Guntupalli & Parthasarathi (No 2)

[2014] FamCA 683

FAMILY COURT OF AUSTRALIA

GUNTUPALLI & PARTHASARATHI (NO 2) [2014] FamCA 683

FAMILY LAW – COSTS

APPLICANT: Mr Guntupalli

RESPONDENT: Ms Parthasarathi

FILE NUMBER: BRC 743 of 2011

DATE DELIVERED: 22 August 2014

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: Considered in Chambers after the receipt of written submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT:	Barry Nilsson Lawyers
COUNSEL FOR THE RESPONDENT:	Mr Galloway by way of written submissions

SOLICITOR FOR THE RESPONDENT: Michael Lynch Family Lawyers (appearance on 10 April 2014)

IT IS ORDERED BY WAY OF FINAL ORDER

1. That, by way of costs order, the Wife pay the Husband the sum of $2,500.00 by 4.00 pm on 12 September 2014.

2. That there is no order as to the costs of and incidental to the Husband’s Application for costs.

3. That there is no order as to the costs of and incidental to the Wife’s Application for costs.

4. That all extant Applications are dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Guntupalli & Parthasarathi (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 BRISBANE

FILE NUMBER: BRC 743 of 2011

Mr Guntupalli

Applicant

And

Ms Parthasarathi

Respondent

REASONS FOR JUDGMENT

1. The trial of the parties’ property settlement proceedings occurred on 6 and 7 February 2014. On 24 February 2014, I made orders (the February 2014 Order) and delivered Reasons for Judgment which finalised the same.  

2. Each party now seeks an order that the other pay their costs of and incidental to the proceedings.

3. Section 117(1) of the Family Law Act (1975)(Cth) (the Act) provides that each party to proceedings under the Act shall bear his or her own costs. However, if the Court is satisfied there are circumstances which justify it, the Court may make such order as to costs as it considers just.[1] In considering what order, if any, as to cost should be made, the Court must have regard to the matters set out in s 117(2A) of the Act.

   [1] Section 117(2) Family Law Act (1975) (Cth).

4. The February 2014 Order resulted in each party receiving property about $3,800,000.00. Whilst, in the Husband’s case, $2,529,926.79 is held within superannuation, he is able to access this. Whilst, in the Wife’s case, $2,177,387.21 is held within superannuation, she has the capacity to earn, as she has previously, between about $375,000.00 and no less than about $500,000.00 per annum.

5. Given the value of the property of the parties, it is unsurprising that neither was in receipt of Legal Aid.

6. The Husband commenced proceedings on 29 February 2012. On 25 June 2012, the parties attended a mediation where each signed Heads of Agreement. This provided that each receive about 50 per cent of the asset pool and included – in Clause 6 – a provision “that the Wife shall forthwith cause to be placed for sale the medical practice and the net sale proceeds be divided equally between the parties”.

7. The medical practice was not in fact sold. The parties dispute the reason for this. Each party accuses the other of resiling from the implementation of the Heads of Agreement but, obviously, no order was made in such terms.

8. Despite reaching the agreement recorded in the Heads of Agreement, neither party later filed any offer to resolve the dispute between them on the basis of an equal division of property and superannuation interests.

9. The parties attended a second mediation on 7 March 2013. Despite this, save for an offer made on the first morning of trial, neither party appears to have made any other offers to resolve the matter in the period from 25 June 2012 to the morning of the hearing on 5 February 2014..

10. In essence, the Husband submits that, as the Heads of Agreement was intended to leave each party with approximately 50 per cent of the net property available for division – the result ultimately achieved at trial - the Wife should be responsible for the costs he incurred after 25 June 2012. He also relies on the Wife’s asserted failure to provide full and complete disclosure as required by the Family Law Rules 2004 (the Rules) in a timely manner as a circumstance justifying the making of an order for costs in his favour.

11. The Wife submits that the Husband’s application for costs should be dismissed and that, instead, there should be an order that he pay her costs of and incidental to the proceedings:

    a)        on a party and party basis up until 25 June 2012; and, thereafter;

    b)        on an indemnity basis, including the costs of the application for costs.

12. She does so substantially on the basis of her assertion that the Husband resiled from the terms of the Heads of Agreement and that, in doing so, his conduct caused her to incur significant cost.

13. It is pertinent to record that, whilst both parties blamed the other for resiling from the agreement reflected in the Heads of Agreement, neither sought orders in those terms at trial.

14. Authority[2] clearly establishes that, unless there are exceptional circumstances, an order for costs should be made on a party and party basis. I am not persuaded that such exceptional circumstances exist in this case.

    [2]See D & D Costs (No. 2) (2010) FLC 93-435 in which the Full Court reviewed extensively earlier authorities, including Limousin & Limousin (Costs) (2008) 38 Fam LR 478 and Kohan and Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248.

15. Neither party filed an offer pursuant to either s. 117(2A)(f) of the Act or Rule 10.01 of the Rules. There is no evidence that either party complied with Rule 10.06.

16. The Wife opposes the making of an order for costs against her on the basis that the Husband’s Application in a Case seeking the same was filed out of time. I reiterate that which I have previously expressed orally to the parties: the Husband’s Application in a Case was forwarded to the Court on 17 March 2014 - within the time mandated by the Rules[3]- but, as a result of my failure to provide the Registry with dates on which the matter could return before me, the Application was not stamped by the Registry until 3 April 2014. In such circumstance, should it be necessary, I dispense[4] with any requirement imposed by the operation of the Rules which would prevent the Court from hearing and disposing of the Husband’s application for costs on its merits.

    [3] Rule 19.08 Family Law Rules 2004.

    [4] Rules 1.10 and 1.12 Family Law Rules 2004.

17. Despite the objection taken by the Husband to the Wife’s reliance on an affidavit filed on 5 June 2014, I have had regard to the same in determining the parties’ competing applications for costs.

18. It is not disputed that the Husband offered to resolve the proceedings on the morning of trial on the basis that each party receive 50 per cent of the net property available for division. However, the quantum of the property available for consideration between the parties was not then agreed: the Husband contended for an add-back of $100,000.00 against the Wife and the parties differed by about $5,500.00 in their respective assertions as to the value of the medical practice. These differences occurred in the context of a total ‘pool’ of property valued at about $7,600,000. The Husband was not ultimately successful in his argument that $100,000.00 should notionally be added back to the value of the property available for consideration.

19. When the discussion between the parties on the morning of the hearing failed to result in a resolution, each party contended for an outcome other than an equal division of property:

    a)the Husband sought orders which would have seen him receive property and superannuation interest valued at 57 per cent of the total value of the property of the parties; and

    b)the Wife sought orders which would have seen her receive property and superannuation interest valued at 60 per cent of the total value of the property of the parties.

20. Given the terms of the February 2014 Order, each party was wholly unsuccessful in the case each presented at trial.

21. Whilst each party seeks to rely on the other’s asserted non-compliance with, or repudiation of, the terms of the Heads of Agreement as a circumstance justifying the making of an order for costs in that party’s favour, I consider the terms of the Heads of Agreement differ in a significant respect to each parties’ case at trial: namely, it provided the Wife would sell her medical practice. Whilst the parties differ about the Wife’s actions in re-opening the practice and the rationale underlying this, I ultimately found her ability to resume her practice – and, in so doing, utilise her significant earning capacity – was a significant factor in persuading me to make the adjustment made in the Husband’s favour pursuant to s 75(2) of the Act.[5]

    [5]          Reasons for Judgment, paragraphs 73-76.

22. Further, as noted above, neither party sought orders at trial in the terms of the Heads of Agreement.

23. I am not persuaded that the fact that the parties – for whatever reason – failed to implement the terms of the Heads of Agreement agreed in June 2012 is a circumstance which justifies the making of a costs order in either party’s favour. I am not persuaded that the fact of the difference in the parties’ financial positions in the time leading up to trial justifies the making of a costs order in the Husband’s favour.

24. Given the findings expressed in paragraphs [28] to [33] and [74] and [75] of the Reasons for Judgment, I am, however, satisfied that it is more likely than not that the Wife delayed and/or failed to provide full and complete disclosure of relevant financial documents to the Husband in a timely manner.

25. I do not accept the submission made on behalf of the Wife to the effect that there is no evidence her conduct put the Husband to any expense he would not otherwise have had in the usual course of litigation in this Court.

26. I am persuaded that it is more likely than not that the Wife’s failure to provide proper disclosure caused the Husband to incur the costs associated with having his solicitor continue to seek proper disclosure from her. I accept that no less than about 18 additional follow-up letters were sent to the Wife as a consequence of her failure to comply with the obligation to disclose.

27. I also accept that it is more likely than not that, as outlined in paragraphs 25 – 29 of the written submissions prepared on the Husband’s behalf, the Wife failed on occasion to comply with the terms of various previous Orders made to facilitate the progress of the matter toward finalisation. I am also persuaded that it is likely that such failure was productive of some cost to the Husband.

28. I am persuaded that the Wife’s conduct in failing to provide full and complete disclosure and in a timely way and her previous failure to comply with Orders in the manner outlined in the Husband’s affidavit justifies the making of a costs order in the Husband’s favour.

29. I am not, however, persuaded that it is just that the Wife be ordered to pay the entirety of the Husband’s costs of and incidental to the proceedings since June 2012 in the manner sought in his Application in a Case. I arrive at this conclusion having regard particularly to the matters outlined in paragraph [8], [9], [13], [15], [18], [19] and [20] above.

30. I am not persuaded that it is just in the circumstances of this case to make an order which requires the parties to agree on an amount to be paid by the Wife to the Husband – such an order is likely only to be productive of further cost.

31. Further, the costs of undertaking the assessment process to determine the costs associated with the Husband’s requests for disclosure over time – as outlined in the affidavit relied on in this Application – and the consequences of the Wife’s failure to comply with Orders on occasion is itself likely to be productive of significant costs to the Husband.

32. In such circumstances, I am persuaded that it is just simply to fix an amount payable by the Wife to the Husband by way of costs. In arriving at this amount, I take into account the costs particularised in Schedule 3 of the Rules and the hourly rate of $224.50 there prescribed for work requiring the skill of a lawyer. I also take into account the appearances on the occasions on which the Husband obtained Orders for further disclosure and the time likely to have been spent in drafting repeated requests for further disclosure or compliance with the terms of the orders requiring disclosure.

33. Doing the best that I can, I am persuaded that it is just that, by way of costs, the Wife pay to the Husband the sum of $2,500.00 within 28 days of the date of this Order.

34. I am not persuaded that the circumstances of the case, as outlined above, justify the making of an order that the Husband pay the Wife’s costs in the manner sought by her or at all.  

35. Further, I am not persuaded that the circumstances justify the making of an order that the Wife pay the Husband’s costs of and incidental to his application for costs – whilst he obtained an order for costs, it is not in the terms sought by him. In that sense, the Wife has not been wholly unsuccessful in her resistance to his application.

36. Consequently, I make orders in the terms appearing at the commencement of these Reasons to give effect to the conclusions outlined above.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 18 August 2014.

Associate:     

Date:              22 August 2014