Carmel-Fevia and Fevia
[2013] FamCA 220
FAMILY COURT OF AUSTRALIA
| CARMEL-FEVIA & FEVIA | [2013] FamCA 220 |
| FAMILY LAW – COSTS |
| Family Law Act 1975 (Cth) |
| Davida and Davida (Costs) [2011] FamCAFC 61 Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor [2005] FamCA 158; (2005) 33 Fam LR 123 Penfold v Penfold (1988) CA 4; (1980) 144 CLR 311 |
| APPLICANT: | Ms Carmel-Fevia |
| RESPONDENT: | Mr Fevia |
| FILE NUMBER: | MLC | 4389 | of | 2008 |
| DATE DELIVERED: | 10 April 2013 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 28 March 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Bartfeld QC with Ms Vohra |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherrie Fildes |
| COUNSEL FOR THE RESPONDENT: | Mr Kirkham QC with Mr Thompson |
| SOLICITOR FOR THE RESPONDENT: | Saxbys Lawyers |
Orders
That the husband pay to the wife 50 per cent of the costs of the hearing from 5 November 2011 until its conclusion on a party and party basis as agreed and, in default of agreement, as assessed (including the costs of the cost application but not otherwise).
That the husband pay interest on the quantum ultimately decided as and from this day.
That for the purposes of determining the rate of such interest, rule 17.03 of the Family Law Rules 2004 shall apply.
To the extent that the application in a case and response thereto seeks other orders for costs arising out of the property proceedings, those paragraphs are dismissed.
IT IS CERTIFIED:
That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel including senior counsel and two counsel to attend.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Carmel-Fevia & Fevia has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 4389 of 2008
| Ms Carmel-Fevia |
Applicant
And
| Mr Fevia |
Respondent
REASONS FOR COSTS JUDGMENT
On 6 August 2012, I made property division orders between the husband and the wife. The wife now seeks costs against the husband and interest on any such order.
On 28 March 2013, after reading the written submissions filed on behalf of the wife, I heard submissions from counsel for both parties on the issue.
In my view, for the reasons that follow, it is appropriate to make an order for costs but not for the extent sought.
The law relating to costs in this jurisdiction was not disputed. In all proceedings under the Family Law Act 1975 (Cth) (“the Act”), the costs issue is governed by s 117 of the Act which provides the general rule that each party shall bear their own costs. That general rule is subject to a broad discretion allowing costs to be ordered in circumstances where the Court considers it is justifiable to make such an award. In the exercise of that discretion, the Court is required to have regard to a number of specified matters set out in s 117(2A).
Regard must be had to all of those matters but the discretion is wide. It is not necessary for the Court to be satisfied that all of the factors in s 117(2A) are satisfied (see Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor [2005] FamCA 158; (2005) 33 Fam LR 123).
The applicant for costs carries no special onus but the Court is required to find the justifying circumstance as the essential preliminary step before making any costs order (see Penfold v Penfold (1988) CA 4; (1980) 144 CLR 311). Thus, any one of the factors may become the sole foundation for an order for costs but on the other hand, all of the relevant factors must be taken into account before arriving at the decision. It is clear therefore that the Court’s discretion with respect to costs is broad. That discretion may include determining whether part or all of a litigant’s costs should be paid providing the circumstances meet the relevant criteria in the Act. That is relevant here as the wife seeks an order that all of her costs be paid by the husband on a party and party basis.
The material relied upon by each party was modest. The wife relied on the various findings I had made in the reasons for judgment and an affidavit by her solicitor. The husband relied upon the same reasons together with the parties’ respective trial affidavits, a response filed by the husband on 25 September 2012 and an affidavit sworn by his solicitor at that time.
In the submissions filed on behalf of the wife, it was said that in relation to the financial circumstances of each of the parties, the husband remained a man of immense wealth and this was a case where his agreed assets amounted to approximately $430 million. It was submitted that whilst the wife was now a wealthy person by virtue of the orders I have made, there was no comparison between the parties’ respective financial positions. The wife’s position is now as a result of the judgment, that she has approximately $24.56 million.
The husband pointed to the fact that there was no good reason to depart from the principle in s 117 because both parties had significant wealth despite the disparity. It was submitted on his behalf that because of paragraphs 36 to 39 of my judgment, to make an order for costs in favour of the wife meant that she would be “double dipping”. I reject that because I included the various sums paid by the husband and received by the wife, in the “pool” of property owned by the parties and factored into my determination that the wife was to retain what she had kept which included costs she had paid to her lawyers.
The wife also submitted that I should take into account as part of the husband’s wealth, the fact that he had instituted proceedings in the Supreme Court of Victoria against the solicitors who drafted the agreement that was ultimately set aside giving rise to the proceedings before me. The wife tendered the Supreme Court writ filed on behalf of the husband and the husband tendered the defence to that writ. The wife pointed to the fact that in the particulars set out in the pleading, the husband asserted an anticipation that having to pay costs for these proceedings before me. The husband said that the compromise did not entitle me to draw any conclusion as to what portion was costs. Interestingly, the defence to that writ contains a synopsis of my judgment from the perspective of the defendant to the husband’s proceedings. It was alleged that I had erred and that the husband had not appealed. For the purposes of the current determination, I have ignored that part of the pleading because it was agreed between counsel that subsequent to the filing of the defence, the husband compromised the position in that proceeding. Thus, that proceeding has little, if any, impact on the financial circumstances in any event.
I find therefore that both parties could afford their own legal fees but that the husband is in a far superior financial position to the wife.
The wife then addressed the issue of the conduct of the parties, that is, as to the way the proceedings were conducted. The written submission filed on behalf of the wife runs to 11 pages and is comprehensive but it includes two matters about which I must make comment because the document is part of the court record.
Notwithstanding the way the submission was drawn, it was conceded that it was overlooked by counsel for the wife that their instructing solicitor wrote on 29 October 2012 that the wife would not pursue as a cost issue, the fact that she was put to significant expense in engaging an expert which ultimately resulted in agreement being reach that the husband’s wealth was about $430 million.
The second matter relates to the submission’s criticism about cross-examination of the wife. It was submitted by the wife that she was inappropriately cross-examined about her contribution and about things said in a hearing before Carter J and that overall, that cross-examination was directed not only to a denial of her asserted contribution but also to effectively vilify her.
After hearing from Mr Kirkham QC and Mr Thomson on behalf of the husband, I am quite satisfied to find that nothing either of those counsel did vilified the wife nor was it inappropriate to cross-examine her as she was having regard to the way she conducted her case. More particularly, I do not find that the husband’s counsel misled the Court or breached any professional conduct rules by that cross-examination. To the extent that the written submission of counsel for the wife, particularly in paragraphs 10.11 and 10.14 might be construed to suggest otherwise, I strongly reject it. It was submitted on behalf of the wife by her senior counsel that the husband instructed his counsel to take the course that was undertaken. I am not convinced that that submission is correct and even if it was, having regard to the findings I made, the husband had every justification for testing the evidence as it was presented.
In relation to the cross-examination of the wife, it was submitted on behalf of the husband that not only was the cross-examination proper having regard to the way the case was put by the wife but that I had found that to be the case. A court should be cautious about imputing to counsel any forensic approach by that counsel on the basis that it was undertaken on instructions. I am conscious that the rules of the Victorian Bar provide the following:
16.A barrister must not act as the mere mouthpiece of the client or of the instructing solicitor and must exercise the forensic judgments called for during the case independently, after appropriate consideration of the client’s and the instructing solicitor’s desires where practicable.
17.A barrister will not have breached the barrister’s duty to the client, and will not have failed to give reasonable consideration to the client’s or the instructing solicitor’s desires, simply by choosing, contrary to those desires, to exercise the forensic judgments called for during the case so as to:
(a)confine any hearing to those issues which the barrister believes to be the real issues;
(b)present the client’s case as quickly and simply as may be consistent with its robust advancement; or
(c)inform the court of any persuasive authority against the client’s case.
18.A barrister must not make submissions or express views to a court on any material
I accept that nothing counsel for the husband did was improper.
The wife submitted that the husband had resisted discovery. He had admitted that he could meet whatever order was made against him but had conducted the case on the basis that the assessment of the wife’s claim was based on her needs only. There is a whole raft of issues arising out of the way this case was conducted. Whilst the husband tested the evidence, the wife in my view ran her case in such a way that she pursued the discovery process unnecessarily. Indeed, I ruled against the wife in respect of that issue before the trial began.
The wife submitted that she had to run up further costs because there had been a dispute about the actuarial rate to be applied in relation to her claim. That was disputed by counsel for the husband who pointed to the fact that there had been a ruling on the issue specifically to avoid the actuary having to be called. I accept that submission.
The wife’s submission also asserted that the husband had failed to meet timelines for orders and had specifically run the case based on conduct. At paragraphs 171 to 178 of the judgment I endeavoured to set out why I thought the wife’s “wish list” which included understandable expenditure in an affluent family was not unreasonable. I found there were other expenses such as taking a companion with her on holidays which I thought unreasonable in the mind of most people in the community. Having regard to what I said in the judgment, nothing I could see justified a finding that the husband ran a case based solely on conduct. The husband was criticised for cross-examining the wife about her drinking problem. The husband had conducted the case on the basis that if the drinking by the wife was indeed admitted as a problem, it must have affected her position as a homemaker and parent in circumstances where she was portraying her contribution as the best she could do. In my view none of this assists me in determining the way in which the proceedings were conducted. It was only after significant cross-examination of the wife that she conceded that her affidavit had not included the flaws in her behaviour. In my view therefore, neither party covered themselves in glory in relation to the conduct of the proceedings.
Thus far, having regard to the way in which the parties addressed s 117(2A), I would find there is no basis to say there is a justification from departing from the principle that each party pay their own costs.
The wife then submitted that because the husband had submitted that the wife should be paid $6.35 million in addition to what she already had, he had been wholly unsuccessful. That pleading was in the context of the wife seeking over $50 million. I found the appropriate figure to be $20 million.
In Davida and Davida (Costs) [2011] FamCAFC 61 Finn J with whom O’Ryan and Ainslie-Wallace JJ agreed:
The other justifying circumstance is the husband’s relative success. True it is that the relevant paragraph in s 117(2A) refers to a party being “wholly unsuccessful”, but I think it fair to say that the practice has been to look at what one might term the relative merits of success or lack of success between the parties, even if necessary doing that under the last matter mentioned in s 117(2A), being any “other” matter.
True it is that the husband did not achieve an outcome that he wanted but then neither did the wife. Having regard to my reference to the judgment in Davida, I consider “wholly unsuccessful” means that there was no justifiable basis for the position adopted having regard to the outcome of the proceedings. Being “wholly unsuccessful” must look at not just the outcome but the position adopted by the parties as well. Accordingly, I would not find that the husband has been wholly unsuccessful.
The final submission on behalf of the wife was that an offer in writing had been made to settle the proceedings. On 4 November 2011, just after the luncheon adjournment and bearing in mind that this was the first day of the hearing, the wife offered to settle on an overall basis that the husband pay her $17.5 million and she otherwise retain her assets. Thus, by virtue of conducting the trial, she came out $2.5 million better off. However, as a result of that trial, nine days of costs were incurred to prove the point.
Counsel for the husband referred to the opening by senior counsel for the wife in which it was said that this was a very hard case “to call”. It was indeed submitted by counsel for the husband that this case was unique. No-one was able to draw my attention to any case in the history of the Court where property of this magnitude was being divided. It was submitted on behalf of the husband that having regard to that, the offers by both parties were within the generous ambit within which both parties might disagree. That was because in response to the wife’s offer of $17.5 million, the husband offered $10.5 million plus she keep what she had. It was submitted therefore that the offers were within an appropriate range and therefore the offer of the wife ought not be the justifying or determinative factor on the issue of costs.
In Davida (supra) Finn J referred to any other relevant factor and it seems to me that this is one of those considerations that tips the balance in favour of the wife being entitled to some costs. Whilst both offer and counter offer were within a reasonable proximity of the ultimate outcome with the wife being closer, this case highlights the difficulty in making offers where there is no authority to guide the outcome and the judicial discretion is very much at large. However, with the amount of money involved in this case, both parties litigated to the full and as I have found above, pursued every point that was relevant. That being the case, each knew the risk they were taking. Because of the complexity of the argument, it is reasonable to say that it is a justifying circumstance to make an order for costs if a trial is lengthy in a discretionary area where every issue that is relevant has to be covered. Each knew what was at stake and each took that chance. The wife was more successful than the husband and having regard to the offer that she made being closer to the ultimate outcome, in my view the husband should contribute something towards her costs.
It is not appropriate in my view that the whole of the costs of the wife be so paid. The line was clearly drawn between the parties on 5 November 2011 when their respective offers were seriously put. Each party had an entirely different agenda up until that time. Thus to the extent that the wife is entitled to any costs, it should only be in respect of the trial hearing itself. Having said that however, she pursued an argument in which she had to make concessions that were not otherwise evident from her case when it began and only became clear when the evidence was comprehensively tested. To that extent, the husband had little choice but to cross-examine as he did. Unscientific as it may be, I propose to exercise my discretion and say that the wife’s legal costs of the nine days on a party and party basis should be paid by the husband but only to the extent of 50 per cent.
I invited parties to put submissions to avoid the prospect of an assessment but neither party indicated that was possible and accordingly if there is no agreement between the parties, that assessment will have to be undertaken by a registrar reading these reasons and noting that I have certified for senior counsel and two counsel as part of the final order.
I have already mentioned that the wife sought interest on the quantum. As this costs issue has dragged on by virtue of the inability of the parties to agree on a date and where there was a rejection it being dealt with on written submissions, there were adjournments. The first the Court was able to hear the matter was in early March when because of my inability to find the time that day, the matter was adjourned to 28 March. In my view, even though the wife may be paying interest on her legal bills if they are still outstanding, interest should run from today. That may also be an incentive for the parties to reach agreement quickly.
The final issue relates to the costs of the costs application itself. In my view, the husband’s position was always that no costs should be paid and again, he has taken the relevant commercial risk. In my view the costs of the hearing on 4 March and 28 March 2013 should be paid by the husband on a party and party basis.
I certify that the preceding Thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 10 April 2013.
Associate:
Date: 10 April 2013
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