Gaudry and Gaudry (No.2)

[2004] FMCAfam 649

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GAUDRY & GAUDRY (No.2) [2004] FMCAfam 649

FAMILY LAW – Costs – circumstances justifying order – whether costs should be awarded on indemnity basis – where no submissions have been made by the respondent.

Family Law Act 1975 (Cth), s.117
Federal Magistrates Court Rules 2001, Part 21

Gaudry & Gaudry [2004] FMCAfam 452
Munday & Bowman (1997) 22 Fam LR 321; FLC 92-784
Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248

Applicant: KIM SHARON GAUDRY

Respondent: ROBERT JOHN GAUDRY

File No: NCM 3889 of 2001

Delivered on: 19 November 2004

Delivered at: Sydney

Hearing date: 7 May 2004 and written submissions

Judgment of: Scarlett FM

REPRESENTATION

Counsel for the Applicant: Mr Graham

Solicitors for the Applicant: Stacks The Law Firm Port Macquarie

The Respondent: There was no appearance by or on behalf of the Respondent

ORDERS

1. The Respondent is to pay the Applicant’s costs in the sum of $14,518.50 together with interest on all amounts unpaid after three (3) months from the date of this Order at the rate specified in Part 22 of the Federal Magistrate Court Rules.

2. The amount of costs and interest if any owing to the Applicant by the Respondent is to be deducted from the amount payable to the respondent out of the proceeds of sale of the real property known as 698 Murphy Road Agnes Water in the State of Queensland.

3. The application is removed from the list of cases awaiting finalisation.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

NCM 3889 of 2001

KIM SHARON GAUDRY

Applicant

And

ROBERT JOHN GAUDRY

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an application by the wife for an order that the respondent husband should pay her costs of proceedings under s.79A of the Family Law Act. She seeks that the costs should be awarded on an indemnity basis and that they should be secured against the respondent’s share of the sale of the matrimonial property. The applicant asks that costs should be fixed in the sum of $17,401.70.

Background

1. There were property proceedings between the parties heard at

   
   

   Coffs Harbour on 30th August 2002. I made certain orders for the sale of a jointly owned property at 698 Murphy Road, Agnes Water, in the State of Queensland. Those orders provided that the property should be sold at a price agreed between the parties and the net proceeds should be divided between the parties. The wife later made an application under s. 79A that those orders should be set aside because the husband had since demolished the residence on the property.

2. I heard the wife’s application on 5th May 2004. Mr Graham of counsel appeared for the wife. The husband appeared in person and did not file any documents. He made oral submissions to the Court. I was satisfied that the husband had been the instigator of the demolition of the house without any satisfactory explanation. I was also satisfied that the value of the property had diminished to the extent of some $35,000.00. As a result, on 7th May 2004, I set aside order 2 made on 30th August 2002 and made fresh orders. The citation for the decision is [2004] FMCAfam 452.

3. The relevant orders that I made on 7th May 2004 are these:

   (2) Upon completion of the sale of the real property situate at and known as 698 Murphy Road, Agnes Water in the State of Queensland, the proceeds of sale are to be distributed as follows:

   (a) first, to pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of any of the said real property;

   (b) second, to discharge the mortgage and any other encumbrances affecting the real property, or any joint debts of the parties incurred during the marriage;

   (c) as to the sum of $21,000.00 to the wife; and

   (d) fourth, the balance then remaining is to be divided as to:

   (i) sixty per centum (60%) thereof to the wife; and

   (ii)Forty per centum (40%) thereof to the husband.

   (3) The parties are to forward short written submissions to the Court within one month setting out:

   (a) whether an order should be made that the Respondent pay the Applicant’s costs of these proceedings; and

   (b) If so, the amount of such order.

4. The wife’s solicitors have forwarded written submissions to the Court. The husband does not appear to have forwarded any documents to the Court at all.

The relevant law

1. The Family Law Act provides in s.117 that, subject to certain considerations, each party to proceedings should bear their own costs. Section 117(2) gives the court the power to make an order for costs if the court is of the opinion that there are circumstances that justify it in doing so, subject to sub-section (2A) and the applicable Rules of Court. Sub-section 117(2A) sets out the matters to which the court shall have regard in considering what order should be made under sub-section (2), if any. The applicable Rules of Court are those contained in Part 21 of the Rules.

Submissions

1. As I mentioned earlier, the Respondent has not made any submission at all. The Applicant’s solicitors have forwarded a written submission dated 3rd June 2004.

2. The Applicant submits that the proceedings before the Court were as a result of the Respondent’s actions in devaluing the matrimonial asset that was the subject of the orders of the 30th August 2002. The Applicant says that she was given no alternative than to file proceedings seeking relief as a result of the Respondent’s action.

3. The applicant contends that there should be an order in her favour for indemnity costs, because the Respondent’s actions make this an exceptional matter. The Applicant refers me to the decision of

   
   Munday & Bowman

   (1997) 22 FamLR 321; FLC 92-784, which contains a review of the authorities and principles. A court should not lightly depart from the ordinary rules relating to costs between party and party. The circumstances justifying any departure should be of an exceptional kind.

4. In Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225;

   
   

   118 ALR 248 there appear a number of examples of cases where indemnity costs may be properly be awarded:

   (a) Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success.

   (b) Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud.

   (c)  Evidence of particular misconduct causing loss of time to the court and to other parties.

   (d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.

   (e) An imprudent refusal of an offer to compromise.    

5. The Applicant submits that the conduct of the Respondent can be seen to come within those examples. The Applicant makes these points:

   a)The Respondent’s conduct in demolishing the house was in contempt of the original orders and was purely designed to prejudice the Applicant so that she would suffer financial loss;

   b)The Respondent provided no assistance to the court in filing any affidavits or any other documentation. Had he obtained legal advice then the proceedings may not have continued to hearing;

   c)The Respondent’s conduct at the hearing was centred not on the issue at hand but in addressing his personal opinions as to the Applicant’s honesty or otherwise and submitting that her legal advisers had continued the proceeding for their own reasons. He also submitted that the appearance by a barrister was “overkill”.

6. The Applicant submits that, but for the Respondent’s actions, she would not have had to commence these proceedings at all. She has been required to pay legal expenses in pursuit of her rightful position if the residence had not been demolished. She says that she has lost the opportunity to sell the property for its value of $110,000.00.

Conclusions

1. In deciding whether to make an order for costs, I must have regard to the relevant matters under s.117(2A) of the Family Law Act. Dealing first of all with the parties’ financial circumstances[1], I am aware that both parties are of modest means. Neither party is in receipt of assistance by way of legal aid[2].

   [1] S. 117(2A)(a)

   [2] S. 117(2A)(b)

2. The conduct of the parties to the proceedings in relation to the proceedings[3] is a relevant consideration, as the Respondent has failed to file any documents at all. I am satisfied that the proceedings were necessitated by the failure of the Respondent to comply with a previous order of the Court[4]. In fact, the Respondent has flagrantly disregarded the earlier orders. The Respondent has been wholly unsuccessful in these proceedings[5]. There are no other relevant matters.

   [3] S. 117(2A)(c)

   [4] S. 117(2A)(d)

   [5] S. 117(2A)(e)

3. Taking the above matters into account, I am of the opinion that the circumstances justify my making an order for costs in favour of the Applicant. I am not satisfied that the circumstances justify the making of an order for indemnity costs.

4. I propose to make an order for costs on the basis of the amounts set out in Schedule 1 of the Rules. I calculate that the appropriate amount is $6,470.00 together with disbursements amounting to another $8,048.50. I order that the Respondent is to pay the Applicant’s costs in the sum of $14, 518.50.

5. The Applicant asks that the order for costs should be secured against the Respondent’s share of the sale of the matrimonial property. It is easy to understand why the Applicant would seek this order. The conduct of the Respondent to date gives me no confidence that he will pay the costs voluntarily. I am satisfied that the costs should be paid out of the Respondent’s share of the proceeds of sale.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Scarlett FM

Associate: 

Date:  15 November 2004