Watson and Watson (No 2)

[2014] FamCA 1016

FAMILY COURT OF AUSTRALIA

WATSON & WATSON (NO 2) [2014] FamCA 1016

FAMILY LAW – COSTS - Between parties – Where the wife seeks costs - where the husband seeks that any costs order be made on a party/party basis - consideration of circumstances justifying the making of a costs order – where the wife was wholly successful in her interim application – where the husband’s conduct strongly favours the making of a costs order – discretion of court considered.

Family Law Act 1975 (Cth)

Prantage v Prantage [2013] FAM CAFC 105

APPLICANT: Ms Watson

RESPONDENT: Mr Watson

FILE NUMBER: MLC 3382 of 2013

DATE DELIVERED: 11 April 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Johns J

HEARING DATE: 1 April 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Dickson QC

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE RESPONDENT: Mr Werner

SOLICITOR FOR THE RESPONDENT: Westminster Lawyers Pty Ltd

Orders

1. That the husband pay the wife’s costs of and incidental to her application in a case filed 17 February 2014 and the husband’s response filed 27 March 2014 as agreed and in the absence of agreement on a party/party basis.

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 3382 of 2013

Ms Watson

Applicant

And

Mr Watson

Respondent

REASONS FOR JUDGMENT

1. On 11 April 2014 I delivered my reasons for judgment in relation to the wife’s application in a case filed 17 February 2014 in which she sought orders with respect to disclosure. On 11 April 2014I made orders as sought by the wife with respect to disclosure.  As a result of those orders the wife sought her costs of and incidental to those interim proceedings.  The question of the wife’s costs arising from that  decision was adjourned for determination in the Judicial Duty List on 9 May 2014 together with other interim issues outstanding between the parties. 

2. Ultimately, by agreement between the parties, that hearing date was vacated and the issue of costs was addressed by way of written submissions.

3. On 21 May 2014 the wife filed written submissions seeking orders that the husband pay the sum of $12,500 towards the wife’s costs of and incidental to her application in a case filed 17 February 2014, and the husband’s response filed 27 March 2014.  In the alternative, the wife seeks an order that the husband pay her costs of and incidental to that application on a party/party basis.

4. On 29 May 2014 written submissions dated 27 May 2014 were filed on behalf of the husband in response to the wife’s costs application.  The husband opposes an order for costs.  In the event that costs are to be awarded, the husband submits that they should be paid on a party/party basis to be assessed by a registrar in default of agreement.

Legal Principles

1. The question of costs is governed by s 117 of the Family Law Act 1975 (Cth ) (‘the Act’). The general rule is that each party to proceedings under the Act shall bear their own costs (s117(1)). However, the Court has a broad discretion as to who should pay costs. Section 117(2) of the Act provides that if “the Court is of the opinion there are circumstances that justify it in doing so, the Court may, subject to the provisions of sub-sections (2A), (4), (4A) and (5) and the applicable Rules of Court make such order as to costs and security for costs as the Court considers just.”

2. Section 117(2A) sets out the matters that the Court should have regard to in considering whether to make an order for costs. Those circumstances are:-

   (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.

The wife’s application for costs

1. The principle basis upon which the wife relies in support of her application for costs is the fact that she has been wholly successful in the interim application determined by the Court.  It is submitted on her behalf that an order for costs is “a natural consequence of the judgment delivered on 11 April, arising from the hearing on 1 April 2014”.[1]

   [1] Wife’s written submissions dated 21 May 2014, paragraph 3.

2. The husband concedes, quite properly in my view, that the wife has been wholly successful in her application.  Nonetheless, it is submitted on behalf of the husband that there should be no order as to costs.  That position does not appear to be strongly pressed by the husband,  as the focus of the husband’s written submissions, save for paragraph 1 is directed towards quantum of costs in the event that I am of the view that costs should be paid by the husband.

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

1. It is submitted on behalf of the wife that each of the parties is in a “comfortable financial position”. The property proceedings before the Court are yet to be determined.  The husband concedes at paragraph 2 of the submissions filed on his behalf that he will have the capacity to meet an order for costs, but submits that such payment will be made from assets as he currently has no capacity to pay.  The husband’s financial statement was filed more than a year ago on 30 April 2013.  The wife’s financial statement was filed on 22 July 2013.  I do not, therefore, have any evidence as to the parties’ current financial position. 

2. Nonetheless the husband concedes that he has future capacity to meet any order I make with respect to costs.  

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

1. Neither party is in receipt of assistance by way of legal aid.

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

1. The wife places great emphasis on this matter in the written submissions filed on her behalf.  In particular, she relies upon the fact that her application in a case was essentially an application to enforce previous orders made by consent with respect to disclosure.  In addition, she sought disclosure in relation to new documents, the existence of which was revealed to the wife in December 2013. 

2. Further, the wife in those submissions is critical of the position adopted by the husband at the hearing of her application, seeking to resist production of the documents on the ground of relevance.  Prior to that hearing, the husband’s position with respect to disclosure was that set out in his affidavit filed 27 March 2014, wherein his explanation for failing to provide disclosure was due to his having “been ordered by the Board of Directors not to do so”.  Further, the husband deposes in that affidavit that he had “no in-principle objections to providing [Ms Watson] with copies of minute[s] of the Directors’ meetings”.

3. The husband does not respond to those matters in the written submissions filed on his behalf.

4. In my view, the husband’s conduct with respect to disclosure is a significant consideration when determining the question of costs. As noted during the hearing and in my reasons for judgment, the obligation of parties to family law litigation to make disclosure of relevant documents is a crucial element in the preparation of property applications before the Court. The wife has been put to significant expense in first having to obtain specific orders with respect to disclosure in November 2013, and then having to file a further application in a case, effectively seeking enforcement of those orders, and further orders for disclosure in relation to matters that came to light following the making of those original orders. Chapter 13 of the Family Law Rules 2004 (Cth) (‘the Rules’) is designed avert such applications having to be made to the Court.

5. Having regard to those matters, I am satisfied that the husband’s conduct in this matter strongly favours the making of an order for costs in favour of the wife. 

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

1. As noted above, the genesis of the wife’s application in a case was the failure of the husband to comply with orders made on 15 November 2013, to which he consented at a time when he was represented by both senior counsel and junior counsel.

2. Accordingly, I am satisfied that a consideration of this factor supports the making of an order in favour of the wife with respect to costs. 

Section (2A)(e)  Whether a party to the proceedings was wholly unsuccessful

1. The husband has conceded in written submissions filed on his behalf that he was wholly unsuccessful in resisting the wife’s application with respect to disclosure.

Section (2A)(f) Whether either party to the proceedings has made an offer in writing to the other party to the proceedings and the terms of that offer

1. Whilst no formal offer of settlement has been made by the wife in these proceedings, in her affidavit filed 17 February 2014 the wife refers to letters sent by her solicitor dated 25 October 2013, 16 December 2013, and 20 January 2014 seeking compliance with the previous orders for disclosure.  Those letters are annexed to the wife’s affidavit.  Further, on 20 December 2013, the wife caused her solicitors to forward to the husband’s solicitors and to his business partner, Mr K, a letter offering to enter into a confidentiality agreement in order to assuage any concerns that the husband or his business partner may have in relation to disclosure of commercially sensitive documents.  That letter is also annexed to the wife’s affidavit. 

2. The evidence of the efforts of the wife, through her solicitors, to obtain disclosure, as is set out in the correspondence supports the making of a costs order in her favour.

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

1. The husband’s failure to make disclosure in accordance with the Rules and the orders he consented to in November 2013 has necessitated the wife making an application to the Court with respect to disclosure. Had the husband met his obligations as set out in the Rules and complied with those earlier orders the application could have been avoided.

2. In all of the circumstances I am satisfied that an order that the husband pay the wife’s costs of and incidental to her application is appropriate. 

Quantum

1. The wife seeks an order that her costs be fixed in the sum of $12,500.  It is submitted on her behalf that that sum is significantly less than the amount actually incurred by her with respect to her application.  She has annexed to her written submissions copies of bills rendered to her since the November 2013 orders.  Those bills total $40,666.79. 

2. It is submitted on behalf of the husband that if costs are ordered it should be on a party/party basis to be assessed by a registrar in default of agreement.  The husband concedes that I have a discretion as to whether to fix costs. However, it is submitted on behalf of the husband that the wife has provided no basis for the amount sought by her.  The husband is critical of the failure of the wife’s lawyers to identify the steps taken by them in preparing the wife’s application before the Court.

3. Further, the husband is critical of the fact that the bills annexed to the wife’s written submissions include the wife’s costs incurred with respect to the proceedings generally, the divorce application, the termination of the wife’s employment, the interim hearing on 15 November 2013 and the conciliation conference conducted on 20 February 2014. 

4. In support of his position, the husband relies upon the decision of the Full Court in Prantage v Prantage [2013] FamCAFC 105 wherein the Court was clear in its rejection of the proposition that the actual costs incurred by a party forming a justification for a departure from the usual order for party/party costs.

Conclusion

1. There is much force in the husband’s submissions with respect to quantum as it is evident on the face of the bills annexed to the wife’s submissions that they include costs incurred with respect to matters clearly not related to the issues raised in the wife’s application in a case.  For example a perusal of the invoice dated 19 December, 2013 refers to fees incurred by the wife with respect to the drawing of her Divorce Application ($480), attendances upon the wife for the swearing of that application ($144), the filing and service of that application and the filing fee for that application ($800).  The bill dated 28 February, 2014 includes the costs of appearance at the divorce hearing, telephone attendances on property valuers and attendances at the Conciliation Conference.

2. The wife’s submissions do not address in any detail the issue of costs incurred by the wife in the preparation of the application ultimately determined by me.  The basis upon which the sum of $12,500 is sought is not articulated in the wife’s submissions, save that it is noted that that sum is “nowhere near meeting her actual costs incurred”.  In light of the Full Court’s decision in Prantage,  I am satisfied that the fact that the costs actually incurred by the wife with respect to her application are higher than those she may otherwise be entitled to in accordance with the Scale is not a basis for departing from the Scale.

3. Even were that not the position, the wife’s submissions do not inform me as to the costs actually incurred by her with respect to the application determined by me.

4. Accordingly, in the absence of that information I am not in a position to fix the quantum of costs to be paid by the husband.  In circumstances where there is no estimate provided as to the costs incurred by the wife with respect to the application determined by me, I am satisfied that the appropriate order is that the husband pay the wife’s costs of and incidental to that application as agreed or assessed.  Accordingly, I make orders as follows:-

   1.That the husband pay the wife’s costs of and incidental to her application in a case filed 17 February 2014 and the husband’s response filed 27 March 2014 as agreed and in the absence of agreement on a party/party basis.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 13 June 2014

Associate:     

Date:  13 June 2014