Matani and Matani and Ors
[2017] FamCAFC 65
•6 April 2017
FAMILY COURT OF AUSTRALIA
| MATANI & MATANI AND ORS | [2017] FamCAFC 65 |
| FAMILY LAW – APPEAL – COSTS – Appeal against costs orders including an order for indemnity costs in favour of third parties – Held trial judge did not err in exercising his discretion as to costs – Appeal dismissed. |
| Family Law Act 1975 (Cth) s 117 |
| Browne v Green (2002) FLC 93-115 |
| APPELLANT: | Ms Matani |
| 1ST RESPONDENT: | Mr D Matani |
| 2ND RESPONDENT: | Mr G Matani |
| 3RD RESPONDENT: | Mr F Matani |
| 4TH RESPONDENT: | L Pty Ltd |
| FILE NUMBER: | PTW | 5409 | of | 2009 |
| APPEAL NUMBER: | WA | 22 | of | 2016 |
| DATE DELIVERED: | 6 April 2017 |
| PLACE DELIVERED: | Perth |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Thackray, Ryan & Aldridge JJ |
| HEARING DATE: | 6 April 2017 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 21 September 2016 |
| LOWER COURT MNC: | [2016] FCWA 78 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Cleary |
| SOLICITOR FOR THE APPELLANT: | DFG Legal |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr Parkinson |
| SOLICITOR FOR THE 1ST RESPONDENT: | Culshaw Miller |
| COUNSEL FOR THE 2ND – 4TH RESPONDENTS: | Mr Berry SC |
| SOLICITOR FOR THE 2ND – 4TH RESPONDENTS: | Leach Legal |
Orders
The appeal be dismissed.
The applications of the Respondents for costs be dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Matani & Matani and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WA 22 of 2016
File Number: PTW 5409 of 2009
| Ms Matani |
Appellant
And
| Mr D Matani |
1st Respondent
And
| Mr G Matani |
2nd Respondent
And
| Mr F Matani |
3rd Respondent
And
| L Pty Ltd |
4th Respondent
EX TEMPORE REASONS FOR JUDGMENT
Thackray J
By an Amended Notice of Appeal filed on 28 December 2016, the wife challenges costs orders made by Moncrieff J on 21 September 2016.
The orders required the wife to:
a)contribute $299,069 towards the husband’s costs; and
b)pay the third parties’ costs on an indemnity basis, to be agreed or in default of agreement to be assessed.
The third parties were relatives of the husband and a company they controlled. Collectively, they sought costs of $337,027 in defending the wife’s claims. Accordingly, the wife’s potential costs obligation exceeds $600,000.
Background
The costs orders arose out of property settlement proceedings commenced in 2009, which proceeded to an eight day trial that concluded in February 2016.
In his reasons in relation to the costs issue, the trial judge recorded that at trial the husband had, subject to certain provisos, “represented the pool of assets having a value of $1,840,314”. On the other hand, the wife had asserted that the assets were worth over $12 million.
The trial judge recorded that the wife’s claims relating to the value of the assets “were not supported by evidence and, notwithstanding the wife’s protestations in her submissions ... about the failings of the husband and the third parties, such claims were not pressed successfully at trial or at all”.
His Honour also noted that the wife sought 65 per cent of the net assets whereas he concluded the wife should receive 57.5 per cent of the “remnants of the pool of assets remaining”.
The Grounds of Appeal
Before discussing the specific complaints, it is important to observe that this is an appeal from a discretionary judgment. The obstacles to challenges to such judgments do not require extensive restatement. They were recently explained in the context of a costs dispute in Fleming & Schmidt [2017] FamCAFC 12 at [42] – [44]. In a nutshell, we can interfere in his Honour’s orders only if the result was plainly unjust, proceeded upon a mistake of fact, or if the discretion was exercised on wrong principles.
In Harris and Harris (1991) FLC 92-254 at 78,711, the Full Court held that costs orders are “peculiarly a matter which are within the discretion of the trial judge” and that “only in the rarest of cases” should an appeal court interfere with such orders. Although this may state the proposition “at its highest” (Browne v Green (2002) FLC 93-115), the authorities consistently emphasise the extent to which costs orders are protected from appellate interference.
An exercise of discretion to order costs will be upheld if it appears to the appellate court that there were reasons upon which the trial judge could rely in making the order: Greedy and Greedy (1982) FLC 91-250 at 77,382; Luadaka v Luadaka (1998) FLC 92-830 at 85,509.
It is in this context that I turn to the grounds of appeal.
Ground 1
Ground 1 contains four separate complaints. It is said that his Honour erred when he found that:
·the wife was wholly unsuccessful at trial;
·the wife was unreasonable in rejecting offers;
·the wife’s “conduct in proceedings was, by implication, unreasonable compared to the conduct of [the husband]”; and
·the wife’s “potential impecuniosity” deserved little weight.
Dealing with the first complaint, his Honour did not find that the “wife was wholly unsuccessful at trial”. What his Honour found was as follows:
35My finding as to the asset pool fell short of the wife’s case by some $11,000,000 and was entirely consistent with the position advanced by the husband. To that extent, the claims made by the wife as to the asset pool were entirely unsuccessful and the consequential effect of my findings as to the asset pool was significant. In measuring the wife’s relative success, it is to be remembered that she was seeking 65 per cent of what she represented as an asset pool of slightly greater than $12,000,000.
36Whilst it may be that the wife achieved greater than 50 per cent overall, as originally proposed by the husband of the non‑superannuation assets, her 65 per cent claim born no relation to what was ultimately available for division between the parties.
Counsel for the wife acknowledged that this was not her strongest point. It is not suggested that in these paragraphs his Honour misstated the position regarding the wife’s claim, and there is accordingly no merit in this portion of the complaint.
The second complaint relates to the treatment of the settlement offers. His Honour detailed the offers at [38] by setting out all the offers made as far back as 2009. It is not suggested that his Honour misstated the effect of the offers or was in error in concluding that the wife would have retained benefits worth in the region of $1 million had she accepted the husband’s proposals. His Honour found at [63] that the husband’s position “throughout was far more proximate to that which was found to be the asset pool”. That finding is unchallenged.
The high point of the wife’s argument is that the trial judge did not take into account the reasons the wife advanced as to why she had not accepted the offers. The fact remains that the husband made a variety of offers more advantageous to the wife than that which she ultimately obtained, and it was open to his Honour to take that fact into account. In all the circumstances, I consider that it was open to his Honour to conclude that overall the wife had adopted an “unreasonable” position in relation to the offers.
It is true that at one point in the negotiations the parties came “close to settlement”. His Honour did not overlook that fact as he said:
59It is true that the parties came remarkably close to settling and, whilst it may well be said that it was open to the husband to compromise further to resolve a settlement, I observe that his representations as to the asset pool were at all times significantly more realistic than that of the wife, as found by me during the course of the trial.
The third part of the complaint relates to his Honour’s findings concerning the conduct of the parties. Conduct is made relevant by s 117(2A)(c) of the Family Law Act 1975 (Cth) (“the Act”). The trial judge discussed issues of “conduct” from [22] to [30] of his reasons. In doing so, his Honour:
· observed that the wife had not taken up “the opportunity afforded to her to investigate the value of the caravan park interests” which she had said were worth over $1 million;
· referred to the wife’s complaints about disclosure but also recited the “sage observation” of a Registrar who dealt with the matter in 2013 and who had observed that the wife had “in excess of 2 years to address, by formal process if necessary, many of the disclosure and lack of information issues presently being pursued”;
· noted that the wife had waited until 2013, some four years after the litigation had commenced, to join the third parties; and
· recorded the husband’s submissions about delays the wife had caused at trial (in dealing with these his Honour did not say whether he accepted the submissions but I infer that he did).
Apart from observing that it was unclear whether his Honour made a finding about the husband’s submissions regarding delay, the wife’s submissions on appeal relating to conduct focused on the alleged failure of the husband to disclose documents, and her written submissions made a general reference to how the court file would show the subpoenas and other methods used to prove her case.
In my view, it is not to be expected that a judge dealing with costs arguments will conduct a post-mortem of the entire litigation. It would appear from his citation of the Registrar’s comments that the trial judge considered that the wife had had sufficient opportunity prior to trial to take steps arising out of the husband’s alleged non-disclosure. In my view, it is sufficient that the reasons disclose that his Honour did not overlook the complaint about non-disclosure.
The final complaint under Ground 1 concerned the weight given to the wife’s “impecuniosity”. His Honour dealt with this at [68] where he said:
I do not ignore the wife’s financial position as found by me during the course of the trial, however, her potential impecuniosity is not a bar to a costs order being made. This position has been consistently maintained by the Full Court of the Family Court of Australia and Family Courts at first instance when considering costs applications.
The principles relating to challenges to the weight given by a trial judge to relevant factors when exercising a judicial discretion are well known. Absent failure to consider relevant considerations or taking into account irrelevant considerations, an appellate tribunal needs to view weight challenges with considerable caution unless the failure to give adequate weight to a relevant consideration amounts to a failure to exercise the discretion at all: Mallet v Mallet (1984) 156 CLR 605 at 614–15 and 621–22.
In support of this complaint, the wife’s written submissions drew attention to authority to the effect that an order for costs will not always be justified against a financially weaker party, even if that party has conducted proceedings in an unjustifiable manner. That proposition is undoubtedly true but it clearly does not provide any support for the proposition that a financially weaker party can conduct proceedings in such a fashion with impunity.
It was further submitted that the costs orders will virtually exhaust the wife’s share of the asset pool. It was argued that “to leave a person without any funds, after finding that she did deserve a greater portion of the funds from the asset pool, is to punish her unnecessarily for continuing”.
With respect, this submission misses the point about costs orders. They are not directed to the punishment of a litigant but rather to the compensation of the other party who has unnecessarily incurred costs in successfully defending a claim. As McHugh J said in Latoudis v Casey (1990) 170 CLR 534 at 566–7:
An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connexion with the litigation … The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be made even though the action has failed through no fault of the unsuccessful party…
The trial judge was familiar with the financial circumstances of the parties, having given judgment in contested property proceedings. He was therefore aware of how little the wife was to receive from the settlement. The husband himself had acknowledged in his cost submissions that “it is quite possible that the 2 costs awards will exceed the wife’s financial entitlements as ordered by the Trial Judge”. The form of orders expressly recognised that the costs would need to come from the proceeds of sale of the matrimonial home.
While it is most unfortunate that the wife will be effectively left penniless as a result of the proceedings, this should be seen as directly referable to the manner in which the wife conducted the litigation. As the Full Court said in Lenova & Lenova (Costs) [2011] FamCAFC 141 at [12]:
a limited financial capacity to meet an order can not [sic] be determinative; if it were, a party would always be able to plead impecuniosity as a means of avoiding a costs order in circumstances where pursuit of the litigation has continued in the face of a reasonable offer to cease that litigation and the incurring of its attendant costs.
For these reasons I find no merit in Ground 1.
Ground 2
By this ground it is asserted that
His Honour was in error and wrongly exercised his discretion when he found that the [wife’s] conduct relative to the conduct of [the husband], rejection of offers, loss at trial and financial circumstances, either alone or together, amounted to circumstances which justified the order as to costs made in favour of [the husband].
In dealing with this complaint, I need only emphasise that we are concerned with the exercise of what counsel for the wife has properly acknowledged today as being a wide judicial discretion. In my view, it cannot reasonably be argued that the conclusion reached by his Honour in relation to the costs of the proceedings was not open to him.
Ground 3
By this ground it is asserted that:
His Honour was in error and wrongly exercised his discretion when he found that the [wife] had no grounds to join Respondents 2, 3 and 4, and awarded indemnity for costs in their favour [sic].
Although the ground asserts error, it does not identify the error.
His Honour dealt with the question of the costs of the third parties from [76] to [87] of his reasons. In accepting that the third parties were entitled to recover costs on an indemnity basis, his Honour recorded at [80] his agreement with the submission made on behalf of the third parties that:
The wife adopted a fixed and inflexible attitude to the outcome she sought in the proceedings. She was not prepared to consider all the material available to her in a reasonable fashion and would not consider changing her mind in the face of material contrary to her position ... So the wife not only maintained her case against the third parties without evidence to support it, she also did so in the face of substantial evidence against her contentions.
(Original emphasis)
His Honour also repeated the finding in his primary judgment where he said that the wife “persisted with maintaining a position of conspiracy”, and he referred to authority in which examples were given of circumstances that might warrant the exercise of the discretion to award indemnity costs, which include “the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions”.
His Honour said:
84There is and was, in my finding, no doubt that when the wife engaged the third parties in the proceedings, she had no evidence, either then or later, to substantiate any claims against them. Her allegations of fraud were groundless and, as submitted by Senior Counsel, she “maintained the allegations recklessly and without a reasonable basis”.
His Honour went on to say:
86 … I acknowledge that the making of an order for indemnity costs is very much the exception, however, the maintaining of the action against the third parties and the conduct of the case against them by the wife in these proceedings was exceptional and of such an exception, in my finding, such as to warrant an order for indemnity costs.
Counsel for the wife in written submissions submitted that the wife had no choice but to join the third parties “given the complicated nature of the financial arrangements the husband had set up”. This argument was not developed in the written outline and in any event fails to engage with the fact that the wife made claims against third parties that were wholly unsuccessful.
It is noted also that no attempt was made in the written outline to attack any part of his Honour’s reasoning relating to the awarding of indemnity costs. It is well recognised that indemnity costs may be awarded against a party who has proceeded in wilful disregard of known facts, made allegations that never ought to have been made or unduly prolonged a case by the making of groundless contentions (see the authorities collected by Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 228–234).
The wife’s written outline concluded by reference to the fact that the wife “had to represent herself in a number of important aspects of the proceedings, including much of the trial”. It was also submitted that it was inevitable the trial would take longer than it might have taken if the wife had the benefit of counsel. The wife engaged many different solicitors during the proceedings. While she was unrepresented at trial, his Honour correctly observed that “lack of legal knowledge is a misfortune, not a privilege”.
It is certainly not the case, as was submitted on behalf of the wife, that the wife was “punished for her inability to afford counsel”. Having had the benefit of legal advice, the wife pursued claims which the trial judge concluded were “extravagant, unmeritorious and, at times, bizarre”, “fanciful” and “entirely unmeritorious”. There is no appeal against the primary order. It was therefore open to the trial judge to order the wife to pay the costs notwithstanding the devastating impact upon her of such an order.
For these reasons I would dismiss the appeal.
Ryan J
I agree and have nothing further to add.
Aldridge J
I also agree.
Thackray J
On that basis the formal order is that the appeal is dismissed.
Costs
The application before the Full Court now is the application for costs made by the husband and by the third parties. The basis upon which costs are sought is that the appeal has been wholly unsuccessful. It is nevertheless the case that the court may take into account a number of other factors pursuant to s 117(2A) of the Act. One of these is the financial circumstances of the parties. The wife’s position, as a result of these costs orders, is that she will be impecunious. I accept there is a possibility the wife could be required to pay on the “drip method” described by counsel for the husband. I also accept that the husband and the third parties have incurred great expense during the proceedings. The wife nevertheless is in a dire financial positon.
Senior counsel for the third parties is quite correct in saying that the law is very clear that impecuniosity is no bar to a costs order, and it is often said that this is especially so in the case of appeals. However, apart from the wife’s dire financial position, another matter to take into account is the conduct of the appeal. As Justice Ryan has said in her comments during argument, this appeal appears to have been presented with efficiency and some economy – and for that those who have represented the wife pro bono ought to be commended.
Speaking for myself, the dire financial position in which the wife finds herself would satisfy me that on this occasion, it would not be appropriate to make an order for costs. I would therefore dismiss the applications for costs.
Ryan J
I agree. The only other matter I take into account in coming to this view is that this was a matter of real significance to the wife. Otherwise I adopt the remarks and proposed orders made by the presiding judge.
Aldridge J
I agree with the reasons of the presiding judge, the orders proposed by him and the additional comments of Justice Ryan.
Thackray J
For those reasons the applications for costs will be dismissed.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Thackray, Ryan & Aldridge JJ ) delivered on 6 April 2017.
Associate:
Date: 12 April 2017
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