Lao and Lao
[2018] FamCA 492
•29 June 2018
FAMILY COURT OF AUSTRALIA
| LAO & LAO | [2018] FamCA 492 |
| FAMILY LAW – COSTS – Where application for costs made by the Applicant wife – Where the husband failed to provide full and frank disclosure in the substantive proceedings – Where the husband’s failure led to the matter being protracted and caused the wife to incur greater costs – Where the circumstances justify an order for the husband pay a portion of the wife’s legal fees – Order made for husband to pay 25 per cent of the wife’s costs as agreed or assessed. |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) r 19.18 |
| Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 Collins and Collins (1985) FLC 91-603 D & D (Costs) (No. 2) (2010) FLC 93-435 Greedy and Greedy (1982) FLC 91-250 Hawkins & Roe [2012] FamCAFC 77 Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 Kelly & Kelly(1981) 7 Fam LR 762 Lao & Lao & Anor [2017] FamCA 917 Luadaka v Luadaka (1998) FLC 92-830 Parke & the Estate of the Late A Parke (2016) FLC 93-748 Penfold v Penfold (1980) 144 CLR 311 |
| APPLICANT: | Ms A Lao |
| RESPONDENT: | Mr B Lao |
| FILE NUMBER: | PAC | 4992 | of | 2014 |
| DATE DELIVERED: | 29 June 2018 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 14 May 2018 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Diamond Conway Lawyers |
| SOLICITOR FOR THE RESPONDENT: | Saba El-Hanania Lawyers |
Orders
That the husband pay to the wife or as she may otherwise direct in writing 25 per cent of the wife’s costs on a party/party basis of and incidental to completed property proceedings being such sum as is agreed within one month from this date or, otherwise, as assessed.
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 Lao & Lao 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).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 4992 of 2014
| Ms A Lao |
Applicant
And
| Mr B Lao |
Respondent
REASONS FOR JUDGMENT
The application for determination is an Application for costs filed by the wife on 12 December 2017 following the delivery of Reasons for Judgment and final orders as to property adjustment, child maintenance and spouse maintenance on 14 November 2017.
These Reasons assume familiarity with the Reasons for Judgment delivered on 14 November 2017: Lao & Lao & Anor [2017] FamCA 917.
Orders made on 14 November 2017 were as follows:
(1) That the property of the parties as set out in the “Schedule to Orders” set out below is to be divided in the proportions 60 per cent to the wife and 40 per cent to the husband.
In order to give effect to Order (1) above:
(2) That the husband do all things necessary within two months from this date to transfer to the wife his interest in the property D Street, Suburb E being land in Folio Identifier ...
(3) That concurrently with the transfer provided for in Order 2, the wife do all things necessary to discharge the existing mortgage encumbrance secured on property D Street, Suburb E in favour of the National Australia Bank.
(4) That concurrently with the transfer provided for in Order 2, the Second Respondent Ms C Lao shall do all necessary things and sign all necessary documents to facilitate a discharge of the second mortgage registered number … presently registered over the property D Street, Suburb E being land in Folio Identifier ...
(5) That within two months from this date the wife sign all necessary documents provided to her by the husband so as to effect a transfer of her interest in the property at F Street, Suburb G, UK to the husband.
(6) That concurrently with the transfer provided for in Order (5), the husband do all things necessary to procure a discharge of the mortgage presently secured over the property at F Street, Suburb G, UK in favour of the H Bank.
(7) That within three months from this date the husband shall pay to the wife by way of further property adjustment the sum of $287,106.00.
Child Maintenance
(8) That the husband pay by way of lump sum child maintenance for the children of the marriage, J born … 2000, K born … 2001, L born … 2006 and M born … 2009, in the sum of $171,000.00 within three months from this date.
Spouse maintenance
(9) That the husband pay by way of spouse maintenance for the wife the sum of $250.00 per week for a period of 26 weeks and that such payments be made by way of a lump sum payment to the wife of $6,500.00 within three months from the date of these orders such payment to be made to the wife or as she may otherwise direct in writing.
Enforcement
(10) That the wife shall have a charge against the husband’s interest in the property at N Street, Country O to the extent of the monies or part thereof outstanding to her from time to time pursuant to Orders (7), (8) and (9) and shall be at liberty to register against the title of the property at N Street, Country O such claim, charge or encumbrance that she may be entitled at law or in equity in Country O.
(11) That in default of the husband’s compliance with Order (7), (8) or (9) or any of them above, the wife is hereby appointed Trustee for Sale of the property at N Street, Country O for the best price reasonably obtainable and the property shall vest in the wife for that purpose and the wife shall sell the property for the best price reasonably obtainable and after payment of selling costs and discharge of mortgage the net proceeds of sale shall be paid as follows:
(a) In default of the husband complying with Order (7) (Property Adjustment) a sum payable to the wife that will result in the wife receiving overall 60 per cent of the property identified in the Schedule to these orders as adjusted by reference to the net proceeds of sale of the Country O property and in accordance with the orders above.
(b) In default of the husband complying with Order (8) (Child Maintenance) of these orders, the sum of $171,000.00 payable to the wife.
(c) In default of the husband complying with Order (9) (Spouse Maintenance) of these orders, the sum of $6,500.00 payable to the wife.
(d) In payment to the wife of her reasonable legal fees incurred in Country O or otherwise in implementation of this order.
(e) In payment of the balance then remaining to the husband.
Schedule to Orders
Husband N Street, Country O $ 1,401,110.00
Husband D Street, Suburb E $ 735,000.00
Joint F Street, Suburb G, UK $ 177,856.00
Husband P Bank Account $ 150.00
Husband GG Bank Account …07 $ 4,318.00
Wife NAB account …70 $ 1,039.00
Wife NAB account …50 $ 2,376.00
Wife NAB account …84 $ 440,766.00
Wife Motor vehicle $ 18,200.00
Wife CBA account …30 $ 1,662 .00
Husband Q Bank account …07 $ 6,659.00
Husband Rental Bond $ 27,746.00
Husband Q Bank Term Deposit $ 3,108.00
Husband NAB account 1221 $ 3,000.00
$ 2,822,990.00
Liabilities
Joint Mortgage UK $ 35,636.00
Husband Mortgage Country O $ 653,457.00
Husband Mortgage Suburb E $ 350,063.00
Husband Rental Bond Country O $ 6,852.00
$ 1,046,008.00
Superannuation:
Husband MLC Wrap Super $ 101,000.00
Husband Country Q Super Fund $ 15,628.00
Husband Country O Super $ 1,500.00
Wife Country O Super $ 2,448.00
$ 120,576.00
In her Application the wife seeks an order “that the husband pay the wife’s costs of the proceedings”.
In support of her Application the wife relies upon the affidavit of her solicitor filed 12 December 2017, her written submissions in relation to costs filed 3 April 2018 and her written submissions dated 21 May 2018 in response to the husband’s written submissions.
The husband, the respondent to the wife’s costs application simply seeks an order that the wife’s application for costs be dismissed. He relied on his written submissions filed 18 May 2018.
Costs
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs.
That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2) of that section, which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.
Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They relevantly, in these proceedings, relate to the following:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party has legal aid and the terms of any grant of aid;
(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 answers, 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.
In Collins and Collins (1985) FLC 91-603 (at 79,877), the Full Court described the discretion conferred by s 117 as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way.
In Greedy and Greedy (1982) FLC 91-250 and Luadaka v Luadaka (1998) FLC 92-830, the Full Court made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.
Later the Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
17. With respect to the application of the section, in Penfold and Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a clear case".
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v. Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
(footnotes omitted)
18. The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:
… A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
The provision relating to the calculation of costs is set out in r 19.18(1) of the Family Law Rules 2004 (Cth) which state:
(1) The court may order that a party is entitled to costs:
(a) of a specific amount;
(b) as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
(c) to be calculated in accordance with the method stated in the order; or
(d) for part of the case, or part of an amount, assessed in accordance with Schedule 3.
It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162, the purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”.
In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 the Court said at [10] that the Court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.
Murphy J observed in Parke & the Estate of the Late A Parke (2016) FLC 93-748:
130. If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court”… The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”…
The wife’s submissions
The wife contends that the relevant considerations for the Court in the context of her application for costs are the financial circumstances of each of the parties (s117(2A)(a)) and the conduct of the parties in relation to the proceedings (s117(2A)(c)).
Neither party is in receipt of assistance from legal aid, there has been no failure by a party to comply with court orders, neither party has been wholly unsuccessful and there are no relevant offers of settlement and no other relevant circumstance relied upon.
It is contended on behalf of the wife that the financial circumstances of the husband more fully set out in the Reasons for Judgment of 14 November 2017 referred to above provide no bar to there being a costs order made.
The question of a party’s conduct in relation to the proceedings is at large but includes:
without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answers, questions, admissions of facts, production of documents and similar matters (s 117(2A)(c)).
The wife relies upon the Court’s findings in the Reasons for Judgment of 14 November 2017 commencing at [10] in the following terms:
The husband’s lack of disclosure
10. The wife’s evidence demonstrates great suspicion as to the husband’s financial circumstances not just after separation but during the latter period of the parties’ cohabitation.
11. There has been significant correspondence between the parties’ solicitors as to disclosure and allegations of non-disclosure by the husband: Exh “V”. In reality, there should have been no real issue from the husband’s side as the matters in dispute could well have been resolved by timely production of what were mostly bank records and other objective financial records. Regrettably, much of the disclosure happened during the husband’s oral evidence, a circumstance that unduly protracted the trial.
12. The husband finally produced his historical tax returns after the trial had commenced as he also did with his later [Q Bank] account statements for the period May 2016 to May 2017. The [Q Bank] account is where his salary is deposited. He failed to disclose before trial his [H Bank] account in the UK opened by him post separation through which he makes mortgage payments for the [UK] property.
13. The husband’s failure to make proper disclosure in a timely manner was conceded by his counsel in final submissions. Regrettably, whilst documents continued to be “discovered” during the trial and during the husband’s oral evidence, there can be no confidence that there has been full and proper disclosure by the husband. Thus his evidence at best must be treated with some circumspection.
The wife’s complaint as to the husband’s evidence and lack of financial disclosure was put before the Court in detail by her counsel in closing submissions at the trial. The complaints made were conceded by the husband’s counsel at trial.
Otherwise, it is submitted that during the proceedings the husband filed no less than five Financial Statements, none of which provided full and proper disclosure of his circumstances and all of which were fundamentally flawed due to the husband’s failure to disclose various bank accounts and other assets in each of the documents.
Yet when tested at trial in relation to his nondisclosure the husband asserted that he was unaware of his obligation or had not been asked to disclose. His response beggars belief in circumstances where there is a wealth of correspondence between the wife’s legal representatives and the husband’s legal representatives requesting full and proper disclosure.
The husband, complains the wife, only one week before final hearing in his trial affidavit filed 14 August 2017 introduced evidence as to his new partner with whom he had been living since 2016 and with whom he had a child in early August 2017. None of the husband’s previously filed documents made reference to this relationship.
The wife asserts that her costs are in the order of $153,000.00 comprising solicitor’s costs of about $96,000.00 and counsel’s fees throughout the course of the proceedings of about $57,000.00.
The wife contends that the husband should pay a sum equivalent to 25 per cent of her costs by reason of the husband’s lack of financial disclosure that:
·precluded any meaningful discussions as to settlement and the prospect of early resolution;
·caused the lengthening of the trial by about a day as a consequence of the husband being taken at length to aspects of his lack of disclosure and financial circumstances during cross-examination (see Kelly & Kelly(1981) 7 Fam LR 762 and Penfold (supra)); and
·caused additional work necessary for the preparation and conduct of a difficult financial trial marked by lack of disclosure by the husband.
The wife seeks an order that the husband pay a proportion of her costs quantified at $38,250.00 being 25 per cent of her legal fees incurred.
The husband’s submissions
The husband contends that the usual rule that each party should pay their own costs should apply and it would be, otherwise, unjust for the husband to pay his legal fees and also the wife’s legal fees or some proportion thereof.
It is contended that the husband is in no financial position to pay any order for costs, a contention that does not follow from the Reasons for Judgment of 14 November 2017 referred to above and the Court’s findings as to the financial circumstances and resources of the parties. In any event, financial impecuniosity is no bar to the making of an order for costs (D & D (Costs) (No. 2) (2010) FLC 93-435).
In the alternative, the husband contends that if there was to be an order for costs it should be only in relation to the one day the trial was protracted and thus if any order was made it should be in the sum of $9,460.00.
Regrettably, the husband’s contention does not allow for the circumstances where in the absence of financial disclosure it is contended the wife was put to additional expense and costs throughout the proceedings in endeavouring to put the husband’s real circumstances before the Court.
Discussion
In this matter there are circumstances, as discussed above, justifying a departure from the usual rule that the parties pay their own costs.
Doing the best on the information available and noting that there is no evidence from the wife as to the fee schedule basis on which she estimates her costs, it is appropriate that there be an order that the husband pay by way of contribution to the wife’s costs 25 per cent of same on a party/party basis.
An order will be made accordingly.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 29 June 2018.
Legal Associate:
Date: 29 June 2018
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