MANOTIS & MANOTIS - [2010] FamCAFC 86

FAMILY COURT OF AUSTRALIA

MANOTIS & MANOTIS

[2010] FamCAFC 86

FAMILY LAW - APPEAL – COSTS – Appeal against order that the husband pay the wife’s costs – Whether trial Judge failed to take into account extensive costs incurred by the wife in relation to alleged irrelevant matters – no error demonstrated

FAMILY LAW - DISCOVERY – Whether the trial Judge found the husband’s unsuccessful efforts to prove the wife had undisclosed assets overseas were unnecessary – the trial Judge found the wife was put to considerable expense in addressing the issue of undisclosed assets – finding was open to the trial Judge – no error demonstrated

FAMILY LAW - OFFERS OF SETTLEMENT – Relevance of offer not properly in evidence before the Court – where offer still fell significantly short of the amount ordered by the trial Judge – offers of settlement ultimately not taken into account by the trial Judge in determining liability for costs – no error demonstrated – Appeal dismissed

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

APPELLANT:

Mr Manotis

RESPONDENT:

Ms Manotis

FILE NUMBER:

PTW

2347

2004

APPEAL NUMBER:

2008

DATE DELIVERED:

29 April 2010

PLACE DELIVERED:

Canberra

PLACE HEARD:

Perth

JUDGMENT OF:

Coleman, Thackray and Crooks JJ

HEARING DATE:

20 October 2009

LOWER COURT JURISDICTION:

Family Court of Western Australia

LOWER COURT JUDGMENT DATE:

21 April 2008

LOWER COURT MNC:

Unreported, Family Court of Western Australia, Penny J, 21 April 2008

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Appellant in person

SOLICITOR FOR THE APPELLANT:

Self represented litigant

COUNSEL FOR THE RESPONDENT:

Mr Howlett

SOLICITOR FOR THE RESPONDENT:

Slee Anderson & Pidgeon

Orders

The appeal is dismissed.
In the event the husband opposes the wife’s application for him to pay her costs of the appeal he shall file and serve written submissions within twenty-eight (28) days of the date of these orders setting out the matters on which he relies in opposing the application.

IT IS NOTED that publication of this judgment under the pseudonym Manotis & Manotis is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH

Appeal Number: WA 14 of 2008
File Number: PTW 2347 of 2004

Mr Manotis

Appellant

And

Ms Manotis

Respondent

REASONS FOR JUDGMENT

This is the husband’s appeal against orders made by Penny J on 21 April 2008 requiring the husband to pay 75% of the wife’s costs in relation to property settlement proceedings. The appeal against a costs order in relation to a parenting issue was discontinued.

Background

The husband and wife were married in Thailand in 1998. They lived in Australia for most of their marriage, prior to separating in 2003. There was one child of the marriage.
Issues concerning property settlement and the child proceeded to trial in July 2007. The main issue in the property proceedings was whether the wife had undisclosed assets in Thailand. The trial Judge was not persuaded the wife had any undisclosed property in Thailand and she determined that the pool of assets should be divided 70:30 in favour of the husband.
The wife applied for costs in relation to both the property proceedings and the issue concerning the child. Written submissions were provided by both parties. There was then a hearing on 10 March 2008 at which oral submissions were made relating to costs. We were not provided with a transcript.
The costs judgment was delivered on 21 April 2008. Penny J ordered the husband to pay 75% of the wife’s costs of the property settlement proceedings and 50% of her costs in relation to the parenting issue. The costs were to be assessed if not agreed.
Subsequent to the delivery of that judgment, her Honour’s attention was drawn to a mathematical error made in her substantive judgment. The amount the husband was ordered to pay the wife to bring about the proposed 70:30 division was amended from $83,053 to $77,717 (Appeal Book 25).

The trial Judge’s reasons

Penny J commenced her reasons by noting that the effect of her decision in the substantive property proceedings was that the wife would retain the “modest assets in her possession” and in addition would receive $83,053 from the husband. Her Honour commented that the wife’s legal fees exceeded that sum.
The trial Judge then recorded that the wife’s claim for costs was “based on the husband’s conduct, in particular the manner in which he ran his case, and the offers made by her to settle prior to trial”. She further noted the wife’s desire for any costs order to be in a fixed sum, “given the husband’s attitude to litigation in the past and his propensity for the filing of affidavits which contain information which is largely irrelevant”.
Her Honour recorded that the husband had filed an affidavit in response to the application for costs in which he raised issues which did not relate to whether or not an order for costs should be made. She noted that she had explained to the husband that most of the matters raised by him in his affidavit went to the amount of costs and were not relevant to the issue of whether an order for costs should be made. She said that if an order for costs was to be made she would not fix the amount, but would instead require the costs to be assessed. She commented that the costs incurred appeared “to be way out of proportion to the benefit derived from the litigation”.
Having noted that the issue concerning the time the child should spend with the parents had been resolved without a trial, and that the assets were modest, her Honour said:
This should have been a very simple matter to resolve. Instead, the Family Court file is made up of some five volumes. A number of Form 2 applications were filed by the husband during the course of the proceedings, supported by very lengthy affidavits. I shall refer to these later in my judgment.
Her Honour then recorded that the main issue at trial had been the husband’s allegations concerning the wife having failed to disclose property in Thailand. She recorded that the husband had visited Thailand on three occasions after separation in order to establish that the wife owned assets in that country. She then said that the husband had been unsuccessful in convincing her that there were any assets in Thailand other than those the wife had disclosed.
The trial Judge recorded that in determining an application for costs she was required to take into account s 117 of the Family Law Act 1975. She then accurately paraphrased ss 117(1) and (2), before discussing the matters referred to in s 117(2A).
The first matter considered was the financial position of the parties. Her Honour recorded that the wife would be receiving a minority interest in a property in Thailand, a vehicle worth only $1,000, and furniture and contents worth only $1,000. In addition, the wife would receive the $83,053 the husband had been ordered to pay. She noted that the wife earned approximately $525 a week whereas the husband was unemployed. She also noted that both parties shared responsibility for the care of the child. She otherwise noted that the husband would receive 70% of the assets.
Having recorded that neither party had received a grant of legal aid, her Honour then turned to consider the conduct of the parties in relation to the proceedings. Given the importance of this matter in the decision ultimately made, we will set out below all her Honour said on this issue.
12.The wife says that I should take into account the manner in which the husband presented his lengthy and repetitive material in affidavits. There is no doubt the manner in which the husband chose to present his material made responding to it very difficult. As an example, his affidavit for trial, handwritten, amounted to 27 pages. Annexed to that affidavit were a number of documents relating to properties in Thailand, as well as other exhibits which the husband believed were of some relevance. Because the first affidavit contained little evidence I ordered the husband to prepare another affidavit. This was not much better. Most of the material presented by the husband in his affidavits was his opinion, hearsay or argument.
13.The husband filed a number of Form 2 applications. On 8 December 2005 he filed an application seeking a return of a 2005 Collins hard cover year planner and wedding photos. The application in relation to the planner was dismissed, and in relation to the wedding photos, adjourned to the trial judge. Not surprisingly, the husband was ordered to pay $500 in relation to the wife’s costs of that application.
14.On 10 February 2002 the husband filed a Form 2 application effectively seeking answers to specific questions, although not in the correct format. His application was subsequently amended and stood as a Request for Answers to Specific Questions. The husband subsequently sought an application that the wife “discover on oath all her bank accounts and statements since marriage in ’98 and 10 years prior to the marriage”. An order was made that she do her best to obtain bank statements since 1995. Although the wife was put to the expense and effort of obtaining these statements they did not prove the wife had undisclosed assets in Thailand.
Her Honour next turned to consider whether either party had been “wholly unsuccessful” in the substantive proceedings. In dealing with that matter she touched only on the issue relating to the child.
Her Honour then briefly discussed the offers of settlement. She referred to the fact that the husband had made three offers. The first was an offer made in 2005 to pay the wife $20,000. The second was an offer to pay $40,000 in 2007. The third was an offer of $50,000 in July 2007.
Her Honour then noted that the wife had offered on 11 January 2006 to accept 20% of the net proceeds of sale of the former matrimonial home, and that this offer had been repeated in March 2007. In paragraph 18 of the reasons, she recorded that the effect of the wife’s offers was that she was prepared to accept approximately $112,000 by way of settlement, which her Honour recorded “was above the sum ordered by me”.
Her Honour then recorded her “Conclusions on costs”. These are set out in full below, insofar as they relate to the property settlement proceedings:
19.The main issue for the husband from the time the Wife brought her application for property settlement was the extent of the wife’s assets in Thailand. As stated previously, he has attended in Thailand on three occasions to attempt to obtain information to prove his allegation. He even commenced proceedings for divorce in Thailand. In the divorce application the husband, dishonestly in my opinion, gave the wife’s residence as an address in Thailand when he was well aware that she was living in [M], Western Australia. The purpose of this was to attempt to obtain orders in Thailand without the wife’s knowledge. The wife applied for a divorce in this court in 1995 [semble 2005]. The husband had initially opposed the application.
20.The wife was put to considerable expense, not only defending the application in Thailand, but addressing the issue of undisclosed property in Thailand by way of affidavits from herself and family members. A stated previously, this was a matter which should have settled quickly and without the necessity of a trial. Instead, there were numerous attendances before the Court and lengthy affidavits prepared by the husband, mostly relating to the issue of the property in Thailand.
21.In my opinion, the husband should be responsible for the costs flowing from these allegations unproven by him. The husband should be responsible for the wife’s costs in relation to property settlement in the sum of 75% of those costs.
Having then determined that the husband should pay 50% of the costs relating to the issue concerning the child, her Honour confirmed her intention that the costs would be assessed, if not agreed.

The Ground of Appeal and the submissions

The husband ultimately relied only on Ground 1(b), which asserted that in making the costs order in the property proceedings her Honour had erred in the exercise of her discretion in not taking into account:
that the wife and her solicitors themselves unnecessarily run out issues such as the issue of the husband’s hepatitis which was a red herring and the wife’s solicitors misunderstanding and running out of the issue of the Notice to Answer Specific Questions and wrongly categorising the husband’s efforts and enquiries as to the wife’s overseas accounts as unnecessary and prolix.
The husband failed to comply with the timetable for the filing of written submissions. By the time he filed his submissions, just a few days before the hearing of the appeal, the wife’s solicitors had already filed her submissions. In addition to allowing the husband to rely on his late filed written submissions, we also allowed him to rely on a letter his solicitor had sent him concerning the merits of what was, at the time, his proposed appeal against the costs orders. We will refer to that letter, for convenience, as the “Memorandum of Advice”.
The husband was self represented and, out of fairness, we indicated we would allow him some latitude in the presentation of his appeal. It is for this reason that we propose to discuss one matter that arose in the course of his submissions which was not the subject of a formal ground of appeal.
We do not propose, however, to discuss those submissions which proceed on an incorrect assumption that her Honour awarded costs on something approaching an indemnity basis. Her Honour made clear that she intended the costs would be assessed if not agreed. In this regard, we do not accept the husband’s submission that “the assessment process does not really deal with the issues of excessive costs or over-servicing”. That is precisely what the assessment process will deal with. This fact was recognised in the Memorandum of Advice where the husband’s solicitor observed that the effect of the orders was that the wife would only be able to recover “properly incurred scale costs”.
The husband’s submissions properly concede that the fact that the wife has incurred “excessive costs” does not appear to have played any part in her Honour’s decision that the husband should contribute to the wife’s costs.

Matters not taken into account

Ground 1(b), as argued, raises two separate matters. The first is that her Honour failed to take account of the fact that the wife had unnecessarily incurred costs in relation to issues such as the husband’s hepatitis and matters relating to the husband’s Notice to Answer Specific Questions.
The husband asserts that issues associated with his hepatitis were a “red herring” and that her Honour erred in failing to take account of the wife’s conduct in relation to that matter. We have examined the husband’s written submissions in response to the wife’s application for costs (Appeal Book 690 to 754) and can see no reference to the husband drawing this issue to the attention of her Honour as being a matter relevant to costs.
We have already noted that we were not provided with a transcript of the oral hearing concerning costs issues and we therefore do not know whether her Honour was asked at that hearing to take into account the conduct of the wife’s case insofar as it related to the husband’s hepatitis. The fact that the husband made a vague reference in his written submissions (Appeal Book 692) to the wife’s solicitors having incurred costs unnecessarily was not sufficient, in our view, for her Honour to appreciate that the husband considered this was a matter that should be taken into account in determining liability for costs.
In any event, we note that Penny J had recorded, in paragraph 43 of her principal judgment, that the husband had suffered from hepatitis in the 1990s and that the wife was first diagnosed with the disease a few months after arriving in Australia following the marriage. Her Honour discussed the hepatitis issue in the context of the treatment the wife required and the impact it would have on her earning capacity. Her Honour had made clear at the hearing that she was not going to endeavour to assess whether the wife contracted the disease from the husband or someone else, although the husband had been keen to pursue that issue (Transcript of proceedings 25 July 2007, page 32 et seq).
Matters pertaining to a party having a serious illness such as Hepatitis C (and even arguably the way in which that disease had been contracted) could not in our view be regarded as a “red herring”. Given the obvious relevance of that matter, and the absence of any indication that her Honour was asked to take it into account in dealing with the costs dispute, we consider this aspect of the husband’s complaint to be without merit.
The other matter it is asserted her Honour erred in failing to take into account related to the “running out” of the issue associated with the Notice to Answer Specific Questions. Again, we are unable to discern anything in the written submissions that were put to her Honour which would have made it appropriate for her to have given consideration to this issue as militating against an order for costs. On the contrary, her Honour referred (in paragraph 14 of the costs judgment) to an application made by the husband to enforce answers to these questions in the context of adverse findings made against the husband in relation to the conduct of the proceedings.
The written submissions provided on behalf of the husband in support of his appeal drew attention to the fact that the husband was successful in obtaining an order requiring the wife to provide answers to the specific questions. We note, however, that the husband’s submissions did not draw our attention to the fact that the order requiring the wife to answer these questions expressly “reserved” only the costs incurred by the wife in relation to that application (Appeal Book 223). Although the husband was self represented at the hearing concerning the specific questions, we consider that the costs of both parties would have been reserved had there been any suggestion that the husband might have been entitled to the costs associated with obtaining the order. In the absence of full information concerning those proceedings, we can only speculate why it was only the wife’s costs that were “reserved”. It may have something to do with the matters to which her Honour referred in paragraph 14 (i.e. the incorrect format of the application and the necessity for the amended application to stand “as a Request for Answers to Specific Questions”).
The husband’s submissions also drew our attention to the fact that the wife later unsuccessfully applied for an order relieving her of her obligation to answer the specific questions because there were 22 questions rather than the 20 allowed by the Family Law Rules 2004 (Appeal Book 227). It was submitted this application had been “petty and unnecessarily incurred costs”. We note, however, that the Magistrate who dealt with that application ordered that the costs of both parties relating to that application should be “reserved” (Appeal Book 241). Had the husband considered the wife’s actions relating to that application to be inappropriate he should have sought to agitate the issue of costs before the Magistrate, either on that day or another day. Alternatively, if it was thought that the costs had been reserved to the trial Judge he should have drawn the relevant circumstances to the attention of Penny J, who would otherwise have had no reason to trawl through the five volumes of the file seeking to identify matters which might be pertinent to the costs issue.

There is accordingly no substance in this part of the husband’s complaint.

The enquiries overseas

The second element of the complaint in Ground 1(b) is that the trial Judge had erred in “wrongly categorising the husband’s efforts and enquiries as to the wife’s overseas accounts as unnecessary and prolix”.
It was submitted in support of this aspect of the husband’s complaint:
20.Whilst the husband’s trial material was voluminous it should not have been difficult for an experienced solicitor to appreciate opinion, hearsay and argument for what it was and to understand that no response was necessary.
21.In cases where one of the parties comes from a country where corruption is endemic what is someone to do in the position of the husband? He should not be criticised for his trips to Thailand nor his investigations which were the only options open to him.
22.Justice Penny was wrong to characterise the case as one which should have settled quickly. The international aspect to the case was a complicating factor which rendered the parties’ failure to settle not really surprising.
23.In the circumstances it was reasonable for the husband to put the wife to proof. It was unfair for Justice Penny to have criticised the husband in that regard and he should not have to pay the wife’s costs.
We do not accept that the trial Judge criticised the husband for making three trips to Thailand in an effort to prove that the wife had undisclosed assets in that country. Her Honour appears to have recorded that fact only for the purpose of demonstrating that, notwithstanding all of his efforts, the husband had been unsuccessful in establishing his claim that the wife had not made a full disclosure. It was a matter for the husband to determine how much effort and expense to outlay in proving his case. Her Honour’s only concern was the extent to which the pursuit of this ultimately unsuccessful (and very serious) allegation had resulted in expense to the wife.
Her Honour had found in her substantive judgment (Appeal Book 15) that:
The husband has been self-represented in these proceedings. He has filed affidavits which have been very lengthy and attached numerous documents. He has found it very difficult to focus on the issues and the facts relating to this matter. He does not work and says he has devoted 15 months to the preparation of this matter for trial...
Her Honour expressed similar sentiments in paragraph 12 of her costs judgment, which we have recited above. She found that the issue of non-disclosure of assets had been the “main issue in the proceedings” and that the wife had been put to “considerable expense” in addressing the issue. Her conclusion was that “the husband should be responsible for the costs flowing from those allegations unproved by him”.
All of these findings and conclusions were open to her Honour. We can see no basis upon which it could be asserted that she erred in the exercise of her discretion in determining that the husband should be responsible for the costs incurred by the wife in responding to an issue that had been unsuccessfully and erratically pursued.

The offers of settlement

In the course of making his oral submissions the husband asserted that the trial Judge had erred in finding that he had made only three offers of settlement whereas, in fact, he had made four. This fourth offer was said to have been made on 19 July 2007 and involved, it seems, a payment to the wife of $60,000, which was $10,000 more than the husband’s best offer of settlement to which her Honour referred in her reasons. Her Honour had made her finding that there were only three offers on the basis of the written submissions provided by the wife in support of her application for costs (Appeal Book 688).
The husband drew our attention to a letter dated 9 April 2008 which he had sent to the Associate to the trial Judge (Appeal Book 777). The letter acknowledged that the husband had failed to draw the fourth offer to her Honour’s attention at the costs hearing on 10 March 2008. Although the husband’s correspondence noted that his solicitor had suggested that he write to the Judge’s Associate, it was clearly inappropriate for the husband to do so, especially when seeking to place evidentiary matters before the Court.
Although the fourth offer was better than the husband’s previous offers, there is no reason to assume it would have made any difference to her Honour’s decision, since it still fell more than $17,000 short of the amount her Honour ultimately ordered the husband to pay the wife. In any event, we note that the husband’s letter to the Judge’s Associate acknowledged that his legal advice was that the:
non appearance of this fourth offer does not affect the Section 117[2A]F position very greatly … What is galling is [that the wife’s solicitors] continue to punch below the belt …. again and again.
For the sake of completeness we should note there was some discussion during the hearing of the appeal concerning the accuracy of the statement made in paragraph 18 of her Honour’s reasons that the amounts sought by the wife in her offers of settlement were “above the sum ordered”. In this regard we note than the husband’s solicitor had said in his Memorandum of Advice that “arguably the wife may have done better at trial than her 20% offer; however Her Honour has found that the wife didn’t do at trial better than her offer given before trial”.
The husband’s solicitor went on to say in his Memorandum, “it appears that Her Honour has not taken into account at all in relation to who is to pay costs, the question of who offered, what particular offers”. Our reading of the reasons for judgment corresponds with that somewhat inelegant observation by the husband’s solicitor. Although her Honour recited her understanding of the offers, she did not indicate that she was taking them into account. This was presumably because she had formed the view that not only had the husband offered to pay less than what he had been ordered to pay but also because the wife had offered to receive more than what she ultimately received.
In expressing her conclusions on costs her Honour made no reference to the offers and instead based her decision entirely on the husband’s lack of success in the “main issue” in the proceedings, and on the way he had conducted the proceedings. Her Honour did not explain why she ordered the husband to pay only 75% of the wife’s costs (and in this regard we note that there is no Ground of Appeal directed to the adequacy of her Honour’s reasons). We can infer, however, that as the husband was entirely unsuccessful in relation to the “main issue”, one of the reasons the wife was not successful in obtaining all of her costs may have been because her offers had exceeded the amount that she ultimately obtained. If that conclusion was an error on the part of the trial Judge then the wife should have sought to agitate that issue by the filing of a Notice of Contention or otherwise. She did not do so.
We are therefore not persuaded that her Honour erred in any way in her treatment of the respective offers of settlement.

The outcome and costs

We have not been persuaded that her Honour erred in the exercise of the very wide discretion conferred on judges in dealing with costs issues. The appeal will therefore be dismissed.
The wife foreshadowed that she would seek an order for costs in the event the appeal was dismissed. The Memorandum of Advice provided to the husband by his solicitor warned him that if his appeal failed it would be likely that a costs order would be made against him.
At the conclusion of the appeal, we informed the parties that in the event the appeal failed we would give the husband the opportunity to provide written submissions within 28 days, setting out any reasons why he ought not bear the costs of the appeal. If no submissions are received we will, in due course, make an order for him to pay the costs of the appeal, to be assessed if not agreed. In the event he does file submissions which appear to have any merit we will, in due course, provide a timetable for the wife to reply.

I certify that the preceding forty nine (49) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court

Associate:

Date: 29 April 2010