C PTY LIMITED & PGW AS LIQUIDATOR OF S PTY LIMITED (IN LIQ)
[2011] FamCAFC 230
•9 December 2011
FAMILY COURT OF AUSTRALIA
| C PTY LIMITED & PGW AS LIQUIDATOR OF S PTY LIMITED (IN LIQ) | [2011] FamCAFC 230 |
| FAMILY LAW – APPEAL – Application to adduce further evidence – where the application was filed after the hearing was completed and judgment was reserved – where the Court determined to treat the application as an application to re-open the hearing in order to adduce further evidence pursuant to s 93A(2) of the Family Law Act 1975 (Cth) – where the further evidence sought to be adduced was that the wife in the original family law proceedings (not a party to the appeal) had declared herself bankrupt prior to the hearing of the appeal – where the fact of the wife becoming bankrupt was of no relevance to the issue of the exercise of jurisdiction which was the subject of the appeal – where there was no basis to admit the further evidence – application dismissed. FAMILY LAW – COSTS – where in the event the application was dismissed the respondent sought an order for costs on an indemnity basis, or if not, on a party and party basis – where the dismissal of the application would justify an order for costs being made in favour of the respondent – where the Court was not persuaded that the applicant’s prior knowledge of the wife’s bankruptcy and failure to file an application to adduce further evidence prior to the hearing constituted the necessary exceptional circumstances to award indemnity costs – costs ordered on a party and party basis. |
| Corporations Act 2001 (Cth) s 1337J Family Law Act 1975 (Cth) ss 93A(2), 117(2) and 117(2A) Family Law Rules 2004 (Cth) r 22.39 |
| CDJ v VAJ (1998) 197 CLR 172 D & D(Costs) (No 2) (2010) FLC 93-435 Watkins v Watkins (2004) 31 Fam LR 590 |
| APPLICANT: | C Pty Limited |
| RESPONDENT: | PGW as Liquidator of S Pty Limited (In Liq) |
| APPEAL NUMBER: | EA | 102 | of | 2010 |
| FILE NUMBER: | SYF | 2153 | of | 2001 |
| DATE DELIVERED: | 9 December 2011 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Strickland, Ainslie-Wallace & Murphy JJ |
| HEARING DATE: | 30 November 2011 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 28 July 2010 |
| LOWER COURT MNC: | [2010] FamCA 646 |
REPRESENTATION
| ADVOCATE FOR THE APPLICANT: | Mr M Rand as a director of C Pty Limited |
| SOLICITOR FOR THE APPLICANT: | Cadmus Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Tobin |
| SOLICITOR FOR THE RESPONDENT: | Brown & Partners |
Orders
The Application in an Appeal filed on 2 November 2011be dismissed.
The applicant pay the respondent’s costs of and incidental to this Application as agreed and in default of agreement as assessed on a party and party basis.
IT IS NOTED that publication of this judgment under the pseudonym C Pty Limited & PGW as Liquidator of S Pty Limited (In Liq) is approved 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
File Number: SYF 2153 of 2001
| C Pty Limited |
Applicant
And
PGW as Liquidator of S Pty Limited (In Liq)
Respondent
REASONS FOR JUDGMENT
Introduction
We have before us an Application in an Appeal filed on 2 November 2011 by
C Pty Limited in appeal number EA 102 of 2010. The order sought is to allow C Pty Limited “to adduce further evidence in relation to the hearing of the appeal pursuant to S 93A(2) of the Family Law Act 1975, and being the documents referred to in the affidavit of [Mr M Rand] sworn on 1 November 2011”. That affidavit is also before us having been filed on 2 November 2011 as well.
Mr M Rand is a director of C Pty Limited and he appeared before us in that capacity without legal representation.
Although the application is to adduce further evidence, strictly, given the fact that the appeal has been heard and our judgment is reserved, the application should have been to re-open the hearing of the appeal. However, because the principles to be applied are the same (Watkins v Watkins (2004) 31 Fam LR 590), we will treat the application as an application to re-open the hearing of the appeal in order to adduce further evidence.
There is no issue about the power of the Full Court to re-open the hearing of the appeal and admit the further evidence; it seems to us that the issue is whether there is a basis for admitting the further evidence, and if there is the appeal should be re-opened to admit that further evidence, but subject to any issue of delay or the like.
The application is opposed by the respondent. On 28 November 2011 the respondent filed a response seeking orders dismissing the application and for costs.
The principles to be applied
Section 93A(2) of the Family Law Act 1975 (Cth) (“the Act”) provides that in an appeal the Full Court can, in its discretion, receive further evidence upon questions of fact. In CDJ v VAJ (1998) 197 CLR 172, the High Court discussed the circumstances in which an appellate court may exercise its discretion to admit further evidence. The majority (McHugh, Gummow and Callinan JJ) said (at paragraph 109):
One consideration in construing s 93A(2) is its remedial nature. Its principal purpose is to give to the Full Court a discretionary power to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors which cannot be otherwise remedied by the application of the conventional appellate procedures. A further, but in practice subsidiary, purpose is to give the Full Court a discretion to admit further evidence to buttress the findings already made.
Discussion
The further evidence sought to be adduced here is that Mrs N Rand, the wife in the original family law proceedings declared herself bankrupt on 25 March 2011 on her own petition, and a trustee, Mr S, was appointed for her estate.
Immediately it is apparent that this pre-dated the hearing of this appeal, namely on 19 May 2011. This does not affect the position vis-à-vis the hearing before the trial judge, but it does go to the exercise of our discretion to re-open the hearing of the appeal. In other words, if relevant, an application to adduce this further evidence should have been filed prior to the hearing of the appeal, and no reason has been proffered as to why that course was not taken. That alone may be sufficient to dispose of the application.
In any event, to return to the issue of the wife’s bankruptcy and the appointment of a trustee for her estate, the first point to make is that the application has only been filed in the appeal in which C Pty Limited is the appellant and the Liquidator of S Pty Limited (In Liq) is the respondent
(EA 102 of 2010). There is no application in the appeal in which Mr and Mrs Rand (the parents of Mr M Rand) are the appellants and the same liquidator is the respondent (EA 104 of 2010). This appears not to have been appreciated by Mr M Rand because in his affidavit filed in support of the application both appeals are referred to and he seems to suggest that the further evidence should be admitted and taken into account in respect of both appeals. However, we are not prepared to treat the application as being made in both appeals. At the very least, for that to occur, a separate application would had to have been made by one or both of Mr and Mrs Rand (the husband’s parents). Mr M Rand has no standing to bring such an application. For that reason as well the respondent objects to us treating the application as being made in respect of both appeals.
However, whether the further evidence is to be adduced in relation to both appeals or just one, we are not persuaded that there is any basis for allowing that evidence to be adduced.
It is suggested by the applicant that as a result of the wife’s bankruptcy, coupled with the fact of the husband already being bankrupt, “no parties from the Family Court proceedings (Husband & Wife) are left in the current Liquidator’s Court proceedings before the Family Court of Australia”. Thus, it is said that the Family Court does not have jurisdiction to hear the “Liquidator’s Court proceedings”.
It is further submitted that as a result of her bankruptcy the wife will “no longer [derive] any benefits from any orders made by the Family Court including those of Rowlands J made on 10 January 2006 which gave all the [Rand] Family Trust interest to her”. It is said that “any interest that she may have had in the [S Pty Limited] outcome has been extinguished with her bankruptcy” because any monies that may be paid will vest in her trustee in bankruptcy to the benefit of her creditors.
It is also submitted that the wife’s bankruptcy has in effect removed any “links” to “any claim or interest in the [S Pty Limited] proceedings”. Mr M Rand summarised it this way in his written submissions:
7. The fact that [Mrs N Rand] became a bankrupt and in the absence of any intervention by her trustee in bankruptcy to assert or claim any rights in the liquidation outcome, that link that could or may have been argued is extinguished. It would be pointless if the Family Court of Australia adjudicates on an application which does not relate to a party to family proceedings and in circumstances where any potential benefit arising to any parties to family proceedings has been extinguished by bankruptcy and where the trustee in bankruptcy has not taken any steps or appearance to assert any rights or entitlements.
However, these submissions are entirely misconceived. Firstly, in the appeal by C Pty Limited there is no issue of jurisdiction, that being properly conceded by senior counsel for C Pty Limited. The issue for the trial judge and then on appeal was whether his Honour should exercise that jurisdiction and not transfer the proceedings to the Supreme Court of New South Wales. Secondly, although jurisdiction was an issue in the other proceedings, and hence the other appeal, as is correctly conceded by Mr M Rand, the wife is not a party and never has been a party to either set of proceedings and thus was also not a party to either appeal. Thus, pausing at that point, the fact of the wife becoming bankrupt would appear to have no relevance to whether the Family Court has the jurisdiction to hear the two sets of proceedings, or in respect of the proceedings in which Mr and Mrs Rand are the appellants, whether the trial judge was in error in exercising the jurisdiction to hear those proceedings.
However, Mr M Rand seems to be under the impression that the effect of the bankruptcy is to take the wife entirely out of the picture, because she is no longer entitled to receive any of the benefits enuring to her under the orders for property settlement made by Rowlands J. Thus, it is said, there is no longer any “link” or “connection” to her. That is not the effect of the bankruptcy though. Certainly any assets, for example, to which she may become entitled under the orders vests in her trustee, but that does not mean that she loses the benefit of those assets. The trustee acts on her behalf and pays out her creditors and the wife is then entitled to receive any surplus. However, this is wholly irrelevant to the exercise of jurisdiction in the C Pty Limited proceedings, and whether jurisdiction exists in the other proceedings. It is not a question of any “link” or “connection” to the wife; it is about the connection between the proceedings where jurisdiction is challenged, and with the exercise of jurisdiction in the C Pty Limited proceedings s 1337J of the Corporations Act 2001 (Cth) in effect provides that the issues as to transfer or not revolve around whether there are good reasons to transfer and what is in the interests of justice.
Conclusion
Thus, to repeat, in our view there is no basis to admit this further evidence. It does not demonstrate that the decision of the trial judge was erroneous.
In these circumstances the Application in an Appeal must be dismissed.
Costs
We sought submissions from the parties as to costs at the conclusion of the hearing.
In the event that the application was dismissed the respondent sought an order for costs assessed on an indemnity basis, or if not, on a party and party basis.
Mr M Rand on behalf of C Pty Limited handed up written submissions in relation to the costs application. However, those submissions solely addressed the question of whether costs should be awarded against him personally. That was clearly prompted by the terms of the order sought by the respondent that “the applicant and/or [Mr M Rand] pay the respondent’s costs…”.
However, no submission was put to us by Counsel for the respondent as to on what basis costs could be awarded against Mr M Rand personally, and thus we proceed on the basis that the costs are sought against C Pty Limited, the applicant. We also proceed on the basis that C Pty Limited opposes any order for costs.
Section 117(2) of the Act provides that an order for costs may be made if there are circumstances that justify the same. Section 117(2A) then sets out a range of matters to which the Court should have regard in considering whether to make an order for costs. One such matter is whether a party has been wholly unsuccessful in the proceedings, and plainly that is the case here; the application is to be dismissed. Accordingly, there are circumstances here that justify an order for costs being made in favour of the respondent.
We next turn to the application by the respondent that any order for costs should be on an indemnity basis.
The most recent consideration of indemnity costs is to be found in the decision of the Full Court in D & D(Costs) (No 2) (2010) FLC 93-435. There, the Full Court reviewed extensively earlier authorities of both this Court and the Federal Court.
It emerges from the discussion by the Full Court in D & D (Costs) (No 2) that there needs to be exceptional circumstances to justify an order for indemnity costs. Here Counsel for the respondent suggests that such circumstances can be found in the following:
a)The applicant’s “knowledge” of the status of the wife prior to the hearing of the appeal.
b)The failure to bring that status to the notice of the Full Court if considered relevant either discreetly or as part of the Application in an Appeal filed by C Pty Limited on 18 May 2011 to adduce further evidence.
c)The applicant’s failure to comply with r 22.39 of the Family Law Rules 2004 (Cth) which provides that a party who seeks to lead further evidence must file the application in an appeal at least 14 days before the commencement of the sittings in which the appeal is listed for hearing.
We are not persuaded that these matters provide the necessary exceptional circumstances. Although it was clearly open to the applicant to bring this issue to the attention of the Full Court prior to or at the hearing of the appeal, if relevant, the fact that the applicant is now doing so, still before the appeal has been finalised, cannot sound in indemnity costs. Thus, there will be an order for costs to be paid on a party and party basis.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ainslie-Wallace & Murphy JJ) delivered on 9 December 2011.
Legal Associate:
Date: 9 December 2011