FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Jess & Jess (No 6) [2023] FedCFamC1F 168
File number MLF 3444 of 2006 Judgment of WILSON J Date of judgment 24 March 2023 Catchwords FAMILY LAW – COSTS – application for party/party costs arising from the judgment delivered on 29 July 2022 – costs ordered to be assessed on a party/party basis. Legislation Family Law Act 1975 (Cth) ss 79, 79A and 117. Cases cited Fitzgerald v Fish (2005) 33 Fam LR 123
In the marriage of Hogan (1986) 10 Fam LR 681
Jess & Jess (No 2) [2021] FedCFamC1A 49
Jess & Jess (No 4) [2022] FedCFamC1F 530
Jess & Jess (No 3) [2023] FedCFamC1A 2
Division Division 1 First Instance Number of paragraphs 19 Date of last submission 10 March 2023 Date of hearing On the papers Place Melbourne Counsel for the applicant Ms L. Johnston Solicitor for the applicant Kenna Teasdale Lawyers Legal personal representative of the first respondent Mr W.P. Howard Counsel for the represented third parties Mr I. Waller KC Solicitor for the represented third parties HWL Ebsworth Lawyers Counsel for the intervenors Ms N. Papaleo Solicitor for the intervenors Lander & Rogers ORDERS
MLF 3444 of 2006 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS JESS
Applicant
AND MR J AS LEGAL PERSONAL RESPRESENTATIVE OF MR JESS SNR (DECEASED)
First Respondent
MR JESS JNR and others
Represented Third Parties
AND MR K AND MR L AS TRUSTEES OF THE BANKRUPT ESTATE OF MR JESS SNR
Intervenors
order made by
WILSON J
DATE OF ORDER
24 MARCH 2023
THE COURT ORDERS THAT –
1.On or before 4:00pm on 28 April 2023 the senior judicial registrar must assess the wife’s and the intervenors’ costs arising from the judgment delivered by me on 29 July 2022.
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 has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
Following the unsuccessful appeal[1] from my decision dated 29 July 2022[2] the wife and the intervenors seek orders for the payment of their costs from the second to 29th respondents, known in this litigation at the represented third parties.
[1] Jess & Jess (No 3) [2023] FedCFamC1A 2.
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CaseChat Overview and Summary
The court was required to determine whether the represented third parties should bear the costs of the litigation, despite their unsuccessful application to resist the setting aside of the consent orders. This involved examining whether the wife's claim under s 79A(1)(a) was wholly unsuccessful and whether the court should reserve costs where the balance of its discretion was yet to be exercised. The court needed to assess if the wife’s reliance on s 117(2A)(e) was appropriate given the context of the application determined on 29 July 2022.
The court reasoned that since the wife succeeded in setting aside the consent order, she was entitled to her costs. The court noted that the success in setting aside the order was a significant achievement, regardless of the amount of material presented on other grounds. It held that the represented third parties should not be denied compensation for the costs incurred to mitigate the consequences of their misconduct. The court concluded that the intervenors, who represented the creditors of the bankrupt estate, should also not bear their own costs as they were acting in a representative capacity to advance the interests of creditors. Therefore, the court ordered that the represented third parties and the intervenors were to pay costs to the wife and the intervenors.
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Orders of the court
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Background to the litigation
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Evidence Before The Court
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Ratio Decidendi
Legal Principle Established
Established by: MR J
The represented third parties submitted that they were not wholly unsuccessful. They put forward a collection of contentions in that regard, namely – (a)the court has exercised part only of its discretion; (b)where the balance of the discretion is yet to be exercised, costs ought to be reserved;(c)the nature of the wife’s claim has changed so only when the case has been tried to completion will the court be best placed to assess all relevant factors under s 117(2A); (d)the wife’s reliance upon s 117(2A)(e) mischaracterises the application determined on 29 July 2022; and (e)the wife’s claim under s 79A(1)(a) was not wholly successful and when attention is devoted to the amount of material employed to advance the s 79A(1A) application, the overwhelming majority of material went to issues concerning s 79A(1)(a). CONSIDERATION To my mind that last argument is akin to a case in which an injunction was sought to restrain conduct in the nature of passing off as well as misleading and deceptive conduct when only the misleading and deceptive conduct claim was upheld upon the injunction being granted. The grant of the injunction enlivened the costs application, irrespective of the basis on which the injunction was ordered. So too here, the order based on one of the two sections on which reliance was placed was successful. The wife should not be denied her costs merely because a larger volume of material was devoted to another ground for the setting aside of the consent order. The consent order was set aside. An appeal against that was dismissed. The wife succeeded, over the opposition of the represented third parties. She should have her costs. The intervenors are in a similar position. They represented the creditors of the bankrupt estate of the late Mr Jess Snr. They are directly affected by the order setting aside the consent orders made by Cronin J. They should not be forced to bear their own costs when acting in a representative capacity in the advancement of the interests of creditors. The submissions of Mr Austin KC and Ms Papaleo usefully assisted in the determination of the issues determined on 29 July 2022. In her written submissions, Ms Papaleo wrote the following – 9.It is important to remember the reason the parties are before this Honourable Court in this litigation: the misconduct of the Represented Third Parties. The fraud was declared by Bennett J, and her finding was upheld on appeal. The purpose of this application was to purge the consequences of that fraud; to clear the slate for [Ms Jess] to press a fresh section 79 application. Justice would see the Represented Third Parties compensate the other parties for the costs they have incurred in order to mitigate their misconduct – especially, it is submitted, the Intervenors, who stand apart from the imbroglio within this family, but who must endure it to pursue the rights of innocent creditors. This litigation truly is an exemplar of complex commercial litigation arising out of a marital collapse. The amounts involved are enormous. The issues being agitated are complex, being both factually and legally challenging. It must not be forgotten that Bennett J was consumed for over 80 sitting days deciding issues of fraud which were not upset on appeal. The case has returned to be processed along its interlocutory path to trial. The first step along that path was the application to set aside the consent orders made by Cronin J. I did that. The represented third parties applied trenchant resistance availing themselves of the services of Mr A. J. Myers AC KC, possibly one of the finest barristers in the Commonwealth of Australia. He was unable to resist the wife’s and the intervenors’ applications. Costs must follow.