Falkner & Candle
[2021] FedCFamC1F 66
•21 September 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)Falkner & Candle [2021] FedCFamC1F 66
File number(s): PAC 623 of 2018 Judgment of: TREE J Date of judgment: 21 September 2021 Catchwords: FAMILY LAW – STAY APPLICATION – INTERLOCUTORY INJUNCTION – SECURITY FOR COSTS – ENFORCEMENT – Where the wife seeks a partial stay of property settlement orders requiring her to pay money to the husband – Where the wife has potential costs applications against the husband – Where the partial stay can be characterised alternatively as an interlocutory injunction or security for costs application – Balance of convenience – Where weighing the relevant matters would not favour a stay, interlocutory injunction or security for costs – Where husband’s application for enforcement must succeed – Costs ordered in favour of husband. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.02
Cases cited: Aldridge & Keaton (Stay Appeal) (2009) FamCAFC 106
Australian Broadcasting Corporation & O’Neill (2006) 227 CLR 57; [2006] HCA 46
Colgate-Palmolive Company & Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Luadaka v Luadaka (1998) FLC 92-830; [1998] FamCA 1520
Muldoon & Carlyle (2012) FLC 93-513; [2012] FamCAFC 135
Yunghanns v Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Division: Division 1 First Instance Number of paragraphs: 45 Date of hearing: 15 September 2021 Place: Cairns (via video link) Counsel for the Applicant: Mr Gardiner Solicitors for the Applicant: Coleman Greig Lawyers Counsel for the Respondent: Mr Othen Solicitors for the Respondent: Jano Family Law ORDERS
PAC 623 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS FALKNER
Applicant
AND: MR CANDLE
Respondent
ORDER MADE BY:
TREE J
DATE OF ORDER:
21 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.The time for compliance with Order 1 of the orders of Foster J made 29 April 2021 be enlarged to 4.00 pm on Friday 24 September 2021.
2.Otherwise the husband’s Application in a Case filed 3 August 2021 be dismissed.
3.The wife’s Response to Application in a Case filed 2 September 2021 be dismissed.
4.Paragraphs 1, 2, 3 and 6 of the wife’s Amended Application in a Case filed 2 July 2021 be dismissed.
5.The wife pay the husband’s costs of and incidental to his Application in a Case filed 3 August 2021.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Falkner & Candle has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
TREE J:
INTRODUCTION
On 29 April 2021, Foster J made final property settlement orders between Ms Falkner (“the wife”) and Mr Candle (“the husband”). Pursuant to Order 1 of those orders, the wife was to “pay to the husband…the sum of $604,168 less any amount outstanding from the husband to the wife in respect of any costs order together with interest accrued thereon within three months from this date”. It is not in dispute that the wife has not done that, but rather has only paid to the husband $204,168. That is because she wishes to retain the $400,000 balance until her outstanding application for costs against the husband in relation to the property settlement proceedings, and any application she may make for costs against the husband in the event that his subsequent appeal against the orders of Foster J is unsuccessful, have been determined. She calculates that the total of her indemnity costs for both the first instance proceedings and the appeal are about $400,000.
To formalise that position, by her Amended Application in a Case filed 2 July 2021, the wife sought a partial stay of the 29 April 2021 orders to the extent that they required her to pay the husband the $400,000 balance. For his part, by Application in a Case filed 3 August 2021, the husband sought enforcement of the orders of Foster J by requiring the payment of the $400,000 plus interest. In her Response to that Application in a Case, the wife again sought a partial stay of the 29 April 2021 orders as contained in her 2 July 2021 Amended Application in a Case.
On 15 September 2021 I heard the parties’ competing applications and reserved my decision. This is that decision and the reasons for it.
BACKGROUND
The trial before Foster J concluded on 6 April 2021, with judgment being delivered on 29 April 2021. As well as the payment by the wife to the husband of $604,168 (subject to adjustment for interest and costs) there were obligations imposed upon the husband to transfer his interest in a particular company to the wife. It is not in dispute that the husband has complied with all his obligations under the orders of Foster J.
On 27 May 2021 the husband filed a Notice of Appeal from the orders of Foster J, extending to some ten grounds. Those challenges include allegations of a denial of natural justice and/or procedural fairness, inadequate reasons, an erroneous notional adding back in the balance sheet of post separation payments to the husband, as well as challenges to the weight which the primary judge gave to relevant considerations.
On 28 May 2021 the wife filed an Application in a Case seeking that the husband pay her costs of and incidental to the property settlement proceedings on an indemnity basis. On 28 June 2021, Foster J had ordered that that Application in a Case “[b]e listed on a date to be advised following the outcome of the appeal”. That precipitated the wife filing her Amended Application in a Case on 2 July 2021, seeking the relevant stays which I have previously adverted to.
The time for the payment of the $604,168 (albeit subject to the adjustments contemplated in the orders of Foster J) was 29 July 2021, and it is common ground that $400,000 of that amount plus accrued interest has not been paid by the wife. That precipitated the husband filing his 3 August 2021 Application in a Case seeking enforcement.
Foster J retired on 12 August 2021, with both applications pending. They were subsequently listed for determination before me.
THE WIFE’S APPLICATION
Overview
Although couched as an application for partial stay of the orders of Foster J, that is not the only way to characterise the wife’s application. It can also be seen as seeking a prohibitory interlocutory injunction, restraining the husband from accessing and utilising the monies which by now ought to have been paid to him, and hence his own property. Alternatively it can also be seen as seeking both a prospective and retrospective application for security for costs. It is useful, given the relatively unusual nature of the wife’s application, to consider her application through all three prisms before determining whether, ultimately, the discretion that I have should be exercised as she seeks.
Viewed as a stay
Ordinarily, where there is an appeal on foot, stays are brought by an appellant anxious to ensure that their appeal is not rendered nugatory, for instance, by preserving the assets which are the subject of the appeal. This is not such an application. Rather it is an application to partially stay orders pending the outcome of both an extant costs application in the first instance proceedings, and a prospective costs application in the appeal.
In Aldridge & Keaton (Stay Appeal) (2009) FamCAFC 106 at [18] the Full Court addressed the relevant considerations engaged when the stay was pending the determination of an appeal. Although this is not such a stay application, by reference to the considerations therein articulated, the following appear to be the relevant considerations in this particular context:
(a)The applicant needs to establish a proper basis for ordering a stay, however special or exceptional circumstances are not required;
(b)Ordinarily a person who has obtained a judgment is entitled to the benefit to that judgment, and entitled to presume it is correct;
(c)The bone fides of the applicant;
(d)A stay would usually be granted on terms that are fair to all parties. This may involve a court weighing the balance of convenience in the competing rights of the parties;
(e)Some preliminary assessment of the strength of the applicant’s case which the stay is intended to protect should be undertaken;
(f)The length of time of the operation of the likely stay is relevant.
Addressing those considerations, plainly as the wife’s counsel properly conceded, the onus is on the wife to establish a proper basis for the stay. Her contended basis is that it is necessary to preserve the $400,000 to meet potential orders for indemnity costs in both the property settlement proceedings and the appeal. That necessarily puts the focus on the merits of her current and anticipated applications for costs, which I shall address shortly.
Here the wife does not contend that the judgment the subject of the husband’s appeal is incorrect, and therefore prima facie the husband is entitled to the benefit of that judgment, notwithstanding his appeal therefrom.
The husband contends that the stay application is a continuation of the wife’s financially controlling behaviour, whereas the wife says her application is intended to secure funds against which any costs order might be made from dissipation. I am prepared to assume the wife is acting bona fide.
The balance of convenience here is a problematic matter. The wife says it favours her, to ensure that any victory she may have in her costs applications is not pyrrhic; on the other hand the husband says that he is entitled to the funds, and that by virtue of earlier orders, he is no longer the owner of a residential dwelling, and inferentially says he may wish to purchase one.
It is not possible to conclude affirmatively that any order for costs that the wife may be successful in obtaining hereafter would be wholly thwarted by releasing the $400,000 to the husband, particularly given that his appeal is presently listed for hearing on 3 November 2021. That is because even if the husband does have alcohol, drug and gambling issues as the wife contends (albeit denied by the husband), it would be quite a remarkable feat to make $400,000 disappear by that time, or more likely, within some months thereafter allowing for the delivery of the appeal reasons and the subsequent determination of the wife’s costs applications.
But even if it be many months before the costs position is clarified, the size of the amount in question is so large as to suggest its complete dissipation in that time is unlikely.
Ultimately it seems to me that the balance of convenience does not favour a stay. I place particular weight upon the fact that, as I shall shortly explain, the wife’s entitlement to any costs – much less indemnity costs of both the property settlement proceedings and the appeal – is moot, whereas the husband’s entitlement to the monies the subject of the stay is presently clearly established by the 29 April 2021 orders.
The strength of the wife’s applications for costs must necessarily start with a consideration of s 117 of the Family Law Act 1975 (Cth) (“the Act”), which establishes a default position that each party should bear their own costs. Even if circumstances justifying an order for costs are established, there is the distinct possibility that a costs order may only operate from a certain date, or only apply to a particular period or event, and more, usually any costs order is made on a party/party basis, not on an indemnity basis, as the wife is claiming here.
In order to justify the making of an order for costs on a basis other than party/party costs, all that is required are particular facts and circumstances of the case in question warranting the making of such an order (Yunghanns v Yunghanns (2000) FLC 93-029 adopting Sheppard J in Colgate-Palmolive Company & Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) 46 FCR 225). That said, an order for indemnity costs is a very great departure from the normal standard, albeit such an order remains wholly compensatory and not punitive (Muldoon & Carlyle (2012) FLC 93-513 at [115]). Examples of where indemnity costs have been ordered include cases brought in clear disregard of settled law or established facts.
Whilst the wife says that the husband has from time to time misconducted himself (for example, by not attending court events and by not making full disclosure) and lists a number of other matters, even cumulatively, they do not appear to be the sorts of matters which would ordinarily justify indemnity costs, or indeed necessarily costs of the entire proceedings even on a party/party basis. Indeed some, for instance, lodging caveats against various properties and posting derogatory comments on social media, are probably quite irrelevant to any form of costs order.
The wife does point to some offers which she made to settle the proceedings which, it seems, would have seen a more generous percentage division outcome to the husband than ultimately prevailed. However, I cannot presently establish whether the monetary outcome was worse than the husband ultimately achieved, given that the parties were likely dealing with different valuations for the parties’ business at the time of those offers than that which prevailed at trial, but also, because the wife thereafter resiled from certain of those offers and then subsequently put lower offers. Further, some of the offers saw the time for payment to the husband stretch over five years. In any event, whilst failing to beat an offer might form a basis for an order for costs, without more, it is unlikely to found a sufficient basis for indemnity costs.
That then brings into focus the fact that the wife has not deigned to detail her costs in any way other than to say that she has paid her solicitors approximately $360,000 in the property settlement proceedings, and thinks that the appeal may cost her about $25,000. In a sense she has brought her application on an all or nothing basis based upon an indemnity costs claim, not a party/party costs claim. It is not possible for me to discern from the material what her party/party costs might be, and more, what they were subsequent to various offers, and what parts might be attributable to the husband’s alleged misconduct. The wife’s counsel’s submission, that I could simply select a figure, would nonetheless need to be based on a sufficient evidentiary foundation, which here there simply is not.
My preliminary assessment of the wife’s prospects of obtaining orders for $400,000 in indemnity costs is that it is slight. She likely has better prospects of some order for party/party costs, but I cannot presently conclude what work might be included within the ambit of such orders, much less what its value might be.
The length of time for which the stay may operate could be considerable. Although the appeal is to be heard on 3 November 2021, judgment will presumably be reserved. Once it is delivered, assuming any applications for costs are then also determined, there will nonetheless still be the wife’s extant application for costs of the primary proceedings to be determined. The material in support of that might be considerable, and the hearing difficult, especially given the retirement of Foster J means another judge will need to become familiar with the whole matter. Again, a reserved decision is certainly on the cards.
Without being unduly pessimistic, it could be even more than nine months until the dust settles. If costs are ordered, but need assessment, it could be closer to 12 months. That is a long time to keep someone from their property merely to accommodate the possibility that the wife may succeed in her application for costs.
Weighing all of those matters in the balance does not, viewing the matter purely as a stay application, justify an order staying the orders of the trial judge to the extent of $400,000 pending the outcome of the wife’s costs applications, nor in any (presently unascertainable) lesser sum.
Viewed as an injunction
As I have indicated, on one view, given that the $400,000 the subject of the application is indisputably the husband’s, what the wife is seeking to do is to restrain him from accessing it and dissipating his property. In that sense she is seeking something akin to an interlocutory injunction.
In Australian Broadcasting Corporation & O’Neill (2006) 227 CLR 57 the High Court affirmed that the test for an interlocutory injunction involves a consideration of the strength of the applicant’s case, together with the balance of convenience. The strength which the applicant’s case must reach is “a sufficient likelihood of success to justify in the circumstances” making the injunction (at [65]). Further, ordinarily in support of an interlocutory injunction, an undertaking as to damages is a condition for the grant of relief.
I have already addressed the merits of the wife’s application for indemnity costs, and particularly noted that she primarily seeks the total of her indemnity costs of both the trial and the appeal. On the present material I could not be satisfied that her claim to all of the $400,000 is a strong one. Likewise, I cannot presently ascertain any likely quantum of any costs orders which the wife may succeed in obtaining for party/party costs, although her chances of getting orders on a party/party basis are better than those of her getting orders for indemnity costs.
Further I have noted that the balance of convenience does not favour a stay.
Finally no undertaking as to damages was offered by the wife. Rather she accepts that she would be obliged to pay interest on the outstanding funds, but that may not fully compensate the husband for the loss of the use of monies which are otherwise plainly his.
Viewed as an interlocutory injunction, the wife’s application would fail.
Viewed as security for costs
As I have noted, on one view, the wife is seeking retrospectively that the husband provide security for her indemnity costs of the entire property settlement proceedings. Further, viewed practically, she is seeking security for her indemnity costs of the husband’s appeal.
Section 117(2) of the Act provides:
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), (5) and (6) 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.
Section 117(2A)(a) requires the court to have regard to, amongst other things, the financial circumstances of each of the parties to the proceedings.
In Luadaka v Luadaka (1998) FLC 92-830 at [62] the Full Court (Ellis, Finn and O’Ryan JJ) said:
The purpose of an order for security is to secure justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other…
Rule 12.02 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) sets out matters that the court may consider in deciding whether to make an order for security for costs, as follows:
(a)the applicant's financial means;
(b)the prospects of success or merits of the application;
(c)the genuineness of the application;
(d)whether the applicant's lack of financial means was caused by the respondent's conduct;
(e)whether an order for security for costs would be oppressive or would stifle the proceeding;
(f)whether the case involves a matter of public importance;
(g)whether a party has an order, in the same or another proceeding (including a proceeding in another court), against the other party for costs that remains unpaid;
(h)whether the applicant ordinarily resides outside Australia;
(i)the likely costs of the proceeding;
(j)whether the applicant is a corporation;
(k)whether a party is receiving legal aid;
(l)any other relevant matter.
By reference to those considerations:
(a)the wife is in a far better financial position than the husband;
(b)the trial has concluded, but it is unclear who was the “winner,” assuming that there was one. The appeal cannot be said to be completely devoid of merit;
(c)I am prepared to assume the wife is genuine in her application;
(d)the wife has recently paid the husband over $200,000, so he could not be said to be wholly without means, but it appears he has likely dissipated most or all of the monies previously paid to him. That cannot be said to be the wife’s fault;
(e)the trial has concluded, and an order would not likely stifle the appeal;
(f)no matter of public importance was raised by the trial, or is raised in the appeal;
(g)no costs orders remain unpaid.
(h)both parties are Australian citizens;
(i)I only have the wife’s bare assertion as to her past and likely future costs, and only quantified on an indemnity basis;
(j)no corporation is a party;
(k)neither party has legal aid;
(l)there are two other relevant matters. Firstly, no application for security for costs of any part of the property proceedings was made, perhaps because the wife was the applicant. But on a practical level, what the wife is now seeking to do is, after the litigation has concluded, obtain an order for such security. More, no such application was included in the articulated relief which she sought before the primary judge at trial, although the prospect of a subsequent claim for costs, to be taken from any ordered payment to the husband, may have been foreshadowed in submissions. That is consistent with her now seeking to undo the consequences of her forensic decision to not bring an application for security for costs prior to the trial, or indeed seeking an order quarantining any payment to the husband for her likely costs of trial.
The second is, as I have already concluded, that the wife’s prospects of success in obtaining orders for indemnity costs appear slight, and I cannot determine any likely quantum of party/party costs orders that may be obtained by the wife.
Weighing those matters mandates the conclusion that, insofar as the wife’s application should be viewed as an application for security for costs, it is without merit.
Evaluation
No matter which prism the wife’s application is viewed through, I would decline to make the orders which she seeks. Therefore her Amended Application in a Case filed 2 July 2021 should be dismissed to the extent it sought the partial stay, and to the extent that the same relief was sought by her Response to an Application in a Case filed 2 September 2021, it should also be dismissed.
THE HUSBAND’S APPLICATION
The wife sensibly conceded that, in the event that a stay were not granted, then the husband’s Application in a Case filed 3 August 2021 must succeed. There will therefore be enforcement ordered as sought in that application, save that the form of order will be that the time for payment of the balance due (accepting interest has been accruing since 29 April 2021) will be enlarged to three (3) business days from the date of my orders. Otherwise the husband’s Application in a Case, and the wife’s Response thereto, should be dismissed.
COSTS
Both parties argued the question of costs before me, covering the potential eventualities of success or loss of their respective applications.
In the event that the wife’s applications failed, and the husband’s application therefore succeeded, she again sensibly appeared to concede that she could not resist an order for costs. Even if I am mistaken as to that, her loss, superior financial position, and failure to comply with prior orders of the court, compel that she should bear the husband’s costs. There will therefore be an order that the wife pays the husband’s costs of his Application in a Case filed 3 August 2021.
CONCLUSION
For these reasons there will be orders as set out at the commencement of these reasons.
I certify that the preceding forty five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Tree. Associate:
Dated: 21 September 2021
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