Lake and Brand and Anor

[2016] FamCA 848

FAMILY COURT OF AUSTRALIA

LAKE & BRAND AND ANOR [2016] FamCA 848

FAMILY LAW – COSTS – Application for costs on an indemnity basis against a third party company – where the company withdrew from the proceedings four days prior to the final hearing – where the wife incurred significant costs in meeting the company’s case prior to its withdrawal – where the company was wholly unsuccessful in its claim to recover a debt alleged to be owed to it by the husband and wife – bona fides of the company in issue – where the costs sought by the wife are directly referable to the proceedings initiated by the company – where the circumstances of the case justify an order for costs on an indemnity basis – order made for costs in a fixed sum as sought by the wife

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

I & I (No 2) (1995) FLC 92-625
Kohan & Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784
Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681; (2000) FLC 93-029

APPLICANT: Ms Lake

RESPONDENT: Mr Brand

SECOND RESPONDENT: I Pty Ltd

FILE NUMBER: MLC 5385 of 2013

DATE DELIVERED: 28 September 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 15 July 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Smallwood

SOLICITOR FOR THE APPLICANT: Wightons Lawyers

THE RESPONDENT: In person

THE SECOND RESPONDENT: No appearance

Orders

IT IS ORDERED THAT

1. I Pty Ltd as Trustee for the I Unit Trust pay the wife’s costs of and incidental to the Response to Initiating Application filed 12 December 2014 (as amended) and the Notice of Discontinuance filed 22 October 2015 fixed in the sum of $30,184.28.

2. As soon as practicable the wife cause a sealed copy of these orders and Reasons for Judgment to be served upon I Pty Ltd (formerly the second named respondent in these proceedings) by prepaid post addressed to its registered office.

3. The Application in a Case filed 16 November 2015 be otherwise dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lake & Brand and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 5385 of 2013

Ms Lake

Applicant

And

Mr Brand

Respondent

And

I Pty Ltd

Second Respondent

REASONS FOR JUDGMENT

1. On 20 May 2016 I made final orders for property settlement as between the husband and the wife. Those orders included an order that I Pty Ltd as trustee for the I Unit Trust, which had formerly been a party to the proceedings, be restrained pursuant to s 90AF(2) of the Family Law Act 1975 (Cth) (“the Act”) from instituting any proceeding to recover any debt it alleged might be owing to it by the wife either severally or jointly with the husband and from endeavouring to prove any debt allegedly due to it from the wife either severally or jointly with the husband in the event of receivership and/or liquidation.

2. I further ordered that that all questions of costs be reserved and listed for hearing together with the wife’s Application in a Case filed 16 November 2015 on 15 July 2016.  In that Application in a Case the wife sought an order that I Pty Ltd pay her costs relating to the Response filed 12 December 2014 (as amended) and the Notice of Discontinuance filed 22 October 2015 on an indemnity basis together with the costs of the Application in a Case. In support of her Application in a Case the wife relied upon her Affidavit filed 16 November 2015 and the Affidavits of her solicitor Ms L filed 20 November 2015 and 1 December 2015.

3. On 31 May 2016 the husband filed a Notice of Appeal against paragraphs 3, 4, 5, 6, 7, 8, 10(a) and 10(c) of the orders made 20 May 2016. That appeal is awaiting hearing.

4. At the commencement of the hearing on 15 July 2016 the wife reserved her position with respect to an application for costs against the husband until the appeal has been heard and determined but sought orders in terms of her Application in a Case filed 16 November 2015.

Background  

1. The wife’s Initiating Application was listed for a first day hearing before Cronin J on 3 November 2014. On that date I Pty Ltd sought and was granted leave to intervene in the proceedings and was ordered to file a response to the wife’s application by 4.00 pm on 12 December 2014.  

2. On 12 December 2014 I Pty Ltd filed a Response to Initiating Application in which it sought the following orders:

   1.That the Husband and the Wife pay [I Pty Ltd] as Trustee of the [I Unit Trust] the sum of $962,875.00 (“the Payment”) by instalments as follows:

   a.       $124,000, within 7 days, from the amount currently invested in a term deposit account at the Westpac Bank on behalf of the parties; and

   b.      The balance within 30 days.

   2.That in the event that the Husband and the Wife default in making the Payment by its due date:

   a.       the Husband transfer his shares in the sailing vessel called ,,, to the Company on trust for sale and the net proceeds of sale (after payment of any sale expenses) be applied towards the Payment.

   b.      the real property situated at and known as [D Street, E Town] be sold and the proceeds of sale applied as follows:

   i.Firstly to pay the costs, commissions and expenses of the sale;

   ii.Secondly to discharge any existing mortgage over the property;

   iii.The balance towards any amount of the Payment that is then outstanding.

   3.Such further or other Orders as the Court deems appropriate.

3. On 20 April 2015 I Pty Ltd filed an Amended Response to the wife’s Initiating Application in which it sought orders in similar terms save that paragraph 2 of the Amended Response to Initiating Application was amended to read as follows:

   2.That in the event that the husband and the wife default in making the payment by its due date:

   a.       The husband transfer his shares in the sailing vessel called … to the company trustee of the [I Unit Trust] on trust for sale and the net sale proceeds (after payment of any sale expenses) be applied towards the payment;

   b.      The real property situated at and known as [D Street, E Town] be sold transferred to the trustee of the [I Unit Trust] on trust for sale and the proceeds of sale applied as follows:

   i.Firstly to pay the costs, commissions and expenses of the sale;

   ii.Secondly to discharge any existing mortgage over the property;

   iii.The balance towards any amount of the payment that is then outstanding.

4. I also sought an order in its capacity as trustee of the I Unit Trust for the return of documents previously stored at the property at B Street, C Town.

5. On 7 July 2015 I Pty Ltd filed a Further Amended Response seeking repayment of $1,125,390 in lieu of the figure sought in both the Response and the Amended Response in the sum of $962,875.  On 18 June 2015 I Pty Ltd filed an Affidavit sworn by Mr Z, an accountant engaged by I Pty Ltd to conduct forensic investigations with “a view to establishing the value of the debt” allegedly owing by the husband and the wife to I Pty Ltd. On 3 September 2015 I Pty Ltd filed Affidavits of evidence in chief sworn by both the husband’s sister Dr M Brand in her capacity as a director of I Pty Ltd and Ms A Brand, the husband’s mother, in her capacity as Secretary and as the bookkeeper for I Pty Ltd in accordance with orders made on 4 May 2015 setting the matter down for final hearing on 26 October 2016.

6. On 22 October 2015, a matter of days before the final hearing commenced, I Pty Ltd filed a Notice of Discontinuance albeit that the husband’s sister Dr A gave evidence at the hearing on behalf of the husband and he relied upon the Affidavit of Mr Z in support of his case.

Service

1. The wife’s Application in a Case seeking costs against I Pty Ltd was served upon I Pty Ltd by posting that application and both the wife’s Affidavit filed 16 November 2015 and the Affidavit of Ms L filed 20 November 2015 to I Pty Ltd at its registered office in Geelong. The wife relied upon the Affidavit of Service of Ms MT filed 1 December 2015 confirming service of the documents upon I Pty Ltd by post on 20 November 2015. On 20 November 2015 the same documents were also posted to the husband, who was at that time a director of I Pty Ltd, addressed to the husband care of GR Club, Geelong and by email addressed to …. Service upon the husband was confirmed by Ms MT in her Affidavit of Service filed 1 December 2015.  

2. The Affidavit of Ms L filed 1 December 2015 was served by post upon I Pty Ltd at its registered office on 1 December 2015 and upon the husband by post care of his address at the GR Club and by email at … on that same day. Service upon both the husband and I Pty Ltd was confirmed by Ms MT in two further Affidavits of Service filed 1 December 2015.

3. On 20 May 2016, notwithstanding that both the husband and his sister Dr A were in Court, I made an order requiring the wife to, as soon as practicable, serve a sealed copy of the first order made that day, which included the order adjourning the wife’s application for costs for hearing on 15 July 2016, upon I Pty Ltd. Ms MT in her Affidavit of Service filed 7 July 2016 deposed to service by post of the orders of 20 May 2016 upon I Pty Ltd at its registered office on 23 May 2016.

4. The husband appeared in person on his own behalf at the hearing before me on 15 July 2016 however in circumstances where he said he had resigned as a director of I Pty Ltd he said he did not appear on behalf of the company. Although I am satisfied that I Pty Ltd had been served with the orders and was aware of the hearing on 15 July 2016, there was no appearance on behalf of the company. In those circumstances the matter proceeded on an undefended basis.

Legal Principles

1. The general rule in proceedings in this Court is that each party should bear their own costs of the proceedings. However s 117(2) of the Act provides that:

   If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

2. In considering what, if any, order should be made for the payment of costs the Court shall have regard to the following matters pursuant to s 117(2A) of the Act:

   (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, inspection, 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. The relevant matters in s 117(2A) of the Act “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” (I & I (No 2) (1995) FLC 92-625)

4. Rule 19.18(1) of the Family Law Rules 2004 (Cth) (“the Rules”) provides that the Court may make an order for 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.

5. Rule 19.08(3) of the Rules requires a party applying for an order for costs on an indemnity basis to inform the Court if that party is bound by a costs agreement and if so the terms of that agreement.

Costs sought by the wife

1. The wife relied upon her Affidavit filed 16 November 2015 and the two Affidavits sworn by her solicitor Ms L and filed on 20 November 2015 and 1 December 2015. It is her case that she has incurred significant costs as a direct result of I Pty Ltd’s intervention in the proceedings and she seeks an order that I Pty Ltd pay those costs on an indemnity basis. The costs the wife seeks are in the sum of $30,184.28 made up as follows:

   ·Professional fees  $13,511.85

   ·Photocopying  $600.00

   ·ASIC and Land Title searches  $274.55

   ·Expert witness  $11,000.00

   ·Fee for drawing up the application for costs and  accompanying affidavit which is calculated in  accordance with the scale fee   $1,497.88

   ·Counsel’s Brief fee for hearing on 15 July 2016                $3,300.00

2. I accept counsel for the wife’s submission that her instructing solicitor Ms L has identified those costs directly referable to the proceedings initiated by I Pty Ltd and accept Ms L’s unchallenged evidence at paragraph 26 of her Affidavit filed 20 November 2015 that the costs sought by the wife exclude:

   (a)the costs associated with inspecting Taxation Returns and Financial Statements and documents produced by I Pty Ltd relevant to the business valuation;

   (b)counsel’s fees associated with any Court appearances during the period I Pty Ltd was a party to the proceedings; and

   (c)the preparation of material for trial pertaining to the husband’s claim and responding to the husband’s affidavit.

3. Ms L further deposed at paragraph  28 of her Affidavit filed 20 November 2015 that the wife’s costs with respect to the report prepared by her adversarial expert Mr V were substantially increased and annexed to her further Affidavit filed on 1 December 2015 an invoice from Mr V identifying his professional fees with respect to his review of the alleged loan advance to the husband and the wife by the I Group.

4. Ms L also set out in some detail the basis of her claim for photocopying expenses of $600.00.

Discussion

1. I am satisfied that there are in this case circumstances which justify the Court departing from the general rule that each party should bear their own costs.

2. There is no question in this case that I Pty Ltd, having withdrawn from the proceedings a matter of days before the commencement of the final hearing, was wholly unsuccessful. Not only was I Pty Ltd unsuccessful, the wife was wholly successful with respect to both the monies allegedly owing by the husband and the wife to I Pty Ltd and the ownership of the real properties in Suburb FF which both the husband and his sister in her Affidavit filed 3 September 2015, sworn in her capacity as a director of I Pty Ltd in support of its case, deposed was owned by I Pty Ltd in its capacity as trustee of the Brand Family Trust and not the I Unit Trust. I found firstly that I was not satisfied on the balance of probabilities that there was a loan and secondly that the real properties in Suburb FF were owned by I Pty Ltd in its capacity as trustee of the I Unit Trust.

3. I am satisfied that the intervention of I Pty Ltd not only placed an additional burden upon the wife in these proceedings of having to deal with another party in circumstances where the husband sought to distance himself from I Pty Ltd notwithstanding that at that time he was both a director and shareholder of that company, but that the expense to the wife was exacerbated by the way in which I Pty Ltd conducted itself in those proceedings.  

4. It was submitted by the wife, as deposed by Ms L in her Affidavit filed 20 November 2015 in support of the application for costs, that I Pty Ltd had failed to provide full and frank disclosure in a timely manner causing the wife to incur further costs in securing the company’s compliance and preventing the wife’s adversarial expert from completing his report.

5. Leave was granted to I Pty Ltd to intervene in the proceedings on 3 November 2014. On that date orders were also made requiring the company to provide full and frank disclosure. Ms L deposes that on 6 January 2015, after I Pty Ltd had filed its Response to the wife’s Initiating Application in which it sought orders that the husband and wife repay the sum of $962,875, she forwarded a letter to I Pty Ltd’s then solicitor requesting copies of all documents I Pty Ltd sought to rely upon in support of the alleged debt. It was her evidence at paragraph 7 of her Affidavit filed 20 November 2015 that thereafter I Pty Ltd produced limited documents “pertaining to various Trusts and Taxation Returns but no documents to support the alleged loan”.

6. On 4 May 2015 I made orders giving the parties leave to adduce evidence from their own expert witnesses in relation to the alleged debt, the value of those alleged debts and any ancillary matters thereto. Ms L deposed at paragraph 9 of her Affidavit filed 20 November 2015 that it was around this time that I Pty Ltd changed solicitors and that, after consultation with Mr V, the wife’s expert witness,  requests were made to its new solicitors for specific documents. In response to those requests I Pty Ltd produced further limited corporate records including taxation returns. 

7. On 10 June 2015, as a result of I Pty Ltd’s failure to produce the necessary documentation requested by Mr V to complete his report, the wife’s solicitor forwarded an email to the Court seeking a mention of the matter to address I Pty Ltd’s failure to comply.

8. On 1 July 2015, as Mr V had been unable to complete his report due to I Pty Ltd’s failure to produce the documents he had requested, the wife’s solicitor forwarded a further email to the Court seeking an urgent listing of the matter. This email was copied to I Pty Ltd ’s solicitor who responded on 6 July 2015 as follows:

   There is no need for an expert valuer to review these loan accounts when valuing a going concern which is usually done on an earnings based multiple applied to sustainable earnings. …

9. He then stated that the wife’s request for information to establish the loan account was a “disingenuous attempt ... to waste further time of the parties and incur further costs on all parties via a valuation expert indulging in an irrelevant forensic review of amounts correctly debited to them jointly via a loan account”.

10. In that letter the solicitors also advised that I Pty Ltd would be opposing any requests for further documents and would be seeking costs on an “indemnity basis”.

11. The matter was thereafter listed for mention before me on 15 July 2015 at which time the parties had reached agreement and presented a minute of consent orders to the effect that further time would be afforded to Mr V to complete his report upon production of the further documents he had requested. Ms L deposes at paragraph 17 of her Affidavit filed 20 November 2015 that notwithstanding the earlier response to her request for the production of documents thereafter I Pty Ltd produced the documents she had been requesting and Mr V was able to complete his report.

12. As a direct result of I Pty Ltd intervention in the proceedings the wife incurred the additional costs of Mr V having to further investigate and report on the alleged loans and the ownership of the Suburb FF properties, confer with Mr Z, I Pty Ltd’s adversarial expert witness, and prepare or settle the necessary joint statement of experts.

13. The wife was also required to incur further expense when I Pty Ltd purported to instruct Finlay Arthur Phillips in addition to the solicitors already acting on its behalf to represent it in relation to the ownership of the real properties in Suburb FF, which I am satisfied added unnecessarily to the wife’s costs.

1. I am also mindful of the fact I Pty Ltd filed a Further Amended Response to Initiating Application, Affidavits of the husband’s sister in her capacity as a director of I Pty Ltd, his mother, purporting to be the company secretary, its adversarial expert witness and the company accountant and an outline of its case in accordance with my orders setting the matter down for final hearing. Not only was the wife required to meet I Pty Ltd’s case but the case she was required to meet changed on a number of occasions, the amount the company alleged to be owing being variously $904,258.57 (being the total of an alleged loan with respect to the yacht of $198,373.14 and a further loan of $705,885.43 pursuant to a loan agreement signed on 29 August 2013), $962,875 or $1,125,390 (see paragraphs 83 to 117 inclusive of Reasons for Judgment delivered on 20 May 2016).

2. Neither the wife nor I Pty Ltd were in receipt of legal aid. The wife as a result of my orders had retained the property at E Town subject to the mortgage (giving her equity of approximately $312,586), as well as the balance of the proceeds of sale of the C Town property of $125,916. Those are her only significant assets. The wife also has superannuation entitlements some part of which was accumulated after the parties separated.

3. As I Pty Ltd elected not to play any part in either the final hearing or this hearing I am left with limited evidence as to the company’s current financial position. I am somewhat comforted by the fact that although during the final hearing both the husband and his sister who gave evidence on his behalf alluded to the possibility of I Pty Ltd being placed in voluntary liquidation, that does not appear to have occurred. In all of the circumstances I am not satisfied that in these circumstances I Pty Ltd’s financial position would preclude the Court making an order for costs against the company.

4. During the course of the hearing before me counsel for the wife tendered a letter dated 25 March 2015 from the wife’s solicitors to the solicitors then acting for I Pty Ltd in which an offer was made on behalf of the wife to I Pty Ltd and the husband. The terms of that offer were as follows:

   (a)That [the husband] receive a cash sum of $100,000.00 from the joint term deposit. Both your client and [the husband] will relinquish any interest in the [E Town] property. Our client will be solely liable for and indemnify [the husband] in respect of the current mortgage attached to the [E Town] property and refinance same into her sole name.

   (b)Our client and [the husband] will retain the motor vehicles currently in their possession.

   (c)[The husband] will retain his ownership in the “…” yacht and be solely liable for any debt owing in respect of such vessel to your client.

   (d)Our client and [the husband] will retain their AMP shareholdings, bank accounts and superannuation entitlements.

   (e)Our client will indemnify [the husband] in respect of any monies owing to [Mr Lake] and/or the Commonwealth Bank of Australia in respect of any personal loans or other monies.

   (f)The Directors of the various corporate entities (and Trusts) making up the [I Group] will provide releases to our client in relation to any alleged debt purportedly owing either individually or jointly with [the husband] to the company/ies and Trusts.

   (g)Our client will renounce any entitlement under the [Brand] Family Trust and [the husband] and you will retain all entitlements to future distributions and indemnify our client in respect of monies owing.

   (h)Each party will bear their own costs save that the costs previously ordered against [the husband] in this matter will be withheld from the $100,000.00 sum referred to above.

   (i)The balance of funds in the term deposit will be paid to our client.

5. It was submitted by counsel for the wife that according to the records of the wife’s solicitors no response to that letter was ever received.

6. Counsel for the wife referred me to the decision in Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681; (2000) FLC 93-029 (“Yunghanns”) in support of her submission that given the commercial nature of the proceedings in this case costs should follow the event. In Yunghans the Full Court found that there were circumstances that justified the making of an order for costs including as one of its reasons what it said was the commercial character of the proceedings between the husband on the one hand and his son and daughter for control of the companies the husband controlled and the fact that in such proceedings in other jurisdictions costs would ordinarily follow the event.

7. Although I do not agree that the proceedings in this case have quite the same commercial character in my view, as already discussed,  there are in any event circumstances in this case that justify the court making an order for costs in favour of the wife against I Pty Ltd .

Indemnity Costs

1. The wife submitted that I Pty Ltd’s withdrawal from the proceedings and its timing were also relevant considerations both for the purposes of the Court being satisfied that there are not only circumstances in this case that would justify the Court departing from the usual rule with respect to costs but also  that any costs should be paid on an indemnity basis.

2. The law relating to indemnity costs is settled. In Kohan & Kohan (1993) FLC 92-340 the Full Court, whilst recognising that this Court has a discretion to order that costs be paid on an indemnity basis, said at p 79,611 as follows:

   … 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 of the parties.

3. The Full Court went on to say at page 79,614 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”.

4. In Munday v Bowman (1997) FLC 92-784 [at p 84,660 drawing from the judgment of Sheppard CJ in  Colgate-Palmolive v Cussons Pty Ltd 46 FCR 225 listed a number of examples of circumstances which might warrant the Court exercising its discretion in favour of costs on an indemnity basis as follows:

   (a)Where it appears that 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 (see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.

   (b)Making allegations of fraud, knowing them to be false, and making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales Pty Ltd (supra)).

   (c)Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd, (unreported, Federal Court of Australia, 3 May 1991)).

   (d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (ss Ragatta developments Pty Ltd v Westpac Banking Corporation (unreported, Federal Court of Australia, 5 March 1993)).

   (e)An imprudent refusal of an offer of compromise.

5. Although frequently cited with approval the circumstances which might give rise to an order for costs on an indemnity basis are not limited to those circumstances identified by Sheppard CJ.  As the Full Court said in Yunghanns & Ors v Yunghanns & Ors; Yunghanns (2000) FLC 93-029 at paragraph 31:

   … 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” (Citation omitted) …

6. In Yunghanns the Full Court, referring to the appellants having withdrawn their claim for costs, said as follows at paragraph 32:

   … Although the appellants, in withdrawing their claim for costs against the non-parties, have not withdrawn the allegations upon which that claim was founded, it seems to us that the withdrawal of the application, in the circumstances in which that occurred, is tantamount to a concession that the application was ill-conceived, and should never have been made.

7. Although I Pty Ltd withdrew from the proceedings, in circumstances where both the husband and his sister, both directors of the company, gave evidence in support of the husband’s case that he and the wife were in debt to the company and refused to consent to an injunction restraining them in their capacity as directors of the company from taking steps to recover the alleged debt if the Court found that it was not satisfied as to the existence of the debt, it could not be said that the company had in any way conceded that its application was ill-conceived. In fact as I found it was more likely than not that “..the decision to withdraw from the proceedings was a tactical move designed to prevent the company being bound by any findings this court might make with respect to the alleged debt” (Reasons for Judgment delivered on 20 May 2016 at [196]).

8. I am satisfied that I Pty Ltd, albeit under the auspices of the husband’s case, was intent on both establishing the existence of the debt and securing its repayment. Arguably that was a course that had always been open to the company.

9. Notwithstanding that being the case, I Pty Ltd sought leave to intervene in the proceedings remaining a party to those proceedings until a matter of days before the final hearing by which time the wife had already been put to the significant expense of meeting the company’s case. In this case the alleged debt was of such a magnitude that, as referred to in my Reasons for Judgment delivered on 20 May 2016 had the Court found in the company’s favour the husband and wife’s assets would have been exhausted leaving them with a substantial debt. The wife in those circumstances clearly had little choice but to meet I Pty Ltd’s case, to incur costs in doing so and, the company then withdrawing from the proceedings, was thereafter left to meet the same case presented by the husband relying upon I Pty Ltd’s evidence.

   In my view the very fact that I Pty Ltd intervened prolonged the case and added unnecessarily to the complexity of the case. As referred to in my reasons I found, that both the husband and his family either personally or in their corporate capacities “…have gone to significant lengths to remove property, to which the wife may have had an entitlement or which might form part of the parties’ property for the purposes of these proceedings, from the reach of orders of this Court thereby defeating the wife’s claim” (Reasons for Judgment delivered on 20 May 2016 at [200]). In those circumstances and given their last minute withdrawal from the proceedings I accept they may well intend to pursue other legal avenues in order to achieve the same result.

10. In all of the circumstances I have significant reservations about the bona fides of I Pty Ltd’s intervention in the proceedings, reservations only heightened by the company’s last minute withdrawal from the proceedings and not only are these circumstances that justify an order for costs. I am satisfied those costs should be paid on an indemnity basis.

11. In all of the circumstances I propose to accede to the wife’s application that I Pty Ltd pay the wife’s costs on an indemnity basis. The Rules set out the various ways in which the Court may make an order for costs. These include an order for a specific amount, as assessed on a particular basis, by the method as stated in the order or in accordance with Schedule 3 of the Rules.   In circumstances where a copy of the wife’s costs agreement has been annexed to the Affidavit of Ms L filed 20 November 2015, the basis upon which the costs are claimed are clearly set out in that same Affidavit of Ms L and I Pty Ltd has not filed any answering material and has chosen not to participate in the proceedings, I propose to fix those costs in the sum of $30,184.28 as sought by the wife.

I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered 28 September 2016.

Associate: 

Date:  28 September 2016