WALDREN & WALDREN

[2020] FCCA 3446

FEDERAL CIRCUIT COURT OF AUSTRALIA

WALDREN & WALDREN [2020] FCCA 3446

Catchwords:
FAMILY LAW – Property settlement proceedings – parties went to arbitration – registration of award in this court – husband applies for costs – consideration of court’s jurisdiction and s 117 of the Act – costs order made.

Legislation:

Family Law Act 1975 (Cth) ss.10L(2)(a), 10L(2)(b), 13E, 13H(2), 117, 117(1), 117(2), 117(2A), 117(2A)(c) and 117(2A)(f)

Cases cited:

Colgate Palmolive Company & Cussons (1993) 46 FCR 225

Applicant: MR WALDREN

Respondent: MS WALDREN

File Number: NCC 3822 of 2017

Judgment of: Judge Betts

Hearing date: 1 May 2020

Date of Last Submission: 14 May 2020

Delivered at: Newcastle

Delivered on: 18 May 2020

REPRESENTATION

Counsel for the Applicant: N/A

Solicitors for the Applicant: Bale Boshev Lawyers

Counsel for the Respondent: N/A

Solicitors for the Respondent: Winder Family Lawyers

ORDERS

1. The Wife pay the Husband’s costs of and incidental of the proceedings fixed in the amount of $17,141.00, with such amount be paid within twenty-eight (28) days and that in order to effect payment:

   (a)The balance of the monies held by Bale Boshev Lawyers be applied towards the costs order;

   (b)Any remaining costs left over be paid out of the Wife’s share of the sale of the former matrimonial home upon settlement.

2. The proceedings be removed from the Active Pending Cases List.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT NEWCASTLE

NCC 3822 of 2017

MR WALDREN

Applicant

And

MS WALDREN

Respondent

REASONS FOR JUDGMENT

1. These reasons for judgment were delivered orally.  They have been corrected from the transcript.

Background:

1. This is an application for costs brought by the applicant husband following the registration of an arbitral award by this Court on 4 March 2020. 

2. Pursuant to the award, the arbitrator Mr Graham of counsel, made a property settlement order to the effect that the husband would, relevantly, receive property totalling $124,852.86, following the breakdown of the 20 + year relationship (in some form or another) between these parties.

3. The proceedings were first commenced by the husband in December of 2017 after various bumps along the road to which I will return shortly. 

4. The proceedings were ultimately referred by consent to arbitration. The Court did not specifically order arbitration. Rather, the Court simply adjourned the proceedings, noting that the parties had agreed to undertake the arbitration. This was a perfectly permissible course. The parties were entitled to agree to attend upon an arbitration and, relevantly, the parties consented to such arbitration pursuant to the provisions of s. 10L(2)(b) of the Family Law Act (“the Act”).  The arbitration was thus a “relevant property or financial arbitration” as defined therein. 

5. Such an arbitration is distinct from a “section 13E arbitration”: see s10L(2)(a) and s. 13E of the Act.

6. Following registration of the award, the husband applied for costs. 

7. In some ways it is regrettable that costs were not determined by the arbitrator as it seems to me that it would have been open to the parties to bring that application to the arbitrator.  In any event, that was not done here.

8. On 4 March 2020 when I registered the award with the consent of the parties, the wife’s solicitor indicated that the husband’s costs application would be subject to a jurisdictional debate.

9. I adjourned the hearing of the costs application (and the jurisdictional debate) to 1 May 2020.

The hearing before me:

1. At the hearing I had the benefit of submissions from Mr Brogan, the husband’s solicitor, and from Mr Wilkinson, the wife’s counsel.

2. In my view, the Court never relinquished its jurisdiction over the proceedings per se.  The Court has always had, at the very least, a concurrent jurisdiction to determine relevant issues in the proceedings, and certainly to address any cost issues or other related issues that may have arisen. 

3. In the course of his submissions, Mr Wilkinson ultimately conceded that the Court did have jurisdiction to make an order for costs, although obviously the wife opposed the making of such an order.  The jurisdictional argument thus fell away. 

4. Ultimately I was firmly of the view that I had jurisdiction.  The concession made by Mr Wilkinson was entirely appropriate and I do not propose to further address that aspect of the matter. 

5. Upon registration, the award has effect as though it were a decree or an order of the Court: s. 13H(2) of the Act.

6. The Court is thus left to decide the application for costs in the usual way.

7. In that regard the husband has filed an Application in a Case on 3 March 2020 essentially seeking that indemnity costs of the proceedings.  Failing that, he seeks costs on a party and party (or standard) basis.  His application is supported by an affidavit filed on 3 March 2020.

8. I turn then to s. 117 of the Act.

9. Pursuant to s. 117(1), each party to proceedings ordinarily bears his or her own costs.

10. This subsection is subject to s. 117(2), which provides that:

    If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A)… and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

11. The husband’s argument for a costs order is a powerful one. I will address each of the relevant s. 117(2A) considerations briefly.

The section 117(2A) considerations:

1. I accept that the parties, at least at the time of the award, were 67 and 58 respectively.  They would still be 67 and 58 years of age. 

2. Their financial circumstances are very modest, as the award makes clear. 

3. The parties were not debating a significant amount of money in this case.  It was a case that every day of the week should have been settled, if at all possible.  It is a case that neither party could reasonably afford to have run, and yet run it they did.

4. I accept that the parties’ financial circumstances, each of them, are modest.  The reality is that the wife is probably going to have to sell the home owned by the parties in order to fulfil the requirements of the award and pay the husband the amount due to him.

5. Neither party is in receipt of legal aid assistance. 

6. Section 117(2A)(c) is a major consideration in this matter.

7. In this regard the wife has fallen well short. 

8. Initially at the first return date of the matter on 12 February 2018 she had not filed any response material.  She was given a further opportunity to do so on that occasion. 

9. In fact, she had not even filed her material by the second Court event on 4 April 2018. 

10. She ultimately filed her response material on 9 May 2018, after having been personally serve with the husband’s application on 4 January 2018.  The rules strictly required that her response material be filed months earlier.

11. This meant, of course, that the husband attended Court on the first return date (12 February 2018) and that not much could happen.  He then attended Court on 4 April and again nothing much could happen. 

12. These attendances were, to a large extent, wasted. 

13. Worse was to come.  On 10 May 2018, his Honour Judge Middleton set the matter down for a Conciliation Conference.  But as the husband’s submissions rightly contend, the Conciliation Conference was a waste of time.  It was unable to proceed at all - because the wife did not attend.  There is no excuse or reason given as to why she did not attend.  The husband had attended with his counsel at the time, Mr Davies.  It was a complete waste of time.

14. The wife failed to attend at a later Conciliation Conference ordered to take place on 19 October 2018.  Again, there is no reasonable excuse given.  The wife suggests that she was in a motor vehicle accident, but despite being ordered to provide evidence of such accident, she has never done so. 

15. In the circumstances, two Conciliation Conferences were wasted. 

16. By this time, the husband had made an offer of settlement on 1 August 2018. (This offer assumes relevance section 117(2A)(f)).

17. The Court ordered that the parties attend a mediation as a result of the wife’s failure to attend the two Conciliation Conferences and the wife was ordered to pay the mediator’s costs in the first instance.  She did so.  (The husband makes no claim against her in that respect). 

18. The matter was subsequently referred to the arbitration with Mr Graham of counsel.

19. To some extent, the Court has addressed the wife’s failure to attend at the Conciliation Conferences by ordering her to pay for the mediator’s costs, but certainly the wife’s conduct in terms of her Court obligations was below that expected of an ordinary litigant. 

20. Moreover - and this is a significant matter - the wife did not make any offers of settlement in the course of the proceeding.  I find that a somewhat extraordinary circumstance.  She could not afford, in my view, to run a trial.  She made no written offers.  She did not respond to the husband’s written offers. 

21. Most relevantly, the husband had made an offer of 1 August 2018 in which he offered to accept $110,000 - some $14,852.66 less than what he ultimately received pursuant to the award.  The husband sensibly made that offer, but he did not even get met with the courtesy of a response.  

22. The husband’s follow-up letter of 9 October 2018 invited the wife to enter into negotiations by reference to that previous offer.  The letter of 9 October 2018 was not strictly an offer, but rather an invitation to enter into negotiations.  The wife declined his invitation for reasons known only to her, but her doing so makes no sense to me whatsoever.

23. The reality of the matter is that the husband has done better than that offer. 

24. The husband also made a later offer in the lead-up to the arbitration on 19 June 2019.  Effectively, his offer was that he would receive approximately $104,000, some $20,852.66 less than he received pursuant to the arbitrator’s award. 

25. So the husband made two (2) separate offers, one on 1 August 2018, one on 19 June 2019, both of which the wife should have accepted, neither of which the wife even gave the husband the courtesy of a response to.  It is really quite extraordinary that she took that position.

26. I have already noted that the wife failed to comply with Court orders.  She did not file her material on time.  She did not attend the Conciliation Conferences. 

27. Moreover, she did not comply with the “spirit” of the rules and with the obligation which is inherent on all parties to property settlement litigation - which is to make a genuine attempt to reasonably settle a dispute.  I accept that parties will always have a different view about what their respective entitlements might mean.

28. In response to the husband’s complaint about the wife adopting a “continued unreasonable stance” Mr Wilkinson in his written submissions responds that such a stance could be considered part of any adversarial system of justice.  That may be true, but that does not mean that it does not carry a consequence.  Parties who behave unreasonably on a persistent basis are always at risk of paying costs, in my view.

29. In short, the wife’s conduct of the proceedings has fallen well short of what the Court would have expected from a litigant in this jurisdiction, and particularly one who can ill-afford, with respect, the costs of going to trial in circumstances where she should have been motivated to get this matter settled and to behave reasonably.  Of course, the wife, in taking that position, condemned the husband to having to run the matter all the way to a contested arbitration.

30. Mr Wilkinson made an interesting argument in relation to the husband’s settlement offers.  With reference to his first settlement offer of $110,000 he submitted that, as the husband had achieved a better outcome by some $14,852.66, this extra sum constituted a “windfall” which should be deducted from his costs claim. 

31. I reject that submission, interesting though it is. In my view, it is not appropriate to conflate the question of a party’s substantive property entitlements with their costs claim. The two are separate and distinct. To conflate them in this way would, in fact, be to take much of the force or potential relevance out of section 117(2A), subsection (f). In a costs context, a party who unreasonably refuses an offer of settlement cannot try to “offset” the other party’s so-called “windfall”. This would be manifestly unjust. Taken to its extreme, a party who offered to settle for a pittance might then find their costs claim totally defeated when they receive a proper settlement amount. Such a result cannot possibly be the law.

32. I also reject the wife’s submission that the husband’s costs application is a “punitive” expedition.  I have no desire or intention to make a costs order that is punitive.  The purpose of a costs order is to compensate and only to compensate.  It is never to punish, certainly not in this jurisdiction.

33. The wife has been unsuccessful in the proceedings in the sense that the husband has done better (or much better) than the settlement offers that he made.  But overall, the husband’s offers and the wife’s conduct of the proceeding are such that the Court considers that it is “justified” to make a costs order against the wife.

34. Mr Brogan submits that the costs order I make should be on an indemnity basis.   He refers me to the decision of Sheppard J in Colgate-Palmolive Company & Cussons (1993) 46 FCR 225, which has been consistently applied in the Family Law Courts of Australia.

35. In that judgment his Honour refers to the usual rule as being that a costs order ought to be made on a standard or party and party basis and that, before an indemnity order could be made, there must be a special or unusual feature of the case.

36. While the categories justifying an indemnity order cannot be closed given the infinite variety of human circumstances and different litigation scenarios that can arise, his Honour gave a few pointed examples of where an indemnity order might be appropriate.  These included the making of allegations of fraud knowing them to be false; where there is evidence of particular misconduct causing a loss of time to the Court and to other parties; or a party commencing or continuing proceedings in wilful disregard of known facts or clearly established law.  There are also other examples given.

37. His Honour did however emphasise that:

    It remains to say that the existence of particular facts and circumstances capable of warranting an indemnity costs order does not mean that judges are necessarily obliged to exercise the discretion to make such an order.  Costs are always peculiarly discretionary.

38. While the wife’s conduct in some ways does engage some of the considerations in Colgate-Palmolive & Cussons, I have ultimately come to the view that I ought not to make an order on an indemnity basis.  I am mindful of the relatively modest assets of the parties.  I am mindful of their financial circumstances. 

39. I have had regard to the Schedule of Costs very helpfully filed by Mr Brogan which itemises the husband’s costs on the party and party basis in accordance with the Court scale in the amount of $17,141, which is a little over half of the husband’s total costs.  In my view, it is just that the Court make an order that the wife pay those costs in their entirety. 

40. Such an order, in my view, reflects a figure that is justified having regard to the wife’s substantial falling short in her obligations as a litigant, and the significant costs of the husband that have essentially been completely avoidable as a result of her taking a relatively intransigent position throughout this litigation.

41. I am concerned that making an order for indemnity costs would potentially be going that step too far and might, in one financial sense, be regarded as crushing. 

42. I consider that the amount of $17,141 as claimed by Mr Brogan on behalf of the husband, is an entirely appropriate sum, noting that the wife has already had to pay for the mediation costs as well because of her conduct in relation to the two aborted Conciliation Conferences.

43. In all of the circumstances, for these reasons I find it just that the wife pay the husband’s costs in the amount of $17,141. 

I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of Judge Betts

Associate:

Date: 17 December 2020