KIDD & KIDD

[2015] FamCA 529

FAMILY COURT OF AUSTRALIA

KIDD & KIDD [2015] FamCA 529

FAMILY LAW – COSTS – Application made by the husband for the wife to pay his costs of the substantive proceedings – Where the Court has concerns of the implications of such an order on the wife’s financial situation and consequently the parties’ children – Where the wife’s conduct does not amount to circumstances justifying an order for costs – Application dismissed.

Family Law Act 1975 (Cth) ss 117(1), 117(2), 117(2A)

Collins & Collins (1985) FLC 91-603
Penfold v Penfold (1980) 144 CLR 311

APPLICANT: Mr Kidd

RESPONDENT: Ms Kidd

FILE NUMBER: SYC 5925 of 2012

DATE DELIVERED: 10 July 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: Dealt with by written submissions

REPRESENTATION

FOR THE APPLICANT: Mr Campton SC and
Mr Wahhab (solicitor)

SOLICITORS FOR THE APPLICANT: York Law Family Law Specialists

FOR THE RESPONDENT: Ms Reid (solicitor)

SOLICITORS FOR THE RESPONDENT: Reid Family Lawyers

Orders

1. That the husband’s application for an order that the wife pay his costs of the substantive proceedings is dismissed.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5925 of 2012

Mr Kidd

Applicant

And

Ms Kidd

Respondent

REASONS FOR JUDGMENT

The proceedings

1. On 21 November 2014, I made orders and delivered reasons for judgment in relation to issues of property settlement, spouse maintenance, child support departure and parenting which finalised litigation between Mr Kidd (“the husband”) and Ms Kidd (“the wife”).  On 19 December 2014, the husband filed an Application in a Case seeking an order that the wife pay his costs of the proceedings.  The wife sought a dismissal of the husband’s application by way of a Response filed on 27 February 2015.  Each of the parties sought an order that the other pay his and her costs of the present application.

Approach to these proceedings

1. Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) 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.

   This general rule is subject to a discretion to award costs where the Court considers that “there are circumstances that justify it in doing so” (section 117(2)).

2. In the exercise of discretion to award costs, the Court must have regard to the matters set out in section 117(2A) which provides as follows:

   (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.

3. In Penfold v Penfold (1980) 144 CLR 311 at 315, the High Court of Australia (Stephen, Mason, Aickin and Wilson JJ) held that an order pursuant to section 117(2) “requires a finding of justifying circumstances as an essential preliminary to the making of an order”.  In Collins & Collins (1985)

   
   

   FLC 91-603 at 79877, the Full Court of the Family Court of Australia (Evatt CJ, Pawley and Barblett JJ) held that “… in deciding whether the circumstances justify an order for costs, there is a broad discretion to be exercised, having regard to the factors set out in sub-section (2A) so far as relevant.  These factors … are not to be read in a restrictive way, however, the discretion remaining a broad one”.

Consideration

1. The material filed by the parties in support of their competing applications descended into a dense level of detail and, to some extent, impeded rather than assisted my determination of the costs issue.  The wife’s affidavit and written submissions in part sought to rehash her grievances in relation to the husband and revisit issues agitated at trial.  Regrettably, the wife’s written submissions repeatedly asserted that material in the husband’s affidavit and written submissions was “false” and went so far as to use the word “misleading” in at least two instances.

2. The written submissions prepared by senior counsel for the husband and filed on 8 April 2015 were succinct and relevant to the issues which arose pursuant to section 117(2A) of the Act. Having regard to the contents and tenor of the written submissions on behalf of the wife filed on 6 May 2015, it is perhaps unsurprising that the same cannot be said of the written submissions in reply filed on behalf of the husband on 28 May 2015.

3. I decline to descend into the dense level of detail contained in the written submissions and affidavits of the parties.  A determination to award costs involves the exercise of a broad discretion, as described in Penfold (supra). It does not impose upon me an obligation to consider and make findings in relation to every submission put on behalf of each of the parties.  That exercise would consume a disproportionate amount of time.

4. As I found at paragraph 118 of the judgment, the husband’s income earning capacity is vastly superior to that of the wife.  His evidence was that he is likely to retire from his employment as a Qantas captain when he turns sixty years of age; which means that he will continue to earn a large income and significantly augment his superannuation fund for a further period of some six years.

5. In her affidavit of 27 February 2015, the wife deposed that she receives a total weekly income of $2,054 from all sources and her expenses amount to $2,341.  She retains approximately $581,000 from the net proceeds of sale of the former matrimonial home.  The wife and the three children of the marriage live in rented accommodation.

6. In his Financial Statement of 28 July 2014, the husband deposed that his gross weekly income was $7,421 and his recurring expenses amounted to $5,022 (judgment at paragraph 128).  He will also pay spouse maintenance of $500 per week until 31 December 2015.  Pursuant to my orders, the husband was to receive approximately $408,000 from the proceeds of sale of the former matrimonial home.

7. On behalf of the husband, it was submitted that there are aspects of the wife’s conduct in relation to the proceedings which warrant an order for costs in his favour.  These matters were set out in the written submissions filed on 8 April 2015.

8. It is correct, as asserted by the husband, that the wife sought orders which would see her receive the whole of the sale proceeds of the former matrimonial home from the time of filing of her Amended Initiating Application on 31 January 2014 until her counsel handed up an outline of case document on the first day of the trial.  That position, while probably optimistic and not achieved by the wife, is not of itself conduct such as to warrant an order for costs in favour of the husband.  He also failed to achieve orders in accordance with his Response or Minute of Proposed Orders.

9. The written submissions on behalf of the husband made reference also to the wife’s alleged “obdurate conduct” in relation to certain applications in the Federal Circuit Court and a misconceived attempt to seek leave to appeal out of time against orders of Judge Scarlett.  These matters are already the subject of costs orders made in favour of the husband and, accordingly, it would be inappropriate to revisit these issues for present purposes.

10. It is correct that the wife maintained her assertion that the husband deliberately reduced his income for the purposes of enhancing his position in the proceedings. The husband adduced evidence, which was ultimately unchallenged, from his superior at Qantas which provided cogent explanations for the decrease in his level of income.

11. It is also correct that the wife was wholly unsuccessful in her application for child support departure orders.  I dismissed that application and indicated that the wife should have utilised the administrative procedure available for review by recourse to the Child Support Agency.

12. The husband drew attention further to the wife’s conduct in relation to the issue of beneficial ownership of a jet ski, which was ultimately determined in his favour.  The evidence which he adduced from his brother was unchallenged at trial and I found that this brother was the beneficial owner of this asset.

13. The wife initially contended for eight so-called “add-backs” which she sought to include in the balance sheet as notional assets of the husband.  In final submissions, counsel for the wife abandoned this argument in respect to five of these amounts.  To my recollection, however, little time was devoted in the trial to these eight alleged add-backs.

14. Each of the parties relied upon offers of settlement made at various stages of the proceedings.  I do not intend to set out in detail and minutely analyse all of these offers, which appear in the written submissions.  In my view, no one offer stands out as being so close to the ultimate result as to justify an order for costs for the benefit of the husband or as a reason to determine that issue in favour of the wife.

15. Additionally, the amount held on account of the proceeds of sale of the former matrimonial home varied from time to time as withdrawals were made to pay school fees, for the purchase of a car for the wife and for the purpose of interim distributions to the parties.  The interest on these funds was used to pay the wife’s rent.  Accordingly, the various offers made by the parties related to varying sums in these bank accounts.

16. I accept that the wife could have conducted her litigation in a more measured, temperate and efficient manner.  I do not conclude, however, that her conduct was such as to amount to ‘circumstances justifying an order for costs’.

17. The husband’s application did not specify an amount which he seeks that the wife pay on account of his costs.  The written submissions prepared by his senior counsel mentioned a figure of $299,000.

18. If I were to order that the wife pay all of the husband’s costs, she would be left with liquid funds of approximately $281,000.  The wife deposed that she relies on interest generated by her funds of some $580,000 to pay her rent but there is a shortfall, which she meets by drawing on capital.  That shortfall would be increased if I were to order that the wife make a contribution to the husband’s costs.  I wonder if the husband has turned his mind to the implications of his application for the accommodation of his children.

19. I do not condone the wife’s method of conduct of the litigation, but I am concerned about the implications of an order for costs upon her financial situation and hence, for the parties’ children.  I take into account the vast disparity in the parties’ financial positions and the husband’s significantly superior capacity to re-establish himself in an economic sense.  In the exercise of my discretion, I decline to make any order for costs in favour of the husband.

20. I put the parties on notice that I do not look sympathetically upon their competing applications that the other pay his and her costs of the present proceedings.  It is well and truly time that they put an end to their quarrels and focussed on the future, rather than the past.

I certify that the preceding twenty four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 10 July 2015.

Associate:  M. Rankin

Date: 10 July 2015