Rankin and Rankin (No 3)

[2016] FamCA 741

FAMILY COURT OF AUSTRALIA

RANKIN & RANKIN (NO 3) [2016] FamCA 741

FAMILY LAW – COSTS – Application by the wife for costs arising out of the husband’s stay application – financial circumstances of the parties considered – where the husband was not wholly unsuccessful in his application – conduct of the husband considered – application dismissed

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

I & I (No 2) (1995) FLC 92-625

APPLICANT: Ms Rankin

RESPONDENT: Mr Rankin

FILE NUMBER: DGC 2859 of 2013

DATE DELIVERED: 2 September 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Johns J

HEARING DATE: N/A – by way of written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hutchings

SOLICITOR FOR THE APPLICANT: Goldhirsch & Shnider

COUNSEL FOR THE RESPONDENT: Ms Tulloch

SOLICITOR FOR THE RESPONDENT: L.Y. Tonge & Co Lawyers

Orders

1. That each party pay their own costs arising out of and incidental to the husband’s Application in a Case filed 3 May 2016.

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 Rankin & Rankin (No 3) 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 MELBOURNE

FILE NUMBER: DGC 2859  of 2013

Ms Rankin

Applicant

And

Mr Rankin

Respondent

REASONS FOR JUDGMENT

1. On 29 February 2016, following a contested hearing that took place over four days in 2015, I pronounced final orders with respect to property, spousal maintenance and child support (“the final orders”).

2. On 27 May 2016, following the hearing of an application made by the husband Mr Rankin for a stay of the final orders, I made orders granting a partial stay of the final orders pending determination of the husband’s appeal (“the stay orders”).

3. Paragraph 5 of the stay orders also provides for either party seeking to make application for costs to file written submissions in support of such application. Pursuant to written submissions emailed to my Associate, the wife, Ms Rankin, now seeks that the husband pay her costs fixed in the sum of $9,680 and calculated on a party/party basis, those costs arising from her defence of the husband’s stay application.

4. The husband opposes the wife’s application for costs.

5. These are my reasons with respect to the wife’s application for costs.

Background

1. The history of this matter has been previously addressed by me in my reasons for judgment delivered on 29 February 2016 in relation to the final orders.

2. The background to the wife’s application for costs the subject of these reasons arises out of the husband’s Application in a Case filed 3 May 2016. In that application, the husband sought a stay of paragraphs 1, 2(d), 14, 15 and 16 of the final orders, those orders relating to property, spousal maintenance and child support.

3. On 17 May 2016 the husband filed a Notice of Appeal in relation to paragraphs 1, 14 and 15 of the final orders.

4. At the commencement of the hearing on 18 May 2016 in relation to husband’s stay application, counsel for the husband tendered a minute of orders sought by him. Whilst that minute maintained the husband’s position with respect to a stay of paragraphs 2(d), 14 and 15 of the final orders pending the determination of his appeal (as sought in his Application in a Case filed 3 May 2016), his position had modified with respect to a stay of paragraph 1 of the final orders. 

5. Rather than seeking a stay of paragraph 1 of the final orders in its entirety, the husband sought orders in the following terms:-

   Pending the determination of the husband’s Appeal filed 17 May 2016 the operation of paragraph 1 of the orders made by the Honourable Justice Johns on 29 February 2016 be stayed to the extent necessary to give effect to the following division of the proceeds of sale of the real properties at [B Street, Suburb C] in the State of Victoria, [L Street, G Town] in the State of Western Australia and [K Street, H Town] in the State of Western Australia (“the proceeds of sale”) (the said proceeds of sale being estimated to be in the sum of $802.546.41);

   (a)Firstly, to the wife the sum of $484,782.20;

   (b)Secondly, to the husband the sum of $78,119.00;

   (c)Thirdly, to the [M] Inc. and [N] Inc. the sum of $36,872.96; and

   (d)Fourthly, the balance then remaining to be held on trust on behalf of both the parties in an interesting (sic) bearing account by the husband’s solicitors L Y Tonge & Co Lawyers of Suite 7, 600 Lonsdale Street, Melbourne.

6. To contextualise that order sought by the husband, paragraph 1 of the final orders provides as follows:-

   That the husband and the wife forthwith do all acts and things and sign all necessary documents to authorise the release of the proceeds of sale of the real properties at B Street, Suburb C in the State of Victoria; L Street, G Town in the State of Western Australia; and K Street, H Town in the State of Western Australia held on trust by the wife’s solicitors to be applied as follows:-

   (a)      Firstly, the sum of $170,000 to the wife’s solicitors in payment of                 her legal costs and disbursements;

   (b)      Secondly, the balance then remaining be divided as follows:-

   (i)       To the wife 70 per cent;

   (ii)      To the husband 30 per cent less:-

   A.The sum of $36,872.96 in unpaid school fees to be paid to [M] Inc. and [N] Inc.;

   B.The sum of $9,771.96 to the wife in respect of arrears of child support.

   C.The sum of $65,000 by way of lump sum spousal maintenance to the wife.

7. The stay orders that I ultimately made on 27 May 2016 provide:-

   1.That pending determination of the husband’s Notice of Appeal filed 17 May 2016 the operation of paragraph 1 of the Orders dated 29 February 2016 be stayed so as to provide as follows:-

   (a)As to paragraph 1(a) of the Orders (“the Orders”) the wife be paid the sum of $110,500 and the balance then remaining, being the sum of $59,500 be held upon trust by the wife’s lawyers pending determination of the husband’s appeal;

   (b)As to paragraph 1(b) of the Orders the balance then remaining to be divided as to:-

   (i)       Pay to the wife 65 per cent;

   (ii)      Pay to the husband 30 per cent, less:-

   A.The sum of $36,872.96 in unpaid school fees which sum is to be paid to [M] Inc. and [N] Inc.;

   B.The sum of $9,771.96 which sum is to be paid to the wife in respect of arrears of child support; and

   C.The sum of $65,000 to be held upon trust by the wife’s lawyers pending determination of the husband’s appeal.

   (iii)The balance then remaining, being five per cent be held on trust by the wife’s lawyers pending determination of the husband’s appeal.

   2.That the stay of the operation of the Orders pursuant to order 1 hereof is conditional upon the husband doing all such acts and things as may be required to prosecute his Notice of Appeal filed 17 May 2016 expeditiously.

   3.That in the event the husband does not fulfil the condition of the stay set out in paragraph 2 hereof the wife has liberty on 14 days’ notice to re-list the matter before Johns J for consideration of discharge of paragraph 1 hereof.

   4.That the husband’s Application in a Case filed 3 May 2016 and the wife’s Response to an Application in a Case filed 17 May 2016 be otherwise dismissed.

   5.That any party seeking to make application for costs file written submissions in support of such application within 14 days of these orders and any response to such application to be filed within 7 days thereafter, such application to be determined upon consideration of written submissions in Chambers.

   6.That pursuant to s 106A of the Family Law Act 1975 (Cth) in the event that either party fails to sign any document required to give effect to these orders and the orders of 29 February 2016, a Registrar of the Court is authorised to sign such documents in the name of that party.

   AND THE COURT NOTES that it is agreed between the parties that in order to give effect to order 1(b)(ii)B of these orders the payment referred to therein will be made to the Child Support Agency.

8. On 10 June 2016 the wife’s solicitors emailed to my Associate written submissions dated 8 June 2016 with respect to the wife’s application for costs (“the wife’s written submissions”). Those written submissions have not been filed with the Court. 

9. On 15 July 2016, being one month after the passing of the deadline for the filing of a response to the wife’s application for costs, the husband’s solicitors emailed to my Associate submissions in response to the wife’s application for costs.  Similar to the wife, those submissions have not been filed with the Court.

10. Notwithstanding that neither party has filed their submissions in accordance with my orders, I propose to consider their submissions regarding the wife’s application for costs.

Legal Principles

1. The general rule as to costs pursuant to s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) is that each party bear his or her own costs. Section 117(2) of the Act permits the court to make a costs order if there are circumstances that justify it in doing so subject to particular subsections of the Act and the applicable Rules of Court.

2. Section 117(2A) of the Act sets out the following factors to be taken into account by the court in determining whether a costs order (if any) should be made:-

   (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.

3. Those factors “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) FLC 92-625).

Discussion

1. I will deal firstly with the application by the husband for leave to file written submissions out of time. The reasons for the delay of one month in submitting written submissions are said to be due to an oversight as to the timeframe in which the submissions were to be filed, the husband and his lawyers being preoccupied with other ongoing proceedings both in this Court and the Magistrates’ Court. It is submitted at paragraph 22 of the written submissions dated 14 July 2016 and emailed to my Associate on 15 July 2016 on behalf of the husband (“the husband’s written submissions”) that the only prejudice suffered by the wife is a delay in the resolution of her application and, in the event that I accede to her costs application, a delay in receiving payment of the monies she would be entitled to receive.

2. The wife has not objected to the late filing of the husband’s written submissions. In these circumstances and where it is unlikely that judgment would have been delivered at an earlier date had the husband’s written submissions been filed in accordance with the timeline imposed by the stay orders,  I propose to grant the husband leave to rely upon his written submissions out of time.  

3. The wife seeks that the husband pay her costs fixed in the sum of $9,680 and calculated on a party/party basis in accordance with Schedule A attached to the wife’s written submissions. Schedule A sets out the wife’s costs as follows:-

   Solicitor’s fees

   Corresponding with Husband’s solicitor, conference with client and Counsel, drafting Affidavits in Response, attending on Wife for execution and filing and serving same and attendance at hearing and filing submissions on costs

   $5,500.00

   Counsel’s fees

   conference, appearance and preparation of submissions on costs

   $4,180.00

   TOTAL FEES  $9,680.00

4. Rule 19.19 of the Family Law Rules 2004 (Cth) (“the Rules”) provides that the maximum amount of party/party costs a person can claim in relation to fees is to be calculated in accordance with Schedules 3 and 4. As noted by counsel for the husband, the quantum claimed by the wife in Schedule A is asserted without any reference to Schedules 3 and 4 of the Rules. It is therefore difficult, if not impossible, to discern from Schedule A whether the costs claimed by the wife exceed the costs allowable for both counsel and lawyer’s work done and services performed.

5. Leaving aside the deficiency in the wife’s application as to the basis upon which the quantum of costs is sought, the wife’s written submissions in support of her costs application appear to focus on three issues:-

   ·the financial circumstances of the parties (s 117(2A)(a) of the Act);

   ·the conduct of the husband both generally in the proceedings and specifically in relation to the stay application (s 117(2A)(c) of the Act); and

   ·that the husband was largely unsuccessful in the stay application (s 117(2A)(e) of the Act).

The financial circumstances of the parties

1. In relation to the financial circumstances of the parties, counsel for the wife, having noted that neither party is in receipt of legal aid, referred to paragraphs 142 to 164 of my reasons for judgment delivered on 29 February 2016.[1] In summary, the findings contained in those paragraphs of my reasons for judgment are that:-

   ·the wife is aged 46 years and is currently unemployed, her only source of income coming from an income tested pension and child support.

   ·the wife has the primary care of the three children of the marriage. Pursuant to final orders made by consent on 18 May 2015 the husband has limited supervised time with the children.

   ·the husband is aged 48 years and is employed as a health professional.

   ·the husband conceded his gross income per annum is approximately $243,000, an income substantially greater than that disclosed by him in his financial statement filed for the purpose of the property proceedings.

   [1] The wife’s written submissions, paragraph 5.

2. It is submitted by counsel for the husband that the parties’ respective incomes are not so disparate when the husband’s income net of tax is considered with reference to his expenses and in particular his obligation to pay child support and private school fees pursuant to the final orders.[2] Counsel for the husband submitted at paragraph 13 that:-

   The income tax and medicare levy payable on $243,000 per annum is $88,000 leaving the husband with an income net of tax of $155,000. Paragraph 14 of the orders made on 29 February 2016 requires the husband to pay child support assessed on a taxable income of $243,000 and paragraph 15 of those orders requires the husband to pay private school fees for all three of the parties children. These two orders combined create an obligation on the husband to pay approximately $100,000, approximately half of which is to be paid to the wife by way of periodic child support and the balance directly to the childrens’ school.

   [2] The husband’s written submissions, paragraph 13.

3. There is no sworn evidence or source documents before me to support either the assertion made by counsel for the husband as to the husband’s net income or the amount of child support payable by him. Whilst the final orders do provide for the husband to pay child support (both periodic and non-periodic) and the husband no doubt is liable to pay some amount of income tax, the last financial statement sworn by him understates his conceded income of $243,000 per annum and  pre-dates the final orders which imposed upon him his current child support obligations. In those circumstances I can place little reliance on counsel for the husband’s submission as to the husband’s net income and the quantum of his child support obligations.

4. In addressing the financial circumstances of the parties, counsel for each of the parties also made submissions with respect to the assets of the parties. It is put by counsel for the wife that the assets the wife will receive, regardless of the outcome of the appeal, are modest.[3]  The thrust of the submissions of counsel for the husband is that the assets the wife will retain pursuant to the final orders, if the husband is not successful in any part of his appeal, will total approximately $687,000.[4]

   [3] The wife’s written submissions, paragraph 5.

   [4] The husband’s written submissions, paragraph 15.

5. The primary asset for division between the parties is the proceeds of sale of three real properties. The pool of assets, excluding superannuation, was valued at approximately $803,000.  Pursuant to the stay orders the wife will receive approximately $521,950, the husband will receive approximately $78,257 (being 30 per cent of the pool less arrears of school fees, child support and lump sum maintenance) and the sum of approximately $156,150 will be held upon trust pending determination of the appeal.  Pursuant to the final orders, which are not subject of the husband’s appeal, each of the parties also has superannuation entitlements of $500,000.

6. While counsel for the husband submitted at paragraph 15 that the husband has a debt to his former solicitors of approximately $55,000 and ongoing legal fees associated with his various legal proceedings, that is not something to which I have regard in the absence of evidence in support of that submission.

7. I also note the wife’s position at the stay hearing, recorded at paragraph 50 of my reasons for judgment delivered on 27 May 2016, that she and the children currently reside in crisis accommodation and that that arrangement will end upon receipt of her property settlement.  Given the stay orders I made provide for the wife to receive a payment of approximately $411,000 (with a further $110,500 to be paid to her for her legal fees), it is likely the case that she is no longer able to reside in crisis accommodation.

8. It is clear that the wife presently has greater assets than the husband; however, I am also cognisant of the husband’s greater income earning capacity and the fact that the wife has the sole care for the three children of the marriage while being unemployed and in receipt of Centrelink benefits.

9. Having regard to those matters, I do not consider the disparity between the financial circumstances of the parties to be so great as to warrant the making of a costs order in favour of the wife.

The conduct of the parties

1. A large part of the wife’s written submissions focuses on the conduct of the husband.  Reference is made at paragraph 6 of those submissions to paragraphs 152 and 153 of my reasons for judgment delivered on 29 February 2016 where I made findings as to the husband’s failure to meet his obligation to make full and frank disclosure of documents which would establish his income and his attempts to mislead the Court as to his current income and income-earning capacity.  Those findings to which counsel for the wife refers arose in the context of the final hearing.  As submitted by counsel for the husband at paragraph 17(a), it is difficult to see how the husband’s conduct in relation to the property proceedings can be relevant to the wife’s application for costs arising out of the husband’s stay application.

1. With respect to the husband’s conduct specifically in the context of the stay application, counsel for the wife noted at paragraph 7 that the husband’s Application in a Case filed 3 May 2016 was deficient in that it failed to comply with r 22.11 of the Rules. Rule 22.11(2) provides that if an appeal has been started or a party has applied for leave to appeal against an order, a party may apply for a stay of part or all of the orders the subject of that appeal; in this case the husband’s application for a stay was filed some two weeks prior to his filing of an appeal. While that may be the case, I accept the submission put by counsel for the husband at paragraph 17(b) that that technical deficiency is unlikely to have caused any prejudice to the wife of the kind envisaged by s 117(2A)(c) of the Act.

2. As discussed above, the orders initially sought by the husband in his Application in a Case filed 3 May 2016 were more expansive than those actually sought at the hearing on 18 May 2016.  In relation to this amendment in the orders sought by the husband, counsel for the wife submits as follows:-

   8.… Whilst still largely without any foundation at law, the amended document was important because it fundamentally altered the Husband’s position as to whether the Wife ought to receive any fruits of the Judgment prior to the appeal being heard and determined. These orders sought were not formally before the Court until the commencement of the hearing of the stay.

   9. The case the Wife was prepared to meet, filed material in relation to, and had (reasonably) instructed solicitors and barristers to defend was that contained within the Application in a Case filed 3 May 2016.

   10.… it was not until the evening before the hearing that the Husband altered his position. The Wife was given no time to adequately consider the changed position (i.e. as to whether to agree or not) and it was too late to withdraw instructions to Counsel or avoid appearance at Court in any event. It was simply expeditious to instruct her lawyers to defend all orders sought by him. It was also reasonable.

3. I accept that had the wife been given more time to consider the husband’s amended position, she may have agreed to his proposal, thereby potentially limiting the scope of the hearing of the husband’s stay application.  The orders sought by the husband at the stay hearing were more limited, and in my opinion, more reasonable than those initially sought by him in his Application in a Case filed 3 May 2016.  In particular, the orders sought by the husband at the stay hearing provided for the wife to receive a payment of approximately $485,000 whereas pursuant to the orders sought in his Application in a Case filed 3 May 2016 the wife would not be entitled to receive any payment pending the husband’s appeal.  

4. Although I am not critical of the wife in defending the husband’s more limited application, I also do not consider the conduct of the husband in putting forward a more limited and reasonable proposal, albeit with little notice to the wife, so poor as to justify the making a costs order in favour of the wife.

5. Counsel for the wife at paragraph 11 of the wife’s written submissions further points towards the husband’s conduct in seeking to rely upon “irrelevant material such as affidavits from his treating doctor and solicitors, as well as further affidavits of his own which went to irrelevant and controversial matters”. That the husband relied upon “irrelevant material” is not conceded by counsel for the husband.

6. Criticism is also levelled at the husband relying upon an affidavit filed 16 May 2016, two days before the hearing of his stay application, and then objecting to the wife relying upon an affidavit provided to the husband the day prior to the hearing in reply to that affidavit.[5]  There is force in that criticism.  Nonetheless, I do not consider that conduct by the husband to be sufficient to justify an order for costs.  

   [5] The wife’s written submissions, paragraph 11.

Whether the husband was wholly unsuccessful

1. Seemingly in respect of s 117(2A)(e) of the Act, that being whether any party to the proceedings has been wholly unsuccessful in the proceedings, the submission put at paragraph 12 of the wife’s written submissions is that “[i]n large part the Husband was unsuccessful and instructed his lawyers to pursue orders which had no proper foundation (i.e those challenging Orders made on the basis of the Husband’s own concessions)”.

2. While it is the case that the husband’s stay application failed in relation to paragraphs 1(b)(ii)A, 1(b)(ii)B, 2(d), 14 and 15 of the final orders (see paragraphs 13 to 31 of my reasons for judgment delivered on 27 May 2016), it cannot be said that the husband was wholly unsuccessful in his stay application.

3. The stay orders quarantine an amount totalling $156,150 pending determination of the husband’s appeal. That figure reflects those amounts payable to the wife subject to challenge by the husband in relation to which I found that the husband has an arguable case on appeal.[6] 

   [6] Reasons for judgment delivered on 27 May 2016, paragraph 49.

4. As submitted at paragraph 17(e) of the husband’s written submissions, pursuant to s 117(2A)(e) of the Act it is when a party is “wholly unsuccessful” that that becomes a matter for the court to consider when deciding whether or not to depart from the usual rule as to costs; the test is not whether a party was in large part unsuccessful. Accordingly, I do not consider this a matter relevant to my determination of the wife’s application pursuant to s 117(2A)(e) of the Act.

5. In considering and balancing the various factors set out in s 117(2A) of the Act relevant to this application, this is not a case, in my view, where it is appropriate to depart from the general rule as to costs. Accordingly, the only order I will make is as follows:-

   (1)That each party pay their own costs arising out of and incidental to the husband’s Application in a Case filed 3 May 2016.

I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 2 September 2016

Associate:

Date:  2 September 2016