Medlon and Medlon (No 7)
[2015] FamCAFC 246
•22 December 2015
FAMILY COURT OF AUSTRALIA
| MEDLON & MEDLON (NO 7) | [2015] FamCAFC 246 |
| FAMILY LAW – APPEAL – NOTICE OF APPEAL – ENFORCEMENT – Where the wife alleges error by the trial judge in failing to off-set against the costs order the husband’s “non-compliance” with previous orders – Where the wife says no reference was had by the trial judge to the prejudice that would be caused to her by enforcement of the orders and that it should have been found that the respondent’s application was vexatious and an abuse of process – Where there is no error by the trial judge – Appeal dismissed. FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – FURTHER EVIDENCE – Where the wife blatantly disregarded the order made for the filing of such an application – Where in the interests of justice an extension of time was granted – Where most of the evidence sought to be presented was irrelevant or inadmissible – Where the evidence the wife was permitted to rely on does not demonstrate error by the trial judge – Application dismissed. FAMILY LAW – APPEAL – INDEMNITY COSTS – Where the husband seeks that the wife pay his costs on an indemnity basis – Where there are circumstances which justify an order for costs being made – Where the appeal was misconceived, had no chance of success and should not have been brought – Where the husband has been put to unnecessary cost in responding to the appeal and to the application in an appeal – Where the wife relies on her financial circumstances and opposes the application – Where the wife has ongoing employment and has assets including real estate and thus has financial resources available to her – Where impecuniosity is not a bar to a costs order being made when the circumstances justify such an order – Where there are exceptional circumstances present here to justify a departure from the ordinary rule as to costs – Costs ordered on an indemnity basis in favour of the husband. |
| Family Law Act 1975 (Cth) – s 117(1), (2) and (2A) CDJ v VAJ (1998) 197 CLR 172 Colgate-Palmolive Co & Another v Cussons Pty Ltd (1993) 118 ALR 248 |
| APPELLANT: | Ms Medlon |
| RESPONDENT: | Mr Medlon |
| FILE NUMBER: | ADC | 491 | of | 2010 |
| APPEAL NUMBER: | SOA | 24 | of | 2015 |
| DATE DELIVERED: | 22 December 2015 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 8 September 2015 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 4 March 2015 |
| LOWER COURT MNC: | [2015] FCCA 1198 |
REPRESENTATION
| THE APPELLANT: | In person by telephone link |
| COUNSEL FOR THE RESPONDENT: | Mr Heinrich |
| SOLICITOR FOR THE RESPONDENT: | Adelaide Family Law |
Orders
8 September 2015
The time for the appellant to file and serve an application seeking to lead further evidence in the appeal be extended nunc pro tunc to the close of business on 27 August 2015.
The appellant be permitted to rely on paragraphs 3, 4, and 8 of her affidavit filed on 27 August 2015 NOTING THAT only sentences 1 to 5 inclusive of paragraph 4 are to be relied upon.
The appellant be permitted to rely on paragraph 5 and annexures RMC3 and RMC4 of her affidavit sworn on 4 September 2015 and which affidavit the Court treats as being tendered this day.
The Notice of Appeal filed on 1 April 2015 be dismissed.
Judgment in relation to the application made on behalf of the respondent for costs be reserved.
22 December 2015
The application in an appeal filed on 27 August 2015 be dismissed.
The appellant wife pay the costs of the respondent husband of and incidental to the Notice of Appeal filed on 1 April 2015 and the application in an appeal filed on 27 August 2015 on an indemnity basis with such costs to be assessed in default of agreement.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Medlon & Medlon (No 7) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE |
Appeal Number: SOA 24 of 2015
File Number: ADC 491 of 2010
| Ms Medlon |
Appellant
And
| Mr Medlon |
Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed on 1 April 2015 Ms Medlon (“the wife”) appealed against orders made by Judge Kelly on 4 March 2015. That appeal is opposed by Mr Medlon (“the husband”).
The orders the subject of the appeal provided as follows:
…
(3)Pursuant to Rule 25B of the Family Circuit Court Rules 2001 as amended, the Respondent pay to the Applicant the sum of $13,913 with respect to all outstanding costs Orders and interest together with the costs of today’s hearing to be paid in full to the Applicant’s solicitors, Adelaide Family Law, no later than close of business Friday 10 April 2015.
(4)In the event the amount as ordered in paragraph 3 hereof is not paid in full by 10 April 2015, then an Enforcement Warrant shall issue for the seizure and sale of the property situate at [G], being the whole of the land comprised and described in Certificate of Title Register Book Volume …. Folio .., with the Enforcement Warrant to issue by the Registrar upon presentation of same by the Applicant husband or his legal representatives.
…
The first thing to note about this appeal is that leave is required, but it was not sought by the wife. However, no point was taken about that by the husband, and the appeal was argued on its merits.
On 27 August 2015 the wife filed an application in an appeal seeking an extension of time to file that application and the affidavit in support, and seeking to adduce further evidence, being the evidence comprised in the supporting affidavit. On 2 September 2015 the husband filed a response seeking that this application be dismissed.
On 6 September 2015 the wife sent a further affidavit in support of her application to the Appeal Registrar, but it was not received for filing, given its lateness.
The appeal came on for hearing before this court on 8 September 2015, and on that day I made the orders appearing at the commencement of these reasons, and I need not repeat them here. In making orders (1) – (4), I indicated that I would provide my reasons therefor as soon as I was able to, and these are those reasons. In relation to order (5), I make the separate order for costs also set out at the commencement of these reasons, and I provide my reasons therefor hereunder.
Relevant Procedural Background
On 29 November 2011 orders for property settlement were made by consent between the parties. Subsequently there have been numerous proceedings instituted by the wife primarily in the Family Court of Australia, and including by way of appeal.
On 27 November 2014 the husband filed an application in a case seeking orders enforcing orders for costs made respectively on 8 May 2013 and 1 September 2014 (two orders). On 4 March 2015 that application was heard and determined by the trial judge, and her Honour, inter alia, made the orders the subject of the appeal.
The Ground of Appeal
The one ground of appeal set out in the Notice of Appeal is as follows:
1.That Her Honour Judge Kelly erred in discretionary power, law and fact by not off-setting costs orders against the non-compliance by the husband and the liabilities still owed by the husband pursuant to the Consent Orders dated 29 November 2011, and the wife is prejudiced by the seriousness of the Orders to enforce the sale of the family home in those circumstances for a sum of $13,913 including where the wife’s family home has little or no net equity in any event, and accordingly the application in a case by the husband is vexatious, an abuse of process and achieves no financial benefit for either party.
That ground in effect raises three issues, namely, did her Honour err:
a)by failing to off-set against the costs orders “the non-compliance by the husband and the liabilities still owed by [him]” pursuant to the order of 29 November 2011;
b)by failing to take into account the prejudice to the wife caused by the enforcement of the orders; and
c)by failing to find that the application was “vexatious, an abuse of process, and achieves no financial benefit for either party”.
Discussion
Off-setting non-compliance by the husband against the orders for costs
This was the primary submission made by the wife to her Honour, but in my view her Honour correctly refused to do what the wife was asking.
It is important to understand that there were no orders made on 29 November 2011 which, for example, provided for the husband to pay to the wife a fixed monetary amount, and that were then not complied with by the husband. Further, there had been no application by the wife to enforce any orders she says the husband has not complied with.
The alleged non-compliance by the husband, and the liabilities allegedly owing by him, are comprised of the wife’s allegations as to the husband’s non-disclosure, tax liabilities that she has been left with, dividends that she says she has not received, long service leave and annual leave entitlements that she says she has not received, unpaid accounts, and items of personalty including motor vehicles not yet delivered up.
However, these allegations are just that, and the wife has not taken any proceedings to address these allegations, and in particular to crystallise them such that there might be something to “off-set”, or indeed something to enforce.
When the wife attempted to raise these issues before her Honour, her Honour correctly indicated that they were not matters that were before her, and the wife conceded that that was the case before this court.
Her Honour considered these issues to be irrelevant to the application that was before her, namely the husband’s enforcement application.
There is no error by her Honour in taking this approach; there was simply nothing to “off-set”, even if that was a course open to her Honour, which I doubt. The wife would have had to have previously sought a stay of the execution of the orders for costs to enable her to pursue any claim against the husband. However, she had not done that.
Prejudice to the wife
As I understand it, this related to a claim by the wife that she did not have sufficient funds to pay the costs orders “at short notice”, and that to force the sale of the house property, which allegedly did not have any equity, was too serious a penalty. However, her Honour was clearly aware of this claim by the wife, and it is beyond doubt that she took it into account. For example, her Honour said this in her reasons for judgment:
…
9.The wife says she cannot afford to discharge her obligation at short notice …
10.…I have taken the wife’s financial circumstances into account in making this order. She is in ongoing employment. While she appears to have significant debts outstanding, I am satisfied that she has financial resources available to her.
…
14.If the wife fails to do so, she should be under no illusion that the Enforcement Warrant will issue and the property will be seized and then sold. I appreciate the wife says that there is no equity in that property because of various debts she claims are secured against the property. I presume the amount owing on the mortgage is formally secured against the property and that sum is able to be clarified, if necessary. The debt the wife apparently owes to [W] Pty Ltd is another question altogether. It may come down to an argument about the priority of debtors. But that is a matter for another day.
…
It has not been demonstrated that the trial judge erred by failing to take into account relevant issues in making those findings.
The nature of the husband’s application
The wife’s claim that the application was vexatious and an abuse of process is a baseless claim. I have not been taken to anything that was before her Honour that demonstrates that this was the case. The husband was clearly entitled to bring the application given the wife’s failure to comply with the orders.
As to the question of “financial benefit”, I assume that relates again to the wife’s claim that there is no equity in the house property. However, as can be seen her Honour considered that, and in effect found that the truth or otherwise in that claim would have to await the outcome of any sale. Again, there is no error here by the trial judge.
The application in an appeal
The wife blatantly disregarded the order that I made as to the time for filing such an application, choosing, she said, to ensure that she filed her summary of argument in time. However, despite this, and despite the opposition of the husband, in the interests of justice I am prepared to grant an extension of time.
There were two affidavits of the wife comprising the further evidence that the wife sought to adduce. However, most of the “evidence” in those affidavits was irrelevant to the application that was before the trial judge, and thus to the appeal before this court. I also observe that much of the content of the affidavits was inadmissible.
I did permit the wife to rely on limited paragraphs of the affidavits, and some annexures to the second affidavit, but that was in an attempt to better understand what the wife’s specific complaints were. Importantly, even that “evidence” does not demonstrate error by the trial judge, and could not be admitted for that purpose under the principles emanating from the High Court decision of CDJ v VAJ (1998) 197 CLR 172.
In the circumstances, the application must be dismissed. I omitted to formally make an order to that effect on 8 September 2015, but I now do so.
Conclusion
Given the one ground of appeal has no merit the appeal must be dismissed.
Costs
In light of the result of the appeal, the husband seeks an order for indemnity costs against the wife. The wife opposes that order.
The first question that arises is whether there should be an order for costs at all, and that is governed by s 117 of the Family Law Act 1975 (Cth) (“the Act”). Relevantly that section provides as follows:
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 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 subsections (2A), (4), (4A), and (5) and the applicable 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 to 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 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.
As can be seen, an order for costs can be made where there are circumstances that justify it. Here, that is the case. The appeal should not have been brought; it was misconceived, and never had any prospect of success. Thus, the husband has been put to unnecessary cost in responding not only to the appeal, but also to the application in an appeal. Further, I note that the wife pursued her appeal, and even filed a further affidavit after receiving the written summary of argument of the husband, which pointed clearly to the futility of the appeal.
The wife puts in issue her financial circumstances, and it is necessary for this court, to take them into account in determining whether an order for costs should be made.
I do not have up to date financial information from the wife, but although she appears to have a number of debts including legal costs, she is in ongoing employment as a legal practitioner, and she has assets including real estate. Like the trial judge, I am satisfied that she has financial resources available to her.
I also observe that on 13 August 2015 I delivered reasons for judgment in another of the wife’s matters before this court (Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157) and I made an order for costs against her. There, I had some detailed information about the wife’s financial circumstances, and I found that she could not maintain that she had no capacity to meet an order for costs.
In any event, as I also said in those reasons for judgment (at [23]), and I repeat here, even if the wife is not able to meet an order for costs, there is clear Full Court authority that impecuniosity is not a bar to a costs order being made, and particularly where there are circumstances which otherwise justify an order for costs (e.g. see D & D (Costs) (No 2) (2010) FLC 93-435), as is the case here.
No one of the factors in s 117(2A) can necessarily prevail over any of the other factors, and in the exercise of discretion to award costs or not, it is a matter of the weight that is accorded to each of the relevant factors. Here, lack of success, and the wife’s conduct in bringing an appeal that was doomed to fail, as well as pursuing such an appeal, plainly outweighs the wife’s financial circumstances. To repeat, the wife instituted the appeal and filed the application, and the husband was obliged to respond and incur substantial legal costs. Thus, there should be an order for costs.
The next question is whether those costs should be calculated on an indemnity basis.
A useful discussion of the question of indemnity costs is to be found in the decision of the Full Court in D & D (Costs) (No 2). There, the Full Court reviewed extensively earlier authorities including Limousin & Limousin (Costs) [2007] 38 Fam LR 478 and Kohan and Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co & Another v Cussons Pty Ltd (1993) 118 ALR 248.
The ordinary rule is that an order for costs is calculated on a party/party basis, and it emerges from the authorities referred to above that to depart from that rule exceptional circumstances need to be demonstrated.
The husband of course seeks that the costs be assessed on an indemnity basis, rather than the usual party/party basis.
As to what might constitute an exceptional circumstance, reference can be made to the oft-cited decision of Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited, where his Honour detailed circumstances that might qualify. Usefully, Holden J in Munday v Bowman (1997) FLC 92-784 at 84,660, drew from the decision of Sheppard J the following examples:
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra).
(c)Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)).
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v Westpac Banking Corporation (unreported Federal Court, 5 March 1993)).
(e)An imprudent refusal of an offer to compromise.
Here, it is readily apparent that the facts and circumstances of this case fit within at least two of these examples, namely (a) and (d).
Thus, I have no difficulty in finding that there are exceptional circumstances present here that warrant a departure from the ordinary rule as to costs and justify an indemnity costs order.
The plain fact of the matter is that the husband should not have to bear any of the legal costs incurred by him in responding to the appeal and the application in an appeal. Thus, the costs will be calculated on an indemnity basis.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 22 December 2015.
Associate:
Date: 22 December 2015
3
8