POTTS & POTTS
[2013] FMCAfam 161
•31 January 2013
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| POTTS & POTTS | [2013] FMCAfam 161 |
| CHILD SUPPORT – Costs – wife’s application for costs following husband filing a notice of discontinuance – husband ordered to pay wife’s costs. |
| Child Support (Assessment) Act 1989 (Cth) Family Law Act 1975 (Cth), s.117 Magistrates’ Court Act 1989 (Vic), s.131 |
| Penfold v Penfold (1980) 144 CLR 311 Lilley & CSR & Ors (SSAT Appeal) [2010] FMCAfam 378 |
| Applicant: | MR POTTS |
| Respondent: | MS POTTS |
| File Number: | MLC 4600 of 2012 |
| Judgment of: | Bender FM |
| Hearing date: | 31 January 2013 |
| Date of Last Submission: | 31 January 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 31 January 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Bacon |
| Solicitors for the Applicant: | Manby & Scott Lawyers |
| Counsel for the Respondent: | Mr Horn |
| Solicitors for the Respondent: | Victoria Legal Aid |
ORDERS
The applicant husband pay the respondent wife’s costs fixed in the sum of $5,618.00 on or before 31 March 2013.
IT IS NOTED that publication of this judgment under the pseudonym Potts & Potts is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 4600 of 2012
| MR POTTS |
Applicant
And
| MS POTTS |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
Introduction
This matter commenced by the husband filing an Application for
Final Orders seeking a departure application under the
Child Support (Assessment) Act 1989(Cth), and an Application in a Case seeking a stay of the husband’s obligations to pay child support in the State Magistrates’ Court on 9 March 2012.
The matter came before Magistrate Hawkins on 17 May 2012, on which occasion Her Honour dismissed the husband’s Application in a Case and otherwise transferred all matters to the Federal Magistrates Court with an order reserving costs.
The matter came before me on 3 July 2012 in a busy duty list.
On that occasion I heard some initial brief arguments as to the merits of the husband’s case as the wife argued that the substantive application was ill-conceived. Without ruling on the merits of the husband’s application, I listed the matter to this day for final hearing.
The matter also proceeded to a conciliation conference on
20 September 2012 where the merit of the application remained a live issue between the parties.
On 31 October 2012, the husband filed a Notice of Discontinuance in relation to his application. The wife through her solicitors, Victoria Legal Aid, put the husband on notice that they would be pursuing the question of the costs incurred by the wife arising from the discontinued proceedings. The matter remained listed to today in relation to the wife’s application for costs.
The law
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) sets out the circumstances in relation to costs incurred in proceedings in the jurisdiction of this Court. Subsection (1) says that:
Subject to subsection (2)… each party to proceedings under this Act shall bear his or her own costs.
Section 117(2) of the Act provides:
If, in proceedings under this Act, the court is of the opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just
Section 117(2A) of the Act sets out several factors or matters which the Court is to have regard to when considering an application for a costs order under section 117(2) of the Act.
In submissions on behalf of the wife in support of an order that the husband pay her costs in relation to the discontinued proceedings, Counsel for the wife quite properly took the Court through the factors set out under section 117(2A) of the Act that it was argued are relevant to why an order should be made in this matter. These are detailed below.
Section 117(2A)(a) the financial circumstances of each of the parties to the proceedings.
The wife is on a disability pension. She has her own home valued at approximately $300,000.00 which is encumbered by way of a small mortgage. There are some nearly $4,000.00 in arrears of child support.
The husband’s financial statement, sworn in the substantive matter, indicates that he is retired. The husband has a half interest in three unencumbered properties, one of which I understand him to reside in and the other two produce rental income.
At the time of the swearing of his affidavit, the husband had $55,000.00 in a bank account. I accept the evidence from the bar table through his legal representative that the husband now has $41,000.00 in that account. The husband deposes to an income of approximately $240.00 a week which, in my understanding, represents the income from his two rental properties. It is the husband’s evidence that this amount represents the entirety of his income.
Section 117(2A)(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 wife is in receipt of legal aid. It is subject to an equitable charge on her property and I accept that any costs incurred by the wife in relation to these proceedings will ultimately have to be met by her.
Section 117(2A)(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.
It is submitted on behalf of the wife that the husband’s application was
ill-conceived from the outset and that the wife has maintained that position from the commencement of these proceedings. The wife’s views in this regard are clearly set out in correspondence forwarded by the wife’s solicitors to the husband’s solicitors dated 13 April 2012.
Counsel for the wife further submitted that the proceedings should not have been commenced in the State Magistrates’ Court or any Court at all as the husband could have pursued the various applications in relation to the orders sought by him through the appropriate channels of the Child Support Agency. The husband did not do so.
Section 117(2A)(g) such other matters as the Court considers relevant.
Finally, it was submitted on behalf of the wife that as the husband discontinued his application without it proceeding to final hearing, the husband should be responsible for the costs incurred by the wife in responding to his discontinued application.
It is the wife’s submission that in all these circumstances it is appropriate that a costs order be made.
In response to the application by the wife for the husband to pay her costs arising from the discontinued proceedings, Mr Bacon submitted on the husband’s behalf argued that it was neither appropriate nor correct for the wife to argue that the husband’s application was ill-conceived. It was argued on behalf of the husband that the decision by the Court at the mention on 3 July 2012 to list the matter for final hearing confirms that the Court considered that there was merit to the husband’s application and accordingly the costs application on the basis that the husband’s application was ill-conceived cannot be substantiated.
It is further submitted on behalf of the husband that the
High Court in the matter of Penfold v Penfold (1980) 144 CLR 311 indicated that any costs order to be awarded in family law proceedings should only be done so in exceptional circumstances.
I was referred to a decision of Riethmuller FM in the matter of Lilley & CSR & Ors (SSAT Appeal) [2010] FMCAfam 378, where in
paragraph 24 His Honour held:
Litigation in child support seems to me to be in a category that I should have careful regard to before making costs orders. In a civil jurisdiction, if it were a claim against a bank or another citizen, the costs would ordinarily follow the event for such a claim. However, no such presumption arises under s.117 of the Family Law Act. I also note that this litigation is in the context of a group of Australians, being those involved with child support, who often confront quite significant emotional turmoil and difficulty with their involvement with the Child Support Agency.
It is submitted on behalf of the husband that the circumstances of this case are not exceptional. It is argued that the husband was entitled to properly commence these proceedings and it was the fact that the husband was not in a position to fund the case to completion that had driven his decision to discontinue the proceedings.
It is also argued on behalf of the husband that he is not in a financial position to meet any costs orders made by this Court.
Finally, it is submitted on behalf of the husband that in relation to the wife’s costs reserved by the State Magistrates’ Court in relation to the matters that first came before it, this Court does not have the jurisdiction to make any orders for these reserved costs given that the basis upon which that Court makes its costs orders is pursuant to section 131 of the Magistrates’ Court Act 1989 (Vic).
Conclusion
I will start my findings by considering the final submission of the husband’s legal representative that this Court does not have jurisdiction to make an order in relation to the costs reserved by the
State Magistrates’ Court.
This matter came before the State Magistrates’ Court under its capacity to exercise jurisdiction under the Family Law Act1975 and under the Child Support (Assessment) Act1989. The orders the State Court made reserving costs were in accordance with that Court’s powers under those pieces of legislation and not in accordance with its powers under the Magistrates’ Court Act 1989. The State Court transferred all matters, including the question of the payment of reserved costs to this Court for determination.
I am therefore satisfied that this Court has the jurisdiction to make orders for the totality of these proceedings including that part of the proceedings heard in the State Court as the State Court was exercising jurisdiction pursuant to the Family Law Act1975 and the
Child Support (Assessment) Act1989.
In relation to the application that I make an order for the payment of the wife’s costs arising from the discontinued proceedings, I am of the view that the basis for making such an order is the legislative pathway set out under section 117 of the Family Law Act 1975. There is no requirement under section 117 of the Act that this Court find exceptional circumstances before it makes an order that a party pay costs. The basis upon which an order is made for a party to pay the other party costs is clearly set out at section 117(2) of the Act. Section 117(2) provides that if the Court is of the opinion there are circumstances that justify it so doing, the Court may make a costs order having properly considered all the factors set out under subsection (2A) of section 117 of the Act.
In this matter the wife is in receipt of a disability pension and she is in receipt of legal aid. I am satisfied that in those circumstances, the wife is not in a position to meet her own legal costs at this time. Further, whilst the wife is legally aided, a caveat has been placed over her property and she will have to reimburse legal aid if her property sells.
I am also of the view that it is not appropriate that the public purse should be required to meet the wife’s costs if I am satisfied that this is a matter where the husband should pay those costs.
In relation to the husband’s financial circumstances, he currently has in excess of $40,000.00 in his bank account. The husband has three unencumbered properties and otherwise how he is maintaining himself is somewhat uncertain given that on the husband’s own material, for some considerable period of time, his cost of living has greatly exceeded his income and yet he is in receipt of no government assistance or otherwise. Given the extent of the husband’s savings, I am satisfied that he is in a position to meet any costs orders that I should make.
It is submitted by Mr Bacon on behalf of the husband that in listing the matter for final hearing I found that his client’s case had, at least on its face, some merit. In these circumstances, it was argued that the husband cannot be seen to have been wholly unsuccessful in these proceedings.
Mr Bacon and I have differing views as to whether I made a ruling as to the merits of the application brought by the husband when this matter was first listed before the Court on 3 July 2012. I do not agree that in listing the matter for final hearing I made a finding that there was some merit in the husband’s application. However, it is a moot point as the husband has discontinued his application which means there can be no findings as to the merits of the husband’s case or otherwise.
The husband’s application has been hotly contested from the very outset. The husband made a decision to discontinue those proceedings before it proceeded to final hearing. As a result, the wife has incurred considerable legal costs in complying with all orders and directions to properly defend that application.
In all the circumstances, I am satisfied that an order should be made that the husband be responsible for the costs incurred by the wife in having to defend proceedings that the husband discontinued.
In the affidavit sworn on 12 December 2012 by Ms Ford, the wife’s solicitor, a document might I make an observation that is well-prepared and of great assistance to me, seeks the husband pay the wife’s costs in the sum of $5,618.88. The amount sought reflects the costs incurred in the State Magistrates’ Court, the costs up to and including the directions hearing and the costs of this matter proceeding today.
I am satisfied that the amounts sought reflect the scale allowed for those appearances and orders will be made for the husband to pay the wife’s costs in the amount of $5,618.00.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Bender FM
Date: 22 February 2013
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