Galeford & Galeford (No. 3)

[2007] FamCA 1139

FAMILY COURT OF AUSTRALIA

GALEFORD & GALEFORD (NO. 3) [2007] FamCA 1139

FAMILY LAW – COSTS  – principles – exercise of discretion – whether indemnity costs are ordered

FAMILY LAW – ENFORCEMENT APPLICATION – whether orders should be made given non-compliance by each party

Family Law Act 1975 (Cth)

APPLICANT:	Mrs Galeford
RESPONDENT:	Mr Galeford
FILE NUMBER:	MLF	1675	of	2003
DATE DELIVERED:	31 August 2007
PLACE DELIVERED:	Sydney
JUDGMENT OF:	Justice Rose
WRITTEN SUBMISSIONS:
Husband	3 & 13 July 2007;  16 August 2007
Wife	20 & 30 July 2007 (re enforcement application only)

REPRESENTATION

SOLICITOR FOR THE APPLICANT:	Isaac Brott & Co.
SOLICITOR FOR THE RESPONDENT:	Forte Lawyers

Orders

1. That the wife pay the husband’s costs on a party/party basis of and incidental to the proceedings determined on 13 July 2007 as assessed and agreed upon or failing agreement as taxed.

2. That the husband may cause the sum of $8,500.00 to be paid to him by way of costs pursuant to the Orders made 18 March 2005 from the funds of the parties held by his solicitors (“the funds”) and then provide a written accounting direct to the wife and her solicitors of the funds and payments made from the funds.

3. That upon the parties reaching agreement in relation to the husband’s costs or a costs assessment order being made in relation to such costs pursuant to Order 1 whichever shall first occur, the husband may cause the amount of his costs to be paid by his solicitors from the funds.

4. That upon payment of the husband’s costs pursuant to Orders 1 and 3 he shall forthwith cause a written accounting to the wife and her solicitors of the funds and all payments made from the funds.

5. That the Application in a Case filed 14 December 2006 on behalf of the wife is dismissed.

6. That each of the parties have liberty to apply for further orders in relation to enforcement of the Orders made 30 April 2004 and costs upon 14 days written notice being given.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

File number:  MLF1675 of 2003

MRS GALEFORD

Applicant

And

MR GALEFORD

Respondent

REASONS FOR JUDGMENT

Introduction

1. Application is made by the husband for an order for costs against the wife (“the costs application”) in relation to the substantive proceedings determined by me on 13 July 2007 as well as in relation to costs reserved following the determination of various interim and interlocutory applications as set forth in paragraph 2.1 to 2.8 inclusive of the written submissions made on behalf of the husband dated 3 August 2007.

2. The wife seeks orders for payment by the husband to her of $161,536.56 pursuant to her Form 2 Application in a Case filed 14 December 2006 (“the enforcement application”).

3. In addition, the wife sought an order that the husband complete and file a “Form 13” pursuant to that application.

4. Written submissions on behalf of the husband were lodged with my Associate and served in accordance with the directions made by me on 24 July 2007.  No written submissions were received on behalf of the wife in relation to the costs application.

The costs application

1. I have decided to first determine this application as there are implications in relation to the exercise of discretion so far as the enforcement application is concerned.

2. I will subsequently make reference to those matters.

Historical background

1. The following are relevant orders and directions.

2. On 2 February 2007, judgment was given and I adjourned the enforcement application and consolidated it with the wife’s pending substantive application fixed for trial to commence on 5 February 2007.

3. On 13 July 2007, judgment was given and orders made as follows in relation to the substantive proceedings and the application of the wife filed 14 December 2006:

   “1.That the Amended Application of the wife filed 22 April 2005 is dismissed.

   2.That in relation to the Application in a Case filed on behalf of the wife on 14 December 2006 counsel lodge with the Associate to the Hon. Justice Rose and serve written submissions endorsed on the front sheet with the date and time of service as follows:

   (a)       Submissions for the wife on or before 5.00pm, 18 July 2007.

   (b)       Submissions for the husband on or before 5.00pm, 23 July 2007.

   (c)Submissions for the wife in reply on or before 5.00pm, 26 July 2007.”

4. On 20 July 2007 a letter of that date was sent by facsimile transmission to my Associate by the solicitors for the wife apologising for their lateness in submissions and seeking to rely upon previous submissions made in relation to the enforcement application.  I have accepted those submissions out of time.

5. On 24 July 2007 written submissions on behalf of the husband dated 23 July 2007 in relation to the enforcement application were received.

6. On 24 July 2007, on the application of the husband, not opposed on behalf of the wife, directions were made for the lodgement and service of written submissions in relation to costs.  The solicitors for the parties were informed of those directions by my Associate’s facsimile transmission of the same date.  The fax report shows that the facsimile transmission was received by the solicitors for the parties on the day it was sent.

7. By letter dated 30 July 2007 my Associate received submissions in reply on behalf of the wife in relation to the enforcement application.

8. On 27 August 2007, at my request, my Associate sent an email to the solicitors for the parties.  I was concerned at the lack of any written submissions on behalf of the wife in relation to the costs application and the absence of any communication by her solicitors in relation to the directions that were made.  That email is in the following terms:

   “Dear Sir/Madam

   I refer to my facsimile transmission to you and the husband's solicitors dated 24 July 2007 sent that day.  The transmission report shows that the facsimile transmission was received by you and the husband's solicitors on the date it was sent at 2.42pm.

   Justice Rose intends to give judgment this week in relation to both your client's application for payment of outstanding amounts pursuant to the consent orders made 30 April 2004 and in relation to the husband's pending application for an order for costs against your client.

   Justice Rose has requested that I send you this email as no written submissions have been received in relation to the issue of costs notwithstanding the directions set forth in my abovementioned letter.  Indeed, written submissions filed on behalf of the husband dated 16 August 2007 states that "you were served by hand delivery at 9.08am that day".

   Would you kindly inform me by email no later than 5.00pm Tuesday, 28 August 2007 in relation to the following:

   1.  Has a written submission in relation to costs been filed and served on behalf of your client?

   2.  If the answer is in the affirmative, please attach a copy forthwith.

   3.  If the answer is in the negative, is it proposed to make an application for leave to file and serve a written submission out of time?

   Should point 3 above be relevant, the application should also be forwarded to me by 5.00pm Tuesday, 28 August 2007.

   Depending upon your written response, if any, I will provide you and the solicitors for the husband with the date and time at which judgment will be given.”

9. No acknowledgment, let alone response, to the last mentioned email has been received by my Associate.

The costs application

1. Pursuant to s117(1) the general principle in this Court is that each party bears his or her own costs.

2. However, pursuant to s117(2) a discretionary power is provided to make an order for costs should there be circumstances which justify the order being made.  As was made clear in Penfold & Penfold a special circumstance is not required.[1]

   [1] Penfold & Penfold (1980) FLC 90-800 at 75,054

3. I find that there is a circumstance which justifies consideration as to whether an order for costs should be made.

4. That circumstance is that the wife’s amended application in the substantive proceedings was dismissed.

5. I now proceed to consider the relevant matters pursuant to s117(2A).

6. The financial circumstances of the husband are that he is a company director carrying on commercial undertakings by various commercial entities under his control referred to in the proceedings as the “[G] Group of Companies”.  The expert evidence adduced on behalf of the husband during the trial of the property settlement proceedings which ultimately resulted in agreement between the parties reflected in the orders made by consent on 30 April 2004 (“the consent orders”) and a financial agreement between them was that group of companies had a value of approximately $2,085,000.00.

7. The expert evidence on behalf of the wife was that the value was approximately $3.5 million.

8. The husband was represented by senior and junior counsel in the trial before me which occupied six days.

9. Accordingly, I find that the husband’s financial circumstances are of considerable value notwithstanding the absence of a financial statement.

10. The wife’s financial position appears to be precarious having regard to her Financial Statement sworn 18 January 2007 filed 23 January 2007.  It reveals that the wife does not have income and has total personal expenditure of approximately $2,807.00 per week.  There is a small deficiency of assets over liabilities.  The means by which the wife has been able to meet the expenditure without income is not explained in the document.  Implicitly, it may be that the personal loans have been utilised for that purpose.

11. No application was made to cross-examine either of the parties in relation to their respective financial circumstances.

12. The conduct of the parties in relation to interlocutory matters is relevant in terms of the various orders referred to in the written submissions on behalf of the husband earlier identified by me and the submissions made in relation to the circumstances relevant to those orders.

13. I accept the submissions made on behalf of the husband.  It appears that a number of unsuccessful applications were made on behalf of the wife.  In addition, the wife made a successful application that the trial listed to commence before Benjamin J on 10 July 2006 be adjourned.

14. Following the adjournment of the proceedings Benjamin J made an order that the wife’s solicitor meet the husband’s costs on an indemnity basis.

15. Consequently, the circumstances of that adjournment have been reflected in the costs order so made and will not be as it were “doubled up” for the purpose of the determination of the application now before me.

16. The wife has been wholly unsuccessful in the substantive proceedings.  Orders had been sought by the wife pursuant to s79A(1)(a) that the consent orders be set aside.  All of the grounds set forth in that sub-section were relied upon with the exception of duress.  The wife also sought an order that the financial agreement entered into between the parties also be set aside pursuant to the provisions of “section 90K and/or section 90KA”.  Ultimately, I was not required to consider the exercise of discretion as none of the grounds relied upon were established.  In addition, no submissions were made in relation to both or either of the last mentioned sections.

17. It had been part of the wife’s case prior to the commencement of the trial that she had been coerced by Senior Counsel then representing her into a settlement between the parties which ultimately was reflected in the consent orders and the Financial Agreement entered into by the parties on the same date.  That was a grave allegation to make as emphasised by the High Court in Clyne and the Bar Association of NSW.[2]  That case is referred to in terms of principle only, and not by way of a comparison with the facts.

    [2] Clyne and the Bar Association of NSW (1960) 104 CLR 186 at pp 200-201

18. It seems extraordinary that that allegation remained on foot to be only abandoned on the first day of the trial before me.

19. Given that I conducted a call-over of this matter as well as others on 18 January 2007 at which counsel for the wife appeared and I was informed that the matter was ready to proceed, one might have expected that by that stage both he and his instructing solicitor had considered the merits of that allegation and the prospects of success in establishing it.  Yet, it was never suggested to me by counsel for the wife that such an allegation was to be withdrawn or was under review.

Conclusion

1. I have determined to make an order for costs in favour of the husband on a party/party basis.  My reasons are as follows.

2. The wife was wholly unsuccessful in the substantive proceedings.

3. As is made clear in the Reasons for Judgment given 13 July 2007, none of the grounds relied upon by the wife pursuant to s79A(1)(a) was established.  Consequently, it was not necessary for me to consider the second stage of the proceedings, namely the exercise of discretion.[3]

   [3] Morrison (1995) FLC 92-573

4. In addition, the factual basis in support of miscarriage of justice due to “any other circumstance” whereby serious allegations were made against senior counsel previously briefed for the wife during the course of the trial before Carter J in April 2004 were apparently maintained to the point where they were only abandoned on the first day of the trial before me.  Preparation was required to be made on behalf of the husband to meet those allegations.  Counsel for the wife was silent as to the reasons for the case mounted for his client being substantially changed at that late stage.

5. The reality is that the costs application has proceeded on an undefended basis as no submissions were made on behalf of the wife.  No application was made on her behalf to extend the time to make such submissions.  Rule 11.02(2)(c) applies.

6. I have also taken into account the respective financial circumstances of the parties.  Notwithstanding the far superior position of the husband to that of the wife in that regard, I nonetheless consider that the weight to be attached to the wife’s financial position does not have the same significance as the weight which I attach to the failure in the wife’s case to even establish one of the grounds upon which she relied.

7. The wife had also made an application to set aside the financial agreement, yet her counsel did not make any submissions in relation to that application, nor was any explanation given for the lack of such submissions.

Indemnity costs

1. Indemnity costs are also sought on behalf of the husband.  I will not make an order on that basis.

2. I bear in mind the principles in relation to a possible departure from the ordinary rules relating to costs as set out by the Full Court in JEL and DDF (No. 2).[4]

   [4] JEL and DDF (No. 2) (2001) FLC 93-083 at 88,441.

3. I follow the caution that the Court “should not depart lightly” from those ordinary Rules “and the circumstances justifying the departure should be of an exceptional kind”.[5]

   [5] ibid, JEL.

4. For that purpose, I have taken into account and given weight to the circumstance that two of the principal grounds relied upon by the wife, namely “suppression of evidence” and “false evidence” depended largely upon the evidence of the wife’s witness, Ms S being accepted.  Ultimately, it was not, although her evidence-in-chief appeared to be plausible.

5. I have also taken into account that the wife’s case in relation to her alleged lack of proficiency in English for the purpose of understanding the relevant documentation and the surrounding circumstances failed and that there was little merit in those allegations for the reasons set forth in the Reason for Judgment delivered 13 July 2007.

6. However, notwithstanding all of the matters referred to in relation to the grounds relied upon by the wife to which I have made reference and the manner in which the case was conducted on her behalf, I do attach considerable weight to the stark difference between the financial circumstances of the parties to which I have referred.

7. Whilst I consider there is substance in the application of the husband that costs be awarded on an indemnity basis, for the reasons stated by me, I will not make an order in those terms.

Costs previously ordered or reserved

1. My determination in relation to each of the individual orders is as follows.

Orders – 8 December 2004

1. Costs were reserved.  In my view, a circumstance has not been established to provide the basis for departure from the general rule that each party bears his or her own costs.  Consequently, an order for costs will not be made.

Orders – 18 March 2005

1. Joske J had fixed the husband’s costs at $8,700.00, reserving the question of the wife’s payment.

2. Funds are held by the husband’s solicitors otherwise accountable to the wife.

3. There was an absence of submissions on the wife’s behalf notwithstanding the directions that I made.

4. Accordingly, I will make an order that the husband’s costs of $8,700.00 be satisfied from the funds so held.

Orders – 30 August 2005

1. I am not satisfied that a circumstance has been established apart from the general rule.

2. Consequently, an order for costs will not be made.

Orders – 9 June 2006

1. On that date the wife’s application to vacate the then existing trial dates was dismissed.

2. I was not referred to the reasons for judgment.

3. In the circumstances, I am not satisfied that s117(2) has been attracted.

4. Consequently, an order for costs will not be made.

Orders – 28 June 2006

1. A further unsuccessful application was made on behalf of the wife that the hearing dates be vacated.

2. I have not been referred to the reasons for judgment.

3. Accordingly, I am not satisfied that s117(2) is attracted.

Orders – 7 July 2006

1. The wife unsuccessfully sought a stay of proceedings.

2. I have not been referred to the reasons for judgment.

3. As a result, I am not satisfied that s117(2) is attracted.

Orders – 15 January 2007

1. My attention has not been drawn to a circumstance that justifies a departure from the general rule.

Orders – 2 February 2007

1. I am not satisfied that a circumstance has been established pursuant to s117(2).

2. There was substance in the relevant application made on behalf of the wife albeit, that orders were not made as sought.

Conclusion

1. Unfortunately, no submissions were made on behalf of the wife in relation to the costs application, despite the directions made and an opportunity to respond to my Associate’s email dated 27 August 2007 sent to the solicitors for both parties.

2. Apart from the lack of professional courtesy in not even acknowledging receipt of that email, let alone an explanation for the lack of submissions on behalf of the wife to whom the solicitors have carried responsibility, prima facie it may be that the wife has been abandoned by them in the face of a pending costs application.

3. In those circumstances, a copy of these Reasons for Judgment will be sent direct to the wife so that she will have an opportunity to be fully appraised of its content.  It will then be a matter for the wife as to whether she seeks explanation from her solicitors for their failure to provide submissions on her behalf, or whether she retains other solicitors or indeed, refers the matter by way of complaint to the Law Institute of Victoria for investigation.

The enforcement application

1. The wife seeks payment of the amounts outstanding by the husband pursuant to the consent orders.

2. In that regard, I refer to my Reasons for Judgment given 2 February 2007 which do not require reiteration.

3. I accept the submissions made on behalf of the husband that payment of those outstanding amounts may render nugatory orders for costs made in his favour given the content of the wife’s financial statement to which earlier reference has been made as well as the potential quantum of costs sought even on a party/party basis.

4. I also take into account the wife has not fully complied with the consent orders so far as her obligations were concerned.

1. I will make orders requiring the husband to cause his solicitors to take all steps necessary to have his costs taxed on a party/party basis as soon as possible, unless costs assessed are agreed upon.  It will always be open to the wife to make a fresh application should relevant circumstances change.  However, as the orders sought by her will not be made it follows that the enforcement application will be dismissed.

I certify that the preceding seventy-seven (77) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose

Associate

Dated:  31 August 2007