X Company and Mathers and Ors (No. 2)

[2012] FamCA 467

FAMILY COURT OF AUSTRALIA

X COMPANY & MATHERS AND ORS (NO. 2) [2012] FamCA 467

FAMILY LAW ─ COSTS ─ Where consequent upon the Court making an order for recusal as sought by Senior Counsel for the applicant, the second and third respondents sought an order that the applicant pay the costs thrown away by the necessity for a recusal order ─ Where the Court did not accept that the conduct of the applicant led the Court to form the opinion that, in the circumstances, an order for costs was appropriate ─ Where the Court found that the probabilities are that the judge who hears and finally determines the substantive proceedings will be amply able to determine the issue in the light of the findings of fact made for the purpose of determining those proceedings, particularly with respect to the fraud claim which the applicant will agitate in those proceedings ─ Costs of an incidental to the hearing on 4, 5 and 6 June 2012 of the second and the third respondents reserved

Family Law Act 1975 (Cth) ss 79A(1)(a), 117(2A)

APPLICANT: X Company

FIRST RESPONDENT: Mr Mathers

SECOND RESPONDENT: Ms Graham

THIRD RESPONDENT: C Pty Ltd

FILE NUMBER: SYC 2405 of 2011

DATE DELIVERED: 21 June 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Coleman J

HEARING DATE: 4, 5 & 6 June 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Richardson SC and Mr Beaumont

SOLICITOR FOR THE APPLICANT: Karras Partners Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Mr Hubert

SOLICITOR FOR THE FIRST 

RESPONDENT:

Capon & Hubert Lawyers & Mediators

COUNSEL FOR THE SECOND RESPONDENT: Mr Simpson SC

SOLICITOR FOR THE SECOND RESPONDENT: Pigdon Norgate Family Lawyers

COUNSEL FOR THE THIRD RESPONDENT: Mr Brereton SC and Mr Millar

SOLICITOR FOR THE THIRD RESPONDENT: A Law Firm

Orders

1. That the costs of the wife and C Pty Ltd of and incidental to the hearing on 4, 5 and 6 June 2012 be reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym X Company & Mathers and Ors (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER:  SYC 2405 of 2011

X Company

Applicant

And

Mr Mathers

First Respondent

And

Ms Graham
Second Respondent

And

C Pty Ltd
Third Respondent

REASONS FOR JUDGMENT

COSTS

1. Consequent upon the Court making an order for recusal as sought by Senior Counsel for the applicant, X Company, for reasons which the Court then articulated, Senior Counsel for Ms Graham (“the wife”), and Senior Counsel for C Pty Ltd sought an order that X Company pay the costs thrown away by the necessity for the recusal order.

2. In essence, the submissions of Senior Counsel for the wife and Senior Counsel for C Pty Ltd were that, because of the lateness of the application by X Company to amend its claim to include a fraud count, thereby resulting in recusal, and the need for a new trial, costs of the aborted trial should be awarded against X Company.

3. Sensibly, Senior Counsel for C Pty Ltd, whose submissions were adopted by Senior Counsel for the wife, did not, in submissions in relation to costs, reiterate the extensive submissions made to the Court in relation to the application by X Company to amend its claim. The Court understands those submissions to be relied upon in the context of the costs application.

4. Senior Counsel for X Company sought to resist the application for costs on three bases. Those bases were, unsurprisingly, based upon the Court’s Reasons for Judgment with respect to the application by X Company to amend its claim and, in consequence of that application being granted, the Court making a recusal order.

5. Senior Counsel for X Company submitted that it was relevant that, but for the recusal issue, allowing the amendment of its claim, to raise a count in fraud, would not have resulted in an adjournment of the trial. That submission is well founded having regard to the Court’s Reasons for Judgment with respect to the amendment and recusal applications. It does not however in the Court’s view provide a complete defence to the application on behalf of the wife and C Pty Ltd.

6. The thrust of the submissions of Senior Counsel for C Pty Ltd, adopted by Senior Counsel for the wife, in relation to this issue was, at least inferentially, that, had X Company amended, or sought to amend its claim prior to the date for trial, there would then have been a recusal order, and the costs incurred over the three days prior to the recusal order being made, would not have been incurred.

7. There is little doubt that the costs of the three days leading up to the recusal order were wasted, or thrown away. Were an order for costs otherwise considered to be appropriate, the Court would not decline to make such an order in reliance upon the first matter raised by Senior Counsel for X Company.

8. The second matter raised by X Company, and, again made in reliance upon what might be termed the Court’s alternate reasons with respect to the recusal application, was that the Court found that, even if X Company had not raised, or been permitted to raise, a fraud count, the evidence in relation to the challenges which X Company had at all material times articulated pursuant to section 79A(1)(a) of the Family Law Act 1975 (Cth) (“the Act”) would have resulted in recusal.

9. As the transcript of the submissions of Senior Counsel for C Pty Ltd in the amendment and recusal applications would confirm, that proposition was squarely raised and addressed by Senior Counsel for all parties in that context. With respect to Senior Counsel for C Pty Ltd, as the Court’s reasons in the amendment and recusal applications also confirm, the Court found that, even if X Company were not permitted to specifically plead and agitate a fraud count, the probabilities were that the circumstances giving rise to the Court’s recusal would still have led to a recusal order being made.

10. With respect to Senior Counsel for the wife and Senior Counsel for C Pty Ltd, it is difficult to accept, and probably inconsistent with the Court’s reasons in the amendment and recusal applications to do so in any event, that the trial could have proceeded before the trial Judge who was due to hear it having regard to the matters which the evidence revealed, particularly as that evidence applied to at least one solicitor.

11. With the benefit of hindsight, even before the spectre of a fraud count was expressly or impliedly raised by X Company, it could have been apparent to Senior Counsel for a number of the parties, or to the Court for that matter, that recusal was, if not inevitable, a distinctly likely eventuality.

12. Although it is perhaps strictly unnecessary to do so, the third matter advanced by Senior Counsel for X Company does warrant a response.

13. It was submitted that, whilst all parties to the proceedings were to some extent responsible for the late recusal application, “who better” was there than Ms Y to appreciate, and raise that issue. It would not be fair to suggest that Ms Y was better placed than anyone else to anticipate the probability of recusal.

14. The application is governed by the provisions of section 117(2A) of the Act. The submissions of Senior Counsel for the wife and Senior Counsel for C Pty Ltd fall most readily within the provisions of section 117(2A)(c) which refers to the conduct of a party to the proceedings.

15. For the reasons stated earlier and expressed in greater detail in the Court’s Reasons with respect to the amendment, and recusal applications, the Court cannot accept that the conduct of X Company would lead the Court to form the opinion that, in the circumstances, an order for costs was appropriate. No other fact or circumstance would lead the Court to so conclude.

16. What the Court can, and does conclude, however, is that the costs of the wife and C Pty Ltd should be reserved for later determination, either by the judge who ultimately hears and determines the substantive proceedings or, if that judge be unwilling to do so, by reference back to this Court for determination in the light of the Reasons for Judgment in the substantive proceedings.

17. The probabilities are that the judge who hears and finally determines the substantive proceedings will be amply able to determine the issue in the light of the findings of fact made for the purpose of determining those proceedings, particularly with respect to the fraud claim which X Company will agitate in those proceedings.

18. The order of the Court will accordingly be that the costs of the wife and C Pty Ltd of and incidental to the hearing on 4, 5 and 6 June 2012 be reserved.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment as to costs of the Honourable Justice Coleman delivered on 21 June 2012.

Associate:   

Date: 21.6.12