Kusno and Kusno (No. 3)

[2018] FamCA 443

FAMILY COURT OF AUSTRALIA

KUSNO & KUSNO (NO. 3) [2018] FamCA 443

FAMILY LAW – COSTS – Where the wife seeks costs – Where the husband failed to comply with orders made by consent – Where the wife filed an application for enforcement – Where orders made for enforcement substantially as sought by the wife – Where the husband was  wholly unsuccessful – Where the wife has been put to expense by the husband’s inaction – Where the wife seeks indemnity costs – Where the wife has not provided a copy of her costs agreement with her solicitor – Where the wife’s application for indemnity costs must fail – Where there are justifying circumstances for an order for the husband to pay the wife’s costs on a party/party basis – Order made for the husband to pay the wife’s costs of and incidental to her enforcement application as agreed or assessed.

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

Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160
Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536
Collins and Collins (1985) FLC 91-603
D & D(Costs) (No. 2) [2010] FamCAFC 64
Fennessy & Gregorian [2009] FamCAFC 44
Greedy and Greedy (1982) FLC 91-250
Hawkins & Roe [2012] FamCAFC 77
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
Joyce & Fante [2013] FamCAFC 141
Kusno & Kusno (No. 2) [2018] FamCA 242
Limousin & Limousin [2007] FamCAFC 1178
Luadaka v Luadaka (1998) FLC 92-830
Parke & the Estate of the Late A Parke (2016) FLC 93-748
Penfold v Penfold (1980) 144 CLR 311
Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681

APPLICANT: Ms Kusno

RESPONDENT: Mr Kusno

FILE NUMBER: PAC 5051 of 2016

DATE DELIVERED: 15 June 2018

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: By way of written submissions last received on 23 April 2018

REPRESENTATION

SOLICITOR FOR THE APPLICANT: David Legal

SOLICITOR FOR THE RESPONDENT: A R Walmsley And Co

Orders

1. That the husband pay the wife’s costs of and incidental to the Application in a Case filed 28 July 2017 on a party/party basis as agreed within one month from this date or otherwise as assessed.

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 Kusno & Kusno (No. 3) 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 PARRAMATTA

FILE NUMBER: PAC 5051  of 2016

Ms Kusno

Applicant

And

Mr Kusno

Respondent

REASONS FOR JUDGMENT

1. On 28 March 2018 the Court delivered Reasons for Judgment and made orders on the wife’s Application in a Case filed 28 July 2017 seeking enforcement of previous orders made 10 April 2017 for the sale of the parties’ property at Suburb C, New South Wales.

2. These Reasons for Judgment assume familiarity with those reasons for judgment: Kusno & Kusno (No. 2) [2018] FamCA 242. Those Reasons for Judgment include the following:

   2.On 10 April 2017 interim orders were made by consent that in substance provided for the parties to obtain a valuation of their real estate holdings and for the sale of the parties’ property at L Street, Suburb C, New South Wales, being the whole of the land in folio identifier … (“the Suburb C property”).

   3.The agreed sale orders provided for the appointment of a real estate agent for the purposes of the sale, that the Suburb C property be sold by private treaty within 42 days from the date of its listing for sale and in default the property be offered for sale by public auction no later than 30 September 2017.

   4.Orders, otherwise, provided for an orderly disposition of part of the proceeds of sale with the balance after various payments to be divided equally between the parties.

   5.This further application comes before the Court in circumstances where the sale has not taken place and the wife complains that the husband has by his own inaction continued to frustrate the sale process.

   …

   12.The husband relies upon his affidavit filed 20 March 2018. Relevantly he asserts in his affidavit that he is concerned that if a trustee is appointed that such appointment will become public knowledge and the property sale may not obtain the best price reasonably obtainable.

   13.Otherwise, the husband offers no evidence as to circumstances that have precluded the property being sold in accordance with consent orders made almost 12 months ago.

3. An Order was made appointing a trustee for sale of the subject property in the following terms:

   (1)That by way of enforcement of the Orders made on 10 April 2017 and for the purposes of facilitating the sale of the former matrimonial home known as and situate at L Street, Suburb C (“the Suburb C property”) Mr M, Solicitor, shall be appointed to act as Trustee for the Husband and Wife (“the Trustee”) and for this purpose the Suburb C property shall vest in the Trustee for sale.

   (2)That for the purposes of Order (1) above, the Trustee shall:

   (a)Cause the Suburb C property to be listed for sale by public auction with such real estate agent/s as appointed by the Trustee (“the Listing Agent”);

   (b)Cause the listing/reserve price of the Suburb C property to be set at an amount nominated by the Trustee in conjunction with the Listing Agent with the intent of maximising the sale price for the benefit of the parties;

   (c)Cooperate in every way with the Listing Agent in relation to the marketing of the Suburb C property for sale including making the key readily available, allowing inspection of the Suburb C property at all times reasonably requested by the Listing Agent and ensuring that the Suburb C property is clean, neat and in good condition at the time of inspection by any prospective buyer;

   (d)Upon agreement being reached for the sale of the Suburb C property the Trustee shall execute the contract of sale and all other documents necessary to complete the sale of the Suburb C property including all transfer documents forthwith upon its submission to them by the agent or their solicitor; and

   (e)Cause the proceeds of sale to be paid in the following manner and priority:

   (i)To discharge any mortgage/s secured over the said property;

   (ii)Payment of the Listing Agent’s commission and advertising and other expenses, if any, payable on the sale;

   (iii)Payment of legal costs relating to the sale;

   (iv)Payment of outstanding utilities and rates;

   (v)Payment of the Trustee’s reasonable costs;

   (vi)Payment of such sums to the parties in compliance with the Orders made on 10 April 2017; and

   (vii)Payment of the balance of the funds in accordance with Orders made on 10 April 2017.

4. The question of costs of and incidental to the wife’s Application for enforcement was the subject of orders for written submissions and upon completion of those submissions judgment was reserved.  Submissions were duly received from the wife.  No submissions were received from the husband.

Costs

1. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs.

2. That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2) of that section, which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.

3. Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: Penfold v Penfold (1980) 144 CLR 311.

4. The matters relevant to determining what order, if any, should be made for costs are set out in s 117(2A). They relevantly, in these proceedings, relate to the following:

   (a) the financial circumstances of each of the parties to the proceedings;

   (b) whether any party has legal aid and the terms of any grant of aid;

   (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 answers, 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.

5. In Collins and Collins (1985) FLC 91-603 (at 79,877), the Full Court described the discretion conferred by s 117 as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way.

6. In Greedy and Greedy (1982) FLC 91-250 and Luadaka v Luadaka (1998) FLC 92-830, the Full Court made it clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.

7. Later the Full Court in Hawkins & Roe [2012] FamCAFC 77 said:

   17. With respect to the application of the section, in Penfold and Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:

   Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a clear case".

   Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.

   18. The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:

   … A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.

8. The provision relating to the calculation of costs is set out in r 19.18(1) of the Family Law Rules 2004 (Cth) (“the Rules”) which state:

   (1)The court may order that a party is entitled to costs:

   (a)of a specific amount;

   (b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

   (c)to be calculated in accordance with the method stated in the order; or

   (d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.

9. It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162 that the purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”.

10. In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 the Court said at [10] that the Court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.

11. Murphy J observed in Parke & the Estate of the Late A Parke (2016) FLC 93-748:

    130. If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court”… The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”…

The wife’s submissions

1. The wife contends that orders made on 27 March 2018 are those as sought by the wife in her application seeking orders as to enforcement.  Thus it is submitted the husband was wholly unsuccessful in the proceedings.

2. Otherwise, it is contended that the enforcement application was brought as a matter of necessity by reason of the husband’s repeated inaction and failure to comply with the terms of the consent orders made in April 2017.  His affidavit in response to the wife’s application for enforcement provided no good reason for his failure to comply with the orders.

3. The wife’s submissions are of substance.

4. Otherwise, the financial circumstances of the parties are not indicative of any inability to meet a costs order.

5. Neither party is in receipt of a grant of legal aid for the proceedings.

Indemnity costs

1. The wife in the circumstances submits that the husband should pay her costs on an indemnity basis.

2. It is usual for the Court to make an order for costs on a party/party basis.

3. Provisions of the Rules, particularly rule 19.18, provides for the method of calculations of costs. That rule is set out above.

4. Rule 19.18 further provides:

   (3) In making an order under subrule (1), the court may consider:

   (a)the importance, complexity or difficulty of the issues;

   (b)the reasonableness of each party’s behaviour in the case;

   (c)the rates ordinarily payable to lawyers in comparable cases;

   (d)whether a lawyer’s conduct has been improper or unreasonable;

   (e)the time properly spent on the case, or in complying with pre-action procedures; and

   (f)expenses properly paid or payable.

5. The Court has jurisdiction in its discretion to make an order for costs on an indemnity basis and the purpose of such an award is to more fully or even wholly repay to a party all, or at least the majority, of their legal costs and disbursements and charges incurred in the proceedings.

6. The category of cases in which an award of an indemnity costs order may be appropriate are not closed and the Full Court of the Family Court observed in Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681 at [31]:

   … 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 order is sought. …

7. More recently, the Full Court has considered indemnity costs in Joyce & Fante [2013] FamCAFC 141, Limousin & Limousin [2007] FamCAFC 1178, Fennessy & Gregorian [2009] FamCAFC 44 and D & D (Costs) (No. 2) [2010] FamCAFC 64.

8. Otherwise, the principles underlying an award for indemnity costs have been classically summarised by Sheppard J in Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536 where his Honour, in summary, said at [24]:

   …

   2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on a party and party basis. …

   3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. …

   4. In consequence of the settled practice which exists, the Court ought not usually make an order for payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. …

9. Sheppard J detailed some of the circumstances which may warrant the exercise of the discretion to award indemnity costs and they included:

   a)false and irrelevant allegations of fraud;

   b)misconduct that causes a loss of time to the Court and other parties;

   c)where the proceedings were commenced or continued for an ulterior motive;

   d)the undue prolongation of a case on groundless contentions;

   e)wilful disregard of known facts and clearly established law; and

   f)the imprudent refusal of an offer of settlement. 

10. The wife has been put to expense in procuring compliance by the husband with his obligations under the earlier orders.

11. The wife has not provided a copy of her costs agreement as between herself and her solicitors in compliance with mandatory obligations under Rule 19.08(3). Failure to do so is fatal to her application for indemnity costs. 

12. However, in the circumstances of this matter, it is appropriate that the ordinary rule as to costs on a party/party basis be applied, there being no egregious circumstances such as contemplated in Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited  that would clearly enliven an award of indemnity costs.

13. Otherwise it is just, for the reasons discussed above, that there be an order that the husband pay the wife’s costs of and incidental to these proceedings on a party/party basis as agreed or assessed.

14. Orders will be made accordingly.

I certify that the preceding thirty four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 15 June 2018.

Associate: 

Date:  15 June 2018