Dougal and Dougal

[2009] FamCA 11

FAMILY COURT OF AUSTRALIA

DOUGAL & DOUGAL [2009] FamCA 11

FAMILY LAW – COSTS

Family Law Act 1975 (Cth)

Fitzgerald (as Child Representative for A (Legal Aid Commissioner of Tasmania)) v Fish (2005) 33 Fam LR 123
Penfold v Penfold (1980) FLC ¶ 90-800

APPLICANT: Mr Dougal

RESPONDENT: Ms Dougal

FILE NUMBER: MLF 2460 of 2005

DATE DELIVERED: 16 January 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: BY WAY OF WRITTEN SUBMISSIONS

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT: LOU CASTELLANO

SOLICITOR FOR THE RESPONDENT: PETER FALCONER & ASSOC

Orders

1. That the application by each party for costs is dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Dougal & Dougal is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 2460  of 2005

MR DOUGAL

Applicant

And

MS DOUGAL

Respondent

REASONS FOR JUDGMENT

1. On 17 December 2008, I made orders arising out of a final property determination in which I made orders on 17 January 2008.

2. The proceedings before me in December 2008 related to both clarification and enforcement of the earlier orders.

3. Each party had applied for orders different from the other and opposed the orders sought by the other.

4. The husband sought orders for the distribution of some trust funds. In reality, the husband wanted me to permit him to have access to some quarantined tax money with him being ultimately obliged to make the payment to the Tax Office upon the assessment being made. That course of action was opposed by the wife.

5. The wife sought orders that the tax money be quarantined and kept in trust until paid and also that the husband comply with other parts of the January 2008 orders.

6. I made provision for each party to make further application for costs if they thought that appropriate.

7. The wife’s solicitor sent a letter with several annexures on 8 January 2009 as her submission as to costs.

8. The wife’s position as outlined in her solicitor’s letter was:

   (a)the wife had been diligent in pursuing the taxation determination issue; and

   (b)the wife had not been told that the husband had complied with orders of the court.

9. The letter otherwise did not specifically address the matters set out in s 117.

10. The husband’s position as outlined in a letter dated 14 January 2009 was a response to the submission of the wife.

11. It was submitted that the wife had been aware of the MS Pty Ltd sale details and also the consequent problem of calculating the capital gains tax. It was submitted that the position adopted by the wife was inconsistent with the January orders. However, the husband’s solicitor submitted that there was common ground between the parties that the sale funds were not to be released until the “resolution” of the capital gains tax issue. I understand that statement to mean agreement as to the calculation of the tax. The argument was about whether the husband could have access to the funds pending the obligation arising to pay the amount.

12. The letter of the husband’s solicitor did not otherwise specifically address the matters set out in s 117.

13. In my reasons for judgment, I commented that I thought the wife had not been diligent. I relied upon the husband’s affidavit (paragraphs 6 and 7 of the affidavit filed 31 October 2008) where the assertion was that there had been considerable correspondence but little response from the wife. The wife’s affidavit did not specifically respond to those paragraphs.

14. The submission of the husband sets out a number of letters that flowed backwards and forwards between the wife’s then practitioners and his own.

15. I accept that the husband became frustrated and needed to take action and having regard to the time that had elapsed, that was not an unreasonable thing to do.

16. The wife also submitted that she had sought details of the husband’s compliance with orders relating to notification to third parties of the January orders. Her complaint was that he had not told her what he had done. The reality is that he had complied with the orders.

17. The husband had also been ordered to execute a charge but it seemed common ground that there was considerable dispute about its wording and also the costs of its completion. Ultimately, the husband’s counsel prepared it and it was executed.

18. The husband’s position was that it was “anticipated” by the husband that the wife’s lawyers would prepare the charge because that is the “commercial tradition”.

19. What flowed from the anticipation and lack of agreement was an argument about what should be in the document. It transpires that there were (and apparently still are) also arguments about legal practitioners withholding funds unilaterally associated with this issue. I have no idea what all that is about and there was no evidence upon which I could make any finding about the question of diligence. If there has been an inappropriate handling of funds or a failure to properly communicate, those are matters for the relevant professional bodies. None of that material is relevant to what I have to determine now.

20. Importantly, in respect of the capital gains tax issues, I am not convinced that the husband can be criticised for the delays.

21. The issue in this case was really about whether or not the funds for the quarantined tax should be released to the husband and he have the opportunity to use them as he saw fit pending the formal assessment to him by the Australian Taxation Office. I ruled that there were risks involved in the husband’s proposal and rejected it.

22. Section 117 of the Family Law Act 1975 (“the Act”) is the relevant statutory provision in relation to an application for costs.  It provides that each party shall bear his or her own costs.  However, pursuant to sub-s (2), the Court may make such order as to costs as it considers just if it is of the opinion that there are circumstances to justify doing so. 

23. In considering what order (if any) should be made the Court is required (inter alia) to have regard to the matters referred to in s 117(2A). They 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.”

24. In Penfold v Penfold (1980) FLC ¶ 90-800, the High Court of Australia said that the general rule expressed by s 117(1) was not paramount to s 117(2). That is, when a court finds circumstances justifying an order for costs, the principle that each party should bear their own costs should give way.

25. Thus, s 117(2) requires a finding of justifying circumstances as an essential preliminary to the making of an order.

26. To determine whether or not there is a justifying factor to depart from the principle that each party should bear their own costs, one needs to look at all of the matters set out in s 117(2A) as well.

27. At the same time, it is important to look at s 117(2A) (g) which provides that the Court should consider any “other matters” it considers relevant. Those additional words make clear that the discretion is extremely wide.

28. In Fitzgerald (as Child Representative for A (Legal Aid Commissioner of Tasmania)) v Fish (2005) 33 Fam LR 123 the Full Court observed that, nowhere in s 117(2A) or elsewhere in s 117 is there any prescription that more than one factor must be present before an order for costs is made, nor any indication as to the comparative weight of the factors set out in sub-s (2A). As a consequence, that there is nothing to prevent any factor being the sole foundation for an order for costs. The difficulty I have here is that identifying any particular factor that would justify an order for costs is not simple.

29. I understand that neither the husband nor the wife is eligible for any legal aid type assistance.

30. In relation to the conduct of the parties in relation to the proceedings, each points the finger at the other and says that the proceedings were necessitated by the actions of the other which gave rise to the impasse. I do not find anything in the conduct of either party that would justify an order for costs.

31. There is an assertion by the wife of failure to comply with court orders but I reject that.

32. I could not say that either party has been wholly unsuccessful.

33. Neither party in their evidence or submissions has put before me any material that would make me think that there was something unusual about the case or in contemplating the factors in s 117(2A) to say that I would be justified in departing from the principle that each should pay their own costs.

34. Accordingly I refuse the applications for costs.

I certify that the preceding Thirty Four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  16 January 2009