STOPFORD MALLOY & MALLOY
[2021] FamCA 234
FAMILY COURT OF AUSTRALIA
| STOPFORD MALLOY & MALLOY | [2021] FamCA 234 |
| FAMILY LAW – COSTS – Where the wife seeks costs against the husband – Where there have been a number of previous applications in relation to the variation or discharge of spousal maintenance – Where the husband’s most recent application was dismissed – Where the husband claims to be impecunious and therefore unable to pay any costs order – Where the wife claims that the husband lives a lavish lifestyle funded by his wealthy father. |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) rr 1.06, 1.07, 1.0 Supreme Court Rules 1987 (NT) r 1.10 | |
| Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Atkins & Hunt and Ors (Costs) [2017] FamCAFC 131 Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29 Bhatt & Acharya (Costs) [2017] FamCAFC 71 B & J (2006) FLC 93-259 Brown & Brown (1998) FLC 92-822 Cachia v Hanes (1994) 179 CLR 403 Latoudis v Casey (1990) 170 CLR 534 Malloy and Ors & Stopford Malloy [2017] FamCAFC 204 Malloy & Stopford Malloy [2019] FamCA 986 Malloy & Malloy [2020] FamCA 506 Northern Territory v Sangare (2019) 265 CLR 164 Oshlack v Richmond River Council (1998) 193 CLR 72 Parke & The Estate of the Late A Parke (2016) FLC 93-748 Paysen & Laukien [2020] FamCAFC 101 PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123 Penfold v Penfold (1980) 144 CLR 311 Prantage & Prantage (Costs) [2014] FamCA 850 Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 Stoian & Fiening (Costs) [2014] FamCA 944 Stopford Malloy & Malloy [2016] FamCA 289 Stopford Malloy & Malloy and Ors [2016] FamCA 748 | |
| APPLICANT: | Ms Stopford Malloy |
| RESPONDENT: | Mr Malloy |
| FILE NUMBER: | ADC | 2595 | of | 2015 |
| DATE DELIVERED: | 23 April 2021 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Harper J |
| HEARING DATE: | In Chambers by way of Written Submissions |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Jonathan Wells QC & Mr John McGinn of Counsel |
| SOLICITOR FOR THE APPLICANT: | Piper Alderman |
| THE SELF-REPRESENTED RESPONDENT: | Mr Malloy |
Orders
That the husband pay the wife’s assessed party and party costs of and incidental to:
(a) The husband’s Application in a Case filed 21 August 2019;
(b) The wife’s Response to an Application in a Case filed 30 September 2019;
(c) The wife’s submission filed 30 March 2020;
(d) The husband’s submission filed 1 April 2020;
(e) Court attendances at which directions were made in relation to the Application in a Case filed 21 August 2019;
(f) Court attendance of 9 April 2020;
(g) That the matter certified as suitable for counsel and senior counsel other than for the appearance on 9 April 2020 which appearance shall be certified for counsel.
Any assessment of costs in accordance with these orders take place no earlier than 1 July 2021.
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 SYDNEY |
FILE NUMBER: ADC 2595 of 2015
| Ms Stopford Malloy |
Applicant
And
| Mr Malloy |
Respondent
REASONS FOR JUDGMENT
Introduction
The protracted proceedings between the applicant wife, Ms Stopford Malloy (“the wife”), and the respondent husband, Mr Malloy (“the husband”) have a long and complex history.
On 7 July 2020, I delivered judgment in which I dismissed an Application by the husband to vary or discharge orders for spousal maintenance originally made in October 2015: Malloy & Stopford Malloy (2020) 61 Fam LR 449; [2020] FamCA 506 (“the primary judgment”). The wife filed an Application in a Case on 4 August 2020 seeking costs against the husband in relation to his unsuccessful application. The husband opposes any orders for costs being made.
Short procedural history
These proceedings were commenced by the wife on 14 July 2015 by the filing of an Initiating Application seeking both parenting and financial relief. The background is set out in the primary judgment and need not be repeated for the purposes of this judgment. I will refer to further factual matters as necessary in the course of these reasons.
The husband’s father, Mr Q Malloy, is the principal of a group of companies known as the “Malloy Group”. He and the Malloy Group are also parties to these proceedings. There has been no dispute that they are well resourced financially and have been a source of financial support for the husband.
On 19 October 2015, by consent, orders were made by Dawe J for the husband to pay the wife $2,000 per week by way of interim spousal maintenance, as well as up to $650 per week in payment of the wife’s rental accommodation together with the amount of any bond payment (“the original orders”).
By March 2016, the husband filed the first of several Applications seeking a variation to the original orders. He claimed that, due to a “minor change in circumstances”, the maintenance due should be reduced to $6,100 a month, in addition to the payment of a NAB mortgage. Dawe J dismissed this Application at the first return date on 22 April 2016, concluding that the proposed variation to the orders would not cover the wife’s living expenses: Stopford Malloy & Malloy [2016] FamCA 289.
By 13 May 2016, the wife claimed significant spousal maintenance arrears, therefore filed an Application in a Case for the enforcement of the spousal maintenance orders. The husband filed a Response to this Application on 9 June 2016, seeking to vary the original orders. He specifically sought to reduce the amount payable by way of spousal maintenance to $650 per week. Bryant CJ delivered reasons on 5 September 2016, concluding that the arrears owing as at 10 June 2016 amounted to $21,197.86, and should be enforced: Stopford Malloy & Malloy and Ors [2016] FamCA 748 at [127]. The husband’s Response to an Application in a Case to vary the amount payable was dismissed.
The husband, his father, and the Malloy Group appealed. The Full Court confirmed the finding of Bryant CJ that there were no changes of circumstances sufficient to justify a variation of spousal maintenance: Malloy and Ors & Stopford Malloy (2017) FLC 93-804; [2017] FamCAFC 204. The appeal on this issue was, therefore, unsuccessful.
The issue of spousal maintenance was again raised before Tree J in 2019, but ultimately was not pressed by the husband at the interim hearing on 11 April 2019. Senior Counsel then appearing for the husband conceded that such an Application would have constituted an abuse of process. By such stage, the husband was in arrears of spousal maintenance in the sum of $337,965.02: Malloy & Stopford Malloy [2019] FamCA 986, at [79].
On 21 August 2019, the husband filed a further Application in a Case, seeking the discharge of the above mentioned arrears, as well as orders to vary the original orders for spousal maintenance to decrease the amount owed to the wife to $100 per week. The wife opposed the husband’s Application.
The Application filed on 21 August 2019 was the subject of the primary judgment and is the subject of this costs judgment.
Orders sought as to costs
The wife’s Application came before me for mention on 10 August 2020, where I ordered the husband to file and serve responsive materials by 24 August 2020. On the same day, I made it clear to the parties that the adjudication of the Application would be undertaken on the basis of the written material provided by the parties, without the need for any oral argumentation.
As ordered, the husband’s Response to the Application in a Case and supporting affidavit were received on 24 August 2020. The husband opposes the making of a costs order, and simply seeks that the wife’s Application be dismissed.
On 14 September 2020, orders were made allowing a further 14 days’ for the wife to file written submissions, and 14 days’ thereafter for the husband to respond.
The wife filed her Written Submissions on 28 September 2020. She presses for the following orders:
That the husband do pay the wife’s assessed party and party costs of and incidental to:
(a)The husband’s Application in a Case filed 21 August 2019;
(b)The wife [sic] Response to an Application in a Case filed 30 September 2019;
(c)The wife’s submission filed 30 March 2020
(d)The husband’s submission filed 1 April 2020
(e)Court attendances at which directions were made in relation to the said Application in a Case
(f)Court attendance of 9 April 2020
(g)That the matter certified as suitable for counsel and senior counsel other than for the appearance on 9 April 2020 which appearance shall be certified for counsel.
The husband filed his Written Submissions on 12 October 2020. He continues to argue that the wife’s Application should simply be dismissed.
The Law
The relevant principles with respect to costs are well settled, and have been discussed by the Full Court in Parke & The Estate of the Late A Parke (2016) FLC 93-748; (2016) 314 FLR 322; [2016] FamCAFC 248, and recently followed in Atkins & Hunt and Ors (Costs) [2017] FamCAFC 131.
In proceedings to which the Family Law Act 1975 (Cth) (“the Act”) applies, the starting point is that each party shall bear his or her own costs: s 117(1). If, however, the Court is of the opinion that there are justifying circumstances, the Court may make such order as to costs and security for costs as the Court considers just: s 117(2).
It is not necessary to establish extraordinary or exceptional circumstances, however there must be circumstances which, at the absolute discretion of the Court, justify a costs order: Stoian & Fiening (Costs) [2014] FamCA 944 at [19]. As the High Court made clear in Penfold v Penfold (1980) 144 CLR 311; (1980) FLC 90-800; (1980) 5 Fam LR 579, s 117(2) requires a finding of justifying circumstances before any costs order can be made.
In determining whether a costs order should be made and in what form, the Court has regard to the considerations set forth in s 117(2A), namely:
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.
It is well-settled that no one factor has priority under s 117(2A), nor must more than one factor be satisfied; any one factor may be sufficient: Prantage & Prantage (Costs) [2014] FamCA 850; PBF & TRF (FLR) (2005) 33 Fam LR 123; [2005] FamCA 158. There may be a dominant or outstanding feature that makes an order for costs appropriate; thus although any one factor may be sufficient, no one factor is essential: Brown & Brown (1998) FLC 92-822; (1998) 23 Fam LR 349; [1998] FamCA 115.
The parties focussed their submissions on their financial circumstances and conduct in particular, although the wife additionally argued that the husband was wholly unsuccessful.
Discussion
The financial circumstances of each of the parties to the proceedings
Although the husband claims to be impecunious, this is not itself a bar to a costs order: Bhatt & Acharya (Costs) [2017] FamCAFC 71.
The wife denies the husband is truly impecunious, contending that “the husband’s financial circumstances permit a lavish lifestyle” whilst she was “in continued need of spousal maintenance” as a result of her own financial circumstances.
The competing financial circumstances were clearly considered and outlined in the primary judgment. Specifically, I found the following in relation to the wife’s circumstances at [51]:
The wife filed a Financial Statement on 30 September 2019. It disclosed an excess of weekly expenditure of $1841 over $707.66 of income and deficit of assets of $395 over liabilities of $1,531,900. I am satisfied the wife continues to need spousal maintenance, and as pointed out above, the husband did not seem to put this in issue.
In contrast, I identified that the husband’s “lavish lifestyle” had previously been an “undisputed fact”: at [60]-[61]. By his affidavit filed 24 August 2020 in relation to this costs application, the husband states he is insolvent and has no financial resources to be able to pay the wife’s costs. He does concede that from July 2015 to July 2019 the Malloy Group paid his legal fees, apparently by way of a loan account. He states he has no authority or control over the loan account.
On 24 August 2020, the husband also filed a Financial Statement, which states he has weekly income of $172.27, with personal expenditure of $1,154, and property valued at $66,927 with liabilities of $19,916,390. These liabilities are said to be owed as borrower or guarantor in respect of various first and second mortgages. If the financial statement is accurate, the husband is clearly hopelessly insolvent. It is unclear why the husband is not bankrupt or how he maintains any ongoing lifestyle, if what he says is true about his financial circumstances.
On the available evidence I am unable to form a clear view about the husband’s present financial circumstances, or accept at face value his assertions of impecuniosity.
The conduct of the parties
The wife argues that the husband’s Application, the subject of the primary judgment, was his fourth unsuccessful attempt to vary the original orders and escape making proper financial provision for the wife.
It is a basic principle that an order for costs is compensatory and not to be used to punish: Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59; Cachia v Hanes (1994) 179 CLR 403; [1994] HCA 14;Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (“Oshlack”) at [1]. In Bell Lawyers Pty Ltd v Pentelow (2019) 372 ALR 555; [2019] HCA 29, the majority said “costs are … not awarded as compensation for lost earnings, much less as a reward for a litigant's success”.[1] Thus, concepts of punishment or reward should be avoided in considering the factors in s 117(2A).
[1] Followed in the Full Court in B & J (2006) FLC 93-259; (2006) 35 Fam LR 222; [2006] FamCA 256.
However, s 117(2A)(c) makes the conduct of the parties a necessary consideration, being conduct “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”. Conduct which unnecessarily prolongs proceedings is relevant to the exercise of a costs discretion: Oshlack, McHugh J at [69] referring to Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873. More recently in Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25; (2019) 60 Fam LR 71 (“Sangare”), the High Court referred to unreasonable delay or a want of the cooperation required of litigants to ensure the "just resolution of the real issues in civil proceedings with minimum delay and expense": Anon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [90].
When the conduct of the parties is being examined, recently in Paysen & Laukien (2020) 60 Fam LR 464; [2020] FamCAFC 101, the Full Court cited Sangare with apparent approval but said at [41]:
It bears emphasis that in this jurisdiction, s 117(2A)(c) of the Act prescribes that conduct be considered against the background that s 117(1) directs the starting position that costs do not follow the event and usually each party to proceedings bears his or her own costs.
Nonetheless, Sangare makes clear that it is not only delay and expense, but the relevant Court rules that should be examined by the Court when exercising its discretion on costs against the general circumstances of the case. In this Court, Rule 1.04 of the Family Law Rules 2004 (Cth) (“the Rules”) specifies a “main purpose” of the Rules, which is “to ensure that each case is resolved in a just and timely manner at a cost to the parties and the [C]ourt that is reasonable in the circumstances of the case”. The Court is to apply the Rules to promote and achieve the main purpose: Rules 1.06 and 1.07. Rule 1.08 of the Rules imposes an obligation on, amongst others, the parties to promote and achieve the main purpose of the Rules, including readiness for Court events, assisting the just, timely and cost effective disposal of cases, and being satisfied there is a reasonable basis for alleging, denying or not admitting a fact.
The wife’s primary argument points to a pattern of “serial” Applications on behalf of the husband to vary the spousal maintenance payable to her. She contends this is conduct of the husband that warrants a costs order. In addition to the Application discussed in the primary judgment, the husband has filed three applications to vary the original orders, as well as filing one Notice of Appeal. All applications have been unsuccessful.
In addition, the husband has failed to pay any spousal maintenance since early 2016, causing significant arrears to accrue, as well as failing to pay two previous costs orders made against him in 2016.
The husband acknowledged the compounding arrears in his Written Submissions and suggested that “[i]t would be irresponsible of [him] to simply ignore the Court ordered spousal maintenance obligations and not attempt to rectify the situation”. For that reason, he argues that the Application subject of the primary judgment was proper, and moreover was a “meritorious” application.
I do not accept the husband’s argument. There is no dispute the husband has failed to pay any spousal maintenance since early 2016. His conduct in failing to pay and in bringing serial Applications to vary or escape his liability for spousal maintenance speaks to delay, want of co-operation and a failure to promote and attempt to achieve the main purpose of the Rules.
Whether any party to the proceedings have been wholly unsuccessful in the proceedings
The wife argued that the husband has been wholly unsuccessful in his application.
The husband appears to oppose this assertion, claiming that the Application was dismissed as a result of insufficient financial evidence, which he attempted to submit to the Court prior to the hearing but which the wife “blocked”.
I do not accept the husband’s argument. In my view he was wholly unsuccessful.
Other matters the court considers relevant
I also take account of the fact that the wife’s lawyers have appeared and continue to appear on a “no win, no fee” basis. Consequently, the wife will not have to pay her lawyers’ fees for the application the subject of the primary judgment until to finalisation of the substantive property proceedings, if she is ultimately successful.
Conclusion
I have given careful consideration to the evidence of the husband’s financial circumstances, but I do not rest my decision on the financial position of the parties. I am satisfied the husband’s conduct, as described above, and his entire lack of success justify an order for costs. I will make the orders sought by the wife. However, the proceedings are listed for hearing of the parenting aspect commencing on 3 May 2021. In my view any assessment of costs in accordance with this judgment should take place after the completion of that hearing.
I certify that the preceding forty-two [42] paragraphs are a true copy of the reasons for judgment of the Honourable Justice Harper delivered on 23 April 2021.
Associate:
Date: 23 April 2021
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