HUDSON & HUDSON

[2012] FamCA 38

FAMILY COURT OF AUSTRALIA

HUDSON & HUDSON [2012] FamCA 38

FAMILY LAW - COSTS: Indemnity costs refused

Family Law Act 1975 (Cth)

Colgate –Palmolive Co v Cussens Pty Ltd (1993) FCA 536
Fennessy and Gregorian (2009) FLC 93-399
Yunghanns v Yunghanns (2000) FLC 93-029

APPLICANT: Ms Hudson

RESPONDENT: Mr Hudson

FILE NUMBER: MLC 820 of 2011

DATE DELIVERED: 18 January 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By way of written submissions

SUBMISSIONS RECEIVED FROM:

SOLICITOR FOR THE 

APPLICANT:

Lander & Rogers

SOLICITOR FOR THE 

RESPONDENT:

Kenna Teasdale Lawyers

Orders

1. That the husband pay the wife’s costs of the amended application in a case filed 25 November 2011 by agreement and failing agreement as assessed according to the schedule to the Family Law Rules 2004.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

IT IS NOTED that publication of this judgment under the pseudonym Hudson & Hudson is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 820 of 2011

Ms Hudson

Applicant

And

Mr Hudson

Respondent

REASONS FOR COSTS JUDGMENT

1. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that in proceedings under the Act, each party shall bear his and her own costs. However, that is subject to the proviso that if there are circumstances which so justify it, the Court may make such order as it considers just but that too is subject to the proviso that the Court must consider the matters set out in s 117(2A).

2. The first question is therefore whether there are circumstances here which would justify a departure from the principle that no orders for costs should be made in this no-cost jurisdiction. If so found, the second question is whether the discretion should be exercised such as to give a just result. In turn, if the discretion should be exercised, the third question is what is a just outcome having regard to the matters in s 117(2A).

3. Section 117(2A) provides:

   (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.

4. If an order for costs is made, should it be on an indemnity basis rather than as determined by the amounts set out in the schedule to the Family Law Rules 2004.

5. The application for costs and indeed indemnity costs, is made by the wife against the husband on the ground that the husband did not comply with interlocutory orders made in October 2011 which it is said, would have advanced the litigation to a stage where negotiations could have been undertaken in earnest or alternatively, that the Court could have heard the matter.

6. Mr Brown SC on behalf of the wife submitted that this was a case of the husband snubbing his nose at the Court.  There is evidence as disclosed by the affidavit of the husband showing that his attention to the issues required of him was distracted.  On all of that evidence, this is not a case of wilful defiance.

7. In a comprehensive written submission, Mr Mawson SC on behalf of the husband set out the chronology of events that occurred after the October orders.  However, one issue that stands out is the husband’s own acknowledgement that he could not have complied with a timetable to which he was a party.  That order was made by consent.

8. I am satisfied that the hearing before me was occasioned because the husband had not complied with orders made on 3 October 2011.  There is an acknowledgement of that by the husband but indeed by both parties because the order I was asked to make upon these proceedings was that until further order, paragraph 1 of the orders made on 3 October 2011 continue “with full force and effect”.  Thereafter, paragraph 2 of the orders I was asked to make required the husband to comply with the October orders almost immediately. 

9. Mr Mawson submitted that the husband faced practical difficulties.  He submitted there was a significant factual dispute between the parties which could not be resolved at this time and may ultimately be a matter for final hearing.  He pointed to the wife’s very presence at the place where the valuation exercise was to be undertaken and that she had failed to make any mention of that in her affidavit material or submissions.  All of those are matters that do not overcome the fact that the wife had to issue enforcement proceedings because otherwise there was no clear picture as to how the litigation would have progressed.  The issue is really about whether it was necessary for the wife to take the steps she did. 

10. I am satisfied that there was not compliance with the orders by the husband.  There was an explanation.  In this case, it was a distraction involving fire fighting responsibilities which may very well have protected some of the property of the parties.  Having regard to the timing of those distractions and the delays which necessitated the enforcement proceedings, the explanations go to the question of indemnity costs rather than a costs order itself.

11. The first and second questions must be answered in the affirmative that there is a justification for making an order for costs and that the discretion should be exercised. 

12. In respect of s 117(2A), the parties’ financial circumstances are not likely to be affected by an order for costs as there is a significant pool of assets. The costs are modest by comparison. Accordingly, one could conclude there are no legal aid considerations either. As I have pointed out, the proceedings giving rise to this application for costs were enforcement by nature. That is one of the specific considerations in s 117(2A). Further, although some of the enforcement aspects were not pursued, the substantive outcome indicates that the husband was wholly unsuccessful with respect to the enforcement. The same cannot be said of the earlier proceedings in October for which the wife’s senior counsel also sought costs orders. I could not find that the earlier proceedings were necessitated entirely by the husband’s conduct of a recalcitrant nature in respect of discovery or valuation.

13. Other matters in s 117(2A) were not seriously argued.

14. Accordingly, albeit a costs order will not impact on the financial resources of either party, one should be made because the wife is otherwise out of pocket.

15. I turn then to the fourth question. 

16. Senior counsel for the husband sought indemnity costs.  As has been said in various authorities, the categories of cases for such an order are not closed.  (See Yunghanns v Yunghanns (2000) FLC 93-029). The principles relating to indemnity costs were summarised by Sheppard J in Colgate –Palmolive Co v Cussens Pty Ltd (1993) FCA 536 which is a decision adopted by this Court in such cases as Fennessy and Gregorian (2009) FLC 93-399. Sheppard J referred to some of the circumstances “which have been thought to warrant the exercise of the discretion”. One of those was where there was evidence of particular misconduct that caused loss of time to the Court and to other parties. In this case, any loss of time was limited because of the way in which the case was conducted but also the amount of time that the wife’s lawyers had to spend in preparation for the proceeding. It was hours in this case rather than days for both the litigants and the Court. Accordingly, this is not a case where indemnity costs should be ordered.

17. An order for costs should be made in respect of the discrete application and not the previous proceedings.  The amount should be agreed between the parties failing which, it should be assessed.  This was a case in which it was appropriate for senior counsel to be briefed having regard to the complexities of the nature of the proceedings generally.  Certification is therefore appropriate.

I certify that the preceding Seventeen (17) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 18 January 2012.

Associate: 

Date:  18 January 2012