Sellers & Burns & Anor (No 2)
[2019] FamCAFC 195
•1 November 2019
FAMILY COURT OF AUSTRALIA
| SELLERS & BURNS AND ANOR (NO. 2) | [2019] FamCAFC 195 |
| FAMILY LAW – APPEAL – COSTS – Where the two appeals before the Full Court succeeded on errors of law – Where costs submissions were provided by both parties – Where the husband seeks an order that the wife pay costs on an indemnity basis – Where an order for costs is not appropriate given the circumstances – Costs certificates awarded to both parties for the appeal. |
| Family Law Act 1975 (Cth) ss 117(2A) Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 9 Family Law Rules 2004 (Cth) |
| Burns & Sellers (No. 2) [2017] FamCA 914 Sellers & Burns [2018] FamCA 93 Sellers & Burns (No. 2) (2019) 59 Fam LR 593; [2019] FamCAFC 113 White v Director of Housing [2003] VSC 124 |
| APPELLANT: | Mr Sellers |
| FIRST RESPONDENT: | Ms Burns |
| SECOND RESPONDENT: | Mr Kirk |
| FILE NUMBER: | PAC | 5854 | of | 2016 |
| FIRST APPEAL NUMBER: | EA | 124 | of | 2017 |
| SECOND APPEAL NUMBER: | EA | 45 | of | 2018 |
| DATE DELIVERED: | 1 November 2019 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Alstergren CJ, Ainslie-Wallace & Kent JJ |
| HEARING DATE: | In chambers on written submissions |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 14 November 2017 23 February 2018 |
| LOWER COURT MNC: | [2017] FamCA 914 [2018] FamCA 91 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Richardson SC |
| SOLICITOR FOR THE APPELLANT: | Taperell Rutledge Lawyers |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Schonell SC |
| SOLICITOR FOR THE FIRST RESPONDENT: | Karras Partners Lawyers |
THE SECOND RESPONDENT: | No appearance |
Orders
There be no order as to costs inter partes.
The Court grants to the appellant a costs certificate pursuant to 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 in respect of the costs incurred by him in relation to the appeal.
The Court grants to the first respondent 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 first respondent in respect of the costs incurred by her in relation to the appeal.
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 Sellers & Burns and Anor (No. 2) has been approved by the Chief Justice pursuant to
s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Numbers: EA 124 of 2017; EA 45 of 2018
File Number: PAC 5854 of 2016
| Mr Sellers |
Appellant
And
| Ms Burns |
First Respondent
And
| Mr Kirk |
Second Respondent
REASONS FOR JUDGMENT
On 14 November 2017, a judge of the Family Court of Australia made interim financial orders as between Mr Sellers (“the husband”) and Ms Burns (“the wife”). In brief, those orders provided that the husband pay weekly spouse maintenance to the wife in the sum of $3,250 and that he pay to the wife $150,000 by way of interim property adjustment.
On 23 February 2018, on the husband’s application, the primary judge stayed the spouse maintenance order, on conditions including that the husband pay interim spouse maintenance of $1,850 per week and that he comply with earlier made financial orders. The primary judge refused to stay the order for interim property adjustment.
The husband successfully appealed the interim financial orders which were set aside and the applications for both interim spouse maintenance and interim property adjustment were remitted to a judge for re-hearing.
On 23 February 2018, on the wife’s application, the primary judge restrained the husband’s solicitor, his legal partners and employees from representing the husband in the proceedings. The husband successfully appealed that injunction and his Honour’s orders were set aside.
The Full Court of the Family Court of Australia made orders for the filing of costs submissions and any replies to those submissions.
In relation to both appeals, the husband seeks an order that the wife pay his costs of and incidental to the appeal with such costs to include the costs of the preparation of the costs submissions. The husband seeks that the costs orders be made on an indemnity basis. He further seeks an order that the wife pay his costs, on an indemnity basis, of and incidental to the application to stay the primary judge’s interim financial orders.
In the alternative, the husband seeks those orders to be made on a party and party basis, or, if the Court considers that no order for costs should be made inter partes, then there should be an order for a costs certificate in the husband’s favour pursuant to the Federal Proceedings (Costs) Act1981 (Cth) (“the Costs Act”).
Some aspects of the husband’s submissions on costs clearly only relate to the interim financial proceedings, otherwise, we regard the submissions as being made in relation to both appeals.
The wife opposes the making of any inter partes costs order and contends that there should be no order as to costs. The wife seeks a costs certificate pursuant to the Costs Act with respect to her costs of the appeal.
Orders for costs in family law cases are governed by the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”) which sets out the general principle that each party should pay his or her own costs save where, in the Court’s opinion, the circumstances justify making a costs order. Section 117(2A) of the Act provides the matters to which the Court must have regard in determining whether to make a costs order.
In this case, the husband contends that there are four matters which would dispose the Court to make a costs order against the wife:
1.That the husband’s financial circumstances are inferior to those of the wife (s 117(2A)(a));
2.The wife’s conduct during the appeal (s 117(2A)(c));
3.The wife’s opposition to the appeal was wholly unsuccessful (s 117(2A)(e)); and
4.That the wife rejected an offer of compromise made by the husband (s 117(2A)(f)).
Although the husband’s application is for indemnity costs, it must first be established that there should be a departure from the usual rule in s 117(1).
The financial circumstances of the husband
The husband argued that he had insufficient income to meet his and the children’s financial needs and that his circumstances are considerably inferior to those of the wife.
The financial circumstances of both parties were matters in dispute before the primary judge in the interim financial proceedings and, because of the interim nature of them, were unable to be fully explored at that time. It was uncontentious that the husband’s principal source of income comprised his entitlements under the Sellers Trust (“the Trust”), which had not been valued as at the interim hearing.
The evidence of the accountant for the Trust at the interim financial hearing was that, while in the past the husband had been advanced money, it was unlikely that further advances would be made to him from the Trust. As noted by the primary judge, there had been significant transfers from the Trust to the husband in the past. It was also uncontroversial that very substantial financial support had historically been provided to the Trust by the husband’s father, both personally and via a company controlled by him.
The husband is the sole beneficiary of his mother’s estate which includes a property with an asserted value of $2.5 million. The husband has afforded his late mother’s partner a life interest in that property. It was therefore argued that the property is not realisable in the near future. The wife challenges the grant of the life interest in the substantive proceedings.
It would seem from a combination of the husband’s evidence to the primary judge that he had secured a loan with which he would pay his lawyers and his appeal having been argued by senior counsel and a senior junior counsel, that he has some funds with which he can meet his own legal costs.
The financial circumstances of the wife
Turning then to the comparative position of the wife, the husband points to the fact that she is able to borrow money from her sister to pay her legal fees. That submission, however, falls short of asserting that any costs order made against the wife would be borne by a loan from her sister. Other than the fact that the wife’s sister has advanced money to her in respect of her legal fees in the past, there is no evidence as to whether her sister is still prepared to advance funds to her now. In those circumstances, this Court can make no finding on the submission that the wife’s sister represents a “financial resource” for the wife.
It was also contended that, as found by the primary judge, the wife has a residual earning capacity with which she could ameliorate her financial position by obtaining work. It is to be noted, however, that the wife is presently the primary carer for the parties’ two relatively young children. The extent of her earning capacity falls to be assessed on an examination of the evidence either at the hearing of the remitted proceedings or at trial.
Given the inchoate nature of the financial evidence in relation to both parties, it is difficult to come to the view advanced by the husband that he has insufficient funds to meet his and the children’s financial needs nor that the wife is in a more advantageous position to the husband.
The conduct of the wife
A significant component of the wife’s claim to interim spousal maintenance was the amount of rent being paid by her. In her financial affidavit, the wife claimed $2,256 per week in rental. The primary judge, albeit erroneously, identified her overall claimed expenses to be $3,904 per week.[1] That overall figure was reduced to $3,250 by the primary judge, his Honour concluding that she could obtain a property at a lesser rent and taking into account her residual but unexercised capacity for employment.[2] In the appeal, the wife’s counsel conceded the mathematical error in his Honour’s identification of the wife’s overall weekly expenses and sought that the appeal be allowed in part and the Full Court re-exercise its discretion in that regard. The Full Court said:[3]
88. However, senior counsel for the husband contended that for the purpose of any re-exercise of discretion the husband would seek the opportunity to place further evidence before the Court. Obviously, authority dictates that the parties must be afforded an opportunity to present evidence as to current facts or circumstances for the purpose of any re-exercise of the subject discretion.
89. Senior counsel for the husband specifically referred to the feature that the further evidence the husband would seek to adduce would include the fact that the wife was no longer incurring the rental expense of $2,256 which formed the largest single item in her claimed weekly expenses in the proceedings before the primary judge…
(Footnotes omitted)
[1]Burns & Sellers (No. 2) [2017] FamCA 914 at [137].
[2]Burns & Sellers (No. 2) [2017] FamCA 914 at [137].
[3]Sellers & Burns (No. 2) (2019) 59 Fam LR 593.
In the result, the appeal was allowed on a number of bases and the applications remitted to be reheard, thus no additional evidence was put before the Full Court. It is to this assertion, namely that the wife was not, at the time of the appeal hearing, paying rent in the same amount or at all as she claimed before the primary judge, that formed the basis for the submission that her conduct in the appeal was such that she should bear a costs order.
It was contended that the wife’s conduct of the proceedings both before the primary judge and before the Full Court was “reprehensible” because when she ceased paying rent she did not reveal that to the primary judge and thus conducted the appeal on the footing, in effect, that she needed spouse maintenance to assist in paying the rent and other expenses.
We set out the relevant submission in full:[4]
20. The Applicant submits that the Respondents actions in withholding crucial facts regarding the rent, thereby avoiding her obligation of full and frank disclosure at a time that may have had a significant impact upon His Honour’s reasoning, would allow the Court to be highly critical of the Respondents conduct before the Trial Judge, which influenced his decision the subject of the successful Appeal. Especially where those actions must be viewed against a background where the Applicant was offering an amount that was not too far removed from the amount that may have been awarded by the Primary Judge had he not taken into consideration the fictitious rent figure of $2,256.00.
[4] Husband’s Costs Submissions, filed 24 July 2019.
Whilst the husband’s submissions make the broad assertion that the wife withheld this information from the primary judge, we do not accept that she did. It is tolerably clear that the wife’s lease was terminated from 1 November 2017,[5] a time after the interim financial proceedings before the primary judge. Moreover, it is clear that at least at the time of the hearing of the husband’s application for a stay of the financial orders, 23 February 2018, the primary judge was aware that the wife was no longer liable to pay rent. So much is apparent from [28] of those reasons where his Honour said:[6]
It is noted that the wife’s asserted rental obligation was previously $2,256.00 per week. The wife’s needs were assessed at $3,250.00 per week … but such sum included an allowance of about $1,400.00 per week for rent. She no longer pays rent and lives with her sister.
[5] Notice of Termination attached to the wife’s Costs Submissions, filed 16 August 2019.
[6]Sellers & Burns [2018] FamCA 93.
Thus we do not accept the submission that the wife concealed this information from the primary judge.
Nor do we accept the argument that the wife’s conduct in not directly raising it in the appeal hearing was in some way to be deplored. While it is true that the wife was not then paying rent, the issue of the correctness of his Honour’s order for spouse maintenance rested on the wife’s proof of her reasonable needs. Those reasonable needs are not necessarily dictated by her present circumstances, in this case, living with her sister.
We do not accept that the wife’s conduct during the appeal gives rise to any basis on which a costs order would be made.
Offer to settle
Turning then to the husband’s contention that the wife imprudently failed to accept his offer made on 19 July 2017 that he would pay to her $500 per week interim spouse maintenance and comply with financial orders made on 21 April 2017 subject to the matter being heard “by the end of the first quarter next year”.[7] It was argued that the amount offered was “not too far removed” from the amount claimed by the wife for interim spouse maintenance but for the rental component and the wife ought to have accepted it.[8]
[7] Transcript 19 July 2017, p. 34 lines 12-13.
[8] Husband’s Costs Submissions, filed 24 July 2019 at paragraph 20.
The wife submits that the offer was “illusory” because no hearing date whether in that nominated period or at all had been offered to the parties.[9] Further, it was argued that, in any event, that given the husband failed to meet later ordered payments on which a stay of the interim financial orders was conditioned, it could not safely be assumed that he would have met the terms of his own offer.
[9] Wife’s Costs Submissions, filed 16 August 2019 at paragraph 8.
While there is significant support for this submission in the husband’s later conduct, it cannot be relevant to the question of whether, at a time before his failure to comply with the terms of the stay, the offer made in fact represented a realistic offer.
However, where an offer to compromise is to be relied on in support of an application for costs, its terms must, inter alia; as Gillard J explained at [17] in White v Director of Housing [2003] VSC 124, “be clear, precise, certain and capable of acceptance”. It is immediately apparent that acceptance of the offer rested on a circumstance beyond the control of both the husband and the wife, that is the appointment of a hearing date. There was no evidence that the husband was pressing the Court for a date early in 2018 nor indeed whether there were hearing dates available to hear the matter in that nominated period. On its face, the terms of the offer were incapable of acceptance. We thus reject the contention that in not accepting the husband’s offer the wife was imprudent and the making of the offer carries no weight in the determination of the question of costs.
Wholly unsuccessful
The husband argues that since the appeals were wholly successful and thus the wife’s opposition to them wholly unsuccessful, she should bear his costs of both appeals because it was contended that the wife’s position in opposing the appeals was unreasonable.
It must be clearly understood that in respect of both interim financial orders, the appeals from those orders succeeded by reason of errors of law by the primary judge. The respective applications have been remitted for rehearing. Other than contending that the wife failed to disclose that she was not paying rent (an argument which we have already rejected), the husband points to no conduct by the wife which would require consideration of a costs order against her. That, of itself, need not stand in the way of a costs order, however, in our view, while it might be said that the wife’s opposition to the husband’s appeal against the order restraining his solicitor from continuing to act was, if not unjustified, imprudent, in view of the legal issues raised on the appeal, the same could not be said of her opposition to the appeal against the interim financial orders.
The two appeals were heard together and even if we were satisfied that the wife’s opposition to the injunction appeal was imprudent and might support an order for costs, we are not satisfied that it would be appropriate in those circumstances to make a costs order against the wife.
It follows then that we will make no order as to costs between the parties and there is, thus, no need to consider the question of indemnity costs.
Implicit in this conclusion is our rejection of the husband’s attempt to characterise the wife’s application for an injunction as “vexatious … and for an ulterior motive”.[10] No such submission was made before the primary judge or before us in the substantive appeal. There is no finding to that effect. We are not assisted by submissions that are without proper foundation. The same can be said for the attempt to characterise the wife’s conduct of the litigation as “vindictive”.[11] Whether either party ultimately is regarded as a model litigant is a matter for the trial.
[10] Husband’s Costs Submissions, filed 24 July 2019 at paragraph 3.
[11] Husband’s Costs Submissions, filed 24 July 2019 at paragraph 40.
However, the appeals having both succeeded on a question of law, we are of the view that costs certificates should be ordered in favour of both parties in respect of the appeals. We decline, in the circumstances, to order costs certificates in relation to any rehearing of the interim financial applications.
There having been no appeal from the determination of the primary judge of the application for a stay of the substantive orders, the costs of the stay proceedings are not within this Court’s remit.
I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Alstergren CJ, Ainslie-Wallace & Kent JJ) delivered on 1 November 2019.
Associate:
Date: 1 November 2019
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