Farmer & Panshin
[2014] FamCAFC 78
FAMILY COURT OF AUSTRALIA
| FARMER & PANSHIN | [2014] FamCAFC 78 |
| FAMILY LAW – APPEAL AGAINST A DECISION OF A FEDERAL CIRCUIRT COURT JUDGE – COSTS – Where the trial judge made costs orders against both the appellant and the respondent – Where the appellant was ordered to pay the respondent’s costs of the proceedings due to the trial judge’s conclusion that offers made by the respondent to settle proceedings were similar to the final outcome – Where the trial judge had failed to consider interim property orders when calculating the final outcome of the property proceedings – Where when the outcomes of the property proceedings are compared with the offers to the settle on a percentage basis it can be seen that the appellant had achieved a better outcome than the offers to settle – Where the submissions on costs were in writing and there was no order for exchange of submissions in reply – Appeal allowed – Re-exercise of discretion. |
| Family Law Act 1975 (Cth) Federal Proceedings (Costs) Act1981 (Cth) |
| De Winter v De Winter (1979) FLC 90-605 |
| APPELLANT: | Ms Farmer |
| RESPONDENT: | Ms Panshin |
| FILE NUMBER: |
SYC 2252 of 2011
| APPEAL NUMBER: | EA 68 of 2013 |
| DATE DELIVERED: | 9 May 2014 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | May, Ryan & Watts JJ |
| HEARING DATE: | 29 April 2014 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 6 May 2013 |
| LOWER COURT MNC: | [2013] FCCA 186 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Othen |
| SOLICITOR FOR THE APPELLANT: | Clayhills Solicitors |
| SOLICITOR FOR THE RESPONDENT: | No appearance by the respondent |
Orders
The appeal be allowed.
Paragraph one (1) of the orders made on 6 May 2013 by Judge Altobelli be set aside.
There be no order as to costs of the trial other than as provided in order (2) of the orders made 6 May 2013.
The Court grants to the appellant 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 in respect of the costs incurred in relation to the appeal.
The cross-appeal be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Farmer & Panshin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 68 of 2013
File Number: SYC 2252 of 2011
| Ms Farmer |
Appellant
And
| Ms Panshin |
Respondent
REASONS FOR JUDGMENT
By way of notice of appeal filed on 3 June 2013, Ms Farmer appeals order (1) of orders made on 6 May 2013 by Judge Altobelli.
That order provided:
(1)Except as provided for in order 2 below the applicant is to pay the respondent’s costs of these proceedings on a party/party basis, as agreed or as assessed, calculated from 8 July 2011.
It is also relevant to refer to the other orders which were as follows:
(2)The respondent is to pay the applicant’s costs reserved on 31 May 2012, 18 June 2012, 8 October 2012, 11 February 2013 and 14 February 2013 on a party/party basis, as agreed or as assessed.
(3)Order 3 made by Federal Magistrate Kemp (as he then was) on 14 March 2013 be vacated to the intent that the respondent is free to access any moneys held representing her share of sale proceeds of the [C] property pursuant to orders made 7 March 2013.
The appellant to this appeal, Ms Farmer, was the applicant in the proceedings before Judge Altobelli.
As was made plain in the submissions on behalf of Ms Farmer, there is no complaint that his Honour misunderstood the principles in relation to orders for costs. Rather, Ms Farmer asserts that there was an error in the judge’s exercise of discretion.
The error, it is argued in grounds 1 to 3 of the notice of appeal, was the weight placed on and the interpretation by his Honour of the offers of settlement made by the respondent. Ground 4 asserts that there was procedural unfairness in the proceedings before the trial judge.
The respondent, Ms Panshin, filed a cross-appeal on 3 June 2013 from order (2) of those orders. The cross-appeal has been deemed abandoned due to Ms Panshin’s failure to file certain material. We propose to deal with those matters later in our judgment.
We note that Ms Panshin has filed a number of appeals in this matter – EA 14 of 2013, EA 34 of 2013, EA 35 of 2013, and EA 36 of 2013, all of which have been deemed abandoned due to the failure of Ms Panshin to file documents as directed.
History
The decision of Judge Altobelli on 6 May 2013 arose from costs applications made by both parties. The judge heard property settlement proceedings between the parties and made final orders and gave reasons on 7 March 2013. As his Honour no doubt correctly observed, those reasons comprehensively dealt with the background to the matter and were not repeated in the costs judgment.
It is relevant however to set out the orders made by his Honour on 7 March 2013:
(1)Subject to order 2 below, the applicant and respondent to forthwith do all things necessary to distribute the sale proceeds of the property at [C] as follows:
(a)To the applicant $50,506.60;
(b)To the respondent $76,993.40;
(c)To the applicant 39.6% of the amount then remaining, if any;
(d)To the respondent, the balance.
(2)Order 1 is stayed for a period of seven (7) days to enable the respondent to bring an application under Federal Magistrate Court Rules r.16.05(2) if she so desires.
(3)Each party otherwise retains sole ownership of all other property in their possession or control including their respective superannuation entitlements.
(4)Any application for costs arising out of these proceedings proceed by way of written submissions not exceeding 750 words, with the applicant for costs to file and serve the same within 21 days, and the respondent within 21 days thereafter.
(5)In the event that either party refuses or neglects to execute any deed or instrument required to give effect to these Orders a Registrar of the Federal Magistrates Court in Sydney is hereby appointed pursuant to Section 106A to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.
The effect of these orders is that the appellant received 69 per cent of the parties’ net property.
The property settlement hearing took place on 5 and 6 July 2012 and 15 February 2013. Ms Farmer was represented throughout, Ms Panshin by a Mr Ang of counsel on the first two days of the hearing. There was no appearance by Ms Panshin on the third day, so the matter proceeded on what the judge described as “an undefended basis”.
Reasons for the Costs Orders
The applications for costs were based on written submissions of each party as provided by order (4) of the substantive orders made on 7 March 2013. As recorded by his Honour, Ms Farmer filed submissions on 28 March 2013 and provided a memo of costs of the lawyers dated 19 April 2013. Ms Panshin filed an application on 28 March 2013 and a response submission on 18 April 2013.
The submissions were not exchanged and as will later be explained there was no clear provision in the orders for Ms Farmer to respond to the submissions of Ms Panshin.
Judge Altobelli found that there were circumstances which justified a costs order against each party, being the conduct of the parties to the litigation in respect of the costs order against Ms Panshin and the making of offers in respect of the costs order against Ms Farmer.
In relation to the order against Ms Panshin there were four “discrete events” which formed the basis for an order for costs. His Honour observed that on each of those occasions costs had been reserved against her and that Ms Panshin resisted the applications, largely on the basis of her financial circumstances.
Judge Altobelli dealt with each subsection of s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”) as was relevant making the following findings:
·The financial circumstances of each party was not a reason to resist making a costs order. Reference was made to the substantive reasons including the difficulties presented by the respondent in her case concerning disclosure of her financial circumstances;
·The conduct of the respondent did warrant an order for costs for the occasions identified. It was noted that the respondent did not provide a response to those issues and that there were no subsequent events that would cause any change to costs orders being made;
·The failure of the respondent to comply with previous orders was accepted as another basis for costs on the nominated occasions. The contentions of the respondent in this respect were rejected; and
·There was substance to the contention on the part of the respondent that an order for costs should be made based on offers of settlement.
It is necessary to refer with some detail to what Judge Altobelli said in relation to the offers of settlement:
21.… The material filed on behalf of the respondent establishes that a series of offers were made which, with hindsight, could only be described as remarkable offers, but which were declined by the applicant. Thus, for example, a letter of 8 July 2011 establishes that the respondent offered to the applicant $50,000 cash, and on the basis that the applicant would otherwise retain all of her assets. This is an extraordinary offer, given that the order of 7 March 2013 only provided to the applicant $50,506.60 together with an unspecified but minimal amount of interest, and otherwise on the basis that she retain all of her assets.
22.On 4 October 2011, the offer was increased to $75,000, and then on 8 December 2011 it was further increased to $100,000. That the applicant did not accept these offers is extraordinary. Moreover, the applicant, knowing of the respondent’s submissions for costs based on offers made, made no attempt to put the offers in a context that might lead to a conclusion that the offers should not be interpreted as they prima facie appear to be articulated. The highest offer made by the applicant known to the Court seems to be contained in a letter from the applicant’s solicitor to the respondent dated 8 December 2011 in which she indicates willingness to accept $112,500.
After noting that the court did not have the benefit of submissions from Ms Farmer in response to what Ms Panshin had said about the offers, the judge continued:
23.… [T]here may have been, indeed probably were, a number of conditions that pragmatically inform the applicant’s deliberations about offers. Thus, for example it is quite possible there was some uncertainty at the time of the relevant offers about the value of the property. Moreover, the applicant probably was concerned about the respondent’s ability to refinance the debt, in order to pay the applicant out which was possibly an issue as regards the last and highest offer. Giving the applicant the benefit of the doubt, indeed being generous to her in this regard, one might understand some scepticism about the offer. All of this fades into insignificance, however, when one has regard to the earlier offers, for significantly smaller amounts, and where there can be far less tolerance about reasonable refusal of offers made. There are very few cases in the Court’s experience where the case for making an order for costs based on offers made is clearer than on the present facts.
24.It is staggering to think that shortly after the matter first came before the Court on 5 July 2011, and well before the conciliation conference on 23 September 2011, an offer was made that is so similar to the final outcome. The applicant’s refusal to accept the offer contained in the letter of 8 July 2011 justifies an order for costs in the respondent’s favour. Again, however, there are no exceptional circumstances that would warrant the making of an indemnity costs order.
The judge ordered Ms Farmer to pay Ms Panshin’s costs from 8 July 2011 and Ms Panshin to pay Ms Farmer’s costs of the five nominated occasions when costs were reserved.
The judge vacated order 3 made 14 March 2013. That order had frozen funds pending the outcome of the costs applications. There was no challenge to the fact that the judge had vacated order 3.
It is appropriate that we repeat the last paragraph of his Honour’s reasons:
28.At paragraph (1) of the Court’s reasons for judgment on 7 March 2013 the Court noted that the evidence before it created the impression that the relationship between the applicant and the respondent was a very intense one, and that the intensity of the relationship was matched if not exceeded by the intensity of the separation and subsequent litigation. This litigation was a tragic waste of public and private resources. Both the applicant and the respondent allowed emotion to cloud rational judgment.
A reading of the substantive reasons for judgment explains these observations. The pool of assets (not including superannuation) as found by his Honour was valued at $190,012, the main asset being a jointly owned house which sale proceeds were $127,500. The sum of $40,000 from the sale was distributed equally prior to the completion of the property proceedings as agreed by orders made on 22 January 2013. The parties also owned motor vehicles and held bank accounts. The respondent’s furniture was valued at $7,000. The appellant had superannuation in total valued at $186,370 whereas the respondent’s superannuation was valued at $20,000.
Submissions on behalf of the appellant
Grounds 1 to 3 contained in Ms Farmer’s notice of appeal are as follows:
1.That the Trial Judge was in error in the exercise of his discretion in making an award of costs in favour of the Respondent, by placing undue weight upon an offer of settlement made on behalf of the Respondent on 8 July 2011.
2.That His Honour’s determination that the offer of settlement made by the respondent on 8 July 2011 was substantially similar to the outcome was plainly wrong and was not a conclusion available to be drawn from the evidence before His Honour.
3.That His Honour’s conclusion that circumstances existed which justified the making of a costs order in favour of the respondent was plainly wrong.
The central submission is that although his Honour was correct in understanding the amounts offered by the respondent, the judge failed to appreciate the overall effect.
The written submissions by counsel for Ms Farmer provided an analysis of the orders of the judge as compared with the offers in tabulated form.
No issue is taken by counsel for Ms Farmer with the judge’s summary of the offers that were made. They are reflected in the following edited table contained on p 3 of Ms Farmer’s written submissions:
Table 1
Date
Made by
Amount payable
8.7.2011
Respondent
$50,000
4.10.2011
Respondent
$75,000
8.12.2011
Respondent
$100,000
8.12.2011
Appellant
$112,500
It was specifically submitted that although it is correct that the respondent offered to pay Ms Farmer $50,000 on 8 July 2011 and the judge ordered Ms Farmer receive $50,506.60 plus interest from the proceeds of sale, there was no account for the sum of $20,000 received as a result of the order of 22 January 2013. Thus, the appellant received $70,506.60 which exceeded the offer even if the result and the offers were otherwise directly comparable, which counsel for Ms Farmer submitted they were not.
It was submitted that the parties were making offers during times when it was believed that the property was worth a great deal more than the sale price ultimately realised and each party was hoping that the house would not be sold. In addition, the pool of assets contended for by each party was not that as found by his Honour. In essence, it was not comparing “apples with apples”.
The percentage division the parties received as a result of the determination by the judge is demonstrated by the following table on p 4 of Ms Farmer’s written submissions:
Table 2
Item
Appellant
Respondent
Scooter
$4,000
Partial Distribution
$20,000
Partial Distribution
$20,000
Savings
$5,012
2000 VW Golf
$6,500
Household Furniture
$7,000
Share of equity
$50,506
$76,994
Superannuation
$186,370
$20,000
Totals
$275,388
$120,994
% of $396,382
69.5%
30.5%
Counsel for Ms Farmer compares the final result with the most generous offer made by the respondent using the appellant’s more pessimistic estimate as to the value of the equity in the C property at the time the offer was made. The offer on 8 December 2011 was for $100,000 to be paid to the appellant. The appellant’s estimate of the equity in C at that time was $375,260. Had that offer been accepted at that time, counsel for Ms Farmer submits that the appellant would have received 50.33 per cent of a pool of $604,242 as the table at p 6 of the appellant’s written submissions demonstrates:
Table 3
Item
Appellant
Respondent
Scooter
$4,000
Partial Distribution
N/A
Partial Distribution
N/A
Savings
$5,012
2000 VW Golf
$6,500
Household Furniture
$7,000
Share of equity
$100,000
$275,360
Superannuation
$186,370
$20,000
Totals
$304,882
$299,360
% of $604,242
50.33%
49.67%
Counsel for Ms Farmer points to the final result in the appellant’s favour of 69.5 per cent of the net assets and superannuation as found by the trial judge (see table 2 at [30] of these reasons) and compares it with the 50.33 per cent the appellant would have received on the respondent’s best offer (table 3 above). The following explanation is provided at [29] of the submissions:
On this comparison, not only did the appellant soundly beat the respondent’s best offer – she soundly beat her own offer of 8 December 2011 in percentage terms. The Appellate was awarded of 69% of the net assets and superannuation as found by the trial Judge.
At the time the offers were made, Ms Panshin thought the property was worth $1.1 million with a mortgage debt of $621,384 and the appellant assumed that it was worth $100,000 less.
This meant in percentage terms that the offer of $50,000 on 8 July 2011 would have seen the appellant receiving 10 to 13 per cent of the parties’ estimate of the equity in the property at the time. The appellant’s own offer on 8 December 2011 where the appellant would have received $112,500, would have given the appellant 30 per cent of the equity she thought there was in the property and only 24 per cent of the equity that the respondent thought was there.
Counsel for Ms Farmer submitted that these offers should be compared with the percentage division the parties received as a result of the determination by the judge.
In the absence of the information provided on appeal, it can be seen that in failing to consider the offers of settlement in the context of what was then known about the value of the parties’ property, and by reference to the totality of the adjustments made in the proceedings, his Honour fell into error.
Grounds 1 to 3 are established.
Ground 4 asserts a failure of the trial judge to invite Ms Farmer to provide submissions in reply to the respondent’s submissions on costs which caused procedural unfairness. This ground is intended as a further reason for allowing the appeal and also to urge us to consider re-exercising as opposed to remitting the matter for re-hearing.
The confusing nature of the orders requiring written submissions on costs, although unintentional, created a lack of procedural fairness. As Judge Altobelli noted in the reasons for judgment, he did not have a response from Ms Farmer.
On one interpretation of the orders each party might have each replied to the other’s submissions. However, the orders did not provide for an exchange of submissions nor specifically for reply. It was wrong of his Honour to consider the respondent’s submissions in isolation without an opportunity for the appellant to respond. No doubt had the judge specifically provided for a response a different picture would have emerged. Ground 4 is made out.
The cross-appeal
On 3 June 2013 the respondent, Ms Panshin, filed a cross-appeal. The appeal is from order (2) made by Judge Altobelli to which we have referred.
The grounds of appeal do not address the costs orders and list various complaints about the judgment and how the property proceedings were conducted. The errors of law asserted are as follows:
Errors of law
A) Contravention & Failure to follow:
1.The Universal Declaration of human rights – Untied [sic] nations: articles 2,7,16&25
2.The human rights of women
3.The international covenant on economic, social and cultural right & on civil rights
4.Convention on elimination on all forms of discrimination against woman
5.Declaration of the elimination of violence against woman
B) Judiciary act 1903 section 78a – Procedurally errors of law occurred and failed to provide a “fair trial”
C) Family: Section 91 ( 1975 Attorney General Intervention),58 ( 1975 Rescission of divorce order on the grounds of miscarriage of justice) ,112,114,90M
Family law section 58 ( 1975 Rescission of divorce order on the grounds of miscarriage of justice). There has been a miscarriage of justice by reason of fraud, perjury, suppression of evidence by the judge and other improper conduct.
D) Contraventions to orders and failure to follow courts domestic violence policy and provide a safe court.
E) Court failure to follow the court 4 step process equitably
…
(Original emphasis)
Directions were made in relation to the appeal and cross-appeal on 29 August 2013. There was no appearance by or for Ms Panshin. As previously mentioned, at that time Ms Panshin was the appellant in four other appeals being EA 14 of 2013, EA 34 of 2013, EA 35 of 2013 and EA 36 of 2013. Ms Panshin was directed to file written submissions in relation to the cross-appeal on 14 March 2014 and file what was described as “the contentious appeal book” by 8 October 2013. Directions were also made about the other appeals. Ms Panshin failed to file submissions in support of her cross-appeal and failed to file any appeal books.
On the occasions those directions were made, [27] provided:
That, subject to any further order of the Full Court, in the event that the appellant in EA 14,34, EA 35, EA 36 of 2013, and the cross appellant in EA68 of 2013, does not attend the adjourned procedural hearing on 6 September 2013, and / or does not comply with the directions made herein, the appeals in EA 14, EA35. EA36 of 2013, and the cross appeal in EA68 of 2013 will be listed before the Full Court hearing the appeal in EA68 of 2013, for consideration of dismissal [o]f those appeals and that cross appeal.
On 6 September 2013 there was no appearance by Ms Panshin. For completeness, we note that the respondent having filed four other appeals to which we have referred, has received notice from the appeals registrar that they have been deemed abandoned by reason of her failing to file appeal books.
The cross-appeal reveals no proper grounds of appeal. In any event, her cross-appeal was deemed abandoned.
The hearing of the appeal
At the commencement of the hearing of this appeal it was noted that there was no appearance by or for Ms Panshin. The appeals registrar referred to us correspondence presumably sent by Ms Panshin the evening before the hearing of the appeal. This included an email from Ms Panshin attaching an application for review, an application in a case and affidavit all filed on 24 April 2013 in the Federal Circuit Court of Australia.
Another email attached an unfiled document entitled “Appellant’s outline of submissions” seemingly in relation to a previous appeal unrelated to the appeal before us. In the email, Ms Panshin makes various allegations about the court and the judge who heard the property proceedings. As to this appeal, it was said “[t]o the appeals court I will not be in your evil court today for fear of my life”.
Is it important to note that the Eastern Regional Appeals Registry was aware that the respondent had expressed concern in relation to her safety and on 16 April 2014 an email was sent to her confirming that the appeal and cross-appeal were to be heard on 29 April 2014. A brochure about safety at court was attached to this email. That brochure explained that if a safety plan is required, it is necessary to advise the court at least two days before the hearing. Also attached was a request to attend by electronic communication so that an application could be made to attend by telephone. Neither of those steps were taken by the respondent.
A further email received by the Eastern Regional Appeals Registry attaches what appears to be a photograph of a doctor’s certificate dated 23 April 2014 in relation to Ms Panshin which merely states “in my opinion he/she will be unfit for court on 29 April 2014”. It is impossible for us to know what was the basis for the doctor’s opinion, for how long Ms Panshin has been unwell, and when if at any time in the future she might be able to attend a hearing of the appeal. There being no application for adjournment by Ms Panshin before us and Ms Farmer wishing to proceed, we determined to hear the appeal in her absence.
We were assured by counsel for Ms Farmer that Ms Panshin had been served with the written submissions filed 16 April 2014 upon which they relied.
Conclusion
The appeal should be allowed. It can now be seen that the failure of the orders to provide for an exchange of submissions and specifically for Ms Farmer an opportunity to respond, and no provision for oral submissions, caused significant procedural unfairness.
The appeal should be allowed as the order was substantially based on a mistake of fact. It is apparent that the judge was not fully informed of the relevant facts and thus his reasons and orders were based on a mistake of fact. It is useful to recall what was said by Gibbs J in De Winter v De Winter (1979) FLC 90-605 at [78091]:
It is apparent from this statement, and is clear law, that a discretionary judgment which is based on a mistake of fact will not be upheld merely because the result reached in itself does not appear unreasonable or unjust. In Storie v Storie (1945) 80 CLR 597, both Latham CJ, at p 600, and Rich J, at p 604, cited from the judgment of Viscount Simon LC in Blunt v Blunt [1943] AC 517 at p. 526: “If it can be shown that the court acted under a misapprehension of fact in that it either gave weight to irrelevant or unproved matters or omitted to take into account matters that are relevant, there would, in my opinion, be ground for an appeal. In such a case the exercise of discretion might be impeached, because the court's discretion will have been exercised on wrong or inadequate materials. …” There are many other authorities, from Young v Thomas [1892] 2 Ch 134 at 137 to Australian Coal and Shale Employees’ Federation v Commonwealth (1953) 94 CLR 621 at 627, that recognize that a mistake of fact is a ground for overruling a decision involving discretionary judgment. It may in some cases appear that the mistake of fact has not affected the final result, or that its effect has been negligible, or that in any case the conclusion reached was correct, notwithstanding the error. But it is not right to say, as the majority of the Full Court appear to have said in the present case, that a discretionary judgment which has proceeded upon a mistake of fact should be upheld simply because the order was well within the range of the discretion of the primary judge.
We accept the submissions made by counsel for Ms Farmer that the appellant received a greater proportion of the available net assets and superannuation as a result of the orders made by the judge at the conclusion of the hearing than was ever offered to her by the respondent. Consequently, the offers of settlement could not be treated as circumstances justifying a cost order against the appellant.
re-exercise of discretion
We are of the view, especially in the light of the history of the matter and the failure of Ms Panshin to appear, and having concluded the appeal should be allowed so that order (1) made on 6 May 2013 is set aside, we should re-exercise the discretion.
We are mindful of the wide discretion of a trial judge in relation to costs. We note that we have the submissions of each party that were before the trial judge. In our view, there should be no order as to costs other than that specifically provided for in order (2).
When the offers are properly understood including the context in which they were made it is clear they do not justify an order for costs. There are no other matters contained in s 117(2A) of the Act which would justify an order for costs. A departure from s 117(1) of the Act that each party pay their own costs is not indicated in this case other than those costs in favour of the appellant as ordered by Judge Altobelli.
costs
In our view our reasons allowing the appeal and application for costs having been made the appellant is entitled to a certificate pursuant to s 9 of the Federal Proceedings (Costs) Act1981 (Cth).
I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 9 May 2014.
Associate:
Date: 9 May 2014
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