Kazimierczak & Koch

[1987] FamCA 19

In the marriage of KAZIMIERCZAK, B.J. and KOCH, E.J.

(1987) FLC ¶91-849

Full Court of the Family Court of Australia at Adelaide.

Judgment delivered 16 November 1987.

Before: Murray, Nygh and McCall JJ.

Murray, Nygh and McCall JJ.: By notices of appeal filed 23 March 1987 and 13 April 1987 the husband appeals against two orders made by Mr Justice McGovern. The first of such orders was made on 21 February 1987 in which the husband was ordered to pay the wife's costs of the proceedings for property settlement heard by his Honour between 10 April 1986 to the date of the order. The second order appealed against was made on 16 March 1987 in which his Honour dismissed the husband's application for an extension of time to appeal against the order of his Honour made in the property proceedings on 24 December 1986.

By his judgment in the property proceedings his Honour awarded to the wife a sum amounting to one-third of the totality of the property of the parties. This amounted to $93,379. The order provided for the retention by the wife of certain chattels and the payment of a lump sum. The result of the orders can be summarised as requiring the husband to deliver to the wife a grand piano valued at $9,000, the wife to retain her jewellery valued at $2,645, and that she retain other chattel property in her possession valued at $10,698. In addition to this the husband was to pay to the wife a lump sum of $71,045.

In the wife's initiating application no order for costs was sought. Nor at the time judgment was delivered on 24 December was any application made for costs.

Following the judgment the piano was duly delivered to the wife on 12 January 1987. However, the piano stool was not delivered and correspondence took place between the solicitors for the parties regarding the return of the piano stool. As the stool was not returned, an application was filed on 12 February 1987 seeking orders for the return of the stool, and, in addition, for the first time seeking the wife's costs relating to the application for property settlement which concluded with the judgment on 24 December 1986.

The husband, by this time, had terminated his instructions to his solicitors and at the hearing of this application on 23 February was unrepresented. That hearing resulted in an ex tempore judgment given by his Honour and orders being made dismissing the application for the return of the piano stool, but directing the husband to pay the wife's costs of the property proceedings from 10 April 1986 to 23 February 1987.

On 21 January 1987 the wife had entered into a contract to purchase a home in which she and the child, of whom she had custody, intended to live. On 24 February 1987 the husband paid the wife the monetary component of the original judgment, namely the sum of $71,045. Settlement of the purchase of the house took place on 27 February 1987. The purchase moneys were made up of $53,017 from the money paid in satisfaction of the order, together with a loan of $40,000.

Although the husband had instructed new solicitors on 18 February 1987, it was not until 26 February 1987 that he was able to receive detailed advice from them. On 23 March 1987 he filed, through his new solicitors, a notice of appeal against the judgment ordering him to pay the wife's costs of the property proceedings. Having received advice from his new solicitors he also decided to appeal against the original property judgment. He was by then out of time to file a notice without leave. The last day for filing such a notice of appeal without leave was 27 January 1987 (taking into account certain holidays). Accordingly, on 11 March 1987 an application was made for an extension of time to file a notice of appeal against the judgment of 24 December 1986. This application was heard on 16 March 1987 and in an ex tempore judgment his Honour dismissed the application. It is against this order that the husband now also appeals.

Appeal as to costs

[Their Honours dealt with grounds of appeal not relevant to this report and continued:]

The next ground of appeal was that there was no power to make an order for costs because the application for costs was not brought within the time specified by the rules. On 6 February 1987 a new O. 38 relating to costs was promulgated. Rule 18 provides as follows:

``18 An application for an order under sub-section 117(2) of the Act as to the costs of proceedings shall be filed or made —

(a) not later than 28 days after the day on which the decree in those proceedings was pronounced; or
(b) within such further time as a Judge of any court having jurisdiction under the Act directs.''

It was argued, therefore, that the application for costs filed on 12 February was out of time and could not be brought without leave of a judge and no such leave had been obtained in this case. However, the application of the new O. 38 is provided for in r. 6 of the Statutory Rules 1987, as follows:

``6(1) The Order substituted by rule 3 applies to and in relation to proceedings commenced on or after 9 February 1987 and, notwithstanding its repeal, the Order repealed by that rule continues to apply to proceedings commenced on or after 3 February 1986 and before 9 February 1987 as if it had not been repealed.''

It was submitted on behalf of the husband that ``proceedings'' in line 2 of r. 6(1) meant proceedings in relation to the application for costs. Accordingly, as the application for costs was not filed until 12 February, that application was caught by the provision and accordingly was not competent without leave of the court.

There is no definition of ``proceedings'' in the Family Law Rules. The only definition is that contained in sec. 4 of the Family Law Act. That definition reads as follows:

```proceedings' means a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding in the course of or in connexion with a proceeding;.''

That definition does not assist us in determining whether in r. 18 of O. 38 the reference to ``proceedings'' relates to the principal proceedings in respect of which costs are sought or to the proceedings in relation to costs themselves.

However, the context of the amended Order itself clearly indicates the answer. The new O. 38 speaks of costs charged for work done in the proceedings. Rule 18 itself refers to ``an application for an order... as to the costs of proceedings''. It is obvious that the reference to proceedings whenever it occurs is to the proceedings in respect of which costs are to be charged. Seen in that light r. 6(1) makes the new O. 38 only applicable if the proceedings in respect of which the application for costs is made were instituted on or after 9 February 1987. The proceedings which were the subject of the present application for costs were of course instituted long before that date. Accordingly no leave was required to institute or to file such an application. There is no other time limit contained in the Act or Rules for the making of an application for costs. In particular, there is no such time restraint contained in sec. 117 of the Act. Accordingly, if the new r. 18 was not applicable, it would appear that there was no time restriction to the filing of an application for costs. However, the success of such an application would depend upon the exercise of the Judge's discretion in which the time delay would no doubt be an important factor. For these reasons, therefore, the ground for appeal under this head in our view is not made out.

The next ground advanced was that, because the judgment had been perfected by being drawn up and signed by the Registrar (see O. 31 r. 5), the court was functus officio and that no new order could be made for costs thereafter in the proceedings. Reliance was placed upon the passage on p. 294 of Odgers, Principles of Pleading and Practice (1975) and the cases cited therein. (See also Halsbury, Vol. 26, para. 556 et seq.)

Whatever may be the rule in other courts, the question of costs in the Family Court is regulated by sec. 117 of the Act. Since the power to award costs is derived from the statute any limitation as to the exercise of that power must be found within the statute itself.

Proceedings for an order for costs fall within para. (f) of the definition of ``matrimonial cause'' in sec. 4(1), that is to say, they must be proceedings ``in relation to... completed proceedings''. It may be that an application for costs is so remote in time from the original proceedings that it can no longer be described as relating to the proceedings which have been completed, but this is hardly the situation in the present case. It appears that the new r. 18 has been specifically inserted to impose a time limit to prevent applications for costs being made long after the conclusion of proceedings.

The next ground of appeal was, in effect, that the order itself was so manifestly unjust as to warrant the court interfering. Under this heading a number of matters were raised on behalf of the appellant. Included were the taking into account of the offers to settle that were filed by each party, and in particular the offers filed by the husband which were considerably less than the amount ultimately awarded.

The question of costs pursuant to sec. 117 of the Act is in the discretion of the trial Judge, but before making an order for costs the Judge is required to take into account the matters referred to in sec. 117(2A). His Honour was aware of the financial circumstances of each party to the proceedings. In the exercise of his discretion he took into account the conduct of the husband in the proceedings. He said:

``It was a situation largely brought about by the husband where the wife was placed in the position of having to outlay her case in very great detail in answer to not only those matters, but indeed on every issue that arose in the case.''

He took into account the matter referred to in para. (e), namely whether a party to the proceedings has been wholly unsuccessful. It was relating to the question of offers that most of the submissions were made with respect to this ground of appeal.

Each party had filed offers. The wife had filed two offers, one in April 1986 and a second in August 1986. The first was to settle the matter for a total of $81,639 and the second was for $95,637. We accept the submissions of the husband's counsel that the trial Judge's arithmetic was incorrect when he found that the final offer by the wife amounted in effect to $92,994.

The husband filed four offers, the first in November 1985 and then in August 1986 and November 1986. These offers commenced at a cash equivalent of $62,639 and rose to the final offer of $72,639.

We are conscious of what was said in Harris and Harris (1987) FLC ¶91-822, at p. 76,191, that:

``... a court should, in our view, be very cautious, when exercising its discretion to make an order for costs, about considering offers in writing made by the party against whom the order for costs is sought. Otherwise a respondent may be worse off by filing a notice of offer and may be discouraged from doing so. In this case, however, it is clear from the context of Kay J.'s judgment that the compelling cause for ordering costs was the offer in writing filed and served by the wife.''

In our view the same could be said of the reason for ordering the husband to pay the costs in this case. In his judgment it is clear that it was the offers by the wife to settle the matter rather than those of the husband that influenced his Honour in making his order in this case. The fact that the court should be cautious in looking to see what offers a respondent makes, nevertheless, in our view, does not preclude the court from looking at all the offers made, including offers from both parties in a case, when considering the questions of costs. This is also the view of the Full Court in Harris's case.

In his judgment his Honour said:

``As I see it in this case the wife has made three offers, all of which would seem to be below the amount that she received, and, certainly in the case of the first of those offers in April 1986, considerably below the amount she was awarded and, as I have said, even on the lesser of the two offers that she made finally on 1 August 1986, that is prior to the hearing commencing, of the order of some $3,000 less than she became entitled to.''

As we have already said, due to a mathematical error the final offer of the wife was not $3,000 less than she became entitled to, but was in fact some $2,258 more than the ultimate order. Nevertheless, in our view, the best offer that the husband made to settle the proceedings was some $20,000 or more below the final order, whereas the wife's final offer was some $2,258 in excess of the award. The relationship between the various offers and the final order are matters which in our view the Judge is entitled to take into account when considering para. (f) of sec. 117(2A) of the Act. As this was a proper consideration for the Judge to take into account, it follows that it cannot be said that in doing so his discretion was not properly exercised. Accordingly, this ground of appeal must fail.

The remaining grounds for appeal were that the trial Judge had failed properly to take into account the financial effect of the costs order upon the husband, and that he had unfairly taken into account the conduct of the husband in contesting the issue of the relevance of bringing into account the property acquired by the husband through his inheritance.

A judgment on costs is a discretionary judgment. The ordinary rules relating to appeals against a discretionary judgment apply equally to an order for costs. It might even be said that it is more difficult to upset a discretionary costs order than another discretionary order. In Scherer v. Counting Instruments Ltd. (1986) 2 All E.R. 529, at p. 533, it was said:

``If, therefore, in the present case the judge had material before him, however slight, on which he could base his exercise of discretion in ordering the plaintiffs to pay the defendants' costs of the motions to dismiss, we cannot interfere. If he had none, this court can entertain this appeal on the basis that the judge has not exercised his discretion or has not exercised it judicially.''

Again, in Federal Commissioner of Land Tax v. Jowett (1930) 45 C.L.R. 115, at p. 121, it was said:

```In order to justify the Court of Appeal in interfering with the discretion of the Judge it must be shown'

1. `that he has exercised it on a matter not within his discretion, or'
2. `that there has been an exercise of his assumed discretion on wrong principles, or'
3. `that there has been some great loss occasioned to some one or other by a clearly erroneous exercise of his discretion'.''

In this case his Honour was fully conversant with the financial situation of each party. He took into account the various valuations upon which it was said the offers were based, but found that the valuations seemed to have little effect on the offers that were made by the husband. His Honour took into account the submissions concerning the way in which the property that came to the husband by way of inheritance should be taken into account, but also found that it was the husband's conduct in the presentation of his case that made these complex matters even more so by allegations made which the wife was required to answer. In our view there was evidence upon which his Honour could base his exercise of discretion. He had taken into account all the relevant matters and it is clear that the costs having been subsequently agreed at $5,500 it is not possible to say that in the context of the appellant's overall financial circumstances some great loss has been occasioned to a party, and in particular by an erroneous exercise of the discretion.

For these reasons, in our view the appeal against the costs order must be dismissed.

Appeal against refusal to extend time to appeal

The order for property settlement was made on 24 December 1986. On 11 March 1987 the husband filed his application for an extension of time to appeal against that order. As we have said the time within which the notice of appeal could be filed without leave expired on 27 January 1987.

The general principles governing applications for leave to extend time have been established in a number of cases. These begin in the Family Court in the case of McMahon and McMahon (1976) FLC ¶90-038. There it was said by Evatt C.J.:

``In summary, the applicant must show that there are adequate reasons which explain the delay; that there is a substantial issue to be raised on appeal; and that no hardship or injustice is caused to the Respondent which cannot be compensated by orders as to costs or otherwise.''

These principles have been applied in subsequent cases, the most recent of which is Hartig and Hartig (1983) FLC ¶91-361.

His Honour, after reviewing the explanation for the delay given by the husband, found that in his view the delay had not been adequately explained. As his Honour found that, in his view, the husband had failed to satisfy the criteria in McMahon's case it should be taken that he found that there was no substantial issue to be raised on the appeal. Because of the view we take on the question of hardship and injustice, it is unnecessary for us to find whether the delay had been adequately explained or whether there was a substantial issue to be raised. On this latter issue we would simply comment that, although the approach taken by the trial Judge may be different to that taken by the Full Court in Lee Steere and Lee Steere (1985) FLC ¶91-626, nevertheless it is an approach which in our view was open to the trial Judge to take following the decision of the High Court in Norbis v. Norbis (1986) FLC ¶91-712.

The overall result arrived at in this case by his Honour is not in our view beyond the range of orders that would be open to his Honour to make, albeit that his award may have been at the upper end of the range. Nevertheless, in our view it is not possible for us to conclude that the award was outside a permissible range so that it could be said that his Honour's discretion had miscarried.

It is principally upon the third of the criteria set out in McMahon that in our view the appeal must fail. Following the judgment and two days after the order for costs was made, namely on 25 February 1987, the husband paid to the wife the cash component of the judgment. This money had been spent, as to $10,462 in paying her solicitors for costs and some $5,560 on furniture for the house she had purchased. On 27 February she settled on the purchase of the house that she had contracted to buy after the judgment, and had paid some $53,423 from the judgment moneys paid to her in settling on the purchase of this new property. At no time had the wife been given any indication that the husband was likely to appeal against the property order.

In our view, as a result of the husband satisfying the judgment without any indication of the likelihood of his appealing, and as a result of the wife expending the moneys so paid to her largely in completing the purchase of a house in which to live with the child, to now give the husband leave to appeal against the property order would constitute hardship to her caused by the delay in failing to file a notice of appeal within the time prescribed under the rules. The wife has, as a result of the delay, altered her position to her detriment. To give leave now would constitute hardship to her or an injustice to her which has been caused by the respondent and which in our view cannot be compensated for by orders as to costs or otherwise.

In any event, in our view there must be some prospect of an appeal materially affecting the outcome of the case. For the reasons we have already stated we do not believe that this would be the case. Accordingly, in our view, the appeal against the refusal to extend time to file a notice of appeal must be dismissed.