Dinci and Smith

[2014] FamCA 76

FAMILY COURT OF AUSTRALIA

DINCI & SMITH [2014] FamCA 76

FAMILY LAW – PROPERTY – Where the Applicant Husband sought orders pursuant to s 79A of the Family Law Act 1975 (Cth) – Where the Applicant Husband failed to appear and has failed to comply with directions and orders of the Court – Application dismissed

FAMILY LAW – COSTS – Where the circumstances justify the making of a costs order on an indemnity basis  

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Allesch v Maunz (2000) 26 Fam LR 237 Kohan and Kohan (1992) 16 FamLR 245 Penfold & Penfold (1980) 144 CLR 311 Prantage & Prantage (2013) 49 FamLR 197
APPLICANT:	Mr Dinci

RESPONDENT: Ms Smith

FILE NUMBER: BRC 10762 of 2008

DATE DELIVERED: 17 February 2014

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Kent J

HEARING DATE: 17 February 2014

REPRESENTATION

FOR THE APPLICANT: No appearance

SOLICITOR FOR THE RESPONDENT: Murdoch Lawyers

Orders

it is ordered that

1. The Amended Initiating Application filed by the Applicant Husband on 4 June 2013 seeking orders pursuant to s 79A of the Family Law Act 1975 (Cth) be dismissed.

2. The Applicant Husband pay the Respondent Wife’s costs of, and incidental to, these proceedings (including the application for indemnity costs) on an indemnity basis to be assessed.

3. The Respondent Wife be at liberty to apply to any balance of funds currently held in Murdoch Lawyers trust account (as per Order 6 of the 9 September 2013 Orders) to satisfy the costs Order made against the Applicant Husband.

4. That following Order 3 herein, any balance of funds currently held in Murdoch Lawyers trust account (as per Order 6 of the 9 September 2013 Orders) be released to the Applicant Husband with it being noted that Murdoch Lawyers have been served with Notice to Pay Money Directly to the Child Support Registrar Pursuant to Section 72A Child Support (Registration and Collection) Act 1988 in the sum of $8,642.20, in relation to the Applicant Husband’s child support arrears.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Dinci & Smith 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 BRISBANE

FILE NUMBER:  BRC 10762 of 2008

Mr Dinci

Applicant

And

Ms Smith

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. The relevant history concerning the previous substantive property proceedings between these parties is set out in part in reasons for judgment delivered by Murphy J on 19 September 2012 and in reasons for judgment I delivered on 9 September 2013.  Briefly stated, on 8 April 2013, final property orders were made by consent of both parties by me, as it happens, in circumstances where, on that day, the then three-day final trial of the property proceedings was to take place.  As I say, in the event, consent orders were made.

2. Relevantly to the present application, those orders contained a provision for the Wife to pay the Husband the sum of $35,000. On 24 May 2013, the Husband filed the application that brings the proceedings to their somewhat tortured present position. He filed an application seeking that the orders made by consent on 8 April 2013 be set aside pursuant to s79A of the Family Law Act 1975 (Cth) (“the Act”).

3. It seems there were two propositions advanced by the Husband on his application by which he contended with respect to the consent orders; that there was a miscarriage of justice within the meaning of s 79A.

4. First, he agitated propositions to the effect that the Wife had not made full and true disclosure prior to the making of those orders; and, second, he agitated complaints in terms of the representation of his then-lawyers suggesting that by reason of the failures in that representation, his consent to the orders was not a true consent in that he felt he had, in effect, no other option. 

5. In respect of the s 79A proceedings, the Husband could have been in no doubt following the earlier orders and reasons of Murphy J about the importance in what was necessary so far as disclosure of either party to property proceedings is concerned.

6. Notwithstanding that he filed his s 79A application initially as long ago as 24 May 2013, the Husband has never at any time since articulated in any meaningful way the alleged failures of disclosure by the Wife. The Wife has filed evidence addressing such alleged complaints which establish, at least on a prima facie basis, that there is nothing in the complaints of non-disclosure agitated by the Husband.

7. The bringing of the s 79A application set in train the usual case management procedures, including the need for the docket registrar for the case making orders and directions designed to facilitate the progress of that case to a final hearing.

8. On 25 June 2013, the Husband filed a further amended initiating application in relation to the s 79A proceedings and in that application he sought a stay of the consent orders that had been made on 8 April 2013. In the event, the interim relief the Husband then sought was heard and determined by me on 9 September 2013 and, for reasons then delivered, I dismissed the Husband’s application for a stay of the orders.

9. The evidence before me on the present application establishes in clear terms that the Husband has manifestly failed to comply with directions and orders of the Court in its case management procedures. 

10. It is also to be noted that, notwithstanding the dismissal of his application for a stay of the orders, it is clear on the evidence that the Husband failed to meet his obligations under the orders in terms of executing the necessary documentation concerning real property transfers to give effect to the 8 April 2013 orders. The Wife was ultimately put to the expense, time and delay involved in having to approach the Court and have a registrar of the Court sign the relevant transfer documents on behalf of the Husband pursuant to s 106A of the Act.

11. On 27 September 2013, the solicitors for the Wife were served with a notice pursuant to s 72A of the Child Support (Registration and Collection) Act 1989 in relation to child support arrears of the Husband owing in respect of his child or children of an earlier relationship. In circumstances where that notice was served and this application, likewise, sought orders affecting the amount of $35,000 held in trust by the Wife’s solicitors, I directed, when the matter came before me on 6 February 2014 at the callover, that the child support agency be informed about the proposed orders sought by the Wife on the current application, given that it seemed that, arguably, the child support agency was a person or party affected by those orders within the meaning of the Act and the Family Law Rules 2004 (Cth) (“the Rules”).

12. In the event, the evidence establishes that the child support registrar and the child support agency has notice of the current application and does not seek to be heard in respect of the application.  Obviously, the inference is that the agency does not wish to be heard concerning an order that would see potentially the whole of the fund, the subject of the notice, being extinguished by the Wife’s costs, that is, that her costs being paid from the trust funds comes in priority to any amount the subject of the notice.

13. Other directions that I made at the callover on 6 February were intended and designed to ensure that the Husband could have no complaint about notice of both the orders sought by the Wife on the present application and the fact that that application was to come before the Court today. 

14. In the event, on 10 February 2014, the Husband was served with the letter the solicitors addressed to him following the last callover, namely, 6 February 2014, together with the affidavit of the Wife’s solicitor, Mr Foley, the order made 6 February 2014; and the case outline document and amended response of the Wife in support of her application for costs.

15. Thus it is that the Husband could have been in no doubt about the orders sought by the Wife, nor could it be contended by him that he has not been given an opportunity to be heard in respect of the orders sought by the Wife. 

16. Rule 11.02 of the Rules is a provision in respect of failure by a party to litigation in this Court to comply with orders or directions of the Court. Relevantly, subrule 11.02(2) provides that if a party does not comply with a procedural order, the Court may dismiss all or part of the case or determine the case as if it were undefended. There is also provision for the making of costs orders.

17. It bears emphasis that the proceedings that bring the matter to the Court today were the s 79A proceedings instituted by the Husband. The fact that the Husband is the applicant in the proceedings brings into focus the significance of the Husband’s failures to even attend relevant directions hearings, let alone his lack of compliance with directions made at such hearings.

18. I am satisfied on the evidence before me that, in numerous respects, the Husband has failed to comply with directions of the Court within the meaning of rule 11.02 of the Rules referred to.

19. I am satisfied that, within the meaning of the statements of principle by Kirby J in Allesch v Maunz (2000) 26 Fam LR 237, the Husband has had ample opportunity to be heard both in respect of the substantive s 79A proceedings, but more particularly on this application.

20. The Wife is seeking an order for costs on the basis that costs are ordered on an indemnity basis with priority being given to them being reimbursed to the Wife from the fund currently held by her solicitors. 

21. What is sometimes referred to as the general rule as to costs is set out in s 117(1) of the Act, that is, that each party to proceedings should bear their own costs. However, s 117(2) provides that if the Court is of the opinion that there are circumstances that justify it in so doing, the Court may make such orders as to costs as the Court considers just.

22. That provision has been considered in numerous authorities, and relevantly by the High Court in Penfold & Penfold[1] where the High Court emphasised the wide discretion that the Court has in relation to making orders as to costs.  As Penfold makes plain, it is not necessary for a court to be satisfied of special or extraordinary circumstances; simply that there are circumstances that justify the making of a costs order. 

    [1] (1980) 144 CLR 311.

23. In the context of these proceedings, the principle about finality of litigation looms as significant; that is, it is the fact that final property orders were made now a significant time ago. Whilst the Husband had the opportunity to pursue an application under s 79A in respect of those orders and, indeed, the Wife’s earlier attempt to have them summarily dismissed did not succeed in an application before me, both the fact that these are s 79A proceedings and the fact that the Wife had sought their summary dismissal emphasises the onus that was upon the Husband in terms of properly progressing the application if he proposed to pursue it.

24. I am satisfied on all the evidence before me that the Husband has not done so and, for the same reasons, I am satisfied that there are circumstances justifying an order for costs of the s 79A proceedings, which I propose, in all the circumstances, to dismiss.

25. The remaining question is whether costs ought be ordered on the standard basis or, as is sought by the Wife on this application, that her costs be ordered on the indemnity basis.  I record that in compliance with the relevant rule, namely rule 19.08, the Wife has detailed the terms of the costs agreement by which she is bound in respect of the costs payable to her current solicitors.

26. The outline filed on behalf of the Wife contains a number of the relevant authorities dealing with the question of costs on an indemnity basis.  In particular, reference is made to Kohan and Kohan.[2]  Aside from the cited passage in Kohan, the Full Court there emphasised that it must be understood that an order for indemnity costs represents a very great departure from the usual orders for costs that are made in proceedings in this Court. 

    [2] (1992) 16 FamLR 245.

27. These principles were more recently considered by the Full Court in Prantage & Prantage,[3] which reaffirmed the approach in Kohan that it must be recognised that there is a significant departure when costs on an indemnity basis are ordered.

    [3] (2013) 49 FamLR 197.

28. However, it seems to me to be clear on the authorities that, whilst each and every of the matters set out in ss 117(2A) are to be considered on any application for costs, the considerations that loom large on the current application is conduct within the meaning of s 117(2A)(c) of the Act.

29. It may also be added that the relevant consideration about proceedings being necessitated by the failure of a party to the proceedings to comply with previous orders of the Court also looms large as well as the fact that, because I intend to dismiss the Husband’s s 79A application, he can be taken to have been wholly unsuccessful in the proceedings, within the meaning of subparagraph (e) of that section.

30. There is also reference in the Wife’s material to the fact than an offer was made by the Wife to the Husband last year in respect of bringing an end to the relevant s 79A proceedings.

31. In my judgment, recognising that an order for costs on an indemnity basis is a significant departure from the usual order in this Court, I am satisfied that such a significant departure is justified in the circumstances of this case. 

32. The Husband’s failure to participate in the proceedings, and the failure to file material, renders it difficult to actually assess his current financial circumstances but, as has been referred to in authorities, whether or not he is impecunious should not in and of itself either defeat an appropriate order for costs nor an order on an indemnity basis.

33. Indeed, it might be said that relevant inferences might be drawn by the feature that a party fails to comply with directions, including directions for the filing of current material as to their financial circumstances.  It is also relevant to note that the subject fund is in an amount of $35,000, whilst the indemnity costs of the Wife, subject to assessment, may well exceed that amount. 

34. As discussed with her solicitor in the hearing, if I make an order for indemnity costs, that will set in chain a path which will require yet further costs to be expended by the Wife, namely, the preparation of the relevant bill of costs and service of it or an itemisation of the costs upon the Husband with him having the opportunity to participate in any actual assessment of those costs.

35. Thus, it would be likely, it seems to me, that if the Husband is impecunious as he suggested to me on a previous hearing when I dismissed his application for a stay of orders, that the only recourse the Wife might have in practical terms, in terms of restoring her position concerning costs, is the subject fund of $35,000 referred to. 

36. It seems to me that a compelling reason for an order for indemnity costs in these circumstances is that the Wife was entitled to the finality that a final order for property settlement proceedings usually brings. She has been put to inordinate expense in respect of the s 79A proceedings because of the Husband’s repeated failures to progress those proceedings or to comply with orders and directions of the Court.

37. I note that, from the reasons for judgment delivered by Murphy J in 2012, when his Honour dismissed his then application for litigation funding, the serious failures of the Husband so far as disclosure were concerned were clearly identified by his Honour.  In my judgment, the Husband’s approach to the 79A proceedings represents no more or less than a continuum of his abject failures to cooperate in systems and procedures of the Court designed to ensure fairness to both parties in terms of not expending unnecessary legal fees where they can be avoided. 

38. For these reasons I make the orders set out above.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 17 February 2014.

Associate: 

Date:  19 February 2014