Pencious and Searle (Formerly Pencious)

[2013] FamCA 754

FAMILY COURT OF AUSTRALIA

PENCIOUS & SEARLE (FORMERLY PENCIOUS) [2013] FamCA 754

FAMILY LAW – COSTS – Application by husband for costs of two hearings and costs of costs application – Application dismissed

Family Law Act 1975 (Cth) s 117

Woodley & Time and Anor [2008] FamCA

APPLICANT: Mr Pencious

RESPONDENT: Ms Searle (formerly Pencious)

FILE NUMBER: MLC 11069 of 2008

DATE DELIVERED: 13 September 2013

PLACE DELIVERED: Hobart

PLACE HEARD: Melbourne

JUDGMENT OF: Benjamin J

HEARING DATE: 31 July 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Carlile

SOLICITOR FOR THE APPLICANT: Adrian Abrahams Family Lawyers

COUNSEL FOR THE RESPONDENT: Ms Wood

SOLICITOR FOR THE RESPONDENT: Altona Legal

ORDERS

1. The husband’s application in a case filed 24 June 2013 (for costs of two days of the hearing and costs of the application in a case) is dismissed.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pencious & Searle (formerly Pencious) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 11069 of 2008

Mr Pencious

Applicant

And

Ms Searle (formerly Pencious)

Respondent

REASONS FOR JUDGMENT

introduction

1. On 24 June 2013 Mr Pencious (“the Husband”) filed an application in a case seeking orders that Ms Searle (formerly Pencious) (“the Wife”) pay his costs incidental to the hearings on 23 April 2013 and 13 May 2013.

2. That application was supported by an affidavit of the Husband filed 24 June 2013.  The Husband based his application for costs on the grounds that the trial was extended by an additional two days as a consequence of the Wife’s counsel seeking to re-open her case on the basis that certain evidence was not in evidence between the parties with regard to a DVD.

3. The Husband said in his affidavit:-[1]

   3.At the hearing of this proceeding on 23 April 2013 and during my counsel making closing submissions on my behalf, the wife, through her counsel, sought to re-open her case on the basis that certain evidence which was sought to be tendered on her behalf had not in fact been either called or admitted into evidence.  The evidence related to a DVD recording taken by the wife following the parties’ separation.

   4.Despite objection on my behalf, the wife’s case was re-opened, the proceedings adjourned and evidence given on 13 May 2013 in relation to the DVD.

   5.As a consequence, I have incurred costs occasioned by the failure of the wife to call that evidence resulting in the hearing occupying further Court time.

   6.I seek that the wife pay my costs incurred as a consequence of such evidence not being called during the presentation of evidence on behalf of the wife.

   [1] Filed the 24 June 2013.

4. That application was opposed by the Wife and submissions were made.  This matter amounted to a relatively small part of time in a day when a number of costs arguments were heard by me.  I significantly constrained counsel for the Wife from making more fulsome submissions having regard to the nature of this application.

5. Towards the end of the substantive hearing an issue arose in relation to a DVD which the Wife had taken showing a large sum of cash in the safe at the parties’ home shortly before the time of separation.  This hearing occupied a significant number of days and was heard at various times over a period of months in the first part of 2013.  There was a belief on the part of counsel for the Wife that the DVD was to be admitted without contest.  It was only during submissions that it became apparent that there was no such agreement.

6. The Husband objected to the admission of the DVD without formal proof and the proceedings were adjourned for that purpose.

7. It would have been necessary, in any event, to come back having regard to the breadth of submissions and the involvement of Searle Pty Ltd.

BACKGROUND TO THE PROCEEDINGS

1. The background to the proceedings is set out at paragraphs13 to 32 of the substantive reasons which I repeat here:-

   13.At the time of the hearing the husband was aged 47 and the wife was aged 48.  They met in the mid 1980’s and married and commenced cohabitation in September 1988.

   14.The husband worked throughout the marriage until a date shortly before separation.

   15.The wife undertook tertiary studies during the marriage and obtained a number of qualifications and degrees. She is now a [healthcare professional] by occupation and runs her own business. She earns a good income.

   16.The wife claims she was the primary carer for the children and primary homemaker during the marriage. The husband disputes this assertion and claims that he was an equal or at least significant child carer and homemaker.

   17.There are two children of the relationship, [C] and [K]. [C] is now aged nineteen and attends full time study at university. [K] is now aged sixteen, turns seventeen in August 2013 and studies full time. The children live with the wife and in 2012 the wife paid school fees for [K] of just under $9,000. The husband has not spent time with [C] since May 2009 and has not spent time with [K] since March 2010. There is an issue as to the cause of those circumstances, which issue I do not need to determine in the context of this proceeding.

   18.In February 1990 the parties purchased a property at [O] Street, [Suburb L] (‘the matrimonial home”). In the early 1990’s the existing home on that property was demolished and a new home built. The parties entered into a contract with the wife’s father to build that new home. There is an issue as to the extent of the involvement of the wife’s father in that building.

   19.The wife alleges that the husband was violent to her throughout the relationship and in particular assaulted her in March 2000, August 2001, April 2005 and November 2008. She alleges the husband assaulted [C] in October 2008, November 2008 and May 2009.

   20.The wife claims that the parties separated in August 2008 but remained living under the one roof. The husband says they separated on 1 December 2008. Not much turns on whether that date was August or December 2008. In any event the wife and children left the matrimonial home on or about 1 December 2008 and the parties have not cohabitated since that date.

   21.It is an agreed fact that shortly before 1 December 2008 the wife removed $165,000 in cash from the safe at the matrimonial home. There remain issues about the use of that money and whether a similar sum remained in the safe, which cash the wife alleges has been retained and used by the husband.

   22.The husband was involved in a motor vehicle accident [in] February 2009 and suffered injuries. He received periodic payments from the Victorian Transport Accident Commission from a time soon after the accident until February 2012. He is now in receipt of a disability pension. The husband claims he does not have capacity to be in paid employment, but the wife disputes that assertion. 

   23.In late 2011 the husband’s application for a ‘Serious Injury Certificate’ was rejected by the Victorian Transport Accident Commission. The husband has commenced proceedings in the County Court of Victoria to review that decision. 

   24.The wife commenced parenting and property proceedings in December 2008 and an Independent Children's Lawyer was subsequently appointed.

   25.On 30 January 2009 the husband vacated the matrimonial home pursuant to a Court order.

   26.On 26 February 2010 the husband filed an application seeking to join the wife’s parents to the proceedings. The husband sought an injunction to require the wife’s parents to pay money in their hands into trust, being the sum of $150,000 allegedly paid to them by the wife from monies which she took from a safe at the former matrimonial home.  That application was dismissed.

   27.On 3 December 2009 the husband filed an application in a case seeking to restrain the wife’s solicitor from acting in the property and parenting proceedings.  Those proceedings were protracted and involved a number of interlocutory hearings. That injunction application was heard by Cronin J. The proceeding was conducted over two days in February 2011, two days in September 2011, and four days in February 2012, some eight hearing days. The husband was represented by senior counsel in that litigation.

   28.On 28 February 2012, the husband’s application for the injunction was dismissed.  The wife sought costs and on 5 April 2012 Cronin J ordered the husband to pay the wife’s costs of the proceedings on an indemnity basis. The husband was also ordered to pay the costs of the Independent Children's Lawyer.

   29.The substantive proceeding was then placed in my docket. I did not have jurisdiction to make parenting orders in respect of [C], the elder child and the parenting application in respect of [K] was essentially abandoned.

   30.The husband filed an appeal in relation to the order made on 28 February 2012. It is an agreed fact that that appeal was abandoned. 

   31.In his case outline, the husband sought an order that ‘there be no order in relation to the present costs dispute’. If that is an application for me to reconsider the indemnity costs orders made by Cronin J, I decline such invitation, as it is beyond the powers of this first instance Court.

   32.The wife sought to adduce evidence of a doctor as to her father’s present health.  However, that application to use that evidence was not pressed, the husband’s counsel having said that no adverse comment would be drawn about the wife’s father failing to give evidence in these proceedings.

THE RELEVANT LEGAL PRINCIPLES TO BE APPLIED

1. The general rule in relation to costs is that each party to the proceedings should bear his or her own costs of the proceedings. This general rule is subject to s 117(2), s 117AA, s 118 of the Act. A court may make such orders as to costs, whether by way of interlocutory order or otherwise, as the Court considers just. The Court is required not only to consider whether there are circumstances to justify the making of costs orders, having regard to s 117(2A) which sets out an inclusive list of the matters the Court should have regard to. The determination of legal costs is a matter of judicial discretion.

2. I repeat the comments that I said in Woodley & Time and Anor [2008] FamCA 162 where I said:-

   30.In Brown v Brown (1998) FLC 92-882, Kay J said at pp 85,346 to 85,347:

   The obligation under s 117(2A) is that the court shall have regard to the various matters set out thereunder. This is in contrast to the previous provisions under which costs orders were made, namely, under the Family Law Regulations and in particular reg 173 which required that the court may in making an order take into account various matters. The movement from a discretionary consideration to a mandatory consideration is a matter in my view of some substance.

   31.In the absence of their being circumstances that justify the court making an order for costs, then s 117(1) provides that each party will bear his or her own costs of the proceedings under the act.

   32.The interpretation to be applied to s117 and the inter relationship of s 117(1) and s 117(2) was considered by the High Court in Penfold v Penfold (1980) FLC 98-800. In this case Stephen, Mason Aickin and Wilson JJ, said at 75,053-75,054:

   It is an accurate description of sec. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to sec. 117(2). As subsec, (1) is expressed to be subject to subsec. (2), the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Subsection (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently…we do not agree with the suggestion…that an order can only be made under sec. 117(2) in a ‘clear case.

   Subsection (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when the costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised.

   Moreover, the transcript shows that it was only after the respondent’s financial position had been investigated at the hearing that, in answer to questions put by the judge in cross-examination, he admitted that he could afford to pay the increased maintenance which was ultimately ordered. The respondent had filed a Form 19… (which) presented a picture of the respondent as an insolvent, a man whose liabilities exceeded his assets. It made no mention of the very valuable assets which he owned and in which he had an interest... (at 75,054).

   Consequently, there was ample material from which the judge could find that there were circumstances justifying the making of an order for costs. The facts that the appellant failed in relation to the trust and the matrimonial home, and that the vacation judge dismissed the interlocutory application, though matters which are of relevance, are not of sufficient strength to deny the conclusion that there were circumstances justifying the making of the order.”

   33.The case of Penfolds was discussed by Justice Wilson in the High Court decision of Mallet v Mallet (1984) FLC 91-507 (with whom Gibbs CJ, Mason, Dean and Dawson JJ agreed at pp 79,123-79,124). Penfolds case also made it clear that s 117(2A) “requires a finding justifying circumstances as an essential preliminary to the making of an order”. It is clear that the court has a wide discretion and that beyond this there is no “additional or special onus” on the applicant for costs which requires the court to make a preliminary finding that special or exceptional circumstances exist before making an order for costs.

   34.By virtue of s 117(2A), in considering what order (if any) should be made under s 117(2), I am required to have regard to the matters set out in s117(2A) (a)-(g) in so far as they are relevant. The factors set out in the subparagraphs do not comprise of a closed list of factors, because s117(2A)(g) includes “such other matters as the court thinks relevant”. I need to consider each of the various factors, subject to their relevance, however, in PBF (as Child Representative for AF (Legal Aid Commission of Tasmania) v TRF and LKL (2005) FamCA 118 the Full Court held at paragraph 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 2(A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.

   35.In the matter of I and I (No 2) FLC 92-625, the Full Court at p 82,277 said:

   that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs.

   36.In this case Nicholson CJ, Ellis and Baker JJ declined to follow the approach adopted in the decision of McDonald and Mc Donald (1994) FLC 92-508 in relation to the question of costs. In that earlier case his Mushin J had said at p 81,271;

   In the first instance it is important to note that the principal proceedings concerned questions of custody. As between parties in the strict sense of that word, it is rare for an order for costs to be made in such proceedings. Circumstances such as a totally unmeritorious case on one side, an attempt to vary a custody order which does not even establish a prima facie case, the withholding of evidence, the giving of false evidence and like matters are common bases for such an order. However, where no factor of this type exists, there would usually need to be a very significant disparity in financial circumstances between the parties before a costs order was made.

   37.The Full Court in I and I (No 2) above, declined to follow this approach and held at p 82,277;

   With respect... we see nothing in the provisions of s 117 to justify the approach to the question of costs in custody or any other proceedings suggested by him. The matters to which he referred are matters which, in an appropriate case, would be taken into account in determining whether the circumstances justified the making of an order for costs in a particular case. However, whether such matters exist or not, the other relevant matters referred to in s 117(2A) must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs. The financial circumstances of the parties are but one of those matters and those circumstances must be taken into account whether or not there is a very significant disparity in financial circumstances between the parties.

3. I have had regard to s 117 of the Family Law Act 1975 (Cth) (“the Act”) and in particular the provisions of s 117(2A) which says:-

   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.

(a)      the financial circumstances of each of the parties to the proceedings;

1. The financial circumstances of each of the parties are as set out in my substantive reasons published in May 2013.

2. The Husband has property totalling about $868,000 and the Wife has property totalling about $1,150,000.  I am conscious of the income earning capacity of each of the parties as set out in those reasons.

(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;

1. Neither party was 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;

1. In terms of this aspect of the costs application it was necessitated by a confusion as to the state of the evidence and, for the reasons set out above, that it is simply part of the ‘hurly burly’ of a long trial.  I make no criticism of either counsel in that respect.  The evidence in respect of the DVD was ultimately accepted by me and was a factor in the determinations made by me in my substantive reasons.

(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court; and

(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

1. The costs application was not necessitated by the failure of a party to comply with orders of the court and it arose out of part of the proceedings and was not the subject of any aspect of being wholly successful or wholly unsuccessful.

(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

1. There was no evidence as to written offers. 

2. Having regard to all of those facts and circumstances I am not satisfied, in all of the circumstances that a costs order ought to be made.

3. During the course of argument I raised the issue of the costs application.  Counsel for the Wife said he wished to make further submissions in respect to that once the determination had been made.  In respect of this part of the application it took up a very small amount of time and the material in support of it was of limited compass.

4. I do not intend, in those circumstances, to make an order that the Wife contribute towards the Husband’s costs in respect of that application.  However, I have considered this aspect of the various applications before me on 31 July 2013 in determining the costs as between the Husband and Wife in the Wife’s application in a case.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 13 September 2013

Associate:     

Date:              13 September 2013