Lin and Wa and Anor (No.2)
[2018] FCCA 223
•2 February 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LIN & WA & ANOR (No.2) | [2018] FCCA 223 |
| Catchwords: FAMILY LAW – Costs – first respondent seeks costs after five day parenting and property case – second respondent seeks indemnity costs – no basis for indemnity costs – each party should pay their own costs. |
| Legislation: Family Law Act 1975, ss.117(1), 117(2A) |
| Cases cited: In theMarriage of Munday and Bowman 22 Fam LR 321 In the Marriage of Kohan and Kohan (1993) FLC 105 Other: |
| Applicant: | MS LIN |
| First Respondent: | MR WA |
| Second Respondent: | MS WA |
| File Number: | MLC 6923 of 2014 |
| Judgment of: | Judge Harland |
| Hearing date: | 13 November 2017 |
| Date of Last Submission: | 18 December 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 2 February 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Fuller |
| Solicitors for the Applicant: | Jasper Lawyers |
| The First Respondent: | Self represented |
| Solicitors for the Second Respondent: | Prudentia Legal Pty Ltd |
ORDERS
The Application in a case filed 1 September 2017 is dismissed.
The Response to the Application in a case filed 15 September 2017 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Lin & Wa & Anor (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 6923 of 2014
| MS LIN |
Applicant
And
| MR WA |
First Respondent
| MS WA |
Second Respondent
REASONS FOR JUDGMENT
The husband and the paternal grandmother in this matter are both seeking costs against the wife.
In family law matters the usual rule is that each party shall be responsible for his or her own costs[1].
[1] See: s.117(1) of the Family Law Act 1975 (Cth)
This matter came before me on 1-5 May 2017 with competing parenting and property applications between the husband, the wife, and the paternal grandmother. The parties filed written submissions with the last submission filed on 19 June 2017. Judgment was handed down on 4 August 2017.
The husband filed his application for costs against the wife on 1 September 2017 and the paternal grandmother filed a response also seeking costs against the wife on 15 September 2017.
The husband’s application came before me in a Duty List on 13 November 2017 where parties agreed to a timeline for filing written submissions.
The husband seeks costs as follows:
a)Costs in accordance with the Federal Circuit Court Rules 2001 scale fixed in the sum of $63,934.84 (including all costs from the commencement of proceedings 7 August 2014); or
b)Costs in accordance with the Federal Circuit Court Rules 2001 scale fixed in the sum of $23,084.63 (including all costs incurred from the date of the first settlement offer 22 June 2015); or
c)In the alternative, either a) or b) and the costs be taxed pursuant to rule 21.02(2)(c) and 21.11(2)(a) of the Federal Circuit Court Rules 2001.
The husband seeks the payment of these costs be made in the first instance from the first respondent’s entitlement of the trust funds held by Taussig Cherie Fildes, and if the funds are insufficient the remainder from the first respondent’s share of the Property A property.
The husband seeks costs on several grounds, including:
a)The two settlement offers made to the wife, the first solely by the husband on 22 June 2015 and the second a joint offer by the husband and the paternal grandmother on 4 May 2017 (the fourth day of the trial), with an alleged superior net result for the wife than what she received at trial;
b)The wife’s rejection of the settlement offers, particularly the offer of 22 June 2015, was unreasonable and imprudent; and
c)The wife’s conduct throughout the proceedings.
The paternal grandmother seeks costs as follows:
a)On an indemnity basis; or
b)Costs in accordance with the Federal Circuit Court Rules 2001 scale fixed in the sum of $29, 964.00; or
c)In the alternative, the costs be taxed pursuant to rule 21.02(2)(c) and 21.11(2)(a) of the Federal Circuit Court Rules 2001.
The wife seeks that each party bear their own costs. It appears the wife prepared her submissions without the assistance of a lawyer.
Paternal grandmother’s application for indemnity costs
At the Directions hearing on 13 November 2017, I raised concerns that the husband and the paternal grandmother were seeking indemnity costs in light of the findings in the judgment. The husband wisely amended the orders he sought, however the paternal grandmother has insisted on continuing to seek indemnity costs.
In the Marriage of Munday and Bowman 22 Fam LR 321 Holden CJ of the Family Court of Western Australia observed that indemnity costs should only be made in exceptional circumstances.
Exceptional circumstances may include:
a)making allegations of fraud knowing them to be false;
b)evidence of misconduct leading to loss of time to the court and other parties;
c)the fact that proceedings were commenced for an improper purpose;
d)proceedings started wilfully disregarding known facts or law;
e)making allegations which shouldn't have been made or unduly prolonging the case through groundless contentions;
f)imprudent refusal to accept an offer of compromise;
g)costs against someone in contempt.
The paternal grandmother seeks indemnity costs on the basis that “the unreasonable conduct of the wife which may be taken to reflect a pattern of an abuse of process which should not be condoned by this court”[2]. The paternal grandmother alleges the conduct of the wife and her solicitor is the ground for awarding indemnity costs. The paternal grandmother’s submissions are pefunctionary and do not engage with the case law with respect to indemnity costs. I refer to the Full Court of the Family Court in the Marriage of Kohan and Kohan (1993) FLC 92-34 and Prantage v Prantage [2013] FamCAFC 105 which also address circumstances where indemnity costs may be ordered.
[2] Submissions Ms Wa filed 27 November 2017 at [7]
She does not grapple with the fact that the usual rule is that each party pay their own costs. To depart from that and order costs in accordance with the scale of costs provided for in Schedule 1 of the Federal Circuit Court Rules is a departure from the usual position. To seek to have the Family Court’s costs scale to apply is another departure again as the costs allowed by the Family Court scale are higher than the Federal Circuit Court scale.
Her submissions do not come close to meeting the hurdle for indemnity costs and do not explain what exceptional circumstances exist to make an order for indemnity costs in this matter.
The paternal grandmother’s approach is unrealistic and unreasonable. For example, she seeks indemnity costs for the directions hearing on 17 April 2017. It is true that the wife and her lawyer did not attend, but I caused the matter to be listed due to noncompliance by the parties. The first final hearing in May 2016 was adjourned because of the husband and the paternal grandmother, and they paid the costs thrown away. What the paternal grandmother, and the husband, fail to address is how the wife’s failure to file her trial affidavit and issuing the subpoenas, which were not served in compliance with the rules, increased their costs. They may have a complaint against the wife’s lawyer, but that is a different issue and not one that is before me. The paternal grandmother is not successful with her application for indemnity costs.
Section 117(2A)
In order for the Court to make a costs order in favour of the parties there must be justifying circumstances as set out in section 117(2A) of the Family Law Act 1975. I will address each of these matters in turn.
I will now consider whether a costs order shall be made in the husband’s and/or the paternal grandmother’s favour.
(a) The financial circumstances of each of the parties to the proceedings
In the wife’s submissions she states that she is “financially drained” and that “any cost order will be very punitive on the wife and result her in hardship and struggled in funding for ongoing care of the child”. The wife is currently studying a (omitted) and states that her sole source of income is $483 per week in Government Benefits payments.
The wife further submits that her legal costs from 31 August 2014 total $282.154.11. Neither her submissions nor her affidavit filed 15 September 2017 contain a detailed summary of those costs or annexures that confirm that amount. She affirms in her financial statement filed 18 December 2017 that the $177,384.44 she received from the settlement of the Property A property and the $20,606.52 she received from the Taussig Cherie Fildes trust account, pursuant to the Final Orders made 4 August 2017, have already been spent on her legal fees and repaying family members to whom she owes money.
The wife annexes to her financial statement a trust statement from (omitted) titled “Property A Conveyancing” dated 12 December 2017 which shows $45,000 has been distributed to Mr M, her cousin, and $132,384.44 to Mr Z Wa, her father, both described as “Distribution of Mr Wa's Settlement Money”. She further annexes a Trust Ledger from Taussig Cherie Fildes which shows two transfers to Mr Z Wa of $20,311.92 and $294.60 on 1 December 2017 titled “Settlement as per Court Orders”.
The husband’s submissions do not adequately address the financial circumstances of the husband. Counsel for the husband refers to my primary judgment in this matter[3] where at [243] I state that “neither [the husband nor the wife] are working currently but both have the capacity to do so”. At the time of the final hearing, the husband said that he was studying a (omitted) online and was seeking employment in his previous field of (omitted)[4]. I have no evidence before me as to the husband’s current employment status. There is no reason why could not also be working, just as he says in his submissions the wife should be.
[3] Wa & Lin & Anor [2017] FCCA 1828
[4] Ibid at [248]
As a result of the previous judgment, the husband received $441,640 of the property pool. Although the Court does not have an exact figure, it is evident from the submissions and documents of the parties that the Property A property sold for a greater amount than the value it had been assigned at the time of trial.
The husband’s financial statement filed on 23 April 2017 indicates that, at the time, the husband’s source of income was from his share of the rent from the Property A property and $312 per week in Government Benefits. It further indicated that he had borrowed substantial sums of money from the paternal grandmother. In my primary judgment, I was not satisfied that these sums were a loan[5]. At the final hearing, the husband, as did the wife, indicated he had spent approximately $200,000 in legal fees and that his parents had paid these fees[6]. At [249] of my primary judgment I said “Both have generous parents who no doubt will continue to provide financial and other support”. However, even if the husband has paid the paternal grandmother the fees that he says he owes her, it is likely that he still retains funds from his share of the property pool, subject to what legal fees he has paid. He received a greater portion of the property than the wife. He does not give any information about his current financial circumstances. Given this I have to assume he is in a stronger financial position than the wife.
[5] Ibid at [179]
[6] Ibid at [2]
Neither the paternal grandmother’s written submissions, nor her affidavit, address her own financial circumstances. However, it was apparent at the final hearing that her financial position, unsurprisingly, is stronger than either the husband or the wife.
The husband seeks an order that the wife pay his costs from the wife’s share of the funds of the Taussig Cherie Fildes trust account and the sale of the Property A property. However, I accept the wife’s evidence that these sums have already been disbursed to the parties and that her share of the property pool has already been spent on her legal fees. Therefore, there is no source of funds for the making of a costs order. Whilst this is not a bar to making a costs order, it is a relevant factor. The husband suggests in his submissions that the wife could work and pay it off, or borrow from her parents. She cannot compel her parents to loan her the funds. This submission ignores the fact that the wife also has significant care of their daughter. What is troubling is that the wife has spent all her property entitlements in legal fees. The husband has spent most of his entitlement on legal fees.
(b) Whether any party to the proceedings is in receipt of assistance by way of legal aid
None of the parties received legal aid. Both the husband and the wife indicated at the final hearing that their parents had assisted them with their legal costs.
(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
The husband, and the paternal grandmother to a much lesser extent, devotes a significant portion of their submissions to the conduct of the wife during the proceedings. It is important to note that the purpose of a costs order is not to punish another party. It is apparent from their submissions in regards to conduct that the husband and paternal grandmother do not understand this.
Wife’s failure to file a trial affidavit
Both the husband and the paternal grandmother submit that the wife’s failure to file a trial affidavit is relevant. I note that none of the parties complied with the trial directions of Her Honour Judge Jones which required parties to file and serve a trial affidavit 28 days before the final hearing. I listed the matter for a compliance hearing on 18 April 2017 due to the noncompliance of all the parties. On this day I ordered that the parties had until 24 April 2017 to file their trial affidavit.
Counsel for the husband submits that the husband incurred costs of $11,550 for complying with the direction of 18 April 2017. His submission seems to be that as he incurred more costs than the wife because he complied with the orders, the wife should be responsible for these costs.
The paternal grandmother’s affidavit filed 14 September 2017 refers to the significant legal costs that she has also incurred complying with the Court Orders made 18 April 2017, while the wife did not comply. It is disingenuous to suggest that these costs are through the fault of the wife when none of the parties complied with the original trial directions of Judge Jones. The paternal grandmother was expected to comply with my filing directions regardless of whether or not the wife filed a trial affidavit.
Although the non-filing of the wife’s trial affidavit meant that the parties were not fully aware of the wife’s case, the person that was most prejudiced by the wife not filing a trial affidavit was the wife herself. Neither party raised that as an issue. Instead, Counsel for the husband submits if the husband had followed the wife’s action of relying on a previous affidavit he could have avoided the costs he spent complying. That option was open to him if he thought that he had a previously filed affidavit that was sufficient for the purposes of the final hearing.
The matter proceeded to trial on 1 May 2017 despite the wife’s noncompliance with filing a trial affidavit.
The wife’s failure to attend the directions hearing
I fail to see how the wife’s non-attendance at the directions hearing was prejudicial to the husband or the paternal grandmother. What their submissions fail to say is that the only reason the matter was listed was due to the noncompliance of all parties. Neither the husband nor the paternal grandmother explain how this conduct has had an impact on the costs of the parties.
The wife’s solicitor, Ziran Guo, filed an affidavit on 5 May 2017 in where he deposed that he had missed the email from the Court informing him of the directions hearing, and therefore he had not informed the wife of the hearing.
The failure to serve the subpoenas
The husband and the paternal grandmother submit that the wife filed three subpoenas on 3 April 2017 but that they were not served upon the other parties until 19 April 2017. As the date of production was 17 April 2017, Counsel for the husband submits that this was a “serious abuse of process”.
In the paternal grandmother’s affidavit filed 15 September 2017 at [12] she states “I further ask the Court to consider the fact I was not served with the wife’s request for 3 subpoenas within the time allowed to object to them been released”.
None of these subpoenas were tendered to the Court as evidence during the final hearing, and neither the husband nor the paternal grandmother addresses in their submissions how this conduct increased their costs during the proceedings. This is an example of the husband and the paternal grandmother again misconstruing the purpose of a costs order.
The wife’s lack of candour in her ex parte application
This is raised solely by the husband. There is no evidence before me as to how this affected the costs of the husband. In my primary judgment at [13] I attributed the wife’s lack of candour as an issue that affected her credibility.
The wife’s credibility during evidence at trial
I made serious credit findings against both the husband and the wife. Although the husband’s submissions attempt to suggest that the husband’s credibility issues are not relevant, they do not address how the credibility of the wife is conduct that is relevant under this subsection. As the Full Court in Prantage[7]observed, conduct by a party as a parent and their conduct as a litigant can be intertwined. One example of the husband’s conduct is his failure to disclose in his affidavit that he retained his (omitted) citizenship card.
[7] Prantage v Prantage [2013] FamCAFC 105
I do not accept the husband’s submission to the effect his conduct was not in relation to the proceedings but the wife’s was. This is an artificial distinction and an overly narrow reading of the provision. I refer to [9] and [10] of my primary judgment.
(d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
This is not applicable.
(e) Whether any party to the proceedings has been wholly unsuccessful in the proceedings
No party has been wholly unsuccessful.
(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
There were two settlement offers made to the wife, the first solely by the husband on 22 June 2015 and the second a joint offer by the husband and the paternal grandmother on 4 May 2017 (the fourth day of the trial). In submissions, Counsel for the husband compares the two settlement offers to the result of the Court’s orders. Counsel submits that pursuant to the Court’s decision the net result achieved by the wife is $253,376. However, if she accepted the first offer of settlement her net result would have been $263,091, and if she accepted the second offer of settlement her net result would have been $294, 091. Counsel further submits that although in both settlement offers included monies to be repaid to the paternal grandmother, and the husband was ultimately unsuccessful in convincing the Court that monies were advanced by the paternal grandmother as a loan, the Court should look to the net money received by the wife as the relevant consideration as to whether the result was inferior.
On the husband’s own submissions, the difference between the first settlement offer and the net result achieved by the wife is approximately $10,000. This difference is so minimal that it is not a worthwhile consideration. There is also some force in the wife’s submission that it is not as simple as comparing the monetary value of the offers when there were substantive issues at trial with respect to the nature of the husband’s interest in the kiosk as well as other issues.
As the second settlement offer came on the fourth day of a five day final hearing, it came far too late in the proceedings to significantly reduce the costs of the parties.
(g) Such other matters as the court considers relevant.
In the wife’s submissions, she submits that this matter would have originally concluded at the final hearing commencing 2 May 2016. This proceeding was adjourned due to an application filed by the husband on 31 March 2016 seeking an order for an updated family report. This was supported by the paternal grandmother and opposed by the wife. Although the wife is correct that this application did create a delay in the proceeding, Her Honour Judge Jones already awarded costs to the wife and the Independent Children’s Lawyer who was appointed at the time as a result of that adjournment.
Conclusion
I find it concerning that the husband and the paternal grandmother brought their applications for costs, given my comments at [2] of my primary judgment about the disproportionate amount of costs the parties spent on this dispute. They have now spent further costs on this application.
The submissions of the husband and the paternal grandmother focused heavily on the conduct of the wife during the proceeding. Their submissions did not adequately explain how the conduct of the wife increased the costs of the parties. Even if they had, it is evident to me that the conduct of none of the parties was exemplary in this matter and that each party contributed to the poor case management of this matter.
As I already have indicated several times, costs are not intended as a punishment. The submissions of the husband and the paternal grandmother do not make it clear that they understand this. The amount of costs all the parties have spent in these proceedings is troubling and appears to be out of proportion with the justiciable issues in this case. In this regards, I refer to Judge Brown’s comments with respect to the Best Practice Guidelines for Lawyers doing Family Law work[8] at [28 and 29] of Ackerman and Eastwood [2013] FCCA 1055.
28.Under the aegis of the Australian Government, through its Family Law Council, “Best Practice Guidelines for Lawyers Doing Family Law Work” have been prepared. The Family Law Section of the Family Law Council of Australia, the oversight body for Family Lawyers in this country, has also had input into the preparation of these guidelines.
29.These Guidelines indicate that best practice, in family law, is characterised by, amongst other things, the narrowing of the issues in dispute between parties and ensuring that costs are not unreasonably incurred by them. In respect of property matters, lawyers are encouraged to bear in mind, at all times, that it is undesirable for the legal costs involved in any case to be disproportionate to the financial position of the separating couple involved.
[8] Best Practice Guidelines for Lawyers Doing Family Law Work (second edition) prepared by the Family Law Council and Family Law Section of the Family Law Council of Australia published October 2010
Based on the reasons above, I see no evidence before me to depart from the usual rule that each party bear their own costs.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Judge Harland
Date: 2 February 2018
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