Abati and Cole

[2016] FamCA 1111

FAMILY COURT OF AUSTRALIA

ABATI & COLE [2016] FamCA 1111

FAMILY LAW – COSTS – Indemnity costs – where the wife seeks costs on an indemnity basis incurred as a result of the husband instituting proceedings in another jurisdiction in the face of a binding financial agreement – where the financial agreement was declared binding at final hearing – where the husband was unsuccessful in his appeal of the final orders – where the husband was wholly unsuccessful – no exceptional circumstances justifying costs on an indemnity basis – orders made that the husband pay the wife’s costs on a party/party basis

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

Brown & Brown [1998] FamCA 115; (1998) FLC 92-822
Kohan & Kohan (1993) FLC 92-340
Munday & Bowman (1997) FLC 92-784
Prantage & Prantage [2013] FamCAFC 105; (2013) FLC 93-544

APPLICANT: Ms Abati

RESPONDENT: Mr Cole

FILE NUMBER: MLC 10475 of 2013

DATE DELIVERED: 21 December 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: By way of written submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Nicholes Family Lawyers

SOLICITOR FOR THE RESPONDENT: Harris Freidman Lawyers

ORDERS

IT IS ORDERED THAT

1. The husband pay the wife’s costs of and incidental to her Initiating Application filed 2 December 2013 including but not limited to the costs reserved on 4 February 2014, 5 March 2014 and 26 August 2014, such costs to be as agreed and in default of agreement on a party/party basis. 

2. The wife’s Application in a Case filed 17 April 2015 be otherwise dismissed.

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 Abati & Cole 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 MELBOURNE

FILE NUMBER: MLC 10475 of 2013

Ms Abati

Applicant

And

Mr Cole

Respondent

REASONS FOR JUDGMENT

1. On 23 March 2015 I made the following declarations:

   A.Clause 81.1 of the Binding Financial Agreement dated 30 April 2012 is void.

   B.The Binding Financial Agreement dated 30 April 2012 is a financial agreement pursuant to s 90B of the Family Law Act 1975 (Cth) and is otherwise binding on the husband and the wife.

2. I also made the following orders:

   1.The husband by himself, his servants and agents or howsoever otherwise be and is hereby restrained from seeking relief against the wife in the Denpasar District Court or any other Court in Indonesia with respect to all or any of the wife’s separate property whether that relief is by way of injunction restraining the wife from dealing in any way with respect to any of that property, or any stipulation or declaration that all or any such property is “community property” or a declaration that any “Marital Seizure” of all or any such property is lawful or valuable or any further or other relief with respect to all or any such property.

   2.Pursuant to clause 80 of the Binding Financial Agreement dated 30 April 2012, the husband pay to the wife interest on the sum of $100,000 in accordance with the Family Law Rules 2004 (Cth) calculated from 8 September 2013 to 20 August 2014, being the date of payment by the husband to the Trust Account of Nicholes Family Lawyers.

   3.The Title Deeds produced pursuant to subpoena directed to [Mr G] issued 1 August 2014 be released to the solicitors for the wife.

3. All questions of costs were reserved for determination and I made orders for the filing of written submissions with respect to any application for costs.

4. On 7 April 2015 the husband filed a Notice of Appeal and the parties agreed that the determination of any costs that might be payable should await the outcome of that appeal. The husband’s appeal was dismissed on 13 May 2016 and on 10 August 2016 I made orders for the parties to file their written submissions in support of any application for costs of and incidental to the hearing before me. Albeit that the husband did not comply with the timetable for the filing of his submissions in reply to the wife’s submissions in support of her application for costs, the Court has now had the benefit of written submissions filed by both parties, including the wife’s reply to the husband’s submissions. 

5. The wife’s case as set out in her submissions on costs filed 17 April 2015 is that the husband should pay her costs from 14 November 2013 on an indemnity basis in the sum of $135,499.63 or in the alternative her costs of the proceedings as assessed on a party/party basis as agreed and failing agreement as assessed or in the further alternative that the husband should pay the costs Cronin J ordered him to pay on 30 May 2014 together with all reserved costs pursuant to orders made on 4 February 2014, 5 March 2014 and 26 August 2014. The wife in her reply to the husband’s submissions filed 29 September 2016 referred to the wife having incurred solicitor’s fees of $106,124.25, plus a further $62,360.59 for disbursements including counsel’s fees and single expert fees from 2013 to date, a total of $168,484.84. Although the wife submitted that this does not include her costs of successfully defending the husband’s appeal, it is not clear to me exactly what these additional costs now claimed by the wife in addition to the amount referred to in her earlier submissions relates to. 

Legal Principles

1. The general rule in proceedings in this Court is that parties to those proceedings each bear their own costs unless there are circumstances which justify the Court departing from that rule (s117(2) Family Law Act 1975 (Cth) (“the Act”).

2. In determining what (if any) order should be made the Court must have regard to the following matters pursuant to s 117(2A) of the Act:

   (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 Court’s discretion is broad and as Kay J said in Brown & Brown [1998] FamCA 115; (1998) FLC 92-822 not one of the matters in s 117(2A) takes precedence over another and one factor may be enough.

Discussion

1. It is submitted on behalf of the wife that there are circumstances in this case that justify the Court departing from the general rule and making an order for costs in the wife’s favour. It is the wife’s case that not only did the husband’s decision to seek orders in the Denpasar District Court with respect to property in the wife’s name in Indonesia fly in the face of the terms of the Financial Agreement which the Court found was binding upon him, but that the Court should also in particular have regard to the husband’s conduct in relation to these proceedings. 

2. The husband’s conduct in the proceedings which the wife relied upon in support of her application for costs included the following matters:

   a.the husband’s failure to respond to the wife’s application in a timely manner and his failure to comply with orders for the filing of answering material;

   b.the husband’s refusal to give an undertaking to the Court that he would not pursue the proceedings in the Indonesian Court pending the outcome of these proceedings; and

   c.the husband’s decision to prosecute the proceedings in Indonesia notwithstanding the orders of this Court restraining him from doing so.

3. The husband’s conduct in relation to the proceedings and in particular his failure to engage in these proceedings in a timely manner and his refusal to provide an undertaking to the Court not to pursue the proceedings in Indonesia pending the outcome of the wife's application are in my view relevant considerations.

4. Although the husband’s decision to prosecute the proceedings in the Denpasar District Court in the face of the orders made by Cronin J on 4 February 2014 does not relate directly to the question of the way in which he has conducted these proceedings, it is in my view a matter to which the Court may have regard particularly in the context of my findings that “the purpose of the agreement was to define the parties’ respective financial positions in the event of their separation, which included the retention of the property they each owned as at the date they each signed the agreement” and that “the husband’s decision to seek orders in the Denpasar District Court with respect to the property in the wife’s name in Indonesia flies in the face of the provisions and the intent of the agreement”. This is in circumstances where the husband had received what I found was the significant benefit of excluding this Court’s jurisdiction and hence the wife having any claim against the property he owned at the time the Financial Agreement was executed, property which based upon the schedules to the Financial Agreement was of significantly greater value than that owned by the wife.

5. In my view the husband’s actions left the wife no alternative other than to issue proceedings seeking an anti-suit injunction in order for her to retain the benefits of the Financial Agreement in return for those rights she had foregone. I am satisfied that there are circumstances in this case which justify a departure from the general rule that each party should bear their own costs.

6. I turn now to the relevant matters in s 117(2A) of the Act. The only evidence before me with respect to the parties’ respective financial circumstances is the evidence of the husband contained in his Financial Statement filed 25 July 2014 and the schedules to the Financial Agreement setting out the parties’ assets and liabilities. At the time the husband swore that document he said he had net assets of approximately $61,878,000.

7. According to the schedule to the Financial Agreement the wife had assets of approximately $3,367,000, her bank accounts and personal possessions. Although it was submitted on behalf of the husband that the properties the wife owns in Bali are now valued at between $9,000,000 and $18,000,000, I accept as submitted by the wife that there is no evidence as to the current value of those properties.

8. Based upon the evidence I do have, the financial circumstances of the parties are not determinative either for or against an order for costs to the extent that the husband would, based upon that evidence, have the capacity to meet the order for costs sought by the wife and albeit, based upon the evidence, the wife is in a less advantageous financial position than the husband, she similarly has the capacity to meet her costs in the event that the Court were not satisfied that it should make an order. Neither of these parties is in receipt of legal aid.

9. Although strictly speaking the proceedings were not necessitated by the husband’s failure to comply with an order of this Court, as previously referred to the wife was left with no alternative than to issue these proceedings if she wished to protect that property to which she submitted and I have found she was entitled to retain pursuant to the terms of the Financial Agreement into which she and the husband entered.

10. I have also had regard to the fact that the husband was wholly unsuccessful. This notwithstanding the somewhat unusual submission on behalf of the husband that notwithstanding my findings I should have regard to the validity of the husband’s case.

11. Neither party relied upon any written offers to settle the proceedings.

Indemnity Costs

1. It is the wife’s case that not only should the Court make an order for costs but that those costs should be payable on an indemnity basis. It is well settled that indemnity costs are “a very great departure from the normal standard” and that “the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind” (Kohan & Kohan (1993) FLC 92-340 (“Kohan”)). The Full Court in Prantage & Prantage [2013] FamCAFC 105; (2013) FLC 93-544 following what it accepted as the well-established principles in Kohan reiterated the need for there to be some special or unusual feature of the case which would warrant the Court departing from the general rule that costs be paid on a party/party basis.  

2. Counsel for the wife referred me to the decision of Holden CJ in Munday & Bowman (1997) FLC 92-784 and his summary based upon the decision of Sheppard J in Colgate Palmolive Co & Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248 of the circumstances which might lead the court to conclude that it should make an order for indemnity costs which include inter alia the following considerations:

   a.Where an action was instituted or continued in circumstances where a party properly advised should have known that the application had no chance of success;

   b.Where there is evidence of particular misconduct causing loss of time to the court and to other parties; and

   c.The making of allegations which should never have been made or the undue prolongation of a case by groundless contentions.

3. I am satisfied that the wife had no alternative other than to seek an anti-suit injunction, that the husband was wholly unsuccessful, that he did not always conduct himself in the proceedings in an appropriate manner and that he did not comply with the orders restraining him from pursuing his proceedings in the Denpasar District Court pending the outcome of the proceedings in this Court, circumstances which in my view enliven the Court’s discretion to order costs in the wife’s favour. However, I am not satisfied as submitted by the wife that the circumstances in this case are of such an exceptional kind as to justify that order for costs being made on an indemnity basis.

Costs

1. Pursuant to Rule 19.18(1) of the Family Law Rules 2004 (Cth) the Court may make an order for costs:

   (a)      of a specific amount;

   (b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

   (c)to be calculated in accordance with the method stated in the order; or

   (d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.

2. Whilst as submitted by the husband it is likely to have been of benefit to both parties if an order could have been made for a fixed amount, that is not possible in this case in circumstances where the wife has not provided any assessment of her costs other than on an indemnity basis. It is also the case as previously referred to that in her reply to the husband’s submissions the wife has provided an assessment of her costs on a different basis and it is not clear upon what basis the amount the wife now claims is based.  

3. On that basis I propose to order that the husband pay the wife’s costs of and incidental to her Initiating Application filed 2 December 2013 to include but not be limited to the costs reserved by Cronin J on 4 February 2014 and 5 March 2014 and reserved by me on 26 August 2014. The orders made by Cronin J on 30 May 2014 remain in force and they have not been satisfied. The costs payable by the husband are to be agreed and in default of agreement to be assessed on a party/party basis, noting that pursuant to r 19.50 Cronin J on both 4 February 2014 and 5 March 2014, as did I on 26 August 2014, certified that it was reasonable to engage Senior Counsel to attend on behalf of the wife.  

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered 21 December 2016.

Associate: 

Date:  21 December 2016