FRANCIS & FRANCIS

[2010] FamCA 318

FAMILY COURT OF AUSTRALIA

FRANCIS & FRANCIS [2010] FamCA 318

FAMILY LAW – ENFORCEMENT – Costs and Property – Equal and opposite amounts – effect of order nugatory

FAMILY LAW – COSTS – concession by one party – just outcome

Family Law Act 1975 (Cth)

Bray & Bray (1988) FLC 91 - 968
Ramsey and Ramsey (1983) FLC 91-301
Slapp & Slapp (1989) FLC 92-022

APPLICANT: Ms Francis

RESPONDENT: Mr Francis

FILE NUMBER: SYF 3032 of 1997

DATE DELIVERED: 23 April 2010

PLACE DELIVERED: Cairns

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 4 March 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Connor

SOLICITOR FOR THE APPLICANT:

COUNSEL FOR THE RESPONDENT: Ms Knox

SOLICITOR FOR THE RESPONDENT: Dettmann Longworth

Orders

1. All applications be dismissed.

2. There be no order for costs.

3. The husband by consent be restrained from bringing any further costs applications in this matter. 

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

FAMILY COURT OF AUSTRALIA AT CAIRNS

FILE NUMBER: SYF 3032 of 1997

MS FRANCIS

Applicant

And

MR FRANCIS

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. The wife seeks the enforcement of an outstanding money order, interest and costs. The husband wants those applications dismissed or alternatively the enforcement of various cost orders against the wife which the husband has had assessed. 

2. The parenting and property matters between the parties have a very extensive and unfortunate history. The parties separated in 1996 with litigation commencing the next year. Litigation has continued for so long that both the children subject to parenting proceedings are now adults.  In her judgment of 2 March 2007 Lawrie J explains:

   [2]-[5] The litigation which has followed the breakdown of their marriage has been ruinous for the parties, both emotionally and financially…The parties have been engaged on this battlefield for years.  They, and everyone engaged, have battle fatigue.

3. A detailed history of this dispute is recorded in the judgment of Cohen J of 22 March 2002 and that of the Full Court of 31 October 2003.

4. I repeat some of the relevant history in the discussion below. 

APPLICATIONS

Wife

1. The wife seeks the following orders:

   5.1.Enforcement of the balance of order 9 made by Lawrie J on 2 March 2007 for the husband to pay $153,061.08 to the wife, $56,152.97 of which is still outstanding.

   5.2.Payment of interest on the $56,152.97 outstanding in the sum of $36,469.18.

   5.3.Costs in relation to a 20 day hearing that took place on: 30 November 2004; 1 – 3 and 6 – 8 December 2004; 14 February 2005; 22 – 26 and 29 – 31 August 2005; 1 September 2005; and 7 – 9 November 2005.

2. The enforcement of order 9 of 2 March 2007, together with interest owed on that payment (as calculated by the wife), amount to $92,622.15.

3. The enforcement of order 9 of 2 March 2007, together with interest owed on that payment (as calculated by the husband) amount to $94,352.82. The husband’s calculations, which were unchallenged, take interest up to the day after the current hearing, 5 March 2010, calculated at $38,199.85.

Husband

1. In response the husband seeks the following orders:

   8.1.That the wife’s applications be dismissed.

   8.2.In the alternative, that various costs orders that have been made in the husband’s favour from time to time against the wife together with accumulated interest be enforced against the wife.

2. If proposed order 7.2 above was adopted, the husband calculated the sum of the costs orders and interest payable on them up to 5 March 2010 to be $90,665.47.

3. The husband asserts that he can off-set monies and interest owed under costs orders against the amount that he would otherwise have to pay pursuant to Lawrie J’s orders.

4. The effect of making the husband’s alternate order would be that money owed to the wife by the husband (including interest pursuant to the orders of Lawrie J) under one order would be nearly the same amount as the money owed by the wife to the husband on account of costs under the other order.  There is a $3,697.42 difference.  The husband asserts that if such orders were contemplated by way of enforcement, given the history of this matter, such orders would be de minimus and should not be made. 

DISCUSSION

1. The background to order 9 made by Lawrie J on 2 March 2007 is set out in the husband’s affidavit as follows:

   12.1.Cohen J’s orders of 22 March 2002 stipulated at order 10 that the wife was to pay to the husband, within one month, the sum of $118,172.00. At order 11, it was ordered that in the event the wife does not make the payment in the stipulated time, the C property be sold and the proceeds applied as follows:

   12.1.1.$281,217 to the wife;

   12.1.2.47.5% of the remainder to the husband; and

   12.1.3.the balance to the wife.

   12.2.The wife failed to pay the amount required by order 10 to the husband in the time stipulated. She did however pay him $50,000 on 20 June 2002 and $70,675.82 on 3 July 2002 – which the husband says he received 8 August 2002.

   12.3.An order enforcing order 11 to sell the C property was made on 8 August 2002 by Registrar Johnston.

   12.4.On 15 August 2002 the wife applied to have the enforcement order stayed and reviewed. A stay was granted on 27 November 2002.

   12.5.The husband says that he did not press the sale of the property thereafter but the property was placed on the market by the wife in 2004 due to pressure from the mortgagee. The property later sold for $750,000 – an increase of $220,000 on the amount at which it was valued at trial.

   12.6.Upon the sale of that property, the husband says he ‘received’ a total of $153,041.08 consisting of the following payments:

   12.6.1.$93,595.00 for his interest in the property pursuant to the 2002 orders; and

   12.6.2.$59,446.08 for costs owed by the wife plus interest calculated up to 13 August 2004.

   12.7.The review of Registrar Johnston’s 2002 orders was heard before Justice Lawrie in 2005. Justice Lawrie’s orders of 2 March 2007 required the husband to repay the sum of $153,061.08 to the wife, which represented the sums received in paragraph 12.6 above (I did not find it necessary to understand why there was a $20 difference). The husband appealed this decision but discontinued his appeal.

   12.8.The husband repaid $96,908.11 to the wife on 15 August 2008. This sum was said to represent:

   12.8.1.The $153,061.08 ordered by Lawrie J;

   12.8.2.Less the amount owed by the wife to the husband on account of costs awarded to him;

   12.8.3.Less the interest payable on those costs,

   12.8.4.Plus interest owed by the husband on the resulting sum payable to the wife.

2. Lawrie J’s gave the following reasons that the husband was to pay back the $153,061.08. Firstly that the Registrar did not apply his discretion based on the circumstances, instead forming the view that if order 10 was not complied with in time then enforcement of order 11 should automatically follow.  Her Honour said that an automatic response was rejected in Ramsey and Ramsey (1983) FLC 91-301 and does not comply with the discretionary nature of s 105 of the Family Law Act (FLA).

3. Secondly, Lawrie J stated that the husband had already received and accepted the amount owed under order 10 of 22 March 2002, mixed it with his own funds, and spent it. Lawrie J ruled that the husband could not gain the benefit of monies owing and then claim more on top of that. If Order 11 was to proceed, then the husband should have been ordered to pay back the payments made under order 10 first, and should have demonstrated that he did not benefit from them.  Her Honour distinguished the cases of Slapp & Slapp (1989) FLC 92-022 and Bray & Bray (1988) FLC 91-968 as pertaining to applications for the amendment of orders rather than the enforcement.

4. Counsel for the wife submits that Lawrie J’s judgment and orders should be read as Her Honour ordering the repayment of a sum of money in the knowledge that the husband had already received payment for his costs under those costs orders.

5. The difficulties with that position are:

   16.1.It is clear from the Reasons for Judgment, that Her Honour did not have before her any application to discharge costs orders which the husband had in his favour.  In the absence of an application to set aside the costs orders of the Full Court or any reference to any costs order, Lawrie J can not be said to have discharged those orders.  

   16.2.Secondly, the argument is based on the notion that the wife “paid” the costs orders.  There is no indication that the wife willingly paid the money from the sale of the C property to the husband on any basis. Counsel for the wife submitted in the case outline that the funds were “demanded and procured through caveats”. The amount of money the husband took was $153,041.08. He had calculated that amount:

   16.2.1.Firstly based on the additional amount of capital that he said he was entitled to receive given that the wife hadn’t complied with the initial order to pay a lump sum and given that the husband said that the default order for a sale was operative and should have been in force (a position that was supported by the Judicial Registrar but not by Justice Lawrie); and

   16.2.2.Secondly, the payment of costs plus interest owed to him by the wife. 

6. A proper interpretation of what happened was that the husband took monies which he said were on account of his cost orders.  The wife did not “pay them”.  Her Honour in effect disapproved of him taking any money from the sale and ordered all money that he had taken from the sale to be paid back. 

7. It is an incorrect characterisation by counsel for the wife to say that the wife had paid the costs orders and that the amount of money that Her Honour ordered be paid back by the husband to the wife had no relationship with the costs orders whatsoever.  Lawrie J ordered that the entire amount the husband took from the proceeds of sale be paid back to the wife. 

8. Consequently I conclude that in the event I made an enforcement order, which had the effect that the husband fully paid to the wife the amount ordered by Lawrie J, the husband would have received no consideration whatsoever for the various orders for costs that he has received, including an order for costs from the Full Court on 22 October 2002, which was secured against the C property.

9. There was no challenge to the husband’s calculations in relation to costs orders and the interest incurred on the costs orders.  The interest incurred has been calculated in accordance with the Family Law Rules from time to time.  It follows that on the one hand, pursuant to the order of Lawrie J, the wife is owed a certain amount of money at a particular date by the husband. On the other hand the husband is owed an equal amount of money by the wife in relation to the costs orders from that same date.  Interest would accrue on both capital amounts at the same rate pursuant to the Family Law Rules. Therefore that the amount of money that the wife is owed including interest under Lawrie J’s orders by way of balance payment, is equal to the amount of money that the husband is owed under the costs orders with accrued interest.

10. Having reached that finding, there is in my view no other fact that would have me exercise my discretion not to enforce either of the equal and opposite orders for the payment of money.  Accordingly, applications for enforcement will be dismissed. 

THE COSTS APPLICATION

1. The wife has made a costs application in relation to the 20 day hearing before Lawrie J.  It is clear from the first paragraph of the judgment of 8 November 2005 that the enforcement of the property part of the hearing took no more than two days.  The balance of the 20 day hearing was concentrated on parenting matters. 

2. The husband was entirely successful in the result of the parenting proceedings, with no order being made for the children to see the mother. 

3. Counsel for the husband pointed out that the mother’s application was for the children to live with her and for the mother to have sole guardianship of the children.  That application was pursued notwithstanding:

   24.1.There was a recommendation of the single expert that the children not see their mother;

   24.2.The children who were in their mid to late teens had expressed a firm view that they not want to see their mother;

   24.3.The mother’s grant of legal aid was only to pursue an “access” application.

4. It is true that Her Honour in her judgment was critical of Q’s methodology.  It is true that Lawrie J in her judgment made comments about the controlling nature of the husband and other comments critical of his attitudes to parenting, particularly in relation to his willingness to involve the mother in the lives of the boys. 

5. Notwithstanding that, Her Honour reached the view that it would not be in the boys’ best interests for there to be any change in arrangements that had existed since 2002.  That result was entirely predictable from the outset based on what was in Dr Q’s report.

6. The husband, so far as I can see, conducted the proceedings in a way that he was forced to, by the pursuit by the mother of an application which on its face had no reasonable prospects of being successful. 

7. It is true that the mother was wholly successful in relation to the applications she made to review the Judicial Registrar’s decision regarding property.

8. Under s 117(1) FLA, it is generally agreed that parties should bear their own costs in family law proceedings. This assumption may be overridden where it is just to do so, under s 117(2). In assessing whether it is just to make a costs order under s 117(2), the factors set out in s 117(2A) are to be considered.

9. The first of the considerations at 117(2A)(a) is the financial position of the parties. The husband states in his affidavit of 8 February 2009 that these proceedings have caused him “severe financial hardship”. According to his financial statement of 21 August 2009 and updated material handed up in Court, the husband earns $2,996 per week before tax but puts his weekly expenses at approximately $2,890. He indicated he owes his lawyers $200,000 in fees and has other liabilities including a $225,000 personal loan for legal expenses, credit card debt and a loan to Woolworths relating to his shares in the company.  His assets include real estate in Queensland worth approximately $320,000, and a balance of $84,000 in his three ANZ accounts sourced partly from share sales, which is used partly for living expenses.  Dividends from the husband’s Woolworths shares are listed as investment income in his Financial Statement; however he states that the dividends for these shares are paid back into the company to satisfy his $27,089 debt relating to those shares. Once the debt and capital gains tax relating to the Woolworths shares are paid, the husband predicts the shares will be worth $55,356 – which he assumes will be directed to payment of lawyer’s fees. He also owns shares beneficially in another company worth $560,000 and has recently exercised his 4,000 share options in Woolworths, with a net receipt before tax of $64,000.

10. The wife’s financial statement of March 2010 puts her weekly income at $679 sourced from housing and disability pensions, and her expenses at $810. She has $87,152 in bank, credit union and term deposit accounts. The wife was said to have received monies from a recent verdict she received from the court of appeal. Her financial statement states at Part O that she was awarded $500,000 after a successful Family Provision Act application in the Supreme Court. Her affidavit of 3 March 2010 indicates that a significant amount of this money has been applied to legal fees, medical expenses, an overseas holiday, a computer and a car. Of the $320,000 remainder, $80,000 was deposited into her bank accounts and the balance was paid into her superannuation account.

11. The second consideration at s 117(2A)(b) is whether the parties are in receipt of Legal Aid. The wife was in receipt of Legal Aid, with a grant to run an “access” application. She however ran an 18 day “custody” application with no real potential for success.

12. The conduct of the parties in the proceedings is a consideration under s 117(2A)(c). The father conducted the hearing as he was forced to, with the mother pursuing a parenting application that had no potential success. In regards to the two days of property hearing, there is no indication that the husband conducted himself in any way which would affect the result in this costs application.

13. Section 117(2A)(d) considers whether proceedings were necessitated by a failure to comply with previous orders of the Court. There is no indication that the hearing before Lawrie J in March 2007 was necessitated by any lack of compliance on the part of the husband.

14. A further consideration under 2A is whether either party was wholly unsuccessful: s117(2A)(e). The husband was wholly successful in the 18 day parenting proceedings while the wife was wholly successful only in relation to the 2 day property proceedings.

15. Lastly, s 117(2A)(f) deals with offers of settlement. There was no indication in submissions or evidence that any offers of settlement were made of any relevance.

16. Of course it is not usual to make costs orders in parenting cases.  Parties are usually permitted to press in court what they believe is in their genuinely held views about the children’s best interests.  However, the extent of this litigation, 18 days, would indicate that the wife had no realistic attitude to what the ultimate outcome might be.  No costs application has been made by the husband against her in relation to the parenting part of the 20 day hearing but clearly one might be feasible in the circumstances of this case.  Having regard to that, it would be not be a just outcome to order costs against the husband for the 2 days of hearing in respect of which the wife could be said to be wholly successful.  I will not make any order for costs in relation to the 20 day hearing.

COSTS OF THIS APPLICATION

1. The husband indicated that he would not make any costs application should he be successful in the current proceedings.  The wife indicated that she would make a costs application if she was successful.  She has not been successful and consequently I make no order for costs in relation to the current applications. 

2. I also note that the husband made a concession during submissions that he would agree not to bring any further costs application in relation to any other part of the litigious history between the parties which might give him some ground to do so and I will make an order based on that concession.

3. Counsel for the husband in the current proceedings reiterated a number of times that ‘this case must end’. 

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts.

Associate: 

Date:  23 April 2010.