Acton and Burton (No 2)
[2015] FamCA 867
•19 October 2015
FAMILY COURT OF AUSTRALIA
| ACTON & BURTON (NO 2) | [2015] FamCA 867 |
| FAMILY LAW – COSTS |
| Family Law Act 1975 (Cth) s 117 |
| Stephens & Stephens & Ors (Enforcement) (Costs) [2010] FamCAFC 172 Cassidy v Murray (1995) FLC 93-633 Latoudis v Casey (1990) 170 CLR 534 |
| APPLICANT: | Ms Acton |
| RESPONDENT: | Mr Burton |
| FILE NUMBER: | BRC | 9435 | of | 2012 |
| DATE DELIVERED: | 19 October 2015 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Hogan J |
| HEARING DATE: | In chambers by way of written submissions. |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Murdoch Lawyers |
| SOLICITOR FOR THE RESPONDENT: | Blanchfield Nicholls Lawyers |
Orders
The Applicant Wife pay the Respondent Husband’s costs of and incidental to the Application in a Case filed 9 March 2015 with such costs:
(a)to be paid on a party/party basis in an amount agreed between the Applicant Wife and Respondent Husband or, failing agreement, as assessed on a party/party basis; and
(b)to be paid within 60 days of the making of a final order in, or final resolution of, the property settlement proceedings between the Applicant Wife and the Respondent Husband.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Acton & Burton (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 BRISBANE |
FILE NUMBER: BRC 9435 of 2012
| Ms Acton |
Applicant
And
| Mr Burton |
Respondent
REASONS FOR JUDGMENT
On 22 June 2015 I dismissed the Applicant’s interim Application, filed 9 March 2015, by which she sought, on an interim basis, a departure from the administrative assessment of child support in respect of the parties’ three children. The Orders made that day accorded the parties the opportunity to be heard, via the delivery of written submissions, in relation to costs.
As outlined in the written submissions filed on his behalf on 6 July 2015, the Respondent seeks an order that the Applicant pay his costs of and incidental to the interim Application in an amount agreed between the parties or, failing agreement, as assessed.[1] Whilst indicating that his actual costs of the interim proceedings were $16,500.00, the Respondent does not seek that any order is made on an indemnity basis.
[1] In accordance with the Scale set out in Schedule 3 to the Family Law Rules (2004).
The Applicant opposes the making of any order for costs. It is submitted on her behalf that:
a)the Respondent’s Application should be dismissed; or, failing that
b)an order should be made reserving the issue of costs for the consideration of the trial Judge (on the basis that trial will provide the best opportunity to assess and consider the parties’ competing financial positions and her assertion that the Respondent has failed properly to comply with his ongoing duty of disclosure); or, failing that
c)if an order for costs is made, the enforcement of the same should be stayed until the finalisation of the property settlement proceedings which remain on foot between the parties.
Applicable Principles
Section 117(1) of the Family Law Act (1975)(Cth) provides that each party to proceedings under the Act shall bear his or her own costs. However, if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to subsection (2A) make such order as to costs as thought just. [2]
[2] Section 117(2) Family Law Act (1975) (Cth).
In determining what – if any – order as to costs should be made in any proceeding, the Court must have regard to the maters outlined in s 117(2A) of the Act.
Neither party is in receipt of legal aid. Neither party made an offer in writing to settle the proceedings constituted by the Application disposed of by the order made on 22 June 2015. It is not suggested that the interim Application was necessitated by the failure of a party to comply with previous orders.
The Respondent’s Application for costs rests on the submissions that the Applicant’s financial circumstances are superior to his and that she was wholly unsuccessful in prosecuting the departure Application on an interim basis. In so far as the conduct of the parties to the proceeding requires consideration, the Respondent submits that the Applicant failed to persuade the Court, on an interim basis, that he had failed to make full and proper disclosure of his financial circumstances.
The Respondent points, in particular, to the fact that the Applicant has net equity in real property of about $230,000.00 - whilst he deposes to a deficit of assets over liabilities in an amount of some $3,047,916.00. She has an income of about $620.00 per week from employment and the Respondent receives an income of about $2,241.00/week, whilst he supports himself via the sale of assets or by increasing liabilities.
Whilst the Applicant accepts that she owns real property in which she has equity of about $230,000.00, she submits that this is her only significant asset and it is the home in which she (and her husband and their child) and the children live.
Both parties have unpaid and, perhaps, unbilled legal expenses. The Applicant’s legal costs are said to be in an amount of about $43,500.00. I do not accept the submission that these outstanding liabilities should properly be excluded from consideration.
The Respondent indicates that his financial position is a deficit of $3,047,916.00 and that he meets his expenses, not by receiving income, but by the sale of assets or incurring further indebtedness. He asserts that the Applicant is the only party with assets of significant value, that she is not impecunious and that her financial circumstances support the making of an order for costs against her. The Applicant takes issue with this assertion as, she says, it ignores the assets which the Respondent accepts he holds – in the value of approximately $1,864,380.00 – a particularly relevant matter, the Applicant says, when the extent of his asserted indebtedness is one of the issues in dispute between the parties. It is clear the Applicant does not accept the Respondent’s assertion as to his financial position.
The Applicant further indicates that the Respondent’s failure to attend to his obligation to file a tax return for the 2014 financial year – and to provide any “valid explanation” for the same – has resulted in a delay to the Department of Human Services’ assessment process and, consequently, “forced” her to incur the legal fees associated with the prosecution of the interim Application.
The Applicant ultimately submits that her financial position is much weaker than that of the Respondent and that the making of a costs order would cause her financial hardship, with consequent impacts upon the parties’ two younger children.
The Respondent submits that the Applicant failed to persuade the Court about his asserted failure to make adequate disclosure and was wholly unsuccessful in her Application: he submits that she ought to have known that her Application was highly likely, if not doomed, to fail.
The Applicant’s written submissions opposing the making of an order for costs maintain her position (as advanced at the hearing of the interim Application) that the Respondent has failed to make full and frank disclosure. She says she should not be “penalised” at this stage of the proceedings for her inability to establish this asserted fact without the assistance of cross-examination. It is, I think, pertinent to note that the Applicant’s legal representatives did not apply for leave to cross-examine the Respondent at the hearing of the interim Application.
The Applicant further indicates that it was the Respondent’s conduct in failing to lodge tax returns, failing to provide disclosure and failing to participate in the child support assessment process necessitated the bringing of the interim Application. The Applicant repeatedly submits she should not be “penalised” by the making of a costs order simply because she failed to succeed on her interim Application. The Respondent repeatedly submits that the reality is that he was put to the cost of defending the interim Application and that the Applicant was unsuccessful in it.
The Applicant ultimately submits that, even if the Court is persuaded of the one or more justifying circumstance[3], the Court would decline to exercise its discretion on the basis that it is not in the interests of justice that an order requiring her to pay the Respondent’s costs of and incidental to the Application is made.
[3] Section117(2A)
Alternatively, the Applicant submits that the determination of the issue of costs associated with the interim Application ought to be reserved so that this issue can be considered during the final hearing of the outstanding proceedings.
Discussion and conclusions
Authority[4] makes it abundantly clear that an order for costs is not punitive. Thus, it is simply wrong to assert that any order requiring the Applicant to pay the Respondent’s costs of and incidental to her unsuccessful interim Application is made by way of “punishment” or that she is being “punished” for unsuccessfully prosecuting that interim Application.
[4]Such as: Cassidy v Murray (1995) FLC 93-633; Latoudis v Casey (1990) 170 CLR 534 (cited with approval in Cassidy); Stephens & Stephens & Ors (Enforcement) (Costs) [2010] FamCAFC 172.
As the Full Court of this Court said, at [62] in Stephens & Stephens & Ors (Enforcement) (Costs)[5] “… Costs are not a penalty or damages”.
[5] [2010] FamCAFC 172.
An order for costs is compensatory in nature and is made to indemnify, partially, or, at least to some extent, reimburse a party (here, the Respondent) who has incurred the costs of litigation as a result of the actions of another party (here, the Applicant).
I am persuaded that the circumstances are such as to justify the making of an order requiring that the Applicant pay the Respondent’s costs of and incidental to the Application in a Case filed 9 March 2015 and that it is just that such order be made. I arrive at this conclusion primarily upon the basis that I consider that, as was almost tacitly accepted by the written submissions prepared on behalf of the Applicant, her case on an interim basis faced significant difficulties. Whether these difficulties can be overcome at a final hearing – or could have been overcome had cross-examination been sought at the hearing of the interim Application – does not affect the reality that the Applicant’s Application was wholly unsuccessful and that it failed because she failed to persuade the Court, on an interim basis, to make an order departing from the administrative assessment of child support payable in respect of the parties’ children. Given that one of the Applicant’s associated complaints was the Respondent’s asserted failure properly to disclose financial information, the evidentiary difficulties she faced in prosecuting her interim Application should have been clearly apparent.
Whilst it is just that the Applicant be required to pay the Respondent’s costs of and incidental to the interim Application in these circumstances, it is also just that her obligation to make such payment occur only after the resolution of the outstanding proceedings. In that way, if the Applicant is able to establish at the final hearing that the Respondent’s financial circumstances at the relevant time[6] were significantly better than he advanced, such established circumstance can properly be taken into account.
[6] Namely, when her interim Application was dismissed.
I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 19 October 2015.
Associate:
Date: 19 October 2015
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