Harland and Harland

[2016] FamCA 160

FAMILY COURT OF AUSTRALIA

HARLAND & HARLAND [2016] FamCA 160

FAMILY LAW – LEGAL COSTS – Where the wife seeks a cost order pursuant to s 117(2) – Where the Court found that there was no basis to award costs to the wife

Family Law Act 1975 (Cth) ss 117(2), 117(2A)

In the Marriage of JU and T Poletti (1990) 15 Fam LR 794

APPLICANT: Ms Harland

RESPONDENT: Mr Harland

FILE NUMBER: SYC 4699 of 2015

DATE DELIVERED: 18 March 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 14 March 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Richards

SOLICITOR FOR THE APPLICANT: Mills Oakley

COUNSEL FOR THE RESPONDENT: Mr Lethbridge SC

SOLICITOR FOR THE RESPONDENT: NLS Law

Orders

IT IS ORDERED

1. That the Amended Response to an Application in a Case filed by the wife on 8 March 2016, seeking an order for litigation funds, be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Harland & Harland 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 SYDNEY

FILE NUMBER: SYC 4699 of 2015

Ms Harland

Applicant

And

Mr Harland

Respondent

REASONS FOR JUDGMENT

1. Ms Harland (“the wife”) applies for an order pursuant to s 117(2) of the Family Law Act 1975 (Cth) (“the Act”) which would require Mr Harland (“the husband”) to pay money on account of her legal costs in defended proceedings involving both parenting and property settlement.

2. The form of the orders sought by the wife is complicated but in essence she asks that the husband pay to her solicitors three dollars for every dollar he pays to his own solicitors until a total of $75,000 has been paid and that thereafter he pays one dollar to her solicitors for every dollar he pays his own solicitors.

3. Although there is no alternate application expressed in the application, counsel for the wife told the Court that her “fall back” position was that a “dollar for dollar” order should be made.

4. An application by the wife for the payment of a lump sum of $100,000 by way of legal fees was heard and determined by Austin J. in November 2015. In his reasons for judgment delivered on 5 November 2015, his Honour stated “I am not satisfied there is any basis upon which to make an order compelling the husband to pay the wife a lump sum, either by interim property settlement or costs.”

5. The wife did not make an application for a “dollar for dollar” order before Austin J.

6. It is not disputed in the proceedings before me that the husband has no capacity, from his own earnings or property, to pay any amount to the wife’s solicitors. His income is more than fully consumed by his periodic commitments which include the payment of the mortgage over the house in which the wife lives and the payment of periodic sums for the benefit of the wife and their child.

7. The husband is currently borrowing money from his father to pay the shortfall between his commitments and his income.

8. The husband’s legal fees are presently being paid by his father pursuant to a loan agreement dated 19 October 2015 which specifies that all sums are to be repaid within six months of the conclusion of this litigation.

9. The only way that the husband could comply with an order such as that sought by the wife is that he borrow further funds from his father. This Court has no power to compel the husband’s father to provide any funds for that purpose. There is no evidence that the husband’s father would provide money for the payment of the wife’s costs.

10. There is no utility in making the orders sought by the wife and therefore it is not necessary to examine the various factors to be taken into account as specified in s 117(2) of the Act. However, lest I be in error in that determination, I would not make the orders sought by the wife pursuant to s 117(2) of the Act (dealing with such of the matters in s 117(2A) of the Act as are relevant) for the following reasons:

11. (a) The financial circumstances of each of the parties

    The wife’s earning capacity is considerably less than that of the husband but, as Austin J. found, and I agree, the husband’s earnings are fully accounted for in his commitments to pay the mortgage and other outgoings for the benefit of the wife and the child. He has no capacity to meet any order for the payment of costs. On behalf of the wife, it was submitted that the availability of loan funds from the husband’s father is a financial resource of the husband but, in circumstances where there is no evidence that the husband’s father is willing or likely to facilitate any order for the payment of the wife’s costs, that is not a matter that assists the wife’s case.

12. (c) The conduct of the parties in relation to the proceedings

    The wife could have made the application presently before the Court before Austin J. She did not. Had she done so, the matter would have been heard and determined on 5 November 2015 and the costs of the present application need not have been incurred.

13. The wife submits that there has been a change of circumstances in that Austin J. was not aware that the husband’s costs were being paid by his father. The husband disputes that assertion. His Honour, in the judgment, refers to “either the hope or expectation he might be able to procure such moneys from his wealthy parents”. His Honour’s judgment makes it clear that the husband’s funds were entirely consumed in day to day expenses. I infer that there was no evidence before Austin J. that the husband was paying his own legal expenses.

14. The wife did not appeal from the judgment of Austin J. Her application for further costs orders was filed less than three months after his Honour dismissed her application for a lump sum. There is merit in the submissions of Senior Counsel for the husband that the wife is attempting to re-argue the issue that was heard and determined by his Honour, albeit in a slightly different form.

15. (e) Whether any party has been wholly unsuccessful in the proceedings

    The substantive proceedings are yet to be determined. The competing applications are considered later in these reasons.

16. (g) Such other matters as the court considers relevant

17. This is not a matter where the amount sought by the wife is a finite sum. Austin J. declined to make such an order. The reasons stated by Austin J. for refusing to make an order for lump sum costs in favour of the wife apply equally to the present application.

18. The order which the Court is being asked to make on behalf of the wife is open ended. There is no assessment of the likely quantum of the wife’s future costs. Even if there were an assessment, it could represent no more than a guess on the part of those representing the wife as they could not predict the course of the litigation.

19. The absence of such evidence is not necessarily fatal to the making of an order but a court will be naturally reluctant to make an order which is open ended and unspecified and the requirement that the order be “just” as specified in s 117(2) of the Act is all the more difficult to satisfy.

20. Counsel for the wife submitted that the Court should attempt to provide a “level playing field” between the parties in relation to their ability to provide for legal fees and that this was a relevant factor to be considered.

21. The Full Court in In the Marriage of JU and T Poletti (1990) 15 Fam LR 794 cited with approval the statements of Nygh J in relation to this concept in the following terms:

    …It is rather…a situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case.

22. In Poletti the Full Court was dealing with a marriage with very substantial assets in the control of the husband from which any order for costs in favour of the wife could be satisfied. The decision cannot be given a wider interpretation, as appears to be the submission of counsel for the wife, to extend its application beyond a situation where the parties’ assets are available to meet any order.

23. The considerations mandated by s 117(2A) of the Act do not favour the making of the order sought by the wife.

24. The application will be dismissed.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 18 March 2016.

Associate: 

Date:  18/03/2016