Binett and Binett
[2019] FamCA 723
•4 October 2019
FAMILY COURT OF AUSTRALIA
| BINETT & BINETT | [2019] FamCA 723 |
| FAMILY LAW – COSTS – Where wife seeks order as to indemnity costs – Where consideration of applicable principles – Where not appropriate to order indemnity costs – Where not appropriate to make any order for costs. |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) r 19.08, 19.18 |
| Anison & Anison [2019] FamCAFC 108 Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 Binett & Binett [2018] FamCA 441 Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536 Collins & Collins (1985) FLC 91-603 D & D (Costs) (No. 2) [2010] FamCAFC 64 Fennessy & Gregorian [2009] FamCAFC 44 Greedy & Greedy (1982) FLC 91-250 Harris & Dewell & Harris (Costs) [2018] FamCAFC 180 Hawkins & Roe [2012] FamCAFC 77 Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 Joyce & Fante [2013] FamCAFC 141 Limousin & Limousin [2007] FamCAFC 1178 Luadaka & Luadaka (1998) FLC 92-830 Parke & the Estate of the Late A Parke (2016) FLC 93-748 Penfold v Penfold (1980) 144 CLR 311 Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681 |
| APPLICANT: | Ms Binett |
| RESPONDENT: | Mr Binett |
| FILE NUMBER: | PAC | 1422 | of | 2017 |
| DATE DELIVERED: | 4 October 2019 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | By way of written submissions last received on 2 August 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Batey |
| SOLICITOR FOR THE APPLICANT: | Jacqueline Kyle Family Law |
| COUNSEL FOR THE RESPONDENT: | Ms Lawson |
| SOLICITOR FOR THE RESPONDENT: | LCI Legal |
Orders
The wife’s application for costs is 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 Binett & Binett 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 PARRAMATTA |
FILE NUMBER: PAC 1422 of 2017
| Ms Binett |
Applicant
And
| Mr Binett |
Respondent
REASONS FOR JUDGMENT
The application for determination is an application for costs contained in the wife’s Application in a Case filed 26 June 2019 and husband’s Response filed 27 June 2019 in ongoing property proceedings between the parties.
The wife’s interim application concerned various interim property orders which included orders:
a)That the husband to deposit proceeds of registered mortgage ... into a trust account in the joint names of the parties
b)That S Business be appointed a valuer for a property at Z Street, Suburb V; and
c)That the parties sign a joint letter of instruction to facilitate such and other orders as to disclosure by the husband relating to the proceeds of the registered mortgage and the Suburb V property.
Orders were made on 2 July 2019, in summary, which provided:
(1)S Business are appointed as single expert to value the property at T Street, Suburb V being the land described in Certificate of Title ….
(2)The wife’s solicitors provide to S Business a letter of instructions within seven (7) days to undertake such valuation.
(3)That the cost of the single expert in the first instance be met by the husband within seven (7) days of him receiving an invoice with the ultimate liability of such costs reserved to final trial.
(4)That the husband provide to the solicitor for the wife in hard copy the following documents within 48 hours of orders being made:
(a)Copies of all bank statements for any accounts where any of the $400,000 being the proceeds of registered mortgage ... may have been paid into or out of for the period 1 April 2019 to date.
(b)Any valuations obtained in relation to the property.
(c)All conveyancing files for any dealings with the property from 1 January 2019 to date.
(d)All applications for loans made by the husband from 30 June 2018 to date.
(e)All correspondence between the husband or anyone on his behalf and financial institutions from 30 June 2018 to date.
(5)Order 3 made on 15 June 2018 be discharged.
(6)That pending further order, the husband be restrained from dealing with, further encumbering, assigning or transferring any or all of his right, title and interest in any real estate property in his name or in the name of any corporate entity controlled by him and is further restrained from taking any action to change the ownership of any shareholding or other interest held by him in any corporate entity controlled by him without the wife’s express consent in writing or further Court order.
(7)Leave is granted to the wife to apply on short notice in relation to the orders made above.
(8)Upon noting that the wife seeks an order for indemnity costs, the wife file and serve short submissions in support of that application within 14 days and the husband file and serve any short submissions in response within a further 14 days and upon completion of submissions judgment reserved to chambers.
(9)The parties are granted leave to issue such subpoena as they consider relevant to the issues for consideration before the Court with such subpoena to be returnable by no later than 14 days before the commencement of the final hearing of this matter.
(10)Leave is granted to the parties to have photocopy access to all financial documents produced on subpoena in these proceedings.
(11)Within 48 hours of today’s date the husband sign an authority authorising the wife, her legal representative or any other party nominated on her behalf to attend upon the administrator X Business and to obtain such information as may be reasonably requested in relation to the ongoing administration of the Y Group.
Trial directions were also made on 2 July 2019 to advance the matter.
Upon receipt of written submissions, judgment as to the issue of indemnity costs was reserved to chambers.
Costs
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs.
That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.
Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They are as follows:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party has legal aid and the terms of any grant of aid;
(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 answers, 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.
In Collins & Collins (1985) FLC 91-603 (at 79,877), the Full Court described the discretion conferred by s 117 as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way.
The Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
17.With respect to the application of the section, in Penfold v Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
1.Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a clear case".
2.Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
(footnotes omitted)
18.The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:
… A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
In Greedy & Greedy (1982) FLC 91-250 and Luadaka & Luadaka (1998) FLC 92-830, the Full Court made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.
The provision relating to the calculation of costs is set out in r 19.18(1) of the Family Law Rules 2004 (Cth) (“the Rules”) which states:
Method of calculation of costs
(1)The court may order that a party is entitled to costs:
(a)of a specific amount;
(b)as assessed on a particular basis (e.g. 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.
It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162 that the purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”.
In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 the Court said at [10] that the Court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.
Murphy J observed in Parke & the Estate of the Late A Parke (2016) FLC 93-748 at [130]:
8.If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court”… The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”…
Considerations
The wife contends that the husband is in a much stronger financial position than her, asserting that he has control over the parties’ wealth. The husband contends that the Y Group of Companies of which he is a director was entered into voluntary administration and as such he now has no funds and limited resources available to him. He also asserts that at the present there is not a valuation of the Y Group to support the wife’s claim.
The husband’s superior financial position has previously been detailed in the earlier Reasons for Judgment: Binett & Binett [2018] FamCA 441. On that occasion interim property orders were made for an interim property distribution to the wife so as to “level the playing field.” However, it is of note that this judgment was delivered prior to the asserted voluntary administration of the husband’s companies. Some doubt exists as to whether the husband is still in a superior financial position to the wife.
Neither party is in receipt of legal aid.
The wife contends that the husband has deliberately failed to make proper disclosure at all material times as to property which necessitated her bringing the application. The husband contends that given no findings have been made in relation to what assets form part of the parties’ complex asset pool, his purported failure to disclose information in relation to certain assets is justified in light of his position that he has no interest in the assets as contended by the wife. This submission belies the obligations as to disclosure on parties to financial proceedings in this Court.
The wife also contends that the proceedings were necessitated by the failure of the husband to comply with previous order of the Court of 15 June 2018 which provided that the husband be restrained from:
dealing with, further encumbering, assigning or transferring any or all of his right, title and interest in any real estate property in his name or in the name of any corporate entity controlled by him… without first giving to the wife 28 days’ notice.
The husband simply asserts that he refutes any allegation that he has previously failed to comply with any restraints imposed upon him by the Court. The husband’s apparent failure to give the wife notice persuaded the Court to make an order in similar terms but which required the husband to obtain the wife’s express consent in writing before dealing with assets falling within the scope of that order.
The wife contends that the husband's Response to her Application in a Case was entirely unsuccessful. This argument fails given one part of the husband’s application in relation the parties’ liability for costs of the single expert is a matter reserved to final trial. The orders made in relation to this application were not wholly those sought by either party. Generally as to “wholly unsuccessful” see Anison & Anison [2019] FamCAFC 108.
The wife also contends that she had made an offer in writing to the husband to settle the proceedings and annexes to her submissions a letter from her solicitor to the husband which she submits is evidence of that offer. As is properly contended on behalf of the husband, such correspondence cannot be characterised as an offer as it simply sets out the wife’s factual allegations in the proceedings.
Indemnity Costs
The wife seeks orders that the husband pay her costs on an indemnity basis.
It is usual for the Court to make an order for costs on a party/party basis if an order for costs is made at all.
Rule 19.18(3) further provides 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.
The Court has jurisdiction in its discretion to make an order for costs on an indemnity basis and the purpose of such an award is to more fully or even wholly repay to a party all, or at least the majority, of their legal costs and disbursements and charges incurred in the proceedings.
The category of cases in which an award of an indemnity costs order may be appropriate are not closed and the Full Court of the Family Court observed in Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681 at [31]:
14.… 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 order is sought. …
More recently, the Full Court has considered indemnity costs in Joyce & Fante [2013] FamCAFC 141, Limousin & Limousin [2007] FamCA 1178, Fennessy & Gregorian [2009] FamCAFC 44 and D & D (Costs) (No. 2) [2010] FamCAFC 64.
Otherwise, the principles underlying an award for indemnity costs have been classically summarised by Sheppard J in Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536 where his Honour, in summary, said at [24]:
1.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 a party and party basis. …
2.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. …
3.In consequence of the settled practice which exists, the Court ought not usually make an order for 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. …
Sheppard J set out some of the circumstances which may warrant the exercise of the discretion to award indemnity costs and they included:
a)false and irrelevant allegations of fraud;
b)misconduct that causes a loss of time to the Court and other parties;
c)where the proceedings were commenced or continued for an ulterior motive;
d)the undue prolongation of a case on groundless contentions; and
e)wilful disregard of known facts and clearly established law.
In Harris & Dewell & Harris (Costs) [2018] FamCAFC 180 (20 September 2018) the Full Court said (footnotes omitted):
23.In Kohan and Kohan, the Full Court held, in applying the principles expounded by Sheppard J in Colgate-Palmolive, that an order for indemnity costs represents a “very great departure from the normal standard”. In the later decision of the Full Court in Prantage & Prantage, Thackray and Ryan JJ referred to Kohan and other authorities in the Full Courts of both this Court and the Federal Court of Australia as well as the state appeal courts. Their Honours concluded (at [86]) that the “usual rule” continued to apply in respect of awards of costs in this Court notwithstanding the Full Court accepting that the difference between party/party costs and a party’s actual costs has continued to grow significantly.
24.That proposition also derives support from what Callinan J said in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation. His Honour said that an order for indemnity costs should “be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers”.
25.The rarity of an order for indemnity costs can also be seen illustrated by the comments of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 2), referred to by their Honours in Prantage (at [102] – [103]). Lindgren J said that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation.”
26.Of course, in proceedings under the Act, an overriding “usual rule” is prescribed by s 117(1), namely that each party bears their own costs. The degree of departure between that “usual rule” and a result where one party bears the totality of the other party’s costs can be seen to be all the greater.
The provisions of the Rule 19.08(3) provide:
Order for costs
(1)A party may apply for an order that another person pay costs.
(2)An application for costs may be made:
(a)at any stage during a case; or
(b)by filing an Application in a Case within 28 days after the final order is made.
(3)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.
The obligation imposed by the Rule is to “inform” the Court if a party is bound by a costs agreement and, if so, to “inform” the Court of “the terms of the costs agreement”. There is no obligation cast by the Rule to put into evidence a copy of the relevant costs agreement, although in practice that is very frequently the means by which the Court is informed of its relevant terms. In any event, the wife adduced a copy of the costs agreement evidencing its terms.
The husband contends that there are no exceptional circumstances in the present proceedings that justify the award of costs on an indemnity basis. He asserts that attendance at court was productive in that the Court made a suite of orders to ensure the matters readiness for trial, which in itself obviated the need for further court appearances and, therefore, saved the parties incurring additional legal costs.
The circumstances of this case are not such that warrant, if the Court was minded to make a costs order at all, the exercise of discretion to award indemnity costs and depart from the usual rule that if a costs order be made it be done on a party/party basis.
While it is the case that the husband’s lack of disclosure and dealings with assets were some of the issues that necessitated the wife filing the interim application, these were not the only issues requiring determination by the Court at the interim hearing.
Relevantly, the Court also used this court event to progress the matter by making trial directions.
For this reason and in all the circumstances discussed above there is no justification for the Court departing from the general rule that each party pay their own costs.
An order will be made dismissing the wife’s costs application.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 4 October 2019.
Associate:
Date: 4 October 2019
0
12
2