PRIOR & PRIOR
[2015] FCCA 1425
•16 June 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PRIOR & PRIOR | [2015] FCCA 1425 |
| Catchwords: FAMILY LAW – Application to vary interim award of spousal maintenance recently made – award made on 16 February 2015 – application in a case filed to reduce award on 13 March 2015 – matters to be considered – has there been a change of circumstances sufficient to justify a diminution in the spousal maintenance order – matters to be considered – costs. |
| Legislation: Family Law Act 1975 (Cth), ss.72, 74, 75, 83, 117 Federal Circuit Court Rules 2001 |
| Redman v Redman (1987) FLC 91-805 Bevan & Bevan (1995) FLC 92-600 Kohan & Kohan (1993) FLC 92-340 Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 |
| Applicant: | MS PRIOR |
| Respondent: | MR PRIOR |
| File Number: | DNC 547 of 2014 |
| Judgment of: | Judge Brown |
| Hearing date: | 18 May 2015 |
| Date of Last Submission: | 18 May 2015 |
| Delivered at: | Adelaide |
| Delivered on: | 16 June 2015 |
REPRESENTATION
| Counsel for the Applicant: | Ms Farmer |
| Solicitors for the Applicant: | Withnalls Lawyers |
| Counsel for the Respondent: | Ms Bowen |
| Solicitors for the Respondent: | Bowen Lawyers |
ORDERS
The application filed on 13 March 2015 is dismissed.
The husband pay the wife’s costs fixed in an amount of $1,000.00.
IT IS NOTED that publication of this judgment under the pseudonym Prior & Prior is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DARWIN |
DNC 547 of 2014
| MS PRIOR |
Applicant
And
| MR PRIOR |
Respondent
REASONS FOR JUDGMENT
Introduction
On 11 November 2014, Ms Prior “the wife” commenced proceedings in this court seeking final orders for the settlement of matrimonial property issues with Mr Prior “the husband”. Concurrently with this application, the wife sought the payment of periodic spousal maintenance, both on a final and interim basis, in the sum of $650.00 per week.
The husband responded to this application on 5 February 2015. He sought the dismissal of the wife’s application for spousal maintenance. He also raised issues to do with the parenting of the parties’ three children, X born (omitted) 2002; Y born (omitted) 2004; and Z born (omitted) 2006.
On 16 February 2015, approximately three months ago, Judge Harland made an order, on an interim basis, that the husband pay the wife spousal maintenance in the sum of $500.00 per week. This order was made following submissions from each of the parties’ counsel and a consideration of affidavit material, including sworn statements of financial circumstances, filed on their respective behalves.
Following this hearing, the parties were directed to attend a conciliation conference on 29 April 2015, to see if this would assist them to reach a resolution of the property issues in dispute between them. It did not. The case was adjourned to 18 May 2015 for further directions.
In the meantime, the husband has filed an application seeking the dismissal of the earlier interim spousal maintenance order. He did so on 13 March 2015 and has subsequently amended his application. He now seeks to reduce the amount of the order to $100.00 per week. The wife seeks the dismissal of the application with costs.
Judge Harland was not able to hear the application. It was listed before me in Darwin. The proceedings are not in the nature of a review or an appeal of the decision of Judge Harland. I have no authority in this regard.
Rather these proceedings are directed to ascertain whether there has been a change of circumstances, since Judge Harland’s order was made, of sufficient moment to justify a change in the order. These reasons for judgment are directed towards the resolution of this interim spousal maintenance issue. The proceedings have generated some heat.
Section 83 of the Family Law Act 1975 deals with the discharge, suspension, revival or variation of a spousal maintenance order. In particular, section 83(1) provides that a court with jurisdiction to modify an order can do so in any of the following ways:
“…
(c) discharge the order if there is any just cause for so doing;
(d) suspend its operation wholly or in part and either until further order or until a fixed time or the happening of some future event;
(e) revive wholly or in part an order suspended under paragraph (d); or
(f) subject to subsection (2), vary the order so as to increase or decrease any amount ordered to be paid or in any other manner.”
Accordingly, the amount of spousal maintenance, specified in an order, can only be increased or decreased on the grounds specified in section 83(2) of the Act. The court must be satisfied that one of the following grounds exists:
(2) The court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:
(a) that, since the order was made or last varied:
(i) the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);
(ii) the circumstances of the person liable to make payments under the order have so changed; or
(iii) in the case of an order that operates in favour of, or is binding on, a legal personal representative—the circumstances of the estate are such;
as to justify its so doing;
(b) that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;
(ba) in a case where the order was made by consent—that the amount ordered to be paid is not proper or adequate;
(c) that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.”
Background
The wife is forty-three years of age and employed as an (occupation omitted) by a (employer omitted) company. She works twenty-five to thirty-five hours per week and according to her statement of financial circumstances[1] earns approximately $750.00 per week or around $39,000.00 per annum.
[1] See wife’s statement of financial circumstances filed 11 November 2014
The husband is fifty years of age. He describes himself as a (occupation omitted) and business owner. His recurrent level of income is controversial. He is however self-employed.
The controversy surrounding Mr Prior’s income is most eloquently expressed by the fact that he has filed two financial statements. The first in response to the wife’s initial application for spousal maintenance;[2] the second in support of his application to reduce the award of spousal maintenance made by Judge Harland.[3]
[2] See husband’s statement of financial circumstances filed 5 February 2015
[3] See husband’s statement of financial circumstances handed up in court on 18 May 2015
Mr Prior has been represented by the same solicitor throughout these proceedings. She apparently assisted Mr Prior in the preparation of each of his financial statements. The two financial statements are separated by a period of around ninety eight days.
It is the submission of Ms Farmer, counsel for the wife, that the only rational explanation for the husband’s application is that he is aggrieved by the order of Judge Harland and has concocted his financial circumstances to escape his proper liability to pay Ms Prior spousal maintenance.
In the first financial statement, Mr Prior asserts that his average weekly income is $2,858.00 and he owns property to a value of approximately $2.5million. This property is subject to various liabilities in an amount of $612,000.00.
In the second financial statement, Mr Prior asserts that his average weekly income has fallen to $499.00 and the value of his property to $2.1million, which is subject to liabilities of $444,000.00.
The nub of this case concerns why there has apparently been such a dramatic change in Mr Prior’s financial circumstances. The wife does not accept that there has been such a change and asserts that the second statement of financial circumstances, filed by Mr Prior, is disingenuous and self-serving.
Mr Prior confirms that he is self-employed and names his business as (business omitted). It is common ground between the parties that Mr Prior has derived his income by (business omitted) in the rural areas outside of Darwin and (business omitted). It is his case that this employment is highly seasonal in nature, particularly in regards to the tropical wet season, when the call for his services is much reduced.
The parties began to live together in 1997; married on (omitted) 2000; and finally separated on 30 August 2014. Arrangements for the care of the parties’ three children are also controversial. Currently, they live mainly with the wife at the parties’ former matrimonial home, situated at Property M. The children spend time with their father on alternate weekends and for half each school holiday period.
The husband has been assessed to pay child support, in an amount of $1,760.75 per month, based on a 2014 taxable income of $139,092. 00. The wife’s income, for child support purposes, is $41,154.00.
The husband aspires to a shared care regime for the children, which the wife opposes. The controversy between the parties, in this regard, is intensified by the wife’s desire to relocate, with the children, to Queensland. The court has ordered that a family report be prepared to assist it in the resolution of these various issues.
The husband is a (occupation omitted) by occupation. He commenced business as a (occupation omitted) in 1996, initially from rented premises in (omitted). He transferred this business to premises at Property B. The parties own these premises, which is where the parties previously had their marital home. The property was purchased in 1994 or thereabouts for $150,000.00. The premises at Property B comprise a rentable house; a rentable demountable; and a rentable caravan.
The parties purchased land at Property M in 2004. They began to build a home, on this land, in 2009 and it became their former matrimonial home in 2010, when they moved from Property B. At separation, Mr Prior left the Property M property and moved to a shed at Property B. Ms Prior and the children continued to live at the Property M property.
It is Mr Prior’s evidence that he is in the process of converting his shed, at Property B, into a more comfortable residence for himself. In the meantime, the former marital home, at Property B has been rented out ($500 per week); as has the demountable on the property ($250 per week); and the caravan ($120 per week). The property has been valued overall at $700,000.00.
The Property M property has been valued at approximately $950,000.00. The land was purchased for the modest price of $68,450.00. It is Mr Prior’s evidence that he had performed significant work in erecting the dwelling on this property.
The wife is the sole proprietor of a property located at Property S. She purchased this property as a residence for her parents. The property collects a rental of $150.00 per week but is subject to a mortgage repayment of $300.00 per week. The wife values the property at $350,000.00.
In addition, the parties previously owned an investment unit in Property A. The property was purchased for $370,000.00 in 2009/2010. It has recently been sold at a loss. The purchase was financed through a loan from the (omitted) Bank and a line of credit with the (omitted). Approximately $100,000.00 remains outstanding.
Finally, the parties purchased two adjoining lots, of twenty acres respectively, at Property F. One lot contains a house, which has previously been rented for $450.00 per week. However, this property has been placed for sale and has not been rented since 26 March 2015.
It appears to be the case that previously rental income received from the Property A unit, the Property F properties and Property B were paid into a (omitted) Bank line of credit facility, which was secured against the parties’ various items of real estate. Mr Prior’s first financial statement indicates that the weekly sum received, by way of rental income, was $1,680.00 per week.
In his second financial statement, his rental income is reduced to $390.00 per week, being rent for the demountable at Property B and the caravan located at the same premises. It is asserted that the tenant in respect of the house, at these premises, has given notice effective from 16 May 2015.
In his first financial statement, Mr Prior calculated the weekly mortgage payments, in respect of the various properties owned by him and the wife, to be $1,253.00. In his second financial statement, this has reduced to $1,216.00. It is his evidence that he remains liable for $304.00, in respect of the shortfall following the Property A unit.
Apart from her own personal liability in respect of the Property S property, the wife does not pay any of the mortgage payments due in respect of the parties’ other properties. It is Mr Prior’s evidence that the mortgage on Property M is $208.00 per week. This payment is not offset by any rental income, unlike the Property B property.
It is my impression that the parties are somewhat overstretched financially and, prior to their separation, relied on their various real estate interests being fully rented out. It is also my impression that there is and was a lack of clarity concerning the income derived by Mr Prior from his legitimate businesses.
With the realisation of some of these properties, these financial pressures have intensified, rather than diminished, as liability remains in respect of Property A and not all of the remaining properties are fully leased. I do not currently have access to evidence, which indicates definitively what are the prospects of the house at Property B being re-rented and how quickly the Property F properties are likely to take to sell.
There is one further issue of some complexity concerning the parties. In early 2013, the husband was charged in respect of matters relating to the supply or trafficking of marijuana. I have not been provided with any specific details in respect of these charges. However, the criminal proceedings are apparently now concluded, with conditional release of the husband.
However, the Property B and Property M properties were apparently implicated in the criminal enterprises concerned and were therefore potentially liable for forfeiture to the Northern Territory Crown.
The husband borrowed $450,000.00 to avoid the forfeiture of the Property B property, the Crown agreeing not to pursue the Property M property, because of the wife’s ownership of it and the Crown’s apparent view that she was not involved in the criminal enterprise.
The wife asserts that, prior to the parties’ separation and for a number of months afterwards, the husband paid her the sum of $1,000.00 per week in order to support her and the children.
It is the wife’s case that she struggled to make ends meet on this sum, particularly as she had a significant weekly fuel bill as a consequence of her residence in the rural area of Darwin and need to travel for both her employment and the needs of the children.
On 3 November 2014, the wife applied for child support. This caused the husband to withdraw the weekly payment of $1,000.00 and apparently precipitated the wife’s application to the court. It appears to be the position of both the husband and the wife that the other is motivated by feelings of petty bastardry against the other.
The husband acknowledges that he agreed to pay the wife $1,000.00 per week but asserts that this included a fee for her to do the books of his two businesses, which he asserts that she did negligently, if at all. Mr Prior confirms that he was briefly incarcerated prior to obtaining bail, in March/April of 2014 and again in September/October of 2014, prior to his conditional release from custody. It is his position that, during these periods, the wife withdrew moneys from his bank account, without authorisation.
It is also his case that the wife was fully aware of his involvement with marijuana cultivation and acquiesced in his criminal enterprises. It is his case that financial gains associated with this criminality financed much of the parties’ lifestyle during their relationship. With his conviction, by necessary implication, it is his position that this stream of income has ceased.
In his affidavit, filed on 5 February 2015, shortly prior to Judge Harland making the interim order for spousal maintenance, Mr Prior deposed that his recurrent weekly expenses significantly exceeded his recurrent level of income. It was also his case, at this stage, that he had only had about three day’s work, since mid-December of 2014 and had not been able to (business omitted).
In this context, he deposed as follows:
“Since separation, I have attempted to finish work on the extension to the shed at Property B property. I have used funds from the (omitted business) business account to purchase various building materials, and am providing my own labour to do the work. I am yet to finish the kitchen, shelves, wardrobes/clothes cupboards, and a partition to separate the bedroom into two separate rooms.”[4]
[4] See husband’s affidavit filed 5 February 2015 at page 14
He further deposed that he had approximately $9,000.00 in a bank account, which was earmarked to pay his 2013/2014 taxation liability of $8,800.00. $13,290.00 in the (omitted business) bank account, which represented deposits for future (business omitted) and $1,482.87 in the bank account relating to rental receipts and mortgage instalments.
The decision of Judge Harland
Judge Harland delivered ex tempore reasons, following the interim maintenance hearing on 16 February 2015. At the request of the husband, these reasons were subsequently transcribed and I have had access to them.
Judge Harland found that the parties split the income derived from the (omitted) businesses, between them, during their marriage, for tax purposes. On this basis, Judge Harland found that Mr Prior’s initial financial statement was not accurate, as it did not reflect that the income splitting had ceased.
In addition, Her Honour found that Mr Prior’s taxable income, for the year ending 30 June 2014, was not “in any way reflective of his actual income”. This was, at least in part, due to the fact that he “ran several personal expenses through the business”. These benefits included fuel and electricity, which benefits the wife was no longer able to access.
Judge Harland found that the husband’s documents were “inconsistent with one another”. As such, Her Honour found that the husband was attempting to paint a financial picture, of his circumstances, which was based on inaccurate information and was therefore unreliable.
In the now published reasons for judgment, Judge Harland found as follows:
“The wife is not making excessive claims with respect to most of her expenses. Certainly, I cannot be satisfied that the husband does not have capacity to pay maintenance on an ongoing basis, given his intermingling of personal and business expenses in the business accounts and him having access to those business accounts to the exclusion of the wife. The husband had been paying the wife $1,000 a week up until November 2014. This amount was for the benefit of the children as well as the wife. The husband has made some ad hoc payments to the wife, and the wife accessed $3,000 from a joint account.
The husband has not provided a clear picture of his financial circumstances as a party is obliged to do in any financial case. It is particularly important when defending a maintenance application. The husband is legally represented. The husband’s lawyer submitted that I could not base the husband’s income on the last financial year because of the downturn of the business during the wet season. The difficulty with this submission is that the husband has not provided the court with the necessary evidence to support this. She had to concede that the husband’s taxable income, as referred to in his financial statement, should be doubled because he is no longer income splitting with his wife. It was also apparent from the submissions from his lawyer that she was confusing the issue of maintenance and child support. I repeatedly had to direct her back to the issue of maintenance.”
Judge Harland was particularly critical of the husband’s evidence regarding the income and expenditure situation regarding the (omitted) business. This evidence seems to have been derived from the husband’s application to seek an administrative departure from the child support assessment applicable to him. In his application, the husband indicated that he had a fuel bill of $400.00 per week.
In respect of this, Judge Harland says as follows:
“… The husband says the business is really quiet because of the wet season, yet he claims he spends $400 per week in fuel expenses and has $10,000 in deposits for (business omitted). I accept this is money that he cannot access but it is indicative of work coming in for the business.”
In all these circumstances, Judge Harland considered that the husband had the capacity to pay the wife spousal maintenance in the sum of $500.00 per week. This was notwithstanding the fact that Mr Prior had also been assessed to pay a not insignificant amount of child support in addition. This was against a background of Judge Harland also making the finding that Ms Prior was not able to support herself reasonably on her recurrent income of $750.00 per week, given the level of her essential recurrent expenditure.
The current application
The husband clearly wishes to revisit the hearing of 16 February 2015 and re-argue the case. In so doing, he has filed further affidavit material, which seems to be an attempt to remedy the omissions noted by Judge Harland in his original material.
In his affidavit filed on 13 March 2015, the husband deposes that between 1 January 2015 and 7 March 2015, he received approximately $2,000.00 from the (omitted) business but expended a sum of $16,700.00 during the same period.
This expenditure is said to include approximately $5,000.00 in legal fees and $4,800.00 in child support. These figures are supported by a profit and loss statement prepared by his bookkeeper.
In the same period, the husband asserts that he received $9,268.19 in income from the (omitted) business but expended a sum of $9,418.70 in the same period. Again, this assertion of fact is supported by a profit and loss statement compiled by his bookkeeper.
I find this document perplexing. It ascribes the husband as having incurred accounting fees of $2,390.00; insurance charges of $2,372.00; and plant and equipment expenses of $1,560.00. No other explanation is given in respect of these various expenses.
On 19 February 2015, the Australian Taxation Office issued Mr Prior with an assessment, for the tax year ending 30 June 2014, in an amount of $8,844.45 based on a taxable income of just over $54,000.00. These figures are supported by an independent documentary source. They do cause me to question whether the husband has the capacity to pay child support of $625.00; spousal maintenance of $500.00; and the mortgage on the Property B and Property M properties. That is however not the end of the matter.
However, much of the husband’s financial affairs remain opaque to me, as they appear to have done to Judge Harland, who does not seem to have been convinced that Mr Prior was entirely candid with either the court or Ms Prior.
I find it impossible to ascertain what is the husband’s exact level of income. The documents prepared by his bookkeeper are not helpful in this regard. In addition, I note that Judge Harland considered the husband’s submission that his business had turned down in the Wet Season and impliedly rejected it.
The wife has not filed any further affidavit evidence. Her counsel, Ms Farmer submits that the husband has not established any change of circumstances sufficient to justify a change in the order of 16 February 2015.
Conclusions
I find this a troubling application. I am not authorised to review the determination of Judge Harland. I am not sitting as a court of appeal on her decision. If the husband is aggrieved in respect of the decision, he has the option of an appeal to the Full Court of the Family Court.
In addition, the order of Judge Harland is an interim order, which was intended to remain in effect, for a finite period of time, until the finalisation of the property proceedings between the parties. As such, the order for spousal maintenance will be subject to finalisation at some stage in the future.
In this regard, the comments of the Full Court of the Family Court in Redman v Redman[5] regarding the procedural and evidentiary requirements which attach to interim spousal maintenance proceedings appear apposite. The Court said as follows:
“… the very fact that the order is limited in time imports certain different considerations. One of these is that such an order is intended to be reconsidered, quite apart from a variation under section 83. … the most common purpose of an interim order is to make provision for the spouse and children pending the determination of the property settlement. … Another consequence is that on an application for interim maintenance the court conducts not as final or exhaustive a hearing as would be the case if one were hearing the matter finally. … The evidence need not be so extensive and the findings not so precise. Having regard to those factors, and the general injunction of section 97(3), the court should in such matters have a greater degree of flexibility than it possesses in applications for maintenance which are intended to last for an indefinite period and can only be varied under section 83.”
[5] Redman v Redman (1987) FLC 91-805 at 76,081
Neither the hearing before Judge Harland nor the one before me was extensive in nature. Necessarily, it was difficult to ascertain the precise level of the husband’s income. This exercise was not assisted by the very different figures provided in his two financial statements.
The regime to be followed in respect of an application for spousal maintenance is set out in sections 74 & 72 of the Family Law Act 1975. In particular, pursuant to section 74 the court may make such order as it considers “proper” for the provision of maintenance to the wife in accordance with the provisions of Part VIII of the Act.
Section 72 deals with the right of a spouse to maintenance and reads as follows:
72 (1) A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
Given the factual basis of this case, the relevant matters referred to in sub-s.75(2) are likely to be the following:
a)the age and state of health of each of the parties;
b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
d)commitments of each of the parties that are necessary to enable the party to support:
i)himself or herself;
e) the responsibility of either party to support another person;
g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration.
The Full Court of the Family Court in Bevan & Bevan[6] determined that the approach to be taken in respect of applications for spousal maintenance involved a four step process as follows:
·a threshold finding under s.72;
·consideration of s.74 and s.75(2);
·no fettering principle that a pre-separation standard of living must automatically be awarded where the respondent’s means permit;
·the discretion exercised in accordance with the provisions of s.74 with “reasonableness in the circumstances” as the guiding principle.
[6] Bevan & Bevan (1995) FLC 92-600 at 81,981-2
I set out these principles, not because I am re-determining the application earlier decided by Judge Harland, but rather to put her decision into context. Her Honour was satisfied that it was proper to make an order for spousal maintenance, in Ms Prior’s favour, because the evidence indicated that she was unable to support herself adequately following the parties’ separation.
Judge Harland reached this conclusion on the basis of her finding regarding Ms Prior’s income, which on any view is a modest one and one on which there are many calls, including her significant fuel costs. This evidence remains unchanged and unchallenged before me.
Judge Harland also found that it was reasonable for an award to be made against Mr Prior because he retained control of the vast majority of the parties’ not inconsiderable real estate portfolio and the two businesses which had previously been the main staple of the family’s income. Again, this remained the situation when the matter was re-listed before me. Finally, like Judge Harland, I remain uncertain as to what is the husband’s precise level of income.
The precipitating factor for these proceedings was the wife’s application for child support and the husband’s decision to reduce the amount of monies he voluntarily paid to the wife. Again, this is not a situation which has arisen post 16 February 2015.
The essential pre-conditions to establish a change to an existing spousal maintenance order are set out in section 83. To either increase or decrease such an order, there must either be a change in the circumstances of the person liable to make the payment concerned or some material fact was withheld.
The husband was represented at the first hearing and filed what ostensibly appears to be a comprehensive statement of his financial circumstances. If any material fact was withheld from the court, at the first hearing, it was by him alone, not the wife. Accordingly the present case turn on whether Mr Prior has demonstrated a change in his circumstances sufficient to justify a decrease in the award made in Ms Prior’s favour.
As was the case before Judge Harland, Mr Prior continues to control the vast majority of the marital estate, particular the Property B property, with its potential to be rented out. In addition, he continues to operate the two legitimate businesses, which have ostensibly been the family’s main source of income over many years. Accordingly, there is no change of circumstance in these matters.
The only change of circumstances is that Mr Prior has filed a different statement of financial circumstances. However, as was the case before Judge Harland, he continues to maintain that he is suffering financial hardship due to the downturn in his business occasioned by the Wet Season.
It is not, in my view, in the interests of the administration of justice that there be a repeated process of adjudication of the same issue at the same level of the judicial hierarchy. This principle pertains just as much to interim applications as to final ones. Litigants should not easily be permitted to bring applications to revisit interim orders recently made or to seek that a different judicial officer exercise the same discretion, earlier utilised, in a different manner.
This is the rationale of section 83. It is neither in the interest of justice nor of the community generally that there be repeated interim applications in respect of the same issue. For that reason, Mr Prior must demonstrate some material change of circumstances before the order of February can be changed. In my view he has not done so.
In addition, the order concerned is provisional in nature. It will operate until either the parties resolve the issues between them consensually or there is a final hearing of those issues and the court resolves them. Such a final hearing is likely to occur in the foreseeable future and will encompass an exhaustive hearing of all areas of controversy. As such, any unfairness arising from the interim maintenance order, which arises with more clarity, at that stage, may potentially be remedied, in any final order made.
In my view, the fact remains, as it did in February of 2015, that Ms Prior is in straitened financial circumstances. Mr Prior is also likely to have suffered a reduction in his standard of living as a consequence of the parties’ separation – two households cannot live as cheaply as one. However, it seems to me that he has greater financial resources than does the wife.
For all these reasons, I have come to the conclusion that the application should be dismissed. The wife seeks her costs calculated in the sum of $2,200.00. This is said to be costs calculated on an indemnity basis.
The normal rule in family law proceedings is that each party should bear his or her own costs. However the court has the authority to make a cost order if it considers that there are circumstances which justify such order and it is just to do so.
I agree that as the husband has been totally unsuccessful in his application to revisit the earlier made spousal maintenance order, he should may the wife’s costs [see Family Law Act at section 117(2A)(e)].
The court’s discretion to make an order of costs is a wide one but it is one which must be exercised carefully and judicially. Orders for indemnity costs are extraordinary or exceptional.
In Kohan & Kohan[7] the Full Court of the Family Court characterised an order for indemnity costs as “being a very great departure from the normal standard.” In the case the Full Court said “the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind.”
[7] See Kohan & Kohan (1993) FLC 92-340 at 79,614
In Colgate-Palmolive v Cussons Pty Ltd[8] it was held that indemnity costs are not commonly ordered and will only be ordered if the Court is satisfied that there is “some special or unusual feature of the case to justify the Court in departing from the ordinary practice” of ordering the costs be paid on a party and party basis.
[8] See Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
There is no closed category of cases in which indemnity costs might appropriately be ordered, but in Colgate Palmolive v Cussons Pty Ltd, the Court said that the kinds of situation in which indemnity costs might be considered were where a litigant had:
·commenced or continued an action knowing it to have no chance of success;
·made false or irrelevant allegations of fraud;
·made groundless allegations which prolong a case; and
·imprudently refused an offer to compromise.
I consider that the current application was, to some extent, misconceived. However, I do not consider it appropriate to make an award of costs on an indemnity basis.
The Court has a wide discretion as to the calculation of costs. Pursuant to Rule 21.02 (2) of the Federal Circuit Court Rules 2001:
“In making an order for costs in a proceeding the Court may:
(a) set the amount of costs; or
(b) set the method by which the costs be calculated; or
(c)refer the costs for taxation under order 62 of the Federal Court Rules or under order 38 of the Family Law Rules; or
(d)set a time for payment of costs which may be before the proceedings is concluded.”
However, pursuant to Rule 21.10:
“Unless the Court otherwise orders a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
(a) costs in accordance to schedule 1 and
(b) disbursements properly incurred.”
The amount allowed for a discrete interim or summary hearing is $1,706.00 plus an appropriate daily hearing fee. The hearing before me on 18 May 2015 occurred on the first mention of the husband’s application. The wife elected not to file any further affidavit material. The hearing was a brief one. In these circumstances, I assess the appropriate award of costs to be $1,000.00.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of Judge Brown
Associate:
Date: 16 June 2015
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