DEBONO & DEBONO

[2014] FamCA 3

FAMILY COURT OF AUSTRALIA

DEBONO & DEBONO [2014] FamCA 3

FAMILY LAW – COSTS – where wife seeks order based on husband’s non-compliance with property orders – Circumstances justify an order – Indemnity costs sought but circumstances not deemed exceptional.

Family Law Act 1975 (Cth)

Kohan and Kohan (1993) FLC 92-340
Prantage and Prantage [2013] FamCAFC 105; (2013) 49 Fam LR 197

APPLICANT: Ms Debono

RESPONDENT: Mr Debono

FILE NUMBER: MLC 7072 of 2011

DATE DELIVERED: 8 January 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By Way Of Written Submissions

SUBMISSIONS RECEIVED FROM:

SOLICITOR FOR THE APPLICANT:	Westminster Lawyers
SOLICITOR FOR THE RESPONDENT:	George Liberogiannis & Associates

Orders

1. That the husband pay the wife’s costs of the enforcement proceeding by agreement and in default of agreement as assessed by the Registrar.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Debono & Debono (No. 3) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 7072 of 2011

Ms Debono

Applicant

And

Mr Debono

Respondent

REASONS FOR JUDGMENT

1. Arising out of orders made on 6 November 2013 and reasons given that day, the wife, by written submission, sought indemnity costs of $45,606.13.  The husband opposed any order being made. 

2. Pursuant to the orders of 6 November 2013, the application for a costs order and the consequential response were filed on 6 December 2013 and 13 December 2013 respectively.  It would seem that the written response contained a number of errors and an email was sent to the Court indicating them with a request that the submission be read accordingly.  That is not appropriate because it requires the Court to juggle documents and in this day and age of computer technology, a redrawn document is the appropriate course of action.  That redrawn document was provided on request on 7 January 2014.

3. The dispute in this case arose out of orders of Young J.  The application before the Court concerned the enforcement of the orders of Young J.

4. It is sufficient in this case to observe that in the reasons for judgment delivered on 6 November 2013, I said that the husband had obfuscated and provided unsatisfactory evidence about a particular issue that was in dispute. 

5. In his written submission, the husband criticised the wife about what steps she took in relation to the orders of Young J.  Indeed, the solicitor for the husband submitted that the wife did not have “clean hands” and that she had wilfully failed to comply with the orders of Young J.  As was clear from the reasons for judgment, no such assertion, let alone submission, was justified.  At paragraph 42 of the reasons delivered in November 2013, I observed that the wife’s approach had been a sensible one and had the husband been concerned about the position of the wife, he could have and probably should have, commenced his own proceedings for enforcement.

6. There can be little doubt therefore that the Court has found that the wife’s position in bringing the proceedings was reasonable.

7. In her written submission relating to costs, the wife submitted that she had used up all of her savings and borrowings to pay legal fees and the husband’s financial circumstances were superior to hers.  Against that, the solicitor for the husband submitted that the Court should take into consideration that the husband had already suffered severe “punitive” orders in respect of both the division of assets as well as an order for costs totalling $145,000 made against him by Young J.  The solicitor for the husband then submitted:

   It is submitted that any further punitive orders for that perceived lack of credibility [a reference to adverse findings by Young J about the husband] would be inappropriate in the circumstances.

   That submission lacks merit. Young J obviously made the order for costs of a substantial amount of money in a jurisdiction where costs do not follow the cause and where a litigant has to justify a departure from the principle that each party pays their own costs. It is also inappropriate to describe the property division orders, as the submission indicated, as being “generous” to the wife. It is trite to say that no appeal was filed by the husband and in a discretionary jurisdiction as indicated by s 79 of the Family Law Act 1975 (Cth) (“the Act”), the submission was perplexing.

8. The wife further submitted that the husband’s conduct subsequent to the orders of Young J had been of an “extraordinary nature” and not just that he had not fulfilled his obligations.  Somewhat disingenuously, the submission on behalf of the husband tried to reargue the issue that I determined in November 2013.  Findings were made and again, my understanding is that no appeal is pending.  I therefore find no merit in that part of the husband’s submission.

9. The wife’s submission then went on to say that the husband’s delay in complying with orders of Young J was “wilful and reckless” and had been such that his failure to advise the wife of what had occurred in relation to some tax returns put the wife in the position where she incurred both costs and interest.  In his response, the husband said that the wife did not identify the delay or in what way the husband was responsible for the delay.  It was submitted that the accountants for the parties’ company had the responsibility for the lodging of the returns and that the time delay was not unusual.  That submission too has no merit having regard to the orders of Young J and what I found as set out by the reasons in November.

10. The wife then submitted that the husband had failed to respond to repeated correspondence seeking that he comply with various orders and failed to instruct solicitors when the wife did bring the enforcement application, necessitating an adjournment.  The husband responded by criticising the wife for failing to respond to correspondence of his solicitor.  It was said that when the matter came on for hearing on the first occasion in October 2013, the husband’s legal representative informed the Court that the husband was absent and overseas.  That ignores the fact that the husband had an obligation to comply with orders that were then almost 10 months old and there had been correspondence requesting that the matter be completed.  I find that the obfuscation of the husband and his lack of response to the completion of the various tasks required by Young J as well as his positive steps taken to remove the wife as a director of the parties’ company inappropriately, were all factors that precipitated the application for enforcement by the wife.  One might rhetorically ask what else she was to do.  In my view, the action of the wife was reasonable in the circumstances.

11. In her submission for costs, the wife set out the manifestation of the husband’s failure to comply with the orders of the Court.  At its highest, the husband’s response can be seen to be that he had done nothing wrong and that it was the wife’s fault that the matters had not concluded.  That position was the one adopted by the husband at the hearing in November and I again reject it.

12. The wife submitted that the husband had been wholly unsuccessful and that must be said to be correct in relation to the issues that were contentious.  As I pointed out in my reasons in November, there were some issues which were sensibly compromised.  That dichotomy makes it difficult to make the type of order for costs as sought by the wife and unfortunately as I shall set out in a moment, I see no other way than to direct discussion between the parties and failing agreement, a form of assessment by a registrar take place and findings made as to what was reasonable.

13. Under the heading of other matters that might be relevant, the wife submitted that the husband’s conduct was wilful and clearly aimed at increasing the wife’s legal costs.  There is a temptation to agree with that broad sweeping statement having regard to the findings of fact by Young J.  However in this case, there appeared to be more of a stand-off between the parties and the husband simply doing what he appears to have always done which was to ignore the wife and not trouble himself about her financial position.  In those circumstances, I would not be prepared to say that the husband’s conduct was wilful nor that it was directly aimed at increasing the wife’s costs.  It is not necessary that the conduct justifying an order for costs be deliberate.  Costs orders are made not to punish a party but to compensate the party who has otherwise incurred expenses.  Here, the husband’s conduct of obfuscation and non-compliance did have the effect of increasing her costs and for those reasons, there is a justification for making an order for costs. 

14. There were some other matters in the wife’s submissions in relation to assertions of the husband lying but I do not take those into account having regard to the fact that I have not made those specific findings in these proceedings.

15. Section 117 of the Act provides that in proceedings in this Court, each party shall bear their own costs. There is a justification for departing from that principle where somebody who has obligations that have been determined by the Court puts the other party to the proceedings in a position where they have no other choice than to litigate to obtain the fruits of their judgment. Whilst the Court is obliged to take into account the matters in s 117(2A) of the Act, those matters clearly indicate the sorts of things that a court should turn its mind to when looking at the justification question. The matters include whether or not someone has been wholly unsuccessful and requires the Court to also look at conduct in the proceedings. The discretion however is wide as is indicated by the fact that the last of the s 117(2A) factors is any other matter that the Court considers relevant. In proceedings over the division of property where a party requires a court to exercise its discretion because agreement cannot be reached at least one of the litigants is entitled to presume that they have an entitlement to the fruits of their judgment and enforcement proceedings should not be necessary as a consequence. If enforcement is necessary, the prospect of a costs order must be seen as real particularly where the other party is not responsive to requests to complete what the court has ordered.

16. I find in this case, the wife had little choice other than to issue the proceedings and the husband had not complied with the requirements that would have enabled the wife to move on with her financial life. 

17. Having made that finding, it is important to consider the matters set out in s 117(2A) of the Act. Whilst the wife pleaded in her submission that the husband’s financial circumstances were superior to hers, there is little doubt that neither party is impecunious. Both parties have money and whilst a costs order against the husband might be seen by him as punitive, the reality is, the wife is going to be out of pocket and that is unreasonable having regard to what I have earlier said.

18. Whilst the husband completed the necessary steps for the process relating to the wife’s application, the Court found that he had not complied with orders and that is a very significant factor because it precipitated these proceedings. 

19. There are no legal aid considerations in this case.

20. I also find that whilst the husband was not wholly unsuccessful, he was substantially so and that is a factor that can be taken into account.  Nothing that I found in the November reasons would justify any criticism of the wife in relation to her involvement in the completion of the obligations under the orders of Young J.

21. For the reasons I have otherwise articulated, I find it is appropriate to make an order for costs.

22. The wife sought costs on an indemnity basis.  In her submission, she noted the words of the Full Court in Kohan and Kohan (1993) FLC 92-340 that the Court had to find that the circumstances were of an exceptional kind. More comprehensively in Prantage and Prantage [2013] FamCAFC 105; (2013) 49 Fam LR 197, the Full Court examined the indemnity costs question and again highlighted the need for a party to show that the circumstances for an indemnity costs order were exceptional.

23. Despite all of the criticisms of the husband, in my view the circumstances here are not exceptional.  They are certainly unpleasant and in my view unnecessary, but exceptional means something out of the ordinary.  That is not the situation here.

24. Despite the request for the wife to have the costs fixed, as I earlier articulated, I am not able to tell what costs should be ordered according to the scale under the Family Law Rules.  It is clear that the wife is entitled to costs from the moment after the proceedings were issued but I am not in a position to say whether costs should be ordered in respect of the period prior to that without some understanding of what was done and whether it was reasonable in the circumstances.  The extent of the husband’s liability must be determined on the basis of whether the steps taken subsequent to the proceedings being proposed, and the costs subsequently incurred, were reasonable. 

25. Counsel appeared appropriately in each of the hearings and because of the complexity, had the presence of his instructor.  That was reasonable in the circumstances even though on the face of it, the application was simply an enforcement of court orders.  Apart from those comments, it is difficult to assess the quantum of the costs and accordingly, failing an agreement, I see no choice but to have the matter assessed.

I certify that the preceding Twenty Five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 8 January 2014.

Associate: 

Date:  8 January 2014