M v W
[2006] SASC 347
•23 November 2006
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
M v W & ANOR
[2006] SASC 347
Judgment of The Full Court
(The Honourable Justice Bleby, The Honourable Justice Besanko and The Honourable Justice Anderson)
23 November 2006
FAMILY LAW AND CHILD WELFARE - DE FACTO RELATIONSHIPS - ADJUSTMENT OF PROPERTY INTERESTS
PROCEDURE - COSTS - JURISDICTION
Application for interim costs order referred to the Full Court by a Master of the Supreme Court - Action involving de facto property dispute where it is alleged that assets held pursuant to a trust – Issue of whether the Court has power to make an interim order for costs – Consideration of two possible sources of power, namely section 40(1) of the Supreme Court Act 1935 (SA) and the inherent jurisdiction of the Court – Application allowed (by majority) – Referred back to Master to hear and determine the application on the merits.
Corporations Act 2001 (Cth) s 1335(1); De Facto Relationships Act 1996 (SA) s 3, 9, 10, 11, 14A; De Facto Relationships Act 1984 (NSW); Family Law Act 1975 (Cth) s 117, 68L(2); Federal Court of Australia Act 1976 (Cth) s 43; Judiciary Act 1903 (Cth) s 26; Law of Property Act 1936 (SA) s 69; Matrimonial Causes Act 1959 (Cth) s 125; Matrimonial Causes Act 1929 (SA); Property Law Act 1958 (Vic) s 285; Real Property Act 1886 (SA) s 64; Supreme Court Act 1935 (SA) s 40(1), 72, 29(1); Supreme Court Act 1970 (NSW) s 76(1)(a); Supreme Court Act 1958 (Vic) s 24(1); Supreme Court Rules 1987 (SA) r 2.01, 3.04, 3.06, 100, 101.01, 106.04, referred to.
Giller v Procopets [2002] VSC 305; Mansfield v DPP for Western Australia [2006] HCA 38; Parker v Parker (1992) 16 Fam LR 458; Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184; Devlin v Collins (1984) 37 SASR 98, discussed.
Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965; Baumgartner v Baumgartner (1987) 164 CLR 137; Breen v Breen (1990) 65 ALJR 195; Cameron v Cole (1943-1944) 68 CLR 571; Copping v ANZ McCaughan Ltd (1995) 63 SASR 523; DJL v Central Authority (2000) 201 CLR 226; Electric Light and Power Supply Corporation Ltd v Electricity Commission of NSW (1959) 94 CLR 554; In the Marriage of D and M Barro (1982) 8 Fam LR 855; Knight v FP Special Assets Ltd (1992) 174 CLR 178; Montreal Trust Co v Churchill Forest Industries (Manitoba) Ltd (1971) 2 DLR (3d) 75; Parij v Parij (1997) 72 SASR 153; Taylor v Attorney-General [1975] 2 NZLR 675; Wilson v Wilson [1966] 2 NSWR 187; GE Dal Pont, "Law of Costs" (2003), [6.6]; Sir Jack Jacob, "The Inherent Jurisdiction of the Court" (1970) 23 Current Legal Problems 23, considered.
M v W & ANOR
[2006] SASC 347Full Court: Bleby, Besanko and Anderson JJ
BLEBY J: I am indebted to Besanko J for setting out the background to these proceedings and for his analysis of the issue for determination, including his discussion of the relevant cases. For the purpose of these reasons I too will describe the type of order sought in this case as an interim order for costs.
For the purpose of deciding whether the Court has power to make an interim order for costs, I can see no relevant distinction between the power to make an order “as to costs”[1] and the authority conferred by section 40(1) of the Supreme Court Act 1935 (SA) that “costs of and incidental to all proceedings … shall be in the discretion of the court”. The use of the phrase “and incidental to” confers on the Court the widest possible powers. If it is a necessary incident of the proceedings to do justice to the parties that the Court should exercise its discretion to make an interim order for costs, the Court should be able to do so.
[1] Section 117, Family Law Act 1975 (Cth); section 125, Matrimonial Causes Act 1959 (Cth) (repealed by the Family Law Act1975 (Cth)).
The power to make an order “as to costs” has been held to justify the making of an interim order for costs.[2] I see no reason why the provisions contained in section 40(1) of the Supreme Court Act should not be held to confer a similar power.
[2] Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184, Gaudron J at 188-189, Gummow J at 191, Hayne J at 219, Kirby J at 201; In the Marriage of D and M Barro (1982) 8 Fam LR 855; Wilson v Wilson [1966] 2 NSWR 187.
There is substantial fortification for that view provided by decisions on an almost identical conferral of power in other States.[3]
[3] Parker v Parker (1992) 16 Fam LR 458; Giller v Procopets [2002] VSC 305.
I do not think it is necessary, in order to provide a foundation for the power to make an interim order for costs, to resort to the power to award costs of and incidental to the administration of trusts on the footing that the Court is ordering the administration of a constructive trust. I doubt that proceedings such as these can be so characterised. Usually, the issue in proceedings such as these is not the administration of a trust but whether such a trust exists.[4]
[4] Cf Baumgartner v Baumgartner (1987) 164 CLR 137.
The fact that this Court has not been asked to make such interim orders in the past is no indication of a lack of power to do so. The conferral of a power to divide property in accordance with the provisions of the De Facto Relationships Act 1996 (SA) is of relatively recent origin. Although the Court exercised a similar power under the Matrimonial Causes Act 1959 (Cth) and earlier State legislation, it has not had the power to make similar discretionary property settlements between living persons since the commencement of the Family Law Act 1975 (Cth). It would be surprising if the Parliament intended, in similar circumstances, that the Court should exercise a less fulsome jurisdiction in respect of costs in a property settlement under the De Facto Relationships Act than it was able to order under the Matrimonial Causes Act 1929 (SA), particularly when the power to make an interim order for costs under similar legislation to that applicable in this State has been held sufficient to justify such an order.
I acknowledge the concern expressed by Besanko J of potential difficulties that could arise if, as it must, the power to award interim costs applies to all civil litigation. It is a power which must be exercised with extreme caution in order to ensure that no injustice is caused to the party required to comply with the interim order for costs. The circumstances in which such costs will be awarded outside matrimonial and de facto property settlement cases will perhaps be rare. Difficulties attending the exercise of the power are not sufficient to deny the power. Kellam J in Giller v Procopets[5] has suggested some relevant considerations appropriate for this type of case.
[5] [2002] VSC 305 at [39]-[44].
In the case of a claim under the De Facto Relationships Act the risk of injustice is perhaps less than in most other types of civil litigation. Proceedings under the De Facto Relationships Act are unlikely unless there is a dispute between two persons as to the entitlement to identifiable property. The definition of “property” in section 3 of the Act is extremely wide:
property of a person includes-
(a) a prospective entitlement or benefit under a superannuation or retirement benefit scheme;
(b) property held under a discretionary trust that could, under the terms of the trust, be vested in the person or applied for the person’s benefit;
(c) property over which the person has a direct or indirect power of disposition and which may be used or applied for the person’s benefit;
(d) any other valuable benefit.
The power of the Court to make an order is set out in section 10:
10-Power to make orders for division of property
(1) On an application for the division of property, the court may make orders it considers necessary to divide the property of either or both the de facto partners between them in a way that is just and equitable.
(2) For example, the court may make orders for-
(a) the transfer of property from one de facto partner to the other; or
(b)the sale of property and the division of the net proceeds between the de facto partners in proportions decided by the court; or
(c) the payment by one de facto partner of a lump sum to the other.
Section 11 of the Act relevantly provides :
11-Matters for consideration by the court
(1) In deciding whether to make an order for the division of property under this Part, and if so the terms of the order, the court-
(a)must consider the financial and non-financial contributions made directly or indirectly by or on behalf of the de facto partners to-
(i)the acquisition, conservation or improvement of property of either or both partners.
…..
The whole of the “property” as defined of both former de facto partners is subject to a possible order of the Court. Although I have said proceedings under the De Facto Relationships Act are not proceedings for the administration of a trust, the Court is able to decide on the apportionment of the total property pool of the two former partners. Provided that the Court is satisfied that the claimant for an interim order for costs has at least some prima facie claim to that part of the property pool held by or under the control of the other in an amount equal to or exceeding the amount of the interim order for costs, it will not be difficult for the Court to make an appropriate adjustment upon the final order for the division of the property if those costs should properly be met by the claimant.
For these reasons I consider that the Court does have power to make an interim order for costs by virtue of the provisions of section 40(1) of the Supreme Court Act.
If necessary I would, for the reasons given by Anderson J, hold that an interim order for costs could be made in the exercise of the inherent jurisdiction of the Court, but in my opinion it is not necessary to rely on that.
I would order that the application for an interim order for costs contained in paragraphs 1 to 4 of the Notice for Specific Directions filed by the plaintiff on 16 January 2006 be referred back to the Master with a direction that the Master hear and determine the application on the merits on the basis that it is an application which the Court has power to determine in the plaintiff’s favour.
BESANKO J: This is an application referred to this Court by a Master pursuant to the power contained in r 106.04 of the Supreme Court Rules 1987 (“SCR”). That rule relevantly provides:
(1)A Master may refer any summons or application to a single Judge or to the Full Court and the Full Court or the Judge may either dispose of the matter or refer it back to the Master with such directions as it or he may think fit.
The application was made by a notice for specific directions issued by the plaintiff to an action in this Court. The action is not yet ready for trial.
The orders sought by the plaintiff
The orders sought by the plaintiff that are relevant to the reference to this Court are as follows:
1.That pursuant to Section 40 (1) of the Supreme Court Act, the First Respondent will provide payment into the trust account of the Plaintiff’s solicitors in the sum of $80,000 for the provision of costs of the Plaintiff in this proceeding.
2.That the payment referred to in Order 1 above be paid by way of cash or bank cheque made payable to Lesley Hastwell & Associates Trust Account.
3.That the payment referred to in Order 1 above be made no later than 14 days after the date of this order.
4.That the payment referred to in Order 1 above be kept separate in the said trust account and those funds be used only for the payment of accounting fees of Edwards Marshall, the professional fees of Mr Colin Pitchfork, coin valuer, and the professional fees of licensed real property valuers, and any other proper legal disbursements and fees.
In my opinion, it is appropriate to view this as one order because the orders sought in paragraphs two, three and four are, in effect, conditions attendant upon the payment referred to in paragraph one.
In the reference to this Court, the Master referred to the order sought as an “interim order for costs”. I am content to adopt that description, although it is no more than a shorthand way of referring to a more complex order.
The sum of money that is the subject of the proposed order relates to expenses incurred and to be incurred, which are of a nature that could be recovered by a successful party to an action pursuant to an order for the payment of that party’s costs. The expenses include legal costs and the costs of witnesses, including the costs of experts and the preparation of experts’ reports. The latter might be more properly described as disbursements, but there is no dispute that for present purposes they fall within the concept of costs.
If an order of the nature sought by the plaintiff is to be made, it would need to be part of the order that the payment only be used for the above purposes, and that may mean that it would be appropriate to order that the monies be held in the trust account of the applicant’s solicitor. That was the approach taken by Kellam J in Giller v Procopets [2002] VSC 305. If an order is to be made, it would also need to be part of the order that any balance be held in the solicitor’s trust account subject to the further order of the court, and that the payment itself be taken into account in such manner as the trial Judge may determine. Brennan J (as he then was) said in Breen v Breen (1990) 65 ALJR 195 at 195-196, in the case of a similar order made by the Family Court:
Such an order made for such a purpose, though it falls within one or other of the powers conferred in the Family Court, should be so framed as to protect the parties from any risk of injustice arising from the manner in which the funds are expended.
The order sought by the plaintiff is to be distinguished from an order for security for costs. In addition to the fact that in the case of an order for security for costs a defendant (as distinct from a plaintiff) is rarely, if ever, ordered to provide such security, the distinguishing feature of this order is that the money is not only paid by the party who is the subject of the order, but is then disbursed for the benefit of the applicant. The power of this Court to order security for costs either under s 1335(1) of the Corporations Act 2001, its inherent jurisdiction or r 100 of the SCR, is not in issue on this reference.
The action
Both the plaintiff and the first defendant are legal practitioners. The second defendant is a company that is said to be the trustee of a trust. The plaintiff and the first defendant are both directors and shareholders of the second defendant and both have given undertakings that the second defendant will abide by the decision and findings of the Court. In effect, the contest on this application is between the plaintiff and the first defendant, and it is convenient to refer to the first defendant simply as the defendant.
It is common ground that the plaintiff and the defendant lived together in South Australia in a bona fide de facto relationship from about October 1979 until about July 2002, and that there were three children of the relationship.
It is alleged by the plaintiff that she brought assets to the relationship in the sense that she had assets which became joint assets of the plaintiff and the defendant. It is alleged by the plaintiff that, pursuant to an agreement with the defendant, she paid the income she earned as a legal practitioner during the relationship to the defendant, and that he had the control of those monies for their joint benefit. It is alleged by the plaintiff that it was a term of the agreement that the principal assets of the plaintiff and the defendant would be held pursuant to a trust. It is alleged that during the course of the relationship, the trust maintained, improved, acquired and sold real property and that the plaintiff carried out works of improvement and maintenance to various properties. It is further alleged that the plaintiff paid monies into a superannuation fund.
Relevantly, the plaintiff seeks the following orders against the defendant:
1A declaration that the trustee (the second defendant) holds the trust assets for the plaintiff and the defendant.
2An order revoking the trust and distributing the trust property in such manner as the court considers just.
3An order for the sale of real property pursuant to s 69 of the Law of Property Act 1936 and s 64 of the Real Property Act 1886.
4A division of property pursuant to s 9 of the De Facto Relationships Act 1996.
As I have said, the plaintiff’s action is still in its interlocutory stages.
The nature of the application
The application by the plaintiff is an unusual one. The Court was not referred to any authority in this State where an order of the nature now sought was made, and I am not aware of any such authority.
The Court was asked to decide only whether there was power to make an interim order for costs, leaving it to the Master to determine the merits of the application. I am prepared to adopt that course. However, in order to fully appreciate the nature of the application, it is necessary to outline in some detail the material put forward by the parties as relevant to the merits of the application.
A number of affidavits have been filed in support of and in opposition to the application.
The plaintiff has sworn two affidavits. In her first affidavit, she sets out the details of her present financial position and health. She also sets out the history of her professional life and her financial activities before and during her relationship with the defendant. She describes the attempts she has made to settle the issues in dispute. The plaintiff states that the financial affairs of herself and the defendant are complicated and that in order to prosecute her claim properly she needs to engage an accountant to undertake a “forensic accounting exercise”. The plaintiff states that there are substantial assets to which she has an entitlement. However, she states that the assets are under the control of the defendant and that:
62.My capacity to prepare for trial is thereby severely inhibited. I am advised by my solicitors that I require at least $60,000 by way of an interim order to get the matter to trial. I am unable to access my monies held in the trust because of [W’s] attitude. I seek an order of the Court in that amount.
63.I know that [W], who has turned 65 in March 2005, can access his superannuation funds to meet such an order and I believe there will be no taxation penalty for him as he had now achieved the age of 65 years and has an entitlement to his superannuation. Further, I know that in December 2004 he withdrew $271,091 (referred to at paragraph [11C] of [W’s] Defence). [W] has informed me that he has deposited it into an Adelaide Bank money market account, which he opened at that time in his sole name. I believe that of the $271,091, about $100,000 came from the distribution of his mother’s estate in late 2003.
The plaintiff’s solicitor, Ms Lesley Hastwell has sworn two affidavits in which she sets out the progress of the action and outlines the issues in dispute. She alleges that the defendant has not cooperated in providing information to the plaintiff such that it has been and is difficult for her to prepare the plaintiff’s case for trial, and she sets out a number of matters in support of that allegation. She makes a number of other allegations, the most important of which may be summarised as follows:
1The plaintiff claims that she has an interest in a coin collection. She wishes to have the collection valued and claims that it will cost $5,000 to carry out that valuation.
2The plaintiff claims that the defendant has not made adequate discovery of relevant financial documents. Those documents are necessary, it is said, so that a forensic accountant can prepare a report of assets and liabilities. The plaintiff estimates that the fees of the forensic accountant will be in the order of $20,000.
3There are various items of real property which need to be valued and the estimated cost of that exercise is $10,000.
Ms Hastwell estimates that to pay for outstanding legal fees and the estimated costs of the coin valuer, forensic accountant and real estate valuer, the plaintiff needs in the order of $80,000.
The defendant has sworn an affidavit in opposition to the application. For present purposes, it is unnecessary to set out the details of his affidavit. It is sufficient to say that he denies a number of allegations made by the plaintiff. He states that he does not have the money to pay the plaintiff the sum of $80,000 or, it seems, any substantial sum.
In summary, the plaintiff claims an entitlement to what she alleges are joint assets or a joint fund which are under the control of the defendant. She alleges that, in order to properly prepare her case for trial, she must engage solicitors and experts, and that she does not have the funds to meet the liabilities which will thereby arise. She alleges that the defendant has sufficient funds to prepare his case for trial and to pay the expenses associated with the preparation of her case. She seeks an order at an interlocutory stage that the defendant pay an amount on account of costs to meet her expenses. Her liability to repay that amount to the defendant will be worked out at the conclusion of the case when orders are made dealing with which party is entitled to judgment, and, if relevant, in what amount, and which party is entitled to an order for costs.
The plaintiff’s application requires the determination of two issues, namely, whether there is power to make an interim order for costs (the question of power) and, assuming there is power, whether an interim order for costs should be made in this case (the merits). As I have said, this Court is asked to determine only the first question. The plaintiff submits that if the Court decides that there is power, then we should refer the application back to the Master with a direction that he determine the application on the merits on the basis that there is power to make an interim order for costs. If there is no power, then it is appropriate for this Court to dismiss the application. The defendant submits that there is no power to make the order sought, but if he is wrong about that, he does not ask this Court to determine the merits of the application.
The plaintiff submits that there are two sources of power to make an interim order for costs, namely, s 40(1) of the Supreme Court Act 1935 (“SCA”) and the inherent jurisdiction of the Court.
Section 40 of the SCA
Although the Court is being asked to exercise its equitable jurisdiction and the jurisdiction it has under various pieces of legislation, including the Trustee Act 1936 and the De Facto Relationships Act 1996, the only statutory provision which is said by the plaintiff to be the source of a power to make an interim order for costs is s 40(1) of the SCA. It should be noted that there is no express power in the De Facto Relationships Act 1996 to order an interim division of property, nor is there a section dealing with the costs of proceedings under the Act.
Section 40(1) of the SCA is in the following terms:
Subject to the express provisions of this Act, and to the rules of court, and to the express provisions of any other Act whenever passed, the costs of and incidental to all proceedings in the court, including the administration of estates and trusts, shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid.
The subsection is expressed to be subject to (among other things) the rules of court.
In the course of her submissions, the plaintiff referred to various rules of court, including the statement of the purpose of the rules (r 2.01), the power in the court to do any acts or give any directions relating to the conduct of the action “subject to such terms as to costs or otherwise as it thinks proper” (r 3.04(g)) and the broad discretion the court has as to costs (r 101.01(1), (4) and (6)). Rule 101.01(1)(4) and (6) relevantly provide:
(1)Notwithstanding the following provisions of this Rule and of the provisions of Rule 101A.01 the costs of any party, the amount thereof, the person by whom, or the fund or estate, or portion of an estate, out of which they are to be paid are in the discretion of the Court, and the Court may:
(a) award a lump sum in lieu of, or in addition to, any taxed costs;
(b) in any action seeking damages for personal injury order that the plaintiff shall not recover costs or shall recover part only of the costs if the plaintiff has failed to submit, at least 90 days before the institution of the proceedings, to the defendants insurer, if he is aware of such insurer, or, if he is not so aware, to the defendant, a detailed claim in writing together with copies of supporting documents including medical reports which set out the nature and extent of the plaintiffs injuries and residual disabilities as known to the plaintiff at that time.
(c) direct whether or not the costs are to be set off;
(d) where the costs of one defendant against a plaintiff ought to be paid by another defendant, order payment to be made by one defendant to the other directly, or the plaintiff to pay the costs of the successful defendant and allow him to include those costs as a disbursement in the costs payable to him by the unsuccessful defendant;
(e) where an indemnity has been given for costs by a person not a party, inquire into and determine that person’s liability as to costs in order that a final order can be made as to the costs of the proceeding.
(4)The Court may in any proceeding exercise its powers and discretions as to costs at any stage of the proceeding and after the conclusion of the proceeding.
…
(6)Where the Court makes an order in any proceeding for the payment of costs the Court may require that the costs be paid forthwith notwithstanding that the proceeding is not concluded.
The statutory power to make rules of court dealing with costs is in s 72 of the SCA, and in particular s 72 (1)(h), which provides as follows:
(1)Rules of court may be made under this Act by any three or more judges of the Supreme Court for any of the following purposes:
...
(h) for regulating the duties of the officers of the court and the costs of proceedings therein (including the costs to be allowed to practitioners of the court in respect of business transacted in the court or the offices thereof), and the conduct of any business coming within the cognisance of the court, for which provision is not expressly made by any Act;
It is not suggested by the plaintiff that the rules themselves confer the power to make an interim order for costs and I do not think reference to the rules of court is of any real assistance in resolving the present issue. The rules of court cannot restrict the power in s 40(1) of the SCA. In Copping & Perball Pty Ltd v ANZ McCaughan Ltd (1995) 63 SASR 523, King CJ (with whom Mohr and Nyland JJ agreed) said (at 527):
The existence of s 40 is also an important, even controlling factor, in the construction of the rule. It is true that the section is expressed to be “subject to the rules”. Nevertheless the legislative intention is plainly to confer on courts and judges an unfettered discretion as to costs. A construction of a rule of court which practically negates the statutory provision is not lightly to be adopted. It may well be that the rule, so construed, would be invalid. Where a statutory provision is made subject to Rules of Court, the rules may prescribe procedures which condition the operation of the statutory provision or limit the mode of its operation. They may even modify or exclude its operation in defined circumstances. But a general provision in a Rule of Court which substitutes a different rule across the board for that prescribed by the statute would seem to me to be invalid as repugnant to the statute.
Nor, consistently with basic principle, can the rules enlarge the scope of the statutory power in s 40(1) of the SCA.
Section 40(1) no doubt confers a wide power on the Court as to its subject matter. It has been said by the House of Lords in the context of a section analogous to s 40(1) that a limitation on the power should not be implied, or, at least, readily implied: Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965. However, in my opinion, the issue in this case is the identification of the subject matter of s 40(1), rather than whether a limitation on the statutory power should be implied.
The plaintiff submits that s 40(1) should be construed against a background of authorities in analogous situations in which it has been held that there is power to make an interim order for costs, or in which observations have been made suggesting that that is the case.
The plaintiff referred to the decision of the High Court in Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 (“Re JJT”) and to certain observations made by members of the Court in that case. The facts and relevant statutory provisions in that case were quite different from the facts and relevant statutory provisions in this case.
Re JJT involved proceedings in the Family Court between a father and mother about contact with the child of their marriage. A Judge of the Family Court made an order that the child be separately represented in the proceedings. Section 68L(2) of the Family Law Act 1975 (Cth) (“FLA”) provided that the Court could order that a child be separately represented in proceedings before the Court and “make such other orders as it considers necessary to secure that separate representation”. The Legal Aid Commission of Victoria was ordered to provide such representation.
Central to the decision in Re JJT was s 117 of the FLA, which was in the following terms:
(1)Subject to subsection (2) and section 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 subsection (2A) and the 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 of 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, in accordance with section 117C or otherwise, 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.
A Judge of the Family Court made an order that, pursuant to s 117 of the FLA, Victoria Legal Aid (the successor to the Legal Aid Commission of Victoria) pay in advance a specified sum for the future costs of the child’s representative in the proceedings. The Family Court’s power to make that order was challenged. A majority of the Court (Gaudron, Gummow, Hayne and Callinan JJ; Kirby J dissenting) held that the Family Court did not have the power to make the order.
One or other of the parties before this Court referred to the following passages in the reasons for judgment of the various members of the High Court. Gaudron J said (at 188-189 [2]-[3]) (footnotes omitted):
The power conferred by s 117(2) of the Family Law Act 1975 (Cth) (the Act) is a power to “make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just”. That power is not simply a power to make an order for costs. Were it so, it would only authorise orders to indemnify for “costs actually incurred in the conduct of litigation”. However, a power to make an “order as to costs” is a broader power. And when regard is had to the consideration that s 117(2) expressly authorises interlocutory orders that sub-section must, in my view, be construed as authorising orders requiring a party to proceedings under the Act to provide another party with funds to conduct those proceedings.
Doubtless, the power to award maintenance under s 74 of the Act also extends to orders that a party to the marriage provide the other with funds to conduct proceedings under the Act. I mention this matter because, as between parties to a marriage who are also parties to litigation, an order to provide funds for the conduct of litigation as to their mutual rights and obligations is as aptly described as a maintenance order as an “order as to costs”. And it may be that, in the absence of statutory power either as to costs or maintenance, a superior court has inherent power in proceedings between de facto couples to make an order that one party provide the other with funds to conduct proceedings, if that is necessary to enable the proper conduct of litigation with respect to their property. And in that situation, an order might as easily be described as a mandatory injunction or an order for interim provision as an “order as to costs”.
Gummow J said (at 191 [10]):
Secondly, the basic concept that orders as to costs provide for or towards an indemnity does not deny the competency of an interlocutory order whereby one party is obliged to make available to another funds towards that indemnity. Such an order may be made quia timet, in advance of the indemnity being called upon after the making of final orders. However, the order to which the prosecutor objects is not of that description.
Hayne J said (at 219 [89]-[91]):
Central to deciding whether s 117 authorised the making of the impugned order is the construction of the expression “order as to costs” as it appears in s 117(2).
In Cachia v Hanes, Mason CJ, Brennan, Deane, Dawson and McHugh JJ said:
“It has not been doubted since 1278, when the Statute of Gloucester introduced the notion of costs to the common law, that costs are awarded by way of indemnity (or, more accurately, partial indemnity) for professional legal costs actually incurred in the conduct of litigation.”
On its face, then, the reference in s 117 to “costs” is a reference to “costs” as that word is ordinarily understood in the law: the amount which the person to whom the order is directed must pay to some party to the litigation as partial indemnity for the professional legal fees and expenses incurred by that party in the course of the litigation. Section 117(1) provides, in effect, a prima facie rule that each party is to bear his or her own costs of the proceeding but that prima facie rule is subject to the operation of s 117(2) which, in turn, is dependent upon the court concluding “that there are circumstances that justify” the making of an order.
It seems that it has long been recognised that the Family Court, acting under s 117 of the FLA, has the power in proceedings before it to make an interim order for costs: see, for example, In the Marriage of Barro (1982) 8 Fam LR 855. The terms of s 117(2) provide a basis for such an order; in particular, the reference to an order “as to costs” (as distinct from “for costs”) and to an order “by way of an interlocutory order or otherwise”. The terms of s 40(1) are quite different, a point to which I will return (see [64], below).
Section 125 of the Matrimonial Causes Act 1959 (Cth), the predecessor to the FLA, was in the following terms:
In proceedings under this Act, the Court may, subject to the rules, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise as the Court thinks just.
Interim orders for costs were made under that section and indeed under the previous State legislation: see, for example, Wilson v Wilson [1966] 2 NSWR 187. The rationale for such orders is discussed by Jenkyn J in Wilson v Wilson (supra).
The plaintiff submitted that interim orders for costs have also been made outside the matrimonial context and she referred to Parker v Parker (1992) 16 Fam LR 458 and Giller v Procopets (supra).
In Parker v Parker (supra) the female plaintiff sought an order under the De Facto Relationships Act 1984 (NSW). She sought an order that the defendant pay $15,000, to be used for investigations by accountants into his financial position and the valuation of his financial interests. Bryson J considered that there was power to make such an order under s 76(1)(a) of the Supreme Court Act 1970 (NSW). That section provided that subject to the Act and the rules, and subject to any other Act, costs were in the discretion of the Court. Bryson J said (at 459):
To my mind the claim is clearly a claim for an interim order for costs and falls within the power of the court to order costs under s 76(1)(a) of the Supreme Court Act 1970. To my mind there is no difficulty about the power of the court to make an order for payment of a sum on account of costs at an interlocutory stage.
On an application for leave to appeal ((1992) 16 Fam LR 462), Kirby P (as he then was, and with whom Priestley J and Meagher JA agreed) said (at 463):
The jurisdiction of a judge of the Supreme Court to fashion an order for costs is extremely wide. Two sources of jurisdiction were relied on in this case by the opponent: viz s 76(1) of the Supreme Court Act 1970 and ss 27 and 38 of the De Facto Relationships Act 1984. His Honour appears to have contented himself with relying upon the former head of power.
It is unnecessary for us to decide whether the latter would also have provided a basis for his orders, any more than it was for the High Court in Breen v Breen (1990) 65 ALJR 195 (HC) to determine the exact source of the power in the Family Court to make the order which was there approved when special leave to appeal from the Family Court was refused. For a very long time orders akin to that which was made in this case were made in matrimonial causes cases. See eg Williams v Williams [1929] P 114 at 118 and Wilson v Wilson (1966) 9 FLR 1 (SC NSW) at 7.
No principle could be fashioned which would satisfactorily allow the very wide powers of s 76 of the Supreme Court Act to be read down on the footing that, in some way, de facto relationships were in a relevantly different class to marriage.
In Giller v Procopets (supra), the plaintiff claimed that she lived in a de facto relationship with the defendant and she made a claim for an interest in property pursuant to s 285 of the Property Law Act 1958 (Vic). Before the trial of the action, the plaintiff made an application for payment of the sum of $84,472.46 by way of what was said to be “interim financial provision for her litigation expenses”. The interim costs were said to be past and future legal costs and future valuation and accountancy fees. Kellam J held that there was power to make an order for interim costs by reason of s 24(1) of the Supreme Court Act 1958 (Vic), which provided as follows:
Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.
Kellam J referred to Parker v Parker (supra), Breen v Breen (1990) 65 ALJR 195 and Re JJT and held that s 24(1) was at least as wide as s 117(2) of the FLA. Kellam J said (at [38]):
In the light of the observations of the Supreme Court of New South Wales and the High Court of Australia in relation to the costs provisions under the Supreme Court Act of New South Wales and the Family Law Act (1975), I am satisfied that s 24(1) of the Supreme Court Act is at least as wide as s 117(2) of the Family Law Act. In such circumstances I am satisfied that the Court has the power to make the order sought by the plaintiff. In my view, the justification for such a power is apparent in relation to defacto property cases. In such cases one party to the proceeding, and more often than not the defacto husband, regularly enjoys the advantages of having ownership of the assets in dispute (together with other financial resources) and an intimate knowledge of his/her own affairs and circumstances. Unless the other party has the resources to investigate and become acquainted with such financial circumstances that party is often at a considerable disadvantage in the preparation and conduct of the litigation. Legal Aid is now rarely, if ever, available to assist parties in the conduct of such proceedings in this Court. Accordingly, the question to be asked is under what circumstances would it be just for the court to exercise its discretion to make such an order.
Kellam J identified the matters that he said were relevant to a consideration of whether the power should be exercised as follows:
1 Whether there is complexity in the financial affairs of the defendant.
2Whether there is a need for an expert investigation into the financial affairs of the defendant.
3Whether the defendant holds a position of considerable financial strength.
4Whether there is a capacity on the part of the defendant to meet his own ongoing litigation costs.
5Whether there is an inability on the part of the plaintiff to meet his or her ongoing litigation costs from his/her own income, assets or financial resources.
6Whether the plaintiff has some reasonable prospect of success in the proceeding.
I would make only one observation about these matters. It must be implied in the matter referred to in paragraph 3 that the defendant has the resources to make the payment sought by the plaintiff.
It is true that s 24(1) of the Supreme Court Act 1958 (Vic) is in similar terms to s 40(1) of the SCA and therefore the decision in Giller v Procopets (supra) is authority supporting the submission made by the plaintiff. The same might be said of the decision in Parker v Parker (supra).
The question whether s 40(1) of the SCA authorises the making of an interim order for costs is one of statutory construction. I have concluded that it does not.
Section 40(1) does not expressly say that the Court may order that one party pay the costs of another. In this respect, it differs from, for example, s 26 of the Judiciary Act 1903 (Cth) and s 43 of the Federal Court of Australia Act 1976 (Cth), which provide that the High Court and the Federal Court, respectively, have jurisdiction to award costs. However, a power to award costs is to be necessarily implied from the terms of s 40(1): G E Dal Pont, Law of Costs (2003), [6.6].
The word “costs” is not defined in s 40(1). In my opinion it is to be given its well-established meaning, which has two important features. First, an order for costs is one relating to professional legal costs actually incurred in the conduct of litigation. Secondly, it is an order that finally determines the liability of one party to pay the costs of another; in other words, an order that requires a payment or creates a liability which is unconditional. The interim order for costs in this case might, as to part of the amount, bear the first feature or characteristic of an order awarding costs, but it does not bear the second feature or characteristic.
In my opinion, the decisions under the FLA are to be distinguished on the basis that s 117(2) makes reference to orders “as to costs” and to orders “by way of interlocutory order or otherwise”. In other words, s 117(2) is in wider terms than s 40(1) of the SCA. No doubt, if Parliament had seen fit to do so, it could have included in the De Facto Relationships Act 1996 a section in similar terms to s 117 of the FLA.
There would seem to be a good deal to be said for a court having the power to make an interim order for costs in the case involving a de facto relationship. Such a case is closely analogous to a case involving a matrimonial cause. However, if, contrary to my view, s 40(1) of the SCA does authorise the making of an interim order for costs, then, having regard to the terms of the section, there would be no reason to limit the power to a case involving a de facto relationship or a claim to a joint fund. The argument of the plaintiff correctly proceeded on that basis, that is, if there is such a power, it would be available in any type of case. It seems to me that if it is thought desirable that this Court or any other court have the power in cases under the De Facto Relationships Act 1996 or, indeed, any type of case, then that is a matter for Parliament.
Furthermore, I make the observation that, although the matters identified as relevant to the exercise of the discretion by Kellam J in Giller v Procopets (supra) seem, with respect, to be sensible enough, there are a number of issues relating to the exercise of the power which need careful consideration.
For example, is a plaintiff entitled to have the quantum of any amount fixed by reference to the same level of legal representation as the defendant? In fixing the quantum of the interim order for costs, to what extent must the court be satisfied of the reasonableness of a particular expense and to what extent can the court later say – after it has heard and determined the merits - that the expense was not reasonably incurred? To what extent would an enquiry about the relevant matters on an application for an interim order for costs itself involve a mini trial? Can an impecunious or near impecunious defendant who has reasonable prospects of defending a claim but short of having the plaintiff’s claim struck out, secure an order that the plaintiff pay his or her costs of defending the action? These matters are appropriately addressed by Parliament if it considers it desirable to grant a power to the court to make an interim order for costs.
In my opinion, as a matter of statutory construction, s 40(1) does not authorise an interim order for costs.
The inherent jurisdiction
There is no doubt that this Court has inherent jurisdiction. It is relevantly a common law court possessing “a well of undefined powers” as part of its inherent jurisdiction: DJL v Central Authority (2000) 201 CLR 226 at 240 [25] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; SCA, s 17.
This Court considered the scope of its inherent jurisdiction in Devlin v Collins (1984) 37 SASR 98 and there is a broad parallel between the issues in that case and those in this case. The question in Devlin v Collins was whether the Court had the power to make an interlocutory injunction restraining a defendant from removing his assets from the jurisdiction or disposing of the same, otherwise known as a freezing order or a Mareva injunction. The submission was that there was power to do so by reason of 29(1) of the SCA or the inherent jurisdiction of the Court.
White J referred to a passage from Halsbury’s Laws of England (4th ed), which, it seems, still represents a concise and accurate statement of the nature of the inherent jurisdiction. His Honour said (at 112) (citations omitted):
The nature and extent of the inherent power or jurisdiction of the court is described in Halsbury, vol 37 par 14, obviously in the words of Professor Sir Jack Jacob:
“The overriding feature of the inherent jurisdiction of the Court is that it is a part of procedural law, both civil and criminal and not a part of substantive law; it may be invoked not only in relation to parties in pending proceedings, but in relation to anyone, whether a party or not, and in relation to matters not raised in the litigation between the parties; it must be distinguished from the exercise of judicial discretion; and it may be exercised even in circumstances governed by rules of court. The inherent jurisdiction of the Court enables it to exercise (1) control over process by regulating its proceedings, by preventing the abuse of process and by compelling the observance of process, (2) control over persons, as for example over minors and mental patients, and officers of the Court, and (3) control over the powers of inferior courts and tribunals.
In sum, it may be said that the inherent jurisdiction of the Court is a virile and viable doctrine, and has been defined as being the reserve or fund of powers, a residual source of powers, which the Court may draw upon as necessary whenever it is just or equitable to do so, in particular to ensure the observance of the due process of law, to prevent improper vexation or oppression, to do justice between the parties and to secure a fair trial between them.”
The above statement has been approved in Montreal Trust Co v Churchill Forest and in Taylor v Attorney-General.
White J had earlier said (at 111):
It is true … that Mareva constituted a “revolutionary departure” from earlier judicial behaviour. If in fact that was a practice based upon a policy in one era, non constat that the practice cannot be changed by judges in another era, I hold that it was, in fact, a practice, based upon judicial policy to refrain from exercising a discretion relating to prevention of abuse of the process of the court. In my opinion, if a discretion exists, it ought to be exercised and exercised judicially, that is, whenever it is appropriate to do so in aid of the effective administration of justice. The only proviso is that the exercise must not cut across or diminish any substantive legal right. A dishonest defendant has no legal right to manipulate the legal system and, under cover of feigned defence, spirit away his assets and make the court’s procedures look foolish.
This case differs from Devlin v Collins (supra) in that the defendant in this case is not threatening to do anything which may frustrate the processes of the Court. There is nothing to suggest that he will do anything other than to defend the action in accordance with his rights and the rules of court.
The discussion of the inherent jurisdiction by Mr Jacob in his article “The Inherent Jurisdiction of the Court” (1970) 23 Current Legal Problems 23 is, with respect, an illuminating one. Passages from the article have been referred to with approval in Canada (Montreal Trust Co v Churchill Forest Industries (Manitoba) Ltd (1971) 2 DLR (3d) 75) and New Zealand (Taylor v Attorney-General [1975] 2 NZLR 675). There is no doubt, as Mr Jacob observes, that the inherent jurisdiction is difficult to define and may be invoked “in an apparently inexhaustible variety of circumstances and may be exercised in different ways”. Mr Jacob’s characterisation of the circumstances in which the inherent jurisdiction has been invoked is helpful.
If there is power to make an interim order for costs, it is part of the inherent jurisdiction of the Court to make orders regulating process and proceedings. None of the examples given by Mr Jacob in this category involve an interim order for costs, or anything analogous to it. The fact that there is no previous case where the inherent jurisdiction has been invoked in a particular context is relevant, but not decisive, as the decision in Devlin v Collins (supra) itself illustrates.
There are the familiar cases where the inherent jurisdiction is invoked to prevent an abuse of process. In my opinion, the inherent jurisdiction does not authorise the making of an interim order for costs on this basis. A defendant who dissipates or disposes of his assets before judgment is potentially frustrating, and thereby abusing, the processes of the court. A defendant who refuses to comply with orders of the court may likewise be abusing the processes of the court. By contrast, a defendant who defends a claim made against him is doing no wrong, and it would be to beg the question to say that he is frustrating or abusing the processes of the court by not paying an amount on account of costs to the plaintiff.
Nor do I think that an interim order for costs can be justified as part of the inherent jurisdiction on the broader basis that it will do justice between the parties or secure a fair trial between them. These matters are relevant considerations in terms of the accepted categories, but I do not think that there is a category based only on such broad considerations. If it were otherwise, the court would be able to make a number of wide-ranging orders, which have never been considered part of the inherent jurisdiction.
In my opinion, the inherent jurisdiction does not authorise an interim order for costs which requires a defendant to pay a sum of money for the benefit of the plaintiff before he or she has been held finally liable for that amount.
Conclusion
In my opinion, there is no power to make the orders sought by the plaintiff and the application should be dismissed.
At the time of the reference, the Master made an order that in future the parties be at liberty to file documents in this matter under the heading “M v W & Anor”. Neither party challenged the order and it appears to be justified having regard to the terms of s 14A of the De Facto Relationships Act 1996. I would not alter it.
ANDERSON J
Introduction
In this matter I have had the opportunity of reading the draft reasons prepared by Besanko J. His Honour sets out the background of this matter in detail. His Honour also analyses the relevant decisions in detail and I am indebted to him for his analysis.
I have come to a different conclusion from Besanko J both in relation to his interpretation of s 40(1) of the Supreme Court Act 1935 (SA) and also, in the event that my interpretation is wrong, as to whether the inherent jurisdiction of the court can be invoked in this instance.
The Plaintiff’s Claim
The plaintiff alleges in her affidavit dated 12 January 2006 that there was an agreement between the plaintiff and the defendant to the effect that money, earned by the plaintiff as a legal practitioner, be paid to the defendant who was to have control of the money for the benefit of them both. They lived in a de facto relationship for 23 years. She further alleges that pursuant to that agreement, the assets of the plaintiff and the defendant were to be held pursuant to a trust. The orders sought by the plaintiff are summarised by Besanko J as follows:
1A declaration that the trustee (the second defendant) holds the trust assets for the plaintiff and the defendant;
2An order revoking the trust and distributing the trust property in such manner as the court considers just;
3An order for the sale of real property pursuant to s 69 of the Law of Property Act 1936 and s 64 of the Real Property Act 1886 for a division of property pursuant to s 9 of the DeFacto Relationships Act 1996.
Besanko J sets out the orders sought in the present application contained in the notice for specific directions filed by the plaintiff:
1That pursuant to Section 40 (1) of the Supreme Court Act, the First Respondent will provide payment into the trust account of the plaintiff’s solicitors in the sum of $80,000 for the provision of costs of the plaintiff in this proceedings.
2That the payment referred to in Order 1 above be paid by way of cash or bank cheque made payable to Lesley Hastwell & Associates Trust Account.
3That the payment referred to in Order 1 above be made no later than 14 days after the date of this order.
4That the payment referred to in Order 1 above be kept separate in the said trust account and those funds be used only for the payment of accounting fees of Edwards Marshall, the professional fees of Mr Colin Pitchfork, coin valuer, and the professional fees of licensed real property valuers, and any other proper legal disbursements and fees.
The Legislation
The legislation empowering the court to deal with these matters is the De Facto Relationships 1996 (SA) (“The Act”). It provides for the “facilitation and resolution of property disputes arising on the termination of de facto relationships; and for other purposes.” Pursuant to the Act, the Supreme Court, District Court and the Magistrates Courts of South Australia have jurisdiction conferred upon them as part of a statutory scheme to determine matters relating to de facto relationships as prescribed by the Act. From this is it follows that when Parliament enacted the Act and conferred jurisdiction upon the Supreme Court, it must have been in its contemplation that orders as to costs would be part and parcel of the ordinary resolution of matters involving property disputes between de facto couples.
It is apparent from cases such as Parij v Parij (1997) 72 SASR 153 that for the purposes of de facto relationships, when the relationship dissolves and the legal title in property does not accurately reflect the parties’ contributions, the courts have found constructive trusts to exist so as to allow for an adjustment of proprietary interests. This has generally involved the making of costs orders.
Section 40(1) of the Supreme Court Act is a general power which expressly provides that the court has the power to make orders for costs. That section reads:
Subject to the express provisions of this Act, and to the rules of court, and to the express provisions of any other Act whenever passed, the costs of and incidental to all proceedings in the court, including the administration of estates and trusts, shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid.
It seems therefore that the court has a general discretionary power in relation to costs, which is incidental to all proceedings including the administration of estates and trusts. In this case, one of the orders sought relates to the assets of a trust.
Section 40(1) of the Supreme Court Act has not been amended since the enactment of the Act. It is evident that when the Act was enacted, s 40(1) must have been considered sufficient for the purpose of making costs orders in de facto property disputes. Any power as to costs is of course exercisable by the court pursuant to a wide discretion.
Relevant Authorities
Besanko J refers to decisions relied on by the parties before the court. I will not repeat his Honour’s summary of those cases. In Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184, the court was dealing with the terms of s 117 of the Family Law Act 1975. The relevant part of the rule as to costs was as follows. Section 117 states:
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 subsection (2A) and the Rules of Court, make such order as to costs and security of costs, whether by way of interlocutory order or otherwise, as the court considers just. (my underlining)
That section as it states was subject to subsection 2(A) which indicated what matters the court could refer to. The section made it clear that an order such as the one sought in this case was clearly contemplated by the provisions of the Family Law Act. The relevant passages in the reasons for judgment of the members of the High Court are set out in the reasons of Besanko J and I will not repeat them.
His Honour then goes on to consider the decisions in Parker v Parker (1992) 16 Fam LR 458 and Giller v Procopets [2002] VSC 305. In the former, Bryson J found that there was power to make an order for interim costs pursuant to s 76(1)(a) of the Supreme Court Act1970 in New South Wales. I note that this section has since been repealed. I will set out the section as it was at the time of the decision.
76 Costs
(1) Subject to this Act and the rules and subject to any other Act:
(a) costs shall be in the discretion of the Court,
(b) the Court shall have full power to determine by whom and to what extent costs are to be paid, and
(c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis.
(2) In subsection (1) the expression costs includes:
(a) costs of or incidental to proceedings in the Court, including the administration of estates and trusts,
(b) in the case of an appeal to the Court, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal, and
(c) in the case of proceedings transferred to or removed into the Court, the costs of or incidental to the whole proceedings, both before and after the transfer or removal.
The decision of Bryson J was the subject of an application for leave to appeal to the Court of Appeal (New South Wales) but leave to appeal was refused.
In that case the plaintiff and the defendant had been involved in a de facto relationship. There is a similarity between the facts in that matter and this matter. The plaintiff filed a statement of claim seeking an adjustment of interests in property and other relief. Throughout the relationship the defendant had been employed on a full time basis and had also been involved as a shareholder in a number of companies. The defendant and plaintiff were required to produce proof of their financial status. The information supplied by the defendant as to his financial position revealed little and was very “superficial”. It was therefore necessary for there to be an investigation into the defendant’s financial position by a firm of chartered accountants so that the plaintiff could be adequately prepared for the property litigation, and could establish her de facto’s financial position.
Bryson J held that there was no realistic prospect of the plaintiff investigating, preparing for the hearing, and presenting her case, or obtaining justice without the benefit of such financial investigation, “because of the plaintiff’s financial resources and her involvement in the care of young children she would not have any real prospect of obtaining justice unless the order sought was made.” The New South Wales Court of Appeal, in the application for leave to appeal, dismissed the application. Kirby P wrote the main judgment with Priestley and Meagher JJ concurring. Significantly, in the decision for refusing leave to appeal, Kirby P said in his judgment at [5]:
No principle could be fashioned which would satisfactorily allow the very wide powers of s 76 of the Supreme Court Act to be read down on the footing that, in some way, de facto relationships were in a relevantly different class to marriage.
It is my view that such reasoning is persuasive when looking at the situation in this matter.
In Giller the plaintiff and defendant had lived together in a de facto relationship for approximately six years. The plaintiff sought an order for interest in property amongst other claims for damages, assault, conversion and detinue. In particular the plaintiff sought an order under s 24(1) of the Victorian Supreme Court Act 1986.
Section 24(1) of the Supreme Court Act 1958 (Vic) states:
Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid. (my underlining)
In Giller Kellam J in the Victorian Supreme Court allowed for payment of the sum of approximately $85,000 as an interim measure to provide for litigation expenses, which were to include both past and future legal costs, and also for future fees for valuation and accountancy reports from experts.
Kellam J held that the court had power to make the orders sought by the plaintiff in that case. His Honour said:
In my view, the justification for such a power is apparent in relation to de facto property cases. In such cases one party to the proceeding, and more often then not the de facto husband, regularly enjoys the advantages of having ownership of the assets in dispute (together with other financial resources) and an intimate knowledge of his / her own affairs and circumstances. Unless the other party has the resources to investigate and become acquainted with such financial circumstances, that party is often at a considerable disadvantage in the preparation and conduct of the litigation.
Further, his Honour went on to say at [41] that:
It is also relevant in an application of this nature to consider the likelihood of the ultimate success of the plaintiff…. All authorities are unanimous that the requirement of justice is a significant matter in an application for interim legal costs.
With respect, I adopt those comments of Kellam J. I think they are persuasive in the present situation, although we are not required to examine the “likelihood of the success of the plaintiff”.
There is no obvious reason why the difference in the wording of s 40(1) of the Supreme Court Act (SA) as compared to section 24(1) of the Supreme Court Act (Vic) should mean that the section should be construed in a more limited manner. The additional words in the statute in Victoria do not add to the scope of the section. I regard s 24(1) of the Supreme Court Act (Vic) as being in such similar terms to s 40(1) of the Supreme Court Act (SA) that the decision should be followed. It is a pragmatic and common sense solution of a situation which requires that both parties to a de facto dispute are capable of adequately preparing for the dispute in court. That is a requirement of justice.
I agree with Besanko J that s 117(2) of the Family Law Act is in wider terms that s 40(1) of the Supreme Court Act. However as I have said, it is my view that the wording of both of the New South Wales and Victorian Acts, and the reasoning applied by Bryson J and Kellam J respectively, is persuasive.
Scope of Section 40(1)
Besanko J gives examples of how an interpretation of s 40(1), in the way I have suggested, could lead to interim orders for costs in all manner of cases. In my view, these are all matters to be weighed up in the exercise of the discretion once it has been decided that the power to make such an order exists. Each case will be determined on its merits and the statute in question. We are not required to determine the merits of this case.
In a very recent decision of Mansfield v DPP for Western Australia [2006] HCA 38 there was a discussion by the High Court regarding statutes which bestow jurisdiction on a court to deal with a particular subject matter. It was part of the reasoning that such statutes should not be construed so as to be limited by the express words of the statute. In Mansfield the High Court, consisting of Gleeson CJ, Gummow, Kirby, Hayne and Crennan JJ, affirmed the principles enunciated by the High Court in Electric Light and Power Supply Corporation Ltd v Electricity Commission of NSW (1956) 94 CLR 554. The court stated at [560]:
In the absence of express words to the contrary or of reasonably plain intendment the inference may safely be made that it takes it as it finds it with all its incidents and the inference will accord with reality.
In Mansfield the High Court cited with approval the remarks of Gaudron J in Knight v FP Special Assets Ltd (1992) 174 CLR 178 where her Honour states at p 205:
It is contrary to long-established principle and wholly inappropriate that the grant of power to a court (including the conferral of jurisdiction) should be construed as subject to a limitation not appearing in the word of grant. Save for a qualification, which I shall later mention, a grant of power should be construed in accordance with ordinary principles and, thus, the words used should be given their full meaning unless there is something to indicate to the contrary. Powers conferred on a court are powers, which must be exercised judicially and in accordance with legal principle. This consideration leads to the qualification to which I earlier referred. The necessity for the power to be exercised judicially tends in favour of the most liberal construction, for it denies the validity of consideration which might limit a grant of power to some different body, including, for example, that the power might be exercised arbitrarily or capriciously or to work oppression or abuse.
It is my view that Parliament would not have given the Supreme Court jurisdiction to deal with de facto property disputes if such a power was to be curtailed to the extent that interim orders for costs could not be made. It is my view that as a matter of construction, s 40(1) does authorise such an order as the one sought in this case. It is because of the nature of de facto property disputes that s 40(1) empowers the court to make interim orders. In other types of disputes that power may not be properly invoked. It is finally a matter in the discretion of the courts.
I do not consider that the power to order the relief sought in this case should be denied because it could be seen as opening the floodgates. If too strict an approach to the interpretation of s 40(1) of the Supreme Court Act is adopted, the section would be working oppressively and contrary to the principles set out by Gaudron J in Knight v FP Special Assets Ltd and approved in Mansfield. The plaintiff would effectively have no form of recourse and therefore denied justice.
That is not to say that in every circumstance where a plaintiff or defendant does not have the means to litigate a matter, the court will intervene and order an interim payment of costs. Having considered the nature of the relationship between the parties, the purpose of the Act and the jurisdiction which it confers upon the Supreme Court, it is my view that this is a case where justice demands that the court has power to make such an interim costs order.
Inherent Jurisdiction
If I am wrong in my interpretation of the statute, then it is my view that in any event, the Supreme Court as a superior court of record, has an inherent jurisdiction to award interim costs in appropriate cases. It is long established that the inherent jurisdiction of the court is used, on a discretionary basis, to ensure that the judicial process is convenient, expeditious and fair for all parties involved. It ensures that justice can be achieved where there is an apparent one-sidedness in litigation. The one sidedness suggested here is the inability of the plaintiff to litigate effectively because of her lack of access to the necessary funds accumulated during the de facto relationship.
Rule 3.06 of the Supreme Court Rules of South Australia 1987 provides that:
The provisions of these Rules are in addition to, and shall not derogate from, any inherent jurisdiction of the Court.
It does not appear that there is any express or implied provision within the Act that precludes the Court from exercising its inherent jurisdiction in relation to interim costs orders. In Re JTT; Ex parte Victoria Legal Aid Gaudron J, in obiter statements, addressed this issue. Her Honour stated at [3]:
And it may be that, in the absence of statutory power either as to costs or maintenance, a superior court has inherent power in proceedings between de facto couples to make an order that one party provide the other with funds to conduct proceedings, if that is necessary to enable the proper conduct of litigation with respect of their property. And in that situation, an order might as easily be described as a mandatory injunction or an order for interim provision as an “order as to costs.”
This follows a similar statement by Rich J in Cameron v Cole (1943-1944) 68 CLR 571 at 589 where his Honour stated:
In the absence of clear words, a statute should not be treated as depriving a court of the inherent jurisdiction possessed by every court to ensure that trials before it are conducted in accordance with the principals of natural justice.
If there is no clear provision in either the Act or the Rules, which enables a balancing exercise to be undertaken to achieve justice, then it is the inherent jurisdiction of the court which enables this to be done.
Besanko J contrasts this case from Devlin v Collins (1984) 37 SASR 98. His Honour makes the point that the defendant in this case is not threatening to do anything to frustrate the processes of the court. However, the defendant has the ability to control the joint assets of the plaintiff and the defendant. In so doing he can prevent the plaintiff from having access to portion of those funds to prepare her case properly. In my view this invokes the inherent jurisdiction of the court so that justice can be done between the parties when the trial is finally conducted. De facto property disputes by their very nature will often involve inequality because one party, with either ownership of disputed assets and/or the ability, through specific detailed knowledge, to control the management and distribution of the income derived from such assets.
In my view, therefore, the inherent jurisdiction of the court, aside from any question of statutory construction of s 40(1), gives the court power to order the defendant to pay money to the plaintiff to enable the plaintiff to properly prepare for and contest the issues in the trial. It is up to the court to determine if the power should be exercised on the facts of this case. This will involve the Court examining the merits of the case and the factual scenario from which the dispute arises. It is likely, that if any interim costs order is made it will be for an amount that will be significantly less than any likely final amount in favour of one party.
I would therefore allow the application and refer it back to the Master to deal with in accordance with these reasons.
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