Pergolesi and Bannister
[2020] FamCAFC 161
•8 July 2020
FAMILY COURT OF AUSTRALIA
| PERGOLESI & BANNISTER | [2020] FamCAFC 161 |
| FAMILY LAW – APPEAL – COSTS – Where each party primarily seeks their costs on an indemnity basis – Where the applicant de facto husband discontinued his Application in an Appeal for an extension of time as required by consent orders made between the parties – Where that application was initially brought nine months after the appealed order was made – Where the appealed order was a declaration pursuant to s 90RD of the Family Law Act 1975 (Cth) – Where the applicant de facto husband has amended his Application in an Appeal multiple times – Where the applicant de facto husband contended that the s 90RD order is interlocutory rather than final and thus leave to appeal is required – Where the respondent de facto wife filed an Application in an Appeal to issue a subpoena – Where the material requested was provided by way of affidavit – Where the application was not pursued and was subsequently dismissed – No order as to costs. |
| Family Law Act 1975 (Cth) ss 90RD, 90SM, 117 Family Law Rules 2004 (Cth) rr 1.14, 22.02(2) |
| Kelly and Kelly (No 2) (1981) FLC 91-108; [1981] FamCA 78 Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 |
| APPLICANT: | Mr Pergolesi |
| RESPONDENT: | Ms Bannister |
| FILE NUMBER: | MLC | 3959 | of | 2018 |
| APPEAL NUMBER: | SOA | 48 | of | 2019 |
| DATE DELIVERED: | 8 July 2020 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Strickland, Aldridge & Austin JJ |
| HEARING DATE: | 20 February 2020 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 5 November 2018 |
| LOWER COURT MNC: | [2018] FamCA 888 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Walker SC |
| SOLICITOR FOR THE APPLICANT: | Martin Street Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Bartfeld QC with Dr R Smith |
| SOLICITOR FOR THE RESPONDENT: | Lander and Rogers |
Orders
There be no order as to costs.
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 Pergolesi & Bannister 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).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SOA 48 of 2019
File Number: MLC 3959 of 2018
| Mr Pergolesi |
Applicant
And
| Ms Bannister |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter was listed before the Full Court on 20 February 2020 to determine an Application in an Appeal seeking an extension of time to appeal against an order made by a judge of the Family Court of Australia on 5 November 2018. The primary order was a declaration pursuant to s 90RD of the Family Law Act 1975 (Cth) (“the Act”) that Mr Pergolesi (“the de facto husband”) and Ms Bannister (“the de facto wife”) were in a de facto relationship from some time in 2008 until February 2018.
In addition to the de facto husband’s application for an extension of time, what was also listed for hearing before us was his argument as to whether leave to appeal was required to appeal the orders.
Just prior to the hearing before us, the parties agreed on Minutes of Order which provided leave for the de facto husband to withdraw his Application in an Appeal, that he have liberty to press his appeal at the conclusion of the property settlement proceedings, and that the question of costs be reserved to the Full Court at the conclusion of any appeal arising from the property settlement orders or 30 days after the property settlement orders are pronounced.
Those Consent Minutes of Order were then provided to the Court, but the Court was not prepared to make the orders as framed.
Instead, an order was made by consent, giving leave to the de facto husband to file and serve a Notice of Discontinuance of his application by 4.30 pm that day, and in default of that Notice being filed, the application would stand dismissed.
As a result of that order, each of the parties made oral applications for costs, and orders were made providing for each party to file and serve written submissions as to their respective costs applications.
Relevant Background
To provide some context to these reasons for judgment, a brief background will be set out.
The de facto husband was 71 years of age at the time of trial, and he describes his occupation as “investor”. It is uncontentious that the de facto husband is a wealthy man (at [61]).
The de facto wife was 53 years of age at trial, and she describes herself as “housewife”, although, as the primary judge found, she considers herself a media personality (at [59]).
Both parties have children from previous relationships, all of whom are now adults, except for one of the de facto wife’s children who was 16 years of age at the time of trial.
The parties met at around the time of the de facto wife’s breakdown of her marriage with her former husband in 2007. The start and end date of the parties’ de facto relationship was highly contentious and was the main dispute before the primary judge.
On 13 April 2018, the de facto wife commenced property settlement proceedings in the Family Court of Australia. On 4 May 2018, the de facto husband filed a Response seeking a declaration that the parties commenced a de facto relationship on 1 February 2012 and it ended in either late 2012 or early 2013 but no later than 1 May 2015, and that therefore the de facto wife’s application should be dismissed for being well out of time.
Following a five day hearing in October 2018, the primary judge delivered reasons for judgment on 5 November 2018 finding that the parties were in a de facto relationship from some time in 2008 until February 2018.
On 5 December 2018, orders were made by consent providing for, inter alia, interim property distributions, spousal maintenance to the de facto wife and for the de facto wife to vacate the property at B Street by 4.00pm on 31 March 2019.
On 26 February 2019, the primary judge made orders for the de facto husband to pay the de facto wife’s costs for three days of the hearing.
The property settlement proceedings are ongoing in the Family Court of Australia.
On 19 September 2019, the de facto husband filed an Application in an Appeal seeking an extension of time to file a Notice of Appeal. That application was supported by affidavits of the de facto husband and his solicitor. As is required, a draft Notice of Appeal was also filed.
On 18 October 2019, the de facto wife filed an Application in an Appeal seeking leave to issue a subpoena to the de facto husband’s former solicitors in relation to their advice to the de facto husband about his prospects of an appeal.
The matter came before Strickland J on 24 October 2019 for hearing. At the outset of the hearing, senior counsel for the de facto husband advised the Court that it was his view that leave to appeal from the declaration pursuant to s 90RD of the Act was required and that earlier Full Court decisions in relation to that issue should be departed from. As a result, senior counsel for the de facto husband sought an adjournment to file and serve amended documents to include an application for leave to appeal. Further, the de facto wife did not wish to pursue the issue of a subpoena because the de facto husband had provided the material sought, which was annexed to an affidavit filed by his solicitor on 22 October 2019. Thus, orders were made on that day dismissing the de facto wife’s Application in an Appeal filed on 18 October 2019 and reserving those costs, adjourning the de facto husband’s Application in an Appeal, providing for him to file amended documents, and for the de facto husband to pay the de facto wife’s costs thrown away that day in the sum of $17,782.
On 13 November 2019, the de facto husband filed an Amended Application in an Appeal and then a Further Amended Application in an Appeal.
On 25 November 2019, the matter returned to Strickland J for directions. At that hearing, it was explained that leave to appeal could not be sought in the Further Amended Application in an Appeal and the application for leave to appeal needed to be sought in a draft Notice of Appeal (r 22.02(2) of the Family Law Rules 2004 (Cth) (“the Rules”)). The Court made orders directing the de facto husband to rectify this and for the filing of further submissions if the parties so wished.
On 10 December 2019, an order was made that the Second Further Amended Application in an Appeal filed on 2 December 2019 be listed before the Full Court to determine both the application for an extension of time, and whether leave to appeal is required.
Pursuant to the Full Court’s order of 20 February 2020, the de facto husband filed a Notice of Discontinuance of his Second Further Amended Application in an Appeal filed on 2 December 2019, and the parties each filed their respective written submissions as to costs, including submissions in response by each party, and submissions in reply by the de facto wife.
Applications
Both parties make applications for costs, and they each oppose the others application.
The de facto husband sought two separate costs orders against the de facto wife; one in relation to the de facto wife’s Application in an Appeal filed on 18 October 2019 which was dismissed on 24 October 2019, and the other in relation to his Second Further Amended Application in an Appeal filed on 2 December 2019 which was discontinued by him. The de facto husband seeks his costs on an indemnity basis, in both matters.
The de facto wife seeks her costs of and incidental to the proceedings on an indemnity basis in the amount of $224,600, or alternatively on a party/party basis in the amount of $100,400, or alternatively as assessed.
The relevant legislation
As with any issue of costs, these applications are governed by s 117 of the Act. That section provides as follows, insofar as is relevant:
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
As can be seen an order for costs can be made if there are circumstances that justify such an order. In determining that question, consideration needs to be given to the factors set out in s 117(2A) of the Act.
The de facto husband’s applications for costs
The de facto wife’s application for leave to issue a subpoena
The circumstances relied on by the de facto husband to justify an order for costs in his favour here is the conduct of the de facto wife (s 117(2A)(c) of the Act).
The de facto husband asserts that the de facto wife’s Application in an Appeal seeking the issue of a subpoena, was unnecessary, and in any event, was not ultimately pursued by the de facto wife. The submission is that the information sought in the proposed subpoena, could have been sought directly from the de facto husband’s solicitor well before the application for leave to issue a subpoena was filed.
In support of the de facto husband’s application seeking an extension of time, and in order to explain the failure to file a Notice of Appeal within the time prescribed in the Rules, the de facto husband relied on advice that he said that he received from his then legal representatives as to the prospects of a successful appeal. Accordingly, on 18 October 2019, the de facto wife’s solicitor sent an email to the de facto husband’s solicitor seeking disclosure by 21 October 2019 of all documents from the de facto husband’s former solicitors evidencing this advice (Annexure “JGP-2” to the affidavit of the de facto husband’s solicitor filed on 5 March 2020). This of course must be seen in the context of the hearing of the application being listed before Strickland J on 24 October 2019.
The email seeking disclosure was sent on the morning of 18 October 2019, yet that same afternoon the de facto wife’s solicitors filed the Application in an Appeal seeking leave to issue a subpoena to the de facto husband’s former solicitors for production of the same documents sought in the email.
Also on 18 October 2019, the de facto husband filed an affidavit sworn on 17 October 2019, namely before the email from the de facto wife’s solicitors was sent, in support of his application for an extension of time, providing the specific details of the advice that he says he was given (Affidavit of the de facto husband filed on 18 October 2019, paragraphs 3–6).
On 22 October 2019, at the request of the de facto husband’s solicitors made on 21 October 2019, his former solicitors provided the only document that they had, namely a file note which detailed the advice given to the de facto husband. That was annexed to the affidavit of the de facto husband’s solicitor which was then filed.
As a result of this, the de facto wife did not pursue the application for leave to issue a subpoena, and as referred to above, it was dismissed at the hearing on 24 October 2019.
In response to the de facto husband’s application for costs, the de facto wife submits that “it was the late filing of [the de facto husband’s affidavit] which prompted the steps taken by the … de facto wife” (Written submissions of the de facto wife filed on 19 March 2020, paragraph 12). However, that cannot be correct, given that that affidavit was filed after the email was sent by the de facto wife’s solicitor on the morning of 18 October 2019, and, given the contents of paragraph 5 of the affidavit of the de facto wife’s solicitor filed on 18 October 2019, after the de facto wife’s application seeking leave to issue a subpoena was filed. In the de facto wife’s solicitor’s email, no reference is made to the contents of the de facto husband’s affidavit prompting the sending of the same, and in paragraph 5 of the de facto wife’s solicitor’s affidavit, it is deposed that “[n]o direct evidence has been adduced from the [de facto husband] or his previous lawyers and/or his previous counsel”. That though was the very topic of the de facto husband’s affidavit filed on 18 October 2019. Further, curiously, nothing is said in that affidavit about the email that was sent. All that is said is that any legal professional privilege attaching to the advice was waived by what was recorded in the affidavit filed on 19 September 2019 by the de facto husband’s solicitor, and the de facto wife was entitled to see the advice.
In any event, it was clearly open to the de facto wife to seek documentary evidence of the advice that was given to the de facto husband, well before she did, for example, immediately following the filing of the affidavit of the de facto husband’s solicitor on 19 September 2019. That would have obviated the need for the application seeking leave to issue a subpoena. Yet, the de facto husband was obliged to incur legal costs in responding to that application.
Thus, we find that this conduct justifies an order for costs in favour of the de facto husband. We will return to that issue later in these reasons for judgment.
The Second Further Amended Application in an Appeal filed on 2 December 2019
Here, again, the circumstance that the de facto husband says justifies an order for costs being made in his favour in relation to the application, is the conduct of the de facto wife in that the offer of settlement that she made on 5 February 2020, entailed a “late and wholesale change of position” from that adopted to that point. The de facto husband submits that:
… In short, the [de facto wife] had gone from rather complete disagreement with all aspects of the [de facto husband’s] position to rather complete agreement in a setting where no material circumstances had changed to explain that change in position, and the change in position was conveyed late in time by its offer and in a way that then exposed the [de facto husband] to a costs order because the [de facto wife’s] offer represented in substance the [de facto husband’s] core position.
(Written submissions of the de facto husband filed on 5 March 2020, paragraph 29)
As referred to above, the offer was to the effect that the Second Further Amended Application in an Appeal filed on 2 December 2019 be withdrawn, and the de facto wife would not oppose the de facto husband appealing the declaration the subject of the application for an extension of time at the conclusion of the s 90SM property settlement proceedings.
That clearly overcame the fact of the de facto husband being out of time, and the need to argue whether the declaration was an interlocutory order or a final order.
However, as submitted by the de facto wife, this did not represent a “wholesale change” to her position.
Up until the hearing on 24 October 2019, the sole issue was whether the de facto husband should have an extension of time to file a Notice of Appeal against the s 90RD declaration made by the primary judge on 5 November 2018. That was opposed by the de facto wife.
Then, on 24 October 2019, the de facto husband decided that he wished to argue that the declaration was an interlocutory order, and leave to appeal was required. As was explained in paragraph 46 of the de facto husband’s supplementary Summary of Argument filed on 7 November 2019, an application for leave to appeal has:
… the effect of bringing forward the appeal against the s 90RD declaration in circumstances where the appeal against the s 90RD declaration otherwise lies as of right at the conclusion of the proceedings in the underlying Court, if this Court concluded that leave to appeal should be granted, then this Court would also extend the time to file the Amended Notice of Appeal to give effect to this Court’s conclusion on the question of leave to appeal…
In that context, the de facto husband still pursued his application for an extension of time after 24 October 2019. It took him until the Second Further Amended Application in an Appeal filed on 2 December 2019 to have the correct application before the Court, namely, seeking an extension of time to file an Amended Notice of Appeal containing an application for leave to appeal, and if leave is granted, to appeal against the orders made on 5 November 2018. It was that application that the de facto wife had to meet, and which she opposed.
It was not an application seeking orders which ultimately mirrored the offer of settlement which was made by the de facto wife, and accepted by the de facto husband.
As was said by the de facto wife in her written submissions for costs in response filed on 19 March 2020:
5.… [I]t must be recalled that the only application before the Court on 20 February 2020 was an application to extend time pursuant to r 1.14 of the Family Law Rules 2004. Absent such extension, the … de facto husband was not able to appeal or seek leave to appeal.
And later:
8.The issue of whether leave to appeal was required to appeal the declarative orders made by Cronin J on 5 November 2018 was only relevant to [sic] extension of time application insofar as it touched on the factors of whether there was a substantial issue to be raised on appeal and the consequences for the parties of the grant or refusal of the application.
At no point did the de facto wife concede the application to extend time, nor the question of whether the declaration was interlocutory rather than final. Indeed, as pointed out by the de facto wife in her submissions, in the correspondence containing the offer of settlement of 5 February 2020, it was stated:
While maintaining that the declarations made by [the primary judge] were final in nature, it is our view that the parties are best served by progressing this matter to a final hearing…
(Affidavit of the wife’s solicitor filed on 5 March 2020, Annexure LAH-11)
Thus, we do not accept that any conduct of the de facto wife in relation to the Second Further Amended Application in an Appeal filed on 2 December 2019 justifies an order for costs in favour of the de facto husband, and no order in relation thereto will be made.
The de facto wife’s application for costs
The de facto wife says that the circumstances justifying an order for costs in her favour are to be found in s 117(2A)(a) and s 117(2A)(c) of the Act, namely the financial circumstances of the parties and the conduct of the de facto husband.
As to the financial circumstances, it is common ground that the de facto husband has assets that are at least $112,000,000 in value, and the de facto wife has current property interests totalling approximately $5,000,000 in value.
The de facto wife submits that the financial disparity between the parties, both alone and together with other relevant factors, namely the conduct of the de facto husband, justifies an order for costs in her favour.
For the former proposition, the de facto wife relies on what was said by the Full Court in Kelly and Kelly (No 2) (1981) FLC 91-108 at 76,810, namely:
In the present case, there is a great disparity in the financial circumstances of the parties. The husband’s assets and financial resources which he controls by far outweigh those of the wife. She is not receiving legal aid. These circumstances might well have justified an order for costs in the wife’s favour whatever the conduct of the husband in the proceedings.
However, that passing comment by the Full Court was clearly obiter. Indeed, the Full Court held there that the trial judge had acted within his discretion, both to order costs, and as to the amount of the costs ordered, having regard to the husband’s conduct and the disparity in the parties’ financial circumstances.
Although there is a significant disparity here, we do not accept that that alone justifies an order for costs in the de facto wife’s favour, but it can, in concert with an adverse finding as to the de facto husband’s conduct, and it can also impact upon the amount of costs awarded.
Turning then to the issue of the de facto husband’s conduct, the de facto wife submits that his conduct in relation to the proceedings “caused a loss of time to the Court and to the … de facto wife” (Written submissions of the de facto wife filed on 5 March 2020, paragraph 10), prolonged the proceedings, and caused the de facto wife to incur substantial costs in responding to the applications of the de facto husband.
It is suggested by the de facto wife that the failure to file a Notice of Appeal within time, and the delay in bringing an application for an extension of time, are relevant. However, because the proceedings resolved by agreement, whether the de facto husband had a satisfactory explanation for failing to file within time, and to bring his application earlier, were not the subject of determination by this Court. Thus, they cannot be the basis for an order for costs.
That said though, the costs of the de facto wife from the time that the de facto husband filed his Application in an Appeal on 19 September 2019 until the hearing on 24 October 2019, can legitimately be claimed given that it was at that hearing that an adjournment was sought by the de facto husband because he wished to argue that leave to appeal was required. There was an order made for the costs thrown away that day to be paid by the de facto husband, but we are referring to any costs incurred by the de facto wife prior to that hearing; those costs were unnecessary given the change of the de facto husband’s position which resulted in the adjournment application.
Following the hearing on 24 October 2019, the de facto husband was to file amended documents, but what he did file was deficient, and required further orders to be made on 25 November 2019. However, although an order for costs was sought by the de facto wife on 25 November 2019, no order was made, and thus there is no basis for the de facto wife to have her costs (if any) incurred between 24 October 2019 and 25 November 2019.
Finally, on 2 December 2019, the de facto husband filed the Second Further Amended Application in an Appeal, and the draft Notice of Appeal needed to advance his claim for an extension of time and to raise the question of whether leave to appeal was required.
Then, on 10 December 2019, the matter was listed for hearing before the Full Court in the week commencing 17 February 2020. No costs were sought, and none were ordered in relation to that hearing.
Thereafter, each party set about preparing their cases for that hearing, all relevant documents, including summaries of argument and lists of authorities having been filed.
However, the hearing did not take place because the offer by the de facto wife to resolve the matter was accepted by the de facto husband, and consent orders were made, including for the Second Further Amended Application in an Appeal seeking an extension of time to be discontinued.
The de facto wife suggests that although it cannot be argued that the filing of a Notice of Discontinuance by the de facto husband equates to him being “wholly unsuccessful” as contemplated by s 117(2A)(e) of the Act, because the de facto wife was “put to great expense” and the Notice of Discontinuance was filed “at the latest possible moment” (Written submissions of the de facto wife filed on 5 March 2020, paragraph 26), that warrants an order for costs in the de facto wife’s favour.
We do not accept that submission.
The filing of a Notice of Discontinuance was a necessary part of the acceptance by the de facto husband of the de facto wife’s offer of settlement, which was only provided on 5 February 2020. Up to then, both parties were maintaining their respective positions in relation to the de facto husband’s application which was to be heard on 20 February 2020.
Next, the de facto wife seeks to rely on offers of settlement. She says that there was a relevant offer made on 24 September 2019, but that is not an offer of settlement as contemplated by s 117(2A)(f) of the Act. It merely called on the de facto husband to withdraw the Application in an Appeal that was then before the Court, failing which, the de facto wife would seek indemnity costs. That “offer” was refused by the de facto husband but that does not justify any order for costs being made against him.
As for the second offer, that is the one made on 5 February 2020, and which was accepted on 18 February 2020. Given its acceptance within a reasonable period of time, that offer also cannot justify an order for costs being made against the de facto husband.
Finally, the de facto wife says that because the de facto husband failed to file a Notice of Appeal within time, and failed to file an application seeking an extension of time within a reasonable time, the de facto husband is seeking an indulgence from the Court, and costs should be awarded to the de facto wife because she incurred costs unnecessarily as a result. However, that could only justify costs being awarded up to the hearing on 24 October 2019, because thereafter the parameters of the dispute changed, with the advent of the argument as to whether leave to appeal was required. In any event, we have indicated that as a result of that change of position, the de facto wife would be entitled to her costs up to the hearing on 24 October 2019.
In these circumstances, we find that the only costs to which the de facto wife is entitled are those costs to which we have just referred.
Conclusion
We have found that the de facto husband is entitled to have his costs of and incidental to the de facto wife’s Application in an Appeal seeking leave to issue a subpoena, and we have found that the de facto wife is entitled to have her costs of and incidental to the de facto husband’s Application in an Appeal seeking an extension of time from the time of its filing on 19 September 2019, and up to but not including, the hearing on 24 October 2019.
We consider though that those costs should cancel each other out, and in the end result there will be no order as to costs in favour of either party.
We also indicate that we are comforted by that result, where ultimately the proceedings were resolved by agreement, without the merits of the application being determined, including the issue of whether leave to appeal was required. As was correctly put by the de facto husband in paragraph 14 of his submissions in response filed on 19 March 2020, the orthodox position when a dispute is settled in those circumstances, is that no order for costs is made (Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622 at 624-625).
I certify that the preceding seventy three (73) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Aldridge & Austin JJ) delivered on 8 July 2020.
Associate:
Date: 8 July 2020
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