Campi & Ferrin (No 2)
[2024] FedCFamC1F 517
•2 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Campi & Ferrin (No 2) [2024] FedCFamC1F 517
File number: PAC 4152 of 2021 Judgment of: HARTNETT J Date of judgment: 2 August 2024 Catchwords: FAMILY LAW – COSTS – Where the husband filed an Application in a Proceeding – Where the husband filed a Notice of Discontinuance the day prior to the hearing – Where the wife sought a costs order against the husband – Where the wife sought costs on an indemnity basis or in the alternative party-party costs – Where the husband’s conduct caused the wife to incur legal costs – Where the husband wholly unsuccessful - Costs order made in favour of the wife – Costs order in a fixed sum. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 10.03
Cases cited: Colgate – Palmolive Co and Anor v Cussons Pty Ltd [1993] FCA 801
Collins & Collins (1985) FLC 91-603
Kohan & Kohan (1993) FLC 92–340
Mallet v Mallet (1984) FLC 91-507
Munday v Bowman (1997) FLC 92-784
Penfold v Penfold (1980) 144 CLR 311
Division: Division 1 First Instance Number of paragraphs: 46 Date of hearing: 11 July 2024 Place: Melbourne via videolink Solicitor for the Applicant: ATW Family Law Counsel for the Respondent: Mr Rosic Solicitor for the Respondent: Shephard & Shephard ORDERS
PAC 4152 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR FERRIN
Applicant
AND: MS CAMPI
Respondent
ORDER MADE BY:
HARTNETT J
DATE OF ORDER:
2 AUGUST 2024
THE COURT ORDERS THAT:
1.The husband pay the costs of the wife fixed in the sum of $10,000. There be a stay on such payment from the husband to the wife until the settlement of the sale of the property situate at D Street, Town E in the State of NSW.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Campi & Ferrin has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARTNETT J
INTRODUCTION
The discrete issue for the Court to determine is whether the application for costs of the de facto respondent wife (“the wife”) as against the de facto applicant husband (“the husband”), following the husband filing an Application in a Proceeding on 27 June 2024, and subsequently a Notice of Discontinuance on 9 July 2024, should be acceded to. If a costs order is made, the issues which follow are on what basis the order should be made, and in what quantum costs should be ordered.
The Independent Children’s Lawyer (“the ICL”) was excused from attending the hearing, the husband’s Application in a Proceeding only pertaining to property matters between the parties and the ICL making no application for costs.
Both parties sought to rely upon their written submissions filed (the wife on the 10 July 2024 and the husband on the 11 July 2024) in respect of the interim hearing. The wife further sought to rely upon her Outline of Case filed 10 July 2024; Response to an Application in a Proceeding filed 8 July 2024; her affidavits filed 8 July 2024 and 9 July 2024; the affidavit of Mr J, real estate agent filed 9 July 2024; and the wife’s Balance Sheet filed 10 July 2024.
Legal Principles
Rule 10.03 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) relevantly, provides:
(1)If a party discontinues an application or response, another party to the proceeding may apply for costs.
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) sets out the general rule that each party shall bear their own costs. It provides:
(1)Subject to subsection (2), subsection 102QAB(6) and sections 117AA and 117AC, each party to proceedings under this Act must bear the party's own costs.
However, the Court being satisfied that there are circumstances justifying it doing so, has the power to make such order for costs as it considers just in accordance with the Court's discretion. Section 117(2) of the Act provides:
(2) 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), (4A), (5) and (6) 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.
In considering what (if any) order for costs it should make, the Court shall have regard, relevantly, to the matters in s 117(2A) of the Act which are as follows:
(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.
Although the Court must have regard to all the matters in s 117(2A) of the Act, each matter’s particular relevance will depend upon the circumstances of each case. The Court is not required to consider these matters in any particular order, and no matter takes precedence over another. It is also not necessary for there to be more than one relevant consideration for the purposes of deciding that an order is justified.
The respondent wife sought orders on an indemnity basis rather than the more common party/party basis. The Full Court in Kohan & Kohan (1993) FLC 92–340 observed that a Court:
…should not depart lightly from the ordinary Rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind.[1]
[1] Kohan & Kohan (1993) FLC 92–340 at 79,614.
Similarly, Sheppard J in Colgate – Palmolive Co and Anor v Cussons Pty Ltd [1993] FCA 801 opined that there should be:
…special or unusual feature in the case to justify the Court in departing from the ordinary practice.[2]
[2] Colgate – Palmolive Co and Anor v Cussons Pty Ltd [1993] FCA 801.
Following a consideration of Colgate-Palmolive Co and Anor v Cussons Pty Ltd [1993] FCA 801 the Full Court of the Family Court in Munday v Bowman (1997) FLC 92-784 assisted trial judges by extracting some examples of circumstances which would warrant the exercise of the discretion at subsection (2A) of the discretion towards an award for indemnity costs and including:
(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 circumstances the action must be presumed to have been commenced and 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 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 have been made or undue prolongation of a case by groundless contentions.
(e) An imprudent refusal of an offer to compromise.[3]
[3] Munday v Bowman (1997) FLC 92-784.
In Collins & Collins (1985) FLC 91-603, the Full Court of the Family Court of Australia (Evatt CJ, Pawley & Barblett JJ), as it was then, said:
In deciding whether the circumstances justify an order for costs, there is a broad discretion to be exercised, having regard to the factors set out in subsection (2A) so far as relevant. Those factors…are not to be read in a restrictive way, the discretion remaining is a broad one: Penfold v Penfold (1980) FLC 90-800 at pp 75,053-75,054 (High Court); quoted in Mallet v Mallet (1984) FLC 91-507 at pp 79,123-79, 124 (by Wilson J).[4]
[4] Collins & Collins (1985) FLC 91-603 at 79,877.
In Penfold v Penfold (1980) 144 CLR 311, the High Court (Stephen, Mason, Aickin and Wilson JJ) held that:
It is an accurate description of s 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to s 117(2). As subsection (1) is expressed to be subject to subsection (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Subsection (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…we do not agree with the suggestion…that an order can only be made under s 117(2) in a 'clear case'.[5]
[5] Penfold v Penfold (1980) 144 CLR 311 at 315.
CONSIDERATION
On 25 May 2022, consent orders were entered into by the parties providing for the property known as and situate at D Street, Town E in the State of NSW (the former matrimonial home) to be sold and for each of the parties to receive $100,000 as an interim property settlement with the net balance to be held in trust on their behalf. In the interim, the husband was provided with ongoing exclusive occupation of the property pending its sale, the property being the home in which he resides with the parties two children, aged 13 years and 14 years respectively.
Following the making of the 25 May 2022 Orders, the former matrimonial home, being a property of some ten hectares, was listed for sale. Thereafter, the parties rejected two offers to purchase the property, one in mid-2022 of $3.5 million, and a second of $3 million in late 2022, although the latter was asserted to be not a formal offer. They thereafter, at the husband’s insistence, appointed a new estate agency. That agency was G Real Estate of which Mr J is the principal.
In early 2023, the parties received a single expert jointly appointed valuation of the former matrimonial home from K Valuations. That valuation provided a range between $2.6 million and $3.2 million. After consultation with their real estate agent, the parties set an auction reserve price at $3 million.
The property was to be auctioned in early 2023. The auction was cancelled shortly before it was due to commence, due to the swimming pool on the property not being compliant with council regulations. The wife asserted the husband deliberately used this issue to delay the auction and sale of the property. The husband sought the pool and further remedial work be carried out before the further placing of the property on the market for sale.
Thereafter, various controversies between the parties erupted; Mr J suggested, in late 2023, the former matrimonial home be offered for sale at a price of $2.5 million; the parties received three offers for the property, one at $2.3 million and two at $2 million, all of which were rejected; and the property got no closer to a sale. The wife sought enforcement of the orders of 25 May 2022.
On 8 December 2023, the wife’s Enforcement Application was listed for hearing and subsequently on 12 December 2023. The wife did not press the application given her precarious relationship with the children who were living in the home.
In early 2024, the estate agent, Mr J, suggested to the parties a furthering lowering of the price at which the property be offered for sale to $2.2 million.
On 22 May 2024, on the wife’s application (Amended Application in a Case filed 14 August 2023) his Honour Riethmuller J made interim property orders relevantly, appointing the wife as sole trustee of the sale of the former matrimonial home, with all obligations and privileges pertaining thereto (including the signing for and on behalf of the husband, and the determination of the price and manner in which the property was to be sold). Those orders also provided for the husband’s continued obligation to meet the outgoings with respect to the former matrimonial home and amended the orders of 25 May 2022, by deleting the figures of $100,000 and inserting ‘50 per cent of the amount remaining after satisfaction of the payments identified in Orders 3.1 to 3.4’. In his Reasons for Judgment, Riethmuller J expressed his lack of persuasion that the husband had been genuinely attempting to effect the sale of the property.[6]
[6] Reasons for Judgment dated 22 May 2024, paragraph 23.
On 24 May 2024, the husband’s solicitors contacted the wife’s solicitors indicating the husband would file an appeal in respect of the interim orders. No appeal (or, more properly, leave to appeal) was lodged by the husband.
On 27 June 2024, some 36 days after the making of the Orders by Riethmuller J, the husband filed an Application in a Proceeding seeking an urgent hearing. He sought that the order appointing the wife as sole trustee for the sale of the former matrimonial home be discharged and that, in the alternative, the wife be restrained from selling the former matrimonial home at a price less than $3 million or in accordance with a figure recommended by a “jointly obtained updated valuation”.[7]
[7] Husband’s Application in a Proceeding filed 27 June 2024, p.4.
On 2 July 2024, the Court listed the matter, in response to the husband’s request for urgency, but also being mindful of the need to afford the wife procedural fairness to respond to the husband’s application. The matter was set down for hearing on 11 July 2024.
On 8 July 2024, the wife filed a Response to an Application in a Proceeding and supporting affidavit which set out in some detail all that had been done by her as the sole trustee acting on the sale of the former matrimonial home. That factual detail was transparent on its face and asserted an appropriate exercise of her powers. She sought the husband’s application be dismissed, and that the husband pay the wife’s costs on an indemnity basis.
On 8 July 2024, the husband’s solicitors emailed chambers seeking an adjournment of his Application in a Proceeding, that he had earlier deemed urgent, due to the husband’s ‘pre‑existing camping trip arranged for the school holiday period’ and ‘in circumstances where [the husband] and the children will not have any reception due to the location of the camping’. The wife’s solicitors did not consent to this adjournment, claiming that the wife ‘incurred legal costs to prepare her material … and to brief Counsel’. The wife’s solicitors further claimed that with the final hearing listed to commence on 17 September 2024, and the wife continuing to act as sole trustee of the sale of the former matrimonial home, any further delay listing the matter may cause her further financial hardship.
Subsequently, the Court advised the parties that an adjournment would not be granted at that time due to the husband’s indication that his Application in a Proceeding required urgent listing, with such listing being accommodated by the Court, together with the fact of the wife’s objection to the request of the husband and her preparedness, obtained in a relatively short time frame, for the hearing. I considered that the husband’s ‘pre-existing camping trip’ would in all probability have been known to the husband at the time he made his request for urgency.
On 9 July 2024, at 3.00pm, the wife filed a further affidavit as to the costs incurred by her in respect of the husband’s application, and an affidavit from Mr J deposing to his attempts to sell the property and the wife’s actions in that regard.
On 9 July 2024, at 5.10pm, the husband filed a Notice of Discontinuance of his Application in a Proceeding filed 27 June 2024.
The wife’s solicitors requested the listing be maintained to argue the question of costs.
On 10 July 2024, the parties were advised that the matter would remain listed for an interim hearing to deal with the issue of costs.
On 11 July 2024, the matter proceeded before me as a costs hearing.
Are there circumstances justifying a costs order?
In the circumstances of the case, not all the matters set out in s 117(2A) of the Act are relevant. Accordingly, only those relevant matters are discussed hereafter.
Financial circumstances of each the parties
The husband is unemployed and in receipt of Centrelink benefits. His taxable income for the financial year 30 June 2023 was $18,706. He has not yet filed his taxation return for 30 June 2024, but as he remains on Centrelink benefits it is probable his income will remain similar.
The husband cares full time for the parties’ two children. Neither child spends any time with the wife. The husband receives $32.70 per week in child support from the wife, which is based on an assessment of $1,560 per annum as child support. This is based on a provisional estimate as it appears the wife has not filed a taxation return for the financial year ended 30 June 2023. I infer that her income is modest.
The husband received an inheritance from his late father, which was utilised as claimed by him for the payment of the mortgage secured over the former matrimonial home in which he resides, and otherwise in payment of other living and general expenses. The wife alleged this amount was at least $60,000.
The husband has no savings in his bank accounts and, as of 1 July 2024, he had $114.85 in one Commonwealth Bank account and $1,634 in the other account. He held $4,462 in his superannuation account.
The parties’ major asset is their equity in the former matrimonial home.
It was the wife’s evidence that there are currently offers of $2.3 million in respect of the sale of the former matrimonial home. There is an outstanding debt of the parties to the Department of Planning Industry and Environment of $80,000; and the Commonwealth Bank mortgage secured by the former matrimonial home is estimated by the wife to be currently in the sum of $416,500.
The wife’s evidence is that she has incurred legal costs in the sum of $15,840 in respect of the husband’s application.
Legal Aid
Neither party is in receipt of Legal Aid.
The conduct of the parties
What the husband sought to do in the filing of his Application in a Proceeding on 27 June 2024, was to relitigate a matter already litigated and determined on 22 May 2024. The Orders made on that day were clearly not satisfactory to him. Instead of seeking leave to appeal and making a stay application, he determined in the following month, and out of time in respect of any foreshadowed appeal, to attempt to argue the same matter again. That was an abuse of process. I accept the submission of counsel for the wife that in those circumstances, properly advised, the husband would have had no chance of success in his application and that consideration is one which goes to an award of indemnity costs.
The conduct of the husband in filing a Notice of Discontinuance following the wife’s filing of her responding documents is also conduct which I consider to be relevant to the issue of costs, but on a party/party basis. The wife had completed her material and her costs had been incurred. It was necessary for her to put before the Court the material she did to meet the husband’s application. The wife contended that her actions as a sole trustee from the date of her appointment were conducted in accordance with her obligations to obtain the best possible sale price for the benefit of the parties. Mr J contended that his actions, and those of the wife when in conjunction with him, were also conducted in good faith and to achieve the best possible sale price of the property.
The evidence of the wife went to, amongst other things, her being conscientious and diligent in her role as a sole trustee. She claimed that there had been 12 interest rate rises since the first listing of the property in 2022 which had an adverse impact on the sale price. The evidence of Mr J was that in his opinion and experience, in the preceding 12 to 18 months, rural and lifestyle properties had dropped in value by 10 to 15 per cent. Accordingly, and given the circumstances of the particular property including the time for which it had been on the market, his advice to the parties was to attend to the slashing of the vegetation on the property (which they did) and market the former matrimonial home seeking offers above $2.2 million. The parties now have two offers for $2.3 million.
CONCLUSION
The wife seeks the husband pay her indemnity costs in the sum of $15,840 or, in the alternative, the husband pay her party/party costs of and incidental to her response to his Application in a Proceeding.
The Court shall make a costs order in the wife’s favour given the above circumstances which I find justify the making of such order.
In the exercise of my discretion, I propose to make an order that is not an indemnity costs order, that not being a usual order in these circumstances although I note the satisfaction of one basis on which such an order could be made. As against that, I take into account the husband’s financial position. I have determined that rather than there be further costs and disputation in the quantification of any party/party costs order, I shall fix the amount payable and consider the sum of $10,000 appropriate in the circumstances.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hartnett. Associate:
Dated: 2 August 2024
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