Watson and Watson (No 2)

[2014] FamCA 558

FAMILY COURT OF AUSTRALIA

WATSON & WATSON (NO. 2) [2014] FamCA 558

FAMILY LAW – COSTS – Where the wife seeks her costs of the proceedings – where the proceedings related to the interpretation of orders – consideration of the factors in s 117(2A) – bona fides of the husband’s case considered – where aspects of the wife’s application were not pursued – wife’s application for costs dismissed.

Family Law Act 1975 (Cth) s 117

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

APPLICANT: Ms Watson

RESPONDENT: Mr Watson

FILE NUMBER: MLC 5375 of 2009

DATE DELIVERED: 16 May 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 17 April 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Melilli

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE RESPONDENT: Mr O’Shannessy

SOLICITOR FOR THE RESPONDENT: Aitken Partners

ORDERS

IT IS ORDERED THAT

1. The wife’s application for costs be dismissed and the matter be removed from the list of cases awaiting hearing.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Watson & Watson has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 5375 of 2009

Ms Watson

Applicant

And

Mr Watson

Respondent

REASONS FOR JUDGMENT

1. This matter commenced by way of the wife’s initiating application filed 15 November 2013 in which she sought the following final orders:

   1.    That pursuant to paragraph 3(c) of and paragraph 10 of the Final Property Orders made on 21 September 2012 (“the Orders”) the Husband, within 14 days, pay to the Wife interest at the rate of 10% per annum on the sum of $494,886 for the period from 21 December 2012 until such date as the Husband makes the total interest payment.

   2.    That within 14 days the Husband pay to the Wife:

   2.1   $600 by way of reimbursement for the children’s medical expenses pursuant to paragraph 24(h) of the Orders;

   2.2 $487 by way of rental adjustment for the property at [C Street, Suburb E] in the ACT;

   2.3   $450 by way of reimbursement for the costs of obtaining a roadworthy for the [motor vehicle 1].

   3.    That within 14 days the Husband do all such acts and things and sign all such documents as may be required to transfer the [motor vehicle 1] to the name of the Wife at the Husband’s expense.

   4.    That the Husband be responsible for the Wife’s costs of and incidental to this Application on an indemnity basis.

   5.    Such further or other final Orders as deemed appropriate by this Honourable Court.  

2. The husband filed a response to that initiating application on 14 January 2014 in which he sought the following orders:

   1.    That the [W]ife’s Initiating Application filed 15 November 2013 be dismissed.

   2.    The documents held by the Wife pursuant to … Order 5 made 21 September 2012 by the Honourable Justice Dessau be delivered up to the Husband.

   3.    The Wife pay the Husband’s costs of and incidental to his Response to her Initiating Application filed 15 November 2013 on an indemnity basis.

   4.    Such further or other interim orders as the Court deems appropriate.

3. The matter was first listed for hearing before me in the Judicial Duty List on 14 January 2014. On that date, after hearing submissions from Mr Melilli of counsel who appeared on behalf of the wife and Mr O’Shannessy of counsel who appeared on behalf of the husband, I ordered a transcript of the proceedings before Dessau J on 21 September 2012 and otherwise adjourned the matter to a date to be fixed upon receipt of the transcript. I reserved the costs of both parties of that hearing.

4. Following receipt of the transcript the matter was again listed for hearing before me on 3 April 2014 at which time I heard further submissions on behalf of both the wife and the husband.

5. On 17 April 2014 I delivered my reasons for judgment and made the following orders:

   1.    By 4.00 pm on 19 May 2014 the husband pay to the wife interest owing in the sum of $39,900.58.

   2.    The application for costs be adjourned to a date to be advised for judgment.

   3.    All extant applications, save and except for the application for costs, be otherwise dismissed and the matter be removed from the list of cases awaiting hearing.

   IT IS CERTIFIED THAT

   Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

6. The hearing before me proceeded on the basis of an agreed figure of $63,179 in the event that I determined that interest was payable. That figure was a calculation of the interest payable on the balance of the payment owing to the wife pursuant to the orders made by Dessau J on 21 September 2012, for the period from 21 September 2013 (the date upon which the final payment was due) until 3 April 2014. Both the husband and the wife proceeded on that basis however it was ultimately conceded by the wife on the date that judgment was delivered but prior to the orders being made that, as submitted by the husband, as and from the date of payment of the outstanding balance to the wife interest was only payable on the outstanding interest and not the principal sum, making a total interest payment of $39,900.58.

7. The wife now seeks an order that the husband pay her costs of and incidental to her application. Mr Melilli for the wife was unable to tell me exactly how much the wife’s costs were however he estimated them to be between $12,000 and $15,000. Mr Melilli did not press the wife’s application that costs be paid on an indemnity basis.

8. The husband opposed the wife’s application for costs and did not seek an order for costs on behalf of the husband. Mr O’Shannessy submitted that if an order for costs were to be made those costs should be fixed rather than assessed.

Legal principles

1. The general rule in proceedings in this Court pursuant to the FamilyLaw Act 1975 (Cth) (‘the Act’) is that each party to the proceedings shall bear their own costs of those proceedings. Section 117(2) of the Act provides as follows:

   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), (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.

2. Section 117(2A) of the Act provides that in considering what, if any, order should be made for the payment of costs the Court shall have regard to the following matters:

   (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.

3. The matters in s 117(2A) must, as the Full Court said in I and I (No 2) (1995) FLC 92-625, ‘all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs.’

Section 117(2A)(a) The financial circumstances of each of the parties

1. It is agreed by the parties in this case that financial circumstances are not a matter which would either lead me to conclude that I should make an order for costs in the wife’s favour or militate against such an order being made. It is agreed that although the husband has a greater income earning capacity, the parties each have the financial resources to meet their own costs and, in the case of the husband, to pay an order for costs in the wife’s favour.

Section 117(2A)(b) Whether either party is in receipt of legal aid

1. Neither of the parties in this case is in receipt of legal aid.

Section 117(2A)(c) The conduct of the parties to the proceedings in relation to the proceedings

1. The wife submits that the way in which the husband has conducted the proceedings supports her application that he should be required to pay her costs of those proceedings.

2. In her affidavit filed in support of her application the wife deposed that in anticipation of payment by the husband of $450,000 on 21 December 2012, her solicitors wrote to the husband’s solicitors on 7 December 2012 requesting confirmation as to the amount the husband proposed to pay on that date and noting that if the balance of the payment was to be paid after that date then interest would accrue. It was her evidence that the husband’s solicitors’ letter in reply confirmed that the husband would not be paying any more than the $450,000 due on that date but did not make any mention of the interest referred to in the letter from the wife’s solicitors.

3. The wife further deposed that on 9 January 2013 her solicitors wrote to the husband’s solicitors and confirmed that the balance of the payment of $494,886 was payable by 21 September 2013 together with interest of 10 per cent calculated  from 21 December 2012 to the date of payment pursuant to paragraph 10 of Dessau J’s orders. The wife deposed that no response was received from the husband’s solicitors to that correspondence.

4. It is not possible on the evidence before me, and in circumstances where that evidence has not been tested, to draw an inference as to the bona fides of the husband’s case with respect to the interpretation of the orders on the basis of his failure – or that of his solicitors – to respond to correspondence or address matters raised in correspondence from the wife’s solicitors in which reference was made to his obligation to pay interest.

5. I am not satisfied that there is otherwise anything about the way in which the husband has conducted these proceedings which would justify my departing from the general principle that the parties should bear their own costs of the proceedings.

Section 117(2A)(d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders

1. Mr Melilli submitted that these proceedings were necessitated by the husband’s failure to comply with Dessau J’s order that he pay interest on the outstanding balance of the payment referred to in those orders.

2. Notwithstanding that I ultimately interpreted the orders in the terms the wife submitted that I should, I am not satisfied that the husband’s case with respect to the interpretation of the orders was not bona fide and that in those circumstances it cannot be said that the proceedings were necessitated by the husband’s failure to comply. Based upon the husband’s interpretation of the orders he did not have to pay any interest.

Section 117(2A)(e) Whether a party to the proceedings has been wholly unsuccessful

1. Although the wife’s application with respect to the payment of interest, which was the most significant aspect of the case, was successful there were, as submitted by Mr O’Shannessy on behalf of the husband, a number of orders sought by the wife in her application which she ultimately did not pursue. I am satisfied that the husband in those circumstances cannot be said to have been wholly unsuccessful.

Section 117(2A)(f) Whether either party made an offer in writing to the other party to settle the matter and the terms of any such offer

1. On 28 March 2014 the wife’s solicitors forwarded a letter to the husband’s solicitors in which they said that ‘[i]n an attempt to avoid the need for either party to incur further unnecessary legal fees, we are instructed that our client is willing to accept a payment from your client of $55,000 by way of full and final settlement of the matter inclusive of costs.’ This offer was made after the hearing before me on 14 January 2014 and prior to the hearing on 3 April 2014 and was made on the basis that as at the date of the hearing on 14 January 2014 the outstanding interest was $52,605 and by the date of the hearing on 2 April 2014 that outstanding interest would amount to $63,044. There was no response by the husband’s solicitors to this offer.

2. Mr O’Shannessy submitted that, although that offer showed a willingness on the wife’s part to compromise, I should not place any weight upon it as the offer was predicated upon the misunderstanding on the part of both parties as to how the interest had been calculated.

3. The husband for his part relied upon a letter sent by his solicitors to the wife’s solicitors on 3 April 2014, following the hearing before me, in which they said as follows:

   We note upon review of your interest calculations presented today to Her Honour, that your interest figure is incorrect. Should you be successful in your submissions this morning and interest is payable, we calculate the total interest at $37,159.35. This sum is calculated at 10% pa, on $494,886.00 from 21 December 2012 to 21 September 2013, a total of 274 days. The amount of $494,886.00 was paid by consent on the 23^rd of September 2013.

   Your client is not entitled to charge interest on amounts already paid to her.

   We request you confirm our calculation is correct and advise Her Honour accordingly.

4. It was submitted by Mr O’Shannessy on behalf of the husband that the response received from the wife to that letter was that the amount of interest that was payable had been agreed upon at the hearing.  On that basis, Mr O’Shannessy submitted that the letters to which I have referred resulted in “a nil all draw”. I do not agree with that submission as the dispute in this case was not how much interest the husband should be required to pay but whether he was required, pursuant to the orders, to pay any interest at all.

5. Notwithstanding what now is agreed was a miscalculation of the interest payable, the husband’s solicitors did not respond to the offer made by the wife until after the hearing on 3 April 2014 and their response was only to correct the wife’s calculation of the potential interest payable not to make any counter offer.  As previously discussed, the husband’s case was that the orders did not require him to pay any interest and not that the interest had been incorrectly calculated.

Section 117(2A)(g) Any other matters the court considers relevant

1. Neither party submitted that there were any other relevant matters I should consider.  

Conclusion

1. Although I am conscious of the fact that it was necessary for the wife to institute proceedings to recover the interest to which I ultimately determined she was entitled, I am not satisfied having regard to all of the circumstances of this case, and in particular the fact that these proceedings were a result of a dispute as to the interpretation of an order, that I should depart from the general rule that each of the parties should bear their own costs. On that basis I propose to dismiss the wife’s application for costs.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 16 May 2014.

Associate: 

Date:  15 May 2014