Russell and Rovanio

[2014] FamCA 26

FAMILY COURT OF AUSTRALIA

RUSSELL & ROVANIO [2014] FamCA 26

FAMILY LAW – COSTS – Respondent to pay the applicant’s costs of the proceedings to establish jurisdiction

Family Law Act 1975 (Cth)

Prantage and Prantage [2013] FamCAFC 105

APPLICANT: Mr Russell

RESPONDENT: Mr Rovanio

FILE NUMBER: MLC 5402 of 2012

DATE DELIVERED: 24 January 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By Way Of Written Submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Mellas

SOLICITOR FOR THE APPLICANT: Joseph Guss Lawyer

Orders

1. That the respondent pay the applicant’s costs of the proceedings to establish jurisdiction culminating in the orders made on 6 November 2013 by agreement and in default of agreement, as assessed.

2. That a copy of this order be served by the applicant upon the respondent as soon as practicable.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Russell & Rovanio 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 5402  of 2012

Mr Russell

Applicant

And

Mr Rovanio

Respondent

REASONS FOR JUDGMENT

1. On 6 November 2013, orders were made arising out of an application by Mr Russell for a declaration that the Court had jurisdiction to hear a financial dispute arising out of the conclusion of his de facto relationship with Mr Rovanio.  In the orders, provision was made for any party to seek costs. 

2. By written submission drawn by counsel and dated 18 November 2013, the applicant sought costs.  No response has been received by the Court from Mr Rovanio.  I have presumed that he therefore has nothing to say in respect of the issue.

3. In the hearing, I found that it was not contentious that there had been a de facto relationship but rather when it ended.  I accepted the evidence of the applicant and rejected that of the respondent and made the necessary declaration.

4. As to the parties, I said:

   12.As primary witnesses, the parties were an interesting contrast.  The applicant was well prepared, responsive and a very accurate historian.  His evidence about personal things was challenged and I accept he gave forthright answers.  I have no doubt about his honesty.  The respondent was obviously not as well prepared and was evasive in his answers.  He obfuscated, for example, about the meanings of text messages and was disingenuous in accusing the witness, [Mr C], of “possibly” fabricating an email that was inconsistent with his case.  He did not cross-examine Mr [C] about this assertion but preferred to skirt around it by suggesting it was possible that his email password had been abused. 

5. I made a general finding that I preferred the applicant’s evidence where there was a conflict.

6. Findings on the evidence were made on the balance of probabilities and some of those findings can for example be seen in paragraphs 44, 46, 47, 48 and 52.

7. Important findings about truthfulness are different to those where the Court is persuaded on two contradictory versions as to which one is more probable. As for a discussion about the former s 117AB which does not apply here but which has some indication as to how evidence is viewed, see Prantage and Prantage [2013] FamCAFC 105 at para 114 and thereafter.

8. Findings about truthfulness can reflect disbelief in what the Court is being told.  There is also a difference between a witness adopting a position regardless of how untenable but still believing it and someone who deliberately lies or obfuscates.  In this case, examples of my findings in the latter category can be seen in paragraphs 48 and 49 of the judgment.

9. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that in proceedings in this Court under the Act, each party shall pay their own costs unless there are circumstances satisfying the Court that it is justifiable to depart from that principle. If the Court finds there are such circumstances, before making an order, it must take into account the matters set out in s 117(2A).

10. The submission on behalf of the applicant was that the circumstances here justify the making of an order for costs.  The circumstances relied upon were really addressed under a heading of matters that the Court might consider relevant.  Counsel submitted the following:

    ·The findings of the Court justified the applicant’s decision to prosecute the preliminary issue as to jurisdiction;

    ·The applicant had no choice but to pursue the matter because of the position adopted by the respondent;

    ·The applicant was successful in relation to significant findings about the lack of credit of the respondent;

    ·The serious findings against the respondent included that he was evasive, disingenuous and not believed; and

    ·Where the Court found that there was a conflict of interest, the evidence of the applicant was preferred over the respondent.

11. I accept that the submission of the applicant is generally well-founded and that there are justifiable circumstances to depart from the principle because of the findings referred to earlier in these reasons but particularly those concerning the truthfulness of the respondent. 

12. It is important to point out that costs are not intended as a punishment but rather as compensation for the party who has had to proceed to litigate for the purposes of establishing what the Court has ultimately found.  I therefore agree with the submission of the applicant that he had little choice but to proceed having regard to the stance adopted by the respondent.  Once a party forces the litigation to proceed, they presumably have taken into account the risks of credit findings as here because they are cognisant of the facts that are in dispute.

13. I find there are justifiable circumstances here to depart from the principle that each party pays their own costs.

14. Before making the order, it is important to look at the matters set out in s 117(2A).

15. The Court is obliged to look at the financial circumstances of each of the parties to the proceedings.  It is not necessary to do a finite examination of the financial circumstances because the Court is required to take into account the parties’ general financial circumstances.  There was little dispute in this case that the respondent is in a stronger financial position than the applicant and he is a professional conducting a business.  It is hard to see how a costs order would affect the financial circumstances of either party in this case.

16. It was common ground between the parties that neither was entitled to or affected by a grant of legal aid. 

17. Section 117(2A) requires the Court to consider the conduct of the parties to the proceedings and then goes on to set out some of the examples that the Court might consider relevant. It is the general conduct of the parties to the proceedings that can be seen across all areas of the litigation that is relevant here. In this case, I found that the respondent’s evidence was not what it should have been.

18. Section 117(2A) also requires the Court to take into account the failure of a party to comply with orders. That is not relevant in this case. What is relevant however is that the respondent has been wholly unsuccessful in the discrete application that the Court was dealing with.

19. The Court is also obliged to take into account offers of settlement and the submission of the applicant indicates that there was no such problem here.

20. Having regard to the apparent financial positions of the parties and the fact that the applicant had to proceed to establish the jurisdiction and the findings that I have made, it is appropriate to make an order for costs associated with the discrete application.  Because there was no precise details provided to me, I am not in a position to make an order for specific costs.

21. The applicant also sought that costs be paid on an indemnity basis and made submissions that a costs order on a party and party basis would not do justice because of the actions of the respondent and the matters that I have set out above.

22. The Full Court in Prantage and Prantage (supra) has made the position very clear in relation to indemnity costs that they are the exception rather than the rule.  In my view, notwithstanding the comments I have made earlier about the way in which the respondent conducted the proceedings, I find there is nothing exceptional about this case and accordingly, it would not be appropriate to make an order on an indemnity basis.

23. Absent any indication as to what the costs were, I propose to make an order that failing agreement as to the costs, they be assessed.

I certify that the preceding twenty three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 24 January 2014.

Associate: 

Date:  24 January 2014