Dunn and Dunn

[2009] FamCA 672

FAMILY COURT OF AUSTRALIA

DUNN & DUNN [2009] FamCA 672

FAMILY LAW – COSTS – Between parties

Penfold (1980) FLC 90-800
Jensen (1982) FLC 91-263

APPLICANT: Ms Dunn

RESPONDENT: Mr Dunn

FILE NUMBER: PAF 5634 of 2002

DATE DELIVERED: 11 June 2009

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Collier J

HEARING DATE: 5 June 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hodgson

SOLICITOR FOR THE APPLICANT: Malouf Solicitors

COUNSEL FOR THE RESPONDENT: Mr Mater

SOLICITOR FOR THE RESPONDENT:

Barkus Edwards Doolan

Lawyers

Orders

1. That the husband pay to the wife an amount ascertained to be four-fifths of the wife’s costs of the trial commencing 28 October 2004 and concluding, with delivery of judgment, on 30 October 2008.  Such costs are to be an amount as agreed and failing agreement, as properly assessed.

2. That the amount referred to in order (1) herein be paid within a time agreed or failing agreement within two months of the issue of a costs assessment certificate.

3. That the husband and wife do all things and execute all documents necessary to cause their respective solicitors to withdraw from the fund currently held pursuant to order (7) of the Orders made 30 October 2008 by them as trustees for the parties, the sum of $5,000.  That amount is to be paid to the wife within fourteen days in satisfaction of Orders for costs made 6 September 2005.

4. That after such payment is made in accordance with order (3) herein, the solicitors for the parties shall continue to hold the balance of monies then remaining in an account nominated under the conditions set out in order (7) of the Orders made 30 October 2008 until the parties shall in writing direct the solicitors as to the disposal of those monies or until further order of this Court.

5. That all outstanding orders reserving costs of the parties be and are hereby discharged.

6. That all outstanding applications and cross application be and are hereby dismissed.

7. That all issues be removed from the pending cases list.

8. That all material produced on subpoena be returned not before fifty-six days from this day.

9. That liberty be granted to either party to restore the matter to the list upon giving fourteen days notice.

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

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAF 5634 of 2002

MS DUNN

Applicant

And

MR DUNN

Respondent

REASONS FOR JUDGMENT

Introduction

1. The application before me for determination involves the costs of a hearing conducted over a significant number of days in various tranches.  The hearing was finalised in a judgment delivered on 30 October 2008.

2. The wife by her application in a case filed on 25 November 2008 seeks an order that the husband pay her costs of and incidental to these proceedings.

3. The husband by his response filed on 29 May 2008 seeks firstly a dismissal of the wife’s application and, second, that the wife pay 25 per cent of the costs of the trial.

Brief History

1. The procedural history of this matter is significant, and I set it out briefly as follows.

2. The hearing of the matter commenced before me on 28 October 2004 when it occupied that day and the next day, was stood over at the conclusion of that second day to obtain further hearing dates.  On 5 May 2005 the matter continued.  It was adjourned on that occasion, and went on over to 6 to 8 September as fixed dates for the continuation of the hearing.  On 6 September the matter was again before me and on that occasion there was an adjournment sought in respect of difficulties encountered with the husband’s superannuation.

3. I should say here that there were real difficulties in the early part of this case as the husband was involved in proceedings in the industrial jurisdiction in relation to proceedings he had taken against the New South Wales Public Service and the Superannuation Trustees in relation to him seeking to be re-ranked from his substantive rank to an acting higher rank for the purpose of calculation of his benefits.

4. The matter in any event went over from 6 September to 8 October, on which occasion hearing dates for 5 December were confirmed.  On 2 December there was a further application for adjournment, or vacation of the dates 5 to 7 December, which application was refused at that time.  On 5 December the application was again made and refused, with the matter proceeding so far as it could on that occasion.  The matter proceeded and evidence was taken on 5, 6 and 7 December, and on 7 December there was an interim series of orders made in relation to the husband’s application, which was refused, for the sale of the V property and other orders.

5. The matter was back before the Court then on 10 May when various orders were made concerning the husband’s industrial proceedings, and the manner in which information was to be conveyed, and particularly the manner in which it was to be kept secret and confidential. 

6. The matter then on 16 June was before me for telephone link-up and the hearing dates of 4 and 5 July 2006 were confirmed.  On those occasions the matter again continued and evidence was taken, and the matter on 6 July, again a series of interim orders was made.

7. On 11 July 2006 there was an order made giving the wife seven days to file an application for a splitting order in respect of the husband’s superannuation entitlements.

8. On 15 February 2007 the matter was again before me and on that occasion the dates, 14, 15, 16 and 17 May were allocated to continue the hearing.  On 3 May there was to have been a short hearing in relation to the husband’s application to re-litigate the parenting aspects of the matter.  The matter could not proceed on that occasion and was adjourned.

9. On 14 May the matter came again before me.  I dealt with the father’s application for variation of parenting orders and those applications were dismissed.  The matter then proceeded to hearing with the hearing concluding on 17 May when judgment was reserved.

The Parties’ Material

1. In the costs hearing before me the applicant wife relied upon the affidavit she swore on 5 June 2009, and that of her solicitor Mr Malouf, sworn on 25 November 2008. 

2. The husband relied upon his affidavit sworn 29 May 2009, and an affidavit of Dr T sworn 2 June 2009.  In addition I received written submissions from the husband’s counsel.

The Husband’s Evidence before Me

1. The husband was required for cross-examination on his affidavit of 29 May.  He gave evidence-in-chief that he had paid an amount for costs since swearing his affidavit, and that his mother and her husband had loaned him moneys for that purpose.  He was cross-examined by the wife’s counsel.  He was unable to explain the factual situation underlying the payments.  This was made clear, that is the underlying situation when information was supplied by his solicitor.  The husband was also asked about earlier activity conducted by him in relation to the line of credit.  Having spoken to his counsel he declined to answer a number of questions in relation to the drawings that he had made on the line of credit and the extent to which the line of credit had been increased.

2. He asserted that he owed his mother and stepfather some $160,000 for moneys they had advanced him in relation to costs.  He agreed that on 19 May 2009 an amount of $47,954.97 was paid into the line of credit.  He said that was to reconcile the account.  Asked if he had used the line of credit to pay costs he declined to answer.  He said that for a period he had worked seven days a week for up to 10 hours a day, which was later modified to indicate that he was in the car for up to 10 hours a day.  He said he had trained for a year and a half in respect of his driving career.  He said he was now working less than five hours a week.  There were tendered into evidence his 2007 and 2008 income tax returns.  Also tendered were the husband’s pay details and St George Bank records in relation to the line of credit.

3. The father’s evidence has assumed some significance.  The wife’s counsel submits that the evidence given before me supports his, that is counsel’s argument, that the husband’s evidence is given with no care and no attention to detail, and that it demonstrates and establishes the need in the trial for lengthy and detailed cross-examination to establish the true situation.  The husband’s counsel says that it is yet again a clear indication that his mental health is such that he cannot give clear and accurate accounts of his own situation. 

4. I am not satisfied having regard to the evidence I heard, and on a reading of the report of Dr T, that the husband’s abilities were so compromised he was not able to function at the time he swore his affidavit and gave evidence.  Indeed, as set out on page 4 of the doctor’s report, the husband has, since March, been able to concentrate, consider matters and give instructions to his attorneys.  His evidence recently given before me is to my mind uncertain, unclear and unhelpful, not because of his mental condition but because he does not want to assist the Court.

The Law to be Applied

1. This is an application for costs. The law governing such applications is to be found in s 117 of the Family Law Act. Section 117(A) makes it clear that the usual course is that in proceedings in this Court each party will pay his or her own costs. However, the Act goes on to say in sub-s (2) that if there are circumstances that so justify it then an order for costs can be made. I am required under sub-s (2)(a) to look at a series of matters in determining whether or not such an order should be made.

2. The relevant considerations are:

   a)The financial circumstances of each of the parties;

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

   c)The conduct of each of the parties;

   d)Whether the proceedings were necessitated by the failure of a party to comply with a previous order;

   e)Whether any party to proceedings has been wholly unsuccessful;

   f)Whether either party to the proceedings has made an offer in writing: and

   g)Such other matters as to the Court seem relevant.

The Parties’ Submissions

1. It was also made clear that neither counsel was putting to me that this was a case where either party had made an offer within the terms of sub-s (f).  It was also made clear to me that neither party was putting his case on the basis that either party had been wholly unsuccessful in accordance with sub-para (e) of s 2(a).  It was made clear to me at the commencement that the wife’s application was founded  on sub-ss (a) the financial situation of the parties, (c) the conduct of the parties, (d) whether the proceedings were necessitated by a failure to comply, and (g) what might be called the justice and equity any other circumstances situation.

2. The thrust of the argument on behalf of the wife was that the husband had been deceitful, and in this respect I was referred to a number of paragraphs of my own judgment, and particular perhaps para (217).  I had made findings in paras (198) and (200) concerning the husband’s truthfulness and capacity, or rather ability, to be believed in the proceedings. 

3. It was put that the cross-examinations, particularly of the husband and his mother, were required to be lengthy because of the uncertainty of the witnesses, and the manner in which they gave their evidence, and were made lengthy by the state of the evidence of each of those witnesses and the manner in which their evidence was given.  In support of this I was referred again to a substantial number of paragraphs of my judgment which dealt with my general dissatisfaction of the evidence of the husband and, to a lesser extent, his mother.  This was relied upon by the wife as conduct by the husband in the course of the proceedings enabling an order for costs to be considered.

4. There was also referred to by Mr Hodson the conduct of the husband in increasing the indebtedness under the St George line of credit which he said was conduct that had the result of diminishing the pool of non-superannuation assets, so that the wife was left no option but to seek quite late in the proceedings a splitting order in respect of the husband’s superannuation entitlements.  That of itself required the matter to be adjourned and lengthened the litigation.  However, it was put that the reason that that was required can and should in this application be sheeted home solely to the conduct of the husband.

5. Mr Mater for the husband, as I have said, provided helpful written submissions.  In oral submissions he made no concession that there had been a breach of my orders, and particularly O.3.  In that order, I endeavoured to fix a limit for the line of credit.  The husband clearly, after my orders, continued to deal with that account as he chose.  It is obvious when one examines the evidence that this is an attitude that he held before and after the orders were made.  Mr Mater referred to a tension between O.3 and O.6 of my final orders, a tension which I do not see.

6. Mr Mater conceded that the husband cannot get it right.  He says that that is because of the pressure he is under.  He goes on to ask rhetorically where would be the advantage to the father, or husband, of the evidence he recently gave.  I have already found that the husband’s motive was not to assist the Court.  I am not persuaded, notwithstanding the submissions of Mr Mater, that I should now find that the husband’s recent evidence was the result of his mental condition.

7. Dealing then with other matters, Mr Mater put that the wife was in a better capital position than the husband and that her income was only slightly less than the father’s.  It was put, and I accept, that if the husband were to commute whole or part of his superannuation then his income must drop correspondingly.  Mr Mater made reference to paras (184) to (186) of my judgment, paragraphs concerning the wife’s credit.  He pointed out to me that I had found that she had a real and cogent dislike of the husband.  However, it is also to be found from those paragraphs that by and large, other than in relation to what the husband had done in and around the home, I accepted her evidence.

8. Mr Mater then dealt in detail with the manner in which the matter proceeded.  He made specific references to the cross-examination by Mr Hodson of the husband and his mother.  It was Mr Mater’s complaint that Mr Hodson continued to cross-examine well after appropriate concessions necessary to ground submissions had been obtained from the witnesses and thus at that point further cross-examination of those witnesses was unnecessary.  He pointed out that the husband’s cross-examination occupied in all some six days. 

9. Clearly the husband was in the box for significant periods of time.  However, his evidence was difficult to understand and, in my view, required some close quarter cross-examination to obtain a real picture of the husband’s situation and financial arrangements and dealings. 

10. Mr Mater made reference to the lateness of seeking a splitting order, and I have already dealt with this in these reasons for judgment.  To my mind that splitting order was made necessary by the fact that the husband chose to continue to deal with and extend the line of credit.  Indeed, it will be recalled that the line of credit was only extinguished save and except to the extent of approximately $44,000 by application of the entirety of the net proceeds of sale of the V property. 

11. Very fairly, and as would only be expected from Mr Mater, he drew to the Court’s attention the provisions of s 117(A)(B). That section provides that if there has been false evidence given an order for costs must be made. It is put that, further, the husband has already been significantly punished by the findings I made in my judgment concerning the factors that I considered under s 75, and particularly s 75(2)(O), resulting in my adjustment of 25 per cent in the wife’s favour as a result of those factors.

Discussion

1. I turn now to examine the provisions of the Act in the light of the evidence and submissions that I have heard and read.  As I have said the usual rule is that each party pay their own costs.  In Penfold[1] in the High Court it was held that s 117(1) is not paramount to s.117(2) and must yield, where a Judge finds that in a particular case there are circumstances which justify the making of an order. From that same case it emerges that what is required is that there are justifying circumstances which need not be special or exceptional. Certainly Nygh J in Jensen[2] said it was not necessary that there be special circumstances.

   [1] (1980) FLC 90-800

   [2] (1982) FLC 91-263

2. I must have regard to the matters set out in sub-s.(2)(i).  I am satisfied that I can, if I am satisfied it is appropriate, grant an order on only one factor or a combination of the factors prescribed. 

3. The first of the matters is the financial circumstances of the parties.  It is clear from decided authorities that a detailed analysis is not usually required, and of course this is a situation where I was the author of the primary judgment.  I accept the wife’s capital position is that she has the home and an entitlement under the splitting orders that I have made, together with payment of a very modest amount of money.  Her capital position is thus to be seen in one light, in the fact that she possesses real property, which as a result of my orders the husband does not, to be somewhat superior to that of the husband.

4. He is earning slightly more than her by way of a secure pension.  The wife has part-time work.  The wife puts before the Court that she is effectively accommodating children aged 21 and 20 who make no contribution to her household, as well as caring for a child of 16 each third week, and a child nine with special needs.  The father also has a responsibility for the child 16 and spends some time with the youngest child.  The husband pays child support in the amount appropriately assessed, although the wife complains that there are arrears and, as I read the material, it appears nothing is being done by the Child Support Agency at this time.

5. The husband’s income from his employment is now low, but he has in the past obtained and achieved much greater working hours.  It seems to me then that the parties’ financial situations are something that I take into account, but are not determinative of this issue. 

6. Sub-s (b) Neither party is in receipt of Legal Aid.

7. Sub-s (c) deals with conduct.  It deals firstly with matters set out in some detail, but those matters are by no means exhaustive or completely cover the field.  The conduct the wife complains of was the husband’s lack of frankness and the confusion surrounding his evidence, and particularly in relation to alleged loans from his mother, and the evidence of his mother in that and other regards.  The wife’s case is that this required lengthy exhaustive cross-examination to ascertain the husband’s true financial position. 

8. The husband appears to say, notwithstanding the confusion in his case which he asserts was a result of his mental condition, the manner in which the cross-examination was administered was unnecessarily protracted and in part totally unnecessary.  I am satisfied that the husband’s presentation and the state of his evidence made it essential for cross-examination to be searching and to be conducted at length.  The husband’s inability to present correct factual material, even when given the opportunity to perhaps do so during adjournments, or material which he put forward without any apparent attempt to ensure its accuracy, made it imperative that he be closely questioned.

9. During the proceedings neither the husband nor his mother could fix with any precision the amount said to be owing, or to establish any method of calculation to ascertain such sum as I referred to in para.(210) of my judgment.  However, there is to my mind some merit in Mr Mater’s submissions that at least aspects of that cross-examination could have concluded more quickly than they did, appropriate answers having been elicited from the witnesses. 

1. The husband’s conduct in further dealing with the line of credit in the face of an undertaking was conduct that to my mind has to be taken into account. 

2. It will be remembered that there were indignant letters written by his attorneys stating that unless his undertaking was accepted there would be repercussions in costs.  The undertaking was given and the husband simply disregarded it.  He disregarded a Court order in selling the Land Cruiser and simply did not attempt, in my view, any form of compliance with that order.  The husband was clearly unmoved by the existence of orders of this Court, or the undertaking given by him and to which I have referred.  This led him, or allowed him, to extend the line of credit apparently as he chose.  This in turn, I am satisfied, led to the wife seeking, albeit in less than satisfactory manner, an order for superannuation splitting. 

3. Sub-s (d) also relates to the refusal to comply with orders requiring further time, or requiring work to be done and the incurring of further costs.  I would repeat what I have said so far as that paragraph is concerned, that the husband was clearly unmoved by the existence of orders and simply went his own way to deal with the line of credit, resulting in the application for a splitting order. 

4. It was agreed by the parties that sub-s (e), which related to either party being wholly unsuccessful, had no present application

5. Under sub-s (f) there is no suggestion that either party has made any offer in writing to compromise the proceedings, and I need not consider this.

6. Under sub-s (g) the wife contends that she is entitled to rely upon the husband’s conduct post-judgment to establish a consistency of behaviour in that he simply refused to acknowledge there were any orders or, indeed, any matters that prevented him acting entirely as he thought appropriate.  I am satisfied that the husband so far as the line of credit was concerned, as I have said to the point of boredom, continued to operate upon it making what he described as an adjustment on 19 May.  I find this behaviour entirely consistent with his behaviour up to the date of judgment.

7. I must also have regard to s 117(A)(B). That sets out that where false allegations or statements are made the Court must make an order for costs. I am of the view that my finding so far as the husband is concerned establishes that he has made knowingly made a false statement within the meaning of s 117(A)(B). The section provides, as I have said, I must award the whole or part of the party’s costs. In this case I am satisfied that this is another factor to be considered along side the factors under s 117(2)(a). Section 117(A)(B) does not, I am satisfied, compel or require me to fix a separate sum or portion of the wife’s costs that are to be paid as a result of this section.

8. When I consider then the totality of these matters I am satisfied that an order for costs must be made in the wife’s favour.  However, I am satisfied that there should be a reduction in the amount that would otherwise have been awarded; firstly because of the prolongation of the trial by the lengthy and sometimes unnecessary cross-examination of both the husband and his mother and, next, because of the wife’s late application for a splitting order, although this does not have the significance it might otherwise have had, resulting as it did from the husband’s conduct.

9. The wife’s application seeks costs of and incidental to these proceedings.  The husband’s response seeks a percentage of the costs of the trial of the proceedings.  Clearly these are different concepts.  The wife is seeking costs of preparation and work done before the commencement of the trial, and the husband seeking relief within the trial itself.  I am not persuaded that the husband’s behaviour during the conduct of the hearing could have caused additional work prior to the hearing to prepare the wife’s case for that hearing.  It is clear that costs are not punitive but compensatory.  Any order that I make should be to ensure that the wife does not suffer because of the husband’s conduct during the trial.

10. Accordingly, I propose to specify any order that I make in relation to the costs of the trial be for the cost of the trial commencing on 28 October 2004.  There has been no argument before me that any costs order I make should be costs on any basis other than party party and the order that I make will be framed accordingly. 

11. There remains a fund of money held by the husband’s solicitors which, by agreement, has not been dispersed.  This is the amount referred to in O.7 of my final orders.  Further, there are a number of orders for the reservation of costs, those being the orders made on 5 March 2004, 26 October 2004, 2 December 2005, 10 May 2006 and 12 February 2007.  I propose, so that there is no possible misunderstanding, to discharge these orders. 

12. There is, however, a completed order of 6 September 2005 in the sum of $5000.  I will not interfere with this order.  Rather, by way of enforcement of that order I will provide for it to be paid from the fund to which I have referred held by the solicitors, within 14 days of this day.  The balance of that fund I will then order held in its present form of investment pending agreement or assessment of the costs to be paid. 

13. To return then to the primary issue.  The factors I have endeavoured to explain and evaluate require a balancing exercise.  However, I am satisfied that the balance is heavily in favour of the wife.  I have decided that the appropriate order is that the husband should pay four fifths of the wife’s costs of the proceedings.  This reflects the matters that I have indeed endeavoured to set out.  I will not make any order in the husband’s favour, and his application will be dismissed.

I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Collier

Associate: 

Date:  29 July 2009