Paviello and Paviello and Anor (No 2)

[2018] FamCA 1025

FAMILY COURT OF AUSTRALIA

PAVIELLO & PAVIELLO AND ANOR (NO. 2) [2018] FamCA 1025

FAMILY LAW – COSTS – Costs of Third Party to a Proceeding – Conduct of parties

Family Law Act 1975 (Cth)

Bilson & Geer (Costs) [2017] FamCAFC 7
Penfold v Penfold (1980) 144 CLR 311

APPLICANT: Ms Paviello

RESPONDENT: Mr A Paviello

RESPONDENT: Mr B Paviello

FILE NUMBER: SYC 2323 of 2017

DATE DELIVERED: 25 October 2018

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Le Poer Trench J

HEARING DATE: On the papers

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Livingstone

SOLICITOR FOR THE APPLICANT: Jordan Djunja Lawyers

ADVOCATE FOR THE RESPONDENT: Mr Baxter

SOLICITOR FOR THE RESPONDENT: Blanchfield Nichols Partners

ADVOCATE FOR THE SECOND RESPONDENT: Ms Parker

SOLICITOR FOR THE SECOND RESPONDENT: Parker Law

Orders

1. The husband’s application for the wife to pay his costs of opposing her application filed 4 May 2018 is dismissed.

2. The wife’s Application in a Case filed 4 May 2018 is dismissed.

3. The costs application contained in the Second Respondent’s Response to an Application in a Case filed 18 May 2018 is dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Paviello & Paviello and Anor (No 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2323 of 2017

Ms Paviello

Applicant

And

Mr A Paviello

Respondent

And

Mr B Paviello
Second Respondent

REASONS FOR JUDGMENT

Introduction

1. Before the Court is an Application in a Case filed by the wife Ms Paviello on 4 May 2018, seeking costs against the first and second respondents, being the husband Mr A Paviello and the husband’s brother Mr B Paviello respectively. I note that in her submissions, the wife has clarified that she seeks that the second respondent pay her costs. The wife is the applicant for final property orders which she specified in an Initiating Application filed by her on 13 April 2017.

2. The wife’s Application in a Case filed seeks:

   That the Respondents pay the Applicant’s costs (on an indemnity basis) of and incidental to the Application in a Case heard before Justice Le Poer Trench on 12 February 2018.

3. Each of the respondents seek that the wife’s application be dismissed and that the wife pay the costs of each respondent for this application. The husband seeks a costs order on an indemnity basis.

Background

1. This matter was heard by me on an interim basis on 12 February last. The application before me was an Application in a Case filed by the wife on 1 September 2017, seeking that the wife be granted leave to inspect the Family Court file of Mr B Paviello and his estranged wife Ms C Paviello.

2. The wife alleged that the evidence sworn by the respondents in the Family Court proceeding between Mr B and Ms C Paviello asserted evidence as to the respondents’ ownership of property is significantly different to that asserted by the husband and the Second respondent in the current proceedings.

3. The application of the wife was opposed by the second respondent. The first respondent was represented before the Court on the day of the hearing, but informed the court that he was not a party to the application of the wife.

4. I delivered a judgment in relation to the application on 13 April 2018 The orders made by me were as follows:

   (1)That the applicant wife and the respondent husband (should he so wish) be granted leave to inspect the following class of documents contained in the Family Court File SYC3563/2014 relating to the second respondent, [Mr B Paviello], and his estranged wife [Ms C Paviello]:

   (a)Any affidavit sworn by the second respondent which deals with property and/or financial matters.

   (b)Any affidavit sworn by the husband.

   (c)Any affidavit sworn by a witness in support of the second respondent which deals with property and/or financial matters.

   (d)Any Financial Statement sworn by the second respondent.

   (2)For the purpose of implementation of order (1) the solicitor for the second respondent is to have first opportunity access to the Family Court file SYC3563/2014 for the purpose of compiling the documents which fit the description prescribed by order (1) hereof. That access is to take place in the presence and under the supervision of the Docket Registrar.

   (3)For the purpose of order (2) hereof the Docket Registrar is to appoint a time (in consultation with the solicitor for the second respondent) for the said file to be accessed in the presence of the Docket Registrar. If it is possible for that to occur within 14 days from the date hereof then it should occur within that time frame or so soon thereafter as the workload of the Docket Registrar allows.

   (4)Upon the solicitor for the second respondent identifying the documents which he/she contends fit the description specified in order (1) hereof, the Docket Registrar is then to inspect the file in the presence of the second respondent’s solicitor to determine whether in the opinion of the Docket Registrar there is any other document on the court file which he/she considers also fits the description of the category of documents specified in order (1) hereof.

   (5)Should the Docket Registrar identify further documents those documents are to be shown to the second respondent’s solicitor who is to then indicate whether he/she agrees the document should be included in the documents to which order (1) hereof refers, or alternatively is to state objection to the inclusion of the document.

   (6)If there be an objection to a particular document following the process specified in order (5) hereof the Docket Registrar is to cause the matter to be further listed before me to determine the issue. In relation to any such listing the husband and the wife in the primary proceeding are excused from attendance.

   (7)The applicant wife is not to use or publish any information obtained from the inspection of the documents, or use any copies of any document contained in the court file, otherwise than for the purpose of the proceeding in this court between the husband and the wife without further obtaining the permission of the court to such use or publication.

   (8)Each of the husband and wife is permitted to take one copy only of each document provided for inspection. No further copies of such documents are to be made. The copy of each document so taken is to remain in the custody of the solicitor acting for the party at the time the photocopy is taken. At the time of making final orders, unless the court orders otherwise, all copies of the documents made pursuant to these orders are to be delivered, by the solicitor acting for the party at the time the photocopy was taken, to the registry manager of the Family Court of Australia at Sydney, together with a copy of this order, and the registry manager is then to cause the copies to be destroyed.

   (9)Should any party seek a costs order, such application is to be made within 14 days in writing restricted to no more than three typed pages of submission. Each party against whom any such cost order is sought is to respond to such application (should they choose to do so) within 14 days of receipt of an application for costs and submission. The determination of any such application will be reserved.

5. I set out here also orders made by Justice Johnston on 11 December 2017 in relation to this application, as there is an assertion by the Second Respondent that these orders constitute a measure of success in the application.

   1. BY CONSENT between the wife and [Mr B Paviello] orders be made in accordance with the handwritten document filed in Court today signed by those persons and by me and placed with the Court papers as set out hereunder:

   1. That within 28 days the Wife provide to the Solicitor for the Second Respondent an Affidavit setting out a complete list of all documents in her possession or control, including copies of documents, she has received from [Ms C Paviello] or any other person which were:

   (a)produced to [Ms C Paviello] by [Mr B Paviello] in accordance with his obligations under the pre-action procedures contained at Schedule 1 of the Family Law Rules 2004 or in accordance with his obligations to make full and frank disclosure in proceedings SYC 3563/2014; or

   (b)affidavits, financial statements or balance sheets prepared by or on behalf of [Mr B Paviello] and/or [Ms C Paviello] for the purposes of the said proceedings.

   2. That pending further order, the Wife shall within 28 days lodge with the Court all copies of the documents referred to in the affidavit to be provided pursuant to Order 1 save and except for copies annexed to affidavits filed in the proceedings.

   3. That upon the Undertaking being given as proposed, the Application for an injunction against the Second Respondent at paragraph 7 of the interim orders sought in the Initiating Application filed 13 April 2017 is dismissed.

   2. The Court notes the written Undertaking by [Mr B Paviello] filed in Court today.

   3. That within 28 days the husband and the wife provide to the second respondent’s solicitor how much money held by the second respondent is to be released and to whom.

   4. That the proceedings between the wife and [Mr B Paviello] be adjourned to the duty list at 9.30 am on 12 February 2018.

   5. That all interlocutory applications between the wife and the husband be included in the list of cases awaiting allocation of one day’s hearing time.

   6. That all costs be reserved.

Evidence

The Wife

1. An affidavit was filed on behalf of the wife, sworn by her solicitor, James Jordan, on 4 May 2018. That affidavit set out:

   a)That she was entirely successful;

   b)That the costs of Mr Livingstone, her barrister, were $4,235;

   c)The costs of the solicitor for the application were $40,000 inclusive of GST; and

   d)The costs of the preparation of the application for costs were $2,200.

The Husband

1. An affidavit was filed on behalf of the husband, sworn by her solicitor, John Baxter on 18 May 2018. That affidavit set out:

   a)That the response to the wife’s Application filed 4 May 2018, and orders sought of costs on an indemnity basis, were filed only after lack of confirmation from the applicant as to the continuation of orders sought.

2. The husband’s solicitors annexed to his affidavit copies of three pieces of correspondence between his firm and the wife’s solicitors. That shows the following in relation to this application of the wife’s for the costs of the proceeding on 12 February 2018.

   ·    The husband’s solicitors sought, by letter dated 11 May 2018, an assurance that the wife was not seeking an order for costs against the husband in her application filed 4 May 2018 as the husband did not participate in the hearing on the 12 February 2018 as no order was sought against the husband.

   ·    The wife responded by letter dated 15 May 2018. She proposed through her solicitors that the wife’s costs of the hearing be reserved against the husband. That the wife be able to prosecute such claim on 28 days’ notice. That the application in a case continue only against the second respondent.

   ·    The husband’s solicitors responded on 17 May 2018 to that proposal by rejecting same and proposing to file a Response and affidavit in support. They advised they would seek an order for indemnity costs.

3. It is hard to see why the offer of the wife to resolve the cost application against the husband as she proposed was rejected. I fail to see what the husband had to lose by the proposal. Given that in the absence of some other extraordinary fact emerging during the balance of the cases history in the court, it is clear the wife would have no success in any cost application against the husband on this particular hearing. After all he did not oppose the order sought by the wife.

4. The husband in his response filed 18 May 2018 sought the wife’s application be dismissed and that the wife pay the husband’s costs on an indemnity basis.

5. I have concluded it was entirely reasonable for the husband to accept the wife’s offer contained in her solicitors letter of 15 May 2018 and I accordingly propose to dismiss his application for costs.

The Second Respondent

1. An affidavit was filed by the second respondent on 18 May 2018. That affidavit set out:

   a)That he verily believed his solicitor attended an appointment with Registrar Hayward to inspect his Family Law file pursuant to orders;

   b)That the only document in the file that falls within the terms of the orders from 13 April 2018 was the Financial Statement filed 1 September 2014;

   c)That the applicant had previously had access to the Financial Statement.

Submissions

Applicant Wife

1. The wife provided written submissions on 4 June 2018. They set out the following.

2. The wife submitted that she was forced to bring her application by the second respondent, and that it was completely unnecessary.

3. She set out that she was seeking that her costs be paid by the second respondent, who she submitted had legal representation at all material times. She further submitted that the second respondent “fought hard” to oppose the application of the wife, and that he has not explained how the asserted discrepancy in the evidence before the court in the separate Family Court proceedings has come to be.

4. The wife submitted that the second respondent’s assertion that he enjoyed a measure of success on 11 December 2017 “merely serves to highlight the cost brought about as a result of the manner in which each Respondent has conducted the proceedings.” She submitted that the disparity between the versions between proceedings leaves available the inference that one is incorrect. She directed the Court’s attention to Penfold v Penfold (1980) 144 CLR 311, submitting that “Putting a party to the costs and expense of proving a statement of financial circumstances is false is a well established basis for ordering costs.”

5. The wife directed the Court’s attention to Alridge J’s judgment in Bilson & Geer (Costs) [2017] FamCAFC 7 in relation to the proposition that costs should be fixed if possible.

6. The wife submitted that the second respondent has not provided evidence as to his costs of the application.

7. The wife submitted that the costs of the First respondent should be reserved to the final hearing. She submitted that he has not been blameless in this matter.

First Respondent Husband

1. The husband provided written submissions on 18 May 2018. They set out the following.

2. The husband filed no response to the Applicant’s Application in a Case, nor did he oppose the application as no relief or costs orders were sought against him.

3. The husband submitted that for all intents and purposes, he was not a party to the Application in a case, except in name only.

4. The husband submitted that even if the Court found him party to proceedings, the amount claimed for solicitor’s costs is manifestly excessive, and an itemised costs account would be a more appropriate approach.

Second Respondent Mr B Paviello

1. The second respondent provided written submissions on 4 May 2018. They set out the following.

2. The second respondent directed the court’s attention to the Family Law Act s 117(2A) which stipulates that costs may be considered only in circumstances where any party has been ‘wholly unsuccessful’ in proceedings.

3. The respondent denies being wholly unsuccessful in the proceedings. He submitted that the following orders placed limits and conditions on the Applicant, and placed her in no better position than she was prior to the application

   a)Orders on 11 December 2017 required the Applicant to lodge copies of all her documents in her possession or control with the Court, in so far as they related to the second respondent’s Family Court file

   b)Orders on 13 April 2018 restricted the Applicant to any affidavit material or financial statement sworn by the Second Respondent, or any affidavit sworn by a witness in support of the second respondent dealing with property and/or financial matters and;

   c)The only document in the Second Respondent’s Family Court file which fell within the class of documents specified above was the Financial Statement to which the Applicant previously had access.

4. The second respondent submitted to the court that these restrictions on the Applicant meant that he, as the Respondent, had not been wholly unsuccessful.

5. He submitted that the Respondent had been partly successful, and thus the Application for Costs should be dismissed.

6. In the alternate, the Second Respondent submitted that the wife had substantial assets available to her and thus was able to fund her own legal costs.

7. He further submits that no exceptional circumstances have been demonstrated which would warrant an order for Indemnity Costs.

8. The second respondent directed the court towards the recent review by Aldridge J in the matter of Bilson & Geer (Costs) [2017] FamCAFC 7 in regards to the wife’s application for fixed costs. He submitted that there was insufficient information.

9. He submitted that should a Cost Order is to be made, they should be limited to

   a)the preparation and service of Application in a case, and the supporting affidavit;

   b)Engrossing and serving the Application in a case and supporting affidavit;

   c)Any relevant photocopies;

   d)Reading the second respondent’s Response and supporting affidavit;

   e)Preparing brief to counsel;

   f)Attending Court on 12 February 2018, instructing counsel;

   g)Reading the reserved judgment in seeking the client’s instructions.

10. He submitted the Court could not be confident on the information before it to a sufficient standard to award a fixed lump sum cost.

Determination

1. The determination of a costs application is directed by s 117 of the Act. The primary position specified by the section is that each party should pay their own costs. Section 117(2A) sets out the matters which the court should address where there is a costs application in order to determine if s 117(1) should be departed from.

2. Section 117(2A) requires the court to consider the following:

   (2A)  In considering what order (if any) should be made under subsection (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.

3. The parties in their submissions addressed only the aspects of conduct and whether either party was wholly unsuccessful.

1. There is no evidence to show what efforts the wife and the second respondent undertook to endeavour to resolve the case. Given that neither has sought to rely upon any offer of compromise it is reasonable to assume no such offers were made.

2. The second respondent relies upon the fact that when the court file relating to his divorce proceeding was inspected by his solicitor and the registrar of the court, pursuant to the court’s orders, the only document which fell within the category of documents to be inspected was the second respondent’s Financial Statement filed in that proceeding. The second respondent states that is a document which the wife had already had access to as the evidence in the hearing disclosed.

3. The assertion of the second respondent that there were no other documents which could have been inspected by the wife and which held any evidence of the second respondent which related to property to which the wife now seeks remedy as against the husband in this court, adds to the dilemma as to why it was necessary to use this court’s time to resolve the issue. Surely those who acted for the second respondent could have recommended that the solicitor for the wife inspect the file in the presence of the second respondent’s solicitors to satisfy the wife that there were no other documents which may assist her in her property claim against the husband.

4. As it transpired the second respondent’s case was that he had nothing in the court file apart from his Financial Statement which could possibly be relevant to any claim by the wife in her property case.

5. The restriction on the class of documents which could be inspected by the wife in the second respondent’s court file should have been included in the application by the wife. The jurisprudence of the court should have been sufficient to suggest a broad order providing access at large to the second respondent’s court file would be unlikely to succeed.

6. Given that the parties sought to restrict their cases to matters set out in their affidavits and submission there is nothing which I can take into account under the balance of the matters to be considered under s 117(2A). I can infer from the content of the evidence and submissions in the case I heard on 12 February last that the wife and also the second respondent have property. Neither the wife nor the second respondent sought to oppose an order for costs on the basis that they did not have the financial capacity to meet a reasonable order for costs arising from the application now under consideration.

7. I conclude that the conduct of each of the wife and the second respondent in relation to the wife’s Application in a Case heard on 12 February this year was such that neither should be awarded with an order for costs.

8. It is an obligation that lawyers who practice in this court have as officers of the court to recommend and implement reasonable compromises in order to save both the client and the court the cost of having to have an issue determined by the court. In this case the available evidence does not satisfy me that reasonable attempts were made to save both the parties and the court from the hearing which took place on 12 February 2018.

9. I conclude therefore that no costs order should be made in favour of any of the parties to the proceeding and I will so order.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench delivered on 25 October 2018.

Associate:

Date: