Stopford Malloy and Malloy & Ors

[2020] FamCA 758

FAMILY COURT OF AUSTRALIA

STOPFORD MALLOY & MALLOY AND ORS [2020] FamCA 758

FAMILY LAW – COSTS – Application by the wife for costs – Where s 117(2A) of the Family Law Act 1975 (Cth) applied – Where husband poor financial circumstances is not a bar to an order for costs that is otherwise justified – Where husband continues to lead an extravagant lifestyle – First application, the husband was wholly unsuccessful in his application for an indemnity from the wife in relation to the receivers’ recovery against him – The husband pay the wife’s assessed party and party costs.

FAMILY LAW – COSTS – Where in the second application the husband may have involved himself in arguments about the subpoenas and ultimately the wife obtained the documents that she sought – Where the subpoenaed companies who primarily took up the running of the resistance to the production of documents – No order for costs against the subpoenaed companies.  

FAMILY LAW – COSTS – Where in the third application the proceedings were necessitated by the failure of the husband to comply with the previous orders of the court – The husband pay the wife’s assessed party and party costs.

FAMILY LAW – COSTS – Where in the fourth application the wife sought for a litigation funding order – Where wife’s application was successful – The husband pay the wife’s assessed party and party costs.

FAMILY LAW – COSTS – Non-party costs order sought – Where not sufficient to demonstrate that they were playing an active part in the conduct of the litigation –Wife application fails – Costs certificates ordered

Family Law Act 1975 (Cth) s 117

Bob Jane Corporation Pty Ltd v Barrrot FT Pty Ltd (No 2) [2012] SASC 89
D & D(Costs)(No 2) (2010) FLC 93-435; [2010] FamCAFC 64
Knight v FP Special Assets Ltd (1992) 174 CLR 178; [1992] HC 28
Medlon & Medlon (No 6)(Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157
Re JJT Ex Parte Victorian Legal Aid (1998) 195 CLR 184; [1998] HCA 44
S & S (1997) FLC 92-762

APPLICANT: Ms Stopford Malloy

FIRST RESPONDENT: Mr Malloy

SECOND RESPONDENT: Mr Q Malloy

THIRD RESPONDENT: The Malloy Group

FILE NUMBER: ADC 2595 of 2015

DATE DELIVERED: 8 September 2020

PLACE DELIVERED: Cairns

PLACE HEARD: Cairns (via Microsoft Teams)

JUDGMENT OF: Tree J

HEARING DATE: 13 May 2020, last written submissions received 25 May 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wells QC together with Mr McGinn

SOLICITORS FOR THE APPLICANT: Piper Alderman

THE FIRST RESPONDENT: In person

COUNSEL FOR THE SECOND AND THIRD

 RESPONDENTS:

Mr Harris QC together with Ms Floreani

SOLICITORS FOR THE SECOND AND THIRD RESPONDENTS: Barnes Brinsley Shaw Lawyers

Orders

1. That the First Respondent pay the Wife’s assessed party and party costs of and incidental to:

   a.   The Receivers’ Application in a Case filed 16 November 2017 for the costs of their receivership;

   b.   The Husband’s Amended Response to an Application in a Case filed 19 July 2018, seeking, inter alia, indemnity from the Wife for the receivers’ costs;

   c.   The Wife’s submissions filed 4 October 2018.

2. That the First Respondent pay the Wife’s assessed party and party costs of and incidental to:

   a.    The Wife’s Application in a Case filed 21 September 2018 (for enforcement of the arrears of spousal maintenance); and

   b.    The Husband’s Response filed 12 December 2018.

3. That the First Respondent pay the Wife’s assessed party and party costs of and incidental to:

   a.    The Wife’s Application in a Case filed 21 September 2018 (for costs as to litigation funding);

   b.    The Husband’s Response filed 12 December 2018.

4. That the proceedings listed in orders 1-3 be certified as fit for Senior and Junior Counsel.

5. That otherwise the wife’s Application in a Case filed 13 January 2020 be dismissed. 

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

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

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

FAMILY COURT OF AUSTRALIA AT CAIRNS

FILE NUMBER: ADC 2595 of 2015

Ms Stopford Malloy

Applicant

And

Mr Malloy

First Respondent

And

Mr Q Malloy & The Malloy Group
Second & Third Respondents

REASONS FOR JUDGMENT

Introduction  

1. On 13 December 2019, for reasons then published, (Malloy & Stopford Malloy [2019] FamCA 986, “first reasons”) I made orders disposing of, amongst other things, four Applications in a Case in these proceedings. Now, by further Application in a Case filed 13 January 2020, Ms Stopford Malloy (“the wife”) seeks costs orders in her favour in relation to each of those four Applications in a Case.

2. On 13 May 2020, I heard oral argument in relation to the 13 January 2020 Application in a Case, and ordered that, upon further written submissions in reply being filed by the wife, my decision in relation to her costs applications would stand reserved. This is that decision and the reasons for it.

Background

1. At paragraph 6 of the first reasons I said as follows:

   6. The wife was born in 1981 and hence is presently 38 years of age.  [Mr Malloy (“the husband”)] was born in 1969 and hence is presently 50 years of age. The parties commenced their relationship in [June] 2010, started cohabitating in [March] 2011, and married in 2013.  The only child to their relationship was born in 2014.  It is not in dispute that during cohabitation, the parties enjoyed a high standard of living.  The parties then separated in March 2015, although they remained living under the same roof for a time.

2. The principal proceedings were commenced by the wife on 15 July 2015, and have had a most complex litigious history, which I shall detail where necessary later in these reasons.

3. Initially the proceedings named only the husband as the respondent, however the husband’s father, Mr Q Malloy, (“Mr Malloy Senior”) and companies associated with him had been involved in the litigation from an early stage, and indeed ultimately Mr Malloy Senior and 48 companies associated with him (“the Malloy Group”) were formally joined as parties to the proceedings on 11 April 2019. However none of the four applications which I disposed of in the first reasons were commenced at a time when the Malloy Group were parties.

The application

1. By her Application in a Case filed 13 January 2020, the wife seeks orders as follows:

   1.That the First, Second, Third, and Fourth Respondents do pay the Wife’s costs of and incidental to:

   a.The Receivers’ Application in a Case filed 16 November 2017 for the costs of their receivership;

   b.The Husband’s Amended Response to an Application in a Case filed 19 July 2018, seeking inter alia indemnity from the Wife for the receivers’ costs;

   c.The Wife’s submissions filed 4 October 2018.

   2.That the First, Second, Third, and Fourth Respondents do pay the Wife’s costs of and incidental to:

   a.The Second, Third and Fourth Respondents’ Application in a Case filed 11 July 2017 as to striking out of subpoenas;

   b.The Second, Third and Fourth Respondents’ Application in a Case filed 2 November 2017 seeking an extension of time to file the Application in a Case of 11 July 2017.

   3.That the First, Second, Third, and Fourth Respondents do pay the Wife’s costs of and incidental to:

   a.The Wife’s Application in a Case filed 21 September 2018 (for enforcement of the arrears of spousal maintenance); and

   b.The Husband’s Response filed 12 December 2018.

   4.That the First, Second, Third, and Fourth Respondents do pay the Wife’s costs of and incidental to:

   a.The Wife’s Application in a Case filed 21 September 2018 (for costs as to litigation funding);

   b.The Husband’s Response filed 12 December 2018.

   5.That the Wife be granted leave to file a further affidavit in support of this application as to the amount of her costs and disbursements as to each of the Applications in a case filed:

   a.16 November 2017;

   b.11 July 2017;

   c.21 September 2018 as to enforcement of arrears of spousal maintenance; and

   d.21 September 2018 as to costs of litigation funding.

   6.That the Wife be granted leave to rely upon the following documents before the Honourable Justice Tree in the proceedings giving rise to His Honour’s judgment of 13 December 2019:

   a.the affidavit of Ms Stopford Malloy affirmed and filed on 30 September 2019, paragraphs [23]-[37];

   b.the Financial Statement of Ms Stopford Malloy affirmed and filed on 30 September 2019;

   c.the findings of this Honourable Court in its judgments of 13 December 2019 (His Honour Justice Tree – no citation details available), [2018] FamCAFC 1 at [11] and [2018 FamCAFC 6 at [7];

   d.the document sealed 3 May 2019 at 05:06 pm ACT time entitled “ENFORCEMENT APPLICATION – APRIL 2019 – WIFE’S MARKED REFERENCES TO HUSBAND’S LOAN LEDGER ENTRIES REFERRED TO AT [8] OF THE WIFE’S AFFIDAVIT SWORN 18.10.2018, AND FILED 19.10.2018”;

   e.the Wife’s affidavit filed 19 October 2018 at [3]-[9].

   7.That the proceedings listed in orders 1-4 be certified as fit for Senior and Junior Counsel.

   8.Such further or other orders as determined by this Honourable Court. 

2. The orders sought in paragraphs 5, 6 and 7 did not prove controversial. However orders 1 to 4 (both inclusive) were contested by both the husband, who self-represented, and the balance of the respondents, who, like the wife, were represented by Queens Counsel and junior counsel.

3. In their written submissions, counsel for the wife did not draw a distinction between her application that the husband pay her costs, and her application that the other respondents pay her costs. However the basis upon which she seeks the latter to pay her costs – they being, at the time, non-parties to the litigation – warrants that aspect of her application being separately considered. I will therefore deal with her applications insofar as they seeks orders against the husband first, and then go on to consider those applications insofar as they relate to the other respondents.

Relevant statutory provisions

1. Section 117 of the Family Law Act1975 (Cth) (“the Act”) relevantly provides as follows:

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

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

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

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

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

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

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

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

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

   g)such other matters as the court considers relevant.

   …

The four applications

Overview

1. In the order in which I dealt with them in the first reasons, the four applications in respect of which costs are now sought, were:

   a)Firstly, an Application in a Case filed 16 November 2017 by receivers appointed under previous orders to the income and property of the husband, to have their remuneration approved and ordered to be paid (“first application”);

   b)Secondly, an Application in a Case filed by the wife on 11 July 2017, seeking the trustees of two trusts associated with the Malloy Group to produce unredacted versions of documents pursuant to subpoenas (“second application”);

   c)Thirdly, an application filed by the wife on 21 September 2018 seeking enforcement of earlier orders for the payment of spouse maintenance, which was in significant arrears (“third application”); and

   d)Fourthly, an Application in a Case filed by the wife on 21 September 2018, which sought what is commonly known as a litigation funding order (“fourth application”).

First application

1. Turning to the first application, on 5 September 2016, Bryant CJ appointed receivers to the income and property of the husband. From those orders the husband appealed, and subsequently, pursuant to an application filed by the husband on 4 October 2016, on 7 December 2016 Bryant CJ stayed the 5 September 2016 orders. However between 5 September 2016 and 7 December 2016, the receivers had undertaken work, reflected in their own fees of $34,640.93, and disbursements incurred in the sum of $15,737.14.

2. On 5 October 2017 the husband’s appeal from the orders appointing the receivers was allowed, and the orders appointing the receivers were set aside.

3. By the first application, the receivers sought to become parties to the proceedings, and further, sought orders approving their fees and disbursements, and that they were entitled to be indemnified in respect of them from the property of the husband, and have a lien over his property as security for their payment. The husband opposed such orders, but in the event that they were made, sought an indemnity from the wife in respect of any sum which may be recovered by the receivers’ from him.

4. In the first reasons I explained why, in my view, there ought be approval of the receivers’ fees and disbursements, and why there ought be declarations as sought by them. I further explained why, in my view, there should be no requirement that the wife indemnify the husband in respect of any sums recovered from him.

Second application

1. The second application was filed by the wife on 11 July 2017. In the first reasons I set out the history behind that application as follows:

   52. As long ago as 2 May 2017, the solicitors for the wife issued a tranche of subpoenae to a number of companies.  Some of the recipients thereafter filed Notices of Objection. On 11 July 2017, an Application in a Case was filed by the solicitor for three subpoenaed companies, seeking orders that the subpoenae directed to them be set aside. As it transpired, that application was out of time, and accordingly, when that Application in a Case first came before me on 26 October 2017, I made orders for a timetable for the filing of a further Application in a Case seeking to extend time for the bringing of the 11 July 2017 application, and for the filing of further material. 

   53. Although it was anticipated that the matter would then proceed on 15 December 2017, it did not, but rather that date was varied by a Registrar’s order of 5 December 2017 to 1 March 2018.  However on 26 February 2018 I acceded to an application that that date be vacated in the light of the late provision of material by the wife, and adjourned the hearing to 18 May 2018.  But yet again, material was filed late by the wife, to which the subpoenaed companies wished to respond.  The matter was then set for hearing on 21 June 2018, although by then documents had commenced to be provided by the subpoenaed companies, albeit in a redacted form, and without prejudice to their Notices of Objection or applications to set the subpoenae aside. To accommodate ongoing discussion between the parties, the matter was then adjourned to 26 October 2018, on which occasion consent orders were made, in light of the continued negotiations between the parties, that the matter be listed for hearing again on 6 December 2018.

   54. By then, the matters in dispute between the parties had markedly narrowed.  On that day I heard relatively brief oral submissions in relation to the remaining issues, and reserved my decision.

   55. I should say that it seems likely that the subsequent joinder of the Malloy Group companies may well have overtaken the subpoena dispute, but no party has formally raised that with the court. It therefore seems that it is still incumbent upon me to determine the slender matters remaining then in dispute.

2. Later, I set out the matters in dispute, as follows:

   58. As I have indicated, albeit without prejudice to their Notice of Objection and application to set aside the subpoena, in fact considerable, albeit redacted, material has already been made available by the subpoenaed companies to the wife.  Although strictly speaking, the application for an extension of time in which to bring the applications to set aside the subpoena remains live, as does the primary application, and indeed a question of whether or not the subpoena should be permitted to be amended, both counsel for the wife and the subpoenaed companies adopted a pragmatic approach, which distilled the issue for resolution to a narrow one, namely whether the special purpose financial reports for the Malloy Trust and the AP Trust should be required to be produced in an un-redacted form. 

   59. If so, then the next issue for determination was the manner by which the release of the further material should occur.  The first argument of the subpoenaed companies was that I should appoint an expert accountant to determine which of the line items should be revealed.  In the alternative, they invited me to examine the accounts in an un-redacted form (which were provided to me in a sealed envelope) so that I could determine for myself what additional items should be revealed. 

   60. The wife resisted both of those alternatives, but conceded that, given the potential sensitivity of the information in the accounts, the un-redacted versions should only be made available to her legal advisors, and any expert accountant retained by them to examine the accounts.

3. Thereafter in the first reasons, I explained why, in my view, further production of the documents was required, and that the production should be of unredacted documents, upon the undertaking of the wife’s legal, and other, advisers, to keep them confidential.

Third application

1. The third application sought enforcement of spousal maintenance arrears. The primary remedy which the wife sought was the fresh appointment of receivers in relation to the husband’s assets, however she also sought an order for delivery up of specific chattels, orders for delivery up of the husband’s household contents, and an order for the oral examination of the husband.

2. In the first reasons I explained why, in my view, I was not persuaded that there should be a further order for appointment of receivers, nor that the husband should be required to deliver to the wife his household contents, however I was satisfied that there should be an order for delivery up of some specific chattels and for an enforcement hearing in relation to the husband.

Fourth application

1. The fourth application sought for a litigation funding order. The order which she sought was what is commonly referred to as a dollar-for-dollar order, and ultimately I was persuaded that such an order should be made in this case.

The claim for costs against the husband

Relevant s 117(2A) considerations generally

1. In the first reasons I commented upon the parties’ financial circumstances in several locations. For instance, at paragraph 128:

   Leaving aside the vintage of the representation, which pertains to 1 July 2014 – 30 June 2015, it does seem clear that the husband’s lavish lifestyle is met by drawings, reflected in loan accounts, from various Malloy Group entities. But there is no sound reason to think that the decision whether to permit a particular drawing lies with the husband, rather than his father as the husband asserts.

2. Later, at paragraph 154:

   It is not in contention that the husband continues to lead an extravagant lifestyle of luxury housing and expensive, exotic cars. On the other hand, the wife is in receipt of social security and the $650 weekly payment made by the husband, and only has the benefit of legal representation because her solicitors are prepared to act for her, seemingly on a no-win no-fee basis.  Her counsel have similarly agreed to act for her, but have not necessarily agreed to continue to do so at any trial.

3. Later again, at paragraph 155:

   The following points tell in favour of a litigation funding order in the wife’s favour:

   …

   ·Despite the husband being without income, he plainly has his lavish lifestyle funded by his father’s largesse, albeit structured by way of drawings, with a corresponding entry in his loan accounts with various entities associated with his father;

   ·The husband’s loan accounts disclose they have been utilised to pay the husband’s father’s legal fees as well.  Whilst that may have been at the instigation of those who undertake book keeping for the relevant entities, it nonetheless shows the flexibility of the husband’s arrangements;

   ·In light of the above, it is self-evident that the husband’s financial position is vastly superior to the wife’s, and can be legitimately be regarded, as counsel for the wife suggests, as unlimited;

   …

4. As I understand it, the husband’s appeal against the orders consequent upon the first reasons includes challenges to those findings. Further it appears as though the husband contends that in any event, now his financial circumstances should be assessed afresh.

5. As to his current financial circumstances, the husband says in his affidavit filed 23 April 2020 that:

   ·He does not own any properties or vehicles [paragraph 30];

   ·His father is now refusing to loan him monies beyond the present $650 per week [paragraphs 29 and 36];

   ·That he is unemployed and on Centrelink benefits [paragraphs 32 and 37];

   ·That he has been recently advised that he, his partner and their child, will need to leave the house they are presently occupying, as it is being sold by the mortgagee (associated with Mr Malloy Senior and the Malloy Group) and has “since moved with our son into my brother’s apartment” [paragraphs 44 and 45];

   ·That he has no money [paragraph 32] or financial resources [paragraph 51];

   ·That his previously apparently good relationship with Mr Malloy Senior is now poor, as he has had falling out with him as a result of the cost of this litigation [paragraph 34];

   ·He is resented by other members of his family [paragraph 34] and Mr Malloy Senior has “even refused to assist in the purchase of a new television and some minor furnishings for [the husband’s] home” [paragraph 51]. Further Mr Malloy Senior has denied the husband’s “numerous questions” for employment. It has now got to the point where the husband “cannot even raise the subject of requesting further money as it always leads to an argument. [Mr Malloy Senior] refuses to provide me with any additional money despite my numerous requests for financial assistance” [paragraph 54]. Further “on 8 April 2020, the husband received a letter from Mr Malloy Senior instructing him “to not continue requesting any further financial assistance as he refused.”

6. Whilst I should say that I entertain real suspicion that the husband’s apparently poor present financial situation – if it indeed be so – is likely an engineered ruse, the material does not allow me to presently so conclude. Further, even if it be a tactical arrangement that the husband is no longer able to access Mr Malloy Senior’s largesse by way of increase in his loan beyond $650 per week, nonetheless it would seem to be the actuality of the husband’s present circumstances.

7. However correctly, the wife identifies that, even if the husband is in the parlous financial circumstances he claims, that is not a bar to an order for costs that is otherwise justified: D & D(Costs)(No 2) (2010) FLC 93-435; Medlon & Medlon (No 6)(Indemnity Costs) (2015) FLC 93-664 at [23].

8. As to the wife’s financial circumstances, at paragraphs 35 to 37 of an affidavit of Ms Haar, (“the wife’s solicitor”) filed 13 January 2020, she relied upon earlier material (being paragraphs 23 to 37 of an affidavit filed by the wife on 30 September 2019) and the wife’s statement of financial circumstances also filed that date. The wife’s solicitor, has deposed in the more recent affidavit that she was instructed, and believes, “that the wife’s financial circumstances are very poor.” Particularly she has the care of the parties’ child, who has an autism diagnosis, and she is dependent upon Centrelink benefits.

9. For his part, whilst not disputing the wife’s financial statement of 30 September 2019, in his affidavit filed 23 April 2020, the husband says that those figures demonstrate that wife has a “net equity of approximately $202,100.” In addition, she owns a car, which he says he believes to be worth $15,000.

10. Neither the husband nor the wife are in receipt of legal aid.

11. The wife relies upon the husband’s failure to make any real effort to pay spouse maintenance arrears as practically having necessitated her bringing the proceedings, at least for enforcement. As to that, as at 29 March 2019, the spouse maintenance arrears were agreed to be $337,965.02 (first reasons at [124]). The wife contended that the husband’s failure to discharge the arrears was “flagrant.” I dealt with that submission in the first reasons as follows:

    125. It also convenient under this sub-heading to deal with the wife’s suggestion that the husband’s non-compliance with the court’s orders is “flagrant.”  It is flagrant in the sense that, although he is paying $650.00 per week (albeit via one of the Malloy Group companies) his breach is otherwise continuing, and there is no suggestion of any attempt to purge his non-compliance.  However the husband has proffered an explanation as to why he is unable to meet spouse maintenance, which does not seem to be in dispute, namely that his father is no longer prepared to make monies available to him sufficient to discharge his obligations to pay all of the spouse maintenance. 

    126. Further, the husband has sought to have the spouse maintenance order discharged, but that was rejected by the Chief Justice on the basis that it was reasonably foreseeable at the time the husband entered into the consent order, that his father would withdraw continued funding so as to meet his obligation, which determination was not disturbed on appeal.  Whilst I express no view as to the correctness or otherwise of the Chief Justice’s decision in that respect, in the sense of whether or not I would make the same decision, appraised of the same facts, it cannot be said that the husband is wilfully refusing to use means demonstrably at his disposal to discharge his obligations to pay spouse maintenance.  In that sense, he is not acting in flagrant breach of the spouse maintenance orders.

12. Later, when dealing with the application for delivery up of specific chattels, I said this:

    140. In the alternative, if a receiver was not appointed, the wife sought an order for delivery up of specific chattels said to be in the husband’s possession, comprising a watch, and a gold and diamond wedding ring (together with documents necessary to permit the wife to sell them).  In the event that the husband does not do so, but asserts that there has been an insurable event in relation to those items, then she seeks orders that the husband “do all things necessary to cause an insurance claim to be made in respect of the said watch and/or ring” and then to pay proceeds of any insurance claimed to the wife.

    141. The husband says that he may have mislaid his watch in Country AH when he was on holidays at his father’s property or yacht there.  That said, he does not really seem to be sure about it.  He thinks he will have a look for it when next in Country AH, but is not sure when that might be.  It is said that at the time it was mislaid, it was probably insured.  However the husband has made no insurance claim.

    142. The situation in relation to a wedding ring is a little less clear.

    143. The husband’s approach to the payment of the arrears is, at least, very casual.  At worst, it is contemptuous.  There must be some response by the court to aid the wife in recovery.  I am satisfied that there should be orders as sought by the wife, and will pronounce them.

13. Although the husband now vociferously disputes the first two sentences of paragraph 143, his protestations do not change my mind. I am well satisfied that the enforcement application was necessitated by the husband’s, at best casual, failure to comply with previous orders.

14. Turning then to the question of the parties’ relative successes, it is true that in the first application the husband was wholly unsuccessful in his application for an indemnity from the wife in relation to the receivers’ recovery against him. Likewise, to the extent that the husband may have involved himself in arguments about the subpoenas in the second application, ultimately the wife obtained the documents that she sought.

15. The third application is a little more problematic. Although the wife did not succeed in obtaining an order for the appointment of receivers, or for the delivery up of the husband’s household chattels; on the other hand she did succeed to the extent of orders for the delivery up of specific chattels, and an oral examination.

    The wife contends that her “application for enforcement should be viewed as a whole and not as discrete applications given the extremity of the husband’s non-compliance with orders for spousal maintenance and the need for a legal response to [the] wife’s application for aid as to recovery” (footnotes omitted) (wife’s Case Outline filed 12 May 2020 paragraph 5).

16. The wife was wholly successful in relation to the fourth application.

Evaluation

First application

1. Turning to the first application, insofar as the husband sought an indemnity from the wife in relation to any amounts recovered by the receivers from his assets, weighing the factors in s 117(2A) to my mind tells in favour of an order for costs in favour of the wife. Particularly the husband was wholly unsuccessful, and it was a complex application which necessitated the wife responding to it. The husband’s claimed financial circumstances ought not be a bar to such an order. There will therefore be an order that the husband pay the wife’s costs as sought by her at paragraph 1 of her Application in a Case filed 13 January 2020.

Second application

1. Turning then to the second application, it does not seem that the husband played any meaningful part in that dispute, at least as it appeared to me in the proceedings. Rather the subpoenaed companies were separately represented, and it was they who primarily took up the running of the resistance to the production of documents. In any event, as shall be seen, I am not satisfied that there should be any order for costs against the subpoenaed companies in relation to the second application.

Third application

1. Then as to the third application, I am satisfied that the proceedings were indeed necessitated by the failure of the husband to comply with the previous orders of the court. Whilst it is true that, from the wife’s perspective, the primary aspect of the third application did not succeed, nonetheless it was entirely appropriate that she sought the aid of the court to enforce its orders, which were plainly not being complied with by the husband. Again, the husband’s claimed financial circumstances should not preclude such an order. There will therefore be an order as sought by the wife in this respect.

Fourth application

1. As to the fourth application, the wife was wholly successful, and the husband wholly unsuccessful. Again I am not satisfied that the husband’s alleged financial position should operate as any bar to such an order. There will therefore be orders against the husband as sought by the wife.

Assessment of costs

1. The wife sought to quantify her costs, rather than have them assessed. However the material does not allow me to make a proper assessment as to their reasonableness. The order will therefore be as sought by the wife in the terms of her application, rather than descending to quantification, as desirable as that might have been.

Certificate

1. I did not understand it to be in serious contention that the proceedings were fit for senior and junior counsel; all parties in the proceedings which led to the first reasons were so armed. I will therefore also give the relevant certificate.

The wife’s claim for costs against the other respondents

Overview

1. Again, although the wife argued her applications in aggregate against the other respondents, it seems to me that there is a conceptual difference between her claim in relation to the application for costs arising from the second application, and her other claims. That is because some of the Malloy Group were active participants in the subpoenaed documents application, but were not active protagonists, at least from the perspective of instruction of counsel and the like, in the others.

The second application

1. As to the second application, counsel for the respondents other than the husband primarily contended that there should be no order for costs in relation to it because, although the wife ultimately succeeded on the slender issue to which that application reduced, the history of the proceedings show that:

   ·The subpoenaed companies had adopted a business-like approach to pragmatically making some documents available;

   ·On at least two occasions, the application of the wife was unable to proceed because she had filed documents late;

   ·The ultimate issue which I resolved in the first reasons, albeit in the wife’s favour, was nonetheless slender.

2. In the event that I was not attracted to that argument, then the counsel for the respondents other than the husband said that I should defer further consideration of the wife’s application until unredacted copies of the fee agreements and retainer agreements pertaining to the wife’s legal representation had been made available. Inferentially, counsel were foreshadowing an argument that, unless and until the wife has an obligation to actually pay her solicitors and counsel, no order for costs should be made in her favour.

3. It is correct to say that some, and potentially some significant, part of the wife’s costs of this application were necessitated by her own failure to file material promptly, or at least sufficiently in advance of the court date to enable it to be properly considered by the respondents.

4. Turning then to the factors enumerated in s 117(2A) of the Act, it is not in dispute that the other respondents are in far better financial circumstances than the wife.

5. Again, no party is in receipt of legal aid.

6. I do not view the other respondents’ conduct, in total, in relation to the subpoenas as being particularly relevant. They were seeking to maintain appropriate confidentiality to their information, which in the first reasons I ultimately recognised was appropriate by virtue of the undertakings which its release was conditioned by. Further, there is the conduct of the wife I have already adverted to.

7. Whilst generally the wife obtained the information which she sought, I do not construe the other respondents as having been wholly unsuccessful in that application.

8. Weighing all of those matters in the balance, does not persuade me that the usual position as to costs under s 117(1) of the Act should be departed from in this case. There will therefore be no order as to costs as between the wife and any of the respondents in relation to the subpoena application.

The other applications

1. Central to the wife’s claim here, is her assertion that, although not parties to them, nonetheless the other respondents possessed a relevant interest in those applications of the kind discussed by the High Court in Knight v FP Special Assets Ltd (1992) 174 CLR 178 (“Knight”). There Mason CJ and Deane J (with whom Gaudron J agreed) said as follows (at 192–193 ):

   For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.

2. It is not in dispute that a non-party costs order is exceptional. It was also not argued before me that s 117 does not permit an order against a non-party, as to which, see Re JJT Ex Parte Victorian Legal Aid (1998) 195 CLR 184 and S & S (1997) FLC 92-762.

3. The notion of costs against a non-party has been discussed extensively both in the United Kingdom and in Australia. In Australia, apart from Knight, a convenient authority is the judgment of Kourakis J (as his Honour then was) in Bob Jane Corporation Pty Ltd v Barrrot FT Pty Ltd (No 2) [2012] SASC 89 (“Bob Jane”). There, having reviewed the authorities, his Honour reiterated that characteristics of the cases where non-party costs order might be considered include whether the party to the litigation is insolvent or without substantial assets, where the other person has some interest in the subject matter of litigation, in the conduct of which, the non-party had played an active part. In Bob Jane, the conclusion was that the non-party directors had played an active part in the conduct of the litigation by the insolvent company, so as to justify a costs order against them.

4. In support of his argument that the other respondents had played an active part in the conduct of litigation, the wife principally points to the fact that:

   ·       Up until about the time of the first reasons, they had funded the costs of the husband, by way of increasing his loan account with the Malloy Group;

   ·       Mr Malloy Senior precipitated the husband’s defaulting in payment of the full amount of spouse maintenance, and there is no indication he could not have continued to afford to make funds available had he so wished.

5. However, it is otherwise difficult to see how the non-parties have a financial interest in the three applications, unless it be to pre-emptively seek to scare the wife off from any advancing challenges to the earlier transfers of the husband’s companies’ assets to them. Further, whilst non-financial interests may suffice, here, other than perhaps family alignment, it is difficult to see what non-financial interests the non-parties might have had in the three applications.  

1. I am not satisfied that the activity of the respondents other than the husband is sufficient to demonstrate that they were playing an active part in the conduct of the litigation, such that they must be taken to have an interest in it. They were not the “real party”: (see Knight at 190).

2. Additionally, no prior notice was given to the other respondents of an intention to pursue them for costs in relation to applications which did not directly permit their participation, and no application for security for costs was ever made against them: (see Knight at 191).

3. I am not satisfied that there is a sufficient basis to consider making a non-party costs order against the respondents other than the husband. It is therefore unnecessary to go on to consider the s 117(2A) factors.

4. This aspect of the wife’s application therefore fails.

Conclusion

1. For these reasons there will be orders as set out at the commencement of this judgment.                  

I certify that the preceding sixty two (62) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 8 September 2020.

Associate:

Date: 8 September 2020