Cross and Beaumont

[2007] FamCA 568

FAMILY COURT OF AUSTRALIA

CROSS & BEAUMONT [2007] FamCA 568

FAMILY LAW - COSTS - Between parties - Cross applications for costs of property proceedings between husband and wife - Application by interveners (husband’s mother, brother and sister) for wife to pay their costs - Husband also sought costs against wife’s practitioner; pre-action procedures, Family Law Rules 2004 Rule 1.05 and Schedule 1, Rule 19.10, Family Law Rules 1984 order 38 rule 35, Family Law Act 1975 s 117(1), (2) and (2A) - Conduct in and of proceedings considered in relation to costs order

APPLICANT: MS BEAUMONT

RESPONDENT: MR CROSS

INTERVENERS: JOSEPHINE EARNSHAW,
JESSIE CROSS and MAURICE CROSS

FILE NUMBER: HBF 1168 of 2004

DATE DELIVERED: 12 June 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Watt J

HEARING DATE: By written submissions and 9 November 2006

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Trezise

SOLICITOR FOR THE APPLICANT: AT LEGALS

COUNSEL FOR THE RESPONDENT: Husband in person

COUNSEL FOR THE INTERVENOR: Interveners in person

Orders

1. Pursuant to Rule 19.50 of the Family Law Rules I certify that the proceedings before me which concluded with my judgment dated 10 May 2006 reasonably required the attendance of solicitor acting as counsel.

2. The husband pay 65% of the wife’s costs of and incidental to the proceedings from 27 September 2004 to the date of my judgment and in default of agreement as to the amount payable under this order being reached within 28 days, such amount to be fixed by taxation.

3. The applications of the husband and wife for costs of the proceedings to the date of my judgment are otherwise dismissed.

4. The application of the interveners for the wife to pay their costs to the date of my judgment is dismissed.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: HBF 1168 of 2004

MS BEAUMONT

Applicant

And

MR CROSS

Respondent

JOSEPHINE EARNSHAW,

JESSIE CROSS and

MAURICE CROSS
Interveners

REASONS FOR JUDGMENT

Introduction

1. This judgment on costs arises out of proceedings in which I delivered judgment and made orders on 10 May 2006 (“the judgment”).

1. The judgment disposed of property proceedings that involved the husband, the wife, (who was the applicant) and members of the husband’s family (his mother, sister and brother) (“the interveners”).

1. It was apparent at the conclusion of the hearing that there were issues of costs to be dealt with – the interveners had already raised the matter, and the wife stated an intention to make an application for costs. I therefore inserted a note at the end of my judgment, to the effect that I would appoint a mention date to fix a timetable for the filing of any applications for costs and to give other directions as necessary.

1. The mention date was fixed for 6 June 2006, to be conducted by telephone link between Melbourne and Launceston.

1. On 24 May 2006, the wife filed an application in a case seeking an order

That the husband pay the wife’s costs of and incidental to the proceedings since the date of filing of her amended application filed 27 September 2004.

1. On 7 June 2006, the husband filed a Notice of Appeal against the judgment (“the appeal”). This has since been heard and determined: see paragraph 12 below.

1. At the first mention of the costs issues, it became clear that the husband was assuming that the appeal he was filing would, of itself, precipitate an adjournment of any costs issues (arising out of the trial) until after the appeal had been heard and determined. When it was made clear to the husband that an adjournment of the costs issues would not necessarily flow from the filing of his appeal, and that the wife did not agree to such an adjournment, the husband made application (orally) for an adjournment of the costs issues until after the hearing and determination of the appeal. This application was heard on 3 July 2006 and was dismissed.

1. In the course of the telephone link hearing on 3 July 2006, after dismissing the husband’s application for adjournment of the costs issues, I fixed a timetable for the filing of further documents by the parties within a timeframe of 28 days, responses in 21 days, and replies in 14 days. The timetable allowed a longer time than usual for the filing of documents in relation to costs, but the husband requested that more time be given because he also had to attend to the preparation of his appeal in the same period. My order of 3 July also provided, in paragraph 4, that following the filing of written submissions, any party could request an oral hearing.

1. The timetable was not strictly adhered to, but documents were filed late without serious objection and the court file now holds the following documents that were filed in the context of the costs applications:

Wife

Wife’s form 2 filed 24 May 2006;

Wife’s written submissions as to costs dated 31 July 2006;

Wife’s Financial Statement filed 31 July 2006;

Wife’s written submissions to husband’s application for a costs order against the wife dated 21 August 2006;

Wife’s written submissions in reply to interveners’ application for costs dated 21 August 2006;

Wife’s written submissions in response to the husband’s reply to wife’s application for costs dated 21 August 2006;

Husband

Husband’s form 2A filed 31 July 2006;

Husband’s affidavit sworn and filed 9 August 2006 – husband’s written submissions;

Husband’s final written submissions filed 4 September 2006;

Husband’s Financial Statement filed 1 September 2006.

Interveners

Intervener’s short statement and claim for expenses – itemised costs account dated 12 August 2005

Intervener’s affidavit sworn and filed 31 July 2006 – affidavit statement of claim for costs incurred;

The wife’s costs application

The wife’s submissions

1. In paragraphs 1 and 2 and 4 of the wife’s first written submission, she recites the terms of my order for property settlement, and their effect, namely, that the wife was to receive cash payments totalling $93,860 from the husband - $31,000 by 30 June 2006 and $62,860 within 90 days of accessing his interest in his late father’s estate, with interest at the rate prescribed by the Family Law Rules.

1. In paragraph 3 of her submission the wife sets out the terms of the payments that she sought in her amended application for final orders filed 27 September 2004. In that application, the wife had sought orders for the payment to her by the husband of cash payments totalling $100,000 to be paid over a period of twenty-four months from the date of the order. In both situations (under my order and the wife’s amended application) the amounts to be paid after the initial payment were to attract interest at the rate prescribed by the Family Law Rules.

1. I mention at this point that in delivering judgment on the husband’s appeal on 2 March 2007, the Full Court reduced the interest payable on the balance of $62,860 from the rate prescribed by the Family Law Rules to 5%. The orders remain otherwise unchanged.

1. In paragraph 4, the wife asserts that the effect of my order was that the wife received only $6,140 less than the amount sought in her amended application.

1. In paragraph 6, the wife’s submission turns to the specific sub-paragraphs of section 117(2A), in these terms:

In relation to considerations under section 117(2A) of the Act, the wife makes the following submissions:

(a)   there is a marked disparity between the income available to the wife and the income available to the husband. This disparity has worsened since the trial in that the husband’s child support payments have significantly reduced. Attached to this submission is an updated form 13 Financial Statement sworn by the wife on the 31^st of July 2006;

(b)  neither party is in receipt of a grant of legal assistance;

(c)  the husband’s conduct, particularly his later self-representation, added considerably to the costs incurred by the wife and the length of the trial;

(d)  not relevant;

(e)  neither party has been wholly unsuccessful in the proceedings, however the wife was prepared to resolve the property adjustment proceedings upon terms similar to that finally ordered by the Court and upon significantly greater terms than as suggested by the husband;

(f)   not relevant;

(g)  the husband was ultimately and wholly unsuccessful in relation to the issue concerning the relevance of the wife’s claim of his vested interest in the property at D. Considerable Court time was spent and additional costs incurred by the wife in relation to the determination of that issue;

The wife also sought certification for the appearance of her solicitor as counsel in the proceedings before me and there is no doubt that such representation was warranted in the circumstances of this case as they appear from the judgment. I will grant such certification.

The husband’s application as originally framed

1. The husband filed a Form 2A application for costs on 31 July 2006 in the following terms:

1.That the lawyer for the applicant wife, Ms Andrea Trezise/AT Legals pay to the wife costs of and incidental to legal correspondent and subsequent legal proceedings since 09 September 2003.

2.That Ms Andrea Trezise/AT Legals pay to the husband costs of and incidental to legal correspondence and subsequent legal proceedings since 09 September 2003.

3.That Ms Andrea Trezise/AT Legals pay to the husband and wife, in equal portions, monies to the equivalent of Ms Andrea Trezise’s personal income for the previous 3 years or other costs penalty the Judge deems appropriate for a just outcome.

4.That Ms Andrea Trezise/AT Legals pay the wife and husband costs of and incidental to any appeals, retrials and other legal actions associated with the wife and husband reaching a final separation settlement.

5.That, if above orders not be granted, the wife or her legal representative pay the husband’s costs of and incidental to all legal proceedings since 09 September 2003.

1. At a telephone link hearing on 2 August 2006, Ms Trezise objected to the relief sought in paragraphs 1,3 and 4 of this application as being beyond the power conferred on the court by the Family Law Act 1975 and the Family law Rules 2004.

1. I upheld that objection in relation to paragraphs 1, 3 and 4, and further ordered that paragraphs 2 and 5 were to be deemed to seek an order that the wife or her legal representative pay the husband’s costs since 9 September 2003.

1. The final written submission was filed on 4 September 2006 and following this, the husband requested an oral hearing and this took place by video link between Melbourne and Launceston on 9 November 2006 and I reserved my judgment on that day.

1. At the conclusion of the costs hearing on 9 November 2006, it emerged that there were other applications that had been transferred from the Launceston Registry to me for hearing – an application by the wife for enforcement of the May 2006 orders and an application by the husband for a stay of those orders. There was also an application by the wife to vary the earlier consent order made in relation to children’s matters which requires her to pay for the children’s travel to see their father in Launceston on each alternative visit. The children live in Victoria with the wife, and travel to Launceston several times each year. Those applications were subsequently heard and determined by me by video link on 1 December 2006.

The proceedings that gave rise to the costs applications

1. I will set out here paragraphs 1 to 8 of my judgment delivered 10 May 2006 which provide the background to the trial:

1.These were proceedings for property settlement between the applicant wife […] a [health professional] aged 43 at trial, and the respondent husband […] aged 41 at trial, a [health professional] and farmer. For reasons that I will mention shortly, the husband’s mother and two siblings were also parties.

2.The proceedings were initiated by the wife's applications filed 9 March 2004 in which she sought interim and final parenting orders and final orders for property settlement.  In terms of property settlement, the wife sought orders that the husband transfer a motor vehicle to her, and pay her the sum of $150,000, and that he retain his interests in his [business] and his farming activities.

3.The matter proceeded through interim hearings to a conciliation conference on 24 August 2004.  The matter did not resolve and orders were then made for the wife to join the husband's mother, sister and brother as respondents.  The wife then named them as respondents in an amended application for final orders filed 27 September 2004. [This is the date from which the wife now seeks that the husband pay her costs.]

4.The husband’s mother, sister and brother became involved in the case because the farming property that was the parties’ home throughout their marriage was part of the estate of the husband’s late father, who died in 1975.  The two properties at [D] that together make up the farming property known as "[Granada]" were the only assets forming the residue of his estate which he left to his wife for life (or until remarriage) and then to his three children in equal shares, if they survived him and attained the age of 21.  All three children survived and attained 21 years of age and so their interests in the residue can be described as vested, although the assets will not become available until the death of the life tenant.  The husband’s mother, […], was 85 years of age at the time of trial.

5.The husband’s mother, […], his sister, […] and his brother, […], having been named as the second third and fourth respondents respectively in the wife’s amended application filed 27 September 2004, all sought leave to intervene in the proceedings and were granted leave on 10 November 2004.

6.The essence of the controversy involving the intervenors was that in her amended application for final orders filed 27 September 2004, the wife sought firstly, orders for property settlement to take effect in the short term – payment by the husband to her of three amounts totalling $100,000 spread over 24 months, and various other orders similar to those set out in her original application. The new element in her amended application was that in the alternative to the orders for property settlement already referred to, she sought the adjournment of the property proceedings for five years under section 79(5) of the Family Law Act 1975 and, in paragraphs 3 and 4. she sought orders in these terms:

“3.That the wife forthwith have leave of the Court to register, at her own expense, with the Land Titles Office a Caveat against the titles of the two (2) properties owned by the husband’s mother, brother and sister as personal representatives of [the husband’s father, Mr C] or [Mr S] (sic) respectively, as contained in Certificates of Title Volume […] Folio […] and […] Folio […].

4.That until further order the respondent husband’s mother, […], the respondent husband’s brother, […] and the respondent’s sister, […], each be restrained from transferring, charging, or otherwise dealing with their interest in the properties known as “[Granada]” [D] as contained in Certificates of Title […] Folio […] and […] Folio […].”

7.The intervenors’ application for leave to intervene was filed on 4 November 2004 and in the affidavit of [the husband’s sister] sworn in support on 29 October 2004, [she] deposed that the relief to be sought by the intervenors if granted leave to intervene was the dismissal of paragraphs 3 and 4, set out above, of the relief sought by the wife in the alternative.

8.On 18 November 2004, final orders in relation to children's issues were made by consent.  At a pre-trial conference on 30 June 2005, the matter was fixed for a three-day trial in August 2005 at the Launceston sittings of the Family Court of Australia.

1. When the matter first came before me in August 2005, I expressed the view that the wife’s application for adjournment of the proceedings was unnecessary in that the husband’s interest in his father’s estate was vested, although it would not fall into possession until the conclusion of the life tenancy. It could therefore be valued at the time of trial (and this occurred) and the case could proceed on the basis that although not immediately available to the husband, it was his property and could be treated as such, subject to its unavailability to satisfy an order for the duration of the life tenancy.

1. I found the relevant assets (including the husband’s revalued interest in his father’s estate) to be $303,242, not including superannuation interests that were valued at $26,917 and treated as a separate pool: judgment paragraphs 184 and 187.

1. Having regard to my findings as to contributions and relevant s 75(2) factors, I apportioned the assets as to 37 ½ % to the wife, and 62 ½ % to the husband, and apportioned the superannuation interests equally between the parties. Giving effect to these apportionments required the husband to pay to the wife the sum of $93,860: judgment paragraph 206.

1. The orders that I made required the husband to pay to the wife the sum of $31,000 by 30 June 2006, and the further sum of $62,860 upon the occurrence of certain events, namely:

… within 90 days of the death of his mother […] or earlier upon him having access to (as security for borrowings) or receiving all or part of his interest in the residuary estate of his father […] and the husband is to inform the wife within 30 days of its occurrence of any event that will give rise to him receiving all or any part of his interest in the said estate or having access to the assets of the said estate for the purposes of securing any borrowing by him of any amount : paragraph 1(b).

1. In paragraph 208 of the judgment I explained that the sum that I ordered to be paid by the 30 June 2006 date was an amount that the husband had set out in paragraph 102 of his amended final submissions at trial that he was prepared to pay by I June 2006, as a combined payment of property settlement and child support. The balance was deferred to be paid upon the husband accessing his entitlement to his interest in his father’s estate.

The relevant law

1. Section 117 of the Act provides:

   (1)Subject to sub-section (2), subsection 70NFB(1) and sections 117AA, 117AB and 118, each party to proceedings under this Act shall bear his or her own costs.

   (2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to sub-section (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   (2A)In considering what order (if any) should be made under sub-section (2), the court shall have regard to¾

   (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.

The husband’s application

1. I have set out in paragraphs 15 to 17 of this judgment the husband’s application and the reframing of it that took place at the hearing on 2 August 2006.

1. The main thrust of the husband’s application, as clearly set out in his written submissions and vociferously reasserted at the oral hearing, was that the wife’s solicitor had not complied with the pre-action procedures set out in the Family Law Rules 2004, see Rule 1.05. In particular he relied on subparagraph 2(5) of Parts 1 and 2 of Schedule 1 to the Rules which set out the pre-action procedures to be followed in property matters and children’s cases respectively. That subparagraph is in these terms:

In situations of non-compliance, the court may ensure that the complying party is in no worse a position that he or she would have been if the pre-action procedures had been complied with.

1. The husband also relied on Rule 19.10 which provides for orders to be made against legal practitioners in certain circumstances.

1. The husband’s written submission dated 9 August 2006 commences with a quote from a media release issued on Friday 19 March 2004 by the Family Court. The release contains part of a statement made by the former Chief Justice of this Court, before the commencement of the Family Law Rules 2004 and the passage quoted is in the following terms:

Under these rules parties and their lawyers are required to make a genuine attempt to resolve the matters before starting hearings. If they fail to do so they may be liable to pay the costs of the other parties. Good family lawyers do this as a matter of course by the purpose of the rule is to ensure that all do so.

1. In paragraph 3 of his submission, the husband asserts that it was Ms Trezise’s responsibility to ensure that all of the pre-action procedures were complied with, or that the wife had given informed consent to the making of a non-compliant application.

1. The husband then proceeds, in paragraph 4, to assert that he is applying to the court under Rule 19.10 for costs thrown away for:

(a)Ms Trezise’s failure to comply with the Rules;

(b)Ms Trezise’s failure to comply with multiple pre-action procedures, and

(c)Ms Trezise’s improper and unreasonable conduct.

1. In paragraph 6, the husband seeks that an order be made of the court’s own initiative that Ms Trezise pay the wife’s costs from 9 September 2003.

1. As appears in paragraphs 15-17 of this judgment, the paragraph of the husband’s application in which he sought this relief (see the first order sought in the application set out in paragraph 15 above) was one that I had struck out as beyond power. That is to say, I took the view that neither the Act nor the Rule 19.10 empower the court to order that a practitioner pay (or repay) the costs of their own client on the application of the opposing party. There are, of course, procedures whereby a party may dispute the costs that he/she has been charged, but in his application, the husband was taking up the cause on behalf of his mother, but clearly without any support from her in so doing. In his written submission, he seeks to side-step this obstacle by seeking that the court take the step that he sought in paragraph 1 of his application of its own initiative. There is no doubt that this power exists: see Rule 1.10.

1. In paragraph 7 of his first written submission, the husband repeats parts of paragraph 4 of his application – that paragraph was also struck out - asking for an order that Mrs Trezise not charge the wife for any work associated with future costs such as appeals.

1. In paragraph 9, the husband asserts that section 117(2) of the Act is authority for the costs orders against Ms Trezise, and in paragraph 10 he identifies the Family Law Rules that have been breached as rules 1.05 and 1.08, and related schedules. These breaches are particularised to some extent in paragraph 12, and summarised in paragraph 14, which commences with the statement:

The fact that the wife’s lawyer went ahead and made the first application to the Family Court for contested final orders without complying with a significant proportion of the mandatory pre-action procedures clearly exposes Ms Trezise or the wife to the costs associated with all of the legal proceedings that come after.

1. [The husband] then sets out a number of factual matters that he relies on, including exchanges of correspondence that took place at the time of, and following separation, which demonstrate, in his view, the extent to which the wife (and Ms Trezise) had failed to comply with the pre action procedures. I will return to the correspondence at a later stage. For the moment, however, I will observe that the wife’s written submission in response dated August 2006 is a one page document which commences

1.The wife does not identify any legal or factual basis in the husband’s written submissions dated 9 August 2006 in support of his application that the wife pay his costs of and incidental to all proceedings since 9 September 2003.

1. After referring to the effect of my order of 2 August 2006 where I dismissed the husband’s application for the wife’s lawyer to pay the wife’s costs the submission continues:

2c)there is no legal or factual basis for an order to be made requiring the wife’s lawyer to pay the husband’s costs as:

i.the husband was unsuccessful in the proceedings;

ii.the wife’s lawyer acted in accordance with her client’s instructions;

iii.the wife’s lawyer did not act in any manner which would justify the making of a costs order;

iv.under Rule 19.10 and the case law, particularly the Full Court decision of Cassidy v Martin (1995) FLC 92633, the wife’s lawyer did not demonstrate ‘improper or unreasonable conduct’.

1. The wife’s submissions did not raise an important matter that has come to my attention (in the context of this case) only in the course of drafting this judgment, namely, that the rule requiring pre-action procedures to be followed did not come into effect or commence operation until 29 March 2004, the date on which the Family Law Rules 2004 commenced. The wife’s proceedings were issued on 9 March 2004, nearly three weeks before the present Rules came into effect. The pre-action procedure requirements of the Rules did not therefore apply in this case, and non-compliance with them does not provide a basis for any complaint by the husband, or any order for costs against anyone. There was no requirement to comply with those procedures at the relevant time.

1. It should be noted, however, that before the requirements of the pre-action procedures came into effect on 29 March 2004, there was much encouragement, on the part of both the legislature and this court, provided to parties who had not issued proceedings to engage in what was then termed “primary dispute resolution” - counselling, mediation and arbitration, both before and after the issue of proceedings.

1. Before the amendments to the Act that took effect on 1 July 2006, section 14G of the Act required legal practitioners consulted by a person considering instituting proceedings under the Act to consider “whether or not to advise the parties to the proceedings, or the person considering instituting proceedings, about the primary dispute resolution methods that could be used to resolve any matter in dispute.” (my emphasis). Section 14E defined primary dispute resolution methods as meaning:

Procedures and services for the resolution of disputes out of court, including:

(a)counselling services provided by family and child counsellors; and

(b)mediation services provided by family and child mediators;

(c)arbitration services provided by arbitrators.

1. Section 14G did not impose any liability on a practitioner to do more that consider advising a client who is considering the institution of proceedings that there are other ways (primary dispute resolution) of resolving the dispute. In many cases, It would be very difficult to prove that a practitioner had not turned his or her mind to that possibility before issuing proceedings. In this case, however, the correspondence from the husband’s solicitors attached to the husband’s first submission clearly  required consideration of the matter by the wife’s solicitor, who replied, rejecting the husband’s proposals, in accordance with her client’s instructions, in the terms that I will  set out below.

1. The correspondence annexed to the husband’s first submission makes it clear that the husband, through his solicitor made several attempts to have the parties engage in counselling or mediation in relation to both children’s matters and property matters. The wife declined the invitations, stating through her solicitor’s correspondence that she did not “feel comfortable attending counselling and/or mediation to discuss issues direct with your client arising from the separation. My client instructs that she feels there is an imbalance of power between herself and your client, that she does not trust him and denies that there is a good rapport.”. The correspondence makes it very clear that both practitioners considered the matters required of them by section 14G and acted in accordance with their respective client’s instructions.

1. Whilst there was no equivalent to Rule 1.05 of the Family Law Rules 2004 in the Family Law Rules 1984, there was a predecessor (in different terms) to the present Rule 19.10 – costs against legal practitioners: see Family Law Rules 1984 Order 38 rule 35, which was in these terms:

(1)The court or a Registrar may make a costs order against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs:

(a)to be incurred by a party or another person because of improper or unreasonable conduct; or

(b)to be thrown away because of undue delay, negligence or any other misconduct or default.

1. For reasons that I will elaborate upon shortly, however, it would be difficult to find that the wife or her practitioner acted improperly in declining the husband’s proposals to engage in counselling or mediation.

1. At trial, and at subsequent hearings before me, the husband was forceful in his presentation, and at times his presentation was extremely forceful. His strong presentation was in part at least based on a firm conviction of the correctness of his position in relation to various aspects of the evidence, and issues that arose in the litigation. The wife, on the other hand, was clearly a much less assertive individual who was dependent on legal advice and support in the preparation and presentation of her case.

1. I would have great difficulty in finding that the wife’s refusal to engage in face to face dispute resolution with the husband was unreasonable having seen for myself the very significant differences in their levels of assertiveness and the husband’s capacity to express himself aggressively in circumstances where he considered that he was in the right.

1. In the context of the financial dispute, there are other matters that would have made early attempts at dispute resolution extremely difficult.

1. Negotiation in respect of financial matters can only be meaningful where the parties are negotiating on a properly informed basis. Here the husband acknowledged that he did not provide the wife with financial information “on the drip” – see page 16 of his affidavit sworn 9 August 2006 set out below – and it was clear to me at the trial that there had not been a free flow of information that the wife was seeking in order to deal with financial issues on an informed basis:

Ms Trezise makes an issue of not receiving financial documents. There are several issues here. The husband had willingly agreed to provide Ms Trezise with a copy of the contract of the [his business] sale [when there was one] and other financial details, however, as your honour knows, no contract was ever finalised and the sale fell through early in 2004. My lawyer agreed with me that no useful purpose would be served ‘drip-feeding’ incomplete and possibly misleading, financial figures to Ms Trezise …

1. The evidence at trial established clearly that during cohabitation, it was a case where the husband controlled the only accounts that related to his business and farming activities, and the wife had little or no knowledge of the state of the family’s finances: see paragraphs 102-104 of the judgment. It would have required very full and frank disclosure very soon after separation for there to be any meaningful negotiations on financial matters at that stage and the husband’s own statement about not giving the wife information “on the drip” makes clear that she would not have been in a position to negotiate on an informed basis.

1. It was a case where the husband had been in control of the income and assets of his business and farming activities at all relevant times, and the wife was not familiar with the finances as managed by the husband.

1. There was, therefore, a very real need for the husband to put the financial position before the wife in some detail before she could negotiate on an informed basis and even at the time of trial, financial information that might have assisted in understanding the husband’s finances and the parties’ financial position was not forthcoming – see judgment paragraphs 182 and 183.

1. As to the mediation of financial issues, it is helpful to consider guidelines for practitioners that are published in paragraph 58-610 of the CCH Family Law Service. These include guidelines as to when mediation may not be suitable. These include, relevantly to this determination:

Mediation might not be suitable in cases involving: 

·discernible power imbalances between the parties, eg one spouse has historically always deferred to the other, or one has total control of finances;

1. Having regard to these matters, I am not satisfied that the wife’s unwillingness to attempt to resolve matters in dispute during the relevant period following separation by negotiation, mediation or however was conduct on the part of herself or her practitioner that could or should give rise to a costs order in favour of the husband against either or both of them.

1. To the extent that the wife’s application was based on the premise that her approach to the quantum issues was much closer to the outcome than the husband’s, the husband responded by reference to an offer that he had put in a conciliation conference conducted on 24 August 2004. Under Order 24 of the Family Law Rules 1984 as they stood before the passage of the Evidence Act 1995 (Cth), evidence of what was said in a conference could be admitted in a very limited range of circumstances – see former Rules, Order 24(1)(9). In the context of costs, statements were admissible only “upon the hearing of an application for costs arising out of the conference”: rule 1(9)(c). The Family Law Rules no longer purport to govern the admissibility of evidence of statements made in conferences of this kind, and the relevant provision is section 131 of the Evidence Act.

1. Sub-section 131(1) is in these terms:

(1)      Evidence is not to be adduced of:

(a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or

(b)a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.

1. Subsection 131(2) creates a number of exceptions to the exclusion imposed by subsection (1), including the following:

(2)      Subsection (1) does not apply if:

…..

(h)the communication or document is relevant to determining liability for costs;

1. Here the wife has based her claim for costs in part on the husband’s approach to the proceedings (in terms of the outcome he sought from 27 September 2007 to trial) as being much further from the outcome that I ordered than the wife’s approach. In response, the husband has set out the terms of an offer made about two years before the trial in terms that would have seen the wife receive three instalments of $20,000, a total of $60,000 over a two year period that would have ended in August 2006. That is an outcome that, as the husband points out, would have placed the wife in a position where, if she had accepted it, she might have saved about $20,000 in costs and, on that scenario, would have been $80,000 “better off” by August 2006.

1. In his submissions in answer to this aspect of the wife’s application, the husband asserts that the orders that I made (which provided for the wife to receive $31,000 by 30 June 2006 and a further $62,860 on the cessation of the life tenancy, ie, his mother’s death), means that she may not receive the greater part of the  sum that I ordered (namely $62,860) for six or more years, having regard to the evidence of his mother’s life expectancy. 

1. These submissions would have great weight if there was evidence that the husband’s August 2004 offer had been kept open up to, or repeated at, the commencement of the hearing. But the husband makes no assertion that the offer was ever repeated, and having been rejected by the wife, it lapsed. The wife’s amended application filed 27 September 2004 picked up the same timetable for payments, but sought greater amounts. There is no evidence, however, that the husband’s offer was ever repeated after that amended application was filed. In her submission in response, the wife outlines the history of the husband’s proposals (other than the offer made in August 2004) in these terms:

2.In his form 1A response filed 29 April 2004 the husband proposed that the wife be paid by the husband “a sum equivalent to one half of the net assets of the parties’ which by reference to annexures A and B of his form 13 Financial Statement filed contemporaneously and the wife’s form 13 Financial Statement filed on 9 March 2004 contemplated that the wife receive a cash payment of less than $5,000.00.

3.On 1 November 2004 the husband filed an amended form 1A response proposing that the wife be paid “a sum equivalent to 60% of the net assets of the parties, which equates with a payment to the wife in the sum of approximately $29,000.00”.

4.By his Case Summary Document filed with the Court on 28 July 2005 and by reference to page 3 – net position for both parties estimate $57,435.00 and b) net position of wife estimate $30,569.00 and paragraph 14 – 70% to the wife and 30% to the husband, the husband was proposing that orders be made on the basis the wife receive a cash payment of $9,635.50.

5.By reference to his mended Case of Argument – exhibit AMH1A filed 10 August 2005 the husband proposed that the wife receive only 20% of the property pool. The effect of orders sought is as set out in exhibit AMH1 proposing a cash payment to the wife of $25,202.00.

6.By reference to his Amended Final Submissions filed 26 August 2005 the husband proposed that the wife receive a cash payment of $26,387.00 payable as follows: a) “a payment to the wife of $11,387.00 within ninety (90) days of the order, plus a second payment of $15,000.00 by 1 June 2006 ..”

The husband in addition proposed a non-periodic child support payment of $5,000.00 and other child support undertaking. At paragraph 205 the trial judge, Justice Watt, found “the undertaking that he offered in respect of child support (set out above) was in my view put in good faith but cannot be accepted because it was linked to a property settlement proposal that is much less than my award”.

7.The husband’s position concerning the wife’s claim for property settlement was untenable throughout the course of the proceedings and resulted in the matter necessitating a trial.

Conclusion

1. I conclude that at August 2004, the husband put an offer that, if accepted at the time, would have provided the wife with benefits much closer to the order that I made than the position that he adopted after the rejection of that offer up to and including the trial. I have no basis for knowing how the husband would have funded this offer had it been accepted. It was clear, however, from the husband’s evidence at trial, and assertions that he made in these costs proceedings, that at the time he made that offer, he anticipated that a sale of his business would be effected at a much higher price than was ultimately achieved. From the time that that offer was rejected in August 2004, however, the husband’s position did not ever approach an outcome that was anywhere close to the outcome that the wife achieved, even with the reduced interest rate.

1. This falls for consideration of subparagraphs (c) (e) and (g) of s 117(2A). In that context, I consider that the husband’s approach to the outcome of the proceedings (in quantum terms) was unreasonable to the point that the wife was put to considerable expense in achieving an outcome that recognised the significant value of the asset that will come into the husband’s possession, and the fact that that asset had increased in value during the parties’ cohabitation, an increase towards which the wife made contributions.

1. A very considerable amount of time was occupied at the trial in ascertaining whether certain amounts that the husband claimed should be deducted from the valuation of his farming activities and business. He was unsuccessful in most of those: see inter alia paragraphs 173, 175, and 179 of the judgment. There were also disclosure issues of significance: see paragraphs 182 -183.

1. The parties’ respective financial circumstances is another matter on which the wife relies in seeking an order for her costs, and in particular the much greater income available to the husband. I do not, however, consider that the disparity is such as to justify or support an order for costs. The husband’s earnings and earning capacity should be taken into account in relation to the payment of child support, and to take them into account again here could be seen as double counting.

1. Had the wife’s application been in terms that were closer to the orders that I made, there would have been a strong case for an order for all her costs to be paid by the husband. Having regard to the husband’s approach to and conduct of and in relation to the proceedings, however, as previously set out, I consider that, it would be appropriate for him to pay more than half of the wife’s costs, and the proportion that I consider just and appropriate in all the circumstances is 65%, to be taxed in default of agreement. It goes without saying that I do not consider that there is any basis for me to exercise the relevant power to make any order of my own initiative of the kind that the husband urged me to do.

The intervener’s claim for costs

1. I have already set out in this judgment, paragraphs 3-7 inclusive of the judgment: see paragraph 20 of this judgment. Those paragraphs explain how the interveners came to be joined as parties to the matter.

1. I also noted, in paragraph 20 of the judgment, on the subject of the interveners’ representation, that:

The husband and the intervenors were not without legal representation at all times leading up to the trial. … On 8 July 2005, Philip Andrew Welch of the firm Philip Welch filed a notice of ceasing to act on the part of the interveners, having acted on their behalf in these proceedings (as appears from the court file) since filing a notice of address for service on their behalf on 29 October 2004. On 27 July 2005 the intervenors filed a document entitled ‘Summary of Argument’.

1. Paragraph 30 of the judgment outlines how this document was treated at trial.

1. In short, the greater part of that document was taken up with assertions of fact that either supported the husband’s case or rebutted the wife’s case, and the husband was permitted to rely on the statements of fact in that document as evidence forming part of his case.

1. The interveners’ claim for costs was first set out in an Itemised Costs Account dated 12 August 2005. In this document, the costs claimed were the amounts of $404.80 (account dated 6 July 2005), and $1,708.30 (account dated 18 July 2005), a total of $2113.10, set out in accounts from Philip Welch, solicitor, that were attached.

1. Both accounts are addressed to the husband’s brother and sister only ([the husband’s mother] was not included) and the first of the accounts is headed:

   Re Family Court Proceedings – [Parties’ names]

1. The second is headed: Re:    Late father’s estate ([the husband’s father]) and this account is endorsed “Overdue 90 days”. I am satisfied, however, that these accounts are likely to reflect costs incurred by at least two of the interveners in seeking advice in relation to the proceedings between husband and wife.

1. Also attached is a one-page statement in support of the costs claim, wherein it is asserted that the proceedings were largely due to the wife pursuing an unreasonable claim.

1. In the final paragraph, the statement appears:

   We have not claimed for considerable out of pocket expenses in time, wages loss, travelling etc but simply the actual legal fees….

2. That document and its attachments were filed before the conclusion of the trial. Once the issue of costs was raised following judgment I allowed the interveners to rely on this document and to file any further submission that they sought to rely on. On 31 July 2006 an affidavit sworn by the husband’s sister was filed on behalf of the interveners that also attached a short statement in support of the claim, identified the two accounts rendered by Mr Welch to which I have made reference as being claimed, and also sought $300 in lost wages for the husband’s brother and $406 in travel costs for the husband’s sister, bringing the total claimed up from $2,113.10 to $2,919.10.

1. In the statement in support, the focus is again on the wife’s unreasonable conduct in relation to the proceedings.

As previously stated until being involved in this action by the applicant wife we had not dealings or knowledge of the private and business affairs of the couple. However since being party to all the legal proceedings and documents it is very evidence that while the respondent [the husband] made every effort to arrange for the fairest possible division of assets of the marriage without undue legal cost all proposals were rejected by the applicant wife and her legal advisor.

1. In the wife’s written submissions in response filed 21 August 2006, the wife recites the procedural history of the matter as far as the intervener’s were involved and concludes:

9.It is clearly appropriate in all the circumstances that the interveners became parties to the proceedings where their personal interests may have been effected by an order of the court.

1. The wife’s written submission also makes reference to the fact that the relief that was granted by me in the form of a restraining order to ensure that the husband’s interest in his father’s estate was not dealt with in a way that might defeat the wife’s claim (or my order) was not a matter of contention at trial.

1. I made such orders firstly as an interim restraining order on 12 August 2005 and later as part of my final orders on 10 May 2006. At the outset of the proceedings I indicated that it appeared to me that an order in such terms was appropriate and all parties accepted this, both as an interim arrangement and later as a final order.

1. What emerges from this history is this:

The wife’s amended application sought injunctive relief against the interveners that she was not ultimately granted. At first blush, it might appear to be appropriate to order her to pay some of the costs that they seek against her.

1. The issue of injunctive relief to preserve the husband’s interest in the estate was resolved not by the interveners making any concession in the form of an order binding them personally, but by their acquiescence in the making of an order restraining the husband from dealing with his interest. As was explained to them at the time, this limits the interveners’ capacity to enter into a consensual arrangement between all parties having an interest in the estate, which includes the husband and the interveners.

1. To the extent that the wife has brought the interveners into the proceedings, it was in the husband’s power together with the interveners, to provide a form of relief that would satisfy the wife’s requirements for the protection of her claim without directly restraining the interveners, and they were content to allow the husband to be so restrained.

1. Had there been any move by the husband and the interveners to offer that relief as an alternative to the relief sought by the wife, which the wife had rejected, the intervener’s costs claim would be strong indeed.

1. As their summary of argument shows, however, one of their primary concerns was to rebut evidence of contribution given by the wife, and to assert evidence of contributions made by or on behalf of the husband. In terms of the trial, their involvement was, in effect, as witnesses for the husband.

1. There clearly was scope for the wife’s claim for a restraining order to be resolved in terms of an order (such as the orders that I made) that would have required the consent of the husband and the acquiescence of the interveners. In the absence of any evidence that such a proposal was put forward by the husband and the interveners, however, it would not be just or appropriate to make the wife alone responsible for any part of the interveners’ costs, and they did not seek any payment from the husband.

1. In the circumstances, I see no reason to depart from the provision of s 117(1) that the parties bear his or her own costs.

1. I will therefore make the following order:

(1)Pursuant to Rule 19.50 of the Family Law Rules I certify that the proceedings before me which concluded with my judgment dated 10 May 2006 reasonably required the attendance of solicitor acting as counsel.

(2)The husband pay 65% of the wife’s costs of and incidental to the proceedings from 27 September 2004 to the date of my judgment and in default of agreement as to the amount payable under this order being reached within 28 days, such amount to be fixed by taxation.

(3)The applications of the husband and wife for costs of the proceedings to the date of my judgment are otherwise dismissed.

(4)The application of the interveners for the wife to pay their costs to the date of my judgment is dismissed.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Watt delivered this day will for all publication and reporting purposes be referred to as Cross and Beaumont

I certify that the preceding eighty seven (87) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watt

Associate:

Date:  12 June 2007