Gissing and Sheffield (No 2)

[2015] FamCA 153

FAMILY COURT OF AUSTRALIA

GISSING & SHEFFIELD (NO 2) [2015] FamCA 153

FAMILY LAW – COSTS

Family Law Act 1975 (Cth)

I and I (No 2) (1995) FLC 92-625
Prantage & Prantage (2013) FLC 93-545

APPLICANT: Mr Gissing

RESPONDENT: Ms Sheffield

FILE NUMBER: MLC 2548 of 2012

DATE DELIVERED: 12 March 2015

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By Way Of Written Submissions

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT: Mathews Family Law

SOLICITOR FOR THE RESPONDENT: Carew Counsel Solicitors

Orders

1. That the respondent pay the applicant’s costs of the interim proceedings culminating in the orders made on 23 January 2015 by agreement and failing agreement as assessed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Gissing & Sheffield (No 2) 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 MELBOURNE

FILE NUMBER: MLC 2548  of 2012

Mr Gissing

Applicant

And

Ms Sheffield

Respondent

REASONS FOR COSTS JUDGMENT

1. On 23 January 2015, I made orders about interim financial arrangements between Mr Gissing (the applicant) and Ms Sheffield (the respondent). The respondent appeared by a case guardian.

2. This matter arose under Part VIIIAB of the Family Law Act 1975 (Cth) (“the Act”) and specifically s 90SM.

3. Provision was made in the January orders for any application for costs to be made and for any response to be by written submission whereupon the matter should be determined in chambers. Time limits were set in the orders.

4. Both the application and the response for costs, were filed within time.

5. The applicant sought costs in an undefined sum.

6. The respondent sought an order that each party bear their own costs. Because of s 117 of the Family Law Act such an order might be beyond power but in any event, I have treated the respondent’s position as asking the Court to dismiss the application.

7. There had originally been a dispute between the parties as to jurisdiction. That was not raised in the specific hearing before me, nor could it have been, because the Federal Circuit Court had made declarations under the Act as to the existence of a de facto relationship.

8. The substantive proceedings were about the alteration of property interests arising out of a de facto relationship. Those proceedings currently await the allocation of a trial in this Court. In the interim period, the applicant sought funding and what he saw as a partial distribution of his entitlement. That interim determination was contested by the respondent.

9. The applicant sought $600,000 from a trust fund in the name of the respondent as part of a settlement with a further payment of $100,000 to be allocated specifically to his anticipated legal expenses. The respondent opposed any property payment because, it was asserted, there were a number of controversial factual issues which may affect the applicant’s ultimate entitlement. Having said that, the respondent agreed to a payment of $100,000 because she wanted $200,000 herself for the same purpose as the applicant.

10. In my reasons, I observed the concession by the respondent to this costs application meant the dispute as between them was really about quantum and therefore, the jurisdiction had been enlivened. The question was whether it was appropriate to exercise the power.  I found it was.

11. The applicant for the costs order referred to the relevant legislation and submitted that the respondent had been wholly unsuccessful. He submitted that the fact that there was also a litigation funding order in her favour did not assist because the applicant had consented to it. The applicant asserted that the respondent had made no offer and she could afford to make a costs payment.

12. It was submitted that a costs order was appropriate to ensure that the applicant was not out of pocket by being forced to seek relief to which he was entitled.

13. It was submitted that my reasons (para 25) were an indication about the respondent’s conduct of the case. What I there said was:

    The respondent could not deny an entitlement by the applicant.  The initiating proceedings of both parties sometimes called the pleadings, were vague.  Notwithstanding these proceedings had commenced in 2012, neither party had set the parameters of the financial dispute.  Each had been vague as to what they were seeking and what the other party was entitled to.  The rules of the Court require parties to plead with particularity.  An exception to the rule is where there is uncertainty as to the nature of the financial position of the parties.  That could not be the case here even if there was a dispute over values because the property is known. 

14. That statement indicates that there was something of a stand-off occurring between both parties and that became evident when I said:

    In respect of each party, I required counsel to tell me what position would be adopted at the final hearing.  Dr Ingleby of counsel for the applicant indicated that if he was counsel for the applicant, he would be seeking a division of 50 per cent of the known assets.  Mr Salamanca of counsel for the respondent indicated that possibly the applicant would receive 25 per cent.  It is clear that this is not a precise science and many minds will see the position differently.  However the starting point is that both parties have acknowledged that it would be just and equitable for the Court to make an order.  The question therefore is what is the proper quantum of the order based upon the relevant provisions of Part VIIIAB.  To a very large degree therefore, if the Court can rely upon the subjective judgments of the counsel who had no doubt brought a fresh mind to the proceedings, the parameter of the dispute was the entitlement of the applicant to somewhere between 25 per cent and 50 per cent of the equity in the assets.

15. What clearly comes out of that is the fact that there was much posturing going on between the parties and little serious attempt was being made to try and work out what the applicant was entitled to bearing in mind the concession that he was going to get some sort of order.

16. In the respondent’s submission in reply to the costs application, it was submitted that there were a number of orders against the applicant that he was unsuccessful in resisting. Reference was made to the respondent’s request for litigation funding, the demarcation issue of the stock sellers and unresolved discovery issues.

17. The respondent did not address the matters otherwise required by s 117 of the Act. Reference was made to subsequent events including non-compliance but those cannot be relevant to this issue; they are matters that should be dealt with on an enforcement application where, if the respondent is right, the applicant would face a costs risk.

18. I turn then to the basis upon which the Court may determine the application for costs. It is the general rule, as prescribed in s 117(1) of the Act, that each party should bear their own costs. However, the Court is empowered by s 117(2) of the Act to make an order for costs if it is of the opinion that there are “circumstances that justify it in doing so”. If the Court finds a justifying circumstance, it still has to have regard to the factors in s 117(2A) (which are those to which the applicant pointed in his submission) in considering what order, if any, should be made (see I and I (No 2) (1995) FLC 92-625).

19. The justifying event here that would make the Court contemplate departing from s 117(1) is the fact that whatever else was in dispute, it was clear that the respondent was not prepared to concede that the applicant should have any funds at this stage. Regardless of what else was disputed, I find that had the simple approach been taken as indicated in paragraphs 13 and 14 above, neither party would have wasted significant time and costs including costs to the community through the resources of the Court. As the respondent was in the position of holding all of the assets and not prepared to concede any payment at that time, the responsibility for that time and cost must fall to the respondent.

20. Before any order can be made, the Court is obliged to consider the matters set out in s 117(2A) of the Act. I turn to those now.

The financial circumstances of the parties

1. The Financial position of the applicant was said to be “pressing” whilst the respondent had the control of all of the funds. On any view, the parties are not impecunious and a costs order would have little impact on either of them now that the applicant is in funds.

Legal aid

1. There are no Legal Aid considerations here.

The conduct of the parties

1. The respondent submitted that the applicant had framed the application in a way that did not concede it was part property settlement and that such an approach was not conceded until the running of the case. This was a disingenuous submission because regardless of what approach the applicant had taken, the respondent was not making any concession that he was entitled to anything. There was no suggestion that this large sum was costs or litigation funding. The specific sum of $100,000 was sought in relation to litigation funding. The $600,000 could hardly have been anything other than a part of his entitlement. The fact that it was to be somehow “characterised” by the trial judge later could hardly have been an impediment to negotiations because it was clear that there were no other significant causes of action involved.

2. Similarly, it was submitted that the applicant’s litigation funding application was not opposed. That was because the respondent wanted funds as well. That was not what the case was about. An examination of the transcript will reveal that the issue was about the entitlement of the applicant to an alteration of property. The respondent’s position was that he should wait until trial. In my view, for the reasons set out above, that was not consistent with the approach that should have been taken under Chapter 1 of the Family Law Rules 2004.

3. The respondent pointed to the fact that the applicant had only been partially successful in relation to the naming of the sellers of the stock. The difference between the parties concerned having one seller or several. The respondent’s position was again disingenuous because what the applicant was seeking was not just a sale but one that would enable the clarification of the assets of the parties to enable the matter to move towards a trial. The orders arose out of an efficacious approach to try and get the parties to prepare for a trial. Every indication was given that the respondent was not doing that.

4. For the purposes of considering a costs order, the relevant conduct under scrutiny must be that as a litigant (see Prantage & Prantage (2013) FLC 93-545). Having regard to the amounts involved and the observations I made above, the applicant would have been receiving a significant sum of money. It is important to observe that the orders were made on 23 January and no appeal has been instituted against them. I conclude therefore that my observation about the entitlement of the applicant was correct.

5. In addition, the respondent who was represented throughout by a case guardian. The case guardian had placed before the Court various bald and unsupported statements imputing dishonesty to the respondent which, if true, may have had some impact on the ultimate determination of what was just and equitable. The vagueness of the assertions was not appropriate in such an interlocutory proceeding. Time and effort was wasted on that exercise inappropriately. Litigants must make full and frank disclosure and that must include matters such as these sorts of allegations.

Written settlement offers

1. No written offers to resolve the dispute were made and nothing was suggested that any offer to contribute towards costs has since been made.

Should the Court depart from the s 117(1) principle?

1. If (as is the case) the Court starts from the point that the usual rule is that each party shall bear his or her own costs, it is important to look for something in the evidence to justify a departure from that usual rule.

2. I am satisfied that the proceedings were conducted on the basis of the alteration of property interests more so than the other issues. Based on the premise that such an issue ought not to have been so significant for the reasons outlined above, the Court should find that justice requires a departure from the usual rule. The Court is then obliged to take into account when deciding whether an order should be made, the matters in s 117(2A) and, on balance for the reasons set out above, I am satisfied that the circumstances of this case justify the making of an order for costs against the respondent.

3. The applicant he did not provide details about the quantum of costs sought. Accordingly, an order will be made for costs to be paid by the respondent on the basis of an agreement and failing agreement, as assessed.

I certify that the preceding Thirty One (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 12 March 2015.

Associate: 

Date:  12 March 2015