Ruane and Bachmann-Ruane (No 2)

[2010] FamCA 578

FAMILY COURT OF AUSTRALIA

RUANE & BACHMANN-RUANE (NO. 2) [2010] FamCA 578

FAMILY LAW – COSTS – Complex arguments about financial agreement – Difficulty in determining whether the unsuccessful party should pay all or some of the costs – Successful party contributed to the dilemma

Family Law Act 1975 (Cth)

APPLICANT: Mr Ruane

RESPONDENT: Ms Bachmann-Ruane

FILE NUMBER: SYC 1991 of 2009

DATE DELIVERED: 9 JULY 2010

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: BY WAY OF WRITTEN SUBMISSIONS

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT: TAUSSIG CHERRIE & ASSOCIATES

SOLICITOR FOR THE RESPONDENT: GADENS LAWYERS

Orders

1. That the wife pay the husband’s costs fixed in the sum of $5,000.

2. That the application of the husband filed by written submission on 4 December 2009and 15 February 2010 and similarly that of the wife filed 11 December 2009 and 24 February 2010 be otherwise dismissed.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: SYC 1991  of 2009

MR RUANE

Applicant

And

MS BACHMANN-RUANE

Respondent

REASONS FOR COSTS JUDGMENT

1. The husband seeks costs against the wife arising out of a number of hearings. The wife opposes the making of any orders. If costs are to be so awarded, the wife seeks that they be visited upon the third party. Despite the fact that in the proceedings, the third party supported the wife’s position, it says that any dispute about costs as between it and the wife is for another proceeding to determine.

2. The husband and wife executed a document prepared by the third party as a financial agreement. In my orders, I held the agreement not to be a binding financial agreement.

3. Subsequent to hearing argument on the substantive point but before judgment, the wife sought to stay the delivery of judgment and/or argue further matters because of impending changes to the law. I ruled against her.

4. The husband therefore now seeks costs relating to the hearings on 6 November 2009 and 13 November 2009 and all of the attendant costs surrounding those dates.

5. In this case, I do propose to make an order for costs against the wife but it must be limited for the reasons that follow.

6. In the substantive application, there were several very well-reasoned and argued issues. I ruled:

   (a)Recital clauses in the financial agreement containing statutory requirements were able to be relied  upon;

   (b)Precise language of the various sections and reference to the various sections in Part VIIIA did not have to be used;

   (c)The agreement’s accompanying certificate had to be signed by a legal practitioner who was an Australian legal practitioner;

   (d)In determining the validity issue, the parties had to resort to 90KA and the principles of contract law;

   (e)A party endeavouring to maintain the validity and enforceability of the agreement cannot resort to principles of estoppel to prevent the other party withdrawing from the agreement.

7. The modest issue which took the least amount of time related to whether the certificate attached to the agreement signed by an English lawyer was sufficient for the purposes of the Family Law Act 1975 (Cth).

8. Despite all of the arguments, I found that to achieve the fundamental purpose of Part VIIIA, the ordinary meaning of “legal practitioner” had to be a person who fitted the description set out in s 4 of the Act. The process of having an English lawyer sign a financial agreement which was undertaken by the husband, albeit supported by the wife, made the agreement fall outside of the legislation.

9. In my view, all but that one point was open and arguable having regard to the state of the jurisprudence in this Court.

10. The irony in this case is that although the husband willingly argued all of the points mentioned above, it was his action in having the English lawyer sign the certificate that caused the arrangement to come undone.

11. Section 117 of the Family Law Act 1975 (Cth) provides that each party should pay their own costs unless there are circumstances which justify the Court departing from that principle. If that justification can be shown, the Court must consider the matters set out in s 117(2A).

12. There can be little doubt that the wife has been wholly unsuccessful and the husband successful albeit at his own hand. The position of the third party is different because although it participated in the proceedings, its role was limited. None of that alone is the basis for departing from the principle set out in s 117. The party seeking costs must show that there is some circumstance that justifies the order.

13. In deciding whether and if so what, order for costs to be made, s 117(2A) requires the Court to consider a number of matters but before examining them, the party seeking costs must show some particular reason why the circumstances justify a costs order being made. It is accepted that the s 117(2A) factors themselves could lead to a court being justified in making a costs order. They do not in this case.

14. Just before judgment on the substantive issue was to be delivered, the wife sought to relist the case and for judgment not to be so delivered. This action was ultimately unsuccessful and it featured in the husband’s first costs submissions.

15. The husband was critical of the wife in her endeavour to re-open the matter before judgment. He said it was an application based on “unmeritorious arguments” and against authority. It was submitted that the application of the wife was speculative and inappropriate.

16. This is therefore an appropriate time to examine what I then said in relation to the wife’s second application which was heard on 13 November 2009.

17. I observed that the husband had relied on Black and Black to say that there had to be strict compliance with the relevant sections of the Act before an agreement could be found to be binding. It was common ground if not common knowledge that there were legislative proposals before the Australian Parliament to ameliorate the problems for people as a result of Black. In my reasons for refusing to allow the wife to re-open or adjourn the proceedings, I noted that the House of Representatives had passed a bill early in 2009 and that on 26 October 2009, the Senate amended the bill and referred it back to the House of Representatives.  I found that it was that event that appeared to have activated the wife’s application to delay delivery of the substantive judgment.

18. I then said that there was an array of legal authorities available on the point about whether proceedings should be delayed pending legislative change. Both parties referred to a variety of authorities. Some authorities were distinguishable and others not helpful. This is an important point because it highlights the fact that there was an arguable cause.

19. Importantly, I said:

    There is a difference also between cases where proposed legislation is before a parliament being debated and various government proposals are floated by media release. There is also a difference between proposed legislation which creates new rights and that which cures technical problems that cause injustice. The various courts referred to above have grappled with each concept differently but the overarching premise in all cases must be that it is the function of the executive government to make the law and for the judiciary to implement it. It is not part of the judicial function to find ways to avoid its responsibilities to carry out the law. To do so would be improper. Thus, with respect, I adopt the views of Mason P in Meggitt that to take into account possible legislative changes in a contested adjournment application to enable a party to possibly benefit would be an error.

    There is also a difference between an adjournment application at an early stage of the time leading up to a trial and one just before trial. In either case however, if the court is seized of an application to be determined, it should hear it. Any application for an adjournment should be determined without an eye on prospective changes which might alter rights. The responsibility for the creation of those rights lies with the executive government.

20. In an unreported judgment of an Adelaide case of P & P delivered on 31 December 2009 by Strickland J, his Honour referred to my judgment and disagreed with the approach I took. His Honour granted the adjournment because of the impending legislation.

21. There was therefore at least an argument that was open to the wife. 

22. Returning then to the overall question of costs, I have already set out the underlying argument of the husband. In his submissions, the husband argued that the wife had “virtually unlimited funds” and she was not in a position to “cry poor”. I do not think she did.

23. The husband argued that the wife’s actions incurred the husband unnecessary costs. Counsel noted that the costs provisions were compensatory to protect the other party from loss. It was submitted that the husband had no way of avoiding participation in the proceedings. With those sentiments I agree but that also is not a basis for making an order for costs. There must be something about those or some other issue that justifies the court taking the step to depart from s 117.

24. On 15 February 2010, the husband filed a much more comprehensive submission than that prepared by his counsel. The first part of that submission referred to the fact that the wife refused to accept evidence presented to her about the certification by the English lawyer. The second part related to aspects concerning the wife’s “behaviour” of “deliberately seeking to delay the determination of the validity of the financial agreement for an ulterior purpose” which I have presumed to mean that she sought to adjourn the proceedings so that the new legislation would be in place when the case was heard. I do not find there is any evidence of that. What would appear to be an open inference is that when the wife became aware of the legislation passing the Senate, she endeavoured to have the Court consider the implication that change may have had.

25. The wife’s submission was really along the lines that there was an arguable cause. Whilst I accept that in respect of the matters other than the Australian lawyer point, it is only if I was satisfied that the latter was arguable that there is merit in the wife’s submission. Counsel for the wife described the case a “genuine contest” as to what authorities were relevant.

26. Ultimately, the wife argued that if there was to be an order for costs, the question of who should pay them should be left to the trial. The submission rightly pointed out the dilemma that the third party is a party to the proceedings but it is unknown whether or not there is any cause of action to be heard.

27. The husband relied upon the well-known authorities in relation to indemnity costs but this is not a case which is so extraordinary or unusual to justify such a course of action. Again, I point to the fact that the husband contributed to the dilemma by signing the agreement and whilst I did not accept that the requirements of the Act had been met, at least in respect of a number of other matters, there were arguable points. That being so, an indemnity costs order would be inappropriate.

28. The wife’s submission also dealt with the indemnity costs argument and with her submission, I agree.

29. The third party submission canvassed many of the issues that may be relevant to whether or not there is a single justiciable controversy for the purposes of the Court exercising its accrued jurisdiction. I do not propose to consider those issues in these reasons. The submission said of the costs issue that the basis of being joined by the wife was “not entirely clear”. I accept that but note that no application has since been made to either demand the wife to produce some form of application or statement of claim nor has any application been made for the third party to be removed. I agree with the submission of the third party that until such time as there is not so much a determination of the jurisdiction but rather whether there is any justification for the third party to contribute towards the costs when it was the wife who ran the argument albeit supported by the third party, no order should be made.

30. The starting point about an application for an order for costs must be that despite the outcome significantly favouring one party and there being large amounts of money and effort involved, some justification must be shown to depart from the principle in s 117.

31. In this case, the case expanded as both sides contemplated a variety of arguments. The size of the case cannot determine the justification for costs.

32. I have already said that there were arguable points and I dealt with them in the reasons for judgment. The one that I consider was not arguable was that relating to the Australian Lawyer. In my view that was never going to succeed.  The decision in Murphy & Murphy [2009] FMCAfam 270 may not have been binding but it certainly flagged the problem if it was not persuasive.

33. The unusual feature of this case is that the husband’s successful point was the one that he created. It must be seen as a situation where he has contributed to the dilemma but that goes to the quantum of costs.

34. In my view, there is a justification for an order for costs.

35. Turning to the matters in s 117(2A), I find:

    (a)each party has access to financial resources albeit arguably and significantly different. The husband’s financial position is set out in the submission but he espouses an entitlement to share in the wife’s wealth;

    (b)there is no conduct in this case that warrants criticism;

    (c)no party is eligible for legal aid;

    (d)the wife has been wholly unsuccessful in the sense of the outcome despite having succeeded in some of the legal arguments.

36. Costs orders are discretionary. Neither party appears to make any reference to the scale in the court rules. I have presumed as each was competently represented that there are significant costs involved. The dilemma however is that it is not justifiable to make an all-encompassing order where there were many issues involved. To have the issue of the costs determined on an assessment by the registrar would not only be a complex and difficult exercise but one which would also be outweighed by the costs involved.

37. Perhaps arbitrary but certainly discretionary, my view is that the husband should have costs fixed in the sum of $5,000.

I certify that the preceding Thirty Seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  9 July 2010