Campbell & Diboll (No 4)
[2022] FedCFamC1F 237
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Campbell & Diboll (No 4) [2022] FedCFamC1F 237
File number: WOC 455 of 2013 Judgment of: GILL J Date of judgment: 11 April 2022 Catchwords: FAMILY LAW – PROCEDURE – Slip Rule – Where the primary judgment predicated on identifying proper costs claimable by applicant liquidators – Liquidators sought variation of primary order to incorporate GST under the slip rule – No GST amount identified or pursued in primary hearing by the liquidators – Application dismissed – Costs awarded to respondent.
FAMILY LAW – COSTS – Indemnity costs – cumulation of factors.
Legislation: Corporations Act 2001 (Cth)
Family Law Act 1975 (Cth) s 117
Federal Circuit Court Rules 2001 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 10.13(1)(e) and r 10.13(1)(h)
Cases cited: Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Harrell & Nesland (No. 2) (2021) 62 Fam LR 230
Kohan and Kohan (1993) FLC 92-340
Penfold v Penfold (1980) FLC 90-800
Phillips & Hansford [2020] FamCAFC 28
Division: Division 1 First Instance Number of paragraphs: 27 Date of hearing: 11 April 2022 Place: Canberra Counsel for the Applicant: Mr Lipp Solicitor for the Applicant: Chamberlains Law Firm Counsel for the Respondent: Mr Moller Solicitor for the Respondent: Farrar Gesini Dunn ORDERS
WOC 455 of 2013 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR X & MR Z
Applicant
AND: MS DIBOLL
Respondent
ORDER MADE BY:
GILL J
DATE OF ORDER:
11 APRIL 2022
THE COURT ORDERS THAT:
1.The application in proceedings filed 22 February 2022 seeking variation under the slip rule made by the applicant liquidators (“the liquidators”) is dismissed.
2.The liquidators pay the respondent’s costs of and incidental to the substantive proceeding, save for the respondent’s costs of her application in a case filed 31 October 2019.
3.The costs payable pursuant to Order 2 be paid:
(a)on an indemnity basis fixed in the sum of $123,424.71;
(b)within 28 days; and
(c)into the trust account of Farrar Gesini Dunn.
4.The liquidators are to pay the respondent’s costs of, and incidental to, the liquidator’s application filed 22 February 2022.
5.The costs payable pursuant to Order 4 be paid:
(a)on an indemnity basis;
(b)in aid of determining the quantum:
(i)the liquidators shall file and serve material to be relied upon restricted to quantum within seven days of today’s date;
(ii)the respondent shall file and serve the material to be relied upon restricted to quantum within 14 days of today’s date;
(iii)either party is at liberty to relist the matter before me to deal with quantum within 21 days of today’s date; and
(iv)failing agreement or exercise of liberty, the costs shall be thereafter as assessed on an indemnity basis.
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 the pseudonym Campbell & Diboll is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
GILL J:
These proceedings follow judgment given on 10 February 2022, at which the application by way of enforcement by the applicant liquidators for the respondent, Ms Diboll, to pay a sum of money re their costs of liquidating a corporate entity of the relationship between Ms Diboll and Mr Campbell was dismissed. The background is set out in the primary judgment. Additionally, the liquidators were ordered to refund to Ms Diboll a portion of the money that she provided to them in part payment of their claims against her.
These proceedings concern both a contest as the costs following that judgment, and an application by the liquidators for amendment of the judgment pursuant to the slip rule provisions at r 10.13(1)(e) and (h) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
I will deal firstly with the slip rule application. By application in a proceedings filed 22 February 2022, and supported by an affidavit of Mr Z affirmed on 21 February 2022, the liquidators seek relief under the slip rule in two respects:
(1)being an adjustment of the judgment to incorporate GST; and
(2)being an adjustment of the judgment to incorporate additional sums as owing to the liquidators, and thereby cause Ms Diboll to pay a further sum to the liquidators.
Ms Diboll neither consented to, nor opposed the GST adjustment, but did oppose the other adjustment.
The GST adjustment is said to arise from the manner in which the judgment calculated amounts owing to the liquidators, in brief, being amounts approved in two creditors’ meetings of 19 May 2015 and 10 September 2015. The slip is said to arise from taking the amounts so approved without GST when they were approved as ‘plus GST’. Despite a lack of opposition to, and a favourable concession regarding this issue by Ms Diboll, it will be refused.
As identified by the liquidators, the judgment was predicated on identifying the proper costs claimable by the liquidators asserted in the judgment to be as approved in the first two creditors’ meetings. The liquidators observe that the ‘plus GST’ would have been incorporated into the amount accordingly. The liquidators assert that it is in the interests of justice that it now be incorporated in the amount, such as to include the ‘plus GST’.
The identical slip rule provisions previously contained in the Federal Circuit Court Rules 2001 (Cth) were dealt with by the Full Court in Harrell & Nesland (No. 2) (2021) 62 Fam LR 230 (at [15]-[19]) from which it may be discerned that:
(1)As a general rule, once an order is made a judge is functus officio;
(2)The overall purpose of the slip rule provisions is to avoid injustice to litigants;
(3)They are directed to what the Court intended to do:
(a)in the correction of orders which do not reflect such;
(b)in some circumstances the correction to what the Court would have determined absent the slip rule omission;
(4)They do not permit the reconsideration or alteration of the substance of the result;
(5)Where the order correctly records the intention of the Court they leave no scope to amend.
Here, the liquidators seize on the stated intention in the judgment to adopt that which was conceded by Ms Diboll in the first two creditors’ meetings to be the proper remuneration, being an amount that was expressed in those meetings in a dollar certain amount, plus an unidentified GST amount. Despite that characterisation, the application will be refused.
The amount that was identified as proper, which did not include GST, was in the following context:
(1)There was no, and nor has there ever been, an identification of the dollar amount of the GST amounts;
(2)The amount that was actually pursued at the hearing by the liquidators involved the GST exclusive amounts approved in each of the four creditors’ meetings. That is it did not incorporate a claim for the GST.
To now amend the judgment is to recast the case that was run before the Court by the liquidators, and to assume the liquidators assumed an amount at variance with what they actually sought. The deficiency in the amount, in so far as it may be seen as such, flows from the manner in which the case was conducted for the liquidators, not from a slip in the judgment. There being no pursuit at the time of the GST, nor identification of the GST, it was not open to include it in the judgment, and there was no intention to include it and accordingly no accident, or slip, or failure in including it. It is not a matter to be corrected under either limb of the slip rule as either failing to reflect the intention of the Court or being a mistake. The correction will not be made.
The second slip rule aspect related to an asserted failure to include the preapproved amounts from the various creditors’ meetings. At each meeting, the creditors’ approved prior liquidator’s expenses as incurred by the time of the meeting, and adopted the liquidator’s future estimate for expenses, and approved such. Such amounts were not included in the judgment. As identified by Ms Diboll, they would have involved double counting as at each subsequent meeting the expenses that had been incurred since the prior meeting were presented for approval, despite the preapproval that had taken place. In any event, given the manner in which the liquidators pursued a sum based on the specific amounts approved at each meeting and including the final preapproved amount from the fourth of the creditors’ meetings, the pursuit of the additional amounts was also a fundamental reconstruction of the liquidators’ case. This is not a matter open to be corrected under the slip rule. Accordingly, the applications for amendment pursuant to the slip rule are refused.
Although Ms Diboll raised an issue regarding the calculation of disbursements, which was on her account favourable to the liquidators, she indicated that on the refusal of the amendment of the liquidator’s claim she would not pursue that argument and has not done so.
COSTS
Costs in this matter are governed by s 117 of the Family Law Act1975 (Cth) (“the Act”). A starting point is that each party will bear his or her own costs, unless the Court considers that there are circumstances which justify an order as to costs taking into account the considerations set out in s 117(2A) of the Act: see Penfold v Penfold (1980) 144 CLR 311. Of those various considerations, there was some identification of Ms Diboll’s financial circumstances which indicated that she faces difficult circumstances. She is now in retirement and there is some risk to her capacity to retain her home. There was no indication of the liquidators’ circumstances. Neither party is in receipt of legal aid.
Some issues as to the conduct of the proceedings arise. Some issues as to the failure to comply with orders also arises, with an instance of such being in the tardiness of production of the file by the liquidators.
In respect of whether a party has been wholly unsuccessful, it may be seen that the liquidators have been wholly unsuccessful in the overall proceedings, although, in respect of two interlocutory applications, Ms Diboll has also been unsuccessful, that is in her early application for an appointment of an expert and in her application for summary dismissal at the time of the final hearing.
An issue also arises as to offers made in writing, with Ms Diboll having made an offer in November 2019 to resolve the matter on her payment to the liquidators of an additional sum of $25,000.
The Court is also at liberty to take into account other matters that bear upon the issue.
The lack of success of the liquidators is sufficient to justify, at least generally, a costs order with potential caveats in relation to Ms Diboll’s unsuccessful applications. Ms Diboll pursues more than a mere costs order, but also pursues the exceptional outcome of her costs being paid on an indemnity basis.
It should be observed that the usual order for costs when one is made, is not that they be paid on an indemnity basis, and that such requires exceptional circumstances, such that the justice of the case requires such an outcome: see cases such as Kohan and Kohan (1993) FLC 92-340; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; and Phillips & Hansford [2020] FamCAFC 28 (“Phillips & Hansford”).
In Phillips & Hansford (at [35]-[36]), it was noted that exceptionality is required and also observed that the categories of exceptionality are not closed. Reasons for the grant of costs on an indemnity basis include, but are not restricted to, the imprudent refusal of an offer of compromise or persistence in a hopeless case, including where a case has been fundamentally misconceived.
Here, there are an accumulation of matters that point to an indemnity costs award being made from November 2019. For much of the history of the proceedings the liquidators pursued their claim based on the Insolvency Practice Schedule (“IPS”) and the Corporations Act 2001 (Cth) (“the Corporations Act”). Ultimately they conceded this to be wrong. This approach, through which both the Court and Ms Diboll went down rabbit holes no one should have had to traverse, may also illustrate the misconceived nature of the application that was put by the liquidators. Further, the application made by the liquidators has varied repeatedly in terms of the relief that has been sought, in particular in relation to the pursuit of particular amounts from Ms Diboll, and also the manner of the pursuit of costs against Ms Diboll. The various applications made by the liquidators have also involved unmeritorious relief being sought in respect of the application of the doctrine of res judicata against her, and in an application to restrain her from resisting their application to enforce the proceedings against her. The conduct of the liquidators also featured unreasonable resistance to orders, including resistance to the production of the file that was essential to answering the question of whether or not the costs that they sought were reasonable.
Ultimately, the liquidators’ case involved an utterly deficient case being presented to the Court.
It should be observed that Ms Diboll, as the respondent in the proceedings, had no choice but to defend the claim. Although it was colourfully put, it was reasonably accurately put that the liquidators were the wolves running for lunch in these proceedings, while Ms Diboll was the rabbit running for her life.
Now, Ms Diboll finds herself in a position that due to the costs incurred by her in defending the case pursued against her by the liquidators, her victory, being a result of the pursuit by the liquidators of an utterly deficient case, may be pyrrhic, depending on the outcome in respect of costs, noting her difficult financial circumstances. In those circumstances, her offer of $25,000 in November 2019 assumes significant weight, even if it did not identify the weaknesses in the liquidators’ case as the liquidators complain it should have.
It is an accumulation of the various factors that justify costs being ordered on an indemnity basis in what is an exceptional case. There should, however, be exceptions to that approach. For example, Ms Diboll should not receive the costs in relation to her application in a case filed on 31 October 2019 regarding the application of an expert. I note, however, that she does not seek costs in respect of that matter. Despite her lack of success in relation to the appointment of an expert in the October 2019 application, I do not propose to offset that by making a costs award in favour of the liquidators, noting that the complexity of the application was generated by their putting of the case based on the IPS, where that was a matter that seriously obfuscated the conduct of that application in a case. I do not propose to depart from the usual rule in respect of that, that each party bear their own costs.
Further, there should be a discounting of the costs due to the failed summary dismissal application on day one of the trial. In discounting such, I accept the assistance in identifying the liquidators’ case for the trial that then immediately followed. That identification of their case was in part a product of a summary dismissal application. It was there, on what was day one of the trial, that the liquidators finally eschewed their misplaced reliance upon the Corporations Act and IPS and nominated bare reliance on the orders of Faulks DCJ as supporting their expenses. While Ms Diboll, in the face of her lack of success, should not receive her costs for that day of the trial, the above circumstances also result in a refusal of liquidators’ costs of that day. Doing as best as I can from the material that has been filed in respect of that, I identify that the solicitor’s costs of that day constituted $2,240, and counsel’s attendance costs (which were discounted from a full day down to a partial day) were $3,960. I anticipate that although there would have been preparation put in respect of the summary dismissal application, there would have been significant overlap in the preparation of that with the preparation of the case proper. I propose to deduct a total incorporating the amounts I have just identified for solicitor and counsel of $6,200 from the amount that Ms Diboll would otherwise receive under an indemnity costs award.
As to today’s costs, again, they should be met on an indemnity basis. The slip rule application was misconceived and reflected an attempt to depart from the manner of the running of the case by the liquidators. However, I do not have the material to make an order in the sum certain as pursued by Ms Diboll. Accordingly, I anticipate, subject to any further submissions from the parties that in making a costs order on an indemnity basis it will be in an amount as agreed, or as assessed on such a basis.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gill. Associate:
Dated: 20 April 2022
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