Cook and Cook

[2011] FamCA 775

FAMILY COURT OF AUSTRALIA

COOK & COOK [2011] FamCA 775

FAMILY LAW – Application for costs of enforcement and other injunctive proceedings – Partial costs sought on an indemnity basis and other costs on party / party scale – Husband’s failure to comply with previous Court Orders – Financial circumstances of parties – Wife substantially successful and husband wholly unsuccessful – Basis of indemnity costs order – Other party / party costs – Registrar to assess costs

Family Law Act 1975 (Cth) s 117(1), (2) and (2A)

Stephens v Stephens 44 FamLR 117
Yunghanns v Yunghanns (2000) FLC 93-029
Limousin v Limousin (2007) FamCA 1178
Fennessy v Gregorian (2009) FLC 93-399 at paragraphs 53 – 73
Colgate-Palmolive Co v Cussons Pty Ltd 118 ALR 248 at 256
Ragata Developments Pty Limited v. Westpac Banking Corporation (Federal Court of Australia, 5 March 1993, unreported)
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) FCA 202

APPLICANT: Ms Cook

RESPONDENT: Mr Cook

FILE NUMBER: MLF 1997 OF 2003

DATE DELIVERED: 5 October 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Young J

HEARING DATE: 3 October 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr St John SC

SOLICITOR FOR THE APPLICANT: Marshalls & Dent

COUNSEL FOR THE RESPONDENT: Mr Spicer

SOLICITOR FOR THE RESPONDENT: Kennedy Partners

ORDERS

IT IS ORDERED:

1. THAT the husband pay the wife’s costs and disbursements of and incidental to the enforcement issues identified in paragraph 6 of her Application in a Case filed 18 May 2011 and that such costs be assessed and paid on an indemnity basis.

2. THAT the husband further pay the wife’s costs and disbursements of and incidental to the hearing of the issues identified in paragraphs 2 and 3 of her Application in a Case filed 18 May 2011 and such costs be assessed and paid on a party / party basis.

3. THAT a Registrar of the Family Court be forthwith appointed for the purposes of determining the quantum of costs payable pursuant to these Orders by the husband to the wife and for that purpose to fix all case management and filing dates and otherwise deal with all assessment of cost issues as soon as practicable.

4. THAT the husband pay the wife’s costs and disbursements within thirty (30) days of the conclusion of the assessment hearing before a Registrar and that thereafter and if in default interest accrue from time to time at the rate prescribed by the Family Law Rules on all outstanding costs then owing.

IT IS CERTIFIED

1. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Senior Counsel for the wife and Counsel for the husband.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:  MLF 1997 of 2003

Ms Cook

Applicant

And

Mr Cook

Respondent

REASONS FOR JUDGMENT

1. In her Application in a Case filed 18 May 2011 (Court Document No. 201) the wife sought various interim injunctive, case management and enforcement orders, including the enforcement of past costs orders and additionally sought an order for costs of and incidental to that Application.

2. The husband’s Response was filed 10 June 2011 and he sought the dismissal of all orders sought by the wife and that she pay his costs of and incidental to that dismissed Application on an indemnity basis.

3. Both hearings proceeded upon the substantial documents filed and affidavit evidence before the Court which I had read and supplemented by written and oral submissions from Counsel.

4. I delivered extempore reasons for judgment on 9 June 2011 and pronounced orders on that day upon the issues raised in paragraphs 2, 3, 4 and 5 of the wife’s Application in a Case.

5. I then reserved the costs of and incidental to that hearing to a further hearing date fixed before me on 29 August 2011.

6. I have separately delivered a reserve judgment as to the enforcement of orders as sought in paragraph 6 of the wife’s Application in a Case and I have pronounced orders.  I further reserved the costs of and incidental to that hearing and preparation of submissions to be consolidated with the adjourned costs date earlier fixed, that was 29 August 2011.

7. On that adjourned hearing date, and upon further submissions from Counsel for both parties, I made orders by way of financial disclosure, required the filing of an updated and complete Financial Statement, reserved the costs of hearing of that day and required written submissions of a reasonable length to be filed and served addressing both questions of the award of costs and the basis upon which costs should be awarded.

8. I ordered further that the extempore reasons for judgment be transcribed, placed upon the Court file and made available to all parties.

9. On all past appearances I have been asked by both parties to certify for the attendance of Counsel, including Senior Counsel for the wife and I have so certified.

10. On the hearing before me on 29 August 2011 Senior Counsel for the wife tendered the current Costs Agreement and an amending letter as between the wife and her solicitor and those documents were marked as an exhibit and retained upon the court file.

11. In the proceedings before me on the hearing of the costs submissions on 3 October 2011 an amended bill of costs was tendered and that document was marked as an exhibit of that day and retained upon the file.

12. The primary difference between the two solicitors’ bills of costs charged to the wife are the correcting of an earlier telephone charge of $1,200 and otherwise the updating of the bill of costs to include charges and disbursements incurred in late August of this year in court hearings and preparation.

13. In summary what is before me are the questions of the reserved costs and if ordered the basis upon which they should be assessed from the hearings or orders on 9 June 2011, 29 July 2011, 29 August 2011 and the further hearing of 3 October 2011.

COSTS SUBMISSIONS - WIFE

1. Senior Counsel for the wife prepared and her solicitors filed on her behalf on 29 September 2011 written costs submissions (Court Document No. 206).

2. The costs orders are sought for all solicitors work, preparation, hearing, court appearances for each of the court events that flowed from the filing of her Application in a Case on 18 May 2011 including disbursements and the costs of preparation of written submissions.

3. As to the Reasons for Judgment and orders pronounced on 9 June 2011 the wife seeks costs on a party / party basis.

4. As to the enforcement orders made for costs pursuant to the order pronounced 29 July 2011 the wife seeks costs on an indemnity basis or otherwise upon a solicitor / client basis or, if such orders are refused then costs calculated upon a party / party basis.

5. The written submissions of Senior Counsel identified the applicable law both as to the award of costs and the considerations upon which costs are awarded on an indemnity basis.  I have carefully read and evaluated those submissions.

6. It is submitted in paragraph 18 of those submissions that “a failure to order indemnity costs will render Pyrrhic the wife’s success in obtaining enforcement orders, penalise her forced recourse to the court and reward the husband’s sustained and tactical refusal to apply with orders”.

COSTS SUBMISSIONS - HUSBAND

1. Counsel for the husband initially sought that there be no order as to costs or, in the alternative, that if an award of costs were pronounced in the wife’s favour of and incidental to paragraph 6 of her Application in a Case then such costs be calculated only on a party / party basis.

2. In his submissions Counsel, upon instructions, focused upon a further order sought and that was, in the event that a costs order was made pursuant to the injunctive orders pronounced 9 June 2011, then those costs should be reserved pending the final defended hearing or otherwise the payment of such costs should be reserved pending the final hearing.

3. I likewise have carefully read the written submissions filed on behalf of the husband which emphasised the general principal of section 117 of the Family Law Act 1975 (Cth) (“the Act”) where it is stated that (subject to sub-section 2 thereof) each party should bear his or her own legal costs. It was submitted on behalf of the husband that it was not a just outcome to conclude a costs order against him and in favour of the wife and in that regard his Counsel addressed the various matters that are set out in section 117(2A) of the Act.

4. It was said that the husband’s capacity to meet any costs order is limited as his weekly expenses exceed his gross weekly income.  It was said that he does not have real or personal property that can be sold to satisfy a costs order.  That submission has not dissuaded me from a costs order.

5. The husband has various operative court orders pursuant to which he is required to pay spousal maintenance and other outgoings for the wife and he submitted that they total $1,646 net per week and, in the course of the hearing, I established that those payments are continuing and are up to date.

6. Counsel for the husband submitted that his conduct in the proceedings does not justify a costs order or alternatively that his conduct in the proceedings does not justify a costs order assessed on either an indemnity or a solicitor / client basis.  I have not accepted that submission.

7. Of significance the husband conceded in the written submissions of his Counsel that the enforcement of costs orders as sought by the wife “were necessitated by his failure to comply with previous costs orders of the court”.  However he submitted that this failure to pay previous costs orders was not wilful but arose out of his inability to pay lump sum amounts that had been previously ordered.  I do not accept that position.

8. Those submissions further opposed indemnity costs on the basis that they are not justified and that, in any event, the wife was only partly successful as she did not achieve the payment of costs within the time frame stipulated by her, that is an unrealistic three business days.

9. Counsel for the husband emphasised that costs are not awarded as a penalty or damages but are made only to compensate a party against expenses incurred in litigation.  That submission I accept and the orders pronounced herein are not by way of punishment but are compensatory.

10. Finally the husband submitted that the wife was not “wholly successful” with respect to both the injunctive and costs orders and in that regard I have reflected upon my Reasons for Judgment and the Orders pronounced 29 August 2011 and I largely disagree with the husband’s position.

PREVIOUS JUDGMENT

1. On 10 November 2010 I delivered a Judgment on costs orders, including indemnity costs orders and in paragraphs 16 – 27 (inclusive) thereof I carefully highlighted section 117 of the Family Law Act and relevant cases applicable to an award of indemnity costs. 

2. Counsel for both the husband and wife have each advised the Court that the proper reference to and acceptance of those legal cases and principles can be achieved by now adopting those paragraphs within that earlier Judgment and I do so on the very clear understanding that I have carefully considered each of those cases and the proper principles for an award of costs, on the usual party basis or as solicitor client costs or indemnity costs as may be applicable in the particular factual circumstances now before the Court.

3. The written submissions of Senior Counsel for the wife highlighted the reported decisions in paragraphs 5 – 9 (inclusive) and I have carefully read again those references.

s.117(2A)

1. I have previously recorded the submissions of Counsel for the husband as to the applicable factors in determining whether it is just to pronounce a costs order and those matters were addressed on behalf of the wife in paragraphs 12 – 17 (inclusive) of her written submissions which I have read carefully and evaluated.

2. I have made certain findings in my previous Judgment and those matters are the basis upon which I consider the justice of an award of costs and the nature of the costs order now to be pronounced.

3. I well know the financial circumstances of the wife from previous hearings and from her evidence before the Court.  She has received an interim settlement of property and is paid periodic support but has limited available cash sums and enormous legal expenses, largely outstanding.

4. I contrast her financial circumstances with that of the husband who is a highly paid company director, does enjoy a reasonable lifestyle, overseas travel and a new motor vehicle notwithstanding his liabilities and continuing expenses. 

5. I balance that overview with the disclosure of financial information by the husband in both his Financial Statement filed 29 September 2011 and his amended Financial Statement filed by leave on 3 October 2011 during the hearing that day.

6. The husband’s income is significant, in excess of $6,000 per week.  His expenses was said to exceed his income.  It is now submitted by the husband that his liabilities substantially exceed the value of property owned by him and his superannuation entitlements.

7. I have carefully read that amended Financial Statement but it is, of course, yet to be challenged under cross examination and I have drawn no final conclusions.

8. I am also acutely aware of the Supreme Court proceedings that are outstanding, the ongoing mediation of the remaining commercial dispute and generally the financial circumstances of the husband post the failure of the K Pty Ltd.  All of these matters have been the subject of evidence before me in the various hearings over the past few years in this matter.

9. The wife’s Senior Counsel placed very considerable emphasis upon the conduct of the parties and in particular the need for injunctive orders so that the wife would be provided with reasonable and up to date information on the Supreme Court litigation and generally on the husband’s circumstances post the conclusion of the hearing in July 2009.  There is merit in the wife’s submissions contained within paragraph 14(c) of her submissions and that is a finding that is important in my exercise of a discretion of costs.

10. Likewise paragraph 14(d) is of considerable importance in that the hearings have arisen as a result of a failure, or refusal, of the husband to comply with previous orders.  Indeed I observe that my orders pronounced 9 June 2011 were intended to place an onus upon the husband to ensure that his commercial solicitors and his family law solicitors, provided a proper level of current information to the wife’s solicitors about the Supreme Court proceedings and ongoing mediation proposals.  That has not properly occurred and indeed I have made further orders at the hearing before me on 3 October 2011 (paragraph 3 thereof) requiring communication of all updated matters of relevance to be made by his commercial solicitors to the wife’s lawyers.

11. Otherwise, and of course by their very nature, the costs orders made against the husband on 27 January 2010 and 10 November 2010 remain outstanding and the husband had not approached the Court for any extension of payment or other redress in that regard.

12. Generally I find that the wife was largely successful and the husband primarily unsuccessful in his opposition to the orders sought by the wife and again that factor is of significant relevance to the exercise of discretion to award costs and the basis of such an award of costs.

13. The wife’s written submissions, in paragraph 14(g) deal with other matters of relevance and I have carefully read each of the five sub-paragraphs thereof and conclude that they are matters of relevance and significance in the exercise of my discretion.

14. The written submissions of the wife further carefully detail in paragraph 17 the various factors as to why an indemnity costs order should be made specifically in relation to the costs enforcement orders and in that regard I accept the submissions contained within sub-paragraphs (c), (d), (e) and (f).

15. As to paragraph 17(g) I do not accept wholly the basis for the submissions, or the language contained within sub-paragraph (iii) thereof.  Nevertheless the matters otherwise dealt with in sub-paragraphs (i) and (ii) thereof are reasonably expressed having regard to my previous Reasons for Judgment or the evidence before the Court.

16. In all of the circumstances I conclude, in the exercise of my discretion, that it is proper that the husband pay the wife’s costs and disbursements of and incidental to the hearings before me on 9 June 2011, the orders of 29 July 2011 and the hearing and orders of 29 August 2011 and now of the hearing on 3 October 2011.

17. The amended Application of the husband arising from the submissions of his Counsel was that there should be a reservation of costs or of the payment of costs.  I do not accept that submission and I have carefully reflected on the evidence and have determined that I should not further reserve any questions of costs and that I should not unnecessarily delay the payment of costs.  I conclude that to do so would further financially disadvantage the wife as her date for payment of her past costs orders and disbursements is now well overdue and she is continuing to be charged interest in default of payment.

18. Whilst I have the original and amended bill of costs before me I made it clear to Counsel and each of their clients who were present in Court throughout all hearings that I do not intend to consider each and every item as charged.  That assessment of costs can and should be properly undertaken by a Registrar of this Court.  Whilst that will incur further costs and expenses it nevertheless is the only properly available option to the benefit of the parties and so that they may support or challenge each and every particular item charged.

19. I therefore find pursuant to s 117(2) that there are circumstances which justify the making of a costs order and that it is my opinion that it is just for costs orders to be pronounced in respect of each of the hearings, orders and written submissions and matters where the solicitors and Counsel have been properly involved in preparation and presentation of evidence to the Court in the conduct of proceedings on behalf of their client.

20. Upon the orders sought by the husband that he be paid indemnity costs upon the dismissal of the wife’s Application it follows that I reject his Application and make no award of costs in his favour.

QUANTUM AND BASIS OF COSTS ORDER

1. I have had careful regard to the Solicitors Costs Agreement filed with the Court and the amended bill(s) of costs.

2. I conclude it just that the husband pay costs on a party / party basis for that part of the injunctive hearing of paragraph 2 of the Application and the Orders pronounced 9 June 2011 and otherwise for the hearing before me on both 29 August 2011 and 3 October 2011.

3. The award of indemnity costs is sought by the wife only in respect of the enforcement for the orders of costs made against the husband on 27 January 2010 and 10 November 2010.  Those issues were before the Court on the 9 June 2011 hearing and are concluded within the Orders pronounced 29 July 2011.

4. In further reflecting upon the indemnity costs order sought for the enforcement of costs hearing I have been referred by Counsel for the husband to the reported decision of the Full Court in Stephens v Stephens 44 FamLR 117 and in particular from pages 130 – 139 (inclusive) which I have carefully read.

5. It is a matter of primary importance to understand that the costs then before the Court were the costs of appeal and it was those costs that were ordered to be assessed on a party / party basis.  The basis upon which the Full Court found that basis of assessment to be proper was that “we could not be satisfied that the husband’s appeal and his defence of the wife’s cross appeal was hopeless and did not give rise to any arguable factual and legal questions”.  Additionally they were not satisfied that the husband’s conduct as a litigant in the appeal proceedings before the Court would justify a special order for costs.

1. I conclude that an award of indemnity costs on the enforcement aspect of the wife’s application (paragraph 6 of her Application) is just and proper.  I conclude that the Court can and should depart from the usual award of costs on a party / party basis.

2. I find this to be a special case with a unique financial history well known to me and its particular circumstances and primarily the husband’s non-payment of costs as had been ordered does justify a departure from the ordinary costs principle.

3. The husband and his solicitors had every opportunity to previously approach the Court and to request a postponement or deferral of the costs order or otherwise respond to the wife’s invitation for a payment plan to be negotiated.  This he failed to do.

4. If costs are not awarded on an indemnity basis for this aspect of the current proceedings the wife would be further financially penalised by having to pay costs to her Senior Counsel and solicitors pursuant to the Costs Agreement and with achieving only a partial repayment thereof pursuant to Court Orders.  That would be, in the particular circumstances of this case, a wholly unjustifiable and unacceptable outcome.

5. I had considered, in the alternative, the wife’s alternate Application for costs on the enforcement issue to be paid on a solicitor / client basis.  That was very much her secondary position.  I have carefully considered that aspect of the case in the context of what would achieve a just outcome and I have determined that costs of and incidental to the enforcement issue should be paid on an indemnity basis. 

6. I well understand that there may be a difficult task confronting the parties, their solicitors and the Registrar of the Family Court in assessing that part of the bill of costs referrable to indemnity costs as distinct from party / party costs.  The appearances of Senior Counsel and the preparation of evidence intertwine these issues and that must lead to a discretionary response from the Registrar when calculating a dollar value for the wife’s costs.

7. I repeat the orders sought by Senior Counsel for the wife were prepared on the basis of partial indemnity costs and partial party / party costs and ultimately it is that outcome which I have found to be just and which therefore I have ordered.

8. Hopefully a significant level of common sense will be adopted by the solicitors in preparing costs documents and presenting outcomes to the Registrar on assessment.  The cost of that process may be significant and a holistic and common sense approach would best serve the financial interests of these parties.

9. On all outstanding costs orders made by the Court or on sums when assessed by the Registrar I do intend that interest in default be payable at the rate prescribed from time to time within the Family Law Rules.

I certify that the preceding sixty six (66) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Young delivered on 5 October 2011.

Associate: 

Date:  5 October 2011