Orwell and Yan

[2008] FamCA 537

FAMILY COURT OF AUSTRALIA

ORWELL & YAN [2008] FamCA 537

FAMILY LAW – COSTS - Assessment

Family Law Act 1975 (Cth)

APPLICANT:  Ms Orwell

RESPONDENT:  Mr Yan

FILE NUMBER: SYF 4562 of 2006

DATE DELIVERED: 15 July 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Cohen J

HEARING DATE: 2 July 2008

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Mr Mitchell of Mitchell Lawyers

COUNSEL FOR THE RESPONDENT: Mr Gruzman

SOLICITOR FOR THE RESPONDENT: Ms Sin of Helen Sin Legal

Orders

1. That the husband shall pay the wife’s costs as agreed or taxed of his appeal and application for leave to appeal from the decision of Magistrate Wynhausen made on 28 November 2006 at the local Court Family Matters St James including her costs for her application for costs within one month of agreement of their quantum and otherwise within one month of completion of their assessment of taxation.

IT IS NOTED that publication of this judgment under the pseudonym Orwell & Yan is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 4562 of 2006

Ms Orwell

Applicant

And

Mr Yan

Respondent

REASONS FOR JUDGMENT

1. This is an Application for costs of an application for leave to appeal and of the appeal of the husband from a state magistrate’s decision to refuse the husband a departure from administrative assessment of child support. I refused leave to appeal, so the appeal itself was not heard, although it was listed for hearing and presumably, had been prepared for hearing by each party. Essentially, I held that the Magistrate had found that the husband had failed to satisfy her that his financial position was as he claimed in circumstances where the administrative assessment had not been based on his taxable income. The husband submitted to the magistrate that his taxable income reflected his true situation. The husband’s stance is more significant than usual because the husband is an accountant and derives his income, in part, from his accountancy practice and has the skills and power to manipulate his financial affairs to meet his perceived needs. The magistrate found that the husband had “misstated and misrepresented his financial situation” and had mixed his finances with those of others “to aid his attempt to deceive”. The magistrate relied on what she held to be the husband’s lack of credit to find that he had not proven the facts on which his case was founded.

2. My refusal of leave was based on my finding that because the husband had not satisfied me that there had been a significant error in a finding of fact or law so that the husband’s substantive rights had been affected by that error, the magistrate’s finding had not resulted in any substantial injustice to him. This was notwithstanding the fact that the magistrate may have mistaken or did mistake the numerical descriptions of the sections of the Child Support (Assessment) Act she relied on. I held that the principles she applied conformed to the requirements of that Act as it applied when the matter was heard in the Local Court and any failure to correctly identify the sections she relied on was irrelevant because she applied the Act without relevant error.

3. The wife’s submission in a support of a costs order was, in effect, to say that on considering the provisions of s.117 of the Family Law Act the balance favoured a costs order for the wife. She placed particular emphasis on the face that the husband appealed from a decision where his attempt at deception and lack of candour had lead to his failure to discharge his onus to prove the facts on which he needed to rely. It was also said that this failure has led to the Court, on the costs application, not knowing his financial circumstances and therefore not being able to find anything on this aspect other than that the husband must be assumed to be well able to afford a costs order against him and that his financial circumstances, when compared with those of the wife, must be sufficiently superior to make a costs order against him just. It was further said that a failure to make a costs order would compound the problem the wife faces as a result of non-payment of his assessed child support debt to the extent of about $70,000.00 and that this debt should be taken into account. The wife’s solicitor asked that I assess the sum of costs to be paid.

4. It was also necessary before a costs order could be made to grant leave to the wife to file the application for costs out of time. My decision to refuse leave to appeal was made on 24 October 2007. I reserved costs for one month. On the evening the decision was made, the wife’s solicitor sent an email to my Associate informing the Court that he was going to apply for costs. As a result, on 31 January 2008, the matter was listed before me and I granted leave to file and serve the application and any affidavit in support within 21 days. The wife’s application for costs and the affidavit upon which the wife relies, were filed within the time limited by the grant of leave. The husband was ordered to file and serve his material within 14 days of service by the wife. He failed to file and serve anything in compliance with this order. During the hearing of the costs application through his counsel, Mr Gruzman, he sought to file an affidavit from his instructing solicitor in Court. Inexplicably, unless it was tactical, he did not seek leave to file and rely on this affidavit until after the wife’s solicitor had completed his closing address. The wife’s solicitor had been shown this affidavit for the first time on the morning of the hearing. It would have been grossly unfair to permit this affidavit to be relied on in the circumstances where no reason was given for the attempt at such late reliance.

5. The arguments put before the Court to oppose the costs application seem to me to largely fail to address anything relevant to my decision. Firstly, it was said that there is an appeal from my decision on the question of leave to appeal which canvassed an important point so I should not order costs. I can only determine costs of the assumption that my judgment is correct. Whether there has been an appeal or not is irrelevant.

6. In a similar vein, it was argued that I should postpone hearing the costs application until the Full Court determines the appeal. This is contrary to proper practice and would involve a waste of Court time as well as a waste of costs. As there has been an appeal from my decision, the Court hearing that appeal should be put in a position to hear any submissions and make any appropriate order for costs of the hearing before me.

7. The next submission is that there should be no assessment of costs by me if I make an order because the material before me is insufficient to assess costs. I agree. If I make an order for costs, the quantum of costs should be as taxed or agreed between the parties.

8. It was submitted that the wife’s financial circumstances were not fully disclosed because those of her husband have not been disclosed. This is correct, but is not necessarily a reason to refuse an order for costs.

9. Overall, it was said that this was a case where s.117(1) should apply so there should not be any order for costs. They should lie where they fall. By inference, the husband relied on my assessment of the factors in s.117(2) of the Family Law Act , to say that I should reach this conclusion.

10. S.117 of the Family Law Act provides that unless the Court is of the opinion that the circumstances justify an order for a party to pay another’s costs, each should bear his or her own costs. If costs are justified, the Court must make an order it considers just. S.117(2A) provides a list of considerations which must be undertaken in deciding what order, if any, should be made. I shall consider these seriatim:

    a) The parties’ financial circumstances: I do not know those of the husband or the wife’s husband. I have a little understanding of those of the wife. She earns a very modest salary, $40,000.00, as an employee of the Public Service. I do not know if this is gross or net of tax. She owns the home in which her and her husband and children live. It has a mortgage to secure about $200,000.00 owing on its purchase, but I do not know its value. The only other substantial property I have been told of is an interest in the family car and household contents. Their combined value is more than $13,800.00, but I do not know how much more. It is not likely to be a lot because the only uncertainty is about the value of the contents of the family home. The wife seems to have few spare funds because she has had to use her home to secure her debt for her legal expenses. Nevertheless, I do not know her husband’s situation and, without knowing it, I cannot really say what the wife’s financial circumstances are.

    Thus I am in the position where I cannot say that either party’s circumstances are such that he or she can better afford a costs order which is against their interests or cannot easily afford to meet a costs order or fail to obtain a costs order as the case may be. I shall assume that each party can afford any costs order I may make which is against interest. It is therefore irrelevant what the extent of such an order may be. However, I can say, because the wife says so in her affidavit, that her costs of the proceedings are likely to be about $13,000.00. Her solicitor prepared the affidavit in which she says she believes her costs of the proceedings have been about $13,000.00.

    b) Neither party has legal aid.

    c) Relevant conduct of the parties: There is, in my opinion, only one aspect of the conduct of either party which could be relevant and significant. It is that the husband was held not to have proven his case before the magistrate in circumstances where this failure was due to his lack of credit. Essentially, my refusal of leave to appeal was based on his failure to prove his case before me on the issue of his true financial circumstances. On the face of his evidence, it lacks credibility. His failure to place any fresh evidence before me which might have made his financial position clear is a serious one. The situation is one, therefore, where the husband’s conduct of the original proceedings was regarded as wrongful and that conduct was the reason why he failed in his appeal because no injustice was done to him by the magistrate’s approach. He attempted, in his appeal, to continue to rely on similar conduct of his case. The husband, prima facie, simply failed to uphold his obligation to make full and frank disclosure.    

    d) Failure to comply with prior orders: The proceedings were not necessitated or prolonged nor were costs increased by any such failure.

    e) Level of success: On any view, the husband has wholly failed and the wife has been wholly successful in the proceedings.

    f) Written offers: There has been no offer, written or otherwise, placed before the Court for the purpose of deciding costs.

    g) Other relevant matters: I have referred, from the outset in this judgement, to all matters which I regard as relevant in deciding the issue of costs.

11. On weighing all the factors referred to, I am of the view that there are circumstances which justify an order for costs being made against the husband in favour of the wife and that that order should be that the husband pay the wife’s costs, including the costs of the application for costs, as taxed or agreed by the parties within one month of taxation or agreement. The circumstances which have moved me to this finding are:

    a) the order will be for less than $13,000.00, a relatively small sum which the husband must be assumed to be able to afford to pay.

    b) the husband was wholly unsuccessful before me.

    c) the husband failed before me because he relied on a case based on his failure to disclose, in the Magistrates Court, in circumstances where he had attempted to misstate, misrepresent and confuse about his income, earning capacity and financial resources where, in particular, his skill as an accountant should have allowed him to have little difficulty in declaring his true position, and thereby proving it in an honest way. Essentially his failure to prove his case in the Court below and his failure, therefore, to show that he had a substantial case before me were due to his dishonesty in the conduct of his case before me; and,

    d) to attempt to dishonestly conduct and continue proceedings ought to be discouraged. It puts the innocent party to unnecessary cost and wastes the time of the Court. It tends to prevent the Court from reaching a just and fair verdict based upon reality; meaning the true facts. The Court has few resources to discourage and prevent this type of conduct. A costs order is virtually the only one. Here it is also the only remedy for the imposition by the husband on the wife of proceedings which should have been unnecessary.

12. The orders which were made on 2 July 2008 were made for the above reasons.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen

Associate: 

Date:  15 July 2008