Matthews and Norris (No 2)
[2020] FamCA 741
•4 September 2020
FAMILY COURT OF AUSTRALIA
| MATTHEWS & NORRIS (NO. 2) | [2020] FamCA 741 |
| FAMILY LAW – COSTS – Application for costs by the husband – Where the wife opposes such application and seeks costs in her favour – Where the wife did not provide full and frank financial disclosure – Where the wife was unsuccessful in part, as orders were made in the husband’s favour – Where orders sought by the wife were beyond the jurisdiction of the Court – Where both parties made genuine attempts to resolve the matter – Where the wife’s conduct added to the costs of the proceedings – Where circumstances do not justify an order for costs on an indemnity basis – Ordered wife pay husband’s costs on a party/party basis. |
| Family Law Act 1975 (Cth) s 117 |
| APPLICANT: | Mr Matthews |
| RESPONDENT: | Ms Norris |
| FILE NUMBER: | NCC | 2226 | of | 2015 |
| DATE DELIVERED: | 4 September 2020 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Cleary J |
| HEARING DATE: | 27 August 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Carty |
| SOLICITOR FOR THE APPLICANT: | Oliver Campbell Heslop Lawyers |
| THE RESPONDENT: | Self-Representing |
Orders
That the wife pay the costs of the husband on a party/party basis, as assessed in accordance with Schedule 3 of the Family Law Rules 2004 or agreed; as follows, such payments to be made within 28 days of agreement or assessment:
1.1For the period 15 December 2018 to 20 November 2019 inclusive;
1.2Of the Application for Costs heard on 27 August 2020.
That the wife pay the husband’s costs, reserved on the following dates in the stated amounts, in a total amount of $9350 within 42 days of the date of these orders:
a.12 July 2017, $2740 [contravention];
b.4 September 2017, $3300 [contravention];
c.4 September 2017, $1100 [contempt];
d.5 October 2018, $2200 [change of venue].
The Application in a Case [costs] of the husband filed 5 August 2020 is otherwise dismissed.
The Response to an Application in a Case [costs of the wife filed on 7 August 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 Matthews & Norris 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 NEWCASTLE |
FILE NUMBER: NCC 2226 of 2015
| MR MATTHEWS |
Applicant
And
| MS NORRIS |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application by Mr Matthews (“the husband”) for costs arising from a six day trial in 2019 and for costs in respect of four applications made by the wife between July 2017 and October 2018, reserved on those dates to the final trial.
The husband filed material necessary to support an application for indemnity costs. The documents reveal fees charged by the solicitor and counsel for the husband.
The respondent, Ms Norris, (“the wife’) is generally opposed to a cost order being made in favour of the husband.
By her Response to an Application in a Case, the wife applied for the Court to make a costs order in her favour as the Court saw fit.
Evidence
The documents relied on in respect of the application were as follows:
The Applicant husband
(a)Application in a Case filed 5/08/2020;
(b)Affidavit of the husband filed 5/08/2020;
(c)Affidavit of the husband filed 20/08/2020;
The Respondent wife
(d)Response to an Application in a Case filed 7/08/2020;
(e)Affidavit of the wife filed 7/08/2020;
(f)Financial Statement of the wife filed 14/06/2019.
(g)Exhibit 1 - Legal Aid invoice for stated period;
(h)Exhibit 2 - letter to the wife from Ms CQ, Senior Analyst at AZ Bank;
Other
(i)Orders of 9 July 2020 (“9 July orders”) and reasons for judgment.
The Law
The principle established by section 117 of the Family Law Act1975 (Cth) (“the Act”) is that each party to proceedings shall bear his or her own costs. However, if in proceedings under this Act the Court is of the opinion that there are circumstances that justify in doing so, the Court may, subject to certain subsections and the applicable rules of Court, make such order as to costs as the Court considers just.
The discretion of the Court to make an order for costs is enlivened, in my view, by the circumstances of this case. Accordingly, in considering what order, if any, should be made, the Court must have regard to the following factors, which are set out in s 117(2A) of the Act.
(a) The Financial Circumstances of Each of the Parties
The Wife
Paragraphs 283 to 288 of the reasons for judgment identify the findings on this point:
Both parties have the physical, mental and academic qualifications to engage in gainful employment.
The husband is a general manager earning about $140,000 per year.
The wife disclosed no income, other than New Zealand Government benefits of $620 per week “JobSeeker including medical and sole parent support”.[1]
The wife did not disclose income from her American company, Company W LLC. The wife made a reference to her two New Zealand companies as debts or loan advances greatly exceeding asset value.
At least after the wife’s younger child, Z, starts school, if not before, the wife will be able to re-enter the workforce as a professional.
Some adjustment is made for the current disparity in income between the parties, but is balanced by undisclosed levels of income received by the wife from the units in the JJ Street property in New Zealand, in which the wife lives.
[1] Financial Statement of the wife filed 14/06/2019.
The Financial Statement of the wife relied on in this application for costs is the document that was relied on at trial by the wife. Accordingly, there is no fresh information about the wife’s financial circumstances.
The wife tendered into evidence a document titled “Tax Invoice Family Legal Aid Fixed Fees for a period 7 May to 17 June 2020”.[2] The purpose of the tender was to establish that the financial circumstances of the wife are such that she is eligible for Legal Aid in New Zealand for a parenting dispute, unrelated to these proceedings. Whilst accepting that the wife has had the benefit of a grant of Legal Aid in New Zealand, I am not in a position to know what information the wife provided to or withheld from Legal Aid New Zealand.
[2] Exhibit 1.
The wife tendered a second document which relates to a refinancing by the wife’s company, Company AA Limited of the property at JJ Street, C Town, New Zealand (“JJ Street”). The wife lives in one of the units which comprise this property. There are eight further units leased by the company. This was a contentious issue at trial.
The letter thanks the wife for provision of a valuation, presumably of JJ Street. The valuation was not provided to the Court. The value was not disclosed. The present debt in its entirety is not disclosed. The amount being refinanced was $625,202. The equity in the property at JJ Street is therefore not known to the Court.
The document confirms that the asset is still in possession of the company and that the wife is the “Covenantor” of a fresh loan. Repayments by the company which the wife controls must be expected.
The position is unclear, but does not support the wife’s submission that she will be bankrupt and living on the streets if ordered to pay costs. The evidence continues to be incomplete with respect to the financial circumstances of the wife.
The Husband
The husband continues to be in full-time employment as a general manager. He has incurred legal fees since he initiated proceedings in August 2015 in a total of $375,736. Those fees were incurred in a range of matters, including a trial for final parenting orders, appeals, numerous short applications and this trial for property orders.
I accepted the evidence of the husband and his father and paternal aunt that he borrowed $250,623 in total to meet a part of those costs.[3]
[3] Matthews & Norris [2020] FamCA 547, para 359.
The costs sought here are in respect of the property proceedings before me and the four discrete applications where costs were reserved to final trial.
(b) The Conduct of the Parties and (d) Failure to Comply with Orders
Counsel for the husband identified findings about the conduct of the wife with respect to certain assets, such as the truck,[4] business asset 1,[5] and the apparent variation of a document.[6]
[4] Matthews & Norris [2020] FamCA 547, paras 113-114.
[5] Matthews & Norris [2020] FamCA 547, para 126.
[6] Matthews & Norris [2020] FamCA 547, para 127.
The conduct of the wife in refusing to properly disclose the value of her assets owned or controlled by her in New Zealand and the United States of America added to the costs of the husband.
The wife took a stance that her foreign assets were not to be taken into account as if the Court could be compelled by the intensity of the stance to accept that position.
I take the conduct as to financial disclosure into account in considering a costs application.
(e) Whether a Party has been Wholly Unsuccessful
The wife has been unsuccessful in terms of her own orders sought. She has retained her New Zealand and United States assets and has been directed to pay a sum of money to the husband.
The orders applied for by the wife in her response were for common law damages of $1.5 million for alleged injury incurred by her at the hands of the husband; a cash payment for damages and for the sale of the home in Victoria, which belongs to the husband’s parents. Spouse maintenance was also sought. Many of the orders were beyond the jurisdiction of the Court and should not have been sought.
(f) Whether Either Party has made an Offer to the Other to Settle
The Husband
On 4 December 2018 the husband, through his solicitor, made an offer in writing to the wife. The offer was as follows:
·Payment to the husband by the wife of $128,000 representing the proceeds of sale by the wife of business asset 1;
·Transfer by the wife to the husband of her 12 ordinary shares in Matthews Pty Ltd;
·That the husband retain the proceeds of sale of the P Town property and the Suburb F property (held in a solicitor’s trust account);
·A cash payment to the husband of $275,000;
·That the self-managed superannuation fund of the parties be subject to a splitting order in favour of the husband, being 100 per cent of the member account of the wife;
·That the parties otherwise retain property in possession and liabilities in the name of that party.
The offer was made at a time when, if accepted, the whole of the costs of a trial could have been avoided.
The Wife
The wife responded immediately to the offer of the husband with an offer of her own. The offer of the wife was as follows:
·That the wife retain all assets owned by companies which she controlled (unvalued);
·That the husband retain the proceeds of sale of the P Town property;
·That the husband retain the one-fifth share in his parents’ property in Victoria;
·That the wife transfer her shares in Matthews Pty Ltd to the husband and that the wife be released from the guarantee in respect to the company’s loans;
·That the wife be responsible for the debt to Mr BP ($25,000);
·That the husband retain proceeds of sale of the motor vehicle 2;
·That there be a superannuation split of the parties’ self-managed superannuation fund in the amount of $300,000 to the wife;
·That the wife would not bring proceedings “around physical damage she has been sustained by the husband”.
There was some commonality in the offers. The husband was seeking a cash payment of $403,000 and to retain the whole of the superannuation fund. The wife was offering no cash payment and wanted $300,000 in a super split. Unfortunately the offer and response stopped with the two letters exchanged on the same day in December 2018. However, it cannot be said that the wife failed to engage with the settlement offer.
Prior to those offers there had been discussion about settlement, but many years before. During a period of separation in August 2014 the wife indicated that she wished to equally divide all Australian assets. During a period of separation in 2013 the husband was content with an equal split of assets overall.
This difference, the inclusion or not of the wife’s overseas assets, continued to date of trial.
I was taken by the wife to references to the wife’s wish to mediate, which appear to be almost exclusively in relation to arrangements for the parties’ child.
In the 2019 trial the asset position became somewhat clearer. What became evident was that the wife at all times considered that her New Zealand and United States assets were “off limits” to the Court. She resisted disclosure with considerable hostility. In my view, the parenting application associated with these proceedings was her main focus, which may have distracted her from focus on the December 2018 offer and counter-offer.
Taking these factors into account, I give weight to the attempts of both parties to resolve the dispute. The attitude of the wife to her foreign assets was at all times unreasonable. However, despite that, the wife did, in my view, at least make a proper offer based on her own premise.
The offer made by the husband was much closer to the eventual outcome and that factor should be taken into account and given considerable weight.
At trial the husband had sought a higher figure of cash payment to him, being $733,000, subsequently modified to $529,000.
However, I do not accept the submission that the circumstances in this matter are so exceptional that the whole of the husband’s costs should be paid by the wife. I do consider that an order for party/party costs is proper recognition of the husband’s realistic offer, the added expense of the husband issuing subpoena to obtain evidence which could have been provided by the wife and, to a lesser extent, the time taken in trial. An order will be made accordingly.
Reserved Costs
Over the course of proceedings costs were reserved on four occasions, which the husband asks this Court to deal with as follows:
a)On 7 February 2017 the wife filed an application for alleged contempt by the husband. On 12 July 2017 the application was dismissed by consent before Austin J. The wife was represented by counsel on that occasion and may or may not have been present. Also by consent, the husband’s costs of and incidental to the contempt application were reserved to the final trial. Ultimately this application comes before me due to the trial having been referred to my docket and conducted by me;
b)On 27 February 2017 the wife filed an application for multiple alleged contraventions by the husband. On 4 September 2017, after several adjournments, the application was dismissed by Austin J. The wife was not present at Court and not represented. Costs were reserved to the final trial of the property dispute. In due course the trial was allocated to me. Costs in the sum of $3300 are reasonable, given the number of alleged contraventions raised and the size of the affidavit in support. An order is made to that effect;
c)On 16 August 2017 the wife filed an application for alleged contempt by the husband with respect to property. On 4 September 2017 the application was listed before Austin J together with a contravention application. Costs were also reserved to the final trial, which ultimately came before me. The sum of $1100 inclusive of GST is reasonable in the circumstances. An order is made to that effect;
d)On 13 June 2018 the wife filed an application for Austin J to disqualify himself from further proceedings and for a change of venue from the Newcastle Registry to the Melbourne Registry of this Court. On 15 June 2018 the application in respect of the second order sought was transferred to me. On 2 August 2018 the matter was listed for determination. On 5 October 2018 the application was dismissed. The sum of $2200 including GST is most reasonable in the circumstances. An order is made to that effect.
Costs of this Application
The wife opposed any order for costs and pursued a cost order for herself.
The wife lodged an Appeal against the 9 July orders. However whatever her expectations are for a different result in the event of a successful appeal, she must have realised that the outcome of the property trial at first instance was likely to give rise to costs being awarded to the husband.
Far from attempting to reach an agreement on costs the wife pursued a cost order in a contested interlocutory hearing.
Accordingly, the husband should have the benefit of a costs order.
conclusion
I have declined to make an order for costs on an indemnity basis. Having said that, the fee schedule for both solicitor and counsel has remained unchanged over four and a half years and is at a reasonable rate, both hourly and daily for solicitor and counsel.
The respondent wife may find that party/party costs are not assessed to be very much less than costs on the indemnity basis. It is open for the parties to agree on a figure for the costs between 15 December 2018 to 20 November 2019 and they should consider doing so.
Orders are made accordingly.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cleary delivered on 4 September 2020.
Associate:
Date: 4 September 2020
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