Reece and Omrhan (Executrix of the Estate of Mr Mairead) (No. 2)

[2013] FamCA 223

FAMILY COURT OF AUSTRALIA

REECE & OMRHAN (EXECUTRIX OF THE ESTATE OF MR MAIREAD) (NO. 2) [2013] FamCA 223

FAMILY LAW – COSTS – Respondent to pay applicant’s costs

Family Law Act 1975 (Cth)

Davida and Davida (Costs) [2011] FamCAFC 61
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor [2005] FamCA 158; (2005) 33 Fam LR 123
Penfold v Penfold (1988) CA 4; (1980) 144 CLR 311

APPLICANT: Ms Reece

RESPONDENT: Ms Omrhan (Executrix of the Estate of Mr Mairead)

FILE NUMBER: MLC 256 of 2011

DATE DELIVERED: 10 APRIL 2013

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By way of written submissions

SUBMISSIONS RECEIVED FROM

COUNSEL FOR THE APPLICANT: Ms Stewart

SOLICITOR FOR THE APPLICANT: Kennedy Partners

COUNSEL FOR THE RESPONDENT: Mr Mellas

SOLICITOR FOR THE RESPONDENT: Nanscawen Lawyers

Orders

1. That the respondent pay the applicant’s costs fixed in the sum of $27,272 forthwith.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Reece & Omrhan (Executrix to the Estate of Mr Mairead) (No. 2) 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 MELBOURNE

FILE NUMBER: MLC 256 of 2011

Ms Reece

Applicant

And

Ms Omrhan (Executrix of the Estate of Mr Mairead)

Respondent

REASONS FOR COSTS JUDGMENT

1. The applicant seeks costs as a result of having pursued and obtained a judgment after a contested hearing concerning the enforcement of a property order.  The respondent is the executrix of the estate of the deceased former de facto partner of the applicant.

2. The contested hearing took place over two days of 14 and 15 February 2013 and I delivered judgment on 21 February 2013.

3. The applicant now seeks costs on an indemnity basis of $50,667 or $27,272 if on a scale basis.  The respondent opposes any order for costs.

4. The law relating to costs in this jurisdiction was not disputed.  In all proceedings under the Family Law Act 1975 (Cth) (“the Act”), the costs issue is governed by s 117 of the Act which provides the general rule that each party shall bear their own costs. That general rule is subject to a broad discretion allowing costs to be ordered in circumstances where the Court considers it is justifiable to make such an award. In the exercise of that discretion, the Court is required to have regard to a number of specified matters set out in s 117(2A).

5. Regard must be had to all of those matters but the discretion is wide. It is not necessary for the Court to be satisfied that all of the factors in s 117(2A) are satisfied (see Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor [2005] FamCA 158; (2005) 33 Fam LR 123).

6. The applicant for costs carries no special onus but the Court is required to find the justifying circumstance as the essential preliminary step before making any costs order (see Penfold v Penfold (1988) CA 4; (1980) 144 CLR 311). Thus, any one of the factors may become the sole foundation for an order for costs but on the other hand, all of the relevant factors must be taken into account before arriving at the decision. It is clear therefore that the Court’s discretion with respect to costs is broad. That discretion may include determining whether part or all of a litigant’s costs should be paid providing the circumstances met the relevant criteria in the Act.

7. The judgment concerned the interpretation and/or enforcement of orders of the Court made on 17 October 2010.  Those orders were made by consent of the parties. 

8. The orders provided that the applicant was to receive from the deceased’s estate 38 per cent.  That amount was to be calculated after payment of:

   (a)all applicant Australian and US taxes;  and

   (b)all liabilities of the estate (including the calculated amount to the applicant).

9. In the judgment, I went on to say that there were two other peripheral orders affecting the determination.  The first was that the respondent was to report to the applicant on a monthly basis as to developments about taxes and liabilities and the second was that there was to be no order for costs.  Bearing in mind the simplicity of all of those orders, it is clear from the judgment that I found that the applicant is justifiably frustrated by not receiving her entitlement in a timely manner. 

10. In the reasons for judgment, I was critical of the respondent.

11. The respondent’s view was that the applicant’s property entitlement was an estate liability and I found that I could not construe the order as such; the orders required the respondent to wind up the estate as soon as practicable and I found that her actions did not seem to be consistent with the order.  The respondent had indicated concern about her own position as trustee for the payment of estate tax but I found there was no evidence of such a liability.

12. The applicant submitted that the respondent increased the costs that she was forced to bear.  The respondent denied her conduct caused an increase in the applicant’s costs.  I have no doubt that the applicant’s frustration at not resolving the issue justified her issuing the enforcement proceedings and, having regard to the findings I have made about the stance adopted by the respondent, I find that the respondent did contribute to the increased costs incurred by the applicant.

13. The applicant submitted the distributions within the estate by the respondent were made without her consent full well knowing that under the orders, her consent should have been obtained.  The respondent in reply denied she had done anything wrong and that her actions were reasonable in all the circumstances.  She denied breaching any undertakings given to the applicant.  In my view, the findings indicate that the respondent ignored the applicant unjustifiably. 

14. The applicant submitted that the respondent’s attitude and actions were misconceived.  The respondent relied upon her own belief as to how the orders of the Court were to be dealt with within the estate.  Having regard to my findings, I must reject the respondent’s position.

15. The applicant submitted that the respondent had failed to comply with her obligations under the orders particularly in relation to providing reports and had delayed providing tax advice which had been in her possession for several months.  I accept that.

16. There was some debate between the parties about mediating the substantive enforcement dispute but the reality was that the mediation did not occur culminating in the proceedings being litigated.  The proceedings could have been compromised at any stage but the respondent adopted the position that she did.  She “chanced her arm”.

17. The applicant submitted that in respect of the respondent’s responsibility under the orders for the distribution of property was found by me to be quite unsatisfactory.  In reply, the respondent submitted that no evidence was offered as to the details of the alleged failure but it was in the proceedings, culminating in my finding that the evidence of the respondent was not satisfactory.

18. The applicant conceded that she had not been wholly successful. Section 117(2A) refers to someone being “wholly unsuccessful”. In Davida and Davida (Costs) [2011] FamCAFC 61 Finn J with whom O’Ryan and Ainslie-Wallace JJ agreed:

    The other justifying circumstance is the husband’s relative success. True it is that the relevant paragraph in s 117(2A) refers to a party being “wholly unsuccessful”, but I think it fair to say that the practice has been to look at what one might term the relative merits of success of lack of success between the parties, even if necessary doing that under the last matter mentioned in s 117(2A), being any “other” matter.

19. The first step is to decide whether there are justifiable circumstances to depart from the principle set out in s 117 of the Act. In my view, where there is an order made and the recipient of the benefits of it is obliged to return to court to enforce those rights, the respondent takes a significant risk if found to be unsuccessful in relation to non-compliance with the order. That is a reference to “chancing one’s arm”. In my view, in an enforcement of a property matter, where the respondent either ignores the obligations or adopts a position which is disputed, requiring the Court to make a determination, there are justifiable circumstances for making an order for costs if the Court is required to intervene.

20. Once the issue of justification is determined, the Court is required to look at the provisions in s 117(2A) of the Act. Here there is no argument about the question of the financial circumstances of the parties. Both are affluent but the reality is, that the respondent is in the position as a trustee in control of significant resources.

21. In respect of the conduct of the proceedings, I am satisfied that the applicant had little choice but to return to court to enforce her rights and the respondent’s actions simply to stand her ground insisting that her position was correct.  Even the offer of mediation, does not overcome the problem that the respondent adopted a position which frustrated the applicant and required her to return to court.

22. Whilst I accept that the respondent has not been wholly unsuccessful, there can be little doubt that she has been largely unsuccessful and the applicant virtually entirely successful save for one issue about which I found the evidence unsatisfactory.

23. There were clearly offers of settlement but they only go to the exercise of discretion.  The fact that the respondent took the opportunity to litigate places her at greater risk than in a situation of an application of first instance.  The applicant submitted that the respondent held herself out as something of an expert.  In his submission on behalf of the respondent, counsel for the respondent denied that there was any evidence of that.  That is not correct having regard to the fact that the respondent gave evidence that, in my view, was very close to misleading about her expertise in the taxation area.  As I pointed out at the time, that did her little credit.

24. In my view, this is a case where there should be an order for costs.

25. Having regard to the findings I have made in the substantive proceedings, there is nothing extraordinary about the proceedings such as would fit within the indemnity costs provisions.  In my view, this is a case where there should be an order for costs determined according to the scale.

26. I have examined the details in the document attached to the applicant’s submission and in my view, they not having been challenged by the respondent, rather than put the parties through a further hearing such as an assessment for costs, I propose to exercise my discretion and make an order that the respondent pay the applicant’s costs fixed in the sum of $27,272.

I certify that the preceding Twenty Six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 10 April 2013.

Associate: 

Date:  10 April 2013