Kaimal & Kaimal (No. 2)

[2020] FamCA 1119

FAMILY COURT OF AUSTRALIA

Kaimal & Kaimal (No. 2) [2020] FamCA 1119

File number(s):

SYC602/2020

Judgment of:

ALSTERGREN CJ

Date of judgment:

24 December 2020

Catchwords:

FAMILY LAW – COSTS – Wife seeks an order that the husband pay her costs – husband seeks there be no order as to costs – consideration of s 117(2A) factors – husband ordered to pay wife’s costs in respect of three Court events – costs calculated on a party-party basis

Legislation:

Family Law Act 1975 (Cth) s 117

Family Law Rules 2004 (Cth) r 19.08, Schedule 3

Cases cited:

 Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 901

In the Marriage of I & I (No 2) (1995) 125 FLR 332; 22 Fam LR 557; [1995] FLC 92-625

In the Marriage of Kohan (1992) 112 FLR 151; 16 Fam LR 245; [1993] FLC 92-340

In the Marriage of Munday and Bowman (1997) 22 Fam LR 321; [1997] FLC 92-784

Yunghanns & Yunghanns (2000) FamCA 681; 26 Fam LR 331, [2000] FLC 93-029

Number of paragraphs:

69

Date of last submission/s:

27 November 2020

Place:

Determined on the papers

ORDERS

SYC602/2020

BETWEEN:

MS KAIMAL

Applicant

AND:

MR KAIMAL

Respondent

ORDER MADE BY:	ALSTERGREN CJ
DATE OF ORDER:	24 DECEMBER 2020

THE COURT ORDERS THAT:

(1)On or before 4:00pm on 21 January 2021 the parties are to agree upon the sum to be paid by the Respondent to the Applicant by way of costs on a party-party basis, for the appearances for the wife on the following Court dates:

(a)        14 February 2020;

(b)        1 April 2020; and

(c)        12 May 2020.

(2)In default of agreement, party-party costs are to be paid as assessed by a Registrar.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Kaimal & Kaimal has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

ALSTERGREN CJ

Introduction

1. These proceedings commenced by way of an Initiating Application filed by the wife on 30 January 2020. The wife sought to have the document signed by the parties on 30 July 2018 entitled “Financial Agreement under Section 90C” (“the Financial Agreement”) declared not binding or, in the alternative, set aside.

2. On 20 November 2020, the Court handed down judgment allowing the application. The findings of the Court were that the Financial Agreement was not binding within the meaning of s 90G of the Family Law Act 1975 (Cth) (the “Act”) due to the wife not receiving legal advice as required by subsection 90G(1)(b). It was further found that, in any event, if the Financial Agreement was binding on the parties, it should nevertheless be set aside under s 90K(1)(b) on the basis of being void for uncertainty.

3. Orders were made that the Financial Agreement be declared not binding, that the parties provide written submissions on costs within seven days, and that the issue of costs be determined on the papers without the need for further oral hearing.

4. Whether an order for costs should be made is therefore the sole issue for determination in this judgment.

   Background

5. In the Initiating Application and Response to Initiating Application, the parties originally each sought an order for indemnity costs.[1]

   [1] Initiating Application of Ms Kaimal filed 30 January 2020; Response to Initiating Application of Mr Kaimal filed 8 May 2020.

6. Pursuant to the Court orders made 20 November 2020, the parties each provided written submissions regarding costs.

7. In her written submissions, the wife seeks an order that, within 28 days of the making of the order, the husband pay the wife’s costs in the amount of $36,217. In the alternative, the wife seeks an order for costs as assessed.

8. In his written submissions, the husband seeks that there be no order for costs.

   General Principles

9. Section 117(1) of the Act sets the general principle that each party to the proceedings shall bear his or her own costs. This is subject to s 117(2), which provides that:

   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) and (5) and the applicable Rules of Court, make such order as the court may make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

10. Section 117(2A) sets out the matters to which the Court must have regard in determining what order, if any, is to be made under s117(2). These factors are:

    (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, admission of facts, production of documents and similar matters;

    (d)Whether the proceedings were necessitated by the failure of a party to the proceeding 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.

    Consideration

11. Costs orders remain at the discretion of the Court having regarding to the factors in s 117(2A). All of the s 117(2A) factors must be considered, and no one factor prevails over another.[2]

    [2] In the Marriage of I & I (No 2) (1995) FLC 92-625.

12. Section 117(2A)(b) is not relevant in these proceedings as neither party was in receipt of legal aid assistance.

13. Neither party offered any other relevant matters for the Court to consider (as per s 117(2A)(g)) nor do any other relevant matters arise in the circumstances of this case that warrant consideration. Accordingly, no weight is given to s 117(2A)(g).

14. The remaining matters in s 117(2A) require closer consideration.

    Section 117(2A)(a)

15. Section 117(2A)(a) requires that the Court have regard to the financial circumstances of each of the parties.

16. The wife submits that she earns a modest income and has had to meet repayments with respect to the Westpac loan as a result of the transfer of the Hugh St property pursuant to the Financial Agreement. The wife deposes that she is struggling to meet the repayments under the loan.[3] The husband asserts that any “sympathy” the Court may have for the financial predicament of the wife is not “properly the basis of an adverse costs order”.[4]

    [3] Costs Affidavit of Ms Kaimal filed 25 November 2020, paragraph 20.

    [4] Written Submissions of Mr Kaimal filed 26 November 2020, paragraph 6.

17. I accept the wife’s evidence that she finds herself in difficult financial circumstances. However, there is no clear evidence that the husband’s financial position is significantly better. In his filed material the husband states that he is currently unemployed and his liabilities exceed his assets.[5] The wife did not raise any evidence to the contrary other than deposing that she is “unaware of the true extent of assets and liabilities [the husband] holds today”. Accordingly, I find it difficult to place much weight on this factor.

    [5] Financial Statement affirmed by Mr Kaimal on 6 May 2020.

18. The husband filed an affidavit on 27 November 2020 annexing two documents, being the loan agreements between himself and his parents. It is unclear what purpose this affidavit intends to serve. It appears that this evidence would have been more relevant to the substantive proceedings than to the issue of costs. I accept that the husband is a party to a loan with his parents, however, this carries little weight in the assessment of his financial circumstances.

19. I am not satisfied on the evidence that the financial circumstances of the parties justify the making of a costs order.

    Section 117(2A)(c) and (d)

20. Section 117(2A)(c) of the Act requires that the Court have regard to the conduct of the parties in relation to the proceedings while s 117(2)(d) requires that the Court have regard to whether there was a failure by a party to the proceedings to comply with previous orders of the Court.

21. The wife submits that the husband’s conduct “was late, inflexible and there was a lack of courtesy in not replying to any of the offers made”, that the husband “did not make any attempt to come to a resolution of the matter”, and, even after oral evidence was concluded, he “continued to press” his case.[6]

    [6] Written submissions of Ms Kaimal dated 27 November 2020.

22. The wife further submits that the husband failed to comply with Court orders dated 14 February 2020 which required him to file documents in response to the Initiating Application by 7 March 2020. He did not do so until 8 May 2020. The husband also failed to appear in Court on 14 February 2020, which hindered the matter from progressing, and an order was made reserving the wife’s costs of that day.

23. The husband’s submissions did not address s 117(2)(c) or s 117(2)(d) in any meaningful way.

24. The wife made three offers of settlement in writing to the husband (on 28 May 2020, 22 June 2020 and 20 July 2020). The husband did not respond to any of these. Prior to these proceedings being commenced, the wife’s solicitors emailed the husband on 28 November 2019 wherein she listed the grounds on which she contended the Financial Agreement should be set aside, and invited the husband to a roundtable conference to attempt to resolve the dispute “on an amicable basis”.[7] The husband also did not respond to this email.

    [7] Costs Affidavit of Ms Kaimal filed 25 November 2020, Annexure “A1”.

25. The matter was listed for an urgent interim hearing on 14 February 2020. The wife deposes that her solicitors sent the husband three emails confirming the date and time of the hearing.[8] The husband did not attend. The wife was represented by her solicitor and Counsel. The costs incurred by the wife for that hearing were $4,250.[9]

    [8] Costs Affidavit of Ms Kaimal filed on 25 November 2020, paragraph [5].

    [9] Costs Affidavit of Ms Kaimal filed 25 November 2020, Annexure “A6”.

26. Orders were made on 14 February 2020 that the husband file a response by 7 March 2020, the matter was listed for further hearing on 1 April 2020 and costs were reserved.

27. The husband did not file a Response by the required date, and the hearing on 1 April 2020 therefore could not progress the matter any further. The costs incurred by the wife for attendance at that hearing were $440.[10] The matter was listed for mention on 12 May 2020.

    [10] Costs Affidavit of Ms Kaimal filed 25 November 2020, Annexure “A6”.

28. The husband filed a Response on 8 May 2020. The hearing on 12 May 2020 progressed the matter for final hearing.  The wife incurred costs of $490 for attendance on that occasion.[11]

    [11] Costs Affidavit of Ms Kaimal filed 25 November 2020, Annexure “A6”.

29. It is apparent that the husband took a rather ambivalent approach when this litigation commenced. While the husband was self-represented at the time the Initiating Application was filed, this does not excuse his non-attendance on 14 February 2020, or his non-compliance with the Court orders to file material in response. The husband has provided no explanation as to his lack of engagement in the proceedings at their commencement.

30. I do note, however, that once the husband obtained legal representation, he filed the required documents and participated in these Court proceedings as was required of him.

31. On balance, I find that ss 117(2)(c) and (d) carry some weight in favour of costs being awarded against the husband at least in relation to those costs incurred by reason of his inaction at the beginning of these proceedings.

    Section 117(2A)(e)

32. Section 117(2A)(e) requires that the Court have regard to whether any party has been wholly unsuccessful in these proceedings.

33. The wife submits that the husband was wholly unsuccessful in opposing her application, and that the husband had been put on notice of the issues which she intended to raise in relation to the validity and binding nature of the Financial Agreement.

34. I agree that the husband was wholly unsuccessful in obtaining the orders he sought in his Response filed on 8 May 2020. Nevertheless, although I allowed the wife’s application on two different bases, I also dismissed two of the wife’s alternative arguments. Therefore, while the wife obtained the outcome she sought, she was not strictly wholly successful.

35. Section 117(2A)(e) carries some weight in favour of a costs order.

    Section 117(2A)(f)

36. Section 117(2A)(f) requires that the Court have regard to whether either party to the proceedings has made an offer in writing to the other party to settle the proceedings and the terms of any such offer.

37. The wife has provided evidence that on 28 November 2019, her solicitors wrote to the husband stating:

    At this preliminary stage, our client would contend that the agreement should be set aside on the basis of the following

    1.[The wife] did not receive independent legal advice about the effect of the agreement on her rights and about the advantages and disadvantages of making the agreement.

    2.The agreement was obtained by fraud, through your failure to disclose assets/liabilities at the time the agreement was made.

    3.In making the financial agreement, you engaged in conduct that was, in all the circumstances unconscionable, including by way of:

    a.Domestic violence through which your client caused our client significant emotional, financial and verbal abuse.

    b.Your client causing our client to attend upon his solicitor, who then required our client to attend upon a solicitor down the road, and you then attending with our client at her solicitor’s office and standing in the lobby while she signed the agreement.

    4.The agreement is void or voidable for uncertainty in circumstances where, in the event the property is sold, the wife will not end up with the assets she is entitled to receive.

    Our client would like to resolve all issues on an amicable basis and would hope that you would approach settlement negotiations on the same basis. To that intent, we would suggest it would be appropriate for an initial round table conference to take place forthwith, together with your solicitor, in the hope of resolving all issues in dispute, and failing which our instructions are to proceed with an application to the Family Court of Australia seeking to set aside the so-called Financial Agreement and to otherwise seek appropriate orders by way of property settlement.

38. This letter is not an offer of settlement. However, it did put the husband on notice of the issues with the Financial Agreement and propose an alternative to commencing proceedings. The husband’s lack of response to this was not conducive to any negotiations.

39. The wife has also provided affidavit evidence that she made the following offers of settlement:

    (a)On 28 May 2020 the wife’s solicitors sent an email to the husband containing an offer of settlement described to be “in accordance with the principles in Calderbank v Calderbank (1975) 3 All ER 333”.[12] The email proposed the Financial Agreement is not binding, that the parties exchange disclosure and file documents in relation to property settlement, and that the parties attend mediation. The husband did not respond.

    (b)On 22 June 2020 the wife’s solicitors sent an offer of settlement to the husband’s solicitor, as he filed a Notice of Address for Service on 19 June 2020.[13] The letter again proposed the Financial Agreement be declared not binding, that the parties exchange disclosure and that they attend mediation. The letter also contained an estimate of the wife’s legal fees should the matter proceed to final hearing. The husband did not respond.

    (c)On 20 July 2020 the wife’s solicitors sent an offer of settlement in the same terms as the two previous letters stated above, and put the husband on notice that the wife would be seeking costs if she was successful at final hearing.[14] No response was received.

    [12] Costs Affidavit of Ms Kaimal filed 25 November 2020, Annexure “A3”.

    [13] Costs Affidavit of Ms Kaimal filed 25 November 2020, Annexure “A4”.

    [14] Costs Affidavit of Ms Kaimal filed 25 November 2020, Annexure “A5”.

40. The husband correctly submits that the three letters of offer of settlement sent to him by the wife do not in any way assert that the wife had not been properly advised regarding the Financial Agreement, which was, as the husband puts it, the “crucial” reason why I found the Financial Agreement non-binding.[15]

    [15] Written Submissions of Mr Kaimal filed 26 November 2020, at [5].

41. The husband also correctly submits that it was the oral evidence of Mr B at trial which was pivotal to the finding that the Financial Agreement was not binding. Mr B’s evidence was not provided on affidavit and it was during the hearing that it became evident the nature of the advice was defective. I accept that the husband was not privy to the meetings between the wife and Mr B and, on the basis of the documentary material that was before me at the commencement of the hearing, the husband would have wanted to pursue his defence rather than accept the terms of the wife’s offers of settlement, as it was arguable that the wife had obtained the required advice.

42. However, I also found on an alternative basis that the Financial Agreement was void for uncertainty. The husband’s submissions do not address this finding in any way.

43. The wife makes reference to the ground of uncertainty in her email of 28 November 2019. However, as noted this was not an offer of settlement, but an invitation to mediate.

44. The letter of offer on 22 June 2020 states:

    It is our view that there are a number of defects in the purported financial agreement, including that the application is poorly drafted and does not actually preclude an application for-property settlement by either party. Given that the agreement is fatally flawed, we would urge your client to agree to setting aside the agreement and encourage the parties to move forward in an exchange of disclosure and negotiations as to a just and equitable property settlement.

45. The letter of offer dated 20 July 2020 makes similar reference to the Financial Agreement being “fatally flawed” and “poorly drafted”.

46. While I accept that the written offers make some generic reference to the ground of uncertainty that was pursued by the wife, in my reasons delivered 20 November 2020 I stated:

    78.I am satisfied that the errors in the Financial Agreement are material, manifest and infect the entirety of the agreement as to what assets and percentage of the property pool each party was to receive. Given the inconsistencies in the terms of the Financial Agreement, it is impossible for the Court to identify the correct, intended meaning on the face of the Financial Agreement…

47. In the paragraph above, I make no reference to the fact that the Financial Agreement “does not actually preclude an application for property settlement by either party” and that “the wife will not end up with the assets she is entitled to receive”. Accordingly, I do not consider that when considering the offer of settlement, the husband was properly aware of the basis of the uncertainty ground. Rather, this became clearer in the written submissions and the helpful oral submissions of Counsel for the wife at the hearing.

1. Further, the “proposal” in each offer clearly provided that the Financial Agreement be set aside under s 90G. The proposal made no reference to s 90K as an alternative. I find that the uncertainty ground was not a matter which was brought to bear to have any weight in the offer of settlement. Rather, the wife’s offers focussed upon her primary ground under s 90G.

2. The terms of settlement presented by the wife were fair. They put the husband on clear notice of the costs that would be sought. The wife’s efforts to engage in discussions and negotiations on an amicable basis without Court proceedings is to be commended.

3. The husband had arguable reasons for believing that he could succeed in defending the wife’s application. Even after Mr B had provided oral evidence at final hearing, for the husband to concede at that point would not have made him immune from the wife seeking costs. There is no evidence of an offer made by the wife to indicate that the wife proposed such a course.

4. I have had difficulty in determining whether s 117(2)(f) weighs in favour of the exercise of the discretion to order costs in this matter.

5. I have concluded that, on balance, it does not. The state of the evidence in this matter when the offers of settlement were exchanged do not lead me to find that the husband’s rejection was unreasonable or baseless.

6. The offers of settlement in this matter do not weigh in favour of costs being awarded.

7. On the basis of the above findings, I consider that costs should be awarded in this matter only in relation to the costs incurred by the wife for the appearances on:

   (a)14 February 2020;

   (b)1 April 2020; and

   (c)12 May 2020.

8. Had the husband engaged in the proceedings from their commencement to any extent then I would consider differently. However, the appearances on the three aforementioned dates were required as a result of the husband’s inaction and unresponsiveness. The need for these appearances would arguably have been avoided or the matter would have progressed quicker if the husband had engaged.

9. I consider only the costs of the three Court appearances as being warranted in the circumstances of this matter. The preparation involved for these appearances was, in my view, preparation which would have been undertaken in the course of the matter in any event. The appearances were, however, additional. The wife’s costs affidavit indicates the sum of the costs for these appearances totals $5,180.

10. Having regard to the scale of costs in Schedule 3 of the Family Court Rules 2004 (Cth) (“the Rules”), I am not satisfied that the sum of $5,180 (as invoiced to the wife) for these appearance is just without having further evidence before me.

11. Accordingly, I will order that the husband be required to pay the wife’s costs of the appearances on 14 February 2020, 1 April 2020 and 12 May 2020 as agreed or as assessed.

    Basis on which costs are to be calculated

12. Rule 19.18 the Rules of sets out the various methods by which any costs that are ordered may be calculated. Generally, costs are calculated on a party-party basis.

13. The wife does not particularise in her written submissions on what basis she seeks the costs be calculated. However, in her Initiating Application the wife sought orders for costs on an indemnity basis.

14. I note that a party applying for costs on an indemnity basis, in accordance with rule 19.08 of the Rules, must inform the Court if the party is bound by a costs agreement in relation to those costs and the terms of that agreement. The wife has not done so.

15. In any event, the circumstances that may warrant an order for indemnity costs were set out by Holden CJ in In the Marriage of Munday and Bowman (1997) FLC 92-784 at 84-660 as follows:[16]

    (a)Where an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;

    (b)The making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;

    (c)Evidence of particular misconduct causing loss of time to the Court and to other parties;

    (d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;

    (e)An imprudent refusal of an offer to compromise.

    [16] Drawing from Sheppard J in Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225.

16. As a general rule, the Court ‘should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind’.[17] Therefore, to depart from the general principle in this matter, the Court must find that there are exceptional circumstances that justify the making of a costs order on an indemnity basis.

    [17] In the Marriage of Kohan (1993) FLC 92-340; Yunghanns & Yunghanns (2000) FLC 93-029.

17. I am not satisfied that the circumstances raised by the wife are of an ‘exceptional’ kind, as described by the case law, to justify the making of a costs order on an indemnity basis. None of the categories identified above, though not exhaustive, can be said to describe to the conduct of the husband in the case before me.

18. The most applicable is category (e) as argued by the wife. However, I do not deem the husband’s refusal to accept the wife’s offers ‘imprudent’ in circumstances where:

    (a)Both parties had appointments with separate, independent legal practitioners to obtain legal advice;

    (b)The husband was not privy to the meetings between the wife and her solicitor Mr B in relation to the Financial Agreement;

    (c)Both parties obtained a signed statement of legal advice purportedly in compliance with s 90G; and

    (d)The critical points on which this case was decided were not truly exposed until the final hearing.

19. I have also considered if, in light of the costs I have held the husband liable to pay, category (c) is enlivened. I do not consider that the husband has committed any “misconduct”. While his approach was less than satisfactory at the commencement of the proceedings, he was a self-represented litigant and while he provided no explanation I am prepared to give him the benefit of the doubt. I am not satisfied that the evidence before the Court is sufficient for me to find that his actions were intended with any malice.

20. Accordingly, the husband will be ordered to pay costs on a party-party basis.

    Conclusion

21. The circumstances of this case justify the husband paying the wife’s costs of the appearances on 14 February 2020, 1 April 2020 and 12 May 2020 on a party-party basis.

22. As noted, I am not satisfied, without evidence as to how the costs were arrived at, that the sum invoiced is just. On that basis, I urge the parties to come to an agreement on the appropriate sum or, failing agreement, the matter be referred to a Registrar to be assessed.

I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Alstergren.

Associate:

Dated: 24 December 2020