· 2021-10-11T07:59:55+0000 · 677 posts

Wife Seeks Order for Husband to Pay Costs of Proceedings

Phipson & Paice [2021] FedCFamC1F 10 (2 September 2021)

The wife sought for an order that her husband pay her costs in relation to property settlement proceedings on an indemnity basis or on a party-party basis. The husband opposed such application asserting that the proceedings need not have been instituted at all if the wife had not ignored his requests to spend time with the child and failed to negotiate with him about the parenting arrangements. The Court, in deciding whether or not to grant the wife's application, assessed whether or not the husband’s non-compliance in relation to court orders justifies a costs order in the wife’s favour.

Facts:

The parties began a relationship in 2010 and finally separated in early 2016. They have a daughter aged eight. In February 2016 the wife initiated proceedings seeking orders for the future parenting of the child and an adjustment of the parties’ property interests including in relation to the home in which the family lived prior to separation (“the Suburb D property”). The parties agreed on interim orders providing that the husband have sole use and occupation of the Suburb D property and that he maintain that property and pay all associated mortgage payments and outgoings. In July 2018 the parties further agreed that the wife transfer her interest in the Suburb D property to the husband and that the husband refinance the property so that the wife bears no liability in relation to it.

July 2018 orders also stipulated that the husband pay the wife just over $300,000 within a specified period of time and that if he failed to do so the Suburb D property be sold. In event that the Suburb D property was sold in accordance with the default sale provisions, the husband is to pay to the wife “$300,000 by way of partial property settlement together with interest calculated from the 29th day following the date of these Orders until the date of receipt of such monies by the Wife. The husband failed to pay the wife the lump sum in accordance with the July 2018 orders and did not place the property on the market pursuant to the default orders, claiming that he was prevented from selling the property until some unauthorised renovations were either removed or authorised to remain in place. In December 2018 the wife filed an application seeking to enforce the July 2018 orders.

A few months later, the husband paid the wife the outstanding sum owed pursuant to court orders. The wife discontinued her enforcement application, except in relation to the claim of interest in relation to the late transfer of funds. In September 2020, the parties agreed on a final parenting arrangement. Orders were made with their consent giving effect to this agreement which provided that they equally share parental responsibility for the child and that the child lives with the wife and spends substantial and significant time with the husband. The wife sought orders that she retain 75 percent of the parties’ property and the husband retain 25 percent, while the husband proposed that he retain 40 percent of the property pool and the wife retain 60 percent.

On 9 June 2021, final orders were made for the wife to receive 70 per cent of the parties’ net assets and the husband to receive 30 per cent. The applicant wife sought an order for her costs in relation to property settlement proceedings with her former husband to be paid by the husband on an indemnity basis or on the “ordinary” basis which I assume to mean party/party costs. Alternatively, she seeks orders that her costs in relation to certain applications be paid by the husband on either an indemnity basis or as agreed or assessed. The husband opposed the application. The wife further seeks an order that the husband pay a specific sum of interest owed to her as a result of his non-compliance with court orders made in July 2018. The wife’s application for this order was reserved until the completion of the hearing to be determined along with her applications for costs.

Issues:

I. Whether or not there are circumstances that justify departing from the usual rule that each party shall bear his or her own costs.

II. Whether or not these circumstances are exceptional to justify that a costs order be made against the husband on an indemnity basis.

Applicable law:

Family Law Act 1975(Cth) ss 117, 117B - provides that each party to proceedings under the Act shall bear his or her own costs, but that section is subject to subsection (2) which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may make an order for costs as it considers just.

Family Law Rules 2004 r 13.14 - provides that the prescribed rate at which interest is payable under paragraphs 87 (11) (b) and 90KA (b) and subsection 117B (1) of the Act is:

(a) in respect of the period from 1 January to 30 June in any year — the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced; and
(b) in respect of the period from 1 July to 31 December in any year — the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced.

Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225 - where Sheppard J provides examples where the exercise of discretion to award indemnity costs is warranted.

D & D (Costs) (No. 2) (2010) FLC 93-435 - provides that impecuniosity is no bar to the making of an order for costs.

Joyce & Fante [2013] FamCAFC 141 - where it is beyond doubt that in order to justify an award of indemnity costs, it must be demonstrated there are exceptional circumstances such that the usual order of party-party costs should be departed from.

Mansfield and Ors & Mansfield and Anor [2019] FamCAFC 186; (2019) FLC 93-920 -recognised the principles in Colgate principles as well-established law with respect to applications for indemnity costs, stating at [8] that “numerous decisions of the Full Court have endorsed the principles stated in Colgate concerning the approach to indemnity costs”.

Penfold v Penfold [1980] HCA 4; (1980) 144 CLR 311 - the High Court indicated that the circumstances justifying an order for costs need not be exceptional, but they must, of themselves, be sufficient to justify making the order.

Waterman and Waterman [2017] FamCAFC 23 - discussed principles referred to by the wife in her submissions in relation to costs.

Weir and Weir [1992] FamCA 69; (1993) FLC 92-338 - where there is nothing on the face of the Act or the Rules that requires the party seeking costs to identify a discernible consequence of non-disclosure on the proceedings as it is the non-disclosure of itself that justifies the award of costs.

Analysis:

There is no evidence from either of the parties as to their current financial circumstances. As a result of the property settlement orders, each party retains their own business from which they each earn an income, and each retains a piece of quite valuable real estate registered in their respective sole names. The wife, however, submits that the husband has “substantially caused a loss of time to the Court and the parties” and that his management of the proceedings, particularly the property settlement proceedings, has seen her expend additional fees prosecuting the matter. She contends that as the husband exercised his right to represent himself in the proceedings, his lack of knowledge in relation to legal matters has resulted in her incurring additional legal fees.

On the other hand, the matters raised by the husband in his written submissions about the wife’s conduct in the proceedings generally amount to no more than mere assertions unsupported by any evidence. There is no evidence to support his contention that the wife ever sought 90 percent of the parties’ property and her contention in the dispute of a 75 percent entitlement is closer to the result following a hearing (of a 70 percent share in her favour) than the husband’s contentions that would see her retain 60 percent of the parties’ property.

Conclusion:

The Court concluded that in all of the circumstances, only the husband’s non-compliance in relation to court orders justifies a costs order in the wife’s favour. The Court ordered the husband to pay the wife’s costs relating to the Applications in a Case filed 16 November 2018 and 20 December 2018 on a party/party basis in a sum as agreed or assessed. The husband is to pay to the wife interest of $8,276.70 owed as a result of his non-compliance with orders of 12 July 2018. The wife’s application for costs is otherwise dismissed.

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