Monroe and Monroe (Costs)
[2009] FamCAFC 221
•15 December 2009
FAMILY COURT OF AUSTRALIA
| MONROE & MONROE (COSTS) | [2009] FamCAFC 221 |
FAMILY LAW - APPEAL – COSTS – Where both parties made applications for costs against the other – Where the appeal was partially successful – Where the assessed costs of each party were of similar amounts – Where the appeal was necessary because of the incorrect treatment of the mortgage liability by the Federal Magistrate – Where the net assets of the wife are significantly greater than that of the husband, but the husband has a greater earning capacity than the wife – Where the husband failed to provide accurate information about his financial position during the trial and on appeal – Where the wife made a limited time offer which would not have led to a result similar to that of the appeal – Where the offer made no consideration that the wife would share in the liability of the mortgage in the same percentage as the property pool was divided – Where overall there are no circumstances justifying an order for costs
| Family Law Act 1975 (Cth) | |
APPELLANT: | Mr Monroe |
| RESPONDENT: | Ms Monroe |
| FILE NUMBER: | BRC | 3418 | of | 2007 |
| APPEAL NUMBER: | NA | 88 | of | 2008 |
| DATE DELIVERED: | 15 December 2009 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Warnick, May, O’Ryan JJ |
| DATE OF SUBMISSIONS: | 15 October 2009, 10 November 2009 and 17 November 2009 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 29 August 2008 |
| LOWER COURT MNC: | [2008] FMCAfam 935 |
REPRESENTATION
| SOLICITOR FOR THE APPELLANT: | Schultz Toomey O’Brien Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr George |
| SOLICITOR FOR THE RESPONDENT: | Adrian Hawkes Lawyers |
Orders
There be no order as to costs.
IT IS NOTED that publication of this judgment under the pseudonym Monroe & Monroe (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 88 of 2008
File Number: BRC 3418 of 2007
| MR MONROE |
Appellant
And
| MS MONROE |
Respondent
REASONS FOR JUDGMENT
On 18 September 2009 the appeal by the husband from the property settlement orders made by the Federal Magistrate was allowed.
On the occasion the orders were made by the Full Court we also made directions in relation to the filing of submissions should either party wish to apply for costs. The husband and the wife have each filed submissions and the husband has filed a reply. We understand from these submissions that each party is asking for an order for costs in relation to the appeal against the other.
In allowing the appeal and re-exercising the discretion, the total value of the parties’ property was altered by us because the Federal Magistrate had made some errors as described in paragraph 71 of our reasons.
On appeal, the husband was not successful in having the percentage division applied to the property pool reduced from 70 per cent in favour of the wife as found by the Federal Magistrate.
After allowing some grounds of appeal, the net value of the pool was found by us to be $957,984.60, as described in paragraph 76 of our reasons. The Federal Magistrate, in coming to his conclusion as to what sum should be payable by the husband, applied the sum of $986,969. This did not include the superannuation of the parties, in the total amount of $26,000, about which there was no order other than that they retain the sole legal and beneficial ownership of property which included superannuation. Their respective interests were of the same value.
The order made by the Full Court varied the amount of the cash payable by the husband to the wife from $252,578 as ordered by the Federal Magistrate to $163,289. This varied amount took into account the sum of $96,000 paid by the husband after the orders were made by the Federal Magistrate, being the mortgage on the house retained solely by the wife.
SUBMISSIONS OF THE HUSBAND
After referring to the provisions of section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) submissions were made under the headings of section 117(2A) as relevant to these proceedings.
After describing the current respective financial circumstances of the parties, including the property held by each of them as a result of the Full Court’s orders and their income together with the child support currently paid by the husband, it was submitted that the wife has the ability to pay the husband’s costs.
The costs claimed were assessed in the sum of $17,500. Attached to the submissions was an assessment from Queensland Independent Costing Services dated 9 October 2009 in the sum of a little over $17,000. A further sum of $451 is claimed for the cost of the preparation of the submissions about costs, so that the total sum is $17,500.
We would note, without wishing to comment adversely on this assessment, one component being a memorandum of fees from Mr Leotta of counsel in the sum of $770. For reasons which were never entirely apparent to us, Mr Leotta was not able to continue with the argument on the appeal. In our view, whether the husband should be liable for Mr Leotta’s fees or not is a matter entirely between him and the solicitor. Those costs may relate to work prior to the appearance in the appeal. It is doubtful that should we conclude that the wife pay the costs as assessed or any part of the costs of the husband on the appeal this should include Mr Leotta’s fees.
In relation to the success of the appeal it was observed that as a result of the orders of the Full Court the husband is obliged to pay the wife a sum significantly less than originally ordered “albeit having discharged the mortgage rather than relying upon the indemnity of the wife”.
It was correctly observed in the submissions that at the hearing of the appeal, the wife’s counsel made concessions concerning some parts of the Federal Magistrate’s judgment, including the treatment of the deduction of the mortgage and the inclusion of the superannuation. It is also correct as submitted that this was not the position originally put forward on behalf of the wife in the written submissions dated 12 December 2008. In those submissions it was claimed that the husband should be liable to pay the wife the sum of $286,578 with the wife responsible for the discharge of the mortgage, leading to a net award to the wife, as it was described, in the sum of $190,578. It was correctly observed in the written submissions:
The Court ultimately ordered that the husband pay $163,289.00 which was $27,289.00 more favourable to the husband than as proposed by the wife.
In addition to this submission we have also been informed that the wife made an offer to settle the appeal on 28 November 2008. The offer was as follows:
In an effort to settle the matter our client is prepared to accept a reduction in total payments from the Husband due under the Final Orders in the sum of $25,000.00. If accepted that will mean that the Husband has a further $207,578.00 to pay to the Wife.
It can be seen that the order made by the appeal court was more favourable to the husband than that contained in the offer by the wife.
As explained in the submissions, the offer that the moneys payable to the wife be reduced by $25,000 to $207,578 took into account that $20,000 had already been paid by the husband, but it did not include a provision that the mortgage be paid out by the wife. We note that attached to the wife’s submissions was a letter to the husband’s solicitors, dated 3 December 2008, which contained the following statement:
Clearly our offer was framed in a way that contemplated that the payout of the mortgage by your client (if and when it is to happen) would be regarded as being part payment of the offer sum.
We will consider this aspect further in our discussion of the wife’s submissions.
It was acknowledged in the submissions that the improved position of the husband was not simply the difference between $252,578 and $163,289 by reason of the inclusion of the mortgage and the superannuation. The mathematical calculations set out in the submission assert that as a result of the orders made by the Full Court the husband was overall $52,000 better off which exceeded the offer made by the wife. On our calculations the figure is more likely $56,000, but the difference is of little significance.
In addition, the offer made by the wife was only open for three days.
Finally, it was submitted, we think correctly, that it was necessary for the husband to appeal because the orders of the Federal Magistrate were that the husband pay the wife the amount of $96,000 in relation to the mortgage but there was no obligation upon the wife to pay out the mortgage. We understand from these submissions that even if it can be seen that the financial benefit to the husband ultimately was of a relatively small compass, the wife by not agreeing to different orders in relation to the mortgage, made it essential for the husband to take the step of appealing from the Federal Magistrate’s orders.
SUBMISSIONS OF THE WIFE
The essential submissions on behalf of the wife are as follows:
1. The husband remains in a superior financial position to the wife;
2.The conduct of the husband in these proceedings is a relevant issue and in considering the question of costs the court should examine the conduct of the husband in relation to the trial, in particular his failure to make proper disclosure;
3.Reference was made to the offer to settle and it was submitted that the mathematical effect of this was that the husband would have been obliged to pay the wife $207,578 or after the payment of the mortgage, the sum of $111,578. It was submitted that the rejection of the offer should lead to an order for costs being made against the husband.
As we have already observed, the offer contemplated the husband paying the entirety of the mortgage.
The wife signed a costs agreement which was attached to her submissions. The amount invoiced to her for the appeal is in the sum of $15,400. We note that this included fees of two counsel being a senior/junior counsel and junior counsel. Whilst the junior counsel was no doubt of assistance, and we would not wish to appear to be critical, this was not an appeal where it could be said that two counsel could be justified. The fee claimed by junior counsel was modest in the sum of $3,300, however we would not consider it appropriate that should we order that the husband pay the wife’s costs that sum be included.
As to a significant point made by wife in relation to the conduct of the proceedings, we would refer to the judgment of the Full Court and in particular the following paragraphs:
73.The husband at trial gave evidence and was cross examined with respect to the debts of the business. There was a real and effective challenge to his evidence. Apart from the limitations of his own evidence, the other real difficulty for the husband in the appeal is the absence of evidence before the Federal Magistrate to which reference could be made in the appeal. There was no application before us to adduce further evidence.
74.In our view, common sense would lead to a conclusion that a business would have movement in the accounts as contended by the husband’s solicitor but in the absence of evidence, especially from Mr [S], the bookkeeper, it was impossible for the Federal Magistrate (as it is for us) to draw any conclusions.
75.The husband would have to pay tax on his income. The difficulty is that he did not provide the necessary information to the Federal Magistrate nor to us, only an estimate.
We also have the benefit of the husband’s response to the wife’s submissions.
CONCLUSIONS
Section 117(1) of the Act provides that subject to subsection (2) each party to proceedings shall bear his or her own costs. Subsection (2) provides that:
If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may … make such order as to costs … as the court considers just.
The written submissions of each party to which we have referred correctly identify the matters relevant to the cost order.
a. The financial circumstances of each of the parties
The wife has a home valued at $495,000 free of mortgage, some small savings, a motor vehicle valued at $10,000 and superannuation valued at $13,000 being the same value of the husband’s superannuation. The husband has a house valued at $395,000, his business valued at $21,500, a motor vehicle valued at $6,000 and moneys at the bank of $6,400. However, he also paid out the mortgage on the former matrimonial home. It can be seen that their respective net assets are $518,500 in relation to the wife and $345,900 in relation to the husband. To obtain a complete picture, there must then be deducted the sum ordered by the Full Court payable by the husband so that the husband’s net assets after the orders were made in the appeal are $182,611 and the wife’s net assets are $681,789.
The parties other financial circumstances of significance are that the husband pays $317 per week by way of child support for two children under the age of 18 years and it is said that after the payment of child support and tax he has a net income of about $840 per week. This still far exceeds the wife’s income of approximately $300 per week, as she works part time. It can immediately be seen that while the wife currently has assets relatively significantly in excess of the husband, his income and potential to earn income greatly exceeds hers so that for the purpose of considering whether a costs order should be made, the disparity between them is not of such significance.
b. The conduct of the parties to the proceedings
In relation to the appeal, we regard this aspect of some significance. As we observed in the judgment, despite the difficulties which must have become apparent to the husband as a result of the way he presented his case to the Federal Magistrate, this was not rectified to the extent to which it may have been by any application before us. The case presented by the husband remained the same; the court was presented with very little proper evidence in relation to the husband’s financial circumstances.
As to whether it can be said that either party can be seen as wholly unsuccessful it must be observed that a number of the arguments presented to the appeal court were not accepted. Significantly, this included whether the percentage to be applied to the parties’ assets should be altered from that of 70 per cent in favour of the wife. We regard this, together with the conduct of the husband in the appeal, as being of some significance.
Finally in relation to the offer in writing, this offer would not have led to a result similar to that as ordered by the Full Court. There was no consideration that the wife may have had to share the burden of the liability of the mortgage in the same percentage as the property pool was divided, which was the effect of the orders made by the Full Court. It must also be observed that it was only open for a period of three days. We would attach limited significance to the offer.
Taking into account the financial circumstances of each of the parties (both their assets and incomes), the conduct of the appeal proceedings by the husband and whilst acknowledging that the husband was partly successful in the appeal and the necessity for the appeal because of the erroneous consideration of the mortgage, we are of the view that in this case there are, overall, no circumstances that justify an order that either party pay the costs of the other.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date: 15 December 2009
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