Mason & Mason (No 3)
[2023] FedCFamC1F 297
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Mason & Mason (No 3) [2023] FedCFamC1F 297
File number: SYC 6981 of 2021 Judgment of: BRASCH J Date of judgment: 21 April 2023 Catchwords: FAMILY LAW – COSTS – Costs arising from Contempt Application – Where three charges prosecuted by wife – Where prima facie case not established on two of the three charges – Where one charge proceeded to further hearing – Where that charge not made out as a flagrant challenge to the authority of the court - Where wife’s application dismissed – Where husband sought costs on party/party basis or scale in the alternate – Where wife resisted the making of any costs order – Where wife unsuccessful – Where asset pool is at least $17 million – Costs Order made and to be met from the wife’s entitlement in the ensuing s 79 of the Family Law Act 1975 (Cth) proceedings set down for September 2023 Legislation: Family Law Act 1975 (Cth) ss 4(1), 79, 112AD, 117(1), 117(2), 117(2A)(a)-(g), 117(4), 117(4A), 117(5), 117(6)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17(1)(a)
Cases cited: Bondelmonte v Bondelmonte (2016) 55 Fam LR 65; [2016] FamCAFC 48
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish (2005) 33 Fam LR 123; [2005] FamCA 158
In the Marriage of Schwarz (1985) FLC 91-618
Mason & Mason (No 2) [2023] FedCFamC1F 72
Mason & Mason [2023] FedCFamC1F 18
Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157
Prantage & Prantage (Costs) [2014] FamCA 850
Rankin and Rankin (No 3) [2019] FamCAFC 133
Sfakianakis& Sfakianakis (2019) 59 Fam LR 419; [2019] FamCAFC 54
Division: Division 1 First Instance Number of paragraphs: 53 Date of last submissions: 6 April 2023 Date of hearing: 20 January and 14 February 2023 Place: Sydney Counsel for the Applicant: Mr Jones SC Solicitor for the Applicant: Barkus Doolan Winning Solicitor for the Respondent: Lander & Rogers ORDERS
SYC 6981 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MASON
Applicant
AND: MR MASON
Respondent
order made by:
BRASCH J
DATE OF ORDER:
21 APRIL 2023
THE COURT ORDERS THAT:
1.The wife pay the husband’s costs of the Amended Application - Contempt filed 25 November 2022, in the sum of $53,099.14.
2.The wife’s payment of those costs is to be paid from her entitlement when the parties’ s 79 proceedings are determined.
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 a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BRASCH J:
INTRODUCTION
As said in Mason & Mason [2023] FedCFamC1F 18 at [1] and [3]:
On 25 November 2022, the wife filed an Amended Application – Contempt, which contained three charges. It was the wife’s case that the husband had contravened orders under the Act and it involved a flagrant challenge to the authority of the court; see s 112AP(1)(b) of the Family Law Act1975 (“the Act”).
...
The hearing of the contempt application was set down for hearing on Friday 20 January 2023. Also before me on that date was an Amended Application in a Proceeding filed by the husband on 9 December 2022 and four objections to two subpoena…
Given the husband’s right to silence on the Contempt Application, it was agreed that his Amended Application in a Proceeding and the four objections to the two subpoena be adjourned for hearing after the Application - Contempt was determined.
The Contempt Application proceeded on 20 January 2023. At the conclusion of the hearing, I reserved my decision on whether a prima facie case had been established for each Charge. On 25 January 2023 I delivered reasons (Mason & Mason [2023] FedCFamC1F 18) dismissing Charge One and Charge Three as a prima facie case had not been established.
However, I was satisfied that a prima facie case had been established for Charge Two. Accordingly, on 14 February 2023, the matter came back before me for hearing. I reserved my judgment at the conclusion of the hearing. On 20 February 2023, I delivered ex tempore reasons dismissing Charge Two (Mason & Mason (No 2) [2023] FedCFamC1F 72) as not constituting a flagrant challenge to the authority of the Court.
I also made the following orders:
2.Any party wishing to agitate for costs do so by filing and serving written submissions within 28 days of the date of this order.
3.The other party is to file and serve written submissions in reply 28 days after the service of any written submissions provided for in Order 2 above.
4.The need to file an Application in a Proceeding with respect to costs is dispensed with.
5. The parties are agreed the issue of costs be determined in Chambers.
On 13 March 2023, the husband filed written submissions seeking costs either on a party/party basis, or scale in the alternate.
On 6 April 2023, the wife filed written submissions opposing the making of any costs order.
BACKGROUND
As said in Mason & Mason [2023] FedCFamC1F 18 at [6]-[9]:
There was little, if any, background information about the parties’ relationship in the material before me. However, from cross-examination of the wife it seems that the parties commenced cohabitation in 1992, married in the same year and separated on 20 June 2021. In cross-examination, reference was made to the parties’ children [X] and [Y].
When together, the husband and wife operated a farming partnership and [another] business. The wife agreed in cross-examination that the husband managed the day to day operation of the farm during the marriage and post separation. The wife also agreed that she was primarily responsible for the books of accounts for the enterprises. The wife is [a finance professional].
The wife also agreed the husband established the […] business with a third party and that she was not involved with its day to day running. She was however the director of [C Pty Ltd], which ran (through a trust) an Airbnb property at [Suburb D].
The wife agreed that the parties’ pool of assets was at least $17 million.
Material – costs
I have previously listed the material each party relied upon in the Contempt Reasons. The wife relied upon the following additional material in relation to costs:
·Written Submissions filed 6 April 2023 (“Wife’s written submissions”); and
·Financial Statement filed 16 December 2022.
The husband relied upon the following additional material in relation to costs:
·Written Submissions filed 13 March 2023 (“Husband’s written submissions”).
Both parties filed Costs Notices prior to each hearing of the Application - Contempt.
Costs
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that each party will bear their own costs. That general rule is subject to s 117(2), which provides that a court may make such order for costs as it considers just if “…the court is of opinion that there are circumstances that justify it in doing so…”.
The factors that are to be considered when contemplating the making of a costs order are those set out in s 117(2A) of the Act; albeit the court may give such weight as it considers appropriate to any relevant factor (Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664 at [24]).
It is well settled that no single factor in s 117(2A) has priority, nor must more than one factor be satisfied; rather, any one factor may be sufficient; Prantage & Prantage (Costs) [2014] FamCA 850 at [12]; Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish (2005) 33 Fam LR 123 at [41].
The first issue to address is has the husband established any circumstances which justify departing from the position that each party pay their own costs and the making of a costs order in his favour. The second question is whether, if there are circumstances justifying a costs order, on what basis should the wife should pay the husband’s costs – for example as was said in Sfakianakis& Sfakianakis (2019) 59 Fam LR 419 at [10]:
It is, however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words “such order as to costs ... as the court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well-known example is assessment on a trustee basis, which is more generous than party and party costs, but falls short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party costs nor an indemnity costs order. ...
Has the husband established any circumstances which justify departing from the position that each party pay their own costs, and the making of a costs order in his favour
(a) the financial circumstances of each of the parties to the proceedings;
The wife agreed during the course of the contempt hearing that the net pool of assets available for distribution is at least $17 million.
Pursuant to the 14 October 2021 orders both parties receive $15,000 per month from matrimonial assets, plus the payment of various other expenses.
The wife’s Financial Statement indicates she has $435,281 in the bank but says $275,000 is earmarked for tax. She also lists three vehicles in her name with a total gross value of about $230,000.
The wife said the husband receives an income via an insurance policy of $387,400 per annum (Wife’s written submissions, paragraph 7). This is said to be in addition to the $15,000 per month to which I have already referred.
The husband made no submissions with respect to his own financial circumstances.
The wife said in submissions that “any savings that the wife has received is by way of partial property settlement” and “[t]hose funds have or [sic] been applied to meet the costs of the wife’s legal fees” (Wife’s written submissions, paragraph 8). She said the $15,000 per month was her only income.
Since the application was heard, the husband has obtained litigation funding with a credit limit of $320,000 (Annexure B to the wife’s written submissions filed 6 April 2023, p.6). In submissions, the wife said “[i]t should also be noted that the husband disclosed for the first time on 29 March 2023 that he has obtained litigation lending...” (Wife’s written submissions, paragraph 10). The agreement found at Annexure B to the wife’s written submissions shows the agreement was only executed by the fund on 22 March 2023. It was also said he can access this money. However, the agreement attached to the wife’s submissions shows the fund is for outstanding legal fees and legal fees going forward to resolution.
Counsel for the wife submitted an order for costs “will be materially adverse to her financial position” (Wife’s written submissions, paragraph 11). The husband’s written submissions contended that the wife “has sufficient income, property, and resources to meet a costs order” and correctly identified that “[i]n any event, impecuniosity is not a bar to an order for costs”, citing In the Marriage of Schwarz (1985) FLC 91-618 (Husband’s written submissions, paragraph 18-19). He sought payment within 28 days.
I accept impecuniosity is no bar to the making of a costs order. Yet it could hardly be said (and was not by the wife) that a pool of at least $17 million rendered someone impecunious. Rather, the submissions were more about the wife’s ability (or inability) to meet a costs order now.
The gravamen of the wife’s submissions under s 117(2A)(a) was that a costs order against the wife “will be materially adverse to her financial positon and the usual costs order would not materially affect the husband’s financial circumstances.” If impecuniosity is no bar to a costs order, it must follow that material adversity to the wife’s financial position is not either.
The parties told me at hearing that the substantive s 79 dispute is set down before another judge of this Court in September 2023. That is not too far away.
(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;
Neither party is in receipt of legal aid.
(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;
The wife submitted that the concession by the husband that he breached the orders and that proceedings should have been brought under s 112AD acknowledges that the institution of proceedings was necessary in any event and “costs expended because of his conduct” (Wife’s written submissions, paragraph 12). It was also said a costs order would reward the husband for his contravention.
The problem with those submissions is that the wife filed a Contempt Application not a Contravention. They are not interchangeable swords. It also overlooks the reality that I dismissed two of the wife’s three charges for failing to make out a prima facie case and ultimately dismissed her application.
Not surprisingly, the husband submitted that the wife’s application “ought more properly have been brought as a Contravention Application pursuant to section 112AD” (Husband’s written submissions, paragraph 21).
I agree. The husband admitted he contravened one order, which is the one charge I permitted to go to further hearing. However, I found that the husband’s contravention fell within the general run of breaches to which s 112AD applies and dismissed the wife’s Contempt Application.
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
The wife submitted that this subsection is “most significant and should be determinative in the circumstance of the present case: cf Bondelmonte v Bondelmonte (2016) 55 Fam LR 65 at [148]” (Wife’s written submissions, paragraph 13).
The wife opposed a costs order in favour of the husband submitting it would “reward him for his disregard of the orders of the Court (Wife’s written submissions, paragraph 14). Again, this overlooks the fact that two of the wife’s charges did not make it over the prima facie hurdle. It also overlooks the reality that the wife chose to bring a Contempt Application, as opposed to a Contravention, and failed.
The Court was only satisfied that one of the three Charges as contained in the wife’s application was made out on a prima facie case. The wife bore the onus of proving the Charges beyond a reasonable doubt and was unable to do so.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
The wife properly concedes she was unsuccessful on her Contempt Application.
Section 4(1) of the Act defines proceedings as follows:
proceedings means a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding in the course of or in connexion with a proceeding.
(Emphasis added)
Clearly, the Contempt Application was an incidental proceeding in the course of or in connexion with the s 79 proceedings.
It is correct that the parties have s 79 proceedings on foot, but both parties approached the Contempt Application, as essentially, its own satellite, self-contained dispute. Consistent with the definition in s 4(1), the husband sought his cost arising out of the Contempt Application and the wife resisted that on the same basis.
The husband submitted the wife was wholly unsuccessful in respect to her Contempt Application (Husband’s written submissions, paragraph 28). I agree; I dismissed the application.
(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
The husband submitted “[n]o offers of settlement relevant solely to the Contempt Application were made (Husband’s written submissions, paragraph 29). The wife made no submissions on this subsection.
(g) such other matters as the court considers relevant.
At the hearing of 20 January and 14 February 2023, the husband was represented by Senior Counsel. The husband submitted that it was appropriate for him to engage Senior Counsel “given the serious nature of the application and the severe consequences which may flow” (Husband’s written submissions, paragraph 30).
The husband submitted that Senior Counsel’s experience and time as Senior Counsel should be considered by the Court and, in the event the Court considered scale costs to be appropriate, the Court should apply the high end (Husband’s written submissions, paragraph 31).
Given contempt applications may come with very serious consequences, I consider it appropriate that the husband engaged Senior Counsel to represent him to defend the Contempt Application. Indeed, the wife has retained Senior Counsel to make submissions resisting the costs order sought.
Subsections 117(4) and (5) concern Independent Children’s Lawyers; this is irrelevant. Section 117(4A) is also irrelevant dealing as it does with s 91B interventions. Subsection 117(6) is about guardians ad litem. It is irrelevant.
Conclusion on justifying circumstances
In the exercise of my discretion, I conclude that the following circumstances justify making an order for costs:
(a)material adversity to the financial position of the wife, as she contends, cannot be a bar to a costs order the same way as impecuniosity is not;
(b)as part of the financial circumstances of the parties, the parties will be having a trial over the $17 million pool (at least) in a matter of a few months; and
(c)whilst the husband admitted to contravening one order, it was the wife who chose to file a Contempt Application and failed on all three charges.
On what basis should the husband should pay the wife’s costs
The husband sought costs on a party/party basis in the sum of $62,848. Looking at the husband’s schedule, I cannot see how that sum is calculated. In the alternative, the husband sought costs according to scale in the sum of $53,099.14. On my calculations, the correct figure is $53,100.03 but little turns on that.
The breakdown of costs sought by the husband was set out in his written submissions.
Unfortunately, the husband did not make any submissions to assist me as to why I might make costs on a party/party basis. I am also unsure how the figure in submissions was arrived at. That has not been helpful. Equally unhelpfully, whilst I appreciate the wife submits each party bears their own costs of the Contempt, the wife too did not make any alternate submission on the basis or quantum of the costs sought, or challenged any of the line items.
The “Court is not obliged to, nor should it attempt, something akin to a taxation of costs undertaken by an assessor” (Rankin and Rankin (No 3) [2019] FamCAFC 133 at [23]). Only where the parties have provided sufficient particulars of the costs claimed, and there has been a sufficient challenge to the costs claimed, would the Court be in a position to assess the costs. The particulars have been provided but the challenge to those specifics is not sufficient.
Disposition
Rule 12.17(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) allows me to fix costs. Thus, I will fix the husband’s costs in the sum of $53,099.14, as set out in submissions. That is by reference to scale. In circumstances where I cannot ascertain why I would order party/party costs I will therefore rely on the scale. I will also not cavil with the particulars, given as the wife did not challenge any line items.
The husband sought that costs be paid to him within 28 days of the making of any costs order.
The wife made no alternate submissions on timing.
Whilst I do not consider the wife’s contention that she is currently cash poor to be a bar to the making of a costs order, I do take it into account with respect to the timing of the payment. I will therefore order that the sum of $53,099.14 be paid from the wife’s entitlement when the s 79 proceedings are determined.
I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Brasch. Associate:
Dated: 21 April 2023
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