Pearson & Pearson
[2020] FamCA 329
•6 May 2020
FAMILY COURT OF AUSTRALIA
| PEARSON & PEARSON | [2020] FamCA 329 |
| FAMILY LAW – COSTS – Indemnity Costs – Where an application was made by wife seeking a costs order that the husband pay her costs of and incidental to the Initiating Application filed by the husband on 30 December 2015 on an indemnity basis such costs to be paid by way of a lump sum in the amount of $136,577.52 – Where the wife sought in satisfaction of such order that the husband transfer to her his half interest in a vacant block of land and pay to her the difference between the sum of $136,577.52 and the value of his half interest in the vacant block of land. FAMILY LAW – COSTS – Indemnity Costs - Where in the alternative the wife sought an order that the husband pay her costs on an indemnity basis as assessed and that the husband be solely liable for all costs of that assessment. FAMILY LAW – COSTS – Where costs were awarded on an indemnity basis in favour of the wife in a fixed sum. |
| Family Law Act 1975 (Cth) s 117 |
| PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & Ors [2005] FamCA 158 Cachia v Hanes (1994) 179 CLR 403 Worth & Worth (No.2) [2019] FamCA 126 Prantage v Prantage (2013) FLC 93-544 Catlin & Catlin (2018) FamCA 235 Pierson & Romilly [2020] FamCAFC 91 Turvey v Crotti (No 3) [2020] NSWSC 346 |
| APPLICANT: | Ms Pearson |
| RESPONDENT: | Mr Pearson |
| FILE NUMBER: | SYC | 8557 | of | 2015 |
| DATE DELIVERED: | 6 May 2020 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Hobart in Chambers |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 27 March 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: |
| SOLICITOR FOR THE APPLICANT: | Russell Kennedy Aitken Lawyers |
| COUNSEL FOR THE RESPONDENT: |
| SOLICITOR FOR THE RESPONDENT: | Marsden Law Group |
Orders
Within thirty (30) days of the date of this order the husband shall pay $136,577.52 to the wife being her legal costs of and incidental to these proceedings on an indemnity basis.
All other extant applications are 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 Pearson & Pearson 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 HOBART |
FILE NUMBER: SYC 8557 of 2015
| Ms Pearson |
Applicant
And
| Mr Pearson |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This is a costs application following a defended hearing before me in 2019.
A three day hearing arose following Mr Pearson (‘the husband’) making an application to set aside consent property orders which had been made in a State Local Court on 21 November 2007 (‘the consent orders’).
Ms Pearson (‘the wife’) opposed that application.
The application was for the Court to set aside orders pursuant to s 79A of the Family Law Act 1975 (‘Cth’) (‘the Act’) and, if successful, then the husband sought a property adjustment pursuant under s 79 of the Act.
This proceeding came before me in a call over on 20 March 2019. The proceeding was bifurcated and the s 79A application was listed for hearing before me 29 April 2019 (‘the substantive proceedings’). Directions were made for filing affidavits.
The scope of the husband’s application pursuant to s 79A was expanded shortly before the 29 April 2019 hearing and consequently took three days instead of one. The additional hearing days occurred in October 2019, for a number of reasons, which were set out in the Reasons for Judgment delivered by me on 6 December 2019 (‘the substantive reasons’).
The substantive proceedings were commenced in the Family Court in December 2015. That Application was brought some nine years after the consent orders were made.
The husband’s application was unsuccessful and consequently his application was dismissed on 6 December 2019. The question of costs were to be determined pursuant to the Family Law Rules 2004 (Cth) (‘the Rules’).
In compliance with the time limitations under the Rules, on 24 December 2019 the wife filed an application in a case, which she amended on 5 February 2020 (‘the costs application’).
On 6 February 2020 the husband filed a response seeking the dismissal of the wife’s costs application.
On 16 January 2020 orders were made by me in Chambers setting out a timetable for the filing of material by the parties in respect of the costs application. Order 6 of those orders provided that the costs application would be reserved from 27 March 2020.
The costs application was dealt with by way of written submissions.
After I had received the parties written submissions and replies, in mid-April 2020 I asked for the following:-
(a)in PDF form, a paginated copy of the exhibits[1] to the affidavit of the wife’s solicitor, Amy Jenkins, filed 24 December 2019;
(b)in PDF form, a paginated copy of the exhibits[2] to the affidavit of the husband filed 6 February 2020; and
(c)if there were no objections for the parties to provide, in PDF form, a copy of the costs disclosures[3] exchanged for the purpose of the hearing (both April 2019 and October 2019) pursuant to Rule 19.04 given the submissions on behalf of the wife.
[1] Exhibit E1.
[2] Exhibit E2.
[3] Exhibit E3 - the husbands May and October 2019 costs disclosures and Exhibit E4 the wife’s April and October 2019 costs disclosures.
The parties replied as follows:-
(a)The husband provided the May and October 2019 costs notifications referred to earlier and the exhibits to his costs affidavit.
(b)The wife provided the exhibits to her solicitor’s affidavit and the April and October 2019 costs disclosures.
I have made an indemnity costs order and I have fixed the amount payable, being the sum sought by the wife.
BACKGROUND
The background and history to the substantive proceedings are set out in paragraphs 1 to 27 of the substantive seasons, which I repeat here:-
1.[The husband] and [the wife] were married in … 1979. They lived together until at least 10 May 2007.
2.There are three children of the marriage, all of whom are now over the age of 18. As at November 2007 the youngest of those three children was aged 17 and attained the age of 18 about ten months after the [Suburb B] Local Court orders were made.
3.On 7 November 2007 an order was made in the [Suburb B] Local Court making consent orders (‘the Consent Orders’) in relation to property owned by the parties. That order was put into effect.
4.The wife applied for a divorce in the Federal Circuit Court in January 2015 and an order for divorce made on … 2015.
5.On 30 December 2015 the husband filed an application for property orders and sought interim orders that pursuant to s 79A of the Family Law Act 1975 (Cth) (‘the Act’) the Consent Orders made at [Suburb B] Local Court be set aside. The application went on to claim orders for property and costs. In addition, he sought interim orders in relation to the wife dealing with property.
6.This proceeding came before me in a call-over on 20 March 2019 and it was listed for the hearing of the Application under s 79A of the Act on 29 April 2019. Directions were made for filing affidavits.
7.On 29 and 30 April 2019 the hearing proceeded. However, the husband’s case had changed somewhat and it was adjourned for further hearing on 24 and 27 May 2019. Leave was given to the legal practitioners for the wife to issue some subpoenas and obtain documents, through the husband, from Centrelink.
8.Subsequently, I ordered that a copy of the Transcript of the April 2019 proceedings to be made available to the solicitors for each of the parties. This was done primarily because after the adjournment of the April 2019 hearing I became unwell and was unable to return to work until mid-October 2019. The hearing of this matter was administratively adjourned and continued on 17 and 18 October 2019 at Sydney.
9.Part of the material sought by the solicitors for the wife were documents from Centrelink. Those documents were provided to the husband’s solicitors by Centrelink in a letter dated 8 July 2019. The documents produced by Centrelink were voluminous and contained about six hundred pages. Perversely, the husband and his legal advisors did not provide a copy of those documents to the solicitors for the wife until the morning of the re-commencement of hearing on 17 October 2019.
10.This was at best unfortunate and at worst an attempt to prevent a proper and timely examination and consideration of those relevant and important documents. It caused a waste of about an hour or so of hearing time and could have caused further delay or even an adjournment of the hearing. It may have given rise to a serious forensic disadvantage to the wife and her legal advisors.
11.The Court was not proffered any adequate reason why these documents were not provided promptly to the wife’s solicitors. An excuse was issued that the documents were to be produced at court and this was the first occasion; that assertion was a nonsense. The wife’s solicitors were actively seeking that material and the husband’s solicitor responded with mute dismissal.
12.The husband and those advising him have an obligation for ongoing disclosure. As recently as January 2019 the Full Court in Bulow & Bulow [2019] FamCAFC 3 said:-
80.… The obligation of disclosure in financial proceedings is ongoing, including up to the point when orders are made. Equally importantly, as authority has consistently emphasised, disclosure must be both “full and frank”.
13.This must apply to the production of documents.
14.This type of delay and obfuscation in production of documents to another party is unacceptable. It brings the legal profession into disrepute and has the capacity to undermine the judicial process. Disclosure is not a game to be played by parties and their legal practitioners. All parties and members of the legal profession are reminded that in family law property proceedings financial disclosure and production of relevant documents are a matter of ‘show and tell’ not ‘hide and seek’.
15.On 17 April 2019 the husband filed an Amended Initiating Application, and I gave leave for him to rely on that application as on the surface it did not substantially change the nature of the relief sought.
16.However, the nature and basis of the Application for setting aside the Consent Orders changed significantly. The husband asserted and his evidence seemed to be that he resigned from his work due to health issues in 2007 and consequently he and the wife separated in 2007, but lived under the same roof until December 2014. This was consistent with what he said in his earlier affidavit filed 30 December 2015, except in that earlier affidavit he asserted that he and the wife were ‘initially separated under the same roof’. He then asserted that he and the wife resumed cohabitation as a couple.
17.The effect of the husband’s evidence is that the parties separated in 2007, but their relationship as a couple was soon restored and they lived as a couple until 16 December 2014.
18.In his affidavit filed 17 April 2019 the husband now asserts that he and the wife cohabited as husband and wife from 2007 and that the final separation did not occur until 16 December 2014. He submitted that he renovated properties owned by the wife; that he and the wife were intimate, and they socialised and they travelled together over that period. The husband relied upon a number of events at that time which he says shows that the separation was a sham or a concoction so that he could receive sickness benefits whilst the parties continued living together.
19.The affidavit evidence of the husband as to separation was not clear, but in the case outline his counsel submitted that I am to read that as the parties ‘being separate for a brief period (2007-2008) and a continuation of the consortium vitae`. It was submitted to me in the husband’s case outline that the orders were put in place to ‘create the false and misleading impression that the parties were at arm’s length when in fact they were collaborating so that the husband could apply for a pension’.
20.The wife disputes the husband’s assertions as to separation and says in her trial affidavit that ‘[the husband] and I separated on 10 May 2007’. She goes on in her trial affidavit and her May 2019 affidavit that the husband moved out and there was no cohabitation from 10 May 2007. The only exception to that was when the husband sought to stay overnight in 2012 in unusual circumstances.
21.The husband asserted that he entered into the Consent Orders which were prepared by the wife’s solicitors and said that he did not receive independent legal advice. He claimed that the wife had assured him that the settlement was a 50/50 division of property.
22.When the matter came before me the nature of the case had changed significantly and as such, I did not grant an adjournment, but stood the matter over part-heard at the end of the first day. I made directions to enable the accordance of procedural fairness to the wife.
23.The issues for me to determine were:-
(a)what was the final date of separation of the parties;
(b)consequently, whether the parties lived together as a married couple after 10 May 2007; and
(c)whether the parties concocted a separation to enable them to obtain consent orders and transfer property, and thus enable the husband to receive Centrelink benefits to which he would not otherwise be entitled from some time after May 2007 until 16 December 2014.
24.At the time of this hearing the husband was aged 62 and is not in paid employment. He is in receipt of Centrelink benefits. He has poor health due to kidney disease. The husband apparently had a kidney transplant in late 2015 or early 2016.
25.The wife is aged 57 and is a packer by occupation. She deposes to an income of about $85,000 a year from her employment and from an investment property.
26.The parties married in 1979 in [Country G]. The three children of their marriage at the date of hearing were aged 36, 30 and 28.
27.In these proceedings any statement of fact is to be regarded as a finding of fact. (Footnotes omitted)
THE EVIDENCE
In support of her costs application the wife relied upon her:-
(a)amended Application in a Case filed 5 February 2020;
(b)affidavit of her solicitor, Amy Jenkins, filed 24 December 2019;[4]
(c)written submissions filed 21 February 2020;
(d)written submissions in reply dated 25 March 2020; and
(e)letters/emails to wife dated 29 April 2019 and 17 October 2019 with costs disclosure in accordance with the Rules.
[4] During the course of the submissions as to costs the exhibits to the solicitor’s affidavit were provided to the Court. They comprised of 44 pages and included copies of orders made 20 June 2016, 5 September 2016 and final orders made 6 December 2019. These clearly related to the affidavit of the wife’s solicitor.
In her written submissions filed 21 February 2020 the wife referred to the following material:-
(a) the initiating application filed by the husband on 30 December 2015;
(b)the financial statement filed by the husband on 30 December 2015;
(c)an affidavit of the husband filed 30 December 2015;
(d)the amended application filed by the husband on 17 April 2019;
(e)the financial statement filed by the husband on 17 April 2019;
(f)an affidavit of the husband filed 17 April 2019;
(g)her response to initiating application filed on 7 March 2016;
(h)her financial statement filed 7 March 2016;
(i)her affidavit filed 18 April 2019;
(j)her financial statement filed 18 April 2019;
(k)orders made by his Honour Justice Watts on 20 June 2016;
(l)the substantive reasons delivered by this Court on 6 December 2019; and
(m)Transcript of Proceedings dated 29 April 2019, 17 October 2019 and 18 October 2019.
The husband relied upon the following:-
(a)his response to an application in a Case filed 6 February 2020;
(b)his affidavit filed 6 February 2020;[5]
(c)his written submissions filed 6 March 2020; and
(d)during the course of submission the husband provided to the Court his costs notification tables for both May 2019 and October 2019.
[5] The exhibits to the husband’s affidavit were provided to me during the course of submissions.
Given his submission, I also had regard to my substantive reasons.
I had regard to all of the above material, albeit the trial material was read through the lens of the findings and determinations as set out in my substantive reasons.
In her costs application the wife sought the following orders as against the husband:-
(a)that pursuant to section 117 of the Family Law Act 1975 (Cth) the husband pay the wife for the costs of and incidental to the Initiating Application filed by the husband on 30 December 2015 on an indemnity basis such costs to be paid as follows:-
i)In first priority by way of a lump sum in the amount of $136,577.52;
ii)In the event the Court is not minded to make Order (a) then in the alternative the husband pay the wife’s costs on an indemnity basis as assessed and the husband shall be solely liable for all the costs of the assessment;
(b)that for the purposes of Order 1, the property situated at and known as Lot … [Suburb F] Folio Identifiers … ([Suburb F] Property), be transferred to the wife within 14 days of the making of these Orders and that the husband pay to the wife the difference between the sum of $136,577.52 and the value of his 50% share in the [Suburb F] Property.
In her written submissions of 21 February 2020 the solicitor for the wife purported to reserve her right to make an application that the husband’s solicitors pay the wife’s costs of the proceedings, including the Appeal. In the event that such an application is made it will be made at the conclusion of the Appeal.
Most first instance judges would salivate at the thought of having jurisdiction and power to make orders as to costs in appeals to the Full Court from our first instance decisions. However, we have been deprived that legislative authority, consequently, I have rejected that part of the wife’s submission.
As to the ‘reservation of the right to make costs orders against the husband’s solicitors’, that prayer was specifically abandoned in the amended application. As such I will not deal with it.
The wife seeks a form of property order with regard to the Suburb F property. The property powers of the Court, given my decision of 6 December 2019 have been extinguished by reason of the consent orders made in 2007. The only power the Family Court would have would be in terms of possible enforcement of the costs order.
At this stage, and given the absence evidence before me, I do not believe I have power to make that particular order. It may be a power that arises in some yet to be commenced enforcement proceedings. The order sought seem at some level to seek to give priority to the wife in terms of her unsecured debt against a debt of the husband, which may or may not be secured. Whether an owner can give security against property which is jointly owned and without the consent of the other owner was not determined by me nor was the question of priority. That may be an argument to have on another day. I have not determined those issues on their merits.
THE LAW RELATING TO COSTS
Costs orders generally
The power to make costs orders are set out in s 117 of the Family Law Act 1975 (Cth) (‘the Act’), which relevantly provides:-
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) 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), (4A) 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.
(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.
In Penfold v Penfold (1980) FLC 90-800 the majority of the High Court expressed the general rule that s 117(1) is not paramount to s 117(2) of the Act. A court must make a finding that there are circumstances justifying the making of a costs order before proceeding to make the orders.
There is no guidance in the legislation between the two sub sections nor any additional special onus on the applicant for an order as to costs.
It is necessary to consider the facts in the light of the provisions set out in s 117(2A) of the Act. While the list in s 117(2A) gives rise to a wide range of factors there is nowhere in s 117(2A) that says any one factor provides a hierarchy in relation to the other factors, it is a matter of weight that is accorded to each of the relevant factors in the Court’s discretion (see Medlon and Medlon (No.6) (Indemnity Costs) (2015) FLC 93-664 per Strickland J). One factor may be enough. In PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & Ors [2005] FamCA 158, the Full Court held:-
41. Nowhere in subsection 2(a) or elsewhere in section 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subsection (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
As such the Court has a broad discretion in determining costs.
It is of value to repeat what I have said in earlier judgments that the Court needs to consider the difference between the various types of unquantified costs orders available under the Act. There are many variations of types of costs orders, but they generally fall into three types:-
(a)Party and party costs - which are calculated having regard to the schedule of costs under the Family Law Rules 2004 (Cth);
(b)Lawyer and client costs – these are essentially indemnity costs, with the onus upon the costs applicant to satisfy the taxing authority that such costs are on balance fair, reasonable and proportionate; and
(c)Indemnity costs - these are essentially lawyer and client costs, with the onus upon the costs respondent to satisfy the taxing authority that such costs are on balance not fair and reasonable and not on balance proportionate, that is the reversal of the onus of proof.
It should be borne in mind that costs orders are restorative and not punitive, and costs cannot exceed the amount actually incurred. They are an indemnity or partial indemnity. In Cachia v Hanes (1994) 179 CLR 403 the plurality of the Court, comprising Mason CJ, Brennan, Deane, Dawson and McHugh JJ observed:-
Whilst the restricted basis upon which party and party costs are awarded may be debated as a matter of policy, it is to be borne in mind that party and party costs have never been regarded as a total indemnity to a successful litigant for costs incurred, let alone total recompense for work done and time lost. Putting to one side the question posed by the relatively rare exception of a solicitor acting in person, there is no inequality involved: all litigants are treated in the same manner. And if only litigants in person were recompensed for lost time and trouble, there would be real inequality between litigants in person and litigants who were represented, many of whom would have suffered considerable loss of time and trouble in addition to incurring professional costs. The partial indemnity which the law allows represents a compromise between the absence of any provision for costs (which prevails as a matter of policy in some jurisdictions) and full recompense. In these days of burgeoning costs, the risk of which is a real disincentive to litigation, the proper compromise is a matter of both difficulty and concern.
This costs application was considered and determined under the provisions of s 117 of the Act.
STEP 1 - WHETHER THERE SHOULD BE A COSTS ORDER AGAINST THE HUSBAND PURSUANT TO SECTION 117(2A) OF THE ACT
In considering what order, if any, I should make under s 117(2A) of the Act I have had regard to:-
(a)The financial circumstances of each of the parties to the proceedings;
The parties’ financial circumstances are well known to me given that I have determined property as between them. I reiterate the findings made by me in the substantive reasons published in December 2019.
The wife’s solicitors in their written submissions contend that the wife has been placed under ‘significant financial duress’[6] as a consequence of the substantial proceedings brought by the husband and his refusal to negotiate a settlement. I accept that for the wife, given her modest resources and history of hard and relatively poorly paid work, the expenditure of $136,557.52 in legal costs would have and did place her in some financial distress.
[6] Wife’s written submissions filed 21 February 2020, pages 3 and 4.
The wife claims she has suffered financial hardship during the proceedings including:-[7]
8.(b).d.i.Paying for medical expenses for her daughter’s IVF and brain aneurysm treatment;
8.(b).d.ii.Injuring her back and being out of work for approximately 8 months in 2017;
8.(b).d.iii.Paying for significant and necessary dental treatment for her son in 2015 totalling approximately $30,000;
8.(b).d.iv.Suffering structural damage to her property as a result of termite damage. In 2016, the wife paid approximately $25,000 toward fixing some of the damage. The damage is yet to be completely repaired.[8]
8.(b).d.v.The wife has spent approximately $136,557.52 in legal fees at the time of filing the application for costs as I indicated earlier.
8.(b).d vi.The wife was required to sell an investment property in order to meet her legal fees. As a result of the sale, the wife has a CGT liability of approximately $45,000.[9]
8.(b).d vii.The wife does not pay tax weekly and receives tax liabilities at the end of each financial year as a result of this. The wife remains in debt for the year ending 2016.
[7] Ibid, page 4.
[8] I do not accept this particular submission.
[9]Wife’s written submissions filed 21 February 2020, page 4.
I accept that the wife took the lion’s share of the responsibility for the financial care of the parties’ children after the consent orders were made. Although much of this was voluntary as they were over 18 years or soon to be over 18 years as at late 2007.
I accept that the wife needed to sell property to fund this litigation.
The wife’s solicitor contends that although the husband’s financial position is unclear he does have the capacity to pay a costs order. She says this assertion is supported by the husbands ‘claim to have an interest in a motor vehicle, some cash at bank, superannuation[10] and a half interest in the Suburb F land. I accept he, at least has his interest in vacant land at Suburb F.
[10] The husband provides no evidence of any present superannuation entitlement.
The wife says that in the Costs Notice served on her by the husband in October 2019 suggests that the husband withdrew $17,000 from his superannuation to pay his counsels fees. The wife says that although the husband has sworn two financial statements declaring that he had no superannuation, the Costs Notice suggests the husband ‘does have superannuation, has failed to disclose it, and is able to access it to pay his expenses’.[11] As a consequence the wife asserts that the husband therefore has some capacity to pay a costs order and ought to be required to do so. It is not clear to me precisely what property, other than the land at Suburb F, is owned by the husband. However, impecuniosity by itself is not a barrier to a costs order. It is something for the Court to take into account in the overall assessment, and I have done so.
[11] Wife’s written submissions filed 21 February 2020, page 3.
In relation to the husband’s incapacity to work the wife contends that the husband’s assertions should be given no weight. In support of this contention the wife relies upon the substantive reasons delivered in the proceedings on the 6 December 2019 where I said:-
‘… the husband was not an impressive witness. I am satisfied that he fabricated the evidence in relation to continuing a relationship with the wife after separation including living together, having an intimidate relationship, travelling as a couple and the like’[12] and ‘The husband’s evidence was unsatisfactory and generally unreliable. I have treated it with great care and at times given the evidence of others, with skepticism’.[13]
[12]At paragraph 60.
[13]At paragraph 63 of the substantive reasons.
In their written submissions the husband’s solicitors contend that the husband does not have the capacity to pay costs in this matter. They say the husband has been unemployed since 2007 and is in receipt of a disability pension and board from his carer. Further, they say that it is unlikely that the husband will be in paid employment in the future due to a kidney transplant and his generally poor health. I find that it is likely that the husband is unwell and is unlikely to achieve paid work in the future.
The husband’s solicitors submitted that there was evidence at the trial which suggested that ‘the husband’s literacy was marginal and he was close to functionally literate’[14] and that the Court made ‘findings as to his spoken English at judgment [J36]’[15]. The solicitors for the husband assert while the Court noted that at one time the husband had been a supervisor the Court did not find that ‘the husband is a supervisor, could work, was working or had any current capacity to work’.[16] The husband submit that the suggestion that the husband should be working or is concealing his employment should be rejected. I accept that part of the submission. But I do not accept that his language skills are as poor as is contended on his behalf.
[14] The husband’s written submissions filed 6 March 2020, page 3.
[15] Ibid.
[16] Ibid.
In their written submissions the husband’s solicitors say the husband does not have any substantial assets or savings and that he withdrew the last of his superannuation funds from his super fund in or around July 2016 and utilised it on some legal expenses and disbursements to third parties. As a consequence the husband has no remaining superannuation in that fund. The husband does own a one half share in the Suburb F property and other modest items of property as set out earlier in these reasons.
In his written submissions the husband contended that:-[17]:-
2.(c)(2) The husband’s legal fees are on a pay on settlement arrangement. The husband would otherwise be unrepresented and has only been able to afford legal assistance because his legal representatives have represented him in the substantive proceedings on a speculative basis.
[17] Ibid.
I accept that the husband has a large legal bill, which remains unpaid. This is likely to be secured against the husband’s half interest in the Suburb F property. As I indicated earlier, the priority as to debts between the husband’s legal advisors and the wife are not part of this determination. In his financial statement filed in April 2019 the husband disclosed a legal costs liability of $94,300. This was before the two days of hearing in October 2019. I have had regard to this expenditure in the later determination of the fairness and reasonableness of the wife’s claim for legal costs.
I accept that the wife has suffered financial disadvantage as a result of the husband commencing proceedings. The husband has incurred legal fees, which he will likely be required to pay. However, it was open for the husband to settle this matter on advantageous terms years earlier, but he chose not to take that path.
I found that the husband moved out of the former matrimonial home in 2007 and the wife has been required to solely maintain the mortgage to the former matrimonial home and the investment properties. She has paid and been liable to pay rates and the like on the Suburb F property, without contribution from the husband. However, she sought not to disturb that outcome following the 2007 consent orders.
In coming to a determination in this costs application, I took into account the financial circumstances of each of the parties, including that the wife’s financial circumstances and resources which far outweighs those of the husband.
The wife owns real estate, including her half interest in Suburb F property, the former matrimonial home and an investment home unit. The wife deposed she had property, in April 2019, to the value of $971,069.[18] She had liabilities of $248,263 and a then superannuation benefit of $170,677. The wife was at that time employed and had an income of $1,720 per week.
[18] See the wife’s financial statement filed 18 April 2019.
The husband has the benefit of a disability pension of about $900 per fortnight, a car with a value of about $6,000 and his one half interest in the Suburb F property. He does not otherwise have assets of significant value. He has a liability to the legal practitioners who represented him in these 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;
This is not a relevant consideration, as neither party are in receipt of legal aid.
(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;
The wife contends that the husband’s conduct in the proceedings should give rise to a costs order in her favour because of the husband’s failure to provide adequate disclosure to her throughout the proceedings. In particular the wife asserts that:-[19]
8.(d).b.ii.The husband continually failed to provide documents related to his Centrelink applications. The wife was forced to prepare a Notice to Produce and request that the husband complete a Freedom of Information request. Despite asserts by the husband’s solicitor that “we will forward the relevant documents to you, once they come to hand” those documents were not in fact provided until 17 October 2019. This was at the start of the first day of trial. The material provided was 600 pages of documents. The trial was delayed by at least an hour to allow the wife’s lawyers to read that material. (Original emphasis)
8.(d).b.iii.In His Honour’s Judgment it was noted “this was at best unfortunate and at worst an attempt to prevent a proper and timely examination and consideration of those relevant and important documents. It caused a waste of about an hour or so of hearing time and could have caused further delay or even an adjournment of the hearing. It may have given rise to a serious forensic disadvantage to the wife and her legal advisors” … “An excuse was issued that the documents were to be produced at Court and this was the first occasion; that assertion was nonsense. The wife’s solicitors were actively seeking that material and the husband’s solicitor responded with mute dismissal. The husband and those advising him have an obligation for ongoing disclosure.” (Original emphasis)
8.(d).b iv.The husband’s failure to provide proper disclosure has caused the wife’s legal fees to increase significantly as further and additional requests were made for material and also results in the Court not being aware of the husband’s financial position. It is submitted that for the purposes of this costs application a Jones and Dunkel inference should be drawn against the husband. I accept this submission.
[19] The wife’s written submissions filed 21 February 2020, page 6.
The husband disputes the wife’s assertion and says that he complied with his obligation to provide financial disclosure during the substantive proceedings. He says he complied with obtaining a Freedom of Information request in respect of his Centrelink records. He claims the volume produced (some 600 pages) were ‘beyond his control’.[20] The husband’s solicitors note that the Court was critical of ‘him and his legal advisors for not producing the documents sooner’[21] however, they assert ‘without cavilling with the Courts findings’ the following points can be made:-[22]
1.b.a.Many of the 600 pages of documents were irrelevant;
1.b.b.The documents were produced in accordance with a notice to produce and on the date it bears;
1.b.c.The husband was in cross examination discussions about matters of evidence were circumscribed;
1.b.d.None of the legal advisors were provided with the opportunity to make submissions setting out why they acted as they did;
1.b.e.The husband cooperated by executing the FOI request as Centrelink could not be subject to a subpoena.
1.b.f.Some of the documents supported the husband’s case as they showed that his actual address differed from the address provided to Centrelink and included the parties’ daughter (who gave evidence for the Respondent) even though he had never lived at her address.
[20] Husband’s written submissions filed 6 March 2020, page 4.
[21] Ibid and paragraph 9 of the substantive reasons delivered December 2020.
[22] Husband’s written submissions filed 6 March 2020, page 4.
The husband is cavilling with my reasoning. Many of the 600 pages may have been irrelevant, but the only way to ascertain that was by looking at them. Either the husband or his legal advisors had these documents in advance, but ‘dropped’ them on the wife’s legal advisors at the re-commencement of the trial in October 2019.
The solicitors for the husband contend that the wife has been selective in providing financial disclosure. In particular the husband alleges:-[23]
(a)the wife failed to provide financial disclosure as requested prior to the Conciliation Conference to enable him to provide a counter offer;
(b)the wife failed to substantiate what documents other than the Freedom of Information documents have delayed the matter and the wife being unknown as to the husband’s financial position in circumstances where the husband filed a Financial Statement on 30 December 2015 and 17 April 2019 in accordance with trial directions made; and
(c)that the application for consent orders was a ‘discredited and inaccurate document’.[24] He says it asserted things which the wife knew were false and excluded a property which resulted in the parties as co-owners of that property thus not finalising their affairs as s 81 promotes. He asserts that ‘the wife’s conduct as the applicant for consent orders was far from impressive’.[25] In particular he asserts that the wife’s sworn evidence that ‘the husband did not contribute to the purchase of the properties’[26] was a statement which was ‘as simple as it was untrue’.[27]
[23] Ibid at paragraphs 1c to 1e.
[24] Ibid.
[25] Ibid.
[26] Ibid.
[27] Ibid.
The solicitors for the husband contend that ‘a decision to seek to set the consent orders aside is never one to be taken lightly. The circumstances of the present application strongly suggested that the husband had a valid claim to seek to set the orders aside’.[28] The husband asserts that the wife’s complaints ‘including threats to seek orders for costs against not only the husband but his solicitors’[29] demonstrates a lack of insight into her own conduct in the proceeding, ‘including giving untrue evidence in a verified Application’.[30]
[28] Ibid.
[29] Ibid.
[30] Ibid, page 5.
This is a circular and self-serving argument, there was no cogent reason why the documents contained in a letter dated mid-July 2019 was not handed over until the start of the October 2019 hearings. The husband well knew the weakness of his case and the delay over the seven or eight year period. This Court made no findings against the wife of failure to make disclosure.
The wife contends that husband’s refusal to withdraw his interim application seeking spousal maintenance in circumstances where the Court had no jurisdiction to consider such an application until the substantial proceedings had been determined should be taken into account by the Court when considering whether a costs order should be made against the husband because she incurred unnecessary costs in defending the husband’s interim application. The wife says that the husband’s interim application was subsequently dismissed by his Honour Justice Watts on 16 June 2016 and the questions of costs was reserved. In her written submissions the wife now seeks to press that those costs be paid by the husband. The husband’s claim for spousal maintenance was at the time wholly unsuccessful and give the outcome of the final hearing, it was without merit.
The husband contends that the result of his interim application is ‘not determinative of the prospects of success of the substantive proceedings’.[31] In his interim application the husband says he sought orders in relation to spousal maintenance rather than seeking orders pursuant to s 79A of the Act and thereafter a property adjustment in the event such application was successful.
[31] Ibid.
In relation to the wife pressing costs in relation to orders made by Justice Watts on 20 June 2016 the husband asserts that the ‘Orders made on this occasion do not indicate that costs were reserved’.[32] Sadly, and troublingly, for this submission the order clearly says ‘Both parties’ costs for today are reserved’.
[32] Ibid.
The wife contends that the husband’s behaviour in lodging caveats over her properties should be taken into account by the Court when considering whether it is appropriate to make a costs order against the husband. In her written submissions the wife’s solicitor asserts that the husband lodged the caveats against the wife’s properties causing her to incur legal fees because she had to take steps to lapse the caveats. The wife says the husband lodged the caveats against her properties in circumstances where he had sought an interim order for permission to do so and the Court had not made such an order.
In relation to this assertion while the husband agrees that an order was not made at the interim hearing allowing him to lodge caveats over the wife’s properties he contends it was necessary. The husband asserts that the wife’s actions in ‘intentionally transferring one of the properties’ owned by to pay legal costs during the substantive proceedings without seeking an order from the Court justified his actions of lodging the caveats to protect his position.
The husband ought to be criticised for the lodgement of the caveat, in the light of his unsuccessful or un-argued application for permission to do so. It was cavalier behaviour at best.
Further, the wife’s solicitor contends the husband’s conduct in general should be considered by the Court in determining whether a costs order should be made against him. I have generally accepted these submissions by the wife, subject to the particular comments I have made. The wife asserted:-[33]
[33] Wife’s written submissions filed 21 February 2020 at pages 4, 5 and 6.
8.(d).a.i.The Conciliation Conference of this matter was conducted on 26 July 2016 [34]
[34] This Court notes that this was almost three and a half years prior to the final orders being made.
8.(d).a.ii.As part of the Orders made on 26 April 2016, the parties were each required to make an offer of settlement. The husband did not comply with this direction.[35]
[35] This is not entirely correct, the husband made a number of offers (see husband’s affidavit 6 February 2020 - paragraphs 4 to 14 and in particular paragraphs 6 and 8). The husband’s oral offer of $80,000 was accepted by the wife, however, the husband withdrew his consent to that oral agreement which was set out in the heads of agreement (wife’s tender bundle - page 24).
8.(d).a.iii.The husband appeared with his solicitor and the wife appeared with hers.
8.(d).a.iv.The wife alleged in her material and submissions at the Conciliation Conference that she had suffered considerable violence at the hands of the husband and that her children had also suffered abuse. Whilst at the Conciliation Conference the Registrar asked the husband whether he conceded that he had been violent. He responded, words to the effect “I hit her when she deserved it”.[36] (Original emphasis)
[36] I accept that the husband was likely to have been violent to the wife during the relationship. However, it was not a consideration in this costs determination.
8.(d).a.v.The husband had filed a s 79A application in circumstances where:-
1.The Consent Orders were filed 9 years prior to the application being made;
2.The husband had made no enquiries of his former solicitors prior to making the application as to what their evidence would be and his solicitors have seemingly taken little note of what prospects of success the husband’s application actually had.
3.He had little to no regard to the impact the proceedings would have on the wife or his children who the wife is financially supporting;
4.He has admitted to engaging in domestic violence against the wife and where these proceedings have acted as a continuation of that violence against the wife.
8.(d).a.vi.The husband has been wholly unsuccessful in the matter, and despite the clear and unequivocal judgment handed down by this Honourable Court the husband has elected to Appeal. The grounds of Appeal indicate that such Appeal has no prospects of success. The husband in his continuing behaviour is able to continue to place significant financial pressure on the wife by his conduct and continue the domestic violence he exerted on her during the relationship and such conduct is worthy of the Court exercising its discretion under s117(2) to award indemnity costs to the wife.[37]
8.(d).a.vii.The husband first suggested, through his solicitors, that he required the assistance of an interpreter at the conclusion of the Conciliation Conference after the parties had reached agreement to resolve the matter.[38]
8.(d).a.viii. The husband has filed various documents both prior to and after the Conciliation Conference that did not have the additional jurat from the interpreter.
8.(d).a.ixThe husband also used the interpreter sporadically throughout the trial, at times answering questions in cross examination prior to the interpreter repeating the question to him. The husband’s conduct in requiring an interpreter increased the length of the trial exponentially and also meant that the Conciliation Conference was a wasted exercise because the husband reneged in an offer he made and the wife agreed to on the basis that he did not have an interpreter.
8.(d).a.x.The wife recently wrote to the husband seeking security for costs with respect to the appeal. The husband responded on 14 January 2020 suggesting that the only way he could provide security was for the Suburb F property to be sold. The wife consented to the sale provided the proceeds of sale were held in trust by her solicitors. The husband has not responded to this letter despite a number of follow up requests being sent. The husband has yet again increased the wife’s costs be (sic) his failure to communicate within reasonable timeframes.[39]
[37] The circumstance that a party has filed an appeal cannot be and was not a factor or consideration in this costs determination. I wholly reject that submission.
[38] I made a number of comments and findings in relation to the husband’s language skills in the substantive reasons. I reiterate those comments and note what was said in the substantive reasons at paragraphs 35, 36, 37, 69, 86, 110, 146, 171, 216, 253 and 254.
[39] In terms of this part of the submission, I have given it no weight.
The husband contends that the wife’s conduct should be taken into account in respect of determining whether to make an order for costs. He complains that the wife continued to make reference to ‘privileged information during the course of the Conciliation Conference when neither party’s legal representatives were personally present during such discussions’.[40] Further, the husband asserts that the wife has made reference to ‘the prospects of success surrounding the Notice of Appeal filed by the husband in relation to the substantive proceedings. The Appeal remains on foot and its success is to be determined by the Full Court. The opinion of the wife as to the Appellant’s prospects is not determinative’.[41] Further, the husband says the wife has criticised his use and requirement of an interpreter. In support of the appropriateness of his need to use an interpreter the husband relies on paragraph 37 of the substantive reasons delivered in December 2019 where the Court said ‘the extent of the husband’s ability to read and write English is unclear’. The husband asserts that the wife has ‘at all times been aware of this’.[42]
[40] The husband’s written submissions filed 6 March 2020, page 5. I have made no findings on whether the wife made reference to privileged information during a conciliation conference where the parties’ legal representatives were not present. What was said at the conciliation conference did not feature in the substantive reasons and I have no specific recollection of it featuring in the trial nor have I been taken to any part of the trial transcript to that end. There is no suggestion that this added to the costs or what the impact of the allegation had in terms of this determination. If it occurred, it would have been in the context of a confidential process and would have been dealt with by the Registrar. This submission by the husband and in response by the wife have no relevance to this costs determination.
[41] I repeat what I said earlier about the Appeal that the circumstance that a party has filed an Appeal cannot be and was not a factor or consideration in this costs determination.
[42] This submission cherry picked the substantive reasons and I re-iterate what I said earlier about the husband’s ability to understand English.
The wife’s solicitors further and appropriately contended that husband’s substantial changes in his application should be considered by the Court in determining whether a costs order should be made against him. In support of this assertion the wife says:-[43]
[43] The wife’s written submissions filed 21 February 2020, pages 7 and 8.
8.(d).e.i.The matter was listed for trial by way of Order dated 20 March 2019. The matter was listed for trial for 1 day to determine the s 79A application.
8.(d).e.ii.It is noted in the reasons that “This proceeding came before me in a call-over on 20 March 2019 and it was listed for the hearing of the Application under s79A of the Act on 29 April 2019.” Further, His Honour notes “On 29 and 30 April the hearing proceeded. However, the husband’s case had somewhat changed it was adjourned for a further hearing on 24 and 27 May 2019”. It is assumed that the reference to the matter being listed on 30 April is a typographical error as the matter was only listed on 29 April.[44] (original emphasis)
[44] This was a typographical error.
8.(d).e.iii.On 17 April 2019 the husband filed an amended initiating application relying on different grounds in support of his application to set aside the previous orders. This amended application was filed without notice and on the same day the parties were required to file their trial affidavits.
8.(a).e.iv.The husband’s affidavit filed 17 April 2019 also submitted new evidence suggesting that the parties did not in fact separate and that the Consent Orders were entered into as a scheme to defraud Centrelink. These matters were new to the wife and ones which she had not been prepared to meet in her evidence which was due on the same day placing her at a significant disadvantage.
8.(d).e.v.The husband’s change to his application and the further evidence relied upon meant that time was spent on the first day of the trial on submissions as to those issues and it also increased the length and complexity of the matter.
8.(d).e.vi.The husband in his affidavit filed 6 February 2020 suggests that the matter was listed for a 3 day trial at paragraph 18. This somewhat disingenuous, when one has reference to the previous court orders.[45] This is not the first occasion in these proceedings where evidence has been misrepresented.[46]
[45] Further, this matter was listed for the hearing of the s 79A argument in April 2019, and this part of the hearing eventually ran over three days, given the changes in the nature of the husband’s case
[46] I do not make this finding for the purpose of the costs determination.
8.(d).e.vii.The husband also changed his evidence on multiple occasions throughout the matter. One relevant example is the asserted date of separation. The husband asserted:-
1.In the application for consent orders the date of separation was 10 May 2007;
2.In the first letter from his solicitors dated 17 February 2015 the date was 2008;
3.In his initiating application that the date of separation was 2008;
4.In his affidavit sworn 23 December 2015 that the date of separation was in or about 2007; and
5.In his Affidavit sworn 17 April 2019 that the parties separated in 2007. In the same Affidavit, the husband swears that the parties continued to live as a couple between 2007 and December 2014.
8.(a).e.viii.The wife was required to refute this evidence which increased her legal fees.
8.(a).e.ix.It is submitted that the husband’s conduct as a litigant has significantly increased the wife’s legal costs.
I generally accept these submission of the wife, except in those areas where I have made express comment.
The husband changed his case in the filing of an amended application in April 2019 and his supporting affidavit filed the same month. This lead to the expansion of the dispute and the need for more time to enable the issues to be adequately ventilated.
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
In her written submissions the wife’s solicitor says this is not a relevant consideration.
In their written submissions the husband’s solicitors contend that the wife’s failure to serve the husband or his legal representatives with a copy of her divorce application meant that the husband was unable to respond. This seems to be an entirely irrelevant submission, it did not feature in the substantive reasons other than I found that the divorce application had been explained to him.[47] I have given this submission no weight.
[47] Substantive reasons paragraph 32.
The husband submitted that between 2 March 2015 and 29 April 2015 neither the husband nor his legal representatives were served with a copy of the application for consent orders or the consent orders made at the Suburb B Local Court. This was a joint application for consent orders and there was no apparent requirement to serve this on the wife. I have given this submission no weight.
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
The solicitor for the wife in her written submissions contends that the husband was wholly unsuccessful in respect of two applications he brought before the Court. The first being his application in a case filed 29 December 2015 seeking orders that:-[48]
[48] The wife’s written submissions filed 21 February 2020, page 9.
(a)the wife pay him $100,000 in addition to spousal maintenance in the sum of $500 per week;
(b)that he be permitted to lodge Caveats over the wife’s properties; and
(c)that the wife be restrained from dealing, selling, transferring or further encumbering the following assets:-
(i)the C Street property, being the wife’s home;
(ii)the Suburb F Property;
(iii)the wife’s two investment units at E Street, Suburb D;
(iv)furniture and contents;
(v)motor vehicles;
(vi)superannuation; and
(vii)savings.
This application was dismissed by Watts J on 20 June 2016 and the question of costs was reserved. The wife is now pursuing those costs, within this costs application.
The second was the substantive proceeding brought by the husband to set aside the 2007 consent orders. The substantive proceedings were dismissed by this Court on the 6 December 2019.
I accept that the husband was wholly unsuccessful in the substantive proceedings before me and the interlocutory proceedings before Watts J.
(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
The solicitor for the wife gave evidence of a series of offers made on behalf of the wife to the husband and two offers from the husband made at the 2016 Conciliation Conference.[49] This included an offer made 22 July 2016,[50] which letter/email I have read, and is as is set out in paragraphs 19 to 20 of the wife’s solicitor’s affidavit. That offer was impliedly rejected by letter/email from the husband’s solicitor dated 22 July 2016.
[49] Affidavit of the wife’s solicitor, Amy Jenkins, filed 24 December 2019.
[50] Ibid paragraphs 19 and 20.
The wife asserts that the husband ‘failed to comply with the Direction of the Court that he make an offer of settlement prior to the Conciliation Conference’.[51] Given the evidence of the husband, I accept that that was the case.
[51] Ibid, page 9.
At the Conciliation Conference the husband made two offers. The wife accepted the husband’s second offer that each of the parties were to retain all assets and liabilities in their sole name and for the wife to pay him $80,000 and that she take title to the Suburb F property. The wife says she incurred legal costs in drawing up a ‘Heads of Agreement’[52] in terms of that settlement. The wife asserts that the husband reneged on this agreement on the basis that he needed an interpreter. That factual history is not in issue as the husband concedes he made the offer that it was accepted, but he did not go through with it.
[52] Ibid page 10.
The husband made an third offer on 18 August 2016 of a payment to him of $200,000. That offer was not accepted. Given the outcome of the proceedings, that offer fell well within the meaning of an ‘ambit claim’.
The husband contends that the wife’s failure to comply with the directions to provide ‘full and frank disclosure pending the Conciliation Conference’[53] meant that he was ‘unable to make any determination of an offer due to the financial disclosure lacking from the wife’.[54] I have made comment on this earlier in these reasons.
[53] Husband’s written submissions filed 6 March 2020, page 6.
[54] Ibid.
It is clear that had any of the wife’s offers been accepted or had the husband not reneged from his offer to accept $80,000 these proceedings would have been resolved and tens of thousands of dollars in costs would not have been incurred. I have had significant regard to that circumstance.
The wife has expended $136,577.52 in legal costs and disbursements in these proceedings.[55] I have considered the detail of these costs, and referred to them later in these reasons.
[55] Affidavit of the wife’s solicitor, Amy Jenkins, filed 24 December 2019 paragraphs 15, 16 and 17.
From his costs disclosure, the husband asserts that he had spent or incurred $116,596.43 in solicitor’s costs up to October 2019. In addition he had paid one of his counsel $7,000. Thus, his disclosed legal fees prior to the October 2019 hearing totalled $123,596.43.
As to the costs for a two day trial, the husband’s solicitor estimated solicitor’s costs of $6,000, counsel’s preparation fees of $3,000 and hearing fees of $13,000 (i.e. $7,500 per day). This totals $22,000.
Given this evidence the total incurred costs and estimated hearing costs totalled $145,596.43.
Further, the notification showed that in addition the husband has paid $8,336.24 into the solicitors trust account; with the fees of $7,000 previously paid to counsel it makes a total of $15,336.24 paid by the husband.
(g)such other matters as the Court considers relevant
In her written submissions the wife’s solicitor asserts that the wife was a ‘victim of domestic violence at the hands of the husband during the relationship’.[56] The wife says some evidence of this was provided by her daughter and herself during the Substantive Proceedings. The wife’s solicitor submits that the delay in the husband bringing the substantive proceedings was an attempt by him to use the Court process to ‘perpetuate continuing family violence’[57] on the wife. She contends that the proceeding have caused her significant financial and emotional stress.[58] I accept that any family law legal proceedings are likely to give rise to stress, in this case there is no evidence that it is unusual stress.
[56] Written submissions of the wife filed 21 February 2020, page 10.
[57] Ibid.
[58] I have made no finding in this respect and as such I have given no weight to this submission.
Further, the wife’s solicitor asserts that the Court found that the husband was an unreliable witness who provided conflicting and confusing evidence. She says that during the proceedings the husband took ‘no steps to reduce the length of the trial, nor has he abided by the pre-action procedures’. I have given weight to this submission.
On the evidence, the husband’s case was weak and while it did not reach the criteria to enable summary dismissal it came close. The husband fabricated evidence to base his substantive contentions. As a consequence of his failed and meritless application the wife has incurred significant cost and loss.
Discussion as to a whether to make a costs order
Given the findings and discussion as set out above, and having considered all of the relevant facts, findings and determinations, I am satisfied that the husband should pay the costs of the substantive proceedings and including the costs of the interlocutory proceeding determined by Watts J.
STEP 2 – WHAT FORM SHOULD ANY COSTS ORDER TAKE
The question remains as whether such costs ought to be on a party/party basis, practitioner/client basis or indemnity basis.
Further, if costs are on one or other of the latter two bases, whether I ought to make a fixed sum costs order or leave it to be determined by agreement between the parties[59] or by assessment of costs under the Rules.
[59] If I adopted the course of looking for agreement, given the history of these parties it would likely be a triumph of hope over reality.
Principles relating to indemnity costs
The law in relation to cost is well established and the general rule is that costs will be awarded on a party and party basis rather than an indemnity basis. In a recent Full Court decision of Worth & Worth (No.2) [2019] FamCA 126 the Full Court comprising of Strickland, Kent and Hogan JJ confirmed the ‘authorities are clear, that for the usual basis to be departed from, exceptional circumstances need to be demonstrated (see, eg, Limousin & Limousin (Costs) (2007) 38 FamLR 478).’[60]
[60] At paragraph 9.
The Full Court went on to say:-[61]
The categories of such circumstances are not closed (Yunghanns & Yunghanns (2000) FLC 93-029), but some examples are provided in the oft-quoted decision of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive Co”), and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660, drew from his Honour’s decision the following:
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud.
(c)Evidence of particular misconduct causing loss of time to the court and to other parties.
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.
(e)An imprudent refusal of an offer to compromise.
(Citations omitted)
[61] Ibid.
In Prantage v Prantage (2013) FLC 93-544 the Full Court of the Family Court reviewed the law in relation to costs and affirmed that there needed be exceptional circumstances to justify an order for indemnity costs. Thackray and Ryan JJ considered other matters relevant to indemnity costs and observed:-
100.His Honour’s statement, at [50], that Sheppard J’s emphasis in Colgate-Palmolive was “on parties who must have or should have known their approach was simply imprudent” does not, in our view, accurately reflect the law as explained in Colgate-Palmolive and other cases dealing with indemnity costs.
101.It is true, as the trial Judge noted, that Sheppard J included in the list of situations that might give rise to an order for indemnity costs “the imprudent refusal of an offer to compromise”. However, in our view, imprudence by a party in “their approach” is not sufficient to enliven the power to award indemnity costs.
102.It is important in this context to recognise, as Lindgren J did in NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77 at [56], that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation”.
103.Lindgren J went on to point out (original emphasis):
Even in a proved case of fraud, for example, in my opinion the presumption is that a costs order against the fraudulent party will be on the party and party basis. The conduct of a party that is relevant to the issue of indemnity costs is the party’s conduct as litigant. But, as noted below, the knowledge that a party has, including knowledge of his or her past conduct, may be relevant to an assessment of his or her conduct as litigant.
I also adopt the observations of Berman J in Catlin & Catlin (2018) FamCA 235 at paragraphs 37 to 38 giving a broader definition of ‘wholly unsuccessful’:-
37.In Penfold & Penfold (1980) FLC 90-800 consideration was given by the Full Court to the extent to which an applicant had been substantially successful in the relief sought and whether that should be a factor in determining an order for costs. The majority of the Full Court said at 75,054:-
… True it is that the appellant obtained only some of the orders which she sought. However, it appears that she would have obtained other orders, those relating to the enrolment of the children as boarders in educational institutions, but for the circumstance that after the hearing before the vacation judge and immediately before the hearing before Allen C.J. in F.L.D. the respondent agreed to the arrangements proposed. …
38.I consider that for a finding to be made that the husband was “wholly unsuccessful” does not require the wife to establish that no part of the husband’s claim for a set off was successful.
Whether the husband should pay the wife’s costs on an Indemnity basis?
In taking and continuing these proceedings the husband was at all relevant times legally represented. If properly advised, he should have known or did know that he had little or no chance of success. The interlocutory proceeding before Watts J ought to have been a chance for the husband and those who advised him to take stock and reflect on the sense and prudence in continuing the litigation. I am satisfied that in this case that the litigation was commenced and continued for some broader motives. Whether it was a continuation of his violence,[62] as asserted by the wife, or to improperly access the assets of his former wife or a combination of those and other motives is not clear. What is clear is that the husband’s taking and continuation of this litigation involved his wilful disregard of the known facts.
[62] To which violence I referred in my substantive reasons at paragraphs 91 to 96, 108, 133, 145 and 148.
The husband made a series of allegations of Centrelink fraud against the wife, knowing them to be false.
The wife had endeavoured to bring these proceedings to an end by making and accepting offers to avoid the continuing litigation. The husband imprudently refused such offers to compromise and reneged from an offer he himself had made.
Rhetorically, I ask where this has left the parties? The wife has spent $136,577.52 on costs. It is likely the husband has spent more on his legal costs than has the wife in these proceedings. He had experienced counsel acting for him and a solicitor who instructed counsel during the hearing. The husband’s counsel’s fees were much greater than those of the wife’s counsel.
The husband has apparently endeavoured to secure his undivided one half interest in the Suburb F property to enable such funding.
I am in all the circumstances satisfied that costs should be calculated on an indemnity basis.
STEP 3 – WHETHER THE COURT SHOULD FIX THE COSTS AS SOUGHT BY THE WIFE
Whether to fix costs or refer that determination to an agreement by the parties or an assessment under the Rules
In terms of this Courts determination of the quantum of costs, I note the remarks of Strickland, Kent and Watts JJ in the recent Full Court decision of Pierson & Romilly [2020] FamCAFC 91 where their Honours said:-
85.It is the policy of this Court to attempt to fix costs at the conclusion of the hearing in order to save the parties the cost, time and resources of a taxation, as well as to save the time of a Registrar in taxing the costs.
I take it that ‘the policy’ referred to in that judgment relates to that of the Full Courts of the Family Court. However, the underlying principles and reasoning upon which that jurisprudence rests must be equally apposite to judges determining costs at first instance.
For issues and conflict to require determination by a judicial officer, the parties or one or other of them have eschewed alternative dispute resolution.
First instance judges are often uniquely informed and equipped to determine costs at large and in particular. The determination of costs falls into three distinct areas of reasoning:-
(a)whether or not a costs order ought to be made;
(b)if there is to be a costs order on what basis should it be calculated; party and party, legal practitioner and client, indemnity, or some other basis;
(c)once those determinations are made, then there needs to be serious consideration as a fixed costs orders or assessment under the Rules. In this phase of the determination judges should have regard to the ‘cost, time and resources of a taxation, as well as to save the time of a Registrar in taxing the costs’ and other relevant factors.
As with the jurisprudence and as set out in the Rules, the determination of the quantum of costs is a process of assessment, not taxation.
Given the history of this dispute, including the negotiations surrounding offers, to which I have been made privy in this application, I find that it is unlikely that these parties would agree on quantum of costs.
In her costs application the wife seeks an order that the husband pay her costs of and incidental to the substantial application on an indemnity basis in the amount of $136,577.52. Her solicitor set out the make-up of the costs in her affidavit filed 24 December 2019 where she said:-
14. I first received instructions from my client in around March 2016. My client consulted with [BB Lawyers] prior to this and was issued with an invoice on or around 2 March 2016 for the lawyer’s attendances.
15. At the time my client instructed me, I was employed by a firm known as Aitken Lawyers. Aitken Lawyers merged with a firm known as Russell Kennedy Lawyers on the 1 April 2019 and became Russell Kennedy Aitken Lawyers. My client has paid fees to each Aitken Lawyers and Russell Kennedy Aitken Lawyers over the course of this matter.
16. My client has paid $136,577.52 in legal fees as set out in the Application in a Case filed contemporaneously with this Affidavit.
These costs were broken down as follows:
(a)Legal fees to BB Lawyers in the amount of $2,021.80. I was provided with a copy of the invoice from BB Lawyers.
(b)Legal fees to Aitken Lawyers in the amount of $39,808.50. I was provided with the trust account statement from Aitken Lawyers, but I did not have the itemised bills of costs.
(c)In April 2019 Aitken Lawyers apparently merged with Russell Kennedy Lawyers and became Russell Kennedy Aitken Lawyers. The evidence was that the wife incurred fees of $59,368.47 with Russell Kennedy Aitken Lawyers.
(d)I was provided with a copy of the fee note from Rhys O’Brien in the amount of $6,600 for the hearing before Watts J.
(e)The wife’s counsel’s fees for the hearing before me amounted to $28,778.75. This was in respect Benjamin Kasep, and a copy of his fee note was provided to me.
I considered those various amounts in the light of the further material provided to me.
As to the $2,021.80 in legal fees paid to BB Lawyers, the invoice showed solicitors costs of $1,881.00 plus copies of $6.25, title search fees of $107.05, sundries of $27.50 plus GST for acting for the wife in relation to the s 79 application and associated applications. The total was $2,021.80. Given the material before me that amount is both fair and reasonable and is proportionate.
There is a claim for the legal fees paid or payable to Aitken Lawyers in the amount of $39,808.50, and the legal fees paid or payable to the merged firm of Russell Kennedy Aitken Lawyers in the sum of $59,368.47. These total $99,176.97. As to those fees, I have considered those in the light of the obvious work undertaken and the nature and complexity of the rich factual issues to be determined in this matter. I considered the nature and scope of the affidavits of the wife and her daughter relied upon during the substantive proceedings before me and of course the interlocutory matter before Watts J.
The wife incurred barrister’s fees of $6,600 with Rhys O’Brien. He appeared on the interim hearing before Watts J and charged $6,600 for the hearing and preparation. This was at a rate of $3,300 per day. Given the material before me that amount is both fair and reasonable and is proportionate.
The wife employed Benjamin Kasep, a barrister who charged fees totalling $28,778.75. This is made up of brief fees of $3,850 per day for three days plus one day of preparation in advance of each of the hearings in April 2019 and October 2019. In addition, Mr Kasep undertook other work as is set out in his invoice dated 7 June 2019. Given the material before me that amount is both fair and reasonable and is proportionate.
In my work as a Justice of the Family Court over the last 14 years, I have heard and been involved in numerous cases, including defended property and parenting cases in the Sydney Registry of the Family Court. I have maintained a keen interest in costs and I generally require the parties to produce to the Court copies of the costs disclosers required under the Rules. As such, I am aware of the costs of litigation in these types of proceedings. In cases similar to this in terms of time, complexity and conflict, I have seen costs and barrister’s fees totalling well in excess of $200,000 for each party.
Prior to my appointment to this bench I had been a legal practitioner in private practice for about 30 years. I had been a costs assessor appointed by the Chief Justice of the Supreme Court of NSW and I Chaired the Costs Assessors Rules Committee for many years. In my role as a costs assessor, I had assessed hundreds of bill of costs.
It is not unusual for a judge to assess costs, nor is it ultra vires the jurisdiction and powers of a judge after a hearing. As recently as 8 April 2020, Emmett AJA observed in Turvey v Crotti (No 3) [2020] NSWSC 346 made lump sum costs orders instead of sending parties to an assessment process. In dealing with the matter as a lump sum, his Honour observed:-
35.Ms Turvey opposes the making of any order as sought in Ms Crotti’s motion. Rather, she says, it should be left to cost assessors. I accept that it is not the function of the Court to undertake the task that would be undertaken by cost assessors. However, having indicated to the parties my concern as to the quantum of costs that have been incurred by both Ms Turvey and Ms Crotti in the conduct of this litigation, I consider that it is desirable that the dispute be brought to an end without further costs being incurred in the undertaking of a cost assessment, a possible appeal to an appeal panel and the prospect of an appeal to the District Court and possible judicial review by the Court of Appeal. I therefore consider that it is appropriate to make an order that Ms Crotti be entitled to a specified gross sum instead of assessed costs.
In terms of the costs of these parties, I read the affidavits of the husband and wife, and those of their witnesses. I saw and heard them give evidence. I read their respective applications and I was aware of the history of the litigation. This included the interlocutory proceedings heard by Watts J.
Given that background, I carefully considered the work done by the wife’s legal practitioners in preparing and running her case for trial. This included the work of the barrister and solicitor in this relatively fact rich and legally interesting case. The amounts were broken down and explained in the evidence of the wife’s solicitor, including the exhibits and costs disclosures.[63]
[63] Affidavit of the wife’s solicitor Ms Jenkins filed 24 December 2019, paragraphs 16 and 17.
From the material before me the sum of $136,577.52 seems a relatively modest amount sought to cover legal fees for the hearing before Watts J and the three day hearing before me. If I make an unspecified costs order (in terms of amount) it will impose on these parties further cost and conflict in going through the minutiae of assessing a bill of costs.
There is clear power for costs to be made in a lump sum amount.[64] I have considered the importance and complexity of this matter and had regard to the fees paid or incurred by the husband.[65]
[64]Family Law Rules 2004 (Cth) 19(18)(1)(a).
[65] Ibid 19(18)(3).
Costs are no longer ‘taxed’ they are assessed in accordance with the Rules. This is not a simple calculation of hours of legal work multiplied by an hourly rate, although time is not unimportant. Assessment of legal costs must involve a consideration of the scope nature of the work and the skills applied by legal practitioners in respect of that work. I have taken into account the nature of the parties and the legal and factual issues that arise. Whether the process of determining levels of costs are on a practitioner/client basis or indemnity basis, they must be assessed as being be fair and reasonable and proportionate to the issues involved. I have applied those principles.
I am satisfied that in all the circumstances that the sum of $136,577.52 is overall both fair and reasonable and is proportionate give the nature and extent of the proceedings in the Family Court, including the proceedings before Watts J and this costs application.
As such I will so order.
I certify that the preceding one hundred and twenty-nine (129) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 6 May 2020.
Associate:
Date: 6 May 2020
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