Berfield & Berfield (No 4)
[2024] FedCFamC1F 881
•19 December 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Berfield & Berfield (No 4) [2024] FedCFamC1F 881
File number: SYC 482 of 2021 Judgment of: HARPER J Date of judgment: 19 December 2024 Catchwords: FAMILY LAW – COSTS – Where the siblings of the husband were joined as Second and Third Respondents (“the siblings”) in the substantive proceedings by the wife – Where the siblings seek costs of proceedings on an indemnity basis against the wife – Where $100,000 of the adjustment payment by the husband to the wife pursuant to the final orders is held on trust as security for the siblings’ costs application – Where the wife was wholly unsuccessful in her equitable claim against the siblings – Indemnity costs not established – Wife to pay 50 per cent of the siblings’ costs of proceedings and the application for costs on a party/party basis as agreed or assessed – Payment in first instance to be from funds held on trust by wife’s solicitors. Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 4, 79, 117
Civil Procedure Act 2005 (NSW) s 98
Uniform Civil Procedure Rules 2005 (NSW) r 42.1
Cases cited: Abano & Abano (No 2) [2024] FedCFamC1F 630
Atkins & Hunt (Costs) [2017] FamCAFC 131
Berfield & Berfield [2024] FedCFamC1F 193
Berfield & Berfield (No 2) [2024] FedCFamC1F 573
Berfield & Berfield (No 3) [2024] FedCFamC1F 714
Harris & Dewell and Anor (No 2) (2018) FLC 93-863; [2018] FamCAFC 180
Moorcroft & Moorcroft (2020) 60 Fam LR 361; [2020] FamCAFC 83
Parke & The Estate of the Late A Parke (2016) FLC 93-748; [2016] FamCAFC 248
Prantage & Prantage (Costs) [2014] FamCA 850
Division: Division 1 First Instance Number of paragraphs: 34 Date of last submissions: 21 November 2024 Date of hearing: On the papers Place: Sydney Solicitor for the Applicant: Marsdens Law Group The First Respondent: Did not participate Counsel for the Second and Third Respondents: Mr Katsinas Solicitor for the Second and Third Respondents: Simone Legal ORDERS
SYC 482 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS B BERFIELD
Applicant
AND: MR C BERFIELD
First Respondent
MR D BERFIELD
Second Respondent
MS E BERFIELD
Third Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
19 DECEMBER 2024
THE COURT ORDERS THAT:
1.The Applicant Wife (“wife”) pay 50 per cent of the costs of the Second and Third Respondents of:
(a)the proceedings from the date of their joinder; and
(b)the Application in a Proceeding filed 25 September 2024,
on a party and party basis as agreed or assessed.
2.The liability of the wife arising from Order 1 be satisfied in the first instance from the funds held in the trust account of the wife’s solicitors pursuant to Order 1 dated 24 October 2024, up to the amount which exhausts those funds, and thereafter for any balance owing by the wife and unpaid, by the wife.
3.There be no order as to costs of the Application in a Proceeding filed on 22 October 2024.
4.All outstanding applications and responses be otherwise dismissed.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 pseudonyms Berfield & Berfield have been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
These are property proceedings under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”) between the wife, Ms B Berfield (“the wife”) who is the applicant in the substantive proceedings and the husband, Mr C Berfield (“the husband”) who is the first respondent in the substantive proceedings.
On 19 July 2022 orders were made at the request of the wife to join the husband’s siblings, Mr D Berfield and Ms E Berfield, as second and third respondents. Intending no disrespect, for clarity I will refer to them in these reasons as Mr D Berfield and Ms E Berfield and collectively as “the siblings”.
On 28 August 2024 I delivered final judgment: Berfield & Berfield (No 2) [2024] FedCFamC1F 573 (“final judgment”). The relevant procedural history and background to these proceedings are set out in that judgment, I will not repeat what I have set out in there unless necessary for this judgment.
The husband and the siblings are co-owners of a parcel of real estate (“Suburb G”) in equal shares as tenants in common. In addition to her application for property division pursuant to s 79 of the Act against the husband, the wife made a claim for purely equitable relief in respect of Suburb G which affected the proprietary interest of the siblings. I rejected this part of her claim.
The siblings have applied for costs orders against the wife. The husband sought an order for costs in his favour in his Further Amended Response to Initiating Application filed 11 March 2024. By consent it was ordered on 30 September 2024 for the wife to pay the husband’s costs of proceedings from the adjustment sum of the final judgment. This reduced the adjustment sum by $60,000.
On 29 June 2023 orders were made by a senior judicial registrar that the wife pay the siblings the sum of $829.99 at final property settlement in relation to her non-compliance with previous orders. In their submissions dated 23 October 2024 the siblings stated these costs have not been paid and sought an order for payment. The wife submitted she has since complied with the costs order and payment was made on 5 November 2024. The delay was caused by her not receiving settlement monies from the husband until 1 November 2024. I accept the wife has satisfied the costs order of 29 June 2023.
Order 1 of the final judgment provided for the husband to pay the wife the cash adjustment sum of $396,352 to effect the final property division between the spouse parties. On 22 October 2024 the siblings filed an Application in a Proceeding seeking this order be stayed and varied until further order to the effect that the husband is only required to pay the wife the adjustment sum of $229,023.70 by 27 October 2024, and the husband retain, or alternatively pay into the Court, the sum of $167,328.32 pending determination of the siblings’ costs application.
On 24 October 2024 orders were made that $100,000 of the adjusting sum payable by the husband to the wife pursuant to the final orders be held in the trust account of the wife’s solicitors pending determination of the siblings’ application for costs (Berfield & Berfield (No 3) [2024] FedCFamC1F 714). It was also ordered that the costs of the siblings’ Application in a Proceeding filed on 22 October 2024 be determined with their costs application against the wife.
ORDERS SOUGHT AS TO COSTS
By way of their Application in a Proceeding filed 25 September 2024, the siblings seek a range of orders in the alternative. In summary they seek their costs of the proceedings against the wife, and their costs of making the costs application, both on an indemnity basis, or as agreed or assessed. They also seek orders compelling the husband to pay to them the quantum of any costs order in their favour, from the cash adjustment sum of $396,352 which was payable to the wife. However, that proposed order was superseded by the orders made on 24 October 2024.
In her response the wife sought an order dismissing the siblings’ application and an order for costs in her favour for the costs application itself. In the alternative she sought that any costs order against her be made on a party and party basis in relation to the substantive proceedings only and no order as to the costs of the costs application itself.
PRINCIPLES REGARDING COSTS
In proceedings to which the Act applies, the starting point is that each party shall bear his or her own costs (s 117(1)). If, however, the Court is of the opinion that there are justifying circumstances, the Court may make such order as to costs and security for costs as the Court considers just (s 117(2)), being costs in the conventional sense, that is, as indemnity for another’s liability for professional fees and out of pocket expenses reasonably incurred in the litigation.
The Court has a wide discretion, which is to be exercised judicially (Parke & The Estate of the Late A Parke (2016) FLC 93-748; Atkins & Hunt (Costs) [2017] FamCAFC 131). When considering what, if any, order for costs should be made, the Court must have regard to the factors set out in s 117(2A):
(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.
No one factor in s 117(2A) has priority, nor must more than one factor be satisfied; rather, any one factor may be sufficient (Prantage & Prantage (Costs) [2014] FamCA 850 at [12]).
I have had regard to all the factors set forth in s 117(2A).
DISCUSSION
Section 117(2A)(a) – the financial circumstances of the parties
The final judgment provided for the wife to retain net assets of $822,301 including the cash payment from the husband of $396,352.
The wife submitted that her financial circumstances are challenging. She has an ongoing disability, is unable to work and receives no income. Because $100,000 is retained on trust she received only $36,656.14 of the cash adjustment paid from the husband after the balance was applied to legal fees and prior costs orders.
The siblings relied on the principle that impecuniosity is not a bar to the making of a costs order with respect to the wife’s arguments of financial difficulty. Neither sibling claimed to be a “wealthy individual” and they submitted the cost of proceedings had eroded their retirement savings, delayed medical treatment and disrupted holiday plans. Nonetheless both siblings are employed, hold one-third interests in Suburb G which is valued at $1,633,333 and each hold at least $100,000 in savings, amongst other assets including real property.
I am not persuaded the financial circumstances of either party justifies a costs order in their favour. Nor am I persuaded that the financial circumstances of the wife discourage a costs order being made against her, particularly where $100,000 is held on trust for the purposes of security for payment for this costs application.
Section 117(2A)(c) – the conduct of the parties
The siblings argued the wife brought broad, poorly formulated claims against them and caused unnecessary delay to the proceedings. As I remarked in the final judgment at [57], the wife failed to file a Case Outline or written submissions that articulated her case against the siblings and her arguments were left to be gleaned from the points of claim, evidence and oral submissions.
The siblings submitted the wife increased costs when on 13 March 2024 the final hearing was adjourned part heard, in part so the wife could obtain further expert evidence to support her claims against the siblings, which she did not.
The wife disagreed that she caused unnecessary delay. The need for further expert evidence was not in contention and she argued that prior to trial she made efforts to obtain such evidence but encountered slow responses from the husband’s solicitors. She pointed to the fact that, prior to the adjournment on 13 March 2024, the parties sent joint correspondence to my Chambers on 7 March 2024 seeking adjournment because of the absence of expert evidence. In Berfield & Berfield [2024] FedCFamC1F 193 at [15] I observed that when the wife’s application for adjournment was subsequently heard on 11 March 2024 “the respondents all changed their positions” by resisting an adjournment, having only days earlier embraced it, and concluded “Clearly, there is considerable force in the wife’s submission that this should be viewed as opportunistic, rather than as a seriously considered position”.
I am not persuaded that the conduct of the wife in the proceedings is a factor justifying a costs order in the siblings’ favour.
Section 117(2A)(e) – whether either party has been wholly unsuccessful
The siblings submitted the wife was wholly unsuccessful in her equitable claims against them, and but for those claims they would not have been necessary parties to the proceedings. At all times the siblings and the husband denied the wife’s claims for equitable relief and sought their dismissal.
The wife submitted that though her equitable claims were unsuccessful, she was not wholly unsuccessful in the substantive proceedings. She argued her claim in equity had merit as against the siblings and it was not found that their joinder was unnecessary. The siblings consented to being joined to proceedings in the orders of 19 July 2022 and no application was filed by them to be removed as parties to the proceedings.
As I set out in the final judgment the wife’s claims in equity were not severable from the matrimonial cause between the spouse parties and/or was itself a separate matrimonial cause as defined under paragraph (f) of the definition in s 4 of the Act.
Nonetheless, I am satisfied that the wife was wholly unsuccessful as against the siblings, who are the parties seeking costs. Her overall success in the proceedings against the husband does not change this reality. Her claims against the siblings were connected to that matrimonial cause but were distinct. But they required the presence and representation of the siblings throughout the trial.
Section 117(2A)(g) – such other matters
Although s 117 governs the question of costs in relation to claims made against third parties to a marriage (Abano & Abano (No 2) [2024] FedCFamC1F 630 at [11]–[13]), I take into account that if the wife brought her equitable claims in another court exercising general law jurisdiction, costs would, in the ordinary course, follow the event in accordance with s 98 of the Civil Procedure Act 2005 (NSW) and r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW).
CONCLUSION ON JUSTIFYING CIRCUMSTANCES
I am satisfied that the wife’s lack of success against the siblings justifies an order for costs in their favour. The question thus remains the basis on which costs should be awarded.
INDEMNITY COSTS
The siblings sought indemnity costs in the amounts of $152,128.32 for the substantive proceedings and $15,242.50 for their costs application, giving a total sum of $167,370.82.
Indemnity costs are awarded only in exceptional circumstances and are rare (Moorcroft & Moorcroft (2020) 60 Fam LR 361; Harris & Dewell and Anor (No 2) (2018) FLC 93-863).
The siblings submitted that indemnity costs were warranted as their costs were a direct result of the wife transforming, in their view, an otherwise straightforward property proceeding between the spouse parties into an equitable proceeding against third parties. They claimed the wife demonstrated a “wilful disregard” to the known facts and applicable law, and that as she was properly legally advised, she should have known she had no chance of success in what should be considered a “hopeless case”. They point to the wife’s awareness that the siblings and the husband denied the existence of a trust and yet she persisted in a “scattergun” approach to litigation to ultimately present a case with substantial evidentiary deficiencies that necessitated adjournments. They claim the ensuing delay and increased costs were solely attributable to the conduct of the wife during proceedings.
I do not accept these submissions. The equitable claims by the wife were not hopeless or bound to fail. I found that there was a common intention which arguably could have supported a constructive trust, even though this part of the wife’s claim ultimately failed for reasons of proportionality. I am not satisfied the siblings have demonstrated any exceptional factor which would justify indemnity costs.
CONCLUSION
I am satisfied that there should be a costs order in favour of the siblings. However, I am further satisfied that this costs order should be for a proportion only of their costs as agreed or assessed for both the substantive proceedings and their application for costs. In light of the wife’s parlous financial circumstances the appropriate proportion is 50 per cent. The funds of $100,000 held in the trust account of the wife’s solicitors, pursuant to the orders of 24 October 2024, should be the source of payment in the first instance.
The costs of the siblings’ Application in a Proceeding filed on 22 October 2024 is also to be determined with their costs application against the wife. No submissions were made regarding the costs of the application filed on 22 October 2024, accordingly each party shall bear their own costs.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 19 December 2024
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