Green and Wall (No. 2)

[2018] FamCA 864

FAMILY COURT OF AUSTRALIA

GREEN & WALL (NO. 2) [2018] FamCA 864

FAMILY LAW – COSTS – section 117(2A) factors-consent orders made in 2016 providing for a division of property – where the husband failed to comply with the orders - where the husband did not appear despite being ordered to do so– where his failure to comply necessitated the wife bringing an application for contravention – party – party costs ordered

Brown & Brown (1998) FLC 92-822
Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Kohan & Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784
Nada and Nettle (Costs) (2014) FLC 93-612
Stephens & Stephens (2010) 44 Fam LR 117
Yunghanns & Yunghanns (2000) FLC 93-029

APPLICANT: Ms Green

RESPONDENT: Ms Wall

FILE NUMBER: MLC 9764 of 2014

DATE DELIVERED: 14 September 2018

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: Written Submissions in Chambers

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Mills Oakley

SOLICITOR FOR THE RESPONDENT: N/A

Orders

1. The husband pay the wife’s costs of and incidental to her Application for Contravention filed 22 December 2017 on a party-party basis.

2. The question of the quantum of the wife’s costs be reserved.

3. By 4.00 pm on 27 September 2018 the wife file and serve upon the husband an itemised account of her costs of and incidental to her Application for Contravention filed 22 December 2017 on a party-party basis.

4. The question as to the quantum of the wife’s costs be otherwise adjourned for mention before Justice Macmillan at 10.00 am on 11 October 2018. 

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 Green & Wall (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 MELBOURNE

FILE NUMBER: MLC9674 of 2014

Ms Green

Applicant

And

Ms Wall

Respondent

REASONS FOR JUDGMENT

1. On 27 April 2016, I made final orders by consent pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) effecting a property division between the parties. Pursuant to those orders, the husband was required to make two payments to the wife, the first being in the sum of $100,000 and the second payment in the sum of $300,000. The husband made the first payment but not the second payment. The wife filed an Application for Contravention on 22 December 2017. On 17 May 2018, I found that the husband had contravened paragraphs 1(b) and 3 of the final orders made on 27 April 2016 and made orders compelling the husband’s compliance with the final orders.

2. On 17 May 2018, I made further orders for the filing of written submissions in support of any application with respect to the costs of and incidental to the wife’s Application for Contravention. On 1 June 2018, the wife filed submissions seeking an order that the husband pay her costs on an indemnity basis in the sum of $109,975.29. In the alternatives, the wife seeks the husband pay the sum of $68,956.65, this representing solicitor fees at scale and counsel’s fees on an indemnity basis or failing that, costs on a party-party basis in the sum of $65,729.54.

3. The husband has not filed a submission in reply to the wife’s application for costs.

Legal Principles

1. The general rule in proceedings in this Court is that parties each bear their own costs (s 117(1) of the Act). However the Court may make such order for costs as it considers just if it is satisfied that there are circumstances which justify it departing from the general rule that each party bear their own costs (s 117(2) of the Act).

2. In determining what if any order it should make for costs the Court must have regard to the following matters (s 117(2A) of the Act):

   (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.

3. The Court’s discretion is broad and although the Court must consider all of the matters in s 117(2A) of the Act, as Kay J said in Brown & Brown (1998) FLC 92-822 no one of those matters in s 117(2A) takes precedence over any another and one factor may be determinative.

Discussion

1. The wife relies on the following circumstances in support of her application for costs:

   ·the financial circumstances of the parties;

   ·the conduct of the husband;

   ·the husband’s failure to comply with previous orders;

   ·the husband was wholly unsuccessful and;

   ·her offers to settle.

Section 117(2A)(a) and (b) of the Act: The financial circumstances of each of the parties to the proceedings and whether either party was in receipt of legal aid

1. Neither the husband nor the wife in this case was in receipt of legal aid.

2. At the time of the final orders the parties had property with an estimated value of $2.7 million and superannuation entitlements of some $3.2 million held by the parties in both Australia and the United States, where the husband now lives.

3. Both the husband and the wife received or retained significant property and/or superannuation entitlements pursuant to the final property orders. At the time the final orders were made the husband was in employment earning a substantial income. In his financial statement filed on 7 March 2016 he disclosed a weekly income of $6,807. The husband did not participate in the enforcement proceedings and as such there is no evidence to suggest that there has been any change in his financial circumstances. I am satisfied that the husband has the capacity to meet an order for costs.

4. The wife is also employed albeit based upon the evidence before me her income is significantly less than that of the husband. Although pursuant to the orders she retained a real property in Suburb R that property is subject to a significant mortgage and she requires the husband’s compliance with the orders to reduce the mortgage so that she can refinance the property. Whilst the wife has both property and income I am satisfied that the costs she has incurred in enforcing the orders places a significant financial burden upon her, denying her of the fruits of the litigation to which she is entitled.

Section 117(2A)(c) of the Act: The conduct of the parties to the proceedings in relation to the proceedings

1. I am satisfied that the husband whilst not required to file any answering material failed to respond to correspondence from the wife’s solicitor with respect to his compliance with the orders and her application for contravention and failed to personally appear on three occasions despite being ordered to do so on two occasions and that his failure to participate in the proceedings added to the costs of those proceedings incurred by the wife.

2. Whilst the wife incurred additional costs as a result of having to engage attorneys to defend the proceedings instituted by the husband it is the husband’s conduct in these proceedings which is relevant for the purposes of the matters I must determine. 

Section 117(2A)(d) of the Act: Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court

1. I found in my reasons for judgement delivered on 17 may 2018 the husband deliberately attempted to avoid the obligations imposed upon him by the final property orders, orders which were made by consent and did not file any material pointing to any mitigating circumstance that might explain his failure to comply. I am satisfied that the wife’s Application for Contravention was necessitated by the husband’s failure to comply with the orders.

Section 117(2A)(e) of the Act: Whether any party to the proceedings has been wholly unsuccessful in the proceedings

1. The husband has been wholly unsuccessful in the proceedings.  

Section 117(2A)(f) of the Act: 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;

1. It was submitted on the wife’s behalf that the various letters to which I have referred to in my reasons delivered on 17 May 2018 constituted offers to settle the proceedings. I do not accept that submission. In my view those letters were for the purposes of  seeking the husband’s compliance with the orders rather than offers to settle the matter.

Should the Court make an order for costs?

1. Having considered the relevant factors in s 117(2A) of the Act, I am satisfied that there are circumstances in this case that justify a departure from the general principle that each party bear their own costs. The husband consented to orders in 2016 where he agreed to make payments to the wife. He was represented by experienced counsel at the time. The husband has not only failed to comply with the orders but has actively taken steps by way of instituting proceedings in E State so as to circumvent the obligations placed upon him by the final property orders. The wife has been put to the expense of having to file an Application for Contravention in order to ensure the husband’s compliance with the final property orders. In all of the circumstances I propose to make an order for costs in the wife’s favour.

Indemnity Costs

1. The general rule is that when a party is ordered to pay another party’s costs those costs should be payable on a party-party basis.

2. The wife in this case seeks an order that the husband pay her costs on an indemnity basis. Whilst there is a discretion to depart from the general rule and order costs on an indemnity basis it is well settled that the Court “…should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind” Kohan & Kohan (1993) FLC 92-340 at page 79,614 (“Kohan”).

3. The wife relied upon the decision of Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate”) in support of her submission that costs be ordered on an indemnity basis. In Colgate Sheppard J observed that there should be some “special or unusual feature in the case to justify the Court in departing from the ordinary practice”. Holden CJ in Munday v Bowman (1997) FLC 92-784 usefully summarised some of the circumstances which might warrant the court departing from the general rule and making an order for indemnity costs as follows:

   ·the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;

   ·misconduct that causes loss of time to the Court and to other parties;

   ·proceedings commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law;

   ·the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;

   ·an imprudent refusal of an offer to compromise; and

   ·an award of costs on an indemnity basis against a contemnor.

4. That the husband failed to comply with orders of this Court and the wife was required to file an Application for Contravention does not amount to exceptional circumstances. Notwithstanding that I am satisfied that the husband did take active steps to circumvent this Courts orders it is the circumstances of this application that are relevant and not the circumstances of the proceedings instituted by the husband in E State.

5. I am not satisfied that this is a case in which there are circumstances which warrant the Court departing from the general rule and making an order for indemnity costs and propose to order costs on a party-party basis.

6. Rule 19.08 of the Family Law Rules (2004) (Cth) (“the Rules”) provides for the Court to make an order for costs of a specific amount, as assessed on a particular basis, to be calculated in accordance with a stated method or to be assessed.

7. The wife seeks costs calculated in accordance with Schedule 3 of the Rules in the sum of $65,729.54. However although those costs are said to calculated in accordance with the scale and the number is very specific no details have been provided. In order to avoid the delays and uncertainty of an assessment I propose to fix the sum however I will first require the wife to provide a breakdown of those costs to enable me to do so.  

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 14 September 2018.

Associate: 

Date:  14 September 2018