Damond and Padros
[2020] FamCA 803
•23 September 2020
FAMILY COURT OF AUSTRALIA
| DAMOND & PADROS | [2020] FamCA 803 |
| FAMILY LAW – COSTS – Where application for costs order relating to interlocutory application in the Federal Circuit Court before proceedings transferred to the Family Court of Australia – Where discussion of applicable principles – Where order for costs in the sum of $10,000. |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) r 19.09 |
| Browne & Green (2002) FLC 93–115 Collins & Collins (1985) FLC 91-603 Greedy & Greedy (1982) FLC 91-250 Hawkins & Roe [2012] FamCAFC 77; (2012) 47 Fam LR 526 Lenova & Lenova (Costs) [2011] FamCAFC 141 Luadaka & Luadaka (1998) FLC 92-830 Penfold v Penfold (1980) 144 CLR 311 Pennisi & Pennisi (1997) FLC 92-774 Robinson and Higginbotham (1991) FLC 92-209 |
| APPLICANT: | Ms Damond |
| RESPONDENT: | Ms Padros |
| INDEPENDENT CHILDREN’S LAWYER: | Mark Macdiarmid |
| FILE NUMBER: | PAC | 706 | of | 2019 |
| DATE DELIVERED: | 23 September 2020 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | By way of written submissions last received on 21 August 2020 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Mr Youssef of Taylor & Scott Lawyers |
| RESPONDENT – SELF-REPESENTED LITIGANT: | Ms Padros |
| SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: | Mark Macdiarmid Family Law Specialist |
Orders
That the respondent Ms Padros pay the costs of the applicant Ms Damond of and incidental to the interim hearing on 2 April 2020 in the Federal Circuit Court of Australia in the sum of $10,000 within one month.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Damond & Padros has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 706 of 2019
| Ms Damond |
Applicant
And
| Ms Padros |
Respondent
REASONS FOR JUDGMENT
These are ongoing de facto property proceedings arising from the relationship between the applicant de facto wife Ms Damond (“the applicant”) and respondent de facto wife Ms Padros (“the respondent”).
On 22 July 2020 the applicant filed an Application in a Case seeking orders, in summary:
(1)That the respondent pay the applicant’s costs in the fixed sum of $20,000; and
(2)That should the respondent fail, refuse or neglect to comply with this order for costs or a previous order made that provided that the respondent “provide the Applicant copies of her B Pty Ltd’s books evidencing her trailing commission and other such income related documents for the period 1 July 2016 to present”, then the respondent “shall be precluded from further participating in these proceedings and the court shall proceed to make orders in her absence by way of an undefended hearing(s) NOTING the court shall also give consideration to enforcement proceedings against the Respondent if they are brought by the Applicant”.
In support of her application for costs, the applicant relied upon:
a)her affidavit filed 22 July 2020; and
b)the Reasons for Judgment of Judge Newbrun of 7 May 2020.
On 23 July 2020 orders were made in relation to this application which provided, in summary:
(1)That the respondent file a Response to this Application in a Case together with any affidavit in support by no later than Friday, 7 August 2020;
(2)The applicant file and serve an outline of written submissions in respect of the application for costs by no later than Friday, 21 August 2020; and
(3)The respondent file and serve the same by Friday, 4 September 2020.
The respondent has failed to file any material in relation to the application for costs in accordance with these orders. Judgment as to costs was reserved to chambers on 10 September 2020.
Brief history of the proceedings
A brief history of the proceedings in the Federal Circuit Court is set out for the purpose of understanding the basis of the applicant’s costs application.
On 10 February 2020 orders were made by a judge of the Federal Circuit Court restraining the respondent from dealing with a number of corporate entities (“the 10 February injunction”) that provided:
(1)That until the interim hearing listed on 19 February 2020 the Respondent shall be restrained from selling, transferring or otherwise disposing or causing or allowing any third party, servant or agent of hers to do so on her behalf in respect of any legal or equitable interest she holds in:
1.1A Pty Ltd;
1.2B Pty Ltd;
1.3B2 Pty Ltd;
1.4C Pty Ltd as trustee of the C Pty Ltd Property Trust
1.5D No.1 Pty Ltd;
1.6D No.2 Pty Ltd (in liquidation); and
1.7D No.3 Pty Ltd.
Further orders were made on this date:
(1)That should the Respondent wish to sell, transfer or otherwise dispose of any legal or equitable interest she may hold as referred to in the immediate preceding order, she shall provide the Applicant all the relevant information and documents of such proposed action with not less than six weeks’ notice so that the Applicant may respond to her.
(2)That within 14 days from the date of a written request by one party in respect of financial disclosure, the other shall provide such information and documents.
(3)That within 21 days from the date of these orders, the Respondent shall provide the Applicant copies of her B Pty Ltd’s books evidencing her trailing commission and other such income related documents for the period 1 July 2016 to present.
(4)That the parties shall as soon as practicable collaboratively work on a joint balance sheet.
(5)That the parties shall have leave to relist the matter on seven days’ notice to the other.
On 19 February 2020 the matter came before the Federal Circuit Court judge for what was expected to be an interim hearing. However, on this date the proceedings were adjourned and orders made for the applicant, within seven days, to file an Amended Application in a Case in relation to the continuation of injunctive orders made 10 February 2020, her orders proposed as to litigation funding and orders regarding proposed valuations in relation to the respondent’s interest in certain corporate entities. The respondent was ordered to then file a Response thereafter within a further 21 days.
On 27 February 2020 the applicant filed an Amended Application in a Case seeking, in summary:
(1)A continuation of the 10 February injunction except in relation to “B2 Pty Ltd”;
(2)That should the Respondent wish to sell, transfer or otherwise dispose of an interest she may hold as referred to in the immediate preceding order, she shall provide the Applicant all the relevant information and documents of such proposed action upon not less than six weeks' notice so that the Applicant may respond to her;
(3)That upon service of a sealed copy of these Orders on E Conveyancing, the funds currently held on trust with the said firm on behalf of the parties being the proceeds of sale of their former Suburb F Property be deposited into the trust account of Taylor & Scott Lawyers (BSB …, account no.…93) .
(4)That upon transfer of the proceeds of sale from E Conveyancing to Taylor & Scott Lawyers in accordance with the preceding order herein:
4.1the Applicant shall be entitled to retain the sum of $75,000 to be characterised at a later date by the trial judge; and
4.2Taylor & Scott Lawyers shall then deposit the balance remaining into a controlled monies account to be held on trust for the parties pending further order or written direction and authority from both parties.
(5)That within seven days the respondent select one forensic accountant from the three proposed in the Applicant solicitors’ letter of 26 February 2020 to be appointed a joint expert to value the respondent’s business and trust interests including but not limited to the aforementioned entities;
(6)That within seven days from the date the Applicant provides the Respondent a draft joint letter of instructions to the joint expert, the Respondent shall sign and return the said document to the Applicant;
(7)That should the Respondent fail, refuse or neglect to comply with either or both of the immediate preceding orders herein, the Applicant shall be at liberty of selecting and/or instructing the joint expert herself.
(8)That the Respondent shall provide the joint expert with any and all information and/or documents to the joint expert within 14 days of being requested to do so from time-to-time.
(9)That the reasonable costs of the joint expert shall be secured and/or paid by the Respondent at first instance as and when required by the joint expert.
(10)That should there arise a dispute between the parties as to the value of any other assets including but not limited to real estate or plant and equipment owned by the Respondent and/or any of the business entities or trusts in which she holds an interest), the parties shall within 14 days of such dispute arising do all acts and things and sign all documents necessary to appoint a joint expert to prepare a valuation report on the value of the asset in dispute, and the Respondent shall secure and/or pay at first instance the reasonable costs of such joint expert as and when required.
(11)That the parties shall do all acts and things and sign all documents necessary to give effect to these Orders as soon as reasonably practicable unless a time provision is already provided herein to the contrary.
(12)That the parties shall have leave to relist the matter on seven days' written notice.
On 27 March 2020 the Federal Circuit Court judge listed the applicant’s interim application filed 27 February 2020 for a short interim hearing on 2 April 2020. On 2 April 2020 the interim hearing proceeded with judgment then reserved.
On 7 May 2020 judgment was delivered with orders made as sought by the applicant with the exception of the order sought by her in relation to the valuation of other business interests (Order 10 above). Otherwise, the order providing for the interim distribution to the applicant was characterised as an interim property provision to her rather than it being characterised at a later date as she had sought.
Costs
Section 117 of the Family Law Act 1975 (“the Act”) provides that each party to the proceedings shall bear his or her own costs.
That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.
Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They are as follows:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party has legal aid and the terms of any grant of aid;
(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 answers, 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 Collins & Collins (1985) FLC 91-603 (at 79,877), the Full Court described the discretion conferred by s 117 as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way.
The Full Court in Hawkins & Roe [2012] FamCAFC 77; (2012) 47 Fam LR 526 said:
17.With respect to the application of the section, in Penfold v Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
1.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".
2.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). 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.
(footnotes omitted)
18.The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held 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”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 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.
In Greedy & Greedy (1982) FLC 91-250 and Luadaka & Luadaka (1998) FLC 92-830, the Full Court made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.
The applicant’s application for costs
The applicant seeks costs in relation to several court events that took place in the Federal Circuit Court pursuant to rule 19.09 of the Family Law Rules 2004 (Cth) which provides:
Costs order for cases in other courts
(1)This rule applies to a case in the Family Court that:
(a)has been transferred from another court; or
(b)is on appeal from a decision of another court.
(2)The Family Court may make an order for costs in relation to the case before the other court.
(3)The order may specify:
(a)the amount to be allowed for the whole or part of the costs; or
(b)that the whole or part of the costs is to be calculated in accordance with these Rules or the rules of the other court.
It was contended on behalf of the applicant that numerous offers of settlement were made to the respondent in relation to the issues that were the subject of the interim judgment in the Federal Circuit Court and otherwise. The applicant relied on correspondence set out as follows:
(1)A letter of 11 February 2020 sent to the respondent’s then solicitor asking the respondent to consent to the 10 February 2020 injunction being made on an interim basis (in circumstances where the issue was to be determined on 19 February 2020 with the order having only been made on a short term interim basis) in light of Federal Circuit Court judge’s comments that the orders would cause the respondent no prejudice in the interim;
(2)A letter of 12 February 2020 sent to the respondent’s solicitor advising that the applicant’s solicitor (in the absence of any response by the respondent) have started preparing the applicant’s material in compliance with directions made by the Federal Circuit Court judge;
(3)A further letter of 12 February 2020 sent to the respondent’s solicitor in which the applicant advised of the costs that would be incurred by the applicant in instructing counsel and with the instructing solicitor appearing at the date first intended to proceed as an interim hearing (19 February 2020);
(4)A letter of 14 February 2020 serving the respondent with the material in relation to the interim hearing of 19 February 2020;
(5)A letter of 24 February 2020 sent directly to the respondent who by that stage was self-represented which contained a without prejudice offer said to have originally been sent to the respondent’s solicitors on 5 February 2020; and
(6)A letter of 26 February 2020 proposing a number of forensic accountants to value the respondent’s interest in various corporate entities and for the respondent to respond with one nomination.
It is clear that not all of the correspondence relied upon contains offers of settlement. Nonetheless, it is evident that at least one offer was made relating to the matters that were then determined by his Honour on 7 May 2020 and orders made as sought by the applicant.
The applicant also asserts that the respondent’s conduct in the proceedings is relevant to the issue of costs in that she has failed to make a “reasonable effort to resolve the dispute” which has caused the respondent to waste legal costs. The applicant contends that comments were made by the Federal Circuit Court judge at the 11 February 2020 court event which made it clear that there was a good prospect that the injunctions made that day on a short term basis would be made on an interim basis.
Otherwise, as to the respondent’s conduct in the proceedings, the applicant contends that the respondent has failed to comply with orders made 7 May 2020 and 23 July 2020 in that she has failed to file a Response in the substantive proceedings, has failed to provide to the applicant’s solicitors financial documents relating to the various corporate entities, has failed to provide to the applicant’s solicitors correspondence received by her in relation to the corporate entities from the Australian Taxation Office and liquidator appointed in relation to D No. 2 Pty Ltd and has failed to secure the single expert valuer’s estimated fees.
As to the parties’ financial positions, the applicant relied on the two latest Financial Statements filed by each of the parties in the proceedings, being the applicant’s Financial Statement of 18 February 2019 and the respondent’s Financial Statement filed 9 December 2019. The respondent’s Financial Statement indicates that her total weekly income as the beneficiary of a trust is $2,700, with asserted weekly personal expenditure of $2,653. In this Financial Statement the respondent also deposes to owning property to the value of $257,684, superannuation to the value of $45,000 and liabilities totalling $126,924. The applicant points to the respondent having received $162,171 from the sale of a property and $20,000 as an interim release of funds from the sale proceed of another property to argue that the respondent’s financial position supports the making of an order for costs. The applicant further contends that in any event impecuniosity is not a bar to a costs order being made (Lenova & Lenova (Costs) [2011] FamCAFC 141).
Discussion
The public policy reason behind the encouragement of the making of offers of settlement during proceedings is that it is beneficial to both of the parties, the Court and the public at large if people are able to resolve their disputes themselves without the need for litigation.
As was observed by Nygh J in Robinson and Higginbotham (1991) FLC 92-209 at 78,417, in relation to offers:
… it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition. …
In Pennisi & Pennisi (1997) FLC 92-774, referring to s 117(2A)(f), the Full Court, said at 84,547:
… Offers must be seen in the context of the case and the extent of the offeree's knowledge of the parties' financial circumstances while the offer is live. In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties' financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer. There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination. These and other features of the context of offers must be taken into account when considering whether it was reasonable or not to accept an offer, no matter how close to the ultimate result the offer may be.
In Browne & Green (2002) FLC 93–115 the Full Court commented at 89,163:
… The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given. …
It is clear that the applicant was substantially successful with her interim application that was determined by the Federal Circuit Court in May 2020. It also seems from the material relied upon by the applicant, that the respondent was unresponsive with the applicant’s attempts to narrow the issues in dispute prior to the interim hearing, particularly where some of the orders sought by the applicant had already been made on a short term interim basis.
The Court is satisfied that the respondent’s failure to comply with a number of orders including the recent orders made 23 July 2020 is another example of her conduct in the proceedings likely to cause delay in the resolution of the proceedings.
Some weight should also be attached to the respondent’s failure to respond to the applicant’s costs application and on this basis the application is determined without any evidence from the respondent.
The applicant contends that she has incurred a total of $23,521.60 in legal costs and seeks costs in the fixed sum of $20,000 to avoid the costs of a costs assessment.
In light of the foregoing discussion, it is just that there be an order for costs in favour of the present applicant being costs of and incidental to the interim hearing on 2 April 2020. The applicant seeks a lump sum order that reflects about 90 per cent of the actual costs incurred such a sum almost reflecting an indemnity costs order.
This is not an application that gives rise to indemnity costs.
There will be an order that the respondent pay the applicant’s costs in the sum of $10,000 within one month of this order.
As to the other order sought by the applicant precluding the respondent from further participating in the proceedings were she to fail to comply with an order for costs or previous orders made relating to disclosure, no submissions were advanced in support of this order sought. In all of the circumstances it is not proper to make such an order.
I certify that the preceding thirty seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 23 September 2020.
Associate:
Date: 23 September 2020
Key Legal Topics
Areas of Law
-
Civil Procedure
Legal Concepts
-
Costs
0
3
2