Farnell & Farnell

Case [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…

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AGLC
Farnell & Farnell [2022] FedCFamC1F 672
Case
[2022] FedCFamC1F 672
Decision Date

CaseChat Overview and Summary

The case of Farnell & Farnell involved a dispute between a husband and wife regarding financial matters, including compliance with orders related to a rollover from their self-managed superannuation fund to a fund nominated by the wife. The wife sought various orders, including payment of interest and costs, while the husband sought indemnity costs. The court was required to determine whether the husband should be ordered to pay interest to the wife as a consequence of the parties’ compliance with certain orders, and whether the husband was entitled to indemnity costs. The court also had to consider the wife’s request for an order for party/party costs. The court found that there were no exceptional circumstances justifying an order for indemnity costs and that the wife was not liable for either the costs of preparation of the 2021 income tax return or income tax assessed on late payment. The court declined to make an order that the husband should pay interest to the wife as a consequence of the parties’ compliance with orders. The court found that it would be ridiculous and absurd to order each party to pay the other the amounts as determined and therefore set off one against the other. The wife was obliged to pay the husband the sum of $2,533 within 7 days of the orders. The court declined to make an order for indemnity costs, finding that the circumstances did not warrant such an order. The court ordered that the husband was obliged to pay to the wife the sum of $4,721 and the wife was obliged to pay the husband the sum of $7,254, with the amounts to be set off against each other. The wife was obliged to pay the husband the sum of $2,533 within 7 days of the orders.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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).

Ratio Decidendi

Legal Principle Established

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.