Boomfield & Grainger & Anor (No 2)

[2018] FamCA 409

FAMILY COURT OF AUSTRALIA

BOOMFIELD & GRAINGER & ANOR (NO. 2) [2018] FamCA 409

FAMILY LAW – COSTS – where the First Respondent seeks an order that the Applicant pay his costs of and incidental to the proceedings following dismissal of the same for want of jurisdiction – where the proceeding dismissed was an application pursuant to s 90K(1)(aa)(i) of the Family Law Act1975 (Cth) to set aside an Agreement entered into by the First Respondent and his wife – where the Agreement on its face asserts it is a s 90C financial agreement – where the First Respondent and his wife relied on the Agreement being a s 90C financial agreement to obtain stamp duty exemption – where the First Respondent admitted in pleading that the agreement was a s 90C financial agreement and maintained that position until the time provided for the filing of affidavit material, when it was contended that the Agreement was not a financial agreement – where the circumstances do not justify the making of an order for costs.

FAMILY LAW – LEAVE TO USE DOCUMENTS – where the Applicant seeks leave to use documents produced in the proceedings dismissed for want of prosecution in foreshadowed proceedings in Supreme Court – where leave is granted.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Hearne v Street (2008) 235 CLR 125

APPLICANT: Ms Boomfield

1st RESPONDENT: Mr Grainger

2nd RESPONDENT: The Bankrupt Estate of Ms Grainger

FILE NUMBER: BRC 89 of 2014

DATE DELIVERED: 5 June 2018

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: Determined in Chambers following the receipt of written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Jones (by way of written submissions filed 15 February 2018 in reply)

SOLICITOR FOR THE APPLICANT: Tucker & Cowen

COUNSEL FOR THE 1ST RESPONDENT: Mr Shoebridge (by way of written submissions filed 14 February 2018 and by way of written submissions in response filed on 28 February 2018

SOLICITOR FOR THE 1ST RESPONDENT: Morgan Conley Solicitors

Orders

IT IS ORDERED THAT

1. The Application in a Case filed 8 November 2017 is dismissed.

2. There be no order as to costs of the proceedings commenced by Application filed 7 January 2014.

3. The Applicant has leave to use documents obtained in the proceedings commenced by Application filed 7 January 2014 in any proceedings commenced in the Supreme Court of Queensland in which the relief sought includes that available in reliance on s 228 of the Property Law Act1974 (Qld).

4. All extant applications are otherwise dismissed.

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 Bloomfield & Grainger 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).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 89 of 2014

Ms Boomfield

Applicant

And

Mr Grainger

First Respondent

And

The Bankrupt Estate of Ms Grainger

Second Respondent

REASONS FOR JUDGMENT

1. By Application in a Case filed 8 November 2017, the First Respondent seeks an order that the Applicant pay his costs (including any reserved costs) of and incidental to the Initiating Application filed 7 January 2014, with such costs to be “taxed.”

2. By the Initiating Application, the Applicant sought to set aside an Agreement ostensibly entered into between Mr and Ms Grainger pursuant to s 90C of the Family Law Act1975 (Cth) (“the Act”) on 1 November 2012. She did so in reliance on, amongst other contentions, the terms of 90K(1)(aa)(i) of the Act, which empowers the Court to set aside a financial agreement if satisfied a party to it entered into it for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors of the party.

3. On 31 January 2018, I dismissed the Initiating Application on the basis of a want of jurisdiction.

Uncontroversial matters

1. The First Respondent’s application for costs falls to be considered in light of the fact of the dismissal of proceedings on the basis of a want of jurisdiction[1] and the following uncontroversial matters, which are clearly relevant to the determination of the current application for a costs order:[2]

   [1] Family Law Act1975 (Cth), s 117(2A)(e).

   [2] Family Law Act1975 (Cth), ss 117(2A)(c),(g).

   a)the proceedings between the parties were commenced in the Federal Circuit Court on 7 January 2014 and subsequently transferred to this Court on 11 November 2014;  and

   b)the Agreement which the Applicant sought to have set aside specifically refers (on its front page) to it being “an agreement pursuant to s 90C of the Act”; and

   c)Clause 2.1(ii) of the Agreement outlines the agreement between the parties to it (namely, the First Respondent and Ms Grainger) that it is an Agreement pursuant s 90C of the Act; and

   d)the First Respondent (and Ms Grainger) relied on the Agreement being “a financial agreement pursuant to s 90C of Act” in order to obtain a stamp duty exemption in accordance with the operation of s 90L (Financial and other agreements etc. not liable to duty) of the Act; and

   e)the First Respondent positively accepted and/or asserted that the Agreement was a “financial agreement”, entered into under s 90C (“Financial agreements during marriage”) of the Act on the following occasions:

   i)in pleadings filed pursuant to an order made by Judge Cassidy of the Federal Circuit Court on 18 March 2014;  and

   ii)in an Outline of Argument filed in the Federal Circuit Court on 20 June 2014;  and

   iii)in submissions filed in support of an Appeal to the Full Court of this Court (an appeal which was heard on 17 February 2015);  and

   iv)in a Summary of Argument filed in the High Court on about 15 December 2015 in support of an Application for special leave to appeal to that Court the orders made by the Full Court on 18 November 2015.

   f)at no time during any of the various pre-November 2017 occasions on which the parties appeared to prosecute a variety of interlocutory applications (for example: in late 2016 in respect of disclosure of documents in respect of which legal professional privileged was asserted; in August 2017 in respect of orders to facilitate the transfer of documents between Courts and at which time the proceedings were listed for final hearing) did the First Respondent seek to depart from the previously advanced contention and acceptance that the Agreement was a ‘financial agreement’ for the purposes of the Act; and

   g)the contention that the Agreement was not, in fact, a “financial agreement” as defined in the Act was not raised by the First Respondent’s solicitors at any time before 7 November 2017 – that is:

   i)it was not raised by Senior Counsel who appeared for the First Respondent during an appeal to the Full Court of this Court;  and

   ii)it was not raised by Senior Counsel who appeared for the First Respondent before the High Court at the hearing of the First Respondent’s Application for special leave to appeal the decision of the Full Court.

2. That is, until the First Respondent’s solicitors correspondence dated 7 November 2017, it was uncontentious in the proceedings that the First Respondent agreed that the Agreement was made under s 90C (“Financial agreements during marriage”) of the Act. Further, until either 7 or 8 November 2017, both parties proceeded on the basis that this Court had jurisdiction to determine the proceedings commenced by the Applicant.

The competing proposals

1. The First Respondent seeks an order that the Applicant:

   a)pay his costs of and incidental to the proceedings (calculated according to the Scale set out in the Family Law Rules 2004 (Cth)) for the period from the commencement of the Application (it was filed in the Federal Circuit Court on 7 January 2014 and an Initiating Application was filed in Family Court on 18 November 2014) until 22 June 2016 and, thereafter, on an indemnity basis; or, alternatively

   b)pay his costs at Scale up to 11 October 2017 and, thereafter, on an indemnity basis;  or, alternatively

   c)pay his costs at Scale up to 6 November 2017 and, thereafter, on an indemnity basis.

2. The Applicant opposes the making of any order that she pay the First Respondent’s costs of the dismissed proceedings.

The First Respondent’s submissions

1. The First Respondent submitted that the following matters would persuade that there are circumstances which justify the making of an order that the Applicant pay his costs of an incidental to the Initiating Application:

   a)the Applicant was wholly unsuccessful in the proceedings;[3]  and

   b)he had maintained at all times throughout the proceedings that her case had no merit; and

   c)with the benefit of the decision in the proceedings it is now “clear” that the Applicant should have pursued her relief in another forum from the beginning;  and

   d)he made an offer in writing to the Applicant on three occasions and, with the benefit of hindsight, such offers should properly have been accepted;  and

   e)the first offer he made represented the best outcome the Applicant could have been achieved in the proceedings and this was the offer to which he received no response; and

   f)in making a counter-offer to resolve the proceedings by receiving a payment of $2,000,000.00, the Applicant manifested a reckless and fanciful attitude toward the proceedings which evidences a total lack of regard for the risks associated with her own case and “a complete absence” of any consideration at all about the arguments she faced;  and

   g)having been presented with the contents of the correspondence dated 7 November 2017, the Applicant should have agreed to discontinue the proceedings immediately but, instead, chose to file an Application in which she sought to add alternative relief in an effort to keep the proceedings before the Court; and

   h)the Applicant’s conduct (being her “imprudent” attitude towards the First Respondent’s offers and in maintaining the proceedings after 7 November 2017 when, properly advised, she must have known she had no prospects of success) constitutes the required “special circumstances”;[4] and

   i)as a “third party”, the Applicant’s decision to commence proceedings in reliance on the provisions of the Act was “a matter of strategy”.

   [3] Family Law Act 1975 (Cth), s 117(2A)(e).

   [4] And, further, if persuaded of this argument also constitutes those circumstances discussed in Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 as being necessary to found an order for costs on an indemnity basis.

2. Overall then, the First Respondent submits that, as the Applicant was wholly unsuccessful in the proceedings, costs should flow from the date the proceedings were instituted and, given that offers were put to the Applicant, the Court would be persuaded to make an order for costs on an indemnity basis from the date of the first offer or, alternatively, from the second offer, or alternatively, from 7 November 2017.

The Offers to Settle

1. By correspondence dated 23 June 2016, the First Respondent made an offer to settle the proceedings.[5] The terms of this offer were that the First Respondent consent to an order requiring him to transfer the T Street property to the trustees in bankruptcy for the Second Respondent in that capacity subject to encumbrances; that he be released from the Undertakings given to the Court on 15 May 2014 to the extent necessary to give effect to the settlement and that, otherwise, the Applicant’s relief be dismissed by consent. The offer contained the proposal that the parties bear their own costs of and incidental to the proceedings which had been before the Federal Circuit Court and subsequently transferred to the Family Court and, further, in relation to any steps necessary to give effect to the settlement and that the parties consent to any orders necessary to give effect to the settlement. The correspondence also outlined that, if the offer was not accepted, it would be relied upon in support of an application for costs and for costs to be assessed on an indemnity basis from the date of the offer.  The First Respondent says that there was no response from the Applicant in relation to this offer.

   [5] Pursuant to Part 10.1 of the Family Law Rules 2004 (Cth).

2. By correspondence dated 12 October 2017 the First Respondent made a second offer.[6] The terms of this offer were that the First Respondent pay the sum of $200,000.00 by 30 November 2017; that such payment to be made to the Applicant’s solicitors trust account to be held on behalf of the Applicant and the Second Respondent;  that upon payment of this sum, the proceeding be dismissed with no orders as to costs. It was proposed that the offer represent a full and final settlement of all matters between the parties (including any outstanding costs orders and any occasions in respect of which an order to reserve costs had been made). Again, the First Respondent proposed that he be released from his Undertaking (provided to the Court on 15 May 2014) and that the parties consent to any orders necessary to give effect to the settlement.  The Applicant rejected this offer by correspondence dated 25 October 2017. 

   [6] Again pursuant to Part 10.1 of the Family Law Rules 2004 (Cth).

3. In the correspondence dated 7 November 2017 (by which the First Respondent’s solicitors advised the Applicant’s solicitors for the first time of their contention that the Agreement was not a “financial agreement” within the meaning of s 90C of the Act), the First Respondent invited the Applicant to dismiss the proceedings by consent. This offer was rejected by the Applicant via correspondence dated 7 November 2017.

Quantum of Costs Incurred by the First Respondent

1. Save for an order made by Judge Cassidy on 18 November 2014 (by which both the Applicant and First Respondent received favourable costs orders for various aspects of the proceeding), all costs of the proceedings have been reserved. 

2. The First Respondent’s solicitor said that, given the costs incurred since the proceedings commenced on 7 January 2014 and the timeframe within which the Application for costs was required to be brought, he has been unable to calculate his costs or have them assessed as against the Scale provided in Schedule 3 of the Rules. 

3. However, he said the First Respondent had incurred Counsel’s fees totalling $99,330.00 since January 2014, in respect of which orders have been made reserving costs.  He also estimated that the First Respondent had incurred approximately $90,000.00 in legal fees in the proceeding since January 2014; that he incurred legal fees totalling about $133,000.00 which relate to the Appeal to the Full Court of this Court and subsequent Application for Leave to Appeal to the High Court; he also estimates that, since 23 June 2016 (when the first offer to settle the proceedings was made to the Applicant), the Respondent has incurred approximately $70,000.00 in additional legal fees.

4. The evidence about the likely quantum of costs is, obviously, relevant to a consideration about the basis on which any costs ordered to be paid should be calculated.

The Applicant’s submissions

1. The Applicant submitted that there should be no order for costs and that each party should be left to bear their own.  It was submitted, in essence, that the Court would not be persuaded that the circumstances justify the making of an order for costs as sought by the First Respondent because both parties had proceeded for nearly four years on the premise that the Court had jurisdiction to determine the Applicant’s proceedings. 

2. The Applicant also emphasised the conduct of the parties to the proceedings in relation to the proceedings.[7] It was submitted it was particularly relevant to note that the matter proceeded by way of pleadings at the request of the First Respondent: I accept the submission that the Applicant relied on the pleadings and, in particular, on the First Respondent’s admission in the Defence that the Agreement was a ‘financial agreement’ within the meaning of s 90C of the Act. I also accept the submission that, given the First Respondent’s position as conveyed by the Defence, it was reasonable for the Applicant to have taken up his admission, to have proceeded on the basis that it was accepted that the Agreement was a “financial agreement” within the meaning of s 90C and to have prosecuted her case on that basis.

   [7] Family Law Act 1975 (Cth), s 117(2A)(c).

3. It was submitted that, if the Court was minded to take into account the terms of the offer made 12 October 2017, then costs (if awarded) should only be awarded on the standard basis because there is nothing in the Applicant’s conduct of the proceedings which would persuade that it is appropriate or just to depart from this basis of assessment.

4. It was also submitted on behalf of the Applicant that the First Respondent should not have the benefit of an order for costs incurred in defending an agreement which was void and which was prima facie entered into for the purpose of defeating the Applicant as a creditor.  It was submitted that this is another circumstance which the Court would take into account in concluding that it is not satisfied that circumstances exist which justify the making of an order that the Applicant pay the First Respondent’s costs of and incidental to the proceedings.

Do the circumstances justify the making of an order as to costs?

1. Section 117(1) of the Act provides that each party to proceedings under the Act shall bear his or her own costs. However, if the Court is satisfied there are circumstances which justify it, the Court may make such order as to costs as it considers just.[8] In considering what order, if any, as to costs should be made, the Court must have regard to the matters set out in s 117(2A) of the Act.

   [8] Family Law Act 1975 (Cth), s 117(2).

2. In arriving at my determination that I am not persuaded that the circumstances justify the making of an order that the Applicant pay the First Respondent’s costs of and incidental to the proceedings commenced by the Initiating Application, I have particularly taken into account the fact that, until early November 2017, both parties proceeded on the basis that this Court had jurisdiction to determine the dispute between them. I have also placed particular weight upon the matters summarised above as being “uncontroversial”.[9]

   [9] See pars [4] and [5].

3. In addition, I consider that, whilst the First Respondent made a number of offers to the Applicant to resolve the proceedings between them, those offers need to be seen in such context also; further, I take into account that, to date, there has been no determination about the underlying aspects of the Applicant’s claim for an order setting aside the Agreement on the basis that it was entered into to defeat her in her capacity as a creditor of the First Respondent’s wife.

4. In the absence of the opportunity to undertake a full consideration of the Applicant’s case, I am not persuaded by the submission that the offers amounted to a result better than the best outcome the Applicant could reasonably have hoped to achieve or that her refusal to compromise the totality of her claim against the First Respondent was imprudent; after all, there is no evidence to establish the current value of the former matrimonial home.

Leave to use documents in other proceedings

1. The Applicant also seeks to be able to use documents obtained in the proceedings commenced by the Initiating Application in any proceedings commenced pursuant to s 228 of the Property Law Act 1974 (Qld).[10] She does so in order to minimise cost and to maximise efficiency.

   [10] That is, she seeks to be released from the implied undertaking not to use documents  for any purpose other than that for which they were provided unless granted leave to do so by the Court: Hearne v Street (2008) 235 CLR 125 at [96].

2. The First Respondent opposes the making of an order which would permit such reliance. He does so on the basis that the Court has no jurisdiction to make such an order; that the operative provision is s 121 of the Act; that there are no current proceedings on foot in the Supreme Court of Queensland; that the Applicant has not particularised those documents upon which she wishes to rely and that questions of admissibility are for the Court in which any future proceedings are commenced.

3. The latter proposition goes without saying. However, the issue raised by the Applicant is not about whether another Court will admit the documents into evidence in any proceedings before it but, rather, about whether it is proper that this Court grant her leave to use documents produced for and obtained during the lengthy course of the litigation in this forum.

4. I do not accept the submission that the Court lacks power to make such an order; I consider that the power to make an order of the sort sought by the Applicant falls within the Court’s inherent power to regulate its own processes and to control the use of documents either brought into existence for, or obtained during, the course of the proceedings initiated before it.

5. Further, I do not accept that s 121 of the Act necessarily prohibits the Applicant from communicating any pleading or other document to the First Respondent during the course of future litigation between them about the Agreement or from using the same in such proceedings between them. I note also that Rule 13.07A of the Rules prohibits a person who inspects or copies documents produced via compliance with the ongoing obligation to disclose from disclosing the contents of the same or from giving a copy of it to any other person without the Court’s permission.

6. I consider that the overarching obligation of according justice to the parties persuades that it is appropriate and proper to make an order in the terms sought by the Applicant in order to minimise future costs to the parties and in furtherance of the efficient disposition of any future litigation about the Agreement.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 5 June 2018.

Associate:     

Date:    5 June 2018