CLEWER & CLEWER (No.2)
[2019] FCCA 938
•12 February 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CLEWER & CLEWER (No.2) | [2019] FCCA 938 |
| Catchwords: FAMILY LAW – Interest paid subsequent to orders – costs applications. |
| Legislation: Family Law Act 1975 (Cth), ss.79A, 117, 117B, 601 Federal Circuit Court Rules 2001 (Cth) s.25B Legal Profession Uniform Law Australian Solicitor’s Conduct Rules 2015 r.21 Real Property Act1900 (NSW) s.57 |
| Cases cited: AON Risk Service v Australian National University (2009) 239 CLR 175 Benedict & Peake (No 3) [2014] FCCA 642 Bryant v Hawkesbury Community Radio [2014] NSWSC 848 Colgate-Palmolive & Cussons (1993) 46 FCR 225 Prantage & Prantage [2015] FamCAFC 145 Re JJT; Ex parte Victoria Legal Aid 195 CLR 184 Simic & Norton [2017] FamCA 1007 |
| Applicant: | MS CLEWER |
| Respondent: | MR CLEWER |
| File Number: | PAC 2725 of 2017 |
| Judgment of: | Judge Harman |
| Hearing date: | 12 February 2019 |
| Date of Last Submission: | 12 February 2019 |
| Delivered at: | Parramatta |
| Delivered on: | 12 February 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Grew |
| Solicitors for the Applicant: | Coleman Greig Lawyers |
| Solicitors for the Respondent: | Mr G Penhall, Penhall & Co Lawyers |
ORDERS
THE COURT NOTES THAT:
The wife has now paid to the husband the sum of $100,000 that was required to be paid pursuant to Orders made 20 September 2017 and as varied 31 October 2018.
THE COURT ORDERS THAT:
Pursuant to section 117B(2) of the Family Law Act1975 (Cth) no interest shall be payable by the wife to the husband with respect to the above payment.
Each party shall pay their own costs of an incidental to these proceedings.
Pursuant to section 114 of the Family Law Act 1975 the parties and each of them shall be and are hereby restrained from taking any step with respect to proceedings SYG537/2018 before the Federal Circuit Court Sydney save and except for the purpose of discontinuing those proceedings or providing such other advice to the Court as may be necessary to allow the proceedings to be discontinued or dismissed without any Order for costs in favour of or against either party.
All outstanding Applications and Responses are withdrawn and dismissed and all issues are removed from the list of matters awaiting hearing.
IT IS NOTED that publication of this judgment under the pseudonym Clewer & Clewer (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 2725 of 2017
| MS CLEWER |
Applicant
And
| MR CLEWER |
Respondent
REASONS FOR JUDGMENT
This is the second judgment delivered in these proceedings today. The proceedings relate to the determination of competing claims regarding:
a)What interest, if any, is to be paid upon a sum certain that was to have been paid pursuant to a primary order made 20 September 2017 and subsequently varied; and,
b)What order for costs, if any, is to be made in favour of the husband and whether those costs, if ordered, are awarded on an indemnity basis.
Regrettably, the matter has consumed a significant quantity of time, not only today but on an earlier hearing date, 31 October 2018 – such that this is, in effect, the second day of hearing of the matter on a part-heard basis.
To give some context to the subject matter of the dispute, if it is not already readily apparent from the judgment delivered earlier today, the quantum of interest that is the subject of dispute is, on its face, no more than $8,500. In relation to costs, bearing in mind the quantum of the dispute as regards interest, it must be observed that indemnity costs are sought of $80,000 or thereabouts. That is 10 times the subject matter of the proceedings.
In the judgment delivered earlier today, the two effectively complimenting each other, I had referred to some of the history of the proceedings and the material considered. However, the material considered is now somewhat more fulsome and the history more clearly outlined.
In dealing with these limited issues, I have had the benefit of very brief oral submissions from counsel, together with the following documents:
a)Exhibit A, three sets of written submissions provided on the husband’s behalf;
b)Exhibit B, a document titled “Statement of Agreed Facts” although it is, in reality, a statement of the facts as alleged by the husband;
c)Exhibit C, a statement of facts alleged by the wife corresponding with exhibit B but identifying those which are in dispute;
d)Exhibit D, correspondence 3 November 2017;
e)Exhibit E, correspondence 6 November 2018;
f)Exhibit F, correspondence 13 July 2018;
g)Exhibit G, correspondence 25 July 2018;
h)Exhibit H, correspondence 6 September 2018;
i)Exhibit I, a letter from ME Bank;
j)Exhibit J, the costs agreement between the husband and his present attorneys.
I have also considered portions of the affidavit material filed by the parties comprising, in the case of the wife, her affidavit, paragraphs 12 to 16 inclusive, 52, 97 to 98 inclusive and incorporating therein numerous annexures as referred to in those paragraphs. In the husband’s case, I have read paragraphs 12 to 54 of his affidavit as filed.
In addition to the issues that the parties have raised, I have also invited submissions with respect to the following:
a)Why an anti-suit injunction, to adopt the terminology of our American cousins, should not be made, which restrains the parties from taking any further step in proceedings SYG 537 of 2018, (being bankruptcy proceedings before the Sydney Registry of the Federal Circuit Court) other than to cause the discontinuance and termination of those proceedings without further application for an order with respect to costs; and,
b)Why a referral of the papers should not be made in the proceedings to relevant professional bodies.
I make clear from the outset that I do not intend to engage in the latter course. That is principally for two reasons. Firstly, these reasons will be published, thus, it will be clear and apparent the issues that have given rise to the request for submissions with respect to the issue. Secondly, it is unlikely that any action would be taken with respect to the matters raised, although they are of particular importance, not only to the public and the administration of justice, but indeed to the workload of this Court. That is perhaps the starting point as it gives a context to the issues in these proceedings and that which must be determined.
I am greatly indebted to Benjamin J for his decision in Simic & Norton [2017] FamCA 1007. Therein his Honour eruditely, as is his wont, expresses, with little emotion, his frustration and disquiet with the conduct of proceedings that had occurred before him. Commencing at paragraph 19, his Honour had the following to say:
Solicitors are not employed to act as ‘postman’ to vent the anger and vitriol of their clients.
I do not suggest that either of the legal practitioners has done so, however, the vitriol of the clients, perhaps more so the respondent than the applicant, is readily apparent. His Honour continues at paragraph 20:
The solicitors are professional legal practitioners and charge significant hourly rates for their time and skills. To that end, they must ensure that correspondence and communication is necessary, balanced, considered and relevant.
I do not propose, for the sake of the practitioners involved, let alone their clients, to enumerate significant rafts of the correspondence that has passed in these proceedings. However, it falls well within the descriptions or criticism subsequently raised by Benjamin J in Simic & Norton [2017] FamCA 1007. Matters are canvassed which are either irrelevant, unhelpful, accusatory, both of legal practitioners and their clients, is generally unhelpful and lacking focus upon the dispute and its resolution.
At paragraph 21 His Honour observes:
Parties to family law litigation can often be distressed, anxious, angry, upset and emotional.
I accept that these parties, whether with equal measure or otherwise, have been so and in all probability remain so. His Honour continues:
Many have little experience in Court process and this may be their one, and hopefully only, interaction with the civil legal system.
Regrettably, for these parties, they believed that they had concluded their business with each other, arising as the sequelae of the breakdown of their relationship, by orders made in November 2017. Since then they have been involved in two sets of proceedings in different Registries of the Court. His Honour continues:
They are generally unsophisticated litigants in terms of costs and rely on the provision of fair, reasonable, competent and proportional professional services by their legal representatives.
Again, I pause to observe that the interest that is in dispute in these proceedings, (which proceedings having occupied, albeit with other business transacted earlier in the day, at least half a day of Court business today and, by the time these reasons are concluded, a full day), equates to approximately $8,500. The husband’s costs are suggested to be in excess of $80,000. The word “proportional” does not spring to mind in that comparison.
Again His Honour continues at paragraph 22:
Given the evidence, during the hearing and the correspondence between the parties [I make clear I have considered the evidence the parties have filed and a wealth of correspondence] I am concerned that one, other or both of the solicitors acting for these parties may not have adopted a fair, reasonable, competent and proportional professional service.
I temper that criticism not for the purpose of avoiding embarrassment of the practitioners, one or the other, but to observe that the correspondence which has flowed from the wife’s attorneys has been more solution-focused, balanced and polite.
His Honour then concludes at paragraph 23:
One of the … purposes of the Rules [His Honour referring to Uniform Solicitors’ Conduct Rules] is expressed be to: -
Promote the main purpose, including minimising the need for the parties and their lawyers to attend Court by, if appropriate, relying on documents.
The Rules also require that fees are ‘proportionate to the issue in a case and their complexity, and the likely cost of the case’ and in a manner which ‘promotes savings of costs’. The family law Courts have rightly been the subject of complaints about the level of costs in family law proceedings.
One shudders to think what would be made by the Australian Law Reform Commission, undertaking its present review, let alone the general populace reading The Daily Telegraph, of hearing of a case where costs have exceeded the subject matter of the dispute, (leaving aside that there is an application that those costs be paid by the wife), by a quantum of 10 to 1.
All judges have seen instances where the financial circumstances of the parties have been emasculated or wholly lost by the impact of legal costs. These are outrageous and often unnecessary outcomes. Again, one must observe that the principal order required the payment by the wife to the husband of a sum of $100,000. In purported enforcement of the wife’s obligations under that order, an obligation that I will return to shortly, the husband is now suggested to have expended in excess of $80,000 or more than 80% of that to which he was entitled.
That portion of Benjamin J’s judgment concludes at paragraph 26:
For legal practitioners to be entitled to be paid costs in this Court, or any Court for that matter, there is the following underlying criteria:-
(a) It needs to be reasonable to carry out the legal work to which the legal costs relate -
In this regard, and as his Honour referred to in relation to correspondence, the communication between legal representatives is not an exercise of “sabre rattling”. It is intended to be focused on identifying issues in dispute and finding their resolution. The following criteria are also identified:
(b) The legal work must be carried out in a reasonable and professional manner;
(c) The quantum of legal costs and disbursements must be fair and reasonable, in all of the circumstances; and
(d) The legal costs and disbursements must be proportionate [4] to the issues in dispute.
His Honour then referred to the costs, which had been incurred in that case as “eye watering”. In this case, with costs exceeding the subject matter of the dispute by a factor of 10 to 1, is appropriately described as “eye watering”.
One of the documents tendered is the costs agreement between the husband and his attorneys. On the basis of the hourly rate, (leaving aside any discourse as to whether hourly rates have a place in legal practice or not, it is a contractual arrangement between the husband and his attorneys with which I do not seek to interfere), it would seem to be suggested, on the basis of costs that are identified as “reasonably incurred” and thus sought to be imposed upon the wife through an order for indemnity costs, to have involved something in the order of 200 hours of work. That is all for enforcement of a simple order and/or, as it falls for determination today, a modest calculation of interest that should be paid.
Before turning to the correspondence and the evidence that the parties have burdened the Court with, I propose to consider the order itself and that which underlies it.
It is suggested that there are important legal issues at play in the case. It is difficult to apprehend what they are or if there are, in fact, legal issues, why they are of such importance to the parties that they outweigh any reasonable, commercially realistic approach towards the dispute.
The order required that the wife pay to the husband $100,000 and simultaneously refinance the mortgage encumbering a particular parcel of real estate. Unconnected with that obligation was a duty upon the parties to list for sale and sell two properties. It was apprehended that one or both of those properties might not sell for a sufficient price to discharge the debts encumbering them. It transpires, and the parties would appear to be at no issue whatsoever, that the mortgages relating to the three properties were cross-collateralised. So much is apparent from the studious lecture delivered by correspondence unto the wife’s solicitors in relation to the nature of cross-collateralised mortgages.
The difficulty that arose predated the making of the order. I do not, for one moment, seek to go behind the order. The orders that were made are suggested to be made in accordance with a document tendered in Court and headed “Heads of Agreement”. The fact that the document bears such a heading does not preclude the Court making orders in accordance with it. However, it would appear common ground between the parties that some communication occurred, in negotiation leading up to completion of that document, as to the enforceability of certain aspects of the orders.
I need not delve further into that controversy. Suffice to observe that the circumstances that subsequently arose involved a realisation that the level of debt in relation to the two properties to be sold was higher than the wife had believed. As is so directly and stridently pointed out by the solicitors for the husband, that is a matter that, perhaps, the wife might have made further inquiry about in the course of those proceedings.
Set against that is the fact that there was some degree of urgency imposed in a resolution of the matter as a consequence of the parties having been served or possibly having apprehended the imminent service of notices under section 57 of the Real Property Act1900 (NSW).
The second circumstance which arose was the difficulty created by the cross-collateralisation mortgages. Again, as is stridently opined to the wife’s solicitors by the husband’s solicitors, this is a matter that the wife could have made further inquiry about. But one would think she need not. It should have been unnecessary. If the husband knew then he might, as part of full and frank disclosure, have raised it.
What ultimately transpired is that the wife was unable to proceed with obtaining finance to discharge her obligation under the primary order until such time as one or both of the properties was sold or some other arrangement made.
It is opined in some of the correspondence from the husband’s solicitors to the wife’s solicitors, the wife might have made inquiry as to the Bank releasing the property that the wife is living in and desired to retain (and has in fact retained) from cross-security so that she could then proceed with finance. As is opined, the wife would not appear to have made the application, and thus no one will ever know whether she would have been successful. One might infer, however, in light of the fact that notices had been or were in the process of being served under the Real Property Act and as the debts were greater than apprehended, that she may well have been unsuccessful.
Of course, the issue that arose was the husband’s insistence, appropriately so as he had the benefit of an order, to be paid his sum of money, his “pound of flesh” as it were, by the date that was fixed by the order for its payment. The order does not expressly tie the wife’s obligation to pay funds to the husband to the sale of the properties. It does not provide, for example, that payment be made within a fixed period after the sale of the properties and the discharge of the mortgages encumbering them. The wife’s obligation was separate and distinct, although non-compliance was factually connected due to the cross-collateralisation.
What then transpired, as is put in submissions by counsel for the husband, is the creation of several lever-arch files of correspondence and pleadings in relation to this “small-money case”. $100,000 is, I accept, a significant sum to the husband. It is also a significant sum to the wife. It is the amount she was required to borrow and pay to the husband in order to retain the property in which she lived. Neither of the parties are in their teens. They are a little further advanced than that. Security of accommodation would, I accept, be of equal importance to the applicant as would be payment of the sum certain to the respondent.
The first correspondence arose within moments, it would seem, of orders being made in accordance with the document “Heads of Agreement”. The correspondence sought to clarify a number of issues. The response thereto was resistant communicating, in effect, “I have an order. I want its benefit”.
Thereafter the several lever-arch files of correspondence produced nothing. It was sabre-rattling at its most euphemistic. It was unproductive and unnecessary disputative correspondence at its worst. Threats were made regarding suggested inappropriateness or unethical behaviour by the wife’s attorneys in continuing to act for her when they had acted for her in the original proceedings. Those allegations are baseless and unnecessary.
Ultimately, all that can be discerned from portions of the correspondence tendered, particularly, that which rejected any entreaty from the wife as to how the situation might be addressed is that it was dogmatism at its worst.
I accept that the husband was entitled to be paid his money. I accept his frustration in not being paid. But what he desired was to be paid. The husband, frustrated by non-payment, ultimately commenced proceedings, not enforcement proceedings under Part 25B of the Federal Circuit Court Rules 2001 (Cth) but proceedings under the Bankruptcy Act1966 (Cth). I accept the husband may well have been entitled to utilise such means of enforcement as he desires.
It is common, for orders to be made by this Court that following the passage of a period in which a payment is to be made that a party might commence proceedings in a Court of competent jurisdiction. I need not venture into the issue as to whether the Family Law Act and rules of Court are an exclusive jurisdiction for enforcement of orders made under the Family Law Act. It is unnecessary.
The husband has simply chosen to invoke the mode of enforcement, as I have previously described, although it is something to which umbrage is taken, which is the most onerous and draconian means of enforcement available, ultimately leading, in all possibility, to the issue of a sequestration order, a trustee appointed to administer and wind up the wife’s affairs with the dramatic costs that this would have incurred, tens if not hundreds of thousands of dollars. Bankruptcy and any subsequent sequestration order would potentially attach not only the wife’s interest in the Property C property but all of the wife’s property save that which is specifically excluded from bankruptcy such as superannuation, tools of trade, proceeds of compensation claims and the like.
Bankruptcy is, put bluntly, and in light of the array of enforcement choices that were available, the nastiest option that the husband could have selected. That is particularly so when it is made clear in submissions, that the Bankruptcy Notice was served not necessarily with the intention of prosecuting the application to its finality but to get the wife to the table, as it were, and to have her engage in negotiation. Negotiation was plentiful – although that is perhaps to misuse the word “negotiation”. All that transpired in hundreds of pages of correspondence was nastiness particularly directed from the husband through his attorneys to the wife.
The husband was entitled to be paid. But there was a clear and jointly known problem impeding payment. The only means by which the wife could pay money was to refinance the mortgage or to sell the property. The mortgage could not be refinanced until the other two properties had been sold.
The correspondence reveals the parties’ engagement in all sorts of sabre-rattling regarding the mechanism for sale of those properties, one or other refusing to bend to any minor variation of the orders, resistant to any entreaty to overcome blockages perceived. An example of this was the husband suggesting that the agent engaged with respect to the sale of one property was “a dud” (presumably suggesting that they were not marketing the property to its full advantage), but refusing to instruct a new agent or the wife proposing that her attorneys act as the solicitors or conveyancers on sale and the rejection of that proposition by the husband. All of these were things which can and should have, simply, been resolved.
It is in that context, perhaps ironically, that one of the submissions that is put on behalf of the husband is that the costs incurred in these proceedings have been “unnecessary”. Indeed, nearly all of the costs have been unnecessary.
For future elucidation I would, simply, make clear that a dispute of this nature should have been dealt with not by ring-binders of correspondence but two letters. The first:
“I remain committed to paying money in accordance with the order. However, I cannot do so until the two properties are sold. It is regrettable and unfortunate, that we did not include a specific linkage between the two transactions in our orders. But we did not. There will be substantial delay in any payment to you, if I am required to sell the property. It will cause significant loss to us both. I am, of course, prepared to pay interest. Indeed, section 117B of the Family Law Act compels it, subject to such orders as the Court might make. And upon eventually payment, if you will afford me the accommodation of permitting the two properties to be sold first, that will, of course, be paid.”
The response thereto, one might think, should have been:
“I appreciate that this is a difficulty we did not apprehend, particularly as the discharge of mortgage in relation to each of those properties will be a greater amount than we felt, and accordingly, you may be left with a greater debt than the orders anticipated. I am prepared to do whatever is necessary to ensure that the two properties are sold as promptly as possible. The following difficulties would appear to be present. Might we address them through negotiation or attendance at family-dispute resolution. Once addressed and those properties sold, I am then prepared to be paid the sum the sum the order requires you to pay within 42 days of the sales so that you have a reasonable opportunity to refinance and subject to payment of interest”.
That of course did not happen. That is a fairy-tale akin to a Disney production of this case. Indeed, sadly, as Benjamin J observed, (having perhaps greater objective insight travelling now to Sydney from southern regions rather than being here fulltime, where one absorbs this behaviour continuously until it becomes normal), it rarely occurs. But, it is what should have occurred. It is what should occur in the future. That is not through some fanciful desire to simply see all parties be respectful and loving of each other and resolve disputes, although that should be sufficient motivation in itself. But regrettably, it is unlikely.
Disputes should be dealt with as above because of r 21 of the Legal Profession Uniform Law Australian Solicitor’s Conduct Rules 2015 requires it. A solicitor must take care to ensure that the solicitor’s advice to invoke the coercive power of a Court is reasonably justified by the material then available to the solicitor, is appropriate for the robust advancement of the client’s case on its merits, is not principally in order to harass or embarrass the person such as – for example – invoking the nastiest, most expensive and most consequence-laden enforcement process possible – bankruptcy – and is not made principally in order to gain some collateral advantage for the client or the solicitor. I do not suggest that the latter arises.
The rule continues. The solicitor must take care to ensure that decisions to make allegations or suggestions under privilege against a person are reasonably justified by the material then available, are appropriate for the robust advancement of the client’s case and are not made principally in order to harass or embarrass. Solicitors do not need to lecture each other as to whether they do or do not have a conflict. They simply need to focus upon “what is the dispute and how might it be resolved”.
Much has been said as to the cost that would have been incurred, let alone the delay, of enforcement proceedings in this Court. That demonstrates a misunderstanding of delay in this Registry or for that matter any Registry of the Court.
These proceedings were listed for hearing on 31 October 2018 and were adjourned, at the request of the parties, part-heard to today. The parties have been called on and dealt with today. Thus, the delay has been brief. As was appropriately recalled and submitted by counsel for the husband when the matter was first before the Court in May 2018, the parties were advised, to paraphrase myself and to adopt that which was put, “there are early dates available to list this matter for hearing, (that being dates earlier than October 2018), but this matter can wait”. Indeed, it could have and it should have. What should have occurred during that period was a negotiation of all issues to resolve the matter to finality, including with respect to interest and costs. That is what legal practitioners do or should do.
I join with Benjamin J in posing the rhetorical question of “What do legal practitioners bring to proceedings, if they cannot resolve a case as simple as this?” Heaven forbid there would be complex issues involved. The submissions that are put on behalf of the husband suggest that there might be some significant complexity to the matter, suggesting that the Court is res judicata for example. But, of course, the Court is not. Section 79A exists for that very purpose. At that point it is germane to observe that the matter has come over to today part-heard following the matter having been listed for hearing in October 2018. On that date the Court disposed of the section 79A application that had been made by the wife.
True it is that the wife made that application after service of the husband’s bankruptcy notice upon her. But I do not accept the submission put on behalf of the husband that the wife filed the application as an abuse of process or merely to obtain delay and disadvantage to the husband. She filed the application as she is legally entitled to do so to protect and pursue her rights. She had been served with a bankruptcy notice, with the consequences that would follow therefrom, if the Court granted a sequestration order. Accordingly the wife sought to rely upon section 79A(1B) of the Family Law Act 1975 (Cth) as the basis for seeking relief from the difficulties that had arisen.
I need not explore the merits of that application, although it is submitted to me, that I should. I need not explore them, because the section 79A Family Law Act 1975 (Cth) plea for relief was resolved by consent (emphasis added) on 31 October 2018. That resolution was expressed in the document tendered as being “without admissions and without prejudice”. All that I need know is that an order was made.
That order made 31 October 2018 varied the primary order. Thus, the order for payment by the wife is no longer the primary order or at least not solely so. The orders that were made on 31 October 2018 varied the primary order so as to provide that the wife was to make payment to the husband by 18 January 2019. It is conceded, that the payment was made some few weeks before Christmas 2018. Thus, the wife has complied with that order and paid in the time, albeit amended, provided for payment. There can be no claim for interest.
The correspondence that has passed and to which the Court has taken is distressing, not on some emotional and personal level, but as reflecting poorly upon the role of the legal profession, as officers of the Court with a primary and paramount responsibility of the rule of law. There would not appear to have been any consideration by the husband as to the proportionality of the relief that he sought in the bankruptcy proceedings or the stridency with which he has opposed that which is sought by the wife.
The husband is dramatically worse off as a consequence of that behaviour, those instructions he has provided or his reliance upon advice to pursue particular courses. I need not enter into a discussion of or inquiry with respect to that advice. The husband has made him choices. It has cost him significantly in terms of legal fees. What has it done to put money in his hand more quickly? Nothing at all. He has been paid in the same timeframe as he would have been paid if the two letters to which I have referred, fictional as they are, had been exchanged between the solicitors to the parties. Certainly, the husband’s correspondence could, acceptably, have gone further so as to express some disquiet in measured terms such as:
I am very disappointed, in fact angry and frustrated that I now have to wait longer than the original order that I agreed to provide for [a year later].
But having expressed the anger there was no need for the husband, though his legal representatives and through his actions, to act upon it.
The delay has led, as the Act provides at section 117B, to the potential for compensation by payment of interest – approximately $8500 or so it is calculated on the husband’s part. I will turn to that issue shortly.
Suffice to conclude, with respect to the exhibits that are tendered and the evidence that is led, that the conduct of this litigation does no service to the community, the rule of law or these individual litigants, more so from the husband’s perspective than the wife’s.
I do not wish to be seen as critical of the wife seeking to raise the issue she has and proposing solutions. True it is the husband has also proposed solutions. On each and every occasion the husband has insisted that the property which the wife lives in and wished to retain be listed for sale be listed for sale and sold. The wife had, at one point, made clear that she could withdraw additional funds from the mortgage and pay those to the husband in the interim. That was rejected. It is submitted that this was, of course, the parties’ money.
Indeed it was. But the wife was not suggesting that the husband would be responsible for its repayment. She would ultimately pay that back into the mortgage on refinancing. Thus, there was no prejudice to the husband if he was, as he asserted continuously, feeling financial pressure, in accepting that proposal. Indeed, its rejection exacerbated the husband’s financial pressure as did accrual of costs. The wife offered to alleviate that pressure. The wife’s correspondence was somewhat balanced, clear and to the point. The husband has simply sought to lecture the wife and her attorneys on their duties, their responsibilities and ultimately the law, in the same fashion that the Court has been lectured on the law, being advised that clearly the Court does not understand anything about the law of bankruptcy.
Certainly I readily acknowledge, not sitting in that jurisdiction with any regularity, if at all, that my knowledge is less than complete. But the basic principles are sufficiently understood, including the reality that there are other means of enforcement available. Division 25B of the Federal Circuit Court Rules 2001 (Cth) is that mechanism. It enables an application for enforcement of an obligation for payment of money.
Detailed submissions have been filed as to whether an application to sell the Property C property would require a section 79A application from the Family Law Act 1975 (Cth). It would not. It is an application seeking an enforcement warrant to enforce a payment of a sum certain. It falls simply under the rules. They are powers delegated to Registrars. They can be dealt with in chambers. Thus, when it is submitted that such an application would have taken substantial time, incurred substantial cost and have been disadvantageous to all, it simply could not be so. Such an application could have been dealt with in a matter of weeks and at very limited cost.
Rule 25B.11 of the Federal Circuit Court Rules 2001 (Cth) provides similarly, for enforcing an obligation to pay money pursuant to an order by the seizure and sale of real estate through an enforcement warrant, through garnishee and attachment of wages or the very same relief the husband sought in bankruptcy, the sequestration order or appointment of a receiver. All of that could have been done in a far more tactful way, even if it had been necessary. It would not have achieved anything much to the benefit of the husband. It might have cut a few months off payment.
It is submitted by the husband that applications of such nature are “never heard”. Of course they are. The application is being heard now. It was heard in October. I readily accept it could have been heard earlier than October, but there were more important matters pending and the Court’s obligations, per AON Risk Service v Australian National University (2009) 239 CLR 175, could not possibly have permitted a matter of this nature to have displaced parenting proceedings. The reality is that this case has displaced parenting proceedings today and it is tragic that it is so, particularly in circumstances where the outcome that is achieved could have been negotiated simply and cordially and all matters addressed at far less cost than was incurred.
I propose now to deal with the three issues that remain. Firstly, interest.
Interest
As I have indicated, section 117B of the Family Law Act 1975 (Cth) provides that interest is payable upon any sum certain if it is not paid by the date fixed, required or inferred for payment. That section provides:
Subject to any order made by the Court under subsection (2), where, in proceedings under this Act, a Court makes an order for the payment of money, interest is payable, at the rate prescribed by the applicable Rules [the parties agree that is 7.5 per cent] from the date on which the order is made or the date on which the order takes effect, whichever is the later.
Again the parties purport to agree that it is the latter, namely, the date for payment fixed by the order 2 November 2017. But the order and date for payment were subsequently varied.
The order was in fact complied with by the wife as was permitted by the variation effected by orders 31 October 2018, approximately 12 months later.
Section 117B(2) provides that:
A Court that makes an order for payment of money may order that interest is not payable on the money payable under the first-mentioned order or may order that interest is payable at a different rate or is payable from a different date.
Thus, the Court has jurisdiction to:
a)Accede to that which is sought by the husband – payment of interest from 2 November 2017, until the date of eventual payment of the rate fixed by the Rules or as otherwise calculated;
b)Agree to grant of the relief sought by the wife that interest is paid until the date upon which the original, primary order was suspended and then ultimately varied; or,
c)Make no order at all.
I propose to take the latter course.
This matter can and should have been resolved quickly, expeditiously and without the need for intervention of any Court, let alone two. The wife has had some burden. She has incurred significant costs as well. She of course does not press for her costs today, although that was one of the issues listed for hearing. She has taken the somewhat pragmatic approach that each party should, as was expressed at the opening of the case today, “walk away” with things as they stand. I am also conscious in that regard that the interest that is in dispute is a modest sum.
The negotiation which led to the making of the order need not trouble me. It is the order itself that must be focussed on. I accept the submission put on behalf of the husband that this is the focus of any application before the Court today. The order required a date for payment, but it would appear to be prefaced upon, as the parties have expressed in some detail in the correspondence that has passed between them, certain understandings or preconditions.
That does not affect the order or its operation, but it does affect what might be described as the bona fides of the parties in taking the positions that they have. The interest that has accumulated, potentially, must be offset against the reality of the wife’s position that the debts for which she has been left liable are greater. She has serviced the mortgage for a far greater period, not because of any action of the husband, it is simply how it is. She has had to continue to service the un-refinanced mortgage until such time as the other properties were sold so that she could refinance and obtain financial benefit herself.
On that basis I would not propose to make any order for the payment of interest. In any event the wife has paid by the date required by the order as amended and interest does not accrue.
Costs
Costs are dealt with by section 117 of the Family Law Act 1975 (Cth). Subsection (1) creates what the High Court has referred to as the “general rule”, that each party should bear his or her own costs. That is, of course, subject to the reservation of discretion in subsection (2), that each party may seek costs and that costs may be ordered if the Court is satisfied of the dual test is met, that it is that costs are both justified and just – see Re JJT; Ex parte Victoria Legal Aid 195 CLR 184.
Subsection (2A) of the Family Law Act sets out a prescriptive but non-exhaustive list of considerations. Subsections (4), (4)(a) and (5) are not relevant, dealing as they do with applications by or involving independent children's lawyers or child welfare agencies.
Each of the factors are relevant, but before turning to them, it must also be observed that costs are sought by the husband not on a party-party basis but on an indemnity basis.
The Full Court summarised eruditely a body of case law, from High Court, superior Courts, appellate Courts and otherwise in Prantage & Prantage [2015] FamCAFC 145.
Their Honours made clear, if I might, and hopefully not impermissibly paraphrase the rationale of that decision, that an order for costs would generally be on a party-party basis. For an order to be made for, as is described in the husband’s submissions as “special costs” or indemnity costs, there must be rare and exceptional circumstances justified by reference to relevant conduct or other circumstance. Some of those circumstances are summarised in the written submissions of the husband wherein, in the last of those submissions, it is submitted that the Court would find circumstances by reference to Colgate-Palmolive & Cussons (1993) 46 FCR 225, discussed at some length in Prantage, of:
a)Fraud;
b)Irrelevant allegations of fraud;
c)Particular misconduct causing loss of time to the Court and other parties – ironically so in light of the time that has been lost to the Court and other parties by this dispute;
d)Proceedings commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law;
e)Making allegations which ought never to have been made;
f)Undue prolongation of proceedings by groundless contentions;
g)Imprudent refusal of an offer of compromise; or,
h)Indemnity costs against a contemnor.
None of the above circumstances are made out in the evidence. What is clear is that the wife, from the get-go and within one day if not less of the orders being pronounced, had raised issues regarding the wording of the orders and matters that arose therefrom.
Certainly, it is trite to observe that the drafting of the orders might have been more carefully considered not only by the wife but also by the husband. There was, of course, no default sale provision with respect to the Property C property, something which the wife was accused of omitting for her own purposes in full knowledge that there would be difficulties. There is no evidence that the wife had any such knowledge. In any event, the husband was represented, by the same representative as retained now.
The wife has not committed nor alleged fraud. The wife has simply encountered practical difficulties that arose beyond her control. It is common ground between the parties that the bank was significantly involved in the dealings that were going on by issuing notices and, through their attorneys, having some degree of control over what the parties would do with the two properties to be sold, how they would be sold, and generally as to how the orders might then practically operate. They are matters beyond the control of either party. They are not matters that are a criticism of nor could they found any complaint of the wife.
The wife has not engaged in misconduct. She has conducted her business efficiently before the Court. She is criticised for having brought an application for extension of time with respect to the bankruptcy notice and, thus, necessitating a Court appearance, if nothing else. If she did not bring that application, the sequestration order may have been granted, something which, it is submitted, was not the husband’s intention. Why one would ever file an application that has the probable consequence, assuming, for example, that the notice had simple gone unanswered and been heard on an undefended basis, that a sequestration order would issue if it was not desired beggars belief.
The proceedings were not commenced for an ulterior motive. The wife had a genuine and arguable case. Indeed that must be so. The relief was ultimately granted by consent (emphasis added).
The wife did not make allegations which should not ever have been made. She made one fairly simple allegation, namely, “I cannot refinance until we sell one or both of these properties.”
The case was not prolonged on the basis of groundless contention. Indeed, the case could have been heard in the mid part of 2018. Any delay has been as a consequence of case management because this matter did not warrant the expedition that other cases did. Why parents seeking to relocate, a parent alleging a child is at risk or a parent who is not seeing their child should wait longer than these parties arguing about the crumbs of financial endeavour, again, beggars belief. It is not a case that ever needed to be before the Court. If the parties wished to deal with the matter more quickly, they could of course have consented to arbitration. That would have resolved the matter within a matter of weeks or months at the very outside. Complaint of delay is misplaced. They have occasioned any delay themselves.
On the basis that there is no ground for indemnity costs, to my satisfaction, I will return to each of the factors in section 117 of the Family Law Act.
Financial circumstances of the parties
Notwithstanding the voluminous material filed, very little is known about the financial circumstances of the parties. I do not propose to go back through the three folios of file to consider the documents the parties had filed earlier. I have not been taken to them. I will simply remain ignorant.
Whether a party is in receipt of Legal Aid
Neither is.
The conduct of the parties
This is, in this case, a disentitling ground. For the reasons that I have already expressed, there was no reason for this case to ever reach this point, far from it.
This case has a great many parallels to statements that I made in an earlier case of Benedict & Peake (No 3) [2014] FCCA 642. The extent of litigation between those parties is similar and similarly unnecessary as case. Two parties for whom no quarter was asked or given. Two parties who were absolutely determined that the case would proceed to finality, ultimately occupying 8 days of Court time (these parties, thankfully, only 2). In that case, I had drawn analogies to the battle of Stalingrad, the parties’ litigation resembling bitter, street to street, house to house fighting between the parties where they were not concerned at all that their “scorched earth” approach produced disadvantage for both. Ultimately, the cost that those parties incurred roughly equalled their interests in property, such that by the end of the litigation, they were each left with nothing. Indeed, by the end of the litigation involving, as it did, a jurisdictional determination which was determined in the negative, they were left to start again in another jurisdiction, having already spent the entirety of their asset pool. As Loughnan J has described in extra curial presentations, that by the time the parties reach a final determination, justice simply cannot be done as the outcome that they each desire is no longer available as a consequence.
Again, and as referred to in the earlier judgment, the Supreme Court of New South Wales has dealt with the issue in Bryant v Hawkesbury Community Radio [2014] NSWSC 848. Certainly, the husband had a perfectly legitimate entitlement to stand his ground and insist that if money could not be paid within the requisite time, that the wife should list this property for sale, something which he has insisted repeatedly and stridently without any other option entertained or offered.
If he had desired the husband could have brought proceedings for the sale of the property. That would have been the consequence of the bankruptcy proceedings but is not their subject matter. The husband sought that the wife’s entire estate be sequestrated, not simply her interest in one parcel of real estate. All of that would have been cheaper. All of that would have been quicker. All of that would have been more efficient, not only of the parties’ resources, but of the Court’s.
Fundamentally, and as I have already observed, simply compromising a word which perhaps has a bad name in this day and age would have been to the benefit of all. The husband would have spent, perhaps a few hundred dollars, sending a letter in reply agreeing to the compromise and he would have far less cost to pay at this point.
In these proceedings, and it is these proceedings that I am confined to at this point, neither party has delayed. It is simply that the parties, and much more the husband, have not directed their attention to what is actually in dispute and the proportionality of that which is alleged or resisted. All that was ever at issue here was how a sum certain would be paid and, if payment was to be delayed, for how long and what compensation or recompense would follow, whether interest or otherwise.
A focus on issues might have assisted these parties avoid the ruination they have now delivered unto themselves, particularly the husband.
I am satisfied that the above conduct would disentitle the husband to an order for costs on a party-party basis. It would certainly not support an order for costs as there nothing with respect to the wife’s conduct that could be pointed to as reprehensible or even inefficient. She has brought her application, prosecuted it promptly. She was entitled to do so. She obtained the order she sought by consent.
Whether the proceedings are necessitated by the failure of a party to comply with an order
On some levels this could be agitated as so. The wife failed to comply with the order to pay a sum certain. But there were reasons which impeded her ability to do so. Indeed, on the husband’s own case, she was unable to do so, and could not do so without listing for sale and selling property of which the parties were the joint owners.
There was much that needed to be done that could have been done by the parties jointly and consensually but they determined that this would not be so, whether jointly or individually. Accordingly, I am not satisfied the factor is relevant.
In any event the proceedings before the Court is the wife’s section 79A application. That application was not necessitated by failure.
Whether a party is wholly unsuccessful
Ultimately, the husband must be seen as unsuccessful, not only in these proceedings, but in the bankruptcy proceedings.
The husband has consented to section 79A relief of the Family Law Act. To some extent he has been successful in obtaining the very payment which could have been obtained more readily and consensually, albeit with delay. He has been unsuccessful in the bankruptcy proceedings as they have, since May 2018, been effectively suspended. The order which formed the basis of the allegation of an act of bankruptcy was suspended since at that time. The order is now varied and, indeed, complied with. Thus, there is nothing to pursue in the bankruptcy proceedings other than the possibility of an application for costs. I will deal with that very shortly.
Whether the parties have made offers in writing
The wife has made myriad offers. The husband has made myriad offers but they have all been a repetition of the same offer, “Sell the house now. Pay me my money. Pay me my costs. Pay me interest.” There has been no communication of alternate positions, certainly, not by the husband. There has been merely the forwarding of correspondence, sometimes cordial, rarely so, but no reception of that which is offered. It is though, to again fall into metaphor, the olive branch has been offered and quickly doused in petrol and set alight.
There has been no genuine attempt by these parties to resolve anything. One would hope that the draft recommendations of the Australian Law Reform Commission might be given effect by Government, whoever that may be at the time that those recommendations are finalised and released. That could see, for example, the provisions of the Civil Dispute Resolution Act 2008 apply to Family Law Act proceedings (presently excluded on the misapprehension that there are pre-action procedures contained within the Family Law Act and which apply in the Federal Circuit Court whereas there are none, save s 60I of the Family Law Act, which applies only to parenting proceedings). That would impose upon the parties a genuine obligation to resolve disputes, to focus upon issues and find solutions.
It is not peculiar to the Family Law Act but it is expected of litigants. Litigants are expected to use the Court’s resources sensibly and appropriately, invoking the Court’s jurisdiction as a last resort. It cannot be a criticism of the husband that he wished to have the benefit of the order that he obtained, that made in November 2017.
What I am critical of is the attitude the husband and his legal representatives have taken towards enforcement – proceedings in bankruptcy, opposition to the wife’s application to vary the order when all that was sought was to vary the order to extent time for payment (which the husband ultimately consented to). Delay may well have been onerous upon the husband. But the issues that I have already identified for the wife means that she has not been free of financial impediment or consequence.
In all of those circumstances I am not satisfied that grounds are made out that would support a finding of justification or justice of an order for costs. Accordingly, that application will also be refused.
The wife does not press her application for costs but has indicated, through her counsel, that she would not oppose any order that might be considered appropriate by the Court. There are potentially grounds, from that which I have discussed above, that would make an order appropriate. But it is not pressed and as notice has not been given of any intention to make such an order, I do not propose to do so. It would not aid these parties further.
That then leaves the issue of anti-suit injunction.
Anti-Suit
I cannot deal with the bankruptcy proceedings. They are before another judicial officer or registrar in a different registry. The application is not before me. I can, however, deal with the issue as best I can under the provisions of the Act.
The Court’s injunctive powers are found in section 114 of the Act. They are largely related to personal protection. I can restrain a party from entering or remaining within particular premises or a place of work, issue an injunction for the protection of the relationship, an injunction in relation to the property a party or an injunction in relation to the use and occupation of the home.
Of those grounds, the only one which would be relevant or available would be an injunction in relation to the property of a party. The application which is brought by the husband is for a sequestration order. Sequestration relates to all of the property of wife, save for protected property under the Bankruptcy Act. I have observed, the husband could not now successfully prosecute that application as the bankruptcy could not be demonstrated. It does not stop him taking further steps in the proceedings including with respect of costs.
I propose, accordingly, to make an order which restrains both parties taking any step in those proceedings other than to seek to discontinue the application without costs sought by either party. There is nothing to be gained by these parties engaging in yet more litigation with each other. It is appropriate that such an order be made so as to avoid future proceedings, future use of the Court’s resources, but importantly to protect the property of the wife and finalise all issues. She is now entitled to that which she received the benefit of under the primary order, as is the husband as regards that which he has received, albeit belatedly, but ultimately that delay being with his consent pursuant to the orders made 31 October 2018.
Accordingly, the orders are made as follows.
I certify that the preceding one hundred and seventeen (117) paragraphs are a true copy of the reasons for judgment of Judge Harman
Date: 11 April 2019
0