3.3 Consideration
50 The authorities to which I have referred demonstrate that the question of whether a third party costs order ought to be made ultimately depends on the particular facts of the case. The factors identified in FPM Holdings provide a useful tool for analysis, bearing in mind however that the earlier cases can provide only limited guidance to the determination of this particular case.
51 I take the following matters into consideration.
52 Pascal is an undischarged bankrupt. The Skelins submit that the evidence of income given by Pascal, coupled with the bank statements, supports the contention that he is not a "man of straw". However, Pascal's trustee in bankruptcy considered that his income did not warrant annual payments of more than $38,000 in 2020 and 2021. Pascal provides no complete picture of his affairs, but rather refers to some payments he received. No contracts with, or invoices issued to, TrueGreen, Halifax or Orion Global are put into evidence.
53 Having regard to the fact that the trustee's second report to creditors, dated 10 September 2021, made no mention of funds being available to discharge the debts owed by Pascal, I am not satisfied on the evidence before the Court that he might properly be regarded as other than an undischarged bankrupt. The evidence available does not provide a clear picture of Pascal's affairs. In particular, it is opaque as to whether such funds that he does receive or has received to date are promised elsewhere.
54 Anne is a party to the Taylor David costs agreement in respect of the appeal proceedings and assisted in the payment of some of the fees and disbursements. Mr Gear's evidence on information and belief from both Anne and Ojdana is that Ojdana made payments to Taylor David at Anne's request pursuant to the loan agreements. Furthermore, in the course of the stay application, Anne offered an undertaking to pay Self Care's costs in the event that the stay was granted and the application for leave to appeal and any appeal was ultimately unsuccessful (see Skelin 1 at [40(6)]). These factors tend to support the conclusion that Anne had some involvement in the proceedings.
55 However, balanced against these matters is the evidence given by Mr Gear that neither he nor those under his supervision received any instructions from Anne in the course of the proceedings. I accept that evidence. It is supported by the evidence given on information and belief from Anne to the effect that she had little knowledge of the detail of the appeal proceedings. I accept that Anne gave no instructions to Taylor David in relation to, and has played no active role in, the conduct of the appeal proceedings.
56 Next, the explanation given for the financial support provided to Pascal by Anne is that she does so because she is his wife, not because she has any particular interest in the litigation itself. Self Care challenges that explanation in several ways.
57 It first submits that if this were Anne's position, she ought to have provided direct evidence of it and been cross examined. However, the total costs in issue in this application are $76,000. Upon taxation they are likely to be reduced. Anne was entitled to adduce evidence in the form that I have admitted. I do not consider that it was necessary for Anne to adduce evidence in person. Whilst I am conscious that in the absence of cross examination Anne's evidence has not been tested, having regard to the whole of the evidence I am prepared to accept as credible the explanation that she has offered.
58 Self Care next submits that "in truth" Anne has a more significant interest in the outcome of the litigation because she is a major creditor in Pascal's bankrupt estate. Self Care relies on the indebtedness of the estate to Berkeley. ASIC records exhibited to Mr Williams' affidavit indicate that Anne is the sole director, secretary, and the holder of one of 2,000 issued shares in Berkeley. The balance of the shares are held by BGA. BGA is the trustee of the Berkeley Group Assets Trust. It is a discretionary trust. Anne is a beneficiary under the trust, but has no proprietary interest in any asset of the trust; Citrus at [33]. The two shareholders in BGA are Latin Holdings Pty Ltd and Berkeley, which hold 1,000 and 1,999 shares respectively. The sole director and secretary of Latin Holdings is Anne. The sole shareholder in Latin Holdings is BGA.
59 At the hearing Self Care submitted that the financial interests of Pascal and Anne are intimately intertwined and that I should reject the evidence that Anne is independently wealthy. Self Care relied on the report of a liquidator into the company activities of Freezeframe China Co Pty Ltd, a company that Pascal was a director and shareholder of prior to his bankruptcy and that is a respondent in both the appeal proceedings and the FCCA proceedings. That report indicates that from September 2017 to November 2019, Freezeframe paid about $869,000 to Berkeley in respect of services rendered by Pascal and Anne to Freezeframe. The September 2021 report by Worrells indicates that Mr Skelin owes Freezeframe $69,300.
60 However, Anne holds one share in Berkeley. The balance are owned by BGA. As I have noted, Anne has no proprietary interest in BGA. In that respect the interest that Anne has in Pascal's estate is not as significant as Self Care contends. Furthermore, whilst the matters to which Self Care refers indicate that there is complexity in the arrangements, they do not go so far as to demonstrate that Anne is a major creditor in Pascal's bankruptcy.
61 Self Care next submits that the personal claims against Pascal in the FCCA proceedings, if successful, will detrimentally affect Anne's assets. However, as a general proposition, it cannot be the case that a spouse providing financial assistance to the conduct of a case becomes personally liable for costs merely because, as a spouse, the success or failure of litigation may be of derivative benefit. More is required.
62 Self Care also contends that in the case of Anne, her house is the subject of a freezing order and may be sold to meet any liability of her husband in the FCCA proceedings. The foundation for this submission is tenuous. There is no dispute that Anne is the sole owner of her Vaucluse property, which she has owned since 2002. Self Care points to no basis upon which it may be found in the FCCA proceedings that any dealing by her in the property would be curtailed by orders made against Pascal. Self Care seeks no relief against the property in the FCCA proceedings and has not established any basis upon which it may be said that Pascal has an interest in that property.
63 Taking these matters together, and having regard to the factors identified by Basten JA in FPM Constructions, I am not satisfied that it is just and equitable that a third party order should be made against Anne as a condition of granting Pascal leave to discontinue the appeal proceedings. Although she has provided some financial support to Pascal for the conduct of the FCCA proceedings, the only matter that is presently relevant is the conduct of the appeal proceedings in this court. Pascal was the moving party in this court. It cannot be said that in truth Anne was the moving party or a real party to the proceedings. Although she provided some of the funds for the appeal proceedings, she did not provide them all. Indeed, the evidence supports a finding that Pascal contributed some $35,000 of the costs. Nor, in my view has it been established that Anne had an interest which was equal to or greater than that of Pascal. An emotional interest in his well-being is not sufficient. It has not been demonstrated that she had a substantial financial interest in the outcome of the proceedings. Indeed, the evidence suggests that she derived no financial benefit in return for making payments towards Pascal's legal costs. To these matters may be added the fact that Self Care does not submit, and I would not in any event find, that the conduct of the appeal proceedings was unreasonable or improper.
64 Taken as a whole I do not consider that it can be said that Anne is so connected with Pascal and has caused Pascal to start, continue or prosecute the appeal proceedings in circumstances where Anne's conduct makes it just and equitable to be visited with a costs order in favour of Self Care; Dunghutti at [88].
65 In relation to Ojdana, she too has provided payments for the appeal proceedings and the FCCA proceedings. She has entered into loan agreements with Anne. Self Care contends that the terms of the loan agreement are commercial in nature and that it cannot be said that they were entered into out of emotional commitment on the part of Ojdana and her husband to Anne and Pascal. It submits that Ojdana has an interest in the outcome of the appeal proceedings because if Self Care is successful against Pascal in the FCCA proceedings, the result will detrimentally affect her asset, in the form of the unrepaid loan.
66 Conversely, Self Care submits that Ojdana would be a beneficiary of his success in the event of a costs order being made in his favour. The converse makes little sense, because at best a party party costs order would provide for partial return of the costs paid in the appeal proceedings (and, if ultimately successful, the FCCA proceedings). More generally, the obvious point in answer is that the loan agreements were not made with Pascal but with Anne. To the extent that they are to be regarded as commercial agreements, it is Anne who is liable. As I have concluded that Anne does not have an interest in the litigation, it is difficult to see how Ojdana can.
67 Ojdana's evidence, adduced through Mr Gear on information and belief, is that she was motivated to enter the loan agreement with Anne and provide funds for Pascal's legal costs out of her love for Anne and Pascal. I accept that evidence.
68 Self Care also submits that Ojdana is a major creditor of Pascal's bankrupt estate. That submission does not withstand scrutiny. Ojdana is at best a minor creditor.
69 Self Care ultimately contends that by protecting Pascal from personal liability in the FCCA proceedings, Ojdana increases the likelihood that his debts to her and Anne will be repaid, and that Anne will repay her debt to Ojdana. However, the trustee does not predict that Ojdana will receive any dividend in the bankruptcy. Furthermore, neither of the loan agreements predicate repayment upon success in the appeal proceedings or the FCCA proceedings and, as I have noted, in any event Pascal is not a party to those agreements.
70 I am not satisfied that either Anne or Ojdana has a sufficient connection with Pascal, as the unsuccessful party, and with the appeal proceedings in general to warrant the Court exercising its jurisdiction to order that they be jointly and severally liable with Pascal for Self Care's costs.