APPLETON & DRAPER
[2015] FCCA 3186
•25 November 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| APPLETON & DRAPER | [2015] FCCA 3186 |
| Catchwords: COSTS – Application for costs – where respondent did not attend court – where applicant wholly successful – conduct of the parties in relation to the proceedings considered – party and party costs. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79, 117 Federal Circuit Court Rules 2001, r.13.03C, Sch.1, Part 1 |
| Cases cited: Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248 Hickey & Hickey [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143 In the Marriage of Kohan (1992) 16 Fam LR 245; (1993) FLC 92-340 PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL [2005] FamCA 158; (2005) 33 Fam LR 109 Prantage & Prantage [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544 Stanford v Stanford [2012] HCA 52; (2012) 47 Fam LR 481; FLC 93-518 |
| Applicant: | MS APPLETON |
| Respondent: | MR DRAPER |
| File Number: | SYC 371 of 2015 |
| Judgment of: | Judge Scarlett |
| Hearing date: | 25 November 2015 |
| Date of Last Submission: | 25 November 2015 |
| Delivered at: | Sydney |
| Delivered on: | 25 November 2015 |
REPRESENTATION
| Solicitor for the Applicant: | Ms Dorrough |
| Solicitors for the Applicant: | Dorrough Smart Solicitors & Attorneys |
| Respondent: | No appearance |
ORDERS
The Respondent husband is to pay to the Applicant wife the sum of $20,000.00 by way of settlement of property within one (1) month of the date of these Orders.
Upon receipt of the said sum of $20,000.00 the wife must within seven (7) days pay to the (omitted) Bank all such amounts as may be outstanding in respect of the personal loan in her name.
Except as provided by the immediately preceding Orders, each party will be solely entitled to the exclusion of the other to all other property including real property and chattels of whatsoever nature and kind in the name or possession of such party as at the date of these Orders and for this purpose bank accounts are deemed to be in the possession of the party whose name appears on the bank’s record thereof, insurance policies are deemed to be in the possession of the owner of the policy, and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.
Each party is to be solely liable for and indemnify the other party against any debts or liabilities in their respective names.
The Respondent is to pay the Applicant’s costs of these proceedings fixed in the sum of $7,437.00 within one (1) month of the date of these Orders.
The Respondent is to pay to the Applicant the sum of $1,100.00 being the costs ordered in her favour on 3 November 2015 in respect of 7 October 2015 and 3 November 2015 within one (1) month of the date of these Orders.
IT IS NOTED that publication of this judgment under the pseudonym Appleton & Draper is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 371 of 2015
| MS APPLETON |
Applicant
And
| MR DRAPER |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application for property settlement by the wife. The orders that she seeks at the final hearing are set out in her Outline of Case Document, and are as follows:
2.1. That the Respondent Husband pay to the Wife the sum of $20,000.00 and that upon such payment the Wife shall pay such monies as are outstanding to the (omitted) Bank with respect to the personal loan in her name and otherwise retain the balance.
2.2 The Husband shall pay the Wife’s costs of and incidental to this Application.
In his Response filed on 27 April 2015 the Respondent seeks these orders:
1. That the Initiating Application filed by the Applicant on 23 January 2015 be dismissed.
2. That the Applicant pay the Respondent’s costs.
Background
The wife was born in Australia on (omitted) 1980.
The husband was born in (country omitted) on (omitted) 1971.
The parties commenced living together in March 2010. They were married on (omitted) 2011 and separated on 27 February 2014. There are no children of the marriage.
The Applicant commenced proceedings in this Court by filing an Initiating Application, a Financial Statement and an affidavit on 23 January 2015. The Application was returnable on 20 April 2015. As the husband had not filed any material in opposition to the Application, he was ordered to do so within seven days and the Application was adjourned to 4 May for mention.
The husband filed a Response, a Financial Statement and an Affidavit on 27 April 2015.
On 4 May 2015 the parties were directed to attend a Conciliation Conference with a Registrar. The Conference took place on 27 July and an agreement in principle was reached. The parties, both of whom were legally represented at the time, completed a document entitled “Heads of Agreement”. They also signed Terms of Settlement, witnessed by their legal advisers. The proposed consent orders were not made by the Registrar but the matter was referred back to Court for mention.
The Application was mentioned before the Court on 7 October 2015. The wife was represented by her solicitor, Ms Dorrough. The husband appeared unrepresented. It transpired that the husband had resiled from the settlement agreement and no orders by consent were to be made. The husband said that he needed some time to arrange funds. The matter was adjourned to 3 November 2015 for further mention and the wife’s costs of the day were reserved.
The husband’s solicitor filed a Notice of Withdrawal as Lawyer on 12 October 2015.
The wife and her solicitor attended Court on 3 November 2015. The husband did not. There was no explanation for his non-attendance. I ordered that the husband should pay the wife’s costs of the day and of the earlier mention on 7 October 2015 in the total sum of $550.00 for each occasion. The substantive Application was listed for an undefended hearing on 25 November 2015 and the husband was advised that if he did not attend on the next occasion then orders may be made in his absence.
The wife attended Court for the hearing, accompanied by her solicitor. There was no appearance by or on behalf of the husband and no explanation for his absence.
Evidence and Submissions
The wife relied on:
a)Her Initiating Application filed on 23 January 2015;
b)Her affidavit sworn on 21 January 2015;
c)Her Financial Statement sworn 21 January 2015; and
d)Her affidavit sworn 21 November 2015 which was filed in Court.
The wife gave oral evidence.
It is the wife’s evidence that she and the husband cohabited for a period of just less than four years. Neither of the parties had assets of significance at the commencement of the marriage. The wife was in employment throughout the course of the marriage. The husband worked from time to time conducting a business in which he conducted (events omitted) ostensibly for charitable purposes but, on the wife’s evidence, the husband received the proceeds and gave little or no money to the charities. She deposed that on such occasions the husband would say to her words to the effect of:
The charities will be lucky if I give them $1,000. The rest of those moneys I am keeping for myself”.[1]
[1] Affidavit of Ms Appleton 21.11.2015 at paragraph [12]
The wife went on to state that the husband told her that he could make $30,000 on a ‘(event omitted)’.
The wife’s solicitor submitted that it is likely that the wife made a greater financial contribution during the course of the marriage but it would be difficult for the Court to make a finding that either party made a greater financial contribution than the other save that the wife went into debt for the husband to invest in a business.
It was submitted that the affidavit material indicates that the wife borrowed money on the basis of a promise by the husband that he would invest that money in a business. She borrowed the money and placed it in the husband’s hands but he has not accounted to her for the money. He obtained the money shortly before the parties separated and made some repayments towards the wife’s personal loan after separation until 22 May 2014.
It was further submitted that this is a matter where the Court would consider the concept of fairness under s. 75(2)(o) of the Family Law Act 1975 (Cth). The husband has had the entire benefit of a loan of $20,000.00 but has failed to make the repayments and has used the money in some form of undisclosed business undertaking. He has not brought evidence of value of this business nor has he made a full disclosure in relation to it.
Ms Dorrough submitted that the Court should take into consideration the well-established principle that s.75(2) is not to bring about equality to bring about fairness.
It was further submitted that the husband should make good all the outstanding indebtedness to the (omitted) Bank and that the wife should receive any funds that are left over after that payment. The only possible way that the outstanding indebtedness to the bank could occur is by the wife making the payments that the husband has failed to do.
The proper approach to determination of a property application
The way a Court approaches a property application under section 79 of the Family Law Act 1975 is, first of all, to follow the principles set out by the High Court of Australia in Stanford v Stanford[2].
[2] [2012] HCA 52; (2012) 47 Fam LR 481; FLC 93-518
First, the Court must consider the requirements of subsection 79(2) of the Act, which prescribes:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
The High Court held in Stanford at [37] that the court must first identify the exiting legal and equitable interests of the parties in the property.
Second, although s.79 confers a broad power on a court to make a property settlement order, “it is not a power that it to be exercised according to an unguided judicial discretion” (at [38]).
The third principle, and perhaps the most important, is:
…whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property, which is fixed by reference to the various matters (including financial contributions) set out in s. 79(4)[3].
[3] [2012] HCA 52 at [40]
Thus, the decision in Stanford means that the Court must consider the requirements of s.79(2) before embarking on the four step process set out by the Full Court of the Family Court of Australia in Hickey & Hickey[4].
[4] [2003] FamCA 393; (2003) 30 Fam LR 35; FLC 93-143
In Hickey, the Full Court set out a process of four inter-related steps that must be taken by a court when determining a property application:
Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss. 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss. 79(4)(d), (e), (f) and (g) (“the other factors”) including …the matters referred to in s.75(2) so far as they are relevant…Fourthly, the Court should …resolve what order is just and equitable in all the circumstances of the case.[5]
[5] [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143 at [39] per Nicholson CJ, Ellis & O’Ryan JJ
It is neither contradictory nor redundant to consider again whether a proposed order is just and equitable under s.79(2), because the Court is considering the matter having undertaken the three previous steps referred to in the Hickey decision.
Just and equitable
The parties have been separated since 27 February 2014. On 7 October 2015 the wife filed an Application for Divorce which is returnable on 10 December 2015.
It is evident that the marriage has irretrievably broken down. It is clearly in the best interests of both parties to resolve the issues between them so that they may both move on with their lives.
I am satisfied that it is just and equitable in all the circumstances to make orders for the settlement of the parties’ property.
The property and liabilities of the parties
The wife’s solicitor told the Court that there is no asset pool.
In her Financial Statement filed on 23 January 2015 the wife claimed that her assets were:
a)A Smart Access account with the (omitted) Bank with a balance of $202.00;
b)A (omitted) saver account with the (omitted) Bank with a balance of $268.00;
c)A Holden Barina motor car with an estimated value of $4,000.00;
d)Household contents with an estimated value of $1,000.00; and
e)An interest in a superannuation plan operated by (omitted) with an estimated value of $56,084.00.
Also in her Financial Statement, the wife claimed that her liabilities at the time were:
a)A personal loan from the (omitted) Bank with an estimated amount owing of $33,998.00;
b)A (omitted) Bank MasterCard with an estimated debit balance of $2,046.00; and
c)A (omitted) Bank Visa Card with an estimated debit balance of $2,679.00.
In his Financial Statement filed on 27 April 2015, the husband disclosed his assets as:
a)An account with the (omitted) Bank with a balance of $2,800.00;
b)An account with the (omitted) Bank in the name of (omitted) with a balance of “Nominal”;
c)A 100% interest in the business known as (omitted) with a value of “NIL”;
d)Household contents with an estimated value of $1,000.00;
e)A personal DVD collection with an estimated value of $1,000.00; and
f)An interest in a superannuation plan with (omitted) Super with an estimated value of $8,000.00.
The husband disclosed an amount owing to the Australian Taxation Office of an estimated $1,000.00 as his only liability.
Non superannuation asset pool
On that information, which appears to be rather sketchy and not jointly agreed upon, the parties’ non superannuation assets would appear to amount to $10,270.00, of which $5,470.00 is in the name or possession of the wife and $4,800.00 is in the name or possession of the husband.
Liabilities
On that same information, the parties’ liabilities amount to $39,723.00, of which the sum of $38,723.00 appears to be owing by with wife and only $1,000.00 by the husband.
The net non-superannuation asset pool
By deducting the total liabilities of $39,723.00 from the non-superannuation assets of $10,270.00, I arrive at a debit balance of $29,453.00.
Superannuation
On the information from the parties’ Financial Statements, the parties’ superannuation assets amount to an estimated total of $64,084.00, of which $56,084.00 is in the name of the wife and $8,000.00 is in the name of the husband.
Net asset pool
By adding the total of the parties’ superannuation entitlements, namely $64,084.00, to the net total of the non-superannuation asset pool, being DR$29,453.00, I arrive at a total of $34,631.00.
The parties’ contributions
The evidence as to the parties’ respective contributions is sparse, save as to the fact that I accept the credibility of the wife’s evidence. It appears that I should accept the submission of the wife’s solicitor about contributions, where she submits:
It is likely that the Wife made a greater financial contribution during the course of the marriage but it would be difficult for the Court to make a finding that either party made a greater financial contribution than the other save that the Wife went into debt for the Husband to invest in a business.[6]
[6] Outline of Case Document page 3 paragraph [8]
It is the wife’s evidence that on 12 December 2013 she obtained a personal loan from the (omitted) Bank on the request of the husband for his sole use. The funds, namely $20,000.00, were transferred to the husband’s bank account in his sole name. The wife deposed that:
The Respondent was to make the payments each month on this outstanding loan. He ceased making these ongoing payments on this loan on or about 22nd May 2014. I have had to continue to make the payments to service this loan.[7]
[7] Affidavit of Ms Appleton 21.1.2015 at [5]
The wife deposed in her affidavit of 21 November 2015 that during her relationship with the husband she had the major responsibility of running the parties’ lives, saying:
I did all the majority of all the house chores. I assisted Mr Draper to run his business, and I was employed in paid work throughout our relationship.[8]
[8] Affidavit of Ms Appleton 21.11.2015 at [24]
I have no difficulty in finding that the parties’ contributions should be assessed as equal during the term of the parties’ cohabitation.
The effect of any proposed property order upon the earning capacity of either party
Subsection 79(4) of the Family Law Act 1975 requires at paragraph (d) that the Court consider the effect of any proposed order upon the earning capacity of either party to the marriage. In my view, the proposed orders will not have any effect upon either party’s earning capacity.
Relevant matters referred to in subsection 75(2)
The Court is required by s.79(4)(e) to consider the matters referred to in subsection 75(2) so far as they are relevant.
The husband was born on (omitted) 1971. He is now 44 years of age. He appears to be in good health.
The wife was born on (omitted) 1980. She is therefore 35 years of age. She, too, appears to be in good health.
The husband operates a business called (omitted) and states in his Financial Statement that his total average weekly income from this activity is an estimated $1,500.00. It is curious that this business appears to have no assets and no value.
The wife is employed as a (occupation omitted) and states in her Financial Statement that her weekly before tax income is $1485.00.
There is no child of the marriage.
Neither party claims to have any responsibility to support any other person.
The husband was living with one Ms L. He stated in his Financial Statement that she had an estimated average weekly income of $1,000.00. However, from the wife’s affidavit of 21 November 2015, it appears that Ms L and the husband are no longer in a relationship. She deposed that Ms L told her that the husband made her sell her car for $12,000.00, which was less than it was worth, so that he could pay the sum of $12,500.00 to the wife by 3 November 2015. Ms L told the wife that she put the money straight into the husband’s bank account. It is the wife’s evidence that she has not received any money from the husband.
It is submitted on behalf of the wife that the Court should take into account the husband’s behaviour under s.75(2)(o) of the Act:
any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
From the wife’s evidence, a pattern of behaviour emerges on the part of the husband, namely obtaining money from women with whom he has been in a relationship at the time to use for his own purposes. In this case, the wife has been left with a debt to the (omitted) Bank which she obtained by way of a personal loan, to provide the husband with the sum of $20,000.00 to use in his business. She is the person to whom the bank will look for repayment, not the husband, as it is a personal loan to her.
As Ms Dorrough submits, the husband cannot be relied on to make any more repayments to the bank and the wife will be obliged to keep on making the payments until the loan is paid out.
Just and equitable
Again, the Court must consider whether the proposed orders are just and equitable. The wife seeks a lump sum of $20,000.00, from which she will pay the outstanding amount to the (omitted) Bank. Otherwise, it would appear that the parties retain their interests in the respective superannuation funds and any items of personalty standing in their own names or in their possession.
I am satisfied that in all the circumstances the proposed orders are just and equitable.
Costs
The wife seeks an order for her costs. I have already made orders for costs of the day in respect of the mentions on 7 October and 3 November 2015.
The question of costs in proceedings under the Family Law Act 1975 is governed by the provisions of s.117 of the Act. Subsection 117(1) contains a general statement that, subject to certain other considerations, each party to proceedings under the Act should bear his or her own costs. However, subsection 117(2) provides that if the Court is of opinion that there are circumstances that justify it in doing so, the Court may, subject to subsection (2A) (relevantly) and the applicable Rules of Court, make such order for costs as the Court considers just.
Subsection 117(2A) provides that in considering what order (if any) should be made under subsection (2), the Court shall have regard to the matters set out in paragraphs (a) to (g) of the subsection.
If the Court decides that there are circumstances that justify it in making an order for costs, what must then be decided is the quantum, or amount of costs to be awarded. It is the usual case that where costs are awarded against a party they are awarded on a party and party basis. Costs would normally be awarded in accordance with the Court scale, which in this case is contained in Part 1 of Schedule 1 to the Rules.
Costs will only be awarded on an indemnity basis (also known as a solicitor-client basis) where there are unusual or exceptional circumstances (see Colgate Palmolive Co v Cussons Pty Ltd[9]; In the Marriage of Kohan[10] and Prantage & Prantage[11]).
[9] [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248
[10] (1992) 16 Fam LR 245; (1993) FLC 92-340
[11] [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544
It appears to me that the following matters under s.117(2A) are relevant:
a)the financial circumstances of the parties are such that neither party has an excess of funds but the wife has been left with a debt to the (omitted) Bank;
b)neither party is in receipt of a grant of legal aid;
c)the wife has been wholly successful in the proceedings; and
d)the conduct of the parties is a significant factor.
No criticism can be made of the conduct of the proceedings by the wife. However, the husband negotiated a settlement at the Conciliation Conference but no orders were made by the Registrar. When the matter came back to Court, at which time the husband was to provide a cheque to pay the agreed amount, he reneged on the settlement and did not pay. He then failed to appear on the next occasion, which led the matter being listed for an undefended hearing. He failed to appear at the undefended hearing.
This factor alone is sufficient to justify an order for costs. It is settled law that there is nothing to prevent any one factor in s.117(2A) being the sole foundation for an order for costs (see PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL[12]).
[12] [2005] FamCA 158; (2005) 33 Fam LR 109
This is not a matter where the circumstances are so unusual or exceptional that an order for indemnity costs would be justified. I propose to make an order for costs according to the Court scale in Part 1 of Schedule 1 to the Rules. I propose to allow the lump sum of $2,048.00 provided by Item 1 together with the amount of $4,365.00 for preparation under Item 6 and the daily hearing fee in Item 13 for a half day hearing being $1,024.00.
This comes to a total of $7,437.00. I have already allowed the amount of $1,100.00 as costs of the day for 7 October and 3 November.
I will order accordingly.
I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Associate:
Date: 1 December 2015
Key Legal Topics
Areas of Law
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Family Law
Legal Concepts
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Costs
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Remedies
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Procedural Fairness
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