Essington Breen v Essington Breen

[1990] HCATrans 308

A	-!,i, AUSTRALIA 4!"
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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S85 of 1990

B e t w e e n -

THOMAS ESSINGTON BREEN

Applicant

and

BEATRICE LYNNE ESSINGTON BREEN

Respondent

Application for special leave

to appeal

BRENNAN J
DAWSON J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 7 DECEMBER 1990, AT 3.00 PM

Breen 1 7/12/90

Copyright in the High Court of Australia

MR J.W. BLACK, QC: If the Court pleases, I appear with my

learned friend, MR P.L.G. BRERETON, for the

applicant. (instructed by Dunhill Madden Butler)

MR G. BARRY HALL, QC: If the Court pleases, I appear with

my learned friend, MR I. SERISIER, for the

respondent to oppose the application. (instructed

by Harris & Company)

BRENNAN J:	Mr Black?
MR BLACK:	Your Honours, may we hand up brief outlines of

submissions to which are attached authorities to

which it may be necessary to refer.

MR HALL:  Your Honour, we filed some submissions this

morning and I hope the Court has those.

BRENNAN J: Yes, I think we have those. Yes, we have them,

Mr Hall. Yes, Mr Black.

MR BLACK:  Your Honours, it was in 1910 in England that the

Master of the Rolls said, "If the divorce court

treats a wife in some respects worse than a

husband, it undoubtedly treats a husband in a very

important matter worse than a wife inasmuch as it
always requires a husband to provide his wife with
the sinews of war to defend herself".
Notwithstanding the passage of some 80 years and

considerable advances in social and legal matters, the Family Court in Australia seeks to retain that

stigma.

It is our submission that the foundation of

that principle which was in the rule that a woman

could not hold property in her own right has long
since gone and been buried and that the power to
order costs in the Family Court is restricted to

the provisions of section 117.

BRENNAN J:  What was the method by which, in 1910, the court

was able to treat the husband this way?

MR BLACK: Well, we would say, in those days the method was

to order security. Now, that is a very different

matter from what has happened in this case. There

is a clear distinction between security for costs

and direct payment of costs in advance for

expenditure.

BRENNAN J:  And is there such an order here?

MR BLACK:  Yes. The order here is that $45,000 be paid to

the wife's solicitors to be spent by her preparing

her case.

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BRENNAN J: It is not to be paid, I take it, until the

expenditure on preparing the case has been

incurred. Is that the position?

MR BLACK: That is right, but that is not security for

costs. It is quite different.

BRENNAN J:  The difference being?

MR BLACK: That it is advance payment and it has gone.

Security for costs means that at the end of the

case there is in court or in some protected fund an

amount which if necessary and if the result

warrants it can be paid to the other party.

BRENNAN J:  Under the old practice was a wife's solicitor

never able to recover any costs until after

litigation was complete?

MR BLACK: Prior to 1975 a practice had developed of

awarding small sums direct and, in addition, other

sums to be kept in trust until the result of the

case and then pending further order of the court.

It is our submission that that was a wrong

practice. The basis for that was a rule in the New

South Wales provisions in the supreme court repealed by the 1975 Act and there are no current

rules or provisions which in any way relate to

interim costs.

If I can take Your Honours to the nub of it, it should be the first extract in the bundle where

Family
the section is set out - section 117 of the the general provision in subsection (1) which is

that:

Subject to sub-section (2) and section 118 -

which need not trouble us -

each party to proceedings under this Act shall

bear his or her own costs.

Then, 117(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 sub-section (2A) and the Rules of

Court, make such order as to costs and

security for costs, whether by way of

interlocutory order or otherwise as the court

considers just.

(2A) sets out a series of matters which have to be

regarded which need not trouble us at the moment in

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discussing whether that subsection (2) gives the

power to make what we say is an extraordinary order

and it is extraordinary for two reasons: first of

all, it has the potential effect, if not the

desire, of defeating subsection (1) because if

costs are paid and spent in advance they are gone;

secondly, it is trite law, in our submission, that

a solicitor's contract is an entire contract and that he is entitled to be paid in the absence of

any special agreement at the end of the

proceedings.

It is quite wrong, in our submission, for a

court to step in and at the expense of another

party alter the normality of such a contract and
that is what ordering direct advance payment of
costs does. In the absence of clear statutory

authority, we say there is no conceivable basis for

making an order which - - -

DAWSON J: Well, there is a limit to that. I mean, there

might be disbursements and, I take it, this sum

goes to cover those as well.

MR BLACK:  Yes. In relation to instructing experts, yes;

not counsel's fees or legal fees.

DAWSON J: Yes.

MR BLACK: Accountants and the like.

BRENNAN J: That is a matter of contract, is it not?

MR BLACK:  Yes.

BRENNAN J: Between the solicitor and the client.

MR BLACK:  Yes, and the normal contract is that the

solicitor is entitled to payment at the conclusion

of the proceedings.

BRENNAN J:  I do not know whether that is normal at all

these days. After all, the normal contract is one,

if you could call it a contract, which one could

not, of a barrister because he got a brief fee and

a refresher, as I understand it, that is a matter

of antiquated and archaic history these days.

MR BLACK:  I do not step into that delicate field,

Your Honour, as to whether he gets it or what he is

entitled to or how he gets it.

BRENNAN J: All I am saying is that it does seem to me

really take the matter very far to say the ordinary

contract between a solicitor and his client is an

entire contract or one that provides for payment at

the end. Many arrangements these days, I imagine,

Breen 4 7/12/90

between solicitors and clients are done on the

basis of monthly accounts or billable hours.

MR BLACK: In those circumstances I agree. I am just

saying, in the absence of any specific contract,

the normal contract is payable on completion and I

quite agree people should - and I have no doubt

endeavour to get monthly payment or perhaps weekly,

one knows not, no harm in trying. But I am just

saying that in the absence of a special agreement

that would be the normal law and in any event why

should one party, if there is such a special

agreement by the other party, thereby be penalized?

To come back to the more general situation, if

I may, I venture to suggest that any person in the

street if told, "There is a jurisdiction in this

country that can order you to fund somebody else to

sue you", would be greeted with open disbelief and

this is the situation here. It is a most unusual

situation, in the past described as unique and, in

our submission now, by virtue of the terms of the

Act it has gone.

GAUDRON J:  Why is it not an interim maintenance order,

Mr Black?

MR BLACK:	The Full Court has expressly said in one of the cases that costs orders are not to be disguised
under maintenance and they have expressly said so
and that I have referred to in our submissions. It
is a case of Wilson, (1989) FLC which, I think,
will be the second or third last in Your Honours'
bundles.

BRENNAN J: This is the judgment of Mr Justice Jenkyn, is

it?

MR BLACK:  No. There were three separate judgments in

Wilson. It was a case from, I think, Western

Australia and concerned some quite amazing sums of

money and items of expenditure.

The concern arose over an application by the

wife and we find that if I can take Your Honours to

page 77,442 at the top, and this is in the judgment

of Mr Justice Kay. It is No 3, towards the foot of

the left-hand column, this application for

$200,000. What was ordered in relation to that was

$100,000 and we find that at the next page - that

is what the judge ordered and the wife was seeking

to appeal against that. The analysis of the

$200,000 was that $100,000 of it, in very broad

terms, related to costs already incurred, other

expenses, legal and accountancy fees, $5000 for

Christmas entertainment, $12,000 for a holiday in

Melbourne, and we find all this at page 77,449 at

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the foot of the left-hand paragraph and the top of
the right-hand paragraph. It was the extra
$100,000 that was described, as we find on the

right-hand column of page 77,449:

"balance of funds to be used in part payment

of further legal and accounting fees".

Then, at point 5 in that paragraph, Mr Justice Kay says:

Two matters need to be considered. As

counsel for the husband rightly submitted in

my view, one cannot make an order for the

payment of costs under the guise of the

maintenance power, but that an order needs to

be made under the provisions of section 117.

The second thing they say is not appropriate to

this major point as to whether there is any

power at all. That is more appropriate as to if

there is, how is it to be exercised? So, there is

Mr Justice Kay saying:

One cannot make an order for the payment of

costs under the guise of the maintenance

power.

In relation to the next judgment, that is

Mr Justice - - -

GAUDRON J: But I had understood your earlier submission to

be it was not an order for costs and it was not an

order for security for costs.

MR BLACK:  It purports to be an order for future costs which

I am saying you cannot make. It does not come

under any - - -

GAUDRON J: Because it is not an order for costs.

MR BLACK: Well, it purports to be.

GAUDRON J: Yes, but your primary is, it is not an order for

costs. It has to be, does it not, Mr Black,

because an order for costs is clearly within power?

MR BLACK:  Yes. It is not an order that the Act gives power

to make. It is a meaningless order.

GAUDRON J:  I can understand your submission that it is not

an order within the terms of section 117(2).

Accepting that for the moment, by way of

assumption, if it does not fall within 117(2), why

would it not, in any event, as a matter of legal

classification, be an order for interim

maintenance?

Breen 6 7/12/90

MR BLACK:  Because of these decisions that I am taking you

to.

GAUDRON J: Well, they are saying it should not be dressed

up, as it were.

MR BLACK:  His Honour Mr Justice Kay says it is not:

cannot make an order ..... under the guise of

the maintenance power -

says in terms. Mr Justice Strauss deals with this

and he deals with it at the foot of page 77,452,

right-hand column, three lines from the bottom:

The wife claimed the further $101,000 as

"funds to be used in part payment of further

legal and accounting fees". In my opinion,
provision for the wife's legal costs, and
associated expenses such as accountant's fees

for the purposes of the litigation between the

parties is not maintenance.

Then he goes on to set out section 117 and then

says:

In my view section 117 of the Family Law

Act "covers the field" as far as orders for

costs are concerned.

So, there are two of them, with respect, saying

that you cannot get costs, or something called

costs, under the guise of maintenance.

BRENNAN J: But then Mr Justice Strauss goes on to say that

you can get it under section 117, does he not?

MR BLACK:  Yes. Well, he is the one that gave the judgment

in this case.

Then, we have page 77,455, right-hand

penultimate paragraph, Mr Justice Nygh saying:

I fully agree with Kay J's remarks on

counsel for the husband's submission that the

interim maintenance order was an order

relating to practice and procedure and on the

wife's claim for a lump sum of $200,000. I

also agree with his comments on the husband's

cross-appeal.

That could be taken, as we see it, to be agreeing

with Mr Justice Kay's remarks; in any event, with

two of them, we say, probably three.

There, the Full Court in terms are saying, "If

you're seeking a fund on account of costs you have

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to bring yourself within section 117 because that

is the only way you can do it".

Then, what happens next in sequence is that

Poletti, which is the unreported case which should

follow on in Your Honours' bundle - in fact,

Mr Justice Nygh was the judge at first instance and

he made an order calling it a partial property

settlement which is a very different thing. In

their judgment, the court say - and this is at

page 8 of the copy of judgment at about point 7:

We are of the opinion that the order was made properly pursuant to section 80(l)(h).

It might be convenient, just so that Your Honours

are informed about that, to pass up copies of

section 80. Section 80 is, in the Part, entitled

"Property, Spousal Maintenance, Agreements"

and 80(l)(h) which comes over the page:

make a permanent order, an order pending the
disposal of proceedings or an order for a
fixed term or for a life or during joint lives

or until further order;

How that, for what it is worth, fits in with

section 81. It is difficult. That may be a cheap

argument, but 81 says, whatever you do, you try and

reduce litigation between the parties rather than

encourage it and providing the sinews, as it said,

is hardly reducing it.

The spirit of section 117, in so far as it

does relate to costs, clearly relates, apart from

the expression "security" which, as I have said, is

something quite different from what happened here,

relates to proceedings which have taken place and

that includes interlocutory proceedings and costs

relating to what has happened there. We see that

when we look at the terms of, I think, rule 30,

Orders 18 and 19. I do not think I need trouble

you with that because the court in this case - the	Full Court in Breen accepted that the rules had no	reference or relevance to what may be described as
"interim costs". That raises the question, of course, as to what does the expression in 117(2):

subject to ..... the Rules of Court -

mean? Does it mean that the section is subject to

the rules or does it mean that you just have to

bear the rules in mind when you are interpreting

the section?

Breen 8 7/12/90

BRENNAN J:  Would it not mean that in exercising the power

conferred by the section, the rules are to be

observed?

MR BLACK:  Yes. Well, that is one interpretation of what

"subject" would mean. Another interpretation is

that the subsection is subject to the rules.

BRENNAN J: That would be an extraordinary interpretation,

would it not?

MR BLACK:  It would indeed. The point is, of course,

though, that under the previous legislation there

was a rule providing for how a wife or a husband,

of course - because it does not matter which side

it is - would approach the court for an order under

the old provisions and, in our submission, all the
cases pre-1975 proceed on the basis of that old
order. It is most conveniently to be found in the
earlier case of Wilson - which should be about the
third or fourth in Your Honours' bundle - the

decision of Jenkyn J, where he, in a case - this

was an undefended case and one of the parties was

unrepresented and there was an application for what

was called interim costs. He dealt with the

history of the matter. Starting at page 4, he

refers to:

Section 125 of the Matrimonial Causes Act

1959 -

and he sets out the terms of that section. Then he

goes on to say at the top of page 5 that there are

no rules under the 1959 Act. Then, he turns to

sections 127(4) and 127(6), the effect of which, if

I may summarize it, is that if there are no rules

then you look to the practice and procedure in the

State with which you are dealing. Then, he goes on

to identify at point 5:

Rule 143 of the New South Wales Matrimonial

Causes Rules -

and that expressly sets out how a wife - and it is

limited to a wife, that provision - can ask:

for an order directing her husband to pay into

court, or secure the payment of such sum of

money as to the court may seem fit on account

of or to cover her costs of and incidental to

the hearing of the case.

That is not a rule which allows direct payment in

advance. He then goes on to refer to a passage

from McKenzie's Divorce Practice that says there is

a practice grown up:

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to order that a small sum be paid directly to

the wife's solicitor ..... and for a further sum

to be paid into court or secured, or paid to
the wife's solicitor upon trust to abide the

further order of the court.

Now he says that that appears to correctly state

the practice. Despite the fact that later in his

judgment he refers to the case of Richardson, which

was a decision of Mr Justice Sholl, and that case

should be in Your Honour's bundle, the second case

in that bundle, and in Richardson, Mr Justice Sholl

orders security for costs and he says, at page 365:

In so far as I order, in this case, the provision of security with respect to any such

expenses -

this was the costs to the wife travelling from

Singapore -

I emphasize that I do so by way of security

only. It will be for the wife, once the

amount has been secured, to make the necessary

arrangements, knowing that she can obtain
reimbursement ultimately if she does make a

journey here, in fact, and if she gives

evidence, and in fact returns to Singapore.

To provide her with the money in advance seems

to me undesirable and contrary to the usual

practice, as I understand it to exist in

England or New South Wales.

But, despite that decision and despite referring to it in his judgment, Mr Justice Jenkyn said the

opposite.

So, this is a practice which is on the

increase, ordering payment in advance to be spent.
It is a serious problem. It sadly, if one looks at

statistics, is one that potentially affects an

increasing number of the citizens of this country,

be they m~le, be they female. It defeats in

advance the provisions of section 117(1). It is

quite wrong, in our submission, that any court

should be able to order one party to pay costs to

be spent by the other party in advance of the

determination of the rightness or wrongness - - -

DAWSON J:	Why is it wrong?
MR BLACK:	Well, with the result that at the end of the day

those costs are gone, and if they are found to have

been wrongly expended, they will be irrecoverable.

The situation is that it may well be - - -

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DAWSON J: I am sorry, I do not follow that. Are you

suggesting they will be misspent by the legal

MR BLACK:  No, but you see, in the Family Court,

Your Honour, the rules make express provision for

written offers to be made which are not put before

the court. There may be, at the end of the day, a

perfectly proper offer having been made by one

party and the other side shown to have quite

unnecessarily spent the money investigating alleged

red herrings and chasing hares down burrows. The

result may be that the court awards a sum within

the offer originally made and then, in those
circumstances, that is an express fact that the
court takes into account when deciding who should

bear the costs.

DAWSON J: Well that means that it is wrong for costs to be

ordered where they may have been misspent - - -

MR BLACK: Exactly.

DAWSON J:	- - - but that is for the court to supervize.
MR BLACK:	No, with respect -
DAWSON J:	It may be that ..... is rare that an order for

costs should be made but there may be appropriate
cases. It does not go to jurisdiction is what I am

saying.

MR BLACK:	But the court cannot know if there is a written offer or not and cannot judge in advance whether
that is going to be a write-off or it is privileged
information and it cannot be disclosed to the
court. If a trial judge learnt of the contents of
it, he or she would have to disqualify themselves.

BRENNAN J: That may be so, but the problem that has been

put to you is that if this order had been limited

in some way so that it could not be expended, for

example, after the receipt of an offer or expended

only on nominated matters, would you then have an

argument that it is beyond power?

MR BLACK:  Oh yes.

BRENNAN J: Then, your argument does not depend upon the

proposition that it may be misspent.	It must
depend on something else.

MR BLACK:  No, that is an illustration of why it is wrong.

BRENNAN J: That is why it is wrong, but the problem is

whether it is beyond power.

Breen 11 7/12/90

MR BLACK:	That is my blunt point, is that it is beyond power and I am merely using that as an illustration
of the injustice that can be wreaked by such orders
and I just simply say, reading 117(2), would
anybody say that means you can pay costs to the
other side in advance?

The only other illustration I give is if I, as

an impecunious person that was run over in the

street by a city omnibus and came to the court, the

supreme court, and said, "Well, I have no money. They have lots of money. I was on a pedestrian

crossing and I want funds to instruct doctors, to

instruct accountants, to instruct lawyers", there

is no conceivable way in which the supreme court

would say, "Oh yes, you can have some costs in

advance". It just would not get off the ground and

we say here that this is a point of considerable

significance and interest and ought to be

investigated because, as one of the judgments in

the Full Court says, whatever else may be in

dispute, the courts have always guarded jealously

the right to keep a close watch on the amount,

extent and liability to pay costs and this offends
against all those principles. Those are our

submissions, Your Honours.

BRENNAN J:  Thank you, Mr Black. We need not trouble you,

Mr Hall.

The order made in this case may be unusual but

it cannot be said to be beyond the jurisdiction of

the Family Court under either section 117(2) or

under section 74 of the Family Law Act 1975

(Commonwealth).

It is unnecessary to determine whether the

power to make the order falls under section 117(2)

rather than under section 74 (as the decision in

Wilson, (1989) FLC 92-033 suggests). Nor is it

necessary to determine whether the order in the

present case is to be characterized as an order as

to costs or an order as to security for costs.

The order seeks to ensure that, in the

circumstances of the present case, the wife should

be able to prosecute the pending matrimonial

proceedings and should have the funds required to

do so. Such an order made for such a purpose,

though it falls within one or other of the powers

conferred on the Family Court, should be so framed
as to protect the parties from any risk of

injustice arising from the manner in which the

funds are expended. However, in the circumstances

of this case, it is not appropriate to grant

special leave to appeal to consider the form of the

Breen 12 7/12/90

MR HALL:  Your Honour, I would ask for costs. Bearing in

mind the nature of the order made in the court

below and the fact that inevitably an order for

costs on a party and party basis would not

adequately compensate the wife but deplete the fund

that has been awarded to her, I would ask that the

Court consider ordering costs on a solicitor and

client basis.

BRENNAN J:	What do you have to say to that, Mr Black?
MR BLACK:	I would seek to rely on section 117(1), which is

before Your Honours.

BRENNAN J:  The application for special leave to appeal will

be refused and will be refused with party and party

costs.

AT 3.39 PM THE MATTER WAS ADJOURNED SINE DIE

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