Kelly and Lomax and Ors (No 2)

[2016] FamCA 1013

FAMILY COURT OF AUSTRALIA

KELLY & LOMAX AND ORS (NO 2) [2016] FamCA 1013

FAMILY LAW – COSTS

Family Law Act 1975 (Cth)

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
D & D (Costs) (No 2) (2010) FLC 93-435
Kohan and Kohan (1993) FLC 92-340
Limousin v Limousin (Costs) (2007) 38 Fam LR 478
Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029

APPLICANT: Ms Kelly

RESPONDENT: Mr Lomax

OBJECTOR: DD Pty Ltd

OBJECTOR: D Pty Ltd

OBJECTOR: ACN...Pty Ltd

THIRD PARTY: Ms Lomax

INDEPENDENT CHILDREN’S LAWYER: Couper Geysen Family & Animal Law

FILE NUMBER: BRC 6009 of 2010

DATE DELIVERED: 25 November 2016

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: 21 November 2016

REPRESENTATION

THE APPLICANT: In person

THE RESPONDENT: In person

THE INDEPENDENT CHILDREN’S LAWYER: No appearance 

Orders

IT IS ORDERED THAT

1. The Application in a Case filed by Ms Kelly on 7 November 2016 is dismissed.

IT IS FURTHER ORDERED, PURSUANT TO S 117(2) OF THE FAMILY LAW ACT 1975 (CTH), THAT

1. By this Order, the solicitors of KC Lawyers are hereby directed to pay the following sums from Ms Kelly’s portion of the funds held by them in trust on her behalf:

   (a)$1,666.66 - to be paid to DD Pty Ltd, in such manner as is directed by Ms Lomax in writing; and

   (b)$1,666.66 - to be paid to D Pty Ltd, in such manner as is directed by Ms Lomax in writing; and

   (c)$1,666.66 - to be paid to ACN...Pty Ltd in such manner as is directed by Mr Lomax in writing.

IT IS FURTHER ORDERED THAT

1. After the solicitors of KC Lawyers have complied with the terms of Clause (2) of this Order:

   (a)Clauses (24) and (27) of the Order made on 30 September 2016 are discharged; and

   (b)each of Ms Kelly and Mr Lomax are at liberty to direct the solicitors of KC Lawyers to pay to them, or at their direction and on their behalf, those remaining funds which have been apportioned to each of them by the solicitors of KC Lawyers, in accordance with Clause (20) of the Order made on 30 September 2016, and held in trust by that firm on their behalf.

2. All other applications for an order as to costs are dismissed.

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 Kelly & Lomax (Costs) 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 BRISBANE

FILE NUMBER: BRC 6009 of 2010

Ms Kelly

Applicant

And

Mr Lomax

Respondent

REASONS FOR JUDGMENT

1. Mr Lomax and Ms Kelly have been involved in litigation, on and off, since their separation in 2004. The proceedings involved Ms Lomax until, on 27 June 2013, Tree J ordered, for the reasons then given, that she be removed as a party to them. On 25 June 2015, His Honour dismissed Ms Lomax’s application for an order that Ms Kelly and her legal representative pay costs in an amount of $109,418.77 on an indemnity basis “for legal fees incurred in [the] unsuccessful attempt to join [Ms Lomax] as a third party to the proceeding”.[1]

   [1]See: Order made and Reasons for Judgement delivered by Tree J on 25 June 2015.

2. On 30 September 2016, I made final parenting and property orders. I also made orders which permitted the parties, and those entities which had been named in subpoena issued at Ms Kelly’s request, to seek an order for costs and be heard in respect of the same via the provision of written submissions.

3. Mr Lomax, Ms Lomax and three entities (namely, DD Pty Ltd, D Pty Ltd and ACN...Pty Ltd) all seek orders that Ms Kelly pay certain particularised costs. Her capacity to meet any order for costs is limited to those funds currently held on trust on her behalf by KC Lawyers – which funds I approximate as being in an amount of about $63,708.67.[2]

   [2]Following the implementation of the Orders made on 30 September 2016.

4. There is no application from Ms Kelly for an order that Mr Lomax pay any costs associated with these proceedings.

Principles

1. Unless otherwise ordered following the formation of an opinion that there are circumstances which justify such order, each party to proceedings under the Family Law Act1975 (Cth) shall bear his or her own costs.[3] Those matters to which regard must be had in determining what order (if any) should be made to depart from this starting point are set out in s 117(2A) of the Act.

   [3] s 117(1) Family Law Act 1975 (Cth).

2. The financial circumstances of Ms Kelly and Mr Lomax are as outlined in the Reasons for Judgment delivered 30 September 2016. Neither of them was in receipt of legal aid at the trial: rather, Mr Lomax appeared on his own behalf and Ms Kelly was represented by Mr Baston of Counsel who appeared on a pro bono basis.

3. As I have already remarked upon, Ms Kelly failed on numerous occasions to comply with directions made to ensure that the matter was ready to proceed as listed. However, given that Mr Lomax appeared on his own behalf after Tree J’s determination of an aspect of the proceedings in 2013, this conduct has not been demonstrated to have resulted in Mr Lomax incurring additional legal costs.

4. Whilst it certainly appears that Ms Kelly received less as a result of my determination of the matter than she may have received if the proceedings were resolved by agreement earlier, this factor alone does not, of itself, compel a conclusion that the circumstances justify the making of an order that she pay those legal costs sought by Mr Lomax.

5. Even if the Court concludes that the circumstances justify the making of an order that one party pay the costs of another, such conclusion does not lead inexorably to the making of an order that such costs be paid on an indemnity basis. This is because authority[4] clearly establishes that an order for costs on an indemnity basis is a “very great departure” from the “normal standard” in this and other jurisdictions.

   [4]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029; Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478, D & D (Costs) (No 2) (2010) FLC 93-435.

Mr Lomax’s application for costs

1. Whilst formulated as constituting part of his overall application for an order that Ms Kelly pay certain costs associated with these proceedings, it is clear that what Mr Lomax really seeks – in part at least – is that Ms Kelly reimburse him for certain payments he has made.

2. That is, as he did at the final hearing before me, he seeks that Ms Kelly is ordered to reimburse him for:

   a)costs associated with the preparation of a Family Report in 2005; and

   b)costs associated with the provision of information by his accountant to her; and

   c)costs associated with the children’s counselling.

   The costs of Mr GW’s Report

3. In mid-2005, Mr GW prepared a Family Report for the parents’ use in considering those parenting arrangements which may have been in their children’s best interests at that time. When he did so, no proceedings were on foot.

4. Mr Lomax’s position may be summarised as being that, as he and Ms Kelly agreed to be equally responsible for the cost of Mr GW’s report, she should reimburse him for half of the total costs associated with it because he paid the entirety of the same. Consequently, he seeks that she pay him the sum of $5,000.00 from the monies held in trust on her behalf.

5. Whilst Ms Kelly accepts to some extent[5] that she agreed to meet half of the costs of this report, she submits that any agreement the parties reached about  this issue involved a term that Mr Lomax be reimbursed at the finalisation of the proceedings. She says that those proceedings were, in fact, finalised when a final parenting order was made by consent in 2010.

   [5]She appeared to suggest that she had not voluntarily agreed to this arrangement and that it has arisen via correspondence which passed between the parties then legal representatives.

6. I accept the thrust of this submission and decline to accede to Mr Lomax’s application for an order that Ms Kelly pay him the sum of $5,000.00.

   Accounting costs

7. On 15 August 2011, Federal Magistrate Demack made Orders which authorised Ms Kelly to speak with, and receive information from, the accountants then employed by Mr Lomax or entities with which he was associated. The Orders also provided that any costs associated with the provision of information pursuant to those orders were to be borne solely by Ms Kelly.

8. A further order made on 12 December 2011 required Mr Lomax to coordinate with Ms Kelly and his accountants to arrange an appointment “for the express purpose of organising disclosure of material held by the accountant in the most cost effective way”.

9. Mr Lomax submits that the costs associated with the provision of information by the accountants to Ms Kelly is in an amount of $9,355.50 and that he should be paid this amount from the monies currently held in trust on her behalf.

10. Whilst Ms Kelly accepts she has not paid any money to Mr Lomax’s accountants, she does not accept that the costs covered by the Order are in the amount asserted by Mr Lomax.

11. Mr Lomax relied on certain invoices and a summary document as providing the basis for his calculation of the costs payable by Ms Kelly. Reference to those documents seems to me to show little more than that both Ms Kelly and Mr Lomax attended on the accountants (both jointly and individually) on various occasions between October 2011 and February 2012, that some documents were to be provided to Ms Kelly and some company searches undertaken.

12. As the summary does not particularise what time was spent with either Ms Kelly or Mr Lomax individually and/or together nor the cost of each individual attendance, it is impossible in my view to determine what proportion of the overall costs is referable to Ms Kelly alone. Additionally, reference to Invoice 124960 reveals that it relates to the preparation of a valuation report - not the provision of information to Ms Kelly. Further, it seems that the meeting on 1 February 2012 related to the valuation report and that preparation for that meeting included reviewing Mr Lomax’s affidavit material.

13. In my view, such activities do not come within the concept of “the provision of information” to Ms Kelly. Unlike what is recorded in the summary document (the authorship of which is not described), the invoice itself does not describe any activity as being something which resulted in a cost or expense associated with preparing “documents to be provided to Ms Kelly.”

14. In such circumstances, insofar as Mr Lomax’s application might be thought to be one seeking to enforce the terms of a pre-existing order, I decline to accede to it. Further, I am not persuaded that the circumstances justify the making of an order that Ms Kelly pay such costs.

    Children’s counselling costs

15. On 14 October 2014, the Principal Registrar ordered that X and W attend therapeutic counselling with a person nominated by the Independent Children’s Lawyer. Mr Lomax was ordered to meet the costs associated with the children’s attendance on the counsellor. He was said to be at liberty to seek an order for the payment of monies for this from Ms Kelly’s property settlement proceeds.

16. It is uncontroversial that the children subsequently participated in the therapeutic counselling. Mr Lomax seeks that Ms Kelly reimburse him $590.00 which is asserted to be half of the total costs he has paid for them to participate in this counselling.

17. Having regard to the manner in which I considered[6] Mr Lomax’s payment of this cost in my determination of the property settlement proceedings concluded by the making of Orders on 30 September 2016, I decline to accede to Mr Lomax’s application in this respect.

    [6]See Reasons for Judgment delivered 30 September 2016, at, for example, [140] and [141].

    Legal costs

18. Mr Lomax seeks that Ms Kelly pay him the sum of $15,536.40, being those legal costs he says he incurred as a consequence of responding to Ms Kelly’s application for relief against Ms Lomax and/or property held by her.

19. He relies on two redacted tax invoices from Mr IK SC for the time period between 5 February 2013 and 13 March 2013. One invoice contains a notation of Mr IK’s estimate that the apportionment of fees was as to approximately 33 per cent to Mr Lomax and the balance to Ms Lomax.

20. Mr Lomax submits that, as Ms Kelly was wholly unsuccessful in her attempts to join and seek relief against Ms Lomax, the circumstances justify the making of an order that she pay his costs associated with the three day appearance before Tree J in mid-2013 after which His Honour ordered – as already adverted to – that Ms Lomax be disjoined from the proceedings which I ultimately determined when I made orders on 30 September 2016.

21. I am not persuaded that the circumstances before me are such as to justify making an order that Ms Kelly pay Mr Lomax’s costs associated with a discrete application that occupied three days of hearing time before Tree J in 2013 and I decline to accede to Mr Lomax’s application in this respect.

Ms Lomax’s application for costs

1. From about mid-2012, Ms Kelly sought relief against Ms Lomax, either by way of order in respect of real property owned by her or entities in respect of which Ms Lomax was the sole director and shareholder.

2. The proceedings as they related to Ms Lomax were finalised in 2013 by orders made by Tree J. After that, His Honour determined Ms Lomax’s application for an order that Ms Kelly pay her costs, on an indemnity basis, “for legal fees incurred in [the] unsuccessful attempt to join [Ms Lomax] as a third party to the proceeding”.

3. Ms Lomax advanced that, despite Tree J’s determination of her application for these costs, I would be persuaded that the circumstances justify the making of an order that Ms Kelly pay her costs associated with an appearance before Federal Magistrate Myers (as his Honour then was) in mid-June 2012.

4. I am not persuaded by her submissions in this respect. I consider that the costs of the appearance before Federal Magistrate Myers forms part of Ms Lomax’s costs of Ms Kelly’s ultimately unsuccessful attempt (as determined by the orders made by Tree J) to join her to the proceedings and then to seek orders against property she owns and/or entities ostensibly under her control. I consider that, given the manner in which Ms Lomax’s earlier application for costs was particularised before Tree J, her subsequent application for an order relating to the costs of the appearance before Federal Magistrate Myers is encompassed by Tree J’s order which dismissed the earlier application.

The entities’ applications for costs

1. On 23 June 2016, Ms Kelly sought and was granted leave to issue subpoena directed to DD Pty Ltd, D Pty Ltd and ACN...Pty Ltd. Each entity objected to the production of a large proportion of documents sought by the terms of the subpoena.

2. I accept that, on 28 June 2016, the entities corresponded with Ms Kelly in an attempt to resolve the issue without the need for a judicial determination. Such correspondence contained the assertions that the documents in respect of which objection to production was taken were, inter alia, irrelevant, that the terms of the subpoena were such that it was fishing in nature and that compliance with the same would be unduly onerous.

3. On 24 August 2016, I set aside the subpoenae, as sought by the entities.

4. Each entity seeks that Ms Kelly pay its costs, on an indemnity basis, associated with the subpoena. The amount sought by each is $1,666.66.

5. I accept that Ms Kelly was wholly unsuccessful in maintaining her reliance on the subpoenas in the terms in which each was drawn. I also accept that each of the entities attempted to resolve the matter of their respective objections to each subpoena (in the terms in which each was drawn) without the necessity of an appearance by Counsel who was instructed jointly by them to appear on their behalf.

6. Whilst I accept that Ms Kelly’s financial circumstances are very limited and/or constrained, I am persuaded that the circumstances justify the making of an order that Ms Kelly pay each entity’s costs of and incidental to the subpoena.

7. As already adverted to, authority makes clear that, unless there are exceptional circumstances, costs should be ordered on a party and party basis. I am not persuaded that the circumstances here are such as to warrant a departure from the ‘usual course’ and I decline to make an order that Ms Kelly pay the entities’ costs on an indemnity basis.

8. However, given:

   a)the quantum of the costs sought by each of the entities; and

   b)the costs allowable pursuant to Schedule 3[7] of the Family Law Rules (2004) for the work encompassed by these costs; and

   c)the likely costs associated with any requirement that the costs are assessed if agreement about the quantum cannot be reached (a matter I consider to be highly likely given the history of this matter),

   I consider it just that I fix the costs which are to be paid by Ms Kelly to each of the entities in the amount of $1,666.66.

   [7]          In particular, Items 201 and 203.

9. Orders will be made to reflect this determination and also to enable Ms Kelly and Mr Lomax to each be paid those funds which are currently held in trust by KC Lawyers on their behalf.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 25 November 2016.

Associate:     

Date:              25 November 2016