Henricksen and Janz (No.2)
[2008] FMCAfam 1081
•3 October 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HENRICKSEN & JANZ (No.2) | [2008] FMCAfam 1081 |
| FAMILY LAW – Costs – application for indemnity costs – principles discussed. |
| Family Law Act 1975, ss.79A, 117 Federal Magistrates CourtRules rr.13.01, 13.02, 21.02, 21.11 Family Law Rules 19.08, 19.19 |
| Janz & Janz [2007] FMCAfam 876 Henricksen & Janz [2008] FMCAfam 866 Penfold v Penfold (1980) 144 CLR 311 I and I (No 2) (1995) FLC 92-625 McDonald and McDonald (1994) FLC 92-508 Kohan and Kohan (1993) FLC 92-340 Yunghanns v Yunghanns (2000) FLC 93-029 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 |
| Applicant: | MS HENRICKSEN |
| Respondent: | MR JANZ |
| File Number: | BRC 2587 of 2007 |
| Judgment of: | Wilson FM |
| Hearing date: | 25 September 2008 |
| Date of Last Submission: | 25 September 2008 |
| Delivered at: | Brisbane |
| Delivered on: | 3 October 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hackett |
| Solicitors for the Applicant: | Hirst & Co |
| Counsel for the Respondent: | Mr Selfridge |
| Solicitors for the Respondent: | Mylne Lawyers |
ORDERS
The husband has leave to discontinue the application filed 1 September 2008, and the amended response filed 17 July 2007 in so far as it sought orders pursuant to s.79A Family Law Act1975;
The husband pay the wife’s costs of and incidental to:
(a)The wife’s application filed 8 March 2007;
(b)The wife’s amended application filed 23 April 2007;
(c)The appearances before the court on 26 April, 2007and 29 May 2007;
(d)the husband’s application for the orders sought at paragraphs 5 and 6 of the amended response filed 17 July 2007;
(e)the husband’s application for the orders sought at paragraphs 7 and 8 of the amended response filed 17 July 2007;
(f)the wife’s application filed 2 May 2008;
(g)the husband’s application filed 1 September 2008;
(h)the wife’s application filed 17 September 2008.
The costs ordered to be paid by the husband in subparagraphs d, f and h hereof shall be taxed pursuant to Chapter 19 of the Family Law Rules on the party and party basis.
The costs otherwise ordered to be paid by the husband shall be taxed pursuant to Chapter 19 of the Family Law Rules on an indemnity basis.
The husband shall not be liable to pay any costs associated with the appearances before the court on 19 June 2007 and 18 July 2007.
IT IS NOTED that publication of this judgment under the pseudonym Henricksen & Janz is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 2587 of 2007
| MS HENRICKSEN |
Applicant
And
| MR JANZ |
Respondent
REASONS FOR JUDGMENT
This is, hopefully, the final stage of these proceedings which have, as I explained in my Reasons for Judgment given on 15 August 2008, grown like topsy. I am now asked to decide the question of costs.
By application filed 17 September 2008, the wife seeks the following orders:
(1)That the Husband pay the Wife’s costs on an indemnity basis of and incidental to the following:
(a)Wife’s application filed 8 March 2007;
(b)Wife’s application filed 23 April 2007;
(c)The Wife’s involvement in proceedings on 26 April 2007, 29 May 2007, 19 June 2007, 18 July 2007, 18 September 2007, 1 November 2007 and 27 November 2007.
(d)The Wife’s costs associated with striking out paragraphs 5, 6, 7 and 8 of the Husband’s amended response of 17 July 2007;
(e)The Wife’s application filed 2 May 2008;
(f)
The Wife’s involvement in proceedings on 21 July 2008,
6 August 2008and 11 September 2008;
(g)
The Wife’s solicitor’s perusal of the Husband’s application filed 1 September 2008, affidavit of Husband filed
1 September 2008, affidavit of Ms F filed 1 September 2008, affidavit of Husband filed 2 September 2008 and further affidavit of Husband sworn 10 September 2008; and
(h)
This application and the hearing of this application on
25 September 2008.
(2)That to the extent that any costs orders have been previously against the husband that any amount ordered to be paid be deducted from the amount assessed to be paid by the husband.
(3)Within 21 days of the date of this order, the wife’s solicitors are to provide to a costs assessor licensed to assess costs in Queensland agreed by the parties and failing agreement, to be Mr G with an itemised account of the legal work performed and the time and outlays associated with same as referred to in paragraph 1 to allow the expert to prepare and provide a costs assessment.
(4)The expert shall keep the wife’s solicitor’s files and all documents provided them/him/her confidential and shall not make them available for inspection by the husband or his advisors without the consent of the wife.
(5)The husband shall be responsible for the payment of any fees incurred by the costs assessor.
(6)The decision of the costs assessor will be final and binding on both parties.
(7)
The husband shall pay the amount assessed pursuant to the costs assessment referred to in paragraph 3 of these orders within
14 days of the assessment issuing.
(8)That each party have liberty to apply.
The wife also seeks, as “Alternative 2”, the same orders but on party and party basis.
For his part, the husband, by application filed 22 September 2008, seeks the following orders:
(1)That the wife’s application for costs filed 18 September 2008 be dismissed.
(2)That the wife pay the husband’s costs on a standard basis for the costs hearing and preparation.
On 30 March 2006 final consent orders were made in the Family Court of Australia in respect of both property issues and parenting orders for the parties’ two children.
On 8 March 2007 the wife filed an application in this court seeking to enforce order 21 made on 30 March 2006. She alleged that the husband had failed to meet a taxation liability that he was required to indemnify her against. That application was met with a denial by the husband that he owed anything, and an argument that order 21 should be given an interpretation that was disputed by the wife.
Before the wife’s application was filed in this Court, there had earlier been applications in the Family Court. By the consent orders of
30 March 2006 the former matrimonial home was to be sold and after the reimbursement and payment to the husband of the amounts referred to in orders 10 and 13 the wife was to receive the net sale proceeds. The husband twice lodged a caveat against the property. Orders had to be made requiring the husband to cause the caveats to be removed. Adverse costs orders were made by the Family Court. I mention this as part of the historical narrative as it reveals a consistent pattern of behaviour, including the need for the wife to bring applications to the court to achieve an outcome mandated by the orders of 30 March 2006, and the husband opposing those applications.
On 23 April 2007, an amended application was filed on behalf of the wife. In this document she sought that the husband pay her $11,266.92; and that order 20 previously made in the Family Court be varied to require him to transfer ownership of a BMW motor vehicle to her. The wife ultimately did not pursue the latter relief.
When the matter came before the Court on 26 April 2007, the husband, then acting for himself, raised matters that suggested he was seeking to set aside the property orders made on 30 March 2006, pursuant to s.79A Family Law Act1975 (“the Act”). The husband was directed to make file and serve an application, supported by appropriate affidavit evidence. This necessitated the adjournment of the wife’s application.
The husband then filed a response on 11 May 2007, in which he sought an order that order 21 made on 30 March 2006 be varied. On 17 July 2007 the husband filed an amended response in which this claim for relief was deleted.
The other orders sought in the husband’s amended response are, however, highly significant. The husband sought to substantially change the parenting orders that had been made on 30 March 2006, and sought to set aside the property orders then made. Effectively, the husband sought to set aside the whole of the consent orders, thus necessitating a re-litigation of all issues that had previously been resolved by consent.
In my view, it is appropriate to differentiate the husband’s application for parenting orders from his application to set aside the earlier property orders.
Up until 17 July 2007 the matter had been before the court on four occasions. On each occasion the proceedings were adjourned to allow the husband to file and serve an application pursuant to s.79A of the Act together with any supporting affidavit evidence. Orders were also made to facilitate mediation.
In my view the adjournments required on 26 April and 29 May were necessitated by the failure on the part of the husband to comply with earlier court orders. The husband admits as much in his affidavit at paragraph 11 where he describes the wife’s affidavit at paragraphs 24 to 41 as “a fair history of the matter.”
So much could also be said for the need for an adjournment on 19 June. However, when the matter came before the court on 18 July (the husband having filed his amended response the day before) no order for costs was sought on behalf of the wife. Order 7 made on 18 July was in the following terms:
“That at the request of the solicitor for the applicant, no order for costs shall be made in relation to non compliance with the orders made 19 June 2007.”
Pursuant to directions given on 18 July 2007 the wife brought an application to summarily dismiss the husband’s application to
re-agitate the consent parenting orders. That application, heard on
18 September 2007was dismissed on 26 October 2007: Janz & Janz [2007] FMCAfam 876. I decided however that the question of whether the court should re-examine the earlier parenting orders be determined as a preliminary issue.
The hearing of the preliminary issue took place on 27 and 29 November 2007. During that hearing, in which both parties gave evidence and were cross examined, it was revealed that the wife had been charged with two criminal offences arising out of her treatment of the children. The wife subsequently pleaded guilty to certain offences. No conviction was recorded. Subsequently the parties, by consent, sought to re-open the evidence to put before me the sentencing remarks of the presiding judge. That occurred on 6 August 2008. I delivered my Reasons for Judgment on the preliminary issue on 15 August 2008: Henricksen & Janz [2008] FMCAfam 866. The husband’s application for parenting orders was dismissed.
Section 117(1) of the Act provides:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
Sections 117(2) and (2A) of the Act provide:
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(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.
As the authors of Australian Family Law & Practice, Brown & Fowler, at [61-100] observe:
“In the absence of there being, in a particular case, circumstances that justify the court in making an order for costs, then s. 117 (1) provides that each party bears his or her own costs of the proceedings under the Act. As noted by the Full Court in Collins and Collins (1985) FLC 91-603, s 117 “negates any principle that costs should follow the event or that the husband should bear the costs of the wife in matrimonial proceedings” (at p 79,877).”
The interrelationship of ss.117(1) and (2) was considered by the High Court of Australia in Penfold v Penfold (1980) 144 CLR 311. There the majority justices in a joint judgment construed s.117(1) as being subject to s.117(2) and that the former must yield to the latter whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs. Their Honours continued, at 315:
“Subsection (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117(2) in a “clear case”.
The discretion of the Court must be exercised having regard to the matters set out in s.117(2A). The weight to be given to a particular consideration under s.117(2A) is a matter for the discretion of the court.
In I and I (No 2) (1995) FLC 92-625 the Full Court expressly disagreed with observations of Mushin J in McDonald and McDonald (1994) FLC 92-508 that in “custody cases” it would be rare for an order for costs to be made. At p.82, 277 their Honours held that the relevant matters in s.117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”.
The husband has not put on any detailed affidavit evidence as to his financial circumstances. Paragraph 20 of his affidavit is vague and unhelpful. The wife is currently self-employed as a [occupation omitted]. Her income is not disclosed. The wife has recently purchased a residence for $850,000 in respect of which she has borrowed $500,000. The wife deposes to having $65,000 available to her. The wife, as a result of recently being involved in a motor vehicle accident, will be unable to work for approximately six weeks. The wife has the primary care of the parties’ two children. There is nothing in this factor that favours or supports a particular costs order one way or the other.
Neither party is in receipt of assistance by way of legal aid.
There is nothing in the conduct of the parties to the litigation so far as the children’s issues are concerned that justifies an order for costs one way or the other. One may be sceptical as to the husband’s motives for seeking to agitate parenting issues when the primary focus of the dispute between the parties until 17 July 2007 had been on whether the husband owed the wife any money pursuant to the property settlement orders. By seeking to include children’s issues the husband may have been acting tactically. However, I am unable to make a finding along those lines because the husband did raise the wife’s treatment of the children in the first affidavit that he filed in this court, and criminal proceedings were brought against the wife in respect of the incidents of family violence in respect of which the husband relied. I conclude that the husband did act bona fide in bringing his application for parenting orders before the court.
The application for parenting orders was not necessitated by either party failing to comply with previous orders of the court.
The father was ultimately wholly unsuccessful in his application for parenting orders. He did succeed in resisting the wife’s application for summary dismissal of his application.
No offers regarding parenting matters were put before the court.
In my view, the dismissal of the husband’s application for parenting orders on the determination of a preliminary issue reflects adversely against the strength of the husband’s case. The parties had settled the parenting orders on 30 March 2006. An application to re-open parenting issues ought not to have been made. I have set out in my earlier Reasons for Judgment why the husband’s application must fail. In my view, the circumstances of the case justify an order for costs in favour of the wife, as the husband has been wholly unsuccessful on this part of the case.
The position with the husband’s applications for property orders is starker.
The husband brought an application to vary order 21 made in the Family Court. He did not persist with that application. The husband brought an application pursuant to s.79A of the Act to set aside all of the earlier property orders. On the day before the matter was to come before the court the husband’s solicitors advised the wife’s solicitors that the husband would be discontinuing that application. The proceedings could not be discontinued without the leave of the court or a Registrar: Federal Magistrates Court (“FMC”) Rule 13.01(3)(a)(i). If that part of the husband’s application was properly discontinued, the husband remained susceptible to an adverse order for costs: FMC Rule 13.02(1).
To make the position clear, the husband should have leave to discontinue his applications, subject to him paying the wife’s costs.
The husband’s application to set aside the earlier property orders was, in my view, doomed to fail. The husband sought to rely on a valuation obtained prior to the making of the consent orders as laying a foundation for an argument that he was induced to make the agreed orders in reliance on inaccurate and misleading evidence. However, in his affidavit filed 3 February 2006, a short time before the consent orders were made, the husband deposed to believing the property to be worth $1.3 million. The husband questioned the accuracy of the valuation. He did not blindly rely on it. The husband has come to regret the bargain that he made. That is not a basis for setting the orders aside.
The husband’s opposition to the wife’s application to enforce order 21 previously made on 30 March 2006 was ultimately withdrawn and the parties compromised that dispute. However, the husband had refused to pay the wife any amount until the day before the proceedings were to return to court for determination on 11 September 2008. The husband had not tendered any amount to the wife. When the wife’s application was commenced the husband denied any liability to pay.
In his affidavit filed 22 September 2008 the husband’s stance changed. He said that his complaint then related to paying the tax in a lump sum. He said that he had negotiated with the Australian Taxation Office and could have paid the tax liability by instalments. However, the wife discharged the tax liability, and by the orders of 30 March 2006 the husband was liable to indemnify her in respect of that liability. Nothing was provided for payment by instalments. Further, as was pointed out by counsel for the wife, if the husband had paid the wife at the instalment rate of $1,100 per month, the debt would have been cleared well before 10 September 2008. I find no merit in the husband’s contention.
The orders of 30 March 2006 entitled the wife to retain possession of the BMW motor vehicle until it was sold. The husband demanded possession of the vehicle (his letter of 13 April 2007 is an example of this). He was not entitled to do this.
As I have already said, the wife was entitled to the bulk of the net proceeds of sale of the former matrimonial home. The property was sold, but because of the pending application of the husband to set aside all of the property orders, it was agreed to place the proceeds in trust. The wife became desirous of purchasing a home for herself and the parties’ two children to live in. She asked that the funds be released to her. The husband refused. The wife had to bring an application before the court. I decided that application on 15 August 2008. The monies previously held on trust were released to the wife, on condition that she use them to purchase a house.
The husband submits that the wife should not have the costs of that application because she did not disclose until the matter was before the court how she intended to use the monies. That submission may have more weight but for the fact that on becoming aware of how the wife intended to use the monies the husband persisted in his opposition to the orders sought by the wife. He did so, on the grounds that to release the monies to the wife would prejudice the husband given that he was seeking to set aside the earlier property settlement orders.
As I said in my Reasons for Judgment, the husband would suffer no such prejudice. Further, given the poor prospects of success on his application pursuant to s.79A, that was ultimately withdrawn (or “discontinued”) the husband’s opposition to the orders sought by the wife was, in my opinion, vexatious.
Turning to the matters in s.117(2A) of the Act, so far as the applications for various property orders are concerned, nothing further needs be said about subparagraphs (a) and (b).
The husband has frustrated the expeditious management of the proceedings. He has failed to comply with orders requiring the filing of documents. I have already referred to two occasions in particular.
The wife’s application filed 8 March 2007, and amended application filed 23 April 2007 were necessitated by the husband failing to comply with order 21 of the orders made on 30 March 2006.
The husband has been wholly unsuccessful in his s.79A application, and in his opposition to the wife’s application. He was also unsuccessful in his opposition to the wife’s application for the funds to be released to her.
Despite advising of his intention to discontinue the s.79A application on 10 September 2008, the husband had, on 2 September filed extensive affidavit material, after the date he was directed to do so, that would have cause the wife to incur legal expense.
In my view the wife should recover her costs of her applications filed
8 March and 23 April 2007. She should also recover her costs of responding to the husband’s applications for various property orders. The husband’s opposition to the wife’s application was unmeritorious and was ultimately not pursued. His own applications for property orders were discontinued at the last minute and had no real prospects of success. The husband’s attitude to the wife’s application filed 2 May 2008 was entirely unmeritorious.
The wife seeks that the husband pays her costs on an indemnity basis.
As Brown & Fowler, supra, observe at [61-420] the ordinary rule is that, where the court orders the costs of one party be paid by another party, the order is for the payment of those costs on the party and party basis. 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” (citing Kohan and Kohan (1993) FLC 92-340 at p 79,614; Yunghanns v Yunghanns (2000) FLC 93-029 at pp 87,470-1).
The authority most often cited on an application for indemnity costs is that of Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225. Of course in that case the court was dealing with a forum in which the ordinary rule as to costs applied, namely that the successful party recovered their costs on a party and party basis. That is to be distinguished from family law proceedings, in which s.117(1) is applicable. That is, the court must be persuaded that circumstances exist which justify any order for costs at all. Neither counsel submitted that the principles discussed in Colgate-Palmolive were inapplicable in this jurisdiction, nor that the Full Court of the Family Court has decided that some different test should apply.
At paragraph [24] in Colgate-Palmolive Sheppard J said:
“24. It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:
1. The problem arises in adversary litigation, i.e. litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg. a government agency or statutory authority.
2. 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. In this Court the provisions of Order 62, rules 12 and 19, and the Second Schedule to the Rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v. British Transport Commission and Handley JA in Cachia v. Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require.” Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, “The categories in which the discretion may be exercised are not closed”. Davies J expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motice (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1978) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will be different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.”
I do not think that, with an exception to which I will shortly refer, the wife should recover her costs of and incidental to the parenting issues on an indemnity basis. Although unsuccessful, the husband’s application was not doomed to fail. It survived an application for summary dismissal. Oral evidence was given by both parents at the hearing of the preliminary issue. The husband did have a factual basis on which to rely in bringing his application. I do not think that one could describe the husband’s application as extraordinary, nor does it fall within the examples given in paragraph 5 extracted above from Colgate-Palmolive.
The exception to which I refer is the husband’s further application for parenting orders filed 1 September 2008. This application was discontinued on 10 September. It was filed notwithstanding my orders of 15 August. In my view the filing of this further application against the background of what had occurred was vexatious, and the application was doomed to fail. This was recognised by the fact that it was discontinued 10 days after it was filed. It is open to conclude that it was filed for some ulterior purpose. The wife should recover her costs of and incidental to this application on an indemnity basis.
I consider that the husband’s response to the wife’s application for payment of the taxation liability should be assessed on the indemnity basis. The husband’s initial stance was that he was not obliged to pay anything. That argument was unsustainable. He sought to maintain an interpretation of Order 21 that was not open on a fair reading of the order. The husband then unreasonably failed to indemnify the wife for a lengthy period. His conduct of this aspect of the proceedings warrants an indemnity costs order.
Similarly, I consider that the husband’s application for orders under s.79A of the Act was ill-conceived. It was groundless. Given the circumstances relied on by the husband for bringing the application (i.e. the inaccurate valuation of the former matrimonial home) when contrasted with his own evidence, in my view it was unreasonable to bring the proceedings. The wife should recover her costs of these proceedings on an indemnity basis.
The wife’s application to have the net proceeds of sale of the former matrimonial home released to her ought not to have been opposed by the husband, particularly after he was advised of the intended use of the funds. Nevertheless I do not consider the husband’s attitude to that application to be so extraordinary or contumelious as to warrant an indemnity costs order.
Although I would make the costs orders just referred to in any event, there is further evidence that supports my conclusions. At paragraphs 64 - 68 of her affidavit filed 17 September 2008 the wife says:
“64. Since the orders of 30 March 2006, I have had a number of conversations with the Husband in which he has made statements to me about our property settlement and about proceedings commenced in this Court by him to set aside the orders of 30 March 2006.
65. These conversations occurred either on the telephone or when the children were being made available to him.
66. He has said to me “those property orders that were made between us are a joke. They do no take into account what I had when I met you in South Africa or the pre-nuptial agreement that we signed. I regret signing those orders. My lawyer was an idiot to tell me I should sign them and I intend suing him for negligence” or words to that effect. He has also said to me “you took everything that was mine. I will make sure that I get it all back from you. I will make sure that you end up in the gutter” or words to that effect.
67. He has also said to me “I will do whatever it takes in court to set those orders aside. They should never have been made in the first place. I will make your life an absolute misery. I will cause you to spend all your money on legal costs so that you end up with nothing” or words to that effect.
68. The Husband made these statements or statements like them to me on many occasions.”
The husband’s affidavit in response to this is confusing. At paragraph 17 of his affidavit filed 22 September 2008 the husband says:
“17. I refer to paragraphs 64 to 68. I will accept that the thrust of the word is as claimed I used is if not the actual words. The genesis of the wife’s allegations are well documented in past affidavits, in particular that of the 17 June 2007. In short; at the outset I had about 5 times as much in assets as did my wife, we had a prenuptial agreement signed in South Africa stating in essence that each party retain the assets that each had in their respective possession as at the time of entering into the relationship. In conversations between us up to the eve of settlement it was 50:50. At settlement it was intended to be 50:50. The result, be it through my reliance on my wife’s assertions, poor drafting, my suffering or the deliberate avoidance of clauses intended to equalize distribution, the net result is about 75% to the applicant wife and 25% to myself. Note here that the children’s issues are totally different, that they would live with their mother was a factor in the 50:50 agreement. In relation to the alleged conversations and words attributed to me in relation to my former solicitor are untrue as I have never discussed or mentioned these matters to the wife.”
The husband in the second sentence accepts the thrust of the words claimed by the wife. However in the last sentence he denies saying what is attributed to him and says that it was the wife who made the statement.
The husband was cross examined. He was an unimpressive witness. He was vague and evasive. The husband accepted that he spoke to the wife about the property orders. He accepted that at the time he spoke to the wife he held the views set out at paragraph 66 of the wife’s affidavit. Yet the husband maintained his denial that he spoke to words attributed to him. I reject the husband’s denial.
Curiously, counsel for the husband did not seek to cross examine the wife about this critical conversation. The wife, as I have said earlier, has recently been involved in a motor vehicle accident. Notwithstanding this she was made available for cross examination. When asked to identify what topics he wished to cross examine the wife about, counsel for the husband identified a number of topics that, after debate, he accepted there was no need to cross examine the wife about. The conversations referred to at paragraphs 64 to 68 of the wife’s affidavit was not in the list of topics the husband’s counsel wished to challenge. The failure to challenge the wife’s evidence on this conversation is telling.
Having accepted the wife’s evidence fortifies my conclusion that the husband used the court process to frustrate the wife and cause her to incur legal expenses. That sort of behaviour justifies the making of an indemnity costs order.
Pursuant to Federal Magistrates Court Rules r.21.02(2)(b) and (c) the order made by me can set the method by which the costs are to be calculated and refer them for taxation under Chapter 19 of the Family Law Rules.
Pursuant to Federal Magistrates Court Rules r.21.11 the Taxing Officer (defined as a Registrar of the Family Court) is required to apply the scale of costs set out in Schedule 3 to the Family Law Rules.
Family Law Rules r.19.08 clearly contemplates the ordering of costs on the indemnity basis.
Family Law Rules r.19.19(1)(b) specifically allows the Court to order that a party is entitled to costs on an indemnity basis.
My orders will be as set out at the commencement of these reasons.
I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of Wilson FM
Associate: Lynnette Chin
Date: 3 October 2008
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