McAlpin v McAlpin

[1994] HCATrans 288

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S118 of 1993

B e t w e e n -

RACHEL MARY McALPIN

Applicant

ahd

WARREN JOHN McALPIN

Respondent

Application for special leave

to appeal

MASON CJ DAWSON J

TOOHEY J

McAlpin 1 22/4/94

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 22 APRIL 1994, AT 10.00 AM

Copyright in the High Court of Australia

MR D.M.J. BENNETT, OC:  May Lt please the Court, I appear

for the applicant with my learned friend,

MR B.J. KNOX.	(instructed by Fleming Muntz
Summons)

MR D. MILNE, OC: If the Court pleases, I appear with my

learned friend, MR P.H. BLACKBURN-HART, for the

respondent. (instructed by Gibney & Gunson)

TOOHEY J:  Mr Bennett, this is an application for leave to

appeal against an order for costs?

MR BENNETT:  Yes, Your Honour. Your Honour, a visit to the

Family Court can be a frightening, emotional and expensive experience for many litigants.

Fortunately, those consequences are frequently

assuaged because litigants have friends, parents,

new partners or concerned associations, which give

them emotional and financial support when they need

it most. What the majority decision of the

Full Court does in this case is create a new hazard

for the good samaritans of the Family Court and for

their proteges.

There are two things the case is not about:

it is not about orders for costs against a third

party, as in Knight v F.P. Special Assets. No such

order was made here and, indeed, the circumstances

Your Honours laid down in that case for the making

of an order were not satisfied because there was no

interest, as is required by that case.

TOOHEY J: In a sense it is though, is it not, because one

of your proposed grounds of appeal is that the

third party was denied natural justice.

MR BENNETT:  It was denied natural justice in relation to

the order for costs, yes.

TOOHEY J: If the order for costs is not against the third

party, how does the question of natural justice

arise?

MR BENNETT: Because, Your Honour, the reason for making the

order for costs, or one of the reasons given for
the making of the order, was that it would be paid
by the third party because of the attitude the

third party had evinced towards the litigant, the

charitable attitude.

What this case is about, Your Honours, is a

factor being taken into account which, we submit,

is quite impermissible and indeed is a means of

avoiding the rules laid down in

Knight v F.P. Special Assets where, first of all, there must be, among other things, an interest and,

McAlpin 2 22/4/94

secondly, natural justice must be given to the

third party.

TOOHEY J: Yes, I understand the argument that says

"an impermissible element was taken into account".

I just have difficulty with the other argument that

there was a failure to accord natural justice to a

third party, against whom no order for costs was

made.

MR BENNETT:  Your Honour, it is really a question of a

dilemma. Either the only person affected and the
only person to be taken into account is the party,

in which case it seems to be acknowledged that the

order would not have been made, or you take into

account the third party, in which case one would

have thought the third party should be heard. The

natural justice is not the principal element of the

submission.	The basic submission is that it is an
impermissible element.	What this case enables a
court to do is to say this:	in any case where it

is likely that for reasons of charity, providence,

relationship or anything else, a third party is
likely to meet a costs order against an impecunious
party, that is a discretionary factor in favour of

making an order for costs against that party,

although one would not otherwise do so.	We would
submit - - -

DAWSON J:  Why should it not be? I suppose you are going to

tell us why it should not be. But where the.other

party has been reduced to financial ruin and.is

unable to even pay his own costs, why not?

MR BENNETT:  Your Honour, that is a discretionary

consideration in its own right which is and should

be and, indeed, was taken into account. We have no

complaints about that. But what one may not take

into account is that there is a third party who is

likely, if an order is made, to be so concerned

about the possible bankruptcy or insolvency of the

impecunious party, that the order can therefore be

made.

DAWSON J:  Why not, if that third party has been financing

litigation, in effect, of that party up until now?

MR BENNETT: Because, Your Honour, the test laid down for an

order against a third party is the

F.P. Special Assets test. If that test - - -

DAWSON J: This is not an order against a third party. It

is simply looking at, realistically, financial

circumstances of the particular party.

MR BENNETT: But, Your Honour, if one has, for reasons of

policy, a series of rules in relation to costs

McAlpin 3 22/4/94

against a third party, why should one have lesser

rules and lesser standards and be able to avoid

those rules by saying, "Well, we will make the

order for costs against a party, and we know that

third party will pay."

TOOHEY J: But you are seeking to erect into some general

principle, Mr Bennett, a decision which turns very much on the particular facts of this case, does it not, really?

MR BENNETT:  No, Your Honour.

TOOHEY J: If you have a litigant who is financially

supported, perhaps encouraged in and financed by a

relative, friend, organization, is it not a

relevant consideration to take into account in

making an order for costs?

MR BENNETT:  We would submit not, Your Honour. The conduct

of the litigant in the case may be in various ways

and, indeed, in certain cases, if one is looking at

the financial situation of a party, it may be
relevant to see what resources that party has had

made available to her or him for charitable

reasons. But what cannot be relevant is to say, "I

know I can make this order for costs against an

impecunious party because that party has a friend

or organization - - -"

DAWSON J: But that is the fallacy in it, it is not against

an impecunious party, if you take the view that the

probability is that party will have funds. You do

not pose any obligation on a third party, you just

look at the real situation.

MR BENNETT:  Your Honour, it is a contingent situation. The

party is only going to have funds if the order is

made.

DAWSON J:  Of course it is. You can only act on the

probabilities.

MR BENNETT:  Yes. But, Your Honour, one does not do that in

relation to legal aid. There is a particular

provision in this section, indeed, which deals with

the legal aid situation. But in the normal case it

would be, in my respectful submission, a wrong

exercise of discretion for a court to say, "This

party is legally aided and we know legal aid will

pay the costs if we order them against that party.

Therefore, although otherwise we would not order

it, we will do so." That, in my respect

submission, would be a wrong exercise of

discretion.

McAlpin 4 22/4/94

TOOHEY J: Say, the party had been a beneficiary under a

deed of trust which empowered but did not require
the trustee to make funds available to that person.

Would it be relevant for the court to take that factor into account?

MR BENNETT:	No, Your Honour, any more than it would in the old days of personal injury litigation to tell the
jury that there was an insurance company behind the
defendant. The reason one could not do that in the
days when we were all young was that the jury might
take it into account, and it was a forbidden
factor.  The fact that a judgment may be paid by
someone else, a fortiori that it may be paid out of
charity, in my respectful submission, cannot be a
proper factor.
TOOHEY J:	You may be right if you cast the net as broadly

as that, but it is a decision that turns on the

particular facts of this case, I would have

thought.

MR BENNETT:  We submit it is a general rule, Your Honour.

If the Court were to grant leave and allow the appeal, the matter would of course go back for

determination of the question. We do not suggest

that this Court would decide the discretionary

question. But what the Court would say, what we

would ask it to say, is that this factor must be

deleted from consideration.

DAWSON J: But when you look at the judgment, what

Mr Justice Strauss was saying was, "I do not really regard this particular party as being impecunious.

It is not only a question of financing litigation,

she was being financed in a variety of ways by this

particular organization. So that she was in an

advantageous position as regards the other party,

distinctly. "

MR BENNETT:  He did not put it on the basis that because

there had been assistance in the past - - -

DAWSON J: And not only legal assistance with regard to

legal costs; assistance generally.

MR BENNETT:  Yes. If he had put it on the basis - and it is

not suggested these were the facts, but if he had

said, "This person has received sums of money from

a third party which she still has and, therefore,

she now has an asset she did not otherwise have,"

clearly, that is a proper consideration. But the

consideration that the third party is likely, out
of charity, to be sorry for the party if I make an

order for costs and therefore pay it, in my

respectful submission, it cannot be a proper

consideration.

McAlpin 5 22/4/94

It is of general importance in two ways,

Your Honours. It applies, first of all, in every

court to every exercise of a discretion as to costs

that can be made. In any situation where one finds
that there is a third party who is likely to pay

the costs if they are made, for example, a young

person involved in a matter in a magistrates court,

would one say, "Well, I will make an order for

costs because I know his father will pay it"?

There are many situations in the law where a

person may have someone who is likely to meet an

obligation imposed on a party. But that, in my

respectful submission, must be an irrelevant

consideration and an improper consideration. Apart

from anything else, as a matter of policy, it

discourages the sort of support which, particularly

in the Family Court, many litigants need. There

are very large numbers of litigants in that court

who are in a situation of emotional weakness, who

do turn - - -

DAWSON J:  I do not understand that. There is no legal

obligation imposed on a third party to contribute.

Why should it discourage them?

MR BENNETT: Because, Your Honour, if it is going to produce

the result that an order will be made where one

otherwise would not be made, and the third party's

charitable attitude is such that it would not allow

the party to go bankrupt if an order for costs was made, then of course it will determine. The third

party will say, in my respectful submission, "It

will be detrimental, in one sense to the party and

in another sense for me, for me to offer the

support the party needs at a time when the party

needs emotional and financial support" and, in my

respectful submission, as a matter of policy that

would be a bad thing, in the Family Court context.

In the more general context, of course, it is

an important question and, we would submit, it is

like the insurance companies in the old days which

the juries could not be told about.	It is a matter
that one may not take into account.

TOOHEY J:	I would be astonished if this judgment were seen as a precedent for making orders for costs against women in Family Court proceedings on the basis that
the parents of the woman had lent some financial
support to her in the conduct of the proceedings.
MR BENNETT:	If Your Honour looks at Mr Justice Baker's

dissent, he certainly regards it as establishing

that proposition and being wrong for that reason.

Indeed, His Honour's dissent very much represents

the arguments which we would put to the Court.

McAlpin 6 22/4/94

The judgment of Mr Justice Strauss is a very

short one, but the passage appears to be - it is at

page 4, paragraph (b), of the application book:

It seems to me unjust that the community

at large through legal aid, should bear the

burden of these costs or that the impecunious

husband should have had to rely on his own

resources in litigation in which the wife

could rely on substantial contributions from

others and which was at least influenced by

others.

MASON CJ: But that is only one of many circumstances

identified by the primary judge.

MR BENNETT:  We accept that, Your Honour.

MASON CJ: But once you accept that it seems to me to be

very difficult to say that this case is going to be

treated as a precedent in the way you suggest.

MR BENNETT:  Your Honour, suppose a judge were to say,

"There are five reasons why I make this order for

costs, and one of them is that the litigant has

blue eyes, and I regard that as an important reason

why she should pay costs" - taking an extreme and

ridiculous example - that would be an appropriate
case for special leave to establish that that is a

factor which a court should not take into account,

and the fact that it is a discretionary judgment

and one of a number of factors, would not be.a

reason not to.

All we would ask the Court to do is send it

back and ask the court to re-consider it with that

factor eliminated from consideration. We submit it

applicant, if the Court pleases.

is a matter of general importance, for the reasons

MASON CJ: Yes, thank you, Mr Bennett. The Court need not

trouble you, Mr Milne.

The principal ground urged in support of this

application is that the primary judge took an

irrelevant consideration into account in making an

order for costs against the wife. The

consideration said to be irrelevant is the conduct

of an organization which was not a party to the

litigation. The conduct consisted of playing a

part in the litigation and encouraging it. We are

not persuaded that the factor was irrelevant. In

essence, the propriety of making the order depended

on the particular facts of the case. The

application for special leave is therefore refused.

McAlpin	22/4/94
MR BENNETT: If the Court pleases.
MR MILNE: Costs, ,Your Honour?
MASON CJ: What do you say as to that, Mr Bennett?
MR BENNETT:	Only that in the Family Court, Your Honour, the

practice has not been to make such orders, except

in exceptional cases. This was below and that was

the ground, and this Court has frequently not made

order on special leave applications in Family Court

matters.

MASON CJ:  It has done so from time to time, but on other

occasions it has made orders, and here we are
dealing with an application for special leave to

appeal in a case in which the Family Court itself

made an order for costs. That seems to me to tip

the scales against you.

MR BENNETT:  Your Honour, the factors there were different

to the factors here.

MASON CJ: True, true enough, but you proceed from a

foundation on which an order for costs has been

made. The application is refused with costs.

AT 10.18 AM THE MATTER WAS ADJOURNED SINE DIE

McAlpin 22/4/94