Forlan and Forlan (No. 2)
[2017] FamCA 936
•20 November 2017
FAMILY COURT OF AUSTRALIA
| FORLAN & FORLAN (NO. 2) | [2017] FamCA 936 |
| FAMILY LAW – CONTRAVENTION – SANCTION – Where allegations of 46 contraventions without reasonable excuse were previously established – Consideration of sanctions under s 112AD(2) – Where it was determined that an order for imprisonment was necessary to ensure future compliance – Where the Court is satisfied that, in all the circumstances of the case, it would not be appropriate for the Court to deal with the contraventions through any other sanction – Where the respondent is sentenced to imprisonment for two months – Where the sentence is suspended on the condition that the respondent enter into a bond for two years with conditions that he be of good behaviour and comply with all orders of the Court. |
FAMILY LAW – COSTS – INDEMNITY BASIS – Where the wife sought an order that the husband pay her costs on an indemnity basis or in the event that such an order was not made, on a party and party basis – Where it was appropriate to award costs on a basis other than party and party - Where costs were ordered on a solicitor and own client basis.
| Crimes Act 1914 (Cth) s 4AA |
B & B [2004] FamCA 268
Bodilly & Hand (No. 2) [2012] FamCA 734
Cluny & Skinner(No. 2) [2017] FamCA 547
Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248
Dobbs & Brayson (2007) FLC 93-346
Malcher & Malcher [2016] FLC 93-740
Stephens & Stephens and Anor (Enforcement) (Costs)(2010) 44 Fam LR 117
| APPLICANT: | Ms Forlan |
| RESPONDENT: | Mr Forlan |
FILE NUMBER: | ADC | 1582 | of | 2015 |
| DATE DELIVERED: | 20 November 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Loughnan J |
| HEARING DATE: | 11 October 2017 |
REPRESENTATION
| COUNSEL FOR APPLICANT: | Ms Lewis |
SOLICITOR FOR APPLICANT: | Black and Wood Divorce & Family Lawyers |
| RESPONDENT: | In Person |
Orders
The proceedings are listed for the making of final orders in the Contravention proceedings on 30 November 2017 at 10.30 am Central Daylight Time.
Those proceedings will be conducted by video link and the husband shall attend personally at the Adelaide Registry of this Court on the adjourned date and shall remain there until released by the Court.
The husband shall pay the costs of the wife of and incidental to these proceedings on a solicitor and own client basis with the quantum of the costs to be as agreed or as assessed. Subject to the assessment processes, those costs shall be paid within 14 days after the conclusion of the property settlement proceedings between the parties.
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 Forlan & Forlan (No. 2) 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 ADELAIDE |
FILE NUMBER: ADC1582 of 2015
| Ms Forlan |
Applicant
And
| Mr Forlan |
Respondent
REASONS FOR JUDGMENT
Introduction
In proceedings instituted by Ms Forlan (“the wife”) against Mr Forlan (“the husband”) findings of contravention of court orders without reasonable excuse in respect of 46 allegations were made on 31 August 2017 for reasons published on that day. The proceedings were adjourned to 11 October 2017 to address consequential orders arising from those findings. In the context of these proceedings, the issues involve the questions of sanctions and costs.
The submission on behalf of the wife was that the husband be sentenced to imprisonment for a period of between two and four months but that the sentence be suspended provided he enter into a bond for a period of two years. The terms of the bond would be that he be of good behaviour and comply with all orders of the Court. I understood the husband to oppose the imposition of any penalty.
In addition the wife seeks that the husband pay her costs of the proceedings on an indemnity basis. I understood the husband to oppose any order for costs.
I refer to the reasons for judgment published in these proceedings on 31 August 2017.
The hearing
On 31 August 2017, reasons for judgment were published and orders and findings were made in the contravention proceedings. Relevantly, an order was made to the effect that the proceedings were to be listed on a date convenient to the parties and the Court in relation to consequential orders under Part XIIIA of the Family Law Act1975 (Cth) (“the Act”) arising as a result of the findings made. By arrangement with the parties, the proceedings were listed on 11 October 2017 by video link. As was the case for the earlier contravention hearing, the wife appeared and was represented by solicitor and counsel and the husband appeared in person and without legal representation.
No further evidence was sought to be adduced, submissions were made on behalf of each party and judgment was reserved.
SANCTIONS FOR CONTRAVENTIONS
Part XIIIA Division 2 of the Act contains the provisions regarding sanctions for failure to comply with orders. Section 112AD provides as follows:
112AD Sanctions for failure to comply with orders
(1) If a court having jurisdiction under this Act is satisfied that a person has, without reasonable excuse, contravened an order under this Act, the court may make an order for the imposing, in respect of the person, of one or more of the sanctions available to be imposed under subsection (2), being a sanction or sanctions that the court considers to be the most appropriate in the circumstances.
(1A) The power given to the court under subsection (1) in respect of a contravention of a maintenance order applies even if the order has been complied with before the matter of the contravention comes before the court.
(2) The sanctions that are available to be imposed by the court are:
(a) to require the person to enter into a bond in accordance with section 112AF; or
(b) to impose a sentence by order on the person, or make an order directed to the person, in accordance with section 112AG; or
(c) to fine the person not more than 60 penalty units; or
(d) subject to subsection (2A), to impose a sentence of imprisonment on the person in accordance with section 112AE.
(2A) The court must not impose a sentence of imprisonment on the person under paragraph (2)(d) in respect of a contravention of a maintenance order unless the court is satisfied that the contravention was intentional or fraudulent.
(3) An order under subsection (1) may be expressed to take effect immediately, or at the end of a specified period or on the occurrence of a specified event.
(4) Where a court makes an order under subsection (1), the court may make such other orders as the court considers necessary to ensure compliance with the order that was contravened.
Section 112AD does not require the Court to impose a sanction. I take it from the husband’s submissions that he would propose that no sanction be imposed. That is not the wife’s proposal and in my view, for the reasons set out below, that could not be an appropriate outcome in respect of the contraventions found in these proceedings.
Orders were made on 30 November 2015, 23 February 2016 and 10 June 2016, in the expectation that assets of the marriage would be disposed of by the husband. The husband was required by those orders to give the wife written notice, in advance, of the proposal or intention to dispose of particular assets and then, notice of the receipt of the consideration received for those assets. The obvious intention of the orders was to provide the wife with information and with the capacity to intervene prior to the disposition of assets. In that way she could satisfy herself, for example, that a disposition was at arm’s length and for value and she could monitor the accounting for the proceeds of sale. Prior to the making of the last mentioned orders, the husband had breached the earlier orders, conceded that fact and apologised for doing so. In his affidavit of 29 April 2016 at paragraph 37 the husband said:
I apologize to the court and to the wife as I realize now that I did not act in compliance with the order made on the 30th of November 2015 in that I signed a contract and then provided a copy to the wife. I realise that should provide her with 7 days advance notice of an offer to purchase equipment before I actually sign a contract. I will comply with the order in the future. I was trying to maintain the value of the pool of assets by managing sales effectively.
As was submitted on behalf of the wife, by the transactions that were the subject of the allegations, more than $600,000 was apparently received for the disposition of the equipment in question. The protections afforded to the wife by the orders were rendered nugatory by the husband’s conduct. She had no opportunity to satisfy herself that any of the dispositions were at arm’s length and for value or that the proceeds of sale were accounted for. It is not possible to know, and it may never be possible to know, what impact the breaches have had. The wife had on foot an application for interim costs. It is submitted that the issue in those proceedings was the identification of funds that could be applied to the wife’s legal costs. If the husband had complied with the orders, it may have been possible for some preliminary distribution of funds to the wife to meet her costs. The wife was represented in the proceedings before me. I do not recall being told whether she was represented and or would be represented in the substantive proceedings. Suffice it to say that the potential harm to the wife and to the substantive proceedings by an interruption or removal of representation in the wife’s case, is serious.
At a more fundamental level, the orders in question were directed to preserve the subject matter of the substantive proceedings. The regime of safeguards established by the orders has been ignored and that could have had very serious consequences. Neither of the parties said anything to me about the balance sheet in the property settlement proceedings but I assume that I would have been told if there is a substantial pool of net assets held by the parties independent of the business assets disposed of by the husband. The husband does not have legal representation and that of itself suggests that there are not abundant funds. In short, it is possible that the husband’s actions have resulted in the destruction of the subject matter of the substantive proceedings and thereby frustrated the wife’s claims to property settlement.
In light of those matters and given that the husband continues to have obligations in the proceedings, it is not an option to release him without penalty in respect of the findings of contravention without reasonable excuse.
The first of the sanctions identified in s 112AD(2) is a bond. Section 112AF provides as follows:
112AF Bonds
(1)This section provides for bonds that a court may require a person to enter into under paragraph 112AD(2)(a).
(2)A bond is to be for a specified period of up to 2 years.
(3)A bond may be:
(a)with or without surety; and
(b)with or without security.
(4)The conditions that may be imposed on a person by a bond include a condition requiring the person to be of good behaviour.
(5)If a court proposes to require a person to enter into a bond, it must, before making the requirement, explain to the person, in language likely to be readily understood by the person:
(a)the purpose and effect of the proposed requirement; and
(b)the consequences that may follow if the person fails:
(i)to enter into the bond; or
(ii)having entered into the bond – to act in accordance with the bond.
A bond is a written promise to do certain things. Except as a condition for the suspension of a sentence of imprisonment, a bare bond is not proposed on behalf of the wife as an appropriate sanction, nor is one sought by the husband. A bare bond would clearly be inadequate because the husband has repeatedly breached court orders and although, he expressed contrition at an earlier time, he showed none in the proceedings before me. Indeed, he seemed defiant. In those circumstances, why would I have confidence that he would comply with a bond? There could be a monetary term to the bond which would increase the consequences of a future breach but there is no indication that the husband has access to funds from which a payment could be made to the Commonwealth on default. In any event any such payment would be of no direct assistance to the wife. There was no offer or indication of the existence of a surety or security for such a monetary term. For example, while the evidence about the husband’s father offered by the husband suggested that he, and not the husband, was running the business at some or all of the relevant times, the husband’s father did not give evidence in the husband’s case in these proceedings. The husband agreed during cross-examination that his father was aggrieved about aspects of the husband’s prior financial conduct. I understood the husband to suggest that there was a level of estrangement between him and his father.
The next of the sanctions identified in s 112AD(2) is additional sentencing alternatives. Section 112AG provides as follows:
112AG Additional sentencing alternatives
(1) Subject to this section, where:
(a) under the law of a participating State or a participating Territory, a court is empowered (whether generally or in particular cases) to impose a sentence by order or make an order of a kind to which subsection (3) applies in respect of a person convicted of an offence against the law of the State or Territory; and
(b) an arrangement under section 112AN in respect of the State or Territory makes provision for and in relation to the carrying out of sentences imposed, or orders made, of that kind under this Division;
a court exercising jurisdiction in the State or Territory may, pursuant to paragraph 112AD(2)(b), impose a sentence or make an order of that kind.
(2)A sentence imposed on a person, or an order directed to a person, pursuant to paragraph 112AD(2)(b):
(a) shall be such that the total number of hours during which the sentence or order regulates the conduct of the person does not exceed the maximum period in relation to the State or Territory in which the sentence is imposed or the order is made; and
(b) ceases to have effect 2 years after it was made, or after such lesser period as is specified in the order.
(3) This subsection applies to sentences or orders of the following kinds:
(a)a sentence or order known as:
(i) a community service order;
(ii)a work order;
(iii)a sentence of periodic detention;
(iv)an attendance centre order;
(v)a sentence of weekend detention;
(vi)an attendance order; or
(vii)a community based order;
(b) a sentence or order that is similar to a sentence or order referred to in paragraph (a);
(c) a sentence or order prescribed for the purposes of this subsection.
(4)Where a court proposes to impose a sentence on a person, or make an order directed to a person, pursuant to paragraph 112AD(2)(b), it shall, before doing so, explain or cause to be explained to the person, in language likely to be readily understood by the person:
(a)the purpose and effect of the proposed sentence or order;
(b)the consequences that may follow if the person fails to comply with the proposed sentence or order or with any requirements made in relation to the proposed sentence or order by or under the applied provisions; and
(c)if the proposed sentence or order may be revoked or varied under the applied provisions – that the proposed sentence or order may be so revoked or varied.
(5)Where a court exercising jurisdiction under section 112AD in a particular State or Territory imposes a sentence or makes an order pursuant to paragraph 112AD(2)(b), the provisions of the laws of the State or Territory with respect to a sentence or order of that kind that is imposed or made under those laws shall, to the extent provided by the regulations and subject to such modifications as are specified in the regulations, apply in relation to the sentence or order.
(6)In this section:
maximum period, in relation to a State or Territory, means 500 hours or such lesser period as is prescribed in relation to the State or Territory.
participating Statemeans a State in relation to which an agreement under section 112AN is in force.
participating Territorymeans a Territory in relation to which an agreement under section 112AN is in force.
The additional sentencing alternatives depend on arrangements made between the Commonwealth and a State jurisdiction to provide access to State corrections arrangements in a proceeding to which s 112AG applies. Neither party gave evidence of an arrangement having been made between the Commonwealth and the State of South Australia as provided for in s 112AN. I know of no such arrangement. Therefore there are no additional sentencing alternative available.
The next of the sanctions identified in s 112AD(2) is a fine of up to 60 penalty units. Pursuant to s 4AA of the Crimes Act 1914 (Cth) a penalty unit is $210. A fine set at the maximum amount for each contravention found would mean a payment to the Commonwealth of $579,600 ($210 * 60 * 46). Given the amounts that were transacted in the dispositions made by the husband in breach of court orders, that amount potentially bears a meaningful relationship to the matters at issue. In my view however, the circumstances of these contraventions could not justify the maximum fine in respect of each breach. In any event, any fine is paid to the Commonwealth and is of no benefit or recompense to the wife. Further, any funds used by the husband to pay a fine may well be funds to which the wife might have a claim under s 79.
Again, neither of the parties submitted that a fine would be an appropriate sanction and I agree.
The last of the sanctions identified in s 112AD(2) is a sentence of imprisonment. Section 112AE provides as follows:
112AE Sentences of imprisonment
(1) A sentence of imprisonment imposed on a person pursuant to paragraph 112AD(2)(d) shall be expressed to be:
(a) for a specified period of 12 months or less; or
(b) for a period ending when the person:
(i) complies with the order concerned; or
(ii) has been imprisoned pursuant to the sentence for 12 months or such lesser period as is specified by the court;
whichever happens first.
(2)A court shall not sentence a person to imprisonment pursuant to paragraph 112AD(2)(d) unless the court is satisfied that, in all the circumstances of the case, it would not be appropriate for the court to deal with the contravention pursuant to any of the other paragraphs of subsection 112AD(2).
(3)If a court sentences a person to imprisonment pursuant to paragraph 112AD(2)(d), the court shall:
(a) state the reasons why it is satisfied as mentioned in subsection (2); and
(b) cause those reasons to be entered in the records of the court.
(4) The failure of a court to comply with subsection (3) does not invalidate a sentence.
(4A)A court that sentences a person to imprisonment under paragraph 112AD(2)(d) may:
(a)suspend the sentence upon the terms and conditions determined by the court; and
(b)terminate a suspension made under paragraph (a).
(5)A court, when sentencing a person to imprisonment under paragraph 112AD(2)(d) may, if it considers it appropriate to do so, direct that the person be released upon the person entering into a bond described in subsection (6) after he or she has served a specified part of the term of imprisonment.
(6)A bond for the purposes of subsection (5) is a bond (with or without surety or security) that the person will be of good behaviour for a specified period of up to 2 years.
(7)Without limiting the circumstances in which a court may discharge an order under section 112AK, a court that has sentenced a person to imprisonment for a period expressed as provided by paragraph (1)(b) may order the release of the person if it is satisfied that the person will, if he or she is released, comply with the order concerned.
(8)To avoid doubt, the serving by a person of a period of imprisonment under a sentence imposed on the person under paragraph 112AD(2)(d) for a failure to make a payment under a maintenance order does not affect the person's liability to make the payment.
For the purposes of s 112AE(2), I have found that none of the other available sanctions would be appropriate.
The purpose of contravention proceedings is to compel compliance. The submissions made for the wife were to the effect that the appropriate sanction would be a sentence of imprisonment for two to four months. Her counsel submitted that the sentence ought to be suspended provided that the husband enters into a bond for two years to be of good behaviour and comply with all orders of the Court.
In Dobbs & Brayson (2007) FLC 93-346 the Full Court dealt with an appeal against a sentence of four months imprisonment by a Federal Magistrate. The Court had found that a mother had contravened an order for contact between the children and their father, without reasonable excuse. Among other things, the Full Court addressed the requirement for reasons for imposing a sentence of imprisonment. The Full Court said at 81,936:
82.Leaving aside any error in the application of principle, such as sentencing for an anticipated rather than an actual breach, we turn to address the adequacy of the reasons for imprisonment.
83.It is well recognised that what is required in reasons is closely linked with context. Imprisonment is of itself a serious matter. It should be, as the Full Court of this Court said in Sahari and Sahari (1976) FLC 90-086 at 75,406, “…invoked only as a last resort.” For this mother, with primary care of two young children, the more so. The expectation from the context would be of cogent and thorough reasons for imprisonment. In scrutinising Jarrett FM’s reasons to see if they meet that criteria, a further question arises: what matters might fall for discussion within adequate reasons?
84.In Tate and Tate (2003) FLC 93-138 (albeit a case dealing with a contempt), the Full Court of the Family Court said:
…The purposes of imposing punishment would appear to reflect the need for individual and general deterrence and retribution for the party’s failure to comply with the order. Retribution is called for because it is essential to the proper working of the court system that court orders are obeyed. …
85.There is no discussion of retribution in the Federal Magistrate’s reasons and, as seen, uncertainty about whether deterrence in respect of the mother’s declared intentions overtook all other aspects.
86.Moreover, though Jarrett FM referred to Peter and Elspeth (supra) (where a four month imprisonment was suspended) he did not otherwise discuss the period of imprisonment he chose. There is no other reference to comparable sentences. We acknowledge that sentencing is a discretionary exercise and each case is individual, but “absences” affect the adequacy of reasons, as much as ambiguities and questionable conclusions.
87.There is no consideration of the nature of the parties’ future relationship, nor discussion of factors personal to the offender (such as her beliefs about the father).
88.The statutory requirement in s 70NFG(2) is that, before sentencing a respondent to imprisonment, the Court must be satisfied that “ …in all the circumstances of the case …” (emphasis added) none of the alternatives are appropriate. Subsection (3) requires that the reasons for this satisfaction be explained. In our view, all the circumstances of the instant case were not addressed.
89.In summary, the reasons raise and leave unanswered several questions:
•If the mother was defiant in the face of a suspended sentence, would an actual imprisonment produce any different result?
•If not, what was the purpose of the sentence?
•Did the mother’s defiance become the only foundation for the sentence?
•Was imprisonment as such and for the period applied, of itself, the right order in respect of the contravention, rather than a result reached by default?
90.Accordingly, though admittedly against a fairly stringent measure, we concluded that the Federal Magistrate’s reasons for the sentence of four months’ imprisonment were inadequate. Consequently, absent sufficient justification for that sentence, the explanation of why orders under other paragraphs of s 70NFB(2), whether alone or in combination with a period of imprisonment, actual or suspended, was insufficient.
Turning to the proceedings before me:
It is not possible to know, at least at this stage, whether anything has been lost as a result of the husband’s contravention. By that I mean it is not clear that the net pool of matrimonial assets has been diminished as a result of his actions. It could be that some or all of the dispositions in question were not for value. It could be that one or more of the transactions were not at arm’s length and that not all of the business assets have been accounted for. It could be that the wife has needlessly been denied funding for her legal representation. I just do not know.
No comparable sentences were referred to me by the parties. In Cluny & Skinner(No 2) [2017] FamCA 547 Kent J was required to consider, among other things with the appropriate sentence for a husband who had been found to have contravened court orders, without reasonable excuse resulting in an amount in excess of $256,000 plus interest not being paid to the wife. The husband was found to be contrite; he proposed to fully repay the wife; he agreed to pay her costs as assessed by her, on an indemnity basis and he had made an open offer to assign to her his superannuation interests, worth over $320,000. Ultimately, Kent J ordered the husband to pay the amount he owed the wife, including costs, plus interest within two years and in default, to show cause why he should not be imprisoned for three months.
B & B [2004] FamCA 268 was a decision by Judicial Registrar Forbes in contempt proceedings. A husband who had breached an injunction in dissipating over $78,000 in funds drawn from his DFRDB lump sum. The husband had offered to make a partial restitution. He was sentenced to imprisonment for 28 days with the sentence being suspended for two years.
In the proceedings before me there was nothing in the nature of physical violence or abuse in the husband’s conduct by which the breaches occurred.
Beyond the facts recorded in the reasons for judgment published on 31 August 2017, I know nothing of the husband’s general circumstances. I do not know if he has any other family responsibilities. Some references were made to the husband’s physical health in those reasons. The findings in the contravention proceedings suggest that to that time he played a central role in the disposition of business assets. His role in the day to day running of the business was not clear.
I gather that the parties do not enjoy a good relationship but beyond the fact of the substantive family law proceedings and the demands of any current or future orders made, I am not aware of their need to interact in the future.
Based particularly on his presentations on 11 October 2017, the husband is not contrite or remorseful in relation to his contravention of court orders. Quite the contrary. There has been no suggestion from him that he would behave differently in the future. I am not satisfied that the husband will fully comply with all court orders unless a future breach carries a very serious consequence for him. It is an aggravating factor that the husband contravened the orders at an earlier time and expressed regret in respect of his conduct and then continued to contravene the orders on many occasions. It is bizarre that he would engage in litigation and neither comply with the resultant orders nor seek by appeal or application, to have the orders changed.
It seems to me that the sentence proposed on behalf of the wife is the appropriate course. There is probably no substantive difference between sentences in the range of two to four months. In the circumstances, I will provide for two months.
The maximum sentence for a contravention of Court orders, falling short of s 112AP contempt, is 12 months. Such a sentence must be reserved for the most serious circumstances. Although there were 46 allegations found proved, they were of a similar and related nature and amounted to one course of similar conduct. In this instance, there is no way to distinguish the import of the individual breaches. One might infer that the disposition reportedly made for $243,973.60 to Q Pty Ltd on 11 March 2016[1] was of greater value or import than that made for $350 to Y Pty Ltd on 18 October 2016[2]. However, the purpose of the original orders was to allow the wife to scrutinise and if necessary, to intervene in individual sales. The apparent value of each sale provides no guarantee of the value of the assets in question.
[1] Allegation 1(a)
[2] Allegation 12(a)
In Malcher & Malcher [2016] FLC 93-740, the Full Court dealt with an appeal in contravention proceedings inter alia against sentencing. In dealing with grounds of appeal in relation to sentencing the Court said at 81,858:
35.The father asserts that his Honour erred in his interpretation of this section. His argument is based on the power of the Court to impose “a” bond, which the father argues his Honour did in respect of all three contraventions. However, the father contends that when imposing a fine for the failure to enter into that bond, his Honour erred by imposing three fines instead of one.
36.The only provision in s 70NEB(1) which entitles the Court to impose a fine for a contravention is s 70NEB(1)(da). His Honour’s reasons make it clear at [12] that he proceeded to determine whether to impose a sanction pursuant to Subdivision E, that is the subdivision relating to “less serious contraventions”. Section 70NEB(1)(da) sits within Subdivision E as the relevant section setting out the powers of the Court for dealing with such a contravention.
37.We note at the outset that the language of the section refers to “a contravention” and clearly contemplates, in accordance with general sentencing principles, that one offence (or contravention) is punishable by one sentence (see Pearce v The Queen (1998) 194 CLR 610). As the father was found to have contravened orders on three separate occasions, his Honour was entitled to consider them separately and impose a sanction as to each.
38.However, in this case, his Honour imposed one sanction, a bond, in respect of all three contraventions and required the father to enter into that bond, rather than impose a bond on each of the three proven contraventions. On the father declining to do so, his Honour was entitled to proceed under s 70NEB(1)(da) in respect of the father failing without reasonable excuse to enter into a bond as required by his Honour’s earlier order. However, as the terms of the section make clear, the maximum fine able to be imposed in relation to the bond is 10 penalty points.
39.Given that his Honour had imposed only one bond, he was in error to proceed to impose three fines for failure to enter into that one bond.
40.In this regard his Honour erred and this ground is made out.
The position is that there can be no more than one penalty for each contravention but there can be one penalty for more than one contravention.
I intend to sentence the husband to imprisonment for two months in respect of all of the contraventions found proved. As is proposed on behalf of the wife, I will order that the sentence of imprisonment be suspended provided that the husband attends on a registrar of this Court in Adelaide within 14 days from the date of the orders made about sanctions pursuant to these reasons, and enters into and complies with a two year bond with the conditions that he be of good behaviour and complies with all orders of this Court. The bond will be without monetary term, surety or security.
Prior to requiring a person to enter into a bond, the Court must explain certain matters about the requirement to the person, in language likely to be readily understood by that person as per s 112AF(5). I will say something about the import of an order that the husband enter into a bond and will give the husband a short period to consider his position. I advise as follows.
Section 112AF (5) Explanation:
·A bond is a written promise to the Court. In the circumstances of this case the required bond will be for a period of two years with the conditions that the husband be of good behaviour and comply with all orders of this Court. There will be no monetary term and therefore no requirement for a surety or security.
·The purpose of the bond is to encourage the husband to meet all of his legal obligations in these proceedings, including, to comply with all orders of the Court.
·In this case, entering into the bond and complying with it, will be the conditions for the suspension of a sentence to be pronounced in these proceedings, that he be imprisoned for a period of two months.
·If the husband fails to enter into a bond in the terms set out above, within 14 days from the date of the order requiring him to do so, he will forthwith commence that sentence of imprisonment.
·In the event that the husband enters into the bond but is found to have failed to comply with the terms of the bond, in addition to any sanctions that might apply following further contravention proceedings, the husband will forthwith commence the sentence of imprisonment.
On 11 October 2017, I gave the husband a brief explanation of the import of an order that he enter into a bond. He expressed concern about an obligation that he has under existing orders to regularly pay money to the wife. I understood him to be concerned that if he entered into a bond of the type foreshadowed and ceased making those payments, he would thereby be in breach of the bond. I explained to him that, in those circumstances, it would be his obligation to comply with the order for payment of moneys until and unless the order was suspended varied or discharged. Of course, that is his obligation in any event. He is required to comply with all orders of the Court. If he feels that he will be unable to comply in the future, it is for him to secure agreement from the wife to have the order suspended, varied or discharged or to obtain such an order in the absence of her agreement by immediately applying to the Court.
The husband must be given the explanation required by s 112AF (5), before a bond is imposed. Therefore I will adjourn the proceedings for the purpose of imposing final orders.
Costs
Costs applications are decided by reference to s 117 of the Act and by certain other specific costs provisions. In the context of this case s 117 relevantly provides:
Costs
(1) Subject to subsection (2) … each party to proceedings under this Act shall bear his or her own costs.
(2) If …the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(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.
The wife seeks that the husband pay her costs of the proceedings on an indemnity basis and if that is not ordered, on a party and party basis. I understood the husband to oppose any order for costs. The wife’s claim has not been quantified. I understood that she seeks an order expressed as “costs as agreed or as assessed”.
Section 117(2A) considerations
Section 117(2A) of the Act requires that the Court shall have regard to certain factors when considering what order, if any, should be made pursuant to s 117(2).
I have no evidence about the financial circumstances of the parties and therefore no findings are possible about their income and outgoings, assets, liabilities or financial resources.
The husband did not have legal representation for the proceedings. I gather that the wife’s representation did not involve a grant of legal aid. There is nothing about the conduct of the proceedings by the parties that should bear on costs.
The proceedings were necessitated by the failure of the husband to comply with Court orders.
Neither party was wholly unsuccessful in the proceedings. I was provided with no evidence of settlement discussions in writing.
These are not the normal run of family law proceedings. Here the wife was obliged to come to Court and incur costs because the husband contravened court orders. Because of their nature, costs orders are often made in contravention proceedings. If the proceedings are successful there is often an order in favour of the applicant. If they fail, there is often an order in favour of the respondent. Here the wife was substantially successful and should be awarded her costs.
The wife’s application is for costs on an indemnity basis but if not granted, on the usual party and party basis. Costs are generally awarded on a party and party basis which provides a partial indemnity to the party who secures a costs order. Absent considerations such as the costs of a representative litigant such as a trustee, the authorities require that justification is given by the Court for awarding costs on any more generous basis than party and party costs. In Bodilly & Hand (No. 2) [2012] FamCA 734I discussed the authorities in respect of the quantification of costs, including the decision of the Federal Court of Australia (Sheppard J) in Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 and the decision of the Full Court of this Court in Stephens & Stephens and Anor (Enforcement) (Costs)(2010) 44 Fam LR 117 in the following terms:
220.…
I record that the Full Court in Stephens later turned to the question of indemnity costs as follows:
Indemnity Costs
72. The Family Court has jurisdiction to make orders for indemnity costs: McAlpin and McAlpin [1993] FamCA 71; (1993) FLC 92-411 per Full Court (Nicholson CJ and Maxwell J, Baker J dissenting); Kohan and Kohan (1993) FLC 92-340 per Full Court (Strauss, Lindenmayer and Bulley JJ); Munday v Bowman(1997) FLC 92-784 per Holden J; Yunghanns & Ors v Yunghanns & Ors and Yunghanns[2000] FamCA 681; (2000) FLC 93-029 per Full Court (Lindenmayer and Holden JJ, Mullane J dissenting) and Limousin v Limousin (Costs) [2007] FamCA 1178; (2007) 38 Fam LR 478 per Full Court (Kay, Coleman and Boland JJ).
73. An order for costs may be made on an indemnity basis, subject to a judicial determination capable of being made that there ought to be a departure from the usual basis that costs be payable on the party and party basis. For a discussion of the jurisdiction to order indemnity costs and its exercise see Colgate Palmolive Co and Another v Cussons Pty Ltd[1993] FCA 536; (1993) 118 ALR 248 per Sheppard J at 256-257 and NMFM Property Pty Ltd and Others v Citibank Ltd (No 2) (Court’s “NMFM” Judgment No 11) [2001] FCA 480; (2001) 109 FCR 77 per Lindgren J at [53] to [90].
221.In Colgate Palmolive Co and Another v Cussons Pty Ltd[1993] FCA 536; (1993) 46 FCR 225 Sheppard J reviewed the English and Australian authorities about costs generally and at paragraph 24 said:
24. It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:-
1. The problem arises in adversary litigation, i.e. litigation as between parties at arm's length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg. a government agency or statutory authority.
2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this Court the provisions of Order 62, rules 12 and 19, and the Second Schedule to the Rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v. British Transport Commission and Handley JA in Cachia v. Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
222.The approach to the quantification of costs is not the result of law made or developed under the Family Law Act, not even in this century nor in the last. In his book Taxation of Costs Between Parties,[13] A. G. Saddington discussed the process of the quantification of costs by taxing officers. He traced the development of the practice and law of awarding costs from the time in English courts when a person could first have a representative present his case. The author explained that every costs award is by way of indemnity and discussed the extent of the indemnity that had been approved. The author discussed various authorities in relation to the assessment of costs on different bases and gives examples of things that have been allowed and not allowed. In relation to an assessment of party and party costs he said:
The costs to be allowed on this class of taxation are all that are necessary to enable the litigation to be properly conducted, all charges incurred merely for conducting litigation more conveniently are considered luxuries, for which the party who incurred them must pay.
223.As to an assessment of party and party costs on a solicitor and client basis he said:[14]
It appears, therefore, that on a taxation between parties on a solicitor and client basis, the unsuccessful party has to pay all the costs incurred by his opponent excepting in respect of (1) costs and expenses incurred prior to the institution of the action; (2) journeys and expenses of which the party liable could have no knowledge, and which would not ordinarily be performed or incurred; (3) the employment of more counsel, or the payment to them of larger fees than the circumstances of the case warrant, including the giving of special retainers.
224.The examples may not still be apposite in the context of our world of costs agreements, pre-action procedures and video conferencing, but they give an indication of the margin that such a basis could have over a party and party award.
In my view there is an argument in these proceedings for the award of the wife’s costs being assessed on a more generous basis than party and party costs. As I have referred to above, it is an aggravating fact that the husband continued to breach the orders after deposing in his affidavit of 29 April 2016 that he realised that he had earlier breached Court orders and apologised to the wife and to the Court about those breaches. The overwhelming majority of the breaches occurred after the husband gave that evidence. In my view, the wife should not be significantly out of pocket as a result of these proceedings. Rather than a full indemnity, I will order the wife’s costs to be calculated on a solicitor and own client basis. That will leave the onus of establishing the costs claimed with the wife.
If the parties cannot agree on the amount of costs, they will need to be assessed. Subject to the assessment processes, I will order that the costs be paid within 14 days after the conclusion of the substantive proceedings between the parties.
For those reasons I make the orders set at out the commencement of this judgment.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 20 November 2017.
Associate:
Date: 20 November 2017
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