KARLSSON & KARLSSON
[2018] FCCA 3483
•9 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KARLSSON & KARLSSON | [2018] FCCA 3483 |
| Catchwords: FAMILY LAW – Indemnity costs – where costs ordered but not on an indemnity basis. |
| Legislation: Family Law Act 1975 (Cth), ss.79A, 117 |
| Cases cited: Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536 |
| Applicant: | MS KARLSSON |
| Respondent: | MR KARLSSON |
| File Number: | SYC 8036 of 2017 |
| Judgment of: | Judge Henderson |
| Hearing date: | 18 May 2018 |
| Date of Last Submission: | 18 May 2018 |
| Delivered at: | Sydney |
| Delivered on: | 9 November 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Dura |
| Solicitors for the Applicant: | Barkus Doolan |
| Counsel for the Respondent: | Mr Rugendyke |
| Solicitors for the Respondent: | Catalyst Family Lawyers |
ORDERS
The matter is listed on 21 March 2019 at 9:30am for mention in relation to the father’s section 79A application and in relation to parenting.
Leave is granted to the parties to appear by telephone.
The father is to pay the wife’s costs in the sum of $7,400.00 plus filing fees and Counsel’s fees for the costs application only with such sum to be paid within 60 days.
IT IS NOTED that publication of this judgment under the pseudonym Karlsson & Karlsson is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 8036 of 2017
| MS KARLSSON |
Applicant
And
| MR KARLSSON |
Respondent
REASONS FOR JUDGMENT
This is an application by a wife for indemnity costs for an enforcement application of final property orders.
Mr Dura, of Counsel, represented the wife, and Mr Rugendyke of Counsel, the husband.
The material that I read was, as follows:
a)Both parties’ Counsel prepared case outlines and minute of the orders their clients sought. The matter was dealt with by way of submissions.
The wife’s documents were:
a)Application in a Case, filed 11 July 2017; and
b)Affidavit, filed 16 February 2018.
For the husband:
a)Application in a Case, filed 22 August 2017, an affidavit of the same date; and
b)Affidavits of 31 August 2017 and 29 March 2018.
The short chronology is as follows.
The parties commenced cohabitation in 1997.
They were married in 2001.
They finally separated on 15 December 2015.
Final property orders were made in consent at [Local Court].
The wife received a property.
The husband was to receive a property at Property A. The Orders provided he was to discharge the mortgage on that property and discharge the wife’s obligation and that on so doing that property was to be his and the wife was to receive nothing upon that discharge.
The husband did not comply with those Orders in accordance with the timetable, and the wife commenced 79A[1] application in the Federal Circuit Court in Newcastle in December 2016, and an application in case to enforce the order. So she was covering her base there quite appropriately.
[1] Family Law Act 1975 (Cth), s79A.
Orders were made by consent on 23 February 2017 in Newcastle for the enforcement of the 29 June 2016 Local Court orders, and that time to comply was extended to 6 April 2017.
Again the wife agreed on 16 April 2017 to an extension of time for the husband to refinance the debt. Then a serious of correspondences and emails commence between the parties’ lawyers.
The wife wrote to the husband’s lawyers on 8 May 2017 indicating that they would proceed to issue a warrant for sale and seizure of the property as the 23 February 2017 Consent Orders provided for, because the husband still have not complied with his obligation to refinance the debt and remove the wife from the title, and her obligation for that debt.
In June 2017 the wife was informed by the husband’s lawyers that he had signed a [Bank] discharge of mortgage form in May 2017, that he has applied for finance, which was subject to him processing his most recent tax return, which had been lodged with the ATO.
The wife presses on regardless, and on 28 June 2017 sent the transfer for his execution. The husband was overseas for work for one month from 29 June 2017, and asserts he could not sign a transfer. I am not sure I agree with that, but there it is.
The wife obtained the services of a new lawyer and the husband sent the wife an email on 5 July 2017 about his progress with refinancing.
On 11 July 2017, the wife filed an application in a case pursuant to section 106A of the Act[2], for a Registrar to in the absence of the husband, for issue of a warrant of possession, and that it be dealt with ex parte and in Chambers. The husband’s lawyers were served with a copy of the application.
[2] Family Law Act 1975 (Cth), s 106A.
The wife knew, at this time, that the husband was overseas until 20 July 2017. This is confirmed to the wife on 18 July 2017.
On 19 July 2017, the husband has advised he has conditional approval for finance and he writes to the wife’s lawyers advising them that he has conditional approval for refinancing the home.
The matter comes before me on 20 July 2017. The wife’s application was heard, effectively, undefended, because although there was a representative of the husband, nothing was tendered in the matter to convince the Court that they should not proceed, given it was nearly 12 months since the original Consent Orders had been entered into as at July 2017.
The husband writes again to the wife in July after the Orders are made for the property to be transferred to her, saying he has been granted conditional approval and asking her for an opportunity to allow him to refinance, and that was sent on 21 July 2017. The wife took absolutely no notice of this and continued to exercise her right, pursuant to the Orders made 20 July 2017.
The Property A property was ultimately sold. The husband had to bring an Application in a Case to remove his personal items, and the wife was paid the sum of $4,132 in respect of Orders obtained from Judge Dunkley in 4 September 2017, and the husband received the balance of the proceeds of sale of the Property A property.
Now, the matter comes about due to the wife’s application to enforce Orders that she transfer her interest in the Property A property to the husband and he discharge the current [Bank] mortgage, and, therefore, her indebtedness, which orders were made in the Local Court on 28 June 2016.
The husband failed to make arrangements for, or have in place, or be in a position to have the mortgage discharged on the property, and to enable the wife to transfer the property to him, be free of that liability until perhaps 21 July 2017 when he received notice of the conditional approval of the loan. They are relevant facts for this matter.
The second set of relevant facts is that, at all times, the husband was to be the owner of Property A, or all of its proceeds of sale. The wife was to share none of it.
On 20 September 2016, the wife’s application to the Court was by way of enforcement of the 28 June 2016 orders, and she sought, by way of enforcement of those Orders, that the Property A property be transferred to her, she sell it, thereby discharging the [Bank] debt and her obligation and liability in respect of that debt.
Throughout 2016, the husband kept telling the wife refinance was in progress, that he was producing his tax returns, they were being done, he had signed documents with the bank, he was overseas for a month and would she give him an opportunity to refinance.
On 23 February 2017 in Court, Consent Orders were entered into providing for the husband to transfer Property A to the wife. These were Consent Orders he entered into, and he was represented. That he would discharge the mortgage and the wife’s costs in the sum of $4000 be paid for the enforcement.
The Orders provided Property A was to be sold, and apart from that $4000, he receive the proceeds of sale. The husband did not comply with those Orders either. Despite him entering into what I regard as very Draconian orders from the husband’s perspective, he was still seeking the wife give him a chance to comply with the original Consent Orders throughout the first half of 2017. So about 12 months have expired and still the wife is on the title and the husband is still saying, “I am getting the refinancing done”.
The husband was oversees for a month, [date] 2017, but he went overseas without having complied with the 23 February 2017 Orders, and the wife pursued his obligation to comply with those Orders. On 20 July 2017, the matter came before me and the wife’s enforcement application, and in the absence of any of the evidence about conditional finance approval and the like, I made Orders that she sought on an undefended basis.
The simple facts are, the husband failed to comply with the 28 June 2016 orders, and the 23 February 2017 orders, and the wife has been the moving party in having these orders complied with, and, thus, has incurred costs in so doing.
Secondly, the wife was, at no time, at any risk because of the husband’s failure to comply financially. She had not been refused a mortgage or loans due to her continued indebtedness on the Property A property, and it was, although the Orders had not been complied with, clear there was no adverse effect on her day-to-day functioning or decision-making in the future. The wife was to receive, as I have said, none of the proceeds of sale of Property A.
This is clearly a matter in which I should exercise my discretion to make a costs order, and depart from the usual rule where both parties pay their costs, if for no other reason that these Court proceedings have come about due to the husband’s failure to comply with two sets of Consent Orders. Not one but two sets of Consent Orders. However, whether the husband’s conduct on these facts amounts to exceptional, out of the ordinary, flagrant, or some other high category to justify an indemnity costs order, which is what I am asked to make, is not so clear.
It is correct that proceedings came about due to the husband’s failure to comply with two sets of Consent Orders. However, the wife knew on 19 July 2017 that the husband had been approved conditional finance. She also knew, at that stage, that the original intention of the 2016 Orders was always that he keep this property, and that if he refinanced the property, this was a much easier thing for her than what ultimately occurred, she having to sell that property, which she did. She also knew she was to receive no funds from the sale of the property other than the costs that she had incurred in obtaining the second set of Consent Orders, and she knew all of this at the hearing before me on 20 July 2017.
I see that fact as significantly ameliorating the husband’s conduct to way below the exceptional or out of the ordinary that is required I find in order to make an indemnity costs order.
The principles in relation to indemnity costs in the Family Law proceedings are referred to in decisions such as Kohan[3], Munday & Bowman[4], and Penfold & Penfold[5]. Going to the decision of Kohan[6], that was a decision of the Full Court consisting of Strauss, Lindenmayer and Bulley JJ, and they found as follows:
In appropriate case, the Court has discretion to order costs on an indemnity basis, and such costs may be ordered where they have been incurred under a costs agreement which departs from the usual scale of costs. However, it is fundamental to the exercise of that discretion in the Family Court that the judge should not only understand that such an order is a very great departure from the normal standard, but also that the judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale, and what its likely impact will be on the financial position of each party.
[3] Kohan & Kohan (1993) FLC 92-340.
[4] Munday & Bowman (1997) FLC 92-784.
[5] Penfold & Penfold (1980) 144 CLR 311.
[6] Above, note 3.
Their Honours go onto say:
The intent of 117(1) and (2) of the Act is that costs should not follow the event. However, where the Justice of the matter requires, the Court may make such order it considers just. It may depart from the scale described by the rules, but should not depart lightly.
In the decision of Munday & Bowman[7], his Honour, the then Chief Justice of the Western Australian Family Court, Holden CJ, set out five criteria to be applied in exercising to discretion to order indemnity costs, and he distilled these principles from the Colgate Palmolive[8] case. His Honour said as follows – and I must bear in mind, as his Honour said in his decision of Munday & Bowman[9], that in dealing with costs under the Federal Court rules, costs do follow the cause, unlike under Family Law proceedings, but the five criteria is this:
[7] Above, note 4.
[8] Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536.
[9] Above, note 4.
Where it appears an action has been commenced or continued in circumstances where a party should have known they had no chance of success,
making allegations of fraud knowing them to be false
there is evidence of particular misconduct that causes loss of time to the Court and other parties
the making of allegations which should never ought to have been made,
or the undue prolongation of litigation, an imprudent refusal of an offer to compromise.
Now, going to the Act under which I operate, section 117 of the Act[10] sets out offers of settlement which apply to the proceedings, and that section says as follows, 117C(2)(a):
If a party to proceedings to which this section applies makes an offer to the other party to the proceedings to settle the proceedings; and the offer is made in accordance with Rules of Court, the terms of the offer must not be disclosed to the Court or heard except for the purposes of the consideration by the Court of whether it should make an order as to costs under subsection 117(2) and the terms of any such order.
[10] Family Law Act 1975 (Cth) s 117.
So what the husband offered to do on 19 July 2017 is, “I have a conditional notice of approval for refinance from [Bank]. Let me take this property over”, was an offer by him which the wife, as I see the evidence, imprudently refused to accept. The husband made an offer to the wife, which she simply rejected, and, for that reason alone, there being no misconduct by the husband, as such, prolonging the litigation, rather, if I could use this word, a slackness by him in getting his finances in order, I see the wife was imprudent to reject that offer.
Further, I am not entirely certain that had I had all these facts now known to me and presented to me on 20 July 2017, I would have made the orders sought by the wife. However, that may be otiose reasoning. However, the father failed to comply with two sets of Consent Orders. His offer to settle was very late in the proceedings, some 15 months almost after the original orders were made.
Given that the wife was wholly successful in the action, and that this action by her was necessitated by his failure to comply, I will order him to pay the wife’s costs at scale as enforcement proceedings, which is:
(a)costs for the 11 July 2017 application, following the application, $2162;
(b)the interim hearing on 20 July 2017, $1801;
(c)the daily hearing fee, which is $1081; and
(d)the advocacy loading, which is 50 per cent of the daily hearing fee, $540, for 20 July 2017 given that the wife’s costs earlier for the first enforcement hearing had been paid from the sale of the Property A property.
She has incurred filing fees, which must be paid by the husband, and she has incurred the cost of the costs application, which is, again, a hearing fee, of $1801, being solicitors costs, and I will allow counsels fees for the costs application, and I am not sure what they are.
At scale, absent the issue of filing fees and Counsel’s fees for the costs hearing, the scale costs I have assessed today that the husband is to pay to the wife is $7400 in addition to Counsel’s fees for the costs hearing and any filing fees incurred by the wife.
They are to be paid by him within 60 days of today’s date.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Henderson
Date: 28 November 2018
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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