Pearce & Pearce (No 5)

Case [2023] FedCFamC1F 761

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Pearce & Pearce (No 5) [2023] FedCFamC1F 761

File number: SYC 2654 of 2017
Judgment of: CAMPTON J
Date of judgment: 5 September 2023
Catchwords: FAMILY LAW – COSTS – Costs applications subsequent to two trial events – Where the parties have been engaged in litigation for more than four years and have each had mixed success in prosecuting their relief – Where the circumstances do not justify a departure from the ordinary position that parties meet their own costs of proceedings – Costs applications dismissed.
Legislation:

Family Law Act1975 (Cth) ss 79, 117

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 68

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.04

Cases cited:

Pavlic & Pavlic (No 2) [2023] FedCFamC1A 97

Pearce & Pearce (No 2) [2022] FedCFamCF1 193

Pearce & Pearce (No 3) [2022] FedCFamC1F 418

Pearce & Pearce (No 4) [2023] FedCFamC1F 525

Division: Division 1 First Instance
Number of paragraphs: 49
Date of hearing: 1 September 2023
Place: Sydney
The Applicant: Did not participate
Solicitor for the Respondent: Ms Morozov, Barkus Doolan Winning
Counsel for the Intervener: Mr Stapleton
Solicitor for the Intervener: Watts McCray

ORDERS

SYC 2654 of 2017

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR PEARCE

Applicant
AND:

MS PEARCE

Respondent

MS R PEARCE

Intervener

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

5 SEPTEMBER 2023

BY CONSENT THE COURT ORDERS THAT:

1.The husband’s Application in a Proceeding filed 8 August 2022 together with the Wife’s Response to an Application in a Proceeding filed 9 May 2023 be withdrawn and dismissed.

2.Paragraph 2 of the wife’s Application in a Proceeding filed 18 July 2023 together with the husband’s Response to an Application in a Proceeding filed 1 August 2023 be withdrawn and dismissed.

3.There be no order as to costs as between the husband and the wife.

ON A DEFENDED BASIS THAT:

4.The intervener’s Application in a Proceeding filed 20 June 2022 be dismissed.

5.The balance of the relief sought in the wife’s Application in a Proceeding filed 18 July 2023 be dismissed.

6.Order 24 as to security for costs made 4 July 2023 is discharged.

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).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 the pseudonym Pearce & Pearce has…

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AGLC
Pearce & Pearce (No 5) [2023] FedCFamC1F 761
Case
[2023] FedCFamC1F 761
Decision Date

CaseChat Overview and Summary

In the matter of Pearce & Pearce (No 5), the intervener filed a Response to an Application in a Proceeding on 25 August 2023, seeking that the wife's costs application be dismissed and that the wife pay the intervener's costs of the costs applications. The husband did not respond to the wife's costs application. The dispute involved various financial transactions and agreements between the parties, including advances made by the intervener to the husband and wife, and subsequent proceedings to recover these advances. The intervener had argued that certain advances were secured by property owned by the husband and wife, a contention which was rejected by the court. The intervener also sought to have her costs covered by the wife.

The primary legal issue before the court was whether the circumstances of the case justified an order for costs in favour of either the intervener or the wife. Under s 117 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), each party is responsible for their own costs, but the court has discretion to order costs otherwise if justified. The court considered the factors set out in s 117(2A) of the Act, which include the conduct of the parties, the reasonableness of their offers of compromise, and the financial circumstances of each party. The intervener argued that the wife's failure to make a reasonable offer of compromise warranted an order for costs in her favour. The wife, on the other hand, did not provide any evidence or submission regarding the costs she sought from the intervener.

The court found that the intervener's failure to make a reasonable offer of compromise did not justify an order for costs in her favour. The court also noted the intervener's substantial assets and income, which suggested she was not financially disadvantaged by the proceedings. Given the closely balanced nature of the case and the lack of compelling evidence from either party, the court determined that neither party had established circumstances justifying an order for costs. Consequently, the court dismissed both the intervener's and the wife's applications for costs. The court also discharged an earlier order for security for costs, allowing the wife's solicitors to release $170,000 held in trust to the wife.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The intervener filed a Response to an Application in a Proceeding on 25 August 2023 seeking that that wife’s costs application be dismissed and the wife pay the intervener’s cost of the costs applications. The husband did not file a Response to the wife’s costs application.BACKGROUND Broadly, the discrete issues reasons delivered on 10 June 2022 made findings that:(a)The intervener and the husband alone (not the husband and the wife) entered an agreement for the intervener to provide the first advance to the husband and wife to complete the purchase of real property, and for those funds to be repaid upon the wife obtaining employment and the property being refinanced. The advance did not carry interest (at [143]); (b)The first advance was repayable upon satisfaction of terms and thereafter on demand (at [148]); (c)In his dealings with the intervener in relation to the first advance, the husband was negotiating for access to funds for the benefit of both he and the wife, not as agent of the wife, however the wife had knowledge of and encouraged the husband in so negotiating (at [139]); (d)The intervener failed in her contention that the first advance was secured upon the real property of the husband and the wife by way of security or charge. The advance was secured only on the husband’s half share of the proceeds of sale of a real property owned by the husband and wife. That security was by way of a charge given by the husband alone on 1 February 2019 (being after separation) (at [168] and [172]);(e)It would be unconscionable to permit the husband and wife to depart from the husband’s promise to repay the first advance, and to retain all the benefit of it (at [180]–[182]). An order was made that the husband and the wife do all things as necessary to pay the intervener the sum of $751,244 (i.e. the first advance) from the joint NAB bank accounts of the husband and the wife which held the proceeds of sale of their real properties. Those accounts had a balance of $1,257,879 at the time of the discrete issues trial (at [172]);(f)The second advance of $200,000 was made by way of loan from the intervener to the husband alone (not to the husband and the wife). It did not carry interest. The intervener failed in her contention that the advance was secured or charged on the real property of the husband and the wife. The fact of recovery of the advance and as to the priority of that recovery if achieved were matters to be determined in the substantive s 79 trial (at [193]); (g)At the discrete issues trial, the intervener abandoned her relief as to recovery of the third advance of $100,000 (at [79]). A further order was made that the costs of all parties of and incidental to the Response to Initiating Application filed by the intervener on 13 March 2019 be reserved. The property adjustment reasons delivered on 4 July 2023 made findings as to the husband’s significant disclosure failures, as to each of the husband and wife’s contributions and as to the factors warranting adjustments from the contribution findings. Relevantly, findings were made that it is more likely than not that the second advance (of $200,000) would have not been called upon by the intervener to be repaid if not for the s 79 proceedings (at [194]). The second advance did not form a liability in the pool identifying the property of the husband and the wife at trial. The husband committed to repay that advance from his share of any property adjustment. The intervener’s relief for the second advance to be repaid in priority to funds being paid to the wife was refused.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The failure of the intervener to make a reasonable offer of compromise flies in the face of the obligations on litigants as identified in s 67 and s 68(1) in the Federal Circuit and Family Court of Australia Act 2021 (Cth).CONCLUSION A consideration of all the s 117(2A) factors in the circumstances of this closely balanced matter do not justify the making of an order for costs in favour of the intervener or in favour of the wife. The Application in a Proceeding of the intervener as to costs filed 20 June 2022 and Order 1 as sought in the Application in a Proceeding of the wife as to costs filed 18 July 2023 (as not determined by way of the consent order) will each be dismissed. By way of this determination, Order 24 as to security for costs made on 4 July 2023 will be discharged (see r 12.04(2) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)) such that the solicitors for the wife will be at liberty to account to the wife for the $170,000 held in their trust account. So as to avoid any uncertainty on this topic, an order will be made to that effect. For all of the above reasons orders shall be made as set out at the forefront of this judgment.

Ratio Decidendi

Legal Principle Established

The wife relied upon the following:·Her costs application filed 18 July 2023;·Her Response to the intervener’s costs application filed 9 May 2023;·Her Case Outline filed 25 August 2023 (Exhibit C); and·Her affidavits filed 18 July 2023 (including annexures and exhibits) and 23 August 2023.THE LAW AND CONSIDERATION Applications for costs in this Court are the exception to the rule. While the starting position established by s 117(1) of the Act is that each party pays their own costs, s 117(2) permits the Court to make such orders as to costs as it considers just, if there are circumstances which justify it doing so. In considering what order for costs, if any, should be made, the Court is required to have regard to the matters set out in s 117(2A) of the Act insofar as they are relevant. Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs. The matters relevant to determining what order, if any, should be made for costs are set out in s 117(2A) of that section. The Court may give such weight as it considers appropriate to any relevant factor. It is well settled that no single factor in s 117(2A) has priority, nor must more than one factor be satisfied. Rather, any one factor may be sufficient. I shall make reference to such of those matters as are relevant and engaged here. The Full Court has described the discretion conferred by s 117 of the Act as being a “broad” one, and held that the factors set out in s 117(2A) are not to be read in a restrictive way. It has made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters. For the purpose of my consideration of the applications for costs, a series of determinations are required: (a)First, whether circumstances exist which justify departing from the position that each party pay their own costs and the making of a costs order in favour of a party; and if so,(b)Second, on what basis should costs be paid, be it party and party, or indemnity, or some other basis and whether the costs are to be fixed or to be agreed or assessed. Has either the intervener or the wife established any circumstances which justify departing from the position that each party pay their own costs, and the making of a costs order in their favour? The value of fees paid by the intervener in respect of these proceedings is in the range of $230,000. The value of fees paid by the wife, arising from the proceedings (including parenting, financial and child support departure disputes), is in the range of $544,000. The wife gave no evidence and made no submission as to even a broad range of the value of the costs she sought the intervener pay. The intervener is retired and 77 years of age. She has real property and superannuation valued in the range of $3.7 million and cash of $1.2 million. Her income is generated by her assets. As recorded in each of the earlier judgments identified in these reasons, the intervener was unlikely to call upon the $200,000 she advanced to the husband (the second advance), she has not attempted to recover the $100,000 advanced to the husband post-separation (the third advance), and it emerged during the course of the litigation that she provided to the husband a further $1 million. She has not called upon an additional advance of $200,000 to her daughter for repayment. Her assets of $4.9 million do not include these items.