Daymond & Anor and Daymond & Ors (Costs)
[2014] FamCA 302
FAMILY COURT OF AUSTRALIA
| DAYMOND AND ANOR & DAYMOND AND ORS (COSTS) | [2014] FamCA 302 |
| FAMILY LAW – COSTS – THIRD PARTY PROCEEDINGS – where proceedings commenced in the Supreme Court of Queensland seeking equitable relief were transferred to this Court to be determined pursuant to this Court’s accrued jurisdiction – where the claim the subject of the Supreme Court proceedings was determined as part of s 79 proceedings between the third party’s father and mother – where the claim for s 79 orders between the third party’s parents was heard together with a s 79 claim made by the third party’s aunt, as against his uncle – where the claims were heard together as the primary asset in each “pool” was a company which was jointly owned by the third party’s father and uncle – where the third party’s claim was ultimately unsuccessful – where the third party’s mother and aunt seek costs orders against him – whether s 117 of the Family Law Act 1975 (Cth) governs the applications – whether the “proceedings” comprised each of the s 79 claims and the claim in equity – consideration of the nature of “proceedings” in the context of accrued jurisdiction – where the “proceedings” comprised each of the claims – where the third party’s claim, together with the two s 79 claims, comprised the “matter” the subject of the “proceedings” – where those “proceedings” were instituted under the Family Law Act 1975 (Cth) – where the Court would not have accrued jurisdiction if the third party’s claim remained a distinct “proceeding” from the “s 79 proceedings” – s 117 found to apply – whether the presumption in s 117(1) ought be departed from – where the involvement of the mother and aunt in the third party claim was open to them, but ought not be at the expense of the third party – no order for costs made against the third party. FAMILY LAW – COSTS – where the second applicant seeks an order for costs of her s 79 claim against the second respondent – where the second applicant claims that written offers made by her, together with conduct on the part of the second respondent, justifies a departure from the presumption in s 117(1) of the Family Law Act 1975 (Cth) – whether the circumstances warrant the making of an order for costs – where the evidence does not support a departure from s 117(1) – application for costs dismissed. |
| Family Law Act 1975 (Cth) Workplace Relations Act 1996 (Cth) |
| C Pty Ltd and Ors & PGW as Liquidator of S Pty Ltd (In liq) [2011] FamCAFC 231 ‘Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002’ (2002) 23 Australian Bar Review 29 |
| 1st APPLICANT: | Ms M Daymond |
| 2nd APPLICANT: | Ms R Daymond |
| 1st RESPONDENT: | Mr D Daymond |
| 2nd RESPONDENT: | Mr I Daymond |
| 3rd RESPONDENT: | P Pty Ltd |
| 3rd PARTY: | Mr A Daymond |
| FILE NUMBER: | BRC | 18 | of | 2011 |
| FILE NUMBER | BRC | 11578 | of | 2010 |
| DATE DELIVERED: | 7 May 2014 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | 25 October 2013 |
REPRESENTATION
| COUNSEL FOR THE 1ST APPLICANT: | Mr Coulson |
| SOLICITOR FOR THE 1ST APPLICANT: | A M Law |
| COUNSEL FOR THE 2ND APPLICANT: | Mr Hackett |
| SOLICITOR FOR THE 2ND APPLICANT: | Bruce Dulley Family Lawyers |
| COUNSEL FOR THE 1ST, 2ND, 3RD RESPONDENTS: | Ms Carew |
| SOLICITOR FOR THE 1ST, 2ND, 3RD RESPONDENTS: | Best Wilson Family Law |
| FOR THE 3RD PARTY: | In person |
Orders
The Application in a Case filed by the First Applicant on 25 July 2013 is dismissed.
The two Applications in a Case filed by the Second Applicant on 5 July 2013 are dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Daymond and Anor & Daymond and Ors (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBERS: BRC18/2011 and BRC11578/2010
| Ms M Daymond |
1st Applicant
And
| Ms R Daymond |
2nd Applicant
And
| Mr D Daymond |
1st Respondent
And
| Mr I Daymond |
2nd Respondent
And
| P Pty Ltd |
3rd Respondent
And
| Mr A Daymond |
3rd Party
REASONS FOR JUDGMENT
On 17 July 2013, I made orders consequent upon proceedings involving claims by Ms M Daymond (“Ms M”) as against her former husband, Mr D Daymond (“Mr D”), and by Ms R Daymond (“Ms R”) as against her former husband, and Mr D’s brother, Mr I Daymond (“Mr I”). Orders were also made on that day in respect of a claim by Ms M and Mr D’s son, Mr A Daymond (“Mr A”), for equitable relief. I will call those proceedings “the third party proceedings”.
Subsequent to the 17 July 2013 orders, each of Ms M, Mr D, Ms R and Mr I filed applications for costs against their respective former spouses. Ms M and Ms R also each filed an application for costs against Mr A (amongst others).
Ms M and Mr D reached agreement: neither party pursued their application(s) for costs. I subsequently made orders by consent dismissing:
a)The Application in a Case filed by Mr D on 7 May 2013;
b)The Response to an Application in Case filed by Ms M on 26 August 2013;
c)The Application in a Case filed by Mr D on 10 July 2013; and,
d)The Application in a Case filed by Ms M on 11 July 2013.
Similarly, Mr I did not pursue the application for costs filed by him on 11 July 2013. An order was made also dismissing that application.
As a result the following applications remain to be determined:
a)Ms M’s application for costs as against Mr A;
b)Ms R’s application for costs as against Mr A; and,
c)Ms R’s application for costs in respect of her s 79 claim as against Mr I.
Costs Applications Against Mr A
Mr A’s Claim
Mr A contended that Mr D and Mr I held their interests, or, at least, an interest equivalent to the “controlling share”, in P Pty Ltd on constructive trust for him. That claim was rejected.
Mr A’s claim, which was instituted by him in the Supreme Court as against Mr D, Mr I and P Pty Ltd seeking relief of the type just outlined, was transferred to this Court by order of the Supreme Court on 30 May 2012.
Upon being transferred to this Court, the matter (comprising both s 79 claims and Mr A’s claim for equitable relief) was mentioned before me on 5 July 2012 to make orders facilitating progression to final hearing on 23 July 2012. Ultimately, the matter was heard over six days; four in July 2012 and two in December 2012.
The claims made by Ms M and Ms R for costs against Mr A seek to delineate between the “property proceedings” and the “third party proceedings”. In Ms M’s case that was done for the purposes of estimating costs. In Ms R’s case it has a greater significance; it is contended that s 117 of the Family Law Act 1975 (Cth) (“the Act”) does not apply to Mr A’s claim. The resolution of the question is not straightforward.
What law applies to the costs applications against Mr A?
In written submissions filed on behalf of Ms R, it was contended that the costs as sought by her against Mr A, should be awarded:
…on the basis that costs should follow the event and that such costs are not constrained by s 117 of the Act as the third party proceedings [that is, Mr A’s claim] were not pursuant to the Act.
The assertion is pregnant with legal difficulty. Regrettably, counsel’s submissions did not assist. No authorities were cited in support of the central contention just quoted. Oral submissions made no reference to the essential principles relevant to the assertion. Written submissions filed on Ms M’s behalf contend that, where a third party is “entirely unsuccessful” in asserting “a right against property which is otherwise subject to the Section 79 division” then “that alone is sufficient to take the matter outside the scope of the normal statutory rule…” No authority was cited in support of that proposition. Counsel’s oral submissions did not at all address this central issue. Mr A, who was self-represented at the hearing of the costs applications, did not make any submissions on this point.
The terms of s 117 govern orders for costs in respect of “proceedings under this Act”. The section provides relevantly:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
…
(Emphasis added).
Section 117(2), then, provides courts exercising jurisdiction in proceedings “under” the Act with the power to make an order for costs, subject to the presumption in (1) and, relevantly, subsection (2A).
It is uncontroversial that Mr A’s claim was determined in the exercise of this Court’s accrued jurisdiction. The issue, then, is whether such a claim constituted, or otherwise fell within the penumbra of, “proceedings under the Act” for the purposes of s 117. A resolution of that issue ultimately turns, in my view, on the nature of the Court’s accrued jurisdiction.
Accrued jurisdiction arose in the instant case not because the “different claims” of Ms M, Ms R and Mr A arose out of “common transactions and facts” or a “common sub-stratum of facts” but, rather, because the claims “are so related that the determination of one is essential to the determination of the other” (Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585-586). That is, the determination of Mr A’s claim was essential to a determination of the “pool” amenable to orders pursuant to s 79 between Ms M and Mr D, and between Ms R and Mr I. Similarly, a determination of the value of Mr D’s interest in P Pty Ltd would dictate the value of Mr I’s interest and vice versa.
As Allsop J (as the Chief Justice then was) observed, extra-curially:
The “matter” is the justiciable controversy between the actors to it comprised of the substratum of facts and claims representing or amounting to the disputed controversy between or amongst them. It is not the cause of action or the causes of action brought by the plaintiff. A justiciable controversy is identifiable independently of proceedings brought for its determination.
(‘Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002’ (2002) 23Australian Bar Review 29 at 36).
Similarly, Brereton J held in Valceski & Valceski (2007) FLC 93-312 (at [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 the 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.
The “matter” before me comprised three claims: each of the s 79 applications brought by Ms M against Mr D and Ms R against Mr I, and Mr A’s claim for equitable relief as against Mr D, Mr I and P Pty Ltd.
The question is whether the “proceedings under this Act” were confined to the two s 79 claims or whether the “proceedings under this Act” were constituted by all three claims comprising the “matter”. Put another way, can the two s 79 claims, which were instituted under the Act, be separated from Mr A’s claim, which was the subject of proceedings in the Supreme Court and heard here pursuant to the Court’s accrued jurisdiction?
The term “proceedings” is defined in s 4(1) of the Act 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” (emphasis added). The emphasised parts of that definition are important in understanding the need for the term “under this Act” in s 117.
It is arguable that a finding that s 117(2) extends to proceedings involving non-federal claims would render the words “under this Act” in both ss 117(1) and (2) otiose.
The words “under this Act” must be given meaning and effect; they cannot be presumed to be mere surplusage (see, for example, Commonwealth v Baume (1905) 2 CLR 405 at 444, per Griffith CJ). Thus, the argument might run, the words mean what they say and qualify the broadly-defined “proceedings” by restricting them to proceedings instituted under the Act; that is, actions provided for in the Act itself.
That argument and its conclusion begs, in turn, at least two questions. First, if the Legislature intended the words to include claims such as non-federal claims as part of the Court’s accrued jurisdiction, why were words such as, for example, “in matters arising under the Act” not used? Secondly, and as a corollary, if the words “under this Act” do not distinguish claims not instituted under the Act (for example, claims pursuant to the Court’s accrued jurisdiction) what work do the words “under this Act” do?
The answer to the last question is provided by ss 3 and 9 of the Act which, respectively, set out repeal and saving provisions and transitional provisions. Those sections refer to “proceedings” instituted in courts other than the Family Court and pursuant to legislation other than the Act; that is, proceedings other than “under this Act”. That is, the words “proceedings under this Act” seek to emphasise that it is only proceedings within the Court’s jurisdiction (noting that it is derived from the Act, but within the limits of constitutional power) which are subject to s 117.
The answer to the first question posed above is that it was unnecessary to use words of the type postulated if “proceedings under this Act” are distinct from those not under the Act as just explained and non-federal claims heard pursuant to accrued jurisdiction can be properly described, nevertheless, as coming “under this Act”. They can because it is the “single justiciable controversy” which permits of the claims being heard together and the “single justiciable controversy” in this case arose “under [the] Act”.
If that analysis commends itself as a matter of statutory construction, does authority support that conclusion?
What do the authorities say?
I was unable to locate any decision of the Full Court dealing specifically with this issue.
That said, no part of the above analysis or conclusion is inconsistent with anything said by the Full Court in C Pty Ltd and Ors & PGW as Liquidator of S Pty Ltd (In liq) [2011] FamCAFC 231. That decision turned on the meaning of “in relation to” in subsection (f) of the definition of “matrimonial causes” in s 4(1) of the Act; it has no direct bearing on what is meant by “proceedings under this Act” in s 117.
Support for the above analysis can, however, be found in decisions of the Full Federal Court in respect of the superseded s 170CS of the Workplace Relations Act 1996 (Cth) which provided, relevantly, that “…a party to a proceeding under s 170CP must not be ordered to pay costs incurred by any other party to the proceeding…” In Goldman Sachs JBWere Services Pty Limited v Nikolich (2007) 163 FCR 62, the Full Federal Court had cause to consider:
88.…whether in a proceeding founded on multiple causes of action, of which s 170CP is only one, the expression “a proceeding under s 170CP” refers to the whole of the proceeding or only to that “part” of the proceeding that is brought pursuant to the provision.
Each member of the Full Court in Nikolich provided separate reasons. Each, however, was agreed that, as Marshall J opined, “[t]he proceeding before [the trial judge] commenced as one under s 170CP of the WR Act. That [the applicant] later amended his application to include the other claims does not alter the fact that the proceeding was one under s 170CP.” Similarly, Jessup J stated:
[379]…it is a simple matter to read the word in s 170CS “a proceeding under s 170CP” as a reference to a proceeding which had its statutory basis under that section. The section was concerned with proceedings under s 170CP, not merely with claims under that section. A proceeding might well have involved claims in the accrued jurisdiction, and I can think of no reason why s 170CS should not be construed accordingly.
[380] For the above reasons, like Moore J in Grout, I take the view that the prohibition on costs in s 170CS(1) extended to every part of a proceeding whose statutory basis was s 170CP of the WR Act, including claims in the accrued jurisdiction which, save for being part of a single “matter” in the constitutional sense, were unrelated to rights and obligations arising under federal statutory law. In the present case, the powers of [the] court to award costs to the successful respondent were, in my view, blocked by s170CS of the WR Act...
(Emphasis added).
Having referred, inter alia, to Nikolich, the Full Court of the Federal Court in the recent decision of Construction, Forestry, Mining and Energy Union and Anor v Director of the Fair Work Building Industry Inspectorate (as successor to the Australian Building and Construction Commissioner) (No 2) (2013) 296 ALR 443 indicated that the opinions expressed in Nikolich reflected accepted principle:
[58]This review of the decided cases reveals agreement as to the position where there is a claim in the court’s accrued jurisdiction in a matter arising under the industrial relations legislation…
In my view, the agreed position there referred to can, with respect, be seen to be analogously applicable to the question in these proceedings and, thus, supports the analysis earlier outlined.
Both Ms M and Ms R instituted proceedings for orders pursuant to s 79. Their separate claims were part of a “single justiciable controversy”, which also included Mr A’s claim for equitable relief. That latter claim accrued to the “matter” which had arisen under the Act, namely, Ms M’s and Ms R’s claims for s 79 orders.
Put another way, the jurisdiction conferred upon the Court by s 31 of the Act extended, in this case, to a determination of a “matter arising under [the] Act” which such matter comprised not only the “matrimonial causes” instituted by Ms M and Ms R, but also Mr A’s claim.
That the Court’s jurisdiction pursuant to s 31(1) extends to matters that encompass claims instituted under the Act as well as claims which are not based in the Act is well-settled (see, for example, Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457, Fencott v Muller (1983) 152 CLR 570, Valceski & Valceski (2007) FLC 93-312 and Warby &Warby (2002) FLC 93-091).
Similarly, the following statement of the plurality (Mason, Brennan and Deane JJ) in Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 at 289 is apposite:
In argument before us much has been made of the terms in which s. 86 grants jurisdiction to the Federal Court, viz., “to hear and determine actions, prosecutions and other proceedings under this Part”. These words, it is suggested, limit the jurisdiction so as to exclude any jurisdiction to hear and determine non-federal claims. This, with respect, is to fasten upon the words as if they stand in lonely isolation, divorced from Ch. III of the Constitution and the dispositions which it makes for the exercise of judicial power in the resolution of litigious controversies. Moreover, it is to pay scant attention to the legislative design involving the creation of the Federal Court as a superior court and the vesting in it of jurisdiction in relation to claims arising under the Act, claims which generally form but part of an entire litigious controversy. And it ignores the recent decisions in Philip Morris and Fencott v. Muller which establish that the jurisdiction that s. 86 confers on the Federal Court extends to non-federal aspects of the controversy of which the federal claim forms an integral part.
(Bold emphasis added).
Finally, it is necessary to mention an inherent difficulty in the submissions made on behalf of Ms R. The submission that s 117 does not apply to Mr A’s claim because “the third party proceedings were not pursuant to the Act” assumes that upon transfer to this Court, Mr A’s claim remained a distinct proceeding. If this were the case, there would be no basis for this Court accruing jurisdiction to determine Mr A’s claim. As Gummow and Hayne JJ stated in Re Wakim (1999) 198 CLR 511:
140.…What is a single controversy “depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships”. There is but a single matter if different claims arise out of “common transactions and facts” or “a common substratum of facts”, notwithstanding that the facts upon which the claims depend “do not wholly coincide”. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are “completely disparate”, “completely separate and distinct” or “distinct and unrelated” are not part of the same matter.
(Footnote references omitted. Emphasis added).
As noted earlier, accrued jurisdiction arose in this case not because the different “claims [arose] out of ‘common transactions and facts’ or ‘a common substratum of facts’” but, rather, because determination of Mr A’s claim was essential to a determination of the parties’ legal and equitable interests in each of Ms M’s and Ms R’s s 79 claims. Thus, if the submission made on behalf of Ms R were correct, that is, that Mr A’s claim constituted distinct “proceedings”, that would be because it did not come within the “matter” in respect of which jurisdiction is vested in this Court pursuant to s 31(1) of the Act.
For the reasons given earlier regarding the nature of the “matter” before this Court, that proposition cannot be accepted.
Conclusion as to what law applies to the costs applications again Mr A
The authorities considered in the preceding discussion point plainly to the “proceedings” before me concerning a “matter” pursuant to s 31(1) which comprised both the claims pursuant to s 79 and Mr A’s claim for equitable relief. They were “proceedings under [the] Act” for the purposes of s 117.
Similarly, those authorities, together with the interpretation of s 117 set out earlier, support the conclusion that s 117 is concerned with “proceedings under [the Act], not merely with claims under [it]” (emphasis added).
Those findings lead me, then, to conclude that s 117 applies to the whole of the proceedings, such that it applies to a determination of the applications for costs sought by Ms M and Ms R against Mr A.
The Costs Applications against Mr A
As a consequence of the preceding findings, s 117(1) of the Act applies to each of the applications brought by Ms M and Ms R against Mr A.
If an order for costs is to be made, it is necessary to find there are “circumstances that justify” such an order and, being satisfied there is, I must consider the factors in ss 117(2A)-(5) relevant in the circumstances. (Of course, those factors can also be considered when determining whether there are “circumstances that justify” the displacement of the presumption in s 117(1)).
I am not satisfied that the circumstances here justify an order for costs.
While Ms M and Ms R were plainly entitled to involve themselves in Mr A’s claim, it by no means follows that their involvement ought be at Mr A’s expense. Mr A’s claim in the Supreme Court named Mr D, Mr I and P Pty Ltd as respondents. Ms M and Ms R became involved at their own instigation and, ostensibly, solely for the purpose of seeking an order transferring the matter to this Court. Whilst there is no doubt that Mr A’s claim had the potential to impact adversely upon the “pool” available for distribution between each party to the two s 79 claims, there was no need for involvement in the claim by either Ms M or Ms R.
Indeed, so much was argued specifically on Ms M’s behalf at a procedural hearing before me on 5 July 2012. On that date an issue arose which suggested that the matter, insofar as it entailed Mr A’s claim, would not be ready to proceed. In that context, counsel for Ms M asserted that:
…Nowhere within the pleadings is any claim made against the wives for unconscionable conduct. Therefore, the 79 proceedings can proceed. There does not need to be a determination of [Mr A’s] proceedings against the brothers and the company, sorry, the fathers and the company, prior to your Honour’s determination of the 79 proceedings.
(Transcript of proceedings, 5 July 2012, p 3, lines 23-27).
Whilst, as I raised with counsel at the time, that proposition overlooked the fact that “…whether or not a trust is established must have an impact” on the orders, if any, able to be made in each s 79 claim (and, indeed, wrongly segregates the claims into distinct proceedings), it flags a matter I consider important to the resolution of the question of justifying circumstances in s 117(1).
Counsel who appeared for P Pty Ltd at the hearing on 5 July 2012 submitted that:
With respect to the costs, there are two parties to the transferred proceedings who are not parties to the section 79 proceedings, the company and [Mr A]. With respect, it seems unnecessary cost for those parties to be involved in the section 79 proceedings…
…
…the wives are now parties to the Supreme Court proceedings only to clothe them with sufficient ability to make application to the transfer of the proceedings to this court. As I earlier submitted to you there is no assertion or claim against them. So it’s highly unlikely unless something changes that they need be part of those proceedings [referring to Mr A’s claim].
(Emphasis added).
Again, issue should be taken with the delineation between “proceedings”, but those submissions reflect, accurately in my view, the role that Ms M and Ms R had in Mr A’s claim insofar as it pertains to justifying circumstances in s 117(1). Ms M (and, ostensibly, Ms R given the absence of any objection to her joinder to the proceedings in the Supreme Court) sought to not only be named as a party to Mr A’s claim but also agitated for its transfer to this Court.
Whilst I acknowledge that counsel for both Ms M and Ms R cross-examined Mr A, it must be said that, with respect to each of them, nothing elicited in that cross-examination assisted me in the determination of Mr A’s claim. In that respect it is crucial to appreciate that both Mr D and Mr I conceded that they had had conversations with Mr A regarding his interest in P Pty Ltd. Mr A sought equitable relief said to result from those conceded conversations. Neither Ms R nor Ms M was a party to any of those conversations. The real issue turned on the nature of the relief sought by Mr A and the absence of any evidence indicating that either Mr D or Mr I had resiled from the asserted promises. Neither Ms R nor Ms M could offer any evidence in respect of that central issue.
In that respect, there was a suggestion by both Ms M and Ms R of complicity between Mr D and Mr I and Mr A but it is a claim I rejected:
11.I reject the claim of connivance or lack of bona fides. I assess [Mr A’s] evidence as essentially honest. I find it unsurprising that informality would have attended, and did in fact attend, any arrangement between [Mr A] and his father and uncle and any understanding held by each of them, or by them jointly, as to their respective future entitlements inter se and with [P Pty Ltd]. Equally, the coincidence between the assertion of rights by the institution of proceedings by [Mr A] with s 79 proceedings by his mother and aunt is, in my view, neither surprising nor inherently sinister; no need had earlier arisen – either as a matter of law or logic – that necessarily commended the assertion of those rights. As a corollary, it would be unsurprising if nothing at all was done by [Mr A] in circumstances where the marriages of his parents and his aunt and uncle subsisted happily.
…
31.The suspicions of [Ms M] and [Ms R] notwithstanding, the differences in the evidence of [Mr A], [Mr I] and [Mr D] are not, in my view, explained by any dishonesty (or disingenuousness) on the part of any of them. Rather, those differences are, I think, a function of, and a reflection of, the arrangement between the three men never being articulated with any precision; each of the father/son and uncle/nephew being content to assume the other could be trusted to “do the right thing” by each other and [Mr A] and that, in time, [Mr A] would be “looked after” either by legacy or inter vivos transactions.
Those findings, which have not been challenged in an appeal against my property orders filed by Mr I on 7 May 2013, dispose, in my view, of any asserted lack of bona fides in the bringing of Mr A’s claim, any “complicity” on the part of either Mr D or Mr I, and any suggestion that there was any “delay” in the bringing of Mr A’s claim in the Supreme Court.
Ms R supports her claim for costs against Mr A by arguing that Mr A did not make any offers.
The submission is somewhat disingenuous. Neither Ms M nor Ms R were parties to Mr A’s claim until Ms M applied for an order to that effect in the Supreme Court on 25 May 2012. The claim was transferred to this Court on 1 June 2012 and the matter was mentioned before me on 5 July 2012 at which time Ms M’s counsel made the submissions referred to above to the effect that Ms M did not have any role in the determination of Mr A’s claim.
The factors just described are highly relevant in prevailing over Mr A’s lack of success in determining whether the circumstances justify a costs order as far as each of Ms R and Ms M is concerned.
The Application in a Case filed by Ms M on 25 July 2013 and the Application in a Case filed by Ms R, insofar as it relates to Mr A, filed on 5 July 2013 should be dismissed.
Ms R’s application for the costs of the “third party proceedings” as against Mr D and/or Mr I
The Application in a Case filed by Ms R on 5 July 2013 seeks orders against each of Mr D, Mr I and Mr A for her costs of and incidental to the “Third Party proceedings.”
I have already disposed of the application insofar as it pertains to Mr A. In my view, there is, similarly, no foundation for the claim as against Mr D and Mr I. As noted, my finding at [11] of the reasons delivered on 9 April 2013 is not challenged. Specifically, no challenge has been made to my rejection of the “claim of connivance or lack of bona fides”.
I reiterate the matters just discussed with respect to the “necessity” of Ms R’s involvement. There is, in my view, no justifying circumstances warranting a departure from the presumption in s 117(1) of the Act.
The Application in a Case filed by Ms R on 5 July 2013, insofar as it seeks orders as against Mr D and/or Mr I for the “Third Party proceedings” should be dismissed.
Ms R’s Claim for Costs against Mr I
In submissions filed on her behalf, Ms R seeks “orders for costs” against Mr I “in respect of the s 79 proceedings”:
…primarily on the basis of written offers she made to [Mr I] to compromise the proceedings, but also based upon the Second Respondent’s conduct in the proceedings.
As noted earlier, s 117(1) prescribes that each party is to bear their own costs. The question, then, is whether by reference to the circumstances of the case as between Ms R and Mr I, including the matters contained in s 117(2A) (as are relevant), there are “circumstances that justify” an order contrary to the presumption in s 117(1).
Neither s 117(2) nor s 117(2A) demand that any one factor has more weight than any other factor. Nor is it necessary that more than one factor enumerated within the latter section must be present (Fitzgerald (as Child Representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123).
The primary factors said to support Ms R’s claim for costs are Mr I’s conduct and written offers (ss 117(2A)(c) and (f) respectively).
Written offers
In respect of the role of written offers in determining what order, if any, for costs ought be made, the Full Court said in Lenova & Lenova [2011] FamCAFC 141:
10.In this jurisdiction, costs do not “follow the event”; the Act prescribes, relevantly, that “subject to subsection (2) … each party to proceedings under this Act shall bear his or her own costs” (s 117(1)). As a result, a litigant, or prospective litigant, cannot rely upon a costs order following upon success in the action as a means of dissuading the other party from pursuing unmeritorious litigation or as a means of seeking to persuade the other party from pursuing litigation.
11.A timely offer in writing genuinely made might, then, be seen as an important part of a limited armory available to prospective litigants seeking to avoid the costs of litigation. Conversely, where, consequent upon success in an action, a litigant can point to the making of a genuine and timely offer having been made, that offer might be seen as an important (albeit not the only) matter in the exercise of the discretion as to the ordering of costs.
12.That consideration must, of course, be balanced against a litigant having a limited capacity to meet a costs order, as well as any other relevant considerations. But, a limited financial capacity to meet an order cannot be determinative; if it were, a party would always be able to plead impecuniosity as a means of avoiding a costs order in circumstances where pursuit of the litigation has continued in the face of a reasonable offer to cease that litigation and the incurring of its attendant costs.
Each of Ms R and Mr I made written offers.
On 3 June 2010, Ms R made an offer which, it is submitted on her behalf, would have seen her receive 32 per cent of the pool as found at trial. It is further submitted that due to Mr I’s refusal of that offer, the parties had to obtain valuations at a cost to each of them.
It is submitted on behalf of Mr I that the reason for his refusal was that the offer was “…imprecise in that in included [sic] provision for unspecified spouse maintenance and adult child support.” Those were not, as was further submitted on behalf of Mr I, “…the subject of any application…”
The offer is contained in a letter dated 3 June 2010 which is attached to an affidavit of Bruce Dulley filed on 5 July 2013. In addition to stating that “[o]ur client is in need of spousal maintenance and we are presently quantifying this and will communicate with you further” the letter also refers to the “monetary needs for support” of the parties’ child.
The lack of specificity attending what appears to be a claim for spousal maintenance (and, apparently, adult child maintenance) together with the fact that the offer does not address who is to be liable for a mortgage secured over real property to be retained by Ms R provides, in my view, reasonable grounds for refusing the offer. Further support for that conclusion is drawn from the affidavit of Mr Dulley in which a reason proffered for Ms R’s refusal of a subsequent offer by Mr I is that the offer was “silent as to who bore” liabilities which were held by Ms R.
On 29 August 2011, Mr I made an offer to Ms R which Mr Dulley states “amounted to $1,098,000” in property, superannuation and cash to be retained by Ms R which represented 49 per cent of the pool as found at trial (I note that I determined the property should be distributed between the parties in the proportion of 52.5:47.5 per cent in favour of Ms R). That offer proposed a cash payment to Ms R upon the sale of certain properties owned by P Pty Ltd.
Ms R made a counteroffer on 31 August 2011 which was contained in a letter sent by Mr Dulley in which clarification was sought regarding aspects of Mr I’s 29 August 2011 offer, including the timing of the proposed sales.
Mr Dulley deposes that the counteroffer proposed by Ms R in the letter of 31 August 2011 would have seen a “percentage division to [Ms R] … [of] approximately 56.5% based upon the pool found at trial”. Ms R’s counteroffer sought a cash payment of $800,000, together with her retention of an unencumbered property. Significantly, Ms R also sought mortgages secured in her favour over three properties owned by P Pty Ltd which she “…would release … accordingly upon [Mr I’s] payment to [Ms R]…” as well as the continued payment to her of $900 per month until 50 per cent of the total cash component was repaid.
Based on the pool as ultimately found at trial, Mr I’s offer of 29 August 2011 was approximately $80,500 less than the distribution ordered by me. It must, however, be borne in mind that that offer was made over 12 months prior to the conclusion of the trial, and, if accepted, would have avoided further legal fees, including counsel fees, for six days of trial. The same considerations apply to Ms R’s counteroffer of 31 August 2011, which was approximately $89,200 greater than that which she was ultimately ordered to receive but, if accepted by Mr I, would have likewise avoided the incurrence of further legal fees.
Mr I withdrew his offer of 29 August 2011 on 4 October 2011.
Ms R’s final offer was made on 5 December 2011. Mr Dulley deposes that that offer represented a “…percentage division … being 51% to [Ms R] based on the pool found at trial”.
It is submitted on behalf of Mr I that, as with the 31 August 2011 offer, the 5 December 2011 offer sought spousal maintenance in the sum of $900 for an indeterminate period. It is further submitted on Mr I’s behalf that “[t]he offer was received at a time when [Mr I] had been put on notice of a possible claim by [Mr A].” In an affidavit filed on 23 August 2013, Mr I states:
59.At the time that the offer of 5 December 2011 was made by [Ms R] I was aware that [Mr A] was obtaining legal advice regarding a claim against the company. At the time of considering [Ms R’s] offer I had no knowledge of the extent of [Mr A’s] claim, the content of [Mr A’s] pleadings or the basis on which [Mr A] would base his claim … Ultimately, I was troubled by the prospect of me settling my property matters with [Ms R] and [Mr A’s] claim being successful against the company, leaving me with significantly less than what was just and equitable…
Mr A filed his claim and statement of claim in the Supreme Court on 23 March 2012. That said, in an affidavit filed by Ms R responding to the affidavit just quoted from, Ms R does not challenge Mr I’s assertion that he was aware of a potential claim by Mr A in December 2011. Rather, Ms R deposes that “…[Mr I] has at all times known the basis and content of [Mr A’s] claim.” In those circumstances, I accept that at the time Ms R’s offer was made on 5 December 2011, Mr I was, on his case, aware of a potential claim to be made by Mr A and, on Ms R’s case, was aware that that claim would, if successful, have removed, at the least, a significant portion of Mr I’s shareholding in P Pty Ltd from the “pool”.
In my view, there is merit in Mr I’s contention that it would not have been appropriate to settle his property dispute with Ms R in light of Mr A’s potential claim, which I have found was bona fide.
In any event, the offer made by Ms R on 5 December 2011 was based on valuations attributed to assets in the “pool” which were significantly greater than the values which founded the “pool” relied upon at trial. For instance, Ms R valued Mr I’s share in P Pty Ltd at $1,743,402. The value of Mr I’s share was agreed at trial to be $1,384,055.50.
Mr I made two subsequent offers to Ms R, one on 15 October 2012 and the other on 3 November 2012 (both having been made after the first four days of hearing had taken place in July). Both offers proposed a percentage distribution to Ms R significantly lower than that which was ultimately ordered. However, as deposed to by Mr I (and not challenged by Ms R), those offers were made in circumstances where settlement offers had been made between P Pty Ltd and Mr A and at a time when Mr A’s claim was yet to be resolved. I accept the contention made by Mr I that the offers made in October and November 2012 took account of the risk of Mr A’s claim being successful and, thus, the effect that would have on Mr I’s shareholding in P Pty Ltd.
Other relevant factors
Conduct
It is submitted on behalf of Ms R that “[t]he conduct of [Mr I] in the proceedings include [sic] his attitude to the following matters weighs heavily in favour of the order sought by [Ms R].” The “matters” therein referred to include Mr I’s “…attitude towards his obligations to make disclosure”.
Similarly, it is contended, by reference to s 117(2A)(d) of the Act that “[t]he property proceedings were made more difficult, complex and expensive due to [Mr I’s] failure to comply with his obligations as to disclosure and his disregard in complying with court directions.”
Despite those submissions, no finding of any lack of disclosure was, ultimately, pressed at trial on behalf of Ms R (or in the written submissions filed by her counsel on 6 December 2012) as affecting the result and no findings were made to that effect.
In support of the submission that Mr I’s conduct warrants a departure from s 117(1), Ms R points to, inter alia, a document obtained as a result of a subpoena to Bank West. That document, which was dated in June 2008 allegedly “…revealed that [Mr I] had informed Bank West that the mine [forming part of the assets owned by P Pty Ltd] had a further 20+ years of production … [whereas] [t]hroughout the proceedings [Mr I and Mr D] maintained that the mine has only 4 years of production left…”
In circumstances where the value of P Pty Ltd was, ultimately, agreed and where Mr I did not seek to rely upon the document produced by Bank West to challenge the value of P Pty Ltd, I fail to see how the document is, first and foremost, relevant and, secondly, how it supports the contention that the proceedings were made “more difficult, complex and expensive due to [Mr I’s] failure to comply with his obligations as to disclosure…”
Another of the “matters” referred to in written submissions is that Mr I “…underestimated the value of [the mine owned by P Pty Ltd] some three times lower than which was ultimately found at trial...” That submission suggests that I was required to make a finding regarding the value of the mine. That was not the case. At the commencement of the final day of the hearing, balance sheets were tendered which contained agreed values for each of the items in the “pool” including the value of Mr I’s shareholding in P Pty Ltd. There was, then, ultimately, no dispute as to the value of the mine.
The submissions go on to refer to a document which was tendered by counsel for Ms R during the trial. That document came from Mr I’s file with his former solicitors. It is asserted in submissions that only part of the file was initially disclosed and that the failure to disclose the entirety of the file “…goes to the continued conduct being that of misinformation, delay and a lack of candour…” That document was relevant to Mr A’s claim and I have already disposed of Ms R’s application for costs as against Mr I in respect of Mr A’s claim.
Insofar as only part of Mr I’s file from his former solicitors was provided, it is submitted on his behalf that that was not intentional and, when called upon to provide the totality of the file, it was provided the following day. Again, I note that no finding regarding disclosure, or the lack thereof, was ultimately sought and I have been taken to nothing which would suggest that the failure to provide the totality of the file had a material impact upon the proceedings insofar as they pertained to Ms R’s claim for s 79 orders.
The parties’ financial circumstances
The orders ultimately made by me had the effect that Ms R would receive $1,170,730.84 comprising real property, superannuation, chattels and a cash payment of over $860,000. Those orders were partially stayed by me pending the outcome of an appeal by Mr I such that Ms R received an amount equal to that contended for by Mr I at the trial, the real effect of which was that Ms R would receive property, superannuation and a cash payment totalling approximately $836,000.
To give effect to the property settlement orders ultimately made by me, “income-earning” assets owned by P Pty Ltd were to be sold, thus reducing the value of the shareholding held by Mr I in that company and his future earnings as a director of that company.
Ms R is 53; Mr I is 68. Ms R is employed casually. Mr I remains a director of P Pty Ltd and, as part of the orders made by me, retained his professional practice.
Relevant to the instant consideration, are the following findings made by me as set out in the property judgment of 9 April 2013, which have not been challenged in Mr I’s Notice of Appeal:
129.[Ms R] is younger than [Mr I] and, although her current contract is casual she now has qualifications as a [healthcare professional] and there is the potential for her to increase her work. That factor is qualified by the fact that she is a person in her mid-50s seeking that employment. Of course, the need to meet a property adjustment order for [Ms R] is a factor potentially impacting on the capacity of [Mr I] to earn money from [P Pty Ltd] and to borrow from it as has historically occurred.
Whilst I found that Ms R would continue to be primarily responsible for the care of the parties’ son, Mr Q, who has special needs, I accept the submission made on behalf of Mr I that it was Ms R’s evidence at trial that Mr Q is remuneratively employed and, indeed, Ms R deposes to having borrowed $20,000 from Mr Q.
Conclusion as to Costs
I consider that each party made “genuine and timely offer[s]” which were reasonably refused by the other, particularly given that from at least December 2011, Mr I was on notice of a potential claim by Mr A that would, if successful, have a very significant impact upon the “pool” available for distribution.
I also reject the contention that conduct on the part of Mr I warrants the making of an order for costs against him. The examples relied upon in Ms R’s submissions fail to support the contention that “[t]he property proceedings were made more difficult, complex and expensive due to [Mr I’s] failure to comply with his obligations as to disclosure and his disregard in complying with court directions.”
I do not consider Mr I to be in a superior financial position to Ms R, particularly given he is presently 68 years of age, and assets which previously provided income for P Pty Ltd have had to be sold in order for Mr I and Mr D to satisfy the s 79 orders made by me. Further, I do not consider Ms R’s current financial circumstances to be such as would warrant a costs order in her favour.
The circumstances do not, in my view, justify an order for costs against Mr I.
I will, then, dismiss Ms R’s application in a case filed 5 July 2013.
Delay
I recognise that it will be cold comfort to the parties should I seek to explain (but not excuse) the delay in the delivery of these Orders and Reasons by reference to the reasons for it. Nevertheless I apologise for that delay which I regret.
I certify that the preceding one hundred and one (101) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 7 May 2014.
Associate:
Date: 7 May 2014
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