ZHOU & MEI
[2020] FamCA 1116
FAMILY COURT OF AUSTRALIA
| ZHOU & MEI | [2020] FamCA 1116 |
| FAMILY LAW – COSTS – Where application was made by the husband’s mother, who was a party to the proceedings, seeking a costs order that the wife pay her cost of and incidental to the Initiating Application filed by the wife on 19 September 2017 on a party/party basis in the sum of about $213,000 – Where costs were awarded in a fixed sum |
| Family Law Act 1975 (Cth) s 117 |
| PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & Ors [2005] FamCA 158 Cachia v Hanes (1994) 179 CLR 403 Pearson v Pearson [2020]FamCA 329 |
| APPLICANT: | Ms Zhou |
| RESPONDENTS: | Ms Mei |
| FILE NUMBER: | SYC | 2897 | of | 2017 |
| DATE DELIVERED: | 14 October 2020 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 14 October 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Stenhouse |
| SOLICITOR FOR THE APPLICANT: | Du & Associate Lawyers |
| COUNSEL FOR THE RESPONDENT: |
| SOLICITOR FOR THE RESPONDENT: | In Person |
Orders
The respondent, Ms Mei shall, within ninety (90) days from the date of this order, pay to the applicant, Ms Zhou, the sum of $170,000 by way of party/party costs in these proceedings.
IT IS DIRECTED
Interest shall accrue on such costs orders in accordance with the Rules under the Family Law Act1975 (Cth) as and from ninety (90) days from the date of this order, unless such costs are paid.
A copy of the reasons for these orders be taken out, settled and placed on the Court file.
IT IS NOTED
These costs include the costs of the costs application.
IT IS CERTIFIED
Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zhou & Mei has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT HOBART |
FILE NUMBER: SYC 2897 of 2017
| MS ZHOU |
Applicant
And
| MS MEI |
Respondent
EX TEMPORE REASONS FOR JUDGMENT
INTRODUCTION
Ms Mei (‘the wife’) and Mr Yao (‘the husband’) and Ms Zhou, (‘the husband’s mother’), were involved in proceedings in the Family Court (‘the substantive proceedings’), which were heard by me on 6, 7, 8 and 9 April 2020, and where I published Reasons for Judgment (‘the Reasons’) on 8 July 2020 and made orders. Those Reasons and the orders that flowed from them were before me today in a costs application by the husband for an order that the wife pay his costs on a party/party basis in the sum of about $128,000. There was a separate application by the husband’s mother that the wife pay her costs of about $213,000, being on a party/party basis.
The wife was unrepresented in these costs proceedings, but was otherwise represented during the course of the substantive proceedings up until at least 9 April 2020. In terms of the wife’s participation in the costs proceedings, I have had regard to the circumstances that she was unrepresented, and I have done as best as I can to explain the processes of the proceedings to her, and I have carefully considered her submissions, both oral and written.
THE ISSUES
The question for me in respect of each of the two separate costs applications was:-
(a) whether costs orders should be made; and
(b) whether I ought to make those as lump sum payments.
The wife contends, firstly, that I ought not to make costs orders at all, but makes no substantive submissions in relation to the lump sum aspect, although I take it, and will take it, that she objects to that course.
THE BACKRGOUND
The background to these proceedings was set out by me in the Reasons in paragraphs 19 through to 48 set out as follows:-
19. The [husband’s mother] is aged 65. There is some evidence that she is in poor health given that she has a history of cancer treatment.
20. The husband is aged 40 and is presently not employed. I accept his evidence in that regard.
21. The husband earnt assessable income between 2010 and 2017 as follows:-
- 2010 $36,928
- 2011 $65,006
- 2012 $81,741
- 2013 $21,319
- 2014 $13,070
- 2015 $54,230
- 2016 $97,841
- 2017 $14,858
22. The wife asserted that the husband was employed by R Pty Ltd in 2010, 2011 and 2012 and from 2015 until 2017 he worked with S Pty Ltd.
23. In his trial affidavit the husband described his occupation as a professional and carer. He was a student in Australia from about 2003 to 2008 at which time he commenced secure employment with R Pty Ltd. In December 2010 he commenced employment with S Pty Ltd and was paid about $60,000 a year. He worked with them for a number of years. The wife asserted that the husband had said he was employed by T Company in City BB and that he had an annual gross income of $569,303. He did this in terms of a loan application but it was not based in fact.
24. In 2011 the husband obtained employment with U Company and was earning about $5,800 per month for a period of two years, except the money was paid into an account in China and that those monies were controlled and retained by the wife. I accept his evidence in that regard.
25. He was engaged to work for V Company and received an income from that entity in the 2017 financial year. He says his employment now is undertaking some tasks for the company which involves about one day a week. These companies (the V Company Group) involve investors from China and I accept that the husband has no beneficial interest in the real estate, which is held in trust for the investors. The husband has some shareholdings, although there was no serious assertion that those holdings have any real value. Most of the companies seemed to be trustee companies.
26. The husband says he is currently unemployed and is looking for work and that he spends a significant amount of time caring for his mother as needed. There is no evidence that the husband is other than in good health.
27. The wife is aged 35 years. She is a permanent resident of Australia having immigrated to Australia on a spouse Visa in December 2012. The wife graduated from University in China in 2007 and was working as finance professional with a company in China. She worked for that company until about 2014.
28. The wife spoke Mandarin and some English at the time the parties met and she has undertaken studies of English since that time. There is evidence that the wife undertook and completed a course to teach English to overseas students which she completed.
29. In 2012 the wife undertook studies at TAFE in education. In 2013 the wife continued her English studies and received a Certificate for Teaching English. In 2015 the wife commenced studying a further degree, although did not complete this course.
30. The wife worked at an education centre from 2013.
31. The wife says that she now regards Australia as her permanent home. She became an Australian citizen in 2017.
32. The wife asserts that she has some health difficulties and has been seeing a psychologist and needed spinal treatment. She adduced no admissible evidence in relation to those conditions. It is clear that the wife was working in education and returned to China. The wife asserts this was due to her health condition although, no admissible evidence as to her health, apart from a certificate from her then employer, saying she left work because of a ‘health situation’. I am satisfied that the wife has a health capacity to work in education and administration and the like.
33. The wife remained in China for six months in 2019 and was supported by her family. She has returned to Australia and is now in receipt of a Newstart Allowance.
34. In July 2019 the wife applied for admission as a student at the W University. She was accepted to that course in October 2019 to commence in February 2020.
35. There are no children of the relationship between the husband and wife.
36. The [husband’s mother] is a permanent resident of Australia. She received a temporary Residence Visa in early 2009 and became a permanent resident of Australia in August 2013.
37. The husband and wife met in December 2009 or January 2010 and formed a friendship. The wife travelled to Australia during 2010 and the husband travelled to China. The parties married in late 2010. During 2010 the wife initially lived in an apartment rented for her by the [husband’s mother]. She lived in that apartment, at times with her mother, until late 2010. From that date the wife then moved into a house with the husband’s parents. I accept the evidence of the [husband’s mother] that the rental on the home was paid for by her and further, that whilst the wife was living with the husband’s parents, including the [husband’s mother], she paid no expenses.
38. I accept the evidence of the [husband’s mother] that she and her husband paid most of the living expenses for the wife from that time, when the wife was living in China until December 2012.
39. In December 2012 the wife had been granted a spouse visa and she moved to Australia. Initially, she and the husband lived in the husband’s Suburb F property. They then moved to a property purchased at X Street, Suburb Y (‘Suburb Y’).
40. Between 2009 and 2016 the husband, and at times the wife, purchased various properties in Australia and borrowed monies for the purchase of those properties, about which, I have discussed later in these reasons.
41. The husband and wife jointly purchased a property at Suburb C in 2014. The husband, wife and the [husband’s mother’] moved into in February 2015. The [husband’s mother] had been living significant times in Australia since 2011 and had lived at Suburb Y prior to the move to Suburb C.
42. In late April 2016 or early May 2016 the parties separated and the husband left the Suburb C property. The wife continued to live in the Suburb C property as did the [husband’s mother]. This arrangement ended in September 2016 when the wife moved out of that home. The husband then returned to live in the Suburb C property with his mother.
43. Following the wife leaving Suburb C she stayed with a friend and then rented accommodation over the next two years between $270 and $280 per week.
44. The husband and wife were divorced on … 2017 and that decree became absolute on … 2017.
THE PROCEEDINGS
45. These proceedings were commenced on 19 September 2017 when the wife filed an Initiating Application seeking interlocutory orders that she have sole use of a motor vehicle and exclusive occupation of the Suburb C property.
46. That interlocutory application as heard by McClelland J in November 2017, as he then was, and the wife’s application for exclusive occupation of the Suburb C property was dismissed.
47. The orders and case history of these proceedings are set out in the case outline of the husband. I have had regard to that history. The proceedings were heard by me as outlined earlier.
48. Any statement of fact in these reasons is to be regarded as a finding of fact unless the contrary is clear from the context of the statement.
(Footnotes omitted)
THE EVIDENCE
The husband’s mother has relied upon her Application in a Case filed on or about 4 August 2020, which was filed within the times provided in the substantive orders. She also relied upon her affidavit filed the same day, and tendered in evidence a tender bundle, which I will deal with a little later.
The wife, who was self-represented, filed a response on 30 September asking the Court to dismiss the applications and order that each party pay their own costs. The wife relied upon two affidavits, one in respect of each of the costs applications. I have read and considered those affidavits. She also tendered documents containing some 58 pages, to which I have had regard to. At the commencement of the hearing, I carefully went through the documents to which each party relied upon, and which included my substantive reasons and the substantive orders.
THE EXHIBITS
The exhibits were:-
Exhibit 1:the husband’s case outline;
Exhibit 2:the husband’s tender bundle which contained pages 18 to 20, 23 to 25, and 37 to 65 of his original tender bundle;
Exhibit E3:the husband’s mother’s case outline, which was only made available to me today through no fault of the counsel for the husband’s mother;
Exhibit E4:the husband’s mother’s tender bundle containing 146 pages, which also provided evidence as to the party/party costs of about $213,000;
Exhibit E5:the wife’s case outline; and
Exhibit E6:the wife’s tender bundle.
the law relating to costs
Costs orders generally
The power to make costs orders are set out in s 117 of the Family Law Act 1975 (Cth) (‘the Act’), which relevantly provides:-
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) 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.
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(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.
In Penfold v Penfold (1980) FLC 90-800 the majority of the High Court expressed the general rule that s 117(1) is not paramount to s 117(2) of the Act. A court must make a finding that there are circumstances justifying the making of a costs order before proceeding to make the orders.
There is no guidance in the legislation between the two sub sections nor any additional special onus on the applicant for an order as to costs.
It is necessary to consider the facts in the light of the provisions set out in s 117(2A) of the Act. While the list in s 117(2A) gives rise to a wide range of factors there is nowhere in s 117(2A) that says any one factor provides a hierarchy in relation to the other factors, it is a matter of weight that is accorded to each of the relevant factors in the Court’s discretion (see Medlon and Medlon (No.6) (Indemnity Costs) (2015) FLC 93-664 per Strickland J). One factor may be enough. In PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & Ors [2005] FamCA 158, the Full Court held:-
41. Nowhere in subsection 2(a) or elsewhere in section 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subsection (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
As such the Court has a broad discretion in determining costs.
It is of value to repeat what I have said in earlier judgments that the Court needs to consider the difference between the various types of unquantified costs orders available under the Act. There are many variations of types of costs orders, but they generally fall into three types:-
a)Party and party costs - which are calculated having regard to the schedule of costs under the Family Law Rules 2004 (Cth);
b)Lawyer and client costs – these are essentially indemnity costs, with the onus upon the costs applicant to satisfy the taxing authority that such costs are on balance fair, reasonable and proportionate; and
c)Indemnity costs - these are essentially lawyer and client costs, with the onus upon the costs respondent to satisfy the taxing authority that such costs are on balance not fair and reasonable and not on balance proportionate, that is the reversal of the onus of proof.
It should be borne in mind that costs orders are restorative and not punitive, and costs cannot exceed the amount actually incurred. They are an indemnity or partial indemnity. In Cachia v Hanes (1994) 179 CLR 403 the plurality of the Court, comprising Mason CJ, Brennan, Deane, Dawson and McHugh JJ observed:-
Whilst the restricted basis upon which party and party costs are awarded may be debated as a matter of policy, it is to be borne in mind that party and party costs have never been regarded as a total indemnity to a successful litigant for costs incurred, let alone total recompense for work done and time lost. Putting to one side the question posed by the relatively rare exception of a solicitor acting in person, there is no inequality involved: all litigants are treated in the same manner. And if only litigants in person were recompensed for lost time and trouble, there would be real inequality between litigants in person and litigants who were represented, many of whom would have suffered considerable loss of time and trouble in addition to incurring professional costs. The partial indemnity which the law allows represents a compromise between the absence of any provision for costs (which prevails as a matter of policy in some jurisdictions) and full recompense. In these days of burgeoning costs, the risk of which is a real disincentive to litigation, the proper compromise is a matter of both difficulty and concern.
This costs application was considered and determined under the provisions of s 117 of the Act.
The steps I must take in this case are twofold. The first is that I must determine whether in each of the applications, separately, I should make a costs order pursuant to s 117(2A) of the Act. If I determine that I should make such a costs order, the second step is whether it ought to be a lump sum costs order, having regard to the evidence before me as submitted by both the solicitor for the husband and counsel for the husband’s mother.
In her submissions, both oral and written, the wife, in many respects, asks me to revisit some of the findings that were made by me in the Reasons. Clearly I cannot and will not do that. The wife’s objections, or defence of the case, rises and falls on the findings and facts and determinations made by me in the Reasons. In this case, the wife was entirely unsuccessful in terms of the application by the husband’s mother.
The wife, quite properly, considered on the breakdown of the marriage that she was entitled to some property and commenced proceedings. Those proceedings came before his Honour McClelland J, as he then was, in an interim hearing in November 2017, and at that time he dismissed the wife’s application for exclusive occupation and other orders. It should have been patently obvious to the wife at that stage that the whole of the source of the funds of the parties came from the assets of the husband’s mother. The wife was at that time legally represented, and continued to be so until the end of the substantive proceedings. The wife ought to have been aware that her case at that time was futile.
I note and accept the submissions of counsel for the husband’s mother in relation to paragraphs 71, 77, 85 and 275 of the Reasons. This was a complex proceeding where, no doubt, frighteningly for counsel, a Family Court judge was asked to engage in understanding and applying the law of equity. It was an important case to determine the equitable interests in property, which is the first step in any property proceedings. In my Reasons I made no significant criticism of either the husband or the husband’s mother, but I did make some criticism, and some significant criticism, of the wife. In my Reasons I talked about the wife dissembling, prevaricating and, at times, fabricating evidence.
The consequence of the substantive proceedings has been that the husband’s mother has spent almost $300,000 in defence of what was clearly her property. It is a considerable amount of money. My task is to consider those factors, having regard to the provisions of s 117(2A) of the Act, and I will do so.
(a)the financial circumstances of each of the parties to the proceedings;
It is clear to me that the wife is, to all intents and purposes, impecunious and has been since separation. She has had limited assets apart from those to which I have referred to in the Reasons, which were taken by her at separation, and from the rental of at least one of the properties. I have treated her as having little or no available funds to meet any costs order.
On the other hand, the husband’s mother has significant assets. I describe them as millions of dollars from her and her husband’s endeavours in China, and I have had regard to that.
(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;
For the purpose of the substantive proceedings, neither party was in receipt of legal aid. The wife was not represented by legal aid today, although she took legal advice she says, and I accept she took legal advice from legal aid and legal services to enable her to deal with this matter.
(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;
I make no criticism of the conduct of the conduct of the husband’s mother. I do repeat the criticisms I made of the wife in the substantive proceedings. It is not a significant factor.
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
That is not a relevant consideration
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
In this case the wife was wholly unsuccessful and, as I have said earlier, she ought to have known after the interim hearing before his Honour Justice McClelland (as he then was) that she would be wholly unsuccessful. It seems to me that her pursuit of the case was opportunistic and perhaps with a view of some members of the community, and indeed some members of the profession from time to time, that in family law everybody receives a prize. It is not the case. The High Court made that clear in Stanford v Stanford,[1] and any application has to be made properly and be properly based. I am not satisfied that the wife’s was properly made or properly based.
(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
[1] (2012) 247 CLR 108.
There were no serious submissions to me in relation to offers of settlement.
(g) such other matters as the Court considers relevant.
As to other matters, I have discussed those in relation to the Rules earlier on.
In summary with regard to the husband’s mother, she was forced to become involved in these proceedings through, in part, the poor performance of her son (the husband) in not being frank with her, and, secondly, the failure of the wife to acknowledge the clear source of the funds that funded their lifestyle and their property.
The husband’s mother has spent a considerable amount of money in costs, and I am satisfied, on balance, that there ought to be a party/party costs order in her favour, and I intend to make such an order.
The second question is whether I ought to make those orders on a lump sum basis. In Pearson & Pearson [2020] FamCA 329, I recently discussed the making of fixed costs orders, where I said:-
Whether to fix costs or refer that determination to an agreement by the parties or an assessment under the Rules
107. In terms of this Courts determination of the quantum of costs, I note the remarks of Strickland, Kent and Watts JJ in the recent Full Court decision of Pierson & Romilly [2020] FamCAFC 91 where their Honours said:-
85.It is the policy of this Court to attempt to fix costs at the conclusion of the hearing in order to save the parties the cost, time and resources of a taxation, as well as to save the time of a Registrar in taxing the costs.
108. I take it that ‘the policy’ referred to in that judgment relates to that of the Full Courts of the Family Court. However, the underlying principles and reasoning upon which that jurisprudence rests must be equally apposite to judges determining costs at first instance.
109. For issues and conflict to require determination by a judicial officer, the parties or one or other of them have eschewed alternative dispute resolution.
110. First instance judges are often uniquely informed and equipped to determine costs at large and in particular. The determination of costs falls into three distinct areas of reasoning:-
(a)whether or not a costs order ought to be made;
(b)if there is to be a costs order on what basis should it be calculated; party and party, legal practitioner and client, indemnity, or some other basis;
(c)once those determinations are made, then there needs to be serious consideration as a fixed costs orders or assessment under the Rules. In this phase of the determination judges should have regard to the ‘cost, time and resources of a taxation, as well as to save the time of a Registrar in taxing the costs’ and other relevant factors.
111. As with the jurisprudence and as set out in the Rules, the determination of the quantum of costs is a process of assessment, not taxation.
112. Given the history of this dispute, including the negotiations surrounding offers, to which I have been made privy in this application, I find that it is unlikely that these parties would agree on quantum of costs.
I have evidence before me as to the party/party costs of the husband and of the husband’s mother. I do not know whether all of those would be accepted by a taxing officer. I accept the submission that assessment of costs is not necessarily an item by item approach. Costs are undertaken by way of assessment as to what is fair and reasonable and proportionate in all the circumstances. Given that approach, I am satisfied that there ought to be a lump sum order so that these proceedings can be brought to an end. I am satisfied that the order ought to be approximately 60 per cent of that sought by the husband in his application, and as such I will be making an order that the wife pay to the husband the sum of $76,800 in legal costs.
In terms of the husband’s mother, I repeat the above comments. I intend, in that case, not to make the order for the full sum sought by her, but to order approximately 80 per cent of that cost in the sum of $170,000.
I will direct that interest will accrue from those after a period of about 60 days, and I will accordingly so order.
In a separate order in these proceedings I make the following orders.
I certify that the preceding thirty six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 14 October 2020.
Associate:
Date: 23 December 2020
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