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Supreme Court of New South Wales - Court of Appeal |
Last Updated: 17 February 2010
NEW SOUTH WALES COURT OF APPEAL
CITATION:
Murakami v Wiryadi &
Ors [2010] NSWCA 7
FILE NUMBER(S):
2006/268290
HEARING
DATE(S):
12 November 2009
JUDGMENT DATE:
15 February
2010
PARTIES:
Takako Murakami (Appellant)
Louise Maria Wiryadi
(First respondent)
Ryuji Murakami (Second respondent)
Ryuzo Murakami
(Third respondent)
JUDGMENT OF:
Spigelman CJ McColl JA Young JA
LOWER COURT JURISDICTION:
Supreme Court
LOWER COURT FILE
NUMBER(S):
SC 2906 of 2005
LOWER COURT JUDICIAL OFFICER:
Gzell
J
LOWER COURT DATE OF DECISION:
[2006] NSWSC 1354 7 December
2006
LOWER COURT MEDIUM NEUTRAL CITATION:
[2006] NSWSC
1354
Murakami v Wiryadi (Supreme Court of New South Wales, Gzell J, 14
December 2006, unreported)
COUNSEL:
M K Meek SC with D Christofis
(Appellant)
A S Bell SC with H El-Hage (Respondent)
SOLICITORS:
Uther Webster & Evans (Appellant)
Atkinson Viden Lawyers
(Respondent)
CATCHWORDS:
PRIVATE INTERNATIONAL LAW - stay of
proceedings - clearly inappropriate forum test – relevance of foreign law
as substantive
law of underlying legal relationship between parties
PRIVATE
INTERNATIONAL LAW - stay of proceedings – clearly inappropriate forum test
- issues in dispute questions as to real
property in New South Wales
PRIVATE
INTERNATIONAL LAW - choice of law - contract with respect to property, including
real property, usually governed by the proper
law of the contract
PRIVATE
INTERNATIONAL LAW - choice of law - implied contract of marriage - governed by
the law of matrimonial domicile.
LEGISLATION CITED:
CASES
CITED:
Amaca Pty Ltd v Frost [2006] NSWCA 173; (2006) 67 NSWLR
635
Attorney-General for England and Wales v R [2002] 2 NZLR 91
Augustus v
Permanent Trustee Co (Canberra) Ltd [1971] HCA 25; (1971) 124 CLR 245; (1971) 45 ALJR
365
Bank of America v Bank of New York [1995] HCA 4; [1995] ATPR 40,334 (41-390)
BHP
Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400
British South
Africa Company v Companhia de Moçambique [1893] AC 602; [1891-4] All ER
Rep 640
British South Africa Company v De Beers Consolidated Mines Ltd [1910]
2 Ch 502
Callwood v Callwood [1960] AC 659
Chase Manhattan Bank NA v
Israel-British Bank (London) Ltd [1981] 1 Ch 105
CSR Ltd v Cigna Insurance
Australia Ltd (1997) 189 CLR 345
Damberg v Damberg [2001] NSWCA 87; (2001)
52 NSWLR 492
De Nichols v Curlier [1898] 1 Ch 403
De Nicols v Curlier
[1900] AC 21
In Re De Nicols [1900] 2 Ch 410
Deschamps v Miller [1908] 1
Ch 856
Director of Public Prosecutions v El Mawas [2006] NSWCA 154; (2006)
66 NSWLR 93
In re Duke of Wellington: Glentanar v Wellington [1947] Ch
506
Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; (2008) 234 CLR
124
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209
CLR 95
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007)
230 CLR 89
Garsec Pty Ltd v His Majesty the Sultan of Brunei [2008] NSWCA
211; (2008) 250 ALR 682
Henry v Henry (1996) 185 CLR 571
House v The King
[1936] HCA 40; (1936) 55 CLR 499
James Hardie Industries Pty Ltd v Grigor (1998) 45 NSWLR
20
Lightning v Lightning Electrical Contractors Ltd [1998] EWHC Admin
431
Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1995] 1 WLR
978
Macmillan Inc v Bishopsgate Investment Trust Plc (No 3) [1996] 1 WLR
387
Maunder v Lloyd [1862] EngR 1088; (1862) 2 J & H 718; 70 ER 1248
McGregor v Potts
[2005] NSWSC 1098; (2005) 68 NSWLR 109
Merwin Pastoral Co Pty Ltd v Moolpa
Pastoral Co Pty Ltd [1933] HCA 31; (1933) 48 CLR 565
Murakami Takako v Wiryadi Louise Maria
[2008] SGCA 44
Murakami v Wiryadi (No 2), Supreme Court of New South Wales,
Gzell J, 14 December 2006, unreported, ex tempore judgment
National
Commercial Bank v Wimbourne (1978) 5 BPR 11,958
Neilson v Overseas Project
Corporation of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331
New South
Wales Crime Commission v Vu [2009] NSWCA 349
Oceanic Sun Line Special
Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197
Paramasivam v Flynn [1998] FCA 1711; (1998) 90
FCR 489; (1998) 160 ALR 203
Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA
41; (2006) 14 BPR 26,639
Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR
265
Raiffeisen Zentralbank Osterreich AG v Five Star General Trading LLC
[2001] 2 WLR 1344; [2001] EWCA Civ 68
Regie Nationale des Usines Renault v
Zhang [2002] HCA 10; (2002) 210 CLR 491
Rickshaw Investments Ltd v Nicolai
Baron von Uexkull [2006] SGCA 39; [2007] 3 LRC 223
In re Ross: Ross v
Waterfield [1930] 1 Ch 377
Spiliada Maritime Corporation v Cansulex Ltd
[1987] AC 460
Talleyrand v Boulanger [1797] EngR 504; (1797) 3 Ves Jun 447; 30 ER
1099
Trustor AB v Smallbone [2000] EWCA Civ 150
Voth v Manildra Flour
Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538
Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531
Welch
v Tennent [1891] AC 639
TEXTS CITED:
DECISION:
1 Appeal
allowed.
2 Discharge the orders of Gzell J made on 14 December 2006.
3
Order the respondents to pay the appellant’s cost of the notice of motion
and of the appeal.
JUDGMENT:
- 2 -
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF
APPEAL
CA 2006/268290
SPIGELMAN CJ
McCOLL JA
YOUNG JA
Monday 15 February 2010
Murakami v Wiryadi & Ors
FACTS
The appellant has instituted proceedings in her capacity as executor of her father, Mr Murakami’s, estate. Mr Murakami died in 1996 leaving a considerable estate spread across a number of jurisdictions. He has four children: the appellant and her brother by a de facto relationship; and two children with the first respondent, Mrs Wiryadi, to whom he was married and subsequently divorced in Indonesia.
At the time of Mr Murakami’s death, the property settlement of the divorce had not been finalised. The extent of the deceased’s estate depends upon that. By Indonesian law, the assets of the marriage would be split equally between the two parties; and each of the four children is entitled to a quarter of the deceased’s estate.
The proceedings in this Court concern the ownership of real estate located in New South Wales and bank accounts located in Australia. The appellant claims that the property is held on constructive trust or, alternatively, on a resulting trust because the first respondent did not disclose the existence of the property as common matrimonial property in the Indonesian courts during the divorce proceedings. The trial judge ordered a permanent stay of proceedings on the basis that the issues to be agitated should be determined by the courts of Indonesia, that jurisdiction being the law of matrimonial domicile.
The issue before this Court is whether it should uphold that order.
HELD
(Spigelman CJ, McColl and Young JA agreeing)
Nature of the appeal
1 The decision on appeal is the application of the Voth ‘clearly inappropriate forum’ test. In the absence of submissions to the contrary, this Court should apply the approach of House v The King, which relates to decisions of a discretionary nature. [32]-[35] [54]-[55] [166] [167]
House v The King [1936] HCA 40; (1936) 55 CLR 499, applied.
Bank of America v Bank of New York (1995) 17 ATPR 40-334; Director of Public Prosecutions v El Mawas [2006] NSWCA 154; (2006) 66 NSWLR 93; Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; (2008) 234 CLR 124; Garsec Pty Ltd v His Majesty the Sultan of Brunei [2008] NSWCA 211; (2008) 250 ALR 682; McGregor v Potts [2005] NSWSC 1098; (2005) 68 NSWLR 109; New South Wales Crime Commission v Vu [2009] NSWCA 349; Oceanic Sun Lines Special Shipping Co Inc v Fay [1988] HCA 32; (1988) 165 CLR 197; Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41; (2006) 14 BPR 26,639; Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531, referred to.
Was the correct test applied?
2 The test for a grant of stay of proceedings is the Voth ‘clearly inappropriate forum’ test. This is not a case to which the exception (CSR Ltd v Cigna Insurance) applies, because there is no suggestion that hypothetical proceedings in Indonesia would raise any distinctively different issues from those sought to be agitated in New South Wales. [47]-[50] [54] [166] [167]
Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265; Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538, applied.
CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345, explained.
The foreign law issue
3 The applicability of Indonesian law is a factor which must be considered in determining whether Australia is a ‘clearly inappropriate forum’. The Voth test will apply differently if the substantive law to be applied is that of New South Wales, rather than that of Indonesia. It is not appropriate to finally decide choice of law questions in an application for a stay on forum non conveniens grounds in these circumstances where the legal issues to be determined have not been identified. [63] [65]-[66] [166] [167]
Macmillan Inc v Bishopsgate Investment Trust Plc (No 3) [1995] 1 WLR 978; Macmillan Inc v Bishopsgate Investment Trust Plc (No 3) [1996] 1 WLR 387, considered.
4 A number of matters affect the choice of law issue. These include the lack of evidence indicating what the Indonesian law would be. There is no suggestion in the expert evidence before the Court or otherwise that any particular difficulty arises with respect to the application of Indonesian law to this case. It appears that the issues in the case with respect to the constructive trust claim are primarily, if not exclusively, issues of fact and not issues of law. However, there is a conflict identified between the Indonesian law of matrimonial property and the appellant’s resulting trust claim. [66] [77]-[78] [85] [90] [91] [166] [167]
Choice of law and real property
5 In respect of real property, the lex situs must be referred to in the first instance. It has always been treated specially in the conflict of laws because it is essential to acknowledge the capacity of the lex situs to render futile any conflicting law with respect to title to real property. [93] [166] [167]
6 The law of the matrimonial domicile created a contract of which one term was that joint matrimonial property would, upon dissolution, be divided equally. [98]-[99] [121] [125]-[126] [166] [167]
In Re De Nicols [1900] 2 Ch 410, applied.
De Nicols v Curlier [1900] AC 21, considered.
Callwood v Callwood [1960] AC 659; Welch v Tennent [1891] AC 639, distinguished.
Neilson v Overseas Project Corporation of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331, referred to.
7 A contract with respect to land, as distinct from a conveyance, is generally governed by the proper law of the contract, provided that is permitted by the lex situs. In this case, the application of the Voth ‘clearly inappropriate forum’ test must take into account the fact that the contractual relationship between the parties finds its origin in Indonesian law. [124] [126] [166] [167]
Choice of law and equitable claims
8 There are a number of circumstances in which the governing law of a fiduciary relationship is not the lex fori. In this case, whether and if so what constructive or resulting trust inheres in the relationship must be influenced, if not determined, by Indonesian law. This is a relevant factor in the application of the ‘clearly inappropriate forum’ test. [131]-[133] [139] [166] [167]
Paramasivam v Flynn [1998] FCA 1711; (1998) 90 FCR 489; (1998) 160 ALR 203, applied.
Augustus v Permanent Trustee Co (Canberra) Ltd [1971] HCA 25; (1971) 124 CLR 245; (1971) 45 ALJR 365; Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] 1 Ch 105; England and Wales v R [2002] 2 NZLR 91; Lightning v Lightning Electrical Contractors Ltd [1998] EWHC Admin 431; Macmillan Inc v Bishopsgate Investment Trust Plc (No 3) [1995] 1 WLR 978; National Commercial Bank v Wimbourne (1978) 5 BPR 11, 958; Rickshaw Investments Ltd v Nicolai Baron von Uexkull [2006] SGCA 39; [2007] 3 LRC 223; Trustor AB v Smallbone [2000] EWCA Civ 150, considered.
9 An equitable claim based on contract should be determined by the proper law of the contractual relationship. [141]-[146] [166] [167]
British South Africa Company v De Beers Consolidated Mines Ltd [1910] 2 Ch 502; Deschamps v Miller [1908] 1 Ch 856; Talleyrand v Boulanger [1797] EngR 504; (1797) 3 Ves Jun 447; 30 ER 1099, referred to.
10 In determining a claim for an equitable interest under Australian law, courts will have regard to, and generally enforce, a relevant foreign element in the dispute. In this case, there is an implied marital contract which is governed by Indonesian law and encompasses immovables situated abroad. Nothing suggests that equity, acting on the conscience of the parties, would do anything other than enforce the expectations created under Indonesian law with respect to the property situated in New South Wales. [147]-[149] [166] [167]
Applying the Voth test
11 The fact that the Court would apply foreign law, or base its analysis to a substantial degree on foreign law, is significant in determining whether New South Wales is a ‘clearly inappropriate forum’ because of the difficulties and uncertainties in proving foreign law. Nevertheless, courts often have to apply foreign law. [150]-[151] [166] [167]
James Hardie Industries Pty Ltd v Grigor (1998) 45 NSWLR 20; Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265; Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491; Rickshaw Investments Ltd v Nicolai Baron von Uexkull [2006] SGCA 39; [2007] 3 LRC 223, considered.
12 In this case, on the expert evidence, there does not seem to be any dispute as to the relevant Indonesian law. The dispute is about identification of the marital property. That is a question of fact. The crucial matters turn on determining the dates and sources of funds for the acquisition and sale of the properties in New South Wales. These are questions of fact. New South Wales is an appropriate and convenient forum to identify the relevant facts. [154] [159]-[161] [163] [166] [167]
Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265, applied.
ORDERS
1 Appeal allowed.
2 Discharge the orders of Gzell J made on 14 December 2006.
3 Order the respondents to pay the appellant’s cost of the notice of motion and of the appeal.
IN THE SUPREME
COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 2006/268290
SPIGELMAN CJ
McCOLL JA
YOUNG JA
Monday 15 February 2010
Murakami v Wiryadi & Ors
Judgment
1 SPIGELMAN CJ: The appellant is the daughter of Takashi Murakami Suroso and has instituted proceedings in this Court as executor of his estate. She was granted probate of his will by this Court in November 2005. She and her brother, Takao Murakami, were the children of a de facto relationship. After the death of the appellant’s mother, her father married the first respondent. There are two children from that marriage. Her father died in 1996.
2 The deceased left a considerable estate which has spawned litigation, primarily in Indonesia, but also in the United States of America, Singapore and Australia. His assets and the assets of the marriage were spread across a number of jurisdictions. The litigation has been hard fought. The proceedings in this Court concern real estate located in New South Wales and certain bank accounts also located in Australia. The estate is clearly a substantial one and the real estate assets located in this State are themselves of substance.
3 The respondents, Mrs Wiryadi (“the first respondent”) and the two children of the marriage (“the second and third respondents”), sought and were granted a permanent stay of the proceedings in this Court. Briefly stated, the stay was granted on the basis that the issues sought to be agitated in this Court should be determined by the courts of Indonesia.
4 Justice Gzell made his orders in December 2006. Leave to appeal to this Court was granted in August 2007. The matter was not brought on for hearing in this Court for over two years. The principal reason for this delay was the institution by the appellant of proceedings in Singapore which sought to agitate the same issues. The Court was informed that the result of those proceedings was that the Singapore Court would assume jurisdiction over the claims to the bank accounts but not over the claims to the real estate. As I have noted, the real estate is entirely situated in New South Wales. The Court was informed by Mr M Meek SC, who appeared for the appellant that, if his client was successful in this Court, the claim for the bank account in Singapore would be dropped. No proceedings have yet been commenced in Indonesia.
5 The appellant is a resident of California in the United States of America. The first and third respondents are Indonesian citizens. The first respondent predominantly resides in Jakarta but visits Australia, where one of her children (the second respondent) is resident, from time to time. She entered an unconditional appearance.
6 The order originally sought on the part of the respondents was either an order permanently staying the present proceedings or an order staying the proceedings until such time as Indonesian litigation finally determined the issues raised in these proceedings. In the event, his Honour made the former order. In submissions to this Court, Mr A S Bell SC, who appeared for the respondents, indicated that his clients would be content with the substitution of the alternative order originally sought.
7 The dispute amongst the parties commenced in the context of divorce proceedings by the deceased against Mrs Wiryadi which, upon the order for divorce being granted and upheld in Indonesia, led to proceedings concerning property. In accordance with Indonesian law and practice, the deceased instituted proceedings for the division of common marital property, which proceedings required the identification of the property of each of the parties to the former marriage. This included assets in Indonesia, Singapore, Tokyo and the United States of America. Save for the identification of one of two bank accounts and one property in Australia (the Carson Street property), which were originally part of the Indonesian property proceedings, the existence of the Australian properties claimed in the New South Wales proceedings was not revealed in the Indonesian proceedings.
8 Following the deceased’s death, the appellant became the moving party in the various proceedings as the executor of the deceased estate.
9 Under Indonesian law children born in wedlock are entitled to inherit. However, children born out of wedlock, like the appellant and her brother, require what is known as ‘pengakuan sebagai anak sah’, or recognition, in order to receive an entitlement to inheritance. The deceased granted them such recognition. Accordingly, under the forced heirship rules applicable in Indonesia, each of the four children is entitled to a quarter of the deceased estate. The Indonesian courts have determined, subject to the appellate review processes available in that nation, that the property be distributed on the basis that each child is so entitled.
10 It will be necessary to refer further to the evidence and factual findings in the context of dealing with particular submissions made on the appeal. The issues in this case turn on the application to the facts of the well-established test for the grant of a stay of proceedings on the basis of what it is convenient to continue to refer to as forum non conveniens grounds, established by the High Court in Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538 and affirmed subsequently. (See, eg, Henry v Henry (1996) 185 CLR 571; Regie Nationale des Usines Renault v Zhang [2002] HCA 10; (2002) 210 CLR 491; BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400; Puttick v Tenon Ltd [2008] HCA 54; (2008) 238 CLR 265.)
The Pleadings
11 The appellant seeks orders relating to a number of real estate properties located in Sydney. The proceedings also relate to two identified bank accounts, the claim to one of which was abandoned in this Court, after it became clear that it had been the subject of consideration in the Indonesian proceedings. I will set out details of the ownership of the nine real estate properties below. The causes of action in this Court are, alternatively, for a constructive trust and for a resulting trust.
12 The claim for a constructive trust and consequential relief is based on an allegation that the first respondent had not disclosed the existence of the properties as common matrimonial property, a concept at the heart of Indonesian family law, in the course of the property proceedings conducted in the Indonesian courts following the divorce.
13 The pleading states:
“16 In the Property Proceedings, the deceased and the First Defendant each had an implied obligation to disclose to the Court, and to each other, honestly, fully, and accurately, all of the property acquired by him, her, or them, during the Marriage wherever that property was situated (‘the Common Property’).
Particulars
i The obligation is implied as a matter of law;
ii The obligation is implied by reference to uncodified custom and to give business efficacy to the type of proceedings; and/or
iii The obligation is implied as the failure to disclose the Common Property may have amounted to embezzlement under Article 372 of the Indonesian Criminal Code.
17 Alternatively, the deceased and the First Defendant each had an implied obligation to honestly assist, and to participate, in the processes of the Court in which the Property Proceedings were conducted, thereby enabling the Court to determine the Common Property.
Particulars
The obligation is implied as a matter of law and to permit the Court to act in accordance with the dictates of justice and the law.
18 On 14 February 1996, a decision of the Court of First Instance in the Property Proceedings was delivered, which Judgment was the subject of a review.
19 On about 23 February 2000, final judgment in respect of the Property Proceedings was given by Supreme Court of Indonesia (‘the Property Judgment’).
Particulars
Judgement of the Supreme Court of Indonesia
No 203/PK/Pdt/1999
20 By the Property Judgment, the Supreme Court of Indonesia determined, inter alia, that:
(a) the doctrine of Common Property applied to the property acquired by the First Defendant and the deceased during the Marriage;
(b) all property owned by the deceased and the First Defendant the Marriage, wherever situated, was Common Property of the Marriage;
(c) The Plaintiff, as the executrix of the Estate, was entitled to receive on behalf of the estate of the deceased, an equal one-half share of all of the Common Property of the Marriage, wherever that property was situated;
(d) the First Defendant was to deliver up to the Plaintiff, an equal one-half share in all of the Common Property of the Marriage in Singapore, Indonesia and in the United States of America;
(e) the First Defendant was to pay the Plaintiff’s costs of the proceedings.
20 There is no subsequent Judgment issued by the Indonesian Court that overrules the Property Judgment.”
14 The pleading goes on to make a number of assertions about Indonesian civil law, setting out the effect of the provisions of the Indonesian Civil Code and of the Indonesian Marriage Law. The effect of the pleading is that, upon a divorce, each of the deceased and the first respondent were entitled to equal shares of the common property and were so entitled irrespective of the part either played in the acquisition of the property.
15 The pleading goes on to say:
“31 As a further consequence of:
(a) the application of the Civil Code; and/or
(b) the Marriage Law
either party to the Marriage was entitled, at any time, subsequent to the Property Proceedings, to claim an interest in any Common Property, that had not previously been adjudicated upon, or dealt with by property settlement, or in the Property proceedings.”
16 The pleading indicates that the first respondent did not disclose in the Indonesian property proceedings the existence of the Australian real property or, alternatively, that the deceased did not know that the Australian property was part of the common property of the marriage.
17 With respect to each property the pleading asserts:
“As a consequence of the First Defendant’s non-disclosure, and/or the lack of knowledge of the deceased of them, the Australian real property ... was not adjudicated upon, or dealt with, by property settlement, or in the Property Proceedings.”
18 Although this assertion is also pleaded with respect to the Carson Street property, it appears that it is common ground that that is in error because the property was disclosed (but not proved) in the Indonesian property proceedings. Submissions were not expressly addressed to this difference.
19 With respect to each property the appellant asserts that each of the relevant properties is held on a constructive trust for her. The following particulars of this claim were given:
“Particulars
(a) As Common Property, the deceased and the First Defendant each had an interest in it during the Marriage, which interest crystallized on the Divorce.
(b) The deceased made a significant contribution to the acquisition of the Common Property, and thereby acted to his detriment.
(c) Alternatively to (a) and (b), the Marriage was a joint endeavour to which the deceased made financial and non-financial contributions.
(d) On Divorce, the joint endeavour failed.
(e) It would be unconscionable for the First Defendant to assert that she holds any Common Property not disclosed in the Property Proceedings, and/or not known by the deceased, free of any beneficial interest of the deceased.”
20 With respect to certain properties held in the name of the first respondent’s children (the second and third respondents) additional particulars are given on the basis of which it is submitted that, by reason of their knowledge or conduct, a resulting trust or a constructive trust arises. It is unnecessary to set out each of the particulars so provided.
21 Alternatively, there is a claim for a resulting trust. The pleadings state, in a form replicated with respect to each property:
“Further or in the alternative, the Australian real property ... was purchased by the First Defendant using the money of the deceased.
The deceased did not know that the First Defendant had used his money to purchase the Australian property ...
By reason of the matters pleaded ... the First Defendants ... hold the parcels of real estate ... on resulting trust for the Plaintiff.”
22 With respect to the bank accounts, one of which is still in issue, it is submitted that the deposited funds were accumulated during the marriage and, accordingly, were part of the common property of the marriage and that the existence of the funds held in those accounts was not disclosed in the property proceedings and the deceased did not know of the existence of the accounts.
23 The pleadings proceed as follows:
“120 As a consequence of the First Defendant’s non-disclosure, and/or the deceased’s lack of knowledge of them, the funds held by the First Defendant in the Australian Bank Accounts were not adjudicated upon, or dealt with, by property settlement, or in the Property Proceedings.
121 In the premises, the First Defendant is liable to account to the Plaintiff for such portion as the Court determines the funds held by the First Defendant in the Australian Bank accounts.
122 Further or in the alternative, by reason of the matters pleaded above, the First Defendant holds the Australian Bank Accounts on constructive trust for the Plaintiff.
Particulars
(a) As Common Property, the deceased and the First Defendant each had an interest in it during the Marriage, which interest crystallized on the termination of the marriage.
(b) The deceased made a significant contribution to the acquisition of the Common Property, and thereby acted to his detriment.
(c) Alternatively to (a) and (b), the Marriage was a joint endeavour to which, the deceased made financial and non-financial contributions;
(d) On Divorce, the joint endeavour failed;
(e) It would be unconscionable for the First Defendant to assert that she holds any Common Property not disclosed in the Property proceedings, and/or not known by the deceased, free of any beneficial interest of the deceased.”
24 The appellant asserts an entitlement to the whole or some portion of the real property and the bank accounts. The pleadings go on to assert:
“124 Further, or in the alternative, on the true construction of the Property Judgment, the Plaintiff, as the executrix of the Estate to whom Probate has been granted, is entitled to a one-half share of the Australian Common Property.
125 Further or in the alternative, the Non-disclosure, in each case, in the Property Proceedings, was made by the First Defendant:
(a) with the intent of deceiving the deceased the Plaintiff, and the Supreme Court of Indonesia, as to the true extent of the Common Property of the Marriage;
(b) alternatively, with reckless indifference to the rights of the deceased and the Plaintiff, with respect to the true extent of the Common Property of the Marriage;
(c) alternatively, negligently.
126 In the premises, it is unconscionable that the First Defendant and the Other defendants retain the full extent of the Australian Common Property as against the Plaintiff.
127 In the premises, the Plaintiff is entitled to such portion of the Australian Common Property as the Court determines.”
The Judgment of Gzell J
25 His Honour set out the background facts, summarised the proceedings and outlined the submissions made before him. His Honour summarised the law and identified the Voth “clearly inappropriate forum” test as applicable. At [41], he also referred to the judgment in CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 400-401 for the following proposition:
“ ... where different issues are involved in the foreign forum from those raised in the local forum, the question is not whether the Australian court is a clearly inappropriate forum but whether having regard to the controversy as a whole the Australian proceedings are vexatious or oppressive in the Voth sense ...”
26 His Honour also referred to the principle that beneficial title to land should be dealt with in the jurisdiction in which the land is situated, on the basis that a court has no jurisdiction to entertain an action concerning rights arising out of land situated in a foreign state. His Honour referred to British South Africa Company v Companhia de Moçambique [1893] AC 602; [1891-4] All ER Rep 640 and cases applying the principle. His Honour went on to say at [43]:
“There are exceptions to that principle and one must be where, as in the instant circumstances, the issues relate to in personam rights and obligations according to Indonesian law.”
27 His Honour proceeded to outline the considerations to which he had regard under the subheading “Application of principles”. In view of the submissions made in this Court, I set out his Honour’s reasoning in full:
“[44] It does not seem to me that legitimate personal or juridical advantage greatly favours the New South Wales court over the Indonesian courts. Interlocutory process is available in Indonesia and while subpoenas are not available, the court may order the attendance before it of witnesses and may order the production of documents. While the Indonesian system tends to create four levels of hearing the obvious litigiousness of the parties to these proceedings suggests that a decision at first instance in New South Wales is unlikely to be accepted as a final judgment.
[45] The connecting factors also do not favour New South Wales against Indonesia. Mrs Murakami is not resident in New South Wales and Mrs Wiryadi and Ryuzo Murakami do not live in Australia. The events the subject of complaint are just as much centred in Indonesia where the non-disclosure of the New South Wales assets is alleged to have occurred as in New South Wales where the assets were acquired.
[46] The law governing the issues is clearly that of Indonesia. That the foreign law governs the issues was regarded as an important factor in Voth. The cause of action was an alleged tort committed in Missouri subject to the law of Missouri and the professional standards of accountants in Missouri. (See, also Puttick v Fletcher Challenge Forests Ltd [2006] VSC 370, Amwano v Parberry (2005) 148 FCR 126, El-Kharouf v El-Kharouf [2004] NSWSC 187, Official Receiver of State of Israel v Raveh [2001] WASC 289, Pacific Petroleum Corp v Nauru Phosphate Corp [2002] QSC 389 and In the Marriage of Kemeny [1998] FamCA 34; (1998) 145 FLR 6).
[47] If matters are to be determined in the New South Wales court expert evidence will be required. If the issues are to be determined in the Indonesian courts there is no need for experts.
[48] Mrs Murakami’s trust claims are based upon a finding that the New South Wales properties are common marital property and non-disclosure to the Indonesian courts. They also involve questions whether property purchased in the name of another person is capable of being common marital property and whether property purchased in the name of someone else with money that was common marital property remains common marital property.
[49] In this case not only is the law of the issues the law of Indonesia, but also an implied obligation to the Indonesian courts is asserted based upon the possibility that embezzlement might be committed as a factor from which the implication is said to arise. The implication is also said to arise from uncodified Indonesian custom and Indonesian court business efficacy. An implied obligation to honestly assist and participate in the processes of the Indonesian courts to permit them to act in accordance with the dictates of justice and the law. It is alleged that in failing to disclose the New South Wales properties and the Australian bank accounts to the Indonesian Supreme Court, Mrs Wiryadi intended to deceive the court.
[50] These are matters peculiarly within the purview of the Indonesian courts. They are not matters easily proved by an expert as a matter of fact. They depend upon the way an Indonesian court would assess Indonesian custom, its own business efficacy and what it needs to act in accordance with the dictates of justice and the law. Whether an Indonesian court would regard the prospect of the commission of a criminal offence as giving rise to the implication of a duty is not proved simply by proving the law of embezzlement. These are matters beyond the establishment of a foreign law as a question of fact. Furthermore, it would be an invidious task for a New South Wales court to make findings as to the sufficiency of the Indonesian Supreme Court common marital property proceedings or the obligations that should be implied by that court in relation to its processes.
[51] To my mind these considerations far outweigh the need for New South Wales proceedings to enforce a judgment of the Indonesian courts or any limitations in Indonesian court procedure and the fact that proceedings in Indonesia have not been commenced. The lack of the concept of a trust under Indonesian law is also outweighed by these considerations. The Indonesian courts clearly have power to determine whether the New South Wales properties and the Australian bank accounts are common marital property and, if so, to order Mrs Wiryadi, Ryuji Murakami and Ryuzo Murakami to deliver up to Mrs Murakami such portion of those assets as the courts think fit. They also outweigh other countervailing matters such as the application being made well after an unqualified acceptance of the jurisdiction and after, no doubt, the incurrence of considerable costs. On the other hand defences have not yet been filed and the costs incurred thus far may be put to good effect in proceedings commenced in Indonesia.
[52] In my view, it is in the interests of the parties that a proper resolution of the issues be made in proceedings to be commenced in Indonesia. The lack of entitlement to subpoena documents can be overcome by the court placing conditions upon a stay such as that Mrs Wiryadi, Ryuji Murakami and Ryuzo Murakami will consent to the tender of documents obtained thus far in the New South Wales proceedings and that Mrs Murakami be released from her implied undertaking not to use documents for purposes other than the New South Wales proceedings.
[53] In my view, the connecting factors to Indonesia are such that, from an objective point of view, the continuation of the proceedings in New South Wales is vexatious or oppressive in the Voth sense.”
28 Justice Gzell went on to refer to the judgment of Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197, in which his Honour formulated the test ultimately adopted by the majority of the High Court in Voth, that a power to stay proceedings should be exercised only in a clear case (at 248). Justice Gzell indicated that, in his opinion, the present was such a “clear case”: at [55].
29 His Honour also said that a condition of the stay would be an undertaking on the part of the defendants before his Honour to consent to the tender in evidence in the Indonesian proceedings of documents obtained under subpoena or notice to produce in the New South Wales proceedings and a release from the implied undertaking not to use search documents for purposes other than the New South Wales proceedings. That undertaking was given and the order for a permanent stay made.
30 Subsequent to his Honour’s decision an application was made to him for leave to replead the statement of claim. Two matters were identified by his Honour in a supplementary judgment. (Murakami v Wiryadi (No 2), Supreme Court of New South Wales, Gzell J, 14 December 2006, unreported, ex tempore judgment.) The first concerned whether common property of the marriage could be held in the hands of a third party. The second was an issue arising as to the failure to disclose matters to the Indonesian courts.
31 His Honour rejected this application, in the course of which he said:
“[2] As I indicated in my reasons for judgment, the question whether or not a stay should be granted on forum non conveniens principles is, ultimately, a matter of impression in balancing competing factors.
[3] It does not seem to me that the impression upon which I based my reasons for judgment would be materially altered by a re-pleading of the above issues and it is for those reasons that I reject the application for leave to replead.”
The Nature of the Appeal
32 At first Mr Meek accepted the submission of Mr Bell that the appeal involved a discretionary judgment to which the approach in House v The King [1936] HCA 40; (1936) 55 CLR 499 applied. However, in the course of oral submissions, Mr Meek, in response to a suggestion from the bench that the position of his client would be advanced if a different approach, such as that identified in Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531, applied, did submit that House v The King did not apply. He did not go on to make any submissions as to why that would be the case or what difference it would make.
33 In my opinion, the application of the “clearly inappropriate forum” test raises a real issue in this respect. An appellate court is in as good a position as a trial judge to formulate the judgment for which the Voth test provides. The making of an order for a permanent stay can be said to involve the exercise of a discretion. (See, eg, Oceanic Sun Lines supra at 247-248; Garsec Pty Ltd v His Majesty the Sultan of Brunei [2008] NSWCA 211; (2008) 250 ALR 682 at [93]- [94]; Bank of America v Bank of New York [1995] HCA 4; [1995] ATPR 40,334 (41-390) at 40,336; McGregor v Potts [2005] NSWSC 1098; (2005) 68 NSWLR 109 at [35].) However, the word ‘discretion’ is often adopted in circumstances where the word ‘judgment’ would be more appropriate.
34 It is not necessary in every case that requires a process of balancing conflicting considerations to conclude that what is involved is a discretion in the House v The King sense. (See, eg, Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41; 14 BPR 26,639 at [35] and the authorities referred to therein; New South Wales Crime Commission v Vu [2009] NSWCA 349 at [7] and the authorities referred to therein; Director of Public Prosecutions v El Mawas [2006] NSWCA 154; (2006) 66 NSWLR 93 at [64]- [70]; Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; (2008) 234 CLR 124 at [37]- [40].)
35 Nevertheless, in the present circumstances, notwithstanding Mr Meek’s oral submission, in the absence of any elaboration as to why House v The King should not apply, this Court should apply that approach.
Was the Voth Test Applied?
36 The most recent restatement of the Voth test is in the majority joint judgment of French CJ, Gummow, Hayne and Kiefel JJ in Puttick supra, where the High Court unanimously reaffirmed the Voth test as the applicable test in Australia. Their Honours said at [27]:
“In Voth v Manildra Flour Mills Pty Ltd, the Court held that a defendant will ordinarily be entitled to a permanent stay of proceedings instituted against it and regularly served upon it within the jurisdiction, if the defendant persuades the local court that, having regard to the circumstances of the particular case, and the availability of an alternative foreign forum to whose jurisdiction the defendant is amenable, the local court is a clearly inappropriate forum for determination of the dispute. The reasons of the plurality in Voth pointed out [at p 565] that the focus must be ‘upon the inappropriateness of the local court and not the appropriateness or comparative appropriateness of the suggested foreign forum’.”
37 The first challenge by the appellant to the decision of Gzell J is that his Honour applied the wrong test. Specifically the appellant submitted that his Honour failed to focus upon the “inappropriateness” of the New South Wales courts, and instead focused upon a comparison, submitted to be impermissible, between the New South Wales proceedings and hypothetical proceedings in Indonesia. In substance this submission was to the effect that his Honour engaged in a task of ‘comparative appropriateness’, which is inconsistent with the Voth test and is, in substance, the rejected test of Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460.
38 In the context of making this submission the appellant drew attention to his Honour’s reliance upon the passage in CSR Ltd v Cigna Insurance, which I have set out at [25] above, that in a context where different issues are involved in the foreign and the local forums, the question is not whether the Australian court is a “clearly inappropriate forum”, but whether the Australian proceedings are vexatious or oppressive in the Voth sense, “having regard to the controversy as a whole”.
39 As noted in CSR Ltd v Cigna Insurance supra at 401, the test of vexation or oppression adopted in Voth is based on the formulation proposed by Deane J in Oceanic Sun Line supra at 247, to the effect that the local proceedings are “productive of serious and unjustified trouble and harassment” or “seriously and unfairly burdensome, prejudicial or damaging”.
40 The appellant submitted that Gzell J erred in adopting this “modified test” because it was only applicable where there were proceedings on foot in the foreign forum at the time of the stay application and, accordingly, an overall assessment of both proceedings was possible and justified.
41 In CSR Ltd v Cigna Insurance a critical issue was the fact that proceedings had been instituted in the United States of America for treble damages under the Sherman Act, which cause of action could not be pursued in New South Wales. The New South Wales proceedings had been instituted, the Court held, for the purpose of preventing the continuation of the United States proceedings.
42 The appellant submitted that the analysis of Gzell J clearly indicated that he was applying the CSR Ltd v Cigna Insurance test in circumstances to which it was inapplicable by reason of the hypothetical nature of the proceedings in Indonesia. Accordingly, his Honour erred in determining that Indonesia was the more appropriate forum, rather than asking whether New South Wales was a clearly inappropriate forum.
43 In written submissions, Mr Bell submitted that CSR Ltd v Cigna Insurance was not authority for the existence of a “modified test”. He submitted that the test for a stay of proceedings was the same whether or not the foreign proceedings were simultaneously on foot. It was, accordingly, appropriate for Gzell J to assess the inappropriateness of New South Wales as a forum in light of the entirety of the controversy between the parties.
44 The reasoning of Gzell J concludes, set out at [27] above, with a statement that continuation of the proceedings in New South Wales would be “vexatious or oppressive in the Voth sense” (at [53]). However, when one looks at his Honour’s analysis leading up to that conclusion it is difficult to discern any difference that would exist if his Honour was applying the Spiliada ‘more appropriate forum’ test, rather than the Voth ‘clearly inappropriate forum’ test. It appears to me that his Honour expressly followed CSR Ltd v Cigna Insurance, which he had quoted at [41], set out at [25] above, and determined that the ‘clearly inappropriate forum’ test did not apply. That is why it is not mentioned at [53] of his judgment where he expressed his conclusion.
45 I am reinforced in this analysis by the critical words in his Honour’s respective steps in the reasoning leading to the conclusion at [53] which are (emphasis added):
“It does not seem to me that legitimate personal or juridical advantage greatly favours the New South Wales Court over the Indonesian courts”: at [44].
“The connecting factors also do not favour New South Wales against Indonesia”: at [45].
“[T]hese considerations far outweigh the need for New South Wales proceedings to enforce a judgment of the Indonesian courts or any limitation in Indonesian court procedures and the fact that proceedings in Indonesia have not yet commenced”: at [51].
“The lack of the concept of a trust under Indonesian law is also outweighed by these considerations”: at [51].
“They also outweigh other countervailing matters such as the application being made well after an unqualified acceptance of the jurisdiction and after, no doubt, the incurrence of considerable cost”: at [51].
46 To similar effect was his Honour’s supplemental observation in a judgment of 14 December 2006 set out at [31] above:
“[T]he question whether or not a stay should be granted on forum non conveniens principles is, ultimately, a matter of impression in balancing competing factors”: at [2].
47 It appears that his Honour did not in fact apply the Voth “clearly inappropriate forum” test. This appears to have been based on his Honour’s application of the proposition in CSR Ltd v Cigna Insurance that, in certain circumstances, that test did not apply.
48 The critical difficulty with his Honour’s approach in this respect is that his Honour does not identify why it is that the CSR Ltd v Cigna Insurance test was applicable. Specifically he does not identify any issue that could arise in the hypothetical Indonesian proceedings which is of the same character as that identified in CSR Ltd v Cigna Insurance, namely a cause of action which is incapable of being agitated in a New South Wales court.
49 This difficulty arises, as the appellant submitted, because the Indonesian proceedings are entirely hypothetical. Furthermore, the expert evidence adduced in this case does not identify what those proceedings would be.
50 The evidence concerning Indonesian law is contained in a series of affidavits by Professor Timothy Lindsey, who is probably Australia’s foremost expert on the Indonesian legal system and Indonesian law. The thrust of his evidence is that the issues sought to be agitated in the New South Wales proceedings are capable of being agitated in Indonesia. He does not suggest that any Indonesian proceedings are contemplated which would raise different issues. There is no evidence that the issues in the hypothetical Indonesian proceedings would be distinctively different from the issues sought to be agitated in New South Wales.
51 It is pertinent to note that a focus on the local forum does not involve setting aside the factors relevant to the suitability of the foreign forum. As the joint judgment put it in Voth supra at 558:
“ ... The question which the [clearly inappropriate] test presents is slightly different in that it focuses on the advantages and disadvantages arising from a continuation of proceedings in the selected forum rather than on the need to make a comparative judgment between the two forums. That is not to deny that considerations relating to the suitability of the alternative forum are relevant to the examination of the appropriateness or inappropriateness of the selected forum.”
52 The joint judgment went on to note at 564-565, that the observations of Lord Goff in Spiliada supra at 477-478 and 482-484 about relevant “connecting factors” and “legitimate personal or juridical advantage”, can provide “valuable assistance” in the application of the clearly inappropriate forum test. This is the approach which the High Court adopted when it came to apply the test in Voth itself (at 569-571). (See the analysis by Brereton J in McGregor v Potts supra at [49]-[50].)
53 Accordingly, whilst it is permissible to have regard to the “connecting factors” identified by Lord Goff, and also to have regard to the suitability of the alternative forum, the need to establish that the local forum is not only “inappropriate” but “clearly” so indicates that something more than merely balancing relevant considerations is required.
54 It does not appear from Justice Gzell’s analysis that his Honour approached the matter in this way, because he regarded himself as applying a different test on the authority of CSR Ltd v Cigna Insurance. In my opinion, his Honour was in error in failing to apply the clearly inappropriate forum test. This constitutes an error in the exercise of discretion within House v The King.
55 In view of this conclusion it is not necessary to consider the other bases upon which the appellant contended that his Honour erred for the purposes of applying House v The King. There was no suggestion in the submissions to this Court that the matter should be remitted. It is necessary for this Court to re-exercise the discretion.
The Foreign Law Issue
56 The appellant contended that Gzell J erred in law by proceeding on the basis that the proceedings were governed by Indonesian law. Although in view of my conclusion with respect to the first basis of the appeal it is not necessary to deal with this matter for House v The King purposes, it is appropriate to deal with the issues raised in this respect in order to put the Court in a position to determine the orders it should make. If, contrary to Justice Gzell’s conclusion, the proceedings are governed by Australian law, it is unlikely that the Court would conclude that New South Wales is a clearly inappropriate forum.
57 His Honour made a number of statements indicating that what he described as the “issues” and “matters” in the proceedings were governed by Indonesian law. The statements included:
“[T]he issues relate to in personam rights and obligations according to Indonesian law”: at [43].
“The law governing the issues is clearly that of Indonesia”: at [46].
“If matters are to be determined in the New South Wales court expert evidence would be required. If the issues are to be determined in the Indonesian courts there is no need for experts”: at [47].
“[Not] only is the law of the issues the law of Indonesia, but also an implied obligation to the Indonesian courts is asserted ...”: at [49].
“These are matters peculiarly within the purview of the Indonesian courts. They are not matters easily proved by an expert as a matter of fact”: at [50].
58 The judgment of Gzell J does not elaborate about why his Honour came to the conclusion that the law governing the “issues” and “matters” was that of Indonesia.
59 The submissions in this court raise two choice of law questions which, it appears to me, were not the basis of his Honour’s conclusions. These questions are:
(i) whether New South Wales law applies to immovable property situated in New South Wales or whether Indonesian law applies on the basis that it is the law of the matrimonial domicile; and
(ii) whether, if the law of the matrimonial domicile would otherwise apply, it is displaced by the fact that equitable claims for a constructive or resulting trust are sought in the proceedings.
60 Justice Gzell did not expressly consider these issues. The written submissions made to his Honour were not supplied to this Court. The Court was, however, informed that the respondents submitted that the law of the matrimonial domicile should be the governing law. It appears, however, that Gzell J did not have detailed submissions of the kind presented to this Court.
61 The focus of the submissions before Gzell J was the content of the pleading. It appears that what his Honour had in mind in the statements set out at [57] above was the centrality to the appellant’s pleaded case of certain propositions concerning Indonesian law and practice.
62 In written submissions to this Court the respondents sought to uphold this approach. Mr Bell submitted that the “central and informing allegation” in the amended statement of claim was that the land in New South Wales was “common property” within the meaning of Indonesian law. He submitted it is only by virtue of the appellant’s appointment as executor of her father’s estate that she is entitled to claim an interest in his property. The respondents also identified a number of other matters in the pleadings which turn on Indonesian legal questions. The complete, albeit overlapping, list of “Indonesian law or Indonesian related questions” relied on by Mr Bell was:
“The proper construction of the Indonesian Property Judgment (See FASOC paras 19 and 124)
Whether any of the properties the subject of the FASOC were Common Property within the meaning of the Indonesian Civil Code and Indonesian Marriage Law as at: the time of the Indonesian Property Proceedings?
Whether foreign property registered in the name of a person other than a party to the marriage can be Common Property for Indonesian law purposes”? (See paras 41, 49, 77 of FASOC, noting that the properties referred to are and or were registered as being owned by persons other than Mrs Wiryadi)
Whether (foreign) properties acquired after the property proceedings can constitute Common Property for Indonesian law purposes? (See paras 92 and 102 of the FASOC, noting that the properties in question were acquired well after the initial property proceedings were commenced)
Whether as a matter of fact the alleged sale proceeds of properties sold prior to the Indonesian property proceedings were in fact not disclosed in the Indonesian property proceedings? (See paras 61-68, 69-76 of the FASOC)
There may also be Indonesian law issues about whether or not property which at one time was Common Property is gifted (if that is what has occurred in some cases) and whether or not it thereupon loses its character as Common Property.
What obligations are owed, if any, by parties before Indonesian courts in property proceedings to disclose the existence of common property or is this the obligation of the civilian courts in their investigatory role? (See paras 16 and 17 of the FASOC)
By reference to which Indonesian law or laws are such obligations of disclosure said to be implied, and what is the extent and scope of the (implied) obligations? (See paras 16 and 17 of the FASOC)
By reference to what uncodified customs of Indonesian courts and or lawyers are such obligations said to be implied and what is the extent and scope of the (implied) obligations? (See para 16 of the FASOC)
Whether the disclosure obligations alleged by the plaintiff are implied from Article 372 of the Indonesian Criminal Code? (See para 16 of the FASOC)
Whether or not there was a breach of that Code?
Whether there was non-disclosure to the Indonesian Supreme Court? (See para 125 of the FASOC)
Whether the Indonesian Supreme Court was in fact mislead? (See para 125 of the FASOC and compare US Supreme Court decision in Sinochem)
The effect of Indonesian forced heirship laws on a written will (see para 11 of the FASOC).”
(Note: ‘FASOC’ refers to the Further Amended Statement of Claim.)
63 The applicability of Indonesian law is a factor which must be considered in determining whether Australia is a clearly inappropriate forum. The Voth test will apply differently if the substantive law to be applied is that of New South Wales, rather than that of Indonesia. Accordingly, the choice of law issues must be addressed.
64 It is not, in my opinion, necessary to finally resolve the two choice of law issues referred to at [59] above. However, the strength of the respective submissions in this regard is relevant to the application of the Voth test. The appellant’s submission that all it needs to show is an arguable case on either question understates the position.
65 As I will discuss below, the position in Australian law on the two questions is not entirely clear. It is not, in my opinion, appropriate to resolve such questions in the course of an application for a stay on forum non conveniens grounds. Such an application is interlocutory and should be determined in a comparatively expeditious manner. There may be cases where it is possible to resolve choice of law issues in that way. This is not such a case.
66 Furthermore, it is not appropriate to definitively resolve a complex choice of law question when the legal issues to be determined have not been identified. This application is based solely on the statement of claim. No defence has been filed. The identification of possible legal issues has been made solely on the basis of the respondents’ expert evidence about Indonesian law. This evidence is given at a level of abstraction which does not identify any specific legal issues which will arise.
67 As Millett J (as his Lordship then was) said in Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1995] 1 WLR 978 at 988:
“In order to ascertain the applicable law under English conflict of laws, it is not sufficient to characterise the nature of the claim: it is necessary to identify the question in issue.”
68 This approach was approved on appeal. (See Macmillan Inc v Bishopsgate Investment Trust Plc (No 3) [1996] 1 WLR 387 at 399C, 407B-C, 418A-B.) Lord Justice Aldous added the following to Justice Millett’s observations at 418:
“Any claim ... may involve a number of issues which may have to be decided according to different systems of law. Thus it is necessary for the court to look at each issue and to decide the appropriate law to apply to the resolution of that dispute.”
(See also at 407, per Auld LJ.)
69 Furthermore as Staughton LJ said in Macmillan [1996] supra at 399:
“[T]he rules of conflict of laws must be directed at the particular issue of law which is in dispute, rather than at the cause of action on which the plaintiff relies. We should translate lex causae as the law applicable to the issue, rather than the suit.”
(See also Raiffeisen Zentralbank Osterreich AG v Five Star General Trading LLC [2001] 2 WLR 1344; [2001] EWCA Civ 68 at [26]- [29] per Mance LJ (as he then was).)
70 In my opinion, it is not possible to undertake the requisite detailed analysis in the present proceedings. This arises in part because of the factual background of the various properties identified in the statement of claim and in part because of the identification in the expert evidence about the scope of relevant Indonesian law.
Factual Background
71 The pleadings are primarily concerned with real estate property in Sydney. One bank account at the Westpac Bank is also involved in the proceedings. I will treat the latter separately below. It is appropriate to focus upon the position of the real estate.
72 Based on the pleadings, the real estate in issue can be allocated to several distinct categories as follows:
(i) Three apartments at Hampden Road were acquired in 1980 and 1983 in the name of the first respondent and remain in her name.
(ii) Two properties at Sloane Street and Rokeby Road were acquired in 1981 and 1983 in the name of the first respondent but were transferred in 1990 and 1991 for consideration to third parties.
(iii) A property at Carson Street was acquired in 1991 in the names of the first and second respondents, but with funds provided by the first respondent. The interest of the first respondent was transferred in 1994 so the property was thereafter in the names of the second and third respondents. It does not appear whether this transfer occurred before or after the formal divorce of 30 July 1994, but it was clearly after the first judgment, subsequently upheld, granting the deceased’s application for divorce in December 1992.
(iv) A property in Barra Brui Crescent was acquired in 1992 in the name of the first respondent’s brother and sister with funds supplied by the first respondent. It was transferred later in that year to the first respondent and was subsequently transferred to an independent third party in 1996.
(v) A property in Fitzroy Avenue was acquired in 1997 in the name of the first respondent and remains in her name.
(vi) A property in Help Street was acquired in 2001 in the name of the second respondent with funds provided by the first respondent.
73 The above categorisation reveals that:
The three properties at Hampden Road were acquired during the marriage and remain the property of the first respondent and, accordingly, are able to be categorised as common marital property for purposes of the Indonesian property proceedings.
The Carson Street property was acquired during the marriage. At least the part originally held by the first respondent is capable of constituting common marital property.
The two properties at Sloane Street and Rokeby Road were acquired during the marriage but transferred for consideration to independent third parties prior to the Indonesian property proceedings. Accordingly, the issue is a claim on the proceeds of sale of those properties.
The property at Barra Brui Crescent was acquired during the marriage by the first respondent and sold to independent third parties after the dissolution of their marriage. Again the issue is a claim on the proceeds of sale.
The property at Fitzroy Avenue was acquired after the dissolution of the marriage by the first respondent and, accordingly, was never part of the common marital property.
The property at Help Street was acquired by the second respondent with funds provided by the first respondent after the dissolution of the marriage and, accordingly, was never part of the common marital property.
74 In the case of the properties that had been sold, Mr Meek informed the Court that the appellant sought orders that the first respondent account for the proceeds of sale and to the extent that the proceeds can be traced into other property, his client would seek orders with respect to that property.
75 It is pertinent to repeat that, insofar as the claims turn on the existence of common marital property in accordance with Indonesian law, the first respondent would be entitled to 50 percent of such property and the appellant, representing the estate, would be entitled to the other 50 percent. Furthermore, in accordance with the decision of the Indonesian courts to which I have referred, each of the second and third respondents have a one quarter interest in the estate. However, as appears from the scope and intensity of the disputation between the parties, the distribution of the estate is unlikely to be imminent.
76 With respect to the one quarter interest of each of the second and third respondents in the estate, it is possible that equitable relief could be fashioned in some manner to acknowledge the interests of the second and third respondents. No doubt that would depend on the then current state of all the multifarious proceedings in which these parties are engaged in numerous jurisdictions. Orders may also need to take into account any success the appellant may have with respect to the resulting trust claims in relation to the real estate interests held in the second and third respondents’ names.
The Relevant Indonesian Law
77 As I have indicated above the expert evidence called by the respondent was given by Professor Timothy Lindsey, a Professor of Asian Law at the University of Melbourne. A considerable part of that evidence was directed to explaining the Indonesian legal system and the proceedings in Indonesia. These are not matters that directly impinge on the choice of law questions. There are, however, some matters which do affect the issue of choice of law.
78 Of particular significance is the absence of evidence indicating what Indonesian law is in a number of respects. An Australian court would, in the absence of circumstances such as those considered in Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492, act on the basis that Indonesian law was the same as Australian law. (Cf the discussion on this principle by A Gray, “Choice of Law: The Presumption in the Proof of Foreign Law” (2008) 31 University of New South Wales Law Journal 136.)
79 Professor Lindsey outlines the system of common matrimonial property or harta gono-gini. Under that system, absent a prenuptial agreement (there is none here), property acquired during the marriage is divided equally between the divorced husband and wife, irrespective of whether one party had earned more than the other party. However, assets held by either husband or wife prior to the marriage are not included in the harta gono-gini. None of the Australian properties are within this exception.
80 The parties to the present proceedings have engaged in a considerable amount of overlapping litigation focussed on determining the deceased’s share of the harta gono-gini. Professor Lindsey describes this disputation as “extremely confused”. There have been numerous proceedings in Indonesia, indeed some 30 separate proceedings, with respect to what does and does not constitute the deceased’s share of the common matrimonial property.
81 Professor Lindsey gave evidence to the effect that further harta gono-gini proceedings in Indonesia are possible in relation to assets of a marriage not dealt with in previous proceedings. He also gave evidence that Indonesian courts would make orders with respect to property situated outside Indonesia.
82 The property proceedings in Indonesia culminated in the Supreme Court Review Decision No 203 (“Judgment No 203”) which is, in accordance with Indonesian civil procedure, the equivalent of a final decision not subject to further appeal or review. That decision identified a number of assets, particularly, Indonesian properties and a property in Tokyo, as matrimonial property and made orders dividing the property and/or the proceeds of sale of such properties.
83 Professor Lindsey reviewed the decision and gave evidence to the effect that none of the properties mentioned in the proceedings in New South Wales were the subject of determination in Judgment No 203. One such property had been mentioned in these proceedings. Professor Lindsey gave evidence about the refusal of the Indonesian District Court to make a decision about the Carson Street property on the basis of a failure of proof. He translated the order made by that Court with respect to the Carson Street property as meaning “to put aside” the claim. He explained that this occurred because the Court considered that the claim was “not proven with ‘sufficient’ or ‘complete’ evidence”. Professor Lindsey suggested that the status of the Carson Street property in Indonesian law was uncertain because:
“it is not clear whether the Indonesian words translated in the English language versions of the judgments as ‘put aside’, together with their surrounding text, should be interpreted to mean the court has dealt with this issue in judgment 203 or not. If it has, then the issue cannot be reopened because of the final and binding nature of a PK [Peninjauan Kembali]. If it has not, then presumably new proceedings could be brought pursuant to Indonesian law.”
Note: ‘PK’ refers to the final review decision in the Indonesian Court system.
84 At the time he gave this evidence he had not seen the Indonesian version of the judgment. When he did see it, he gave evidence that “to put aside” meant either “to ignore” or “to dismiss”. He did not, however, resolve the issue he left open in his previous affidavit, that is whether it was even possible to raise the Carson Street property in further proceedings. On his evidence, however, all the other properties could be considered in Indonesia.
85 It is of particular significance that there is no suggestion in the expert evidence or otherwise, that any particular difficulty arises with respect to the application of Indonesian law to the circumstances of this case. It appears clear that the three properties at Hampden Road and that part of the Carson Street property originally held in the name of the first respondent constituted common marital property. There is no suggestion that there is any difficulty in concluding, if it is established that they were acquired at the time identified, that the property would be held equally.
86 With respect to that part of the Carson Street property originally held in the name of the second respondent, there is no evidence as to how that would be treated in Indonesian law. Similarly, there is no evidence as to the effect in Indonesian law of the transfer at or about the dissolution of marriage of the first respondent’s interest in that property.
87 With respect to the two properties at Sloane Street and Rokeby Road, sold prior to the dissolution of the marriage, the issue, as I have noted, is a claim on the proceeds of sale. There is no suggestion that those proceeds would not have been the common marital property.
88 With respect to the property at Barra Brui Crescent, the property was sold after the dissolution of the marriage. It appears that a right to claim the real estate as common marital property was available. There is no evidence as to how Indonesian law would deal with the proceeds of sale after dissolution.
89 The properties in Fitzroy Avenue and Help Street were acquired after the dissolution of the marriage. They were never capable of constituting common marital property. The issue may be whether they were acquired with funds not disclosed in the previous property proceedings culminating in Judgment No 203. There is no evidence that any legal complication in Indonesian law arises.
90 This review of the evidence of the applicability of Indonesian law to the facts of this case suggest that the issues with respect to the constructive trust claim are primarily, if not exclusively, issues of fact and not issues of law. A critically relevant question, as shown by the inability to dispose of the Carson Street property in Judgment No 203, is establishing when property was acquired.
91 On the evidence in this case, there is only one relevant conflict between the law of Indonesia and that of Australia. In Indonesia, property acquired during the marriage becomes common matrimonial property irrespective of who provided the funds to acquire it. That is clearly accepted as the basis of the appellant’s constructive trust claim. However, this is not consistent with the appellant’s alternative resulting trust claim, which turns on the proposition that the deceased had supplied the funds.
92 There is a suggestion in the judgment in the Singapore proceedings that the first respondent will assert that, under Indonesian law, she is entitled to some properties as gifts. (See Murakami Takako v Wiryadi Louise Maria [2008] SGCA 44 at [30].) Presumably, this involves something in the nature of a presumption of advancement to rebut a resulting trust claim. However, no such claim has been advanced in these proceedings and there is no evidence that Indonesian law, if it applies, is in dispute or raises any issue that may be difficult to resolve.
Choice of Law and Real Property
93 With respect to the real property situated in New South Wales, over which claims have been made in these proceedings, the lex situs must be referred to in the first instance, if only to determine whether any special rules apply to dealings with the property in a manner relevant to the claims raised in the proceedings. Real property has always been treated specially in the conflict of laws because it is essential to acknowledge the capacity of the lex situs to render futile any conflicting law with respect to title to such property.
94 Subject to any mandatory law of the lex situs, a court of the situs will, in an appropriate case, apply a choice of law rule which determines that an issue in dispute will be governed by the law of another jurisdiction. (See, eg, In re Ross: Ross v Waterfield [1930] 1 Ch 377 esp at 396, 403; In re Duke of Wellington: Glentanar v Wellington [1947] Ch 506 at 513-514.) The validity of this approach is reinforced by the adoption of the “no advantage” principle with respect to choice of law in tort by the High Court in Neilson v Overseas Project Corporation of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331 esp at [89]-[91], [176], [271]. (See also Amaca Pty Ltd v Frost [2006] NSWCA 173; (2006) 67 NSWLR 635 at [93]- [100].)
95 In the present case the choice is between New South Wales as the lex situs and Indonesia as the law of the matrimonial domicile. The evidence on Indonesian law is clear and uncontradicted. Professor Lindsey testified that the Indonesian principle of common marital property, or harta gono-gini, operates upon all property acquired during a marriage. Assets held by either husband or wife prior to a marriage are not included in the common marital property. Subject to any prenuptial agreement, common marital property will be divided equally upon divorce. Where, subsequently to separation, one spouse dies, his or her estate includes both his or her personal estate and his or her share of the harta gono-gini. Professor Lindsey also noted that the harta gono-gini system is “relatively well known in Indonesia”.
96 It is relevant to note that, because the parties to the marriage are not Muslim, their affairs are subject to determination in accordance with the Civil Code in Indonesia, rather than under sharia law. The critical Code provisions, set out by Professor Lindsay are:
“Article 232 (First Book – Tenth Chapter – Third Section)
Civil Code:
If the divorced spouses were married on the basis that there would be a joint matrimonial property between them, the division of assets will take place pursuant to, and in the manner stipulated in, the Sixth Chapter.
Article 128 (First Book - Sixth Chapter – Third Section)
Civil Code:
Following the dissolution of a marriage, the joint matrimonial property shall be divided into equal parts between the husband and wife, or each of their heirs, without taking into consideration from which party the goods originated. The rules stipulated in the Seventeenth Chapter of the Second Book concerning separation of estate shall be applicable to the division of joint matrimonial property based on law.”
97 It is clear from the whole of the proceedings, especially Judgment No 203, that these sections of the Code applied to the marriage underlying these proceedings. Accordingly, the deceased and the first respondent were married on the basis identified in Article 232, with the effect specified in Article 128.
98 The present situation appears to me to be indistinguishable from that considered by the House of Lords in De Nicols v Curlier [1900] AC 21. In that case, as in this, a husband and wife had not, as the law of the matrimonial domicile permitted, entered into a prenuptial contract modifying the rules applicable under the Civil Code. The French marriage law of community of goods was held to apply, notwithstanding the subsequent change of domicile of the couple to England, where no such principle applied.
99 The French community of goods law is jurisprudentially equivalent to the harta gono-gini system under Indonesian law. Each party to the marriage has an equal right to the assets acquired during the marriage. Under the French and Indonesian law, the parties are entitled to determine that these provisions do not apply to their marriage.
100 In De Nicols the House of Lords restored the order at first instance of Kekewich J, who had been overturned in the Court of Appeal. (De Nichols v Curlier [1898] 1 Ch 403.) This phase of the proceedings was concerned with the moveable property acquired during the marriage.
101 Pursuant to the French law in force at the time of De Nicols the parties to a marriage had a choice as to how matrimonial property could be treated. They could opt out of the ‘community of goods’ rule, which was the default position in the absence of an express election to the contrary.
102 At first instance, Kekewich J held at 411:
“ ... [T]he parties did for all proprietary purposes enter into a contract although not expressed.”
103 In the House of Lords the relevant principle was variously expressed in the respective judgments:
Lord Chancellor Halsbury referred to a “contract which the law created between” the parties to the marriage (at 26) and went on to say that French law conferred “not only an implied but an actual binding partnership proprietary relation fixed by the law” (at 29).
Lord Macnaghten referred to “a valid compact between spouses as to their property, whether it be constituted by the law of the land or by convention between the parties” (at 33) and characterised the effective French marriage law as “equivalent ... to an express contract” (at 33). His Lordship concluded by stating that effect of French law in the present case “was to all intents and purposes ... equivalent to a written contract” (at 36), having just referred to characterising another case in terms of “an implied contract” (at 36).
Lord Shand concluded that the parties to the marriage “were ... substantially and for all legal purposes in the same position as if they had made their contract in writing” (at 37).
Lord Brampton said the system of community of goods operated by “mutual assent” (at 41) and added: “... they were married ...” under French law and “... upon the faith and under the belief that its provisions would regulate the property of both” (at 41). He went on to say, at 44:
“In every civilised country marriage is treated as a contract of grave importance ... It involves incidentally an agreement that the spouses will mutually respect and fulfil those marital rights and obligations which are imposed upon them by that law, as incidents inseparable from their matrimonial union ... once established, the system becomes a regulation or settlement of their choice, and the expression of their mutual intention to be bound by its provisions, creating mutual legal rights and obligations binding upon each, throughout their married lives.”
He concluded at 45:
“In these voluntary and mutual intentions and acts are to be found all the essential elements of a legal contract, rendered so complete and obligatory by the law of France that nothing could in that country annul or give it greater force.”
104 As I have indicated this phase of the proceedings in De Nicols was concerned with moveable property. Subsequently Kekewich J came to deal with the immovable property of the marriage. (In Re De Nicols [1900] 2 Ch 410.) Referring to the House of Lords decision with respect to moveable property, Kekewich J said at 413:
“Albeit so restricted, the decision proceeded on the broad principle that a contract operating by force of law in the absence of expression by the parties is as complete and as obligatory as a contract expressed, and must have effect given to it on the same footing.”
105 His Honour went on to say, at 414, that the issue before him was whether “in enforcing the contract” immovable property would be treated in the same way as moveable property. The first question was whether or not the real estate was “within the scope of the contract” found to exist on the evidence in the previous proceedings. He held, on the evidence, that immovable property situated abroad was within the provision in the Code.
106 Justice Kekewich then considered the issue of the application of the lex situs and said, at 416:
“According to the decision of the House of Lords, there is here a special nuptial contract between the parties ascertained by reference to the Code, but not less precisely ascertained because it was not reduced into writing in connection with the particular marriage. It ought, therefore ... to be carried into effect everywhere, but under the limitations and exceptions belonging to all other classes of contracts, one of which is, that as regards immovables, the lex rei sitae must prevail. There is nothing in the common law of England to make the contract, which we have already seen to be definite, unenforceable respecting the freeholds and leaseholds in question, and if there be any obstacle, it must be found in some statutory provision.”
107 He went on to hold that there was no such provision. Similarly, no inhibition arising under the law of New South Wales has been suggested to exist in the present proceedings.
108 Justice Kekewich concluded at 418:
“It is established here by evidence that land acquired by either of the two parties to the contract would by force of the contract be held by him or her on certain terms described briefly by the phrase, community of goods.”
109 Justice Kekewich was correct to proceed on the basis that the House of Lords held that, in accordance with French law, there was an implied contract with respect to the distribution of property of the marriage. He held that property included both moveables and immovables.
110 It has been suggested that the “implied contract” approach of De Nicols is both “impracticable and contrary to principle”. (Collins et al, Dicey, Morris & Collins: The Conflict of Laws, 14th ed (2006) Vol 2, Thomson, at [28-023].) The learned authors accordingly doubt whether the principle that the law of the matrimonial domicile determines the rights to moveable property also applies to immovable property. They doubt the practicability and the appropriateness of an implied contract approach.
111 There is a hint of an academic turf battle in this analysis – conflicts scholars resenting the intrusion of contracts scholars. In the latter context such issues would usually arise when asking whether there was an intention to enter contractual relations. In my opinion, in contemporary circumstance it is no longer appropriate to act on any presumption that there is no such intention in the context of a marriage. (Cf Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 esp at [24]-[28] with respect to a similar presumption in the context of employment of clergy.)
112 Statutory regimes for distribution of property are so all encompassing that relevant case law does not exist. Subject to any mandatory law of the forum, I do not see any reason why the courts should be reluctant to infer the existence of a marriage contract. (See generally G B Goldberg, “The Assignment of Property on Marriage” (1970) 19 International and Comparative Law Quarterly 557.)
113 There appears to be a drift away from the traditional approach to marriage as a relationship based on status, to a relationship including contractual rights and obligations. (See, eg, Scott and Scott, “Marriage as a Relational Contract” (1998) 84 Virginia Law Review 1225; Keyes and Burns, “Contract and the Family: Whither Intention?” [2002] MULR 30; (2002) 26 Melbourne University Law Review 577.) No doubt this reflects changes in society about the expectations of the parties to a marriage.
114 The learned authors of Dicey, Morris & Collins (14th ed) state (at [28-027]) that In Re De Nicols cannot be reconciled with the judgment in Welch v Tennent [1891] AC 639. In Welch v Tennent, the House of Lords decided that the rights of a couple, who married in Scotland and separated, over immovable property in England were governed by the lex situs. The authors reject the suggestion that In Re De Nicols applies where the law of the domicile adopts the “implied contract” theory. The authors disapprove of this distinction because they disapprove of the “implied contract” approach. However, this approach is supported by authority and is, in my opinion, a proper basis for distinguishing Welch v Tennent, upon which the appellant primarily relied in this Court for the proposition that New South Wales law applies to the determination of rights and interests with respect to real estate situated in this jurisdiction.
115 The learned authors of the basic Australian conflicts text do not suggest that there is any conflict between In Re De Nicols and Welch v Tennent. They clearly distinguish the former as a case of what they call a “tacit contract”. (See P E Nygh and M Davies, Conflict of Laws in Australia, 7th ed (2002) LexisNexis Butterworths, at [26.7].) They go on to state, on the authority of Welch v Tennent and Callwood v Callwood [1960] AC 659, at [26.8] that:
“Where there is no marriage contract, express or implied, the lex situs determines the application of the matrimonial property regime.”
This clearly suggests that an “implied” contract may lead to a different result.
116 In Callwood supra, their Lordships indicated, at 683, that, even if there had been evidence to the effect that Danish law purported to apply to foreign property, which there was not, it would be a “difficult question” whether Danish law would apply in view of the lex situs, which was English law. However, the point of distinction made in this regard was only whether Danish law purported to apply to foreign land. Their Lordships made no reference to a situation in which the law of the matrimonial domicile created a contractual right with respect to foreign real estate.
117 In my opinion, there is a distinction between the two lines of authority. In neither Welch v Tennent nor Callwood was there evidence, let alone a finding, to the effect that the law of the matrimonial domicile should be given contractual force.
118 This conclusion is supported by the policy considerations discussed by A M Gleeson, then a final year law student, in a case note on Callwood. He noted the tension between In Re De Nichols and Welch v Tennent and said:
“The attitude adopted by Lord Herschell in Welch v Tennent is, it is suggested, symptomatic of a tendency in English private international law to exaggerate the role of the lex situs in disputes concerning immovable property. This attitude is seen at its extreme in the principle, stated in the Mocambique Case, that an English Court has no jurisdiction to try an action for damages for trespass to foreign land. The effective administration of the land law does require that certain aspects of that law be left to the exclusive control of the lex situs. The country in which land is situated clearly has an interest in requiring that the formalities of its conveyancing system be observed, and that interests in land be within the scope of its real property and conveyancing laws; a fortiori where a system of public registration of title operates. But so long as the local law concerning the nature of interests in land, and their modes of transfer, be complied with, then surely the source of these interests must not be governed by the lex situs.
The chief merit of the De Nichols v Curlier approach is that in most cases it will give effect to the intention of the parties. It is reasonable to assume, for example, that a husband and wife whose domiciliary law provides for a system of community of property would regard their dealings with all their property, including foreign immovables as operating within that system. Thus in the case under discussion it is probable that a decision in favour of the widow would have given effect to the intentions of the testator. If the law is to frustrate the intentions of parties, justice requires that there be some reason of policy behind it. Mere timidity in the face of unfamiliar legal conceptions is not sufficient.”
(A M Gleeson, “Community of Property and the Conflict of Laws” (1962) 1 Sydney Law Review 139 at 143.)
119 This approach, which emphasises the expectations of the parties to the relevant legal relationship, is in accord with contemporary High Court jurisprudence which has applied a “no advantage principle” if proceedings in tort are instituted in Australia but are governed by the law of the lex loci delicti. As Gummow and Hayne JJ said in Neilson supra:
“[89] ... [T]he rules adopted should, as far as possible, avoid parties being able to obtain advantages by litigating in an Australian forum which could not be obtained if the issue were to be litigated in the courts of the jurisdiction whose law is chosen as the governing law.
[90] Once Australian choice of law rules direct attention to the law of a foreign jurisdiction, basic considerations of justice require that, as far as possible, the rights and obligations of the parties should be the same whether the dispute is litigated in the courts of that foreign jurisdiction or is determined in the Australian forum. This is not a consideration which seeks uniformity for the sake of the aesthetic value of symmetry. Nor is it a precept founded in notions of international politeness or comity. As has been said, comity is ‘either meaningless or misleading’; it is ‘a matter for sovereigns, not for judges required to decide a case according to the rights of the parties’.
[91] Rather, adopting a rule that seeks to provide identical outcomes is neither more nor less than an inevitable consequence of adopting a choice of law rule to which there is no exception. To apply that choice of law rule in a way that would permit a party to gain some advantage by litigating in the courts of the forum, rather than the courts of the jurisdiction whose law provides the governing law, would constitute a considerable qualification to that choice of law rule. A party could gain an advantage by litigating in the courts of the forum rather than the courts of the foreign jurisdiction only if the forum were to choose to apply only some of the law of that foreign jurisdiction. And to do that would make a significant inroad upon what on its face is stated to be an unqualified choice of the law which is to govern the rights and obligations of the parties: the lex loci delicti.”
120 Furthermore, as I observed in Amaca v Frost supra:
“[87] The no advantage principle reflects the basis upon which Australian law adopted the lex loci delicti as the choice of law rule.
[88] In John Pfeiffer the Court said (at 536 [75]):
‘[75] The chief theoretical consideration in favour of applying the law of the place of commission of the tort to decide the substantive rights of the parties (at least in intra-national torts) is that reliance on the legal order in force in the law area in which people act or are exposed to risk of injury gives rise to expectations that should be protected.’
[89] After Regie Nationale de Usines Renault SA v Zhang, it is not appropriate to restrict this reasoning to intra-national torts. The Australian choice of law rule should meet the reasonable expectations of the parties in situations where torts are committed abroad. The underlying objective is to ensure that, whatever forum is chosen, the result will be the same. (See P Nygh & M Davis Conflict of Laws in Australia (7th ed) at pars 3.19-3.20).”
121 The reasonable expectation of the parties to an Indonesian marriage is that their property rights will be determined on the basis of the harta gono-gini system. Those expectations can be fulfilled by inferring, on the authority of the De Nicols cases, the existence of a matrimonial contract containing such conditions. Subject to the laws of the forum with respect to dealing with interests in land – and none were suggested to be relevant in the present case – such a contract will be enforced in New South Wales. Like any other contract, immovable property is governed by the proper law of the contract, provided that that is permitted by the lex situs.
122 It appears to me to be inappropriate to characterise the implied contract identified in the De Nicols proceedings as a “fictitious contract”, as the learned authors of Dicey, Morris & Collins supra do at [28-023]. A contract can be inferred (a better term than implied) from conduct and, once inferred, has the same force as an express contract.
123 I see no difficulty in saying that a matrimonial contract ought to be enforceable in accordance with the same principles as a contract between arms length commercial parties. If a choice of law provision in a written commercial contract – such as a partnership or joint venture arrangement – will be recognised and enforced by the lex situs of immovable property as it will be, I see no reason in principle why this approach should not be applied with respect to a contract entered into in a matrimonial context. (See British South Africa Company v De Beers Consolidated Mines Ltd [1910] 2 Ch 502; P E Nygh & M Davies supra (2002) at [19.3]. See also Dicey and Morris: The Contract of Laws, 11th ed (1987), Stevens & Sons at 1254-1258. I refer to the 11th edition because the 12th edition in this respect turns on the Rome Convention, which does not apply to Australian common law.)
124 It is necessary to distinguish between contract and conveyance. It is in the context of the latter that the lex situs clearly applies. As the authors of Scott on Trusts, 4th ed (1989), Little, Brown & Company, put it at 506: “Although land is an immovable, interests in land are neither movable or immovable.” The traditionally rigid distinction between moveable and immovable property has no sound basis in policy. (See Scott on Trusts at 573-75.) It does not appear to me to reflect contemporary conditions, especially the ease of cross-border investment. The location of real property remains a significant indicator of what the proper law of the contract is, but that is subject to a contrary contractual intention. (See Merwin Pastoral Co Pty Ltd v Moolpa Pastoral Co Pty Ltd [1933] HCA 31; (1933) 48 CLR 565 esp at 576). A contract with respect to land, as distinct from a conveyance, is generally governed by the proper law of the contract. (See Dicey, Morris and Collins (14th ed) at 1748-1751.) Local law can, as the lex situs, override other dealings or expectations. However, it does not necessarily do so.
125 De Nicols in the House of Lords, as applied in In Re De Nicols [1990], is based on a legal regime that is indistinguishable from that under consideration in the present proceedings. Specifically, the text and structure of the French Code is to the same effect. It was interpreted so that the parties to the marriage were taken to have turned their minds to determining what would be their legal relationship with respect to property. This overcame the reluctance, more clearly applicable at the end of the 19th century than today, to infer a contractual intent into a marriage. The same approach is applicable to the Indonesian Code as appears from Article 232, set out at [96] above, which commences “If the divorced spouses were married on the basis that there would be a joint matrimonial property ... ”.
126 This Court should apply De Nicols as it accords with contemporary policy and principle and no law of the lex situs prevents its application. Although, as I have indicated, it is not necessary to finally determine this issue, my analysis suggests that the application of the Voth ‘clearly inappropriate forum’ test in the present case, must take into account the fact that the legal relationship between the parties finds its origin in Indonesian law.
127 The appellant relied on this line of authority, although its pleading does not reflect the contractual basis of the claim. However, for purposes of a forum non conveniens submission this Court would not order a stay where the pleadings can readily be amended.
Choice of Law and Equitable Claims
128 The appellant’s alternative submission is that, even if the law of the matrimonial domicile applies to immovable property, the position changes because of the equitable rights asserted on the pleadings, for which the applicable law is the lex fori. The appellant asserts, alternatively, a claim of constructive trust and a claim of resulting trust. Both claims are proprietary in nature. The appellant asserts an equitable interest, not merely a claim to equitable relief.
129 There is authority which suggests that such a claim is determinative of the applicable law and that a New South Wales court will apply its own law. In National Commercial Bank v Wimbourne (1978) 5 BPR 11,958 Holland J said at 11,982:
“In my opinion, it is, prima facie, a complete answer to this contention that the plaintiffs are claiming equitable rights and equitable remedies. The Equity Court has long taken the view that because it is a court of conscience and acts in personam, it has jurisdiction over persons within and subject to its jurisdiction to require them to act in accordance with the principles of equity administered by the court wherever the subject matter and whether or not it is possible for the court to make orders in rem in the particular matter. In short, if the defendant is here, the equities arising from a transaction to which he is a party as ascertained by New South Wales law and the equitable remedies provided by that law will be applied to him.”
130 I note, however, that another highly respected equity judge, Millet J (as his Lordship then was) said that it was “a highly dubious proposition” to assert that a claim for equitable relief is “as such ... governed by the lex fori”. (Macmillan Inc [1995] supra at 989D.)
131 The position with respect to such fiduciary claims in Australian law is, in my opinion, as stated by the joint judgment of the Full Federal Court in Paramasivam v Flynn [1998] FCA 1711; (1998) 90 FCR 489; (1998) 160 ALR 203, a bench including, most relevantly, Justice Lehane, one of Australia’s foremost equity scholars. This Court should follow a judgment of another intermediate Court of Appeal unless it is convinced that it is wrong. (See Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89.)
132 The joint judgment in Paramasivam supra identified a number of circumstances in which the governing law of a fiduciary relationship is accepted to be a law other than the law of the forum and added, at 503:
“Particular considerations may arise where the source of a fiduciary relationship is a contract the governing law of which is not that of the forum. It may be that in such a case principles, such as those for which Augustus is authority, will apply. Similarly, particular considerations may arise where what is in question is the duty owed to a foreign corporation by its directors or officers. But such matters do not arise here and it is unnecessary for us to form any view about them. In other cases of fiduciary relationship, both principle and the balance of Anglo-Australian authority favour, in our view, the general application of the lex fori, subject, perhaps, to this: that where the circumstances giving rise to the asserted duty or the impugned conduct (or some of it) occurred outside the jurisdiction, the attitude of the law of the place where the circumstances arose or the conduct was undertaken is likely to be an important aspect of the factual circumstances by reference to which the Court determines whether a fiduciary relationship existed and, if so, the scope and content of the duties to which it gave rise.”
(For ‘Augustus’ see [141] below.)
133 The qualification at the end of this passage provides considerable scope for the court of the Indonesian matrimonial law background to apply the underlying relationship. This analysis is consistent with the focus on the law which governs the underlying relationship in Lightning v Lightning Electrical Contractors Ltd [1998] EWHC Admin 431 at [14], [25], [34].) This approach is of particular significance when applying the ‘clearly inappropriate forum’ test. Whether and if so what constructive or resulting trust could be found to inhere in the relationship involved in the present proceedings must be influenced, if not determined, by Indonesian law.
134 Paramasivam has been criticised by a number of academic authors, in particular by T M Yeo, Associate Professor in the Faculty of Law at the National University of Singapore. (See T M Yeo, Choice of Law for Equitable Doctrines, (2004) Oxford University Press, esp at [Int 010-103], [Intr 020-021], [1.01]-[1.13], [2.10]-[2.17], [8.71]; T M Yeo “Choice of Law for Equity”, in Simone Degeling and James Edelman (eds), Equity in Commercial Law, (2005) Law Book Co, esp at 152, 166-171.)
135 Professor Yeo sets out a different approach to these issues by adopting a starting point of choice of law analysis rather than a starting point of whether or not equitable relief is sought. However, as the learned authors of Young, Croft and Smith: On Equity (2009) Law Book Co point out at [2.470], in the introduction to Professor Yeo’s book, Justice Gummow states at (vi):
“ ... the precepts and principles which inform the ‘conscience’ of the defendant and give the plaintiff the necessary ‘equity’ are framed, not with a view to the responses of the man on the Clapham omnibus, but in overriding and universal terms. This consideration tends to support the notion (which Professor Yeo does not favour) that the question of whether such an equity exists is not to be determined by a consideration of foreign law despite connecting factors with other legal systems.”
136 It is not appropriate in Australia to extend the reasoning of Paramasivam in the way Tipping J has done in Attorney-General for England and Wales v R [2002] 2 NZLR 91 at [28]-[30]. His analysis is based on what Australian equity lawyers still reject as a fusion fallacy.
137 Understandably, the approach of Professor Yeo has been partially adopted by the courts of Singapore. In Rickshaw Investments Ltd v Nicolai Baron von Uexkull [2006] SGCA 39; [2007] 3 LRC 223, the joint judgment of the Court of Appeal of the Supreme Court of Singapore referred to Professor Yeo’s thesis and said at [81]:
“ ... we would not go so far as to endorse the proposition that equitable concepts and doctrines are always dependent on other established categories (because, as the modern law of restitution illustrates, the law itself never ceases to develop). We would, however, accept the more limited proposition to the effect that where equitable duties (here, in relation to both breach of fiduciary duty and breach of confidence) arise from a factual matrix where the legal foundation is premised on an independent established category such as contract or tort, the appropriate principle in so far as the choice of law is concerned ought to be centred on the established category concerned. We would also leave open the possibility that future legal developments might result in equitable obligations constituting a separate established category in so far as choice of law is concerned ...”
138 In the proceedings between the parties conducted in the Supreme Court of Singapore one of the issues was the application of the forum non conveniens rule which, in Singapore, is the Spiliada test. (Murakami Takako v Wiryadi Louise Maria [2008] SGCA 44 at [26].) This was the judgment in which the appellant sought to invoke the assistance of the Singapore courts for her equitable claims to the assets in the present proceedings after Gzell J had issued his stay. The Court proceeded to apply the Spiliada test and concluded that the connecting factors favoured Indonesia over Singapore. The Court accepted that the lex causae was the lex domicilii of the testator, which was Indonesia.
139 Notwithstanding the statement in Paramasivam supra at 503, set out at [132] above, that the lex fori applies “in other cases of fiduciary relationship”, I do not understand their Honours to suggest that the categories of exceptions are closed. The principles underlying the identified exceptions could be applied in other specific contexts. There are a number of categories to which lex fori is not applied, notwithstanding the fact that equitable relief is claimed.
140 The right to trace monies paid under a mistake of fact has been held to be governed by the law of the place of payment, rather than the lex fori: Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] 1 Ch 105. (This was also an element emphasised in Trustor AB v Smallbone [2000] EWCA Civ 150 at [61]- [62] to identify “the proper law of the constructive trust”.)
141 In Paramasivam, the Court referred to Augustus v Permanent Trustee Co (Canberra) Ltd [1971] HCA 25; (1971) 124 CLR 245; (1971) 45 ALJR 365 for the proposition that the governing law of an express trust of moveables is to be determined in the same way as the proper law of a contract. I can see no reason why a claim for a constructive trust arising from a contractual relationship should not be determined by the proper law applicable to that relationship. (Cf R W White, “Equitable Obligations in Private International Law: The Choice of Law” (1986) 11 (1) Sydney Law Review 92 at 111. The author is now Justice White of the Supreme Court of New South Wales.)
142 Significantly for present purposes, the joint judgment in Paramasivam supra further noted at 503, as quoted at [132] above, that analogous principles may apply where the source of a fiduciary relationship is a contract governed by foreign law. A similar approach is suggested by the learned authors of Jacobs’ Law of Trusts in Australia, 7th ed, (2006) LexisNexis Butterworths at [2822], who say, albeit confining these observations to movables:
“ ... where the issue arises from contractual relations between the parties ... the existence of a constructive trust of movables should be determined ... by the proper law of contract.”
143 Courts of equity have applied English law to a contract relating to foreign property, including immovables, not because it is the lex fori; but because it is the proper law of the contract. (See, eg, British South Africa Company v De Beers supra. See also Deschamps v Miller [1908] 1 Ch 856 at 863-4; R W White (1986) supra at 107-109.) I can see no reason why the obverse should not apply, subject of course to any local mandatory rule, specifically a rule relating to title to real estate. This is what the Court of Appeal of Singapore did in Rickshaw Investments supra as quoted at [137] above.
144 My analysis of the case law and of policy in the previous section, focussing on De Nichols, supports the adoption of a similar approach to the case of a foreign contract even when equitable rights are asserted. Specifically, the “no advantage” principle endorsed by the High Court in Neilson has been applied in an analogous context.
145 In Talleyrand v Boulanger [1797] EngR 504; (1797) 3 Ves Jun 447; 30 ER 1099, the plaintiff provided security in order to avoid imprisonment for a debt. He had been arrested while in exile during the French Revolution. The principal obligation had been entered into in France. Under the law of France no person could be arrested in execution of that obligation. Lord Chancellor Loughborough said:
“[I]t would be contrary to all principles which guide the Court of one country in deciding upon contracts made in another to give a greater effect to the contract than it would have by the laws of the country where it took place.”
The defendant was injuncted from seeking to enforce the securities obtained under the duress. To enforce such a security would be, the Lord Chancellor said, “against all conscience and humanity”.
146 There is no clear authority to guide this Court. Indeed, the comment most frequently made in this respect is about the paucity of the case law. (See, eg, Jacobs’ Law of Trusts supra at [2821]; Adeline Chong, “The Common Law Choice of Law Rules for Resulting and Constructive Trusts” (2005) 54 International and Comparative Law Quarterly 855 at 855, 859.) That is why Professor Yeo’s detailed treatment of the issues is so valuable.
147 It may well be that disputes over matrimonial property should be accepted as a distinct category for choice of law purposes. For present purposes, it is sufficient to proceed on the basis of the marital contract which I have found to exist and which, on the above analysis, encompasses immovables situated abroad. (Cf Maunder v Lloyd [1862] EngR 1088; (1862) 2 J & H 718; 70 ER 1248 in which the Court of Chancery ordered the winding up of a partnership and the taking of accounts, over assets in England, notwithstanding the fact that the partnership was governed by the law of Haiti.)
148 In determining a claim for an equitable interest under Australian law, this Court will have regard to, and generally enforce, a relevant foreign element in the dispute. On the above analysis that element is a contract which gave rise to obligations which, the pleadings suggest, were not performed in a manner said to justify the intervention of equity. There will, of course, be circumstances in which equity will not enforce a foreign contract. No such issue has been raised in this case.
149 Again, it is not necessary to express a concluded view on this issue. For purposes of applying the ‘clearly inappropriate forum’ test, it is sufficient to note that the fact that equitable relief is claimed is not, in the circumstances of this case, entitled to significant weight. In the present case it is sufficient to proceed on the basis that nothing suggests that equity, acting on the conscience of the parties in this Court, would do anything other than enforce the expectations created under Indonesian law with respect to the property situated in New South Wales.
Applying the Voth Test
150 The fact that the Court would apply foreign law, or base its own analysis to a substantial degree on foreign law, is a significant factor which must be taken into account in determining whether New South Wales is a clearly inappropriate forum. As Mr Bell submitted, the need to prove foreign law is itself a source of prejudice. One of the difficulties and uncertainties involved in such proof is, as he put it, the risk that important aspects of the foreign law will be lost in translation. The need to prove foreign law introduces additional levels of complexity, expense and uncertainty together with the risk of error in the application of foreign law. (See James Hardie Industries Pty Ltd v Grigor (1998) 45 NSWLR 20 at 37, 42; Rickshaw Investments supra at [42].) Indeed, the majority joint judgment in Regie v Zhang supra, said at [66], in comparison with conflicts issues arising between the states of the Australian federation, proof of foreign law is a “more onerous task”. (See also at [192] per Callinan J.)
151 Nevertheless, courts are often placed in a position where they must apply foreign law and will do so. As the majority judgment of the High Court said in Puttick v Tenon supra at [31]:
“ ... it by no means follows that showing that the tort which is alleged is, or may be, governed by a law other than the law of the forum demonstrates that the chosen forum is clearly inappropriate to try the action. The very existence of choice of law rules denies that the identification of foreign law as the lex causae is reason enough for an Australian court to decline to exercise jurisdiction ...”
152 On the evidence before this Court there is only one respect in which Indonesian law may give rise to any conflict in this case. I refer to the resulting trust claim. The Indonesian law of common marital property applies to create an equal right to property acquired during the marriage, irrespective of either party’s contribution to the acquisition of the property. This is what the appellant seeks in the constructive trust claim.
153 As I have noted above, in this respect the resulting trust claim is inconsistent with the constructive trust claim with respect to properties which were common marital property. This is, however, an alternative cause of action and a point may arise where the appellant is required to elect between the alternatives. That point has not yet arisen.
154 I regard it of particular significance that, on the expert evidence, there does not seem to be any issue in dispute as to what the Indonesian law of common marital property is. The only dispute appears to be about identification of that property. This is a question of fact.
155 In Puttick v Tenon, the High Court overturned a decision that Victoria was a clearly inappropriate forum where, at that stage of the proceedings, it was arguable, but not clear, that the lex causae was not Victoria. This reasoning applies by analogy, to a situation where the evidence before the court does not indicate, even if foreign law applies, that there is any material effect arising from its application.
156 The second matter involving Indonesian law which arises on the pleadings, and which features in most of the points in Mr Bell’s list set out at [62] above, is the assertion that the first respondent failed to disclose the existence of common marital property in the course of the Indonesian proceedings. The obligation to disclose turns on Indonesian law. Further, the pleadings refer to a provision of the Indonesian Criminal Code which it is suggested forms one basis for implying a duty to disclose. In the absence of any expert evidence, or even defence, denying the existence of a duty to disclose, it does not appear to me that this is a significant aspect of the pleading.
157 This Court would proceed on the basis that there was some form of legal obligation on the part of the parties to the Indonesian proceedings to disclose common marital property, unless there is evidence suggesting that there was no obligation of disclosure. If there were such evidence, an issue may then arise as to whether the non-disclosure is an important aspect of a claim for a constructive trust or whether the fact that certain properties were in fact common marital property is sufficient. For present purposes, it is sufficient to note that the assertion in the pleading of an obligation to disclose under Indonesian law is not a matter entitled to weight.
158 As I have indicated above only some of the properties which are alleged to have been acquired during the marriage remain registered in the name of the first respondent. There is no evidence as to what, if any, attitude would be taken in Indonesian law to tracing the proceeds of sale of common marital property. Nor is there evidence about the approach it would take to the rights of the second and third respondents with respect to their interests in real estate, which may have been acquired with funds that were common marital property at the relevant time. Nor is there any evidence as to what the position might be with respect to the acquisition of the real estate after the dissolution of the marriage, which may have been acquired with funds that were common marital property at the relevant time.
159 In the absence of evidence of this character there is no basis for inferring that any significant conflict of law issues will arise in the New South Wales proceedings if they are permitted to go ahead. Rather, it appears that the crucial matters are questions of fact in determining the dates and source of funds for the acquisition and sale of the properties mentioned in the pleadings.
160 The same is true with respect to the claim to the bank account. Insofar as it constituted common marital property it is subject to the same marital contract discussed above.
161 The difficulties of proof in Indonesia in this respect are highlighted by the inability of the appellant to establish the facts with respect to the Carson Street property, which led the Indonesian courts to refuse to determine the rights to that property on the basis of inadequacy of evidence. It is quite possible that similar difficulties will arise with respect to the other properties if proceedings have to be pursued in Indonesia. New South Wales appears to be a convenient forum, indeed probably the more convenient forum, to identify the relevant facts.
162 Justice Gzell tried to accommodate these matters by indicating that any material produced on subpoena in the current proceedings should be made available for the putative Indonesian proceedings and the appellant should be relieved from her implied undertaking not to use such materials for any other purpose than the proceedings. Nevertheless, there is no indication that any significant body of information of this character was acquired by way of subpoena or discovery prior to the determination of the forum non conveniens application.
163 It seems clear to me that disputes of this character, relating to the identification of the flow of funds and the acquisition of specific properties, are most likely to be best conducted in this Court. This is a substantial advantage which is entitled to significant weight in formulating the judgment for which the Voth test provides.
164 In my opinion, it has not been established that New South Wales is a clearly inappropriate forum.
Conclusion
165 The orders I propose are:
1 Appeal allowed.
2 Discharge the orders of Gzell J made on 14 December 2006.
3 Order the respondents to pay the appellant’s cost of the notice of motion and of the appeal.
166 McCOLL JA: I had the privilege of reading the reasons in draft of Spigelman CJ. I agree with his Honour’s reasons and the orders he proposes.
167 YOUNG JA: I agree with the Chief Justice.
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LAST UPDATED:
17 February 2010
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