Allard & Jokela
[2025] FedCFamC1F 10
•17 January 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Allard & Jokela [2025] FedCFamC1F 10
File number: SYC 5571 of 2023 Judgment of: SCHONELL J Date of judgment: 17 January 2025 Catchwords: FAMILY LAW – COSTS – Where the applicant and a company sought costs against the respondent – Where the respondent sought that the application be dismissed or in the alternative costs be assessed – Consideration of factors under s 117 of the Family Law Act 1975 (Cth) – Where there are circumstances that justify the making of a costs order – Where the applicant and the company sought indemnity costs – Where the Court is not satisfied there are exceptional circumstances warranting indemnity costs – Costs ordered in a fixed sum of $25,000 each to be paid from any final order in the respondent’s favour. Legislation: Family Law Act 1975 (Cth) ss 95, 117, 117(2), 117(2A)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Federal Circuit and Family Court of Australia, Central Practice Direction – Family Law Case Management, 1 May 2024
Cases cited: Bant & Clayton (Costs) (2016) 56 Fam LR 31; [2016] FamCAFC 35
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Fisher & Fisher (1990) FLC 92-127
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123; [2005] FamCA 158
Graham & Squibb (2019) FLC 93-892; [2019] FamCAFC 33
Kohan and Kohan (1993) FLC 92-340
Leichhardt Municipal Council v Green [2004] NSWCA 341
Nada v Nettle (Costs) (2014) FLC 93-612; [2014] FamCAFC 207
Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 29
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Warbrick and Warbrick (No. 2) (2021) FLC 94-030; [2021] FamCAFC 101
Westbury Holdings Kiama Pty Ltd v ASIC [2007] NSWSC 1064
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Division: Division 1 First Instance Number of paragraphs: 28 Date of hearing: 17 January 2025, determined in chambers on the papers Date of last submissions: 20 December 2024 Place: Sydney Solicitor for the Applicant: Uther Webster & Evans Solicitor for the Respondent: Barkus Doolan Winning Solicitor for the Third Party: Lander & Rogers ORDERS
SYC 5571 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ALLARD
Applicant
AND: MR JOKELA
Respondent
B PTY LTD
Third Party
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
17 JANUARY 2025
THE COURT ORDERS THAT:
1.The husband pay the costs of the wife of and incidental to an Application in a Proceeding filed 4 October 2024 fixed in the sum of $25,0000 such costs to be paid from any final order in the husband’s favour.
2.The husband pay the costs of B Pty Ltd of and incidental to an Application in a Proceeding filed 4 October 2024 fixed in the sum of $25,0000 such costs to be paid from any final order in the husband’s favour.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Allard & Jokela has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
This is an application for costs sought by the wife and a company as a consequence of an Application in a Proceeding filed by the husband on 4 October 2024 that was resolved by way of consent orders at an interlocutory hearing on 20 November 2024 subject to the issue of costs. Each of the wife and the company seek the husband pay costs on an indemnity basis or in the alternative in a fixed sum. The husband for his part opposes the orders sought by the wife and the company and contends that the application for costs should be dismissed and, in the alternative, assessed.
An application for costs is governed by the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”), which provides a general rule that each party to the proceedings should bear their own costs.
Section 117(2) of the Act reposes in the Court a discretion to make a costs order if the Court determines there are circumstances that justify this and, if there are such circumstances, the Court may make such order as it considers just, having regard to the matters set out in s 117(2A) of the Act.
In Penfold v Penfold (1980) 144 CLR 311 at 315, the plurality in the High Court determined that to make an order under s 117(2) of the Act, the Court needs to make a finding of “justifying circumstances” as a preliminary prerequisite to the making of an order. Their Honours also observed that a term such as “a clear case” is not necessarily a determiner of whether an order for costs should be made. All that is required or necessary is that there are justifying circumstances.
It is well-settled law that no one factor in s 117(2A) is determinative, and the Court may give such weight as it considers relevant to any factor. In Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at 130, the Full Court observed:
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 2(A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
Addressing the matters under s 117(2A), I find as follows:
(a) The financial circumstances of each party to the proceedings
The husband contends that he is unemployed and his financial position is precarious. A perusal of his Financial Statement indicates that he is without an income, is the joint owner of a property at Suburb C with the wife in which he estimates his half share to be worth $2.75 million, has no other assets of substance other than an interest in a business for which he ascribes no value, contends that he owes monies under the mortgage secured over the property with the former wife, and has personal liabilities to two persons totalling $507,100 as well as a credit card debt.
The financial circumstances of the wife would appear to exceed those of the husband by some magnitude.
Even assuming what the husband says, impecuniosity is not a bar to the making of a costs order (Nada v Nettle (Costs) (2014) FLC 93-612). Unmeritorious litigation is no less unmeritorious because it is pursued by a person who is impecunious (Northern Territory v Sangare (2019) 265 CLR 164 at [27]).
(b) Whether any party was in receipt of legal aid
Not applicable.
(c) The conduct of the parties
What is relevant is conduct of a party which in some way or other leads to an increase in costs by the other party. Such factors may include uncooperative behaviour, obstruction, prolonging litigation or the bringing of unreasonable or unmeritorious applications. It may include non‑disclosure or a failure to comply with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) in relation to disclosure. By way of example, in Fisher & Fisher (1990) FLC 92-127, a costs order was made in circumstances of a party conducting proceedings in an unjustifiable manner where there were allegations of fault made that were not relevant to any issue in the proceedings.
The wife and the company contend that the application brought by the husband was without merit, evidenced by the cascading amendments and ever decreasing ambit of the relief sought by the husband together with the fact that it was compromised at the interlocutory hearing. They jointly contend that it was an application that should never have been brought.
The husband contends that the application was brought to meet an evolving situation that arouse as a consequence of the failure by the wife to provide timely disclosure.
A review of the evidence of each of the parties, the amending applications brought by the husband and the submissions reveal that the husband in effect, ‘jumped the gun’. As much is clear by the extent of the relief sought in his Case Outline compared to that sought in the initial Application. The more appropriate course was, before filing, to seek further clarification and/or documents from the wife and the proposed joinder party, and, to adopt the vernacular “take a deep breath” and reflect upon the consequence of his proposed actions and the relief sought when measured against what had been disclosed and the pool of assets as known. Had that course been undertaken, then the potential inevitability of the result as established by the orders made on 20 November 2024 would have become apparent without the intervention of court proceedings and attendant cost. As much was clear from his Case Outline filed 15 November 2024 in preparation for the interim hearing that stated, as follows:
13.…The Husband accepts, having regard to the evidence that has now been put on by the Wife and [B Pty Ltd], that the balance of convenience does not favour an unqualified restraint because this would prevent the Proposed Transaction…
I am satisfied that the husband’s application was, as articulated in the submissions of the wife and company, one that should never have been brought.
(d) Whether the proceedings were necessitated by the failure of a party to comply with a previous order
Not applicable.
(e) Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The term “wholly unsuccessful” refers to a situation in which proceedings as a whole have been unsuccessful, rather than necessarily an application or a form of relief (Bant & Clayton (Costs) (2016) 56 Fam LR 31). The husband has not 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
The wife and the third party rely upon offers of settlement made by each of them. In the case of the wife, the offer of settlement was made on 14 November 2024 and involved various paragraphs of the application being made by consent but included the husband pay the wife’s costs fixed in the sum of $50,000. This is in excess of the wife’s costs at scale. In the case of the company, their offer of settlement made on 13 November 2024, sought various paragraphs of the applications but also contained a provision that the husband pay their costs fixed in the sum of $75,000.
I am not satisfied that there is any element of compromise in the offers, given that the Act provides that each party pay their own costs subject to the provisions of s117(2A). Rather, it is an invitation to the husband to surrender (Westbury Holdings Kiama Pty Ltd v ASIC [2007] NSWSC 1064; Leichhardt Municipal Council v Green [2004] NSWCA 341).
(g) Any other matter the court considers relevant
Not applicable.
I am satisfied for the reasons given above that there are circumstances that justify the making of a costs order. An order will be made that the husband pay the costs of the wife and the company.
I will now turn to consider whether the order should be made on an indemnity or a party/party basis and if the costs should be fixed.
INDEMNITY OR PARTY AND PARTY COSTS
The authorities make plain that an order for indemnity costs is not one that is lightly made, and there should be circumstances of an exceptional kind that warrant orders for costs on an indemnity basis (Kohan and Kohan (1993) FLC 92-340). Justice Sheppard in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 identified various guidelines as to the circumstances in which a court might entertain an order for indemnity costs. The category of cases in which a court may make an indemnity costs order are not closed and are not limited to those identified by Sheppard J (Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 at 87,471).
I am not satisfied that there is anything exceptional about this application that warrants the making of an order on an indemnity basis. The only thing exceptional is the exorbitant costs incurred by the wife and the company. The wife seeks indemnity costs of $84,940 while the company seeks indemnity costs of $163,627 all relating to work incurred at best over approximately six weeks. Such costs are entirely disproportionate to the issues involved and inconsistent with the overarching purpose of family law litigation as enshrined in s 95 of the Act and reinforced by the Rules and the Federal Circuit and Family Court of Australia, Central Practice Direction – Family Law Case Management, 1 May 2024. To order costs of such magnitude would not be just.
I am not satisfied that there is any basis for the making of costs order on anything other than a party/party basis.
The respondents seek an order in a fixed amount. The Rules and authorities make plain that the Court can fix an amount for costs (Pascoe & Larsen (No 2) [2022] FedCFamC1A 126; Graham & Squibb (2019) FLC 93-892). I propose to adopt the approach taken by the Full Court in Warbrick and Warbrick (No. 2) (2021) FLC 94-030 (“Warbrick”) where the Full Court observed that it did “not intend to permit the costs question to become, in effect, satellite litigation” and would fix the costs amount.
I am satisfied that the observations of the Full Court in Warbrick are apposite here. These parties are engaged in litigation the intensity of which bears little relation to the complexity of the issue or the quantum of the pool. I am more than comfortably satisfied that to leave the determination of the costs issue to one that was to be agreed or assessed would be to embroil these parties in further conflict and litigation. That, to an extent, is unavoidable in circumstances where there is ongoing litigation. I do not, however, propose to permit it to extend any further than is necessary.
I am satisfied having regard to the itemized Costs Schedules which identify work undertaken that the party/party costs of the wife and the company should be fixed in the amount of $25,000 each as a reasonable sum for the costs of the application and propose to make an order to that effect. In view of the husband’s financial position such amount is to be paid from the husband’s property settlement entitlement.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 17 January 2025
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