Harcourt & Langham (No 2)

[2012] FamCA 524

FAMILY COURT OF AUSTRALIA

HARCOURT & LANGHAM (NO. 2) [2012] FamCA 524

FAMILY LAW - COSTS – order for costs on a party-party basis

Family Law Act 1975 (Cth)

Colgate – Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Kohan & Kohan (1993) FLC 92-340
Stephen and Stephens and Anor [2010] FamCAFC 172

APPLICANT: Mr Harcourt

RESPONDENT: Ms Langham

FILE NUMBER: MLC 3385 of 2011

DATE DELIVERED: 11 July 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: By written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Edward

SOLICITOR FOR THE APPLICANT: Slater & Gordon

COUNSEL FOR THE RESPONDENT: Mr Salamanca

SOLICITOR FOR THE RESPONDENT: Taussig Cherrie Fildes

IT IS ORDERED THAT

1. Failing agreement as to costs within 28 days from the date of these orders or such further time as may be agreed between the parties in writing, the wife's costs of and incidental to the husband’s application in a case filed 17 May 2012 together with her costs of and incidental to this application for costs be assessed as between parties pursuant to the provisions of Chapter 19 of the Family Law Rules 2004 and when so assessed be forthwith paid by the husband.

2. The wife’s application for costs be otherwise dismissed.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel including solicitor acting as counsel.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Harcourt & Langham (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 3385  of 2011

Mr Harcourt

Applicant

And

Ms Langham

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 29 May 2012 I dismissed the husband’s application in a case filed 17 May 2012 and made orders by consent in accordance with the orders sought by the wife in her response filed that day. The wife now seeks the costs of and incidental to the husband’s application and her response. The wife seeks that the costs be paid on an indemnity basis.

2. The general rule is that each party to proceedings in this Court bears his or her own costs. That general rule is subject to s117(2) of the Family Law Act 1975 (Cth), which provides that if the Court is of the opinion that there are circumstances that justify it doing so, it may make such order as to costs as it considers just. Section 117(2A) sets out the matters the Court must have regard to in determining what, if any, orders should be made for costs, in so far as they are relevant. There is no one factor that must be present nor is it necessary for there to be more than one factor present and the weight to be given to any particular factor is a matter for the court in each particular case.

3. In most cases, orders for costs are made on a party and party basis, however the Court does have discretion to order indemnity costs. The decision to order indemnity costs should not be taken lightly and there must be some “special or unusual feature in the case to justify the court in departing from ordinary practice” (Colgate – Palmolive v Cussons Pty Ltd (1993) 46 FCR 225.) In Kohan & Kohan (1993) FLC 92-340 at p.79,614 the Full Court held that the circumstances justifying that departure should be of an exceptional kind.

4. On 23 February 2012  the husband filed an application seeking orders that the valuation report prepared by Mr S dated 10 August 2011 in relation to E Unit Trust not be admitted into evidence for the purposes of the final hearing, that the wife reimburse the husband for his share of the fees paid to Mr S and that in the alternative the husband have leave to tender a valuation report prepared by Mr N in relation to E Unit Trust.

5. On 29 February 2012 I made orders by consent setting out a timetable for the parties to question Mr S and for Mr S and the parties’ shadow experts to confer. I otherwise made orders setting the matter down for final hearing before me on 1 August 2012.

6. The meeting between the single expert and the shadow experts has not yet taken place and in fact the husband sought the urgent listing of his application prior to the date fixed for that meeting.

7. In his application filed 17 May 2012 the husband sought orders that the valuation report prepared by the single expert not be admitted into evidence for the purposes of the final hearing. However on this occasion, rather than seeking leave to file and to rely upon the evidence of his own adversarial expert witness, the husband sought orders for the appointment of a further single expert to value the husband’s units in E Unit Trust Pty Ltd.

8. I am required to consider the financial circumstances of each of the parties. Neither of these parties is in receipt of legal aid. Mr Salamanca referred me to the husband’s Financial Statement in which he discloses total weekly income of $25,000 per week or approximately $1.3 million per annum. The wife according to her Financial Statement earns $3,733 or approximately $195,000 per annum. It was further submitted that there is a substantial pool of assets. I am satisfied that the husband would be able to meet any order I might make requiring him to pay the wife’s costs.

9. Mr Salamanca questioned the bona fides of the husband’s conduct of the proceedings. He submitted was that it was clear what was intended to be valued but that, notwithstanding that was the case, the husband sought to rely upon the fact that the single expert had valued the husband’s professional business rather than the units in what was the service trust. He said that the husband, having conceded that his professional business needed to be valued for the purposes of the hearing, in both his applications sought to value his units in the E Unit Trust. As pointed out by the Full Court in Stephen and Stephens and Anor [2010] FamCAFC 172 it is the party’s conduct as a litigant that is relevant to the issue of indemnity costs.

10. The proceedings were not necessitated by the failure of either party to comply with the orders, however in my view it is relevant that the husband issued a further application which was clearly intended to avoid the necessity for the conference of experts to which he had consented to only two months earlier. An application which was wholly unsuccessful. Conversely, the wife’s response was not only wholly successful, but the orders sought by the wife were made by consent.

11. It was the wife’s case that the husband was on notice as to costs. The wife’s solicitor annexed to her affidavit a copy of a letter from the husband’s solicitor dated 19 October 2011 in which he complained about discussions between the wife’s solicitors and the single expert in relation to the methodology used by the single expert, which discussions the husband’s solicitor said occurred without his knowledge, and advising as to his client’s belief that his business was worth only a fraction of the value attributed to it by the single expert. The husband’s solicitor foreshadowed an application along the lines of his application filed 23 February 2012. The wife’s solicitor responded by letter dated 25 October 2011 stating that:

    there is no basis to remove the single expert in this matter. This communication is an open letter and will be produced on the question of costs, should your client elect to initiate such proceedings.

12. It was submitted by the husband that evidence as to whether the valuation of the single expert is tainted by the communications between the single expert and the wife’s solicitor and the question as to the understanding of what the single expert was required to value needs to be tested and that on that basis the costs should be reserved for determination at the conclusion of the proceedings. 

13. Whilst the evidence with respect to the exact nature of the discussions between the wife’s solicitor and the single expert is untested, I have found that the husband would have understood that it was his business and not just the service trust that was to be valued. It is hard to reconcile the husband’s concession that his professional business should be valued with the husband’s submissions with respect to this issue both in support of his substantive application and this application and with the orders he sought for the appointment of a single expert to value the same units.

14. Even if the evidence is untested, in my view and having regard to the orders made by consent on 29 February 2012, the husband’s application was premature. As stated in my reasons for judgment it is always possible that the single expert and the parties shadow experts might reach agreement as to value.

15. In all of the circumstances I am satisfied that an order for costs is justified. However I am not satisfied that the circumstances of this case are so exceptional or as submitted on behalf of the wife that the husband’s conduct as a litigant would justify my departing from ordinary practice and making an order for indemnity costs.

16. Mr Salamanca submitted that the husband should be required to pay the costs as ordered within a reasonable time.

17. I am satisfied that the husband has the capacity to meet an order for costs and therefore I propose to order that the husband pay the wife’s costs within 28 days from the date of this order, such costs to be as agreed and failing agreement, as assessed.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 11 July 2012

Associate: 

Date:  11 July 2012