MALLOY & REID (NO.2)
[2018] FamCAFC 137
•26 July 2018
FAMILY COURT OF AUSTRALIA
| MALLOY & REID (NO.2) | [2018] FamCAFC 137 |
| FAMILY LAW – APPEAL – COSTS – Where the appeal and cross-appeal were dismissed – Financial circumstances of the parties considered – The appellant was wholly unsuccessful in the appeal and the respondent was wholly unsuccessful in the cross-appeal – Written offer of settlement – Appellant to pay the respondent’s costs in fixed sum. |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) |
| Lenova & Lenova (Costs) [2011] FamCAFC 141 |
| APPELLANT/CROSS RESPONDENT: | Ms Malloy |
| RESPONDENT/CROSS APPELLANT: | Mr Reid |
| FILE NUMBER: | TVC | 55 | of | 2016 |
| APPEAL NUMBER: | NA | 58 | of | 2017 |
| DATE DELIVERED: | 26 July 2018 |
| PLACE DELIVERED: | Perth |
| PLACE HEARD: | In Chambers |
| JUDGMENT OF: | Thackray, Murphy & Aldridge JJ |
| HEARING DATE: | In Chambers by way of written submissions |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 26 September 2017 |
| LOWER COURT MNC: | [2017] FamCA 760 |
REPRESENTATION
| SOLICITOR FOR THE APPELLANT/CROSS RESPONDENT: | Ruhl Family Law Centre |
| COUNSEL FOR THE RESPONDENT/CROSS APPELLANT: | Mr Shoebridge with Ms Fraser |
| SOLICITOR FOR THE RESPONDENT/CROSS APPELLANT: | Purcell Taylor Lawyers |
Orders
The appellant pay the respondent’s costs of the appeal fixed in the sum of $10,000 which sum is to be deducted from the payment the respondent is obliged to make to the appellant pursuant to paragraph 35 of the orders made by the Honourable Justice Tree on 26 September 2017.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Molloy & Reid (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 58 of 2017
File Number: TVC 55 of 2016
| Ms Malloy |
Appellant/Cross Respondent
And
| Mr Reid |
Respondent/Cross Appellant
REASONS FOR JUDGMENT
On 11 May 2018 we dismissed the appellant’s appeal and the respondent’s cross‑appeal in relation to orders made by Tree J on 26 September 2017 (Molloy & Reid [2018] FamCAFC 89). The appeal was against the dismissal of the appellant’s application for permission to relocate to New Zealand, while the cross-appeal was against a notation to an injunction made against the respondent.
We must now consider the respondent’s application contained in submissions filed on 25 May 2018 seeking costs in accordance with Schedule 3 of the Family Law Rules 2004 (Cth) in the sum of $38,322.23. The respondent explained that the amount sought would have been greater, but that he had discounted his claim by 5 per cent on account of his lack of success in the cross‑appeal.
The appellant filed responding submissions on 8 June 2018 opposing the application and referring to her difficult financial position now that she is unable to return home to New Zealand. However, if we are minded to make a costs order, the appellant submits that costs should be fixed at $20,000, again on account of her weak financial position. In the event that argument also fails, the appellant submits that costs should be fixed at $30,000 for reasons identified in her submissions. We need not set out those reasons since the respondent, in reply submissions filed on 14 June 2018, agreed to limit his claim to $30,000 “in the interests of efficiency and to avoid further possible costs on taxation of costs”.
The legislation
Section 117(1) of the Family Law Act 1975 (Cth) provides that subject, inter alia, to s 117(2), each party shall bear their own costs. However, s 117(2) provides that the court may order costs to be paid if it considers there are circumstances that justify it in doing so. In considering what order (if any) should be made, the court must have regard to a variety of prescribed factors set out in s 117(2A). In determining the matter, we will refer only to those factors which the parties have identified as being relevant.
The financial circumstances of each of the parties to the proceedings
We accept that the appellant is not in a strong financial position. She has primary responsibility for three children and she has what the primary judge found to be a “markedly poorer capacity to earn income than does the father”. Under the terms of the settlement she will have a home worth about $340,000 with a mortgage of about $37,000. She has no other assets save for a vehicle, furniture and modest superannuation. Under the terms of the orders she is to receive a further $61,383 cash and $61,400 by way of a “superannuation split”. She will also be entitled to receive “spousal” maintenance of $100 per week for one year.
The respondent owns some pieces of real estate, but they are heavily encumbered. He will retain a modest superannuation entitlement, but has a business valued at $166,545 which has an annual income of about $200,000.
The respondent seeks to meet the appellant’s case about her financial position by acceding to her request that any costs order be satisfied from the funds that the respondent is obliged to pay to her on or before 26 September 2018.
The conduct of the parties to the proceedings
The appellant seeks that we take into account the primary judge’s findings about the respondent’s behaviour during the relationship. She also asks us to take into account his conduct in recording her telephone calls with the children. However, as the respondent submits, it is only the conduct of the parties in relation to the appeal proceedings that is relevant under this heading.
Whether any party has been wholly unsuccessful in the proceedings
The appellant was wholly unsuccessful in the appeal and the respondent was wholly unsuccessful in the cross-appeal. We accept the respondent’s argument that the cross-appeal was of very limited ambit and would have accounted for only a small proportion of the costs associated with the appeal proceedings.
Whether any party has made an offer to settle the proceedings
The respondent made a written offer on 8 November 2017, which was the day after the respondent had filed his cross-appeal, and approximately one week prior to the date set down for the directions hearing for the appeal. The offer proposed that “the matter be remitted back to the Family Court for re‑hearing” and that there be no order as to costs. The offer was open only until 14 November 2017. Nothing was said about the short time frame in the appellant’s submissions.
The respondent submits that the outcome achieved by him “was better than that provided for in the Offer”. The appellant responds by saying that the inevitable consequence of acceptance of the offer would have been a rehearing in relation to the property proceedings as the offer was that “the matter be remitted back to the Family Court for re-hearing” (emphasis added). The respondent’s submissions in reply do not join issue with this proposition.
Conclusion
We accept that there are circumstances that justify the making of an order for costs in favour of the respondent.
First, and most importantly, the appellant was entirely unsuccessful in the appeal. Although the respondent was equally unsuccessful in the cross-appeal, that part of the proceedings would not have incurred much by way of additional costs.
Secondly, the appellant did not respond to the offer which would have given the appellant a second chance to obtain an order for relocation. It has been pointed out by the Full Court that, because of the provisions of s 117(1) of the Act, “[a] timely offer in writing genuinely made might … be seen as an important part of a limited armoury available to prospective litigants seeking to avoid the costs of litigation” (Lenova & Lenova (Costs) [2011] FamCAFC 141 at [11]).
If the appellant was concerned that acceptance of the offer would have opened up the property matter, she could have made a counter offer seeking to address that issue. Instead, she pressed ahead with the appeal in which she was seeking that we re-exercise the discretion and permit her to relocate (admittedly on the basis she would take a 10 per cent reduction in her property entitlement as she had proposed at the trial if permitted to relocate). In our view, insofar as it is relevant to the issues of costs (s 117(2A)(c)), the appellant should have at least attempted to engage with the respondent in seeking to resolve the appeal proceedings.
The appellant relies primarily upon her financial circumstances. Again, in Lenova the Full Court said (at [12]):
… 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.
We are nevertheless mindful of the relevance of the appellant’s financial circumstances, which see her with modest assets and a limited income and with primary responsibility for the children. The appellant’s primary position is that these factors should result in there being no order as to costs and it is only her secondary argument that the costs be limited to $20,000.
While the factors to which we have referred justify an order for costs, taking account of the appellant’s financial position we consider that costs should be fixed in an amount equivalent to one third of the respondent’s reduced claim, namely $10,000.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Thackray, Murphy & Aldridge JJ) delivered on 26 July 2018.
Associate:
Date:26 July 2018
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