Polito and Polito (No.2)
[2009] FMCAfam 923
•10 September 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| POLITO & POLITO (No.2) | [2009] FMCAfam 923 |
| FAMILY LAW – Costs. |
| Family Law Act 1975, ss.117(1), (2), (2A), 117AB |
| Charles & Charles [2007] FamCA 276 Sharma & Sharma (No.2) [2007] FAMCA 425 In the Marriage of Schwarz [1985] FLC 91-618 Greedy & Greedy[1982] FLC 91-250 Oriolo and Oriolo[1985] FLC 91-653 Briese & Briese(1986) FLC 91-713 Kendling & Kendling[2008] FAMCA360 Claringbold & James[2008] FAMCA57 G & G [2004] FMCAfam 9 |
| Applicant: | MS POLITO |
| Respondent: | MR POLITO |
| File Number: | HBC 285 of 2007 |
| Judgment of: | Baker FM |
| Hearing dates: | 27 & 29 July 2009 |
| Date of Last Submission: | 29 July 2009 |
| Delivered at: | Hobart |
| Delivered on: | 10 September 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Keating |
| Solicitors for the Applicant: | Dobson Mitchell & Allport |
| Counsel for the Respondent: | Mr Turnbull |
| Solicitors for the Respondent: | Ogilvie Jennings |
ORDERS
(1)The husband pay the wife’s costs in the fixed sum of $4,030.00.
(2)The wife’s costs of $4,125.00 ordered to be paid by the husband on 20 July 2007 and the costs ordered pursuant to paragraph 1 be secured by a first charge against the respondent’s entitlements under the order made on 27 May 2009 and be paid out of those entitlements.
(3)That the subpoena issued to the Practice Manager at [R] Medical Centre on 29 August 2007 is discharged and all documents produced to the Court pursuant that subpoena be returned to the [R] Medical Centre.
IT IS NOTED that publication of this judgment under the pseudonym Polito & Polito is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT HOBART |
HBC 285 of 2007
| MS POLITO |
Applicant
And
| MR POLITO |
Respondent
REASONS FOR JUDGMENT
This is an Application in a Case filed on 3 June 2009 by the wife. The wife seeks that the husband pay her costs of and incidental to the parenting and property proceedings. Counsel for the wife stated that the wife’s costs amount to $90,000.00 on a party-party basis. The wife is seeking costs at the rate set out in the Family Law Scale. She is seeking a general discretionary order for costs pursuant to s.117 and a finding about costs under s.117AB of the Family Law Act 1975. She is seeking some or all of her costs of the proceedings.
In support of the application the wife relied on a Statement of Grounds in lieu of an affidavit, filed on 3 June 2009, written submissions dated 27 July 2009 and a Chronology.
The husband opposes the application and says that each party should bear their own costs. He relied on a letter dated 18 October 2007, a letter dated 12 December 2008 and an email dated 15 December 2008 to the wife’s solicitors and the Independent Children’s Lawyer.
The application was made in respect of the wife’s application for final orders in which she sought both property and parenting orders filed on 10 October 2006.
On 17 December 2008 parenting orders were made by the Court. The order provided for:
(1)The children to continue to live with the mother and she be able to relocate to Queensland with the children; and
Until further order
(2)(a) Mr T be appointed and report to the Court in accordance with Terms of Reference attached to the orders with the express aim of the father spending physical time with the children on an unrestricted basis some time in the future.
I delivered judgment on 27 May 2009 in relation to the property division between the parties.
I will consider the costs of the property and parenting proceedings separately, due to the way Counsel argued the matter.
Background
The wife’s Application for Final Orders was filed in the Family Court of Australia on 10 October 2006 seeking parenting and property orders.
On 9 January 2007 interim children’s orders were made providing for the children to live with the wife and for the husband to spend time with the children each alternate weekend, subject to prohibitions on the use of drugs, gambling and consuming alcohol.
On 2 March 2007 the application was transferred to the Federal Magistrates Court.
An Independent Children’s Lawyer was appointed on 9 March 2007.
A Contravention Application filed by the husband was heard on 20 July 2007. A costs order was made against the husband in the sum of $4,125.00.
A Single Expert’s Report was released on 7 September 2007.
On 31 October 2007 the husband, through his solicitor, indicated that he agreed to attend an Independent Children’s Lawyers conference.
On 12 December 2007 the proceeding were transferred to the Family Court as Federal Magistrate Roberts disqualified himself from hearing the matter.
On 26 June 2008 the Single Expert prepared an updated report. The children expressed a wish not to see their father and the Single Expert recommended that counselling commence between the father and the children.
On 26 September 2008 the proceedings were transferred from the Family Court to the Federal Magistrates Court at Hobart.
On 20 November 2008 trial directions were made in respect of the children’s matter only and it was listed for hearing on 16 December 2008. The wife had sought to have separate trials and to have the children’s matter expedited.
On 12 December 2008 the husband’s solicitors wrote to the wife’s solicitors stating that he agreed for the mother to relocate to Brisbane and proposed that a psychologist in Queensland be appointed as a Single Expert to provide reportable therapeutic counselling for the parties and the children, with the aim of the husband spending physical time with the children on an unrestricted basis sometime in the future.
The Independent Children’s Lawyer’s Outline of Case document was filed on 15 December 2008 and it adopted the husband’s proposal set out in his solicitor’s letter dated 12 December 2008.
On 17 December 2008 parenting orders were made in similar terms to the offer made by the husband. Trial directions were made for the property application and it was listed for final hearing on 24 March 2009.
Hearing of costs application
The husband submitted that the wife’s application for costs of the parenting application was out of time, because a final order for the wife’s relocation was made on 17 December 2008. The Application in a Case for costs was filed on 3 June 2009.
The husband submitted that the application for costs should have been made at the latest by 15 January 2009.
In paragraph 6 of the wife’s Amended Application for Final Orders filed on 24 February 2009, she sought “that except as previously ordered, the respondent pay the applicant’s costs of and incidental to these proceedings commenced by her Application for Final Orders on 10 October 2006”. The wife submitted that if the application was out of time it was only around 39 days late.
The wife submitted that any application for costs of and incidental to the wife’s Application for Final Orders could not have been dealt with by the Court until both the children and property aspects had been dealt with.
The wife has applied for an extension of time in the event that the Court accepts the husband’s argument that the wife is out of time to make the application for costs.
Rule 21.02(1) of the Federal Magistrates Rules states that an application for an order for costs may be made:
(a) At any stage in a proceeding; or
(b) Within 28 days after a final decree or order is made; or
(c) Within any further time allowed by the Court.
The authorities in respect of applications for extension of time indicate that an applicant should have adequate reasons which explain the delay, there should be a substantial issue to be raised and there should be no hardship or injustice to the respondent which cannot be compensated by orders for costs or otherwise.
The wife’s explanation for the delay was that her solicitors were of the view that the time for making an application for costs of and incidental to the application filed on 10 October 2006 would not commence to run until both the children’s and property aspects of the application had been dealt with. The wife argued that the mistake should not be ascribed to her.
The wife has a substantial issue to be raised. She is seeking costs due to the husband having been untruthful in the proceedings, due to being successful in obtaining orders that the children continue to reside with her and being permitted to relocate with the children to Brisbane. Finally, the husband did not consent to the orders being sought by the wife until close to the trial date.
The husband has not claimed that he is prejudiced by the delay.
In my view the wife is out of time in making her application for costs in respect of the order made on 17 December 2008 by 39 days. However, I am satisfied that there are grounds to order that an extension of time should be granted to make the application. The husband was aware of the fact that the wife was making a costs application from the time the application was filed in 2006, and which was confirmed on 24 February 2009, when the wife filed her amended application and indicated that she was seeking costs of and incidental to the proceedings commenced by her application in October 2006.
The wife has explained the delay and it is, in my view, an adequate reason for the wife’s solicitors to have waited until the property matter had been disposed of. The wife has a substantial issue to raise and there is no prejudice to the respondent.
Section 117AB
I shall firstly consider the wife’s application for costs based on the provisions of s.117AB of the Family Law Act1975.
Section 117AB provides:
117AB(1) [Application of section] This section applies if:
(a) Proceedings under this Act are brought before a court; and
(b)The court is satisfied that a party to the proceedings knowingly made a false allegation or statement in the proceedings.
117AB(2) [Court must order some or all of the costs of another party] The court must order that party to pay some or all of the costs of another party, or other parties, to the proceedings.
The wife submits that the husband gave false evidence to
Dr Janet Haines, the Single Expert. The Single Expert said:
“When asked about his gambling, Mr Polito said it used to be a problem, however Mr Polito said that the records showed that he gambled $41,000.00 over a ten year period. He said that
Ms Polito was always happy when he won money and bought things such as furniture, he said that Ms Polito also used to gamble.”The wife submits that because the husband made this statement rather than the correct statement that he lost $41,202.00 between 25 May 2000 and 11 February 2006 that an order for costs should be made against him. The correct evidence was given by the husband in his trial affidavit when he said:
“In relation to the monies lost through gambling, I incurred a net loss of $3,937.20 between the periods 18 October 1997 and 25 May 2000 and the amount of $41,202.00 between the period 25 May 2000 and 11 February 2006.”
The husband did not deny to Dr Haines he had a gambling problem during the relationship. Dr Haines concluded:
“…there has been an identification of gambling behaviour that, at best, would be considered to be outside the limits of normal behaviour…”
The husband admitted his gambling problem, what he did not say was that the loss of $41,202.00 was over a five and three quarter year period.
I found at paragraph 87 of my reasons for judgment:
“The husband was not truthful about the loss of $17,500.00 in 2002 and attempted to underplay the losses amounting to $41,201.88 by stating that these losses occurred over a ten year period”.
In order to be satisfied that Mr Polito knowingly made a false statement to Dr Haines, I must find that he made an untrue statement and he made it knowing it to be untrue. As Cronin J said in Charles & Charles[1]:
“For a court to be satisfied that a person knowingly made a false allegation or statement in the proceedings must mean that a court can be comfortable…to be satisfied that a lie has been told and to so find requires a careful analyses of two things. The first is that the proper version of fact is untrue but that it is put knowing it to be untrue. The court must then be cautious about such a finding because of the mandatory consequence. The finding must be elevated above the probable level set in s.140(1) of the Evidence Act 1995 to consider the matters contemplated in s.140(2) of that Act.”
[1] [2007] FamCA 276 at para.24
I am not satisfied beyond doubt that the husband has knowingly made a false statement to Dr Haines. I found that he attempted to underplay the losses amounting to $41,201.88. The losses he made were over a five and three quarter year period, rather than a ten year period. Over a ten year period his losses amounted to around $44,000.00.
The wife submits that because the husband made false denials in the Notice Disputing Facts dated 23 November 2007 he should pay the wife’s costs. I am not satisfied beyond doubt that the husband knowingly made false denials in the Notice.
I am of the view that the husband’s denials and his statement to
Dr Haines were made carelessly and recklessly, because the husband had the betting records and he had provided them to the wife’s solicitor. In my view, the husband could not have properly and carefully checked the records.
The wife also submits that the husband knowingly gave evidence which was false. In my reasons for judgment at paragraphs 79 and 87, I made a finding that the husband had admitted that evidence in his trial affidavit was untrue about the use of the Sydney property sale proceeds. He was also not truthful about the loss of $17,500.00 in 2002.
I am satisfied beyond doubt that my findings in paragraphs 79 and 87 in my reasons for judgment fall into the category of the husband knowingly making a false statement about what happened to the sale proceeds of the Sydney property. The loss of $17,500.00 over a period of less than one month was evidence which led to my finding in paragraph 89 of my Reasons. The husband swore his affidavit 12 days before he was cross-examined and must have known that the evidence was untrue. Therefore, an order for costs must follow.
I must consider whether the order should be some or all of the wife’s costs. There is no guideline as to how the Court determines the quantum of costs payable pursuant to s.117AB. Ryan J stated in Sharma & Sharma (No.2)[2], “The factors which would ordinarily influence the Court’s discretion about whether an order would be made at all (s.117(2A) purport to relate only to the exercise of that discretion and not to the separate issue of the quantum of a costs order which s.117AB mandates. Nonetheless, s.117(2A) contains a useful structure of relevant considerations when determining the quantum of a s.117AB order.”[3]
[2] 2007 FAMCA 425
[3] Ibid at paragraph 15.
The wife is seeking a discretionary order for costs even if there were no finding under s.117AB. I shall consider the relevant s.117(2A) factors in respect of the s.117 costs application and also to determine the quantum of the costs order pursuant to s.117AB.
Section 117 (1), (2) and (2A)
Section 117(1) of the Family Law Act 1975 provides that subject to certain other provisions, including s.117(2), each party to the proceedings under the Act shall bear his or her own costs. Section 117(2) provides the Court with a general discretion to make an order for costs if it is of the opinion there are circumstances that justify it in doing so. Section 117(2A) comprises the factors that the Court must consider in determining what costs order, if any, should be made.
Paragraph (g) of sub-section (2A) provides that the Court shall have regard to such other matters as the Court considers relevant. This paragraph makes it clear that the earlier paragraphs are not exhaustive of the factors to be taken into account by the Court and confers a broad discretion upon the Court in determining whether a costs order should be made. Not only is the question of costs a discretionary one, but so is the quantum.
(a) the financial circumstances of each of the parties to the proceedings
I made findings as to the financial circumstances of the parties in my Reasons for Judgment.
142. In respect of the superannuation the wife will receive $24,279.00…
132.…the wife shall receive assets to a value $77,772.78 and the husband $56,318.22, $32,264.00 of which has been notionally added back.
123. The wife is a homemaker and parent and does not earn an income outside the home. She receives a Newstart allowance of $198.00 per week or $10,296.00 per annum. She said that she is currently looking for part-time work.
124. The husband was working as a real estate agent earning $28,559.00 in the 2007-2008 financial year. He was dismissed from his employment with [omitted] late in 2008. He believes that he will be able to work as a [omitted] again. He currently receives a Newstart allowance of $250.00 per week or $13,000.00 per annum. The husband has an earning capacity of approximately $30,000.00 per annum.
125. The wife has the full time care of the two children of the marriage. [X] is 10 years old and [Y] is 8 years old. The wife has the main financial burden of the children.
126. The wife has not set out her commitments and the children’s commitments in her financial statement. The only expense she has indicated is $25.00 per week for her visa card minimum payments. The “Costs of Children”, based on the Lee scale indicated that the cost of supporting an 8 year and 10 year old is $358.80 per week or $717.60 per week for both children.
127. The wife is living with her partner in Brisbane, Mr C. Mr C is a [occupation omitted] and has a taxable income for 2008 of $16,716.00. She has the benefit of residing with him and he is supporting her and the two children.
128. The husband set out his commitments in his financial statement as $294.50 per week. The husband pays child support of $3.10 per child per week. The husband will have the expense of travelling to Queensland in order to re-establish a relationship with the children.
The wife’s assets exceed the husband’s assets. The income positions of the parties are modest and similar, although the wife has the financial burden of supporting the two children. The husband has a costs liability of $4,125.00 which will come out of his property award. I have considered that the wife will have a large costs liability. In my view, whilst the wife is entitled to instruct her solicitors to pursue her applications to the extent that they did, the husband should not have to compensate her for this unless there are circumstances which justify this. In my view, an order for costs is not justified under this sub-paragraph on its own.
(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
The husband is in receipt of legal aid. This does not in itself cause a barrier to an award of costs.[4] However this sub-paragraph does not influence the outcome of the application.
(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
[4] In the Marriage of Schwarz [1985] FLC 91-618
On 20 July 2007 a Court order was made that the husband provide to the wife copies of all statements issued since 1 January 2004 in relation to his credit card accounts and all other bank, credit union or similar accounts including but not limited to those with the Commonwealth Bank of Australia and B&E Limited save for those held jointly with the wife. The husband failed to produce all his bank statements as ordered and as requested in letters dated 12 November 2007, 19 August 2008, 13 October 2008 and 14 January 2009, which resulted in the issue of a subpoena to the Commonwealth Bank of Australia on 29 January 2009.
The husband also failed to agree to a restraint order relating to his superannuation until after an application was made on 16 February 2009 despite three requests by letter dated 28 January, 3 and 6 February for an undertaking, which were not responded to. The husband consented to an order on 27 February 2009, several days after being served with the Application.
In cases such as Greedy & Greedy[5] and Oriolo and Oriolo[6], the Full Court discussed the issue of costs being awarded where a party wrongfully fails to disclose his or financial circumstances or causes to be put into issue unnecessarily, details of his or her financial circumstances. The Full Court in Oriolo & Oriolo cited the judgment of Smithers J in the case of Briese & Briese[7] where he said:
“…the need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding…”[8]
[5] [1982]FLC 91-250
[6] [1985]FLC 91-653
[7] (1986)FLC 91-713
[8] page 80,256
Smithers J went on to say:
“…the fact that in the present case it is not a question of ultimate non-disclosure of matters relevant to the orders made, but is of a different nature being relevant to delay and expense, does not in my view prevent the principle being applicable here as to the matter of costs. There is an obligation on each party to act so as to provide a basis upon which the two of them are in a position to resolve the case by agreement, or proceed to a hearing as expeditiously as may reasonably be done.”
These matters in my view indicate the husband’s attitude to the proceedings, which put the wife to extra expense. An award of costs based upon the conduct of one of the parties must bear some relation to the conduct of the proceedings by the parties[9]. An award of costs is to compensate a party for costs which were incurred as a consequence of the conduct of the parties. This conduct weighs in favour of the wife’s costs application of the property proceedings.
[9] Greedy & Greedy[1982] FLC 91-250
The husband caused to be issued and pursued a subpoena in relation to the wife’s medical records with the [R] Medical Centre. The issue was in respect of the wife’s drug use during the marriage. Counsel for the wife argued that the records were not relevant to any issue in the proceedings. The wife objected to the release of her medical records and the hearing of the objection was adjourned on several occasions. When it came before me the husband did not pursue the release of the records, because the wife’s Counsel produced a letter from the wife’s general medical practitioner dated 1 May 2008, which contained the information the husband sought.
In my view it was not unreasonable for the husband to cause a subpoena to be issued in respect of the alleged use by the wife of prescription drugs. The husband was defending the add-back issue in respect of his drug use during the marriage, on the basis that the wife also used drugs and prescription drugs and it was a lifestyle choice. During the hearing, the wife admitted that she experimented with drugs during the relationship.
The wife submits that the husband should pay her costs in respect of the parenting proceedings because:
(i)“The husband only agreed to the relocation order sought by the wife on the eve of trial and after all the wife’s trial documents had been filed and served in preparation of the trial.
(ii)His position prior to that and, as set out in his amended application filed on 4 December 2007 was that the children live with him each week and spend time with the wife each weekend (although his offer of 27 August 2008 (referred to later) he agreed to the wife relocating but subject to extensive spending time with orders and acceptance of his offer in relation to property.))”
Whilst the father’s formal position was contained in his Amended Application filed on 4 December 2007, in which he sought that the children live with him each week and spend time with the mother each weekend, he made it clear to the Single Expert that he did not believe shared parenting works. He said that he would like to see his children every second weekend.
The Single Expert said in her report:
“It would seem that Mr Polito recognises the advantages to the children of having their mother fulfil the role of primary care giver…there is probably no strong psychological reason why the children should not move to Brisbane with their mother. My strongest reservation relates to Ms Polito’s tendency to fail to recognise her own responsibility in facilitating or maintaining an arrangement. I would recommend that the logistics of how the children’s relationship with their father and [Z] are to be maintained be clearly spelt out with each parents responsibilities listed. In addition, I would recommend that clear consequences of non-compliance be developed.”
The Single Expert identified that the wife had shared with the children the adult concerns that were matters before the Court and expressed her views about the husband to the children. She said that the children’s expression of their preferences with regard to any potential move to Queensland predominantly related to an identification of their mother’s needs and not their own:
“…it was evident that the children had rehearsed what they were supposed to say and their accounts where fundamentally the same after [Y] finally recalled what she intended to say…I would anticipate ongoing difficulties with Ms Polito putting obstacles in the way of good father-daughter relationships, especially when things are not the way Ms Polito would like them to be…although Ms Polito has expressed an intention to allow the children to continue a close relationship with their father, I do have some concerns…”
On 12 December 2008 the husband’s solicitors wrote to the wife’s solicitors stating that he agreed for the mother to relocate to Brisbane and that a psychologist in Queensland be appointed as a Single Expert to provide reportable therapeutic counselling for the parties and the children, with the aim of the husband spending physical time with the children on an unrestricted basis sometime in the future.
The Independent Children’s Lawyer did not make his position clear until 15 December 2008. His position was that of the father’s proposal set out in a letter dated 12 December 2008.
The issue of the father’s time with the children has still not finalised. Although the father agreed for the mother to relocate to Brisbane there is still a possibility of a trial.
Having regard to the issues involved in the dispute and the fact that the Independent Children’s Lawyer did not make a recommendation until just before the trial, it was not unreasonable for the father to settle the parenting proceedings when he did.
I am of the view that an order for costs is not justified on the basis of this sub-paragraph in respect of the parenting proceedings.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
The wife sought a 70/30 division of the non-superannuation and superannuation assets in her favour including an add-back of $121,344.00. If she had succeeded she would have received the total of both pools. The wife obtained a result of 58% of the non-superannuation asset pool and 60% of the superannuation pool, with an add-back of $32,264.00. The husband sought an equal division of both pools. Neither party was wholly unsuccessful in the property proceedings.
The wife claimed an add-back of $43,225.00 in respect of the husband’s use of marijuana and an add-back of $19,760.00 for the consumption of alcohol. She failed in respect of both claims. In respect of the husband’s gambling she sought an add-back of $68,759.86 and was successful in an award of an add-back of $32,264.00.
The wife sought to include the non-superannuation and superannuation assets in one pool. The husband sought to include the non-superannuation and superannuation assets in two separate pools.
He was successful in respect of this issue.
The wife was successful in respect of the husband’s parents’ contribution of the gift of the interest free component of a loan and in respect of the wife’s accessed superannuation not being added back.
In respect of the property proceedings, each party was wholly unsuccessful in respect of some of the issues. In my view this sub-paragraph does not justify an order for costs against the husband.
In respect of the parenting proceedings the wife submitted that she was successful because an order was made that she could relocate with the children to Brisbane. As Counsel for the husband submitted, relocation cases are often very difficult. There were other issues such as whether the wife would promote a meaningful relationship between the children and the father. The issue of the children’s time with the father has not resolved. The wife sought an order for sole parental responsibility and an order that the husband be psychiatrically examined. Orders in these terms were not made.
Neither of the parties was wholly unsuccessful in respect of the parenting proceedings.
I am not satisfied that there are circumstances which justify an order for costs in respect of the property or parenting proceedings under this sub-paragraph.
(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
The following offers were made by the parties: -
(1)The husband by email dated 27 August 2008.
(2)The wife’s response by letter dated 3 September 2008.
(3)The husband by letter dated 26 September 2008.
(4)The wife’s response by letter dated 13 October 2008.
(5)The wife’s offer by letter dated 25 November 2008.
The wife’s offer of 25 November 2008 was the offer which the wife’s Counsel submitted was closest to the result. It provided that:
Property
Proceeds of sale home $128,700.00.
Husbands superannuation $56,500.00
Wife’s superannuation $10,000.00
Add back – waste $127,200.00
Total $322,400.00
60% to the wife $193,440.00
The wife indicated that she would accept the proceeds of sale of the home in full settlement of the property matter. This would have given her $128,700.00 cash. Neither party included liabilities in the asset pool in their offers.
I found that the asset pool amounted to $134,091.00 net and the superannuation pool $40,465.00. The judgment gave the wife $99,343.00 of the sale proceeds and $24,279.00 of superannuation amounting to a total sum of $123,622.00. This is a sum close to the offer made, however the offer did not involve a mix of cash and superannuation and it did not include the liabilities. Because of this and because an add-back of $127,200.00 was included in the offer, it was not unreasonable, in my view for the husband to reject the offer. Given the arguments about add-backs, it would have been difficult for either practitioner to predict the outcome of the proceedings.
The husband made an offer in an email dated 27 August 2008 in respect of the children’s matter but it was conditional upon the property settlement being agreed to as well. The offer proposed that the children live with the mother and contained comprehensive proposals for the father’s time with the children each year.
The offer made by the wife in response to the husband’s offer was included in a letter dated 3 September 2008. The wife stated she would agree:
“…for the present suspension of the time the husband spends with the children to be lifted and for the restoration of his relationship with them. A considerable amount of “mea culpa” is required by Mr Polito together with initiatives by him, and possibly with the intervention of other persons as suggested by the Single Expert.”
On 13 October 2008 the wife made an offer to settle the property and the children’s matter all in, “that our client be permitted to relocate to Brisbane with the children, with your client to have such time with them as either the Court shall order or the parties may agree or as reasonably recommended by the Independent Children’s Lawyer” .
On 25 November 2008 the wife’s offer was, “that our client be permitted to relocate to Brisbane with the children with your client to have such time with them as either the parties may agree or the Court shall order at the conclusion of counselling by Ms G”.
As I have already indicated, on 12 December 2008 the husband’s solicitors wrote to the wife’s solicitors stating that he agreed for the mother to relocate to Brisbane and that a psychologist in Queensland be appointed as a Single Expert to provide reportable therapeutic counselling for the parties and the children, with the aim of the husband spending physical time with the children on an unrestricted basis sometime in the future.
The Independent Children’s Lawyer did not make his position clear until 15 December 2008. His position was that of the father’s proposal set out in a letter dated 12 December 2008.
The issue of the father’s time with the children has still not finalised. Although the father agreed for the mother to relocate to Brisbane there is still a possibility of a trial.
In my view, a consideration of the wife’s offers does not justify an order for costs in either the property or parenting proceedings.
Conclusion
I find that a costs order should not be made in respect of the parenting proceedings pursuant to s.117AB. Having regard to all the section 117(2A) considerations, I am not satisfied that there are circumstances which justify an order for costs in respect of the parenting proceedings.
In respect of the property proceedings the husband shall pay some or all of the husband’s costs pursuant to s.117AB. The conduct considerations in sub-paragraph (c) of s.117(2A) overlap with s.117AB.
The major issue of the property proceedings was whether the Court should make add-backs amounting to $121,344.00. The husband did not deny that he gambled, smoked marijuana and drank alcohol during the marriage. His case was that it was a lifestyle choice made by the parties and the wife was aware of this when she commenced living with him, and therefore there should be no add-backs.
In this matter, there was no doubt that the husband had gambled, drank alcohol and smoked marijuana. The issue was whether the Court should exercise its discretion to order add-backs or to take into account the expenditure pursuant to s.75(2)(o). Most of the time during the trial was taken up in respect of the claim by the wife and the defence by the husband of the total of add-backs of $121,344.00. The extent of the gambling was not in dispute. The losses could be assessed from the time the records were produced by the husband. The records showed that the sum of $17,500.00 from the sale proceeds was lost by the husband’s gambling in less than one month. When the loss was put to the husband during cross-examination he admitted it. He admitted his evidence about the sale proceeds was untrue. The circumstances of this case can be distinguished from the authorities in which substantial costs orders have been made pursuant to s.117AB.
This was not a matter in which the false statement has had the effect of undermining the integrity of the proceedings, as in Kendling & Kendling[10], in which Cronin J found that the husband’s presentation of his case during interlocutory proceedings was not child focussed or genuine and had the effect of undermining integrity in the proceedings. The husband was disputing the wife’s capacity to parent, but on day three of the trial during cross-examination he conceded he was no longer concerned about the wife’s ability to parent. Cronin J found there were many unnecessary things put by the husband in his own case and his challenge to the wife’s case. Cronin J found that the husband had knowingly made false statements in the proceedings and that his conduct had prolonged the trial which lasted for ten days.
[10] [2008] FAMCA 360
The false statement has not increased the time and cost of the trial as in the case of Claringbold & James[11] in which Bennett J found that the wife had knowingly made false statements about her relationship with Mr S and the domestic violence in that relationship. Bennett J estimated that not less than one half of the trial time was attributed to adducing evidence which demonstrated that evidence given or statements made by the wife were false.
[11] [2008]FAMCA57
In this matter the wife calculated the amount of add-backs for the husband’s gambling from the Centrebet records, which were produced by the husband. The loss of $17,500.00 could be ascertained from the records. The effect of his false statement was that the wife was put to expense by requiring her Counsel to examine the Centrebet, Bass & Equitable statements, and the husband’s Commonwealth Bank statements. The wife was also put to expense in respect of the interlocutory matters already referred to.
As to the quantum of the costs order, I have taken into account the relevant 117 (2A) considerations including the financial circumstances of the parties and the husband’s conduct. I am of the view that the husband should contribute to the extent of the cost of the subpoena to the Commonwealth Bank, the cost of the wife’s Application in a Case in respect of the husband’s superannuation and one half of the preparation costs for final hearing of a two day matter.
The wife submits that the appropriate scale should be the Family Law Scale rather than the Federal Magistrates Court Scale. The wife’s costs on a party-party basis on the Family Law Scale amount to $90,000.00. This is in respect of both the parenting and property issues.
Rule 21.02 of the Federal Magistrates Rules provides, “In making an order for costs in a proceeding, the Court may:
a)Set the amount of the costs; or
b)set the method by which the costs are to be calculated; or
c)refer the costs for taxation under Order 62 of the Federal Court Rules FCR or under Chapter 19 of the Family Law Rules; or
d)set a time for payment of the costs, which may be before the proceedings concluded.
The wife’s Counsel referred to G & G[12]. In that case, her Honour Chief Federal Magistrate Bryant (as she then was), found that the Federal Magistrates Scale would not have provided sufficiently for the wife’s costs and made an order that the wife’s costs be taxed in accordance with the Family Law Scale.
[12] 2004 FMCAFam 9
I am not persuaded that the Family Law Scale should be used in these proceedings which, in my view, were not complex and involved a small asset pool. The lump sum scale should compensate the wife for the matters I have referred to.
I favour finality in this matter, given the small size of the asset pool and the modest nature of the parties’ incomes, the costs shall be fixed so that further costs are not incurred by either party.
The costs order I intend to make will include the following:
(a) Application in a Case - Interim or summary hearing – as a discrete event $1,465.00
(b) Short mention for subpoena $240.00
(c) Preparation for final hearing
for a two day matter $4,650.00 – one half = $2,325.00
Total $4,030.00
I will also order that the applicant’s costs of $4,125.00 ordered to be paid by the husband on 20 July 2007 and the costs to be paid pursuant to these Reasons be secured by first charge against the husband’s entitlements under the order made on 27 May 2009 and be paid out of those entitlements.
I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of Baker FM
Associate: Sita Buick
Date: 10 September 2009
0
2
1