Brown and Brown (Costs)

[2007] FamCA 353

FAMILY COURT OF AUSTRALIA

BROWN & BROWN (COSTS) [2007] FamCA 353

FAMILY LAW - APPEAL - COSTS - RE-EXERCISE OF DISCRETION – COSTS OF THE APPEAL AGAINST THE SPOUSAL AND CHILD MAINENANCE ORDERS – Husband seeks that wife pay 85 percent of costs of appeal – wife sought that husband pay her costs of appeal – each party sought a costs certificate in event that primary submission failed – appeal failed in respect of child maintenance order – appeal succeeded in respect of spousal maintenance issue but only reduction of lump sum and not dismissal of wife’s primary application altogether, as sought by husband – questions as to financial circumstances of parties – evidence as to husband’s more recent financial circumstances – wife sought to rely on husband’s conduct in trial – costs certificates granted 

FAMILY LAW - APPEAL – COSTS – COSTS OF THE APPLICATION IN RESPECT OF ANCILLARY ORDERS – uncertainty about parties’ financial circumstances – each application entirely failed - order that husband pay wife’s costs of and incidental to applications on party/party basis

FAMILY LAW - APPEAL – COSTS – RE-EXERCISE OF DISCRETION - AGAINST THE COSTS OF THE TRIAL – both parties agreed that because of the result of the appeal, the issue of costs of the trial of spousal maintenance issues be considered afresh – husband sought that each party bear own costs on several grounds, including that O’Ryan J wrongly addressed question of his financial capacity – wife argued that order should be same as O’Ryan J – it is only necessary to examine O’Ryan J’s conclusions in so far as they are relied upon for the re-exercise of discretion - no error found in O’Ryan J’s conclusions – O’Ryan J entitled to take into account husband’s non-compliance with previous orders of court – conclude that husband should pay wife’s costs of and incidental to trial on indemnity basis

FAMILY LAW - APPEAL – COSTS – COSTS OF THE ANCILLARY APPLICATIONS – no agreement that appeal against these orders must succeed and discretion be exercised – order for indemnity costs was found to be inappropriate, including as to the costs of the costs application – appeal against cost orders dismissed

FAMILY LAW - APPEAL – COSTS – COSTS OF THE COSTS APPEAL – husband submitted that each party should bear their own costs of preparation of written submissions regarding costs appeal – no contrary submissions made – order that there be no orders as to costs of costs appeal

Family Law Act 1975 (Cth)
Federal Proceedings (Costs) Act 1981

 

Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Harris and Harris (1991) FLC 92-254
Kent v Kent (1970) 92 WN (NSW) 503
Penfold and Penfold (1980) FLC 90-800
Robinson and Higginbottom (1991) FLC 92-209
Tyson and Tyson (No. 2) (1993) FLC 92-401
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93, 029

APPELLANT: MR BROWN

RESPONDENT: MS BROWN

FILE NUMBER: SYF 9777 of 1992

APPEAL NUMBER: EA146
EA38
EA128 of
of
of 2005
2006
2006

DATE DELIVERED: 23 April 2007

PLACE DELIVERED: BRISBANE

JUDGMENT OF: KAY, WARNICK AND BOLAND JJ

HEARING DATE: By way of written submissions

LOWER COURT JURISDICTION: Family Court of Australia

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Mater with Mr Livingstone

SOLICITOR FOR THE APPELLANT: Barkus Edwards Doolan

COUNSEL FOR THE RESPONDENT: Mr Richardson SC with Mr Campton

SOLICITOR FOR THE RESPONDENT: York Family Law

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Brown and Brown (Costs).

Orders

EA146/05

1. That the court grants to the appellant a costs certificate pursuant to the provisions of section 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.

2. That the court grants to the respondent a costs certificate pursuant to the provisions of section 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent father in relation to the appeal.

3. That the husband pay the wife’s costs of and incidental to:

   (a)The application of the husband filed 26 April 2006 for an extension of time within which to file applications for leave to appeal the orders of O’Ryan J made 22 and 23 December 2005 and 14 February 2006.

   (b)The application filed 13 April 2006 for leave to appeal the order of O’Ryan J made 17 March 2006.

4. That appeal EA128/06 be dismissed.

5. That there be no order as to costs in respect of appeal EA128/06.

FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number:       EA146 of 2005
  EA38 of 2006
  EA128 of 2006
File Number:            SYF 9777 of 1992

MR BROWN

Appellant

And

MS BROWN

Respondent

REASONS FOR JUDGMENT

1. On 5 March 2007 we allowed an appeal by the husband Mr Brown in so far as it related to an order by O’Ryan J that the husband pay the wife Ms Brown $3.75 million lump sum spousal maintenance.  We ordered that he pay $2.25 million.

2. Simultaneously we dismissed the appeal so far as it related to an order for child maintenance for a limited period of time.

3. We also dismissed an application by the husband for an extension of time within which to file applications for leave to appeal orders of O’Ryan J made subsequently to the spousal maintenance order on 22 and 23 December 2005 and 14 February 2006, and an application for leave to appeal an order of O’Ryan J made 17 March 2006.  These subsequent orders were in the way of securing payment to the wife of the spousal maintenance.

4. Also before us when we made the orders adumbrated, was a further appeal by the husband against an order O’Ryan J made on 13 November 2006 that the husband pay the costs of the wife of the spousal maintenance trial, including “…the balance of the costs in relation to the application for leave pursuant to section 44(3)…determined by Le Poer Trench J…on an indemnity basis…”; and that the husband pay the costs of the wife of the proceedings seeking extensions of time and for leave to appeal, also on an indemnity basis; and finally, against O’Ryan J’s order that the husband pay the wife’s costs of and incidental to the application for costs, again on an indemnity basis.

5. Thus, when we delivered our judgment in respect of the appeal against the spousal maintenance order there were a number of outstanding issues:

   •The costs of the appeal against the spousal maintenance and child maintenance orders;

   •Costs of the application in respect of the ancillary orders;

   •The appeal against the costs orders; and

   •Costs of the costs appeal.

6. We directed that those matters be dealt with by way of written submissions, which we have now received.  These reasons are in respect of our determination of the proceedings and issues outlined above.

Costs of the appeal against the spousal and child maintenance orders – EA146/05

1. The husband seeks that the wife pay 85 per cent of the costs of the appeal, Mr Mater, his counsel, saying in his written submissions:

   “The allowance of 15 per cent relates to the dismissal by the Full Court of the husband’s applications…to adduce further evidence and the unsuccessful challenge to order 2 made 5 December 2005 (child maintenance).”

2. The wife sought that the husband pay her costs of the appeal.

3. Each party sought, in the event that his/her primary submission failed, a costs certificate under the Federal Proceedings (Costs) Act 1981.

4. We are not persuaded that either party should pay the costs of the other in respect of the appeal.

5. While the appeal succeeded against the spousal maintenance order and that was by far the dominant issue, it failed in respect of the child maintenance order and the application to adduce further evidence was also unsuccessful.  Moreover, even though the appeal succeeded in respect of the spousal maintenance issue, the result was only a reduction, albeit significant, in the lump sum.  The husband had sought dismissal of the wife’s primary applications altogether, whereas the amount awarded remained substantial.

6. As to the parties’ financial circumstances, the question arises as to what evidence is before us of the husband’s more recent financial circumstances.  We rejected evidence in respect of that at the hearing of the appeal.  However, evidence about those circumstances was before O’Ryan J when he determined the question of costs of the trial.  Mr Mater’s submissions in respect of the costs of the appeal proceeded on the basis that we have regard to what the husband says of his current financial circumstances.  On the other hand, the submissions for the wife either imply that we may not proceed on that basis or at least urge us to have sole regard to the evidence of the husband’s circumstances at trial of the substantive issue.

7. While on a re-exercise of discretion in the appeal, we concluded that we should make the order for spousal maintenance that should have been made at first instance and accordingly that decision was based on the material before the trial Judge and the further evidence of the husband’s circumstances was rejected, in this application we think we must have regard to what is put before us as to the financial circumstances of the parties.  This effectively was the evidence that was before O’Ryan J when he decided the costs of trial and subsequent applications.

8. That evidence is of course untested.  O’Ryan J discussed at length the husband’s claims about his then current financial circumstances when he made the costs orders on 13 November 2006.  We consider that discussion further later, but for present purposes O’Ryan J concluded that the husband’s financial circumstances were “difficult to fathom” and “…there are, and probably will remain for some time, issues about the extent and value of the financial circumstances of the Husband.”

9. For the wife it was asserted that the husband’s conduct in the appeal was relevant: he did not pursue a number of appeal grounds; he sought by way of further evidence to resile from the effect of the concession given to the trial Judge (that he could meet the wife’s claim) and despite acknowledging through his senior counsel the overwhelming significance of that concession and not initially pressing that further evidence about the husband’s capacity be received, he nonetheless ultimately made an application in that regard and as seen, that application failed.  Moreover, the further evidence that the husband was permitted to adduce (about his health and life expectancy), was ultimately found to be unhelpful.

10. While these submissions are well founded, they nonetheless related to comparatively minor aspects of the proceedings.

11. Though we think each of these matters relevant, we think that ultimately they counter-balance each other.

12. In so far as the wife sought to rely upon the husband’s conduct in the trial before O’Ryan J, we consider that a matter the pertinence of which has been exhausted in O’Ryan J’s consideration of costs of the trial and of the subsequent ancillary applications.  It is not a matter which we now take into account in considering the costs of the appeal.

13. As to the alternative applications for certificates, the Full court said in Tyson and Tyson (No.2) (1993) FLC 92-401 (at 80,111):

    “The grant or refusal of a costs certificate under the Act is purely discretionary, and the Act itself lays down no guidelines for the exercise of that discretion. Without intending to be exhaustive, matters such as the overall reasonableness or otherwise of the attitude adopted throughout the proceedings by the party applying for the certificate to the relief sought by the other, the financial resources of the applicant, and the likely quantum of that party's total costs of the appeal, as compared with the “prescribed maximum amount'' payable upon a costs certificate (in this case $4,000.00), all appear relevant for consideration by the Court in the exercise of that discretion, as too is the fact that the funds to honour such a certificate must come from the public purse.” (page 80,111)

14. In the circumstances described, notwithstanding the possibility that each of the parties has wealth: because the husband’s circumstances are not as he contends; or in the wife’s case, because she may receive payment of the lump sum; since the appeal succeeded on a question of law, we consider a grant of certificates is appropriate.

Costs of the applications in respect of the ancillary orders – EA38/06

1. Notwithstanding the uncertainty about the financial circumstances of each of the parties, since each of these applications entirely failed, in our view there should be an order that the husband pay the wife’s costs of and incidental to the applications on a party/party basis.

The costs appeal – EA128/06

1. the costs of the trial

1. Both parties agree that, because of the success of the appeal in relation to the quantum of the lump sum spousal maintenance award, the appeal against the order for the costs of the trial must succeed and that we should consider the issue of those costs afresh.  We agree.

2. In the circumstances it is unnecessary to consider the other grounds of appeal against the relevant costs order, except in so far as they challenge findings of the court below which we might otherwise wish to adopt upon the re-exercise of our discretion.

3. The husband sought that on a re-exercise of discretion by us, we conclude that each party bear his/her own costs.  The wife argued that, notwithstanding the change to the quantum of the award, we ought conclude that the proper order was the same as that made by O’Ryan J.

4. That order was:

   “1.The Husband pay the costs of the Wife of and incidental to the proceedings determined by orders made on 5 December 2005, including the balance of the costs in relation to the application for leave pursuant to s 44(3) Family Law Act1975 (Cth) determined by Le Poer Trench J. on 18 March 2003, on an indemnity basis as agreed or in default of agreement as assessed under the Family Law Rules 2004 (Cth).”

5. The submissions for the husband imply that his Honour wrongly addressed the question of the husband’s financial capacity, in light of the further evidence that was put before him subsequent to the substantive proceedings.

6. However, ultimately it seems to us that his Honour did no more than remind himself of what he had found in the substantive hearing as to the husband’s circumstances, address the further evidence placed before him from time to time, and conclude as follows:

   “59.In my Judgment of 20 March 2006 I concluded by saying that there are, and probably will remain for some time, issues about the extent and value of the financial circumstances of the Husband.  This remains my view.

   60.On behalf of the Wife it was submitted that I would not accept the evidence from the Husband’s recent assertions as to the extent and value of his wealth for a number of reasons.  There was then identified in the written submissions (par 24) some nine matters and a conclusion that all of these, and many other matters, are indicative of the Husband having significant and substantial assets as I found in my judgment of 5 December 2005.  I accept these submissions.  I remain of the view that the Husband has failed to make a full and frank disclosure of his financial circumstances.

   61.Given the manner in which the Husband has at all times, both before and after 5 December 2005, approached the issues relating to full and frank disclosure of his financial circumstances it would probably take considerable time, effort and cost to ever be able to confidently say that the Husband had made such a disclosure.  I repeat that even in the Husband’s submissions it was said that “it is quite clear, with hindsight, why the husband’s financial position was difficult to fathom” (emphasis mine).”

7. We see no error in those conclusions, which do not amount to definitive findings of the husband’s financial circumstances.

8. In so far as the trial Judge relied upon the husband’s conduct in the proceedings the husband does not argue that those findings were wrong, though the submissions do refer to “…real difficulties which should to some extent ameliorate blame.…”  However, these references do not establish that any of the trial Judge’s findings were wrong.  The only pertinent submission of a general nature is that when O’Ryan J referred to what he had said in earlier judgments of the husband’s conduct, O’Ryan J did not:

   “…specify which particular parts of those (each fairly long) judgments he was referring to.  His Honour in J 65 made some broad findings unfavourable to the husband, but again it is respectfully submitted that the findings lack the specificity that would enable the reader and the Husband in particular to know just what had guided his Honour to conclude that an order for costs should be made, particularly an order for indemnity costs.”

9. We reject this contention.  In his reasons of 13 November 2006, his Honour said:

   “63.I am required to consider the conduct of the parties to the proceedings in relation to the proceedings.…This is an important relevant matter.

   64.In relation to this matter a number of submissions were made (see pars 29-44 of Wife’s submissions).  I refer to what I said in my Reasons for Judgment of 17 November 2006, 5 December 2005, 14 February 2006 and 20 March 2006.  I also refer to what I have said in this judgment about the financial circumstances of the Husband.

   65.In my judgment of 5 December 2005 I said that in my view, prima facie, the Husband had attempted to obstruct the Wife in her endeavours to gain relevant information and documents about a number of matters including the Husband’s financial circumstances.  Further, that the Husband also absented himself from the jurisdiction in circumstances where he knew that the Wife and those advising her were anxious for good reason to examine him in relation to his financial circumstances.  I accept the submissions made on behalf of the Wife.  I am satisfied that the manner in which the Husband has approached the conduct of the proceedings has caused the Wife significant cost.  The Husband has obfuscated and taken steps to obstruct, the Wife in the conduct of the proceedings, at the very least from time to time by inactivity, both prior to the trial in late 2004 and generally.  I have no doubt that by reason of the manner in which the Husband has conducted the proceedings he has caused unnecessary costs.

   66.I am required to consider whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court.  This matter is relevant.

   67.From time to time the Husband failed to comply with orders of the Court.  I observe, that he has also failed to do what he said he would do.  For example, the hearing dates in December 2004 were chosen at his request, to meet his convenience, and he failed to appear.  Next, he has said on more than one occasion this year that he would file a Financial Statement but he has not done so.”

10. We do not agree that his Honour’s reasons are insufficient.  He has in paragraph 65 above, generally summarised the type of conduct which he regarded as relevant.  By reference to the reasons for judgment nominated and the wife’s submissions, it is a relatively straight-forward matter to discern the detail of what his Honour has summarised in that paragraph.

11. In any event we are mindful of what has been said by the majority in Penfold and Penfold (1980) FLC 90-800, at 75,054:

    “Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised: Kent v Kent (1970) 92 WN (NSW) 503 at 505. Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.”

1. It was argued that the finding by the trial Judge in paragraph 67 that the husband has “…said on more than one occasion this year that he would file a financial statement but he has not done so” was in error, because the financial statement that the husband swore on 27 October 2006 was before O’Ryan J when he considered the costs issues.  However, we do not take the statement in paragraph 67 to be incorrect because, as O’Ryan J recorded, on more than one occasion that year (2006) the husband had said he would file a financial statement and had not done so.  Though the phrase “has not done so” is present tense, we would not on this account alone consider that his Honour had overlooked the very recently filed statement of financial circumstances drawn to his attention that day.

2. We consider that his Honour was entitled to take account, as he did, of the husband’s failure to comply with previous orders of the court and contrary to submissions on the husband’s behalf, we do not consider that the prospect that the husband’s absence from the hearing did not extend the trial constitutes a rebuttal of the relevance of his failure to appear.

3. A further argument for the husband was that the wife’s application for lump sum maintenance was a “…remarkably unusual application.  It could only be expected that the husband would defend it and it is submitted that the wife must have brought that claim with the knowledge of the normal rule, subject to s 117(2), that each party should bear his/her own costs of proceedings in the court.”  There is little weight in this argument.  While the application may well have been unusual, it was so not particularly because of the relevant law, but substantially because of the facts, including the husband’s concession, that he could pay the amount of the wife’s claim.

4. We take account of the fact that the wife claimed $4 million and has received $2.25 million.

5. In re-considering the wife’s application for costs of trial we take account of the following:

   •On an application for a $4 million dollar award she received $2.25 million, against a stance by the husband that she receive nil.

   •The adverse findings of significant obstruction by the husband in the spousal maintenance litigation.

   •The adverse findings that he had failed to comply with orders.

   •That there are issues about the extent and value of the financial circumstances of the husband.

6. We have regard to the passage in Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93,029 to which the trial Judge himself referred:

   “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.  All that is required is that the Court asked to exercise the discretion be satisfied that some “particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis”: per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.” (at 87,471)

7. We consider that the husband should pay the wife’s costs of and incidental to the trial on an indemnity basis.

8. As no submissions specifically addressed the inclusion by O’Ryan J of the balance costs of the application under s 44(3) heard by Le Poer Trench J, we also include provision for those costs.

1. costs of the ancillary applications

1. There is of course no agreement that the appeal against these orders must succeed and the discretion be re-exercised.

2. As Nygh J (with whom Simpson and Smithers JJ agreed) said in Robinson and Higginbottom (1991) FLC 92-209:

   “As counsel for the husband rightly submitted, this Court should be very reluctant indeed to interfere with the exercise of discretion in respect of costs…” (p 78,417)

3. And as the Full Court (Ellis, Strauss and Lindenmayer JJ) said in Harris and Harris (1991) FLC 92-254:

   “…Orders for costs are peculiarly a matter which are within the discretion of the trial judge and it is only in the rarest of cases that the Full court should interfere with a costs order.”

4. While these statements do not imply that interference may be withheld if the result is plainly unjust or the discretion was exercised on wrong principles, they bespeak the very broad nature of the discretion where costs are concerned.  With that in mind, we turn to the submissions of the husband.

5. In respect of the orders made ex-parte on 22 December 2005, the husband argues that “…it is a rare occurrence indeed for an order for costs to be made against a party who has no notice that orders are sought against him and further that the circumstances in this case certainly did not justify such an order being made, particularly on an indemnity basis.”

6. In our view, as was found here, if a party has caused or contributed to circumstances in which an application is brought ex-parte and succeeds, that is a pertinent matter which may justify an order for costs against that party.

7. In relation to the subsequent applications, the husband argues that he had some degree of success, in that he asked for and received a stay.  In our view, however, as we discussed in our reasons handed down 5 March 2007, the proceedings for the stay raised essentially the same issues as the wife’s application for injunctive relief and on the essential issues, the husband’s subsequent applications failed.

8. Against the background of the trial Judge’s findings in respect of the husband’s conduct in relation to the substantive application, the continued proceedings, which were ancillary to them, may in our view be correctly seen as affected by the same considerations.  Therefore, an order for indemnity costs was not inappropriate, including as to the costs of the costs application.

Conclusion

1. We would therefore dismiss the appeal against the costs orders.

Costs of the costs appeal

1. The husband submitted that each party should bear his/her own costs of preparation of written submissions in respect of the costs appeal itself.  No submission was made to the contrary.  We intend to make an order that there be no orders as to the costs of the costs appeal.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.

Associate:     

Date:  24/04/2007