Bence and Bence (No 2)

[2020] FamCA 916

FAMILY COURT OF AUSTRALIA

BENCE & BENCE (NO. 2) [2020] FamCA 916

FAMILY LAW – COSTS – where the wife seeks that the husband pay indemnity costs – where the husband opposes an order as to costs – consideration of s 117(2A) factors – where there are exceptional circumstances in this case to award costs on an indemnity basis – order that the husband pay 60 per centum of the wife’s costs on an indemnity basis.

Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) rr 19.08, 19.18

Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Guild & Stasiuk [2020] FamCA 348
I and I (1995) FLC 92-625
Kohan & Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784
Prantage & Prantage [2013] FamCAFC 105

APPLICANT: Ms Bence

RESPONDENT: Mr Bence

FILE NUMBER: MLC 11283 of 2017

DATE DELIVERED: 30 October 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Johns J

HEARING DATE: Written Submissions in Chambers

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Barbayannis Lawyers

THE RESPONDENT: In person

Orders

1. That within 30 days the husband pay the wife’s costs of and incidental to the proceedings, calculated on an indemnity basis and fixed in the sum of $157,688.

2. That all extant applications be otherwise dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bence & Bence has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 11283 of 2017

Ms Bence

Applicant

And

Mr Bence

Respondent

REASONS FOR JUDGMENT

Introduction

1. Following a four day trial final orders were made with respect to the adjustment of the parties’ property interests on 4 September 2020 (“the Final Orders”), Reasons for Judgment having been delivered on 20 August 2020 (“the Judgment”). 

2. In accordance with order 27 of the Final Orders, the wife seeks orders that the husband pay her costs of the proceedings on an indemnity basis or alternatively on a solicitor and client basis or party/party basis.  In support of that application she relies upon the costs submissions filed on 21 September 2020.

3. The orders sought by the wife are set out at pages 9 and 10 of those submissions and provide as follows:-

   1.That the Husband pay the Wife's costs fixed in the sum of $262,814.46.

   2.In the alternative, the Husband pay the Wife's costs of these proceedings assessed on a solicitor and client basis in the sum of $248,472.43.

   3.In the further alternative, the Husband pay the Wife's costs fixed in the sum of $140,194.96.

   4.Such further or other order as this Honourable Court deems appropriate.

4. The husband opposes the wife’s application for costs.  He relies upon his submissions in reply filed 2 October 2020.  He seeks orders that the wife’s application for costs be dismissed.

5. These are my Reasons for Judgment with respect to the wife’s application for costs.

Background

1. The complex factual background of the parties’ property dispute is detailed at length in the Judgment.  I do not propose to repeat those facts. 

Legal Principles

1. The question of costs is governed by s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) which provides:-

   Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.

2. That is, the general rule in proceedings under the Act is that subject to the provisions of s 117(2), the parties to the proceedings shall bear their own costs of the proceedings.

3. Section 117(2) of the Act provides that if the Court is of the opinion that there are circumstances that justify it doing so, the Court may, subject to sub-sections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs as the Court considers just.

4. Section 117(2A) of the Act provides that in determining what order (if any) should be made under sub-section (2), the Court must have regard to the following:-

   (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.

5. Costs are not awarded as punishment of the unsuccessful party, but rather are compensatory in the sense that they are awarded to ameliorate the expense of the successful party as a result of having been required to participate in the legal proceedings.

6. The discretion in s 117 of the Act is broad and the relevant factors in s 117(2A) are not to be read in a restrictive way; any one of those factors may found an order for costs but all factors must be taken into account and balanced (I and I (1995) FLC 92-625).

7. The method of calculation of costs is referred to in r 19.18(1) of the Family Law Rules 2004 (Cth) (“the Rules”). It provides:-

   (1)The court may order that a party is entitled to costs:

   (a)of a specific amount;

   (bas assessed on a particular basis (eg; lawyer and client, party/party or indemnity);

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

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

8. Rule 19.18 sets out the method of calculation of costs, providing that:-

   (3)In making an order under subrule (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, or in complying with pre-action procedures; and

   (f)expenses properly paid or payable.

9. Having regard to the above matters, I consider that I have a wide discretion in respect of matters relating to any costs orders.

10. The wife principally relies upon the considerations identified at s 117(2A)(c), (e) and (f) of the Act, that is, she contends that the relevant considerations are:-

    ·    The conduct of the parties in relation to the proceedings;

    ·    Whether any party to the proceedings has been wholly unsuccessful; and

    ·    Whether either party to the proceedings has made an offer in writing to the other party to settle the proceedings and the terms of any such offer.

Section 117(2A)(a) The financial circumstances of the parties

1. The wife is unemployed.  Although a qualified finance professional, she has not been engaged in meaningful employment since 1996.  At the time of hearing, her income as disclosed in her financial statement filed 13 June 2019 was approximately $323 per week, being rental income received from the parties’ investment properties.  She submits that that income ceased on 27 April 2020 and that she now receives a JobSeeker payment in the sum of $1,214.50 per fortnight.

2. The husband is a finance professional.  He contends that he has “earnt less than $20,000 in the last 12 months” and that he lives off rental income from properties.[1]

   [1] The Husband’s Written Submissions in Reply, para 15.

3. The Judgment records my finding that the parties’ net assets are valued at $14,347,750.[2] I found that there ought to be an adjustment of 55 per cent to the wife and 45 per cent to the husband.  There has been no challenge to those findings or the Final Orders.

   [2] Reasons for Judgment dated 20 August 2020, para 222.

4. As a result of those findings, following that adjustment, the wife will have net assets valued at approximately $7,891,000 and the husband will receive assets valued at approximately $6,456,000. 

5. On any view the husband and the wife will each have available to them substantial property and resources.  Accordingly, I am satisfied that their respective financial circumstances are not an impediment to an order for costs. 

Section 117(2A)(b) Whether either party is in receipt of Legal Aid

1. Neither the husband nor the wife is in receipt of Legal Aid.

Section 117(2A)(c) The conduct of the parties in relation to the proceedings

1. The wife submits that the husband’s conduct warrants an order for costs and in particular she relies upon the husband’s:-

   ·    Failure to provide full and frank disclosure; and

   ·    Attempts to mislead both the wife and the Court as to his financial circumstances.

2. The wife submits that as a result of that conduct she was placed in the invidious position of having to pursue arduous and costly legal proceedings to piece together relevant information to establish the parties’ financial circumstances.

3. In support of that submission, at  paragraph 16 of her costs submissions the wife contends that:-

   Specifically, the Court found the Husband had failed to:

   (a)Disclose his interest in a primary industry facility in Country AF which was only revealed in cross-examination;

   (b)Provide any evidence in support of the alleged promissory notes owed to H Pty Ltd;

   (c)Provide any evidence of any loan owed to L Pty Ltd;

   (d)Disclose the shareholders agreement (or any interest) between J Ltd and Bence Pty Ltd; and

   (e)Provide any evidence in support of the building costs he alleged were paid for the construction of the former matrimonial home (including the Husband reconstructing records of transactions).

   (Citations omitted)

4. The wife contends that she has been put to significant expense in the conduct of these proceedings as a result of the husband’s assertions as to liabilities and his failure to disclose his financial circumstances.  She submits that as a result of the husband’s actions it has been necessary for her to cause her solicitors to issue subpoenas throughout the course of the proceedings in order to illicit the most basic financial information regarding the husband’s financial circumstances.  The subpoenas issued on her behalf included subpoenas directed to BL Partners, BG Financial Services, National Australia Bank, Commonwealth Bank, BH Pty Ltd and the BK Bank and BM Bank.

5. Throughout the trial the husband asserted that he had borrowed $2 million from L Pty Ltd.  At the time of trial, the husband contended that the sum of $5,064,391 was owing in respect of that loan.  Further, the husband contended that he had executed a promissory note in favour of L Pty Ltd and that that document evidenced the liability. 

6. At a mediation conducted approximately one month prior to the trial, counsel representing L Pty Ltd produced bank statements in the name of the parties’ family trust (“Family Trust”), it being asserted that those statements evidenced monies paid to the parties by L Pty Ltd. 

7. It was only during cross-examination that the husband acknowledged that those bank statements had been altered so as to give the impression that funds had been transferred to the Family Trust by L Pty Ltd, when in fact that had not occurred.  As a result of the production of those altered bank statements, the wife was put to the further expense of issuing subpoena to produce documents to the National Australia Bank in order to obtain copies of the original bank statements.  It was only upon production of those bank statements that she could establish the deception by or on behalf of L Pty Ltd; the original documents produced by the bank proved that those produced at the mediation had been altered.  In relation to that matter, at paragraph 132 of the Judgment I found that:-

   Given the elaborate attempt to mislead the wife, which included the alteration of banking records and the engagement of Mr Q to represent L Pty Ltd’s interests to prove the alleged debt at the parties’ mediation, I do not accept the husband’s evidence that he had no knowledge of the deception.  The documents altered were bank statements to the NAB accounts for the Family Trust to which only the husband had access; he is the only party in these proceedings who has an interest in proving the alleged debts.

8. As submitted on behalf of the wife and as is recorded in the Judgment, the husband did not make disclosure with respect to a range of issues, including:-

   ·    His interest in a primary industry facility in Country AF;

   ·    His business interests in Country G, including his interest in “BF Company”, the “D Bank” and the nature and extent of his interest held via F Pty Ltd;

   ·    The remittance of monies to Country G for the purposes of developing his business interests.  The husband disputed the wife’s contentions in respect of those matters in his trial affidavit but ultimately did not challenge the wife’s evidence that he had caused $1,178,301 to be drawn on the portfolio mortgage account and transferred to Country G; and

   ·    The husband’s interest in K Ltd which only emerged during cross-examination.  He then conceded that he had invested approximately $2.7 million in that venture, drawing from the parties’ portfolio mortgage in order to fund that investment. 

9. As to the husband’s attendance to his obligations to make full and frank disclosure, at paragraph 79 of the Judgment I found the husband to demonstrate:-

   …a cavalier attitude towards his responsibilities to make full and frank disclosure.  His attitude towards those obligations appeared to be “catch me if you can”; unless presented with direct evidence as to an interest or investment, the husband appeared to disregard his obligation to make full and frank disclosure regarding such interest. 

10. In addition to the husband’s failure to observe his obligations with respect to full and frank disclosure, the husband sought to pursue his contention as to substantial liabilities being debts of the marriage to be taken into account in the assessment of the parties’ net assets.  In particular, the husband pursued his allegations as to loans payable to L Pty Ltd and H Pty Ltd.

11. The husband asserted those liabilities totalled approximately $8.5 million.  As a result of those contentions, significant time was spent during the trial in relation to those matters.  Ultimately, I determined that those alleged liabilities were not liabilities of the parties to be taken into account in the calculation of their assets.

12. The wife submits that as a result of my findings with respect to the husband’s conduct, particularly his blatant disregard for his obligations with respect to disclosure, the discretion as to costs should weigh heavily in her favour.  Further, it is submitted that the conduct of the husband supports the making of an order for costs on an indemnity basis.

13. The husband addresses the issue of conduct at paragraphs 18 to 20 inclusive of his submissions in reply.  He there asserts that the wife has made a baseless application for a family violence intervention order against him and that such action placed him under “immense emotional stress” at the commencement of the proceedings and further prevented the husband from having access to documents at the former matrimonial home.  Those submissions relate to proceedings in another court and are not relevant to the issues of conduct in these proceedings.  That the husband may have been suffering emotional stress following the breakdown of the parties’ relationship and upon the commencement of proceedings is not unusual in family law proceedings and is not a factor that excuses him from his obligation to make full and frank disclosure.

14. The husband also submits that the wife has embarked upon “an immense effort to spread false and baseless rumours” about him and stopped the parties’ two sons from contacting him. Again, these matters are not relevant to the assessment of conduct as contemplated pursuant to s 117(2A)(c) of the Act.

15. Finally, the husband submits that the wife eventually obtained details regarding his financial affairs from other sources such as “ASX announcements” and “through the medium of subpoena issued by or on her behalf”.  He further submits that there was nothing of any monetary value arising from those records and as such it seems to be his position that any non-disclosure by him which gave rise to the necessity for the wife to take such action is irrelevant to the assessment of costs. 

16. I do not accept that submission.  That the wife was able to piece together a picture as to the nature and extent of the parties’ interests using subpoena does not relieve or excuse the husband from his duty to make full and frank disclosure.  That she was forced to resort to such measures in order to identify the parties’ interests highlights the failure of the husband to satisfy his obligations as to disclosure. 

17. Further, that some of the information obtained by the wife may not have resulted in increasing the value of the parties’ interests does not lessen the impact of the husband’s shortcomings with respect to disclosure; that the wife incurred greater legal costs in adducing evidence of the husband’s financial circumstances was as a result of the husband’s non-disclosure and I am satisfied that it is conduct relevant to the assessment of her application for an order for costs.

18. Having regard to the manner in which the husband conducted the case, and in particular given my findings in relation to his failure to fulfil his obligations with respect to disclosure, I am satisfied that that conduct has resulted in the wife incurring unnecessary and additional costs to establish the nature and extent of the parties’ interests and also in meeting the assertions made by the husband with respect to the extent of the parties’ liabilities.  As a result, I am satisfied that the manner in which the husband has conducted the matter has unnecessarily complicated and prolonged the proceedings.

19. I am satisfied that the conduct of the husband as submitted by the wife is a compelling consideration which supports an order for costs in her favour.

Section 117(2A)(d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court

1. Neither the husband nor the wife made any submissions with respect to this consideration.

Section 117(2A)(e) Whether a party to the proceedings has been wholly unsuccessful

1. The wife submits that the husband has been wholly unsuccessful in the proceedings. 

2. The husband challenges that assertion and contends that in circumstances where the wife sought an adjustment of 60/40 in her favour she was unsuccessful insofar as in the result, orders were made for an adjustment on the basis that she receive 55 per centum of the parties’ interests.  Further, the husband contends that the wife was not successful in her contention that the husband should be solely responsible for the portfolio mortgage or in her contention that the husband transfer to her one half of his interest in the H Pty Ltd shares.

1. The position of the husband throughout the hearing was that the parties had substantial liabilities, particularly the L Pty Ltd loan of $5,064,391, the liabilities arising under the H Pty Ltd promissory notes of $3,460,227 and in respect of the portfolio mortgage valued at $4,018,046.  It was his position that the parties’ net assets were valued at approximately $4,825,831. 

2. Notwithstanding the dearth of evidence to support his contentions with respect to the L Pty Ltd loan and the H Pty Ltd promissory notes, the husband maintained his position with respect to those liabilities throughout the proceedings.  It was only during closing submissions that the husband’s counsel made limited concessions with respect to some of the claimed liabilities.

3. Ultimately as is recorded in the Judgment, the husband’s contentions regarding those liabilities were not accepted by the Court.  To that extent, the husband has been unsuccessful in his application.  That the husband relentlessly adhered to his position with respect to those liabilities, notwithstanding the lack of evidence to support his contentions, and in circumstances where he was represented by counsel and solicitor (and as a result is presumed to have been advised as to evidentiary issues), is a factor to be taken into account in the assessment of the wife’s application for costs. 

4. When considering the position of the parties with respect to the contentions made by each of them as to the adjustments sought and the value of the interest to be so adjusted, overall I am satisfied that the husband was unsuccessful in many aspects of his case.

Section 117(2A)(f) Whether either party to the proceedings has made an offer in writing to the other party to the proceedings and the terms of that offer

1. At paragraph 23 of her submissions the wife refers to a Calderbank offer made by her (Annexure A) which sought a 52.6 percentage division of the assets in her favour (an adjustment of $9,265,000 of the estimated net assets totalling $17,607,500).  The husband did not respond to that offer. 

2. The Judgment records that the parties’ interests were found to be valued at $14,347,750 and the wife received an adjustment of 55 per cent of that pool, being $7,891,262.50.

3. It was submitted on behalf of the wife that whilst she received less than the amount contained in her offer, that this was so was as a result of the difficulties in crystallising the balance-sheet given the husband’s non-disclosure. 

4. The husband made a Calderbank offer to the wife on 24 May 2018 (Annexure B).  In that offer, the husband contended that the parties’ net assets were approximately ($1,797,446) and it was his proposal that he retain the parties’ real properties and pay to the wife the sum of $200,000.  Further, the husband proposed that the wife retain her superannuation entitlements, jewellery, motor vehicle and property in the Country G.

5. It was submitted on behalf of the wife that the terms of the husband’s offer of settlement demonstrate the husband’s mala fides towards the wife and the proceedings.  Given my findings as to the value of the parties’ net assets, there is much force in that submission.

6. In my view, the husband’s offer is consistent with the manner in which he conducted the trial.  It is consistent with his blatant disregard towards his obligations as to disclosure and to his pursuit of arguments with respect to the parties’ liabilities that were doomed from the outset, given the lack of evidence to support his contentions. 

7. Accordingly, I am satisfied that the offers of settlement made by each of the parties is a relevant consideration with respect to the issue of costs.

Section 117(2A)(g) Any other matters the court considers relevant

1. There are no other relevant considerations.

Are there circumstances that justify an order for costs?

1. I am satisfied that an order for costs against the husband is warranted in the circumstances of this matter, having regard to the considerations addressed above.  I am satisfied that the husband’s conduct throughout the proceedings, particularly with respect to his obligations to make full and frank disclosure, coupled with the many unsuccessful aspects of his case and his offer of settlement, are matters that justify an order for costs.

Should costs be paid on an indemnity, solicitor-client or party/party basis?

1. Rule 19.18(1) of the Rules provides that the Court may make an order for costs:-

   (a)Of a specific amount;

   (b)As assessed on a particular basis (eg lawyer and client. party-party or indemnity);

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

   (d)For part of the case or part of an amount, assessed in accordance with schedule 3.

2. The wife seeks an order that the costs payable by the husband be assessed on an indemnity basis.  She seeks the sum of $262,814.46.  In the alternative she seeks costs on a solicitor-client basis in the sum of $248,472.43.  In the further alternative, she seeks that the husband pay her costs on a party-party basis fixed in the sum of $140,194.96.

3. The Rules provide that the Court may make an order for costs on a number of different bases. The applicant seeks that the order for costs be determined on an indemnity basis. Rule 19.08(3) provides:-

   A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.

4. In support of her application for indemnity costs, the wife relies upon the disclosure statement and costs agreement between Barbayannis Lawyers and the wife dated 21 September 2017 (Annexure C).  Having regard to that document, I am satisfied that the wife has met the requirements of r 19.08(3). 

5. The law with respect to indemnity costs is well settled; the Full Court observed in Kohan & Kohan (1993) FLC 92-340 that the Court should not depart lightly from the ordinary rules with respect to costs. In the decision of Prantage & Prantage [2013] FamCAFC 105, the Full Court confirmed that indemnity costs should only be awarded if the case has some special or unusual feature.

6. In Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225, Sheppard J identified circumstances that might constitute special or unusual features so as to justify an award of indemnity costs. Usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660 drew from the decision of Sheppard J the following examples:-

   (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.

   (b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud.

   (c)Evidence of particular misconduct causing loss of time to the court and to other parties.

   (d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.

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

   (Citations omitted)

7. The category of circumstances which enliven the discretion to award indemnity costs are not closed; the circumstances do not need to come precisely within the examples provided by Sheppard J.

8. It is submitted on behalf of the wife that each of the examples identified by Holden CJ at sub-paragraphs (a), (c), (d) and (e) are relevant to the determination of the wife’s application for indemnity costs. 

9. As to sub-paragraph (a), it is submitted on behalf of the wife that the husband pursued his application to include liabilities that were unable to be substantiated in circumstances where he should have known that contention had no prospect of success.

10. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Woodward J considered such circumstances and at page 401 stated:-

    …I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, 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 or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion.

11. Save for his own trial affidavit and the promissory notes signed by him, the husband adduced no evidence to prove the liabilities he alleged should be taken into account.  The husband was represented by lawyers at the time of filing his trial affidavit and throughout the final hearing.  Hence, it is reasonable to presume that he was advised as to the challenges he faced in establishing those loans.  Absent evidence from the lenders or documents which established receipt of the monies advanced under the loans, in the face of the wife’s position that she denied their existence, the husband’s contentions were bound to fail. 

12. Those issues are compounded given my earlier findings as to the deliberate non-disclosure by the husband, coupled with the attempt to mislead the wife and the Court by the production of banking records in the name of the Family Trust that had been altered with the intent to prove the liability to L Pty Ltd. Those factors also found the wife’s contentions with respect to subparagraphs (c) and (d) as enunciated by Holden CJ. 

13. It was submitted on behalf of the wife, and I accept, that the husband engaged in conduct, the effect of which was to protract the dispute.  I am satisfied that the husband failed to discharge his obligations as to disclosure and further that he sought to pursue an adjustment based on an “artificially deflated balance sheet” in order to obtain some advantage over the wife. 

14. As to subparagraph (e), the wife relies upon her Calderbank offer referred to earlier in this judgment.  The husband did not respond to that offer.  The only attempt to resolve the matter made by the husband was his offer, which would have resulted in the wife receiving less than 10 per cent of the result ultimately attained by her pursuant to the Final Orders.

15. As a result of that conduct the wife submits that an order for indemnity costs is justified.

16. The husband opposes orders for indemnity costs.  His primary submission in opposition to an order for indemnity costs is that such costs are to be awarded in only exceptional cases.

17. Further, the husband submitted that the wife’s lawyers had fallen into error insofar as they have adopted a “machine-gun approach” as was described by Wilson J in Guild & Stasiuk [2020] FamCA 348. In particular, the husband relied upon paragraph 86 of that judgment wherein his Honour cautioned that:-

    …Legal practitioners must take care in advancing their clients’ cases to establish at a factual level that the relevant claim to relief exists in law or in equity, that the basis of the claim is properly articulated in the court documentation, that the person claiming the relief proves an entitlement to it and that the precise order sought is properly formulated. 

18. Notwithstanding the husband’s submissions, I am satisfied that the wife’s lawyers have carefully and appropriately founded the wife’s claim for costs based on the findings contained in the Judgment.  Further I am satisfied that they have clearly articulated in the submissions filed on behalf of the wife the bases upon which costs should be awarded.

19. I am satisfied that the circumstances of this matter are so exceptional as to justify an order for indemnity costs, having regard to my findings that:-

    ·    The husband failed to meet his obligation to make full and frank disclosure, thus resulting in the wife incurring additional costs and the prolonging of the proceedings;

    ·    The husband pursued arguments, particularly with respect to the nature and extent of the parties’ liabilities, which were bound to fail in the absence of evidence supporting those contentions; and

    ·    There was a deliberate attempt to mislead the wife and the Court in relation to the L Pty Ltd loan.

20. The impact of the manner in which the husband pursued the litigation has resulted in a protracted trial and the wife incurring unnecessary and substantial legal costs. 

21. Notwithstanding the efforts by the wife to resolve the matter at an early stage through the production of a Calderbank offer, the matter was incapable of resolution due to the failure of the husband to respond to the wife’s proposals or to engage in negotiations. 

22. What was an otherwise straightforward property case, having regard to the length of the marriage, the contributions made by each of the parties and the relevant s 75(2) matters became a protracted and costly dispute due to the manner in which the husband elected to conduct the proceedings, which created uncertainty as to the identification and valuation of the parties’ interests.  That this is so is evidenced by the fact that the wife was cross-examined for approximately one and a half hours, whilst the husband’s evidence was given over three days in a hearing of four days duration.  I am satisfied that were there no issues in relation to the husband’s disclosure or contentions as to the parties’ liabilities, the matter may well have been capable of proceeding by way of submissions, particularly given there was no dispute between the parties in relation to the contribution assessment.

23. As to quantum, the wife relies upon Annexures C and D to her submissions which provides a statement of her legal costs and a calculation of costs pursuant to Schedule 3 of the Rules. The husband does not challenge the quantum of costs sought by the wife.

24. The wife seeks indemnity costs in the sum of $262,814.46.  Those costs relate to the totality of the proceedings. 

25. Whilst I am satisfied that the husband’s conduct has necessitated the wife engaging her lawyers to undertake additional work to ascertain the nature and extent of the parties’ interests and further, that the husband’s conduct has prolonged the proceedings, I am not satisfied that it is reasonable that the whole of the wife’s costs be sheeted home to the husband.  Even had the husband complied with the rules of court as to disclosure and the proceedings been conducted in an orderly fashion, the wife would have incurred costs in the prosecution of her application. 

26. Accordingly, having regard to those factors I am satisfied that the husband should pay 60 per centum of the wife’s costs, calculated on an indemnity basis fixed in the sum of $157,688.

I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 30 October 2020

Associate:

Date:  30 October 2020