Chong and Ha (No.2)
[2018] FCCA 320
•14 February 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CHONG & HA (No.2) | [2018] FCCA 320 |
| Catchwords: FAMILY LAW – Application to re-open after judgment delivered and final orders made – purported s.79A application – dispute regarding documents jointly produced in a joint tender bundle in substantive proceedings – functus officio – res judicata – whether costs be paid on an indemnity, solicitor/client or party/party basis – assessment of costs. |
| Legislation: Family Law Act 1975, ss.79A, 90SN & 117 Federal Circuit Court Act 1999, s.86 |
| Cases cited: Chang & Su [2002] FamCA 156 Urban Transport Authority of New South Wales & Nweiser (1992) 28 NSWLR 471 |
| Applicant: | MR CHONG |
| Respondent: | MS HA |
| File Number: | SYC 2468 of 2014 |
| Judgment of: | Judge Kemp |
| Hearing date: | 9 February 2018 |
| Date of Last Submission: | 9 February 2018 |
| Delivered at: | Sydney |
| Delivered on: | 14 February 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Othen |
| Solicitors for the Applicant: | Linden Legal |
| Counsel for the Respondent: | Mr Bell |
| Solicitors for the Respondent: | Caroline Chung & Associates |
THE COURT ORDERS THAT:
The wife’s Application in a Case filed on 16 November 2017 is dismissed.
The wife pay the husband’s costs in the sum of $95,014.84 in respect of the proceedings, the husband’s Application in a Case filed 27 July 2017 and his opposition to the wife’s Application in a Case filed 16 November 2017, within 3 months’ of today’s date.
The husband’s Application in a Case filed on 27 July 2017 is, otherwise, dismissed.
The matter is, otherwise, removed from the active pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Chong & Ha (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 2468 of 2014
| MR CHONG |
Applicant
And
| MS HA |
Respondent
REASONS FOR JUDGMENT
Introduction
On 30 June 2017, judgment was delivered by this Court (“the judgment”) and the following orders (“the orders”) and declarations were made:
(1)A declaration pursuant to s.90RD of the Family Law Act 1975 (“the Act”) that the parties were in a de facto relationship between June 2006 and February 2012 and that such a relationship existed for a period of at least 5 years 8 months.
(2)A declaration that the husband made substantial contributions of a kind referred to in s.90SM(4)(a) and s.90SM(4)(b) of the Act.
(3)That within 42 days from the date of these orders, the wife will do all acts and things and execute all documents necessary to transfer to the husband, at the expense of the husband, the whole of the wife’s right, title and interest in the property situate and known as Property A in the State of New South Wales, being the whole of the land contained in folio identifier …(“the Property A property”), subject to the encumbrance thereon.
(4)That simultaneously with order 3, the parties will do all acts and things and the husband will pay all sums of money to discharge the joint mortgage secured over the Property A property or refinance the said mortgage into his sole name.
(5)That other than as is specifically provided for in these orders, each of the parties are solely entitled, to the exclusion of the other, to all items of personal and real property in the their respective possession or of which they are the registered proprietor as at the date of these orders, including but not limited to all or any money standing to the credit of each of the parties in any bank or building society, shareholdings, motor vehicles and any present or future expectation under a trust or estate and any superannuation entitlements.
(6)That in default of the parties or either of them doing all acts and things and executing all such documents as are necessary to give effect to these orders, a Registrar of the Federal Circuit Court of Australia at Sydney be appointed pursuant to s.106A of the Act to execute all such documents in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said orders.
(7)If any party seeks costs, an appropriate written application may be made within 28 days of today’s date, (supported by any documentary material) to be filed and served within that time period and a copy forwarded to Chambers. The Court will then deal with that matter by way of written submissions, unless the parties wish to be heard orally. If no such application is made within the time period specified, there will be no order as to costs.
(8)The matter is, otherwise, removed from the active pending cases list.
The terms of the judgment are included in these reasons as if fully set out herein and were received as Exhibit “Court 1”.
The husband in compliance with order 7 as referred to above then filed an Application in a Case on 27 July 2017, which was made returnable on 13 September 2017, in which he sought the following orders:
(1)That within 21 days of orders being made, the respondent pay the costs of the applicant on an indemnity basis in the sum of $102,216.55, being the costs paid by the applicant in relation to the proceedings to date.
(2)In the alternative to order 1 hereof, that within 21 days of orders being made, the respondent pay the applicant’s costs in relation to the proceedings to date, as agreed or assessed in accordance with Part 19 of the Family Law Rules 20014.
(3)That within 21 days of orders being made, the respondent pay the costs of the applicant in connection with this costs application in the sum of $3,833.00.
The husband relied on the affidavit of his solicitor, Ms Zippy Wen Yee Chan sworn 19 July 2017 and filed on 27 July 2017.
The respondent wife did not file any response to the abovementioned Application in a Case.
On 13 September 2017, the following orders and notations were made:
(1)Leave is granted to the husband to file in Court today, his written submissions.
(2)The husband is to serve on the wife the written submissions referred to in order 1, within 7 days of today’s date.
(3)The wife file and serve any written submissions as to costs together with any affidavit in response 14 days after compliance with order 2 above.
(4)If the wife files any affidavit in terms of order 3 above, the husband to file any short affidavit in reply, 7 days thereafter.
(5)The Cost issue will be dealt with in Chambers upon receipt of the affidavit/submissions at the expiration of the time in order 4.
(6)The husband’s solicitor is to notify the wife’s solicitor of the orders made today.
THE COURT NOTES:
(7)The wife’s solicitors are still on the record for the respondent, but did not appear today.
On 14 September 2017, the solicitors for the wife (Goh Lawyers) forwarded to the husband’s solicitor and the Court, a Notice of Intention to Withdraw, as filed on that day.
On 29 September 2017, the wife’s said solicitors filed a Notice of Withdrawal as Lawyer.
The wife’s solicitor, Ms Caroline Chung, forwarded an email to the Court on 25 September 2017 requesting an extension of time to file documents and on 26 September 2017, the following order and notation was made in Chambers:
(1)The time for the wife to file and serve any written submissions as to costs together with any affidavit in response under order 3 of 13 September 2017 is extended to within 14 days of today’s date.
THE COURT NOTES
(2)If the wife files any affidavit/submissions in accordance with the above order, order 4 of 13 September 2017 allows the husband to file any short affidavit in reply, 7 days thereafter.
On 27 September 2017, the wife filed a Notice of Address for Service confirming her new solicitor as Ms Caroline Chung.
By way of a further order made on 10 October 2017, time was extended for the wife’s written submissions to be filed by 13 October 2017.
On 13 October 2017, the wife’s written submissions were received, together with an affidavit from the wife sworn on 12 October 2017 and filed on 13 October 2017.
On 18 October 2017, the husband’s written submissions in reply were received.
The wife’s written submissions raised an issue as to whether the wife was seeking to re-open “the evidence generally” or on some restricted basis on the question of costs. No order had been sought by the wife in these terms either by way of a response to the husband’s Application in a Case or by way of a fresh Application in a Case by the wife.
On 13 November 2017, as no Application in a Case had been filed by the wife to reopen her case, the Court wrote to the parties advising them that if no Application in a Case was filed by 12 noon Friday, 17 November 2017, the matter would proceed on the papers only.
On 16 November 2017, the wife filed an Application in a Case seeking the following orders:
(1)Grant leave to the wife to re-open the evidence, including for the purposes of relying on material attached to her affidavit sworn 12 October 2017 and filed in the costs application.
(2)Further, or in the alternative, pursuant to s.79A of the Act, the orders be varied or amended so as to revise the property pool so as to reflect exclusion of Bank of China account ….
(3)Further, or alternatively, such variations to the orders made as reflect the exclusion of the amounts forming part of the pool referrable to the contended Bank of China account and consequential orders.
(4)Costs.
(5)Further or other orders or directions as the Court deems just.
The wife relied also on the affidavit of her solicitor, Ms Caroline Chung sworn 16 November 2017 and filed on that date. That affidavit seeks to explain why the wife had not filed an Initiating Application in terms of the relief sought at proposed order 2 in paragraph 16 above. Ms Chung says that she was not permitted by the Registrar to file such a document. Annexure “D” to Ms Chung’s affidavit, however, notes that the Registrar rejected the Initiating Application on the basis that there was no supporting affidavit and no financial statement filed in support of it. The “s.79A of the Act” application must be dismissed in terms of it being brought within an Application in a Case largely responsive to the husband’s application for costs. Further, that particular section is not, relevantly, applicable to the parties to this relationship given that they were never married. Further, if reliance is to be placed on s.90SN(1) of the Act, in terms of a miscarriage of justice by reason of suppression of evidence, it is hard to see how that would be successful given that the wife had the evidence at the time of hearing that had not been disclosed. Mr Bell, substantially, conceded that the wife’s application under this provision was premature. In those circumstances, the Court is of the view that such application in its present form should be summarily dismissed.
The “orders” referred to in paragraph 16 above, would appear to be the orders, as set out in paragraph 1 above.
The orders, as set out in paragraph 1 above, have not been the subject of any appeal.
On 2 February 2018, the husband then filed a Response to the wife’s Application in a Case which sought the following orders:
(1)That the Application in a Case filed by the wife on 16 November 2017 be dismissed.
(2)That the application by the wife seeking orders pursuant to s.79A of the Act be summarily dismissed.
(3)That the wife pay the husband’s costs of and incidental to these interim proceedings on an indemnity basis.
The husband also relied on the affidavit of his solicitor, Ms Zippy Wen Yee Chan, sworn 1 February 2018 and filed on 2 February 2018.
While the Court sought the parties’ further consent to deal with the matter on the papers only (noting that that position had been reached on 13 September 2017 – see paragraph 6 above) and such consent was provided by the husband, the wife sought to make further submissions at an oral hearing. Accordingly, the Court allocated 9 February 2018 for that event.
On 9 February 2018, the wife sought to rely on an affidavit sworn/affirmed by her on that day. The Court, for the reasons given on the day, rejected that affidavit. The Court received further written submissions from Mr Othen of Counsel.
The wife was represented by Mr Bell of Counsel and the husband by Mr Othen of Counsel.
The Court’s determination is, therefore, based only on a study of the documents before it, including the affidavits as identified and read and the submissions (both oral and written) of the parties’ legal representatives. Neither party has sought to adduce oral evidence or to cross-examine the other and, accordingly, there is no provision for a more extensive hearing where evidence as to those matters can be tested in cross-examination and where the Court can make findings of fact, after testing credibility and truthfulness in respect thereof.
Application to re-open
The wife seeks to re-open the matter and submits that there are a number of alternative propositions open to the Court, articulated using the wife’s lawyer’s wording, as follows:
First alternative:
a)If the wife is permitted to re-open generally and the material is considered as to the adjustment of property generally as well as the question of costs.
b)If the wife is permitted to re-open the material for the learned Trial Judge more generally, then it would undermine the force of the husband’s case in relation to a key aspect of the balance sheet.
c)If the Court received further material, it would be open to amend orders to adopt such of the Court’s reasoning as applies. With more broad application it would affect other evaluation of issues and the parties and the criticisms of the wife.
Second alternative:
d)If the wife is permitted to re-open but material is only considered on the question of costs.
e)If the Court grants leave to the wife to adduce further material but confines that use to the specific costs application and, in particular, the matters pressed by the husband, it would negate matters raised by the husband and show the wife is far worse off than the husband contends.
Third alternative:
f)If no leave is granted on any basis and the Application is dealt with entirely based on the husband’s submissions and the wife’s reply to matters raised there, it is submitted the husband’s Application should fail by resort to conventional principles referred to below. The cases are not controversial albeit Chang & Su [2002] FamCA 156 perhaps the most relevant on the topic.
The evidence sought to be relied upon is referred to in paragraphs 3, 4 & 5 of the wife’s affidavit sworn 12 October 2017. The wife refers in paragraph 3 to the Trial tender bundle of 31 January 2017 and to page 40 which, she says, is a purported Bank of China statement for account number …in Chinese. A partly translated copy is at page 41. The wife says that that account number is her account number in China. The wife says that she withdrew the RMB 5,000.00 but “could not transact since”. The wife says that she produced the Bank of China passbook account after retaining new solicitors and that she understood that these new solicitors had sent a copy to the husband’s solicitors. She annexes as Annexure “A” a copy of the passbook. The original passbook was received conditionally as Exhibit “1” and the Court now receives it as that exhibit. The wife says that she compared the passbook and the statement and says that they conflict and that the statement must be wrong. She annexes as Annexure “B” a schedule prepared by her new solicitors, comparing the passbook and statement transactions for the same period. The wife says in paragraph 4 that she rarely operated the account and last did so, withdrawing the RMB5,000.00. The wife says it was “hard to access” after 2013. She says that the bank “wanted identity clarification and it was hard communicating from Australia”. The wife says that on 23 September 2016, she attended the Bank of China head office at …and after meeting a manager “could withdraw $5,000.00 RMB”. The wife says that the bank statement records ATM withdrawals when she was not in China. She says that in 2016, she went to China from 2 March 2016 to 12 April 2016; 2 September 2016 to 28 September 2016 and 5 December 2016 to 8 December 2016. The wife says that the bank statements record ATM withdrawals of RMB2,700,000.00 on 23 February 2016; RMB2,400,000.00 on 21 April 2016 and RMB4,300,000.00 on 4 May 2016 and says that on those dates she was not in China and annexes as Annexure “C” a copy of her passport.
The wife submits in respect of the above, the following:
a)The material relates to a passbook variously described as Bank of China Account ending “…”. This is not a concession it was an asset of significance. The purpose was to compare this to the statement on which the husband relied.
b)The wife seeks to tender a Schedule prepared by her new solicitors to “carefully match the items in the exhibited Statement against the passbook”, she also seeks to tender.
c)The exhibit ought to be excluded or given no weight at least on costs.
d)For convenience, the wife seeks to have the statement properly translated and to put a further submission. Alternatively, the ambiguity of these matters cannot be resolved against the wife. This submission was directly put to Mr Bell as to what it meant. Mr Bell could not further amplify on this.
e)The wife does not concede Account “…” ought to be treated as an asset at trial but, in any event, says it is similar to another amount attributed to the wife.
The wife, further, submits as to the following:
Context and relevance
a)The Court found in excess of $500,000.00 Australian to be an asset of the wife. It was one of two features identified as controversial between the parties.
b)In the Court’s consideration as reflected in the Reasons there was identification that it was the husband’s case that the wife had not disclosed it.
The exhibit from National Australia Bank Limited (“NAB”) subpoenaed documents
c)More importantly, the husband relied upon a partially translation of a purported Statement in subpoenaed NAB document.
d)At its highest it is a document produced by NAB, not adopted by the wife to the Bank or anywhere. It was not clearly put and is a Browne and Dunn failure. The Court notes, however, that this document was part of the parties’ joint tender and that, accordingly, this submission simply makes no sense.
e)It may reflect his lack of confidence in its reliability. The transcript discloses cross-examination on lesser issues, including transfers to the Bank of China the husband asserted.
f)The bundle continues the home loan application. It notes factual matters. The only purported adoption is on page 8.
g)Further documents in the cluster are dated after printing of the statement. Whatever may be said in documents when customers put a good light on finances, there is no reference to substantial moneys held by the wife in the Bank of China or anywhere. Some dishonour references are seen.
h)The partially translated statement became part of NAB records by unidentified process. The document purportedly from Company 1 was not adopted by the wife.
i)More significantly it conflicts with the passbook. The Court notes that this conflict was never raised by the wife at the hearing nor did she disclose the passbook to the Court or to the husband, in any event.
j)The translation on 30 May 2016 (page 41) appears to be a statement that the source document was dated 26 May 2017 for the identified period of 1 February 2016 to 26 May 2016.
k)The tender bundle page 1 refers to Property B contract front page for Property B.
l)The contract is dated 22 April 2016 with a deposit of $318,000.00. The balance of $2,862,000.00 was payable with other costs of sale.
m)Page 2 discloses a loan draw down of $2,225,581.86 on 15 July 2016 and various transaction consistent with a purchase. The bundle follows with a report of 27 June 2016 disclosing organisational structure noting sole director and secretary as … appointed to both roles on 21 December 2014.
Trial context more generally
n)Certain features apply regardless of these alternatives. They are important in consideration of any overall picture.
o)It is not intended to be overcritical of questions and answers from transcripts without participation at trial.
p)With great respect, some questions put to her shifted time frames, reference points and topics. One example is weekly income paid by the husband. Other ambiguities in the evidence are frequent. For example, advocate and witness are at cross purposes with the topic of the alleged $1,000.00 per week. A witness with good English may understand clear questions and say in plain English for tax planning or similar, she was deemed receiving a sum of money she did not physically receive by way of book entry.
q)Depending on details, it may or may not be significant. In the alternate if it was clearly the husband’s position there was no tax planning and rather physical payments were handed across the kitchen table or directly banked as per returns, that could be clear. It is confusing for the husband to conflate book entries as facts to become a prior inconsistent statement. This is not to be unduly critical simply that where the wife contributed to confusion she did not monopolise it.
Property B property
r)There was considerable agitation about Property B.
s)There remains doubt as to responsibility for confusion. This may be implicitly conceded by submission by learned Counsel for the husband that the wife ought to be criticised for failure to disclose a transaction to her barrister.
t)Where a party is represented by Counsel and instructing solicitor at Court, the distinction is unusual.
u)The distinction about Counsel and solicitor presumably arises because the wife’s solicitor acted on the purchase.
v)In fairness to others who have not been appearing or joined, and putting aside speculation it is clear her solicitors were aware of Property B.
w)Parties are entitled to reasonable guidance as to what is relevant or their obligations. In any event, there are several scenarios. Given the wife’s instructing solicitors were on notice of the property, it was incumbent on them to make set out the implications of that property to their client and to Counsel. The Court accepts the thrust of this submission insofar as the wife’s solicitors at the hearing were concerned.
x)If they made a genuine error, whether or not reasonable, that would be relevant on this application.
y)If they made worse error, the same applies. If they were correct, or arguably so it would not sound in costs. There is no suggestion of seeking to withdraw because of matters the client refusing to disclose required matters.
Other considerations
z)As to conduct of the case by all accounts, the matter did not resolve. The matter required determination and over a period that with some issues or difficulties was not particularly extensive having regard to a number of issues. To express the matter neutrally, there was a reasonable range of issues of contribution, quantum property value and the like. There is no impecuniosity or hardship. The husband had property of value, albeit relying on a valuation no more recent than 2014.
aa)The case was not conducted at length. There is, very properly, no suggestion that conduct of the case eg length itself bore unreasonably upon the costs.
bb)The gravamen appears to be alleged non-disclosures and in particular the Bank of China Account. That of itself is not a grounds for a costs application. The findings against the wife sounded against her in the outcome. To add costs thereto is a penalty.
If the husband opposes re-opening
cc)It is submitted the husband ought as a matter of principle consent to tender given it was his case an account in that number at that bank did exist. He cannot be heard to hold on to possible error drawn to his attention.
dd)Naturally should he wish to contend the calculations or aspects are wrong, he should have that opportunity. If the husband opposes reopening, it is submitted this fundamentally changes whether or not he could be seen as having conducted the case reasonably.
ee)The highest the husband puts it is in his Case Outline “applicant’s value from subpoena material-as 25.05.16 balance was RMB $2,765,660.63 or AUD $548,351.”
ff)The husbands argument the wife was wholly unsuccessful depends on that account. On his case he learned about it very late. Without resort to reductionism it follows without that he could not argue she was wholly unsuccessful in the terms he agitates.
Some of the above submissions are unclear as to their import. Some appear to be critical of the wife’s former solicitors. No evidence was called from them to amplify or explain any of these criticisms. Some of these submissions appear supportive of the husband’s position. The document has the “air” of one which was prepared to advise the wife on the outcome of the proceedings by her new solicitors, to an extent critical of her former solicitors.
The Court accepts that while the wife has leave to rely on an affidavit in the costs proceedings provided pursuant to directions made, such affidavit must be relevant to the costs dispute, itself. The husband says that the Court should reject paragraphs 3-5 of the wife’s above mentioned affidavit. The husband says that the affidavit simply represents “an ill-fated attempt to re-open the evidence in the principal proceedings, despite the fact that judgment has already been handed down.
The husband’s solicitors’ affidavit sworn 1 February 2018 provides a background in terms of the production of the documents which became the agreed indexed bundle of documents, being Exhibit “Court 3”, in the substantive proceedings. In the Court’s judgment, the Court noted that it was left in the position of then having to consider the documents so produced without any further explanation. There was no application made by the wife to re-open in order to provide an explanation as to the documents produced on her behalf and supplied by her bank and it was, accordingly, noted that the Court could only draw conclusions from the face of the documents themselves and the parties’ written submissions. The husband’s solicitors say that as a result of preparing the draft agreed bundle of documents, they did not receive any request by the wife or her solicitors to include further documents as part of that tender. The parties, by way of a joint letter to the Court signed by their solicitors, forwarded the joint tender bundle for reliance on by the Court. Pages 40 and 41 of the tender bundle were documents which related to the wife’s Bank of China account number …which had been produced by her bank, the NAB in answer to a subpoena issued to that Bank. Those documents had not been previously produced by the wife to the husband as part of any disclosure in the proceedings. That account however, was disclosed as it was referred to in the balance sheet with the husband asserting that it had $548,351.00 in it and with the wife asserting it had $0. That contest was referred to in the Court’s identification of the property set out at paragraph 68 of its judgment. The Court determined in paragraph 87 of the judgment that the wife did, in fact, have the sum of $548,351.00 in that account. Mr Bell concedes that the document, which proves that sum, produced by the NAB should not have been included in the tender bundle, without further explanation. Mr Bell, further, concedes that the wife should have tendered the passbook as it was clear that she had it in her possession at that time. Some of the submissions, in this regard, as prepared by the solicitors instructing Mr Bell are entirely unclear in their terms. They appear, as said, to have been drafted critical of the wife’s former solicitors. Mr Bell was, however, further critical of the husband in failing to cross-examine the wife about that account. This criticism could only apply if the husband was aware of the deposit book. The wife’s solicitors in not raising any matter of concern represented, in terms of the agreed tender bundle, that the bank statement provided to the wife’s bank was, indeed, accurate. Mr Othen would not have been required to cross-examine the wife over that matter. Mr Bell’s criticism that the husband may have acted in silence to allow the Court to be misled is without foundation. There is no evidence before the Court that the husband knew of the passbook or knew of any discrepancy between the passbook and the document in the tender bundle. The only person who had that knowledge or the potential to gain that knowledge was the wife, herself.
Mr Bell submits that it is for the Court to determine whether, if it was misled, as to the amount in the Bank of China account, that that amount was such as to materially affect the Court’s decision given that he, appropriately, conceded that the Court’s exercise is not one of mathematical precision. Mr Othen does not concede that there was any misleading of the Court. Mr Othen submits that the document now produced as Exhibit “1” on this application simply does not prove that which the wife seeks to assert of it. The Court accepts Mr Othen’s submission. If the wife was of the view that the passbook showed something different from that which was represented to her bank, then she bore the obligation to raise that matter herself and to deal with it. It was not for that issue to be, as Mr Bell submits, “squarely” raised with the wife, presumably by Mr Othen. Mr Othen says there may be a number of reasons why the wife did not disclose it, including, in particular, forensic decisions made by her previous lawyers. Those forensic decisions going to the very nature of the document itself and the representations that the wife or someone on her behalf had made to her bank in terms of the provision of the bank statement, relied on in Exhibit “Court 3”, in the substantive proceedings. The Court asked Mr Othen whether such a forensic decision could have arisen in terms of the bank providing funds having been potentially misled by the provision of that statement. The Court accepts Mr Bell’s submission, however, that it would not be appropriate to go any further in that regard, given the paucity of evidence, the uncertainty as to who provided such a statement to the bank, the lack of any evidence based on reliance and, indeed, a general unfairness to the wife in not having any of those matters put to her. The Court, therefore, simply notes that forensic decisions are made and the Court had received a document by way of a joint tender when both parties were legally represented. Mr Bell makes no criticism of the Court in relying on that document and the terms of the information contained therein. The Court’s position is that if anything was to be made other than from what the documents stated on their face, it was up to the parties themselves, to do so. The ball was clearly in the wife’s court in that regard and more importantly, neither she nor her legal representatives at that time did anything about that. That weighs heavily against her application. The Court notes and accepts Mr Othen’s submission that the wife cannot be heard to say now that she did not have a fair chance to produce evidence at the hearing nor that she had any misunderstanding of that Court process. There was no denial of a fair hearing. It must be noted that Mr Bell is retained by the wife’s new solicitors who had no involvement in the conduct of the substantive proceedings. Indeed, the Court noted that the wife had not provided her previous solicitors with important information and had not been forthcoming in her disclosure obligations. There has been nothing said by the wife as to why the passbook (which predates the hearing) that she now seeks to place so much reliance on was not produced pursuant to those disclosure obligations, when she clearly had it in her possession or control.
The husband says that the Court should not permit a re-opening of the evidence to include the material in the wife’s affidavit given, essentially because the Court is “functus officio” as to those matters. The Court, largely, accepts that submission. The Court notes, however, that it is dealing with a current costs application.
The husband, further, says that as for the criticisms of the exhibit of documents produced by the mortgagee on subpoena, the exhibit was tendered with the wife’s consent on a re-opening of evidence at hearing with no application made by her to lead further evidence about it, or subject herself to further cross-examination. The wife gives no specific evidence so as to explain why the documents that she now seeks to rely on were not relied on at the hearing, given particularly, she seems to have had them in her possession or control and provided them to her new solicitors, after the Court’s decision had been handed down.
The Law – Re-opening
The Court has had regard to the decision of Urban Transport Authority of New South Wales & Nweiser (1992) 28 NSWLR 471 as authority for the proposition that the guiding principle on the question as to whether a party should be allowed to re-open is whether the interests of justice are better served by allowing or rejecting the application, as the case may be.
In that case, the principle set out by the Court of Appeal (Mahoney JA, Clarke JA and Meagher JA) was noted as follows:
“The principle which should guide the court in determining whether to grant an application for leave to reopen is whether the interests of justice are better served by allowing or rejecting the application as the case may be. No doubt it is relevant to take account of a number of matters, such as likely prejudice to the party resisting the application and the reasons why the evidence was not led in the first place. But there is not, in my opinion, any hard and fast rule which requires the court to reject an application where the decision not to call the witness in the plaintiff’s case was a deliberate one. Of course that does not mean that that is not a very relevant consideration. It is.” (Clarke JA, with whom Meagher JA agreed, as did Mahoney, JA.)
In Askew & Askew [2015] NSWSC 192, Rein J refers to much of the affidavit material, the subject of the application to re-open, as being substantially in the nature of submissions. His Honour determined that leave should not be given to re-open the case and relied on Urban Transit Authority & Nweiser, setting out the guiding principles for a Court in determining whether such leave to open should be granted.
His Honour also referred to the case of Australian Securities and Investment Commission (ASIC) v Rich [2006] NSWSC 826, where Austin J summarised 9 matters to which regard should be had in determining the outcome of an application to reopen, as follows:
“(i) the nature of the proceedings…
(ii)whether the occasion for calling the further evidence ought reasonably to have been foreseen;
(iii) the consideration of fairness that the defendant is entitled to know all of the evidence he has to meet in taking forensic decisions as to cross-examination and the nature and extent of the evidence he will himself adduce on the matters in question;
(iv) the extent to which the plaintiff has embarked upon calling evidence on the issue in question in its case in chief;
(v) the importance of the issue on which the further evidence is sought to be adduced to the pleaded issues in the case;
(vi) the degree of relevance and probative value of the further evidence sought to be adduced and its potential to involve an undue waste of time;
(vii) the prejudice to the defendant in terms of delay in the completion of the proceeding and the consequential costs;
(viii) the public interest in the timely conclusion of litigation;
(ix) what explanation is offered by the plaintiff for not having called the evidence in chief.”
However, the above mentioned law applies to an application to re-open prior to the delivery of judgment. Mr Bell referred to the decision of Justice Murphy in Summitt & Summitt & Ors (Re-opening) [2009] FamCA 365 which related to an application to re-open at a time when a draft judgment was all but complete but not yet published. There are other cases where reasons for judgment had been given but formal orders not yet made. Guidance in relation to this situation can be found in 2 decisions of the High Court of Australia namely, Smith v. NSW Bar Association (1992) 176CLR 256 and Autodesk Inc v Dyason (No.2) (1993) 176 CLR 300.
In Smith’s case, Justices Brennan, Dawson, Toohey & Gauldron stated at pg. 266:
“If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application (9). But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete (10), or one in which reasons for judgment have been delivered (11). It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side (12). In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re-open should be exercised. But those considerations bearing on re-opening are not decisive of the question whether, a matter having been re-opened by reason of error, further evidence can be called.”
In the Autodesk case, the following was stated:
Per Brennan J. Paragraph 1 - This Court has undoubted jurisdiction to recall a judgment which it has pronounced, at least prior to the formal entry of the judgment, if the judgment has been pronounced against a person who, without fault on the part of that person, has not had an opportunity to be heard as to why that judgment should not be pronounced ((20) State Rail Authority of N.S.W. v. Codelfa Construction Pty. Ltd. (1982) 150 CLR29; Wentworth v. Woollahra Municipal Council (1982) 149 CLR672, at p 684). The jurisdiction is exercised sparingly for it is important to bring litigation to finality in this Court.
Per Gaudron J. Paragraph 1 …However, the circumstances in which justice requires that course are, in practice, extremely rare, particularly if there has been an opportunity for full argument ((42) Wentworth v. Woollahra Municipal Council [1982] HCA 41; (1982) 149 CLR 672, at p 684; State Rail Authority of N.S.W. v. Codelfa Construction Pty. Ltd. [1982] HCA 51; (1982) 150 CLR 29, at pp 38 and 48). In order to make clear my reasons for holding that the interests of justice do not require that course in this case, it is necessary for me to repeat, at least to some extent, the facts involved …
While the Court accepts that it has a general capacity to re-open following even its publication of reasons, but prior to the finalisation of orders, such a capacity should be exercised in exceptional circumstances where the case requires it, in the interests of justice. In the matter before the Court one could not say that the wife did not have the opportunity of putting before the Court the material she now seeks to lead and that, substantially, sounds against her.
Further, what the Court deals with here is an application to re-open following not only the publication of the Court’s reasons but the making of formal orders.
The Full Court of the Family Court of Australia in Vadisanis & Vadisanis and Anor [2015] FamCAFC 180 considered the law in terms of the re-opening of perfected orders. That consideration was set out at paragraphs 31 to 39 as follows:
Can perfected orders be reopened?
31.There is considerable authority for the proposition that the Family Court lacks the power to set aside or vary a final judgment once the order has been perfected. In DJL v Central Authority (2000) 201 CLR 226 the High Court determined that although the Family Court is a superior court of record [32], it was created by statute and therefore lacks the “well of undefined powers” available to common law courts as part of their inherent jurisdiction [25]. The High Court went on to state that, in considering the Family Law Act 1975 (Cth) (“the Act”) as the governing statute of the Family Court, it is clear that the Act provides no express conferral of any power to reopen final orders after they have been perfected. Further, “no such power is derived by necessary implication from the statutory structure” [45]. Indeed, the provisions of the Act may in fact “negative” any inherent power the court may have: Taylor v Taylor (1979) 143 CLR 1 [8].
32.Counsel for the husband relied on the following passage from Bailey v Marinoff (1971) 125 CLR 529 at 530 (per Barwick CJ) in support of the submission that the court could not go behind Order 5 or otherwise reconsider the issue of costs:
Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court.
33.It is noteworthy that Bailey v Marinoff was not concerned with an omission or mistake but with an order that undoubtedly gave effect to the court’s intention.
34.Notwithstanding the principles above, there are some limited circumstances in which a court may reopen its own orders. For example in DJL v Central Authority, Callinan J acknowledged a narrow class of exceptions that may warrant the reopening of a matter following judgment and perfected orders:
189.The decisions of the majority in [Bailey v Marinoff] and [Gamser v Nominal Defendant] confirm that intermediate appellate, and certainly other statutory courts (absent clear provision to the contrary) lack inherent power to re-open perfected orders disposing of proceedings. Those authorities have not been doubted in this Court. The stated exceptions to this general rule are few and rarely found in practice. On the current authorities they are confined (statute apart) to the correction of formal errors and the like, fraud, or failure to give a party a hearing. This case is not an occasion for any extension of this narrow, and properly so, category of exceptions.
(Emphasis added)
35.It must be noted that the exceptions to the general rule are rare. In State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (No 2) (1982) 150 CLR 29 the High Court held at 38 that although there is “no doubt” that there is a power to vacate its own orders, “it is a power to be exercised with great caution” and that “the circumstances that will justify a rehearing must be quite exceptional.” This was echoed in Burrell v The Queen (2008) 238 CLR 218, where the High Court stated that when considering whether perfected orders can be reopened, the “underpinning consideration” is the principle of finality of litigation [15].
36.The power of the Family Court to reopen perfected orders where a party was denied the opportunity to be heard was confirmed in Taylor v Taylor. Gibbs J there held that an order made in the absence of a party who had no notice of the hearing ought to be set aside as it was “made in breach of a fundamental principle of natural justice” [12]. It is not only a rule of justice but a rule of “common sense” that the court is able to correct itself when there has been a failure of such an essential requirement [10].
37.In the present case, the court made Order 5 having found the necessary preconditions to make an order for costs certificates (including the requirement that the matter be one where parties ought to bear their own costs) had been met. However, this finding was made without providing the wife the opportunity to be heard on the issue notwithstanding the court’s indication that directions would be made facilitating the filing and exchange of submissions on this issue. Importantly this occurred through no fault of the wife but by oversight of the court.
38.In our view, this case falls squarely within the circumstances contemplated by the High Court in DJL v Central Authority [2000] HCA 17. It constitutes an exception to the general rule that the court cannot reopen perfected orders because it was a mistake of the court that denied the wife her right to be heard on the issue of costs.
39.Thus in our view, this Court has the ability both by reason of the operation of r 17.02 to correct Order 5 by revoking it and because it was an order made in denial of the wife’s right to be heard.
Mr Othen refers to Rule 16.05 of the Federal Circuit Court Rules 2001 which refers to the power of the Court to vary or set aside its judgment or order after it has been entered. That rule provides for such a power in circumstances where the order is made in the absence of a party; the order is interlocutory; the order is an injunction or for the appointment of a receiver; the order does not reflect the intention of the Court; or the party in whose favour the order is made consents. Mr Othen submits and the Court accepts that none of the above matters apply here. Further while Mr Bell says that depending upon the Court’s decision, the receipt or otherwise of the wife’s passbook showing a different amount from that which was the subject of the joint tender of the parties meant that the final orders of the Court did not reflect the intention of the Court, this, in the terms of the facts of this matter, clearly does not fall within the “slip” rule. The Court does not accept Mr Bell’s submissions, in that regard.
The Court, further, accepts Mr Othen’s submission that the wife’s application which seeks to, in effect, vary the facts found in the Court’s judgment to the effect that she did not have the sum of $548,351.00 but, in fact, had some other smaller monies in her Bank of China account, seeks to “revisit” the cause of action which has now merged into the Court’s judgment. The wife, clearly, falls foul of the doctrine of res judicata. As stated in Jackson v Goldsmith (1950) 81 CLR 445 at 466 (Fullagar J.):
“The rule as to res judicata can be stated sufficiently for present purposes by saying that, where an action has been bought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action.”
Similarly, the Court accepts that the facts in the judgment which the wife seeks to vary have now merged into its judgment. As stated in Blair v. Curran (1939) CLR 464 at page 531 (Dixon J.):
“A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so it cannot afterwards be raised between the same parties or their privies.”
The Court having made final orders and those orders having been entered onto its record and, it would appear, implemented (noting that the orders were enforced under s.106A of the Act and put into effect) then the Court is functus officio. Its role has been spent. The Court refers to paragraph 45 above in its reference to Bailey v. Marinoff (1971) 125 CLR 529 and the dicta of Chief Justice Barwick as therein stated.
In that regard, the Court notes that these proceedings cannot be re-opened and the orders cannot be varied. Facts cannot be re-determined as stated by the Full Court of the Supreme Court of Victoria in Pollard v Incorporated Nominal Defendant [1972] VicRp 110 (Winneke CJ, Adam & Newton JJ), once proceedings have been determined:
“…those proceedings may properly be treated as dead, subject only to appeal”
Of course, the wife can have regard to any other statutory relief in particular to one properly constituted under s.90SN(1) of the Act.
The husband, further, maintains in terms of the wife’s submissions with respect to the costs dispute, the following:
a)In the section the “second alternative” it is said the material in the wife’s affidavit shows the wife is far worse off than contended for by the husband. The Court could not be satisfied as to the veracity of the matters claimed by the wife in her affidavit, but even accepted at it highest, the other findings about her wealth show the wife to be comfortably well off to the extent that her financial circumstances would not operate to prevent a costs order being made in the full amount claimed.
b)The submissions about the Property A property and the failure to disclose it to the Court or even the wife’s own Counsel, even though the wife’s then solicitor acted on the sale and sat next to Counsel throughout the trial, do not reduce the force of the husband’s submissions about the costs impact of the conduct of the litigation by the wife. In fact they reinforce them. There is no evidence the wife acted on advice and was somehow innocent. In fact, she was prepared to lie on her oath in re-examination and inform the Court her solicitor did not know about the property when obviously he did, and equally obviously, she knew that he did.
c)It is next argued that there are no special circumstances arising from the conduct of the litigation or the result to justify a costs order, as if the proceedings were of the usual order where minds might reasonably differ as to outcome. The proceedings could not be so characterised, and the submission does not address either the total loss suffered by the wife, or the compelling offers in writing.
d)It is then argued there is no suggestion the trial was longer than necessary due to conduct. This is wrong, since a submission was made and developed to this very effect in the husband’s submissions.
e)There is a submission the costs would be a penalty, because the findings sounded against the wife in the outcome. A party who brings proceedings and suffers a total loss can expect a costs order. A party who runs a case to trial after rejecting offers in writing which her opponent then beats, can expect a costs order. Costs in these circumstances are not a penalty, but compensation to the other litigant for being put to the expense of legal proceedings.
In the circumstances of this matter, the Court is, therefore, only minded to receive the evidence as sought by the wife not in terms of any re-opening of the evidence on the hearing, but simply limited to the terms of the current costs dispute before it.
The Law - Costs
The Court’s general power to award costs is found in s.86 of the Federal Circuit Court Act 1999 and, in particular, pursuant to Rule 21.02 of the Federal Circuit Court Rules2001.
Pursuant to Rule 21.02(1) of the said Rules, an application for an order for costs may be made:
a)At any stage in a proceeding; or
b)Within 28 days after a final decree or order is made; or
c)Within any further time allowed by the Court
Pursuant to Rule 21.02(2) of the said Rules, in the making an order for costs in a proceeding, the Court may:
a)Set the amount of the costs; or
b)Set the method by which the costs are to be calculated; or
c)Refer the costs for taxation under part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
d)Set a time for payment of the costs, which may be before the proceeding is concluded.
In relation to costs, s.117 of the Act states:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 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), (4A) 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.
(3) To avoid doubt, in proceedings in which an independent children's lawyer for a child has been appointed, the court may make an order under subsection (2) as to costs or security for costs, whether by way of interlocutory order or otherwise, to the effect that each party to the proceedings bears, in such proportion as the court considers just, the costs of the independent children's lawyer in respect of the proceedings.
(4) However, in proceedings in which an independent children's lawyer for a child has been appointed, if:
(a) a party to the proceedings has received legal aid in respect of the proceedings; or
(b) the court considers that a party to the proceedings would suffer financial hardship if the party had to bear a proportion of the costs of the independent children's lawyer;
the court must not make an order under subsection (2) against that party in relation to the costs of the independent children's lawyer.
(4A) If:
(a) under section 91B, an officer intervenes in proceedings; and
(b) the officer acts in good faith in relation to the proceedings;
the court must not, because of the intervention, make an order under subsection (2) of this section against the officer, or against an entity (including the Commonwealth or a State or Territory) by or on behalf of whom the officer was engaged or employed.
(5) In considering what order (if any) should be made under subsection (2) in proceedings in which an independent children's lawyer has been appointed, the court must disregard the fact that the independent children's lawyer is funded under a legal aid scheme or service established under a Commonwealth, State or Territory law or approved by the Attorney-General.
Section 117 of the Act was considered by the High Court of Australia in Penfold v Penfold (1980) 144 CLR 311, where it was said:
“Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions, which imposes any additional or special onus on an applicant for an order for costs”.
In Latoudis v Casey(1990) 170 CLR 534, the High Court of Australia stated as follows:
“…in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.”
Section 117 of the Act, provides for a discretionary power in the Court. The Court must examine each of the factors, set out in the section, in turn, in relation to justifying a costs order. A costs order can be made on the basis of one or a combination of those factors Brown v Brown [1998] FamCA 115. The discretion to award costs is a broad discretion: see for example Collins & Collins (1985) FLC 91-603.
The issue of costs was outlined in Cachia v Hanes [1994] 179 CLR 403, at paragraph 98, as follows:
“Indeed, the list of matters set out in sub-s (2A) to which the Family Court is directed to have regard in making orders under s 117(2) indicates clearly that the subject-matter of the orders to be made under s 117(2) is the costs which a person may be ordered to pay another as indemnity for that other's liability for professional fees and out of pocket expenses reasonably incurred in the litigation, that is, "costs" as that expression is ordinarily understood in the law.”
Application of the Law
The husband submits there are 3 justifying circumstances in this case which make his costs application very strong:
a)The failure to accept offers available at all times over 4 years the same or better than the result obtained;
b)The complete lack of success the wife had in the proceedings; and
c)The conduct of the wife in failing to make a proper disclosure of her financial circumstances which necessitated a lengthy and expensive trial.
Section 117(2A)(a) The financial circumstances of the party
The husband submits that the Court found he will retain net assets of about $1,980,000.00 and the wife $2,177,000.00 at paragraph 163 of the judgment. The Court found the husband earns $1,538.00 per week and the wife makes $450,000.00 per year in addition to receiving rental income at paragraphs 127-128 of the judgment.
The wife submits that her financial circumstances may be different from that found at the hearing given the matters referred to at paragraphs 27, 28 and 29 above but does not say how they differ or how that specifically impacts on her ability to meet any costs orders. The wife’s position being that she may not have access to the sum of $548,351.00 as found by the Court in her Bank of China account. The Court notes that it was not contended by Mr Bell that the wife, subsequent to the Court’s findings on the final hearing, had expended those monies. That may have been of some relevance. Mr Bell’s submission was that the Court had been misled as to those funds being in the wife’s account at all. That submission falls foul of the matters referred to above. Mr Bell, further, submits that it was that account into which the wife’s income was received and that the Court should be mindful not to “double count” such an entry in terms of her available monies and her income.
The husband, however, says that even if the Court was to deduct $548,351.00 from the wife’s determined net assets, she would have in the order of $1,629,251.00 and therefore could comfortably afford any costs order made. The Court accepts that submission.
The wife was able to fund, in terms of her passport, travel to China on 3 occasions in 2016. In terms of her evidence she operates a bank account in China. The Court accepts that nothing has been put by the wife to evidence being unable to meet a costs order in the sum sought by the husband.
Section 117(2A)(b) If any party in receipt of legal aid
The husband submitted and the Court submits that neither party received Legal Aid and that this factor is not applicable.
Section 117(2A)(c) The conduct of the parties in relation to the proceedings
The husband submits as follows:
a)The proceedings were rendered more complex by reason of the failure of the wife to make a full and frank disclosure of her true financial position.
b)The wife ran the entire case on the basis of false evidence as to her financial circumstances. She failed to make adequate disclosure of the use of funds in her control and most of the trial was taken up in cross-examination of the wife, using records she ought to have produced, herself, but which the husband had had to subpoena. The Court made detailed findings about the non-disclosure of the wife at paragraphs 24 to 44 of the judgment and the husband adopts those findings.
c)The asset pool as found by the Court was remarkably divergent from the picture the wife had painted in her evidence in chief. It is not an exaggeration to say that the failure of the wife to be frank to the Court or even her own barrister about her financial circumstances caused the proceedings to be necessary.
The Court adopts the finding of Smithers J In the marriage of Briese (1986) FLC 91-713 where he stated that the husband “failed significantly to co-operate in a manner calculated to bring the proceedings to an early conclusion at a minimum of cost” as supportive of a costs order being made against the husband. That applies to the wife, here. As Smithers J also said: “there is an obligation on each party to act so as to provide a basis upon which the two of them are in a position to resolve the case by agreement, or proceed to a hearing, as expeditiously as may reasonably be done.” The Court is not satisfied that the wife, in this case, fulfilled that obligation. That weighs against her.
Section 117(2A)(d) Proceedings necessitated by the failure of a party to comply with previous orders
The husband submits that this factor is not directly applicable.
Section 117(2A)(e) Whether any party wholly unsuccessful in the proceedings
The husband submits that the wife was wholly unsuccessful. She suffered a total defeat. No order for property adjustment was made in her favour. The property adjustment order sought by the husband was made without deviation.
The Court accepts that in circumstances where parties pursue unsuccessful issues, the Court is entitled to make an order for costs against them. See In the Marriage of Rouse (1981) FLC 91-073.
The Court accepts that this factor weighs in favour of the husband.
Section 117(2A)(f) Any offers in writing
The husband’s solicitor, Ms Zippy Wen Yee Chan, stated in her affidavits as follows:
a)The following offers/proposals to settle were forwarded to the solicitors acting for the wife, at that time, as follows:
i)Letter dated 18 October 2013 to Peter Wayne & Associates. The proposal contained therein was for the wife to transfer her interest in the Property A property to the husband and the husband would refinance the mortgage secured over the property into his sole name. The parties will otherwise retain all other assets and liabilities in their respective names, possession and control. This proposal was not made on a “Without prejudice” basis.
ii)Letter dated 29 October 2013 to Peter Wayne & Associates, repeating the proposal in the letter dated 18 October 2013 referred to above. This proposal was not made on a “Without prejudice” basis.
iii)Letter dated 24 January 2014 to Peter Wayne & Associates. The proposal contained therein was for the Property A property to be sold and for the wife to receive 20% of the net proceeds, or in the alternative, for the parties to retain a single expert and for the wife to retain the Property A property in her sole name, refinance the mortgage into her sole name and pay to the husband an amount representing 80% of the net equity of the said property. The parties will, otherwise, retain all other assets and liabilities in their respective names, possession and control. This proposal was made on a “Without prejudice” basis.
b)The above proposals were not accepted by the wife and the husband filed his Initiating Application on 28 April 2014.
c)The matter was listed before the Court for a Conciliation Conference on 28 January 2015. Annexure “H” of Ms Chan’s affidavit is the husband’s Conciliation Conference document which was prepared for the purposes of that conference. The orders proposed by the husband at the Conciliation Conference were for the wife to transfer her interest in the Property A property to the husband and the husband would refinance the mortgage secured over the property into his sole name and, further, that he would pay to the wife the sum of $50,000.00. The parties would, otherwise, retain all other assets and liabilities in their respective names, possession and control. The proposal was not accepted by the wife and the matter did not settle at the conference.
d)In accordance with the husband’s instructions, an Open Offer to Settle dated 11 February 2015 was forwarded to the solicitors acting for the wife (at that time), proposing that the wife transfer her interest in the Property A property to the husband and that he would refinance the mortgage secured over the property into his sole name and, further, that he would pay to the wife the sum of $50,000.00. The parties would, otherwise, retain all other assets and liabilities in their respective names, possession and control. This Open Offer remained open for acceptance from that time on.
e)By letter dated 22 June 2015, the husband was advised by Mr Vince Margiotta, that he no longer acted for the wife. On the husband’s instructions, by letter dated 23 September 2015, his solicitors wrote to the wife directly, forwarding to her a copy of the Open Offer dated 11 February 2015 (referred to above) and invited her to consider accepting it.
f)By email dated 30 September 2015, the husband’s solicitors were advised by Mr Frank Ngo of GOH Lawyers that they were now acting for the wife. By email dated 1 October 2015, the husband’s solicitors forwarded a copy of their letter dated 23 September 2015 to the wife’s solicitor and the Open Offer dated 11 February 2015 was also forwarded.
g)The husband’s Open Offer dated 11 February 2015 was not accepted by the wife.
h)The matter was listed before Judge Scarlett for final hearing on 5 and 6 November 2015. It was later adjourned by the Court and ultimately the matter was heard by Judge Kemp on 14 to 17 November 2016.
i)Orders were made by the Court on 30 June 2017, providing, inter alia, for the wife to transfer her interest in the Property A property to the husband and that he was to refinance the mortgage secured over the property into his sole name. The parties would, otherwise, retain all other assets and liabilities in their respective names, possession and control. The orders made reflect the proposal made by the husband in the letter dated 18 October 2013 to the wife’s (then) solicitors, Peter Wayne & Associates.
The husband submits that:
a)The evidence shows that throughout the process, from the pre-action procedures to the eve of the trial, an offer was available for acceptance by the wife which, if accepted, would have rendered the whole proceedings unnecessary.
b)The husband’s best offer of settlement before proceedings even commenced was for the wife to receive 20% of the equity of the Property A property, either by sale or by the wife buying out the husband. His very first offer, made 4 years ago on 18 October 2013, was in the same terms as the orders made.
c)After proceedings commenced, from the Conciliation Conference to the end of the trial, the wife could have accepted a payment of $50,000.00 on the basis that she transfer the Property A property to the husband and he take over the mortgage, under the terms of an Open Offer.
d)The husband was sufficiently motivated to settle when the wife changed solicitors, he caused a fresh copy of the Open Offer to be sent to her new solicitors.
The wife makes no relevant submissions with respect to this factor.
A written offer of settlement is “highly relevant” to the question of costs. Such offers provide litigants with an incentive to settle and thereby avoid or reduce the costs of litigation (see Robinson & Higginbotham (1991) FLC 92-209).
As Justice Nygh stated in In the Marriage of Murray (1990) FLC 92-173, a party cannot reject or ignore a reasonable offer seriously made, except at his or her peril as to costs:
“If one considers the issue as a matter of policy, that is, on the basis of what the Parliament's objective and purpose was in enacting the legislation, it is clear that the Parliament wished to encourage settlements thereby reducing the cost of litigation to the parties and to the community. That must mean that a party cannot reject or ignore a reasonable offer seriously made except at his or her peril as to costs. At the same time a party cannot sit tight and postpone a decision as to acceptance until a matter is at the door of the court. By that time an offer which might have been acceptable to the offeror because of savings in time and preparation costs, may have become unattractive. In this case the offer was left open for a reasonable period, was clear and capable of acceptance which would have saved the parties considerable costs....”
In Browne v Green (2002) FLC 93-115, the Full Court of the Family Court of Australia (Kay, Coleman and Warnick JJ) said:
“Whilst s 117(2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement that have been made. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given”
The Court accepts that it is important for it to give proper consideration to written offers of settlement which have been made. These offers enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to enable proper consideration to be given to it is something to which “very significant weight” ought normally be given. See Browne v Green (2002) FLC 93-115.
The Court is of the opinion that:
a)The wife had adequate knowledge at the time the offers were made, particularly as to the quantum of the property pool available for division between the parties, to give proper consideration to the terms of the said offers.
b)The terms of the husband’s offers were not ambiguous or unclear, were expressed with precision and were objectively capable of being clearly understood. See In the Marriage of Harris (1987) FLC 91-822.
c)The offer made by letter dated 11 February 2015, was clear and unambiguous in its terms and was open for acceptance by the wife who, at all relevant times, had both the information and capacity to properly consider her position concerning the same and which was reasonable in its financial terms and in such terms exceeded the adjustment ultimately obtained by the wife pursuant to the orders.
d)That the above matters weigh heavily in favour of the husband’s application for costs, at least as and from 11 February 2015.
Section 117(2A)(g) Such matters as the Court considers relevant
The husband seeks an order that costs be paid on the indemnity basis, and if so, in the amount proved in his affidavit to avoid the need for an assessment process.
In the alternative, he proposes that the costs be assessed under the Family Law Rules2004, rather than at the scale in the Federal Circuit Court Rules2001.
The husband maintained that:
a)The whole claim brought by the wife was based on false evidence about her financial circumstances. Once the complete financial picture came out in cross-examination, it was obvious her claim should never have been brought. The Court, however, accepts that proceedings were commenced by the husband and the Court’s jurisdiction was required to be exercised in terms of the making of the orders, in particular, order 3 as referred to in paragraph 1 above.
b)The wife failed to prove any contribution of note to the Property A property or to the relationship.
c)The wife’s claim on a proper understanding of circumstances stood no reasonable prospect of success.
d)A case otherwise capable of determination comfortably within one day stretched out to 3 days because of the wife’s conduct. The Court accepts that the hearing of this case was made somewhat longer by the wife’s failure, in that regard.
e)The wife is, in fact, a wealthy person who has remarried, not a single person with low income and relatively limited property. This was only known because of the forensic efforts on behalf of the husband and the trial process, when it was the wife’s duty to be transparent about her financial circumstances and she failed to fulfil that duty.
The husband, further, says that the wife has failed to assert that she will suffer financial hardship and that no submissions have been made on her behalf to indicate that any fees payable by her in relation to her own legal costs on a solicitor/client basis have not been paid. The inference being that in the absence of such submissions there will be no financial hardship to the wife and no costs stand presently unpaid by her. The Court accepts that position.
The special circumstances which justify departure from an assessment at scale are:
a)The wife’s decision to prosecute a claim which had no realistic prospects of success;
b)The total loss she suffered when she could have accepted a far better outcome at an early stage and saved the husband the costs he incurred;
c)The wife’s breach of duty to the Court and the husband, in her failure to make a full and frank disclosure;
d)The great difference between what the proceedings have cost the husband and what he would recover using the scale in the Federal Circuit Court Rules;
e)The wife’s comfortable capacity to pay; and
f)The limited weight to be given to access to justice considerations, compared with the need to ensure the husband is not left out of pocket in defending the wife’s claim.
g)The Court has evidence of the basis upon which the husband was charged fees and the amounts he was, in fact, charged.
The Court accepts that the abovementioned special circumstances ground a departure, in the husband’s favour, from an assessment at scale.
Assessment
The husband’s solicitor, Ms Chan, in her affidavits stated the following:
a)The husband provided instructions to his solicitors on 18 September 2013.
b)The total amount of fees billed to the husband to date in connection with his family law matter is $72,609.55, which includes office disbursements, GST and some of Counsel’s fees or expert’s fees. Annexure “D” was a copy of the husband’s solicitor’s Bill History Report. Some disbursements such as Court fees, filing fees, Counsel’s fees and expert’s fees were paid directly from funds deposited into the solicitor’s trust account by the husband, as follows:
Court setting down/hearing fee (3 days at $590 a day) $1,770.00
Land & Property Information filing fees $109.50
Chris Othen, barrister interim fees $990.00
Chris Othen, barrister final hearing fees $24,750.00
Court filing fees for subpoena and conduct money $245.00
Translation fees for documents $241.00
Mr C , expert valuer fees (half share for 3 properties) $1,501.50
Totalling $29,607.00
c)The total amount expended by the husband in connection with these proceedings was $102,216.55, broken down as follows:
Total fees billed $72,609.55
Total expenses paid from trust (as set out above) $29,607.00
Total $102,216.55
d)The total amount expended by the husband in connection with the costs application, is as follows:
Solicitors’ fees $5,902.90;
Counsel’s fees $2,500.00;
Total $8,402.90
e)The total amount estimated to be expended by the husband in connection with his opposition to the wife’s application in a case filed on 16 November 2017 is as follows:
Solicitor’s fees billed to date $1,683.00
Solicitor’s fees to be billed $2,500.00
Solicitor’s fees for appearing at the hearing $4,000.00
Counsel’s fees for appearing at the hearing $6,750.00
Total $14,933.00
Indemnity Costs
In Munday v Bowman (1997) FLC 92-784 Holden CJ of the Family Court of Western Australia noted:
“…some of the circumstances which have been thought to warrant the exercise of the discretion to award costs on an indemnity basis. Some examples which may be of relevance to the present case are as follows:
a. Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts: see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
b. Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud: see Fountain Selected Meats (Sales) Pty Ltd.
c. Evidence of particular misconduct causing loss of time to the court and to other parties: see Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, Fed C of A, 3 May 1991, unreported).
d. The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: see Ragatta Developments Pty Ltd v Westpac Banking Corporation (Davies J, Fed C of A, 5 March 1993, unreported).
e. An imprudent refusal of an offer to compromise.
In the matter Kohan & Kohan (1993) FLC 92-340, the Full Court of the Family Court of Australia (Strauss, Lindenmayer and Bulley JJ) held:
“The power to order costs on an indemnity basis…
…that in an appropriate case, the Court has a discretion to order costs on an indemnity basis and that such costs may be ordered where they have been incurred under a costs agreement which departs from the usual scale of costs. However, it is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties.
This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under sec 117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.
The proper exercise of the discretion
The intent of sec 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules… The Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind…
Indemnity costs orders are still an exception in this and other jurisdictions… Insofar as an unaccepted offer of compromise which exceeds a judgment may justify an order for costs, the general practice in this jurisdiction so far has been to order no more than costs on a party and party basis. Even in cases where there has been dishonest concealment of assets or income… no more than party and party costs have been awarded.
When considering what is just in this case, one must bear in mind that a party who enters into a costs agreement should be warned and must anticipate in this jurisdiction that each party might well have to bear his or her own costs, and that even if an order for party and party costs is made, the difference between party and party costs and costs payable under a costs agreement may consume all, or a substantial part, of the property order. In this particular case the wife changed her solicitors in August 1990. It must then have been apparent to her, or at least to her new solicitors that this might become drawn out litigation and that a rate of costs which amounted to three times the scale, exposed the wife to great risks. If she was willing to assume these risks, it does not seem just to saddle the husband with them.
However, the Full Court of the Family Court of Australia in Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029 (Lindenmayer, Holden & Mullane JJ) stated:
“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 223.”
In JEL & DDF (No.2) (2001) FLC 93-083, the Full Court of the Family Court of Australia (Kay, Holden & Guest JJ) stated:
“the category of cases in which it would be appropriate to make an order for indemnity costs does not appear to be fully defined.”
The Court held that the failure to accept an offer to compromise was, without more, insufficient to justify the making of a costs order on an indemnity basis. They stated:
“In our opinion, the failure to accept an offer which in retrospect, perhaps should have been accepted is without more, insufficient to justify the making of a costs order on an indemnity basis. The rejection of the offer must be at the very least imprudent. We express no opinion as to when the rejection of an offer may be so classified…”
Aside from the longstanding doctrine that some special or unusual circumstance is required before departing from the usual rule of party/party costs, the Full Court has made plain that access to justice considerations play a significant part in the continuance of this doctrine even as costs at scale depart ever more from the costs charged by lawyers. In Prantage v Prantage [2013] FamCAFC 105, the Full Court of the Family Court of Australia comprising of their Honours Thackray, Ryan & Murphy JJ concluded:
“94“We recognise that the Rules now expressly refer to orders for costs on an indemnity basis. We recognise also that the rules in this Court are not precisely the same as those in other courts; however, there is nothing in the Rules which indicates that the fundamental principle applied in other jurisdictions should not also be applied in this jurisdiction. Indeed rule 19.18 makes clear that the “default” position is that costs are awarded on a party/party basis.
95 As we have pointed out, the “usual rule” relating to the basis upon which costs are ordered in this jurisdiction is well entrenched. We consider it would be most unsettling if we purported to depart from the existing practice. Furthermore, we would not consider it desirable to do so…”
96In particular, we respectfully agree with Cooper and Merkel JJ ([note added] – in Re Wilcox, Ex parte Venture Industries Pty Ltd [1996] FCA 1942; (1996) 72 FCR 151)) that there are “two seemingly irreconcilable objectives” at stake. Placing great emphasis on the importance of one objective, namely “relieving a successful litigant from the burden of costs which that litigant should not have been required to incur” will inevitably lead to insufficient emphasis being placed on the importance of the other objective of “protecting access to justice by only exposing an unsuccessful litigant in the usual course to an order for scale costs on a party and party basis”.
The Court is of the opinion that the husband’s costs in the substantive and costs proceedings (not the wife’s current Application in a Case) should not be paid on an indemnity basis or solicitor/client basis but rather should be paid on a party/party basis.
Costs in a fixed sum
The Court accepts that the husband’s costs can be fixed in a specific sum. This is supported by the decision of the Full Court of the Family Court of Australia in Braithwaite & Braithwaite [2007] FamCA 468, (Kay, Warnick and Boland JJ ) where it was said:
“We accept the practicality of the submission that, in an appropriate case, a judicial officer should make an order in sum certain, rather than put the parties to the expense and stress of further proceedings to assess costs.”
and in Bolinger v Ivy [2008] FamCA 274, where the judge stated:
“There is much to be said for fixing costs. The process of assessment of costs is in itself time consuming and expensive. There is also of course, the possibility of a later review”. The wife submitted that in Independent Children’s Lawyer SS and Anor [2009] FamCA 519 it was said “I have the power to order specific amounts of costs”.
Conclusion
The husband has provided a detailed statement of the costs incurred by him in the various applications before the Court for costs. Mr Bell made no submission that the costs were not, otherwise, reasonable.
The Court proposes however, to exclude from the sum of $29,607.00 claimed against the wife as referred to in paragraph 88(b) above, the sums for land and property information filing fees $109.50, Mr Othen’s interim fees of $990.00, the Court filing fees for subpoena and conduct money of $245.00, the translation fees for documents of $241.00 and the husband’s share of the expert valuer’s fees of $1,501.50 totalling $3,087.00 and will, therefore, provide for the sum of $26,520.00 to be paid by the wife. These costs are excluded as the Court accepts that they would necessarily have been incurred in seeking the relief the husband ultimately obtained and are reflective of an assessment of the husband’s costs on a party/party basis following 11 February 2015, noting more likely than not that the total of Counsel’s fees for hearing would have been recovered on a party/party basis.
The Court will provide for 66.6% of the total solicitor’s fees billed of $72,609.55 (as raised with and conceded by Mr Othen), referred to in paragraph 88(c) above representing the Court’s assessment of those costs on a party/party basis for the period following the husband’s solicitor’s letter of 11 February 2015, being $48,357.96 to be paid by the wife.
The Court will provide for the wife to pay the husband’s costs in terms of this costs application referred to in paragraph 88(d) above, on the same percentage basis of 66.6% of the solicitor’s costs sought of $5,902.90 being $3,931.33 together with the full sum of Counsel’s fees of $2,500.00 being $6,431.33 in terms of its assessment of those costs on a party/party basis to be paid by the wife.
The Court will, however, provide for the wife to pay the husband’s costs in terms of the husband’s defence of the wife’s application in a case filed on 16 November 2017 on the basis that it was without merit on a solicitor/client basis in respect of the full payment of Counsel’s fees of $6,750.00 and applying a percentage of 85% to the solicitor’s fees of $8,183.00 representing such costs on a solicitor/client basis of $6,955.55, being $13,705.55 to be paid by the wife. Those costs being appropriate also on the basis that the husband sought to deal with the matter on the papers only and in Chambers and the wife sought to agitate the matter by way of oral hearing. The Court accepts that the wife’s “re-opening” argument had no prospect of success in the terms in which it was conducted. Her application in a case filed on 16 November 2017 must be dismissed.
On that basis, the wife will be ordered to pay the husband the sum of $95,014.84, (the total of the sums referred to in paragraphs 97, 98, 99 & 100 above) in respect of his costs. The Court is of the view that this amount is appropriate, reasonable and just in all of the circumstances of this matter.
Time to pay
There has been no time limit sought for any payment of costs. The Court is of the view that it will allow the wife some time to pay the costs and will order that payment be made within 3 months of today’s date.
The matter is removed from the active pending cases list.
I certify that the preceding one hundred and three (103) paragraphs are a true copy of the reasons for judgment of Judge Kemp
Date: 14 February 2018
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