Telama and Telama

[2011] FamCA 81

FAMILY COURT OF AUSTRALIA

TELAMA & TELAMA [2011] FamCA 81

FAMILY LAW – COSTS

APPLICANT: Ms Telama

RESPONDENT: Mr Telama

FILE NUMBER: SYC 1450 of 2008

DATE DELIVERED: 21 February 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Hon. Justice Cohen

HEARING DATE: 4 March 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr C. Simpson SC

SOLICITOR FOR THE APPLICANT: Armstrong Legal

THE APPLICANT: In person

Orders

1. That the husband pay to the wife her costs of and incidental to the husband’s Application in a Case filed 13 October 2009 together with the wife’s costs of and incidental to the costs application of the wife made orally on 4 March 2010 as assessed or agreed within one (1) month of such assessment or agreement.

IT IS NOTED that publication of this judgment under the pseudonym Telama & Telama is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1450 of 2008

MS TELAMA

Applicant

And

MR TELAMA

Respondent

REASONS FOR JUDGMENT

1. I must deal with a costs application by the wife in circumstances where, as the husband said in his response to the wife’s argument and I agree is either true or so close to the truth that the difference is irrelevant, there are four large boxes for the Court file, 92 subpoenas have been issued of which the husband has issued four, 55 affidavits filed, 48 appearances in Court, about 4,000 pages of documents filed, more than 10,000 pages of documents produced under subpoena and the husband has received more than 200 letters from the solicitors for the wife. His costs have been limited to about $135,000 because he has been self-represented for much of the litigation. The wife has spent about $700,000 in costs on the husband’s estimate, all over children’s issues and what the husband says was and still is an asset pool of from $2m to $2.5m. I do not know how he could say the asset pool is so large in the light of the other material before me, yet I accept that this is likely to be the best estimate which has been put before the Court in the remaining financial proceedings which are over spousal maintenance and child support. The property dispute has been settled.

2. Of course, what the husband says is the asset pool and is his income and the wife’s non-acceptance of this are at the heart of the appalling statistics referred to above. It is the wife’s stand through her senior counsel, Mr Chris Simpson SC, that the husband’s financial circumstances, despite the wife’s legal advisors’ earnest efforts to obtain disclosure, have not been disclosed to the degree which comes within the Court’s requirements i.e. full and frank disclosure, for the purposes of the remaining financial disputes. Mr Simpson told me when I asked him that he could not say what the husband’s net assets are because the husband had intentionally failed to disclose his true position. I cannot say whether the husband claims are true or whether the wife’s claims are true because these issues were not litigated before me and could not have been litigated in interim proceedings.

3. The actual costs application does not require a detailed knowledge of all the facts of the proceedings to be properly decided or for me to know where the truth about disclosure lies. What occurred is quite simple and straight forward.

4. On 1 October 2009 a judicial registrar delivered a judgment in proceedings which the wife had instituted for spousal maintenance and departure from administrative assessment of child support. On 13 October 2009 the husband applied to review all orders the Judicial Registrar made. The matter came before me for the first time on Friday 13 November 2009 in a duty list. I was informed that there was three hours of reading necessary before proceeding further. It was not an exaggeration to say, as Mr Simpson did, that there was a “great body of material.” Mr Simpson said that his submissions would take one and a half hours. Mr Schonell who then appeared for the husband would have taken some time too.

5. The Judicial Registrar had ordered the husband to make up arrears of spousal maintenance of about $8,000 at the rate of $1,000 per week and to pay spousal maintenance to the wife of $1,000 per week in future. He further made a child support departure order which required $78,000 per annum to be paid to the wife in child support until 28 February 2010. That amounted to just $9,130 more than the administrative assessment.

6. When the hearing commenced before me on 13 November 2009, Mr Schonell contended that there should be no order for spousal maintenance and that the child support should revert to the sum administratively assessed by the child support agency at $45,855 per annum until 28 February 2010.

7. The matter became part herd on 13 November and was eventually adjourned to 4 March 2010. On 24 February 2010 the husband filed a notice of discontinuance.

8. The underlying principal in determining costs in the Family Court of Australia, in matters governed by the Family Law Act or where the provision in that Act as to costs must be applied, is that unless there are circumstances which justify a costs order against a party, costs should be borne where they fall. The essential reason for this is obvious. It is not in the public interest that the Court should make orders which will tend to increase the level of animosity between litigants who were once members of one family and who still may have family in common unless there are reasons for making a costs order which outweigh this consideration.

9. Here, in my opinion, such reasons exist. There was a hearing in which the relevant dispute was fully aired. It was before the Judicial Registrar who made a decision. The husband did not accept that decision and appealed by way of rehearing, as was his right. Such a right does not, however, come without risk as to costs. He must have appreciated that the hearing before the Judicial Registrar put the wife to considerable expense; expense which appears to have been justified because she was relatively successful. When he decided to appeal he must have realised that much of the expense already incurred by the wife would be wasted and that she would have to incur further very considerable expense; at a much greater level than is usual in this Court in matters of the same or similar nature because of the complexity of the husband’s affairs and his own failure to disclose in a candid manner, to re-litigate her case on the rehearing. Yet he discontinued after the matter had become part-heard and so close to the adjourned hearing date that it was highly likely that the wife had already incurred most or all of the expense involved in preparing for the hearing set for 4 March. The husband must or should have realised this, especially as he estimated the wife’s costs to be such an extreme amount.

10. I am quite satisfied, for these reasons, that this is a matter in which the circumstances justify the Court, subject to subsection 117(2A), in making a costs order.

11. In deciding whether or not to make such an order, the Court must consider and weigh the matters specified in subsection 117(2A).

12. The first such matter is the financial circumstances of the parties to the proceedings. Because the issues were not fully aired because of the discontinuance, I have not determined what they are as between the stances each party has taken. For the purpose of the costs application, I have not been put in a position where I might do so. Nevertheless, the husband admits the assets pool is $2m to $2.5m and the wife must believe it might be considerably higher.

13. The property proceedings between the parties were decided by consent on 18 December 2008. The wife appeared to receive all the parties’ assets and a $400,000 debt which was the husband’s. Her most recent statement of financial circumstances prior to the costs submissions being made, that of 11 November 2009, discloses that she has an average weekly income of $435, outgoings of $7,639 per week and net property worth about $1.3m. The husband’s statement of financial circumstances of the same date disclose an average weekly income of $8,540, expenditure of $10,777 per week and total property of $107,000, yet liabilities of $865,377. An indication of his own perception of his situation is his then rent which was $900 per week and his $823 weekly contribution to superannuation.

14. The husband’s outgoings included alleged payments of maintenance for the parties’ children of $2,500 per week which was not in fact being paid so far as I can tell. The $107,000 in property mostly consisted of the value of two cars. Of the husband’s claimed debts of $865,377, he included the debt the wife is liable for under the property orders in the sum of $480,000. An additional $134,700 was not for debts which were due and payable. This was the total amount due for the hiring or hire purchase instalments on the two cars. So the husband’s debts were really more like $250,000 including $68,000 for unassessed income tax and GST.

15. The husband’s bankers must have had some confidence in his financial viability because he had credit card debts of $162,700. He listed his two companies, those only recently disclosed, as having no value. Yet in his submissions he disclosed that the profit on the development venture being undertaken through them might be $1m before tax. The nature of the husband’s circumstances leads one to feel real discomfort that there has not been full disclosure of the real status of the husband’s business ventures. In those submissions, he admitted to employment income of $154,545 gross per annum or $2,033 per week after tax.

16. In those circumstances, if a costs order is made against the husband he should be able to afford to meet it without suffering undue hardship and if a costs order against the husband is refused the wife must believe her share of the pool will be substantial and therefore she will not suffer undue hardship by having to meet her own costs.

17. The circumstances here are such that I can confidently assume neither party was in receipt of legal aid for the spousal maintenance and child support assessment departure.

18. The conduct of the proceedings by the husband is the reason why the wife has made the costs application and her main justification for an order in her favour. Firstly, the wife says that leading up to the hearing before the Judicial Registrar the husband failed to make a full and frank disclosure. It is said that costs were wasted because the solicitor for the wife had to press the husband for information about his financial circumstances and that it was not until 18 September 2009 that the husband disclosed for the first time the existence of the two companies and their dealings which are critical to discovery of the husband’s true financial situation. The wife’s solicitors continued to seek the information they were entitled to receive and had not been given after 18 September. As late as 12 and 23 February 2010, the wife’s solicitors were still demanding financial information they should have been provided with earlier and were, therefore, incurring costs for the preparation of the 4 March hearing. When disclosure was made it was minimal, circumscribed and disclosed just enough to require more enquiries to be made.

19. Nevertheless, the essential aspect of conduct of the husband which goes to the issue of costs is that he appealed from the Judicial Registrar’s decision then withdrew the appeal when it was too late for the wife to avoid suffering most of the costs she would have incurred if the husband had not withdrawn his appeal.

20. There was no actual failure by the husband to comply with orders of the Court. His failure was to comply with the requirement of full and frank disclosure at the proper time. That he did not do so made the wife incur greater costs in preparation for the hearing of the matter right up to the time of his withdrawal of the appeal than she should have had to incur.

21. The withdrawal of the appeal seems to me to be equivalent to the husband being wholly unsuccessful in it. At the hearing before the Judicial Registrar the wife sought spousal maintenance of $2,000 per week, so to the extent that she was awarded $1,000 the husband had some success. Otherwise the wife was wholly successful.

22. The husband relies on having made offers in writing to the wife which she did not accept. It is properly said by the wife in response to this submission that the wife could not accept any offer because she had not been put in a position to know enough about the husband’s financial affairs to determine whether or not the offer should be accepted. In any event, only offers made after the Judicial Registrar made the decision appealed from are relevant and these clearly could not have provided a better result for the wife than discontinuance achieved.

23. The husband has sought to excuse the discontinuance on the ground that the cost of pursuing the review was disproportionate to the amount in issue. That is a matter which I think undermines the husband’s case to resist a costs order. He should have considered the costs of the appeal to both himself and the wife before he instituted it. Or, if the circumstances changed, at an earlier time than he did so he could have discontinued earlier and at less cost to the wife. The husband’s own written submissions support this conclusion. In them, he indirectly admits that by 30 October 2009 he was in a position to know that the review application was not worth his while to pursue. He knew at that time that his employment would continue to 24 December 2009 making it possible for him to make the payments ordered by the Judicial Registrar up to 31 December 2009 and knew that the child support departure which had been made expired as early as 28 February 2010 that if he became unemployed after 24 December 2009 he could make a fresh application to alter spousal maintenance because the order which had been made by the Judicial Registrar was interim or “until further order.”

24. A weighing of all the above leads to the conclusion that it is just to make a costs order in favour of the wife. It should be that the husband pay her costs of and incidental to the review application which he withdrew together with the costs of this costs application as taxed or as agreed within one month of such taxation or agreement.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen delivered on 21 February 2011.

Associate:     

Date:              21 February 2011