Nash & Finch - [2009] FamCAFC 79

FAMILY COURT OF AUSTRALIA

NASH & FINCH

[2009] FamCAFC 79

FAMILY LAW – PROPERTY – APPEAL FROM FEDERAL MAGISTRATES COURT – Costs Orders – Procedural Fairness

FAMILY LAW –APPEAL – Non-attendance by party

Family Law Act 1975 (Cth)
Federal Proceedings (Costs) Act 1981

Brown v Brown (1998) FLC 92-822

APPELLANT:

MS NASH

RESPONDENT:

MR FINCH

FILE NUMBER:

BRC

2007

APPEAL NUMBER:

2008

DATE DELIVERED:

15 May 2009

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

MAY J

HEARING DATE:

15 April 2009

LOWER COURT JURISDICTION:

Federal Magistrates Court

LOWER COURT JUDGMENT DATE:

17 March 2008

LOWER COURT MNC:

[2008] FMCAfam 618

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr George

SOLICITOR FOR THE APPELLANT:

Smith & Associates Solicitors

RESPONDENT:

No Appearance

Orders

The appeal be allowed.
Paragraph 11 of the order made 17 March 2008 be set aside.
The wife serve the judgment and these orders on the husbands parents, Mr and Mrs Finch personally within 14 days of today.
The application of the husband for costs be listed for re-hearing before Federal Magistrate Burnett on the written request of the husband after giving 21 days notice in writing to the wife.
That the Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal against the costs orders.

IT IS NOTED that publication of this judgment under the pseudonym Nash & Finch is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 55 of 2008
File Number: BRC 26 of 2007

MS NASH

Appellant

And

MR FINCH

Respondent

REASONS FOR JUDGMENT

Introduction

This is an appeal from a costs order made by Federal Magistrate Burnett on 17 March 2008. The substantive issue before him was the parties’ applications for property settlement. At trial, the husband was represented by a solicitor and barrister, the wife represented herself.
This appeal was heard by me as a single Judge by direction of the Chief Justice pursuant to s 94AAA(3) of the Family Law Act 1975 (Cth) (“the Act”).
The order from which the wife appeals is contained in the following paragraph:
11.That the Respondent pay the Applicant’s costs on a standard basis with respect to all applications made to the Court for property matters, including all costs reserved.
As there has been no assessment of the costs order the quantum is not known.
The wife seeks that the costs order be discharged and instead that the parties bear their own costs.

Background

The essential history as set out by the trial Judge provides some context to the matter:
22.By way of background, the parties are both Russian in ethnicity, the applicant husband having been born […] December 1980 and the respondent wife […] March 1972. Each of them came to Australia sometime in the 1990s, ostensibly to study at [...] University, where they met in about 1999, and shortly thereafter commenced cohabitation. [In] 2002 they married and [in] 2005 the parties had a child, [A], who now lives with the wife and will be the subject of separate orders following this proceeding. The parties lived together until 19 July 2005, when they separated. The marriage was, by all accounts, a short marriage, including the relationship lasting not more than about seven years.
At the trial before Burnett FM the husband asked that the response of the wife be dismissed and that the court hear his application on an undefended basis. It was the husband’s case that the wife had failed to comply with three court orders restraining her from dealing with various matrimonial assets and otherwise her failure to properly participate in the proceedings should lead to an undefended hearing.
The matrimonial pool as found by the Federal Magistrate was small, $99,000 in total assets. However the liabilities consisting of loans to the husband’s parents, loans for cars and other debts exceeded the assets. The net asset worth was found to be in the negative $100,000.
Federal Magistrate Burnett found that there was sufficient evidence that the wife had failed to comply with orders and that her breach was sizeable, amounting to a dissipation of at least $70,000 of the matrimonial assets. Explanations offered by the wife for her breaches were found to be unsatisfactory.
His Honour did not accept her explanation and acceded to the husband’s application for the following reasons:
14.Dealing first with the first complaint, the respondent acknowledged that she had notice of the orders made. The sums involved were sizeable, $60,000. The moneys were allegedly disposed of in the discharge of debt. There is no particularisation as to how the debt was made up, whether the debts were her own debts, personally, or whether they were debts of the marriage but, in any event, the funds were dissipated. When called up on to provide an explanation for why the funds were dissipated, the best that the respondent could come up with was that she did not know which way she could go. She claimed that she was essentially a new Australian citizen and that she did the best she could, to paraphrase her circumstances. She had not sought legal advice at the time, nor did she consult the solicitors for the applicant. It is, in my view, frankly unsatisfactory.
…
17.In this case, dissipating a sum of $60,000, which represented, by and large, the balance of equity available in the property, without consulting the other party, clearly, in my view, was a contravention that was designed to impede the delivery of justice in the primary proceedings. Again, for those reasons I am not satisfied that there has, indeed, been a reasonable excuse. It seems to me that in the circumstances there should be a dismissal of the response on that basis alone.
18.In any event, as I have indicated, there is the third complaint which arises, and that concerns the dissipation of the $11,000, which was the prepayment made to the dentist. Again, looking to the principles which are provided for in A v Z, when asked about an excuse, the respondent, in this instance, admitted she did not ask her solicitor for any advice. She was aware, she says, that she should not have done what she did, but says she did so because she had no choice and complained, for instance, that there had been a failure by the applicant to pay child support. Again, frankly, it is not an acceptable. We have a rule of law and a legal process for good reason. It is there to resolve disputes between parties who cannot come to an agreement between themselves. It is not for the parties to take the law into their own hands and simply proceed to ignore orders made by the Court. In my view, the excuses proffered on this occasion were not reasonable excuses.
19.Furthermore, when one looks at the second point that the Court suggests should be considered, that is whether there be an element of challenge to the authority of the Court, again, addressing that point in the context of the Full Court's reasons at paragraph 137 in A v Z, the contravention, in the circumstances, again, to my mind, did impede the delivery of justice in the primary proceedings by the dissipation of another asset which was otherwise available for consideration as part of the property pool. Again, I am not satisfied there is any reason why the respondent undertook that conduct and, in my view, she should be admonished for it.
20.In all of the circumstances I think it is appropriate in this case, having regard to the quantum of the estate, having regard to the orders that were made, having regard to the knowledge of the respondent of the presence of the orders, having regard to the absence of any reasonable excuse in relation to the non-compliance with the orders, and having regard to the manner in which the non-compliance with the orders has served to dissipate the principle assets available for distribution between the parties and, by its effect, has rendered, to a large extent, the delivery of justice in the primary proceedings for the applicant a nullity and nugatory, it is, in this case, appropriate that the response be dismissed.
The reasons for the order for costs of the trial made against the wife were contained in one paragraph:
57.This is a case where I have proceeded to hear the application on an undefended basis because of a failure by the respondent to obey Court orders of a substantive kind made on two occasions in relation to the issue of injunctions. The effect of the disobedience of those orders was significant. It saw the dissipation of at least $70,000 of matrimonial property in favour of the wife and effectively has denied the applicant husband any remedy, in a real sense, in these proceedings. It seems to me that in those circumstances the husband, having been put to the expense of having to run to trial in order to have these matters finalised, has been unduly disadvantaged and should be afforded at least the benefit of a costs order.
Apart from the moneys retained by the wife she received no property from the orders made by the Federal Magistrate.

Hearing of the Appeal in the Absence of the Respondent Husband

There was no appearance by or on behalf of the husband at the appeal. The husband was never served personally with the Notice of Appeal.
It is necessary to describe in some detail steps taken by the appellant wife and orders made to appreciate why it is appropriate to hear the appeal in the absence of the husband.
This matter came before me five times for directions before I listed the appeal for a hearing. On each of those five occasions the wife appeared before me, with no appearance on behalf of the husband.
At the first procedural hearing before me on 12 August 2008 the wife appeared in person and asked for an adjournment to seek legal representation. The wife on that occasion made an application for substituted service. She submitted that the husband, to her knowledge, currently resided in Korea where he ran a shipping business but that his parents lived at an address known to her at the Gold Coast and that his mail was often redirected to that address.
It was evident from the husband’s financial statement filed 31 March 2006 before the Federal Magistrate that when he signed that statement he was in Korea. An affidavit of Catherine Louise Burchill, the husband’s solicitor at trial filed 6 June, 2006 also confirmed that the husband resided in Korea at that time.
An order, in effect for substituted service was made allowing the wife to serve the husbands previously instructed solicitors, Burchill & Horsey Lawyers and personally serve the husbands parents at their Gold Coast address.
On 1 September 2008 the Appeals Registrar received a letter from the respondent’s solicitors, Burchill and Horsey Lawyers. The letter advised that the firm had held instructions for the husband for the matter at first instance but that they did not hold instructions with respect to the appeal. The letter further noted that they were unable to contact the husband and that they are unaware of his current address and/ or contact details.
In a further procedural hearing before me on 9 February 2009, there was again no appearance by the husband. The wife on that occasion was represented by counsel. Mr George, counsel for the wife made an application for an adjournment in order to provide advice to her.
On 16 February 2009, the matter again came before me. Again there was no appearance by husband. The wife appeared in person and asked that the matter be adjourned while she acquired funds to further instruct counsel.
On 20 February 2009, the wife was represented by her solicitor who sought leave to file an Amended Notice of Appeal and applied for further orders for substituted service. The wife’s solicitor submitted that orders should be made allowing personal service on the husband’s parents. The solicitor for the wife submitted on instructions that the husband was known to return to his parents Gold Coast address from time to time. An affidavit of the husband before the Federal Magistrate filed 26 July 2006 stated that the husband worked for his father, Mr Finch’s shipping company in Korea. It was submitted on behalf of the wife that she had exhausted all other means of service and that the husband no longer communicates with the child of the marriage, A, restricting the wife’s ability to contact the husband through the child.
In an affidavit of the wife filed 20 February 2009 she gave the following evidence:
3.I am aware that the Husband is currently living in South Korea and despite my best efforts to locate him; I have been unable to ascertain the Father’s current physical address in South Korea. I am aware, from previous affidavit material filed by the Husband in the substantive family law proceedings that he intends to permanently reside outside Australia for the foreseeable future but that he travels back to Australia occasionally.
4.In or around June 2008, I contacted Burchill & Horsey Solicitors, who previously represented the Husband throughout the substantive family law proceedings from 2006 to 2008, to make enquiries as to whether they were or not they were still representing the Husband. I was informed by a lady from the offices of Burchill and Horsey Solicitors that they no longer represented the Husband and had no instructions to represent him in this Appeal.
5.I am aware that when the Husband is staying in Australia, he lives at his parent’s residence at [the Gold Coast] Queensland and I believe that his mail is currently being forwarded to South Korea from this address.
6.I am aware that the Husband’s parents, Mr. [Finch] and Mrs. [Finch], live at [the Gold Coast] Queensland. I am aware, from previous affidavit material filed by the Husband in the substantive family law proceedings that he operates some sort of import export business on behalf of his parents in South Korea. As a result of this, I would expect that the Husband and his parents would be in regular communication about the day to day operation of his parent’s business. Further, I believe that the Husband’s parents would know his forwarding address details in South Korea as they are his employers.
6.On 16 February 2009, I instructed my solicitors to again Burchill & Horsey Solicitors to find out whether or not they had a forwarding address for the Husband. I was informed by my solicitors and believe that this contact was made and that they were informed by a representative from Burchill & Horsey that they had no such address for the Husband.
On 20 February 2009 I made an order granting leave to the wife to file her Amended Notice of Appeal and an order for substituted service allowing the wife to serve the husbands parents personally.
At the next procedural hearing on 16 March 2009, the wife represented by her solicitor demonstrated compliance with the substituted service order made by me on 20 February 2009. An affidavit of service dated 12 March 2009 stated that the paternal grandfather had been personally served with the wife’s Amended Notice of Appeal.
On 23 March 2009 I made orders for directions and ordered:
(7)That the appellants solicitors serve this order on Mr [Finch] personally, together with a letter informing him that the hearing of the appeal is at 10:00am on 15 April 2009 and that if there is no appearance by or on behalf of the respondent husband, orders may be made in his absence including that the appeal be allowed and including costs.
At the appeal hearing there was no appearance on behalf of the husband. Compliance issues arose with respect to order 7 referred to above. The wife filed an affidavit of service filed 14 April 2009 which indicated that a letter from the wife’s solicitors, the wife’s Summary of Argument and the List of Documents she wished to rely upon at the appeal had been left in the letter box of the paternal grandparents Gold Coast address on 3 April 2009. The order made by me provided that these documents were to be delivered personally on Mr Finch (the paternal grandfather). The service was not by hand. Further, the letter accompanying the other documents was not annexed to the affidavit of service. The letter was provided to me by Mr George and was marked Exhibit 1.
Another affidavit of service filed 15 April 2009 indicated that the order made by me on 23 March 2009 was served personally on the paternal grandmother, Mrs Finch. The order made by me with respect to substituted service required the paternal grandfather, Mr Finch to be served personally. Mr George submitted that a previous order for substituted service made by me specified that either Mrs Finch or Mr Finch be served personally. He submitted that serving the paternal grandmother was a negligible detail as both the grandmother and grandfather lived at the same address and were both able to bring the documents to the husbands attention.
The question is whether the appeal should be heard in the absence of the other party including whether there has been satisfactory compliance with the orders made on 20 February 2009 and 23 March 2009.
Rule 22.30 provides:
Non-attendance by party
If a party does not attend, in person or by lawyer, when an appeal is called on for the hearing of the appeal, the court may:
(a) if the appellant does not attend — dismiss the appeal; or
(b) if the respondent does not attend — proceed with the appeal.
This is a discretionary matter such that the position of each party must be considered together with the consequences. If the matter could not be heard in the absence of the husband the wife would be deprived of a right to challenge the orders. In this case, for reasons I will explain in greater length later in this judgment the wife may have been deprived of a proper opportunity to be heard and the reasons were inadequate. Further, as it is intended to only set aside the orders rather than dismiss them the possible unfairness to the husband is minimalised.

Appellant Wife’s Submissions on costs appeal

The wife submits in her summary of argument that in failing to accord the wife procedural fairness an error in law was made because she was not given an opportunity to be heard on the costs issue. In addition, it was submitted that the Federal Magistrate did not take into account matters he was bound to consider by the legislation.
As section 117(1) of the Act provides, the general principle relating to costs of proceedings is that each party to a proceedings should bear their own costs subject to justifying circumstances. It is useful in this case to set out part of that section:
117 Costs
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 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) 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.

Counsel for the wife, Mr George, submits that Federal Magistrate Burnett did not give consideration to the relevant matters contained in s 117(2A), resulting in a miscarriage of the exercise of his discretion. This submission is made in addition to that of failure to accord procedural fairness. It is submitted in the written outline that the following errors were made:
6.As best can be presently determined, in the absence of the transcript, it is submitted:
(a)the Wife has been denied natural justice in that she was not afforded the opportunity to be heard on the question of costs;
(b)the learned Federal Magistrate did not, expressly or by reasonable implication, consider any/all of the relevant matters referred to in S.117(2A);
(c)the learned Federal Magistrate was overly influenced by the Wife’s actions during the proceedings and, in effect, “penalised” her by the making of the costs order rather than appropriately determine that there were circumstances that justified deviation from the general principle (S.117(2)) and then properly consider the matters in S.117(2A);
(d)the most important matter not considered was the significant disparity in income and financial resources between the parties. In this case the Husband has not, since the judgment in March 2008, sought to quantify or demand payment of his costs. It is a matter of no moment to him, but, conversely, it is the “sword of Damocles” hanging over the Wife’s head;
(e)whilst the Wife’s “conduct” was a relevant consideration (S.117(2A)(c)), that conduct needed to be considered in the full context of the proceedings, the acrimonious relationship between the parties and the Wife’s nationality and the fact that she was not legally represented.
Although the transcript of the hearing on 17 March 2008 was not provided it is apparent from the transcript of 20 May 2008 that that attempts by the wife to make further submissions about costs were futile. The Federal Magistrate provided the reasons on 17 March 2008 and this occasion was apparently to “settle orders” (T/script p.1 l.14 & 15)

Conclusions

Whilst it must be observed that the conduct of the wife in breaching the court orders (which is not denied by her) would be circumstances justifying costs orders it needs also to be said that the Federal Magistrate apparently did not give any consideration to other matters contained in s 117(2A). Of real significance was the wife’s financial circumstances. The Federal Magistrate was provided with her Form 13 financial Statement filed on 31 January 2008 which demonstrates her poor financial position. The wife was entirely dependant on government benefits and did not receive any financial support for the parties’ child living exclusively with her.
The effect of the matters complained of as summarised in paragraph 6 of the submissions is that the appeal should be allowed.
The next and more difficult question is what orders should then be made. The appellant asked that the order be dismissed and there be no re-hearing of the application.
In the absence of the husband and material filed on his behalf specific to this application re-exercise of the discretion to order costs is impossible.
Mr George attempted to persuade me that there should be no re-hearing in this matter if the court decides not to re-exercise. It was his submission that should the discretion be re-exercised it would be clear that there could be no order for costs by reason of the wife’s financial circumstances, the result for the wife after the property proceedings and that to order costs would in effect be a double penalty. These of course were not contempt proceedings. Reliance was placed on the reasons of Kay J in Brown v Brown (1998) FLC 92-822 at p.85,347. In that case the trial Judge made an order that one party pay the costs because of a late decision made in relation to the calling of a witness necessitating an adjournment. It also became necessary for the trial Judge to disqualify himself by reason of remarks made on an earlier occasion. In that case Kay J at paragraph 22 concluded:
22. This is a case in my view in which no order for costs should have been made, or alternatively, at the extreme, an order reserving the issue of costs until a Judge was in a position to understand all of the s 117(2A) issues.
In this case it can be said that the discretion was exercised on wrong principles however it cannot immediately be said the result was plainly unjust to the wife. For that reason I would decline to make the order that the costs order be discharged and would instead make orders allowing the husband to seek a re-hearing should he apply.

I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.

Associate:

Date: 15 May 2009