Kyriakos & Kyriakos

[2013] FamCAFC 22

FAMILY COURT OF AUSTRALIA

KYRIAKOS & KYRIAKOS AND ANOR [2013] FamCAFC 22

FAMILY LAW – APPEAL – INTERIM COSTS ORDERS- Where the appellant who is a third party appeals from a decision of  a Federal Magistrate ordering the appellant to pay the wife $50,000 to fund her litigation expenses in relation to financial and property proceedings between the husband and the wife – Where the appellant is the husband’s father – Where the Federal Magistrate dismissed an application by the appellant for a stay of the litigation funding order pending an appeal – Where the Federal Magistrate made a costs order requiring the appellant to pay the wife’s costs of the stay application – Where Federal Magistrate gave brief reasons for making the litigation funding order and reserved the right to expand upon his reasons “if necessary” – Where the Federal Magistrate noted that he had not been asked “to provide further or more detailed reasons” prior to the filing of the application for leave to appeal the litigation funding order – Where the Federal Magistrate was of the view that it was arguable” that upon an appeal being filed he was no longer able to expand on the brief reasons already given – Where after the appeal was filed the Federal Magistrate produced settled ex-tempore reasons with additional sections headed “Preamble” and Short background” – Where the Federal Magistrate did not identify the relevant source of power relied on to make the interim costs order – Leave to Appeal granted – Appeal allowed – no order for costs – certificates granted.
FAMILY LAW – APPEAL – STAY – COSTS – Where the Federal Magistrate made a material error of fact regarding the appellant’s ownership of assets and capacity to meet the litigation funding order – Leave to Appeal granted – Appeal allowed – no order for costs – certificates granted.

Family Law Act 1975 (Cth)
Federal Magistrates Court Rules 2001 (Cth)
Federal Proceedings (Costs) Act 1981 (Cth)

Aldridge v Keaton (Stay Appeal) [2009] FamCAFC 106
Bar-Mordecai v Rotman & Ors [2000] NSWCA 123
Bennett & Bennett (1991)  FLC 92-191
Bing and Bing (2007) FLC 93-318
Bromley v Bromley [1965] P111
Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378
Kendling v Kendling (2009) 39 Fam LR 404
Lam v Beesley (1992) 7 WAR 88
Loughnan v Altman (1992) 111 ALR 445
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578
Peters (aka Eustace) v Castuera (1994) FLC 92-500
Pettitt v Dunkley (1971) 1 NSWLR 376
Richmond v BMW Australia Finance Limited (No 2) (2009) 254 ALR 76
Rollings & Rollings [2009] Fam CAFC 87
S v S; The Child Representative; Victoria Legal Aid; The Chief Commissioner of Victoria Police (1997) FLC 92-762
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Strahan v Strahan (2009) 42 Fam LR 203.
Wentworth v Rares [1990] NSWCA 185

Zschokke and Zschokke (1996) FLC 92-693

APPELLANT: A Kyriakos

FIRST RESPONDENT: F Kyriakos

SECOND RESPONDENT: G Kyriakos

FILE NUMBER: MLC 7947 of 2009

APPEAL NUMBERS: SOA 46 of 2011

SOA 72 of 2011

DATE DELIVERED:	26 February 2013
PLACE DELIVERED:	Canberra

PLACE HEARD: Melbourne

JUDGMENT OF: Finn, Strickland and Forrest JJ

HEARING DATE: 15 February 2012

LOWER COURT JURISDICTION: Federal Magistrates Court

LOWER COURT JUDGMENT DATES: 17 June 2011 &
21 September 2011

LOWER COURT MNC: [2011] FMCAfam 777
[2011] FMCAfam 1030

REPRESENTATION

COUNSEL FOR THE APPELLANT: Dr Ingleby

SOLICITOR FOR THE APPELLANT: GSM Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Ms Smallwood

SOLICITOR FOR THE FIRST RESPONDENT: Mitrakas Savas & Co.

COUNSEL FOR THE SECOND RESPONDENT: Appearance Excused

SOLICITOR FOR THE SECOND RESPONDENT: Appearance Excused

Orders

Application for leave to appeal /appeal SOA 46 of 2011

(1)Leave to appeal Order 1 of the orders made by Federal Magistrate Walters on 17 June 2011 (“the order”) be granted.

(2)The appeal be allowed.

(3)The order be set aside.

(4)There be no order for costs in relation to the application for leave to appeal/the appeal.

(5)The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in relation to the appeal.

(6)The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by her in relation to the appeal.

Application for leave to appeal /appeal SOA 72 of 2011

(7)Leave to appeal Orders 1 and 3 of the orders made by Federal Magistrate Walters on 21 September 2011 (“the orders”) be granted.

(8)The appeal be allowed.

(9)The orders be set aside.

(10)There be no order for costs in relation to the application for leave to appeal/the appeal.

(11)The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in relation to the appeal.

(12)The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by her in relation to the appeal.

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE

Appeal Numbers: SOA 46 of 2011; SOA 72 of 2011
File Number: MLC 7947 of 2009

A Kyriakos

Appellant

And

F Kyriakos

First Respondent

And

G Kyriakos

Second Respondent

REASONS FOR JUDGMENT

Finn and Strickland JJ

Introduction

1.These are applications for leave to appeal and, if leave be granted, appeals by Mr A Kyriakos (“the appellant”) against:

·    orders made on 17 June 2011 by Walters FM (as he then was) which included an order (Order 1) which required the appellant to pay to the solicitor for Ms Kyriakos (“the wife”) the sum of $50,000 to be used on account of her costs in prosecuting her claims in financial proceedings between herself and her husband, Mr G Kyriakos (“the husband”) and which will be referred to as “the litigation funding order”;

·    orders made on 21 September 2011 also by Walters FM which dismissed an application by the appellant for a stay of the litigation funding order and which required him to pay the costs of the wife (fixed at $2963) in relation to the application for the stay of the litigation funding order.

2.

It was agreed at the hearing before us that the applications for leave to appeal and the appeals would be heard together although no order had previously been made to that effect. It will thus be convenient in these reasons to refer to the applications and appeals which are before us simply as “the appeal” or

“the appeals” at least in so far as the context permits.

3.

Also at the hearing before us we were informed by counsel for the appellant (towards the conclusion of his opening oral submissions) that although the notices of appeal in relation to both appeals stated that the appeals were against all orders, the appeals were in fact only against the litigation funding order (Order 1 of the orders of 17 June 2011), and against the orders dismissing the appellant’s application for a stay of the litigation funding order and requiring the appellant to pay the wife’s costs of that application (Orders 1 and 3 of

21 September 2011).

4.We mention also at this introductory point that the only parties who participated in the appeals were the appellant and the wife. The husband was excused from appearing.

5.In order to understand the issues in both appeals, it is necessary to begin by providing some history of the matters which give rise to the appeals, as it occurred prior and subsequent to the making of the orders now appealed.

History

6.On 3 August 2010, at a time when proceedings in relation to property settlement and child support were pending between the wife and the husband in the Federal Magistrates Court of Australia, the wife filed an application in a case in which she named the appellant (who is the husband’s father) as the second respondent to the proceedings between herself and the husband, and in which she sought an order pursuant to Rule 11.02 of the Federal Magistrates Court Rules 2001 (Cth), joining the appellant as a party to those proceedings. By an order made by Walters FM on 16 September 2010 the appellant was joined as a party to the proceedings.

7.In her application filed on 3 August 2010 the wife also sought orders that the appellant transfer to her the shares previously held by the husband in a company, F Pty Ltd, and the 24 units (“the units”) now held by the appellant, in The C Unit Trust, and that the appellant be restrained from disposing of certain property.

8.In her affidavit filed on 3 August 2010 in support of her application in a case, the wife stated (at [4]) that during a hearing on 28 June 2010 in relation to the child support matters, counsel for the husband had informed the Court that (amongst other things) the 24 out of 100 units owned by the husband as part of The C Unit Trust, of which F Pty Ltd is the trustee, had recently been transferred by the husband to his father, the appellant.

9.The wife went on in her affidavit (at [9]) to explain her reasons for seeking to join the appellant as a party to the proceedings. Those reasons included the claims that most of the entities in which the husband had interests were associated with the appellant or other members of the husband’s family, and that the husband, the appellant and other members of their family have embarked, or will embark, on a course of conduct designed to reduce the husband’s assets.

10.The wife also explained (at [10]) that she sought that the shares previously held by the husband in the trustee company and the 24 units now held by the appellant in the unit trust be transferred to her and that she would be willing to be restrained from disposing of the units pending final determination of the property proceedings, or that the appellant hold the units on trust for her.

11.On 27 April 2011 the wife filed a further application in a case again naming the appellant as the second respondent and seeking an order that the appellant pay to the wife’s solicitor the sum of $50,000:

1.…and that such sum be available to be used on account of the costs of the Wife in prosecuting her claim in these proceedings including the costs of engaging a forensic accountant to report on the financial position of the Husband and/or the Second Respondent and any and all related entities in which either or both of them may have or have had a beneficial interest, including but not restricted to any interests the Husband has or had at the time of separation directly or indirectly in entities associated with his family, engaging a certified translator in the Greek language to undertake a translation of documents obtained from the Titles Office in Greece, which may establish ownership by the Husband to properties in Greece and in the event that the Husband’s ownership is established, undertaking valuation of same and otherwise in respect of the Wife’s legal costs and disbursements to be incurred in these proceedings.

12.The wife also sought an order that the husband and the appellant make available “all documents reasonably required to establish or investigate the Husband’s financial position or that of any entity with which he is or was associated” with a number of entities being identified.

13.The wife’s application (filed 27 April 2011) in which she sought orders that the appellant provide her with the sum of $50,000 for the purpose of funding her costs in the proceedings and for the production of documents, was heard by Federal Magistrate Walters on 17 June 2011. At that hearing the husband, the wife and the appellant all appeared by counsel.

14.Having heard submissions from the wife’s counsel in support of her application for the provision of funds to her by the appellant, and submissions in opposition to that application from counsel for the appellant and from counsel for the husband, the Federal Magistrate indicated (at Transcript, p. 39) that he proposed to order the appellant to provide $50,000 to the wife.

15.His Honour then gave brief reasons for his decision (which in their settled form comprise seven paragraphs and some of which we will later set out), although he later (at Transcript, p. 41) reserved “the right to review and expand upon” his reasons “if necessary”. (The passage of the Transcript in which his Honour reserved the right to expand his reasons will be set out later in Ground 2 of the grounds of appeal against the litigation funding order.)

16.It appears that his Honour then gave the parties’ representatives the opportunity to prepare a minute of orders to give effect to his decision, with orders subsequently being made in terms of such a minute (at Transcript, p. 46). In the engrossment of those orders, the litigation funding order reads as follows:

1.On or before 12 August 2011 the second respondent pay, or cause to be paid, to the wife’s solicitors the sum of $50,000.00, and such sum be available to be used on account of the costs of the wife in prosecuting her claim in these proceedings including the costs of engaging a forensic accountant to report on the financial position of the husband and/or the second respondent and any and all related entities in which either or both of them may have or have had a beneficial interest, including but not restricted to any interests he has or had at the time of separation directly or indirectly in entities associated with this family, engaging a translator to undertake a translation of documents obtained from the Titles Office in Greece in relation to the husband’s assets in Greece and otherwise in respect of the wife’s legal costs and disbursements to be incurred in these proceedings, and the characterisation of such sum be reserved to the trial of this proceeding.

17.On 12 July 2011 the appellant filed a notice of appeal in which leave was sought to appeal the orders made on 17 June 2011. In the last of the seven grounds of appeal contained in the notice of appeal, the appellant reserved “the right to file further or alternative grounds of appeal in the event that Judgment is delivered by the learned Federal Magistrate before the appeal is heard”.

18.On 1 August 2011 the appellant filed an application in a case (together with a supporting affidavit) seeking that “[t]he operation of Order 1 of the Orders made on 17 June 2011 … be stayed pending the determination” of the appeal against those orders.

19.Settled ex-tempore reasons for judgment, which also included two additional sections headed respectively “Preamble” and “Short background” were issued by the Federal Magistrate on 17 August 2011 (according to the Associate’s endorsement at the end of the reasons).

20.Walters FM heard the application for the stay on 21 September 2011. He delivered ex-tempore reasons that day and made orders dismissing the application for the stay and awarding costs against the appellant in favour of the wife.

21.On 14 October 2011 the appellant filed a notice of appeal seeking leave to appeal those orders made on 21 September 2011.

22.On 8 December 2011 the appellant filed an amended notice of appeal seeking leave to appeal the orders made on 17 June 2011. The amended notice of appeal contained the same seven grounds of appeal as in the original notice of appeal (including as Ground 7 what had been the final ground in the original notice of appeal which reserved the right to file further or alternative grounds of appeal following delivery of the judgment), together with a new ground (Ground 8) which asserted error on the part of the Federal Magistrate because he did not identify the relevant source of jurisdiction for the litigation funding order.

The appeal against the litigation funding order (SOA46 of 2011)

23.Before considering the grounds of appeal directed to the litigation funding order, we will refer to the content of the Federal Magistrate’s reasons for that order, both in their original and in what can be termed their “expanded” form; this is necessary because most of the grounds are directed to his Honour’s reasons.

The original and expanded reasons for judgment of the Federal Magistrate

24.

In his original reasons delivered immediately after he had announced

(at Transcript, p. 39) that he proposed to order that the appellant provide $50,000 to the wife, the Federal Magistrate explained that the purpose of the payment was to provide funds to the wife for her litigation expenses. He then continued (according to the settled version of his original ex-tempore reasons):

25.… The final categorisation of those funds, be they a partial or interim costs order, or be they an interim or partial property settlement or order pursuant to the powers of the Court under section 106B or any other provision of the Family Law Act, can be determined at trial.  I am very conscious of the inadequacy (in many respects) of the evidence from all the parties currently before me, but I must say that the wife’s explanation for her inability to meet all the expenses to which she has referred rings true in the light of the earlier material.  It would appear, from her clear statement in her affidavit, that she does not have sufficient resources to meet the expenses associated with properly investigating the financial affairs of the husband and members of his immediate family.

26.At the end of the day, if the Court finds that the moneys that I have ordered to be paid to the wife have been wasted by her, then those funds will go on the wife’s side of the ledger.  There are sufficient assets ultimately available to the wife – through the home, for example – to compensate the second respondent and the husband if some form of waste or inefficient use of the funds now to be provided should occur.

27.I am troubled, to say the least, by the piecemeal disclosure of certain transactions that have obviously occurred, and have been conceded to have occurred, between the husband and his father.  I have made a number of references to Mr Melilli’s concession that the husband’s father is, in effect, and to use a colloquialism, “warehousing” assets to the value of something in the order of at least $468,000 for the benefit of the husband (and perhaps for the benefit of the wife as well).

28.Neither the husband nor the second respondent has provided an adequate explanation for that arrangement, and no clear reference is made to it in the material that has been referred to on behalf of the husband, or on behalf of the husband’s father.  The difficulty with incomplete and inadequate disclosure is that the Court then lacks confidence in what may be the true position of the party who has not made full and frank disclosure.  The Court is then entitled to draw appropriate inferences.  In the light of the submissions made by Mr Melilli, and the concessions that he made, it is fair for the Court to conclude that the second respondent’s financial position is significantly stronger than is revealed in his documents. 

29.I would add that the second respondent has not stated clearly and unequivocally that he does not have the capacity to provide the payment of $50,000 to the wife.  I am left to draw that inference from statements made in a financial statement which Mr Melilli concedes is inaccurate.  I am not prepared to draw that inference.  In the unusual circumstances of the case now before me, it needs, and it needed, the second respondent to say with clarity, and with particularity, that he does not have the capacity to meet the payment that has been requested of him by the applicant. 

25.As already mentioned, the “expanded” reasons for judgment, which became available on 17 August 2011, included additional material to that contained in the original ex-tempore judgment. The additional material appeared at the commencement of the reasons under the headings “Preamble” and “Short background”.

26.

Under the heading “Preamble”, and after identifying the parties to the proceedings, the Federal Magistrate referred to the fact that an application for leave to appeal the orders to which the reasons related had been filed, and he observed that having regard to that application and to the proposed grounds of appeal, it was arguable that he was now precluded from expanding his brief

ex-tempore reasons which he gave when he made the orders on 17 June 2011. His Honour also referred to his statement on the transcript of that day that he reserved the right to review and expand upon his reasons if necessary, and he noted that he had not been asked to “provide further or more detailed reasons” prior to the filing of the application for leave to appeal.

27.Then under the heading “Short background”, the Federal Magistrate provided a brief chronology of the relationship of the husband and wife until their separation, before referring to the business interests of the husband’s family, including the C Unit Trust which owns an unencumbered commercial property in Melbourne. His Honour then referred to, and made some comments about, the husband’s affidavit evidence concerning his transfer of 24 units in the unit trust to his father, the appellant. He also referred to the concessions made before him by the appellant’s counsel that the 24 units in question were worth approximately $480,000 and that they had been “warehoused” with the appellant.

The grounds of appeal directed to the litigation funding order

28.As was explained by counsel for the appellant in his oral submissions to us, six of the eight grounds of appeal in the amended notice of appeal in relation to this appeal (being Grounds 1, 3, 4, 5, 6 and 8) are directed to the adequacy of the Federal Magistrate’s reasons for the litigation funding order. We will refer to the complaint contained in those grounds shortly.

29.Of the remaining two grounds, the ground (Ground 7) which reserved the right to amend other grounds once the judgment was received can, of course, be disregarded in light of the delivery of the settled ex-tempore and expanded reasons for judgment provided on 17 August 2011 and also of the amended notice of appeal (filed 8 December 2011).

30.The only other ground (Ground 2) was in the following terms:

2.The learned Federal Magistrate’s assertion that:

“I reserve the right, as I always do in these sorts of cases, to provide more full reasons if I am obliged to do so. If the parties wish to obtain a transcript of today’s hearing, that’s fine, the court will obtain that and pay for it, so at least there is no argument about who should meet the cost of that. But as I say, any reasons that I have given I reserve the right to review and expand upon if necessary. And I hope it won’t be, because it’s just going to delay the proceedings further, and I think these parties really need to get them moving just looking at the rate at which the file is expanding” (Transcript p. 41)

amounts to an inappropriate exercise of judicial power because:

(a)It deprives the appellant of an opportunity to consider the legal and factual basis for the making of the order;

(b)It tends to discourage the Appellant from perusing [sic] his legal remedies in the Full Court; and

(c) In the event that a litigant in the Appellant’s position wishes to appeal he is obliged to go to the trouble and expense of having two sets of Grounds of Appeal drafted and filed.

31.Ultimately, as we understood the submissions of counsel for the appellant, this ground was not pressed because although the “expanded” reasons had been provided, they did not remedy the essential problem concerning the adequacy of the reasons for the order. Counsel did, however, explain that the point of this ground was that a litigant should not have to request reasons. We agree with that proposition certainly as a general rule. However, we do not agree, as presently advised, with the proposition, which was expressed as “arguable” in the Federal Magistrate’s expanded reasons, that he was not entitled to add anything of substance to his ex-tempore reasons after the appeal was filed (at least in circumstances where he had reserved the right to do so). Given that Ground 2 was not ultimately pressed, we will not here say more about the matters which it raises, although it is relevant to what follows in these reasons to observe that it has, of course, been necessary for us to determine the appeal on the basis of such reasons as his Honour gave at the time he made the litigation funding order and in his expanded reasons.

32.We return now to the six grounds of appeal which, as explained by counsel for the appellant, were all ultimately directed to the complaint made in Ground 1 being that the Federal Magistrate failed to provide adequate reasons for the litigation funding order.

33.Grounds 3, 4, 5 and 6 assert, respectively, that the litigation funding order was against the weight of the evidence, was based on material errors of fact, was made without jurisdiction, and was beyond a proper exercise of the discretion. However, it was Ground 8 on which the appellant primarily relied and it is on the basis of that ground that we consider it is necessary for us to interfere with the order in question.

34.Ground 8 asserts that the Federal Magistrate “erred in law because he did not identify the relevant source of jurisdiction as required by paragraph [86] of the Full Court’s decision in Strahan (2009) 42 FamLR 252.” It was submitted by counsel for the appellant in his written summary of argument (at [5]), that “[t]he legal requirement to identify the relevant head of power” has a close relationship to the duty to give reasons. We agree with that submission and in so doing draw attention to the discussion by Lindenmayer J in Peters (aka Eustace) v Castuera (1994) FLC 92-500 at p 81,210-81,214 of the relationship between the duty to give adequate reasons for a discretionary decision and the obligation to identify and evaluate the relevant factors upon which the discretion is to be exercised.

35.

In Strahan v Strahan, Boland and O’Ryan JJ agreed (at [84] and [86]) with the statement by Brereton J in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 (at [30]) that the earlier decision of the Full Court of this Court in Zschokke and Zschokke (1996) FLC 92-693 had established “that it is important, when contemplating an order for interim provision for litigation expenses, to identify the relevant source of power – because it is the source of power that determines the necessary preconditions and relevant considerations for making the order”. We also agree with Brereton J’s statement as to the effect of Zschokke, and we consider that the decision of the Full Court in

Bing and Bing

(2007) FLC 93-318, to which our attention was drawn by counsel for the appellant, can be distinguished on the basis that the Full Court in that case did not give any in-depth consideration to the requirement for the making of a litigation funding order because the Court considered that despite some matters of concern regarding the orders sought to be appealed, leave to appeal was not warranted in that case. In any event, however, Bing precedes Strahan and the detailed consideration contained in the latter decision.

36.It will be seen from the paragraphs of the Federal Magistrate’s ex-tempore reasons set out earlier at [24] of these reasons, that he did not in those paragraphs indentify any head of power in the Family Law Act1975 (Cth) (“the Act”) on which he was relying to make the order for, in Brereton J’s words, “interim provision for litigation expenses”. Nor is any reference to such a head of power for the interim order to be found in his Honour’s expanded reasons. Indeed his Honour’s reference at [25] of his reasons to “final categorisation” might well suggest that he did not, at the time of making the interim order, determine under what section of the Act he was making that order.

37.We acknowledge that it has been common practice in the jurisdiction when making an interim litigation funding order to provide that the final categorisation of funds provided pursuant to the order is to be determined at the final trial of the matter for which the funding was provided. However, such a provision does not negate the requirement to identify the source of power which is relied on for the making of the interim order (even though the nature of, or basis for, the interim order may later be changed). This is because, as Brereton J succinctly explained in Paris King Investments, it is “the source of power that determines the necessary preconditions and relevant considerations for making the order.”

38.We agree with the further submission of counsel for the appellant that the need for identification of the source of power was particularly important in this case where the interim litigation funding order was being sought against a third party.

39.Counsel for the appellant was prepared to acknowledge that the fact that the litigation funding order was here made against a third party, may well carry the implication that it was being made pursuant to the power to make orders for costs under s 117 of the Act. This would be so because the other heads of power which authorities such as Zschokke and Strahan recognise as being available to support an interim litigation funding order, being s 74 (the spousal maintenance power) and s 79 (the property settlement power), could not support an order against a third party.

40.

We mention in this context that before us counsel for the wife submitted that the interim order in question might be supportable under s 90AE (orders under s 79 binding a third party); but even if s 90AE was the power relied on for the order, the appeal against the order would have to succeed because no regard can be seen to have been had in its making to the important requirements in

s 90AE (2) and (3).

41.

Similarly, the Federal Magistrate raised, in [25] of his reasons, the suggestion that the litigation funding order might be finally categorised as an order under

s 106B of the Act (which is the section which permits the Court to set aside or restrain the making of an instrument which may defeat an existing or anticipated order under the Act). It appeared to be common ground before us that the wife’s application against the appellant for the transfer to her of units held by the appellant was brought pursuant to s 106B. However, the present status and/or future of that application appeared to be extremely uncertain given the apparent concession by the appellant’s counsel to the Federal Magistrate that the units were only being held by the appellant for the benefit of the husband. Thus, even assuming, but certainly not deciding that an order against a third party for an interim litigation funding order could be made pursuant to s 106B, that section could not have supported the interim order made in this case at the time that order was made. Moreover, none of the matters contained in that section which would have to be considered before an order could be made under that section were referred to by the Federal Magistrate.

42.Notwithstanding the assertion in Ground 5 that the Federal Magistrate exceeded the jurisdiction of the Court in making the order appealed, counsel for the appellant was prepared to accept that on the basis of the decision of Nicholson CJ in S v S; The Child Representative; Victoria Legal Aid; The Chief Commissioner of Victoria Police (1997) FLC 92-762, an interim costs order can be made against someone other than the husband or the wife. However, counsel’s submission in relation to any reliance on the costs power to support the order in this case was that the relevant matters in s 117(2A) which require consideration when a costs order is to be made, cannot be seen to have been considered by the Federal Magistrate in the present case.

43.Again we agree with that submission. Although, as will be seen from [25] of his reasons, his Honour gave some consideration to the financial circumstances of the wife, and from [28] and [29] some consideration to the financial circumstances and conduct of the appellant (s 117(2A)(a) and (c)), in our opinion, such consideration was far from adequate to support the order made. In this context, we are concerned about the onus which his Honour appeared to have placed on the appellant in [29] of his reasons, to have “clearly and unequivocally” stated that he did not have the capacity to provide the payment of $50,000 to the wife.

44.

On the basis therefore of Ground 8, the appeal against the interim litigation funding order should be allowed and the order set aside. There can be no question other than that leave to appeal should be granted given the significant error of principle identified by Ground 8, and the injustice that the appellant would suffer by having to provide funds pursuant to an erroneous order. We do not consider it necessary to order that the wife’s application for the litigation funding order be remitted for rehearing for the reason that there is no bar to more than one application being made for such an order.

(cf. Kendling v Kendling (2009) 39 Fam LR 404).

Costs of the appeal against the litigation funding order

45.Having regard to the submissions made to us at the conclusion of the hearing of the appeal and to the fact that this appeal has succeeded because of an error of law on the part of the Federal Magistrate, we consider that there should be no order for costs in relation to the appeal and that the appellant and the wife should receive the appropriate certificates in respect of their costs incurred in the appeal under the Federal Proceedings (Costs) Act 1981 (Cth).

The appeal against the refusal to stay and the order for costs in relation to the stay application

46.As earlier mentioned, on 21 September 2011 Walters FM refused the appellant’s application for a stay of the litigation funding order and ordered the appellant to pay the costs of that unsuccessful application fixed at $2,963. On the same day his Honour made an order concerning hearing dates but, as earlier explained, it is only the order dismissing the application for stay and the costs order which are the subject of the application for leave to appeal/appeal.

47.The three grounds of appeal contained in the notice of appeal are on their face directed only to the order dismissing the application for the stay, in that they assert that that order:

a)will render the appeal nugatory (Ground 1);

b)was based on material mistakes of fact (Ground 2);

c)is outside the ambit of the proper exercise of the discretion (Ground 3)

48.It was, however, asserted in the written submissions on behalf of the appellant that if the submissions in support of the challenge to the order dismissing the stay application were accepted, then the basis for the costs order would fall. We agree with that submission.

49.

So far as the challenge to the order dismissing the stay application is concerned, only Grounds 2 and 3 were the subject of written submissions, with no submissions, either written or oral, being put in support of the specific complaint in Ground 1 that a refusal to stay would render the appeal against the litigation funding order nugatory. However, the complaint contained in Ground 1 can be seen as being raised in the submissions in support of

Ground 2

.

50.In the written submissions in support of Ground 2, two material errors of fact were alleged in the following terms:

·    “Opportunity to provide reasons and merits of appeal generally”; and

·    “Ownership of assets”.

51.Because the submissions made in relation to these two alleged material errors of fact refer to a number of passages in the Federal Magistrate’s reasons for judgment in relation to the stay application, it is necessary to set out, notwithstanding its length, that part of his reasons where his Honour applied to the present case the principles concerning the determination of applications for a stay of an appealed order, as those principles emerge from authorities such as Aldridge v Keaton (Stay Appeal) [2009] FamCAFC 106. In so doing we will emphasise the particular parts of the reasons to which counsel for the appellant drew attention in his submissions in support of the appeal (emphasis added):

6.        The principles that are relevant include the following: 

a)Firstly, the onus to establish a proper basis for the stay is on the applicant for the stay, although no special or exceptional circumstances are required.

b)It follows that the onus to establish the appropriateness of the stay in this matter is on the second respondent, who is the applicant before the Full Court.  I do not require the second respondent to demonstrate any special or exceptional circumstances.  Nevertheless, and for the reasons that I will record to [sic] in a moment, I am not satisfied that any sufficient circumstances have been demonstrated, such as would warrant the granting of a stay.

c)The next principle is that a person who has obtained a judgment is entitled to the benefit of that judgment.  It needs to be said, again, that this is not an application to stay a final order; the relevant order is an interim or interlocutory order for the payment of funds to enable the wife to properly prepare her case for trial.  In those circumstances, it is arguable that it is particularly important for the funds to be provided to the wife, because I have found that they are needed for the purpose that she has indicated.  I have also found that the second respondent should have the capacity to meet the payment.  I am not here to sit on appeal from myself, and I have been given no reasons as to why I should change the views that I formed on the previous occasion. 

d)Clearly, the wife should be entitled to the benefit of the funds that I have ordered be paid to her.  Mr Mort has not persuaded me that the Court should prevent her obtaining the funds that she needs to properly prepare her case.  It is clear that there will be adequate funds available to these parties at trial to repay the second respondent (or, indeed, the husband) if it is ultimately determined that the wife should not have received the amount that I ordered that she should be paid.  I dealt with that subject on the earlier occasion and will not revisit it now.

e)The next factor is to the effect that a person who has obtained a judgment is entitled to presume that the judgment is correct.  I need say nothing about that at this stage.  The other side of the coin, however, is that a person who lodges an appeal (on an application for leave to appeal) is perfectly entitled to do so, and simply because a judgment has been obtained does not mean that it is necessarily or unassailably correct – but such an observation simply leads to a further consideration of the other factors that are relevant in a stay application, and amounts to a circular argument. 

f)The next factor is that the mere filing of an appeal is insufficient to grant a stay.  Still less does the filing of an application for leave to appeal amount to sufficient reason to grant a stay.

g)The next factor relates to the bona fides of the applicant.  I made certain comments on the last occasion about the behaviour of the second respondent, and during the course of today I have recorded the fact that all or almost all of the proposed grounds of appeal involve matters that were not raised before me on 17 June.  I would add to that the fact that the second respondent applied for leave to appeal without giving the Court any opportunity to provide more detailed reasons in the manner that it had indicated that it would.  These are factors that, in my view, are relevant to the bona fides of the applicant.  They are also relevant to the strength of the grounds of the proposed appeal, and the appeal’s chances of success.  These are matters that I take into account.  In my opinion, they do not reflect positively on the bona fides of the applicant.

h)The next factor is to the effect that a stay may be granted on terms that are fair to all parties.  As Mr Testart has indicated, it is difficult to see how that factor might be considered relevant in the context of the current application.  It seems to be relevant only if the Court is minded to actually grant a stay – and, as I have indicated, I am not persuaded that a stay is appropriate in this case.  If I thought that a stay on terms might be appropriate, then I would certainly be looking at that factor in more detail. 

i)The next factor involves a weighing of the risk that an appeal might be rendered nugatory if a stay order is not granted.  Mr Mort did not press this factor because (as matters currently stand) is [sic] there are clearly going to be sufficient funds available to these parties at trial to repay either the respondent or the second respondent, if at the end of the day the Court considers that the payment of the $50,000 was not warranted for one reason or another.  Of more concern, as I suggested earlier, is the fact that the wife may not be able to effectively prepare for and conduct the trial if the order is not complied with. 

j)The next factor involves some preliminary assessment of the strength of the proposed appeal.  I indicated during the course of submissions today that, in my view, and in spite of the fact that the applicant may have an arguable case, the grounds are not strong ones.  Relevantly, they are not strong because:

i)        they were never raised at first instance;

ii)Mr Melilli conceded that the second respondent is, to use a colloquialism, “warehousing assets” on behalf of either the respondent or the respondent and the wife; and

iii)insofar as the grounds of appeal relate to a lack of reasons, the fact of the matter is that the Court offered to provide more detailed reasons, but that offer was not accepted. 

k)I accept that the Full Court may take a different view to that expressed above, but I need to determine the matter on the basis of the facts and the evidence before me, and I am not persuaded that the application for leave to appeal (let alone the appeal itself) is likely to succeed, although I accept that there are elements of it that may be arguable.

l)The final factor relates to the period of time in which the appeal can be heard.  I am told that the appeal will be dealt with in February 2012.  The trial of this matter is likely to be in the first half of next year, but I am not sure precisely when it will be.  If it remains in my docket, then it will not be held until September or October of 2012, but it is more likely to be between April and June 2012 if it can be reallocated to another docket.  I have taken that factor into account but, in my view, it does nothing to assist me to determine whether the stay should or should not be granted.  On the other hand, it is important that the wife be provided with the funds that she needs to properly prepare and conduct her case, and to carry out the investigations that she says are necessary.  I was not persuaded on the last occasion that either the respondent or the second respondent will be disadvantaged in any way by the provision of these funds, which can ultimately be repaid from assets available to the parties at trial, and in particular from assets that the wife might otherwise be expected to obtain or retain.

52.We will deal first with the second material error of fact alleged in Ground 2, which is described in [14] of the appellant’s written outline as being  in relation:

to the nature of the findings that were made as to the Applicant Appellant’s ownership of assets, which is relevant not only as to the merits of the appeal, but also as to the “nugatory” requirement of the stay application, in relation to which the finding in subparagraph 6(i) … to the effect that “it can all be sorted out later” simply misses the point.

53.References are then made in the outline to (amongst other findings) the findings in subparagraph 6(c) that “I have also found that the second respondent should have the capacity to meet the payment … and I have been given no reasons as to why I should change the views that I formed on the previous occasion ”

54.It is then further submitted in [19]:

In the Reasons for Judgment on the previous occasion the learned trial judge found that the second respondent needed “to say with clarity, and with particularity, that he does not have the capacity to meet the payment that has been requested.” The learned trial judge omits consideration of paragraphs 10 and 11 of the affidavit in support of the stay application … which are precisely to this effect.

55.In our reasons in relation to the appeal against the litigation funding order, we expressed concern about the Federal Magistrate’s statement set out in [19] of the appellant’s outline, and the onus which his Honour apparently placed on the appellant to establish his capacity to meet the litigation funding order. This concern on our part is heightened in the current context by the fact that paragraphs [10] and [11] of the affidavit in support of the appellant’s application for a stay appear to have been overlooked by his Honour in his decision to refuse the stay. This oversight is a matter which we consider requires our intervention with the order refusing the stay.

56.Moreover, it seems to us self-evident that to refuse to stay the litigation funding order, would render an appeal against that order nugatory. It was certainly not appropriate, in our opinion, to adopt the approach that, in the words of the appellant’s outline, “it can all be sorted out later”, particularly where a third party was involved.

57.For these reasons we would grant leave to appeal and allow the appeal against the order dismissing the application for a stay of the litigation funding order. We would set aside that order. It is unnecessary that the application for the stay be re-determined because we have now determined the appeal against the order sought to be stayed.

58.We are fortified in the conclusion that the appeal against the refusal to stay should be allowed when we have regard to the first material error of fact alleged in the appellant’s written summary of argument (at [5]), being the finding in [6(g)] and again in [6(j)(iii)] of his Honour’s reasons for refusing the stay that, in the words of the appellant’s written summary, the appellant “had denied” his Honour “the opportunity” to provide reasons. It would seem from what follows in the written summary at [7] that the appellant’s contention is that it was the Federal Magistrate’s duty to provide reasons and that the appellant should not have been required to apply for them. It was then further submitted at [9]:

The materiality of this error is compounded by the further findings in subparagraph 6(g) that the alleged impropriety on the part of the Appellant Applicant was relevant to:

a.The bona fides of the applicant;

b.The strength of the grounds of the proposed appeal;

c.The appeal’s chances of success.

59.Although in the appeal against the litigation funding order, the ground (Ground 2) which challenged the Federal Magistrate’s approach to the giving of reasons for that order, was not pursued (thereby making it unnecessary for us to determine that ground), we did when referring to that ground, express general agreement with the proposition that a litigant should not be required to apply for reasons. We also (as presently advised) expressed our disagreement with his Honour’s view that he could not add to his reasons once the appeal was filed, at least where he had reserved the right to do so. We repeat those views in the context of the present appeal, and accordingly conclude that the first material error of fact asserted by Ground 2 of the appeal against the refusal to stay the litigation funding order, would be established.

60.The success of the appeal against the refusal of the application to stay the litigation funding order must mean that the appeal against the order for costs made against the appellant in relation to that application must succeed and that order must also be set aside.

Costs of the appeal against the refusal to stay and the consequent costs order

61.Again, having regard to the submissions made to us at the conclusion of the hearing of the appeal and to the fact that this appeal has also succeeded because of an error of law on the part of the Federal Magistrate, we consider that there should be no order for costs in relation to the appeal and that the appellant and the wife should receive the appropriate certificates in respect of their costs incurred in the appeal under the Federal Proceedings (Costs) Act 1981 (Cth).

Forrest J

62.I have had the advantage of reading the reasons for judgment of Finn and Strickland JJ. I agree that the appeals be allowed for the reasons given by their Honours. However, there is one point of principle referred to in their Honours’ reasons with which I respectfully disagree and in respect of which I wish to set out my own views.

63.Their Honours pointed out (in [31] of their joint reasons) that Ground 2 of the grounds of appeal in the amended notice of appeal directed to the litigation funding order (set out in full in [30] of their joint reasons) was not pressed by counsel for the appellant. Their Honours went on though to express agreement with the proposition, at least as a general rule, that a litigant should not have to request reasons. I respectfully agree with their Honours on that point.

64.Their Honours then said:

However, we do not agree, as presently advised, with the proposition, which was expressed as “arguable” in the Federal Magistrate’s expanded reasons, that he was not entitled to add anything of substance to his
ex-tempore reasons after the appeal was filed (at least in circumstances where he had reserved the right to do so).

65.That is the point on which I respectfully disagree with their Honours.  I do not consider the Federal Magistrate was entitled to add anything of substance to his reasons after the appeal was filed. Indeed, although Ground 2 was not pressed on the appeal, I also consider, with respect, the learned Federal Magistrate (as he then was) erred when he gave ex-tempore reasons and expressly reserved the right to review and expand upon his reasons “if necessary”.

66.It is a matter of accepted principle that a Federal Magistrate and judges of the Family Court may pronounce judgment (in the sense of making orders) and, in circumstances where the administration of justice is best served, reserve the giving of reasons for that judgment to a later time.[1] Such circumstances do not excuse the obligation to provide adequate reasons as that is an obligation owed to the parties, founded in judicial accountability.[2] Of course, the sooner the reasons can be delivered after judgment is pronounced, the better.[3]

[1]Rollings and Rollings [2009] FamCAFC 87; Richmond v BMW Australia Finance Limited (No 2) (2009) 254 ALR 76

[2]See Bennett and Bennett (1991) FLC 92-191; Pettitt v Dunkley (1971) 1 NSWLR 376; Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247

[3]          See Rollings and Rollings (supra) and the cases cited therein at [63]

67.Being an obligation owed to the parties, unless the parties expressly relieve the judicial officer from the obligation, the duty to give adequate reasons is only discharged by the delivery of those reasons. It is not discharged by the judicial officer purporting to reserve the right to discharge the obligation upon specific request of either party.

68.It is also accepted principle that a judicial officer has the right to revise reasons that were delivered ex-tempore. Indeed, in Bar-Mordecai v Rotman & Ors [2000] NSWCA 123, in a joint judgment of Sheller, Stein and Giles JJA, the New South Wales Court of Appeal said (at [193]-[196]):

It is always possible, indeed proper, for a judge to revise ex tempore reasons. So long as the substance of the ex tempore reasons is not altered, nor the orders which they sustain, there is no bar to revision, even if it is extensive.

In an extra curial publication (1997) 9 Judicial Officers’ Bulletin at 25 Gleeson CJ said:

A judicial officer revising a transcript of reasons for a decision is entitled to alter the transcript where, because of a slip, the reasons as expressed do not reflect what the judicial officer meant to say; or where there is some infelicity of expression which the judicial officer desires to remedy. There is no reason, in law or in policy, why a judicial officer who delivers a judgment ex tempore should be strictly bound to the precise manner in which the reasons were expressed. On the contrary, judges and magistrates are encouraged, where it is possible and appropriate to do so, to decide cases promptly and to give their judgments immediately. It would not advance that policy to prevent them from later improving the manner of expression of their reasons, provided, of course, that they do not alter the substance.

See also Kirby J Ex Tempore Judgments – Reasons on the Run (1995) 25 UWALRev 213 at 229-30

This extends to corrections of errors of fact, within the constraints mentioned. The matter was well put by Danckwerts LJ in Bromley v Bromley[1965] P111 at 116

… the general principle must be that this court must accept as the authentic record of the judge’s judgment that which has been approved by him after consideration of the draft produced by the shorthand writer. It is not only a question of possible mistakes by shorthand writers, who do their best extremely well but are sometimes unable to hear exactly the words used by the judge in the course of his judgment. There are other cases which arise through the judge not saying clearly what he meant, or indeed sometimes by slip saying something which he cannot possibly have meant.

After all, an extemporary judgment is not always easy to deliver perfectly in all respects on the spur of the moment; there must be corrections which need to be made so as to give the real meaning of the judge, and he is perfectly entitled, it seems to me, not only to correct mistakes, but to alter words which do not express his intended meaning at the time when he uttered them.

See also Lam v Beesley (1992) 7 WAR 88, Loughnan v Altman [1992] FCA 580; (1992) 111 ALR 445 and Wentworth v Rares (Court of Appeal, 19 November 1990, unreported.

We do not think that any revisions made by his Honour, by way of the addendum and as otherwise asserted by the appellant, were other than appropriate, permissible and within the principles discussed above. They cannot be seen as altering the substance of the reasons, and clearly made no difference to the result on the critical issues for determination by the Court.

69.I respectfully agree with the views expressed by their Honours in that case and those of the judges they referred to in that extracted passage.

70.However, the right to revise ex-tempore reasons already delivered and the right to pronounce judgment and reserve the giving of the reasons to a later time do not combine to create a right to deliver some reasons at one point in time and to expand upon, or alter the substance of those reasons at a later time, if required by one of the parties or, by choice, after an appeal against the orders has been filed.[4]

[4]          R v Tupou; ex-part AG (Qld) [2005] QCA 179 and DPP (Cth) v Thomas [2005] VSC 85 at [17]

71.It cannot, therefore, be legitimate for a judicial officer to deliver some reasons, or partial reasons, and invite the parties or either of them to request further reasons. Such an invitation expressly acknowledges that the reasons already provided are, or may be, inadequate to explain the decision. In the matter under appeal, the learned Federal Magistrate’s own determination not to provide “expanded” reasons once the notice of appeal had been filed must be viewed as an acknowledgment by his Honour that the substance of his reasons already delivered would likely be altered by the further reasons he might otherwise have provided.

72.The process of arriving at a discretionary judgment is a single, self-contained and indivisible exercise. The provision of reasons, delivered orally or in writing, is merely the articulation of that process for the benefit of the parties and the public administration of justice. An invitation to parties to request further reasons, or a reservation of the right to review and expand upon reasons, after some have already been given simply reveals that the process of arriving at the discretionary judgment has not been adequately disclosed, and the obligation of the judicial officer thus not discharged. 

73.At least, in my respectful opinion, the error that his Honour made by reserving the right to review the reasons he had given and to expand upon them “if necessary” was not compounded by him going on, after the notice of appeal was filed, to actually add to the substance of those ex-tempore reasons. That said though, in the end, it is the inadequacy of the reasons he had given that has led to the success of the appeal against the orders he made.

74.I agree that the orders proposed to be made by Finn and Strickland JJ should be made.

I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 26 February 2013.

Associate: 

Date: 26 February 2013.