Greene and Greene (No.2)
[2011] FMCAfam 473
•20 June 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GREENE & GREENE (No.2) | [2011] FMCAfam 473 |
| FAMILY LAW – Costs – application for costs – indemnity costs – whether indemnity costs appropriate – party and party costs – time to pay. |
| Family Law Act 1975 (Cth), s.117 Federal Magistrates Court Rules 2001, r.21.02, Sch.1 |
| Greene & Greene [2011] FMCAfam 13 Colgate Palmolive Pty Ltd v Cussons Ltd (1993) 46 FCR 225 |
| Applicant: | MS GREENE |
| Respondent: | MR GREENE |
| File Number: | SYC 6651 of 2010 |
| Judgment of: | Scarlett FM |
| Hearing date: | 9 May 2011 |
| Date of Last Submission: | 9 May 2011 |
| Delivered at: | Sydney |
| Delivered on: | 20 June 2011 |
REPRESENTATION
| Solicitors for the Applicant: | Watts McCray |
| Solicitors for the Respondent: | Etheringtons Solicitors |
ORDERS
The Wife is to pay the Husband’s costs of the Interim Application heard on 21 December 2010 and dismissed on 11 January 2011fixed in the sum of $7,000.00.
The said costs are to be paid at the conclusion of the wife’s substantive Application.
AND IT IS FURTHER ORDERED THAT
Within seven days of the date of these orders the Respondent is to respond to correspondence from the Wife’s solicitors dated 23 March 2011 regarding the appointment of a single expert or single experts as appropriate to undertake the valuation of the following assets:
(a)The former matrimonial home at Property B
(b)The company known as [A] Pty Ltd
(c)Plant and equipment held by [A] Pty Ltd
(d)The [Greene] Superannuation Fund
If the parties fail to reach an agreement within fourteen (14) days of the date of these Orders regarding the appointment of a single expert to value the former matrimonial home, the said company, the said plant and equipment and the [Greene] Superannuation Fund then the Wife is to nominate three (3) experts in respect of the various assets for the Husband’s consideration.
If the husband fails to select an expert in respect of each of the assets within a further period of fourteen (14) days then the Wife is at liberty to determine the appointment of such expert or experts.
The application is to be listed for final hearing on a date to be fixed.
NOTATION
A.The Court notes that the Wife seeks to file an Application for Parenting Orders.
IT IS NOTED that publication of this judgment under the pseudonym Greene & Greene (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 6651 of 2010
| MS GREENE |
Applicant
And
| MR GREENE |
Respondent
REASONS FOR JUDGMENT
This is an application for costs arising out of an Application for exclusive occupation of the matrimonial home that was heard on
21st December 2010. On 11th January 2011 the application was dismissed (Greene & Greene[1]).
[1] [2011] FMCAfam 13
The husband, who was the respondent to the Application and is the respondent to the substantive Application, has filed an Application in a Case in which he seeks that the applicant pay the indemnity costs of the respondent “with respect to the wholly unsuccessful interim proceedings instituted by the Application for exclusive occupation of the property known as Property B, in the State of New South Wales”.
The Application for costs is opposed:
a)in its entirety; and
b)as to costs on an indemnity basis.
The Application for costs is supported by an affidavit of the husband’s solicitor, Mr Etherington, affirmed on 4th February 2011, to which a number of items of correspondence are annexed, seeking the amount of $18, 177.73 by way of costs and disbursements on an indemnity basis. This amount is made up as follows:
a)Counsel’s fees $7,012.50;
b)Solicitors’ costs $11,165.23
Total $18,177.73
The correspondence annexed to the affidavit consists of a number of letters from the parties’ solicitors to each other between 12th October 2010 and 28th January 2011.
The wife’s solicitors wrote to the husband’s solicitors on 12 October 2010. In a letter headed marked ‘Without Prejudice Save As To Costs’, the wife’s solicitors informed the husband’s solicitors that they were instructed to file an application for exclusive occupation of the home if they did not receive confirmation that the husband would vacate the premises, being a cottage on the property, by Thursday 14 October 2010.
The letter goes on to say;
We are further instructed to rely on this correspondence with respect to an application for costs.[2]
[2] Affidavit of P.M. Etherington 4.2.2011 Annexure “A”
The husband’s solicitors replied by letter dated 21 October 2010 in which they said:
However, for your client to bring an application for exclusive occupation in a situation produced by your client’s conduct would be of considerable concern to the court.[3]
[3] Ibid Annexure “B”
The letter went on to point out why the husband’s solicitors believed that the threatened application for exclusive occupation would fail.
On 21st October 2010 the wife’s Initiating Application, which included interim orders for exclusive occupation of the property, was filed at the Court.
On 7th December 2010 the husband’s solicitors wrote to the wife’s solicitors, urging the wife to consider withdrawing her application for exclusive occupation. The letter went on to say:
In the event that your client withdraws the application, we have instructions that we will not seek our client’s costs. However, should your client elect to proceed with the application and fails at hearing then we put you on notice that we will seek our client’s costs against your client on an indemnity basis.[4]
[4] Affidavit of P.M. Etherington 4.2.2011 Annexure “C”
The wife’s solicitors replied the next day, saying;
In the interest of the children’s wellbeing, we again invite your client to reconsider his position and consent to provide our client with exclusive occupation of the former matrimonial home pending a resolution of these proceedings. We put your client on notice that should your client continue to refuse to do so, this letter and any relevant correspondence will be relied upon to seek costs against your client on an indemnity basis at the Interim Hearing on 13 December 2010.[5]
[5] Ibid Annexure “D”
The wife’s application was returnable at this Court on 13th December 2010. On that date the Court was asked for an early hearing and the application was listed for hearing on 21st December 2010.
The application was heard on 21st December. Both parties were represented by counsel. I declined to make an ex tempore order and reserved the decision until 11th January 2011.
On 11th January 2011 the application was dismissed. I also made orders along the lines of those sought by the husband in his Amended Response filed on 20th December 2010, that:
(2) Until Further Order the applicant wife is to reside in the former matrimonial home on the land known as Property B in the State of New South Wales to the exclusion of the respondent husband and the respondent husband is to reside in the nearby cottage on the land known as Property B in the State of new South Wales to the exclusion of the applicant wife.
(3) Until Further Order the parties are restrained from approaching one another except for the purpose of communicating about matters directly relevant to the welfare of the children of the marriage.
The husband’s solicitors wrote to the wife’s solicitors on 28th January 2011. The letter was headed Without prejudice save as to costs and sought the payment of the husband’s costs in the sum of $18,177.73. The letter went to say:
In the event that your client does not accept this figure, then we will file an application for costs without further notice to your firm…Obviously, our client will be seeking an indemnity costs order against your firm.[6]
[6] Affidavit of P.M. Etherington 4.2.2011 Annexure “F”
The husband filed the Application in a Case seeking indemnity costs on 7th February 2011.
Submissions
Mr Etherington, who appeared for the husband, submitted that the wife had threatened the husband with a costs order, including indemnity costs, before the hearing. The wife had been given an opportunity to withdraw but had persisted with “a hopeless application”, which was never going to succeed. The Court’s time was “well and truly wasted” and an order for cost should be made on an indemnity basis.
Ms Smyth, for the wife, submitted that the Court should have regard to the requirements of s.117 of the Family Law Act 1975 and, amongst other things, consider the wife’s financial situation. She receives child support in the sum of $178.00 per week and has the majority care of two of the parties’ children.
The wife’s application had been brought with the intention of minimising conflict between the parties for the benefit of the children. It was based very soundly on the need for some rules to be put in place. Ms Smyth tendered a copy of a letter from the wife’s solicitors to the husband’s solicitors dated 5th May 2011, which noted that they had not replied to four letters dated 4th February, 18th March and two of
23rd March 2011, relating to the following issues:
a)the costs application;
b)the wife’s immediate financial needs;
c)values of various assets and the need to obtain a single expert’s opinion; and
d)parenting arrangements for the parties’ youngest child.
Further, it was submitted that even if the Court considered that a costs order should be made, costs should be on a party and party basis and not on an indemnity basis. The circumstances did not warrant an order for costs on an indemnity basis, as set out in Colgate Palmolive Company v Cussons Pty Ltd[7]).
[7] (1993) 46 FCR 225)
If costs were to be awarded, they should be on the scale set out in Schedule 1 of the Rules.
It was submitted that the appropriate figure for costs, if awarded, would be $2785.00.
The Relevant Law
It is well established that, when dealing with an application for costs, a Court should first consider whether an order for costs should be made at all. If the Court decides that it is appropriate to make an order for costs against a party, then the question of quantum should be decided. This will involve a consideration of whether there should be a departure from the usual practice of awarding costs on a party and party basis.
Costs do not follow the event in proceedings under the Family Law Act 1975. Under s.117 of the Act, each party to proceedings shall bear his or her own costs, unless the Court is of the opinion that there are circumstances that justify a costs order (s.117(2)).
The Court is required to have regard to the matters set out in s.117(2A), including the parties’ financial circumstances, whether party is legally aided, the parties’ conduct in relation to the proceedings, whether a party had failed to comply with previous court orders, whether a party had been wholly unsuccessful and whether either party had made a written offer of settlement.
Costs are usually awarded on a party and party basis. The circumstances in which the Court in the proper exercise of its discretion may depart from the normal practice of making an order for costs on a party and party basis are set out in the decision of Sheppard J in Colgate Palmolive Company & Anor v Cussons Pty Ltd[8] at 232-234.
[8] (1993) 46 FCR 225
Those principles appear to be as follows:
The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis…
The circumstances of the case must be such as to warrant the Court in departing from the usual course…
…there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice.[9]
[9] (1993) 46 FCR 225 at 233
Sheppard J went to note some of the circumstances which had been thought to warrant the exercise of the discretion to award costs on an indemnity basis:
· The making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud
· Evidence of particular misconduct that causes loss of time to the Court and to other parties
· The fact that the proceedings were 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
· An award of costs against a contemnor[10]
[10] (1993) 46 FCR 225 at 233-234
The provisions of Subrule 21.02(2) are relevant:
In making an order for costs in a proceeding, the Court may:
(a) set the amount of costs; or
(b) set the method by which the costs are to be calculated; or
(c) refer the costs for taxation under Order 62 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
(d) set a time for payment of the costs, which may be before the proceeding is concluded.
Conclusions
The application for exclusive occupancy was dismissed. I am of the opinion that there are circumstances that justify the Court in making an order that the wife pay the husband’s costs for these reasons:
a)I have taken account of the parties’ financial circumstances and I note that the proceedings between them involve financial matters; whilst a party may suffer hardship if required to pay costs within a short period of time, I propose to allow reasonable time to pay;
b)Neither of the parties is in receipt of assistance by way of legal aid;
c)The wife persisted in bringing an application for exclusive occupation in circumstances where it must have been obvious that her chances of success were slim, at best;
d)There was no failure by a party to obey an order of the Court;
e)The wife was wholly unsuccessful in her application, as the Orders made were essentially those that the husband sought in his Amended Response filed the day before the interim hearing; and
f)The husband’s solicitors had written and offered the wife an opportunity to withdraw the application without a costs order.
Thus, I am satisfied that a costs order should be made against the wife.
I am not satisfied that the circumstances of the case are such as to warrant departing from the usual course that costs should be assessed on a party and party basis. There are no special or unusual features that would justify the Court in awarding costs on an indemnity basis.
True it is that the wife refused an offer to settle the matter made on
7th December 2010. The offer was to withdraw the application for exclusive occupancy on the basis that the husband would not seek an order for costs if she did so. This is an offer of settlement, commonly referred to in the law as the parties “walking away” from the proceedings.The wife did not agree to that offer, but I am not satisfied that this should be characterised as such an “imprudent refusal of an offer to compromise” that would justify awarding costs on an indemnity basis. The fact that there were mutual threats of indemnity costs made does not of itself justify an award on that basis.
The Court has power under Rule 21.02 to set the amount of costs to be awarded and I am satisfied that this would be the quickest and least costly step to take.
Costs are discretionary, and the Court is not bound by the fixed costs in Schedule 1.
This was a matter where each party briefed counsel. I am of a view that this was appropriate, bearing in mind the nature of the application.
In my view, taking into account counsel’s fees, and noting the work that was done in preparation for hearing, the figure for costs should be set at $7,000.00.
Time to Pay
The amount of costs should be paid at the conclusion of the proceedings.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Date: 20 June 2011
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