Donella and Donella

[2014] FamCA 386

FAMILY COURT OF AUSTRALIA

DONELLA & DONELLA [2014] FamCA 386

FAMILY LAW – COSTS – Assessment – Consideration of circumstances justifying the making of a costs order – where the husband was wholly unsuccessful – costs order made for sum less than that sought by the wife.

Family Law Act 1975 (Cth)

APPLICANT: Ms Donella

RESPONDENT: Mr Donella

FILE NUMBER: MLC 2881 of 2011

DATE DELIVERED: 12 June 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Johns J

HEARING DATE: 27 March 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Glass

SOLICITOR FOR THE APPLICANT: Altavilla Vessali

COUNSEL FOR THE RESPONDENT: Mr Stavrakakis

SOLICITOR FOR THE RESPONDENT: Kyriacou Lawyers Pty Ltd

Orders

1. That by 4.00 pm on 14 July 2014 the husband pay the wife’s costs fixed in the sum of $4,766.

2. That the wife’s costs application be otherwise dismissed and the matter be removed from the list of cases awaiting hearing.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Donella & Donella 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 MELBOURNE

FILE NUMBER: MLC 2881 of 2011

Ms Donella

Applicant

And

Mr Donella

Respondent

REASONS FOR JUDGMENT

1. On 9 April 2014 I delivered my reasons for judgment and made the following orders:-

   1.That paragraphs 1 to 6 inclusive of the final orders sought in the husband’s response filed 6 August 2013 be dismissed.

   2.That paragraph 1 of the interim orders sought in the husband’s response filed 6 August 2013 be dismissed.

   3.That should any party seek costs arising out of these orders, such application be made by written submission and filed and served no later than 17 April 2014 with such submission being endorsed with the fact that it has been so served on the other party, and any recipient of such submission have until 1 May 2014 to file and serve any response and such response be endorsed with the fact it has been so served upon the other party and upon receipt of any such application for costs it or they be determined in Chambers.

2. Pursuant to paragraph 3 of the orders the wife now seeks an order that the husband pay her costs and that they be paid on an indemnity basis in the amount of $7,150.  The husband opposes the wife’s application for costs.  However, he submits that in the event that an order is made for costs, such costs should be paid on a party/party basis in default of agreement as to quantum. 

3. In support of her application for costs the wife relies upon written submissions dated 15 April 2014.  The husband in response relies on written submissions filed on his behalf dated 30 April 2014. 

Legal Principles

1. The general rule is that each party to proceedings pursuant to the Family Law Act 1975 shall bear their own costs. 

2. Section 117(2) provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to the provisions of subsections (2A), (4), (4A) and (5) and the Rules of Court make such order as to costs and security for costs as the Court considers just. 

3. Section 117(2A) sets out the matters that the Court should have regard to in considering whether to make an order for costs.  Those circumstances are:-

   (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 wife’s application for costs

1. In support of her application, the wife principally relies upon the following matters to support her position that the husband pay her costs:-

   (a)That the husband has been wholly unsuccessful in the proceedings (s 117(2A)(e)); and

   (b)The financial circumstances of each of the parties to the proceedings (s 117(2A)(a)).

Section 117 (2A)(a) The financial circumstances of each of the parties

1. It is common ground between the parties that each is in receipt of Centrelink benefits. 

2. The parties have recently finalised property proceedings.  As a result of the making of final property orders it is agreed that the wife is entitled to a payment in the sum of $164,500 from the husband.  It is submitted by the wife that after payment of outstanding debts her net asset position will be approximately $70,000. 

3. Pursuant to the final property orders, the husband retains the former matrimonial home, albeit that it is subject to a mortgage.  It is submitted on behalf of the husband that the husband’s net asset position taking into account his legal expenses and mortgage commitments is approximately $90,000.  On that basis, it is submitted on behalf of the husband that the parties’ financial circumstances are similar.

4. The wife has the primary parenting responsibility for the parties’ three children.  As the husband is in receipt of Centrelink benefits, he has been assessed as having nil liability with respect to child support.  Accordingly, the whole of the financial responsibility for the care of the three children of the marriage rests with the wife. 

5. I am satisfied that the payment of costs for both parties is a significant financial obligation.  In determining the question of costs, I have taken into account the financial circumstances of each of the parties generally.

Section 117(2A)(b) Whether either party is in receipt of legal aid

1. Neither party is in receipt of assistance by way of legal aid.

Section 117(2A)(c) The conduct of the parties in relation to the proceedings

1. Neither party made submissions in relation to this matter.  Nonetheless, I have regard to the lengthy history of litigation with respect to parenting issues and in particular the protracted proceedings heard by Forrest J which are referred to in detail in my reasons for judgment. 

2. I also note my findings with respect to the impact of that litigation upon the children, the need for the children to have a period of stability in the aftermath of that litigation, and further, my findings that there is no change of circumstance which would warrant a re-litigating of the parenting proceedings at this time.

Section 117(2A)(d)  Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court

1. Neither party made submissions with respect to this matter.  I am satisfied that this matter is not a consideration in the determination as to the application for costs in this case.

Section 117(2A)(e) Whether a party to the proceedings was wholly unsuccessful

1. It was submitted on behalf of the wife that the husband has been wholly unsuccessful in his application for parenting orders.  As noted in my reasons for judgment the wife opposed the application of the husband to re-litigate the parenting matters which had been determined by Forrest J on 6 January 2012.  The wife relied upon the principles enunciated in Rice and Asplund (1979) FLC 90-725 (Rice and Asplund) in support of her application that the husband’s application be dismissed.

2. As a result of the nature of the applications, the issue with respect to Rice and Asplund was listed as a half-day hearing before me and specific directions were made for the filing of material in relation to that application.

3. The wife was wholly successful in her application that the husband’s parenting application be dismissed and I made orders to that effect.

Section (2A)(f)        Whether either party to the proceedings has made an offer in writing to the other party to the proceedings and the terms of that offer

1. Again, no submissions were directed to this consideration. 

Section (2A)(g)       Any other matters the Court considers relevant

1. I am satisfied that the husband has been wholly unsuccessful in respect of his parenting application. 

2. Whilst it is unusual to make costs orders in a parenting case, I am satisfied that it is appropriate to make such an order in this matter.  Mushin J considered the circumstances in which costs orders may be made in parenting cases in the decision of Green v. Knowles (No. 2) [2009] FAMCA 541 and at paragraph 44 of his judgment noted:-

   While in my view an order for costs in a parenting case is unusual, that does not mean that such an order cannot and should not be made in the appropriate matter…A wholly unsuccessful party, as is the husband in this matter, cannot proceed with impunity, ignoring the weight of the evidence and adhering dramatically to the proposition that his is the only proposal which is in the best interests of the children.

3. I respectfully agree with Mushin J’s comments in that decision.

4. The husband maintains that having regard to the modest financial circumstances of each of the parties that it is not appropriate to make costs orders and the fact of their modest circumstances would mitigate against the making of such orders.  Both parties have incurred costs as a result of the parenting issue raised by the husband.  Indeed, a discrete hearing was conducted in order to determine that issue.  Whilst the husband is a man of modest means he does not bear any financial responsibility for the care of the parties’ three children.

5. Having regard to those circumstances I am satisfied that it is appropriate that he bear some of the costs of the wife incurred in relation to his unsuccessful parenting application.

Quantum

1. The application for costs is for a total of $7,150.  To make an order of that nature would require me to contemplate an indemnity costs application. 

2. The Full Court said in the decisions of Kohan and Kohan (1993) FLC 92-340 and Prantage and Prantage [2013] FamCAFC 105, that for an order for indemnity costs, it is necessary for the Court to make a finding of exceptional circumstances. As was noted in Kohan, to make such an order is “a very great departure from the normal standard”.  I am not satisfied that the circumstances of this case justify a departure from the normal standard.  Other than the fact of the application, the wife does not point to any conduct of the husband as justifying a departure from the usual practice of the Court with respect to costs.  The making of an application, which is ultimately unsuccessful, is not a sufficient basis for an order for indemnity costs.

3. The husband alleges that the costs sought by the wife include costs of the hearing on 31 October 2013, which was a hearing in relation to both parenting and financial matters.  Accordingly, it is submitted by the husband that to claim the costs of that day is inappropriate as the wife’s counsel was also engaged with respect to the financial matters before the Court. A perusal of the orders made that day confirms that both parenting and financial proceedings were dealt with by the Court that day.  In the circumstances, there is some force to the submission made on behalf of the husband that he should not be required to meet the costs of that hearing.

4. Rule 19.18 of the Family Law Rules 2004 (Cth) provides that the Court may make an order for costs:-

   (a)Of a specific amount;

   (b)As assessed on a particular basis (eg Lawyer and client, party/party or indemnity);

   (c)To be calculated in accordance with the methods stated in the order; or

   (d)For part of the case, or part of an amount, assessed in accordance with Schedule 3.

5. Although I am satisfied that the circumstances of the case justify the Court departing from the general rule that each party bear their own costs, I am not persuaded that I should make an order that the husband pay all of the amount sought by the wife.  As detailed herein, I am satisfied that there is likely some overlap between the costs incurred by the wife with respect to the parenting proceedings and the property applications that were also on foot. 

6. Whilst I am satisfied that neither the husband nor the wife are affluent I am nonetheless satisfied that it is appropriate that the husband pay a proportion of the wife’s costs.  The wife faced a significant financial burden in having to brief a solicitor and counsel to appear on her behalf before me at the hearing on 27 March 2014, which was a discrete hearing in relation to the Rice and Asplund issue. 

7. In the circumstances and having regard to the financial position of both the husband and the wife, I propose to make an order that the husband pay two-thirds of the wife’s costs fixed in the sum of $4,766.  I am satisfied that that amount is, in all of the circumstances of the case, an appropriate contribution by the husband to the costs incurred by the wife. 

8. Accordingly, the orders I propose to make are as follows:-

   1.That by 4.00 pm on 14 July 2014 the husband pay the wife’s costs fixed in the sum of $4,766.

   2.That the wife’s costs application be otherwise dismissed and the matter be removed from the list of cases awaiting hearing.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 12 June 2014

Associate: 

Date:  12 June 2014