VC and GC (Costs)
[2010] FamCAFC 222
•5 November 2010
FAMILY COURT OF AUSTRALIA
| VC & GC (COSTS) | [2010] FamCAFC 222 |
| FAMILY LAW - APPEAL – COSTS OF APPEAL – Appellant wife not wholly successful in appeal - Where appellant wife’s partial success arose because of errors of trial judge – Circumstances do not justify a departure from s 117(1) of the Family Law Act 1975 (Cth) – Appropriate to grant a certificate under s 6 of the Federal Proceedings (Costs) Act 1981(Cth) to the wife - Appropriate to grant a certificate under s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) to the husband – Where approach adopted by 2nd to 5th respondents to appeal a relevant consideration – Not appropriate to grant certificates under the Federal Proceedings Costs Act 1981 (Cth) to the 2nd to 5th respondents. |
| Family Law Act 1975 (Cth) ss 24(4)(a), 117 Federal Proceedings (Costs) Act 1981(Cth) ss 6, 8, 9 |
| Penfold & Penfold (1988) 144 CLR 311 |
| APPELLANT: | VC |
| 1ST RESPONDENT: | GC |
| 2ND RESPONDENT: | The executors of the Estate of DC |
| 3RD RESPONDENT: | XYZ Pty Ltd |
| 4TH RESPONDENT: | LB |
| 5TH RESPONDENT: | AC |
| FILE NUMBER: | PTW | 4624 | of | 2006 |
| APPEAL NUMBER: | WA | 2 | of | 2009 |
| DATE DELIVERED: | 5 November 2010 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Boland & Thackray JJ |
| HEARING DATE: | By way of written submissions filed 19 April 2010, 3 May 2010 and 11 May 2010 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 18 December 2008 |
| LOWER COURT MNC: | [2008] FCWA148 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Berry |
| SOLICITOR FOR THE APPELLANT: | Elizabeth Wiese & Associates |
| COUNSEL FOR THE 1ST RESPONDENT: | Dr Dickey QC |
| SOLICITOR FOR THE 1ST RESPONDENT: | O’Sullivan Davies |
| COUNSEL FOR THE 2ND, 3RD, 4TH & 5TH RESPONDENTS: | Dr Ingleby with Mr Elder |
| SOLICITOR FOR THE 2ND, 3RD, 4TH & 5TH RESPONDENTS: | Kim Wilson & Co |
Orders
There be no order as to costs.
The Court grants to the appellant wife a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by her in relation to the appeal.
The Court grants to the respondent husband a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by him in relation to the appeal.
IT IS NOTED that publication of this judgment under the pseudonym VC & GC and Ors (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WA 2 of 2009
File Number: PTW 4624 of 2006
| VC |
Appellant
And
| GC |
First Respondent
And
| The executors of the Estate of DC |
Second Respondent
And
| XYZ Pty Ltd |
Third Respondent
And
| LB |
Fourth Respondent
And
| AC |
Fifth Respondent
REASONS FOR JUDGMENT
Introduction
On 29 March 2010 the Full Court (Warnick, Boland and Thackray JJ) delivered reasons allowing an appeal by VC (“the wife”) against orders made by Crisford J dismissing the wife’s applications under s 106B of the Family Law Act 1975 (Cth) (“the Act”) to set aside a number of transactions. The trial Judge’s orders were made in proceedings between the wife and her husband GC and four other respondents. The husband and the other respondents resisted the appeal.
As set out in the reasons of the Full Court of 29 March 2010, the four other named respondents in the appeal were:
(i)The executors of the estate of the late DC (“the husband’s father”). The husband’s father died during the proceedings before the trial Judge;
(ii)XYZ Pty Ltd (“XYZ”). XYZ is the corporate trustee of a discretionary trust known as the XYZ Trust (“the trust”);
(iii)LB. LB was the husband’s father’s accountant. He was appointed a director of XYZ in December 2006;
(iv)AC (“the husband’s mother”). The husband’s mother was appointed a director of XYZ in December 2006.
On 29 March 2010 the following orders were made by the Full Court:
(1)The appeal be allowed.
(2)Order 5 of the orders made by the Honourable Justice Crisford on 18 December 2008 and varied under the slip rule on 9 March 2009 be set aside insofar as it dismisses paragraphs 10.4, 10.5, 11 and 12 of the wife’s consolidated Minute of Proposed Orders.
(3)Paragraphs 10.4, 10.5, 11 and 12 of the wife’s consolidated Minute of Proposed Orders sought be listed for rehearing and determined by the Honourable Justice Crisford at the same time as the competing applications for property settlement.
(4)The parties are at liberty to file written submissions with regard to the costs of the appeal in accordance with the following timetable:
(a)on behalf of the appellant within 21 days of the date hereof;
(b)on behalf of the 1st respondent in response thereto within 14 days thereafter;
(c)on behalf of the 2nd to 5th respondents in response thereto within 14 days thereafter;
(d)on behalf of the appellant in reply thereto within 14 days thereafter; and
(e)that each submission have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.
Pursuant to the orders, the wife filed submissions as to costs on 19 April 2010, the husband’s submissions in response were filed on 3 May 2010 and the submissions of the 2nd to 5th respondents were filed on 11 May 2010. The wife did not file any submissions in reply (as provided for in Order 4(d) of the orders of 29 March 2010).
In paragraph 263 of the reasons of 29 March 2010 the Full Court explained that one of the members of the Full Court hearing and determining the appeal was to retire on 31 March 2010. Referring to s 28(4)(a) of the Act the reasons noted that “[g]iven the timetable we propose to provide for the filing of written submissions, it is inevitable that the costs issue will now have to be determined by the remaining members of the Court”. Section 28(4)(a) of the Act provides:
(4)Where, after a Full Court (including a Full Court constituted in accordance with this subsection) has commenced the hearing, or further hearing, of proceedings and before the proceedings have been determined, one of the Judges constituting the Full Court dies, resigns his or her office, ceases to be a member of the Court by reason that the term of his or her appointment expires or otherwise becomes unable to continue as a member of the Full Court for the purposes of the proceedings, then the hearing and determination, or the determination, of the proceedings may be completed:
(a)if only 2 Judges remain and one of those Judges is assigned to the Appeal Division, or if more than 2 Judges remain and a majority of those Judges are assigned to the Appeal Division – by the Court constituted by the remaining Judges; or
…
Accordingly this judgment is a judgment of Boland and Thackray JJ.
The wife seeks orders that the respondents be jointly and severally liable to pay her costs of the appeal on a party and party basis, or such percentage of those costs as the Court determines just. In the alternative, the wife seeks costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth). Both the husband and the 2nd to 5th respondents oppose any order for costs to be made in the wife’s favour.
The husband’s solicitor submitted that “at the very least” no order for costs should be made against the husband. The husband and the 2nd to 5th respondents also seek costs certificates.
Relevant law
Section 117 of the Act deals with the issue of costs. The relevant provisions of that section in relation to this appeal are found in s 117(1), (2) and (2A) and are as follows:
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(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) and (5) 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 parties’ submissions
Submissions of the wife
In support of the costs order sought by the wife she relied on subparagraphs (a), (c) and (e) of s 117(2A). The wife submitted that subparagraphs (b), (d), (f) and (g) are irrelevant, or do not apply.
The wife acknowledged that the financial information contained in the appeal book was not current and “the financial circumstances of one or more of the parties may have changed significantly”.
In relation to her financial circumstances, the wife referred to her financial statement sworn 15 January 2008, which is contained in the appeal book.
As to the financial circumstances of the executors of the husband’s father’s estate (the 2nd respondent) the wife submitted:
The husband’s father, on 19 December 2006, deposed to the joint assets of himself, the fifth respondent [the husband’s mother], the XYZ Trust and the [A] Discretionary Trust as being worth $10 - $11 million … with debts through the XYZ Trust of $1.5 million to $2 million …
The wife referred to the financial circumstances of XYZ by drawing our attention to paragraph 138 of the Full Court reasons. In that paragraph the Full Court said:
It was not in dispute before the trial Judge that the trust, although it had not been formally valued for the purpose of the proceedings, had significant assets, even taking into account the so-called beneficiary loan accounts, including those in the name of the husband’s parents.
The wife further asserted that the financial statements of 30 June 2007 for the trust record the value of real estate “at cost not current market value”.
The wife conceded that the financial circumstances of LB and the husband’s mother are not known, but in respect of the husband’s mother, referred us to the financial circumstances of the executors of the husband’s father’s estate.
In relation to s 117(2A)(c) (the conduct of the parties in relation to the proceedings) the wife asserted that the 2nd to 5th respondents to the appeal “unreasonably failed to make the concessions made by the [husband]”. The wife further asserted that such unreasonableness is “magnified” on the basis that the 2nd to 5th respondents ran proceedings, including the appeal, on the basis of two propositions that “have inconsistent legal consequences”.
In respect of s 117(2A)(e) the wife submitted that no party to the appeal was “wholly unsuccessful”. The submissions of the wife concede that while the wife was “substantially successful”, she “failed” in respect of the orders sought regarding the 1997 and 2001 transactions.
Submissions of the husband
The husband’s solicitor’s primary submission was that s 117(1) of the Act should apply, and thus each party should bear his or her own costs.
She further asserted that, to the extent the wife was successful in the appeal, it was principally because the trial Judge erred in the exercise of her discretion in allowing the s 106B issues to be determined as preliminary issues. The husband submitted that the wife “must herself accept blame at least for Justice Crisford having made a final decision” in relation to the four particular instruments “because she joined in seeking a determination in this regard”.
The solicitor noted that a number of the wife’s grounds of appeal were dismissed or found by the Full Court to be “unnecessary to deal with”. She submitted that the husband was required to “give particular consideration to each of the Wife’s 28 Grounds of Appeal”.
At paragraph 9 of the submissions it is submitted that “at the very least” no costs orders should be made against the husband by virtue of the “major concession” made by the husband that, as a result of his resignation as appointor and guardian of the trust, subsequent transactions were void and of no effect.
The solicitor asserted that the wife proceeded with her grounds of appeal in respect of this issue, not only as a result of the other respondents not making the same concession, but “because she did not accept the validity of the Husband’s letter of resignation as Guardian and Appointor”. She referred to the grounds of appeal challenging the validity of the husband’s resignation which were dismissed.
The husband relied on an affidavit filed in spousal maintenance proceedings affirmed on 23 March 2010. The husband testified that he then had an excess of liabilities over assets of $47,959.00, and that he then had a current weekly deficit of income over expenditure of about $2,512.47.
The 2nd to 5th respondents’ submissions
On behalf of the 2nd to 5th respondents it was submitted that “the question of whether a concession was made as to the validity of the resignation is irrelevant to the costs of the appeal” but rather that:
The position of the 2nd to 5th respondents in relation to the validity and consequences of the husband’s resignation can only be relevant in relation to the costs of the overall proceedings.
It was submitted by counsel for the 2nd to 5th respondents that this was not relevant to the “precise point before the Full Court” which was the question of whether the trial Judge erred in dismissing the wife’s s 106B applications.
The submission on behalf of the 2nd to 5th respondents noted that those respondents agreed with the wife’s concession (and similar submission by the husband on this point) that no party was “wholly unsuccessful” in the appeal.
The “primary position” of the 2nd to 5th respondents as set out in the written submission on their behalf is that there should be no orders as to costs and thus, no departure from the “general principle” that each party bears his or her own costs.
The “secondary position” of the 2nd to 5th respondents is that “the determination of costs should await the determination of the substantive proceedings”. This submission is made on the basis of the assertion that the appeal was in respect of orders “which were in many senses interlocutory”.
Discussion
As is clear from the orders made by the Full Court at the conclusion of the appeal, the appeal was allowed and Order 5 of the orders of the trial Judge, insofar as that order dismissed paragraphs 10.4, 10.5, 11 and 12 of the wife’s consolidated Minute of Proposed Orders, was set aside. Whilst those paragraphs of the wife’s consolidated Minute of Proposed Orders were remitted by the Full Court for rehearing, the Full Court’s orders provided that they should be determined by the trial Judge at the same time as the competing applications for property settlement. Thus, a separate discrete rehearing was not a consequence of the Full Court’s orders.
In her written submissions opposing the wife’s application for costs of the appeal, solicitor for the husband, in our view, succinctly summarised the overall effect of our judgment. In paragraph 2 she said:
The Wife has not been wholly successful in her appeal. To the extent that the Wife has been successful, this was principally because the judge at first instance, Justice Crisford, erred in the exercise of her discretion in allowing the s. 106B issues to be determined as preliminary issues: see the Full Court’s Reasons for Judgment, especially paras. 154 (the relevant Grounds of Appeal are at para. 120), and 209 (the relevant Grounds of Appeal are at para. 192).
The solicitor for the husband, in paragraph 4 of her submissions, said:
The Wife must herself accept blame at least for Justice Crisford having made a final decision on the status of 4 particular documents in issue, because she joined in seeking a determination in this regard…
The solicitor for the husband referred to paragraph 161 of our reasons where we said:
In reaching our conclusion that her Honour committed appealable error, we acknowledge she was placed in an extremely difficult position where the wife and the third parties sought, in effect, a final determination of the status of the four instruments rather than a deferral of such a decision until the conclusion of the proceedings. No doubt the procedure adopted was instrumental in the appealable error we have identified. However, we conclude in the circumstances which confronted the trial Judge it was unsafe to dismiss the wife’s application in respect of these transactions at the outset of the proceedings.
We agree with the submissions of the solicitor for the husband that the wife was not wholly successful in her appeal. We acknowledge that fact was conceded by the wife.
Reference was also made to appeal grounds numbered 9, 10, 11, 12 and 13. Of these grounds the Full Court said at paragraph 240 of its reasons:
A number of the grounds agitated, particularly in this grouping, were directed to what we would describe as an overly critical or pernickety examination of the trial Judge’s reasons. Her Honour was faced with a plethora of documentation and evidence relevant to 13 transactions spreading over more than 21 years. The comments of Kirby J in AMS v AIF (1999) 199 CLR 160 at 211 are apposite.
The Full Court found those challenges to be without merit save and except for the matters discussed in paragraph 231 of the reasons.
We also have regard to the fact that the wife’s grounds of appeal challenging the validity of the husband’s resignations as appointor and guardian of the XYZ Trust in 1997 were dismissed.
It is not in dispute that the discretion to be exercised in awarding costs is a wide one (see Penfold & Penfold (1988) 144 CLR 311, at 315-316).
Overall having regard to the matters raised in the submissions by each of the parties we are not satisfied, in the circumstances of this case, there should be a departure from s 117(1). In reaching this conclusion we have found merit in the majority of the submissions made by the solicitor for the husband.
Thus we are satisfied that each party should pay their own costs of and incidental to the appeal.
We turn now to the question whether or not all or any of the parties should receive certificates pursuant to s 6 and/or s 9 of the Federal Proceedings (Costs) Act1981 (Cth).
We are satisfied that the appeal was allowed by reason of error of law by the trial Judge. We propose to grant certificates pursuant to s 6 and s 9 of the Federal Proceedings (Costs) Act1981 (Cth) to the wife and the husband in respect of the appeal.
Notwithstanding we have determined the criteria necessary to award a costs certificate has been established, we do not propose to grant a certificate under s 9 to the 2nd to 5th respondents. In so determining we have taken into account the position adopted by those parties to the conduct of the appeal which conduct is succinctly summarised in the submissions for the husband’s solicitor.
We have considered whether or not we should grant certificates in relation to the rehearing.
As we ordered that the rehearing of the s 106B applications should be heard at the same time as the substantive proceedings we do not propose to grant certificates under s 8 of the Federal Proceedings (Costs) Act1981 (Cth) to any party. In any event, no party sought a costs certificate under s 8.
I certify that the preceding forty five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date:
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