Gonsalves & Gonsalves (No 5)
[2024] FedCFamC1F 238
•16 April 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Gonsalves & Gonsalves (No 5) [2024] FedCFamC1F 238
File number: SYC 1702 of 2019 Judgment of: CHRISTIE J Date of judgment: 16 April 2024 Catchwords: FAMILY LAW – COSTS – Where the Court is not satisfied that there are circumstances justifying the making of an order for costs – Application dismissed. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.13, Sch 3
Division: Division 1 First Instance Number of paragraphs: 35 Date of last submission: 26 March 2024 Date of hearing: Determined in chambers on the papers Counsel for the Applicant: Ms Ingenito Solicitor for the Applicant: Bazaliza Lawyers Counsel for the Respondent: Ms Clarke Solicitor for the Respondent: J S Pinto & Co ORDERS
SYC 1702 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR GONSALVES
Applicant
AND: MS GONSALVES
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
16 APRIL 2024
THE COURT ORDERS THAT:
1.The Application in a Proceeding seeking costs filed 10 January 2024 is dismissed.
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 a pseudonym Gonsalves & Gonsalves has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an application for costs arising out of determination of the wife’s application for rectification and enforcement of a financial agreement.
On 13 December 2023 I dismissed the wife’s application.
The husband seeks an order that the wife pay his costs on an indemnity basis and in the alternative as “the Court sees fit” or in accordance with the scale in Sch 3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). The wife resists any order for costs.
The Family Law Act 1975 (Cth) (“the Act”) sets out the basis upon which the Court is empowered to award costs and the matters to be taken into consideration on any application.
The starting point is that each party bears his or her own costs: s 117(1) of the Act.
It is necessary to set out some of the factual matters which bear on the costs application.
The proceedings have had a lengthy history and the costs incurred by both parties well exceeded the value of what was in issue between them.
The proceedings commenced on 19 March 2019 and were finalised on 13 December 2023.
The litigation was focused on whether (or not) the financial agreement which the parties executed should be read as containing an equal division of superannuation entitlements.
An equal division of superannuation entitlements would have required a superannuation splitting clause which required the wife’s superannuation to increase by an amount of $55,757 which would have been sourced from the husband’s superannuation.
It is not controversial that the clauses which dealt with superannuation were left blank.
In that context the solicitors who acted for both of the parties were joined to the proceedings. Agreement was reached with the solicitor who acted for the wife and the wife received $30,000 pursuant to that Agreement, some of which was to be applied by her to legal fees.
I made directions in respect of the costs application and reserved (absent objection) determination of the application to chambers. The wife filed a further affidavit out of time and I granted leave to the wife to rely on that affidavit and made directions that the husband be permitted to file any affidavit and submissions in response. At the husband’s request I extended the timetable for that material. The husband did not comply with the extended timetable and no application has been made to reopen the matter. Accordingly, the proceedings will be determined having regard to the material which was filed in accordance with the Court’s orders.
I turn to consider the relevant matters in s 117(2A) of the Act.
(a) the financial circumstances of each of the parties to the proceedings;
The wife has child support which is owed to her by the husband in the sum of $30,276. This is not controversial having regarded to the evidence filed in this application being supported by documentation from the Child Support Agency. This supports the conclusion that during the period in which these arrears accrued, the wife provided for the financial support of the parties’ children without receipt of the amount which the Child Support Agency assessed ought be contributed by the children’s father, the husband. This is relevant to her financial circumstances.
The wife is the holder of a pensioner concession card and receives a carer allowance, family tax benefit and a carer payment. The evidence indicates that the total amounts received by her are $837.20 plus $262.36 plus $153.50.
The wife owns her home which is subject to a mortgage. I accept on the basis of her evidence that she would have to sell that property in order to meet any order for costs.
The husband did not provide any evidence of his financial circumstances.
The wife’s financial circumstances are such that I am able to find that she has an asset which would be capable of meeting any order for costs but otherwise her financial circumstances are modest.
I accept that even impecuniosity is not a bar to the making of a costs order but I am entitled to take into account both parties’ financial circumstances when considering the exercise of my discretion and absent evidence from the husband and in the possession of evidence from the wife, the wife’s financial circumstances speak against the making of an order for costs.
(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;
The proceedings were not conducted expeditiously. The original trial was adjourned and the parties were involved in several case management events. Both parties consented to adjournment of the trial listed 13 March 2023 and to that extent the adjournment necessitated additional costs for both parties.
On 29 September 2023 the wife filed an application seeking to enforce orders which had been made for inspection of documents. The husband’s solicitor filed an affidavit providing explanation for the delay. I reserved the costs of both parties noting the wife’s application sought costs in the sum of $9,987. That interlocutory event occurred as a consequence of the husband’s lack of compliance with previous orders and is relevant to my evaluation of the merits of his application for costs.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
While the wife was wholly unsuccessful as against the husband, she did settle the proceedings with her former solicitor.
(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;
Both parties made offers in this case.
The proceedings, having been on foot for over a year, the husband offered to resolve it on the following basis:
1.[The husband] pay the amount of $12,500 to [the wife] by way of a superannuation split; and
2. The parties otherwise keep all property in their respective names; and
3. Each party pay their own legal costs.
That offer was not accepted. It is plain that both parties would have been in a better financial position had this offer been accepted, having regard to the costs of the litigation. Certainly, the wife would have been in a better position.
On 28 July 2021 the wife made an offer to settle the proceedings as against all the Respondents including the husband. The amount which the wife sought from the husband was as follows:
As against the First Respondent: The Applicant offers to settle with the First Respondent for the sum of $30,000 plus costs. This sum is to be paid to the Applicant by the First Respondent agreeing to and undertaking all steps necessary to authorise a super splitting order from his current [Superannuation Fund 1] account for the sum of $30,000 plus costs which is to be paid/transferred to the Applicant’s current superannuation account...
It is not plain from the face of the offer whether it was severable from the offers which related to the other respondents but I accept that subsequent to this offer the wife did indeed settle with the other respondents. The fact of the wife having settled with the other respondents was communicated to the husband’s lawyers on 28 July 2021.
The husband did not accept this offer. It is not quantified in so far as it says “$30,000 plus costs”. It is difficult to assess what it would have resulted in – if accepted. There is no evidence that either party entered into correspondence in an effort to clarify the offer.
The husband made a further offer of settlement on 18 August 2021 which was to the following effect:
The First Respondent offers to compromise these proceedings on the basis that the Applicant discontinues the current proceedings against the First Respondent with each party to pay their legal costs.
Had the wife accepted this offer she would have been in a better financial position having regard to the amount she has incurred in legal fees.
I find that the offers of settlement are a relevant consideration in so far as I accept that both parties engaged in the process and either of the husband’s offers (if accepted) would have resulted in a better commercial result for both parties.
(g) such other matters as the court considers relevant.
On 10 November 2020 Judge Neville transferred these proceedings from the Federal Circuit Court of Australia to the Family Court of Australia and at that time her Honour made a number of notations. I set out some of those relevant to this determination:
L.The court has, on prior occasions, raised concern with each of the legal representatives for the husband and the wife as to the parties’ legal fees as against the quantum of the husband’s superannuation.
M.The wife’s legal representative today informed the court that the wife has, to date, incurred legal fees totalling $19,000 of which she has paid $3,500.
N.The husband’s legal representative today informed the court that the husband has, to date, incurred legal fees totalling $15,000 of which he has paid $2,500. The husband’s legal representative further informed the court that he now appears on a pro bono basis for the husband and that he does not have a deferred fee or contingency fee agreement in place with the husband.
O.Today, the court again expressed concern as to the cost of the litigation having regard to the quantum apparently in dispute between the parties including a concern that the parties’ legal fees may exceed the value of the husband’s superannuation interest such that at the conclusion of the proceedings, each party may, in fact, be in debt.
I am particularly concerned about Notation N in the context of this application. It must be assumed that the position changed. It is not clear on what date. No costs agreement is in evidence. A party making an application for indemnity costs must inform the Court if the party is bound by a costs agreement and the terms of the agreement: r 12.13(4) of the Rules. Here it is also relevant to determining what costs if any accrued after the representation that the solicitors were acting pro bono.
Having regard to my assessment of the relevant s 117(2) considerations discussed above I am not satisfied that there are circumstances justifying the making of an order for costs in the circumstances of this case and I dismiss the application.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 16 April 2024
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