Owen & Richardson (No 2)
[2024] FedCFamC2F 1490
•24 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Owen & Richardson (No 2) [2024] FedCFamC2F 1490
File number(s): BRC 10546 of 2022 Judgment of: JUDGE WILLIS AM Date of judgment: 24 October 2024 Catchwords: FAMILY LAW – COSTS – where the applicant wife was wholly unsuccessful in bringing an application for property division pursuant to s90SM – the wife’s application lacked any merit – wife’s refusal to accept reasonable offers – where indemnity costs were considered – where costs pursuant to the scale are inadequate – special costs payable Legislation: Family Law Act 1975 (Cth) s117 Cases cited: Colgate-Palmolive Company & Colgate-Palmolive Pty Limited v Cussons Pty Limited (1993) 118 ALR 24
Collins and Collins (1985) FLC 91-603
May & Longley [2016] FamCAFC 261
Penfold & Penfold (1980) FLC 98-100
Division: Division 2 Family Law Number of paragraphs: 44 Date of last submission/s: 11 October 2024 Date of hearing: In Chambers on the papers Place: Brisbane Solicitor for the Applicant: Amanda Fawaz Solicitor Solicitor for the Respondent: Wilsons The Family Lawyers ORDERS
BRC 10546 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS OWEN
Applicant
AND: MR RICHARDSON
Respondent
ORDER MADE BY:
JUDGE WILLIS AM
DATE OF ORDER:
24 OCTOBER 2024
THE COURT ORDERS THAT:
Costs
1.Within three (3) months from the date of these Orders the applicant wife is to pay the respondent husband the costs of and incidental to the proceedings filed by the applicant wife (on 25 August 2022) in the fixed sum of $42,000 with such payment to be made to the trust account of Wilsons – The Family Lawyers.
2.All outstanding applications are removed from the pending cases list.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE WILLIS AM
This is a costs application by the de facto husband which follows on from a judgment delivered on 15 August 2024 following a one-day property hearing held in Brisbane on 13 March 2024 where the applicant de facto wife, Ms Owen (“the wife”) was wholly unsuccessful in her application for a property alteration Order under the de facto provisions pursuant to 90SM of the Family Law Act 1975 (Cth) (“the Act”).
As directed the applicant for costs (the respondent in the substantive proceedings) Mr Richardson (“the husband”) has filed written submissions seeking payment of his legal costs incurred together with a minute of orders sought based on an indemnity basis or in the alternate based on the respective scale pursuant to the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 (Cth) (“the Rules”).
The respondent wife in this costs application has also filed written submissions in response.
I have read each of the documents provided by both parties.
As indicated in the final orders this application will be dealt with on the papers unless either of the parties sought the matter to be listed for an oral application. Neither party has made a request for the matter to be heard otherwise.
The husband seeks the Court make an Order that the wife pay his legal costs of and incidental to the dismissed Initiating Application filed 25 August 2022 on an indemnity basis in the amount of $85,910.34 or in the alternate in accordance with the Scale prescribed in the Rules, in the amount of $36,741.03.
The wife seeks the Application for Costs be dismissed or in the alternate that the wife pay the husband’s costs of and incidental to these proceedings in accordance with the Scale prescribed in the Rules in an amount to be determined by the Court.
SECTION 117(2) OF THE FAMILY LAW ACT
The law
This is an application for cost under section 117(1) and (2) of the Act. The starting point for costs under the Act is that each party pays their own costs. However, there are circumstances in which a court can order costs. Section 117(2) provides that the Court can make an order for costs, and when considering whether to do so, the Court is required to consider certain matters set out in s 117(2A) together with any other relevant matter.
In Collins and Collins (1985) FLC 91-603 at page 79,877 the Full Court said:
In deciding whether the circumstances justify an order for costs, there is a broad discretion to be exercised, having regard to the factors set out in subs. (2A) so far as relevant. Those factors…. are not to be read in a restrictive way, however, the discretion remaining is a broad one: Penfold v Penfold (1980) FLC 90-800 at pp 75,053-75,054 (High Court); quoted in Mallet v Mallet (1984) FLC 91-507 at pp 79,123-79, 124 (by Wilson J).
The High Court case of Penfold & Penfold (1980) FLC 98-100 makes it clear that section 117(2) is not subservient to section 117 (1), and that both the provisions apply and that, where it is appropriate to order costs then the Court can do so, taking account of the respective matters.
In terms of the application for an indemnity costs order, I refer to authorities such as Colgate-Palmolive Company & Colgate-Palmolive Pty Limited v Cussons Pty Limited (1993) 118 ALR 24 wherein His Honour Justice Sheppard stated that it was useful to list some of the circumstances in which it was thought to warrant the exercise of the discretion. Those instances included:
(a)Making allegations of fraud and knowing them to be false and the making of irrelevant allegations of fraud;
(b)Evidence of particular misconduct that causes loss of time to the Court and to the parties:
(c)The fact that proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law:
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: and
(e)An imprudent refusal of an offer to compromise.
Application of section 117 (2) and 117 (2A)
Section 117 (2A) states that when considering what if any costs order should be made, under subsection (2) the court shall have regard to the following matters:
The financial circumstances of each of the parties
The wife is aged 50 whilst the husband is aged 54.
In the wife’s case outline filed in preparation for the trial, the wife sought to rely upon her financial statement filed on 25 August 2022 which states the wife was earning $1,500 per week as an administrative officer.
The wife’s case up to the final hearing was that she was unemployed due to her physical and mental health issues. The wife did not produce any expert evidence regarding this submission. On the morning of trial however, the wife reluctantly disclosed to the Court that she was actually working as a tradesperson on a property near Town B receiving a $500 payment for a seven-day period. The wife’s trial affidavit sworn on 26 February 2024 deposing that she was not able to work, failed to mention this casual work.
The wife advised the Court she was also receiving $805.70 from the government for JobSeeker as well as income protection.[1]
[1] Transcript of proceedings (13 March 2024), p 15-17.
The written submissions filed on 11 October 2024 do not mention this payment or any paid employment so I will infer that this arrangement has ceased. It is submitted that the wife is now only in receipt of $2,710 per month after tax from her income insurance and $1,500 per month in Centrelink benefits.[2] The wife also has $78,260 in net assets.[3] The wife contends that she suffers health issues, however no further submissions were made regarding this. I note my earlier finding that the wife has capacity to earn an income by virtue of her years of experience as an administrative officer.[4]
[2] Written submissions filed by the wife on 11 October 2024.
[3] Written submissions filed by the wife on 11 October 2024.
[4] Owen & Richardson [2024] FedCFamC2F 1120 [106].
The husband is employed on a fly-in-fly-out basis as a tradesperson and earns approximately $230,000 gross per annum.[5] The husband’s financial position is set out in the Reasons for Judgment.[6]
[5] Written submissions filed by the husband on 12 September 2024.
[6] Owen & Richardson [2024] FedCFamC2F 1120 [49].
Whether any party was legally aided
Each of the parties were legally represented and privately funded up to the trial. I note there was a grant of Legal Aid funding under the Commonwealth Cross Examination Scheme (“the Scheme”) following a s102NA Order issued by the Court on 30 August 2023. The wife has taken up this opportunity for funding, noting her solicitor was on the Legal Aid panel which meant the fees incurred incidental to the trial were covered under the Scheme. Prior to the trial however it appears the wife had incurred the sum of $22,000 plus GST in legal fees, of which the wife had paid the sum of $510 plus GST, resulting in an amount owing to her legal representatives, Amanda Fawaz Solicitor of $21,490 plus GST.[7]
[7] Costs Notice filed 14 March 2023.
The husband however remained privately funded using his post separation income to meet his legal fees.[8] At the time of final hearing, the husband had paid legal fees in the total amount of $44,221.94 and was estimated to incur a further $41,000 to $68,000 in estimated future costs as a result of the final hearing.[9]
[8] Costs Notice filed 12 March 2023.
[9] Written submissions filed by the husband on 12 September 2024.
The conduct of the parties to proceedings
The husband makes reference to the judgment regarding the conduct of the wife, where the Court made the following findings:[10]
The applicant gave evidence and was cross-examined. During her cross-examination the applicant found difficulty in making concessions that were against her own interests, instead preferring to screw up her face, sometimes shrug her shoulders and then say nothing. This went on throughout her cross-examination. Several times she was directed by Counsel and the Court to listen to the question and actually give an answer. The applicant would say a few words and then stop completely. Unfortunately the applicant was not an impressive or honest witness.
[10] Owen & Richardson [2024] FedCFamC2F 1120 [50].
The wife’s evidence was most unsatisfactory on various topics including her willingness to swear to her Statement of Affairs Declaration to her Trustee in Bankruptcy wherein she answered the question that she did not have a partner or a spouse and to then come to this Court and allege she was in a de facto relationship during this period. The wife (an administrative officer) had also completed tax declaration that for years through to 2021 inclusive, confirming she was no in a de facto relationship.
In advancing her alleged claims of domestic violence against the husband, the wife has overlooked her own behaviour during the relationship of routinely drinking too much, being abusive and as the wife said becoming someone she did not want to be. Other allegations were made that the husband would not let her have visitors over. This was when the wife and her children were living rent free in the husband’s home whilst he was away working. The idea was quite preposterous as the wife had weeks to herself when the husband was away. Overall, the wife was trying to paint a false narrative about the husband’s conduct to further advance her case.
The mere fact of the wife going bankrupt spoke volumes about her lack of financial standing and contributions. In the context of her relationship with the husband, the wife was given temporary housing for herself, and her two daughters and the husband agreed the wife could stay in his house during COVID. The husband then found that the wife would not move out.
The evidence of the wife was wholly inadequate to justify the Court making a determination that the justice and equity consideration would require a property alteration Order be made.
Most of the issues raised to bolster the wife’s case during the trial were time wasting and trivial. Reference to the wife buying decorative items for the house or making lunch for an adult son and other similar evidence, ought never to have been raised. The wife’s reliance on her picking up the husband when he returned from his fly in fly out work as a contribution was nonsense. The wife, who had free use of the husband’s car for weeks, and who lived largely free of rent in his home, said she would pick up the husband. These are examples of the wife’s evidence of contributions which was woefully inadequate. It seems to me that she had never undergone any reality testing in commencing her application. There was simply no basis for the wife seeking a cash payment of $300,000 plus a superannuation split of $190,000 in what was a childless relationship, where the husband owned his own home and had accumulated significant superannuation prior to meeting the wife and where the wife had not made any substantial contributions that would suggest a legal or equitable interest could be argued. The wife also overlooked the benefits she and her own two children had from living in the husband’s home and using his vehicle.
It is incumbent on a legal practitioner to undertake a reality check and provide fearless advice as to the prospects of success.[11]
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
[11] May & Longley [2016] FamCAFC 261 [20].
Not relevant in this matter.
Whether either party was wholly unsuccessful
The wife was wholly unsuccessful as indicated throughout the judgment. It was ultimately found that “the applicant and those representing her have attempted to present a case which is unsupported by the evidence.”[12] The wife failed to satisfy the requirements of the de facto provisions under the Act in advancing her case. Her case was without merit.
Whether either party in 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
[12] Owen & Richardson [2024] FedCFamC2F 1120 [73].
The husband submits that he made two offers of settlement to the wife, the first on 17 August 2023 which would see the wife receiving $20,000 within 14 days and to otherwise retain all assets and liabilities within her power and control. This offer was declined. It is accepted by the wife that if she had accepted this offer, it would have resulted in a far greater outcome than the Orders made by the Court on 15 August 2024.
The husband made a subsequent offer on 14 March 2024 (being one day following the final hearing), offering:[13]
[13] Written submissions filed by the husband on 12 September 2024.
(1)That by consent there be a declaration that there would not be in accordance with justice and equity an adjustment of the parties property interests;
(2)That your client’s application be dismissed; and
(3)That there be no order for costs.
This offer was declined. The husband quite rightly points out that this offer is consistent with the ultimate Orders made on 15 August 2024 as to the property proceedings, save for the issue of costs, which if accepted would have resulted in a better outcome for the wife, who is now subject to a costs application.
The wife has refused reasonable offers to resolve this matter and the husband has incurred the cost of running the litigation.
The wife contends that she made several offers to resolve the proceedings and that those offers were reasonable. I disagree. They were all unreasonable and well beyond anything reasonable in light of the findings of the Court. They include on 16 August 2023 which sought that the husband pay the wife a sum of $197,848 being 10.5% of the net asset pool and that each party otherwise retain all assets and liabilities held in their sole name.
It is important here to note the disparity in the financial circumstances of the parties. The wife had no real estate or other significant assets at the commencement of cohabitation, rather she had significant debts and was ultimately declared bankrupt during the relationship, whereas the husband owned real property almost debt free, had significant superannuation to his name which he had been accumulating long before this relationship commenced and significant shares.[14] This offer of $197,848 to the wife is entirely inconsistent with the facts and circumstances in this matter where it has been found the wife made no financial contributions and very little non-financial during their short, childless relationship. I repeat the Court’s previous finding that the applicant has simply conducted a case on her alleged “contributions” without any regard to the question of whether it is just and equitable for a property alteration Order to be made.[15]
[14] Owen & Richardson [2024] FedCFamC2F 1120 [49].
[15] Owen & Richardson [2024] FedCFamC2F 1120 [127].
A further offer was made by the wife on 12 November 2023 which sought the husband pay her the sum of $60,000 as well as a superannuation split in the sum of $40,000 and otherwise retain all assets and liabilities held in their sole name.[16] This offer by the wife was also made in disregard of their respective positions at the commencement of the relationship and the issue of the Court having to be satisfied that it would be just and equitable to make an Order altering property interests.
[16] Written submissions filed by the wife on 11 October 2024, exhibit 4 & 5.
The wife had every opportunity to take up the husband’s offers but she refused to do so.
EVALUATION.
This is a matter where I am satisfied that the provisions of Section 117 (1) wherein each party pays their own costs does not apply. The husband has incurred significant legal costs in defending a claim which ought not to have been initiated.
I consider that the wife acted imprudently in refusing reasonable offers. The wife was not an honest witness, and the husband had to defend her allegations which were not borne out. The wife has been wholly unsuccessful, and her application was without merit.
I have taken account of the fact the wife earns less than the husband or would submit that she cannot afford to pay a costs Order however this is not determinative of a costs application.
Taking account of all of the evidence I have referred to; I am satisfied that the wife should pay the costs of and associated with the husband’s costs.
The husband seeks costs on an indemnity basis or failing that, pursuant to the scale. I note that the husband’s total costs in the litigation amount to $85,910. I have considered the application for indemnity costs; however, I do not consider that the provisions of Colgate-Palmolive[17] are sufficiently enlivened in this matter. I do, however, observe that the wife has made allegations which ought not have been made, her evidence was woefully lacking and that she was wholly unsuccessful.
[17] Colgate-Palmolive Company & Colgate-Palmolive Pty Limited v Cussons Pty Limited (1993) 118 ALR 24.
I have considered costs on the scale as the alternate position of the husband, as set out in the written submissions which total $36,741.03. I am satisfied that the scale is inadequate in the circumstances of this case, and I intend to make a special costs order fixing the sum at $40,000. I note in addition the costs associated with the costs application, which I will fix at $2,000. In total a sum of $42,000.
I will make an Order that the wife is to pay the husband’s costs of and incidental to the proceedings fixed in the sum of $42,000 with such payment to be made to the trust account of Wilsons -The Family Lawyers within three months from the date of this Order.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Willis AM. Associate:
Dated: 24 October 2024
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