Midden and Galloway (No.2)

[2013] FCCA 2264

FEDERAL CIRCUIT COURT OF AUSTRALIA

MIDDEN & GALLOWAY (No.2) [2013] FCCA 2264

Catchwords:
FAMILY LAW – Property – slip rule – stay application pending appeal – whether application for costs should also be stayed.

Legislation:

Family Law Act 1975 (Cth), s.117

Federal Circuit Rules 2001, r.16.05, sch. 1

Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106
Penfold & Penfold (1980) 5 Fam LR 579
The Marriage of Kohan (1992) Fam LR 245
In the Marriage of Munday and Bowman (1997) 22 Fam LR321
Rittman and Rittman (No.3) [2009] FamCA 1138

Applicant: MR MIDDEN

Respondent: MS GALLOWAY

File Number: DNC 199 of 2012

Judgment of: Judge Harland

Hearing date: 27 November 2013

Date of Last Submission: 27 November 2013

Delivered at: Darwin

Delivered on: 23 December 2013

REPRESENTATION

Counsel for the Applicant: Ms Truman

Solicitors for the Applicant: DS Family Law

The Respondent: In Person

ORDERS

1. That pursuant to rule 16.05(e) of the Federal Circuit Court Rules 2001 the Orders made 25 October 2013 be amended as follows:

   (a)Order (1)(e) of the Orders be amended with the years “2007 and 2008” be substituted for the words “2011 and 2012”;

   (b)That Order (1) of the Orders be amended with “$340,000” to be substituted with “$239,817”;

   (c)That Order (13) be amended with the inclusion of sub Order (e) and (f) stating as follows:

   e)That the respondent be restrained from continuing proceedings No. (omitted) in the Supreme Court of the Northern Territory.

   f)That the respondent be restrained from instituting further proceedings against the applicant in respect of the property of the parties, trusts of the parties or either of them in any Court, apart from the Family Court of Australia or the Federal Circuit Court of Australia.

2. That the orders made, as amended by order (1) above 1 – 8 and 10 – 12 of the orders made on 21 October 2013 be stayed pending the determination of the respondent’s appeal File No. (omitted).

3. That order (9) be stayed only in so far as it applies to the properties at Property A and Property M in the Northern Territory.

4. That within 3 business days the respondent provide to the applicant signed withdrawals of caveats for the Property I and Property B properties in South Australia. 

5. In the event the respondent does not comply with order (4), I direct that a Registrar of the Federal Circuit Court of Australia sign the withdrawals of caveats.

6. That the respondent pays the applicant’s costs in the sum of $38,428 within 60 days of today’s date.

7. That order (6) be stayed pending the determination of the respondent’s appeal File No. (omitted).

IT IS NOTED that publication of this judgment under the pseudonym Midden & Galloway (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DARWIN

DNC 199 of 2012

MR MIDDEN

Applicant

And

MS GALLOWAY

Respondent

REASONS FOR JUDGMENT

Introduction

1. I delivered judgment and made final property orders in this matter on 25 October 2013. The respondent filed an appeal on 23 November 2013. That appeal will be heard some time in 2014. The issues I have to determine are:

   a)The applicant’s application to amend 3 orders pursuant to the slip rule;

   b)The respondent’s application for a stay of the property orders pending the appeal;

   c)The applicant’s costs application;

   d)The respondent’s application to stay the costs application under the outcome of the appeal is known.

2. I gave the parties a further opportunity to make written submissions with respect to the stay of orders (9), (13) and (14) which was not agreed to and with respect to costs as the respondent had not complied with my previous order with respect to submissions on costs.

3. In addition to oral submissions I have considered the following documents.

4. The husband relied on the following documents;

   (a)Submissions in respect to costs;

   (b)Application in a Case;

   (c)Affidavit sworn by Mr K on 8 November 2013;

   (d)Affidavit sworn by Mr K on 26 November 2013;

   (e)Affidavit sworn by Mr K on 9 December 2013;

5. The wife relied on the following documents:

   a)Application in a Case;

   b)Affidavit sworn 27 November 2013;

   c)Affidavit sworn 4 December 2013;

   d)Affidavit sworn 4 December 2014.

Slip rule

1. The purpose of the slip rule is to correct errors which arise from an accidental slip or omission. It enables the judicial officer to correct errors which are obvious on their face without the need for parties to appeal. 

2. Rule 16.05(e) of the Federal Circuit Court Rules 2001 states that to vary its judgment or orders after it has been entered if the order does not reflect the intention of the Court.

3. I determine that the slip rule applies to the three issues raised by the applicant which are:

   a)It is apparent from paragraph [226] of the judgment that order (1)(e) should refer to 2007 and 2008 instead of 2011 and 2012.

   b)It is also clear from paragraph [81] of the judgment that additional injunctions restraining the respondent from continuing the Supreme Court proceedings.  I will add those orders at (13)(e) and (f).

   c)The last issue relates to the figures used in the asset pool at paragraph [248]. It is not controversial that the applicant owns a half interest in the two South Australian properties. The parties included the values for the whole of the property values and mortgages in the balance sheet instead of the half figures. I will amend the orders as well as paragraph 248 of the judgment accordingly.

Stay application

1. The principles which apply to applications for a stay of orders are succulently summarised by the Full Court in Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106 at paragraph 18:

   “The principles to be applied in determining an application for a stay of orders both in the general law and in respect of parenting proceedings are also well known (see The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Limited [No.1] (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation (1985) 2 NSW LR 685; Jennings Construction Limited v Burgundy Royale Investments Pty Limited (1986) 161 CLR 681; Clemett & Clemett (1981) FLC 91-013; JRN & KEN v IEG & BLG (1998) 72 ALJR 1329 at 1332).  The authorities stress the discretionary nature of the application which should be determined on its merits.  Principles relevant to this matter include the following:

   • the onus to establish a proper basis for the stay is on the applicant for the stay.  However it is not necessary for the applicant to demonstrate any “special” or “exceptional” circumstances;

   • a person who has obtained a judgment is entitled to the benefit of that judgment;

   • a person who has obtained a judgment is entitled to presume the judgment is correct;

   • the mere filing of an appeal is insufficient to grant a stay;

   • the bona fides of the applicant;

   • a stay may be granted on terms that are fair to all parties - this may involve a court weighing the balance of convenience and the competing rights of the parties;

   • a weighing of the risk that an appeal may be rendered nugatory if a stay is  not granted – this will be a substantial factor in determining whether it will be appropriate to grant a stay;

   • some preliminary assessment of the strength of the proposed appeal – whether the appellant has an arguable case;”

2. The respondent consents to the stay of orders being granted pending the appeal except for orders (9), (13) and (14). There is an arguable case on appeal as it raises errors of law. It is a sensible approach by the applicant. It is only necessary to consider whether orders (9), (13) and (14) should be stayed.

3. Order (9) requires the respondent to lift all caveats she has lodged on the properties. The focus of argument was particularly with respect to the two caveats lodged on the properties in South Australia which the applicant owns with his business partner, Ms S.

4. The respondent has since lodged a caveat over the property at Property A. The affidavit filed for December 2013 the respondent makes the various complaints about the court, the applicant and the applicant’s solicitor. For example she complains that the orders made on 28 May 2012 were wrong and that this has caused the case to become delayed and complicated. The respondent did not appeal those orders. The respondent also annexes her version of the pool of assets which she complains the Court has ignored. In this regard I refer to my comments in the primary judgment.  As is also clear from my primary judgment, I do not accept the respondent’s complaints that the applicant has acted improperly with respect to the trust and assets.

5. The respondent annexes a loan application offer dated by November 2012 as proof that the applicant will dissipate assets. This is not so. There is no evidence that the applicant intends to sell assets and defeat the respondent’s claim.

6. The respondent has not shown that keeping the caveats on the South Australian properties is necessary to protect her interests. These properties are owned by the applicant and a third party and there is no reason why a third party should be restricted from dealing with property if she decides she wants to sell the interests and the applicant agrees to that course. I will require the respondent to remove the caveats on that the South Australian properties. If she fails to do so in accordance with the orders, I shall make the Registrar of the Court sign the withdrawals of caveats. It will not be necessary for the applicant to make any further application to the Court. I refer to the affidavit of the applicant’s solicitor filed on 3 December 2013 indicating that the Registrar of the Land Titles Registration Office in South Australia will accept the withdrawal of caveat signed by the Registrar of this Court.

7. The respondent asked for an order requiring the applicant’s shares of the proceedings of sale be held in escrow pending the outcome of her appeal. The respondent has failed to establish on any reasonable basis that her claim is a risk of being defeated if this order is not made. I will not make such an order. The majority of the orders are stayed and she still has caveats over the two Darwin properties.

8. The applicant did not press that the other caveats be lifted. In the circumstances with the other property orders are the days and there is no prejudice to the applicant in letting those remain. I will not require the respondent to remove those caveats.

9. Order 13 of the orders made on 21 October 2013, as amended by the slip rule, is a series of injunctions. The applicant opposes the injunctions being stayed. She does not provide any reasons as to how not staying that order prejudices her and would prejudice the appeal. On the other hand given the respondent’s conduct which I refer to in my primary judgment, would be considerable potential prejudice to those protected by the injunctions if the injunctions were not maintained. I will not stay order (13).

10. Order (14) requires the respondent to return various personal items to the applicant. The respondent was well aware of that order at the hearing and did not allege that certain items were no longer in existence. She only raised this as the matter was before me in court for the argument about the stay and other orders. I will not stay order (14).

Costs

1. The applicant’s lawyer filed an affidavit and written submissions with respect to costs on 8 November 2013. The affidavit of Mr K sets out the costs claimed by the applicant in detail both on a party/party basis and an indemnity basis for a different period.

2. The applicant seeks that the respondent pays his costs on an indemnity basis. If the Court does not find that an order for indemnity costs is warranted, he seeks costs is warranted he seeks costs on a party/party basis.

3. The respondent seeks that the application for costs be stayed depending the outcome of the appeal. The applicant opposes such a stay. He says that if a costs order was made in his favour, there is a real likelihood that the respondent will appeal it. The respondent confirmed this in court, stating that she will appeal any costs order made against her.

4. Given this, in my view, it is in the interests of these parties and in the interests of the efficient administration of Justice in this court for any costs appeal to be dealt with at the same time as the primary appeal. This avoids a potential situation of a further appeal taking place with respect to costs some time in 2014 or later, if the respondent is wholly or partially unsuccessful in her appeal. For this reason, I will determine the costs application.

5. The respondent filed an affidavit on 4 December 2013 dealing with the costs issue. In that affidavit the respondent again makes numerous criticisms of the Court and of the applicant’s solicitor. It would be counter-productive to go through those matters. I have considered the letters of offer and the legal costs incurred by the respondent.

6. Section 117 of the Family Law Act1975 (Cth) deals with costs. The normal rule is that each party pay for his or her own costs. This reflects the nature of family law proceedings which is different in character to other civil proceedings where the usual rule is that the costs follow the event. Section 117(2) states that the Court may make the costs order if it is of the opinion that there are circumstances to justify such an order subject to subsections (2A), (4), (4A) and (5). In this case only subsection (2A) is relevant.

7. Section 117(2A) lists several matters the Court must have regard to when considering ordering costs. It is not necessary for all of the factors to apply. I will address each of these matters in turn. It is not necessary for each of the factors listed to apply.

(a)    The financial circumstances of each of the parties to the proceedings

1. The effect of the orders in the primary judgment, subject to the amendments to the orders pursuant to the slip rule, result in both parties having assets and in the case of the respondent, a cash payment of $239,817.20.

2. The applicant will receive 70% of the known pool.

3. However as pointed out by the applicant in his written submissions, it is important to note that I made findings about the respondent deliberately failing to comply with the obligations of full and frank disclosure which meant that I could not make an accurate finding about her financial position.

4. The respondent does have capacity to pay costs.

(b) Whether any party to the proceedings is in receipt of assistance by way of legal aid

1. Neither party is in receipt of legal aid.

(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

1. This factor is relevant here. It was necessary for the applicant to commence proceedings on an urgent basis because of the respondent’s conduct. If there was a contested interim hearing before Federal Magistrate Turner (as she then was), she delivered reasons on 27 June 2012.

2. In addition, in my primary judgment, I made several findings about the respondent’s conduct which included burning and altering documents, harassing the applicant’s mother and Ms S, interfering with the valuation of the (omitted) properties and deliberately failing to comply with her obligations to provide full and frank disclosure despite several orders requiring her to do so.

3. The applicant complains about the respondent’s conduct on 18 June 2013, where counsel appearing for the respondent made submissions which were erroneous as referred to in the primary judgment which were presumably based on the instructions of the respondent.

4. The respondent not only failed to comply with the positive obligation in the Federal Circuit Court Rules to provide disclosure but she failed to comply with three sets of consent orders which were made on 29 May 2012, 21 June 2012 and 28 August 2012. On all three occasions she was legally represented.

(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

1. This factor is not relevant.

(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings

1. The respondent 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

1. Both parties made offers before the court proceedings began.

2. This was before the parties exchanged disclosure documents. The applicant made an offer to the respondent of 65/35 split on 2 April 2013.

3. The respondent changed her position throughout the proceedings to see a greater percentage of the pool.

4. The respondent received 30% at the final hearing. It is not as simple as this, however, as there has been a dispute about what should be included in the pool which continued to be an issue of some controversy.

5. The decision as to whether by making an order for costs is a discretionary one. It is a departure from the ordinary rules that each party pay his or her own costs.

6. In Penfold and Penfold (1980) 5 Fam LR 579 the High Court found that the fact that the wife establish the husband’s true financial circumstances due to his non-disclosure was enough to a justify circumstance for the purposes of section 117(2).

7. It is clear that making a costs order in favour of a party is departing from the ordinary rule that the parties should pay their own costs.

8. I am satisfied that there are circumstances in this case to justify an order for costs. My reasons for this are primary based on the respondent’s conduct during the proceedings and here non-disclosure.

9. I now have to consider whether or not to order costs on an indemnity basis. It is important to note that in family law matters making a costs order is departing from the normal practice. Indemnity costs should only be ordered in exceptional cases.

10. In The Marriage of Kohan (1992) Fam LR 245 the Full Court referred to the scale of costs being normal rates of charges.

11. Indemnity costs are only ordered in exceptional cases. See In the Marriage of Munday and Bowman (1997) 22 Fam LR32. The applicant referred to Rittman and Rittman (No.3) [2009] FamCA 1138 in addition to other cases addressing indemnity costs. Rittman’s case dealt with section 117AB which has been repealed.

12. I am not satisfied that the circumstances are exceptional to justify indemnity costs. I am also not satisfied that the respondent should pay the applicant’s costs for the whole of the proceedings. It is reasonable for there to be some allowance for negotiations and exchange of documents early in the proceedings.

13. The respondent should pay the applicant’s costs as follows in accordance with Schedule 1 of the Federal Circuit Court Rules 2001:

Stage	Sub-total
Interim hearing	$2658
Judgment – interim hearing	$271
Short mention – 28 August 2012	$406.50
Preparation - final hearing	$7,526
Solicitor – instructing hearing	$5,982
Counsel – hearing	$18,991
Mention – 30 July 2013	$406.50
Receiving Judgment	$271
50% printing and photocopying	$267.50
50% of hearing fee	$840
Application costs 50%  stage 2 (costs argument) preparation summary	$808.50
Sub-total	$38,428

1. I will stay the order for payment of costs pending the appeal of my primary decision.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Judge Harland

Date:       23 December 2013