CRW and CML (No 2)
[2003] FMCAfam 446
•3 October 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CRW & CML (No. 2) | [2003] FMCAfam 446 |
| FAMILY LAW – Child Support – Costs |
Family Law Act 1975
Child Support (Assessment) Act 1988
Kelly v Kelly (No.2) (1981) FLC 91 – 108
Hogan (1986) FLC 91 –704
I v I (No.2) (1996) FLC 92 – 625
Penfold (1980) FLC 90 – 800
Vaughan (1990) FLC 92 – 135
| Applicant: | CRW |
| Respondent: | CML |
| File No: | MLM 9493 of 2002 |
| Delivered on: | 3 October 2003 (in Chambers) |
| Delivered at: | Melbourne |
| Hearing Date: | 25 June 2003 |
| Written Submissions: | 15 & 30 September 2003 |
| Judgment of: | Walters FM |
REPRESENTATION
| Counsel for the Husband: |
| Solicitors for the Husband: | Eales & Mackenzie |
| Counsel for the Wife: |
| Solicitors for the Wife: | Marshalls & Dent |
ORDERS
The husband do pay the wife’s costs of and incidental to these proceedings fixed in the sum of $6,852.50.
The costs referred to in (1) above be paid not later than 4.00 pm on
1 April 2004.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 9493 of 2002
| CRW |
Applicant
And
| CML |
Respondent
REASONS FOR JUDGMENT
The Wife Seeks Costs
The wife seeks an order for costs, following the husband’s unsuccessful attempt to vary the periodic payment provisions of a child support agreement.
The husband’s application was dealt with at trial on 25 June 2003. I published my Reasons for Judgment on 1 September 2003. The husband’s application was dismissed.
The wife now seeks an order for costs arising out of the proceedings and the orders made on 1 September 2003 (including an order that costs of $2,400.00 – which were fixed and reserved by Federal Magistrate Connolly on 12 March 2003 – be paid by the husband).
Short History
The proceedings first came before this Court on 6 January 2003. On that day, the Chief Federal Magistrate ordered, inter alia, that the child support agreement be deemed to be filed in the Federal Magistrates Court. Her Honour also gave the husband leave to amend paragraph 1 of his form 63 application (filed 13 November 2002) – to seek that the child support agreement “be discharged”.
The latter order was made in the context that the husband (who was then unrepresented) had sought the following orders in the form 63 filed on 13 November 2002:
(1) Declare null and void child support agreement…as it is unreasonable in relation to income of husband.
(2) Discharge (the husband) from arrears calculated under the child support agreement…as they are unreasonable in relation to husband’s income.
(3) Order that further child support be assessed under the Child Support Agency Formula.
The husband filed an amended form 63 application on 4 March 2003. He was still unrepresented at that time. Paragraph 1 of the orders sought was amended to read:
“The child support agreement…be discharged”.
Paragraphs 2 and 3 remained unchanged.
In accordance with the directions made by the Chief Federal Magistrate on 6 January 2003, the proceedings came on for hearing before Federal Magistrate Connolly on 12 March 2003. The wife’s version of the events on that day (contained in paragraph 3 of her Costs Submissions) is not admitted by the husband. Suffice it to say, however, that:
a)the husband was unrepresented on 12 March 2003;
b)the wife was represented on that day;
c)the case did not proceed, and was adjourned to 25 June 2003 for a one day final hearing; and
d)an order was made that: “the wife’s costs of this day be fixed and reserved in the sum of $2,400.00”.
The trial took place on 25 June 2003. By that stage, the husband had obtained legal representation.
At the commencement of the hearing, counsel for the husband (Ms Wheeler) made it clear that the husband was no longer seeking the orders set out in the amended application filed in March 2003. Relevantly, he no longer sought that the agreement be set aside or discharged. The husband’s case at trial was that the agreement should be varied by:
“…setting the periodic payments as and from 26 February 2001 at an amount calculated by applying the Child Support Formula to the husband’s taxable income to result in a more just and equitable determination reflective of the husband’s income earning capacity, property and financial resources.”[1].
[1] See Part G of the husband’s Outline of Case document
The husband’s case at trial is outlined in paragraphs 11 to 14 of the Judgment. The wife’s case was that the husband’s application should be dismissed.
The Law
The provisions of the Family Law Act relating to orders for costs are deemed to apply to the Child Support (Assessment) Act by the operation of section 100 of the Child Support (Assessment) Act[2].
[2] See Vaughan 1990 FLC 92-135 at 77,925
The question of costs in family law proceedings is dealt with in section 117 of the Family Law Act. A judicial officer has a broad discretion in costs matters, and the Full Court has indicated that it will not ordinarily intervene unless the order is plainly unreasonable. Indeed, it has been held that the court has an almost unlimited jurisdiction in relation to costs, although any costs order must be just. [See Kelly v Kelly(No.2) (1981) FLC 91 – 108, Hogan (1986) FLC 91 – 704 and I v I(No.2) (1996) FLC 92 – 625.]
It is not the law that a costs order can only be made in “a clear case”. Thus, although a finding of justifying circumstances is an essential preliminary to the making of a costs order, there is no additional or special onus on an applicant for an order for costs. Although the general rule is that each party shall bear his or her own costs, that general rule is expressed to be subject to section 117(2) and must yield whenever the judicial officer finds that there are circumstances justifying the making of the costs order. [See Penfold (1980) FLC 90 – 800.]
Section 117(2A)(a) – The Parties’ Financial Circumstances
The parties’ financial circumstances have been dealt with in the Judgment. Neither party is in a strong financial position.
The husband has significant liabilities. The company of which he is sole director and shareholder (and which the husband conceded is his alter ego) owes the Australian Taxation Office approximately $130,000.00. It owes its workers compensation insurer approximately $8,000.00. Other liabilities (of either the husband or the company) are referred to in the Judgment.
I accept that the husband will have considerable difficulty meeting any costs order that I may be minded to make in this case, but the fact of the matter is that the wife’s financial position is not significantly better than that of the husband. The costs associated with the conduct of these proceedings has clearly been a heavy burden for both parties.
Section 117(2A)(b) – Legal Aid
Neither party is in receipt of assistance by way of Legal Aid.
Section 117(2A)(c) – Conduct
This provision requires the Court to have regard to the parties’ conduct in relation to the proceedings. In other words, their conduct as litigants must be considered.
The orders made by Federal Magistrate Connolly in March 2003 directed the parties to file and serve any further affidavits upon which they intended to rely by not later than 4.00 pm on 4 June 2003. Notwithstanding that order, the husband’s principal trial affidavit was sworn and filed on 6 June 2003. His most recent financial statement was sworn on 24 June 2003 (being the day before the trial).
The wife complied with the procedural orders made in March 2003.
I take into account the fact that the husband did not comply with the procedural orders made in March 2003. It would appear, however, that the late filing of his documents did not adversely affect the conduct of the trial.
No other aspects of the parties’ conduct as litigants has been brought to my attention in the parties’ Costs Submissions.
I have not overlooked the fact that Federal Magistrate Connolly ordered that the wife’s costs of the hearing on 12 March 2003 be fixed and reserved in the sum of $2,400.00 – but neither party has presented to me any admissible evidence of the circumstances giving rise to his Honour’s order. Although the fixing and reservation of the wife’s costs might suggest that Federal Magistrate Connolly was of the view that the husband should meet the wife’s costs in any event, that is not an inference that I should draw in the absence of relevant evidence. In my opinion, it is for the wife – who now seeks a formal order regarding the costs reserved on that day – to demonstrate that there are circumstances that justify such an order. The costs submissions as they are presently drafted are of little assistance in that regard.
Section 117(2A)(d) – Whether the Proceedings were Necessitated by the Failure of a Party to Comply with Previous Orders
It is not suggested that this provision is of relevance.
Section 117(2A)(e) – One Party Wholly Unsuccessful
In my opinion, it is clear beyond argument that the husband was wholly unsuccessful in the case which he ran at trial. The only provision of the child support agreement that the husband sought to vary was clause 1(a), dealing with periodic payments of child support. That provision was not varied, and the husband’s application was dismissed.
It is submitted on behalf of the husband that “…without the wife agreeing that the children’s school fees should continue to be paid, the (husband’s) case would have been…that the whole of the agreement should be set aside”. To the extent that this submission suggests that the husband’s lack of success in the proceedings may be attributable – in some way – to the wife’s conduct, then I reject it. The wife’s case was that the husband’s application should be dismissed in its entirety. The wife recognised that the Court may ultimately be minded to vary the periodic payment provisions of the child support agreement, but at no stage did the wife concede that such a variation was appropriate.
It was always open to the husband to seek to attack the obligation to pay his sons’ education and other expenses. He elected not to attempt to vary this part of the child support agreement.
I have not overlooked the attitude of the parties to the support of their children in the broadest sense – and I refer, in this regard, to paragraphs 95 to 103 inclusive of the Judgment. The reality is, however, that the wife took the view that the husband had entered into the child support agreement in the circumstances described in paragraphs 95 to 101 of the Judgment, that he had done so relatively recently and that he had failed to demonstrate any grounds which should or could properly lead to the agreement being varied[3].
[3] See paragraph 105 of the Judgment
Section 117(2A)(f) – Offers
Neither party asserts that this is a relevant consideration.
Section 117(2A)(g) – Other Matters
Under this general heading, the wife submits that it is relevant to take into account that one of the purposes of the child support legislation is to enable parties to enter into their own “contractual arrangements” relating to their children. This is a matter to which I have referred in paragraphs 88 and 89 of the Judgment. At the end of the day, however, its principal relevance is as a factor to be taken into account in the determination of the question of whether the husband should or should not succeed in the substantive proceedings. And there it was considered. It is a factor which played its part in my determination that the husband’s application should be dismissed. To that extent, it may be relevant under section 117(2A)(e) – but it is not a “stand alone” consideration, as it were.
Does the Wife Seek Costs on an Indemnity Basis?
The wife appears to be seeking an order that the husband pay her costs on an indemnity basis. This submission is not expanded upon in any way. I propose, therefore, to do no more than refer to the discussion of indemnity costs in paragraph [61 – 420] of the CCH Australian and Family Law and Practice Service, and to make the following observations:
a)I am not aware of any exceptional circumstances which would justify a departure from the ordinary rules relating to costs between party and party;
b)there do not appear to be any special or unusual features in the case such as to justify a departure from the ordinary practice; and
c)I cannot and do not presume or conclude that the husband commenced or continued the proceedings for some ulterior motive, or because of some wilful disregard of the known facts.
Conclusion
In my opinion, the most significant of the factors referred to above is the husband’s lack of success in the proceedings.
I am conscious of the husband’s financial circumstances, and the difficulty that he is likely to experience in meeting an order for costs. I take into account, as well, the wife’s financial position following the dismissal of the husband’s application and the likely payment to her of all or a substantial proportion of the child support arrears.
I am not persuaded that there are circumstances which would justify the Court in ordering the husband to pay the wife’s costs reserved in March 2003, but I am of the opinion that there are circumstances that justify the Court in making an order for costs in the wife’s favour in respect of the proceedings generally.
The order that I consider to be just in all the circumstances of this case is one which will require the husband to pay the wife’s costs of the final hearing (including preparation).
Counsel for the husband does not appear to take issue with the relevant items in paragraph 28 of the wife’s costs submissions (being the items contained in paragraph 28(b)(iii) – (viii)). I propose, therefore, to make the following orders:
a)The husband pay the wife’s costs of and incidental to these proceedings fixed in the sum of $6,852.50.
b)The costs referred to in (a) above be paid not later than 4.00 pm on 1 April 2004.
I have allowed the husband (six) 6 months within which to pay the costs ordered in recognition of the financial pressures which currently affect him. Given that the parties’ eldest son should soon be completing his secondary education, and given the comments in the Judgment regarding the Dunolly property, it seems to me that a period in excess of (six) 6 months within which to pay the costs awarded is unnecessary and unwarranted.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Walters FM
Deputy Associate: Rebecca Young
Date: 3 October 2003
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