Stephens v Stephens
[2010] FamCAFC 172
•9 September 2010
Family Court Of Australia
| STEPHENS & STEPHENS AND ANOR (Enforcement) (Costs) | [2010] FamCAFC 172 |
| FAMILY LAW - COSTS – Application on behalf of the Wife that the Husband pay the costs of the appeal – Consideration of the Husband’s financial circumstances and conduct during the proceedings – Significant weight given to the appeal being wholly unsuccessful – Where the Husband has failed to comply with previous orders of the court – Justifying circumstances established – Appellant to pay the Respondent’s costs FAMILY LAW - INDEMNITY COSTS – Where the Wife seeks an order for indemnity costs – Where the Court is not satisfied that the Husband’s appeal and his defence of the Wife’s appeal was hopeless and did not give rise to any “arguable factual and legal questions” – Application for indemnity costs dismissed |
| Botany Municipal Council v Secretary, Department of Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 Brott and Joachim (2006) FLC 93-259 Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 I and I (No 2) (1995) FLC 92-625 Ian Charles Fowell Spry in his Personal Capacity and in his Capacity as Trustee of the ICF Spry Trust v Moylan and Ors [2010] HCATrans 195 Kohan and Kohan (1993) FLC 92-340 Latoudis v Casey (1990) 170 CLR 534 Limousin v Limousin (Costs) (2007) 38 Fam LR 478 McAlpin and McAlpin (1993) FLC 92-411 McDonald and McDonald (1994) FLC 92-508 Munday v Bowman (1997) FLC 92-784 NMFM Property Pty Ltd and Others v Citibank Ltd (No 2) (Court’s “NMFM” Judgment No 11) (2001) 109 FCR 77 Penfold v Penfold (1980) 144 CLR 311 Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 Ruddock and Ors v Vadarlis and Ors (2001) 188 ALR 143 Stephens v Stephens (2010) 43 Fam LR 106 Stephens & Stephens (Stay Application) (2010) FLC 93-429 Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 |
| Family Law Act 1975 (Cth) – s 70NFB(1), s 79, s 106B, s 117, s 117(2A), s 117AA, s 117AB, s 117AC, s 117B, s 118 Family Law Rules 2004 (Cth) – r 19.08, r 19.11, r 19.18, r 19.19 |
| APPELLANT: | MR STEPHENS |
| FIRST RESPONDENT: | MS STEPHENS |
| SECOND RESPONDENT: | MR STEPHENS (as Trustee of the Stephens Trust) |
| FILE NUMBER: | MLC | 788 | of | 2009 |
| APPEAL NUMBER: | SA SA | 23 24 | of of | 2009 2009 |
| DATE DELIVERED: | 9 September 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | By way of written submissions |
| JUDGMENT OF: | May, Boland & O’Ryan JJ |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 10 March 2009 |
| LOWER COURT MNC: | [2009] FamCA 156 |
Representation
| THE APPELLANT: | In Person |
| SOLICITOR FOR THE APPELLANT: | Nedovic & Co. |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr N. J. Ackman SC with Ms K.M. MacMillan SC |
SOLICITOR FOR THE FIRST RESPONDENT: | Kennedy Wisewoulds Lawyers |
Orders
The Husband pay the Wife’s costs of and incidental to:
(a)the Husband’s notice of appeal filed on 27 March 2009;
(b)the Husband’s application for a stay filed on 27 March 2009;
(c)the Husband’s application filed on 27 March 2009 to extend time to file an application for leave to appeal against the orders of Watts J made on 1 February 2009, and to extend time to file an application for leave to appeal against the orders of Cronin J made on 2 February 2009;
(d)the Husband’s application to adduce further evidence filed on 30 March 2009;
(e)the Husband’s application to adduce further evidence filed on 9 November 2009;
(f)the Husband’s oral application made on 4 December 2009 seeking to reopen the hearing of the appeal;
(g)the Wife’s cross appeal filed on 9 April 2009; and
(h)the Wife’s application to adduce further evidence filed on 21 May 2009.
The Husband pay the Wife’s costs of the submissions prepared and filed on 21 January 2010 and 19 March 2010 in relation to costs.
The costs in orders (1) and (2) hereof be assessed on a party and party basis.
To the extent that there are sufficient funds still retained by Kennedy Wisewoulds Lawyers as stakeholders, such funds may be applied towards satisfaction of the obligations of the Husband pursuant to orders (1) and (2) hereof.
IT IS NOTED that publication of this judgment under the pseudonym Stephens & Stephens and Anor (Enforcement) (Costs) 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 |
First Respondent
And
| MR STEPHENS (as Trustee of the Stephens Trust) |
Second Respondent
Reasons For Judgment
Introduction
Before us for determination is an application by Ms Stephens (“the Wife”). The respondent is Mr Stephens (“the Husband”).
The Wife seeks an order pursuant to s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) that the Husband pay her costs of and incidental to the:
·Husband’s notice of appeal filed on 27 March 2009;
·Husband’s application for a stay filed on 27 March 2009;
·Husband’s application filed on 27 March 2009 to extend time to file an application for leave to appeal against the orders of Watts J made on 1 February 2009, and to extend time to file an application for leave to appeal against the orders of Cronin J made on 2 February 2009;
·Husband’s application to adduce further evidence filed on 30 March 2009;
·Husband’s application to adduce further evidence filed on 9 November 2009;
·Husband’s oral application made on 4 December 2009 seeking to reopen the hearing of the appeal;
·Wife’s cross appeal filed on 9 April 2009; and
·Wife’s application to adduce further evidence filed on 21 May 2009.
The Wife also seeks an order that the Husband pay her costs of the submissions prepared and filed on 21 January 2010 and 19 March 2010 in relation 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 funds held by Kennedy Wisewoulds Lawyers, pursuant to order 3 of orders made by Coleman J on 10 March 2009.
The Husband seeks that the Wife’s application for costs be dismissed.
We had written submissions from the Wife and the Husband. Attached to the submissions of the Wife is a schedule of her costs and disbursements, calculated in accordance with a costs agreement, in relation to the appeal proceedings in 2009. The costs total $115,222.05.
Background
In relation to the relevant background we propose to repeat some of what we said in reasons for judgment delivered on 19 February 2010: reported as Stephens & Stephens (Stay Application) (2010) FLC 93-429.
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.
Before proceeding we observe that since 2002 there has been significant protracted litigation between the Husband and the Wife. In our reasons of 19 February 2010 we observed at [33] that the Wife testified that by the time of a judgment of the High Court on 3 December 2008 she had spent in excess of $655,000.00 on legal costs and disbursements. We noted at [105] that the Wife had spent a further $100,000.00 as at March 2009. We also stated at [105] that as at 4 February 2010 the Wife had a liability of $150,000.00 for legal costs and disbursements. Since proceedings commenced in 2002, the Wife may have incurred legal costs and expenses of almost $1 million.
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 that on or before 28 February 2006 the Husband pay to the Wife the sum of $2,034,362.00 as corrected. The Husband appealed those 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.
In 2006 the Full 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 appeal, 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”).
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 were heard by 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 the Husband’s 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 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 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
In summary, pursuant to the judgment pronounced on 10 March 2009, as amended by the slip rule later that day, the Wife was entitled to receive payment from the money invested the sum of $996,362.18 and interest of $500,647.98 being a total of $1,497,010.16. A sum of $500,000.00 was ordered to be invested and held pending determination of costs applications.
In our reasons of 19 February 2010 we observed at [114]:
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.
On 27 March 2009 the Husband filed a notice of appeal against the orders of 10 March 2009. The Wife subsequently filed a cross-appeal.
On the same day the Husband filed an application seeking a stay of the orders of 10 March 2009 for the payments to the Wife. This application came before Coleman J on 2 April 2009.
On 2 April 2009 Coleman J 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 [Mr Stephens] on 27 March 2009 be reserved to the Full Court hearing [Mr Stephens]’s Appeal on 8 May 2009.
His Honour ordered a stay of orders requiring the filing of submissions as to costs.
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.
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.
In our reasons of 19 February 2010 we observed at [56] that, 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 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 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.
In our reasons of 19 February 2010 we observed at [57] that 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 an affidavit sworn on 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. The Wife contended that there was a shortfall of the interest due to her of $239,462.48 and this money remained owing to her by the Husband. We observed that this amount of $239,462.48 could be paid from the assets of the Stephens Trust. We observed that there remained invested the sum of $500,000.00 on account of costs. We also observed that in the affidavit of the Wife sworn on 4 February 2010 the shortfall was calculated to be the sum of $239,462.40, however, the correct figure was $239,462.48.
In our reasons of 19 February 2010 we observed at [58] that, in our view, it was the amount of $239,462.48 which was the only interest the Husband had in the proceedings in his personal capacity. We observed that if the Husband’s previous contentions as to his financial circumstances were correct then the amount would never be paid by him. We also observed that if the Husband’s previous contentions as to the assets of the Stephens Trust were correct then the amount would never be paid by this trust.
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 pending the determination of the application.
Pursuant to order 13 made on 24 December 2009 submissions as to costs were to be filed by the parties on or before 21 January 2010. Written submissions were filed on behalf of the Wife on that day but the Husband did not file any submissions.
On 21 January 2010 the Husband filed an application for special leave to appeal to the High Court. The Husband sought special leave to appeal orders 1, 2, 4, 5, 6, 9 and 10 of the judgment pronounced on 24 December 2009.
On 2 February 2010 the Husband filed an application seeking the following:
1. An order staying the operation or enforcement of paragraphs 1 to 4 and 6 to 9 of the [o]rders 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 [o]rders.
2. The applicant seeks an [o]rder that the costs of and incidental to this application be reserved.
On 2 February 2010 the Husband swore an affidavit in support of this application.
By letter dated 2 February 2010 the solicitors for the Wife wrote to the solicitors for the Husband and 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 on 6 April 2009 the Husband received the sum of $1,345,219.84. 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 orders in relation to the Wife filing a response to the application filed on 2 February 2010 and any affidavit on which she sought to rely by 4.00 pm on 5 February 2010.
Pursuant to order 14 made on 24 December 2009 any submissions in answer were to be filed by 4 February 2010. No submissions were filed by the Husband.
On 5 February 2010 the Wife filed a response in relation to the Husband’s application filed 2 February 2010 in which she sought:
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 her response the Wife swore an affidavit on 4 February 2010.
In our reasons of 19 February 2010 we observed at [69] that in her affidavit of 4 February 2010 the Wife testified that her current financial position was that she owns a property, the title of which was unencumbered and which was valued by Westpac Banking Corporation for lending purposes in September 2009 at $1.45 million. We also observed that the Wife testified that, “putting to one side” her motor vehicle, furniture and other effects, and deducting applicable loans, she had net shares and cash at bank of $1,452,246.00. The Wife said that she had not been readily able to fund payment of legal fees and disbursements since March 2009 without selling shares which she was reluctant to do in the current market and presently owed approximately $150,000.00 in legal fees and disbursements. We observed that the Wife testified that this amount would increase due to the costs of the proceedings in the High Court which would involve briefing counsel. We also observed at [70] that the Wife continued to work as an archivist and earned $16,000.00 per annum.
On 8 February 2010 the Husband swore an affidavit in reply to the affidavit sworn by the Wife on 4 February 2010. In our orders of 3 February 2010 we made no provision for any further evidence from the Husband.
During a 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.
In our reasons of 19 February 2010 we observed at [11] that 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 was disbursed. The Husband was not suggesting that he should repay the money to the stakeholders or the Stephens Trust.
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. In our reasons of 19 February 2010 we set out at [74] and [75] the exchange that took place with the Husband’s counsel. After obtaining instructions counsel for the Husband sought a stay of orders 13 and 14 of 24 December 2009 and this was opposed by the Wife.
In our reasons of 19 February 2010 we observed:
118. 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.
119. 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.
120. 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.
121. 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.
At the conclusion of the hearing on 9 February 2010 we reserved judgment.
Pursuant to order 15 made on 24 December 2009 any submissions in reply were to be filed by 11 February 2010. No submissions were filed by the Husband.
On 12 February 2010, without prior notice, an application was filed by the Husband in which he sought 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 was supported by an affidavit sworn by the Husband on 12 February 2010. The Wife sought that the application be dismissed.
In summary, the Husband was seeking that no submissions be made in relation to costs pending the determination of the special leave application. The orders the Husband sought in the application of 12 February 2010 were, in effect, what he had sought by amendment on 9 February 2010, namely, a stay of orders 6 to 8 of 10 March 2009 and orders 13 and 14 of 24 December 2009 pending the determination of the application for special leave to appeal.
In our reasons of 19 February 2010 we observed at [77] that in his affidavit sworn on 12 February 2010 the Husband 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 allowed him to make written submissions as to costs.
Arrangements were made to list the 12 February 2010 application of the Husband before us on 16 February 2010.
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. The Wife 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.
In our reasons of 19 February 2010 we observed at [84] that we were 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 and thereafter we identified three categories of orders. In summary, the first category was those which dealt with the amounts paid to the Wife on 24 December 2009. The second category was those which dealt with the amounts paid to the Wife of interest. The third category was those that related to costs being orders 6, 7 and 8 of 10 March 2009 and orders 13 and 14 made on 24 December 2009.
On 19 February 2010 we made the following orders:
1. 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] in the State of Victoria 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.
2. It be noted that the title of the property at [suburb B] in the State of Victoria is in the sole name of the First Respondent and is unencumbered.
3. The Application in a Case filed by [Mr Stephens] on 2 February 2010 be dismissed.
4. The Application in paragraph 2 (costs) of the Response filed on behalf of the First Respondent on 5 February 2010 be dismissed.
5. In relation to the costs of the proceedings concluded by judgment on 24 December 2009:
(a)[Mr Stephens] 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.
6. [Mr Stephens] 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.
7. The costs referred to in order 6 hereof be in an amount as agreed in writing between [Mr Stephens] 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.
In our reasons of 19 February 2010 we observed:
128. In all the circumstances, we do not propose to grant a stay of [o]rders 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.
129. 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.
130. 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.
131. 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.
On 12 March 2010 written submissions were filed by the Husband. On 19 March 2010 written submissions were filed by the Wife in reply to the submissions of the Husband.
On behalf of the Wife it was submitted:
The heart of the husband’s submissions, filed in response to the wife’s submissions in support of her application that the husband pay her costs of the appeal and the associated proceedings, is essentially that costs should not be ordered because the decision of the Full Court in dismissing the husband’s appeal from the orders of Coleman J is wrong at law, alleged bias having lead the court into error, and the subject of an application for leave to appeal to the High Court. The husband submits inter alia that no decision should be made with respect to costs pending the decision of the High Court.
The Husband in his written submissions did not reply to the submissions of the Wife filed on 21 January 2010 and, with the exception of the matter in s 117(2A)(a) of the Act, did not deal with the relevant statutory considerations. However, the Husband did accuse us of “clear” bias and dishonesty and that our reasons contained “grave errors of law” which sought to “obfuscate the relevant issues and mislead the High Court”. The Husband also made disparaging remarks about senior counsel for the Wife.
The Husband made submissions to demonstrate that we were wrong in our judgment, and without repeating all of what he said, the topics that he addressed were:
·Breach of Duty of Disclosure of the Wife;
·Misrepresentations by the Full Court of Tax Returns;
·Misleading Analysis by Full Court as to Trust Assets;
·Attempt by the Full Court to Exclude Parties;
·Failure by the Full Court to Amend Court Documents on Mr J Ceasing to be a Trustee;
·Wrongful Attempt by the Full Court to Reverse the Onus of Proof;
·False Claims by the Full Court as to Part VIIIAA;
·Rhetorical Statements re the “Deduction of Funds”;
·Misleading by the Full Court of Effect of Affidavit Evidence;
·Misleading Disparaging Remarks by the Full Court;
·Misleading Statement by the Full Court as to the Wife’s Entitlement;
·Misleading Statement by the Full Court as to Challenge to Findings;
·Misleading Statement by the Full Court as to Trust Application; and
·False Statement by the Full Court as to the Children’s Trusts.
We do not propose to deal with the submissions of the Husband in relation to the alleged “wrong decisions and wrong observations of the Full Court”. It is clear that the Husband made these submissions to illustrate that because of the alleged errors in our judgment, the High Court would grant the special leave application, and it would be undesirable for us to determine the applications for costs until the High Court made a decision. The Husband submitted:
8. In the present case the large number of errors (only some of which have been discussed here), and the fact that for practical purposes all of these errors benefit [the Wife], reinforce the general conclusion of bias or severe partiality. It is an inescapable conclusion that the High Court will regard the Full Court reasoning as deficient in law and as prejudiced and dishonest, and as intended to mislead the High Court. On this basis it is highly likely that special leave will be granted, especially in view of the importance of some of the errors that the Full Court has made.
9. All of the foregoing is relevant to the course to be taken by the Full Court on the present application. It is undesirable that a determination as to costs (on the basis that [the Wife] has so far succeeded) be made when the High Court is in the process of examining the reasoning that has led to [the Wife]’s success in the Full Court. Accordingly no determination as to costs should be made until the High Court has indicated its views.
The Husband attached to his written submissions an affidavit he swore on 10 February 2010, which may have been filed in the High Court. It was submitted on behalf of the Wife that notwithstanding the failure of the Husband’s applications to reopen his case and adduce further evidence, the Husband has not sought leave to reopen his case nor to adduce further evidence. It was submitted that the affidavit is not part of the evidence in this case or relevant to the determination of the Wife’s application for costs. We have considered what the Husband said in the affidavit and we accept the submissions on behalf of the Wife and propose to ignore the affidavit.
The application for special leave to appeal was dealt with by the High Court on 30 July 2010. Heydon and Kiefel JJ, comprising the bench, observed that there were six special leave questions, namely:
·First, whether “a trustee of a discretionary trust the objects of which may be treated as including the trustee’s former wife, can be compelled by an order of the Family Court of Australia to pay over to the former wife sufficient assets of the trust in order to satisfy orders for payment of money made against the trustee personally by that Court as to property settlement, interest thereon and costs of proceedings.” The High Court noted that the Husband had raised grounds for questioning the correctness of parts of the reasoning of the Full Court and said: “Whether or not these grounds would be made out on an appeal there is no reason to suppose that the actual orders of the court below were incorrect”.
·Second, whether “in circumstances where the evidence demonstrated that a sum held by stakeholders was partly the property of a husband personally and partly his property as trustee of a discretionary trust, the burden of demonstrating what part of the property was the husband’s property lay on a former wife seeking to obtain the husband’s property to satisfy orders in her favour for a property settlement, interest and costs”. The High Court found that: “The applicant trustee had, on his own case, withdrawn the trust property from investment and intermingled it with non-trust property so that the whole of the property was in the form of cash. The court below did not err in concluding that in these circumstances a burden lay on the trustee to explain who owned which part of the intermingled fund”.
·Third, whether “the approach taken by the Full Court in rejecting the applicant’s applications of 30 March 2009 and 9 November 2009 to adduce further evidence involved too narrow an application of s.96A(2) [semble s 93A(2)] of the [the Act]”. The High Court found that: “There [was] no reason to doubt the correctness of the decisions attacked, which were discretionary decisions on a matter of practice and procedure”.
·Fourth, whether “the power under s.117B(2) of the [Act] may only be exercised by the Judge making the order for payment of money referred to in s.117B(1)”.
·Fifth, whether “the approach to the selection of a rate of interest payable under s.117B(2) taken by the primary Judge was inappropriate.”
In relation to the fourth and fifth questions the High Court observed: “Whatever the answer to these questions, no injustice in the outcome in relation to the rate of interest selected [by] the Full Court has been demonstrated”.
·Sixth, whether “and in what circumstances Part VIIIAA of the [Act] is applicable as against trusts”. The High Court found that: “Whatever the answer to this question, the orders below are correct for reasons other than Part VIIIAA”.
The special leave application was dismissed with costs: see Transcript of Proceedings, Ian Charles Fowell Spry in his Personal Capacity and in his Capacity as Trustee of the ICF Spry Trust v Moylan and Ors [2010] HCATrans 195 (30 July 2010).
Relevant Principles
General
Section 117(1) of the Act provides: “[s]ubject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.”
Section 117(2) of the Act provides that if, in proceedings under the Act, the court is of opinion that there are circumstances that justify it in doing so, it may, subject to sub-ss (2A), (4) and (5), and the applicable rules, make such order as to costs, whether by way of interlocutory order or otherwise, as it considers just.
Section 117(2A) of the Act 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 (Kay, Warnick and Boland JJ), referring to s 117(2A), said at 130:
A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 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.
As to the relationship between s 117(1) and s 117(2) of the Act in Penfold v Penfold (1980) 144 CLR 311, in joint reasons, Stephen, Mason, Aickin and Wilson JJ said at 315:
It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in “a clear case”. (emphasis added)
As to the nature of the hearing of an application pursuant to s 117 of the Act in Penfold their Honours said at 315-16:
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v. Kent [(1970) 92 W.N. (NSW) 503, at p. 505]). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
We also observe that in Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 the majority of the High Court (Gaudron, Gummow, Hayne and Callinan JJ, Kirby J dissenting) held that s 117(2) of the Act referred to costs in the conventional sense and thus to the payment by one party to litigation of money by way of a partial indemnity for professional legal fees and expenses actually incurred by another party in the course of the litigation: see Hayne J at 219. An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature. Costs are not a penalty or damages: Latoudis v Casey (1990) 170 CLR 534 per Mason CJ at 543 and McHugh J at 567; Ruddock and Ors v Vadarlis and Ors (2001) 188 ALR 143 per Full Court of the Federal Court at [12] and Brott and Joachim (2006) FLC 93-259 per Full Court (Holden, Warnick and Boland JJ) at 80,403-404.
There are various relevant machinery provisions in Part 19 of the Rules. Rule 19.08 provides:
(1) A party may apply for an order that another person pay costs.
(2) An application for costs may be made:
(a)at any stage during a case; or
(b)by filing an Application in a Case within 28 days after the final order is made.
(3) A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.
Note 1 The court may make an order for costs on its own initiative (see rule 1.10).
Note 2 A party may apply for an order for costs within 28 days after the filing of a notice of discontinuance by the other party (see subrule 10.11 (4)).
Note 3 A party may apply for an extension of time to make an application (see rule 1.14).
(4) In making an order for costs, the court may set a time for payment of the costs that may be before the case is finished.
Rule 19.11 of the Rules provides:
(1) Before making an order for costs against a lawyer or other person who is not a party to a case, the court must give the lawyer or other person a reasonable opportunity to be heard.
(2) If a party who is represented by a lawyer is not present when an order is made that costs are to be paid by the party or the party’s lawyer, the party’s lawyer must give the party written notice of the order and an explanation of the reason for the order.
Part 19.5 of the Rules deals with the calculation of costs. Rule 19.18 provides:
(1) The court may order that a party is entitled to costs:
(a)of a specific amount;
(b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
(c)to be calculated in accordance with the method stated in the order; or
(d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.
Example
For paragraph (1) (c), the stated method may be in accordance with Schedule 3 but with an additional percentage for complexity.
(2) If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.
(3) In making an order under subrule (1), the court may consider:
(a)the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the case;
(c)the rates ordinarily payable to lawyers in comparable cases;
(d)whether a lawyer’s conduct has been improper or unreasonable;
(e)the time properly spent on the case, or in complying with pre-action procedures; and
(f)expenses properly paid or payable.
Rule 19.19 of the Rules provides:
(1) This rule sets out the maximum amount of party/party costs a person may recover:
(a) if the court orders that costs are to be paid and does not fix the amount; and
(b) if a person is entitled to costs under these Rules.
(2) The maximum amount of costs that a person may recover under this rule is as follows:
(a) for fees — an amount calculated in accordance with Schedules 3 and 4;
(b) for an expense mentioned in Schedule 4 (other than item 101) — the amount specified in Schedule 4 for that expense;
(c) for any other expenses — a reasonable amount.
Note This Division provides that, if an account payable by a person is not in an itemised form, the person has the right to request an itemised account (an "itemised costs account"). The person may then dispute the itemised costs account by following the procedures set out in this Division. A person may apply to extend the time for taking any action required under these Rules (see rule 1.14).
Indemnity Costs
The Family Court has jurisdiction to make orders for indemnity costs: McAlpin and McAlpin (1993) FLC 92-411 per Full Court (Nicholson CJ and Maxwell J, Baker J dissenting); Kohan and Kohan (1993) FLC 92-340 per Full Court (Strauss, Lindenmayer and Bulley JJ); Munday v Bowman (1997) FLC 92-784 per Holden J; Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 per Full Court (Lindenmayer and Holden JJ, Mullane J dissenting) and Limousin v Limousin (Costs) (2007) 38 Fam LR 478 per Full Court (Kay, Coleman and Boland JJ).
An order for costs may be made on an indemnity basis, subject to a judicial determination capable of being made that there ought to be a departure from the usual basis that costs be payable on the party and party basis. For a discussion of the jurisdiction to order indemnity costs and its exercise see Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 per Sheppard J at 256-257 and NMFM Property Pty Ltd and Others v Citibank Ltd (No 2) (Court’s “NMFM” Judgment No 11) (2001) 109 FCR 77 per Lindgren J at [53] to [90].
Relevant Statutory Considerations In Relation To Costs
Introduction
Submissions were made on behalf of the Wife in relation to the matters in s 117(2A)(a), (c), (d), (e) and (g) of the Act. The Wife also made submissions in relation to indemnity costs. As we have already observed, the Husband in his written submissions did not reply to the submissions of the Wife and with the exception of the matter in s 117(2A)(a), namely his financial circumstances, did not deal with the relevant statutory considerations.
We observe that no discrete submissions were made on behalf of the Wife in relation to the appeal by the Husband, the cross appeal by the Wife and the various applications and the Husband made no complaint about this approach. As such we shall consider the submissions as to the various applications and determine them in globo.
Section 117(2A)(a) – Financial circumstances
Section 117(2A)(a) of the Act requires consideration of the financial circumstances of each of the parties to the proceedings.
In his written submissions the Husband contended that he has been “effectively bankrupted by [the Wife], through decisions of the Family Court” in that although no formal bankruptcy order has been made, he has only such assets as he could retain in a bankruptcy, such as his furniture and his motor car.
As we observed at [69] of our reasons for judgment of 19 February 2010, the Wife, in her affidavit of 4 February 2010, gave evidence, which we have set out above, of her current financial position.
We observe that pursuant to the property settlement order the Wife is still owed the sum of $239,462.48 and as we observed at [18] and [19] of our reasons for judgment of 19 February 2010, if what the Husband contended during the hearing of the appeal was the extent of his financial circumstances, then the amount will probably never be paid by him and that the Stephens Trust would also not have the resources to enable the payment to the Wife.
Order 3 of 10 March 2009 provided that Kennedy Wisewoulds Lawyers invest the sum of $500,000.00 of the moneys held by them 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; the Husband’s liability for costs pursuant to 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. As we observed at [7] of our reasons of 19 February 2010, we were informed on 16 February 2010 that in respect of the costs order of the High Court and the order of the Full Court, the quantum of the costs had not been determined. We were also told that with respect to the proceedings determined by Strickland J on 30 November 2005 there were outstanding costs proceedings and any liability pursuant to s 117 of the Act had 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 reserved his judgment. We observe that on 10 March 2010 Strickland J pronounced judgment in the disqualification proceedings and refused the Husband’s application: reported as Stephens v Stephens (2010) 43 Fam LR 106.
On behalf of the Wife it was submitted that the funds held by Kennedy Wisewoulds Lawyers are not the subject of an order of the court and will ultimately be funds to which the Husband has an entitlement and are funds from which an order for costs may be satisfied.
On behalf of the Wife it was also submitted that, as well, the Husband has or has had $1,345,219.84 which he could use to satisfy an order for costs. This is the balance of the funds held by Kennedy Wisewoulds Lawyers which was paid to the Husband on 6 April 2009 pursuant to order 4 made by Coleman J on 10 March 2009. At [218] to [225] of our reasons for judgment of 24 December 2009 we dealt with this amount, and how the Husband disposed of these funds shortly after they were received by him.
It was submitted on behalf of the Wife that having unilaterally decided to distribute the amount of $1.3 million to the four children as a distribution of capital from the Stephens Trust, the Husband now contends that there is nothing left in the trust.
It was submitted on behalf of the Wife that, as a defence, the Husband cannot rely on his disposal of the funds that he knew might be required to satisfy an order for costs. It was submitted that “[h]is now alleged impecuniosity if true is based upon a self inflicted wound”. It was submitted that the alleged impecuniosity should not preclude making an order for costs against the Husband.
It was submitted on behalf of the Wife that the Husband “has the capacity to attempt to repatriate the [moneys] paid to the children particularly in circumstances where the said distribution to the children is being used by the husband to attempt to deprive the wife of funds to which she is entitled in the event of an order being made in her favour”.
It was also submitted on behalf of the Wife that having unilaterally decided to distribute the sum $1.3 million, it cannot be said that in those circumstances the Husband has been “effectively bankrupted by his wife”.
In the written submissions of the Wife reference was also made to what senior counsel for the four children informed Coleman J on 17 February 2009, namely, that the position of the children was that “the order of the court should be carried into effect and that [the Wife] should be paid whatever is proper under the orders”. It was submitted that, in those circumstances, the Husband has the capacity to seek the consent of the children “to repatriate the [moneys] paid to them when the said distributions to them is being used by the husband in an attempt to deprive the wife of funds to which she is entitled pursuant to the orders of this Court”.
Section 117(2A)(c) – Conduct of the parties
Section 117(2A)(c) of the Act requires consideration of the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters.
In the written submissions of the Wife it was stated that the Husband’s general conduct of the proceedings was dealt with in the submissions dealing with s 117(2A)(g) of the Act and the submissions in support of the application for indemnity costs.
Section 117(2A)(d) – Failure to comply with previous orders
Section 117(2A)(d) of the Act requires consideration as to whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court.
It was submitted on behalf of the Wife that the proceedings before Coleman J on 10 March 2009 and, as a consequence the subsequent unsuccessful appeal before us, were necessitated by the Husband’s failure to comply with the orders of Strickland J of 30 November 2005.
Section 117(2A)(e) – Outcome of the proceedings
Section 117(2A)(e) of the Act requires consideration of whether any party to the proceedings has been wholly unsuccessful in the proceedings
It was submitted on behalf of the Wife that the Husband’s appeal and his applications to extend time for leave to appeal against the orders of Watts J and Cronin J, his applications for leave to adduce further evidence filed on 30 March 2009 and 9 November 2009 and his oral application for leave to reopen the hearing of the appeal on 4 December 2009 were all wholly unsuccessful.
It was submitted on behalf of the Wife that her application for leave to adduce further evidence filed on 21 May 2009 was wholly successful. It was submitted that whilst the Husband was granted a stay of the orders of Coleman J his appeal against those orders upon which the application for a stay was based, ultimately failed. The Wife’s cross-appeal was also successful.
Section 117(2A)(g) – Any other relevant matters
Section 117(2A)(g) of the Act requires consideration of such other matters as we consider relevant.
It was submitted on behalf of the Wife that the Husband conducted all the proceedings both at trial and on appeal on the basis that the decision of the High Court was wrong and that the moneys held by the stakeholders, save and except for the sum of $1,038,000.00 which the Husband conceded should be paid to the Wife, was the property of the children’s trusts and as such should be paid to those trusts. It was submitted that it was not until the hearing on 4 December 2009 that the Husband ultimately conceded that funds paid to him by the stakeholder pursuant to the orders of Coleman J were in fact the property of the Stephens Trust.
It was submitted on behalf of the Wife that the proceedings were a direct result of the Husband’s intention to deal with the sum of $4.4 million “in a manner contrary to any obligation he may have had as trustee and his obligation to pay [the Wife] the amounts to which she was entitled pursuant to the order of Strickland J”. Reference was made to what we said in our reasons for judgment of 24 December 2009 at [133] that the Husband “did not put in issue that he had converted certain assets into cash which was in excess of $4.4 million and that he threatened to destroy the cash. The behaviour of the Husband and his threat to destroy the assets of the Trust is hardly consistent with a person who is cognisant of the duties and obligations of a trustee”.
It was submitted on behalf of the Wife that notwithstanding his actions, when confronted with the Wife’s application to enforce the property settlement order the Husband sought to hide behind his “obligations” as trustee claiming that the funds belonged to the children’s trusts and that the court could not make an order satisfying his personal obligation to the Wife from funds which belonged to those trusts. It was submitted that the Husband’s actions were contrary to the findings of the trial Judge, the Full Court and the High Court.
It was submitted on behalf of the Wife that the Husband “actively and deliberately sought to deprive the wife of the fruits of her judgment”. It was submitted that “[h]aving unsuccessfully pursued every avenue of appeal in total disregard of the decision of the High Court the husband turned to self help in flagrant disregard of his legal obligations, disregarding the very principles of trust upon which he sought and continues to seek to rely”.
It was submitted on behalf of the Wife that we found at [28] of our reasons for judgment of 24 December 2009 that the Husband’s conduct was of concern.
It was submitted on behalf of the Wife that the Husband’s application for leave to adduce further evidence filed on 30 March 2009 sought to direct our attention to the notations on envelopes containing the money which the Wife removed from the Husband’s home. It was submitted that the Husband contended that the envelopes, with notations, in which the money was found should have been produced and in so far as the Wife had not done so she had not provided a full and frank disclosure. It was submitted that the Husband relied upon that contention both in support of his application for leave to adduce further evidence and his applications to extend the time to apply for leave to appeal against the orders of Watts J and Cronin J. It was submitted that it was ultimately “conceded” by senior counsel for the Husband that the copies of the envelopes annexed to the Husband’s affidavit were not true copies and that two amounts had been added by the Husband. It was submitted that the Husband’s conduct had the potential to mislead the Court and was only “corrected” upon the matter being brought to the Husband’s attention by the Wife’s solicitor.
It was submitted on behalf of the Wife that a significant example of the Husband’s conduct generally, and in particular the manner in which he has conducted the proceedings, is the Husband’s failure to disclose the resignation of Mr J as trustee of the three children’s trusts and the resignation of W Stephens as trustee of the W Stephens Trust. It was submitted that the Husband knew that at all relevant times, including during the proceedings before the High Court, that Mr J was not a trustee of the children’s trusts and he continued to allow the court to be misled as to the relevant parties to the proceedings. It was submitted that it was the Wife who brought Mr J’s resignation to the Court’s attention.
The submissions made on behalf of the Wife in relation to indemnity costs are also relied upon by her when considering the matters in s 117(2A) of the Act. We shall briefly refer to those submissions.
It was submitted on behalf of the Wife that the Husband “was a practising member of the legal profession for many years and one of Her Majesty’s Counsel for over 30 years”. It was submitted that the Husband should therefore understand his obligation to comply with court orders. It was submitted that:
[H]aving exhausted all his legitimate remedies the husband actively challenged the authority of the court, failing to comply with the orders of Strickland J, as upheld by the High Court, whilst actively taking steps which if successful would unlawfully and illegally prevent the wife obtaining the benefit of the orders made in her favour. His conduct upon the evidence as found by the Trial Judge and this Court showed a contumacious attitude to his legal obligation to comply with the court order.
It was submitted on behalf of the Wife that the Husband also conducted the appeal, and in particular made written submissions in his capacity as “co-trustee” of the children’s trusts, in a manner which “demonstrated a total disregard and lack of respect and or contempt for the orders of the court, and its members and his obligations both as a litigant and a former member of the profession and one of her Majesty’s Counsel”.
Conclusion
Order for costs
As we have observed, the only statutory consideration the Husband appears to rely on is s 117(2A)(a) of the Act being the financial circumstances of the parties.
Our first observation is that there is a fund available from which an order for the Wife’s costs could be satisfied, namely, the amount of $500,000.00 held by Kennedy Wisewoulds Lawyers. However, given that this fund is also available to satisfy 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; any costs ordered by Strickland J with respect to the proceedings determined by him on 30 November 2005; and the additional amount of interest the Husband will have to pay in consequence of the orders of 24 December 2009, there may be insufficient funds left to satisfy any order we may make. There are also the costs of the application for special leave to appeal to the High Court and the costs of the proceedings determined by us on 19 February 2010. There also remains for determination any liability for costs of the proceedings determined by Coleman J on 10 March 2009.
Next, the Husband provided no evidence of his current financial circumstances. In his written submissions the Husband contended that he has only such assets as he could retain in a bankruptcy, such as his furniture and motor vehicle. However, we observe that the Husband gave no evidence of his income including, for example, whether he has any royalty or other type of income from the legal text of which he is the author.
We also observe that although the Husband had the benefit of an amount of $50,000.00 from the fund held by Kennedy Wisewoulds Lawyers, he has given no evidence explaining how he was able to retain senior counsel and junior counsel for the purposes of the appeal before us and the subsequent proceedings, including in the High Court.
We also observe that the Husband was on notice that costs would be sought in the event that he did not succeed. We take into account that the Husband made a distribution of capital of approximately $1.3 million at a time when he was aware of his obligations pursuant to costs orders of the Full Court and the High Court and his potential liability for costs of the proceedings before Strickland J and Coleman J and the pending further appeal proceedings. However, it is not a matter to which we can attach any or any significant weight given that the children are not parties to these costs proceedings and no relief was sought pursuant to s 106B of the Act.
Next, even if we were satisfied that the Husband did not have the capacity to meet an order for costs, we repeat what the Full Court observed in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)), namely, that there is no “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”.
We also observe that in McDonald and McDonald (1994) FLC 92-508 Mushin J said at 81,271:
In the first instance it is important to note that the principal proceedings concerned questions of custody. As between the parties in the strict sense of that word, it is rare for an order for costs to be made in such proceedings. Circumstances such as a totally unmeritorious case on one side, an attempt to vary a custody order which does not establish a prima facie case, the withholding of evidence, the giving of false evidence and like matters are common bases for such an order. However, where no factor of this type exists, there would usually need to be a significant disparity in financial circumstances between the parties before a costs order were made.
In I and I (No 2) (1995) FLC 92-625 the Full Court (Nicholson CJ, Ellis and Buckley JJ) referred to what Mushin J said in McDonald and said at 81,277:
With respect to Mushin J, we see nothing in the provisions of s.117 to justify the approach to the question of costs in custody or any other proceedings suggested by him. The matters to which he referred are matters which, in an appropriate case, would be taken into account in determining whether the circumstances justified the making of an order for costs in a particular case. However, whether such matters exist or not, the other relevant matters referred to in s.117(2A) must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs. The financial circumstances of the parties is but one of those matters and those circumstances must be taken into account whether or not there is a very significant disparity in financial circumstances between the parties. (emphasis added)
We generally agree with the submissions on behalf of the Wife and are satisfied that she has established a justifying circumstance. The consideration to which we attach the most significant weight is that the Husband was wholly unsuccessful in the proceedings. We dismissed the Husband’s appeal. We allowed the Wife’s cross-appeal. As well, the Husband’s application to extend time for leave to appeal against the orders of Watts J and Cronin J, his applications for leave to adduce further evidence filed on 30 March 2009 and 9 November 2009 and his oral application for leave to reopen the hearing of the appeal on 4 December 2009 were also unsuccessful.
We also take into account under s 117(2A)(g) of the Act the conduct of the parties to the proceedings and refer to what we described in our reasons for judgment of 24 December 2009 and 19 February 2010: see Brott and Joachim. We have no doubt that the Wife has incurred significant professional cost and expense by reason of the conduct of the litigation by the Husband.
We have also taken into account the financial circumstances of the parties. However, in our view, the other considerations we have referred to overwhelmingly justify making orders for costs in favour of the Wife including an order for costs of these proceedings.
Quantum of costs
On behalf of the Wife it was submitted that the circumstances in this case are so exceptional as to justify the making of an order for indemnity costs.
In accordance with r 19.08(3) of the Rules, the Wife attached to her written submissions a copy of a costs agreement signed by her, and letters of variation to the agreement. As we have also observed, attached to the submissions is a schedule of the Wife’s costs and disbursements calculated in accordance with the costs agreement in relation to the appeal proceedings in 2009. The costs total $115,222.05.
Notwithstanding our general agreement with the submissions on behalf of the Wife, including that the proceedings were for enforcement, the disbursement of the amount of approximately $1.3 million, and other matters, we are not persuaded that the presumption in favour of party and party costs does not prevail. The Husband’s behaviour may in some respects fall within the description identified by Gummow J in Botany Municipal Council v Secretary, Department of Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 415, as explained by Lindgren J in NMFM Property Pty Ltd and Others v Citibank Ltd (No 2) at [54], as “ethically or morally delinquent”. However, as Lindgren J made clear at [56]: “The conduct of a party that is relevant to the issue of indemnity costs is the party’s conduct as litigant” (emphasis in original). Lindgren J then gave an example in the same paragraph of a “proved case of fraud” and said that, in his opinion, “the presumption is that a costs order against the fraudulent party will be on the party and party basis”.
In conclusion, we cannot be satisfied that the Husband’s appeal and his defence of the Wife’s cross-appeal was hopeless and did not give rise to any “arguable factual and legal questions”: NMFM Property Pty Ltd and Others v Citibank Ltd (No 2) at [72] to [81]. Nor are we satisfied that the Husband’s conduct as litigant in the appeal proceedings before us would justify a special order for costs. However, this finding does not preclude the Wife raising issues about the Husband’s conduct in the costs proceedings before Strickland J and Coleman J.
Payment of costs
We propose to make an order that the Husband pay the costs of the Wife to be assessed on a party and party basis. We also propose to make an order that insofar as there may still be funds held by Kennedy Wisewoulds Lawyers pursuant to order 3 of 10 March 2009 such funds may be applied towards satisfaction of the Husband’s obligation pursuant to the costs order we propose to make. This will be a matter for the discretion of the Wife. However, if resort is had to such funds to pay the costs and there are insufficient funds available to wholly satisfy the order then the Husband will remain responsible for payment of any balance remaining.
I certify that the preceding one-hundred and twenty (120) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court of May, Boland & O’Ryan JJ delivered on the date 9 September 2010.
Associate:
Date:9 September 2010
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