Garapiperis and Kasiopoulas

[2011] FamCA 634

FAMILY COURT OF AUSTRALIA

GARAPIPERIS & KASIOPOULAS [2011] FamCA 634

FAMILY LAW – COSTS - Circumstances justifying order - Costs where appeal filed - whether party is wholly unsuccessful - offer of settlement
STAY OF PROCEEDINGS – Stay not automatic on appeal - Whether detriment suffered

Family Law Act 1975 (Cth) section 117

APPLICANT: Ms Garapiperis

RESPONDENT: Mr Kasiopoulas

FILE NUMBER: SYC 6432 of 2008

DATE DELIVERED: 25 July 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan J

HEARING DATE: 25 July 2011

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Ms Ruggero,

Vizzone Ruggero & Associates

COUNSEL FOR THE RESPONDENT: Mr T. Hodgson

SOLICITOR FOR THE RESPONDENT: Hancock Alldis & Roskov Lawyers & Notaries Public

Orders

1. That the Application in a Case of the wife filed 23 December 2010 as varied by the minute of orders sought today is dismissed.

1. That the parties provide to the associate to Justice Loughnan and each other written submissions in relation to the costs of the wife’s application filed 23 December 2010 within 21 days from today’s date.

1. That any submissions in reply be lodged and exchanged within a further 14 days thereafter.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6432 of 2008

Ms Garapiperis

Applicant

And

Mr Kasiopoulas

Respondent

REASONS FOR JUDGMENT

1. These are proceedings for costs and a stay arising out of a property settlement judgment delivered on 2 December, 2010.  The application before me is an application on behalf of the wife of 23 December, 2010.  A minute was provided to me this morning, so in total the arguments are the wife seeks that the orders I made on 2 December, 2010 be stayed pursuant to the minute handed up today.  The wife seeks that the husband pay her costs on a party and party basis from 19 February, 2010 to 2 December, 2010.  As I understand the relevance of those dates, that’s the date from a time when an offer was made to the date of the judgment.

2. The matter was argued before me today.  I reserved judgment until this afternoon and excused the parties on delivery of judgment and their lawyers and, as it transpires, there is no appearance in accordance with those directions.  As to the question of costs, the legislation provides in section 117 that generally parties bear their own costs.  The court has power to make an order and in doing so in considering an order it is to take into account their financial circumstances, relevantly the conduct of the parties in relation to the proceedings, particularly going to the conduct of the parties in the litigation, whether the proceedings were necessitated by the failure of a party to comply with orders, whether any party has been wholly unsuccessful, whether either party has made an offer in writing to settle the proceedings and if so the terms of the offer, such other matters as the court considers relevant.

3. The argument made this morning on behalf of the wife relied on three things.  There was an argument that the husband is in a stronger financial position, so a greater capacity to pay.  There was an argument that the argument was expressed to be that the wife was wholly successful, but I suppose in terms of the legislation the corollary is that the husband was wholly unsuccessful and the wife would rely on the fact of various offers of settlement.  The chronology of the proceedings was that sadly the proceedings have had quite a history.  These are 2008 proceedings.  Property settlement orders were made after a defended hearing by, as he then was, Judicial Registrar Johnson on 29 January, 2010.

4. Inter alia those orders provided for, in effect, the wife to buy the husband’s interest in a property at B Town on consideration of a payment of $89,000 with the parties to retain otherwise what they had and there was a default order for sale and division.  There was subsequently an application to review that decision.  That came before me in September of 2010 and I delivered judgment on 2 December, 2010 which made not dissimilar orders providing for, in those terms, the husband to sign over the property at B Town upon payment to him of $91,000 and for the parties to retain otherwise what they had and, again, there was a default order for sale in the event that that payment was not made.

5. Subsequent to my orders, there has been appeal filed.  The parties told me that they had been told that the appeal might be heard sometime next year, but in the meantime there is the costs issue arising out of the proceedings before me and I would have thought the logic would be that the costs issue is dealt with on the basis of the judgment that I have made.  Of course, if that judgment is substantially upset, then I would imagine that the costs order would also fall or may also be the subject of an appeal.  The appeal has been filed on behalf of the husband.  The notice of appeal raises a number of issues to do with an impermissibly wide exercise of discretion and that seems to be the main ground.

6. There are a couple of challenges to findings in relation to add backs and other things.  The orders sought on the appeal by the husband are that presumably the judgment be set aside and that the husband and wife do all things to sell the B Town property and that the proceeds be divided 56 per cent to the wife, 44 per cent to the husband.  Just to put that in context, the consequential order made by me meant that the husband would receive, in effect, 9.4 per cent.  So there is a difference of about 30 per cent between the outcomes proposed on behalf of the husband and that identified in my judgment and this is in the context of an equity approaching a million dollars.

7. So, turning to the matters relevant to the case, as to the financial circumstances of the parties, I made findings in relation to that in the course of my judgment.  I found the assets to have a value of $2.3 million and the relevant debts to be $992,000.  The most significant aspects of that were the B Town property at a million, the property at P town, which the husband owns with his new partner, at $1 million and, in terms of liabilities, $630,000 owing on the P Town property and a tax liability of the husband of $315,000.

8. In terms of the other aspects of the parties financial circumstances, I found that the husband earned about $4000 a week in salary, but I found that his income from the material available to me at the time was something more like $5800 a week from other benefits from his employment and I found that his outgoings were about $4000 a week.  I found that there was some confusion in the husband’s case about his expenses and there was another document that put his expenses at about $4400 a week.  I went into some detail about other benefits available to the husband.

9. As to the wife, she received $1490 a week being salary from a part time job as an office manager bookkeeper of about $1000 a week, some modest interest, $80 in family payments and $327 in maintenance and child support and in terms of expenses, $1526 a week.  I also found that the wife had a capacity, some unexercised capacity for paid employment because she wasn’t working full time and I put her earning capacity at about $70,000 a year.  There is no legal aid.  As to the conduct of the parties, nothing was brought to my attention by either of the advocates today in relation to the conduct of the review proceedings before me.  They were not brought about by reason of a failure to comply with court orders.

10. As to whether either party was wholly unsuccessful, I think the better view would be that no one was wholly unsuccessful.  These were review proceedings.  So they proceeded by way of a fresh hearing and although the outcomes were expressed in similar terms, the background information changed dramatically.  There was a significant change in terms of the value of assets and liabilities between the date Judicial Registrar Johnson, as he then was, determined the matter and the date I determined the matter.  Had all things remained equal, one might say, well, the husband’s challenge resulted in a difference of $1900 which is not significant and there would be an argument about the relative lack of success or not.  Even then, I don't know that it can fairly be said that the husband was wholly unsuccessful in the proceedings.

11. It is a difficult concept, I think, in relation to cases where there is an exercise of discretion as a matter of degree as opposed to cases where the entire application results in a success or a failure.  So, I think the better view, as I say even though the orders have a not dissimilar look about them, a reading of the two judgments reveals that the case is a very different case and that is just simply the product of the fact that nothing stands still between the hearing of an application and a fresh hearing conducted about a year later. 

12. Finally there is the issue raised with me about offers of settlement.  In that regard, there was an offer made by the wife in writing on 19 January, 2009.  The wife offered to just simply accept a settlement whereby the husband walked away and there was no adjustment towards his interests for the B Town property on the basis that the wife indemnify him in relation to the modest mortgage.  Then relevantly the orders were made by Judicial Registrar Johnson, 29 January, 2009.  On 9 February, 2009, sorry, on 9 February, 2010, I think probably that date is wrong.  I think the Judicial Registrar’s decision was probably 2010.

13. On 9 February, 2010, an offer of settlement was sent though the wife’s solicitor to the husband proposing the payment by the wife of $50,000 rather than the $89,000 contained in the judgment and that seems a bit unusual in that the wife had already received the judgment at $89,000 but I gather from the terms of the letter that issues were raised about questions of failure of disclosure by the husband.  Anyway, that elicited a response from the husband acting then for himself dated 10 February, the next day, whereby he rejected that proposal and countered with an offer that he receive $250,000 rather than either the $50,000 then offered or the $89,000 in the judgment.

14. A review application was filed on 19 February in relation to the Judicial Registrar’s orders and then, on 1 March, 2010, an offer was made from the wife proposing that she settle on the basis of the judgment figure.  The argument, I gather, is that if the husband had accepted that offer, $89,000, that he, in effect, would have been better off.  The problem with this, I think, is the problem with the matter as a whole.  It was a different case and in those circumstances, it is a bit hard to say.  He would have literally been better off because he would have had his money then rather than waiting another year to $1900.  He would not have incurred legal fees and he would have been better off, but the fact is the world did not stay the same.

15. There were a number of liabilities crystallised as a result of the husband taking certain steps in relation to some shares and also the B Town property increased in value to a considerable extent.  So it seems to me on the basis of that material, those factors would not justify, in terms of the offers of settlement, or there being somebody wholly unsuccessful would not justify a costs order.  As to the husband’s financial circumstances, that contemplates two broad categories of things.  One is the income earning capacity of the parties and there the husband is significantly ahead. 

16. On the other hand, there is the fact that under the orders I proposed in terms of accessible assets and in terms of the entire pool, the wife was substantially better off than the husband under the orders I made.  It is yet to be decided, of course, whether those orders will be retained, but as I said, I need to determine the costs application on the basis of the matters as I have left them and therefore we have the husband with a greater earning capacity and the wife with a lesser earning capacity, the wife with a greater allowance of the available property pool and the husband with a significantly lesser allowance and in particular in relation to accessible assets, readily accessible assets, the margin for the wife is even greater.

17. It seems to me on the basis of those things that there should be no order for costs.  The legislation makes provision for there to be a review of the exercise of judicial power by a delegate.  As things have transpired reviews of decisions of judicial registrars are a thing of the past, but nevertheless it’s not that there is an assumption that there is somehow an indulgence by a party seeking to review a judicial registrar’s decision.  That was a matter of right and, indeed, considered to be an acceptable part of the mechanism of supervision of the exercise of judicial power by a delegate’s decision such as Harrison v Kelodeane make that clear.

18. So the husband has not sought an indulgence.  He has acted on his rights.  Although the outcome was not dissimilar in dollar terms, in terms of the adjustment that was to be made out of the B Town property, it was different in every other way because the pool was different and I am not satisfied, in those circumstances that there should be a costs order and that the usual position should apply and that the parties bear their own costs.  In terms of the stay application, it think it would not be unfair to say that the legal position is that a stay is granted where the court is satisfied that without a stay an appeal would be rendered nugatory and then questions of any particular prejudice that might apply if a stay is granted or not granted and the balance of convenience between the parties.

19. This is again an unusual argument because one would normally expect that the application for stay would come from the appellant and so the courts have taken into account the likelihood of success of an appeal and in a situation like this a rather ironic position is reached whereby the husband is left to argue that his appeal might not be successful and the wife would be arguing that his appeal might be successful when that is entirely inconsistent with their positions in relation to the appeal.  So the husband will not be arguing that without a stay his appeal is rendered nugatory and the wife will be arguing that there is a substantial appeal and some chance of success.

20. The wife’s argument was twofold.  One related to costs and that is no longer an issue.  I think that argument which went along the lines of if I’m successful in relation to costs and those costs have to be paid, rather than the husband receiving $91,000 and disbursing it, some of that money should be held so that it would be available for the payment of costs back.  I don't think that argument can have any success.  It is not likely that there would be no available funds from which a costs order could be met.  The question of the funds being more readily available, I don't think is an argument that would warrant a stay, but anyway that argument is no longer relevant because there is no costs order.

21. The main issue is that the wife’s argument is that if she is put to raising money to pay the husband out of the B Town property, she will have to go to the trouble and expense of raising a mortgage which contemplates both the current mortgage of something a bit under $30,000 and the amount to be paid to the husband and if she does all of that, then that is an entirely wasted effort if the husband is successful on the basis that she would not be able to pay or she might not be able to pay the amount that was then necessary to buy him out and that therefore the property would have to be sold and she would have taken the trouble of securing a facility secured on the property paying the husband out all for nothing when the property had to be sold in any event.

22. The husband’s argument against the stay is that he is entitled to the fruits of his victory so to speak.  He has a judgment for $91,000 and he is entitled to be paid.  I am somewhat intrigued as to why the application was made and presumably something has passed between the parties.  Obviously, the husband held off pressing for enforcement of Judicial Registrar Johnson’s orders when he was entitled to receive $89,000 and I was told by his counsel that he had held off enforcing my orders and I think I was told as a result of this very application, the application filed on behalf of the wife on 23 December not long after judgment and that might explain what’s happened that the husband was not willing to make the same accommodation for my judgment that he made for Judicial Registrar Johnson’s judgment and the wife must have had wind that the husband was going to act on his rights under the orders which would be to a payment of $91,000 or for the property to be sold and him to receive a proportion of the value of the property.

23. At the end of the day, the wife bears the onus in an application for a stay of this judgment.  She has to satisfy me that the stay is appropriate.  There is reference in the legislation; the Family Law Rules make reference to a stay not being automatic on an appeal.  There is no doubt in any event that the court has inherent power to stay its own judgments, but it is the wife’s case to make and it is as effectively put, as I have put it, in a few words.  There is no evidence in the wife’s material as to what detriment she would suffer.  At the moment the judgment stands.  There is an order made for payment, an amount owing under the judgment.  It has not been paid.  Interest runs and I was told without complaint from the other side that interest, whatever it is, is likely to be in excess of the sort of interest that would be payable on a bank loan.

24. Now, the rules of court provide for interest on judgments to be pegged at one and a half per cent above the bond rate.  So the wife says, in her affidavit of March of 2011, paragraph 28:

    In the event that the orders are enforced and I am to pay the husband the sum of $91,070.85 the current mortgage on the property is $26,000.  In the event that I am to pay the husband, I would have to borrow the money from the bank.  I would have to borrow the money from the bank and pay interest rates accordingly.  I anticipate that interest rates would be approximately 6 per cent per annum.  This is estimated at today’s interest rate and on the sum of $118,000 that would be $7080 per annum.  In the event that I pay the husband and the appeal is not dealt with –

    I don’t quite follow what that means:

    - it may be that I am required to pay the husband less and therefore would lose the interest that I’m paying the meantime.  I seek a stay of the orders.

    She goes on:

    I’ve had to go through two hearings and now an appeal.  If I am successful in the appeal and I’m successful in the application for costs, I do not wish to enter further litigation to recover any costs from the husband and I ask that I not be required to pay my former husband until determination of the appeal and costs application.

25. The problem with that is and she goes on to say that the costs could be offset as I have said.  The problem with that is there is no cross-appeal.  So the only possible outcomes of the appeal would be that either the wife is left in the position where she would have been under the orders I made or something worse than that.  So it is not possible, I cannot imagine a scenario where it would be possible, that her appeal could result in her paying less than $91,000.  The fact alone that she would have to borrow money at an interest rate that is likely to be less than the rate she is currently paying on this unpaid judgment does not seem to me to be an argument of any hardship at all.

1. True it is, one could imagine that there would be costs in raising the facility.  She has not said what they would be and that is something that she could have said.  Were they to be out of all proportion to the amount borrowed and it is hard to imagine how that could be, that is something that she would have to give some evidence about and she hasn’t.  So, it can’t be said that the payment would render the appeal nugatory.  I suppose from the wife’s point of view and what she wants, her failure to pay and the lack of a stay could mean that the bargain she sought in the original judgment would be rendered nugatory, but that is not the matter that I am to take into account and by that I mean if the husband was to act on the orders that I made in default of payment and pressed for the sale of the property, then the wife could not retain the property in those circumstances

2. So there is nothing about the argument, albeit that it is run in reverse that suggests that the appeal without a stay could render the arguments nugatory.  As to any prejudice, the husband says he needs the money.  He says he owes a tax debt, I think, of the order of $300,000.  He has a significant mortgage on the P town property and he hasn’t paid his lawyers and he could use the money and in terms of the balance of convenience, the wife would rather have the money, albeit costing interest at a significant rate.  She would rather not have to find the money today and would rather wait until the appeal is determined.  I do not think that’s enough. 

3. It seems to me that the onus is with the wife and the arguments in relation to whether the appeal would be rendered nugatory, any prejudice and the balance of convenience, don’t get her over the hurdle of discharging that onus.  Therefore the application of the wife filed 23 December, 2010, as varied by the minutes of orders sought today, is dismissed.  The wife flagged a question of costs in her application, that’s the costs of these proceedings and counsel for the husband indicated that his client would be seeking costs if the application was unsuccessful.  Unfortunately, the price of releasing the parties is that they’re not here to argue the question of costs now and I think natural justice requires that they be able to do that.  Perhaps I will just give the parties an opportunity to make written submissions in relation to that within a period and then I will deal with that issue on the papers.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 25 July 2011.

Associate:

Date:              12 August 2011