Jess & Jess (No 6)
[2023] FedCFamC1F 168
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
Ritter v Godfrey [1920] 2 KB 47
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.
[2] Jess & Jess (No 4) [2022] FedCFamC1F 530.
Each of the wife and the intervenors contend that the represented third parties were wholly unsuccessful in their opposition to the wife’s application to set aside the consent orders made by Cronin J on 24 September 2009.
The represented third parties submit that the costs of and incidental to the application determined by me on 29 July 2022 should be reserved until the completion of the trial of the whole proceeding. Alternatively, the represented third parties submit that the intervenors’ costs application should be dismissed and the wife’s costs should be paid only as to 50% once assessed on a party/party basis. Neither the wife nor the intervenors sought costs on a basis other than party/party costs.
As these reasons explain, I take the view that the application determined by my reasons dated 29 July 2022 was a stand-alone interlocutory application that need not abide the outcome of the whole proceeding. I also am of the view that the represented third parties’ opposition to the wife’s application was wholly unsuccessful, as the reasons of the Full Court demonstrated. As only one element in s 117(2A) need be made out to enliven a costs order under s 117(2) that deviates from the more usual costs order made under s 117(1),[3] the wife and the intervenors are entitled to an order that their costs be paid well prior to the outcome of the trial. As for the basis of the costs to be paid, it should be on a party/party basis to be assessed by a registrar of the court. It follows that I am not willing to make an order for the payment of a lump sum amount of costs.
[3] Fitzgerald v Fish (2005) 33 Fam LR 123.
The wife additionally seeks the costs of this application.
Her lump sum costs on the 29 July 2022 application are the subject of evidence from a costs consultant and are calculated in the sum of $117,906.49. She seeks payment of that sum in 28 days.
Any order for costs must be just as was held in In the marriage of Hogan.[4]
[4] (1986) 10 Fam LR 681.
WAS THE OPPOSITION WHOLLY UNSUCCESSFUL
The wife submitted it was. Orders were made under s 79A(1A). Counsel for the wife made written submissions[5] about the nature and effect of the orders pronounced on 29 July 2022. She submitted as follows –
12.The 2nd to 29th Respondents were wholly unsuccessful in relation to their opposition of the order sought under section 79A(1A), including their reliance on section 79A(2) and the submission that a s 79A application must be dealt with at the same time as the s 79 proceeding is conducted. In dismissing both arguments, his Honour concluded inter alia that:
a.“[Mr Jess Jnr] does not have a relevant interest to oppose the consent application put forward by the wife, the husband’s personal representative and the trustees because [Mr Jess Jnr] was not a party to the orders made by Cronin J, irrespective of the interest he understandably wishes to agitate in his case in relation to the units in [JRUT] once a later s 79 proceeding is commenced”;[6] and
b.“no mandatory requirement exists in the learning compelling a s 79A application to be dealt with at the same time as the s 79 proceeding is conducted”.[7]
13.The order made pursuant to section 79A(1A) of the Act “disposed of the need to embark upon a consideration of the litany of sophisticated arguments in relation to s 79A(1)(a)”.[8]
[5] Those were written by Ms Laura Johnston of counsel dated 30 September 2022.
[6] Reasons for Judgment of Wilson J dated 29 July 2022, [157(b)].
[7] Reasons for Judgment of Wilson J dated 29 July 2022, [157(c)].
[8] Reasons for Judgment of Wilson J dated 29 July 2022, [157(f)].
The intervenors submitted that their costs of $115,202.36 should be paid by the represented third parties because the represented third parties had been wholly unsuccessful in their opposition of the intervenors’ support for the wife.
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.
But in family law litigation, unlike in common law courts, costs do not follow the event as most classically was held in Ritter v Godfrey.[9] In this court an order for costs that deviates from an order the substance of which follows s 117(1) must –
(a)be made under s 117(2);
(b)be based on one only of the grounds of s 117(2A); and
(c)in all the circumstances be just.
[9] [1920] 2 KB 47.
In this case the wife and the interveners relied principally on s 117(2A)(e). In my view they were correct. It seemed to me that the represented third parties were wholly unsuccessful in their resistance to the wife’s application to set aside the consent orders, irrespective of howsoever many affidavits were directed to s 79A(1A) or s 79A(1)(a). In the upshot, the wife succeeded. Her costs should be paid by those opposing her application. So should the intervenors’. The represented third parties must pay those costs.
I do not accept that the payment of those costs must or should await the ultimate outcome of the trial. This was a discrete interlocutory application that, properly advised, the represented third parties choose to oppose. The wife and the intervenors were put to considerable expense in fighting the represented third parties. The wife and the intervenors should not be left without remedy for the attitude adopted by the represented third parties. I gain little support from the observations in Jess & Jess (No 2)[10] as extracted in paragraph 30 of the submissions of the represented third parties. I found the intervenors’ submissions helpful. Far from them sitting quietly parroting the wife’s submissions, they independently highlighted how the unsecured creditors of the bankrupt estate of the late Mr Jess Snr are at risk in this litigation. There was no duplication in effort or costs. They are entitled to their costs.
[10] [2021] FedCFamC1A 49.
LUMP SUM OR ASSESSMENT
Attractive as it would seem to make an order for costs in a fixed sum, I take the view that such a course is fraught. Costs must be assessed.
A senior judicial registrar sits in the administration of the list assisting McClelland DCJ, me, Harper, Strum, Schonell, Campton and Baumann JJ. I direct that the senior judicial registrar assess costs by not later than 4:00pm on 28 April 2023.
Each party’s costs of this costs application are his, her or its own costs under s 117(1).
I certify that the preceding nineteen numbered paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson. Associate:
Dated: 24 March 2023
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