FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Gazi & Strobel [2022] FedCFamC1F 166
File number: SYC 4715 of 2020 Judgment of: MCGUIRE J Date of judgment: 29 March 2022 Catchwords: FAMILY LAW – COSTS – Application by Trustee in Bankruptcy seeking an order that the first respondent de facto husband pay the costs of an interlocutory application on an indemnity basis or in the alternative on a party and party basis - Order that the first respondent de facto husband pay the applicant Trustee in Bankruptcy’s costs from the 15 July 2020 on a party and party basis Legislation: Family Law Act 1975 (Cth) s 117(2A) Cases cited: Brown v Brown (1998) FLC 92–822
Colgate–Palmolive Co and Anor v Cussons Pty Ltd (1993) 46 FCR 225
Cooper & Oakley (No.2) [2012] FamCAFC 187
Kohan & Kohan (1993) FLC 92 – 340
Munday v Bowman (1997) FLC 92-784
Nada & Nettle (Costs) (2014) FLC 93-612
Sfakianakis & Sfakianakis (2019) 59 FLR 419
Worth & Worth (No.2) (2019) FLC 93-910
Division: Division 1 First Instance Number of paragraphs: 39 Date of hearing: 25 February 2022 Place: Hobart delivered in Melbourne Counsel for the Applicant: Mr Ridley Solicitor for the Applicant: Matthews Folbigg Pty Ltd Solicitor for the First Respondent: Litigant in Person Counsel for the Second Respondent: Mr Benson Solicitor for the Second Respondent: A R Conolly & Company Lawyers ORDERS
SYC 4715 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR SHELLBACK AS TRUSTEE FOR THE BANKRUPT ESTATE OF STROBEL
Applicant
AND: MR GAZI
First Respondent
C PTY LTD
Second Respondent
ORDER MADE BY:
MCGUIRE J
DATE OF ORDER:
29 MARCH 2022
THE COURT ORDERS THAT:
1.That the respondent de facto husband, Mr Gazi, pay the applicant trustee, Mr Shellback for the Bankrupt Estate of Strobel, costs of and incidental to the interim application such costs to be agreed or taxed/assessed as and from the 15 July 2020 in accordance with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) and on a party/party basis.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym of Gazi & Strobel has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McGuire J
APPLICATIONS
This is an application in a proceeding filed by Mr Shellback…
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CaseChat Overview and Summary
The legal issues before the court included whether the circumstances justified a costs order and, if so, the appropriate basis for such an order. The court considered the financial circumstances of each party, the conduct of the parties during the proceedings, and the statutory guidelines provided by section 117(2A) of the Act. The court acknowledged that while impecuniosity was not a bar to a costs order, it was a relevant factor. Additionally, the court noted the absence of legal aid for the respondent, which influenced the assessment of the respondent's ability to bear costs.
The court's reasoning reflected a nuanced approach to cost orders, emphasizing that the words “such order as to costs... as the court considers just” permitted flexibility in crafting orders that were fair given the circumstances. The court rejected the notion that a costs order could only be made on a party-and-party basis or on an indemnity basis, pointing out that a "special costs order" could also be appropriate. The court was unable to determine the financial position of the respondent definitively without further evidence but recognised the importance of considering the parties' conduct in relation to the proceedings.
The final orders of the court would reflect the discretion exercised in determining the appropriate costs order, taking into account the specific circumstances of the case. The court's decision underscored the broad scope of its discretion under section 117(2) of the Family Law Act 1975 (Cth), allowing for tailored cost orders that could include a party-and-party basis, an indemnity basis, or a specially tailored order that suited the unique facts of the case.
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Ratio Decidendi
Legal Principle Established
The above are examples only and the discretion remains more broadly open including as to whether an award for costs be made on an indemnity basis.[8] The breadth of discretion is evidenced by the decision of the Full Court in Sfakianakis & Sfakianakis[9] where their Honours state:[9]The ordinary position in proceedings under the Family Law Act 1975 (Cth) (“the Act”) is that each party is to bear his or her own costs (s 117(1)). Where the Court is of the opinion that circumstances justify it in doing so, the Court may make such order as to costs as it considers just (s 117(2)). Thus, an order may be made for the payment of costs on an indemnity basis, although such orders are exceptional…[10]It is, however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words “such order as to costs … as the court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well-known example is assessment on a trustee basis, which is more generous than party and party costs, but falls short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party costs nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a “special costs order”.CONSIDERATION[8] Worth & Worth (No.2) (2019) FLC 93-910.[9] (2019) 59 FLR 419.Section 117(2)(a) the financial circumstances of each of the parties to the proceedings The application for costs is by the trustee and in this sense it is neither necessary nor proper to comment on the applicant's financial position. The respondent de facto husband, however, claims to be impecunious. His submissions on his application were to the effect that his only financial asset or resource sits in the trust account of the applicant trustee, although the applicant trustee argues that the respondent de facto husband has recently disposed of real property of significant value and tenders the settlement statement of 23 February 2022 accordingly. I am unable at this stage and without cross-examination to determine with any certainty the financial position of the respondent de facto husband. It is well-established, however, that impecuniosity is not a bar to the Court making a costs order pursuant to s 117 of the Act.[10] Section 117(2A)(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[10] Nada & Nettle (Costs) (2014) FLC 93-612, per May, Ainslie-Wallace and Austin JJ at [11] and Cooper & Oakley (No.2) [2012] FamCAFC 187, per May, Thackray and Murphy JJ at [14]. The applicant trustee on the costs application is not, of course, in receipt of a grant of legal aid. Interestingly, the respondent de facto husband in this matter has previously sought adjournments so as to obtain legal advice and at times, on his claim, from a Legal Aid Commission. There is, however, no evidence that he is currently in receipt of a grant of legal aid and quite obviously he appeared on his own behalf on his interlocutory application and in response to this application for costs.Section 117(2A)(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