Doran and Keyes and Anor (No.2)

[2017] FCCA 2205

FEDERAL CIRCUIT COURT OF AUSTRALIA

DORAN & KEYES & ANOR (No.2) [2017] FCCA 2205

Catchwords:
FAMILY LAW – Costs – application for costs by the respondent de facto wife and intervenor following the delivery of reasons in relation to property matters – findings in the original judgment that the de facto husband was dishonest in his evidence in relation to the loan by the intervenor resulting in wasted time during the trial – costs of intervenor to be paid in accordance with the Family Law Rules – costs of the de facto wife to be paid in accordance with the Federal Circuit Court Rules – Application in a Case to stay the Order wherein the de facto wife is to pay the de facto husband a sum of money pursuant to the property order and for the costs of the de facto wife and intervenor to be deducted from the amount payable to the husband, prior to the husband receiving those funds.

Legislation:

Family Law Act 1975, s.117

Cases cited:

Collins and Collins (1985) FLC 91-603
Penfold v Penfold (1980) FLC 90-800

Applicant: MR DORAN

First Respondent: MS KEYES

Second Respondent: MS M KEYES

File Number: BRC 1340 of 2015

Judgment of: Judge Willis

Hearing date: 10 July 2017

Date of Last Submission: 30 June 2017

Delivered at: Cairns

Delivered on: 10 July 2017

REPRESENTATION

Solicitors for the Applicant: Self-represented - no appearance

Solicitors for the First Respondent: Atherton Tablelands Law

Solicitors for the Second Respondent: Atherton Tablelands Law

ORDERS

1. That Order 2 of the Orders made on 18 April 2017 be suspended pending the assessment of costs referred to in Orders 2 and 7 herein.

The Respondent De Facto Wife’s legal costs

1. The Applicant defacto Husband pay the Respondent defacto Wife’s costs of and incidental to the property proceeding (including her application for costs) including all disbursements and outlays to be assessed on a party/party basis in accordance with Schedule 1 of the Federal Circuit Court Rules 2001 (Cth) in relation to her Response to the Applicant defacto Husband’s Application for property orders filed 17 February 2015 as amended by Application filed 5 April 2016.

2. That the Court certifies it was reasonable for the Respondent defacto Wife to employ Ms Kathryn McMillan QC to appear on her behalf as an advocate in the proceeding (including her application for costs) pursuant to Rule 21.15 of the Federal Circuit Court Rules 2001 (Cth).

3. That the sum of any costs payable by the Applicant defacto Husband to the Respondent defacto Wife pursuant to Order 2 herein be deducted from the amount to be paid by the Respondent defacto Wife to the Applicant defacto Husband  pursuant to Order 2 of the Orders dated 18 April 2017.

The Respondent Intervenor’s legal costs

1. That the Applicant defacto Husband pay the Intervenor’s costs of the proceeding (including her application for costs) to be assessed on a party/party basis in accordance with the scale in Schedule 3 of the Family Law Rules 2004 (Cth) and including all disbursements and outlays in accordance with Schedule 1 of the Federal Circuit Court Rules 2001 (Cth).

2. That the Court certifies it was reasonable for the Intervenor to employ Mr Ross Cameron of Counsel to appear on her behalf as an advocate in the proceeding (including her application for costs) pursuant to Rule 21.15 of the Federal Circuit Court Rules 2001 (Cth).

3. That any costs assessed to be payable by the Applicant defacto Husband to the Intervenor be deducted and paid to the Intervenor from the amount to be paid by the Respondent defacto Wife to the Applicant defacto Husband in accordance with Order 2 of the Orders made on 18 April 2017 after deduction of any costs the Applicant defacto Husband is adjudged to pay to the Respondent defacto Wife pursuant to Orders 2 and 5 herein.

4. That the balance payable (if any) by the Respondent defacto Wife to the Applicant defacto Husband  pursuant to Order 2 of the Orders dated 18 April 2017 be paid by the Respondent defacto Wife to the Applicant defacto Husband contemporaneously with the transfer of property set out in Order 1 of the Orders dated 18 April 2017.

5. That the parties do all acts and sign all documents required to implement these Orders.

6. All outstanding property applications are dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Doran & Keyes & Anor (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT CAIRNS

BRC 1340 of 2015

MR DORAN

Applicant

And

MS KEYES

First Respondent

MS M KEYES

Second Respondent

SETTLED EX TEMPORE REASONS FOR JUDGMENT

1. In this matter, the parties have been through a lengthy trial. My decision was some 60 pages.  It was a property application and Mr Doran was the applicant de facto husband and the respondent de facto wife is Ms Keyes. The intervenor is her mother, Ms M Keyes. The hearing dates were 25 May, 2 and 3 June 2016; submissions were filed in July 2016. The decision was handed down on 18 April 2017.

2. After handing down my judgment, I made an order that if there was to be any application for costs, the applicant was to file written submissions attaching a minute of orders sought with reference to the scale within 28 days of the date of this order. The respondent (for the costs application) was to file and serve any written submissions in response, attaching a minute of orders sought within 14 days of being served.

3. I have received all of the submissions as read into the record. The de facto wife and the intervenor sought costs against the de facto husband. The de facto husband’s submissions in response were filed on 29 May 2017 with some additional submissions filed on 30 June 2017.  I have had regard to those submissions. They essentially set out why I ought not make any order for costs. I also have fulsome submissions by Ms McMillan QC filed on 17 May 2017 with a reply on 9 June 2017 on behalf of the applicant de facto wife. Submissions were also filed on behalf of the intervenor, who was represented by Croxford Partners at the trial and who is now represented by Ms English. Mr Cameron of Counsel appeared for the intervenor at the trial also sought costs in his written submissions.  All the parties have agreed that determination of the costs applications can proceed on the papers. 

4. Because I have another application in a case about these costs, I have determined that I will deliver my reasons today on the actual costs application and then I can deal with the application in a case filed by the de facto wife and the intervenor relating to the payment of any costs order by the husband, listed for hearing today. I note that the de facto husband does not appear today. He is now self-represented.

5. In relation to the costs application, the relevant section of the Act is section 117.

The Law

1. Section 117(2) of the Family Law Act 1975 is the relevant section. It provides essentially for each party to pay their own costs. S.117(2) provides that the Court can make an order for costs, and when considering whether to do so, the Court is required to consider certain matters set out in s.117(2A) together with any other relevant matter.

2. In Collins and Collins (1985) FLC 91-603 at page 79,877 the Full Court said:

   “In deciding whether the circumstances justify an order for costs, there is a broad discretion to be exercised, having regard to the factors set out in subs. (2A) so far as relevant.  Those factors…. are not to be read in a restrictive way, however, the discretion remaining is a broad one:  Penfold v Penfold (1980) FLC 90-800 at pp 75,053-75,054 (High Court); quoted in Mallet v Mallet (1984) FLC 91-507 at pp 79,123-79, 124 (by Wilson J).”

3. In Penfold and Penfold (supra), the High Court overturned a decision of the Full Court of the Family Court who upheld an appeal against the trial judge’s decision to order that the husband pay the wife’s costs in relation to a maintenance application.  Importantly the whole of the High Court (who unanimously overturned the Full Court’s decision)  held that:

   (a) The general rule expressed by section 117 (1) that each party should bear his own costs, is not paramount to section 117(2) and must yield whenever a judge finds a particular case where there are circumstances justifying the making of an order for costs.

   (b)  Apart from the requirement that the judge must find that there are circumstances justifying a costs order, there is nothing in section 117(a) or (32) which imposes any additional or special onus on an applicant for costs.  It is not correct to say that an order for costs can only be made in a clear case.

4. Justice Murphy of the High Court also added: “Presentation of a false statement of financial circumstances which puts the other party to the trouble and expense of disproving it, is a circumstance which justifies an order for costs. Courts should regard such circumstances which tend to undermine the integrity of proceedings with great concern, and should do everything in their power to determine who is responsible in order maintain that integrity.”

5. The de facto wife seeks her costs primarily because the applicant was wholly unsuccessful looking at the financial circumstances of the parties and that there were offers made. The respondent sets out in the written submissions the position in relation to discussion of those issues. 

6. Turning to the considerations under section 117(2A):

(a) The financial circumstances of each of the parties

1. In relation to the first of the 117(2A) factors, the financial circumstances of the parties, I have had regard to those issues. I note that the de facto wife at the time of the trial was in receipt of the family tax benefit. I note that the husband’s evidence was that his average weekly income was $1,300.00 and at trial, he informed the court that he was earning about $1,000.00 per week.  That should be seen in the context of the mother having the care of the parties’ four children, two of whom were aged under 18 by the time of the trial. The mother has had the ongoing responsibility for being the sole parent since the parties separated in 2014.

2. I note also that there has been almost no child support paid. There is some suggestion that there may have been some paid in more recent times; however, for the bulk of the time post separation the father has paid no child support. The mother is in a more precarious position in terms of her capacity to earn an income, as she has been out of the paid workforce since 1997. The husband has, in contrast, been in the workforce for the entire time. The de facto husband’s deliberate financial mismanagement and failure to lodge tax returns as and when they were due results in the de facto wife being unable to access family tax benefits for most of the post separation period.   

3. I am also aware, as submitted by Ms McMillan of Counsel, that there is a current debt of $44,000.00 to (omitted) School in relation to the schooling of the two children.

4. The de facto wife can expect no financial assistance from the husband in relation to the 2 children under 18, one aged only 5. She does not possess skills which readily permit her to return to the workforce, unlike the de facto husband.

(b) Whether either party is in receipt of Legal Aid

1. In terms of whether either party was in receipt of Legal Aid, each party was privately funded.

(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, direction to answer questions, admissions of facts, production of documents and similar matters.

1. I adopt the submissions of Ms Macmillan of Counsel, that, in all the 11 propositions advanced by Counsel for the applicant, all were rejected.  Of course, that all takes time to go through in the trial and the judgment and deal with all of the time-wasting arguments that were put forward by or on behalf of the de facto husband.

2. The case run by the de facto husband had the appearance as though every legal argument remotely possible found in a text book had been used in this. I referred to this feature in my reasons as an “omnibus of legal reasons and principles” as to why the Court should not regard the advance made by the intervenor as a loan. These concepts ranged from Jones v Dunkel arguments, the statute of limitations, no binding contract at law, and issue as to unconscionability. I rely upon but do not repeat my observations in the judgment in this respect. This was time wasting and indulgent conduct on behalf of the de facto husband. The trial was longer that it ought to have been and the other parties were put to expense (unnecessarily) in addressing unnecessary issues.

3. I also refer to the judgment regarding the husband’s conduct as a litigant which including him being willing to give untruthful testimony as the basis of his contention that the loan advanced by the intervenor was a gift, not a loan.

(d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

1. The proceedings initiated in this matter were not initiated due to the failure of either party to comply with an order. 

(e) Whether any part to the proceedings has been wholly unsuccessful in the proceedings

1. In terms of whether either party was wholly unsuccessful, it has to be said, in no uncertain terms, that the husband was wholly unsuccessful.  I refer to but do not repeat all of the passages in this respect of my judgment.

2. I also adopt the passages set out by Ms McMillan of Counsel as to the very significant findings made against the de facto husband. This goes towards his conduct as well as his failure to succeed in his litigation.  The de facto husband chose to run a contested property matter which was ultimately in relation to the pivotal issue in contest, contrived by the de facto husband. The fanciful story concocted by the de facto husband to done to advance his position in the litigation. 

3. There were aspects to his evidence, as I have found in the judgment and which I rely upon but do not repeat, that were purely strategic. For instance, his false version of events as to the circumstances in which he had been “forced” by the intervenor to sign a document. I found that as being untruthful, implausible and entirely inconsistent with the rest of his evidence. He gave evidence that he hadn’t signed any document. In fact, he had signed mortgage documents in the presence of his solicitor.   Hence, my findings that a lot of what the father said was entirely implausible and dishonest.

4. The de facto husband was, as I have found, a most unimpressive witness and his entire case against the intervenor and his whole argument that the significant amount of funds, $156,435.00 advanced by the intervenor were, in fact, a gift, not just to the de facto wife but also to him, was all hanging on one conversation of probably less than a minute where the intervenor is alleged to have said to the de facto husband “I will give you the money.”  This was also untruthful.

5. There were documents put to the de facto husband in the course of the trial which were in his own handwriting, which satisfied the Court that he knew that there was a debt owed to the intervening maternal grandmother. He had written on the documents words to the effect “how much is the grandmother owed” and other entries which made it abundantly clear, together with the rest of the evidence from the other parties that the husband well knew all along that this money was to be repaid. The Court made a very serious finding of dishonesty against the de facto husband. 

6. All of this conduct by the de facto husband resulted in a trial that ought not to have occurred and also made the property trial significantly longer than it ever needed to be. This is particularly so as regards to the intervenor. The intervenor had no choice about coming to Court to file her material and run her case that the money was always a loan. I found the de facto wife and her mother as being truthful witnesses who did not embellish their evidence and whose evidence was to be accepted. 

7. The husband has certainly been wholly unsuccessful. He has wasted court time in the decision taken as to how to run his case. His financial situation, which is only one of the matters to be considered, is healthier than the wife’s. 

(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

1. I have also had regard to the offers which were exchanged and note that the offers of May and June from the de facto wife’s and intervenor’s solicitors align with the orders made by the court.

(g) Such other matters as the Court considers relevant

1. It also is not to the point that as submitted by the de facto husband, if costs are ordered that the de facto husband is not going to get very much money by the end of it. The issue in this case is that there are very good reasons as to why the de facto husband ought to pay costs, and that is particularly in light of his decision to run what amounted to a false argument and other time-wasting arguments putting the parties to additional expense, particularly the intervenor. The de facto wife has had to come along and argue the property matters generally, but the intervenor was here at the trial solely to disprove the husband’s false evidence. The de facto husband has chosen to litigate based on false testimony. This has caused significant cost consequences for the other two parties.

2. I note the reference in the intervenor’s submissions for costs of Mr Cameron of Counsel about “impecuniosity not incapacity” to meet an order for costs. The de facto husband’s ability to pay a costs order is simply one of the issues for consideration. The submission that the de facto husband could not afford to pay the costs was put forward by those representing the de facto husband in answer to a claim for costs. If this were so impecunious litigants could litigate with impunity regardless of the cost to other parties.

Discussion

1. I am satisfied, in all the circumstances, that it is appropriate that I exercise my discretion to order that the de facto husband pay the de facto wife’s costs of and incidental to the proceedings. I intend to make an order certifying for Queen Counsel to appear on her behalf. 

2. In relation to the intervenor, I accept all of the submissions made on her behalf. In relation, though, to the intervenor, in my view, there was a single issue that involved the intervenor and the prolonged and concocted story of the de facto husband had to be defended. His allegations of having to sign documents under pressure were false. I consider that it was even more onerous on the intervenor to have to come to court to protect what had been a loan.  I have had regard to her financial situation and I am also satisfied that the de facto husband ought to pay the intervenor’s costs and I certify for counsel.

3. In relation to those costs, for all of the reasons set out in the submissions of Mr Cameron of Counsel, I am satisfied that the de facto husband concocted a story involving falsehoods about being under pressure signing documents, and about him not knowing that it was a loan and running a false argument that it was a gift. These issues put the costs application for the intervenor in a different category to that of the de facto wife. I am satisfied that, in relation to the intervenor, for the reasons that I have referred to (I adopt the submissions of Counsel for the intervenor), that the costs ought to be assessed on the Family Court scale, which is a higher scale than the Federal Circuit Court scale. I will make an order that the costs of the intervenor be assessed according to the Family Court scale.  I have certified for counsel.

Application in a Case – Stay of Orders

1. Now, having made those orders, I now have an application in a case seeking to make an order that order number 2 of the orders of 18 April 2017 be stayed pending the determination of those costs, and any order that any costs assessed to be payable by the applicant to be deducted.

2. This application in a case was set down for today at 9:30 am. There is no response to it from the de facto husband nor does he appear.

3. In this matter, the de facto husband’s conduct amounts to financial abuse in refusing to pay any money for the financial support of the de facto wife and children as referred to in my findings. I refer to the de facto husband and his admissions that he stopped paying the mortgage, he stopped paying the rates, he stopped paying their debts, and he didn’t pay any child support or taxes. It is not difficult to conclude therefore that it would be highly unlikely that, upon receiving the funds (as per the order of the de facto wife to pay the de facto husband) he will use them to pay costs as ordered. 

4. I note the behaviour of the de facto husband in wishing to avoid all of his financial obligations and his preparedness to enter into what was really a campaign to make sure that the de facto wife and children ended up in extreme financial distress as referred to in the judgment.  I am satisfied that the husband was prepared to cause the wife to incur legal fees by his own conduct in running a case based on false evidence. This was a waste of the Court’s time. All through his cross examination the husband maintained his untruthful and various versions of events. He showed a lack of respect to the Court and the justice system in doing so. I have no confidence that he will respect the order to pay the legal costs of the wife or the intervenor even if he has the funds to do so.

5. I am satisfied in all of the circumstances that it is appropriate for me to make an order as sought by the intervenor in her amended application in a case. Similarly, as sought by the wife in the minute of orders sought. That is that effectively the total sum of the two costs orders of this Court (wherein the de facto husband is to pay the costs of each of the de facto wife and intervenor) is to be deducted by the de facto wife, from the amount that the de facto wife is to pay the de facto husband pursuant to the final property orders made by this Court on 18 April 2017 (being the sum of $58,609.00). The balance, if any, is then to be paid to the de facto husband. The shortfall, if any, is to remain an outstanding judgment debt payable by the husband to each of the wife and intervenor respectively.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Willis

Date: 26 September 2017