Roy & Yalden (No. 2)
[2021] FamCA 203
•19 April 2021
FAMILY COURT OF AUSTRALIA
Roy & Yalden (No. 2) [2021] FamCA 203
File number(s): SYC 1833 of 2015 Judgment of: MCCLELLAND DCJ Date of judgment: 19 April 2021 Catchwords: FAMILY LAW – COSTS – Where wife seeks that the husband pay her costs of and incidental to the hearing of the substantive property proceedings on a party/party basis – Where the husband and wife each contend they made written offers of settlement closely approximate to the final judgment entered – Where aspects of both parties conduct in relation to the proceedings was inconsistent with the main purpose of the Family Law Rules 2004 – No circumstances found to justify an order for costs – Application dismissed. Legislation: Family Law Act 1975 (Cth) s 117
Federal Court of Australia Act 1976 (Cth) ss 37M, 37N
Family Law Rules 2004 (Cth) r 1.04, 1.08, 17.02
Cases cited: Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123
I and I (No 2) (1995) FLC 92-625
Julstar Pty Ltd v Hart Trading Pty Ltd [2014] FCA 108
Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61
Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664
Mijac Investments Pty Ltd v Graham [2013] FCA 296
Modra v Victoria (Department of Education and Early Childhood Development and Department of Human Services) (2012) 291 ALR 429
Penfold v Penfold (1980) 144 CLR 311
Sklavos v Australasian College of Dermatologists [2013] FCA 1065
Number of paragraphs: 54 Date of hearing: 23 February 2021 Place: Sydney by video web conference Counsel for the Applicant: Ms Coulton Counsel for the Respondent: Mr Othen Solicitor for the Applicant: Law Corporation Pty Ltd Solicitor for the Respondent: Broun Abrahams Burreket ORDERS
SYC 1833 of 2015 BETWEEN: MS ROY
Applicant
AND: MR YALDEN
Respondent
ORDER MADE BY:
MCCLELLAND DCJ
DATE OF ORDER:
19 APRIL 2021
THE COURT ORDERS THAT:
1.The Application in a Case filed 4 January 2021 seeking an order for costs is dismissed.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Roy & Yalden has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McClelland DCJ:
INTRODUCTION
This decision concerns an Application for costs filed 4 January 2021 whereby Ms Roy (“the wife”) seeks orders requiring Mr Yalden (“the husband”) to pay her costs of and incidental to the substantive property proceedings between the parties on a party/party basis. My Reasons for Judgment concerning the substantive proceedings were delivered on 7 December 2020 (“the primary judgment”) (see [2020] FamCA 1026). In those reasons, I explained why I made orders adjusting the parties’ property requiring the husband to pay to the wife the sum of $126,438. That amount was, however, subsequently adjusted, pursuant r 17.02 of the Family Law Rules 2004 (“the Rules”), to the figure of $121,191. The costs incurred by the parties in litigating to achieve that outcome totalled slightly in excess of $282,000. That outcome gives cause for the parties, their legal advisers and the Court to reflect on how that situation eventuated.
BACKGROUND
In essence, the Application for costs relates to that portion of the proceedings which focussed upon whether the husband was indebted to members of his family and a family related corporate entity in respect to monies that the wife acknowledged had been advanced to him (at [280]). The primary judgment held that, other than in respect to one loan from his mother, the husband had not satisfied the Court as to the existence of the remaining loans which are referred to in the primary judgment (see [131]–[215]).
In the primary judgment, I determined that the net property pool was not reduced by the amount of the alleged loans but the monies so advanced to the husband were a significant contribution on his behalf. Having regard to the totality of the parties’ contributions, including the amounts advanced by his family members, I determined that an appropriate adjustment of the parties’ net property pool was a 15 per cent distribution to the wife and an 85 per cent distribution to the husband. Accordingly, I held that the wife be declared the sole owner of the property known as B Street in Suburb C, that the husband be declared the sole owner of property in his name and, in respect to property which he held jointly with other members of his family, and, to effect the adjustment, that the husband pay to the wife the amount of $126,438, being the difference between the 15 per cent adjustment to the wife and the net property of the wife as determined in the substantive judgment. As noted, that amount was subsequently adjusted, to be a figure payable to the wife of $121,191.
APPLICATIONS
Orders sought by the wife
The wife seeks that orders be made in accordance with those set out in her Application in a Case filed 4 January 2021 and sealed on 11 January 2021, as follows:
1.That the Respondent Husband pay to the Applicant Wife costs of and incidental to the property proceedings assessed on an ordinary party/party basis or as agreed between the parties from 1/04/2020 pursuant to s 117(2) of the Family Law Act.
2.Further and in the alternative that the Respondent Husband pay to the Applicant Wife the costs of and incidental to the property proceedings assessed on an ordinary party/party basis or as agreed between the parties of the costs thrown away by the conduct of the Respondent Husband in unduly prolonging the hearing of the matter or the proceedings with claims relating to alleged loans by the Respondent Husband which were rejected by the Court.
3.Pursuant to Rule 19.02 of the Family Law Rules, interest accrue on the final costs as and from the due date.
4. Such other order as this Honourable Court deems fit.
5. Costs.
Orders sought by the husband
The husband seeks orders be made in accordance with those set out in his Response to Application in a Case filed 1 February 2021, as follows:
1. That the Orders sought by the Applicant Wife be dismissed.
2.That pursuant to Rule 17.02 of the Family Law Rules the Orders made on 7 December 2020 be amended as follows:
2.1. That Order 1 be amended to read as follows:
“1.That within 60 days of the date of these Orders Mr Yalden (“the husband”) pay to Ms Roy (“the wife”) the sum of $109,000”
2.2. That Order 5 be amended to read as follows:
“5.That if the husband fails to pay the sum of $109,000 to the wife within 60 days of the date of these orders in accordance of Order 1 herein, the husband will do all acts and things and sign all documents necessary to sell the property known as D Street, Suburb E and use the proceeds thereof to pay the wife”
3.That the applicant wife pay the respondent husband’s costs of an incidental to this application.
The husband’s counsel did not press his application for proposed order 2 of his Response in these proceedings.
EVIDENCE
The wife relied upon the following documents:
(a)Application in a Case filed 4 January 2021 and sealed on 11 January 2021;
(b)Affidavit of the solicitor for the wife filed 5 January 2021; and
(c)Summary of Argument filed 22 February 2021.
The husband relied upon the following documents:
(a)Response to an Application in a Case filed 1 February 2021;
(b)Affidavit of the husband filed 1 February 2021; and
(c)Written submissions dated 23 February 2021.
THE LAW – CONCEPTS AND PRINCIPLES
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) sets out the basis upon which the Court is empowered to award costs. That section relevantly provides:
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) 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 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.
Those provisions make it clear that, while the general rule in family law proceedings is that each party bears his or her own costs, the Court may order a party to pay the costs of another where there are circumstances justifying the making of such an order.
The considerations set out in s 117(2A) of the Act must all be taken into account and balanced in deciding whether or not to order a party to pay the costs of another: see I and I (No 2) (1995) FLC 92-625 at 82,277 (per Nicholson CJ, Ellis and Buckley JJ). 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: see Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 at [24] (per Strickland J).
As such, a litigant seeking a costs order must establish that the justice of the case requires an order for costs, by reference to the non-exhaustive list of statutory considerations set out in s 117(2A) of the Act, before such an order is made. Although the applicant for costs must establish circumstances which would justify such an order, it is not the case that a costs order can only be made in what has been described as “a clear case”: see Penfold v Penfold (1980) 144 CLR 311 at 315 (per Stephen, Mason, Aickin and Wilson JJ).
Accordingly, there is “nothing to prevent any factor being the sole foundation for an order for costs” being made: see Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at [42] (per Kay, Warnick and Boland JJ).
CONTENTIONS
Helpfully, each of the parties provided a written summary of argument which were subsequently expanded upon in oral submissions. Those respective written summaries are as follows:
Submissions of the wife
The written summary of the wife’s submission are as follows:
1. The Wife offered to settle the property proceedings by way of a letter dated 1 April 2020 from her solicitors to the Husband’s solicitors on the basis that the Husband pay to her the sum of $150,000, that she be declared the owner of the Suburb C property, that the parties be declared the owner of any property, chattels, superannuation and chattels whatsoever in their names both at law or in equity, and that both parties be responsible for any liabilities including mortgages in their names: see annexure “A” of the affidavit of Mr AG.
2. The Court found at paragraphs 349 & 350 of the judgment that the combined net value of the parties’ property was $4,987,016 and that the Wife should have a 15 per cent adjustment in her favour of that property which equated to $748,052.
3. The Wife’s offer of 1 April 2020, taking into consideration the orders made under the ‘slip rule’ on 27 January 2021, represented 15.57 per cent of the net value of the parties’ property. That percentage figure (“P”) is calculated as follows:
B ÷ A x 100 = P
Where:
Combined net property pool of the parties: $4,987,016 (“A”)
Wife’s net property before adjustment: $626,8611;
Wife’s net property after $150,000 adjustment proposed in the Wife’s offer: $776,861; (“B”)
4. It is submitted that the Court can and should make an order for costs against the Husband under s 117(2A) of the Family Law Act given that the Wife’s offer was in effect the same or so close to the adjustment finding by the Court having regard to the combined net value of the property and the unnecessary expense of legal costs by the Wife since the offer was made. The Court can rely upon subsections 117(2A) (a), (c), (e), (f) and/or (g) of the Act.
5. The evidence in paragraphs 2 and 3 of the Husband’s affidavit sworn 1 February 2021 is not only inadmissible and misleading but irrelevant to these proceedings. The Husband is not only not bringing a claim for costs against the Wife, but there is no evidence as to any agreement between the parties or expert evidence as to the respective values asserted by the Husband in Annexure “A”, and there has been a finding by the Court that the loans asserted by the Husband in that document have not been accepted by the Court.
6. The Husband contended that he had liabilities totalling $1,206,766.00 (see Items 20, 21, 22, 23, 24 & 26 of the Balance Sheet) but the Court included only $74,796 from Item 20 of that total as a liability of the Husband.
7. The Court noted at paragraph 105 of the judgment “The time and expense incurred by the parties in these proceedings were primarily as a result of their dispute in respect of those matters.”
8. The dispute about the alleged loans took approximately at least 70 per cent of the preparation, the court hearing and the time spent on written submissions. The Husband was in effect totally unsuccessful in respect of his assertions, which not only wasted court time but inflicted unnecessary legal costs on the Wife particularly having regard to their respective financial circumstances and the findings of vague and uncertain evidence of the Husband.
Submissions of the husband
The written summary of the husband’s submission are as follows:
1. The usual rule is each party pays their own costs, however if the Court is satisfied a justifying circumstance exists then the Court may make a different order in its discretion.
2. The wife relies upon two bases for her costs application, that she offered to settle for a payment of $150,000 (in addition to retaining the whole of the Suburb C property subject to mortgage and her own assets and liabilities), and that she should have her costs of the argument that certain liabilities ought be brought to account in the balance sheet.
3. The husband relies on an offer he made at commencement of the proceedings, for the wife to receive the same outcome bar the payment ordered by the Court ($121,000 as it turned out, or $109,000 if the slip rule application succeeds).
4. The Court is to consider offers of settlement in writing. There is no limitation placed on the words by the statute, however generally it is where parties make offers which are of greater value to them than the judgment received which attract costs orders. Offers made by the respondent are relevant in defence of costs applications, particularly in this case where the husband’s pursuit of an aspect of the proceedings is said to be conduct justifying a costs order against him. Here the wife’s conduct of the proceedings in relation to the proceedings has caused great loss to the husband, for no net return to her, simply because of her unreasonable refusal of an offer.
5. The wife’s offer was made very late in the proceedings, only one month before trial, when large amounts of costs had already been incurred by the parties, and was significantly worse than judgment received, by almost $30,000, potentially $41,000 if the slip rule application succeed. It is not a justifying circumstance in and of itself.
6. By contrast, the husband’s offer was made at commencement of proceedings, 4 years and 8 months prior to trial. It is highly relevant. It would cause the Court to be critical of the wife of pursuing the proceedings over four and half years, when all she has to show for it (compared with the offer of settlement) is the recovery of the amount she spent on her legal fees. She receives $121,000 ($109,000 if the slip rule application succeeds). The proceedings cost her $102,000. They have been entirely pointless. They have cost the husband far more, all costs in reality thrown away by the wife’s pursuit of a far better judgment than the one she received. Plainly, she should have accepted the husband’s offer and saved all concerned the cost and stress of this lengthy litigation.
7. The husband did fail to persuade the court that certain liabilities be included in the balance sheet, however this does not amount to justifying circumstances. The husband was not wholly unsuccessful in the proceedings, to use the language of the statute; he faced a far more aggressive claim than the judgment received by the wife would justify, and he successfully defended it. He had no option but to defend the proceedings, particularly noting the wife’s failure to accept a reasonable offer at commencement, and the wife’s failure to engage meaningfully with likely outcomes for her until a month before trial.
8. Usually “conduct of the proceedings in relation to the proceedings” is understood to refer to the manner in which the proceedings themselves are conducted, rather than success or failure on particular aspects of the matter on the merits. To the extent the Court considers the particular successes or failures, the Court would consider the wife failed the most, at huge expense to the husband. The proceedings cost him over $175,000, to defend a very aggressive claim which bore no relation to the final result. The wife failed to engage meaningfully in settlement discussions when all the work bar the hearing itself had been done. The wife failed to accept a very reasonable offer of settlement, and put the husband to the expense and trouble of the litigation to receive a judgment which sees her no better off than if she had simply accepted his offer, because the cash payment goes to her lawyers.
9. There are no justifying circumstances which suggest the husband should bear any of these costs, given the offer he made.
CONSIDERATION
I have considered each of the paragraphs contained in s 117(2A) of the Act and have determined that the factors most relevant to my decision are those set out at paragraphs (f), (c), (e) and (g).
Offers of settlement
As noted from the parties’ respective submissions, each party contends that the other has unreasonably rejected written offers of settlement made by the other.
The first offer of relevance is an offer set out in a letter from the solicitors for the husband to the solicitors for the wife dated 29 September 2015. That letter is contained in the Affidavit of the husband filed 1 February 2021 as annexure “A” and reads as follows:
We are instructed to put the following proposal for settlement of the properly proceedings between the parties:
1. That your client retain the properly registered in her name known as B Street Suburb C (“the Suburb C property”).
2. That within 42 days of the date of orders your client take all steps necessary and sign all documents necessary to procure a release from the National Australia Bank of any guarantee provided by our client in respect of the mortgage register number … secured over the Suburb C properly.
3. That other than ls provided for in the orders each of the parties shall be solely entitled to the exclusion of the other to all property, chattels and superannuation of whatsoever nature and kind in the possession, ownership and control of each party as at the date of these orders.
4. That except as any of the orders provide to the contrary:
4.1. Our client indemnifies your client from and against in respect of all actions, claims, suits and demands as may be made against her in relation to all liabilities in his name.
4.2. Your client indemnifies our client from and in respect of all actions, claims, suits and demands as may be made against him in relation to all liabilities in her name.
5. That each party pay their own costs of these proceedings.
We attach a schedule setting out the effect of the above settlement proposal to each of the parties.
The above offer of settlement will remain open for acceptance by your client for a period of 28 days and following that period will be withdrawn.
(As per original)
The evidence provided by the parties does not indicate what response, if any, was provided by the solicitors for the wife to that offer.
The second offer of relevance is the offer made by the solicitors for the wife to the solicitors for the husband by way of letter dated 1 April 2020, contained in the Affidavit of the solicitor for the wife filed 5 January 2021 as annexure “A”, as follows:
Noting the current crisis and with a view to minimizing further costs to the parties, we are instructed to make the following without prejudice offer save as to costs:
1. Your client pay to our client the amount of $150,000 within 28 days by way of property settlement;
2. That the property known as B Street Suburb C (“the Suburb C Property”) be declared the property of our client, in equity and law, subject to the existing mortgage;
3. That other than set out above, each of the parties shall be solely entitled, to the exclusion of the other, to all property, chattels and superannuation of whatsoever nature and kind in their respective possession, ownership and control in equity or law;
4. That each party indemnify the other from and against all actions, claims, suits and demands as may be made against them in relation to all liabilities in their own name; and
5. That each party pay its own costs of the proceedings.
We note the above offer remains open for acceptance by your client for a period of 28 days. However, we hope to obtain a response from you promptly in order to reduce the costs of further preparing the matter for any hearing and/or obtaining updated valuations.
Again, no evidence has been presented as to the response provided by the solicitors for the husband save to the extent that paragraph 3 of the Affidavit of the wife’s solicitor dated 5 January 2021 states that the offer was not accepted.
It is to be noted that the outcome of the proceedings which resulted in the parties retaining all property in their respective names together with the husband paying the wife the sum of $121,191 exceeded the offer made by the solicitors for the husband in their letter dated 29 September 2015. The reverse also applies in respect to the letter from the wife’s solicitors to the husband dated 1 April 2020. That is, the wife received less in the primary judgement than the amount of her settlement offer.
Nevertheless, both offers were “in the ballpark” of a reasonable outcome and warranted serious consideration and required a sensible response from the other party. The difficulty I have is that, save to the extent that the Court has been advised that each of the respective offers were rejected, there is no additional evidence as to whether either party responded by way of making a sensible and appropriate counteroffer and/or proposed further constructive negotiations.
Relevantly, in considering the respective offers and the reasonableness of the parties’ responses to those offers, I note that, in respect to proceedings before the Family Court, the Court, the parties and legal advisers are expected to act consistently with the main purpose of the Rules which is set out in r 1.04 of the Rules as being “to ensure that each case is resolved in a just and timely manner at a cost of the parties and the court that is reasonable in the circumstances”.
Rule 1.04 is consistent with similar provisions that exist in State Acts of Parliament relating to civil procedure in State courts. It is also to be noted that r 1.04 is consistent with the obligation of parties and practitioners under ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth) (“the Federal Court Act”). Specifically, s 37M(1) of the Federal Court Act provides:
The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes:
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.
Significantly, both the Federal Court Act and the Rules refer to the resolution of disputes and do not exist simply to facilitate matters being prepared for and presented in Court at a final hearing. In other words, the parties, the Court and the public are entitled to assume that legal practitioners will comply with their obligations under the Rules, which includes, as described by Tracy J in Mijac Investments Pty Ltd v Graham [2013] FCA 296 at [49]:
…. a practitioner offering objective and considered advice to a client. This includes advice as to matters such as whether a proper basis in law exists for the making and pursuit of a particular application and the contents of any affidavits sworn in support of such an application. Without such advice, the just resolution of disputes according to law and as quickly and inexpensively as possible may well be hampered, if not frustrated.
There is similarly an obligation to not unreasonably fail to accept an offer. This is made clear by Greenwood J in Julstar Pty Ltd v Hart Trading Pty Ltd [2014] FCA 108, where his Honour said at [94] that achieving the overarching purpose of a just resolution involved parties “not unreasonably failing to accept an offer” and “required the applicants to carefully assess all the material, including the discovered material, to determine and confront the strengths and weaknesses of their case”.
As stated by Jagot J in Sklavos v Australasian College of Dermatologists [2013] FCA 1065 at [35]:
These provisions are not merely exhortatory. The duty is real and can be enforced, if necessary, by appropriate costs orders.
That obligation applies to both parties and practitioners. Indeed, as Gray J observed in Modra v Victoria (Department of Education and Early Childhood Development and Department of Human Services) (2012) 291 ALR 429 at [31]:
… the impact of those sections on the obligations of legal practitioners practising in this Court is significant.
The public policy objective in the relevant legislation and Rules, to which I have referred, speaks for itself. It is in the interests of the parties, the courts, and the public for matters that are capable of sensible resolution to be resolved as early as is reasonably practicable. That cost to the parties is not only financial, it is also, frequently, emotional and, ultimately, in terms of the application of court resources, it is a cost borne by the taxpaying public. This case is a prime example of the consequences of not resolving a matter as early as reasonably practicable. I have earlier noted, in combination, the parties spent in excess of twice as much on litigating the issues in dispute than the amount ordered as the adjustment made in favour of the wife. It is impossible to see how either party was well served by this litigation.
In summary, and by way of conclusion, on this point, the Court takes seriously the obligations placed on practitioners and parties to act in accordance with the main purpose of the Rules. Unreasonably rejecting an offer of settlement or, at least, failing to give appropriate consideration to a reasonable offer of settlement, as indicated by the authorities to which I have referred, may establish grounds for making an order for costs against the party determined to have acted unreasonably.
The difficulty I have in this case, however, is that I have not been provided with details of the nature of the response to each of the respective offers that were made by the parties. In the absence of being provided with that information, I am not in a position to determine whether either of the parties acted unreasonably in rejecting the other party’s offer of settlement.
Conduct of the proceedings
Most relevant to my consideration of the parties’ respective contentions is the manner in which the proceedings were conducted.
In that respect, it is the case that the majority of the proceedings were taken up considering the husband’s contentions in respect to the alleged loans to which I have referred. The mere fact that the husband was unsuccessful in respect to those arguments does not, in itself, justify an order for costs. This is particularly so in the area of family law where there can be a fine line between family members assisting other members of their family by advancing funds to them as opposed to intending to enter into a legally enforceable agreement. Frequently, that issue cannot be determined until a party’s evidence is tested in cross examination.
However, in this case, it is my view that the husband acted unreasonably in pressing purported loans that were clearly statute barred (see [136], [170], and [209]).
Further, it was, in my view, unreasonable for the husband to assert that written instruments prepared, after the funds had been advanced or partly advanced, simply confirmed the terms of the earlier oral agreements, in circumstances where the terms of the written instruments were inconsistent with the parties’ evidence as to the nature of the oral agreements. This occurred in circumstances where, in several instances, the evidence as to the nature of the oral agreements was that funds advanced to the husband would be repaid either on demand or when he was in a position to repay the funds, whereas the terms of the written instruments, said to reflect those oral agreements, provided for either periodical payments to be made or for payments to be made within a certain time (see [157] and [188]).
Accordingly, had it not been for the manner in which the wife conducted these proceedings, I would have made an order for costs in favour of the wife in respect to those aspects of the proceedings.
However, in my view, the wife similarly acted in an unreasonable manner in advancing a claim for a 40 per cent apportionment of the parties’ assets which was described by counsel for the wife as an “ambit claim” (Transcript 23 February 2021, p.19 lines 40–41). That was, with respect, an apt description of the nature of the claim in circumstances where the claim was not supported by authority and it considerably exceeded the amount of the respective offers of the parties which were presumably informed by the parties’ legal advisors’ assessment of a likely outcome in the proceedings.
Presenting an unrealistic claim at final hearing is contrary to the responsibilities of parties and lawyers in achieving the main purpose of the Rules as set out in r 1.04 of the Rules. In that respect, r 1.08 of the Rules requires parties to ensure “that any orders sought are reasonable in the circumstances of the case” (r 1.08(a)); to assist in achieving “the just, timely and cost-effective disposal of [the case]” (r 1.08(g); to identify “the issues genuinely in dispute” (r 1.08(h)); and to be satisfied “that there is a reasonable basis for alleging, denying or not admitting a fact” (r 1.08(i)).
Also of relevance to the consideration of this matter is the Joint Practice Direction: JPD1 of 2020, which sets out the Core Principles in the Case Management of Family Law Matters and relevantly provides, in Principle 2, under the subheading “Parties,’ lawyers’ and the Courts’ obligations and overarching purpose” that:
The overarching purpose to be achieved is to ensure the just, safe, efficient and timely resolution of matters at a cost to the parties that is reasonable and proportionate in all the circumstances of the case, having regard to the significant impact of family law disputes on children and families.
Principle 8b further provides that “applications should only be brought before the court if they are reasonably justified on the material available”.
In the context of the extent of the husband’s vastly superior financial contributions, the fact that the parties’ relationship was relatively short and the fact that there were no children of the relationship, together with the evidence establishing that each party had relatively similar future earning capacities and the capability to pursue career paths that had not been adversely impacted by the relationship, the wife’s claim for a 40 per cent adjustment of the parties property in her favour was not, in my view, reasonably justified.
Returning to the “main purpose” of the Rules, it is to be noted that the parties and the Court have an obligation to ensure that matters and resolved “in a just and timely manner and at a cost to the parties and the court that is reasonable in the circumstances of the case” (Emphasis added).
Not only did the wife’s conduct in advancing an ambit claim absorb unnecessary hearing time, it required additional judicial time in explaining, within the primary judgement, why the claim advanced on behalf of the wife exceeded what was reasonable on the basis of relevant authorities.
Accordingly, in circumstances where the manner in which each of the parties conducted this litigation gives rise to concern, I do not make an order for costs.
Wholly unsuccessful and other relevant matters
As previously noted, s 117(2A)(e) of the Act requires the Court to consider whether a party has been “wholly unsuccessful” in the proceedings. I respectfully agree with the submission by counsel for the husband that it cannot be said that the outcome of these proceedings is one where either party can claim to be “wholly successful” or conversely, that either party was “wholly unsuccessful”.
That situation does not, however, in my view, preclude the Court from considering whether a party has been partially unsuccessful in respect to a particular issue that was pressed in proceedings. This is particularly so in circumstances where the agitation of that issue resulted in the parties’ incurring substantial costs and/or where the agitation of that issue or those issues occupied a substantial part of Court time and resources.
In that respect, in Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 (per Bennett, Besanko and Beach JJ) the Full Court of the Federal Court stated at [297] that “a successful party may be awarded less than its costs, or there may be an order apportioning costs, on the basis of success on the issues”. In explaining the reasoning for this, at [301], the Full Court noted that “Courts have been increasingly concerned, generally, to use all proper means to encourage parties to consider carefully what matters they will put in issue in their litigation”.
Unlike most other civil jurisdictions, the Family Court generally does not require parties to identify issues by way of pleadings. In my experience, this can result in an unsatisfactory ambiguity of issues that require the courts determination which, in turn, has the potential to result in poorly defined and even unmeritorious issues being pressed at final hearing. It also has the potential for legal advisers to escape a degree of scrutiny that would otherwise occur if they were required to properly plead their client’s case and to present relevant evidence to establish the points that they have so pleaded. Comparatively, the existence of pleadings assists the parties and the Court to identify the issues in dispute, what evidence is relevant to the issues in dispute and, ultimately, to determine whether a party has or has not been successful in respect to the particular issue and, by extension, whether there was a reasonable basis for pressing that issue.
It is generally accepted that pleadings may be appropriate in circumstances where third parties are joined to proceedings. However, equally, further consideration should be given to whether pleadings are also appropriate in a case, such as this, where a party is advancing a binary proposition that either will or will not be established as an affirmative proposition. Specifically, in this case, whether the purported loans existed as legally enforceable agreements. Simple pleadings could have, for instance, in this case, set out:
(a)Who were the parties to the purported loans?
(b)When were the purported loans made?
(c)Was the agreement oral or in writing or partly oral and partly in writing?
(d)What was the subject matter of the agreement and, specifically:
(i)What was the amount of funds advanced or to be advanced?
(ii)When, and/or, in what circumstances were those finds to be advanced?
(iii)Was interest payable?
(iv)What was the term of the loan?
(v)What were the requirements for repayment including, for instance:
(A)Whether the amount was to be repaid by regular periodical payments;
(B)Whether the amount was repayable at a particular dates or dates; or
(C)Whether the funds were repayable on demand.
Such simple pleadings would have assisted the parties and the Court, in this case, to identify that several of the loans, even if they existed, were statute barred. It would have also assisted the parties and the Court to identify the consistency or, more relevantly, the inconsistency between the purported oral agreements and the subsequent written instruments to which I have earlier referred.
Accordingly, in summary on this point, the fact that s 117(2A)(f) requires the Court to consider whether a party has been wholly unsuccessful does not preclude a party seeking costs, even in circumstances where a party has been partially unsuccessful particularly, in circumstances where the issue or issues which they have been unsuccessful, required the parties and the Court to devote substantial resources to determine that particular issue. This may particularly be so if an issue is unsuccessfully pressed in circumstances where it has not been clearly identified to the other party and the Court.
Nevertheless, for reasons which I have set out, having regard to the conduct of both parties in these proceedings, I make no order as to costs and I dismiss the wife’s Application in a Case filed on 4 January 2021.
I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland. Associate:
Dated: 19 April 2021
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