Arthurman and Arthurman
[2009] FamCA 773
•7 August 2009
FAMILY COURT OF AUSTRALIA
| ARTHURMAN & ARTHURMAN | [2009] FamCA 773 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Application to set aside orders – Section 79(1)(a) – Applicant is a self-represented litigant FAMILY LAW – COSTS – Indemnity costs |
| Family Law Act 1975 (Cth) Family Law Rules 2004 |
| Bigg v Suzi (1998) FLC 92-799 Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 Fennessy and Gregorian (2009) FLC 93-399; [2009] FamCAFC 44 Gitane and Velacruz (2007) FLC 93-309 JEL and DDF (No 2) (2001) FLC 93-083 Kohan and Kohan (1993) FLC 92-340 Lyndon v Commonwealth No 2 (1996) 70 ALJR 541 Miller and Harrington (2008) FLC 93-383 Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 219 CLR 365 N and H [2003] FamCA 1284 Pagliotti and Hartner (2009) FLC 93-393 Rogers v The Queen (1994) 181 CLR 251 |
| APPLICANT: | Ms Arthurman |
| RESPONDENT: | Mr Arthurman |
| INTERVENOR: | H Pty Limited | ||||
| INTERVENOR: | H Pty Limited Trust | ||||
| FILE NUMBER: | SYF | 2938 | of | 2003 | |
| DATE DELIVERED: | 7 August 2009 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Justice Le Poer Trench |
| HEARING DATE: | 23 June 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | In Person |
| SOLICITOR FOR THE APPLICANT: | In Person |
| COUNSEL FOR THE RESPONDENT: | Mr Lloyd |
| SOLICITOR FOR THE RESPONDENT: | Dettmann Longworth Lawyers |
| COUNSEL FOR THE INTERVENORS: | Applicant in person |
| SOLICITOR FOR THE INTERVENORS: | Applicant in person |
Orders
The wife’s applications filed 18 June 2008, 14 July 2008 and 11 December 2008 are dismissed.
That the wife pay the husband’s costs of and incidental to the determination of the wife’s applications filed 18 June 2008, 14 July 2008 and 11 December 2008.
The wife’s application filed 17 June 2009 may be relisted for further mention before me on the application of the wife and notice to the husband.
IT IS NOTED that publication of this judgment under the pseudonym Arthurman and Arthurman is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 2938 of 2003
| MS ARTHURMAN |
Applicant
And
| MR ARTHURMAN |
Respondent
REASONS FOR JUDGMENT
Before the Court are five applications filed by the wife. Each application is an Application in a Case, or an Amended Application in a Case. The applications filed by the wife on 18 June 2008, 14 July 2008 and 11 December 2008 all seek Orders pursuant to s 79A(1)(a). They seek that Orders made by the Court on 18 March 2008 be set aside. One of the applications sets out further orders which the wife seeks in the event of her success in having the Orders of 18 March 2008 set aside on the grounds set out in the section. The wife’s application (by H Pty Limited Trust) filed 15 May 2009 seeks orders against the husband requiring him to take action under the Corporations Act 2001 in relation the company H Pty Limited. The wife’s application filed 17 June 2009 sought orders against the husband and H Pty Limited. This application appears to be an amended application superseding that filed on 15 May 2009. The Court’s time was dedicated, in the hearing before me, to dealing with the applications of the wife filed 18 June 2008, 14 July 2008 and 11 December 2008.
The wife relied on the following affidavit material:
(a)affidavit of the wife filed 18 June 2008;
(b)affidavit of the wife filed 3 March 2009;
(c)affidavit of the wife filed 16 April 2009;
(d)affidavit of the wife filed 11 December 2008;
(e)affidavit of the wife filed 20 February 2009; and
(f)a Notice of Intervention by the wife filed 20 February 2009.
The husband relied on his Response filed 15 July 2008. He also relied on his Response filed 13 May 2009.
The husband relied on the following affidavit material:
(a)affidavit of the husband sworn 14 July 2008 and filed 15 July 2008;
(b)affidavit of the husband sworn 1 May 2009 and filed 6 May 2009;
(c)affidavit of Mr N sworn 18 March 2009 and filed 20 March 2009;
(d)affidavit of the husband sworn 22 March 2009 and filed 23 March 2009;
(e)affidavit of Ms L sworn 18 March 2009 and filed 19 March 2009; and
(f)the affidavit of Ms V sworn 18 March 2009 and filed 19 March 2009.
During the course of submissions the wife tendered the Financial Statement of the husband filed 27 November 2007, a document titled “Orders Sought by the Husband – Financial (as at 5 March 2008)” and the affidavit of Mr K sworn 18 December 2007.
The husband relied on Orders made by consent on 22 November 2007. Both parties relied on the judgment of Justice Fowler delivered 18 March 2008.
The Wife’s Case
The wife in submissions told me that her case related to non-disclosure, fraud, suppression of evidence, the giving of false evidence and “any other circumstance” in relation to the trust known as the V Trust and the trust known as the H Pty Limited Trust.
In relation to the V Trust the wife relied on s 79A(1)(a) and said that the husband had suppressed evidence and had failed to disclose relevant matters relating to that Trust. She submitted that prior to the final hearing the husband had filed three Financial Statements. The last Financial Statement was that filed on 27 November 2007. The wife alleged that in each of those Financial Statements, the husband failed to disclose he was a trustee of the V Trust.
In relation to the husband’s Financial Statement filed 27 November 2007 the wife submitted the husband had failed to comply with Rule 13.04 of the Family Law Rules 2004 (“the Rules”). He had failed to make a relevant disclosure at Item 11; that is, he failed to disclose income from the V Trust. She said he failed to make a relevant disclosure at Item 41. In that regard, he failed to disclose that he had an interest in a trust. She submitted he failed to make a relevant disclosure at Item 56. That item required him to state any “interest in any trust”.
The wife submits that pursuant to paragraph 3.9 of the V Trust deed, which is annexed to the affidavit of the husband sworn 22 March 2009, the husband, who is a joint trustee with Mr N, is “...entitled to a fee to be charged annually of five (5%) per cent of any income earnt by the trust whether such income as accrued or received, and further where there is more than one trustee then such fee shall be divided equally between the trustee’s [sic].” She further says that on page 7 of the trust deed under paragraph 1S1(o) the trustees are entitled “to determine in all cases of doubt whether moneys or property coming to its hands as Trustee are capital or income and whether any liabilities or outgoings shall be charged to capital or income and to apportion blended funds”.
The wife relies on paragraph 19 of the husband’s affidavit sworn 22 March 2009. That paragraph, in relation to the V Trust, is as follows:
“I have not charged an annual fee to the Trust on a regular basis. I have rendered accounts for professional [fees]. Any fees I have earned have been in my capacity as [a professional] with fees being paid into the Firm and forming part of the total receipts of the Firm. I believe the first time I rendered accounts for professional [fees] to the Trust was in 2004. From records I have viewed the Firm also rendered an account in 2008.”
The wife submits that this evidence, at its highest, establishes the husband has charged an annual fee but not on a regular basis. The husband submits the evidence establishes that the only fees he has charged have been returned as income in his practice as a professional. The relevance of the husband’s submission is that his interest in the professional practice was valued and included in the parties’ balance sheet in the hearing before Justice Fowler.
Annexed “B” to the husband’s affidavit sworn 22 March 2009 is the financial report for the V Trust for the year ended 30 June 2006. The report also contains the figures for the 2005 year. The report shows that in 2006, the Trust suffered a loss of $6,469 and in 2005 a profit of $2,117. The total income in the 2006 year was $16,394 and the total income in the 2005 year was $18,876. There is nothing in the expenses column in respect of either the 2006 year or the 2005 year which identifies a payment to the trustees as an annual fee. The husband submits that the “management fee” referred to in the list of expenditure was to a real estate agent in connection with the rental of the property owned by the V Trust. Even assuming that submission was incorrect, there is a total management fee of $1,224 in 2006 and a total management fee of $1,141 in the 2005 year; such management fee having to be divided equally between the two trustees as their income. Neither of those figures can be correlated as being 5% of the income expressed in the financial report. Thus, the submission of the husband gains weight.
The wife further submitted that the property owned by the V Trust in the northern beaches could be the subject of a subdivision application and could be developed. She said that the power to deal with the Trust property in that manner was established through the Trust at paragraph 1S1(d) of the Trust Deed. The wife submitted that as a consequence of the provision the husband somehow acquired some interest in the trust property. I cannot accept that is the position and I consider that the paragraph referred to by the wife in the trust deed is nothing more than an ordinary enabling provision within the powers provided to a trustee by the settlor of the Trust.
The wife further alleges that at the time the husband signed his affidavit on 27 November 2007 (the Financial Statement) he was required to provide a copy of the trust deed and copies of the preceding three Financial Statements. The Rules currently in force do not make that provision. Looking then at what the Rules do and have provided in relation to disclosure of “interests” in trusts I set out the following.
In relation to full and frank disclosure:
From 29 March 2004 to present
Taking into account R13.05 as amended by SLI No 53 of 2004 (repealing the FLR 1984):
13.04 Full and frank disclosure
(1) A party to a financial case must make full and frank disclosure of the party’s financial circumstances, including:
(a)the party’s earnings, including income that is paid or assigned to another party, person or legal entity;
(b) any vested or contingent interest in property;
(c) any vested or contingent interest in property owned by a legal entity that is fully or partially owned or controlled by a party;
(d) any income earned by a legal entity fully or partially owned or controlled by a party, including income that is paid or assigned to any other party, person or legal entity;
(e) the party’s other financial resources;
(f) any trust:
(i) of which the party is the appointor or trustee;
(ii)of which the party, the party’s child, spouse or de facto spouse is an eligible beneficiary as to capital or income;
(iii)of which a corporation is an eligible beneficiary as to capital or income if the party, or the party’s child, spouse or de facto spouse is a shareholder or director of the corporation;
(iv)over which the party has any direct or indirect power or control;
(v)of which the party has the direct or indirect power to remove or appoint a trustee;
(vi)of which the party has the power (whether subject to the concurrence of another person or not) to amend the terms;
(vii)of which the party has the power to disapprove
a proposed amendment of the terms or the appointment or removal of a trustee; or
(viii)over which a corporation has a power mentioned in any of subparagraphs (iv) to (vii), if the party, the party’s child, spouse or de facto spouse is a director or shareholder of the corporation;
(g) any disposal of property (whether by sale, transfer, assignment or gift) made by the party, a legal entity mentioned in paragraph (c), a corporation or a trust mentioned in paragraph (f) that may affect, defeat or deplete a claim:
(i)in the 12 months immediately before the separation of the parties; or
(ii) since the final separation of the parties; and
(h) liabilities and contingent liabilities.
(2) Paragraph (1) (g) does not apply to a disposal of property made with the consent or knowledge of the other party or in the ordinary course of business.
(3) In this rule:
legal entity means a corporation (other than a public company), trust, partnership, joint venture business or other commercial activity.
Note The requirements in this rule are in addition to the requirements in rules 12.02 and 12.05 to exchange certain documents before a conference in a property case.
From 1 January 2003 to 1 July 2003
(Family Law Rules 1984)
Order 17 Financial circumstances
1 Application of Order
(1) Subject to subrule (2), this Order applies to proceedings with respect to financial matters, including proceedings under section 79, 79A, 85A or 87 of the Act.
(2) Unless the court, or a Registrar, otherwise orders, this Order does not apply to:
(a) applications for interim or procedural orders; or
(b)applications under Order 11, Division 3 or Order 14, Division 1.
2 Superannuation information form and financial statement (Form
17)(1) This rule applies to a person who:
(a)files an application instituting proceedings to which this Order applies; or
(b)is a respondent to proceedings to which this Order applies and who files a response in those proceedings.
(2) The person must file with the application or response a financial statement in accordance with Form 17.
(3) if the person is seeking an order for property settlement and has a superannuation interest, the person must attach to Form 17 a completed superannuation information form in relation to that interest
3 Full and frank disclosure
A person who is required by these Rules to file a financial statement in accordance with rule 2 must make in the financial statement a full and frank disclosure of the person's financial circumstances including details of:
(a) any vested or contingent interest in property (including real or personal property, superannuation and legal and equitable interests); and
(b) the person's income from all sources, including any benefit received in relation to, or in connection with, the person's employment or business interests; and
(c) the person's other financial resources; and
(d) any trust:
(i) of which the person is the appointor or trustee; or
(ii) of which the person, or the person's child or spouse, or de facto spouse, is an eligible beneficiary as to capital or income; or
(iii) of which a corporation is an eligible beneficiary as to capital or income if the person, or the person's child or spouse, is a shareholder or director of that corporation; or
(iv)over which the person has any power or control, either direct or indirect; or
(v)of which the person has the power, directly or indirectly, to remove or appoint a trustee; or
(vi) of which the person has the power (whether subject to the concurrence of another person or not) to amend the terms; or
(vii) of which the person has the power to disapprove:
(A) a proposed amendment of the terms; or
(B) the appointment or removal of a trustee; or
(viii) over which a corporation has a power referred to in subparagraphs (iv) to (vii), if the person is a director or shareholder of that corporation; and
(e) any gift or other disposition of property made by the person since the separation of the parties.
In relation to a Financial Statement:
From 6 July 2007 to present
Taking into account R13.05 as amended by SLI No 207 of 2007, Sch 1 [65]
13.05 Financial statement
(1) A party starting, or filing a response or reply to, a financial case (other than by an Application for Consent Orders) must file a Financial Statement at the same time.
(2) If a party is aware that the completion of a Financial Statement will not fully discharge the duty to make full and frank disclosure, the party must also file an affidavit giving further particulars.
Note The court may order a party to file an affidavit giving further particulars in relation to the party’s financial affairs.
From 29 March 2004 to 5 July 2007
Taking into account R13.05 as amended by SLI No 53 of 2004
(repealing the FLR 1984)
13.05 Financial statement
(1) A party starting, or filing a response or reply to, a financial case (other than by an Application for Consent Orders (Form 11)) must file a Financial Statement (Form 13) at the same time.
(2) If a party is aware that the completion of a Form 13 will not fully discharge the duty to make full and frank disclosure, the party must also file an affidavit giving further particulars.
Note The court may order a party to file an affidavit giving further particulars in relation to the party’s financial affairs.
From 1 January 2003 to 28 March 2003
(Family Law Rules 1984)
Order 17 Financial circumstances
1 Application of Order
(1) Subject to subrule (2), this Order applies to proceedings with respect to financial matters, including proceedings under section 79, 79A, 85A or 87 of the Act.
(2) Unless the court, or a Registrar, otherwise orders, this Order does not apply to:
(a) applications for interim or procedural orders; or
(b)applications under Order 11, Division 3 or Order 14, Division 1.
2Superannuation information form and financial statement (Form 17)
(1) This rule applies to a person who:
(a)files an application instituting proceedings to which this Order applies; or
(b)is a respondent to proceedings to which this Order applies and who files a response in those proceedings.
(2) The person must file with the application or response a financial statement in accordance with Form 17.
(3)if the person is seeking an order for property settlement and has a superannuation interest, the person must attach to Form 17 a completed superannuation information form in relation to that interest
3 Full and frank disclosure
A person who is required by these Rules to file a financial statement in accordance with rule 2 must make in the financial statement a full and frank disclosure of the person's financial circumstances including details of:
(a) any vested or contingent interest in property (including real or personal property, superannuation and legal and equitable interests); and
(b) the person's income from all sources, including any benefit received in relation to, or in connection with, the person's employment or business interests; and
(c) the person's other financial resources; and
(d) any trust:
(i) of which the person is the appointor or trustee; or
(ii)of which the person, or the person's child or spouse, or de facto spouse, is an eligible beneficiary as to capital or income; or
(iii)of which a corporation is an eligible beneficiary as to capital or income if the person, or the person's child or spouse, is a shareholder or director of that corporation; or
(iv)over which the person has any power or control, either direct or indirect; or
(v)of which the person has the power, directly or indirectly, to remove or appoint a trustee; or
(vi)of which the person has the power (whether subject to the concurrence of another person or not) to amend the terms; or
(vii) of which the person has the power to disapprove:
(A) a proposed amendment of the terms; or
(B) the appointment or removal of a trustee; or
(viii)over which a corporation has a power referred to in subparagraphs (iv) to (vii), if the person is a director or shareholder of that corporation; and
(e)any gift or other disposition of property made by the person since the separation of the parties.
4 Production of documents
(1)Unless the court, or a Registrar, otherwise orders, a person who is required to file a financial statement in accordance with rule 2 must serve on each party who has an address for service in the proceedings the following documents:
(a) copies of the person's 3 most recent taxation returns;
(b) copies of the person's 3 most recent taxation assessments;
(c) if the person is a member of a superannuation plan:
(i)if not already filed or exchanged — the completed superannuation information form for any superannuation interest of the person; and
(ii)for a self-managed superannuation fund — the trust deed and copies of the 3 most recent financial statements for the fund;
(d) copies of the 3 most recent financial statements and taxation returns of any relevant partnership, trust or company (except a public company).
(2)The documents must be served no later than 3 days before the case assessment conference or first directions hearing.
5 Amendment of statement if circumstances change
(1)If a person files a financial statement in accordance with rule 2 and there is a significant change in relation to the person's financial circumstances, the person must amend the statement, as soon as practicable:
(a) if the amendment may be clearly set out in 3 folios or less — by filing and serving an affidavit setting out the amendments; or
(b)in any other case — by filing and serving an amended financial statement.
(2)If a person files an amended financial statement under paragraph (1) (b), the person must:
(a) re-swear or reaffirm the statement; and
(b) clearly identify the amendments.
Lastly, in relation to the duty of disclosure:
From 6 July 2007 to present
(R 13.07 amended by SLI 2007 No 207, Sch 1[29])
13.07 Duty of disclosure — documents
The duty of disclosure applies to each document that:
(a) is or has been in the possession, or under the control, of the party disclosing the document; and
(b) is relevant to an issue in the case.
Note 1 For documents that parties must produce to the court:
(a) on the first court date for a Maintenance Application, see rule 4.15;
(b) on the first court date for a child support application or appeal, see rule 4.26 (2);
(c) at a conference in a property case, see Part 12.2; and
(d) at a trial, see Chapters 15 and 16.
Note 2 Rule 13.15 provides that a party must file a written notice about the party’s duty of disclosure.
Note 3 Rule 15.76 provides that a party may give another party a notice to produce a specified document at a hearing or trial.
Note 4 A document disclosed to a party must be used for the purposes of the case only and must not be used for any other purpose without the consent of the other party or an order.
From 19 September 2005 to 5 July 2007
(R 13.07 amended by SLI 2005 No 212, r 3 and Sch 1[65])
13.07 Duty of disclosure — documents
The duty of disclosure applies to each document that:
(a) is or has been in the possession, or under the control, of the party disclosing the document; and
(b) is relevant to an issue in the case.
Note 1 For documents that parties must produce to the court:
(a) on the first court date for a Maintenance Application, see rule 4.15;
(b) on the first court date for a child support application or appeal, see rule 4.19;
(c) at a conference in a property case, see Part 12.2; and
(d) at a trial, see Chapters 15 and 16.
Note 2 Rule 13.15 provides that a party must file a written notice about the party’s duty of disclosure.
Note 3 Rule 15.76 provides that a party may give another party a notice to produce a specified document at a hearing or trial.
Note 4 A document disclosed to a party must be used for the purposes of the case only and must not be used for any other purpose without the consent of the other party or an order.
From 29 March 2004 to 18 September 2005
Taking into account R13.05 as amended by SLI No 53 of 2004 (repealing the FLR 1984)
13.07 Duty of disclosure — documents
The duty of disclosure applies to each document that:
(a) is or has been in the possession, or under the control, of the party disclosing the document; and
(b) is relevant to an issue in the case.
Note 1 For documents that parties must produce to the court:
(a) on the first court date for a Maintenance Application, see rule 4.15;
(b) on the first court date for a Child Support Application or Appeal, see rule 4.19;
(c) at a conference in a property case, see Part 12.2; and
(d) at a trial, see Chapters 15 and 16.
Note 2 Rule 13.15 provides that a party must file a written notice about the party’s duty of disclosure.
Note 3 Rule 15.76 provides that a party may give another party a notice to produce a specified document at a hearing or trial.
Note 4 A document disclosed to a party must be used for the purposes of the case only and must not be used for any other purpose without the consent of the other party or an order.
As can be seen from the above the husband had an obligation to disclose he was a trustee of the V Trust during the proceedings which were determined by Justice Fowler. In the consideration of this summary dismissal application I am unable to take into account the evidence of the husband. In particular his evidence that his solicitor disclosed to the wife’s solicitor that the husband was the registered proprietor of the land in the northern beaches which is owned by the V Trust. However, if the wife is permitted to proceed with the hearing of her application under s 79A, she must understand that the establishment of such a fact by the husband may prove fatal to her application.
In relation to the H Pty Limited Trust the wife alleges the husband has been guilty of fraud, suppression of evidence, giving of false evidence and “any other circumstance”. In relation to the fraud, the wife says the husband sought orders that the property of the Trust be transferred to himself. In this respect the wife relied on the “Orders Sought by the Husband - Financial” provided to the Court on 5 March 2008. She said the seeking of those orders amounted to a fraud because the husband was not a beneficiary under the Trust. She conceded that at the relevant time, the husband and wife were each equal shareholders in the company H Pty Limited. The company, H Pty Limited, is relevant because that company is the beneficiary of the H Pty Limited Trust. The trustees are the husband and wife. The Trust Deed is annexed to the wife’s affidavit filed 16 April 2009. The settlor and appointer of the trust is the same person, one Mr T. There is no evidence to establish any relationship between either party and that person. The only named beneficiary is H Pty Limited.
In relation to the above submission the wife did not explain why this argument was not pressed before Justice Fowler in the property hearing nor did she suggest that the argument was not available to her to present at the time of the hearing before Justice Fowler.
It should be noted that H Pty Limited was granted leave to intervene in the proceedings by Order of the Court made 23 May 2005. The name of the company does not appear as a party in the judgment delivered on 18 March 2008 by Justice Fowler, nor does it appear as a party to the Orders of the Court made 22 November 2007, to which I will refer in due course.
In relation to “suppression of evidence” the wife says that two days after the completion of the trial the husband secured registration of a plan of subdivision with the Land Titles Office of New South Wales in respect of the M property owned by the H Pty Limited Trust. That fact is conceded by the husband. The wife concedes that she knew the plan had been lodged for registration before the trial concluded. So much is evident by the Orders of 22 November 2007 which were consent orders. Those Orders required, inter alia, that the parties, as officers of H Pty Limited and the H Pty Limited Trust, lodge with the Land Titles Office the linen plan for the subdivision of the property and thereafter the parties were to list the property for sale at an agreed sale price of $725,000 and upon certain terms. The proceeds of sale were to be paid in a manner which included “in payment to each of the parties of the sum of $100,000 by way of partial property settlement to be taken into account by the Trial Judge as a partial property settlement in favour of that party.” The Order further provided “the balance to be held in an IBD account in both parties’ name [sic] on trust for [H] Pty Ltd and not to be disbursed pending further Order of the Court or agreement of the parties.” It is clear that the property referred to in the Orders was the M property owned by the Trust. Further, the Orders provided for the parties to draw down on a housing loan with the Commonwealth Bank of Australia secured against the Trust property a sum of $25,000 and apply the funds to repayment of an overdraft facility for H Pty Limited and otherwise to be used in the sale of the Trust property at M.
Thus it can be seen from those consent orders that each of the parties was aware of the H Pty Limited Trust and further that each of the parties treated the Trust property as their own property by requiring a distribution to each of them personally of $100,000 from the sale proceeds.
The wife complains that the registration of the plan took place after the hearing on either 21 or 22 December 2007 and that she did not know about that registration. She concedes that nothing prevented her from making her own enquiries of the Land Titles Office of New South Wales as to when the plan was or might be registered.
In relation to the wife’s allegation that the husband had given false evidence, the précis is that the false evidence is established by the husband seeking orders for the Trust property to be transferred to himself. She says that it is false evidence because the single expert carried out his calculations of the value of the company H Pty Limited on the basis that the assets of the Trust would be distributed to the company H Pty Limited. I cannot, under any circumstances, see how such an act could amount to “false evidence” as it is referred to in s 79A(1)(a).
The wife submits there is a tax differential of substance between the way the Orders provided for the disposition of the H Pty Limited Trust property as opposed to the manner in which tax would have been attracted and payable if the assets had been distributed to the husband solely.
In relation to that portion of the wife’s case she concedes she has provided no evidence at all to establish there would be any tax difference flowing from the different method of distribution through the Court Orders of 18 March 2008 to that promoted by the wife as the appropriate avenue for distribution of the assets of the Trust. Her argument appears to be associated with the fact that the Court determined she was to receive 38% of the assets of the parties. The Judge quantified that percentage as a fixed sum and required a payment by the husband to the wife of that sum. Although not specifically stating how this may arise it is inferred from the wife’s submissions that the quantum of the 38% of the net proceeds may have been greater if the consequence of the Orders of the Court was to give rise to a reduction in the amount of tax which the husband would pay upon receipt of the assets of the Trust as opposed to the amount of tax payable were the Trust to distribute the assets to the company and then the company distributed the assets to the husband.
The wife in particular, refers to tax losses which are highlighted in the affidavit of Mr K.
Having had an opportunity to consider the valuation of Mr K, it is clear that he took into account the taxation the parties would incur on a distribution of the sale proceeds of the M property through the company H Pty Limited. He was faced with a disagreement between the parties about the position in relation to their loan accounts and he concluded that there was a range which ultimately provided a total of about $953,000. The parties agreed on the figure of $892,098 and incorporated that figure into the balance sheet used by the trial Judge. The trial Judge was not required to go behind that agreement. Clearly, the agreement was based on evidence of Mr K and took into account the taxation incident of selling the M property owned by the H Pty Limited Trust and distributing the funds to the company H Pty Limited and then having H Pty Limited distribute the funds to the parties.
The approach taken by Mr K is also evident in relation to the H Pty Limited Trust. He set out the basis for concluding as follows:
“I consider the [H] Trust to be no more than an acknowledgment by the parties that they hold the [M] property on absolute trust for [H] Pty Limited.”
The wife further submits that the Orders of the Court cannot bind H Pty Limited because the company was not a party to the proceedings.
The record shows that H Pty Limited was a party to the proceedings.
No order was made by the trial Judge, Justice Fowler, against the company H Pty Limited. All Orders were made in personam against the parties. It is certainly the case that the assets of H Pty Limited are affected by the orders made by Justice Fowler; however, the company is entirely owned by the parties to the proceedings.
The Orders of Justice Fowler make it clear that he took the same view as Mr K of the H Pty Limited Trust and H Pty Limited. That is, that the parties were trustees for H Pty Limited of the property which they held at M. The fact that the parties treated the assets of H Pty Limited as their own is evidenced by the consent order made providing for a distribution to each of them of $100,000 of the sale proceeds of the M property. The orders made no provision for any of those funds to be paid to the company before being paid to the parties.
In her submissions, the wife also referred to loan accounts in the company H Pty Limited. She said that there was evidence in relation to the loan accounts which has not been divulged. The report of Mr K, which I have referred to earlier in these reasons, makes it clear that each of the parties was asserting different facts in relation to the loan accounts with H Pty Limited and certainly it is evident that the wife was well aware of the loan accounts in the company. It was necessary knowledge for her to be making submissions to Mr K in relation to the loan accounts of the company.
The wife in her submissions alleged she had not seen a copy of the Trust document. That allegation appears to be quite incredible given the other evidence in the case. It is clear that the wife’s lawyers knew of the existence of the H Pty Limited Trust, at least through the operation of the Orders made on 22 November 2007. Further, the report of Mr K makes it clear that the wife knew of the H Pty Limited Trust because of the joint letter of instruction dated 13 November 2007, which is annexed to Mr K’s affidavit. That letter attaches a copy of the trust deed in relation to the subject trust.
In relation to the V Trust it is uncontroversial that the husband is a bare trustee, with another, of the property occupied by Mrs V. There appears to be no capacity under the trust deed for the husband to become a beneficiary. There is no evidence to suggest that the husband has ever treated the assets of the Trust as his own. If the husband has received any benefit from the Trust, it is only for payment for legal services rendered or alternatively, an allowable fee of up to 5% of the income of the Trust which must be shared equally with the co-trustee. The records of the Trust made available show that even if the husband did receive a fee (which he denies) which was not paid as income to his professional practice, it would have been for insignificant amounts of money given the balance of the parties’ incomes, assets and financial circumstances.
In relation to the husband’s obligation to disclose, the Financial Statement form requires disclosures of an interest in a trust. The husband has no beneficial interest in assets of the V Trust.
In his affidavit of 15 July 2008 the husband attaches a purchaser’s index search which he provided to his solicitor when the proceedings commenced in 2003. That document discloses the legal title to the property which is the asset of the V Trust. Further, the husband in his affidavit asserts that the wife was actively involved, as his assistant in his professional practice, in the acquisition of the property in the husband’s name as trustee for the V Trust. This latter evidence was untested in the hearing before me and it was not conceded. It is not material to which the court can have regard when considering an application for summary dismissal of the wife’s application. It may be seen differently when considering an application for a permanent stay of the wife’s applications.
To the extent that the husband is required under the Rules of the Court to disclose the trust because he is a trustee, the husband has failed to make that disclosure.
The husband moves to have the wife’s applications under section 79A either summarily dismissed or permanently stayed. The Full Court has provided guidelines in relation to both those remedies.
Summary Dismissal
Summary judgements and separate decisions are provided for in Part 10.3 of the Family Law Rules 2004. An Application for summary judgement or a separate decision is made by filing a Form 2 Application in a Case and an affidavit. In this case however, the wife has not filed any Final Application.
Rule 10.12 provides for the making of summary orders. Summary judgement may be applied for after a response has been filed if a party claims, in relation to an application or response, one of the following:
a) the court has no jurisdiction;
b) the other party has no legal capacity to apply for the orders sought;
c) it is frivolous, vexatious or an abuse of process; or
d) there is no reasonable likelihood of success.
The decision of Lyndon v Commonwealth No 2 (1996) 70 ALJR 541 at 544-5, discussed the source of the Court’s jurisdiction to dismiss an application summarily, and the principles bearing upon the exercise of that discretion. In Bigg v Suzi (1998) FLC 92-799, Barblett DJC, Lindenmayer and Finn JJ (at paragraph 5.10), quoted Kirby J (at 544-5) in Lyndon (supra), below:
“The approach to be taken by the Court to the Commonwealth's application
for summary relief is not in doubt:
1. It is a serious matter to deprive a person of access to the courts of law for it
is there that the rule of law is upheld, including against government and other
powerful interests. This is why relief, whether under O 26, r 18 or in the
inherent jurisdiction of the Court, is rarely and sparingly provided; [General
Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
at 128f; Dyson v Attorney-General [1911] 1 KB 410 at 418.
2. To secure such relief, the party seeking it must show that it is clear, on the
face of the opponent's documents, that the opponent lacks a reasonable cause
of action [Munnings v Australian Government Solicitor (1994) 68 ALJR 196
at 171f, per Dawson J] or in advancing a claim that is clearly frivolous or
vexatious; [Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at
91.]
3. An opinion of the Court that a case appears weak and such that it is unlikely
to succeed is not, alone, sufficient to warrant termination. [Coe v The
Commonwealth (1979) 53 ALJR 403; Wickstead v Browne (1992) 30 NSWLR
at 5-7.] Even a weak case is entitled to the time of a court. Experience teaches
that the concentration of attention, elaborated evidence and argument and
extended time for reflection will sometimes turn an apparently unpromising
cause into a successful judgment;
4. Summary relief of the kind provided for by O 26, r 18, for absence of a
reasonable cause of action, is not a substitute for proceeding by way of a
demurrer. [Coe v The Commonwealth (1979) 53 ALJR 403 at 409.] If there is
a serious legal question to be determined, it should ordinarily be determined at
a trial for the proof of facts may sometimes assist the judicial mind to
understand and apply the law that is invoked and to do so in circumstances
more conducive to deciding a real case involving actual litigants rather than
one determined on imagined or assumed facts;
5. If, notwithstanding the defects of pleadings, it appears that a party may have
a reasonable cause of action which it has failed to put in proper form, a court
will ordinarily allow that party to reframe its pleading. [Church of Scientology
v Woodward (1980) 154 CLR 25 at 79.] A question has arisen as to whether O
26, r 18 applies to part of a pleading. [ Northern Land Council v The
Commonwealth (1986) 161 CLR 1 at 8.] However, it is unnecessary in this
case to consider that question because the Commonwealth's attack was upon
the entirety of Mr Lindon's statement of claim; and
6. The guiding principle is, as stated in O 26, r 18(2), doing what is just. If it is
clear that proceedings within the concept of the pleading under scrutiny are
doomed to fail, the Court should dismiss the action to protect the defendant
from being further troubled, to save the plaintiff from further costs and
disappointment and to relieve the court of the burden of further wasted time
which could be devoted to the determination of claims which have legal
merit.”
In an application for summary dismissal where the test is whether or not the application is “doomed to fail” the Court must determine the application by considering only the evidence in support. In Miller and Harrington (2008) FLC 93-383 the Full Court (Warnick, Boland and Murphy JJ) said (at paragraph 69) that “…the usual approach has been to determine the application by reference to material in the case for the respondent together with any non-contentious facts.” In Bigg v Suzi (supra) the Full Court looked also to the outline of argument filed on behalf of the appellant, noting at paragraph 6.2 that “…the real substance of the husband’s appeal was much more clearly and precisely defined in the written “outline” of argument…:”.
In further taking into account what material is to be considered Finn J in Custodio and Pinto & Ors (2006) FLC 93-279 said that:
8. The authorities also establish that there are limitations on the material upon which an applicant for summary dismissal can rely in establishing the case for such relief. As Kirby J said in Lindon (supra) that in order to secure relief by way of summary dismissal, “the party seeking it must show that it is clear on the face of the opponent’s documents that the opponent lacks a reasonable cause of action” (at 544-5).
9. In Beck (supra) the Full Court cited a passage from the joint judgment of Mason CJ, Dean and Dawson JJ in Webster v Lampard (1993) 177 CLR 598 at 608 concerning the power to summarily dismiss which concluded with the following:
As has been said, it was incumbent on the Master, in the absence of any opportunity of cross-examination, to dispose of the case on the basis that the [respondent’s] version of the facts, which was not inherently incredible, would ultimately be accepted on the trial of the action.
10. Having cited this passage, the Full Court in Beck continued (at paragraphs 20–21):
20. Further support for the proposition that an application for summary dismissal must be determined on the basis only of the material put forward by the respondent (to that application) is to be found in the passage from the judgment of Kirby J in Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541 at 544-5 (which was quoted by the Full Court in its judgment in Bigg v Suzi) where his Honour said:
“…2. To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action (Munnings v Australian Government Solicitor (1994) 68 ALJR 196 at 171f, per Dawson J) or in advancing a claim that is clearly frivolous or vexatious; (Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.)”
21. Regard should also be had to paragraph 6.31 of the judgment in Bigg v Suzi where the Full Court referred to the fact that the wife, who was the applicant for the summary dismissal of a s 79A application by the husband, “had no right to adduce any evidence at that summary hearing to contradict the evidence of the husband or to seek to contradict any inference which it might be submitted should be drawn from that evidence.”
11. In the recent decision in Bain Pacific Associations LLC, BCIP Associates II-B and Pacific Equity Partners (NZ) Limited, and others and Kelly [2006] FamCA 518, having referred to what was said in paragraphs 21 of the judgment in Beck (supra), the Full Court of this Court accepted the proposition:
21.… that apart from material in the case of the respondent to an application for summary dismissal, the court may have regard to relevant non-contentious facts, even if raised by the applicant for summary dismissal.
The difficulty associated with successfully pursuing an application for summary dismissal was highlighted by the Full Court (Kay, Coleman and Boland JJ) in Gitane and Velacruz (2007) FLC 93-309. In that case, the trial Judge dismissed the husband’s s79A application, and the orders went on to provide a notation that the dismissal was a summary dismissal.
The Full Court allowed the husband’s appeal, finding that it could not be said the husband’s case was “doomed to fail” and that “…on a strict reading of the written application that was before him, there was, on that return that day no such application pending” (at 81-313). Kay J (Coleman and Boland JJ agreeing) stated (at 81-314):
24. The principles to be applied in an application to strike out for summarily dismiss [sic] have been discussed in a number of cases by this Court and in particular the words of Kirby J in Lyndon v Commonwealth No 2, (1996) 70 ALJR 541 at 544 and 5 have been applied. I refer, amongst other decisions, to the decision of Bigg v Suzi (1998) FLC 92-799 at paragraph 510.
25. I paraphrase the salient points as follows:
(1) that relief for summary dismissal is rarely and sparingly provided;(2) that it is only available if it is clear on the face of the documents of the person asserting a cause of action that there is no reasonable cause of action or that it is a frivolous or vexatious one;
(3) that it is not enough to attain summary dismissal to show that it is a weak case;
(4) that there is a defect in the pleading and it appears that the party still has a reasonable cause of action, the Court will allow the party to reframe its pleading;
and
(5) that one only summarily dismisses if it is clear that the case is doomed to fail.
Furthermore, under Rule 10.14, the Court may:
a) dismiss any part of the case;
b) decide an issue;
c) make a final order on any issue;
d) order a hearing about an issue or fact; or
e) with the consent of the parties, order arbitration about the case or
part of the case.
Permanent Stay
A permanent stay of proceedings is typically sought where there are similar proceedings in another country. The Court has the inherent power to order a permanent stay (see Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 219 CLR 365 at paragraph 68).
Cases in which a permanent stay of proceedings is sought are perhaps more varied than those the subject of a summary dismissal application. The principles governing relief may include the proposition that the case is untenable and where it would be an abuse of process to commence or continue proceedings if the stay were not granted. This position was summarised by me at paragraph 60 in an earlier Judgement, N and H [2003] FamCA 1284, and set out below:
1. Without seeking to develop and [sic] exhaustive list, it may be an abuse of process to commence or continue proceedings in the Court where:-
(a)The proceedings are commenced not in good faith and for an improper purposes (sic);
(b) The Court “is satisfied that the continuation of the proceedings would be so unfairly and unjustifiably oppressive.”
(c) The processes and procedures of the Court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness.
(d) It would be manifestly unfair to a party, or would otherwise bring the administration of justice into disrepute among right-thinking people.
(e) The proceedings are frivolous, vexatious or oppressive.
2. That the application of the relief should only be applied in an exceptional or extreme case. Sparingly and with the utmost caution.
3. The proceedings may be “unjustifiably oppressive” where there is inordinate delay in commencing the litigation.
4. “Where there is delay the whole quality of justice deteriorates. What has been forgotten can rarely be shown”
5. Long delay gives rise to a general presumption of prejudice.
6. Delay may give rise to an abuse where it is such that a court could conclude that by the time the matter came to trial relevant facts would no longer be in the minds of the potential witnesses.
7. The finding of actual prejudice and the possibility of other prejudice should give rise to the relief sought.
In Rogers v The Queen (1994) 181 CLR 251 at 255 (footnotes omitted), Mason J said:
“The concept of abuse of process is not confined to cases in which the purpose of the moving party is to achieve some foreign or ulterior object....The circumstances in which abuse of process may arise are extremely varied and it would be unwise to limit those circumstances to fixed categories…”.
A majority of the High Court of Australia (Mason CJ, Deane and Dawson JJ, Brennan and Toohey JJ dissenting) in Walton v Gardiner (1993) 177 CLR 378, affirmed the decision of a majority of the New South Wales Court of Appeal to permanently stay proceedings in relation to medical practitioners. In finding that the proceedings had been properly stayed the Majority said (at 392-3, footnotes omitted):
“The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Thus, it has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance, proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail (36). Again, proceedings within the jurisdiction of a court will be unjustifiably oppressive and vexatious of an objecting defendant, and will constitute an abuse of process, if that court is, in all the circumstances of the particular case, a clearly inappropriate forum to entertain them (37). Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings (38). The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v. Chief Constable of the West Midlands Police (39) as "the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people”.”
Whilst this case concerned proceedings before the Medical Tribunal, the Court’s power also arises in civil cases, and the Majority went on to say in Walton (supra) (at 394-5, footnotes omitted):
“In her judgment in Jago (44), Gaudron J. stressed that the power of a court "to control its own process and proceedings is such that its exercise is not restricted to defined and closed categories, but may be exercised as and when the administration of justice demands." Her Honour added the comment (44) "that, at least in civil proceedings, the power to grant a permanent stay should be seen as a power which is exercisable if the administration of justice so demands, and not one the exercise of which depends on any nice distinction between notions of unfairness or injustice, on the one hand, and abuse of process, on the other hand". Subsequently in her judgment (45), her Honour made clear that, subject to some refinements which she identified, that comment was also appropriate to be adopted in relation to criminal proceedings.”
In the recent Full Court judgment of Fennessy and Gregorian [2009] FamCAFC 44 at issue was whether the father’s appeal should be dismissed or permanently stayed. The reasoning of their Honours (Coleman, Boland and Thackray JJ) (at paragraph 29) is instructive for present purposes:
26. Under the heading “Balance between orders for Dismissal or Permanent Stay or Strike out”, Counsel for the Director General reminded the Court that “the power to dismiss an appeal which may have the effect of prejudicing the rights of the appellant must be exercised with great care”. Counsel also reminded the Court of the authorities which support that proposition.
27. We accept without hesitation the wisdom of that caveat. Ultimately, the issue becomes one of balancing the entitlement of an appellant to have the merits of his or her appeal considered on the one hand, and the rights of other parties to finality of litigation and undisturbed enjoyment of the fruits of success in that litigation on the other.
28. The Director-General concluded his submissions as to whether the appeal should be dismissed or permanently stayed by submitting:
18. If this Honourable Court is satisfied that there are adequate reasons for the delay in lodging that security and for the failure of the Appellant to prosecute the Appeal it is submitted that on balance it is in the best interests of the child that the appeal should still be dismissed.
19. Conversely if the Court is satisfied that on balance the interests of justice require the Appellant have the opportunity to prosecute the appeal then the appeal should be permanently stayed or struck out. [Director-General’s submissions filed 23 January 2009].
29. Whilst there may in practice not be a significant distinction between the courses, the reality is that only an order for dismissal, and consequential extinguishment of the Court’s jurisdiction, brings absolute finality to the proceedings. Although it is difficult to suggest how, as an order permanently staying proceedings does not have that consequence, it may be that the father in this appeal would be potentially advantaged by an order permanently staying his appeal. That would be an unfortunate outcome.
…
34. In our view, the circumstances justifying either a permanent stay of the father’s appeal or its dismissal are not materially different. The attraction of an order dismissing the appeal for those resisting it is that, subject only to the father bringing an application for special leave to appeal in the High Court, the lengthy and expensive saga of litigation will certainly be at an end.
35. An order permanently staying the proceedings must of its nature preserve some prospect of further litigation in this Court. The history of the proceedings suggests that to leave that prospect open when it could be averted would be unjust. From the father’s perspective, if this Court dismisses his appeal, and there is substance in the father’s complaint that he has been unjustly dealt with, he is free to pursue his complaints in the High Court.
In discussing the Court’s power to control its own processes and proceedings, Gaudron J in the High Court decision in Jago v District Court of New South Wales (1989) 168 CLR 23 said (at 74, footnotes omitted):
“The power of a court to control its own process and proceedings manifests itself in a variety of ways. It may involve no more than the grant of an adjournment. On the other hand, it is accepted that it may result in the grant of a permanent stay of civil proceedings that are frivolous, vexatious or oppressive. See Metropolitan Bank v. Pooley (84); Lawrance v. Norreys (85).
The power of a court to control its own process and proceedings is such that its exercise is not restricted to defined and closed categories, but may be exercised as and when the administration of justice demands. See eg., Jackson v. Sterling Industries Ltd. (86); Hamilton v. Oades (87).
The terms “frivolous”, “vexatious” and “oppressive”, when used in relation to civil proceedings, sometimes serve to signify that the proceedings are an abuse of process such that, in the interests of the administration of justice, they should attract the grant of a permanent stay. But the terms “vexatious” and “oppressive” may also import a consideration of the justice or fairness of the proceeding, those terms signifying, in appropriate context, proceedings which are “seriously and unfairly burdensome, prejudicial or damaging” or are “productive of serious and unjustified trouble and harassment”: Oceanic Sun Line Special Shipping Company Inc. v. Fay (88); Hamilton v. Oades (87).
The above general considerations lead me to think that, at least in civil proceedings, the power to grant a permanent stay should be seen as a power which is exercisable if the administration of justice so demands, and not one the exercise of which depends on any nice distinction between notions of unfairness or injustice, on the one hand, and an abuse of process, on the other hand.”
...
In Pagliotti and Hartner (2009) FLC 93-393 the husband at first instance filed a response seeking an order that the application filed by the wife for relief pursuant to s 79A be permanently stayed. The parties had engaged in proceedings in the Italian courts. The husband also sought to pursue a claim under s 78.
In referring to the trial Judge’s reasoning the Full Court (Coleman, Boland and O’Ryan JJ) said (at 83,232):
33. Reference was then made to the decision of the majority in the High Court in Henry v Henry (1996) 185 CLR 571. Her Honour recorded that on behalf of the husband it was asserted that the wife's section 79 application was either "oppressive, in the sense of 'seriously and unfairly burdensome, prejudicial or damaging to the husband; and/or, vexatious, in the sense of 'productive of serious and unjustified trouble and harassment' to him".
34. Her Honour recorded that the wife's section 79 application should be permanently stayed if the evidence fulfilled either or both of the criteria to which she had been referred in reliance upon Henry (supra).
35. Reference was then made to the submission on behalf of the husband that the wife's “application must be regarded either as res judicata or such as would constitute an abuse of process, which would be restrained on the basis of the principles enunciated in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589”.
CONCLUSION:
The wife has established that the husband failed to disclose to the court that he was a trustee of the V Trust. The wife has not established that the husband had at any time prior to 18 March 2008, now has or could have in the future, any beneficial interest in the V Trust.
The wife has not established that the husband was guilty of any “fraud, suppression of evidence, giving false evidence or any other circumstance” as required by section 79A in relation to the H Pty Limited Trust.
If the wife establishes that the husband has failed to disclose a relevant fact (as she has done in relation to the V Trust), does that entitle her to succeed in relation to her s 79A(1)(a) application insofar as that application seeks to set aside the Orders made by the Court on 18 March 2008?
The decisions of the Full Court require, in the hearing of an application under s 79A, for the Court to be satisfied firstly, that there is a relevant finding in respect of the grounds set out under s 79A. Next, the Court is required to exercise a discretion in setting aside the Orders originally made and in making Orders to substitute for the original Orders. The point sought to be made here is that the mere establishment of a ground in a s 79A proceeding does not of itself lead to the making of different or further property orders to those made initially by the Court.
In this case, based on the evidence of the wife in relation to the V Trust, I would not exercise the discretion of the Court in setting aside the Orders made 18 March 2008 simply on a finding that the husband had failed to disclose that he was a trustee of the V Trust during the determination of the proceedings which gave rise to the Orders of 18 March 2008. I am satisfied that had the husband disclosed his position as Trustee of the V Trust, and all relevant material relating to his dealings with the trust, it would not have had any meaningful impact upon the decision of the court.
Given all that has been said in these reasons so far, I conclude that the wife’s applications are doomed to failure insofar as they seek to set aside the Orders of the Court made on 18 March 2008 pursuant to s 79A. If I be in error in that conclusion, then I am of the opinion that to allow the wife to proceed with her applications on the evidence which she has placed before the Court would amount to an abuse of process as there is no evidence presented by the wife which, if it had been before the trial Judge, Justice Fowler, could reasonably be seen to have led to his Honour reaching a different conclusion to that set out in his judgment of 18 March 2008. The administration of justice in my view requires that the wife’s application, at the very least be permanently stayed. To allow the wife to proceed further, on the case she presents at this time, would be to subject the husband to “serious and unjustified trouble and harassment”.
I can well understand the dilemma facing those who acted for the husband prior to 18 March 2008 about disclosing the husband’s position as trustee of the V Trust. However, as clearly appears from these reasons, there was an obligation on the husband to make the disclosure to both the wife and the Court. The husband should clearly have followed the time honoured practice of Family Lawers, “If in doubt disclose”.
I respectfully agree with the Full Court’s conclusion in Fennessy and Gregorian (supra) that, for all practical purposes, there is no difference between an order for summary dismissal and an order imposing a permanent stay.
Accordingly I would dismiss the wife’s applications made pursuant to s 79A of the Family Law Act 1975 (“the Act”).
Costs
The husband seeks an order for indemnity costs if the wife is unsuccessful in her application.
The availability to the Court to make an order for indemnity costs has been the subject of jurisprudence in this court. The following represents a summary of that jurisprudence.
Indemnity Costs
In the absence of circumstances justifying the making of an order for costs, the general principle under s 117(1) of the Act is that each party to proceedings shall bear their own costs. Where it is ordered that the costs of one party be paid by another party, the most common form of assessment is for the payment of costs on a ‘party and party’ basis, as agreed or taxed.
The Court has a broad discretion as to the orders that it makes for costs, with s 117(2) of the Act allowing the Court to make such orders for costs as it considers just. In the exercise of that discretion, regard must be had to the matters set out in section 117(2A), namely:
(a) the financial circumstances of each of the parties to the
proceedings;
(b) whether any party to the proceedings is in receipt of
assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the
proceedings including, without limiting the generality of the
foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in
writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
An order for costs may also be made on a ‘solicitor and client’ or ‘indemnity’ basis. In Kohan and Kohan (1993) FLC 92-340 the Full Court (Strauss, Lindenmayer and Bulley JJ) held (at 79,614) that:
“…where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules.”
This represents a significant departure from the ordinary standard and the Full Court in Kohan and Kohan (supra) went on to say (at 79,614) that:
“…the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind.”
Similarly, Sheppard J in Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 stated that there must be some “special or unusual feature”, to justify such a departure.
In exercising the discretion to award indemnity costs the terms of the cost agreement or costs agreements under which the costs are quantified should be disclosed to the Court, pursuant to Rule 19.08(3) of the Family Law Rules. In addition, the Court should know the extent of the departure from the scale of costs and indeed this may be a reason for not making an order for indemnity costs (Kohan and Kohan (supra) at 79,611 and 92-340). The Court should also be aware of the impact the departure will have on the financial position of the parties.
In the recent decision of Fennessy and Gregorian (supra), the Full Court (Coleman, Boland and Thackray JJ), in deciding that the jurisdiction to award indemnity costs was not enlivened in that case, provided a convenient summary of the principles governing when an order for costs may be made on an indemnity basis as follows:
59. Amongst other places, indemnity costs were discussed by the Full Court in Limousin & Limousin (Costs) (2008) 38 Fam LR 478; [2007] FamCA 1178 in the following terms:
41. The decision of the Full Court of the Family Court (Strauss, Lindenmayer and Bulley JJ) in Kohan and Kohan (1993) FLC 92-340; (1992) 16 Fam LR 245 held that nothing in s 117 or 123 of the Family Law Act 1975 (“the Act”) prevents the Court making an order for costs on an indemnity basis. It was recorded at FLC 79,614; Fam LR 258 (citations omitted):
The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the court may make such order as the court considers just. As we have pointed out, the court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O 38 r 2, the provisions of O 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. Order 38 rule 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind. See Degmam v Wright (No 2); Wentworth v Rogers (No 5); Hobartville Stud v Union Insurance Co.
Indemnity costs orders are still an exception in this and other jurisdictions.
42. The principles underpinning indemnity costs were summarised by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 at 256:
(2)The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis …
(3)This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it …
(4)In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course …
43. In the decision of Yunghanns v Yunghanns (2000) FLC 93-029; (2000) 26 Fam LR 331 the Full Court of the Family Court (Lindenmayer, Holden and Mullane JJ) acknowledged that the category of cases in which an indemnity costs order is appropriate is not closed. It was recorded in paragraph 31:
It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought.
60. As was the case in Limousin (supra), the following passage from the Judgment of Shephard J in Colgate-Palmolive (supra) is instructive (at 257):
… it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson; Maitland Hospital v Fisher (No 2); Crisp v Kent) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). (citations omitted)
….
62. It would in our view be impermissibly extending the principles governing the awarding of indemnity costs to do so in this case. Whilst contributing to the dismissal of his appeal, and justifying the making of an order for costs, we do not consider the father’s conduct of the proceedings in this Court to be “special or unusual” or of such an “exceptional” kind as to justify the awarding of indemnity costs. Nor in our view does the father’s conduct constitute “extraordinary conduct” sufficient to justify the making of an order for indemnity costs (see Yunghanns (supra)).
In addition, the Full Court in JEL and DDF (No 2) (2001) FLC 93-083 (Kay, Holden and Guest JJ) held that failure to accept an offer of compromise alone was insufficient to justify the making of an indemnity costs order. Their Honours said:
70. In our opinion, the failure to accept an offer which in retrospect, perhaps, should have been accepted is without more, insufficient to justify the making of a costs order on an indemnity basis. The rejection of the offer must be at the very least imprudent. We express no opinion as to when the rejection of an offer may be so classified. It is clear to us in the circumstances of this case that the rejection of the offer, although unwise in retrospect was not imprudent.
Rule 19.34(2) of the Family Law Rules 2004 provides that where costs have been ordered on an indemnity basis, the Registrar must allow all costs reasonably incurred, and of a reasonable amount, having regard to the following (among other things):
(a) the scale of costs in Schedule 3;
(b) any costs agreement between the party to whom costs are payable
and the party’s lawyer; and
(c) charges ordinarily payable by a client to a lawyer for the work.
Determination of the Costs Application
The financial circumstances of the parties are reasonably disclosed by the judgement of Justice Fowler and the evidence before the Court in the applications under consideration.
The application for indemnity costs is based upon the wife’s failure in her applications and the husband’s success in having her applications dismissed.
It must be recognised that to initiate an application under s 79A carries with it a heavy burden on the applicant to prove the ground relied upon in order to have the Court then consider making further s 79 orders. Not only must the ground be established, the Court must then exercise a discretion to set aside, vary and/or make further property orders.
The Act does not encourage the making of a s 79A application. Section 81 of the Act imposes a duty on the Court to end financial relations. It is anticipated by the legislature that all orders made pursuant to s 79 of the Act intend finality with the making of the order. There is no jurisdiction in the Court to hear another application under s 79 of the Act once a final property order has been made. The only pathway is through the provision of s 79A.
The Court must guard well the requirement to make a full and frank disclosure in a property proceeding and impose serious sanctions upon those who are found to have not complied with that requirement. Any injustice which arises from any such established failure to make a full and frank disclosure is capable of remedy by the power provided through s 79A. There are other sanctions which may be available. In circumstances where it becomes necessary for the Court to make a further property order under s 79A arising from a wilful failure to make a proper disclosure, this will often warrant the making of a costs order against the defaulting party. In such circumstances an indemnity costs order may be appropriate.
Given the matters set out in the above three paragraphs the Court must consider the approach to be taken in considering costs applications where an applicant for a remedy under section 79A has failed. Clearly one approach may be to make an order for indemnity costs against a failed applicant where the application can be clearly seen to be frivolous or vexatious. It may also be applicable in cases of clear abuse of process. On the other hand an applicant who has a legitimate point to make (i.e. to show a clear failure to disclose relevant facts) and who, notwithstanding, fails to obtain any further property orders because the Court determines that the non disclosed fact would not or could not have reasonably impacted upon the courts original determination, whilst possibly deserving of a costs order, ought not in my view, to carry a sanction/penalty of indemnity costs in other than exceptional circumstances.
All of the above goes, I think, to establish that the Court ought to be seen to discourage applications under s 79A which are unlikely to succeed. The degree of justification in the commencing or continuing with the application will probably determine whether a costs order to be made against a failed applicant should be one for indemnity costs or party and party costs. Another consideration might arise in relation to self represented applicants for the remedy. Ought the failure of the case have been reasonably predicted by the self represented litigant?
In this case the wife has established a failure to disclose a relevant fact at a relevant time by the husband. The wife is a self represented litigant. Although she has a history of working in a legal environment over a lengthy period I do not think she comprehended that whilst, on the one hand, she may expose a failure to disclose by the husband that may, nonetheless, result in her application being dismissed. On the other hand she should have been reasonably able to see that even if she established the non disclosure in relation to the V Trust it was most unlikely to give rise to further orders. The wife appeared to be adopting the view that the revelation of the non disclosure would provide her with a complete re-run of the proceedings before another judge than Justice Fowler and thereby the prospect of a more favourable outcome.
In my view it would be most unfair to the husband to require him to have defended the wife’s application incurring all the normal costs associated with that exercise and not receive a costs order when he had been successful in the litigation. Further, given the wife’s financial circumstances as set out before the court it is difficult to see why the wife had chosen to represent herself in the hearing before me. She could at least have obtained some legal advice before running the hearing.
I conclude therefore that an order should be made for the wife to pay the husband’s costs of and associated with the failed applications. However, it is not appropriate to make such an order one for indemnity costs.
The Wife’s Amended Application Filed 17 June 2009
This Amended Application in a Case appears to arise out of the Orders of the Court made by Justice Fowler which were subsequently stayed following the appeal of the wife. The wife says that the husband proceeded to implement orders of the Court relating to the company H Pty Limited notwithstanding the stay order subsequently made. The appeal is yet to be determined. I would encourage the wife not to seek to proceed with her application until the appeal is heard unless she can see that serious consequences may flow to her of failing to expeditiously prosecute that action.
The application may be listed for further mention before me on the application of the wife.
I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench
Associate:
Date: 7 August 2009
Key Legal Topics
Areas of Law
-
Family Law
-
Civil Procedure
Legal Concepts
-
Abuse of Process
-
Res Judicata
-
Costs
-
Stay of Proceedings
-
Procedural Fairness
-
Remedies
0
24
2