HARB & HARB

In the matter of HARB & HARB, Judge Harman of the Federal Circuit Court of Australia considered an application for costs arising out of family law proceedings that had involved an arbitration. The dispute centred on the wife's claim for costs on an indemnity basis, stemming from the husband's alleged non-compliance with disclosure obligations and prior court orders, which she contended significantly hampered her ability to conduct the litigation and resolve the case.

The primary legal issues before the court were whether it possessed the jurisdiction to award costs in circumstances where the matter had been referred to arbitration, the extent of an arbitrator's power to award costs and issue a section 128 certificate, and how to treat certain "addbacks" in light of section 75(2)(o) of the *Family Law Act 1975* (Cth). The court also had to determine whether the husband's conduct, including a negligent approach to business valuation, deficient disclosure, and "chicanery" to hide non-disclosure, warranted an award of costs on an indemnity basis, or at least a significant contribution on a party-party basis, considering the justice and equity between the parties and whether the husband had been wholly unsuccessful.

Judge Harman reasoned that while an arbitrator may have the power to award costs, the court retained jurisdiction to make orders concerning costs, particularly where the arbitration was part of a broader litigation process. The court found that the husband's conduct, including his obfuscation and failure to comply with prior orders, had necessitated the proceedings and prejudiced the wife's ability to conduct her case. Applying principles of justice and equity, and considering the husband's effective control over the parties' income and assets, the court determined that a substantial contribution to the wife's costs was warranted.

Consequently, the court ordered that the Husband pay to the Wife, as a contribution to her costs incurred in the proceedings on a party-party basis, the sum of $139,789.85. This sum was to be paid within 28 days, with interest to accrue thereafter at the rate prescribed by the Federal Circuit Court Rules. The court further ordered that this sum would be a charge upon the Husband's interest in specified company shares and a real estate property, to be discharged upon full payment.