Roy & Yalden (No. 2)

Case [2021] FamCA 203

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

  1. 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…

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AGLC
Roy & Yalden (No. 2) [2021] FamCA 203
Case
[2021] FamCA 203
Decision Date

CaseChat Overview and Summary

In *Roy & Yalden (No. 2)*, the wife sought orders that the husband pay her costs of and incidental to the substantive property proceedings on a party/party basis. The wife contended that she had made a written offer of settlement that was closely approximate to the final judgment, and that aspects of the husband's conduct were inconsistent with the Family Law Rules 2004. The court was the Federal Circuit and Family Court of Australia, with McClelland DCJ presiding.

The primary legal issue before the court was whether there were circumstances justifying an order for costs against the husband, pursuant to section 117(2) of the *Family Law Act 1975* (Cth). This involved considering various factors outlined in section 117(2A), including the conduct of the parties in relation to the proceedings, the making of written offers to settle, and whether any party was wholly unsuccessful. The wife sought costs on two bases: an offer she made late in the proceedings, and costs thrown away due to the husband's pursuit of claims relating to alleged loans that were ultimately rejected by the court.

McClelland DCJ reasoned that while the general rule in family law proceedings is that each party bears their own costs, an order for costs may be made if there are justifying circumstances. The court considered the written offers of settlement made by both parties. The wife's offer, made shortly before trial, was found to be significantly worse than the judgment she ultimately received. Conversely, the husband's offer, made at the commencement of proceedings four years and eight months prior to trial, was considered highly relevant. The court found that the wife's pursuit of the proceedings for such a lengthy period, when the outcome was no better than the husband's initial offer (after accounting for legal fees), rendered the litigation largely pointless and costly for both parties. While the husband did not succeed on all alleged loan claims, he was not wholly unsuccessful, having defended a more aggressive claim than the final judgment justified. The court concluded that no circumstances were found to justify an order for costs against the husband.

Consequently, the court dismissed the wife's application for costs.

Orders

Orders of the court

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).

Background

Background to the litigation

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. APPLICATIONSOrders 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

Evidence

Evidence Before The Court

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).

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

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