.
[224] The contributions of the parties to the marriage, direct or indirect, are central to the means by which the court is to determine proceedings with respect to property. Reference to those contributions serves both to identify the property in question and to provide one means of assessment for the purpose of decision. Property which the court is intended to deal with extends beyond property in which the parties have a legal interest. By the wide meaning given to the term "settlement" in this context, it is sought to give the court power to deal with all property held for the use and benefit of the parties to the marriage and which may represent an accumulation of their assets in the course of the marriage. The purpose of s 85A is to ensure that, since the previous arrangements for the property cannot continue, the property is applied equitably to the benefit of the parties, or the children. Whether a disposition or other settlement qualifies as an ante-nuptial (or post-nuptial) settlement made in relation to the marriage is informed by these purposes, rather than by reference to authorities dealing with statutes employing different language and having purposes which cannot be regarded as wholly the same.
[225] Each of the features necessary to render the property of the trust settled property within the purview of s 85A is present in this case. In reaching this conclusion, one must look to the individual words of the section in light of their context and purpose. "Settlement" is to be given a broad meaning consonant with the intention of s 85A to bring discretionary family trusts within the ambit of the Act. "Property" is to be read as including those assets to which the parties have contributed throughout the course of their marriage and which are held for their use and benefit. The trust assets constitute property, much of which was obtained by way of the parties' contributions to the marriage. The assets therefore attract the operation of s 85A. Further, as shall become clear, on each occasion that property was transferred to the trust, the parties "dealt with" their property, and effected settlements within the meaning of s 85A. The trust property represents contributions of the parties and is held on terms of a settlement. It is "property dealt with by ... settlements".
[226] The settlement in this case may also be regarded as having the requisite nuptial element. The approach for which the trustees contend, which would deny the application of the section to the trust as an ante-nuptial settlement, is one which has regard to the situation at the time the trust was made. At that point it could not have been referable to the marriage. Such an approach is literal and emphasises the words "ante-nuptial ... settlements" and "made in relation to the marriage". It may assume importance where the settlor's intention is relevant, but no such issue arises here. It could hardly be said that the settlor's intentions here were unfulfilled. A preferable approach is one which gives effect to the purposes of the section. If necessary, particular words in the section should be adjusted to that end. [220]
[227] Section 85A(1) is intended to have a wide operation, to property held for the benefit of the parties on a settlement and to which they have contributed. It is intended to apply to settlements whether they occur before or during marriage. The essential requirement of the section is that there be a sufficient association between the property the subject of a settlement and the marriage the subject of proceedings. It does not require that a settlement made prior to marriage be directed to the particular marriage at the point it is made. It is sufficient for the purposes of the section that the association of which it speaks ("made in relation to") be present when the court comes to determine the application of the property settled under s 85A(1). In the present case the trust was used to hold property for the benefit of the parties to the marriage upon the terms of the trust. It thereby acquired the nuptial element. Section 85A(1) applies.
[228] The submissions for the trustees would also deny that the property held by the trust was settled after marriage, by viewing the original settlement of the trust as the only one to which s 85A(1) can apply. It may be accepted that the trust was the form adopted as the expression of the nature of the provision the parties intended for themselves, [221] but it does not reflect the continuous nature of the parties' contributions to the trust throughout the marriage. An approach which recognises settlements of property made from time to time by the parties to the marriage is more consonant with the focus of the Act on the property which is the subject of a settlement and the contributions which the parties make to that property during the course of a marriage. Such an approach is therefore better able to give effect to the goals of the Act. [222] It facilitates both an identification of property the subject of contributions and a means of assessing that contribution, as earlier observed.
[229] There appears to be no reason why each disposition of property to the trust, from the time of the parties' marriage, cannot be viewed as a separate trust created at that time, albeit on the terms of the trust. [223] It has been said that it is sufficient for the establishment of a trust that property is impressed with a trust obligation. [224] In any event the conception of a settlement in s 85A is substantially informed by statutory context and purposes.
[230] In construing s 85A(1) it should be borne in mind that the property to which it refers will in many cases be property which reflects the contributions of the parties to the marriage, whether direct or indirect. A settlement coming within the section may take many forms so long as it has the essential characteristics earlier spoken of. The words "ante-nuptial or post-nuptial" should be taken to refer to all settlements made before or after marriage which have the connection of which the following words speak. The settlement must be associated with the marriage the subject of the proceedings. The necessary association will often be provided by the allocation of property into a trust or other fund and by the provision the settlement makes for the benefit of the parties to the marriage, or their children.
[231] The trustees also placed reliance upon the description of the beneficiaries of the trust, which extended beyond the husband and wife and the children of the marriage. By this means it was sought to deny the necessary nuptial element of the trust. The husband's sisters and their issue also fell within the class of beneficiaries. The question of the impact of any order under s 85A upon those persons may be put to one side for present purposes. So far as concerns the character of the trust, their inclusion does not deny the nuptial element. Regard must be had to the circumstances pertaining to the trust, for the purposes of s 85A. The nuptial element can readily be seen by the contribution made by the parties to the marriage to the trust and the holding of that property for their benefit. The fact that the other beneficiaries may have received some, undisclosed, distribution from the trust at some point does not detract from its essential character.
[232] It is necessary at this point to return to the question of whether the wife should be permitted to place reliance upon s 85A for the first time on the final appeal. The rule, that this should not be permitted, is strictly applied unless the point sought to be raised is one of construction of law and the facts necessary have been established [225] or, as was said in Minister Administering the Crown Lands Act v New South Wales Aboriginal Land Council, [226] where the point sought to be raised is about the legal characterisation of the facts established in the courts below. This would not be so if there was a discretion to be exercised in relation to these facts, and the primary judge had not had an opportunity of exercising that discretion. [227]
[233] The question raised by s 85A is whether it is just and equitable for the court to apply the settled property for the benefit of the parties to or the children of the marriage. In doing so the court is required to take into account the matters referred to in s 79(4), so far as they are relevant. [228] In the present case the primary judge had undertaken that exercise, not only with respect to what might properly be called the property of the parties to the marriage, but also with respect to the trust property. It is difficult to comprehend what further evidence the husband, the trustees and the children could have put forward in connection with the trust, its property or the parties' contribution to it. The trust, and the wife's claim to it, was central to the parties' cases.
[234] The primary judge found that the wife should receive a sum of money, in addition to specific property, representing her contribution to the pool of assets which had been created by the endeavours of the husband and wife. The problem that faced his Honour was how the husband could meet that sum from the assets at his disposal. His Honour's answer to that question was that it could, and should, come from the trust property. His Honour found that the wife should be paid out of the trust, but considered that that result could only be effected by the husband. That was not a correct view, having regard to s 85A(1). Action, on the part of the husband, was not necessary to appropriate so much of the trust property as was necessary to meet the primary judge's order. The court could make an order directly applying that property to her benefit. It did not need to have regard to the status of either the wife or the husband as beneficiaries in order to do so.
[235] Section 85A(1) provided the power and the means by which the trial judge's findings and intention could be carried into effect. The question sought to be raised is one which does not depend upon the establishment of further facts. All that was involved in the exercise of the discretion in s 85A(1) had been dealt with by the primary judge, who had determined that the settled property, or part of it, should be applied to the benefit of the wife. The primary judge had taken into account the interests of the children in connection with the application of the trust property, as s 85A(1) requires.
[236] The position of the other beneficiaries under the trust had not assumed importance in his Honour's reasons, no doubt because of the view he took of the true nature and purpose of the trust. [229] It was submitted for the husband that it was not intended that the court should make orders that would operate to the detriment of third parties . Ascot Investments Pty Ltd v Harper, [230] to which reference was made, was not concerned with a situation such as concerns the third parties in this case. It was there held that the Family Court had no power to order directors of a company to register shares, where the memorandum and articles of association of the company enabled them to decline to do so, at least where the company was not controlled by the husband. [231] It was not doubted that the rights of third parties may be indirectly affected by orders of the court. [232] It has long been accepted that third-party interests could be altered by courts dealing with property the subject of a nuptial settlement. [233] Whether, and the extent to which, a court would alter such interests might depend upon the remoteness or uncertainty of those interests. [234] Here the interests of the other beneficiaries, in the due administration of the trust, were always subject to the husband's control. The extent of that control, to the detriment of the third parties' interests, was shown by the attempted distribution of the entire trust property to the children's trusts.
[237] This litigation has been lengthy and costly, involving as it did parties in addition to those to the marriage. In the unusual circumstances of this case the wife should be permitted to rely upon s 85A. It may be inferred that a failure to do so at an earlier point was the result of a misapprehension about the applicability of the section, a misapprehension which may not be limited to the parties to these proceedings. The proper construction of the section, in order to explain its intended operation, is a matter of general importance. All that was outstanding in this case, and which s 85A resolves, was how effect could be given to the primary judge's orders. The only variation required to the orders made is that the sum to be paid to the wife be applied from the trust property.