Sewin & Cheals (No. 2)

[2021] FamCA 250

FAMILY COURT OF AUSTRALIA

Sewin & Cheals (No. 2) [2021]FamCA 250

File number(s):

PAC 4193 of 2018

Judgment of:

HANNAM J

Date of judgment:

30 April 2021

Catchwords:

FAMILY LAW – COSTS – Where the wife seeks that the husband pay her costs on an indemnity basis – Where consideration of applicable principles – Where circumstances do not justify a departure from the usual rule that each party bear their own costs

Legislation:

Family Law Act 1975 (Cth) s 117

Family Law Rules 2004 (Cth) r 12.02

Cases cited:

D & D (Costs)(No 2)(2010) FLC 93-435

PBF as Child Representative for AF (Legal Aid Commissioner of Tasmania) & TRF & LKL (2005) 33 Fam LR 123

Penfold v Penfold (1980) 144 CLR 311

Number of paragraphs:

40

Date of last submission/s:

3 December 2020

Date of hearing:

In Chambers

Place:

Parramatta

Solicitor for the Applicant:

El Baba Lawyers Pty Ltd

Solicitor for the Respondent:

Brighton Lawyers

ORDERS

PAC4193 of 2018

BETWEEN:

MS SEWIN

Applicant

AND:

MR CHEALS

Respondent

ORDER MADE BY:	HANNAM J
DATE OF ORDER:	30 APRIL 2021

THE COURT ORDERS THAT:

1.That the wife’s application 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 Sewin & Cheals has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

HANNAM J

INTRODUCTION

1. An applicant wife seeks an order that her costs in relation to an interim application brought by her in property proceedings with her husband be paid by the husband.

2. The husband seeks dismissal of the wife’s application.

3. The parties agree that the wife’s application for costs could be dealt with in chambers after submissions had been filed. Following receipt of both parties’ written submissions (noting that neither party filed any further affidavit in relation to the application), judgment was reserved in December 2020.

4. The question for me to determine is whether there are circumstances that justify departing from the usual rule that each party shall bear his or her own costs.

   BACKGROUND

5. The wife who is 36 (“the wife”) and the husband who is 31 (“the husband”) were married in 2014 and have been involved in property and parenting proceedings involving their two children (‘the children”) since September 2018.

6. In November 2013 the husband purchased the former family home in his sole name and it is his contention that a significant part of the funds used to purchase the home were advanced by his parents on the basis he was to hold the property on trust for them until they migrated to Australia. The paternal grandparents also assert this position and for this reason they have been joined to the proceedings. During the marriage the parties purchased at least two other properties and it is contended by the wife that the husband purchased a 50 per cent share in a business and holds an equitable interest in a third property.

7. The proceedings were initiated in the Federal Circuit Court where various orders were made prior to the proceedings being transferred to this Court. Of particular relevance are orders made in October 2019 for the sale of two investment properties by auction and for the balance of the proceeds of sale to be deposited into a solicitor’s trust account. At the same court event interim parenting orders were made that provide for the children to live with the wife and spend time with the husband each alternate weekend and a weekday in the alternate week. The proceedings were then transferred to this Court.

8. In April 2020 at a court event before a Registrar the parties advised that they had been unable to sell their two investment properties by auction as ordered due to COVID19 restrictions. Orders were also made at this event for both parties to provide disclosure to one another in accordance with the Family Law Rules which had also been a matter of ongoing dispute between them.

9. At a court event before a Registrar in May 2020 the matter was adjourned to allow the parties to come to an agreement to facilitate the sale of the investment properties.

10. The Court’s records indicate that at a further court event before a Registrar in May 2020 the parties had still not come to an agreement about orders to facilitate the sale of the investment properties and there remained an outstanding issue of disclosure.

11. In June 2020 the dispute over the sale and matters of disclosure had still not been resolved at a court event before a Registrar, at which time the proceedings were listed before me for the purpose of an interim hearing.

12. At the interim hearing on 15 June 2020 orders were made joining the husband’s parents, who assert an interest in the former family home, as second and third respondents to the proceedings. Further orders were made with the consent of all parties to facilitate the sale of the two investment properties and with the consent of the husband and wife to restrain the husband from further encumbering the former family home without the written consent of the parties. An order was also made with the consent of the parties requiring the husband to ensure all rental income from the investment properties is transferred and continues to be transferred to the respective loan accounts for those properties.

13. At the interim hearing the wife also sought orders that she receive a lump sum payment of $80,000 to be characterised by the Court as the Court sees fit at final hearing. The wife also contended that the husband failed to provide adequate disclosure in the proceedings and she pressed for further orders for disclosure. Further, the wife also sought an order restraining the parties from further encumbering or dealing with the investment properties without the written consent of the parties or court order.

14. The husband consented to most of the orders sought by the wife in relation to the sale of the investment property and disclosure, while also pressing himself for additional orders for disclosure. Otherwise he opposed the order for a lump sum payment.

15. On 28 September 2020 I made orders largely in terms sought by the wife in relation to the lump sum payment and in terms as sought by both the husband and wife in relation to disclosure. I did not make an order for an injunction restraining the husband from further encumbering the investment properties as I considered that the orders made at the interim hearing with the parties’ consent were proper to protect the wife’s interests in the circumstances.

    THE LAW & DISCUSSION

16. The applicant wife is seeking that her costs of and incidental to her application for interim orders be paid by the respondent husband in the amount of $36,850.

17. Applications for costs in this Court are the exception to the rule. Section 117(1) of the Family Law Act 1975 (“the Act”) sets out the general rule as being that each party is to bear his or her own costs. That principle is, however, subject to subsection (2) which gives the Court a discretion to make an order for costs if there are circumstances that in the Court’s opinion justify it in doing so. Any such order for costs is to be pursuant to section 117(2) “as the Court considers just”.

18. The High Court in Penfold v Penfold[1] indicated that the circumstances justifying an order for costs need not be exceptional, but they must, of themselves, be sufficient to justify the making of an order for costs. Therefore, there is no additional or special onus on an applicant seeking an order for costs other than the Court finding justifiable circumstances to make such an order.

    [1] (1980) 144 CLR 311

19. Section 117(2A) sets out the relevant matters, if any are applicable, to which the Court is to have regard in considering an order for costs. The matters relevant in this case are considered below.

    The financial position of each of the parties to the proceedings

20. The wife contends that her financial circumstances are strained. In written submissions made on her behalf she relies upon her affidavit filed 23 April 2020 where she deposes that her weekly income is comprised of Centrelink benefits of $1450 per fortnight, and child support payments received from the father of her two other children. The wife asserts that she receives no financial support from the husband and she solely provides for the children’s expenses.

21. The wife deposes that her personal expenditure each week is $998, which consists of rent, groceries, utilities and bills, child care fees, school expenses, car expenses, private health insurance and tutoring fees.

22. The wife also deposes to have approximately $7,000 in various bank accounts. She owns a motor vehicle approximately valued at $8,000, jewellery worth $800 and household contents $4,000 in value. The wife also indicates that she has a superannuation entitlement of $10,987. Otherwise, she deposes to a debt of $32,516 for unpaid legal fees.

23. In written submissions the husband asserts that his taxable income for the 2019 financial year was $12,642. In submissions made on his behalf it is asserted that he is responsible for the children’s day-to-day expenses when they are in his care, four nights a fortnight. While the husband has been represented throughout the entirety of the proceedings he contends that counsel has been funded through money borrowed from his parents and that he remains significantly indebted to his solicitors. The husband submits that his financial position is no greater than the wife’s, particularly in circumstances where the wife has been granted a lump sum payment of $80,000.

24. No affidavit was filed by the husband in relation to this application and as a result the Court was provided with limited information in relation to his current financial circumstances. As I understand it he relies on his affidavit and Financial Statement filed in relation to the interim application to support the submission made on his behalf that he does not have significant means and is seriously burdened by debt. In his affidavit filed for the purpose of the interim application the husband deposes that he receives a salary for working 3 – 4 days per week in a small business. It can be gleaned from this affidavit that the husband claims to earn no more than approximately $411 per week before tax. The husband receives rent from two investment properties held in both parties’ names, but these properties are due to be sold and until that occurs, in accordance with orders made by consent on 15 June 2020 all rental income from each property must be transferred to the respective loan accounts for those properties.

25. The husband deposes to have approximately $2,043 in various bank accounts. According to his Financial Statement relied upon at the interim hearing he has a superannuation entitlement of $14,768. The husband owns a motor vehicle which is valued at approximately $70,000.

26. The former family home is valued at approximately $1,700,000 and is held by the husband in his sole name. He has enjoyed exclusive occupancy since the wife left the home in August 2018. The property is encumbered by a mortgage of $900 per week according to his Financial Statement. The husband also deposes to approximately $18,200 in liabilities in the form of personal loans borrowed from a friend and his parents to meet the shortfall on repayments of the investment properties and to fund his legal fees. He contends to remaining indebted to his solicitors in the amount of $48,825.

27. Interim parenting orders were made by consent in October 2019 which provide that the children are to spend time with the husband for four nights per fortnight and half of the school holidays. He is responsible for the costs of caring for the children during these periods.

28. The husband submits that he is in no better financial position than the wife. However, as noted in my interim judgment he has been employed as a professional for some years and appears to have had access to substantial financial resources to fund or provide security for loans to purchase real estate. In my view he does have the financial capacity to pay the wife’s costs if that were ordered. In any event this matter is not determinative as impecuniosity is not bar to the making of an order for costs,[2] particularly where there are circumstances which otherwise justify an order for costs.

    [2]D & D (Costs)(No 2)(2010) FLC 93-435.

    Whether any party to the proceedings is in receipt of assistance by way of legal aid

29. Neither of the parties were assisted in the proceedings by way of legal aid.

    The conduct of the parties to the proceedings in relation to the proceedings

    Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

    Whether any party to the proceedings has been wholly unsuccessful in the proceedings

30. It is contended by the wife that the husband’s conduct significantly increased the costs incurred by her. She contends that she was compelled to institute urgent interim proceedings as a result of the husband’s failure to provide full and frank disclosure and his unwillingness to reach an agreement in relation to the sale of the investment properties and restraints on further encumbering the properties, although these orders were largely made by consent at the interim hearing.

31. In written submissions, the wife contends that issues in relation to disclosure first arose in November 2019 when her solicitor contacted the husband’s solicitor by email requesting financial disclosure and no response was received. Further correspondence was sent to the husband’s solicitor in March 2020 which was also unanswered. The husband contends that he did not provide financial disclosure at the time as the matter had not been given a listing date and the wife had also not yet provided financial disclosure despite requesting the husband to do so.  

32. At a court event before a Registrar in April 2020 orders were made that each party exchange with each other party all documents prescribed in rule 12.02 of the Family Law Rules within 14 days. The wife submits that she provided disclosure within this timeframe however it was nominal in nature due to her limited assets and income. She further submits that the husband has only partially complied with orders for financial disclosure and even this was provided approximately two hours before the second court event in April.

33. The husband disputes the wife’s submission that she had provided disclosure prior to the second court event in April. The husband contends that while the wife claimed that she owned no assets and only received income through Centrelink payments she did not provide the husband’s solicitor with any relevant evidence until the morning of the second court event in April.

34. It is clear that disclosure has been an issue for both parties throughout the course of the proceedings. Despite orders for disclosure being made by a Registrar in April 2020 I found it was necessary to make further orders in relation to disclosure at the interim hearing. Ultimately I made orders in relation to disclosure as sought by both parties.

35. The wife contends that the husband acted unreasonably by objecting to proposed orders regarding the sale of the investment properties and an order preventing him from further encumbering the properties. She contends that this objection led to unnecessary delays in the resolution of the issues.

36. During the interim hearing the husband opposed the making of an order restraining him from “encumbering” the investment properties on the basis that when he failed to meet the mortgage repayments he would automatically be in breach of such an order if made. I accepted the husband’s contentions in this regard and ultimately an order was made with the consent of the parties requiring the husband to ensure all rental income for the investment properties is transferred into the respective loan accounts. This interim order was in my view proper to protect the wife’s interests in the circumstances and there is little force to the argument that the husband was unreasonable in objecting to the order in the exact terms sought by the wife.

37. In her written submissions the wife also asserts that she was almost entirely successful in obtaining the orders sought in her application and the husband was wholly unsuccessful in obtaining the orders sought in his Response. While the orders I made were largely consistent with those sought by the wife, the husband’s application was not wholly unsuccessful. He consented to the orders sought by the wife in relation to the sale of the investment properties and also successfully sought orders that she provide further financial disclosure.

    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

38. Neither party made an offer in writing to the other party to settle proceedings.

    Such other matters as the court considers relevant

39. There are no other matters which the Court considers relevant to this costs application.

    CONCLUSION

40. Balancing the relevant matters that I have set out, I am of the view that there is insufficient justification to depart from the usual rule that each party bears their own costs. As I do not consider there are circumstances that justify a departure from this rule, I do not need to consider the wife’s submissions with respect to indemnity costs. Accordingly, the wife’s application that the husband pay her costs is dismissed.

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hannam.

Associate:

Dated:       30 April 2021