Wade-Ferrell & Wade-Ferrell
[2001] FamCA 138
•22 March 2001
[2001] FamCA 138
FAMILY LAW ACT 1975
IN THE FULL COURT OF THE
FAMILY COURT OF AUSTRALIA
AT SYDNEYAppeal Nos. EA 1 of 1999
ALE 3 of 1999
File No. SY 8971 of 1997
IN THE MATTER OF: WADE-FERRELL
Appellant/Wife
AND: WADE-FERRELL
First Respondent/Husband
AND: READ
Second Respondent/Intervener
CORAM: LINDENMAYER, FINN & MORGAN JJ
DATE OF HEARING: WRITTEN SUBMISSIONS
DATE OF JUDGMENT: 22 MARCH, 2001
JUDGMENT OF THE COURT AS TO COSTS
Appearances: Miss Taunton of Counsel (instructed by Erdem Hussein, Solicitor & Attorney, Suite G, 1st Floor, 111 Main Street, Blacktown, NSW, 2148) for the Appellant/Wife
Mr Lloyd of Counsel (instructed by Webb Thom & Associates, Solicitors, 1012 Victoria Road, West Ryde, NSW, 2114) for the First Respondent/Husband
Mr Collier of Counsel (instructed by Maund & Co, solicitors, 7/2-6 Hunter Street, Parramatta, NSW, 2150) for the Second Respondent/Intervener
JURISDICTION OF THE FAMILY COURT OF AUSTRALIA – Appeal against costs order- Jurisdiction to make an order for costs in proceedings between a party to the marriage and an intervener – Jurisdiction as to costs dependent upon jurisdiction to make substantive order on application of intervener - Whether the trial Judge made order in substantive proceedings in purported exercise of cross-vested state jurisdiction, or under s79 of the FLA, or in exercise of accrued federal jurisdiction. Zdravkovic and Zdravkovic (1982) FLC 91-220 considered and applied: Stack v Coast Securities (No.9) Pty Ltd (1983) 154 CLR 261; Fencott v Muller (1983) 152 CLR 570; Smith v Smith (1986) 161 CLR 217; Phillip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 33 ALR 465; Smith & Smith (No.2) (1985) FLC 91-604; McKay and McKay (1984) FLC 91-573; and Ireland & Ireland (1986) FLC 91-731 considered.
ORDERS OF THE FAMILY COURT OF AUSTRALIA – Order made beyond jurisdiction – Whether order made in purported exercise of cross-vested state jurisdiction prior to decision of High Court in Re: Wakim; ex parte McNally (1999) 163 ALR 270, and not able to be supported by any other source of jurisdiction, is a nullity, or valid and binding until set aside – Such order valid and binding until set aside on appeal or quashed by prerogative writ issued by High Court – DMW v CGW (1982) 151 CLR 491 and Re Macks and Others; Ex parte Saint [2000] HCA 62; 176 ALR 545 applied, Residual Assco Group Ltd v Spalvins [2000] HCA 29; 74 ALJR 1013; McLaughlan v Fosbury (1904) 1 CLR 546; and Maiden v Maiden (1909) 7 CLR 727, referred to.
APPEAL TO FULL COURT OF FAMILY COURT OF AUSTRALIA – Appeal from order made in purported exercise of cross-vested state jurisdiction – Effect of the Federal Courts (State Jurisdiction) Act 1999 (NSW) – Re Macks (supra) and Friis v Friis (2000) FLC 93-009 referred to.
On 28 April, 2000, the Full Court published its reasons for orders, which were made on 16 June, 1999, and allowed, in part, an appeal by the wife from property orders made by Lawrie J in proceedings between the wife and her former husband, in which the husband’s mother had intervened.
At the trial of the proceedings, there was a dispute between the husband (in conjunction with the intervener) and the wife as to the quantum and nature of certain cash advances made by the intervener to the husband and the wife during the marriage.
The trial Judge found, as contended by the husband and the intervener, that $63,000 had been advanced as loans, not as a gift (as to $50,000) and in repayment of earlier loans from the spouses (as to the balance), as contended by the wife. The trial Judge further held that the intervener had contributed $13,756 directly towards improvements to the granny flat which was attached to the former matrimonial home, and that these had produced an increase in the value of the property by $10,000. Accordingly, the trial Judge ordered that the former matrimonial home be sold and, from the net proceeds of sale, $73,000 be paid to the intervener and the balance divided between the spouses in the proportions 60% to the wife and 40% to the husband, with the husband to pay a further $6,000 to the intervener from his share in respect of a further loan of that sum from her to him only.
None of those findings or conclusions reached by the trial Judge were disturbed on appeal. However, the Full Court did conclude that the trial Judge made some errors in her calculation of the net pool of assets. Therefore the appeal was allowed only to the extent necessary to correct the trial Judge’s errors of calculation.
The wife also appealed against the trial Judge’s order that she pay the intervener’s costs from 5pm on 16 November, 1998. In making this order the trial Judge noted, firstly, that the orders made in favour of the intervener were significantly more generous than her offer to settle, secondly, that if the intervener bore her own costs this would amount to 20% of the judgment, and finally, the intervener would be left without any significant resources other than the fruits of the judgment.
In challenging the costs order made against her at first instance, the wife submitted that her Honour had erred as there was an absence of proper pleadings in respect of the intervener’s case. The wife submitted the intervener’s claim, whilst purporting to be made under the Family Law Act, could only have been made and granted under the Jurisdiction of Courts (Cross-Vesting) Act 1987 but that the jurisdiction conferred on the Family Court by that Act was not invoked by the intervener’s pleading of her claim. Accordingly, it was submitted, s.117 of the Act had no application to the issue of costs between the intervener and the wife. Reference was also made to the fact that in Re Wakim; Ex parte McNally (1999) 163 ALR 270; 24 Fam LR 669, the High Court held that the provisions of the Jurisdiction of Courts (Cross-Vesting) Act 1987 Cth which purported to confer jurisdiction in state matters on federal courts are constitutionally invalid. Although it was not expressly submitted that the Court had no jurisdiction to make an order for costs in favour of the intervener, the inference seemed to be that, as the intervener did not properly invoke the Court’s supposed jurisdiction under the Cross-Vesting Act, which supposed jurisdiction must nevertheless have been relied upon by the trial Judge to make the orders for payment to the intervener, the wife should not have been ordered to pay any part of the intervener’s costs of the proceedings.
Held: in dismissing the wife’s appeal from the trial Judge’s costs order:
Having regard to the decision of the High Court in Re Wakim; ex parte McNally (supra), if, in making the substantive order against the wife in favour of the intervener, the trial Judge was purporting to exercise cross-vested jurisdiction in a “State matter”, and if no other source of jurisdiction could be relied upon to sustain the validity of that order, then it was an order beyond the jurisdiction of the Family Court, although it would remain valid and binding upon the parties until set aside on appeal or quashed by prerogative writ issued by the High Court: – DMW v CGW (1982) 151 CLR 491; 8 FamLR 677; Re Macks and Others; Ex parte Saint [2000] HCA 62; 176 ALR 545; Residual Assco Group Ltd v Spalvins [2000] HCA 29; 74 ALJR 1013; Friis v Friis (2000) FLC 93-009 McLaughlan v Fosbury (1904) 1 CLR 546 and Maiden v Maiden (1909) 7 CLR 727, considered and applied.
As the jurisdiction to make an order as to costs in proceedings arises out of and as incidental to the jurisdiction to entertain and determine the substantive proceedings, if the Court lacked jurisdiction in relation to latter it also lacked jurisdiction as to the former (leaving aside the question of jurisdiction to award costs of proceedings to determine whether the Court has jurisdiction, which does not arise here.)
If the order as to costs, the subject of the appeal, was beyond the jurisdiction of the Court it should be set aside, but that would not necessarily relieve the wife of her rights (eg to a merits appeal) and obligations (eg as regards enforcement) arising under that order, because of the provisions of sections, 4, 6 and 7 of Federal Courts (State Jurisdiction) Act 1999 (NSW), the equivalent sections of which in the corresponding statutes of Queensland and South Australia were held to be constitutionally valid by the High Court in Re Macks; ex parte Saint (supra).
Notwithstanding any assumptions which may have been made during the hearing of the substantive appeal, there is nothing in her Honour’s judgment in the substantive proceedings to indicate that she either intended to exercise, or understood herself to be exercising, cross-vested state jurisdiction in those proceedings. Further, the intervener did not purport to invoke the Court’s cross-vested jurisdiction, as O.31A, rr.4 and 6 of the Family Law Rules then required her to do if she intended to rely on that jurisdiction.
Having regard to the circumstances of the intervener’s intervention in the proceedings, by leave of the Court, the order which she sought, and the order actually made in her favour, at least so far as $63,000 of the amount awarded to her is concerned, her Honour, in making that order, and this Court in affirming it, was exercising jurisdiction under s.79 of the Act, in accordance with the principles stated in Zdravkovic and Zdravkovic (1982) FLC 91-220. Thus, irrespective of the basis for the order for payment of the other $10,000, the proceedings between the wife and the intervener were, at least in part, proceedings under the Act, so as to enliven the Court's jurisdiction as to costs under s.117 of the Act in relation to those proceedings.
In those circumstances, it is not necessary to decide whether, in making the order for payment of the additional $10,000, her Honour (and the Full Court on appeal) was also exercising jurisdiction under the Act, but it is certainly at least arguable that the jurisdiction exercised in respect of that amount was accrued federal jurisdiction, not state jurisdiction, and that the Court was therefore exercising jurisdiction under s.31(1)(a) of the Act in that respect also. Whether the grant of jurisdiction to this Court, by s.31(1)(a) of the Act, with respect to “matters arising under this Act … in respect of which matrimonial causes are instituted or continued under this Act”, carries with it the accrued jurisdiction to determine, in proceedings constituting a matrimonial cause, an attached non-severable claim based on State law, has not yet been conclusively determined by any decision of the High Court or this Court. If this Court does have accrued jurisdiction, then this is a case in which the non-federal claim of the intervener in respect of the improvements which she effected to the matrimonial home of the husband and wife was, in the context of this case, “attached to” and “non-severable from” both the claims of the husband and wife under s.79 of the Act for orders in respect of that home, and the intervener’s claim, in those s.79 proceedings, for payment to her of the debt of $63,000 owing to her by the husband and wife. All three claims (the claims of the spouses under s.79, the claim of the intervener in respect of the debt and the claim of the intervener in respect of improvement to the home) arose out of a “common substratum of facts” (per Mason J in Phillip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 33 ALR 465 at 504), and it was clearly just and convenient that all three claims be adjudicated upon in the same proceedings by the same court.
The trial Judge did not err in any way in the exercise of her discretion in ordering that the wife pay the intervener’s costs of the proceedings from 5pm on 16 November, 1998. It has not been shown that her Honour erred in principle, that she mistook the facts, that she failed to take into account any relevant consideration or took into account any irrelevant consideration. Nor was her Honour’s order plainly unjust.
Held, further: in ordering the wife to pay the intervener’s costs of the substantive appeal:
Since s.7 of the Federal Proceedings (Costs) Act 1981 applies only to a respondent to an appeal who, pursuant to an order of the Court, is required to pay an appellant’s costs, it has no application to an appellant, and therefore cannot be resorted to by the wife.
In this case, the appeal succeeded, to the limited extent that it did, only on questions of fact, namely errors by the trial Judge in the calculation of the net pool of assets available for division in the proceedings. In all other respects, it failed. Since, by s.9(1) of the Costs Act, a costs certificate under that section may be granted to an appellant only where the appeal “succeeds on a question of law,” the wife’s application for a costs certificate is rejected.
10. Given that the wife was wholly unsuccessful in her appeal against the order made by the trial Judge in favour of the intervener, the relative financial circumstances of the two relevant parties and the conduct of them both in relation to the proceedings (including, particularly, the wife’s failure to respond positively to the intervener’s very favourable settlement offer), the circumstances justify the making of an order that the appellant wife pay the intervener’s costs of the appeal.
REPORTABLE
INTRODUCTION
On 16 June, 1999 this Court made orders allowing, in part, an appeal by the wife from orders made by Lawrie J (“the trial Judge”) in proceedings between the wife and her former husband the husband in which his mother, the intervener had intervened. The proceedings were proceedings between the husband and wife for orders under s.79 of the Family Law Act 1975 (“the Act”) in relation to their property, and proceedings in relation to child support payable by the husband to the wife in respect of their two children. Our reasons for judgment supporting the orders made on 16 June, 1999, were published on 28 April, 2000.
The principal item of property to which the s.79 proceedings related was the former matrimonial home of the husband and wife having an agreed net value, at the time of trial, of $320,700. The intervener had intervened in those proceedings, by leave of the Court, pursuant to s.92 of the Act.
In the property proceedings, the husband sought orders for the sale of the former matrimonial home and that, from the net proceeds of sale, there be paid to the intervener all moneys owing to her in respect of her contributions to the property (subsequently quantified by him at $82,700), with the balance then to be divided between the parties in the proportions 45% to the husband and 55% to the wife. The principal orders ultimately sought by the wife, in those proceedings, were that the husband transfer his interest in the former matrimonial home to her, subject to the existing mortgage, and that the husband indemnify her against any claim by the intervener in respect of moneys allegedly owing to her.
The husband and the intervener both claimed that the latter had advanced sums to the husband and wife during the marriage, totalling $82,756, of which $69,000 was by way of loans, and $13,756 by way of direct contributions to improvements to a granny flat which was added to the former matrimonial home in 1993, and subsequently occupied by the intervener. The wife admitted advances to the spouses by the intervener totalling $63,000, but claimed that $50,000 of that was a gift, and the balance was repayment of moneys previously advanced to her by them. She denied any knowledge of a further alleged advance by the intervener of $6,000, and contested the claim that she had directly contributed $13,756 to the improvements to the granny flat.
It was in the light of the spouses’ conflicting positions in relation to the alleged advances by the intervener, and their conflicting applications as to the disposition of the former matrimonial home and the associated treatment of the alleged debt to the intervener, that the latter sought and obtained the leave of the Court to intervene in the proceedings. Having done so, she ultimately sought an order that the husband and wife pay her the sum of $82,756 within 60 days.
The trial Judge found that the $63,000, which the wife admitted had been advanced by the intervener to the husband and wife, was advanced as loans, not as a gift (as to $50,000) and in repayment of earlier loans from the spouses (as to the balance) as asserted by the wife. Her Honour found that the further sum of $6,000 was advanced by the intervener to the husband only, as a loan to him, and that he alone should be responsible for its repayment. She further held that the intervener had contributed $13,756 directly towards improvements to the granny flat, and that these had produced an increase in the value of the property by $10,000. Accordingly, she ordered that the former matrimonial home be sold and, from the net proceeds of sale, $73,000 be paid to the intervener and the balance divided between the spouses in the proportions 60% to the wife and 40% to the husband, with the husband to pay a further $6,000 to the intervener from his share.
None of those findings by the trial Judge, nor her conclusion that the spouses’ entitlements in respect of their net property were 60% to the wife and 40% to the husband, was disturbed on appeal. What this Court held was that her Honour made some errors in her calculation of the net pool of assets, which she had found amounted to $327,527, but which this Court held she should have found to amount to $340,921. We therefore allowed the appeal only to the extent necessary to correct her Honour’s errors of calculation. In addition, as the wife then sought an opportunity to retain the former matrimonial home, and as neither of the other parties opposed her being granted that opportunity, we varied the trial Judge’s orders to give her that opportunity.
Finally, an application by the wife for leave to appeal from the trial Judge’s determination of the child support aspect of the proceedings, was dismissed, as being entirely without merit.
One of the grounds of appeal in the wife’s amended Notice of Appeal (ground 35) related to an order for costs made by the trial Judge on 12 March, 1999. As counsel for the parties, at the appeal hearing on 7 June, 1999, considered that it would be inappropriate for them to make submissions in relation to that appeal until we had delivered our reasons for judgment in the substantive appeal, we included, in our orders of 16 June, 1999, orders for the filing and service, by all parties, of written submissions in relation to both the costs appeal and the costs of the substantive appeal, and indicated that, following receipt of those submissions, we would give our judgment and make our orders on those issues without any further oral argument.
Pursuant to those directions, we have now received and considered the following written submissions by the parties:-
submissions of the appellant/wife filed on 22 May, 2000;
submissions of the intervener filed on 7 June, 2000;
submissions of the respondent/husband, filed on 14 July, 2000 (which are identical to the submissions filed on his behalf on 17 December, 1998 in relation to the costs of the proceedings before the trial Judge); and
submissions of the appellant/wife in reply to those of the intervener and the husband, filed on 12 October, 2000 (to which is annexed is a copy of her submissions to the trial Judge referred to in paragraph 11(v), below).
In addition, we have obtained from the Appeals Registrar, and considered, copies of the following documents relevant to the costs appeal:-
the orders of the trial Judge as to costs, made on 12 March, 1999;
the reasons for judgment of the trial Judge as to costs, also dated 12 March, 1999;
the written submissions of the husband as to the costs of the proceedings before the trial Judge, filed on 17 December, 1998;
the submissions of the intervener as to the costs of those proceedings, filed on 18 December, 1998;
the submissions of the wife as to the costs of those proceedings, the filing date of which is not disclosed; and
the submissions of the husband, in reply to those of the wife, in relation to the costs of those proceedings, filed on 4 February, 1999.
THE COSTS APPEAL
The orders which the trial Judge made on 12 March, 1999, as to the costs of the proceedings before her, were these:-
“1. That the wife pay the intervener’s costs from 5pm on 16th November 1998.
2. That all other applications for costs in the matter be dismissed.”
Although the wife, in her written submissions to the trial Judge, had sought an order that the husband and/or the intervener pay her costs of those proceedings, it is clear, both from the terms of ground 35 of her amended Notice of Appeal, and from her written submissions on the costs appeal, that she is appealing only from order 1 of those orders (obliging her to pay part of the intervener’s costs of the proceedings) and not from order 2 (dismissing her application for costs against the husband and intervener).
In her costs judgment of 12 March, 1999, the trial Judge, after first referring to the substantive orders which she had made on 3 December, 1998, recited the terms of s.117(1), (2) and (2A) of the Act, which are the relevant provisions governing the Court’s power to make orders as to costs in proceedings under the Act. She then dealt with the intervener’s application for costs against the wife, as follows:-
“3. The intervener, the husband’s mother, seeks an order for her costs against only the wife. The intervener had on 16th November 1998 served on the parties an offer that she would resolve the matters on the payment of $63,000 within 60 days and that she would vacate the premises within a further 30 days thereafter. The offer was accepted by the husband but was rejected by the wife. The orders made in favour of the intervener were significantly more generous than her offer to settle. The making of an offer which is better than the outcome is a very weighty consideration in determining whether an order for costs should be made.
4. In other respects as well, the intervener can raise matters for consideration under section 117. The parties were not on Legal Aid and the costs of the proceedings which were heard over six days amount to $25,621.50 of these $16, 012.50 were incurred after the offer had been made. This would mean that 20% of the judgement to the intervener would be applied in costs.
5. The intervener is now without any significant resources other than the fruits of this judgment. In those circumstances the fact that she had made an offer on the 16th November 1998 does make this a case where it would be just and equitable to order that the wife pay the costs of the intervener incurred following the serving on the wife of the offer on the 16th November 1998, and I so order.”
The wife’s only ground of appeal against the costs order in favour of the intervener is in these lamentably vague terms:-
“35. Her Honour erred in finding that the wife should pay the intervener’s costs.”
The only submission in the wife’s written submissions, filed on 22 May, 2000, which could be said to be in support of this appeal (although it also relates to the costs of the substantive appeal), is this:-
“3. In relation to the costs of the Intervener there was an absence of proper pleadings in respect of the Intervener’s case before the Trial Judge. The Full Court recognised that a Court of Equity would grant her an equitable charge over the property to secure the sums claimed (paragraphs 62 and 63 Judgment of Court of Appeal). The Intervener therefore has been successful in her claim under equitable principles and the Intervener has had to therefore rely on cross-vested jurisdiction in the application sought by her and in her application for costs. At no time did the Intervener plead and seek relief under the cross vesting jurisdiction. Under the recent High Court decision of Wakim (1999) the Intervener could not have cross-vested and her remedy should have been sought in another jurisdiction. In the circumstances noting there was an absence of proper pleadings in respect of the Intervener’s case before the Trial Judge and noting the Intervener has succeeded under equitable principles, her remedies would only succeed if she cross vested which the Intervener failed to do. It is therefore submitted the Intervener should not be allowed costs before the Trial Judge and the Full Court.”
The submissions of the intervener on the costs appeal seek “an order that the costs ordered in respect to the proceedings against the … wife … before her Honour Justice Lawrie stand”. Those submissions (which, from that point on, appear to be a verbatim repetition of the intervener’s costs submissions to the trial Judge filed on 18 December, 1998) then contain a summary of the history of the proceedings, and of the intervener’s intervention (relevant details of which we have already set out in the introduction to this judgment), and a reference to the terms of the written offer of settlement made by her to the parties “at about 2.55pm” on 16 November, 1998, and accepted by the husband but rejected by the wife. As an adequate summary of that offer is contained in paragraph 3 of the trial Judge’s costs judgment, which we have quoted in paragraph 14 hereof, it is unnecessary for us to repeat those terms here. The submissions make the point that the intervener “faired substantially better” from the trial Judge’s orders, and the wife substantially worse, than if the intervener’s offer had been accepted.
Those submissions then traverse the subsequent history of the proceedings before the trial Judge, noting that, despite her mounting costs as the trial (which lasted six days) proceeded from day to day, the intervener never sought to increase the amount for which she was prepared to settle the issues between her and the spouses beyond the $63,000 specified in her written offer, and that that offer “remained alive and … actively sought” by her throughout the trial, whilst the wife “remained fixed and adamant that the offer was rejected absolutely” and proposed no “compromise position … at any time during the hearing”.
Reference is also made in those submissions to the intervener’s financial position, which is said to have been “precarious from the start of the proceedings” and to the fact that the wife did not really dispute the making of the advances claimed by her, but only their character. It is also submitted that, as “stated and restated” by the trial Judge during the hearing, even if the wife’s defence of her claim had been successful, the advances which the intervener had made to the spouses would have been taken into account in the proceedings between the husband and wife as contributions made by or on behalf of the former (citing Kessey & Kessey (1994) FLC 92-495 and Gosper & Gosper (1997) FLC 91-818).
Those submissions then make detailed references to the provisions of s.117 of the Act, particularly to the matters referred to in subs.(2A), and contain relevant submissions as to how those matters support a costs order in favour of the intervener.
The submissions for the intervener do not address the issue (admittedly raised only somewhat obliquely in the submissions for the wife quoted in paragraph 16 hereof) of the impact upon the costs appeal of the decision of the High Court in Re Wakim; ex parte McNally (1999) 163 ALR 270; 24 FamLR 669, in which it was held that the provisions of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Clth) which purported to confer jurisdiction in State matters on Federal Courts (including the Family Court of Australia) were constitutionally invalid. This is an issue to which we shall return below.
The submissions of the wife, filed on 12 October, 2000, in reply to those of the intervener, appear to have been filed well outside the time prescribed by our order no.7 of 16 June, 1999. As our reasons for judgment were published on Friday, 28 April, 2000, and as these submissions of the wife are not the only ones which appear to have been filed late, we set out below the dates upon which the various submissions of the parties should have been filed, the dates on which they were filed, and the number of days by which (where applicable) they were late.
| Submissions | Last Date for Filing as Ordered | Date filed | Number of Days Late |
| Appellant Wife’s Submissions | 22 May, 2000 | 22 May, 2000 | Nil |
| Intervener’s Submissions in Answer | 6 June, 2000 | 7 June, 2000 | 1 day |
| Husband’s Submissions in Answer | 6 June, 2000 | 14 July, 2000 | 38 days |
| Wife’s Submissions in reply to Intervener | 15 June, 2000 | 12 October, 2000 | 119 days |
| Wife’s Submissions in reply to Husband | 24 July, 2000 | 12 October, 2000 | 72 days |
No party offered any explanation for their delay in filing their submissions, nor made an application (even an informal one) for an extension of the time prescribed by our orders of 16 June, 1999 for the filing and service of their submissions. Each party was, to some extent, at fault in this regard, the intervener least of all, and the wife most of all (in respect of her submissions in reply). The husband’s delay in filing his submissions in answer to those of the wife is the least explicable, as the submissions which were at last filed on his behalf were merely a copy of the costs submissions previously made to the trial Judge. However, as the husband is not a party to the costs appeal, as explained in paragraph 13 hereof, and as his submissions filed are virtually irrelevant to the costs of the substantive appeal, we need say no more about his tardiness.
Notwithstanding some misgivings, and in the absence of any objection being lodged with the Court by either the wife or the intervener to the lateness of the relevant submissions of the other, we propose to have regard to both the intervener’s submissions of 7 June, 2000, to the contents of which we have already referred, and those of the wife in reply of 12 October, 2000, to which we now turn.
In those submissions in reply, the wife refers to two further matters which she contends are relevant to the costs appeal. The first of those is that the intervener, in her affidavit supporting her application for leave to intervene, deposed to making loans to the parties totalling $69,000 and incurring expenditure of $13,756.26 on the granny flat (a total of $82,756.26), yet she indicated that she proposed to claim $100,000 from the husband and wife, with no particulars of how that amount was arrived at. The second is that on 29 February, 1996, the intervener had lodged a caveat over the title to the former matrimonial home claiming an equitable interest in it “pursuant to an implied or constructive trust” and that her written settlement offer made on 16 November, 1998 (referred to above) made no mention of her withdrawing that caveat.
Apart from those two matters, the wife’s submissions in reply merely refer to and annex a copy of the written submissions on costs made on her behalf to the trial Judge, on which it is stated that reliance is placed. We have had regard to those earlier submissions, but in our view most of what is contained therein is irrelevant to the costs appeal, which is an appeal from an exercise of discretion by the trial Judge. As such, the appellant wife faces the hurdles which confront any appellant seeking to challenge an exercise of judicial discretion, as explained by the High Court in such cases as House v The King (1936) 55 CLR 490 at 504-5, Lovell and Lovell (1950) 81 CLR 513 at 519, Gronow v Gronow (1979) 144 CLR 513 at 519-20 and (with particular reference to costs) in Penfold and Penfold (1980) 144 CLR 311.
The only part of those earlier submissions which we think to be of any relevance to this appeal is that part (which appears at pp.18-21 thereof) in which it is submitted, in effect, that the intervener’s claim, whilst purporting to be made under the Act, could only have been made and granted under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Clth) (“the Cross-Vesting Act”), but that the jurisdiction conferred on the Family Court by that Act was not invoked by the intervener’s pleading of her claim. Accordingly, it was submitted, s.117 of the Act had no application to the issue of costs between the intervener and the wife. Although it was not there submitted that the Court had no jurisdiction to make an order for costs in favour of the intervener, the inference from the submission seems to be that, as the intervener did not properly invoke the Court’s supposed jurisdiction under the Cross-Vesting Act, which supposed jurisdiction must nevertheless have been relied upon by the trial Judge to make the orders for payment to the intervener, the wife should not be ordered to pay any part of the intervener’s costs of the proceedings.
Further, it was submitted (in reliance upon the decision of the Full Court in Zdravkovic and Zdravkovic (1982) FLC 91-220) that an order for payment to the intervener of the amount found to be owing to her by the parties could have been made by the Court as part of its “overall adjustment of the [husband’s and wife’s] financial rights” in the s.79 proceedings. Accordingly, it was submitted that the intervener’s intervention in the proceedings was “unnecessary, time wasting and cost wasting, so that either the husband, or alternatively the interveners should be ordered to pay the wife’s costs of and incidental to the hearing time wasted by the intervener”. As the wife has not appealed against the trial Judge’s rejection of her costs application against the intervener and the husband, but only against her Honour’s order that she pay the intervener’s costs, the latter submission can now only be relied upon to support an assertion that the trial Judge erred in making the latter order.
THE JURISDICTION QUESTION
As a result of the High Court’s decision in re Wakim (supra), which was given on 17 June, 1999 (the day after this Court’s orders in the appeal) some jurisdictional questions possibly arise in relation to the costs appeal, but only if, in making the substantive order which she did in favour of the intervener, the trial Judge was purporting to exercise jurisdiction in a “State matter”, pursuant to the Cross-Vesting Act, and no other source of jurisdiction can be relied upon to sustain the validity of her order (Friis v Friis (2000) FLC 93-009, per McPherson JA at [3] and [5] and per Williams J at [41]; McLaughlan v Fosbury (1904) 1 CLR 546; and Maiden v Maiden (1909) 7 CLR 727). If she was purporting to exercise cross-vested jurisdiction, and if no other source of jurisdiction can be relied upon to support her order, then that order was, as re Wakim subsequently revealed, an order beyond the jurisdiction of the Family Court of Australia. Similarly, on that hypothesis, the order of this Court, in so far as it upheld the trial Judge’s order in favour of the intervener, would have been beyond the jurisdiction of this Court.
Since the jurisdiction to make an order as to costs in proceedings arises out of and as incidental to the jurisdiction to entertain and determine the substantive proceedings, it would follow that if the Court lacked jurisdiction in relation to the latter it also lacked jurisdiction as to the former (leaving aside the question of jurisdiction to award costs of proceedings to determine whether the Court had jurisdiction, which does not arise here). Therefore, on that hypothesis, the trial Judge’s order that the wife pay the intervener’s costs of the proceedings would be as fundamentally flawed as her substantive order in favour of the latter.
However, the mere fact that the order of the trial Judge was beyond jurisdiction would not render it a nullity. It would remain valid and binding upon the parties until set aside, either by appeal to this Court or by the issue of a prerogative writ by the High Court quashing the order: DMW v CGW (1982) 151 CLR 491; 8 FamLR 677; Re Macks and Others; Ex parte Saint [2000] HCA 62; 176 ALR 545, per Gleeson CJ (at [19-23]), Gaudron J (at [51]-[53]), McHugh J (at [152]), Gummow J (at [209]-[219]), Kirby J (at [257] & [306]) and Hayne and Callinan JJ (at [343] & [344]). See also Residual Assco Group Ltd v Spalvins [2000] HCA 29; 74 ALJR 1013.
Thus, the wife having appealed from the costs order, and having now raised in her appeal the issue of her Honour’s jurisdiction to make that order, then, upon the hypothesis referred to in paragraph 29 hereof (i.e. that the order was made in purported exercise of cross-vested jurisdiction and no other source of jurisdiction can be relied upon to sustain its validity,) this Court would be obliged, in view of the decision of the High Court in re Wakim (supra), to uphold the appeal and set aside the order. Such an order by this Court, however, would not necessarily relieve the wife of her rights and obligations arising under the costs order, because of the provisions of the Federal Courts (State Jurisdiction) Act 1999 (NSW) (“the State Act”).
Pursuant to ss.4, 6 and 7 of the State Act (the equivalent sections of which, in the corresponding statutes of Queensland and South Australia, were held to be constitutionally valid by the High Court in Re Macks (supra)) the costs order of the trial Judge would be an “ineffective judgment” (as defined by s.4 of that Act) and, by virtue of s.6(a)(ii) thereof, the rights and liabilities of the parties (i.e. the wife and the intervener) would be the same as if that order had been a valid judgment of a judge of the Supreme Court of New South Wales. By s.7(2) and (3) of that Act, the rights conferred by s.6 include the right to appeal against the ineffective judgment as if it were a judgment of a judge of the Supreme Court of New South Wales (i.e. to the New South Wales Court of Appeal). And by s.8 of that Act, anything done or omitted to be done under or in relation to a liability imposed by s.6 would have the same effect (e.g. as regards enforcement and the like) as if it were done or omitted to be done in respect of a judgment of the Supreme Court.
In theory, then, at least, if we were to set aside the costs order on the ground that it was made without jurisdiction, the wife could nevertheless (subject, perhaps, to necessary extensions of time and the like) appeal to the New South Wales Court of Appeal against the merits of the costs order. Conversely, the intervener could take steps, under the relevant Rules of the Supreme Court of New South Wales, to enforce that order. What this Court could not do, on this hypothesis, would be to entertain an appeal on the merits from the costs order.
We turn, then, to the question whether the trial Judge’s costs order was made in purported exercise of cross-vested state jurisdiction, or whether any other source of jurisdiction could support the order. Those questions, in turn, depend upon whether her substantive orders in favour of the intervener were made in the purported exercise of cross-vested jurisdiction, or whether they could be supported by some other jurisdictional base.
Nothwithstanding any assumptions which may have been made during the hearing of the substantive appeal, there is nothing in her Honour’s judgment in the substantive proceedings to indicate that she either intended to exercise, or understood herself to be exercising, cross-vested state jurisdiction in those proceedings. Further, as pointed out in the wife’s submissions referred to in paragraph 27 hereof, the intervener did not purport to invoke the Court’s cross-vested jurisdiction, as O.31A, rr.4 and 6 of the Family Law Rules then required her to do if she intended to rely on that jurisdiction.
We have already set out, earlier in these reasons, the chain of circumstances which led the intervener to seek leave to intervene in the proceedings, and the nature of the order which she sought against the parties, following the grant of that leave by the Court. The substantive order which the trial Judge made in her favour was (except as to the quantum thereof) in substance the very order which she sought, namely an order that the husband and wife pay to her the sum of money which they owed her, and her Honour made that order “as part of the overall readjustment of the parties’ [i.e. husband’s and wife’s] financial rights” and “as a term of” the s.79 order: Zdravkovic and Zdravkovic (supra) at 77,205-6.
Of the $73,000 which the trial Judge ordered, and this Court confirmed, be paid to the intervener from the proceeds of sale of the former matrimonial home before the division of the balance between the husband and wife, $63,000 represented moneys lent by the intervener to the spouses, thus constituting a simple loan repayable on demand. The remaining $10,000 represented the value of improvements effected by her to that property. Although the trial Judge did not identify the legal basis upon which she included that $10,000 in the amount to be paid to the intervener, this Court held that that sum represented the Court’s quantification of the equitable charge over the property arising in favour of the intervener from the circumstances of her carrying out those improvements, and the order for payment from the sale proceeds was the Court’s method of enforcing that charge.
Having regard to the circumstances of the intervener’s intervention in the proceedings, by leave of the Court, the order which she sought, and the order actually made in her favour, we are of the opinion that, at least so far as $63,000 of the amount awarded to her is concerned, her Honour, in making that order, and this Court in affirming it, was exercising jurisdiction under s.79 of the Act, in accordance with the principles stated in Zdravkovic (supra). Thus, irrespective of the basis for the order for payment of the other $10,000, we conclude that the proceedings between the wife and the intervener were, at least in part, proceedings under the Act, so as to enliven the Court's jurisdiction as to costs under s.117 of the Act in relation to those proceedings.
In those circumstances, it is not necessary to decide whether, in making the order for payment of the additional $10,000, her Honour (and this Court on appeal) was also exercising jurisdiction under the Act, but it is certainly at least arguable that the jurisdiction exercised in respect of that amount was accrued federal jurisdiction, not state jurisdiction, and that the Court was therefore exercising jurisdiction under s.31(1)(a) of the Act in that respect also.
It is now settled law that the Commonwealth constitution gives the Federal Parliament the power “to give authority to federal courts to decide the whole of a single justiciable controversy of which a federal issue forms an integral part”: Stack v Coast Securities (No.9) Pty Ltd (1983) 154 CLR 261 at 293 (per Mason, Brennan and Deane JJ). It is also settled that “the grant of jurisdiction to determine ‘a matter’ carries with it jurisdiction to determine the whole matter, and that a “matter” is a justiciable controversy which must either be constituted by or must include a claim arising under a federal law but which may also include another cause of action under another law, provided it is attached to and is not severable from the former claim’ ”: Smith v Smith (1986) 161 CLR 217 at 237; FLC 91-732 at 75,331 (per Gibbs CJ, Wilson and Dawson JJ, quoting from Fencott v Muller (1983) 152 CLR 570 at 606). The jurisdiction of the federal court to determine the attached, non-severable cause of action or claim is referred to as “accrued jurisdiction”.
Whether the grant of jurisdiction to this Court, by s.31(1)(a) of the Act, with respect to “matters arising under this Act … in respect of which matrimonial causes are instituted or continued under this Act”, carries with it the accrued jurisdiction to determine, in proceedings constituting a matrimonial cause, an attached non-severable claim based on State law, has not yet been conclusively determined by any decision of the High Court or this Court. There is single judge authority (per Lindenmayer J in Ireland & Ireland (1986) FLC 91-731) that it does, and dicta both ways, in judgments of individual judges sitting in this Court (Evatt CJ and Nygh J in favour of it in, respectively, Smith & Smith (No.2) (1985) FLC 91-604 and McKay and McKay (1984) FLC 91-573, and Fogarty J and Strauss J against it in, respectively, Smith & Smith (No.2) and McKay and McKay (both supra)).
If this Court does have accrued jurisdiction, then we think that this is a case in which the non-federal claim of the intervener in respect of the improvements which she effected to the matrimonial home of the husband and wife was, in the context of this case, “attached to” and “non-severable from” both the claims of the husband and wife under s.79 of the Act for orders in respect of that home, and the intervener’s claim, in those s.79 proceedings, for payment to her of the debt of $63,000 owing to her by the husband and wife. All three claims (the claims of the spouses under s.79, the claim of the intervener in respect of the debt and the claim of the intervener in respect of improvement to the home) arose out of a “common substratum of facts” (per Mason J in Phillip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 33 ALR 465 at 504), and it was clearly just and convenient that all three claims be adjudicated upon in the same proceedings by the same court.
As we have said, however, it is not necessary to reach a definitive conclusion about whether the jurisdiction exercised in respect of the $10,000 was accrued federal jurisdiction or purported cross-vested state jurisdiction, because our conclusion that the jurisdiction exercised with respect to the $63,000 was jurisdiction under the Act is sufficient to sustain, jurisdictionally, the trial Judge’s order for costs against the wife in favour of the intervener.
As to the merits of the wife’s appeal against that costs order, we are of the opinion that it has none. We have already referred, in paragraph 26 hereof, to the legal hurdles which face the wife in this appeal from such a discretionary judgment. Having considered the trial Judge’s judgment, and the wife’s submissions, we are not satisfied that the trial Judge erred in any way in the exercise of her discretion in ordering that the wife pay the intervener’s costs of the proceedings from 5pm on 16 November, 1998. It has not been shown to our satisfaction that her Honour erred in principle, that she mistook the facts, that she failed to take into account any relevant consideration or took into account any irrelevant consideration. Nor are we satisfied that her Honour’s order was plainly unjust.
On the contrary, it seems to us, having regard to all of the matters referred to in s.117(2A) of the Act, that the order was fully justified as an exercise of judicial discretion. The costs incurred by the intervener after 5pm on 16 November, 1998, were all incurred because the wife alone failed to accept what turned out to be a very reasonable offer made by the intervener. The failure of the intervener’s offer to mention the removal of the caveat over the former matrimonial home is entirely a side issue, or an incidental detail, which could no doubt have been readily negotiated had the wife had the good sense to signify her willingness to accept that the intervener was entitled to be paid, not the $73,000 which she ultimately received, but only $63,000.
Accordingly, the wife’s appeal from the trial Judge’s costs order will be dismissed.
THE COSTS OF THE SUBSTANTIVE APPEAL
As we have noted previously, the submissions filed on behalf of the husband pursuant to our directions of 16 June, 1999, are merely a copy of the submissions on costs made on his behalf to the trial Judge. Accordingly, they do not relate to the costs of the appeal, and there is no application made by him for any order in his favour in relation to those costs.
The submissions for the intervener filed on 7 June, 2000, seek an order that the wife pay her costs of the appeal. Such an application was opposed, in anticipation, by the wife in paragraph 3 of her submissions filed on 22 May, 2000, and such opposition is confirmed, inferentially, in her submissions in reply filed on 12 October, 2000.
In paragraph 1 of her submissions filed on 22 May, 2000, the wife submits as follows:-
“1. The Appellant has been successful in part in the Appeal and the Appellant applies for a Costs Certificate pursuant to Section 7(1) Federal Proceedings (Costs) Act 1981,”
That application is misconceived, since s.7 of the Federal Proceedings (Costs) Act 1981 (“the Costs Act”) applies only to a respondent to an appeal who, pursuant to an order of the Court, is required to pay an appellant’s costs. It has no application to an appellant, and therefore cannot be resorted to by the wife.
In paragraph 2 of her submissions of the 22 May, 2000, the wife asks that, if the Court orders “each party to bear his or her own costs in accordance with s.117” of the Act, she be granted a costs certificate under s.9(1) of the Costs Act.
Again, that application is misconceived, since, by s.9(1) of the Costs Act, a costs certificate under that section may be granted to an appellant only where the appeal “succeeds on a question of law”. In this case, the appeal succeeded, to the limited extent that it did, only on questions of fact, namely errors by the trial Judge in the calculation of the net pool of assets available for division in the proceedings. In all other respects, it failed. Accordingly, this application is rejected.
That leaves for determination the intervener’s application for costs against the wife.
In respect of that application, the predominant factor for our consideration, under s.117(2A) of the Act, is that the wife was wholly unsuccessful in her appeal against the order made by the trial Judge in favour of the intervener. That total lack of success, when coupled with the relative financial circumstances of the two relevant parties, and the conduct of them both in relation to the proceedings (including, particularly, the wife’s failure to respond positively to the intervener’s very favourable settlement offer) lead us to conclude that the circumstances justify the making of an order that the appellant wife pay the intervener’s costs of the appeal.
ORDERS
For the foregoing reasons, the orders of the Court are:-
That the wife’s appeal from the costs order of The Honourable Justice Lawrie of 12 March, 1999, be dismissed.
That the appellant wife pay the intervener’s costs of and incidental to the appeal from the orders of The Honourable Justice Lawrie of 3 December, 1998, such costs to be taxed if not agreed.
I certify that the preceding 56 paragraphs are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.
Sgnd: L. Kopp
Associate
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