POYZER & TRITTON

[2017] FamCA 923

FAMILY COURT OF AUSTRALIA

POYZER & TRITTON [2017] FamCA 923

FAMILY LAW – COSTS – pursuant to judgment May 2015

Family Law Act 1975 (Cth) ss 117, 117(2A)

Cachia v Haines (1994) 179 CLR 403
Prantage v Prantage (2013) FLC 93-544

APPLICANT:

Mr Poyzer

RESPONDENT: Ms Tritton

FILE NUMBER: ADC 1873 of 2016

DATE DELIVERED: 15 November 2017

PLACE DELIVERED: Hobart

PLACE HEARD: Hobart

JUDGMENT OF: Benjamin J

HEARING DATE: 20 October 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Pyke QC

SOLICITOR FOR THE APPLICANT: Mellor Olsson

COUNSEL FOR THE RESPONDENT: In person

SOLICITOR FOR THE RESPONDENT:

Orders

1. Ms Tritton (‘the wife’) pay the legal costs and disbursements of Mr Poyzer (‘the husband’) associated with the initiating application filed by the wife on 25 May 2016 and which was determined by final orders made 24 May 2017.

2. Such costs and disbursements be agreed or assessed under the Family Law Rules 2004 (Cth) on the following basis:-

   (a)of and incidental to the proceedings determined by orders made 24 May 2017;

   (b)of and incidental to the costs application;

   (c)to be determined on a party/party basis; and

   (d)to be agreed as between the relevant parties or in the absence of agreement to be assessed in accordance with the Family Law Rules 2004 (Cth); and

   (e)such costs to include any fair and reasonable fees charged by senior counsel appearing for the applicant.

IT IS CERTIFIED

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

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT HOBART

FILE NUMBER: ADC 1873 of 2016

Mr Poyzer

Applicant

And

Ms Tritton

Respondent

REASONS FOR JUDGMENT

INTRODCUTION

1. Ms Tritton (‘the wife’) (‘commenced proceedings against Mr Poyzer (‘the husband’) in May 2016 to set aside substantive property orders made in this Court on 3 August 2010 (‘the substantive orders’). 

2. The wife asserted that the substantive orders ought to be set aside pursuant to s 79A(1)(a) of the Family Law Act 1975 (‘the Act’). That application to set aside the substantive orders was wholly unsuccessful. Reasons were published and orders made on 24 May 2017 dismissing the wife’s application except the question of costs.

3. This is the determination of the husband’s costs application.

4. Following publication of the reasons and the making of orders, the husband filed an application in a case on 20 June 2017 supported by an affidavit of the husband’s solicitor and his financial statement filed the same day.

5. The husband sought that any costs ordered ought to be on an indemnity basis.

6. The wife filed a response on 18 October 2017 opposing any costs orders and relied upon her affidavit filed the same day. 

7. The proceedings were heard before me by video-link between Hobart and Adelaide on 20 October 2017.

8. The husband tendered a retainer agreement between his solicitor and his senior counsel dated 8 June 2016.[1]

   [1] Exhibit E12.

9. The wife relied upon her financial statement.  This document was unfiled, but was tendered in evidence and was sworn 18 October 2017.[2]

   [2] Exhibit E13.

BACKGROUND

1. The wife and the husband are both aged in their sixties.  The husband is a property developer and the wife is in receipt of Centrelink benefits. 

2. These parties commenced a relationship in about 1979, married in 1988 and separated in December 2000.  There are two adult children of their relationship.

3. Following separation proceedings were commenced in the Family Court in about 2001.  The hearing of those proceedings commenced in November 2007 and eventually occupied some 53 or 56 days of hearing between its commencement and the finalisation of evidence in June 2010.  On 3 August 2010 reasons were published and the substantive orders were made by Dawe J in Adelaide.

4. Shortly after the delivery of reasons and the making of the substantive orders the husband lodged an appeal to the Full Court.  That appeal was dismissed about two years later in August 2012.

5. The application to set aside the substantive orders was commenced in May 2016 and was determined by final orders made by this Court on 24 May 2017. 

6. In considering the question of costs, I had regard to the orders made by me and the reasons delivered on 24 May 2017. 

7. There were three bases upon which the wife sought to have the judgment set aside and they are set out in paragraph 3 of my reasons for judgment,[3] in which I said:-

   3.The foundation upon which the wife seeks the set aside the orders and eventual rehearing is as follows:-

   (a)an alleged asset, namely of $446,760 of Poyzer Investments Pty Ltd (‘PI’), had not been taken into account in terms of the reasons set out upon which the substantive orders were based;

   (b)that the true value of the property located at the Medical Centre was not realised because of the husband’s failure to provide full and frank disclosure to a single expert real estate valuer; and

   (c)the husband allegedly admitted that he is the owner of a property at Property GG, despite his denials that such was the case during the property hearing.

   [3] Delivered 24 May 2017.

8. These were serious allegations and the onus was on the wife to establish the factual basis upon which they were made.

9. In relation to the allegation that the husband had a property GG I determined that such claim was not established and as such the wife’s claim must fail. 

10. In relation to the issue of the valuation of $446,760 as an asset in Poyzer Investments Pty Ltd, the Court determined that there was no miscarriage of justice as was asserted by the wife.  As such her application should fail.

11. The final issue was whether the true value of Property GG was not realised because of the husband’s failure to provide full and frank disclosure. The wife’s allegation in that regard was not established and as such that claim failed.

12. The husband was represented by senior counsel throughout the 2017 hearing and in the subsequent costs application.  The wife was unrepresented.  It was put to me that the wife was experienced in litigation, given the history of the proceedings.

13. As the wife had legal representation through most of the earlier hearings days, I do not accept that submission and I have treated the wife as being unrepresented.  I repeat the comments I made at paragraph 105 of the May 2017 reasons which were:-

    The onus applied in terms of the case was a civil onus and rests with the wife.  In coming to this decision I took into account that the wife was unrepresented and endeavoured to ensure that she was enabled to present her case and the evidence upon which it was based.

14. In July 2016 the solicitor for the husband wrote to the wife asserting that her claim would fail and if the claim failed they would seek costs on an indemnity basis.[4]  I accept that the husband incurred costs in this recent application totalling $71,329.47 and that added to that would be the cost of the costs application.

    [4] Affidavit Ms GJ - Annexure JG1.

COSTS APPLICATIONS AND THE LAW UNDER THE FAMILY LAW ACT 1975 (Cth)

1. This costs application was considered and determined under the provisions of s 117 of the Act.

2. There are two areas to which I need to address the law.  The first is in relation to whether a costs order ought to be made at all, and the second is in relation to whether it ought to be on an indemnity basis.

3. The power to make costs orders are set out in s 117 of the Act, which relevantly provides:-

   (1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.

   (2)If, in proceedings under this Act, the court is of 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.

   (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.

4. In Penfold v Penfold (1980) FLC 90-800 the majority of the High Court expressed the general rule that s 117(1) is not paramount to s 117(2) of the Act. A court must make a finding that there are circumstances justifying the making of a costs order before proceeding to make the orders.

5. There is no guidance in the legislation between the two sub sections nor any additional special onus on the applicant for an order as to costs.

6. It is necessary to consider the facts in the light of the provisions set out in s 117(2A) of the Act. There is nowhere in s 117(2A) that says any one factor provides a hierarchy in relation to the other factors. One factor may be enough. As such the Court has a broad discretion.

7. It is of value to repeat what I have said in earlier judgments that the Court needs to consider the difference between the various types of unquantified costs orders available under the Act. There are many variations of types of costs orders, but they generally fall into three types:-

   a)Party and party costs - which are calculated having regard to the schedule of costs under the Family Law Rules 2004 (Cth);

   b)Lawyer and client costs – these are essentially indemnity costs, with the onus upon the costs applicant to satisfy the taxing authority that such costs are on balance fair and reasonable; and

   c)Indemnity costs  - these are essentially lawyer and client costs, with the onus upon the costs respondent to satisfy the taxing authority that such costs are on balance not fair and reasonable, that is the reversal of the onus of proof. 

8. It should be borne in mind that costs orders are restorative and not punitive, and costs cannot exceed the amount actually incurred.  They are an indemnity or partial indemnity.  In Cachia v Hanes (1994) 179 CLR 403 the plurality of the Court, comprising Mason CJ, Brennan, Deane, Dawson and McHugh JJ observed:- [5]

   Whilst the restricted basis upon which party and party costs are awarded may be debated as a matter of policy, it is to be borne in mind that party and party costs have never been regarded as a total indemnity to a successful litigant for costs incurred, let alone total recompense for work done and time lost. Putting to one side the question posed by the relatively rare exception of a solicitor acting in person, there is no inequality involved: all litigants are treated in the same manner. And if only litigants in person were recompensed for lost time and trouble, there would be real inequality between litigants in person and litigants who were represented, many of whom would have suffered considerable loss of time and trouble in addition to incurring professional costs. The partial indemnity which the law allows represents a compromise between the absence of any provision for costs (which prevails as a matter of policy in some jurisdictions) and full recompense. In these days of burgeoning costs, the risk of which is a real disincentive to litigation, the proper compromise is a matter of both difficulty and concern.

   [5] At pages 414 and 415.

9. I accept that the Court has a wide discretion with regard to costs. 

10. There are two substantial considerations in the court determining the question of costs, which is a discretionary determination.  First in this case is the financial circumstances of each of the parties. 

11. The husband has filed a financial statement in which he shows that he has assets totalling about $1,500,000 and income of just under $5,000 per week. 

12. The wife asserted that the husband had not made full and frank disclosure of his finances nor had he made full and frank disclosure of his income.  There was no cross-examination in relation to the financial circumstances of the husband, however, I have accepted that his income and assets are overwhelmingly greater than that of the wife.

13. The wife’s financial statement shows that she is in receipt of a Centrelink benefit of about $254 per week.  She does not have the responsibility to support any other person although one of her children apparently lives with her.  That child is currently overseas.

14. The wife owns a property in the Adelaide area which she asserts has a value of some $750,000, a motor vehicle which she says has a value of $4,000, and no superannuation.  She has credit card debts of about $40,000.

15. The wife has little capacity to fund a costs order except by way of advance, if that is at all possible, against the home in which she lives.

16. The other significant factor in this case relates to that set out under s 117(2A)(e) of the Act in that the wife was wholly unsuccessful in the proceedings. I accept the submissions by senior counsel for the husband that the proceedings were doomed to fail.

17. Those proceedings were unnecessary.  The issues raised by the wife ought to have been raised before the trial judge over the lengthy period of hearing or could have been dealt with by way of order under the Slip Rule, if that was appropriate, or by way of appeal to the Full Court.

18. On the evidence presented to me in the hearing in early 2017 there was little upon which the assertions propounded by the wife could be based. 

19. That proceeding was not the first property hearing; it was an application to set the substantive orders aside in circumstances that if properly advised these proceedings by the wife should not have been commenced.  Notwithstanding the wife’ impecuniosity and exercising that wide discretion I have in relation to Family Law proceedings, I have determined that there ought to be a costs order.

20. The next question is whether it ought to be on an indemnity basis.

21. In Prantage v Prantage (2013) FLC 93-544 the Full Court of the Family Court said that there needed be exceptional circumstances to justify an order for indemnity costs. Thackray and Ryan JJ observed:-

    100.His Honour’s statement, at [50], that Sheppard J’s emphasis in Colgate-Palmolive was “on parties who must have or should have known their approach was simply imprudent” does not, in our view, accurately reflect the law as explained in Colgate-Palmolive and other cases dealing with indemnity costs. 

    101.It is true, as the trial Judge noted, that Sheppard J included in the list of situations that might give rise to an order for indemnity costs “the imprudent refusal of an offer to compromise”.  However, in our view, imprudence by a party in “their approach” is not sufficient to enliven the power to award indemnity costs. 

    102.It is important in this context to recognise, as Lindgren J did in NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77 at [56], that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation”.

    103.Lindgren J went on to point out (original emphasis): 

    Even in a proved case of fraud, for example, in my opinion the presumption is that a costs order against the fraudulent party will be on the party and party basis.  The conduct of a party that is relevant to the issue of indemnity costs is the party’s conduct as litigant.  But, as noted below, the knowledge that a party has, including knowledge of his or her past conduct, may be relevant to an assessment of his or her conduct as litigant.

22. As to the claim for indemnity costs, I have considered the submissions of the parties.  I am not satisfied in this case that there should be an order for indemnity costs or for practitioner/client costs in favour of the husband.

23. I will order costs on a party/party basis.  However, I will provide in the orders that the fees of senior counsel be included provided that the husband is able to convince the wife or a Registrar assessing such costs that the level of fees of the senior counsel is fair and reasonable in all of the circumstances.

I certify that the preceding forty one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on         15 November 2017.

Associate:

Date:              15 November 2017