VERMA and VERMA

[2022] FCWA 32

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: VERMA and VERMA [2022] FCWA 32

CORAM: DUNCANSON J

HEARD: 12 OCTOBER 2021

DELIVERED : 11 FEBRUARY 2022

FILE NO/S: [Redacted]

BETWEEN: MR VERMA

Applicant

AND

MRS VERMA

Respondent

Catchwords:

COSTS - of interim proceedings - where the evidence has not been tested - where costs are reserved to the trial

Legislation:

Family Law Act 1975 (Cth) s 90C, s 117

Category: Reportable

Representation:

Counsel:

Applicant	:	Mr C Grasso
Respondent	:	Mr J Hedges SC & Mr W Elder

Solicitors:

Applicant	:	Millsteed Grasso
Respondent	:	West End Legal

Case(s) referred to in decision(s):

Collins and Collins (1985) FLC 91-603

Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor (2005) 33 Fam LR 123

I and I (No 2) (1995) FLC 92-625

Kohan and Kohan (1993) FLC 92-340

Madin v Palis (Costs) (2016) 55 Fam LR 59

Mansfield and Ors & Mansfield and Anor (2019) FLC 93-920

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT – PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

IT IS NOTED that publication of this judgment by this Court under the pseudonym Verma and Verma has been approved by the Family Court of Western Australia pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

1The respondent wife, [Mrs Verma] seeks an order for costs arising from property proceedings between her and the applicant husband, [Mr Verma].

BACKGROUND

2The parties were married [in] 2007 and separated in 2016. They are not divorced.

3On about 13 September 2017, the wife signed a document purportedly to be made pursuant to s 90C of the Family Law Act 1975 (Cth) ("the Act"). The husband deposed that he signed a copy of the binding financial agreement. I refer to this document as "the financial agreement" in these reasons, although in submissions the parties have described it in various ways.

4The husband commenced these proceedings on 21 February 2020 when he filed an initiating application seeking parenting orders. On 26 February 2020 the wife filed a response in which she sought parenting orders. Subsequently on 4 September 2020 the wife filed an amended response to initiating application in which she sought final orders for property settlement and spousal maintenance and final parenting orders.

5In the amended response the wife also sought interim parenting orders and various interim financial orders including orders for bank transfers, injunctions, spousal maintenance, disclosure, legal costs and a dollar-for-dollar order. She sought costs on an indemnity basis.

6On 8 October 2020, the husband filed a reply in which he sought orders including that the application for spousal maintenance be dismissed and an order for transfer of property. He sought declarations that:

•the binding financial agreement entered into between the parties on 13 September 2017 was valid and effective; and

•that the parties' financial matters had been settled in 2017 pursuant to the binding financial agreement.

7On 6 November 2020, and subsequent dates parenting orders were made.

8On 9 March 2021, the financial proceedings were adjourned to 30 June 2021 for interim argument with an estimated hearing time of one day. On 9 March 2021 orders were made also for the husband to provide particulars with respect to the financial agreement.

9The wife asserts the husband did not comply fully with the orders for the provision of particulars.

10On 31 March 2021, orders were made for the provision of particulars, subpoenas, disclosure and the filing of trial affidavits.

11The wife asserts the husband did not comply with said orders.

12On 1 July 2021, the husband filed an affidavit. He deposed to having attended upon a new lawyer on 24 June 2021. He deposed:

3.After hearing the facts pertaining to the Binding Financial Agreement he [the husband's new lawyer] told me it was most clear that there was nothing binding about that agreement at all and he expressed surprise why the case had gone this far.

13The husband deposed to various matters in relation to the signing of the agreement, the parties' actions and their conversations.

14By reason of a COVID-19 lockdown the hearing on 30 June 2021 was vacated. The proceedings were listed for a special appointment on 12 October 2021. On that date orders were made for the filing of costs submissions and financial statements.

THE ORDERS SOUGHT

15The orders sought by the wife are contained within her costs submissions filed 12 October 2021. The wife seeks an order that the husband pay a fixed amount of $27,000 towards her costs. In the event the amount is not fixed then she seeks costs as taxed on an indemnity basis.

16The orders sought by the husband are contained in his costs submissions filed 28 October 2021. The husband proposes that issues in relation to costs should be decided at the conclusion of the trial.

THE LAW

17Section 117(1) of the Act provides that, subject to s 117(2) each party to proceedings shall bear his or her own costs.

18Section 117(2) provides that if the Court is of the opinion there are circumstances that justify doing so, the Court may, subject to s 117(2A) make such orders as to costs as it considers just. Section 117(2A) provides as follows:

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.

19The Full Court in Collins and Collins (1985) FLC 91-603 described the discretion conferred by s 117 of the Act as being a "broad" one and noted that the s 117(2A) factors are not to be read in a restrictive way. The Full Court said in I and I (No 2) (1995) FLC 92-625 at 82,277, the relevant matters in s 117(2A) "must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs". The Full Court in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fishand Anor (2005) 33 Fam LR 123 also made clear that any one of the factors referred to in s 117(2A) may be the sole foundation for an order for costs.

20It is necessary for me to take into account all of the relevant matters in s 117(2A) and balance them to determine whether the overall circumstances justify making an order as to costs.

Indemnity Costs

21The usual rule is that costs are awarded on a party/party basis. Indemnity costs orders are "a very great departure from the normal standard" (Kohan and Kohan (1993) FLC 92-340).

22The Full Court has observed with respect to applications for indemnity costs that they should only be made and will only be ordered "in the most extreme cases" (Madin v Palis (Costs) (2016) 55 Fam LR 59).

23In Mansfield and Ors & Mansfield and Anor (2019) FLC 93-920 the Full Court stated:

7.The Full Court noted in Prantage & Prantage (2013) FLC 93-544 (“Prantage”) at [42], that even in jurisdictions where the usual rule is that costs follow the event, it is well settled that indemnity costs “should only occur in an extremely rare situation” (see Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] 179 ALR 406). We agree with Murphy J in Prantage at [152] that in proceedings under the Act, where the usual rule is that each party shall bear his or her own costs, an order for indemnity costs is even more exceptional.

THE WIFE'S POSITION

24The wife's position is that there are circumstances in this case that justify the Court from departing from the usual rule that each party to proceedings bears his or her own costs and that having regard to the provisions of s 117(2A) of the Act the Court should make an order as to costs in relation to the interim proceedings.

25The wife submits the husband's true financial position is not known and he is in a stronger financial position than her.

26As to the husband's conduct, the wife submits he was advised he should not have made the application and he did so, either because he did not follow prior legal advice or that advice was inadequate.

27The wife asserts the husband failed to comply with prior orders for disclosure and particulars. The wife submits the husband has been wholly unsuccessful in his claim that there is a binding financial agreement, and he did not abandon it until six days prior to trial.

28The wife seeks indemnity costs.

THE HUSBAND'S POSITION

29The husband submits the issue of the binding financial agreement has been abandoned. He submits there was an agreement of sorts signed which the parties did think was a binding financial agreement.

30The husband submits orders were sought in relation to many interim issues and he questions whether the wife incurred costs of $25,000 in relation to the issue of the binding agreement only.

31The husband denies having given inconsistent evidence. He submits the action was "doomed" and there was no need for the wife to spend $25,000 "to work that out".

32The husband submits the wife seeks to take advantage of a situation where the husband was defending her property claim on three grounds:

•that there was a binding deed (hopeless argument);

•that the parties negotiated and settled; and

•equitable estoppel.

33The husband submits there may have been some costs incurred to the wife, but those issues should be decided at the end of the trial as, if he was to succeed as to equitable estoppel, that he relied on the agreement and has been prejudiced thereby, then it is feasible there will be no order for costs against him.

DISCUSSION AND CONCLUSION

34The circumstances of the husband's reliance on the financial agreement and issues as to whether he did not follow prior legal advice or that advice was inadequate as asserted by the wife, have not yet been determined. These issues relate to the conduct of the husband in relation to the proceedings.

35The circumstances in relation to the financial agreement are part of the broader set of circumstances involving the division of the parties' property. The conduct of the parties in relation to the proceedings, the reasonableness of their positions in relation to the financial agreement are part of those circumstances. These are matters about which I can make no finding at this interim stage.

36The husband's argument of equitable estoppel has not yet been determined and is a matter for trial.

37The husband abandoned his reliance on the financial agreement and acknowledged it was a "hopeless argument". However, the wife's property claim was also opposed on other grounds.

38The wife has incurred costs. At the conclusion of the trial and with the benefit of the Court's findings, the Court will be in a position to determine whether or not circumstances exist which justify it from departing from the general rule that each party should bear their own costs of the interim proceedings, or whether an order should be made that the husband pay the wife's costs of those proceedings and upon what basis.

39At this time, I can make no findings, including with respect to the financial agreement, and it is not appropriate that I do so until the evidence is tested. I propose to reserve the wife's costs to the trial.

THE ORDERS

1The application of the wife for the costs of interim proceedings, being those sought in her costs submissions filed 12 October 2021, be reserved to the trial.

2The proceedings be listed for directions only on 14 March 2022 at 10.00 am in the Duty Judge List.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.

CL

Judicial Support Officer

2 MAY 2022