Brand and Yoke (No. 2)

[2007] FamCA 1187

FAMILY COURT OF AUSTRALIA

BRAND & YOKE (NO. 2) [2007] FamCA 1187

FAMILY LAW – COSTS – Whether costs should be ordered on an indemnity basis – Relevant factors in awarding indemnity costs include the production of an offer to compromise and the husband’s failure to participate fully in the litigation

Family Law Act 1975 (Cth)

Colgate Palmolive & Cussons Pty Limited (1993) 46 FCR 225
Fountain Selected Meats Sales Pty Limited (1988) 81 ALR 397
JEL & DDF(No 2) (2001) FLC 93-083

APPLICANT: Ms Brand

RESPONDENT: Mr Yoke

FILE NUMBER:

CAC 1635 of 2007

CAF 437 of 2004

DATE DELIVERED: 20 September 2007

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Faulks DCJ

HEARING DATE: 20 September 2007

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Mr Farrar

NO APPEARANCE ON OR BEHALF OF THE RESPONDENT

Orders

1. That within 30 days the husband pay to the solicitors for the wife, Farrar Gesini & Dunn the costs and disbursements of the wife of and incidental to these proceedings in the sum of $150,734.

2. That within 14 days the husband pay to the Single Expert, Mr W, the sum of $5,445 being one half of his fees as the Single Expert in this matter.

3. I further direct that the matter be removed from the pending cases inventory. 

IT IS NOTED that publication of this judgment under the pseudonym Brand & Yoke is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: CAC 1635 of 2007

MS BRAND  

Applicant

And

MR YOKE

Respondent

REASONS FOR JUDGMENT

1. In this matter the application before the Court is that filed by the applicant wife, Ms Brand, on 23 August 2007 seeking two orders.  One is that within 30 days the husband pay to the solicitors for the wife, Farrar Gesini and Dunn, the costs and disbursements of the wife of and incidental to these proceedings; such costs to be paid on an indemnity basis.  The second is that within 14 days the husband pays to the single expert, Mr W, the sum of $5,445 being one half of his fees in the matter. 

2. In this matter the law that governs my determination of questions of costs is contained in s 117 of the Family Law Act 1975 (Cth) which prescribes that as a primary rule, except in the exceptional circumstances recently added to section, in sub-section (1) that each party ought properly to bear his or her own costs.

3. However, sub-section (2) of s 117 provides that

   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) 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.  

   The matters the Court is obliged to take into account under sub-section (2A) of s 117 are, in brief form, the following:

   a.the financial circumstances of the parties…

   b.whether [either] party is in receipt …of  legal aid…

   c.the conduct of the parties to the proceedings in relation to the proceedings…

   d.whether the proceedings were [brought about] by the failure of a party to ….comply with ….orders of the Court.

   e.whether any party to the proceedings has been wholly unsuccessful…

   f.whether either party… has made an offer… [which would have produced a better result in effect from that that was finally achieved]

   g.such other matters as the court considers relevant.

4. In this matter each of those has some part to play, apart from the Legal Aid question. The application however is for indemnity costs and the rules prescribe, as Mr Farrar correctly pointed out, that in such circumstances there is an obligation on the applicant to make available to the Court any costs agreement or agreement between her solicitors and herself about costs.  That has been complied with in the affidavit filed in support of these proceedings and I note that, as Mr Farrar also pointed out, while there is no apparent imposed obligation to provide a copy of that agreement to the other party in this matter, the affidavit of Ms Fox sets that out and that affidavit has, so far as it was possible to do so, been drawn to the attention of the respondent.

5. Mr Farrar analysed the amount of costs further being expended in the matter as supported by the material set out in the affidavit of Ms Fox filed in support of the application for costs and fixed the amount that had been paid by his client exclusive of any interest that had been incurred as a result of lending arrangements to meet the payment of costs on the way through the proceedings in the sum of $150,734.  This, in effect, is money that has been paid by the wife to her solicitors for services that they have rendered in relation to these proceedings. Ultimately the proceedings were determined on an undefended basis in the sense that the husband did not attend the hearing and his documentation was limited. 

6. During the course of the hearing and in my judgment I made mention of the fact that his failure to honour his appropriate obligations under the Rules and indeed under the Act and the law generally to make a proper and full and frank disclosure had lead to the incurring of costs.  In the long run; although invited to do so, I declined to take account of that matter as a particular factor under s 75(2) (logically it would be s 75(2)(o)) of the Family Law Act (Cth), but indicated at that point that it may well be an appropriate matter in relation to costs and I think it is.

7. So far as the question of costs are concerned; I will deal with that first and then return to the question of whether or not the order should be made on an indemnity basis. 

8. In my opinion the financial circumstances of the parties as found by me in the course of the final judgment are such that there is a disparity in the financial circumstances of each of the parties and this is a matter which would favour, in these circumstances, the wife, not the husband.  The conduct of the husband in relation to the proceedings as set out extensively in my judgment and as corroborated in the affidavit of Ms Fox in support of this application, is such that the proceedings were drawn out, involved significant interlocutory steps such as discovery and inspection and [caused] other inquiries to be made because of the failure on the part of the husband properly to disclose his assets.

9. And to some extent it could be said that the proceedings were, in part at least, necessitated by his failure, from time to time, to comply with orders of the Court to make appropriate disclosure.  I do not rely heavily upon that matter for the purposes of making an order for costs, but note simply that those that fail to comply with directions and orders of this Court to enable the Court properly to ascertain the position of the parties and to make a determination cannot be heard to complain about the fact that they are subsequently ordered to pay costs.

10. It is hard to say that in property proceedings in this Court either party was wholly unsuccessful.  Nevertheless, in relation to his response filed in the proceedings, it would have to be said that the husband was substantially unsuccessful even if not wholly unsuccessful. 

11. The offers to resolve this matter have been set out in the course of the affidavit of Ms Fox and they reveal that the husband would have been well-advised to have accepted an offer of settlement at a much earlier point than he did and if he had he would have been much better off than would be the present effect of the orders that I have made.  In those circumstances it is appropriate that I should take that into account and it is a matter that is appropriately taken into account in determining whether there should be an order for costs.

12. Finally; in relation to other matters as the Court considers relevant, if I were to regard s 117(2) as a general authority on the part of the legislature to order costs it would be appropriate in relation thereto to take account under (g) of subsection (2A) the proposition that the husband's conduct during the course of these proceedings is such that the wife has been put to additional expense which was found by me unequivocally in my judgment to have been justified to the extent that the husband's assets were found to be as the wife asserted and not as he asserted.

13. In those circumstances it would seem, even on the strict interpretation, literal interpretation of s 117(2) it would be open to me to make an order that the husband pay the wife's costs in the sum estimated by her.

14. Beyond that, however, as Mr Farrar has pointed out to me, there are a number of reasons why this Court might, in any event, consider the imposition of indemnity costs; those being costs which were designed to put the wife back into the situation she might properly have been without expenditure of money if the husband had, in the circumstances of this matter, behaved in an appropriate way. 

15. In the matter which has now become effectively the leading case in relation to indemnity costs, Colgate Palmolive & Cussons Pty Limited (1993) 46 FCR 225, his Honour, Shepherd J, set out a number of criteria which have subsequently been the subject of comment and substantial adoption by the Full Court of this Court; most relevantly, again as Mr Farrar has pointed out to me, in JEL & DDF(No 2) (2001) FLC 93-083.

16. Of the matters that his Honour, Shepherd J, drew attention to and which were effectively endorsed by the Full Court in JEL & DDF (supra), the following, in my opinion, are relevant in this matter.  First; it does appear that there were statements subsequently found by me to be false made by the husband in his very limited documentation in these proceedings, being his financial statement.  I do not believe the evidence would enable me at this point to make a finding that the statements were made in a fraudulent way or in the sense that the husband knew that he would effectively be committing perjury by making them.  The fact that he chose to express himself in terms which, in my opinion, were so far reasonably from the circumstances of what had happened is, in itself, a matter I can properly take into account although I do not feel entirely comfortable that the circumstances in this matter would bring the matter within the Fountain Selected Meats Sales Pty Limited (1988) 81 ALR 397 which deals specifically with this aspect of the matter.

17. There is no doubt however that the husband failed consistently to comply with his obligations under the rules and under general law and in accordance with the established case law of this Court to make a full and frank disclosure.  Even in circumstances where it was made abundantly clear to him and his legal advisers that his failure to make available the appropriate evidence may bring about an adverse finding in due course.  In those circumstances, that in itself, in my opinion, would provide a basis upon which an order for indemnity costs might be made and ought properly to be made in this case.

18. In addition, the case was unquestionably unreasonably prolonged by the failure again in the same terms of the husband properly to have provided information sought.  I do not mention this in the context of using the previously referred to ground as being a separate basis.  They are part of the same conduct.  But the conduct in itself has consequences which are different depending upon the way in which they are regarded and on either event the conduct is an appropriate matter to justify an order for indemnity costs.

19. Finally, Mr Farrar suggested that I should take account of the fifth matter that his Honour, Shepherd J, made reference to, which was - in the words of his Honour:

    An imprudent refusal of an offer to compromise.  

20. This was a factor which again the Full Court in JEL & DDF (supra) took up because that was the specific basis for the application for indemnity costs in that matter.  Their Honours in the Full Court of this Court indicated that simply to refuse to accept an offer of compromise does not in itself give rise to an inevitable consequence of indemnity costs but if it is “sufficiently imprudent” (to return to the wording used by Shepherd J) it is a reasonable basis in combination with other factors for concluding that a litigant ought properly to be put back into his or her financial state prior to the commencement of proceedings so far as that is possible.

21. I finally take into account in relation to this matter the fact that the conduct of the husband and indeed the way in which the proceedings took place, had meant that the wife had incurred an added expense for interest in money borrowed to pay her fees of $9,500 or thereabouts which is an amount she would not otherwise have had to incur if in fact the proceedings had been conducted in accordance with the appropriation admonitions, rules and case management guidelines of this Court.

22. In those circumstances it appears to me that there is a justification for an order for indemnity costs. 

23. I propose however to frame the order in terms of an order that the husband pay the wife's costs in the sum of $150,734 rather than to frame it as an order for indemnity costs as such.

ORDERS DELIVERED

1. In relation to the last mentioned Order (2), I indicate that while I have extreme sympathy for the plight of Mr W in having accepted, at the invitation of this Court, an invitation to be a Single Expert on the basis that he would be paid as to one half of his fees by each of the parties, that he may be left bereft so far as the obligation for the husband, however, it would be inappropriate to impose an obligation to pay what is clearly what is the husband's obligation on the wife and the order sought in the circumstances is reasonable.  It carries with it the consequence, as does the order in relation to the wife's costs, that a failure to pay within the time stipulated will then generate interest in accordance with the Family Law Rules 2004 for payment in due course if the order is able to be enforced.

ORDERS DELIVERED

I certify that the preceding twenty four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks

Associate

Date: 8 October 2007