J & T

[2005] FamCA 679

[2005] FamCA 679

FAMILY LAW ACT 1975

IN THE FULL COURT       
OF THE FAMILY COURT OF AUSTRALIA                  Appeal No WA02 of 2005
AT PERTH  File No PT6703 of 1998

BETWEEN:

J
Appellant Wife
- and -

T
Respondent Husband

REASONS FOR JUDGMENT

CORAM:  KAY, HOLDEN & WARNICK JJ
DATE OF HEARING:                 5 July 2005
DATE OF JUDGMENT:             5 July 2005

APPEARANCES:  The Appellant Wife in person.

The Respondent Husband in person.

J & T
APPEAL NO:  WA02 OF 2005
CORAM:  Kay, Holden & Warnick JJ
DATE OF HEARING:  5 July 2005
DATE OF JUDGMENT:                5 July 2005

Catchwords:  APPEAL – Costs – in property proceedings the husband made a claim that $84,000 was payable for CGT - the wife incurred $1250 costs in retaining her own expert who asserted the proper amount was $14,000 - at trial the husband's account reduced his claim to $37,500 and his evidence was accepted - trial Judge refused to make any order for the costs incurred by the wife in resisting the husband's claim - appeal dismissed.

KAY J: 

1. This is an appeal brought by the appellant wife concerning a costs ruling by Penny J on 16 December 2004.  It raises a discrete issue in respect of one matter only. 

1. The proceedings that brought about the application for costs were property proceedings between the husband and wife in which judgment was delivered on 3 November 2004.  Pursuant to that judgment the wife was found to be entitled to 38 per cent of the net assets of the parties as found by the trial Judge.  That required that the wife receive assets to the value of just under $120,000 and that the husband retain the sum of about $190,000 in net assets.

1. In establishing the pool of assets an issue arose as to capital gains tax (CGT) payable in respect of some shares that were sold by the husband.  In the course of the trial the husband produced a report from his accountant that indicated there was to be an amount of CGT of approximately $84,000.  The wife, who was self-represented, indicated that she was caught by surprise in relation to this issue and sought and was granted an adjournment to enable her to obtain her own report from an accountant on the issue of the CGT.  She sought and received advice and a report from an accountant who indicated to her that there was a CGT liability of $18,514 rather than the $84,000 that the husband's accountant had come up with.

1. The matter then proceeded on an adjourned return date after the accountants had had some discussions, although it is not entirely clear whether the discussions ultimately proved to be fruitful.  That resulted in the husband's accountant reducing his claim for CGT from $84,000 down to $37,500, thus increasing the net pool of assets by about $50,000. 

1. At the adjourned trial the wife's accountant gave no further evidence.  The husband's accountant gave some evidence.  It is not abundantly clear from the limited amount of transcript that is available in the appeal book as to the circumstances that led to the husband's accountant being required to give any further evidence because we have only been given some extracts of the transcript.  It is clear that he was only asked a few questions by the wife on her challenging the cost base that was ultimately used in assessing the $37,500 figure.  She was unsuccessful in challenging the cost base calculation, so the new figure then became the figure that the Judge chose to rely upon.

1. The wife submitted a claim for costs to the trial Judge of just under $1300, which was the amount for the account she received from her accountant.  She said that these were moneys for which she should be reimbursed given that the husband had made a claim for $84,000 that was unsubstantiated and it was necessary for her to challenge that and incur the expense. 

1. The trial Judge refused to make any order for costs on this issue or on other issues, but it is only in relation to this issue that the appeal has been mounted.  The trial Judge said in dismissing the application as follows:

"It is true that as a result of the wife obtaining a report from [an accountant], [the husband’s accountant’s] opinion as the amount of Capital Gains Tax payable more than halved.  On cross-examination, however, his opinion was not changed and I accepted his evidence in relation to the amount of Capital Gains Tax payable.  It was necessary for the husband, as a result of [the wife’s accountant’s] report, to instruct [his accountant] again in relation to the Capital Gains Tax issue.  It was necessary for him to give evidence, an expense which would have to have been met by the husband.  The wife did not accept [the husband’s accountant’s] revised estimate of the Capital Gains Tax, and it was at her insistence, that he was cross-examined, incurring further costs for the husband.  In these circumstances, I am not satisfied that the husband should pay the wife's costs of the report from [the accountant]."

1. There was an earlier finding by the trial Judge, although it does not necessarily appear to be germane to the exercise of her discretion, that after the differing reports came to fruition there was no conference between the accountants because the wife’s accountant’s instructions were terminated by the wife. 

1. An examination of the limited part of the transcript does not actually provide any evidentiary base for the finding that the wife’s accountant’s instructions were terminated by the wife.  Nor is it abundantly clear that no conference ultimately took place between the accountants.  What is clear, however, is that the effect of the wife having obtained a report was that the husband’s accountant’s opinion was changed and the wife succeeded in reducing the claim by the husband to amount of CGT, but she did not succeed to the extent that she had ultimately put forward to the Court, namely, that the CGT should have been in a lesser sum than ultimately found by the trial Judge.

1. It was a trial that raised several complicated issues.  The proceedings had taken place over an extended period of time.  The husband had been represented in the proceedings, the wife was self-represented.  There were several issues in dispute that required expenditure by the parties and it is very difficult to deal with costs issues in relation to discrete issues without looking at the global picture.

1. The power to award costs comes from s 117 of the Family Law Act. Section 117(1) reverses the normal position that costs follow the event by providing that in proceedings under the Act, unless the Court otherwise orders, each party bears their own costs.

1. Section 117(2) then provides a very broad discretion to the Court to make costs orders if the Court is of the opinion that there are circumstances that make it appropriate. The authorities such as Penfolds' case (1980) 5 Fam LR 579; 28 ALR 213; [1980] FLC 90-800 make it abundantly clear that this is a broad discretion in which an appellate Court should only intervene if it is clearly evident that the discretion has miscarried.

1. Speaking for myself, I am not persuaded in the circumstances of this case that the discretion has miscarried.  Even if there is some factual error or matter that cannot be supported in relation to the basis upon which her Honour indicated that she would exercise the discretion, it still appears clear to me that the costs that ultimately led to the pool of assets being fixed in the sum that they were fixed were part and parcel of the normal rough and tumble, if I can use that expression loosely, of the litigation.  It was necessary to ascertain the value of the assets, and that would of itself require parties to make expenditure relating to those issues, and then for that expenditure to be absorbed as part of the general run of issues.

1. The net effect of what the wife did by expending $1200 to persuade the husband's accountant to re-evaluate his figures was, of course, to increase the pool by some $50,000, of which the wife received 40 per cent, so that her position was clearly made much more advantageous as a result of the evidence that she was able to lead or at least challenge.  It seems to me that the money spent on her own accountant was money well spent.

1. I am not persuaded in the circumstances of the case that there are circumstances which would make it appropriate for this Court to interfere with the broad discretion of the trial Judge on whether or not this particular issue made it appropriate that there should have been a costs award in favour of the wife.  I would dismiss the appeal.

HOLDEN J: 

1. Yes.  I would also dismiss the appeal for the reasons given by the presiding judge to which reasons I have nothing to add.

WARNICK J: 

1. I would also dismiss the appeal; however, for reasons differing from those of his Honour, the presiding judge, and Holden J. 

1. Before I give the reason upon which I would rely I should say in case there is any confusion or might be confusion in a reader of the reasons of the Court, or the individual judges of the Court, that the tax with which the evidence of the accountants were concerned was capital gains tax.  In the reasons of the learned trial judge, wherever the full term or reference to that tax is used, namely, capital gains tax, it is obviously correctly described.  However, whenever initials are used to speak of the tax, rather than CGT the initials GST are used.  There is, to the reader of the full judgment, no doubt that there is only one tax under discussion and that is capital gains tax.

1. Having said that, I would find merit in a ground of the appeal in that I consider when the trial judge found no such conference - I interpolate - of experts took place, as the wife’s accountant’s instructions were terminated by the wife, her Honour was in error.  The evidence did not support that finding and, indeed, in my view, the transcript supports the finding that a telephone conference had taken place between the two experts.  As to whether the wife’s accountant’s instructions were terminated by the wife there is really no acceptable or admissible evidence.  The solicitor for the husband suggested that the wife had terminated the accountant's instructions, the wife disagreed, and the husband’s accountant started to say something about the matter, but was stopped. 

1. It would therefore be necessary for me and the Court if I was in the majority to re-exercise discretion.  For myself on a re-exercise of discretion I would arrive at the same decision as that arrived at by the trial judge, for reasons very similar to matters referred to by his Honour, the learned presiding judge. 

1. This was but a small issue in the midst of property proceedings in respect of which no order for costs was made. The wife gained benefit from the evidence which she gathered, and in those circumstances I would see no reason for making an order outside the provisions of subsection (1) of section 117. The end result would be as I indicated at the outset, that I too would dismiss the appeal.

KAY J: 

1. The formal order of the Court is that the appeal be dismissed.

I certify that the 22 preceding
 paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.

Elizabeth Hore
Associate