Lindner and Lindner - [2018] FamCA 928

FAMILY COURT OF AUSTRALIA

LINDNER & LINDNER

[2018] FamCA 928

FAMILY LAW – COSTS – where a person seeks costs although not a party to the proceedings where her private financial circumstances may have been the subject of a subpoena – consideration of the power to make an order for costs in favour of a non-party.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Collins and Collins (1985) FLC 91-603
McAlpin & McAlpin (1993) FLC 92-411
Re JJT; Ex parte Victoria Legal Aid [1998] HCA 44; 195 CLR 184
Sully & Sully [2018] FamCA 786

APPLICANT:

Ms A Lindner

RESPONDENT:

Ms B Lindner

FILE NUMBER:

MLC

10352

2017

DATE DELIVERED:

16 November 2018

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

14 November 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Ms Wheeler

SOLICITOR FOR THE APPLICANT:

Mills Oakley

COUNSEL FOR THE RESPONDENT:

Mr Brown QC with Mr Cameron

SOLICITOR FOR THE RESPONDENT:

Mackay Lawyers & Advisors

Orders

The application for costs by the purported Interested Party, Ms A Lindner, is dismissed.

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 Lindner & Lindner 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 MELBOURNE

FILE NUMBER: MLC 10352 of 2017

Ms A Lindner

Applicant

And

Ms B Lindner

Respondent

REASONS FOR JUDGMENT

Ms A Lindner (“Ms Lindner”) is related to Mr Lindner (“the husband”) who is a party in the substantive property proceedings before the Court. Ms Lindner is also a director of some corporate entities. To the accountant of those entities, Ms B Lindner (“the wife”) had the Court issue a subpoena on 24 May 2018, to produce documents.
Ms Lindner was not served with the relevant subpoena but became aware of the extent of the documents being pursued. Through her solicitors, Ms Lindner contacted the wife’s solicitors asserting she was an “interested person” within the definition in the Family Law Rules 2004 (Cth) and insisted on being properly informed about what was being sought. In short compass, this all led to a costs application being made by Ms Lindner against the wife after other disputes involving the parties to the proceedings were resolved.
The dispute between the parties to the proceedings was heard in the judicial duty list on 14 November 2018 despite the fact that the subpoena had been issued as long ago as May 2018. Objection was lodged by the accountant to the release of the documents for inspection by the wife. His objection related to the width of the subpoena, giving rise to an assertion that it was oppressive. After discussion between those involved (apparently save Ms Lindner), a compromise was reached culminating in orders which I need not mention further.
At the conclusion of discussion between bench and bar which gave rise to those orders, counsel for Ms Lindner sought an order for costs against the wife in the sum of $10,500.
To be clear, Ms Lindner is not (and was not) a party to the proceedings although she was intending to (or did) file a notice of address for service. The costs claimed were said to be $4,400 for counsel and $6,100 for her solicitor. Unashamedly, those costs were calculated on the basis of the costs agreement that Ms Lindner had signed with her solicitors.
In discussion, I raised with counsel for Ms Lindner the question of the power to make an order in favour of a non-party.
It was acknowledged by counsel for Ms Lindner that s 117 of the Family Law Act 1975 (Cth) (the Act”), that is, the traditional cost power, related to parties and Ms Lindner did not fit into that category. Her counsel submitted that there was an inherent power within the Court to regulate its own processes and that s 80 of the Act might also assist. Counsel submitted that Ms Lindner should be seen as a party having been “brought” to the Court. I reject that. In my view whatever her rights were, she had not been joined as a party nor had she sought to intervene. In fairness, that may in part had been due to the amount of notice she had been given of the subpoena objection hearing.
On any view, none of the grounds upon which counsel submitted could give rise to the Court’s power to make an order for costs. I suggested that the appropriate power, if it existed, lay in s 117(2) of the Act and counsel for Ms Lindner adopted that position.
Senior counsel for the wife submitted that there was no clear statutory authority to make the orders sought, but in any event, no such order should be made having regard to the position that Ms Lindner and her mother had adopted in pushing the husband out of the corporate entities that had ultimately given rise to some of the problems about the wife getting access to documents.
Having regard to the very nature of the dispute about whether the power exists, I think it is important to examine that issue first.
Section 117(2) of the Act provides:
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.
It may be immediately presumed that the relevant subsections mentioned are not going to be of much assistance here. It will also be immediately apparent that there is no reference to “parties” in the section and the provision appears wide as well as discretionary.
In Collins and Collins (1985) FLC 91-603, the Full Court dealt with an appeal against an order made by the trial judge that the Victorian Legal Aid Commission pay the husband’s costs. The Full Court said there was “no doubt that s 117 of the Act confers a broad discretion” in regard to costs but it had to be exercised “having regard to the primary rule that each party bears their own costs”. The Full Court observed that such a rule negated any principle that costs followed the event. The Court observed that the Victorian Legal Aid Commission was not “technically” a party and had not intervened. Their Honours remarked that the absence of express power assumed some significance. Ultimately, the Full Court held that the lack of any inter partes application together with the fact that the legal aid commission was not a party, was “fatal to the exercise of power”. The problem however did not go away.
In McAlpin & McAlpin (1993) FLC 92-411, a differently constituted Full Court examined again s 117(2) of the Act and held (albeit obiter) that on its natural reading, the Court’s jurisdiction to order costs was unlimited. Their Honours saw no reason to confine the jurisdiction where the legislature had used the word “parties” in ss 117(1) and 117(2A) but not in s 117 (2). The Full Court said that the position articulated in Collins (supra) did not represent the law.
In the proceedings before me, no authority was submitted by either party to say that McAlpin (supra).had been overturned or restricted.
Section 117(2) of the Act requires the Court to have regard to the matters set out in s 117(2A) and of that particular subsection, subparagraph (g) speaks of “such other matters as the court considers relevant”. The absence of the word “parties” in s 117(2) means that the Court can take into account whether or not to make an order, such other matters as the Court considers relevant, and that might include the action of a party bringing non-parties into the proceedings.
In Re JJT; Ex parte Victoria Legal Aid [1998] HCA 44; 195 CLR 184, Gaudron J [at 4] noted that the provision of s 117(2) of the Act was drafted such that it was “wider than the bare power ‘to award costs’ [as contemplated] in Knight v FP Special Assets Ltd.”
In Knight v FP Special Assets Lt (1992) 174 CLR 178, Mason CJ and Deane J had said:
[15]Generally speaking, only parties on the record of the proceedings are bound by the orders made in the proceedings. But there [were] a variety of situations in which persons, not being parties in that sense, will be bound.
Their Honours went on to say that:
[27]… it is impossible to construe the wide and general words of [the rule of the state court in relation to costs] as delimiting the jurisdiction to order payment of costs as one which was and is confined to parties to the proceedings…It is preferable to interpret the words of the rule according to their natural and ordinary meaning as conferring a grant of jurisdiction to order costs not limited to parties on the record and ensure that the jurisdiction is exercised responsibly.
It is the use of language such as a “exercised responsibly” that gives some indication that s 117(2) of the Act ought not be seen as unlimited or that costs follow the cause or that there should be an assumption in every case that a non-party should receive an order for costs.
In Re JJT (supra), Gaudron J said (at [4]) that the provisions of s 117(2) “ authorises orders against persons who are not parties to proceedings in the exceptional circumstances in which that course is appropriate.”
The use of the words “exceptional circumstances” like the words “exercised responsibly” seem to have a limiting effect on what the Full Court said in McAlpin (supra).
It is not clear why there would need to be caution having regard to the language used in s 117(2) of the Act, but I have inferred that it is because s 117(1) of the Act provides that this is effectively a no-costs jurisdiction except in circumstances which justified departure from that principle.
Importantly, as the Court in Re JJT (supra) said, it is the “proceedings” which found the s 117 power (see [92]). The High Court saw no reason in principle why an applicant could not seek costs within the relevant proceedings.
Section 4 of the Act defines “proceedings” as a proceeding whether it is between parties to a marriage or not. However, there has to be a “connexion with a proceeding.”
In my view, there is a proceeding here between the husband and the wife which founds the s 117 power. The Court has before it an oral application by Ms Lindner who sought to be heard (and in respect of which no objection was raised by any other party) on the subject of her being an “interested person” in respect of the discrete issue of the subpoena issued within the proceedings.
Chapter 15 of the Family Law Rules 2004 (Cth) (“the Rules”) not only contemplates the protection of the privacy rights of a person affected by a subpoena within the proceedings, but requires a party seeking to issue that subpoena to serve a copy of it upon any person who may be deemed to be so interested. Trying to work out how such a subpoena would affect individuals is a matter that remains perplexing (see Sully & Sully [2018] FamCA 786). However, whatever r 15.22 of the Rules means, the power to make an order for costs predominantly must come from s 117(2) of the Act and the authorities all indicate that orders should only be made in exceptional circumstances or sparingly. As I have observed, I consider that language is intended to draw the Court’s attention back to finding a justifiable circumstance to depart from the principle that each party pays their own costs.
Turning then to the immediate application, I am satisfied there is jurisdiction to make an order.
Counsel for Ms Lindner said that her client had been brought into the proceeding and had a right to be heard on it focused on the protection of her privacy. It is unclear to me whether that right of privacy related to her personal circumstances, or whether it was in her role as a director, but in respect of the latter, it would hardly be private in the same sense. For example, in respect of a corporate entity, there would no doubt be minutes and all members of the company would be privy to those discussions. The privacy in that sense is different from that relating to one’s personal circumstances. The difficulty here is that there is no evidence from Ms Lindner. No request was made on Ms Lindner’s behalf to file material to indicate why her privacy needed to be protected having regard to the fact that she is a relative of the husband, who was until recently, apparently involved in the corporate entity.
Senior counsel for the wife pointed the finger at Ms Lindner as being involved in keeping documents away from the wife by virtue of actions to exclude the husband from the company. I have no evidence of that either, other than the oblique reference that senior counsel made to affidavits that had been previously filed.
It is difficult therefore to get a sense of why Ms Lindner was complaining about her privacy when there was no evidence as to what was to be so protected.
Returning then to the question of how such an application for costs should be dealt with, I have taken the view that there needs to be circumstances to justify departing from the general principle that each party pays their own costs. In circumstances where Ms Lindner had every right to argue that she was an interested person and that her privacy was to be protected, I have no understanding of what was to be protected and why it was particularly sensitive in this case, having regard to the number of entities which presumably have something to do with the property proceedings between the parties. There is no evidence upon which I could make a determination here that the rights of Ms Lindner were being trampled upon or likely to be so, or that the wife’s approach in issuing the subpoena that may have captured documents inappropriately. In the circumstances, I decline to make an order for costs at all.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 16 November 2018.

Acting Associate:

Date: 16 November 2018