WELLEN & WELLEN
[2018] FamCAFC 192
•26 September 2018
FAMILY COURT OF AUSTRALIA
| WELLEN & WELLEN | [2018] FamCAFC 192 |
| FAMILY LAW – APPEAL – COSTS – Where the primary judge ordered that the husband pay the wife’s costs thrown away as a result of an adjournment on an indemnity basis – Procedural unfairness – Where neither party sought an adjournment and the primary judge ordered the adjournment on his own motion – Adequacy of reasons – Where the primary judge failed to give adequate reasons for adjourning the hearing – Where the primary judge failed to give adequate reasons for ordering that the costs thrown away be paid on an indemnity basis – Error demonstrated – Appeal allowed – Order for indemnity costs set aside. FAMILY LAW – APPEAL – COSTS – Indemnity costs – Appeal against order quantifying indemnity costs – Where the order for indemnity costs was based on an incorrect premise and was set aside – Where the order quantifying those costs must also be set aside – Appeal allowed. |
| Family Law Act 1975 (Cth) s 117 |
| Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148 D & D (Costs) (No 2) (2010) FLC 93-435; [2010] FamCAFC 64 Kohan and Kohan (1993) FLC 92-340 Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178 Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 Sun Alliance Insurance Ltd v Massoud [1989] VR 8 Thorne v Kennedy (2017) 350 ALR 1; [2017] HCA 49 |
| APPELLANT: | Mr Wellen |
| RESPONDENT: | Ms Wellen |
| FILE NUMBER: | BRC | 8305 | of | 2015 |
| FIRST APPEAL NUMBER: | NOA | 38 | of | 2018 |
| SECOND APPEAL NUMBER: | NOA | 39 | of | 2018 |
| DATE DELIVERED: | 26 September 2018 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Murphy, Aldridge & Kent JJ |
| HEARING DATE: | 26 September 2018 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 11 April 2018 16 April 2018 |
| LOWER COURT MNC: | [2018] FCCA 1187 [2018] FCCA 1468 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Firth |
| SOLICITOR FOR THE APPELLANT: | Damien Greer Lawyers |
| COUNSEL FOR THE RESPONDENT: | The Hon. Mr Foley |
| SOLICITOR FOR THE RESPONDENT: | Get Real Legals |
Orders
Appeal number NOA 38 of 2018 from the orders of Judge Egan made on 11 April 2018 be allowed.
Appeal number NOA 39 of 2018 from the orders of Judge Egan made on 16 April 2018 be allowed.
Orders 1 and 2 of the orders made by Judge Egan on 11 April 2018 be set aside.
Orders 1 and 2 of the orders made by Judge Egan on 16 April 2018 be set aside.
In lieu of the said orders, each party shall bear their own costs occasioned by the adjournment of 12 March 2018.
Each party bear their own costs of and incidental to the appeal.
The Court grants to the appellant a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (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 him in relation to the appeal.
The Court grants to the respondent a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (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 her in relation to the appeal.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Wellen & Wellen has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NOA 38 of 2018; NOA 39 of 2018
File Number: BRC 8305 of 2015
| Mr Wellen |
Appellant
And
| Ms Wellen |
Respondent
EX TEMPORE REASONS FOR JUDGMENT
Aldridge J
Introduction
Mr Wellen (“the husband”) appeals against two costs orders made by Judge Egan made on 11 and 16 April 2018.
The husband and Ms Wellen (“the wife”) were engaged in property proceedings which were listed for hearing on 12 March 2018. The hearing did not proceed and on 11 April 2018, the primary judge ordered:
1.That the [husband] pay the [wife’s] costs thrown away as a result of the adjournment of the matter before Judge Egan on 12 March 2018, and that such further costs be assessed on an indemnity basis.
2.That the quantification of costs pursuant to the Federal Circuit Court Rules 2001 be adjourned for consideration at 9.30am on 16 April 2018.
…
(Original emphasis)
These orders are the subject of the first appeal (NOA38 of 2018).
On 16 April 2018 the primary judge made the following orders, which are the subject of the second appeal (NOA39 of 2018):
1.That the [husband] pay to the [wife’s] solicitors on behalf of the [wife], the [wife’s] costs thrown away as a result of the adjournment of the trial as ordered on 12 March 2018.
2.That the [husband] pay the [wife’s] costs fixed in the amount of $17,775.05 to the [wife’s] solicitors no later than 4.00pm on or before 16 May 2018.
…
(Original emphasis)
Before turning to the grounds of appeal, it is helpful to set out the course of events which, as I shall point out, cause me some dismay.
At the outset of the hearing on 12 March 2018, counsel for the wife announced that the proceedings involved serious issues of non-disclosure and possible concealment.
This was, in fact, the case. Whilst the husband had filed and served a Financial Statement on 16 February 2018, it omitted any reference to a property at Suburb A (“Property A”), which he had purchased in December 2017 for $430,000. The husband’s lawyer later informed the Court that the purchase had been financed by the husband borrowing $100,000 from his father and $344,000 from a bank.
The Court was informed that an amended Financial Statement had been prepared and was, subject to leave being granted, to be filed. It disclosed both the acquisition and the borrowing.
The wife became aware of the purchase when her solicitor conducted real estate searches shortly prior to the hearing.
Returning then to the events of 12 March 2018, after being informed of the wife’s allegations, the following exchange took place:
MR FOLEY: The allegation is that the most recent financial statement of the husband is false in that it did not reveal a property purchased by the husband some two months previously. There are a number of other - - -
HIS HONOUR: And is there evidence of that, Mr Foley?
MR FOLEY: Yes, your Honour.
HIS HONOUR: Well, if that’s the case and you’re unable to properly address that issue, or address pool issues, then I can’t either.
MR FOLEY: Well, that’s a fundamental question and - - -
HIS HONOUR: But, Mr Foley, what I’m getting at is if there has been material non-disclosure - - -
MR FOLEY: Yes.
HIS HONOUR: - - - then the trial can’t proceed. I adjourned a matter last week - - -
MR FOLEY: Yes.
HIS HONOUR: - - - where there was insufficient documentary evidence substantiating what was a third party loan.
(Transcript 12 March 2018, pp. 2-3) (Emphasis added)
As can be seen, there was no indication by counsel for the wife that he was not in a position to proceed with the hearing.
After ascertaining that the allegation was of recent non-disclosure, the primary judge said:
And it needs – it needs investigation to establish one way or the other whether there has been a material non-disclosure which is deliberate or not.
(Transcript 12 March 2018, p.3)
That proposition was but weakly adopted by counsel for the wife. He said:
That is true, but, with respect, it is not the whole truth with respect to the case.
(Transcript 12 March 2018, p.3)
He then said that a number of written requests for disclosure in recent weeks had resulted in some disclosure but the wife did not accept it as being complete.
Nevertheless, to the extent that there was any doubt about the wife’s position, it quickly became clear that she was not seeking an adjournment, as the following passage demonstrates:
MR FOLEY: … Now, normally the wisdom, which has fallen from your Honour’s lips, would be very compelling that one adjourns and investigates. However, in my respectful submission, the wise course in this case, and in the interests of justice, is to proceed with the trial to explore as far as one can in cross-examination the husband on these matters before a decision is taken on adjournment. Now, I accept that that is not the most convenient way to run an extremely busy court list. However, in this case the evidence is not simply one of inadvertence on the part of the parties or the lack of a document to straighten it out. It goes far beyond that.
(Transcript 12 March 2018, pp.3-4)
The reference to cross-examination in this passage is significant. The husband’s contention was that the non-disclosure had been inadvertent and that he had nothing to gain from not doing so. This was, he asserted, because the costs of buying the property ($444,000) exceeded the purchase price ($430,000) and therefore had a negative impact on his financial position. Counsel for the wife clearly considered that these were important issues to be covered in cross-examination and, most importantly, that he was in a position to conduct that cross-examination. There was no suggestion that a valuation of the new property was necessary.
The primary judge then turned to counsel for the husband, who agreed that Property A had not been disclosed. The primary judge then said:
HIS HONOUR: All right. Well, if that’s the case then why can’t there be an admission as to what has occurred? This is just looking at the prospect of the matter proceeding, Mr Foley, as opposed to not proceeding
(Transcript 12 March 2018, p.5)
Counsel for the wife agreed.
The information as to the purchase of the property which I have set out earlier was then given to the Court. There was some further discussion and counsel for the wife said:
My instructions are to oppose an adjournment for the reason that the wife is in very modest circumstances and wants to avoid, if at all possible, a further delay and costs.
(Transcript 12 March 2018, p.7)
It bears repeating that, at this stage, no application for an adjournment had been made by anyone.
The primary judge then proposed that the matter be adjourned to a date in April. Why such a course was being considered by his Honour does not emerge from the transcript.
Counsel for the husband interrupted to say that he sought to have part of the Amended Initiating Application seeking orders for lump sum spousal maintenance struck out as an abuse of process. This was, apparently, because the amendment was made after the parties had filed their evidence. He did not, however, seek an adjournment or assert that the case could not proceed. He did point out that his client would need to amend his Financial Statement to complete Part N.
With that, the matter was then adjourned to 11 April 2018 for the hearing of all matters. Costs were reserved and the parties directed to file written submissions addressing that issue.
I view with concern the adjournment of proceedings which had been fixed for hearing, where no application for an adjournment had been made and no indication had been given that the matter could not proceed by either party and where the party affected by any late or non-disclosure wished the matter to proceed. The case was seemingly adjourned at the motion of the primary judge for reasons that are not at all apparent.
Counsel for the wife actively opposed such a course, pointing out her modest financial circumstances.
Added to the waste of the parties’ legal costs and time as well as the Court’s time, the issue of costs has taken up part of two days of the hearing. It is difficult to see how any of this was in the interests of the parties or the efficient administration of justice.
The orders of 11 April 2018
It will be recalled that by these orders the primary judge ordered that the husband pay the costs thrown away by reason of the adjournment assessed on an indemnity basis. The five grounds of appeal overlap to some extent but it can be seen that the challenges to the orders are that the primary judge:
·failed to provide adequate reasons;
·made a material error of fact (namely, that the husband sought an adjournment on 12 March 2018);
·failed to take into account a number of relevant considerations; and
·erred in the overall exercise of discretion.
The obligation to give adequate reasons is well-known.
In Bennett and Bennett (1991) FLC 92-191 at 78,266 – 78,267 the Full Court adopted the principles expounded in Sun Alliance Insurance Ltd v Massoud [1989] VR 8, saying:
In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal. Gray J, who delivered the principal judgment, said, at 18:
“The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if: —
(a) the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b) justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.”
We think that the test propounded by Gray J is a particularly useful one, and one which also applies to discretionary judgments. In Maday and Maday (1985) FLC 91-636, Fogarty J, in a judgment with which the other members of the Court (Emery and Murray JJ) agreed, took the view that these principles clearly did apply to discretionary judgments and, in particular, judgments in custody matters.
In Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 McColl JA summarised the principles with respect to the obligation to give adequate reasons as follows:
57The giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes “a sense of grievance” and denies “both the fact and the appearance of justice having been done”, thus working a miscarriage of justice: Mifsud v Campbell (1991) 21 NSWLR 725 (at 728); Beale (at 442) per Meagher JA.
58The extent and content of reasons will depend upon the particular case under consideration and the matters in issue: Mifsud (at 728) per Samuels JA; Hull v Thompson [2001] NSWCA 359 (at [53]) per Rolfe AJA (Sheller JA and Davies AJA agreeing). While a judge is not obliged to spell out every detail of the process of reasoning to a finding (Yates Property Corporation Pty Limited (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156 (at 171) per Mahoney JA, (at 182) per Handley JA), it is essential to expose the reasons for resolving a point critical to the contest between the parties: North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435 (at 442) per Kirby ACJ; Soulemezis (at 259) per Kirby P, (at 270) per Mahoney JA, (at 280) per McHugh JA; applied in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56; (2003) 216 CLR 212 (at [40]) per Gleeson CJ, Gummow and Heydon JJ.
59The reasons must do justice to the issues posed by the parties’ cases: see Moylan v Nutrasweet Co [2000] NSWCA 337 (at [61]) per Sheller JA (Beazley and Giles JJA agreeing). Discharge of this obligation is necessary to enable the parties to identify the basis of the judge’s decision and the extent to which their arguments had been understood and accepted: Soulemezis (at 279) per McHugh JA. As Santow JA (with whom Meagher and Beazley JJA agreed) explained in Jones v Bradley [2003] NSWCA 81 (at [129]) it is necessary that the primary judge “ ‘enter into’ the issues canvassed and explain why one case is preferred over another”; see also Flannery v Halifax Estate Agencies Ltd t/as Colleys Professional Services [2000] 1 All ER 373 (at 377-378) per Henry, Laws LJJ and Hidden J.
It has been well established for many years that reasons need be neither “lengthy nor elaborate in order to be adequate”: Thorne v Kennedy (2017) 350 ALR 1 per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ at [61].
His Honour’s reasons were brief and I set them out in full:
1.I have heard submissions by Mr Foley of Counsel for the wife and I have also heard Mr [Wellen] as to the circumstances surrounding the adjournment of the trial listed for hearing before me on 12 March 2018. The Husband admits that he filed a financial statement on 16 February 2018 which relevantly did not disclose the fact that, in December 2017, he had purchased [Property A].
2.It was clear at the time the matter was last listed for hearing that the wife had been taken surprise by the fact of non-disclosure of that purchase by the husband, quite apart from any argument relating to whether that had any effect upon the monetary value of the asset pool which would affect any order as to adjustment of property to be made by a Judge. The wife was fully entitled to investigate the matters surrounding the purchase of that property, where the funds emanated from for the purchase of that property, the terms on which the property was purchased, and matters relevant to repayments to be made under any loan in relation to any such purchase.
3.As it transpired, then Counsel for the husband on 12 March 2018, Mr Thiele, conceded that there had been material non-disclosure on the part of the husband. He sought an adjournment on another basis which was not a basis germane to the reason why I made an order that the trial be adjourned until today. It was my view then, and it is my view now, that a party should not be put in the position at trial of guessing what the true financial position of her former husband is in circumstances where there had been ample opportunity here, on the part of the husband, to make full disclosure in relation to [Property A].
4.There is power for me to award costs pursuant to Section 117(2) of the Family Law Act (“the Act”) where I am of the opinion that there are circumstances that justify the making of such an order. In this case, it is relevant for the purposes of section 117(2)(A) of the Act that the husband, by his conduct, has failed to materially disclose relevant financial matters relating to the purchase of [Property A]. It is also relevant for the purposes of Section 117(2)(A)(a) of the Act that the wife is in a substantially weakened financial position relative to her husband, as disclosed on the material.
5.In all of the circumstances, therefore, I consider it appropriate that I make an order that the husband pay the costs thrown away as a result of the adjournment of the matter before me on 12 March 2018, and further, that those costs be assessed on the indemnity basis.
In my opinion, these reasons adequately set out his Honour’s reasons for making a costs order, as it can be understood why it was made. His Honour took into account the husband’s conduct in failing to disclose Property A and the wife’s modest financial position and the fact that “the wife was fully entitled to investigate” the recent purchase of property. Both were relevant considerations (s 117(2A)(c) and s 117(2A)(a) of the Family Law Act 1975 (Cth)).
The reasons, however, do not say why the costs should be assessed on an indemnity basis.
Indemnity costs are awarded in exceptional circumstances: Kohan and Kohan (1993) FLC 92-340 at 79,614; Limousin v Limousin (Costs) (2007) 38 Fam LR 478 and D & D (Costs) (No.2) (2010) FLC 93-435.
As orders for indemnity costs are exceptional, the reasons must make it clear why the judge considers such an order to be appropriate. It is not for an appeals court to speculate about why such an order was made.
The reasons are inadequate to that extent.
There is, however, a fundamental misapprehension in the primary judge’s reasons. The wife did not assert that she needed “to investigate the matters surrounding the purchase” of Property A or that she was in the position of guessing “the true financial position of the husband”. Not only did she not seek an adjournment, she positively and firmly opposed such a course.
The motion for the adjournment was that of the primary judge. That fact ought to have been reflected in the reasons.
Further, the wife correctly points out that the primary judge erred by recording that the husband sought an adjournment. As the reasons make plain, his Honour did not consider that to be relevant to the adjournment that was granted.
However, it did, in fact, seem to be a basis for the adjournment. In the course of the hearing the primary judge referred to the recent claim for lump sum spousal maintenance and, in his view, the need to adjourn the matter saying:
HIS HONOUR: … My inclination is to adjourn the matter to 11 April for the hearing of all matters, including lump sum spousal maintenance. I will give directions.
…
Well, I think that’s the only way to resolve it, particularly, in the light of [what counsel for the husband] has just raised so.
(Transcript 12 March 2018, p.9)
Once again the primary judge was mistaken – there was no application for an adjournment by either party arising from the discussion as to maintenance. There is, therefore, some force in the husband’s submission that the primary judge erred in finding that the issue of lump sum maintenance was not germane to the adjournment. It seems to have played a role, although no adjournment was sought by the husband.
It follows that the reasons are based on a fundamentally misconceived premise and, in my opinion, Orders 1 and 2 cannot stand. The application for costs will need to be re-considered.
The orders of 16 April 2018
A necessary consequence is that the orders of 16 April 2018 quantifying those costs must also be set aside, as they are based on the same incorrect premise as the earlier order.
I would add, however, that the husband was only served with a copy of the wife’s submissions late in the evening of 15 April 2018, a copy of the expert’s report the following morning and never received a copy of the affidavit relied upon by the wife.
Whilst the husband did not appear on 16 April 2018, it is difficult to see how he was accorded procedural fairness by being given adequate notice of the evidence to be relied upon.
Conclusion
This must be considered to be a most unfortunate outcome. In circumstances where neither party sought an adjournment, the proceedings were stood over to another day leading to two court hearings and this appeal.
The question is, what order should now be made?
Both parties asked us to re-exercise the discretion as to costs.
I consider that the proceedings were not adjourned as a result of the husband’s non-disclosure. Whether that failure to disclose was deliberate or accidental, both parties were in a position to proceed with the hearing. It was adjourned against the wishes of both of them. The consequence is that no costs were thrown away by the actions of the husband.
In my opinion, it follows that each party should bear their own costs occasioned by the adjournment.
Kent J
I agree with the orders proposed by Aldridge J with respect to each of these two appeals and I agree with his Honour’s reasons for those orders.
Murphy J
I too agree with the orders proposed by Aldridge J and also agree with his Honour’s reasons for those orders.
I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Murphy, Aldridge & Kent JJ) delivered on 26 September 2018.
Legal associate:
Date: 28 September 2018
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