Phillips and Hansford (Costs) - [2015] FamCAFC 185

FAMILY COURT OF AUSTRALIA

PHILLIPS & HANSFORD (COSTS)

[2015] FamCAFC 185

FAMILY LAW – APPEAL – COSTS – Where the appeal is allowed in part – Where the husband abandoned the parenting aspects of the appeal shortly before the hearing of the appeal – Where both parties seek an order for costs – Where an order is made for the appellant to pay the respondent’s costs relating to the parenting aspects of the appeal – Where circumstances do not justify an order for costs for the property appeal.

Family Law Act 1975 (Cth) s 117(1), s 117(2), s 117(2A)

APPELLANT:

Mr Phillips

RESPONDENT:

Ms Hansford

FILE NUMBER:

ADC

4008

2013

APPEAL NUMBER:

2015

DATE DELIVERED:

25 September 2015

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Finn, Aldridge & Johnston JJ

HEARING DATE:

By way of written submissions

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

21 January 2015

LOWER COURT MNC:

[2015] FCCA 117

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Hodgson

SOLICITOR FOR THE APPELLANT:

Nicholl & Co

COUNSEL FOR THE RESPONDENT:

Ms Brasch SC

SOLICITOR FOR THE RESPONDENT:

Dobinson Davey Clifford Simpson

Orders

The husband is to pay to the wife the costs incurred by her in relation to the parenting aspects of the appeal, as agreed or in default of agreement, as assessed.
Other than as provided for in Order 1 the parties are to bear their own costs of the appeal.

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 26 of 2015
File Number: ADC 4008 of 2013

Mr Phillips

Appellant

And

Ms Hansford

Respondent

REASONS FOR JUDGMENT

Introduction

On 21 July 2015 judgment was delivered by the Full Court in an appeal from orders of Judge Hughes. The appeal was allowed in part. Directions were made providing for the parties, if they were so minded, to make an application for costs.
On 17 August 2015 Ms Hansford (“the wife”) filed an Application in an Appeal seeking an order for costs in her favour together with two supporting affidavits. On 18 August 2015 Mr Phillips (“the husband”) filed a document headed “Written Submissions On Behalf Of Appellant Father In Relation To Application For Costs”. That document does not appear to be in response to the wife’s application and affidavits. It sought an order for costs in his favour.
Contrary to the directions, the wife did not file any submissions within the time provided and the husband filed neither an application nor affidavits. The wife subsequently filed submissions which, if regarded as being in reply, would be within time as provided by our orders and we propose to have regard to them.
Judge Hughes made the orders appealed from on 21 January 2015. Those orders concerned both the property of the parties and the parenting arrangements for their children. On 25 March 2015 the husband filed a Notice of Appeal pursuant to orders made by Ainslie-Wallace J on 24 March 2015, extending the time to lodge such a notice. The Notice of Appeal related to both the parenting and property orders. Ainslie-Wallace J ordered the husband to pay the wife’s costs of the application for an extension of time fixed at $2,000.
Also on 25 March 2015, the husband filed an application to stay the parenting orders. That application was refused by Judge Hughes on 27 March 2015. On 18 May 2015 her Honour ordered the husband to pay the wife’s costs of that application in the sum of $4,778.
The wife’s evidence was that the husband has not met either of the two costs orders.
The appeal was fixed for hearing on 1 July 2015. Although the husband’s Summary of Argument was to have been filed by 27 May 2015, it was filed on 10 June 2015. An Amended Notice of Appeal was also filed on 10 June 2015 and deleted all of the grounds of appeal relating to the parenting orders and amended and expanded the grounds relating to the property orders. On 12 June 2015 the husband filed an Application in an Appeal which sought leave to file the Amended Notice of Appeal. On 1 July 2015, without opposition at the hearing of the appeal, the court permitted the husband to rely on the Amended Notice of Appeal.
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to proceedings under the Act is to bear his or her own costs. If the court is of the opinion that there are circumstances that justify it in doing so, the court may make such order as to costs as it considers just (s 117(2)). In undertaking such a consideration the court is to have regard to the matters raised by s 117(2A).
The parties’ assets available for division had a value, according to the trial judge, of $423,881. They were to be divided as to 65 per cent to the wife and 35 per cent to the husband. This resulted in the husband being ordered to pay the wife a cash sum of $128,155. On appeal this was reduced to $92,193 to take into account some errors in arithmetic and characterisation of payments made under interim orders that had been made by the trial judge. The husband’s challenge to the trial judge’s determination as to the division of their property was dismissed. The husband’s challenge to the order splitting his superannuation of $197,643 so that the wife received 65 per cent, was also dismissed.
The property of the parties was not extensive and they each received little from the property proceedings. Each has debts owed to their parents, who had provided funding for the proceedings, far in excess of what each party retained under the property settlement. The wife said that when she received the $92,193 pursuant to the 21 July 2015 orders, she paid it to her parents, leaving a debt owing of approximately $390,000. The husband’s evidence at trial was that he had a loan agreement with his parents for $150,000.
The husband is a financial professional. In 2014 his gross income was $108,450 per annum. The trial judge found that it would most likely be lower if he moved to Adelaide to be closer to the children. It appears from the wife’s evidence that he has since moved to Adelaide.
According to his counsel’s submissions, the husband’s costs on the appeal were $39,000. Those submissions do not disclose the husband’s present income.
The wife’s submissions disclosed that the wife’s costs of the appeal “exceeded $41,000”. She deposed in her affidavit to receiving $442 per week from a company associated with her parents. She also receives the benefit of a mobile phone and a car from that company. She receives $131.50 child support each week from the husband. She pays her parents board of $400 per month. Other than for jewellery and savings of $12,000, she has no significant assets.
The payment of the other party’s costs would, therefore, be a significant burden for each of the parties. It is to be recalled, however, that impecuniosity is not of itself a bar to a costs order. If it were otherwise, impecunious litigants could proceed with impunity.
The conduct of the parties to the proceedings is relevant. Although it was necessary for the husband to seek an extension of time to appeal, it was opposed by the wife notwithstanding that the husband was only out of time by one day and she received the benefit of the costs order referred to earlier which remains unpaid. The husband was late in filing his Summary of Argument. It was not suggested by the wife that any particular costs were wasted by that delay.
On 3 June 2015 the husband’s solicitors sent a letter of offer seeking to settle the parenting aspects of the appeal. In part it stated:
Our client will not progress the Appeal on matters of parenting if agreement can be reached in relation to the following…
The husband then proposed that a notation be added to the existing orders which defined, with great precision, when school terms were to be taken to commence and finish. Two additional orders were proposed. One dealt with the time the children were to spend with the parties during Easter. The other dealt with extracurricular activities.
That offer was rejected on 9 June 2015. On 10 June 2015 the parenting appeal was, effectively, withdrawn by the husband.
Also on 3 June 2015, the husband sent the wife a letter concerning the property aspects of the matter headed “Without Prejudice Save as to Costs”. The letter and the accompanying schedule comprehensively explained the husband’s assertions of the trial judge’s errors of arithmetic and characterisation of assets and liabilities. It proceeded to make the following offer:
Notwithstanding the above, our client is keen to conclude proceedings for the sake of the children and on this basis outlines his offer to settle all property matters on the following basis:
a)Our client pays your client a sum of $57,492 by 17 July 2015 or within 14 business days of the confirmation of the removal of the caveat on [Suburb S property] (whichever is later) representing 55% of the total net non-superannuation property pool of $172,521 less the $29,662 of interim property distributions, $5,000 of jewellery and $2,732 First home saver account received or retained by her.
b)Contemporaneously with (a), our client will refinance the mortgage secured over [Suburb S property] in his sole name.
c)Your client consents to receive $96,052 of our client’s superannuation representing 50% (equalised) of the total $203,181 of superannuation interests less $5,538 of her superannuation interests.
This offer will remain open until 9:00am on Tuesday 9 June 2015 after such time it will be withdrawn.
It is to be noted that this offer not only took account of the asserted errors of the trial judge but also varied the division of the non-superannuation assets to 55 per cent in the wife’s favour and the division of superannuation to an equal division.
That offer was rejected by the wife on 9 June 2015.
On 26 June 2015, five days before the hearing of the appeal, the wife made the following offer, which, apparently, was not accepted:
We are instructed to put the following proposal to settle the appeal in relation to the property matter:
1.Your client withdraws his appeal;
2.Your client retain [Suburb S property] and refinance the loan in his sole name;
3.Your client pay to our client the sum of $93,000 within 42 days;
4.The superannuation split remains as ordered by Her Honour and as effected;
5.The parties otherwise retain what they have.
Please note that our client still requires the ordered costs payments to be made to her and has instructed us to press for costs thrown away in relation to the parenting appeal.
As can be seen, save for the court ordering the husband to pay to the wife $92,193, as opposed to $93,000, this substantially reflected the outcome of the appeal.
This offer was sent a few days before the hearing of the appeal. There is no evidence as to whether any acceptance of this offer within a reasonable time would have resulted in a significant saving of legal costs.
At the hearing of the appeal on 1 July 2015, senior counsel for the wife conceded two errors made by the trial judge totalling $25,300. As far as the material available indicates, that concession was made for the first time in the wife’s Summary of Argument filed on 26 June 2015.
The court accepted that the trial judge had made two further errors of characterisation that required adjustment. The husband was, therefore, in the main successful on the grounds which asserted arithmetical error and errors in categorisation.
The husband also launched a substantial attack on the trial judge’s exercise of discretion to divide the assets, including superannuation, 65 per cent to the wife and 35 per cent to the husband. It failed entirely.

Conclusion

The husband effectively abandoned the parenting appeal. The offers made by him did not go to matters of substance and, when they were rejected, he gave up the parenting appeal.
The appropriate order is that the husband pay the wife’s costs in relation to the parenting aspects of the appeal.
The property appeal is somewhat more difficult. The husband had some success on the appeal and the appropriate concessions made by the wife were made late in the piece. Whilst the wife’s offer to resolve the appeal was very close to the orders ultimately made by the court, it too was made very late.
The appropriate outcome is that each party should bear their own costs of the property aspect of the matter.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, Aldridge & Johnston JJ) delivered on 25 September 2015.

Associate:

Date: 25 September 2015