Barnes and Barnes
[2012] FMCAfam 321
•5 April 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BARNES & BARNES | [2012] FMCAfam 321 |
| FAMILY LAW – Application for costs following interim property application – conduct of the parties – whether indemnity costs should be awarded – matters to be considered. |
| Family Law Act 1975, s.117 Federal Magistrates Court Rules, Rule 21 |
| Kohan & Kohan (1993) 92-340 at 79,614 Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 Latoudis v Casey (1990) 170 CLR 534 |
| Applicant: | MS BARNES |
| Respondent: | MR BARNES |
| File Number: | ADC 4047 of 2011 |
| Judgment of: | Brown FM |
| Hearing date: | 3 April 2012 |
| Date of Last Submission: | 3 April 2012 |
| Delivered at: | Adelaide |
| Delivered on: | 5 April 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Howe |
| Solicitors for the Applicant: | Howe Martin & Associates |
| Counsel for the Respondent: | Mr Holland |
| Solicitors for the Respondent: | S J McKinnon & Associates |
ORDERS
The husband pay the wife’s reserved costs of the hearing of 2 December 2011 before Turner FM in an amount of $900.00.
It is certified pursuant to Rule 25.15 of the Federal Magistrates Court Rules that it was reasonable for each party to engage an advocate to appear in the aforementioned hearing.
The interim applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Barnes & Barnes is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 4047 of 2011
| MS BARNES |
Applicant
And
| MR BARNES |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to these proceedings are Ms Barnes “the wife” and
Mr Barnes “the husband”. The proceedings relate to the settlement of matrimonial property.
The parties were married [in] 1984. They are now divorced. For a period of time, they were separated under the one roof. Undoubtedly, this was a difficult and stressful period for each of them.
The wife is an [occupation omitted]. She earns a modest income. The husband is a self-employed [occupation omitted]. In her statement of financial circumstances, the wife estimates her average weekly income as being $577.00. The husband estimates his weekly income to be on average $1,000.00.
On 18 October 2011, solicitors instructed by the wife wrote to the husband informing him that the wife intended to instigate proceedings for the settlement of matrimonial property. Following the dispatch of this letter, the wife asserts that the following occurred:
“After receipt of the letter of 18 October 2011, my husband told me that he was going to take the Mazda motor vehicle from me. He told me that he would need to sell it, so that he could pay off some debts. He rummaged through my handbag, found the keys to the Mazda, and has taken it from the former matrimonial home. I assume that he has stored it at someone’s home. I need the vehicle to travel to and from work and for various other purposes and I seek an urgent order that my husband return the vehicle to me and that he be thereafter restrained from taking it from my possession.”[1]
[1] See wife’s affidavit filed 26 October 2011 at paragraph 17
The husband asserts as follows in respect of the Mazda motor vehicle.
“I had a discussion with my wife about the Mazda motor vehicle and our assets generally after discovering that my wife had been taking money out of our joint Streamline Account often on a daily basis and with consecutive withdrawals. The keys to the motor vehicle were on the table. We each have a set of keys. I am prepared to undertake to this Honourable Court not to sell the motor vehicle which is in my possession. Both my wife and I use the motor vehicle. My wife “car pools” with a girlfriend and does not use the car every day. My wife also has access to the Hyundai motor vehicle which she purchased primarily for our daughter’s use.”[2]
[2] See husband affidavit filed 21 November 2011 at paragraph 24
This was the factual background to the wife commencing proceedings, in this court, on 26 October 2011. On a final basis she seeks an order that she retain the Mazda motor vehicle. On an interim basis, she sought the return of the vehicle to her, as well as some items of jewellery.
The husband responded to this application on 21 November 2011. On a final basis, he seeks to retain the Mazda motor vehicle. In addition, on an interim basis, he sought an injunction preventing the wife from removing the vehicle from his possession.
The wife asserts that the vehicle was purchased for the sum of $37,000.00 in November 2010. The husband does not significantly disagree with this value, but asserts that it was purchased by means of money provided by his parents.
I am the docket Federal Magistrate in respect of the proceedings. This means that, wherever practicable, I should deal with all applications and procedural matters coming before the court. The ideal being that I should be responsible for the management of the matter from start to finish.
The parties’ competing applications first came before me on 23 November 2011. Both parties were represented by experienced legal practitioners. Besides the issue relating to the Mazda motor vehicle, there were some other issues in dispute between the parties.
On 23 November, the parties were able to agree on a number of these significant interim issues. In particular, they agreed to be each restrained from disposing of items of personal property in their respective possessions. They also agreed as to how the proceeds of sale of a piece of real property should be dealt with pending the final outcome of the proceedings before them.
They remained at logger heads over who of them should have possession of the Mazda motor vehicle. On this basis, the parties joined together to seek that an urgent interim hearing be appointed to resolve the issue.
The date appointed for the hearing was 2 December 2011. I was not available to deal with the matter. In my absence, Turner FM dealt with the matter. On 6 December 2012, after hearing submissions from each of the parties, she delivered her decision in the matter.
Her Honour ordered that the husband forthwith deliver the motor vehicle in question to the wife for her sole use. In addition, the costs of the interim hearing were reserved.
On 6 February 2012, the wife filed an application in which she seeks that the husband pay her costs of and incidental to her interim application in respect of the Mazda motor vehicle on an indemnity basis. In addition, she seeks that those proceedings be certified as being fit for counsel. These reasons for judgment are concerned with this issue of costs.
In her reasons for judgment, Turner FM, after summarising the respective positions of the parties, provided the following rationale for her decision:
“There are two motor vehicles, there are two parties. Fairness, logic and commonsense dictate that each party should have access to a motor vehicle, and as the husband needs the utility for his work purposes, then the wife should have use of the Mazda.”
She characterised the decision of the husband to remove the car from the wife as being an exemplar of “bloody-mindedness”.
The wife’s application was listed before me. The parties agree that considerations of practicality dictate that I should determine the cross-application, notwithstanding that I did not determine the interim issue.
The wife’s solicitor, Mr Howe has sworn an affidavit in support of the application for costs. To this application is annexed correspondence, which passed between the parties, prior to the hearing of 2 December 2011. The most significant piece of correspondence is a letter dated 24 November 2011, in which Mr Howe indicates that, in the event the husband is unsuccessful in his application in respect of the Mazda motor vehicle, his client will seek costs on an indemnity basis. It should also be said that earlier correspondence specifically sought the return of the motor vehicle.
The legal principles applicable
Section 117(1), abolishes, for the purposes of Family Law Act proceedings the general rule that in civil proceedings costs follow the event. Section 117(2) then provides the Court with a general discretion to make costs orders if it is of the opinion that there are circumstances that justify it in so doing. Section 117(2)(a) sets out the matters that the Court shall have regard to.
Matters delineated in section 117(2)(A) include the following: the financial circumstances of the parties concerned; the conduct of the parties to the proceedings; whether the proceedings were necessitated by the failure of a party to comply with previous Court orders; whether one of the parties to the proceedings have been wholly unsuccessful, and any other relevant matter.
The Court’s discretion to make an order of costs is a wide one but it is one which must be exercised carefully and judicially. Orders for indemnity costs are extraordinary or exceptional. In Kohan & Kohan[3] the Full Court of the Family Court characterised an order for indemnity costs as “being a very great departure from the normal standard.”
[3] See Kohan & Kohan (1993) 92-340 at 79,614
Accordingly, the Full Court said “the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind.” In Colgate-Palmolive v Cussons Pty Ltd[4] it was held that indemnity costs are not commonly ordered and will only be ordered if the Court is satisfied that there is “some special or unusual feature of the case to justify the Court in departing from the ordinary practice” of ordering the costs be paid on a party and party basis.
[4] See Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
There is no closed category of cases in which indemnity costs might appropriately be ordered, but in Colgate Palmolive v Cussons Pty Ltd, the Court said that the kinds of situation in which indemnity costs might be considered were where a litigant had:
·commenced or continued an action knowing it to have no chance of success;
·made false or irrelevant allegations of fraud;
·made groundless allegations which prolong a case; and
·imprudently refused an offer to compromise.
The Court has a wide discretion as to the calculation of costs. Pursuant to Rule 21.022 of the Federal Magistrates Court Rules:
“In making an order for costs in a proceeding the Court may:
(a) set the amount of costs; or
(b) set the method by which the costs be calculated; or
(c)refer the costs for taxation under order 62 of the Federal Court Rules or under order 38 of the Family Law Rules; or
(d)set a time for payment of costs which may be before the proceedings is concluded.”
However, pursuant to Rule 21.10:
“Unless the Court otherwise orders a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
(a) costs in accordance to schedule 1 and
(b) disbursements properly occurred.”
Pursuant to Rule 21.15 the court may certify that it was reasonable to employ an advocate to appear for a party in a proceedings. As previously indicated, the wife seeks such a certification.
In section 3(2) of the Federal Magistrates Act, the legislature sets out the objects of the Federal Magistrates Court as follows:
to enable the Federal Magistrates Court to operate as informally as possible in the exercise of judicial power; and
to enable the Federal Magistrates Court to use streamlined procedures; and
to encourage the use of a range of appropriate dispute resolution processes.
No doubt, the intention of the legislature in this regard was to reduce the cost of court proceedings pursuant to Federal legislation and provide litigants with a cheap and cost effective means of accessing justice within the Federal jurisdictional sphere. Rule 21.10 creates a scale of costs by reference to the occurrence of fixed events. In my view, the creation of such a scale was designed to help achieve these objects.
Conclusions
For obvious reasons, family law proceedings, dealing as they do with arrangements for children and the division of property in the aftermath of relationship failure, very often evoke strong emotional responses from those involved in them. In such circumstances, it is not uncommon for objectivity to be lost and for resources to be committed to litigation which are disproportionate to the monetary value of what is at stake. The subject matter of family law matters is both intensely personal and private.
Again, it is not uncommon for specific events or even items of property to become emblematic of the hurt and disempowerment a person feels at both the end of a marriage and a subsequent involvement in legal proceedings. The human content of such cases may make it difficult for their participants to be completely dispassionate about how the proceedings are to be conducted. People do not always behave well when under stress or deeply unhappy.
In addition, given the content of such proceedings, it may be difficult to discern whether one party or the other has been successful in the final outcome, particularly where that outcome involves the balancing of closely related and sometimes countervailing considerations. In cases involving children, where it is invariably the case that it is beneficial for parents to at least have the semblance of a workable relationship together, it is not usually helpful to create a perception that one party has won the case and the other has lost it.
For these reasons, the general rule in family law proceedings is that the parties to them should bear their own costs. In my view, I must be careful before departing from this general rule.
In this matter, for reasons which are not entirely clear to me, the possession of the Mazda motor vehicle seems to have become an emblem of all the unhappiness and frustration unleashed from the parties at the end of their long marriage, particularly in the difficult circumstances in which they had to share the same premises. These feelings seem to have been more pronounced in the husband than the wife, as Turner FM’s findings demonstrate.
The intellectual and evidentiary issues surrounding the motor vehicle were not complex. When compared to the overall pool of their assets, its value was not significant. Both parties had rational arguments to demonstrate why he or she should have its use, at least in the interim, until the final resolution of their competing claims.
From the wife’s point of view, her case was based on claims of utility and logistics. She had need of a car and she did not have one. Previously she had used the Mazda. The husband had access to another vehicle.
From the husband’s perspective, his parents provided the funds used to purchase the vehicle. He claimed to have a need for the Mazda because of a recently commenced position as a salesman. Turner FM found this argument unconvincing. He also, initially at least, had criticisms of the wife for accessing common property without reference to him.
Her honour also found that the vehicle in question had been purchased in joint names. Accordingly, as a matter of strict legal application, each was entitled to possess and use the Mazda in the period following their separation.
The sad fact of this case is that a disproportionate level of resources has been applied to the issue of who of the parties should use the car in the period leading up to trial. It would have been prudent for the parties to have reached a compromise about the matter and garnered their financial resources for more significant aspects of the case.
That being said, it seems to me that the litigation about the issue was completed in a pragmatic and cost effective manner. The hearing before Turner FM was short. The affidavit material concerned was concise. The issue was determined expeditiously. To the parties’ mutual credit, they were able to resolve consensually other interim property issues, particularly those relating to the wife’s jewellery.
As I have already observed, it is not uncommon for parties to behave, in matrimonial property cases, in a manner which can be objectively regarded as imprudent or even selfish and spiteful. As matters ultimately transpired, it was contrary to Mr Barnes’ interests to have persisted with his objection to returning the Mazda to Ms Barnes, in cirucmstances where commonsense would appear to dictate that, given he had access to another vehicle and had superior financial resources to the wife, it was highly probable that she would be successful in the matter.
In addition, the wife’s solicitors made it clear to the husband and those advising him that the wife regarded the issue of the Mazda as significant to her and, as such, she would not be minded to waver in her resolution that considerations of fairness, when coupled with her need for the vehicle, dictated that she should have it, certainly pending trial. In these circumstances, it seems to me that the husband was somewhat reckless, when objectively judged, in his defence of the matter. However, I also accept that, in a subjective sense, the issue was of some importance to him.
The wife stance in the proceedings has been completely vindicated by the subsequent outcome. She has been wholly successful in them. The behaviour of the husband, when objectively judged by Turner FM, has been described as being “bloody-minded”. These two factors, to my mind, dictate that there should be a departure from the general rule in family law proceedings that each party should bear their own costs. However, the case is not so unusual that it would be appropriate to make an order for indemnity costs.
Although Mr Barnes’ conduct in regards to the Mazda motor vehicle cannot be described as being beyond reproach, the purpose of an award of costs is not to punish him for his behaviour. Rather it is to partially reimburse a successful litigant for costs actually incurred and provide compensation for the financial disadvantage arising as a result of being a successful litigant in proceedings. The rationale for such an order being that it is:
“… just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory.”[5]
[5] See Latoudis v Casey (1990) 170 CLR 534 per McHugh J
In calculating the quantum of costs to be awarded, I am of the view that I should adopt a pragmatic and expeditious approach. The parties are unlikely to be able to agree an appropriate amount for the costs to partial reimburse the wife. The cost of a taxation is likely to be disproportionate to the amount of costs ultimately calculated. In addition, such a taxation is likely to take some time to be finalised.
In these circumstances, it seems to me to be in keeping with the ethos of the Federal Magistrates Act to loosely adopt the fixed event scale provided by schedule one of the Court’s Rules.
The lump sum allowable for an interim or summary hearing as a discrete event is $1,465.00 plus the daily hearing fee for any necessary court attendance. The fee for a half-day hearing is $880.00 plus a 50% advocacy loading. This makes a total of $2,785.00.
Given that the preparation of the initiating documents encompassed matters other than the Mazda motor vehicle; given that the parties were also able to comprise other of the interim issues raised in this material; and given that the interim hearing took only around half an hour; this amounts seems to me to be excessive.
In all the circumstances of the case, I propose discounting this amount by approximately two thirds, given the length of the hearing and the low level of complexity surrounding it. I will make an order for costs in the wife’s favour in an amount of $900.00.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgement.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Brown FM
Date: 5 April 2012
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