FAMILY COURT OF AUSTRALIA

MANNING & HUTTON	[2015] FamCA 968	

FAMILY LAW – PRACTICE & PROCEDURE – Leave to withdraw – where the applicant seeks leave to withdraw her applications for a declaration pursuant to s 90RD that the applicant and respondent were in a de facto relationship and  that she have leave pursuant to s 44(6) to proceed after the standard application period – final orders made granting the applicant leave to withdraw her application

FAMILY LAW – COSTS – Application by the respondent for costs on an indemnity basis – where the applicant sought leave to withdraw her application – where the applicant sought leave to withdraw at a late stage in the proceedings – where the possibility of a costs application being made was foreshadowed – where the applicant was wholly unsuccessful in her application – where neither the applicant nor the respondent are in a strong financial position – where the circumstances justify the making of a costs order on a party/party basis – no exceptional circumstances to justify the making of a costs order on an indemnity basis – interim order for costs on a party/party basis	

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)	

Prantage & Prantage (2013) FLC 93-544; (2013) 49 Fam LR 197	

APPLICANT:	Ms Manning	

RESPONDENT:	Mr Hutton	

FILE NUMBER:	DGC	1792		of	2014	

DATE DELIVERED:	6 November 2015	

PLACE DELIVERED:	Melbourne	

PLACE HEARD:	Melbourne	

JUDGMENT OF:	Johns J	

HEARING DATE:	19 & 20 October 2015	

REPRESENTATION

COUNSEL FOR THE APPLICANT:	Mr Howe	

SOLICITOR FOR THE APPLICANT:	Peninsula Community Legal Centre	

COUNSEL FOR THE RESPONDENT:	Mr McIvor	

SOLICiTOR FOR THE RESPONDENT:	Burrell Family Law 	

Orders
(1)	That the applicant be granted leave to withdraw her Amended Initiating Application filed 19 December 2014.
(2)	That the applicant pay the respondent’s costs of and incidental to these proceedings, such costs to be as agreed or in default of agreement as taxed on a party/party basis. 

IT IS NOTED that publication of this judgment by this Court under the pseudonym Manning & Hutton 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: DGC 1792  of 2014

Ms Manning 	
Applicant

And

Mr Hutton 	
Respondent

REASONS FOR JUDGMENT
Introduction
1.	On the second day of the final hearing the applicant sought leave to withdraw her applications  seeking:-
•	a declaration pursuant to s 90RD of the Family Law Act 1975 (Cth) (“the Act”) that a de facto relationship existed between the applicant and the respondent; and 
•	leave pursuant to s 44(6) of the Act to institute proceedings for final property orders.  
2.	The application for leave to withdraw her applications was not opposed by the respondent.  Accordingly, I granted the applicant leave to withdraw her applications.
3.	As a result of the applicant’s withdrawal the respondent sought orders that:-
•	the applicant forthwith do all acts and things and sign all documents required to cause the removal of caveat number AL724163R lodged on her behalf in respect of the property at B Street, Suburb C; and
•	the applicant pay the respondent’s costs on an indemnity basis fixed in the sum of $50,087.
4.	Through her counsel the applicant conceded that the caveat should be withdrawn.  However, in circumstances where this Court does not have jurisdiction to make orders with respect to property, that being the position maintained by the respondent throughout the proceedings, I do not have the power to make orders with respect to the removal of the caveat.  Ultimately it will be for the respondent to seek the appropriate relief in the state courts in the event the applicant does not remove the caveat.
5.	These are my reasons for judgment with respect to the respondent’s application for costs.
The Parties
6.	The applicant is aged 42 years and lives in Suburb D with her father.  She is the registered carer of her elderly father and receives a carer’s pension of approximately $427 per week.  She also receives rental income in respect of a property held by her in Suburb E.
7.	The respondent is aged 46 years.  He is employed as a plumber.  The respondent resides at a property owned by him in Suburb C.  He shares that home with his wife.
The Applicant’s Application
8.	The applicant alleged that the parties lived together in a de facto relationship between 1990 and 2011.  
9.	The respondent denies that the parties lived together as a couple on a genuine domestic basis for that period.  Rather, it is the respondent’s position that the parties lived together in a de facto relationship between 1992 and 1996.  The respondent admits that the parties continued to have a casual sexual relationship after their separation and that the applicant stayed at his home on a temporary basis for a few months in 2009.
10.	At the commencement of the hearing the applicant sought a declaration that a de facto relationship existed for the period alleged and further she sought leave to commence property proceedings out of time.  Those applications were opposed by the respondent.
11.	The matter first came before me in a judicial duty list on 2 December 2014.  That day I made orders that the matter be listed for final hearing before me as to the issues of:-
•	The existence of and period of a de facto relationship; and
•	Leave to proceed out of time pursuant to s 44(6) of the Act.
12.	I listed the matter for hearing before me on 11 May 2015 as a three-day matter.  
13.	On 6 May 2015 the matter was listed for mention before me.  That day, the applicant’s former solicitors sought leave to withdraw.  As a result of the late withdrawal of the applicant’s former solicitors, the original hearing date was vacated and procedural orders were made listing the matter for further mention before me on 19 June 2015.
14.	At the mention hearing on 19 June 2015, the matter was listed for hearing before me in relation to the threshold issues to commence on 19 October 2015.
15.	The hearing in relation to those issues commenced before me on 19 October 2015.  The applicant gave evidence and was cross-examined by counsel for the respondent.  In addition to that evidence, the applicant relied upon affidavits of her cousin, Ms F and her friend, Ms G.  Both of those witnesses were cross-examined by counsel for the respondent.
16.	On the second day of the hearing, the respondent gave evidence and was cross-examined, as were his witnesses, Ms H Hutton, Ms I Hutton and Mr J.  
17.	On each of the occasions that the matter has been listed before me, I have made observations that the very nature of the application before the Court gave rise to potential costs consequences in the event that the applicant was unsuccessful.  
18.	Further, during the course of the hearing I made observations as to the matters pursuant to ss 90RD and 4AA of the Act that the applicant would need to establish in order to succeed in her application.  At the outset I reminded her of the matters taken into account in determining whether or not the parties were living in a de facto relationship and that the requisite standard for establishing those matters was the balance of probabilities.  The onus for establishing those matters lay with the applicant.  
19.	Pursuant to order 13 of my orders dated 19 June 2015, at the commencement of the hearing I required each party to provide me with a statement setting out the costs incurred to that date and from what source those funds have been paid and what costs are expected to be incurred until the completion of the hearing.  The statement of costs provided to the applicant by her lawyer (Exhibit A1) states that the total costs incurred by the applicant up to the commencement of the hearing was approximately $62,000 and that the estimated trial costs were $9,000.
20.	The costs letter provided to the respondent by his lawyers (Exhibit R7) discloses that the respondent has incurred costs of $19,658 to date and that the estimated costs to final hearing were $26,000.
21.	In opening, it was conceded by counsel for the applicant that were she to succeed in persuading the Court to make a declaration as to the existence of the de facto relationship and further to obtain leave pursuant to s 44(6), she would be seeking a payment by way of property settlement from the respondent in the order of approximately $125,000.  Given the modest sum sought by her by way of property settlement, the amounts expended by her in pursuing her application appear disproportionate.
22.	At the conclusion of the applicant’s evidence on the first day of the hearing, I expressed serious concerns as to the merits of her pursuing her application and reminded the parties that I would be relying upon the evidence before me to determine the issues before the Court.  Notwithstanding those preliminary observations, the trial continued into the second day.
23.	After the luncheon adjournment on the second day (when all but one of the witnesses had given their evidence) the applicant sought leave to withdraw her Amended Initiating Application filed 19 December 2014.  That application was not opposed.
24.	I will grant the applicant leave to withdraw her Amended Initiating Application. The only remaining issue is the application of the respondent that the applicant pay his costs of and incidental to the application fixed in the sum of $50,087.  Costs are sought on behalf of the respondent on an indemnity basis.  The applicant opposes the respondent’s application for costs.
The Law in Relation to Costs
25.	The general rule with respect to costs is that each party to proceedings under the Act shall bear his or her own costs.  This is provided in s 117(1) of the Act.
26.	Section 117(2) provides that if the Court is of the opinion that 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 Rules of Court make such order as to costs and security for costs as the Court considers just.  
27.	Section 117(2A) sets out the matters that the Court should have regard to in considering whether to make a costs order.  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.
28.	The respondent seeks costs be paid on an indemnity basis, that is, he seeks payment of all costs incurred in accordance with the costs agreement between he and his lawyer.  
29.	The principles to be applied when considering an order for indemnity costs are set out in the decision of the Full Court in Prantage & Prantage (2013) FLC 93-544; (2013) 49 Fam LR 197 (“Prantage”).  That decision confirms that an order for indemnity costs is “a very great departure from the normal standard”.
The Respondent’s Application 
30.	The respondent principally relies upon sub-paragraph (c) and sub-paragraph (e) of s 117(2A) in support of his application for costs.  
The conduct of the parties
31.	As to the issue of the applicant’s conduct, it was submitted on behalf of the respondent that the manner in which the applicant has conducted the proceedings justifies an order for costs.  
32.	The respondent relies upon the fact that the applicant has been on notice of his costs application since the filing of his Response to Initiating Application on 6 August 2014.  Further, he points to the fact that at earlier mention hearings I raised with the parties the potential for costs to follow the event given the nature of the parties’ respective positions with respect to the threshold issues.  
33.	The respondent also relies upon the applicant’s “late in the day” application for leave to withdraw, that application being made after one-and-a-half days of hearing and in circumstances where all but one of the witnesses relied upon had been called to give evidence.  
34.	Further, the respondent was critical of the manner in which the applicant pressed her claim, in particular noting her allegations that the respondent and those witnesses called on his behalf were lying to the Court.  
35.	It was submitted on behalf of the respondent that from the outset the applicant’s claim was speculative, ill-founded and doomed to fail.  
36.	In response, it was submitted on the applicant’s behalf that she was poorly advised by her previous lawyers and that that is not a matter she should be penalised for.  I am not in a position to make any findings with respect to that issue.  However, I am not satisfied that were the applicant poorly advised by her previous lawyers, that this is a matter which would provide a platform to avoid an order for costs, particularly in circumstances where at a time when represented by her current lawyers, the applicant pressed her application for one and a half days at the final hearing before determining to withdraw from the proceedings. 
37.	Whilst the applicant was unrepresented for a period of time between May and September 2015, she did have lawyers acting on her behalf at the time her application was filed and in the periods leading up to the two listed trial dates.  The affidavit material filed on behalf of the applicant in the proceedings was prepared by her former lawyers.
38.	In my view it would be grossly unfair to the respondent that he be prevented from seeking costs in circumstances where the applicant has withdrawn her application, on the basis that the applicant has been poorly advised.  In my view that submission must fail.  
39.	As to the question of the manner in which the applicant has conducted her case, no further submissions were made on her behalf in response to the matters raised by the respondent.
40.	Neither of the applicant’s witnesses could confirm that the parties shared a common residence at the respondent’s property in Suburb C, which was purchased by him in August 2000 and where he has resided since that date.  Indeed, neither Ms F nor Ms G gave any evidence as to their observations of the parties together at that property in the decade following the respondent’s purchase of the property.  Ms G conceded during cross-examination that she had observed the parties together at one social function since 2000.  Both Ms F and Ms G conceded during cross-examination that they had no knowledge of the parties’ living arrangements.  
41.	Having read the material and heard all but one of the witnesses be cross-examined, I am satisfied that the applicant’s application was misguided; having observed her giving evidence, I am satisfied that whilst she considered herself to be in a relationship with the respondent for the relevant period, neither her own evidence nor that of her witnesses supported her contention that she and the respondent were in a de facto relationship within the meaning of the Act for the period alleged.  Hence, there is much force to the submission of the respondent that the applicant’s application was “doomed to fail”.
42.	Accordingly, the applicant’s decision to proceed with her application until the luncheon period on the second day of the hearing in circumstances where her own evidence did not support her contentions is conduct I have regard to in determining the respondent’s application for costs. 
Whether a party was wholly unsuccessful
43.	The respondent also relies upon the fact that the applicant has been wholly unsuccessful in her application before the Court.  That this is so was conceded by counsel appearing for the applicant. 
The financial circumstances of the parties
44.	It was submitted on behalf of the applicant that her financial circumstances are relevant to determining any application for costs.  It was submitted that the applicant is impecunious, her only income being a carer’s pension.  That submission ignores the applicant’s evidence as contained in her financial statement filed 19 December 2014 which discloses that the applicant currently receives rental income in the sum of $300 per week.  The applicant is the registered proprietor of a property in Suburb E valued at approximately $290,000 and which is subject to a mortgage of approximately $264,000.  Otherwise the applicant has no other assets of significance.  
45.	The applicant has interests in superannuation valued at approximately $45,000.  
46.	The respondent’s financial statement filed 23 January 2015 discloses that he has an average weekly income of approximately $1,898.  His expenses total approximately $1,539.  The respondent is the registered proprietor of a property in Suburb C valued at approximately $400,000 and which is subject to a mortgage of approximately $149,000.
47.	Having regard to the financial statements filed on behalf of each of the parties, I am satisfied that neither party is in a strong financial position.  The properties held by each of them are heavily encumbered and their incomes are modest.  
48.	In those circumstances, I am satisfied that the cost of these proceedings has placed a significant financial burden on each of them.
Whether either party is in receipt of legal aid 
49.	Neither party has had assistance by way of legal aid.  
Whether the proceedings were necessitated by the failure of a party to comply with previous court orders 
50.	Neither party has failed to comply with court orders.
Whether either party to proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings 
51.	No submissions were made on behalf of the parties with respect to offers to settle the proceedings.
Conclusion
52.	In circumstances where the applicant has withdrawn her application and therefore been wholly unsuccessful in the proceedings and where she has pressed her application against a backdrop of having been given notice as to the potential costs consequences were her application to fail, I am satisfied that it is appropriate that she pay the respondent’s costs of and incidental to the application.
53.	As noted earlier, these proceedings have placed a substantial financial burden upon both parties; that the applicant has limited financial means is not a basis for refusing to award costs.  The respondent too has modest income and assets and has been put to considerable expense in responding to the applicant’s claim.
Should the Applicant Pay Costs on an “Indemnity Basis” 
54.	Rule 19.08(3) of the Family Law Rules 2004 (Cth) (“the Rules”) provides that a party applying for costs on an indemnity basis must inform the Court if the party is bound by a costs agreement in relation to those costs and if so, the terms of the costs agreement.  I was informed by the respondent’s solicitor that the respondent is indeed a party to a costs agreement.  That agreement dated 15 December 2014 was tendered during the course of the respondent’s submissions.  The schedule to that agreement sets out the scale of charges payable by the respondent pursuant to the agreement.  It provides that his lawyer will charge on an hourly rate of $320 per hour for time reasonably spent by that lawyer on work requiring the skill of a lawyer.  Additional charges are levied with respect to drafting documents and letters, reading documents, photocopying, scanning and the time reasonably spent by a lawyer or clerk on work. 
55.	Rule 19.18(1) of the Rules provides that a Court may make an order for costs on a number of different bases which include:-
•	A specific amount;
•	As assessed on a particular basis (for example, lawyer and client, party/party or indemnity);
•	To be calculated in accordance with the method stated in the order; or
•	For part of the case, or part of an amount, assessed in accordance with Schedule 3 of the Rules.
56.	In determining an application for costs rule 19.18(3) of the Rules provides that the Court may consider:-
(a)	the importance, complexity or difficulty of the issues;
(b)	the reasonableness of each party’s behaviour in the case;
(c)	the rates ordinarily payable to lawyers in comparable cases;
(d)	whether a lawyer’s conduct has been improper or unreasonable;
(e)	the time properly spent on the case or in complying with pre-action procedures; and
(f)	expenses properly paid or payable.
57.	It was recognised by the Full Court in Prantage that where circumstances justify the making of a costs order such costs are usually ordered to be paid on a party/party basis.  At paragraph 82 of that decision Thackray and Ryan JJ noted that where there is some unusual or special feature and when the justice of the case requires, there may a departure from the usual course depending upon the particular facts and circumstances of the case in question.
58.	No submissions were made on behalf of the respondent with respect to the decision in Prantage.  
59.	In the circumstances of this case, I am not satisfied that it is appropriate to order that the applicant pay the respondent’s costs on an indemnity basis.  Whilst it is arguable that the applicant’s claim was misguided such circumstance does not enliven the power to award costs on an indemnity basis.  
60.	In my view, the conduct of the applicant as a litigant is not so exceptional as would warrant a departure from the usual order that costs be paid on a party/party basis.  The threshold issues the subject of the proceeding required factual determinations as to the existence or otherwise of a de facto relationship and the duration of such relationship.  In my view the issues were not complex or difficult.
61.	Accordingly, the orders I make are as follows:-
(1)	That the applicant be granted leave to withdraw her Amended Initiating Application filed 19 December 2014.
(2)	That the applicant pay the respondent’s costs of and incidental to these proceedings, such costs to be as agreed or in default of agreement as taxed on a party/party basis. 

I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 6 November 2015. 

Associate: 

Date:  6 November 2015