Huo and Lok

[2020] FamCA 657

FAMILY COURT OF AUSTRALIA

HUO & LOK [2020] FamCA 657

FAMILY LAW – COSTS – where the husband seeks costs on an indemnify basis or in the alternative on a party/party basis – where the wife does not make an application for costs but opposes any costs order by the husband – where the wife’s application was wholly unsuccessful and there is a disparity between the financial circumstances of the parties – where the circumstances are not exceptional and do not warrant an order for indemnity costs – where the wife is ordered to pay the husband’s costs on a party and party basis – where the husband is silent as to the quantum of costs he seeks on a party and party basis – where the husband’s application is adjourned for further hearing as to the quantum of party and party costs

Family Law Act 1975 (Cth) s 78, s 117
Family Law Rules 2004 (Cth) r 19.08(3), 19.18

Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
In the Marriage of I & I (No 2) (1995) FLC 92-625
Kohan & Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784
Stanford & Stanford (2012) 247 CLR 108; (2012) FLC 93-518
Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029

APPLICANT: Mr Huo

RESPONDENT: Ms Lok

FILE NUMBER: MLC 1165 of 2019

DATE DELIVERED: 11 August 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: Written Submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Oceania Lawyers and Consultants

SOLICITOR FOR THE RESPONDENT: Barry Nilsson Lawyers

Orders

IT IS ORDERED THAT

1. That the wife pay the husband’s costs on a party and party basis.

2. The husband’s application for costs be adjourned for mention before the Honourable Justice Macmillan at 10.00 am on 18 August 2020.   

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 Huo & Lok 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 1165 of 2019

Mr Huo

Applicant

And

Ms Lok

Respondent

REASONS FOR JUDGMENT

Introduction

1. The husband who is the applicant in the substantive proceedings seeks an order  that the wife pay his costs incurred in defending her Application in a Case filed 4 April 2019 (“Application in a Case”) on an indemnity basis, and in the alternative on a party and party basis. The wife opposes the husband’s application and it is her case that either his application for costs be dismissed, or in the alternative all costs should be reserved for trial.

Background

1. On 5 February 2019 the husband filed an Initiating Application seeking final property orders.

2. On 4 April 2019 the wife filed a Response together with an Application in a Case (“wife’s Application in a Case”) seeking that the husband’s Initiating Application be summarily dismissed or in the event of that application not being summarily dismissed, that the husband pay the wife $200,000 by way of security of costs.

3. On 13 March 2019 the husband’s Initiating Application was amended seeking orders substantially the same as the original Initiating Application, albeit he also sought a declaration that the wife held the property at B Street Suburb C on trust for him and the wife pursuant to s 78 of the Family Law Act 1975 (Cth) (“the Act”).

4. There were a number of procedural hearings and the matter was ultimately listed before me for the hearing of the wife’s Application in a Case.  

5. On 28 February 2020 judgment (“the judgment”) was delivered in this matter dismissing the wife’s Application in a Case. Further orders were made for the filing of submissions with respect to any application for costs.

6. The husband in his written submissions in support of his application for costs seeks to rely upon an Affidavit filed 21 May 2019 which he states sets out his financial circumstances, employment status and history, source of the funds for his legal fees, living arrangements and care of the children of the marriage.

7. There are three children of the marriage X who is aged 8 and twins Y and Z who are both aged 6. The eldest child currently lives with the wife in Australia and the twins reside with the husband in China.

Legal Principles

1. Pursuant to s 117(1) of the Act the general rule in this court is that each party to proceedings pursuant to the Act shall bear his or her own costs of those proceedings. However if the court is satisfied that there are circumstances in the particular case which justify it doing it so can make such order as to costs as it considers just (s 117(2)).

2. In considering what if any order should be made the court must have regard to the matters in s117(2A) which are as follows:

   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, inspections, 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.

3. In the Marriage of I & I (No 2) (1995) FLC 92-625 is authority for the principle that no one factor in s 117(2A) prevails over the other and the entirety of the factors must be considered to the extent that they are relevant to the particular facts of the case.

4. Rule 19.18 of the Family Court Rules 2004 (Cth) (“the Rules”) sets out the various methods by which any costs that are ordered may be calculated. The court may order costs of a specific amount, as assessed on a particular basis such as party and party or indemnity costs, in accordance with the method specified in the order or for part of a case or part of an amount assessed in accordance with Schedule 3 of the Rules. The general rule is that when the court makes an order for costs those costs are calculated on a party and party basis.

Indemnity Costs

1. When determining whether costs should be awarded on an indemnity basis the Full Court in Kohan & Kohan (1993) FLC 92-340 (at page 79,614) stated 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”.

2. Holden CJ in Munday v Bowman (1997) FLC 92-784 at page 84-660, summarised the circumstances which might warrant an order for indemnity costs identified by Shepherd J in the decision of Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate”). They include the following:

   ·    Where an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;

   ·    The making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;

   ·    Evidence of particular misconduct causing loss of time to the court and to other parties;

   ·    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.

3. The circumstances which might support an order being made on an indemnity basis are not closed as stated by the Full Court of the Family Court of Australia in Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029. At 87, 471 Lindenmayer and Holden JJ stated:

   …It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought. All that is required is that the Court asked to exercise the discretion be satisfied that some ''particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis

4. A party applying for costs on an indemnity basis, in accordance with rule 19.08 of the rules, must inform the court if the party is bound by a costs agreement in relation to those costs and the terms of that agreement. The husband has provided the Court with a copy of the costs agreement between him and his solicitor Muyang Melinda Lok of Oceania Lawyers.

Are There Circumstances Which Justify An Order For Costs

Financial Circumstances of Each of the Parties

1. It is conceded by the wife that although her financial circumstances are superior to the husband, the husband’s submissions with respect to this issue are vague and unspecified and that they fail to have regard to the evidence or my findings. In my view, the evidence and my findings support the husband’s submission as to his limited means and the wife’s superior financial circumstances, albeit this is only one of the matters I must consider. The husband receives a monthly salary and has recently commenced his own business, he has been able to borrow from his cousin and had the benefit of at least AUD$314,879 including the proceeds of sale of a property in China, severance pay and funds transferred from the wife’s L Bank account. However, although the wife is engaged in home duties and says she is reliant upon her parents for her support and payment of her costs, she also has assets of approximately AUD$8,750,000.

Legal Aid

1. Neither party in this case is in receipt of legal aid.

The conduct of the Parties to the Proceedings

1. The husband’s submissions in relation to this issue were focused on the wife having sought orders for security for costs in circumstances that she would have known he had no capacity to pay, thereby preventing him from pursuing his application for property settlement and having sought orders requiring him to personally attend the hearing. The order for the husband to attend was made by the Court in chambers on 2 August 2019 and also required the wife to attend.  The basis upon which that order was made is not clear. Although the wife’s application for security for costs was not successful, I cannot be satisfied on the evidence before me that the primary purpose of this application was to preclude the husband pursuing his application for property settlement, albeit that was the likely outcome if such an order had been made or that in those circumstances the wife can be criticised for the way in which she has conducted the proceedings.

2. I am similarly not satisfied as submitted by the wife that the way in which the husband conducted the proceedings necessitated or contributed to the wife having to file her Application in a Case seeking summary dismissal of the husband’s application for property settlement. The wife’s application was based upon her submissions that on the basis of the Divorce Agreement the parties had entered into in China, the husband was estopped from seeking orders for property settlement in this Court, that even if Divorce Agreement did not deal with the property in Australia Anshun estoppel should apply, and that in the event that it did not, the husband’s case in any event had no reasonable likelihood of success based upon the principles in Stanford & Stanford (2012) 247 CLR 108 (“Stanford”). Nor do I see the relevance of the husband having lodged a caveat when no orders were sought with respect to that caveat. The wife’s application that the husband be required to provide security for her costs was similarly based upon what she submitted, was the husband’s limited prospects of success and his capacity to meet an order for costs.

3. In my view the parties conduct in relation to the proceedings is not a significant consideration in this case.    

Whether proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

1. This is not a relevant consideration in this case.

Whether any party to the proceedings has been wholly unsuccessful in the proceedings

1. The husband submits that the wife’s application was wholly unsuccessful with the Court rejecting both her application for summary dismissal and security for her costs. Whilst the wife concedes that her application was unsuccessful, it is her case the Stanford argument remains to be determined. Although I accept that the Stanford argument is yet to be determined as part of the substantive proceedings, the wife’s application for summary dismissal based upon a Stanford argument has been determined and was unsuccessful.

Whether any party to the proceedings has made an offer in writing to the other party to the proceedings to settle and the terms of any such offer

1. Neither the husband nor the wife have at any point asserted that a relevant offer of compromise was made in writing in relation to the Application.

Should there be an Order for Costs

1. It is the wife’s case that there should be no order for costs or that in the alternative each party’s costs should be reserved for determination by the trial Judge. The wife submitted as the Stanford argument has yet to be determined, it remains to be seen what they husband’s entitlements to property settlement may be and that to make an order for costs in his favour would be predetermining the failure of the wife’s Stanford argument. I do not accept that is the case. The application that has been determined is the wife’s Application in a Case for summary dismissal and security for her costs not her substantive application. They are discreet applications and in my view the husband is entitled to have his application for costs determined based upon the outcome of the wife’s Application in a Case.

2. In these circumstances weighing up all of the relevant matters in s 117(2A) of the Act, I am satisfied having regard in particular to the wife’s Application in a Case having been wholly unsuccessful and the disparity in the husband and wife’s financial position that there should be an order for costs in the husband’s favour.

Quantum of Costs sought

1. The husband is seeking costs on an indemnity basis and in the alternative party and party costs. The husband says that his costs in defending the wife’s Application in a Case are $20,723 calculated in accordance with the costs agreement he has signed and which I note include the costs of his travel to Australia.

2. There is some force in the wife’s submission that the husband has not clearly enunciated his case in support of his application for indemnity costs. It is in any event the general rule that unless there are exceptional circumstances costs should be ordered on a party and party basis. In my view, there are no exceptional circumstances in this case.

3. Counsel for the wife further submits that because the husband is silent as to the quantum of costs he seeks on a party and party basis his application should be dismissed. Although the court can fix the amount of the costs, it can also make an order for those costs to be taxed, which is one of the options in this case.  However, I do not see that as being in the interests of either party and in circumstances where I propose to make orders that the wife pay the husband’s costs of and incidental to her Application in a Case filed 4 April 2019 on a party and party basis I also propose to list the matter for further mention to allow the husband the opportunity to quantify his costs in accordance with Schedule 3 so that orders can be made for a specific amount. I see no benefit to either party having to incur the further costs of a taxation.

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 11 August 2020.

Associate: 

Date:  11 August 2020