Stinson & Stinson

[2013] FamCA 104

FAMILY COURT OF AUSTRALIA

STINSON & STINSON AND ANOR [2013] FamCA 104

FAMILY LAW - COSTS – refused including to a third party demanding a confidentiality agreement

Family Law Act 1975 (Cth)

APPLICANT: Ms Stinson

RESPONDENT: Mr Stinson

INTERVENOR: Mr Hunt

FILE NUMBER: MLC 9869 of 2011

DATE DELIVERED: 26 February 2013

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By way of written submissions

SUBMISSIONS RECEIVED FROM:

SOLICITOR FOR THE APPLICANT: Taussig Cherrie Fildes

SOLICITOR FOR THE INTERVENOR: HWL Ebsworth Lawyers

Orders

1. That there be no order as to costs

2. That the costs applications by the third party and the wife are dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Stinson & Stinson and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 9869  of 2011

Ms Stinson

Applicant

And

Mr Stinson

Respondent

REASONS FOR COSTS JUDGMENT

1. These reasons concern costs applications by Mr Hunt (the third party) and Ms Stinson (the wife) each against the other. I do not propose to make any orders for costs.

2. The third party has nothing to do with the parties to the marriage other than he is involved in business with the husband.

3. The property proceedings between the husband and the wife have now resolved.

4. Unfortunately, whilst the issues giving rise to the dispute were determined in July and August 2012, because of my absence and other subsequent commitments, these reasons have been unreasonably delayed. I take responsibility for that.

5. The issue that gave rise to these applications was a little unusual. The third party sought to intervene in the property dispute between husband and wife because he wanted orders that required the wife and her advisers to execute a “confidential undertaking” before she was given documents that she wanted to see as part of the husband’s obligation (directly or indeed indirectly) of disclosure. The husband had been ordered by a registrar to provide that disclosure. The wife opposed the third party’s application simply by acknowledging that she had a duty to keep any documents confidential.

6. To put it in context, the polarised positions of the parties were clear as articulated by their respective senior counsel. The wife argued there was no evidence that would justify requiring her to enter into a confidentiality agreement having regard to her express acknowledgment as written by her solicitor as her understanding of her obligation once documents were given to her and her agents.  The third party wanted complete protection from publication of the information bearing in mind it was the Court (by its order) requiring him to disgorge documents.

7. I observed at the time that having regard to the nature of the third party’s business, I accepted that the risk of exposure and competitive damage was real. In other words, it was obviously too late once the information was in the public domain.

8. Having acknowledged the third party’s concern, I then said:

   Family law litigation is no different from any other litigation save that the rules of court require the parties to the marriage to make comprehensive disclosure of any document that might enable the other party to the relationship to understand the financial circumstances in dispute.  Of necessity, that obligation captures and infringes upon the privacy of third parties who are involved with a party to the marriage.  It is for that reason that the Court provides the protection of what is described as the implied undertaking but which is in reality, an enforced obligation. 

9. I accepted that there were industry competitors of the third party who could take advantage of the publication and I found his concern reasonable. In finding that however, I made my view clear that the third party was entitled to a reassurance that the Court and the wife took the obligation seriously.  I put the third party into a category which was the exception rather than the rule that justified a reiteration of how the Court saw the obligation. 

10. Notwithstanding the document proposed by the third party may have been seen as a standard commercial litigation practice document, I was not prepared to have it imposed on the wife and her advisers because, apart from anything else, many people would be handling documents including court staff.

11. I concluded by saying:

    In my view, once satisfied that there is a basis to reiterate the obligation expressly, careful consideration needs to be given to how that obligation is executed.  The power to limit the extent of that order lies in s 114(3) of the Act.  Because the Court is being asked to reiterate the obligation it imposes, the Court should set the limits.

    In my view, the undertaking should amount to an express acknowledgement of the obligation not to use the documents for any other purpose than specifically within the proceedings and that the obligation lies with the principals to be responsible for agents and servants.  The undertaking must set out the consequences of a failure to comply on the basis that the Court might be asked to deal with the breach by way of contempt of court process.  Because there is a prospect of an unwitting or negligent breach of the obligation, it should set out the prospect of damages being ordered in the event that they are proved to have befallen the claimant.  Because of the jurisdictional problems of this Court associated with claims for damages, that needs to be carefully spelt out.

    For those reasons, I am satisfied that it is appropriate for the wife and her solicitors to sign for the benefit of [Mr Hunt] an express acknowledgement of the obligation that they have to keep his documents confidential in the sense of not being used for any other purpose than the proceedings themselves.

12. I then made the following orders:

    1.That the wife forthwith execute an acknowledgement addressed to the applicant that she will keep all documents provided by him confidential and that they will not be used for any other purpose than the proceedings.

    2.That the wife’s firm of solicitors execute an acknowledgement addressed to the applicant that:

    (a)they will keep all documents provided by him confidential and that they will not be used for any other purpose than the proceedings;

    (b)they will advise all professional advisers of the wife of that acknowledgement with a request that before being given any documents, they too will keep the documents confidential;

    (c)they will ensure all their staff and agents are aware of their acknowledgement.

    3.That for the purposes of paragraph 1, the wife’s acknowledgement include a statement that a breach of that confidentiality may expose her to an application:

    (a)for damages; and

    (b)that she be dealt with for contempt of court.

    4.That for the purposes of paragraph 2, the solicitors acknowledgement include a statement that a breach of that confidentiality may expose them to an application:

    (a)for damages; and

    (b)that they be dealt with for contempt of court,

    including in relation to breaches by staff, agents and other engaged professionals.

13. Arising out of those orders, there was a further dispute but that does not affect what I am now asked to do.

14. The third party submitted:

    ·the wife was wholly unsuccessful;

    ·the combined effect of the provisions in s 117(2A) relevant to these proceedings and to which I shall turn below, amounted to circumstances justifying an order for costs against the wife; and

    ·if an order was made, the court should fix the costs.

15. The third party’s submission acknowledged the provision in s 117 of the Act which commences by saying that each party shall bear their own costs. That principle does not apply if there are circumstances which justify a departure from it. If the Court considers there is a justifiable circumstance, then whether and what order should be made requires a consideration of s 117(2A).

16. I do not accept that by simply referring to the collective effect of s 117(2A), one can say that an order should be made. This was a contentious dispute involving a person connected by commercial interests to the husband but otherwise having nothing to do with the matrimonial dispute. As I mentioned above, the third party wanted the reassurance that the Court treated the obligation seriously and would require the wife to state the same. What was obvious however was that I did not accept that the sensitivities justified the approach taken by the third party.  His approach was to insist on a comprehensive document being executed and I rejected that. To therefore say that the wife was “wholly unsuccessful” was not right.

17. The third party did not accept the wife’s acknowledgment given before proceedings began and the difference between her position and that of my determination was that I required her to acknowledge her obligation formally and the consequence of any breach.

18. The paucity of authority in this Court might have justified the wife’s adopted position as a result of the High Court’s view which I set out in my reasons. The third party had to show that there was some exceptional reason to make an order of the type envisaged by the High Court. As I found, there was such a reason but not to make an order of the type or magnitude he sought.

19. On that basis, I would find there was a justifiable circumstance to depart from the principle in s 117 because the third party had to come to court to get a formal acknowledgment of the wife’s obligation; she having simply brushed aside his request by saying she understood what her obligations were. But that is not the end of the matter. When referring to s 117(2A), the third party’s submission set out:

    ·the wife had the financial capacity to pay;

    ·there were no legal aid considerations;

    ·no conduct was relevant;

    ·there was no failure to comply with orders;

    ·the wife was wholly unsuccessful; and

    ·the correspondence from the wife denied the need for confidentiality.

20. The last two dot points must be rejected. I have already dealt with the first. In relation to the second, I do not accept that the wife denied the need for confidentiality. Quite the opposite, her case was conducted on the basis that she acknowledged her obligation and she maintained that there was no evidence to justify the exercise of the discretion required to make the injunctive order sought by the third party. I accept that is correct.

21. It is correct to say that this was an unusual point and there was a lot of money at stake. The third party apparently has significant resources but so does the wife. The third party has spent a significant amount on his lawyers as was indicated by the various documents attached to the submission. Indeed, the claim was for over $60,000 but it was his choice to engage with legal practitioners to that extent.

22. Apart from the justification to depart from the s 117 principle because of what I have said in paragraph 18, there was otherwise nothing unusual about this case. It was a discovery dispute and the extent of discovery is often a part of financial proceedings including in relation to third parties. Bearing in mind the clear philosophy of s 117, the matters set out in paragraph 19 do not provide a justification for a costs order.

23. In my view, notwithstanding the unusual nature of the application and the paucity of authority and despite the bland response of the wife, this is not a case where I should exercise the discretion and make an order at all.

24. A similar costs application was made by the wife. That arises out of what the wife described as the third party’s insistence on the matter being litigated after her limited offer of acknowledgment of confidentiality. It was submitted that the claim by the third party for costs was audacious and bold.

25. The same legislative provisions were canvassed by the wife.

26. The wife asserted that the third party was intransigent and refused to explore compromises and preferred to take “every point”. It was then submitted that it was the third party who was “wholly unsuccessful” because all of what he sought had been rejected.

27. I have already indicated what the respective positions were in what was undoubtedly a “stand off”.

28. I do not find there was any circumstance under which I could make an order in favour of the wife for what was referred to as the first hearing because each party had an argument and neither was wholly successful. This was a dispute that required a court intervention and neither party saw that as a solution. There is nothing therefore to justify a departure from the principle that each party should pay their own costs.

29. The wife also sought costs for a second hearing where the third party had requested a relisting after still disputing the extent of the acknowledgment. That issue was quickly resolved by some discussion between counsel and I suspect, a clear indication that what I had written, I did not intend to alter. In my view, this was a matter in which the lawyers should have sat down and resolved the issue rather than required intervention by the Court. The wife in my view was in no stronger position on that score than was the third party. Each was prepared to engage senior counsel and expend significant costs after the earlier determination. Whilst that is not unusual, the provision in s 117 must be there for a specific reason. There is nothing unusual about what these parties were doing after my determination such as would justify me making any order for costs in favour of the wife.

30. Both applications are therefore dismissed.

I certify that the preceding Thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 26 February 2013.

Associate: 

Date:  26 February 2013