Keenon & Keenon
[2008] FamCAFC 58
•7 May 2008
FAMILY COURT OF AUSTRALIA
| KEENON & KEENON | [2008] FamCAFC 58 |
| FAMILY LAW - APPEAL – FEDERAL MAGISTRATE – COSTS ORDER – Whether the appellant was denied procedural fairness by not having the opportunity to make submissions in respect of costs – Whether Federal Magistrate erred in the exercise of discretion in making costs order – Lack of procedural fairness established – Appeal upheld. FAMILY LAW - APPEAL – APPLICATION TO ADMIT FURTHER EVIDENCE – Where relevance of further evidence questionable – Where evidence was available at the time of the hearing before the Federal Magistrate and could have been adduced at the hearing – Application dismissed. |
| Family Law Act1975 (Cth) – s 79A, s 90MT (1)(a), s 94AAA(3) Federal Proceedings (Costs) Act 1981(Cth) |
| Allesch v Maunz (2000) 203 CLR 172 CDJ v VAJ (1998) 197 CLR 172 Kioa v West (1985) 159 CLR 550 Re Minister for Immigration and Multicultural and Indigenous Affairs: Ex parte Lam (2003) 214 CLR 1 Tudor & Tudor (1992) FLC 92-275 West & Green (1993) FLC 92-395 |
| APPELLANT: | Ms Keenan |
| RESPONDENT: | Mr Keenon |
| FILE NUMBER: | SYC | 2291 | of | 2007 |
| APPEAL NUMBER: | EA | 119 | of | 2007 |
| DATE DELIVERED: | 7 May 2008 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Boland J |
| HEARING DATE: | 27 February 2008 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 12 September 2007 |
| LOWER COURT MNC: | [2007] FMCAfam 811 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Pagani |
| SOLICITOR FOR THE APPELLANT: | Miller Harris Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Walsh |
Orders
That the appeal is allowed.
That Order 5 of the orders made by Federal Magistrate Kemp on 12 September 2007 be set aside.
That appellant wife file and serve on or before 12 May 2008 brief written submissions as to whether the matter should be remitted for rehearing before Federal Magistrate Kemp, or in the event that it is sought that the discretion be re-exercised, setting out particulars of orders sought.
That the respondent husband file and serve on or before 19 May 2008 brief written submissions as to whether the matter should be remitted for rehearing before Federal Magistrate Kemp, or in the event that it is sought that the discretion be re-exercised, setting out particulars of orders sought.
IT IS NOTED that publication of this judgment under the pseudonym Keenon & Keenon is approved 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 119 of 2007
File Number: SYC 2291 of 2007
| Ms Keenon |
Appellant
And
| Mr Keenon |
Respondent
REASONS FOR JUDGMENT
Introduction
By Further Amended Notice of Appeal filed 2 November 2007 Ms Keenon seeks to appeal an order for costs made by Federal Magistrate Kemp on 12 September 2007 when the hearing of her claim under s 79A of the Family Law Act1975 (Cth) (“the Act”) was adjourned. The appeal is resisted by Mr Keenon.
Mr and Mrs Keenon were divorced many years ago, and Mr Keenon has remarried. For convenience only, and without wishing to cause any offence, in these reasons I will refer to Mr Keenon as “the husband” and Mrs Keenon as “the wife”.
This matter is being heard by me as a single judge pursuant to a direction given by Chief Justice Bryant under s 94AAA(3) of the Act. The appeal was conducted with the wife’s counsel participating by video link from the Townsville Registry.
Although the Further Amended Notice of Appeal contains one ground (with nine sub-grounds) it was agreed by counsel before me that the appeal raised two issues:
· Was the wife denied procedural fairness as her counsel was not afforded any opportunity to make submissions in respect of costs; and
· Did his Honour err in the exercise of his discretion in making the costs order and in particular did he fail to properly consider relevant matters under s 117(2A) to find there were circumstances which warranted departure from s 117(1) of the Act.
The wife’s Further Amended Notice of Appeal sought orders in the event the appeal was allowed that the costs order be set aside, and that the issue of costs of the hearing 12 September 2007 and the costs thrown away as a consequence of the adjournment be reserved “to the Trial Judge or Federal Magistrate”. By implication, I understood that the wife sought the costs issue be reserved to the judicial officer hearing the s 79A application.
The wife also sought to have further evidence admitted on the appeal. She relied on the further evidence to impugn his Honour’s order, and for the purpose of re-exercise of the discretion in the event the appeal was allowed. I reserved my decision on her application to admit further evidence, and indicated I would give my reasons in respect of that application with these reasons.
I propose to explain the background leading to the application for costs, and then to record relevant parts of his Honour’s reasons. Next I propose to deal with the procedural fairness ground, and if necessary thereafter, the challenge to the exercise of discretion by his Honour under s 117(2A) of the Act.
Background
There is understandably little by way of background in Kemp FM’s reasons for awarding costs. Some relevant material is found in the judgment of Lawrie J delivered 17 March 1995, which the parties agreed I should read. The following background material is found in the judgment of Lawrie J, his Honour’s reasons, and the appeal book.
The wife was born in September 1955, and has qualifications as a nursing sister. The husband was born in December 1956 and was at the time of the hearing before Lawrie J, and remains, a pilot. The parties married in June 1978 and they were divorced in November 1994. There are four children of the marriage.
The husband remarried and has two children from his second marriage aged respectively 10 years and 6 years at the date of the hearing before his Honour.
Defended property proceedings were heard by Lawrie J on 13 to 15 March 1995 and her Honour delivered reasons for judgment and made orders on 17 March 1995. In summary her Honour’s orders provided for the sale of the parties’ former matrimonial home, and division of the net proceeds of sale as to 80 per cent to the wife, and 20 per cent to the husband. The husband assumed responsibility for a number of liabilities including a credit union debt and bank loans. Orders (orders 2 to 7) were made in accordance with the wife’s application to deal with the husband’s superannuation entitlement with the Q Limited Staff Superannuation Fund. The order was similar to the order made by Kay J in West & Green (1993) FLC 92-395 in that it provided for payment at the time of the husband’s retirement of part of the husband’s superannuation to the wife calculated by reference to a “formula”.
On 22 August 2005 the wife commenced proceedings in the Family Court of Australia, Cairns Registry. That application was amended on September 2005. The amended application sought pursuant to s 79A(1)(a) of the Act that orders 2 to 7 inclusive made by Lawrie J on 17 March 1995 be set aside and a splitting order be made under s 90MT (1)(a) of the Act.
On 31 May 2006 the proceedings were transferred from the Family Court to the Federal Magistrates Court.
On 27 March 2007 Registrar Victoire made orders in the Federal Magistrate’s Court, Cairns Registry including the following order:
The APPLICANT file and serve within 21 days any further amended application for Final orders particularising her claim pursuant to S79A and specify the relief sought, a Financial Statement and any relevant Affidavit.
At some point thereafter the husband made an application, which was successful, for the transfer of the proceedings to the Sydney Registry of the Federal Magistrates Court.
On 26 April 2007 Mr Hodgson of counsel, acting it appears on a direct access brief, wrote to the wife’s solicitors noting that the wife had not complied with Order 2 of Registrar Victoire’s orders, and documents should be served on him “at your earliest convenience”.
On 7 June 2007 Mr Hodgson again wrote to the wife’s solicitors seeking urgent confirmation as to whether or not she intended to file an amended application or to provide particulars in relation to the relief sought under s 79A.
On 15 June 2007 the wife’s solicitors wrote to Mr Hodgson saying “We consider the current application specifies sufficiently the Orders sought.”
Prior to the commencement of the hearing, on 2 July 2007, the trustee of the Q Superannuation Fund wrote to the husband and advised inter alia:
…
Amendments have been made to the Family Law Act 1975 that allow parties to a marriage to split a superannuation interest following the dissolution of their marriage, as part of a financial agreement made under Part VIIIA of the Family Law Act (superannuation agreement).
These amendments commenced operating on 28 December 2002 and do not apply to any consent orders/agreements made before 28 December 2002. A notification, such as yours to the Trustee, of a superannuation Plan, will be recorded by the Trustee and treated as a request to pay the specified benefit on your behalf when it becomes payable, unless the request is withdrawn by yourself. Also, if you die prior to the entitlements otherwise becoming payable, the direction will no longer have any effect and the Trustee will be obliged to treat the benefit as a death benefit and deal with it accordingly.
Consequently, the request to split the superannuation interest in the amounts specified can only be recorded and treated by the Trustee as a request to pay when the benefit ultimately becomes payable, and if you direct the Trustee to do so. A direction to pay is not binding on the Trustee but may be taken into account by the Trustee when paying the benefit. You will ultimately be responsible under the court order to ensure that you comply with the order.
…
[original emphasis]
On 2 August 2007 the wife’s solicitors wrote to Mr Hodgson referring to the husband’s affidavit filed on 23 July 2007 as follows:
…
We note your client deposes “that the [Q] Superannuation Fund has confirmed both verbally and in writing that they are in receipt of directions from me [the husband] to pay the wife in accordance with the orders and that they will act on these directions”.
We ask you to provide us with a copy of these documents.
We also ask you to provide us with the following information:
1.who the nominated beneficiary is of the superannuation fund;
2.the death benefit nominations;
3.copy of the trust deed; and
4.current beneficiaries of Mr [Keenon’s] superannuation fund.
…
No reply was received to that letter.
On 21 August 2007 the wife’s solicitors notified the husband’s counsel that they had issued a subpoena to the trustee of the Q Superannuation Plan which was returnable before the Court on 6 September 2007.
On 12 September 2007, hearing day of the wife’s application, the wife sought to rely on her Further Amended Application. The wife’s solicitors, who practise in Cairns, had sent by facsimile about the 10 September 2007, a Further Amended Application (being an Application in a Case) to the Federal Magistrates Court of Australia, Sydney Registry for filing. In that application the wife set out particulars of her application to set aside orders pursuant to s 79A as follows:
…
2.Particulars of Application to set aside Orders pursuant to Section 79A:
(a)That there has been a miscarriage of justice which has occurred by reason of the following circumstances:
i.The Orders relating to superannuation entitlements made on 17th March 1995 by the Honourable Justice Lawrie were ultra vires the powers of the Family Court of Australia in that they were Orders purporting to effect a division of financial resources and not property;
ii.The said Orders relating to superannuation entitlements are unenforceable by the wife insofar as they do not, and cannot, bind the Trustees of the [Q] Limited Staff Superannuation Fund;
iii.The entitlements of the wife pursuant to the said Orders are not capable of being protected or preserved in circumstances where the Orders do not bind the superannuation fund;
iv.In circumstances where the wife’s entitlements to the said superannuation fund cannot be protected in that the orders are not enforceable against the said superannuation fund, the Orders made are not just and equitable.
(b)That circumstances have arisen since the Order was made it [sic] impracticable for the Order to be carried out or impracticable for part of the Order to be carried out in that:
i.The said Orders relating to superannuation entitlements are unenforceable by the wife insofar as they do not, and cannot, bind the Trustees of the [Q] Limited Staff Superannuation Fund;
ii.The entitlements of the wife pursuant to the said Orders are not capable of being protected or preserved in circumstances where the Orders do not bind the superannuation fund;
iii.In circumstances where the wife’s entitlements to the said superannuation fund cannot be protected in that the orders are not enforceable against the said superannuation fund, the Orders made are not just and equitable.
… [original emphasis]
The effect of the amendment sought by the wife was to plead reliance on s 79A(1)(b) of the Act.
On 12 September 2007 his Honour heard the submissions from counsel for each party, granted the adjournment sought by the husband because of the amendment to the wife’s application, made procedural orders to facilitate preparation of the matter, and stood the matter over for mention on 28 March 2008. His Honour made an order (Order 5) that the wife pay the husband’s costs thrown away by virtue of the further amendment, and the costs of the day on a party/party basis. His Honour noted an undertaking of the husband not to enforce the costs order “at this time”.
Reasons for judgment
After noting the matter had been listed before him for a final hearing that day, and the nature of the wife’s application, his Honour then referred to the correspondence between the wife’s solicitors and the husband’s counsel, details of which I have set out above.
His Honour then explained that the effect of the wife’s amended application was to rely on s 79A(1)(b) in paragraph 4 (that is, that circumstances had arisen since the orders were made which made it impracticable for them, or parts of them, to be carried out), and that if the amendment was allowed, the husband’s counsel asserted his client would suffer prejudice, and would seek an adjournment. He also explained that the wife asserted the amendment was only bringing to the husband’s attention something he had known for a long time.
His Honour rejected the wife’s counsel’s submissions saying “[i]t appears to me that the amendment is of some importance to how the applicant mounts her case and raises matters which I accept….may need to be met by evidence going to the practicalities or impracticalities of the position.” (paragraph 15)
The Federal Magistrate then referred to documents produced on subpoena from the husband’s superannuation fund, including a letter of nomination by the husband dated 11 December 1998, which documents became exhibits in the application, and recorded that the “respondent husband’s direction [to the trustee of the superannuation fund] pursuant to the orders of Lawrie J, would not have effect in the circumstance of the respondent’s death.”(paragraph 16)
His Honour then remarked that he found it “somewhat surprising” that the husband would have deposed in his affidavit that the orders were enforceable, but concluded at paragraph 19 as follows:
I, however, make no finding in respect of this as the respondent has not given direct evidence before me today and his understanding may be the matter of some clarification and amplification. (paragraph 19)
Turning to the question of discovery, his Honour explained that the wife had sought information the husband was obliged to discover, but no formal orders for discovery had been made. His Honour also noted that the husband’s counsel’s letter of 12 June 2007 “made it clear” that the husband would not provide documents “other than by way of Court compulsion” and that a subpoena had been issued on 21 August 2007 some two months later. Later, at paragraph 22, his Honour explained that the documents produced from the superannuation fund appeared to be the basis of the proposed amendments.
His Honour determined, in order to prepare the case, that further evidence would be required, including expert evidence, and that an adjournment should be granted. Thereafter the Federal Magistrate noted that the husband’s counsel “has sought indemnity costs” which costs orders he said were opposed by the wife’s counsel who submitted “the amendment was brought about by the respondent’s failure to discover and to respond to correspondence and a notice to produce”.
His Honour then made findings that, as at 12 June 2007, the wife was on notice that the husband was not going to produce documents, but did not issue a subpoena for some two months. His Honour did note that at June 2007 the hearing date was then some five months away, but when it was moved to an earlier date on 18 July 2007 the wife had taken one month to issue a subpoena. His Honour then said:
27.In the circumstances, I order that the applicant pay the respondent’s costs thrown away as a result of the amendment and the costs of today on a party/party basis as agreed or assessed.
28.I have been requested to provide reasons in respect of my order on costs. The costs thrown away by the amendment are the usual orders that would flow. In respect of the costs of today, I have had regard to s.117(2A) of the Family Law Act. The Court must have regard to the conduct of the parties to the proceedings, discovery, inspection, production of documents and similar matters.
29.The applicant had failed to issue a subpoena and in light of this failure and the late production of documents and the matters which gave rise to the amendment today as referred to above, I find under 117(2A)(c) that this failure was a matter which is to be put at the door of the applicant. I have also had regard to the applicant’s failure under 117(2A)(d) of the Family Law Act..
The procedural fairness ground
Ground 1(h) is in the following terms:
1(h)The learned Federal Magistrate failed to accord natural justice to the Appellant in making costs orders against her without giving her an opportunity to be heard on relevant matters applicable to costs prior to ordering that the Respondents [sic] costs be paid by the appellant.
In order to properly discuss this ground it is necessary that I refer to the conduct of the proceedings before his Honour.
On 12 September 2007 the wife’s application for relief under s 79A was listed for hearing before the Federal Magistrate. Both parties had filed affidavits of evidence in chief, as well as their Financial Statements. The wife had filed an outline of case document and written summary of argument prepared by her counsel (a member of the Queensland Bar). The wife had travelled from Cairns where she lives for the hearing.
At the commencement of the hearing the wife’s counsel advised his Honour the wife sought to rely on her Further Amended Application, and counsel for the husband opposed that course, and submitted as follows:
So that, in my submission, there should be an adjournment if this is going to be relied upon and that there should be an order for costs and, in my submission, it’s such a flagrant breach of directions that it should be an order for indemnity costs…
(Transcript, 12 September 2007 p 5, lines 8-11)
The wife’s counsel then made submissions as to why the adjournment should not be granted, and referred to the letter of 2 July 2007 to the husband from Q, which had not been disclosed by him, and noted that leave to inspect material from Q had only been granted on 6 September 2007.
Thereafter his Honour invited submissions from the husband’s counsel on the issue of impracticability (transcript page 9). Submissions were then heard from both parties’ counsel as to the merits of the wife’s claim, including (from the husband’s counsel) an assertion that the appropriate remedy for the wife was to seek an extension of time in which to appeal the orders of Lawrie J.
At the end of this discussion his Honour summarised the position with the husband’s counsel as follows
FEDERAL MAGISTRATE: - - - and that means that I either reject the amendment and proceed today without it.
MR HODGSON: Yes.
FEDERAL MAGISTRATE: Or I allow the amendment and give your client such time as is necessary to deal with it and look at the issue of the costs.
(Transcript 12 September 2007 p16, lines 29-35)
Thereafter his Honour heard lengthy submissions from the wife’s counsel as to why she submitted the s 79A relief should be granted, and submissions from the husband’s counsel as to what further evidence he would need to rely on to meet the claim under s 79A(1)(b). Thereafter a lengthy dialogue took place between his Honour and counsel as to whether or not the orders of Lawrie J were capable of implementation under the terms of the superannuation deed, particularly in the event of the death of the husband prior to his superannuation entitlement vesting. At the conclusion of the dialogue his Honour said:
FEDERAL MAGISTRATE: Do the parties have any further submissions?
MRS PAGANI: Not on that preliminary point.
FEDERAL MAGISTRATE: The Court will take a short adjournment. I will go off the Bench and consider the matter and my Deputy will contact the parties shortly.
(Transcript 12 September 2007 p 35, lines 42-48)
On the matter resuming after the luncheon adjournment, his Honour proceeded to immediately deliver his reasons for judgment allowing the adjournment, and made an order the wife pay the husband’s costs on a party and party basis. The transcript reveals the following:
SHORT ADJOURNMENT [12.17 pm]
RESUMED [2.08 pm]
JUDGMENT DELIVERED
MRS PAGANI: Would your Honour be minded to give reasons pursuant to section 117(2)(a) [sic] please?
JUDGMENT DELIVERED
(Transcript 12 September 2007 p 36, lines 1-10)
After having delivered his reasons for judgment, the Federal Magistrate turned to the question of further directions to enable the matter to be heard. His Honour said:
FEDERAL MAGISTRATE: All of these matters have been put from the Bar table, there’s no evidence of anything before me at the moment - - -
MRS PAGANI: It’s in the husband’s affidavit.
FEDERAL MAGISTRATE: No affidavit has been read - - -
MR HODGSON: Yes.
FEDERAL MAGISTRATE: - - - before me today. There’s no evidence of the financial circumstances of the parties other than what’s been said from the Bar table. Nothing has been read before me today…
(Transcript 12 September 2008 p46, lines 10-21)
and later recorded that the husband’s affidavit had not been read before him that day.
Relevant legal principles
The principles of relating to procedural fairness are subject of well established authority. Gleeson CJ said in Re Minister for Immigration and Multicultural and Indigenous Affairs: Ex parte Lam (2003) 214 CLR 1 at [37]:
Fairness is not an abstract concept. It is essentially practical. Whether one talks of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.
See also Kioa v West(1985) 159 CLR 550; Tudor & Tudor (1992) FLC 92-275.
Discussion
It is clear from the transcript that the husband’s counsel foreshadowed in the event that the adjournment was granted he sought indemnity costs on behalf of his client. However, no opportunity was afforded to him to submit why there should be a departure from s 117(1) of the Act being the section which governs costs in proceedings under the Act, (there being no “usual order” that costs follow the event), or why it was appropriate costs should be assessed on an indemnity basis.
Of significance in this appeal however is the situation of the wife. An examination of the transcript reveals the wife’s counsel was not afforded any opportunity to put submissions in respect of costs at all, and in particular with reference to s 117, before the costs order was made. Further, as is apparent from the transcript his Honour had not, at the time he made the costs order read any of the material, including in particular the parties’ Financial Statements which would have enabled him to consider relevant matters in the exercise of his discretion. Thus ground 1(h) must succeed, and Order 5 of the orders made 12 September 2007 be set aside.
Having determined the procedural fairness ground must succeed it is unnecessary that I consider the balance of the grounds raised in the wife’s notice of appeal.
Application to adduce further evidence
The wife sought to adduce further evidence being an affidavit of her solicitor, Rebekah Clair Tunevitsch sworn 31 January 2008. Ms Tunevitsch deposed to conducting searches at the Land and Property Information Service NSW on or about August 2007 which she said revealed that the husband and his present wife had sold their interest in a property for a sale price of $2,000,000.00 in March 2007, and that the husband disclosed in February 2007 his 50 per cent ownership of this property in his Financial Statement. Ms Tunevitsch said “The husband prior to or at the hearing of this matter, disclosed that his financial circumstances have changed” (paragraph 4). If this paragraph is correct it is difficult to see the purpose of the further evidence.
It is also clear that this evidence was available at the time of the hearing before the Federal Magistrate and could have been adduced at the hearing.
Having regard to the principles applicable to the adducing of further evidence as discussed in CDJ v VAJ (1998) 197 CLR 172 and Allesch v Maunz (2000) 203 CLR 172 I am satisfied that the evidence sought to be adduced should be rejected. First, it was available at the time of the hearing before his Honour, and there is nothing to suggest it was sought to be adduced at that time. Secondly, it appears on the face of Ms Tunevitsch’s affidavit the husband disclosed the change of circumstance. If however there are words missing from paragraph 4 of Ms Tunevitsch’s affidavit, it appears to me it would be of little relevance on the re-exercise of discretion in assessing the husband’s financial position when there is no evidence of the net proceeds of sale received, and it would be controversial evidence if it is sought to be relied on under s 117(2A)(a) on the re-exercise of the discretion.
Re-exercise of discretion or remission to the Federal Magistrate for rehearing
Counsel for the wife sought that, in the event the appeal succeeded, I should re-exercise the discretion, and make an order reserving both parties’ costs to the final hearing. The husband’s counsel did not address in his submissions the question of re-exercise in the event that the appeal was allowed.
The orders made by his Honour on 12 September 2007 reveal the matter was listed for final hearing on 21 April 2008. In those circumstances the orders sought by the wife in the Notice of Appeal may now be inappropriate. Accordingly I propose to allow each party the opportunity to provide brief written submissions as to the course they now wish to adopt. If his Honour has not delivered reasons it may be appropriate for the costs of the adjournment to be reheard by him after affording the parties the opportunity to make any relevant submissions as to costs.
Costs of the appeal
The wife sought, in the event the appeal succeeded, that the husband should pay her costs, or in the alternate, error of law having been demonstrated, that I grant certificates under the provisions of the Federal Proceedings (Costs) Act1981(Cth).
The appeal has succeeded on an error of law. In these circumstance I am satisfied it is appropriate to grant certificates. However, at this stage, it is not clear whether the matter will require to be reheard, and I propose to defer making the order granting certificates which may need to include a certificate for the rehearing, until I receive further submissions from the parties as to the future conduct of the matter.
I certify that the preceding fifty two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Boland.
Associate:
Date:
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