Cornish & Cornish (No. 3)
[2021] FamCA 438
•25 June 2021
FAMILY COURT OF AUSTRALIA
Cornish & Cornish (No. 3) [2021] FamCA 438
File number(s): MLC 12589 of 2019 Judgment of: WILLIAMS J Date of judgment: 25 June 2021 Catchwords: FAMILY LAW – COSTS – s 117 of the Family Law Act 1975 (Cth) – Justifying circumstance for order for costs – Unacceptable conduct – Party/party costs. Legislation: Family Law Act 1975 (Cth) s 117(1), 117(2), 117(2A) Cases cited: Cornish & Cornish (No. 2) [2020] FamCA 1090
Cornish & Cornish [2020] FamCA 962
Marriage of I & I (No. 2) (1995) 22 Fam LR 557
Worth & Worth (No.2) [2019] FamCAFC 126
Number of paragraphs: 48 Date of last submission/s: 29 April 2021 Date of hearing: 13 April 2021 Place: Melbourne Solicitor for the Applicant: Mr Guo Solicitor for the Applicant: GR Lawyers Counsel for the Respondent: Mr Dunlop Solicitor for the Respondent: Taussig Cherrie Fildes Counsel for the Intervener: Mr Cain Solicitor for the Intervener: Andrew Croxford And Associates Pty Ltd ORDERS
MLC 12589 of 2019 BETWEEN: MR CORNISH
Applicant
AND: MS CORNISH
Respondent
MR WALEY
Intervener
ORDER MADE BY:
WILLIAMS J
DATE OF ORDER:
25 JUNE 2021
THE COURT ORDERS THAT:
1.The husband pay the party/party costs and disbursements of the putative second respondent, Mr Waley, of and incidental to:
(a)the Application in a Case dated 17 January 2021, which was sealed on 22 January 2021;
(b)preparation of the costs submissions;
as agreed, and in default of agreement, to be taxed.
2.The payment referred to in order (1) hereof be made within 30 days of agreement as to quantum, or failing agreement within 30 days of the determination of the taxed costs.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cornish& Cornish has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Williams J
This matter was listed in the Judicial Duty List on 13 April 2021. One of the issues for determination was whether the husband should pay the costs of the putative respondent, Mr Waley, the wife’s brother, arising out of the husband’s application to join him as second respondent to the substantive property proceedings. I made orders that the parties file and serve written costs submissions.
The husband and the wife are in dispute about the parenting arrangements for their daughter and a division of matrimonial property. Since the Initiating Application was filed on 7 November 2019 there have been numerous interim applications filed by both parties. A number of the applications were heard and determined by me in Cornish & Cornish [2020] FamCA 962 and a number of other applications were determined by the Honourable Justice Bennett in December 2020 in Cornish & Cornish (No. 2) [2020] FamCA 1090.
Despite both of those hearings, the plethora of interim applications and disputes has continued, including an Application in a Case filed by the husband on 22 January 2021, which sought to join the wife’s brother as a party to the substantive proceedings. In support of that application, the husband swore an affidavit which was filed on 17 January 2021. On 2 February 2021, the application and affidavit were forwarded via email to the proposed second respondent and were properly served on Mr Waley’s solicitor’s office later that afternoon.
The basis of the proposed joinder of Mr Waley was to compel him to sign documents necessary to sell a property situated at 2 U Street, V Town. Mr Waley is a registered proprietor, as tenants-in-common, of that property as to 50%, with the remaining 50% being registered in the name of a company controlled by the husband.
Part D of the orders sought in that application, states as follows:
1.That Mr Waley, the Wife’s brother, be given 24 hours from the date of these Orders to sign all deeds and execute all documents and do all things required to effect the Third Party Purchase Offer to purchase 2 U Street V Town presented by Y Real Estate.
2.If the Wife’s brother fails to sign the Third Party Purchase Offer within 24 hours, then a Family Court Registrar is to be appointed to sign all documents in place of Mr Waley in order to effect the sale of the Property for a minimum of $1.135m.
3.The Wife’s brother be joined to the Family Court proceedings as a Respondent only for the purposes of this property sale process.
4.The Wife’s brother to pay to the Husband, full indemnity costs of $3,300 for the costs of filing of this Urgent Enforcement Application.
On 4 March 2021, the wife’s brother Mr Waley filed a Response to an Application in a Case which sought that the husband’s application to join him as a second respondent be dismissed and that the husband pay his costs and disbursements on an indemnity basis.
On 4 March 2021, the putative second respondent Mr Waley filed an affidavit in support of his Response.
The 4 March 2021 affidavit of Mr Waley deposes to:
(a)the appointment of an estate agent by the president of the Real Estate Institute of Victoria, as the parties could not agree on an estate agent;
(b)the property was auctioned on 19 December 2020, however, the highest bid on that day was $850,000;
(c)thereafter, the agent entered into negotiations with prospective purchasers and on 25 January 2021 Mr Waley signed a contract of sale for the property for $1,135,000 with the settlement date on 29 June 2021;
(d)on 3 February 2021 a letter was forwarded to the husband’s solicitor, which is annexure W-3, to the affidavit, inviting the applicant to discontinue the Application in a Case seeking to join him as a respondent to the proceedings, as an unconditional contract had been signed and advising that the letter would be produced to the court on the question of costs in the event the husband proceeded with his application.
Annexure W-4 to the 4 March 2021 affidavit is a letter from the husband’s solicitor in response to the letter advising that the contract of sale had been signed by Mr Waley.
That letter under the heading The basis for joining your client Mr Waley states as follows:
Your client is required to be joined proceedings inter alia so that several of his false assertions can be tested under cross-examination in trial. (sic)
There are currently three grounds for joining your client to the Family Court proceedings:
1.Completion of the sale of 2 U Street V Town
2.Your client’s character propensity for fraud and his ongoing attempts to defraud the Cornish family asset pool.
3.The risks your client presents to the safety and welfare of the child, Z.
The letter continues to elaborate about the asserted basis for the necessity of the wife’s brother to be joined as a responded to the proceedings. The Application in a Case did not assert any necessity to join the wife’s brother to the proceedings in relation to the matters alleged in the preceding paragraph, other than the completion of the sale of the U Street V Town property.
LEGAL PRINCIPLES
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”), states, subject to the provisions of s 117(2), that the general rule in proceedings in this court, is that each party to proceedings, shall each bear his or her own costs.
Section 117(2) of the Act provides as follows:
If, in proceedings under this Act, the court is of the opinion that there are circumstances that justify it in doing so, the court may subject to subsections (2A), (4), (4A) and (5) 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.
Section 117(2A) of the Act provides, that in considering what order (if any) should be made for the payment of costs, the court shall have regard to the following matters:
(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.
In the Marriage of I & I (No 2) (1995) 22 Fam LR 557, the Full Court said that the relevant matters in s 117(2A):
“…must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”
I will now address each of the relevant considerations.
Section 117(2A)(a) the financial circumstances of each of the parties
There were no specific submissions about the financial circumstances of either of the parties. However, the affidavit of the wife’s brother of 4 March 2021 refers to the property the subject of the sale being unencumbered, with an entitlement to 50% to the wife’s brother and the remaining entitlement of the sale price, to a company controlled by the husband, which will no doubt form part of the asset pool between the husband and the wife.
Absent any further information about the respective financial circumstances of the husband and Mr Waley, I am able to infer that Mr Waley will be entitled to a one half share of the net proceeds of sale of the V Town property, and the company controlled by the husband, will receive the other half share. That will of course, be included in the asset pool and is a substantial sum.
Section 117(2A)(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
There were no submissions about this consideration and I can infer from the legal costs initially sought by the husband in his Application in a Case, which he has subsequently abandoned, and the claim by the wife’s brother for his legal costs, that neither party is in receipt of legal aid.
Section 117(2A)(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
At paragraph 8 of his 4 March 2021 affidavit, Mr Waley deposes to the chronology of the negotiations leading up to his signing the contract of sale for the V Town property. An auction occurred on 19 December 2020 when there was a bid for $850,000. Between the auction and 25 January 2021, the date on which the Contract of Sale was signed by him, there were negotiations both as to price and terms of the Contract of Sale.
The Application in a Case was filed by the husband on 17 January 2021, but not sealed by the Registry until 22 January 2021 and served on Mr Waley on 2 February 2021, when he had signed the Contract of Sale seven days earlier. The submissions of the husband, at paragraph 10 assert that Mr Waley had refused to sign the contract of sale until after the husband had filed an Application in a Case to join him as a party.
At paragraph 11 of those submissions, it is asserted that the husband informed Mr Waley’s solicitor by an email on 17 January 2021, that proceedings had been issued and provided him with an unsealed copy of the application. That email is Exhibit C to the husband’s costs submissions. That email does not state that an unsealed copy of the Application in a Case was enclosed as an annexure, but rather advises the orders sought in the Application in a Case. The orders referred to in the email include “appropriate remedies for contempt of court”, which is not an order sought in the Application in a Case, as well as payment of full indemnity costs of $3000 for the costs of filing of this urgent enforcement application .
It is also asserted that it was necessary to issue the proceedings to force Mr Waley to sign a Contract of Sale and impliedly, that absent the issue of proceedings, Mr Waley would not have signed a Contract of Sale.
At paragraph 8 of his 4 March 2021 affidavit, Mr Waley deposes to the sequence of offers made by the prospective purchaser between the date of the auction and the date of signing the Contract of Sale. It is apparent from that chronology that as at 17 January 2021, the purchase price was $1,135,000, however, settlement was proposed to take place on 14 July 2021. The negotiations on 19 January 2021 provided for the same purchase price with a settlement date of 21 July 2021 and on 21 January 2021, an offer was made for the same purchase price, with a settlement date of 29 June 2021, without any penalty conditions. The offer made on 21 January 2021 was incorporated into a Contract of Sale which was signed by Mr Waley on 25 January 2021.
I do not consider it unreasonable that Mr Waley signed a Contract of Sale four days after the conclusion of negotiations on 21 January 2021. According to the husband, the application was issued by him on 17 January 2021, however, negotiations continued until 21 January 2021, which included an earlier settlement date and removal of penalty conditions, which was advantageous to both vendors.
The orders referred to in the email from the husband to Mr Waley’s solicitors of 17 January 2021, namely indemnity costs and appropriate remedies for contempt of court, are inflammatory and provocative in the extreme.
The husband’s costs submissions are replete with references to the lack of bona fides of Mr Waley accusing him of seeking to share the matrimonial assets, and the conduct of his solicitor as being clearly provocative and exploiting and agitating the situation, knowing full well the lack of trust between all parties.
I do not accept the assertions in the costs submissions of the husband, which are of themselves provocative and offensive.
There was no need to issue proceedings as of 17 January 2021 when negotiations were continuing between the vendors’ agent and the prospective purchaser. The husband’s solicitors are also critical of Mr Waley for failing to advise the husband that he had signed the Contract of Sale. In circumstances where correspondence had been forwarded to him on 17 January 2021, seeking indemnity costs and referring to appropriate remedies for contempt of court, it is not surprising that Mr Waley did not communicate to the husband that he had signed the Contract of Sale on 25 January 2021.
Clearly the husband was aware of the negotiations and could easily have ascertained the state of negotiations from the selling agent.
Second 117(2A)(d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
This is not a relevant consideration as there were no previous court orders pertaining to the husband and the wife’s brother.
Section 117(2A)(e) whether a party to the proceedings has been wholly unsuccessful
There has been no determination of whether the application to join the wife’s brother was properly made by the husband. However, the husband has not persisted with the application to join the wife’s brother, and in that regard the application could be regarded as unsuccessful.
Section 117(2A)(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
Paragraph 11 of Mr Waley’s costs submissions refers to a series of letters passing between the solicitors for the respective parties pertaining to the proposed joinder and consequent costs. The letters are appendix A to F inclusive to the submissions.
The letters demonstrate as follows:
(a)on 3 February 2021, the solicitors for Mr Waley invited the husband to discontinue the application against their client and that indemnity costs would be sought against him;
(b)on 25 March 2021, the husband’s solicitors proposed a resolution of the joinder application prior to the hearing scheduled for 26 March 2021, and that there be no order for costs;
(c)on 30 March 2021, the solicitors for Mr Waley again sought discontinuance of the application for joinder and an intention to seek indemnity costs;
(d)on 12 April 2021, the solicitors for the husband agreed that Mr Waley should not be joined as a party to the proceedings and that the issue of costs should be reserved;
(e)on 12 April 2021, the solicitors for Mr Waley confirmed that their client should not be joined as a party to the proceedings and that costs would be sought on an indemnity basis against the husband. The letter also referred to the husband’s failure to sign documents to progress the conveyancing of the sale;
(f)on 14 April 2021, following an attendance at court on 13 April 2021, the solicitors for Mr Waley proposed that their client should not be involved in the proceedings and that it was still their clients intention to seek costs on an indemnity basis which included counsel’s fees and preparation of costs submissions.
It is abundantly clear that:
(a)as at 12 April 2021, the solicitors for the husband agreed that Mr Waley should not be a party to the proceedings;
(b)at all times the solicitors for Mr Waley sought their clients costs of the joinder application, including counsel’s fees and preparation of costs submissions, be paid by the husband on an indemnity basis.
Section 117(2A)(g) any other matters the court considers relevant
I have considered and taken into account all of the relevant matters in s 117(2A) of the Act and the submissions of both parties, and I am satisfied that there are justifying circumstances to depart from the general rule that each party shall bear his or her own costs.
In particular, it was apparent to the husband from the very commencement of his Application in a Case that Mr Waley would seek costs against him if he persisted with such an application. It is difficult to understand why, after the husband ascertained that the Contract of Sale had been signed by Mr Waley, that he persisted with the application which resulted in more than one court appearance. That was supposedly justified on the basis that the husband had an apprehension that Mr Waley would not sign documents to enable the settlement of the sale to proceed.
In fact, as it transpired during the hearing on 13 April 2021, it was the husband who failed to complete and Client Authorisation Form and Discharge Authority, to enable the ANZ Bank to discharge the mortgage which had remained registered on the title.
This is also evidenced by the further submissions of the husband as to costs, which was forwarded to the court on 29 April 2021 which purportedly supports the husband’s position that Mr Waley is effectively involved in the proceedings and the attempt to join him was appropriate.
The further submissions and the attachments do not substantiate that position in the slightest. The attachment to the second submissions is a letter from the wife’s solicitors dated 29 April 2021 enclosing a Client Authorisation Form and ANZ Discharge Authority which the husband was to sign at court on 13 April 2021, and he failed to do so. The letter sought the signature and return of documents by 29 April 2021, failing which an application for an order pursuant to section 106A of the Act, would be sought.
The letter was copied to the solicitors for Mr Waley, quite appropriately, as he is a co-registered proprietor of the property and should be kept informed of the signature of documents required to effect settlement, by all parties. The submission that advising a co-registered proprietor of a property about conveyancing documents, gives little weight to the costs submissions of Mr Waley, is without any sensible foundation. The fact that as at 29 April 2021, the husband had failed to sign documents which he was required to sign at court on 13 April 2021, is indicative of the husband’s lack of cooperation, not lack of cooperation on the part of Mr Waley.
Indemnity Costs
As I am satisfied that there are justifying circumstances for an order for costs, the outstanding issues are whether costs should be ordered on the usual party/party basis, or the exceptional indemnity basis.
The principles as to the basis on which indemnity costs should be ordered is set out by the Full Court in Worth & Worth (No.2) [2019] FamCAFC 126, as follows:
[9] The authorities are clear, that for the usual basis to be departed from, exceptional circumstances need to be demonstrated (see, eg, Limousin & Limousin (Costs) (2007) 38 FamLR 478). The categories of such circumstances are not closed (Yunghanns & Yunghanns (2000) FLC 93-029), but some examples are provided in the oft-quoted decision of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive Co”), and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660, drew from his Honour’s decision the following:
(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 cases the action must be presumed to have been commenced or 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 the 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 to have been made or the undue prolongation of a case by groundless contentions.
(e)An imprudent refusal of an offer to compromise.
The solicitor for Mr Waley submits an order for indemnity costs is appropriate because, there exists some special or unusual feature in the case to justify the court in departing from the ordinary practice.
The conduct of the Husband which Mr Waley relies upon is as follows:
(a)the husband should have known, and was warned he had no prospect of success;
(b)it is possible to infer from his conduct that he had an ulterior and malicious motive in making application against the wife’s brother;
(c)the husband made irrelevant claims and allegations against the wife’s brother;
(d)the husband unduly prolonged the proceedings with groundless contentions against the wife’s brother relating to the U Street property;
(e)until late in the afternoon before the matter was to resume on 13 April 2021, the husband imprudently refused to resolve the issue of whether the wife’s brother should properly be joined in the proceedings;
(f)since the letter of 3 February 2021, the husband has been on notice of the intended claim for indemnity costs against him;
(g)subsequent to that letter there has been numerous correspondence in relation to the issue of indemnity costs which is clear and unambiguous;
(h)the wife’s brother should not be prejudiced and denied relief by way of recovery of costs on an indemnity basis, because of the correspondence between the parties.
Conclusion
The Husband opposes any order for costs, let alone indemnity costs and submits that each party should bear his own costs in the proceedings. I do not accept that submission for the reasons set out in the proceeding paragraphs.
The conduct of the Husband is clearly unacceptable and in my view warrants an order for costs, when all of the relevant statutory considerations are addressed however, the appropriate costs remedy is to order costs on a party/party basis. I am not persuaded that the circumstances of this matter are so exceptional, as required by the authorities, that my discretion should be exercised to make an order for indemnity costs.
I intend to make an order that the husband pay the party/party costs of Mr Waley of and incidental to the husband’s Application in a Case dated 17 January 2021 and sealed 22 January 2021 and including the costs of the preparation of the costs submissions, as agreed and in default of agreement, to be taxed.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Williams.
Associate:
Dated: 25 June 2021
0
4
1