Benito & Emmanouel (No 2)
[2023] FedCFamC1F 1048
•8 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Benito & Emmanouel (No 2) [2023] FedCFamC1F 1048
File number: SYC 103 of 2023 Judgment of: REES J Date of judgment: 8 December 2023 Catchwords: FAMILY LAW – COSTS – Where the wife was wholly unsuccessful in s 79A proceedings – Where the husband seeks costs on an indemnity basis – Where the Second and Third Respondents gave notice to the wife that costs would be sought on an indemnity basis – Where it is not appropriate for the wife to pay the husband’s costs – Where the wife had an arguable case against the Second and Third Respondents – Where the circumstances are not found to be “special or unusual” such as to justify an order for indemnity costs Legislation: Family Law Act 1975 (Cth), ss 79, 79A, 79A(1)(c) and 117(2A)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021, r 12.13(4)
Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Prantage & Prantage (2013) FLC 93-544
Division: Division 1 First Instance Number of paragraphs: 32 In Chambers: 8 December 2023 Counsel for the Applicant: Mr Lloyd SC Solicitor for the Applicant: JC Legal Practice Counsel for the 1st Respondent: Mr Wong Solicitor for the 1st Respondent: Barkus Doolan Winning Counsel for the 2nd & 3rd Respondents: Mr Havenstein Solicitor for the 2nd & 3rd Respondents: Gordon & Barry Lawyers Pty Ltd ORDERS
SYC 103 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BENITO
Applicant
AND: MR EMMANOUEL
First Respondent
MR B EMMANOUEL
Second Respondent
MS ULRICH
Third Respondent
ORDER MADE BY:
REES J
DATE OF ORDER:
8 DECEMBER 2023
THE COURT ORDERS:
1.That the husband’s application for costs is dismissed.
2.That the wife pay the costs of the husband’s parents as taxed or agreed on a party and party basis, such payment to be made within three months of such agreement, or the date upon which taxation is completed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Benito & Emmanouel has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
REES J:
On 30 November 2023, I delivered reasons and made orders in proceedings pursuant to s 79A(1)(c) of the Family Law Act 1975 (Cth) (“the Act”) between Ms Benito (“the wife”); Mr Emmanouel (“the husband”) and Mr B Emmanouel and Ms Ulrich (“the husband’s parents”).
At the conclusion of the reasons I stated,
The respective counsel have made their submissions in relation to costs but I was informed that the husband’s parents wish to rely on offers of settlement made. It was not appropriate for me to receive evidence of offers before the substantive issue was determined and the orders will provide that any further documents are to be filed within seven days and the issue of costs will be determined in chambers.
The husband filed an affidavit sworn by him on 6 December 2023.
The wife filed an affidavit sworn by her solicitor and a Financial Statement sworn by her on 6 December 2023.
The husband’s parents relied on an affidavit sworn by their solicitor on 28 November 2023.
Further written submissions were not allowed.
The wife was wholly unsuccessful in the s 79A proceedings but there were also proceedings in relation to a superannuation splitting order that had not been put into effect because, inter alia, the fund had changed its name after the orders were made and before the wife sought to put them into effect. The issues in relation to superannuation were resolved in the course of the hearing before me and orders made by consent.
The husband and the husband’s parents now seek indemnity costs.
This application is governed by the provisions of s 117(2A) which are reproduced below:
SECTION 117
(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.
I will deal firstly with the husband’s application.
Should the wife be ordered to pay the whole or part of the husband’s costs?
In her affidavit relied upon in the substantive proceedings, the wife deposed that she earns $75,000 per annum and that she lives, with her children and her parents, in the property which was transferred to her in the s 79 proceedings and which she estimates to be valued at $750,000.
The husband in cross-examination said he was employed in IT. I have not been directed to any other evidence about his financial position.
Neither party was in receipt of legal aid.
The husband relied upon the fact that the wife was wholly unsuccessful in the s 79A proceedings.
I have not been provided with any offers of settlement.
I take into account that, at the time the substantive orders were made, the three properties that the husband received had an agreed value of $4,005,000, although, on the husband’s case at that time, they were fully encumbered. By postponing the sales of the three properties that were transferred to him pursuant to the substantive orders, albeit that he paid the outgoings in the meantime and that he had the consent of the secured creditor, the husband was able to sell the three properties for some $1,770,000 over and above the agreed value.
In those circumstances, it is not appropriate for there to be any order for costs.
Should the wife be ordered to pay the costs of the husband’s parents?
The position in relation to the husband’s parents is different.
They are third parties and they were not parties to the dispute in relation to the superannuation splitting order.
There is no evidence in relation to their financial position other than that, between November 2021 and November 2023, they have received from the husband about $1,311,000.
As against the husband’s parents the wife was wholly unsuccessful.
The wife was on notice that the third parties sought indemnity costs because that order is sought in their response filed 10 February 2023.
On 22 June 2023, the solicitor for the husband’s parents wrote to the wife’s solicitors offering to settle the proceedings on the basis that the wife’s application be dismissed and that there be no order as to costs. The wife was advised that, if the matter proceeded, the third parties would seek indemnity costs.
It is appropriate that the wife should pay their costs.
Should the costs be paid on an indemnity basis?
The husband’s parents have complied with Rule 12.13(4).
When considering whether an order for indemnity or solicitor/client costs would be appropriate, it is instructive to revisit the decision of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive v Cussons”) at 233 where his Honour reviewed the authorities and said:
4. …The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require". Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo: "the categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 ay 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
The Full Court considered the law in relation to indemnity costs in Prantage & Prantage (2013) FLC 93-544 (“Prantage”). The majority (Thackray and Ryan JJ) set out the principles to be applied, holding that the principles enunciated by Sheppard J in Colgate-Palmolive v Cussons should continue to be applied in the Family Court of Australia.
In summary, the Full Court stated in Prantage,
2.In order to exercise the discretion judicially the following principles have been accepted by the Court as applicable:
(a)the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;
(b)the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course;
(c)whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.
It cannot be said that the wife did not have an arguable case against the husband’s parents.
The fact that they gave notice that they would seek indemnity costs is not sufficient to bring the facts within the parameters of those “special or unusual” cases where indemnity costs would be ordered.
This is not a matter in which indemnity costs are appropriate.
The wife will pay the costs of the husband’s parents on a party and party basis as taxed or agreed.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rees. Associate:
Dated: 8 December 2023
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