Jones & Anor & Markham

[2010] FamCA 1026

FAMILY COURT OF AUSTRALIA

JONES AND ANOR & MARKHAM [2010] FamCA 1026

FAMILY LAW – COSTS – Application for costs pertaining to previous substantive property proceedings – Application for costs was not filed within 28 days pursuant to the Family Law Rules 2004, r 19.08(2)(b) – Finding that the respondent suffers no irremediable prejudice in having to address the application for costs out of time – Leave is granted pursuant to the Family Law Rules 2004, r 1.14 to bring the application for costs out of time – Costs in the Family Court are regulated by the Family Law Act 1975, s 117 which provides each party bears his or her own costs of proceedings – In substantive proceedings the respondent had brought a suit in equity against the applicants – Finding that the respondent shall pay the costs of the applicants in respect of the equity suit which he unsuccessfully prosecuted against them – Application for costs insofar as it relates to the residual matrimonial aspects of the previous substantive proceedings is dismissed – Apportionment of costs is one-third to the equity suit and two-thirds to the matrimonial proceedings

Family Law Act 1975 (Cth) s 117
Family Law Rules 2005 rr 1.14 and 19.08(2)(b)

Gallo v Dawson (1990) 93 ALR 479
Marriage of Tormsen (1993) 18 Fam LR 232
Outboard Marine Australia Pty Ltd v Byrnes [1974] 1 NSWLR 27
Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274
Maitland v Nationwide News Pty Ltd [2004] NSWCA 155

1st APPLICANT: Ms Jones

2nd APPLICANT: Ms Elder

RESPONDENT: Mr Markham

FILE NUMBER: NCC 2156 of 2007

DATE DELIVERED: 27 October 2010

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Justice Austin

HEARING DATE: 27 October 2010

REPRESENTATION

COUNSEL FOR THE 1st APPLICANT: Not Applicable

SOLICITOR FOR THE 1st APPLICANT: Mr Hill, Hills Solicitors

COUNSEL FOR THE 2nd APPLICANT: Not Applicable

SOLICTOR FOR THE 2nd APPLICANT: Mr Hill, Hills Solicitors

COUNSEL FOR THE RESPONDENT: Not Applicable

SOLICITOR FOR THE RESPONDENT: Ms Monnox, Kim Monnox & Associates

Orders

1. The respondent shall pay one third of the costs of each applicant incidental to the proceedings concluded by orders made on 9 June 2010, such costs to be in the sums agreed or assessed on a party/party basis.

IT IS NOTED that publication of this judgment under the pseudonym Jones and Anor & Markham is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: NCC 2156 of 2007

MS JONES AND MS ELDER

Applicants

And

MR MARKHAM

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

Introduction

1. These proceedings are back before the Court in relation to the issue of costs.

2. The substantive proceedings were determined by orders and reasons published on 9 June 2010. 

3. Arising out of that decision the third and fourth respondents have now made an application for costs against the applicant.  The third and fourth respondents, who are the applicants in the costs dispute (“the applicants”), are the natural children of the respondent wife to the substantive property adjustment proceedings.

4. The application for costs is resisted by the husband, who was the applicant in the substantive proceedings, and who is now the respondent to the costs application (“the respondent”).

Proposals and evidence

1. The applicants press their Application in a Case filed on 8 October 2010, in support of which they rely upon the affidavit sworn by their solicitor, Mr Warwick Hill, filed on 8 October 2010.

2. In rebuttal of the Application the respondent relies upon his Response filed on 26 October 2010, in support of which he relies upon his affidavit and Financial Statement, both of which were filed on 26 October 2010.

Leave to extend time

1. As I have already mentioned, the substantive proceedings were determined by orders made and reasons delivered on 9 June 2010. 

2. Order 11 made on that date reserved the parties’ costs for a period of 28 days.  Order 11 mirrors Rule 19.08(2)(b) of the Family Law Rules (“the Rules”).  Accordingly, the applicants’ Application in a Case seeking orders for costs against the respondent ought have been filed by 7 July 2010.  As I have already observed, the Application was not in fact filed until 8 October 2010.  Consequently, there is a preliminary issue about the grant of leave to the applicants to bring their application out of time.

3. Rule 1.14 of the Rules permits the Court to shorten or extend time as it sees fit.  Although it does not say so, that exercise of discretion must be judicious and not capricious. 

4. The exercise of the discretion to extend time has been the subject of authoritative discussion. The power to extend time should be exercised so as to do justice between the parties (Gallo v Dawson (1990) 93 ALR 479 at 480; Marriage of Tormsen (1993) 18 Fam LR 232 at 235-236). The power will normally be exercised unless the non-compliance is contumacious or the lapse of time is such that the other party has suffered irremediable prejudice (Outboard Marine Australia Pty Ltd v Byrnes [1974] 1 NSWLR 27 at 30; Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [50-58]; Maitland v Nationwide News Pty Ltd [2004] NSWCA 155 at [16-17]).

5. Having regard to the evidence and the submissions, I am not satisfied that the respondent suffers any irremediable prejudice in having to address the application for costs out of time.  His resistance of the applicants’ application for leave to bring the claim for costs out of time is essentially based on the fact that he must now meet that costs application on its merits, whereas he would not have been called upon to do so had the time imposed by Order 11 and Rule 19.08(2)(b) been strictly enforced.  In my view, that is not the type of prejudice contemplated by the authorities cited.

6. As a consequence, I grant leave to the applicants to bring their application for costs.

Costs application

1. In relation to the substantive proceedings, there were effectively ten distinct issues agitated, only three of which directly pertained to the applicants.  The applicants were joined to the substantive proceedings by the respondent specifically to agitate those three issues.  The applicants would not have participated in the proceedings as parties but for the forensic decisions of the respondent.

2. Of the three issues which directly involved the applicants, those issues were of two distinct types. The first concerned an equity suit brought by the respondent, which was to be determined by the Court as a consequence of accrued jurisdiction, and the second were proceedings pursuant to s 106B of the Family Law Act (“the Act”). 

3. It is trite to observe that costs in the Family Court are regulated by the provisions of s117 of the Act. That legislative provision ensures that ordinarily each party bears his or her own costs of the proceedings. However, it must be observed that that rule applies to proceedings under the Act. The proceedings between the applicants and the respondent in respect of the equity suit were not proceedings under the Act.

4. In respect of the equity suit, the applicants were wholly successful in their resistance of the respondent’s claim.  The respondent capitulated on that issue on the first day of trial. As was observed in the Judgment delivered on 9 June 2010:

   34.The husband initially sought to agitate an allegation that the second, third, and fourth respondents each held their individual 25% legal proprietary interests in the real property situated at [B], NSW on trust for the wife, such that the wife enjoyed a 100% equitable interest in that property. That allegation depended upon the husband’s ability to sustain his asserted equitable claims in the nature of constructive trust and unjust enrichment, which in turn depended upon the Court being seized of accrued jurisdiction to entertain those claims.

   35.Following some preliminary argument between the husband on the one hand, and the third and fourth respondents on the other, concerning the locus standi of the husband to press such equitable claims, the parties reached an agreed position. The husband abandoned his applications for Orders 13 and 14, as set out in his Amended Application filed on 16 July 2008, and the costs of the third and fourth respondents referrable to their defence of those two orders sought by the husband were reserved against the husband until the conclusion of the proceedings.

5. I have regard for the fact that ordinarily costs follow the event in relation to claims brought at common law and in equity.  I am satisfied that it is appropriate that the respondent pay the costs of the applicants, at least in respect of the equity suit which he unsuccessfully prosecuted against them.

6. The other aspect of the proceedings involving the applicants was matrimonial in nature and a costs application in respect of that aspect of the proceedings is consequently governed by the provisions of s 117 of the Act.

7. The respondent was partially successful in his claims against the applicants brought pursuant to s 106B of the Act. In respect of one of those claims a specific finding was made in the respondent’s favour to the following effect.

   125. I find on the evidence that the objective effect of the dispositions was the likely defeat of anticipated property adjustment orders of the Court.

8. That finding related to the disposition of $50,000 by the wife to each of the applicants in 2005.  Although the applicants were not ordered in the substantive proceedings to immediately repatriate those sums to the matrimonial pool of property, a default order was made requiring them and others sell a jointly owned property to ensure sufficient monies were in the matrimonial pool if the wife failed to make a cash payment to the respondent as ordered.  Although the respondent was successful on that point, his case was always stridently resisted by the applicants.

9. The respondent has adduced evidence as to his financial circumstances.  The applicants did not challenge any of the contents of the respondent’s Financial Statement.  Casual appraisal of that document reveals that the respondent’s current financial circumstances are best described as parlous.  Conversely, no evidence has been adduced by the applicants about their financial circumstances and I accept the submission made by the learned solicitor for the respondent that an inference is therefore fairly available that the applicants’ financial circumstances are superior to those of the respondent.

10. It is apparent from the affidavit filed by the applicants’ learned solicitor that one applicant made an offer to settle the case, which offer was communicated to the respondent on or about 20 January 2009 (affidavit of Mr Hill, Annex.E). That applicant offered the sum of $10,000 to the respondent. Axiomatically, the respondent failed to avail himself of that offer. However, the making of that offer is not influential in the outcome of the current costs application because the respondent’s ultimate success against both applicants under s 106B of the Act in relation to the sums of $50,000 paid to them in 2005 well exceeds the quantum of the offer made in January 2009.

11. Although I have not adverted individually to every factor prescribed as relevant by s 117(2A) of the Act, neither party addressed any factor not already mentioned, either in the evidence or submissions, and I accordingly conclude that they concede the remaining factors have no relevance to the outcome of the application.

12. As a consequence of those conclusions, it follows that it is appropriate to grant the applicants’ application in respect of the equity suit but dismiss the applicants’ application in so far as it relates to the residual matrimonial proceedings. 

13. The question therefore arises as to the proportionality of their costs as between those two aspects of the proceedings.  I accept the applicants’ submission that the appropriate apportionment is one-third to the equity suit and two-thirds to the matrimonial proceedings. 

14. That proportionality is appropriate for essentially two reasons.  Firstly, the equity suit was concluded on the first day of a three day trial.  Secondly, the equity suit constituted one of the three issues in the proceedings which directly involved the applicants.

15. For those reasons, the order I am about to announce is appropriate.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 27 October 2010.

Associate: 

Date:  27 October 2010