Lett & Lett (No. 2)

[2007] FamCA 878

FAMILY COURT OF AUSTRALIA

LETT & LETT (No. 2) [2007] FamCA 878

FAMILY LAW – Costs

Family Law Act 1975

Applicant: Mr Lett

Respondent: Mrs Lett

File Number: MLF 184 of 2004

Date Delivered: 23 August 2007

Place Delivered: Melbourne (Orders made in Chambers)

Place Heard: Melbourne

Judgment of: Carter J

Hearing date: By way of written submissions
Husband’s submissions filed 12 June 2007
Wife’s submissions filed 22 June 2007

Representation

Solicitor for the Applicant: Caroline Counsel Family Lawyers

Solicitor for the Respondent: Hale & Wakeling

Orders

In Chambers and Upon Reading the Written Submissions

filed by the Parties

IT IS ORDERED:

1. That the wife pay the husband’s costs of and incidental to the proceedings commenced by his applications, both filed 14 May 2007.

2. In the event that the husband and the wife are unable to agree as to the quantum of the husband’s costs by 10 September 2007, such costs be assessed pursuant to Ch 19 of the Family Law Rules 2004.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Carter delivered this day will for all publication and reporting purposes be referred to as Lett & Lett.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 184 of 2004

Mr Lett

Applicant

and

Mrs Lett

Respondent

REASONS FOR JUDGMENT

(Re Costs)

(In Chambers)

1. Mr Lett (for convenience referred to as “the husband”) seeks an order for costs consequent upon Judgment delivered on 29 May 2007.  Mrs Lett (for convenience referred to as “the wife”) resists that application.

Background

1. The husband and the wife are both aged 47 years.  They were married in October 1987 and separated in 2003.  A decree nisi was granted on 27 January 2005.

2. There were three children born of the marriage.  The eldest son is 16 years of age; the middle son is now 14 years of age; and the youngest child is 11 years of age.  All three children attend L College. 

3. Proceedings commenced in this Court in 2004 and final orders were made as to financial and children’s issues by consent of the parties on 11 September 2006.

4. Pursuant to those orders the children spend time with their parents on a week about arrangement and this arrangement continues throughout holiday periods.  Further, the husband and the wife have equal shared parental responsibility for making decisions about the long-term care, welfare and development of the children and are required to consult with each other in writing in respect to any major long-term issue affecting the children.

5. Provision is made in par 8 of the orders for the circumstance in which either parent seeks to take the children on a holiday for more than one week each year out of Melbourne.  Paragraph 8(a) provides that the party seeking to take the children on such a holiday must give notice in writing to the other party as far in advance as practicable, or at the latest 10 weeks (one school term) prior to the requested holiday.  Pursuant to par 8(b) the other party “will not unreasonably withhold their consent in respect of the proposed holiday and must communicate in writing within two weeks of receipt of a written request, his or her response to the proposed holiday”.

6. The husband is a graduate of a University in the United States of America and this year marks the 25^th Anniversary of his graduation.  The husband wished to take the children to the reunion which was to take place in June this year.  The husband has remarried and his wife and their infant son were also to participate in this event.  Following the reunion the husband proposed to travel to South Carolina to visit members of his extended family as well as friends.

7. It is common ground that, following the conclusion of the litigation in this Court, the wife requested that the husband communicate with her by SMS.  He sent her an SMS on 28 December 2006 which in broad terms requested her consent and gave notice of his proposed trip with the children to the US from 5 June to 26 June 2007.  He also notified her at the time that the Heads of the Upper and Middle Schools at L College “strongly” supported the trip.  There then followed correspondence between the parties which is detailed in their respective affidavits.

8. The proposals in respect of the eldest son changed.  He was due to go with his school mates to Germany on a trip, leaving Melbourne on 23 June 2007 and returning on 13 July 2007.  The husband was originally of the view that the eldest son was not particularly interested in going to Germany however changed his proposals to accommodate this trip when he became satisfied that the eldest son’s wishes had changed.  The orders which he proposed were varied to accommodate this trip on the day of the hearing.

9. Paragraph 3 of the consent orders requires the parties to attempt to resolve any disagreement about any major long-term issue affecting the children by referring the disagreement to the Minister for the time being of L Uniting Church, B.  To my mind, the dispute between the husband and the wife was not such an issue.

10. Paragraph 13 of the consent order provided for the parties to undertake post-litigation counselling with Mr V and the parties did attend upon Mr V, at the husband’s suggestion, in an attempt to resolve this dispute.  The dispute did not resolve, although the wife has expressed the view in her affidavit that Mr V did not support the proposed trip.

11. In any event, and notwithstanding the parties’ efforts to resolve the matter, resolution did not occur, and accordingly the husband initiated the current proceedings on 14 May 2007.

12. The wife opposed the husband’s Application, her Responses being filed on 25 May 2007.  The husband’s Applications were supported by an affidavit filed 14 May 2007 and for her part the wife filed an affidavit in support of her Responses on 25 May 2007.

13. The proceedings came before me on 29 May 2007 and for reasons given at the time extemporaneously I granted the husband’s application and made orders on the same day.

14. The question of costs had been foreshadowed by both parties and I was told that the husband sought an order for costs.  I made provision in the orders I made on 29 May 2007 for the husband to file and serve an up-to-date Financial Statement together with written submissions in support of his application for costs within 14 days and for the wife to file a Financial Statement together with any written submissions in reply within a further 14 days thereafter.

15. Both parties complied with this timetable and filed the required documents, the husband doing so on 12 June 2007, with the wife’s documents being filed on 22 June 2007.

16. I have read the documents in question.  The submissions form part of the Court record and will only be referred to where necessary.

Legal Principles

1. Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides, relevantly, that subject to s 117(2) of the Act, each party to the proceedings under the Act shall bear his or her own costs. If I am of the opinion that there are circumstances that justify me in so doing, I may, subject to s 117(2A), (4) and (5) and the applicable Rules of Court, make such orders as to costs, whether by way of interlocutory order or otherwise, as I consider just. (See s 117(2).)

2. In Penfold (1980) FLC ¶ 90-800 the High Court described s 117(1) as expressing the general view, namely that each party should bear his own costs, but added that this section was not paramount to s 117(2) and must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs. The Full Court also held in Penfold that s 117(2) required a finding of justifying circumstances as an essential pre-requisite to making an order for costs under s 117(2).

3. It is clear that the Court has a wide discretion and that an applicant does not bear “any additional or special onus”.

4. In considering what order (if any) should be made under s 117(2), I am required by s 117(2A) to have regard to the matters set out in s 117(2A)(a)-(g). The factors set out in these subparagraphs do not comprise a closed list of factors, given that s 117(2A)(g) includes “such other matters as the Court thinks relevant”. Each of the various factors needs to be considered, subject to relevance, however, in Fitzgerald (as Child Representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 FamLR 123 the Full Court held at [41]:

   “[41]Nowhere in subsection (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 subsection (2A).  As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.”

5. In I and I (No. 2) (1995) FLC ¶ 92-625 the Full Court declined to follow the approach adopted by Mushin J in McDonald (1994) FLC ¶ 92-508 making it clear that there is no rule to the effect that special circumstances must be shown to justify a costs order in children’s matters.

Relevant Factors

Section 117(2A)(a) Financial Circumstances

The Husband

1. The husband is a self-employed legal practitioner and, according to his Financial Statement derives a gross income of $2,800 per week from his business.  His total personal expenditure was sworn to be $2,739 per week, including income tax estimated at $850 per week.  As I have already noted the husband has remarried and his wife earns $10,000 per week.  Again, as already noted, the three children live on a week about arrangement with both their parents.  None of the children were said to have any income.  The husband owns property valued at $1,434,178.  This includes three accounts with the National Australia Bank totalling $380,833.  He deposed to another account with B National Bank with a credit balance of $3,000 and some other modest assets.  The property noted includes his interest in his home which is said to be registered in the name of his wife.  According to his Financial Statement the husband does not have any liabilities.  He has superannuation interests with a total gross value of $134,852.

The Wife

1. In her Financial Statement the wife deposed to investment income by way of distributions from a partnership estimated at $100 per week together with dividends of $6 per week.  She has repartnered and she has disclosed in her Financial Statement that her partner, Mr H, has an average weekly income estimated at $8,000.  She also noted that Mr H paid for school fees and living expenses in an estimated amount of $4,000.  The wife deposed to income tax estimated at $1,923 per week as well as some other minor expenditure such as motor vehicle registration.  The total personal expenditure claimed by the wife was $6,004, including $4,000 per week for “all other expenditure” (Item 32 on the wife’s Financial Statement).  The wife swore that she owned property totalling $2,023,001.  This included her half share in her home valued at $900,000 as well as other real estate which she owned in various proportions.  Additionally the wife has $51,152 in her National Australia Bank Account, some modest investments with BHP Billiton, a motor vehicle, household contents and various other items of personal property.  The wife deposed to superannuation having a total gross value of $52,900.

2. The wife owes $100,000 by way of income tax assessed and unpaid for the last financial year, which was said in her Financial Statement to be due on 12 June 2007.  She also deposed to a personal loan of $100,000 and a Visa Card debt.  In all her liabilities totalled $202,560.  In Part M of her Financial Statement the wife has deposed to the sale of a number of parcels of shares, although she was not able to provide details as to the amount received for a number of those shares.

Discussion

1. The husband’s gross superannuation entitlements are more than twice than those of the wife.  The wife owns property, having a nett value of $1,820,441 after deducting the total of her liabilities.  The husband has property valued at $1,434,178, almost $400,000 less than that of the wife.

2. The husband’s income is vastly superior to that of the wife.  She does not engage in employment outside the home.

3. Both the husband and the wife have repartnered and their respective partners earn significant incomes.

4. The husband has savings in bank accounts which greatly exceed the wife’s savings.

5. Both parties would be able to pay their own legal costs, and in the wife’s case, costs ordered against her.

6. Nonetheless, the husband’s financial situation is better than that of the wife given the disparity in their income, and his savings.

Section 117(2A)(b)  Legal Aid

1. Neither party is in receipt of legal aid.

Section 117(2A)(c)  Conduct

1. The wording of s 117(2A)(c) makes it clear that the conduct of the parties is limited to conduct “in relation to the proceedings”, and without limiting the generality thereof includes 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.  In other words conduct in this context relates to a party’s conduct as a litigant.

2. Both parties have referred to this subsection in their respective submissions but to my mind the matters are best dealt with under sub-s (g).

Section 117(2A)(d)  Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court

1. This subsection is not relevant, indeed it is the case that both parties complied with their obligations pursuant to par 8 of the orders made 11 September 2006.

Section 117(2A)(e)  Whether a party has been wholly unsuccessful in the proceedings

1. The wife was wholly unsuccessful in her resistance and opposition to the husband’s application.  I note that it was submitted on behalf of the wife that the husband varied his proposed orders on the morning of the hearing in as much as they related to the eldest son.  That submission is factually correct.  However the wife’s opposition to the proposals of the husband were not limited to the eldest son and his particular circumstances, rather was it her case that none of the children should travel during school term.

Section 117(2A)(f)  Offer in writing to settle and the terms of any such offer

1. At one stage this subsection required consideration of whether either party to the proceedings had in accordance with s 117C or otherwise, made an offer in writing to the other party to settle the proceedings and the terms of any such offer.  The reference to s 117C no longer appears in the subsection.  Section 117C does not apply to proceedings for parenting orders (inter alia).

2. The husband’s written submissions point to correspondence in which the husband proposed alternatives, such as a reduction of the period of the proposed travel.  To my mind, that correspondence does not meet the definition of an offer in writing to settle the proceedings.  However I do not regard it as irrelevant and I will consider it pursuant to sub-s (g).

Section 117(2A)(g)  Such other matters as the Court considers relevant

1. In par 2 of the wife’s written submissions it was said:

   “It is significant this was a hearing conducted as an interim hearing, albeit a final decision was made.”

2. It is the case that the hearing was conducted “on the papers”.  There was no alternative, given the date of the proposed travel.  It is also the case, as was submitted, that the evidence was not tested.  The evidence did, as was also submitted, include hearsay evidence and this was the case in both parties’ material.

3. In the circumstances it is not open to me to conclude whether the wife unreasonably withheld her consent to the travel.

4. It is the case, as was submitted on behalf of the wife, that the proceedings related to a disagreement between two parents as to appropriate parenting of their children.  It also appears to be the case that these parties would benefit from long-term mediation.  It also appears to be the case that the orders which were made with the consent of the parties on 11 September 2006 attempted to institute methods which could be used to mediate on-going issues in relation to the children and to reduce, if not prevent, future litigation.

5. The penultimate paragraph on p 3 of the wife’s submissions is as follows:

   “It is respectfully submitted that what is needed in this case is an end to on-going disputes between the parties and a greater focus on the needs of the children.  Perhaps this could be better achieved by prior consultation and discussion rather than simply advising what is intended, going through the process, and litigating.”   (My emphasis.)

6. The last sentence of this paragraph appears to be critical of the husband and the manner in which he acted prior to the proceedings being instituted.  If that is the case I do not accept this submission.  If I am wrong in my understanding of the way this was raised, it matters not, because the matters which I will now turn to discuss have relevance in any event.  Put simply, it is my view that the husband attempted to compromise and assuage the wife’s concerns but she remained obdurate in her opposition and would not countenance any proposal which was not in accordance with her own view.

7. It is appropriate in the circumstances to set out in more detail the events prior to the institution of these proceedings.

8. I have already referred to par 8 of the orders made 11 September 2006 which set out the requirements placed upon both parties in circumstances in which either parent sought to take the children on a holiday out of Melbourne for more than one week each year.  Both parties complied with their obligations under that order.

9. Whilst not being required by any order, both parties attended upon Mr V in an attempt to resolve their dispute.  That fact does credit to them both.

10. The wife’s submissions suggest that the husband did not attend upon Reverend B, the Minister at L Uniting Church.  However, the wife deposed in par 21 of her affidavit that Reverend B met separately with both the husband and the wife.  In any event, to my mind, they were not required pursuant to par 3 of the orders to attempt to resolve this dispute by referring the disagreement to him, given that par 8 related to any “major long-term issue affecting the children”.  The dispute which I was called upon to determine could not be said to be such an issue.

11. It is common ground that on 28 December 2006 the husband sent the wife an SMS which in broad terms requested her consent and gave notice of his proposed trip with the children to the US from 5 June to 26 June 2007.  He also notified her at the time that the Heads of the Upper and Middle Schools at L College “strongly” supported the trip.  I have to say I think it was sensible of the husband to approach the school given that the proposal required the children to be absent from school.  The views of their teachers would obviously be relevant to whether or not such a trip should be undertaken.

12. When the wife replied to the husband’s message she advised that the eldest son was doing Year 12 German and was registered to attend the trip at a time which conflicted with the timetable of the husband’s proposed trip.  She also advised him that she did not approve of taking the children out of school for three weeks.  So much is common ground.

13. Thereafter, the husband had further discussions with the relevant Heads of School and on 4 March 2007 forwarded letters to them requesting that they provide a letter confirming their support and encouragement of the trip.  Copies of the letter were annexed to the husband’s affidavit in Annexure “KAL1”.  Both Heads of School responded in a joint letter dated 9 March 2007 (see Annexure “KAL2” to the husband’s affidavit).  In that letter the teachers referred to the trip which had been planned to occur from 5 June until 26 June 2007 and confirmed their support for it.  The letter noted that arrangements could easily be made for the eldest son to do his exams and further that appropriate work could be provided for the younger two children if that was required.

1. On 9 March 2007, without being aware that the husband had had discussions with the children’s school teachers, the wife wrote to the husband confirming her opposition to the proposed trip.  The letter is Annexure “KAL3” to the husband’s affidavit.  In that letter the wife said that she had declined permission to alter the “access arrangements” to take all three children out of school to go on a trip to the United States of America.  She went on to say that she had no objection to travelling to the United States, but said that it could not take place during school term, particularly in the eldest son’s case.  She raised certain matters in relation to the eldest son and his attitude to school work and noted that he was scheduled to go on the class trip to Germany during the school holidays (inter alia).

2. On 24 March 2007 the husband wrote to the wife and responded to the concerns she had expressed in relation to that trip (see Annexure “KAL4” to the husband’s affidavit).  Amongst other matters in that letter the husband stated that it would be acceptable to him for the eldest son to fly directly to Germany from the United States if the eldest son decided he did wish to attend the school trip to Germany.  The husband asked the wife to reconsider her decision and if she did not do so, asked her to attend a counselling session with Mr V or another Family Counsellor of her choice to discuss the matter.  The wife subsequently agreed to this latter proposal, subject to the husband paying the cost of the session.  The husband also enclosed a copy of the letter which he had received from the school, dated 9 March 2007.

3. The wife took strong exception to the fact that the School had written the letter of 9 March 2007, noting that she did not receive a copy from the school and that discussion with her had not taken place.  She raised this matter with the Principal of L College by letter dated 26 March 2007.  Her letter is Annexure “LL1” to her affidavit.  In that letter she raised a number of matters which related to her concerns about the eldest son and said:

   “Given my firm belief and indeed my informed decision that [the eldest son], in particular, should not be taken out of school for a further three weeks, I am most distressed that the School should take the position which it has.

   As I will continue to hold this view, [the husband] will, as he has done in the past take this matter to court.  In fact he has already commenced the preliminaries.  …  The letter which [L College] has given [the husband] will now be the basis for another action …”

4. In the letter the wife also saw fit to advise the School Principal of a recent Contravention Application which had been brought by the husband, and to which I will subsequently return.  The wife requested the School Principal to “rescind” their consent to the travel and children’s absences from school.

5. The school did not do so.

6. In par 14 of the husband’s affidavit the husband set out various alternatives which he had proposed to the wife, and in particular, noted his preparedness to reduce the duration of the trip.  I note that the wife did not admit the contents of par 14 of the husband’s affidavit, which also contained other matters which I need not set out.  She did however state her view that the children would not be advantaged intellectually or physically by a one week trip to the east coast of the United States, which was one of the husband’s proposals.

7. It is common ground that the husband wrote again to the wife on 9 May 2007 seeking that she provide him with the children’s passports by 10:00am on the following day.  The letter is Annexure “KAL5” to the husband’s affidavit and on the face of it was delivered by hand.  The letter noted, amongst other things, that the children would only be able to attend the University 25^th Reunion Children’s Program during the week when they would normally be living with their father, which would require them to be absent from school on only three school days.  The husband requested the passports in order to allow the children to have the opportunity to attend the reunion and also “to avoid further litigation”.  It is also common ground that the wife did not produce the passports and did not respond to the husband’s letter.

8. The “process” which the husband went through was to my mind a genuine attempt to resolve the situation and to satisfy the wife’s concerns about the interruption, in particular, to the eldest son’s schooling.  To my mind he was conciliatory and the wife was not.

9. None of this amounts to “conduct” or “an offer in writing” within the definition of s 117(2A).  However, I do take into account that the husband was willing to compromise and offered to do so, whereas the wife made no such offer or attempt to compromise.

10. Reference was made in the submissions filed on behalf of the husband to the fact that the husband had brought a Contravention Application against the wife, which application was dismissed and which resulted in an order for costs against him.  That part of the submission concluded by saying:

    “On this occasion the husband was successful in his application and it is only fair and reasonable that costs be awarded to him.”

11. Perhaps because of this sentence it was submitted on behalf of the wife that the fact that an order for costs was made against the husband was, of itself, irrelevant, “other than to perhaps demonstrate motive and attitude”.

12. At the same time I note that the wife raised this in her letter to L College and also in her affidavit.

13. Save to note that both these parties must be perfectly aware that an order for costs may lie against an unsuccessful litigant, I place no weight upon the submissions or evidence by either party as to the earlier Contravention proceedings.

Conclusion

1. In I and I (No. 2) (supra) the Full Court held that the relevant matters in s 117(2A) “must be taken into account and balanced in order to determine whether the overall circumstances justified the making of an order for costs”.

2. I have identified the matters which are in my view relevant.  The husband enjoys a better financial situation than does the wife, and in particular has significantly greater savings.  The wife however could hardly be said to be impecunious.  If, as was submitted on her behalf, she is not able to sell assets because they are all jointly owned, she does have savings from which an order for costs could be satisfied.  In any event a disparity in financial circumstances is only one of the matters to be considered pursuant to s 117(2A).  When I balance that factor against the wife’s complete lack of success and the matters which I have considered pursuant to s 117(2A)(g) in my view there are justifying circumstances for an order for costs to be made against the wife.

Quantum of Costs

1. The husband claims costs of more than $5,000.  It was submitted on behalf of the wife that the costs did not accord with the Scale of Costs and include matters not normally included in party/party costs and indeed matters not relevant to these proceedings.  It was noted that the wife incurred costs of just over $4,000 in responding to the husband’s application.

2. An order that the husband’s costs be assessed pursuant to Ch 19 of the Rules will involve the parties in further expense and will no doubt also provide further fertile ground for their dispute to be continued. I am tempted in those circumstances to make an order that the wife pay the sum of $4,000 towards the husband’s costs, having reference to what she has been charged for her own costs. However, I cannot be certain that this would produce a result which is fair to either or both of the parties and therefore have no alternative other than, with great reluctance, to make an order that the costs be assessed unless there is agreement as to quantum.

I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carter.

Associate:     

Date:              23 August 2007