Brugman v Tavener

Background 3 While there is a dispute about the exact dates, Mr Brugman and Ms Tavener were in a de facto relationship between about July or September 2006 and about July or September 2009. During the period that they were in that relationship, they mainly resided on Norfolk Island. 4 The breakdown of the de facto relationship between Mr Brugman and Ms Tavener, and the sorting out of any property and financial issues arising from the cessation of that relationship, has been far from amicable and orderly. It has given rise, in particular, to an apparently bitter dispute concerning whether there should be an adjustment of interests in property held by Ms Tavener and whether Ms Tavener is liable to maintain Mr Brugman. 5 One of the critical issues in that dispute concerns the existence and enforceability of an agreement, called a "cohabitation agreement", which was apparently signed by Ms Tavener and Mr Brugman on 16 November 2006. On the one hand, Ms Tavener has contended that, by reason of s 40(2) of the De Facto Relationships Act, the Court cannot make any order in relation to the adjustment of property or maintenance which is, in any respect, inconsistent with the terms of that agreement. On the other hand, Mr Brugman has contended that the cohabitation agreement should be set aside pursuant to s 41 of the De Facto Relationships Act, and that the Court is not required to give effect to the terms of the agreement because it has been revoked or has otherwise ceased to have effect for the purposes of s 42 of the De Facto Relationships Act. 6 Mr Brugman first commenced proceedings against Ms Tavener in the Federal Circuit Court of Australia. In that proceeding, which was commenced by the filing of an originating application in October 2016, Mr Brugman sought various orders concerning the distribution of Ms Tavener's "cash assets", the use and occupancy of a residence on Norfolk Island owned by Ms Tavener, the use of a motor vehicle and some other equipment, and financial maintenance. Importantly, Mr Brugman did not seek any order concerning the cohabitation agreement. That may perhaps be explained by the fact that Mr Brugman was not legally represented when he commenced proceedings in the Circuit Court. 7 Unfortunately, the conduct of the proceeding in the Circuit Court went somewhat awry. That was in no small part due to the approach taken by Ms Tavener's legal representatives. At a case management hearing before the Circuit Court judge on 5 December 2016, counsel for Ms Tavener took the Circuit Court judge to the cohabitation agreement. The Circuit Court judge appears to have formed the view that the existence of the cohabitation agreement meant that the Circuit Court had no jurisdiction. Her Honour said that the cohabitation agreement "preclude[d her] from hearing anything". That view was supported by counsel for Ms Tavener, who submitted that Mr Brugman had commenced proceedings in the wrong court and that if he wanted to set aside the cohabitation agreement, he would have to commence proceedings in this Court. At the conclusion of the hearing, the Circuit Court judge stated that she was "transferring this matter to Norfolk Island". It is not entirely clear what her Honour meant by that. 8 There was another case management hearing before the Circuit Court judge on 13 March 2017. At that hearing, Ms Tavener's solicitor again asserted that the Circuit Court had no jurisdiction and made or foreshadowed the making of an application that Mr Brugman's application be summarily dismissed. The Circuit Court judge did not entertain the application on that day. Her Honour suggested to Mr Brugman that he obtain some legal advice and pointed out to him that if his application had to be dismissed for want of jurisdiction, he may be at risk of paying Ms Tavener's legal costs. 9 Shortly following the second case management hearing, Ms Tavener's solicitor wrote to Mr Brugman, who at that stage was still unrepresented, and again asserted that the Circuit Court did not have jurisdiction to entertain his application because of the cohabitation agreement. The solicitor stated that if Ms Tavener succeeded in striking out Mr Brugman's application on that basis, Ms Tavener would apply for an order that Mr Brugman pay her legal costs, which were said to be in the order of $10,000. The solicitor said that Ms Tavener was, however, prepared to resolve the matter by agreeing to an order that Mr Brugman's application be dismissed by consent with no order as to costs. 10 Perhaps not surprisingly, given what had been said by both the Circuit Court judge and Ms Tavener's lawyer concerning the Circuit Court's jurisdiction and, given the threat of a costs order that was said to be in the vicinity of $10,000, Mr Brugman agreed to discontinue the proceeding in the Circuit Court. It would appear, however, that he did not understand the difference between discontinuing the proceeding and consenting to its dismissal. He signed consent orders dismissing the proceeding, while at the same time filing a notice of discontinuance. The Circuit Court dismissed the proceeding in May 2017. 11 Either way, it is clear that the merits of Mr Brugman's claim were never entertained or determined by the Circuit Court. It is readily apparent that that occurred largely because Mr Brugman was led to believe that the Circuit Court did not have jurisdiction and that if he wanted to pursue any application for maintenance, or the adjustment of property, he was required to first commence proceedings in this Court to have the cohabitation agreement set aside. 12 As will be seen, it is now clear that Mr Brugman had commenced his proceeding in the correct court and that the submissions made by Ms Tavener's legal representatives concerning jurisdiction were erroneous. 13 On 26 July 2017, Mr Brugman commenced proceedings in this Court by filing an originating application which sought an order that the cohabitation agreement be set aside. The application also sought various interim orders concerning maintenance and access to property. Ms Tavener filed a defence to Mr Brugman's application on 10 November 2017. Shortly thereafter, Mr Brugman filed an interlocutory application seeking, amongst other things, "interim spousal maintenance". 14 After some delay, primarily occasioned by requests for more time made by Ms Tavener's legal representatives, the matter was listed for a case management hearing on 16 November 2017. At that case management hearing, Mr Brugman pressed his application for interim relief. That application was refused, though Mr Brugman's substantive application was listed for an early final hearing to commence on 26 March 2018. Procedural orders were made to ensure that the matter would be ready for hearing. Those orders included orders for the filing of: an amended originating application; a defence to the amended originating application; any reply and any further evidence by both Mr Brugman and Ms Tavener. The matter was also referred to a Registrar for mediation. 15 It is important to emphasise that Ms Tavener supported the order that the proceeding be set down for an early final hearing. At no stage was it suggested that the Court did not have jurisdiction to entertain Mr Brugman's application. Nor was it suggested that this was the incorrect court, or that the application could, or should, be transferred to the Family Court. It is clear that Ms Tavener and her legal advisers were still operating on the same basis that they had in the Circuit Court, being that this Court was the appropriate court in which to ventilate the issue concerning the cohabitation agreement. 16 That appears to have changed at, or about, the time when the matter was mediated by the Registrar. By that time, it seems that Ms Tavener's legal advisers had worked out that any question concerning the validity of the cohabitation agreement was required to be determined by the Family Court. 17 It is unnecessary for present purposes to explain in detail exactly why Mr Brugman's application must be heard by the Family Court. Suffice to say that it is the result of amendments made to the Family Law Act 1975 (Cth) that commenced operation on 1 March 2009. The amendments included a new Part VIIIAB of the Family Law Act which deals with financial matters relating to de facto relationships. A new s 39B of the Family Law Act confers jurisdiction on the Family Court and the Federal Circuit Court with respect to "de facto financial causes", which include proceedings between the parties to a de facto relationship with respect to maintenance and the distribution of property, as well as proceedings "with respect to a Part VIIIAB financial agreement that are between…the parties". 18 It is now common ground between the parties that, despite having been made before the commencement of the operation of Part VIIIAB, the cohabitation agreement between Mr Brugman and Ms Tavener is a "Part VIIIAB financial agreement" for the purposes of the Family Law Act. That is because the agreement was a written agreement, was signed by Ms Tavener and Mr Brugman, was purportedly made under s 39 of the De Facto Relationships Act and, by reason of s 40 of the De Facto Relationships Act, the Court cannot make an order that is inconsistent with the agreement: see item 88 in Part 2 of Schedule 1 of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth). 19 The provisions of Part VIIIAB apply to the exclusion of any law of a State or Territory, including Norfolk Island, to the extent that the law of that State or Territory deals with financial matters relating to the parties to de facto relationships arising out of the breakdown of those de facto relationships: s 90RC of the Family Law Act. Division 2 of Part VIIIAB contains provisions relating to maintenance, declarations of property interests and alterations of property interests following the breakdown of a de facto relationship. Section 90SA provides, however, that Division 2 does not apply where a Part VIIIAB financial agreement that is "binding on the parties" applies to the maintenance of one of the spouse parties, or the property of the spouse parties or of either of them. Section 90UJ sets out the circumstances in which a Part VIIIAB financial agreement is binding on the parties. 20 If, therefore, the Family Court or Circuit Court finds that there is a binding Part VIIIAB financial agreement that contains provisions concerning maintenance or the adjustment of property interests, Division 2 of Part VIIIAB does not apply and the court cannot make maintenance or property settlement orders following the breakdown of the de facto relationship between the parties to the agreement. If the court finds that there is no such agreement, or that any agreement is not binding, the court can make orders for maintenance and property adjustment pursuant to Part VIIIAB. 21 The upshot is that, contrary to the submissions made on Ms Tavener's behalf in the Circuit Court and contrary to the representations that were made on Ms Tavener's behalf to Mr Brugman, the Circuit Court did have jurisdiction to entertain a claim concerning whether the cohabitation agreement binds Ms Tavener and Mr Brugman in relation to matters such as maintenance and property adjustments after the breakdown of their de facto relationship. So too does the Family Court. If the Family Court or Circuit Court finds that the cohabitation agreement does not bind Ms Tavener and Mr Brugman, it may then make orders concerning maintenance and the adjustment of property interests in accordance with Part VIIIAB of the Family Law Act. 22 Importantly, the Circuit Court and the Family Court have jurisdiction in relation to those matters to the exclusion of this Court. It is certainly not the case, as was submitted to the Circuit Court by Ms Tavener's counsel, that the cohabitation agreement could only be set aside in this Court and that, until that occurred, the Circuit Court had no jurisdiction. The Circuit Court proceedings were accordingly dismissed, without consideration of the merits of Mr Brugman's claim, as a result of a misconception concerning the appropriate jurisdiction. 23 I should emphasise that I am not intending to be critical of Ms Tavener's legal representatives for taking the position they took. The jurisdiction of the Circuit Court and Family Court to entertain a claim concerning the financial implications of the breakdown of a de facto relationship on Norfolk Island, in circumstances where there is a relevant Norfolk Island enactment dealing with that issue, and an agreement purporting to have been made under that enactment, is not self-evident. The relevant provisions in the Family Law Act that confer jurisdiction on the Circuit Court and Family Court in relation to such matters are by no means simple and straightforward. That is perhaps evidenced by the fact that, when Mr Brugman eventually retained a solicitor to act for him, that solicitor appears also to have proceeded on the basis that this Court had jurisdiction and was the appropriate court to determine the relevant dispute.

Transfer of the proceedings to the Family Court 24 It is common ground, in the circumstances, that the proceeding commenced in this Court should be transferred to the Family Court. The Cross-Vesting Act extends to every external territory, including Norfolk Island: s 3 of the Cross-Vesting Act. Subsection 5(1) of the Cross-Vesting Act relevantly provides that where a proceeding is pending in the Supreme Court of a Territory and it appears to that court that the proceeding would have been incapable of being instituted in that court, but would be capable of being instituted in the Family Court, the court must transfer the proceeding to the Family Court if it would be more appropriate for the proceeding to be determined in the Family Court, or the interests of justice would dictate such a course. 25 That is plainly the case here. Given the terms of s 39B and Part VIIIAB of the Family Law Act, the Family Court is clearly the appropriate court to resolve questions with respect to the cohabitation agreement between Mr Brugman and Ms Tavener, including whether it is binding on the parties. The interests of justice plainly dictate that the proceeding be transferred to the Family Court for determination in accordance with the Family Law Act. That is accepted by both Ms Tavener and Mr Brugman.

Freezing Order 26 Mr Brugman applied for a freezing order in respect of some properties owned by Ms Tavener. That application was made pursuant to r 741 of the Civil Procedure Rules 2006 (ACT), which apply in proceedings in this Court. That rule provides that the Court may make a freezing order for the purpose of preventing the frustration or inhibition of the Court's processes by ensuring that an order, or prospective order, of the Court is not made valueless or diminished in value. 27 There are a number of difficulties with the freezing order application. The first is that there is no evidence capable of establishing that there is any risk of the Court's processes being frustrated, or any risk that any prospective order by the Court will be made valueless or diminished in value. The only evidence pointed to by Mr Brugman was evidence that Ms Tavener had not, at this stage, responded to his solicitor's request that Ms Tavener provide valuations of her properties. That is an insufficient evidentiary basis for a freezing order. 28 In any event, as the proceeding is to be transferred to the Family Court, there is in effect no prospective order of this Court which may be made valueless, or may be diminished in value, by any conduct of Ms Tavener. If there is any risk of any court's processes being frustrated, the relevant court is the Family Court, not this Court. If Mr Tavener wishes to pursue an application for a freezing order, he should do so in the Family Court.

Costs 29 The only remaining issue is whether an order should be made in relation to the costs of this proceeding and, if so, who should pay whose costs and on what basis. As so often happens in cases involving disputes about costs, the respective contentions of the parties were at polar extremes. Ms Tavener contended that Mr Brugman should pay her costs on an indemnity basis. Mr Brugman contended that Ms Tavener should pay his costs on an indemnity basis. 30 Neither contention is justifiable or has any merit. 31 Ms Tavener contended, at least in her written submissions, that Mr Brugman should pay her costs on an indemnity basis because Mr Brugman and his legal representative "commenced and continued" the proceeding in this Court "despite being aware or that they ought to have been aware [sic] that the Court did not have jurisdiction to determine that application and that the orders they sought could not be made pursuant to the [De Facto Relationships] Act". Ms Tavener contended that she had incurred unnecessary costs in defending Mr Brugman's application in circumstances where the proceeding was commenced in the wrong court and under the wrong legislation. 32 There is plainly no evidentiary basis for finding that Mr Brugman or his legal advisers knew that the proceeding was commenced in the wrong court and pursuant to the wrong legislation, at least until about February 2018 when the matter was mediated. Indeed, Ms Tavener's submission in that regard was, to say the least, somewhat surprising, if not disingenuous, in circumstances where Mr Brugman initially commenced the proceedings in the correct court. He only agreed that those proceedings should be discontinued or dismissed as a result of the erroneous statements made by the Circuit Court judge, based on submissions advanced by Ms Tavener's counsel, that the Circuit Court did not have jurisdiction. The submission that Mr Brugman ought to have known that he had commenced proceedings in the wrong Court is equally surprising in circumstances where it is readily apparent that Ms Tavener and her legal advisers also did not appreciate that to be the case until the matter was referred to mediation. 33 I should note, in this context, that the submissions advanced by counsel who appeared for Ms Tavener at the hearing of this application were somewhat more measured and realistic. He submitted that, while Mr Brugman initially commenced proceedings in the correct court, his application did not refer to, let alone seek to set aside, the cohabitation agreement. He submitted that the question of jurisdiction in this matter was not easy and that it is clear that, until fairly recently, the legal representatives of each of the parties proceeded on the basis that this Court had jurisdiction, and was the appropriate court to consider issues surrounding the cohabitation agreement. 34 Mr Brugman contended that Ms Tavener should pay his costs on an indemnity basis because the proceeding could have been determined in the Circuit Court and he only commenced proceedings in this Court "because of the gross and compounded errors" of Ms Tavener or her advisers in respect of which "no explanation or justification has been provided". Ms Tavener's actions have, in Mr Brugman's submission, "caused extensive and unnecessary delay" and there is a need to "hold accountable" Ms Tavener's legal representatives for the misleading statements concerning the Circuit Court's jurisdiction. 35 Putting the hyperbole to one side, there is some merit in Mr Brugman's submission that the actions of Ms Tavener's legal representatives ultimately caused him to erroneously consent to the dismissal or discontinuance of the proceeding in the correct court, the Circuit Court, and commence proceedings in the incorrect court. That said, there is no reason to infer that the actions of Ms Tavener's legal advisers were the result of anything other than an innocent error. There is no basis for inferring that the legal advisers deliberately led the Circuit Court, or Mr Brugman, into error. Nor is there any basis for inferring that Ms Tavener's legal representatives became aware of their error until about the time that the matter was mediated in February 2018. When the error was discovered, Ms Tavener and her legal representatives brought that to Mr Brugman's attention and accepted that the proceeding should be transferred to the Family Court. There is no basis for finding that Ms Tavener or her legal advisers acted improperly or unreasonably. 36 It should also be noted that, at least until fairly recently, Mr Brugman was not legally represented. It is difficult in those circumstances to see how he has incurred significant costs, as he is said to have done, as a result of the dismissal of the Circuit Court proceedings and the commencement of the proceeding in this Court. As for any delay, a costs order is not intended to compensate for delay. Nor is a costs order intended to be punitive in nature, as some of Mr Brugman's submissions would tend to suggest. Mr Brugman must also share some of the responsibility for the errors and delays in his proceedings given that, even accepting that for the most part he was unrepresented, his filed documents were far from pellucid. As has already been noted, his application filed in the Circuit Court did not grapple at all with the cohabitation agreement. 37 The submissions of both Ms Tavener and Mr Brugman proceed on the assumption that much of the work that has been done in this proceeding to date has been wasted. That assumption may turn out to be entirely unjustified. While ultimately it will be a matter for the Family Court judge who hears the matter, contrary to some of the submissions that have been advanced by both parties, it is difficult to see why the pleadings and affidavits filed by the parties to date cannot be utilised in the proceedings in the Family Court. If there are any difficulties with any of the documents that have been filed by the parties, those difficulties are likely to be the product of poor drafting or inadequate attention to the issues, not the change in venue. 38 The Court has a very wide jurisdiction in relation to costs. The primary consideration must be to do justice in the particular circumstances of the case. In my opinion, the justice of this case is best served by reserving the question of costs so it can be considered by the Family Court judge who ultimately hears the substantive application. That is so for a number of reasons. 39 First, there is no doubt that, by reason of s 12 of the Cross-Vesting Act, the Family Court can make a costs order that relates to the conduct of the proceedings in this Court: see, for example, Woodland Home Products Pty Ltd v Picalovski [2010] NSWSC 629. 40 Second, in my opinion the question of costs should be approached on the basis that the proceeding should have been commenced pursuant to the provisions of the Family Law Act. In that regard, it is relevant to have regard to s 117 of the Family Law Act. Subsections 117(1), (2) and (2A) provide as follows: 117 Costs (1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs. (2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such an order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just. (2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to: (a) the financial circumstances of each of the parties to the proceedings; (b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party; (c) the conduct and 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. … 41 Subsection 70NFB(1) and ss 117AA and 117AC are inapplicable to the circumstances of this case. Section 118 relates to frivolous or vexatious proceedings. Subsections 117(4), (4A) and (5) are also inapplicable to the circumstances of this case. 42 The general effect of s 117 is that ordinarily a party to proceedings under the Family Law Act will bear his or her own costs, but that the court may make a costs order if of the opinion that it is justified having regard to the considerations listed in s 117(2A). Plainly, the Family Court judge who hears the substantive proceeding will be in a better position to assess the considerations in s 117(2A) and whether a costs order should be made in all the circumstances. It is also sometimes the case that the costs of interlocutory applications are best resolved at the conclusion of the proceedings when all the facts are known. 43 Third, the Family Court judge will also be in a much better position to determine what, if any, costs were wasted or thrown away as a result of the need to transfer the proceeding to the Family Court. As I have already said, I do not accept that much of the work that has been done by the legal advisers for both Mr Brugman and Ms Tavener while the matter has been in this Court has been wasted. I do not, for example, accept that the costs incurred in the mediation were wasted. 44 Fourth, I do not consider that it is desirable for this Court to make a costs order at this stage of the proceedings when the matter is to be transferred to the Family Court. The effect of making such a costs order would be that the costs order would be taxable and enforceable forthwith, unless an order was made that the costs order was not enforceable until the conclusion of the Family Court proceedings. Even in those circumstances, this Court may be left with lingering issues concerning the taxation or assessment of costs in accordance with any costs order. I should note, in that context, that I am not satisfied that an indemnity costs order would be appropriate. Nor am I satisfied that the parties have provided sufficient evidence of the costs that have been incurred to allow the Court to make a lump sum costs order. As I noted earlier, in my view, any costs order made in the circumstances would not necessarily cover all the work that has been engaged in by the legal advisers while the matter has been in this Court. 45 I have given some consideration to whether a costs order should be made in relation to the hearing of the rival interlocutory applications. The main order sought by Ms Tavener in her interlocutory application was that Mr Brugman's application in this Court be dismissed for want of jurisdiction. That said, Ms Tavener did not ultimately press that aspect of her application. Indeed, as will be seen, she made it quite clear to Mr Brugman prior to the filing of her application that she would consent to the transfer of the proceeding to the Family Court. Mr Brugman's interlocutory application sought an order transferring the proceeding to the Family Court. To that extent, he was the successful party. He also sought a freezing order. To that extent his application was unsuccessful. 46 One difficulty for Mr Brugman is that, as has already been adverted to, prior to the filing of her interlocutory application, Ms Tavener, through her solicitor, made a "without prejudice" offer to Mr Brugman. That offer was that the proceeding be transferred to the Family Court and that the question of costs be reserved for determination by the Family Court. Mr Brugman did not accept that offer within the stipulated period, the result being that Ms Tavener filed her interlocutory application. The question arises whether, in those circumstances, Mr Brugman should be ordered to pay Ms Tavener's costs of the application. 47 While I can see some merit and justification for ordering Mr Brugman to pay Ms Tavener's costs of the hearing of this application, given the offer that was made by Ms Tavener, I have ultimately come to the view that this again is a matter that should be determined by the Family Court in the context of the proceedings generally, and in light of the considerations in s 117 of the Family Law Act. I note in that context that there is some evidence to suggest that Mr Brugman may be impecunious. I would not consider it appropriate, in all the circumstances, to make a costs order against Mr Brugman that may be payable forthwith if the effect of such an order would be to frustrate or impede the prosecution of his application in the Family Court. 48 In all the circumstances, the appropriate order is to reserve costs for the consideration of the Family Court. Orders will be made accordingly, along with orders transferring the proceeding to the Family Court. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wigney.