ANDREWS & KYLE

[2016] FamCA 836

FAMILY COURT OF AUSTRALIA

ANDREWS & KYLE [2016] FamCA 836

FAMILY LAW – SPOUSAL MAINTENANCE - Application by husband seeking the discharge of Orders in respect of his obligation to pay spousal maintenance–Application dismissed

FAMILY LAW – CHILD SUPPORT – Application by husband seeking the discharge of Orders in respect of his obligation to pay child support – Application dismissed

FAMILY LAW – COSTS Application by wife for costs thrown away on court appearance on the first return date and the costs of the hearing – Application by wife for costs on the application brought by the husband where the husband was substantially unsuccessful – Costs allowed on party/party basis

Family Law Act 1975 (Cth)

Penfold v Penfold (1980) FLC 90-800
Brown v Brown (1998) FLC 92-822
Cachia v Hanes (1994) 179 CLR 403

APPLICANT: Mr Andrews

RESPONDENT: Ms Kyle

FILE NUMBER: SYC 6025 of 2013

DATE DELIVERED: 19 August 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Benjamin J

HEARING DATE: 19 August 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gardiner

SOLICITOR FOR THE APPLICANT: Slater & Gordon Lawyers

COUNSEL FOR THE RESPONDENT: Mr P Batey

SOLICITOR FOR THE RESPONDENT: Broun Abrahams Burreket

Orders

1. The application in a case filed 21 July 2016 is dismissed.

2. The husband pay the wife’s costs of the application in a case including the cost of the hearing today and the costs thrown away earlier this week on the first return date, such costs to be agreed and assessed on a party/party basis on the whole of the application in a case and such costs not to be required to be paid until after settlement of property or property orders are finalised.

IT IS DIRECTED

1. A copy of the reasons for these orders be taken out and placed on the court file.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

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 Andrews & Kyle 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).

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FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6025 of 2013

Mr Andrews

Applicant

And

Ms Kyle

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. On 21 July this year, the husband filed an application in a case seeking orders that the spousal maintenance order be discharged and that he be, although not specified but clear from the case outline, released from his undertaking with regard to the child support aspect and that he pay child support as assessed under the child support regime.  In support of that application, he relied upon:-

   (a)his affidavit filed and sworn 21 July;

   (b)his financial statement filed 21 July 2016; and

   (c)his financial statement of 11 April 2014, some two years ago. 

2. The wife opposes any change to that maintenance order and the release of the husband from the undertaking.  I am told that this matter is listed for final hearing in March 2017, some seven or eight months from now. 

3. The husband is currently aged 56.  He works in a senior management position at an educational facility.  He has an income from that organisation of some $3,219 per week before tax. 

4. The wife is aged 50.  She is a homemaker and cares for the parties’ two children namely, B, who is aged nine, and C, who is aged 14.  The parties apparently separated in 2012. 

5. In these proceedings, I took the unusual step of allowing cross-examination in a limited form of the husband, as there had only been a significant disclosure by him shortly before the commencement of this application.  The proceedings were adjourned from Tuesday of this week until today. 

6. I accept and adopt the submissions of Mr Batey in terms of the law regarding a variation to maintenance, that is, particularly in the circumstances of this case where there is to be a hearing in March of next year, that there needs to be shown some substantial change to the financial circumstances of one or other of the parties, and in terms of the husband his income and in terms of his expenditure.  

7. It is submitted on the part of the husband that he does not have the capacity to continue making the payments.  It is submitted that the husband earns some $2,194 after tax, and he has significant payments and does not have enough income upon which to live.  From the evidence before me, it is clear that the husband’s income is at present roughly the same as the income he was earning at the time the consent orders were made.  The husband deposes that in the following year, his income dropped from about $160,000 down to about $54,000.  It is not clear to me what his income is or was in the last financial year.  He obtained employment with the educational facility and is now receiving a PAYG salary, although part of it seems to be paid, if I understand him, through his corporate structure.  It is not entirely clear. 

8. From the documents, it seems that the husband’s entity, D Proprietary Limited (‘the Company’), had sales last year of $72,875.  I take that from the activity statement for the fourth quarter of 2015/2016, plus $36,300 which was from the activity statement in the first quarter of that year, a sum of some $100,000. 

9. In addition, the husband received a sum of about $1,500 for the use by the Company of a prestige motor vehicle.  It is not clear to me whether that was paid from his salary working with the educational facility or out of moneys that he had earned in his other business.  He has a Japanese motor vehicle which is operated through his employer on some form of novated lease. 

10. There is evidence before me that, at least until recently, the husband had access to an expense account and he spent somewhere in the vicinity of, or slightly less than, an average of $500 per week on food and alcohol.  The husband conceded in evidence that part of this was to his advantage.  He has reimbursed the sum, although it was not clear to me whether that is reimbursed through the his employer or from his own finances.

11. The husband claimed a number of expenses which were paid by his consulting company, including the rent on his property, some insurance and his health insurance.  He clarified that he is not paying the health insurance before his cross-examination commenced. 

12. Since these orders were made, and quite sadly, the husband’s mother has passed away.  A home she owned was sold prior to her death and subsequent to the sale a sum slightly in excess of $1 million was put aside for the husband and his sister.  Part of that has been distributed but the exact nature of that distribution has not been fully disclosed.

13. Given the state of the evidence as it currently stands I cannot be satisfied there has been sufficient changes to the circumstances of the husband in terms of income or expenditure such as would warrant a discharge of the order and a release from the undertaking. No doubt when this matter comes on for hearing the parties can argue as to how these payments should be treated in terms of section 75(2)(o) of the Act and it is open for the parties to do so. However, I am not prepared to do so at this stage and as such I will discharge the application in a case.

14. In these proceedings there is an application for costs and it falls into two categories:  firstly the costs thrown away when the matter came before me on Tuesday earlier this week; and secondly, the costs of the application in a case generally.  In terms of the finances of the parties, they have modest assets and in the current circumstances modest income, although they are now close to a hearing.

THE LAW

1. There are three areas in which I need to address the law.  The first in relation to whether a costs order ought to be made at all.  The second in relation to whether it ought to be determined on an indemnity costs basis and the third should be as to the date of commencement of that cost order.

2. The power to make costs orders are set out in s 117 of the Family Law Act 1975 (Cth) (‘the Act’) which provides:-

   (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 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 of 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.

3. In Penfold v Penfold (1980) FLC 90-800 the majority of the High Court expressed the general rule that s 117(1) is not paramount to s 117(2) of the Act. There is no guidance in the legislation between the two sub sections nor any additional special onus on the applicant for an order as to costs. A court must make a finding that there are circumstances justifying the making of a costs order before proceeding to make the orders.

4. There is no threshold in the determination; however the subsection requires that I identify the circumstances which enliven the power under ss 117(2). In this case those factors equate to the matters to which I have referred under 117(2A) of the Act, and I am satisfied that there are circumstance which may give rise to a costs order.

5. The next step is to consider the matters set out in s 117(2A). In Brown v Brown (1998) FLC 92-822 Kay J said when determining whether a costs order ought to be made:-

   15.The obligation under s 117(2A) is that the court shall have regard to the various matters set out thereunder. This is in contrast to the previous provisions under which costs orders were made, namely, under the Family Law Regulations and in particular reg 173 which required that the court may in making an order take into account various matters. The movement from a discretionary consideration to a mandatory consideration is a matter in my view of some substance.

6. There is nowhere in s 117(2A) that says one factor is providing any hierarchy in relation to the factors. One factor may be enough. The Court has a wide discretion.

7. In terms of the relevant factors, neither party are in receipt of legal aid.  I have raised some concerns about the husband’s disclosure and I made that clear in my reasons.

8. The husband has been entirely unsuccessful.  With regard to the adjournment from earlier this week until today my recollection was that Mr Batey was put to an election by me as to whether the husband be cross-examined or got an adjournment.  He chose the former rather than the latter and then quite sensibly counsel for the husband, and I think almost inevitably, sought the adjournment to today.  I think given that circumstance costs on a party/party basis must inevitably flow from that area.

9. In terms of the costs themselves, first of all, I do not give any weight to whether notice was given or not.  There is not sufficient evidence one way or the other and I do not treat that as a factor.  I am, however concerned that the application was made in the shadow of the trial, and that perhaps material that should have been put before the Court well in advance, and material which ought to have been produced was not there.  Having regard to the wide discretion that I have, I intend to make an order for party/party costs in respect of the application in a case.  However, I will direct that no payment of those costs are required until after the final determination of the property orders, whether by agreement or by determination.

I certify that the preceding twenty three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 19 August 2016.

Associate:     

Date:              29 September 2016