PATRICE & PATRICE (COSTS)
[2010] FamCA 174
•22 February 2010
FAMILY COURT OF AUSTRALIA
| PATRICE & PATRICE (COSTS) | [2010] FamCA 174 |
| FAMILY LAW – COSTS |
| Family Law Act 1975 (Cth) ss 117(1), 117(2), 117(2A) Family Law Rules 2004 (Cth) Chapter 13 Rule 13.01 |
| APPLICANT: | Ms Patrice |
| RESPONDENT: | Mr Patrice |
| FILE NUMBER: | CAC | 1076 | of | 2008 |
| DATE DELIVERED: | 22 February 2010 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Faulks DCJ |
| HEARING DATE: | 22 February 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr D. Farrar |
| SOLICITOR FOR THE APPLICANT: | Farrar Gesini & Dunn |
| COUNSEL FOR THE RESPONDENT: | Mr R. Maurice |
| SOLICITOR FOR THE RESPONDENT: | KJB Law |
Orders
The husband will pay to the wife the sum of $6,500 as to the costs of the proceedings between them in relation to the division of property.
Such sum will be paid on or before 22 March 2010.
All existing matters are otherwise removed from the pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Patrice & Patrice is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT CANBERRA |
FILE NUMBER: CAC 1076 of 2008
| MS PATRICE |
Applicant
And
| MR PATRICE |
Respondent
REASONS FOR JUDGMENT
Introduction
In these proceedings, the applicant seeks an order as to costs, following on from proceedings before the Court for alteration of property interests of the parties.[1]
[1] For which judgment was delivered on 20 May 2009 – Patrice & Patrice [2009] FamCA 669.
Mr Farrar submits today on behalf of the wife[2] that there are five discrete circumstances justifying a costs order. Initially, it was not apparent from the form of the application that it was so confined. Mr Farrar provided me with a summary of argument or submissions, and I was also assisted by some comprehensive submissions from Mr Maurice on behalf of the respondent.
[2] In the course of this judgment I might refer, from time to time, to the parties as husband and wife. I do not intend any insult to either of the parties in doing so. I am aware of the fact that they are not longer husband and wife.
Relevant law
The proceedings are brought pursuant to s 117(2) of the Family Law Act 1975 (Cth). The starting position in relation to any cost application is that each of the parties should be obliged to meet his or her own costs.[3]
[3] Family Law Act 1975 (Cth) s 117(1).
Section 117(2) of the Family Law Act 1975 (Cth) 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, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
The Court is not obliged to make, as it would be in an ordinary common law matter, an order for costs, but an order, in the circumstances, as to costs. In my opinion, the wording of the section makes it likely that the Parliament intended this effect.
Section 117(2A) of the Family Law Act 1975 (Cth) relevantly provides that:
In considering what order (if any) should be made under [s 117(2)], the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to 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; and
(g) such other matters as the court considers relevant.
Neither parties suggests that s 117(2A)(a) of the Family Law Act 1975 (Cth) should affect my decision.
Neither party, so far as I am aware, is in receipt of legal aid.
Section 117(2A)(c) is relevant for these proceedings and I will come to this in my reasons below.
Section 117(2A)(d) may be indirectly referable to this application (albeit this submission was not made by either party) in relation to the failure of the husband to comply with certain orders, and that, therefore, certain steps had to be taken as a consequence. However, that is not, in my opinion, the meaning of s 117(2A)(d) of the Family Law Act 1975 (Cth), nor was it put to me by either party that it was.
Neither party was either wholly unsuccessful in the proceedings in relation to the substantive proceedings before the Court for alteration of the parties’ interests in property.
Neither party has suggested to me that there was any written offer to settle the proceedings relevant to s 117(2A)(f) of the Family Law Act 1975 (Cth).
Discussion
In his opening address, Mr Farrar suggested that there were five broad categories in which the wife would be seeking some costs order. These were:
a) non-disclosure by the husband generally;
b) non-disclosure by the husband with respect to the wine collection;
c) the fact that the husband had sought, through an initial interim application, certain orders about the conduct of a business and related matters which was filed, but was subsequently withdrawn some time later after the wife had been put to expense. The circumstances of that withdrawal were agreed, in part, as being on the basis that the final hearing was shortly to commence;
d) the late filing of documents by the husband and the consequences that flowed therefrom; and
e) the fact that, the husband sought to re‑open the proceedings after final judgment was delivered to seek that there should be different orders made by the Court which took account of the Capital Gains Tax (CGT) implications of the division of property (as ordered by the Court). At the same time, it was noted the wife also sought in those proceedings, that there should be a re-opening in order to re-value all of the properties if there was otherwise to be a re-opening of the evidence.
Some of the matters referred to in this application were resolved substantially by the orders eventually made in the proceedings. For example, in relation to the wine, the orders I made, in effect, precluded the necessity for there to be a valuation of the collection because of the taking into account of the sale of some items, the value of the rest, and so forth.
Similarly, in relation to CGT implications, the orders that I made in the end, although not those precisely sought by the parties, took account of the fact that if property were sold within a limited period, then there should be adjustments either for or against one of the parties to take account of the CGT implications and, obviously (and implicitly) in such an order, any increase in the value of the property up until the point of sale.
I asked Mr Farrar what he suggested might be the overall figure that might flow from my considering all of his submissions favourably. Mr Farrar advised that the figure was approximately $10,000.
At the commencement of today’s hearing, it became apparent that there were some difficulties with the evidence in support of the wife’s application, in that an affidavit had been filed by an employee of Mr Farrar’s firm – Ms Sarah Keenan – who annexed substantial parts of the correspondence between the lawyers involved in the proceedings and other sorts of documents. Mr Maurice, on behalf of the husband, took the objection that Ms Keenan was not the solicitor on the record or had not demonstrated perhaps more accurately, that she was the author of the correspondence referred to, and was unable to say, Mr Maurice suggested, or again at least had not said, that she was able to verify the accuracy and the authorship of the documents that were annexed to her affidavit.
The husband had also filed an affidavit in which he annexed correspondence, but did so on the basis that he asserted that he had given instructions for the correspondence or had received the correspondence where that was relevant. It transpired that Mr Maurice, at least initially, wished to cross‑examine the author of some of the documents, presumably to verify what was meant by some of the statements contained in them. We never found out why because, after a short adjournment, both he and Mr Farrar declined the offer I had made for cross‑examination to occur.
In all of the circumstances, it seemed to me that it was appropriate to deal with the issues that did not require any cross‑examination first and that gave both parties an opportunity to consider their position.
I also took the view, as I mentioned during the course of the proceedings, that, in my opinion, it was unnecessary that there should be a verification of the correspondence passing between the solicitors as such. The issue of whether or not the author of the correspondence ought to be available for cross‑examination I regarded as different and was prepared to make an order that would have facilitated the cross‑examination of Mr Farrar, the solicitor on the record, and the person with whom responsibility for the correspondence rested on behalf of the wife and the cross‑examination of Mr Patrice as the husband in the proceedings as a counterpoint. However, as it transpired, neither party sought to exercise that right.
Discussion
I resolve the issues as follows. I do so acknowledging that these issues were not made as five separate applications as to costs, but rather as different facets of the same application for costs. Nevertheless, it would seem to me to be unreasonable for me to simply apply a global figure, or no figure at all, to the proceedings without at least indicating how I saw the relevant issues as being resolved and how I saw the allocation of the costs associated with them. During the course of the proceedings, I indicated to the parties that I felt that there was some force in a number of the different aspects of the application made and that would result in some order for costs.
Husband’s withdrawn interim application
I turn to the interim application that was filed by the husband and subsequently withdrawn. There is no particular blame attaching to the husband in relation to this and I emphasise, as indeed both parties urged upon me, that costs should not, of their nature, be punitive. Costs are designed to ensure that a party who has lost money, in effect, through legal activity as a consequence of the action of the other party, which proved to be unnecessary or inappropriate (or whatever) it might be, is in some way, compensated.
In an appropriate case, depending upon the nature of the behaviour of the people involved, it might be appropriate that the parties should be put back into the position in which they were previously. This has been known variously as solicitor/client costs and indemnity costs, although the two are not necessarily the same and it is a topic on which there is some difference of opinion and now a not inconsiderable body of law. That is not a matter that affects us this day.
In relation to this interim application by the husband, it persisted over a period (and Mr Farrar's submissions outline these dates and I do not propose to go through them individually) until eventually, in the beginning of 2009, the application was withdrawn. The effect of this was that there had been an affidavit filed on behalf of the husband in proceedings which were commenced in the Federal Magistrates Court of Australia of some 20 pages with annexures, which elicited from the wife a reply of some 36 pages with 60 pages of annexures. It is in relation to that work, and the attendances at court, to which the application for costs is directed.
It seems to me that, in all of the circumstances, it is appropriate there should be some compensation – and I use that word in the broader sense, not necessarily in any technical sense – to the wife in relation to this part of the proceedings. The cost of dealing with the application, and its subsequent failure to be pursued, leaves her in a position where she is significantly out-of-pocket. The husband failed to withdraw from the application at an earlier point which would have made the application for costs almost risible, and in the end, it was not pursued, nor were the merits of it ever determined. As such, in my opinion, it is reasonable for the wife to succeed on that part of her application and for that to be reflected in an appropriate order for costs.
Mr Farrar assigned a figure of about $2,500 to this. This is by way of an assignment, not an assessment. I no longer purport to have a detailed knowledge of the way in which costs are charged or calculated by solicitors, nor have I examined the scale in detail for some time. However, when I look at what is involved in the preparation of the affidavit and I look at what that figure is under the scale for the preparation of affidavits and the time it would have taken to produce it and the number of times the matter came before the Court, it seems to me that a figure of that sort would be appropriate.
Late filing of documents
Mr Farrar submitted that the question of the late filing of documents related principally to the husband's initial contributions. It was an interesting argument in that initially the husband appears to have claimed, and I am satisfied he did claim in correspondence and earlier affidavits and exchanges between the parties, that the value of his pre‑relationship contributions was as much as $600,000. It is asserted that the wife initially suggested that his contributions were not worth anything. It does, however, appear that certainly after the proceedings had been afoot for a time, that position ($600,000) was abandoned in favour of a position which appears to have been that they were worth a net $322,000 or thereabouts.
Subsequently, contrary to directions given by me, the husband sought to have an expert valuation put upon those properties he owned prior to the commencement of the relationship. This involved the retaining of an expert and the filing of an affidavit and the attempted reliance upon it in the course of the hearing. What transpired from that is, to some extent, forensic and tactical manoeuvring, but in the end the value that was put upon the contributions of the husband, finished up being about $154,000. This resulted in an adjustment of the contributions between the parties in my final reasons for judgment.
The complaint in relation to these matters was not that the husband claimed that his contributions were worth more – and the wife that they were less. That is the nature of proceedings before the Court. It was that, contrary to directions made, he attempted to rely upon evidence at a late point when that was unable to be responded to by the wife without an adjournment.
It seemed to me, however, that the way in which the matter had unfolded, as I suggested to Mr Farrar, that upon receiving notice of the valuation, what he was required to do was to in fact look at the bottom line, see whether the total of the purported valuation of Mr L was less or more than the figure that they had previously indicated that they would accept, and then to seek instructions in an appropriate way from his client. If the figure was significantly more than the figure he said he was previously prepared to accept, then he was left with little choice, except to seek an adjournment. This should have and would have been afforded to him, with costs. That is the penalty any person who fails to comply with directions and uses evidence before the Court (which is ultimately accepted as being appropriate) must suffer for justice to done to them. Justice is two‑handed and blind.
In this situation, however, what happened was that the figures were substantially accepted, as I take from the transcript of the proceedings. In any event, no adjournment was sought nor was it necessary and there was no adverse effect on the wife's case. Accordingly, if there is to be any compensation in relation to any costs to be awarded, perhaps more effectively, in relation to the conduct of the proceedings by the husband in this regard, it should only be in relation to the matters to which I have referred before. In my opinion, a figure of $1,000 would more than compensate for that additional work on the part of the wife.
Husband’s seeking to re-open after final judgment delivered
The third matter raised by the wife was the question of the re-opening of the proceedings after judgment had been delivered. The husband sought that there should be adjustment to the orders to take account of CGT. I have looked at the transcript of the proceedings in relation to this matter, and I have looked at the fact that the wife did ultimately also seek to have the matter re‑opened. I also looked at my judgment, which took account of the fact that there may have to be the sale of some of the properties. I should also take account the fact that no submissions were made to me at the relevant time about CGT and its effect on the outcome.
All in all, it does not seem to me there is enough in those proceedings to justify any order for costs. I note that in part the wife expressed interest in the re‑opening of the proceedings in any event, once it became clear that this was a possibility. In my opinion, there should be no order as to costs in relation to that aspect of the matter.
Husband’s specific non-disclosure about the wine collection
With respect to this component of the wife’s application, the wife draws attention to the fact that, at a very early stage in the proceedings, the wife asserted that the husband had a collection of wine which had cost, she said, $45,000. This was largely constituted by one particular type of wine.
References were made from time to time; directions were given; promises were made; requests were made; demands were made – all for making the wine available for inspection, or for a list or an inventory to be prepared as to what constituted the collection so a valuation could be carried out. If, in fact, the requests that had been earlier made were in fact implemented then there would have been a single expert appointed sooner. Each of the parties then would, in accordance with normal procedures, have paid one half of the cost of the valuation. In the end, the wine that the wife retained, perhaps as a retaliatory strike, and that which the husband had, and even that which he eventually sold (without benefit of any order of the court and contrary to the requirements of the Family Law Rules 2004 (Cth),) would have been taken into account and valued.
As it transpired, it was only very late in the proceedings that it became clear that the husband had not only kept the wine, but had disposed of some of it and had not made any disclosure about it, nor had he provided a list, until quite late in the proceedings after the wife, in exasperation, had retained, on a solo basis, an expert for the purposes of valuing the wine. I made adverse mention of the attitude and conduct of the husband in relation to this matter in the course of my judgment. It is important, however, to look at this as not being a matter of punishing the husband, but rather determining what were the consequences of this. It seems clear that the wife, in any event, would have been liable for the cost of one half of the valuation – precisely what that would have been is not in evidence before me. In addition, and far more significantly, probably, in the overall picture, the wife would not have been responsible for a number of attendances at court, letters, following up of instructions, and other things that are outlined in the course of the fairly voluminous correspondence that has been put before me during these proceedings.
In this regard, it seems to me that it is appropriate that the failure on the part of the husband to carry out what would be the proper requirements of disclosure and discovery under the Family Law Rules 2004 (Cth)[4] should be reflected in some order relating to costs.
[4] Family Law Rules 2004 (Cth) Chapter 13, Rule 13.01 refers.
In my opinion, that would be appropriately reflected in an order for $3,000 in relation to that particular area which takes account of whatever may have been the cost of the valuer.
Husband’s general non-disclosure
The submissions on behalf of the husband are that the wife, in equitable terms, does not come with clean hands in that she failed – as was disclosed in the course of the documents tendered in these proceedings as part of the annexures to the affidavit filed on behalf of the wife – to disclose that there had been a retention of money, apparently not declared for taxation purposes. It was asserted by the husband that this had been the subject of deliberate failure of disclosure to the court, because, in the words quoted from the letter of Mr Farrar, a letter of advice to his client:
Obviously if a judge is to hear the matter, then it is possible he could refer the papers to the tax office for a full audit.
There has been quite a deal of heat, (not necessarily a lot of light,) about what the meaning of these words were and the extent to which either or both of the parties were engaged in the process of removing or keeping cash money, as it is commonly referred to, from the business and, effectively, not declaring that money for tax purposes. Mr Farrar points to parts of his client's affidavit, some parts which have been objected to and some parts which have not, which suggests, at least on one reading, that all money that had been paid into the business, whether by cash, cheque or otherwise, had been declared for taxation purposes.
It is not immediately apparent to me from reading the paragraph referred to above that this is the ordinary and common meaning of what is contained in his client's affidavit. I am puzzled, to the extent of being incredulous, that if in fact his client had been a totally innocent party in relation to the issue of taxation and cash money, that this would not have been raised in a signal fashion almost from the beginning of the proceedings.
It is not as though the parties are so much in love with each other still that they are trying to save each other from the unfortunate consequences of their respective actions. It is not as though this is an issue that would not have been of benefit to the wife to raise at an earlier point because of the fact that she would presumably seek some exoneration from that which had been visited upon her by what she would describe as a malicious and malevolent husband. These are issues which, in the long run, I cannot possibly resolve because it seems to me that the evidence that I will need to have before me about it has, for whatever reason, not been put before me in these proceedings.
Mr Farrar, in his submission sets out at some length the various attempts that have been made to ensure that documents that were appropriate to be before the Court were, in fact, put before the Court. There are a number of examples that he gives; the question of the value of the husband's initial contributions is one in which he says no appropriate documents were provided. There is counter‑allegation that documents were provided and that Mr Farrar chose, rather than to accept a direct response to documents specifically requested, to inspect all the documents himself, thereby putting (it is asserted impliedly) his client to the cost and him to the pain of inspecting all of the documents, rather than accepting a narrower brief.
Given the nature of the dispute between the parties, this is a somewhat difficult criticism to maintain. There was, from day one, deep‑seated suspicion on the part of both the parties about the motives, the activities and the failure to disclose of both parties. It would be fair to say that the person who had the most to disclose was the husband and it would certainly be fair to say that most of the activity about obtaining disclosure came from the wife directed to the husband.
Mr Maurice has given examples of instances where it could be said that the wife has not been entirely as straightforward about the disclosure of documents as she might have been. It seems to me that in the overall context of what was a difficult matter, from an evidentiary point of view, not particularly assisted by the attitude of either of the parties, but in particular by the husband, it is difficult to determine precisely what it is and what extra expenses have been incurred in relation to discovery by the wife as a result of the actions of the husband or, for that matter, by the husband in relation to the actions of the wife. The husband is not seeking any costs, apart from the cost of today, and seeks simply to resist the actions of the wife.
In my opinion, the doubts in relation to the issues relating to taxation, to some extent – and I do not pretend that it is an even‑handed matter, but it is difficult to be precise about the problem that neither party had given what would properly have been regarded as a complete disclosure on all issues at all times – lead me to conclude that there is nothing that would cause me to make a specific order in relation to this aspect of the matter.
Conclusion
I make an order as to costs for $6,500 in favour of the wife. I make that order as an order in relation to costs and not a specific quantification of the costs in relation to any of the items I have chosen. This seems fair in relation to what aspects of the matter I would allocate a particular proportion of $6,500, but the $6,500 is a total figure with reference to all of the matters and not a specific order in relation to the individual components.
I note that Mr Maurice had sought an order for costs in relation to today's proceedings, as, impliedly, does Mr Farrar, if he did not explicitly do so. It seems to me, on the basis of the fact that there have been some findings in favour of one and in some in favour of the other, that it would be inappropriate for me to make any order for costs in relation to the proceedings of today and each party should, in accordance, with s 117(1) of the Family Law Act 1975 (Cth), pay his or her own costs for today’s proceedings.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks.
Legal Associate:
Date: 5 March 2010
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