Holcomb & Holcomb (No 2)
[2022] FedCFamC1F 779
•14 October 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Holcomb & Holcomb (No 2) [2022] FedCFamC1F 779
File number(s): SYC 1486 of 2021 Judgment of: RIETHMULLER J Date of judgment: 14 October 2022 Catchwords: FAMILY LAW – COSTS – Indemnity costs – Where the applicant seeks costs following the making of a divorce order which was unsuccessfully contested by the respondent on the basis of forum non conveniens Legislation: Family Law Act 1975 (Cth) ss 39, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 8.01, 12.13
Cases cited: Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 536
Holcomb & Holcomb [2022] FedCFamC1F 580
Indyka v Indyka [1969] 1 AC 33
Kohan and Kohan (1993) FLC 92–340; [1992] FamCA 116
Division: Division 1 First Instance Number of paragraphs: 36 Date of last submission/s: 7 September 2022 Place: Parramatta Solicitor for the Applicant: Boyce Family Law & Mediation Solicitor for the Respondent: JA Law Solutions ORDERS
SYC 1486 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS HOLCOMB
Applicant
AND: MR HOLCOMB
Respondent
order made by:
RIETHMULLER J
DATE OF ORDER:
14 October 2022
THE COURT ORDERS THAT:
1.There be no orders as to costs.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Holcomb & Holcomb has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
RIETHMULLER J:
Introduction
The applicant husband seeks an indemnity costs order against the respondent wife with respect to the divorce proceedings where he obtained a divorce order from this Court on 12 August 2022. The divorce proceedings were contested on the basis set out in the reasons for judgment in this matter in Holcomb & Holcomb [2022] FedCFamC1F 580 (“Holcomb & Holcomb”).
Background
As set out in Holcomb & Holcomb, the husband and wife met in Country B in around 1993 or 1994, where they commenced cohabitating before moving to Sydney, Australia in 1997. The parties then married in Sydney in 2001.
Thereafter, the parties returned to City C, Country B where they have primarily resided and raised two children (who are now 19 and 17 years of age). From around April 2013, the wife and children lived in Sydney for around five and a half years before returning to City C in around August 2018.
The parties' only real estate is a property that they own in Suburb D, a suburb of Sydney. The husband operates a business in City C, but the parties do not appear to have any other substantial assets.
The husband is an Australian citizen with residency rights in Country B and the wife a Country B citizen with permanent residency rights in Australia. The children are, at present, dual citizens of Australia and Country B although it appears that upon attaining majority (20 years of age under Country B law) they will be required to elect as to whether or not they will retain their Country B citizenship or their Australian citizenship as Country B law does not permit them to have dual nationality.
For the reasons set out in Holcomb & Holcomb, the husband was unable to obtain a divorce in Country B, which operates, in effect, a fault-based divorce system (unless the parties consent to a divorce order). It was apparent from the wife's evidence and demeanour in the witness box that she is most distressed at the prospect of a divorce, which having regard to the law in Country B, is likely an embarrassing outcome for her. The case presented difficulties as it became clear that a divorce order granted in Australia would not be recognised in Country B as Country B does not recognise foreign divorce orders made in circumstances where the parties are domiciled in Country B. The law in this regard is different in Australia. Pursuant to Australian law, as an Australian citizen, the husband is entitled to a divorce order unless the wife established that Australia was a clearly inappropriate jurisdiction in which to proceed: see s 39(3)(a) of the Family Law Act 1975 (Cth) (“the Act”). For the reasons set out in Holcomb & Holcomb, the principle that personal status depends upon the law of domicile (as articulated strongly in 19th Century English cases) is not the law in Australia at present, nor does it appear to continue to be the law in England where the House of Lords acknowledge that “the position appears to be that most European countries attach more importance to nationality” than to domicile: see Indyka v Indyka [1969] 1 AC 33 at 64.
As a result, it was open to the husband to seek a divorce in Australia. A range of other relevant considerations are discussed in Holcomb & Holcomb and need not be repeated here. However, it is worth mentioning one strong consideration, that the Country B legal system would not recognise an Australia divorce order and the result of such an order would be that the parties would have differing personal status in Australia and in Country B: that is, they remain a married couple in Country B pursuant to Country B law, but are divorced spouses in Australia pursuant to Australian law.
The husband seeks a costs order pursuant to s 117 of the Act. The costs order he seeks is primarily on the basis of indemnity costs, and in the alternative, costs at scale.
Pursuant to s 117(1) of the Act, the usual position is that no costs orders are made in Family Law proceedings. However, an order for costs is not precluded under the Act. If costs are to be ordered, s 117(2A) of the Act sets out a number of factors that should be considered, as follows:
Costs
…
(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.
The parties have addressed these relevant considerations in their submissions.
The financial circumstances of the parties
The parties' financial circumstances are distinctively different. The husband operates a business and is said to earn in the vicinity of $600,000 per annum. The wife appears to have no income, and is unlikely to have any significant income in the future as her role in their marriage was that of homemaker and child-rearer. As present, the wife relies upon spousal maintenance and child maintenance payments from the husband.
Whether the parties are in receipt of assistance of legal aid
Neither party in this matter was in receipt of a grant of legal aid in Australia, nor does either party suggest that they received any legal assistance from a legal aid agency in Country B.
The conduct of the parties in the proceedings generally
The husband says that both parties conducted themselves appropriately in the proceedings, however the wife takes issue with the conduct of the husband. The wife argues that the husband failed to respond to a letter sent by her solicitors on 17 September 2021 seeking admissions of fact with respect to four points. The phrasing of the facts upon which the wife sought an admission presents some difficulty.
The first matter raised in the letter was that “Country B has jurisdiction over the parties’ current mediation proceedings as the respondent wife domiciles in Country B” (Annexure “A” to the wife’s written submissions filed 7 September 2022). There was no dispute in the proceedings that Country B would have jurisdiction over the matrimonial proceedings of the parties, and indeed had commenced to exercise jurisdiction as part of the Country B processes. The issue in dispute was whether or not Country B would have exclusive jurisdiction, having regard to Australian law, and more significantly, whether or not Australia was actually an inappropriate jurisdiction in these proceedings.
The second matter was as to the effect of any agreement reached between the parties in mediation proceedings in the City C Family Court. The wife sought an admission that such a written agreement would have the same effect as a final binding judgment. Again, there does not appear to have been any dispute as to this point on the facts in the proceedings, rather the issue was that at no point has the wife been prepared to enter into such an agreement.
The third matter is in substance a replication of the first, implying that an admission is sought that only Country B would be an appropriate forum for the proceedings.
The fourth matter was a request for an admission that Country B has jurisdiction over the matters relating to the children of the parties and to child support. The fourth matter was not in dispute in the proceedings and before me.
The solicitors for the wife did not provide to the solicitors for the husband a notice to admit facts in the appropriate form used pursuant to the Court rules: see r 8.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). Whilst the husband's solicitors ought to have responded to this letter, the failure to make such admissions does not appear to me to have resulted in any additional costs in the proceedings to the extent that the admissions sought were merely as to the state of Country B law. To the extent the admissions sought went further than that, they effectively requested that the husband capitulate in the proceedings and he was ultimately successful. I am not persuaded that this matter indicates that the husband has not conducted himself appropriately in the proceedings.
The second matter is a complaint that when the joint expert was engaged (an experienced and capable professor of Country B law), the Court directions made on 14 March 2020 (by the Chief Justice) made provision for the parties to provide questions to the expert. The wife makes complaint about whether or not this process was strictly followed. However, there was no issue as to whether or not the joint expert had responded to the questions relevant to the proceedings, nor any complaint of any lack of procedural fairness. To the extent that there was not strict compliance with those directions, it does not appear to have had any impact upon the conduct of the proceedings.
The third matter raised by the wife is that the husband's documents were filed 12 days late. They were due on 21 March 2022. The trial was not listed for hearing until 10 June 2022. Again, whilst there may have been technical non-compliance, it did not result in any additional costs or difficulty in the conduct of the proceedings.
The final matter of which the wife complains, is that she says that requests were made to the husband to make full and frank financial disclosure which had not been answered. The financial matters did not loom large in the divorce proceedings. The only relevance of the financial matters was the location of the property of the parties and the location of their businesses or employment. It is, no doubt, for this reason that no complaint was made at trial about the lack of disclosure of detailed financial records, which would only have been relevant in property settlement proceedings.
I am not persuaded that there are aspects of the way in which the parties conducted the proceedings which tell in favour of a costs order. Whilst minor irregularities and technical non-compliance ought to be avoided, it is not uncommon among busy legal practitioners. In circumstances where it does not appear to have added any significant costs to the parties, nor impeded the progress of the matter to hearing, it does not appear to me that it becomes a factor relevant to the Court’s exercise of the discretion as to whether or not to make a costs order.
Whether the proceedings were necessitated by failure to comply with a previous order
There is no suggestion in this case that the proceedings were necessitated by failure of a party to comply with previous orders of the Court. Notably, there were no previous orders of either this Court or the Country B Courts that the parties are said to have ever breached.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The husband points to the fact that the wife has been wholly unsuccessful in the proceedings, noting the relief he sought in these proceedings.
Whilst the applicant husband has been entirely successful in obtaining a divorce order it must be borne in mind that divorce applications are almost always successful on the part of the applicant for divorce. This, of itself, would not be a basis for departing from the usual principles set out in s 117 of the Act, that the parties bear their own costs, otherwise every application for divorce would also obtain a costs order. The relevant consideration relates to the costs of contesting the divorce.
Offers of settlement
The husband points to an offer that he made on 3 December 2021 in an attempt to settle the proceedings. On that date, he offered to discontinue the proceedings in Australia on the basis that the wife agree to a divorce being granted in Country B. Whilst this would have avoided the divorce proceedings in Australia, it cannot be said that the outcome of the Australian proceedings provided the husband with relief as extensive as he would have achieved had the wife consented to a divorce in Country B. That is, a Country B divorce (which would have been recognised in Australia), would have resulted in the husband's personal status in both jurisdictions becoming that of an unmarried person. His success in obtaining a divorce order in Australia has effected such a change in his status in this jurisdiction, but his status in Country B remains that of a married spouse.
The wife also made a without prejudice offer to the husband on 6 December 2021, on the basis that he discontinue the Australian divorce proceedings, pay her costs on an indemnity basis, and allow the matter to run its course in Country B. In substance, this was simply an offer that the husband capitulate and pay the wife's indemnity costs as, on the evidence given and my view of the attitude of the wife, it would not have resulted in a divorce being achieved in Country B. The request for indemnity costs is unlikely to have done anything other than inflame the dispute, and may in part have prompted the husband's application for indemnity costs that is currently before the Court.
The wife also argues that additional costs were incurred by having an oral hearing in this Court rather than having the matter dealt with on the papers in chambers. Whilst this undoubtedly added additional costs to the proceedings, considerable evidence was given at the oral hearing including cross-examination of the expert, Professor E of G University, Country B. The evidence before the Court on which the husband ultimately succeeded was more extensive than that set out in the written trial material of the parties. It is the norm in the Australian legal system for the parties to be entitled to an oral hearing should they request one. I am not persuaded that the oral hearing was a waste, nor that the matter was so straightforward that it could have appropriately been dealt with on the papers. Indeed, had it been so apparent that the husband would succeed on the papers, such as to not warrant any oral hearing, one would have expected that the wife would have conceded the application rather than proceeding to an oral hearing. She did not do so, and in these circumstances her complaint in this regard appears to me to be hollow.
Other matters
The husband also asks that I have regard to other facts and circumstances surrounding the matrimonial dispute, including the fact that the wife continues to resist the divorce in Country B, and that the outcome of the separation (either as a result of the conduct of the parties and/or the legal system within which they live), has resulted in the husband becoming estranged from the children in Country B. None of these matters appear to be a direct result of the divorce application in Australia, nor directly bear upon whether or not the costs of this application should be borne solely by the wife. Similarly, the wife's submissions that the parties are meaningfully engaging in negotiations in Country B with respect to children and property issues does not bear directly on the question of whether or not there should be a costs order for this divorce application.
The husband's solicitors seek that any costs orders be made on an indemnity basis rather than a party/party basis. In this regard, they rely upon the well-known decision of Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 232–234, which set out the principles applicable in the civil jurisdiction, pointing to one of the relevant considerations: whether a party persists in what on proper consideration ought to be seen as a hopeless case. Remarkably, the solicitors for the husband suggest that this case is one that was always a hopeless case for the wife and that there was “no discernibly rational basis as to why the wife would resist the divorce Application by the husband” (Husband’s written submissions filed 26 August 2022). I reject this submission entirely. Firstly, whether or not a person remains married or is divorced affects their personal status and for many people this is a deeply emotional issue. Secondly, the parties are domiciled in Country B, where pursuant to Country B law, the wife is entitled to resist a divorce from the husband unless the husband is able to, in effect, prove fault against her. The international law aspects of the case made it difficult due to the differing legal systems that operated in Australia and Country B, and the extent of the connection of the parties to both jurisdictions. The husband’s written submissions filed 26 August 2022 appear to be drafted only viewing the case through the lens of a no fault divorce system where, once the parties have separated for 12 months, there is effectively no practical defence to a divorce application.
As the Country B legal system does not make provision for divorce that is effectively on a no-fault basis, it must be taken to be the view of Country B society (as reflected in the legislation passed by their elected representatives) that freely available divorce is not consistent with the social values of the people of that nation. Once one views the matter through the lens of the Country B divorce system it cannot possibly be said that the wife's opposition to the divorce was hopeless, nor entirely unreasonable.
I also note that whilst in the civil jurisdiction costs ordinarily follow the outcome of the proceedings, a different costs regime is in place in the Family Law jurisdiction as a result of s 117 of the Act. Section 117(1) of the Act provides that each party to the proceedings shall bear their own costs. In Kohan and Kohan (1993) FLC 92–340 at 79,605, the Full Court, when discussing the proper exercise of the discretion, explained that:
The intent of s 117(1) and (2) is that in the Family Court costs should not follow the event as a matter of course. However, where the justice of the matter requires, the Court may make such order as it considers just.
…
Indemnity costs orders are still an exception in the Family Court and other jurisdictions.
I also note that the husband has not complied with rule r 12.13(4) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) which requires the party seeking indemnity costs to file a copy of the costs agreement as between that party and their legal representatives. No copy of the costs agreement has been filed.
Finally, the solicitors for the husband submitted that it would be “wholly inequitable for the husband to be left with any part of the costs incurred by him in respect of” the divorce application (Husband’s written submissions filed 26 August 2022). Had the husband brought the divorce application and the wife not opposed it, he would nonetheless have incurred the costs of the filing fee and lawyers to prosecute an undefended divorce. Costs orders would not ordinarily be made in such circumstances. In Australia's no fault divorce system, the dissolution of the matrimonial bonds is an expense of both parties in order to alter their personal status. A divorce application, of itself, would not ordinarily result in a costs order in favour of one or the other of the parties. The result of the application has not been that one or the other of the parties has received property or financial advantage of significance so as to make the outcome “inequitable”. As is apparent from the reasons in Holcomb & Holcomb, the likely outcome of this case was by no means clear, and that the question that required judgment was a complex one given the circumstances of the parties and the very different nature of the legal systems in Australia and Country B with respect to divorce and personal status. I am in no way persuaded that the wife's case was hopeless nor that the proceedings were either unreasonable or for an inappropriate purpose, if one has regard to the position of the wife through the lens of the legal system within which she lives.
In the circumstances I am not persuaded that in this case it is appropriate to make a costs order with respect to the divorce application. I am of the view though, that the costs application, at least to the extent that it sought indemnity costs, was hopeless and bound to fail. However, the issues relating to indemnity costs were but a small part of the costs application and not the subject of specific response by the solicitors for the wife.
In the circumstances, I make no order for costs with respect to either the Application for Divorce filed 4 March 2021 or the costs application.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Riethmuller. Associate:
Dated: 14 October 2022
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