El Maalouf & Issa & Ors

[2019] FamCA 430

FAMILY COURT OF AUSTRALIA

EL MAALOUF & ISSA AND ORS [2019] FamCA 430

FAMILY LAW – COSTS – Where application for costs by a party as against Third Party Intervener – Where Third Party later withdrew from the proceedings – Where wife put to expense of meeting the third party claim – Discussion of applicable principles – Where costs order made as sought.

Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) r 19.18

Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160
Collins & Collins (1985) FLC 91-603
Greedy & Greedy (1982) FLC 91-250
Hawkins & Roe [2012] FamCAFC 77
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
Luadaka & Luadaka (1998) FLC 92-830
Parke & the Estate of the Late A Parke (2016) FLC 93-748
Penfold v Penfold (1980) 144 CLR 311

APPLICANT: Ms El Maalouf

FIRST RESPONDENT: Mr Issa

SECOND RESPONDENT: Ms Berry

THIRD RESPONDENT: B Pty Ltd

FILE NUMBER: PAC 2389 of 2017

DATE DELIVERED: 4 July 2019

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: By way of written submissions last received on 24 May 2019

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Adam Jones Solicitor

SOLICITOR FOR THE FIRST RESPONDENT: Circle Bridge Legal

SOLICITOR FOR THE SECOND RESPONDENT: Cambridge Law

SOLICITOR FOR THE THIRD RESPONDENT: Cambridge Law

Orders

1. That B Pty Ltd [ACN …] pay to the wife or as she may, otherwise, direct in writing the costs of the wife in the sum of $6,600.00 within one month from this date.

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 El Maalouf & Issa and Anor 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 2389  of 2017

Ms El Maalouf

Applicant

And

Mr Issa and Ms Berry

Respondent

REASONS FOR JUDGMENT

1. In the context of ongoing property proceedings as between the applicant wife and respondent husband a third-party creditor sought leave to intervene in the proceedings.

2. On 7 March 2018 B Pty Ltd filed an Application in a Case seeking leave to intervene in the primary proceedings asserting that it was a creditor of the applicant wife.  The company was subsequently joined as third respondent to the proceedings.

3. The application to intervene was supported by an affidavit sworn by a director of the said company.  The intervener asserted a 2012 sale agreement as between himself and the respondent husband for the purchase by the husband of the company’s business conducted at premises C Street, Suburb E.  The asserted sale price was $175,000.00 comprising goodwill $135,000.00 and equipment $40,000.00.

4. The company asserted that $47,000.00 of the purchase price was paid and that an amount of $128,000.00 remained unpaid.

5. The assertion by the company as to the liability of the wife to it for the outstanding debt of $128,000.00 relied on certain documents purportedly signed by the wife.

6. Appropriately at an early stage parties agreed to instruct a single expert forensic document examiner to determine the question of the authenticity of the alleged signatures of the wife.  The report of the single expert dated 5 June 2018 determined that the purported signatures were not those of the wife.

7. Subsequently on 16 April 2019 the third respondent company sought and was granted leave to withdraw from the proceedings and was removed as a party to the proceeding.  On that date the applicant wife sought an order for costs as against the third respondent company and directions were made for that costs application to proceed by way of submissions.

8. Submissions were duly received from the applicant wife with no submissions in response being received by or on behalf of the former third respondent.

Costs

1. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs.

2. 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.

3. 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.

4. 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.

5. 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.

6. The Full Court in Hawkins & Roe [2012] FamCAFC 77 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.

7. 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.

8. The provision relating to the calculation of costs is set out in r 19.18(1) of the Family Law Rules 2004 (Cth) (“the Rules”) which states:

   (1)Method of calculation of costs

   (2)The court may order that a party is entitled to costs:

   (a)of a specific amount;

   (b)as assessed on a particular basis (e.g. lawyer and client, party/party or indemnity);

   (c)to be calculated in accordance with the method stated in the order; or

   (d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.

9. It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162 that the purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”.

10. In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 the Court said at [10] that the Court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.

11. Murphy J observed in Parke & the Estate of the Late A Parke (2016) FLC 93-748 at [130]:

    8.If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court”… The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”…

12. The wife contends that the general position as to each party paying their own costs should not apply, thereby justifying circumstances for an order for costs to be made against the former third respondent.

13. The wife is in a poor financial position earning a modest income as a small business owner supplemented by Centrelink benefits received by her for the ongoing support of the child now aged seven of her relationship with the father.

14. The wife contended from the outset that her signature relied on by the third respondent as to the wife’s liability was not hers and was fraudulent.

15. The wife paid for the single expert forensic document examiner report at a cost of $3,850.00.

16. On subsequent case management listings of the proceedings the third respondent failed to attend on 20 November 2018, 6 December 2018 and 14 December 2018.  The third respondent attended on 16 April 2019 and on that day withdrew as a party to the proceedings.  The circumstances as to any asserted liability of the husband to the third respondent remains unclear.

17. The wife seeks an order for costs in the sum of $6,600.00 comprising fees paid to the forensic document examiner $3,850.00 and $2,750.00 professional costs of responding to the third respondent’s application including reading, advice, correspondence and settling affidavit evidence for the wife.  Otherwise, there were ongoing case management listings in the matter at which the third respondent did not appear.

18. In all of the circumstances it is considered that the order for costs in the quantum sought is appropriate and that there are circumstances by reason of the discussion above justifying a departure from the general rule.

19. There will be an order that the company pay the applicant wife’s costs assessed in the sum of $6,600.00 within one month from this date.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 4 July 2019.

Associate:

Date:  4 July 2019