MIG and JJG

[2004] FCWA 148

JURISDICTION:

FAMILY COURT OF WESTERN AUSTRALIA

ACT:	FAMILY LAW ACT 1975
LOCATION:	PERTH
CITATION:	MIG and JJG [2004] FCWA 148
CORAM:	PENNY J
HEARD:	WRITTEN SUBMISSIONS
DELIVERED:	9 NOVEMBER 2004
FILE NO/S:	PT 6646 of 2000
BETWEEN:	MIG

Applicant/Husband

AND

JJG

Respondent/Wife

AND

INSOLVENCY & TRUSTEE SERVICE
AUSTRALIA
Applicant in Federal Court Proceedings

Catchwords:

Costs

Legislation:
Nil

Category: Not Reportable

Representation:
Counsel:

Applicant:	Self Represented Litigant
Respondent:	Ms M Chape
Applicant in Federal Court Proceedings:	Mr A Carles

Solicitors:

Applicant:	No appearance
Respondent:	Clairs Keeley
Applicant in Federal Court Proceedings:	Carles Solicitors

Case(s) referred to in judgment(s):
Kohan and Kohan (1993) FLC 92-340

1 The wife seeks costs from 1 August 2003 in relation to her response seeking orders in relation to property settlement, and her application to annul the husband's bankruptcy. On 20 February 2004 I delivered my judgment in this matter.

2 The proceedings in this court were commenced by the husband in December 2000, when he sought orders that the three children of the marriage reside with him. In January 2001 he amended his Form 3 application to seek orders in relation to the parties' property, particularly, the former matrimonial home. At that time he sought orders that it be sold and the net proceeds of sale be divided equally between the parties.

3 On 9 July 2001 the husband filed a debtor's petition declaring himself bankrupt. The wife was then forced to bring an application in the Federal Court seeking to annul the bankruptcy. This application was transferred to the Federal Magistrate's Court and subsequently to the Family Court and was dealt with by me. I found that the husband was not insolvent when he filed his petition for bankruptcy and that the bankruptcy should be annulled.

4 Section 117(1) of the Family Law Act states that subject to sub-section(2) each party to the proceedings under this Act shall bear his or her own costs. Section 117(2) says that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to sub-section (2A) and the Rules of Court, make such order as to costs as the court considers just.

5 Section 117(2A) states that in considering what order, if any, should be made by the Court in relation to costs, the Court shall have regard to a number of matters. Those matters which are relevant to these proceedings are as follows:

The financial circumstances of each of the parties to the proceedings

6 My judgment delivered on 20 February 2004 sets out the parties' financial circumstances as disclosed by them at that time. The husband's current position was not known as he was working overseas and had failed to file an up to date statement of his financial circumstances. What was known, however, was that he was earning approximately US$80,000 per year while working overseas. The wife was then hopeful of returning to work in the near future, earning approximately $40,000 per year.

7 As a result of my judgment the wife retained the former matrimonial home valued at $280,000, with an outstanding mortgage of $130,000. In addition, she had other debts which had to be paid by her.

The conduct of the parties to the proceedings in relation to the proceedings

8 The husband did not make a full disclosure of his financial circumstances, particularly after going to work overseas. The wife was forced to come back to the court when the husband failed to comply with orders which resulted in legal costs to her. The husband was not bankrupt at the time he presented the debtor's petition, and therefore the bankruptcy was annulled. In a letter to the wife's mother, who was owed money by the parties, he stated that he had only filed the petition for bankruptcy in order to get the wife's mother her money back. Significant legal expenses were incurred by the wife setting this bankruptcy aside.

9 On 22 September 2003 the husband filed an amended Form 3 application seeking orders in relation to property. One of the orders sought by the husband was that his debtor's petition in bankruptcy be declared "void abanitio" or be set aside. Such an order could not be made by consent. Section 153B of the Bankruptcy Act 1966 states that if the Court is satisfied that a debtor's petition ought not have been presented then the Court may make an order annulling the bankruptcy. In my view, there was no choice but for a judge to consider the application and make a determination. If the husband had not lodged the petition in 2001 this would not have been necessary and the wife would not have had to incur significant costs in bringing the application in first the Federal Court, then the Federal Magistrate's Court and finally in the Family Court.

Whether any party to the proceedings has been wholly unsuccessful in the proceedings

10 The husband failed to comply with orders to file documents and the wife was forced to bring proceedings on an undefended basis. It was therefore necessary for her to bring all the evidence forward to support her claim.

11 In the husband's amended Form 3 filed on 22 September 2003, he agreed that the former matrimonial home should be transferred to the wife, subject to her indemnifying him in relation to the mortgages held by BankWest, any other outgoings in relation to the former matrimonial home and any debt owed by the parties to the wife's mother. He further sought orders that $150,000 of the property transferred to the wife "be ascribed to the child support payable by the husband to the wife", including arrears, to 20 May 2015. The wife in her amended response sought an order that the property be transferred to her in similar terms to that proposed by the husband. She also sought orders that the sum of $100,000 of the property transferred to her be ascribed to child support, including arrears accrued, and $50,000 be ascribed to spousal maintenance.

12 In my judgment I agreed that the property should be transferred to the wife subject to her indemnifying the husband in the terms agreed by her. I determined that the only sums which should be attributed to the husband's child support arrears and future payments were 8% of the net assets, or $21,200. This sum did not equate to the amount of arrears which were owing at that time by the husband.

13 The wife, as a result of my judgment, received more than she sought in her amended Form 3A, in that only $21,200 of the property received by her was attributed to the husband's child support commitments rather than the $100,000 she sought. The amount awarded was significantly less than that sought by the husband of $150,000.

Whether either party to the proceedings has made an offer to settle in writing to the other party

14 The husband says that he made an offer to settle the proceedings in 2000 in terms similar to that ordered by me. In that letter the husband offered to pay child support in the sum of $1,000 per month and to transfer to the wife the matrimonial home

subject to the wife taking over the mortgage and the debt to the wife's mother. He proposed that otherwise each party would retain the property and chattels in their possession, and be responsible for their own liabilities. There was contained in this letter, however, an important paragraph. It stated as follows:

"My instructions are that the question of property settlement and that of obtaining of child support as set out in this letter are linked and are matters that would be dealt with at the same time by way of separate agreement."

15 It is clear the offer to transfer to the wife the husband's interest in the former matrimonial home was subject to her agreeing to a monthly amount of child support payable by the husband to her in the sum of $1,000 per month. At that time the husband was assessed to pay child support in the sum of $1,816 per month. I can understand why the wife did not accept the offer contained in that letter. I am not satisfied that this offer could be accepted by the wife without affecting her child support entitlement.

16 In the amended Form 3 filed by the husband on 2 January 2001 he sought orders that the former matrimonial home be sold and the proceeds divided equally between the parties, after discharge of debts.

17 The husband in his submissions refers to offers made in the conciliation conference, which I cannot take into account.

18 The amended Form 3 filed by the wife on 29 July 2003 offers the husband the sum of $100,000 to be ascribed to child support from the property settlement. This was a very generous offer and a greater sum than was awarded by me at trial.

Conclusions on costs

19 I am satisfied, given the husband's conduct in lodging a petition for bankruptcy when he was not bankrupt, and not accepting the offer made by the wife in her amended response filed in July 2003, that he should be responsible for the wife's costs from August 2003, when she retained solicitors to act on her behalf.

Indemnity costs

20 The wife's solicitors in their submissions acknowledge that there is no signed costs retainer agreement between the respondent wife and her solicitors. In 2000 a draft agreement was prepared, however, the wife was subsequently granted legal aid and this agreement was not signed. The wife's solicitors commenced to act for the wife again on 1 August 2003, but not pursuant to a grant of aid. They have charged the wife at a rate of $220 per hour for work involving a senior solicitor, and a lower rate for work carried out by a junior solicitor or clerk. The current rate which can be charged pursuant to Schedule 3 of the Family Court Rules by a lawyer is $165 per hour.

21 The Full Court in Kohan and Kohan (1993) FLC 92-340 held that indemnity costs could only be awarded where there was a costs agreement between the parties seeking costs and their solicitors. Despite this the wife's solicitors submit I have a discretion to award indemnity costs.

22 In my view, indemnity costs can only be awarded where a costs agreement exists between the party seeking costs and their solicitors because of Rule 19.18 of the Family Court Rules. That rule states as follows:

"The maximum amount of costs that a lawyer may charge and

recover from a client for work done for a case is:

(a)	an amount calculated in accordance with a costs agreement between the lawyer and the client for work; or
(b)	if there is no costs agreement, an amount calculated in accordance with Schedule 3."

23 In this matter, as there is no costs agreement, the maximum amount the wife's solicitors can charge and recover from her is an amount calculated in accordance with Schedule 3. That being the case I cannot order that the husband pay the wife's costs other than in accordance with the Schedule.

24 The husband shall pay the wife's costs from 1 August 2003 in relation to both the wife's Form 3A response and proceedings relating to the husband's bankruptcy, to be taxed if not agreed.

I certify that the preceding [24] paragraphs are a true copy of the reasons

for

judgment delivered by this Honourable Court

Associate