Moneta and Kimpton and Anor
[2014] FCCA 2622
•24 November 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MONETA & KIMPTON & ANOR | [2014] FCCA 2622 |
| Catchwords: FAMILY LAW – COSTS – Third party – whether costs against a third party based on Family Law Act or Uniform Civil Procedure Rules – whether costs payable, and if so, on what basis. |
| Legislation: Family Law Act 1975 (Cth), ss.79, 117(1), (2) and (2A) Child Support Assessment Act 1989 (Cth), s.118(1)(a) |
| Thorpe& Thorpe and Anor [2012] FamCA 719 at 14 I & I (No.2) (1995) FLC 92-625 |
| Applicant: | MS MONETA |
| First Respondent: | MR KIMPTON |
| Second Respondent: | MS DUFORT |
| File Number: | WOC 960 of 2010 |
| Judgment of: | Judge Altobelli |
| Hearing date: | In Chambers |
| Date of Last Submission: | 1 September 2014 |
| Delivered at: | Wollongong |
| Delivered on: | 24 November 2014 |
REPRESENTATION
| Solicitors for the Applicant: | Rita Thakur & Associates |
| Counsel for the First Respondent: | Mr Jackson |
| Solicitors for the First Respondent: | Kydon Segal Lawyers |
| Solicitors for the Second Respondent: | Patrick Lim & Associates |
ORDERS
That the Husband is to pay two thirds of the Wife’s costs of the proceedings up to and including the date of the present Orders as agreed, or otherwise as assessed.
IT IS NOTED that publication of this judgment under the pseudonym Moneta & Kimpton & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT WOLLONGONG |
WOC 960 of 2010
| MS MONETA |
Applicant
And
| MR KIMPTON |
First Respondent
| MS DUFORT |
Second Respondent
REASONS FOR JUDGMENT
Introduction and background
On 28 February 2014, I published my reasons for judgment in this matter. The present Application results from that judgment and involves determining whether a costs order should be made, against whom, and if so on what basis.
Without going into the substantive reasons in detail, the litigation involved the Applicant Wife, the Respondent Husband and his mother as Second Respondent. As between the Husband and Wife, the issue was alteration of property interests under s.79 of the Family Law Act 1975. This involved, however, establishing what interest the Husband and the Wife had in a property they co-owned with the Husband’s mother, the Second Respondent. In the end result, a declaration was made that the Wife, Husband, and the Husband’s mother held a property at [C] on trust as to 50 per cent jointly to the Husband and the Wife, and 50 per cent to the Husband’s mother. Orders under s.79 were also made as between the Husband and the Wife. In addition, the Court made orders under s.118(1)(a) of the Child Support Assessment Act 1989.
The reasons for judgment comprise 89 paragraphs over 54 pages. In hindsight, it would be fair to characterise some of the findings made against the Respondent Husband (in particular) and his mother (to a much lesser extent) as strident. Apart from making this observation, the Court does not intend to refer to the judgment in detail as it must surely be familiar to those currently litigating the costs issue. If relevant, reference will be made to specific paragraphs in the judgment.
The present application
By way of an Application in a Case filed 27 March 2014, the Wife asked the Court to make an order that the Husband pay to her the costs for the period 14 December 2011 until 6 January 2014 in the amount of $85,000 as agreed or assessed, or as assessed by a costs assessor. Moreover, the Wife seeks an order against the Second Respondent that she pay the Wife’s costs incidental to these proceedings. Pausing here, it is quite unclear what these orders mean on the face of it. It does not seem to be an application for indemnity costs, on the face of it, though it conceivably be if what the Wife was meaning to convey was that the Husband pay her $85,000 towards her costs, and his mother pay the rest.
What is known from the Wife’s evidence is that her costs were much, much greater than $85,000. If something else was intended, it is not clear. Perhaps the Wife intended that the Husband pay the first $85,000 of such costs as might be assessed or ordered to be paid, and his mother the balance? The significance of the figure of $85,000 is also unclear, as is the reference to “agreed or assessed”, appearing in the context in which those words appear.
As the Court does not wish to put the parties in this long, drawn out, complex and acrimonious litigation to further unnecessary cost and inconvenience, the Court will assume that the Wife is seeking a costs order against both the Husband and his mother as Second Respondent on whatever basis the Court considers appropriate. Curiously, the lack of precision in the orders sought by the Wife was not the subject of observation or comment by either the Husband, or his mother.
In any event, the Application in the Case is supported by the Wife’s Affidavit, sworn 21 March 2014, and her solicitor’s Affidavit, sworn 16 April 2014. The evidence was supported by an extensive set of written submissions as to costs on behalf of the Wife, dated 1 July 2014, and then a further brief submission purporting to respond to the Second Respondent, dated 30 July 2014.
By way of a Response to an Application in a Case filed 16 June 2014, the Respondent Husband sought dismissal of the Application insofar as it pertained to him. His Response was supported by the Husband’s Affidavit sworn 11 June 2014, together with extensive submissions as to costs, dated 28 July 2014.
By way of a Response to an Application in a Case, filed 11 June 2014, the Second Respondent, mother of the Husband, also asks that the Application be dismissed insofar as it relates to her. The Second Respondent swore an Affidavit on 26 May in support of her Response. On her behalf, submissions were filed on 23 July 2014, and then 1 September 2014. The last submissions in this matter, therefore, were received on 1 September 2014.
In the costs application the Wife was represented by her solicitor, Ms Thakur, the Husband through his solicitors, with his Counsel,
Mr Jackson, providing written submissions, and as for the Second Respondent by her solicitors, Patrick Lim and Associates.
The submissions made were extensive, clearly reflect some detailed consideration, and were of assistance to the Court in deciding the present issue.
Preliminary issue
A preliminary issue in this case is, if the Court makes a costs order against the Second Respondent, should it be pursuant to the Family Law Act 1975, Family Law Rules 2004, and Federal Circuit Court Rules 2001, or should it be pursuant to the Uniform Civil Procedural Rules 2005 given that the claim against the Second Respondent mother was an equitable one pursuant to the Court’s accrued jurisdiction?
The Wife’s contention in this regard is that as the claim against the Second Respondent was an equitable one, the Civil Procedure Act 2005 applied and thus the Uniform Civil Procedure Rules apply as to costs. Accordingly, the Wife submitted, in accordance with well-established principles of discretion applied to the making of a costs order and, in effect, costs should follow the event. On behalf of the Wife it was contended that two single judge decisions of the Family Court, Thorpe & Thorpe and Anor [2012] FamCA 719 at 14, and Selen & Selen and Ors [2011] FamCA 310 at 150 support her contention that the Uniform Civil Procedure Rules apply.
Both the First Respondent Husband and his mother, the Second Respondent, contend otherwise. Mr Jackson, Counsel for the Husband, submitted that even though the orders against the Second Respondent were made pursuant to an accrued jurisdiction, that did not necessarily embrace the practices and procedures, including in relation to costs, of the Court whose jurisdiction was accrued.
The solicitor for the Second Respondent submitted that the decisions in Thorpe and Selen were made without a detailed consideration of the jurisdictional issues. Indeed, the Second Respondent relied on a decision of Murphy J in Daymond and Anor & Daymond and Ors (Costs) [2014] FamCA 302 where His Honour exhaustively considers the jurisdictional issue and concluded that, as a matter of statutory interpretation, any such costs order had to be founded on the Family Law Act 1975. In short, and this does no justice whatsoever to His Honour’s reasoning, the opening words of s.117(2) “in proceedings under this Act” must be given full meaning and effect, and includes a cause of action arising out of the use of accrued jurisdiction in circumstances where the single substratum of facts clearly emerges in the context of s.79 proceedings.
This Court respectfully adopts the reasoning of Murphy J in Daymond. The accrued jurisdiction that led to the making of the order against the Second Respondent was founded on an application under s.79 of the Family Law Act 1975. Its ultimate source, therefore, was the Family Law Act 1975, and thus any application for costs is caught under s.117 of the Family Law Act 1975.
The applicable law
Section 117(1), (2) and (2A) relevantly state:
Costs
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, 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) and (5) 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
The effect of s.117 is that the Court must consider whether an order for costs be just and that there are circumstances that justify it in making the order. Unlike the procedure under the Civil Procedure Act 2005, for example, there is no principle that costs should follow the event under the Family Law Act 1975. In Penfold & Penfold (1980) FLC 90-800, the High Court stated that s.117(2A) requires a finding of justifying circumstances as an essential preliminary to the making of an order for costs.
Subsection (2A) lists the matters to be taken into account. The Full Court in I & I(No.2) (1995) FLC 92-625 at 82277 stated that the relevant matters in sub-s.(2A) must all be taken into account and balanced in order to determine whether the overall circumstances justify the making of an order for costs. Once the Court has done that, however, the weight to be given to a particular consideration under sub-s.(2A) is a matter for the Court’s discretion.
Each of the parties addressed s.117 in their written submissions. These reasons for judgment will firstly deal with the application against the First Respondent Husband, and then deal with his mother, the Second Respondent.
A claim against the First Respondent Husband
Much was made by the Respondent Husband, and his mother, about the absence of any material filed on behalf of the Wife as to her current financial circumstances. Indeed, it was submitted that an inference should be drawn that her failure to do so would suggest that her financial circumstances do not suggest that a costs order be made in her favour.
The Court does not accept this submission. The financial circumstances of all of the parties, particularly that of the Husband and the Wife, were subjected to the closest scrutiny over three days in Court. All that is known for certain is that the Husband has, in fact, paid to the Wife that which he was ordered to pay and, it would seem, that the Wife has done that which she was required to do. This means the Wife has received a substantial lump sum, and the reasons for this are clearly set out in the judgment. To the extent that either the Husband or his mother submit that this is a reason in itself not to make a costs order, the Court does not accept this.
Both the Husband, and his mother, provided some brief evidence about their current financial circumstances. To the extent that, expressly or by implication, the Husband is asserting that his financial circumstances contraindicate the making of an order for costs against him, that is nonsense and ignores one of the fundamental findings that, because of his non-disclosure, the Court still was not sure of what his actual financial circumstances were at the time the judgment was published. To argue, even implicitly, impecuniosity when one’s hands are stained with the mud of non-disclosure, is hypocrisy. The long shadow that is cast by non-disclosure extends to the costs proceedings after the hearing when adverse findings were made.
The financial circumstances of the parties is merely a consideration that does not contraindicate the making of a costs order against the Husband, though it is certainly not determinative in its own right.
The Wife’s submissions emphasised the conduct of the Husband throughout the litigation, and during the hearing, and the consequent strident findings that were made against him. The parties to the proceedings know exactly what findings were made against the Husband. There is no need for the Court to repeat them here. The written submissions filed on behalf of the Wife contain ample reference to the relevant paragraphs. The authorities are quite clear as to the circumstances when the Court might consider conduct in an application for costs. The High Court in Penfold referred to the giving of false or misleading evidence, especially where extra time and expense is occasioned to disprove the evidence. The Full Court in Weir (1993) FLC 92-338 gave the example of a party failing to provide proper information or obstructing the provision of information. Being generous to the Husband, he was clearly found wanting in relation to the above.
The curious argument submitted on his behalf was that costs should not be made against him based on this conduct because the Wife could not establish that, for example, his conduct resulted in additional cost, or the lengthening of the proceedings. Indeed, the Husband’s submissions go on the offensive and criticise the Wife’s solicitor for sending further and multiple correspondence seeking disclosure (one example) in circumstances when he either declined to respond, or took the view that there was nothing to respond about. The Husband’s argument is nonsense.
The findings against him are self-evident. There is no need for an applicant for costs to establish through the evidence a direct causal connection between the recalcitrant party’s actions and the consequential impact on the conduct of the litigation. The Court will readily draw the inference in determining whether to make a costs order. If the Wife acted improperly, unnecessarily or disproportionately to the actions of the recalcitrant party, then that is a matter for assessment of costs, rather than whether a costs order should be made.
The conduct of the proceedings by the Husband is a significant issue that points towards the making of a costs order against him.
On the Wife’s behalf it was suggested that she was successful in the proceedings and the Husband was unsuccessful. The Court did not understand her argument to be that costs follow the event, as that is clearly not what s.117 of the Act says. What the Wife was saying, in effect, is that in a broadbrush sense she achieved most of the objectives she sought to achieve and the Husband achieved few, if any. The Court accepts that in looking at whether a party has been successful, or unsuccessful, a broadbrush approach is sometimes appropriate.
The argument advanced on behalf of the Husband and the Second Respondent, is that this particular paragraph in sub-s.(2A) did not apply because it was meant to cover the situation of unsuccessful applicants, as opposed to unsuccessful respondents. The Court does not accept that as being a legitimate interpretation of para.(e). That paragraph refers to “any party”, not to either applicant or respondent. When one considers the orders sought by the Respondent Husband, and indeed his mother, the inescapable conclusion is that they were “wholly unsuccessful”. Thus, whilst this particular consideration is not determinative in its own right, it is yet another factor pointing towards a costs order in favour of the Wife.
The Wife also submitted, quite strongly, that she had made offers in writing to settle at a very early stage of the proceedings that had not been accepted.
The argument is problematic and is ultimately unsuccessful. As it turns out, against the Second Respondent mother, the offers were not explicitly made. Moreover, as both the Respondent Husband and Second Respondent submit, the financial circumstances of the parties fluctuated so much as between the time the offer was made, and the time of the hearing, that it is almost impossible to measure the proximity of offers made in different circumstances to the final outcome of the case. The Court accepts this. Whereas a consideration that looks at success or otherwise of the proceedings might involve a broadbrush approach, when considering offers of settlement, the focus becomes on the detail and understanding precisely what was offered and its meaning at the time.
To the extent, therefore, that the Wife relied on s.117(2A)(f), the Court does not accept her submissions.
Most of the considerations referred to above point to the making of a costs order against the Husband. How the costs order should be assessed, and apportioned as between him and the Second Respondent, is a matter to be considered below.
A Costs Order against Second Respondent
The position of the Second Respondent is quite different to that of her son, the first respondent. Whilst the Court was critical of the second respondent, particularly in terms of how her case was conducted in relation to what, precisely, was her interest in the property, there was no suggestion that she was dishonest about her financial affairs. Thus, for example, the Court has no reason to doubt the veracity of the evidence that she gave in her Affidavit of 26 May 2014 about her financial circumstances. Her financial circumstances are a strong contra-indicator against making an order for costs against her.
There was more than a hint in the substantive reasons for judgment, for example at paragraph 34, that had the Second Respondent’s case been argued properly, and more importantly, independently of her son, the outcome against her might have been different. Even today, the lingering impression remains that the Second Respondent has lost out, not just through her own inaction, but because of her son’s actions. This is a matter that the Court is entitled to consider under paragraph s117(2A)(f).
In the circumstances, whereas the considerations pointing towards an order for costs against the Husband are quite clear, they are far less clear in the case of the Second Respondent Mother. Particularly having regard to her financial circumstances, however, the Court declines to make an order for costs against her.
Assessing, and Apportioning, the Costs Order Against the First Respondent
The remaining issue, is, therefore, the basis of any costs order against the Husband, and its apportionment. The lack of precision in the orders sought by the Applicant Wife has already been noted. If the Wife sought indemnity costs, it is certainly not clear, and the Court is not prepared to infer, that indemnity costs were sought. If costs are to be ordered, as indeed the circumstances indicate, it will be on a party and party basis, and it will either be as agreed, or as assessed. The Court is certainly not in a position to undertaken an assessment pursuant to the Federal Circuit Court Rules.
If the subsection (2A) consideration as regards the Second Respondent had pointed towards the making of a costs order, the Court would have apportioned the costs as to one third to her. This is based on an overall broadbrush and impressionistic assessment of the role that the issue involving the ownership of the home at [C] played in the case. On this analysis, therefore, the Husband could not be liable for more than two thirds of the Wife’s costs. This will be the basis of the costs order against him.
I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Associate:
Date: 24 November 2014
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