Carapello and Carapello and Anor

[2013] FamCA 1115

FAMILY COURT OF AUSTRALIA

CARAPELLO & CARAPELLO AND ANOR [2013] FamCA 1115

FAMILY LAW – COSTS – Where the wife sought an order for costs against the company on an indemnity basis and that the court fix the amount of those costs – Where the company sought an order that each party pay their own costs – Where the company’s application for summary dismissal was entirely unsuccessful – Where the court determined that even though the company’s application was unsuccessful, it was not an application that was of such an exceptional nature that requires the payment of indemnity costs – Where the court made an order that the company pay the wife’s costs as agreed or as assessed.

Family Law Act 1975 (Cth) ss 117; 117(2A)

Family Law Rules 2004 (Cth) r 10.12

Colgate Palmolive Co v Cussons Proprietary Limited (1993) 46 FCR 225
Lindon v Commonwealth (No 2) (1996) 70 ALJR 541
Prantage & Prantage [2013] FamCAFC 105

APPLICANT: Ms Carapello

FIRST RESPONDENT: Mr Carapello

SECOND RESPONDENT: X Pty Ltd

FILE NUMBER: SYC 4376 of 2012

DATE DELIVERED: 20 December 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 13 December 2013

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Broun Abrahams Burreket

SOLICITOR FOR THE FIRST RESPONDENT: Blanchfield Nicholls Partners

COUNSEL FOR THE SECOND RESPONDENT: Mr Fernon

SOLICITOR FOR THE SECOND RESPONDENT: Yates Beaggi Lawyers

Orders

1. That X Pty Ltd shall pay the costs of Ms Carapello, of the application in a case filed 22 March 2013, as agreed or assessed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Carapello & Carapello & X Pty Ltd has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 4376  of 2012

Ms Carapello

Applicant

And

Mr Carapello

First Respondent

And

X Pty Ltd

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. On 17 September I dismissed an application by X Pty Ltd (‘X’) to have the claim made against it by Ms Carapello (‘the wife’) summarily dismissed pursuant to rule 10.12 of the Family Law Rules 2004 (Cth).

2. The wife now seeks an order that X pay her costs of that application, that those costs be on an indemnity basis and that I fix the amount of those costs.  X seeks an order that each party pay their own costs of its application.

3. The wife asserts that X is holding property in trust for the husband, Mr Carapello, and that X is his alter ego, notwithstanding that its directors and shareholders are his parents.

4. I found there was evidence, if accepted at a trial, that was capable of establishing that it was the husband and not his parents who controlled the decision-making of X, at least in relation to the two properties the subject of evidence and that, to that extent, there was evidence, if accepted at a trial, that was capable of demonstrating that X was a puppet of the husband.  What was missing was evidence of the source of the funds used by X to buy the two properties.

5. As the wife did not need to establish a prima facie case and as X failed to establish that there was no reasonable likelihood of success, its application was dismissed.

The wife’s costs application

1. Pursuant to section 117 of the Family Law Act 1975 (Cth), each party is to bear his or her own costs unless the court is of the opinion that there are circumstances that justify another order for costs. In considering making such an order, the court is to have regard to the matters set out in section 117(2A).

2. There is no evidence as to the financials circumstances of the wife.  There is some evidence as to the financial circumstances of X in that it appears to have significant equity in the two properties, the subject of evidence in the application.  Its complete financial position is, however, not known.  Thus the financial position of the parties is not a relevant factor.

3. Neither party appears to have been in receipt of legal aid.  Both parties relied upon the conduct of the other.  X was asked, by the wife, to provide details as to how the properties were financed.  It declined to do so.  The wife did not seek the same information from the husband, merely forwarded a copy of the letter sent to X.

4. The wife’s case is thus based on material known to her and on documents obtained from third parties.  X is, according to the wife, playing a game of ‘catch me if you can’, forcing her to the expense of issuing many subpoenas.

5. X, on the other hand, asserts that the application was justified in the light of the wife’s belated and inadequate compliance with Registrar Campbell’s order to file Points of Claim setting out her allegations against X.  The wife’s Points of Claim were two months late and far from ideally expressed.

6. It is not an answer to say that the claim could not be pleaded because the information relied upon at the hearing was not available at the time the Points of Claim were drawn.  It is a fundamental proposition that claims should not be brought against a person unless there is a reasonable basis for doing so.

7. The application, however, was not one to strike out pleadings but rather one for summary dismissal, as was pointed out in the earlier judgment.  The inadequacies of the Points of Claim could not be and were not a basis for summary dismissal.

8. The conduct of the parties generally in relation to the proceedings is, however, relevant.  There is force in the position of both parties.  Thus the conduct of the parties does not point to a particular party bearing the costs of the application.

9. There is no relevant failure to comply with any orders.  X did point to the wife’s delay in filing the Points of Claim, which has already been considered.  X accepts that it was wholly unsuccessful in its application.  Neither party asserts that there was any relevant offer to settle the proceedings.

10. The court is also to take into account any other matter it considers relevant.  X asserts that the inadequacy of the Points of Claim is such as matter.  As stated earlier, however, the application extended beyond the pleadings.

11. Secondly, X submitted that as the wife had abandoned, at the hearing, the claim that the shareholders of X were holding their shares on trust for the husband, the bringing of the application was justified.

12. That circumstance may have justified an application to strike out part of the Points of Claim but again it does not justify the broader claim for summary dismissal.

13. Thirdly, X submits that the wife relied upon affidavits of the husband and herself filed prior to the filing of the application but which were not provided to it until the hearing.  Thus X did not have, it was said, the opportunity to consider this material prior to the hearing.  This may be so but no application for adjournment for the purpose of considering that material was made.

14. Finally, X submitted that the application should be deferred to the ultimate hearing when all of the facts and the circumstances of the parties are known, including their financial position.

15. As to the last, it was open to either party to adduce evidence of the financial position of this application.  Neither did so.

16. As to the other matters, it is true that a final hearing, much more will be known, including the fate of the wife’s application.  This application, however, was a different kind, for example, for an interim injunction, preserving the status quo until a final hearing.

17. It is common for the costs of such an interim application to be reserved to the final hearing where much depends upon the ultimate success of the claim in respect of which interim relief was granted.  Only then can it be seen whether the application was necessary or not.

18. An application for summary dismissal is different.  It is not a necessary claim to preserve property until final hearing.  It is an attempt to terminate proceedings at an early stage.  It has been completely determined and whether or not it was determined to be necessary does not depend on anything that might emerge or be decided at a final hearing.  It is therefore appropriate to deal with the issue of costs at this stage.

19. An application for summary dismissal will only be successful if the application can persuade the court that the claim against it has no reasonable prospect of success.  As was said in Lindon v Commonwealth (No 2) (1996) 70 ALJR 541 at 544 to 545, such relief is rarely and sparingly granted. Even a case that is weak and unlikely to succeed is not, of itself, sufficient to attract summary dismissal.

20. This was not such a case.  Although there were difficulties with the Points of Claim and quite possibly difficulties with some essential elements of the wife’s claim should she be required to prove a prima facie case, there is, at least, sufficient evidence to support’s the wife’s application to defeat the application for summary dismissal.  By way of repetition it is not essential for her to prove, at this stage, that she has a prima facie case.

21. Applications for summary dismissal are not to be encouraged.  They are, as the authorities point out, limited to cases which are manifestly groundless, to use one of the expressions commonly used.  The wife’s case is not manifestly groundless.  The application was entirely unsuccessful.

Conclusion

1. Taking these matters into account and weighing against the first three matters relied upon by X, the balance falls clearly in favouring making a costs order in favour of the wife.  The wife seeks that the costs be paid on an indemnity basis.

2. The categories that justify such costs are not limited but are exceptional.  They were widely discussed in Colgate Palmolive Co v Cussons Proprietary Limited (1993) 46 FCR 225.

3. They were recently discussed by the Full Court in Prantage & Prantage [2013] FamCAFC 105. There is no conduct of code discussed in Colgate Palmolive in this matter.

4. Even though X’s application was unsuccessful, it was not an application that was of such an exceptional nature that requires the payment of indemnity costs.

5. The wife seeks that I fix the costs and relies upon an affidavit from her solicitors, setting out the costs that she has incurred.  Firstly, to give effect to that affidavit would be to, in effect, award indemnity costs.  Secondly, the court cannot determine, from that affidavit, whether any particular entry or any particular rates were justified and are reasonable.  Accordingly, I will not fix the costs.  It is appropriate to certify for the appearance of senior counsel.

6. Accordingly, I order that X Proprietary Limited is to pay the costs of the wife of the Application in a Case dated 22 March 2013 as agreed or as assessed.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 20 December 2013.

Legal Associate: 

Date:  18 February 2014