Proust and Croce (No 3)

[2015] FamCA 696

FAMILY COURT OF AUSTRALIA

PROUST & CROCE (NO 3) [2015] FamCA 696

FAMILY LAW – COSTS – application for parenting costs – where the husband did not participate in the proceedings – where there is a comprehensive schedule of costs – where the concept of an order being made by default is not considered – where the unusual nature of an order for costs in a parenting case is considered – where 60 percent of the wife’s costs could have been avoided.

FAMILY LAW – COSTS – application for financial costs – where the wife has made significant effort to resolve the outstanding issues on behalf of the parties – where there is an offer for settlement – where the husband is in opposition to the wife’s efforts to achieve a resolution – where a significant proportion of the fees incurred were unnecessary and as a result of the husband’s non-compliance – where there is consideration of section 117 of the Family Law Act 1975 (Cth) – where it is ordered that the husband pay costs.

Family Law Act 1975 (Cth) – s 117(1), s 117(2), (2A).

Family Law Rules 2004 – Schedule 3

Brown & Brown (1988) FLC 92-822
Penfold v Penfold (1980) FLC 90-800

APPLICANT: Ms Proust

RESPONDENT: Mr Croce

FILE NUMBER: MLC 6005 of 2012

DATE DELIVERED: 21 August 2015

PLACE DELIVERED: Adelaide

PLACE HEARD: Melbourne

JUDGMENT OF: Berman J

HEARING DATE: 13 August 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Glass

SOLICITOR FOR THE APPLICANT: Glezer Lanteri & Associates

COUNSEL FOR THE RESPONDENT: Litigant in Person

SOLICITOR FOR THE RESPONDENT:

UPON NOTING that pursuant to paragraph 1 (d) of the orders made 13 August 2015

(“the order”) there remains the sum of $20,000 held on trust pending the

determination of the wife’s applications for costs.

Orders

1. That from the sum of $20,000 held on trust pursuant to paragraph 1 (d) of the said order, the sum of ELEVEN THOUSAND ONE HUNDRED AND FIFTY FOUR DOLLARS ($11,154) shall be paid to the trust account of Glezer Lanteri and Associates for and on behalf of the wife.

2. That following the transfer of funds as provided in paragraph (1) hereof, the balance of funds held in trust pursuant to paragraph 1(d) of the said order shall be paid to the husband.

3. That within 14 days of the date of this order the wife do either deliver up to the husband or make available to him all documents held by her that relate personally to the husband or to any entity in which he has control, the major shareholding, or is the majority unit holder.

4. That all proceedings are removed from the Pending List of Cases.

5. That the proceedings are certified fit for counsel.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Proust & Croce (No 3) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: MLC 6005  of 2012

Ms Proust

Applicant

And

Mr Croce

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. On 18 May 2015 I heard and determined the orders sought by Ms Proust (“the wife”) as set out in the Third Further Amended Initiating Application filed 2 April 2015.

2. The orders made and the reasons delivered that day reflect that the Second Amended Response filed by Mr Croce (“the husband”) was struck out and the proceedings were heard on an undefended basis.

3. The judgment reflects that at the conclusion of the orders made in respect of parenting issues, the wife’s counsel applied for the wife’s costs to be paid by the husband as and from 22 May 2015.

4. Given the absence of the husband, I considered that he would not necessarily have contemplated that an application for costs would be made. It was reasonable to assume that the husband may well have determined that he would not wish to be heard on the parenting orders as sought by the wife but to be given an opportunity to be heard in respect of an application for costs arising out of the proceedings.

5. My order of 29 June 2015 reflects that the wife’s costs application would be heard on 3 August 2015.  Based upon a schedule of costs prepared on a party/party basis the wife seeks the sum of $15,207.

6. On 3 August 2015 I heard argument in respect of an Amended Application in a Case filed by the wife on 31 July 2015 directed to the manner in which sale proceeds of a house property would be disbursed. The issue arises from orders made for property settlement by Cronin J on 21 May 2014.

7. Judgment in respect of that application was reserved to 13 August 2015.  In addition to the delivery of judgment, it was expected that I would hear argument in relation to the wife’s costs application arising out of the parenting orders previously made and potentially further costs incurred by the wife in respect of the said application.

8. On 13 August 2015 it was anticipated the question of the wife’s costs would be heard and determined.

9. The resolution of the proceedings was complicated by the husband filing a Response to the Application in a Case on 12 August 2015.  The Response and the Affidavit in support reflect that whilst they were filed on 12 August 2015, they were sworn by the husband on 15 June 2015.

10. It appears that whilst the husband’s documents had been transmitted to the wife’s solicitors, he had neglected to file them until they were e-filed on 12 August 2015.

11. The wife’s solicitors objected to the Response and Affidavit being received on the basis that the evidence in respect of the wife’s application had been heard and therefore the husband would need leave to adduce further evidence before the response and the affidavit could be considered.

12. I determined that I would hear the husband’s oral application for leave to re-open and adduce further evidence but for the reasons given in an ex-tempore judgment I struck out paragraphs 1, 3, 4, 5, 6(a), 7, 8 and 9 of the application.  In summary, I determined that the offending paragraphs sought substantive relief rather than consequential or mechanical relief.

13. Paragraph 2, 6(b) and (c) were however considered to be by way of ancillary relief and therefore should be considered.

14. All outstanding matters were heard and determined on 13 August 2015 and it is in respect of those issues that these reasons relate.

ISSUES FOR DETERMINATION

(1)The wife’s application for her costs arising from children’s orders made 18 May 2015.

(2)The wife’s application for her costs arising from financial orders made 13 August 2015.

(3)Orders in respect of the remaining paragraphs of the husband’s Response filed 12 August 2015.

RESPONSE FILED 12 AUGUST 2015

1. It had been a feature of the proceedings following orders made by consent on 21 May 2014 that the husband alleged the wife continues to withhold all of the husband’s financial documents and private papers. Fortunately whilst the wife considers that all of the husband’s personal papers have been given to him, she nonetheless is prepared to consent to an order that any document that relates personally to the husband will be returned.  That position is satisfactory to the husband.

2. Paragraph 6(b) and (c) is a little more complex but ultimately has also been resolved by compromise.

3. Dr M and Mr D were each involved in the parenting proceedings.  Dr M was requested to prepare separate psychiatric reports in respect of the parties and Mr D was tasked to prepare a family assessment report.

4. The relevant orders reflect an agreement by the parties that the husband would pay the costs as charged by the singe experts but that the wife would reimburse the husband one half of the charged costs at settlement.

5. Initially it was argued that the property settlement reached by the parties and embodied in the order of 21 May 2014 should be considered as a settlement of all outstanding matters including the monies paid by the husband for the various reports.

6. Following some discussion the wife very properly agreed that she would pay one half of the fees incurred by the husband.

7. The position of the wife was that the husband should submit proof of payment and then the wife would reimburse the husband for one half the total cost within 28 days of receiving the relevant invoices.  Whilst that was acceptable to the husband, it is my position that there is sufficient money available to the parties that all claims can be brought to account.  If I find favour with the wife’s separate applications for costs then I can see no reason why any money that the wife owes to the husband representing her share of the disbursement cost for the reports could not be offset against her costs entitlement.

8. The husband did not have proof of payment with him.  I determined that if the husband was able to provide to my chambers (and to the wife’s solicitors) proof of payment in respect of the expert reports, then, subject to any complaint by the wife I would bring those to account.

9. The husband has forwarded the following documents (now exhibit “BVC1”):

   (1)Invoice from Mr D to Mr Croce 28/11/2012 - $4,950.

   (2)Invoice from Mr D to Glazer Lanteri & Associates 19/5/2014 - $4,950.

   (3)Letter from Victoria Legal Aid dated 4 September 2012 confirming the charge from Dr M of $1,980 for each of the parties.

10. The total inclusive of GST paid by the husband is $13,860.

11. The wife agrees to reimburse the husband $6,930.

COSTS APPLICATION - PARENTING

1. The wife seeks costs assessed on a party/party basis in the sum of $15,207.

2. I raised with the husband that if I were to determine that there he should bear liability for the wife’s costs in respect of either the parenting or the financial application, then I could determine the matter to finality by way of fixing quantum, or refer the matter to a Registrar for the wife’s costs to be assessed.

3. I explained to the husband that the detailed schedules of costs as prepared by the wife’s solicitors were helpful and were clearly prepared on a party/party basis and by reference to the relevant schedule of costs.  Therefore, if it was acceptable to the husband I would be in a position to fix quantum.  The husband indicated that he was keen to bring all outstanding proceedings to an end and did not wish to incur further costs should the matter be referred for taxation.

4. The wife’s argument in support of her application is that on 23 September 2014 an offer of final settlement was forwarded to the husband’s solicitors Pearsons Barristers and Solicitors.  The summary of that letter is set out in paragraph 15 of the wife’s affidavit filed 21 May 2015 as follows:

   (a)that the children live with [the wife].

   (b)that [the wife] have sole parental responsibility in relation to the child B.

   (c)that the husband spend time with the children in accordance with their wishes.

   (d)that there be permitted written communication with the children.

   (e)that the children’s passports be released into the care of the wife.

5. The correspondence (“JP11” to the wife’s affidavit) also puts the husband on notice of the wife’s intention to seek costs pursuant to the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”) and that the letter of offer should be considered as at “Calderbank” letter. Demonstrably, the husband did not accept the wife’s proposal but rather sought orders that would see the children spending significant and substantial time with him.

6. Orders were made on 24 November 2014 listing the matter for trial on 18 May 2015 and setting out a timetable for the preparation of the matter generally but the filing of affidavit material in particular.

7. It is a reasonable summary that only the wife complied with the trial direction orders.  The matter was listed on a number of occasions with the husband being given the accommodation of an extension of time to file any amended response and affidavits upon which he intended to rely.  Whilst the husband apparently confirmed that he would be filing material and therefore participate in the proceedings, it is clear that he did not do so.  It was only on 11 May 2015 that the husband provided correspondence to the solicitors and to the court advising that he would not be filing any trial material nor did he have any intention to attend the hearing on 18 May 2015.

8. As is apparent from the orders made and my reasons delivered,  the husband did not participate at any level.

9. The wife’s position is that the husband was wholly unsuccessful in the proceedings regarding the children’s issues.

10. In his affidavit of 12 August 2015, the husband considers that the offer of the wife was “disingenuous and unworkable”.

11. The husband is clearly distressed by the fractured relationship with his children and it seems that the essence of his argument in opposition to the wife’s application for costs is that she is the author of the children’s reluctance to communicate and/or spend time with the husband and therefore an order for costs in her favour would be akin to a reward for her perceived poor conduct.

12. The schedule of costs appears as part of annexure “JP10” to the wife’s affidavit filed 21 May 2015.

13. The schedule is comprehensive and I am satisfied that it has been prepared by appropriate reference to the relevant items pursuant to the scale of costs. The costs appear to have been calculated from 29 September 2014 being six days after the letter of offer dated 23 September 2014.

14. If I consider that the husband should pay the wife’s costs, then the issue will be whether the husband should be required to reimburse the wife for the entirety of her party/party costs or a proportion thereof.

15. It seems to me that irrespective of the husband’s involvement in the proceedings, the application, affidavit material and the final hearing were nonetheless necessary albeit potentially in a truncated form.

16. I do not consider that there is a concept of an order being made by default pursuant to Part VII of the Act. I am required even in the absence of opposition or alternative proposal to consider each and every parenting application on its merits and to consider whether the orders that are sought are in the best interests of the child. Clearly, that process can be shortened in circumstances where there is no opposition. The trial itself was able to be dealt with within the day rather than extend over a number of days. The consideration of the factors in s 60CC both primary and additional are able to be determined within the limited confines of the evidence that is presented.

17. The costs charged by counsel is a good indication of the extent of preparation required.  If counsel had been aware from the beginning that the proceedings would not involve the husband, I consider that 40 per cent of the work undertaken by counsel would have nonetheless still be required.

18. The preparation of affidavit material was also required.  The wife could not know what the court would require.  Equally the wife cannot be criticised for preparing comprehensive trial affidavits, but to a significant degree they would have nonetheless been required in any event.

19. It is difficult to assess from a perusal of the itemised schedule the extent to which each particular item may or may not have been required if the wife’s solicitors knew that the husband was not intending to be heard.

20. Doing the best that I can, I think it reasonable that I attribute 60 per cent of the wife’s costs as claimed to work that could have been avoided if the husband had made his position clear.

WIFE’S COSTS - FINANCIAL

1. Separate to the claim of costs by the wife for parenting issues, she seeks $10,884.07 for costs in relation to the financial component of the proceedings.  The schedule is an annexure to the affidavit of the wife’s solicitor filed on 11 August 2015.

2. I am prepared to accept that the costs schedule has been prepared pursuant to Schedule 3 of the Family Law Rules 2004.  There is no challenge in respect of the individual items and if I am minded to make an order of costs in favour of the wife then the husband agrees that I can fix quantum by reference to the schedule.

3. In the course of submission, counsel for the wife conceded that the issue of costs really arises from the refusal by the husband to consider the proposal of the wife for the appointment of a single expert valuer as contained in her solicitors correspondence dated 4 June 2015 being annexure “JP2” to the wife’s affidavit.

4. The consequence of that concession is that the charges as appear on the itemised schedule between 28 May 2015 and at least 16 June 2015 are not tenable.

5. The substantive complaint of the wife is that the Application in a Case filed 25 June 2015 (and subsequently amended) was made necessary by the husband refusing to sign the joint letter of instruction to the single expert valuer dated 16 June 2015.

6. In that respect I repeat my remarks in my reasons delivered 13 August 2015:

   [43]The wife has gone to significant effort to resolve the outstanding issues on behalf of the parties.  It is not to her benefit specifically that she brings the application.  The original orders were crafted to avoid the very mischief that has now befallen the parties namely, the current proceedings.  They were unnecessary and the conduct of the husband in his barren opposition to the wife’s efforts to achieve a resolution is not able to be easily explained.

LEGAL PRINCIPLES

1. The general rule in proceedings under the Act is that each party should bear their own costs.

2. Subsections 117(2)-(2A) of the Act provide an exception to the general rule. Those subsections read:

   (2)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.

   (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 fact, 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 mother 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.

3. In respect to the obligation created under s 117(2A), in Brown & Brown (1998) FLC 92-822 Kay J said at 85,346:

   The obligation under s 117(2A) is that the court shall have regard to the various matters set out thereunder.  This is in contrast to the previous provisions under which costs were made, namely, under the Family Law Regulations and in particular reg. 173 which requires that the court may in making an order take into account various matters.  The movement from a discretionary consideration to a mandatory consideration is a matter in my view of some substance.

4. To further highlight the interplay between s 117(1) and s 117(2) but in particular the extent to which judicial discretion s to be exercised the judgment of the High Court in Penfold v Penfold (1980) FLC 90-800 at 75,053-4 is informative:

   It is an accurate description of sec. 117(1) to say that it expresses a general rule provided that it is firmly understood that the subsection is not paramount to sec. 117(2). As subsec. (1) is expressed to be subject to subsec. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Subsection (2) requires a finding of justifying circumstance as an essential preliminary to the making of an order.  Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which impose any additional or special onus on an applicant for an order for costs.

MATTERS TO BE CONSIDERED

Section 117(2A)(a) - financial circumstances of the parties

1. Neither party sought to address me on any factors relevant to the financial circumstances of each of them.  Whilst I do not have the advantage of recent statements as to financial circumstances, nonetheless I am aware of the terms of the consent order for property settlement made 21 May 2014 and also have an understanding of the settlement sums that remain in trust for distribution to the parties pursuant to my recent orders.

2. This subsection is not an impediment to the making of an order for costs.

Section 117(2A)(b) – whether any party is legally aided

1. No party is in receipt of any legal aid and accordingly this subsection is not relevant.

Section 117(2A)(c) – conduct of the parties

1. It is the wife’s complaint in respect of the parenting proceedings that a significant proportion of the fees that she incurred were unnecessary if the husband had made his position clear namely, that he did not intend to file any documents or participate in the proceedings.

2. It is unusual for there to be an order for costs in a parenting case. That is because the court is required to hear and determine the matter by reference to the provisions of Part VII of the Act. This case is however unusual. Whilst I am not necessarily of the view that the “Calderbank” offer is necessarily applicable or indeed even appropriate in respect of a parenting case, it does take on a greater relevance where the husband does not participate but chooses not to make that position known until the case has been essentially prepared and the mater ready for hearing.

3. Obviously costs have been incurred by the wife simply arising from the husband’s non-compliance.  Various attendances were required at court and further accommodation was given to the husband in the expectation that he would comply with trial direction orders.  The husband did not and I have assessed that if costs are appropriately awarded in favour of the wife that should be represented by a sum equivalent to 60 per cent of the total costs incurred by reference to the schedule of costs.

Section 117(2A)(d) – failure of a party to comply with previous orders

1. To some extent the wife’s costs have been exacerbated by the failure of the husband to comply with orders of the court, in particular compliance with trial directions.

Section 117 (2A)(e) – a wholly unsuccessful party

1. The concept of a party being wholly successful or unsuccessful in respect of a parenting order made pursuant to Part VII of the Act does not sit comfortably and whilst it has some technical application, it is really the husband’s conduct that has exacerbated the wife’s costs.

Section 117(2A)(f) – offer for settlement

1. Whilst I accept that an offer in writing to settle the proceedings was made by the wife in a timely fashion, unless it could be demonstrated that the husband had determined at that stage that he would not participate in the proceedings and his conduct thereafter was one of obfuscation, I consider the argument in respect of this subsection was pressed only faintly.

2. Accordingly, I consider that the wife should receive her costs calculated on the basis of 60 per cent of the itemised schedule of costs namely, $9,124.

3. In relation to the financial application, the wife’s application is supported by reference to s 117(2A)(c), (d) and (f).

4. As discussed, the husband’s refusal to cooperate in the benign process of appointing a single expert and then to put the wife to the unnecessary proof of the date by which the parties had ceased to reside in the property at E Street, Suburb F is without proper explanation.

5. The process undertaken by the wife was entirely in keeping with the consent orders of 21 May 2014 and the application, court appearances and the necessity to obtain orders was only made necessary because of the recalcitrant conduct of the husband.

6. I consider that the wife should receive her costs but appropriately amended to reflect that by reference to the schedule costs to the sum of $1,924 were incurred in the period up to and including 16 June 2015 which is conceded is not sustainable.

7. Accordingly, the wife’s costs for the financial application is fixed in the sum of $8,960.

CONCLUSION

1. The parenting costs are in the sum of $9,124.

2. The financial costs are in the sum of $8,960.

3. The total costs are therefore $18,084 less the sum of $6,930 being the wife’s reimbursement to the husband for one half of the single expert report fees.  Accordingly, the total amount outstanding to the wife is $11,154.

4. It is appropriate that this sum be deducted from the husband’s entitlement pursuant to orders made 13 August 2015.

5. The orders will reflect that the wife’s costs will be paid from the sum of $20,000 remaining on trust pursuant to order 1(d) of orders made 13 August 2015 with the balance to be payable to the husband.

6. I therefore make orders as appear at the commencement of these reasons for judgment.

I certify that the preceding seventy six (76) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 21 August 2015.

Associate: 

Date:  21 August 2015