Belrose and Kendrick and Anor (No.2)
[2017] FCCA 1898
•23 August 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BELROSE & KENDRICK & ANOR (No.2) | [2017] FCCA 1898 |
| Catchwords: HELD – The Husband should pay the Wife’s costs of the Application in a Case – there are no exceptional circumstances that would justify an order that the Wife’s costs be paid on an indemnity basis. |
| Legislation: Family Law Act 1975 (Cth), s.117 |
| Cases cited: Mundy v Bowman (1997) FLC 92-784 Medlon & Medlon (No 6) (Indemnity Costs) [2015] FamCAFC 157 |
| Applicant: | MS BELROSE |
| First Respondent: | MR KENDRICK |
| Second Respondent: | [THE MORTGAGEE] |
| File Number: | MLC 10512 of 2010 |
| Judgment of: | Judge Bender |
| Hearing date: | 3 August 2017 |
| Date of Last Submission: | 3 August 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 23 August 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Ham |
| Solicitors for the Applicant: | Jeffrey Willetts |
| Counsel for the First Respondent: | Ms Swart |
| Solicitors for the First Respondent: | RKL Lawyers and Consultants |
Counsel for the Second Respondent: | Not Applicable |
| Solicitors for the Second Respondent: | Gadens Lawyers |
ORDERS
The Husband pay the Wife’s costs in relation to the Application in a Case filed 21 March 2017 on a party/party basis in the sum of $9,486.00.
IT IS NOTED that publication of this judgment under the pseudonym Belrose & Kendrick & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 10512 of 2010
| MS BELROSE |
Applicant
And
| MR KENDRICK |
First Respondent
And
| [THE MORTGAGEE] |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This is the Wife’s Application that the Husband pay her costs of the Application in a Case filed by her on 21 March 2017 on an indemnity basis in the sum of $69,837.36.
The Husband opposes any orders be made he pay the Wife’s costs and that if such an order is made, that those costs be payable on a party/party basis in accordance with Part 1 Schedule 1 of the Federal Circuit Court Rules 2001.
Background
The Wife’s Application in a Case came before the Court on 17 May 2017. In the Reasons for Judgment delivered that day the background to the Application was set out in paragraphs (1)-(11) as follows:
1. In this matter the Applicant, Ms Belrose, seeks the enforcement of orders made by Judge Hughes on 8 November 2013 (as amended on 22 November 2013) and 7 April 2014.
2. The 8 November 2013 orders, as amended on 22 November 2013, related to property proceedings between the parties. Her Honour ordered that the Respondent pay to the Applicant the sum of $202,009 (“the payment”) and, contemporaneously with that payment, the Applicant transfer to the Respondent all of her right, title and interest in a property at Property A (“ the Property A property”) within 60 days of the date of the orders (“the due date”).
3. Order (3) of the 8 November 2013 orders provides that in the event the Respondent failed to make the payment by the due date, the Property A property was to be sold and the proceeds of sale be distributed such that the Applicant receive the amount outstanding, together with interest in the sum of eight per cent, as well as costs in the sum of $7,500.
4. The matter returned to Court on 7 April 2014 on the Application of the Wife as the Husband had failed to comply with the 8 November 2013 orders. On that occasion orders were made enabling the Applicant to have the conduct of the sale of the Property A property, including the right to sole possession of that property.
5. On 27 October 2014 [the mortgagee] (“[the mortgagee]”), being the mortgagee of the Property A property, issued a Writ of Possession in relation to the Property A property in the Supreme Court as the Respondent was in serious arrears of the mortgage. On 25 March 2015 [the mortgagee] entered judgment in default of appearance by the Applicant.
6. The Applicant subsequently permitted [the mortgagee] to have the conduct of the sale of Property A. The property sold for $2,250,000.00 and settlement took place in or around November 2016.
7. Because the Applicant failed to clear the Property A property of a vast quantity of chattels when [the mortgagee] took possession of the property, [the mortgagee] removed and subsequently auctioned those chattels.
8. In the lead-up to the settlement of the sale of the Property A proposals, I am satisfied that the Applicant’s solicitor, Mr Willetts, forwarded multiple correspondence to the Respondent seeking his cooperation in reaching agreement as to the distribution of the proceeds of sale so that the Applicant could receive the moneys that she was entitled to under the Orders that were made in November 2013.
9. The Respondent did not acknowledge receipt of any of Mr Willetts’ correspondence and did not cooperate in providing instructions to [the mortgagee] for the distribution of the proceeds of sale.
10. I note the net proceeds of sale of Property A and its contents are $1,713,321.19. This amount is greatly in excess of the values given to the property and its contents that formed the basis of the quantum of payment to the Wife determined by Justice Hughes in her November 2013 decision.
11. Today the Applicant is seeking orders that she be paid what she is entitled to under the November 2013 orders. The Applicant is claiming an amount of $267,610, which includes the interest accrued since the payment was due and the various costs orders that are outstanding. The Applicant is also seeking an order that the Respondent pay the Applicant’s costs of this application on an indemnity basis.
[the mortgagee] (“[the mortgagee]”), was a party to the Wife’s Application as the mortgagee who had conduct of the sale and held the balance of the proceeds of sale of the Property A property pending instructions from both parties as to its distribution.
On 17 May 2017 orders were made that [the mortgagee] pay the Wife’s solicitors the sum of $267,610.35. This amount reflects the capital payment due to the Wife pursuant to the November 2013 orders, the interest on that sum and outstanding costs payable by the Husband to the Wife pursuant to orders made on 8 November 2013 and 7 April 2014.
On 17 May 2017 the Wife’s Application the Husband pay her costs on an indemnity basis was adjourned for hearing on
3 August 2017. Orders were made for the Wife to file and serve written submissions as to the question of costs by 23 June 2017 and for the Husband to file and serve answering submissions by 21 July 2017.
An order was also made on 17 May 2017 for [the mortgagee] to retain $75,000 in trust pending the determination of the Wife’s costs Application.
The Law
The first question to be determined in this Application is whether a costs order should be made at all.
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) sets out the powers of the Court on the question of costs. It provides as follows:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(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.
Both parties in their written submissions filed in relation to the costs matter quite properly addressed the various matters set out under section 117(2A) of the Act.
It is my intention to address each of those matters in turn.
The financial circumstances of the parties to the proceedings
It is submitted on behalf of the Wife that when the final property orders were made on 8 November 2013, the division by her Honour represented the Wife retaining 28% of the total asset pool and the Husband retaining 72% of the asset pool.
At the time Her Honour determined the matter, the Property A property was valued at $1,150,000 and the antiques in the property were valued at $26,000. When the Property A property finally sold it fetched $2,250,000 and the antiques netted $57,029.10.
It is submitted on behalf of the Wife that as the amount payable to the Wife was a set amount and not a percentage, the Husband is the true beneficiary of the increase in the value of the Property A property to the extent that even with the mortgagee’s and sale costs, the amount the Husband will retain is now almost 85% of the pool.
In circumstances where the Husband has available for payment to him well in excess of $1,000,000.00 from the sale of the home, it is submitted he has the capacity to make any order for payment of the Wife’s costs.
Other than the amount paid to the Wife pursuant to the orders made on 17 May 2017, the Wife places no further evidence before the Court in relation to her financial circumstances.
It is submitted on behalf of the Husband that save for the capital gain in the sale of the Property A property, the Husband’s financial circumstances have deteriorated with the loss of the property and more particularly with the loss of his antique business.
It is submitted on behalf of the Husband that the retention of $75,000 in the trust account by [the mortgagee] pending the determination of the costs issue is not of itself determinative of the question of whether a costs order should be made.
Whether any party to the proceedings is in receipt of assistance by way of legal aid
Neither party is in receipt of legal aid.
The conduct of the parties to the proceedings
It is submitted on behalf of the Wife that the Husband failed to comply with the orders of Judge Hughes, failed to co-operate in the sale of the Property A property, failed to service or pay the mortgage, instituted Federal Court proceedings attempting to stop [the mortgagee] auctioning the Property A property and failed to respond to not one, but four requests that he co-operate in confirming instructions to [the mortgagee] to pay the Wife the monies to which she was entitled under Judge Hughes’ orders. In so doing he clearly necessitated the Application in a Case filed by the Wife on 21 March 2017.
It is submitted on behalf of the Husband that the Wife made the decision to place the conduct of the sale of the Property A property in the hands of the mortgagee despite the orders made by Judge Hughes on 7 April 2014 that the Wife have sole conduct of the sale.
It is therefore submitted on behalf of the Husband that if the Wife had conducted the sale herself, as was ordered by Judge Hughes, there would have been no need for any Application to be made by the Wife for orders directing [the mortgagee] to make payment to her as she would have had the control of the proceeds of sale.
In response to this argument by the Husband, it is submitted on behalf of the Wife that when the Husband vacated the Property A property he left in excess of 100,000 chattels and antiques in that property. [the mortgagee], as the mortgagee, was entitled to take action not only for the sale of the property but also in relation to the contents of the Property A property. The Wife did not have the same legal right. She therefore made the very sensible decision to allow [the mortgagee] to conduct the sale of the Property A property in order to avoid the considerable costs she would have incurred in dealing with the chattels/antiques and any possible action against her by the Husband if she had sold the chattels/antiques.
It is further submitted on behalf of the Wife that as there was no doubt that the Wife was entitled to monies from the proceeds of sale in accordance with Judge Hughes’ orders, there was no reason for the Husband to refuse to co-operate in instructing [the mortgagee] to pay to the Wife the monies to which she was entitled.
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court.
It is submitted on behalf of the Wife that this is clearly a matter where the proceedings were necessitated by the Husband’s failure to comply with the previous orders of the Court. The entire reason for the proceedings is the Husband’s failure to comply with Judge Hughes’ orders.
It is submitted on behalf of the Husband that whilst he accepts that he failed to comply with the previous orders, the Wife’s Application in a Case was only necessary because the Wife chose to allow the mortgagee to conduct the sale of the Property A property rather than selling it herself pursuant to Judge Hughes’ April 2014 orders.
Whether any party to proceedings has been wholly unsuccessful in the proceedings
It is submitted on behalf of the Wife that she has been wholly successful in her Application. It is further submitted on behalf of the Wife that it was inevitable that she would be wholly successful as all she was seeking was her entitlement pursuant to final orders made by this Court.
It is submitted on behalf of the Husband that whilst he accepts that the Wife was wholly successful in her Application for orders to release funds to her from the mortgagee’s trust account, until the costs Application is determined, it will not be known whether the Husband has been wholly unsuccessful in resisting the entirety of the Wife’s Application.
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
It is submitted on behalf of the Wife that by way of the letters and emails sent on her behalf by her solicitors on 24 November 2016,
1 December 2016, 8 December 2016 and 2 February 2017 in which the Husband was invited to co-operate in the division of money held by [the mortgagee] from the mortgagee’s sale in accordance with the final orders made in 2013, she put to him an appropriate offer to resolve the proceedings to which he did not respond.
It is submitted on behalf of the Husband that the letters and emails sent by the Wife’s solicitors do not constitute offers to settle the proceedings.
Such other matters as the Court considers relevant
It is submitted on behalf of the Wife that the Court has on two previous occasions made costs orders against the Husband which he has failed to comply with.
It is further submitted on behalf of the Wife that the amount due to
be paid to the Wife was clear and obvious and the Husband, in not
co-operating in giving the appropriate authorities to [the mortgagee] to facilitate that payment, was simply seeking to prevent the Wife from receiving her entitlement and did so despite being put on notice that costs would be sought if an Application had to be issued.
It is further submitted that when the Wife’s Application issued, the Husband failed to file any answering material so that on the day of the hearing her Application for indemnity costs, which was clearly set out in her Application, had to be adjourned for further hearing. This necessitated the Wife incurring even further costs.
It is submitted on behalf of the Husband that the Husband’s inability to pay the costs ordered against him was part of his inability to pay the Wife the settlement sum when due and is what triggered the order for the Wife to sell the Property A property.
The Husband concedes that he did not file any material for the hearing on 17 May 2017. It is argued however the question of costs had to be adjourned for written submissions and further argument because the Wife was seeking indemnity costs of a very large amount and not because the Husband had failed to file answering material.
Conclusion
As was held by Justice Strickland in the matter of Medlon & Medlon (No 6) (Indemnity Costs) [2015] FamCAFC 157 at paragraph [24]:
“24. There is no doubt that any one of the factors in s 117(2A) of the Act cannot prevail over any of the other factors, and it is a matter of the weight that is accorded to each of the relevant factors”.”
In this matter the Wife’s Application was necessitated by the failure of the Husband to comply with orders of the Court and by his failure to give what were clearly sensible and appropriate instructions to [the mortgagee] to pay the Wife what she was entitled to pursuant to the orders made by Judge Hughes.
Further, the Husband has the capacity to pay a costs order given the funds that have been realised from the sale of the Property A property and the amount currently being held on trust by [the mortgagee] pending the determination of the costs issue.
The Husband explains in part his lack of response to the reasonable requests of the Wife to him being overwhelmed by the loss of the Property A property and his business. However, he was not so overwhelmed that he was unable to bring proceedings in the Federal Court trying to prevent the sale.
The Husband further explains his lack of response to the request to authorise the release of funds to the Wife on the basis he had an intention to appeal Judge Hughes’ orders.
When the Wife’s Application came before me on 17 May 2017 the Husband sought an adjournment of the Application on the basis he intended to appeal Judge Hughes’ orders. On that occasion I refused the Husband’s Application to adjourn the Application as he had had more than ample opportunity to lodge such an appeal and any such appeal would have been, in my opinion, without merit.
In all these circumstances I am satisfied that there should be made an order made that the Husband pay the Wife’s costs of her Application in a Case filed 21 March 2017.
Should the costs be payable on an indemnity basis or a party/party basis?
The Wife is seeking orders that the Husband pay her costs assessed on an indemnity basis.
Justice Strickland in the matter of Medlon & Medlon (No 6) (supra) succinctly summarised the law in relation to this issue in paragraphs [27] and [28] as follows:
“27. In relation to this claim, it is useful to record what the Full Court said in D & D (Costs) (No. 2):
26. In Limousin & Limousin (Costs) [2007] 38 FamLR 478, the Court reviewed the authorities in relation to indemnity costs. Reference was there made to the judgment of the Full Court in Kohan and Kohan (1993) FLC 92-340. It was recorded at 79,614 (citations omitted) in which it was said that:
The intent of s 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. By O 38 r 2, the provisions of O 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O 38 r 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. 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) [1983] 2 NSWLR 354]; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534; Hobartville Stud v Union Insurance Co (1991) 25 NSWLR 358 at 368–70.
Indemnity costs orders are still an exception in this and other jurisdictions.
27. The Court in Limousin (supra) also referred to the judgment of Shephard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 upon which learned Counsel for the Wife relies in support of the present application. Shephard J said in Colgate-Palmolive (supra) (at 256):
“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 which 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 …”
28. Reference was made to the later decision of the Full Court of Yunghanns v Yunghanns (2000) FLC 93-029 in which is [sic] was said (at 87,471, par 31):
“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.”
28. In Colgate-Palmolive Company v Cussons Pty Limited, Sheppard J provided some examples of circumstances that might warrant the exercise of discretion to award indemnity costs, and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660, drew from his Honour’s decision the following:
(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.”
It is submitted on behalf of the Wife this is a matter in which the justice of the case clearly requires that indemnity costs be ordered.
Addressing the factors identified by Holden J in Mundy v Bowman (1997) FLC 92-784 as referred to by Justice Strickland in Medlon & Medlon (No 6) (Supra), it was submitted on behalf of the Wife as follows:
·the Husband in this matter should have known he had no chance of success but forced the matter to be determined by the Court. It is reasonable to infer that the Husband had an ulterior motive of wishing to put the Wife to the trouble and expense of litigation whilst not incurring any legal expenses on his part and that such action was wilful;
·the Husband sought at the hearing of the Application to impute that the Wife had in some way given false evidence to achieve the final orders made by Judge Hughes in November 2013 and that it was on this basis that he indicated to the Court that he had long held an intention and continued to hold an intention to appeal those orders;
·that in failing to respond to correspondence seeking his co-operation in the direction to [the mortgagee] for disbursement of funds, the Husband caused a loss of time to the Court and to the Wife;
·that by his very inaction in failing to comply with the orders and then co-operate to enable the Wife to finally receive the monies due to her upon the sale of the Property A property, the Husband was unduly prolonging the case and necessitating proceedings to be commenced by the Wife that should have been completely unnecessary.
·in imprudently and arrogantly refusing the sensible and obvious offers made to him to instruct [the mortgagee] to distribute the funds to the Wife so that she received the monies payable to her pursuant to the Court orders, the Husband imprudently refused an offer of compromise.
In response to the Wife’s submissions it was submitted on behalf of the Husband as follows:
·this is the Wife’s Application – not the Husbands’ – and therefore he cannot be seen to have commenced or continued proceedings where he knew he had no chance of success. Further, the Husband’s failure to respond to the request to release the funds whilst frustrating to the Wife and her solicitors, is not misconduct;
·the Husband filed no material in this matter and accordingly cannot be seen to have made false allegations of fraud;
·there was no misconduct causing loss of time to the Court and to other parties as the Wife was successful in obtaining the orders sought by her on the first return date of her Application;
·the Husband’s failure to respond to the request to release the funds to the Wife is not misconduct or a wilful disregard by him of known facts. He mistakenly continued to harbour a belief that he could appeal or challenge Judge Hughes’ order and in those circumstances did not believe it appropriate that he should consent to the release of funds;
·the Husband made no allegations that he should not have made and he did not unduly prolong the hearing of the Application in a Case due to making groundless contentions. As previously noted, the Wife was successful in obtaining the orders sought by her on the first return date of her Application;
·the only reason the Application for indemnity costs was adjourned was because of the amount of costs sought by the Wife on an indemnity basis and the determination by the Court that it would be unfair to the Husband, given he was unrepresented, to respond to that Application without first obtaining the benefit of written submissions from the Wife and obtaining his own advice. The Husband had no strategy to prolong or delay the hearing of the matter and in particular the question of indemnity costs;
·the Husband concedes that he did not consent to the Wife’s request that he authorise the release of funds, but that he did so in the mistaken belief that he had a basis on which to appeal or challenge the orders of the Court;
·this Application came before the Court as a result of the Husband’s failure to authorise the release of funds. This failure has attracted an order of this Court to pay the Wife’s costs of the Application. There is nothing however in the circumstances of this case that are of such an exceptional nature that the Court should exercise its direction to make an order that the costs be paid on an indemnity basis.
Conclusion
Judge Hughes made final orders in this matter on 8 November 2013 (amended 21 November 2013) after a four day defended hearing in April 2013.
Her Honour ordered that within 60 days of the date of the orders the Husband pay the Wife the sum of $202,009 and that contemporaneously with the payment the Wife transfer to the Husband the property at Property A and the Husband refinance the mortgage. Her Honour also made orders for the payment by the Husband of outstanding costs from previous orders made in the running of the matter. Pending payment to the Wife, Judge Hughes ordered the Husband pay the mortgage on the property.
Her Honour’s orders also made provision that in the event the Husband failed to make payment to the Wife, the parties were to do all things necessary to sell the Property A property within three months and reserved liberty to the parties to apply in relation to the terms of the sale.
When the Husband failed to pay the Wife in accordance with her Honour’s orders, the Wife filed an Application in a Case on 11 February 2014 seeking orders that she have the sole conduct of the sale, that she be provided vacant possession of the Property A property and that a writ of possession issue in the event the Husband failed to provide the Wife with vacant possession.
That Application came before Judge Hughes on 7 April 2014. On that occasion her Honour made orders that the Wife have the sole and exclusive conduct of the sale of the Property A property, that the Husband vacate the Property A property within seven days and that a Writ of Possession issue to be activated by the Registrar of the Federal Circuit Court in the event that the Husband refused to provide vacant possession.
Judge Hughes also made orders for the Husband to pay the Wife’s costs of that Application fixed in the sum of $4,000.
Because the Husband had not been paying the mortgage in accordance with Judge Hughes’ orders, [the mortgagee] as mortgagee engaged solicitors to take the appropriate proceedings to enable them to sell the Property A property.
The Wife made the decision that rather than sell the Property A property herself, she would allow [the mortgagee] to have the carriage of the sale of the property and would co-operate with them in achieving that sale.
As the Wife is resident in Italy, she retained the services of her current solicitors to represent her to liaise on her behalf with [the mortgagee] with respect to the sale of the Property A property. Because of the 100,000 plus chattels left in the property and the Husband’s Federal Court Application seeking to prevent the auction of the property (which was unsuccessful) the sale of the Property A property was not finalised until late 2016.
As has been set out in this judgment, in the lead up to the settlement of the sale of the Property A property, the Wife’s solicitors contacted the Husband in an endeavour to obtain his consent to the Wife receiving from the proceeds of sale the money she was entitled to under the orders of Judge Hughes. The Husband’s refusal to consent to the payment to the Wife led to the Application filed on the Wife’s behalf on 21 March 2017.
The very detailed itemised bill of costs filed on behalf of the Wife as part of her Application for indemnity costs contain the costs incurred by her as a result of her engaging her current solicitors to represent her in her dealings with [the mortgagee] for the sale of the Property A property.
It is submitted on behalf of the Husband that those costs cannot be seen to be in any way related to the Wife’s Application in a Case filed 21 March 2017 but rather a reflection of her decision not to sell the Property A property in accordance with the orders of Judge Hughes and leave that task to [the mortgagee].
I am in complete accord with the submissions on behalf of the Husband in this regard. The costs incurred by the Wife in having solicitors assist her in her dealings with [the mortgagee] rather than herself as she was not living in Australia and where she had made the decision to allow them to have the conduct of the sale cannot be seen to be costs of the Application in a Case before the Court.
In relation to the Application before the Court that the Wife’s costs of the Application filed on 21 March 2017 be paid on an indemnity basis, I am not satisfied that there are exceptional circumstances present which would justify a departure from the usual rule that costs be ordered on a party/party basis.
In this matter the Wife’s solicitors forwarded correspondence to the Husband seeking he co-operate in instructing [the mortgagee] to pay the Wife the monies she was entitled to under orders of the Court. He did not respond. The Wife was therefore left with no other option but to bring the Application that she did. That Application was dealt with on its first return date when orders were made in the terms sought by the Wife.
That the Husband did not consent to the release by [the mortgagee] of the monies the Wife was entitled to under Judge Hughes’ orders and therefore necessitated the Wife’s Application is the basis upon which an order is being made that the Husband pay the Wife’s costs of the Application, rather than each party being responsible for their own costs.
There is nothing in the circumstances leading to that Application that takes it outside the usual “norm” of Applications for enforcement of an order when it has not been complied with by a party to the proceedings.
Whilst the Wife has been unsuccessful in her Application that the Husband pay her costs on an indemnity basis, I am satisfied that the Husband should be responsible for the Wife’s costs of the hearing of her costs Application. The Wife’s Application in a Case was necessitated by the Husband’s failure to comply with the orders of the Court. The Wife’s costs Application appropriately flowed from the necessity of that Application. Further, the Husband opposed a costs order being made at all and therefore the costs Application had to be determined.
The Wife is seeking that the Husband pay her accountant’s costs of $5,000 incurred when she had to obtain advice as to whether she would have to pay capital gains tax on the monies received by her from the proceeds of sale of the Property A property. It is submitted these costs were incurred by her because of the Husband’s failure to comply with Judge Hughes’ orders.
It is submitted on behalf of the Husband that these costs do not relate in any way to the Application before the Court and are therefore not disbursements reasonably incurred in the course of the proceedings currently before the Court.
I agree with the submissions made on behalf of the Husband. Whilst the advice obtained by the Wife was necessary given the sale of the Property A property, it is not an expense that was incurred for the purposes of the Application before the Court.
Accordingly, orders will be made for the Husband to pay the Wife’s costs of the proceedings on a party/party basis pursuant to schedule 1 of the Federal Circuit Court Rules as follows:
Item 1
Initiating an Application
$2,887.00
Item 12 + 13
(First Return Date)
Counsel’s fees
½ day hearing$1,621.50
Item 3
Item 12 + 13Interim hearing
(Second Return Date)
Counsel’s fees
½ day hearing$1,832.00
$1,645.50Item 14
Disbursements
Counsel’s fees for preparing written submissions$1,500.00
Total
$9,486.00
I certify that the preceding sixty nine (69) paragraphs are a true copy of the reasons for judgment of Judge Bender
Date: 23 August 2017
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Procedural Fairness
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Remedies
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