Czeb and Czeb (No 2)

[2011] FamCA 230

FAMILY COURT OF AUSTRALIA

CZEB & CZEB (NO 2)

[2011] FamCA 230

FAMILY LAW – COSTS – Where wife is seeking the husband pay her costs at a fixed amount of $37,236 – Where the wife is a high income earner and the husband is incarcerated – Where the wife has made two reasonable offers to settle – Where the husband has been wholly unsuccessful – Where the husband has filed unmeritorious material – Husband to pay the wife’s costs on an indemnity basis at the amount fixed by the wife.

FAMILY LAW – APPEAL – Where husband is seeking an application for a stay and extension of time – Orders to be stayed subject to the husband’s application for extension of time being listed for hearing – In the event this application is not ultimately successful, stay is to be automatically lifted – Wife permitted to rent the property pending final resolution of the matter – Rent received to discharge mortgage and rates and give effect to the property settlement.

WIFE’S APPLICATION IN A CASE FILED 16 MARCH 2011 –
INDEMNITY COSTS APPLICATION

HUSBAND’S APPLICATION FOR A STAY AND FOR EXTENSION OF TIME WITHIN WHICH TO APPEAL – BEING APPLICATION IN AN APPEAL RECEIVED IN THE COURT ON 22 MARCH 2011

APPLICANT: Ms Czeb

RESPONDENT: Mr Czeb

FILE NUMBER: SYC 7329 of 2008

DATE DELIVERED: 6 April 2011

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Barry J

HEARING DATE: 24 March 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Maurice of Counsel appearing by telephone for the Applicant Wife

SOLICITOR FOR THE APPLICANT: Pigott Stinson Lawyers

COUNSEL FOR THE RESPONDENT: The Respondent Husband appearing by telephone (not legally represented)

Orders

1. The Husband pay the Wife’s costs of and incidental to the property settlement proceedings on an indemnity basis fixed at $37,236.

2. The Wife be at liberty to deduct such amount from any amount payable to the Husband pursuant to the property settlement orders dated 23 February 2011.

3. The orders of 23 February 2011 and the orders made on today’s date be stayed subject to the following conditions:

   (a)       the application for an extension of time within which to appeal be listed     by the Appeals Registrar in Sydney for hearing; and

   (b)       that such application for an extension of time is ultimately successful.

4. In the event that the application for an extension of time is not successful, the stay of the orders is to be automatically lifted.

5. Pending the final resolution of this matter the Wife be at liberty to rent the property situated at … L Street in H, New South Wales, on such terms as she in her absolute discretion may determine.

6. The rental proceeds received by the Wife are to be paid in the following fashion:

   (a)       in payment of any mortgage instalments;

   (b)       in payment of any other outgoings on the property including rates and        Council charges, to include any arrears of rates and charges; and

   (c)       subject to any order made in the determination of the appeal, the surplus,   if any, is to be deposited in an account in the Wife’s name to be         distributed 60 per cent to the Wife and 40 per cent to the Husband.

7. In the event the application for an extension of time within which to appeal is not granted, or in the event the appeal is withdrawn or otherwise dismissed, the lump sum payment of costs is to accumulate interest as from the date hereof and is to be deducted from the amount payable to the Husband pursuant to the property settlement orders.

8. Subject to any order made in the determination of the appeal, any amount to be paid to the Husband by the Wife pursuant to the property settlement orders not accrue any interest until the appeal is finalised.

IT IS NOTED that publication of this judgment under the pseudonym Czeb v Czeb (No 2) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: SYC 7329 of 2008

Ms Czeb

Applicant

And

Mr Czeb

Respondent

REASONS FOR JUDGMENT

1. On the 23 February 2011 for reasons given at the time, I made orders by way of property settlement, the effect of which was the property of the parties be divided 60/40in favour of the Wife (Ms Czeb).

2. This determination followed a two day trial in November 2011 in the Family Court at Sydney.  At all material times throughout the litigation the Wife has been legally represented and was represented by Counsel at the hearing before me.  The Husband (Mr Czeb) was not legally represented.

3. On the 16 March 2011 the Wife filed an application that the Husband pay her costs fixed at $37,236.  If the Court was to make an order in these terms it would effectively be an order for indemnity costs.

4. The Husband has indicated he wishes to appeal the property settlement orders.  He is at this point in time seeking an extension of time within which to lodge his appeal.  During the course of the hearing on the 24 March 2011, I indicated that part of his application which related to an extension of time, would be referred to an Appeal Court Judge in the Sydney/Parramatta Registries for determination.

5. The issues which I am required to determine are the application for costs and the Husband’s application for a stay of the orders pending the determination of his appeal.

Wife’s Application for Costs filed 16 March 2011

1. The Wife has filed an affidavit in support of her application for costs.  Annexed to that affidavit is a copy of a costs agreement (Annexure “C”) entered into between the Wife and her lawyers on the 7 April 2008.  Annexure “D” consists of various tax invoices rendered by the solicitors for the work undertaken on her behalf.  Annexure “E” involves the tax invoices rendered by Counsel for his services.  Annexures “F” and “G” are tax invoices by process servers and valuers who valued the former matrimonial home.  Annexure “H” consists of bank statements evidencing payment of mortgage instalments by the Wife for the period 1 November 2010 to 28 February 2011.  Annexure “I” are rates notices from the local  Council.

2. Importantly Annexures “J” and “K” were offers of settlement letters forwarded to the Husband on the 22 June 2009 and 27 August 2009 respectively.  In the first letter the Wife offered to settle on an apportionment of 70/30 in her favour and subsequently she offered to settle on an equal division of the assets.

3. During the course of the hearing I was informed by Counsel for the Wife that had the Husband accepted the offer contained in the letter of 27 August 2009, his entitlement would have been in the order of $206,000.  I have no reason to doubt the accuracy of this information.  Indeed it was not challenged in any fashion by the Husband.

Applicant Wife’s Submissions on Costs

1. The calculations made pursuant to the orders are that the Husband by way of property settlement would receive $160,576 from which it is now sought the Wife’s costs be deducted.  Counsel produced written submissions. 

2. Counsel drew attention to the financial circumstances of the parties.  The Wife is employed earning about $150,000 gross plus superannuation.  All of the Husband’s physical needs are being met as he is serving a lengthy term of imprisonment for inflicting serious injury upon the Wife.  He is not due for release until some time after 2020.

3. In the course of his written submissions Counsel indicates:

   “Upon his release some time after 2020 he has a variety of valuable qualifications that should ensure that he is capable of supporting himself financially.”

4. I would have to seriously question such a submission.  For my own part I am not prepared to draw such inference as I noted in the reasons for judgment the Husband has a poor work record as an employed staff member and has not shown any proficiency in being self employed.  I accept that he is intelligent having obtained a degree in professional field 1 in his native country and a degree in professional field 2 in more recent times from an Australian university.  Given his conviction for a serious offence of violence, it is highly speculative whether he would be able to obtain appropriate employment in either professional field 1 or 2.

5. I accept the force of the submission in paragraph (c) on page 2 of the written submissions when adverting to the conduct of the parties that the Husband filed three unmeritorious applications in a case, which ultimately were dismissed for want of prosecution.  I accept that much of the Husband’s material was inadmissible, irrelevant and argumentative. 

6. In relation to whether either party to the proceedings has been wholly unsuccessful, I accept the force of the submission that the Husband’s property settlement claim was totally unsuccessful.  The Husband’s claim for property settlement (where he sought more than 100 per cent of the property pool) can only be described as unrealistic in the extreme.  I note the two offers to settle which were forwarded to the Husband were very reasonable in their terms, particularly the latter.

7. In the course of his submissions on the issues of costs, the Husband appeared to largely want to argue the matter as if it was an appeal. 

Costs Order – Indemnity Costs

1. In Stephens v Stephens 44 Family Law Reports 117 the Full Court (May, Boland and Ryan JJ) canvassed the relevant principles when considering the merits of an application for indemnity costs.

2. I accept that when considering a costs application a Court must determine costs on a compensatory basis.  A costs order is not to be perceived as punitive or a back door way of awarding damages.  I accept a Court has the power to order a percentage of costs to be paid, or to defer payment of an order of costs for a period of time.

3. The Full Court in Stephen’s case (at page 133) observed a Judge has the power to make an order for indemnity costs:

   “…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.”

4. As I perceive the facts of this matter I ask myself the rhetorical question, “if not now, when?”  The conduct of the Husband has been so outrageous there is no reason whatsoever why the Wife should have to pay any of her costs.  The Husband confronted the Wife with a typed agreement, the effect of which she was to transfer all the property to him and pay him $250,000, a sum which she would have needed to borrow.  In effect, he would receive all the assets in addition to a large cash sum and she would be left with a significant liability.  For any prospect of success it was necessary for the Husband to establish some evidentiary basis in support of his allegations.  No such evidence was forthcoming. 

5. It is difficult to comprehend how a person who is familiar with the principles of property settlement division in this jurisdiction could make such outlandish claims.  In the Husband’s typed submissions to the Court at trial he listed most of the leading authorities in property settlement cases.

6. I find there was no merit in the stance taken by the Husband in response to the Wife’s application for property settlement.  At all times the position he adopted was so outrageous as to be untenable.

7. At all times the position adopted by the Wife was measured and reasonable. 

8. Where as here, one party has adopted a position so far outside a normal range for resolution of issues, it is appropriate to award indemnity costs.

9. In considering the specific factors enumerated in s 117(2A), I make the following observation:

   ·Subparagraph (c) the conduct of the parties to the proceedings….  As a litigant the Husband has at all times behaved in a manner totally removed from how a litigant should conduct himself or herself and such behaviour had the effect of the matter proceeding to trial when it should have been resolved.

   ·The Husband has been wholly unsuccessful in the proceedings.

   ·Most importantly, the Wife made a perfectly reasonable offer of settlement prior to the hearing which would have resulted in the Husband obtaining an outcome more favourable than the orders which were ultimately made.

Quantum of Costs

1. Annexure “C” to the Wife’s affidavit filed on the 14 March is the costs agreement entered into with her solicitors.

2. I have perused the terms of the costs agreement and I am prepared to find that the charges set out in the costs agreement reflect commercial rates for practitioners in the Sydney area.  I do not find the charges set out to be in any way out of kilter with what one would expect to pay for legal services in a matter such as this.

3. I am prepared to find that the amount claimed by way of costs for a two day trial in this jurisdiction is reasonable.

4. To save the expense of an assessment process, which would undoubtedly be contested having regard to the Husband’s past behaviour, I propose to order a lump sum amount.  I am of the view that it is an appropriate case where a Judge should exercise the discretion to award costs on a lump sum basis.  The additional expenses and stress associated with the assessment process is not justified.

5. Accordingly an order will issue that from any moneys due and owing pursuant to the property settlement orders there is to be deducted the sum of $37,236 by way of costs of and incidental to the property settlement determination.

6. If the Husband continues to maintain an untenable position whilst pursuing further litigation his modest entitlement which is currently in the order $123,000 could well be further diminished by a succession of costs orders.  As his material needs are likely to be met for the foreseeable future by the tax payer, I find that he has the financial capacity to meet the order for costs.  It is a matter for the Husband whether he pursues his appeal, but where the appeal is limited to property settlement issues, in the event his appeal is unsuccessful it would not be surprising to find a further costs order made.

Respondent Husband’s Application in an Appeal

1. In this document received by the Court on the 22 March 2011 (which does not appear to have been processed), the Husband seeks orders summarised as follows:

   ·A stay of all orders made on the 23 February 2011.

   ·A stay of the wife’s pending application in a case of 14 March 2011 (the costs application).

   ·That until the appeal is heard the wife pay all mortgage instalments on the former matrimonial home together with all other outgoings including rates and insurance.

   ·An order that the Court, at it’s own expense, provide the transcript of the hearing on the 11 May 2010 before Judicial Registrar Johnston and of the trial heard on the 19 and 20 November 2010.

   ·An extension of time of fourteen days in which to file his notice of appeal.

2. Subject to certain conditions (which appear eminently reasonable) the Wife’s lawyers do not oppose the granting of the stay.  In relation to the condition that the stay be granted subject to the Wife being at liberty to rent the property at commercial rates, the Husband was opposed to this, seemingly on the basis that he expected his appeal against the criminal convictions to be successful in the High Court and he wanted the property to be available for his own occupation and/or rental upon his release.  The Husband adverted, without elaborating, to the fact that he had read media reports that tenants in Australia were notoriously unreliable – presumably he did not want the subject property being damaged by unsatisfactory tenants.

3. There is no merit in the submission made by the Husband that the property should remain untenanted.  It makes sense that pending the resolution of the appeal process, the property should be producing income to assist in defraying the mortgage instalments.  I propose to so order.

Leave to Extend Time For Filing Notice of Appeal

1. I indicated that this matter would be referred by me to the Appeals Registrar in Sydney for listing before one of the Appeal Court Judges.

Transcript

1. In relation to the application that the Court provide a transcript as particularised above, the Husband advised that he had been quoted a cost of approximately $3,000 for the supply of such transcript.  The Husband has about $700 in a bank account which he has access to at the present time. 

2. I do not propose to order that the Husband be provided at Court expense with a copy of the transcript.  It is not the usual practice.  Where he has an entitlement of somewhere in the range of $123,000, but is electing to appeal, it would seem he should make some other arrangements.  The Husband is at liberty to raise the transcript issue when seeking the extension of time within which to appeal.

Whether the Property Should be Rented

1. The untenable stance which the Husband has adopted to all aspects of this litigation is further illustrated, in text book fashion, by his insistence that the Wife pay all of the mortgage instalments and outgoings on the property, but that the property remain untenanted.

2. It is normal practice to only grant a stay of orders once an appeal has been lodged.  The Wife’s Counsel, quite sensibly proposed, that it be a condition of the stay that the application for an extension of time within which to appeal be conditional on the application for an extension of time within which to appeal being granted.

3. Such a proposal is eminently reasonably.

4. I propose to make orders in terms of the Wife’s application.  I will, out of an abundance of caution, place a clause in the orders that no interest is to accumulate on the moneys to be paid to the Husband pursuant to the property settlement determination until the appeal process is concluded.

5. For the above reasons orders will issue as set out on page 3 hereof.

I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry delivered on 6 April 2011.

Associate: 

Date:  6 April 2011