HESTER & HESTER (No.2)
[2018] FCCA 3140
•2 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HESTER & HESTER (No.2) | [2018] FCCA 3140 |
| Catchwords: FAMILY LAW – Costs. |
| Legislation: Family Law Act 1975 (Cth), ss.79, 117 Federal Circuit Court Rules 2001, r.21.02 |
| Cases cited: Hester & Hester [2018] FCCA 1137 Penfold & Penfold (1980) 144 CLR 311 |
| Applicant: | MS HESTER |
| Respondent: | MR HESTER |
| File Number: | PAC 2671 of 2016 |
| Judgment of: | Judge Obradovic |
| Hearing date: | In chambers |
| Date of Last Submission: | 3 October 2018 |
| Delivered at: | Parramatta |
| Delivered on: | 2 November 2018 |
ORDERS
That upon order (7) made on 10 May 2018 in proceedings number
PAC2671/2016 coming into effect, the husband is to pay the wife the sum of $20,723.
IT IS NOTED that publication of this judgment under the pseudonym Hester & Hester (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 2671 of 2016
| MS HESTER |
Applicant
And
| MR HESTER |
Respondent
REASONS FOR JUDGMENT
On 10 May 2018, following a final hearing in 2017 which took two days, the Court delivered its Reason for Judgment in respect of the Applicant Husband’s application pursuant to s79 of the Family Law Act 1975 (Cth). The Respondent wife joined in the husband’s application by also seeking relief pursuant to the Act, albeit she sought different orders to the husband.
Orders adjusting the parties’ property interests were duly made, following the making of certain findings as to the pool of assets, parties’ contributions and what was just and equitable in all of the circumstances. Ultimately, the Court found that there should be an overall adjustment in the wife’s favour of 57% and in the husband’s favour of 43%.[1] Ultimately, the Court calculated that the wife was to receive $864,350 and the husband was to receive $652,054.
[1] See Hester & Hester [2018] FCCA 1137 at [43]; See also [45] in respect of the superannuation splitting order and the consequent re-adjustment of the non-superannuation assets
On 5 June 2018, the Wife filed an Application in a Case seeking an order for costs in the amount of $19,304, calculated in accordance with Schedule 1 of the Federal Circuit Court Rules 2001. The application for costs is opposed.
The relevant facts which the wife relies upon are set out in her Affidavit filed on 5 June 2018. Those facts are not disputed. The husband filed his Affidavit on 6 August 2018. Those facts are not disputed. As such[2], the following is apparent:
[2] And including from the Court file in respect of Court events and orders made
a)Proceedings were commenced on 10 June 2016.
b)On 6 February 2017, the matter was set down for final hearing at 10am on 2 March 2017. On that day, the Court, inter alia, made the following orders:
i)Within 14 days the solicitors for each of the parties are to provide, in writing, the following information to their respective clients:
1. Costs incurred to date;
2. Costs paid to date;
3. Outstanding costs to date;
4. Estimate of costs to conclusion of final hearing, including counsel’s fees and if the matter is not reached any further costs to be incurred in those circumstances;
5. Possible range of outcomes and possible costs ramifications;
ii)Within 21 days, the parties are to exchange written offers of settlement in accordance with the principles in Calderbank v Calderbank[1975] 3 All ER 333;
c)On 17 February 2017, the wife made an offer of settlement that there be an equal division of the net proceeds of sale of the former matrimonial home (after the repayment of a loan to the husband’s parents) and an equal division of the superannuation pool. The offer was not accepted. The orders ultimately made by the Court saw the wife better off than she would have been had this offer been accepted by the husband.
d)On 27 February 2017, the husband made an offer of settlement, subject to the wife providing the husband with certain disclosure documents, that there be an equal division of the net proceeds of sale of the former matrimonial home (after the repayment of a loan to the husband’s parents) and superannuation splitting order in the wife’s favour of $94,000. The offer was not accepted. The orders ultimately made by the Court saw the wife better off than she would have been had this offer been accepted by the wife.
e)The final hearing commenced on 2 March 2017. The matter ultimately went over part-heard to 14 August 2017, when the hearing concluded.
f)On 3 May 2017, the wife made a further offer of settlement. The offer was made on the basis of the balance sheet tendered at the time of the part-heard hearing, and noted the agreed position in respect of the superannuation pool. The offer was for the wife to receive 53% of the net sale proceeds of the sale of the former matrimonial home (after the repayment of a loan to the husband’s parents) and a splitting order in respect of the superannuation pool. The offer was not accepted. The orders ultimately made by the Court saw the wife better off than she would have been had this offer been accepted by the husband.
The principles in respect of costs orders in family law proceedings are well known. The starting position with respect to costs, as set out in s117 of the Act is that, subject to subsection 117(2), each party to proceedings under the Act shall bear his or her own costs.
The discretion to award costs is a broad discretion.[3]
[3] see for example Collins & Collins (1985) FLC 91-603.
The High Court held in Penfold & Penfold[4] that it is necessary for the Court to make a finding of justifying circumstances as an essential preliminary to the making of an order for costs. The Court is not required to specify the circumstances which justify the making of such an order.
[4] (1980) 144 CLR 311
As long as there is an essential preliminary finding that there are justifying circumstances to make a costs order, there is no additional or special onus which the Applicant needs to establish for an order for costs. It is not the law that a costs order can only be made in what has been described as a ‘clear case’. [5]
[5] See in general the comments made by the Full Court in Wrensted & Eades [2016] FamCAFC 46 and in particular where the Full Court approved the comments of the judge below at [103]
In Latoudis v Casey[6] the High Court stated as follows:
… in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of an unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.”[7]
[6] (1990) 170 CLR 534
[7] Referred to in the context of family law proceedings by Judge Kemp in Cochrane & Cochrane [2012] FMCAfam 984 at [17]
In determining what order, if any, should be made under s117(2) the Court must have regard to the prescriptive but non-exhaustive list of considerations in sub-section (2A).
Rule 21.02(2) Federal Circuit Court Rules2001 provides that in making an order for costs the Court may set the amount of costs; or set the method by which the costs are to be calculated; or refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules.
The husband’s primary objection to the application for costs appears to be grounded in the wife’s failure to provide full and frank disclosure prior to the commencement of the hearing. Albeit there was correspondence between the parties in respect of requests for full and frank disclosure, no application was brought before the Court in respect of any particular failure by the wife to provide disclosure either in accordance with her obligations under the Rules or in accordance with her obligations under the law in general. No submissions were made at final hearing in respect of the wife’s lack of disclosure in a timely manner nor was she asked any questions in cross-examination about that issue. Furthermore, no cross-examination of the wife was sought in respect of the issue following her application for costs.
The husband states that given he did not receive full disclosure until approximately 5pm on 27 February 2017[8] and that he was not able to obtain advice until the “following day”[9], namely, 1 March 2018 which was the day before the hearing. The husband states he identified two transactions in those documents which were unable to be clarified until the morning of the hearing. The husband does not explain in his evidence what the effect of that clarification meant to his case or how his case was then conducted in a different manner as a result of that clarification. The husband does not explain how the lack of disclosure affected the running of his case or prevented him from accepting the wife’s offer.
[8] This was a Monday
[9] The following day was 28 February 2017
The husband submits that the wife’s conduct misled the husband as to her financial circumstances and did not provide sufficient information upon which he could consider her offer of settlement. Such submissions are not supported by any specific evidence.
There is no doubt that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts[10].The mere compliance with rules of the court or practice directions does not alter the basic principle of the need for full and frank disclosure. However, disclosure is not an end unto itself. The purpose of full and frank disclosure must be “the need for each party to understand the financial position of the other party, which is at the very heart of cases concerning property”[11].
[10] See for example: Livesey v Jenkins[1985] 1 All ER 106; In the Marriage of Briese (1985) 10 Fam LR 642 ; [1986] FLC 91-713 and Oriolo v Oriolo(1985) 10 Fam LR 665 ; [1985] FLC 91-653
[11] See In the Marriage of Briese (1985) 10 Fam LR 642 ; (1986) FLC 91-713, approved by the Full Court in the case of Oriolo v Oriolo(1985) 10 Fam LR 665 ; [1985] FLC 91-653
Even if the husband was confused as a result of the failure by the wife to fully and frankly disclose all her credit cards, bank accounts and statements, ultimately he did receive disclosure and clarification of those matters on the first day of hearing. The matter could have settled at that point or at any point thereafter. It did not.
The parties are each in reasonable financial circumstances. They each received the benefit of the Orders made by the Court on 10 May 2018. The wife’s income is less than that of the husband. The payment of their own legal costs for each of the parties will no doubt be a financial burden to them.
Neither party is in receipt of legal aid.
The conduct of the parties to the proceedings has been discussed earlier in these reasons, and the Court has considered the submissions made by the parties in this regard. The wife did not make full disclosure of the document sought by the husband until the eve of the hearing.
The proceedings have not been necessitated by the failure of either party to comply with any Court orders. While an order for property adjustment has been made, neither party has been wholly unsuccessful. They each sought orders adjusting their various property interests. In fact, each of the parties was partially successful in obtaining the relief they sought.
Both parties made offers of settlement. As noted earlier, the wife has ultimately done better as a result of the orders than she would have done had the husband accepted her offers or had she accepted the husband’s offer.
The Court finds that there are circumstances justifying the making of a costs order.
In all of the circumstances it is appropriate that the husband pay the wife’s costs of and incidental to the hearing, namely preparation for hearing and daily hearing fees including Counsel’s fees. It is appropriate to apply the scale of costs contained in Schedule 1 of the Federal Circuit Court Rules.
Therefore, the husband is to pay the wife’s costs assessed in accordance with that scale as follows:
a)Item 7: Preparation for final hearing - $5,921
b)Item 9: $305 and $305 (short mention) – total $610
c)Item 12: Advocacy Loading: $6723 (2 day hearing)
d)Item 13: Daily hearing fee $4482 (2 day hearing)
Total: $17,736
The Court also finds that there are circumstances justifying the making of a costs order in respect of this costs application noting that the husband was wholly unsuccessful and the wife wholly successful. Such costs order will also be made in accordance with the scale, with the relevant item in the schedule being item 3: interim hearing as a discrete event. The husband is to also pay the wife’s costs in the amount of $1,867 and $1,120 being a total of $2,987, in respect of the costs application.
For all of these reasons, orders as set out in the forefront of these Reasons for Judgment are made.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Date: 2 November 2018
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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