Martyn and Martyn (No 2)
[2020] FamCA 799
•24 September 2020
FAMILY COURT OF AUSTRALIA
| MARTYN & MARTYN (NO. 2) | [2020] FamCA 799 |
FAMILY LAW – COSTS – Where the father has made an Application for costs in respect to a successful Application to set aside a binding child support assessment – Where the Applicant father, however, was unsuccessful in setting aside arrears of child support that has been accumulated – Where it is agreed that the issue of costs is to be determined under s 117 of the Family Law Act 1975 – Whether the Applicant father has established circumstances justifying such an order – Application dismissed. |
| Family Law Act 1975 (Cth) s 117 |
| Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123 Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 Penfold v Penfold (1980) 144 CLR 311 Stoian & Fiening (Costs) [2014] FamCA 944 |
| APPLICANT: | Mr Martyn |
| RESPONDENT: | Ms Martyn |
| FILE NUMBER: | SYC | 6514 | of | 2016 |
| DATE DELIVERED: | 24 September 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney by web conference |
| JUDGMENT OF: | McClelland DCJ |
| HEARING DATE: | 18 September 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Givney |
| SOLICITOR FOR THE APPLICANT: | Lama Family Lawyers |
| THE RESPONDENT IN PERSON |
Orders
The Application in a Case filed on 27 July 2020 and sealed on 5 August 2020 seeking an order for costs in respect to the judgement of the Court dated 1 July 2020 is dismissed.
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 Martyn & Martyn 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).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 6514 of 2016
| Mr Martyn |
Applicant
And
| Ms Martyn |
Respondent
REASONS FOR JUDGMENT
Introduction
This decision concerns an Application for costs by Mr Martyn (“the Applicant father”) who succeeded in an Application to set aside a binding child support agreement (“the child support Application”). My reasons for acceding to that Application are set out in my decision dated 1 July 2020 (“the child support decision”).[1] The child support decision also explains why I declined to make orders, as sought by the Applicant father, to waive or eliminate the arrears of child support that had been accumulated in the sum of $31,928.22 as at May 2020.
[1] [2020] FamCA 526.
Application
By Application in a Case sealed 5 August 2020, the Applicant father seeks that Ms Martyn (“the Respondent mother”) pay his costs in respect to the child support Application, by seeking the following orders be made:
1. That the Respondent Mother pay to the Applicant Father an amount of $16,200.00 by way of legal costs and disbursements in relation to all matters relating to offers made with regards to the Binding Child Support Agreement.
2. That the Respondent Mother pay all costs of and incidental to this Application.
In response, the Respondent mother seeks that orders be made in accordance with her Response to Application in a Case sealed 4 September 2020, as follows:
1. I request that the court dismiss the order that the applicant Mr Martyn seeks in regard to me paying an amount of $16,200 for legal costs and disbursements in relation to what he says are offers made in regards to a new Binding Child Support Agreement.
2. I request that the court also dismiss the second order in Mr Martyn application that I pay all costs of and incidental to his/this application.
3. I request that an order be made for Mr Martyn to pay an amount of $400 per month off the child support arrears/debt that he owes for our daughter, which was retained arrears from the Binding Child Support Agreement (now set aside) and which stands at $34,712.78 as of 28 August 2020.
I indicated to the Respondent mother that in circumstances where the Child Support Registrar had not been served with her Application, I was unable to consider her proposed order 3.
The Law – concepts and principles
It was agreed that the issue of costs is to be determined in accordance with s 117 of the Family Law Act 1975 (Cth) (“the Act”).
Section 117 relevantly provides:
(1) Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, 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), (5) and (6) 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.
Those provisions make clear that, while the general rule in family law proceedings is that each party bears his or her own costs, the Court may order a party to pay the costs of another where there are circumstances justifying the making of such an order.
The considerations set out in s 117(2A) of the Act must be taken into account in deciding whether or not to order a party to pay the costs of another. No one factor under s 117(2A) prevails over any other factor. It is a matter of weight that is accorded to each of the relevant factors in the trial judge’s discretion: Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 per Strickland J.
As such, a litigant seeking a costs order must establish that the justice of the case requires an order for costs, by reference to the non-exhaustive list of statutory considerations set out in s 117(2A) of the Act, before such an order is made. Although the applicant for costs must establish circumstances which would justify such an order, it is not the case that a costs order can only be made in what has been described as “a clear case”: Penfold v Penfold (1980) 144 CLR 311 at 315.
Accordingly, there is “nothing to prevent any factor being the sole foundation for an order for costs” being made: Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123 at 130.
Consideration
It is necessary to determine whether the Applicant father, who seeks an order for costs, has established circumstances justifying such an order which displaces the position articulated in s 117(1) of the Act. It is not necessary to establish extraordinary or exceptional circumstances, however, there must be circumstances which, at the absolute discretion of the Court, justify a costs order: Stoian & Fiening (Costs) [2014] FamCA 944 at [19] having regard to the matters set out in s 117(2A) of the Act.
Subsection (2A)(a) – The financial circumstances of each of the parties to the proceedings
In the child support decision, I set out, in broad terms, the financial circumstances of the Applicant father which, as explained in that decision, have been adversely impacted by the current COVID-19 pandemic.
At paragraph 10 of her Affidavit filed on 4 September 2020, the Respondent mother explains that she has been unemployed since 25 June 2020 also “due to Covid-19 induced circumstances”. The Respondent mother attests, in that paragraph, that she considers that she does not have “the financial capacity or resources to pay” the Applicant father’s legal costs. In that context, the Respondent mother attests to living on withdrawals that she is making from her accrued superannuation as well as assistance she is obtaining from her current partner.
The fact that the Respondent mother attests to being unemployed is consistent with the child support assessment undertaken by the Commonwealth Department of Human Services Dated 18 August 2020. That Assessment records the mother’s taxable income as $0.
Counsel for the Applicant father contended that the mother has, in her Affidavit, failed to explain what she has done with the proceeds of the sale of what she described as her only asset, which was a home unit that she had purchased subsequent to her divorce from the husband which was located in a northern Sydney suburb. Counsel for the Applicant father further contended that the Court is not in a position to assess the Respondent mother’s current financial circumstances in circumstances where she has not provided particulars as to the superannuation that she is drawing upon to sustain herself.
I accept that, in opposing the Applicant father’s Application for costs, it would have been of assistance to the Court for the Respondent mother to have provided an updated financial statement. However, on the other hand, such a document has also not been provided by the Applicant father.
I accept that both parties have incurred substantial legal fees in respect to the litigation between themselves over the past few years and it is reasonable to assume that the Respondent mother, as she attests, sold her home in order to fund those legal fees. I note that the Respondent mother has access to superannuation, however it is generally understood that superannuation should be retained to sustain a person in their retirement and only accessed at a date prior to their retirement to relieve a situation of financial need.
Making an order for the Respondent mother to pay the costs of the Applicant father in circumstances where she is unemployed would require her to further deplete the balance of superannuation monies that she is currently accessing to relieve a situation of financial need caused by her unemployment.
Subsection (2A)(b) – Whether any party to the proceedings is in receipt of assistance by way of legal aid
The Respondent mother was legally aided during the proceedings concerning the child support Application. That legal assistance was, however, provided as result of the operation of s 102NA of the Act which is intended to avoid a situation where a party who alleges that they have been the subject of family violence cross-examining or being cross examined by their opponent. In other words, the legal assistance provided to the Respondent mother was not due to inadequate means.
Subsection (2A)(c) – The conduct of the parties to the proceedings in relation to the proceedings
Save to the extent that the Applicant father contends that the Respondent mother unreasonably rejected offers of settlement, the Applicant father does not seek to rely on this paragraph in seeking an order for costs.
Subsection (2A)(d) – Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
It is not contended, by the Applicant father, that this consideration is relevant.
Subsection (2A)(e) – Whether any party to the proceedings has been wholly unsuccessful in the proceedings
Counsel for the Applicant father noted that while the Applicant father was unsuccessful in obtaining an order for the elimination of arrears of child support which he owes, the Applicant father was successful in his primary Application to seek orders setting aside the binding child support agreement.
It could not be said, however, that the Applicant father was wholly successful in his Application or that the Respondent mother was wholly unsuccessful in opposing the father’s Application.
Subsection (2A)(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
Electronic folders and documents submitted by each party set out various offers that had been exchanged between them. Most of those offers occurred in late 2019.
I have not had regard to those 2019 offers in considering the Applicant father’s Application for costs in this matter. That is because, my child support decision dated 1 July 2020 makes it clear that the crucial reason for my acceding to the Applicant father’s Application was the exceptional circumstances created by the current COVID-19 pandemic. That pandemic did not occur until 2020.
Accordingly, the only offer that I have considered to be relevant to my consideration of the Applicant father’s Application for costs is an offer which he made on or about 1 June 2020 and included the following proposal:
Outstanding Child Support
19. All arrears in child support payments payable by the father pursuant to the Child Support Agreement dated 16 August 2012 is reduced to NIL.
Periodic Payments
20. The father will pay or cause to be paid to the mother as the mother may direct from time to time in writing, child support for the child in the total sum of $400 per month directly to the mother's nominated bank account, the first payment to be made on the 4th day of each month and the final payment to be made upon the date of a terminating event.
21. In the event that the Father ceases to work for a period of 60 days or more, as a result of injury or illness or matters beyond his control, then the father will pay periodic payments as assessed by the Child Support Agency only during the period of his unemployment.
22. Upon the father's return to paid employment and provided that his income is greater than or equal to the taxable income noted on his 2017 tax return, the provisions of this Agreement will continue otherwise the Father shall pay periodic payments as assessed by the Child Support Agency.
While the amount of $400 per month which was offered by the Applicant father in respect to the father’s ongoing obligation by child support exceeded the amount that the father is now required to pay as result of the child support assessment made on 18 August 2020, that offer by the Applicant father needs to be seen in the context of paragraph 19 of the Applicant father’s proposed child support agreement. As noted, paragraph 19 would have resulted in a situation where the Applicant father’s liability in respect to outstanding child support would have been extinguished. That liability, it has been noted, totalled, as at May 2020, the sum of approximately $31,928.22.
This is significant, because, in circumstances where, as at 1 June 2020, the parties child, who is the beneficiary of the child support, was 11 ½ years of age, the value of the child support for the remaining 6 ½ years, being the period of time until the child reaches the age of 18, would have totalled $31,200.
In other words, the Respondent mother would have been worse off by accepting the Applicant father’s offer of 1 June 2020 as compared to the outcome of the proceedings which dismissed the Applicant father’s Application to extinguish the arrears of child support owing..
Subsection (2A)(g) – Such other matters as the Court considers relevant
The position taken by the Respondent mother in this litigation was entirely reasonable. If it had not been for the unique circumstances created by the COVID-19 pandemic, it would have been unlikely that the Applicant father would have been able to establish the required exceptional circumstances requirement justifying the binding child support agreement being set aside. It is also significant that the ultimate beneficiary of the child support that the mother sought to retain is the parties’ daughter.
Conclusion
For all these reasons, the Applicant father has not satisfied the Court that there are circumstances that displace the presumption set out in s 117(1) of the Act. I therefore dismiss the Applicant father’s Application.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice McClelland delivered on 24 September 2020.
Associate:
Date: 24 September 2020
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