Hilditch and Huang (No 2)

[2020] FamCA 255

FAMILY COURT OF AUSTRALIA

HILDITCH & HUANG (NO. 2) [2020] FamCA 255

FAMILY LAW – COSTS – Where each of the parties seeks an order for costs – Where the substantive proceedings were in relation to both parenting and property – Where the mother and father each contend that the other party was wholly successful in the parenting and property proceedings, respectively – Where the Court found that neither party was wholly unsuccessful – Where the mother is in a better financial position than the father – Where the father did not respond to the mother’s offer of settlement – Where, overall, the circumstances do not justify a costs order against either party – Applications dismissed.

Family Law Act 1975 (Cth) ss 79, 117

Stanford v Stanford (2012) 247 CLR 108

APPLICANT: Mr Hilditch

RESPONDENT: Ms Huang

INDEPENDENT CHILDREN’S LAWYER: Morton Family Lawyers

FILE NUMBER: SYC 2358 of 2013

DATE DELIVERED: 21 April 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan J

HEARING DATE: Written submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Linden Legal

COUNSEL FOR THE RESPONDENT: Mr Johnston

SOLICITOR FOR THE RESPONDENT: Super & Super Lawyers

INDEPENDENT CHILDREN’S LAWYER: Morton Family Lawyers

Orders

1. The applications of the parties for costs arising out of the parenting and property settlement proceedings concluded by orders made on 31 January 2020 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 Hilditch & Huang 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 SYDNEY

FILE NUMBER:  SYC2358 of 2013

Mr Hilditch

Applicant

And

Ms Huang

Respondent

And

Independent Children’s Lawyer

REASONS FOR JUDGMENT

Introduction

1. In the context of parenting and property settlement proceedings between Mr Hilditch (“the father” or “the husband”) and Ms Huang (“the mother” or “the wife”) each of the parties seeks an order for costs. 

2. What follows are the reasons for the order set out above.

Applications

1. The father seeks the following orders: [1]

   a.That the Wife pay the Husband’s fixed (gross) sum costs of $84,000 in respect of the property proceedings, such payment to be made within 14 days of the making of this order.

   b.Further, and in the alternative, that the Wife pay the Husband’s Costs of the property proceedings as agreed or taxed.

   c.Further, and in the alternative, the Wife pay the Husband’s costs of the property proceedings in such sum as it determined by the Court.

   [1] In accordance with the father’s summary of argument dated 23 March 2020.

2. The mother seeks the following orders: [2]

   1.That the mother pay to the father a sum equivalent to 20% of the father’s assessed costs of the proceedings as assessed on a party/party basis.

   2.That simultaneously with the payment referred to in order 1 that the father pay to the mother a sum equivalent to 80% of the mother’s assessed costs of the proceedings as assessed on a party/party basis.

   [2] In accordance with the written submissions of the mother dated 11 April 2020.

Short history

1. The property proceedings commenced on 10 October 2014 and the parenting proceedings commenced in February 2017.  The final hearing was conducted in November 2019 and judgment was delivered on 31 January 2020.  It is asserted on behalf of the father that he has incurred legal costs of $251,338.  In the substantive proceedings I found that the mother had incurred costs of $428,938.45 with previous lawyers as well as having some outstanding fees owing.

The law

1. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) relevantly provides:

Section 117

Costs

(1)  Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.

(2)  If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

(2A)  In considering what order (if any) should be made under subsection (2), the court shall have regard to:

(a)  the financial circumstances of each of the parties to the proceedings;

(b)  whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

(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;

(d)  whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

(e)  whether any party to the proceedings has been wholly unsuccessful in the proceedings;

(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; and

(g)  such other matters as the court considers relevant.

Discussion

1. Turning to the s 117(2A) considerations:

(a)  the financial circumstances of each of the parties to the proceedings;

1. This criterion is relied on by the father.

2. The substantive proceedings included proceedings for property settlement between father and mother.  The orders I made were aimed at achieving a property division as to 37.5 percent to the father and 62.5 percent to the mother which would mean that the father would have about $2,753,617 and the mother would have about $4,589,361. [3]  As to their income and outgoings, in the reasons for judgment I recorded the following:

   313.According to the mother’s evidence, her weekly income is $13,019.  Her personal expenditure totals $16,943 a week.  This is made up of income tax, mortgages, insurance premiums, credit card repayments, a small amount on motor vehicle finance and $250 on other miscellaneous expenditure.

   314.The evidence about the mother’s assets and liabilities is set out earlier in these reasons.

   315.The father’s weekly income is recorded as $1,540, made up of rent and commissions.  His personal expenditure is recorded as $1,390, comprising income tax, superannuation, mortgages and insurance.  However, as I referred to above, the recorded personal expenditure does not account for miscellaneous expenses, which the father has listed as “not calculated” on his Financial Statement.  In that way the father has provided no assessment of his other general living costs, such as food, household supplies, clothing, utilities, transport et cetera.  By his unhelpful Financial Statement the father shows a weekly surplus of $150.  However, it is likely that, as with the mother, the father’s weekly budget is substantially in deficit.

   [3] Paragraph 346 of the reasons for judgment delivered on 31 January 2020.

3. The mother is in significantly better financial circumstances than the father and that is likely to continue, both as to assets and income.

4. One impact of the difference in the financial circumstances of the parties highlighted by the father is that whereas the mother was substantially able to meet her legal costs during the proceedings as they arose, from her income, the father continues to owe nearly $185,000 in respect of his costs.

(b)  whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

1. No party was in receipt of a grant of legal aid.

(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;

1. This criterion is relied on by both parties.

2. For the father it is asserted that:

   ·the mother’s formal position in the proceedings was that there should be no adjustment of property in favour of the father;

   oWhile that has been the mother’s formal position, she made the only offer to compromise the proceedings in November 2016.  That offer involved a settlement of property.

   ·the mother’s position in respect of expert valuation evidence was unreasonable.  For example, the mother was ordered to pay the father’s costs of proceedings before a registrar on 5 April 2017;

   oThat order having been made, there is nothing further to seek about the costs of that interlocutory application.  In any event it is contended that it was the father who insisted on a formal valuation of the mother’s jewellery.

   ·the mother persisted in seeking to include in the balance sheet for property settlement, fees and donations associated with the child’s private school.  The fees and donations should never have been included in draft balance sheets and were not ultimately pressed;

   oIt is the mother’s case that she included the expenses as joint liabilities until they were paid and that thereafter, those expenses were removed from her balance sheet for the first day of the less adversarial trial.  The remaining category was for future school fees and the mother agreed to remove that liability during the trial.  In any event it is not practicable to sheet home responsibility for the costs of a particular contention in the context of proceedings where the costs were of the order of $700,000.

   ·the mother unsuccessfully persisted in allegations that the father held beneficial interests in certain assets – AE Pty Ltd and Company CC;

   oIn response from the mother it is asserted that she had good grounds for suspecting that the father held the interests in question and she was entitled to test the issue.  

   oSadly, the parties had little trust in each other and a highly conflictive relationship.  That may have led to proof being required of matters that in the normal course could be accepted on the basis of an informal assurance.  Again, I am not able to distinguish the conduct of the parties in the litigation, in a way that would sound in a costs award against one party.

   ·the mother failed in her obligation of disclosure;

   oIt is the mother’s case that in addition to her Financial Statements and Financial Questionnaire there were nine instances of disclosure between 22 December 2014 and the commencement of the final hearing.  I am not in a position to find that the mother did not meet her responsibility to provide financial disclosure.

   ·the proceedings were transferred from the Federal Circuit Court to this Court based on representations made on behalf of the mother, leading to the property settlement hearing being delayed by nearly three years.

   oIn response, it is noted on behalf of the mother that the oral evidence of the parties occupied nearly two and a half days and that it is nonsense to suggest that the hearing of the entire proceedings could have been contained within two days.

   oThe problem with this contention is that a determination was made by a judge of the Federal Circuit Court that it was appropriate to transfer the proceedings.  As a matter of comity between Courts I would not and do not assume that decision was anything but correct.  In any event I do not understand the basis for the assertion that but for the transfer, the proceedings would have been determined by a final hearing in March 2017.

   oThe submissions on behalf of the mother include reference to the hearing being delayed as a result of the retirement of the judge to which the matter was docketed.

3. In addition to her responses to the father’s submissions, for the mother it is also asserted that:

   ·the father opposed the appointment of an Independent Children’s Lawyer (“ICL”) for the parties’ child, X, in early 2017.  An ICL was subsequently appointed.  The father opposed the mother’s November 2017 application for a further expert report in the parenting proceedings.  The ICL supported there being a further report and a further report was ordered; and

   ·when X ran away from the father in January 2019 the father’s response was to commence contravention proceedings against the mother.  The father’s contravention application was dismissed on 6 February 2019.

4. The final orders made on 31 January 2020 brought an end (subject to appeal) to more than six years of litigation.  In my view, it is not possible to sheet home responsibility under this criterion, to one party alone. 

(d)  whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

1. The proceedings were not necessitated by the failure of a party to comply with previous orders of the court.

(e)  whether any party to the proceedings has been wholly unsuccessful in the proceedings;

1. Each of the parties contends that the other was wholly unsuccessful as to one aspect of the proceedings. It is submitted for the father that the mother was unsuccessful in obtaining an order that there be no orders for property settlement. In that sense the mother was wholly unsuccessful in the property proceedings. Her argument based on s 79(2) of the Act and the position identified in Stanford v Stanford (2012) 247 CLR 108 was not accepted. However, a property settlement on some terms was always in prospect.

2. In a similar vein, the mother contends that the father achieved none of the parenting orders he sought. 

3. In my view, neither party was wholly unsuccessful in the substantive proceedings.  It transpired in these proceedings, as it often does in parenting and property settlement proceedings, that the final outcome is one of degree, rather than “yes” or “no”.

(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; 

1. Remarkably, there was only one written offer of settlement.  The mother’s solicitors sent an offer to the father’s solicitor contained in a letter dated 4 November 2016.  The offer related to the property settlement proceedings and comprised a proposal for:

   ·the transfer of 1 L Street, Suburb M QLD to the father;

   ·the equal division of a joint S Bank account;

   ·the mother to pay the father $53,741; and

   ·the parties to otherwise retain what they had and responsibility for what they owed.

2. In the written offer, the mother asserted that the effect of the proposed settlement was to distribute a pool of assets worth $5,616,308 in the proportions 30/70, leaving the father with $1,684,892 and the mother with $3,931,416.  In addition, the mother offered to enter into a Child Support Agreement providing for her to bear all of the school, health and insurance costs for the parties’ son X until he reached 18 years.  The offer was conditional on the parties settling a binding financial agreement, protecting each other from spousal maintenance claims.  

3. It was asserted, without complaint, that there was no response from the father to that offer.

4. It is submitted on behalf of the father that the calculations about the mother’s offer relied on school fees and donations to the child’s school being wrongly included as liabilities.  It is very difficult, if not impossible, to compare the import of the 2016 offer and the effective outcome of the proceedings in 2020.

(g)  such other matters as the court considers relevant;

1. There is criticism on behalf of the father about the terms of the offer of settlement made by the mother in 2016.  However, there are two further issues.  First, it is asserted, without complaint on behalf of the father, that he failed to respond to the mother’s offer.  Secondly, I gather that the father made no written offer of settlement.  Those matters support the mother’s application.

2. Otherwise nothing comes to attention here.

Conclusion

1. The general position is that the parties bear their own costs.  Valid arguments relevant to costs have been made on behalf of each party.  The matters relevant to the father’s application for costs include that the mother consistently maintained as her formal position, that there should be no property settlement adjustment.  Relevant to the mother’s application was the father’s unsuccessful contravention proceedings and his opposition to orders for the appointment of an ICL and for an expert’s report.

2. The mother’s written offer of settlement was based in part on contentions about the balance sheet that were not maintained at trial.  On the other hand the father did not respond to the offer and did not make an offer of his own.

3. Although the mother seeks that a costs order be made against her as to a proportion of the father’s costs in the property settlement proceedings, in my view that does not amount to her consenting to such an order.  As the mother’s submissions make plain, she seeks a greater award in her favour for the costs of the parenting proceedings.

4. At the end of the day the general position should apply.  I will make no order for costs.

I certify that the preceding 30 (thirty) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 21 April 2020.

Associate: 

Date:  21 April 2020