Lenova & Lenova (Costs) - [2011] FamCAFC 141

FAMILY COURT OF AUSTRALIA

LENOVA & LENOVA (COSTS)

[2011] FamCAFC 141

FAMILY LAW - APPEAL – COSTS – COSTS OF APPEAL – where the wife asserts lack of financial capacity – whether the wife should pay the husband’s costs of the appeal – relevance of offer to settle – importance of offers to settle - wife ordered to pay the husband’s costs of appeal – costs fixed at $4000.

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)
Federal Proceedings (Costs) Act 1891 (Cth)

APPELLANT:

Mr Lenova

RESPONDENT:

Mrs Lenova

FILE NUMBER:

MLC

5218

2009

APPEAL NUMBER:

SOA

2010

DATE DELIVERED:

30 June 2011

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Melbourne

JUDGMENT OF:

Bryant CJ, Coleman and Murphy JJ

HEARING DATE:

By way of written submissions

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

14 September 2010

LOWER COURT MNC:

[2010] FamCA 834

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Puckey

SOLICITOR FOR THE APPELLANT:

Taussig Cherrie Fildes

COUNSEL FOR THE RESPONDENT:

Mr Nicholson

SOLICITOR FOR THE RESPONDENT:

Schetzer Constantinou Lawyers

Orders

The respondent wife pay to the appellant husband, within 21 days of the date of this order, his costs of and incidental to this appeal, fixed in the sum of $4,000.

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: SOA 80 of 2010
File Number: MLC 5218 of 2009

Mr Lenova

Appellant

And

Mrs Lenova

Respondent/Cross-Appellant

REASONS FOR JUDGMENT

(COSTS)

On 24 May 2011 we made orders that the appeal in this matter be allowed. Consequent upon that order, we also ordered that the parties file with the Appeals Registrar within 21 days of the date of that order, any written submissions in respect of the issue of costs, together with a minute of any order sought. Each of the parties have now filed submissions in relation to that issue.
The appellant husband seeks the following orders:
1.That the wife pay the husband’s costs of and incidental to the Appeal, to be taxed in default of agreement.
2.In the alternative, that the husband be granted an Appeal Costs Fund Certificate in respect of his costs of the Appeal.
The respondent wife does not attach to the written submissions made on her behalf a minute of the orders sought by her, but those submissions indicate that she “opposes any orders for costs being made against her”.
The submissions on behalf of the husband make reference to the financial circumstances of the parties (s 117(2A)(a) Family Law Act 1975 (Cth) (“the Act”)) and refer to the fact that pursuant to a property settlement effected in 2010, the wife received an order which included a cash payment of $850,000 together with a lump sum spousal maintenance payment of $39,000 pursuant to a s 90C financial agreement entered into by the parties contemporaneously with the final orders. It is said that the wife was represented by senior counsel throughout the “substantive proceedings” and “by new solicitors and counsel on the appeal” and that “the payment of costs is clearly within the capacity of the wife.”
The wife says in response that the whole of the $850,000 was used to pay her legal fees and the $39,000 was applied “to her living expenses and further legal costs”. It is asserted that “the Wife has no other assets or financial resources of significance.” Further, it is submitted that the wife works as a “supermarket attendee” and “earns a nominal income which she applies in its entirety to her living expenses.”
The husband contends that he has been wholly successful in the proceedings (s 117(2A)(e)), a proposition not challenged by the wife.
The husband points, predominantly, to a written offer to settle the proceedings (s 117(2A)(f)). In support of that contention, reference is made to a letter from the solicitors for the appellant husband addressed to the then solicitors for the wife, dated 29 September 2010. It is submitted that:
The offer focussed upon only one aspect of the Orders appealed from, being the provisions in paragraph 1(e), the challenge to which was always destined to succeed, given the matters recorded in the Judgment and on Transcript, wherein the Trial Judge made it clear that he intended to make no such order. The entire appeal process would have been avoided if the wife had grasped the opportunity to adopt the practical solution proposed by the husband in his offer.
The letter just referred to says in that respect:
(b)paragraph 1(e) of the Orders provides that your client has “limited scope” to inspect the Leased Land, should your client seek to rely upon order 1(e) in any event (which our client disputes she is able to do, given the wording in the order);
…
[The husband] has been advised to appeal orders 1 and 5 of the Orders. His preference is to avoid further litigation, but considers he has no choice as your client appears unable to control her conduct.
The purpose of this letter is to request that your client agree to discharge, by consent, paragraph 1(e) of the Orders.
If your client is not able to provide her agreement to this proposal by 10.00 a.m. on Monday, 4 October 2010, [the husband] will confirm his instructions for us to file an appeal against the entirety of paragraph 1 and paragraph 5 of the Orders.
This is an open letter and may be relied upon by us in future Court proceedings in relation to the question of costs. (emphasis in original)
It might be seen that the offer to settle was made on the basis that the trial judge said he would not make an order and that success was destined on that ground. Nevertheless, as the letter makes clear, the husband indicated plainly that, if the appeal proceeded, he would seek to set aside other orders.
In this jurisdiction, costs do not “follow the event”; the Act prescribes, relevantly, that “subject to subsection (2) … each party to proceedings under this Act shall bear his or her own costs” (s 117(1)). As a result, a litigant, or prospective litigant, cannot rely upon a costs order following upon success in the action as a means of dissuading the other party from pursuing unmeritorious litigation or as a means of seeking to persuade the other party from pursuing litigation.
A timely offer in writing genuinely made might, then, be seen as an important part of a limited armoury available to prospective litigants seeking to avoid the costs of litigation. Conversely, where, consequent upon success in an action, a litigant can point to the making of a genuine and timely offer having been made, that offer might be seen as an important (albeit not the only) matter in the exercise of the discretion as to the ordering of costs.
That consideration must, of course, be balanced against a litigant having a limited capacity to meet a costs order, as well as any other relevant considerations. But, a limited financial capacity to meet an order can not be determinative; if it were, a party would always be able to plead impecuniosity as a means of avoiding a costs order in circumstances where pursuit of the litigation has continued in the face of a reasonable offer to cease that litigation and the incurring of its attendant costs.
Whilst regard is had to the financial circumstances of the respondent wife, she was advised by legal practitioners at each stage of the proceedings. She can, in our view, be seen to have known the risks of refusing to compromise in the face of a written offer made before the appeal was filed. That factor, together with the husband’s success in the appeal, warrants an order for costs being made in favour of the husband.
The respondent wife seeks no order pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth). Section 7 of that Act provides that an appellant may seek such a certificate in circumstances where a respondent is ordered to pay costs and the respondent “is entitled to apply to the court for a costs certificate.” The section does not refer to the respondent having made such an application. Here, the appellant applies for such a certificate only in the alternative. We are not persuaded that we should exercise our discretion pursuant to s 7(1) of that Act granting a certificate certifying as to the opinion referred to in s 7(2).
We consider it appropriate that the wife be ordered to pay the husband’s costs, but in light of her financial circumstances, would limit the amount of those costs to $4,000.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, Coleman and Murphy JJ) delivered on 30 June 2011.

Associate:

Date: 30 June 2011