Mortimer (Jnr) and Mortimer (Snr)
[2016] FCCA 2763
•3 November 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MORTIMER (JNR) & MORTIMER (SNR) | [2016] FCCA 2763 |
| Catchwords: COSTS – Third party joined to primary proceedings between husband and wife – wholly unsuccessful as against third party – justifying circumstances – wide discretion – costs ordered. |
| Legislation: Family Law Act 1975, ss.79, 117 Federal Circuit Court Rules, r.21.02 |
| Cases cited: Braithwaite & Braithwaite [2007] FamCA 468 Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 Fitzgerald (as Child Representative for A (Legal Aid Commissioner of Tasmania) v Fish & Anor (2005) 33 FamLR 123 Penfold & Penfold (1980) 144 CLR 311 Prantage & Prantage (2013) FLC 93-544 |
| Applicant: | MR MORTIMER (JNR) |
| Respondent: | MR MORTIMER (SNR) |
| File Number: | NCC 2048 of 2011 |
| Judgment of: | Judge Obradovic |
| Hearing dates: | 6, 7, 8 August 2014; 20, 21 November 2014; 13 May 2014 |
| Date of Last Submission: | 30 August 2016 |
| Delivered at: | Parramatta |
| Delivered on: | 3 November 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Ridley |
| Solicitors for the Applicant: | Matthews Folbigg Pty Ltd |
| Counsel for the Respondent: | Mr Hale |
| Solicitors for the Respondent: | Toronto Legal |
ORDERS
That within 90 days the Respondent pay to the Applicant costs in the amount of $49,310.
IT IS NOTED that publication of this judgment under the pseudonym Mortimer (Jnr) & Mortimer (Snr) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
NCC 2048 of 2011
| MR MORTIMER (JNR) |
Applicant
And
| MR MORTIMER (SNR) |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant in this costs application is the son of the Respondent.
The primary Judgment, out of which this costs application arises commences as follows:
(1)This is a matter in which there are competing property applications between the applicant wife and the respondent husband. The second respondent son of the parties has sought to assert that a property claimed by the husband as being property of the husband and wife, be excluded as it is his (the son’s) property. The second respondent has, accordingly, sought an order that the husband withdraw a caveat that the husband has placed upon that property.
That primary Judgment was delivered by Judge Donald on 7 June 2016.
By way of Application in a Case filed on 21 June 2016, the Applicant seeks an order “That the First Respondent pay the Applicant’s legal costs of and incidental to these proceedings.”
The Applicant was joined to the primary proceedings by way of an Amended Response filed by the Respondent on 6 June 2013.
The Applicant seeks an order for the payment in the amount of $90,127.36. It is in truth an application for indemnity costs, including indemnity costs of this costs application.
The starting position with respect to costs, as set out in s117 of the Family Law Act 1975 (Cth), is that, subject to subsection 117(2), each party to proceedings under the Family Law Act shall bear his or her own costs.
The discretion to award costs is a broad discretion.[1]
[1] see for example Collins & Collins (1985) FLC 91-603.
The High Court held in Penfold & Penfold[2] that it is necessary for the Court to make a finding of justifying circumstances as an essential preliminary to the making of an order for costs. The Court is not required to specify the circumstances which justify the making of such an order.
[2] (1980) 144 CLR 311
As long as there is an essential preliminary finding that there are justifying circumstances to make a costs order, there is no additional or special onus which the Applicant needs to establish for an order for costs. It is not the law that a costs order can only be made in what has been described as a ‘clear case’. [3]
[3] See in general the comments made by the Full Court in Wrensted & Eades [2016] FamCAFC and in particular where the Full Court approved the comments of the judge below at [103]
In Latoudis v Casey[4] the High Court stated as follows:
… in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of an unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.”[5]
[4] (1990) 170 CLR 534
[5] Referred to in the context of family law proceedings by Judge Kemp in Coggan & Coggan [2012] FMCAfam 984 at [17]
The discretion to determine a costs dispute is a very wide one.
In determining what order, if any, should be made under s117(2) the Court must have regard to the prescriptive but non-exhaustive list of considerations in sub-section (2A).
Rule 21.02(2) Federal Circuit Court Rules2001 provides that in making an order for costs the Court may set the amount of costs; or set the method by which the costs are to be calculated; or refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules .
Section 117(2A) Factors
Section 117(2A) of the Family Law Act provides the factors that the Court in ordering what costs, if any, should have regard to.
All relevant matters referred to in s117(2A) must be taken into account: Re David Costs (1998) FLC 92-809; and Braithwaite & Braithwaite [2007] FamCA 468 at [115]).
In Fitzgerald (as Child Representative for A (Legal Aid Commissioner of Tasmania) v Fish & Anor (2005) 33 Fam LR 123, the Full Court held that there is nothing to prevent any one factor being the sole determinate for an order of costs to be made.
Financial circumstances of each of the parties: s117(2A)(a)
The Applicant submits that both parties have an earning capacity.
The Applicant’s financial circumstances are not known, and he does not rely on any Financial Statement or other evidence as to his financial circumstances.
The Respondent is a (occupation omitted). His net income for the 2015 financial year was approximately $130,000. His net income for the 2016 financial year is likely to be similar.
The Financial Statement filed by the Respondent discloses his current financial situation.
It is submitted by the Respondent, that he is the sole carer for his daughter who is 17 years of age, unemployed, and suffers from Schizophrenia. The care of the child is a matter which Judge Donald took into consideration in making the property adjustment orders which were handed down on 7 June 2016.[6] While the Court feels sympathy for the child’s circumstances, it is the Respondent’s financial resources which are relevant, and there is very limited probative evidence in the Respondent’s Affidavit about various matters which are asserted both in submissions and in his Affidavit.
[6] See paragraph 78 of Reasons for Judgment
The Court takes into consideration the further evidence that the Respondent no longer holds the term deposit of $32,000 as he has had to pay out two car leases.
The Respondent states in his Affidavit of 28 July 2016 as follows:
19. After the settlement of the sale of the Property H (sic) property I anticipate that I will receive approximately $28,000 to $30,000 residue from the sale after Ms C is paid the sum ordered by the Court. The remainder from the sale is to be held by the solicitors for my son as security for costs.
The Court understands from the above that a sum of money is to be held as security for the Applicant’s costs, subject to this application. This is in addition to the amount of $28,000 to $30,000 which the Respondent will receive. The Court notes that the Affidavit is rather ambiguous in this regard. If this understanding is incorrect, namely that there are funds being held in addition to the $28,000 to $30,0000 the Respondent is to receive, there is still approximately $28,000 to $30,000 readily available to the Respondent to meet a costs order, or part of it.
The Applicant, in his Written Submissions, submits that “the agreed amount of these surplus funds is $48,500”. This of course, is not a matter of submission but a matter of evidence, about which there is none in the Applicant’s case.
The Respondent, in his Written Submissions asserts that the proceeds of sale of the Property H property were $38,300 and not $48,500 as asserted by the Applicant. The Respondent submits that thirty thousand of that is held in a trust account.[7] Once again, this is not a matter for submissions but a matter for evidence.
[7] Although he asserts that he will need this money to care for his 17 year old daughter
The Court is satisfied that the Respondent has the capacity to meet a costs order.
Conduct of the parties in relation to the proceedings
The Applicant submits that the relief sought by the Respondent relating to the Property O property was misconstrued and doomed to failure in the particular circumstances of this case. It is submitted that a proper consideration of the matters set out in Judge Donald’s Reasons for Judgment and the authorities relied on by both parties would have indicated to the solicitor for the Respondent that the relief sought was without merit. The Court does not understand the relevance of this submission. There is no personal costs order sought against the solicitor for the Respondent. The Respondent is of course a (occupation omitted). Perhaps such a submission levelled against the Respondent might have had some merit, but none was made.
The Respondent sought orders for the Property O property to be included as part of the pool of assets subject to an order for adjustment of property interests pursuant to s.79. The only way he could proceed with such an application was to join the Applicant. It is submitted that the Applicant was “required to participate in the proceedings”. This is not entirely correct. A party may choose how actively they participate in proceedings. This is not a criticism of the Applicant for his full and active participation in the proceedings once he was joined, it is a criticism of the submission that he was ‘required to participate’ and that “all work carried out by the Applicant was unnecessary”. This is in reality, a submission for indemnity costs.
There is no evidence before the Court suggesting that there was any delay or other conduct of the Respondent in the proceedings so as to warrant a consideration of this ground. The submissions made by the Applicant in this regard are with respect, misconstrued.
Whether a party has been wholly unsuccessful: s.117(2A)(e)
The Respondent has been wholly unsuccessful in the primary proceedings as against the Applicant.
Relevantly Judge Donald made the following findings of fact:
[9] Between 1993 and 2009, the parties purchased a number of properties. Each of these properties were purchased in their own names other than for one purchased in the name of the second respondent at Property O, Queensland. This particular property was purchased on 2 February 2001 and, as noted, is the subject of dispute between the parties.
…
[12] The husband registered a caveat over the property at Property O on 3 May 2013.
…
[27] I turn, firstly, to consider whether the Property O property should be included in the pool of property available for distribution between the husband and the wife. That question requires that a determination be made as to whether, when the property at Property O was purchased in the name of the second respondent son, it was gifted to him or it was intended by the husband and the wife that the second respondent hold that property in trust for them.
[28] The second respondent was joined to these proceedings when the respondent husband filed an Amended Response whereby he sought orders including those that provided for the Property O property to be sold and the proceeds divided between the husband and the wife. The wife has not sought orders touching upon the Property O property.
[29] The husband has identified the question on this issue as being whether when the property was purchased in the name of the second respondent, it was gifted to him or was it the intention of the parties that the second respondent hold that property in trust for the husband and the wife. In short form, he has based his submission on an assertion that the principle of advancement has been rebutted and that the second respondent holds that property on trust for the husband and the wife.
…
[35] … Firstly, I find that the husband and the wife purchased the subject property in the name of the second respondent son of the parties. I also accept, however, that the second respondent was a signatory to the mortgage securing a loan the funds from which largely enabled the purchase of the property.
[36] The second respondent legally holds the property. I accept that the second respondent is, on the face of it, the legal and beneficial owner of the property.
[37] …[I]t cannot be that the second respondent holds the Property O property pursuant to an express trust in favour of the husband and the wife. I accept, pursuant to that submission, that in accordance with Queensland statute law, an express trust cannot be created in respect of land without writing. There is no such relevant writing here. (foot note omitted)
[38] Turning to the issue of whether a resulting trust exists in relation to this land, I accept the proposition that a resulting trust only arises as at the time of purchase. Later contributions do not give rise to a resulting trust.
[39] … The evidence before the Court establishes that when this property was purchased, the husband arranged a loan and mortgage over the property and that the second respondent signed such mortgage to secure the funds used to purchase that property.
[40] The second respondent was obliged to repay the $240,000 advanced for the purchase of the property. …[I]t does not matter who subsequently made the repayments on the loan secured by mortgage. Accordingly, the situation as at the time of purchase was that the second respondent contributed $240,000 of the $242,500 purchase price. The property was then transferred into his name as registered owner. He was then the legal owner of that property. In these circumstances, I accept that there can be no resulting trust.
[41] … I also find that the presumption of advancement does apply. I do find that given the parent/child relationship, it is more probable than not that a beneficial interest in the subject property was intended to be conferred on the Second Respondent.
…
[44] There is no evidence before the Court that could satisfy it that the second respondent shared the view of the husband that he held the property on trust for the husband and the wife. The evidence of the husband, himself, was that the property was purchased in the name of the second respondent so that the second respondent could use that property as collateral to borrow against when he commenced (employment omitted). That appears to have been a common understanding between all parties in this matter. … [The] intention at the time of the purchase is consistent with the presumption of advancement.
[45] The evidence of the wife is consistent with this intention being expressed and with the understanding of the second respondent in this regard.
[46] …[T]he second respondent has never contributed to the ongoing costs associated with that purchase. Even though the second respondent has completed his studies and now (employment omitted), the burden of payment of rates, slashing and other outgoings has continued to fall upon the shoulders of the husband and wife.
…[A]t the time of the purchase of the property there was a conversation between them where the husband indicated that they should pay for the outgoings until the second respondent was in a position to pay them himself. This factor does not serve to rebut the presumption of advancement.
[47] I note that when the second respondent purchased a property in his name in 2005, the Property O property continued to be registered in his name and was unencumbered. Nevertheless, the second respondent did not list this property as an asset of his in his application for finance nor did he use that property as security for the purchase. Rather, he relied upon a personal guarantee of the husband and mortgages over other properties held by the wife and the husband. At first blush this would seem to support the assertion by the husband that the property was not considered by the parties as being beneficially owned by the second respondent. The evidence of the second respondent, that I accept, was that he did not include the subject property in the application for finance as it had been agreed that the subject property was to be used in the future to assist the second respondent in establishing a surgical practice. This is consistent with the earlier evidence of all parties.
[48] There is other evidence supporting the assertion of the husband. Ms J who is a daughter of the husband and the wife gave evidence. In that evidence, she asserted that the second respondent said to her in about September 2010 that he had reached an agreement with the wife that he would claim the subject land as owned by him and then give it to the wife. I do not give weight to this evidence having regard to the estrangement of the witness from the wife and given my observations of that witness when giving evidence to the Court in this hearing.
[49] …I find, if necessary, that the presumption of advancement has not been rebutted.
[50] It follows that the Property O property should not be included in the pool of property available for distribution between the parties.
The Court does not accept the submission made by the Applicant that the stance taken by the Respondent ‘was untenable’. The arguments required significant consideration by the trial Judge.
The Court is not aware of any application for summary dismissal having been made in respect of the relief sought by the Respondent in the primary proceedings with respect to the Property O property. Had the Respondent’s position truly been ‘untenable’ such an application would no doubt have been made and granted.
However, the Respondent was still wholly unsuccessful as against the Applicant.
Offers made & any other matters: s.117(2A)(f) & (g)
Section 117(2A)(f) is concerned with written offers. There is no evidence before the Court of any such offer.
However, the Court notes that the Applicant at all times resisted the relief sought by the Respondent in respect of the Property O property.
The Court is also mindful of the fact that the Applicant was a third party brought into proceedings in respect of property adjustment orders as between a husband and wife. This in itself is a relevant matter which the Court takes into consideration.
Costs Ordered
As a result of the consideration of the above matters and the findings which have been made, the Court finds that the circumstances of this case justify the Court making an order as to costs, as required by sub-section 117(2). The Court has had particular regard to the finding that the Respondent was completely unsuccessful as against the Applicant, a third party, as well as the financial capacity of the Respondent.
The questions remaining are quantum and whether costs are warranted on an indemnity basis.
Indemnity Costs
There is nothing in the Family LawAct which inhibits the making of an order for indemnity costs.[8] However, an order for costs itself is a great departure from the normal standard.[9]
[8] See Prantage & Prantage (2013) FLC 93-544
[9] See Kohan & Kohan (1993) FLC 92-340.
The passage of Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd[10] stating the position with regards to indemnity costs is well known:
… there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo, “the categories in which the discretion may be exercised are not closed”.
[10] (1993) 46 FCR 225
The above principles are of course, applicable to matters decided under the Family Law Act[11], and have been applied by this Court, the Family Court and the Full Court of the Family Court in appropriate instances.
[11] Eg. Munday & Bowman (1997) FLC 92-784
Nothing which the Applicant submitted persuades the Court that an order for indemnity costs is appropriate in all of the circumstances of this case.
Quantum
In all of the material which has been prepared by the Applicant on the question of costs, the Applicant has not thought it appropriate to provide a procedural chronology or to set out, except by reference to various invoices, what the amount of costs sought is.
It appears to the Court, from a perusal of the file that the Applicant has partaken in six directions hearings, one Conciliation Conference and two Interim Hearings. No evidence about these matters or what occurred on each occasion is before the Court, as such in the Court’s discretion, the Court will only award limited costs in respect of procedural matters which occurred prior to the final hearing.
In exercising the wide discretion the Court has in respect of what costs order, if any, it will make, the Court is mindful of the scale in Schedule 1 of the Rules which provides for event-based costings. The Court is satisfied the Schedule is appropriate in respect of an assessment of costs incurred.
The Court therefore makes the following costs order, by reference to Schedule 1:
a)Opposing an application which includes interim orders up to the completion of the first court date, including short mention: $2,998;
b)Preparation for final hearing – 6 day matter: $10,606;
c)Daily hearing fee solicitor (6 days): $12,162;
d)Daily hearing fee counsel (6 days)[12]: $18,243;
e)The disbursements incurred are assessed at: $3,500; and
f)The costs of this application treated as a discrete event: $1,801.
[12] Daily hearing fee plus advocacy loading
The total costs to be paid by the Respondent are $49,310.
The Court proposes to allow a period of 90 days for the payment of costs.
Accordingly, orders are made as set out at the forefront of these Reasons.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Date: 3 November 2016
Key Legal Topics
Areas of Law
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Civil Procedure
Legal Concepts
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Costs
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