Fryatt & Thompson (No. 2)
[2005] FMCAfam 545
•12 October 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FRYATT & THOMPSON (No. 2) | [2005] FMCAfam 545 |
| FAMILY LAW – Costs – circumstances justifying order – whether costs should be allowed on an indemnity basis – where no submissions have been made by the respondent – Family Law Act 1975 (Cth) s.117 does not raise any presumption whether or not in a particular case costs should or should not be ordered – where Respondent rejected two offers of settlement – costs ordered on party and party basis. |
Family Law Act 1975 (Cth), ss.117, 117C
Federal Magistrates Court Rules 2001 Schedule 1
G and G [2004] FMCA 9; (2004) FLC 93-194
Munday & Bowman (1997) 22 Fam LR 321; FLC 92-784
Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248
Kilich and Wood [2003] FamCA 629; (2003) FLC 93-169
Gaudry & Gaudry (No. 2) [2004] FMCAfam 649; (2004) FLC 93-203
Robinson & Higginbotham (1991) FLC 92-209
Gaudry & Gaudry (No.1) [2004] FMCAfam 452; (2004) FLC 202
Penfold v Penfold (1980) 144 CLR 311; 5 Fam LR 579; FLC 90-800
| Applicant: | Delma Fryatt |
| Respondent: | Morgan Leigh Thompson |
| File No: | NCM 3037 of 2002 |
| Delivered on: | 12 October 2005 |
| Delivered at: | Sydney |
| Hearing dates: | 29 April, 17 & 18 June 2005 |
| Date of Last Submission: | 8 July 2005 |
| Judgment of: | Scarlett FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Bateman |
| Solicitors for the Applicant: | Stacks – The Law Firm |
| Solicitors for the Respondent: | Merrick Spicer & Associates |
ORDERS
That the Respondent father pay the Applicant’s costs of the Maintenance proceedings between the parties fixed in the sum of $13,650.00.
That the Respondent pay the Applicant’s costs of this application fixed in the sum of $1,135.00.
I allow six (6) months to pay the above costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
NCM 3037 of 2002
| Delma Fryatt |
Applicant
And
| Morgan Leigh Thompson |
Respondent
REASONS FOR JUDGMENT
This is an application by the mother for an order for costs against the father arising out of proceedings for the maintenance of their adult son. The son (to whom I will refer by the pseudonym J) was attending university, and on 21st February 2005 I made orders to this effect:
a)that the Respondent Father should pay maintenance at the rate of $150.00 per week with effect from 4th May 2002;
b)that the maintenance should be paid into a bank or credit union account in the name of the adult son; and
c)that the Respondent’s liability to pay maintenance other than arrears is to cease on 30th November 2005.
Background
The Respondent defended the proceedings, both on the question of liability to pay maintenance and on the amount, if any, that should be paid. The proceedings were protracted, and took three hearing days to complete. Eventually, I reserved judgment.
I handed down judgment on 21st February 2005.
Issues
The Applicant submits that:
a)The Court should order the Respondent to pay the Applicant’s costs;
b)Costs should be paid on an indemnity basis; and
c)In the alternative, there should be an order akin to that made by Bryant CFM in G and G (2004) FLC 93-194.
In G and G (supra), Bryant CFM (as she then was) held that the husband in that case should pay the wife’s costs taxed on the Family Law Scale. The reason for this was that the Federal Magistrates Court Scale, which is a lump sum scale, would not have provided sufficiently for the wife’s costs in that matter.
The father in this case, who was represented in the proceedings, has not filed any submissions. The mother’s solicitors have filed a written submission prepared by Counsel.
Principles to be applied
The Family Law Act provides in s.117 that, subject to certain considerations, each party to the proceedings should pay their own costs. Section 117(2) gives the Court the power to make an order for costs if the court is of the opinion that there are circumstances that justify it in doing so, subject to sub-section 2A and the applicable Rules of Court. Sub-section 117(2A) sets out the matters to which the Court should have regard in considering what order should be made, if any.
The applicable Rules of Court are found in Part 21 of the Federal Magistrates Court Rules 2001.
The Applicant’s submissions
The Applicant’s written submissions cover the matters set out in the various paragraphs of s.117(2A). In particular, she submits that the father’s conduct was provocative in that he refused to pay anything at all for J’s support. As a result, the mother had no alternative but to commence court proceedings. The mother also submits that the father failed to produce documentation regarding his business activities until the morning of the court hearing. She further submits that he gave no assistance to the Court in the production of his documents. The father had the benefit of legal advice but made no payment for J after he turned 18.
The Applicant also refers the court to the fact that she made two written offers of settlement to the Respondent, neither of which was disclosed to the Court. The first offer was to accept the sum of $160.00 per week, commencing on 11th May 2002, with a CPI increase, to cease on the young man finishing his tertiary education. The second was in similar terms, but at the rate of $120.00 per week. The Respondent did not accept either offer.
The Applicant refers to the decision in Munday & Bowman (1997) 22 Fam LR 321; FLC 92-784, where it was held that a court should not lightly depart from the ordinary rules relating to costs between party and party. The circumstances justifying any departure should be of an exceptional kind.
The Applicant also refers to the decision in Colgate Palmolive Co. v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248, where there appear a number of examples where indemnity costs may properly be awarded. The Applicant submits that the conduct of the Respondent could be seen to come within two of the five examples:
“(c) Evidence of particular misconduct causing loss of time to the court and to other parties”; and
“(e) An imprudent refusal of an offer to compromise”.
The Applicant also referred to the decision in G and G (supra), where Bryant CFM was not satisfied that the Court should order indemnity costs but made these comments at page 79,223:
“70. The wife sought an order for indemnity costs but I am not satisfied that the circumstances in this case give rise to the situation in which that would be appropriate. However, a great deal of work has had to be done by way of interlocutory process and discovery to prepare the matter for hearing in view of the lack of information provided by the husband and in view of his obfuscation – deliberately, I have found – of his financial position.
71.. I therefore do not consider that the Federal Magistrates Court Scale, which is a lump sum scale, would provide sufficiently for the wife’s costs in this matter and in this unusual case I propose to order that the husband pay the wife’s costs to be taxed in accordance with the Family Law Scale.”
The Applicant has also referred me to the decision of the Full Court of the Family Court in Kilich and Wood [2003] FamCA 629; (2003) FLC 93-169, where the trial judge made a costs order against the wife and said that the circumstances justifying the order were:
“The findings of fact made contrary to the wife’s case in relation to her alleged financial contributions, the time taken in order to hear the wife’s evidence, and from the perspective of the husband’s legal representatives the preparation in relation to it; my findings as to the wife’s credibility …and the offer of settlement that was made on the morning of the first day of the three day hearing.”
The trial judge refused to grant indemnity costs having regard to the wife’s very modest financial circumstances.
The wife challenged the costs on the grounds that:
a)The trial judge failed to place sufficient weight on the disparity in the parties’ financial circumstances; and
b)The trial judge erred in placing any or undue weight on the oral offer of settlement made on the first day of the hearing.
The Full Court of the Family Court dismissed the appeal, holding that:
a)The Court should be very reluctant to interfere with the exercise of discretion in respect of costs (Robinson & Higginbotham (1991) FLC 92-209). It is necessary to demonstrate that the result was plainly unjust or that the discretion of the trial judge was exercised upon wrong principles.
b)The trial judge did not overlook the disparity between the parties’ financial circumstances. Because he gave considerable weight to other facts he concluded that a costs order should be made. There was no basis to interfere with this exercise of discretion.
c)Section 117(2A) (g) allows the Court to have regard to oral offers as long as it deems them relevant.
Finally, the Applicant referred me to my own decision in Gaudry and Gaudry (No.2) ([2004] FMCAfam 649; (2004) FLC 93-203). In that case I made an order for costs against a respondent who had demolished a house on the property the subject of property orders that I had made in previous proceedings.[1] In that case, I took into account the parties’ modest financial circumstances and the fact that neither party was legally aided. I then went on to find (at page 79,308):
“14. The conduct of the parties to the proceedings is a relevant consideration, as the Respondent has failed to file any documents at all. I am satisfied that the proceedings were necessitated by the failure of the Respondent to comply with a previous order of the Court. In fact, the Respondent has flagrantly disregarded the earlier orders. The Respondent has been wholly unsuccessful in these proceedings. There are no other relevant matters.”
[1] See Gaudry and Gaudry (No.1) [2004] FMCAfam 452; (2004) FLC 93-202
The Respondent made no submissions, despite being given an opportunity to do so.
Conclusions
In G and G (supra) at [60], Bryant CFM referred to the decision of the High Court of Australia in Penfold v Penfold (1980) 144 CLR 311;
5 Fam LR 579; FLC 90-800, where the Court considered subsection. 117(1) of the Family Law Act, which provides that each party shall bear his or her own costs unless the Court otherwise orders. The High Court said that there is no presumption arising from this as to whether in a particular case costs should or should not be ordered and that each case depends upon its own facts.
In my view, with respect, the decision in Penfold v Penfold (supra) is a good starting point. Each case depends upon its own facts and the Court should consider the relevant matters in s.117(2A) when considering what order, if any, should be made for costs.
It appears to me that the Court must first decide whether a costs order should be made before considering the quantum of that order. In considering the quantum, the Court must then decide whether there should be a departure from the normal order that costs should be assessed on a party and party basis.
First, the Court must consider the parties’ financial circumstances. The Respondent is self employed and owns his own home, upon which there is a modest mortgage. He has re-partnered. I am not convinced that the evidence showed the Respondent’s income to be as “continuous and profitable” as the Applicant’s counsel submits.
The Applicant has re-married. Her present husband is a solicitor. The child J lived with the Applicant since the parties separated in 1997. The Applicant has borne the major financial burden of attending to J’s upkeep since the parties separated and I note that the Respondent father’s arrears of child support payments stood at $5,767.43 at the time of the hearing. The Applicant has her own income and an interest in a home at Taree with her present husband.
Neither party is legally aided.
The Respondent contested the proceedings, which took three hearing days. In my view, the time taken was excessive, and I am not satisfied that the blame lies entirely with the Respondent or his legal advisers.
The proceedings were not brought about by the failure of a party to comply with any court orders. The Respondent has been unsuccessful in the proceedings, in that an order for maintenance was made. It is significant that the Respondent rejected two settlement offers, one of which would have involved him in paying a lower amount of maintenance than was eventually ordered. This offer was dated 24th April 2003. There are no other relevant considerations.
In my view, the Respondent could have settled the matter before the first allocated hearing day on more advantageous terms than the Court eventually ordered. He chose not to do so, and the matter proceeded for three hearing days before he was eventually unsuccessful.
I am satisfied that the circumstances warrant making an order for costs in favour of the Applicant. I now turn to consider the question of quantum, and whether costs should be calculated on an indemnity basis.
I have considered the matters set out in Colgate Palmolive co v Cussons Pty Ltd (supra), and it appears to me that the only relevant matter is the Respondent’s imprudent refusal of an offer to compromise. I am not satisfied that the length of the proceedings is entirely due to any particular misconduct of the Respondent, although it is clear that he was legally represented and should have considered the impact of a contested hearing that was obviously not going to finish on the first day.
I am not satisfied that the conduct of the Respondent or any other circumstances warrants a departure from the usual practice of ordering costs on a party and party basis. Equally, I have considered the judgment of Bryant CFM in G and G (supra), and I consider that the facts in that case are not on all fours with the facts in this case.
I propose to distinguish G and G on that basis.
The Applicant, in the alternative, seeks costs based on the scale set out in Schedule 1 of the Federal Magistrates Court Rules, which has been set out at $5,460.00 together with additional disbursements of $8,190.00, making a total of $13,650.00. I propose to make an order in that amount.
The Applicant also seeks costs of this application, which her counsel appears to assess at $4,660.06. Taking into account the fact that the proceedings were dealt with in chambers and involved no court appearance, I consider the amount sought to be rather excessive. The Respondent did not file any submissions. I propose to allow the sum of $1,135.00 for the costs of this application.
I have considered the Applicant’s application that the costs should be secured against the Respondent’s home property. There is no evidence that this is necessary and I do not intend to accede to that application.
The Respondent is to pay the Applicant’s costs of the Maintenance proceedings in the sum of $13,650.00 and the Applicant’s costs of this application in the sum of $1,1350.00, making a total of $14,785.00.
I will allow six months to pay.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Associate: Virginia Lee
Date: 11 October 2005
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