Stanton and Stanton (No. 2)

[2007] FamCA 679

FAMILY COURT OF AUSTRALIA

STANTON & STANTON  (NO. 2) [2007] FamCA 679

FAMILY LAW - COSTS - Children's and property matters

Family Law Act 1995 (Cth), ss 79, 117

Knight & Anor v. FP Special Assets Limited  & Ors (1992) 174 CLR 178
Myers v Elman (1940) AC 282
Edwards and Edwards (1958) P 235
Gardiner and Gardiner (1977) FLC 90-304
Collins and Collins (1985) FLC 91-603
Cassidy v Murray (1995) FLC 92-633
Ridehalgh v Horsefield (1994) 3All ER 848
Myers v. Elman (1939) 4 All ER 484

APPLICANT: MR STANTON

RESPONDENT: MRS STANTON

INTERVENOR: N/A

INDEPENDENT CHILDREN’S LAWYER: N/A

FILE NUMBER: MLF 1251 of 2007

DATE DELIVERED: 11 July 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Brown J

HEARING DATE: By written submission annexed hereto

REPRESENTATION

FOR THE APPLICANT: The husband in person

COUNSEL FOR THE RESPONDENT: Mr Davis

SOLICITOR FOR THE RESPONDENT: Webb Korfiatis

Orders

IN CHAMBERS and UPON READING THE WRITTEN SUBMISSIONS FILED BY THE PARTIES, IT IS ORDERED:

1. That the husband’s application that the wife pay his costs of and incidental to the applications for parenting and property orders filed herein be dismissed.

1. That the husband’s application that Mr Korfiatis pay his costs of and incidental to the applications for parenting and property orders filed herein be dismissed

FAMILY COURT OF AUSTRALIA AT  

FILE NUMBER: MLF1251 OF 2004

MR STANTON

Applicant

And

MRS STANTON

Respondent

REASONS FOR JUDGMENT

Background

1. On 20 March 2007 I made final orders, determining competing property applications filed by the husband and wife.    Paragraph 15 of the orders provided that any written submissions in support of an application for costs of the applications for final property orders be filed within twenty-eight days, and each party have a further twenty-eight days in which to file and serve any answering submission.  Each submission was to have endorsed on the cover sheet the date on which a copy of it was served on the other party.  

2. On 17 April 2007 the husband filed a submission (“the first submission”) stated to be “in relation to two costs applications”.  Although the submission does not expressly state this, I take the husband to be seeking costs against the wife in respect of applications for property orders and parenting orders, and costs against the wife’s solicitor, Mr Korfiatis, probably in relation to property and parenting applications. 

3. On 8 May 2007 the wife filed a submission in response to the husband’s application for costs: the coversheet notes that it was served on the husband by post on 9 May 2007.  In a facsimile sent on 4 June 2007 the husband filed a second submission (“the second submission”), in response to the answer and submission of the wife.  Its coversheet notes that it was served on 4 June 2007.   Although there was no provision for such a response, I include it as part of the husband’s submission.    

4. The wife did not seek a costs order against the husband.

5. For ease of reference I propose to attach the three submissions to which I have referred in this judgment.  It must be said that it is difficult to make sense of some parts of the husband’s submissions, although their gist is clear.  When I quote from them, I do so verbatim, without correcting errors of syntax.

LEGAL PRINCIPLES

1. Section 117 of the Family Law Act 1975 contains the general rule that each party to proceedings under that Act shall bear his or her own costs. Section 117(2) provides that if the court is of the opinion that there are circumstances which justify it in doing so, it may make such order as to costs and security for costs as it considers just. The matters to be taken into account by the court, when considering an application for costs, are set out in s.117(2A), as follows:

   (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.

APPLICATION FOR COSTS IN RELATION TO PARENTING ORDERS

1. The proceedings between the parties commenced in the Federal Magistrates Court in 2003 and were transferred to this Court on 13 April 2004.  From the outset parenting and property orders were sought.  Final parenting orders were made on 4 September 2006.  Orders made that day provided that “the parties respective applications for parenting orders be otherwise dismissed”.  The applications for “property/financial orders” were referred to the Listings Registrar.  At a pre-trial conference on 4 October 2006 those applications were fixed for trial commencing 22 January 2007. The hearing before me on 22, 23 and 24 January 2007 related only to the competing property applications. 

2. Paragraph 15 of the orders of 20 March 2007 made it clear that the written submissions in relation to costs related to “the costs of the applications for final property orders”.   The final parenting orders made on 4 September 2006 contained no provisions in relation to costs and there is no evidence that any costs of the husband had been reserved, earlier.  Whatever applications for costs may have been made in the initiating applications or earlier in those proceedings, the final parenting orders otherwise dismissed all applications relating to the parties’ respective applications for parenting orders.   The husband’s application to seek costs relating to the applications for parenting orders by submission made in response to the orders of 20 March 2007 is misconceived, and will be dismissed. 

3. For completeness, I do note that on 16 October 2006 the husband filed a form 2 application which related to the parenting orders.  In that application he sought the discharge of all previous parenting orders and a new set of orders.  He did not seek costs against the wife in that application.  That application was listed for 13 November 2006 in the Registrar’s Duty List.  On 19 October 2006 the wife filed a form 2 application seeking an order fixing the commencement date of a three–weekly cycle of residence referred to in the final orders of

   
   

   4 September 2006.  Amongst other orders, she sought that the husband pay her costs of that application.  It was fixed for hearing on 25 October 2006.

4. On 25 October 2006 Mushin J heard the wife’s application and made a number of declarations “to enable greater certainty of interpretation” of the final orders of 4 September 2006.  He otherwise dismissed the wife’s form 2 application (incorrectly described as being filed on 16 October 2006) and reserved all question of costs.  That costs order can only relate to the application he heard that day.  The husband filed no form 2A response to the wife’s form 2 filed on 19 October 2006 and was not legally represented on 25 October 2006.  The husband had earlier filed an affidavit in support of the form 2 he filed on 16 October 2006 but that was part of those proceedings, not a response to an as yet unfiled form 2 application of the wife.  The wife obtained orders on 25 October 2006.

5. There is no mention of the order for reserved costs in the husband’s submission.  Were he to apply for his costs of and incidental to the wife’s form 2 filed 19 October 2006, the application would almost certainly fail.  Were the wife to apply, the result might be otherwise, but she has not applied. 

6. The husband then filed another form 2 application on 9 November 2006 in which he sought orders compelling the wife’s solicitor “to respond to property matters”, the service of a subpoena by registered post and an order “directing the wife to cease threatening [R] aged 8 years about the [Ms C] report of January 2005”.  That application was listed the same day before a Registrar in the subpoena list.  She made orders for service of a subpoena (on a witness called in the trial of the property applications). 

7. On 13 November 2006 the wife filed a form 2A response to the form 2 application filed by the husband on 16 October 2006, in which she sought its dismissal and that the husband pay her costs occasioned by his application. On 13 November 2006 Senior Registrar Fitzgibbon dismissed the form 2 filed by the husband on 16 October 2006 and the form 2A filed 13 November 2006.  The husband was ordered to pay the wife’s costs, fixed in an agreed sum of $2,050. 

8. This history, post final parenting orders of 4 September 2006, does not establish any basis on which the husband could obtain an order for costs in relation to those applications.

APPLICATION FOR COSTS OF PROPERTY APPLICATIONS

1. The gist of the husband’s submission (in his first submission) appears to be that the wife should pay the costs of the property applications because she received less pursuant to the final orders of 20 March 2007 than he offered her in “mid 2004”.  The husband adduced no evidence of the asserted offer in mid 2004 but described it (in the first submission) as follows:

   The offer was for the joint mortgage over the [K] property to be paid out by myself and my interest in that property transferred into the Applicant’s name and a cash amount of $25,000 was to be paid to the Applicant wife.  Further I was also to indemnify the Applicant Wife against any joint debts which existed at the time of offer.  This offer as later rejected in its entirety by Mr Korfiatis’ client.

2. In the response filed by the wife, her solicitors stated:

   With respect to the Application for costs from the Applicant Wife, we have searched the documents on the Court file and indeed our file and are unable to find an offer to the Applicant Wife in mid 2004.  Indeed, we did not receive instructions in the matter until early January 2005. A perusal of our predecessor’s file does not disclose an offer by the husband in the terms referred to therein.

3. In the absence of any further evidence, I am unable to quantify the offer the husband alleged was made in mid 2004.  At the conclusion of the trial I found that the parties purchased the K property in joint names in 1989 for $82,950, with a mortgage of $73,500.  In the proceedings before me, both parties adopted a valuation of $195,000 for that property; the mortgage liability was then about $54,000.  I cannot say what it was valued at in “mid 2004”, nor (importantly) what sum was then owing on the mortgage.   Further, I am unable to say when the offer was made, save “in mid 2004”, or whether it was express (oral or in writing) or implied.

4. In his first submission the husband referred to discussions of this offer with Mr P, who he referred to as the “Court appointed family therapist”.  He said he believed Mr P was appointed to assist the family in resolving property and children’s issues, a view reiterated by him in his second submission.

5. Mr P is a clinical psychologist. As noted in paragraph 27 of the judgment of 20 March 2007, his reports were not in evidence before me during the trial but reference was made to them in the affidavits of both of the parties.  Mr P’s reports were dated 6 June 2005 and 7 March 2006, and it is fair to assume he saw family members in reasonable proximity to those dates.   The order providing for his appointment was made on 27 January 2005, by consent, and was in these terms:

   That all parties attend Family Therapy with [Mr P] and at dates and times as he arranges.  The parties to bear cost of such family therapy equally.

6. The only other order of substance made that day related to the proceedings for parenting orders.

7. In his first submission the husband stated that he would be seeking court orders to have Mr P produce his handwritten file notes from both interviews, and the video of the second interview, to support his application for costs.  To the extent that that statement “I will be seeking court orders”, amounts to an application for that to be done, I dismiss it as nothing satisfies me of its relevance to the application.

8. An order for the parties to attend family therapy with a clinical psychologist is not an order appointing the psychologist to resolve property proceedings.  The parties had attended a conciliation conference with a deputy registrar on 19 August 2004.  The husband’s submission refers to a conversation the parties’ daughter, C, had with Mr P, “challenging” the contents of [Mr P’s] first report.  Whatever was discussed between C and Mr P after the first report, it related to his report and interpretation of C’s  statement to him in that first report, which related to the children’s proceedings.   Further, C, estranged from her mother, could not be an agent for her mother, without express authority.

9. The parties did not see Mr P at all in 2004 so could have had no discussion with him about any offer that year.  By the time they saw him the “offer” must have been between six and twelve months old.

10. The original application of the wife was filed on 4 December 2003 and the husband filed a response on 16 December 2003. He subsequently prepared an amended response which was served by facsimile on the wife on 1 September 2006, but apparently not filed, in which he sought that the K property be sold and the wife be paid the sum of $168,000. If an offer had been filed pursuant to s 117C, and specified to remain open after the amended response was served, it could have remained live. But in the absence of any evidence of the offer’s form or detail, it would have been reasonable for the wife to assume the amended response served on her constituted the husband’s then position, and offer. In final submissions, the husband sought that the property be sold, that the net proceeds be used to discharge the mortgage over the C property and that the balance, (which I found would be less than $75,000 after selling costs) be divided as the court determined but (it seemed) with the greater percentage going to him. Whatever offer the husband believes was made by him in mid 2004, I do not find it establishes a basis for a costs order against the wife.

11. In his second submission the husband sought that his application for costs against the wife “be heard in the appropriate forum”, stating that his preference was for it to be heard in the Supreme Court of Victoria. That application is misconceived. The proceedings before me were brought pursuant to s 79 of the Family Law Act 1975 and it is this Court which has the jurisdiction to make orders for costs in respect of those proceedings, pursuant to s.117.

12. To turn to the other sub-paragraphs of s.117(2A), the financial circumstances of the parties are set out in the reasons for judgment delivered on 20 March 2007. The effect of the orders made is set out in the concluding section of that judgment. The husband was given almost four months to raise funds to pay to the wife $54,000 and an additional sum of $19,428 was to be paid in four equal payments of $4,857, the first on 1 August 2007 and the last on 1 February 2008.

13. I found the wife’s entitlement to be 40% of the asset pool, amounting to $214,428.

14. Neither party was in receipt of legal aid. 

15. Those parts of the husband’s submissions which raised allegations of unethical and unconscionable dealings by the wife’s solicitor, a failure to communicate, and other allegedly unprofessional behaviour, relate to the application for costs against Mr Korfiatis.   Insofar as the husband may have meant them also to be relevant to his application for costs to be paid by the wife, I find no substance in them.  In the judgment delivered on 20 March 2007 reference is made to the intemperate accusations the husband made against Mr Korfiatis and counsel for the wife, a course of conduct he continued in the costs submissions.   A number of the dot points on pages 2 and 3 of his first submission appear to relate to the application for parenting orders.

16. In terms of success, before me the husband’s application was that the wife receive some part of a total sum which would have been less than $75,000, that part being (it seemed) less than 50%.   Instead, she received the sum of $214,428.  That was considerably less than the sum sought by her in the trial.  To that extent neither party was absolutely successful. 

17. Whilst the husband is right that the specific figure of claimed costs need not be quantified in an application, it is vital that an application specifies the general nature and extent of the costs claimed. From his material it appears that the husband seeks the whole of his costs in respect of all parenting and property applications, although he was not represented after final parenting orders were made in 2006. Were the court to find an offer to have been made in mid 2004 which was relevant for the purposes of s.117(2A)(f), it could infer that he was seeking costs incurred from that date until the date on which he formulated a different offer. However, it has made no such finding.

18. Insofar as the husband submitted that false and misleading evidence had been given by the wife I can only refer to the reasons for judgment; there is no significant criticism which would warrant such a finding.  

19. There is no evidence any offer was made pursuant to s.117C.

20. As noted earlier, the husband’s application that the wife’s costs be fixed by the Supreme Court is misconceived.  I cannot say what application he would seek to make to the Legal Services Commissioner; it may relate to the alleged conduct of the wife’s solicitor but it cannot be an application for the wife to pay his costs in respect of the property proceeding before me.

21. Nothing in the two submissions of the husband satisfies me the wife should pay any part of the husband’s costs of the property applications and his application for costs against her is dismissed.

APPLICATION FOR COSTS AGAINST MR KORFIATIS

1. The material relied upon by the husband in respect of this claim is set out in dot points on pages 2 and 3 of his first submission; he also relied upon paragraphs 5, 6 and 7 of a letter which is annexed to that submission, dated 10 April 2007, being a letter to Mr Korfiatis.   In paragraph 5 he reiterated his claim for costs against the wife, based on the alleged offer to settle in mid 2004.   Paragraph 6 of that letter is as follows:

   I will be seeking to the court a Damages Claim against yourself for being, what I believe, complicit in giving evidence to the Family Court of Australia which is contrary to the facts.  I have highlighted in previous applications some of these incidents that I refer to.  Also for, the delaying of these proceedings, in which I believe, for your client to have the children’s Residence Application heard under the new Parenting Legislation 2006.  In addition, not responding to many letters of correspondence prior to the defended trial of 22 January 2007 which in fact cost your client thousands of dollars in court time over the three year period. As per our phone conversation in this matter, I will seek to the Family Court of Australia to have this matter transferred to the Supreme Court of Australia.  Reasons include you being an Officer of the Family Court of Australia, there are concerns of bias against my family.

1. The husband elaborated on aspects of this submission on the second page of his second submission.   The matters there relate to a hearing in respect of the parenting applications before Senior Registrar FitzGibbon on 22 July 2005, and the family report of Ms C, dated 23 January 2005, again relating to the children.   Only the paragraph numbered 2 appears to relate to the property proceedings, and again the allegations are of delaying and not responding to communications.

2. There is no doubt that a court has the power to order a lawyer of one party to pay costs incurred by the other party, this being an exception to the general rule that the person who is not a party to proceedings cannot be ordered to pay the costs of the proceedings; see Knight & Anor v. FP Special Assets Limited  & Ors (1992) 174 CLR 178; Myers v Elman (1940) AC 282; Edwards and Edwards (1958) P 235; Gardiner and Gardiner (1977) FLC 90-304; and Collins and Collins (1985) FLC 91-603. In Cassidy v Murray (1995) FLC 92-633 the Full Court set out the principles relevant at that time to the exercise of the jurisdiction to award costs against a lawyer under the Family Law Act 1975. The Full Court referred with approval to the decision of the Master of the Roles, Sir Thomas Bingham, in Ridehalgh v Horsefield (1994) 3All ER 848 at 855, which he referred to five fundamental propositions set out in Myers v. Elman (1939) 4 All ER 484, and then summarised the law in this court, by listing six propositions (at 82,365) as follows:

   1. Pursuant to s. 117(2) Family Law Act, the Court has jurisdiction to make an order for costs against a solicitor or a non-party.

   2.The court should not make such an order without giving the person to be affected by the order an opportunity to be heard.

   3.The Court may make an order for costs against a solicitor without the necessity to establish that the solicitor has been guilty of serious professional misconduct.

   4.The solicitor has a duty to the Court to promote the interests of justice whilst at the same time attending to the needs of the solicitor's client.

   5.A mistake or error of judgment would not justify an order for costs against a solicitor. However, misconduct, default or negligence, any of which are found by a Court to be of a serious nature, may be sufficient to justify an order.

   6.The jurisdiction is compensatory.

1. These principles are reflected in Rule 19.10 of the Family Law Rules 2004 which provides that a person may apply for an order against a lawyer for costs thrown away during a case, for a reason including the lawyer’s failure to comply with the rules, an order or a pre-action procedure; the lawyer’s improper or unreasonable conduct; and undue delay or default by the lawyer. Rule 19.10(2) provides that the court may make an order that the lawyer pay the costs of a party or repay another person’s costs found to be incurred or wasted and Rule 19.11(1) provides that before making an order for costs against the lawyer or other person who was not a party to a case, the court must give that person a reasonable opportunity to be heard.

2. Nothing in the evidence establishes any justification for an order that Mr Korfiatis pay any part of the husband’s costs.   As found in the judgment, the husband’s scorn for and anger with Mr Korfiatis was manifest and permeated his affidavit material; it was indicative of an apparent incapacity to focus on the real issues to be determined.  By his costs application the husband seeks to make the same complaints he sought to make in the trial.

3. I note that in his second submission the husband seeks damages rather than costs against Mr Korfiatis.  Little will be served by discussing the distinction, save to say that the application before me is an application for costs.

4. The husband’s application that Mr Korfiatis pay all or any part of his costs of the property proceedings is dismissed.

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Brown

Associate: 

Date: 

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as STANTON & STANTON