Walker and Malbury and Anor
[2014] FCCA 2760
•5 December 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WALKER & MALBURY & ANOR | [2014] FCCA 2760 |
| Catchwords: FAMILY LAW – Costs – application by second respondent. |
| Legislation: Family Law Act 1975 |
| Applicant: | MS WALKER |
| First Respondent: | MR MALBURY |
| Second Respondent: | [B] PTY LTD |
| File Number: | MLC 8933 of 2009 |
| Judgment of: | Judge McGuire |
| Hearing date: | 25 August 2014 |
| Date of Last Submission: | 25 August 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 5 December 2014 |
REPRESENTATION
| Counsel for the Applicant: | Ms Robinson |
| Solicitors for the Applicant: | Carew Counsel Pty Ltd |
| Solicitors for the First Respondent: | Unrepresented - No Appearance |
| Counsel for the Second Respondent: | Mr Gdanski |
| Solicitors for the Second Respondent: | Rockwell Oliver |
ORDERS
That the second respondent’s application for costs be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Walker & Malbury & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 8933 of 2009
| MS WALKER |
Applicant
And
| MR MALBURY |
First Respondent
| [B] PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
The application is one by the third party for costs. The substantive proceedings concerned an enforcement application by the wife as against the husband in respect of previous property settlement orders.
The husband and the wife entered consent orders in the Family Court at Melbourne on 16 December 2009.
On 2 February 2011 the wife had reason to commence enforcement proceedings against the husband. Those matters were resolved by consent orders on 9 June 2011.
The wife brought a further enforcement application on 1 October 2013 alleging non-compliance by the husband in respect of the final orders of 16 December 2009 and the consent orders of 9 June 2011.
The major issue between husband and wife concerned the transfer of properties at [M] in Victoria to the wife and the discharge of a mortgage with the Commonwealth Bank by the husband. As such, the wife was to receive the properties unencumbered. The properties were to be transferred on or before 22 December 2009 and the husband was to discharge the mortgage on or before 22 December 2012.
Unsurprisingly, the transfers could not be transferred until the mortgage was discharged. However, it seems that memoranda of transfer were executed by the husband. The wife had lodged caveats on 2 October 2009 to protect her interest pending registration.
The parties had estimated the [M] properties to be worth in excess of $1.5 million although market factors seem to have significantly impacted on those estimates.
The Commonwealth Bank held a first mortgage securing approximately $900,000. During 2012 caveats were lodged against the title of the [M] properties on behalf of [B] Proprietary Limited, the second respondent and the applicant in the costs application now before me. That company had advanced loan monies to the husband in the sum of $260,000. [B] claimed an interest in the [M] properties by reason of a second mortgage which was apparently lodged with the first mortgagee’s consent.
It is clear that the husband defaulted on the Commonwealth Bank mortgage and a mortgagee sale eventuated resulting in no excess funds available to either the second mortgagee or the wife.
The husband has taken no part in these enforcement proceedings.
The wife sought to join [B] as a second respondent to her enforcement proceedings presumably because of their competing claims to equity in the [M] property, and that the orders she sought might impact on any claimed entitlement of the second respondent.
On 11 February 2014 the wife’s application was listed for directions before Judge Altobelli. The court file shows consent orders providing inter alia for [B] to be joined as a party. The orders note [B] being represented by counsel before His Honour on that day.
His Honour’s orders of 11 February 2014 also provided for all parties to attend a conciliation conference which was eventually listed for 15 August 2014. It is clear that the Commonwealth Bank set in train the foreclosure prior to the conciliation conference but probably after the filing of the wife’s application. In any event, the husband was the sole registered proprietor and it is unlikely that the wife had any prior knowledge of the Commonwealth Bank’s actions or the husband default.
In light of the mortgagee’s sale, the wife was obliged to discontinue her enforcement applications and her prima facie entitlement to unencumbered properties then valued at approximately $1 million. She advised the registrar at the conference of the discontinuance and I assume that the conference was then of no effect.
I am satisfied that the wife’s solicitors attempted to discontinue her application with the consent of the second respondent prior to the parties attending the registrar for the conference. I am equally satisfied that the second respondent did not provide consent to those terms but required the condition that its cost be met by the wife.
On 15 August 2014 I made orders of the court as follows:
(1) The amended initiating application filed 7 February 2014 be dismissed.
(2) The matter be adjourned to 25 August 2014 at 9.30 am for hearing of the costs application.
The second respondent’s solicitor appearing on the application had difficulty in quantifying its costs and eventually settled on a figure of $31, 000. The justification for such an amount was not particularised. No bill of costs was tendered. I have difficulty in equating the involvement in the proceedings by the second respondent with the costs sought given the limited court events and dearth of material filed.
Relevant Law
Issues of costs are provided for in section 117 of the Family Law Act 1975 (“the Act”). Subsection (1) provides generally that each party to proceedings under this Act shall bear his or her own costs. Nevertheless subsection (2) states:
If, in proceedings under this Act, the court is of the opinion that there are circumstances that justify it in doing so, the court may, subject to subject to subsections (2A), (4), (4A) and (5), 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.
It is well established that justifying circumstances is not a term synonymous with “special” or “extraordinary” circumstances.
Subsection (2A) continues:
In considering what order (if any) should be made under subsection (2), the court should have regard to:
(a) the financial circumstances of each of the parties ot the proceedings;
(b) whether any party to the proceedings is in receipt of assistance from Legal Aid;
(c) the conduct of the parties to the proceedings in relation to the proceedings, including, without limiting the generality of the forgoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admission of facts, production of documents in 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 offers;
(g) such other matters as the court considers relevant.
Discussion and Conclusions
The wife’s financial circumstances are precarious. She deposes to an income primarily from single parent’s benefit with receipts of $285 per week from rentals. Her expenditure exceeds her income. She deposes to assets of $105,500 but liabilities of $128,691. She has no liquid assets. The second respondent did not challenge the wife’s financial circumstances and, in fact, conceded her to be “woman of straw”. Obviously, the wife’s anticipation of an unencumbered home valued at $1 million is unfulfilled.
I know nothing of the second respondent’s financial circumstances, accepting, as I am told, that it has lost $260,000 by reason of the husband’s default on the loan. The second respondent is an incorporated entity.
Neither party is in receipt of Legal Aid.
There were lengthy submissions in respect of the relationship between the husband and the solicitor now acting for the second respondent. I do not, however, consider this issue to be relevant in respect of a costs application and, in any event, I am unable to decide such issues of disputed facts and credit without some lengthy testing of the evidence. Suffice for me to say that should the wife continues to be troubled by that relationship, if any, between the solicitors formerly acting for the husband and now acting for the second respondent then she has other recourse available to her. There are other no issues of the conduct of the parties which impact on my consideration.
I am to consider whether the proceedings were necessitated by the failure of a party to proceedings to comply with previous orders. Sadly, the only party to these proceedings who has not complied with orders is the husband and this has resulted, on the face of it, in significant financial loss to both the wife and the second respondent.
It seems to me that the second respondent relies on the subsection of the wife being unsuccessful in her application. Whilst it is true that the wife discontinued her application and in this sense it is wholly unsuccessful, I must look at her application more generally and within context. That application was one seeking enforcement of orders. Prima facie it is a valid and meritorious application and one likely to succeed save for the default of the husband on the mortgage. Further, the wife properly, in my view, sought to join the second respondent to her application given the likelihood that any order in her favour might impact on the second respondent’s interests. Again, and notably, the second respondent, properly in my view, consented to the joinder. I note there have been no applications to remove the second respondent.
I am told, and it is not disputed, that the wife attempted to resolve these matters by a consent order prior to the conciliation conference in August. It is clear that she had by this stage learned of the husband’s default and the foreclosure by the bank, together with there being no excess funds. I can infer that she herself has accrued substantial legal costs in prosecuting what was in the end a fruitless exercise. Whilst her request to end the proceedings prior to the conciliation conference was prudent and reasonable, so was the response of the second respondent in pursuing his own costs. Consequently, the wife’s “offer” and its refusal by the second respondent carries no weight in my consideration.
Conclusion
I am not persuaded that this is a matter which should attract a costs order. That is, in such an unusual factual platform, I am not satisfied there are circumstances which justify an order for costs against the wife and in favour of the second respondent. In many ways, they are both innocent parties but victims to the husband’s culpability in this matter. The wife properly joined the second respondent in her application. Her application was prima face not without merit. The second respondent consented to the joinder and did not make application to be removed. In all of those circumstances, I am not of the view that there are circumstances justifying a costs order in the form sought against the wife.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Date: 5 December 2014
Key Legal Topics
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Civil Procedure
Legal Concepts
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Costs
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