Costello & Condi & Anor (No 2)

[2013] FamCA 726

FAMILY COURT OF AUSTRALIA

COSTELLO & CONDI AND ANOR (NO 2) [2013] FamCA 726

FAMILY LAW – PROPERTY – Costs – Where Court is not of the opinion that there are circumstances within the meaning of section 117(2) of the Family Law Act 1975, that justify the making of a costs order – Application for costs dismissed

Family Law Act 1975 (Cth)

APPLICANT: Mr Costello

FIRST RESPONDENT: Mr Condi by his Case Guardian Mr E

SECOND RESPONDENT: Ms Condi

FILE NUMBER: BRC 3380 of 2011

DATE DELIVERED: 16 September 2013

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Kent J

HEARING DATE: 6 May 2013 and by written submissions filed on 28 May 2013 and 11 June 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr North SC with him Mr Waterman

SOLICITOR FOR THE APPLICANT: Slater & Gordon

COUNSEL FOR THE FIRST AND SECOND RESPONDENTS: Ms Carew

SOLICITOR FOR THE FIRST AND SECOND RESPONDENTS: Rice Naughton Buckley

Orders

IT IS ORDERED THAT

1. There be no order as to costs of any party with respect to the Second Respondent’s Application in a Case filed on 28 March 2013.

2. The applications for costs in respect of that Application be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Costello & Condi and Anor (No 2) 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 BRISBANE

FILE NUMBER: BRC 3380 of 2011

Mr Costello

Applicant

And

Mr Condi By His Case Guardian Mr E

First Respondent

And

Ms Condi

Second Respondent

REASONS FOR JUDGMENT

1. For convenience in these reasons I will refer to the First Applicant, Mr Costello as “the applicant”; to the First Respondent, Mr Condi as “the husband” and to the Second Respondent, Ms Condi as “the wife”.

2. The relevant background to, and the nature of, the substantive proceedings between the parties is detailed in the reasons for judgment of O’Reilly J delivered on 16 May 2012. The material facts alleged by the applicant and the substantive relief claimed by him are identified in the Points of Claim of the applicant filed on 8 June 2012.

3. On 14 May 2013 I made certain orders by consent having the effect of varying an injunction ordered on 16 May 2012 and further orders in relation to the wife’s Application in Case filed on 28 March 2013 including the dismissal of her application for security for costs for the reasons then delivered. 

4. I also ordered that each parties’ costs of that application be reserved to the trial judge subject to the proviso that should any party seek an order for costs of the application in advance of the trial, rather than having those costs reserved to the trial judge for determination, the party could take that option by the filing and service of written submissions.

5. By written submissions filed on 28 May 2013 the wife sought an order for her costs of the Application in a Case in the amount of $10,592.78 calculated by reference to the scale of costs and as itemised in a schedule attached to the submissions.

6. By written submissions filed on 11 June 2013 the applicant opposed the costs order sought by the wife and sought that the application for costs be dismissed; or alternatively for an order for costs to be made in favour of the applicant or in the alternative for there to be no order as to costs. Attached to the applicant’s submissions is a schedule outlining and itemising his costs in accordance with the scale.

7. Reference is made in the wife’s written submissions to the feature that in the applicant’s Initiating Application filed on 20 April 2011 and in the further Amended Initiating Application filed by the applicant the orders sought included an order that the wife be restrained from dealing with one-half of the wife’s interest in the subject real property (“the Suburb B property”) but despite this feature, Order 3 of the Orders made on 16 May 2012 required that the wife be restrained from dealing with the whole of her interest.

8. To the extent that the written submissions in this form might convey the impression that in making the orders on 16 May 2012 O’Reilly J granted an injunction in terms wider than the injunction that was actually sought, I note that at paragraphs [259] to [277] in the reasons for judgment delivered on 16 May 2012 O’Reilly J dealt with the issue of the injunctive relief to be granted. Specifically, commencing at [272] her Honour detailed reasons for the Orders being made in the terms in which they were made, as follows:

   272.During argument, Counsel agreed that it is not possible for restraint to operate in relation to a “one half-interest” of a property when the title is held by one person indivisibly. That is to say, whilst it is possible to transfer a one-half interest, it is not possible to encumber a one-half interest, although it is possible to encumber a property only to the value of a one-half interest, namely the wife’s interest, but not the former interest of the husband.

   273. The matter is further unclear because the former title extract is not in evidence so presently it is not established whether previously the husband and the wife held the property as tenants in common in equal shares, or as joint tenants, or otherwise.

   274. Thus, in order to preserve until trial whatever was the husband’s former interest in the property, and being mindful that an injunction should be no wider than necessary to achieve the end of not defeating any final judgment which the first applicant might obtain, it is both just and convenient to order that until further order the wife be restrained from selling, transferring, mortgaging, encumbering or otherwise dealing with the property, but with an order that she may apply on notice to vary or narrow the terms of the injunction when the precise nature of the husband’s former interest in it can be identified by reference to the former title extract, to allow the husband’s former interest in it to be preserved and to allow the wife, if she wishes, to deal with the equivalent of her former interest in any way she wishes, eg if in the future she should seek a Hogan order or any other order.

   275. The value of the property presently is not the subject of evidence, nor the value of the existing encumbrance. These matters will need to be the subject of evidence on any application by the wife for variation of any of the terms of the injunction.

   276. By such orders, the wife will be fully protected as to her own former interest in the property which existed prior to the transfer to her of the husband’s interest in it.

9. The relevant Orders made by O’Reilly J on 16 May 2012 were in the following terms:

   3.The second respondent is restrained from selling transferring mortgaging encumbering or otherwise dealing with the property situate at [F Street, Suburb B] Queensland … more particularly described as Lots … and … on RP… title reference …(the property).

   4.The second respondent however may apply on notice to vary or narrow the terms of the injunction by mortgaging encumbering or otherwise dealing with the property provided that she may be able to demonstrate that such would preserve until trial the first respondent’s former interest in it, such application if any to be listed for hearing before the Honourable Justice O’Reilly at a time and date to be arranged between the Manager Judicial Services and the Associate.

10. O’Reilly J obviously determined a need, on the one hand, to secure the husband’s former interest in property given the nature of the relief sought by the applicant in the substantive proceedings, but at the same time was conscious of the wife’s pre-existing property interest not being unduly fettered by the injunction.

11. By its express terms paragraph 4 of the Orders made by O’Reilly J cast an onus upon the wife of being “able to demonstrate” that any variation or narrowing of the injunction would nevertheless “preserve until trial the first respondent’s former interest in it.”

12. This highlights that whilst the foundation for the applicant’s claim is the money judgment for claim and the money judgment for costs the applicant obtained in the District Court against the husband, the applicant’s claims in these proceedings are not money claims. The relief the applicant contends for in these proceedings is the setting aside of the Consent Order made on 11 May 2005 pursuant to s 79A of the Family Law Act 975 (Cth) (“the Act”) and the setting aside of the financial agreement and consequential Orders for, inter alia, the husband and wife to cause a one-half share as tenant in common in the Suburb B property to be registered in the name of the husband, as identified in the Points of Claim.

13. Thus whilst the wife has emphasised, from the time she via her legal representatives commenced agitating that she needed to borrow funds on the security of the Suburb B property, the proportion which the applicant’s money judgments and interest bear in total to the equity in the Suburb B property, it is important to recognise the nature of the relief claimed by the applicant in the substantive proceedings and the injunction in the form in which it was granted in respect of that claim including paragraph 4 of the Orders as referred to.

14. In my judgment that recognition was absent in the wife’s initial proposal as outlined in her solicitor’s correspondence of 11 January 2013[1].

    [1] Wife’s affidavit filed 28 March 2013 and annexure EPC-4 to that affidavit.

15. That recognition is reflected in the Orders that were negotiated on the date of the hearing before me. Importantly, Consent Orders were framed on the basis of undertakings from each of the wife and the husband (by his Case Guardian) “not to raise any defence to the applicant’s claims that may arise by reason of either the mortgage being granted or the mortgaged property being sold.”

16. Those undertakings assume importance in circumstances where, having regard to the relief claimed by the applicant in the substantive proceedings as referred to, a mortgagee of the Suburb B property in its entirety was to become involved. Likewise, the disposition of sale proceeds in the event of a mortgagee sale might be significant, in terms of relief available to the applicant should his substantive claim ultimately succeed. That is reflected in the Consent Orders ultimately negotiated and made which deal with the dispersal of such proceeds.

17. Self-evidently, given that on the day of the hearing the parties and their respective legal advisors were able to negotiate agreed terms of the undertakings and terms of Consent Orders, the issues referred to were always capable of a negotiated solution. I accept that prior to the day of the hearing the applicant had not offered or proposed a solution and it may be that short of a formal application being made, as occurred, which brought the applicant to Court he may not have actively negotiated.

18. However, the wife does not point to any offer made by her or any proposed solution advanced by her in the period between making her initial proposal on 11 January 2013 and the hearing of this application. That may well be because proper recognition was not given by the wife to the nature of the relief claimed by the applicant in the substantive proceedings vis-à-vis the effect of the mortgage security she had proposed.

19. Whether or not I am right about that, and accepting that the applicant might readily have spelled out a solution sometime between 11 January 2013 and the date of filing of the application that would have obviated any need for a formal application (and consequent incurring of costs), paragraph 4 of the Orders made on 16 May 2012 as referred to cast an onus upon the wife. The wife’s evidence does not establish any proposal subsequent to the initial proposal referred to demonstrating the matter identified in paragraph 4.

20. The written submissions of the wife in support of this application for costs do not fully answer the submissions of the applicant filed for the hearing on 6 May 2013 at paragraphs 5.5 to 5.9 thereof which articulate the consequences or potential consequences of the then proposed borrowing and mortgage. Moreover, the wife’s submission that for the Suburb B property to cease being the wife’s principal place of residence she would have to acquire an alternate property seems to me to be misconceived. There are a range of possibilities, including rental elsewhere or moving to a care facility, that would see the wife ceasing to occupy the Suburb B property short of her having to “acquire”, in terms of purchase, alternate property. I accept the submission on behalf of the applicant that there are fundamental and important differences in the form of orders ultimately consented to based, importantly, on the undertakings referred to and the wife’s original proposal. That is, it cannot reasonably be concluded that only minor matters of detail or matters of no real consequence were negotiated in reaching the consensus referred to as compared with the orders sought by the wife in her application.

21. For these reasons and what follows below, and having regard to the considerations in s 117(2A), I am not of the opinion within the meaning of s 117(2) of the Act that there are circumstances that justify the making of an order for costs in favour of the wife in respect of the application to vary the injunction. The power to award costs under s 117(2) and the principles governing the exercise of the discretion to award costs are well-settled by authority and need not be re-stated here.[2]

    [2] Penfold and Penfold (1980) 144 CLR 311; Mallet and Mallet (1984) 156 CLR 605; Jensen and Jensen (1982) FLC 91-263; Collins and Collins (1985) FLC 91-603; Harris and Harris (1991) FLC 92-254; Robinson and Higginbotham (1991) FLC 92-209.

22. Nor am I of the relevant opinion referred to with respect to the applicant’s costs of that application. In my judgment it was disingenuous of the applicant, well knowing that the injunction as originally granted, secured significantly more property in extent and value (and in that sense was wider than necessary) having regard to the basis upon which he claimed relief in the substantive proceedings, being the money judgments referred to, and being aware of the obvious need the wife had to fund her legal costs; not to provide any terms acceptable to him. That is, the applicant could have done what was done on the morning of the hearing well prior to then and could have negotiated it seems a solution meeting both sides’ objectives. The Family Law Rules 2004 (for example rule 1.08) impose positive obligations on parties to litigation in this Court. In my judgment it was unreasonable for the applicant to simply dismiss the initial proposal advanced on behalf of the wife without identifying alternatives that would have met his objectives and ones acceptable to him.

23. Whilst with respect to the considerations identified in s 117(2A) I am mindful of the apparently superior financial circumstances of the applicant as compared with those of the wife it seems to me that the matters already referred to, relevant to one or more of the other considerations referred to, are determinative in this instance. 

24. As to the security for costs application the wife would have been on firm ground to agitate for costs if, once the applicant had belatedly filed his material to finally answer her requests for information, she had not pursued what I found to be on the evidence, including the belatedly filed material, an unmeritorious application. That is, by pursuing her application for security for costs (at least in part) in these circumstances notwithstanding the evidence of the applicant it can be inferred that the wife would have pursued the application even had the relevant information been provided earlier. At the least, that inference is not excluded. The wife was wholly unsuccessful on her application for security. 

25. For his part, the applicant’s material was late and he had ample opportunity to provide the relevant information well before any formal application was filed.

26. For these reasons I am not of the opinion within the meaning of s 117(2) of the Act that there are circumstances which justify the making of a costs order in favour of either party arising out of the application in a case as would disturb the effect of s 117(1).

27. I therefore Order that there be no order as to costs of any party with respect to the wife’s Application in a Case filed on 28 March 2013 and that the applications for costs be dismissed. 

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 16 September 2013. 

Associate:

Date:  16 September 2013