Wade and Wade (Costs)

[2017] FCWA 126

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: WADE and WADE (COSTS) [2017] FCWA 126

CORAM: O'BRIEN J

HEARD: 16 JUNE 2017 & WRITTEN SUBMISSIONS

(FINAL SUBMISSIONS RECEIVED ON 10 JULY 2017)

DELIVERED : 29 SEPTEMBER 2017

FILE NO/S: PTW 5533 of 2015

BETWEEN: MS WADE

Applicant

AND

MR WADE
Respondent

Catchwords:

COSTS - Where the Respondent pursued parenting orders for children to return to Western Australia when the actual dispute related to child support and travel costs - Where circumstances justify an order for costs - Where costs on an indemnity basis are not justified - Contribution to costs in a fixed sum.

Legislation:

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Category: Not Reportable

Representation:

Counsel:

Applicant: Ms R Oakley

Respondent: Self-Represented Litigant

Solicitors:

Applicant: Bell Dixon Butler Lawyers

Respondent: Self-Represented Litigant

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

Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160

Braithwaite v Braithwaite [2007] FamCA 468

Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23

In the Marriage of Kohan (1993) FLC 92-340

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

Parke & the Estate of Parke (2016) FLC 93-748

Wrenstead v Eades (2016) FLC 93-697

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

1[Mr Wade] (“the husband”) commenced proceedings on 4 December 2015 seeking orders that [Ms Wade] (“the wife”) return the twin children of the marriage, [Child A] and [Child B], born [in] 2004 and a daughter, [Child C], born [in] 2010, to the Perth metropolitan area. At that time, the children were living with the wife in [Coastal Town A, State A], having moved there with her from [Coastal Town B, Western Australia] on 11 November 2015.

2Those proceedings were finally concluded on 10 March 2017 when orders were made by consent and the trial, listed to commence on 1 May 2017, was vacated.

3The matter for determination is the wife’s application for an order that the husband pay the whole of her costs of the proceedings on an indemnity basis. At the first hearing of that application written submissions on behalf of the wife were handed up. I ensured that the husband was provided with a copy of the relevant sections of the legislation and he was given time within which to file written submissions in response. He filed those submissions and an affidavit on 10 July 2017.

4The parties had also agreed that unless the wife sought an opportunity to make oral submissions in response to the husband’s written submissions, the costs application could be determined in chambers on the papers. Following receipt of the husband’s written submissions, the solicitors for the wife confirmed that an opportunity for oral submissions was not sought.

Background

5The parties began living together in 1998 and were married [in] 1999. They separated in October 2014, having previously separated for a period of approximately eight months in 2012.

6At the time of the birth of the twins, the parties were living in Coastal Town A. They remained there until 2007, when they relocated to [City C]. During the period of their separation in 2012, the wife returned to Coastal Town A with the children and the husband moved to Western Australia to pursue employment in the north-west of the State. Upon their reconciliation, the wife and the children moved to join the husband in Coastal Town B; the wife was the primary caregiver for the children, and the husband worked on a fly-in fly-out basis, spending two weeks in the north-west of the State and one week in Coastal Town B.

7When the parties finally separated in October 2014, the wife and the children remained in Coastal Town B and the husband moved to Perth. He continued to work on a fly-in fly-out basis and spent time with the children by agreement.

8In mid-2015, the wife raised with the husband her desire to return to State A with the children and sought his agreement to that course of action. She first emailed him in that regard on 22 July 2015. The husband’s response was to indicate that his concern in relation to the proposal was its financial implications, and the related issues of the costs associated with the children spending time with him, and his child support obligations.

9The parties then exchanged communications confirming an informal agreement that the wife would move to State A with the children as proposed, and that she would agree to the husband’s child support liability being reduced to nil, bearing in mind the costs that would be associated with him spending time with the children.

10That agreement was never formalised. The parties each blame the other for that. In addition, it does not appear that the wife had considered the implications of the informal agreement in terms of her entitlement to Government benefits. The wife left Western Australia with the children on the strength of the informal agreement reached; the husband responded by commencing the proceedings.

11As the wife observes, the husband’s application proposed no final orders in relation to the children, rather seeking leave to particularise the relief sought “upon the children being returned to the Perth metropolitan area”. He did not seek an order that the children live with him. It is not clear why the husband proposed that the children be returned to the Perth metropolitan area, in circumstances where they had never lived there, rather than to Coastal Town B.

12The focus of the husband’s application was to seek urgent interim relief compelling the return of the children to Western Australia. In that context he filed an exemption form seeking to commence proceedings without participating in family dispute resolution on the basis of urgency.

13His documents alleged that the wife had removed the children from Western Australia “without [his] consent”. The only reference in those documents to the negotiations which had taken place was in his case information affidavit:

The mother had raised the possibility of relocating with the children to [State A] with the father over the last few months but the father said that he was not prepared to agree to the mother and the children relocating without court orders / a written agreement in place.

14At the first hearing on 9 December 2015 interim orders were made by consent for the children to live with the mother in State A. Orders were also made in relation to the time to be spent by the children with the father, and for him to communicate with them.

15The minute of consent orders also noted the following:

That within 7 days the Mother is to provide to the Father, via the parties solicitor, a draft Child Support Agreement for consideration by the Father.

The parties undertake to negotiate in good faith, to resolve the question of how the cost to the Father, of travel and accommodation for the purpose of spending time with the Children, is to be addressed by that Child Support Agreement.

16It appears that negotiations in relation to child support arrangements then broke down. On 2 March 2016 an order was made requiring the husband to file and serve an amended Form 1 application particularising the final orders sought by him. While he filed an amended Form 1 application on 9 March 2016, it did not comply with the order made. The amended document simply deleted some of the interim orders proposed in his original application in circumstances where those orders were clearly no longer required, but otherwise still failed to particularise any final parenting orders sought.

17At a further procedural hearing on 4 April 2016, before the Judge assigned to manage the case, orders were made to program the matter to trial. Again, an order was made requiring both parties to file and serve a minute of proposed orders setting out the orders sought on a final basis. The record noted that the parties would “negotiate the issue of child support in an attempt to resolve the issues”.

18In compliance with that order, the wife filed a detailed minute of proposed final orders on 13 May 2016. The husband did not comply with the order.

19At a readiness hearing on 15 August 2016 orders were made to enable the matter to proceed towards trial. The husband was again ordered to file a minute of orders sought by him on a final basis, within 14 days.

20The husband filed that minute on 26 August 2016. He sought final orders requiring the wife to return the children to live in Western Australia within 250 kilometres of the Perth metropolitan area. He sought a further order that in the event the wife did not wish to relocate with the children, they live with him. He also filed affidavit material for trial. Consistent with his earlier documents, that material focused on financial issues and the husband’s view that the wife had not done what she had agreed to do in relation to child support.

21The matter progressed towards trial before orders were made by consent as referred to above. The orders were largely consistent with the proposals raised by the wife throughout. They included orders for the husband to make any travel arrangements for the purpose of spending time with the children, and meet the associated costs, but also provided that the wife contribute $1,500.00 per annum towards those costs. The minute of consent orders also noted the agreement of the parties that the husband would continue to pay child support as assessed, that the amount so paid would be applied by the wife to the children’s schooling expenses, and that the wife would not seek any additional contribution from the husband to those schooling expenses.

The law

22There are two primary matters for determination; whether there are circumstances that justify an order for costs and if so, what order for costs is just.

23Subsection 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that, subject to s 117(2) each party to the proceedings shall bear his or her own costs.

24Subsection 117(2) provides that if the court is of the opinion that there are circumstances that justify doing so, the court may, subject to s 177(2A) make such order as to costs as it considers just. Subsection 117(2A) provides as follows:

(2A)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.

25The discretion conferred by s 117(2) is broad. The factors set out in s 117(2A) are not to be read in any restrictive way. Any one of those factors may, in appropriate circumstances, be the sole basis for an order for costs. That said, the relevant matters referred to in the subsection must be taken into account and balanced in order to determine whether an order for costs is justified.

26An order for costs is compensatory, not punitive: Braithwaite v Braithwaite [2007] FamCA 468.

27The legislative provisions in relation to costs do not draw any distinction between parenting cases and financial cases, nor is the court’s discretion subject to any such distinction: Wrenstead v Eades (2016) FLC 93-697.

28If an order for costs is to be made, the principle that such costs should be calculated on a party-party basis should not be “lightly departed from” unless circumstances of an exceptional kind exist: In the Marriage of Kohan (1993) FLC 92-340 at 79,614.

29The Full Court’s more recent observation in Madin & Palis (Costs) (2016) 55 Fam LR 59 at [23] bears repeating:

Finally, we take the opportunity to observe that in so far as the appellant sought an order for indemnity costs, applications for such costs should only be made, and such costs will only be ordered, in the most extreme cases. This is particularly so having regard to the fact that the primary rule in this jurisdiction is that each party should pay their own costs. Unfortunately, however, applications for indemnity costs are increasingly being made in this jurisdiction, thereby imposing further burdens on the court’s limited resources and causing further unnecessary expense for litigants.

30Rule 19.18 (1) of the Family Law Rules 2004 (Cth) (“the Rules”) provides:

19.18 Method of calculation of costs

(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 method stated in the order; or

(d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.

31The purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”: Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162.

32As Murphy J observed in Parke & the Estate of Parke (2016) FLC 93-748 at [130] (citations omitted):

If the court is to fix a sum it should be “fixed broadly having regard to the information before the court”… The process does not “by its very nature… envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”…

33The court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”: Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 at [10].

Non-contentious matters required to be considered

34Neither party was in receipt of legal aid. The proceedings were not necessitated by the failure of either party to comply with previous orders of the court.

35While the terms of the orders to which the parties eventually consented were substantially similar to those proposed by the wife from the outset, it cannot properly be said that either party was wholly unsuccessful in the proceedings. While the submissions filed on behalf of the wife suggest otherwise, at paragraph 40 of her affidavit filed in support of her costs application she somewhat more accurately states:

[the husband’s] application was that the children be relocated from [Coastal Town A] to live with him in Perth. To the extent that the outcome was for the children to remain in [Coastal Town A], [the husband] has been wholly unsuccessful in his application.

36A party cannot be “wholly unsuccessful” to a limited extent. In any event, s 117(2A)(e) is directed to proceedings which are heard and determined; the present proceedings were settled. Nevertheless, the point properly raised by the wife can be taken into account pursuant to s 117(2A)(g).

37Accordingly, in considering what order (if any) for costs should be made, I must have regard to:

(a)the financial circumstances of the parties;

(b)the conduct of the parties in relation to the proceedings;

(c)whether relevant offers in writing have been made and, if so, the terms of those offers; and

(d)such other matters as I consider relevant.

The financial circumstances of the parties

38The wife filed a financial statement on 19 May 2017, sworn on 30 March 2017. In that document, she stated that she was not employed and that her only sources of income were Government benefits and child support. Her expenses exceeded her income. She said that she had property to a value of $162,226.00, most of which was comprised of cash in the bank. She disclosed no liabilities.

39The husband last filed a financial statement on 4 August 2016. In that document he disclosed a weekly income of $1,912.00 from his employment. His claimed expenses consumed almost all of his income. He asserted that he had assets to the value of $18,445.00, superannuation to the value of $95,000.00 and liabilities of just over $29,000.00.

40Each party claims that the other is in a de facto relationship. There is no evidence as to either relationship, or the financial circumstances of them.

41The wife says that she has incurred costs in the total sum of $20,060.03 in the primary proceedings, plus additional costs incurred in pursuit of her application for costs. The husband also incurred legal costs at an earlier stage of the proceedings; a costs notification letter lodged by his former solicitors at the same time as they filed a notice of ceasing to act on 14 December 2015 showed that to that point he had incurred costs of approximately $5,300.00. In her submissions the wife conceded that the husband had incurred legal costs totalling $6,180.00. He has not provided any additional information in relation to any further legal costs he might have incurred.

The conduct of the parties in relation to the proceedings

42The wife makes various complaints about the conduct of the husband generally. Most particularly, she asserts that the position taken by him in the parenting proceedings was driven purely by considerations relating to child support, rather than considerations relevant to the best interests of the children.

43In my view, matters of that nature may appropriately be taken into account pursuant to s 117(2A)(g).

44The court’s consideration of the conduct of the parties in relation to the proceedings pursuant to s 117(2A)(c) is, as is made clear by the inclusive list of examples of such conduct in that subsection, directed to the issue of their conduct as litigants. That is, the court is directed to a consideration of the manner in which they have conducted the litigation itself, including but not limited to compliance with requirements imposed by the rules, case management guidelines, and procedural orders made during the course of the proceedings.

45As already noted, the husband failed to comply in a timely fashion with various procedural orders made during the course of the proceedings including orders directed towards the definition of the matters in issue between the parties. Other than those matters there is nothing in the conduct of the husband in relation to the proceedings which would give rise to a circumstance justifying an order for costs.

Offers

46In the written submissions filed on her behalf the wife draws attention to an offer in writing made by her on 15 December 2015. That offer sought to address the issue of child support by proposing a limited child support agreement whereby the husband would pay a total of $8,000.00 per annum towards the support of the children, which amount would include a contribution by him of half of the cost of travel and accommodation for the children to spend time with him.

47The husband rejected that proposal.

48The wife made a further offer of settlement, in relation to the parenting proceedings actually on foot as distinct from the dispute about child support, under cover of a letter from her lawyers dated 22 February 2016. She proposed that the parenting proceedings be finalised on the basis of a draft minute of consent orders which was enclosed with that letter. Notably, the offer was conditional in its terms, as included in the minute was a proposed order that the husband pay the wife’s costs of the proceedings as assessed.

49That offer was also rejected. Given its conditional nature, and the uncertainty inherent in the proposition that costs be paid “as assessed”, the rejection of that offer is not in my view a circumstance justifying an order for costs.

50There were other exchanges between the parties setting out various proposals for settlement. All of those exchanges related to the issue of child support, and the impact of travel costs related to the children’s time with the husband on the proper assessment of child support.

51Of course, as properly observed on behalf of the wife, there were no proceedings on foot in this court in relation to child support.

Other matters considered relevant

52The wife argues that the husband’s focus throughout the proceedings was in relation to the financial issues between them, rather than parenting issues. She contends that the husband had no genuine objection to the children living with her in State A, and that he used the parenting proceedings as a mechanism by which to try and negotiate a child support arrangement to which he was not properly entitled, under threat of pursuing the return of the children to Western Australia.

53The evidence is consistent with that contention.

54The exchanges between the parties prior to the wife’s departure to State A made it clear that the husband did not object to the proposed move, provided that an agreement was in place pursuant to which he would not have to pay any periodic child support. When an agreement in that regard was not formalised to the husband’s satisfaction, he advised the wife prior to her departure that he would do everything he could “to bring the kids back if [she departed] without an agreement”.

55The initiating documents filed by the husband to commence the proceedings in this court were, whether intentionally or otherwise, less than accurate in their depiction of the issue between the parties.

56Tellingly, at the first hearing date before a Magistrate, against the background of the interim orders which were being made by consent for the children to remain in State A with the wife, counsel for the husband conceded that the dispute between the parties “entirely turn[ed] on child support”.

57At the same hearing, the Magistrate made it clear to the parties (who were at that stage both represented) that there were difficulties with the manner in which the husband proposed the child support dispute be resolved, but that there were options open to them to resolve it. Those options were, self-evidently, external to the parenting proceedings which had been commenced by the husband. Similar observations were made by the Honourable Justice Duncanson when the matter came before her at subsequent hearings.

58Once he did eventually particularise the orders which he sought, the husband maintained the proposition that the children should be returned to Western Australia if an arrangement acceptable to him in relation to child support and travel costs could not be reached. By adopting that approach, rather than limiting the scope of the proceedings to the resolution of the matter actually in dispute, he caused the wife to incur additional legal costs.

59In my view, that amounts to a circumstance justifying an order for costs.

60The question then arises as to what order for costs is just.

Conclusion

61Even had the proceedings been appropriately focused from the outset, both parties would reasonably have incurred legal costs. The determination of what order for costs is just, therefore, must involve a consideration of the extent to which the wife’s costs have been increased by virtue of the matters referred to above.

62The wife seeks costs on an indemnity basis in the sum of $20,060.03. Those costs were calculated in accordance with her costs agreement with her lawyers; appropriately, that costs agreement is in evidence. It demonstrates that the fees charged to the wife were calculated by reference to hourly rates ranging from $350.00 for a junior lawyer, to $475.00 for a Partner or Consultant.

63No estimation of the relevant fees payable at the scale set out in the Rules is provided.

64I am not satisfied that the circumstances of this case are such as to justify a costs order on an indemnity basis. This is not in any sense an “extreme” case.

65In the event that costs are not awarded to her on an indemnity basis, the wife seeks costs in an amount to be agreed or assessed. It would not be controversial to suggest that there is no reasonable likelihood of agreement in relation to the quantum of costs being reached. I do not consider it appropriate to cause to be incurred by the parties or the court the delay, investment of time, and further expense which would be associated with a formal assessment.

66In any event, as foreshadowed above I consider it appropriate for the husband to contribute to the wife’s costs as distinguished from paying the whole of those costs, however calculated.

67I conclude that in all the circumstances the appropriate quantum of that contribution is $10,000.00.

Orders

1.[Mr Wade] (“the Respondent”) pay the costs of [Ms Wade] (“the Applicant”) in these proceedings, fixed in the sum of $10,000.00, payable within 30 days from the date of these orders.

2.The Form 2 application filed by the Applicant on 3 April 2017 otherwise be and is hereby dismissed with no order as to costs.

I certify that the preceding [67] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate
29 September 2017