SCVG and Estate of KLD (deceased) (No 2)

[2020] FamCA 52

FAMILY COURT OF AUSTRALIA

SCVG & ESTATE OF KLD (DECEASED) (NO. 2) [2020] FamCA 52

FAMILY LAW – COSTS – Where the wife seeks a costs order against the husband –  where the husband was wholly unsuccessful in particular applications – where there is an underlying issue of fraud to be resolved in the final proceedings – where the question of fraud is relevant to the question of costs – reservation of costs applications to final hearing.

Family Law Act 1975 (Cth) s 117

Penfold v Penfold (1980) 144 CLR 311

APPLICANT: Mr SCVG

1^st RESPONDENT: Mr Draper

2^nd RESPONDENT: Ms Eaton

FILE NUMBER: SYC 4380 of 2008

DATE DELIVERED: 5 February 2020

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 12 December 2018

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Self-representing

COUNSEL FOR THE RESPONDENTS: Mr A Stenhouse

SOLICITOR FOR THE RESPONDENTS: Macphillamy’s Lawyers

Orders

1. The Application for Costs made by the Wife against the Husband in relation to the Application in a Case filed 16 October 2017, including the subsidiary Application filed 27 October 2017, and the two Applications in a Case filed 9 May 2018 is reserved until the substantive hearing of the Husband’s applications.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym SCVG & Estate of KLD (Dec’d) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: SYC 4380 of 2008

Mr SCVG

Applicant

And

Mr Draper and Ms Eaton

Respondents

REASONS FOR JUDGMENT

Introduction

1. The parties to this dispute are SCVG, the Applicant Husband, and Ms KLD, the Respondent Wife.

Orders Sought

1. Ms KLD seeks:[1]

   [1] Ms KLD, Written Submissions, filed 28 September 2018, p. 1.

   a)Costs in the following judgments:

   (a)The Application in a Case filed 16 October 2017 by the Applicant (the Application to Set Aside), heard on 7 December 2017 with judgment dismissing that Application given on 8 August 2018; and

   (i)The subsidiary Application filed 27 October 2017 by the Applicant (the Interim Stay Application) seeking that the orders made by Gill J on 14 September 2017 be stayed pending the outcome of the Application to Set Aside, which was heard on 9 November 2017, with costs reserved pending the determination of the Application to Set Aside; and

   (b)The two Applications in a Case filed 9 May 2018 by the Applicant (the Two Applications for Stay), heard on 21 May 2018 with judgment dismissing those Applications given on 31 May 2018.

   b)Costs to be fixed according to scale.

2. Mr SCVG opposes these Cost Applications.[2]

[2] Ms KLD, Written Submissions, filed 22 October 2018.

Material Relied On

1. Ms KLD relied on:

   a)Written Submissions, filed 28 September 2018; and

   b)Affidavit of Christopher Eric Macphillamy, filed 28 September 2018.

2. Mr SCVG relied on:

   a)Written Submissions, filed 22 October 2018; and

   b)Affidavit of the Applicant, filed 22 October 2018.

The proceedings

1. These applications for costs relate to a tiny portion of the convoluted and lengthy proceedings between the parties, proceedings that continue despite the making of Final Orders in 2015.

2. The application made by Mr SCVG on 16 October 2017 related to orders made in his absence, following his failure to attend court on 14 September 2017.  Those orders dismissed his applications for the review of decisions as to quantum of costs made by Registrar McNamara on 15 May 2017, Registrar McNamara on 25 July 2017 and Registrar Payget on 31 July 2017.  Mr SCVG sought the setting aside of those orders on the basis that they were made in his absence.

3. In parallel to those proceedings, Mr SCVG seeks to set aside both the orders of Cronin J awarding costs against him on 20 August 2015 (the costs order), along with orders as to the quantum of those costs made by me on 14 September 2017 (the quantum order), on the basis that the orders made by Cronin J were procured by fraud.

4. It may be seen that Mr SCVG’s case has involved multiple bases to set aside the costs awarded against him flowing from the Cronin J orders.

5. Mr SCVG also, by an application in a case filed 27 October 2017, sought a stay of the orders made on 14 September 2017 (and the underlying costs order made by Cronin J on 20 August 2015) pending the resolution of the application of 16 October 2017.  That was initially dealt with by orders made on 9 November 2017, unopposed by Ms KLD, that provided that Ms KLD would not seek to enforce the orders of 14 September 2017 pending the resolution of the application to set aside, unless she gave Mr SCVG 28 days’ notice of her intention to do so.  The costs of that application were reserved to the resolution of the setting aside application.

6. By further applications, both filed on 9 May 2018, Mr SCVG also sought the staying of the costs order and the quantum order pending the determination of his claim to have them set aside on the basis that they were procured by fraud.

7. Mr SCVG’s application filed 16 October 2017 to set aside those orders based on his non-appearance, was dismissed on 8 August 2018.  He was wholly unsuccessful.

8. Ultimately, the stay applications of 9 May 2018 were dismissed on 31 May 2018, in advance of the disposal of the various applications to set aside.

9. Costs are sought primarily on the basis that Mr SCVG was wholly unsuccessful in his attempt to set aside the orders of 14 September 2017, and that the application for a stay formed a part of the unsuccessful application, and further that Mr SCVG was wholly unsuccessful in his applications of 9 May 2018.

10. Mr SCVG opposes the orders for costs.  There are three primary limbs raised by him.  The first is that the overall litigation context is of his seeking to set aside various orders on the basis of fraud.  He says that if he is successful in this respect, he should not be required to pay the costs of steps taken in those proceedings even though he may have been unsuccessful in those steps.  The second is that he says that Ms KLD’s conduct generally in litigation with him has been poor.  In this respect he primarily relies on comments made in the child related judgment made in the then Federal Magistrates Court, and in the conduct that he says founds his application to set aside judgments on the basis of fraud. Thirdly, he says that Ms KLD is in a stronger financial position than he and is using that financial position in their litigation in an oppressive manner.

Principles in relation to costs

1. Costs are governed by the operation of s 117 of the Family Law Act 1975 (Cth) which provide a starting point that each party should bear his or her own costs, unless circumstances are established, pursuant to ss 117(2) and (2A) that justify the making of a costs order. In this case it is ss 117(1), (2) and (2A) that have application. Those provisions are in the following terms:

   (1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.

   (2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   (2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (a) the financial circumstances of each of the parties to the proceedings;

   (b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   (e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g) such other matters as the court considers relevant

2. These provisions were dealt with by the High Court in Penfold v Penfold[3] where the plurality said:

   It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in “a clear case”.

   Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v. Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.

   [3]Penfold v Penfold (1980) 144 CLR 311.

3. As noted above, the primary basis put forward by Ms KLD is that Mr SCVG was wholly unsuccessful in each of these applications.  Mr SCVG’s resistance is based not only upon the default position, but also that his overarching case is based upon fraud by Ms KLD which, if made out, he says, should not burden him with any costs.  He also relies on various other aspects of conduct by Ms KLD in other aspects of the litigation and a financial imbalance. 

4. Those other aspects of conduct have little to no bearing upon the current application.  Ms KLD’s conduct before Federal Magistrate Altobelli (as he then was) has no bearing on the current costs issue.

5. The extent of any financial imbalance and the relative financial circumstances of the parties is presently opaque.

6. However, the complete lack of success of Mr SCVG in setting aside a judgment and in pursuing various stays presents as a justification to depart from the default position, although it could not be said that any of the applications were completely unmeritorious.

7. However, as suggested by Mr SCVG, his ultimate success (should he secure it) in setting aside the underlying judgment on the basis of fraud, which forms the bulk of the subject matter of those applications, would be a matter that could bear heavily on the question as to whether he should bear any liability for such costs.  It is an aspect of the conduct of the proceedings by Ms KLD that is not yet established, and unable to be established until the completion of the substantive applications.  Should it be established, it is conduct that bears upon the question of whether a costs order should be made, even in relation to the aspects already dealt with.  That is not to say that it will necessarily determine the outcome, but rather that, at face value, it is an important consideration.

8. That particular issue is sufficient to accede to the position articulated by Mr SCVG that the substantive matter should be the subject of resolution prior to determining costs in relation to these matters, despite Mr SCVG’s lack of success in relation to them.

9. The issue as to costs will be further reserved to the resolution of the substantive case.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 5 February 2020.

Associate: 

Date:  5 February 2020