Atkins & Hunt
[2017] FamCAFC 131
•14 July 2017
FAMILY COURT OF AUSTRALIA
| ATKINS & HUNT AND ORS (COSTS) | [2017] FamCAFC 131 |
| FAMILY LAW – APPEAL – COSTS – where two appeals were filed in respect of spousal maintenance and final property settlement orders – where the question of costs for the spousal maintenance appeal was reserved until the delivery of orders and reasons in the property settlement appeal – where those orders required each of the parties to file submissions in relation to costs – where applications for costs were made in respect of both appeals – where the wife made an application seeking that the husband pay the costs of both appeals – where the wife sought that no order for costs be made against her by the second to sixth respondents – where the wife sought in the alternative that the husband indemnify her against any costs ordered against her – where the husband sought no order for costs – where the second to sixth respondents made an application that the wife pay their costs – where the success of the spousal maintenance appeal and the parties’ relative financial circumstances justified an order for costs in respect of that appeal – where the wife was wholly unsuccessful in her appeal against the second to sixth respondents – where the wife’s claims on appeal in relation to the second to sixth respondents were not raised at the trial – where those circumstances justified an order for costs against the wife in the property settlement appeal – where there was no basis to make an order for the husband to indemnify the wife – where the husband resisted the property settlement appeal and should pay the wife’s costs thereof – application for costs in the spousal maintenance appeal allowed against the husband – application by the second to sixth respondents for costs in the property settlement appeal allowed against the wife – application by the wife for costs in the property settlement appeal allowed against the husband. |
Family Law Act 1975 (Cth) ss 44(3), 74, 75(2), 83, 117, 117(1), 117(2A), 117(2A)(a), 117(2A)(c), 117(2A0(e), 117(2A)(f)
Family Law Rules 2004 (Cth) r 19.50
Federal Proceedings (Costs) Act1981 ss 6, 8
| Parke & The Estate of the Late A Parke (2016) FLC 93-748 |
| APPELLANT: | Ms Atkins |
| FIRST RESPONDENT: | Mr Hunt |
| SECOND RESPONDENT: | N Pty Limited |
| THIRD RESPONDENT: | T Pty Limited |
| FOURTH RESPONDENT: | H Pty Limited |
| FIFTH RESPONDENT: | Mr D |
| SIXTH RESPONDENT: | Mr J |
| FILE NUMBER: | SYC | 425 | of | 2012 |
| APPEAL NUMBER: | EA | 171 | of | 2014 |
| EA | 158 | of | 2015 |
| DATE DELIVERED: | 14 July 2017 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | By way of written submissions |
| JUDGMENT OF: | Bryant CJ, May and Murphy JJ |
| HEARING DATE OF APPEAL: | 23 and 24 August 2016 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATES: | 4 December 2014 21 August 2015 |
| LOWER COURT MNC: | [2014] FamCA 1076 [2015] FamCA 707 |
REPRESENTATION
| SOLICITOR FOR THE APPELLANT: | Milevski Family Lawyers |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Lethbridge SC |
| SOLICITOR FOR THE FIRST RESPONDENT: | Sexton Family Law |
| COUNSEL FOR THE SECOND – SIXTH RESPONDENTS: | Mr S Gray |
| SOLICITOR FOR THE SECOND – SIXTH RESPONDENTS: | HWL Ebsworth Solicitors |
Orders
The husband pay to Milevski Family Lawyers Trust Account the wife’s costs of and incidental to the spousal maintenance appeal EA158 of 2015 as agreed or failing agreement as assessed.
The husband pay to Milevski Family Lawyers Trust Account the wife’s costs of and incidental to the property appeal EA171 of 2014 as agreed or failing agreement as assessed.
The wife pay the second to sixth respondents’ costs of and incidental to the property appeal EA171 of 2014.
Pursuant to rule 19.50 of the Family Law Rules 2004 (Cth) the Court certifies that it was reasonable for the parties to engage Senior Counsel in relation to the appeals.
IT IS NOTED:
The written submissions on behalf of the second to sixth respondents record that they will not take steps to enforce the wife’s payment of their costs pursuant to order (3) herein, pending the re-hearing and determination of the property applications, provided that such application is litigated by the wife with all due diligence.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Atkins & Hunt and Ors (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA171 OF 2014; EA158 of 2015
File Number: SYC425 OF 2012
Ms Atkins
Appellant
And
Mr Hunt
First Respondent
And
N Pty Limited
Second Respondent
And
T Pty Limited
Third Respondent
And
H Pty Limited
Fourth Respondent
And
Mr D
Fifth Respondent
And
Mr J
Sixth Respondent
REASONS FOR JUDGMENT
As a consequence of two Full Court decisions in respect of appeals filed by Ms Atkins (“the wife”) in relation to spousal maintenance and property settlement, applications were made seeking costs. These reasons deal with those applications and the written submissions filed pursuant to orders made by the Full Court.
The husband and wife were the only parties to the maintenance appeal, and the wife, husband and a number of third parties (“the second to sixth respondents”) were parties to the property appeal. The second to sixth respondents included companies in which the husband had an interest, being N Pty Limited, T Pty Limited and H Pty Limited. Two of the husband’s children, D and J were also respondents.
On 12 November 2016, the Full Court made orders allowing the spousal maintenance appeal (EA158 of 2015) (“the maintenance appeal”). The appeal was against orders made by McClelland J on 21 August 2015 which dismissed the wife’s application for final and interim spousal maintenance. The application was remitted for re-hearing, and relevantly Order 7 of the Full Court Orders provided:
(7)The question of costs of this appeal be reserved with directions to be made in relation to the filing of written submissions together with any other costs submissions upon the delivery of Orders and Reasons in relation to Appeal EA 171 of 2014.
On 28 April 2017, the Full Court made the following orders allowing the wife’s appeal (EA171 of 2014) (“the property appeal”) in respect of orders made by Aldridge J on 4 December 2014. Those orders provided:
(1)Grounds 1, 2.1, 2.2 and 5 of the Amended Notice of Appeal filed 31 July 2015 be struck out.
(2)The appeal be allowed.
(3)The orders of Aldridge J made on 4 December 2014 be set aside.
(4)The wife’s application for settlement of property be remitted for re-hearing.
(5)Any application by either party in respect of the costs of the appeal and/or in respect of the costs of Appeal No 158 of 2015 reserved by order of the Full Court on 11 November 2016 shall be filed and served by not later than 4.00pm on 20 May 2017 and shall be accompanied by such written submissions, limited to not more than three pages in length, in support of any such application.
(6)Any written submissions in reply to those filed pursuant to paragraph (5) of these orders shall be filed and served by not later than 4.00pm on 10 June 2017 and shall be not more than two pages in length.
The Applications
The wife’s Costs Application
The wife seeks orders which can be summarised as follows:
Appeal EA171 of 2014 [the property appeal]
·The husband pay her costs in relation to the appeal;
·The court certify that it was reasonable to engage Senior Counsel;
·There be no order for costs against the wife in favour of the second to sixth respondents;
·Alternatively, the husband indemnify the wife for any costs she may be ordered to pay the second to sixth respondents; and
·If there is no order for costs, the wife receive a costs certificate under the Federal Proceedings (Costs) Act1981 for the appeal and re-hearing.
Appeal EA158 of 2015 [the maintenance appeal]
·The husband pay her costs;
·Alternatively if there is no order for costs, the wife receive a costs certificate under the Federal Proceedings (Costs) Act1981 for the appeal.
The Husband’s response
The husband in response seeks the following orders:
Appeal EA171 of 2014 [the property appeal]
·There be no order for costs against him;
·The husband receive a costs certificate under the Federal Proceedings (Costs) Act1981 for the appeal and re-hearing; and
·The husband also sought certification that it was reasonable to engage Senior Counsel.
Appeal EA158 of 2015 [the maintenance appeal]
·There be no order for costs against him; and
·The husband receive a costs certificate under the Federal Proceedings (Costs) Act1981 for the appeal.
The Second to Sixth Respondents’ application
The second to sixth respondents’ seek the following orders:
·The wife pay their costs of the property appeal;
·Alternatively, if no order for costs is made, the second to sixth respondents receive a costs certificate under the Federal Proceedings (Costs) Act1981 for the appeal and for the re-hearing if the remitter is without limitation.
Relevant Matters
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that subject to certain exceptions, each party to proceedings shall bear their own costs. The Court may make an order for costs if there are circumstances justifying such an order. Section 117(2A) sets out the factors to which the court shall have regard.
The relevant principles with respect to costs are well settled, and are set out in detail in the Full Court decision of Parke & The Estate of the Late A Parke (2016) FLC 93-748.
The relevant matters to be considered in these applications, by reference to the provisions of s 117(2A) are as follows:
(a) the financial circumstances of each of the parties to the proceedings;
…
(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;
…
(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; …
The following discussion refers to the underlying facts asserted by the parties to be relevant to the applications for costs of the appeals.
Financial circumstances of the parties — s 117(2A)(a)
The wife filed an affidavit on 19 May 2017 in support of her application for costs. It states that her liabilities currently exceed her assets by $627,953.02 (at [3]). The wife sets out her assets and liabilities in a table. It is relevant to note the wife does not earn any income and has a number of bank loans, personal loans and credit card debts. Her legal fees presently outstanding to her solicitors are in excess of $90,000 and her liability for expert fees exceeds $180,000.
As a result of the orders made by McClelland J, the wife initially received no spousal maintenance, and pursuant to the orders of Aldridge J, received $174,747 by way of property settlement.
Pursuant to the Full Court orders made on 12 November 2016, the spousal maintenance application was remitted for re-hearing before another judge. On 24 March 2017, Justice Rees made orders for the wife to receive spousal maintenance in the sum of $1,130 per week.
The wife’s affidavit notes that she does not seek an order for costs for the appearance of junior counsel, Mr Stenhouse, but does seek certification that it was reasonable to brief Senior Counsel.
In submissions, it is said that the wife has no qualifications for employment and difficulties with her health. The wife states that she is “not employed and has no prospects of obtaining employment”. The wife contends that the husband’s financial resources “are overwhelming” in comparison to her own, and that this is “a significant factor”.
Submissions and an affidavit of the husband about his financial circumstances were filed. The affidavit contains a considerable amount of irrelevant and/or inadmissible evidence in relation to assertions that the husband makes about the wife. For that reason we make no reference to those parts of the affidavit.
The relevant aspects of the husband’s affidavit details the changes in the shareholding structure of a company, N Pty Ltd. The effect of this, apparently, will dilute the husband’s control over the company. The husband says that he had commenced this process prior to his separation from the wife, but was prevented from completing it because of an injunction in 2012. The husband noted that his “reasons for wanting to continue that process included [his] age, [his] residence overseas, the fact [he has] not enjoyed good health for the past couple of years and [his] concern that if something happened to [him], leaving the process unresolved, it could lead to a significant dispute between [his] children.”
The husband details at some length his present financial position, including his indebtedness to the respondent companies. The husband states that he has personally assumed responsibility for company loan accounts which were previously in the parties’ joint names. His overall indebtedness has increased since the proceedings. The husband described a series of loans and dividends between him and the respondent companies, recorded as book entries to give effect to orders of the Court. As a result of the payment of dividends the husband has a tax liability of $243,366 for the 2015/16 financial year. The husband expects to incur further tax liabilities.
The husband says that he presently lives in A in a property owned by his partner. He pays her rent. He returns to Australia approximately four times each year, and generally stays with his children and pays for his own living costs. The husband, presently aged 82 years says that he is in poor health.
An affidavit of the solicitor for the second to sixth respondents was filed in support of their applications. It annexes an Australian Securities and Investments Commission (“ASIC”) company search of one of the respondents, N Pty Ltd. The company search reveals that 1,000 “A Class” shares have been issued in N Pty Ltd, the consequence of which it is said that the husband’s interest and voting power in the company has been significantly diluted, since the hearing of the appeal.
Conduct of the parties —s 117(2A)(c)
As to the maintenance appeal, the wife claims the husband is “entirely responsible” for leading the primary judge into error. The wife argues that this had a “substantial consequence financially” and deprived her of an order to which she was entitled.
In response, the husband submits in relation to the maintenance appeal that even if the primary judge had heard argument about the need for leave pursuant to s 44(3) of the Act, it cannot be said a different outcome would have been reached. In his written submissions, the husband asserts there are no issues of conduct relevant to the question of costs.
As to the property appeal, the submissions of the second to sixth respondent address those of the husband and the wife. The second to sixth respondents support the submissions of the husband, in particular his prior stated intention to transfer ownership of the group entities to his children. The second to sixth respondents contend that the wife’s financial circumstances are of her own making, namely her challenge to the expert evidence; complaints of violence; and her decision to argue grounds of appeal based on the issue of “alter ego”, which had not been run at trial. Further, that these arguments did not lead to the appeal being allowed.
Wholly unsuccessful — s 117(2A)(e)
The wife argues that she was wholly successful in the spousal maintenance appeal, and had “substantial success” in the property appeal. The wife claims that the husband was wholly unsuccessful, and even though the wife failed on some of her grounds of appeal in the property appeal, she was “ultimately successful” as the appeal was allowed and the matter remitted for a retrial.
The husband argues that “there were factors which significantly qualify the significance of” the wife’s claim to have succeeded in both appeals. As to the maintenance appeal, it is correct that the wife was successful but on a point that was not decided at first instance. The husband claims that the wife was not put to the expense of a trial to determine the point on which she ultimately succeeded on appeal. As to the property appeal, the husband correctly contends that the wife’s arguments in respect of the “alter ego” issues were not raised in the trial and unnecessarily involved the second to sixth respondents. Therefore, it is submitted, any costs order made in her favour should be reduced to exclude costs occasioned for preparation in relation to those arguments which did not succeed.
Offers to settle — s 117(2A)(f)
There is no suggestion by any party that offers to settle had been made.
Spousal Maintenance Costs Claim
The wife seeks her costs. It is important to understand why this appeal succeeded. A precis, as is relevant to the costs is as follows. The primary judge found that he was without jurisdiction to make a spousal maintenance order pursuant to s 83 of the Act. In addition, the judge found that he would not allow the wife leave to amend her application seeking maintenance pursuant to s 74 of the Act because it would circumvent the provisions in relation to applications being instituted within 12 months of divorce as contained in s 44(3) of the Act.
The judgment delivered on 12 November 2016 explains the questions for determination in the appeal [7].
We concluded that the wife’s application before the primary judge for leave to amend the application was to pursue a claim pursuant to s 74 of the Act. Further, that his Honour was incorrect in concluding that leave pursuant to s 44(3) of the Act was necessary.
It is quite clear from the reasons [65], that the manner in which counsel for the wife argued the matter before the primary judge could not be criticised.
The wife succeeded in the maintenance appeal because of the error of the primary judge.
As noted in the factors set out above, the husband disputes the wife’s financial circumstances and filed an affidavit detailing his own apparent difficulties.
The wife’s appeal was successful. Despite the husband’s various claims, there are circumstances which justify an order against him for the costs. These include the parties’ relative financial circumstances but primarily that the appeal succeeded.
The Property Proceedings Costs Claim
The wife seeks her costs against the husband. Further, in the event costs of the other respondents are ordered against her, the wife seeks that the husband indemnify her in respect of those costs.
The husband seeks that the wife’s claim for costs be denied. The husband also resists her application that he indemnify the wife in respect of costs, and argues that “no action by the Husband led to the joinder” of the second to sixth respondents. The husband is correct in this assertion.
The appeal succeeded primarily because of the challenge to the trial judge’s assessment of relevant matters in relation to the wife’s financial circumstances (s 75(2) of the Act) and that the orders could not be seen to be just and equitable. Certainly the wife failed to persuade the court that different orders should be made by reason of an argument that a company was the “alter ego” of the husband.
The effect of those grounds which did succeed is that the appeal was allowed and the matters remitted for re-hearing.
The second to sixth respondents resist the wife’s application for costs. They claim that while the wife argues her financial position is poor, her affidavit contends that she has a significant claim in the re-hearing. The second to sixth respondents therefore contend that it is likely her financial situation will dramatically improve from her current situation, which should defeat her application for costs on that basis. It is impossible for this court to predict whether that is correct and in any event it would not be a proper reason for refusing an order for costs should the justifying circumstances exist.
The second to sixth respondents further note that the husband no longer retains voting control over the companies and cannot compel any sums to be paid in the wife’s favour. As noted in the submissions on behalf of the wife, there is no evidence of the financial circumstances of the fifth and sixth respondents, the husband’s children. The wife’s claim that they have access to significant wealth is therefore, it is submitted by them, unfounded.
The second to sixth respondents seek an order that the wife pay their costs of the appeal, and in the alternative seek a costs certificate pursuant to ss 6 and 8 of the Federal Proceedings (Costs) Act 1981 (Cth).
As to issues regarding their joinder to the appeal proceedings, their contention is as follows:
i)The wife served the amended notice of appeal on the second to sixth respondents on 17 August 2015.
ii)At that time the second to sixth respondents were not named as respondents to the appeal and sought to clarify the wife’s position.
iii)The wife responded “if the appeal was to succeed it may have substantive effect upon [the second to sixth respondents], and as parties to the proceedings any issue determined would be binding upon them.”
iv)The second to sixth respondents ultimately invited the wife to join them in the proceedings, and the wife responded that she did “not consider the involvement of [the second to sixth respondents] as necessary given she client (sic) does not seek any relief against them.”
v)The second to sixth respondents filed an application seeking to be joined, on the basis that they were parties to the first instance proceedings and that the orders sought by the wife in the appeal directly affected them.
The response of the wife was that she took no objection to their joinder.
The husband maintains that no action on his part can be attributed to the second to sixth respondents being joined as parties to the appeal. The husband resists any order requiring him to indemnify the wife should costs be ordered in favour of the second to sixth respondents. It is correct that there is no merit in the wife’s application for indemnity in these circumstances.
It is argued by the second to sixth respondents that a costs order against the wife is justified, primarily because they have been wholly successful in resisting the grounds likely to affect them.
While that submission is correct, it must also be appreciated that at least in part, the aetiology of those grounds of appeal was the failure of the wife to raise those arguments before the primary judge.
The second to sixth respondents in the written submissions express concern about the possible interpretations of Order 4 of the Full Court decision of 28 April 2017, which reads as follows:
(4)The wife’s application for settlement of property be remitted for re-hearing.
They contend that this order may be interpreted to mean the wife can raise any issue (including those not previously raised) on a re-hearing of the property settlement application and this may result in the second to sixth respondents meeting another claim against them. We regard this as a matter entirely for the consideration of the trial judge hearing the remitted applications.
The wife indicated by way of letter from her solicitors that she did not intend to respond to these submissions. Her submissions in support of her application note that any costs orders in favour of the second to sixth respondents would “inevitably place them in a position where they can bankrupt the appellant and thus stymie proceedings”. The second to sixth respondents reject this assertion, stating that it is mere speculation and note that they “are prepared to agree not to take steps to enforce any costs orders made against the Wife in their favour until such time as her application for settlement of property (as remitted by the [Full Court]) has been reheard and determined.” We intend to note this in these orders.
A consequence of our orders in the property appeal is that the second to sixth respondents are third parties who can be seen as strangers to the matrimonial litigation between the parties. The wife has been wholly unsuccessful against the third parties. In our view, the wife’s lack of success against them, particularly as her arguments in respect of the “alter ego” issues were not raised in the trial and emerged for the first time in the appeal, justifies an order for costs in their favour.
As to the wife’s claim against the husband for the costs of the property proceedings appeal, we are of the view that there are circumstances which justify such an order. Lack of success in an appeal or in resisting an appeal is not, of course, determinative in deciding whether the circumstances of an appeal justify departure from the s 117(1) prescription that each party bear their own costs. However, this court has very frequently referred to the importance of that factor in appeals. That arises because appeals, by their nature, seek to deny a party the fruits of their judgment and are brought, or resisted, in the light of what is, or should be, consideration of the starting presumption — that the judgment under attack is correct — the appeal being a careful analysis of the proper legal basis for challenging its correctness or resisting a challenge to its correctness.
In this case the husband resisted the appeal and although some grounds were found to lack merit, it was decided the appeal should be allowed and the matter remitted.
In addition to the orders for costs we will make orders providing for certification that it was reasonable to engage Senior Counsel (Rule 19.50 of the Family Law Rules 2004(Cth)). We agree that the issues raised in the appeal justify such a certificate.
I certify that the preceding fifty three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, May and Murphy JJ) delivered on 14 July 2017.
Associate:
Date: 14 July 2017
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