BAAM & BAAM - [2010] FMCAfam 676

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BAAM & BAAM

[2010] FMCAfam 676

FAMILY LAW – Application to disqualify oneself – apprehended bias – test of reasonable fair-minded lay observer – considered in the context of ordinary judicial practice – whether an agreement was validly struck at the conference – whether the solicitor acted in breach of warranty of authority or whether solicitor acted outside his role as agent for the client – two stage test – application for costs.

Family Law Act 1975 Part VIII A
Federal Magistrates Court Act

Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
Johnson & Johnson [2000] 201 CLR 488
Vakauta & Kelly (1989) 167 CLR 568
Woodland & Todd (2005) FLC 93-217

Applicant:

MS BAAM

Respondent:

MR BAAM

File Number:

BRM 2207 of 2001

Judgment of:

Burnett FM

Hearing date:

11 June 2010

Date of Last Submission:

11 June 2010

Delivered at:

Brisbane

Delivered on:

11 June 2010

REPRESENTATION

Counsel for the Applicant:

Solicitors for the Applicant:

Legal Aid Queensland as friend of the Court

Counsel for the Respondent:

Solicitors for the Respondent:

Neumann & Turnour Lawyers

ORDERS

That the application filed 31 May 2010 be dismissed.
That the application for disqualification be dismissed.
That the respondent resubmit a form of order precisely reflecting the Heads of Agreement dated 7 April 2009 within fourteen days of the date of the sealed orders.
That the Registrar of the Federal Magistrates Court of Australia execute any documents required to be executed by the wife in the event of complaint by the husband of the wife’s failure to execute any document within seven days. Evidence of any such omission may be provided by the husband’s solicitor in any affidavit in support on information and belief.
That the wife pay the husband’s costs of and incidental to the application filed 21 April 2009 on a standard basis to 15 October 2009 and thereafter on an indemnity basis.

IT IS NOTED that publication of this judgment under the pseudonym Baam & Baam is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRM 2207 of 2001

MS BAAM

Applicant

And

MR BAAM

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

This an application brought by the applicant wife in respect of orders made on 21 April 2009. She seeks leave to have the orders dated

21 April 2009 reviewed.
She seeks further orders that a declaration that any document or agreement purported to have been signed for or on her behalf by solicitor, Peter J. Hofstee, be deemed invalid and without any legal effect whatsoever.
She seeks orders that a spousal maintenance order made on 16 May 2000 be discharged as from 27 June 2008, that being the date the then extant spousal maintenance was stayed by a court and that $21,000 of spousal maintenance arrears owing at that date be paid by the respondent within 30 days of the making of these orders.
She also seeks an order that all child support arrears be paid by the respondent within 30 days of the making of these orders and that an application for costs by the respondent be dismissed.
There was also an application made that I disqualify myself upon the basis of bias. I will deal with that point first. It was not agitated in debate but it is the first point to dispose of.
The matters relevant to disqualification have been discussed by the High Court in decision of Johnson & Johnson [2000] 201 CLR 488 where, commencing at paragraph 11, the majority, in addressing the governing principles, noted the question:
“whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide.”
Their Honours continued further at paragraph 13 to discuss that matter generally in these terms:
“Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to the court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the sphinx.”
Their Honours then referred to an earlier High Court decision of Vakauta & Kelly (1989) 167 CLR 568, where Brennan, Deane and Gaudron, JJ referred to “trial and appellate proceedings [speaking] of dialogue between bench and bar which is so helpful in the identification of real issues and real problems in a particular case.” Their Honours continued:
“Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgement. Judges are not expected to wait until the end of the case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue and counsel are usually assisted by hearing his opinions, and being given the opportunity to deal with them.”
The particulars of any basis for alleged bias are not advanced. The matter was not pressed, but in any event, I am completely satisfied that nothing that has passed from this court to either party appearing in this instance which could be seen as being anything beyond the engaging of exchanges in order to tease out what are the real issues in this case.
In this instance, no fair-minded lay observer might reasonably apprehend that I have not brought to bear an impartial and unprejudiced mind to the resolution of the question that required to be decided. That part of the application is dismissed.
Moving then to what can be described as the substantive application before me being the application to set aside orders that were made on a previous occasion. First to deal with the formal orders themselves to dispose of what might be described as a technical matter.
The applicant has quite correctly brought to my attention that the orders that were ordered by consent on the previous occasion do not in fact precisely reflect the terms of an agreement which is sought to be enforced.
Insofar as that is the case, counsel for the respondent concedes that matter and concedes that all that is sought to be enforced in terms of the orders made on 21 April last year are orders giving effect to the agreement which was concluded between the parties on 7 April last year. He seeks no more nor no less. The form of orders can be corrected to give effect to that intent without prejudice to the rights of either party and the interests of justice would require that.
From that premise I, in turn, need to consider the real issue in this case which is whether or not I ought to discharge that order in substance and send the matter off for trial. In effect that is what is sought by the remaining orders which have been sought in the application.
The principal ground advanced by the applicant is that the agreement struck on 7 April 2009 is not a Part VIII A agreement. In other words, it is not a formal binding financial agreement as provided for by the Family Law Act (FLA).
By way of background, these parties have obviously been in dispute for many years. The Heads of Agreement relate to issues of spousal maintenance and child support which appear to date back to about 2000 when the first application was brought and the first orders were made.
That matter obviously was agitated between the parties over the following years. A trial apparently was set down for hearing of the matter in May 2009. On or about 7 April 2009 a conference was conducted between solicitors for the applicant wife and solicitors for the respondent husband.
At that conference, an agreement, which is entitled Heads of Agreement, was concluded. That is the agreement which is sought to be enforced.
The wife now contends that the solicitor who appeared at the conference, first, was not her agent and appointed as her agent for that purpose. She says that any agreement, which was struck between the solicitor who purported to act for her and the solicitor for the husband, is not her agreement by reason of the lack of agency by the solicitor.
Alternatively, I apprehend the alternative case to be that the solicitor acted in breach of his warranty of authority, in that, if he was indeed the wife’s solicitor, he had no authority to conclude the agreement of the form which is now sought to be enforced.
Other issues which appear to be evident on the periphery are issues as to the knowledge of these matters by the solicitor for the husband although no evidence or basis to support this suggestion was advanced. All up, what is sought now to be brought into trial is the question of authority and the circumstances surrounding the Heads of Agreement. There is no evidence to suggest, for instance, beyond these issues of agency, that the agreement was one induced by unconscionability or that the parties lacked appropriate capacity to form an intention to be legally bound. There is certainly no question of an absence of an offer, acceptance or consideration.
In the absence of any action for declarations, there is, on the face of it, an enforceable agreement. The only matter advanced against me enforcing the agreement is that it is one which does not comply with the terms of Part VIII A of the FLA.
The fact that it was not intended to be a binding financial agreement, I think, is self-evident from its terms. It does not express itself as being an agreement made pursuant to that part of the FLA.
That leaves the question of whether or not the agreement ought to be enforceable in its own right. It’s been submitted on behalf of the applicant that, because the agreement does not comply with the terms of Part VIII A of the FLA, the agreement is not enforceable. I do not accept that submission. It was submitted in support of the proposition that there was authority to be found in a decision of Woodland & Todd (2005) FLC 93-217.
I do not accept that case to be authority for that proposition at all. In fact, the only statement which could arguably form part of the ratio of the case dealing with that express issue, is to be found at paragraph 24, where, when one sees the point on appeal, as identified on the grounds of appeal, to be that the trial judge in that case erred in accepting that there existed a property settlement between parties.
The Full Court noted that that ground was not pressed, that is, a ground that asserted the trial judge erred in accepting there existed a property settlement between parties. In other words, a common agreement between parties.
It was submitted that there are remarks to be found at paragraph 38 which support the applicant’s contention. Those remarks could only be seen to be statements made obiter dicta but, in any event, are not to the point.
The ground of appeal being considered and addressed in paragraph 38 addressed the issue of whether or not the court in the case under review was to apply to the arrangements between the parties arrived at in 1997 being the time of agreement or some other time. That is the law as it applied at that time, namely 1997. In the context of deciding that point, the court made observations about agreements.
But those observations, of course, were made obiter dicta in the context of the issue then before the court, and furthermore, were made in the context of property settlement agreements rather than agreements in relation to spousal maintenance. That is significant, because the property settlement agreement has as a requirement, a consideration of a property settlement being subject to court sanction by assessment or whether such agreement is just and equitable.
Such a requirement does not exist in relation to a spousal maintenance agreement, which really requires no more than that the parties’ obligations and rights under section 72 in relation to spousal maintenance, are to be informed by reference to the matters provided for in section 75(2), which of course does not import any obligation for a court to independently consider whether or not any arrangement that may be struck between the parties, is one which is just and equitable. It is merely an arrangement that has to take account of various matters.
In the absence of an overriding additional factor, it is difficult to see how, in the absence of an unenforceable agreement per se, the court can intervene between the parties. This is particularly so in a case where the agreement appears to have been struck, not only by the parties in title, but also by the parties informed by the assistance of legal advice at the time the agreement was struck.
In summary, it seems that the agreement between the applicant and respondent is a perfectly enforceable and valid agreement, subject to the contentions advanced on behalf of the applicant in relation to its interface with the Family Law Act.
Of course, if the applicant is correct, she has remedies against those who have contravened her legal rights. She has rights against her solicitor, and perhaps if she can demonstrate that the respondent knew, or had knowledge of the absence of authority that she asserts on behalf of the solicitor, she may indeed have the right to have the contract set aside.
But for present purposes, none of those matters have been prosecuted. She was afforded an opportunity on 21 April to do that, when the matter came before me on that occasion, and the issues which are now again pressed, were raised. An order was made, permitting her an opportunity to commence proceedings in a court of appropriate jurisdiction within 28 days of that date.
That is not to say that she necessarily had to commence proceedings in another court. It may well be that an argument could have been advanced for the prosecution of proceedings in this court, supported by the court’s powers under Federal Magistrates Court Act section 17, dealing with the court’s accrued jurisdiction. In any event, irrespective of that, the applicant has not purported to commence any proceeding in furtherance of the orders made on 21 April 2009. The respondent wants the matter concluded.
The fact that the applicant has gone to seek redress from the Legal Services Commission and other authorities is not compliant with the order that was made on 21 April 2009. So prima facie the position is as I have expressed it, that is, there is a contention made but no action has been brought in support of the contention.
It follows in my view that the parties have come to an agreement in relation to the matter in dispute between them, and it is not a matter where the court, in the absence of any basis at common law, has an obligation to intervene. There being no ground at common law established by the applicant, she having been afforded an opportunity to do so, it follows that the application must fail, and the orders which are sought for the enforcement of the agreement brought in May.
By way of rectification of defective expression in the earlier orders, I will make orders in terms of the Heads of Agreement. The only other order that I will make in order to facilitate the performance of the agreement, given the history of this matter, is that I will direct that the registrar sign any papers or documents necessary to be signed, to give effect to the agreement in the event that the applicant wife refuses to sign any such document, or indeed if the respondent husband does likewise.

Costs

In this application, the respondent makes application for costs. The application I refer to is the application made 21 April 2009. On that date, consent orders were made and it was agreed that the costs be reserved. The consent order was in relation to costs of the agreement with the costs of the application being reserved.
On 21 April 2009, the husband sought orders that the wife pay the husband’s costs of and incidental to the spousal maintenance application. However consent orders were reached which included orders in relation to the agreement and provided in respect of those matters that each party was to bear their own costs of an incidental to those proceedings, and I put that to be the proceedings in relation to the spousal maintenance agreement.
However, insofar as the application of 21 April was concerned, it was ordered that the costs be reserved. The background of that, of course, is, as I have earlier noted, that the matter had been set down for trial and the substantive matters for trial had been the subject of an agreement entered into on 7 April 2009. Difficulties allegedly arose in respect of the agreement and that was the subject of the application on 21 April 2009, and that is why, as I have said, the orders differentiate between the costs of the proceeding, being a substantive proceeding, and the costs of the application of 21 April. I deal only with the costs of the application of 21 April.
The application, as I have noted, resulted in a guillotine order for the undertaking of certain steps by the wife but otherwise left in place, in the event of default, the orders that were then the subject of consent between the parties. Further difficulties have arisen since that order and continue to remain in respect of the substance of the order. That is, the wife continues to contend that the agreement is not enforceable, very much the same as she did on 21 April 2009. Although there are also difficulties alleged in respect of the form of the order, there was no disagreement about that matter and it did not impact upon or precipitate this application.
On that occasion, she was afforded an opportunity in respect of her allegations of unenforceability to pursue her rights and remedies. She has not done that and so to that end, the substantive application potentially remains alive, at least on that ground, subject to the failure in respect of the guillotine order. There has been, as has been identified, a separate order made today which varies the terms of the consent order. It is in fact the case that the orders that are made today will be expressed differently to the terms of the order expressed by consent on 21 April, but that is a matter of process, not substance.
It has never been the case and it has never been contended by the respondent that they seek anything more than enforcement of the agreement they struck. Irrespective of how it may be expressed, that is all they sought and for clarification purposes, another order will be made today which will more clearly express that matter. But ultimately, the substance of the application in a case failed on 21 April 2009 has failed again today, and so it is for that reason that the respondent seeks costs, both of that occasion and of today. He contends that he ought to be allowed costs on an indemnity basis.
The process for assessing costs is articulated in section 117 of the Family Law Act. It is a two stage process. First, the court must work from the premise that in family law proceedings, each party, under the FLA, bears his or her own costs. The court may, however, if it is of the opinion that the circumstances justify it in doing so, subject to the considerations in subsection 2A, and make such other orders to costs as the court considers just. The issues identified in subsection 2A which are relevant to these proceeding are these.
First, the financial circumstances of the parties. The wife says that she is on a disability support pension. She has significant debts including a debt to the Commonwealth Bank in the sum of $7000 and she has Centrelink debt. She provides assistance to a daughter with health issues. It is not contended on the husband’s part that there is any financial impediment to him paying a costs order, so I weigh those two factors.

Next is 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. I note that the wife was previously assisted with Legal Aid. That assistance now seems to have ceased. She appeared today with a Legal Aid lawyer for the purpose of today’s application but otherwise it would seem that there is no assistance granted to her by way of aid and she is, to that end, self-represented. The husband, on the other hand, of course, is able to afford legal representation.
Next is the conduct of the parties in the proceedings. This is a case where an agreement was struck in purported conclusion of a substantive matter in respect of maintenance. The wife has taken issue with the agreement. She was afforded an opportunity initially on

21 April to take further action in respect of that agreement. She has not commenced any proceedings which seek to prosecute any matter which would impugn the agreement, so the agreement stands.
She comes back to court today seeking to re-agitate the very issue that she was sent away to further consider on 21 April last year. Nothing seems to have advanced, it seems. On that occasion, she was seeking an indulgence, given that she had only a short time before entered into a binding and enforceable agreement it appears that her situation has not advanced in any respect between then and today. The husband has at all times been ready, willing and able to perform the agreement that was struck between them.
Today’s application particularly has been necessitated by a failure by the applicant to comply with the orders made on 29 April, in particular by her failure to commence an application in order to have agitated the substantive matter which she now complains of. To that end, it would seem that today’s costs clearly can be identified as relating to omission or failure on her part. The applicant has been wholly unsuccessful on this occasion and partially unsuccessful on the previous occasion.
On the previous occasion, having regard to the matters she identified, she was afforded an opportunity to go off and prosecute her rights. She has not taken up that opportunity and despite that failure, now seeks today to re-agitate the issue which she raised on the first occasion. On that occasion she was informed it appeared to have no merit. She has not done anything about that matter.
There are questions of offers made, and I will deal with those matters more generally when I look at the question of indemnity costs, but they do not detract from the general view I have formed about costs.
Having regard to each of those matters I am required to consider, it is appropriate that in this instance an order for costs be made as being a just order in all of the circumstances and that it be an order that the applicant pay the respondent’s costs of the application, that is, the application filed 31 May 2010 and of the application in its form today.
The respondent seeks costs on an indemnity basis. The matter of assessment of costs is well settled and of course, in Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225, a decision of the Federal Court. There was a slightly different construct within which the rules applied in that case. In the Federal Court, there is no such equivalent provision to section 117 of the FLA, so one commences from the premise that costs ordinarily follow the event and then having got to that point, proceed to examine the question of indemnity costs. Indemnity costs are generally ordered only if it can be demonstrated that there is some special or unusual feature justifying the court’s exercise of that discretion.
In family law proceedings that superimposes a consideration upon the considerations provided for in section 117 which deal initially only with the issue of costs on a standard basis. In assessing what are special or unusual features in a case justifying exercise of a discretion to award indemnity costs, Shepherd J noted in Colgate-Palmolive v Cussons Pty Ltd:
“…The categories in which the discretion may be exercised are not closed. Davies J expressed similar views in Regata. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion, [for] instance, the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud. Evidence of particular misconduct that causes loss of time to the court and to other parties. The fact that proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law.
In this case the respondent contends that the costs have been significantly increased because the applicant, properly advised, knew or ought to have known, that she had no or little chance of success. She has not complied with the steps set out in the order of 21 April, and instead it is contended she has drawn the matter out and attempted to obfuscate the dispute with irrelevant and unfounded allegations.
It is contended that although she has been informed that her remedies may lie elsewhere, she has refused to pursue them. All this has been done at great expense to the respondent.
The respondent contends, by correspondence of 15 October 2009, he sought to resolve the issue of costs which were alive from the application filed 21 April 2009. In particular, on the bottom of page 1, going on to page 2, he noted that his client had expended significant legal costs in attempting to resolve the matter. Those costs exceeded $14,000 on the narrow issue alone. Clearly his client was prepared to reach an agreement in terms that were expressed at the top of page 2 which included an observation that his client did not agree that each party bear their own costs in relation to the hearing on 21 April, but there was a limit on costs.
The offer, unfortunately, is not one that I can really readily understand because it is not, at this stage, able to be measured against an assessment and it is not attended with sufficient certainty to constitute an offer which I think assists me in this case. I am certainly mindful of the fact that the application has on this occasion, today, at least, sought to prosecute an application which quite plainly was not going to deliver a result any different to the result which would have been anticipated on the occasion of the 29 April when it first came before the court.
And to that end, I am minded only to award indemnity costs in respect of the application today, on the basis that the applicant ought to have appreciated that this application today was, indeed, one which sought or was continued for some ulterior purpose or motive, however, at least in disregard case of the plainly known facts and established law.

I direct the applicant pay the costs of the application pay the costs of and incidental to the application, to be assessed on a standard basis to 15 October ’09 and thereafter on an indemnity basis.

I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Burnett FM

Date: 6 July 2010