Caro and Pan
[2018] FCCA 2503
•3 August 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CARO & PAN | [2018] FCCA 2503 |
| Catchwords: FAMILY LAW – Property – enforcement of Orders – considerations regarding the award of costs including indemnity costs. |
| Legislation: Family Law Act 1975 (Cth), s.117 |
| Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Stephens v Stephens (2011) 44 Fam LR 117 |
| Applicant: | MR CARO |
| Respondent: | MS PAN |
| File Number: | CAC 1209 of 2016 |
| Judgment of: | Judge Neville |
| Hearing date: | 6 June 2018 |
| Date of Last Submission: | 16 July 2018 |
| Delivered at: | Canberra |
| Delivered on: | 3 August 2018 |
REPRESENTATION
| Counsel for the Applicant: |
| Solicitors for the Applicant: | Walsh & Blair, Wagga Wagga |
| Counsel for the Respondent: |
| Solicitors for the Respondent: | Self represented |
ORDERS
If not already attended to, within 21 days of the date of these Orders, being by close of business on 24 August 2018, the Respondent is to cause the discharge of the mortgage to the Bank 1 in relation to Property A, NSW.
Noyce Salmon D’Aquino Solicitors release the $10,000 held by them in trust pursuant to Walsh and Blair Lawyers in part payment to the Applicant’s costs Order.
The Respondent is to pay a sum of $750 towards to Applicant’s costs within 60 days of the date of these Orders, being by 2 October 2018.
All extant Applications are dismissed and the matter is now finalised and will be removed immediately from the docket.
IT IS NOTED that publication of this judgment under the pseudonym Caro & Pan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
CAC 1209 of 2016
| MR CARO |
Applicant
And
| MS PAN |
Respondent
REASONS FOR JUDGMENT
Introduction
On 3rd August 2018, I delivered oral reasons and made Orders. What follows are those reasons revised from the transcript.
Final property Orders were made, by consent, on 2nd September 2016. Among other things, those September 2016 Orders contained provision for the sale of a large number of properties (approximately 20) identified in a schedule to the Orders, and a time-frame within which they were to be sold and or transferred as specified in the Orders.
On 16th March 2018, the Husband filed an Application in a Case by which he sought to finalise the disposition of the properties (and the distribution of proceeds of sale) that were the subject of the September 2016 Orders. By consent, the September 2016 Orders were amended pursuant to Orders made on 4th May 2018.
Among other things, the self-represented Wife complained in oral argument that she encountered many problems in the repair, and then the sale, of certain of the said properties. She said further that the time-frame agreed between the parties in the Final Orders ultimately proved to be unrealistic in relation to dealing with certain properties. Moreover, she also said that in certain unspecified and generally undetailed discussions with the Husband, certain concessions and allowances had been given by him regarding the sale of the outstanding properties. Subject to what is said later in these reasons, unfortunately, these matters, as just indicated, are not formally in evidence before the Court.
The actual issues now in dispute between the parties have narrowed even further. Indeed, in Orders made on 6th June this year, the Court recorded that there were only two outstanding issues that required determination: (a) what to do with $10,000 currently held in a specified trust account; and (b) the Order for costs sought against the Wife for having to bring the matter before the Court. Further, on 8th June 2018, the Husband filed a Minute of Order Sought in which he sought an Order for costs against the Wife on an indemnity basis. No Amended Application in support of this Minute was filed.
On 6th June 2018, the Court made directions for the filing of written submissions regarding these remaining issues.
The Husband’s Submissions
The Husband’s submissions, filed 28th June 2018, were as follows:
1) The Applicant seeks an order for costs arising from his Application in a Case, filed on 16 March 2018, being an enforcement application. Final Orders were made in the substantive proceedings by consent on 2 August 2016[1]. At that time the parties owned 19 properties and had joint debts of approximately $1,450,000[2]. The Orders gave the Respondent 7 months to sell properties and refinance the joint loans into her sole name or transfer unsold properties into her sole name, i.e. by 28 February 2017[3].
[1] Annexure A to Applicant’s Affidavit sworn 14 March 2018 (AA)
[2] Paragraph 3 page 2 AA
[3] Order 1 page 3 of AA
2) Thereafter the Respondent sold properties netting her in the Order of $750,000 but rather than discharging debts the Respondent, without the Applicant’s consent or knowledge, used the net equity to purchase further properties worth at least $425,695 in her company name[4]. The Respondent did not provide any information to the Applicant in relation to the sale of the properties owned in her sole name.
[4] Paragraphs 8-10 page 3 AA
3) At the time the Applicant filed his Application in a Case on 16 March 2018, 18 months after the date of the Final Orders, the balance owing on the joint loans was $952,413.03[5]. At that time the sale of 2 further properties were due to settle and the Applicant was concerned at the lack of compliance by the Respondent. Letters were sent to the Respondent’s solicitors and real estate agent seeking that the net equity be held in trust, rather than being released to the Respondent[6]. The Respondent’s reply is Annexure O to the Applicant’s Affidavit at pages 33-34. The Respondent refused the Applicant’s request[7].
[5] Paragraph 4 page 2 AA
[6] Annexure L, M & N p30-32
[7] Annexure O second last paragraph p34 AA
4) On Friday 16 March 2018 the Court granted an ex parte injunction requiring the solicitors acting on the sales and the agent to hold the net proceeds in trust. The injunction orders were promptly served on the solicitors and agent. By Tuesday 20 March 2018 the Respondent had paid $800,000 off the joint loans. The balance was then paid out on the settlement of the 2 sales on 28 March 2018. When the matter returned to Court on 4 April 2018 these facts were confirmed to the Court by the Respondent. At that time the Respondent sought an adjournment to enable her to organise the transfer of the remaining titles and discharge of the remaining mortgages. By consent the parties subsequently agreed on 12 April 2018 that, given that the Respondent had paid out the joint loans, all but $10,000 of the joint funds held in trust could be released to the Respondent.
5) It is clear that the Respondent had the capacity to payout the joint loans when she first received notification of the Applicant’s intention to commence these proceedings. Rather than do so voluntarily in the face of the threat of court proceedings, she refused, claimed to need more time to sell properties, and said that if the Applicant refused this request she had “no other option though [sic] to go to court”[8]. In short, if the Respondent had simply said she would pay the loans as she was clearly able to then the proceedings would never have been commenced and the Applicant would not have incurred any legal costs.
[8] Annexure O final paragraph p34 AA
6) The Respondent’s disingenuous request for further time was made in circumstances where she was already in default of the Orders for 13 months and had used the benefit of net proceeds to purchase properties in a clandestine way, rather than retire joint debt as she was obligated to.
7) The Respondent has filed no evidence in these proceedings. There is no explanation by the Respondent as to her conduct outlined above. The Applicant waited for 18 months before commencing enforcement proceedings and was given little other choice. The Respondent seeks in Annexure O to blame the Applicant for the delay, which is denied, but clearly any such alleged delay even if true clearly did not prevent the Applicant from paying out or refinancing the joint loans prior to the commencement of the proceedings. Whilst the joint loans remained outstanding the Applicant’s ability to obtain finance remained diminished.
8) Section 117(2A) gives the court the power to award costs. Considering each subsection:
(a) there is $10,000 held in trust. The Court would be satisfied that there is capacity for the Respondent to pay a costs order given the asset pool and Respondent’s financial circumstances filed in the proceedings;
(b) legal aid is not applicable;
(c) the conduct of the parties during the proceedings - the Applicant has appropriately and expeditiously prosecuted the matter, the Respondent sought adjournments;
(d) the proceedings were necessitated by the failure of the Respondent to comply with previous orders of the court;
(e) the Applicant has been wholly successful in the proceedings - the Respondent has complied with her obligations but only because proceedings were commenced;
(f) an offer in writing was made to the Respondent prior to the commencement of proceedings to settle the proceedings but the Respondent ignored it and falsely claimed she needed more time when it is clearly apparent she did not
(g) other relevant matters - the Respondent was able to comply with the Orders prior to the commencement of the proceedings of which she as provided notice but she sought further delay and time to pay knowing such position to be false.
9) The Full Court of the Family Court observed in Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681 that the category of cases in which an award of an indemnity costs order may be appropriate are not closed.
10) In Lotta & Lotta (No 2) [2017] FamCA 916 Foster J provides a useful summary of the law of indemnity costs including at paragraph 45 quoting Justice Strickland in Bele & Vaughan (Costs) [2012] FamCAFC 198 providing principles from Colgate-Palmolive Co & Another v Cussons Pty Ltd. The following paragraphs are of relevance:
(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.
(e) An imprudent refusal of an offer to compromise.
11) It is submitted that this is an appropriate case to depart from the usual order that each party pay their own costs and order that the Respondent pay the Applicant’s costs on an indemnity basis. The Applicant seeks the Court assess the costs in accordance with the Tax Invoice and Costs Agreement provided.
The Wife’s Submissions
The Wife’s submissions, filed 16th July 2018 (excluding the multiple annexures), were as follows (for ease of reference, I have added paragraph numbering; some inconsequential typographical corrections have also been made):[9]
[9] The annexures were as follows: A letter, dated 6th July 2008, from mortgage broker Ms K, which outlined problems for both parties regarding finance and sale of the properties; a letter from real estate agent Ms M, dated 28th June 2018, which similarly outlined problems with the sale of certain properties. These problems included Mr Caro refusing, among other things, to sign a managing agency agreement. A third letter, dated 11th July 2018, was from Mr J, from Real Estate. This letter similarly outlined a range of issues (a) between the parties, and (b) the delayed sale of certain properties and the reasons for these delays.
1) Since September 2016 when the court order was put in place I have continually placed properties on the market for sale, refinancing 19 properties was not possible in the time frame given. Attached is a letter from Ms K explaining the situation.
2) Mr Caro’s solicitor implying that I brought 3 properties since the first court order rather than paying out existing properties. I’d like to make you aware one of the properties is my home residence at Property B, NSW. Also my main source of income is buying, renovating and re selling property.
3) A number of the properties In Mr Caro and my name that I was selling were in lower economic areas and over the last 2 years I have had to evict tenants for not cooperating with placing the properties on the market, rent arrears and damaged properties.
4) The process of removing tenants took up to 3 months, and as I progressively vacated tenants from the properties, they trashed the properties and caused damage to them. This then took me another 6 to 8 weeks to clean properties up and fix damages to bring the properties back up to market standard to sell.
5) Properties Affected are listed below
a) Property C (Evicted due to not co-operating with the Real Estate, holding up the sale of the property by 4 months)
b) Property E (Tenant was evicted due to rent arrears and damage to the property)
c) Property D Managed by Real Estate Agent (Tenant was evicted due to rent arrears and substantial damage to the property)
d) Property F (Tenant was evicted due to rent arrears and substantial damage to the property ) property stayed vacant for another 4 months before it was sold
e) Property G (Tenant was evicted due to rent arias and substantial damage to the property. The property was vacant for 14months due before it was sold)
f) Property H (Tenant was taken to tribunal and a warrant being issued due to loss of rent and property was substantial damaged upon tenant vacating) property was tenanted a month after.
g) Property I, 3 blocks of land at Town A (Settlement held up by Mr G)
h) Property J (Tenant was evicted due to rent arias and substantial damage to the property) managed by Ms S, Realastate. Property was vacant for another 5 months before property was sold
i) Property K ( Vacant for 8 months before they were re - tenanted ) now managed by Ms S, Realastate
j) Upon Mr Caro vacating the family property it took me 5 weeks to remove excess house hold rubbish excess truck tyres, truck batteries and several barrels of old truck oil from the property and prepare the property to an appropriate standard to sell. The Family Property sold for $745,000 Mr G received $400,000 and I was left with the remainder and agency costs for selling the property.
6) The removal of tenants due to damages and loss of rent were unexpected delays and were not taken into consideration at the time the Court Order was written in 2016.
7) Attached is a letter from Ms M stating how Mr Caro became very difficult to communicate with and by him not co-operating with the signing of paperwork referring to property management this caused losses via rental income and affecting my income causing the finance companies to refuse my loan applications.
8) Attached is a letter from Mr J stating how Mr Caro was also un co-operative with signing paperwork for the sale of Property I costing myself accounting cost so as he would agree to signing the contract.
9) On the 20th of February 2018 my sister Ms P was visiting Town B, Mr Caro and Ms P past paths and had a heated discussion.
10) Mr Caro immediately rang me, first abused me then threated that he was going to make me suffer all because my sister and him had words with one another. Not knowing what he was talking about, I settled him down and let him know that I would contact Ms P regarding the matter and that if he seen her again to walk away rather then [sic] stand there and have a yelling match with one another.
11) I received a phone call from Ms M on the 12th of March 2018. Ms M stated that she had received an email from Mr Caro’s Solicitor Jeremy Naumann stating that Mr Caro was actioning the Court Order.
12) I rang and spoke to Mr Caro on the 16th of March 2018 regarding Jeremy Naumann’s email. We talked for all most 2 hours and I explained everything that had been happening and asked him to give me until the 30th of June 2018. He agreed. The following day I texted Mr Caro to make sure he was still in agreeance, he texted me back and said the application had already been submitted to the court and he cannot do anything about it. Confused over the conversation we had the day before I chose not to have any more contact with Mr Caro.
13) I feel that I have done all that I could possibly do to work through the Court Order.
14) Mr Caro actioned the most recent court case purely out of spite and anger over a heated moment between him and my sister Ms P
15) Throughout these past 2 years I believe Mr Caro has not been affected by me not being able to finalise the court order in the relevant time. Mr Caro has been able to purchase a new home at an estimated cost of $870,000 and move in with a new family. Mr Caro has not lost any income and has experienced minimum disturbance with his business and personal life.
16) I have had my life continually disrupted working through a court order that at the time of signing it I was not aware of how un realistic the timeframe was to sell off 19 properties and was not aware of the problems that would arise with tenants not cooperating with me in selling the investment properties off also disruption of my personal life. Losing large losses in rental income and extra costs associated with fixing all damages done to the properties by tenants.
17) I therefore believe that I should not be liable to pay any of the court cost that Mr Caro’s solicitor has outlined. I believe that I have explained and given the relevant evidence to support this.
Consideration & Disposition
I will first outline relevant principle, then outline the evidence, such as it is, before considering what the appropriate Orders are in the current matter. In relation to relevant principle, I note the following matters.
In Stephens v Stephens, the Full Court provided a convenient and comprehensive outline of considerations regarding the making of an Order for costs, including indemnity costs, under s.117 of the Family Law Act 1975 (“the Act”).[10] At [62] – [73] the Court (May, Boland and O’Ryan JJ) said:
[10] Stephens v Stephens (2011) 44 Fam LR 117.
[62] Section 117(1) of the Act provides: “[s]ubject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.”
[63] Section 117(2) of the Act provides that if, in proceedings under the Act, the court is of opinion that there are circumstances that justify it in doing so, it may, subject to sub-ss (2A), (4) and (5), and the applicable rules, make such order as to costs, whether by way of interlocutory order or otherwise, as it considers just.
[64]Section 117(2A) of the Act provides that in considering what order (if any) should be made under s.117(2), the court shall have regard to the matters set out in paragraphs (a) to (g). In Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 the Full Court (Kay, Warnick and Boland JJ), referring to s.117(2A), said at 130:
[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.
[65] As to the relationship between s.117(1) and s.117(2) of the Act in Penfold v Penfold (1980) 144 CLR 311, in joint reasons, Stephen, Mason, Aickin and Wilson JJ said at 315:
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 sub-section is not paramount to s.117 (2). As sub-s. (1) is expressed to be subject to sub-s. (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.
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”. (emphasis added)
[66] As to the nature of the hearing of an application pursuant to s.117 of the Act in Penfold their Honours said at 315-16:
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 [(1970) [1970] NSWR 229; 92 WN (NSW) 503 at p. 505]). 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.
[67] We also observe that in Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 the majority of the High Court (Gaudron, Gummow, Hayne and Callinan JJ, Kirby J dissenting) held that s.117(2) of the Act referred to costs in the conventional sense and thus to the payment by one party to litigation of money by way of a partial indemnity for professional legal fees and expenses actually incurred by another party in the course of the litigation: see Hayne J at 219. An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature. Costs are not a penalty or damages: Latoudis v Casey (1990) 170 CLR 534 per Mason CJ at 543 and McHugh J at 567; Ruddock and Ors v Vadarlis and Ors (2001) 115 FCR 229 per Full Court of the Federal Court at [12] and Brott and Joachim (2006) 35 Fam LR 222 per Full Court (Holden, Warnick and Boland JJ) at [36].
[68] There are various relevant machinery provisions in Part 19 of the Rules. Rule 19.08 provides:
(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.
Note 1 The court may make an order for costs on its own initiative (see Rule 1.10)
Note 2 A party may apply for an order for costs within 28 days after the filing of a notice of discontinuance by the other party (see subrule 10.11 (4)).
Note 3 A party may apply for an extension of time to make an application (see rule 1.14)
(4) In making an order for costs, the court may set a time for payment of the costs that may be before the case is finished.
[69] Rule 19.11 of the Rules provides:
(1) Before making an order for costs against a lawyer or other person who is not a party to a case, the court must give the lawyer or other person a reasonable opportunity to be heard.
(2) If a party who is represented by a lawyer is not present when an order is made that costs are to be paid by the party or the party’s lawyer, the party’s lawyer must give the party written notice of the order and an explanation of the reason for the order.
[70]Part 19.5 of the Rules deals with the calculation of costs. Rule 19.18 provides:
(1) The court may order that a party is entitled to costs:
(a) of a specific amount;
(b) as assessed on a particular basis (eg 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.
Example
For paragraph (1) (c), the stated method may be in accordance with Schedule 3 but with an additional percentage for complexity.
(2) If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.
(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.
[71]Rule 19.19 of the Rules provides:
(1) This rule sets out the maximum amount of party/party costs a person may recover:
(a) if the court orders that costs are to be paid and does not fix the amount; and
(b) if a person is entitled to costs under these Rules.
(2) The maximum amount of costs that a person may recover under this rule is as follows:
(a) for fees — an amount calculated in accordance with Schedules 3 and 4;
(b) for an expense mentioned in Schedule 4 (other than item 101) — the amount specified in Schedule 4 for that expense;
(c) for any other expenses — a reasonable amount.
Note This Division provides that, if an account payable by a person is not in an itemised form, the person has the right to request an itemised account (an "itemised costs account"). The person may then dispute the itemised costs account by following the procedures set out in this Division. A person may apply to extend the time for taking any action required under these Rules (see rule 1.14)
Indemnity Costs
[72] The Family Court has jurisdiction to make orders for indemnity costs: McAlpin and McAlpin (1993) 16 Fam LR 888 per Full Court (Nicholson CJ and Maxwell J, Baker J dissenting); Kohan and Kohan (1992) 16 Fam LR 245 per Full Court (Strauss, Lindenmayer and Bulley JJ); Munday v Bowman (1997) 22 Fam LR 321 per Holden J; Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) 26 Fam LR 331 per Full Court (Lindenmayer and Holden JJ, Mullane J dissenting) and Limousin v Limousin (Costs) (2007) Fam LR 478 per Full Court (Kay, Coleman and Boland JJ).
[73] An order for costs may be made on an indemnity basis, subject to a judicial determination capable of being made that there ought to be a departure from the usual basis that costs be payable on the party and party basis. For a discussion of the jurisdiction to order indemnity costs and its exercise see Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 46 FCR 225 per Sheppard J at 256-257 and NMFM Property Pty Ltd and Others v Citibank Ltd (No 2) (Court’s “NMFM” Judgment No 11) (2001) 109 FCR 77 per Lindgren J at [53] to [90].
Given that the Husband seeks an Order for indemnity costs, albeit only by way of a Minute of Orders Sought and not an Amended Application, in my view it is important to set out the following detailed statements of principle by Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd.[11] At FCR pp.232 – 234, regarding the principles to be considered in making such a significant Order, his Honour said:
[11] Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225.
1. The problem arises in adversary litigation, i.e. litigation
as between parties at arm's length. Different considerations
apply where parties may be found to be entitled to the payment
of their costs out of a fund or assets being administered by or
under the control of a trustee, liquidator, receiver or person
in a like position, eg. a government agency or statutory
authority.
2. 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 the party and party
basis. In this Court the provisions of Order 62, rules 12 and
19, and the Second Schedule to the Rules will apply to the
taxation. In many cases the result will be that the amount
recovered by the successful party under the Order will fall
short of (in many cases well short of) a complete indemnity.
3. 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. No doubt any
consideration of whether there should be any change in the
practice would require the resolution of the competing
considerations mentioned by Devlin LJ in Berry v. British
Transport Commission and Handley JA in Cachia v. Hanes on the
one hand and by Rogers J in Qantas on the other. The relevant
passages from the respective judgments have been earlier
referred to.
4. In consequence of the settled practice which exists, the
Court ought not usually make an order for the 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. That has been the view of
all judges dealing with applications for payment of costs on
the indemnity or some other basis whether here or in England.
The tests have been variously put. The Court of Appeal in
Andrews v. Barnes (39 Ch D at 141) said the Court had a general
and discretionary power to award costs as between solicitor and
client "as and when the justice of the case might so require."
Woodward J in Fountain Selected Meats appears to have adopted
what was said by Brandon LJ (as he was) in Preston v. Preston
((1982) 1 All ER at 58) namely, there should be some special or
unusual feature in the case to justify the Court in departing
from the ordinary practice. Most judges dealing with the
problem have resolved the particular case before them by
dealing with the circumstances of that case and finding in it
the presence or absence of factors which would be capable, if
they existed, of warranting a departure from the usual rule.
But as French J said (at 8) in Tetijo, "The categories in which
the discretion may be exercised are not closed". Davies J
expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to
note some of the circumstances which have been thought to
warrant the exercise of the discretion. I instance the making
of allegations of fraud knowing them to be false and the making
of irrelevant allegations of fraud (both referred to by
Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were
commenced or continued for some ulterior motive (Davies J in
Ragata) or in wilful disregard of known facts or clearly
established law (Woodward J in Fountain and French J in
J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless
contentions (Davies J in Ragata); an imprudent refusal of an
offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at
724 (Court of Appeal), Crisp v. Keng (Supreme Court of New
South Wales, 27 September 1993, unreported, Court of Appeal)
and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are
to be found in the reports. Yet others to arise in the future
will have different features about them which may justify an
order for costs on the indemnity basis. The question must
always be whether the particular facts and circumstances of the
case in question warrant the making of an order for payment of
costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and
circumstances capable of warranting the making of an order for
payment of costs, for instance, on the indemnity basis, does
not mean that judges are necessarily obliged to exercise their
discretion to make such an order. The costs are always in the
discretion of the trial judge. Provided that discretion is
exercised having regard to the applicable principles and the
particular circumstances of the instant case its exercise will
not be found to have miscarried unless it appears that the
order which has been made involves a manifest error or
injustice.Fairly, in his written submissions, the solicitor for the Husband noted that Ms Pan is a self-represented litigant and, in many ways understandably, for reasons not explained otherwise, she has not filed any evidence. That said, she has provided material at different times, and in different ways, not least being the independent letters to which I have earlier referred in these reasons. Although not argued, those letters could perhaps be regarded as “business records” and admitted, in due course, if necessary. However, in terms of the formalities of evidence, the Court has very little from the Wife’s side except (as already stated) the series of letters that are annexed to her submissions.
To speak generally, these letters from third parties, to a not insignificant degree, support the Wife’s comments regarding (a) the improvident and impractical time-table agreed upon by the parties for the sale of so many properties, (b) there were, unavoidably, certain unforeseen events regarding the eviction of tenants and the necessary repairs to properties prior to their sale, and (c) a degree of lack of co-operation by the Husband regarding certain transactions referred to in the correspondence. If these documents were formally admitted into evidence, in my view, they would go quite some way towards challenging the making of any adverse costs Order against her.
Although these letter are not formally before the Court, at the same time the Court cannot simply ignore them. They require the Court to act in the most cautious manner. The matters contained in them, in my view, shed sufficient doubt on the complete story, as told by both sides, that the Court should be very wary of acting too boldly in terms of making Orders regarding costs, which are contrary to the usual rule where each party pays her or his own costs. The supervening circumstances recounted in those letters must necessarily impact on the exercise of the Court’s discretion which would make it utterly unjust to make a costs Order against the Wife on an indemnity basis. Although no Order has or will be made regarding the tender of said letters, I will treat them as having been read by the Court but not formally admitted into evidence in circumstances where, as earlier stated, the Wife is a self-represented litigant.
Moreover, the contents of the annexed letters earlier referred to support, to a not insignificant degree, the submissions (oral and in writing) made by the Wife. I do not doubt what she tells me. But again, for the purposes of actual evidence before the Court, I do not have relevant details, save for the annexures to the Wife’s submissions. What actually was said between the parties is formally not before the Court, and therefore it is not admissible evidence. At the same time, there is nothing before the Court by the Husband that refutes the claims by the Wife in relation to the conversations and events she recounts. Moreover, in order to test each of the claims by each of the parties would require that both of them be cross-examined, which would likely take quite some time. It would also involve in all likelihood the calling of each of the persons who wrote the letters that the Wife attached to her written submissions and for each of them to be cross-examined. Such a process wold obviously take much time and involve very significant cost to the parties.
As a matter of procedure, the Wife should have sought either or both a variation of the original Orders, and or that one or more of them be set aside, for example because of the external circumstances that, to some degree, frustrated the performance of the Orders. She may also have sought to cross-examine the Husband about the various conversations to which she alludes between her and the Husband.
Indeed, put another, slightly different way, Ms Pan’s explanations regarding:
a)the difficulties that she has had in selling the properties, including repairing a number of them; and
b)the time that it actually took for those properties to sell;
do not ultimately appear to be challenged by the Husband. They seem to be more than reasonable explanations, to the degree that that is relevant for the purposes of the matter before the Court. There is no question, therefore, that the properties were not in fact sold within the timeframe contemplated in the Orders.
All of this said, Mr Caro has spent funds in bringing the matter to Court. I have referred already to the fact that there is only a Minute of Orders Sought that refers to “indemnity costs.” In my view, procedurally there should have been an Amended Application to support such a potentially onerous Order. The Husband of course cannot rely upon being a self-represented litigant like the Wife. He has extremely experienced and capable solicitors acting for him.
The Court cannot, in all of the conflicted circumstances alleged by the parties (again accepting the problem of the lack of formal evidence from the Wife, save for the various letters from real estate agents to which I have referred), make any relevant findings or determination, for example, as contended by the Husband regarding things like (a) the Wife’s “clandestine” purchase of property, and or (b) that she sought extra time to comply with Orders “disingenuously”. Both of these accusations are in par.6 of the Husband’s submissions.
In my view, on the facts of this case, where, notwithstanding what might be described properly, or reasonably, as mitigating circumstances on the part of Ms Pan, for the reasons that I have given, I think there should be an Order for costs, not on an indemnity basis, but a very modest costs award in the Applicant’s favour, of $750. This is to be paid within 60 days. In making this Order, I am conscious of the fact that the Court will also make an Order to release to the Husband funds (in the sum of $10,000) from the trust account earlier referred to, which funds will presumably be used to offset the Application for costs sought by the Husband. As per the Consent Orders made on 4th May 2018, those funds held in trust are the net proceeds of sale from the property at Property J.[12]
[12] See also par.4 of the Husband’s Submissions which otherwise refers to the proceeds of sale being distributed (by consent) to the Husband, but for the $10,000 held in trust.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Neville
Date: 12 September 2018
Key Legal Topics
Areas of Law
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Civil Procedure
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Property Law
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Equity & Trusts
Legal Concepts
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Costs
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Injunction
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Remedies
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