Choate and Choate and Ors

[2010] FamCA 114

FAMILY COURT OF AUSTRALIA

CHOATE & CHOATE AND ORS [2010] FamCA 114

FAMILY LAW – COSTS – Property proceedings – Second and third respondents seek costs order against applicant wife – Applicant wife seeks costs order against respondent husband – Not established that the financial circumstances of the parties assume significance in the exercise of discretion created by section 117 of the Family Law Act 1975 (Cth) – Not established that the wife should pay the husband’s parents’ costs from the time a “concession” that husband was entitled to be recompensed for work done on parents’ property was made – Not established that the husband should pay wife’s costs as the husband was not wholly unsuccessful in resisting the wife’s claim – Court of the opinion that no party having persuaded the court the circumstances justify a costs order in the terms sought, there will be no order for costs of the proceedings

Family Law Act 1975 (Cth) s 117
Penfold v Penfold (1980) 144 CLR 311 at 315

APPLICANT: Mr Choate

RESPONDENT: Ms Choate

SECOND AND THIRD RESPONDENTS: Mr and Mrs Choate (Snr)

FILE NUMBER: PAF 1448 of 2006

DATE DELIVERED: 23 February 2010

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: COLEMAN J

HEARING DATE: 10, 11 & 12 March 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Anne Rees

SOLICITOR FOR THE APPLICANT: Nikola Velcic & Associates

COUNSEL FOR THE RESPONDENT: Mr Maurice and Mr Dura

SOLICITOR FOR THE RESPONDENT: Galloways

COUNSEL FOR THE SECOND AND THIRD RESPONDENTS: Mr Willmott S.C.

SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS: Don Velcic & Co

Orders

1. That there be no order for costs.

IT IS NOTED that publication of this judgment under the pseudonym Choate & Choate and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAF 1448 of 2006

MR CHOATE

Applicant

And

MS CHOATE

Respondent

And

MR AND MRS CHOATE (SNR)

2^nd & 3^rd Respondents

REASONS FOR JUDGMENT

COSTS

1. Consequent upon the delivery of the court’s judgment in the substantive proceedings, the second and third respondents (hereinafter referred to as “the husband’s parents”) sought an order that the applicant wife pay the husband’s parents’ costs of the proceedings on a party and party basis, subject to a qualification arising out of the husband’s father having given evidence in support of the husband’s case. In the alternative, the husband’s parents sought an order that the wife pay their costs “beyond the first day of the trial” of the proceedings.

2. By submissions filed on her behalf on 10 December 2009, the wife opposed the making of any order for costs against her in favour of the husband’s parents. The wife sought that, in the event that any costs were awarded against her in favour of the husband’s parents, the husband be ordered to indemnify her with respect to such costs. In the alternative, the wife sought that the husband pay her costs.

3. In submissions filed on his behalf on 16 February 2010, the husband opposed any order for costs being made against him.

4. It is appropriate to consider the costs issue by reference first to the order primarily sought by the husband’s parents. If an order is not made in the terms sought by them, it becomes necessary to consider the alternate relief sought by the husband’s parents. If either application of the husband’s parents finds favour, it will be necessary to consider the wife’s application that the husband indemnify her with respect to any such order. Irrespective of those determinations, it is necessary to consider the wife’s application that the husband pay her costs.

5. In support of the husband’s parents’ claim, significant reliance was placed upon the court’s reasons for rejecting the wife’s claim against the husband’s parents in the substantive proceedings [submissions paragraphs 5 and 6]. Reliance was placed upon the wife being said to have been “wholly unsuccessful” in the proceedings as against the husband’s parents.

6. Correctly in the court’s view, the distinction between being “wholly unsuccessful in the proceedings” and “wholly unsuccessful with her claim against the husband’s parents” was acknowledged by senior counsel for the husband’s parents.

7. Ultimately it was submitted in this regard that “This was not a case where, notwithstanding the Applicant Wife’s testimony having been accepted, her claim was defeated on a jurisprudential basis. She was comprehensively and ‘wholly unsuccessful’ in her claim against the 2^nd and 3^rd respondents”. [Submissions paragraph 7].

8. It was submitted to be “not to the point” that the credit of the husband’s father (the second respondent) had been “generally impugned” in the court’s substantive judgment. Accurately, senior counsel for the husband’s parents submitted that the wife’s claim against them had been “defeated by reason of the deficiencies in her own evidence” in the respects earlier identified. [Submissions paragraph 9].

9. It was submitted to be similarly extraneous to the husband’s parents’ costs application that the husband and his father had been found by the court to have acted “hand in glove” in relation to the P property.

10. Senior Counsel for the husband’s parents submitted that the wife’s financial circumstances were such that she would be able to meet any order for costs made in favour of the husband’s parents.

11. With respect to the submissions of senior counsel for the husband’s parents, the evidence before the court in the trial of the substantive proceedings, although less than comprehensive or necessarily reliable in that regard, provides a sufficient foundation for refusing to decline to make any of the various orders sought by the parties to these proceedings in reliance upon the financial circumstances of any of those parties. Expressed another way, if any party or parties establishes an entitlement to a costs order, the financial circumstances of the party against whom such order is sought would not provide a shield against such an order.

12. Both in support of their primary and ancillary applications, the husband’s parents relied upon the concession made through their senior counsel early in the trial that they were indebted to the husband in the sum of $222,400 after tax with respect to work done by him on the P property and that such sum could be charged against that property. It was submitted, correctly, that the concession thus made was not subsequently withdrawn.

13. It was also submitted, having regard to the orders ultimately made by the court, that had the wife “accepted the concession as fully satisfying her claim against the 2^nd and 3^rd Respondents, the claim could have otherwise been discontinued against them thus avoiding the need for their continued representation in the proceedings. The fact that the concession was not accepted meant that the continued representation on their behalves was necessary in order that they might be given the opportunity to be heard…to cross-examine the Applicant Wife and to put to the Court submissions as to why her claim should be rejected”. The wife’s refusal to accept the concession was thus submitted by senior counsel to have needlessly caused the husband’s parents to incur the further costs of participation in the proceedings before the court. [Submissions paragraph 12].

14. In opposition to the husband’s parents’ claim, it was submitted on behalf of the wife that her claim against the husband’s parents, had been “formulated in several ways, the last of which largely was accepted” and that, irrespective of the nature of the wife’s claim and its success or failure, there remained a “live issue as to what was owed to the parties or either of them by the second and third respondents”. [Wife’s submissions, page 2].

15. It was further submitted on behalf of the wife that the husband’s parents “at all times prior to the afternoon of the first day of the trial had maintained that nothing was ‘owed’ to the husband and/or wife in respect of any work done or materials provided in respect of the [P] property”, a position also adopted by the husband.

16. The submission that the “timing of the concession” rendered it “ineffective” for the purposes of the costs dispute has some attraction, at least in relation to the primary application of the husband’s parents. Whether, and if so what significance the offer had with respect to the balance of the trial is perhaps another matter.

17. By reference to the court’s reasons for judgment, and ultimate decision, counsel for the wife submitted that a significant proportion of the total net asset pool as found by the court was referrable to matters which had not been disclosed by the husband or either of his parents.

18. Further, it was submitted that, notwithstanding the concession made on behalf of the husband’s parents, it remained necessary for those advising the wife to seek to establish a number of other relevant and significant financial details relating to the husband and his parents. It was accordingly submitted that the contention of learned senior counsel for the husband’s parents that it was unnecessary for the wife to have joined them in the proceedings, or to continue to oblige them to remain in the proceedings was not correct.

19. With respect to learned senior counsel for the husband’s parents, a number of the submissions made on behalf of the wife resonate with the court. As the court’s reasons for judgment reveal, the evidence of the husband’s parents was relevant to a number of significant issues in the case over and above the “concession” which, no doubt having heeded sound advice from their learned senior counsel, the husband’s parents made during the first day of the trial.

20. It is unnecessary to refer in detail to the court’s numerous and unequivocal adverse findings with respect to the level and adequacy of financial disclosures made by the husband and his father. Any exercise of discretion favourable to either of them would be difficult to reconcile with notions of justice or equity in the light of those findings.

21. The submissions of counsel for the wife in relation to the financial disclosures of the husband and his father are compelling having regard to the court’s findings of fact.

22. The court perceives that the submissions of senior counsel for the husband are not relevant to the husband’s parents’ application for an order that the wife pay their costs.

23. As the submissions of all counsel recognise, the competing applications are governed by the provisions of section 117 of the Family Law Act 1975 (Cth) (“the Act”). In Penfold v Penfold (1980) 144 CLR 311 at 315, to which a number of the submissions refer, the High Court said:

    Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s 117 (2) in "a clear case".

24. As noted earlier, the financial circumstances of the parties do not assume significance in the exercise of the discretion created by section 117 of the Act. Quite simply, if an entitlement to a costs order is otherwise established, the financial circumstances of the party liable to be visited with such order would not disincline the court to exercise the discretion to make such order.

25. There is no suggestion that any party to these proceedings has been in receipt of legal aid, and a state apoplexy approaching mortification would be engendered in the Court if any party had been in receipt of legal aid.

26. Section 117(2A)(c) does not assume significance, nor does section 117 (2A)(d) or, in accordance with its terms, section 117(2A)(f) of the Act.

27. Whilst it is perhaps literally correct to suggest that the wife was “wholly unsuccessful in the proceedings” brought by her specifically against the husband’s parents, that would not incline the court to make an order in their favour. There are a number of reasons why that is so.

28. As the court’s reasons for judgment in the substantive proceedings reveal at various places, the substantial absence of credibility of the husband’s father, his failure to disclose, or to accurately disclose, and generally obfuscatory approach to the proceedings militate against exercising any discretion in his favour with respect to costs.

29. The submission of counsel for the wife that the “concession”, seen in context, did not have the implications asserted by learned senior counsel for the husband’s parents has substance. The court does not accept that counsel for the wife could, or should, have simply accepted the concession and excused the husband’s parents from the proceedings when the concession was made during the first day of the trial. There can be and is, quite properly, no suggestion that the concession could have been accepted before it was made.

30. Objectively, the way in which the case for the husband and his parents was revealed by them, which is not said critically of those representing them, left counsel for the wife in the position of having to keep all possible options open until the conclusion of the trial. Even at that stage, as the court’s reasons for judgment in the substantive proceedings confirm, the cases of the husband and his parents were, in an evidentiary sense, shrouded in almost as much uncertainty as they had been at all previous times.

31. There is also substance in the submission of counsel for the wife that the net asset pool as determined by the court reflected in a number of instances the unsatisfactory financial disclosures of the husband and/or his parents as they emerged in evidence given subsequent to the making of the “concession”.

32. The court does not understand that the discretion created by section 117(2A) requires minute analysis of every aspect of the proceedings. Standing back from this case, a number of fundamental truths emerge from the court’s reasons for judgment in the substantive proceedings. So far as the husband’s parents are concerned, the essential lack of credibility and reliable disclosure (with the notable exception of the husband’s brother) of the husband and his father are the hallmarks of the case for the husband’s parents.

33. Save for the concession made during the first day of the trial, the husband’s parents’ attitude to the wife’s claim can essentially be described as “you find out and try to prove it”. Whilst, and accurately, learned senior counsel for the husband’s parents referred to the wife’s lack of success and the reasons for it, that is not in the court’s view a matter which should elevate the costs claim of the husband’s parents. As will be seen, however, those findings have consequences for the wife when her application for an order for costs against the husband is considered.

34. At the risk of unduly oversimplifying the position, the wife can be seen as having done significantly better in the proceedings than she otherwise would have by maintaining her claim against the husband’s parents, albeit, for reasons which the court gave in its substantive judgment, no order was ultimately made against the husband’s parents, and the wife received significantly less than she sought in an overall sense. In circumstances where one party is untruthful and the other is, at least prone to significant exaggeration, and the result of their dispute is not what either sought in an overall sense, there is an essential fairness about each paying his or her own costs.

35. Nor is the court of the opinion that the wife should pay the husband’s parents costs from the time the “concession” was made. Why that is so has largely been referred to. In essence, given the way the husband’s parents and the husband ran their cases, counsel for the wife quite properly maintained the claim against the husband’s parents after the making of the concession. Whilst in a narrow sense so doing could be seen as having wholly failed to produce success by way of order against the husband’s parents, the wife may well have done significantly worse than she did, had she discontinued her claim against the husband’s parents upon the making of the concession.

36. Having elected to inadequately and inaccurately disclose the true nature and extent of their financial dealings, the husband’s father (and thereby by association his mother) and the husband cannot avoid such a conclusion. The court is thus not of the opinion that the wife should be ordered to pay any portion of the husband’s parents’ costs. That being so, no question of an indemnity order in favour of the wife as against the husband arises for consideration. There remains for consideration however the wife’s claim for costs against the husband.

37. In support of that claim, it was submitted that the husband had significantly failed to make a full and frank disclosure with respect to his income and financial resources both generally and in the ways specifically identified [page 11] by learned counsel for the wife.

38. The court’s reasons for judgment in the substantive proceedings with respect to the husband’s credibility speak for themselves. On behalf of the husband it was submitted by learned senior counsel that the wife was arguably in a stronger financial position than that of the husband. With all due respect to learned senior counsel for the husband, the court cannot accept that proposition given the nature and extent of the critical findings with respect to the husband’s credibility, and the level and adequacy of financial disclosures as they emerge from the court’s reasons for judgment in the substantive proceedings.

39. Although, not perhaps, for reasons which will become apparent, strictly necessary to do so, the court does not accept the thrust of the submissions made on behalf of the husband with respect to 117(2A)(c), and particularly the submission that the wife increased the duration of the trial. Objectively, given that the husband so substantially failed to make full and frank disclosure of his financial circumstances, and dealings with his parents, as did his father, securing a just and equitable outcome for her was always going to oblige counsel for the wife to cross-examine the opposing parties extensively.

40. Significantly for present purposes, senior counsel for the husband referred, correctly in the court’s view, to the reality that neither the husband nor the wife had been wholly unsuccessful as against each other, and to the court’s conclusion that the wife had failed to establish a number of her contentions, both with respect to the relationship between herself and her husband and the arrangements, or their absence, with respect to the P property.

41. Again at the risk of oversimplification, the court is not of the opinion that the husband should pay any part of the wife’s costs. To the extent that the husband and his father elected not to make full and frank disclosures of relevant financial matters, it could be suggested that those failures have rebounded on them in the award the court made against the husband. Notwithstanding those matters, the husband was not wholly unsuccessful in resisting the wife’s claim. In addition, as the court’s reasons for judgment in the substantive proceedings reveal, the wife’s own evidence, albeit not to anything like the extent involved with that of the husband, was not able to be accepted in its entirely or without qualification.

42. Accepting that, albeit by reference to the matters referred to in section 117(2A) the court is exercising a broad discretion, the court is not persuaded that, in all the circumstances, the wife should have the benefit of an order for costs against the husband.

43. No party having persuaded the court that the circumstances justify a costs order in the terms sought by them or her, there will be no order for costs of the proceedings.

I certify that the preceding forty three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman

Associate: 

Date:  23 February 2010