FADDEN & FADDEN (COSTS APPEAL)
[2011] FamCAFC 214
•11 November 2011
FAMILY COURT OF AUSTRALIA
| FADDEN & FADDEN (COSTS APPEAL) | [2011] FamCAFC 214 |
| FAMILY LAW – APPEAL – COSTS APPEAL – where the husband appeals against a costs order requiring him to pay the wife’s costs of and incidental to her application for property settlement in the Federal Magistrates Court – where the husband argued that due to the circumstances of the making of the costs order he was denied procedural fairness – where the Full Court found that although there was no error on the part of the Federal Magistrate, nevertheless having regard to the further evidence provided by the husband’s solicitor, the husband had suffered a procedural unfairness in the making of the costs order – appeal allowed – matter re-determined. |
| Family Law Act 1975 (Cth): s 117 Federal Magistrate Court Rules 2001 (Cth): r 21.10 Federal Proceedings (Costs) Act 1981 (Cth) |
| Allesch v Maunz (2000) 203 CLR 172 CDJ & VAJ (1998) 197 CLR 172 D & D (Costs) (No. 2) (2010) FLC 93-435 |
| APPELLANT: | Mr Fadden |
| RESPONDENT: | Ms Fadden |
| FILE NUMBER: | CRC | 314 | of | 2008 |
| APPEAL NUMBER: | NA | 57 | of | 2010 |
| DATE DELIVERED: | 11 November 2011 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Finn, Strickland and Ainslie-Wallace JJ |
| HEARING DATE: | 16 February 2011 |
| DATE OF LAST SUBMISSION: | 12 April 2011 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 29 April 2010 |
| LOWER COURT MNC: | [2010] FMCAfam 412 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Tregilgas |
| SOLICITOR FOR THE APPELLANT: | B a Law Firm |
| COUNSEL FOR THE RESPONDENT: | Mr Priestley |
| SOLICITOR FOR THE RESPONDENT: | F a Law Firm |
Orders
The appeal against Order 1 of the orders made by Federal Magistrate Jarrett on 29 April 2010 be allowed.
The order be set aside and in its place the following order be made:
(a) The respondent husband pay the applicant wife’s costs of and incidental to her application for property adjustment from 23 May 2007 fixed in the sum of $8,095.00.
There be no order for costs in relation to the appeal.
The Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of the costs incurred by him in relation to the appeal.
The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by her in relation to the appeal.
IT IS NOTED that publication of this judgment under the pseudonym Fadden & Fadden (Costs Appeal) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 57 of 2010
File Number: CRC 314 of 2008
| Mr Fadden |
Appellant
And
| Mr Fadden |
Respondent
REASONS FOR JUDGMENT
This is an appeal by the husband, Mr Fadden, against an order for costs made by Jarrett FM on 29 April 2010. The order (Order 1) provided that the husband should pay the costs of the wife, Ms Fadden, which were “of and incidental to the application for property adjustment from 23 May, 2007 fixed in the sum of $10,040.00”.
As will be explained more fully later, the grounds of appeal and the oral and written submissions made in support of them, were directed, for the most part, to the natural justice issues arising out of the circumstances of the making of the costs order, and in particular to the material to which the Federal Magistrate had regard when making the costs order.
For this reason it is necessary for us to record in some detail the history of the proceedings which led to the making of the order. We do so having regard not only to his Honour’s reasons for judgment and other material in the appeal books, but also to the content of an affidavit of the husband’s solicitor, Mr B, sworn on 28 January 2011. We received that affidavit pursuant to an application by the husband to adduce further evidence in support of the appeal. That application was not opposed on behalf of the wife, although she did oppose the appeal.
Relevant history
On 31 October 2006 the wife filed an application for property settlement in the Federal Magistrates Court, with an amended application being filed on 20 May 2007. The application was heard by Scarlett FM on 22 May 2008, and judgment was delivered on 23 September 2008.
On 20 October 2008 the husband filed a Notice of Appeal against Scarlett FM’s orders.
On 26 August 2009 the Full Court of the Family Court made orders and delivered reasons for judgment dismissing the husband’s appeal against Scarlett FM’s orders of 23 September 2008.
On 4 December 2009 the husband filed an application for special leave to appeal to the High Court. That application was ultimately dismissed by the High Court in November 2010.
Meanwhile, on 21 October 2008 the wife had filed an application in the Federal Magistrates Court seeking an order for the costs of the proceedings before Scarlett FM.
That application was apparently not progressed pending the outcome of the husband’s appeal against the property settlement orders to the Full Court. However, on 17 November 2009 it came before Jarrett FM. Only the wife appeared (by her representatives) on that day when the Federal Magistrate made the following directions:
1.That the husband file and serve Submissions in Response within 28 days of the date of this Order.
2.That the wife file and serve Submissions in Reply by no later than 21 days after receipt of the Husband’s Submissions in Response pursuant to Order 1 above.
3.That judgment be reserved in relation to the issue of costs to be considered in chambers without further appearance of either party.
According to the husband’s solicitor (in his affidavit sworn on 28 January 2011), it was only on 17 December 2009 (that is, two days after the expiration of the 28 day period provided for in the orders of 17 November 2009) that the husband received a letter from the wife’s solicitor enclosing the orders of 17 November 2009 together with costs submissions from the wife dated 15 September 2009 and 27 October 2009. The husband then instructed his solicitor “just prior” to the solicitor closing his office for the Christmas holidays.
On 18 January 2010 the husband’s solicitor wrote by email to the Associate to Jarrett FM advising that the husband had only become aware of the directions made on 17 November 2009 on 17 December 2009, and seeking an extension of time to file the husband’s submissions until 29 January 2010. On 18 January 2010 the solicitor for the husband also sent to the solicitor for the wife under cover of a letter explaining the husband’s position, a copy of the letter to the Associate.
On 21 January 2010 the solicitor for the husband sent the husband’s response and submissions to the Court. These documents were given a filing date of 25 January 2010 by the Court.
The matter came before Jarrett FM on Wednesday, 17 February 2010, with both parties being represented apparently by telephone as his Honour was at the Rockhampton Registry of the Court. At the commencement of the hearing his Honour said that he had asked for the matter to be mentioned before him in order to ascertain what applications were before him.
After the solicitor for the husband had advised his Honour that “no formal application” had been filed to extend time for compliance with the directions of 17 November 2009, and also that the extension was not consented to by the wife’s side, the following exchange occurred:
HIS HONOUR: Yes. Well, I don’t understand the notion that you simply write to the court and ask for time to be – why wouldn’t you file a formal application if it’s not otherwise the subject of agreement between the parties? You see, because it then puts the court in a position where I have got no idea what is properly before me.
MR B [sic]: Well, okay, I apologise, your Honour. As to what ---
HIS HONOUR: When can you file such an application, Mr [B] [sic], if you want to bring one?
MR B [sic]: I’m sorry, your Honour.
HIS HONOUR: When can you file such an application if you want to bring one?
MR B [sic]: I could file it immediately, your Honour.
HIS HONOUR: All right. You can do that and I will deal with that application on its merits, having regard to the material that’s filed in support of it …
(Transcript, 17 February 2010, p 2-3)Then after his Honour had raised some concerns which he had with the wife’s solicitor about the length of an affidavit filed on behalf of the wife, the following further exchange occurred:
HIS HONOUR: … Now, Mr [B] [sic], you will file an application for an extension of time by the end of this week?
MR B [sic]: Certainly, your Honour.
HIS HONOUR: Excellent. And, Ms [K], you can have any response to that application and any submissions that you wish to make in relation to it – I’m sorry, Mr [B] [sic], I should say both material and any submissions you want to make in support of that application in writing by the end of the week.
MR B [sic]: Yes, your Honour.
HIS HONOUR: Ms [K], you can do the same and then submissions dealing with that additional cross issue by the end of the next week?
MS K: Yes, your Honour.
HIS HONOUR: Excellent. And then I will decide the matter in chambers. If the parties want an oral hearing after reflecting on the matter, then be sure to include that request in your written submissions and if you request a further oral hearing, then I will give you one, but otherwise I intend to determine all of the outstanding applications in chambers.
(Transcript, 17 February 2010, p 3-4)The husband’s solicitor (who is based on the North Coast of New South Wales) explains in his affidavit sworn 28 January 2011 that the timeframe imposed by the Federal Magistrate posed difficulties because although the Commonwealth Courts Portal, through which documents can be filed electronically, permitted affidavits to be filed, it did not permit the filing of documents such as applications or written submissions. Therefore to be received by the Court on 19 February 2010 at its Lismore or Brisbane Registries, the documents would have to have been sent “on 17 or (possibly) 18 February 2010”. (We agree that it was not possible at the time to file the application which was required to be filed in this case, being an Application in a Case, although we note that it was possible to file an Initiating Application.)
But however that may be, on 19 February 2010 the husband’s solicitor emailed a letter to the Associate to Jarrett FM enclosing copies of an application and submissions which were said to “have been sent to the Court for filing”. Copies of that letter and its enclosures were sent to the wife’s solicitor.
The husband’s solicitor deposes (in his affidavit sworn 28 January 2011) that when he sent the documents to the Associate and to the wife’s solicitor, he directed his then secretary to send the application and submissions to the Court for filing by document exchange, but for reasons which he could not explain, only the application but not the submissions were sent to the Court. The application was only sealed by the Court on 15 March 2010.
The husband’s solicitor also deposes that he received from the wife’s solicitors under cover of a letter dated 18 February 2010, a copy of her submissions, which had been sent “directly” to the Federal Magistrate as they were “unable to be electronically filed”.
On 29 April 2010 Jarrett FM delivered reasons for judgment and made the order that the husband pay the wife’s costs of and incidental to the application for property adjustment from 23 May 2007 fixed at $10,040.00.
The parties’ material relied on in the Federal Magistrate’s reasons for judgment
In dealing with what he described as a “preliminary matter” at the beginning of his reasons, Jarrett FM explained that the wife had commenced her application for costs on 21 October 2008, but it had “remained unresolved” because of the husband’s appeal to the Full Court and then his application for special leave to appeal to the High Court. His Honour then said that the parties had agreed that the costs application should await the outcome of the appeal process. However, he also said that the process was now complete, adding “[t]he High Court has refused special leave …”. That was a factual error on his Honour’s part since the High Court did not in fact dismiss the special leave application until … November 2010.
His Honour then recorded that the costs application had been before him on 17 November 2009 when only the wife appeared. He also set out his directions made that day, including the direction for the husband to file submissions in response “within 28 days”.
His Honour went on to observe that the husband did not comply with that direction, and that he filed nothing until 25 January 2010 when a response and written submissions were filed on his behalf.
After making some comments regarding his concerns as to the length of the wife’s affidavit and its annexures, his Honour referred to the further mention of the costs application before him on 17 February 2010, and he set out the directions which he had made on that day. He then continued:
10.The husband did not comply with the directions. Although, he filed an application on 15 March, 2010 there is no explanation for his failure to file the application in compliance with the directions. No submissions to support any extension of time were filed either.
11.The wife has not filed a response as directed, but did file written submissions on 18 February, 2010 as to why the husband ought not be granted an extension of time …
12.Given the husband’s persistent failure to comply with the directions of the Court, and the lack of any explanation as to the most recent failure, I do not propose to grant any extension of time as sought by the husband. No reasons have been advanced as to why it would be appropriate to grant such an extension. Directions have been made in this matter with which the husband has consistently failed to comply. In the circumstances, I do not intend to have regard to the husband’s written submissions on the wife’s costs application.
Thus it appears that his Honour was under the impression that the husband had only filed his application to extend time (to file his submissions which had been required by 15 December 2009, but were not in fact filed until 25 January 2010) on 15 March 2010 and that he had not filed any submissions in support of that application (as required by the directions made on 17 February 2010). His Honour therefore determined that he would decide the wife’s costs application without regard to the husband’s submissions (which had been filed on 25 January 2010).
His Honour then proceeded to consider and determine in the wife’s favour her application for costs.
The scope and course of the husband’s appeal
The husband’s Notice of Appeal against the costs order (filed 25 May 2010) contained 13 grounds of appeal.
As explained by Counsel for the husband (at paragraphs 15 to 17 of his written submissions filed on 28 January 2011) the thrust of the grounds was that by refusing to have regard to the husband’s documents which had been provided well before 29 April 2010 and by relying only on the wife’s material, the Federal Magistrate had denied the husband natural justice. The husband’s documents, which it was asserted, should have been taken into account included the letter sent by the husband’s solicitor to the Federal Magistrate’s Associate on 18 January 2010, the husband’s response and written submissions filed on 25 January 2010, the application sent electronically to the Federal Magistrate’s Associate on 19 February 2010 (and filed on 15 March 2010), and the submissions in support of that application sent electronically on 19 February 2010.
In addition, certain of the grounds asserted that his Honour had made a factual error in relation to the finalisation by the High Court of the special leave application and that he had erred in refusing to accept the husband’s delayed material when the parties had agreed that the costs application would only be determined after the special leave application was finalised.
It should be noted that no ground of appeal was directed to the substance of the costs order. This might perhaps be explained by the fact that the husband sought in his Notice of Appeal that the costs application should be remitted for re-hearing. This is a matter to which we will return.
When the appeal came before us for hearing on 16 February 2011, we had not been provided with the transcript of the mention before Jarrett FM on 17 February 2010. Particularly given the claims made by the husband’s solicitor (in his affidavit sworn 28 January 2011) concerning the practical difficulties which he faced in filing the application seeking an extension of time in the timeframe provided by the directions made on 17 February 2010, we considered it important to have access to that transcript.
Accordingly, at the conclusion of the hearing of the appeal, we made directions that the transcript be obtained by the Court and provided to the parties, with a timetable for further written submissions directed to the content of the transcript. Such further written submissions were received from the husband on 23 March 2011, the wife on 5 April 2011 and the husband again on 12 April 2011.
Discussion and conclusion in relation to the natural justice complaint
For purposes of the discussion which follows, we accept the evidence of the husband’s solicitor in his affidavit (sworn 28 January 2011) explaining the reasons why the husband did not comply until 25 January 2010 with the directions made on 17 November 2009 (for the filing of a response to the costs application and submissions). We also accept the solicitor’s evidence concerning his endeavours to send to the Court within the required time both the application to extend time (in which to file the response to the costs application and submissions), and the submissions required by the directions made on 17 February 2010.
We also accept for the purposes of this discussion, that his Honour did not have before him when he prepared his reasons for judgment, the husband’s submissions in support of the application to extend time. Nor, of course, would he have had the information that we have concerning the attempts by the husband’s solicitor to comply with the directions made on 17 February 2010.
During the hearing of the appeal there was considerable discussion and speculation concerning the fate of the submissions which the husband’s solicitor emailed to the Federal Magistrate’s Associate under cover of a letter on 19 February 2010. A perusal of the Federal Magistrates Court file by our staff during the appeal hearing failed to locate the submissions or the covering letter.
Therefore, as we have said, we will proceed on the basis that when the Federal Magistrate prepared his reasons for judgment, he did not have available to him the submissions in support of the application to extend time, although he did have that application but it would only have borne a filing date of 15 March 2010.
It appears from his Honour’s reasons for judgment that he was aware of the husband’s response to the costs application and the supporting submissions (both of which were filed on 25 January 2010); however it also appears that he determined that he would have no regard to that material when determining the costs application, apart from noting in paragraph 2 of his reasons that the husband opposed that application.
While at the mention on 17 February 2010, another judicial officer might have accepted and granted an oral application from the husband for an extension of time to file his response to the wife’s costs application, it was certainly within his Honour’s discretion to require the husband to file a formal application and supporting material in relation to it. This is particularly so in circumstances where the application for an extension of time was opposed, and where there was apparently nothing then before his Honour which would have informed him of the reasons for the husband’s delay in complying with the directions made on 17 November 2009.
Similarly, it was within his Honour’s discretion to determine the wife’s costs application without regard to the husband’s material in circumstances where he was apparently unaware of the attempts by the husband’s solicitor to comply with the directions made on 17 February 2010, and was indeed under the impression that the only attempt made on behalf of the husband to comply with those directions had been by filing an application (without any supporting documents) on 15 March 2010.
However, this Court now has the benefit of the evidence contained in the affidavit of the husband’s solicitor (sworn on 28 January 2011), and on the basis of that evidence which explains the husband’s failure to comply with the directions of 17 November 2009 and 17 February 2010, we must conclude that the husband has suffered a procedural unfairness in the making of the costs order which requires our intervention.
In reaching this decision we make clear that our intervention is not required because of any error on the part of his Honour, but rather because of the further evidence provided by the husband’s solicitor in his affidavit (sworn on 28 January 2011). (See CDJ & VAJ (1998) 197 CLR 172 at [109].)
We also observe in passing that we do not consider that there was any substance in the complaint contained in the husband’s grounds of appeal concerning his Honour’s mistake in relation to the date of dismissal by the High Court of the husband’s application for special leave to appeal. Although his Honour was clearly mistaken about that matter, it is not a mistake which would carry any material consequence for his Honour’s decision.
The future course of the costs application
Towards the conclusion of the hearing of the appeal, we raised with Counsel for the husband the possibility of a re-determination of the costs application by this Court on the material which both parties had provided (or endeavoured to provide) to the Federal Magistrate, in the event that we found substance in the natural justice complaint. The purpose of this proposal was to save further costs to the parties and further expenditure of court resources over a relatively small amount of money. Counsel’s response to our proposal was as follows:
The husband hasn’t articulated in any written submissions what his position would be if the court found in his favour and dealt with the appeal as a re‑exercise of discretion by this court. So whilst my learned friend quite properly has put in his submissions what he says should happen, we don’t have that in our written submissions, apart from the written submissions that originally went before the federal magistrate. I could deal with that by providing your Honours within a short period of time some short written submissions on our side about the things that your Honours may need to take into account, but can I just say this in relation to it. There’s been a long history in this case, as my learned friend has said, but we’re going back to determine a costs issue from a trial which took place in May 2008 and which was determined in September 2008.
Some of the material that was filed in terms of the costs argument before the federal magistrate was filed by the wife as late as 2008, from the appeal books, and the husband’s material was filed in January of last year, so some of that material is dated. As I understand it of what the High Court said in Allesch & Maunz, is that if your Honours were going to re‑exercise the discretion reposed in the trial judge, then your Honour would need to consider – and I don’t have those instructions with me, especially in terms of section 117(2A)(a) – what the husband’s current financial situation is. Your Honours would need to be appraised of what the husband’s current financial situation is to re‑exercise the discretion that was reposed in the original trial – federal magistrate. But what I would say to your Honours is that – two final points in relation to that.
The husband’s appeal was always in relation to the procedural matters and we didn’t direct our attention, wrongly or not, to forensically analysing a fair amount of material in relation to how would you arrive at costs in this case. If your Honour was minded to re‑exercise – to allow the appeal and re‑exercise the discretion yourselves in a matter that probably should really go back to a federal magistrate because it hasn’t been dealt with on its merits, it’s been dealt with not on its merits, but on a hearing which really involved the wife’s material, but if your Honours were saying, despite it not being heard on the merits and the husband’s appeal was successful, then if your Honours would allow me just a short period of time, maybe 14 days, to provide some short written submissions just so I can have my instructing solicitor’s input into those matters, and they wouldn’t go into major matters of evidence, but your Honours would need to be aware of what the husband’s present financial circumstances were and any of the other matters under subsection 117(2A) that I haven’t discussed in any detail with my solicitor, and I think that would ‑ ‑ ‑
(Transcript, 16 February 2011, p 38-39)
We understood from those submissions, and indeed subsequently clarified with Counsel for the husband, that if we were minded to re-determine the costs application, then the husband may want the opportunity to put before us updating evidence pursuant to the principles in Allesch v Maunz (2000) 203 CLR 172.
Therefore in the directions which we made at the conclusion of the hearing of the appeal, in which we provided for the parties to make further written submissions in relation to the transcript of the mention before Jarrett FM on 17 February 2010, we also included provision for the husband to advise if, whether in the event the Court was minded to allow the appeal and re-determine the matter, he would wish to rely on any updating evidence pursuant to the principles of Allesch v Maunz (supra).
The written submissions filed on behalf of the husband on 23 March 2011 were directed virtually exclusively to issues relating to or arising out of the transcript of the hearing on 17 February 2010. Only in the last paragraph of those submissions was there reference to the future course of the matter, with it there being submitted “that the appeal should be allowed and the matter remitted to the Federal Magistrates Court for re-determination by a Federal Magistrate other than Federal Magistrate Jarrett”. It was further submitted that it would be appropriate for Scarlett FM, who had originally dealt with the substantive property matter, to now deal with the costs application.
In responding submissions filed on behalf of the wife on 5 April 2011, her Counsel made the following persuasive submissions:
10.The first point to note is that by the silence of his latest submissions, the Appellant Husband has indicated he does not wish to rely on any updating evidence due to the Allesch v Manuz principle. The intent of the direction made by the Court was, it is submitted, to enable the Court if possible to deal with this fairly minor matter without the need for any further delay and in particular, costs. It is sobering to note that the trial of the substantive matter occurred almost 3 years ago in May 2008.
11.The failure of the Respondent to indicate a desire to rely on any updating evidence should not be viewed as an omission. The Appellant is clearly aware of the hearing that occurred on 16th February 2011 and has chosen not to inform the Court of any need for any updating evidence.
12.The Court therefore is in the perfect position to decide this matter. The submissions of the parties have been made both in the initial application for costs and by the Respondent in her initial submissions in writing to this Court. The Full Court will no doubt take into consideration the submissions of the Appellant that were not considered at first instance. It is noted that the Counsel for the Appellant indicated that he wished to have an opportunity to reply to the Respondent’s submissions made to the Full Court on this point. There is no opposition to a short period of time being given to the Appellant to make such submissions.
Notwithstanding those submissions from the wife, the husband’s submissions in reply (filed on 12 April 2011) in relation to the future course of the matter again said only:
…
The Appellant contends that the Appeal should be allowed and the matter remitted to a Federal Magistrate – most preferably Federal Magistrate Scarlett – for re-determination.
As no good reason has been put forward on behalf of the husband as to why this Court should not re-determine the costs application on the basis of the submissions of the parties that were before, or should have been before, Jarrett FM, we propose in the interests of proportionality to re-determine the costs application ourselves.
We will do so on the basis of the wife’s written submissions filed 15 September 2009 and 27 October 2009, and of the husband’s written submissions filed 25 January 2010. It should be noted that it was stated in the second paragraph of the husband’s submissions that they were made in response to the affidavits of the wife’s solicitor (Ms C) sworn on 17 October 2008 and 7 September 2009 (both of which were in the appeal books) as well as the two sets of written submissions from the wife.
Re-determination of the wife’s application for costs
By her application for costs filed 21 October 2008 the wife sought an order that the husband pay her costs and disbursements in relation to the property adjustment proceedings “on an indemnity basis from 4 May 2006 to date as agreed or assessed”. (It appears from paragraph 13 of the Federal Magistrate’s reasons for judgment of 29 April 2010 that the significance of 4 May 2006 is that on that day the wife’s solicitor wrote to the husband before proceedings were instituted offering to settle the property dispute on certain terms.)
By his response filed 25 January 2010 the husband sought that the wife’s application be dismissed.
It must be said at the outset that there would not appear to be any “extraordinary” circumstances about this case which would warrant an order for costs to be awarded on an indemnity basis if a costs order is to be made. Indeed we note that nothing contained in the wife’s submissions filed on 15 September 2009 and 27 October 2009 would appear to address the recognised criteria for an award of indemnity costs. (See D & D (Costs) (No. 2) (2010) FLC 93-435 and the earlier authorities there cited.)
Each party recognised in their respective written submissions that s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that each party is to bear his or her own costs unless there are circumstances which justify an order for costs, having regard to the matters contained in s 117(2A) of the Act. Each party’s submissions addressed in considerable depth the matters in s 117(2A) which could have relevance in the present case.
The wife’s submissions of 27 October 2009 set out a useful background to her costs application, which appears not to be challenged in the husband’s submissions, and which we now summarise as follows:
·The major assets of the parties were two properties located at Q Road on the North Coast of New South Wales, one of which was the former matrimonial home, and another property at M Street on the North Coast of New South Wales, in which the wife resided at the date of the trial.
·The parties were directors of a company known as Fadden Pty Ltd, through which a sawmilling business had been conducted.
·By her initiating application for property settlement filed 31 October 2006 the wife sought orders that would see:
1. the Q Road properties be transferred to the husband and the M Street property be transferred to the wife;
2.all mortgages be refinanced in the sole name of the husband;
3.the company be under the sole control of the husband and with appropriate indemnities being provided by the husband to the wife in respect of the company; and
4.the husband pay the wife a cash adjustment of $308,000.00
·By his response filed 10 April 2007 the husband sought the same orders in respect of the real property and the company, and a refinancing of the mortgage on the Q Road properties, but he sought that there be no provision for a cash adjustment to the wife.
·In an amended application filed on 23 May 2007 the wife reduced the “cash adjustment” to $250,000.00. Her application otherwise remained as it was in its major respects, though additional orders were sought in respect of burial plots, joint bank accounts, and personal effects and furniture.
·By a further amended application filed in Court on 20 May 2008 the cash adjustment sought by the wife was changed from $250,000.00 to $300,000.00.
·Also on 20 May 2008 an offer to settle was served on the husband in the same terms as the further amended application, save that as noted in the reasons for judgment of Jarrett FM (paragraph 19) but not recorded in the wife’s submissions of 27 October 2009, the cash payment sought was changed back to $250,000.00.
Before referring further to the parties’ submissions in support of, and in opposition to, the costs order, it will be instructive to explain the division of property, which was made by Scarlett FM in his reasons for judgment delivered on 23 September 2009.
His Honour found the net value of the parties’ assets to be $888,128.55. He assessed their contributions at 55 per cent to 45 per cent in favour of the wife, and then determined that there should be a further adjustment of 10 per cent in her favour for the relevant s 75(2) matters, resulting in a proposed overall division of 65 per cent to 35 per cent in favour of the wife. But then turning to consider what would be a just and equitable outcome, his Honour continued:
52.Sub-section 79(2) provides that the Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. A just and equitable outcome has to be considered in percentage terms but rather in terms of the assets that the parties would ultimately hold (Russell & Russell; Phillips & Phillips). (Footnotes omitted)
53.The orders to be made will involve each party retaining a house to live in. The husband will receive real estate of much greater value. Each party will have a car. The wife will receive a sum of money. The husband has conceded that the wife may receive the items of personalty she seeks as well as the burial plots.
54.65% of the net value of the assets would give the wife more than she has in fact asked for in her amended application that was filed in Court on the date of the hearing. I am not satisfied that this would be just and equitable in all the circumstances. Accordingly, I propose to order that the wife should receive the items that she seeks in her amended application, being:
(a)[M Street, on the North Coast];
(b)The sum of $300,000.00;
(c)The furniture and other items which the husband conceded during the hearing;
(d)The burial plots, which the husband also conceded during the hearing;
(e)The Ford Falcon motor vehicle in her possession;
(f)Her superannuation; and
(g)The bank and other accounts in her name.
55.The husband will receive the balance.
Thus, in summary, Scarlett FM’s orders provided for the husband to receive the Q Road properties (subject to a mortgage) and for the wife to receive the M Street property together with a cash sum of $300,000.00.
In the wife’s submissions (filed 27 October 2009) it is asserted, correctly it will be noted, that the orders made by Scarlett FM were more favourable to her than those sought in her amended application filed on 23 May 2007 (which was approximately one year before the hearing) and more favourable than the offer to settle filed at the commencement of the hearing. It is thus submitted on her behalf that “the costs suffered by the wife have been wholly unnecessary, and were necessitated by the conduct of the husband in refusing to accept the wife’s offer …”.
It is, however, acknowledged in the wife’s submissions that there was what was termed “a peculiarity” in Scarlett FM’s judgment in that although he had determined that the wife should receive 65 per cent of the net assets, his orders resulted in her only receiving approximately 54 per cent to 55 per cent of those assets. Thus, it is acknowledged on behalf of the wife that it might be said that she did not achieve the result which she sought. But it is then contended for her that “what the parties were truly contesting was whether a payment of cash should be paid to the wife”, and in this the wife was successful.
For his part, the husband concedes (on the third last page of his submissions filed on 25 January 2010) that in the amended application filed by the wife on 23 May 2007 she sought orders less favourable to her than those which his Honour eventually made. However, it is then submitted that had the “true” value of the assets been relied on by the Court, a 54 per cent division would have resulted in the wife receiving a payment of less than $250,000.00.
We understand the reference in the husband’s submissions to the “true” value of the assets to be a reference to the contention made elsewhere in his submissions that Scarlett FM “overstated” the value of the husband’s savings (at the time of hearing) by some $100,000.00, with it being the husband’s further contention that the net value of the assets should have been found to be $792,425.00.
The difficulty which these submissions by the husband must face, is that his assertion that the Federal Magistrate erred in his calculation of the net value of the assets was raised before, considered in depth, and rejected by the Full Court, which determined his appeal against the Federal Magistrate’s orders. This fact is acknowledged in the husband’s submissions, but it is nevertheless asserted that he can continue to rely on his complaint regarding the Federal Magistrate’s calculation of the value of the property in the context of the costs application.
We do not agree that it is open to the husband to continue to challenge the Federal Magistrate’s calculation of the net value of the property following the Full Court’s conclusion that his Honour did not err in that calculation (save in respect of a small amount in the order of approximately $2,500.00, which in any event the Full Court found to be “de minimis” in the overall circumstances of the case). Accordingly, for the purposes of this costs application the success, or lack of success, of the parties, and the relevance of any application and/or offer would have to be considered against the value of the parties’ property as determined by the Federal Magistrate (although the husband could perhaps rely on his understanding of the value of the property in seeking to establish that it was reasonable for him to reject particular offers from the wife).
It is further submitted on behalf of the husband that he “could not have contemplated” that the Federal Magistrate would make an adjustment of 10 per cent in favour of the wife on account of the “s 75(2)” matters. It is also submitted that such an adjustment “was outside the usual range”.
Again it is to be noted that the Full Court, which determined the appeal against the Federal Magistrate’s orders, was not prepared to interfere with his Honour’s s 75(2) adjustment. But perhaps even more significantly for present purposes, that Full Court noted (at paragraph 106 of the reasons) that ultimately the 10 per cent adjustment had little impact given that the Federal Magistrate effectively reduced the wife’s entitlement from 65 per cent to 54 per cent. For that reason also, the “s 75(2)” adjustment is not a matter that could assist the husband in the context of the present application.
As the summary of the history of the applications earlier set out shows, and as was submitted for the wife, the real issue or dispute in this case was whether there should be a cash payment to the wife, the parties being otherwise in agreement about the distribution of their major assets. Ultimately, the husband was unsuccessful on the significant issue of the wife’s entitlement to a cash payment. Moreover, under the Federal Magistrate’s orders (affirmed by the Full Court) he ultimately had to pay the wife the sum of $300,000.00 when over a year earlier on 23 May 2007 her amended application had sought only $250,000.00. These, in our view, are circumstances which, having regard to paragraphs 117(2A)(e) and (f), would justify an order for costs in the wife’s favour.
The amount of costs to be paid
In the interest of saving the parties’ the expense of a formal assessment, we consider that we should assess the costs and that we should do so by adopting (save in one respect) the assessment made by Jarrett FM under Rule 21.10 of the Federal Magistrates Court Rules 2001 (Cth). Jarrett FM’s assessment (contained in paragraph 36 of his reasons) was as follows (original emphasis):
Stage 3: Up to and including $1,465.00
conciliation conferenceStage 5: Preparation for final $3,750.00
hearing
For a 1 day matter:Stage 6: Final hearing costs for
solicitor
Attendance at hearing (Counsel) $2,640.00
To take judgement and explain orders $240.00Stage 2: Interim or summary hearing $1,465.00
(this application for costs)
Plus: Court attendance (17.11.09)$240.00
Plus: Court attendance (17.02.10)$240.00Total $10,040.00
It will be seen that the last three amounts included in the Federal Magistrate’s assessment relate to the wife’s application for costs. His Honour gave no reasons as to why he determined that in relation to the costs application there should be a departure from the general rule that each party bear their own costs of proceedings under the Act. But it can be reasonably safely assumed that he did so because of the wife’s success in relation to that application and his perceptions of the husband’s non-compliance with directions in relation to the determination of the application.
However, we have earlier in these reasons accepted the evidence of the husband’s solicitor explaining why the husband had not complied with such directions, with the result that his apparent non-compliance cannot be relied upon to support an award of costs against him in relation to the wife’s application for costs.
We do not consider that the wife’s success in relation to the costs application would of itself justify an order for costs in relation to that application. This then is the one respect in which we would not adopt Jarrett FM’s assessment.
That assessment would therefore be reduced by $1945.00.
We will therefore order that the husband pay the wife’s costs of and incidental to her application for property settlement as from 23 May 2007 (being the date of the wife’s amended application) fixed in the sum of $8,095.00. Our proposed alteration of Jarrett FM’s assessment will require the appeal against his Honour’s order to be allowed. Having allowed the appeal, we will set aside and substitute our own order for his Honour’s order.
Costs of this appeal
Having regard to the fact that our intervention with the Federal Magistrate’s orders has been made necessary for procedural fairness reasons, which (even if caused through no fault of the Federal Magistrate) can be categorised as an error of law, and having regard also to the submissions of both Counsel at the hearing before us, there will be no order for costs in relation to the appeal and each party will receive the appropriate certificate under the Federal Proceedings (Costs) Act 1981 (Cth).
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, Strickland and Ainslie-Wallace JJ) delivered on 11 November 2011.
Associate:
Date: 11 November 2011
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