POOLE & POOLE (No.2)
[2014] FCCA 1410
•9 July 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| POOLE & POOLE (No.2) | [2014] FCCA 1410 |
| Catchwords: FAMILY LAW – Application for costs – following determination of property adjustment and parenting proceedings – justifying circumstance not made out – costs application dismissed – applicant did not genuinely prosecute position or act in good faith. |
| Legislation: Family Law Act 1975 (Cth), ss.117, 117C Migration Act 1958 (Cth) |
| Re JJT & Ors; Ex Parte Victoria Legal Aid [1998] FLC 92-812 Marinko (1983) FLC 91-307 White (1982) FLC 91-246 Greedy [1982] FLC 91-250 Tuck [1981] FLC 91-021 Rouse [1981] FLC 91-073 Kelly (No.2) [1981] FLC 91-108 Davida (Costs) [2011] FamCAFC 61 Robinson & Higginbotham (1991) FLC 92-209 Telfer [1996] FLC 92-688 Prantage [2013] FamCAFC 105 |
| Applicant: | MS POOLE |
| Respondent: | MR POOLE |
| File Number: | CAC 1681 of 2011 |
| Judgment of: | Judge Harman |
| Hearing date: | By written submissions |
| Date of Last Submission: | 30 May 2014 |
| Delivered at: | Parramatta |
| Delivered on: | 9 July 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Mazengarb |
| Solicitors for the Applicant: | Mazengarb Family Lawyers |
| Counsel for the Respondent: | Mr Cummings |
| Solicitors for the Respondent: | Farrar Gesini Dunn |
ORDERS
Dismiss the Application for Costs made by Ms Poole.
Each party shall pay their own costs of and incidental to these proceedings and with respect to the determination of the Costs Application.
Publish my Reasons.
IT IS NOTED that publication of this judgment under the pseudonym Poole & Poole (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
CAC 1681 of 2011
| MS POOLE |
Applicant
And
| MR POOLE |
Respondent
REASONS FOR JUDGMENT
The proceedings
This determination relates to an Application for Costs consequent upon determination and conclusion of proceedings between the parties with respect to both property adjustment and parenting applications. Separate reasons were delivered disposing of the substantive issues.
The parties to the proceedings are a former husband and wife,
Ms Poole and Mr Poole. Ms Poole is the Applicant and moving party as regards the issue of costs. Mr Poole resists and opposes any Order with respect to costs.
The matter has proceeded on the basis of the following material having been read and considered:
a)My Reasons for Judgment with respect to the substantive issues;
b)Written Submissions on behalf of the wife filed 9 May 2014;
c)Affidavit of the wife filed 8 May 2014;
d)Written Submissions filed on behalf of the husband 30 May 2014;
e)Affidavit of the husband filed 30 May 2014.
As the issues in dispute between the parties are entirely clear and addressed in their Written Submissions and Affidavit material, I have not sought to afford to the parties any further opportunity to make oral submissions nor has an application been made for same.
General Principles
As identified by both parties the determination of an application for costs is governed by section 117 of the Family Law Act 1975 (Cth).
Section 117(1) sets out what is often referred to as the “general rule” namely, that “each party to proceedings under this Act shall bear his or her own costs.”
The “general rule” is subject to the discretion reserved by subsection (2) by which the Court may, subject to findings satisfying the dual tests of both the existence of a justifying circumstance and an order for costs being just and equitable, make such order as to costs as the Court considers just.
As the High Court has discussed in Re JJT & Ors; Ex Parte Victoria Legal Aid [1998] FLC 92-812 both preconditions must be met.
The Court is obliged to consider the matters set out in subsection (2A) of section 117 of the Act. Those considerations are set out below and I propose to deal with each in turn. The considerations set out in section 117(2A) are non-exhaustive, namely:
(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.
Counsel for the wife has also drawn the Court’s attention to regulation 44.15 of the Federal Circuit Court Rules 2001, which provides that “…an unsuccessful party in the proceedings must pay the costs of a successful party”. As is observed by Counsel for the husband regulation 44.15 is specifically confined to proceedings under the Migration Act 1958 (Cth) and is thus irrelevant to these proceedings. Even if the regulation were not confined to proceedings under the Migration Act 1958 (Cth), the rules of the Court are in aid of jurisdiction and cannot subvert or interfere with the will of parliament as expressed through legislation and thus section 117 would still prevail.
I am referred in the Applicant’s case to the decision of Kay J in Brown & Brown [1998] FamCA 115. In addition I am referred by Counsel for the husband to the Full Court’s decision (comprising Kay, Coleman and Warnick JJ) in Browne & Green [2002] FLC 93-115 together with Marinko (1983) FLC 91-307, White (1982) FLC 91-246, Greedy [1982] FLC 91-250, Tuck [1981] FLC 91-021, Rouse [1981] FLC 91-073, Kelly (No 2) [1981] FLC 91-108, Davida (Costs) [2011] FamCAFC 61, Robinson & Higginbotham (1991) FLC 92-209, Telfer [1996] FLC 92-688 as well as certain provisions of the Federal Circuit Court Rules.
I have considered each of the authorities and rules to which I have been referred together with the Full Court’s decision in Prantage [2013] FamCAFC 105.
Counsel for the wife does not make specific submission as to a justifying circumstance although they identify factors which are suggested would and should appropriately be taken into account.
One can infer from the wife’s submissions that the justifying circumstance is suggested to be the wife’s substantial success and the husband’s substantial lack of success combined with offers of settlement that were made by the wife with respect to both the parenting and property adjustment aspect of the proceedings.
It would be trite to observe that the Orders made at the conclusion of the trial were substantially in accordance with the relief sought by
Ms Poole. Further, Mr Poole was not successful in persuading the Court to make Orders as sought by him.
The net effect of the parenting Orders made in the proceedings was to continue an arrangement for the children which had been in place for some time. I had also made some comment during the course of the Judgment as to the absence of Family Dispute Resolution or Family Counselling between the parties and the failure by either party to seek or obtain an exemption from such attendance.
On the basis of those factors it appeared that the parenting aspect of the proceedings was not properly before the Court. That is a matter that should have been apparent to the wife and her attorneys and an application to strike out that portion of the husband’s Response may well have concluded that portion of the proceedings and significantly reduced both the preparation and hearing time required.
As regards the property adjustment aspect of the proceedings, if it might be so described for present purposes, it is to be noted that the parties did not, other than motor vehicles and superannuation, have any “property” to divide between them. The gravamen of the determination was an apportionment of debt between the parties. Ms Poole had sought an Order that Mr Poole indemnifies her with respect to a certain debt in her name and she was successful in obtaining that relief.
I would propose now to deal with each of the factors which I am required to address by reference to section 117(2A) of the Act.
Financial circumstances of the parties
Having heard and determined the property adjustment proceedings between the parties, I am satisfied that I am familiar with the financial circumstances of the parties. During the course of the hearing between the parties I had referred to the reality that they were, in effect, part of the growing group of “middle class working poor”.
Both parties have, throughout their lives and certainly throughout their relationship with each other, worked hard and earned income. They have been fully contributing members of civil society. However, notwithstanding this and no doubt as a consequence of the costs of living which they have faced (neither enjoying a particularly extravagant lifestyle whether jointly or severally) and the care and support of the children of their relationship, they have accumulated significant debt rather than assets.
At the conclusion of the case a portion of that debt was effectively transferred from Ms Poole to Mr Poole.
Mr Poole’s Affidavit satisfies me that his financial position has been negatively impacted as a consequence of the Orders and such that his expenses equal or exceed his present income. Put bluntly and in the vernacular, there is “no fat to trim” from the meat of Mr Poole’s finances.
Ms Poole’s financial circumstances are not significantly better. To the extent that her income is perhaps slightly greater and noting that she receives payment of child support from Mr Poole, she has the substantial care of the children of the relationship.
The financial circumstances of each of the parties satisfy me that there would be financial hardship to either party if required to meet any further expense.
It is also germane to note the wife’s submission that she has, in the prosecution of her application, incurred legal costs in the sum of $29,624.04 (from paragraph 10 of Ms Poole’s Affidavit 8 May 2014). This is set against the debt that was the subject of the dispute between the parties (and which was ultimately transferred to Mr Poole) with a balance of $19,574.
Ms Poole has seen fit to expend, to wager, an amount on legal costs which exceeds that which was in dispute by the order of $10,000.
It is also to be noted that Mr Poole’s case had been that he would suffer substantial financial hardship if he were required to contribute to let alone assume responsibility for the debt which has now become his responsibility. I accept Mr Poole’s evidence that he has, in effect, no tangible assets (only superannuation and a motor vehicle) and is responsible for significant unsecured debt (suggested to be in the order of $60,000). He has applied for finance with three separate institutions so as to be able to discharge the debt which is now his responsibility. He has been rejected by each and thus he is required, from his weekly income, to meet payments of principal and interest with respect to the various debts.
Counsel for Mr Poole concludes their submission with the statement, which I accept is far from hyperbolic, that:
“…it is a very real possibility that he will be forced to declare bankruptcy.” That will not only affect him but also his ability to provide for the children of the parties. This factor must militate against the granting of the Applicant’s request for costs.”
There is some real force to that submission.
Assuming that appropriate costs disclosure has occurred it is extraordinary that Ms Poole would have pursued an application with respect to a debt which was $10,000 less than the amount of costs which she has incurred and presumably had been quoted she would incur.
I accept that each party will suffer financial hardship as a consequence of their present financial position including in the case of each:
a)Meeting various debts;
b)Meeting the costs of the children when they are in their care and in the case of Mr Poole through, additionally, payment of child support; and
c)Through meeting legal costs of their own lawyers.
Whether either party is in receipt of a grant of legal aid
Neither party is or was.
The conduct of the parties
Counsel for Mr Poole raises a number of complaints with respect to
Ms Poole’s conduct of the case, in particular her failure to provide material by way of disclosure without significant action first taken by Mr Poole’s attorneys and including seeking and obtaining Orders from the Court for such disclosure.
Mr Poole’s Counsel point to a number of issues regarding non-compliance with directions for filing material and the like and which included on at least one occasion a “needless appearance” before the Court.
Overall, I am not satisfied that either party has engaged in conduct in such a fashion that would either warrant or militate against an order for costs. The factor is somewhat neutral.
Whether the proceedings are necessitated by failure to comply with a previous order
This is not relevant.
Whether any party has been wholly unsuccessful
It is submitted by Counsel for Ms Poole that Mr Poole has been wholly unsuccessful.
Certainly it is true that Mr Poole has not obtained the relief that he sought by his application before the Court. Ms Poole did obtain that which she had fundamentally sought.
With respect to the parenting issue a very real issue was raised. I could not describe Mr Poole’s application for relief as frivolous, vexatious or without merit. The fact that the application did not ultimately find favour with the Court does not suggest that it is so.
What is clear is that the relationship between the parties, particularly as regards their parenting arrangements, is so poor that the resolution of what should have been a relatively simple and straightforward matter (and which should have been subject to Family Dispute Resolution) became a significant dispute which required determination by the Court (with substantial cost to the tax payer as well as the parties).
Evidence of the poor communication between the parties and the hostile attitude of each to the other (particularly as regards Ms Poole’s attitude to Mr Poole) became apparent during the trial. Ms Poole had established a website with the purpose (wholly or substantially) of venting her spleen as regards Mr Poole and his perceived injustices and misbehaviours towards her and his failings as a partner and person.
But for the attitude of the parties (especially that of Ms Poole) and their moribund communication, the parenting issue between them could and should have been resolved cooperatively and without the need for any Court intervention.
In relation to the property adjustment issue and whilst Mr Poole was not successful in resisting Ms Poole’s application or obtaining the relief that he sought, the issues were relatively minor (on an objective not subjective basis) and, again, can and should have been resolved through commercially realistic compromise.
There is no inevitability to the determination of the proceedings and the case was determined on its merits having regard to the evidence as it fell. On that basis a range of outcomes was possible and certainly the orders which each party proposed had some merit in their formulation.
Counsel for Mr Poole has referred me to and specifically relies upon the decision of Davida (Costs) [2011] FamCAFC 61 and submission is put that the Court should consider whether there was any justified basis adopted by the unsuccessful party having regard to the ultimate outcome of the proceedings.
I am satisfied, as is submitted by Counsel for Mr Poole, that the competing proposals, evidence and written and oral submissions of the parties resulted in a Judgment, which whilst it did not favour Mr Poole did not suggest that Mr Poole’s application was not made in good faith or based upon arguments devoid of logic or possibility of success.
Mr Poole’s application simply failed to find favour whereas on another day before another judicial officer (such are the vagaries of the litigation process and common law system and the particular issues in this case) the outcome may have been different.
I accept the submissions of Counsel for Mr Poole that this factor neither favours nor militates against an order for costs.
Offer of settlement
Ms Poole refers in her Affidavit material and submissions to offers of settlement made with respect to both the property adjustment and parenting aspect of the proceedings. With respect to those offers I note the comments of the Full Court in Browne & Green (paragraph 57) as follows:
The insertion of s 117C into the legislation is a clear indication of the desire of parliament to enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given.
Set against this is the submission on behalf of Mr Poole that his rejection of the offers particularly as regards the final aspect of the proceedings was in part influenced by and predicated upon the absence of disclosure and further material which had been sought by him from Ms Poole.
It is clear that offers of settlement (counter offers if one would prefer) were made by Mr Poole and it is submitted that they were “ultimately ignored by the Applicant wife and her legal advisers.” Thus, it is submitted that:
“The lack of engagement by the Applicant wife with the Respondent husband’s offer meant that there could be no process of negotiation between the parties at the initiation of the Respondent husband.”
In hindsight, Ms Poole may well feel justified in failing or refusing to participate in negotiation. She can readily point to having obtained relief in accordance with or substantially in accordance with her Application and thus could well say that negotiation was not necessary from her part, she being the party of right. However, that was not and could not have been known by the wife until such time as a Judgment was delivered by the Court.
The offers of settlement that were put by the wife were entirely reasonable. The offers put by the husband are not before the Court but I accept that they would also have been reasonable albeit predicated upon potentially different information and certainly different considerations.
A commercially realistic resolution of this case, involving as it did nothing more than the apportionment of debt, is what was called for in this case not some obstinate standing on principle and assertion of entitlement which is what would appear to have typified the wife’s dealings with the husband and the Court (even if her arguments were ultimately accepted). For the wife to expend nearly $30,000 arguing about $15,000 and to consume resources of the Court of similar value is illogical and nonsensical.
The wife engaged in a wholly unnecessary and inappropriate “scorched earth” approach to this litigation. Such a scorched earth policy may have been tactically advantageous to the Russian armies retreating before the German armies across the Russian Steppes but, in this case, it has come with the same inevitable consequence of pain and misery and the depletion if not destruction of scarce resources.
With respect to the parenting aspect of the matter I am not satisfied that any offer of settlement would warrant significant weight. The issues between the parties were real and live and their non-resolution and the inability of the parties to reach compromise was based purely upon antagonism and moribund parental communication and absence of empathy for the others position. To that end Ms Poole was, to some extent, the instrument of her own destruction as regards the incurring of cost as her somewhat toxic attitude towards Mr Poole made it impossible for any sensible and appropriate negotiation or resolution of those issues to occur.
I am not satisfied that the offers of settlement made by the wife, whilst clearly she has obtained an outcome proximate thereto, would of themselves and without other supporting factors be a justifying circumstance for a departure from the general rule created by section 117(1) of the Act, let alone support the justice and equity of an order.
Other matters
Material is annexed to Mr Poole’s Affidavit which is highly concerning. This is particularly so in light of the above comments and with respect to the subject matter of the parenting aspect of the proceedings.
It is clear from correspondence between the parties, and introduced by Mr Poole’s Counsel, that within approximately one week of Judgment being delivered (which favoured Ms Poole’s position) that Ms Poole then readily acceded to Mr Poole’s proposal being that which he had prosecuted through the proceedings. Thus, the entire portion of the proceedings relating to parenting would appear to have been a sham, a complete waste of time, money and effort (including the Court’s time and resources which are already sadly stretched and which, at the time of hearing of these proceedings, were further stretched as a consequence of illness of a judicial colleague but for which illness I would not have been present in Canberra to hear these proceedings).
It is little short of scandalous that a party would steadfastly prosecute a position before the Court over many months and at final hearing (at great cost to the tax payer) and then within a week readily and willingly accede to the very position which she had steadfastly opposed and which the husband had sought.
I am satisfied, as is submitted by Mr Poole’s Counsel that this suggests that Ms Poole did not genuinely prosecute her position or act in good faith. As is submitted:
“her preparation to accede, immediately after the judgment, to the arrangements he [Mr Poole] had been contending for [in] the proceedings, makes one wonder why that issue had to be litigated at all. It suggests she opposed the parenting orders sought by the Respondent Husband for reasons disconnected from an honest desire to promote the children’s best interests. Given the website she maintained against the husband as annexed [to] the Respondent husband’s trial affidavit, one could be forgiven for assuming that her motivation in pursuing the final parenting orders that she sought at the final hearing was an extension of the enmity she feels towards the husband.”
It is ultimately submitted that this factor militates against the making of a costs order and I am satisfied that this is so. It would potentially be a justifying circumstance, in and of itself had it been sought, for an order for costs against the wife.
Summary
Having regard to the above I am not satisfied that a justifying circumstance is made out by the wife.
Lest I am wrong in that regard I am not satisfied that it would be just and equitable as between the parties or as regards the community for an order for costs to be made.
Whilst a litigant should not be denied the fruits of their litigation nor should they be rewarded:
a)For acting other than in good faith (as I am satisfied occurred as regards the parenting aspect of the matter); or
b)For prosecuting with zeal an uneconomical application and pursuing that application to a ludicrous point of financial ruination.
The wife has been deprived of the “fruits” of her litigation by pursuing the litigation. If the wife had done nothing and simply paid the debt in her name she would be, in all probability, at least as well off as she would be with her Judgment and a costs order. She has placed a wager that could never have advantaged her. It was a most imprudent decision and course of action to adopt.
Both parties are in an incredibly poor financial position and the impost that legal costs create for each party is significant. Ms Poole has either pursued her litigation without regard for the predictable consequences of doing so, (being a further deterioration in already difficult circumstances) or without clear advice as to the costs she would, was and did incur.
Rather than this litigation enabling Ms Poole to “buy the farm” it has caused financial ruination for both. The amounts expended on this litigation by the parties (leaving aside that expended by the Court and which can neither be recouped nor made available to other litigants) would have funded lavish annual holidays by these parents and their children each year until their majority. Instead, those amounts have been expended on perpetrating bitterness and pain with no net gain for either parent.
Ms Poole points to the instalment payments being made by Mr Poole to his attorneys (to reduce his liability to them) as a potential source of funds he could utilise to meet any costs order. Mr Poole’s attorneys represented him well, diligently and on a bona fide basis prosecuting an application, in accordance with the advocacy rules, which was not devoid of prospects of success nor frivolous or vexatious. They are entitled to be paid and to suggest that this periodic payment arrangement that Mr Poole has been given the benefit of, which his attorneys should be terminated in preference to providing funds to
Ms Poole, does not find favour with me on any level.
Whilst Ms Poole will bear her own costs and, I accept, this will create financial hardship for her (indeed the litigation has created for her a debt some $10,000 more than the amount that was in dispute in the proceedings and thus she would have been in a better financial position now by simply having withdrawn her application and having continued to meet the liability the subject of the dispute) I am satisfied that there would be a corresponding and dramatically more catastrophic consequence for Mr Poole were I to require him to meet some or all of Ms Poole’s costs (even if a justifying circumstance had been established which I am not satisfied it has).
I accept, it having been Mr Poole’s evidence at hearing (prior to Judgment and further costs incurred by him) that any order for costs would be, as it were the “straw that breaks the camel’s back”. It would in all probability drive him into bankruptcy. It would in all probability impact significantly upon his personal relationships and most assuredly upon his capacity to provide for, accommodate and meet the needs of his children, he enjoying a substantial and significant time arrangement with them and thus having their shared care (at least within its broader context).
For all of the above reasons I am satisfied that there is no justifying circumstance for nor justice and equity in departing from the general rule established by section 117(1) of the Act. Accordingly, each party shall pay their own costs and an Order shall be made to that effect.
I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Judge Harman
Associate:
Date: 9 July 2014
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Procedural Fairness
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