DENISON & TILFORD

[2020] FamCA 604

FAMILY COURT OF AUSTRALIA

DENISON & TILFORD [2020] FamCA 604

FAMILY LAW – COSTS – application by wife for indemnity costs – alleged that consent orders only came about by forcing the respondent on for orders – not appropriate to deviate from s 117(1) – application for costs dismissed.

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

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania) v Fish (2005) 33 Fam LR 123
Guild & Stasiuk (No. 2) [2020] FamCA 564
Horne (in his capacity as trustee of the bankrupt estate of Narain) v Narain [2017] FCCA 1190
Latoudis v Casey (1990) 170 CLR 534
Re JJT; ex parte Victoria Legal Aid (1998) 195 CLR 184

APPLICANT: Ms Denison

RESPONDENT: Mr Tilford

FILE NUMBER: MLC 9252 of 2017

DATE DELIVERED: 24 July 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Wilson J

HEARING DATE: 17 July 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr D. Sweeney

SOLICITOR FOR THE APPLICANT: Lander and Rogers

COUNSEL FOR THE RESPONDENT: Mr G. Dickson QC

SOLICITOR FOR THE RESPONDENT: Kenna Teasdale Lawyers

Orders

1. The applicant’s application for indemnity costs of and incidental to the hearing on 17 July 2020 is dismissed.

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 Denison & Tilford 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 MELBOURNE

FILE NUMBER: MLC 9252 of 2017

Ms Denison

Applicant

And

Mr Tilford

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 17 July 2020 Mr Sweeney of counsel on behalf of the applicant and Mr Dickson One of Her Majesty’s Counsel on behalf of the respondent announced that they had reached an agreed set of orders that further progresses this proceeding through its interlocutory phases.

2. Mr Sweeney’s client sought an order that Mr Dickson’s client pay the applicant’s costs of and incidental to the appearance on 17 July 2020 on an indemnity basis. Mr Dickson QC said no order as to costs should be made. He said even an order reserving costs presupposed that the conventional order under s 117(1) was to be countermanded.

3. Having examined this litigation and the lead up to the events on 17 July 2020, I am now better informed to make a determination on the question of costs of and incidental to the hearing on 17 July 2020.

Synopsis

1. For the reasons that now follow, I am of the view that the provisions of s 117(1) apply and that each party should bear his and her own costs. In my view no basis exists to order indemnity costs pursuant to s 117(2A) of the Family Law Act.

Short factual recital

1. Mr Sweeney endeavoured to show that events leading to the orders on 17 July 2020 disclosed an approach by the respondent that warranted the imposition of a costs order against the respondent.  Mr Sweeney went further by arguing that those circumstances in the lead-up to 17 July 2020 were such as to enliven one or more of the factors adumbrated by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd.[1]

   [1] (1993) 46 FCR 225.

2. In the passages below, those factors are set out.

3. Pursuant to the consent orders made on 17 July 2020 the respondent agreed to pay the applicant the sum of $1,000,000 by way of part-property settlement.  Payment of that sum is to be made by four instalments, each of $250,000.  On behalf of the applicant, Mr Sweeney outlined why he said a costs order should be made against the respondent, those circumstances including –

   a)the applicant filed her part-property application on 16 December 2019;

   b)the respondent had failed to provide proper disclosure;

   c)the likely value of the total asset base in this litigation was in the vicinity of $130,000,000;

   d)the respondent had expended, so Mr Sweeney said, “tens of millions of dollars on acquiring other assets” in respect of which no consultation had been engaged in with the applicant;

   e)three orders for disclosure and discovery had been made in this case requiring the respondent to more exhaustively disclose his financial position; and

   f)this application was necessitated by the respondent’s failure to make a reasonable payment in a timely manner.

4. In support of his indemnity costs application, Mr Sweeney relied on my decision handed down on the morning of 17 July 2020 in Guild & Stasiuk (No. 2).[2]  In that case, citing my previous decision of Horne (in his capacity as trustee of the bankrupt estate of Narain) v Narain[3] while sitting as a member of the Federal Circuit Court of Australia, I examined the Colgate-Palmolive criteria for the imposition of indemnity costs.  It is utile to state them here –

   [2] [2020] FamCA 564.

   [3] [2017] FCCA 1190.

   The genesis of modern learning, at least in the Federal jurisdiction, in respect of indemnity costs is attributable to the decision of Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd[4] (“Colgate-Palmolive”). That was an intellectual property case. Sheppard J addressed an award of costs on an indemnity basis. Relevantly, his Honour said that costs on an indemnity basis could be awarded –

   a)where a party made allegations of fraud knowing them to be false or where that party made irrelevant allegations of fraud;

   b)where evidence of misconduct existed causing loss of time to the court and the other parties;

   c)whether the proceeding was commenced for some ulterior motive;

   d)whether the proceeding was commenced or continued with wilful disregard of known facts or clearly established law;

   e)where allegations were made that ought never to have been made;

   f)where the proceeding was unduly prolonged by groundless contentions; and

   g)where there was an imprudent refusal of an offer of compromise.

   [4] (1993) 46 FCR 225.

5. On behalf of the respondent, Mr Dickson QC took issue with the factual substratum underpinning Mr Sweeney’s client’s application.  In particular, Mr Dickson submitted –

   a)the application made on 17 December 2019 was not a part-property settlement and instead was an application for payment of $1,500,000 “such payment to be characterised by the trial judge”, very different to a part-property application, so Mr Dickson said;

   b)the application filed on 9 July 2020 was made on the basis that any payment made pursuant to it was either a part-property settlement or a costs payment, at the discretion of the court;

   c)no urgency existed in the lead-up to the respondent agreeing to pay $1,000,000 as was recorded by the consent orders made 17 July 2020;

   d)the applicant still retains $500,000 in the bank;

   e)the affidavit material of Mr B on which the applicant relied in this application was filed after the respondent notified his agreement to paying the sum of $1,000,000;

   f)the respondent recognised that he did not give advance notice to the applicant that he was acquiring certain properties yet he provided documents subsequent to those acquisitions so no assets have been hidden;

   g)many documents sought by the applicant could not have been disclosed until after 30 June 2020 and more likely will not be capable of disclosure until nearer the end of August in view of the financial period to which they relate; and

   h)having regard to the state of the business operations conducted by the respondent, discovery is an onerous obligation to satisfy.

6. So far as costs were concerned, Mr Dickson QC urged me to apply the usual position prescribed by s 117(1) of the Family Law Act.  Mr Dickson submitted that not even a reservation of costs was appropriate.

7. Mr Sweeney in reply pressed that his client ought not have been in court on 17 July arguing about costs at all, had the respondent more diligently approached disclosure.

Consideration

1. Whatever may have been the position at common law, under the Family Law Act the determination of questions of costs is based wholly on the provisions of the legislation.  The High Court so held in Re JJT; ex parte Victoria Legal Aid.[5]

   [5] (1998) 195 CLR 184.

2. Costs orders are not made as a punishment, as the High Court held in Latoudis v Casey.[6]

   [6] (1990) 170 CLR 534.

3. In the absence of a basis for so ordering under s 117(2A) of the Family Law Act, a costs order is not ordinarily made as s 117(1) provides that each party bears his or her own costs.

4. Only one factor in s 117(2A) must be identified before it is competent for a court to make a costs order that deviates from the general provision in s 117(1), as was held in Fitzgerald v Fish.[7]

   [7] (2005) 33 Fam LR 123.

5. If the court is persuaded to make a costs order under s 117(2A), the order to be made including the basis on which costs are to be assessed is in the court’s discretion.

6. Unlike in common law courts, in this court the notion of costs following the event has very limited application.

7. On the current state of the evidence I am unable to reach a legally maintainable conclusion that the applicant was correct in her contention that she was forced to bring the application and to make the appearance that culminated in the orders I pronounced by consent on 17 July 2020.  Equally, whether the respondent has or has not been derelict in meeting his obligations in relation to discovery is something I am unable to assess on this application for consent orders.  Having regard to the fact that disclosure obligations are ongoing and are not fixed in any temporal sense, it will be unsurprising for further discovery and possibly issues relating to that further discovery to emerge right up to the start of the trial and possibly during the trial.

8. So far as the criteria for the making of an order for indemnity costs was concerned, I did not detect circumstances that enlivened the Colgate-Palmolive test on any basis.  It seemed that Mr Sweeney may have been emboldened to make the application for indemnity costs having regard to the success he enjoyed on the morning of 17 July 2020 consequent upon my reasons in Guild & Stasiuk (No. 2).  That case was very different to this, as Mr Dickson QC pointed out, correctly in my view.

9. The provisions of s 117(1) of the Family Law Act apply to this application.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 24 July 2020.

Associate: 

Date:  24 July 2020