DENMEAD and DENMEAD

[2016] FCWA 103

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: DENMEAD and DENMEAD [2016] FCWA 103

CORAM: THACKRAY CJ

HEARD: 25 OCTOBER 2016 & 2 NOVEMBER 2016

DELIVERED : 3 NOVEMBER 2016

FILE NO/S: PTW 2725 of 2014

BETWEEN: MS DENMEAD

Applicant

AND

MR DENMEAD
Respondent

Catchwords:

COSTS - The settlement ordered was essentially the same as the settlement initially sought by the wife - The husband failed to persuade the court that the wife had undisclosed assets - Order for the husband to pay fixed costs.

Legislation:

Family Law Act 1975 (Cth), s 117, s 117(2), s 117(2A)

Category: Not Reportable

Representation:

Counsel:

Applicant: Mr Hedges (25 October 2016)

: Ms Nicholson (2 November 2016)

Respondent: Self Represented Litigant

Solicitors:

Applicant: Young & Young

Respondent: Self Represented Litigant

Case(s) referred to in judgment(s):

Collins and Collins (1985) FLC 91-603

Fitzgerald v Fish (2005) 33 Fam LR 123

Greedy and Greedy (1982) FLC 91-250

I and I (No 2) (1995) FLC 92-625

Luadaka v Luadaka (1998) FLC 92-830

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

1On 26 July 2016, I made orders resolving a property dispute between [Ms Denmead] (“the wife”) and [Mr Denmead] (“the husband”). My orders contained a timetable to deal with any application for costs that might arise following publication of the judgment.

2These reasons deal with the application for costs filed by the wife on 8 August 2016 and the response of the husband filed on 23 August 2016.

3In arriving at my decision, I have had the benefit of written submissions from both parties, supplemented by oral argument. I do not propose to deal with some of the misconceptions evident in the husband’s submissions which arose out of his lack of understanding of the law. I explained those matters to him during the oral argument and my comments should be treated as part of these reasons.

The application for costs

4The wife seeks $58,325 by way of a contribution to the costs she incurred in the proceedings. The costs she actually incurred were $82,298, of which counsel fees were $31,285. These amounts stand to be considered in light of the fact that, at trial, the wife sought a settlement worth less than the amount she had incurred in legal fees.

5The wife’s costs claim was calculated on the basis of her seeking to recover about 60 per cent of the fees rendered by her solicitors and 100 per cent of the fees rendered by counsel. The reduction is to take account of the fact that the fees charged by the solicitors exceeded the relevant scale laid down by the Family Law Rules 2004 (Cth). The fees charged by counsel also exceed the amount laid down in that scale, but there was no reduction of his fees.

6The husband seeks that each party be responsible for their own costs.

The law

7Subsection 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that, subject to s 117(2), each party to proceedings shall bear his or her own costs.

8Subsection 117(2) provides that if the court is of the opinion there are circumstances that justify doing so, the court may, subject to s 117(2A), make such orders as to costs as it considers just. Subsection 117(2A) provides as follows:

In considering what order (if any) should be made under subsection (2), the court shall have regard to:

(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.

9The Full Court of the Family Court of Australia in Collins and Collins (1985) FLC 91-603 at 79,877 described the discretion conferred by s 117 as being a “broad” one, and held that the s 117(2A) factors are not to be read in a restrictive way. The Full Court in Fitzgerald v Fish (2005) 33 Fam LR 123 also made clear that any one of the factors referred to in s 117(2A) may be the sole foundation for an order for costs. Nevertheless, as an earlier Full Court said in I and I (No 2) (1995) FLC 92-625 at 82,277, the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”.

10The Full Court has made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters. An exercise of discretion to order costs will be upheld if it appears to the appellate court that there are reasons upon which the trial judge could rely: see Greedy and Greedy (1982) FLC 91-250 at 77,382; Luadaka v Luadaka (1998) FLC 92-830 at 85,509.

Factors under s 117(2A)

11I will refer briefly to the factors I am required to consider under s 117(2A).

Financial circumstances of the parties

12Neither party is in a strong financial position. As a result of my judgment, the wife will receive 25 per cent of the modest asset pool and the husband will receive 75 per cent. In my reasons, I found that the total pool was worth $323,028 net.

13The wife is much younger than the husband and I accept she has greater capacity to earn income. Overall, however, I am not satisfied that the disparity in the parties’ financial circumstances is a matter that should influence the decision in relation to allocation of costs. In coming to my decision, I have not overlooked the fact that the husband will have to sell his home in order to finance the settlement. The wife does not have a home either.

Whether any party is in receipt of Legal Aid

14Neither party was legally aided.

The conduct of the parties to the proceedings

15The husband complains about the wife’s alleged failure to give disclosure of documents and the wife complains about the excessive costs she was required to incur in producing documents which she said were “historical” and otherwise of no relevance to the proceedings, or which she did not have. I accept that significant costs were incurred in pursuing these matters, which ultimately led nowhere given the findings I made in the substantive judgment.

Failure of a party to comply with previous orders

16This is not a relevant factor.

Whether any party to the proceedings has been wholly unsuccessful

17When the wife commenced proceedings in April 2014, she proposed that she retain the business and take on responsibility for the business debt, and that the husband pay her $75,000. On this basis, she proposed that the husband retain the former matrimonial home. No mention was made of this in the original submissions in support of the wife’s application for costs, which was most surprising since the relief she sought at the outset was almost precisely the relief she obtained in the judgment (albeit at the commencement of the proceedings she was also seeking $7,350 held in the business account which had been dissipated by the time of trial).

18In his response filed in July 2014, the husband proposed that the wife retain the business and that he retain the home. Significantly for present purposes, the husband proposed that the wife pay him an amount of $200,000. The husband was represented by a solicitor at the time. In attempting to ascertain how it could have been thought that the husband was entitled to such a large payment from the wife, I note that in his financial statement filed at the same time, the husband attributed a value of $88,000 only to the business. Accordingly, the claim could only have been predicated on the basis of the husband’s contention that the wife had failed to disclose assets.

19Although no mention was made of it in the original costs submissions, I also note that on 20 April 2015 the wife filed a Minute of Final Orders Sought in which she sought a payment from the husband of $150,000. It is not readily apparent why the wife amended her position in order to seek a payment which was double the amount she originally sought.

20On 18 June 2015, the husband filed a Minute of Final Orders Sought in which he repeated his earlier claim for a payment to him of $200,000.

21In her Papers for the Judge, which were only received by the Court two days prior to trial, the wife proposed that she receive a payment from the husband of only $70,100 (based on an estimated asset pool of $314,774). This proposal was made on the basis that the wife would retain responsibility for debts associated with the business totalling $48,600. For reasons explained in my judgment, the wife was awarded a little more than the amount she sought (i.e. $75,000). This involved her retaining responsibility for the business debts, as she had proposed.

22On the morning of the trial, the parties reached an agreement that the net assets would be divided in proportions 75:25 in favour of the husband. The only remaining issue was whether or not the wife had failed to disclose assets, and it was accepted that in the event that it was found that there were undisclosed assets, then those should also be divided in proportions 75:25. For reasons explained in my judgment, after two days of trial, I found that there were no undisclosed assets.

23If the husband had consented to the orders sought by the wife at the outset of the proceedings, almost all of the money expended on this litigation could have been saved. Instead, the wife has run up costs of over $80,000 in order to obtain almost precisely the settlement which she sought at the very beginning. The husband has been wholly unsuccessful in opposing the wife’s claim to be paid a sum of money, and has been wholly unsuccessful in pursuing his claim for a payment to him of $200,000.

Offers in writing

24The wife relied upon an offer of settlement made on 23 November 2015 in which she sought a payment to her of $60,000, but this offer was made on the basis that the husband would assume responsibility for the business loan in an amount of about $45,000. Although the offer might be seen as ‘in the ball park’, it involved the wife receiving a settlement worth about $30,000 more (in a small asset pool) than she received. I therefore do not consider that it greatly assists the wife in her application for costs, albeit I accept it could have provided the basis for sensible negotiations had it not been for the fact that the husband steadfastly maintained the position that he was entitled to a payment from the wife.

25The husband made an offer of settlement on 1 December 2015. Instead of the $200,000 he was formally seeking, this offer proposed that the wife pay him $100,000 and that she assume the business debt. His proposal fell very wide of the mark.

Conclusion

26The husband continues to maintain that he has suffered an injustice because he says the wife failed to give proper disclosure and that, as a result, she was able to conceal assets which should have formed part of the property to be divided. However, the husband took the risk of running these arguments at trial with little evidence to support them. My finding was that there were no hidden assets. That being the case, the wife’s opening position in the litigation and her offer of settlement were sensible positions to adopt, whereas the husband’s position throughout was untenable. The husband conducted part of the litigation without incurring any legal expenses, whereas I accept that it would not have been feasible for the wife to attempt to represent herself and she was therefore dependent upon professional, costly representation. The husband’s insistence that the wife had not disclosed assets contributed significantly to the costs of the litigation, in which he conceded he was ultimately unsuccessful.

27Had the wife maintained her original position throughout, I would have been strongly inclined to order the husband to pay her entire costs. However, she changed her approach part way through the litigation, and the offer of settlement she made fell short of the ultimate outcome. This was, of course, remedied at the outset of the trial when she sought an order that was slightly more favourable to the husband than the outcome he ultimately received. I also recognise that the wife’s offer of settlement did not involve the husband having to make any contribution to her legal costs, which would have been substantial by the time the offer was made on 23 November 2015.

28The failure of the wife’s advisers to refer to the original proposal (and to the Minute of 20 April 2015) only came to my attention when preparing these reasons. This necessitated further oral argument on 2 November 2016 (for which I trust the wife will not be charged). During this second hearing, the wife’s solicitor advised that the costs incurred by the wife from 20 April 2015 (when the Minute was filed) through to 23 November 2015 (when the offer was made) amounted to $21,240, and she accepted that the wife’s total claim might be reduced by about 60 per cent of that amount.

29In the exercise of my wide discretion, I have concluded that the husband ought to make a substantial contribution to the wife’s costs. I have the power to fix the amount, which I intend to do in order to avoid the expense and delay associated with a formal assessment of the costs. My order will be for the husband to contribute $30,000 to the wife’s costs, payable upon sale of the former matrimonial home.

Costs reserved in interlocutory proceedings

30In her initiating application, the wife sought interim orders for disclosure; for the husband to “assign the day to day running of the [business]” to her; for the husband to transfer the business bank account to her; and for injunctions restraining the husband from “interfering with the business … in any manner”, “harassing, molesting or otherwise interfering with the staff of the [business]” and attending at the [business]. Other injunctions were also sought. In support of these applications, the wife claimed, inter alia, that “since separation [the husband] has on several occasions attempted to disrupt the running of the business. He has pasted notices in the [business] window denigrating me”. She attached to the affidavit one such notice. She also claimed “in addition [the husband] has intimidated and frightened my staff”, and she annexed to her affidavit statements by one staff member and by the mother of another staff member expressing concern in relation to inappropriate conduct on the part of the husband.

31An order was made on 9 May 2014 in the Magistrates Court in Bunbury, restraining the husband from interfering with the running of the business until further order of the court. When the matter came before a Family Law Magistrate on 2 July 2014, orders were made by consent in the terms proposed by the wife insofar as her claim related to the conduct of the business and the husband’s involvement in it.

32On 7 July 2014, the husband filed a response in which he expressly indicated that he consented to the making of the orders sought by the wife relating to him being restrained from interfering with the business; attending at the business premises; and harassing, molesting or otherwise interfering with the staff.

33Despite this, on 9 March 2015, the husband applied for the discharge of the earlier orders, and sought an order that the business be sold and the proceeds held on trust pending further order of the court. He also sought that pending the sale of the business, he “have the right to operate the business as he sees fit without interference from the wife”. In his affidavit in support, the husband claimed, inter alia, that the wife had not been complying with an earlier order requiring her to maintain the business account and provide details and financial statements on a quarterly basis. He further alleged that the wife was not making any payments on the business loan.

34In her affidavit in reply, the wife acknowledged that no payments had been made towards the principal outstanding on the business loan since December 2013. She complained about the husband’s conduct and said that he had no knowledge of how to run a business and would be unable to [run the] business to the standard required.

35The proceedings came before a Family Law Magistrate on 25 May 2015, at which time the husband’s application was dismissed. The costs were reserved to the trial judge. I have not been provided with a transcript of the reasons of the Magistrate.

36Although I accept that the husband’s conduct was such as to justify the wife making the application to have him removed from the business, the wife’s application also dealt with other procedural and substantive matters. Furthermore, the application made by the husband to discharge the orders, on closer examination, was not as capricious as it may have first looked. In all the circumstances, I do not consider the husband’s conduct in relation to these interlocutory proceedings was such as to warrant an additional award of costs over and above the $30,000 I propose to order.

I certify that the preceding [36] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate
3 November 2016