Stella & Stella (No 2)
[2024] FedCFamC1F 258
•12 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Stella & Stella (No 2) [2024] FedCFamC1F 258
File number: SYC 2525 of 2021 Judgment of: STRUM J Date of judgment: 12 March 2024 Catchwords: FAMILY LAW – COSTS – Where the wife seeks costs pursuant to s 117 of the Family Law Act1975 (Cth) in respect of property proceedings – Where the husband opposes the making of a costs order – Where each of the parties received less than they respectively sought but more than the other party proposed they receive – s 117(2A) factors discussed – No orders as to costs in relation to the proceedings, including the application for costs. Legislation: Family Law Act 1975 (Cth) s 117 Cases cited: Collins & Collins (1985) FLC 91-603; [1985] FamCA 15
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Silver Fox Co Pty Ltd (as Trustee for the Baker Family Trust) v Lenard’s Pty Ltd (No 3) [2004] FCA 1570
Division: Division 1 First Instance Number of paragraphs: 32 Date of hearing: 12 March 2024 Place: Melbourne, heard via Microsoft Teams Solicitor-advocate for the Applicant: Mr Wahhab Solicitor for the Applicant: York Law Family Law Specialists Counsel for the Respondent: Mr Roberts Solicitor for the Respondent: Abbott Delaney Lawyers ORDERS
SYC 2525 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS STELLA
Applicant
AND: MR STELLA
Respondent
ORDER MADE BY:
STRUM J
DATE OF ORDER:
12 MARCH 2024
THE COURT ORDERS THAT:
1.All applications for costs be 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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Stella & Stella has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Delivered Ex TemporeSTRUM J:
On 15 December 2023, I made final orders and delivered reasons for judgment in proceedings between the parties for an alteration of interest in property pursuant to s 79 of the Family Law Act 1975 (Cth) (“Act”). Not unusually, each of the parties received less than they respectively sought but more than the other party proposed they receive. However, on balance, the wife, who was the applicant in the substantive proceedings, was the successful party. She now seeks an order for costs in her favour to be paid by the husband, which he opposes.
Each of the parties has filed written submissions and supporting affidavits, respectively in support of and in opposition to an order for costs, which I have read and considered.
Further, I have had the benefit of oral submissions today by the solicitor for the wife and counsel for the husband. The written submissions and supporting affidavit of the wife were filed on 25 January 2024, and those of the husband were filed on 12 February 2024. Although the husband’s material was filed late, the wife could not point to any prejudice she or the Court suffered by reason thereof. At the hearing today, her solicitor advised the court that she did not persist with her objection to reliance by the husband upon those submissions.
Section 117(1) of the Act relevantly provides that subject to, inter alia, s 117(2), each party to proceedings under the Act bears his or her own costs. Section 117(2) relevantly provides that if, in proceedings under the Act, the Court is of the opinion that there are circumstances that justify it in so doing, the Court may, subject to, inter alia, s 117(2A) make such order as to costs that the Court considers just.
Section 117(2A) provides that in considering what order, if any, should be made under s 117(2), the Court shall have regard to the matters set out in paragraphs (a)–(g) thereof. Those matters are:
(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;
(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.
In Penfold v Penfold (1980) 144 CLR 311 at 315–316, the plurality of the High Court relevantly said, in relation to s 117(2), albeit in the form in which it then was over 40 years ago, as follows:
It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub‑s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in “a clear case”.
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v. Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
(Footnotes omitted)
In Collins & Collins (1985) FLC 91-603 at 79,877, the Full Court said that, although the discretion under s 117(2) “is to be exercised having regard to the primary rule that each party bears his or her own costs”, it is a “broad” discretion, to be exercised having regard to the factors set out in sub-section (2A) thereof, which factors are not to be read in a restrictive way, and that “the discretion remains a broad one”.
In support of her application for costs, the wife, in her filed written submissions, relies upon paragraphs (a), (c), (d), (e) and (f) of s 117(2A), to which she has added today, in the course of oral submissions, paragraph (g).
Turning to the first of those; as to s 117(2A)(a), namely, the circumstances of each of the parties to the proceedings, the wife (at paragraph 5 of her written submissions) points to the joint balance sheet tendered by the parties referred to at [56] of my reasons for judgment. She submits that, “[e]ven if the Husband is in a lesser financial position than the Wife this disparity should not mitigate against making an Order for Costs against him noting the size of the pool he will have after compliance with the substantive Order”. However, the wife’s written submissions ignore [57], which sets out the aide-mémoire tendered by her Senior Counsel in closing submissions, which divided the parties’ property between non-inherited assets (Pool A) and inherited or gifted assets (Pool B).
At [149], I found that it was just and equitable to make an order altering the parties’ interests in non-inherited assets, as well as gifted assets (but not inherited assets), totalling $6,132,117.
At [225] of my reasons, I said, inter alia, that:
… By reason of my contribution-based assessment, the wife will retain and receive $2,452,847 in respect of the Pool A assets. In addition also to the retention by the wife of her two ANZ bank accounts ([#...65] and [#...98]), totalling $627,117, that will require receipt by her of a payment from the husband of $1,825,730. She will also retain assets from Pool B totalling $6,051,010 and superannuation entitlements of $261,018, together with a taxation liability of $51,792 and latent capital gains taxation liability on her inherited share portfolio, if and when they are sold (as to which there is no evidence). She will, therefore, retain and receive assets (including superannuation) totalling $8,712,683.
At [226], I further said, inter alia, that:
By reason of my contribution-based assessment, the husband will retain $3,678,670 in respect of the Pool A assets, after the payment to the wife. He will also retain assets from Pool B totalling $3,796,295 and superannuation entitlements of $128,606.
I continued:
The husband will, therefore, receive and retain assets (including superannuation) totalling not less than $7,603,571.
Contrary to the wife’s submission, this is not a case of, “[e]ven if the husband is in a lesser position than the wife”, as she posits. He is in a lesser financial position than her, to the extent of approximately $1.1 million. Further, whilst she submits that “this disparity should not mitigate against making an Order for Costs against him noting the size of the pool he will have after compliance with the substantive Order”, she disregards the size of the pool she is to retain and receive, which exceeds his by that not insubstantial amount.
Turning to s 117(2A)(c) and (d), namely, the conduct of the parties to the proceedings in relation to the proceedings and whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court, the wife addresses these two considerations together. She submits that the husband’s “conduct is significant and important and … gives rise to the court awarding costs against [him]”. However, she glibly skims over my finding at [22] of my reasons for judgment, that “they each exaggerated aspects they thought favourable to them and sought to minimise or deny aspects they thought unfavourable to them”. Further, in respect of the wife, I said at [24] that, in respect of some two dozen paragraphs of her trial affidavit:
… the wife’s evidence that such events occurred was not substantially shaken in cross‑examination, she could provide no basis for her estimations of the number of times they occurred. I cannot find whether such exaggeration was deliberate on her part or a matter of drafting on the part of her solicitor, who is disclosed as the person who “prepared” her affidavit. Either way, it is an exaggeration, notwithstanding her oath that the contents of her affidavit were true.
At [28] of my reasons, I said:
In cross-examination, she was unable to explain these discrepancies. However, she continued to maintain that the numbers were correct.
I continued:
I find that she has repeatedly grossly exaggerated her evidence in this regard.
Further, insofar as the wife complains about the husband’s conduct and his failure to comply with interlocutory orders of the Court, and without in any way condoning any such breaches, ultimately, they were of little relevance at trial or to the outcome, given the way she conducted her case. Much of the wife’s complaints in this regard related to an add-back contended by her, in the estimated sum of $4,480,000, for alleged wastage by the husband in share trading. However, in circumstances where I substantially accepted her primary argument that only the parties’ interests in non-inherited property should be the subject of alteration, together with the balance of the funds gifted inter vivos by the husband’s grandmother to her, the husband’s alleged conduct and breaches had no bearing adverse to her on the outcome of the case.
Turning to s 117(2A)(e), the wife submits correctly, in my view, that the husband has been wholly unsuccessful in the proceedings. That is because:
(a)in the husband’s further amended response to initiating application filed on 19 September 2022, he merely sought orders that the wife’s amended initiating application be dismissed; and
(b)in his Case Outline at trial, his primary position was that the Court should decline to exercise the power under s 79, and in the alternative sought an order that the wife pay a sum of money to him.
That remained his position in closing submissions. None of the matters for which he contended eventuated. The wife points to [88] of my reasons for judgment where I said:
The wife’s case is that, whilst she contends it is just and equitable to alter the parties’ interests in the Pool A assets, overwhelmingly comprised of the former matrimonial home, it is not just and equitable to alter their interests in the Pool B assets, comprising assets (or assets sourced from assets) received by each of them by way of inter vivos gifts and inheritances from the husband’s paternal grandmother, nor their superannuation interests. The husband’s primary case is that it is not just and equitable to make any alteration whatsoever in their existing legal and equitable interests in property.
At [142], I rejected the husband’s argument that it would not be just and equitable to make any order under s 79 whether in relation to the Pool A or the Pool B assets.
At [146], I found that it was just and equitable to alter the parties’ interests in respect of the Pool A assets as the wife contended.
At [147], I found that in respect of the Pool B assets, it was not just and equitable to alter the parties’ interests in the inheritances received by each of them respectively from the husband’s grandmother and the existing assets derived therefrom, as the wife contended.
However, insofar as the wife submits that, at [99]–[100] of my Reasons for Judgment, I noted that the position taken by the husband and the submissions made in support of the same were not just wrong in law but were inappropriately emotive, a proper reading of those paragraphs makes it manifest that I was referring there to the husband’s submissions that she did not have “any just and equitable claim to the appropriation of his property” (emphasis in original) and that she did not have a “principled basis in justice and equity for her claim to deprive the [husband] of [the former matrimonial home]” (emphasis in original). It was his references to appropriation and deprivation that were wrong in law and inappropriately emotive, rather than his case that it was not just and equitable to make any alteration of interests in property, although ultimately unsuccessful. However, that is but one of the multitude of factors to be taken into account in considering the wife’s application.
As to s 117(2A)(f), it is this aspect of the wife’s application for costs that I find most troubling. In blatant disregard, at the very least, of the terms of that paragraph, she seeks to rely primarily upon an offer made by her and a counter-offer made by the husband at a mediation in March 2022. There is no suggestion, either in her written submissions or in her affidavit filed in support thereof, that they were made in writing. This was confirmed by her solicitor in his oral submissions today. This is notwithstanding the fact that s 117(2A)(f) refers relevantly to “an offering in writing” to settle the proceedings.
It ill behoves the wife to contend, albeit inaccurately, that I found the husband’s case at trial to be wrong in law but herself to make a submission in support of her application for costs that is indubitably wrong in law. If that were not sufficient, the husband points to the terms of the mediation agreement signed by the parties, cl 21 of which relevantly provides that:
[i]n any arbitral or judicial proceedings the following will at all times be kept confidential and will be privileged, and the Parties and the Mediator will not disclose nor rely upon them nor issue nor cause to be issued any subpoena to give evidence or to produce documents concerning them:
(i) any settlement proposal;
(ii) the willingness of a Party to consider any such proposal:
(iii) any statement, admission or concession made by a Party;
(iv) any statement or document made by the Mediator.
It would appear that the only exception to this clause is contained in cl 25, which provides that:
Any Party will be at liberty:
(i)to enforce the terms of a settlement agreement;
(ii)in any enforcement proceeding to adduce evidence of and incidental to the settlement agreement including evidence from the Mediator and any other person engaged in the Mediation.
The wife in her oral submissions today referred me to a decision of Mansfield J of the Federal Court in Silver Fox Co Pty Ltd (as Trustee for the Baker Family Trust) v Lenard’s Pty Ltd (No 3) [2004] FCA 1570 commencing at [26]. However, that case turns upon an entirely different legislative framework, in a different jurisdiction. It turns upon s 43 of the Federal Court of Australia Act 1976 (Cth), subsection (1) of which merely provides that the Federal Court or a judge thereof has jurisdiction to award costs in all proceedings before that court, other than proceedings in respect of which Act (or any other Act) provides that costs must not be awarded. There are certain exceptions that are set out there. That is the diametric opposite to this Court, in which the starting position is to be found in s 117(1), namely, that each party to proceedings under the Family Law Act shall bear his or her own costs.
The solicitor for the wife, when this was brought to his attention by me, sought then to rely upon paragraph (g) of subsection 117(2), namely, that the Court shall have regard to such other matters as the Court considers relevant. In my view, if I were to consider oral offers made at mediation under paragraph (g) of that subsection, it would effectively render paragraph (f) thereof nugatory. The legislature has seen fit to require the court to take into account offers in writing, and if an offer is not put in writing, I consider that it would not be proper to have regard to it under paragraph (g) of that subsection.
Whilst the wife, in her filed written submissions, also refers to “an offer for settlement” made by the husband on 15 November 2021, which she apparently rejected, as well as an “offer for settlement” made by her on 21 December 2021, which he apparently rejected, there is no suggestion, in either her submissions or her affidavit in support thereof, that such offers were made in writing. Even if they were, they have not been tendered into evidence.
Taking all of these matters into account, in the exercise of the broad discretion conferred upon me by s 117(2), I do not consider that there any circumstances that justify the Court making an order as to costs. Accordingly, I do not need to consider the quantum of the costs sought by the wife or the basis thereof, and I shall dismiss the wife’s application for costs, both in respect of the substantive property proceedings and, it follows, in respect of her application for costs.
Taking into account all of the matters set out in s 117(2)(A), and for not dissimilar reasons to those for which I have dismissed the wife’ application for costs, I similarly dismiss the husband’s application for costs of the wife’s application this day.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Strum. Associate:
Dated: 3 May 2024
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