BURTON & BURTON

[2020] FamCA 610

FAMILY COURT OF AUSTRALIA

BURTON & BURTON [2020] FamCA 610

FAMILY LAW – COSTS – Where the husband seeks costs in the interim against the wife – Where both parties are in troubling financial circumstances – Application for costs reserved until finalisation of the proceedings.  

Family Law Act 1975 (Cth) s 117(2A)

APPLICANT: Mr Burton

RESPONDENT: Ms Burton

FILE NUMBER: WOC 307 of 2019

DATE DELIVERED: 16 July 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: Dealt with by written submissions in chambers

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Melissa Gillies SC submitted on behalf of the applicant

SOLICITOR FOR THE APPLICANT: Hansons Lawyers

COUNSEL FOR THE RESPONDENT: Mr Christopher Lawrence submitted on behalf of the respondent

SOLICITOR FOR THE RESPONDENT: Maguire & McInerney Lawyers

Orders

1. The husband's costs of the Application in a Case filed by the wife on 22 March 2019 and the subpoena objections hearing listed on 10 July 2019 are reserved to the finalisation of these proceedings.

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  Burton & Burton 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).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: WOC 307 of 2019

Ms Burton

Applicant

And

Mr Burton

Respondent

REASONS FOR JUDGMENT

The proceedings

1. On 12 November 2019 I dismissed an application by the wife, Ms Burton, for orders that the husband, Mr Burton, pay interim spouse maintenance.  On 4 December 2019 the husband executed an application that the wife pay his costs of the interim maintenance proceedings and in relation to objections to subpoenae, together with a supporting affidavit.  This application was received in the Registry on approximately 11 December 2019 and was brought to my attention on that day.  I directed that the husband's application for costs be listed for mention and directions in chambers on 30 January 2020.  On that date I made the following directions:

   1.The respondent will file and serve a Response to an Application in a Case and supporting affidavits within 21 days of the date of these Orders.

   2.The applicant will file and serve written submissions in support of his Application in a Case within a further period of 14 days.

   3.The respondent will file and serve written submissions in support of her Response to an Application in a Case within a further period of 14 days.

   4.Thereafter Justice Stevenson will determine the competing applications in relation to costs, unless either or both parties satisfies the court that there is a necessity for the proceedings to be listed for oral submissions.

2. Accordingly it is incorrect to assert that the husband's costs application was filed out of time, as was submitted by counsel for the wife.  The application was prepared and forwarded to the Registry for filing within the time prescribed by Rule 19.08.

3. The orders sought by the husband were as follows:

   1.That the Wife pay the Husband's costs of and incidental to the spouse maintenance hearing listed on 21 June 2019, 10 July 2019 and 8 October 2019 on an indemnity basis being the sum of $62,483.50.

   2.That in the alternative to Order 1 the Wife pay the Husband's costs of and incidental to the spouse maintenance hearing listed 21 June 2019, 10 July 2019 and 8 October 2019 fixed at the sum of $60,000.00 or otherwise any other amount which is agreed or assessed.

   3.That the Wife pay the Husband's costs of and incidental to the subpoena objection hearing listed on 10 July 2019 on an indemnity basis being the sum of $17,742.17.

   4.That in the alternative to Order 3 the Wife pay the Husband's costs of and incidental to the subpoena objection hearing listed on 10 July 2019 fixed at $12,000.00 or otherwise any other amount which is agreed or assessed.

   5.That the Wife pay the Husband's costs of this Application.

4. The husband appeared to acknowledge that the wife has no present capacity to pay his costs.  He proposed that his costs be met from the wife's share of the net pool of assets upon a final resolution of the proceedings.  The husband requires that the wife pay his costs on an indemnity basis.  His costs include the fees of senior counsel whom he engaged for the conduct of proceedings for interim spouse maintenance.

Consideration

1. In accordance with section 117(1) of the Family Law Act 1975 (Cth) (“the Act”), as a general rule each of the parties will bear his or her own costs. Section 117(2) provides that the court may make such order for costs as it deems just, if there are circumstances which warrant a costs order. Section 117(2A) sets out certain considerations to which the court must have regard in determining whether to make an order for costs. Clearly, therefore, a determination whether there should be an order for costs is a discretionary exercise.

2. Section 117(2A) provides as follows:

   (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.

Section 117(2A)(a) the financial circumstances of each of the parties to the proceedings

1. In the interim proceedings, I found that the husband lacked the financial capacity to pay interim spouse maintenance to the wife.  I found further that the wife appeared to have made a choice not to exercise her income-earning capacity, at least in part, at the time of the interim spouse maintenance hearing.

2. The reality is that each of the parties is in an unenviable financial situation.  Obviously, they would be better advised to attempt to resolve their differences on a final basis rather than continue to incur large debts for legal costs.  I have no reason for confidence that they will attempt to settle the proceedings, prior to a final hearing.

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

1. Not applicable.

Section 117(2A)(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

1. The husband relied heavily upon the wife's conduct in support of his application for costs.  He claimed that she should never have lodged objections to subpoenae which she issued and that she should have conceded this issue before 21 June 2019.  The husband alleged that the wife should not have pursued her application for interim spouse maintenance.

2. The husband raised an issue as to whether he and his lawyers had adequate notice of the listing of the subpoena objections on 11 June 2019.  In my view, this supposed issue is but a distraction for present purposes.  The bench sheet of the Federal Circuit Court for 11 June 2019 stated:

   …

   B.The Respondent Husband contends that he was given little or no notice of this listing of the objections before the Court today.

   C.This court has no capacity to deal with these issues before the next listing on 21 June 2019 at 11.30 am before Judge B Smith.

3. In circumstances where the proceedings were adjourned on 11 June 2019 because the court lacked capacity to deal with the issues, I do not understand why the wife should pay the husband's costs of this event.  Certainly I can see no basis upon which the wife should bear the husband's costs of this court event on an indemnity basis.

4. On 21 June 2019 the wife withdrew her objections to the subpoenae issued on behalf of the husband.  I accept that the husband and his legal advisers then required time to inspect and consider the documents produced, before the interim spouse maintenance hearing could proceed with fairness to both parties.  I accept also that the Federal Circuit Court Judge indicated that there was insufficient time to deal with the issues both of interim spouse maintenance and the subpoena objections on 21 June 2019.

5. It seems that the proceedings were then adjourned to 10 July 2019.  On that date the Federal Circuit Court transferred the proceedings to the Family Court of Australia, apparently on the basis of lack of capacity to deal with the matter.  In this context, the Federal Circuit Court referred to the volume of documents and the estimated length of the hearing.  I do not see how the wife can reasonably be held responsible for the costs of this court event.

Section 117(2A)(d)  whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

1. Not applicable.

Section 117(2A)(e)  whether any party to the proceedings has been wholly unsuccessful in the proceedings

1. The wife was wholly unsuccessful in her application for interim spouse maintenance.

Section 117(2A)(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

1. At various times during the period leading up to the hearing before me on 8 October 2019, both of the parties made offers to settle the interim spouse maintenance issue.  On 2 July 2019 the husband offered to pay to the wife by way of partial property settlement a sum of $5,285 within seven days.  This amount was expressed to consist of $440.42 per week "for 12 weeks while she looks for alternative employment opportunities or otherwise attends to the following NDIS training".  This offer included a further payment of $5,000 which “funds are to be used by [the wife] to gain NDIS accreditation…" and would be paid directly to "the training organisation".  The husband's offer continued as follows:

   Your client can thereafter continue to receive ongoing payments for caring for her brother and continue operating the F Business thereafter.

2. In a letter dated 4 July 2019 the wife's solicitor commented, inter alia, as follows in relation to this offer of the husband:

   Our client has never provided care to her brother.  Our client's brother resides in Victoria and this would make it physically impossible to care for her brother.  Our client did previously manage her brother's support services under his Individual Support Package, however, due to legislative changes under the NDIS which her brother is now a recipient of, family members are no longer allowed to claim for such a service which is supported in the evidence already provided to your office.  Accordingly, this is not an option.

3. This same letter from the wife's solicitors contained a counter offer in the following terms:

   1.That both parties do all things and sign all documents necessary to convert the mortgage payments to interest only.

   2.That pending further order, the Husband be responsible for all mortgage repayments in respect of the former matrimonial home.

   3.That the Husband have exclusive occupation of the former matrimonial home.

   4.That pending final property settlement the Respondent Husband pay to the Applicant Wife the sum of $350 per week by way of spousal maintenance.

   We note that your client is able to apply the $14,285 that he offers in your letter dated 2 July 2019 to the above and the further income in respect of the reduced mortgage repayments and storage payments to pay our client.

4. On 9 July 2019 the husband's solicitors wrote to the wife's lawyers with a further offer as follows:

   1.That within 14 days the Husband pay to the Wife the sum of $10,000.00 by way of a lump sum;

   2.That on or before 1 April 2020 the Husband shall pay to the Wife the sum of $2,000.00 by way of a lump sum;

   3.That the payments in 1 and 2 shall be characterised by the trail [sic] Judge at the final hearing;

   4.That the Wife's application for spouse maintenance be dismissed;

   5.That each of the Wife and the Husband's costs of and incidental to the spouse maintenance application be reserved;

   6.That the Wife, within seven days, sign all necessary documents to allow the Husband to apply to the mortgagee for an alteration to their home loan repayments so the husband can thereafter attend to interest only payments on the home loan pending further Order;

   7.That the Husband shall have exclusive occupation of the former matrimonial home to the exclusion of the Wife and the Wife shall not attend at property for any reason without the written prior consent of the Husband.

5. On the same day the wife's solicitor responded with a counter offer as follows:

   1.That within 14 days the Husband shall pay to the Wife the sum of $10,000.00 by way of a lump sum;

   2.That on or before 1 April 2020 the Husband shall pay to the Wife the sum of $5,000 by way of a lump sum;

   3.That the payments in 1 and 2 shall be characterised by the trial Judge at the final hearing;

   4.That each of the Wife and Husband's costs of and incidental to the spouse maintenance application be reserved;

   5.That the Wife, within 7 days, sign all necessary documents to allow the Husband to apply to the mortgagee for an alteration to their home loan repayments so that the husband can thereafter attend to interest only payments on the home loan for a period of no more than 6 months;

   6.That the Husband shall have exclusive occupation of the former matrimonial home to the exclusion of the Wife and that the Wife shall not attend that property for any reason without the prior written consent of the Husband.

6. On 30 September 2019 the solicitors for the wife conveyed the following offer of settlement to the husband's lawyers:

   1.That your client pay to our client a lump sum of $20,000 on 30 March 2020 by way of spousal maintenance.

   2.That in the event that all current issues before the Court are not resolved by 30 March 2021, your client pay to our client a further lump sum of $20,000 on 30 March 2021 by way of spousal maintenance.

   3.That each party pay their own costs.

   It would appear that there was no reply to this offer.

Section 117(2A)(g)  such other matters as the court considers relevant

1. This litigation as yet is in its early stages and shows no indication of resolution prior to trial, on both parenting and financial issues.  A Child Inclusive Conference Memorandum dated 20 January 2020 contained potentially disturbing information in relation to the current parenting arrangements for the parties' three children, X, Y and Z, who are aged 13, 12 and 3 years respectively.  X and Y expressed clear dissatisfaction with the current arrangements and concern at their father's ongoing denigration of their mother.  A Family Report was recommended but it seems most unlikely that there will be any resolution of parenting issues for the foreseeable future.

2. The Family Consultant reported that the husband "raised ... the difficulties for him and him with the children in sharing the waiting area with Ms Burton."  The CIC Memorandum noted also that the husband "enquired with reception about the possibility of him and the children being placed in a separate room to Ms Burton."

Conclusion

1. As indicated above, both parties find themselves in unfavourable financial circumstances.  The orders sought by the husband, being a delayed payment of his costs, will do nothing to alleviate his current financial difficulties.  He seeks that the wife ultimately pay to him a sum of $80,226, $72,000 or such sum as may be agreed by the parties or assessed independently.  On the basis of the Financial Statements relied upon by the parties at the interim hearing, the husband seeks from the wife an amount equivalent to approximately 7% to 8% of the net non-superannuation assets excluding any tangible commercial value of the B App.

2. Prior to a final resolution of the proceedings, circumstances may well intervene which would compromise justice and equity to such an outcome.  As noted, it seems likely that this litigation is in its infancy in relation to both property and parenting issues.  I have referred above to the live dispute between the parties in relation to the care of their children and to the husband's apparent antagonism toward the wife.

3. In the period leading to the interim hearing on 8 October 2019, each of the parties made offers of settlement.  The last offer was made by the wife on 30 September 2019 and, apparently the husband elected to make no reply.  The interim spouse maintenance hearing then took place on 8 October 2019.

4. It seems to me that the dictates of justice and equity require that the husband's costs should be reserved to the finalisation of the proceedings.  The fact that the wife was wholly unsuccessful in her application for interim spouse maintenance is only one relevant factor and not the determinant of the issue of costs.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 15 July 2020.

Associate: 

Date:  16 July 2020