Farnell & Farnell
[2022] FedCFamC1F 672
Federal Circuit and Family Court of Australia
(DIVISION 1)
Farnell & Farnell [2022] FedCFamC1F 672
File number(s): SYC 5028 of 2021 Judgment of: SCHONELL J Date of judgment: 6 September 2022 Catchwords: FAMILY LAW – ENFORCEMENT – Where final orders had been made in April 2020 – Where the husband sought that the wife pay her half share of the funds incurred in ensuring compliance with the orders – Where the wife sought interest on monies that the husband paid late – Orders made for the wife to pay her half share of the funds incurred by the husband and for the husband to pay interest on monies paid to the wife late.
FAMILY LAW – COSTS – Where the husband sought a costs order – Consideration of factors in s 117(2A) of the Family Law Act 1975 (Cth) – Husband’s application dismissed – Each party to bear their own costs.
Legislation: Family Law Act 1975 (Cth) ss 117, 117B
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 67
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Bant & Clayton (Costs) (2016) 56 Fam LR 31; [2016] FamCAFC 35
Farnell & Farnell [2020] FamCA 297
Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123; [2005] FamCA 158
Penfold and Penfold (1980) 144 CLR 311; [2980] HCA 4
Stephens & Stephens & Anor (Enforcement) (2009) FLC 93-425; [2009] FamCAFC 240
Division: Division 1 First Instance Number of paragraphs: 56 Date of last submissions: 1 September 2022 Date of hearing: 28 July 2022 Place: Sydney Counsel for the Applicant: Mr Apelbaum Solicitor for the Applicant: Nicole Evans Lawyers Solicitor for the Respondent: Beazley Lawyers ORDERS
SYC 5028 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR FARNELL
Applicant
AND: MS FARNELL
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
6 SEPTEMBER 2022
THE COURT ORDERS THAT:
1.Within 7 days of the date of these orders, the respondent wife (“the wife”) pay to the applicant husband’s (“the husband’s”) bank account (BSB … account number …45) the sum of $2,533 pursuant to Order 6 of the final property orders dated 30 April 2020 after allowance for interest payable by the husband to the wife.
2.The husband’s application for indemnity costs is dismissed.
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 Farnell & Farnell has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are proceedings that arise as a consequence of an Initiating Application filed by the applicant husband (“the husband”) on 9 July 2021 seeking orders effectively by way of enforcement of final property orders made on 30 April 2020 by Rees J. The respondent wife (“the wife”) likewise seeks orders that the husband pay to her interest on various monies that were not paid in accordance with the final orders.
The husband seeks orders as follows:
1. Within 14 days of the date of these orders, the Respondent Wife pay to the Applicant Husband’s bank account [(BSB […]account number …45)] the sum of $7,254 pursuant to order 6 of the final property orders dated 30 April 2020.
2. Within 30 days of the date of these orders, the Respondent Wife or her solicitor pay the Applicant Husband’s costs of and incidental to these proceedings on an indemnity basis.
The wife seeks orders as set out in her Amended Response filed 24 May 2022 as follows:
…
3. The Husband’s application be dismissed.
…
5. The husband pay the wife’s costs.
6. Noting that the Husband complied with order 1 of the orders dated 30 April 2020 on 15/09/21, when the due date for payment was 01/08/2020, the Husband pay the wife interest pursuant to the Family Law Rules in the amount of $5,556.90;
7. Noting that the Husband complied with order 7 of the orders dated 30 April 2020 on 26/04/22, when the due date for payment pursuant to order 10 was 07/10/2020, the Husband pay the wife interest pursuant to the Family Law Rules in the amount of $19,421.33;
8.Noting the husband claims one half of $2,640.00 for the preparation of the 2020 superannuation income tax return, and $2,200.00 for the preparation of the superannuation rollover, being a total liability admitted by the wife of $2,420.00, the wife seeks an order that the husband pay the wife the sum of $22,558.23 within 14 days.
9. The Court declare the wife is not liable for either the costs of preparation of the 2021 income tax return or income tax assessed on late payment in the amount of $6,907.00.
(As per the original)
There has been a complete lack of focus, and a despairing lack of proportionality and discourtesy in these proceedings. The lack of proportionality is exemplified by the husband seeking reimbursement of expenses of $7,254, incurred in ensuring compliance with the orders, where his counsel informed the Court that by way of indemnity costs he also seeks an order in the sum of $36,397.70. The lack of proportionality is immediately apparent. The discourtesy is amply demonstrated by the wife’s failure to respond to correspondence from the husband.
The wife for her part seeks an order by way of interest, after various setoffs, totalling $23,878.23. She also seeks an order for costs. I am informed by her solicitor that the wife seeks a sum of $8,800 by way of party/party costs.
It is relevant for the purposes of the competing applications to identify the orders that were made by Rees J on 30 April 2020. The orders were as follows:
1. That within three calendar months of the date of these orders the husband pay to the wife the sum of $84,976.
2.That from the sum in Order 1, the wife pay 52 per cent of the amount, if any, required, after the application of the sale money, to discharge the mortgage over the property at [T Street, F Town] and pay the commission and costs of sale.
3.That the husband pay the remaining 48 per cent of amount, if any, required, after the application of the sale money, to discharge the mortgage over the property at [T Street, F Town] and pay the commission and costs of sale.
4.That upon receipt of the sum in Order 1, the wife do all things necessary to transfer to the husband her interest in the jointly owned shares in [G Company]; to transfer or otherwise assign to the husband any interest she may have as a beneficiary of the [Farnell Family Trust]; to resign from any directorship of [S Pty Ltd] and to transfer to the husband any shares held by her in [S Pty Ltd].
5.That the husband indemnify the wife in respect of any taxation liability which might arise from her being a director or shareholder of [S Pty Ltd] or from being a beneficiary of the [Farnell Family Trust] in the financial years ended 30 June 2018, 2019 and 2020.
6.That the husband and the wife forthwith do all acts and things required to cause the accounts and member balances of the [Farnell Superannuation Fund] to be prepared and lodged and to pay equally any costs, taxes, fines or penalties incurred.
7.That pursuant to s 90XT(4) of the Family Law Act 1975 (Cth), the Court allocates a base amount to the wife out of the husband’s interest in the [Farnell Superannuation Fund] of $204,280.
8.That in accordance with s 90XT(1)(a) of the Family Law Act 1975 (Cth), the Court:
a.Creates an entitlement on the part of the wife to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
b.Makes a corresponding reduction in the entitlement of the husband, or such other person to whom a splittable payment may be made, would have in the fund but for these orders.
9.That the husband and wife, in their capacities as directors of the Trustee Company, shall do all such acts and things and have signed all such documents as may be necessary to cause the accountants for the [Farnell Superannuation Fund] to ensure payment to the wife of the base amount in accordance with Order 8(a) and (b).
10.That the operative time for Order 7 of these Orders is twenty eight (28) business days after the making of these Orders
11.That the wife, upon receipt of the funds referred to in order 7, do all things required to resign as a director of the [Farnell Superannuation Fund] and to transfer to the husband, or his nominee any share held by her in any trustee company.
The husband relied upon the following documents:
(1)Amended Initiating Application filed 8 June 2022;
(2)Affidavit of husband filed 8 June 2022;
(3)Case Outline;
(4)Written Submissions including those in reply; and
(5)Justice Rees’ judgment of Farnell & Farnell [2020] FamCA 297 delivered 30 April 2020.
The wife relied upon the following documents:
(1)Amended Response to Initiating Application filed 24 May 2022;
(2)Affidavit of wife filed 24 May 2022;
(3)Case Outline;
(4)Written Submissions; and
(5)Justice Rees’ judgment of Farnell & Farnell [2020] FamCA 297 delivered 30 April 2020.
Whilst the husband’s Case Outline refers to a financial statement, this is incorrect. No financial statement has been filed.
The matter was listed before the Court for final hearing on 11 August 2022, with it being estimated to take half a day. Due to changes in the judicial calendar, the parties were advised that the matter would be heard on 5 August 2022. The solicitors for the husband advised the Court that neither the solicitor nor the husband’s counsel were available on 5 August 2022. As a consequence, the Court listed the matter for mention on 28 July 2022.
At the mention, following enquiries made with counsel for the husband, the Court was informed that the husband did not wish to cross-examine the wife. Enquiries made with the solicitor for the wife indicated that he wished to briefly cross-examine the husband. The husband was sworn and some brief cross-examination occurred. After the completion of cross-examination, the Court determined, consistent with the overarching purpose of the Family Law Practice and Procedure as set out in s 67 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), that the efficient use of judicial resources and resolution of the dispute at a cost that was proportionate to the importance and complexity of the matters in dispute, made it apparent that the best utilisation of Court resources and the parties’ finances was that the proceedings be completed by written submissions. The Court thereafter made directions that the parties were to file written submissions limited to 10 pages each, with the husband having a right of reply.
Orders as sought by the husband
The husband seeks an order that the wife pay 50 per cent of the costs incurred by him in accordance with Order 6 of the orders dated 30 April 2020.
The husband sets out in his affidavit a breakdown of the funds that he says he was required to incur:
78. The cost breakdown in relation to amounts owing to me in accordance with order 6 is as follows:
Amounts to be paid as per Order 6 Income tax assessed on late payment $ 6,907.00 Cost of preparing income tax return for FY20 $ 2,640.00 Cost of preparing income tax return for FY21 $ 2,761.00 Cost of preparing the lodgement of Rollover benefit for Ms Farnell (at “AA-33”) $ 2,200.00
Total $ 14,508.00 50% of the total as per Order 6 $ 7,254.00
It is apparent from the wife’s material that she raises no issue with the cost of preparing the income tax return for the year ended 2020 of $2,640 and the costs of preparing the rollover of $2,200. Thus, the wife’s objection is limited purely to the costs of preparing the income tax return for the year ended 2021 and the income tax assessed on the late payment of $6,907.
The operative orders are Orders 6, 7, 8, 9, 10 and 11. It is immediately apparent from a reading of those orders that an obligation was cast upon both the husband and wife to do things required in relation to the parties’ self-managed super fund, including as is clear from Order 6 to “pay equally any costs, taxes, fines or penalties incurred”.
To provide further context, I have had regard to the reasons for judgment of Rees J delivered 30 April 2020. Her Honour’s reasons include the following:
THE FARNELL SUPERANNUATION FUND AND THE FARNELL FAMILY TRUST
81.The wife has refused to sign the accounts of the Superannuation Fund and of the family trust that have been prepared by the husband. She asserts that the accounts are inaccurate and do not represent the actual distribution of funds.
82.It is likely that accountancy fees will have to be paid and it is possible that fines and penalties will be imposed as a result of the late lodgement of returns.
83.The evidence does not allow any finding to be made about which party is responsible for the fact that returns have not been lodged.
84.If there are costs, fines or penalties incurred in bringing the accounts into compliance, the parties should bear them equally.
Her Honour’s reasons make it plain that the wife had in the past refused to sign various documents, that there were in the future to be incurred accountancy fees, fines and penalties, and that the parties were to be liable for those costs equally.
The husband in his affidavit sets out in significant detail his attempts to have the wife engage in the process of making the parties’ superannuation fund compliant to enable thereafter a rollout of the wife’s interest in the superannuation fund to a fund nominated by her.
I accept the matters set out in the husband’s affidavit, which were not the subject of challenge. The affidavit makes it plain that the husband was endeavouring over a long period of time to engage the wife and her solicitor in attempts to render compliant the parties’ self-managed super fund and to thereafter effect the rollover of the wife’s entitlement to the fund.
That process was commenced by the husband in May 2020 and continued into 2022. He wrote a number of letters to the wife’s solicitor which were unanswered. It was discourteous not to answer. I can only assume that was the wife’s instruction.
The following examples from the husband’s affidavit of which there are many will suffice:
23. On 22 September 2020, I sent a letter to [Ms Farnell's] lawyer noting that it had been 145 days since Final Orders and that I was 'delighted to finally hear' from them. I noted that I had made four attempts to contact [Ms Farnell's] lawyer and another two attempts to contact [Ms Farnell] directly without response since the Final Orders were made. In the letter, I outlined the issues I was having with the superannuation fund, noting that [Ms Farnell] had refused to sign its tax returns for the preceding four: financial years. I sought that [Ms Farnell]:
(a) Contact the ATO to furnish the signed tax returns to enable the [Farnell Superannuation Fund] to be compliant;
(b) Provide a duly executed rollover form and a completed Rollover Benefits Statement from the ATO;
(c) Confirmation of the amounts payable to [Ms Farnell] in accordance with Order 1 and Order 2; and
(d) Whether [Ms Farnell] wished for me to deduct the amounts payable by [Ms Farnell] in accordance with Order 6 from the amount payable to [Ms Farnell] in accordance with Order 1 or Order 7. I did not receive a response. Annexed hereto and marked [“AA-7”] is a true copy of my letter dated 22 September 2020.
24. On 17 December 2020, I sent a letter to [Ms Farnell's] lawyer noting that another three months had passed and we were still no closer to finalising the matter. I outlined that the accountant for the [Farnell Superannuation Fund] had also attempted to contact [Ms Farnell] directly regarding the 2020 financial statement and income tax return and there had been no response. I completed my letter by seeking confirmation as to whether [Ms Farnell's] lawyer remained acting for [Ms Farnell] and requested a full response to my five previous letters. I did not receive a response. Annexed hereto and marked [“AA-8”] is a true copy of my letter dated 17 December 2020.
…
27. On 14 May 2021, my lawyers sent a letter to [Ms Farnell's] lawyers noting the number of times I had attempted to contact [Ms Farnell's] lawyer and seeking a response including the information that I needed to complete the orders. As approximately eight months had passed since I was provided with [Ms Farnell's] bank details, and noting that she wished to have her superannuation rolled into [W Superannuation], my lawyer sought confirmation of those instructions as well as complete superannuation rollover forms and any outstanding tax returns which were required by the orders to be lodged with the ATO. My lawyers sought a response by 4pm on 17 May 2021 to complete the orders in the absence of enforcement proceedings. I am informed that my lawyers did not receive a response. Annexed hereto and marked [“AA-10”] is a true copy of the letter from my lawyer dated 14 May 2021.
28. By 25 May 2021 , I was growing concerned that we were nearing the end of another financial year and that there may be penalties imposed by the ATO in relation to [Farnell Superannuation Fund] and [Farnell Family Trust], both of which had not completed and filed tax returns since 2016. I still had not received any correspondence from [Ms Farnell's] lawyer since 22 September 2020. I instructed my lawyers to send a letter to [Ms Farnell] directly. The letter set out particulars I needed from [Ms Farnell] to complete the Final Orders (and further details in relation to parenting our children). The seven queries regarding the Final Orders were as follows:
(a) Updated banking details to affect payment in accordance with Order 1;
(b) Confirmation of the amount payable in accordance with Order 1 and Order 2;
(c) Updated particulars as to [Ms Farnell's] nominated superannuation fund and a completed rollover form;
(d) Confirmation that 50% of costs associated with compliance and rolling-out [Ms Farnell's] super from the [Farnell Superannuation Fund] would be met by [Ms Farnell] in accordance with Order 6;
(e) Confirmation that [Ms Farnell] had contacted the ATO regarding the filing of tax returns;
(f) I enclosed the FYE 2017, 2018 and 2019 financial accounts (including tax returns) for the [Farnell Family Trust] and sought that they be signed and returned to me for lodgement and/or filing;
(g) I enclosed the FYE 2017, 2018, 2019 and 2020 financial accounts (including tax returns) for the [Farnell Superannuation Fund] and sought that they be signed and returned to me for lodgement and/or filing.
…
66. On 13 October 2021, my lawyer sent a letter to [Ms Farnell's] lawyer noting that [Ms Farnell's] entitlement in the fund was not $240,981 above and urging [Ms Farnell] to execute the 2020/2021 income tax return for the [Farnell Superannuation Fund]. The letter included a notice from the ATO that if the tax returns were not lodged within 8 weeks, serious compliance action would be undertaken by the A TO against the Trustees of the fund. I an1 informed that my lawyer did not receive a response. Annexed hereto and marked [“AA-29”] is a true copy of the letter from my lawyer dated 13 October 2021.
…
69. On 12 November 2021, my lawyer sent a final letter to [Ms Farnell's] lawyer urging compliance with the Final Orders and referring to the orders of SJR […] regarding costs orders against lawyers and obligations of legal practitioners under the Rules and Practice Directions. The letter placed [Ms Farnell's] lawyer on notice of personal costs orders noting the undue delay and increasing costs as a result of his failure to meaningfully attempt to resolve the matter. Annexed hereto and marked [“AA-31”] is a true copy of the letter from my lawyer dated 12 November 2021.
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71. On 16 November 2021, my lawyer sent an email to [Ms Farnell's] lawyer specifically relating to the rollover of [Ms Farnell's] superannuation and the outstanding FYE 2020/2021 tax return for the [Farnell Superannuation Fund]. I instructed my lawyer to outline that that the superannuation rollover must occur on the SuperStream platform and to reiterate that it was the obligation of both parties to affect the superannuation rollover in accordance with Order 9 and that it was not simply my duty to ensure [Ms Farnell] received her superannuation roll-out. The email concluded in outlining that [Ms Farnell] had not been resolution focused and that if the matter needed to proceed, I would seek my legal costs. Annexed hereto and marked [“AA-32”] is a true copy of the email from my lawyer dated 16 November 2021.
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77. On 8 December 2021, my lawyer sent a letter to [Ms Farnell's] lawyer providing a breakdown of the amounts still owing to me in accordance with Order 6, providing a draft Rollover Benefit Statement for [W Superannuation] and seeking final particulars (including the ESA and super fund bank account details) to process the rollover. I am informed that my lawyer did not receive a response. Annexed hereto and marked [“AA-35”] is a true copy of the letter from my lawyer dated 8 December 2021.
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81. On 22 April 2022, my lawyer sent a letter to [Ms Farnell's] lawyer confirming that the transfer of [Ms Farnell's] superannuation entitlements had been completed in accordance with the final orders and again seeking [Ms Farnell's] compliance with Order 6 (being the signing of the FYE 2020/2021 income tax return for the fund and amounts payable to me to being the fund to compliance). The letter also noted that as of 22 April 2022, I had fulfilled my duties in accordance with the Final Orders, despite [Ms Farnell's] intransigence. The letter concluded by placing [Ms Farnell] on notice as to costs. I am informed that my lawyer did not receive a response. Annexed hereto and marked [“AA-37”] is a true copy of the letter from my lawyer dated 22 April 2022.
The wife did not address any of these contentions in her evidence.
The husband was cross-examined on the income tax assessed on the late payment. I accept the husband’s evidence that this was income tax that was due and payable. There was no challenge to the balance of the husband’s affidavit where he set out the circumstances in which costs were incurred by way of income tax and in relation to the preparation of the 2021 income tax return. I accept the husband’s evidence. I am comfortably satisfied that the wife was tardy in carrying out the obligations imposed upon her by the orders. This led to the incurring of costs, which the orders require her to meet equally.
In those circumstances, I see no basis to depart from the clear terms of the orders and the obligations that were made plain by her Honour’s judgment. Accordingly, I find that the wife is required to pay the husband the sum of $7,254 pursuant to Order 6 of the orders dated 30 April 2020.
Orders as sought by the wife
The wife seeks interest on the monies she says was payable under the terms of the final orders.
The circumstances in which a party is entitled to interest under a judgment are s 117B of the Family Law Act 1975 (Cth) (“the Act”), which provides as follows:
117B Interest on moneys ordered to be paid
(1) Subject to any order made by the court under subsection (2), where, in proceedings under this Act, a court makes an order for the payment of money (other than an order for the payment by way of maintenance of a periodic sum), interest is payable, at the rate prescribed by the applicable Rules of Court, from:
(a) the date on which the order is made; or
(b) the date on which the order takes effect;
whichever is later, on so much of the money as is from time to time unpaid.
(2) A court that makes an order for the payment of money as mentioned in subsection (1) may order that interest is not payable on the money payable under the first-mentioned order or may order:
(a) that interest is payable at a rate specified in the order, being a rate other than the rate prescribed by the applicable Rules of Court; or
(b) that interest is payable from a date specified in the order, being a date other than the date from which the interest would be payable under subsection (1).
It is immediately apparent that an order for the payment of interest is discretionary. The Act provides no guidance as to how the discretion should be exercised. The Full Court in Stephens & Stephens & Anor (Enforcement) (2009) FLC 93-425 observed the following in relation to s 117B of the Act and the discretion conferred by it:
429.Section 117B(1) of the Act is a general provision which provides that where, in proceedings under the Act, a court makes an order for the payment of money interest is payable at the rate prescribed by the Rules from the date on which the order is made, or the date on which the order takes effect whichever is later. However, the effect of s 117B(1) is subject to any order made by the court under s 117B(2). Thus, the phrase “subject to” which is added to s 117B(1) limits its operation. Section 117B(2) allows the court, by order, to vary some of the consequences which otherwise flow automatically from s 117B(1), namely by ordering that no interest be paid or by varying the rate, or the date from which it becomes payable. The wording suggests that s 117B(2) offers a divergence from the effect of s 117B(1) and thus limits its operation by working as an exception. We are also of the view that as an exception, s 117B(2) shifts the onus onto the party seeking to take advantage of the exception: see Rural Export & Trading (WA) Pty Ltd v Hahneuser (2007) 243 ALR 356 per Gray ACJ at [65].
430.The discretion conferred by s 117B(2) of the Act is extremely wide. However, in our view it “enables such lower or higher rate of interest to be determined as the interests of justice in a particular case may require”: see Gould and Another v Vaggelas and Others.
431.We would not seek to prescribe the considerations that may be relevant to the exercise of the discretion conferred by s 117B(2) of the Act. We are of the view that a purpose of interest on a judgment debt is to compensate the party entitled to the benefit of the judgment until it is satisfied. However, we do not accept that this is the only purpose and are of the view that another purpose is to ensure compliance with orders. For example, there may be circumstances where a recalcitrant party liable to pay an amount of money may seek to take advantage of an interest rate which is less than the prescribed rate.
Order 1 of her Honour’s orders required the husband to pay to the wife $84,976 within three months of the date of the final orders, namely by 30 July 2020. It appears an agreed fact that the husband complied with the order on 15 September 2021, some 13 months after the due date for payment. The wife seeks interest pursuant to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) in the sum of $5,556.90.
The husband agrees with the calculation of interest as sought by the wife. Order 1 is clear on its face. On any interpretation and/or reading of the orders, there was no condition precedent required before payment. It was not conditional upon any act by the wife, it required the husband to pay a sum of money to the wife within three months.
The husband in his affidavit identifies that following the making of the orders he wrote four times to the wife’s solicitors seeking amongst a number of things, bank account details in which to pay the monies pursuant to Order 1. The wife’s solicitor did not respond to the husband’s correspondence until 22 September 2020. There is no explanation provided by the wife as to why she did not respond. It was discourteous not to respond to a simple and polite enquiry as to the bank account in which the wife wished the monies to be paid. That said, as at 22 September 2020, the husband was clearly on notice of the wife’s bank account into which the funds should be paid.
The husband has not addressed in his affidavit, nor in his written submissions, why it was that upon being provided with the bank account details for the wife which he had requested, he did not immediately pay the moneys as required by the order. The wife was entitled to the payment of the monies within three months of the date of the making of the order and the husband did not comply with the order.
In my view, the wife is entitled to interest payable on the monies due and payable to her pursuant to Order 1 but not in the amount claimed. As I stated earlier, the wife has chosen to provide no evidence as to why her solicitor did not respond to the husband’s correspondence until after the date due for payment. It was discourteous not to do so. In the exercise of my discretion, I will order that the wife’s entitlement to interest will run from 1 October 2020 (a date approximately a week after notice of the account details) until the date of its final payment on 15 September 2021. Therefore, in accordance with the schedule attached to the letter from the wife’s solicitor, the interest payable by the husband to the wife is $4,721.
The wife seeks also seeks a further sum of $19,421.33, being interest said to be due and payable to the wife as a consequence of the delay in payment to the wife’s superannuation fund. It is said that the date due for payment was 7 October 2020. By no means of construction of her Honour’s orders is that conclusion apparent. Nor is the interest payable to the wife in her own right but rather to the Trustee of her superannuation fund.
I am of the view, having read the husband’s material and accepting what he says which is not challenged, that the wife did not comply with the obligations cast upon her by the orders in a timely manner. Whilst there was no time limit provided for the transfer contemplated by the order, it was clearly in contemplation of her Honour that various things were to be done by both parties to render the fund compliant and to thereafter give effect to the rollover. It is not in issue that ultimately on 26 April 2022, there was a rollover to the wife’s nominated fund. I am not satisfied that the wife has established before me that interest was due and payable on the said sum at any time prior to the date of payment as a consequence of any act of default by the husband.
For the reasons given earlier, I decline to make an order that the husband should have to pay interest to the wife as a consequence of the parties’ compliance with orders in relation to a rollover from the parties’ self-managed super fund to a fund nominated by the wife.
Conclusion
As a consequence of the findings that I have made, the husband is obliged to pay to the wife the sum of $4,721 and the wife is obliged to pay the husband the sum of $7,254.
It would be ridiculous and absurd to order each party to pay the other the amounts as determined and accordingly, I will set off one against the other. The wife will therefore pay to the husband the sum of $2,533, with such amount to be paid within 7 days of these orders.
Costs
The husband sought an order for indemnity costs. No order for costs was sought on a party/party basis. All too often parties as a matter of course seek orders for indemnity costs. It is a practice that should be eschewed given the clear jurisprudence on the circumstances in which they will be ordered.
The authorities make it plain that an order for indemnity costs is not one that is made lightly and there should be circumstances of an exceptional kind that warrant orders for costs on an indemnity basis. In Kohan & Kohan (1993) FLC 92-340, their Honours in the Full Court observed at 79,614:
The intent of s117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O. 38 r. 2, the provisions of O. 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O. 38 r. 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, 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 of an exceptional kind. See Degmam v. Wright (No.2) “(supra); Wentworth v. Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR at 368 to 370.
Indemnity costs orders are still an exception in this and other jurisdictions. …
This was not such a case. There was nothing exceptional about the circumstances of this matter.
An application for costs is governed by the provisions of s 117 of the Act, which provides a general rule that each party to proceedings should bear their own costs.
Section 117(2) reposes in the Court a discretion to make a costs order in circumstances where the Court determines that there are circumstances that justify it making an order and, if there are such circumstances, the Court may make such order as it considers just, having regard to the matters set out in s 117(2A).
In Penfold and Penfold (1980) 144 CLR 311, the plurality in the High Court determined that to make an order under s 117(2), the Court needs to make a finding of justifying circumstances as a preliminary prerequisite to the making of an order. Their Honours also observed that terms such as an exceptional case, special circumstances or a clear case are not necessary determiners of whether or not an order for costs should be made. All that is required or necessary is that there are justifying circumstances.
It is well-settled law that no one factor under s 117(2A) is determinative and the Court may give such weight as it considers relevant to any factor. In PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123, the Full Court observed:
41. … 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
Dealing now with the relative subsections in s 117(2A).
(a) the financial circumstances of each party to the proceedings
Neither party has filed a financial statement.
(b) whether the parties are in receipt of legal aid
Not relevant.
(c) the conduct of the parties to the proceedings
The husband contends that the wife’s conduct is relevant to the granting of a costs order.
What is relevant is conduct of a party, which in some way or other leads to an increase in costs by the other party. Such factors may include uncooperative behaviour, obstruction, prolonging litigation or the bringing of unreasonable or unmeritorious applications. It may include non-disclosure or a failure to comply with the Rules of Court in relation to disclosure. I accept that the wife’s conduct in relation to the self-managed superannuation fund may attract a costs order.
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
I refer to my early findings that the husband did not comply for nearly 12 months with the order requiring payment to the wife. This is a factor that militates against making an order.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
The term “wholly unsuccessful” refers to a situation in which proceedings as a whole have been unsuccessful, rather than necessarily an application (see Bant & Clayton (Costs) (2016) 56 Fam LR 31).
The wife was not wholly unsuccessful.
(f) whether any party has made an offer in writing
No reference was made to any offer referable.
(g) any other matter the Court considers relevant
There is no other matter relevant.
As I referred to earlier, this is not such an exceptional case as to warrant an order for indemnity costs.
I dismiss the husband’s application for indemnity costs. The wife has not filed any submissions as to costs. If she wishes to do so after reading these reasons, then such application is to be made within 7 days.
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 6 September 2022
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