BELE & VAUGHAN

[2013] FamCA 71

FAMILY COURT OF AUSTRALIA

BELE & VAUGHAN [2013] FamCA 71

FAMILY LAW – COSTS – on an indemnity basis

Family Law Act 1975 (Cth)

Colgate-Palmolive Co & Another v Cussons Pty Ltd (1993) 118 ALR 248
Munday v Bowman (1997) FLC 92-784
Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397
Tetijo Holdings Pty. Ltd. v. Keeprite (unreported, Federal Court, 3 May 1991)
Ragatta Developments Pty. Ltd. v. Westpac Banking Corporation (unreported, Federal Court, 5 March 1993)

APPLICANT: Ms Bele

RESPONDENT: Mr Vaughan

FILE NUMBER: MLC 9056 of 2009

DATE DELIVERED: 19 February 2013

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: By written submissions and 26 November 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: In person by telephone

SOLICITOR FOR THE APPLICANT: N/A

COUNSEL FOR THE RESPONDENT: Mr Harriss 

SOLICITOR FOR THE RESPONDENT: Mills Oakley

IT IS ORDERED THAT

1. The applicant pay the respondent’s costs of and incidental to paragraphs 2, 4, 5, 6, 11, 12 and 15 of her Application in a Case filed with leave of the Court on 20 July 2012 and the respondent’s Response thereto calculated on an indemnity basis from the 23 July 2012 to date and including the costs incurred with respect to the written submissions as to costs and the hearing before me on 26 November 2012.

2. In default of agreement as to the cost payable by the applicant to the respondent, such costs to be assessed on an indemnity basis.

3. The costs payable by the applicant to the respondent pursuant to these orders as agreed or assessed to be paid to the respondent from the applicant’s share of the net proceeds of sale of the No. 9 property held in trust by Mills Oakley Lawyers.

4. The applicant’s application for costs be otherwise dismissed.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel including solicitor acting as counsel.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bele & Vaughan 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: MLC 9056  of 2009

Ms Bele

Applicant

And

Mr Vaughan

Respondent

REASONS FOR JUDGMENT 

1. On 4 October 2012 I delivered my reasons and made orders dismissing paragraphs 2, 4, 5, 6, 11, 12 and 15 of the applicant’s Application in a Case filed by leave of the Court on 20 July 2012 and adjourned for hearing before me on 11 September 2012. I further ordered that the parties file and serve any application for costs by 4.00 pm on 1 November 2012.

2. The respondent in his Response to the applicant’s Application filed 11 September 2012 sought an order that the applicant pay his costs of and incidental to her Application in a Case filed 20 July 2012 and his Response to that Application and that such costs be paid on a solicitor and own client basis. Having previously sought an order for costs on 30 October 2012 the respondent filed written submissions in support of that Application.

3. The applicant in her Application in a Case similarly sought an order for costs. On 2 November 2012 the applicant filed lengthy written submissions which purported to be by way of reply to the respondent’s submissions in support of his Application for Costs, and in support of her Application for Costs and in support of the following orders:

127. That Respondent to pay all the costs of the Applicant and to refund the costs orders already ordered against the Applicant as the Respondent did not act in accordance with the affected orders of 13 December 2012.

128. That this court provide a supplementary reason of judgment, to address issues the Applicant has set out in this submission and its annexures, to address any incorrect statements in the reason of judgments dated 4 October 2012.

129. The cost agreement of the Respondent has a provision that the Respondent can dispute the charges before VCAT. Whereas the Applicant when ordered to pay costs charged by the Respondent’s legal representatives, is not afforded the same rights to challenge the costs. She is faced with charges to which she does not know how they relate to any of the proceedings. For example, the cost charged for the 91 page Affidavit filed by Mr Damian Harriss  filed on 21 March 2012 which was used in the proceedings before His Honour Cronin J on 26 March 2012 to claim costs. Damian Harriss did not serve this affidavit on the Applicant’s or her legal representatives. Therefore a list should be provided to the Applicant of all cost charges that Mills Oakley Lawyers so far have charged to the Respondent and proof of payment by the Respondent.

130. It appears that the Respondent was obtaining transcripts whilst Mills Oakley Lawyers claimed they represented the Applicant. Thus the Applicant seeks an order for Respondent or Mills Oakley Lawyers to provide these transcripts to the Applicant.

131. The Applicant’s Application for a STATUS QUO was at all times a proper Application as the Applicant from the outset maintained her OBJECTION TO JURISDICTION. His Honour Cronin J from outset failed to deal with the objection to jurisdiction, as per rule 9.03 of the Family Law rules 2004. It is not a matter of the court just assuming jurisdiction. It is matter for the court to determine if there is any valid jurisdiction to begin with. It was for the Respondent (then Applicant) to prove the validity of the legislation to be applied within s40(2) of the Family Law Act 1975. Until, the court does hear this OBJECTION TO JURISDICTION the Court can only make limited orders as to maintain the STATUS QUO, including any orders for cost. Thus, the Applicant seeks the court to provide stay orders as sought by the Applicant in these submissions.

132. All previous orders in this matter are set aside unde 90SN due to misleading and possibly fraudulent conduct of the Respondent and Mills Oakley Lawyers in conducting a sale of a property when they did act lawfully and/or in accordance with the affected orders of 13 December 2012.

133. That this Honourable Court requests the Applicant is to provide the Respondent with costs she has incurred for litigation subsequent to the Orders of His Honour Le Pour Trench J. If the Respondent fails to come to an agreement with the Applicant to settling this cost claim, the Registrar of this court is to assess the cost claim and to provide such cost compensation to the Applicant as the Registrar deems appropriate. This is to ensure that the Applicant is not out of pocket for her legal representation and other out of pocket expenses, including but not limited to, her travel and accommodation costs to attend the hearings in Australia.

134. Having regard to the matters set out by the Applicant in these submissions and annexures;

(a) The Respondent files with the Court and serves upon the Applicant (preferably in CD/DVD format),within 4 weeks of the date of these orders,

1) A set out of all cost charges (Bill of Cost).

2) Any monies the respondent has had refunded by Mills Oakley Lawyers.
3) This includes all details regarding Family Court of Australia litigation as well as before VCAT.
4) All communication between the respondent, his lawyers and purchasers, the titles office and the real estate agents.

(b) The Applicant within 6 weeks of the date of having been served such a set out referred to in (b)

1) File (preferably in CD/DVD format) with the court a response as to all and any charges.
2) As well as file and serve at the same time, her set out of all and any legal charges she incurred from commencement of engaging legal representation in the litigation in the Family Court of Australia.

(c) The Registrar of this Court list the matter for hearing no earlier than 20 weeks after the date of these orders for a Judge of this court to consider the material filed and any relevant applications either party may have filed. Such applications shall be filed and serve no later than 19 weeks of the date of these orders and may be filed and served electronically.

(d) Where either or both parties prefer to file details other than in CD/DVD format being it in hard copy then this is permitted.

135. The Respondent shall file with this court and serve upon the Applicant within 6 weeks of the date of this order a proper detailed set out as to why the Respondent failed to comply with the terms of the Orders of His Honour Le Pour Trench J of 13 December 2011. Where the Respondent has evidence the Applicant failed or was deemed to be a “defaulting party” to sign such document/instrument, then the Respondent sets out in details what the respondent pursued for the registrar to sign on behalf of the Applicant. Where the Respondent did obtain authority by way of the Applicant or the Registrar to sell in trust the said property, the Respondent then also sets out which documents were signed, including any contract of Sale, Notice to Vacate, Exclusive auction authority, S32 Statement or other relevant document as trustee for the Applicant.

136. The Respondents legal representatives Mills Oakley Lawyers shall file with this court and serve upon the Applicant why they listed themselves as representing the Applicant and continued to do so despite the Applicant written objections. This is to include the legal basis upon which Mills Oakley Lawyers claimed they were the Applicant’s legal representatives.

137. The Respondents legal representative shall place all and any monies received from the settlement, other than what was paid out to the Real Estate Agent or other authorities such as to rates, insurance and water authorities with the Law Institute of Victoria in a trust account. The Law Institute of Victoria shall hold such monies in trust until further order of this court. In the alternative the monies can be placed in a trust fund mutually appointed by the Applicant and Respondent, but such trust shall not be permitted to disperse of any funds without an order of this court.

138. Each party shall file within 6 weeks of the date these orders and serve upon each other, a Statement of Financial Circumstances setting out their financial positions as of 25 August 2012. Such Statement of Financial Circumstances to include any outstanding legal cost to be paid with evidence of such charges and to be paid with evidence of such charges.

139. The Respondent shall file and serve within 6 weeks of the date of these orders a set out of all and any rent he received from his [K] property supported by rental receipts, taxation records and receipt’s, as well as other incoming and outgoing expenses. The Respondent shall file and serve with this details as to how the Respondent’s income was contributing to the de facto relationship in a State in Australia. This is to include the details of his wages or other payments he received during that time both in the [European country] and/or in the Commonwealth of Australia, including any tax refunds, also all and any bank records, credit union or other financial institution in the [European country] and/or In the Commonwealth of Australia which he claims were contributions he made in a State in Australia.

1. There is little in those submissions of relevance to the question of costs which I must determine. They are simply a repeat of the submissions made by the applicant in relation to matters that have been previously determined and a further attempt to argue a case that has been found to be without merit. Strickland J in his reasons for judgment delivered on 21 August 2012 described the applicant’s submissions in the case before him as “meaningless and incoherent drivel”. That is an apt description of the applicant’s submissions filed on 2 November 2012 in this case in relation to the question of costs. There is no basis whatsoever for the orders sought by the applicant primarily because these are matters that have already been heard and determined and are not the subject of an appeal, and secondly because there is no basis for the Court to make such orders. The applicant’s Application was wholly unsuccessful and there is in my view no basis for an order for costs to be made in her favour. In those circumstances I propose to dismiss her Application for costs.  

2. As I could make little sense of the applicant’s submissions I afforded her the opportunity to make submissions by telephone on 26 November 2012 as to why I should not make the order for costs sought by the respondent. Notwithstanding that I explained to the applicant the need to focus on the relevant provisions of the Family Law Act 1975 (Cth) and in particular the matters to which the Court should have regard in s 117(2A) and notwithstanding my efforts to have the applicant focus on those issues she was unable to resist re-visiting issues that have already been determined and which the Court has found to be entirely without merit.

Legal Principles

1. The general rule is that each party should bear his or her own costs of proceedings pursuant to the Act. However the Court may make an order for costs if it is of the opinion that there are circumstances which would justify an order for costs (s 117(2)). The matters to which the Court must have regard when determining whether to make an order for costs and for how much that order should be, in so far as they are relevant to the particular case, are set out in s 117(2A) of the Act. Those matters are as follows:

Financial circumstances of the parties

1. The applicant submitted that she has gone into substantial debt to pay legal fees and has “negative equity in the [European country]”. Neither party filed an updated financial statement or otherwise produced any evidence with respect to their respective financial positions.

2. The respondent relied upon the fact that pursuant to the orders made by consent by Le Poer Trench J on 13 December 2011 the proceeds of sale of the No 9 property which was sold for $1,760,000 are to be divided as to 52/35 in favour of the applicant less the sum of $100,000 which was to be paid to the respondent by the applicant out of her share. The applicant’s share is held in trust by Mills Oakley Lawyers. The applicant submitted that the monies held in trust are earning interest for the sole benefit of the respondent. That of course is not the case because the orders made by Le Poer Trench on 13 December 2011 make provision for a division of the net proceeds of sale as to 46.75 per cent to the respondent and the balance to the applicant and subject to the payment of any orders for costs the wife will in due course be entitled to receive her share of those proceeds.

3. I am satisfied that the financial circumstances of the parties do not preclude an order for costs being made in the respondent’s favour.

Legal aid

1. Neither of the parties are in receipt of legal aid.

The conduct of the parties to the proceedings, whether the proceedings were brought about by the failure of one party to comply with previous orders and other circumstances

1. The history of these proceedings has been set out in significant detail in Strickland J’s reasons for judgment delivered on 21 August 2012 and 4 December 2012 and my reasons for judgment. I do not propose to repeat again that history. Suffice it to say that the genesis of these proceedings is the applicant’s failure to comply with the orders made by consent by Le Poer Trench J on 13 December 2011 and the orders made by Cronin J on 26 March 2012, 9 June 2012, and 25 June 2012.

2. Although, as I said in my reasons, I had some difficulty understanding exactly what relief the applicant was seeking, she did with some prompting from me identify the following issues:

   ·That the Court has not dealt with her objection to jurisdiction with respect to the orders made by Cronin J on 9 June 2011 and the orders of Le Poer Trench J made 13 December 2011;

   ·That the husband and/or his solicitors have not complied with the orders made by Le Poer Trench J in that the No 9 property was not transferred to the husband for sale;

   ·That the date shown on the Contract of Sale of the No 9 property signed by Registrar Mestrovic was 20 March 2012 but that it was not until 21 March 2012 that the husband’s solicitor, Mr Harriss, swore and filed his affidavit in support of his request that the Registrar sign the Contract annexing an unsigned copy of that Contract, it being her case that the contracts were not the same; and

   ·That there is concurrent litigation on foot in the European country with respect to the No 9 property.

3. The respondent submitted that the fact that the applicant made an open offer during the course of the hearing before Cronin J on 20 July 2012 to withdraw all her applications and appeals on the basis that the respondent withdrew his proceedings demonstrated the applicant’s lack of bona fides. Whilst this open offer does raise some questions in relation to the applicant’s bona fides I am also mindful of the fact that parties make all sorts of compromises in order to bring litigation to an end.

4. I find the manner in which the applicant has repeatedly unsuccessfully pursued the same issues, both at first instance and then on appeal, and the manner in which she has done so much more compelling. I found that the Application before me was more of the same and that there was no basis for the orders that the applicant sought. The applicant’s decision to proceed with her Application before me must be viewed in the context of those previous proceedings and the fact that it was another attempt on the applicant’s part to re-visit what had been found to be entirely unmeritorious submissions. The applicant has adopted the same course in relation to this Application for costs.

5. On 7 September 2012 the respondent’s solicitor forwarded a letter to the applicant putting her on notice that it would be the respondent’s case that the remaining aspects of the applicant’s Application which were listed for hearing before me were “entirely misconceived, nonsensical and likely to be dismissed” and that in the event that that Application were to be dismissed an order would be sought that the applicant pay the respondent’s costs on a solicitor client basis. The applicant was invited to withdraw her Application and was given until 3.00 pm on 10 September 2012 to do so.

6. The applicant did not withdraw her Application which has inevitably lead to the respondent incurring further costs including the costs of this Application for costs all as a result of the manner in which the applicant has chosen to conduct these proceedings.

Wholly unsuccessful

1. The applicant has not only been wholly unsuccessful she has been repeatedly unsuccessful in relation to the very same issues.  

Whether there have been any offers of settlement

1. There have been no offers of settlement.

Conclusion

1. I am satisfied that there are circumstances in this case that justify an order for costs. Those costs are sought on a solicitor client basis or indemnity basis.

2. The rule is that unless there are exceptional circumstances an order for costs should be made on a party/party basis. Sheppard J in Colgate-Palmolive Co & Another v Cussons Pty Ltd (1993) 118 ALR 248 set out in some detail the circumstances that might give rise to an order for indemnity costs. Those circumstances were summarised by Holden J in Munday v Bowman (1997) FLC 92-784 at page 84,660 as follows:

   (a) Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397).

   (b) Making allegations of fraud, knowing them to be false, and the
   making of irrelevant allegations of fraud (see Fountain Selected
   Meats (Sales) Pty. Ltd. (supra)).

   (c) Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v. Keeprite
   Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)).

   (d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v. Westpac Banking Corporation (unreported, Federal Court, 5 March 1993)).

   (e) An imprudent refusal of an offer to compromise.

1. These examples fit well with the circumstances of this case and in particular (a), (c) and (d). In circumstances where the applicant was attempting to re-agitate issues that had been determined and found to be without merit it is inconceivable, notwithstanding that she was representing herself, that the applicant would not have understood that her Application had no prospect of success.

2. The applicant’s reliance on submissions that the Court had found to be without merit unnecessarily prolonged the case and without doubt added to the costs incurred by the respondent. The applicant’s submissions with respect to costs clearly demonstrate the problems the respondent faced in the conduct of his case. The applicant submitted some 42 pages of submissions, only a small part of which had anything to do with costs.

3. I am satisfied that there are exceptional circumstances in this case which justify the Court departing from the rule that an order for costs should be made on a party/party basis. I have been provided with a copy of the Costs Agreement signed by the respondent and although the hourly fee charged by the respondent’s solicitor is considerably higher than that provided by the Family Law Rules 2004, I am satisfied that the respondent should not be required to bear the costs incurred as a result of the manner in which the applicant has conducted the proceedings before me.

4. On that basis I propose to make an order that the applicant pay the respondents costs of and incidental to paragraphs 2, 4, 5, 6, 11, 12 and 15 of her Application in a Case filed 20 July 2012 and this application with respect to costs on an indemnity basis.

5. The respondent has also sought an order that those costs be paid out of the applicant’s share of the net proceeds of sale of the No 9 property. The applicant resides in a European country. Given the manner in which the applicant has sought to frustrate the implementation of the orders made by Le Poer Trench J on 13 December 2011 I am satisfied that an order for payment of the costs from those monies would be the most efficient way to ensure the payment of those costs. 

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 19 February 2013

Associate: 

Date:  19 February 2013