Lake and Brand (No 3)

[2016] FamCA 1112

FAMILY COURT OF AUSTRALIA

LAKE & BRAND (NO 3) [2016] FamCA 1112

FAMILY LAW – COSTS – Indemnity costs – where the wife seeks costs on an indemnity basis incurred in circumstances where the wife was required to make application to the Court on three occasions for removal of caveats lodged by the husband – where the husband has lodged an appeal – where the husband has made serious and unsubstantiated allegations of fraud both against the wife and her solicitor - serious questions about the bona fides of his case – where the husband was wholly unsuccessful – exceptional circumstances justifying costs on an indemnity basis – orders made that the husband pay the wife’s costs on an indemnity basis

Family Law Act 1975 (Cth)
Bankruptcy Act 1966 (Cth)

Brown v Brown (1998) FLC 92-822
Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
I & I (No 2) (1995) FLC 92-625
Kohan & Kohan (1993) FLC 92-340
Prantage & Prantage [2013] FamCAFC 105

APPLICANT: Ms Lake

RESPONDENT: Mr Brand

FILE NUMBER: MLC 5385 of 2013

DATE DELIVERED: 21 December 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: Written Submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Wightons Lawyers

THE RESPONDENT: In person

Orders

IT IS ORDERED THAT

1. The husband pay the wife’s cost of and incidental to the Application in a Case filed 22 August 2016 fixed in the sum of $3,448.50.

2. Payment of the wife’s costs fixed aforesaid be made by the husband within 30 days of the date of this order.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lake & Brand (No 3) 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

REASONS FOR JUDGMENT

1. On 20 May 2016 I made final property orders including an order requiring the husband to withdraw a caveat (“the first caveat”) that he had lodged over the title to the property at D Street, E Town (“E Town property”) registered in the wife’s name. Pursuant to those final property orders the wife retained her interest in the E Town property.

2. When the husband did not provide a withdrawal of that caveat as he was required to do pursuant to the orders made 20 May 2016 that withdrawal was signed by a Registrar of this Court in lieu of the husband.

3. On 22 August 2016 the wife received notification from the Department of Environment, Land, Water and Planning that the husband had lodged a further caveat (“the second caveat”) over the E Town property.

4. On 22 August 2016 the wife filed an Application in a Case in which she sought orders requiring the husband to sign a withdrawal of the second caveat and that in the event that he failed to do so a Registrar of this Court be authorised to sign that withdrawal in his stead.

5. That application was listed before me on 26 August 2016 and I made the following orders:

   IT IS ORDERED THAT

   1.        Leave is granted to the wife to amend her application in a case filed 22 August 2016 to seek an order that the respondent by injunction until further order be restrained from transferring, disposing or otherwise dealing with any share held by him in I Pty Ltd (ACN …) whilst any monies owing by the husband to the wife pursuant to any order of this Court remains unpaid.

   IT IS FURTHER ORDERED THAT

   2.        The husband, at the hearing of this Application in a Case, sign a Withdrawal of Caveat No. AM… lodged over the title to the property known as and situate at [D Street, E Town] (“[E Town]”) being Certificate of Title Volume … Folio … and deliver same to the solicitors for the wife. 

   3. In the event the husband refuses or neglects to sign such Withdrawal of Caveat referred to in paragraph 2 hereof, a Registrar of the Family Court of Australia is hereby appointed to sign such document on behalf of the husband pursuant to Section 106A of the Family Law Act 1975 (Cth) forthwith thereafter.

   4.        The husband, by injunction be restrained from lodging any Caveat, dealing, transfer or other document with the Registrar of Land Victoria, any other Government or financial institution which impacts or effects the wife’s ownership or possession of [E Town].

   5.        The husband by injunction, until further Order, be restrained from transferring, disposing or otherwise dealing with any share held by him in [I Pty Ltd] (ACN …) whilst any monies owing by the husband to the wife pursuant to any order of the Family Court of Australia remain unpaid.

   6.        The wife shall cause a copy of this Order to be served on the Directors of [I Pty Ltd] at its registered address by pre-paid mail.

   IT IS FURTHER ORDERED THAT

   7.        By 4.00 pm on 9 September 2016 the wife file and serve any written submissions in support of paragraph 4 of her application in a case filed 22 August 2016.

   8.        By 4.00 pm on 23 September 2016 the husband file and serve any reply to any written submissions of the wife pursuant to paragraph 7 herein.

   9.        Paragraph 4 of the wife’s application in a case filed 22 August 2016 be otherwise adjourned to a date to be fixed for judgment.

6. The wife in her Application in a Case filed 22 August 2016 also sought orders that the husband pay her costs of and incidental to that application on an indemnity basis and on 26 August 2016 I  made orders requiring the parties to file and serve any written submissions in support of or by way of reply to that application. The wife filed written submissions in support of her application and the husband filed written submissions in reply.

Legal Principles

1. The general rule in proceedings in this Court pursuant to the Family Law Act 1975 (Cth) (“the Act”) is that the parties to those proceedings shall each bear their own costs pursuant to s 117(1) of the Act.

2. This is subject to s 117(2) of the Act which 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.

3. Having formed the opinion that there are circumstances that would justify it making an order for costs the Court may do so having had regard to the matters in s 117(2A) of the Act. Those matters are as follows:

   (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.

4. The matters in s 117(2A) of the Act applicable to the particular case “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). However as Kay J said in Brown v Brown (1998) FLC 92-822 the Court’s discretion is broad, no one of the matters in s 117(2A) takes precedence over another and one factor may be enough.

5. Pursuant to r 19.18(1) of the Family Law Rules 2004 (“the Rules”) 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.

Discussion

1. The wife submits that there are circumstances in this case that justify the Court departing from the general rule that each party should bear their own costs. I accept that submission. As referred to in my reasons delivered on 26 August 2016 this is the third occasion upon which a Registrar of this Court has been called upon to sign a withdrawal for the removal of a caveat lodged by the husband over property the subject of these proceedings. In my reasons for judgment published on 20 May 2016 at paragraph 19 I described the husband as follows:

   … The husband was in my view quite disingenuous and somewhat manipulative. On numerous occasions the husband suggested that he was not a lawyer and did not understand the process, that he was not capable of conducting the proceedings on his own behalf. He said he was further disadvantaged because of his mental health issues, albeit he said on 27 January 2016, when he sought an order for part property settlement and thereafter it follows an adjournment to enable him to engage solicitors and repay family loans, that he only saw his general practitioner every few months and had not seen him since before Christmas. The husband is a qualified engineer and clearly a highly intelligent man. In my view the husband conducted the proceedings more than adequately and significantly better than many litigants who must appear without legal representation. He had a good understanding of the process but more importantly in my view understood the nature of the issues in dispute and had a good grasp of the legal concepts.

2. My view of the husband has not changed and I am satisfied given the history of these proceedings that the husband would have been left in no doubt, based upon my reasons for judgement published on 20 May 2016 and following the removal of the first caveat pursuant to the orders made that day, that lodging the second caveat over the property would with absolute certainty result in the wife making a further application for the removal of that caveat and he could not in all of the circumstances have ignored the likelihood of the Court acceding to that application.

3. The wife in this case is in full time employment and earned at the time of the trial approximately $200,000 per annum. She is not in receipt of legal aid and must bear the cost of these proceedings as a direct result of the husband’s actions. Pursuant to my orders she has retained her interest in the E Town property subject to the mortgage which she has not refinanced. There was evidence before me at the trial as to the wife having incurred legal costs as at the commencement of the final hearing of approximately $94,000. Those costs would no doubt have been significantly higher by the conclusion of that hearing. The wife’s costs included costs she incurred in relation to the intervention of I Pty Ltd (“I”) in the proceedings. On 28 September 2016 I made orders that I Pty Ltd pay the wife’s costs of and incidental to its Response to Initiating Application filed 12 December 2014 and the Notice of Discontinuance filed 22 October 2015 fixed in the sum of $30,184.  

4. Although the husband in his written submissions referred to the fact that he was insolvent, reliant upon Centrelink benefits for income other than sporadic casual earnings, had limited prospects of employment and that a Form 3 Statement of Affairs in Accordance with s 54 of the Bankruptcy Act 1966 (Cth) had been prepared, there is no actual evidence before me other than the husband’s evidence at the trial in relation to his financial position. However as I referred to in my reasons published on 20 May 2016 there was evidence which suggested that the husband’s income earning capacity might not be as limited as he submitted it to be. It is also the case as referred to in my reasons delivered on 26 August 2016 that I found the husband’s interest in I was worth approximately $509,000.

5. In all of the circumstances I am not satisfied that either the wife’s financial circumstances or those of the husband would weigh against an order for costs being made in the wife’s favour in all of the circumstances of this case.

6. Although there was no order requiring the husband to remove the second caveat in circumstances where the husband had been ordered to provide a withdrawal of the earlier caveat giving the wife clear title to the E Town property, I am satisfied that these proceedings were in effect necessitated by the husband’s failure to abide by those orders by lodging a further caveat.

7. It is also the case that the husband was wholly unsuccessful and although there were no formal offers of settlement I am satisfied that the husband was on notice that the wife would be likely to make an application to have the caveat removed and that even after service of that application upon him he still chose not to provide the wife with a withdrawal of that caveat.  

Indemnity Costs

1. Having regard to all of these matters I am satisfied that there are circumstances in this case that justify the Court making an order for costs. It is the wife’s case that those costs should be assessed on an indemnity basis, which according to the summary attached to the wife’s submissions are $3,448.50.

2. The law with respect to indemnity costs is well settled and as the Full Court said in Kohan & Kohan (1993) FLC 92-340 (“Kohan & Kohan”), the Court should not depart lightly from the ordinary rules with respect to costs and as the Full Court said in Prantage & Prantage [2013] FamCAFC 105, indemnity costs should only be awarded if the case has some special or unusual feature.

3. Sheppard J in Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 gave the following examples of what might meet the test of there being some “special or unusual feature”:

   (a)the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;

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

   (c)proceedings commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law;

   (d)the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;

   (e)an imprudent refusal of an offer to compromise; and

   (f)an award of costs on an indemnity basis against a contemnor.

4. These are examples and the categories of cases in which the Court might make an order for indemnity costs are not closed.

5. The wife has on three occasions had to apply to the Court for the removal of caveats lodged by the husband, including on this occasion a caveat lodged over the title to the E Town property a matter of weeks after the Registrar was required sign a withdrawal of the caveat pursuant to the final orders made on 20 May 2016 lodged over the title to the same property.  The husband has acted in what, in my view, can be property described as wilful disregard of both the findings and orders of this Court.

6. In circumstances where this matter is awaiting the outcome of the husband’s appeal his attempts to re-litigate the matter, which include his serious and unsubstantiated allegations of fraud both against the wife and her solicitor, raises serious questions about the bona fides of his case and the basis upon which he lodged this further caveat over the title to the E Town property.

7. In all of the circumstances I am satisfied that there are special features in this case which warrant the Court departing from the ordinary rule with respect to orders for costs and ordering that those costs be paid on an indemnity basis.

8. In all of the circumstances I propose to accede to the wife’s application.    

I certify that the preceding twenty six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered 21 December 2016.

Associate: 

Date:  21 December 2016