C Pty Limited & Ors & PGW As Liquidator of S Pty Limited (in Liq) (Costs) - [2012] FamCAFC 38

FAMILY COURT OF AUSTRALIA

C PTY LIMITED AND ORS & PGW AS LIQUIDATOR OF S PTY LIMITED (IN LIQ) (COSTS)

[2012] FamCAFC 38

FAMILY LAW – APPEAL – COSTS – where the appellants seek that each party bear their own costs or in the alternative that they be granted a certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) – where the respondent seeks costs on “the ordinary basis” – where costs certificates cannot be granted pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) given the appeals have been dismissed – where the appellants object to the Full Court receiving the respondent’s submissions in reply which they assert were filed out of time – where the submissions in reply were received – where both sets of proceedings before the Family Court were proceedings under the Family Law Act 1975 (Cth) (“the Act”) and thus the applications are governed by s 117 of the Act – where the appeals have been wholly unsuccessful – where there is no evidence as to the financial circumstances of the parties which either supports or prevents an order for costs being made – where there is no basis for making an order for costs based on the conduct of the respondent – where there is relevant conduct by the appellants to be taken into account in favour of an order for costs being made – where the offers of settlement made by the appellants are disregarded – where the applicants are to pay the respondent’s costs of and incidental to the appeals as agreed and in default of agreement as assessed on a party/party basis – costs order made.

Family Law Act 1975 (Cth) s 117(1), (2) & (2A)
Federal Proceedings (Costs) Act 1981 (Cth)

Fitzgerald v Fish and Anor (2005) 33 Fam LR 123

APPELLANT:

C Pty Limited

RESPONDENT:

PGW as Liquidator of
S Pty Limited (In Liq)

APPEAL NUMBER:	EA	102	of	2010
1^st APPELLANT:	Mr Rand
2^nd APPELLANT:	Mrs Rand

RESPONDENT:

PGW as Liquidator of
S Pty Limited (In Liq)

APPEAL NUMBER:

104

2010

FILE NUMBER:

SYF

2153

2001

DATE DELIVERED:

15 March 2012

PLACE DELIVERED:

Adelaide

PLACE HEARD:

By way of written submissions

JUDGMENT OF:

Strickland,
Ainslie-Wallace & Murphy JJ

DATE OF LAST SUBMISSION:

2 February 2012

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

28 July 2010

LOWER COURT MNC:

[2010] FamCA 646

REPRESENTATION

SOLICITOR FOR THE APPELLANTS:

Cadmus Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Cotman SC

SOLICITOR FOR THE RESPONDENT:

Brown & Partners

Orders

The appellants pay the respondent’s costs of and incidental to the appeals as agreed, or in default of agreement, as assessed on a party/party basis.

IT IS NOTED that publication of this judgment by this Court under the pseudonym
C Pty Limited and Ors & PGW as Liquidator of S Pty Limited (In Liq) (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 102 of 2010; EA 104 of 2010
File Number: SYF 2153 of 2001

C Pty Limited

Appellant

And

PGW as Liquidator of S Pty Limited (In Liq)
Respondent

And Between

Mr Rand

First Appellant

And

Mrs Rand

Second Appellant

And

PGW as Liquidator of S Pty Limited (In Liq)

Respondent

REASONS FOR JUDGMENT

Introduction

We now have before us effectively an application by the respondent in both appeals for an order for costs, and an application by the appellants in both appeals in respect of costs.
On 9 December 2011 we delivered our reasons for judgment and made the following orders:
1. Leave to appeal be granted in respect of both appeals.
2. The appeals be dismissed.
3.The parties are at liberty to file written submissions with regard to the costs of the appeals and to adduce any further evidence in relation thereto by way of affidavit in accordance with the following timetable:
(a)on behalf of the respondent within twenty-eight (28) days hereof;
(b)on behalf of the appellants any response thereto within twenty-eight (28) days thereafter;
(c)on behalf of the respondent in reply thereto within fourteen (14) days thereafter.
4.Each submission and affidavit have endorsed on the cover sheet the date on which a copy thereof was served on the other party or parties.
Pursuant to paragraph 3 of those orders the respondent filed his submissions on costs on 5 January 2012 and in which he seeks that he be “awarded costs on the ordinary basis”.
On 2 February 2012 the appellants filed their submissions on costs and in which the following orders are sought:
(a)That each party pays their own costs in accordance with section 117 of the Family Law Act 1975; or
(b)A certificate be granted pursuant to the Federal Proceedings (Costs) Act 1981 to the Respondent.
On 17 February 2012 the respondent sent to the Court and to the appellants his submissions in reply. However, the appellants have objected to us receiving those submissions, and requested that they be disregarded. It is said by the appellants that those submissions were filed out of time, arguing that they should have been filed on 16 February 2012. The respondent disagrees though and says that they were filed in time.
Save and except in relation to one matter with which we disagree, all the matters raised in the reply are matters that were in our contemplation in any event. Therefore it is neither here nor there whether we receive the reply or disregard it. For the sake of completeness though we do propose to receive the reply and we do not feel constrained to enter into the debate that has proceeded apace between the solicitors about whether the submissions should have been filed by 16 February or by 17 February 2012.
Can we also at this early stage deal with the second of the orders sought by the appellants. That is not an order that can be made. A costs certificate is only available under the Federal Proceedings (Costs) Act 1981 (Cth) if the appeal is allowed. Here, as we assume the appellants know, their appeals were dismissed. Turning then to the other orders sought.

The application by the respondent for costs

The respondent appears to suggest both in his initial submission and in his reply that because the subject matter of the applications before the trial judge was “commercial in nature”, s 117 of the Family Law Act 1975 (Cth) (“the Act”) does not necessarily apply, and costs should follow the event.
We do not accept that submission. Both sets of proceedings before the Family Court comprise matrimonial causes, and are proceedings under the Act. As such s 117 applies to those applications, and must govern the determination of the application for costs that is before us.
Section 117 insofar as it is relevant provides as follows:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
The appellants, in seeking dismissal of the respondent’s application for costs rely on s 117(1). However, the issue here is whether there are circumstances that justify an order for costs, and if so what order should be made. (Section 117(2) and (2A)).
The circumstance promoted by the respondent is that the appeals were wholly unsuccessful (s 117(2A)(e)), and of course, as is beyond doubt, there only needs to be one circumstance to result in an order being made (Fitzgerald v Fish and Anor (2005) 33 Fam LR 123).
The appellants submit that the respondent has not been wholly successful because we granted leave to appeal. However, that submission is misconceived. As the respondent says in his reply:
4.… The Full Court determined to grant leave because of the significance of the issues apparently at stake (at [46] of the Full Court Judgment dated 9 December 2012 …), primarily being the issue of jurisdiction. The Full Court did not grant leave because of the merits of the grounds of appeal. The Full Court found that the grounds of appeal were without merit after consideration of matter [sic] (at [124]). In fact, the appeal did not raise the issues claimed to be at stake let alone succeed on them.
Thus there is no question that the appeals have been wholly unsuccessful and that this circumstance justifies an order for costs.
However, there are other matters under s 117(2A) that we need to take into account. First, and as relied on by the appellants, there are the financial circumstances of the parties (paragraph (a)). We are restricted though in our consideration of this factor given the lack of evidence, and in particular we simply do not know anything about the financial positions of Mr and Mrs Rand or C Pty Limited. With S Pty Limited (In Liq) we know of course that it is in liquidation, but we have no detail as to what assets and liabilities that it has.
The appellants seem to be suggesting that it is relevant under this heading to speculate as to the outcome of the substantive proceedings, and the financial impact of that. We agree with the submission of the respondent though, that that is not something we can do.
Thus, there is nothing before us as to the financial circumstances of the parties which either supports or prevents an order for costs being made.
Secondly, the appellants attempt to raise the “conduct of the parties” (paragraph (c)). First, it is suggested that the appellants in both appeals were justified in challenging the jurisdiction of the Family Court of Australia. However, the argument in support of that submission relates to the hearing at first instance rather than the appeals, and in any event, in one appeal the issue of jurisdiction was conceded, and in the other, to be absolutely clear, we found that the Family Court of Australia does have jurisdiction over the proceedings, and the challenge by the appellants had no merit. In any event, this is not to what paragraph (c) is directed, as is readily apparent from the words of the paragraph themselves.
Secondly as to the issue of “conduct”, it is put that at the time of the hearing before Cohen J in July 2010 the pleadings by the appellants had not been “formulated nor completed” and “the likelihood of success to the challenge of the Family Court jurisdiction was significant”. However, the argument continues, that changed when the orders of Cohen J providing for the appellants to file their pleadings were complied with, and “the proceedings took on a different dimension” before us.
This is an extraordinary submission, and how that assists the case of the appellants in opposing an order for costs completely escapes us. As the respondent says in his reply:
… the late filing of the appellants’ pleadings at first instance in breach of Cohen J’s orders (which pleadings were sought to be led in evidence pursuant to a late section 93A(2) application) meant that the issues as to jurisdiction on appeal were only made explicit by the appellants at the eleventh hour – and, as the respondent noted in the appeal – such pleadings rendered the appeal almost academic. The irony of the appellants’ submission at paragraph [7] on page 6 of the [sic] their submissions, is that they claim that ‘the likelihood of success to the challenge of the Family Court (sic) jurisdiction was significant’ (emphasis added) at the time of the hearing before Cohen J – that is, at the time when they had not disclosed what their cases were by determining not to specifically plead those cases. When they did plead their cases, it became patently obvious that they had no sustainable claim as regards jurisdiction (or any other claim).
Indeed, we addressed this issue in paragraphs 58 to 68 inclusive of our reasons for judgment delivered on 9 December 2011.
Thus, there is certainly no basis on the strength of these submissions to find that there was conduct on the part of the respondent that prevents an order for costs being made.
On the other hand though, it seems to us that there is relevant conduct by the appellants to be taken into account in favour of making an order for costs, namely, and as we have just identified, what ironically the appellants raise themselves in relation to the effect of their late compliance with the orders of Cohen J for the filing of the pleadings, and the placing of those pleadings before us as further evidence in the appeals. To repeat, that “almost rendered the appeals academic”.
As to paragraph (e) we have already commented on what is relevant there. The appellants though point to where in our judgment we found that the trial judge erred and/or became confused. There is no doubt that we made those findings in relation to certain aspects of his Honour’s reasons for judgment, but none of those errors or instances of confusion were sufficient to allow either of the appeals. We do not propose to go to the specific matters, but in general they were either peripheral or inconsequential, and they had no material effect upon the overall correctness of the trial judge’s decision. Importantly, we do not consider that any of these matters prevent us proceeding on the basis that the appeals were wholly unsuccessful.
Thirdly, the appellants point to what they describe as offers of settlement (paragraph (f)). The first offer was made on 9 May 2011, and it was that “both appeals be discontinued on the basis that each party pays its own costs of the appeals and for the main proceedings to continue in the Family Court of Australia.” This offer was rejected by the respondent, and in our view justifiably so. It was an offer made 10 days before the hearing of the appeal, and obviously at a time when substantial costs had been incurred by at least the respondent. Moreover, the result of the appeals is that they have been dismissed, and as we will indicate shortly, with the appellants having to pay the costs of the respondent. Thus, this was in no sense an offer of settlement that should have been accepted, and it certainly cannot prevent an order for costs being made in favour of the respondent.
Then, bewilderingly, the appellants look to rely on an “offer” made on 8 June 2011. This of course was after the hearing of the appeals, but significantly it was an offer to settle the entirety of not only both sets of proceedings but also all of the disputes between the parties. It entailed, inter alia, the withdrawal of the proceedings and each party paying their own costs.
The problems with this offer in the context of the application for costs that is now before us are twofold. First, it was not open to the respondent to accept the offer only insofar as it related to the appeals, and secondly, again it left the respondent to bear the substantial costs incurred in preparing and running his opposition to the appeals. There is also the actual result of the appeals compared with the terms of this offer.
Thus, we disregard both of these offers of settlement.
Fourthly, and finally, the appellants seek to invoke s 117(2A)(g), namely “such other matters as the court considers relevant”. The other matter raised is once again the circumstance that leave to appeal was granted and the suggestion that the appeal raised “significant and substantial matters of public interest nature”. We have already addressed this claim though and, to repeat, it simply does not assist the appellants given that the appeals have been dismissed, and when it is also recognised that the major issue became “almost academic” by the very actions of the appellants.
We also observe with some concern that there is reference here by the appellants to the circumstance that “the wife became bankrupt”. Our concern stems from the fact that as the appellants well know there was an unsuccessful attempt made on behalf of C Pty Limited, one of the appellants, to introduce this as further evidence after the hearing of the appeals but before judgment was delivered. We dismissed that application effectively on the basis that the fact of the wife’s bankruptcy was irrelevant to the proceedings under appeal.

Conclusion

We confirm that there are circumstances here that justify an order for costs being made in favour of the respondent, namely the appellants were wholly unsuccessful in their appeals. Further, if any support is needed for this conclusion then we point to the conduct of the appellants in relation to the effect on the appeals of the pleadings at first instance filed well after the appeals had been instituted.
As to what order should be made, we were not provided with an amount that the respondent sought, and thus we propose to make the usual order providing for the appellants to pay the respondent’s costs of and incidental to the appeals as agreed and in default of agreement as assessed on a party/party basis.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ainslie-Wallace & Murphy JJ) delivered on 15 March 2012

Legal Associate:

Date: 15 March 2012