Kellner and Kellner and Anor

[2019] FamCAFC 178

FAMILY COURT OF AUSTRALIA

KELLNER & KELLNER AND ANOR [2019] FamCAFC 178

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Where the trial judge divided the parties’ property interests in the proportions of 70 per cent to the de facto wife and 30 per cent to the de facto husband – Where the trial judge found that the de facto husband’s post-separation conduct was the only factor justifying an adjustment to the parties’ equal contributions-based entitlements – Where the trial judge granted a 10 per cent uplift to the de facto wife pursuant to the s 75(2) factors – Where the de facto husband’s challenges on appeal relate solely to complaints of procedural fairness – Where there are no specific challenges to the findings of fact made by the trial judge or, beyond the assertions of denials of procedural fairness, that the trial judge acted on wrong principle or made any errors of law – Where Ground 1 was abandoned – Where neither of the remaining two grounds raise any question of general principle – Where only short reasons are required – Consideration of the extent of a trial judge’s obligations under Re F: Litigants in Person Guidelines (2001) FLC 93-072 – Where a trial judge is not bound to specifically inform a party that if they fail to put their case to the other party in cross-examination, the other party’s evidence may be accepted – Where the determinative issue, being the de facto husband’s significant failure to provide full and frank disclosure, did not rest on the de facto wife’s evidence – Appeal dismissed – Where the de facto husband is ordered to pay the de facto wife’s costs of the appeal on a party/party basis fixed in the sum of $30,000.

Family Law Act 1975 (Cth) ss 90 SF(3), 90SM(4), 94(2A), 117

Family Law Rules 2004 (Cth) r 19.18(1)(a)

Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119; [1995] FCA 1250
D & D (Costs) (No 2) (2010) FLC 93-435; [2010] FamCAFC 64
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178
Re F: Litigants in Person Guidelines (2001) FLC 93-072; [2001] FamCA 348
Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54
Stopford Malloy & Malloy (Costs) [2018] FamCAFC 6
Yein & Zihao (2019) FLC 93-889; [2019] FamCAFC 20

APPELLANT: Mr Kellner

FIRST RESPONDENT: Ms Kellner

SECOND RESPONDENT: Ms King

FILE NUMBER: DNC 439 of 2012

APPEAL NUMBER: NOA 122 of 2018

DATE DELIVERED: 11 October 2019

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Kent, Watts & Tree JJ

HEARING DATE: 28 August 2019

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 28 November 2018

LOWER COURT MNC: [2018] FamCA 1000

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Hanlon

SOLICITOR FOR THE APPELLANT: Bowen Lawyers

COUNSEL FOR THE FIRST
 RESPONDENT: Mr Looney QC with Ms Horsley

SOLICITOR FOR THE FIRST RESPONDENT: Withnalls Lawyers

SECOND RESPONDENT In person via telephone

Orders

1. That the appeal be dismissed.

2. That within twenty-eight (28) days of the date of these orders, the de facto husband pay to the trust account of the solicitors for the de facto wife her costs of the appeal fixed in the sum of $30,000.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Kellner & Kellner and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number:       NOA 122 of 2018
File Number:            DNC 439 of 2012

Mr Kellner

Appellant

And

Ms Kellner

First Respondent

And

Ms King

Second Respondent

REASONS FOR JUDGMENT

1. By an Amended Notice of Appeal filed on 21 February 2019, Mr Kellner (“the de facto husband”) appeals from property settlement orders made by a trial judge in the Family Court of Australia on 28 November 2018 pursuant to Part VIIIAB of the Family Law Act 1975 (Cth) (“the Act”).

2. Ms Kellner (“the de facto wife”) opposes the appeal.

3. The adult daughter of the de facto husband, Ms King, is the second respondent in the proceedings and is self-represented. Despite being afforded the opportunity to seek orders and actively participate as a party at the trial stage of the proceedings, the second respondent failed to comply with directions made to facilitate that. The trial judge determined, for reasons then given, that the trial ought proceed with respect to the second respondent on an undefended basis.

4. Despite there being no appeal from the trial judge’s determination that the trial proceed as against her on an undefended basis, nor any appeal by the second respondent from the final orders made, the second respondent filed a Summary of Argument in which she purports to seek, on appeal, that this Court make orders in her favour. Whilst we were not prepared to entertain the second respondent’s illegitimate attempt to seek such orders on appeal, we gave her leave to participate in the appeal by electronic communication at her request, such leave not being opposed by the other parties. In the result, the second respondent did not take up the opportunity we afforded her to make submissions.

Determination of the trial judge

1. The trial judge found the property interests of the de facto parties to have a net worth of $3,623,927 (at [125]) plus a further amount which was unidentifiable due to the de facto husband’s conduct, including his significant non-disclosure. That net value as found included the real property in which the second respondent holds a one third legal interest, with the de facto parties holding the other two thirds. Though, the trial judge found that the entire equitable interest in that property was held by the de facto parties (at [124.4.19]).

2. His Honour adopted the approach of considering the entire period of the parties’ cohabitation from 1986 until July 2012 (at [117]) and found that the respective contributions of the parties pursuant to s 90SM(4) of the Act should be treated as equal (at [145] and [149]). This was on the basis that the conduct of the de facto husband in the lengthy post-separation period (post-July 2012) fell to be addressed pursuant to s 90SF(3)(r) of the Act (at [146] and [149]).

3. With respect to s 90SF(3) matters, the trial judge found that the de facto husband’s post-separation conduct was the only factor justifying an adjustment to the parties’ equal contributions-based entitlements (at[169]). As summarised by the trial judge at [166] and [167] that conduct comprised the de facto husband’s respective failures:

   ·To provide full and frank disclosure;

   ·To account for income received, including cash received by him via the de facto parties’ partnership business;

   ·To account for rental income received by him;

   ·To make interest payments on various overdrafts and loan accounts;

   ·By unnecessarily incurring substantial bank charges; and

   ·To pay rates and taxes and insurances on various properties.

4. The trial judge recorded that the de facto wife sought an adjustment of 10 per cent for s 90SF(3) matters. His Honour observed (at [170]):

   … that is somewhat generous to the de facto husband given the substantial effect of his conduct on the assets of the parties, and the funds available to them, as well as the question mark over what cash money the de facto husband might still retain. However, that is the adjustment sought, and I find that it is an adjustment that should be made.

5. The trial judge thus concluded that the net assets of the parties should be divided 60 per cent to the de facto wife and 40 per cent to the de facto husband (at [175]). The trial judge made orders to give effect to that conclusion. It is from those orders that the de facto husband appeals.

The de facto husband’s challenges on appeal

1. The de facto husband’s challenges on appeal relate solely to complaints of procedural fairness. Beyond broad and unparticularised assertions, there are no specific challenges either to the findings of fact made by the trial judge nor, beyond the assertions of denials of procedural fairness, is it contended that the trial judge acted upon wrong principle or made any errors of law.

2. Ground 1 of the de facto husband’s Amended Notice of Appeal asserts that the trial judge denied the de facto husband procedural fairness by not granting him an adjournment of the trial on medical grounds. However, early in the course of oral argument of the appeal, counsel for the de facto husband acknowledged, properly in our view, that the complete absence of medical evidence before the trial judge to establish that the de facto husband was medically unfit to participate in the trial was fatal to this ground, and it was abandoned. It is mentioned here only because the raising of this ground, and its maintenance and its belated abandonment only at the hearing of the appeal and after the de facto wife had comprehensively addressed it in her Summary of Argument for the appeal, is relevant to the question of costs.

3. There exists significant overlap between the de facto husband’s remaining two grounds of appeal. Indeed, counsel for the de facto husband acknowledged that Ground 3 would “rise or fall” with Ground 2, meaning that Ground 3 could only be sustained if Ground 2 succeeded. Those remaining grounds are as follows:

   2.The learned Judge’s failed to provide to the Appellant procedural fairness in so far as the learned Judge failed to follow the guidelines for Trial Judges set out in Re F: Litigants in Person Guidelines (2001) FLC 93-072 in so far as the learned Judge did not specifically:

   a.Inform the Appellant of the process and the right to cross examine the Respondent and put to her his case,

   b.Failed to explain to the Appellant the procedures relevant to the litigation

   And the learned Judge’s failure to do so is an error of law.

   3.The learned Judge relied upon the unchallenged evidence of the Respondent in circumstances where the learned Judge had not properly explained to the Appellant pursuant to Appeal Ground 2 the procedures relevant to the litigation or to cross examination and the learned Judge’s failure to do so lead him to miscarry in the exercise of his discretion and the findings that he made in relation to the Appellant’s conduct and the case generally.

   (As per the original)

4. As is evident, Grounds 2 and 3 are each founded on the uncontentious fact that the trial judge did not specifically inform the de facto husband of his right to put his case to the de facto wife in cross-examination. By Ground 2, the de facto husband contends that, by reference to the guidelines in Re F: Litigants in Person Guidelines (2001) FLC 93-072 (“Re F”) this constitutes a failure by the trial judge to afford the de facto husband procedural fairness and is an error of law. Ground 3 contends that the trial judge’s reliance on the de facto wife’s “unchallenged evidence” in these circumstances constitutes a miscarriage of discretion. These grounds are conveniently dealt with together.

Disposition of the appeal

1. This appeal ought be dismissed and as we are of the opinion that it does not raise any question of general principle, reasons for that decision may be given in short form (s 94(2A)). Moreover, the singular lack of merit in the de facto husband’s contentions on appeal renders the conclusion that reasons in short form are all that is necessary.

2. We do not accept that, in the circumstances of this case, the trial judge was bound, in order to achieve a fair trial, to specifically inform the self-represented de facto husband that if he did not put his case to the de facto wife in

   
   

   cross-examination, her evidence may be accepted. Nor do we accept the premise implicit in this contention, namely that the outcome of the case rested upon the trial judge accepting the de facto wife’s evidence.

3. Our reasons for these conclusions are as follows.

4. First, as is emphasised in Re F (at [229]) the nature and degree of assistance to be provided by a trial judge to a self-represented litigant in order to achieve a fair trial is discretionary and the application of the guidelines must depend on the circumstances of the particular case. Here, those circumstances included the de facto husband’s experience in this litigation. This included that, in 2013, the de facto husband participated (with legal representation) in a four day trial on the issue of the existence and duration of the subject de facto relationship. Obviously, that process entailed extensive cross-examination of witnesses. Further, in 2015 the de facto husband participated (again, with legal representation) in no less than 10 days of trial over which the first property settlement trial in this matter was conducted by Dawe J. The subject trial was the retrial of the proceedings following the de facto husband’s successful appeal of the orders made by Dawe J.

5. Whilst the de facto husband was legally represented in the 2013 trial and in the 2015 trial, the point is that he had experienced the litigation process and had the opportunity of observing lawyers undertaking the cross-examination of witnesses and he had the experience of being extensively cross-examined by Counsel for the de facto wife. He also observed cross-examination of the de facto wife. Notably, he also had the benefit of the judgments in each case evidencing findings being made by judges based upon evidence expressed to be accepted or rejected.

6. Demonstrative of the de facto husband having accumulated some proficiency with the litigation process is that he clearly had some familiarity with objections to evidence having filed his own list of objections to evidence in the de facto wife’s case for the purpose of the subject trial.

7. Second, during the course of dealing with the de facto husband’s objections to the de facto wife’s evidence, counsel for the de facto wife specifically confirmed that her evidence was “able to be challenged in cross-examination if it’s disputed by [the de facto husband]” and the trial judge specifically referred to the de facto husband being able to cross-examine about “disputed” matters.[1]

   [1] Transcript 15 January 2018, p.45 lines 18-44.

8. Third, whilst the list of guidelines in Re F (at [253]) includes, as guideline 2, a judge informing a litigant in person about the right to cross-examine witnesses, it is to be noted that, unsurprisingly in our view, the guideline does not extend to casting a further obligation upon a trial judge of having to specify what consequences might follow from not cross-examining on a specific fact or issue. That would appear to be obvious. There is no suggestion here that the de facto husband was unaware of his right to cross-examine. That knowledge is ultimately evidenced by the fact that he exercised the right to cross-examine the de facto wife. Moreover, in one of his affidavits submitted in support of his failed attempt to adjourn the trial (affidavit sworn 15 January 2018) the de facto husband asserted his incapacity to “ask questions to anyone” as a reason for seeking an adjournment, but the point is that he well knew that asking questions was part of the task that confronted him.

9. Indeed, at the commencement of his cross-examination of the de facto wife, the trial judge confirmed that it was the de facto husband’s “turn to now ask questions of this witness”[2] and thereafter the trial judge engaged with the de facto husband and explored how the de facto husband proposed to ask questions; whether he had many questions or only a few; and generally thereafter assisted the de facto husband with his questioning.[3]

   [2] Transcript 15 January 2018, p.63 line 46.

   [3] Transcript 15 January 2018, p.66 to p.67.

10. Fourth, when the reasons for judgment of the trial judge are considered as a whole, the decisive feature of this case was not the evidence of the de facto wife or the trial judge’s acceptance of her evidence. Rather, what was decisive was the abject failure of the de facto husband to make full and frank disclosure and the other serious aspects of his conduct enumerated earlier. At [64] of the reasons, the trial judge recorded:

    64.The de facto wife only gave brief oral evidence-in-chief, and in the end result she was not cross-examined to any extent by the de facto husband. Thus, I had little opportunity to hear and see her give evidence and attempt to make an informed assessment of her credit. However, as a result of the lack of cross examination of her by the de facto husband, her affidavit of evidence in chief was before me unchallenged, and I accept the truth and correctness of the same. In any event, the de facto husband’s behaviour and his oral and written evidence, was such that I have no difficulty in finding that wherever the evidence of the parties conflict, the evidence of the de facto wife is to be preferred. Specifically, and importantly, that assessment applies in relation to any topic that is relevant to the decision that this Court has to make.

    (Emphasis added)

11. At [65] of the reasons, the trial judge records his findings, unchallenged on this appeal, that the de facto husband used the presence of an interpreter to delay the proceedings, to obfuscate, and to avoid answering questions “when the answers would not have assisted him”. The trial judge there also records the findings, also unchallenged on this appeal, that the de facto husband feigned a lack of understanding of questions he was asked; of being evasive in his answers; of being non-responsive to many questions and refusing to give information.

12. At [75] to [109] of the reasons, there is extensive discussion and recording of numerous, critical findings by the trial judge, unchallenged on this appeal, concerning the de facto husband’s failure to disclose and his unilateral receipt of income and use of assets that ought to have been available to the parties. For example, at [81] to [109] the trial judge deals with the de facto husband’s extensive cash dealings, the detail of which he failed entirely to account for. Likewise, within that discussion, are numerous findings as to the de facto husband’s utilisation of substantial funds wholly unaccounted for.

13. It bears emphasis that none of the findings of the trial judge concerning the de facto husband’s failure to make full and frank disclosure, and the consequences of each aspect of the de facto husband’s conduct as found by the trial judge, are the subject of any challenge whatsoever on this appeal.

14. Further, it is simply not the case that the trial judge purported to rely entirely upon the de facto wife’s affidavit evidence, ignoring that of the de facto husband. The trial judge’s careful reasons for judgment include numerous references to the affidavit evidence of the de facto husband in the trial judge’s resolution of the central issues, even where that evidence was not put to the de facto wife by the de facto husband in cross-examination. It is plain that issues raised by the parties’ respective affidavits were not resolved simply on the basis of the trial judge accepting the de facto wife’s evidence because it went unchallenged. Rather, the trial judge undertook careful consideration of the de facto husband’s affidavit evidence as well as the oral evidence he provided in cross-examination in resolving issues.

15. Importantly, given that the determinative issues related to the de facto husband’s serious and far-reaching non-disclosure of information only within his knowledge or means of knowledge; and his conduct with respect to, for example, the partnership business that he continued to operate over the years

    
    

    post-separation and about which he gave no relevant accounting, it was not a matter for the de facto wife’s evidence, or the acceptance of her evidence to resolve those issues. Put another way, the determinative issues rested upon the de facto husband’s failure to disclose or failure to provide relevant information or evidence rather than upon any evidence that the de facto wife was able to provide.

1. In argument of the appeal, counsel for the de facto husband acknowledged that the adverse findings the trial judge made about the de facto husband’s credit and conduct did not rest upon the de facto wife’s evidence. It was also acknowledged by counsel for the de facto husband that none of the adverse findings to which reference has been made were the result of the de facto wife’s evidence not being challenged in cross-examination. It follows that there is no merit in the appeal.

2. For completeness, we record that counsel for the de facto husband failed to identify, in either his Summary of Argument or in his oral argument, any determinative factual finding of the trial judge, or any issue determined by the trial judge, where that determination depended upon the de facto wife’s “unchallenged” evidence being accepted by the trial judge. In short even if, contrary to our view, it were to be assumed in favour of the de facto husband’s argument that there exists some departure from the requirements of procedural fairness, nothing was identified as demonstrating that such departure had any material consequence. It follows that the de facto husband’s appeal cannot succeed.[4]

   [4]Stead v State Government Insurance Commission (1986) 161 CLR 141; Yein & Zihao (2019) FLC 93-889.

3. We do not accept that the trial judge failed to afford the de facto husband procedural fairness, whether in the manner alleged in the subject grounds of appeal, or otherwise. On the hearing of the appeal, counsel for the de facto wife submitted, as an aide-memoir, a schedule of transcript passages setting out the numerous transcript references where the trial judge can be seen to provide assistance to the de facto husband over the course of the trial. Counsel for the de facto husband acknowledged the accuracy of the document. The extensive nature of that document renders it impracticable to set out each and every instance, but suffice for us to observe that the trial judge’s assistance to the de facto husband as a self-represented litigant was, in our judgment, ample to ensure a fair trial was conducted.

4. There being no substance in either of the remaining grounds of appeal, the appeal is dismissed.

Costs

1. In the event the appeal was to be dismissed, the de facto wife sought an order for costs against the de facto husband.

2. Three alternatives bases for costs were advanced. The first was for party/party costs up until 14 March 2019 and on an indemnity basis thereafter, calculated in a total fixed sum of $50,020.66. The relevance of 14 March 2019 is that is the date when the trial judge delivered reasons for judgment refusing the de facto husband’s application for a stay of the orders. The submission is that the detailed reasons his Honour delivered engaging with the grounds of appeal and merits of the appeal ought to have informed the de facto husband that his appeal was without merit and that, by persisting with the appeal past that date, an order for indemnity costs is warranted.

3. The second alternative advanced was for party/party costs up until 7 August 2019 when the de facto wife’s Summary of Argument was filed and indemnity costs thereafter. The fixed sum calculated on that basis is $44,394.71.

4. Finally, if costs are awarded on a party/party basis for the entire period, the fixed sum calculated is $39,358.83.

5. Whilst the de facto husband generally opposed an order for costs being made against him, counsel for the de facto husband confirmed on his behalf, subsequent to the hearing of the appeal, that the de facto husband did not challenge the respective calculations of quantum of the fixed sums sought on the three respective bases identified.

6. The de facto husband has been wholly unsuccessful in the appeal within the meaning of 117(2A)(e) of the Act. There is nothing about the financial circumstances of the parties to the proceedings as to stand in the way of an order for costs being made against the de facto husband in favour of the de facto wife in these circumstances (s 117(2A)(a)).

7. We are therefore satisfied that there exists circumstances that justify a costs order within the meaning of s 117(2) of the Act.

8. It is well settled that the purpose of r 19.18(1)(a) of the Family Law Rules 2004 (Cth) which provides for the Court to order costs in specific amounts, is to “avoid the expense, delay and aggravation in protracted litigation arising out of taxation” (Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 cited with approval in Stopford Malloy & Malloy and Anor (Costs) [2018] FamCAFC 6).

9. The authorities recognise that orders for indemnity costs are exceptional (Kohan & Kohan (1993) FLC 92-340 at 79,614; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; D & D (Costs) (No 2) (2010) FLC 93-435).

10. We are not persuaded that such a departure is warranted in this case.

11. In terms of the appropriate fixed sum for costs, as we have noted, counsel for the de facto husband did not challenge the quantum of party/party costs sought in a total sum of $39,358.83. However, for ourselves, we have difficulty with the appropriateness of that sum being awarded for a respondent to an appeal of this nature, given the limited extent of the issues raised. There is a degree of internal inconsistency in the de facto wife’s arguments, on the one hand, that the appeal was so obviously lacking in merit and that this was evident from an early stage, yet such an extent of party/party costs was accumulated by the de facto wife in resisting the appeal.

12. Despite an order being made in advance of the appeal for a schedule of costs to be provided, no such schedule was available at the hearing of this appeal. That precluded us from engaging in any discussion with the legal representatives about the appropriateness of the claims.

13. It can be seen, from the costs schedule now provided, that, primarily, that total amount of costs derives from the involvement of both senior counsel and junior counsel and, to some extent, participation of the instructing solicitor in flying from Darwin to Brisbane return for the hearing of the appeal. In our judgment, once the de facto wife’s Summary of Argument for the appeal was settled, not all of the costs claimed for preparation by each counsel and for the attendance of a solicitor from Darwin are justifiable on a party/party basis.

14. Doing the best we can, we would fix a sum of $30,000 as being, within the meaning of s 117(2) of the Act, an amount which is “just” to order for the de facto wife’s party/party costs of the appeal.

Orders

1. We make the following orders:

   (1)That the appeal be dismissed.

   (2)That within twenty-eight (28) days of the date of these orders, the de facto husband pay to the trust account of the solicitors for the de facto wife her costs of the appeal fixed in the sum of $30,000.

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Kent, Watts & Tree JJ) delivered on 11 October 2019.

Associate:

Date:  11 October 2019