Stephens & Stephens (Stay Application)
[2010] FamCAFC 20
•19 February 2010
FAMILY COURT OF AUSTRALIA
| STEPHENS & STEPHENS (Stay Application) | [2010] FamCAFC 20 |
| FAMILY LAW - PROPERTY – STAY APPLICATION – PENDING SPECIAL LEAVE TO APPEAL TO HIGH COURT – Application for stay of orders of the Full Court and the orders of a single judge in the appellate jurisdiction of the Family Court of Australia – Where the mere filing of an application for special leave to appeal to the High Court does not operate as a stay of execution of the orders in respect of which leave to appeal is sought – Whether the circumstances in this case are exceptional FAMILY LAW - STAY APPLICATION – Where the Wife has received the benefit of the judgment and has invested the money into real property – Where it was submitted that there was a real risk that it would not be possible to restore the interested parties to their former position – Whether there was any reasonable prospect of recovery of the moneys paid pursuant to the orders FAMILY LAW - STAY APPLICATION – Circumstances in which the Wife is prepared to give an undertaking to the Court, the effect of which would be to restrain her from dealing with the real property and her investment portfolio – Where it was submitted that there may be a risk that the assets, the subject of the undertaking, would be vulnerable to claims by unspecified unsecured creditors of the Wife – Where the Wife testified that if the appeal succeeded she may have to sell the property – Where the evidence clearly demonstrates that the Wife currently has more than adequate assets to support the undertaking – Where the court is not persuaded that there is evidence that the Wife is a spendthrift or that she would dissipate her assets such that we could infer that she would take steps to put at risk her financial position by incurring significant unsecured liabilities – Application dismissed provided the Wife files in court an undertaking in the terms described FAMILY LAW - STAY APPLICATION – Stay of orders of a single judge of the appellate jurisdiction – Where the Order provided that the stakeholders invest a sum of money as trustees for the parties pending quantification and/or determination of the Husband’s liability for costs pursuant to orders made in various courts – Where no submission were made regarding the dissipation of this money by either the Wife or the Husband before the outcome of the special leave application – Application dismissed provided the Wife files in court an undertaking that no amount be disbursed from that portion of money held by the stakeholders FAMILY LAW - STAY APPLICATION – Stay of orders of the Full Court providing for written submissions regarding costs – Where the Husband did not file written submissions as to costs as the orders required – Where the Husband submitted that a determination of any application for costs of the appeal proceedings should await the outcome of the application for special leave to appeal to the High Court – Where disputes over costs must not be allowed to develop into a sort of satellite litigation – Where the court granted an indulgence to the Husband by extending the time to file submissions – Application dismissed FAMILY LAW - COSTS – STAY APPLICATION – Hearing on 9 February 2010 – Where the Wife was put on notice that a stay application would be made in the event their application was successful and that costs would follow – Where the Husband submitted that if the court accepted the undertaking proposed by the Wife during the hearing that the Wife should pay costs – s117(1) – No order as to costs FAMILY LAW - COSTS – STAY APPLICATION – Hearing on 12 February 2010 – Where the Wife has established justifying circumstances – Where the Husband did not comply with the Order by the court to file submissions – Where the Husband had the opportunity to seek an extension to file submissions but sought not to – Husband to pay the costs of the Wife |
| Australian Federation of Consumer Organisations Incorporated v Tobacco Institute of Australia Ltd (No. 2) (1991) 30 FCR 548 Buller Ski Lifts Ltd v Mt Buller Alpine Resort Management Board [2000] VSCA 31 Bryant v Commonwealth Bank of Australia and Another (1996) 134 ALR 460 De Lewinski v Director General, NSW Department of Community Services (1996) 70 ALJR 532 Edelsten v Ward [No. 2] (1988) 63 ALJR 346 Fauna Holdings Pty Ltd and McGillivray v Mitchell (2000) FLC 93-024 Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania) v Fish and Another (2005) 33 Fam LR 123 Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No. 1] (1986) 161 CLR 681 Kennon v Spry (2008) 238 CLR 366 O’Rourke v P & B Corporation Pty Ltd [2008] WASC 36(S) Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 2) (1998) 72 ALJR 869 Tate and Tate (No 4) (2003) FLC 93-139 The Commissioner of Taxation of the Commonwealth of Australia v The Myer Emporium Ltd [No. 1] (1986) 160 CLR 220 |
| Family Law Act 1975 (Cth) |
| APPELLANT: | MR STEPHENS |
| RESPONDENT: | MS STEPHENS |
| FILE NUMBER: | MLC | 788 | of | 2009 |
| APPEAL NUMBER: | SA SA | 23 24 | of of | 2009 2009 |
| DATE DELIVERED: | 19 February 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Melbourne via video link with Brisbane & Sydney |
| JUDGMENT OF: | May, Boland & O'Ryan JJ |
| HEARING DATE: | 9 and 16 February 2010 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 24 December 2009 |
| LOWER COURT MNC: | [2009] FamCAFC 240 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr S.C. Smith |
| SOLICITOR FOR THE APPLICANT: | Nedovic & Co |
| COUNSEL FOR THE RESPONDENT: | Mr N.J. Ackman QC with Ms K.M. MacMillan SC |
| SOLICITOR FOR THE RESPONDENT: | Kennedy Wisewoulds, Lawyers |
Orders
The First Respondent file and serve within seven days of the date of these orders an undertaking to the Family Court of Australia which should provide that pending the determination of the application for special leave to appeal to the High Court of Australia filed on 21 January 2010 and any consequent appeal if special leave is granted:
(a)the First Respondent be restrained from transferring, assigning, encumbering by mortgage or charge or otherwise or in any way dealing with her interest in the property situate and known as [suburb B] and further shall not similarly deal with the shares and cash at bank referred to in paragraph 30 of her affidavit of 4 February 2010 such as to cause such shares and cash at bank to have a value of less than $200,000.00.
(b)the First Respondent be restrained from executing any deed, document, instrument or writing or doing any act or thing to cause any portion of the amount of $500,000.00 referred to in order 3 made on 10 March 2009 to be paid by the stakeholders in satisfaction of any orders for costs.
It be noted that the title of the property at [suburb B] is in the sole name of the First Respondent and is unencumbered.
The Application in a Case filed by [the Husband] on 2 February 2010 be dismissed.
The Application in paragraph 2 (costs) of the Response filed on behalf of the First Respondent on 5 February 2010 be dismissed.
In relation to the costs of the proceedings concluded by judgment on
24 December 2009:
(a)[The Husband] be at liberty to make an application by way of written submissions in respect of costs incurred in relation to the applications by him to extend the time to file an application for leave to appeal; the appeal by him and the cross-appeal by the Wife by filing such submissions at the Southern Region Appeal Registry of the Family Court of Australia and serving them on the other parties within 21 days of the date hereof.
(b)Each other party have a further 14 days in which to make written submissions in answer thereto by filing such submissions at the Southern Region Appeal Registry of the Family Court of Australia and serving them on the other parties.
(c)Each party endorse on the cover sheet of any submissions filed pursuant to orders 5(a) and (b) the date upon which a copy of that submission was served on the other parties.
IT IS NOTED that the First Respondent filed her written submissions on costs on 21 January 2010 in accordance with the orders of the Full Court made
24 December 2009.
[The Husband] and the [Stephens Trust] pay the costs of the First Respondent of and incidental to the Application in an Appeal filed on 12 February 2010 and the hearing of the said application on 16 February 2010.
The costs referred to in order 6 hereof be in an amount as agreed in writing between [the Husband] in his personal capacity and as trustee of the [Stephens Trust] and the First Respondent within 21 days of the date of these orders and failing such agreement as assessed by a taxing officer on a party and party basis.
IT IS NOTED that publication of this judgment under the pseudonym Stephens & Stephens (Stay Application) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SA 23 & 24 of 2009
File Number: MLC 788 of 2009
| MR STEPHENS |
Appellant
And
| MS STEPHENS |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
Before us for hearing is an Application in a Case filed by Mr Stephens (“the Husband”) on 2 February 2010 in which he seeks the following:
1. An order staying the operation or enforcement of paragraphs 1 to 4 and 6 to 9 of the Orders of the Honourable Justice Coleman made in this matter on 10 March 2009, pending determination of the special leave application filed with the High Court on 21 January 2010 and of any consequent appeal if special leave is granted, and that for this purpose the First Respondent be required to repay to the stakeholders any moneys paid to her pursuant to the said Orders.
2. The applicant seeks an Order that the costs of and incidental to this application be reserved.
The First Respondent is Ms Stephens (“the Wife”).
On 5 February 2010 a Response was filed by the Wife in which she seeks:
1. That the husband’s application filed 2 February 2010 be dismissed.
2. That the husband pay the wife’s costs of and incidental to the application on an indemnity basis.
3. Such further and other orders as the Court deems appropriate.
In support of his application the Husband relied upon his affidavit sworn
2 February 2010 and his affidavit in reply sworn 8 February 2010. The Wife relied upon her affidavit sworn 4 February 2010.
There is also before us an Application in an Appeal filed on 12 February 2010 on behalf of the Husband in which he seeks the following:
1. That further or alternatively to the orders sought in the stay application by the applicant heard on 9 February 2010:
(a)orders 6, 7 and 8 of the order of Justice Coleman made on 10 March 2009 be amended so that the time limits therein set out take effect, not from the date of that order, but from the date of determination of the application to the High Court for special leave to appeal (or if special leave is granted, until the determination of the appeal); and
(b)order 13 of the order of the Full Court made on 24 December 2009 be amended so that the period of 28 days therein referred to be calculated to commence from the date of determination of the application to the High Court for special leave to appeal (or if special leave is granted, until the determination of the appeal).
2. Such other order or orders as to the Court appears appropriate.
3. That the costs of and incidental to this application be reserved.
The Court is not requested to deal with this application in the absence of the parties in accordance with Part 5.4.
This application is supported by an affidavit sworn by the Husband on
12 February 2010. The Wife seeks that the application be dismissed.
On 10 March 2009 Coleman J made the following orders:
(1) That Kennedy Wisewoulds solicitors (the stakeholders) forthwith pay to the wife from moneys held by the stakeholders pursuant to orders of the Court of 1 February 2009 the sum of $996 362.18 being the balance of moneys owed by the husband to the wife pursuant to the orders of the Court of 30 November 2005
(2) That the stakeholders do forthwith further pay from the moneys held by them the sum of $500 647.98 by way of interest payable on moneys owed by the husband to the wife pursuant to orders of the Court of 30 November 2005
(3) That the stakeholders invest the sum of $500 000 of the moneys held by them pursuant to orders of this Court on 1 February 2009 in an interest bearing account as trustees for the parties pending quantification and/or determination of
(a)The husband’s liability for costs pursuant to orders made by the High Court of Australia on 3 December 2008
(b)The husband’s liability for costs pursuant to orders made of the Full Court of the Family Court of Australia on 13 July 2007
(c)Any costs ordered by Strickland J with respect to the proceedings determined by him on 30 November 2005
(4) That the stakeholders pay the balance of the moneys held by them after payment and/or investment of the moneys referred to in orders 1, 2 and 3 hereof to the husband or such entity or entities as the husband shall within 48 hours of these orders specify in writing to the stakeholders
(5) That order 4 of the orders made by Watts J on 1 February 2009 be and is hereby discharged
(6) That written submissions in support of any application for costs of the wife’s application filed 2 February 2009 be filed and served within 21 days
(7) That written submissions in opposition to any such submissions be filed and served within 35 days
(8) That written submissions in reply be filed and served within 42 days
(9) That the wife’s application filed 2 February 2009 and the husband’s response filed 13 February 2009 be otherwise dismissed
On 16 February 2010 during a hearing of the application filed on 12 February 2010 by the Husband, we were informed, and it is not controversial, that in respect of order 3 of 10 March 2009 orders for costs were made by the High Court on 3 December 2008 and the Full Court on 13 July 2007 however the quantum of the costs has not yet been determined. We were also told that with respect to the proceedings determined by Strickland J on 30 November 2005 there are outstanding costs proceedings and any liability pursuant to s 117 of the Family Law Act 1975 (Cth) (“the Act”) has yet to be considered. We were also told that an application was made by the Husband that Strickland J be disqualified from hearing any costs applications and that his Honour has reserved his judgment.
On 24 December 2009 we made the following orders:
1. The appeal by the Husband be dismissed.
2. The cross-appeal by the Wife be allowed
3. Order 2 made by Coleman J on 10 March 2009 be set aside.
4. The Husband forthwith pay to the Wife such sum as represents interest calculated in accordance with r 17.03 of the Family Law Rules 2004 payable on moneys owed by the Husband to the Wife pursuant to the order of the Court of 30 November 2005.
5. It be noted that in the event that sufficient funds are still retained by the Kennedy Wisewoulds, Solicitors (the stakeholders) that the Husband’s obligation to the Wife pursuant to Order 4 hereof may be satisfied from that source.
6. It be noted that the amount to be paid pursuant to Order 4 hereof is after allowance for any amounts paid pursuant to Order 2 made by Coleman J on 10 March 2009.
7. The application by the Husband to extend the time to file an application for leave to appeal against the orders made by Watts J on 1 February 2009 be dismissed.
8. The application by the Husband to extend the time to file an application for leave to appeal against the orders made by Cronin J on 2 February 2009 be dismissed.
9. The application by the Husband filed on 30 March 2009 for leave to adduce further evidence be dismissed.
10. The application by the Husband filed on 9 November 2008 for leave to adduce further evidence be dismissed.
11. The oral application of the Husband made on 4 December 2009 seeking to reopen the hearing of the appeal be dismissed.
12. The application by the Wife filed on 21 May 2009 for leave to adduce further evidence be granted and the Wife have leave to adduce further evidence.
13. Each party be at liberty to make an application by way of written submissions in respect of costs incurred in relation to the applications by the Husband to extend the time to file an application for leave to appeal; the appeal by the Husband and the cross-appeal by the Wife by filing such submissions at the Southern Region Appeal Registry of the Family Court of Australia and serving them on the other parties within 28 days of the date hereof.
14. Each party have a further 14 days in which to make written submissions in answer thereto by filing such submissions at the Southern Region Appeal Registry of the Family Court of Australia and serving them on the other parties.
15. Each party be at liberty to reply to an answer by way of written submissions by filing such reply at the Southern Region Appeal Registry of the Family Court of Australia and serving it on the other parties within a further seven days.
16. Each party endorse on the cover sheet of any submissions filed pursuant to orders 13, 14 and 15, the date upon which a copy of that submission was served on the other parties.
On 24 December 2009, in consequence of our judgment, the stakeholders paid $1,516,525.80 to the Wife which included the amount due to her pursuant to orders 1 and 2 made on 10 March 2009.
During the hearing before us on 9 February 2010 the Husband sought to amend his application to seek a stay of orders 1, 3 and 6 to 9 of the orders made by Coleman J on 10 March 2009 and order 4 made by the Full Court on
24 December 2009. These amendments were sought in consequence of discussions during the hearing on 9 February 2010 and the application was not opposed. However, during the hearing the Husband also sought a stay of orders 13 and 14 made on 24 December 2009 and this was opposed by the Wife.
The amendment was necessary for a number of reasons. Order 4 of the orders of 10 March 2009 provided for the payment of money by the stakeholders to the Husband and this happened on 6 April 2009 and the money has now been disbursed. The Husband was not suggesting that he should repay the money to the stakeholders or the Stephens Trust.
In the application filed by the Husband on 2 February 2010 he is the only named applicant. The Wife is named as the First Respondent. W Stephens is the Second Respondent. X Stephens is the Third Respondent. Y Stephens is the Fourth Respondent. Z Stephens is the Fifth Respondent. There are no other parties named in the application.
We observe that there was no appearance before us by any of W Stephens, X Stephens, Y Stephens and Z Stephens. We were not informed if they were served with the application.
However, in the application for special leave to appeal to the High Court the applicant is the Husband in both his personal capacity and in his capacity as trustee of the Stephens Trust. Attached to the application is a schedule of parties and the Wife and each of the four adult children are named as respondents. However, there is also included as the Sixth Respondent the Husband and Mr J as trustees of the X Stephens Trust, the Y Stephens Trust and the Z Stephens Trust and the Husband as trustee of the W Stephens Trust.
When the hearing commenced on 9 February 2010 Mr S.C. Smith of counsel announced his appearance on behalf of the Husband. The Husband also appeared and he announced an appearance on behalf of “the Children’s Trusts”. In the reasons for judgment of French CJ he referred to the W Stephens Trust, the X Stephens Trust, the Y Stephens Trust and the Z Stephens Trust as “the Children’s Trusts”: see Kennon v Spry (2008) 238 CLR 366 at [2]. We assume that when the Husband announced his appearance he was referring to each of these four trusts. We also observe that no appearance was announced on behalf the Husband as trustee of the Stephens Trust.
At the hearing of the appeal in May 2009 there was an issue about who should be parties to the proceedings. In our reasons for judgment of 24 December 2009 we said at [334] that we did not accept that the trustee of the X Stephens Trust, the Y Stephens Trust and the Z Stephens Trust and the trustee of the W Stephens Trust “have any interest in the proceedings”. We did however accept that the trustee of the Stephens Trust had “an interest in the proceedings because it is from the reconstituted assets of that trust that funds were paid to the Wife”.
During the hearing on 9 February 2010 we raised for discussion the observation that neither the Husband as trustee of the Stephens Trust nor the Husband as trustee of the W Stephens Trust nor Mr J and the Husband as joint trustees of the X Stephens Trust, the Y Stephens Trust and the Z Stephens Trust were parties to the application for a stay. This was notwithstanding that there was an appearance before us by counsel for the Husband in his personal capacity and an appearance by the Husband on behalf of “the Children’s Trusts”. Counsel for the Husband said:
Yes your Honour. It is a point that I did consider early this morning and your Honour, if the issue was raised, my instructions were that I would also be acting on behalf of the [StephensTrust]. But it’s a case where I’m presently instructed to act on behalf of [the Husband], and he’s acting on behalf of the children’s trust. The application was just in the name of [the Husband], but it was really only stated as such in a representative capacity of all the possible relevant parties and their interests. I wasn’t involved in identifying the parties to this application, your Honour. but in my submission, the court shouldn’t take a narrow view of the interests that would pertain only to [the Husband] personally for the purposes of this application, that the wider group of parties, particularly in light of the application to the High Court that’s been exhibited to [the Husband]’s affidavit, really seek relief to a substantial degree for the benefit of the beneficiaries of the trusts. And in that regard it’s submitted that the court should have regard to those interests in the exercise of the court’s discretion in whether or not the court would grant the stay that has been sought. (Transcript, 9 February 2010, p 29)
In our reasons for judgment delivered on 24 December 2009 we adverted to difficulties experienced from time to time in relation to the identity of the parties to proceedings. These difficulties have practical consequences. For example, the Husband in his personal capacity is only affected by order 4 made on
24 December 2009. If the application for special leave to appeal does not succeed or the application succeeds but the appeal is dismissed, then the Husband would have to pay an amount of $239,462.48 to the Wife, being a shortfall of interest which we will later explain. However, if what the Husband contended during the hearing of the appeal was the extent of his financial circumstances, then the amount due will probably never be paid. These are matters which may be relevant to consider when exercising the discretion to grant a stay.
On the other hand, we accept that the entity that does have an interest in the proceedings is the Stephens Trust. If the application for special leave to appeal is successful, and so also the appeal, then any amounts that had to be repaid by the Wife would be the property of this trust. However, we also observe that the Husband contends that if the application for special leave to appeal does not succeed or the application does succeed but the appeal is dismissed, then the Stephens Trust would also not have the resources to enable payment of an amount of $239,462.48 to the Wife.
No submissions were made in relation to the separate interests of the Husband and the Stephens Trust. Notwithstanding this unsatisfactory situation, we shall proceed on the basis that the application for a stay is being made by the Husband in his personal capacity and also in his capacity as trustee of the Stephens Trust and the submissions made on behalf of the Husband were also made on behalf of this trust.
During the course of the hearing before us on 9 February 2010, after discussion with senior counsel for the Wife, there was filed in Court a form of undertaking on behalf of the Wife in the following terms:
1. Not to encumber, dispose of or otherwise deal with the property at [suburb B];
2. Not to dispose of $200,000.00 of the cash monies/investments presently held by me.
For reasons we will shortly explain, the Husband (and also perhaps the Husband as trustee of the Stephens Trust) does not accept the adequacy of this undertaking. The submissions before us were largely confined to whether an order should be made as sought by the Husband that the amount paid to the Wife on 24 December 2009 be repaid by her to the stakeholders, or if we simply accept the undertaking proposed by the Wife.
BACKGROUND
In her affidavit sworn 4 February 2010 the Wife contended that since the separation of the Husband and the Wife in October 2001 to date, her financial position has been uncertain and difficult. The Wife gave evidence that at the time of separation she owned shares worth $624,000.00 and also a home in suburb A.
In April 2002 proceedings were commenced in the Family Court when the Wife filed an application for final orders for property settlement and spouse maintenance.
In late 2002 the Wife sold the home at suburb A and from the proceeds of sale received $960,000.00 which she invested largely in shares giving her a total share portfolio of $1.55 million.
From early 2003, after settlement of the sale of the home at suburb A, the Wife lived in rented accommodation. She contended that this was due to her need to have substantial moneys readily available to fund the ongoing litigation.
In 2004 the Wife took out a margin lending loan, initially in the sum of $1 million, primarily to enable her to access moneys to pay her legal expenses without having to sell income producing shares. The dividends that the Wife was receiving from her shares largely funded her living expenses and also paid some of the interest on the margin lending loan.
After considerable delay, largely due to the number of interlocutory applications required, including an application by the Husband that the children of the marriage be joined as parties, the matter came on for hearing before Strickland J in July 2005.
On 30 November 2005 Strickland J pronounced judgment on the final orders applications and made orders pursuant to s 106B of the Act and an order pursuant to s 79 of the Act. The order pursuant to s 79 included a provision (paragraph 4 of the orders) that on or before 28 February 2006 the Husband pay to the Wife an amount of money being the sum of $2,034,362.00 as corrected. The Husband appealed these orders. The payment of this amount was the subject of a stay which was later extended by consent, pending appeals to the Full Court and then to the High Court.
Pursuant to the property settlement order made on 30 November 2005 the Wife retained assets then valued at $2,530,466.00. Of this an amount of $300,000.00 was notional, being legal fees that she had paid which were added back to the asset pool. In summary, the Wife had net assets of $2,230,466.00, the bulk of which comprised shares.
In 2006 the Full Court of the Family Court heard the appeal against the orders of Strickland J and dismissed the appeal. The High Court then granted special leave to appeal against the orders of the Full Court and on 3 December 2008 dismissed the appeal.
As a consequence of the dismissal by the High Court of the appeals, the Husband still had the obligation to pay $2,034,362.00 to the Wife as part of her property settlement entitlement and interest on that amount at the rate prescribed by the Family Law Rules 2004 (“the Rules”).
The Wife testified that “[b]y the time of the High Court judgment, on
3 December 2008 [she] had spent in excess of $655,000.00 on legal fees and disbursements”. The Wife had used the margin lending loan to pay her legal expenses and also to supplement her living expenses and to contribute to the expenses for the children such as weddings and birthdays. The Wife also contended that “by that time the stock market had crashed, and [her] shares substantially diminished in value”. The Wife had also been required to sell shares to meet margin calls and she contended that she only had a net equity of about $350,000.00 after taking into account the margin lending loan that was then $900,000.00.
The Wife testified that when judgment was pronounced by the High Court in December 2008 she began to make plans to buy a home once she received the monies that were due to be paid to her.
On 1 February 2009 the Wife entered the Husband’s home and removed the sum of $4.42 million in cash. Pursuant to orders made ex parte on 1 February 2009, and varied on 2 February 2009 to permit the moneys to be banked, the moneys the Wife removed from the Husband’s home were thereafter held by the Wife’s solicitors as stakeholders.
An application for enforcement was then brought by the Wife which came before Coleman J in February 2009. The proceedings were for the enforcement of that part of the property settlement order made by Strickland J that required the Husband pay $2,034,362.00 to the Wife together with interest in accordance with s 117B(1) of the Act. Essentially, the enforcement proceedings concerned efforts by the Wife to recover the amounts due and whether such amounts could be satisfied from the assets of the Stephens Trust.
The proceedings came on for hearing before Coleman J on 17 and 18 February 2009.
On 17 February 2009 the Husband handed to the Wife’s solicitor a letter assigning to the Wife the sum of $1,038,000.00 from the moneys held by the solicitors in part satisfaction of his obligation to the Wife pursuant to the property settlement order. At the same time the Wife consented to release the sum of $50,000.00 to the Husband. There remained an obligation of the Husband to pay $996,362.18 plus interest. The Wife was also seeking an amount for costs.
In relation to the amount of $1,038,000.00 received by the Wife she retained $938,000.00 with $100,000.00 being retained by her solicitors to cover legal fees and disbursements. The Wife said that the full amount of $100,000.00 was subsequently billed to her for legal fees and disbursements, covering the ex parte applications and subsequent proceedings before Coleman J and she did not receive any part of these moneys.
On 10 March 2009 Coleman J delivered reasons and made the orders we have earlier set out. In summary, pursuant to the judgment pronounced on 10 March 2009 and as amended by the slip rule later that day, the Wife was entitled to receive payment from the monies invested of the sum of $996,362.18 and interest of $500,647.98 being a total of $1,497,010.16. The sum of $500,000.00 was ordered to be invested and held pending determination of costs applications. On 10 March 2009 pursuant to the orders of Coleman J the Wife received the sum of $1,497,010.16.
The Wife testified that in March 2009, after judgment was pronounced by Coleman J, she again started to look to buy a home.
On 27 March 2009 a Notice of Appeal was filed against the orders of 10 March 2009. The Wife subsequently filed a cross-appeal.
On the same day the Husband made an application for a stay of the orders of
10 March 2009 for the payments to the Wife and this application came before Coleman J on 2 April 2009.
On 2 April 2009 Coleman J noted that the appeal would be listed for an expedited hearing before the Full Court on 8 May 2009 and thus any delay in payment would be limited. Accordingly his Honour made the following orders:
1. That Orders 1 and 2 of 10 March 2009 be stayed until 4 pm on 8 May 2009 or further order of the Full Court.
2. That Orders 6 – 9 inclusive of 10 March 2009 be stayed until 4 pm on 8 May 2009 or further order of the Full Court.
3. That the costs of this Stay Application filed by [the Husband] on 27 March 2009 be reserved to the Full Court hearing [the Husband]’s Appeal on 8 May 2009.
We observe that his Honour ordered a stay of orders requiring the filing of submissions as to costs.
On 2 April 2009 Coleman J also noted that the Wife repaid the money that she had received. The Wife did this and thereafter the moneys were again invested by her solicitors.
On 6 April 2009 the sum of $1,345,219.84 being the balance of moneys required to be paid to the Husband by order 4 of the orders of 10 March 2009 was paid to him. On 2 April 2009 Coleman J did not order a stay of this order. The Husband has since disposed of these moneys.
The appeal was heard by the Full Court on 7 and 8 May 2009 and at the conclusion of the hearing judgment was reserved.
On 8 May 2009 the Husband sought the Wife’s consent to a continuation of the stay of the orders of 10 March 2009 and the Wife agreed to the stay being extended until judgment was handed down by the Full Court.
In June 2009 the Wife used the bulk of the amount of $938,000.00 that she received from the Husband in February 2009 “to pay down” the margin lending loan.
In July 2009 the Wife received notice that the townhouse she had been renting for six and a half years was to be sold and that she would have to vacate the property. This meant that the Wife would have to find another rental property and possibly sign another 12 month lease. The Wife decided to locate a property to purchase as she had sufficient funds remaining to pay a deposit.
The Wife testified that she located a property at suburb B (“the suburb B property”) and decided to proceed with the purchase effectively borrowing the full purchase price, minus the deposit, pending the receipt by her of the judgment sum and interest. The Wife took the view that if the appeal was upheld then she would have to sell the property.
On 12 September 2009 the Wife entered into a contract to buy the suburb B property for $1.29 million with settlement occurring on 11 December 2009. The Wife borrowed the amount of $1,096,500.00 from Westpac Banking Corporation to enable her to complete the purchase.
On 23 December 2009 the Husband wrote a letter that was hand delivered on
24 December 2009 at 8:50am to the solicitors for the Wife. In the letter the Husband said “we understand” that judgment of the Full Court will be handed down at 11:00am on 24 December 2009 and advised that, “[i]f the order is in favour of [the Wife] as to the whole or alternatively as to any part of the moneys in dispute we shall make an application to the High Court for special leave to appeal. We request that meanwhile none of the moneys be disbursed to or for the benefit of [the Wife], and a stay will be sought”.
On 24 December 2009 the Full Court pronounced judgment and delivered reasons in relation to the appeal by the Husband and others from the orders made by Coleman J.
At the time of the pronouncement of judgment by the Full Court and the delivery of reasons no application was made for a stay of the orders. This was in circumstances where the Husband clearly intended to make an application to the High Court for special leave to appeal, and also make an application for a stay of the judgment of the Full Court. The Husband was also aware that previously, after the orders of 10 March 2009, moneys due to the Wife were forthwith paid to her by the stakeholders.
In consequence of the dismissal of the Husband’s appeal the Wife became entitled to the payment of $996,362.18. The Wife’s cross-appeal for additional interest in accordance with the Rules was allowed and she therefore became entitled not only to interest of $500,647.98 as ordered by Coleman J, but additional interest at the rate required under the Rules, which the Wife’s solicitors calculated to 24 December 2009 to be $258,978.12. An order was made by the Full Court that the payment be made to the Wife out of the moneys held by the solicitors insofar as this was possible. In summary, the Wife was entitled to receive a total of $1,755,988.28 ($996,362.18 + $759,626.10 = $1,755,988.28) which included interest of $759,626.10 ($500,647.98 + $258,978.12 = $759,626.10).
On 24 December 2009 the Wife received payment from the solicitors of $1,516,525.80 being $1,497,010.16 that had been invested, plus interest of $19,515.64. In her affidavit of 4 February 2010 the Wife deposed that interest of $16,950.00 was withheld by the bank as the Husband had failed to provide his tax file number to the bank despite requests to do so. As the Husband refused to provide his tax file number, interest on the invested moneys was required to be withheld by the bank at the rate of 48.5 per cent. The Wife contends that there is a shortfall of the interest due to her of $239,462.48 ($1,755,988.28 less $1,516,525.80 = $239,462.48) and this money remains owing to her by the Husband. This amount of $239,462.48 can be paid from the assets of the Stephens Trust. There does however remain invested the sum of $500,000.00 on account of costs. We observe that in the affidavit of the Wife sworn 4 February 2010 the shortfall was calculated to be the sum of $239,462.40, however, the correct figure is in fact $239,462.48.
In our view, it is the amount of $239,462.48 which is the only interest the Husband has in the proceedings in his personal capacity. As we have already observed if the Husband’s previous contentions as to his financial circumstances are correct then the amount will never be paid by him. We also observe that if the Husband’s previous contentions as to the assets of the Stephens Trust are correct then the amount will never be paid by this trust.
When the Wife received the sum of $1,516,525.80 she used $1,096,893.12 to discharge the mortgage secured over the suburb B property and otherwise invested the balance of $419,632.68 in a high interest bank account.
By letter dated 6 January 2010 the Husband wrote to the solicitors for the Wife and advised that an application for special leave to appeal would be filed and then “a formal stay” would be sought until the determination of the application.
On 21 January 2010 written submissions as to costs were filed on behalf of the Wife pursuant to Order 13 made on 24 December 2009. The Wife is seeking an order that the Husband pay her costs of and incidental to the Husband’s Notice of Appeal filed 27 March 2009; the Husband’s application for a stay filed
27 March 2009; the Husband’s application filed 27 March 2009 to extend the time to file an application for leave to appeal against the orders Watts J made on 1 February 2009 and to extend the time to file an application for leave to appeal against the orders of Cronin J made 2 February 2009; the Husband’s application to adduce further evidence filed 30 March 2009; the Husband’s application to adduce further evidence filed 9 November 2009; the Husband’s oral application made 4 December 2009 seeking to reopen the hearing of the appeal; the Wife’s cross-appeal filed 9 April 2009; the Wife’s application for leave to adduce further evidence filed 22 May 2009; and the Wife’s submissions with respect to costs. The Wife seeks payment of her costs on an indemnity basis or in the alternative on a party and party basis. The Wife also seeks that the costs be paid from the funds held by the stakeholders on account of costs pursuant to order 3 of the orders made on 10 March 2009.
On 21 January 2010 the Husband filed an Application for Special Leave to Appeal to the High Court. The Husband is seeking special leave to appeal from orders 1, 2, 4, 5, 6, 9 and 10 of the judgment pronounced on 24 December 2009. The ‘Grounds’ set out in the application commence from paragraph 2 and are as follows:
2. The Full Court erred in affirming the finding of the primary Judge that the moneys held by Kennedy Wisewoulds, Solicitors, pursuant to the orders of the Family Court of Australia (‘the Court’) of 1 February 2009 and sought by the first respondent (‘the wife’) in her application to the Court of 2 February 2009 were, on the balance of probabilities, the property of the applicant personally. (‘the husband’)
3. The Full Court erred in affirming the holding of the primary Judge that, in the circumstances, the husband bore the onus of showing that the moneys were not his personally.
4. The Full Court erred in holding that, if the moneys or part of them were property of the [Stephens Trust] (‘the Trust’), the Court had the power to order:
(a)the husband to pay such moneys to the wife as moneys owed by him to her pursuant to the orders of the Court of 30 November 2005; or
(b)that property of the Trust be held for the purpose of satisfying orders for costs in favour of the first respondent against the applicant personally in the proceedings in the Court and in this Court.
5. To the extent that the Full Court relied on s79 of Part VIIIAA of the Family Law Act 1975, the Full Court erred in so doing because:
(a)moneys that were property of the Trust or the second, third, fourth or fifth respondents (‘the children of the marriage’) were not property of the parties to the marriage or either of them within the meaning of ss4 and 79 of the Act; and
(b)the Full Court failed to consider any of the matter referred to in ss90AE(3)(e) or 90AF(3)(f) of the Act.
6. In refusing the husband leave to adduce further evidence, the Full Court erred in failing to give weight or due weight to the interests of the children of the marriage or the objects of the Trust including third parties other than the respondents, or the risk that the proceedings would miscarry in the absence of such further evidence.
7. The Full Court erred in holding that the primary Judge, not having been the judge who made the orders of 30 November 2005, did not have power to make orders under s117B(2) of the Act.
8. The Full Court erred in holding that the primary Judge had not applied appropriate criteria in determining the interest rate payable pursuant to s117B(2) of the Act and in holding that there was any basis for setting aside his exercise of discretion in that regard.
In the event that special leave is granted and the appeal is successful the Husband seeks the following:
9. Appeal be allowed with costs.
10. The orders of the Full Court of the Family Court of Australia made on 24 December 2009 appealed from be set aside, and in lieu thereof it be ordered:
(a)That the appeal of the appellant made in his personal capacity against orders of the primary Judge be allowed with costs and the cross-appeal of the first respondent against order 2 of the primary Judge be dismissed with costs.
(b)That orders 1, 2, 3, 6, 7 and 8 of the orders of the primary Judge be set aside.
(c)That the applications made by the appellant in his personal capacity filed on 30 March 2009 and 9 November 2008 [sic] for leave to adduce further evidence be allowed.
(d)That Kennedy Wisewoulds, Solicitors, pay $500,000 invested by them pursuant to order (3) of the primary Judge made 10 March 2009 and interest accrued thereon to the applicant in his capacity as Trustee of the Trust.
(e)That Kennedy Wisewoulds, Solicitors, from the funds referred to in order 1 of the orders of this Court made 2 February 2009 and interest accrued thereon, pay the sum of $238,815.16 (being the difference between $738,815.16 and the amount paid pursuant to (d) hereof) to the appellant as Trustee of the Trust, and pay $356,999 to the second respondent, $324,116 to the third respondent, $307,948 to the fourth respondent and $269,132 to the fifth respondent, and that, to the extent that such funds are insufficient, that the first respondent pay such sums.
(f)Alternatively to (e), that Kennedy Wisewoulds, Solicitors, from the funds referred to in order 1 of the orders of this Court made 2 February 2009, pay the sum of $1,497,010 to the appellant in his capacity as Trustee of the Trust, and that, to the extent that such funds are insufficient, that the first respondent pay such sum.
(g)That interest accrued on the funds and not already paid to the first respondent, be apportioned amongst and paid to the recipients of all sums payable pursuant to (e) by Kennedy Wisewoulds, Solicitors, and that the first respondent pay interest on all sums payable by her pursuant to (e) from the time she received such sums at a rate (‘the said rate’) which is 2 per cent in excess of the rate from time to time prescribed by the Reserve Bank of Australia as the cash rate.
(h)Alternatively, that interest accrued on the funds be paid to the appellant in his capacity as Trustee of the Trust of all sums payable pursuant to (f) by Kennedy Wisewoulds, Solicitors, and that the first respondent pay interest on all sums payable by her pursuant to (f) from the time she received such sums at the said rate.
(i)That interest payable on moneys owed by the appellant to the first respondent pursuant to the orders of the Court of 30 November 2005 be payable only from 1 September 2008 and at the said rate.
11. Such further or other order as to the Court may seem [sic] proper.
By letter dated 22 January 2010 the solicitors for the Husband wrote to the solicitors for the Wife requesting confirmation that the Wife agreed to a continuation of the stay until the determination of the special leave application.
By letter dated 29 January 2010 the Husband as trustee of the Stephens Trust wrote to the solicitors for the Wife. The Husband said that there had not been a response “to letters re the stay” and contended that “[t]his question affects the contents of the draft notice of appeal, and if an appropriate order were not granted by a judge a further appeal to the Full Court would be bought on this issue”.
As seen, the application for a stay was filed on 2 February 2010 supported by an affidavit sworn by the Husband on that same day. In his affidavit the Husband stated:
5. The application for special leave to appeal that was filed with the High Court on 21 January 2010 contains serious arguments that the order of the Full Court of 24 December 2009 should not have been made. For example, of the moneys in dispute $1,258,195.00 is the property of [W Stephens, X Stephens, Y Stephens and Z Stephens].
…
8. In light of the foregoing, I have a serious apprehension that unless a stay is granted [the Wife] will dissipate or disburse moneys, the subject of these proceedings in such a way that they are not recoverable or are not readily recoverable. I ask that the Application herein be granted.
By letter dated 2 February 2010 written by the solicitors for the Wife to the solicitors for the Husband and sent by facsimile transmission, the solicitors for the Wife explained that upon the Full Court orders being made on 24 December 2009, the moneys invested, save for the amount of $500,000.00 held for costs, “were immediately disbursed to [the Wife]”. Particulars were provided of the amount which was paid to the Wife. It was stated that in the circumstances it was inappropriate for there to be a stay of the orders as the payment had already been made. The solicitors for the Wife further advised that the Wife opposed any order requiring her to return the moneys she received and it was observed that the payment to the Husband that was required by the orders of 10 March 2009 was not stayed and that the Husband received the sum of $1,345,219.84 on 6 April 2009. The solicitors for the Wife also advised that in the circumstances should any application be made seeking that the Wife return the moneys it would be strenuously opposed and that the Wife would seek that the Husband pay her costs on an indemnity basis.
On 3 February 2010 we made the following orders:
1. The wife shall file in the Southern Appeal Registry and serve on the husband’s solicitors a Response to the Application in a Case: Stay filed 2 February 2010 and any affidavit on which she seeks to rely by 4.00 pm, Friday, 5 February 2010.
2. The Appeal Registrar shall notify the parties in writing of the time and date of the listing before the Full Court of the husband’s stay application as soon as practicable.
3. It is noted that it is anticipated the stay application will be listed for hearing during the week commencing 8 February 2010.
In her affidavit of 4 February 2010 the Wife testified that her current financial position is that she has the suburb B property, the title of which is unencumbered and which was valued by Westpac Banking Corporation for lending purposes in September 2009 at $1.45 million. The Wife testified that, “putting to one side” her motor vehicle, furniture and other effects, and deducting applicable loans, she has net shares and cash at bank of $1,452,246.00. She said that she has not been readily able to fund payment of legal fees and disbursements since March 2009 without selling shares which she is reluctant to do in the current market and presently owes approximately $150,000.00 in legal fees and disbursements. The Wife testified that this amount will increase due to the costs of the proceedings in the High Court which will involve briefing counsel.
The Wife testified that if the Husband is granted a stay and orders in terms as sought by the Husband then she will have to redraw on the suburb B property mortgage, the sum of $1,096,893.00 and then will have to pay interest at the rate of about 6.76 per cent per annum, requiring interest only payments of about $5,500.00 per month. The Wife continues to work as an archivist and earns $16,000.00 per annum. The Wife contended that she will find it very difficult to make payments on the mortgage and also pay living expenses, as well as support the child Z Stephens, who is still a student.
The Wife said, “I have waited many years to receive the sum due to me. I do not intend in any way to divest myself of the moneys, that I have received, nor to do anything that would render nugatory the husband’s eventual appeal to the High Court, should the husband obtain special leave from the High Court, to appeal and then be successful on the appeal”. It was because of what the Wife said that there was discussion during the hearing on 9 February 2010 about an undertaking being given by the Wife.
In his affidavit sworn 8 February 2010 the Husband purported to give evidence in reply to the affidavit of the Wife of 4 February 2010. We do not propose to repeat all of what the Husband said, however, we observe that he contended that he has been advised by counsel and verily believes that the appeal to the High Court raises serious arguments that the orders of 24 December 2009 should not have been made and that there are good prospects of the appeal being successful. Before us, the Husband volunteered that the application was settled by “Mr Jackson, the leading High Court Queens Counsel” (Transcript, 9 February 2010, p 29).
In his affidavit of 8 February 2010 the Husband also contended:
17. Any order that does not restore the moneys to the stakeholders will be substantially more difficult to restore the position of the parties to the status quo that existed as at the time the judgment was delivered by the Full Court in this proceeding. The use of moneys by the [Wife] in the paying down of a mortgage and other transactions invariably carries with it complications that allow for competing interests to be raised by third parties. This may and can frequently involve costs, delays and in a number of cases the loss of the moneys the subject of the proceedings. An order that merely directs the [Wife] not to dispose of or otherwise encumber property in her name, still leaves that property in a vulnerable [sic] position and in a position where it is subject to being claimed by third parties in satisfaction of unrelated claims.
…
22. If the stay is not granted there can be no confidence that the [Wife] will not act in such a way that the relevant moneys are not recoverable or readily recoverable.
23. I verily believe that the High Court will expect that any order they make will be capable of being fully and readily effectuated; as such it is paramount that the moneys be restored to the stakeholders for safekeeping.
As to the last matter raised by the Husband we observe that it is the expectation of all courts, as it has always been in this case, that any order made would be “fully and readily effectuated”.
During the hearing before us on 9 February 2010 the Presiding Judge inquired of counsel for the Husband if the Husband intended to file any submissions as envisaged by order 13 made on 24 December 2009 and counsel sought an opportunity to seek instructions. The following exchange took place:
MR SMITH:And your Honour, what [the Husband] has instructed me is that I should be seeking, as part of the stay, a stay that would extend to order 13 of your Honour’s orders made on 24 December.
BOLAND J:Mr Smith, could I raise this with you? On a practical consideration, if that order was stayed, the matter then goes to the High Court. They either grant special leave or they don’t grant special leave, and there’s still this cost question hanging around. Would it not be more practical and costs [sic] effective from everybody’s point of view that we determine the costs arising from the Full Court appeal heard by us, and that in the event that either party was dissatisfied with our judgment, they have the right to seek special leave from the High Court which would be dealt with or could be consolidated and heard at the same time as the present special leave application?
MR SMITH: Yes your, Honour. That’s one way, however - - -
BOLAND J:I’m just thinking there has been enormous costs in this matter. The litigation has gone on for an inordinate amount of time. We are conscious both of the resources of this court and the High Court; and the resources of the parties, and it just seems to me that what I’ve indicated is a practical way of dealing with the matter. I would be interested to know if that’s a view shared by [the Husband] and perhaps the others at the bar table to try and bring some conclusion to these proceedings.
MR SMITH:Yes your Honours. As I said, I haven’t had the chance to deal with this issue in relation to costs. I wasn’t involved in the proceeding when it came on before your Honour’s previously. [the Husband] has asked me to seek the opportunity to get instructions from him, and those are my instructions as I have now communicated it to the court.
BOLAND J:But on one part, it couldn’t [sic] be said our order was self-executing and in fact we gave 28 days to file any application. No application having been filed, we could take the view - very properly - that [the Husband], by not complying with our order has simply opted not to make any application or to file submissions and we deal with those which have been filed on behalf of [the Wife].
MR SMITH:Yes. I hear what your Honours say in relation to that. That’s one view that you may well take. However, given that there are these matters that are still alive, so to speak, by way of appeal, I’d simply seek the opportunity, if I could, to get instructions from [the Husband] as to what he proposes in relation to those orders, number 13 and 14, that were made on 24 December. Would your Honours give me that opportunity?
MAY J:Yes. You’d like us to stand down? It’s difficult for you to get instructions while we’re all here; is that right?.
MR SMITH:Yes, your Honours. I’m sorry, but this issue of costs, I really aren’t in any way briefed to deal with it off the cuff.
MAY J:No. I understand. I understand that, Mr Smith, and it’s quite right that you would want to get instructions before you say anything. And Justice Boland has described to you the various possibilities, with which I agree entirely. I suppose another possibility, is that [the Husband] apply for an extension of time to allow him to file submissions which may well be met by some concern on behalf of the wife that she has complied with the court orders and he’s been given an extension. But it might be better that we deal with this question now, rather than on yet another occasion because as Justice Boland has again most correctly said, the costs to the parties in this case is really very significant.
So if this is a problem that can be dealt with relatively simply, we would be pleased to do so. But you need to get instructions. Well, we’ll just adjourn. How long do you think you will be before you get – do you need very long? (emphasis added)
MR SMITH: Just five minutes, your Honour.
MAY J: Yes. All right.
MR SMITH: Just five minutes.
MAY J: Well, we’ll adjourn for perhaps 10 minutes. Thank you.
ADJOURNED [12.49 pm]
RESUMED [12.53 pm]
MAY J: Yes, Mr Smith
MR SMITH:Yes, your Honours. Thank you for giving me that opportunity to get instructions. My instructions are to seek the stay that is sought to extend to paragraphs 13 and 14 of your Honour’s orders made on 24 December 2009. My instructions are that the stay ordinarily operates in cases such as this to orders pertaining to costs, and we would seek the ordinary stay to apply in relation to those orders. So those are my instructions, if the court please.
MAY J:Right. Do you have any other submission about that in addition to what you’ve just said?
MR SMITH:No, your Honours, I do not. (emphasis added) (Transcript, 9 February 2010, p 36-38)
In our view, it is relevant to consider what was then submitted to us on behalf of the Wife.
MR ACKMAN: Thank you, your Honours. Well, your Honours, yes, we do. Of course, we strongly oppose it. We take up very strongly Justice Boland’s point. Courts are intended to be helping courts. Your Honours all, as your Honours’ brethren do, treat litigants with courtesy and patience, your Honours. But this is really going too far. Your Honours know, with the greatest respect, there are two litigants - I’m not suggesting for a moment your Honours don’t. The orders make it absolutely clear, we hadn’t been served with them, but there was a remote possibility they’d been served on the court. It’s only when your Honour told us that he hadn’t responded that we knew with absolute certainty he hadn’t responded. He doesn’t then pay the court the courtesy of even saying, “Well, it’s an oversight.” He has to give his barrister instructions. So until your Honours drew it to his attention he hadn’t even considered it.
Your Honours would understand the apprehension of justice means that my client is sitting in court, she’s complied with the orders, we now know with certainty that he hasn’t responded. We are entitled to assume, therefore, that he is not going to respond, and it’s a self executing order. Then when that doesn’t happen, your Honours draw to - and I’m not suggesting for a moment that I’m in any way being critical. Your Honours then say, well, would you like to seek an extension, would you like to seek a stay. Your Honour Justice Boland makes very compelling reasons why the approach that they are now continuing to pursue isn’t the correct approach, and on they go. In our respectful submission, enough is enough. There is no reason given for the delays. There is no reason given for the non compliance.
The husband, in our respectful submission, has been granted enormous indulgences, and at the moment my client is paying for them. And at the moment, we would say, your Honours, the orders require that the orders that his submissions be submitted is out of time. He has not sought an extension of time until asked. He has not given reasons as to why he requires an extension. He has not rebutted the suggestion of Justice Boland put arguendo. What is to be gained? All of that leaves one with the irresistible conclusion that justice should be seen to be done, with the greatest respect, to my client, and he should not be granted a stay. He’s not been given leave, and your Honour should treat them as self executing orders which have not been responded to. Thank you, your Honours.
At the conclusion of the hearing we reserved judgment.
Then on 12 February 2010, without notice, the Husband sought to file the Application in an Appeal which we have earlier described. In the affidavit sworn by the Husband on 12 February 2010 in support of the application he maintained at paragraph 4 that “[a]lthough for reasons that have been expressed” by his counsel during the hearing on 9 February 2010 a stay should be granted “it is also wished to file written submissions in respect of costs and, in particular, written submissions opposing submissions that have been made on behalf of [the Wife] as to costs”. The Husband then requested that orders be made that allow the Husband to make written submissions as to costs.
Arrangements were then made to list the 12 February application of the Husband before us on 16 February 2010. At the hearing on 16 February 2010 the Wife opposed the application and sought an order that the Husband pay her costs of and incidental to the appearance before us. During discussion on 16 February 2010 counsel for the Husband in the alternative to the relief set out in the application of 12 February 2010 sought an order that the Husband have an extension of 21 days to file any submissions.
RELEVANT PRINCIPLES
The mere filing of an application for special leave to appeal to the High Court does not operate as a stay of execution of the orders in respect of which leave to appeal is sought. Further, there are no provisions in the Act or the Rules that directly address the question of a stay of orders of the Full Court pending the determination of an application for special leave. Nevertheless, it is well established that when an application for special leave to appeal is made to the High Court, the jurisdiction to grant a stay may be exercised by the court below and it is to that court (that is, the court in which the matter is pending and which is familiar with the matter) that an application to stay should be made: Fauna Holdings Pty Ltd and McGillivray v Mitchell (2000) FLC 93-024; Tate and Tate (No 4) (2003) FLC 93-139. As such, it is not controversial that this Court has the power to grant such a stay.
However, the jurisdiction to grant a stay pending an application for special leave to appeal to the High Court is an extraordinary jurisdiction and exceptional circumstances must be shown before its exercise is warranted. In Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No. 1] (1986) 161 CLR 681 Brennan J said at 684:
A stay to preserve the subject-matter of litigation pending an application for special leave to appeal is an extraordinary jurisdiction and exceptional circumstances must be shown before its exercise is warranted. If an order for a stay is made, the respondent is kept out of the benefit of the order of the court in which the matter is pending until the hearing of the application for special leave to appeal. That was the situation to which this court adverted in Marconi's Wireless Telegraph Co. Ltd. v The Commonwealth [No 3] [(1913) 16 CLR 384]. There the Court granted an order staying the operation of one of its own orders pending the hearing of an application to the Privy Council for special leave to appeal. What the court said in that case [at 386] is applicable to this case:
“The Court will not ordinarily grant an application of this kind unless very strong and special grounds are shown. This is a very peculiar case. The conditions are such that, on the one hand, if the stay is granted without more, the whole benefit of the action may be lost to the plaintiffs, while, on the other hand, unless the stay is granted on some fair terms, the defendants’ appeal will be nugatory. It really is a question of the preservation of the rights of the parties without disregard of the balance of convenience.”
In Edelsten v Ward [No. 2] (1988) 63 ALJR 346, Brennan J, emphasising the “exceptional” character of the Court’s inherent jurisdiction to preserve the subject matter of litigation pending the making of a special leave application, said at 346:
[This jurisdiction] is one which can only be exercised in extraordinary circumstances. It is as well to emphasise that observation again lest the impression be created that, in the conduct of litigation, the orders of this Court are available to keep matters in status quo until the litigation is finally resolved. That is not the purpose of the inherent jurisdiction. Something quite exceptional must be shown before that jurisdiction is exercised.
In The Commissioner of Taxation of the Commonwealth of Australia v The Myer Emporium Ltd [No. 1] (1986) 160 CLR 220, Dawson J noted at 222 that the High Court Rules (see now O 70 r 8(1)) provide that, unless otherwise ordered, neither an application for special leave nor an appeal shall operate as a stay. His Honour said at 222 – 223:
It is well established by authority that the discretion which it confers to order a stay of proceedings is only to be exercised where special circumstances exist which justify departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation pending the determination of any appeal: see, e.g., The Annot Lyle [(1886) 11 P.D. 114]; Scarborough v. Lew's Junction Stores Pty. Ltd. [[1963] V.R. 129]. Special circumstances justifying a stay will exist where it is necessary to prevent the appeal, if successful, from being nugatory: see Wilson v. Church [No. 2] [(1879) 12 Ch. D. 454]; Klinker Knitting Mills Pty. Ltd. v. L'Union Fire Accident and General Insurance Co. Ltd. [[1937] VLR 142]. Generally that will occur when, because of the respondent's financial state, there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance. However, special circumstances are not limited to that situation and will, I think, exist where for whatever reason, there is real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed: see McBride v. Sandland [No. 2] [(1918) 25 CLR 369].
See also Bryant v Commonwealth Bank of Australia and Another (1996) 134 ALR 460 at 463-464 per Kirby J and Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 2) (1998) 72 ALJR 869 at 870 per
Hayne J.
As to the factors to be considered by a court in the exercise of its discretion, in considering a stay pending an application for special leave in Jennings Constructions Ltd v Burgundy Royale Investments Pty Ltd Brennan J said at 685:
In exercising the extraordinary jurisdiction to stay, the following factors are material to the exercise of this Court's discretion. In each case when the Court is satisfied a stay is required to preserve the subject matter of the litigation, it is relevant to consider —first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; thirdly, whether the grant of a stay will cause loss to the respondent; and fourthly, where the balance of convenience lies.
See also Bryant v Commonwealth Bank of Australia and Another at 308-9 and De Lewinski v Director General, NSW Department of Community Services (1996) 70 ALJR 532 at 534 per Gummow J.
CONCLUSION
General
We are of the view that there may still be some confusion about precisely what orders ought to be the subject of the application for a stay.
The first category of orders are those which deal with the amounts paid to the Wife on 24 December 2009. The Wife was paid the amount that she was entitled to receive pursuant to order 1 made on 10 March 2009, being the sum of $996,362.18. This was the balance of that part of the November 2005 property settlement order that required the payment of money by the Husband to the Wife. On 24 December 2009 the Wife was paid $1,516,525.80 which included the amount of $996,362.18.
The second category of orders are those which deal with the payment to the Wife of interest. This was dealt with by order 2 made on 10 March 2009 which was discharged by order 3 made on 24 December 2009 on the basis that the cross-appeal by the Wife, in relation to the quantum of interest succeeded. It was not apparent what amounts, if any, the Wife had been paid, and what was the precise amount outstanding. It was replaced by order 4 made on 24 December 2009 subject to paragraphs 5 and 6. The Wife was entitled to receive the amount of $759,626.10 as interest ($500,647.98 + $258,978.12 = $759,626.10). However, there was only $1,533,475.80 ($1,497,010.16 + $19,515.64 + $16,950.00 = $1,533,475.80) held by the stakeholders and after payment of $996,362.18 there remained only $537,113.62 ($1,533,475.80 less $996,362.18 = $537,113.62). The bank retained $16,950.00 to meet tax liabilities on interest income leaving only $520,163.62 ($537,113.62 less $16,950.00 = $520,163.62). The amount of $520,163.62 was then paid to the Wife pursuant to the order 4 made on
24 December 2009. There remains the amount of $239,462.48 to be paid by the Husband to the Wife for interest pursuant to order 4 made on 24 December 2009 ($759,626.10 less $520,163.62 = $239,462.48).
The third category of orders are those that relate to costs being 6, 7 and 8 of 10 March 2009 and orders 13 and 14 made on 24 December 2009.
Subject to the outcome of the application for special leave to appeal, the assets of the Stephens Trust comprise its interest in the amount of $16,950.00 retained by the bank to pay income tax and the amount of $500,000.00 that is still held by the stakeholders pending the outcome of costs applications. As we have already observed, on 6 April 2009 the Stephens Trust was entitled to receive the amount of $1,345,219.84 that was paid to the Husband and which he contends he paid to each of the four adult children. This money could have been used to pay the amount of $239,462.48 that is outstanding for interest.
We are of the view that we should first deal with the application for a stay of orders 1 and 9 made on 10 March 2009, and order 4, incorporating the notations in paragraphs 5 and 6 of the orders of 24 December 2009. These orders directly affect the interest of the Stephens Trust. Order 4 of 24 December 2009 orders also affects the Husband.
We will then deal with the application for a stay of order 3 of 10 March 2009. This order also affects the interests of the Stephens Trust because we understand that the amount of $500,000.00 that is still retained by the stakeholders is the property of this trust.
We will separately deal with the application for a stay of orders 6, 7 and 8 of 10 March 2009 and orders 13 and 14 of 24 December 2009 as they relate to costs applications.
Orders 1 and 9 of 10 March 2009 and order 4 incorporating paragraphs 5 and 6 of 24 December 2009.
As we have just outlined above orders 1 and 9 of 10 March 2009 and order 4 incorporating paragraphs 5 and 6 of 24 December 2009 relate to the amounts that were paid to the Wife on 24 December 2009 pursuant to the orders of 10 March 2009 as varied by the orders of 24 December 2009.
In relation to the prospects of success in gaining special leave to appeal, other than a general assertion in his affidavit of 2 February 2010 that the Husband’s application for special leave contained “serious argument that the order of the Full Court of 24 December 2009 should not have been made” no submissions were made on behalf of the Husband in his personal capacity or as trustee of the Stephens Trust. For example, it was not contended that the application involves a question of general public importance. At the hearing on 9 February 2010, the Husband in very brief submissions, in reply to the submissions on behalf of the Wife, did refer to the fact that although the orders of the trial Judge were maintained, the process of reasoning to support the orders differed between the trial Judge, the majority of the Full Court and ultimately the majority of the High Court. The Husband submitted that in the High Court “the various judges went different ways in regard to the matter”. However, nothing was put in submissions as to why it is contended we were in error in finding that in relation to the Wife’s enforcement application an order could be made that the judgment be satisfied from the assets of the Stephens Trust. As well, no separate submissions were made in relation to our findings with respect to the cross-appeal of the Wife. We have already made observations about the practical outcome of the special leave application in relation to the cross-appeal. In the circumstances it is very difficult for us to make any assessment of the prospects of success of the application.
Referring to what was said by Dawson J in The Commissioner of Taxation of the Commonwealth of Australia v The Myer Emporium Ltd, the only significant matter referred to in the submissions in support of the application for a stay of orders was that unless there was a stay, and the Wife repaid the amounts she received on 24 December 2009 to the stakeholders, then there was no reasonable prospect of recovery of the moneys paid pursuant to the orders. It was submitted that there was a real risk that it would not be possible for the Stephens Trust, if it is successful, to be restored substantially to its former position. This was described by counsel for the Husband as a “special circumstance”.
The Wife has received the benefit of the judgment to the extent of $1,516,525.80. We accept that if the Wife were to dissipate all of her assets there would be a real risk that if the special leave application was granted and the appeal successful, then the Stephens Trust could not be restored to the position it was in prior to 24 December 2009.
We observe that insofar as the Husband has an obligation to pay interest to the Wife, no submissions were made in relation to the application for special leave to appeal so far as the Husband in his personal capacity is concerned. We are not troubled by the interests of the Husband in his personal capacity because he has not paid the amount he is required to pay and, given what he contended are his financial circumstances, it is unlikely that he will ever pay the amount due to the Wife. In our view, it could be argued that any application by the Husband for special leave to appeal to the High Court may be a waste of resources. It highlights the concerns we have expressed as to who are the relevant parties to proceedings. However, the Stephens Trust is in a different position.
The Wife is prepared to give an undertaking to the Court, the effect of which would be to restrain her from dealing with her real property and her investment portfolio to the extent of $200,000.00. The suburb B property has an undisputed value of $1.45 million and the title is unencumbered. It is not challenged that the assets, the subject of this undertaking, would have a net value of approximately $1.6 million, which is more than adequate to meet any obligation of the Wife to repay the amount of approximately $1.516 million to the Stephens Trust.
As to why there may be a risk, the only complaint of the Husband, we assume as trustee of the Stephens Trust, is that the assets, the subject of the undertaking, would be vulnerable to claims by unspecified unsecured creditors of the Wife. As to why the assets may be vulnerable to such claims, in the affidavits of the Husband and also in the submissions by counsel for the Husband and the Husband, no detailed submissions were made. However, reference was made to the fact that in 2009, before judgment, the Wife acquired the suburb B property and to enable her to complete the purchase she committed herself to a substantial borrowing. This was described by the Husband as a “rash step”. We reject this contention. The Wife explained in her affidavit why she acquired the property and also said that, in the event that the appeal had succeeded, she accepted that she may have to sell the property.
A further matter which was identified was that according to the evidence of the Wife, there has been a significant reduction in the value of her net assets between the date of separation and proceedings in 2009. We observe that in his reasons of 30 November 2005, Strickland J found that the Husband had net assets of a value of $1,790,108.15 and yet at the time of the hearing before Coleman J in February 2009, with the exception of items of personal property, the Husband contended that he only had net assets of approximately $1.038 million. In any event, the Wife in her affidavit gave an explanation for the diminution in the value of her net assets.
In summary, in our view, the evidence clearly demonstrates that the Wife currently has more than adequate assets to support the undertaking. In our view, the evidence does not establish that the two matters that were identified in the submissions in support of the application could be described as reckless, wanton or negligent. We are not persuaded that there is evidence that the Wife is a spendthrift or that she would dissipate her assets such that we could infer that she would take steps to put at risk her financial position by incurring significant unsecured liabilities.
The Wife as the successful party is entitled to the benefit of our judgment of
24 December 2009 and a relevant matter is any loss that she may be caused in the event that a stay was granted. In her affidavit the Wife set out in some detail her financial circumstances and what has happened since proceedings were commenced in 2002. Ultimately, in 2009 the Wife acquired a home for her personal accommodation and to enable her to pay the cost she obtained a loan for $1,096,500.00. If the Wife paid interest at the rate of 6.76 per cent then she would be required to pay around $5,500.00 per month. However, in December 2009 the Wife obtained the amount of $1,516,525.80 and used a significant portion of the funds to repay the debt and thus significantly reduced her outgoings. The Wife is in receipt of a salary of $16,000.00 per annum and dividend/interest income.
If the Wife had not received the amount of $1,516,525.80 in late December 2009 she would still have a debt of $1,096,500.00 owed to Westpac Banking Corporation and not have the full benefit of the orders she obtained over four years ago in November 2005.
If the Wife had to repay the amount of $1,516,525.80 she would have to borrow a significant portion of this amount and probably also realise a large portion of her share/cash at bank portfolio. The Wife would have borrowing costs, periodic repayments and reduced dividend/interest income. We observe that no suggestion was made by the Husband that, either in his personal capacity or as trustee of the Stephens Trust, he would pay to the Wife any shortfall between the loan repayments and interest on any funds invested by the stakeholders, borrowing costs and the amount of reduced income of the Wife. However, on one view, this is understandable because the Husband and the Stephens Trust do not have the ability to make any payments. In our reasons of 24 December 2009 we explained what the Husband contended he did with the amount of $1,345,219.84 that he received in April 2009 from the funds held by the stakeholders.
In summary, the order sought by the Husband as trustee of the Stephens Trust would cause significant loss to the Wife which could not be compensated for in the event that the special leave application was refused, or if allowed, the appeal was dismissed.
As to the bona fides of the Husband in either his personal capacity or as trustee of the Stephens Trust this was put in issue by the Wife. Senior counsel for the Wife submitted that the application is vexatious and that the Husband is simply seeking to re-agitate before the High Court issues that were previously dealt with. The litigation commenced in 2002 and in our reasons of 24 December 2009 we set out some of the long and protracted history. We have no doubt that the public and private cost of the litigation has been enormous and burdensome. For example, as at December 2008 the Wife had spent $655,000.00 on legal costs and disbursements and a further $100,000.00 as at March 2009. As at
4 February 2010 the Wife had a liability of $150,000.00 for legal costs and disbursements. As well, in our reasons we identified some matters in relation to the behaviour of the Husband, including his threat to destroy assets, which are troublesome and undoubtedly raise suspicions about his bona fides. However, notwithstanding some reservations, we are of the view that the evidence does not enable us to safely reach a conclusion that the Husband and others are not bona fides in seeking special leave to appeal.
In passing, we observe that there has been no undue delay between the time of the orders of 24 December 2009 and the filing of the application for a stay. Further, we understand that there should be no inordinate delay before the application for special leave to appeal is heard by the High Court. We were informed by senior counsel for the Wife that the application may be heard in late April 2010.
In conclusion, in all the circumstances of this case, we are of the opinion that, on the basis that the Wife files in court within seven days an undertaking in the terms we will shortly describe the application should be dismissed.
The undertaking of the Wife to the Court should provide that during the period of the stay she will not transfer, assign, encumber by mortgage or charge or otherwise or in any way deal with her interest in the suburb B property and further shall not similarly deal with the shares and cash at bank referred to in paragraph 30 of her affidavit sworn 4 February 2010 such as to cause such shares and cash at bank to have a value of less than $200,000.00. For reasons we will shortly explain, the undertaking should also include an undertaking not to deal with the funds retained by the stakeholders pursuant to order 3 of the orders made on 10 March 2009.
Order 3 made on 10 March 2009
As seen, order 3 of 10 March 2009 provides that the stakeholders invest the sum of $500,000.00 of the moneys held by them pursuant to the orders of 1 February 2009 in an interest bearing account as trustees for the parties pending quantification and/or determination of the Husband’s liability for costs pursuant to orders made by the High Court on 3 December 2008; orders made by the Full Court on 13 July 2007 and any costs ordered by Strickland J with respect to the proceedings determined by him on 30 November 2005. The amount of $500,000.00 was the property of the Stephens Trust and thus the trust has an interest in the application for special leave to appeal against this order.
No discrete submissions were made on behalf of the Husband, either in his personal capacity or as trustee of the Stephens Trust, as to why a stay of order 3 of 10 March 2009 should be granted. The amount is still retained by the stakeholders and thus no submissions were made in relation to the possible dissipation of this money by either the Wife or the Husband before the outcome of the special leave application is known. It was not suggested that the money be paid to the Stephens Trust and this is understandable given what the Husband did with the funds he received on 6 April 2009.
As we have already observed, on 16 February 2010 we were informed that the quantum of the costs ordered by the High Court on 3 December 2008 and the Full Court on 13 July 2007 has not yet been determined. We were also told that with respect to the proceedings determined by Strickland J on 30 November 2005 there are outstanding costs proceedings and any liability pursuant to s 117 of the Act has yet to be determined. An application was made by the Husband that Strickland J disqualify himself from hearing any costs applications, and his Honour has reserved his judgment.
It is of concern to us that there still remain outstanding these issues as to costs. We will shortly deal with the application for a stay of the orders made by us for the filing of submissions in relation to costs of the appeal determined by us on
24 December 2009. In our view, provided no amounts were paid out of the sum of $500,000.00 held by the stakeholders pending the outcome of the special leave application, we see no reason why any proceedings necessary to conclude the quantum and or liability for the costs of the proceedings described in order 3 of 10 March 2009 should not be determined.
We propose to require that the undertaking of the Wife also provide that pending the determination of the application for special leave to appeal to the High Court filed on 21 January 2010 and any consequent appeal if special leave is granted, no amount for costs be disbursed from the amount of $500,000.00.
Orders 6, 7 and 8 of 10 March 2009 and orders 13 and 14 of 24 December 2009 (Costs)
As seen, order 6 of the orders of 10 March 2009 provided that written submissions in support of any application for costs of the Wife’s application filed on 2 February 2009 be filed and served within 21 days. Provision was then made in order 7 for the filing of any submissions “in opposition” to any such submissions and order 8 provided for the filing of “written submissions in reply”. As to the orders made on 10 March 2009 no submissions were made on behalf of any party in relation to the stay of these orders. We therefore assumed that the position was adopted that no costs issues should be addressed and resolved until the application for special leave is determined.
As seen, order 13 of 24 December 2009 provides that each party be at liberty to make an application by way of written submissions in respect of costs incurred in relation to the applications by the Husband to extend the time to file an application for leave to appeal; the appeal by the Husband and the cross-appeal by the Wife, by filing such submissions at the Southern Region Appeal Registry of the Family Court and serving them on the other parties within 28 days.
In compliance with the order written submissions were filed on behalf of the Wife on 21 January 2010. No submissions have been filed on behalf of the Husband in either his personal capacity or as trustee of the Stephens Trust or any other interested party.
Order 14 of 24 December 2009 provided that each party have a further 14 days in which to make written submissions in answer thereto by filing such submissions at the Southern Region Appeal Registry of the Family Court and serving them on the other parties. No submissions have been filed pursuant to this order and no application has been made to extend the time to file any submissions.
During the hearing on 9 February 2010 we invited discussion as to whether or not we should proceed to determine any application for costs of the appeal proceedings concluded by us on 24 December 2009. As seen, the suggestion was made that any issue of costs of the proceedings should be determined as soon as practicable given that every effort should be made to avoid the additional costs and expense that would be incurred in the event that subsequent to the determination of the application to the High Court for special leave to appeal and, if successful, the appeal, we then determined the costs proceedings and one party was aggrieved by the outcome and sought special leave to appeal. The consideration was that we should make every effort to try and conclude any outstanding proceedings.
Counsel for the Husband submitted that a determination of any application for costs of the appeal proceedings should await the outcome of the application for special leave to appeal to the High Court. Senior counsel for the Wife submitted that we should proceed to hear and determine any costs applications.
It was after this discussion, and when the opportunity was given to counsel for the Husband to seek instructions, that the application was made to further amend the application for a stay, seeking a stay of orders 13 and 14 made on
24 December 2009.
Notwithstanding it was referred to in discussion, no application was made on
9 February 2010 on behalf of the Husband or the Stephens Trust or any other party whose interests counsel for the Husband purported to represent seeking an extension of time within which to comply with orders 13 and 14 of 24 December 2009.
As seen, an application was then filed on behalf of the Husband on 12 February 2010 in which he sought that “further or alternatively to the orders sought in the stay application by the [the Husband] heard on 9 February 2010” orders 6, 7 and 8 of 10 March 2009 be amended so that the time limits set out take effect from the date of determination of the application to the High Court for special leave to appeal (or if special leave is granted, until the determination of the appeal), and order 13 made on 24 December 2009 be amended so that the period of 28 days be calculated to commence from the date of determination of the application to the High Court for special leave to appeal (or if special leave is granted, until the determination of the appeal). In summary, the Husband is seeking that no submissions in relation to costs be made pending the special leave application. The orders the Husband is seeking in the application of 12 February 2010 are in effect what he sought by amendment on 9 February 2010, namely a stay pending the application for special leave of orders 6 to 8 of 10 March 2009 and orders 13 and 14 of 24 December 2009.
During the hearing on 16 February 2010, in response to what the Presiding Judge raised, an oral application was made on behalf of the Husband seeking in the alternative an extension of time within which to file submissions, namely a further 21 days. So far as the Wife is concerned she opposed both the application of 12 February 2010 and the oral application made on 16 February 2010. However, the solicitor for the Wife did say that if we were disposed to grant a further indulgence to the Husband then there was no objection to a period of 21 days.
Conclusion - Costs
What happened during the hearing before us both on 12 and 16 February 2010 is an example of how the conduct of the litigation could be said to be adding to the protraction and cost. For example, the only party before us should have been the Husband as trustee of the Stephens Trust. However, the Husband appeared as advocate for “the Children’s Trusts” and the Husband appeared in his personal capacity represented by counsel. However, as it transpired, most of the submissions were made by counsel for the Husband. We note that in our reasons of 24 December 2009 we observed at paragraph 218 that “the appearances and applications were interchangeable”.
The merits of an approach that the hearing of any outstanding costs applications be deferred until after the outcome of the special leave application, and any subsequent appeal, is known are obvious. It may be that any order for costs has to be reversed once the special leave application is resolved. However, we observe that to date there are only two relevant costs orders being of the High Court on 3 December 2008 and the Full Court on 13 July 2007. No order has yet been made in relation to the proceedings before Strickland J in 2005, Coleman J in 2009 or the Full Court in 2009. It is not a case where a stay is being sought of an order for costs pending an appeal where the payment of money by the appellant pursuant to the costs order would be irrecoverable in the event that the appeal was successful. In such a case a stay of the costs order “will normally be granted”: see Australian Federation of Consumer Organisations Incorporated v Tobacco Institute of Australia Ltd (No. 2) (1991) 30 FCR 548 at 552 per Morling J. In any event, in the circumstances of this case, what we propose in relation to any disbursement of funds from the amount of $500,000.00, held by the stakeholders, would deal with any immediate concerns.
On the other hand, the litigation has now been on foot for almost eight years and has cost hundreds of thousands of dollars in legal costs. No quantification of the public cost is possible, but it must be assumed that it has also been extraordinary. When consideration is given to the outstanding costs issues, unless some attempt is made to rationalise such proceedings, they could protract the litigation for some years to come. For example, there remains for determination the costs of the proceedings before Strickland J concluded in November 2005, and the parties are awaiting the outcome of an application that his Honour disqualify himself from hearing any costs applications. Depending on the outcome of the disqualification application it may be that this is the subject of appeal proceedings. The parties have yet to resolve the quantum of the costs to be paid pursuant to the orders of the High Court and the Full Court, and if history is any guide this will probably be controversial. There are then the costs of the proceedings before Coleman J in February 2009 and the costs of the appeal proceedings before us in May 2009.
Although the circumstances were different to those we are considering, it is instructive to consider what Martin CJ said in O’Rourke v P & B Corporation Pty Ltd [2008] WASC 36(S) (unreported, Martin CJ, 14 March 2008). In that case the Chief Justice discussed disputes referred to as “satellite litigation” and described such disputes of this kind as “parasitic litigation”. His Honour said at [5]: “I use that term because litigation of this kind in relation to costs has the distinct tendency to sap the energy of the parties and their legal advisors and the court, and to distract legal advisors and the court from getting on with the other more important issues including the resolution of substantive disputes”. So also in Buller Ski Lifts Ltd v Mt Buller Alpine Resort Management Board [2000] VSCA 31 (unreported, Phillips, Charles and Batt JJA, 9 March 2000). Phillips JA referred to disputes which are described as “satellite litigation” and said: “[t]his Court has said more than once that disputes over costs must not be allowed to develop into a sort of satellite litigation that occupies argument disproportionate to either the main issue or the costs themselves, and that is something which this court will not overlook”. We have no doubt that in this case the further litigation in relation to costs may be significant and “sap the energy” of the parties.
In all the circumstances, we do not propose to grant a stay of Orders 13 and 14 of 24 December 2009. In our view, all outstanding proceedings should be concluded as soon as possible, and thus we will proceed to separately determine the Wife’s application for costs.
We accept that the issue of proceeding to resolve any costs applications of the appeal proceedings before us, notwithstanding the pending application for special leave, was raised in the course of discussion on 9 February 2010. We also accept that it may be that counsel for the Husband was confused given his lack of knowledge of what had transpired, and thus it was only after the hearing on 9 February that there was time for a more considered approach to be formulated in relation to what we raised. In all the circumstances, we propose to grant the Husband an extension of 21 days to file any submissions. We do, however, emphasise that it represents a very considerable indulgence being granted to the Husband.
We also do not propose to grant a stay of the orders in relation to costs made on 10 March 2009. Obviously, the hearing in relation to the costs of the proceedings concluded before Coleman J is a matter for his Honour and under no circumstances would we seek to interfere with his Honour’s discretion as to when those proceedings are determined. The parties, however, are at liberty to approach his Honour and seek that he either determine those proceedings, subject to the outcome of the special leave application, or defer the hearing of those proceedings until the special leave application and any subsequent appeal has been determined.
Further, we repeat that we see no reason why the quantum and or liability for the costs of the proceedings identified in order 3 of 10 March 2009 should not be determined.
COSTS
General
At the conclusion of the hearing we received submissions in relation to costs of the stay proceedings.
Counsel for the Husband submitted that in the event an order was made in the terms of what was sought by the Husband then an order should be made that the Wife pay the costs. In very brief submissions, it was contended that the Wife was on notice that an order would be sought in the event that the application was successful and that in the circumstances, costs should follow the event. It was also contended that what was described as “unreasonable conduct” of the Wife in not responding to the correspondence, which we have earlier identified, was a relevant factor.
Counsel for the Husband submitted that in the event that we accepted the undertaking proposed by the Wife then again an order should be made that the Wife pay costs. It was submitted that the undertaking was only offered during the course of the hearing before us.
Counsel for the Husband submitted that in the event that the application for a stay was refused then there should be no order for costs, given that there was no timely response by or on behalf of the Wife to the correspondence.
No submissions were made by the Husband in relation to costs. Again, we observe that it is not entirely clear on whose behalf the application for costs is being made. However, we assume that counsel for the Husband was making the application on behalf of the Husband in his personal capacity and as trustee of the Stephens Trust.
So far as the Wife is concerned, it was submitted by her senior counsel that in the event that we simply accepted the undertaking proffered by the Wife then an order should be made that the Husband pay the Wife’s costs to be assessed on an indemnity basis. In support of this application senior counsel relied upon the written submissions filed on behalf of the Wife on 21 January 2010 pursuant to order 13 made on 24 December 2009. It was also submitted that there were no comments made by counsel for the Husband or the Husband on the terms of the undertakings which the Wife proposed. Other submissions were made which we need not repeat. Senior counsel submitted that in the event that the application succeeded then there should be no order as to costs.
In relation to the hearing before us on 16 February 2010 an application was made by the Wife that the Husband pay her costs of and incidental to the hearing on that day.
Legal principles
Section 117(1) of the Act provides that subject to s 117(2), and other provisions with which we are not concerned, each party to proceedings under the Act shall bear his or her own costs. Section 117(2) provides that if, in proceedings under the Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules, make such order as to costs whether by way of interlocutory order or otherwise, as the court considers just. Section 117(2A) provides that in considering what order (if any) should be made under s 117(2), the court shall have regard to the matters set out in paragraphs (a) to (g).
In Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania) v Fish and Another (2005) 33 Fam LR 123 the Full Court said at 41: “The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subsection (2A) or elsewhere in section 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs”.
Conclusion
In relation to the costs of the stay proceedings that were heard by us on 9 February 2010 we do not propose to deal seriatim with each of the matters in s 117(2A) of the Act. The Husband both in his personal capacity and as the trustee of the Stephens Trust was unsuccessful in obtaining a stay of the orders of 24 December 2009. We were of the view that the Wife should not have to repay the amounts she received on 24 December 2009 and accepted her undertaking. The Husband was also not successful in obtaining a stay of previous orders in relation to costs proceedings.
The Wife was successful in that we accepted her undertaking in relation to her dealing with certain of her assets. However, we observe that the undertaking was only provided on the morning of the hearing.
The Husband as the trustee of the Stephens Trust submitted that a relevant consideration was the belated response of the Wife to the requests that were made commencing with the letter of 23 December 2009. However, we do not accept that there was any aspect of the behaviour of any party that would justify an order in favour of any other party. Beyond this matter, in our view, no party was able to point to any significant justifying circumstance other than the outcome of the proceedings.
In the result we have come to the conclusion that in all the circumstances of this case in relation to the application for stay filed on 2 February 2010 as amended at the hearing before us on 9 February 2010 there should be no order as to costs in favour of any party.
In relation to the application by the Husband filed on 12 February 2010 and the hearing on 16 February 2010 we are of the view that the Wife has established a justifying circumstance and that the Husband should pay the costs of the Wife. The Husband did not comply with the order we made on 24 December 2009 and had the opportunity on 9 February 2010 to seek an extension of time to file submissions. However, what he did was file an application on 12 February 2010 again seeking in effect a stay and then during the hearing on 16 February 2010 sought an extension of time within which to file submissions. We then granted a significant indulgence to the Husband. The Wife has been put to cost and expense by reason of the non-compliance by the Husband and his conduct of the proceedings. The matters in s 117(2A)(c) and (d) of the Act are relevant and clearly support an order in favour of the Wife. We propose to make an order that the Husband pay the Wife’s costs of and incidental to the application filed on
12 February 2010 and the hearing on 16 February 2010 and that the costs be assessed on a party and party basis.
I certify that the preceding one-hundred and forty-five (145) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court of May, Boland and O’Ryan JJ.
Associate:
Date:19 February 2010
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