LINNANE & BRIDGE
[2015] FCCA 633
•20 March 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LINNANE & BRIDGE | [2015] FCCA 633 |
| Catchwords: FAMILY LAW – Costs – where the respondent is of inferior financial circumstances – where inferior financial circumstances should not be used as an advantage by a party – where all the circumstances justify a costs order – where justice and equity of final property orders need to be maintained. |
| Legislation: Family Law Act 1975, s.117 Federal Circuit Court Rules 2001, rr.21.02, 24.03, 24.06 and Schedule 1 |
| Black & Kellner (1992) FLC 92-287 Brown & Brown [1998] FamCA 115 Browne v Green (2002) FLC 93-115 Cachia v Hanes [1994] 179 CLR 403 Collins & Collins (1985) FLC 91-603 Goldstein & Goyle [2012] FamCAFC 149 Harris & Harris(1991) FLC 92-254 In the Marriage of Murray (1990) FLC 92-173 Kilch & Wood[2003] FamCA 629 Latoudis v Casey(1990) 170 CLR 534 Lennon & Lennon (Costs) [2012] FamCA 116 Lenova & Lenova (Costs) [2011] FamCAFC 114 Linnane & Bridge [2014] FCCA 2572 Luciano & Luciano [2000] FamCA 401 Penfold v Penfold (1980) 144 CLR 311 Pennisi v Pennisi (1997) FLC 92-774 Robinson & Higginbotham (1991) FLC 92-209 Weir & Weir (1993) FLC 92-338 |
| Applicant: | MR LINNANE |
| Respondent: | MS BRIDGE |
| File Number: | CRC 31 of 2013 |
| Judgment of: | Judge Kemp |
| Date of Last Submission: | 12 January 2015 |
| Delivered at: | Sydney |
| Delivered on: | 20 March 2015 |
REPRESENTATION
| The Applicant appeared in person |
| The Respondent appeared in person |
THE COURT ORDERS THAT:
The respondent wife pay the applicant husband costs in the sum of $10,744.00, within 6 months of the date hereof.
The matter is removed from the active pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Linnane & Bridge is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
CRC 31 of 2013
| MR LINNANE |
Applicant
And
| MS BRIDGE |
Respondent
REASONS FOR JUDGMENT
Background
The applicant husband filed an application on 7 December 2014 in which he seeks an order that the respondent wife pay his costs of the substantive proceedings in the sum of $28,894.00, being those costs calculated by reference to Schedule 1 of the Federal Circuit Court Rules 2001, although he says his total costs were in the order of $40,630.00.
On 8 December 2014, the wife was ordered to file and serve written submissions within 5 weeks.
However, on 22 December 2014 the wife sent an email to Chambers requesting an extension of time in which to file her submissions. The husband consented to this course and on 12 January 2015 orders were made extending the time for the wife to file her written submissions to 27 January 2015. On 12 January 2015, my associate sent an email to the parties stating that as requested, “the time for the wife to file and serve written submissions in response to the costs application will be extended to 27 January 2015 (given that 26 January 2015 is a public holiday)”.
Despite the wife herself requesting the extension on 12 January 2015, the wife responded by email to Chambers stating:
“I cannot cope with this, I cnanot cope with this I cannot cope with thiws I cannot cope with this I cnnot cope with this I cannot cope with this. SOMEBODY PLEASE HEAR ME PLESAE HEARE ;ME” (sic).
As at today’s date, the wife has not filed any written submissions.
On 10 November 2014, judgment (Linnane & Bridge [2014] FCCA 2572) (“the substantive judgment”) was delivered and the following final orders made:
1.By consent, the husband transfer to the wife all his right title and interest in and to the property known as Property E in the State of Queensland (“the Property E property”) by 31 March 2015.
2.Simultaneously with the transfer referred to in order 1, the parties refinance the mortgages (numbered (omitted), (omitted) and (omitted)) held jointly by the parties in relation to the Property E property into the wife’s sole name.
3.By consent, simultaneously with the transfer referred to in order 1, the wife transfer to the husband all her right title and interest in and to the property known as Property J in the State of Queensland (“the Property J property”).
4.By consent, simultaneously with the transfers referred to in orders 1 and 3, the husband refinance the debt in relation to the Property J property (loan account numbers (omitted), (omitted) and (omitted)) into his own name.
5.By consent, simultaneously with the transfer referred to in order 1, the wife transfer to the husband all her right title and interest in and to the property known as Property V in the State of Queensland (“the Property V property”).
6.By consent, simultaneously with the transfers referred to in orders 1 and 5, the husband refinance the debt in relation to the Property V property (loan account number (omitted)) into his own name.
7.By consent, simultaneously with the transfer referred to in order 1, the wife transfer to the husband all her right title and interest in and to the property known as Property K1 & K2, in the State of New South Wales (“the Property K1 & K2 property”).
8.By consent, simultaneously with the transfers referred to in orders 1 and 7, the husband refinance the debt in relation to the Property K1 & K2 property (loan account numbers (omitted) and (omitted)) into his own name.
9.By consent, in the event of non-compliance with any of orders 1 to 8 inclusive above, then in respect of the property or properties in relation to which there has been non-compliance, then that property or properties must be listed for sale within 14 days of the non-compliance with an agreed real estate agent and failing agreement with two agents one nominated by each party at a price to be agreed within 14 days of the non-compliance and failing agreement at a price to be determined by (omitted) with the cost of such valuation to be borne equally by the parties with instructions for such valuation to be given within 21 days of the non-compliance, with the legal work to be carried out by a conveyancer or solicitor of the choosing of the party intended to receive that property and to disburse the proceeds of sale in the following manner and priority:
a. payment of legal fees, agent’s commission and fees;
b. payment of any outstanding mortgage;
c. payment to the husband for any payments made by him in satisfaction of the obligations of the wife, in excess of those made pursuant to order 10 below; and
d. the balance to be paid to the party intended to receive that property as shown in orders 1 to 8 inclusive above.
10.The husband pay all outgoings in relation to the Property E property until 31 March 2015 and indemnify the wife in relation to the following items including but not limited to all mortgage payments (loans numbered (omitted), (omitted) and (omitted)), rates, insurances, taxes and outgoings including arrears relating to that property, but only for the period ending 31 March 2015.
11.By consent, the husband continue to pay all outgoings in relation to the Property J property, the Property V property and the Property K1 & K2 property and indemnify and continue to keep indemnified the wife in relation to the following items, including but not limited to all mortgage payments (loans numbered (omitted), (omitted), (omitted), (omitted), (omitted) and (omitted)), rates, insurances, taxes and outgoings including arrears relating to those properties.
12.By consent, simultaneously with the transfer referred to in order 1, the husband as a director of (business omitted) Pty Ltd (“(business omitted)”) transfer to the wife the Toyota Starlet motor vehicle registered number (omitted).
13.By consent, simultaneously with the transfer referred to in order 1, the wife resign from any position she may hold, and transfer any share or shares held in (business omitted) to the husband, which company and its assets will then become the sole asset of the husband.
14.By consent, the husband will indemnify and keep indemnified the wife in relation to any liability of any kind in relation to (business omitted).
15.By consent, the wife do all such acts and things and sign all necessary documents to transfer to the husband all of her right title and interest in the joint bank accounts with (omitted) Bank (numbered (omitted), (omitted) and the (omitted) account (omitted)) or to close those accounts and pay all proceeds to the husband or as he may direct
16.By consent, the wife send to the husband his birth certificate, citizenship certificate and his past tax returns which are presently in her possession.
17.By consent, the parties as between each other, be declared to have the sole right title and interest in:
a. Any chattels (save for 2 pieces of artwork and a water cooler in the husband’s possession to be made available for the wife’s collection), goods, furnishings, motor vehicles and other property which are, at the date of these orders, in their possession respectively; and
b. Any moneys, shares, debentures, superannuation and life insurance policies which stand in their sole name respectively at the date hereof.
18.By consent, each party release and indemnify the other from any liability held in their sole name respectively at the date of these orders.
19.By consent, the husband and the wife do all acts and things and give all consents and execute all documents and writings necessary to give effect to these orders.
20.By consent, in the event that either party refuses or neglects to execute any deed or instrument, the Registrar of the Federal Circuit Court is appointed pursuant to Section 106A of the Family Law Act (“the Act”) to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed or instrument.
21.The Court allocates:
a. As required by s.90MT(4) of the Act, a base amount of $69,290.00 to the wife out of the husband’s interest in (omitted) accumulation account number (omitted).
b. That in accordance with s.90MT(1)(a) of the Act:
i.The wife (or her administrators, executors, beneficiaries, heirs or assigns) is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulation, 2001; and
ii.The entitlement of the husband in (omitted) Super (or the entitlement of such other person who becomes entitled to receive a payment out of the husband’s superannuation interests) is correspondingly reduced by force of this order.
c. That the trustee of (omitted) (“the Trustee”) will do all such acts and things and sign all such documents as may be necessary to:
i.Calculate, in accordance with the requirements of the Act the entitlement awarded to the wife in the immediately preceding clause of this order; and
ii.Pay the entitlement whenever the Trustee makes a splittable payment from the husband’s interest in (omitted) Super.
d. That this order has effect from the operative time and the operative time is 4 business days after the Trustee is notified of the making of this order.
e. That this order binds the Trustee and its successors.
22.The husband, in addition to meeting the outgoings in relation to the Property E property pursuant to order 10 above, pay the wife by way of maintenance, the following:
a. The sum of $350.00 per week up until 31 March 2015.
b. As and from 1 April 2015, the sum of $500.00 per week up until 30 September 2015; and
c. As and from 1 October 2015, the sum of $350.00 per week up until 31 March 2016.
23.If any party seeks costs, an appropriate written application may be made within 28 days of today’s date, (supported by any documentary material) to be filed and served within that time period and a copy forwarded to my chambers. The Court will then deal with that matter by way of written submissions, unless the parties wish to be heard orally. If no such application is made within the time period specified, there will be no order as to costs.
24.The matter is, otherwise, removed from the active pending cases list.
Despite judgment in this matter being reserved on 2 October 2014, the wife filed two applications in a case on 23 October 2014 and 30 October 2014 seeking further orders in respect of spouse maintenance. The applications in a case were given a return date of 19 November 2014. As it happened, this was a date after the delivery of the final judgment. Therefore, the Court no longer had jurisdiction to hear the wife’s applications. However, on that date, the Court made the following orders with the consent of the parties:
1. By consent, orders be made in accordance with the document signed by the parties and initialled by me and placed with the papers, as follows:
1 The various applications in a case returnable on 17 November 2014 (and subsequently adjourned to 19 November 2014) filed by the wife be dismissed, including the amended application for an enforcement order and the amended application for spousal maintenance.
3.NOTE the agreement of the parties that the receipt by the wife of $2,500 from account number 10090723 on or about 15 October 2014 and the payment of $5,000 by the husband to the wife on or about 18 November 2014 are agreed to be in satisfaction of the orders for spousal maintenance in force as at before and after 10 November 2014 and it is further agreed the next payment of $350 pursuant to the order of 10 November 2014 is payable on 17 February 2015.
4.By consent and pursuant to s.79A(1A) of the Family Law Act:
A)order 21a of the final orders made on 10 November 2014 is varied by deleting “$69,290.00” from the first line thereof and inserting in lieu thereof the symbol and number “$68,290.00”.
B)The table appearing in paragraph 173 of the judgment are varied by removing the reference to and value of the Starlet Motor Vehicle from the list of property to be retained by the husband and inserting that reference into the list of property to be retained by the wife.
C)The figure $35,668 appearing at paragraphs 173 of the judgment at the top of page 63, and also at paragraph 174 and paragraph 175 is removed and replaced with the figure of $36,668
D)The figure $69,290 appearing at paragraph 175 and 176 of the judgment are deleted and the figure of $68,290 is inserted in lieu thereof.
2. Order 2 be made in accordance with the document prepared by the husband, as follows:
2.The parties are to make any application for costs of the dismissed applications by on or before 8 December 2014 and with written submissions in respect thereof to be in writing and filed and served by 8 December 2014.
The Court’s determination as to costs is based only on a study of the documents before it and the submissions of the parties. Neither party has sought to adduce oral evidence or to cross-examine the other and accordingly, there is no provision for a more extensive hearing where evidence can be tested in cross-examination and where the Court can make findings of fact, after testing credibility and truthfulness. Indeed, it appears that the wife has decided not to participate in the application presently before the Court.
The Law
The Court’s general power to award costs is found in s.86 of the Federal Circuit Court of Australia Act1999 and, in particular, pursuant to Rule 21.02 of the Federal Circuit Court Rules2001.
In relation to costs, s.117 of the Family Law Act 1975 (“the Act”) states:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(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.
(3) To avoid doubt, in proceedings in which an independent children's lawyer for a child has been appointed, the court may make an order under subsection (2) as to costs or security for costs, whether by way of interlocutory order or otherwise, to the effect that each party to the proceedings bears, in such proportion as the court considers just, the costs of the independent children's lawyer in respect of the proceedings.
(4) However, in proceedings in which an independent children's lawyer for a child has been appointed, if:
(a) a party to the proceedings has received legal aid in respect of the proceedings; or
(b) the court considers that a party to the proceedings would suffer financial hardship if the party had to bear a proportion of the costs of the independent children's lawyer;
the court must not make an order under subsection (2) against that party in relation to the costs of the independent children's lawyer.
(4A) If:
(a) under section 91B, an officer intervenes in proceedings; and
(b) the officer acts in good faith in relation to the proceedings;
the court must not, because of the intervention, make an order under subsection (2) of this section against the officer, or against an entity (including the Commonwealth or a State or Territory) by or on behalf of whom the officer was engaged or employed.
(5) In considering what order (if any) should be made under subsection (2) in proceedings in which an independent children's lawyer has been appointed, the court must disregard the fact that the independent children's lawyer is funded under a legal aid scheme or service established under a Commonwealth, State or Territory law or approved by the Attorney-General.
Section 117 of the Act was considered by the High Court of Australia in Penfold v Penfold (1980) 144 CLR 311, where it was said:
“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”.
In Latoudis v Casey(1990) 170 CLR 534, the High Court of Australia stated as follows:
“In exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings".
Section 117 of the Act, provides for a discretionary power in the Court. The Court must separately examine each of the factors set out in the section in relation to justifying a costs order. A costs order can be made on the basis of one or a combination of those factors (see Brown & Brown [1998] FamCA 115). The discretion to award costs is a broad discretion (see for example Collins & Collins (1985) FLC 91-603).
The issue of costs was outlined in Cachia v Hanes [1994] 179 CLR 403 at paragraph 98 as follows:
“Indeed, the list of matters set out in sub-s (2A) to which the Family Court is directed to have regard in making orders under s 117(2) indicates clearly that the subject-matter of the orders to be made under s 117(2) is the costs which a person may be ordered to pay another as indemnity for that other's liability for professional fees and out of pocket expenses reasonably incurred in the litigation, that is, "costs" as that expression is ordinarily understood in the law.”
Section 117(2A)(a) The financial circumstances of the party
The husband submits that the effect of the Court’s orders were that the wife received 63.5% of the total asset pool, inclusive of spouse maintenance. The husband submits that if the wife argues against a costs order on the basis of her financial circumstances, the Court should consider the decision in the matter of Lenova & Lenova (Costs) [2011] FamCAFC 114, where the Full Court of the Family Court of Australia said:
“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.”
The husband also submits that the Court should have regard to the Full Court of the Family Court of Australia’s decision in Goldstein & Goyle [2012] FamCAFC 149. In that case, the Full Court rejected the appeal by the husband that his financial circumstances were such that a costs order should not have been made against him. The husband submits that in respect of that case, the husband’s financial circumstances were “worse” than that of the wife in this case. In this regard, the husband submits that the wife will receive approximately $320,000 in equity in real property and $68,290.00 in cash, inclusive of the superannuation split, and that, by comparison, the costs sought by him are minimal. However, leaving aside the realty, the costs sought represents 42% of the wife’s cash sums.
The husband further asserts that the wife has used her inferior financial position to advance her position and has refused all reasonable offers and has taken a course designed to delay the Court process, to his financial detriment. Specifically, the husband says that the wife sought to delay proceedings in order to continue to obtain spouse maintenance payments from him. Further, he submits that the wife’s numerous delays in the completion of her (course omitted) could be seen as another way in which she has refused to contribute her own funds to her own maintenance and lifestyle.
Although the wife received 60% of the total property pool, it is useful at this point to set out, in dollar terms, exactly what the wife received:
a)Motor bike $4,500.00
b)Starlet motor vehicle $1,000.00
c)Cash in bank $818.00
d)Household contents $2,500.00
e)Disputed bank transaction $4,900.00
f)Frequent flyer points $106.00
g)Add-back legal costs $89,000.00
h)Interim property distribution $4,000.00
i)Superannuation $68,290.00
j)Property E property $450,000.00
Subject to a mortgage of - $129,691.00
TOTAL RECEIVED $495,423.00
However, in reality, the majority of the items of above property are not readily realisable so that the wife could use the funds to pay any costs ordered against her. Indeed, items 18(g) and (h) have already been expended by the wife. Further, items 18(a), (b), (d) and (f) are likely to be worth more to the wife than any other person and if sold/redeemed may not even result in the wife receiving the value as included in the balance sheet. Therefore, the Court is of the view that the only way that the wife would be able to pay any costs ordered against her would be to increase the mortgage over the Property E property (where she currently lives) or pay the monies out of her superannuation or any income earnings.
As noted in the Court’s substantive judgment (at paragraph 176):
“The property and superannuation adjustments will see the wife retain the Property E property subject to a mortgage debt totalling $129,691.00 (the instalments of which will be paid by the husband until March 2015 in any event). From an examination of the parties’ banking documents it would appear that this would expose the wife to a payment in the order of $120.00 per week. The wife does not have the current ability to meet such a payment. Mr Priestley SC [for the husband] concedes as much. The wife would have available to her $69,290.00 in the superannuation pool. This would enable her to effect a reduction in the mortgage debt to a level consistent with her potential earnings. If the wife found that she could not service her debts, the Property E property could still be sold and the wife would have an opportunity to “trade down” to more affordable accommodation be it by way of purchase or, indeed, rental.” (emphasis added)
Therefore, the Court is not satisfied that the wife could increase the mortgage over the Property E property in order to pay the costs as sought by the husband. Further, given the wife’s age and her financial circumstances, the Court is not of the view that it is appropriate to expect her to pay the costs sought by the husband out of the very limited superannuation that she has received, given the Court’s understanding that these monies could be used by the wife to reduce the debt over the Property E property, given her potential inability to make any repayments on the loan.
It is also useful to summarise the findings of the Court in the substantive judgment in this matter, particularly as to the parties respective financial circumstances, as follows:
a)The husband is approximately 43 years of age and works as a (occupation omitted), currently earning approximately $3,117.00 per week or $162,084.00 per annum.
b)The wife is close to 20 years older than the husband at 62 years of age. The wife does not currently work in paid employment and has not been in full-time employment for at least 12 years and has not been (employment omitted) since 2011. The wife is currently studying for her (qualifications omitted), however she has delayed her completion of this on a number of occasions.
c)The wife had received her superannuation in July 2013 and by the date of the hearing, these monies had all but been expended. The wife had no other income other than monies received from the husband by way of spouse maintenance. In the Court’s final orders as set out in paragraph 6 above, the Court extended the payment of spouse maintenance to the wife until 31 March 2016.
d)The wife has no savings and is in a far more insecure and deleterious financial circumstance than the husband.
The Court is of the opinion that the above weighs against a costs order against the wife in the magnitude sought by the husband.
Section 117(2A)(b) If any party in receipt of legal aid
Neither party is in receipt of legal aid.
Section 117(2A)(c) The conduct of the parties in relation to the proceedings
The husband submits that the wife has engaged in a course of conduct that has caused delay and further costs in these proceedings. By way of example, the husband submits the following:
a)all Responses filed by the wife were filed late and not in compliance with Court orders;
b)the wife had requested an adjournment of the conciliation conference one day prior to the allocated conference in October 2013;
c)the wife had only provided her disclosure documents some 11 days prior to the final hearing;
d)despite withdrawing $108,000.00, being the entirety of her superannuation entitlements in July 2013, the wife did not disclose this to the husband until March 2014 and gave no real explanation for this delay;
e)given that both parties were at times self-represented, they had to communicate directly with each other in relation to the proceedings. The wife used these communications as the basis for her application for a domestic violence order against the husband in the QLD Magistrate’s Court, an application that was ultimately proved unsuccessful; and
f)that after the final hearing and while judgment was reserved, the wife withdrew funds from the parties’ joint bank account, without the husband’s consent.
The husband also submits that aspects of the wife’s conduct can be seen as engaging in a course of conduct designed to increase his costs, including:
a)altering the divorce application so that it was doomed to fail and requiring the husband to file a second application (see paragraph 107 in the substantive judgment) whereby he forfeited the filing fee of $550.00 and which required him to pay a further $800.00 for a second application. The Court accepts that this weighs in favour of a costs order as to that sum of $1,350.00.
b)contacting the parties’ insurance company and causing it to refuse the husband’s insurance claim and to record a “fraud” against him. No costs implications in these proceedings, however, flowed from that.
c)commencing domestic violence proceedings in the QLD Magistrates Court, which the husband defended and which were ultimately unsuccessful. No costs implications in these proceedings, however, flowed from that; and
d)continuing to live beyond her means and withdrawing large sums of money from the parties’ joint accounts. Again, no costs implications flowed from that in these proceedings.
The husband also submits that the legal fees incurred by the wife, said to be in excess of $89,000.00, were excessive, particularly when compared to the costs orders sought by him. In this regard, the Court refers to its reasons in the substantive judgment and the wife’s submission made in those proceedings that:
“…the payment for legal costs should not be added-back, as the wife was mentally ill and would have required greater assistance from legal representatives and, accordingly, those fees were not paid as some form of wastage. There was no relevant evidence concerning mental illness and, further, this submission was misconstrued given that an “add-back” was not sought in the circumstances outlined by Baker J in Kowaliw & Kowaliw (1981) FLC 91-092.”
The husband also submits that while the orders for him to pay the wife spouse maintenance ended on 31 December 2013, the husband had continued to pay spouse maintenance, despite no orders being in place.
The Court has had specific regard to:
a)Rule 24.03 of the Federal Circuit Court Rules 2001, which requires the parties make full and frank disclosure and as submitted by the husband, the wife had failed to do so at relevant times.
b)Rule 24.06 of the Federal Circuit Court Rules 2001, which requires speedy amendment of any financial statement or affidavit in the event that it becomes clear to a party that their material is no longer accurate.
c)The decisions of Weir & Weir (1993) FLC 92-338 and Black & Kellner (1992) FLC 92-287 which refer to the duty of a party involved in property proceedings to make a full disclosure as to financial affairs. In Luciano & Luciano [2000] FamCA 401 O’Ryan J. stated that a failure to disclose undermines the whole process of adjudication of proceedings in relation to financial matters. The Court accepts that the obligation to make a full and frank disclosure is at the corner stone of family law litigation in relation to financial proceedings.
Ultimately, a consideration of the above factors does not weigh in any specific costs as against the wife.
Section 117(2A)(d) Proceedings necessitated by the failure of a party to comply with previous orders
The applicant submit and the Court accepts that this factor is not relevantly applicable.
Section 117(2A)(e) Whether any party wholly unsuccessful in the proceedings
The applicant submit and the Court accepts that this factor is not relevantly applicable.
Section 117(2A)(f) Any offers in writing
The husband submits that all but one of the 6 offers made by him to the wife would have resulted in her receiving more than she did in the substantive judgment, which he states provided for her to receive 63.5% of the total property, inclusive of maintenance.
The husband says that he made numerous offers to the wife and that the offers would have resulted in the following adjustments in her favour (using the balance sheet as per the substantive judgment) and incorporating the following table:
| OFFER | DETAIL OF SPLIT TO WIFE |
| Final Judgment 10/11/14 | Net assets (NA): 495K (60%), Maintenance(M): 29K (3.5%) Total: 524K (63.5%) |
| Offer 1 16/9/12 | Assets: Property E 450K + Property K2 275K(estimated) + Super 101K + Cash 51K + Other 9K = 883K Liabilities: Mortgages: Property E 130K + Property K2 235K = 365K Maintenance: 12 months at $1450/week(est) = 75K NA: 518K (62.8%), M: 75K (9.1%), Total: 593K (71.9%) |
| Counteroffer 1 18/11/12 | Assets: Property E 450K + Property K2 275K(estimated) + Cash* 51K + Other 9K = 782K. Liabilities: Property K2 mortgage 235K Maintenance: 12 months at $1450/week(est) = 75K NA: 547K (66.3%), M: 75K (9.1%), Total: 622K (75.4%) |
| Offer 2 1/5/13, 9/5/13 | Assets: Property E 450K + Cash 96K + Legal* 16K = 560K Maintenance: Nil extra, Liabilities: Nil NA: 560K (67.9%), Total: 560K (67.9%) |
| Offer 3 15/10/13 | Assets: Property E 450K + Super 108K + Legal 23K + Tax return 6K + Other 9K = 596K Liabilities: Mortgage 101K. Maintenance: $600/wk for 12mths = 31K NA: 495K (60%), M: 31K (3.8%), Total: 526K (63.8%) |
| Offer 4 27/11/13 | Assets: Property E 450K + Cash 55K + Super 108K + Legal 23K + Tax return 6K + Other 9K = 651K Liabilities: Property E mortgage 130K. Maintenance: $500/wk for 12mths = 26K NA: 521K (63.2%), M: 26K (3.2%), Total: 547K (66.3%) |
| Counteroffer 3 16/3/14 | Assets: Property E 450K + Cash 70K + Legal 58K + Other 9K = 587K Liabilities: Nil. Maintenance: $975 + $26/wk for 18mths = 78K NA: 587K (71.2%), M: 78K (9.5%), Total: 665K (80.6%) |
| Offer 5 29/3/14 | Assets: Property E 450K + Term dep 54K + Cash 30K + Legal 58K + Other 9K = 601K. Liabilities: Property E mortgage 130K. Maintenance: Nil. NA: 471K (57.1%), Total: 471K (57.1%) |
| Offer 6 7/7/14 | Assets: Property E 450K + Cash 139K + Legal 89K + Other 9K = 687K Liabilities: Property E mortgage 130K. Maintenance: Nil. NA: 557K (67.5%), Total: 557K (67.5%) |
a)Offer 1 made on 16 September 2012 71.9% (inclusive of maintenance)
b)Offer 2 made on 1 May 2013 and 9 May 2013 67.9% (inclusive of maintenance)
c)Offer 3 made on 15 October 2013 63.8% (inclusive of maintenance)
d)Offer 4 made on 27 November 2013 66.3% (assuming that the wife still had $108,000.00, which she had apparently cashed in and not informed the husband of) (inclusive of maintenance)
e)Offer 5 made on 29 March 2014 57.1% (inclusive of maintenance)
f)Offer 6 made on 7 July 2014 67.5% (inclusive of maintenance)
The Court accepts that the last offer of the husband of 67.5% was more generous that the orders which provided for the wife to receive 63.5% of the total asset pool inclusive of spouse maintenance. This weighs in favour of a costs order.
The husband also submits that while not strictly an “offer”, in his amended Initiating Application, he sought 45% of the assets (inclusive of maintenance) to be paid to the wife.
The husband says the wife made a counter offer in November 2012, equating to 75.4% in her favour, inclusive of maintenance.
The husband further says that the wife made 2 counter offers on 16 March 2014 but that one of them made no sense to him and appeared to result in her receiving “over 100%” (emphasis added). The wife’s counter offer 3 would have seen her receive 80.6%, inclusive of spouse maintenance. These two offers are both significantly over the amount that the Court awarded her.
The husband refers to Lennon & Lennon (Costs) [2012] FamCA 116, wherein Murphy J discussed the rationale for and application of s.117(2A)(f). There is no form prescribed in the Rules for making an offer. The Full Court of the Family Court of Australia has observed that an offer does not have to precisely accord with s.117C before it may be taken into account (see for e.g., Harris & Harris(1991) FLC 92-254; Kilch & Wood[2003] FamCA 629).
The husband submits that his offers to the wife, even though most were not in the prescribed form under s.117C, were all clear in what was on offer to her. Additionally, the wife specifically requested in writing that offers should be made in a form that did not include legal jargon in order that she better understand their import. The offers included the husband’s table of offers and he says that they should be considered in a form acceptable to be considered for this costs determination. The Court accepts this.
The husband refers to Pennisi v Pennisi (1997) FLC 92-774, where the Full Court of the Family Court of Australia stated:
“The plain words of the paragraph do not limit a Court's attention to offers which are greater than the amount awarded. Nor does the paragraph state what consequences flow from whether the offer is greater or lesser than the amount awarded, or how much that is the case. Words of limitation should not be imported into the provision and nor should it be read as though offers in proceedings under the Act carry the same consequences as payments into Court in common law matters.
We do, however, consider that the closer the offer is to the award when the offer is under the amount awarded by the Court, the more weight that should be given to this factor in considering the question of costs. This principle must not, however, be rigidly applied. Offers must be seen in the context of the case and the extent of the offeree's knowledge of the parties' financial circumstances while the offer is live. In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties' financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer. There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination. These and other features of the context of offers must be taken into account when considering whether it was reasonable or not to accept an offer, no matter how close to the ultimate result the offer may be.”
The husband submits, and the Court accepts, that had the wife accepted any one of the offers made to her, it is likely that she would be in a more advantageous financial position. Indeed, had she accepted the husbands offers, it would have saved her the emotional distress and distraction that appeared to have a significant impact on her ability to focus on and complete her (qualifications omitted) studies (see the evidence of Dr S in the substantive judgment). The Court accepts that position.
The husband says that as the substantive judgement provided for 60% of property to the wife and 40% to him, plus maintenance of $29,000 or a further 3.5% of assets, he believed he had been far closer to successful in his application than the wife had been.
A written offer of settlement is “highly relevant” to the question of costs. Such offers provide litigants with an incentive to settle and thereby avoid or reduce the costs of litigation (see Robinson & Higginbotham (1991) FLC 92-209).
In Robinson & Higginbotham (1991) FLC 92-209, Justice Nygh stated:
“Similarly, when one looks at paragraph (f) it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition...”
As Justice Nygh stated in In the Marriage of Murray (1990) FLC 92-173, a party cannot reject or ignore a reasonable offer seriously made except at his or her peril as to costs:
“If one considers the issue as a matter of policy, that is, on the basis of what the Parliament's objective and purpose was in enacting the legislation, it is clear that the Parliament wished to encourage settlements thereby reducing the cost of litigation to the parties and to the community. That must mean that a party cannot reject or ignore a reasonable offer seriously made except at his or her peril as to costs. At the same time a party cannot sit tight and postpone a decision as to acceptance until a matter is at the door of the court. By that time an offer which might have been acceptable to the offeror because of savings in time and preparation costs, may have become unattractive. In this case the offer was left open for a reasonable period, was clear and capable of acceptance which would have saved the parties considerable costs....”
In Browne v Green (2002) FLC 93-115, the Full Court of the Family Court of Australia (Kay, Coleman and Warnick JJ) said:
“Whilst s 117(2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement that have been made. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given”
The Court accepts that it is important for it to give proper consideration to written offers of settlement which have been made. These offers enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to enable proper consideration to be given to it is something to which “very significant weight” ought normally be given.
The Court is of the opinion that:
a)that the wife had adequate knowledge at the time the offers were made, particularly as to the quantum of the property pool available for division between the parties, to give proper consideration to the terms of the offer made;
b)the terms of the husband’s offers were not ambiguous or unclear, were expressed with precision and were objectively capable of being clearly understood. See In the Marriage of Harris (1987) FLC 91-822; and
c)the above matters weigh in favour of a costs order in the husband’s favour.
Section 117(2A)(g) Such matters as the Court considers relevant
The husband submits that given the history of the litigation and the way in which the wife has conducted her case, it would be “greatly inequitable”, if some form of costs were not awarded to him. He says :
“If some form of costs are not awarded, I feel that this position would be greatly inequitable given the history of this litigation. Throughout the marriage, Ms Bridge was controlling, and this continued post-separation, an example of which is attached ……. The abusive texts and emails I have been subjected to are too innumerable to provide here. After an agreement was reached, she demanded more. When I did not acquiesce, she demanded property valuations, which she knew I would have to pay for. When those valuations returned unfavorable to her, she refused to negotiate further and refused to honor our original agreement. She then withdrew a large sum of money from our account to pay her solicitor to commence litigation against me. I was forced to commence proceedings myself. She continued to take money from me, and did everything she could to harm me financially by prolonging the litigation process, ensuring refusal of a home insurance claim made by me, using fraudulent means to sabotage a divorce application, having me charged with domestic violence without foundation, falsely accusing me of being controlling and dominating (behaviours of which belong to her), falsely accusing me of hiding money, and continuing to spend inordinate amounts of money despite knowledge about living beyond both her and our means. Meanwhile, I have ensured that she has been provided for financially, have reduced my spending to do this, have had to put up with her continued abusive correspondence. My tongue bears the scars from biting it so much. She has refused each and every one of my multiple offers of settlement, all but one of which would have given her more than what she has ended up with, and which would have given her an unencumbered home. And all this despite being advised at mediation (which I again paid $3000 for) that what she was looking for was too high (80+%) and spending over $90,000 on legal advice, even when she was mostly self-represented.
At no time throughout these unfortunate and costly proceedings have I used my position (financial or otherwise) against Ms Bridge. There is evidence that Ms Bridge has time again, used hers against me in prolonging this court process, continually stretching out her (course omitted) completion, refusing to contribute or work, refusing to rent out her granny flat, thereby prolonging and increasing the maintenance payable by me to her. Her argument will now be that those same financial factors will warrant not making a costs order against her. In the interests of fairness and equity, courts should not allow this to occur. There is already precedence to order costs where one party has used their superior financial position to prolong litigation…. In the same way, it should not be that a self-represented party or one in an inferior financial position be allowed to do the same (as what Ms Bridge has done) and then claim impecuniosity as a defense, without attracting a costs order.
I feel a costs order is an equitable position given the arguments above.” (sic)
In addition to the matters considered above, particularly the matters set out in paragraphs 18 and 19 above, the Court is of the view that, even though on the face of the husband’s application and in conjunction with the wife’s failure to consider any reasonable offers and her general conduct of the matter, this may have been a matter where the Court would have ordered larger costs to make an order in the magnitude as sought by the husband, would undermine the justice and equity of the final property orders, in a matter that was as finely balanced as this one. In those circumstances, the Court is of the view that the wife should pay some of the husband’s costs with respect to the preparation for and conduct of the hearing given his last written offer and given that shortly prior to the commencement of the hearing and during the course of the hearing the wife had the benefit of representation by counsel. Those costs are as calculated below.
The Court proposes to apply Schedule 1 of the Federal Circuit Court Rules 2001. This Schedule was designed to effect the remit of the Court to deal with matters as efficiently as possible in the exercise of its judicial power. The Court applies the Schedule as follows:
a)
Preparation for a final hearing (2 day matter) being $5,412.00 but reduced to $3,000.00 plus GST of $300.00 as in fact charged by Mr Priestley of Counsel
$3,300.00
b)
Costs on a daily hearing fee – applied for two days (in accordance with the said Schedule)
$4,096.00
c)
Advocacy loading in respect of (b) above (being 50% of the daily hearing fee in accordance with the said Schedule)
(Noting that Mr Priestley was briefed on a direct brief basis as junior counsel and during the final hearing was appointed senior counsel. The Court also notes Mr Priestley charged some $6,000.00 in attending on the hearing, plus GST of $600.00)
$2,048.00
d)
Divorce costs thrown away (see paragraph 26(a) above)
$1,300.00
TOTAL
$10,744.00
The Court has not provided for costs claimed by the husband for Mr Priestley’s attendance and preparation at dates set for hearing when the matter was not reached at that time.
The Court has not provided for costs claimed by the husband for Mr Priestley’s attendance on matters post-judgment, given that orders were made by consent which implemented agreed changes to the Court’s final orders.
On that basis, the wife will be ordered to pay the husband the sum of $10,744.00. The Court is of the view that this amount is appropriate, reasonable and just in all of the circumstances of this matter.
Time to pay
There has been no time limit sought for any payment of costs. The Court is of the view that it will allow the wife some time to pay costs due to the financial circumstances referred to above and in the Court’s substantive decision and, accordingly, will order that payment be made within 6 months of the date hereof.
Conclusion
In all the circumstances of this matter and having considered the husband’s submissions and the matters referred to above and given them the weight referred to, the Court is of the view that there are sufficient justifying circumstances to ground a costs order in the husband’s favour against the wife in the sum assessed in paragraphs 51 and 54 above and will so order.
I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Judge Kemp
Associate:
Date: 20 March 2015
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Appeal
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