Walker and Castell (No.2)

[2018] FCCA 114

FEDERAL CIRCUIT COURT OF AUSTRALIA

WALKER & CASTELL (No.2) [2018] FCCA 114

Catchwords:
FAMILY LAW – Costs – discharge of order where no jurisdiction to make the order.

Legislation:

Family Law Act 1975 (Cth)

Federal Circuit Court Rules 2001 (Cth)

Cases cited:

Penfold & Penfold [1980] HCA 4; (1980) 144 CLR 311

Hawkins & Roe [2012] FamCAFC 77
Pennisiv Pennisi (1997) FLC 92-774

Applicant: MR WALKER

Respondent: MS CASTELL

File Number: NCC 1370 of 2011

Judgment of: Judge Middleton

Hearing date: 5 June 2017

Date of Last Submission: 5 June 2017

Delivered at: Newcastle

Delivered on: 6 February 2018

REPRESENTATION

Counsel for the Applicant: Ms Kearney

Solicitors for the Applicant: Boyd Olsen Lawyers

Counsel for the Respondent: Mr Taylor

Solicitors for the Respondent: N/A

ORDERS

1. Within 28 days of todays date the Applicant Husband pay to the Respondent Wife costs in the sum of $3491.

2. Order 12 of the orders dated 24 August 2016 is discharged.

IT IS NOTED that publication of this judgment under the pseudonym Walker & Castell (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT NEWCASTLE

NCC 1370 of 2011

MR WALKER

Applicant

And

MS CASTELL

Respondent

REASONS FOR JUDGMENT

Background

1. Property settlement proceedings were commenced by the Applicant Husband by way of initiating application filed on 16 December 2014. The Respondent filed her Response to that application the 24 February 2015.

2. The matter proceeded to trial and on 24 August 2016 I delivered my judgement and orders were made.

3. The Applicant Husband filed an Application in the Case on 19 September 2016 seeking an order for costs and that the order I made on 21 August 2016, order 12 be discharged due to the court having no jurisdiction to make it.

4. The Respondent filed her Response to an Application in a Case on 28 October 2016 wherein she sought an order dismissing the application and seeking costs in relation to the Application in a Case.

Material

1. The Applicant relied upon the following documents:

   a)Application in Case filed 19 September 2016;

   b)Affidavit of Mr Walker filed 19 September 2016;

   c)Affidavit of Mr Walker filed 2 June 2017;

   d)Financial Statement filed 12 December 2016;

   e)Financial Statement filed 2 June 2017; and

   f)Written submissions, Exhibit 1 of 5 June 2017.

2. The Respondent relied upon the following:

   a)Response to an Application in a Case filed 20 October 2016;

   b)Affidavit of Ms Castell filed 28 October 2016;

   c)Financial Statement filed 10 February 2017.

The Issues

1)Whether the respondent should pay the applicants costs.

2)Whether the applicant should pay the respondents costs.

3)Whether order 12 of the orders made 24 August 2016 should be discharged.

Relevant Law  

1. The general principle under the Family Law Act1975 is expressed in section 117(1) namely each party to proceedings shall bear their own costs.

2. Section 117(2) provides that if the Court is of the opinion that there are circumstances that justified in doing so the Court may make such order as to costs as the Court considers just.

3. Section 117(2A) sets out the matters which the Court must have regard to in considering what order (if any) should be made under subsection (2).

4. With regards to the application of the section, in Penfold & Penfold[1], the High Court said:

   ‘subsection (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs.’

   [1] [1980] HCA 4; (1980) 144 CLR 311

5. In Hawkins & Roe[2] the Full Court said:

   ‘The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that 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”.’

   [2] [2012] FamCAFC 77 at 18.

6. It follows in my view therefore that I must consider and weigh each of the relevant factors contained within section 117(2A) if I am to be satisfied that it is just to make an order for costs.

Section 117(2)(a)

1. Both parties have filed a financial statement. An assessment of the Applicant Husband's financial statement reveals that he has property totalling $593,000, consisting of cash, income exceeding expenditure, and superannuation totalling $8000.

2. An assessment of the Respondent Wife's financial statement reveals that she has property totalling $230,008, income less than her expenditure and $22,982 in superannuation.

3. Furthermore the husband has no liabilities.

4. The wife has liabilities totalling $639,994.

5. It is clear that the husband is in a far superior financial position than the wife.

s117(2) (b)

1. Neither party was in receipt of a Legal Aid grant.

s117(2) (c)

1. The substantive proceedings were commenced after the husband attempted to rely upon a financial agreement in order to receive payment from the wife. Ultimately the financial agreement was found to be void.

2. The wife complained that an agreement had been reached however the husband had failed to sign and return the agreement to the wife and that thereafter the next time she saw the agreement was when the husband commenced proceedings. The wife at that stage could not accept that the agreement was binding having regard to a number of factors that had taken place since the initial conversation.

3. It was a complaint of the wife in the substantive proceedings that the husband had failed to properly disclose his financial circumstances. At paragraph 164 of my judgement dated 21 August 2016 I said

   ‘I am not satisfied that the husband has been frank and open in relation to the sources of income that is available to him’.

4. At paragraph 47 of my judgement I said:

   ‘My impression was that the husband was resentful of the wife and determined to discredit her and cause as much financial embarrassment as he possibly could’.

5. Furthermore at paragraph 48 I said:

   ‘I found the husband to be a poor historian and that he attempted to mislead the Court in failing to disclose his true financial position in relation to payments he received for providing respite care for the children.’  

6. Overall I was concerned of the conduct of the Applicant Husband throughout the proceedings. It was very apparent that he had a total disregard for the Respondent Wife and that he was determined to cause her financial ruin and/or embarrassment.

7. In those circumstances the Respondent Wife had very little alternative other than to engage in the trial process.  The Respondent Wife asserts that the husband was not willing to negotiate appropriately.

8. In circumstances where I found that he did not disclose his true financial position and that he was determined to cause the Respondent Wife financial hardship and/or embarrassment I am satisfied that the Respondent had very little choice other than to continue to litigate the preceding.

s117(2) (d)

1. The substantive proceedings were not necessitated by the failure of a party to the proceedings to comply with a previous order of the Court.

s117(2) (e)

1. The Applicant Husband submits that the wife was wholly unsuccessful in her Application. Whilst it is true that the Respondent Wife sought an order that the Applicant pay her the sum of $200,000 and transfer his interest in the former matrimonial property to her it is not true to suggest that the Respondent made that offer in circumstances where she had full knowledge of the true financial position of the parties.

2. Indeed the Applicant refused to properly disclose his financial position and in those circumstances I place very little weight on the fact that the Respondent was unsuccessful in obtaining the orders that she sought.

s117(2) (f)

1. The Applicant Husband made an offer to the Respondent Wife on 27 August 2015. That offer is set out as Annexure ‘B’ to the Applicant's Affidavit filed 15 September 2016.

2. The offer purported to rely upon a financial agreement that was ultimately found to be not binding. The Applicant sought $70,000 plus interest of $14,491.92. The offer provided that in the event the Respondent could not pay to the Applicant the sum of $84,491.92 the property at Property A (the former matrimonial property) be placed on the market for sale.

3. The Respondent says in relation to that offer that the parties had not entered into a financial agreement and that the Applicant would not agree to a financial agreement as had been drafted and amended as per his request because he did not return the document. 

4. The Respondent says the first time she saw the original amended agreement as prepared by her then solicitor Mr Wilkinson back in 2011 was when the Applicant produced it in support of his Initiating Application filed on 3 February 2015.

5. The Respondent says she could not properly consider the offer made on 27 August 2014 because at that time she was not sure as to what agreement the Applicant was referring to and furthermore he did not provide her with a copy of the agreement as he ought to.

6. I am of the view that it was reasonable for the Respondent to reject the offer in those circumstances.

7. The Applicant made a further offer to the Respondent on 27 January 2016.

8. Submissions on behalf of the Applicant suggest that the offer was that the Applicant be paid $130,000 or 31.7% of the balance of sale proceeds of the Property A property whichever is the greater.

9. With respect to those submissions that summary of the offer is misleading. The offer provided that the wife vacate the premises within 28 days and that the Applicant Husband be appointed trustee for sale. The offer further provided that the Applicant be paid an amount equivalent to 31.7% of any arrears of the (omitted) Bank loan secured by mortgage over the property.

10. The Respondent says that pursuant to orders made on 11 September 2015 the parenting arrangements for the parties children were finalised. She says that the requirement for her to vacate the Property A premises was not reasonable and furthermore she says that the Applicant Husband was well aware that she wished to retain the Property A property.

11. In relation to the requirement that the Respondent pay the Applicant 31.7% of any arrears of the (omitted) loan the Respondent says that she had not seen any correspondence from the (omitted) Bank with regards to arrears until she first received the Applicant’s trial affidavit.

12. The Respondent says that she had been in communication with the (omitted) Bank to pay a reduced monthly amount. It is her submission that the Applicant refused to sign any agreement even though she was to be solely responsible for all payments and there was no requirement for the Applicant to contribute.

13. The Respondent in her affidavit filed 28 October 2016 says that she immediately made contact with the (omitted) Bank in relation to the letter setting out the arrears and enquired as to why she had not received any written correspondence from the bank.

14. Her evidence is that the bank employee informed her that her mailing address had been changed approximately 2 years prior and all the written correspondence between the bank and her was being sent to our mailing address at (address omitted), the address of the Applicant Husband's then wife's current investment property.

15. In short the Respondent says the Applicant had changed her address so as to cause her financial hardship.

16. Having regard to my findings in relation to the substantive proceedings I am satisfied that the Applicant would have done all he could to cause the Respondent Wife financial hardship including changing her mailing address so that the former matrimonial property would fall into arrears and potentially cause the bank to foreclose on the property.

17. In those circumstances I am satisfied that it was reasonable for the Respondent Wife to reject the offer.

18. The Applicant made a further offer on 8 February 2016. Again the summary of that offer as provided for in submissions by the Applicant is misleading.

19. Whilst the Applicant effectively sought a payment of $122,000 or 29.2% of the balance of the sale proceeds, whichever was the greater he also required 29.2% of any arrears owing under the home loan and required the Respondent to vacate the premises within 28 days.

20. For the reasons set out above I am satisfied it was reasonable for the Respondent Wife to reject the offer.

21. Ultimately the amount the Respondent was required to pay to the Applicant pursuant to the final property orders was the sum of $126,720. Contemporaneous with that payment the Applicant was to transfer his interest in the property to the Respondent.

22. The amount awarded to the Applicant was a less than his offer of 27 January 2016 by $3280 and exceeded his offer of 8 February 2016 by $4270.

23. At paragraph 24 in Hawkins & Row[3]their Honours referred to Pennisiv Pennisi (1997) FLC 92-774 where the Full Court said at 84,547:

    [3] [2012] FamCAFC 77

    ‘The husband’s submissions refer to Robinson and Higginbotham (1991) FLC 92‑209 as authority for the proposition that the fact that an offer just exceeds the award is no bar to an order for costs.  Equally, however, it is only one of the factors to be considered under s 117(2A) and it is not the law that an offer of greater or equivalent value to that which results from the Court will lead to an order for costs in favour of the offeror – Harris and Harris (1991) FLC 92‑254. 

    We would also add that just because an offer is marginally less than the amount ordered by a Court does not mean that it is not a factor to be taken into account in determining whether costs should be awarded.

    …

    We do, however, consider that the closer the offer is to the award when the offer is under the amount awarded by the Court, the more weight that should be given to this factor in considering the question of costs.  This principle must not, however, be rigidly applied.  Offers must be seen in the context of the case and the extent of the offeree’s knowledge of the parties’ financial circumstances while the offer is live.  In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties’ financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer.  There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination.  These and other features of the context of offers must be taken into account when considering whether it was reasonable or not to accept an offer, no matter how close to the ultimate result the offer may be.’

24. It can be seen that all of the offers made by the Applicant contained subject matter that was legitimately open for determination.

25. The first offer purported to rely on a binding financial agreement which was ultimately found to be void.

26. The two subsequent offers were made in circumstances where it was a requirement that the Respondent vacate the former matrimonial property and repay to the Applicant a sum of money representing a percentage of a amount of arrears. Both of those requirements were left to be determined by the Court and both of those requirements were not found to be appropriate. 

27. In those circumstances I am satisfied that it was reasonable for the Respondent to not accept the offers notwithstanding that the offers were close to the ultimate result achieved by the Applicant in money terms.

s117(2) (g)

1. It is relevant to this Application to note my findings that the Applicant was determined to discredit the Respondent and cause her as much financial embarrassment as he possibly could.

2. I consider this Application in a Case a further attempt to cause the Respondent financial embarrassment and/or hardship.

3. He is in a far superior financial position to that of the Respondent and yet he still seeks that she pay his costs in circumstances where he caused much frustration throughout the proceedings to the Respondent.

4. The Respondent seeks an order for costs relating to the need to defend the Application in a Case filed by the Applicant for his costs.

5. For the reasons as set out previously I am of the opinion that there are circumstances that justify me in making an order for costs against the Applicant and in favour of the Respondent.

6. Rule 21.02(2) of the Federal Circuit Court Rules provides:

   ‘in making an order for costs in the proceeding, the court may:

   (a)    set the amount of the costs; or

   (b)    set the method by which the costs are to be calculated; or

   (c)     refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or

   (d)     set a time for payment of the costs, which may be before the proceeding is concluded.’

7. Having considered all of the matters previously referred to I am satisfied that it is just for me to make an order that the Applicant pay the Respondent’s costs within 28 days in the amount of $3491.

8. The other matter for consideration is whether order 12 of the orders made on 24 August should be discharged.

9. The substantive proceedings in relation to parenting orders left for determination related to where the children would attend school. The orders made were those sought by the Respondent Wife including an order that the parties are to be equally responsible for the payment of the children’s school fees.

10. Section 64B sets out the meaning of a parenting order. Section 64B(2) provides:

    ‘(2)   A parenting order may deal with one or more of the following:

    (a)     the person or persons with whom a child is to live;

    (b)the time a child is to spend with another person or other persons;

    (c)      the allocation of parental responsibility for a child;

    (d) if 2 or more persons are to share parental responsibility for a child--the form of consultations those persons are to have with one another about decisions to be made in the exercise of that responsibility;

    (e) the communication a child is to have with another person or other persons;

    (f)     maintenance of a child;

    (g)the steps to be taken before an application is made to a court for a variation of the order to take account of the changing needs or circumstances of:

    (i)  a child to whom the order relates; or

    (ii)  the parties to the proceedings in which the order is made;

    (h) the process to be used for resolving disputes about the terms or operation of the order;

    (i)any aspect of the care, welfare or development of the child or any other aspect of parental responsibility for a child.

11. Section 64B(5) provides:

    ‘To the extent (if at all) that a parenting order deals with the matter mentioned in paragraph (2)(f), the order is a child maintenance order .’

12. Part VII Division 7 of the Family Law Act 1975 relates to child maintenance orders.

13. Relevantly section 66E(1) provides:

    ‘A court having jurisdiction under this Part must not, at any time, make, revive or vary a child maintenance order in relation to a child on the application of a person (the applicant) against, or in favour of, a person (the respondent) if an application could properly be made, at that time, by the applicant under the Child Support (Assessment) Act 1989 for the respondent to be assessed in respect of the costs of the child, or vice versa.’

14. At the time I made my orders in August 2016 an application could properly be made for the Respondent to be assessed in respect of the costs of the child, or vice versa.

15. It follows therefore that order 12 of the orders made in 2016 were made in circumstances where I had no jurisdiction to make that order.

16. In those circumstances order 12 of the orders made 24 August 2016 is discharged.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Judge Middleton

Date: 6 February 2018