MacCailein & Roy (No 2)
[2024] FedCFamC1F 597
•5 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
MacCailein & Roy (No 2) [2024] FedCFamC1F 597
File number: SYC 2742 of 2019 Judgment of: AUSTIN J Date of judgment: 5 September 2024 Catchwords: FAMILY LAW – COSTS – Where the wife makes an application for costs following the husband’s discontinuance of an interlocutory property application – Where the husband’s contention that his financial circumstances militate against a costs order being made against him is rejected – Where the husband’s interlocutory application was hopelessly misconceived – Husband to pay the wife’s party/party costs of the discontinued application in a fixed sum. Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 114, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17
Succession Act 2006 (NSW)
Division: Division 1 First Instance Number of paragraphs: 33 Date of hearing: 5 September 2024 Place: Newcastle (via Microsoft Teams) Solicitor for the Applicant: Jo-Anna F S Moy Solicitor Counsel for the First Respondent: Ms Druitt Solicitor for the First Respondent: JC Legal Practice Solicitor for the Second Respondent: Blumberg Family Lawyers Solicitor for the Third Respondent: Jeffrey Choy Legal ORDERS
SYC 2742 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR B MACCAILEIN
Applicant
AND: MS ROY
First Respondent
THE ESTATE OF MR C MACCAILEIN
Second Respondent
MS MACCAILEIN
Third Respondent
ORDER MADE BY:
AUSTIN J
DATE OF ORDER:
5 SEPTEMBER 2024
THE COURT ORDERS THAT:
BY CONSENT, IT IS ORDERED THAT
1.The Response to an Application in a Proceeding filed by the third respondent on 4 September 2024 is dismissed.
IT IS FURTHER ORDERED THAT
2.The applicant shall pay the first respondent’s party/party costs of and incidental to the Application in a Proceeding filed on 20 August 2024 and discontinued by the applicant on 2 September 2024, such costs fixed in the sum of $6,000, payment of which falls due upon the completion of the sale of the real property at D Street, Suburb E, NSW.
3.Otherwise, the Response to an Application in a Proceeding filed by the first respondent on 27 August 2024 is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym MacCailein & Roy (No 2) has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE
REASONS FOR JUDGMENTAUSTIN J:
These reasons explain why the applicant husband should pay the first respondent wife’s costs in respect of a hopelessly misconceived interlocutory application.
BACKGROUND
The husband and the wife are engaged in property settlement proceedings under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”), commenced in 2019.
The husband’s parents were joined to the proceedings as the second and third respondents respectively, as they assert their equitable ownership of a parcel of real property at Suburb E, NSW (“the Suburb E property”), of which the spouses are the registered legal owners – the husband as to 90 per cent and the wife as to 10 per cent. The executor of the husband’s late father’s deceased estate now stands in his stead as the second respondent.
The second and third respondents contend they are somehow (it was not revealed how) beneficially entitled to either some or all of the Suburb E property. The husband apparently concedes they are both beneficially entitled to either some or all of the Suburb E property. The wife conversely alleges the second and third respondents have no beneficial interest at all in the Suburb E property.
The parties mediated their dispute in 2024 and reached an “in principle agreement”, which could not be consummated until various documents were drafted. The necessary documents included the consent orders necessary to resolve the financial cause under the Act, a deed of family arrangement, and a deed of release under the Succession Act 2006 (NSW). Nor could the agreement be consummated until the probate of the second respondent’s deceased estate was granted by the Supreme Court of NSW, without which no person would have legal authority to bind the deceased estate.
The husband’s solicitor circulated the draft documents to the parties for their comment several weeks after the mediation, inviting their feedback about any necessary amendments. Some months later, in 2024, the wife’s solicitor replied to the husband’s solicitor confirming two points: first, she did not wish to be a party to the deed of family arrangement executed between the husband and the second and third respondents; and secondly, she proposed amendments to the orders which the parties would ask this Court to make to finalise the financial cause under Pt VIII of the Act. The husband’s solicitor replied, alleging “these documents were agreed to by all the parties”, but that was denied the wife’s solicitor in another email.
The delay was not critical because probate in respect of the second respondent’s estate was not granted until a few weeks beforehand in 2024.
Given the unresolved dispute over the terms of the documents drafted by the husband’s lawyer, the husband informed the other parties in mid-2024 that he would be vacating the Suburb E property and would no longer pay the mortgage or the rates. The dispute between the spouses then widened because the wife, after then having inspected the Suburb E property, alleged the husband caused “significant damage” to it and left it in a “dilapidated state”.
On 20 August 2024, the husband filed an Application in a Proceeding seeking:
(a)an order for specific performance of the “Agreement” which is “documented in a series of documents circulated to the parties” (Order 1);
(b)alternatively, an order compelling the wife to pay the costs of the husband, second respondent and third respondent (Order 2); and
(c)a mandatory injunction compelling the sale of the Suburb E property (Order 3), with attendant orders about the disbursement of the sale proceeds (Order 4).
On 27 August 2024, the wife filed a Response to an Application in a Proceeding seeking the dismissal of the husband’s application with costs.
The contest between the husband and the wife narrowed to only his liability for her costs when he discontinued his application on 2 September 2024.
However, another dispute between the wife and the third respondent remained live until the hearing on 5 September 2024. The day before, the third respondent filed a Response to an Application in a Proceeding acceding to the grant of the husband’s application, but that proposal fell away when the husband discontinued his application. Alternatively, the third respondent sought orders compelling the sale of the Suburb E property and the payment of the net sale proceeds into the wife’s solicitors’ trust account pending the determination of another interlocutory application several weeks hence. However, at the hearing, all parties consented to an order dismissing that application with no order as to costs, following which the second and third respondents were granted leave to depart the hearing as they had no further interest in the costs dispute between the husband and the wife.
ADJOURNMENT
The husband sought an adjournment of the costs dispute, which the wife opposed.
The adjournment application was refused because the husband made no sensible submission in support of it. The question of costs relates to a discrete interlocutory application, filed on 20 August 2024 and discontinued on 2 September 2024. The husband failed to persuade that the costs dispute should be either adjourned to be dealt with by me on a later date or adjourned for another judge to deal with. The husband knew from the wife’s Response that he would need to confront her application for costs at the hearing on 5 September 2024.
EVIDENCE
The wife relied upon:
(a)her affidavit filed on 27 August 2024;
(b)the two affidavits of her solicitor filed on 2 and 4 September 2024;
(c)an email dated 2 September 2024 (Exhibit 1); and
(d)another email dated 2 September 2024 (Exhibit 3).
The husband relied upon:
(a)his affidavit filed on 14 Augst 2024; and
(b)a series of emails exchanged between the parties in 2024 (Exhibit 2).
COSTS
Parties to proceedings under the Act should ordinarily bear their own costs (s 117(1)), though costs orders can be made when warranted (s 117(2)), in which event the Court must consider certain mandated factors (s 117(2A)).
Only those factors which are relevant are addressed.
Financial circumstances (s 117(2A)(a))
The husband contended his financial circumstances militated against a costs order being made against him, but the submission is rejected. By his own admission, he legally owns 90 per cent of the Suburb E property. Any costs order can be met from his share of the net proceeds realised on the sale of the Suburb E property and the wife agreed to wait until then to receive payment of the costs. All parties apparently agree the Suburb E property needs to be sold.
Conduct (s 117(2A)(c)
This factor was the central plank of the wife’s application. With good reason, she contended the husband’s application was hopelessly misconceived and should never have been brought.
The order for specific performance of the “agreement” sought by the husband could never have been made for several reasons.
First, there is no source of statutory power for the Court to make such an order, which is an equitable remedy for a cause of action, the nature of which was not disclosed.
Secondly, there is no agreement to enforce because its terms were indefinite. Being only an “in principle agreement” means, by definition, the precise detail of the agreement remained to be settled. That is why the husband’s solicitors circulated documents to the other parties in only draft format, inviting their further comments and proposed amendments, which invitation the wife accepted. The husband deposed this in his affidavit:
17.My solicitor wrote to each of the parties to establish if any changes were required to the draft documents….
Thirdly, even if an oral agreement was reached at the mediation, even if its terms were certain, and even if the wife did resile from it, she was entitled to do so. She was given no contractual consideration at the mediation by any other party to bind her to the oral agreement.
Fourthly, proposed consent orders between parties to finalise a financial cause under Pt VIII of the Act can only ever be made by the Court whilst the proposed orders continue to enjoy the consent of the parties. If consent is withdrawn, the proposed orders cannot be made by consent and a trial of the cause of action is then necessary. In any event, even if parties adhere to their agreement, the orders cannot be made unless and until the Court is satisfied the orders are just and equitable.
Nor was there any statutory power to compel the wife to pay the costs incurred by the husband with his solicitor to draft the various settlement documents, as s 117 of the Act only empowers the Court to order one party to pay the costs of another in respect of “proceedings under the Act”. The mediation and the parties’ legal costs associated with it were not costs incurred in conducting proceedings under the Act.
The mandatory injunction proposed by the husband requiring the sale of the Suburb E property could only have been made pursuant to s 114(1)(e) of the Act, but no evidence was adduced by him in his supporting affidavit to demonstrate why it would be “proper” to make such an order when his application was contested by the wife. Nor would any interlocutory order be made by the Court prescribing the manner in which the net sale proceeds of the Suburb E property should be disbursed pending trial. Making orders disbursing portions of the sale proceeds to the parties, other than in shares to the spouses commensurately with their existing registered legal proprietorship (for which no order would be required), would pre-empt the determination at final trial of the parties’ dispute over their respective legal and beneficial proprietary interests in the Suburb E property.
It is difficult to see how such applications could have been conceived by the husband and the costs application could easily have been made against his lawyer, but it was not.
No aspects of the wife’s conduct bear materially upon her application for costs.
DISPOSITION
The husband should pay the wife’s party/party costs of the discontinued application. The application should never have been brought and the wife had to incur costs to meet it. The husband’s financial circumstances do not weigh heavily enough against that consideration.
The wife preferentially applied for costs on an indemnity basis but, when pressed, conceded no submission was available to elevate the application to that level. When challenged, the wife’s counsel resiled from initial submissions against the husband of “ulterior purpose” or any other synonym of intentional connivance which could justify an indemnity costs order.
The husband and wife agreed party/party costs could be fixed pursuant to r 12.17(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). The husband suggested a figure of $2,000, which is rejected as being unreasonably parsimonious. The wife posited her party/party costs in the range of $5,000 to $7,000, which is more realistic. Costs are fixed at $6,000.
Payment of the costs will not be required until the sale of the Suburb E property has been completed.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 9 September 2024
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