Barajas & Frye (No 2)

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Barajas & Frye (No 2) [2024] FedCFamC1F 200

File number: SYC 5751 of 2022
Judgment of: MCGUIRE J
Date of judgment: 3 April 2024
Catchwords: FAMILY LAW - COSTS - Application by wife seeking an order that the husband pay the costs of a Review Application on an indemnity basis - Order that husband pay wife’s costs on a party and party basis
Legislation: Family Law Act 1975 (Cth) ss 117 and 117(2A)
Cases cited:

Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225

Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116

Munday v Bowman (1997) FLC 92-784

Sfakianakis & Sfakianakis (2019) 59 FLR 419; [2019] FamCAFC 54

Division: Division 1 First Instance
Number of paragraphs: 40
Date of hearing: 12 March 2024
Place: Hobart via Microsoft Teams:   delivered Melbourne
Counsel for the Applicant: Ms Watson
Solicitor for the Applicant: Watson Law Pty Ltd
Counsel for the Respondent: Mr Manning
Solicitor for the Respondent: Maning Lawyers

ORDERS

SYC 5751 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS FRYE

Applicant
AND:

MR BARAJAS

Respondent

ORDER MADE BY:

MCGUIRE J

DATE OF ORDER:

3 APRIL 2024

THE COURT ORDERS THAT:

1.Mr Barajas ‘the husband’, pay Ms Frye’s (‘the wife’) costs of and incidental to the Application for Review filed 28 July 2023, subsequently amended 19 August 2023 and the Application in a Proceeding filed by the wife on 11 October 2023 in a sum of $20,000 such to be paid within 30 days of the date of these Orders.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym of Barajas & Frye has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

McGuire J:

APPLICATIONS

  1. On 7 December 2023 I handed down orders and Reasons on a Review Application brought by the husband, Mr Barajas,[1] in respect of orders by a senior judicial registrar (“SJR”) made 28 July 2023 providing inter-alia that the husband pay to the wife interim spousal maintenance in a quantum of $1,270 per week.

    [1] “The husband”.

  2. My orders confirmed the decision of the SJR.  The husband’s obligation for interim spousal maintenance was back dated to 3 February 2023 with the husband given four calendar months to make…

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Details
Case
[2024] FedCFamC1F 200
Decision Date

CaseChat Overview and Summary

In the case of Barajas & Frye (No 2), the wife, Ms Frye, sought an order that the husband, Mr Barajas, pay her costs on an indemnity basis for a Review Application concerning spousal maintenance and related issues. The husband opposed the application and argued that any costs should be awarded on a party and party basis. The Federal Circuit and Family Court of Australia was tasked with deciding whether to grant the wife's application for indemnity costs or to limit the costs to a party and party basis.

The court examined several factors under section 117 of the Family Law Act 1975, including the financial circumstances of the parties, their conduct during the proceedings, and the necessity of the Review. The wife, who is not in employment and relies on child support and the former matrimonial home, has limited income and no direct income from the family business. The husband, who continues to operate the business and has directed significant funds towards litigation, was found to have discrepancies in his financial disclosures. The court also considered the husband’s ability to meet any costs order immediately and the suggestion to delay payment until the substantive financial litigation is settled.

The court concluded that the circumstances justified an order for costs on a party and party basis, given the husband's capacity to fund litigation and the wife's limited financial resources. The court ordered that Mr Barajas pay Ms Frye's costs of the Review Application and related proceedings in a sum of $20,000 to be paid within 30 days of the order.

Orders

Orders of the court

SYC 5751 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS FRYE

Applicant

AND:

MR BARAJAS

Respondent

ORDER MADE BY:

MCGUIRE J

DATE OF ORDER:

3 APRIL 2024

THE COURT ORDERS THAT:

1. Mr Barajas ‘the husband’, pay Ms Frye’s (‘the wife’) costs of and incidental to the Application for Review filed 28 July 2023, subsequently amended 19 August 2023 and the Application in a Proceeding filed by the wife on 11 October 2023 in a sum of $20,000 such to be paid within 30 days of the date of these Orders.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

The application is opposed. Alternatively, counsel for the husband argued that should the Court be persuaded towards an order for costs then such costs should be awarded only on a party/party basis in accordance with more general practice.RELEVANT BACKGROUND The parties commenced cohabitation in 2013 and were married in 2014. There is one child of the parties being X (aged eight years). X lives primarily with the wife. The husband contributes $60 per week child support for X. The wife has three children from a previous relationship and two of those continue to live in the wife’s family unit where one of the children, E (aged 14), remains dependant. During the relationship the parties operated a business, C Company. The parties are equal shareholders. The husband is the sole director. The husband terminated the wife’s employment on 12 September 2022. The business was incorporated as B Pty Ltd in mid-2020. The evidence is that the wife receives no direct dividend or other income from the business and hence the application for spousal maintenance. The husband commenced substantive proceedings in this Court in August of 2022. The SJR made orders inter-alia on 28 July 2023 for the husband to pay interim spousal maintenance in a quantum of $1,270 per week to the wife and until further order with the first payment to be made by 4:00pm on 28 July 2023. The husband sought a Review of that decision.RELEVANT LAW – COSTS Matters of costs are provided for at s 117 of the Family Law Act 1975 (Cth) (“the Act”) where there is a general rule at subsection (1) that each party to proceedings under this act shall bear his or her own legal costs. That general rule is, however, subject to a discretion being available for a court to make an award for costs if there are justifying circumstances. The term “justifying circumstances” should not be read as synonymous with “extraordinary circumstances”. At subsection (2A) and in considering whether, and what, if any, orders should be made for costs under subsection (2), the Court is mandated to have regard to the following factors:(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 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, and 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 proceeding;(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.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Nevertheless, there remains a discretion to make an order for indemnity costs as emphasised by the Full Court in Sfakianakis & Sfakianakis[10] where their Honours said:9.The ordinary position in proceedings under the Family Law Act 1975 (Cth) (“the Act”) is that each party is to bear his or her own costs (s 117(1)). Where the Court is of the opinion that circumstances justify it in doing so, the Court may make such order as to costs as it considers just (s 117(2)). Thus, an order may be made for the payment of costs on an indemnity basis, although such orders are exceptional…10.It is, however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words “such order as to costs … as the court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well-known example is assessment on a trustee basis, which is more generous than party and party costs, but falls short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party costs nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a “special costs order”.CONSIDERATION[10] (2019) 59 FLR 419; [2019] FamCAFC 54.Section (2A)(a) the financial circumstances of each of the parties to the proceedings; The wife is not in employment. She has the care of the parties’ eight year old daughter. The wife receives just $60 per week for child support. She does not receive dividends or income from the business despite her shareholding. She does, however, continue to live in the former matrimonial home. The husband’s sworn Financial Statement of 14 November 2023 discloses an income from all sources of $1,384 per week and expenditure of $1,258 per week. I found, however, some discrepancies and omissions in his evidence as to his detailed financial situation. The husband retains the benefit of the business and its corporate entity. Despite his claims as to financial difficulty, he continues to operate the business. He was able to direct expenditure of $74,000 – $123,000 to Supreme Court litigation involving the wife and her son and since separation. The 2023 Company Financial Statements indicate a loss for the year of $10,487. Counsel for the husband in this argument as to costs again raises the husband’s current capacity to immediately meet any costs order and suggests that, should there be an award for costs, then payment be delayed until settlement of the parties substantive financial litigation in circumstances where the husband’s claimed financial situation remains untested by full cross‑examination and where the wife remains in residence of the major asset of the parties being the former matrimonial home.Section 117(2A)(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;