Garrett and Cowell

[2011] FamCA 732

FAMILY COURT OF AUSTRALIA

GARRETT & COWELL [2011] FamCA 732

FAMILY LAW – COSTS – Application by the wife seeking costs on an indemnity basis – Application by the husband seeking a portion of his costs – Whether the circumstances justify the making of a costs order – Consideration of factors under s 117(2A) of the Family Law Act 1975 (Cth) – Where the wife alleges her costs were increased due to the husband’s failure to give disclosure and failure to comply with orders – Where wife’s application included costs incurred in relation to proceedings that were not under the Family Law Act 1975 (Cth) – Where neither the wife nor the husband were wholly or substantially successful in the substantive proceedings – Where the circumstances justify the making of a costs order in favour of the wife – Orders that the husband pay a portion of the wife’s costs on a party/party basis as agreed or assessed – Husband’s application dismissed.

Family Law Act 1975 (Cth), s 117
Family Law Rules 2004

APPLICANT: Ms Garrett

RESPONDENT: Mr Cowell

FILE NUMBER: SYF 3566 of 2006

DATE DELIVERED: 20 September 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ryan J

HEARING DATE: By way of written submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT: In person

SOLICITOR FOR THE RESPONDENT: In person

Orders

1. That Mr Cowell (“the husband”) pays Ms Garrett (“the wife”) party/party costs as agreed or assessed in relation to the following applications:-

   (i)The husband’s application for review filed 18 December 2008 (up to and including receipt of the husband’s notice of discontinuance);

   (ii)The husband’s application for a stay filed 19 December 2008;

   (iii)The wife’s application in a case filed 13 January 2009;

   (iv)The wife’s application in a case filed 7 July 2009;

   (v)Costs of the conciliation conference on 16 June 2008.

2. That the husband pays costs pursuant to the above order within 28 days of agreement or assessment, whichever first occurs.

3. That the parties applications for costs incurred in relation to the husband’s appeal against orders made by Moore J on 16 July 2007 are struck out.

4. All outstanding applications for costs are otherwise dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Garrett & Cowell has 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: SYF 3566 of 2006

Ms Garrett  

Applicant

And

Mr Cowell

Respondent

REASONS FOR JUDGMENT

1. Before the Court are applications for costs of proceedings for property settlement and related relief.  These proceedings began with an Application for Final Orders field by Ms Garrett (“the wife”) on 3 August 2006 and concluded when Mr Cowell (“the husband”) filed a Notice of Discontinuance of his Application for Review on 3 June 2011.

2. These proceedings coincided with property settlement and parenting proceedings in the District Court of City B, Country C (“the County C Court”).

Salient facts

1. The wife was born in 1963 and is currently 47 years of age.

2. The husband was born in 1962 and is currently 49 years of age.

3. The parties met in May 1995 and commenced a relationship in June 1995. At that time the wife was divorced with a child who resided with her and the husband had separated from his previous wife.

4. In July 1996, the husband purchased a property D Street, Suburb E (“Suburb E”) for $251,000.

5. The parties commenced cohabitation sometime between December 1996 and March 1997.

6. In December 1996, the husband’s previous marriage was dissolved.

7. There are three children of the marriage, F, born in 1997, G, born in 1999 and H, born in 2005 (“the children”).

8. In January 1997, the husband purchased a property at J Street, Suburb K (“Suburb K property”) which was rented.

9. In March 1998, the parties purchased in joint names a property at L Street, Suburb M (“Suburb M property”).

10. In May 2001, the Suburb E property was sold and the net proceeds were used to reduce the mortgage on the Suburb M property.

11. In August 2001, the parties married and moved to Country C for the husband’s employment; the Suburb M and Suburb K properties were rented with rental income paid to the husband’s N Bank account.

12. In November 2004, the parties sold the Suburb M property with part of the net proceeds used to reduce the Suburb K mortgage and the remainder paid into an O Bank account.

13. In February 2005, the husband’s employment was terminated.

14. On 10 April 2005, the parties separated and the husband vacated the family home.

15. On 11 April 2005, the husband commenced work with P Pty Ltd in Country C.

16. On 28 June 2005, the husband applied for legal separation orders in Country C and all assets including the husband’s accounts were frozen. For reasons I explain below, a costs order will not be made in relation to the proceedings in Country C.

17. In November 2005, the wife placed a caveat on the Suburb K property despite her almost certainly not having a caveatable interest. As is explained later a costs order will not be made in relation to the costs she incurred lodging the caveat.

18. On 15 February 2006, the Country C Court made orders that the children live with the wife, providing access for the husband and child maintenance.

19. In May 2006, the wife filed for divorce which was granted in July 2006.

20. In July 2006, the husband filed for property orders in Country C.  An injunction to freeze the wife’s bank account was granted. In August 2006 the wife was permitted by the Country C Court to withdraw an amount from her bank account per year, the remaining funds remained frozen.

21. On 3 August 2006, the wife filed an Application for Final Orders in this Court seeking 65 per cent of the net matrimonial assets and her costs. As will become apparent neither the wife nor the husband was wholly or substantially successful in relation to this application.

22. On 16 October 2006, the husband filed an Application in a Case seeking the wife’s application be dismissed and costs.  The husband’s application was dismissed by Moore J on 16 July 2007.  Although the husband filed a notice of appeal, the appeal was deemed abandoned in February 2008. For reasons I explain below, a costs order will not be made for the costs associated with the hearing before Moore J, nor the abandoned appeal.

23. On 17 September 2007, the Country C Court made orders which allowed the wife to remove the children to Australia.  In Australia the wife registered the child maintenance orders which become enforceable from 30 October 2007.

24. In October 2007, the wife and the children moved into rental accommodation.  The wife commenced employment four days per week.

25. In December 2007, the Country C Court ordered maintenance to be paid directly from the husband’s salary.

26. On 31 December 2007, the husband ceased employment with P Pty Ltd in Country C and in early 2008 he resumed employment with P Pty Ltd in Country Q as a technician.

27. On 4 February 2008, the wife filed an ex parte application in this Court seeking an injunction to restrain the husband dealing with the Suburb K property. On 5 February 2008, a judicial registrar made orders granting an injunction until 12 February 2008.  For reasons I will explain below, a costs order will not be made for the costs incurred as a result of the wife’s application for an injunction.

28. On 12 February 2008, a judicial registrar made orders restraining the husband from dealing with the Suburb K property, money held in his pension or superannuation funds and money held in the parties’ names in a City R share trading account.

29. On 21 February 2008, a notice of default was issued by the mortgagee on the Suburb K property.

30. On 5 March 2008, a judicial registrar ordered that the husband pay the mortgage arrears and maintain the ongoing payments, that the wife be authorised to enquire directly in relation to the mortgage status, that the wife be appointed the manager of the Suburb K property and to retain the rents toward on-going child and spousal maintenance and that the wife account to the husband in relation to the management of the property every three months.  The husband was ordered to file and serve a response, financial statement and affidavit and the parties were ordered to attend a conciliation conference.

31. In April 2008, the wife took up a position as a senior analyst in a government agency.

32. On 16 June 2008, the husband failed to attend the conciliation conference.  He failed to comply with directions which required him to file documents.

33. On 28 July 2008, the wife forwarded to the husband a Minute of Proposed Order and affidavit by email.

34. The husband filed a Response on 22 August 2008.

35. On 25 September 2008, the wife filed an Application for Contempt stating that the husband failed to comply with the 5 March 2008 orders that he maintain mortgage payments on the Suburb K property. This was listed for mention on 17 November 2008 before a judicial registrar and withdrawn on that date.  For reasons I will explain below, a costs order will not be made in the wife’s favour for the costs incurred as a result of her Application for Contempt.

36. On 17 and 18 November 2008, a two day final hearing was conducted before a judicial registrar.

37. The wife in her Minute of Order asked for the following property settlement:

    Balance of City R Share Account – Joint    $133,059

    Two O Bank Accounts –Wife    $110,501

    Country C Quote Share Account – Husband   $107,093

    100 per cent of the husband’s superannuation       $243,726

    Suburb K property (net)  $208,865

    Other items of property in her possession or control.

38. The husband in his case outline asked for a stay of proceedings, or in the alternative, the removal of the caveat and other notations from the title of the Suburb K property and for the parties to retain all other assets and liabilities in their sole names.

39. The judicial registrar made final orders on 5 December 2008 providing, inter alia:

    ·    That the wife be empowered to sign all documents necessary to effect a transfer and/or withdraw monies from the joint account held in the Country S, the wife’s personal O Bank account and monies held in the Country C “share account” in the name of the husband.

    ·    That the court request any impediment made by the District Court in Country C in terms of the wife’s capacity in this regard be removed

    ·    That whenever a splittable payment becomes payable in respect of the interest held by the husband in the T Fund, the trustee shall pay to the wife an amount equal to 89 per cent of that splittable payment (approximately $151,000).

    · That pursuant to Reg 7A.06 (1) of the Superannuation Industry (Supervision) Regulations 1994, the wife may rollover or transfer the transferable benefits out of the husband’s interest in the fund account, to a fund of the wife’s choosing.

    ·    That the husband pays to the wife the sum of $76,042.42 within 28 days.

    ·    That if the husband does not pay the said sum to the wife, the husband must sell the Suburb K property and the money be distributed to the wife from the proceeds of the sale.

40. It is apparent that neither party was wholly or substantially successful in these proceedings, with the wife receiving approximately $225,000 less than she sought and the husband receiving approximately $400,000 less than he asked for.  For reasons I will explain below, a costs order will not be made for the costs incurred as a result of this hearing.

41. On 18 December 2008, the husband filed an Application for Review of the judicial registrar’s orders and sought an order that the wife pays his costs. For reasons I will explain later, an order for costs in favour of the wife with respect to this application will be made.

42. On 19 December 2008, a judicial registrar made orders which stayed the orders made 5 December 2008 (except order 2) conditional upon the husband diligently prosecuting his Application for Review and restrained him from pursuing a property division in the Country C Court except for seeking a discontinuance or stay.

43. On 13 January 2009, the wife filed an Application in a Case seeking orders for the husband to disclose certain information. For reasons I will explain below, I will make a costs order in favour of the wife for the costs incurred with respect to this application.

44. On 15 January 2009, Fowler J made orders that provided:

    ·    By consent that the husband make an application to the Country C Court to obtain a release of injunction to enable the wife to access monies held in the O Bank account and to obtain suspension of the property proceedings.

    ·    By consent that the wife make an application to the Country C Court to suspend proceedings enforcing arrears of maintenance against the husband.

    ·    That the husband to give disclosure of certain documentation within six weeks in accordance with the orders sought in the wife’s Application in a Case filed 13 January 2009.

45. On 18 February 2009, the wife filed a claim in the Country C Court to have her account released.  On 31 March 2009, the husband filed a rejection of this claim.

46. On 6 May 2009, the Country C Court ruled in favour of the wife and the husband was ordered to pay her costs.

47. On 24 June 2009, the matter was listed before Fowler J for case management. Directions regarding the filing of documents were made and costs reserved.

48. On 7 July 2009, the wife filed an Application in a Case seeking that the Application for Review filed by the husband be dismissed, that the stay of orders be discharged and that the wife be released from her undertaking to suspend her Country C proceedings for enforcement of maintenance orders. For reasons I will explain below, I will make a costs order in favour of the wife for the costs incurred with respect to this application.

49. On 26 July 2009, as the husband had not complied with the orders made on 15  January 2009, the Country C Court made final orders that released both parties’ accounts.

50. On 26 and 27 July 2009, the matter came before Cohen J for case management.

51. On 26 July 2010, the husband’s then solicitor filed an affidavit stating that although he was retained by the husband, he was unable to obtain instructions from his client on issues relating to the husband’s failure to comply with the mandatory injunction made March 2008, directions made 15 January 2009, directions made 27 July 2009 and the undertakings made by counsel at the hearing on 27 July 2009.

52. On 30 August 2010, the matter came before Cohen J for case management.  Consent orders were made providing for the husband to give disclosure on oath by 30 August 2010 and for the wife’s Application in a Case filed 7 July 2009 to be dismissed.

53. On 2 September 2010, the matter again came before Cohen J for case management.

54. On 12 May 2011, the parties were offered dates for a final hearing.  The wife wanted to take the dates, however the husband could not be contacted.

55. On 3 June 2011, the matter came before me.  The husband was granted leave to file a Notice of Discontinuance, which he subsequently did. The orders made on that date allowed for any application for costs to be made in writing within 28 days, to be supported by written submissions.

Submissions

1. An Application for costs and written submissions were received from the wife on 1 July 2011 and from the husband on 4 July 2011.  The wife’s response to the husband’s cost submissions was received on 11 July 2011.

2. The wife seeks an order that the husband pays her costs of the substantive proceedings, of his appeal against the decision of Moore J, of his Application for Review, and of his Country C property proceedings which continued in breach of injunction.

3. In her submissions, the wife has included the following costs incurred:

   Caveat  $760.22

   Initial stages   $8,891.65

   Husband’s Application to Dismiss   $48,597.00

   Husband’s Appeal  $4,834.65

   Wife’s Application for Contempt  $2,612.60

   Preparation for hearing before Loughnan JR                    $31,137.50

   Proceedings is Country C  $52,894.40

   Husband’s Application for Review   $37,349.25

4. Throughout her submissions, the wife includes costs incurred from a law firm referred to as ‘U & V’, who were her legal representatives in the Country C proceedings.  In addition to the costs in relation to the proceedings in Country C, the costs being claimed in relation to the Application to Dismiss and the Application for Review include not insignificant amounts paid to her Country C legal representatives.

5. In her submissions, the wife claims she has incurred significant costs due to the husband’s failure to give disclosure, including costs involved in taking alternative steps including inquiries, investigation and the issue and service of subpoenas to obtain information for trial that would have otherwise been available if proper disclosure had been made.

6. The wife also claims her costs were significantly increased due to the husband’s repeated failure to comply with orders, including orders that he pay the mortgage payments and arrears and to discontinue the Country C proceedings.  The wife also incurred significant costs in preparation for the hearing of the husband’s Application for Review which he discontinued.

7. The husband seeks an order that the wife pay his costs for the substantive proceedings, for his Application for Review and for the wife’s child support orders from Country C. However, the husband’s submissions in support of his application for costs provide little, if any, assistance.

Discussion

1. Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) is the basic provision concerning costs and provides the general rule that that subject to s 117(2), s 117AA and s 118, each party to proceedings under the Act shall bear his or her own costs. Neither party submitted that s 117AA or s 118 was relevant. If there are circumstances that justify it in so doing, the Court may make an order for costs pursuant to s 117(2) as the Court considers just. In considering what order, if any, should be made I am required to have regard to the provisions of s 117(2A) of the Act and take them into account, identify them and balance the relevant matters.

2. The wording of s 117 makes it clear that it is only applicable to “proceedings under this Act”. The cost incurred with respect to the proceedings conducted in the Country C Court and the costs with respect to the lodgement of the caveat were not incurred in relation to proceedings under the Act. I therefore have no power to make costs orders in relation to these matters.

3. Additionally, with respect to the application of costs of the abandoned appeal, rule 22.43 of the Family Law Rules 2004 provides that the appellant, in this case the husband, may be ordered to pay the costs of the other parties (for example the wife) and that an application for costs of an abandoned appeal must be filed within 28 days after the appeal became abandoned. As the appeal was abandoned in February 2008, the cost applications for the abandoned appeal are patently out of time. Notwithstanding, the determination of cost applications with respect to an appeal is an application in relation to an appeal and thus an exercise of the appellant jurisdiction of the Court. It follows that a costs order can only be made by the Full Court and not by a single judge exercising original jurisdiction. Accordingly, in relation to such part of the application as to costs of appeal, I am unable to advance that matter further. That application will accordingly be struck out. It thus remains open for a party to apply to the Full Court for leave to proceed out of time and for costs of the abandoned appeal. Before doing so prudence suggests the party gives consideration to taking legal advice.

4. I am thus limited to costs orders with respect to the substantive proceedings undertaken in this Court, namely the Applications to Dismiss and for Contempt as well as the husband’s Application for Review.

5. Taking into account the circumstances surrounding the husband’s noncompliance with orders and his late notice at which he chose to discontinue his Review application I am of the opinion that there are circumstances that justify the making of a cost order in favour of the wife.

1. To determine what order, if any, should be made as a consequence of my findings pursuant to s 117(2), I am required to consider those matters set out in s 117(2A)(a)-(g) in so far as they are relevant.

2. Subsection (a) is concerned with the parties’ financial circumstances.

3. The wife lives in Melbourne and works from home as a senior analyst for a government agency.  Although her present income is not disclosed, in 2008 her income was recorded as $1,634 per week made up of $1,517 by way of salary and Family Assistance of $117.  I therefore infer that the wife is presently earning at least this amount.  In 2008 the wife disclosed that after expenses she had a weekly deficit of $1,025.00. She has the sole responsibility for the three children of the marriage and receives no assistance from the husband. The wife in her written submissions points out that her contract was due to end at the end of August 2011 and there is no certainty of renewal.  In the 2008 property settlement the wife received approximately $160,000 in superannuation assets plus $500,000 in non-superannuation assets (including approximately $80,000 in paid legal fees and $116,000 maintenance arrears).

4. The husband works as an electrical technician for P Pty Ltd Country Q and at trial gave evidence that his income was $306 per week plus a motor vehicle and accommodation. After expenses the husband claimed he had a weekly deficit of $570. The husband provided no documents to support these claims. In response to the husband’s evidence the judicial registrar made the following remarks:

   I have no confidence in the evidence about the husband’s current financial circumstances. At the end of 2007 something remarkable happened in the husband’s working life and yet he provided no evidence as to how it came about.  Further, he has failed to produce any documents to permit even the most superficial examination of the circumstances. At the end of 2007 the husband worked for [P Pty Ltd] in [Country] C as [a technician], earning well over $120,000 per annum.  In 2008 he accepted a job in [Country Q] for an entity associated with [P Pty Ltd] as a Technician with his remuneration reduced to the use of accommodation and a motor vehicle and a salary of $306 per week. (paragraphs 203-204)

   In the 2008 property settlement the husband received approximately $244,000 in superannuation assets plus $142,000 non-superannuation assets (including approximately $40,000 in paid legal fees).

5. Both parties’ financial circumstances are modest and the application of the subsection is moot.

6. Neither party is in receipt of a grant of legal aid (subsection (b)).

7. In relation to subsection (c), the husband’s conduct in relation to disclosure caused the judicial registrar in his reasons for judgment to conclude that “the husband was a poor witness” whose “non-disclosure was deliberate” (paragraphs 100-101).  It is the wife’s case that this conduct significantly increased her legal costs. However, the judicial registrar also found cause to make the following remarks about the adequacy of the wife’s disclosure (at paragraph 99):

   …There are unsatisfactory aspects to her disclosure that suggest that the wife has not always been careful about her representations made to Courts… 

8. Subsection (d) relates to whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court.  The husband’s failure to give adequate disclosure and, in particular to comply with orders and directions, attracts the application of the subsection in favour of the wife. 

9. Subsection (e) requires the Court to consider whether any party to the proceedings has been wholly unsuccessful.  The husband was wholly unsuccessful in his Application in a Case filed in 16 October 2006 seeking the wife’s initial application be dismissed and his Application for Review of the final property orders filed which was discontinued. However, as I have already noted the husband was not wholly unsuccessful in the substantive proceedings before the judicial registrar in November 2008. 

10. It cannot be said, however, that the wife was successful in the substantive proceedings in November 2008 as she received significantly less that she sought in her proposed Minute of Order.  The wife also was unsuccessful in her Application for Contempt which was withdrawn on 17 November 2008 and her Application in a Case dated 7 July 2009 which was dismissed by consent on 30 August 2010. The wife was, however, wholly successful in relation to her ex parte application for an injunction filed in February 2008 and in her Application in a Case filed 13 January 2009.  In relation to her ex parte application success warrants little weight.  However, her success in the January 2009 application weighs in favour of orders for costs being made in her favour.

11. Subsection (f) is concerned with offers to settle the proceedings and the terms of any such offer.  No such offers have been brought to my attention.

12. Subsection (g) enables the Court to take into account such other matters as the Court considers relevant.   There are no other relevant matters.

13. While I am satisfied that the wife has established circumstances which justify making an order for some of her costs, the circumstances are such that the wife has not established a basis for an order that the husband pays all of her costs of the proceedings.  In the substantive proceedings neither party was wholly or substantially successful or wholly unsuccessful.  Moreover both parties received unfavourable comment in relation to the adequacy of their disclosure.

14. However, the wife has incurred not insignificant costs in relation to the husband’s Application for Review filed on the 18 December 2008.  The husband was granted a stay provided he diligently prosected this Review.  This he did not do and indeed the Notice of Discontinuance was filed some 17 months after the Application for Review was filed.   

15. The wife incurred costs in relation to the conciliation conference which the husband failed to attend.  His breach of orders/directions in relation thereto warrants a costs order in the wife’s favour.

16. I am therefore satisfied that the wife has established circumstances which justify making an order for costs in relation to the husband’s Application in Review on party/party basis as agreed or assessed.  The evidence is insufficient for me to determine the specific amount payable. Although it appeared she sought costs on an indemnity basis I am not satisfied that such a departure from the usual order is appropriate.

17. For these reasons I make the orders identified at the start of this judgment.

I certify that the preceding eighty six (86) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 20 September 2011.

Associate:

Date:   20 September 2011