Lotte & Inger (No 3)

[2024] FedCFamC1F 73

FEDERAL CIRCUIT AND
FAMILY COURT OF AUSTRALIA (DIVISION 1)

Lotte & Inger (No 3) [2024] FedCFamC1F 73

File number(s):	BRC 14228 of 2021
Judgment of:	HOGAN J
Date of judgment:	13 February 2024
Catchwords:	FAMILY LAW – COSTS – Where final orders were made to finalise property proceedings between the parties – Where the applicant’s application for costs of and incidental to the proceeding is dismissed – Where there is no order as to costs in relation to the proceedings, including the application for costs
Legislation:	Family Law Act 1975 (Cth)
Cases cited:	Lotte & Inger [2022] FedCFamC2F 559
Division:	First Instance
Number of paragraphs:	17
Date of hearing:	13 February 2024
Place:	Brisbane
Counsel for the Applicant:	Ms Karaman
Solicitor for the Applicant:	McLaughlins Lawyers
Litigation Guardian for the Respondent:	Mr Nylander

ORDERS

BRC 14228 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS LOTTE

Applicant

AND:

MR NYLANDER AS LITIGATION GUARDIAN FOR MR INGER

Respondent

ORDER MADE BY:	HOGAN J
DATE OF ORDER:	13 FEBRUARY 2024

THE COURT ORDERS THAT:

1.The Application made on behalf of the Applicant today that the Respondent pay the Applicant’s costs of and incidental to the proceedings is dismissed.

NOTATION

A.There is no Court known by the name “Federal Circuit and Family Court of Australia”.

B.The design of the seal affixed to this order issued by the Federal Circuit and Family Court of Australia (Division 1) has been determined by the Attorney-General pursuant to the undated Federal Circuit and Family Court of Australia (Seal) Determination 2021 signed by the Attorney-General.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lotte & Inger has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

EX TEMPORE
REASONS FOR JUDGMENT

HOGAN J:

1. The Applicant seeks an order the Respondent pay her costs of and incidental to the Initiating Application on an indemnity basis fixed in the amount set out at paragraph 31 of the document entitled “Written Submissions of Costs on behalf of the Wife”, dated 12 February 2024, and provided by Counsel today or, failing that, on a party and party basis in such amount as may be assessed. 

2. On the evidence, the Applicant’s solicitors have rendered invoices in a total amount of about $91,000 and have work in progress (including provision for the trial originally listed for this week but which concluded yesterday) which may be billed at a further $53,000 approximately.  Consequently, the amount of costs sought on the indemnity basis is an amount of approximately $144,000 to $146,000. 

3. I proceed on the basis that the Respondent opposes any order for costs being made.

4. The starting point in relation to costs under the Family Law Act 1975 (Cth) (“the Act”) is that each party bears their own costs.[1] However, if it is of the opinion that there are circumstances that justify it in doing so, then the Court may, subject relevantly to s 117(2A) of the Act, make such order as it considers just.[2] In considering what order, if any, as to costs should be made, the Court must have regard to the matters set out in s 117(2A) of the Act.

   [1]           Family Law Act 1975 (Cth) s 117(1).

   [2]           Family Law Act 1975 (Cth) s 117(2).

5. Consequently, the first question to be determined is whether the circumstances of the current proceedings justify departing from the statutorily prescribed starting point of each party bearing their own costs. 

6. Neither party in this proceeding was in receipt of Legal Aid.  The Applicant privately engaged her legal representatives and Mr Nylander, who was appointed as the Respondent’s Litigation Guardian by an order made by Judge Murdoch on 25 May 2022, appeared on his own behalf.  It seems accepted that Mr Nylander was selected or nominated by the Attorney-General’s Department to fulfil the role of Litigation Guardian in these proceedings. It also appears accepted that he is not personally known to the Respondent.

7. I am not persuaded that the proceedings for property adjustment orders were necessitated by the failure of either party to comply with previous orders. Whilst the Respondent has not complied with orders for him to file an affidavit for trial and/or Financial Statements, his failure has not necessitated the Applicant’s application for property settlement orders but has occurred in the course of her prosecution of the same. 

8. The Respondent has been wholly unsuccessful in the proceedings in the sense that it appears likely from comments contained in the records of the Queensland Police Service, which are in evidence before me, that his view is that the Applicant should not have been entitled to any payment at all and that the former matrimonial home, which is owned solely by him legally, is and should remain only his property. 

9. The parties’ respective financial circumstances may be summarised as being that each has little, if any, property other than what each will receive from what appears to be the likely sale of the former matrimonial home, the Town D property.  Whilst the amounts actually received by each of the parties will depend upon variables – such as the sale price and the costs associated with the sale process – for indicative purposes only, I proceed on the basis that, if the property was sold for the $900,000, at which it has been valued by a kerbside valuation, then, disregarding the costs of sale, the orders I have just made to finalise the property settlement proceedings between these parties are such that the Applicant would receive an amount of about $405,000, and the Respondent an amount of about $495,000. 

10. The Respondent’s failure to participate in the proceedings in the manner directed by the Rules and as required by orders previously made has no doubt made the advancement of the Applicant’s case more onerous than it likely would otherwise have been.  However, since his appointment as Litigation Guardian, Mr Nylander has, I accept, done – within the constraints within which he has been required to discharge that obligation – all that he has been able to do to minimise the costs to the parties.  For example: no objection was taken to affidavits filed late in the Applicant’s case; various proposals to tender various bundles of documents on behalf of the Applicant were accepted; no formal objection was taken to the tender of an updated report from Dr E when such a course may have been open to him, although it would likely only have resulted in more time being taken to finalise the trial than was in fact taken. 

11. The Applicant made two offers to resolve the proceedings before the trial, which occurred yesterday: 

    (a)the first offer was made on 24 October 2023, by which she offered to resolve the proceedings on the basis that the Town D property was sold and she receive a payment representing 40 per cent of the net value of the same and that each party otherwise retain their own property and be responsible for their own liabilities and there be no order as to costs;  and

    (b)secondly, on 29 November 2023, she offered to resolve the proceedings on the basis that the Town D property be sold and she receive a payment representing 45 per cent of the net value of the same and that each party otherwise retain their own property and be responsible for their own liabilities and there be no order as to costs. 

12. Given the orders made earlier today to provide for the Applicant to receive a payment representing 45 per cent of the net value of the Town D property and for the parties to retain the property in their respective possessions and be responsible for their own liabilities, it is obvious that, if the Respondent had accepted the Applicant’s 24 October 2023 offer: 

    (a)he would have received more from the sale proceeds of the Town D property than he will receive consequent on the orders I have just made; and

    (b)the Applicant would not have been put to the costs of preparing trial affidavits and having her legal representatives appear at the trial yesterday.

13. Whilst it is also clear that, if the Respondent had accepted the Applicant’s November 2023 offer, the Respondent would have been pretty much in the same position (if not exactly the same position) in which he will now be following the orders I have made earlier today and that such acceptance would also have removed the necessity for the Applicant to file trial affidavits and ensure that her legal representatives undertook the work involved in taking the matter to trial yesterday, it is also relevant to note that:

    (a)the Applicant made, with leave, an oral application on 27 April 2022 for an order that a Litigation Guardian be appointed for the Respondent – which clearly reflected an assessment, as was quite properly submitted on her behalf to the Court at that time, that the Respondent did not understand the nature and possible consequences of the proceeding and was not capable of adequately conducting or giving adequate instruction for the conduct of them; and

    (b)the Reasons for Judgment delivered by Judge Murdoch[3] when making the order appointing a Litigation Guardian for the Respondent record the finding by that Court that it was satisfied that he was not capable of adequately conducting the proceedings and recited the opinion of medical experts (who had assessed him for the purpose of the personal injuries litigation) who had assessed, prior to 2009, that:

    (i)he was difficult to engaged and lacked insight into his cognitive impairment; and

    (ii)he made poor decisions with regard to his health, finances, accommodation and service provision;  and

    (iii)he presented and performed in tests in such a manner as indicated likely widespread impairments in higher order language conceptualisation and reasoning and judgement; and

    (iv)his capacity to make fully informed, rational decisions with respect to his health, finances and future lifestyle choices was likely to be adversely affected by his impaired insight, mental inflexibility, reduced self-control and illicit drug use; and

    (v)he had already behaved, as at 2006, in a manner that raised some concerns about his judgement, his decision making and his potential vulnerability to manipulation. 

    [3]          Lotte & Inger [2022] FedCFamC2F 559.

14. I consider the reality of the Respondent’s functioning particularly relevant to the exercise of the discretion in determining whether the circumstances here justify the making of an order that the Respondent pay the Applicant’s costs. 

15. But for the Respondent’s impairment, I would have had no hesitation in being persuaded that, because of his failure to comply with the Rules and his failure to accept the offer made in October 2023 and/or the subsequent offer made in November 2023 to resolve the proceedings, the circumstances justified the making of an order that he pay the Applicant’s costs of and incidental to the proceeding – at least from those dates and at least in relation to those costs incurred after the offers were made.  I may well, in such a circumstance, have also concluded that, because of such conduct, it was just for an order to be made that costs be paid on an indemnity basis. 

16. However, the reality of the Respondent’s impairment which incurred in 2006 is such that I am not persuaded that the circumstances justify the making of an order for costs.  Whilst the Applicant has incurred costs, I consider that making an order that the Respondent pay the costs in the circumstances of this case would be tantamount to imposing a monetary punishment on a litigant for failing to do something which the evidence establishes that they are incapable of doing. 

17. For these reasons, I decline to accede to the application for an order that the Respondent pay the Applicant’s costs of and incidental to the proceedings. Such application will be dismissed. 

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Justice Hogan.

Associate:

Dated:       13 February 2024