Kearney and Dreyfus (Costs)

[2011] FamCA 117

FAMILY COURT OF AUSTRALIA

KEARNEY & DREYFUS (COSTS) [2011] FamCA 117

FAMILY LAW – COSTS – Where father was wholly unsuccessful – Circumstances justify a departure from s 117(1) of the Family Law Act 1975 (Cth) – Father to pay mother’s costs in the sum of $14,000

Family Law Act 1975 (Cth), s 117

Penfold v Penfold (1980) 144 CLR 311

APPLICANT: Ms Kearney

RESPONDENT: Mr Dreyfus

FILE NUMBER: SYC 50 of 2007

DATE DELIVERED: 2 March 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ryan J

HEARING DATE: 15 February 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lloyd SC

SOLICITOR FOR THE APPLICANT: Newnhams Solicitors

SOLICITOR FOR THE RESPONDENT: Hugh J Byrne Family Lawyer

Orders

1. Mr Dreyfus (‘the applicant father”) shall pay Ms Kearney (‘the respondent mother”) costs in the sum of $14,000.00 in relation to her Application in a Case filed 20 December 2010.

2. The costs payable pursuant to the above order shall be paid by the applicant father to the respondent mother within 28 days.

IT IS NOTED that publication of this judgment under the pseudonym Kearney & Dreyfus (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 50 of 2007

Ms Kearney

Applicant

And

Mr Dreyfus

Respondent

REASONS FOR JUDGMENT

1. On 24 November 2010 I made an order that the parties’ son, B (“the child”) attend H school.

2. An application was brought by Mr Dreyfus (“the father”), who is the child’s father, for an order that the child attend K school.  Ms Kearney (“the mother”), who is the child’s mother, opposed his application and applied for an order that the child attend H school.  Self evidently, the Court’s determination was that it was in the child’s best interests for him to attend the school which had been nominated by the respondent mother.

3. On 20 December 2010 the mother filed an application in a case in which she sought costs of the proceedings on an indemnity basis.  Her professional costs calculated on an indemnity basis amounted to $28,407.50. 

4. During the costs hearing, the mother appropriately abandoned her application for indemnity costs in favour a claim for party/party costs of $14,000.00.  The father opposed the mother’s application for costs.  However, he agreed that in the event an order for costs is to be made against him, no challenge was made to the quantum sought by her.

5. An application for costs is governed by s 117 of the Family Law Act 1975 (Cth) (“the Act”). Section 117(1) sets out the general rule that subject to, inter alia, s 117(2), s 117AA and s 118, each party to proceedings shall bear his or her own costs. Neither party submitted s 117AA or s 118 was relevant. Section 117(2) requires a finding of justifying circumstances as an essential preliminary to the making of an order for costs (Penfold v Penfold (1980) 144 CLR 311).

6. Considerable reliance was placed by senior counsel for the mother upon the fact the father was wholly unsuccessful. As I understood the submission, it is this factor which establishes the s 117(2) circumstances that justify the making of a costs order in favour of the mother. I agree. To determine what order, if any, should be made as a consequence of my findings pursuant to s 117(2), I am required to consider those matters set out in s 117(2A)(a) – (g) insofar as they are relevant.

7. Sub-section (a) is concerned with the parties’ financial circumstances.  Each of the parties filed a Financial Statement which was relied upon in the substantive hearing.  In relation to the mother’s financial circumstances I determined she is financially secure and her net worth is significant. 

8. The father’s financial circumstances were discussed in paragraphs 29 and 30 of my substantive reasons.  In summary, I found the father conducts a financial planning business through a family trust.  Although he has few assets in his name, the trust has significant cash assets.  In his Financial Statement, the father deposed the funds held by the family trust are his, as is the income produced from his financial planning business.  I was satisfied that should the father wish it, he could arrange for the trust to distribute more than the $1,500.00 each week presently received by him which would enable him to, for example, pay child support and private school fees. 

9. Thus the father is financially secure with reasonably significant cash assets able to be accessed by him.  Nonetheless, the mother’s financial circumstances are superior and the application of the sub-section favours the father.

10. Neither party was in receipt of a grant of legal aid.

11. Submissions were made by senior counsel for the mother in relation to sub-section (c).  This relates to the conduct of the parties to the proceedings.  Essentially, the matters relied upon related to an argument the father’s case was weak and highly risky and thus are more appropriately considered under sub-section (e).

12. No submissions were made in relation to sub-section (d) and I agree it is irrelevant.

13. Sub-section (e) requires the Court to consider whether any party to the proceedings has been wholly unsuccessful.  This is the linchpin of the mother’s application for costs.  Senior counsel for the mother correctly pointed out this was a discrete issue in relation to which the Court was invited to decide between one of two options.  In other words the limited nature of the dispute inevitably meant one party would be entirely successful and the other wholly unsuccessful.  I agree.  It is clear this was not a case where each of the parties secured a degree of success: the father was wholly unsuccessful.  I agree the application of this sub-section weighs in the mother’s favour.  Because of the discrete nature of the issue it is appropriate to afford this finding significant weight.

14. Sub-section (f) is concerned with offers to settle the proceedings and the terms of any such offer.  It would appear there were none.

15. Sub-section (g) enables the Court to take into consideration such other matters as the Court considers relevant.  On the father’s behalf strong submissions were made in relation to the father’s motivation for his application and the merit of his case.  It was correctly pointed out his application sought the school outcome which the child wanted and that the child’s views in favour of K school had been given considerable weight in the Court’s decision.  In addition, it was emphasised the father had been influenced by the child’s desire to maintain an established friendship circle which was accepted by the Court as a relevant consideration.  In circumstances where the father offered to pay K school’s school fees it was submitted his case was not lacking in merit and there had been a serious issue to be tried.

16. In response, senior counsel for the mother referred to the Court’s findings in relation to the child’s views set out in paragraphs 49 and 50.  Thus, while considerable weight was placed upon the child’s views in favour of K school the Court was satisfied the child was willing to accept whatever decision, either K school or H school his parents made.  This was afforded reasonable, albeit less weight, than the child’s preference in favour of K school.  Strong submissions were made in relation to the father’s failure to pay child support or contribute to the child’s school fees incurred at the private fee paying school he had attended from whence he started school.  The father’s poor record in this regard weighed heavily against the Court’s ability to accept his commitment to pay K school fees.  The point being, although there were aspects of the father’s case which had some merit, overall, his was a weak case which, in the context of the Court being presented with a stark choice between one of two options, the father must have contemplated if unsuccessful, his lack of success would significantly weigh against his capacity to resist an application for costs by the mother.

17. I accept the submission made by the father that his application was not devoid of merit. 

18. However, clearly, the Court was satisfied the constellation of factors relevant to the child’s best interests favoured the mother’s nominated school.  Hers was the stronger case, and when the Court’s finding that the child was willing to accept either school option is taken into account, that the father decided to litigate a weaker case in relation to such a discrete issue weighs heavily in favour of the mother’s costs application.   

Conclusion

1. Notwithstanding the mother is in a financially superior position, the parties are both financially sound and the father is able to meet the mother’s costs without undue hardship.  Although the father’s case was not devoid of merit, he elected to take to trial an issue in which one party, in this case him, would be wholly unsuccessful.  The mother’s case was stronger and she proposed a school option which was acceptable, albeit not preferred, by the child.  When the totality of these findings are taken into account, on balance, I am satisfied an order for costs in the reduced sum sought by the mother is appropriate. 

2. The parties agree the father should have 28 days within which to any costs order.

3. For these reasons, I make the orders identified at the start of this judgment.

I certify that the preceding twenty one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 2 March 2011.

Associate:     

Date:              2 March 2011