Costigan & Costigan and Ors (No 2)
[2017] FamCA 886
•25 October 2017
FAMILY COURT OF AUSTRALIA
| COSTIGAN & COSTIGAN AND ORS (NO. 2) | [2017] FamCA 886 |
| FAMILY LAW – COSTS – Where the wife makes an application for costs – Where it is found that it was reasonable for the Wife to engage Queen’s counsel and junior counsel – Where the husband is ordered to pay the wife’s costs on a party and party basis in relation to a hearing on 26 July 2017 – Where the question of the balance of the wife’s costs is reserved to the trial judge. |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) | |
| Allen & Cortez (No 2) [2016] FamCA 837 Bennett & Bennett (2001) FLC 93-088 C Pty Limited and Ors & PGW as liquidator of S Pty Ltd (in liq) (2011) FLC 93-485 CSR Ltd v Cigna Insurance Australia Ltd, (1997) 189 CLR 345 Daymond and Anor & Daymond and Ors (Costs) [2014] FamCA 302 Henry & Henry (1996) FLC 92-685; (1996) 185 CLR 571 Kohan & Kohan (1993) FLC 92-340 | |
| APPLICANT: | Ms Costigan |
| FIRST RESPONDENT: | Mr Costigan |
| SECOND RESPONDENT: | Mr A Costigan |
| THIRD RESPONDENT: | Ms B Costigan |
| FILE NUMBER: | MLC | 3981 | of | 2016 |
| DATE DELIVERED: | 25 October 2017 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Carew J |
| HEARING DATE: | In chambers determined on written submissions |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Kennedy Partners |
| SOLICITOR FOR THE FIRST RESPONDENT: | Marshalls and Dent Lawyers |
Orders
The husband is to pay the wife’s costs of the hearing on 26 July 2017 and preparation of material relied upon at that hearing on a party and party basis as agreed and failing agreement to be assessed.
Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it is certified that it was reasonable to engage a lawyer (including Queen’s counsel and junior counsel) to attend for the wife.
The question of the wife’s costs incidental to the husband’s application for a stay (as set out in paragraph 1 of the interim orders sought in the Amended Response to the Initiating Application filed 22 March 2017 as further amended by leave on 26 July 2017) and her costs incidental to the anti-suit injunction (contained within paragraph 3 of the wife’s Amended Initiating Application filed 18 April 2017 as further amended by leave on 26 July 2017) and as set out in paragraph 2 of the wife’s submissions filed 20 September 2017 is reserved to the trial judge.
The husband shall pay the costs as agreed or as assessed within one month of agreement or assessment whichever occurs earlier.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Costigan & Costigan and Ors (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: MLC 3981 of 2016
| Ms Costigan |
Applicant
And
| Mr Costigan |
First Respondent
And
| Mr A Costigan |
Second Respondent
And
| Ms B Costigan |
Third Respondent
REASONS FOR JUDGMENT
The applicant and respondent are married although separated. This is an application by the wife for the husband to pay her costs arising from the dismissal of the husband’s application for a stay of the wife’s proceedings in Australia and the granting of an injunction against the husband restraining him from continuing his financial proceedings in Israel. The husband opposes an order for costs or in the alternative submits that costs should be reserved to the trial judge.
The relevant proceedings were before me on 26 July 2017 and judgment was delivered on 2 August 2017. The order made on 2 August made provision for the parties to file written submissions in relation to any costs application and, subject to any submission to the contrary, for that application to be determined in chambers. An extension of time was granted on 21 August 2017 for the filing of submissions which were filed on 20 September 2017.
background
The relevant background and chronology is set out in some detail in my Reasons for Judgment published on 2 August 2017. I do not propose to restate those matters but I have taken them into account when considering this application for costs.
wife’s submissions
The wife’s primary position is that the husband should pay her costs of and incidental[1] to the relevant applications on an indemnity basis with the quantum to be agreed and failing agreement as assessed. In the alternative the wife seeks an order for costs on a lawyer and client basis or further in the alternative on a party and party basis.
[1] See paragraphs 1 and 2 of the wife’s submissions filed 20 September 2017
In relation to the second and third respondents the wife submits that they should bear their own costs rather than them being costs in the cause. There is no application by the second or third respondents for a costs order and no submissions have been filed by them in relation to the wife’s application for costs against the husband.
It is submitted on behalf of the wife that although s 117 of the Family Law Act 1975 (Cth) (“the Act”) normally governs how an application for costs is determined, the proceedings concerning a stay of proceedings in favour of a foreign court are not proceedings under the Act as the Court is exercising its ‘inherent’ jurisdiction. In support of that proposition reliance is placed upon the following cases: In the marriage of B (2003) FLC 93-136; Skinner & Alfonso-Skinner (Costs) [2010] FamCA 1108; Yeo & Huy (Costs) [2012] FamCA 758; Chen & Tan (No 2) [2012] FamCA 796; Allen & Cortez (No 2) [2016] FamCA 837.
It is submitted that costs should be considered under relevant State legislation, namely, the Supreme Court Act 1986 (Vic) (in particular s 24) and the Civil Procedure Act 2010 (Vic) (in particular s 65C) by virtue of s 79(1) of the Judiciary Act 1903 (Cth) which provides that in the event of a lack of Commonwealth legislation as to procedure, a federal court is to turn to applicable State legislation.
It is submitted that while costs are discretionary under the Victorian legislation the usual practice in State courts in Victoria is that ‘costs follow the event’ and that should be adopted in this case. It is further submitted that even though s117 of the Act does not apply, the various matters set out in s 117(2A) of the Act may be relevant to the exercise of the discretion of whether or not to make a costs order.
Whether s 117 of the Act or the State legislation applies it is submitted that the circumstances of this case warrant an order for costs and that costs should be awarded on an indemnity basis. It is acknowledged that it is unusual to make an order for costs to be paid on an indemnity basis and that exceptional circumstances are required.[2]
[2] Kohan & Kohan (1993) FLC 92-340; Yunghanns & Yunghans (2000) FLC 93-029; Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
The circumstances submitted to warrant an indemnity costs order include:
a)The husband had himself commenced financial proceedings in Australia on 5 May 2016 before withdrawing his Application;
b)The husband participated in the wife’s Australian proceedings without demur from October 2016 until March 2017;
c)Delay in seeking a stay of the wife’s Australian proceedings (the wife’s proceedings had been on foot since October 2016 and the husband did not seek to stay those proceedings until 22 March 2017);
d)Delay in commencing proceedings in Israel to set aside the financial agreements;
e)Declining to withdraw the Israeli proceedings when invited to do so by letter dated 28 March 2017;
f)The husband’s financial proceedings in Israel necessitated the wife incurring legal costs in that jurisdiction;
g)The husband’s failure to inform the Court or the wife that he intended to seek an earlier hearing of his financial proceedings in Israel which would predate the hearing of the wife’s interim proceedings in Australia;
h)The husband’s conduct in seeking to bring forward the hearing of his financial proceedings in Israel once a date had been set in Australia;
i)The husband’s conduct necessitating an urgent hearing before Cronin J when the husband was ordered to take steps to have the Israeli proceedings adjourned;
j)The failure of the husband to comply with that order;
k)The consequent necessity to again have the matter listed for urgent hearing before Cronin J when the husband was ordered to instruct his lawyers in Israel to request an adjournment of the Israel proceedings;
l)The husband knew or ought to have known that his position in seeking a stay of the wife’s Australian proceedings had no or little prospect of success.
It is submitted that the husband’s conduct amounts to an abuse of process and was designed to place financial pressure on the wife. The conduct of the husband caused the wife to incur significant legal costs.
The wife is a party to a costs agreement with her lawyers, a copy of which is before me. It is submitted that as the proceedings concerned complex legal issues it was reasonable for the wife to retain senior and junior counsel as did the second and third respondents while the husband was represented by a senior junior counsel and two instructing solicitors.
In the event that the Court is of the view that the circumstances do not warrant an indemnity costs order being made, the wife nevertheless relies upon the same matters, namely, the husband’s conduct and poor prospects of success to support a costs order.
Other relevant matters to consider include the wife’s deteriorating financial circumstances in which her expenses greatly exceed her income. The husband is self-employed and works in both Israel and Australia and has ongoing financial assistance from his parents. The husband is not currently paying child support.
husband’s submissions
The husband’s submissions do not address the issue raised by the wife as to the applicability of s 117 of the Act other than to submit:
It is also submitted that s. 117 of the Act is the only basis upon which the Court can make a costs determination in this case, contrary to the argument the Wife has indicated through her solicitors that she will make that somehow the Act does not apply because the Husband brought a stay application.
Regrettably no reference is made to any authority on this issue.
It is submitted on his behalf that the only two matters in s 117(2A) of the Act that are relevant are the financial circumstances of the parties and whether a party has been wholly unsuccessful in the proceedings.
The husband resists an order for costs on the following bases:
a)His case was at least arguable and the anti-suit injunction logically followed the decision to dismiss the stay application;
b)By reason of the disparity in the parties’ financial circumstances it would not be ‘just’ (as required by s 117 (2)) to make a costs order.
It is contended that the husband has no significant assets apart from the property of the parties that is the subject of these proceedings and the husband’s share of the property is presently being withheld from him by the terms of clause 18(c) of the Australian Agreement (referred to in the Reasons for Judgment). By contrast the wife has received her share of the sale proceeds of the Suburb H property.
If the application by the wife is not dismissed, costs should be reserved to the trial judge for the following reasons:
a)The husband’s argument that the Israeli Agreement needs the endorsement of the Israeli court before the Israeli and Australian Agreements become binding remains for determination by the trial judge and if this is ultimately accepted the husband’s stance would be vindicated and the trial judge will be in a better position to determine how the burden of costs in relation to forum should be borne;
b)Payment of any costs order from the funds withheld presumes the outcome of the parties’ competing substantive applications and may therefore prejudice either party depending upon the outcome;
c)The husband will not be able to meet any costs order until the outcome of the substantive proceedings.
It is submitted that there are no exceptional circumstances that would warrant an indemnity costs order and that “merely being unsuccessful on an arguable case, without some aggravation feature or circumstance, cannot justify an order for costs on an indemnity or solicitor-client basis.”
If a costs order is made it should be in relation to the 26 July hearing and preparation of material for that hearing only. If the wife seeks an order outside that scope (as she does) the husband seeks that the issue not be determined in chambers and seeks to make further oral submissions.
If a costs order is made it is submitted that the parties should have the opportunity to agree and failing agreement costs should be assessed and not paid until the conclusion of the proceedings.
how costs applications are generally determined in this jurisdiction
In this jurisdiction parties are generally required to bear their own costs.[3] However, where justifying circumstances exist, s 117(2) of the Family Law Act 1975 (Cth) (“the Act”) empowers the Court to make such order for costs as the Court considers just when the proceedings are under the Act.
[3] Section 117(1) Family Law Act 1975 (Cth)
In the exercise of that discretion regard must be had to the factors set out in s117 (2A) of the Act, so far as they are relevant.
Those factors are as follows:
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.
No one factor has more weight than any other nor is it necessary for more than one factor to be present.[4]
[4] see Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 FamLR 123 at 130
When discussing the subparagraphs in s 117 the High Court in Penfold v Penfold[5] said:
It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
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. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in “a clear case”.
[5] [1980] HCA 4; (1980) 144 CLR 311 at 315
When considering what specific order to make, Rule 19.18 of the Family Law Rules 2004 (Cth) (“the Rules”) empowers the Court to make an order:
a)of a specific amount;
b)as assessed on a particular basis (e.g. lawyer and client, party and party or indemnity);
c)to be calculated in accordance with the method stated in the order; or
d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.
In considering what specific order should be made the same Rule provides that the Court may consider any of the following factors:
a)the importance, complexity or difficulty of the issues;
b)the reasonableness of each party's behaviour in the case;
c)the rates ordinarily payable to lawyers in comparable cases;
d)whether a lawyer's conduct has been improper or unreasonable;
e)the time properly spent on the case, or in complying with pre-action procedures; and
f)expenses properly paid or payable.
The term ‘costs’ is not defined in the Act but the Dictionary to the Rules provides that:
Costs means an amount paid or to be paid for work done by a lawyer, and includes expenses.
The term ‘expenses’ is also defined in the Dictionary to the Rules:
Expense means an amount paid to a third party, other than a lawyer, for work done in a case or services provided for a party.
In Stephens& Stephens[6] the Full Court observed:
67. We also observe that in Re JJT; Ex parte Victoria Legal Aid[1998] HCA 44; (1998) 195 CLR 184 the majority of the High Court (Gaudron, Gummow, Hayne and Callinan JJ, Kirby J dissenting) held that s 117(2) of the Act referred to costs in the conventional sense and thus to the payment by one party to litigation of money by way of a partial indemnity for professional legal fees and expenses actually incurred by another party in the course of the litigation: see Hayne J at 219. An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature. Costs are not a penalty or damages: Latoudis v Casey[1990] HCA 59; (1990) 170 CLR 534 per Mason CJ at 543 and McHugh J at 567; Ruddock and Ors v Vadarlis and Ors(2001) 188 ALR 143 per Full Court of the Federal Court at [12] and Brott and Joachim [2006] FamCA 256; (2006) FLC 93-259 per Full Court (Holden, Warnick and Boland JJ) at 80,403-404.
[6][2010] FamCAFC 172; (2010) 44 Fam LR 117
A court will not lightly make an order for costs to be paid on an indemnity basis. There would need to be some circumstance of an exceptional nature to justify that course.[7]
[7] Kohan & Kohan (1993) FLC 92-340; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248; Yunghanns v Yunghanns (2000) FLC 93-029
The Full Court in Prantage & Prantage[8] discussed the meaning of ‘indemnity costs’ and said:
16. Before discussing the merit of the appeal, we should state our understanding of the meaning of the expression “indemnity basis”.
17. Although the Explanatory Guide to the Family Law Rules 2004 (“the Rules”) is not formally part of the Rules, we accept as accurate its definition of “indemnity basis” when applied to a costs order as being:
an entitlement to costs , including costs under a costs agreement, for all costs incurred, other than costs that are unreasonable in amount or that have been incurred unreasonably.
[8](2013) FLC 93-544
does s 117 of the act apply?
Section 117 applies to ‘proceedings under this Act’. Section 4 of the Act defines proceedings as:
a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding in the course of or in connexion with a proceeding.
The wife’s submission that s 117 does not apply to her costs application against the husband was addressed only to the stay application although her submissions seem to suggest that s 117 applies to neither.
In considering whether s 117 of the Act applies, I turn to consider what jurisdiction is being exercised to grant a stay or an anti-suit injunction – ‘jurisdiction’ being the capacity of the court to entertain a claim and ‘power’ being the means by which the claim can be disposed of i.e. what the court can do in the exercise of that jurisdiction.
There were two applications dealt with on 2 August 2017. The first was the husband’s application for a stay of the wife’s financial proceedings in Australia on forum non conveniens grounds and the second was the wife’s application for what is generally called an ‘anti-suit’ injunction restraining the husband from commencing or continuing certain proceedings in Israel. The substantive proceedings concern an application by the wife to enforce a financial agreement and to seek declarations that certain property in the name of third parties is held on trust for the wife and husband. The latter claims involve the Court’s accrued jurisdiction.
The wife’s submissions refer to the Court’s ‘inherent jurisdiction’ to order a stay of proceedings in order to prevent an abuse of process.
A review of relevant authorities
As to the nature of ‘inherent jurisdiction’, Menzies J in R v Forbes[9] observed:
Inherent jurisdiction is not something derived by implication from statutory provisions conferring particular jurisdiction; if such a provision is to be considered as conferring more than is actually expressed that further jurisdiction is conferred by implication according to accepted standards of statutory construction and it would be inaccurate to describe it as 'inherent jurisdiction', which as the name indicates, requires no authorizing provision.
[9][1972] HCA 34; (1972) 127 CLR 1, 7.
The High Court in DJL v Central Authority disapproved of the use of the term ‘inherent’ in the Family Court context and said:[10]
24. Section 21(1) of the Family Law Act provides that a court "to be known as the [Family Court] is created'' by that statute. Original jurisdiction is conferred on the Family Court by s 31 and appellate jurisdiction by s93A(1). Jurisdiction is also conferred by other statutes, including the Child Support Act (ss 101, 102, 105), the Bankruptcy Act 1966 (Cth) (s 35A), and the Trade Practices Act 1974 (Cth) (s 86B).
25. The Family Court is thus not a common law court as were the three common law courts at Westminster. Accordingly, it is "unable to draw upon the well of undefined powers'' which were available to those courts as part of their "inherent jurisdiction''. The Family Court is a statutory court, being a federal court created by the Parliament within the meaning of s 71 of the Constitution. A court exercising jurisdiction or powers conferred by statute "has powers expressly or by implication conferred by the legislation which governs it'' and "[t]his is a matter of statutory construction''; it also has "in addition such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred''. It would be inaccurate to use the term "inherent jurisdiction'' here and the term should be avoided as an identification of the incidental and necessary power of a statutory court.
(footnotes omitted)
[10] (2000) FLC 93-015; [2000] HCA 17; (2000) 201 CLR 226
Accordingly, although this Court does not have ‘inherent’ jurisdiction there can be no doubt that it has ‘implied’ power “to prevent its own processes being used to bring about injustice”[11]. Such ‘implied’ power has enabled the Court to stay proceedings before it[12] and to restrain a party from pursuing proceedings in a foreign court,[13] the latter sometimes referred to as the ‘counterpart’ to the stay application.[14]
[11]CSR Ltd v Cigna Insurance Australia Ltd, (1997) 189 CLR 345 at 391
[12] Henry & Henry (1996) FLC 92-685; (1996) 185 CLR 571; see also B v B (Re Jurisdiction)
[13]Bennett & Bennett (2001) FLC 93-088
[14]CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 391
In Skinner v Alfonso-Skinner (Costs)[15] Murphy J held that s 117 of the Act did not apply when considering a costs application arising out of the granting of a stay on forum non conveniens grounds. His Honour accepted the submission that ‘proceedings under this Act’ is a proceeding which claims relief pursuant to a specified provision of the Act. Thus, it was held, proceedings brought under the Court’s ‘accrued equitable jurisdiction’ or ‘implied jurisdiction’ or pursuant to some other Act e.g. Corporations Act were not proceedings ‘under this Act’ within the meaning of s 117.
[15] [2010] FamCA 1108
Murphy J applied that reasoning to a subsequent case, namely, Yeo & Huy (Costs)[16] holding:
9. … proceedings for stay are an exercise by the Court of its accrued equitable jurisdiction or its implied jurisdiction (see CSR Ltd v Cigna, above at 391-392), and are not proceedings “under the Act”. Section 117, which contains the Court’s power to order costs, refers to proceedings “under the Act”.
[16] [2012] FamCA 758
The applicable source of power to award costs in those cases was found to be s79(1) of the Judiciary Act 1903 (Cth) which provides:
(1)The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
And as a result, the relevant State legislation relating to the making of costs orders applied.
Murphy J’s reasoning was followed by Kent J in Chen & Tan (No 2)[17] and MacMillan J in Allen & Cortez (No 2).[18]
[17] [2012] FamCA 796
[18] [2016] FamCA 837
However, Le Poer Trench J in Hampton & Farley & Ors (No 3)[19] took a different view when considering a costs application arising out of proceedings which included the exercise of the Court’s accrued jurisdiction. His Honour said:
164. The decision of the Full Court of the Family Court in C Pty Ltd v S Pty Ltd is binding on trial judges. It also resolves the dilemma which is created by the words “proceedings under this Act” as the words appear in s 117 of the FLA.
165. Once “a proceeding” is a “matrimonial cause”, as defined by the definition of matrimonial cause in s 4 of the FLA, then s 31 of the FLA is called into play and the proceeding falls within the original jurisdiction of the court.
166. Consequently, once the court has determined that it is appropriate to exercise its accrued jurisdiction in relation to a proceeding which would otherwise be outside of the court’s statutory jurisdiction, then that proceeding will invariably become a matrimonial cause, as defined by s 4 of the FLA. Thus, s 117 of the FLA becomes available to the court should an application for costsbe made relating only to the proceeding which was considered by the court having to accrue jurisdiction to do so.
[19] [2013] FamCA 890
As to the impact of C Pty Ltd v S Pty Ltd on the earlier decision of Skinner Le Poer Trench J observed:
144. It is helpful to note, at this point, that the definition of “matrimonial cause” as referred to in C Pty Ltd v S Pty Ltd plays into s31 of the FLA which specifies the original jurisdiction of the Family Court of Australia. Given that Murphy J formed part of the majority in C Pty Ltd v S Pty Ltd, his Honour clearly would have to take a different position in relation to that taken by him in Skinner were those facts to be repeated in another case before him.
C Pty Limited and Ors & PGW as liquidator of S Pty Ltd (in liq)[20] concerned an appeal against an order dismissing an application to transfer proceedings to the Supreme Court of New South Wales. There were completed proceedings in the Family Court pursuant to s 79 of the Act and subsequently an application was filed by the liquidator of S Pty Ltd to recover money the company had paid, as guarantor, to discharge a loan and an application by C Pty Ltd to reverse the decision of a liquidator to reject a proof of debt. There had been an order for the winding up S Pty Limited in the completed s 79 proceedings. In addition there was an application for security for costs pursuant to s 117 brought against S Pty Limited. The trial judge found that the applications were a matrimonial cause as defined in s 4(1)(f) of the Act. Any dispute over the implementation of the order made pursuant to s 79 or the winding up order itself or the proof of debt issue were held by the trial judge to be part of the one justiciable controversy of which the family law claim forms part and as such the jurisdiction to determine these matters arose pursuant to the Court’s accrued jurisdiction. The security for costs application was determined pursuant to s117 of the Act.
[20] (2011) FLC 93-485
The Full Court observed that the Family Court had jurisdiction to hear the winding up proceedings pursuant to the power vested in the Court under s1337C of the Corporations Act but that did not prevent the proceedings also being a matrimonial cause. As to the claim arising out of the guarantee, the Full Court agreed with the trial judge and held that the guarantee proceedings were a necessary part of the winding up process that ensured that the efficacy of the s79 order and accordingly within the original jurisdiction of the Court pursuant to s 31(1)(a) of the Act. The Full Court also agreed with the trial judge that the determination of the claims (including the proof of debt) were alternatively within the accrued jurisdiction of the Court stating that it was:
… patently obvious that the winding up proceedings, being a matrimonial cause, and the guarantee proceedings which are brought by the Liquidator in the context of progressing the winding up proceedings, are part of the one “justiciable controversy”. The winding up proceedings have certainly not been completed and thus they satisfy the need for there to be a family law claim as part of the justiciable controversy….
The trial judge’s determination of the security for costs application pursuant to s 117 of the Act was held to be correct given that the guarantee proceedings were a matrimonial cause and thus ‘proceedings’ within the meaning of s 117.
Original jurisdiction is conferred on the Court by s 31 of the Act which relevantly provides:
(1)Jurisdiction is conferred on the Family Court with respect to:
(a) matters arising under this Act … in respect of which matrimonial causes are instituted under this Act.
In discussing the meaning of ‘matter’ in the context of jurisdiction Brereton J in Valceski & Valceski[21] stated:
38. When a federal law confers jurisdiction on a court in respect of a “matter” arising under the Constitution or a federal statute, the jurisdiction extends to authorise determination of the whole “matter”. It has long been established that a matter is a “justiciable controversy”, the determination of which may involve both federal and state law …
39. Thus, when a federal court is invested with federal jurisdiction, it is also invested with the power to determine non-federal aspects of a justiciable controversy which involves the exercise of its federal jurisdiction, provided that the non-federal aspects of the controversy form an integral part of the same controversy [Stack v Coast Securities]. The scope of the “matter” in respect of which a federal court has jurisdiction is described by the ambit of the justiciable controversy. There is but a single matter, and the non-federal claims are within the accrued jurisdiction, where the different claims arise out of “common transactions and facts” or “a common substratum of facts” [Philip Morris, 512 (Mason J)], notwithstanding that the facts upon which the claims depend “do not wholly coincide” [Fencott v Muller, 607 (Mason, Murphy, Brennan and Deane JJ); Re Wakim, 586 [141]]; or where different claims are so related that the determination of one is essential to the determination of the other [Philip Morris, 512 (Mason J)]; or where, if the proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings [Re Wakim, 586 [141]]. However, it must always be borne in mind that the ultimate question is not the existence of each of the several suggested indicia, but whether there is in substance a single justiciable controversy.
[21](2007) FLC 93-312
Murphy J in Daymond and Anor & Daymond and Ors (Costs)[22] considered whether s 117 of the Act applied to an application for costs against a third party in which the Court had exercised its accrued jurisdiction. In dismissing a submission that the proceedings were not proceedings ‘under this Act’ as required by s 117, Murphy J undertook a review of relevant authorities (including Valceski and a number of decisions of the Federal Court of Australia) and concluded that as the ‘proceedings’ (as that term is defined in s4 of the Act) comprised claims under s 79 and claims pursuant to the Court’s accrued jurisdiction, the Court was exercising its original jurisdiction under s31(1) (a) of the Act, namely, with respect to ‘matters arising under this Act’. The reference to ‘matters’ being a reference to the ‘justiciable controversy’ comprising the “substratum of facts and claims representing or amounting to the disputed controversy” the determination of which involved both the federal and state law. Accordingly, His Honour concluded that the application for costs was properly considered under s 117 of the Act.
[22] [2014] FamCA 302
Murphy J referred to C Pty Ltd and Ors & PGW as Liquidatior of S Pty Ltd (In liq)[23] and observed that no part of his analysis or conclusion was inconsistent with anything said by the Full Court in that case but His Honour considered it had no direct relevance to the meaning of the term ‘proceedings under this Act’ in s 117 as it was a decision that turned on the meaning of ‘in relation to’ in subsection (f) of the definition of ‘matrimonial cause’ in s 4(1).
[23] supra
In Esdale & Schenk[24] Murphy J held that s 117 applied to a costs application (in the form of ‘litigation funding’) prior to the Court having determined whether or not it had jurisdiction to entertain the substantive claim stating:
21. Plainly, proceedings in which the Court is asked to determine if it has jurisdiction are not “proceedings under [the] Act” if that expression is confined to proceedings which find the head of power to which they relate specified in terms within the Act; no provision of the Act gives the Court jurisdiction to decide if it has jurisdiction.
22. Yet, as has been seen, plainly enough the Court does have such jurisdiction. And, that jurisdiction exists despite the fact that this Court, although a superior court of record, is a court whose jurisdiction and power is confined by statute. Where the Court has inherent jurisdiction, such as the jurisdiction to decide the facts upon which the existence of jurisdiction are based, the Court has all of the powers necessary or ancillary to the determination of that issue.
23. In my judgment, the expression “proceedings under [the] Act” in s117 includes proceedings brought to determine if there is jurisdiction in respect of proceedings under the Act. The power to award costs pursuant to s 117 is a power ancillary to the exercise of those powers in respect of those proceedings.
[24][2012] FamCA 111
Before concluding my review of relevant authorities I note that the Full Court in Lan & Hao (No 2)[25] referred to counsel’s reliance on the Court’s ‘implied’ jurisdiction to support an anti-suit injunction application to restrain proceedings in a foreign jurisdiction “rather than the equitable jurisdiction to restrain unconscionable conduct or the unconscientious exercise of a legal right”. The proceedings in that case were between husband and wife and the substantive proceedings in Australia concerned relief sought under s 79 of the Act.
[25] (2017) FLC 93-795 at [36], [38]
conclusion
In my view the jurisprudence in relation to this issue has developed since Skinner such that the phrase ‘proceedings under this Act’ is now given a much wider meaning. Where once it was thought that s 117 applied only where a costs application arose out of a claim brought pursuant to a provision of the Act, it is now apparent that it applies in any case where the Court is called upon to exercise its original jurisdiction in a single matter before it, whether that involves an exercise of its ‘implied’ powers, accrued jurisdiction or a determination of whether it has jurisdiction at all.
The substantive proceedings in this case comprise a matrimonial cause (enforcement of a financial agreement) and the Court’s accrued equitable jurisdiction (declarations of trust). The power to grant the interlocutory relief as between the wife and husband (stay of proceedings and anti-suit injunction) arises as a result of the powers which are implied i.e. to prevent an abuse of process and to protect the integrity of the Court’s processes. In that sense the powers exercised were “incidental and necessary to the exercise of the jurisdiction”. The jurisdiction is the original jurisdiction of the Court. An additional source of power to grant the anti-suit injunction was discussed by the Full Court in Teo & Guan[26] as being s 114(3) of the Act.
[26]Teo & Guan (2015) FLC 93-653
Before concluding, I observe that although this Court and the Federal Court of Australia are both superior courts of record this Court has no general equitable jurisdiction.[27] Accordingly unless the Court is exercising accrued jurisdiction it has no general equitable jurisdiction.
[27] see s 5 of the Federal Court Act 1976 (Cth) provides that the Federal Court is a court of law and equity – No similar provision appears in the Family Law Act
Having concluded that s 117 applies to the application for costs I turn to consider whether costs should be awarded.
should costs be awarded?
I am persuaded that there are circumstances which justify an order for costs including:
a)The husband’s conduct and in particular his delay in bringing his application for a stay in circumstances where he had:
(i)Himself elected to commence proceedings for property settlement in Australia in May 2016;
(ii)Participated in the proceedings commenced by the wife without demur for many months before seeking a stay;
b)The husband has been wholly unsuccessful in his application to stay the wife’s proceedings and the anti-suit injunction was necessary to protect the integrity of the Australian proceedings;
c)The husband continues to operate a professional practice in both Australia and Israel.
However, I am not persuaded that the circumstances are of an exceptional nature such as to justify an order for costs on an indemnity basis nor that the circumstances justify an order for costs on a lawyer and client basis. The costs order will be on a party and party basis.
The husband resists the costs award for reasons including that he has no property other than that which is held in trust pending the conclusion of the proceedings and those funds may ultimately be determined to be the property of the wife. However, as noted above, the husband continues to operate his own professional practice both in Australia and Israel. In any event, even if the husband were impecunious, that fact alone would not preclude the making of a costs order.[28]
[28]Lenova & Lenova (Costs) [2011] FamCAFC 141
The husband sought the relisting of the matter for oral submissions in the event a costs order was proposed to be made other than for the hearing on 26 July and preparation of material for that hearing. As the proceedings in Australia are continuing I do not propose to list the matter for further submissions as proposed by the husband and will limit my order to the hearing on 26 July 2017 and preparation of material for that hearing and reserve the question of the balance of the wife’s costs to the trial judge.
I certify that the preceding Sixty-Six (66) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carew delivered on 25 October 2017.
Associate:
Date: 25 October 2017
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