Kennon v Spry

[2008] HCA 56

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(Judgment by: Gummow J, Hayne J)

Kennon
v.Spry

Court:

Judges: French CJ

Gummow J
Hayne JHeydon 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

Hearing date:
Judgment date: 3 December 2008

Canberra

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Judgment by:
Gummow J
Hayne J

[84] These appeals from a decision of the Full Court of the Family Court of Australia (Bryant CJ and Warnick J, Finn J dissenting) ^[43] were heard together. The Full Court dismissed an appeal and cross-appeal against orders made on 30 November 2005 by a judge of the Family Court ([2005] FamCA 1181 per Strickland J) in litigation the parties to which, in addition to the former spouses, included their children and the trustees of certain trusts.

The matrimonial relationship and the course of the proceedings

[85] The husband was born in 1940 and the wife in 1956. They married in 1978. At that time the husband was in practice at the Bar of Victoria and he was appointed Queen's Counsel in 1979. There were four children of the marriage, Elizabeth (born 1980), Catharine (born 1982), Caroline (born 1984) and Penelope (born 1987).

[86] The husband retired from legal practice in 1998. After various matrimonial difficulties over several years, the parties separated on 30 October 2001 and the husband left the matrimonial home. In December 2002 the wife filed her divorce application in the Federal Magistrates Court of Australia. This was a "matrimonial cause" within the meaning of para (a)(i) of the definition of that term in s 4(1) of the Family Law Act 1975 (Cth) (the Act) and jurisdiction to entertain it was conferred upon that court by s 39(1A) and s 39(5AA) of the Act. A decree nisi was granted on 16 January 2003 and it became absolute on 17 February 2003.

[87] While the divorce proceedings were pending, on 19 April 2002 the wife applied to the Family Court for an order that the husband pay to her:

... by way of lump sum maintenance and property settlement such sum as the Court shall determine to be just and equitable.

The wife sought orders on the basis that the assets of the parties to the marriage be divided 60% to the wife and 40% to the husband.

[88] The Family Court application was a "matrimonial cause" within the meaning of para (ca) of the definition of that term in s 4(1) of the Act, being "proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings ... arising out of the marital relationship ... [and also] in relation to concurrent, pending or completed divorce ... proceedings between those parties". Jurisdiction with respect to the matrimonial cause was conferred upon the Family Court by s 39(1)(a) of the Act. In many provisions of the Act reference is made to the "court"; in relation to any proceedings this means a court exercising jurisdiction in those proceedings by virtue of the Act: in particular, by one or more of the operations of s 39. ^[44]

With respect to the property of the parties to the marriage

[89] The phrase in para (ca) "with respect to the property of the parties to the marriage or either of them" should be read in a fashion which advances rather than constrains the subject, scope and purpose of the legislation. In particular, as statements by this court ^[45] illustrate, the term "property" is not a term of art with one specific and precise meaning. It is always necessary to pay close attention to any statutory context in which the term is used. ^[46] In particular it is, of course, necessary to have regard to the subject-matter, scope and purpose of the relevant statute.

[90] The questions that arise in these matters raise a dispute about construction of the Act. That dispute is not resolved by considering only the ways in which the term "property" may be used in relation to trusts of the kinds described as "discretionary trusts". As Binnie J, writing for the Supreme Court of Canada, has recently said ^[47] (albeit in a different statutory context):

[16] ... The task is to interpret [the relevant statutes] in a purposeful way having regard "to their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament". ^[48]

And as Binnie J also said, because an interest (in that case, a fishing licence): ^[49]

[16] ... may not qualify as "property" for the general purposes of the common law does not mean that it is also excluded from the reach of the statutes. For particular purposes Parliament can and does create its own lexicon.

[91] Section 4(1) of the Act provides:

" property ", in relation to the parties to a marriage or either of them, means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.

Shortly after the commencement of the Act, the Full Court in In the Marriage of Duff ^[50] considered that definition and said that an understanding of the term "property" in a comprehensive sense:

... commends itself to us as being descriptive of the nature of the concept of "property" to which it is intended that [the Act] should relate and over which the Family Court of Australia should have jurisdiction to intervene when disputes arise in relation to the property of spouses as between themselves or when the court is asked to exercise the powers conferred upon it under Pt VIII or its injunctive powers under s 114 so far as they are expressed to relate to a property of the party to a marriage.

We are of the view that the intention of s 79 is to enable the court to take into account and assess all the property of the parties upon being asked by either of them to make an order altering the interests of the parties in the property. We are further of the view that when s 4 defines property as being "property to which the parties are entitled whether in possession or reversion" the words "whether in possession or reversion" are not intended to indicate that the kind of property with which this Act can deal must be property to which a party is entitled in possession or reversion but rather the phrase "whether in possession or reversion" is, as a matter of grammar, an adverbial phrase which qualifies the word "entitled". The phrase means that the entitlement to the property may be either in possession or reversion; ie, the phrase is descriptive of the entitlement and not of the property and it removes any fetter upon the court in dealing with property under this Act by limiting the nature of the entitlement thereto to entitlement in possession.

[92] Subsequently, in In the Marriage of Kelly (No 2), ^[51] the Full Court remarked that, nevertheless, what had been said in Duff as to the definition of "property" was not broad enough to cover the assets held by a family company or held by trustees of a discretionary trust. That may be accepted but, as will appear, will not be a sufficient answer to issues arising on these appeals.

Part VIII of the Act

[93] Part VIII of the Act (ss 71-90) is headed "Property, spousal maintenance and maintenance agreements". ^[52] The reference in the application by the wife to payment by way of property settlement of a sum determined to be just and equitable attracted the operation of s 79 of the Act. So far as material s 79(1) states:

(1)

In property settlement proceedings, the court may make such order as it considers appropriate:

(a)

in the case of proceedings with respect to the property of the parties to the marriage or either of them -- altering the interests of the parties to the marriage in the property; or

...

including:

(c)

an order for a settlement of property in substitution for any interest in the property; and

(d)

an order requiring:

(i)

either or both of the parties to the marriage; or

...

to make, for the benefit of either or both of the parties to the marriage or a child of the marriage , such settlement or transfer of property as the court determines. [Emphasis added.]

[94] The reference in s 79(1) to "the parties to the marriage" is given by s 4(2) an application in a situation where, as in the present case, the marriage is dissolved before the court makes its order in property settlement proceedings. The effect of s 4(2) is that the phrase in s 79(1) "the parties to the marriage" includes a reference to a person who was a party to a marriage which has been terminated by divorce at a time before the court makes its order under s 79(1).

[95] Section 79(2) provides that "[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order". The phrase "just and equitable" appears to have its origins in the principles of equity which were developed with respect to the dissolution of partnerships, where they remained general words which were not to be reduced to the sum of particular instances. ^[53] However, in considering what order if any should be made under s 79 in property settlement proceedings the court is obliged by s 79(4) to take into account various matters detailed in paras (a)-(g). In particular, para (a) requires the court to take into account "the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them".

[96] Paragraph (e) of s 79(4) directs consideration to "the matters referred to in subsection 75(2) so far as they are relevant"; para (b) of s 75(2) refers to "the income, property and financial resources of each of the parties". The term "financial resources" is apt to include more than assets which answer the definition of "property" to which reference has been made.

[97] Section 81 enjoins the court, in proceedings under Pt VIII of the Act, including s 79, to "as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them". In exercising its powers under Pt VIII of the Act, the court is authorised, among the other matters spelled out in paras (b)-(l) of s 80(1), to "order payment of a lump sum, whether in one amount or by instalments" (s 80(1)(a)). Additional powers conferred by other paragraphs of s 80(1) are mentioned below.

[98] Section 79 also is supplemented by s 106B. Section 106B appears in Pt XIII of the Act (ss 105-109B), which is headed "Enforcement of decrees". At all material times ^[54] s 106B(1) and (3) stated:

(1)

In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.

...

(2)

The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.

The orders of the primary judge

[99] The orders of the primary judge which are principally in contention are orders numbered 2 and 3 and expressed to be made pursuant to s 106B (the s 106B orders) and an order (O 4) that on or before 28 February 2006 the husband pay the wife the sum of $2,182,302. It will be noted that O 4 mandates no variation in the terms of any trust instrument.

[100] On its face O 4 may appear not to mandate a "settlement" of property in substitution for any interest in the property of the parties to the marriage or either of them and so not to amount to an exercise of powers conferred by paras (c) and (d) of s 79(1). There was no order for a settlement in the conveyancing sense of a disposition by deed vesting property in trustees to be held for a succession of interests. ^[55] Rather, O 4 requires the payment of money by the husband but does not attach that obligation to any fund or other source of payment. In 1983 in Mullane v Mullane it was said that when s 79 refers to a settlement of property this is in a sense "which is closely related to the meaning which the expression bears in the law of real and personal property". ^[56] But s 79 was extensively amended thereafter ^[57] and always had to be read with the range of powers conferred by s 80(1). More recently, in Brooks, ^[58] Lord Nicholls of Birkenhead emphasised that in English law "settlement" is not a term of art, with one specific precise meaning, and that its meaning depends upon the context, particularly any statutory context, in which it is used. ^[59] Accordingly, some further reference to legislative history is of assistance here.

[101] A power with some similarities to s 79 had been included in s 86(1) of the Matrimonial Causes Act 1959 (Cth) (the 1959 Act). ^[60] Of that provision in Smee v Smee ^[61] Sugerman J said:

The origins of legislation of the type of s 86(1) go back to s 45 of the original Matrimonial Causes Act 1857 (Eng), which gave the court power, when it pronounced a decree for divorce or judicial separation on the ground of the wife's adultery, to order such settlement of her property or of part thereof as it thought reasonable for the benefit of the innocent party and the children of the marriage. To this power to order a settlement of the wife's free property, s 5 of the Matrimonial Causes Act 1859 (Eng), added a power to vary existing ante-nuptial and post-nuptial settlements (cf [the 1959 Act], s 86(2)).

[102] In Sanders v Sanders ^[62] Windeyer J said he agreed with what had been said by Sugerman J in this passage, but cautioned against the "colouring" of s 86 of the 1959 Act by history. In particular, as Barwick CJ stressed in Sanders, ^[63] in the exercise of the powers conferred by the modern legislation there is no occasion for elements of punishment or deprivation of a party. However, what has been carried forward is what, with reference to Dewar v Dewar, ^[64] Windeyer J said ^[65] was the "very wide denotation" given in this context to the word "settlement". In Dewar ^[66] Dixon CJ, Kitto and Menzies JJ made reference to the empowering of 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 because of the dissolution of that marriage should be reconsidered and to empower the Court to make orders for what appears in the changed circumstances a just application of the property.

[103] The primary judge also made orders (numbered 8 and 9 respectively) that each party "do all such acts and things and sign all such documents as may be necessary to give effect to the terms of this order", and that each party have "[l]iberty ... to apply as to consequential matters". Reservation of liberty to apply is directed to questions of machinery which may arise from the other orders which the court in question has made. ^[67] Orders 8 and 9 reflect provision made by s 80(1) of the Act, in particular by paras (d) and (k), which state that the court may:

(d)

order that any necessary deed or instrument be executed and that such documents of title be produced or such other things be done as are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;

...

(k)

make any other order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks it is necessary to make to do justice ...

[104] The s 106B orders made by the primary judge were expressed to "set aside" an instrument dated 7 December 1998 executed by the husband and identified as "the ICF Spry Trust Instrument of Variation" (the 1998 instrument), and an instrument executed by the husband on 18 January 2002 (the 2002 instrument), together with certain dispositions then made pursuant to that second instrument. These dispositions included the application of all of the income and capital of what was known as "the ICF Spry Trust" (the trust) as to one quarter to each of four trusts known as the Elizabeth Spry Trust, the Catharine Spry Trust, the Caroline Spry Trust and the Penelope Spry Trust (the children's trusts).

[105] Clause 3 of the 2002 instrument declared that as trustee of the trust the husband applied all of the income and capital of the trust as it stood on 18 January 2002 by assigning one quarter to the trustees of each of the children's trusts. Each of these trusts for a child of the marriage thereby acquired assets of approximately $875,000. Also in January 2002, the husband effectively assigned to the four children by declaration of trust some $500,000 of his own assets. Each child derived an interest worth approximately $125,000. That disposition was not set aside by the court for reasons given by the primary judge in a passage in his reasons which is set out below.

The reasons of the primary judge

[106] With respect to the terms of s 106B(1), the primary judge found that, as to the 1998 instrument, at the relevant time the husband "was looking to defeat an anticipated order for property settlement". His Honour also made adverse findings with respect to the steps taken in 2002, saying that the husband had been concerned that despite what he had done in December 1998 certain assets "may have still been within the reach of the wife and the Family Court".

[107] The primary judge used the expressions "the Trust" and "the ICF Spry Trust" to identify a trust declared orally by the husband on 21 June 1968 with himself as trustee and subsequently reduced to writing by an instrument executed by him on 15 October 1981 (the 1981 instrument). This had been followed by an instrument executed by the husband and the wife on 4 March 1983 (the 1983 instrument). It will be necessary to make further reference to these instruments later in these reasons. However, it should be noted here that the primary judge accepted that the trust had been established in 1968 well before the marriage. He found that the trust (the assets of which included the family home at Toorak purchased in 1979) was maintained "to allow the parties to accumulate assets for the benefit of the family in the most tax effective way" and that the 1983 instrument was designed to ensure that the Toorak property was not, for land tax purposes, aggregated with other properties owned personally by the husband.

[108] The 1998 instrument and the 2002 instrument and accompanying dispositions, which together were the subject of the s 106B orders, had operated directly or indirectly upon or by reference to the state of affairs of the trust which otherwise had been established and administered under the 1981 instrument and the 1983 instrument.

[109] The primary judge proceeded upon the "guidelines" that the court first determine "the assets, liabilities and financial resources of the parties to the marriage", then consider "all relevant contributions of each of the parties", and "the prospective components of the claims of each of the parties", identify any "alteration" having regard to relevant s 75(2) factors and, finally, consider whether the proposed order was "just and equitable" (s 79(2)).

[110] The primary judge under the heading "Conclusion" stated (at [264]):

[264] The net assets of the parties should be divided 52%/48% in the husband's favour. As a result ... it is necessary to exercise the discretion to set aside the instrument and disposition[s] of 18 January 2002. The assets of the Trust need to be actually in the asset pool for division to allow the wife to receive her entitlement as the figures will shortly indicate.

[111] Under the heading "Just and equitable", his Honour said that pursuant to s 79 an order could not be made unless the court was satisfied that in all the circumstances it was "just and equitable" to make the order. His Honour continued (at [266]-[269]):

[266] The net asset pool comprises a monetary equivalent of $9,818,144.37. Thus, the effect of my decision is that the husband is entitled to net assets to the value of $5,105,435.00 (in round dollars) and the wife is entitled to net assets to the value of $4,712,709.00 (in round dollars).

[267] The wife has or has had the benefit of net assets totalling $2,530,406.80 and the husband has or has had the benefit of net assets totalling $1,790,108.15.

[268] Thus, the husband will have to pay to the wife the sum of $2,182,302.00 (in round dollars) . Where that will come from though is entirely up to the husband. On the figures he has assets to the value of $1,790,108.15 less $57,727.15 being the amount he has paid for legal costs, but I have found that the assets of the [ICF Spry Trust] can be treated as his property once the relevant instruments and dispositions are set aside, and thus that is a source of funds for the husband. My orders though will not permit the husband to apply the assets that he assigned to the children because he himself successfully argued that the discretion to set aside that disposition should not be exercised where the husband has the ability to otherwise meet the order. That of course will not prevent the husband reaching some arrangement with the children about this given that I have still notionally added back these assets to the net asset pool of the parties.

[269] The husband's position as a result of my proposed orders is therefore somewhat unclear given that it will depend on what he does in relation to the ICF Spry Trust and its assets. However, that is entirely a consequence of the husband's own actions in attempting to remove assets from the reach of the wife and the Family Court, and this cannot prejudice the position of the wife in any way. In any event, on the basis of the applicable figures the proposed orders leave the husband with substantial assets but, of course, with a large proportion of those assets being assets in the [ICF Spry] Trust . To repeat, it is entirely up to the husband what he then does about this. [ Emphasis added.]

[112] The primary judge then turned to consider the impact his proposed orders would have on the children of the marriage. The effect of his Honour's reasoning is that it was neither unjust nor inequitable against the children that there be applied out of the augmented assets of the trust the lump sum provided in O 4 for the benefit of the wife.

[113] The primary judge said (at [272]-[274]):

[272] ... The assets of [the children's trusts] will be returned to the [ICF Spry] Trust, and depending on what the husband does in response to the orders there may or may not be assets retained in that trust for the benefit of the children and the other beneficiaries. Further, although prima facie the children will still have the shares assigned to them by the husband, again the husband may choose to make other arrangements with them about that given that those assets have been notionally treated as the husband's property.

[273] In these circumstances it might be tempting to feel some sympathy for the children, but when analysed that does not necessarily follow. There is simply no basis on which the children can complain about the effect of the orders that I propose. Prima facie they were the innocent victims of the husband's actions. The husband used them initially in his attempt to remove assets from the reach of the wife and the Family Court, and for that the children cannot be criticised, but it is sad that the children have chosen to thereafter become involved in what is essentially a dispute between their parents. The husband's actions were to divert assets that the parties had accumulated for the benefit of the entire family, yet the children have sought in these proceedings to maintain the position created by the husband. That is unfortunate to say the least given that in reality the children have had the ability as much as the husband has had to prevent this dispute not only from occurring at all but certainly from reaching the heights that it has ...

[274] The consequences of the children's attempts to in effect hold on to assets which they had no direct input in accumulating and which should still be under the control of their parents has been a bitterly fought and extremely costly court case, let alone the negative impact on the family and the relationships between the members of that family.

The appeals to this court

[114] The appellants in Appeal No M25 of 2008 are the trustees of the children's trusts, for whom Mr D F Jackson QC appeared. The appellant in Appeal No M26 of 2008 is the husband, for whom Mr A J Myers QC appeared. He largely adopted the submissions of Mr Jackson. The wife is a respondent in each appeal and was represented by Mr J T Gleeson SC. Dr I J Hardingham QC appeared for the children of the marriage; they are among the respondents to each appeal. He adopted, and supplemented, the submissions of Mr Jackson.

[115] In this court, as before the Full Court, the husband and other parties supporting his submissions contend to the effect that in the passages set out above the primary judge erred by acting upon a wrong principle or was guided or affected by extraneous or irrelevant matters. ^[68] In particular, it is said that his Honour erred by treating the assets of the trust, supplemented by the setting aside of the dispositions in favour of the children's trusts, as part of the "asset pool". The reasoning is said to be flawed because it contains as a necessary step the erroneous proposition that the husband could in law apply the assets of the trust to or for himself.

[116] The falsity of that proposition may be accepted. But as will appear in these reasons that is not determinative of success in the appeals to this court.

The 1981 instrument and the 1983 instrument

[117] To assist an appreciation of the issues in the appeals to this court, something more should be said respecting the terms of the 1981 instrument and the 1983 instrument, followed by further reference to the 1998 instrument and the 2002 instrument which were "set aside" by the s 106B orders.

[118] First, as to the 1981 instrument. This identified the husband as settlor and as the present trustee. He was empowered by cl 2 to vary the terms of the trust "but not in such a manner as to increase in any way his rights under this trust to the beneficial enjoyment of the fund". The "beneficiaries" were identified in cl 4 as meaning all "issue" of the father of the settlor, "and all persons married to such issue". There is a question on the appeals as to whether, since her divorce became effective on 17 February 2003, the wife any longer answers that description. Clause 6 states:

The trustee shall have the power from time to time, as he in his absolute discretion sees fit, to apply all or any part of the income and/or capital of the fund to or for all or any of the beneficiaries, either by making payments to or applications for the benefit of the beneficiary in question or payments to a trust set up substantially for the benefit of such beneficiary; and income not from time to time lawfully paid or applied shall be accumulated.

At the date of distribution the fund is to be divided among such of the beneficiaries as the trustee shall think fit, and, in default, shall be divided equally among all male beneficiaries, with the exception of the settlor (cl 7).

[119] Clause 3 of the 1983 instrument provided that the "issue" identified in cl 4 of the 1981 instrument included "all descendants however remote", and stated that any variation in the trusts of that instrument would be invalid to the extent that it purported to confer any right or benefit upon the husband. This supplemented the provision made in cl 2 of the 1983 instrument as follows:

The [husband as] settlor hereby releases and abandons all and any beneficial interest or rights held by him or which may hereafter be held by him under the trust instrument or under the said trust or in the trust fund or income thereof 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.

It should be noted that the wife remained a beneficiary within the terms of cl 4 of the 1981 instrument.

[120] However, one consequence of cl 4 of the 1998 instrument had been to remove any power or discretion under cl 6 of the 1981 instrument to pay or apply the capital of the fund in favour of the husband or the wife or in favour of any trust in which either of them had any interest, right or possibility. Clause 3 of the 2002 instrument had applied all of the capital and income of the trust fund by assigning a quarter to each of the children's trusts constituted on 18 January 2002, and cl 4 varied the terms of the trust accordingly.

[121] What then are the relevant consequences, particularly for the 1981 instrument and the 1983 instrument, of the s 106B orders which set aside what was done in 1998 and 2002?

[122] In considering that question it should be appreciated that O 8 of those orders requires the husband (and other parties) to do all such acts and sign all documents as may be necessary to give effect to the terms of the s 106B orders and the lump sum provision in O 4, and O 9 confers liberty to each party to apply as to consequential matters.

[123] Orders 8 and 9 illustrate the proposition that the grant of federal jurisdiction by s 39 of the Act carries with it the power to do all things necessary to determine conclusively the issue in controversy which attracts it. ^[69] This state of affairs is supplemented by the terms of s 81 of the Act, to which reference has been made earlier in these reasons. ^[70] Further, relevant common law rights and duties which may otherwise subsist must accommodate compliance with orders made in the exercise of federal jurisdiction. In addition, any state law providing that the rights and liabilities of the parties to the litigation were to be other than as established by or pursuant to the orders of the Family Court would be inoperative by operation of s 109 of the Constitution; the state law would alter, impair or detract from the operation of s 39 of the Act defining the jurisdiction of the Family Court. ^[71]

[124] In her dissenting reasons in the Full Court, Finn J rejected (with respect correctly) the submission that, given the 1983 instrument remained in effect according to its terms, the assets of the trust could be treated by the court as property of the husband for the purposes of s 79 by reason of the "control" he exercised. However, having rejected that submission her Honour then concluded that there could have been no point in making the s 106B orders and the assets of the children's trusts should not have been brought into the asset pool. Rather, the assets of the children's trusts should have been treated as a "financial resource" of the husband within the meaning of s 75(2)(b) as applied by s 79(4)(e), and an adjustment then should have been made in favour of the wife. The effect of some of the submissions by the wife is to side-step the reasoning which commended itself to Finn J. Those submissions should be accepted.

Conclusions

[125] The wife was an eligible object of benefaction of the trust. She was one of the class of "beneficiaries" identified in cl 4 of the 1981 instrument. The use in that document of the term "beneficiaries" was inapt in so far as it suggested the existence of any vested beneficial interest in the assets held on the trust of the 1981 instrument. Dr Hardingham correctly identified the wife as one of the class of objects of the discretionary power conferred upon the trustee by cl 6 of the 1981 instrument. She also was one of the class of objects for division of the fund at the distribution date: cl 7. Furthermore, as an object of these powers the wife had a right in equity to due administration of the trust. ^[72] The existence of such a right did not depend upon entitlement to any fixed and transmissible beneficial interest in the trust fund. ^[73] The right of the wife was accompanied at least by a fiduciary duty on the part of the trustee, the husband, to consider whether and in what way he should exercise the power conferred by cl 6. ^[74]

[126] Reference was made earlier in these reasons to the comprehensive sense in which the term "property" is defined in s 4(1) of the Act. ^[75] And it will also be recalled that the "property" which may be the subject of orders under s 79(1) of the Act is "the property of the parties to the marriage or either of them " (emphasis added). The right of the wife with respect to the due administration of the trust was included in her property for the purposes of the Act. The submissions by Mr Gleeson to this effect should be accepted. The submissions to the contrary by Mr Myers should not be accepted. And in considering what is the property of the parties to the marriage (as distinct from what might be identified as the property of the husband) it is important to recognise not only that the right of the wife was accompanied at least by the fiduciary duty of the husband to consider whether and in what way the power should be exercised, but also that, during the marriage, the power could have been exercised by appointing the whole of the trust assets to the wife. Observing that the husband could not have conferred the same benefit on himself as he could on his wife denies only that he had property in the assets of the trust; it does not deny that part of the property of the parties to the marriage, within the meaning of the Act, was his power to appoint the whole of the property to his wife and her right to a due administration of the trust.

[127] The further submission was made by counsel opposed to Mr Gleeson that by the time the primary judge made his orders on 30 November 2005 the parties were divorced and, as a result, the husband as trustee could not then treat the wife as one of the class of "beneficiaries" under the trust and her property as identified above no longer existed for the purposes of the Act.

[128] However, as indicated at an early stage in these reasons, by force of s 4(2) of the Act, the reference in provisions such as s 79 to "the parties to the marriage or either of them" includes a reference to the parties to a marriage terminated by divorce at a time before the court makes its order. Further, the detailed provisions in s 79 respecting adjournment of property settlement proceedings ^[76] assume that the parties to those proceedings may be parties to the pending divorce proceedings which are completed before the grant of relief in the property settlement proceedings.

[129] In such circumstances, which apply in the present case, it is within the power of the court to proceed in the property settlement proceedings "as if" ^[77] changes to property rights otherwise brought about by the anterior divorce had not yet occurred; this is so, provided it otherwise is just and equitable to proceed in this manner. The order which is made in the property settlement proceedings speaks from the time it is made, but the considerations which govern its formulation are governed by reference to the kind of controversy to be quelled by the court -- a matrimonial cause in the defined sense -- and by the imperative indicated by s 81 of the Act -- the final determination of financial relationships between the parties to the dissolved marriage and the avoidance of further proceedings between them.

[130] In the circumstances of the present case, it was open to the primary judge to formulate his orders, as he did, on the basis that the "asset pool" comprised $9,818,144.37 and included the assets of the trust as supplemented by the operation of the s 106B orders. To proceed on that basis properly reflected what was "the property of the parties to the marriage or either of them" as if the changes to property rights otherwise brought about by the divorce of those parties had not yet occurred. To proceed on the basis propounded by the husband would confine attention to what was his property.

[131] Some reference was made in argument to the significance to be attached to the presence of s 85A(1). This was introduced by the 1983 Act and states:

(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.

[132] The provision appears to have been a legislative response in part to apprehensions that as s ^[79] stood the court could not "deal directly" with the unascertained interest which a spouse may have in a discretionary trust. ^[78] However that may be, s 85A should not be read as confining the powers otherwise given by ss 79 and ^[80] in any relevant respect. In particular, it should not be read as confining the power to make an order for payment of a money sum in a way that would preclude the making of an order that either permits or requires the application of an element of the property of one or other of the parties to a marriage in satisfaction of the order for payment.

[133] Section 85A should be read as focused upon the variation of settlements of the kinds identified in the provision. No relevant implication of the kind considered in Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia79 now arises. Of Anthony Hordern and the subsequent cases, it was said in Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom: 80

[59] Anthony Hordern and the subsequent authorities have employed different terms to identify the relevant general principle of construction. These have included whether the two powers are the "same power", ^[81] or are with respect to the same subject-matter, ^[82] or whether the general power encroaches upon the subject-matter exhaustively governed by the special power. ^[83] However, what the cases reveal is that it must be possible to say that the statute in question confers only one power to take the relevant action, necessitating the confinement of the generality of another apparently applicable power by reference to the restrictions in the former power. In all the cases considered above, the ambit of the restricted power was ostensibly wholly within the ambit of a power which itself was not expressly subject to restrictions.

[134] The relationship between s 85A and the other provisions of Pt VIII of the Act is not of the character described in this passage.

[135] The situation of the children of the marriage did not render it other than just and equitable to make the s 106B order with respect to the 2002 instrument and application of the trust fund between the children's trusts. The interests of no other third parties were involved in setting those transactions aside.

[136] As already remarked in these reasons, O 4 in providing for payment by the husband of a lump sum to the wife does not earmark any particular asset of the husband and oblige him to apply it in satisfaction of that order. Nor was there any mandatory order of the nature considered in Ascot Investments Pty Ltd v Harper ^[84] which extinguished the rights or enlarged the obligations of third parties.

[137] The conclusion reached by the trial judge (erroneously) that the husband could have applied the whole or part of the trust fund to or for his own benefit is inconclusive of the outcome. The jurisdiction being exercised by the Family Court was, as earlier indicated, jurisdiction over "proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them " ^[85] (emphasis added). What matters in this case is that once the 1998 instrument and the 2002 instrument were set aside by the s 106B orders, the property of the parties to the marriage or either of them was to be identified as including the right of the wife to due administration of the trust, accompanied by the fiduciary duty of the husband, as trustee, to consider whether and in what way the power should be exercised. And because, during the marriage, the husband could have appointed the whole of the trust fund to the wife, the potential enjoyment of the whole of that fund was "property of the parties to the marriage or either of them". Furthermore, because the relevant power permitted appointment of the whole of the trust fund to the wife absolutely, the value of that property was the value of the assets of the trust. In deciding what orders should be made under ss 79 and 80 of the Act, the value of that property was properly taken into account. Wrongly attributing its value to the husband is irrelevant to the ultimate orders made.

[138] If the husband wishes to satisfy his obligations to the wife under O 4 by recourse to the augmented assets of the trust then it is open to him to approach the court for an appropriate order to assist him in doing so. By such an order the court would provide the machinery whereby the trust was to be administered "as if" the wife had not ceased to be the spouse of the husband, and there was an application by the husband as trustee of a stipulated sum in favour of the wife in pro tanto discharge of his obligation to her under O 4. It would be for the court to determine whether, putting aside the interests of the children of the marriage for the reasons already given, it was just and equitable to make the order having regard to the interests of any third parties who may also fall within the defined class of "beneficiaries".

[139] Whether or in what circumstances the wife may apply for orders of this nature need not be further considered here.

[140] The result is that upon the basis explained above the challenged orders made by the Full Court are to be supported as a proper exercise of the powers conferred by the Act. The majority of the Full Court reached the correct result in dismissing the appeal and cross-appeal.

[141] That conclusion makes it unnecessary to consider further (i) the submissions by Mr Gleeson in support of a remitter to consider the "financial resources" issue to which Finn J referred; and (ii) applications by the wife for special leave to cross-appeal against the orders of the Full Court and to rely upon a case supported by s 85A of the Act.

Orders

[142] The applications for special leave to cross-appeal should be dismissed but with no order as to costs. The appeals should be dismissed. The matter of costs is for this court and is not controlled by provisions respecting costs in the Act. ^[86] In each appeal the appellants should pay the costs of the wife and there should be no costs order in favour of the other respondents.