ANA & ANA

[2012] FamCA 36

FAMILY COURT OF AUSTRALIA

ANA & ANA [2012] FamCA 36

FAMILY LAW – COSTS - Indemnity costs refused.

Family Law Act 1975 (Cth)

Colgate –Palmolive Co v Cussens Pty Ltd (1993) FCA 536
Fennessy and Gregorian (2009) FLC 93-399

APPLICANT: Ms Ana

RESPONDENT: Mr Ana

FILE NUMBER: MLC 1367 of 2008

DATE DELIVERED: 18 January 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By way of written submissions

SUBMISSIONS RECEIVED FROM:

SOLICITOR FOR THE APPLICANT: Perisic & Thomas Lawyers

Orders

1. That the husband pay to the wife $15,700 towards the costs of the proceedings culminating in orders made on 11 October 2011.

IT IS NOTED that publication of this judgment under the pseudonym Ana & Ana is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 1367 of 2008

Ms Ana

Applicant

And

Mr Ana

Respondent

REASONS FOR COSTS JUDGMENT

1. On 10 October 2011, I made final property orders between the parties and provided for submissions concerning costs.  The wife filed a submission but the husband did not. 

2. The wife sought $47,736 which would unashamedly amount to an indemnity costs order. As an alternative, she sought $29,670. That was calculated with reference to amounts that do not bear resemblance to the scale set out in the Family Law Rules 2004.

3. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that in proceedings under the Act, each party shall bear his and her own costs. However, that is subject to the proviso that if there are circumstances which so justify it, the Court may make such order as it considers just but that too is subject to the proviso that the Court must consider the matters set out in s 117(2A).

4. The first question is therefore whether there are circumstances here which would justify a departure from the principle that no orders for costs should be made in this no-cost jurisdiction. If so found, the second question is whether the discretion should be exercised such as to give a just result. In turn, if the discretion should be exercised, the third question is what is a just outcome having regard to the matters in s 117(2A).

5. Section 117(2A) provides:

   (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.

6. In this case, there is also the question about the quantum of the costs. If an order for costs is made, should it be on an indemnity basis rather than as determined by the amounts set out in the schedule to the Family Law Rules 2004.

7. The wife’s submission points to the fact that by letter dated 7 July 2011, the husband was offered a settlement on the basis that he was to pay the wife $30,000 in addition to the wife retaining the funds from the proceeds of the sale of a property.  That coincided exactly with the order that was ultimately made.

8. This was a case involving a very modest pool of assets in which the antipathy between the parties was palpable and the husband constantly refused to communicate with or negotiate with the solicitors for the wife.  It is perhaps therefore not surprising that there was no response by the husband to the offer of settlement made in July. 

9. Accordingly there should be an affirmative answer to the first and second questions mentioned above.  There is a justifiable reason to make an order for costs and the discretion should be so exercised.

10. Turning to the matters set out in s 117(2A), it is very clear that there are very few assets. The husband retained the business which generated the income. He has the capacity to manipulate his income by virtue of a corporate entity. The husband had the advantage of sending money overseas to acquire an interest in a property in Sri Lanka. Be all that as it may, the financial circumstances of both parties are modest. In the proceedings, I was critical of the husband’s failure to provide material that would have enabled a sensible resolution of the matter even to the extent that the husband openly acknowledged that he had a property in Sri Lanka for his future and that of the children. That was the first time that that had been disclosed.

11. Having regard to the offer of settlement, it must be said that the husband has been wholly unsuccessful.  This was not a case in which the husband was a novice in respect of litigation as the proceedings had been before the Federal Magistrates Court of Australia over many days and only pending an appeal against final orders, did the parties consent under s 79A(1) to set aside the orders and have the matter retried. 

12. Despite the modest financial circumstances, the husband was left with interests and to fail to make an order for costs would mean that the wife would be out of pocket in circumstances where she had little choice but to litigate because of the position the husband adopted.  Under those circumstances, an order for costs should be made. 

13. I turn then to the fourth question relating to indemnity costs.  The principles underlying indemnity costs were summarised by Sheppard J in Colgate –Palmolive Co v Cussens Pty Ltd (1993) FCA 536. In this Court, indemnity costs are the exception rather than the rule and as was pointed out in Fennessy and Gregorian (2009) FLC 93-399 there needs to be something of a special or unusual nature if not indeed “exceptional” to justify making an award for indemnity costs. Costs are not to be ordered on a punishment basis but rather to compensate the person out of pocket. In this case, the wife has engaged lawyers with whom she has contracted to pay costs at a rate higher than that of the scale. That is a matter that the Court must take into account as well. Despite my criticisms of the husband, this is not a case where I could find that the husband made allegations of fraud which were irrelevant or that he wasted time or that the proceedings were continued for an ulterior motive. It is a case however where he refused to accept an offer of settlement and that may be seen as imprudent but having regard to his approach to litigation, I think it is understandable that he would not deal with the lawyers and therefore there was no other way of resolving the problem. Whilst I am sympathetic to the wife’s position having incurred the costs against a background where the husband was uncooperative, this is not a case where an order for indemnity costs should be made. In addition, no copy of the costs agreement of the wife was provided.

14. Having regard to the attitude of the husband to negotiation, it would be pointless in this case to make an order that the parties agree on the issue of costs failing which there be an assessment.  An assessment would be inevitable and costly.  That would not be just to the wife in those circumstances.  Having regard to the items attached to the submission provided by the wife which was served upon the husband, I am in a position to make my own determination and I propose to do so.

15. Using the submission and the itemised costs and disbursements, I assess the costs using the Schedule 3 items at $15,700. 

I certify that the preceding Fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 18 January 2012.

Associate: 

Date:  18 January 2012