Argyropoulos & Argyropoulos and Ors

[2007] FamCA 323

FAMILY COURT OF AUSTRALIA

ARGYROPOULOS & ARGYROPOULOS AND ORS [2007] FamCA 323

FAMILY LAW – Costs - Indemnity costs

Family Law Act 1975 (Cth)

Reserved Judgment
(Costs)
Delivered in Chambers

Applicant: Mr Argyropoulos

Respondent: Mrs Argyropoulos

Second Respondent Nostalgia Pty Ltd

Third Respondent Mr Nissiopoulos

Fourth Respondent Mrs Nissiopoulos

File Number: MLF 603 of 2006

Date Delivered: 18 April 2007

Place Delivered: Melbourne

Judgment of: Carter J

Hearing Date: By Written Submissions
concluding 13 April 2007

Address for Service

Solicitor for the applicant: Maria Barbayannis & Co 

Solicitor for the Respondent: Leo Dimos & Associates

Solicitor for the Third & Fourth Respondents Ms Joanne Alexiou

Orders

1. That the husband pay the wife’s costs of and incidental to the husband’s Form 2 Application in a Case filed 21 August 2006, including the costs reserved 18 September 2006, 31 October 2006 and 15 December 2006, such costs to be assessed on an indemnity basis in default of agreement as to quantum.

2. That the husband pay the wife’s costs of preparation of the submissions for costs filed on her behalf, such costs to be assessed on a party/party basis in default of agreement as to quantum.

3. The Court certifies for counsel’s attendance on 31 October 2006.

4. Payment of the aforesaid costs be stayed until the earlier of the conclusion of the final hearing in this proceeding or settlement of this proceeding.

   By Consent As between the Husband And the Third And Fourth Respondents

5. That the husband pay the third and fourth respondents’ costs of and incidental to the husband’s Form 2 Application in a Case filed 21 August 2006, including costs reserved on 18 September 2006, 31 October 2006 and 15 December 2006, such costs to be assessed on a party/party basis in default of agreement as to quantum.

6. The Court certifies for counsels’ attendance on 31 October 2006 and 15 December 2006.

7. The payment of the aforesaid costs be stayed until the earlier of the conclusion of the final hearing in this proceeding or settlement of this proceeding.

8. That the Minutes of Consent Orders signed by the solicitor for the husband and the solicitor for the third and fourth respondents remain on the Court file.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 603  of 2006

Mr Argyropoulos

Applicant

and

Mrs Argyropoulos

Respondent

and

Nostalgia Pty Ltd

Second Respondent

and

Mr Nissiopoulos

Third Respondent

and

Mrs Nissiopoulos

Fourth Respondent

REASONS FOR JUDGMENT

(Costs)

1. On 15 December 2006 I delivered a reserved judgment and made orders in this case.

2. Paragraph 2 of those orders provided:

   “2.That there be liberty to make an application for costs of and incidental to these proceedings by filing written submissions within 56 days hereof;  and

   (a)the respondent to any such application have a further 28 days to make written submissions in reply;  and

   (b)the applicant for costs have a further 28 days in which to make any written submissions in reply;  and

   (c)each submission have endorsed on the cover sheet the date on which a copy of that submission was served on the other party;  and

   (d)that a copy of all written submissions be forwarded to my Associate by email at […] at or around the time such submissions are filed.”

3. At the request of counsel I granted a period of time which was somewhat longer than customary for the preparation of submissions given the imminence of the holiday season and counsel’s personal arrangements.

4. Submissions in support of an application for costs were filed on behalf of the respondent wife and the third and fourth respondents.  Those submissions were filed within the time prescribed in my orders and in both instances the orders for costs were sought against the husband.

5. Subsequently the husband and the third and fourth respondents reached an agreement, the broad thrust of which was that the husband would pay the costs of the third and fourth respondents which were to be assessed on a party/party basis unless agreement was reached as to quantum.  Orders will be made by consent in accordance with the Minutes of Consent Orders.

6. The husband has not filed any submissions seeking any order for his own costs but has filed submissions opposing the orders for costs sought by the wife.  The wife responded to those submissions.

Legal Principles

1. Section 117 of the Family Law Act 1975 (“the Act”) is the relevant statutory provision. It is a general rule under s 117(1) that each party shall bear his or her own costs. However, pursuant to sub-s (2) the Court may make such order as to costs as it considers just if it is of the opinion that there are circumstances to justify doing so. In considering what order (if any) should be made the Court is required (inter alia) to have regard to the matters referred to in s 117(2A). They are:

   “117(2A)  [Matters relevant to costs order]

   In considering what order (if any) should be made under sub-section (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.”

2. In Penfold (1980) FLC ¶ 90-800 the Full Court of the High Court of Australia held that the general rule expressed by s 117(1) is not paramount to s 117(2) and must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs. Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Apart from that, however, there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. The members of the High Court did not agree with the suggestion made by the Full Court of this Court in the judgment under appeal that an order could only be made under s 117(2) in “a clear case”.

Background

1. Proceedings are pending in this Court for alteration of interests in property (inter alia ).  The proceedings commenced when the husband filed applications by way of Forms 1 and 2 on 3 February 2006. 

2. On 21 August 2006 the husband filed an amended application seeking final orders.  He named a company, Nostalgia Pty Ltd (ACN … ) (“the company”) as second respondent and also named Mr and Mrs Nissiopoulos (“the wife’s parents”) as third and fourth respondents.

3. The husband also filed a Form 2 Application in a Case on 21 August 2006 seeking a number of interim or interlocutory orders.  Some of the orders sought by the husband related to proceedings in the Supreme Court of Victoria.  The wife’s parents had entered judgment against the company.  The husband wanted to set that judgment aside and an application to that effect was returnable in the Supreme Court two days after the matter came before me on 31 October 2006.  The wife’s parents had also brought a garnishee summons against the company in the Supreme Court which had been adjourned to 8 November 2006. 

4. In broad terms, the husband’s applications as finally argued before me were:

   12.1an application to restrain the wife’s solicitors from continuing to act on her behalf;

   12.2an application to restrain the wife’s parents from taking any further steps in the Supreme Court proceedings;

   12.3an application which effectively sought injunctive relief against the wife, requiring her to empower the husband to act on behalf of the company in the Supreme Court proceedings;

   12.4further, or alternatively, relief pursuant to the Corporations Act 2001 (Cth) (“the Corporations Act”) which would empower him to act on behalf of the company in the Supreme Court proceedings;  and

   12.5further, or in the alternative, an application pursuant to ss 232(1) and 237 of the Corporations Act for an order that he have leave to intervene in the Supreme Court proceedings, again, effectively to empower him to act on behalf of the company in the Supreme Court proceedings.

5. The wife opposed the husband’s application in so far as it sought orders against, or which affected her and the wife’s parents opposed the husband’s application in so far as he sought orders against or which affected them.

6. The husband’s counsel provided a brief chronology and a list of authorities.  Written submissions were filed on behalf of the wife and the wife’s parents.  All these documents remain on the Court file.  The company was not represented at the hearing which proceeded by way of submissions, no oral evidence being called.  After hearing the submissions, I made orders dismissing all the applications which I have just recorded save for the application to restrain the wife’s solicitors from continuing to act.  That issue was reserved and ultimately also dismissed.  The husband had also sought that the Court determine, as part of its accrued jurisdiction, whether any and, if so, what moneys are payable or repayable by the company and/or the husband and/or the wife to the wife’s parents or either of them.  The husband did not seek to address that part of his application and subsequently confirmed that it was not sought to proceed with it on an interlocutory basis.  Accordingly, this application was also subsequently dismissed.  The husband had originally also sought an order that the wife’s parents make available to him certain documents in relation to a loan which formed part of the background to the proceedings.  That application was also dismissed.

7. In summary, and as can be seen, the husband was completely unsuccessful in his application.

Submissions

1. In the comprehensive written submissions filed on behalf of the wife’s parents, a helpful summary of the facts which had been submitted by the wife’s parents and, where relevant, by the wife during the hearing was set out in par 2.  Relevant references to the Reasons for Judgment were also provided.

2. Further background, this time relating to the proceedings in the Supreme Court was also set out in par 3 and in par 3E, F and G information was provided as to events subsequent to the hearing.  None of the matters set out have been contradicted.

3. It appears therefore that on the day after the proceedings had been before me, that is to say, on 1 November 2006 the company filed a further summons seeking, effectively, an order for representation under the Corporations Act.  The summons was returnable on 2 November 2006.  On 2 November 2006 the summons brought by the company which had been filed on 31 August 2006 and which sought to set Judgment aside was dismissed;  the summons brought by the company which was filed 1 November 2006 under the Corporations Act as I have just recorded, was also dismissed;  and orders were made against the husband in respect of costs of the wife and her parents in the Supreme Court proceedings.

4. On 8 November 2006 the garnishee summons was determined and a garnishee order was made that the Commonwealth Bank pay the wife’s parents the sum of $326,000, which sum has been received by the wife’s parents.  That does not discharge the Judgment debt which the wife’s parents had obtained.

5. In par 4 of the wife’s parents written submissions there was set out a history of the proceedings in this Court commencing on 21 August 2006 when the husband amended his application.  I have already summarised that history. 

6. In par 4 of the written submissions filed on behalf of the wife it was noted that my Reasons for Judgment and the submissions of the wife's parents detailed at some length the background to the matters raised in the application, as well as the interrelationship of the proceedings in this Court with the proceedings in the Supreme Court involving the company and the wife’s parents.  The wife referred to and relied on that background.

7. The submissions of both the husband and the wife have identified the relevant provisions under the Act relating to costs, and again, I have set out the relevant law earlier in these Reasons for Judgment.

8. The submissions of both the husband and the wife then went on to deal with the matters under s 117(2A) to which the Court is required to have regard. The particular matters which were said to be relevant in both submissions were s 117(2A)(a), (c), (e) and (g). I agree that these are the relevant matters in the circumstances of this case and do not propose to address the other matters set out in s 117(2A).

Section 117(2A)(a) - The financial circumstances of each of the parties to the proceedings.

1. It is common ground that the husband and the wife have a joint bank account at the Commonwealth Bank of Australia which has a credit balance of some $355,000.  That account has been frozen. 

2. It was submitted on behalf of the wife, and the husband has not denied, that she does not earn a weekly income from employment.  I also note that the two children of the marriage who are aged eight and six both live with the wife and spend time with the husband.

3. The husband says that he is required to pay child support and board from his weekly earnings of approximately $500.  It was submitted on the husband’s behalf that his financial circumstances were “nothing short of desperate”.  According to the submissions filed on the husband’s behalf the litigation in the Supreme Court and in this Court “has caused him great financial hardship and he has no capacity to pay the wife’s costs”.  Further, and again according to the submissions filed on behalf of the husband, he has “significant legal costs outstanding in relation to both the Family Law and Supreme Court proceedings”.  Details of those costs have not been provided, and in particular, I do not know what part, if any, of those legal costs have been paid by the husband to the wife or her parents.

4. I have no expert evidence as to the company’s financial position, although certain Trust Tax Returns were put into evidence in the proceedings before me.  It appears to be common ground that the company still owes money, together with interest, pursuant to the judgment obtained in the Supreme Court.

5. It was contended on behalf of the wife that the husband’s capacity to pay was not an issue, whereas it was the husband’s contention that he had no capacity to pay the wife’s costs.  Further, it was submitted on behalf of the husband that any moneys which he had in accordance with his Financial Statement as at the time of separation had been expended on living expenses, rehousing and legal costs.

6. In the wife’s Response objection was taken to any of the husband’s submissions which were not the subject of evidence before the Court.  The submissions filed on behalf of the wife’s parents and relied on by the wife assert that the husband was ordered to pay costs in the Supreme Court proceedings and I take this into account.  There is no evidence before the Court as to the husband’s financial situation other than as noted.  In any event the submission that his situation is “desperate” is too vague to be of any real assistance.

7. In all of those circumstances it is my view that the husband’s financial position is better than that of the wife, given that he does earn income whereas the wife does not.  Any financial difficulty can be recognised in other ways.

Section 117(2A)(c) – the Conduct of the Parties in Relation to the Proceedings; and

Section 117(2A)(g) – such Other Matters as the Court Considers Relevant

1. The written submissions filed on behalf of the husband and the wife have linked these particular subparagraphs and I will follow the same procedure.

2. I note that sub-s (2A)(c) relates to conduct of the parties “in relation to the proceedings”.  It is possible, however, to take into account, conduct which is thought to be relevant but which is not within this sub-section under sub-s (2A)(g).

3. It is convenient to turn first to that part of the husband’s application which sought that the wife’s solicitors be restrained from continuing to act on her behalf.  As was correctly submitted on behalf of the wife I found that there was no evidence by the husband that he had at any time given any confidential information to the wife’s solicitors, and nor was there any evidence from which the Court could properly infer this.  I agree with that part of the submission put on behalf of the wife that the husband’s application was not supported by appropriate evidence at first instance.  As such, in my view, it was doomed to failure.

4. I have read the husband’s response to the wife’s submissions in this regard.  It is set out in par 3(d) of the written submissions.  In my view, the submissions do not answer the matters raised by the wife, and are of little if any assistance to me.

5. The wife’s written submissions next turn to the injunctive relief sought against the wife which variously related to a stay of the Supreme Court proceedings, enjoining the wife from acting on behalf of the company in those proceedings, or seeking to require the wife to empower the husband to act on behalf of the company.

6. I dealt with the injunctive relief sought against the wife in pars 124-130 of my Reasons for Judgment and went on to consider, commencing at par 131 the husband’s reliance upon the Corporations Act.  For the reasons discussed in those parts of my judgment I agree with the submission put on behalf of the wife that the application was misconceived and was not supported by the sections of the Corporations Act which had been relied upon.

7. The husband’s submissions in response to this are set out in par 3(e) of the written submissions. The husband’s denial that his application was misconceived, inappropriate or unsupported by the sections of the Corporations law relied upon, is contrary to my findings in this matter. Otherwise, I do not find the husband’s submissions of any real assistance in this matter.

8. In the wife’s written submissions it was submitted that the Court had found that the husband did not tell the truth in some of his assertions in his affidavit evidence.  My attention was drawn to pars 67, 68 and 70 of my Reasons for Judgment.  It is not correct to say that I made a finding that the husband had not told the truth.  I did find, and said, in par 70 that “the husband was incorrect in his assertions as to pressure being caused as to the settlement of Unit 3”.  This emerged from certain annexures to the affidavit of the wife’s father and the affidavit of Mr P.  However, given that there was no cross-examination it could not be determined, and was not determined, whether or not the husband had told the truth.

9. It is the case, as was submitted, that there was inconsistency between the husband’s evidence that the company was not indebted and the statutory declaration which he had made acknowledging the company did in fact owe the mortgagee the sum of $400,000 which was to be secured by way of a registered mortgage over a particular item of real estate.  However, this inconsistency again was not tested by cross-examination and the truth or otherwise of the husband’s assertions will have to await a final determination of the substantive proceedings.  In response the husband responded to this part of the wife’s submissions in par 3(f) of his written submissions.  I do not regard the first sentence of that paragraph as being either relevant or of any assistance.  The husband went on to assert that it was “relevant that in open Court it was submitted on behalf of the wife and her parents, that the husband and wife were not guarantors in relation to the alleged loan to [Nostalgia] Pty Ltd whereas that was not the case”.  It is factually correct that such a submission was made, however, I do not understand how it is relevant.  This matter did not protract the hearing.  In as much as it might be relevant, it is far outweighed by the other findings I have made in dealing with these subsections.  Those findings favour the wife.

Section 117(2A)(e) – Whether Any Party to the Proceedings has been Totally Unsuccessful in the Proceedings

1. The husband was wholly unsuccessful in his Application in a Case filed 21 August 2006 in which he sought orders against the wife (and the wife’s parents).

2. The husband concedes in his written submissions that he was wholly unsuccessful however, submitted that “the Court should exercise its discretion not to award costs against him given the complex nature of these proceedings and injunctions being sought against the third parties”.   Whilst I accept that there was complexity in these proceedings, I do not accept that this can or should be used by the husband as a shield.

Conclusion

1. It was submitted on behalf of the husband that there should be no costs order as between the husband and the wife arising from the Form 2 Application in a Case filed on 21 August 2006.  The husband went on to submit that all costs arising as between the husband and wife from the proceedings heard on 31 October 2006 should be reserved to the trial judge in this matter, “given the complexity of the issues, the Supreme Court proceedings and the question of the involvement of the third parties being [Nostalgia] Pty Ltd and the wife’s parents”.

2. It is convenient here to remind myself that the husband and the wife’s parents have agreed to orders pursuant to which the husband is to pay the costs of the wife’s parents of and incidental to the husband’s Form 2 Application in a Case filed on 21 August 2006, including the costs reserved on 18 September 2006, 31 October 2006 and 15 December 2006.  I also note that payment of those costs is to be stayed until the earlier of the conclusion of the final hearing in this proceeding or settlement of this proceeding.

3. Whilst the applications against the wife included an application discrete to her, namely that her solicitors should be restrained from continuing to act for her, I still find the husband’s agreement to pay the costs of the wife’s parents somewhat at odds with his submission made in respect to the costs incurred by the wife.

4. Notwithstanding that however, it is my view that the wife has established that there are circumstances which justify an award of costs against the husband.  Those circumstances have been identified and discussed in the preceding sections.

5. The matter does not stop there, however, given that it is sought that those costs should be awarded on an indemnity basis.

Indemnity Costs

1. There is no doubt that the Court has the power to award indemnity costs, however, it must be borne in mind that an award on this basis is an exception in this Court as well as other jurisdictions (see Kohan (1993) FLC ¶ 92-340 and Colgate-Palmolive Companyand Anor v Cussons Pty Ltd (1993) 46 FCR 22).

2. Chapter 19 of the Family Law Rules 2004 (“the Rules”) deals with and regulates charges which lawyers may make in family law cases, except where the Court is exercising its bankruptcy jurisdiction.

3. Rule 19.18 applies (inter alia) if the Court orders that costs are to be paid and does not fix the amount.  If a lawyer and a client have a Costs Agreement then the maximum amount of costs that may be charged is to be calculated in accordance with that agreement.  However, if there is no valid Costs Agreement, the fees are to be calculated in accordance with the scales set out in Schedules 3 and 4 and if those scales do not mention the nature of the expense, then the maximum amount that may be claimed is “a reasonable amount”.

4. Pursuant to r 19.19 the Court may order that r 19.18 does not apply and that a party is entitled to costs:

   (a)of a specific amount;

   (b)as assessed on a lawyer and client basis or an indemnity basis;

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

   (d)for part of the case or part of an amount, assessed in accordance with Schedule 3 (see r 19.19(1).

5. Rule 19.19(2) provides that, in making a order under sub-r (1), 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;

   (f)expenses properly paid or payable.

6. The Explanatory Guide to the Rules defines indemnity costs as being “an entitlement to costs, including costs under a Costs Agreement, for all costs incurred, other than costs that are unreasonable in amount or that have been incurred unreasonably.”

7. When a party applies for an order for costs on an indemnity basis, the Court must be informed if the party is bound by a Costs Agreement in relation to those costs, and if so, the terms of the Costs Agreement (see r 19.08(3)).

8. In the present case I have been informed that the wife is not bound by a Costs Agreement in relation to this proceeding.

9. The basis upon which indemnity costs are payable was discussed by the Full Court in JEL and DDF (No. 2) (2001) FLC ¶ 93-083 at 88,441-442, where the Full Court said:

   “… the category of cases in which it would be appropriate to make an order for indemnity costs does not appear to have been fully defined.  The Full Court has, however, set out some general principles.  In Kohan and Kohan (1993) FLC ¶ 92-340 the Court said at 79,614:

   ‘The Proper Exercise of the Discretion

   The intent of ss 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules. However the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges.

   …  Consequently 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.  (See Degmam v Wright (No. 2)(supra);  Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v Union Insurance Co (1991) 25 NSWLR at 368-370.”

   63.The principles that emerge from the authorities were conveniently summarised by Sheppard J in Colgate-Palmolive Company and Anor v Cussons Pty Ltd (1993) 46 FCR225. His Honour in that case summarised the position as follows:

   ‘…

   2.The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. …

   3.This has been the settled practice for centuries in England.  It is a practice that is entrenched in Australia.  Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it.  ..

   4.In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis.  The circumstances of the case must be such as to warrant the Court in departing from the usual course. …’

   64.His Honour then went on note some of the circumstances which have been thought to warrant the exercise of the discretion to award costs on an indemnity basis.  His Honour said at 233:

   ‘Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)).  Other categories of cases are to be found in the reports.  Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis.  The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.’

   …”

10. In Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC ¶ 93-029 the Full Court specifically acknowledged the categories of circumstances that may give rise to an indemnity order are not closed. The Court said at 87,471:

    “‘It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought.  All that is required is that the Court asks to exercise the discretion be satisfied that some “particular facts and circumstances of the case in question warrant the making of an order for repayment of costs other than on a party and party basis”;  per Sheppard J in Colgate-Palmolive Company  v Cussons Pty Ltd (1993) 46 FCR 225 at 233.”

11. One of the circumstances identified by Sheppard J in the Colgate-Palmolive case as being one when indemnity costs might properly be awarded involved circumstances where it appeared that an action had been commenced or continued in circumstances where a party, properly advised, should have known that he or she had no chance of success.

12. In my view, the proceedings against the wife in respect of the Supreme Court proceedings, the injunctive relief sought to restrain her from acting on behalf of the company, or seeking to cause her to empower the husband to act on behalf of the company, fall within this category.  As I have already noted the application was not supported by the sections of the Corporations Act relied upon.  In short, the husband’s application against the wife in relation to the Supreme Court proceedings and the company was totally misconceived, and if the husband had been properly advised, he should have known he had no chance of success.  I agree with the submission that the appropriate course for the husband to have taken was to seek to wind up the company in the absence of “a controlling mind”.

13. The husband’s application to restrain the wife’s solicitors from continuing to act is not quite as clear cut as the other parts of his application.  However, I agree with the submission that this was not a case where on balance, or on the basis of material filed in response to a party’s application, that the Court decided against the party.  It was a case where the application was not supported by appropriate evidence at the time it was filed.  Again, had the husband been properly advised, he should have known he had no chance of success.

14. It is common ground and I take into account, that the applications, save perhaps for the “conflict application” raised issues which were important, complex and difficult (see r 19.19(2)(a)).  In this regard I note the submissions on behalf of the wife given by way of guidance as to the time spent by counsel and the fees charged for the hearing.  I also note the husband’s submissions in this regard which effectively challenge quantum.  I repeat that the wife’s submissions were put by way of guidance. I make no determination of whether the fees and/or work done were appropriate or otherwise. That will be a matter for the assessment process pursuant to Ch 19 of the Family Law Rules.

15. For all the foregoing reasons I am satisfied that the wife’s costs should be paid on an indemnity basis.  I acknowledge that the Full Court has generally held that the fact that a party was “wholly unsuccessful” was not enough on its own to warrant indemnity costs (see for example, C & C [2000] FamCA 1145). However, as can be seen, this is not the only consideration which has caused me to form this view.

16. It is also appropriate in my view that the husband pay the wife’s costs of preparation of the submissions for costs filed on her behalf, however, those costs should be assessed on a party/party basis in default of agreement as to quantum, and not an indemnity basis.  There are no circumstances which warrant an indemnity-based costs order.

17. It was sought on behalf of the wife that the costs be “taxed”.  That is appropriate in my view and I will make an order for costs to be assessed in default of agreement as to quantum.

Conclusion

1. I have acknowledged as can be seen that indemnity costs are an exception in this jurisdiction as well as in other jurisdictions.

2. In my view, the circumstances of this case which I have identified and discussed are such as to justify a departure from costs being awarded against the husband on a party and party basis.

3. Whatever the husband’s financial situation may be there are costs orders against him in the Supreme Court as well as in favour of the wife’s parents in this Court.  Payment of the costs which I will order that he pay to the wife will be deferred until determination or settlement of the substantive applications, as in the case of the costs order in favour of the wife’s parents.

I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carter.

Associate:     

Date:              18 April 2007