Genesalio & Genesalio (No 3)
[2023] FedCFamC1F 613
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Genesalio & Genesalio (No 3) [2023] FedCFamC1F 613
File number(s): MLC 7657 of 2018 Judgment of: JOHNS J Date of judgment: 25 July 2023 Catchwords: FAMILY LAW – COSTS – joinder application – costs reserved – where applicant successfully joined second respondent to proceedings – where all parties filed written submissions as to costs – where applicant seeks both first and second respondent pay her costs on party/party basis – where first and second respondent oppose costs application – where there was a delay in bringing joinder application – where final hearing has not taken place yet – costs to be reserved for final hearing Legislation: Family Law Act 1975 (Cth), ss 79, 117(1), (2) & (2A)
Federal Circuit and Family Court of Australia (Family Law) Rules (2021), Rules 12.17(1) & (3)
Cases cited: Genesalio & Genesalio [2023] FedCFamC1F 160
I and I (1995) FLC 92-625
Division: Division 1 First Instance Number of paragraphs: 40 Date of last submission/s: 24 May 2023 Date of hearing: On the papers Place: Melbourne Solicitor for the Applicant: Mazzeo Lawyers Solicitor for the First Respondent: Matthew Oldham Barrister & Solicitor Solicitor for the Second Respondent: Litigant in person ORDERS
MLC 7657 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GENESALIO
Applicant
AND: MR GENESALIO
First Respondent
MR M GENESALIO
Second Respondent
order made by:
JOHNS J
DATE OF ORDER:
25 July 2023
THE COURT ORDERS THAT:
1.That the wife’s application for costs made by submissions filed 10 May 2023 arising from the hearing of her application to join the second respondent as a party to the proceedings be reserved to the final hearing.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Genesalio & Genesalio has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
On 26 April 2023 I made orders that the second-named respondent, the husband’s brother Mr M Genesalio, be joined as a party to the proceedings. I also made orders in relation to valuation of identified assets.
By Written Submissions filed 10 May 2023 in accordance with those orders, the wife seeks that the husband and the second respondent pay her costs of the joinder application on a party/party basis.
Both the husband and the second respondent oppose that application. The husband relies upon Written Submissions filed 23 May 2023 and the second respondent relies upon Written Submissions filed by him on 24 May 2023. In his submissions the second respondent confirms that he agrees with and adopts the submissions made on behalf of the husband.
For the reasons that follow, I am not persuaded that it is appropriate that an order for costs be made at this time. I propose to reserve the question of costs of and incidental to the wife’s joinder application to the conclusion of the proceedings.
LEGAL PRINCIPLES
The question of costs is governed by s 117(1) of the Family Law Act 1975 (Cth) ("the Act") which provides:-
Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
On that basis, the general rule in proceedings under the Act is that, subject to the provisions of s 117(2), the parties to a proceeding shall bear their own costs of that proceeding.
Section 117(2) of the Act provides that:-
If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
Section 117(2A) of the Act provides that in determining what, if any, order should be made under subsection (2), the Court must have regard to the following:-
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
Should it be determined that it is just to make an order as to costs, costs are not awarded to punish the unsuccessful party, but rather are compensatory in the sense that they are awarded to ameliorate the expense of the successful party resulting from their having been required to participate in the proceedings.
The discretion afforded by s 117 of the Act is broad and the relevant factors contained in s 117(2A) are not to be read in a restrictive way; any one of those factors may found an order for costs, but all factors must be taken into account and balanced (I and I (1995) FLC 92-625).
The method of calculation of costs is prescribed by r 12.17(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules (2021) ("the Rules"), which provides:-
(1) The court may order that a party is entitled to costs:
(a) of a specific amount; or
(b) as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c) to be calculated in accordance with the method stated in the order; or
(d) for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
Rule 12.17(3) sets out matters that may be considered in the calculation of costs, providing that:-
(3) In making an order under subrule (1), the court may consider the following:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party's behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d) whether a lawyer's conduct has been improper, unfair, unreasonable or disproportionate;
(e) the time properly spent on the proceedings, or in complying with pre-action procedures;
(f) whether expenses (paid or payable) are fair, reasonable and proportionate.
Having regard to the above matters, I consider that I hold a broad discretion in respect of matters relating to any costs orders.
The wife’s application for costs principally relies upon the considerations identified at s 117(2A)(e) of the Act. That is, the wife submits that in circumstances where the husband and the second respondent have been wholly unsuccessful in their opposition to the joinder of the second respondent as a party to the proceedings, a costs order is justified.
The wife seeks costs be paid on a party/party basis.
Section 117(2A)(a) – The financial circumstances of the parties
The parties made no submissions in relation to this consideration.
Section 117(2A)(b) – Whether either party is in receipt of legal aid
None of the parties are in receipt of legal aid.
Section 117(2A)(c) – The conduct of the parties in relation to the proceedings
The wife submits that the conduct of the husband and the second respondent is relevant as it is their conduct that has necessitated her bringing the application for joinder. In support of that submission she relies upon requests made by her seeking the cooperation of the husband and his brother to the valuation of identified property, which she submits forms part of the ‘partnership property’; the wife made such request in April 2022.
It is common ground that neither the husband, nor his brother the second respondent, agreed to the wife’s proposals that the second respondent’s property be valued.
The wife is also critical of the behaviour of the husband and the second respondent more generally in the proceedings, particularly in relation to the second respondent’s involvement in the conduct of the husband’s case as a case guardian in the early stages of the proceedings. It was submitted on behalf of the wife that the approach of the second respondent has frustrated the orderly conduct of the proceedings and that his opposition to the wife’s joinder application was a further example of such conduct.
Neither the husband nor the second respondent accept the wife’s criticisms of the second respondent’s conduct. Further, they point to the wife’s own conduct, particularly her delay in seeking to join the second respondent as a circumstance which ‘disqualifies’ her from having an entitlement to costs.
The husband submits that the wife originally foreshadowed an application to join the second respondent as a party to the proceedings at the Conciliation Conference convened on 27 October 2020. The orders made that day include the following notation:-
The husband’s brother may be added as a party.
At the First Day Hearing before me on 25 October 2021, the husband’s Counsel noted the wife’s failure to press her claims for joinder of the husband’s brother. Indeed, the wife’s application seeking a joinder of the second respondent was not filed until approximately six months later on 14 April 2022.
Up until the first court date, it was open to the wife to add the second respondent as a party to the proceeding by naming him as a party in her application[1] or by amending her application to add his name.[2]
[1] Federal Circuit and Family Court of Australia (Family Law) Rules 2021, r 3.03(1)
[2] Ibid, r 3.03(3)
As a result of the wife’s delay in making her application, it was necessary for her to file an Application in a Proceeding to resolve the issue thus necessitating the interlocutory hearing on 21 November 2022.[3]
[3] Ibid, r 3.03(4)-(5)
The second respondent adopts and agrees with the submissions made on behalf of the husband in relation to the wife’s conduct. The second respondent describes that conduct as ‘disentitling conduct’.
Having regard to the history of the litigation, there is some force in the submissions made by the husband (and supported by the second respondent) with respect to the manner in which the wife has conducted the proceedings.
Section 117(2A)(d) – Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
This consideration is not relevant.
Section 117(2A)(e) – Whether a party to the proceedings was wholly unsuccessful
It was submitted on behalf of the wife, and I accept, that the husband and the second respondent have been wholly unsuccessful in relation to their opposition to the second respondent being joined as a party to the proceedings.
Section 117(2A)(f) – Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of such offer
This consideration is not relevant.
Section 117(2A)(g) – Any other matters that the Court considers relevant.
It was submitted on behalf of the wife that the fact the second respondent is a stranger to the marriage is a relevant consideration in the Court awarding costs against him in circumstances where he has been unsuccessful. It was submitted that the nature of the dispute is commercial in character and it is being heard by the Court in its accrued jurisdiction. Accordingly, it was submitted that it is appropriate that the Court deal with the costs in accordance with “normal principles” associated with the exercise of that jurisdiction and that the costs thrown away ought to follow the event. It was on that basis that it was submitted that the husband and the second respondent should pay the wife’s costs on a party/party basis.
The husband challenged those assertions and relied upon [31] of the Reasons for Judgment dated 26 April 2023 (Genesalio & Genesalio [2023] FedCFamC1F 160) wherein it is stated:-
Although there was some doubt at the commencement of the hearing as to whether the husband’s brother sought to challenge this Court’s jurisdiction to determine the wife’s property claim, it was conceded by him at the commencement of the hearing that there was no such challenge, it being common ground that as a result of the Court’s accrued jurisdiction, it is able to determine those issues, they clearly arising from a common substratum of facts.
He noted that the wife seeks an adjustment pursuant to section 79 of the Act and that part of the dispute (as it relates to the second respondent) is being heard by the Court exercising its accrued jurisdiction. As such, it was submitted on behalf of the husband that any claim as to costs in relation to the joinder application should lie against the second respondent and not the husband.
In addition to those matters, it was submitted by both the husband and the second respondent that any costs order at this stage of the proceedings would be premature. That position is maintained in circumstances where the Court is yet to determine the claims made by the wife against the second respondent. The husband noted at [3] of his Written Submissions as follows:-
There is a serious prospect that trial will reveal the Wife’s allegations to be incapable of being presented with sufficient particularity or corroboration.
Further, the second respondent submitted that an award of costs to the wife at this stage would be premature as it “would unjustly enrich the Wife and result in a substantial injustice to the second respondent”[4] given the then outstanding appeal against the order for joinder, and in circumstances where the principal substantive applications for final relief are yet to be determined.
[4] Written Submissions filed by the Second Respondent on 24 May 2023, [5]
Are there circumstances that justify an order for costs?
Having regard to the considerations addressed above, in my view it would be premature to make any determination with respect to the wife’s application for costs at this time. Whilst the husband and the second respondent were wholly unsuccessful in their opposition to the wife’s joinder application, the reality is that the matters that underpin that decision, that is, her claims against the second respondent, are yet to be heard and determined by the Court.
Whilst I have determined that the wife has a triable claim and that the second respondent is a necessary party to the proceedings, it is at this time, absent a testing of evidence, unclear as to what will be the outcome of the wife’s application against the second respondent.
Accordingly, in my view, the appropriate course is for the wife’s costs application to be determined at the conclusion of the proceedings, particularly in circumstances where the husband and the second respondent maintain that neither the wife nor the husband have any entitlement or claim to the interests held by the second respondent. Those are matters that will be determined at the final hearing upon a testing of evidence.
That view is bolstered in circumstances where there has been delay in the wife joining the second respondent to the proceedings; whilst the proceedings were commenced in 2018 her application was not filed until April 2022, by which time she required the Court’s leave to add a party, thus necessitating the application and hearing in relation to those matters.
In all of the circumstances, in my view the appropriate course is to reserve the question of costs related to the wife’s application for joinder and I will make orders to that effect.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johns. Associate:
Dated: 25 July 2023
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