HAND & BODILLY

[2019] FamCA 1

FAMILY COURT OF AUSTRALIA

HAND & BODILLY [2019] FamCA 1

FAMILY LAW – COSTS - Application for discharge of a dollar for dollar litigation funding order made in 2017 where the substantive application relates to an application to discharge a long-standing and substantial spousal maintenance order. Where the evidence does not support a finding that the order is no longer just.

Family Law Act 1975 (Cth)

Atkins & Hand & Anor [2018] FamCA 14

APPLICANT: Mr Hand

RESPONDENT: Ms Bodilly

FILE NUMBER: MLC 10737 of 2009

DATE DELIVERED: 8 January 2019

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By way of Written Submissions

SUBMISSIONS RECEIVED FROM:

COUNSEL FOR THE APPLICANT: Mr Matta of Counsel

SOLICITOR FOR THE APPLICANT: Sayer Jones

COUNSEL FOR THE RESPONDENT: Mr St John QC

SOLICITOR FOR THE RESPONDENT: Pearce Webster Dugdales

Orders

1. That the application in a case filed 23 November 2018 and the response thereto filed 14 December 2018 are dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hand & Bodilly has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC10737 OF 2009

Applicant
Mr Hand

And

Respondent
Ms Bodilly

REASONS FOR COSTS JUDGMENT

1. By an application in a case filed 23 November 2018, Mr Hand (the applicant) seeks to discharge orders made by the Court on 20 December 2017 under which he was required to contribute money towards legal costs incurred by Ms Bodilly (the respondent) pending the final determination of a claim to discharge a long-standing spousal maintenance order. The orders in December 2017 have been loosely described as a dollar for dollar order.

2. The respondent opposes the discharge of the 2017 orders and maintains the applicant has not established a ground for such a discharge.

3. In February 2019, the Court is to hear the applicant’s substantive application to discharge the spousal maintenance order; that is about five weeks away. Much of the legal work associated with getting this case to a final hearing has largely been completed. I am unclear therefore what further costs other than those for the final hearing days, will be incurred by either party but I am conscious of the fact that only if the applicant expends money on his lawyers will the respondent have a similar benefit.

4. Having regard to the evidence submitted and the submissions made by each counsel, I am satisfied that it is not appropriate to make the order sought by the applicant. My reasons are now set out.

5. In making the determination, I had had regard to the submissions put in writing but also each of the affidavit documents drawn to my attention by those submissions. I have not been able to make findings on those affidavits as the evidence was not the subject of cross-examination.

6. The question of the power of a court at a final hearing to order a refund of any, or all, such payments made under the December 2017 orders was not argued but it is a matter that I consider I am entitled to contemplate in making the present determination. As the whole basis of making any order for costs is that it must be just to make it, where the evidence at an interlocutory stage of the litigation is untested, justice requires that there be an opportunity to make adjustments later if it be found that the order was not just in the first place once the evidence is comprehensively exposed to scrutiny. That is particularly so where the mandated principle in s 117 of the Family Law Act 1975 (Cth) (“the Act”) is that each party should bear their own costs subject to the exceptions set out.

7. The philosophical basis upon which a dollar for dollar order has been made is that of creating a level playing field (see the discussion in Atkins & Hand & Anor [2018] FamCA 14). Thus, once the evidence is tested, the justice of making the interlocutory order is exposed is scrutiny. In this case, the respondent has assets against which any adjustment could presumably be made in favour of the applicant if the Court found that it was not just for her not to have spent her own funds as a litigant. With a final hearing pending only weeks away, the capacity to make such a readjustment is a relevant factor that can be taken into account.

8. The background to this litigation does not need to be re-stated save to say that the spousal maintenance order is a significant sum of money and the obligation has been long-standing.

9. The final hearing of the present litigation has unfortunately been delayed for a variety of reasons including a recent injury to the respondent.

10. The starting point is the December 2017 orders. The relevant paragraphs read:

    7.That the first respondent pay on a monthly basis the same costs he has incurred (whether paid or otherwise) to the applicant commencing with a payment on 15 January 2018 for the period from 16 December 2017 onwards until trial.

    8.That the payment of those costs be made on the 16th day of the month.

    9.That the first respondent and the second respondent respectively give instructions to their legal practitioners to provide to the solicitors for the applicant by no later than the 15th of each month hereafter, the amount of costs incurred by their client for the preceding month commencing on the 16th day of that month.

11. It is also relevant to note that the respondent’s application had sought a lump sum be paid towards her legal costs as an alternative to the periodic payments and that application was dismissed.

12. The reasons given for making the dollar for dollar order were that there was a disparity of financial circumstances favouring the applicant and there was an existing (and on the basis of the final orders, an indefinite) entitlement of the respondent to spousal maintenance which the applicant was challenging. The usual order for litigation funding was problematic because of the legal costs being anticipated for a case involving spousal maintenance (that is, living expenses) and I urged restraint. I found that the only just way to ensure a level playing field was to order that whatever sum was spent by the applicant (and at that stage, his wife was also a party with her own lawyers who were being funded by him) should also be provided to the respondent’s lawyers providing the respondent had incurred similar costs.

13. As I have already said, it was unfortunate that the final hearing did not take place in February 2018 when, in December 2017, it was anticipated. The delays and the further interlocutory hearings have no doubt exacerbated the expenditure by both parties.

14. The applicant submitted that when the 2017 orders were made, there was some uncertainty about the respondent’s capacity to access her superannuation entitlements. I remain unconvinced about that as the evidence was that the respondent had accessed her capital previously. What was unclear to me was the impact of such a drawdown on her income stream and the consequences for her way of life that had been the basis for the order for maintenance in the first place. It was well known that the respondent had superannuation entitlements but their use was not the subject of scrutiny.

15. In addition, the new Commonwealth disability funding scheme had just begun and the quantification of the respondent’s entitlement to benefits was not known. Indeed, it is now submitted on her behalf that her attempts to ascertain the reasoning behind the outcome of her subsequent application to review the decision of the NDIS have been unsuccessful and therefore, what funds she will have in the future remains uncertain. That is relevant where the basis of the NDIS is to provide for disparate categorised needs rather than simply providing a discretionary lump sum amount.  

16. The answers to the two main 2017 questions are now clearer in that whilst in respect of the NDIS it is not known how the government agency made its decision, at least the respondent knows she has an entitlement.

17. Neither of the matters put by counsel for the applicant assists me in the immediate application. In both areas, the respondent has (and had) the entitlements and whilst there may have been access difficulties, the litigation funding orders were made on the basis of a disparity of overall financial circumstances. I again stress that the orders (and indeed the present orders) are made on the basis of evidence that was (and is) untested and upon which final submissions have not been heard. It is unclear to me what the applicant’s final argument will be about the entitlement of the respondent to spousal maintenance in the future. There has been a flavour in argument that the applicant has been supporting the respondent for many years and should not have to continue to do so having regard to his present obligations to his second family. If that argument is put, the case is not just about the financial capacity of the applicant to pay but also the respondent’s entitlement to ongoing maintenance.

18. In addition, the respondent’s entitlement to the NDIS does not seem to be viewed by government in the same light as other income-tested pensions or benefits which the Act requires the court to exclude from its calculations and considerations in a spousal maintenance case. How significant that will be in the final hearing is also unclear as is whether the Court has to consider public policy considerations.

19. The respondent’s submissions also began by suggesting that the applicant’s application should be adjourned to the final hearing but in my view, that would achieve little. The applicant seeks to stop the payments being made now. As I have already observed, nothing has been said about adjustment at the final hearing if the applicant is successful. Putting off the determination evades the question raised which is whether there is a present basis for a continuation of the extant order. In my view, the matter should be determined on the material presented.

20. The respondent’s submissions focused on two main things. First, it was said there was no urgency. Secondly, it was submitted that there was no change of circumstances.

21. In respect of the first point, urgency is not the issue so much as the fact that there is a hearing pending in a month’s time. Although the applicant’s application was filed in November, his counsel’s submissions were received after that time (and within the time required) and the respondent’s submissions were received just on Christmas. Where an application is made to a court, it should deal with it. I propose to do that even though the final hearing is only weeks away.

22. In respect of the second point, I agree with the submission of senior counsel for the respondent that the applicant has to show a change of circumstances of either party such as to warrant an alteration to the extant orders. It was submitted that the applicant had failed to show hardship or the impact of a continuation of the orders. One basis for the applicant to seek to discharge the orders for spousal maintenance is his financial position and how that is inextricably bound up with the entitlements to property and income of his second family. Again, I am unsure of the extent and relevance of that argument as the evidence cannot be tested in the present application.

23. Ultimately, the 2017 principle of endeavouring to achieve a level playing field focused on the greater financial strength of the applicant whose capacity was viewed on the papers as stronger than that of the respondent. I found then that it was just to make the order. At an interlocutory level, that view was formed on the basis of the untested evidence but also without the benefit of the submissions to which I have just referred. I do not consider that I am in any better position now, a year later, even knowing that the respondent can apparently access her finances better than she could in 2017.

24. The applicant has not satisfied me that there is any significant change of circumstances such as to justify a discharge of the 2017 orders.

I certify that the preceding Twenty Four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 8 January 2019.

Associate:

Date:  8 January 2019