Murdock and Tucker (No 2)

[2015] FamCA 149

FAMILY COURT OF AUSTRALIA

MURDOCK & TUCKER (NO 2) [2015] FamCA 149

FAMILY LAW – COSTS

Family Law Act 1975 (Cth)

I and I (No 2) (1995) FLC 92-625
Prantage & Prantage (2013) FLC 93-545
Rosati and Rosati [1998] FamCA 38; (1998) FLC 92-804; 23 Fam LR 288

APPLICANT: Mr Murdock

RESPONDENT: Ms Tucker

FILE NUMBER: MLC 1719 of 2013

DATE DELIVERED: 11 March 2015

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By Way Of Written Submissions

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT: Westminster Lawyers Pty Ltd

SOLICITOR FOR THE RESPONDENT: Burke Family Law

Orders

1. That the husband’s application for costs is dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Murdoch & Tucker has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 1719  of 2013

Mr Murdock

Applicant

And

Ms Tucker

Respondent

REASONS FOR COSTS JUDGMENT

1. As a result of orders made on 28 January 2015, the husband has now sought a costs order against the wife.

2. The substantive proceedings were about the division of the parties’ property. In reality, they had modest assets but even then, were unable to reach a compromise. The husband points to the wife’s responses to offers and the orders she sought at the final hearing as the reason for making a costs order. The wife, who although represented by solicitors and counsel at trial, prepared the response to the costs claim herself.

3. The final orders provided for written submissions on costs and for the matter to be determined in Chambers. The husband’s application by submission was filed on 16 February 2015 and the response of the wife was filed on 25 February 2015.

4. The husband sought costs from February 2013 of $36,330.08 or in the alternative from a September 2013 date of $29,422.29. It was not suggested that the costs should be on some indemnity basis.

5. The wife opposed any order for costs.

6. In the substantive proceedings, the wife also sought child support orders and spousal maintenance. It is a little confusing as to whether she did not proceed in respect of the latter but in any event, I found that she could adequately support herself. She sensibly did not proceed with the child support case because the husband had agreed to continue the support for the one child under 18 years of age. The issue was whether the pleading of those actions for relief up until the commencement of the trial caused some inconvenience to the husband. I do not find that they made any significant difference.

7. The submission of the husband in essence was that the justification for an order was that he had made an offer which the wife did not accept and as a consequence, the matter went to a hearing. He submitted that the wife did worse by so proceeding. That (for the reasons that follow) was disputed and rejected by the wife.

8. The husband submitted that in February 2013, he made an offer in writing. His precise orders were appended to the submission. He submitted that that outcome, if accepted by the wife, would have meant 83 per cent of non-superannuation in favour of the wife and 90 per cent superannuation alteration in favour of the husband. His offer contained a second scenario because the first was premised on the wife retaining the house and taking over the encumbering mortgage. The alternate proposition was that he retain the house and pay out the wife. In a helpful appendix, he set out the assets and liabilities as he then saw them. The wife ended up with 57.5 per cent of the non-superannuation assets and 50 per cent of the superannuation.

9. The wife submitted that the “asset pool” in February 2013 was not agreed and there were issues about shares and tax liabilities. That is somewhat perplexing because, as I observed in the judgment, neither party had pleaded with particularity at that time. Importantly, on the evidence from the trial, it was hard to understand why there had been any dispute about the assets at that time. There were no obvious complicating factors at that point.

10. The wife’s examination and submission of the husband’s submission on this February 2013 offer were that she did better in the final settlement. The husband’s submission highlighted the percentages as he saw them. He (and the wife) took the superannuation and non-superannuation as two lists and then as one list. Neither party seemed, in February 2013, to have a specific approach to what was just and equitable. Accordingly, it is difficult now to say that the offer made was one that should have been accepted given the disparate nature of the superannuation and non-superannuation assets. That, combined with the wide discretionary approach of a judge, makes criticism for not settling at that time, a problem.

11. Not much seemed to have occurred until the parties went to a conciliation conference in September 2013. I again observe that the “pleadings” remained vague and whilst the parties may (and should have) known what each other was seeking, the Court did not. That is not necessarily a problem either because the Court at that stage was not required to intervene and determine the case.

12. In September, the parties reached agreement at the conference and signed “heads of agreement”. The final hearing did not deal with the basis of why the wife resiled from what was otherwise a conclusion of the matter. In her written submission, she said that at the time she signed the agreement she was not well but had thought about the terms and had decided that because she could not work, a mortgage would be impracticable. The husband again pointed out that the ultimate determination was a better outcome for him than that which had been agreed. The wife disagreed and observed that there was a dispute about the husband’s taxation liabilities. The inference I have drawn was that she was referring to the Rosati argument about capital gains tax because she referred to her view that she disputed then that the husband was going to sell the shares (see Rosati and Rosati [1998] FamCA 38; (1998) FLC 92-804; 23 Fam LR 288). That issue was easily determined by me in the reasons for judgment.

13. Things became a bit more complicated because shortly after that period, the husband was retrenched and received a significant cash package. There does not seem to be any doubt that he not only disclosed all of that but also paid various household expenses. The wife submitted that the “pool” changed then because the husband bought a Sydney investment property and had not provided documents.

14. The wife’s submission was that the ultimate outcome provided her with a better outcome than the offers along the way. Having read the submissions of both parties, I do not consider that I am in a position to make a firm judgment about that. Each party seems to have looked at the matter in their own way. In any event, one factor alone in s 117(2A) is not decisive of the outcome although the unusual feature here is that the husband’s justifying circumstance underpinning the costs application is the offers. Regardless of who is correct, on my own analysis of what each was saying, two things may be observed. First, the husband was making a concerted effort to resolve the matter but the wife was resistant to putting any position other than the one she opened her case on. If that is not correct, there was nothing to indicate otherwise. The second point is that the husband’s offers were much closer to the outcome than the apparent position at trial of the wife. The very strong message to the Court from the wife at the commencement of the hearing was her desire to retain the house. The arithmetic gymnastics to achieve that were found not to be fair. The wife’s position about the need to retain the house was not accepted by the Court but nor was it seen as a just and equitable outcome.

15. It is the general rule, as prescribed in s 117(1) of the Act, that each party should bear their own costs. However, the Court is empowered by s 117(2) of the Act to make an order for costs if it is of the opinion that there are “circumstances that justify it in doing so”. If the Court finds a justifying circumstance, it still has to have regard to the factors in s 117(2A) (which are those to which the applicant pointed in his submission) in considering what order, if any, should be made (see I and I (No 2) (1995) FLC 92-625).

16. Whilst the wife submitted a financial position inconsistent with the findings, I consider that neither party in this case is in a position where a costs order would adversely affect them. Both have resources and the husband is in the stronger income position whilst the wife is in a stronger capital position. The justice of the case must look at both sides. Should the husband have to pay all of his own costs in circumstances where the wife should have settled to avoid him spending money? The wife has her own costs to pay but that is the price she faces for having litigated. The question about financial circumstances however concerns both parties. Should the Court increase the wife’s expenses by an order for costs as a result of her own lack of pragmatism as a litigant? These are all matters that must be balanced.

17. There are no Legal Aid considerations here.

18. The relevant conduct must be that as a litigant (see Prantage & Prantage (2013) FLC 93-545). The various interlocutory orders were met. There were no indications that the husband had not been diligent in his discovery notwithstanding the wife’s assertions above that she did not get documents. If that had been a problem, nothing in the trial indicated that prejudiced the wife’s approach not only to settling but also as to preparation and conduct of trial. On the other hand, the husband was critical of the wife and indeed, I found him to be correct, that the wife did not provide documents that were within her control. Even during cross-examination, she did not approach the matter diligently. In her submission, the wife said that “in retrospect”, she realised she could have done better but she did not deliberately withhold documents. That concession points to the obvious. Time was spent in the trial pursuing those documents and ultimately, as I found, it did not affect the situation much but it was an expense that should not have been incurred by the husband.

19. Notwithstanding the last paragraph, there is little about this case that is unusual. The parties needed a resolution from the Court because they could not work it out themselves. The husband had taken a better approach than the wife but he too wanted a determination. The Court was ultimately required to exercise its discretion. On balance, I am satisfied that it would not be just to make an order departing from the principle that each party should pay their own costs.

I certify that the preceding Twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 11 March 2015.

Associate: 

Date:  11 March 2015