Caughey & Peckham (No 5)

Case [2024] FedCFamC1F 431

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Caughey & Peckham (No 5) [2024] FedCFamC1F 431

File number(s): SYC 3782 of 2019
Judgment of: CHRISTIE J
Date of judgment: 25 June 2024
Catchwords: FAMILY LAW – COSTS – Where each party seeks costs of litigation that exceeded the length of the parties’ de facto relationship – Where there were a number of discrete interlocutory issues which the parties brought before the Court prior to a final determination – Where the final orders provided for the division of the net equity in the joint property so as to provide the de facto husband 85 per cent and the de facto wife 15 per cent – Where there are circumstances justifying the de facto wife to have her costs from the date of her offer of settlement to the date of the de facto husband’s offer as agreed or taxed on a party/party basis – Indemnity costs refused – Where there are circumstances justifying the de facto husband to have his costs at scale in relation to two discrete case management hearings and attendant applications    
Legislation: Family Law Act 1975 (Cth) s 117
Cases cited:

Colgate-Palmolive Co v CussonsPty Ltd (1993) 46 FCR 225

Fevia v Carmel-Fevia (Costs) [2010] FamCA 143

Hogan and Hogan (1986) FLC 91-704

Prantage & Prantage (2013) FLC 93-544

Division: Division 1 First Instance
Number of paragraphs: 54
Date of hearing: 18 June 2024
Place: Sydney
Counsel for the Applicant: Mr Givney
Solicitor for the Applicant: Apex Legal
Counsel for the Respondent: Mr Livingstone
Solicitor for the Respondent: Holmes Donnelly & Co Lawyers

ORDERS

SYC 3782 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS CAUGHEY

Applicant
AND:

MR PECKHAM

Respondent

ORDER MADE BY:

CHRISTIE J

DATE OF ORDER:

25 JUNE 2024

THE COURT ORDERS THAT:

1.Ms Caughey pay Mr Peckham’s costs of:

(a)the Application in a Proceeding dated 25 March 2022; and

(b)the Application in a Proceeding dated 8 June 2022;

such costs to be payable in accordance with the scale set out in the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

2.Mr Peckham pay Ms Caughey’s costs as agreed or taxed on a party/party basis from 7 November 2019 until 12 February 2024 excluding the costs of the applications in Order 1(a) and (b) above and the costs of the hearing on 29 October 2019.

3.The parties’ respective applications are 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…

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AGLC
Caughey & Peckham (No 5) [2024] FedCFamC1F 431
Case
[2024] FedCFamC1F 431
Decision Date

CaseChat Overview and Summary

The case of Caughey & Peckham (No 5) involved the applicants, Ms Caughey and Mr Peckham, who were in a de facto relationship and subsequently separated. The dispute centred on the division of their joint property and the associated costs of litigation. The court was tasked with determining the costs incurred by each party and deciding the appropriate allocation of those costs. The case was heard in the Federal Circuit and Family Court of Australia.

The primary legal issue before the court was the determination of the costs incurred by both parties during the litigation process. This included the costs associated with various interlocutory applications and hearings, as well as the final property adjustment proceedings. The court had to consider the financial circumstances of both parties, the nature and outcome of the various applications, and the offers of settlement made by each party.

The court held that Ms Caughey was not entitled to indemnity costs but was entitled to have her costs from the date of her offer of settlement to the date of Mr Peckham’s offer of settlement assessed on a party/party basis as agreed or taxed. This period included the costs of the threshold hearing and the accrued jurisdiction hearing. The court also determined that Mr Peckham was entitled to have his costs at scale for two specific case management hearings and their attendant applications. The court declined to fix costs except as specified and directed that the parties either agree on the costs or have them assessed.

The court's reasoning was based on the financial disparity between the parties, the nature of the interlocutory applications, and the offers of settlement. The court noted that while Mr Peckham had the financial capacity to pursue various interlocutory applications, Ms Caughey had to compromise her applications to save costs. The court found that the circumstances justified the de facto wife having her costs from the date of her offer of settlement to the date of Mr Peckham’s offer on a party/party basis, and the de facto husband having his costs at scale for two discrete case management hearings.

The final orders of the court required Ms Caughey to pay Mr Peckham’s costs for the applications dated 25 March 2022 and 8 June 2022, to be assessed according to the scale in the Federal Circuit and Family Court of Australia (Family Law) Rules 2021. Mr Peckham was ordered to pay Ms Caughey’s costs from 7 November 2019 until 12 February 2024, excluding the costs of the specified applications and the hearing on 29 October 2019, to be assessed on a party/party basis as agreed or taxed. The court dismissed the parties’ other applications for costs.

Orders

Orders of the court

SYC 3782 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS CAUGHEY

Applicant

AND:

MR PECKHAM

Respondent

ORDER MADE BY:

CHRISTIE J

DATE OF ORDER:

25 JUNE 2024

THE COURT ORDERS THAT:

1. Ms Caughey pay Mr Peckham’s costs of:

(a) the Application in a Proceeding dated 25 March 2022; and

(b) the Application in a Proceeding dated 8 June 2022;

such costs to be payable in accordance with the scale set out in the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

2. Mr Peckham pay Ms Caughey’s costs as agreed or taxed on a party/party basis from 7 November 2019 until 12 February 2024 excluding the costs of the applications in Order 1(a) and (b) above and the costs of the hearing on 29 October 2019.

3. The parties’ respective applications are 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.

Background

Background to the litigation

It is necessary to understand that there were a number of discrete interlocutory issues which the parties brought before the court before the application for final relief:(a)An interim application for spouse maintenance by Ms Caughey and discontinued without hearing (“the spouse maintenance application”);(b)An application for a declaration that there was no de facto relationship between the parties by Mr Peckham (“the threshold application”);(c)An application by Ms Caughey for Mr Peckham’s solicitor to be restrained from acting (subsequently withdrawn) (“the injunction application”);(d)An application for Campton J to recuse himself (“the recusal application”);(e)Case management hearings relating to an affidavit which was filed by the wife and ultimately withdrawn by her (“the sealed affidavit case management hearings”)(f)An application filed 22 March 2022 relating to Ms Caughey’s non-compliance with trial directions (costs of Mr Peckham reserved) (“the first case management hearing”);(g)An application filed 8 June 2022 relating to Ms Caughey’s non-compliance with trial directions (costs of Mr Peckham reserved) (“the second case management hearing”);(h)An application for the court to accrue jurisdiction to hear and determine proceedings for defamation by Mr Peckham (“the accrued jurisdiction application”); and(i)The final property adjustment proceedings (“the final hearing”).BACKGROUND On 13 September 2023 I made final orders. Those orders adjusted the parties’ interests in property such that each party retained his or her own assets, liabilities, superannuation interests and financial resources and the only jointly owned asset was transferred to Mr Peckham simultaneously with his discharge of the mortgage and a payment to Ms Caughey of $345,000. Some background concerning the acquisition and value of that jointly owned asset is necessary. In my reasons for judgement (Caughey & Peckham (No 4) [2024] FedCFamC1F 197) I found:6.The parties own a property at [M Street], [Town L] (“the [Town L] property”) which was purchased [in late] 2018 as tenants in common in equal shares.7.The purchase price was [over $1,700,000]. In addition, stamp duty of $61,000 was payable on the transaction. The applicant contributed the sum of $86,250. The respondent contributed the sum of $400,000. The parties obtained a loan for the remainder of the purchase price in the sum of $1,300,000. The loan repayments (which are in the sum of $1,950 per week at present) have been met by the respondent alone.8.In addition, the respondent says he has expended funds on improvements and maintenance and has met the outgoings. He provides an estimate of those expenses in the sum of $812,500.9.The Respondent wishes to retain the property and to that end seeks orders that the applicant transfer to him her interest in the [Town L] Property.10.The property is currently valued by the single expert at $3,600,000 and is subject to a mortgage in the sum of $1,299,858.11.The equity in the [Town L] Property is $2,300,142.…46.I have set out the history in respect of this property acquisition above and those facts were not in contest.47.One of the matters I am considering is the contribution the applicant made as a joint mortgagee. In Calverley v Green (1984) 155 CLR 242 the High Court was considering whether a case where both parties had been joint mortgagees but only one party had paid from their own funds towards the purchase led to a situation where the party who had made no direct financial contributions held the property on resulting trust for the party who had made direct financial contributions. The situation in this case is different in so far as the applicant did make a contribution to the purchase price and both parties acknowledge that I am not dealing with a situation of resulting trust but rather one where I am obliged to assess the parties’ actual financial and non-financial contributions in the context of a de facto relationship.48.Nonetheless it remains the case that one of the contributions I am considering is the applicant being a joint mortgagee. The bank provided the funds on the basis that both parties were liable at law for the repayment of principle and interest in accordance with the terms of the mortgage. The applicant has remained liable from the time of the mortgage to the time of trial. Against that the respondent has had an identical responsibility and in addition has met all mortgage payments, leading to the inevitable conclusion that his contributions have been substantially greater both because of the initial disparity in the contributions to the purchase price and because of the repayments made subsequently, accepting that the mortgage balance remains at about the same amount as it was when the loan was first advanced.49.Somewhat more controversial was the weight to be attached to the funds which the respondent has spent on improvements to the property. There is no question that the parties intended to undertake work on the property after acquisition. The relationship broke down about the time of separation and accordingly the parties were not able to put those plans into effect together.50.The respondent’s affidavit estimates the value of that work at $812,500. The applicant was critical of the lack of supporting documentation. I accept that all work which has been undertaken has been undertaken at the respondent’s expense. I accept the respondent’s evidence that the payment for work undertaken has come from his bank account which was discovered (albeit belatedly). Against that the applicant applied funds from her mother to some outside gardening tasks and the installation of a security system.51.There is no evidence by which I could be satisfied that any increase in value is attributable to work undertaken as opposed to the effluxion of time and movement of the market. Accordingly, while I regard the work paid for by the respondent as a post-separation contribution, I am unable to make any finding as to whether it has contributed to an increase in the value of the [Town L] Property. For this reason while I acknowledge that the applicant experienced frustration arising from the lateness of the discovery and disclosure I am not of the view that it is material to the ultimate outcome.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I therefore decline Ms Caughey’s application for costs on an indemnity basis.Conclusions I have indicated that there are two discrete case management hearings (and attendant applications in a proceeding) for which Mr Peckham should have his costs at scale. I otherwise determine that Ms Caughey should have her costs from the date of her offer of settlement (excluding the applications referred in the immediately preceding paragraph and the 29 October 2019 hearing) until the date of Mr Peckham’s offer of settlement on a party/party basis as agreed or taxed. That will self-evidently include the costs of the threshold hearing and the costs of the accrued jurisdiction hearing. Neither party sought a sum certain or provided me with any information to allow make to make a reasonable assessment of the costs payable by the other. Accordingly, I am not in a position to fix costs (except as I have indicated according to scale). The making of orders for costs will, accordingly, require the parties to agree in respect of costs or in the absence of agreement to have costs assessed.

Ratio Decidendi

Legal Principle Established

In Prantage & Prantage (2013) FLC 93-544 the majority (Thackray and Ryan JJ, with whom Murphy J agreed) held that the principles set out by Sheppard J in Colgate-Palmolive were applicable to costs applications in this Court.CONSIDERATION Ms Caughey seeks an order for legal costs for the period 7 November 2019 to 25 March 2024. This is an order from the date on which she made an offer of settlement until the conclusion of the trial. As set out in Mr Peckham’s written outline of argument, he seeks an order that Ms Caughey pay his costs of and incidental to the following: (a)The Applicant’s unsuccessful application to restrain the Respondent’s solicitor from acting for the Respondent, heard on 29 October 2019.(b)The Case Management hearing on 8 November 2019 in respect of the affidavit material filed by the Applicant on 5 November 2019 and the subsequently aborted fixed trial for 12 and 13 November 2019; together with all costs relating to the review, consideration and listing of the matter to strike out her filed primary affidavit of evidence.(c)The respondent’s application in a proceeding dated 25 March 2022 relating to the Applicant’s late filing of consolidated trial affidavit;(d)The Respondent’s application in a proceeding dated 8 June 2022 relating to the Applicant’s late filing of tender material;(e)The Applicant’s amended application for final orders pursuant to section 90SM of the Family Law Act filed 16 November 2022. It is necessary to understand a number of matters that bear on evaluation of the competing costs applications:(a)The parties’ respective final and interlocutory applications;(b)Offers of settlement;(c)Value of the jointly owned asset at the time of offers of settlement;(d)Legal fees expended before and after the offers of settlement; and(e)The impact of post-separation contributions on the assessment of entitlements. I will consider one general matter which bears upon each of the discrete applications before turning to consider any other matters peculiar to the individual applications.The financial circumstances of each of the parties to the proceedings Counsel for Ms Caughey submitted that the financial disparity between the parties to these proceedings was a relevant consideration under s 117(2A)(a). I accept that the net assets and superannuation of Ms Caughey at trial (excluding the jointly owned property) were between $1,532,045 and $2,391,670. In contrast the net assets and superannuation of Mr Peckham at trial (excluding the jointly owned property) totalled between $16,031,031 and $23,521,187 before consideration of financial resources. This financial disparity, it was submitted, allowed Mr Peckham to pursue interlocutory applications (which were ultimately determined against him). In contrast it was submitted that Ms Caughey was required to compromise applications to save costs. The financial capacity to engage in litigation which had the effect of prolonging the proceedings with attendant cost was tied to Mr Peckham’s superior resources.