D PTY LTD & HUNTER
[2017] FamCAFC 138
•17 July 2017
FAMILY COURT OF AUSTRALIA
| D PTY LTD & HUNTER | [2017] FamCAFC 138 |
| FAMILY LAW – APPEAL – COSTS – where the appellant challenges an order for costs – where the appellant contends it was not wholly unsuccessful because the husband’s case shifted prior to the commencement of the trial – where the appellant asserts that the written offer of settlement relied upon by the trial judge was not sufficiently certain – where the appellant contends the trial judge did not have regard to the disparity of financial circumstances of the parties and the order for costs was otherwise unreasonable or unjust – where no error is demonstrated – where the appeal is dismissed. |
| Family Law Act 1975 (Cth) s 117 |
| Bant & Clayton (Costs) [2016] FamCAFC 35 Harris and Harris (1991) FLC 92-254 Johnston and Johnston (2004) FLC 93-189 Robinson and Higginbotham (1991) FLC 92-209 |
| APPELLANT: | D Pty Ltd |
| RESPONDENT: | Mr Hunter |
| FILE NUMBER: | BRC | 10255 | of | 2011 |
| APPEAL NUMBER: | NA | 62 | of | 2016 |
| DATE DELIVERED: | 17 July 2017 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Ainslie-Wallace, Kent and Loughnan JJ |
| HEARING DATE: | 17 July 2017 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 5 August 2016 |
| LOWER COURT MNC: | [2016] FamCA 629 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Davies |
| SOLICITOR FOR THE APPELLANT: | Condon Charles |
| COUNSEL FOR THE RESPONDENT: | Mr Kirk QC |
| SOLICITOR FOR THE RESPONDENT: | Hartley Healy |
Orders
The appeal against the orders of Hogan J made on 5 August 2016 is dismissed.
The appellant pay the respondent’s costs of and incidental to the appeal, such costs to be agreed or assessed and paid within twenty-eight (28) days of agreement or assessment.
Pursuant to r 19.50 of the Family Law Rules 2004 (Cth) the Court certifies that this matter reasonably required the attendance of counsel, including Queen’s Counsel.
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 D Pty Ltd & Hunter 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).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 62 of 2016
File Number: BRC 10255 of 2011
| D Pty Ltd |
Appellant
And
| Mr Hunter |
Respondent
REASONS FOR JUDGMENT
EX TEMPORE
Kent J
On 5 August 2016, her Honour Justice Hogan ordered that D Pty Ltd (“DPL”) pay Mr Hunter’s costs of and incidental to the proceedings as between DPL and Mr Hunter, with such costs to be paid on a party/party basis. DPL appeals from that order.
That order arose out of proceedings between Mr and Mrs Hunter for property settlement orders consequent upon the breakdown of their 27 year relationship. DPL was a corporate entity owned and controlled by the two adult daughters of Mr and Mrs Hunter. The dispute between Mr Hunter and DPL related to the ownership of real farming property known as ‘the O Property’. Further disputes arose as to the treatment of various liabilities incurred in the acquisition of this property.
The husband and wife had historically operated their farming enterprises through various corporate and trust structures; relevantly, including the Property Trust of which L Pty Ltd was the original corporate trustee. The husband and wife were the original unit holders and appointors of the Property Trust and controllers of its corporate trustee.
In May 2005, the husband and wife transferred to their two daughters, who were at that time 18 and 16 years of age respectively, the units in the Property Trust.
In January 2006, L Pty Ltd as trustee of the Property Trust purchased two lots of land, being collectively the property referred to as ‘the O Property’. This purchase was financed by borrowings from the Commonwealth Bank of Australia (“the CBA debt”), however, the borrowings were not secured by mortgage over the O Property lots, but rather over other farming property held by the parties (or entities associated with them) and by personal guarantees of the husband and wife. The mortgage payments were thereafter met by L Pty Ltd.
In 2007 the husband and wife resigned as appointors of the Property Trust and appointed their two adult daughters in their place. L Pty Ltd remained as trustee of the Property Trust.
The husband and wife separated in 2011.
In February 2012 the parties’ two adult daughters exercised their rights as appointors and replaced L Pty Ltd as trustee of the Property Trust with DPL. The husband was not notified of this change. Also at this time the wife closed the Property Trust bank account, again without notice to the husband, which had the consequence of mortgage payments ceasing. The mortgage subsequently fell into arrears and the CBA threatened enforcement action.
Steps were then taken to ensure the mortgage payments were met by another trust controlled by the husband and wife and payments were recorded as a loan to the Property Trust in that entity’s books of account. By the time of the trial of the property proceedings this loan was apparently in an amount of about $324,000 and interest totalled about $223,000.
In the property proceedings, the husband sought to be exonerated by DPL from the guarantees given by him and the other trust of the husband and wife in respect of the purchase of the O Property, and to have the loan to the Property Trust repaid.
DPL asserted that neither the husband nor wife intended for it (effectively being the children) to take responsibility for the CBA debt and that the husband and wife always intended that the daughters should receive the O Property free of encumbrance.
In the trial proceedings the trial judge ultimately accepted the husband’s contention that the acquisition of the O Property was to enable him to share farm that property for as long as he saw fit, and to benefit the children only after his death and that the purchase was structured as it was so as to avoid a testamentary claim by the children of his previous relationship.
The appeal
In its appeal from the costs order, the central contentions of DPL are, broadly, that:
a)Her Honour erred in finding that DPL had been “wholly unsuccessful” in the proceedings when regard is paid to the husband’s shifting case in the property proceedings;
b)Her Honour erred in her treatment of a written offer of settlement dated 26 June 2013; and
c)Her Honour erred in her failure to consider the disparity in the financial positions of the parties.
Before dealing with these contentions it is important that it be observed that within the realm of discretionary judgments, a judgment as to costs is quintessentially discretionary. There is ample Full Court authority which emphasises it will only be in a rare or limited case that the Full Court interferes with the exercise of discretion as to costs by a trial judge. As the Full Court observed in Harris and Harris (1991) FLC 92-254, at 78,711, “[o]rders for costs are peculiarly a matter which are within the discretion of the trial judge and it is only in the rarest of cases that the Full Court should interfere with a costs order”. In Robinson and Higginbotham (1991) FLC 92-209 the Full Court observed (at 78,417) that the Full Court “should be very reluctant indeed to interfere with the exercise of discretion in respect of costs”. The Full Court stated the principle governing legitimate intervention as “if the result is plainly unjust or if the discretion was exercised on wrong principles”.
Dealing with the appellant’s contention that it was not “wholly unsuccessful” in the proceedings, the matter relied upon by the appellant for that contention is a change in the case advanced by the husband in the proceedings, Mr Hunter, not long before the trial commenced and in particular on the first morning of trial. However, as it seems to me, the question of whether a party “has been wholly unsuccessful in the proceedings”, within the meaning of subsection 117(2A)(e) of the Family Law Act 1975 (Cth), is whether a party can be said to have been wholly unsuccessful in the proceedings on the issues joined before and as ultimately determined by the Court. Support for that proposition is gained from a relatively recent decision of the Full Court in Bant & Clayton (Costs) [2016] FamCAFC 35 (at [22]). This is not to say that alterations in a party’s case from time to time prior to or during the trial may not be relevant as a discretionary consideration as to an order for costs, however, in terms of contending that her Honour was wrong to conclude that the appellant was “wholly unsuccessful”, it seems to me that on the issues joined between the parties and determined by the Court the appellant was “wholly unsuccessful”, and so much was properly acknowledged by Mr Davies of counsel for the appellant on the hearing of the appeal.
I would only add that it would seem that precisely the same facts or factual scenario was relevant to the husband’s claims for relief whether the claim was based upon him being entitled to a life interest in the subject property (as earlier advanced) or whether, as finally advanced and determined by the Court, his claim was for an entitlement to the discharge of particular liabilities or indemnity in respect of other liabilities, in respect of the O Property.
The appellant contends, with respect to a certain offer in writing made on 26 June 2013, that the offer had sufficient ambiguity or lack of clarity such that it could not be relied upon, or ought not to have been relied upon, by her Honour in making the order as to costs. As it seems to me, when regard is had to the terms of the offer it is tolerably clear that it was not necessary for the husband to specify in the offer what was to happen with the balance proceeds of sale of the subject property to which the offer was directed – the O Property. The offer specified, from the proceeds of sale of the O Property, the discharge of certain liabilities and reimbursement of a family trust loan from the Property Trust, in circumstances where the property to which the offer was directed (the O Property) was legally owned by DPL as trustee of the Property Trust. Her Honour was correct, in my judgment, to find that it was implicit in that offer that DPL would receive or retain the balance of sale proceeds. I am not satisfied that her Honour was plainly wrong in observing of the offer in writing referred to dated 26 June 2013 that it was sufficiently clear what was intended to be conveyed by the offer (reasons at [41]). Whilst the appellant relied upon Johnston and Johnston (2004) FLC 93-189 (“Johnston”) in support of the proposition that an offer must be clear and unambiguous it seems to me it is important to contrast the facts of Johnston with this case. In Johnston, the relevant offer referred to the “monetary value” of certain shares and options. On the evidence in Johnston discussed in that case, there was a very significant tax burden with respect to the subject shares and options of some hundreds of thousands of dollars. The relevant exchanges of offers happened in close proximity to each other such that the final offer by the wife referring to the “monetary value” of the shares was entirely unclear as to whether it was a reference to the gross value of the subject shares and options or a reference to the nett value after payment of substantial capital gains tax. For the reasons already discussed it seems to me that the circumstances here are completely different. In Johnston itself, there is reference to offers being construed and considered in the context of the whole of the circumstances of the case.
In my judgment, in the circumstances referred to this offer was sufficiently clear as her Honour found; expressed another way I am not satisfied that her Honour was plainly wrong to observe of the offer the observations she made of it in the reasons (at [40] to [43]).
The further matter argued is in relation to two associated contentions, that is: “disparity” of financial circumstances, to use the language of the appellant and that the order for costs was unreasonable or unjust.
It is to be borne in mind that the order for costs as expressed was an order on a party and party basis of the costs incurred as between Mr Hunter and DPL on that part of the proceedings involving DPL. The evidence before her Honour was that the whole of the husband’s costs on an indemnity basis, incurred following the making of the offer of 26 June 2013, was in the total sum of approximately $630,000. However, as her Honour referred to on the evidence, on the husband’s best case by his solicitor no more than about half of those costs could be attributable to the proceedings as between the husband and DPL. In turn, no more than half of the claimed costs, claimed on an indemnity basis, would be attributable to costs assessed on a party and party basis. In the end result then, when reference is had to the evidence supporting her Honour’s findings in relation to the estimated amount of costs (at [32]), what was at stake, in terms of a party and party costs order as made by her Honour, was something in the order of between about $80,000 (on the proportions contended for by DPL before her Honour) to perhaps about $160,000, depending on what proportion of the total amount of costs was in fact party and party and what proportion was attributable only to the claim as between the husband and DPL. The relevant subsection, s 117(2A)(a), refers to the financial circumstances of each of the parties to the proceedings. It does not refer to “financial disparity” as such but plainly the Court in exercising a wide discretion as conferred by the section is to have regard to the financial circumstances of each of the parties. On the figures referred to, Mr Davies of counsel properly acknowledged during argument of the appeal that there was no evidence before her Honour that the order her Honour made by way of costs was an order that DPL was incapable of meeting, in terms of its financial circumstances.
In my judgment it cannot be said that her Honour disregarded the financial circumstances of the parties, expressly identifying that as being a relevant consideration for her Honour (at [5] and [33]). I am not persuaded that her Honour made any error in terms of considering the financial circumstances of the parties, nor in respect of the contention associated with that, that the order was unreasonable or unjust.
In my judgment it is not demonstrated that the result here is plainly unjust or that her Honour acted upon wrong principles. There is no merit in the appeal or any ground in support of it and the appeal ought be dismissed.
Loughnan J
I agree with the reasons given by Justice Kent and with the order he proposes.
Ainslie-Wallace J
I, too, agree with the reasons given by Justice Kent and the orders he proposes and the orders of the Court will be:
(1)The appeal against the orders of Hogan J made on 5 August 2016 is dismissed.
(2)The appellant pay the respondent’s costs of and incidental to the appeal, such costs to be agreed or assessed and paid within twenty-eight (28) days of agreement or assessment.
(3)Pursuant to r 19.50 of the Family Law Rules 2004 (Cth) the Court certifies that this matter reasonably required the attendance of counsel, including Queen’s Counsel.
I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Kent & Loughnan JJ) delivered on 17 July 2017.
Associate:
Date: 18 July 2017
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