Malloy & Stopford Malloy
[2021] FamCAFC 23
•24 February 2021
FAMILY COURT OF AUSTRALIA
Malloy & Stopford Malloy [2021] FamCAFC 23
Appeal from: Malloy & Stopford Malloy [2019] FamCA 986 Appeal number(s): SOA 4 of 2020 File number(s): ADC 2595 of 2015 Judgment of: STRICKLAND, ALDRIDGE & KENT JJ Date of judgment: 24 February 2021 Catchwords: FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – COSTS – Where interveners seek costs against husband – Financial circumstances – Wholly unsuccessful application for leave to appeal – Where written offers to settle were reasonable and should have been accepted – Husband to pay interveners’ costs of the application for leave to appeal as agreed or assessed – Husband to pay the interveners’ costs of the application for costs as agreed or assessed.
FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – COSTS – Where wife seeks costs against husband – Financial circumstances – Wholly unsuccessful application for leave to appeal – Details of written offers to settle not provided – Husband to pay wife’s fixed costs of the application for leave to appeal – Wife’s application for costs of the costs application dismissed.
Legislation: Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) r 19.50
Cases cited: Lenova & Lenova (Costs) [2011] FamCAFC 141
Malloy & Stopford Malloy [2019] FamCA 986
Malloy & Stopford Malloy and Ors [2020] FamCAFC 270
Mallory & Mallory [2020] FamCAFC 62
Division: Appeal Division Number of paragraphs: 36 Place: Heard in Chambers by way of written submissions, delivered in Sydney Applicant/ Second Cross-Respondent: Self-represented litigant Counsel for the First Respondent/ First Cross-Respondent: Mr McGinn Solicitor for the First Respondent/ First Cross-Respondent: Piper Alderman Third Respondent/ Second Cross-Applicant: Did not participate Solicitor for the Interveners: Crawford Legal ORDERS
SOA 4 of 2020
ADC 2595 of 2015APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA
BETWEEN: MR MALLOY
Applicant/ Second Cross-Respondent
AND: MS STOPFORD MALLOY
First Respondent/ First Cross-Respondent
MR Q MALLOY
Second Respondent/ First Cross-Applicant
THE MALLOY GROUP
Third Respondent/ Second Cross-Applicant
MR R AND MR S, RECEIVERS
Interveners
ORDER MADE BY:
STRICKLAND, ALDRIDGE & KENT JJ
DATE OF ORDER:
24 FEBRUARY 2021
THE COURT ORDERS THAT:
1.The husband is to pay the interveners’ costs of and incidental to the application for leave to appeal as agreed, or in default of agreement, as assessed.
2.The husband is to pay the interveners’ costs of the Application in an Appeal filed on 3 December 2020 as agreed, or in default of agreement, as assessed.
3.The husband is to pay the wife’s costs of and incidental to the application for leave to appeal fixed in the sum of $21,057.08.
4.The wife’s application for the costs of and incidental to the Application in an Appeal filed on 4 December 2020 is dismissed.
5.The wife’s application for certification of senior and junior counsel pursuant to r 19.50 of the Family Law Rules 2004 (Cth) 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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Malloy & Stopford Malloy has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
STRICKLAND, ALDRIDGE & KENT JJ
INTRODUCTION
Ms Stopford Malloy (“the wife”) and Mr Malloy (“the husband”) have been involved in property settlement, spousal maintenance and enforcement proceedings since July 2015. On 13 December 2019, a judge of the Family Court of Australia made orders to the following effect:
·the husband was to pay the remuneration ($34,640.93) and the legal costs and expenses ($15,737.14) of Mr R and Mr S (“the interveners”) who had been appointed as receivers of the income and property of the husband by the Court pursuant to orders made by another judge on 5 September 2016. A further order was made charging the husband’s property with that obligation (Orders 1–6);
·the husband was not to permit his lawyers to draw on funds provided to them for the purpose of conducting the proceedings on his behalf, until the same amount had been paid to the wife’s lawyers (Orders 16–22); and
·the trustees of the Malloy Trust and the AP Trust were to provide an unredacted version of their financial accounts, which have previously been provided only in redacted form (Orders 7–9).
On 6 November 2020, this Court dismissed an application for leave to appeal filed by the husband against the first and second sets of orders outlined above and an application for leave to cross-appeal filed by Mr Q Malloy, the husband’s father and The Malloy Group, a group of 48 companies apparently controlled by Mr Q Malloy (“the cross-applicants”) against the third set of orders outlined above. We also dismissed an Application in an Appeal filed by the wife to file a supplementary appeal book.
As we explained in our substantive reasons for judgment, we were not satisfied that there was sufficient doubt about the primary judge’s orders to warrant reconsideration by the Full Court or that any substantial injustice would flow if leave to appeal or to cross-appeal was refused (Malloy & Stopford Malloy and Ors [2020] FamCAFC 270 at [26]–[27], [34] and [45]–[47]).
On 3 December 2020, the interveners filed an Application in an Appeal seeking costs against the husband in relation to his application for leave to appeal, as did the wife on 4 December 2020. The interveners and the wife also seek costs against the husband for their respective applications for costs.
Additionally, the wife sought costs against the cross-applicants in relation to the application for leave to cross-appeal. That application was resolved and requires no consideration.
The applications for costs against the husband made by the interveners and the wife are being heard by way of written submissions, pursuant to orders made by Strickland J on 4 December 2020 and 14 December 2020, respectively.
As directed, all parties have now filed their written submissions.
THE INTERVENERS’ APPLICATION FOR COSTS FILED ON 3 DECEMBER 2020
In the interveners’ Application in an Appeal filed on 3 December 2020, they seek that the husband pay their costs of the application for leave to appeal on a party/party basis. Additionally, they seek that the husband pay their costs of this application for costs.
In proceedings under the Family Law Act 1975 (Cth) (“the Act”), each party is to bear his or her own costs of the proceedings (s 117(1)), unless in all the circumstances, the Court considers that a different order is just (s 117(2)). In considering whether such other order should be made, the Court is to have regard to the matters set out in s 117(2A) of the Act.
The interveners rely on three matters set out in s 117(2A) of the Act to justify the costs order sought by them.
First, the interveners rely on the finding made by the primary judge, which was not disturbed on appeal, that the husband had access to or the benefit of significant funds which has enabled him “to lead an extravagant lifestyle” (Malloy & Stopford Malloy [2019] FamCA 986 at [154]) (s 117(2A)(a) of the Act).
For his part, the husband contends that he does not have any financial resources or capacity to pay the interveners’ costs and that he is unemployed. The husband filed a Financial Statement on 21 October 2020 which demonstrates that he is in receipt of Centrelink payments and has total liabilities in the sum of $15,858,642. The husband receives an allowance in the sum of $650 per week from his father, although he submits that he is “unable to seek or borrow any money from [his] father and previous requests have resulted in his refusal” (the husband’s written submissions filed on 24 December 2020, paragraph 13).
The primary judge considered the husband’s financial position and found that “[d]espite the husband being without income, he plainly has his lavish lifestyle funded by his father’s largesse, albeit structured by way of drawings, with a corresponding entry in his loan accounts with various entities associated with his father” (Malloy & Stopford Malloy [2019] FamCA 986 at [155]). In the light of the primary judge’s findings as to the husband’s financial circumstances, weight must be given to the interveners’ submission that they should not be “left out of pocket from their appointment by the Court to act as receivers” (the interveners’ written submissions filed on 11 December 2020, paragraphs 10 and 15). As we said in our substantive reasons for judgment, the “acts undertaken by them whilst their appointment subsisted were validly undertaken” (Malloy & Stopford Malloy and Ors [2020] FamCAFC 270 at [22]).
In any event, if weight were given to the husband’s submissions as to his financial circumstances, the interveners correctly submit that impecuniosity is not a bar to a costs order (Lenova & Lenova (Costs) [2011] FamCAFC 141 at [12]; Mallory & Mallory [2020] FamCAFC 62 at [9]).
The interveners’ second submission is that the husband was wholly unsuccessful in his application for leave to appeal (s 117(2A)(e) of the Act).
Finally, the interveners rely upon written offers to settle the proceedings (s 117(2A)(f) of the Act).
In considering the written offers, it is helpful to recall that the husband’s Notice of Appeal was filed on 8 January 2020 and judgment was delivered as to his application for leave to appeal on 6 November 2020.
On 31 January 2020, the interveners’ solicitor wrote to the husband and informed him that, in accordance with the orders made by the primary judge on 13 December 2019, the sum of $98,899.45 (the total sum of the interveners’ remuneration, expenses, legal costs and costs of and incidental to the Application in a Case filed on 16 November 2017) was owing to them by the husband (Annexure “A” to the interveners’ solicitor’s affidavit filed on 11 December 2020). The interveners proposed to reduce their costs of the Application in a Case so that the total sum reduced to $70,000.
There was no response by the husband to that letter. The offer was a reasonable proposal which would have obviated the need for the application for leave to appeal being made insofar as it related to the interveners.
Taking all these matters into account, the appropriate order is that the husband pay the interveners’ costs of and incidental to the application for leave to appeal.
On 26 November 2020, after the husband’s application for leave to appeal had been determined, the interveners’ solicitor sent a written offer to the husband (Annexure “A” to the interveners’ solicitor’s affidavit filed on 3 December 2020), seeking the husband’s agreement to pay the interveners’ costs of and incidental to the application for leave to appeal on a party/party basis. The costs of the application for leave to appeal had already been incurred, so the written offer relates only to saving the expense of filing an Application in an Appeal as to the issue of costs.
The husband replied to that letter indicating that he “cannot commit to paying [the] costs” because he is unemployed, in receipt of Centrelink payments and has no financial resources (Annexure “B” to the interveners’ solicitor’s affidavit filed on 3 December 2020).
The acceptance of this offer would have rendered the interveners’ present Application in an Appeal unnecessary. The interveners’ costs should include the costs of this costs application.
The sum sought by the interveners was not identified in the Application in an Appeal filed on 3 December 2020, the written submissions filed on 11 December 2020 or the affidavits filed by their solicitor on 3 December 2020 and 11 December 2020. It is the practice of this Court to fix costs where it can, but this cannot be done in the absence of at least a schedule of costs calculated at scale. The interveners’ costs will need to be assessed, if they cannot be agreed.
THE WIFE’S APPLICATION FOR COSTS FILED ON 4 DECEMBER 2020
On 4 December 2020, the wife filed an Application in an Appeal seeking that the husband pay her costs of and incidental to the application for leave to appeal fixed in the sum of $21,057.08 (calculated at scale), which sum does not include the costs of the wife’s unsuccessful Application in an Appeal to file a supplementary appeal book. In the alternative, the wife seeks her costs in an amount to be assessed on a party/party basis.
Additionally, the wife seeks that the husband pay her costs of and incidental to this application for costs.
The wife submits that her financial circumstances are that of significant financial hardship (s 117(2A)(a) of the Act). The wife’s Financial Statement filed on 10 July 2020 indicates that she receives Centrelink payments, owns property estimated to be in the value of $359,500 and has liabilities in the sum of $1,711,700.
Nonetheless, as described earlier, the primary judge considered the financial position of the husband to be “vastly superior” to that of the wife (Malloy & Stopford Malloy [2019] FamCA 986 at [155]). His Honour also said:
154.It is not in contention that the husband continues to lead an extravagant lifestyle of luxury housing and expensive, exotic cars. On the other hand, the wife is in receipt of social security and the $650.00 weekly payment made by the husband, and only has the benefit of legal representation because her solicitors are prepared to act for her, seemingly on a no-win no-fee basis. Her counsel have similarly agreed to act for her, but have not necessarily agreed to continue to do so at any trial.
In response to the wife’s costs application, the husband relies on his financial circumstances which are recorded above.
In the appeal, the husband did not identify why the primary judge’s consideration of his financial circumstances was insufficient or why it was wrong (Malloy & Stopford Malloy and Ors [2020] FamCAFC 270 at [32]).
Secondly, the wife submits that the husband was wholly unsuccessful in his application for leave to appeal (s 117(2A)(e) of the Act).
Lastly, the wife referred to a written offer to settle in her submissions but as we were not provided with a copy of it, we cannot take it any further (s 117(2A)(f) of the Act).
No challenge was made to the quantum of costs claimed by the wife.
Taking the above matters into account, the appropriate order is that the husband pay the wife’s costs of and incidental to the application for leave to appeal fixed in the sum of $21,057.08.
As to the wife’s application seeking that the husband pay her costs of this costs application, the sum sought by the wife was not identified and the sum involved is unlikely to justify the cost of an assessment.
The wife made an application for the matter to be certified pursuant to r 19.50 of the Family Law Rules 2004 (Cth). As the wife’s costs have been fixed, the application is now unnecessary and will be dismissed.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Strickland, Aldridge & Kent. Associate:
Dated: 24 February 2021
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