Dudley and Ryecroft (No 3)

[2020] FamCA 814

FAMILY COURT OF AUSTRALIA

DUDLEY & RYECROFT (NO. 3) [2020] FamCA 814

FAMILY LAW – COSTS – Interim – Where the de facto wife seeks costs of and incidental to an interim hearing – Where the de facto husband opposes the costs order – Where the decision as to costs of the interim hearing is more appropriately determined following the finalisation of the substantive proceedings.

Family Law Act 1975 (Cth) s 117

APPLICANT: Ms Dudley

RESPONDENT: Mr Ryecroft

FILE NUMBER: BRC 7473 of 2018

DATE DELIVERED: 8 June 2020

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 16 and 24 April 2020
(Last submissions received 8 May 2020)

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Looney QC
with Ms Fraser

SOLICITOR FOR THE APPLICANT: N R Barbi Solicitors

COUNSEL FOR THE RESPONDENT: Mr Hackett

SOLICITOR FOR THE RESPONDENT: Hirst & Co

Orders

1. That each party’s costs of and incidental to the hearing and determination of the Applications in a Case filed on 3 April 2020 and 23 April 2020 are reserved until the finalisation of the competing substantive property adjustment applications of the parties.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Dudley & Ryecroft has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 7473 of 2018

Ms Dudley

Applicant

And

Mr Ryecroft

Respondent

REASONS FOR JUDGMENT

1. On 24 April, earlier this year, I made interim Orders in these property adjustment proceedings between former partners in a de facto relationship that effectively determined interim applications of the wife and the husband (as the parties, for convenience, shall be called by me).

2. Anticipating that the outcome, even before I had made my decision, might generate a costs application by whoever that outcome favoured, I invited submissions from the parties as to the issue of costs. Queen’s Counsel for the wife and counsel for the husband each agreed to the filing of written submissions on the issue, whatever the outcome.

3. When I made the Orders, I also made some Orders setting a timetable for the filing of those submissions. I have since received written submissions from each party in support of and opposition to an application by the wife for the husband to pay her costs of and incidental to the proceedings fixed at $20,550.

4. Evidence was adduced by the wife’s solicitors that the wife’s actual costs were $34,264.13 and the Court is told by the wife’s counsel that $20,550 equals 60% of that amount. In the alternative, the wife seeks an order for her costs to be paid by the husband assessed on party and party basis.

5. Though s 117(1) of the Family Law Act 1975 (Cth) (‘the Act”) sets the general principle that parties to proceedings under the Act shall bear their own costs, it is subject to discretion conferred on the Court in s 117(2) to make an order that it considers just if satisfied that the circumstances justify the making of an order for costs. Section 117(2A) lists a broad array of matters that the Court must consider when determining what, if any, order to make in the exercise of the discretion.

6. For the wife, it is submitted that the husband should pay her costs because his financial circumstances are such that he has the capacity to pay and because he has been wholly unsuccessful in relation to the wife’s application and his own application.

7. For the husband, it is submitted that he was not wholly unsuccessful and, further, in any event, that the wife’s application for costs in respect of proceedings for interim injunctive relief to preserve property pending final property adjustment trial should more appropriately be reserved to the trial judge. It is submitted that it is after those proceedings are finalised that it will truly be known whether the injunctive relief granted was actually required.

The Factual Circumstances 

1. The trial in this matter has for several months now been listed for hearing over three days in late July this year. My Orders listing the matter for that trial were made on 19 December 2019. In those same Orders, I listed the matter before me for a compliance check on Wednesday, 1 April 2020.

2. There have been a number of interim proceedings in the matter since it was commenced in the Court, some resulting in injunctions being granted directed at preserving the property of the parties or either of them pending the finalisation of the matter.

3. On 27 March 2020, a few days before the compliance check, the husband filed an interim application seeking a suite of further interim orders apparently focused on preservation of property pending the finalisation of the matter. That application was resolved by the parties asking the Court to make Orders the terms of which they had agreed to. Those Orders were made on 1 April 2020.

4. On 1 April 2020, though the Court was not aware of it at the time, the husband’s solicitors had also written to the wife’s solicitors only two days prior, informing of the husband’s intention to cause one of the entities controlled by the husband to borrow substantial funds ($918,000) from a third-party lender and telling the wife that the paperwork required to obtain the borrowings would take 7-10 business days to complete. A cash flow statement, said to support the need for the borrowings, was also referred to.

5. On 1 April 2020, the wife’s solicitors wrote to the husband asking for certain information to be provided so that she could give consideration to the issue. Relevantly, the husband was asked for an undertaking that he would:

   ... not take any further steps to obtain finance by or on behalf of [the entity] from [the third-party lender] or anyone else without giving [the wife] the opportunity to consider his detailed response to [her letter of 1 April 2020].

6. On 3 April 2020, not having received the undertaking requested of the husband, the wife’s solicitors caused an Application in a Case to be prepared in which the interim injunction restraining the husband from causing the company to borrow further funds against the mortgage security of any of its property was sought. Before it was filed with the Court, unsealed copies of it and the supporting affidavit were sent to the husband’s solicitors. Those documents were sent to the Court for filing that same day.

7. On 6 April 2020, the husband’s solicitors wrote back to wife’s solicitors. No undertaking was given. No answers to any of the questions previously asked by the wife’s solicitors were given. A copy of a letter of finance dated 3 April 2020 was provided. The amount being offered was not $918,000 but rather $549,368 on specified terms which included the provision of security in the form of first registered mortgages of two units owned by the husband’s entity. No explanation was offered as to the difference in the amount to be borrowed from the amount that the husband had, a few days previously, given notice of intent to borrow.

8. Within hours, the wife’s solicitors wrote again to the husband’s solicitors attaching their earlier letters of 1 and 3 April and repeating the wife’s objection to further finance being obtained by the husband.

9. Again on 6 April, later in the afternoon, the husband’s solicitors wrote to the wife’s solicitors. This letter contained detailed responses to the questions previously asked by the wife’s solicitors. It also contained notice of the husband’s opposition to the wife’s application to restrain him from further borrowing and it did, this time, explain the reasons for the difference in the amount proposed to be borrowed. The letter conveyed the husband’s intention to proceed, as planned, with another property development (the husband being a property developer by business), and his assertion that he required the proposed further borrowings to be able to do so.

10. On 7 April, the wife’s solicitors wrote to the Court and sought to have the application for injunction listed for an urgent hearing. That request and the filed documents were referred to my chambers for consideration on 8 April.  I was on leave but indicated the matter would be listed for a hearing on 16 April if the husband gave an undertaking not to formalise the borrowings before the hearing and determination of the application. If he had not, I would have given consideration to listing it more urgently than that. That undertaking was forthcoming that same day and the application was listed as foreshadowed.

11. On 15 April, the husband filed his Response in which he sought the dismissal of the wife’s application and his supporting affidavit. On the afternoon of 16 April, I heard the Application in a Case using the Microsoft Teams internet video platform. Mr Looney QC appeared with Ms Fraser for the wife and Mr Hackett appeared for the husband.

12. Essentially, the argument for the husband was that an injunction restraining him from borrowing $549,368 was not necessary to preserve the wife’s position in the property adjustment proceedings as, even if that amount was borrowed as proposed, final Orders that are just and equitable will still be able to made without the wife’s position being in any way prejudiced.

13. I reserved my decision at the end of the hearing and the husband’s undertaking previously given on 7 April was again given to the Court through his legal representatives. 

14. Within a day or so, the Court was informed that the wife also proffered an undertaking as to damages as is often given on applications for interim injunctive relief.  

15. On 23 April, whilst I was still reserved, the husband filed an Application in a Case seeking orders that he be released from the undertaking he had given the Court on 7 April as the proposed third party lender had made it clear that the offer to advance the funds in question was only open until the afternoon of 24 April.

16. I caused the parties to be informed that this Application was listed for hearing on the morning of 24 April and when the hearing was convened I granted the injunction in the terms sought by the wife in her Application in a Case on the undertaking as to damages she had proffered and dismissed the husband’s Application to be released from his undertaking. I gave oral reasons at the time.

My Determination

1. At first blush, it appears that the wife was wholly successful and the husband wholly unsuccessful in respect of the two interim applications. The argument advanced for the husband that he was not wholly unsuccessful because he was able to have included in the relief that was granted an undertaking as to damages in circumstances where the wife had not included it in her application does not, with respect, persuade me that he was not wholly unsuccessful. His counsel certainly did not raise the point at the hearing. There is no evidence to suggest that the undertaking was not immediately proffered when asked for and I certainly did not order or require the wife to give it.

2. I am, however, persuaded by the argument that none of the parties, nor the Court, will know whether the husband’s arguments actually had real substance until the finalisation of the contested property adjustment proceedings that are currently listed to be heard by me in just over seven weeks’ time. It may be that after just and equitable property adjustment orders are determined, it becomes clear that permitting further borrowings of just under $550,000 by the husband would not have prejudiced the wife’s ultimate position. On the other hand, it might become clear that it would have.

3. In addition, at the compliance hearing on 1 April, there was discussion between me from the bench and the legal representatives for the parties about the parameters of this property adjustment dispute, the apparent strength with which the parties are contesting it and the enormous amount of legal costs they have each expended on it. In that discussion, the Court was informed that written offers of settlement have been made with a view to supporting costs applications if justified at the end of the matter. Bearing that in mind, and noting the relative importance of the consideration of written offers of settlement in the determination of costs applications made after finalisation of property adjustment proceedings, that is further reason why I consider that reserving the question of each party’s costs until the finalisation of the proceedings is an order currently justified in the circumstances. That will be my Order.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 8 June 2020.

Associate: 

Date:  8 June 2020