Moy & Pao

Case [2022] FedCFamC1A 17

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Moy & Pao [2022] FedCFamC1A 17

Appeal from: Moy & Pao (No. 4) [2021] FamCA 506
Appeal number(s): SOA 47 of 2021
File number(s): MLC 6493 of 2011
Judgment of: MCCLELLAND DCJ, TREE & MCEVOY JJ
Date of judgment: 15 February 2022
Catchwords: FAMILY LAW – APPEAL – LEAVE TO APPEAL – COSTS – Where the appellants appeal against an order dismissing their applications for costs following the adjournment of a trial – Where the primary judge’s conclusion that costs were unlikely to be thrown away comprises a material error of fact – Adequacy of reasons –Conduct of respondent’s legal representatives warranted an order for indemnity costs – Leave to appeal granted – Appeal allowed – Re-exercise of discretion – Indemnity costs ordered – Costs of appeal ordered in favour of appellants.
Legislation:

Family Law Act 1975 (Cth) s 117(2A)

Family Law Rules 2004 (Cth) rr 16.05, 16.06
Cases cited:

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801

Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251

Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34

Moy & Pao (No. 3) [2021] FamCA 310

Robinson and Higginbotham (1991) FLC 92-209; [1991] FamCA 5

Rozenblit v Vainer (2018) 262 CLR 478; [2018] HCA 23

Stasiuk & Guild [2021] FamCAFC 62

Number of paragraphs: 37
Date of hearing: 1 February 2022
Place: Melbourne (via video link)
Counsel for the First Appellant: Dr Smith
Solicitor for the First Appellant: Kennedy Partners
Counsel for the Second Appellant: Mr Atkinson
Solicitor for the Second Appellant: PCL Lawyers
Counsel for the Respondent: Mr Felkel
Solicitor for the Respondent: McDonald Lawyers

ORDERS

SOA 47 of 2021
MLC 6493 of 2011

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTION
BETWEEN:

MS MOY

First Appellant

MR PAO

Second Appellant
AND:

B PTY LTD

Respondent

ORDER MADE BY:

MCCLELLAND, TREE & MCEVOY JJ

DATE OF ORDER:

15 FEBRUARY 2022

THE COURT ORDERS THAT:

1.Leave to appeal be granted.

2.The appeal be allowed.

3.The orders made on 13 July 2021 by the primary judge be set aside.

4.Within 28 days, the respondent pay the first appellant’s costs thrown away as a result of the adjournment of the trial of the primary proceedings on 13 May 2021 in the sum of $32,353.75, together with costs of the Application in a Case filed 11 June 2021 in the sum of $1,178.34.

5.Within 28 days, the respondent pay the second appellant’s costs thrown away as a result of the adjournment of the trial of the primary proceedings on 13 May 2021 in the sum of $29,012.50, together with costs of the Application in a Case filed 11 June 2021 in the sum of $1,178.34.

6.Within 28 days, the respondent pay the first appellant’s costs of this appeal in the sum of $9,021.21.

7.Within 28 days, the respondent pay the second appellant’s costs of this appeal in the sum of $6,775.44.

Note:…

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AGLC
Moy & Pao [2022] FedCFamC1A 17
Case
[2022] FedCFamC1A 17
Decision Date

CaseChat Overview and Summary

The appellants, former spouses involved in property settlement proceedings, appeal against an order dismissing their applications for costs following the adjournment of a trial. The respondent, a creditor, intervened in the proceedings seeking orders in relation to a judgment debt. The primary judge dismissed the appellants' applications for costs on an indemnity basis and under section 117(2) of the Family Law Act 1975 (Cth). The Full Court allowed the appeal and ordered that the respondent pay the appellants’ costs on an indemnity basis, including costs thrown away due to the adjournment, costs incurred in prosecuting their applications for costs, and the costs of the appeal.
The primary issues for the Full Court were whether the primary judge erred in concluding that there were unlikely to be costs thrown away and whether the primary judge’s decision to dismiss the costs applications was plainly unjust or exercised on wrong principles. The Full Court found that the primary judge erred in concluding that there were unlikely to be costs thrown away because the matter had been adjourned after three days of final hearing, without the trial commencing. The Full Court also found that the primary judge’s decision to dismiss the costs applications was plainly unjust or exercised on wrong principles. The Full Court concluded that the conduct of the respondent’s legal representatives warranted an order for indemnity costs.
The Full Court allowed the appeal and set aside the orders made by the primary judge on 13 July 2021. The Full Court ordered that the respondent pay the first appellant’s costs thrown away in the sum of $32,353.75, together with costs of the Application in a Case filed 11 June 2021 in the sum of $1,178.34. The Full Court also ordered that the respondent pay the second appellant’s costs thrown away in the sum of $29,012.50, together with costs of the Application in a Case filed 11 June 2021 in the sum of $1,178.34. The Full Court further ordered that the respondent pay the first appellant’s costs of the appeal in the sum of $9,021.21, and the second appellant’s costs of the appeal in the sum of $6,775.44.

Orders

Orders of the court

SOA 47 of 2021

MLC 6493 of 2011

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

DIVISION 1 APPELLATE JURISDICTION

BETWEEN:

MS MOY

First Appellant

MR PAO

Second Appellant

AND:

B PTY LTD

Respondent

ORDER MADE BY:

MCCLELLAND, TREE & MCEVOY JJ

DATE OF ORDER:

15 FEBRUARY 2022

THE COURT ORDERS THAT:

1. Leave to appeal be granted.

2. The appeal be allowed.

3. The orders made on 13 July 2021 by the primary judge be set aside.

4. Within 28 days, the respondent pay the first appellant’s costs thrown away as a result of the adjournment of the trial of the primary proceedings on 13 May 2021 in the sum of $32,353.75, together with costs of the Application in a Case filed 11 June 2021 in the sum of $1,178.34.

5. Within 28 days, the respondent pay the second appellant’s costs thrown away as a result of the adjournment of the trial of the primary proceedings on 13 May 2021 in the sum of $29,012.50, together with costs of the Application in a Case filed 11 June 2021 in the sum of $1,178.34.

6. Within 28 days, the respondent pay the first appellant’s costs of this appeal in the sum of $9,021.21.

7. Within 28 days, the respondent pay the second appellant’s costs of this appeal in the sum of $6,775.44.

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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

For the reasons that follow, the application for leave to appeal and the appeal are allowed and the orders made on 13 July 2021 discharged. Further, the respondent is ordered to pay the appellants’ costs on an indemnity basis, being costs thrown away by virtue of the adjournment, costs incurred in prosecuting their applications for costs, and their costs of this appeal.BACKGROUND The appellants are former spouses involved in property settlement proceedings. The respondent, who is a creditor of the appellants, intervened in those proceedings and sought orders in relation to its judgment debt. The respondent has been a party to the property settlement proceedings since their inception in May 2017. After various attempts to set the matter down for trial, on 27 July 2020, the property proceeding was listed for a four day final hearing on 11 May 2021 before the primary judge. The trial directions then made, which were by consent, required the respondent to file and serve its evidence-in-chief of all witnesses, including expert witnesses, by 15 December 2020. The respondent failed to comply with that timetable. On 28 January 2021, the respondent’s solicitor sent an email to the chambers of the primary judge advising that if his client’s witnesses were unable to travel from China to Australia to appear at the trial in person, then the respondent would seek leave for them to give their evidence by electronic means. On 29 January 2021, the then solicitor for the husband sent an email to all parties and the Court, alerting them to the requirements of rr 16.05 and 16.06 of the then Family Law Rules 2004 (Cth) (“the Rules”), which were the rules governing applications for foreign witnesses to give evidence by electronic means. The respondent was therefore on notice of the requirements of rr 16.05 and 16.06 since 29 January 2021, but at no stage prior to the trial did the respondent attempt to invoke the mandatory procedures set out in the Rules. At the outset of the hearing on the first day of trial, counsel for the respondent first sought leave to rely upon several affidavits that had not been filed in accordance with the trial directions, nor previously foreshadowed as being relied upon, and secondly sought leave for those witnesses to give evidence electronically. Counsel for both the wife and husband opposed that course. As the ex tempore reasons of the primary judge in the subsequent decision of Moy & Pao (No.3) [2021] FamCA 310 make plain, much of the first three days of the trial were spent on housekeeping issues and argument concerning the respondent’s application to call its witnesses electronically. The matter was stood down several times over those three days for the respondent’s counsel to gather her thoughts or to amend certain documents in an attempt to comply with rr 16.05 and 16.06. Ultimately as found by the primary judge, the respondent failed to establish compliance with rr 16.05 and 16.06 of the Rules (at [33] and [34]). On the afternoon on the second day of the trial, counsel for the respondent made an application for an adjournment of the trial in order to allow her client to comply with the relevant rules and for her client’s witnesses to attend either in person or electronically. The parties’ submissions on the adjournment application continued until mid-morning on the third day of trial, after which the primary judge delivered his ex-tempore reasons for judgment granting the adjournment. The trial was adjourned to a further three days in October 2021, however for reasons that are unclear, the trial did not proceed at that time and is still awaiting final hearing. As part of the orders adjourning the trial, his Honour ordered that the parties file a joint timetable for the filing of material on the issue of costs consequent upon his Honour’s ruling.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Before we discuss the grounds of appeal, it must be noted that whilst the Full Court has generally been reluctant to interfere with a primary judge’s discretion as to costs (Robinson and Higginbotham (1991) FLC 92-209 (“Robinson”)), that does not mean that this Court should never interfere with the exercise of a costs discretion (Stasiuk & Guild [2021] FamCAFC 62 at [6] (“Stasiuk & Guild”)). This Court must interfere “if the result is plainly unjust or if the discretion was exercised on wrong principles” (Robinson at 78,417).REASONS FOR JUDGMENT The primary judge’s reasons for dismissing the costs applications run to nine paragraphs in length, however relevant to this appeal are as follows:4First, it is necessary to address the claims for costs to be assessed on an indemnity basis. Stasiuk & Guild is a recent illustration of a repeat theme that the decision in In the Marriage of Kohan remains good law and that indemnity costs are ordered in exceptional circumstances. There was nothing exceptional about the trial of this proceeding being adjourned. It will resume on 13 October 2021. Whether the intervenor is ultimately successful in pressing for recovery of many millions of dollars in a judgment debt obtained in Australia remains to be seen. This case scarcely commenced before three days of “housekeeping” issues emerged. No evidence was called. Only when I have a better understanding of the merits of this case will I be placed to make a costs order, if one under s 117(2) is appropriately made at all.5Second, there are unlikely to be costs thrown away. The material on which all parties have proceeded to date will be used when the trial resumes.6Third, even if a party successfully enlivens one of the grounds of the subsections of s 117(2A) of the Family Law Act, it does not follow that a costs order is axiomatically made. The making of a costs order must be just. 7It must not be forgotten that the applicant and the respondent have been battling in this court for a long time. The intervenor has been owed a very large amount for a long time. The case has not been tried. A costs order may well be made after trial. Equally, one may not. I am not prepared to materially alter the status quo by the making of the costs order sought.8In my view the proceeding must resume on the dates allocated. If the case runs to judgment then costs may become an issue. It is too early to tell.9In those circumstances I dismiss the applications for an order that the intervenor pay the applicant’s and the respondent’s costs on an indemnity basis. I also dismiss their applications for a costs order under s 117(2) on a party party basis. Costs should be borne by all parties under s 117(1) of the Family Law Act.(Footnotes omitted)Ground 1 This ground of appeal contends:1.The [primary judge] erred in concluding that there were unlikely to be costs ‘thrown away’ of the husband and the wife, notwithstanding that the matter had been adjourned after three days of final hearing, without the trial commencing.(As per the original)

Ratio Decidendi

Legal Principle Established

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