Kennedy and Thorne (Costs)
[2017] FamCAFC 11
•9 February 2017
FAMILY COURT OF AUSTRALIA
| KENNEDY & THORNE (COSTS) | [2017] FamCAFC 11 |
| FAMILY LAW – APPEAL – COSTS – Where the appellant seeks an order that the respondent pay the costs of the trial and of the appeal – Where the respondent seeks that there be no order as to costs – Where it is considered that the disparity in the parties’ financial circumstances coupled with the wife’s position at trial not being unreasonable militates against an order for the costs of the trial being made – Where the application for the costs of the trial is dismissed – Where it was plainly unreasonable for the respondent to reject the settlement offers in the context of the appeal – Where the respondent is to pay the costs of the deceased’s estate of and incidental to the appeal. |
| Family Law Act 1975 (Cth) - s 117 |
D & D (Costs) No 2 (2010) FLC 93-435
| APPELLANT: | The Estate of the late Mr Kennedy |
| RESPONDENT: | Ms Thorne |
| FILE NUMBER: | LEC | 206 | of | 2012 |
| APPEAL NUMBER: | NA | 24 | of | 2015 |
| DATE DELIVERED: | 9 February 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Strickland, Aldridge & Cronin JJ |
| HEARING DATE: | In chambers – by written submissions |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 4 March 2015 |
| LOWER COURT MNC: | [2015] FCCA 484 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Lethbridge SC and Ms Eldershaw |
| SOLICITOR FOR THE APPELLANT: | Jones Mitchell Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Kearney SC |
| SOLICITOR FOR THE RESPONDENT: | Somerville Laundry Lomax |
Orders
The application by the appellant for the costs of the trial be dismissed.
The respondent pay the costs of the deceased’s estate of and incidental to the appeal, such costs to be assessed in default of agreement.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Kennedy & Thorne (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 24 of 2015
File Number: LEC 206 of 2012
| The Estate of the late Mr Kennedy |
Appellant
And
| Ms Thorne |
Respondent
REASONS FOR JUDGMENT
Introduction
On 26 September 2016 this court delivered judgment and made orders allowing the appeal, dismissing the Notice of Contention, setting aside paragraphs (1), (2) and (3) of the order made on 4 March 2015, and declared that the financial agreement dated 20 November 2007 was binding on the parties. We then provided for written submissions to be filed as to the costs of the trial and of the appeal.
In relation to costs, the trustees seek orders that the wife pay the costs of the deceased’s estate of and incidental to the proceedings before the trial judge, and the costs of the estate of and incidental to the appeal. In the alternative to the latter order the trustees seek a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”).
In response, the wife seeks that there be no order as to the costs of and incidental to the proceedings before the trial judge, and in relation to the appeal seeks a costs certificate pursuant to the Costs Act.
The legislation
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) relevantly provides as follows:
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)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 to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(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 costs of the trial
The submissions made on behalf of the trustees can be summarised as follows:
(a)although it is conceded that the financial circumstances of the estate have at all times been “significantly superior” to those of the wife, financial impecuniosity is no bar to making a costs order if it is otherwise warranted;
(b)although successful at trial, the orders of this court indicate that if the law had been properly applied by the trial judge, the wife’s application would have been dismissed. Thus, the wife can be treated as being wholly unsuccessful at trial;
(c)an offer of settlement was made by the husband providing for the wife to received $20,000 more than she was entitled to under the financial agreement, but that offer was rejected by the wife;
(d)the wife was represented by senior counsel.
As to the first submission, that seems to raise s 117 (2A)(a) of the Act namely, the financial circumstances of the parties. However, the submission that the financial impecuniosity is no bar to a costs order being made is misplaced. The issue here is that the estate’s financial circumstances are so superior to the wife’s that there should be no order for costs, and not whether the wife’s impecuniosity is a bar to an order for costs.
The wife has filed an affidavit as to her financial circumstances, but the trustees in effect submit in reply that that affidavit should not be received. We agree. Our orders do not provide for affidavits to be filed, and in any event, the trustees have no ability to test the truth or otherwise of the contents of the wife’s affidavit; nor are they in a position to concede the accuracy of what is deposed to. It is enough though that there is no doubt that the financial circumstances of the estate (and of the husband at the time of the trial) are “significantly greater” than the wife’s. That factor alone adds great weight to the wife’s submission that there should be no order for costs.
In relation to the second submission, it is true that this court has found error by the trial judge in her application of the law, but in our view it was not unreasonable for the wife to take the position that she did before her Honour. For example, the relevant evidence needed to be heard and tested.
As to the offer of settlement, it follows from what we have just said that it was not unreasonable for the wife to reject the husband’s offer. We note that there was also a further offer by the husband, namely an offer made on 6 February 2015 between the conclusion of the trial and the delivery of her Honour’s judgment. Although that offer also provided for the wife to receive more than she was entitled to under the financial agreement, and it was rejected by her, again, in the circumstances it was not unreasonable for her to take that position.
With the final submission, there is no indication on what basis it is made. It could be that if the wife can afford senior counsel then her financial circumstances cannot be too bad, but that does not take anything away from the conceded significant disparity in their financial circumstances. Alternatively, it could be because the wife had senior counsel, then her position at trial should have been different, but that would be drawing too long a bow given what needed to be determined at trial, and we do not accept it.
We consider that the combination of the significant disparity in their financial circumstances, and the wife’s position at trial not being unreasonable, militates against an order for costs being made, and the general rule that each party should bear their own costs (s 117(1) of the Act) should prevail.
The costs of the appeal
The circumstances relied upon by the trustees here are once again that impecuniosity is not a bar to an order for costs, but also the fact that the wife was wholly unsuccessful in the appeal, and the offers of settlement that were made.
As to the latter, there were a number of offers, namely on 28 July 2015, 18 August 2015 and 2 October 2015 before the appeal was heard, and then on 14 December 2015 after the appeal was heard. On each of the first three occasions the trustees increased the offer, but with the last the offer was decreased because of the amount of costs incurred by the trustees to that point of time. The offers ranged between payments of $400,000 and $675,000 and each substantially exceeded the wife’s entitlements under the financial agreement and the offers of settlement made prior to the hearing. Not only did the wife reject all of the offers, she put in counter-offers and increased the amount that she sought in response to the trustees increasing their offers.
In this instance the settlement offers made by the trustees were offers that the wife should have accepted, each of them providing her with more than she ultimately achieved. Unlike the position at trial, it was plainly unreasonable for the wife to reject the offers in the context of the appeal where she was represented by senior counsel. This alone justifies an order for costs in favour of the trustees, but that result is further justified by the wife being wholly unsuccessful. Again, unlike at trial, her position was plainly unreasonable in the context of an appeal where she was represented by senior counsel.
Finally, although there is still a significant disparity in the financial circumstances of the parties, the proposition earlier relied upon by the trustees, namely that when an order for costs is otherwise justified, impecuniosity is no bar to such an order being made (D & D (Costs) No 2 (2010) FLC 93-435) applies.
Thus, there should be an order for the costs of the appeal in favour of the trustees.
I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 9 February 2017.
Associate:
Date: 9 February 2017
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