Guest and Boehm

[2018] FamCA 556

FAMILY COURT OF AUSTRALIA

GUEST & BOEHM [2018] FamCA 556

FAMILY LAW – COSTS – Section 117(2A) factors – de facto wife seeks an order that the de facto husband pay her costs on an indemnity basis – where the husband has consistently failed to provide disclosure – where the husband has failed to facilitate the valuation of assets - where the circumstances justify a departure from the general rule that each party bear their own costs – where indemnity costs ordered.

Family Law Rules 2004 (Cth)

Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Kohan & Kohan (1993) FLC 92-340

APPLICANT: Ms Guest

RESPONDENT: Mr Boehm

FILE NUMBER: MLC 12151 of 2015

DATE DELIVERED: 24 July 2018

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 6 July 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Mort

SOLICITOR FOR THE APPLICANT: Lander And Rogers Lawyers

COUNSEL FOR THE RESPONDENT: Mr Potter

SOLICITOR FOR THE RESPONDENT: Roberts Guest Lawyers

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: Mr Eidelson

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Westminster Lawyers Pty Ltd

Orders

1. The de facto husband pay the de facto wife’s costs of and incidental to the hearing on 6 July 2017 with such costs to be awarded on an indemnity basis in the sum of $5,000.

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 Guest & Boehm 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: MLC 4172  of 2017

Ms Guest

Applicant

And

Mr Boehm

Respondent

And

Independent Children’s Lawyer

REASONS FOR JUDGMENT 

1. On 22 January 2018 I listed this matter for final hearing before me commencing at 10:00 am on 9 July 2018 and set out a timetable for the filing of documents in preparation for the final hearing.  Those orders also provided for valuations of the real property and the appointment of Mr B to prepare valuations and reports as to the value of the husband’s interests in various entities.  The de facto husband (“the husband”) also consented to an order that he would cooperate fully with all reasonable requests made by Mr B or his nominee for the purposes of completing his assessment and valuation and provide an authority to his accountant Mr C by 4:00 pm on 29 January 2018 to provide information and documents to Mr B as requested by Mr B for the purposes of the preparation of his valuation. 

2. The husband also consented to an order that he pay for the valuations at first instance with the de facto wife (“the wife”) to pay her half share out of her property settlement and an order that within 21 days he disclose to the wife all documents in his power, possession and/or control which he is obliged to disclose pursuant to the Family Law Rules 2004 (Cth) (“the Rules”) and as may be requested by the wife’s solicitors in writing. A list of documents was annexed to the order.

3. On 16 May 2018, the matter was listed for mention before me in circumstances where the husband had failed to comply with my orders.  The parties in this case have sought both parenting orders and orders adjusting their property interests.  These proceedings have been on foot since late 2015.  Notwithstanding the husband’s failure to comply with my orders, the wife’s solicitor submitted that the matter could be made ready to proceed on 9 July 2018 and that I should not vacate the hearing date. The parties consented to a revised timetable for the preparation of valuations and the filing of their trial documents.  Whilst that timeline was tight, I was reassured that the parties would be in a position to proceed on 9 July 2018.  The husband also consented to an order that he pay the wife’s costs of and incidental to the hearing on 16 May 2018 fixed in the sum of $2,500.

4. With the hearing due to commence on 9 July 2018 the matter was again listed for mention before me on 6 July 2018, the husband having failed to produce the documentation required to complete the valuations and those valuations having not been prepared. It was inevitable in these circumstances that the trial date would have to be vacated. The parties were able to agree upon a partial property settlement and further orders in anticipation of the matter again being listed for final hearing. The husband conceded that an order should be made for him to pay the wife’s costs of the matter having to be mentioned in order to vacate the hearing and the relisting of the matter, as well as the Court again making orders for the preparation of the matter for that trial.

5. Although the husband agreed to pay the wife’s costs the parties could not agree upon the quantum of those costs. It was the husband’s case that those costs should be calculated in accordance with the scale, in the sum of $1,678.35, whereas the wife sought the payment of her costs on an indemnity basis in the sum of $5,000. The wife also sought an order for the payment of her costs by the husband out of his partial property settlement whereas the husband’s case was that those costs should be paid at the conclusion of the proceedings.

6. I am satisfied that the husband’s consent to an order was appropriate as there are circumstances in this case which justify the Court departing from the general rule that parties should bear their own costs.  Although the Court has the discretion to order indemnity costs, it is well settled, as articulated in Kohan & Kohan (1993) FLC 92-340 at page 79,614 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”.

7. In Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 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”. His Honour, in summary, gave the following examples:

   ·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.

8. The husband in this case has a long history of non-compliance with orders for discovery and has not met his obligation to provide full and frank disclosure in a timely manner, having failed to comply since 2 August 2016 when Stevenson J first made orders for discovery. The Court has, as a consequence of his non-compliance, already made a number of orders requiring the husband to pay the wife’s costs. Those costs have on each occasion been payable on a party-party basis. The husband has also not filed a Financial Statement despite orders being made on 30 November 2016 requiring him to do so.  

9. Counsel for the husband referred me to and relied upon his client’s affidavit filed 15 May 2018 in anticipation of the mention of the matter before me on 16 May 2018.  In particular, he relied upon his client’s evidence that he had unexpectedly been placed in a financial position that meant he could no longer fund the various valuations at first instance. However I was also advised by counsel for the husband that his client had borrowed the funds necessary to pay the outstanding legal costs for litigation in other courts referred to in his affidavit. The husband did not explain how it was that he could borrow the funds necessary for this purpose but not the funds necessary to meet the cost of the valuations in this case, orders for their preparation having been extant for over a year.

10. The husband also deposed that he had not been able to produce the documents required by the single expert valuer because his accountant had suffered a heart attack in mid-April, and having been hospitalised for a number of weeks and unable to work it was left to his partner to produce the required documents.

11. Neither of these explanations explain why, after the Court made orders by consent on 16 May 2018, the husband has still not complied as a result of which the matter is not able to proceed on 9 July 2018.

12. The husband has again failed to comply with the orders notwithstanding the previous orders requiring him to pay the wife’s costs. The husband’s conduct has wasted the Court’s time and in my view continues to prejudice the wife. I am satisfied that the husband’s ongoing non-compliance notwithstanding the Court’s various orders for costs does amount to exceptional circumstances which in my view justify the Court departing from the general rule that costs be ordered on a party-party basis.

13. Rule 19.08(3) of the Rules provide that “a party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement”. A copy of both the solicitor’s cost agreement and counsel’s cost agreement was forwarded to my chambers.

14. Counsel for the wife submitted that the husband’s conduct of these proceedings is intended to drain the wife’s resources. Although I am not in a position to make findings as to whether that is the husband’s intention, I am satisfied that the costs I propose to order should be paid out of the husband’s partial property settlement. The wife has incurred these costs as a direct result of the husband’s non-compliance, she already has outstanding legal costs and in circumstances where the husband has made unilateral decisions with respect to the application of borrowed funds to pay legal costs, I am satisfied that the wife should not have to wait for the payment of these costs.  In all the circumstances, I propose to accede to the wife’s application. 

I do certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 24 July 2018.

Associate: 

Date:  24 July 2018