KELLNER & KELLNER

[2019] FamCA 139

FAMILY COURT OF AUSTRALIA

KELLNER & KELLNER [2019] FamCA 139

FAMILY LAW – STAY – PROPERTY – Where the de facto husband seeks a stay pending the hearing of his appeal – Consideration of applicable principles – Where a successful appeal would not be rendered nugatory if a stay is not granted – Where the de facto husband’s appeal lacks merit – Where the de facto wife challenges the bona fides of the application – Stay refused – Application dismissed.

FAMILY LAW – SECURITY FOR COSTS – Where the de facto wife seeks an order for security for costs as a condition of any stay order that may be made – Where no stay is granted – Application to be dismissed in the event that the de facto wife does not seek to have it heard by the Full Court as part of the appeal process.

FAMILY LAW – COSTS – Where the de facto wife seeks her costs of the application for costs and the de facto husband’s application for a stay – Where the de facto husband opposes any order being made on the basis of his financial circumstances and suggests that such an application could only be dealt with after the hearing of his stay application and it should not be heard at all until after the determination of his appeal by the Full Court – Where impecuniosity is not a bar to an order for costs being made where there are circumstances which otherwise justify such an order – Where the conduct of the de facto husband in the proceedings provide circumstances that justify an order for costs being made – Where the de facto wife has demonstrated the presence of exceptional circumstances such as to warrant a departure from the ordinary rules as to costs – Costs of the proceedings ordered in favour of the de facto wife to be assessed on an indemnity basis in default of agreement – No exceptional circumstances having been demonstrated in relation to the application for costs and the de facto husband’s stay application, costs ordered in favour of the de facto wife to be assessed on a party/party basis in default of agreement.

Family Law Act 1975 (Cth) s 117
Family Law Rules (2004) (Cth) r 19.18(1)(a)

Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
D & D (Costs) (No. 2) (2010) FLC 93-435
Kellner & Kellner (No. 2) [2018] FamCA 1000
Logan & Logan (2013) FLC 93-555
Munday v Bowman (1997) FLC 92-784
Norbis v Norbis (1986) 161 CLR 513
Re F: Litigants in Person Guidelines (2001) FLC 93-072
Stead v State Government Insurance Commission (1986) 161 CLR 141
Stephens & Stephens (Stay application) (2010) FamCAFC 20
Yein & Zihao [2019] FamCAFC 20

APPLICANT/RESPONDENT: Ms Kellner

RESPONDENT/APPLICANT: Mr Kellner

FILE NUMBER: DNC 439 of 2012

DATE DELIVERED: 14 March 2019

PLACE DELIVERED: Perth

PLACE HEARD: Adelaide

JUDGMENT OF: Strickland J

HEARING DATE: 25 February 2019

REPRESENTATION

COUNSEL FOR THE

APPLICANT/RESPONDENT:

Mr Looney QC

SOLICITORS FOR THE

APPLICANT/RESPONDENT:

Withnalls Lawyers

COUNSEL FOR THE

RESPONDENT/APPLICANT:

Mr Bunning

SOLICITORS FOR THE

RESPONDENT/APPLICANT:

Bowen Lawyers

Orders

1. The application for a stay filed by the de facto husband on 10 January 2019 be dismissed.

2. In the event that the de facto wife does not seek to have her application seeking an order for security for costs filed on 18 February 2019 heard and determined by the Full Court, that application be dismissed.

3. The de facto husband pay the de facto wife’s costs of and incidental to:

   (a)The proceedings for property settlement subsequent to the orders made by the Full Court on 20 July 2017 as assessed on an indemnity basis in default of agreement;

   (b)The application for costs filed by the de facto wife on 17 December 2018 as assessed on a party/party basis in default of agreement; and

   (c)The application for a stay filed by the de facto husband on 10 January 2019 as assessed on a party/party basis in default of agreement.

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 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).

FAMILY COURT OF AUSTRALIA AT DARWIN

FILE NUMBER: DNC 439 of 2012

Ms Kellner

Applicant/Respondent

And

Mr Kellner

Respondent/Applicant

REASONS FOR JUDGMENT

Introduction

1. There are three applications before the Court. In chronological order they are the de facto wife’s application filed on 17 December 2018 seeking an order for costs consequent upon the delivery of my reasons for judgment and the making of final orders for property settlement on 28 November 2018 (see Kellner & Kellner (No. 2) [2018] FamCA 1000). Secondly, there is the application filed by the de facto husband on 10 January 2019 seeking in effect a stay of the orders made on 28 November 2018. Thirdly, there is the application filed by the de facto wife on 18 February 2019 seeking an order for security for costs.

2. To explain the latter application, security for costs is only sought as a condition of any stay order that might be made, and not as a stand-alone application seeking security for costs in relation to the appeal that the de facto husband has now filed against the orders of 28 November 2018; such an application would need to be dealt with by the Full Court.

3. Although the stay order sought by the de facto husband did not specify this, the written submissions of the de facto husband filed on 22 February 2019 indicated that the stay was sought “pending the hearing of the husband’s appeal”. I mention this because curiously in paragraph 1 of the affidavit filed by the de facto husband on 20 February 2019, it is said that the stay is sought until the “outcome” of the rehearing that the de facto husband seeks if the appeal is successful. That of course is not an order that would be made, and indeed, I doubt that such an order has ever had to be considered by a court in the context of an application such as this. Unfortunately, it is just one example of the lack of understanding by the de facto husband’s solicitor of what a stay entails, and what information should be put before the court in support of an application for a stay. I will delve into some specifics of that later in these reasons, but suffice to say that a significant proportion of the de facto husband’s second affidavit filed on 20 February 2019, and the affidavit of the de facto husband’s son-in-law, Mr KK, also filed on 20 February 2019, was irrelevant to the application as well as being inadmissible not only for that reason, but because no regard was paid to other rules of evidence, such as the rule against hearsay. As discussed with the de facto husband’s counsel during the hearing, and as was conceded by him as being appropriate, short of striking out the offending paragraphs, I will be ignoring much of what was contained in those affidavits, yet the unfortunate consequence of them being filed is that the de facto wife has unnecessarily filed a responding affidavit, and both the de facto husband and the de facto wife will receive substantial bills from their respective solicitors in relation to the same.

4. It is also instructive to record how it came about that the de facto husband filed those further affidavits.

5. When the application first came before the court on 30 January 2019, it was recognised by the de facto husband’s counsel that the de facto husband’s affidavit filed in support of the application was completely inadequate; all it did was record that an appeal had been filed, that a stay was sought, and that the de facto husband would let the Court know when the appeal was determined. Thus, there was nothing in that affidavit which would provide a basis for the stay order, and an adjournment was sought to file further material. That adjournment was granted on the condition that the de facto husband pay a number of outstanding costs orders totalling $31,838, and which could not be the subject of any stay order. Despite one of the costs orders having been made on 28 November 2018, the de facto husband was ordered to pay the total of those outstanding costs orders within 28 days.

6. The affidavit of the de facto husband and the affidavit of his son-in-law referred to above, comprised the further material the de facto husband filed during the period of the adjournment. He also filed a Financial Statement on 20 February 2019.

7. The de facto husband satisfied the condition of the granting of the adjournment, and paid the said amount of $31,838.

The application for a stay

1. The principles applicable to such an application are not in doubt. In exercising the discretion that the court has to grant or refuse a stay, the following matters need to be considered:

   a)Whether the stay is necessary to ensure that the appeal will not be rendered nugatory if it is successful.

   b)The merits of the appeal.

   c)Any undue delay in bringing the application.

   d)The bona fides or genuineness of the application.

   e)The length of time before the appeal can be heard.

2. It also must not be forgotten that the discretion to order a stay is “only to be exercised where special circumstances exist which justify departure from the ordinary rule that a successful litigant is entitled to the fruits of [the] litigation pending the determination of any appeal” (Stephens & Stephens (Stay application) (2010) FamCAFC 20 at [82], quoting Commissioner of Taxation v Myer Emporium Ltd (No. 1) (1986) 160 CLR 220 at 222–223 (Dawson J)).

3. In this case there has been no delay in bringing the application, and the length of time before the appeal can be heard has not been raised as a significant matter to be considered. However, the de facto husband relies on a claim that the stay is necessary to ensure that the appeal will not be rendered nugatory if it is successful, and the alleged merits of the appeal, in support of his application. The de facto wife opposes the application, and for her part says that there is a lack of bona fides or genuineness in the bringing of the application.

4. As to the question of whether the appeal will be rendered nugatory, in straightforward terms, the de facto husband says that he cannot afford to make the payment to the de facto wife that the orders require, namely $361,234, and on that basis, as provided for in the orders, the property at U Street, Suburb V (“the Suburb V property”) would need to be sold, the loan account secured over the title to that property paid out, the de facto wife receive the said amount, and the balance of the proceeds of sale be paid to the de facto husband. However, if his appeal is successful one order that the de facto husband seeks on a rehearing is to retain that property subject to the loan account.

5. In the same context the de facto husband also says that if his appeal is successful, on a rehearing he would want to have the property at C Street, Suburb D, instead of the de facto wife retaining that property as provided for in the orders made on 28 November 2018. However, it is not apparent to this Court how the refusal of a stay would render the appeal nugatory in respect of what he seeks in relation to that property, and in any event, at trial the order sought by the de facto husband was that the de facto wife could retain that property.

6. In any event, the difficulty with the submission in relation to the Suburb V property is that if the de facto husband’s financial circumstances are as portrayed in his Financial Statement, and at paragraphs 8 and 31 of his affidavit filed on 20 February 2019, then he will not be able to retain that property in any event. At the very least, he will not be able to make the repayments required in relation to the loan account, or even pay the rates and taxes. Indeed, he said as much in paragraphs 8 and 32 of his said affidavit.

7. One only needs to look at the extent of his liabilities as set out in paragraph 8 of his said affidavit to appreciate how it is impossible for him to retain the Suburb V property in any circumstance.

8. In addition, pursuant to the orders of 28 November 2018, the de facto husband was to have (with his daughter) the property at I Street, Suburb K, which is subject to a loan account of $232,537. In the orders that he says he will seek if the appeal is successful and there is a rehearing, he does not look to change this. Thus, again there is no obvious answer to how he would be able to service that loan account.

9. The de facto husband of course resides in the Suburb V property, but to date he has simply failed to make any repayments in relation to the loan account, or pay any of the rates or taxes, and significantly that is despite him being ordered on 26 August 2016 to make those payments. As I explained in my reasons for judgment, the de facto husband has refused to pay liabilities, including interest payments on loans, and rates and taxes assessed on the various properties. That failure resulted in less money being available to the parties upon the sale of some of those properties, and has increased their current liabilities.

10. Pausing there, extraordinarily, in paragraphs 29 and 8e of his affidavit filed on 20 February 2019, the de facto husband sought to lay the blame for the increase in the liability over the Suburb V property and the lack of payment of the rates and taxes at the feet of the de facto wife. I say extraordinarily because as referred to above, on 26 August 2016 he was ordered to make those payments, and he has completely failed to comply with that order.

11. The de facto husband now claims that he has had to borrow money from his son‑in-law to pay the outstanding costs orders referred to above, and to place his solicitor in funds to meet his current and ongoing legal costs. However, from the little that is admissible in the affidavit of the son-in-law, it is apparent that he requires the de facto husband to repay the money that has allegedly been lent.

12. In any event, given the de facto husband’s apparent ability to borrow money from his son-in-law, there is nothing in any of the affidavits to indicate that he has requested a loan to meet the payment required to be made to the de facto wife under the orders of 28 November 2018, and that that request has been refused.

13. Plainly, all that assumes is that the de facto husband’s financial position is as he deposes in his affidavit and his Financial Statement, however, given my findings set out in my reasons for judgment, that assumption cannot be made.

14. Under the heading “THE DE FACTO HUSBAND’S FAILURE TO PROVIDE FULL AND FRANK DISCLOSURE” I said this:

    75.The de facto husband failed to provide any disclosure relevant to his unilateral operation of the partnership following separation, his receipt of income, his cash dealings, his use of funds, his payment of liabilities including interest payments and rates and taxes, and his claim as to the “misapplication, withdrawal from accounts, or the taking of monies” by the de facto wife, not only for the purposes of the trial before me, but also for the purposes of the earlier trial before Dawe J. At both trials most of the relevant documents were provided by the de facto wife, including a significant number obtained by subpoena such as bank statements and the like.

    76.Importantly, despite the findings by Dawe J following the earlier trial, the de facto husband failed to provide any disclosure at all subsequent to those findings and prior to the commencement of the trial before me. The findings that I am referring to are for example those at [69] – [71], where her Honour said this:

    69.He was questioned at length about work he had done over the years and the use to which he had put the funds he had received recently and his explanation for the inconsistencies in his written evidence and oral evidence.

    70.When cross-examined about payments or withdrawals from accounts and where the money went, the de facto husband gave confusing answers and frequently said that his affidavit was wrong and he had not prepared it, his lawyer was wrong or his lawyer was confused. He also alleged that he did not write cheques he simply signed them and left them. At other times when presented with documents he would say that his original evidence needed to be corrected. Generally, the evidence of the de facto husband as to the whereabouts of monies withdrawn from accounts was unsatisfactory.

    71.I am satisfied that the evidence indicates that the de facto husband withdrew large sums from accounts and notwithstanding there were large sums due and owing by way of mortgages and loans, he paid sums to his adult children and, in particular, to his daughter [Ms LL] and son-in-law.

    77.The de facto husband came to the hearing before me claiming that he had “bundles of documents to produce”. He attempted to introduce some of those documents at the commencement of his cross-examination of the de facto wife, but understandably that was objected to by the de facto wife's senior counsel on the basis that the documents had not been discovered, and I ruled that the documents could not be presented in those circumstances.

15. I note that despite his failure to disclose, and despite the need for the de facto wife to issue 10 subpoenas in an attempt to put relevant documents before the Court as to the de facto husband’s financial circumstances (see paragraph 62 of the affidavit of the de facto wife filed on 22 February 2019), the de facto husband, in paragraphs 21 and 22 of his affidavit filed on 20 February 2019 made the following inaccurate and disingenuous statements:

    21.…I say that at no time had I refused to comply with any requests of the other party for disclosure. When ever request was made for production of any documents, I have always complied with the best of my ability.

    22.I say that at no time had I attempted to evade my responsibility to provide full and frank disclosure of any materials I have had in my possession or control. I say that I was unable to comply with the orders of the court, and at no time had I attempted to deliberately obstruct the compliance with the court orders. I say that I had never had anything to hide and I was always willing to cooperate to minimise the litigation.

16. Then, at sub-paragraph 26q the de facto husband had the temerity to depose as follows:

    I have in my possession cheque books, invoices, receipts and bank statements, which had always been available for inspection/disclosure, if requested. I have records to show all of my payments recorded in the books, and declared to the ATO.

17. Importantly, that last sentence demonstrates how it is not possible to accept anything the de facto husband says. During both the trial before Dawe J and the trial before me, the de facto husband conceded that he failed to declare to the Australian Taxation Office the cash monies that he received, and his reason for doing that was to keep that money from the Commissioner of Taxation (see [89] and [90] of my reasons for judgment). Further, it was demonstrated in cross‑examination that the cash money that the de facto husband received was substantial, and at least in the order of $260,000, and that the BAS statements that he submitted contained false information in that regard.

18. Not only was it demonstrated that the de facto husband received large amounts of cash which he failed to account for, but he withdrew substantial amounts of money from various accounts, including loan accounts, and failed to account for those monies as well (see [81] – [109] of my reasons for judgment).

19. In these circumstances, it is entirely open to suggest that the de facto husband’s current financial circumstances may not be as he portrays, and there may very well be funds that he has access to sufficient to meet the payment required to be made to the de facto wife in order that he can retain the Suburb V property.

1. Thus, either because the de facto husband’s financial circumstances are as he deposes and he is not in a position to be able to retain the Suburb V property in any event, or he has the ability to borrow the funds necessary to pay out the de facto wife, or he has access to sufficient undisclosed funds for that purpose, there is no basis to find that a successful appeal will be rendered nugatory if a stay of my orders is not made.

2. Given that finding, it frankly does not matter whether the appeal will be successful or not in the context of whether a stay should be granted. If a successful appeal will not be rendered nugatory there can be no basis to grant the stay. However, it is useful to address the merits of the appeal in any event.

3. The grounds of appeal set out in the Amended Notice of Appeal filed on 21 February 2019 are as follows:

   1.The learned Judge erred in so far as he did not provide to the Appellant procedural fairness by denying the Appellant an adjournment in circumstances where he had evidence before him that the Appellant had been hospitalised and was ill during the Trial.

   2.The learned Judge’s [sic] 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 [sic] 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.

4. As to the first ground, at the commencement of the trial on 15 January 2018 the de facto husband tendered an affidavit in relation to his physical health. Annexed to that affidavit were copies of hospital records relating to his recent hospitalisation. He made no application though to adjourn the hearing because of his health, and indeed those records, putting aside their admissibility, did not indicate any ongoing difficulties, nor that his medical condition prevented him from appearing in court and conducting his case.

5. The de facto husband next referred to his health on the morning of the second day of the hearing. In the context of him seeking an adjournment to obtain legal assistance, he tendered an affidavit, paragraph one of which read as follows:

   I will seek adjournment of this case due to my poor health condition. When I was in and out in the hospital, I was not able to help my wife to complete the documents properly because of the severe pain in my right kidney.

6. However, no further medical reports or hospital records were provided, and again, putting aside the issue of admissibility of the documents presented previously, and this paragraph, that was all that he put.

7. I refused the application to adjourn given the stage of the hearing and what had transpired up to that point.

8. Importantly, and to repeat, even if the hospital records provided previously were admissible, there was nothing in those documents to suggest that the de facto husband was unable to appear at the trial and conduct his case, and unlike what is in the ground of appeal itself, at no stage was there any medical evidence presented to say that the de facto husband was “ill during the Trial”.

9. I am not persuaded that this ground of appeal can succeed.

10. As to the second ground of appeal, that raises an issue of procedural fairness. It is said that I failed to apply the “guidelines” for trial judges set out by the Full Court in Re F: Litigants in Person Guidelines (2001) FLC 93-072, at [253] (“Re F”).

11. In particular, and as explained in paragraph 23a of the de facto husband’s written submissions filed on 22 February 2019, the complaint is that I “failed to explain to the Husband the procedure relevant to the litigation, namely that the Husband had to put his case to the Wife in cross examination.”

12. It is conceded that I did not specifically inform the de facto husband that he “had to put his case to the wife in cross examination”. However, given the history of this litigation, I did not consider it necessary to do more than I did. I informed him of what was to happen when each stage of the trial was reached, and in relation to cross-examination, I informed him when it was time for him to ask questions of the wife, and I gave him every assistance in how he should ask questions. Indeed, as I will explain shortly, he embarked on that process and only stopped when he decided that he would not continue.

13. By the history of the litigation I am referring to the fact that the property settlement proceedings were commenced by the de facto wife on 17 October 2012, and thereafter numerous court events took place with the de facto husband legally represented at all relevant times until about September 2017.

14. Those court events included a hearing before Judge Harland in the Federal Circuit Court of Australia in 2013 in relation to whether the parties were in a de facto relationship, and a trial which lasted for 10 days before Dawe J in April/May and July 2015, where extensive cross-examination took place.

15. In preparing for the trial before me, apart from his failure to provide full and frank disclosure, the de facto husband, even without legal representation, was able to comply with the orders made, including filing responding affidavits to the de facto wife’s affidavits, and even identifying the objections that he had to the content of those affidavits.

16. Following the de facto wife’s evidence-in-chief, the de facto husband was invited to cross-examine her. At that point the only query that he raised with me was whether he was to cross-examine only on the “paperwork” that had just been discussed, namely an aide memoir which was tendered on behalf of the de facto wife and which was marked as Exhibit W2, “or in general on her affidavits”. I responded by indicating that he was to cross-examine in general. Before he did that though there was some further evidence-in-chief adduced from the de facto wife, and the following exchange took place:

    HIS HONOUR:  All right. Thank you. All right. Now, we’re almost at 1 o’clock, but perhaps I can do it – do this. Mr [Kellner], it’s your – it’s now – now is the time for you to ask questions of this witness. Now – but before we start, how – how do you propose to do it? Have you got – have you got many questions – let’s deal with that first. Have you got a lot of questions or only a few?

    THE INTERPRETER:         Many.

    HIS HONOUR:  Many. And how are you going to do it?

    THE INTERPRETER:         Based on her affidavit, we will start with that – points on that.

    HIS HONOUR:  Okay. So you will be asking her questions from her affidavit?

    THE INTERPRETER:         Yes.

    HIS HONOUR:  Okay. All right. Well, let’s get an example of that, and we will see how we go. We’ve only got a few minutes before we adjourn, but let’s get an example of that, and we will see if it’s acceptable or not. And then if it’s not, we can sort something out over the adjournment. So – all right. Let’s proceed ---

    THE INTERPRETER:         Okay.

    HIS HONOUR:  All right. Now, it’s probably going to be easier if both of you sit down, I suppose. All right. All right, let’s start with your first question, Mr [Kellner].

    (Transcript 15 January 2018, p.66 line 39 – p.67 line 16)

17. The de facto husband then commenced his cross-examination, but following an objection to him showing a document to the de facto wife which had not been discovered, and after the lunch adjournment, the de facto husband made an oral application to adjourn the hearing for that day, to enable him to copy the documents that he had brought to court, provide them to the other side, and resume the hearing on the next day.

18. That application was opposed by the de facto wife, but the de facto wife’s senior counsel offered to look at the documents and indicate which documents would not be objected to, and thus allow the de facto husband to proceed with his cross‑examination. There was then a short adjournment for that purpose.

19. Upon resuming, the de facto wife’s senior counsel indicated that three categories of documents had been identified, namely a bundle to which no objection was taken, a bundle to which objection was taken, and a bundle that would need to be looked at overnight. However, rather than proceed with his cross-examination the de facto husband then made another application to adjourn the hearing until the next day in order that he could find a lawyer to deal with the difficulty with the documents.

20. At that point there was a storm in Darwin which caused a power outage, and the trial had to be adjourned to the next day in any event.

21. The next day the de facto husband pursued his oral application, and as referred to above he tendered an affidavit which commenced by saying that he sought an adjournment “due to [his] poor health condition”. However, as identified above, no evidence of his “condition” was presented by him at that time.

22. The affidavit said nothing about obtaining legal assistance, and simply reiterated that he wanted to provide the documents that he referred to the day before.

23. I refused his application to adjourn and the trial proceeded with the de facto wife being recalled. However, the following exchange occurred:

    HIS HONOUR:  Now, yes. Now, Mr [Kellner], we’re proceeding with the case. The witness is in the witness box again, so you proceed with your cross-examination of her.

    THE INTERPRETER:         He hasn’t brought in the papers for the hearing. He didn’t bring any of the documents with him. He has – hasn’t prepared questions or anything. He just wanted to come in and bring the application and the affidavit.

    HIS HONOUR:  So he doesn’t want to ask any questions, I take?

    THE INTERPRETER:         He can’t – he doesn’t have the capability of making questions at the moment. He’s not a lawyer. And he hasn’t brought anything with him. He’s not prepared.

    HIS HONOUR:  So – that’s the end of his questioning. If he can’t ask questions, we – there’s no point in sitting here waiting for him to ask questions, is there?

    THE INTERPRETER:         He wanted to come in and bring his evidence and submit his affidavits and his proof of this hearing that hadn’t been submitted before. And, at the moment, he’s not going to make any questions.

    HIS HONOUR:  So no questions to ask of this witness. All right. Thank you.

    MR LOONEY:  May this witness be excused?

    HIS HONOUR:  Yes.

    MR LONEY:  Thank you.

    HIS HONOUR:  You can step down.

    (Transcript 16 January 2018, p.84 lines 15 – 44)

24. It is well-established that divergence from the “guidelines” set out in Re F is not of itself sufficient to demonstrate appealable error, and the question to be asked is whether any divergence has resulted in injustice to the party affected, such that a new trial is warranted (see Yein & Zihao [2019] FamCAFC 20, Stead v State Government Insurance Commission (1986) 161 CLR 141 and Norbis v Norbis (1986) 162 CLR 513).

25. In order to answer that question it is necessary to look at the context of the alleged divergence, and the entire circumstances of the case.

26. As was said by the Full Court in Re F:

    228.…As pointed out in the recent publication of the Australian Institute of Judicial Administration (2001) Litigants in Person Management Plans: Issues for Courts and Tribunals, Carlton:

    “…

    The extent of the obligation on the court to assist litigants in person is contextual and may depend on the litigant, the nature of the case and the litigant’s intelligence and understanding of the case. The court may also have regard to the position of the other party or parties concerned and the efficient conduct of the proceedings.” (at page 6, footnotes omitted)

    229.With these matters in mind, we think that the giving of such assistance should lie in the discretion of the trial judge and should not be required by mandatory guidelines nor should the nature of the interventions from the bench be rigidly proscribed or prescribed. The exercise of such discretion serves the goal of achieving a fair trial so that the interests of justice can be served. Therefore, the application of the guidelines must depend on the circumstances of the particular case.

    230.We have noticed that a number of litigants in person are endeavouring to use the alleged breach of the guidelines as a ground of appeal in itself. We do not think it is appropriate for the guidelines to be used in this way as there may well be good reason in particular cases to depart from some of the guidelines but always remembering the Court’s obligation to provide procedural fairness and a fair trial. Thus, if in the circumstances of a particular case, a trial judge does not follow the guidelines, it does not follow that there has not been procedural fairness and a fair trial.

    …

27. Thus, what is required is a careful reading of the transcript of the proceedings, the whole of the reasons for judgment, and reference to the issues that needed to be determined.

28. For context, I refer again to the history of the litigation, and specifically to those parts of the transcript as to what occurred at the commencement of the trial, and in relation to the de facto husband’s cross-examination of the de facto wife. To repeat, he was not prevented from cross-examining, indeed he was invited to do so and given every assistance by the court. He proceeded to ask questions of the de facto wife until he decided that he would not continue.

29. As to the issues that needed to be determined, it is important to refer to my findings as to the de facto husband’s failure to provide full and frank disclosure, his dealings in cash and his deliberate decision to not disclose that cash income to the Australian Taxation Office.

30. There are then my findings as to the credit of the de facto husband set out in the following paragraphs:

    65.The de facto husband was provided with the services of an interpreter for the entirety of the proceedings. However, I am satisfied that he understood almost all of the questions that he was asked, not only in cross-examination, but by me. He used the presence of the interpreter to delay the proceedings, to obfuscate, and to avoid answering questions when the answers would not have assisted him. His tactics were to respond by disingenuously saying that he did not know the answer, when he clearly did, by feigning a lack of understanding even when the question was translated to him, by delaying his response to the question and being evasive in his answers, by being non-responsive to many questions and instead making statements that he wanted to put to the court, whether relevant to the questions or not, by refusing to accept the court’s rulings and answering in the way that had previously been disallowed, or by giving information that he well knew he was unable to give.

    66.Importantly, when he was questioned in cross-examination about his affidavit of evidence-in-chief, he initially said that he had read it before swearing as to the truth of the contents, but when he was asked about the accuracy of some specific paragraphs which were inconsistent with his oral evidence, he attempted to disown the affidavit. First, he said that the affidavit was a result of being copied from his affidavit relied on in the previous trial, that he had left it to his current wife to do the copying, that he had assumed that that had been done correctly, but now realised that some paragraphs had been incorrectly copied. However, when questioned further about this he said that he did not read it before he signed it, and that it was put together by his current wife, effectively without any input from him.

    67.At this point senior counsel for the de facto wife applied to strike out the affidavit. I adjourned the hearing until later that day to enable the de facto husband to take legal advice, and/or read the affidavit and be prepared to indicate what of it he adopted as true and correct.

    68.After that unnecessary delay in the proceedings, the hearing resumed, and I struck out the affidavit. However, to allow the matter to proceed, upon the de facto husband indicating that apart from two paragraphs that he did not understand, he adopted all other paragraphs as his evidence before the court as being true and correct, I permitted those paragraphs of the affidavit to again be before me.

    69.As became apparent in his cross-examination though, it was not the case that all of those paragraphs were true and correct.

31. I say that the factual conclusions that I reached were not only open on the evidence, but were bolstered by the lack of disclosure by the de facto husband and his lack of credibility. That could not be cured by any greater compliance with the “guidelines” identified in this ground of appeal.

32. By contrast, there was documentary evidence produced by the de facto wife which corroborated her evidence and demonstrated the de facto husband’s lack of credibility in relation to his financial dealings and circumstances.

33. The thrust of the de facto husband’s complaint is that it was not explained to him that he “had to put his case to the Wife in cross-examination”. However, in Logan & Logan (2013) FLC 93-555, the Full Court said (at [53]):

    …[t]he rule in Browne & Dunn, that it is necessary to put to an opponent’s witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, does not apply where “the witness is on notice that the witness’s version of events is in contest” (LC v TC …). Further … “[t]hat notice may come from the pleadings or the other side’s evidence or the other side’s opening; it may even come from the general manner in which the case is conducted”.

    (Citations omitted)

34. Here, given the history of the litigation, and the case presented by the de facto husband in his material filed for the purposes of the trial, the de facto wife was on notice that her version of the facts was in dispute, and it was unnecessary for the de facto husband to put his case to the de facto wife in cross-examination.

35. Further, given his lack of disclosure and his inability to produce documentary evidence which challenged the de facto wife’s evidence, what could he usefully put to the de facto wife in cross-examination in contradiction of that evidence, corroborated as it was by documentary evidence, that would have made any difference to my findings, and in particular, that the de facto husband should not be believed?

36. Thus, any alleged divergence from the “guidelines” had no bearing on the outcome of the trial.

37. The de facto husband also submits that a relevant context was that he appeared before the Court with English as his second language, and having the assistance of an interpreter throughout the course of the hearing. However, although this is accurate, my findings about that put that submission into context, and I refer to [65] quoted in [56] above.

38. I also note that none of the de facto husband’s affidavits filed for the purposes of the trial, or for the purposes of the applications now before the Court, needed to be translated to him before he swore to the truth and accuracy of the same.

39. I am not persuaded that this ground of appeal can be made out in the circumstances of this case.

40. As to the third ground of appeal, that follows on from Ground 2, and to a certain extent its success is dependent on the success of that ground. In any event, it is not correct to say that I “relied upon the unchallenged evidence of the respondent” in the circumstances referred to in Ground 2. It is the case that as a result of the lack of cross-examination of the de facto wife by the de facto husband, the de facto wife’s affidavit was before the court unchallenged, but that does not and did not mean that that evidence was accepted, or relied upon, for that reason. As is apparent from the reasons for judgment, I still had to determine whose evidence I accepted (or rejected) and as I said in [64], “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”.

1. As with the other two grounds, I am not persuaded that this ground of appeal can be made out in the circumstances of this case.

2. Given that neither of the primary bases for seeking a stay of my orders have any merit, I will be dismissing the application.

3. Before leaving this topic though, and as referred to above, the de facto wife challenges the bona fides of the application. That challenge is based on my findings as to the conduct of the de facto husband in terms of his delaying tactics at trial, and his use of the presence of the interpreter to obfuscate and to obstruct the running of the trial.

4. Thus, it is said that what the de facto husband is attempting to do here is avoid the outcome of the orders that I have made by filing an appeal which has little if any merit.

5. I agree with this submission, and that is another reason to dismiss the application.

The application for an order for security for costs

1. As I will be dismissing the de facto husband’s application for a stay, I do not need to address the wife’s application seeking an order for security for costs given that, as explained, the order was only sought as a possible condition of the granting of a stay.

2. If the de facto wife determines to seek an order for security for costs before the Full Court, it may be possible to treat this application as the application for that purpose. However, I will leave that to the de facto wife and her legal advisors, and I will make an order that the application is to be dismissed in the event that the de facto wife does not seek to have it heard by the Full Court.

The application for costs

1. The application filed by the de facto wife on 17 December 2018 is supported by an affidavit filed on that same day, and a further affidavit filed on 25 January 2019.

2. The de facto wife seeks an order that the de facto husband pay her costs, and pursuant to subrule 19.18(1)(a) of the Family Law Rules 2004 (Cth) that be a specific amount.

3. The de facto wife also seeks the costs of the application, as she also does in relation to the de facto husband’s application for a stay.

4. The de facto husband’s position in relation to the application for costs was to suggest that it could only be dealt with after the hearing of his application for a stay, but even then, it should not be heard at all until after the determination of the appeal by the Full Court, because the de facto husband may well be successful in the orders that he seeks in that appeal. If that is the case, then the findings that I made and on which I would base an order for costs, may not be the findings that would be made on a rehearing.

5. However, as I indicated to the de facto husband’s counsel at the hearing, I do not accept that submission and I will deal with the application for costs.

6. Apart from the de facto husband opposing any order for costs, the only submission that I have from him is that given his Financial Statement, he is in “precarious financial circumstances”. In this regard I note that on 30 January 2019 when I set up the adjourned hearing of the application for costs, I ordered that the de facto husband file and serve any affidavit material on which he intends to rely in relation to that application. The de facto husband has not filed any discrete affidavit material in compliance with that order. All he did was set out his alleged financial position in the affidavit filed on 20 February 2019 in relation to his application for a stay and the de facto wife’s application for security for costs.

7. The issue of costs is governed by s 117 of the Family Law Act 1975 (Cth), which relevantly provides as follows:

   (1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.

   (2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   (2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   (e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g)such other matters as the court considers relevant.

8. As can be seen, the primary position is that each party should bear their own costs, but that is subject to whether there are circumstances that justify an order for costs being made.

9. Here, there are such circumstances in the conduct of the de facto husband (s 117(2A)(c) and (g)), and they comprise the following:

   a)The failure by the de facto husband to provide full and frank disclosure as set out in [75] – [77] of my reasons for judgment (see [21] above).

   b)The conduct of the de facto husband during the course of the trial, and in particular as explained in [65] of my reasons for judgment quoted above in [56].

   c)The attempts by the de facto husband to adjourn the trial and the delays thereby caused to the running of the trial.

   d)The allegations by the de facto husband as to the de facto wife’s receipt and use of funds, many of which had either been withdrawn during the previous trial or demonstrated to be false. There was also the time that had to be taken to address these allegations which was completely unnecessary and delayed the trial (for example see [97] – [99] of my reasons for judgment).

   e)The delays caused, and the unnecessary costs incurred by the de facto wife by having to once again demonstrate the de facto husband’s failure to account for cash money that he received, and in attempting to establish the extent of the same in the context of his previous admission that he failed to declare cash income to the Australian Taxation Office (see [89], [90] and [102] of my reasons for judgment).

   f)The refusal by the de facto husband during the course of the trial to abide by my rulings, and answering in the way that had previously been disallowed, or by giving information that he well knew he was unable to give (see [65] of my reasons for judgment).

   g)The adverse findings as to the credit of the de facto husband (see [64] – [74] of my reasons for judgment).

10. These circumstances plainly justify an order for costs being made in favour of the de facto wife, but in considering whether I should make such an order I am obliged to take into account any other relevant factors arising pursuant to s 117 (2A).

11. The only other relevant factors are the financial circumstances of each party ((a)), whether the proceedings were necessitated by the failure of a party to comply with previous orders of the court ((d)), and whether any party has been wholly unsuccessful in the proceedings ((e)).

12. As to paragraph (e), although the de facto wife has been far more successful than the de facto husband, it cannot be said that he was wholly unsuccessful, but at the very least this circumstance can be taken into account pursuant to s 117(2A)(g).

13. As to paragraph (d), there have been orders that the de facto husband has not complied with, namely the orders for costs and the order made on 26 August 2016, and although they formed a part of the further proceedings, it is difficult to say that those proceedings were necessitated by that failure to comply.

14. That leaves paragraph (a).

15. Putting aside the de facto husband’s non-disclosure, and the query as to funds that he may have available to him which he has not disclosed, the prima facie effect of my orders is that each party will be left with various assets, but also significant liabilities, including those such as capital gains tax which is yet to be assessed. Further, neither party has obvious prospects of obtaining gainful employment, and their actual financial positions appear precarious. However, as has often been said by the Full Court, impecuniosity is not necessarily a bar to an order for costs where there are circumstances otherwise that justify an order for costs (for example see D & D (Costs) (No. 2) (2010) FLC 93-435). That is the position here, and particularly given the de facto husband’s failure to provide full and frank disclosure and the serious question mark over what funds he may have available to him that have not been disclosed.

16. Given then that there will be an order for costs, the next question is the basis on which the order should be made. As identified above, the de facto wife seeks that I order a specific amount, but with that calculation effectively being on the basis of the actual costs and disbursements incurred by her. That can only be the outcome if it is demonstrated that it is appropriate to calculate the costs awarded on an indemnity basis, and for that to be the case there must be exceptional circumstances as to why the usual rule of awarding costs on a party/party basis should be departed from.

17. It is useful to record what the Full Court said in D & D (Costs) (No. 2):

    26.In Limousin & Limousin (Costs) [2007] 38 FamLR 478, the Court reviewed the authorities in relation to indemnity costs. Reference was there made to the judgment of the Full Court in Kohan and Kohan (1993) FLC 92-340. It was recorded at 79,614 (citations omitted) in which it was said that:

    The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the court may make such order as the court considers just. As we have pointed out, the court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O 38 r 2, the provisions of O 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O 38 r 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind. See Degmam v Wright (No 2) [1983] 2 NSWLR 354]; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534; Hobartville Stud v Union Insurance Co (1991) 25 NSWLR 358 at 368–70.

    Indemnity costs orders are still an exception in this and other jurisdictions.

    27.The Court in Limousin (supra) also referred to the judgment of Shephard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 upon which learned Counsel for the Wife relies in support of the present application. Shephard J said in Colgate-Palmolive (supra) (at 256):

    “2.The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis …

    3.This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it …

    4.In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course …”

    28.Reference was made to the later decision of the Full Court of Yunghanns v Yunghanns (2000) FLC 93-029 in which is [sic] was said (at 87,471, par 31):

    “It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought.”

18. In Colgate-Palmolive Company v Cussins Pty Ltd (1993) 46 FCR 225 (“Colgate‑Palmolive Company”), Sheppard J provided some examples of circumstances that might warrant the exercise of the discretion to award indemnity costs, and usefully, Holden CJ in Munday v Bowman (1997) FLC 92‑784 at 84,660, drew from his Honour’s decision the following:

    a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts… .

    b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud… .

    c)Evidence of particular misconduct causing loss of time to the court and to other parties… .

    d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions… .

    e)An imprudent refusal of an offer to compromise.

    (Citations omitted)

19. The circumstances relied on by the de facto wife here are as follows:

    a)There were significant costs incurred as a result of the de facto husband’s failure to comply with his obligation for full and frank disclosure. For example, the de facto wife had to subpoena bank and other records to demonstrate that the de facto husband’s allegations as to the receipt and use of money, particularly in relation to the partnership business, were false.

    b)The conduct of the de facto husband in pursuing at trial allegations against the de facto wife that were either withdrawn, or demonstrated to be false at the previous trial, and the making of further false allegations.

    c)The conduct of the de facto husband during the course of the trial as identified above, and which conduct led to delays and a substantial amount of wasted time in completing the trial.

20. Plainly, some of the circumstances identified in Colgate-Palmolive Company as being sufficiently extraordinary are present here, and indeed, I find that all of the circumstances relied upon are in that category. Thus, I have no hesitation in finding that the costs order should be calculated on an indemnity basis.

21. I also note that I have the costs agreement entered into by the de facto wife with her solicitors, and thus I am able to compare what is sought on an indemnity basis with what would be awarded on a party/party basis, if it is necessary to do that.

22. However, unfortunately there is some confusion in the affidavits filed by the de facto wife as to the costs that are sought.

23. At the hearing on 30 January 2019 the solicitor for the de facto wife indicated that the costs and disbursements sought are set out in paragraph 51 of the affidavit filed on 25 January 2019. However, those costs and disbursements included costs and disbursements incurred in relation to the first trial, whereas I am not in a positon to make any order for costs in relation to the proceedings prior to the orders made by the Full Court on 20 July 2017. I have only been dealing with the rehearing of the property settlement proceedings as a result of those orders.

24. A further difficulty is that it is not possible for me to determine the appropriateness or the reasonableness of all of the costs said to be incurred in relation to the proceedings that were before me. I instance what are said to be the costs incurred in relation to the de facto husband’s non-disclosure and non‑compliance, in relation to the subpoenas, in relation to the safety deposit box, and in relation to a witness Ms MM, and the second respondent Ms King.

25. There is the comment by the de facto wife’s senior counsel in his written submission that the costs incurred subsequent to the first trial are “in excess of $140,000”. That is consistent with what appears in paragraph 46 of the de facto wife’s affidavit filed on 17 December 2018 where the amount of $141,833.72 is mentioned, but no detail is provided, and there is also an amount of $67,397 mentioned in the next paragraph.

26. Thus, I am not able to make an order for a specific amount, and the costs will have to be assessed on an indemnity basis in default of agreement.

27. That is also the position as to the costs sought by the de facto wife in relation to the application for costs and the de facto husband’s application for a stay. Plainly, the de facto wife should have her costs of those applications given the de facto husband has been wholly unsuccessful in relation to both, but that should be on a party/party basis, there being no exceptional circumstances demonstrated.

I certify that the preceding one hundred (100) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 14 March 2019.

Associate: 

Date:  14 March 2019