FRENCH & FRENCH

[2015] FCCA 3173

FEDERAL CIRCUIT COURT OF AUSTRALIA

FRENCH & FRENCH [2015] FCCA 3173

Catchwords:
FAMILY LAW – Costs – application for costs in family law proceedings – indemnity costs – party and party costs – whether respondent should pay applicant’s costs – whether costs should be awarded on an indemnity basis – conduct of the proceedings by the parties – where respondent failed to comply with previous court orders.

Legislation:

Family Law Act 1975 (Cth), ss.106A, 117

Federal Circuit Rules 2001, Sch.1 Part 1

Cases cited:
Cassidy & Murray [1995] FamCA 91; (1995) 19 Fam LR 492; FLC 92-633
Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248
In the Marriage of Kohan (1992) 16 Fam LR 245; (1993) FLC 92-340
Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534
Penfold v Penfold [1980] HCA 4; (1980) 144 CLR 311
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL [2005] FamCA 158; (2005) 33 Fam LR 109
Prantage & Prantage [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544

Applicant: MS FRENCH

Respondent: MR FRENCH

File Number: SYC 5888 of 2012

Judgment of: Judge Scarlett

Hearing date: 8 September 2015

Date of Last Submission: 29 September 2015

Delivered at: Sydney

Delivered on: 30 November 2015

REPRESENTATION

Solicitor for the Applicant: Mr Alfonzetti

Solicitors for the Applicant: Greg Alfonzetti Lawyer

Counsel for the Respondent: Mr Blake

Solicitors for the Respondent: Michael Vassili

ORDERS

1. The Respondent is to pay the Applicant’s costs fixed in the sum of $5,056.00 as follows:

   (a)The amount of $5,000.00 held in the trust account of the Applicant’s solicitor in accordance with the Orders made on 13 July 2015 is to be released to the Applicant forthwith; and

   (b)The Respondent is to pay the balance of $56.00 within one month from the date of these Orders. 

IT IS NOTED that publication of this judgment under the pseudonym French & French is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 5888 of 2012

MS FRENCH

Applicant

And

MR FRENCH

Respondent

REASONS FOR JUDGMENT

Application

1. This is an Application for costs by the Wife in these proceedings. The Application arises from an Application in a case filed by the Wife on 28^th March 2015 and returnable on 6^th July 2015, seeking to enforce final orders for property settlement made on 20^th October 2014. 

2. The Applicant now seeks her costs of the Application in a Case, calculated on an indemnity basis, in the sum of $10,264.65.

3. The Applicant seeks that payment of the costs should be effected by:

   a)An amount of $5,000.00 held in her solicitor’s trust account to be released to her forthwith; and

   b)the Respondent paying the balance of $5,264.65 within twenty-eight (28) days.

4. The Applicant advises that the amount of costs is calculated as follows:

   a)The total of a tax invoice dated 1^st September 2015            $9,192.15

   b)Costs chargeable by the Applicant’s solicitor to the Applicant in respect of work carried out after 1^st September 2015, being:

   i)Attendance at Court on 8 September – 1.5 hours        $585.00

   ii)GST  $ 58.50

   iii)Travelling to and from court, drafting Short Minutes of Order, correspondence with Court and Respondent’s solicitor – 1 hour  $390.00

1. GST  $ 39.00

Total$10,264.65 

Background

1. The claim for costs arises out of the facts set out in an affidavit by the Applicant of 26^th March 2015 in support of the Application in a Case seeking to enforce the Orders of 20^th October 2014. In her affidavit she deposed that:

   a)One of the Orders made on 20^th October 2014 required a sale of a property at Property W in the Northern Territory;

   b)The sale was completed on 6^th February 2015;

   c)Under the Orders, the Applicant was required within 42 days of completion of the sale to pay the sum of $103,086.00 to the Respondent’s solicitor’s trust account;

   d)In consideration of that payment the Respondent was then required to transfer to the applicant his interest in a property at Property S, New South Wales;

   e)The Applicant obtained bank finance to comply with her obligation under the Orders;

   f)To obtain the finance, the Applicant was required to provide a mortgage over the Property S property and to discharge the Respondent’s liability under the existing mortgage;

   g)The full amount of the loan secured by the existing mortgage was paid out on completion of the sale of the Property W property, however, the mortgage remained on the title of the Property W property and the Applicant and the Respondent were required to bring about a formal discharge of the mortgage;

   h)This required both the Applicant and the Respondent to sign a discharge/refinance authority for the release of the Property S property;

   i)The Applicant’s solicitor wrote to the Respondent’s solicitor on 18^th February 2015 seeking that the Respondent comply with that requirement;

   j)The Applicant also sought that the Respondent should sign a Memorandum of Transfer in respect of his interest in the Property S property and her solicitor wrote to the Respondent’s solicitor on 19^th February 2015 asking him to execute the transfer;

   k)The Respondent’s solicitors advised by means of an email dated 16^th March 2015 that their client had been hospitalised at the (omitted) Hospital in Victoria and was unable to execute any documents;

   l)Further, the Respondent was required by the Orders to discharge the Applicant’s liability in respect of the joint mortgage over a property at Property G, NSW;

   m)Upon the Respondent’s compliance with that order, the Applicant was then required to transfer her interest in the Property G property to the Respondent;

   n)If the Respondent did not comply with that Order, the parties were required by the Orders to sell the Property G property;

   o)The Respondent through his solicitors did not advise the Applicant as to his compliance with the Orders by 16^th March 2015;

   p)Again, an order for costs in the sum of $1,800.00 was made against the Respondent on 6^th May 2013;

   q)The Respondent did not comply with that Order;

   r)The Respondent was also required to pay half of the shortfall between the amount paid for the rent of the Property W property and the amount required to pay out the loans on the property;

   s)The Respondent did not pay his half of the shortfall, amounting to $1,977.00; and

   t)The Applicant was therefore obliged to pay the amount herself.

2. On 13^th July 2015, the Court made Orders by Consent that:

   a)If the Respondent had not handed to the Applicant’s solicitor the Transfer and Discharge Request duly executed by him by 13^th July than the Registrar of the Court was appointed under s.106A of the Family Law Act 1975 (Cth) to execute those documents on behalf of the Respondent;

   b)If the Respondent’s solicitors did not hand to the Applicant’s solicitor a Withdrawal of Caveat duly executed by 13^th July 2015 then the Registrar of the Court was appointed under s.106A of the Family Law Act 1975 to execute the document on behalf of the Respondent;

   c)The time for the Applicant and Respondent to comply with the substantive Orders was extended to 31^st August 2015;

   d)On the Applicant’s compliance with Order 1 of the substantive Orders the following events would occur:

   i)The sum of $2,000.00 would be deducted from the principal sum of $103,086.00;

   ii)The Applicant would pay the sum of $5,000.00 into her solicitor’s trust account; and

   iii)The Applicant would pay the sum of $96,086.00 into the trust account of the Respondent’s solicitors;

   e)The amount of $5,000.00 paid to the Applicant’s solicitor was not to be disbursed unless by further order of the Court or as agreed in writing between the parties; and

   f)The Applicant’s costs were reserved.          

Submissions

1. The Applicant submits that the Respondent should pay her costs of the Application in a Case on an indemnity basis, as she was always ready, willing and able to comply with the Orders whilst the Respondent was in default. The Applicant submitted a Costs Disclosure from her solicitor, showing that her solicitor charged at the rate of $390.00 per hour.

2. The Respondent relied on an affidavit affirmed on 29^th September 2015 and a written submission dated the same day.

3. In his affidavit, the Respondent deposed that:

   a)He is currently unemployed;

   b)His only income is a Centrelink Newstart allowance in the amount of approximately $519.49 per fortnight;

   c)He has significant expenses and liabilities, including a loan from his mother in the amount of approximately $100,000.00;

   d)He has a bank account with a balance of $561.57;

   e)He is indebted to his former case guardian and his solicitor in an amount in excess of $100,000.00;

   f)Between 20^th October 2014 and March 2015 he was unable to provide instructions to his solicitor due to his medical condition of Complex Regional Pain Syndrome, which saw him admitted to the (omitted) Medical Centre on 17 March 2015;

   g)He was unable to sign any documents;

   h)He was assaulted on 4^th April 2015 and suffered serious head injuries;

   i)He was discharged from (omitted) Medical Centre on 18^th March 2015;

   j)He annexed to his affidavit as Annexure “G” a medical certificate issued by a Dr N; and

   k)For a period of about a week after his discharged from hospital he was heavily medicated.

4. There was no medical certificate annexed to the Respondent’s affidavit.

5. The Respondent submitted that the normal rule in proceedings under the Family Law Act 1975 is that each party should pay their own costs but the Court may make an order for costs under s.117(2) if it is satisfied that in the particular circumstances of the case it should so. Subsection 117(2A) sets out the factors to which the Court shall have regard when considering making an order for costs.

6. The Respondent referred to the decision in Penfold v Penfold[1] as authority for the proposition that the wording of s.117 of the act does not create an onus on either of the parties and that it is a matter for the Court in each case to consider, having regard to the matters in s.117(2A) of the Act, whether in a particular case to order costs or not to order costs.

   [1] [1980] HCA 4; (1980) 144 CLR 311

7. It was further submitted that an order for costs is compensatory in the sense that it is awarded to indemnify the successful party against expense to which he or she has been put by reason of the legal proceedings (Latoudis v Casey[2]; Cassidy & Murray[3]).

   [2] [1990] HCA 59; (1990) 170 CLR 534

   [3] [1995] FamCA 91; (1995) 19 Fam LR 492; FLC 92-633

8. The Respondent also relied on the decision of PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL[4]in support of the proposition that s.117(2) of the Act requires a finding of justifying circumstances as an essential preliminary to the making of an order for costs.

   [4] [2005] FamCA 158; (2005) 33 Fam LR 109

9. The Respondent submitted in respect of the matters to which the Court shall have regard under s.117(2A) that:

   a)The Respondent’s financial circumstances are dire, in that he is unemployed and suffering from financial hardship, and he has his disabled brother to support;

   b)Neither party to the proceedings was in receipt of assistance by way of legal aid;

   c)The Orders of 20^th October 2014 provided a means by which the Applicant could have enforced Order 1 without recourse to further proceedings by means of the provisions of Order 19, which already provided for a Registrar or Deputy Registrar to sign the documents necessary to transfer to the Applicant the Respondent’s interest in the Property S property;

   d)The proceedings were not necessary even though the Respondent had failed to comply with the Orders of 20^th October 2014;

   e)The proceedings were settled and the Respondent was not wholly unsuccessful; and

   f)The Respondent offered to mention the matter by consent on 8^th September 2015 and advise the Court that the application for costs could be dealt with by way of submissions, but the Applicant did not accept this offer.

10. The Respondent opposes an order for costs.

The law to be applied

1. The question of costs in proceedings under the Family Law Act 1975 is governed by the provisions of s.117 of the Act. Subsection 117(1) contains a general statement that, subject to certain other considerations, each party to proceedings under the Act should bear his or her own costs. However, subsection 117(2) provides that if the Court is of opinion that there are circumstances that justify it in doing so, the Court may, subject to subsection 2A (relevantly) and the applicable Rules of Court, make such order for costs as the Court considers just.

2. Subsection 117(2A) provides that in considering what order (if any) should be made under subsection (2), the Court shall have regard to the matters set out in paragraphs (a) to (g) of the subsection.

3. If the Court decides that there are circumstances that justify it in making an order for costs, what must be decided is the quantum, or amount of costs to be awarded. It is the usual case that where costs are awarded against a party they are awarded on a party and party basis. Costs would normally be awarded in accordance with the Court scale, which in this case is contained in Part 1 of Schedule 1 to the Rules.

4. Costs will only be awarded on an indemnity basis (also known as a solicitor-client basis) where there are unusual or exceptional circumstances (see Colgate Palmolive Co v Cussons Pty Ltd[5]; In the Marriage of Kohan[6] ; Prantage & Prantage[7]).

   [5] [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248

   [6] (1992) 16 Fam LR 245; (1993) 92-340

   [7] [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544

Consideration

1. The thrust of the Respondent’s submission is that the Applicant has run up costs unnecessarily because:

   a)The Application in a Case filed on 28^th March 2015 need not have been brought to enforce the Orders as the Orders themselves contained their own means of enforcement; and

   b)There was no need for the Applicant’s solicitor to attend Court on 8^th September 2015 as the Respondent’s solicitors had offered to mention the matter by consent.

2. In considering the first point, it is necessary to ask what it was that the Respondent failed to do that required the Applicant to file her Application in a Case.

3. The Application in a Case sought the following from the Respondent:

   a)That the amount of costs ordered against the Respondent on 6^th May 2013 in the sum of $1,800.00, should be deducted from the principal sum of $103,086.00 payable by the Applicant to the Respondent under Order 1 made on 20^th October 2014;

   b)That the Respondent reimburse the Applicant for an amount of $1,977.00 as his half of the shortfall of rent between the amount required to pay out the loans for which the parties were to be equally liable under the Consent Orders;

   c)That the Respondent provide a withdrawal of Caveat in registrable form;

   d)That the Respondent provide a Memorandum of Transfer to the Applicant in return for which she would pay the principal sum less the amounts of $1,800.00 and $1,977.00;

   e)That the Respondent’s solicitors retain the amount of $10,000.00 as security for the Applicant’s costs.

4. There was clearly no need to bring an Application in a Case to obtain an order that a Registrar be appointed to execute documents on behalf of the Respondent under section 106A of the Family Law Act 1975 if he failed or refused to do so. Order 19 made on 20^th October 2014 already provided for that to be done. Indeed a Registrar of the Court executed certain documents in accordance with section 106A on 16^th January 2015.

5. However, the Orders of 20^th October 2014 made no provision for the payment of $1,800.00 by way of costs ordered on 6^th May 2013. That sum would be a proper amount to be set off in favour of the Applicant out of the principal sum ordered on 20^th October 2014. Presumably the parties overlooked the fact that the costs were owing when they drafted Consent Orders.

6. Similarly, the reimbursement by the Respondent to the Applicant of his half of the shortfall could not be remedied by recourse to the Orders.

7. In my view, the Applicant had a need to bring an Application in a Case to enforce the Consent Orders.

8. The Respondent also claims that it was unnecessary for the Applicant’s solicitor to appear on 8^th September because the Respondent’s solicitors offered to mention the matter by consent. The Respondent annexes to his affidavit at Annexure “H” the email correspondence between the solicitors about that offer.

9. The Respondent’s solicitors sent this email to the Applicant’s solicitor at 10:42 am on Monday 7^th September 2015:

   Dear Colleagues,

   We note that the consent orders have been satisfied by reason of the settlement of the Property G discharge of mortgage. As such, the substantive matter is resolved, and in respect to tomorrows appearance, our client offers to either;

   a.  Appear at the direction hearing tomorrow, by consent, to confirm the completion of the matter, or

   b. If your client seeks costs in relation to the Application in a Case filed 26 March 2013, appear at the directions hearing tomorrow on your behalf by consent, to seek that costs (relating to the application) be dealt with by way of submissions to be heard in chambers.

   We await your urgent reply.[8]

   [8] Affidavit of Mr French 29.9.2015 Annexure “H”

10. The second alternative is exactly what happened the following day, except that the Applicant’s solicitor handed up a copy of a tax invoice addressed to the Applicant, showing an amount due and payable of $9,192.00.

11. The Applicant’s solicitor appeared not to reply to this email.

12. The Applicant seeks the amount of $1,072.50 in connection with this appearance, including an unspecified amount for travelling to and from Court. The Applicant’s solicitor’s office is situated in Balmain, an inner city suburb of Sydney.

Conclusions

1. I am satisfied that the Applicant is entitled to an order for costs in respect of the steps taken to enforce the Consent Orders of 20^th October 2014 and the earlier costs order. It is settled law that there is nothing to prevent any one factor in s.117(2A) being the sole foundation for an order for costs (PBF as Child Representative for AF (Legal Aid Commission of Tasmania & TRF & LKL[9]). The conduct of the proceedings by the Respondent is sufficient, in my view. The Respondent did fail to comply with previous orders of this Court. The Respondent’s strained financial circumstances are not of themselves a reason not to make a costs order, although those circumstances may be relevant in any consideration of time to pay.

   [9] supra

2. The Applicant seeks costs on an indemnity basis, but there does not appear to be anything unusual or exceptional about the circumstances. True it is that the Applicant sought indemnity costs in her Application in a Case, but that is not sufficient to justify a departure from the normal rule that costs are awarded on a party and party basis. The production to the Court of a tax invoice addressed to the Applicant does not assist in obtaining an order for costs to be assessed on other than the normal basis.

3. The Applicant’s costs will be assessed according to the scale set out in Part 1 of Schedule 1 of the Rules. I will allow the lump sum of $1,706.00 under Item 3 together with the daily hearing fee for 6^th July, 13^th July and 8^th September 2015, all calculated on a half day basis, making a total of $4,778.00. I will allow a further $278.00 under Item 13 for attending to take the judgment. No amount is sought for disbursements.

1. Thus, the total amount to be awarded by way of costs is $5,056.00. It would appear that almost all of this amount can readily be deducted from the sum of $5,000.00 held in the Applicant’s solicitor’s trust account. The balance of $56.00 can be paid within one month.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Associate: 

Date:  30 November 2015