C and C - [2002] FMCAfam 53

FEDERAL MAGISTRATES COURT OF AUSTRALIA

C & C

[2002] FMCAfam 53

FAMILY LAW — Costs — failure of either party to endeavour to resolve case before trial.

Applicant:

R M C

Respondent:

A D C

File No:

ZM 6576 of 2001

Delivered on:

15 February 2002

Delivered at:

Melbourne

Hearing Date:

15 February 2002

Judgment of:

Walters FM

REPRESENTATION

Counsel for the Applicant:

Ms Dellidis

Solicitors for the Applicant:

Hale & Wakeling

Counsel for the Respondent:

Mr Crockett

Solicitors for the Respondent:

Robert Wood & Associates

ORDERS

The husband pay the sum of $2,000.00 towards the wife’s costs of and incidental to this matter — such payment to be made on or before
30 June 2002.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

ZM 6576 of 2001

R M C

Applicant

And

A D C

Respondent

REASONS FOR JUDGMENT

(Ex Tempore)

In this matter the wife seeks an order that the husband pay her costs of and incidental to the husband’s form 12 application filed 25 September 2001 and the wife’s amended form 12B response filed 22 November 2001. In response the husband seeks that there be no order as to costs, or alternatively, that the wife’s application for costs be dismissed. The competing applications in relation to the subject of costs have their genesis in proceedings which took place before me on 22 November 2001. In the Reasons for Judgment, which were delivered on 26 November 2001,

I traced the history of the proceedings to a limited extent. I also referred to the relevant documents relied upon.
I made certain findings regarding the financial position of each of the parties, and regarding their approach to the proceedings generally.
The question of costs in family law proceedings is dealt with in section 117 of the Family Law Act. The trial judge, or Federal Magistrate, as the case may be, has a broad discretion in costs matters. To the extent that it is relevant, the Full Court will not ordinarily intervene unless the order is plainly unreasonable. Indeed, this Court has an almost unlimited jurisdiction in relation to costs — although any costs order must be just.
In that regard see Kelly v Kelly No 2 (1981) FLC 91-108, Hogan (1986) FLC 91-704 and I v I No 2 (1996) FLC 92-625. It is not the law that a costs order can only be made in a clear case. Thus, although a finding of justifying circumstances is an essential preliminary to the making of a costs order, there is no additional or special onus on an applicant for an order for costs. Although the general rule is that each party shall bear his or her own costs. That general rule is expressed to be subject to section 117(2) and must yield whenever the trial judge or Federal Magistrate, as the case may be, finds that there are circumstances justifying the making of a costs order (see Penfold (1980) FLC 90-800 at page 75053 and 4).
All admissible offers, whether or not they are subsequently withdrawn, can be taken into account in considering whether or not an order for costs should be made. That includes offers contained in correspondence in which it is stated that the letter in question will be used on the question of costs. In this case, it would appear that there was no correspondence or negotiation entered into between the parties with a view to resolving issues prior to trial.
I turn now to consider the relevant provisions of section 117(2A) which set out the matters which must be considered in determining what order, if any, should be made under section 117(2).
The first is the financial circumstances of each of the parties to the proceedings. I have dealt with the financial circumstances of each of the parties in the judgment which I have delivered. The husband has a significant income — which I mentioned in paragraph 27 of the judgment as being just over $86,000.00 per annum. He has very few assets. I found that the value of his assets and resources, which includes superannuation of about $24,000.00, exceeds the total of his liabilities by approximately $16,000.00. I made reference in subsequent paragraphs to other aspects of the husband’s financial position and his relationship with the person whom I described as J, his girlfriend.
I also dealt with the wife’s financial position, and in paragraph 35

I stated that the wife’s amended response revealed that she had property and financial resources valued at approximately $48,000.00 and at that time she had no liabilities. Counsel for the wife has drawn my attention to another part of the judgment where I stated that if it were not for the spousal maintenance that the wife receives and social security — and leaving aside the savings that she has at the moment — she would be destitute. She clearly does not have the ability to support herself.
That is a matter which, in my view, the husband well knew. It is clear, however, that if either of these parties have to meet legal costs associated with the proceedings there would be imposed upon them a very significant burden.
Section 117(2A)(b) requires the Court to consider whether either party is in receipt of assistance by way of legal aid and I am advised in this matter that neither party is in receipt of legal aid. I am advised, in the wife’s submissions, that the wife is ineligible for a grant of legal aid, given her savings. No doubt the husband would be ineligible for a grant of legal aid given his income.
Section 117(2A)(c) requires the Court to have regard to 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 party in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of fact, production of documents and similar matters. I agree with counsel for the husband in this matter — that this provision requires the Court to look at the parties’ conduct as a litigant, if you like, in the proceedings.
In relation to the types of matters that are set out in section 117(2A)(c), a simple finding to the effect that the husband may have borne resentment to the wife or that he was not a credible witness (for example) does not in itself fall directly within this particular provision — although it might be relevant under, for example, section 117(2A)(g). In the end, it seems to me that nothing turns on the conduct of the parties in relation to the proceedings.
My recollection is both the husband’s form 12 and the wife’s form 12B were amended at different times. Certainly the husband’s was amended at trial.
Having regard to the nature of the proceedings and the relatively short period of time that had elapsed between the filing of the application and the hearing of the matter, it seems to me that neither party can effectively be criticised in any way in relation to the manner in which they conducted the proceeding.
Section 117(2A)(d) requires the Court to take into account whether the proceedings were necessitated by the failure of a party to comply with previous orders. That would not appear to be a relevant consideration in this case.
Section 117(2A)(e) requires the Court to consider whether any party to the proceedings has been wholly unsuccessful in the proceedings. The wife argues that the husband was unsuccessful in that he failed to have the order for spousal maintenance discharged or suspended. The husband argues that the wife was unsuccessful because she failed to have his application simply dismissed. At the end of the day, though, the reality is that the principal request of the husband — his primary request — was that the spousal maintenance order be suspended for a period of time, and that it thereafter be discharged.
The way the document initially read, and the way that it was understood by the advisers of the wife until 21 November 2001 when paragraph 1 of the application was amended, was that the husband wished to discharge the spousal maintenance order forthwith. The consequences of a discharge of a spousal maintenance order are serious — and clearly so, having regard to the marital status of the parties (they were divorced in October 2001). Had the husband been successful with his initial claim (that is, that the spousal maintenance order be discharged in its entirety), then the effect would have been that, the parties having been divorced, there would soon have been an additional hurdle placed in the way of the wife, preventing her from making a fresh application for spousal maintenance.
It seems to me in the context of these proceedings that the wife was far more successful than was the husband. It is true the spousal maintenance order was reduced to some extent, but it was a modest order to start with and the effect, really, is that by keeping the order on foot, as the wife has succeeded in doing, she has left the door open to the possibility of a further variation in spousal maintenance at some time in the future — perhaps after the husband no longer has to meet the commitments that have been referred to in the judgment.
It is true, however, that neither party was wholly successful in the proceedings and neither was wholly unsuccessful. I do take into account, however, the fact that, for the reasons I have expressed, the wife was substantially more successful in the proceeding than was the husband.
Under section 117(2A)(f) the Court is required to take into account any offers that were made. Regrettably, in this matter neither party made any formal offers to the other. During the course of the submissions in relation to costs, I commented to counsel for the wife that, having regard to the likely cost of conducting the proceeding, the sensible approach may have been for the wife’s solicitors to contact the husband with a view to having an informal conference designed to reach agreement on the matters in issue in the proceedings, if at all possible.
Given that the wife had solicitors representing her, it seems to me that there is no reason why that conference could not have been conducted in a balanced and relatively amicable way. The husband could then have produced his material at an early stage and had it assessed, and some realistic attempt could have been made to find middle ground (if middle ground could indeed be found). Alternatively, the solicitors for the wife could have assessed the case and determined whether or not it was in the wife’s best interests to proceed.
Unfortunately that step was not taken and both parties simply prepared for the proceedings and the trial took place.
Section 117(2A)(g) requires the Court to have regard to such other matters as the Court considers relevant. During the course of submissions I made the comment that, in my view, the husband must have known that — having regard to the likely consequences to the wife in the event of the orders that he sought being granted — the wife would find it imperative to obtain legal advice in relation to the application and ultimately to be represented.
The wife has certain medical and other difficulties to which I have referred in the judgment. These are well known to the husband. Notwithstanding those difficulties, the husband took the approach that the wife had some limited earning capacity, and I dealt with that submission in the course of my judgment. In my view, the husband well knew when he commenced the proceedings that the likelihood was that the wife would have to incur substantial legal fees in trying to meet his application, and he well knew that he was not going to have to face equivalent costs. I find that the husband may well have had it in his mind that the simple making of the application and his perseverance with it, coupled with the wife’s difficulties from a medical and emotional point of view (which difficulties clearly impeded her ability to conduct the proceedings on her own), would put her at a disadvantage.
The husband may well have thought and hoped that she would be forced to capitulate rather than fight him (and thereby incur costs that bore no real relation to the effective benefit to either party if the matter was eventually litigated).
I take all the above matters into account.
I have seen the documents attached to the wife’s application for costs. In my view, it is inappropriate for the husband, if he is obliged to meet an order for costs, to have to pay an amount approaching $13,000.00 or more in relation to these proceedings. I have determined, taking into account the various matters to which I have referred, that it is appropriate that there be some order for costs in this matter, but that the quantum of costs sought by the wife is inappropriate.
The rules of this Court give me power to set the amount of the costs, set the method by which costs are to be calculated, or to refer the costs for taxation under the Family Law Rules or set a time for payment for costs (which may be before the proceedings have concluded). It seems to me that any further delay in this matter is inappropriate. Any requirement, for example, that costs be taxed is simply going to incur additional costs that these parties can ill afford.
The husband was unrepresented; the wife was represented but the husband well knew, as I have found, that the wife would have to be represented and that she would have no alternative but to endeavour to have his claim dismissed. However, the failure of each of the parties to endeavour to negotiate a resolution of the matter prior to the hearing, is not a matter that I wish to ignore (given, in particular, that the wife was represented by solicitors). It seems to me that it was incumbent upon the wife’s solicitors to take some steps to protect her position. For reasons which are unclear that step was not taken.
In the circumstances I propose to make an order which will, to some extent at least, distribute between the parties the burden of both of them in relation to the litigation process associated with this application. After all, they jointly failed to make use of the facilities provided by this Court (in the broadest sense), and neither made any real attempt to resolve the matter before it came on for trial. Accordingly, there will be an order that the husband pay the sum of $2000.00 towards the wife’s costs of and incidental to this matter — such payment to be made on or before 30 June 2002.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Walters FM

Associate:

Date: