Venson and Venson (Costs)

[2009] FamCA 1250

FAMILY COURT OF AUSTRALIA

VENSON & VENSON (COSTS) [2009] FamCA 1250

FAMILY LAW - COSTS - Application by the mother for costs against the father who was unsuccessful in the substantive proceedings - Mother filed her application for costs out of time - Extension of time for filing application for costs granted and orders made for the father to pay the mother’s costs on a party/party basis subject to certain limitations

Family Law Act 1975 (Cth)

Gallo v Dawson (1990) 93 ALR 479
Maitland v Nationwide News Pty Ltd [2004] NSWCA 155
Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274
Outboard Marine Australia Pty Ltd v Byrnes [1974] 1 NSWLR 27

APPLICANT: Ms Venson

RESPONDENT: Mr Venson

FILE NUMBER: SYF 2376 of 2004

DATE DELIVERED: 18 December 2009

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Justice Austin

HEARING DATE: 29 October 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Brender

SOLICITOR FOR THE APPLICANT: Not Applicable

COUNSEL FOR THE RESPONDENT: Mr Lloyd

SOLICITOR FOR THE RESPONDENT: Newnhams Solicitors

Orders

1. The father shall pay the mother’s costs of and incidental to the father’s Further Amended Application for Final Orders filed on 24 July 2008, determined on 8 September 2009, subject to the following conditions:

   (a)       The costs are payable on a party/party basis

   (b)The costs of the mother are confined to those incurred during the following periods:

   (i)From 23 February 2005 to 29 August 2006 inclusive; and

   (ii)From 14 May 2008 to 3 June 2008 inclusive; and

   (iii)From 4 August 2008 to 3 November 2008 inclusive; and

   (iv)On the first day of trial on 5 August 2009.

2. The costs payable pursuant to Order 1 shall be in the sum agreed or assessed. 

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

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: SYF 2376 of 2004

MS VENSON

Applicant

And

MR VENSON

Respondent

REASONS FOR JUDGMENT

INTRODUCTION  

1. Substantive proceedings between the parties were concluded by way of orders and reasons which were published on 8 September 2009.

2. The question of costs was reserved in those reasons.

3. On 14 October 2009 the mother, who was the respondent to the substantive proceedings, filed an Application in a Case seeking costs against the father, who was the unsuccessful applicant in the substantive proceedings.

4. Rule 19.08(2)(b) of the Family Law Rules requires an application for costs to be filed within 28 days after the final order is made. Given that the final orders were made in the substantive proceedings on 8 September 2009, any costs application ought have been filed by 6 October 2009. The application filed by the mother was therefore late by some 8 days.

5. A preliminary question therefore arose concerning the grant of leave to the mother pursuant to Rule 1.14 to bring her application for costs out of time. In the event of a grant of leave, the costs application then required determination.

LEAVE TO APPLY OUT OF TIME

1. The mother’s Application was returnable before the Court on 29 October 2009.

2. Both parties, who were legally represented, appeared by telephone.

3. The father opposed the grant of leave for the mother to file her costs application out of time.

4. Each of the parties made oral submissions either in support or rebuttal of the grant of leave to the mother.

5. At the conclusion of those submissions, leave was granted to the mother to file her costs application out of time, with reasons for that preliminary determination to be delivered contemporaneously with the publication of reasons for determination of the costs application itself. These are those reasons.

6. The mother read her affidavit filed on 14 October 2009 on the hearing of the interlocutory issue of the extension of time. Her evidence was not the subject of contest by the father.

7. The father adduced no affidavit evidence, on the understandable basis that he believed that the mother had merely sought procedural directions on the first return date of the Application. The father’s solicitor was however content to deal discretely with the question of the extension of time on the first return date by way of submissions.

8. In the course of submissions, the father’s solicitor contended that he was holding a letter dated 3 August 2009 written to him by Douglas Taylor solicitor, in which Mr Taylor represented himself as the solicitor then acting for the mother in the substantive proceedings. The substantive hearing occupied two hearing days, commencing on Monday 5 August 2009. The letter was not tendered in evidence because the parties were appearing by telephone at geographically distant positions from one another and the Court. The mother’s counsel did not dispute the fact of that correspondence.

9. Allowing for that conceded fact, and the factual material comprised within the mother’s affidavit, the following chronology can be reconstructed.

10. Following the publication of orders and reasons by this Court on 8 September 2009, the mother’s counsel emailed the father’s counsel on 14 September 2009 inquiring about an agreement on the father’s payment of the mother’s costs of the proceedings. The following day, being 15 September 2009, the father’s counsel replied by email saying that he would get some instructions. He must have done so because on 17 September 2009 the father’s solicitor, Mr Chapple, wrote to Mr Taylor, in anticipation that Mr Taylor was still acting for the mother, suggesting that each party should pay their own costs of the proceedings.

11. Mr Taylor apparently wrote to the mother on 23 September 2009, but his letter to her was not received. As a consequence, the father and his legal representatives honestly thought that, in the absence of a reply to Mr Chapple’s letter dated 17 September 2009, the costs dispute had died away. On the other hand, the mother and her counsel thought that they were still waiting on the father’s counsel to make good on the promise in his email dated 15 September 2009 to revert to the mother’s counsel with further instructions.

12. Despite Mr Taylor’s representation to the father’s solicitor on 3 August 2009 that he was instructed by, and was acting for, the mother, that situation is not so plain. He was not on the record of this Court as so acting. He later sent an email to the mother on 7 October 2009 explaining that his instructions from her were limited to briefing counsel on her behalf to appear at the final hearing. No such limitation was made apparent to the father and his legal representatives.

13. In any event, on 24 September 2009 the mother’s counsel sent a reminder email to the father’s counsel. It went unanswered, presumably because the father’s counsel genuinely believed that he had dealt with the matter by having his instructing solicitor write to the solicitor thought to be acting for the mother.

14. In the absence of a reply, the mother’s counsel sent to her on 6 October 2009 copies of the emails he had earlier sent to the father’s counsel. That was the last day for the filing of her costs application in accordance with Rule 19.08(2)(b).

15. The mother spoke by telephone with Mr Taylor that day, and he sent a clarifying email to her the next day, which is mentioned above. For reasons which are unexplained, there was then a delay of another week before the mother filed her Application and supporting affidavit.

16. Rule 19.08(2)(b) stipulates the time within which a costs application must be filed. The period of 28 days is apparently an arbitrary time period, but some reasonable time period must be adopted so as to impose regularity and control upon such applications.

17. Rule 1.14 contemplates the need to extend time periods prescribed by the Rules in certain circumstances, and affords the Court discretion to do so.

18. The power to extend time is discretionary, so as to permit the court to do justice between the parties (Gallo v Dawson (1990) 93 ALR 479 at 480). The power will normally be exercised unless the non-compliance is contumacious, or the lapse of time is such that the other party has suffered irremediable prejudice (Outboard Marine Australia Pty Ltd v Byrnes [1974] 1 NSWLR 27 at 30; Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [50-58]; Maitland v Nationwide News Pty Ltd [2004] NSWCA 155 at [16-17]).

19. The father was on notice from as early as 14 September 2009 that the mother was seeking costs against him. That was within a week of the publication of the Court’s orders and reasons. No fault can be attributed to the father by reason of the mother’s delay in filing her application for costs, but even allowing for that delay, he was still on notice of her application by 14 October 2009 or shortly thereafter.

20. The father can point to no irremediable prejudice occasioned to him as a consequence of the relaxation of the time period within which the application ought have been made. His resistance of the mother’s application for leave to bring her claim for costs out of time is based simply on the fact that he must then meet that application on its merits, whereas he would not have been called upon to do so had the time period imposed by Rule 19.08(2)(b) been strictly enforced. That is not the type of prejudice contemplated by the authorities as justifying refusal of an extension of time. In my view, the delay of 8 days is immaterial, given that the father was on notice a month before, and within time, that the mother was pressing a claim for costs against him.

21. Although the mother did not adduce evidence to explain her delay in filing the Application between 6 and 14 October 2009, that in itself does not convert the application for the grant for extension of time from a meritorious claim to an unmeritorious claim. The delay of 8 days is hardly egregious, and no appreciable prejudice is suffered by the father.

22. Conversely, strict application of the 28 days time period would work an injustice upon the mother. She was substantially successful in the substantive proceedings and had signalled to the father at an early time her intention to seek costs against him.

COSTS

1. In support of her costs application the mother reads her affidavit filed on 3 November 2009.

2. In rebuttal of her application the father reads the following affidavits, all of which were filed on 9 November 2009:

   a)Affidavit of the father

   b)Affidavit of the father’s present wife

   c)Affidavit of the father’s solicitor, Mr John Francis Chapple

3. None of the deponents have been cross examined on the evidence contained within their affidavits.

4. The orthodox rule is that parties bear their own costs of proceedings conducted under the Family Law Act (s 117(1)). The rule is, however, the subject of exceptions. In particular, the Court can award costs if of the opinion that there are justifying circumstances (s 117(2)).

5. The mother asserts that the circumstances of the case conducted between the parties do justify an order for costs in her favour against the father. To make good that submission, the mother needs to demonstrate justification for the order by reference to the criteria specified by the Act (s 117(2A)), to which I now turn.

6. As the mother correctly points out, no findings were made in the substantive proceedings about the parties’ financial circumstances.[1] That was because the father’s application was dismissed for legal rather than factual reasons.[2] That does not, however, preclude the Court from considering the evidence adduced at trial relevant to the parties’ financial circumstances, which was tested in cross examination. Arguably, it is safer to rely upon that evidence than the evidence adduced on this costs application, which is untested. I will have regard for both.

   [1] Mother’s costs submissions para 19

   [2] Reasons for Judgment 8/9/09 para 59

7. When cross examined at the hearing in August 2009, the father gave evidence to the effect that:

   a)   He received $200,000 to $300,000 upon the sale of real property at P in about November 2003, although the Child Support Agency retained a large proportion of those funds to meet child support arrears.

   b)     He had travelled overseas every year since 2004.

   c)     He spent about $4,300 per month on his credit card between 2007 and 2009 on funding the lifestyle of him and his current wife. That expenditure did not include mortgage repayments and car expenses.

   d)     He had injected capital of $229,000 into a private company within the last 3 years, notwithstanding that he was unlikely to be repaid that money. Once that money was channelled into the company, some of it was spent on personal items for him.

   e)     He had imported two vehicles from Asia in 2008 to sell as collectors items.

   f)   His present wife owned a parcel of real property in Queensland, to which he had contributed some funds.

   g)     He had received some $170,000 out of Supreme Court proceedings concluded between him and the mother.

8. The mother has adduced further documentary evidence about the financial circumstances of the father and his current wife. The documents are a schedule of assets and liabilities of the father and his wife,[3] and correspondence sent to the father’s wife by her solicitors about payments made and still due to her.[4]

   [3] Mother’s affidavit filed 3/11/09 Annexure D

   [4] Mother’s affidavit filed 3/11/09 Annexure A

9. The schedule of assets and liabilities of the father and his wife is a copied document. Although it may have also been annexed to an earlier affidavit filed in the substantive proceedings,[5] the authenticity of the document in that form is contentious.[6] The document is itself undated. The father deposes to it being some years old. On the state of the evidence, I repose little weight in it.

   [5] Mother’s costs submissions para 12

   [6] Father’s affidavit filed 9/11/09 para 2.12

10. The correspondence received by the father’s wife from her solicitors is quite recent. It apparently relates to a parcel of real property owned by the wife in Queensland.[7] The father is aggrieved about the manner in which that document may have come into the possession of the mother, but as is pointed out by the mother, the apparent receipt by the father’s wife of past and future payments relating to that property is not disputed.[8] The payments amount to $85,000 between August and December 2009, with the possible payment of a further $450,000 in 2010.

    [7] Affidavit of the father’s current wife filed 9/11/09 para 2.8.6

    [8] Mother’s costs submissions in reply para 9

11. Whatever payments have been and will be received by the father’s wife in respect of that property, they are payments made to her as the legal proprietor of the property. The payments are not made to the father. Whether the father has or had an equitable interest in that property has never been determined. Even so, it would be absurd to ignore the fact that the person with whom the father shares a matrimonial relationship has and will likely receive payments of such significance.

12. It is proper to infer that the financial circumstances of the father, within his current marriage, are comfortable.

13. When the mother was cross examined at the hearing in August 2009, she gave evidence to the effect that:

    a)   There were errors in her filed Financial Statements. In particular, they omitted mention of her receipt and/or expenditure of sale proceeds of about $779,000 generated through sale of some real property in about January 2004. It was apparent that this was the same property at P to which the father had earlier referred.

    b)     Of that money, she invested $600,000 and spent the remainder. The investment money was also later exhausted in entirety over ensuing years.

    c)     She had the capacity to service a loan of $900,000 for which she applied in 2002, even though she could not convincingly explain how. The loan did not proceed.

    d)     She withdrew money from the account of a private company to fund living expenses for herself and the two children. She ceased receiving that money in about mid 2002.

    e)     She had represented to other parties, including Citibank, that she earned $40,000 per annum from employment, which employment and earnings were not disclosed in evidence by her.

    f)   She had been untruthful to credit providers about her financial circumstances.

    g)     She received cash payments from a friend for helping out in her store.

    h)     She received a Centrelink pension, without disclosing her alleged employment or cash receipts.

    i)   She last filed a taxation return in about 1988.

    j)   She received $90,000 from the sale of a boat in December 2007. That money was entirely spent.

    k)     She had also travelled extensively overseas.

    l)   She had exhausted most of the funds that had come into her control in the years preceding the hearing. She regarded her current financial position as much worse than it had been in November 2000, when she and the father had negotiated property adjustment orders between them.

14. By reason of those matters, the reliability of the mother’s evidence must be treated with some caution.

15. On the current application the mother has adduced further evidence as to current debts.[9] She contends being on the verge of bankruptcy. Despite my caution about treating the mother as a reliable witness, I am persuaded that her current financial circumstances are difficult.

    [9] Mother’s affidavit filed 3/11/09 paras 9-10

16. Although I cannot determine the financial circumstances of the father with any sense of precision, I infer from the available evidence that he is in a superior financial position to the mother.

17. Neither party is presently in receipt of legal aid. There is no evidence that either party was in receipt of a grant of legal aid at any point during the proceedings.

18. There was no delinquency about the father’s conduct of the proceedings. The mother submits that the father’s conduct of the proceedings should sound in a costs order against him. She asserts, inferentially rather than expressly, that the father is deserving of censure for having brought a legally incompetent application.[10] I do not accept that submission. The fact that the father brought an application that was misconceived does not equate to misconduct. There was nothing about the father’s management of his case that evokes criticism.

    [10] Mother’s costs submissions para 20

19. The mother’s initial application at trial was that the father’s Application be summarily dismissed. When that was raised as a preliminary issue the mother’s counsel abandoned any such interlocutory application and elected to deal with the matter on its merits. The first time that the mother raised the legal point about the incompetence of the father’s Application was after all of the evidence was in, and after completion of the applicant’s submissions. The mother’s point was vindicated. Had it have been pressed as a preliminary point there is nothing that the father could have done about it. The father had particularised his case and adduced the affidavit evidence in chief upon which he intended to rely. The legal defect could not have been cured by the father. The father’s case would have failed for the same reasons that it eventually did had the legal point been taken by the mother on the first day of trial. By reason of the mother delaying the pursuit of her legal argument, the trial was prolonged by a second day.

20. The issue was raised with the parties as to whether any costs ordered in favour of the mother ought be confined to the first day of trial by reason of the mother’s tactical decision to delay raising the point from the beginning of the first day until the end of the second day. The mother argues not.[11] I reject the mother’s contention. The only reason that the matter was adjourned part-heard for written submissions on the point was because it was at the very end of the second day of trial that the issue was raised by the mother. Had it been raised at first instance at the commencement of the trial the issue could have been clarified during the course of the first day and the father’s application dismissed that day. That is not to say that the mother should necessarily be criticised for having taken that tactical decision, but fairness dictates that the father ought not bear the financial responsibility for the mother’s tactical decision to delay disclosure of her insurmountable defence.

    [11] Mother’s costs submissions paras 23-24

1. The proceedings were not necessitated by any failure of one party to comply with existing orders. The mother submits that the proceedings were necessitated by the father’s failure to comply with consent orders, which is presumably a reference to the consent orders that comprised the child support agreement that was the subject of the litigation.[12] I do not accept that submission. It was the father who applied to set aside the child support agreement, and he successfully sought that the operation of that agreement be stayed pending the determination of his Application. The father was actively challenging the operation of the child support agreement through proper litigious channels. He was not simply defaulting in compliance with orders without explanation.

   [12] Mother’s costs submissions para 18

2. The mother asserts that the father was pressing a case against the mother that she was dishonest, which implication is derived by her from the alleged particularisation appearing in the father’s “opening document”.[13] Contrary to that submission, there was no evidence adduced and no submissions made by the father in this case alleging fraud against the mother. As was set out in the reasons given for dismissal of the father’s substantive Application,[14] the father’s case against the mother was never one characterised as fraud. I reject the mother’s submission that it would have been premature for her to have raised her comprehensive legal point on the first day because of an allegation of fraud.

   [13] Mother’s costs submissions para 24

   [14] Reasons for Judgment dated 8/9/09 paras 42-46

3. The central plank of the mother’s claim for entitlement to costs is that the father’s application to set aside the child support agreement was wholly unsuccessful.[15] It is undoubtedly true that the father’s application to set aside the child support agreement failed completely.

   [15] Mother’s costs submissions paras 14, 17

4. The father’s Application was not one in which the Court was called upon to exercise a discretion, as would be the case in pronouncing property adjustment orders under s 79 of the Act or parenting orders under Part VII of the Act. The Application was expected by the father to rise or fall by application of s 136 of the Child Support (Assessment) Act to the evidence. His claim to set aside the child support agreement was particularised in a manner analogous to a common law claim.

5. Ultimately the father’s Application was bound to fail because his particularised case for the setting aside of the child support agreement did not correlate with the statutory criteria. Once that became apparent, there was no discretion vested in the Court about the outcome. The Court was obliged as a matter of law to dismiss the application. That is a matter which carries considerable weight in the determination as to whether the father should compensate the mother for her costs in resisting his Application.

6. The father does not contend that his Application was anything other than entirely unsuccessful. His argument is that the mother promoted a reciprocal application for enforcement of the accrued arrears of child support, which she also wholly failed to sustain.[16]

   [16] Father’s costs submissions para 12(e)

7. The mother’s answer is that that aspect of her case was virtually inconsequential, because there was neither cross-examination nor submissions made about it.[17] I accept the submissions of the mother in that regard. No time was apparently devoted by either party to preparation or conduct of the case in respect of the mother’s reciprocal application. It was entirely ignored during the hearing. The order made by the Court dismissing that application was only made so as to resolve all live disputes between the parties.

   [17] Mother’s costs submissions paras 15-17

8. There is no evidence that either party made any material offer of settlement to the other.

9. The Court record discloses that the mother has not always been legally represented during the course of these proceedings. Specifically, the mother’s representation has been formally recorded as follows:

   a)   By Paul & Paul Solicitors, between 23 February 2005 and 29 August 2006. That firm filed a Notice of Address for Service on the former date and a Notice of Ceasing to Act on the latter date.

   b)     By York Family Law, between 14 May 2008 and 3 June 2008. That firm filed a Notice of Address for Service on the former date and a Notice of Ceasing to Act on the latter date.

   c)     By Hamish Cumming Solicitor, between 4 August 2008 and 3 November 2008. That solicitor filed a Notice of Address for Service on the former date and a Notice of Ceasing to Act on the latter date.

10. The Court record discloses that the mother was unrepresented after 3 November 2008 up until the time of hearing on 5 and 6 August 2009, at which time she was represented by counsel. The circumstances of limited involvement by Douglas Taylor solicitor shortly before the trial are set out earlier in these reasons.

11. For reasons of procedural fairness, the sporadic representation of the mother was raised with the parties as an issue. Each party was invited to make submissions about the influence upon the costs application of the mother’s intermittent legal representation.

12. The mother has adduced evidence, which is untested, that she incurred legal fees with other lawyers at times outside those during which a lawyer was formally on the record for her in these proceedings.[18] No attempt has been made to verify her evidence by the filing of an affidavit by those other lawyers who allegedly rendered her with fee invoices.

    [18]   Mother’s affidavit filed 3/11/09 paras 4-7, 9

13. The mother has annexed correspondence to her affidavit which purports to verify her debt to one firm of solicitors, being Paul & Paul.[19] The mother says that that firm acted for her at times outside the period during which that firm was on the record for her.[20] The father asserts that that firm acted for the mother in other proceedings as well, and that the costs of those lawyers were taken into account in those other proceedings.[21] Because the parties have not been tested on their evidence I cannot be satisfied as to the correct circumstances.

    [19]  Mother’s affidavit filed 3/11/09 para 10, Annexure B

    [20]  Mother’s affidavit filed 3/11/09 para 5

    [21]  Father’s affidavit filed 9/11/09 paras 2.4-2.5

14. The mother has not annexed to her affidavit copies of any other fee invoices that she alleges incurring with other lawyers not formally on the record.

15. The mother has submitted that the formal record of the dates upon which the mother was represented in the proceedings is not the only relevant factor that will determine the extent of the mother’s entitlement to costs in the proceedings, on the basis that she did seek advice at other times from solicitors not on the record, or incurred disbursements in periods when she was not represented on the record.[22] The mother admits, though, that she was not legally represented for much of the life of the litigation.[23] The mother is the applicant for costs. It is incumbent upon her to adduce the evidence to satisfy me that she ought be awarded costs.

    [22] Mother’s costs submissions para 11

    [23] Mother’s costs submissions para 16

16. The Court is entitled to legitimately infer that it is only during those periods that a lawyer is formally on the record as acting for the mother in the proceedings that she actually incurred legal fees in her conduct of the proceedings. Alternatively, it is only the formal appearance of legal representation on the Court record which constitutes the circumstances justifying an award of costs under the provisions of the Act.

17. The notable exception is the appearance made for the mother by counsel at the hearing on 5 and 6 August 2009, at which time counsel accepted the mother’s instructions directly. Mr Brender of counsel has never been on the record as the mother’s lawyer, but he undoubtedly acted for her at the final hearing.

18. It may be that the mother did consult other lawyers at other times in relation to these proceedings, and it may be true that she incurred other fees with them. However, in the face of controversy, in the absence of proper verification, and by reference to the Court record, the circumstances do not justify the award of costs to the mother for any fees which fall outside those periods to which I have referred, together with fees incurred by the mother with Mr Brender of counsel (for the first day of trial).

19. Apart from these proceedings, the parties were involved in proceedings before the Supreme and Local Courts of NSW at various times. The sets of proceedings overlapped at times.

20. The father asserts that any costs awarded in these proceedings should be confined to those incurred specifically in these proceedings. There can be no sensible argument against that.

21. The father submits that the difficulty that may be confronted in separating out those costs incurred by the mother, in these proceedings and no other, at times when a lawyer was on the Court record as acting for her, is a reason in itself for dismissing the mother’s application for costs.[24] I reject that submission, as suggested by the mother.[25] Although that exercise might present some difficulty, it is a matter for the costs assessor should the parties not be able to reach agreement. It is not the function of this Court to undertake the costs assessment.

    [24] Father’s costs submissions para 15

    [25] Mother’s costs submissions in reply para 15

22. The Court also raised with the parties the prospect of the mother being denied her costs of the application for leave to bring this costs application out of time, on the basis that she was granted an indulgence to do so. The mother accepts the fairness of such a limitation.[26]

    [26] Mother’s costs submissions paras 21-22

23. The circumstances persuade me that, on balance, the mother is deserving of a costs order in her favour. However, I am also persuaded that the costs order in favour of the mother should be the subject of limitations to which I have referred.

24. There is no argument that the award should be made on any basis other than a party/party basis.

25. As a consequence, I make the orders set out at the commencement of these reasons.

I certify that the preceding seventy two (72) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin

Associate: 

Date:  18 December 2009