Joliffe and Joliffe (No 2)

[2020] FamCA 686

FAMILY COURT OF AUSTRALIA

JOLIFFE & JOLIFFE (NO. 2) [2020] FamCA 686

FAMILY LAW – COSTS – where the wife filed an application in a case seeking orders for a partial property settlement and lump sum spousal maintenance – where the husband was not complying with inter alia previous orders for periodic spousal maintenance – where the wife seeks for her costs of the application to be paid on an indemnity basis or in the alternative party and party – where the husband opposes the wife’s application for costs – where the circumstances justify the court departing from the general rule that parties bear their own costs – where the proceedings were necessitated by the husband failure to comply with orders – where whilst the husband was not entirely unsuccessfully the wife was successful to the extent that her application was pressed – where indemnity costs are not awarded – where costs are awarded on a party/party basis

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

Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Kohan & Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784
Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029

APPLICANT: Ms Joliffe

RESPONDENT: Mr Joliffe

FILE NUMBER: MLC 7613 of 2019

DATE DELIVERED: 19 August 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: Written Submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Hargreaves Family Lawyers

SOLICITOR FOR THE RESPONDENT: Kennedy Partners

Orders

IT IS ORDERED THAT

1. The Husband pay the Wife’s costs fixed in the sum of $9723.00 those costs to be paid out of the husband’s property settlement or by 4.00 pm on 12 February 2021 whichever first occurs.

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 Joliffe & Joliffe 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 7613 of 2019

Ms Joliffe

Applicant

And

Mr Joliffe

Respondent

REASONS FOR JUDGMENT

Introduction:   

1. On 17 December 2019 the wife filed an Application in a Case seeking a variety of orders, some of which she considered more pressing than others. They included her application for a partial property settlement of $150,000 to enable her to pay her legal fees and fund the ongoing proceedings and in circumstances where the husband had not complied with the orders made by consent on 1 August 2019 for periodic spousal maintenance, lump sum spousal maintenance of $50,000.

2. The application was first listed for hearing before me on 14 January 2020. The husband having not filed any answering material and his solicitor not being at Court the matter was adjourned for further hearing before me on 12 February 2020. I fixed the wife’s costs of that day in the sum of $5,824.00 and reserved the question of the payment of those costs until the further hearing.

3. On 6 March 2020 I made various orders by consent including an order that the husband pay the reserved costs of $5,824. I also made orders by consent requiring the parties to sign all necessary documents in order to pay the wife, out of the proceeds of sale of the property at B Street, Suburb D (“B Street”), the sum of $150,000 by way of partial property settlement and a further sum of $50,000, to be characterised at trial.

4. On that date I also made orders, which were opposed by the wife, for the husband to receive $20,000 out of the B Street proceeds by way of partial property settlement. The costs of $5,824 the husband had been ordered being paid out of that $20,000.  I further ordered that the balance of the B Street proceeds be invested in an interest bearing account with DD Bank and a direct debit established for payment of the mortgage over the property at P Street, Suburb D (“P Street”) where the wife now lives with the parties’ child. Finally I made orders for the filing of submissions in support of any application for costs.

5. The wife now seeks an order for the payment of her costs of and incidental to her Application in a Case filed 17 December 2019 as amended on 11 February 2020 on an indemnity basis or in the alternative as calculated in accordance with Schedule 3 of the Family Law Rules 2004 (Cth) (“the Rules”). Those costs calculated on an indemnity basis are $19,131.75 and calculated in accordance with Schedule 3 are $9723.80.

6. The husband opposes the wife’s application for costs but submitted in the alternative that if costs were to be ordered those costs be calculated in accordance with Schedule 3 rather than on an indemnity basis.

Legal Principles

1. The general rule in this court is that each party to proceedings pursuant to the Family Law Act 1975 (Cth) (“the Act”) shall bear his or her own costs (s117(1)). However pursuant to s117(2) of the Act the court has the power to make an order for costs if it is satisfied that there are circumstances which justify it doing so and it may make such order as it considers just.

2. Subsection (2A) set out the matters the court must have regard to when considering what if any order for costs it should make pursuant to s117(2).They include the following matters:

   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.

Financial Circumstances of Each of the Parties

1. The wife is aged 59 years and has not been in full-time employment since 2004 when the parties’ only child was born. The wife has been financially dependent upon the husband since separation, albeit it was her case that the husband apart from the $50,000 she received pursuant to the orders made by consent on 19 September 2019 has failed to comply with the orders for spousal maintenance.

2. The husband is a professional and operates his own business providing professional services. As referred to in my reasons for judgment dated 6 March 2020, the husband says that he now has only one employee.

3. The husband’s case during the hearing before me was that he has been spending time caring for his mother who has cancer and that this together with his mental health issues has meant that he has been unable to devote as much time to his practice as a consequence of which the practice no longer has the capacity to pay him a salary.  However I found that the husband’s explanation with respect to the cash he has withdrawn from the business accounts and his lifestyle was far from satisfactory.

4. It is the wife’s case that given my order that the husband receive a partial property settlement of $20,000 and although he was required to pay the wife’s costs of $5,824 out of that sum, he has a little over $14,000 available to him to meet the order for costs they now seek.

5. I accept as submitted by the husband that this submission ought to be approached with some caution in circumstances where the husband sought an order for a partial property settlement to enable him to meet his living expenses and secure accommodation. However in circumstances where there is some uncertainty surrounding the husband’s financial position and the evidence remains to be tested and although the wife is to receive a further $150,000 which she can use to meet her outstanding and ongoing legal costs, I am not satisfied that the husband’s financial circumstances would preclude an order for costs being made in the wife’s favour.

Whether any party is in receipt of Legal Aid

1. Neither the husband nor the wife are in receipt of legal aid.

The Conduct of the Parties

1. It is the wife’s case that the husband’s conduct in these proceedings has caused her to incur significant and avoidable legal fees. In my view many of the examples relied upon were not directly referable to the way in which the husband conducted himself with respect to this particular application and not relevant for the purposes of the determination I must make with respect to her costs. In so far as there was a complaint that when the matter came on for hearing on 14 January 2020 the husband had not filed any answering material I note that an order has been made with respect to the wife’s costs of that hearing.

2. Although I found that the husband changed his position several times and that it was at times difficult to understand how he put his case this was in circumstances where he was representing himself.  And in so far as the wife submits that the husband took an unnecessarily technical positon to orders rather than joining in an application with the wife for a “slip rule” amendment I accept as submitted by the husband that the amendment of the order was one of many orders sought by the wife and would not of itself have been likely to add significantly to her costs of the application I determined.

3. In all of the circumstances I do not see the way in which the husband has conducted these proceedings as being of particular relevance for the purposes of my determination as to whether or not there should be an order for costs in the wife’s favour in relation to this application.

Whether the Proceedings were necessitated by the failure of a party to comply with an order

1. I accept as submitted by the wife that her Application in a Case was filed as a direct consequence of the husband’s failure to comply with the orders made by consent on 1 August 2019, in particular the orders with respect to her maintenance. The fact that the husband now says that because of the change in his financial circumstances he had a reasonable excuse for not complying, which is in any event a matter yet to be determined, in my view does not alter the fact that this application was necessitated by his non-compliance. Whatever the Court ultimately determines in relation to his financial position the reasonableness of his excuses for not complying does not automatically flow on from this.

Whether any Party has been Wholly Unsuccessful

1. Notwithstanding that the $50,000 the wife is to be paid pursuant to my orders has not been characterised as spousal maintenance, she was, if not wholly successful, successful with respect to those parts or her Application in a Case which were pressed by counsel on her behalf. I am satisfied that counsel took a pragmatic approach to the time constraints imposed by a busy duty list and it does not follow in those circumstances that those parts of her application she did not pursue were not successful.

2. However I am also not satisfied that the husband was wholly unsuccessful. Whilst orders for partial property settlement were not made in the amount sought by the husband an order was made in his favour and although the husband sought the discharge of the orders for spousal maintenance they were suspended on the basis of the lump sum paid to the wife.

Offers in Writing

1. The wife relied upon an offer having been made in writing in relation to the “slip rule” amendment of the orders of 19 September 2019. I accept as submitted by the husband that any offer to settle that matter must be viewed in the context of all of the issues in the case.

2. The wife also relies upon the correspondence from her solicitors to the husband requiring him to comply with the orders with respect to spousal maintenance, provide the weekly reports with respect to his income and expenses and to establish the DD account. In my view these are not written offers to the settle the matter and are not a relevant consideration in this context.

Other Matters

1. The wife further relied upon there having been previous orders for costs made in her favour on an indemnity basis. I must determine each application based upon its particular circumstances and merits and in my view the fact that there have been previous orders is in this case not a relevant matter for the purposes of this application.

Is an order for costs justified

1. I am satisfied that in this case there are circumstances justifying the Court departing from the general rule that each party should bear their own costs. In particular that these proceedings were necessitated by the husband’ failure to comply with the orders for spousal maintenance and that whilst the husband was not wholly unsuccessful the wife’s application was to the extent it was pressed, a successful application. Although it is the husband’s case that he has a reasonable excuse for not complying with the orders for spousal maintenance there is also evidence which supports the wife’s submission that he may not have been totally forthcoming with respect to his present circumstances.

Quantum of Costs sought

1. Rule 19.18 of the Rules sets out various methods by which any costs if ordered are 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.

Indemnity Costs

1. The general rule is that when the court makes an order for costs those costs are calculated on a party and party basis.

2. In Kohan & Kohan (1993) FLC 92-340 at page 79,614 (“Kohan”) the Full Court opined 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”.

3. Munday v Bowman (1997) FLC 92-784 (“Munday”) Holden CJ (at page 84-660) summarised by reference to the circumstances identified by Shepherd J in Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate”) which might warrant an order for indemnity costs. They include albeit they are not limited to the following matters:

   ·    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.

4. The circumstances which might support an order being made on an indemnity basis are not closed. In Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029. At 87, 471 Lindenmayer and Holden JJ stated as follows:

   …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

5. A party applying for costs on an indemnity basis, in accordance with r 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 costs agreement the wife signed with her lawyers is ‘Annexure A’ of her written submissions.

Conclusion

1. Although I am satisfied that there are circumstances in this case which justify an order for costs I am not satisfied that the circumstances are exceptional or that on that basis the Court should depart from the general rule that those costs be payable on a party and party basis.

2. In all of the circumstances I propose to order that the husband pay the wife’s costs fixed in the sum of $9723.00. The wife’s application was that those costs should be paid within 28 days however I am not satisfied that I should make an order in those terms. The husband proposed that any amount the Court ordered should be paid out of his property settlement. Without knowing when the matter is likely to heard and determined I am not satisfied that the wife should be required to wait until the conclusion of the proceedings. Balancing the needs of both parties I propose to allow the husband 6 months to pay the costs or that they be paid out of his property settlement whichever first occurs. Even if the proceedings have not been completed he will have the opportunity to set aside the funds required to pay the costs.

I certify that the preceding thirty two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 19 August 2020.

Associate: 

Date:  19 August 2020