Lenardi and Lenardi (No. 2)

[2011] FamCA 604

FAMILY COURT OF AUSTRALIA

LENARDI & LENARDI (NO. 2) [2011] FamCA 604

FAMILY LAW – COSTS – Between parties in relation to both parenting and property matters – s 117(2A)(a) disparity between parties’ financial circumstances –
s 117(2A)(c) conduct of both parties to the proceedings criticised – S117(2A)(e) neither party wholly unsuccessful – Costs order made against wife due to her favourable financial circumstances

Family Law Act 1975 (Cth)

Family Law Rules 2004 (Cth)

Browne & Green (2002) FLC 93-115
I and I (No. 2) (1995) FLC 92-625
Marinko, In the Marriage of (1983) FLC 91-307
McDonald and McDonald (1994) FLC 92-508
Penfold v Penfold (1980) 144 CLR 311

APPLICANT: Mr Lenardi

RESPONDENT: Ms Lenardi

FILE NUMBER: PAC 1472 of 2007

DATE DELIVERED: 3 August 2011

PLACE DELIVERED: Parramatta

PLACE HEARD: Sydney

JUDGMENT OF: Collier J

HEARING DATE: 1 July 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton

SOLICITOR FOR THE APPLICANT: McPhee Kelshaw

COUNSEL FOR THE RESPONDENT: Mr Gould

SOLICITOR FOR THE RESPONDENT: Family Law Matters

Orders

1. I discharge all and any Orders reserving issues of costs.

2. I order that the wife pay to the husband, for his costs, a sum agreed between the parties, within a time agreed between them for payment. Such agreements are to be evidenced in writing within one (1) month of the date of these Orders.

3. That in the event the parties cannot reach an agreement in accordance with paragraph (2) above, then the wife shall pay to the husband an amount equivalent to forty per cent of his costs and disbursements properly incurred in the preparation for and conduct of the substantive hearing as to the issues of parenting and property and this application for costs, but excluding any previously reserved costs, as taxed or assessed by an appropriate taxing officer or assessor, on a party/party basis.

4. That unless otherwise agreed and evidenced in writing, the sum determined to be paid by the wife to the husband shall be paid within four (4) months of the issue of the appropriate certificate of assessment. 

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lenardi & Lenardi (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 1472 of 2007

Mr Lenardi

Applicant Husband

And

Ms Lenardi

Respondent Wife

REASONS FOR JUDGMENT

1. By an Application in a Case emailed to the Court on 9 May 2011 and filed on 20 June 2011, the husband sought the following orders:

   1. That the wife pay the husband’s costs of and incidental to these proceedings.

   2. That the wife pay the husband’s costs of and incidental to this Application in a Case.

2. The wife in an Application in a Case emailed to the Court on 9 May 2011 and filed in Court on 1 July 2011, the wife sought the following orders:

   1. That the husband’s Application in a Case served 9 May 2011 be dismissed.

   2. That the husband pay the wife’s costs of and incidental to the proceedings.

   3. That in the event Order 2 is not made, that the husband pay the wife’s costs reserved in relation to the parenting proceedings.

   4. That the husband pay the wife’s costs of and incidental to this Application.

3. At the hearing of the applications, the parties refined their respective positions. The husband in his outline document then sought the following orders:

   2.1 That the wife pay the husband’s costs of and incidental to these proceedings:-

   (i) as a sum determined by the Court, or

   (ii) on a solicitor/client basis as agreed or as assessed, or

   (iii) on a party/party basis as agreed or as assessed,

   such payment pursuant to (i) above be made within fourteen (14) days of the date of such quantified order or, pursuant to (ii) or (iii) above, within fourteen (14) days of the date of such agreement or assessment.

   2.2 That the wife pay the husband’s costs of and incidental to this application for costs within fourteen (14) days of either an Order made as to quantum or within fourteen (14) days of the date of any agreement or assessment of such costs.

   2.3 That any response to an Application in a Case or Cross Application of the wife as to costs be dismissed.

   The wife provided a document setting out the orders that she then sought in these terms:

   1. That the husband’s Application in a Case served 9 May 2011 be 

   dismissed.

   2. That the husband pay the wife’s costs reserved in relation to the schooling aspect of the parenting proceedings in the sum of $13,120 as follows:

   (a) Sum of $8,250 with respect to costs reserved on 26 September    2009; and

   (b) Sum of $4,870 with respect to costs component of Final Hearing.

   3. That the husband pay the wife’s costs of and incidental to this Application.

   The wife thus no longer sought an order for her costs of the substantive hearing. She still sought that the husband’s application for costs be dismissed and she still sought orders in respect of costs which had been reserved during the protracted course of the hearing of this matter.

Brief history

1. The parties were in dispute as to parenting and property issues. The matter was intensely hard fought on all fronts. There were a number of interim hearings relating particularly to parenting issues preceding the substantive hearing.

2. I delivered one judgment as to the parenting issues on 8 December 2010. I delivered a further judgment in respect of financial issues on 11 April 2011. In my judgments, I made findings critical of both parties, but more so of the wife than of the husband.

Parties’ documents

1. The husband relied upon the following documents:

   (1)Affidavit of husband sworn 17 June 2011, filed 20 June 2011;

   (2)Affidavit of Ms CC sworn 17 June 2011, filed 20 June 2011;

   (3)Husband’s statement of financial circumstances verified by affidavit sworn 17 June 2011, filed 17 June 2011; and

   (4)Affidavit of Ms CC sworn 28 June, filed 29 June 2011. 

2. The husband also relied upon two earlier affidavits of Ms CC as to historical matters. The husband’s counsel relied upon his outline document and an aide memoire of 1 July 2011. The husband filed supplementary submissions pursuant to my Orders of the 1 July 2011.

3. The wife relied upon the following documents:

   a)Affidavit of wife sworn 17 June 2011, filed 17 June 2011; and

   b)Affidavit of wife sworn 28 June 2011, filed 29 June 2011.

4. I then heard from counsel for each of the parties. Towards the end of the hearing I raised with both counsel whether or not an order should be made restricting the parties from filing further applications without leave. I requested written submissions in this regard and have received those submissions which are the subject of a separate judgment.

The law to be applied as to costs

1. Costs in the Family Court of Australia are governed by section 117 of the Family Law Act 1975 (Cth). Section 117(1) provides that, subject to certain following sections, each party to proceedings under the Act shall bear his or her own costs. Section 117(2) provides that if the Court is of the opinion that there are circumstances that justify it doing so, it may make an order for costs. The High Court in Penfold v Penfold[1]determined that it was not necessary to establish an exceptional or special case before a costs order could be made. Their Honours found that what was required were circumstances justifying an order.

   [1] (1980) 144 CLR 311.

2. I am satisfied that there is no difference in the approach to be taken as to costs relating to children’s matters as against property matters[2].  

   [2] I and I (No. 2) (1995) FLC 92-625. The Full Court in this matter declined to follow the approach to the question of costs in parenting proceedings adopted by Mushin J in McDonald and McDonald (1994) FLC 92-508.

3. Section 117(2A) of the Act then sets out the matters the Court shall have regard to in considering what order is to be made. I set out subsection (2A) in full hereunder:

   (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.

4. I am satisfied that it is necessary for me to take into account and balance all relevant matters referred to in section 117(2A) (see I and I (No. 2) (supra)). I turn then to the subsections themselves.

5. Firstly, as to subsection (a) in relation to the financial circumstances of each of the parties, their Honours of the Full Court in Browne & Green[3] said at paragraph 20:

   An inquiry under s 117(2A)(a) where the financial circumstances of the parties may be relevant is an inquiry to enable the court to have some concept of the relative financial positions of the parties. It is not a search for minutiae nor is it to be seen as an appropriate exercise to conduct inconsequential arguments over the value of each party’s assets.

   Further, at paragraph 26 of their judgment, their Honours said:

   What the court needs to ascertain is a broad overview of the financial circumstances of the parties if it does not already have that broad overview. The costs application is not the time for conducting a wholesale examination into every aspect of the parties’ financial circumstances …

   It was sufficient, as we have already indicated that the court had a broad comparison of the parties’ financial positions available to it.

   I accept that, in considering a costs order, this is not an occasion to reassess the parties’ financial positions as they were determined at the hearing. Nonetheless, in this case, I believe it was appropriate to have some recognition of the parties’ positions having regard to the Orders for property settlement that I have made.  

   [3] (2002) FLC 93-115.

6. The husband filed a financial statement on 17 June 2011which sets out his current position in this regard. The wife, however, has not done this. Rather, in her affidavit of the 17 June 2011, in paragraphs 41, 42 and 43 of that affidavit, she sets out some information concerning her financial position. She alerts me to the fact that there have been changes in her employment and her salary has increased. She indicates that her expenses have also increased. However, I am not given any figures to support these contentions.

7. Whilst I accept what their Honours have said in Browne & Green (supra) without question, in this particular case, there is a further illustration of the wife’s attitude and approach to this litigation.

8. Whilst she had no time to make anything approaching a detailed disclosure of her own situation, the wife goes to great detail in her affidavit of 28 June 2011 at paragraphs 4.1 to 4.16 to carry out a detailed and critical assessment of the husband’s financial circumstances as disclosed in his financial statement filed 17 June 2011.

9. I am satisfied the wife could have provided far more specific information as to her own situation had she so chosen. I infer that it was her decision not to do so. I am left with some uncertainty as to the wife’s position. However, and mindful of Browne & Green (supra), I am not conducting an inquiry which will lead me to a concluded view as to the precise financial situations of the parties. I am satisfied from the material I have that the wife is in a superior position to the husband, both in respect to property and income. I accept that the wife is paying a significant amount of child support for the parties’ children. However, I am satisfied that that money is for the needs of the children and not for the husband.      

10. Further on this question of the financial situation of the parties, the husband asserts that because of the manner in which the wife has behaved and the result of the substantive property proceedings which have been, he asserts, “significantly to his detriment”, this fact should be taken into account in determining the issue of whether or not a costs order should be made.

11. I have come to the conclusion in respect of this assertion that an adjustment was made in the husband’s favour in the substantive proceedings. Thereafter, to make any order for costs that would amount to what in effect is a thinly disguised attempt for a further adjustment possible, would be unjust. Whilst the disparity in the financial positions of the parties is demonstrable, it is to be seen as a matter possibly justifying a costs order and no more.

12. I am aware that cases such as Marinko[4] establish that a disparity in income may of itself justify an order for costs. However, I am further satisfied that that does not of itself relieve me from my obligation to examine and balance all factors as required of me by the decision of I and I (No. 2) (supra).

    [4] (1983) FLC 91-307.

13. As to subsection (b), there is no issue of legal aid in these present proceedings.

14. As to subsection (c), the conduct of the parties. The husband complains that the wife in her case, whilst giving the impression of great precision and accuracy in compilation and presentation of her material, was in fact far from precise, and made it extraordinarily difficult for the husband’s lawyers to ascertain the true state of her finances. She was excessively voluminous in her written material. It will be recalled that in my judgment, I found her oral evidence in significant aspects less than accurate. In Penfold (supra), their Honours said that “(a) failure to disclose financial circumstances compelling the other party to establish the true financial position justifies an order for costs.” However, it must be recalled that I also found portions of the husband’s evidence less than satisfactory. His evidence that his parents were overseas when they had returned to Australia was a matter that caused me considerable concern. As I expressed in my judgment, I was not so concerned that the husband was endeavouring not to be completely truthful with the Court as I was when it came to the wife.

15. The volume of the wife’s material to which I made reference in my judgment was, in my view, far greater than was necessary to make out and establish her case. It was not only voluminous, it was confusing. As to the wife’s explanation as to what she had done with moneys she withdrew following separation, whilst it eventually became apparent that the amount not accounted for was less than $20,000, required great attention to detail to resolve. The husband raises, and I accept, that the wife opposed attempts by the husband to increase his time with the children; this is contrary to the wife’s assertion that the husband did not make such requests. I found that he did and that the wife refused to in any way agree or negotiate about increased time, leading to further litigation on an interim basis.

16. Having said that, it is clear that the husband was determined to achieve that which he wanted. Both parties were tenacious and unyielding.

17. There was the issue of valuation evidence. No agreement could be reached in this regard and a determination was required at some cost to each of the parties. To misquote, “what one proposes, the other opposes”. This indeed is an apt description of the parties’ apparent stance during the whole of this litigation.

18. I am not satisfied that subsection (d) dealing with failure to comply with orders has particular application.

19. I then turn to subsection (e), whether either party has been wholly unsuccessful. It is the husband’s proposition that at the very commencement of these proceedings, in the Federal Magistrates Court, he sought certain orders as to both parenting and property issues. He says that the results he subsequently obtained were in fact in accordance with those original orders he sought. Thus he says the wife was wholly unsuccessful. I do not accept this proposition.

20. Mr Campton further asserted that the husband was successful in that a number of findings that were made were contrary to the interests of the wife or critical of her. I am satisfied that “wholly unsuccessful” as it appears in subsection (e) refers to success as to the ultimate outcome of the proceedings. Even allowing that findings of the kind asserted by Mr Campton were made against the wife (and they were), I am satisfied that to have such a finding made against the other party is not to demonstrate that the party against whom the finding has been made has been wholly unsuccessful within the meaning of the subsection as I understand it.

21. “Wholly unsuccessful” is difficult to define. However, to my mind, what it means is that a party has completely failed to attain what he or she sought by way of substantive relief.

22. As in this case, the result most commonly reached by judgment falls somewhere between the positions taken by the parties in the presentation of their cases as to parenting and property issues.

23. An illustration in this case could be made by reference to other applications made by each of the parties. The wife sought an order for departure from a child support assessment. This application was dismissed. In this respect, the wife was wholly unsuccessful.

24. Similarly, the husband made an application for spouse maintenance. That application was dismissed.

25. It would seem then in respect of each of those particular applications that there was a clear cut and unqualified finding. The applications were dismissed. I am satisfied that the applications in each of those cases were wholly unsuccessful. 

26. As to subsection (f), I am not satisfied that that which was sought in the original application by the husband in the Federal Magistrates Court could be considered an offer in the sense contemplated by the subsection. When the matter was before me, the position of the husband was different. Indeed, both parties sought that other than equal shared time, the children should spend 9 days with them and 5 days with the other party. As to property, this was a matter where it was ultimately only determined by my findings as to what were the assets, liabilities and resources of the parties and the manner in which a distribution was to be effected. I am not satisfied that it is open to the husband to rely on much earlier applications to assert that he had made an offer in accordance with the subsection.

27. Under subsection (g), the husband asserts that, I must have regard to the wife’s adopting a position, as he describes it, of taking every conceivable point. He refers to proportionality. He asserts the wife used her income to oppress the husband. I am satisfied that the wife was in a preferred and better position to that of the husband throughout the litigation. She had superior income, and devoted a significant part of her income to funding these proceedings.

28. However, the suggestion that she oppressed the husband is, to my mind, not one that can be accepted without qualification.

29. It must be remembered that many of the interlocutory applications were bought by the husband. He says that this was because the wife would not deal with him in a sensible and proper manner. Even allowing that to be so, it was his choice to bring the litigation on.

1. I do accept that the wife produced voluminous material that certainly caused the husband to incur expense in dealing with it.

2. There are also issues of reserved costs. Those costs were reserved to the hearing and it was my clear, if poorly expressed, intention that the financial orders that I made would bring to an end all financial issues between the parties including that of reserved costs. Accordingly, and so there is no further difficulty in this regard, I propose to order that all outstanding reservations of costs are dismissed and discharged.

3. If I am to make an order for costs, Rule 19.18 of the Family Law Rules 2004 (Cth) deals with the method of calculation of costs and is set out below:

   (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.

   During his submissions and in his outline document, counsel for the husband made reference to indemnity costs and indicated at various times that the behaviour of the wife might begin to attract the issue of whether costs should be ordered on an indemnity basis, however, he stopped short of doing this. Accordingly, the husband does not seek any order on an indemnity basis.

Discussion      

1. There is significant discrepancy in the financial circumstances of the parties, with the wife being in the preferred position. I am concerned that the wife devoted paragraphs 4.1 to 4.16 of her affidavit of 28 June 2011 to meticulously dissecting the husband’s financial information as set out in his statement of affairs of the 17 June 2011. This, to my mind, is an example of the wife’s approach to the entirety of these proceedings. It illustrates that where it suits her she can go to the most minute and specific detail to illustrate that which she wishes to have the Court accept. However, in contrast, I find that in making a disclosure as to her own financial circumstances, the wife was at best, unhelpful.

2. This is not dissimilar to what I found the wife’s behaviour to be in the conduct of the substantive hearing. The wife was, when it suited her, meticulous, voluminous, indeed exhaustive in the material she provided. However, in relation to matters where she might have expected to have exercised at least a degree of the same care, she makes only general statements. The difference is, to my mind, marked and continuing.

3. I am satisfied that there exists a discrepancy between the financial situation of the parties which substantially favours the wife. The parties have equal shared parental responsibility and equal time with the children. Whilst I am satisfied in this case that the discrepancy in their financial situations can of itself justify an order for costs, I believe I am still required to have regard to all of the other subsections that I consider to be applicable before reaching a determination.

4. I have also made comment and, more relevantly, findings as to the conduct of the parties. I am satisfied that the conduct of the wife in relation to the hearing is more deserving of criticism than that of the husband. Having said that, the husband was also prepared to take each and every point available to him. On balance, however, I find the wife’s conduct such that it must have a consequence in respect of the determination of whether or not a costs order should be made.

5. I am not able to say, other than in the limited issues of the departure from a child support assessment application and the spouse maintenance application, that either party has been wholly unsuccessful.

6. I am satisfied that there is no offer in writing as contemplated by subsection (f).

7. As to subsection (g), I am satisfied that as I have said, an adjustment was made at hearing as required by section 79(4) of the Act. Notwithstanding the strongly mounted argument to the contrary on behalf of the husband, I find that I am unable as it were to consider the same matters so as to ground a costs order.

8. I am satisfied that, having regard to the matters I have identified, that I am justified in making an order for costs. However, I am not satisfied that it would be proper to order that the wife pay the whole of the husband’s costs. I am satisfied, as I have sought to explain, that whilst the wife has clearly been in a financially better situation and her conduct has been such that it made the proceedings both more difficult to prepare and conduct on behalf of the husband, that it is not appropriate in the circumstances that the wife should bear the whole of the husband’s costs. The husband must be recognised as having also contributed to the difficulty and complexity of this matter.

9. I have determined that in the circumstances of this case that it is appropriate that the wife should pay a sum equivalent to forty per cent of the husband’s costs of the substantive proceedings and this application.

10. I am satisfied that in all the circumstances of this case, having regard to what I have earlier said about various methods of calculation, that the costs should be calculated on a party/party basis.

11. I do propose to give the parties an opportunity to agree on an amount and method of payment. I will give them one month from the date of these Orders to do so. If agreement is not reached within that time then the costs are to be assessed and apportioned in accordance with my Orders appearing at the commencement of this judgment.

I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Collier delivered on 3 August 2011.

Associate:

Date:              3 August 2011