Saxton and Keenan
[2016] FCCA 643
•22 February 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SAXTON & KEENAN | [2016] FCCA 643 |
| Catchwords: FAMILY LAW – Costs – Court advised on first day of trial that proceeding unable to commence as listed – totality of expert valuation evidence not before the Court – fault for delay lies with the applicant – failure of applicant to comply with orders of the Court – consideration of s.117 of the Family Law Act 1975 – costs order made – applicant to pay respondent’s costs of and incidental to the day as taxed. |
| Legislation: Family Law Act 1975, ss.117, 117(2A) Federal Circuit Court Rules 2001 (Cth), r.15.08(2) |
| Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27 Dawson v Deputy Commissioner of Taxation (1984) 71 FLR 364 In the Marriage of Jensen (1982) 8 Fam LR 594 In the Marriage of Kelly (No 2) (1981) 7 Fam LR 762 In the Marriage of Talbot (1979) 5 Fam LR 766 Mallet v Mallet (1984) 156 CLR 605 Maronis Holdings Ltd v Nippon Credit Australia Ltd [2000] NSWSC 753 The State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 |
| Applicant: | MR SAXTON |
| Respondent: | MS KEENAN |
| File Number: | MLC 11671 of 2014 |
| Judgment of: | Judge Wilson |
| Hearing date: | 22 February 2016 |
| Date of Last Submission: | 22 February 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 22 February 2016 |
REPRESENTATION
| Counsel for the Applicant: | Ms B Phelan |
| Solicitors for the Applicant: | Plaza Legal |
| Counsel for the Respondent: | Mr R Hoult |
| Solicitors for the Respondent: | Berry Family Law |
ORDERS
The matter be adjourned to this Court on 20 February 2017 at
10.00 a.m. for Final Hearing with an estimated hearing time of
two (2) days (“the Final Hearing”).The party responsible for the payment of any fee including a setting down or hearing fee do pay or cause to be paid such of the Fees as shall be payable by that party in accordance with, and within the time specified in, the Federal Circuit Court Regulations.
The applicant make, file and serve any further Affidavit to be relied upon by 4.00 p.m. 28 days prior to the Final Hearing.
The respondent make, file and serve any further Affidavit to be relied upon by 4.00 p.m. 14 days prior to the Final Hearing.
On or before 4.00 p.m. 3 working days prior to the Final Hearing, each party must make, file and serve:
(a)one agreed table between the parties setting out the values of all assets and liabilities to be relied on at the hearing, each to be marked ‘agreed’ or ‘in dispute’;
(b)a list which identifies each discrete contested factual issue including the evidence upon which the parties rely, applicable to that discrete issue; and
(c)an Outline of Case document including the following:
(i) a list of the documents to be relied upon;
(i)a brief chronology;
(iii)a list of all of the assets, liabilities and financial resources claimed to be part of the asset pool;
(iv) a list of contributions claimed or contended for;
(v) a list of other factors relied upon (s.75(2) factors);
(vi) the percentage adjustment contended for;
(vii) the main contentions on disputes as to:
(A) what items are to be included in the pool; and
(B) the value of each asset in the pool;
(viii) a statement of the precise orders sought; and
(ix)(if applicable) whether the trustee of a superannuation fund has been afforded procedural fairness in relation to a proposed superannuation splitting order.
The applicant pay the respondent’s costs of and incidental to today as agreed between the parties and in default of agreement, as taxed.
IT IS NOTED that publication of this judgment under the pseudonym Saxton & Keenan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 11671 of 2014
| MR SAXTON |
Applicant
And
| MS KEENAN |
Respondent
REASONS FOR JUDGMENT
Introduction
On 22 February 2016, on the first of two days fixed for the trial of this proceeding, counsel for both parties – Ms B Phelan (“Ms Phelan”) for the applicant de facto husband Mr Saxton (“the applicant”) and Mr R Hoult (“Mr Hoult”) for the respondent de facto wife Ms Keenan (“the respondent”) – informed me that the trial of this proceeding could not commence by reason of the fact that the totality of the expert valuation evidence was not then before the Court. After debate during which I searched for an explanation for why the case was not ready to proceed, it became apparent that the fault lay with the applicant. As result, I adjourned the further hearing of the trial of this proceeding to a date in February 2017 (one full calendar year hence) and I made a costs order against the applicant. The legal representatives for the applicant requested reasons for my making the cost order.
These are my reasons.
Background
By initiating application filed 22 December 2014, the applicant sought orders adjusting the respective property interests of the applicant and the respondent. The case was issued into the docket of her Honour Judge Riley who made interim property orders by consent on 1 April 2015 and otherwise stood the matter over to 16 November 2015 for final hearing before her Honour Judge Harland on an estimated duration of two days.
On 16 November 2015 the parties appeared before her Honour Judge Harland, both represented by experienced counsel. On that day, her Honour Judge Harland made orders for the filing of additional affidavit material, the applicant by 26 January 2016 and the respondent by 9 February 2016. Her Honour additionally ordered that by 19 February 2016, each party was required to make file and serve an agreed table setting out the values of all assets and liabilities on which the parties relied at the hearing indicating which values were agreed and those which were in dispute. As is the practice of her Honour Judge Harland, her Honour noted that in the event of non-compliance by any party with the orders or directions made that day in respect of the filing of documents or the undertaking of procedural issues, the entire proceeding may have been struck out or the proceeding continued on an undefended basis.
This litigation was transferred to my docket and on 9 February 2016, I made orders by consent following debate. Almost immediately after the case was called on that day I said the following to the parties –
His Honour: … as far as my notes recall, everyone has distinguished themselves by doing precisely nothing to comply with the orders of Judge Harland made on 16 November.[1]
Ms Phelan appearing for the applicant explained what was the problem. She said the joint valuation of land at Property S attributed a value to that land of $3.5 million. She said the applicant’s sole valuation valued the property at $2.5 million. She said the parties were fighting over the million dollar difference. She said that the respondent wanted her client to pay for an updated joint valuation. Mr T (“Mr T”), who appeared for the respondent on that day, submitted that all or none of the valuations needed updating. Ms Phelan then said “If they’re going to file another affidavit, we’re going to have to file another affidavit”.[2] I then stood the matter down to enable Ms Phelan and Mr T to discuss the best way forward. Almost two hours later, near midday, Mr T and Ms Phelan returned with consent orders. The orders specifically contemplated the trial of this case proceeding on 22 February 2016. Mr T informed me that the consent orders dealt with issues of finalising updated valuations prior to the final hearing.
[1] Transcript of proceedings of 9 February 2016 at p.2.
[2] Transcript of proceedings of 9 February 2016 at p.5.
Leaving aside the orders made by consent, on 9 February 2016 I fixed this case for trial on 22 February 2016 on an estimated duration of two days before me. So far as the agreed orders of 9 February 2016 (“the consent orders”) were concerned, the parties agreed at paragraph 1 of the consent orders to –
[D]o all such things and sign all such documents not including a reference to payment jointly to ensure that (omitted) Property Group perform updated valuations of the properties at Property G, in the State of Victoria and Property D, in the State of Victoria.
Paragraph 2 of the consent orders also recorded that if either party wished to obtain, at her or his expense, further valuations of any of the relevant properties then the party in residence was to facilitate that valuation. Paragraph 5 of the consent order, recorded that the valuers were to complete and prepare a statement pursuant to r.15.08(2) of the Federal Circuit Court Rules 2001 (Cth) before 17 February 2016.
As is the practice of my associates, in the days leading to the commencement of the trial of every proceeding, my associates contact the legal representatives of the parties to ensure that no outstanding procedural obstacles exist to the commencement of the trial. By close of business on Friday 19 February 2016, none of the legal representatives of the parties in this proceeding had made contact with my associates to alert them of the existence of any obstacles to the commencement of what I had expected was to be a two-day trial between 22 and 23 February 2016. To the contrary, upon enquiring about the existence of any obstacles, the legal representatives of the applicant informed my Chambers that none existed. Put differently, by close of business on Friday 19 February 2016, I was not alerted to the existence of any impediment of any description which might have had an impact upon the commencement of this proceeding at trial on its allocated start date, 22 February 2016. Bearing in mind that the applicant at all times has had the carriage of this proceeding, if any impediment had existed on the last business day before the commencement of the trial, the efficient conduct of litigation in this Court dictated that the fact of and details of such impediment would have been brought to my attention. None was.
The trial on 22 February 2016
On 22 February 2016 this case was called for trial. After Ms Phelan for the applicant and Mr Hoult for the respondent announced their appearances, Ms Phelan reported that “we still have a problem in this case in relation to the valuers, your Honour, because they have not conferred”.[3] The ‘problem’ to which Ms Phelan adverted was of such a magnitude that its consequence to the efficient commencement and running of the trial of this proceeding was, or should have been, obvious to all practitioners in this case. That was especially so in respect of the practitioners representing the applicant because the applicant had and at all times has been the moving party in the conduct of this proceeding.
[3] Transcript of proceedings of 22 February 2016 at p.2.
The ‘problem’ that Ms Phelan mentioned within seconds of getting to her feet on the first day of the trial of this proceeding should have been but was not mentioned to me nor otherwise brought to my attention prior to the commencement of the trial. After receiving appearances, I explored with Ms Phelan the precise basis of the reason for that failure during which the following exchange took place –
HIS HONOUR: Did anyone bring to my attention the likelihood that this case would be met with the fate that it currently suffers at midday on day 1 of the trial?
MS PHELAN: No.
HIS HONOUR: Right. Is there a reason for that?
MS PHELAN: I can’t answer that, your Honour.
HIS HONOUR: Well, you can, because this is information within your control as counsel for the moving party, so I would like to know about it.
MS PHELAN: Well, I knew about this on Friday afternoon.
HIS HONOUR: Did you take steps to alert my associates?
MS PHELAN: No. I didn’t.
HIS HONOUR: Well, isn’t that how one normally approaches a case that’s locked away for two days.
MS PHELAN: I usually leave that to my instructing solicitors.
HIS HONOUR: Did anyone approach my court – my people?
MS PHELAN: No.
HIS HONOUR: Well, again, isn’t that the way it’s normally done? Isn’t that the way good conduct should have cases running?
MS PHELAN: It should – well, it should have been done, but I must say that’s probably not the normal practice that I’m used to in this court that we would be notifying you on Friday afternoon.
HIS HONOUR: Well, when did you know that things were amiss?
MS PHELAN: I knew on Friday afternoon that we were still far …
HIS HONOUR: What time did you know? What time did you know?
MS PHELAN: Late in the afternoon.
HIS HONOUR: Well, did anyone take any steps to notify my court – my people that this …
MS PHELAN: Not from my side, as I understand, your Honour.
HIS HONOUR: Well, is there a reason for that?
MS PHELAN: No.[4]
[4] Transcript of proceedings of 22 February 2016 at pp.9-10.
That exchange revealed the lamentable state of co-operation between the legal practitioners for the applicant and the Court in the days immediately preceding the commencement of the trial in this proceeding. I say ‘lamentable’ for the simple reason that common sense dictated that the judge be alerted, ahead of the listed start date, of the likelihood (in this case the inevitability) that the trial would not proceed. Had that been done, alternative arrangements could have been made within the Court to list other, urgent applications that could have been dealt with as a stop-gap to fill the void created by the last-minute notification of the fact that the two days allocated for the trial of this proceeding would not be utilised.
In the exchange outlined above Ms Phelan said she was not familiar with the practice that I mentioned to her of early notification to the Court of looming impediments to the start date for trial. Precisely why she said that, I cannot gainsay. However, her practice is not a practice that I encourage nor one am I willing to tolerate. Routinely, in State and Federal courts across the Commonwealth of Australia a more heightened level of co-operation is exhibited between legal practitioners and the court. That is for the simple reason that the
co-operative approach not only assists the administration of justice but also litigants who have waited, usually for some time, for their cases to be tried.
Upon probing further for the real reason why this case was not ready to commence on the first day of the trial, I was told that two valuers should have conferred for the purpose of discussing the differences between them in respect of their respective valuations concerning one item of property. Counsel told me that the valuers did not confer. A suggestion was made that I should hear the evidence of one or other of the valuers, viva voce, from the witness box on the second day of the trial thereby overcoming the inconvenience occasioned to that point by witness unavailability. In response I said the following –
HIS HONOUR: The real obstacle with that is that we will learn for the first time what their position is – the very reason behind the advance exchange of expert reports is to give the other side the opportunity to know not only the – in the case of a valuer – the arithmetic as well as the thinking behind the attribution of a value to a particular piece of land. The rules provide for the exchange of that within a certain time, that instructions can be obtained about it, questions can be put, instructions for cross-examination obtained and the usual things. I’m not keen on receiving viva voce evidence, essentially cold, from a witness in the witness box who should have done the steps required in this case much earlier than the day he gets into the witness box. I’ve never seen a case done in that way and I don’t want to be a trail blazer by permitting it to be done here.
There are two positions that might present themselves in the face of those circumstances: one is that we go on in the way you’re suggesting, although I’m not crazy about doing it that way. The other is to adjourn. Is there a downside to adjourning? Well, the properties are not going to decrease in value. They will increase, even for a short space of time. The applicant will lose his place in the queue. And if he gets another date, it won’t be this calendar year. It will prolong the resolution of the squabble between [the parties]. That’s obviously undesirable. And there will be a costs order. But I don’t know what else I can do to do justice between the parties in the face of what appears to be a flagrant dereliction of compliance with orders previously made.[5]
[5] Transcript of proceedings of 22 February 2016 at pp.12-13.
Thereafter, Ms Phelan again made submissions about the inappropriateness of my relying on valuations obtained in July 2015 in relation to the properties in issue in this proceeding. I told her I agreed that it was inappropriate for me to rely on outdated valuations.
Both parties contended that an adjournment was the only way forward and it became necessary to deal with the appropriate way to redress the inconvenience occasioned by reason of the fact of an adjournment being necessitated.
Legal principles
Ordinarily, in proceedings in this Court under the Family Law Act 1975 (Cth) (“the Act), costs orders are not made. Section 117(1) of the Act makes provision for the usual state of affairs of each party bearing his or her own costs. That is the usual state of affairs.
Section 117(2) of the Act permits a deviation from the usual order being made of each party bearing his or her own costs. The touchstone empowering the court to deviate from the normal order is that the Court is of the opinion that there are circumstances that justify the Court in doing so.[6]
[6] See Family Law Act 1975 (Cth), s.117(2).
In this case, it was not appropriate for the respondent to suffer the financial consequences of preparing for the trial of this proceeding in the expectation that the case would run, then being met on the first day of the trial with a badly explained reason for the failure of the case proceeding and for the respondent to be forced to bear the financial ramifications of retaining solicitors and briefing counsel in the expectation of the case running only to find that the case did not proceed on the allocated date. The failure of the case to proceed was in no way attributable to the respondent. To my mind, leaving the respondent without a costs remedy in those circumstances was grossly unfair.
Prior to the pronouncement by the High Court of Australia of its decision in Aon Risk Services Australia Ltd v Australian National University[7](“Aon”), principles of case management ordinarily permitted a court to regulate its own business, the guiding principle then being statements by the High Court in The State of Queensland and Anor v J L Holdings Pty Ltd[8] (“J L Holdings”). The reasoning in
J L Holdingsno longer holds sway. In Aon, French C J held that the adversarial system has been qualified by changing practices in the courts directed to the reduction of costs and delay and the realisation that the courts are concerned not only with justice between the parties which remains their priority but also with the public interest in the proper and efficient use of public resources.[9] French CJ further held that the adversarial system is not a system which today permits disregard of undue delay.[10] The Chief Justice held that undue delay can undermine confidence in the rule of law. To that extent its avoidance based upon a proper regard for the interests of the parties transcends those interests. The Chief Justice held that another factor which relates to the interests of the parties but transcends them is the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes, vacate trial dates or adjourn trials because of non-compliance with court timetables.
[7] [2009] HCA 27.
[8] (1997) 189 CLR 146.
[9] [2009] HCA 27 at [23].
[10] [2009] HCA 27 at [24].
In Dawson v Deputy Commissioner of Taxation,[11] King CJ acknowledged the responsibility of judges to ensure, so far as possible and subject to overriding considerations of justice, that the limited resources which can be committed to the administration of justice are not wasted by the failure of parties to adhere to trial dates of which they have had proper notice.
[11] (1984) 71 FLR 364, 366.
As French CJ held in Aon, the mischief engendered by unwarranted adjournments and consequent delays in the resolution of civil proceedings goes beyond their practical effects on the court in which those delays occur.[12]
[12] [2009] HCA 27 at [27].
In Aon, Heydon J referred to the decision of Bryson J of the Supreme Court of New South Wales in Maronis Holdings Ltd v Nippon Credit Australia Ltd[13] (“Maronis”) in which Bryson J dealt with the inconvenience occasioned to one party when a trial date had to be altered, expressed in the following terms –
When forbearance and liberality are extended to a delinquent the burden of inconvenience and lost opportunities for preparation tends to fall heavily and without adequate repair on parties who have not been delinquent. A relative disadvantage is imposed on those who proceed methodically and in due time; their interest in procedural justice should claim at least as much consideration as the interests of the applicant for a late amendment who does not have to look far for the creator of his difficulty.[14]
[13] [2000] NSWSC 753.
[14] [2000] NSWSC 753 at [15].
While it is true that the decisions in Aon and Maronis concerned amendment applications which torpedoed the trial date in both cases whereas this case concerns an adjourned trial occasioned by the failure to adduce evidence in a timely manner, this case along with Aon and Maronis have the common factor of inconvenience being occasioned to the opposite party to the litigation as well as to the court by reason of one party’s failure to do what it should have done. In this case, the applicant should have complied with orders previously made and with which he failed to comply.
In this case, not only am I concerned with the interests of the parties in justice being done between them by the orderly conduct of their trial but I am also concerned with the public interest in the proper and efficient use of public resources. Undue delay can undermine confidence in the rule of law. The waste of public resources and the inefficiency occasioned by the need to vacate trial dates by reason of non-compliance with court-ordered deadlines is manifest in this case. Unless good reason is shown, parties should adhere to trial dates of which they have had proper notice, and in this case proper notice was duly given to both parties.
The business of this Court is extremely heavy and its workload immense. Once it became necessary to adjourn the trial of this proceeding, a new trial date could not be accommodated earlier than February 2017. Naturally, that adversely affects both parties to this litigation. Self-evidently, the parties have been inconvenienced by reason of the fact that the trial of this proceeding could not commence on the date allocated to it, especially in circumstances where this Court was ready, willing and able to accommodate the parties for a trial according to their estimated duration on the date listed namely 22 February 2016.
The power to make a costs order against a party to a proceeding in this Court under the Act is found in s.117 of the Act. Under s.117(1) of the Act, the situation that generally applies is that each party bears his or her own costs. That general position is subject to s.117(2) of the Act that permits the Court to make a specific costs order against a party. Aside from cases in which an Independent Children’s Lawyer is involved (this not being one of them) under s.117(2) of the Act this Court may make such interlocutory costs order as the Court considers just if the Court is of opinion that circumstances exist justifying the Court making a costs order. If circumstances do exist, the Court is required to have regard to the seven matters prescribed by s.117(2A) of the Act. I have considered each of the subsections of s.117(2A) of the Act. Let me address each.
The financial circumstances of the parties are such that a costs order is unlikely to inflict financial harm on either. The assets in dispute in this case are substantial.
Neither party is in receipt of legal aid.
In the passages above I have addressed issues relevant to s.117(2A)(c) of the Act in the context of the conduct of the parties that has led me to impose the costs order in this case.
Section 117(2A)(d) of the Act is of particular relevance, as is revealed by my consideration above, especially in relation of the previous orders concerning the fixing of the trial date.
Section 117(2A)(e) of the Act is not relevant as this proceeding has not yet been tried.
No evidence was before me about issues bearing upon s.117 (2A)(f) of the Act.
Other relevant matters are as set out above.
Conclusions
While a consideration of the elements of s.117 of the Act are idiosyncratic to each case, varying from one case to the next, the metes and bounds of the operation of s.117 of the Act have been considered by single judges exercising jurisdiction under the Act, by the Full Court of the Family Court of Australia as well as by the High Court of Australia, the last of which is illustrated by the decision in Mallet v Mallet[15]. Among the very many decided cases on point is the decision of Nygh J in In the Marriage of Jensen[16] where his Honour held that a costs order will be warranted where a proceeding has been unduly prolonged by non-cooperation or by the obstructiveness of the other party. To like effect are observations in In the Marriage of Kelly
(No 2).[17] In the specific context of a party’s failure to obtain valuation evidence, that too has formed the factual basis for the imposition of a costs order, as was the case in In the Marriage of Talbot.[18][15] (1984) 156 CLR 605.
[16] (1982) 8 Fam LR 594 at 595.
[17] (1981) 7 Fam LR 762
[18] (1979) 5 Fam LR 766.
An abundance of authority exists for the making of the costs order I have made in this case. So too is there legislative power to do so.
Having regard to the most unsatisfactory reasons offered as the basis for the need to adjourn this case, I had given consideration to making a costs order on an indemnity basis and for those costs to be paid by the solicitors and barrister in this case. However, I have resisted that preferring instead to make a costs order in terms earlier pronounced.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge Wilson
Date: 23 March 2016
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