Coleman & Coleman (No. 2)
[2022] FedCFamC1F 80
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Coleman & Coleman (No. 2) [2022] FedCFamC1F 80
File number(s): BRC 15612 of 2019 Judgment of: CAREW J Date of judgment: 23 February 2022 Catchwords: FAMILY LAW – COSTS – Where the husband seeks an order for costs on a party/party basis in a fixed sum – Where the wife resists the costs application of the husband – Where at trial the wife was found to have failed in her obligation to provide full and frank disclosure – Where a section 75(2) adjustment was made of 2.5 per cent in favour of the husband – Where the wife argues she has already borne a financial consequence from her non-disclosure in the form of a 2.5 per cent adjustment – Where the wife argues any costs order would be unjust – Where the wife is ordered to pay the husband’s costs in a fixed sum amount. Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)Cases cited: Fitzgerald vFish sub nom PBF v TRF (FLR) (2005) 191 FLR 294
Kilich & Wood [2003] FamCA 629
Lenova v Lenova (Costs) [2011] FamCAFC 141
Penfold v Penfold (1980) 144 CLR 311
Pennisi & Pennisi (1997) FLC 92-774Stopford Malloy & Malloy (Costs) [2018] FamCAFC 6
Number of paragraphs: 35 Date of last submissions: Husband’s written submissions filed 22 December 2021;
Wife’s written submissions filed 24 December 2021Date of hearing: In Chambers on the papers Place: Brisbane Counsel for the Applicant: Mr P W Hackett Solicitor for the Applicant: Hirst & Co Family Lawyers Solicitor for the Respondent: Hopgood Ganim Lawyers ORDERS
BRC 15612 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR COLEMAN
Applicant
AND: MS COLEMAN
Respondent
ORDER MADE BY:
CAREW J
DATE OF ORDER:
23 FEBRUARY 2022
THE COURT ORDERS THAT:
1.The respondent contribute to the applicant’s costs of and incidental to the proceedings commenced by Application for Final Orders on 23 December 2019 and the Application for costs filed 10 November 2021 in the fixed sum of $53,500.
2.The sum of $53,500 be paid within 90 days of the date of this order.
3.The respondent’s application for costs be 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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Coleman & Coleman has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAREW J:
After a three day trial in August 2021, I made a final property order on 13 October 2021 disposing of the proceedings between Mr Coleman (“the husband”) and Ms Coleman (“the wife”). By an application filed 10 November 2021 the husband applies for an order that the wife pay his costs of those proceedings in the fixed sum of $178,059.60 (including the costs associated with this application). The application for costs of the proceedings is opposed by the wife and she seeks an order that the husband pay her costs of this application.
On 10 November 2021 I made an order in chambers requiring each party to, among other things, file written submissions by 5 January 2022 and notifying the parties that the application would be determined in chambers unless either party requested an oral hearing. No such request has been made. A notation to that order specifically required the parties to address why, in the event a costs order is made, it should not be for a specific amount.
For the reasons which follow I propose to order the wife to pay the husband’s costs fixed in the sum of $53,500.
BRIEF BACKGROUND
After a 17 year marriage (including two years pre-marriage cohabitation) the parties separated in 2018. They had three children. The husband was a professional and the wife worked throughout the marriage in a financial services business, O Company (“OPL”), a family business. Upon its sale in 2007 the wife continued to work in the business then known as P Pty Ltd (“PPL”).
During their marriage the parties bought and sold various properties and at the end of the marriage each lived in a property owned by them, which they respectively retained under the final order. The wife also retained a property at Suburb A.
At trial the husband contended for a net asset pool of $5,928,852 and the wife contended for a net asset pool of $6,780,723. I found the net pool to be $6,258,075.
The husband sought a division of the assets in the proportion 60/40 in his favour and the wife sought a division of the assets in the proportion 55/45 in her favour. The final order provided for a division of the assets in the proportion 52.5/47.5 in the husband’s favour and in order to give effect to that order the wife was required to pay the husband $330,265. There is a prospect of the wife receiving a payment from the husband in the future, if an investment property, G Property, sells for more than $4,650,000. If that occurs she is entitled to receive 47.5 per cent of any amount in excess of $34,337 (which was the net value attributed to the family trust that owns the G Property).
There were a number of significant issues at trial including the following:
(a)The value that should be attributed to the G Property which were always going to be sold;
(b)Whether the wife should be able to retain the Suburb A property;
(c)The wife’s claim that her father had gifted and/or lent her various sums of money during the marriage;
(d)Whether the wife had an equitable interest in OPL and hidden her share of the sale proceeds.
HUSBAND’S SUBMISSIONS
In summary, the husband relies on the following matters in support of his application for costs:
(a)While the husband earns a greater income than the wife, it was found by the trial judge (at [140] and [143] of the Reasons) that the wife has the capacity to work more than two days per week and the Suburb A property is an income producing asset;
(b)The wife’s conduct during the proceedings as found by the trial judge are as follows:
(i)The unsatisfactory nature of the evidence relied upon by the wife in support of her claims that her contributions included sums provided by her father (at [102] of the Reasons);
(ii)Despite the wife describing herself as a hoarder, the source documents proving where certain sums came from were not provided (at [103]);
(iii)The wife and her father gave a totally implausible and inconsistent story about an alleged payment of $50,000 to the wife in August 2009 and no evidence was produced of a deposit for the sum at the relevant time (at [104]);
(iv)The wife failed to disclose the ‘separate agreement’ (referred to in the sale contract between OPL and PPL) which raised the real possibility that the wife was not a mere employee of OPL and had received benefits from its sale (at [122]);
(v)No documents were produced to corroborate the wife's father's claim that the entire proceeds of sale of OPL were paid into his superannuation fund in circumstances where the wife had a demonstrated ability to obtain relevant documents (at [120]); and
(vi)The wife failed in her obligation to provide full and frank disclosure of all information relevant to the case (at [16]).
(c)While neither party was wholly unsuccessful there were aspects of each party’s case that did not succeed and in particular, the wife did not succeed in relation to the following matters:
(i)That the sums identified by the wife totalling $225,116 should be treated as a contribution made on behalf of the wife rather than the sum of $94,000 conceded by the husband.
(ii)That the husband's interest in the Coleman Property Trust was valued at $304,337 when the value was found to be $34,337 for the purposes of the proceedings, but with the husband to account to the wife should a higher sale price be achieved.
(iii)That the wife's credit cards of $17,521 ought be included.
(iv)That the contingent tax and realisation costs of sale of the G Property as per the report of single expert Mr MM be excluded, when it was clear the G Property was to be sold.
(v)That the husband's paid legal fees of $234,864 ought be included as an addback.
(d)The husband made an offer at mediation, which was confirmed in writing to the wife on 13 December 2019. While it is not contended that, on the asset pool as found at trial, the wife would have been in a better position had she accepted the offer, the husband contends that the wife’s failure to respond to his offer or make any offer at all until during the trial, is a relevant consideration on the question of costs.
WIFE’S SUBMISSIONS
In summary, the wife relies on the following matters to resist the husband’s application for costs:
(a)Despite the wife being found to have a greater earning capacity than currently utilised, the husband will continue to earn more than the wife even if she obtains full time employment;
(b)The wife had to refinance the Suburb A property in order to pay out the husband;
(c)No finding about the wife’s conduct “stretches to an extent that could conceivably justify a costs order”;
(d)The wife has “borne the result” of the findings and inferences made against the wife at trial “by way of a s 75(2) adjustment, unquantified in respect of that aspect, in the husband’s favour” (at [147] of the Reasons) although it is conceded that it is not apparent what proportion of the 2.5 per cent adjustment related to the issue of non-disclosure;
(e)While the wife was unsuccessful as to the extent of gifts she claimed were made to her by her parents, she did succeed to the extent of $94,000;
(f)The husband had argued that the wife’s interest in OPL should be represented in the asset pool at $750,000 or as a financial resource of that amount. “No amount of documents about the wife’s parents assets and liabilities could either prove or disprove that contention”;
(g)The wife was not wholly unsuccessful in the proceedings:
(i)The wife retained the Suburb A property which the husband wanted sold;
(ii)The wife’s alleged interest in OPL was not included in the property pool as sought by the husband;
(iii)The wife was not required to amend her tax returns as sought by the husband.
(h)The wife did make an offer of settlement at the mediation although it was not confirmed in writing. Like the husband, she made one offer before trial;
(i)The wife rejected the husband’s offer at the mediation. The husband’s offer was restated in writing after the mediation but the wife had already rejected it.
HOW COSTS APPLICATIONS ARE DETERMINED
Costs in this jurisdiction are generally borne by each party irrespective of the outcome of the dispute.[1] However, the Court has the power to make a costs order if it is of the opinion that there are circumstances that justify it in doing so.[2] The list of matters to which the Court must have regard when determining a costs application are set out in s 117(2A) of the Family Law Act 1975 (Cth) (“FLA”) and since the commencement of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) on 1 September 2021 there are now additional matters to which the Court must have regard.[3]
[1] See s 117(1) of the FLA.
[2] Section 117(2) FLA.
[3] The notation to s 117(2) FLA refers to s 69(4)(d) and (e) of the FCFCOA Act.
The matters set out in s 117(2A) of the FLA are as follows:
(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.
When considering the factors set out in s 117(2A) of the FLA, it is sufficient for one factor to be present.[4]
[4] Fitzgerald vFish sub nom PBF v TRF (FLR) (2005) 191 FLR 294 at 301, [41].
In a notation to s 117(2) of the FLA reference is made to s 69(4)(d) and (e) of the FCFCOA Act which provides as follows:
69 Power of the Federal Circuit and Family Court of Australia (Division 1) to give directions about practice and procedure in a civil proceeding
…
(4)In particular, the Federal Circuit and Family Court of Australia (Division 1) or Judge may do any of the following:
(a) …
(b) (c) …
(d)award costs against a party;
(e)order that costs awarded against a party are to be assessed on an indemnity basis or otherwise.
Although not mentioned in the notation to s 117(2) of the Act, there is an additional mandatory requirement created by s 68(4) of the FCFCOA Act which is in the following terms:
(4)In exercising the discretion to award costs in a civil proceeding, the Federal Circuit and Family Court of Australia (Division 1) or a Judge must take account of any failure to comply with the duty imposed by subsection (1) or (2).
The duty imposed by ss 68(1) and (2) is in the following terms:
(1) The parties to a civil proceeding before the Federal Circuit and Family Court of Australia (Division 1) must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose.
(2) A party’s lawyer must, in the conduct of a civil proceeding before the Federal Circuit and Family Court of Australia (Division 1) (including negotiations for settlement) on the party’s behalf:
(a) take account of the duty imposed on the party by subsection (1); and
(b) assist the party to comply with the duty.
The “overarching purpose” is set out in s 67 of the FCFCOA Act in the following terms:
Overarching purpose of family law practice and procedure provisions
(1)The overarching purpose of the family law practice and procedure provisions is to facilitate the just resolution of disputes:
(a)according to law; and
(b)as quickly, inexpensively and efficiently as possible.
Note 1: See also paragraphs 5(a) and (b).
Note 2: The Federal Circuit and Family Court of Australia (Division 1) must give effect to principles in the Family Law Act 1975 when exercising jurisdiction in relation to proceedings under that Act.
(2)Without limiting subsection (1), the overarching purpose includes the following objectives:
(a)the just determination of all proceedings before the Federal Circuit and Family Court of Australia (Division 1);
(b)the efficient use of the judicial and administrative resources available for the purposes of the Court;
(c)the efficient disposal of the Court’s overall caseload;
(d)the disposal of all proceedings in a timely manner;
(e)the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
(3)The family law practice and procedure provisions must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose.
(4)The family law practice and procedure provisions are the following, so far as they apply in relation to civil proceedings:
(a)the Rules of Court;
(b)any other provision made by or under this Act, or any other Act, with respect to the practice and procedure of the Federal Circuit and Family Court of Australia (Division 1).
At the time the substantive proceedings commenced, the Rules applicable to costs applications were contained in the Family Law Rules 2004 (Cth) (“the old Rules”), but the old Rules were repealed on 1 September 2021 by the Family Law Repeal Rules 2021 (Cth), and replaced with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the new Rules”), with effect from 1 September 2021. Note 1 to r 1.02(2) of the new Rules states as follows:
… The new Rules apply to a proceeding that was commenced in accordance with the old Rules and was not determined before the repeal of the Rules.
Part 12.5 of the new Rules deals with ‘orders for costs’ and, among other things, empowers the Court to set a time for payment[5] and requires an application for costs to be made within 28 days after the final order is made.[6]
[5] r 12.13(5) of the new Rules.
[6] r 12.13(3)(b).
Part 12.6 deals with ‘calculation of costs’ and provides as follows:
12.17 Method of calculation of costs
(1)The court may order that a party is entitled to costs:
(a)of a specific amount; or
(b)as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c)to be calculated in accordance with the method stated in the order; or
(d)for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
(2)If costs are payable under the Family Law Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party and party basis.
(3)In making an order under subrule (1), the court may consider the following:
(a)the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c)the rates ordinarily payable to lawyers in comparable proceedings;
(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e)the time properly spent on the proceeding, or in complying with pre‑action procedures;
(f)whether expenses (paid or payable) are fair, reasonable and proportionate.
Rule 12.08(2) (referred to in r 12.17(3)(b)) provides as follows:
(2)In considering whether a party’s legal costs have been fairly, reasonably and proportionately incurred, regard must be had to all relevant matters including, but not limited to, whether a lawyer representing the party, a lawyer representing any other party, or any self‑represented litigant has:
(a)complied with all relevant rules and orders of the court, including requirements that documents be filed or provided to other parties by a given date; and
(b)acted reasonably in raising, pursuing or contesting a particular allegation or issue; and
(c)made reasonable efforts, subject to the client’s instructions, to resolve the dispute through negotiation, mediation or arbitration; and
(d)made reasonable efforts to narrow the issues in dispute; and
(e)filed no more interlocutory applications than are reasonably necessary in the circumstances of the proceeding; and
(f)filed no more affidavits or other documents than are reasonably necessary in the circumstances of the proceeding.
filed no more affidavits or other documents than are reasonably necessary in the circumstances of the proceeding
When determining an application for costs, the Court may make such order as to costs as it considers just.[7] An applicant for costs bears no “additional or special onus” other than the establishment of “justifying circumstances”.[8]
[7] s 117(2) FLA.
[8] Penfold v Penfold (1980) 144 CLR 311 at 315 (“Penfold”).
As to the identification of such circumstances by the Court, the High Court of Australia in Penfold[9] said the following:
Sub-section (2) [of s 117] does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised. Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
[citation omitted]
[9] Penfold at 316.
Not only does this Court have the power to order a specific amount for costs,[10] it has been the policy (at least of the former Appeal Division of this Court) for a specific amount to be ordered rather than requiring an assessment of costs.[11] This is because the latter approach will inevitably involve the parties in yet further conflict, delay, and cost.[12]
[10] See r 12.17(1)(a) of the new Rules.
[11] Stopford Malloy & Malloy (Costs) [2018] FamCAFC 6, [10]–[12] (“Stopford”).
[12] Stopford.
In Parke & the Estate of the Late A Parke[13] Murphy J quoted with approval the observations made by Einstein J in Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus[14] when that court was considering an analogous provision to that contained in r 12.17(1)(a) of the new Rules:
130.If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court” (Beach Petroleum NL v Johnson (No 2) [1995] FCA 1250; (1995) 57 FCR 119, at [24]cited in Idaport at [9]). The process does not “by its very nature ... envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”. (Idaport at [9](v), citing Harrison v Schipp[2002] NSWCA 213; (2002) 54 NSWLR 738).
131.Obviously enough, the court must act judicially in fixing or specifying a sum of costs, but:
...the requirement that the power to award a gross sum should be exercised judicially does not mean that it must be exercised in any scientific or formulaic manner. At the heart of the judicial function is the responsibility to weigh up competing factors and considerations, many of which might conflict, to reach a determination. Acting judicially carries with it an obligation to apply the rules of natural justice, to act impartially and to apply the law to the facts. ...
(Idaport, at [10] per Einstein J.)
[13] (2016) FLC 93-748 at 81,943–81,944, [122]–[134].
[14] [2007] NSWSC 23 at [9].
CONCLUSION
In my view, a costs order against the wife is justified in the circumstances of this case.
Although the wife’s conduct in relation to non-disclosure was a factor taken into account pursuant to s 75(2) when determining the division of property between the parties, I was not taken to any authority which precludes that matter nevertheless being taken into account in a costs application. There were in fact 13 factors taken into account pursuant to s 75 (2), some of which favoured each party. The disclosure factor was described in my Reasons in these terms:
(c)The failure by the wife to provide full and frank information about the sale proceeds of [OPL] in 2007;
132. As already discussed earlier in these reasons, the unsatisfactory evidence relating to the numerous deposits and withdrawals from the wife’s numerous bank accounts and absence of evidence to substantiate the bare denials of the wife and her father that the wife did not receive a share of the proceeds of sale of [OPL], together with the unusual arrangements and unsatisfactory explanation surrounding the wife’s involvement in the [OPL] business permit, a robust view to be taken of the wife’s financial circumstances. While it is impossible to quantify any undisclosed funds, I find that it is more likely than not that the wife has access to funds that she has not disclosed in the proceedings.
Consistent with authorities such as Weir & Weir[15] the disclosure factor enabled a more robust view to be taken about the wife’s financial circumstances. It was not in truth a ‘conduct’ factor. Accordingly, in my view, it remains a factor relevant to the determination of the costs application.
[15] (1993) FLC 92-338.
Had the wife complied with her obligations in a timely manner or explained her inability to do so, some of the issues that occupied time at the trial may have been able to have been resolved or at least the duration of the trial shortened. To that extent, at least, the wife has acted unreasonably and has failed in her obligation to conduct the proceedings as efficiently as possible. It is nevertheless not a factor that justifies an award to the extent sought by the husband.
Quantum
It is appropriate in my view to order a specific amount rather than referring the matter off for assessment. The costs sought by the husband have been calculated by reference to a “rule of thumb” that his party and party costs would be 60 per cent of his total costs. The total costs expended by the husband in the substantive proceedings are $273,627.90 (including GST) and he estimates a further $23,138 for his costs application. The specific amount sought is $178,059.54. Other than listing the dates of invoices and amounts, there is no evidence particularising the fees or their purpose.
The wife resists the specific amount sought by the husband on a number of bases including:
(a)“The percentage he estimates. The rule of thumb he refers to has no more information than a bland assertion”;
(b)“what percentage of his costs related to the issues that were in fact litigated” ; and
(c)“what proportion of his costs related to the issues where he was successful, when he was unsuccessful in so many aspects of the litigation”.
I accept the wife’s submissions that the absence of any particulars in relation to the fees incurred makes the assessment of their reasonableness difficult to assess and that there were a number of issues pressed by the husband at trial about which he was unsuccessful. Accordingly, I do not propose to adopt the sum sought by the husband.
I have come to the conclusion that a just amount in the substantive proceedings is $50,000 and in the application for costs an additional $3,300. Accordingly, I propose to make an order that the wife pay $53,500 towards the husband’s costs.
As no submissions were made in relation to time to pay I will order that the costs be paid within 90 days.
The wife’s application for costs of the husband’s application for costs will be dismissed.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew. Associate:
Dated: 23 February 2022
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