Panwar and Panwar & Anor (No 2)
[2020] FamCA 724
•4 September 2020
FAMILY COURT OF AUSTRALIA
| PANWAR & PANWAR AND ANOR (NO. 2) | [2020] FamCA 724 |
| FAMILY LAW – COSTS – applicant who successfully obtained leave under s 44(3) to bring a s 79 proceeding out of time seeking costs – applicant arguing she was wholly successful in the proceeding – consideration of costs questions – applicant not wholly successful in s 79 application – only leave to bring it has been granted – whether trustee was undertaking the legitimate discharge of his duty by opposing leave application – held, yes – costs ordered under s 117(1) and not otherwise. |
| Family Law Act 1975 (Cth) ss 44(3), 44(4), 75, 79, 117 Family Law Rules 2004 (Cth) r 19.18(1) Statute of Gloucester 1278, 6 Edw 1 |
| Andrews v Barnes (1888) 39 Ch D 133 Arkin & Blasberg [2019] FamCA 476 Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 Black v Black (2008) 38 Fam LR 503 Brott v Grey [2000] FCA 1836 Bunbury v Fuller [1853] 156 ER 47 Byrns v Davie [1991] 2 VR 568 Cachia & Hanes (1994) 179 CLR 403 Chen & Chen and Anor [2020] FamCA 602 Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Commissioner of Australian Federal Police v Razzi (No 2) (1991) 101 ALR 425 Corporation of Burford v Lenthall [1743] 26 ER 731 Cummings v Lewis & Ors (1993) 41 FCR 559 D.M.W. v C.G.W. (1982) 151 CLR 491 Dunworth & Falletti [2020] FamCA 178 Federated Engine-Drivers and Firemen’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398 Garnet v Bradley [1878] 3 AC 944 Goodridge & Beadle (No 2) [2019] FamCA 786 Grassby v The Queen (1989) 168 CLR 1 Greedy & Greedy (1982) 8 Fam LR 669 Guild & Stasiuk (No 2) [2020] FamCA 564 Harlen & Hellyar (No 2) [2020] FamCA 413 Hazeldell Ltd v Commonwealth (1924) 34 CLR 442 Hearl & Digby [2020] FamCA 474 Holder & Holder [2020] FamCA 347 Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 In the Marriage of Hogan (1986) 10 Fam LR 681 In the Marriage of I & I (No 2) (1995) 22 Fam LR 557 In the Marriage of Oriolo & Oriolo (1985) 10 Fam LR 665 In the Marriage of Tuck (1979) 7 Fam LR 492 In the Marriage of Waugh (1999) 27 Fam LR 63 In the Marriage of Wilson (1989) 13 Fam LR 205 In the Marriage of Yunghanns (1999) 24 Fam LR 400 Jones v Coxeter [1742] 26 ER 642 Kain & Kain and Ors [2020] FamCA 650 Karjala & Gallard [2020] FamCA 110 Kennon v Spry (2008) 238 CLR 366 Knight v F.P. Special Assets Ltd (1992) 174 CLR 178 Latoudis v Casey (1990) 170 CLR 534 Mullen v De Bry (2006) 36 Fam LR 454 Nine Films and Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046 Norton & Locke (2013) 50 Fam LR 517 Official Trustee in Bankruptcy v Nedlands Pty Ltd (in liq) (2000) 99 FCR 554 Old UGC Inc v Industrial Relations Commission of New South Wales (2006) 225 CLR 274 Panwar & Panwar and Anor [2020] FamCA 480 PBF & TRF (2005) 33 Fam LR 123 Peacock v Newtown Marrickville and General Co-operative Building Society No 4 Ltd (1943) 67 CLR 25 Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 Penfold v Penfold (1980) 144 CLR 311 Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia (2012) 249 CLR 398 R v Gray; ex parte Marsh (1985) 157 CLR 351 Re JJT; ex parte Victoria Legal Aid (1998) 195 CLR 184 Re Macks; ex parte Saint (2000) 204 CLR 158 Re Principal Strategic Options Pty Ltd; Coshott v Coshott [2001] FCA 664 Robins v Incentive Dynamics Pty Ltd (1999) 91 FCR 423 Scherer v Counting Instruments Ltd [1986] 1 WLR 615 Tsiang & Wu [2019] FamCAFC 128 Willocks v Anderson (1971) 124 CLR 293 Yeo & Rambaldi (as trustees of the bankrupt estate of Arifovic) v Arifovic & Anor (No.2) [2017] FCCA 1189 Zhang v Zemin (2010) 79 NSWLR 513 |
| Mark Leeming, Authority to Decide – The Law of Jurisdiction in Australia (Federation Press, 2012) |
| APPLICANT: | Ms Panwar |
| FIRST RESPONDENT: | Mr Panwar |
| SECOND RESPONDENT: | Mr Nash (as trustee of the bankrupt estate of Mr Panwar) |
| FILE NUMBER: | MLC | 14650 | of | 2019 |
| DATE DELIVERED: | 4 September 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | On the papers |
| JUDGMENT OF: | The Honourable Justice Wilson |
| DATE OF FINAL SUBMISSIONS: | 25 August 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr S. Fuller |
| SOLICITOR FOR THE APPLICANT: | Neylon Legal |
| COUNSEL FOR THE FIRST RESPONDENT: | Not applicable |
| SOLICITOR FOR THE FIRST RESPONDENT: | Not applicable |
| COUNSEL FOR THE SECOND RESPONDENT: | Not applicable |
| SOLICITOR FOR THE SECOND RESPONDENT: | Lennon Lawyers |
Orders
Paragraph 1 of the applicant’s application in a case dated 23 July 2020 is dismissed.
All parties’ costs of and incidental to the applicant’s application for leave under s 44(3) of the Family Law Act to commence a proceeding under s 79 of the Family Law Act are his or her own costs under s 117(1) of the Family Law Act.
Paragraph 2 of the applicant’s application in a case dated 23 July 2020 is dismissed.
All parties’ costs of and incidental to the applicant’s application for costs are reserved to be determined by the learned trial judge.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Panwar & Panwar has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 14650 of 2019
| Ms Panwar |
Applicant
And
| Mr Panwar |
First Respondent
And
| Mr Nash (as trustee of the bankrupt estate of Mr Panwar) |
Second Respondent
REASONS FOR JUDGMENT
Introduction
On 18 June 2020 I handed down my reasons for judgment[1] pursuant to which I gave leave to the respondent to commence this proceeding out of time. By application in a case dated 23 July 2020 the applicant has sought orders compelling the second respondent who is the first respondent’s trustee-in-bankruptcy to pay costs –
a)of the applicant’s leave application brought under s 44(3) of the Family Law Act; and
b)of and incidental to this application.
[1]Panwar & Panwar and Anor [2020] FamCA 480.
In her written submissions filed in support of her costs applications, the applicant sought an order under s 117(2A) of the Family Law Act. However, no application was made for an order to be made that costs be paid on an indemnity basis. It follows that the applicant was in reality, seeking an order for costs on a party party basis. It also followed that the applicant was endeavouring to divide her application for costs into two temporal epochs, namely, first, the costs associated with the leave application and second, the application for costs occasioned by the formulation and filing of written submissions on point.
On behalf of the trustee-in-bankruptcy, Mr G. P. Thompson of counsel provided extremely helpful written submissions pointing out that no order for costs should be made.
Synopsis
For the reasons that follow, in my judgment no order for costs should be made and instead, the provisions of s 117(1) should apply requiring each party to bear his or her own costs.
Consideration
The applicant needed leave under s 44(3) to bring her property adjustment proceeding out of time. In making that application she needed to put before the court the factual material on which she relied in seeking leave. She did that. But that was no more than she was required to do. The costs of preparing her affidavit were necessary costs. It had to be borne by her. Even if the application had been unopposed she incurred the costs of her affidavit.
It followed that the debate about costs associated with the s 44(3) application was necessarily confined to the appearance before me in which, to use the applicant’s written submission’s wording, the “senior junior counsel Mr Peter Fary” appeared opposed to (using my words) the even more senior junior counsel Mr Graeme Thompson.
The debate before me was very well argued by both counsel who advanced propositions of fact and law that called for detailed consideration by me.
Mr Thompson pointed out at paragraph 3 of his written submissions that the applicant had no option except to apply to court. He submitted, correctly in my view, as follows –
For the Wife’s application under section 79(4) relief to be heard, she first had to overcome the operation of section 44(3) and comply with section 44(4). Section 44(3) provides that property proceedings “…shall not be instituted except by leave of the Court…” twelve months after making of a divorce order. In other words, it was necessary for the Wife to come to Court to make the application as a preliminary step before she could invoke section 79(4). Without her bringing the section 44(3) application, there was no jurisdiction for the Court to hear her section 79(4) claim. On that view her application was a shield to the Trustee’s claim under section 121 and 122 of the Bankruptcy Act.
In resisting the applicant’s application for leave under s 44(3), the trustee-in-bankruptcy quite properly relied on the applicant’s dilatory approach in bringing the application. Had that contention been upheld, then the applicant may well have been refused leave under s 44(3). It must not be forgotten that the trustee-in-bankruptcy is an officer of the court invested with certain statutory duties. Among his many roles is the obligation to protect and prosecute the interests of the general body of unsecured creditors of the bankrupt. It seemed to me that by opposing the grant of leave under s 44(3), the trustee-in-bankruptcy was doing no more than discharging his statutory duties and his ground of opposition, namely, the applicant’s delay was open on the evidence.
Further, by the grant of leave to bring the s 79 proceeding, it could not be said that any questions about altering property interests have been touched upon or adjudicated upon. To the contrary, they are still at large.
On behalf of the applicant it was correctly submitted that the general rule premised upon an order under s 117(1) must yield to an order under s 117(2) where circumstances are shown that an order under s 117(2) is appropriate. Lest authority for that proposition is needed, one needs only to have regard to the High Court’s observations on point in Penfold v Penfold.[2]
[2] (1980) 144 CLR 311, 315.
In several recent decisions[3] I have traced the jurisdiction of this court to make costs orders. The jurisdiction of this court is statutory whereas the jurisdiction of common law courts to make costs orders can be traced to Courts of Chancery in such cases as Jones & Coxeter[4] and Corporation of Burford v Lenthall.[5] Certain preliminary matters about costs should be restated, even though I have already addressed them in the cases recorded in footnote 3.
[3] Goodridge & Beadle (No 2) [2019] FamCA 786, Harlen & Hellyar (No 2) [2020] FamCA 413, Hearl & Digby [2020] FamCA 474, Guild & Stasiuk (No 2) [2020] FamCA 564.
[4] [1742] 26 ER 642.
[5] [1743] 26 ER 731.
In Cachia & Hanes[6] the plurality of the High Court held that it has not been doubted since 1278 when the Statute of Gloucester of the United Kingdom introduced the notion of costs to the common law that costs are awarded as a partial indemnity for professional legal costs actually incurred in the conduct of litigation. In Knight & FP Special Assets Ltd[7] the High Court contrasted the common law position with respect to costs with a position in equity. I surveyed the learning on point in Goodridge & Beadle (No 2).[8]
[6] (1994) 179 CLR 403.
[7] (1992) 174 CLR 178.
[8] [2019] FamCA 786.
The history of the making of costs orders at common law from the 1700s commencing with the judgment of Lord Blackburn in Garnet v Bradley[9] was surveyed by the plurality of the High Court in Knight v F.P. Special Assets Ltd.[10] There, the High Court contrasted the position at common law in respect of costs orders with the position in equity. Two early illustrations of equity’s treatment of costs warrant particular consideration. The first was Jones & Coxeter.[11] In that case the Lord Chancellor held that the award of costs was entirely discretionary and could be ordered at the time of the decree, unlike at common law where an order for costs had to await final judgment. The discretionary nature of costs in equity lay in its attachment to the conscience as Lord Hardwicke LC held in Corporation of Burford v Lenthall.[12] The second important early exposition of costs in equity was the decision in Andrews v Barnes.[13] There, the court held that equity’s power to order costs arose from the general and inherent power of the Lord Chancellor, the exercise of which carried with it a very wide discretion. Hence, in the Court of Chancery general orders for costs were made that included “full costs”, “good costs”, “double costs” and others.
[9] (1878) 3 AC 944
[10] (1992) 174 CLR 178
[11] [1742] 26 ER 642.
[12] [1743] 26 ER 731.
[13] (1888) 39 Ch D 133.
All aspects of costs have always been within the purview of the trial judge. That includes the imposition of costs, the basis of their imposition and whether some, all or none of them should be ordered. Judges possess a high degree of latitude in the making of costs orders. Costs can be ordered on one basis for all of the case save for the time and effort spent on one particular issue. The decision in Commissioner of Australian Federal Police v Razzi (No 2)[14] seems to be little more than one illustration of that matter. In the Federal Court of Australia and in the Federal Circuit Court of Australia I am familiar with a method of ordering costs by which the judge makes an order for a precise lump sum of costs to be paid thereby avoiding the time-consuming and expensive process of taxing costs.
[14] (1991) 101 ALR 425.
Underpinning any exercise of discretion about the making of any order for costs is the need for that discretion to be exercised judicially. The authorities on point are both English and Australian. I canvassed them in Yeo & Rambaldi v Arifovic[15] in the following terms –
While possessing a discretion in relation to the award of costs, that discretion is not one to be exercised arbitrarily as the discretion must be exercised judicially in accordance with established principles and in relation to the facts of a case. One scarcely needs authority for that proposition, but authority on point dates back to the last century in the decision of Buckley LJ in Scherer v Counting Instruments Ltd.[16] More recently the proposition was stated by the Full Court of the Federal Court of Australia in Cummings v Lewis & Ors,[17] by Toohey J in Hughes v Western Australian Cricket Association Inc,[18] by Cooper J in Brott v Grey,[19] by Branson J in Re Principal Strategic Options Pty Ltd;Coshott v Coshott[20] and by Tamberlin J in Nine Filmsand Television Pty Ltd v Ninox Television Ltd.[21]
…
A costs order does not serve to punish the party against whom the costs order is made. That much was held by the High Court in Latoudis v Casey[22] (“Latoudis”). There, McHugh J explained that the rationale for a costs order is that it is just and reasonable that the party who has caused the other to incur costs of litigation should reimburse the successful party for the liability incurred.
[15] [2017] FCCA 1189.
[16] [1986] 1 WLR 615, 621.
[17] (1993) 41 FCR 559.
[18] (1986) ATPR 40-748.
[19] [2000] FCA 1836.
[20] [2001] FCA 664.
[21] [2006] FCA 1046.
[22] (1990) 170 CLR 534.
Since the enactment of the Family Law Act, a statutory regime has replaced equitable and common law concepts relating to costs in family law litigation. No narrow construction is to be applied to the provisions of s 117(1), 117(2) and 117(2A) of the Family Law Act, as was held in Re JJT; ex parte Victoria Legal Aid.[23] In that case Kirby J was of the view that whatever may have been the source of the court’s power to order costs, on and from the commencement of the Family Law Act the sole repository of the power to make a costs order has been the statute.
[23] (1998) 195 CLR 184, 201.
As with any power conferred by statute, the starting point in any consideration of the exercise of that power is the source of the power under the relevant statutory provision. So much was the subject of judicial pronouncement by the High Court in Penfold v Penfold[24] in reference to s 117 of the Family Law Act, albeit in terms different to its current iteration. The essential characteristic of s 117(2) has been preserved in the current iteration of s 117(2) in that the court may make such order as to costs it considers just if the court is of opinion in a particular case that there are circumstances that justify it doing so. The High Court held that the provisions of s 117(1) to the effect that each party to a proceeding under the Family Law Act shall bear his or her own costs must yield to s 117(2) whenever a judge finds that there are circumstances which justify the making of an order for costs.
[24] (1980) 144 CLR 311
The decision of the High Court in Penfold v Penfold[25] was an early authoritative statement about the proper interpretation of s 117(2) of the Family Law Act. There, the plurality (Stephen, Mason, Aickin and Wilson JJ) held that it was erroneous for the Full Court of this court (Evatt CJ, Asche & Lusink JJ) to have concluded that an order can only be made under s 117(2) in a clear case. The High Court held that s 117(2) of the Family Law Act said no such thing and that the applicant for costs has to establish no more than the existence of circumstances justifying the making of the order and further, the applicant for costs bears no onus to show that it is a clear case for an order for costs. However, s 117(2A) of the Family Law Act overcame other observations in that decision, especially the observation that “in the absence of some positive legislative indication, we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs”.
[25] (1980) 144 CLR 311
By 1981 the Family Court recognised the existence of a wide discretion in relation to orders for costs. So much was held in In the Marriage of Tuck.[26] The following year similar observations were made in Greedy & Greedy.[27] In In the Marriage of Oriolo & Oriolo[28] the Full Court (Emery, Fogarty & Murray JJ) pronounced on point to similar affect.
[26] (1979) 7 Fam LR 492
[27] (1982) 8 Fam LR 669
[28] (1985) 10 Fam LR 665
Ordinarily each party bears his or her (occasionally its) own costs in family law litigation pursuant to s 117(1) of the Family Law Act. That is for the simple reason that s 117(1) of the Family Law Act makes provision for an order to that effect. Section 117(2) of the Family Law Act enables an order to be made pursuant to which one party is ordered to pay costs. Where circumstances justify the court so doing, the court is empowered to make such order as to costs as it considers just, as s 117(2) provides. The applicable rules of court mentioned in s 117(2) include r 19.18(1) of the Family Law Rules. Relevantly, that rule provides that the court possesses a discretion to make an order that costs be paid in a specific sum or on a particular basis, most usually on an indemnity basis of the type canvassed in Colgate Palmolive Co v Cussens Pty Ltd.[29]
[29] (1993) 46 FCR 225
Illustrations of costs orders under s 117(2) include indemnity costs orders or an order for costs to be paid on a particular basis or at a particular rate. Those orders are permissible yet in arriving at an order other than one to which s 117(1) applies, the court must undertake an examination and consideration of the elements in s 117(2A) of the Family Law Act.
Section 117(2A) is expressed in mandatory terms to require a court when considering what order (if any) should be made under s 117(2) to have regard to seven matters. None of those seven matters is determinative. However, the court must consider each matter in the seven alphabetical subsections of s 117(2A).
As was held in PBF & TRF,[30] it is not necessary for more than one factor to exist under s 117(2A) before it is competent for a judge to enliven s 117(2A) so as to make a costs order that departs from the general principle set out in s 117(1) of each party bearing his or her own costs.
[30] (2005) 33 Fam LR 123.
The elements of s 117(2A) and the observations in In the Marriage of Wilson[31] (especially those of Kay J) lead me to the conclusion that direct evidence of those matters relevant to costs is essential. In other words, in order for me to determine a question of costs – whether as to liability for or quantum of costs – direct evidence (rather than mere submission) must be before me about each matter canvassed in the alphabetical subsections of s 117(2A). Accordingly, I needed direct evidence of –
a)the financial circumstances of each party;
b)whether either was in receipt of legal aid;
c)the conduct of the parties in respect of the issues set out in s 117(2A)(c);
d)whether the litigation was necessitated by a failure to comply with a previous order;
e)whether any party had been wholly successful in the proceeding;
f)whether an offer of settlement had been made to settle the litigation and its terms; and
g)any other relevant matter.
[31] (1989) 13 Fam LR 205
As with any costs order, the need for such an order to be just was stated in In the Marriage of Hogan.[32] That is the case irrespective of whether the costs order is interim or final.
[32] (1986) 10 Fam LR 681
Of course, as an antecedent issue to be examined, well prior to considering on what basis any order for costs should be made, the provisions of s 117 of the Family Law Act are enlivened.
It is necessary to descend to s 117(2A) and its various subsections. The seven matters raised in those subsections are mandatory considerations, as is revealed by the phrase in s 117(2A) “the court shall[33] have regard to” them. In view of the use of the word “shall” it seemed scarcely necessary for the court in In the Marriage of I & I (No 2)[34] to have observed that the matters in s 117(2A) “must be taken into account”. That much was obvious. Yet s 117(2A) does not say, as the court said in I & I (No 2) that the section said, that “all the matters must be balanced in order to determine whether the overall circumstances justify the making of an order for costs.” The relevant wording of s 117(2) was that “the court may”, subject to subsections (2A), (4), (5) and (6) and the applicable rules of court “make such order as to costs”… “as the court considers just.” There is no mention of taking all the matters in s 117(2A) into account and balancing them to determine whether the overall circumstances justify the making of an order for costs. Section 117(2A) imposes a mandatory requirement on the court to consider all the matters in subsections (a) to (g). However, if any one of the matters in the subsections predominates on the facts of a case or even if “such other matter as the court considers relevant” predominates, then it is competent for the court to make a costs order. There is no mention in s 117(2A) about determining whether the overall circumstances justify the making of a costs order.
[33] My emphasis.
[34] (1995) 22 Fam LR 557.
So far as s 117(2A)(a) was concerned, the applicant said she was not “a woman of significant means”. The trustee-in-bankruptcy contended that the applicant “is a person of some financial means” owning real estate valued at $717,500, she has an income and, so the trustee said, she can pay her own costs. The applicant said the trustee is a “sophisticated litigant” and “must be taken to be aware of the risks and costs involved in litigation”. The costs involved in litigation in this court, in the absence of an order under s 117(2A) is that s 117(1) applies, each party bearing his or her own costs.
Knowing only the briefest of the financial circumstances of the parties to the proceeding, very little assistance is given by the applicant to any adjudication about costs.
So far as s 117(2A)(b) was concerned, neither party is in receipt of legal aid.
Section 117(2A)(c) involved a consideration of the conduct of the parties in relation to the proceeding. The applicant contended that the trustee pursued a hopeless cause of an interlocutory injunction. The trustee submitted that nothing in his conduct in this case adversely reflected upon the trustee. The trustee focused, quite properly in my view, on the real issue on the s 44(3) application. Mr Thompson put the point as follows[35] –
The issue for determination under sections 44(3) and 44(4) required the Wife to demonstrate hardship if no leave was granted. She was obliged to make the application to the Court in order to apply for section 79(4) relief. In other words, there needed to be a hearing on the issue as parties cannot consent to jurisdiction.
[35] Paragraph 5(c) of the trustee-in-bankruptcy’s written submissions.
So far as the injunction application brought by the trustee was concerned, Mr Thompson scotched the point, entirely appropriately. He contended as follows[36] –
The Applicant refers to the injunctive relief in the Trustee’s application. This was not pursued. It did not take up Court time. In any event, at paragraph 47 of the judgment, the learned judge makes reference to the Wife “giving an assurance not to deal with the property” and no formal order was required.
In summary, it is submitted there is no conduct on behalf of the Trustee that could be said he pursued hopeless or unjustified opposition to the Wife’s claim.
[36] Ibid.
I agree. The injunction was not pursued. The applicant undertook not to deal with property so no formal order in the nature of an injunction was made.
The applicant’s reference to an array of authorities was beside the point as the injunction was not pursued. The cases cited by the applicant included Australian Broadcasting Corporation v O’Neill,[37] In the Marriage of Waugh,[38] Mullen v De Bry[39] and Tsiang & Wu.[40] There are very many others as I surveyed in cases such as Arkin & Blasberg,[41] Dunworth & Falletti,[42] Holder & Holder,[43] Chen & Chen and Anor[44] and Kain & Kain and Ors.[45]
[37] (2006) 227 CLR 57.
[38] (1999) 27 Fam LR 63.
[39] (2006) 36 Fam LR 454.
[40] [2019] FamCAFC 128.
[41] [2019] FamCA 476.
[42] [2020] FamCA 178.
[43] [2020] FamCA 347.
[44] [2020] FamCA 602.
[45] [2020] FamCA 650.
The s 44(3) application was determined by me without any need to embark upon a debate on the injunction application. The applicant’s submissions about that application being “hopeless and should not have been made”[46] were wholly ill-directed. But if the injunction application was as “hopeless” as the wife said, one wonders why she freely gave the assurance not to deal with property.
[46] Paragraph 21 of the applicant’s written submissions.
Section 117(2A)(d) required a consideration of whether any failure to comply with a previous order was involved. Neither party said this subsection was enlivened.
Section 117(2A)(e) enlivened the greatest debate in this costs application. The applicant submitted the trustee was wholly unsuccessful. In support of that broad claim, on behalf of the applicant the following was written[47] –
The rationale behind the ‘wholly unsuccessful’ factor is akin to the rationale of the general rule in other civil jurisdictions that costs follow the event, that is to say the party who succeeds is allowed the costs that he or she incurred in bringing his or her claim or application. The rational basis of this is that if an applicant has a sound claim against the respondent, the applicant should not have to bear the legal costs of establishing and asserting his or her legal claim. Applied to the matter at hand, the applicant ought fairly be compensated for the costs incurred in successfully making out her leave application in the face of opposition by the trustee.
[47] Paragraph 24 of the applicant’s written submissions.
Several things must be said of that contention. In no special order they are as follows –
a)as Kirby J pointed out in Re JJT; ex parte Victoria Legal Aid,[48] legal issues about costs in family law litigation is wholly reposed in the Family Law Act;
b)concepts of costs following the event in litigation conducted in common law courts, as canvassed in decisions such as Byrns v Davie,[49] have no application to litigation under the Family Law Act as the power to award costs is entirely statutory;
c)in this case questions of the trustee being wholly unsuccessful inverts the relevant enquiry because the applicant needed to apply for leave under s 44(3) to commence this litigation; and
d)the fact that she obtained that leave did not mean that the trustee was “wholly unsuccessful in the proceeding”.
[48] (1998) 195 CLR 184, 201.
[49] [1991] 2 VR 568.
Each of those propositions is applicable here, especially the last. Section 117(2A)(e) must be construed as a reference to the party against whom a costs order was sought being “wholly unsuccessful”[50] but additionally “in the proceedings”. Here, the applicant obtained leave to commence the proceeding out of time. She has not been wholly successful in this litigation nor has the trustee been wholly unsuccessful in the litigation. That may change at trial.
[50] To that end, the subsection does not speak of “partially unsuccessful” nor does it say “unsuccessful on discrete issues”.
Section 117(2A)(f) speaks of any offer in writing, none of which is relevant.
Section 117(2A)(g) invites attention to “such other matter as the court considers relevant”. Here, I consider it relevant to focus on the trustee’s discharge of his statutory duty when he considered it appropriate to oppose the applicant’s application under s 44(3). The application was made out of time. On that basis alone he was legitimately entitled to oppose the application. He was also entitled to test whether the applicant had adequately proved that she would suffer hardship. As it happened I found against the trustee. But the point was entirely arguable. A trustee should not be lightly visited with a costs order for contesting a point legitimately open to him to challenge when by so challenging the point he was acting properly in advancing the interests of parties he is bound by statute to protect, namely unsecured creditors of the bankrupt.
In my view no warrant has been shown to invoke s 117(2A) of the Family Law Act. Paragraph 1 of the applicant’s application in a case dated 23 July 2020 is dismissed. Each party must bear her and his own costs under s 117(1) in relation to the application for leave under s 44(3) of the Family Law Act.
Costs of this application
In my view the applicant did not have a sound legal basis for seeking the costs of this application. She pressed for costs on an erroneous basis. But in my view it is not sufficient to make provision for a costs order under s 117(1) in relation to the written submissions seeking costs. In my view the trustee is correct in his application for costs to be reserved.
Before leaving the subject it is necessary to address a few contentions in the applicant’s reply submissions. Those submissions in reply contain a number of errors of law that need to be corrected.
First, the applicant responded to the trustee’s argument that it was necessary for the court to determine the s 44(3) application and that “parties cannot consent to jurisdiction”. The author of the applicant’s reply submissions contended that “strictly speaking, the submission is incorrect”.
Strictly speaking, the applicant’s reply submission is incorrect. It is not competent for parties to purport to consent to jurisdiction where no jurisdiction exists. An abundance of authority at High Court level has made observations to that effect. I surveyed the learning on point in Karjala v Gallard.[51] It is useful to record what I said in that case. It was as follows –
[51] [2020] FamCA 110.
74.It is well settled that every court, superior or otherwise, undoubtedly possesses implied jurisdiction upon the principle that a grant of power carries with it everything necessary for its exercise. The High Court has so held in Grassby v The Queen[52] and in Pelechowski v Registrar, Court of Appeal (NSW).[53] As Dr Mark Leeming SC wrote (prior to his Honour’s elevation as the Honourable Justice Leeming) –
[52] (1989) 168 CLR 1.
[53] (1999) 198 CLR 435.
That implied jurisdiction includes the authority to decide whether the court’s jurisdiction has been validly invoked, whenever an issue arises (say, because a defendant asserts an immunity from service or that a subject matter limitation has been exceeded).[54]
75.In Hazeldell Ltd v Commonwealth[55] Isaacs ACJ held that the very first duty of any court in approaching a cause before it is to consider its jurisdiction. That proposition has been repeated, at length, in such cases as Federated Engine-Drivers and Firemen’s Association of Australasia v Broken Hill Pty Co Ltd,[56] Old UGC Inc v Industrial Relations Commission of New South Wales,[57] Robins v Incentive Dynamics Pty Ltd[58] and Zhang v Zemin[59] to name a few.
76.Even if parties do not raise the court’s jurisdiction, it is competent and proper for the court to do so of its own motion as was held in Official Trustee in Bankruptcy v Nedlands Pty Ltd (in liq).[60]
77.Parties cannot consent to jurisdiction if jurisdiction does not exist. That statement is generally attributed to Coleridge J in Bunbury v Fuller.[61]
78.Where highly contestable questions of fact arise upon which the court’s authority depends, the grant of jurisdiction carries with it power to determine the existence of facts upon which jurisdiction depends. Authority at High Court level has repeatedly so held in such cases as D.M.W. v C.G.W.,[62] R v Gray; ex parte Marsh,[63] Re Macks; ex parte Saint,[64] Kennon v Spry[65] and Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia.[66]
79.If a court finds that it has no jurisdiction to determine the controversy presented in the application, then in the exercise of implied jurisdiction, it has authority to stay or dismiss the proceeding for want of jurisdiction making a costs order. The High Court so held in Peacock v Newtown Marrickville and General Co-operative Building Society No 4 Ltd[67] and Willocks v Anderson.[68] The Full Court of the Family Court of Australia has also considered matters on point in such authorities as In the Marriage of Yunghanns,[69] Black v Black[70] and Norton & Locke,[71] to name but a few.
80.There is no doubt that I have power to determine jurisdiction about whether s 79 applies to the facts of this case.
[54] Mark Leeming, Authority to Decide – The Law of Jurisdiction in Australia (Federation Press, 2012) paragraph 2.5.
[55] (1924) 34 CLR 442.
[56] (1911) 12 CLR 398.
[57] (2006) 225 CLR 274.
[58] (1999) 91 FCR 423.
[59] (2010) 79 NSWLR 513.
[60] (2000) 99 FCR 554.
[61] [1853] 156 ER 47.
[62] (1982) 151 CLR 491.
[63] (1985) 157 CLR 351.
[64] (2000) 204 CLR 158.
[65] (2008) 238 CLR 366.
[66] (2012) 249 CLR 398.
[67] (1943) 67 CLR 25.
[68] (1971) 124 CLR 293.
[69] (1999) 24 Fam LR 400.
[70] (2008) 38 Fam LR 503.
[71] (2013) 50 Fam LR 517.
In Dunworth & Falletti[72] I made other observations about jurisdiction.
[72] [2020] FamCA 178.
Jurisdiction must be established as the court’s principal task. Sir Isaac Isaacs held as much in the early years of the High Court. His Honour’s observations remain as true today as they were when first uttered.
Whatever may be said about s 44(3), in this case it could not have been assumed that the applicant would in fact be successful in obtaining leave, irrespective of whether consent was given. Only the court could make the order upon being satisfied of the requisite matters. I do not share the applicant’s enthusiasm for the contention that the trustee is immune from an order for costs merely because a judicial determination was required. And even if the trustee had given consent, I nevertheless needed to be satisfied that leave was appropriately given. As it happened, I was very much assisted by the trustee’s submissions and would not have had the benefit of them had the applicant simply been allowed to make out her application. The trustee’s role as a contradictor was entirely proper.
Let me now address what I regard as a most tendentious submissions – if not bold and wrong. It was as follows[73] –
The Trustee proposes that the costs application be reserved for determination at trial. It must be asked – what facts or circumstances will be ventilated at the trial that are not apparent to the Court now? The answer is none. The Court is now equipped with sufficient evidence to address the considerations in s.117 of the Act. The Wife is not a wealthy litigant and has been wholly successful in prosecuting her leave application in the face of hearty and active opposition by the Trustee. There are persuasive circumstances at play which justify an immediate award of costs. It is cannot be just to allow determination of the costs of the leave application to be deferred to the final hearing of the parties' substantive applications as, given the Court's busy schedule, such a determination is unlikely to take place for over 12 months.
[73] Paragraph 5 of the applicant’s written submissions in reply.
As to the question of what is to be ventilated at the trial, the answer is the whole of s 79 and s 75(2) considerations. They were not dealt with in the leave application except in the most perfunctory of ways. As to the submission that I regard as bold, if not rude, “it cannot be just to allow determination of the costs of the leave application to be deferred to the final hearing.” I have not. I have refused the applicant’s application for costs. I have reserved the issue of the escalation of costs by reason of the applicant’s written submissions.
Orders
For the above reasons, the orders I make are as follows –
1.Paragraph 1 of the applicant’s application in a case dated 23 July 2020 is dismissed.
2.All parties’ costs of and incidental to the applicant’s application for leave under s 44(3) of the Family Law Act to commence a proceeding under s 79 of the Family Law Act are his or her own costs under s 117(1) of the Family Law Act.
3.Paragraph 2 of the applicant’s application in a case dated 23 July 2020 is dismissed.
4.All parties’ costs of and incidental to the applicant’s application for costs are reserved to be determined by the learned trial judge.
I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 4 September 2020.
Associate:
Date: 4 September 2020
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