Teh and Muir

[2017] FamCA 472

FAMILY COURT OF AUSTRALIA

TEH & MUIR [2017] FamCA 472

FAMILY LAW – COSTS – Between parties – Where the respondent seeks an order for costs – Where the applicant has been wholly unsuccessful in the proceedings – Where it is appropriate to award costs – Where to order indemnity or party/party costs – Where an order for party/party costs in made in favour of the respondent.

Family Law Act 1975 (Cth) s 117

Family Law Rules 2004 (Cth) rr 19.08, 19.09, 19.18

APPLICANT: Ms Teh

RESPONDENT: Ms Becke as case guardian for Mr Muir

FILE NUMBER: ADC 1922 of 2014

DATE DELIVERED: 2 June 2017

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 2 June 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: No appearance by Litigant

SOLICITOR FOR THE APPLICANT:

COUNSEL FOR THE RESPONDENT: Ms Hurley

SOLICITOR FOR THE RESPONDENT: Culshaw Miller Lawyers

Orders

1. I fix the costs of the respondent to the proceedings being Ms Becke as Case Guardian for Mr Muir in the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000).

2. That the applicant pay the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000) for and on behalf of the respondent’s costs to the Trust Account of Culshaw Miller Lawyers or as may be otherwise directed by the respondent’s Case Guardian on or before 4 pm on 15 July 2017. 

IT IS NOTED that publication of this judgment by this Court under the pseudonym Teh & Muir 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 ADELAIDE

FILE NUMBER: ADC 1922  of 2014

Ms Teh

Applicant

And

Ms Becke as Case Guardian for Mr Muir

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

INTRODUCTION

1. By Amended Initiating Application, filed on 2 June 2014, the applicant  in the proceedings Ms Teh (“Ms Teh”),  sought orders for the enforcement of a binding financial agreement that she entered with Mr Muir (“the respondent”). 

2. A Response was filed on 13 June 2014 by Ms Becke who sought that the binding financial agreement be set aside.  Ms Becke is the case guardian for Mr Muir and was appointed by order of the Guardianship Board on 15 April 2014.

BACKGROUND

1. The short background to the matter is that the parties met in 2003.  The applicant and her son spent some time in the respondent’s home before returning to City D in China.  Following communication between the parties, the applicant and her son returned to Australia in 2010 with the intention of remaining in Australia on a more permanent basis.

2. The applicant contends that she and Mr Muir were at all relevant times in a de facto relationship.  The case guardian asserts that at no time was the applicant in a de facto relationship with Mr Muir but rather,  she and her son were mere boarders in the respondent’s home.  It is alleged by the applicant that the de facto relationship existed  between 26 January 2010 and 14 April 2014 and  that the separation was as a result of violent conduct perpetrated by Mr Muir.

3. The matter came on for trial between 24 October 2016 and 1 November 2016.  The applicant was a self-represented litigant at all relevant times.  However the Court file records that throughout the entirety of the proceedings and in respect of subsequent interim hearings, the applicant was assisted by the services of a highly trained, competent and courteous interpreter.  Ultimately, judgment was delivered on 10 March 2017, and it is important  to record the orders made on that occasion:-

   (1)That there be a finding that the parties were not at any stage in a de facto relationship;

   (2)That the financial agreement made 19 February 2015 between the applicant and the respondent be set aside, and;

   (3)That monies contained or held in the trust account of the respondent’s solicitors that were not required for the payment of any outstanding legal fees or other accounts are to be made available to the respondent by his case guardian.

   Those orders then concluded the substantive proceedings.

4. There were findings made against the applicant as to her credibility and her propensity not to tell the truth.  A significant issue raised in the evidence and ultimately that now resonates in respect of the current costs application is a finding that, notwithstanding Court orders and requests to produce and discover documents, the applicant was steadfast in her refusal to do so.  She did not comply with her obligations under the Family Law Act 1975 (Cth) (“the Act”) to make full and frank disclosure of bank statements and other documents which would have revealed the true extent of her financial circumstances.

5. Paragraph 48 records as follows:-

   The applicant’s evidence was unconvincing and, whilst it was self-evident that she and her son could not have managed financially on $150 per week, she refused to concede that in circumstances where she was not employed she must have had access to other funds.  No documents evidencing her employment were produced.

6. In relation to an explanation for the conduct of the applicant in terms of the proceedings and the basis upon which she sought the orders, paragraph 79 refers to email communication that passed between the parties.  It summarises the Court’s position in relation to the applicant’s presentation in the following terms:-

   [79]Whilst the applicant denied that the emails should be read as suggesting that she was financially motivated, I am satisfied that the communication forwarded by the applicant to the respondent lends no support for the applicant’s contention that she and the respondent commenced a committed and loving relationship in 2010.  The email communication is consistent in my finding that the applicant was financially motivated in respect of her involvement with the respondent.

7. In relation to evidence as to the attendance by the respondent on three separate solicitors over a short period of time to vary the terms and conditions of his last will and testament, and with the effect of those alterations increasing the benefit that would inure to the applicant upon the respondent’s death, the following appears at paragraph 84 :-

   The applicant’s evidence did nothing to dispel the clear inference that the respondent’s will became subordinate to the wishes of the applicant, and that she took advantage of the respondent’s vulnerability and infirmity.

8. Importantly at paragraph 110 the following appears:-

   The applicant was an unimpressive witness.  I consider that her evidence was concocted and contrived.  She showed no preparedness to assist the court in respect of the provision of discovery and, in particular, her bank statements.  I am left in little doubt her evidence of a theft having taken place, and her discoverable documents having been stolen or in some way retained by her landlord is complete fabrication.  There is little about her evidence that was credible and I was left with the clear impression that she was prepared to do all in her power to take advantage of the respondent for her own financial benefit.

9. The matter came back before the Court on 9 May 2017 in respect of an application for the respondent’s costs in respect of the litigation generally.  On that occasion the applicant appeared in person, although again the Court notes that she was assisted by an interpreter.  The Court had the advantage of an affidavit of the respondent’s solicitor filed 22 March 2017. 

10. That document sets out the total costs sought on behalf of the respondent and is broken up into various categories; the first relates to orders for costs made during the course of the proceedings where the respondent’s costs were reserved.  The total in paragraph 2(a) to (e) inclusive, together with the further costs incurred in paragraph 3, total $43,914.44. Paragraph 4 sets out the costs incurred by the respondent in the defence of an unsuccessful appeal by the applicant to the Full Court.  Those costs are in the sum of $17,062.82.  The balance of the costs in respect of the trial heard by me in October and November 2016 total $83,930.  Accordingly, the total costs sought in relation to solicitor and counsel fees and appropriate disbursements is in the sum of $144,907.26 inclusive of GST.

11. There are a number of matters immediately apparent from the construct of the solicitor’s affidavit.  The first is that there is nothing to assist the Court in terms of the itemisation of each of the three or four categories of costs as sought.  And secondly, that the costs have been prepared or sought on a solicitor/client  and not a party/party basis .

12. The proceedings were adjourned to 31 May 2017.  Ms Teh filed an affidavit which provides little assistance to the Court.  It deposes that she would wish the Court to understand she has a compromised financial position, that she worked part-time and that she has an average income of $330 per week.  She does not receive any benefit from any organisation and does not consider that there is any prospect of her financial situation improving in the near future.

13. She annexes some documents in respect of her son’s attendance at high school and that there are outstanding accounts. A financial statement pursuant to rule 13.05 of the Family Law Rules 2004 (Cth) (“the Rules”) is prepared which sets out that she is employed and she receives a modest income of $330 per week. She has no savings and the majority of her income, if set out accurately, would be taken up with the general exigencies of life in respect of her expenses and those of her son.

14. The matter was due to come before the Court on 31 May 2017.  The applicant did not appear and the Court received advice that she was unwell.  A medical certificate was forwarded to the registry from Dr S of T Street, that Ms Teh was receiving medical treatment from Tuesday 30 May to Wednesday, 31 May 2017 inclusive and that she will be “unfit to continue her usual occupation”.  There is nothing in the medical certificate that indicates Ms Teh sought the advice of Dr S as to the nature of her illness or the medical treatment she was receiving.  Whilst she may have been unfit for employment during that period, she may not have been unfit to attend Court.  The proceedings were then adjourned until 1 June 2017.

15. Ms Teh is acutely aware that all reasonable accommodation has been provided to her in recognition of her status as a self-represented litigant.  Nonetheless this is a matter that needs to be concluded, and if she is not able to attend Court for whatever reason then it is not sufficient for her simply to forward a medical certificate not directed to the necessary inquiries that the Court would make, but rather directed for the purposes of her employment.

16. In order to assist Ms Teh, the costs application in was adjourned until 2 June 2017.  At 5.52 am the Registry received an email from Ms Teh in the following terms:-

    To associate and [Ms U], I am writing with regarding that I, the applicant would not be able to attend the hearing on June 2, 2017, at 9.15 am as the applicant have (sic) a medical condition and the doctor has advised me a few days’ rest.  Here attached is the applicant’s medical certificate.  And I apologise any convenience that it may caused you. Best regards, the applicant (Ms Teh).

17. Together with that document is a medical certificate dated 1 June 2017 from the V Medical Group by a different doctor, namely Dr W which certifies that on that date he examined the applicant it was his opinion that “he/she will be unfit for his/her normal work”.  The period for which Ms Teh is unfit for work was between 1 and 2 June 2017.

18. The medical certificate is wholly inadequate.  Not only does it not necessarily refer to the applicant, but it provides no assistance as to the nature and extent of the treatment, diagnosis or symptoms allegedly exhibited by Ms Teh and how that condition or her medical issues would affect her ability to attend Court.

19. Not only is the medical certificate wholly inadequate but the problem compounded when it is understood that in the advice given to Ms Teh from an officer of the Registry advising her of the adjourned date, namely from 31 May 2017 to 2 June 2017, she was advised that if she remained unwell then she would need to provide a full medical report and that her doctor should be made available to give evidence at the hearing.

20. Upon the matter being called on today, the Court attempted to call Ms Teh on her mobile number given by her to the Court.  Nobody answered the call, and the message went through to the message bank.

21. An attempt was then made to contact Dr W but, after the Court remained on hold for some significant time, the call was thereafter disconnected.  I do not suspect that it was disconnected deliberately but the complexity in attempting to make contact with Ms Teh’s medical practitioner was not consistent with any arrangement that the Ms Teh was to have made to ensure that her medical practitioner was expecting a call from the Court and would be available and able to assist the court by giving evidence.

22. The matter was stood down for a short period of time to enable counsel for the respondent to obtain instructions as to whether there would be an application made for the proceedings to be further adjourned or whether the application would be for the matter to proceed.  The Court has been asked for the matter to proceed.  The Court is told that the financial position of the respondent is precarious.  As is obvious, the monies received, or the balance of monies received from the sale of the property held by the respondent have all but been exhausted.

23. The respondent’s legal fees are in excess of $144,000.  The fees in respect of Mr Muir and his transition into his current care arrangements were also significant.  I am told that the financial resources of the respondent in terms of monies in the estate are entirely exhausted.  To the extent that there are currently proceedings, to a very large degree they have now been funded personally by the case guardian, as opposed to monies available from the respondent.

24. It is a circumstance which is completely unacceptable and it seems to me that in all cases there needs to be a balance between the proper administration of justice and the need for the Court to properly manage its own affairs, but also to ensure that parties are not prejudiced, particularly where they are the successful litigant, and the very nature of the process has had the real impact of denying the fruits of the litigation to the successful party.

25. The applicant has conducted herself with scant regard for the Court process, has not complied or undertaken, or attempted to assist the Court in terms of providing a fulsome medical report which would give the Court some confidence in understanding the issues that adversely impact upon Ms Teh’s ability to engage in the proceedings, and would importantly then enable the Court to determine the extent to which an adjournment of the proceedings might provide assistance to Ms Teh in that she would have completely recovered from whatever medical impediment she currently suffers from.

26. The very real consideration is that the applicant’s presentation is disingenuous and that she is utilising the device of ill-health to avoid the consequences and the conclusion of the proceedings. I determine that in the circumstances of this case it is appropriate that the matter proceed in the absence of Ms Teh. In respect of any application for costs, the Court is obviously assisted by having regard to rule 19.08(1) of the Rules, in circumstances where the respondent has applied for an order that the applicant, Ms Teh, pay its costs.

27. Whilst not sought, there have been discussions today as to whether the Court should consider an order being made on an indemnity basis. Rule 19.08(3) of the Rules provide:-

    A party applying for an order for costs on an indemnity basis must inform the Court if a party is bound by a costs agreement in relation to those costs and, if so the terms of the cost agreement. 

28. No such cost agreement has been provided and, as has been discussed, the information that the Court has is set out in the affidavit of Ms U of 23 March 2017, assisted by the itemisation of the account or at least the trust ledger in her affidavit of 9 May 2017. 

29. The method of calculation of costs is referred to in rule 19.18 of the Rules in the following terms:-

    (1)The Court may order that a party is entitled to costs:

    (a)of a specific amount;

    (b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

    (c)to be calculated in accordance with the methods stated in the order; or

    (d)for part of the case or part of an amount as may be assessed in accordance with schedule 3. 

30. The Court is further assisted by subrule 19.18(3), which provides that the Court may consider:-

    (a)the importance, complexity or difficulty of the issues;

    (b)the reasonableness of each party’s behaviour in the case;

    (c)the rates ordinarily payable to lawyers in comparable cases;

    (d)whether a lawyer’s conduct has been improper or unreasonable;

    (e)the time properly spent on the case, or in complying with pre-action procedures; and

    (f)expenses properly paid or payable. 

31. In considering what order should be made, if any, in respect of the respondent’s costs, section 117(2A) of the Act requires the Court to have regard to the following:-

    (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 forgoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admission 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;

    (g)such other matters as the court considers relevant. 

32. Accordingly, I have a wide discretion in respect of matters relating a potential costs order.  It is conceded that the total costs order of $144,907.26, inclusive of GST, is calculated on a solicitor/client basis.

33. If the Court was inclined to make an order for indemnity costs it may well be persuaded to make an order for the total amount.  The Court however is not persuaded and will make an order on the basis of party/party costs. 

34. The financial circumstances of the parties are clearly relevant and it is relevant that neither party has significant, or indeed, any financial resource. 

35. I am entirely satisfied as to the transparency of the financial circumstances of the respondent.  I am satisfied that the respondent had available to him via his case guardian a significant sum of money following the sale of his property. That money has been extinguished and exhausted, not by his expenditure but by the expense that he was required to incur in order to meet the barren claim of the applicant. 

36. Whilst it is likely that the applicant’s resources are meagre, it is a relevant consideration that there were findings made on the evidence that she was resistive to making full and frank disclosure.  Indeed, to the very present, it is still the position that her level of disclosure in terms of bank accounts and her true position in terms of the movement of significant sums of money, most of which emanated from the resources of the respondent, whilst the parties lived under the same roof, is wholly inadequate and continues to raise the spectre that the applicant is not prepared to reveal the full extent of her financial resources. But I nonetheless still accept that her financial situation is likely to be poor.  Having said that, that is not a barrier in and of itself to an order for costs being made.  It may present as a difficulty in terms of enforcement but it is not a barrier.

1. It is important to note that in the judgment of the Full Court an order was made following the dismissal of both of the applicant’s appeals that the applicant was to pay the respondent’s costs of and incidental to the applications within 28 days of agreement or assessment and that, at paragraph 33, their Honours Finn and Strickland commented in the following terms:-

   Notwithstanding the appellant’s submission concerning her difficult financial circumstances, in our opinion, an order that she pay the respondent’s costs in relation to her unsuccessful applications would be justified, given that her application has been wholly unsuccessful. 

2. Ryan J at paragraph 74 commented in the following terms:-

   Although I accept that the respondent’s financial situation is difficult, I place greater weight on her having been entirely unsuccessful and am satisfied that an order for costs in favour of the respondent is appropriate.

3. Returning to provisions of s 117(2A) of the Act, I have remarked on the appalling conduct of the applicant in terms of her engagement in the proceedings. They were unnecessarily protracted and made more complex by the applicant’s refusal to provide discovery and to present documents as and when requested. If she had provided appropriate documents, in particular, a comprehensive statement of her various bank accounts, I suspect that the proceedings would have been significantly more truncated. The proceedings were also, to a very large degree, made necessary and elongated by her refusal to comply with various orders of the Court, predominantly in relation to the provision of documents.

4. The applicant has also been wholly unsuccessful in the proceedings.  I consider that an order for costs should be made including the order of the Full Court in relation to costs on the unsuccessful appeal.  I am being asked to bring the proceedings to an end and to make a single order in respect of costs, which will avoid further hearing, further assessment and enable the respondent, by his case guardian, to give consideration as to how any order should be enforced and what other orders might be sought. I consider, for the reasons that I have already given, that is a sensible approach.

5. I have had cause to consider my ability to quantify the costs in relation to the orders made by the Full Court that the applicant pay the costs of her failed appeals.  I am satisfied that by reference to rule 19.09(1)(b) that I am able to make an order in relation to costs of another court,  in this case of the Full Court and I propose to do so. 

6. I will determine costs on a party/party basis and it is an important consideration that in assessing costs I do so not by superimposing myself into the shoes of a taxing registrar but rather that my involvement is a very different exercise and that I am able to exercise my reasonable discretion in circumstances where I am satisfied that the parameters of the respondent’s costs are well-understood and the basis upon which the Court makes the order will assist in the prompt disposal of the matter.

7. I have considered that on the basis of party/party costs and taking into account the total solicitor/client costs of $144,907.26, inclusive of GST, it seems to me that something in the region of two-thirds of that sum would represent an appropriate reflection of the reasonably party/party costs incurred by the respondent. 

8. I propose to fix the respondent’s costs in the sum of $100,000. 

9. I now turn to the question of time to pay.  I have little information that would assist me in determining the applicant’s ability to meet such an order but, again, I am guided by the assistance of the Full Court in terms of their confidence in making an order that the applicant should pay any order for costs, either fixed or the subject of assessment, within 28 days.

10. It seems to me that that is a reasonable way forward and I propose to give the applicant until 4 pm on 15 July 2017 to pay the costs as ordered.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 2 June 2017.

Associate: 

Date:  8 June 2017