Rayburn & Pritchard
[2014] FamCAFC 13
FAMILY COURT OF AUSTRALIA
| RAYBURN & PRITCHARD | [2014] FamCAFC 13 |
| FAMILY LAW – APPEAL – Procedure – Costs – Appeal against decision of trial judge granting leave to extend time to file an itemised bill of costs – where no satisfactory explanation for lengthy delay – appeal allowed – trial judge’s discretion re-exercised. FAMILY LAW – COSTS CERTIFICATES – Where the appeal was allowed on a question of law – Each party granted costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth). |
| Family Law Act 1975 (Cth), ss 44, 117 Federal Proceedings (Costs) Act 1981 (Cth), ss 6, 9 |
| Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 |
| APPELLANT: | Mr Rayburn |
| RESPONDENT: | Ms Pritchard |
| FILE NUMBER: | PTW | 1897 | of | 2000 |
| APPEAL NUMBER: | WA | 8 | L | of | 2012 |
| DATE DELIVERED: | 13 February 2014 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Bryant CJ, Finn & Duncanson JJ |
| HEARING DATE: | 11 April 2013 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 16 March 2012 |
| LOWER COURT MNC: | [2012] FCWA 26 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Ashdown |
| SOLICITOR FOR THE APPELLANT: | WA Costs Consultants Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Mr Hooper SC |
| SOLICITOR FOR THE RESPONDENT: | Summers Legal |
Orders
Leave to appeal against the orders of the Honourable Justice Martin made on 16 March 2012 be granted.
The appeal be allowed.
The orders made on 16 March 2012 be set aside.
The wife’s application to file an itemised costs account out of time be dismissed.
The parties bear their own costs of the appeal.
The Court grants to the appellant husband a costs certificate pursuant to the provisions s 9 of the Federal Proceedings (Costs) Act1981 (Cth) 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 husband in respect of the costs incurred by him in relation to the appeal.
The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (Cth) 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 respondent wife in respect of the costs incurred by her in relation to the appeal.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rayburn & Pritchard has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WA 8 L of 2012
File Number: PTW 1897 of 2000
| Mr Rayburn |
Appellant
And
| Ms Pritchard |
Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed on 13 April 2012 Mr Rayburn (“the husband”) appealed against orders made by Martin J on 16 March 2012 in proceedings between the husband and Ms Pritchard (Rayburn) (“the wife”).
Following parenting and property proceedings before Barlow J his Honour made an order on 3 July 2003 whereby the wife was entitled to an order for costs, partly on a party-party basis and partly on an indemnity basis, to be taxed if not agreed. The Family Law Rules 1984 (Cth) (then in force) provided for the wife to file an itemised costs account within 28 days of the date of
Barlow J’s order made on 3 July 2003, namely by 31 July 2003. On 6 August 2010, the wife filed an application seeking to extend the time in which to serve and file an itemised account, approximately seven years out of time. Martin J extended the time and the husband appeals that order.
The orders made by her Honour were as follows:
The time in which the Applicant, [Ms Pritchard], has to serve an itemised cost account, be extended to 1 May 2012.
The itemised costs account is to state, and total, the costs set out in relation to each issue.
Upon service of the Applicant’s itemised costs account, the Respondent’s time for filing of a Notice Disputing Itemised Costs account be extended to 1 July 2012, subject to further order.
In the event the Respondent, [Mr Rayburn], files and serves a Form 2 application seeking the extension of time to file an itemised costs account, with supporting affidavit, it be listed before Justice Martin as soon as practicable, but no less than 21 days after filing.
By no later than 3 days prior to the hearing, the Applicant have leave to file and serve a Form 2A response with supporting affidavit, in response to the Respondent’s documents.
The Respondent have leave to file and serve a Form 2 application for costs, in relation to the application filed 6 August 2010.
Costs in relation to the Form 2 application filed 6 August 2010 be and are hereby reserved.
There be liberty granted to both parties to apply for further directions.
On appeal, the husband sought an order that the orders made on 16 March 2012 be set aside and in lieu thereof the wife’s application dated 16 June 2010 (for an extension of time in which to serve an itemised costs account on the husband) be dismissed.
The wife resisted the husband’s appeal and sought to maintain her Honour’s orders.
For reasons which follow, we have found that her Honour erred in extending the time for filing and service of the itemised costs account. Therefore the appeal should be allowed. In our re-exercise of the discretion we have made an order dismissing the wife’s application for an extension of time.
Background
In her reasons for judgment in relation to her orders made on 16 March 2012 her Honour set out the background as follows:
8The husband was born [in] 1933 and is now 78 years old [80].
9The wife was born [in] 1955 and is now 56 years old [58].
10The parties married [in] September 1994, having commenced cohabitation in the early 1990s. They separated in about March 2000 and were divorced in May 2002.
11There are two children of the marriage, [W] born [in] 1995 (now 16 years old) [18], and [M] born [in] 1996 (now 15 years old) [17]. Both children have been diagnosed with severe autism and speech difficulties.
12Proceedings were commenced in this court on 15 March 2000 by the husband.
13As the wife correctly describes it, the proceedings were “intricate, complex and drawn-out”.
14The position was complicated by the fact that there were also several appeals filed.
15The substantive trial in relation to both children’s and financial issues proceeded before the, then, Justice Barlow, and extended over some 29 sitting days, commencing on 21 October 2002.
16His Honour delivered judgment in relation to the substantive issues on 27 February 2003, and, on 3 July 2003, in relation to costs. Both parties appealed his Honour’s decisions.
17The husband was unsuccessful in his appeal in relation to costs and contraventions, with his application being dismissed by the Full Court of the Family Court of Australia on 3 December 2003.
18The wife’s appeal in relation to parenting orders was successful, the Full Court delivering judgment on 22 December 2003, and on 5 May 2004 the Full Court also found in her favour on the property settlement appeal, awarding her a total sum of $2,374,000, being an additional $974,000 on appeal.
19 The orders as to costs made by the trial judge were:
1.The husband pay the wife's costs and disbursements of the proceedings and the trial up to and including 27 February 2003, in relation to the following issues on a party/party basis, such costs to be taxed if not agreed:
(a)The nature of the children's disorders and the appropriate treatment for such disorders;
(b)The husband's concerns about the manner in which the wife performed her parental obligations.
2.The husband pay the wife's costs and disbursements of the proceedings and the trial up to and including 27 February 2003, in relation to the following issues on an indemnity basis, such costs to be taxed if not agreed:
(a)The nature and extent of his control over the [Rayburn] Family Trust ‘the Trust’;
(b)The nature and extent of his control over other entities in which he has an interest (other than [CW] Pty Ltd) and in particular over
[Rayburn] Pty Ltd and the value of such interests;
(c)The date upon which the Deed of Variation of the Trust Deed, pursuant to which the appointors and trustee of the Trust were varied, was executed;
(d)The date on which the husband and wife commenced cohabitation.
3.The wife pay the second and third respondents' costs and disbursements of the proceedings, such costs to be taxed if not agreed.
4.In assessing the costs to be paid by the husband pursuant to these orders no allowance be made for any additional costs incurred by the wife as a result of her changing solicitors.
20 At [65] of his judgment, His Honour said:
65.I appreciate that the effect of making orders for costs in relation to particular issues, as distinct from an order covering the whole of the proceedings, is to make the assessment of those costs by the parties and/or the taxation of them a difficult exercise. However in the particular circumstances of this case I have concluded, that there is no alternative which would do justice to the parties in relation to costs.
21The costs in relation to the appeals are also outstanding, and the subject of this application.
Leave to Appeal
Leave to appeal is necessary as the relief sought was interlocutory. In written submissions the wife did not oppose leave being granted and conceded the grounds agitated by the husband raised matters of principle. We agree there are matters of principle involved and thus would grant leave.
The wife’s application to extend time
First, we observe that although the costs order of Barlow J was made under the Family Law Rules 1984 (Cth), the proceedings have continued under the Family Law Rules 2004 (Cth) (“the 2004 Rules”) with no issue being raised. That to us seems to be the correct position in light of the relevant transitional provisions of the 2004 Rules (Table A, items 3 and 4).
Pursuant to rule 19.21 and/or clause 6.22 of Schedule 6 of the 2004 Rules, the wife ought to have filed an itemised costs account within 28 days of 3 July 2003, that is by 31 July 2003. She did not do so. Judgment in the husband’s appeal in relation to costs and contraventions was delivered on 3 December 2003. Judgments in the wife’s appeals in relation to parenting and property orders were delivered on 22 December 2003 and 5 May 2004 respectively.
Background chronology following Barlow J’s costs order
The following background chronology comes predominantly from her Honour’s judgment and appeal book material that was not in contention.
On 11 July 2005, B Lawyers, the wife’s then solicitors, filed an itemised costs account in relation to children’s matters with costs estimated at $322,250.
On 6 September 2005 the parties attended a procedural conference. The Registrar ordered that by 13 September 2005 the wife file and serve a Form 2 Application and any affidavit upon which she sought to rely in relation to the question of leave to proceed (with the itemised costs account) out of time. The Registrar ordered that the husband file a Form 2A Response and any responding affidavit by 20 September 2005 or within seven days of receipt of the Form 2, whichever was the later. The matter was listed in the Duty Judge List on 27 September 2005.
The matter came before Penny J on that date. No application had been filed by the wife. No orders were made.
On 5 October 2005 B Lawyers sent the wife’s bill of costs to the husband’s solicitors, C Lawyers. They said there were a further three bills (pursuant to orders of the court) to be taxed. The wife’s solicitor referred to telephone conversations between him and the husband’s solicitor and confirmed the husband’s solicitor’s advice that the husband would not consent to an extension of time in which to lodge the bills.
On 24 October 2005 the husband’s then solicitor, Mr F, wrote to B Lawyers referring to deficiencies in the itemised bill of costs in relation to children’s matters and invited the wife’s solicitors to provide them with copies of bills of costs in relation to all matters in respect of which the wife was entitled to recover costs from the husband. Mr F proposed that once bills from both parties had been prepared and exchanged it would be useful to hold a without prejudice conference to attempt to settle all costs issues between the parties. The letter concluded:
It appears that the parties have already expended a very considerable amount of time, effort and money in litigating against each other and, in my view, it would be to both party’s benefit for a more pragmatic approach to be adopted in relation to the costs issues. I therefore request that you give careful consideration to the above proposal and I look forward to hearing from you.
No response was received.
Nothing further occurred in relation to the wife’s itemised costs account until about four years later, when, on 8 September 2009 the wife’s solicitor, Mr S of S Lawyers, telephoned Mr F to enquire whether he was instructed to accept service of the wife’s bill of costs. By letter dated 10 September 2009
Mr F confirmed that he had instructions to accept same. On 14 September 2009 S Lawyers sent four bills of costs to Mr F. Mr F served notices disputing each of the costs accounts upon S Lawyers on 2 October 2009.
On 6 August 2010 the wife filed a Form 2 Application seeking orders in the following terms:
1.An extension of time pursuant to Rule 1.14 of the Family Law Rules 2004 for the purpose of the wife serving an itemised costs account on the husband in conformity with Rule 19.21 of the Family Law Rules 2004.
2.An extension of time pursuant to Rule 6.25 of Part 6.6 of Schedule 6 to the Family Law Rules 2004 for the purpose of the wife filing in the registry of the Court an itemised costs account.
3.Such further or other order as this Honourable Court deems fit.
The wife did not seek an order varying the orders dated 6 September 2005 which contained the time limit within which her Form 2 Application ought to have been filed. She did not seek an extension of the time provided for in that order.
The wife’s application came before Martin J on 15 November 2010. Judgment was delivered on 16 March 2012 and the orders referred to above were made.
The grounds of appeal
There are 13 grounds of appeal in the husband’s Notice of Appeal. The grounds fall within the following broad categories:
• The previous order dated 6 September 2005, not having been set aside, ought not to have been ignored or “sidestepped” by her Honour (ground 1);
• The orders made by her Honour extending time with respect to appeal costs were beyond her jurisdiction (ground 2);
• Her Honour erred in the exercise of her discretion in extending the time for service of an itemised costs account (grounds 3-9);
• Her Honour erred in the exercise of her discretion in considering that the quantum of costs and the nature and conduct of the trial overrode the extent of the delay (grounds 10 and 11);
• The inadequacy of reasons (ground 12); and
• Her Honour’s orders ought to have been conditional upon a mutual extension of time (ground 13).
We will deal with grounds 3-9 first (and to the extent there was overlap, with grounds 10 and 11) as they were the grounds principally relied upon by the husband, but before doing so we will set out her Honour’s reasons for her decision.
The trial judge’s reasons for judgment
In her reasons for judgment her Honour set out the legal background including rule 1.14 and rules 6.22 to 6.27 and 6.29 to 6.32 as set out in Schedule 6 of the 2004 Rules.
At [28] and [29] of her judgment her Honour summarised the process with respect to costs as follows:
28 Therefore, in brief summary, the process required is:
(i)The applicant is to provide a properly itemised account within 28 days;
(ii)The respondent is to itemise objections to the account within a further 28 days; and
(iii)The matter may then be listed to a settlement conference, preliminary assessment or an assessment hearing.
29If the preliminary assessment is objected to, then an assessment hearing may be required about disputed items.
Her Honour discussed cases referred to by the parties in their submissions including OP v HM (2002) 168 FLR 465, Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 and Gallo v Dawson (1990) 93 ALR 479.
Her Honour referred to Clivery and Conway [2007] FamCA 1435 wherein the Full Court of the Family Court of Australia (May, Thackray and O’Reilly JJ) said at para 14:
The principles emerging from Gallo v Dawson may be summarised as follows:
• The grant of an extension of time is not automatic.
•The object is to ensure that Rules which fix times do not become instruments of injustice.
•Since the discretion to extend the time is given for the sole purpose of enabling the Court to do justice between the parties, the discretion can only be exercised upon proof that strict compliance with the Rules will work an injustice upon the applicant.
•When determining whether the Rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time.
•When considering an application for extension of time in which to file an appeal or an application, it is necessary also to consider the prospects of success of that appeal or application.
Her Honour found the above principles to be broadly relevant but distinguished the issues in the present case describing them as “substantially different”.
Her Honour went on to say at [38]:
In the present case, the wife has a very substantial entitlement to costs, which was upheld on appeal. It would appear her entitlement must be several hundred thousand dollars.
Her Honour then referred to the case of Olsthoorn v Collins [2003] FCWA 93, a decision of Barlow J which she said had a more similar factual background.
At [39] and [40] of her judgment, her Honour stated:
39A more similar factual background was the first decision of Barlow J in Olsthoorn v Collins [2003] FCWA 93, where the Court accepted that the delay in filing a bill by the wife in relation to costs to which she was entitled pursuant to an order of the Full Court may have caused the husband inconvenience, but not necessarily prejudice or hardship. I believe the wife was there to receive half her costs of trial. Despite financial prejudice to the wife, the court was not satisfied that there was any adequate explanation provided by the wife for the delay of nearly 18 months in the filing of the bill of costs, such as would justify the granting of an extension of time to do so. Although there may have been a substantial amount of costs involved in that case, it is likely a much lesser amount was involved than in the present case.
40As the wife in this case was awarded costs by Barlow J in July 2003, and the costs appeal was dismissed in December 2003, the wife’s delay to filing the present application was in excess of six and a half years from the time when the appeal in relation to the order for costs was dismissed.
Her Honour then set out a brief summary of the parties’ cases. She explained the wife’s submission to be that if the wife’s application was not granted she would be unable to collect her substantial entitlement pursuant to the costs orders. The delay, and any prejudice to the husband in the “very unusual circumstances”, was not such that her discretion should not be exercised in the wife’s favour.
As to the husband’s case she explained his position to be that the extraordinary delay had not been adequately explained. The bill of costs was inadequate in that it did not differentiate between the categories of costs ordered by Barlow J. There was significant prejudice to the husband because of the delay, for example documentation had become unavailable.
Her Honour set out the history of the delay. She referred to the depositions of the wife and her solicitor, Mr S, which suggested that the main reason for the delay was the length of time it took the wife’s legal advisers to prepare the itemised bill of costs. Four firms of practitioners had represented the wife in the proceedings. The wife had been convicted of a number of charges involving cheques drawn on the husband’s bank account and sentenced to terms of imprisonment, which were suspended. In 2005, the Western Australia Court of Appeal allowed her appeal and quashed the convictions. Her Honour said at [46] “I regard these proceedings, in themselves, by their extraordinary and difficult nature, as providing a reasonable explanation for the delay to that point.”
Her Honour referred to the parties’ attendance at a procedural conference on 6 September 2005 at which the presiding registrar made the orders referred to above.
Her Honour also referred to the letter from Mr F to B Lawyers, dated 24 October 2005, to which we have referred above.
Her Honour referred to the wife’s changes of solicitors, including to her current solicitor, Mr S. Mr S deposed that one of the reasons for the delay was that the two costs specialists known to him were unavailable as both had acted for the parties in the proceedings and finding a suitable specialist was difficult. The husband pointed out that one of those specialists, Mr G, had acted for the wife and therefore there was no conflict.
Her Honour summarised the evidence of the wife and her solicitors, referring to the time it took to uplift documents from firms previously retained by the wife, the delivery of files and documents to her current solicitors, and the collation of those documents, which was completed on 27 October 2006. In November 2006 a barrister was instructed although he returned the brief shortly afterwards. In about April 2007 Mr J, solicitor, was instructed to prepare the bill of costs and documents were delivered to him on 11 May 2007. The bill of costs was completed by Mr J in September 2009. It was delivered to the husband’s solicitor on 15 September 2009 and he provided a notice disputing the costs account on 2 October 2009. The husband was served with the application on 26 August 2010. It was listed before her Honour on 13 September 2010 for directions. The proceedings were heard on 15 November 2010.
In her discussion regarding the delay her Honour described the wife’s position to be that her delay can be attributed to her difficulties in finding suitable advisors, her various solicitors, their inattention to her matter and the length of time needed to draw up an itemised bill, having regard to the magnitude of the case.
Her Honour described the husband’s position to be that the wife had not adequately explained the delay. The wife and her lawyers were aware of the time limitation for filing itemised costs and no explanation for the delay from 3 July 2003 until November 2005 had been given.
His position was the wife was on notice as to her obligations in relation to relevant time limits in September 2004 when her solicitors filed submissions in relation to an extension of time sought by the second and third respondents in respect of their costs. The wife had also attended the procedural hearing on 6 September 2005. Her Honour distinguished the present case from the decision of Penny J in Wensinger and Summers Partners [2003] FCWA 1 on the basis that that case concerned charges made by a solicitor where the present case concerned costs pursuant to an order for costs upheld on appeal.
Her Honour took the view that there was a substantial issue to be raised and at [78] said:
78There is no doubt that, having regard to the enormity of the costs incurred, there is a substantial issue at stake. There is no dispute that very substantial costs are to be paid by the respondent to the applicant, and if the applicant is unsuccessful on this application, she will be unable to claim the sum due to her.
Her Honour discussed hardship or injustice to both parties and then at [85] to [94] of her judgment set out her conclusion as follows:
85It is apparent that the very lengthy delay in providing the itemised bill within the required time has not been fully explained. However, there is adequate explanation for a substantial portion of the delay, which was clearly more that of the wife’s legal advisers, than the wife. There is no doubt that preparation of the bill was a mammoth task which was going to take a lengthy period to undertake. However, this does not justify the extent of the delay.
86However, while important, delay is only one of the matters to be considered.
87Clearly, the wife would be prejudiced in the event leave is not granted because of the very substantial sum involved.
88The husband is obviously prejudiced by the fact that some material may not be in existence, but the evidence is that the wife’s is, as is the court file. The husband’s documentation, while of significance, is of less importance than that of the wife in assessing the extent of work done by the wife’s legal advisers.
89At judgment, the husband sought to raise issues as to costs owing by the wife to him, and it is appreciated his files would be significant in this regard.
90The husband has known for years that he owes a very substantial sum in costs to the wife, and for several years, did nothing to get this issue resolved – presumably because he was hoping it would go away. He had no obligation to do so. He was unsuccessful in challenging the costs on appeal.
91While the matter should have been resolved long ago, any prejudice to the husband is far less than any prejudice to the wife – he has not had to pay the wife hundreds of thousands of dollars he otherwise owed, for several years, and, therefore, has retained use of the funds for an extended period.
92To the extent that the delay has meant that preparation of notices of objection and any itemised account more difficult [sic], it would be open to the parties, and any assessor of costs, to take this into account in possibly, giving the husband more of the benefit of the doubt on some issues than he may otherwise have had. However, it really was for him and his advisers to ensure his own documents were secured, until the proceedings were definitely finalised – I consider that this [is] not “the ordinary course” referred to in Lewis Blyth & Hooper v Dennis (supra) which, again, related to solicitor/client costs.
93The overarching issue is the interest of justice – the wife’s entitlement of costs was achieved after an extraordinarily long and difficult battle, including an appeal.
94I have concluded that, in these very unusual circumstances, the time for the wife to file an itemised Bill of Costs should be extended.
Grounds 3-11: error in the exercise of discretion
We will first discuss grounds 3 to 11.
These grounds provide as follows:
3.The learned Judge erred in law in failing to, of [sic] failing to properly, take account of or apply legal principles applicable to the grant of an extension of time.
4.The learned Judge erred in law and fact in finding that there was an adequate explanation for a substantial portion of the Respondent’s (Applicant’s) delay, and ought to have found that there was no factual basis, or any proper factual basis, to explain or justify the Respondent’s (Applicant’s) delay, including:
(a)failure to comply with the time limits provided for in Rule 19.21 and/or clause 6.22(1) of Schedule 6 of the Family Law Rules 2004;
(b)extension of the 28 day time limit provided for in the Rules of Court of such a magnitude;
(c)failure to serve an itemised costs account (Bill of Costs) and/or to seek an extension of the time limits prior to March 2005;
(d)failure to comply with the orders made on 6 September 2005;
(e)failure to communicate with the Appellant (Respondent) with respect to any issue regarding costs, or otherwise notify the Appellant (Respondent) of any continuing claim with respect to costs (including for an extension of time to pursue costs) between 5 October 2005 and 8 September 2009;
(f)failure to seek an extension of the time limits at a time earlier than 16 June 2010.
5.The learned Judge erred in law and in fact in that there was no factual basis, or any proper factual basis, to establish that compliance with the Rules of Court would work an injustice upon the Respondent (Applicant) and/or that absent an extension of time (of the magnitude sought) there would be an injustice upon the Respondent (Applicant) in the circumstances of the case.
6.The learned Judge erred in law in failing to, or failed to properly, take into account relevant matters and/or material considerations.
7.The learned Judge erred in law in allowing, or taking into account, extraneous and/or irrelevant matters to guide or affect the decision.
8.The learned Judge erred in law in drawing a distinction between an extension of the 28 day time limit with respect to solicitor/client costs and party/party costs pursuant to Rule 19.21 and clause 6.22(1) of Schedule 6 of the Family Law Rules 2004.
9.The learned Judge erred in law in finding that the Appellant (Respondent) was under a duty, and/or a continuing duty as at 2010, to ensure that the Appellant’s (Respondent’s) documents were secured and available to the Appellant (Respondent).
10. The learned Judge, having correctly concluded that the extent of the delay by the Respondent (Applicant) was not justified (Reasons [85]), erred in law in concluding that:
(a)there existed a prejudice to the Respondent (Applicant) by virtue of the “very substantial sum involved” (Reasons [87]);
(b)the cost order was “achieved after an extraordinary long and difficult battle, including an appeal” Reasons [93]);
(c)these factors constituted the interests of justice and over-rode the other relevant factors to be taken into account, including the failure of the Respondent (Applicant) to justify the delay.
11. The learned Judge erred in law in failing to properly exercise the discretion (if any) pursuant to Rule 1.14 of the Family Law Rules 2004 to extend the time limit provided for in Rule 19.21 and/or clause 6.22(1) of Schedule 6 of the Family Law Rules 2004.
The husband’s case in relation to these grounds was essentially that her Honour had failed to have regard to relevant matters, had regard to irrelevant matters and, to the extent that matters were relevant, had placed too much weight on matters that ought to have been accorded less and, conversely, too little weight on others that were relevant (such as the unexplained delay). Counsel for the wife essentially contended that the judgment was a discretionary one and that her Honour had considered all of the matters she was required to consider, and the result was within the generous ambit of discretion reposing in the trial judge.
Discussion
The matters that her Honour concluded were relevant, and which eventually led to her decision, require examination. Her Honour’s conclusions can be found at [85] to [94] inclusive of the reasons for judgment, which we have earlier set out. On the question of the delay, her Honour found that the wife’s failure to pursue the awarded costs had not been fully explained – and to the extent that explanation had been attempted, it “did not justify the extent of the delay” (at [85]). Nevertheless, her Honour attributed greater importance to other factors than the delay. These were said to be:
a)the wife would be prejudiced in the event that leave was not granted because of the very substantial sum involved (at [87]);
b)the husband would be “obviously” prejudiced by the fact that some material may not be in existence, but his documentation, while of significance, is of lesser importance than that of the wife in assessing the extent of the work done by the wife’s legal advisers (at [88]);
c)to the extent that the husband raised issues as to costs owing to him, his files would be significant (at [89]);
d)the husband has known for years that he owes a substantial sum to the wife and did nothing to get the issue resolved – although he had no obligation to do so (at [90]);
e)the prejudice to husband is less than that to the wife, because he has not had to pay the wife the substantial sum owed, and has therefore retained the use of the sum for an extended period (at [91]);
f)to the extent that the delay meant that preparation of notices of objection to an itemised account would be more difficult, that fact could be taken into account by the assessor, and it was for the husband to ensure that his own documents were secured until the proceedings were finalised (at [92]); and
g)the overarching issue is the interests of justice, and the wife’s entitlement to costs was achieved after an “extraordinarily long and difficult battle”, including an appeal (at [93]).
Length of and reasons for the delay
The relevant orders were made on 3 July 2003. The itemised costs account ought to have been filed within 28 days, that is on 31 July 2003. At worst, the period of the delay was from 31 July 2003 to 6 August 2010, a period of over seven years.
The orders made by Barlow J were the subject of appeals.
The wife’s appeal in relation to costs and contraventions was finalised by the Full Court on 3 December 2003.
The wife’s appeal in relation to parenting orders was finalised by the Full Court on 22 December 2003.
The wife’s appeal in relation to property was finalised by the Full Court on 5 May 2004.
An itemised costs account was not filed until 11 July 2005 and the parties attended a procedural conference on 6 September 2005 at which the Registrar ordered that by 13 September 2005 the wife file and serve a Form 2 Application and any affidavit upon which she sought to rely in relation to the question of leave to proceed (with the itemised costs account).
No such application was made. At best the period of delay was from the date of the orders at the procedural conference, namely 6 September 2005 to 8 September 2009 when the wife’s solicitor contacted the husband’s solicitor to enquire whether he had instructions to accept service of the itemised costs account, a period of four years. It was almost another year however while an application to extend time was made.
In KLD & SCVG [2009] FamCAFC 56 O’Ryan J explained the law applicable to an application to extend time in the following passage, which was cited with approval by the Full Court in the unreported decision of Kite & Kite [2010] FamCAFC 107 at [46]:
36. Rule 1.14 of the Rules deals with the shortening or extension of time. Rule 1.14(1) provides that “[a] party may apply to the court to shorten or extend a time that is fixed under these Rules or by a procedural order”. Rule 1.14(2) provides that “[a] party may make an application under subrule (1) for an order extending a time to be made even though the time fixed by the rule or order has passed”. However, there are “no preconditions to the exercise of power” to extend time: see Strudwick v Baker Johnson (1996) FLC 92-683 per Lindenmayer J at 83,098. The Rules do not set out what matters are to be considered in relation to an application for leave to do something out of time.
37. However the discretion to extend time although unfettered will not be exercised automatically. In Gallo v Dawson (1990) 93 ALR 479 McHugh J said at 480 “[t]he grant of an extension of time… is not automatic…” and citing the decision of McInerney J in Hughes vNational Trustee Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262 said “[t]he discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties”. The discretion to extend time is given for the purpose of enabling the court to avoid an injustice and the court must determine whether justice as between the parties is best served by granting or refusing the extension sought. In The State ofQueensland v J L Holdings Pty Ltd (1997) 189 CLR 146 Dawson, Gaudron and McHugh JJ said at 154: “…case management is not an end in itself. It is important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim”.
38. In OP v HM [2002] FamCA 454 the Full Court (per Kay, Coleman and Rose JJ) at 19 said that whilst there is a broad discretion the fundamental issue is whether an extension of time will enable the Court to do justice between the parties. Their Honours explained that this is “normally shown by the applicant demonstrating that there are adequate reasons which explain the delay, that there is a substantial issue to be raised on the hearing of the application, and that no hardship or injustice will be caused to the respondent which cannot be compensated by orders as to costs or otherwise”: see also McMahon and McMahon (1976) FLC 90-038 at 75,144, and Tormsen and Tormsen (1993) FLC 92-392 at 80,017.
39. Various authorities have established that in order to determine whether compliance with the Rules would work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences to the parties of the grant or the refusal of the extension of time: see Gallo v Dawson (supra) per McHugh J at 480-1; Lawecki & Marcel Kalfus & Co (1985) FLC 91-644; Prowsev Prowse (1995) FLC 92-557 at 81,568-81,573 but in particular at 81,572-3; Morrison v Morrison (1995) FLC 92-573 at 81, 674; and more recently OP v HM (supra).
40. However, the Full Court (Lindenmayer, Baker and Rowlands JJ) observed in Prowse v Prowse (supra) at 81,572: “[h]owever, whilst it is no doubt correct to identify those matters as ‘factors’ to be considered, and even as ‘the usual considerations’, we believe that it would be an error to elevate those ‘factors’ or ‘considerations’ into an exclusive code within the confines of which the court’s discretion to extend time must be exercised”. In other words, it is important to recognise that although the factors set out in various cases are “normally shown” by a successful applicant for an extension of time they should not confine the broad discretion: Hill v Hill [2007] FamCA 1657 (Unreported, O’Reilly J, 1 November 2007) at 13.
The husband contended that, following Gallo & Dawson, an extension of time is not automatic and there is a public interest in ensuring both that rules of court are adhered to and that the administration of justice is not brought into disrepute.
In Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400, a case relied upon by counsel for the husband, the Supreme Court of Western Australia was considering an application for taxation of the defendant’s costs without regard to the time limits imposed by the relevant rules of the Supreme Court, the application having been made approximately three and half years after the time allowed by the rules. In counsel’s written submissions he referred to two passages from that decision and it is helpful to set out both in full [Appellant’s submissions p10]. At p 406, Malcolm CJ said:
So far as the question of delay is concerned it is this aspect of the case that has caused me the gravest difficulty. Judgment was delivered on 28 April 1989 and the motion for the special order for costs is dated 7 August 1992. That is a period of nearly three years and four months. The period of delay between the delivery of judgment and the making of this application can only be described as extremely gross and extraordinary. Accepting as I do that the failure to make an application for a special order was as a result of the inadvertence of counsel, it appears that it is only very recently that any step was taken with a view to enforcing the order for costs.
Malcolm CJ went on to say, at pp 408-9, as follows:
In my view, the making of an order after such an inordinate period of delay and in the circumstances which I have mentioned would be to do something which would tend to “bring the administration of justice to disrepute among right thinking people”, a phrase used in the judgment in Hunter v Chief Constable of West Midland Police [1982] AC 529.
There must come a point where the interests of finality of litigation militate against the exercise of discretion in favour of a party whose solicitors or counsel have failed by inadvertence to make an appropriate application at the appropriate time.
It has been urged upon me by counsel for the defendant that the court should be reluctant to visit upon the litigant the consequences of inadvertence by his solicitors or counsel. So much may be accepted, but there must be in the interests of the administration of justice and finality in litigation some limit to the exercise of that discretion which is by way of an indulgence of the court. If a litigant suffers loss or damage as a result of inadvertence amounting to negligence, he has a remedy.
First we note that the orders of Barlow J were the subject of appeal and it was not until 3 December 2003 that the husband’s appeal in relations to costs and contraventions was dismissed by the Full Court. It would be unreasonable, in our view, to include the time between the making of the orders in July 2003 and the dismissal of the appeal in December 2003 as part of any delay. The husband conceded as much in written submissions (at [85] of submissions).
Her Honour found (at [44] to [45]) that the difficult task of preparing the itemised bill of costs was complicated by the fact that four firms of practitioners had represented the wife, and she had been charged with and convicted of forging and ushering cheques drawn on the husband’s bank account and had served a term of imprisonment. Following an appeal, heard in late 2004, in early 2005 the Court of Criminal Appeal allowed the appeal and quashed the conviction. Her Honour found that those proceedings, “in themselves, by their extraordinary and difficult nature, provided explanation to a certain extent”. Nevertheless, her Honour went on to explain at [47] to [50] that there was work being done in preparation of the bill and by 11 July 2005 an itemised account in relation to children’s matters had been filed. If her Honour was relying on these facts as forming part of an “adequate explanation” for “a substantial portion of the delay” she could not be criticised. However, we cannot discern from the reasons what period of time her Honour had in mind when she used those words in [85] of her Reasons.
On 6 September 2005 the parties attended a procedural conference as the wife had filed the itemised costs account out of time. The presiding registrar ordered the wife to file an application and affidavit in relation to the question of leave to proceed out of time by 13 September 2005. The matter was listed before a judge in the duty list, but when that matter came on, no application had been filed and nor was one filed thereafter, until the present proceedings.
The husband argued in ground 1 that the order of the registrar was directive and that it was not open to the wife to make a new application to extend time, as she had done in 2012, because what she should have done was sought to vary the orders made on 6 September 2005 by seeking to extend the time for filing an application.
In oral submissions, the husband conceded that the point was not fatal, but contended it was important because it drew attention in September 2005 to what action was required by the wife. As no explanation was proffered by the wife for her failure to file an application for an extension of time, as ordered on 6 September 2005, we consider her Honour should have ascribed significant weight to this four year delay. Her Honour noted (at [76]) that the wife had been ordered to file an application but did not thereafter refer to it. Whilst her Honour noted that work was being done on preparation of a Bill for the wife, it was apparently occurring without notice to the husband or the court.
Counsel for the husband submitted that, in view of the extent of the delay, it was incumbent upon her Honour to consider it in greater detail than she did in her conclusion at [85], and that having regard to the length of time between the hearing and the delivery of judgment, it was reasonable for the Full Court to scrutinise very carefully her Honour’s reasons in this respect (M & M [2006] FamCA 868 at [76]-[86]).
In particular, the husband pointed out that the wife instructed her current solicitor in November 2005. Further, the husband challenged the validity of one of the wife’s stated reasons for the delay, this being that two costs specialists would be unavailable because both had acted previously for the parties in the proceedings and were thus conflicted. This was said to be incorrect because one of the costs specialists had in fact previously acted for the wife, so there was no conflict in that regard, and the wife’s present counsel could well have been available also.
It is difficult, therefore, without more, to completely understand how her Honour arrived at the view that there was “an adequate explanation” for a “substantial portion” of the delay, unless we are to infer that her Honour was referring to the period during which the wife was involved in criminal proceedings. However, as explained previously, there did appear to be work done on preparation of accounts during that period and that period concluded in 2004. There were clearly issues with illness and retirement on the part of the wife’s solicitors, but the totality of the period in which the default lies must be given some overall weight. Even the period to 2005, for which we infer (in the absence of clarity) her Honour found there was some explanation, was concerningly long. A further period in excess of four years without adequate explanation, in our view, should have led her Honour to place considerable weight on the issue of delay and the inadequate explanation that she found for the four-year delay from September 2005 until December 2009. It does not appear that she did.
It is also not apparent that her Honour had regard to the question of whether the circumstances of such a lengthy delay, without adequate explanation, would bring the administration of justice into disrepute. We say this because there is a point at which the interests of the finality of litigation militate against the exercise of the discretion in favour of a party where that party or their legal advisors have failed to make an appropriate application at an appropriate time.
It is also important to record that this was not simply a delay in failing to file an itemised bill of costs in the time required by the 2004 Rules. On 6 September 2005 when a registrar ordered the wife to make an application to extend the time for filing the bill by 13 September 2005, the wife was on notice of what was required to progress the process, already over two years late, and the time in which she had to take that step. It defies common sense that nothing further was done, at least in any formal sense, nor any communication made, for another four years. Nor, importantly, was any adequate explanation offered for this failure.
In our view the effect that the grant of leave after such a long delay might have on the administration of justice needed to be considered. It is instructive that in one of the cases referred to by her Honour (Olsthoorn & Collins [2003] FCWA 93), where Barlow J had refused an application to file a bill of costs in relation to a costs order in the applicant’s favour, the delay was nearly 18 months, a significantly lesser period than in this case.
Major reliance on the fact that the wife had an order for costs that she would not be able to conclude and enforce, begs the question of the point at which the line is to be drawn with regard to time limits and the wider interests of justice. In one sense, it is difficult to see where the temporal limits of an application to file an itemised costs account out of time would lie, if the decision about an extension of time was to be based entirely on the fact that the wife would lose a substantial benefit. In other words, there must be some point at which the delay is simply too long, without an adequate explanation.
These were not matters her Honour addressed.
Finally, before leaving these grounds, we also find merit in the submission that her Honour took into account an irrelevant matter, namely that the costs order was “achieved after an extraordinarily long and difficult battle, including an appeal”. This is particularly so where her Honour prefaces her comments with the words “[t]he overarching issue is the interest of justice”. The fact to be weighed in the balance was the costs order itself. How the litigation that preceded it was conducted was not a matter that could properly be given weight.
The circumstances in which an appellate court should interfere with a discretionary judgment are well known. The decision whether or not to extend time is quintessentially an exercise of discretion.
In House v The King (1936) 55 CLR 499 Dixon, Evatt and McTiernan JJ said at 504-5:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.
For the reasons expressed we have concluded that her Honour failed to consider or consider adequately relevant matters and placed too much reliance on others, some of them irrelevant. As a result the decision cannot stand.
Remaining grounds
Having found merit in grounds 3-9 there is no need to consider any further ground 1, which we have already indicated was argued both as a stand-alone ground but also in overlap with grounds 3 to 9, and we have considered it in the course of these grounds.
We have already considered grounds 10 and 11 in our discussion of grounds 3 to 9 and there is no need to traverse these grounds any further.
To the extent that ground 12 relates to inadequacy of reasons, implicitly we have accepted the submissions of the husband in our consideration of grounds 3 to 9. No further consideration of this as a separate ground is required.
Ground 13 relates to an assertion that her Honour’s orders ought to have included a mutual extension of time for the husband. As a result of our finding that the appeal should be allowed, we need not consider this further.
This leaves for consideration ground 2, that her Honour’s orders extending time to file an itemised bill in relation to appeal costs exceed her Honour’s jurisdiction.
The husband’s contention is that Rule 1.14(1) of the 2004 Rules governing extensions of time allows an application to “the court to shorten or extend a time…” (our emphasis). This, it is submitted, refers to the court exercising jurisdiction in relation to the order for payment of the wife’s costs arising from the appeal. The relevant court would be the Full Court and thus the order made by her Honour would be made without jurisdiction.
The Rules are silent on this question. Counsel for the husband submitted that if the order were to be regarded as merely a machinery order, then it could be made by a single judge in the original jurisdiction of the Court. If the time limit in relation to filing the itemised bill of costs attaches to the order it would fall within s 94(2D) and need to be determined by a judge of the Appeal Division or by the Full Court. The point does not seem to have previously arisen and may need determination on another occasion but as we have found that her Honour was in error in granting an extension, nothing now turns on this issue and we do not need to consider it further.
Re-exercise of discretion
Both counsel conceded that if we allowed the appeal, it was open to this court to re-exercise the discretion and determine the question of whether the time within which the wife is to serve and file her itemised account be extended to the present time. This would require the court to consider, if we were to exercise the discretion in her favour, whether there should also be a similar extension to the husband.
Given the matters that we have alluded to in [60] to [74] (inclusive), there is no need for us to set out the factors upon which the discretion should be exercised. In our view, the lengthy delay, without adequate explanation, at least for a four year period, is a significant matter to be weighed against the hardship to the wife, in that she will not recover costs in her favour. We are not able, as her Honour was not, to deduce from the evidence whether or not the failure was the wife’s, or her solicitors’, or both. To the extent that the fault can be laid at her solicitors’ feet, then as was pointed out in Esther Investments Pty Ltd v Markalinga Pty Ltd, where there is negligence on the part of her solicitors or her legal advisors, she has a remedy. To the extent that it was not, then the need for an adequate explanation, which was absent in this case, becomes crucial. We are mindful of the comments of Malcolm CJ in Esther Investments Pty Ltd v Markalinga Pty Ltd that a period of three years and four months was considered to be gross and extraordinary and likely to bring the administration of justice into disrepute among right-thinking people. When one considers the entirety of the delay in this case, namely seven years, an extension of time would bring about a long extension of the 2004 Rules, which impose a timeframe of 28 days, or the reasonable exercise of discretion in departing from the Rules. In our view, the application to extend time should fail.
Accordingly, the appeal should be allowed, the trial judge’s orders should be set aside and the wife’s application to file an itemised costs account out of time should be dismissed.
Costs
Neither party sought an order for costs but both sought Certificates pursuant to the Federal Proceedings (Costs) Act 1981(Cth) if the appeal succeeded. We propose to grant certificates.
I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 13 February 2014.
Associate:
Date: 13 February 2014
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