Draper & Corwin (No 2)
[2022] FedCFamC1F 923
Federal Circuit and Family Court of Australia
(DIVISION 1)
Draper & Corwin (No 2) [2022] FedCFamC1F 923
File number(s): MLC 4817 of 2020 Judgment of: HARTNETT J Date of judgment: 29 November 2022 Catchwords: FAMILY LAW – COSTS – Where the wife seeks indemnity costs of and incidental to the hearings on 21 April 2022 and 15 June 2022 – Where the husband sought the wife’s application be dismissed – Costs ordered in favour of the wife. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) sch 3, r 12.13
Civil Procedure Act 2010 (Vic)
Supreme Court Act 1986 (Vic)
Cases cited: Allen & Cortez (No 2) [2016] FamCA 837
Chen & Tan (No 2) [2012] FamCA 796
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Collins and Collins (1985) FLC 91-603
Kohan & Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784
Nada & Nettle (Costs) (2014) FLC 93-612
Penfold v Penfold (1980) 144 CLR 311
Sfankianakis & Sfankianakis [2019] FamCAFC 54
Yeo & Huy (Costs) (2012) 48 Fam LR 519
Yunghanns & Yunghanns (2000) FLC 93-029
Division: Division 1 First Instance Number of paragraphs: 41 Date of last submission/s: 19 September 2022 Date of hearing: On the papers Place: Melbourne Solicitor for the Applicant: Litigant in person Counsel for the Respondent: Mr Tatarka Solicitor for the Respondent: KCL Law Solicitor for the Independent Children's Lawyer: VM Family Lawyers ORDERS
MLC 4817 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR DRAPER
Applicant
AND: MS CORWIN
Respondent
INDEPENDENT CHILDREN'S LAWYER
order made by:
HARTNETT J
DATE OF ORDER:
29 NOVEMBER 2022
THE COURT ORDERS THAT:
1.By 4.00pm on 28 January 2023, the husband pay the wife’s costs of and incidental to his Application for Enforcement on an indemnity basis.
2.The wife shall, within 7 days of the date of these orders, forward to the husband in writing the amount of costs represented by Order 1 of these orders.
3.The husband shall, within 7 days of receipt of the quantum of costs claimed as required by Order 2 of these orders, respond in writing as to whether he accepts the amount so specified, in which case the husband shall pay the amount in accordance with Order 1 with such payment to be in full and final discharge of the husband’s obligations pursuant to Order 1.
4.In the event that the husband does not accept the amount specified by the wife in accordance with Order 2, or pay the said amount within the time so specified in Order 3, the amount of the costs required to be paid in accordance with Order 1 shall be as assessed by a Registrar.
5.By 4.00pm on 28 January 2023, the husband pay the wife’s costs of and incidental to the husband’s Amended Application in a Proceeding filed 11 May 2022, being his application for a permanent stay of the wife’s application, on a party and party basis, with costs to be assessed by a Registrar plus an amount allowed by the Registrar in accordance with Schedule 3 of the Federal Circuit and Family Court of Australia (Family Law Rules) 2021 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Draper & Corwin (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARTNETT J
On 24 August 2022, the Court made orders, relevantly, dismissing the applicant husband’s Amended Application in a Proceeding filed on 11 May 2022, which primarily dealt with the issue of whether the Court was the appropriate forum to hear the parties divorce and extant property proceeding, and his Application for Enforcement filed 30 May 2022. Such Application for Enforcement was in respect of Order 2 of the orders made 21 April 2022. The question of the wife’s costs was reserved for determination in chambers with the parties to file and serve written submissions. On 7 September 2022, the wife filed her written submissions. On 19 September 2022, the husband filed his written submissions. No submissions in reply were filed by the wife.
The reasons for judgment delivered 24 August 2022 sets out the relevant background to the proceeding. Whilst the husband subsequently filed an appeal in respect of the orders made 24 August 2022, such appeal was dismissed. It is therefore appropriate to proceed with the wife’s costs application.
The wife sought her costs of and incidental to the hearings on 21 April 2022 and 15 June 2022 and for the preparation of the 7 September 2022 written submissions, on an indemnity basis fixed in the sum of $31,689.60 or, in the alternative, costs fixed in accordance with Schedule 3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”) in the sum of $13,336.38 plus an amount to be calculate in accordance with Schedule 3 as allowed by a Registrar.
The husband opposed the orders sought by the wife and, in particular, submitted that the costs of the hearing on 21 April 2022 do not pertain to the costs reserved by the Court pursuant to the orders made on 24 August 2022.
On 21 April 2022, the Court heard the husband’s Application in a Proceeding filed on 30 March 2022 and his Application in a Proceeding filed 13 April 2022. The husband’s Application in a Proceeding filed 13 April 2022, was subsequently amended following the hearing on 21 April 2022, and an Amended Application in a Proceeding was filed on 11 May 2022; being the application in relation to which the Court reserved costs on 24 August 2022. The hearing on 21 April 2022, in so far as it pertained to the Application in a Proceeding filed 13 April 2022, is relevant to the question of costs.
Legal Principles
Section 117(1) of the Act sets out the general rule that each party shall bear their own costs. However, the Court being satisfied that there are circumstances justifying it doing so, may make such order for costs as it considers just in accordance with the Court’s discretion.[1] In considering what (if any) order for costs it should make, the Court shall have regard to the matters in s 117(2A) of the Act as follows:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(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 answer 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.
[1] Family Law Act 1975 (Cth) s 117(2).
Although the Court must have regard to all of these matters, and their relevance will depend upon the particular circumstances of each case, it is not required to consider these matters in any particular order, and no matter takes precedence over another. It is also not necessary for there to be more than one relevant consideration for the purposes of deciding that an order is justified.
In Collins and Collins (1985) FLC 91-603 at page 79,877, the Full Court of the Family Court of Australia (Evatt CJ, Pawley & Barblett JJ), as it was then, said:
In deciding whether the circumstances justify an order for costs, there is a broad discretion to be exercised, having regard to the factors set out in subs. (2A) so far as relevant. Those factors…. are not to be read in a restrictive way, however, the discretion remaining is a broad one: Penfold v Penfold (1980) FLC 90-800 at pp 75,053-75,054 (High Court); quoted in Mallet v Mallet (1984) FLC 91-507 at pp 79,123-79, 124 (by Wilson J).
In Penfold v Penfold (1980) 144 CLR 311, the High Court (Stephen, Mason, Aickin and Wilson JJ) held that:
12.It is an accurate description of s. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to s.117(2). As subsec (1) is expressed to be subject to subsec (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
13.Subsection (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 …... we do not agree with the suggestion….... that an order can only be made under s.117(2) in a 'clear case'.
The power to award costs in forum cases was summarised by Macmillan J in Allen & Cortez (No 2) [2016] FamCA 837, by reference to Kent J in Chen & Tan (No 2) [2012] FamCA 796 and Murphy J in Yeo & Huy (Costs) (2012) 48 Fam LR 519, as follows:
10.It is submitted by the wife that the Court in this case was exercising its implied powers not its statutory powers and that in those circumstances, the substantive proceedings not being a proceeding pursuant to the Act, s 117 of the Act is not applicable.
…
12. At paragraph 12 of Chen & Tan (No 2) (supra), Kent J said:
… I do not find that the mere fact that the forum dispute concerned the potential staying of proceedings commenced under the Act renders the interim hearing conducted before me in this matter a ‘proceeding under the Act’. Proceedings which dispute as to whether Australia is a clearly inappropriate forum are not regulated by the Act; rather, they arise either as part of this Court’s equitable accrued jurisdiction or its inherent jurisdiction as a Court of superior record to regulate the proceedings before it.
13.I accept counsel for the wife’s submissions that the power to make an order for costs in this case is not found in s 117 of the Act as submitted by the husband.
14.I also accept the wife’s submission, as was accepted by the court in each of the three cases upon which she relied, that where there is no applicable Commonwealth legislation as to the procedure in a particular case, the court exercising federal jurisdiction is bound by the applicable State legislation. In this case it is the Supreme Court Act 1986 (Vic) and the Civil Procedure Act 2010 (Vic) which confer power, in these circumstances, upon this Court to make orders in relation to costs. That power is discretionary.
15.Notwithstanding that the court has a discretion as to whether or not it should make an order for costs, the normal course is that costs will follow the event unless there are good reasons why such an order should not be made (Sahin v National Australia Bank Ltd [2013] VSCA 93).
16.As submitted by counsel for the wife both Murphy JJ in Yeo & Huy (Costs) (supra) and Kent J in Chen & Tan (No 2) (supra) concluded that whilst the matters in ss 117(2A) of the Act would not determine how the court should exercise its discretion they might inform that exercise of discretion. It was on this basis and in order to address the submissions made on behalf of the husband that counsel for the wife addressed the matters in s 117(2A) of the Act.
Are there circumstances justifying a costs order
I shall consider s 117 of the Act as applicable in respect of the enforcement application below. Otherwise the matters in s 117(2A) of the Act, whilst not containing the power to make an order for costs, shall be considered by me to inform the exercise of my discretion in determining a costs order where the normal course would be that costs follow the event.
In the circumstances of the case, not all of the matters set out in s 117(2A) of the Act are relevant. Accordingly, only those relevant matters are discussed below.
Financial circumstances of each of the parties
The wife is a full-time student and engages in part-time work as a teacher at F School earning approximately $473 net per week. She is also in receipt of the Single Parenting Payment and Family Tax Benefit from Centrelink in the sum of $500 per week. The wife and parties’ child, who is aged 3 years, live in a self-contained unit adjacent to the maternal grandparent’s home. The wife pays board to the maternal grandparents in the sum of $200 per week.
The wife submits that she is reliant upon a loan from her parents to meet her legal costs, which she intends to repay.
The husband has not filed a Financial Statement in this proceeding and his financial circumstances are unclear. The husband submits that he has no funds available to him to pay an order for costs. He has, however, paid a United States attorney to run his litigation in the United States, and claims to work full-time as an educator in the United States. The husband resides with his parents.
The fact that the husband has not set out his financial circumstances or “is impecunious, even indigent, is not a bar to the making of a costs order if the Court is otherwise of the opinion that an order ought to be made.”[2]
[2] Nada and Nettle (Costs) (2014) FLC 93-612.
There is an outstanding cost order against the husband made pursuant to orders of the Court of 9 August 2021. The husband has failed to make this payment to wife. There was no evidence before the Court as to why this sum has not been paid. The costs order outstanding totals $8,000.
Legal Aid
Neither party are in receipt of Legal Aid.
The conduct of the parties
The wife submitted that the husband’s conduct in these proceedings has cause her to incur significant and unnecessary costs and, indeed, unnecessary delay. The husband filed seven applications (including amended applications with further and/or new orders) from 1 January 2022 up to 24 August 2022.
In the husband’s Amended Application in a Proceeding, filed 11 May 2022, orders sought by him were as set out in paragraphs one to four and six to seven. These matters required determination prior to the matter being set down for final hearing (as sought in paragraph five of that application). The husband in those orders, inter alia, sought, as described by him, that the forum hearing scheduled for 17 June 2022 be dismissed; for the wife’s divorce application, including all other matters pertaining to the parties’ separation, including financials, in Australia be stayed; and that the wife be penalised for abuse of process in using the Court to restrain the husband and evade divorce and financial claims in the J State B Court. For the Court to consider the orders as sought by the husband, a forum hearing was required to proceed before the Court. The husband’s order sought that the hearing be dismissed is, therefore, misconstrued.
The husband has not been a forthcoming litigant in particular with regard to his lack of disclosure to the wife as to what financial issues exist between the parties. Further, as set out in the reasons for judgment delivered 24 August 2022, the husband has insisted that there is nothing which requires him to specify his financial claims in the Court and that the wife should contact his United States attorney if she wants that information. Such conduct could be considered vexatious.
I find, as submitted by the wife, that the Application for Enforcement filed by the husband was unnecessary in circumstances, as set out at [62] in the reasons for judgment delivered 24 August 2022, where:
The Order [the husband sought to enforce] does not place any obligation or requirement on the wife to sign any documents in relation to the husband’s withdrawal of his application in the [B Court] of [J State]. Rather, the Order is a permissive order which allowed the husband to withdraw his application noting that pursuant to Order 4 of the orders made 21 April 2022 the husband was otherwise restrained from taking any further steps in the proceedings in the [B Court] of [J State], [C County], No. […] of 2020.
Such misconstrued application caused the wife to incur unnecessary legal costs.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The husband was wholly unsuccessful in his Application for Enforcement filed 30 May 2022. The husband was, on the majority of his Amended Application in a Proceeding filed on 11 May 2022 unsuccessful, save for paragraph five, which sought an order listing the Initiating Application filed 24 August 2020 for final hearing.
As set out in the reasons for judgment delivered 24 August 2022, neither party challenged the jurisdiction of Australia or the USA to grant a divorce order, and both had consented to the parties parenting matters being litigated in Australia. The husband would not particularise property orders as sought by him but claimed there were outstanding property matters to be determined as between the parties and continued to pursue the orders as sought by him.
I found at [59] of the reasons for judgment delivered 24 August 2022:
…having the proceeding determined in Australia would not “be vexatious or oppressive, being seriously and unfairly burdensome, under circumstances where parties have a prima facie right to conduct proceedings where they have regularly invoked the jurisdiction”.[3] I am further satisfied that Australia is not a “clearly inappropriate forum” and propose to make orders in the terms sought by the wife.
[3] Penhall & Gibbens [2021] FedCFamC1F 6 referring to Henry & Henry (1996) 185 CLR 571 at 587.
Offers made between the parties
On 8 April 2022, the wife’s solicitors sent a letter to the husband inviting the husband to withdraw his Application in a Proceeding prior to the wife incurring any expense, and noting that if the wife were successful in her application to the Court to have the husband’s application dismissed, that she would seek her costs on an indemnity basis.
On 10 April 2022, the husband responded with a lengthy email that he would not be withdrawing his Application in a Proceeding nor his Application for Enforcement, unless his stipulated conditions were met. The husband was unsuccessful with respect to the question of forum. His Application for Enforcement was without merit. Whilst he asserted in his correspondence of 10 April 2022 that this application was necessary, because the wife’s United States attorney ignored his United States attorney’s written requests in relation to his withdrawing the parenting orders sought by him in the J State proceeding, I note [63]-[64] of the reasons for judgment delivered 24 August 2022 wherein I found:
63At the time of the hearing on 21 April 2022, the husband did not inform the Court or the other party or provide any indication that the wife would be required to sign any documentation in relation to his withdrawal of his application in the [J State] proceedings as to the parenting orders component. Further, in his Application in a Proceeding filed 5 April 2022, the husband merely sought to change the orders of 7 July 2020 to enable him to withdraw the cause of action related to the custody and parenting matters in the [J State] proceedings.
64Counsel for the wife submitted that the wife had understood that family law proceedings in [J State] could be withdrawn in a similar manner to that of this Court, being the filing of a Notice of Discontinuance or Notice of Withdrawal, and did not require the wife’s input. The husband has now stated that this is not the case.
I dismissed the husband’s Application for Enforcement and ordered the husband to file the necessary documentation in the B Court of J State, County C, to withdraw his applications therein filed, and was satisfied the wife would assist in that regard if required.
Conclusion
I am satisfied in all of the circumstances as described above, that the Court is not precluded from making a costs order against the husband, both as to the enforcement application, and to the forum applications (including stay applications), the latter in respect of which s 117 of the Act is not applicable, and that an order for costs is an appropriate exercise of my discretion.
The general rule in this Court is that costs are payable on a party-party basis unless the Court decides to exercise its discretion to order costs on other terms, including indemnity costs. The costs sought by the wife are indemnity costs.
The Court “should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be an exceptional one”.[4]
[4] Kohan & Kohan (1993) FLC 92-340.
The circumstances justifying an order for indemnity costs are not closed.[5] The Court in exercising its discretion must be satisfied that the circumstance of the case “warrant the making of an order for the payment of costs other than on a party-party basis”.[6] Circumstances which may warrant such an order were summarised by Holden CJ in Munday v Bowman (1997) FLC 92-784, as identified in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, as follows:
•Where an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;
•The making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;
•Evidence of particular misconduct causing loss of time to the court and to other parties;
•The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;
•An imprudent refusal of an offer to compromise.
[5] Yunghanns & Yunghanns (2000) FLC 93-029.
[6] Yunghanns & Yunghanns (2000) FLC 93-029.
In the more recent decision of Sfankianakis & Sfankianakis [2019] FamCAFC 54, the Full Court observed at [10] that:
…It is however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words “such order as to costs as the Court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well known example is assessment on a trustee basis, which is more generous than party and party costs, but fall short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party cost nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a “special costs order”.
Pursuant to r 12.13 of the Rules, a party applying for costs on an indemnity basis must inform the Court if that party is bound by a costs agreement in relation to those costs and the terms of that agreement. The wife entered into a costs agreement with KCL Law on 27 November 2019. Ms Goldman, as of 1 July 2022, has reduced her hourly rate from $620 per hour plus GST to $300 per hour plus GST taking into account the financial circumstances of the Respondent and legal fees incurred by her to date. Ms Goldman had previously reduced her rate to $400 plus GST.
I am satisfied in the circumstances that the husband was aware that where he sought proceedings occur in the United States, and where the wife sought the proceedings occur in Australia, that a forum hearing was required. The wife was entitled to engage legal representation and sign a costs agreement in respect of legal charges that would be incurred by her. In the circumstances, it was appropriate for the wife to engage a solicitor and counsel. The husband was at liberty to engage a solicitor, as he has done in the United States, and/or counsel in Australia. The proceedings between the parties have been protracted and involved a number of interim, procedural and other hearings, including on appeal and with some degree of complexity.
Further, I am satisfied that the husband ought to have known that the Order that he sought to enforce was a permissive order for him to take the action of withdrawing his application for parenting orders in the United States. It did not require any action on the part of the wife.
I am satisfied that there are circumstances in this case which justify the Court departing from the general rule of each party pay their own costs and in substitution therefore a costs order should be made against the husband in respect of to the Application for Enforcement. That costs order should be an indemnity costs order in the wife’s favour, in particular given the unreasonableness of the husband’s conduct in relation to that application. I will however, have such costs as claimed, assessed by a Registrar where there is no agreement as to quantum.
Otherwise, whilst the husband submitted that “the costs submissions submitted by the respondent are false in their totality and the amount of costs incurred by [the] respondent due to applicant’s applications of 11 May and 30 May amounts to $0 dollars”. Clearly, a submission I do not accept.
I am further satisfied that in the circumstances of the forum applications, where the normal procedure would be that costs should generally follow the event unless there is good reason not to have that occur, that the Court should exercise its discretion to make an order for costs that the husband pay the wife’s costs of and incidental to the Amended Application in a Proceeding filed 11 May 2022 and hearing on 21 April 2022 on a party-party basis as assessed by a Registrar with an amount calculated in accordance with Schedule 3 of the Rules as allowed by the Registrar.
I prefer the above party-party approach, with an ability to add further sums as allowed by a Registrar, to indemnity costs, as in my view, an indemnity costs order is not justified, the husband having a case to argue.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hartnett. Associate:
Dated: 29 November 2022
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