Quang & Nhat
[2022] FedCFamC2F 531
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Quang & Nhat [2022] FedCFamC2F 531
File number(s): PAC 2154 of 2020 Judgment of: JUDGE OBRADOVIC Date of judgment: 29 April 2022 Catchwords: FAMILY LAW – Practice and Procedure – Costs – Application wholly unsuccessful – Costs awarded in the scale amount. Legislation: Family Law Act 1975 (Cth), ss 71, 79, 90B, 90G, 90K, 90SA, 90SM, 90UB, 117
Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021
Cases cited: Cochrane & Cochrane [2012] FMCAfam 984
Colgate Palmolive Co and Anor v Cussons Pty Ltd [1993] FCA 801
Collins & Collins [1985] FamCA 15
Fitzgerald v Fish and Anor [2005] FamCA 158
Greedy & Greedy [1982] FamCA 41
I & I (No.2) [1995] FamCA 80
Jensen &Jensen [1982] FamCA 57
Kohan & Kohan [1992] FamCA 116
Latoudis v Casey [1990] HCA 59
Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157
Penfold & Penfold [1980] HCA 4
Renald & Renald (Costs) [2018] FamCAFC 4
Stasiuk & Guild [2021] FamCAFC 62
Division: Division 2 Family Law Number of paragraphs: 39 Date of last submission/s: 13 April 2022 Date of hearing: On the papers Place: Parramatta Appearing for the Applicant: Mr Brown Solicitors for the Applicant: Browns The Family Lawyers Appearing for the Respondent: Mr Mehmedbasic Solicitors for the Respondent: JB Solicitors ORDERS
PAC2154 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR QUANG
Applicant
AND: MS NHAT
Respondent
ORDER MADE BY:
JUDGE OBRADOVIC
DATE OF ORDER:
29 APRIL 2022
THE COURT ORDERS THAT:
1.The Respondent pay the Applicant’s costs in the amount of $11,726 with such costs to be paid 28 days after the conclusion of the substantive proceedings.
2.The matter is listed for directions at 2:15pm on 9 June 2022.
3.The parties are to file a jointly drafted agreed statement of issues 7 days prior to the directions hearing, together with an agreed minute of order for the further progress of the matter.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Quang & Nhat has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE OBRADOVIC:
Introduction
On 11 May 2020, the applicant commenced property proceedings, seeking orders for the alteration of property interests. Such application was supported by an affidavit and financial statement in the usual manner. The initiating application made it clear that the parties lived together for a number of years but were never married.
The parties lived together from about October 2004 until about 8 April 2019. Whilst the parties participated in a Buddhist tea ceremony in 2004 neither the applicant nor the respondent asserts that they were married[1]. They have three children together.
[1] Within the meaning of Marriage Act 1961 (Cth)
At some time in about October 2004 the parties signed a document headed “Prenuptial Agreement”.
On 21 September 2020, the respondent filed her response seeking, inter alia that:
A declaration pursuant to section 90G(1A) and section 90KA of the Family Law Act 1975 (Cth) that the Binding Financial Agreement dated 30 October 2004 is a valid section 90UB Financial Agreement.
Whether there was a binding financial agreement between the parties is an important issue because if the applicant and the respondent are parties to a binding financial agreement then in essence, the Court has no power to make orders to alter their property interests.
On 17 September 2021, following earlier directions for the parties to attend mediation and a conciliation conference, the Court set the matter down for hearing on 15 February 2022, in respect of the threshold issue of whether there was a binding financial agreement between the parties.
Having regard to the filed Response, there were a number of problems with the relief sought by the respondent, namely:
a.The parties were never married;
b.The Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) inserted a new Part VIIAB into the Family Law Act 1975 (Cth) (“the Act”) from 1 March 2009;
c.The parties commenced their de facto relationship and signed the agreement prior to the commencement date of the de facto provisions being inserted into the Act[2];
d.Sections 90G(1A) and 90K of the Act are found in Part VIIIA not Part VIIIAB, that is ss.90G(1A) and 90K are concerned with married couples not de facto couples; and
e.Section 90UB deals with financial agreements entered into before a de facto relationship commences.
[2] The provisions are not retrospective
In an attempt to remedy these, what one might consider, fundamental problems with the response, on the eve of the hearing, in the case summary document filed on 13 February 2022, the respondent framed the relief she sought as follows:
A declaration that the financial agreement entered into by the parties on a date prior to 30 October 2004 is binding upon the parties.
It was then further conceded by the respondent, that the agreement is non-compliant with the requirements of s.90B in that:
a.It does not specify the date on which it was actually signed by each of the parties;
b.It does not specify the statutory basis upon which it was executed;
c.Although the agreement was purportedly made in contemplation of marriage, the parties were never married; and
d.The agreement does not expressly purport to oust the jurisdiction of the Court to make property orders or spousal maintenance orders, although it was submitted that this intention could be implied from the recitals to the agreement.
Furthermore, it was conceded that the agreement does not contain a certificate signed by the persons providing independent legal advice stating the advice was provided (albeit it was submitted that as a consequence of the 2009 amendments it is unnecessary for the requirements of ss.90G(1)(c) and (ca) concerning legal advisers’ certificates to be met).
It would therefore have been necessary for the Court to firstly rectify the agreement.
At the hearing, it was submitted on behalf of the respondent that the Court could make a declaration that the financial agreement (once rectified) was a binding financial agreement pursuant to s.90B being an agreement entered into before marriage and in contemplation of marriage.
In essence, the respondent argued that the agreement was a Part VIIIA binding financial agreement.
How the issue was determined
If the parties had been married, the Court’s power to make property adjustment orders would have derived from s.79 of the Act, which is found in Part VIIIA of the Act. Part VIIIA does not apply to financial matters or financial resources to which a financial agreement that is binding on the parties to the agreement applies (s.71A). In short, if there is a binding financial agreement (pursuant to Part VIIIA) between parties to a marriage then the Court has no jurisdiction to make a s.79 order.
As the parties were never married, the Court’s power to make property adjustment orders derives from s.90SM of the Act, which is found in Part VIIIAB Division 2 of the Act. Part VIIIAB came into effect on 1 March 2009. Part VIIIAB Division 2 relevantly does not apply to the property of the parties or the financial resources of the parties to which a Part VIIIAB financial agreement that is binding on the parties applies (s.90SA(1)).
It is clear from the relevant legislative provisions that the jurisdiction of the Court to make an order pursuant to s.90SM of the Act is not effected by a Part VIIIA financial agreement. In essence, there was no utility to the respondent if the declaration she now sought was made, the applicant would still be able to prosecute his application for property adjustment orders.
This was ultimately conceded by the respondent but only after judgment was reserved and following the Court inviting the parties to provide further submissions in respect of that particular issue, namely the effect of s.90SA(1).
Ultimately, the respondent was granted leave to withdraw her application for a declaration of a binding financial agreement and was granted leave to file an Amended Response.
Relevant Legal Principles Relating to Costs in Family Law Proceedings
The principles in respect of costs orders in family law proceedings are well known. The starting position with respect to costs, as set out in s.117 of the Act is that, subject to sub-section 117(2), each party to proceedings under the Act shall bear his or her own costs.
The discretion to award costs is a broad discretion (see for example Collins & Collins [1985] FamCA 15). No one factor under s.117(2A) prevails over any other factor. It is a matter of weight that is accorded to each of the relevant factors in the trial judge’s discretion (Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157 at [24] (“Medlon”).
The High Court held in Penfold & Penfold [1980] HCA 4 (“Penfold”) that it is necessary for the Court to make a finding of justifying circumstances as an essential preliminary to the making of an order for costs. The Court is not required to specify the circumstances which justify the making of such an order.
As long as there is an essential preliminary finding that there are justifying circumstances to make a costs order, there is no additional or special onus which the applicant needs to establish for an order for costs. It is not the law that a costs order can only be made in what has been described as a “clear case” (Penfold; Jensen &Jensen [1982] FamCA 57).
Any one of the factors in s.117(2A) may be the sole foundation for an order for costs (Fitzgerald v Fish and Anor [2005] FamCA 158 at [41]; Renald & Renald (Costs) [2018] FamCAFC 4 at [11] (“Renald”)). Nevertheless, the relevant matters in s.117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs” (I & I (No.2) [1995] FamCA 80; Renald at [11])
In Latoudis v Casey [1990] HCA 59 (“Latoudis”) the High Court stated as follows:
… in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of an unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.
(Referred to in the context of family law proceedings by Judge Kemp in Cochrane & Cochrane[2012] FMCAfam 984 at [17])
In determining what order, if any, should be made under s.117(2) the Court must have regard to the prescriptive but non-exhaustive list of considerations in sub-section (2A).
The Court has the power to order costs on an indemnity basis (Kohan & Kohan [1992] FamCA 116 (“Kohan”); Latoudis). An order for indemnity costs in proceedings to which s.117 applies is exceptional (Kohan; Stasiuk & Guild [2021] FamCAFC 62).
The principles in respect of indemnity costs orders are also well known (see generally Sheppard J in Colgate Palmolive Co and Anor v Cussons Pty Ltd [1993] FCA 801), relevantly:
a.Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] FCA 364 (“Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd.”).
b.Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd.)
c.Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd [1991] FCA 225).
d.The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v Westpac Banking Corporation (unreported Federal Court, 5 March 1993)).
e.An imprudent refusal of an offer to compromise.
(Medlon at [28] referring to Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660)
It is unnecessary to spell out detailed reasons for decisions in costs matters (Greedy & Greedy [1982] FamCA 41; Renald at [12]).
Determination as to Costs
Given the concessions ultimately made, it is clear that the respondent’s application for a declaration was at all times a futile exercise in that, even if made, it would not oust the Court’s jurisdiction to make property adjustment orders if ultimately the Court in its discretion decided to do so.
The declaration sought in the Response was initially a confused and embarrassing application. The attempts at remedying it only clarified the further insurmountable problems faced by the respondent. The concession was only made after the question was posed by the Court and further submissions made.
While the respondent makes the submission that she did not unreasonably continue to litigate once the s.90SA(1) issue was identified by the Court, the respondent should have prior to filing her documents properly considered her legal position. She was at all times legally represented. She was the party moving the Court for that particular relief. But for the manner in which the respondent conducted herself in seeking the declarations, the threshold hearing would not have been needed.
There are therefore circumstances justifying the making of a costs order.
The Court accepts that the respondent is not in a strong financial position in that she is unemployed and that she receives financial assistance from the maternal grandmother. The respondent has the care of the parties’ three children. The respondent is the legal owner of two real properties, the parties’ former home where she resides with the children (which is co-owned with the applicant) and an investment property from which she derives an income.
The applicant’s income and expenditure are approximately equal, and his financial circumstances show that his legal fees represent a significant financial burden to him.
The respondent was wholly unsuccessful.
The concession that the respondent’s application was doomed and therefore subsequently withdrawn came very late and only after the matter was raised by the Court. It was a concession properly made at that time and this is a matter that is taken into consideration by the Court in respect of the indemnity costs application. Once she was properly advised, the respondent no longer pressed with her application for the declaration.
Having regard to the s.117(2A) matters it is appropriate that a costs order against the respondent be made, and that such costs be in accordance with Schedule 1 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021.
The respondent is to pay the applicant’s costs as follows:
a.Item 4 – Threshold hearing as a discrete event: $1,964
b.Item 7 – Preparation for final Hearing 2 day matter: $6,227
c.Item 13 – Daily Hearing fee full day plus half day: $3,535
Total: $11,726
The costs will be payable 28 days after the conclusion of the substantive proceedings.
40 I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Obradovic.
Associate:
Dated: 29 April 2022
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