Wall & Mitchell
[2010] FamCA 1194
•24 December 2010
FAMILY COURT OF AUSTRALIA
| WALL & MITCHELL | [2010] FamCA 1194 |
| FAMILY LAW – COSTS – Interim costs to meet legal costs and disbursements FAMILY LAW – DE FACTO RELATIONSHIPS – Jurisdiction |
| Family Law Act 1975 (Cth) Part VIIIAB, ss 85A, 90RD(1), 90SB, 90SB(a), 90SB(c), 117, 117(1), 117(2), 117(2A) |
| Parker v Parker (1992) 16 Fam LR 458 Greval, J. S. v. Estate of the late Greval, F.; Sandalwood Lodge Pty. Ltd (1990) FLC 92-132 In the Marriage of Zschokke (1996) 20 Fam LR 766 PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123 |
| APPLICANT: | Ms Wall |
| RESPONDENT: | Mr Mitchell |
| FILE NUMBER: | SYC | 3705 | of | 2010 |
| DATE DELIVERED: | 24 December 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Johnston J |
| HEARING DATE: | 25 August 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Livingstone |
| SOLICITOR FOR THE APPLICANT: | Armstrong Legal |
| COUNSEL FOR THE RESPONDENT: | Mr Richardson, SC |
| SOLICITOR FOR THE RESPONDENT: | York Family Law |
Orders
That the application in paragraph 2 of the interim orders sought in the Initiating Application filed on 11 June 2010 is dismissed.
That both parties have leave to re-list these proceedings by arrangement with Justice Johnston’s Associate for further directions.
IT IS NOTED that publication of this judgment under the pseudonym Wall & Mitchell is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 3705 of 2010
| MS WALL |
Applicant
And
| MR MITCHELL |
Respondent
REASONS FOR JUDGMENT
Introduction and Applications
The parties in these proceedings are Ms Wall and Mr Mitchell. For convenience I shall refer to them as “the applicant” and “the respondent”.
The applicant asserts that she and the respondent were in a de facto relationship and that the relevant provisions of the Family Law Act 1975 (“the Act”) enable this Court to make financial orders in her favour.
The applicant is seeking substantive orders to the effect that the respondent pay to her the sum of $2 000 000 by way of property settlement and periodic maintenance in the sum of $2 070 per week.
The matter which is immediately before the Court is an application by the applicant for an interlocutory order namely, that within 7 days the respondent deposit to the trust account of the applicant’s solicitors the sum of $150 000 to meet the applicant’s legal costs and disbursements.
All applications are opposed by the respondent who seeks orders to the effect that they be dismissed. The respondent also seeks an order to the effect that it be declared pursuant to s 90RD(1) of the Act that a de facto relationship never existed between these parties which would attract Part VIIIAB of the Act. In the alternative the respondent seeks a declaration that any de facto relationship between the parties concluded prior to 1 March 2009 and does not attract the provisions of Part VIIIAB of the Act.
Background
The applicant was born in 1977 and she is therefore 33 years of age. The respondent was born in 1959 and therefore he is 51 years of age. The parties met in November 2007.
The applicant says that the parties were living in a de facto relationship from 16 February 2008 until 21 February 2010. The applicant also says that during the course of their relationship she was financially dependant on the respondent, at least to some extent, and that she made significant contributions to the respondent’s welfare, as a homemaker and by way of cooking for the respondent, by attending to domestic duties including shopping for groceries, cleaning up after dinner, doing the ironing and the laundry, supervising the cleaner, acting as the respondent’s unpaid personal assistant, assisting the respondent in the renovation of his homes including liaising with the interior decorator and by contributing design ideas. The applicant also says that she engaged contractors during the renovations and made various other contributions of a non-financial nature.
On the other hand the respondent denies that the parties ever lived in a de facto relationship. He says that they had what he described as an “on/off boyfriend/girlfriend” relationship. He says that their “boyfriend/girlfriend” relationship existed during the following periods:
·From mid to late June 2008 to 26 December 2008;
·From 31 December 2008 until early January 2009;
·From the end of January 2009 until early to mid-April 2009; and
·From the end of November 2009 until mid-January 2010.
The applicant alleges that the parties commenced a sexual relationship on 16 February 2008. On the other hand the respondent says that they commenced a sexual relationship in early May 2008. He says that he was in a relationship with a Ms R between mid-December 2007 and approximately mid-May 2008.
The applicant’s case
As indicated above, the applicant is seeking payment from the respondent of $150 000 into her solicitor’s trust account to meet her legal costs and disbursements. It is submitted on behalf of the applicant that these are proceedings under the Family Law Act 1975 in that orders are sought pursuant to the provisions of Part VIIIAB of the Act. It is submitted that s 117(2) of the Act applies to enable the Court to make a costs order in proceedings under the Act.
It is submitted that the applicant is impecunious, that the respondent’s affairs are complicated and that he has access to very considerable wealth. The respondent has filed 16 affidavits and anticipates filing a further 9 affidavits. The respondent suggests that the hearing of the threshold issue will involve five hearing days. This threshold issue is whether the parties have been living in a de facto relationship for the minimum period of two years being the requirement pursuant to s 90SB(a) of the Act to enable the Court to have jurisdiction to make the substantive orders sought by the applicant. It is submitted that there is a serious inequality in the litigation playing field between these parties in circumstances where the respondent has retained both senior and junior counsel and that such inequality will remain unless the applicant is put into sufficient funds to enable her to continue to instruct her lawyers.
In support of the application, learned Counsel for the applicant referred to the decision of Bryson J in the Supreme Court of New South Wales in the case of Parker v Parker (1992) 16 Fam LR 458 which was subsequently upheld by the New South Wales Court of Appeal. In that case there were substantive proceedings under the De Facto Relationships Act 1984 (NSW). Bryson J made an order the effect of which was to require one of the parties to pay to the solicitors for the other party the sum of $15 000 to be held by the solicitors for the purposes of paying costs of an expert accountant to report on the financial position of the other party and the valuation of his financial interests. The order was made under the wide costs power under s 76(1) of the Supreme Court Act 1970 (NSW).
Counsel pointed to numerous admissions made by the respondent in his affidavit. These were as follows:
·The parties attended public functions and events including friends’ social functions and some of the respondent’s business functions;
·They spent Christmas Day 2008 with the respondent’s family;
·They discussed having a baby together and the respondent had medical checks concerning his fertility;
·The respondent paid the rent for an apartment in Sydney for the parties to use in which the applicant resided;
·The respondent booked accommodation in Aspen for the parties to use in January 2010 and that they stayed in this accommodation.
It was submitted that the Court has a broad jurisdiction to make costs orders pursuant to s 117(2) of the Act where it is just to do so. It was submitted that the justice of the case requires such an order in favour of the applicant to provide fairness to her in circumstances where it was submitted that the respondent is prepared to use his considerable financial strength in opposing the relief sought by her in this Court.
The respondent’s case
It was submitted that the Court’s jurisdiction to make substantive orders of the nature sought in this case arises under s 90SB of the Act. In her Initiating Application the applicant asserts that there are two bases under which the Court can exercise jurisdiction. The first is the applicant’s assertion that she and the respondent had a de facto relationship of at least two years duration. The second is that the applicant has made substantial contributions within the meaning of the relevant provisions of Pt VIIIAB of the Act and that a failure to make the orders sought by her would result in a serious injustice to her. These jurisdictional bases are set out in ss 90SB(a) and 90SB(c) of the Act.
In relation to the second of these asserted jurisdictional bases, learned Senior Counsel for the respondent submits that on the basis that Counsel for the applicant did not seek to rely on any part of the applicant’s affidavit in support of this, the Court would not accept this as a basis for finding jurisdiction.
It is submitted that there is a very serious issue for trial. This issue is whether there is any jurisdictional basis under the relevant provisions of the Act for the making of any order against the respondent. Section 90SB(a) of the Act enables jurisdiction where parties had a de facto relationship of at least two years duration.
It is submitted that s 117(2) of the Act, which would enable the Court to make a costs order in proceedings under the Act, is not available in circumstances where the Court has not found itself to have jurisdiction in the substantive proceedings. It is submitted that this is because s 117(2) of the Act is a power to make orders ancillary to the exercise of a primary power rather than being a primary power in itself.
In this regard learned Senior Counsel for the respondent referred to the decision of the Full Court of this Court in the case of Greval, J. S. v Estate of the late Greval, F.; Sandalwood Lodge Pty Ltd (1990) FLC 92-132 in support of his submission. This was a case concerning the application of s 85A of the Act. At page 77,906 the Court was considering the construction of the words “in proceedings under this Act”. These words are used in s 117(1) and s 117(2) of the Act. It was submitted that the Court in Greval concluded that s 85A was an ancillary power rather than a primary power and as such it required validly constituted proceedings in the form of primary proceedings under the Act in order to have life. By analogy learned Senior Counsel submitted that s 117(2) is ancillary rather than primary in nature and therefore in the present context in order to have application it would have to be applied in the context of properly constituted primary proceedings. It was submitted that in the present case there are no properly constituted primary proceedings because the Court has not yet determined the question of whether there is jurisdiction to make the substantive orders sought.
Learned Senior Counsel submitted that even if he is entirely wrong about this, the only basis upon which a preliminary costs order, such as that sought by the wife pursuant to s 117(2) of the Act, could be made is if the Court considers it just to do so. It is submitted that that requirement would involve justice to both parties including the respondent. And in relation to the respondent, the Court is being asked to impose on him an order that he make a payment to the wife in circumstances where there is a strong probability that the required facts which would enable the Court to make such an order ultimately will not be established by the applicant.
Learned Senior Counsel for the respondent then undertook a somewhat detailed analysis of some of the inconsistencies between the parties in their affidavits to highlight the husband’s assertions that during the times when the applicant said she was in a de facto relationship with him in fact she was having a relationship with one or more other persons.
It was submitted that all of the cases referred to by learned counsel for the applicant were cases which involved discussion of the exercise of the Court’s discretion to make orders for payment of preliminary costs. It was submitted that none of the cases involved a court considering the existence of those matters necessary for engaging a substantive jurisdiction.
Learned Senior Counsel accepted that there is ample authority that the Court is empowered to grant an injunction for example to preserve the subject matter of an exercise of its jurisdiction while it determines for itself whether in fact such jurisdiction exists. But learned Senior Counsel was unable to find a single case to suggest as a matter of principle the proposition that whilst jurisdiction is in issue the Court can make an order providing satisfaction of the ultimate subject of the proceedings.
Discussion
As indicated above, there are two streams of submissions by learned Senior Counsel for the respondent in urging the Court not to make any preliminary costs order in favour of the applicant.
The first such stream, as indicated above, is to the effect that s 117 of the Act is an ancillary power, rather than an independent power. I am inclined to accept this submission because the very wording of s 117(1) and s 117(2) of the Act makes it clear that in order for these sub-sections to have application there need to be “proceedings under this Act”. These provisions are as follows:
117(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.
117(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.
I accept that because of these words “proceedings under this Act” a person cannot ask the Court simply to make an order for costs in the absence of some other proceedings under the Act. So the power in s 117(2) is ancillary.
The next part of the submission is to the effect that in order for s 117(2) to be able to have application, the “proceedings under the Act” need to be properly constituted primary proceedings. It is submitted that the present proceedings are not yet properly constituted because the Court has not made a finding that the parties have been in a de facto relationship, let alone a de facto relationship of at least two years duration.
I am unable to accept this part of the submission. As indicated above, learned Senior Counsel has conceded that there is ample authority to support a court which is under jurisdictional challenge having power to make interlocutory orders during the period prior to it making a finding that it does, or does not, have jurisdiction.
In my view, at this stage, the present proceedings fall within the words in s 117(1) and s 117(2) “proceedings under this Act”. As was submitted by learned Counsel for the applicant there is nothing in the sub-sections or elsewhere in the Act to indicate that the provisions should be interpreted in the restrictive way submitted on behalf of the respondent. I do not propose to interpret s 117 in this way.
Moreover, if I was to do so, then this Court would not have jurisdiction to make a costs order in relation to the present stage of these or similar proceedings in the event that ultimately it was to find that there is no jurisdiction to make the substantive orders sought. In my view this could cause considerable unfairness and can hardly have been intended by Parliament.
Accordingly, in my view, the provisions of s 117 of the Act are available in these proceedings and at this stage of the proceedings.
As indicated above the second stream to learned Senior Counsel’s submission is that in the circumstances of the present case it would not be just within the meaning of s 117(2) of the Act for the Court to make a preliminary costs order against the respondent.
This is said to be because there is a very serious issue for trial, namely whether these parties in terms of their relationship satisfy the jurisdictional requirements which would enable the Court to make any order in favour of the applicant. It is submitted on behalf of the respondent that it is likely that this Court will find on the evidence that the parties’ relationship does not amount to a de facto relationship let alone a de facto relationship of at least two years duration. It is submitted that in such circumstances the applicant is unlikely to receive an order for payment of any money. It is submitted that to require the respondent to pay some amount by way of preliminary costs to the applicant in circumstances where there is a real likelihood that she will be entirely unsuccessful in her claim, would visit a serious injustice on the respondent.
Conclusion
I accept the thrust of this second part to the submissions on behalf of the respondent.
In the case of In the Marriage of Zschokke (1996) 20 Fam LR 766 the Full Court of this Court confirmed that an order requiring one party to proceedings to provide the other with funds to prosecute family law litigation can be made under s 117(2) of the Act. At page 781 the Full Court said as follows:
If the order is to be made under s 117(2) then, in our view, the matters contained in s 117(2A) must be addressed, and this would seem to have been recognised, if not expressly at least by implication, by the Full Court in Poletti. In saying this we acknowledge that a number of the paragraphs in the sub-section (notably para (d) failure by one party to comply with court orders; para (e) total lack of success by one party in the proceedings; and para (f) existence and terms of an offer for settlement) may not have relevance in an application for an order of the type in question. We also acknowledge that it may well be necessary in such an application for the Court to have regard to a range of relevant matters other than those specified in the sub-section, as is permitted by para (g). …
Sub-section 117(2A) provides as follows:
(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.
I note that some further guidance to interpreting the provisions of s 117(2A) of the Act was provided by the Full Court in the case of PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123. At paragraph 41 the Full Court in considering the various factors mentioned in s 117(2A) said as follows:
… Nowhere in subsection 2(A) or elsewhere in section 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subsection 2(A).
From this is appears that the Court is to have regard to whatever matters fall within the specific factors referred to in s 117(2A) including s 117(2A)(g), namely “such other matters as the court considers relevant”.
At this stage, in my view, the relevant matters are the financial circumstances of the parties and the uncertainty of likely result created by the jurisdictional issue.
In relation to the financial circumstances of the parties it is clear that the applicant is impecunious. She works in the hospitality industry. She says that she is unable to support herself adequately on her salary. She owns no property of significant value. She says that she is unable to fund her legal costs and disbursements in these proceedings and is unable to derive funds for this purpose. The applicant’s solicitors have estimated her future costs of the proceedings at $150 000. They are not prepared to continue to act for the applicant without an order for preliminary costs.
On the other hand it is clear that the respondent is a person of apparently very substantial means. He concedes that he has the financial capacity to pay in accordance with any proper order of the Court.
On a reading of the parties’ affidavits, there are many matters in issue. And matters which go to the heart of the characteristics fundamental to a finding that the parties had a de facto relationship and for the required period. In these circumstances, in my opinion, it is impossible for this Court to form even a preliminary view about what the applicant’s prospects for success in obtaining a financial order from the Court might be.
Would it be just within the meaning of s 117(2) to order the respondent to pay money to the applicant to be used by her to fund the costs of her litigation with the respondent when it is far from clear that there is at least some likelihood that the Court would make any substantive order in her favour? In my view, if the Court was to make a preliminary costs order, and ultimately it turned out to be the Court’s finding that there was no basis upon which the respondent could be required to make a substantive payment to the applicant, this would be most unjust to the respondent. This is because it is clear that the applicant has no means by which any such preliminary payment could be refunded to the respondent.
Having considered the relevant matters in s 117(2A) of the Act I find myself unable to conclude that it would be just within the meaning of s 117(2) of the Act to make any preliminary costs orders in favour of the applicant at this stage of the proceedings.
In my view, the application must fail.
I certify that the preceding forty-five (45) paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johnston delivered on 24 December 2010.
Associate:
Date: 24 December 2010
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