Tipping and Stanton
[2014] FCCA 507
•28 March 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TIPPING & STANTON | [2014] FCCA 507 |
| Catchwords: FAMILY LAW – Property – application by husband to join wife’s parents to proceedings – claim wife’s parents hold property on constructive trust – summary dismissal of application – application by husband for litigation costs. |
| Legislation: Family Law Act 1975 (Cth) ss.79, 80, 80(1)(h), 117(1), 117(2A) |
| Shepherd v Doolan [2005] NSWSC 42 Oldfield & Oldfield & Ors [2013] FCCA 213 Baumgartner & Baumgartner (1987) 164 CLR 137 Strahan & Strahan [2009] FamCAFC 166 Paris King Investments Pty Ltd & Rayhill [2006] NSWSC 57 Lovett & Xavier and Anor [2014] FamCA 49 Wayne & Dillion & Anor [2008] FamCA FC 204 B Pty Ltd and Ors & K and Anor [2008] FamCA FC 113 Bigg & Suzi [1998] FLC 92-799 Pelerman & Pelerman [2000] FLC 93-037 Muschinski v Dodds [1985] HCA 78 Green v Green (1989) 17 NSWLR 343 West v Mead [2013] NSWSC 161 Hibberson v George (1989) 12 Fam LR 725 Allen v Snyder [1977] 2 NSWLR 685 Parianos v Melluish [2003] FCA 190 Spencer v Commonwealth of Australia (2010) 241 CLR 118 George v Fletcher (Trustee) [2010] FCAFC 53 Iphostrou & Iphostrou [2011] FamCA 20 Kyriakos & Kyriakos [2013] FamCA FC 22 Bevan & Bevan [2013] FamCAFC 116 Stanford v Stanford [2012] HCA 52 Prantage & Prantage [2013] FamCAFC 105 Sitwell & Sitwell [2014] FamCAFC 5 |
| Applicant: | MR TIPPING |
| First Respondent: | MS STANTON |
| File Number: | MLC 1152 of 2011 |
| Judgment of: | Judge O’Sullivan |
| Hearing date: | 7 March 2014 |
| Heard at: | Melbourne |
| Date of Last Submission: | 7 March 2014 |
| Delivered at: | Dandenong |
| Delivered on: | 28 March 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Horsfall |
| Solicitors for the Applicant: | HDL Legal & Consulting |
| Counsel for the First Respondent: | Dr Ingleby |
| Solicitors for the First Respondent: | Wisewould Mahoney Lawyers |
| Counsel for the Proposed Second and Third Respondents: | Ms Nikou, Q.C. |
| Solicitors for the Proposed Second and Third Respondents: | Lampe Family Lawyers |
ORDERS
The husband’s application to join the wife’s parents as respondents to these proceedings and his application against them be dismissed pursuant to Rule 13.10 of the Federal Circuit Court Rules 2001 (“the Rules”).
The husband’s application for litigation costs be dismissed.
The wife shall file and serve any application for costs and further material upon which she seeks to rely by not later than 14 April 2014.
The wife’s parents shall file and serve any application for costs and further material upon which they seek to rely by not later than 14 April 2014.
The husband shall file any response to the costs applications and any further material upon which he seek to rely by not later than 28 April 2014.
The proceedings be otherwise adjourned to 9 May 2014 in Melbourne to deal with the costs application(s) arising from the above orders and to make procedural orders for the future conduct of the property proceedings between the husband and the wife.
IT IS NOTED that publication of this judgment under the pseudonym Tipping & Stanton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 1152 of 2011
| MR TIPPING |
Applicant
And
| MS STANTON |
First Respondent
REASONS FOR JUDGMENT
Introduction
Before the Court are proceedings between Mr Tipping (“the husband”) and Ms Stanton (“the wife”). The husband filed an application for property settlement in December 2012. The wife filed her response to that application in February 2013. Since then the proceedings have been prolonged by inter alia non-compliance with court orders and the need to deal with various interim applications made by the parties.
Before turning to address the current dispute before the Court it is convenient to provide an overview of the background to these proceedings and the current interim applications.
Background
The husband is aged 43 and says he is a (occupation omitted). The wife is aged 42 and gives her occupation as (omitted) and full time mother.
The parties commenced a relationship in 2003, married in (omitted) 2005 and separated in June 2010. The parties were divorced in December 2012. There are three children of the parties’ marriage namely, X born (omitted) 2006, Y on (omitted) 2007 and Z born (omitted) 2008 (“the children”).
There were final parenting orders made by consent for the children on 7 August 2012. Those orders provided for the children to live with the wife and spend time with the husband.
Since the parties separated the wife and the children have moved to live closer to the wife’s parents’ home. Unfortunately, the wife’s parents have now become embroiled in these proceedings. The wife told the Court she has stopped working as she has been diagnosed with cancer.
Initiating application and response
In his initiating application filed on 18 December 2012 the husband sought the following orders:
“1.Final orders as determined by the Court and that the Applicant be excused from particularising these orders until discovery and inspection has taken place.”
There were no interim orders sought by the husband.
In her response filed on 13 February 2013, the wife sought the following orders:
“Final orders sought
1.That save as otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other all property (including choses-in-action) in the possession of such party as at the date of these orders.
(b)monies standing to the credit of the parties in any joint bank account are to become the property of the wife.
(c)insurance policies remain in the sole property of the beneficiary named therein;
(d)each party be solely liable for an indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders and for to any personal debt;
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
2.The applicant pay the respondent’s costs in this matter.
3.Such further Orders that this Honourable Court deems fit.
Interim orders sought
1.That save as otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other all property (including choses-in-action) in the possession of such party as at the date of these orders.
(b)monies standing to the credit of the parties in any joint bank account are to become the property of the wife.
(c)insurance policies remain in the sole property of the beneficiary named therein;
(d)each party be solely liable for an indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders and for to any personal debt;
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
2.The applicant pay the respondent’s costs in this matter.
3.That all extent applications be otherwise struck out.
4.In the alternative, the matter be set down for a Conciliation Conference forthwith and the Applicant provide full and frank disclosure of all financial documents he seeks to rely on to the Respondent’s solicitors within 30 days of these orders.
5.Such further orders that this Honour Court deems fit.”
Orders on first Court date
The proceedings came before the Court for the first court date on
20 February 2013. Both parties were represented and the following orders were made:
“BY CONSENT IT IS ORDERED:
1.That the parties attend a Conciliation Conference with a Registrar of the Federal Magistrates Court of Australia at the Melbourne Registry at 9.15am on 3 June 2013.
2.That the matter be adjourned for mention on 3 June of 2013 at Melbourne at the conclusion of the Conciliation Conference.
3.That the Wife provide the following by way of discovery by Wednesday, 3 April 2013:
(a)Her tax returns for the past five (5) years;
(b)Her bank statements including credit card statements for the past five (5) years;
(c)The purchase documentation for the property at
Property E including bank statements detailing mortgage payments;
(d)Sale documentation for the property at Property E including supporting documentation to the disbursement of funds;
(e)Purchase documentation for the property at Property S including supporting documentation as to the source of funds;
(f)Purchase and sale documentation for the property at Property M including all bank statements relating to the Mortgage.
4.That the Husband provide discovery by Wednesday, 3 April 2013 as follows:
(a)His tax returns for the past five (5) years;
(b)Credit card statements for the last five (5) years;
(c)Bank statements for the past five (5) years;
(d)All documentation relating to the business known as (omitted) and (omitted) including all bank statements and credit card statements;
(e) Receipts in support of his contributions;
5.That by 3 May 2013 the Husband serve and file an amended application and affidavit.
6.That discovery take place by way of exchange at the Respondent’s solicitor’s office.
7.Costs reserved.”
Husband’s first amended application
The husband filed his first amended application on 8 May 2013 which sought the following orders:
“Final order sought
1.A declaration that the property at Property E and the proceeds of sale from that property and the property at Property S be held on constructive trust for the Applicant and the Respondent by the Respondent’s parents Mr G and Ms M.
2.A split of the Respondent’s superannuation moneys currently held by (omitted) Finance or such other superannuation in the Respondent’s name to be split between the Applicant and the Respondent in such proportions as is ordered by this Honourable Court.
3.That a binding death benefit nomination form in relation to the Respondent’s superannuation moneys and any insurance attached be executed in favour of the Applicant.
4.That the Respondent pay the Applicant a sum of money as directed by this Honourable Court within thirty (30) days of the date of these orders.
5.Such further Orders that this Honourable Court deems fit.
Interim orders sought
1.That leave be granted by this Honourable Court for Mr G and Ms M to be joined as respondents to this Application.
2.That Mr G and Ms M provide full and frank disclosure of all financial documents relating to their financial relationship with the Respondent including but not limited to the payment of her legal costs and the ownership of the property at Property E and Property S.
3.That the Respondent pay the sum of $20,000 towards the Applicant’s legal costs or in the alternative an amount equal to the Respondent’s cost on a dollar for dollar basis such payment to be categorised in such a manner as the Court deems fit.
4.That the Respondent provide additional discovery in relation to:
(a)her superannuation benefits accrued during the course of and before her marriage and the disbursement of those benefits;
(b)the purchase and sale of the property at Property M and the tax benefits received from the holding of that property.
5.That the respondent supply the Court with medical evidence in relation to her diagnosis in relation to breast cancer and her prognosis.”
The husband’s (first) amended application was made returnable on
3 June 2013 by the Registry.
Orders of 3 June 2013
The matter returned to Court on 3 June 2013. The conciliation conference had not occurred as the husband had only recently made an interim application for an order joining the wife’s parents to the proceedings. The application to join the wife’s parents had not been served on them.
For the reasons given ex tempore on 3 June 2013 the following orders were made:
“THE COURT ORDERS THAT:
1.The applicant pay the respondent’s costs thrown away as a result of the Conciliation Conference being abandoned in the amount of $2,588 within 60 days.
THE COURT ORDERS BY CONSENT THAT:
2.The applicant file and serve any further Amended Application including serving Ms M and Mr G with same on or before 1 July 2013.
3.The respondent provide discovery in compliance with the orders made on 20 February 2013 for the conveyancing for the property at Property E, the property at Property M, Queensland and her superannuation.
4.The respondent provide further discovery by way of the production of her tax returns for the years ended 30 June 2003 to 30 June 2008.
5.The matter be adjourned for a mention on 11 October 2013 commencing at 10:00 am at the Federal Circuit Court of Australia at Melbourne.”
No order was made on 3 June 2013 (or has yet been made) joining the wife’s parents to the proceedings.
Husband’s second amended application
On 21 June 2013 the husband filed another amended (the second amended) initiating application which sought the following orders:
“Final order sought
1.A Declaration of Trust pursuant to Section 78 of the Family Law Act 1975 that the Second Respondent and Third Respondent hold the proceeds of sale of the property at
Property E and the property at Property S on trust for the Applicant and the First Respondent and the Court make such consequential orders to give effect to the declaration, including orders as to sale and partition, possession and an account to the beneficiaries.
2.A split of the First Respondent’s superannuation moneys currently held by (omitted) Finance or such other superannuation in the First Respondent’s name to be split between the Applicant and the First Respondent in such proportions as is ordered by this Honourable Court.
3.That a binding death benefit nomination form in relation to the First Respondent’s superannuation moneys and any insurance attached be executed in favour of the Applicant.
4.That the First Respondent or in the alternative Second and Third Respondent pay the Applicant a sum of money as directed by this Honourable Court within thirty (30) days of the date of these orders.
5.That the Applicant be excused from particularising these Orders until such time as the Second and Third Respondent provide discovery of all relevant documents and inspection of those documents have taken place.
6.Such further Orders that this Honourable Court deems fit.
Interim orders sought
1.That the Second Respondent and Third Respondent provide full and frank disclosure of all financial documents relating to their financial relationship with the First Respondent including but not limited to the payment of her legal costs and the ownership of the property at Property E and Property S.
2.That the First Respondent and/or the Second Respondent and Third Respondent pay the sum of $25,000 twenty five thousand dollars or such other sum as the Court deems fit towards the Applicant’s Legal Costs or in the alternative an equal amount to the Respondent’s costs on a dollar for dollar basis such payment to be categorised in such a manner as the Court deems fit.
3.That the First Respondent provide additional discovery in relation to her superannuation benefits.”
This (second) amended application was made returnable on 11 October 2013 by the Registry.
Husband’s application in a case
After having filed the second amended application, the husband filed an application in a case on 8 October 2013. That application sought the following:
“Abridgement of Time
1.That all time be abridged and the husband’s interim application be urgently listed for hearing on the earliest possible date.
Application for Interim Costs
2.That within 28 days of the making of this order that the respondents pay direct to the Applicant the sum of thirty thousand dollars ($30,000.00) by way of preliminary and interim costs.
3.That the preliminary costs to be paid into an interest bearing account in the same of the Applicant.
4.That the preliminary costs be paid towards:
(a)filing fees, service fees and the fees of real estate valuers and similar experts and proper fees and disbursements of any other experts retained by the Applicant;
(b)the Applicant’s legal costs to date including Counsel’s fees;
(c)All other proper disbursements incurred by the Applicant; and
(d)The Applicant’s legal costs associated with attending the conciliation conference, preparation for final hearing trial including outline of case document and attendance at the trial including counsel’s fees.
5.That the second respondent and the first respondent pay the costs of the Applicant of this application.
Application for Dollar for Dollar Costs
6.Alternatively, that the respondents pay the Applicant the sum of twelve thousand dollars ($12,000.00) to cover the costs of the litigation to date together with further amounts of money as determined by the following orders.
7.Alternatively, within seven (7) days after the payment by or on behalf of the wife or the second or third respondent in payment of accounts rendered by their solicitors in respect of these proceedings the wife, second or third respondent shall pay or cause to pay the same amount of money to the husband’s solicitors.
8.Within one (1) day after payment the first, second and third respondent (as the case may be) shall give the husband’s solicitors a memorandum stating the amount so paid.
9.All money paid to the solicitors for the wife shall be held in trust by the wife’s solicitors and not be applied in payment of her legal costs and outlays until such time as the same amount has been paid on behalf of the wife to the husband’s solicitors, and in the event that such payments is not made to the husband’s solicitors within seven days after the payment by the husband referred to in order 6, then the wife direct her solicitors to pay 50% of the amount held in trust to the husband’s solicitors.
10.The amounts paid by or at the direction of the wife to the husband’s solicitors pursuant to these orders be applied by them in the payment of the husband’s legal costs and outlays incurred and incurred by the husband in the conduct of these proceedings including but not limited to the reasonable costs and outlays:
(a)rendered by the husband’s solicitors in respect of these proceedings;
(b)rendered by any accountant, valuer or other expert engaged by the wife in respect of these proceedings.
11.The determination as to whether the payments made by or on behalf of the wife to the husband’s solicitor’s are to be treated as a debt due from the payment to the husband, or as part of the husband’s entitlement to a property settlement, or the provision of maintenance to the husband or in payment by the wife of the husband’s costs of and incidental to these proceedings, be adjourned to the trial judge.”
This application in a case was made returnable on 24 February 2014 by the Registry.
Response of wife’s parents
The day after the husband filed the application in a case (and on
9 October 2013) the wife’s parents filed a response to the husband’s (first) amended application. The wife’s parents sought the following orders:
“Final Orders Sought
1.That the amended application of the applicant husband insofar as it seeks relief against the second and third respondents be struck out.
2.That the applicant husband pay the second and third respondents costs on an indemnity basis.
Interim Orders Sought
1.That the amended application of the applicant husband insofar as it seeks relief against the second and third respondents be struck out on a summary basis.
2.That the applicant husband pay the second and third respondents costs on an indemnity basis.”
Orders of 11 October 2013
The proceedings returned to Court on 11 October 2013. All parties were represented and the following orders were made:
“THE COURT ORDERS THAT:
1.The application in case filed on 8 October 2013 and the second and third respondents summary dismissal application filed 9 October 2013 be listed for a hearing on
7 March 2014 commencing at 10:00 am at the Federal Circuit Court of Australia at Melbourne.
2.The applicant file and serve a response to the second and third respondent’s summary dismissal application within
28 days of today’s date.
3.The first, second and third respondents file and serve any response to the application in a case any material upon which they rely and an outline of submission on both applications 28 days prior to the adjourned date.
4.The applicant file and serve anything in reply and an outline of submissions on both application 14 days prior to the adjourned date.
5.The second and third respondent’s costs of this day be fixed and reserved at $3,000.00.
6.Any application to enforce the costs orders made 3 June 2013 that is filed also be made returnable on 7 March 2014.
7.The first return date of the application in case filed on
8 October 2013 of 24 February 2014 be vacated.”
Husband’s response to summary dismissal application
The husband then filed a “Response to an Application in a Case” on
8 November 2013, which sought the following orders:
“1.The application by the first and second applicant to have the husband’s application for final orders struck out on a summary basis be dismissed.
2.Orders as applied for in the applicant’s application in a case filed with this Honourable Court on 9 October 2013.
3.An Order restraining the first applicant from contacting the respondent’s employer by email, letter or social media under any circumstances and an order restraining the first and second applicant denigrating the respondent and committing family violence against him.
4.That a forensic accountant be appointed to examine the financial affairs of the respondent wife and the financial arrangements between the respondent wife and the first and second applicant.
5.The first and second applicant’s pay the respondent’s legal costs on an indemnity basis.”
Pursuant to the orders made on 11 October 2013, the wife’s parents filed submissions on 5 February 2014, the wife filed her submissions on 14 February 2014 and the husband filed his submissions on
21 February 2014.
Hearing on 7 March 2014
On 7 March 2014 the husband was represented by Mr Horsfall of Counsel. The wife was represented by Dr Ingleby of Counsel. Ms Nikou, Senior Counsel appeared on behalf of the wife’s parents but only in so far as was necessary to have the husband’s application, to join her clients to the proceedings and his claim against him summarily dismissed.
The husband had not complied with the orders made on 3 June 2013 to pay the wife’s costs. Counsel for the husband could not point to any application to stay or appeal that order or provide the Court with any evidence as to why his client had not complied.
Given this, and the interest the Court has in enforcing its own orders, Counsel for the husband did not oppose his client being cross examined for the purposes of enforcement of that order, before the Court dealt with the various interim applications. The wife hadn’t previously pressed for enforcement of the costs order, (to ensure sufficient time to deal with the other issues). However as sufficient time was available no reason was given why an enforcement hearing should not occur first. Counsel for the husband did not seek an adjournment.
The husband gave evidence and was cross examined on inter alia the differences between his most recent financial statement and that sworn at the time the proceedings were commenced. The husband’s evidence made plain he had “put money aside” beyond that referred to in his most recent financial statement. The husband’s evidence made clear he had also omitted to detail all his bank accounts in his most recent financial statement.
In the face of this evidence and the absence of any appeal or other application in relation to the costs ordered in June 2013, Counsel for the husband didn’t resist the order sought by the wife that the husband make payments in instalments to meet the costs order on 3 June 2014. At the end of the hearing on 7 March 2014 and for the reasons given at the time an order to that effect was made.
The parties also agreed that given the orders sought by the wife’s parents (the summary dismissal application) it was convenient to deal with that application first.
It was not controversial that in the event the wife’s parents’ application was successful this would just leave the husband’s interim application for litigation costs as against the wife to be determined. It was also accepted that once the Court had determined the above issues any further procedural orders and costs issues arising from the above could be determined.
It was on this basis that the parties identified the material they relied on and made submissions before the Court. At the end of those submissions the Court reserved its decision.
Summary dismissal of application against the wife’s parents
In considering this issue it should be remembered that the husband in the (first) amended application filed on 8 May 2013 sought the following orders against the wife’s parents:
“Final order sought
1.A declaration that the property at Property E and the proceeds of sale from that property and the property at Property S be held on constructive trust for the Applicant and the Respondent by the Respondent’s parents Mr G and Ms M.
…
Interim orders sought
1.That leave be granted by this Honourable Court for Mr G and Ms M to be joined as respondents to this Application.
2.That Mr G and Ms M provide full and frank disclosure of all financial documents relating to their financial relationship with the Respondent including but not limited to the payment of her legal costs and the ownership of the property at Property E and Property S.
3. …”
On 21 June 2013 the husband then filed a (second) amended application which sought the following orders against the wife’s parents:
“Final order sought
1.A Declaration of Trust pursuant to Section 78 of the Family Law Act 1975 that the Second Respondent and Third Respondent hold the proceeds of sale of the property at
Property E and the property at Property S on trust for the Applicant and the First Respondent and the Court make such consequential orders to give effect to the declaration, including orders as to sale and partition, possession and an account to the beneficiaries.
2.…
3.…
4.That the First Respondent or in the alternative Second and Third Respondent pay the Applicant a sum of money as directed by this Honourable Court within thirty (30) days of the date of these orders.
5.That the Applicant be excused from particularising these Orders until such time as the Second and Third Respondent provide discovery of all relevant documents and inspection of those documents have taken place.
6.…”
Interim orders sought
1.That the Second Respondent and Third Respondent provide full and frank disclosure of all financial documents relating to their financial relationship with the First Respondent including but not limited to the payment of her legal costs and the ownership of the property at Property E and Property S.
2.That the First Respondent and/or the Second Respondent and Third Respondent pay the sum of $25,000 twenty five thousand dollars or such other sum as the Court deems fit towards the Applicant’s Legal Costs or in the alternative an equal amount to the Respondent’s costs on a dollar for dollar basis such payment to be categorised in such a manner as the Court deems fit.
3.…”
Then in the application in a case 8 October 2013 the husband sought the following orders against the respondents (including the wife’s parents):
“Abridgement of Time
1.That all time be abridged and the husband’s interim application be urgently listed for hearing on the earliest possible date.
Application for Interim Costs
2.That within 28 days of the making of this order that the respondents pay direct to the Applicant the sum of thirty thousand dollars ($30,000.00) by way of preliminary and interim costs.
3.That the preliminary costs to be paid into an interest bearing account in the same of the Applicant.
4.That the preliminary costs be paid towards:
(a)filing fees, service fees and the fees of real estate valuers and similar experts and proper fees and disbursements of any other experts retained by the Applicant;
(b)the Applicant’s legal costs to date including Counsel’s fees;
(c)All other proper disbursements incurred by the Applicant; and
(d)The Applicant’s legal costs associated with attending the conciliation conference, preparation for final hearing trial including outline of case document and attendance at the trial including counsel’s fees.
5.That the second respondent and the first respondent pay the costs of the Applicant of this application.
Application for Dollar for Dollar Costs
6.Alternatively, that the respondents pay the Applicant the sum of twelve thousand dollars ($12,000.00) to cover the costs of the litigation to date together with further amounts of money as determined by the following orders.
7.Alternatively, within seven (7) days after the payment by or on behalf of the wife or the second or third respondent in payment of accounts rendered by their solicitors in respect of these proceedings the wife, second or third respondent shall pay or cause to pay the same amount of money to the husband’s solicitors.
8.Within one (1) day after payment the first, second and third respondent (as the case may be) shall give the husband’s solicitors a memorandum stating the amount so paid.
9.All money paid to the solicitors for the wife shall be held in trust by the wife’s solicitors and not be applied in payment of her legal costs and outlays until such time as the same amount has been paid on behalf of the wife to the husband’s solicitors, and in the event that such payments is not made to the husband’s solicitors within seven days after the payment by the husband referred to in order 6, then the wife direct her solicitors to pay 50% of the amount held in trust to the husband’s solicitors.
10.The amounts paid by or at the direction of the wife to the husband’s solicitors pursuant to these orders be applied by them in the payment of the husband’s legal costs and outlays incurred and incurred by the husband in the conduct of these proceedings including but not limited to the reasonable costs and outlays:
(a)rendered by the husband’s solicitors in respect of these proceedings;
(b)rendered by any accountant, valuer or other expert engaged by the wife in respect of these proceedings.
11.The determination as to whether the payments made by or on behalf of the wife to the husband’s solicitor’s are to be treated as a debt due from the payment to the husband, or as part of the husband’s entitlement to a property settlement, or the provision of maintenance to the husband or in payment by the wife of the husband’s costs of and incidental to these proceedings, be adjourned to the trial judge.”
In written submissions in relation to orders sought by the wife’s parents the husband’s position had been:
“The law relating to Summary Dismissal:
1.Rule 10.12 of the Family Law Rules provides that a party may apply for summary orders if the party claims that there is no jurisdiction or that there is no reasonable likelihood of success.
(1)In terms of the 1st limb of the test the Court has jurisdiction to a make an order binding third parties in proceedings under Section 79 of the Family Law Act pursuant to Section 90AE of the Family Law Act;
(2)The principal in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) HCA 69 applies to an application for summary dismissal. The jurisdiction summarily to determine an action is to be sparingly employed and not to be used except in a clear case. The Court can only act to dismiss the proceedings if the case is “so obviously untenable that it cannot possibly succeed,” “is manifestly groundless”, or “so manifestly faulty that it does not permit of argument.”
2.None of the above applies to the Applicant’s Application which is well founded in law and equity and the third party provisions of the Family Law Act as follows:
Constructive Trust
3.The Applicant says that there are two constructive trusts arising out of the financial relationship between the Applicant and the 1st Respondent and the 2nd and 3rd Respondent and in particular the ownership of the former matrimonial home at Property E and the proceeds of sale which amounted to $1,055,000.
1.The property and the proceeds of sale are held on constructive trust by the wife’s parents on behalf of the wife. This being the case the wife’s beneficial interest in the property and the proceeds of sale should be included as the property of the wife in determining the property of the parties in accordance with the process outlined in Stanford. The wife’s contributions consist of making payments of principal and interest on a repayment of a loan to the (omitted) Bank and monies spent renovating the property. The bulk of the purchase price of the Property E property was funded by a mortgage from the (omitted) Bank which was serviced by the wife.
2.The Property and the proceeds of sale are held on trust by the wife’s parents on behalf of the Husband and Wife. The Husband says that he has acquired a beneficial interest in the property by virtue of his financial contributions and his work done to the property outlined in his affidavit.
4.Constructive Trusts are imposed by the Court to remedy an unconscionable insistence on a legal title. They can be imposed irrespective and sometimes contrary to, the intention of the parties to create a trust.
5.In this case the 2nd and 3rd Respondent’s insistence that they are the sole owner of the property at Property E is unconscionable for the following reasons:
1.It would be unconscionable for the Wife’s parents to insist on the legal title against their daughter given her financial contributions to the property;
2.It would be unconscionable for the wife’s parents to insist on the legal title against the husband given his financial contributions towards the property and the fact that he has otherwise acted to his detriment in relation to the property;
3.Further, it would be unconscionable for the wife’s parents to retain the benefit of the husband’s contributions
4.The wife had a proprietary interest in the property given that she has exclusive possession of the property and made financial contributions to it. There is no contemporaneous lease agreement;
4.The payments to the (omitted) Bank included payments of principal and interest, thereby increasing the equity in the property;
6.In the alternative, the Applicant says that the 2nd and 3rd Respondents have been unjustly enriched as a result of the contributions made by the Applicant and the 1st named Respondent in that they should not solely retain the benefit of the windfall gain. On a purchase price of $610,000 and stamp duty and other costs of $36,000, the total transaction cost amounted to $646,000. The mortgage serviced by the Wife provided 77% of the purchase price. The wife was a significant contributor to the acquisition of the property and it was she who funded the monthly instalments of $3,320.
There is no evidence to suggest that the Second and Third Respondent would have been in a position to buy the Property E property without the Wife’s Contribution and her capacity to borrow such a large amount of money to fund the purchase.
7.In the circumstances, it would be appropriate at the Final Hearing for the Court to make an order under the third party provisions of the Family Law Act after applying the tests outlined in Section 90 AE. It is submitted that in the circumstances the making of such an order is reasonable necessary, or reasonably appropriate and adapted, to effect a division between the parties to the marriage.
8.It is clear from the case law in relation to claims under constructive trust that the Applicant’s claim is neither novel or unusual and the Applicant has a good case with a reasonable likelihood of success supported by ample evidence. This analysis was used by His Honour Judge Burchardt in Oldfield v Oldfield and Ors (2013) FCCA 213 ( a case with a very similar facts)
9.There are additional reasons why the second and third respondents should be joined to the action. It is not appropriate that they should be designated beneficiaries under the Wife’s superannuation scheme while litigation for a property settlement is taking place.”
The husband’s submissions before the Court, in so far as they identified the basis upon which the wife’s parents should be joined to the proceedings, and his claim against them, did so on the basis it was alleged there were “two constructive trusts arising out of the financial relationship between the husband and the wife and the wife’s parents. In particular the ownership of the former matrimonial home….”
In submissions before the Court, Counsel for the husband identified the evidence upon which his client relied for this claim. Counsel for the husband noted that the husband had deposed in his affidavit filed
21 June 2013 that:“The property at Property E
6.I am informed that:
(a)The Property E property was purchased in 2001 for $610,000 with stamp duty and other transaction costs amounting to $36,497 making a total cost of $646,497. Part of the purchase price appears to have been funded by mortgage of $500,000 from the (omitted) Bank with a monthly commitment of $3,320 which was secured by a guarantee supported by a mortgage over the Property E property and another property situate at Property H both parties in the name of the Mr G and Ms M.
(b)Mortgage Payments were made by the respondent during the duration of the relationship. The amount of the periodic mortgage payments exceed the interest due under the loan.
(c)The Property E property was sold in May of 2010 for a sale price of one million and fifty five dollars and settlement took place at the (omitted) Bank on 16 July 2010. Of this sum $256,151.19 was required to clear the debt to (omitted) Bank leaving an amount of equity in the property of $798,849 part of the proceeds of which were used to fund the purchase of the property at Property S.”
Counsel for the husband told the Court his client also relied on the evidence of the wife in her affidavit filed 13 February 2013 where she had deposed:
“2.The Applicant and I met in and commenced living together in 2003 when the Applicant moved into live with me at
Property E (“the Property E property”), a property owned by my parents, Mr G and Ms M (“my parents”). The loan on the property was under my name as all mortgage re-payments were considered to be my rental. Prior to the Applicant living with me I had lived at the Property E property for 2 years and had paid, and I continued to pay for 7 years with the Applicant until separation in June 21010 over $2,000 per month towards the mortgage.”
Counsel for the husband then told the Court his client also relied on the evidence of the wife’s father in his affidavit filed 9 October 2013, where he had deposed:
“3.In 1990 my wife and I purchased a property at Property C. We paid approximately $110,000 together with stamp duty and other legal expenses. To complete the purchase we borrowed approximately $55,000 from the bank, and that loan was secured by way of mortgage over that property. My wife and I arranged for the mortgage loan to be in the name of our daughter Ms Stanton (the first respondent) even though our property secured that loan. The idea was to give her some responsibility. Although the property provided a place for our daughter to live it was never intended that our daughter acquire an interest in the property. It was an investment for us.
…
5.In or about 1993 we sold Property C. We used all of the proceeds after discharge of mortgage to purchase a property at Property H (“Property H”). The sale of Property H was a capital gain event for my wife and me, and was declared by us. We paid Capital Gains Tax in accord with our assessments.
6.Again, we allowed Ms Stanton to reside in Property H and to pay mortgage instalments and rates in lieu of rent. It was never intended by us, or to my knowledge Ms Stanton, that Ms Stanton acquire any interest in Property H.
7.In 2001 my wife and I sold Property H and purchased another property at Property E (“Property E”). Again, all of the proceeds of Property H were applied by my wife and me towards the purchase of our next investment property, Property E. We again paid Capital Gains Tax.
8.Property E was purchased for $610,000 and there were further legal costs (including stamp duty) of over $36,000. My wife and I again arranged for a loan to help fund the purchase (together with the proceeds of Property H which were about $250,000) and that loan was secured over the property by way of mortgage. Again, the mortgage loan was in Ms Stanton’s name. We had taken out bridging finance over Property E but that was paid out by the proceeds of sale of Property H. My wife and I also paid Land Tax on the property each year.
…”[1]
[1] Counsel for the husband told the Court that this along with the evidence in paras.[36] and [37] was the evidence his client relied on for the existence of the alleged first constructive trust.
In relation to what Counsel for the husband said was the existence of the alleged second constructive trust the Court was directed to and told by Counsel the husband relied on the husband’s evidence in his affidavit filed 8 November 2013 where he deposed:
“1.In conversations that I had with the wife prior to and very early on in the marriage I had the understanding that the property at Property E for all intents and purposes belonged to her and was in her parents name solely for asset protection purposes. The wife referred to the property as her house prior to the marriage and our house after the marriage in conversations I had with her particularly when we were discussing home improvements. She was concerned that in her work as a (omitted), a disgruntled client might sue her and as a result she might lose her home. Apart from this there were never any mention of her parent’s involvement. The wife chose to sell the property that she lived in at Property H and it was well known between me and all of the wife’s friends that the profit she made on this property was applied to the purchase of the Property E. My recollection is that she selected the property, negotiated and the loan arrangements with the Bank on both the Property H and Property E properties.
2.Although the mortgage to the (omitted) Bank of the Property E property was in the name of the second and third respondents the loan agreement was in the name of the Respondent wife as the primary borrower and she made all the payments of principal and interest (including a one off payment of fifty thousand dollars) from her account with the (omitted) Bank. The amount of the loan was five hundred thousand dollars and I am advised by my solicitor who is familiar with banking law and practice that a loan of this amount would only be available to a person with a very high income such as the wife as she had the capacity to service the loan. The funds supported by mortgage made up the bulk of the contribution to the purchase price.
3.Additionally, the wife paid the rates due to (omitted) as well as other utilities in relation to the property.
4.In reliance of the position that the applicant wife was the beneficial owner of the family home I paid and contributed the following in relation to the property:
(a) the renovation of the bathroom;
(b)the painting of the fence surrounding the property, the inside living room and X and Y’s bedroom both in terms of my labour and also in purchasing the paints and painting materials;
(c)the landscaping of the garden (labour and materials) including the payment for new grass for the back yard, outdoor electrical plugs and edging for the new front driveway;
(d) the purchase and installation of a spa and;
(e) an aviary and rabbit hutch;
(f)the purchase and installation of a number of appliances, some of which remained in the Property E property such as air-conditioning in the bedroom, the fireplace in the living area and fridge and dishwasher in the kitchen and others which were removed from the property such as the bed, lounge suite, television red recliner chair and barbeque;
(g)assisted with the maintenance and repairs to the property.
5.I have receipts for the expenditure outlined in paragraphs
4 all of which have been supplied to the Respondents.
As outlined earlier in my affidavit I gave the Respondent at her insistence the sum of $2,000 per month as well as $20,000 cash in 2010 and the proceeds of my night shift job with (employer omitted)… which are details of the expenditure.
I estimate the total expenditure to be in the vicinity of two hundred thousand dollars.
6.In addition (and contrary to assertion contained in paragraph 38 of the First Respondent’s affidavit) I assisted with cooking and cleaning and child care and bathed the children when I returned from work of an evening.
The applicant contributed towards the installation of a deck on the property and other improvements on the property contrary to the assertion of Mr G in paragraph 19 of his affidavit dated 9 October 2013.
7.I think it is safe to say for the sake of my financial security that I would have been reluctant to make the payments described above had I known that the beneficial interest in the Property E property was owned in the Property E by someone other than the wife. The reasons for this will become apparent from the contents of the following paragraphs.”
Counsel for the husband confirmed that this was the evidence upon which his client relied in relation to the allegation that there existed two constructive trusts and the basis for his client’s claim against and why the wife’s parents should be joined as parties to the proceedings.
In submissions before the Court Counsel for the husband relied on a decision of His Honour Judge Burchardt in Oldfield & Oldfield & Ors [2013] FCCA 213. In that case His Honour considered the indicia for the existence of a constructive trust as follows:
“51.Having consulted Equity and Trusts in Australia, G.E. Dal Pont and D.R.C Chalmers, fourth edition, Lawbook Company 2007, and Ford and Lee, Principles of the Law of Trust, Lawbook Company, loose-leaf service, it is apparent that the precise boundaries of what might be thought to be constructive trust territory are little defined. In Dal Pont, at page 981, the learned authors assert:
“The constructive trust is a means adopted by courts of equity to make accountable persons in certain circumstances where to do so is consistent with equitable principle.”
52.In Ford and Lee, at paragraph 22.020, learned author writes:
“A constructive trust is imposed by operation of law where, according to established equitable principle, it would be unconscientious for the holder of the title to property to deny the claimant a beneficial interest in that property, or for the defendant to deny that he is liable to account to the claimant as if he were an express trustee.”
53.The obvious possibility, in my opinion, that arises from this case here is that the parties might be thought to have conducted themselves in such a fashion as to give rise to what is sometimes described as a common intention constructive trust of the sort identified in Baumgartner & Baumgartner (1987) 164 CLR 137.
54.It is clear from the works to which I have referred that relevant considerations may include:
(a)a mutual arrangement between the parties under which the parties each spent monies for the purpose of their joint relationship with the object that some or all of those monies were to finance the purchase of the home (Hibberson & George (1989) 12 Fam LR 725 at 742-743);
(b)The pooling of labour on behalf of both parties (Miller & Sutherland (1990) 14 Fam LR 416 at 424); or
(c)contributions to family welfare by way of domestic assistance, such as homemaker and parent (Baumgartner at 155-157 per Gaudron J).
55.Nonetheless it is for the party asserting the common intention to prove it (Burns & Burns (1984) Ch 317).”
Counsel for the husband submitted given the above evidence his client’s application had a “reasonable likelihood” of success.
Senior Counsel for the wife’s parents told the Court in addition to the affidavit material that they had filed, the wife’s parents relied on the written submission filed on 5 February 2014, as follows:
“1.The Applicant has failed to proffer any evidence, or any sufficient evidence, to establish the existence of a trust of any identifiable kind.
2.The burden of establishing a prima facie case, or an issue proper for judicial determination, lies squarely with the Applicant. In the absence of any evidence to establish that premise, the Applicant’s application, as against the Second and Third Respondents, should be summarily dismissed. He raises no justiciable matter.
3.In order to establish a constructive trust, which presumably is the nature of the trust alleged, as between the legal owners of the real estate, and the parties to the marriage, the Applicant must prove common intention. He does not lead any evidence to that effect. There is no evidence to the effect that the Second and Third Respondent had any communication with the Applicant at all with respect to the real estate, nor is there any evidence to even suggest the legal owners knew of the Applicant’s alleged state of mind as to ownership or otherwise of the real estate.
4.Secondly, the Applicant must show he contributed to the improvement or development of the real estate, in reliance upon a common understanding as to its beneficial status. His affidavit does not do so.
5.Thirdly, he must show he sustained substantial detriment, in the reasonable belief that by doing so he would acquire a beneficial interest in the real estate. His affidavit does not do so.”
Senior Counsel for the wife’s parents noted the wife’s parents had in their affidavits set out their relationship and arrangement with the wife and provided the rationale for this all of which occurred before the husband and the wife were in a relationship.
Senior Counsel for the wife’s parents submitted that in so far as the husband sought to join her clients and make a claim against them he had:
·failed to properly identify the basis for doing so;
·failed to particularise at all the kind of trust he seeks to establish;
·simply claimed relief without establishing what entitled him to it;
·not identified any evidence where he set out the elements necessary to give rise to a trust as against her clients;
·not identified any conversation with her clients nor any common intention nor any detriment to him; and
·brought an application that was “an abuse”, “doomed” and “jaw dropping” and one which it was “obvious had to fail.”
In relation to this issue the wife’s Counsel did not seek to make submissions beyond noting that both in relation to this issue and the application for litigation costs, the husband could not say he had not been put on notice of the arguments that would be made against him.
It was submitted that, notwithstanding this the husband had failed to properly identify, a basis upon which the wife’s parents should be joined to the proceedings or the basis upon which he could made a claim against them.
Counsel for the wife also noted it appeared the husband had not correctly identified the test for summary dismissal either by reference to the most recent authority or the correct rules of the Court.
Consideration
Approach to joinder
The husband had applied to join the wife’s parents to the proceedings. Pursuant to Rules 11.01 and 11.02 of the Federal Circuit Court Rules 2001 (“the Rules”), the Court can make an order joining a party to the proceedings as it is necessary to do so:
Rule 11.01 and 11.02 of the Rules provide for the joinder of parties as follows:
“Necessary parties
(1)Subject to any order of the Court, a person whose participation is necessary for the Court to completely and finally determine all matters in dispute in a proceeding must be included as a party in the proceeding.
(2)The Court may require a person to be included as a party.
(3)A person required to be included as an applicant who does not consent to be included may be included as a respondent.
(4)The Court may decide a proceeding even if a person is incorrectly included or not included as a party.
Party may include another person as a party
(1)A party to a proceeding may include any person as a party by:
(a)naming the person as a party in the application, response or reply; and
(b)serving on the person a copy of the application, response or reply and all other relevant documents filed in the proceeding.
(2)A party may not include a person as a party after the first court date without the leave of the Court.
(3)The Court may at any time order a party who has included a person as a party to file and serve on each other party in the proceeding an affidavit setting out the basis on which the person has been included.”
In Wayne & Dillon & Anor [2008] FamCA FC 204, in the context of an appeal, the above rules were considered by Warnick J who said:
“13.In B Pty Ltd and Ors & K and Anor [2008] FamCA FC 113, the Full Court of the Family Court considered an appeal from orders permitting joinder of third parties. As with the Federal Magistrates Court Rules, the Family Law Rules 2004 also provide for joinder. Rule 6.02 is:
A person whose rights may be directly affected by an issue in a case, and whose participation as a party is necessary for the court to determine all issues in dispute in the case, must be included as a party to the case.
14.In the proceedings leading up to the appeal in B Pty Ltd & K (supra), because the application to amend to join the third parties was made outside the time permitting amendment as of right, leave was required. Before Morgan J, she and the parties treated the application for leave as being “of the nature of one for summary dismissal”.
15. In B Pty Ltd & K (supra), the Full Court said:
43.In the usual run of applications for alteration of property interests or parenting orders, the fact of marriage or parenthood, accompanied, in respect of the former, by a history of contribution to and acquisition of, property and, in respect of the latter, evidence that relates to any aspect of a child’s interests, is sufficient to make the existence of a “cause of action” apparent. No pleading in the traditional sense is required to identify further facts material to the cause.
44.However, the narrative or descriptive nature of evidence is often unsuited to formulate or particularise a cause of action against a third party. Something resembling a statement of claim will generally be necessary.
45.In Gould v Gould; Swire Investments Ltd (1993) FLC 92-434 Fogarty J (with Nicholson CJ and Finn J agreeing) said (at 80,451):
I conclude, consistently with Buckeridge and Barro, that the correct procedure, where an applicant in proceedings under the Family Law Act seeks relief against a person who is a stranger to the marriage or relationship, is to name that person as an additional respondent in the proceeding and set out the nature of the claim and the basis of it in the ordinary way in the application. (emphasis added)
46.Of relevance to the procedure adopted in the instant case, Fogarty J had also earlier said (at 80,448).
...good case management and fairness to the parties, in particular to a third party, suggest that in appropriate circumstances the claim against a third party, or more particularly the jurisdictional base of that claim, be determined as a preliminary issue where it is appropriate and practical to do so. ...
47.Morgan J had before her no statement of claim or equivalent; only the orders which the wife wished to add and an affidavit of the wife, in which the wife said: ...
...
49.In her reasons for the orders permitting amendment, Morgan J did not address the nature of the wife’s deposition, nor attempt to identify the material facts in support of the claim which the wife sought to add. It is at least unusual in respect of an application said to be of the nature of one for summary dismissal that attention is not given to the identification of facts material to the cause of action.
16.As seen, rule 11.02(3) of the Federal Magistrates Court Rules, permits the court to require a party to set out in an affidavit “the basis on which the person has been included”. It might be argued that in light of Rule 11.02(3), that when application is made to join a third party, no requirement for a statement of claim should be imposed. However, whether or not that is so, the rule that had particular application to the application before Purdon-Sully FM was Rule 11.01(1).
17.As seen, while neither that rule nor the relevant Family Law Rule refers to an applicant for leave to join having to establish a cause of action and supporting “case” which, taken at its highest, is arguable, that test was adopted by the parties before Morgan J and by her Honour. That approach was not attacked in the appeal in B Pty Ltd & K (supra).
It is a test consistent with the references, in the passages quoted above from B Pty Ltd & K (supra), to the need for an applicant for joinder to set out the nature of the claim and the basis of it. As also seen, in Gould v Gould; Swire Investments Ltd (1993) FLC 92-434, Fogarty J particularly referred to the need for fairness to the third party. Any person joined to a proceeding ought, at that point, be able to take advice on whether the facts pleaded (if established) would lead to a successful claim. Joinder to litigation is a serious step with often significant financial consequences.
18.The word “necessary” in rule 11.01(1) must mean something more than “useful” or “expeditious”. In my view, if there are available alternative means to joinder to the substantive proceedings, of obtaining from a third person or someone already a party what is needed to allow an applicant for joinder to establish an identified “case”, joinder is unlikely to be “necessary”.
19.However, if a cause of action, recognisable at law, against a “third person” is particularised, then it is at least highly likely that joinder will be “necessary for the court to completely and finally determine all matters in dispute”. Thus, in an application such as was before the Federal Magistrate, such a question falls for consideration.”
As noted earlier the wife’s parents, who have not been formally joined, seek an order that the husband’s application as against them be summarily dismissed.
Approach to summary dismissal
The basis upon which the husband sought to join the wife’s parents as contained in his application and the affidavit evidence upon which he relied was as his Counsel described the alleged existence of two constructive trusts.
The Federal Circuit Court’s power of summary dismissal is governed by s.17A of the Federal Circuit Court of Australia Act 1999[2] and Rule 13.10 of the Federal Circuit Court Rules 2001 (“the Rules”).[3]
[2] Formerly the Federal Magistrates Act 1999
[3] Formerly the Federal Magistrates Court Rules 2001
Subsection 17A(2) of the Federal Circuit Court of Australia Act 1999 (“the FCCA Act”)[4] provides that the Court:
[4] Formerly the Federal Magistrates Act 1999
“…may give judgment for one party against the other in relation to the whole or any part of a proceeding if:
(a)the first party is defending the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.”
The test to be applied is whether or not an application has a reasonable prospect of success, not whether an application is “doomed to fail”. This is made clear by subsection (3):
“For the purposes of this section, a defence or a proceeding or a part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospects of success.”
Rule 13.10 of the Rules provides:
“The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
(a) the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim;
…”
The relevant provisions of the Rules of this Court follow those sections of the FCCA Act which are in the same terms as s.31A of the Federal Court of Australia Act 1976 (“the Federal Court Act”). These provisions are different to the power identified in cases dealing with summary dismissal of applications under the Family Law Act 1975 in the Family Court of Australia such as Bigg & Suzi [1998] FLC 92-799 and Pelerman & Pelerman [2000] FLC 93-037.
In this case, the orders sought could potentially be made as an interim property order pursuant to sections 79 and 80(1)(h) of the Act or as an interlocutory costs order pursuant to section 117(2).
The Court does not have to be satisfied that there are compelling circumstances in order to make an interim property order, only that it is a proper case to do so. The Court must still be satisfied that it is just and equitable to make such an order.
If the Court proceeds to exercise the power in s.79 of the Act, it is required to undertake consideration of the matters in s.79(4) including by reference to s.79(4)(e) the matters in s.75(2) so far as they are relevant. Consideration of such matters may be brief.
An interim property order would be problematic given what both parties appear to agree is the absence of adequate financial disclosure. It is therefore difficult to accurately assess whether or not the husband is likely to receive by way of property settlement a sum at least equivalent to the amount he now seeks for legal fees.
In Strahan & Strahan [2009] FamCAFC 166, the Full Court said that the applicant for the funds had to have at least an arguable case for substantive relief which deserved to be heard. Their Honours referred to the requirement to show the likely cost of litigation. It is put by the husband that he needs an order to defray the likely costs.
The fundamental thing that is missing is the very first step in the process under s.79 of the Act namely, evidence of property which the Court is being asked to divide.
Given the financial position of the parties and the extent and nature of their assets and liabilities, I am not satisfied that it wouldn’t result in an injustice to the wife.
In light of the affidavit evidence and the parties’ submissions, I also accept the submission made on behalf of the wife that given the husband is working, even on his own evidence, there is no basis to find he could get such an order by way of interim spousal maintenance.
Turning then to the alternative basis for litigation costs. The starting point in relation to costs in family law matters is that each party bears their own costs.[8] However, if the Court is satisfied that there are circumstances justifying it doing so, it may make “such orders as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.”[9]
[8] s.117(1) Family Law Act1975
[9] s.117(2) Family Law Act 1975
In determining whether or not to make such an order, the Court must have regard to the matters set out in s.117(2A) of the Act. In the context of an interim hearing conducted on the papers, findings of fact cannot generally be made but some consideration of the relevant factors is warranted. Unlike the cases referred to by Counsel for the husband this is not a case involving complex commercial family disputes.[10] The first and most relevant consideration in s.117(2A) in the current context is the financial circumstances of the parties to the proceedings. The financial circumstances of the wife are difficult.
The husband has failed to adequately disclose his financial circumstances and his evidence before the Court made it clear he has done so selectively.
[10] Iphostrou & Iphostrou [2011] FamCA 20 at [60].
The next relevant matter is the conduct of the parties to the proceedings including in relation to discovery. The husband did not comply with the order for costs made in June 2013 and made the application to join the wife’s parents which was dismissed for the reasons set out above.
The next matter for consideration under section 117(2A) is whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders. There are disputes between the parties over disclosure however on any description of the husband’s evidence regarding his financial statement it represents only a partial picture of his financial circumstances. The wife submits the husband’s failure to comply with his obligation of full and frank disclosure tells against a litigation costs order.
The remaining considerations are not relevant in the context of the current interlocutory proceedings. In my view, almost all the necessary requirements and the justifying circumstances to make an order are absent in the present case. There are also profound and ultimately unassailable difficulties standing in the way of the husband getting such an order on either/or any of the bases made on his behalf. Accordingly the husband’s application for litigation costs should be dismissed.
Conclusion
For the reasons set out above the husband’s application to join the wife’s parents and his claim against them should be summarily dismissed. The husband’s application for a litigation funding order against the wife should also be dismissed.
There was one remaining matter that was raised by the husband.
This related to claims the wife’s father had breached s.121 of the Act. Senior Counsel for the wife’s parents told the Court she had provided her clients with advice about those provisions. Senior Counsel confirmed she had instructions that the wife’s father would give an undertaking not to breach s.121. In the circumstances and as the husband’s Counsel couldn’t point to any reason why that wasn’t appropriate I am content to accept this and leave the matter there.[11]
[11] See Sitwell & Sitwell [2014] FamCAFC 5 about injunctions restating effect of s.121 being unnecessary
It will be necessary to hear from the parties, beyond the submissions already made by the wife and her parents that the husband pay their costs on an indemnity basis. The parties should bear in mind the statements of the Full Court in Prantage & Prantage [2013] FamCAFC 105. It will also be necessary to make procedural orders for the future conduct of the substantive matter. For these reasons there will be orders as set out at the beginning of these reasons for decision.
I certify that the preceding ninety four (94) paragraphs are a true copy of the reasons for judgment of Judge O’Sullivan
Date: 28 March 2014
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Jurisdiction
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Procedural Fairness
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Appeal
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