Lawson and Crawford and Ors

[2015] FamCA 191

FAMILY COURT OF AUSTRALIA

LAWSON & CRAWFORD AND ORS [2015] FamCA 191

FAMILY LAW – COSTS – Interim costs – wife’s application for costs against the husband on a solicitor/client basis or a party/party basis – whether it is appropriate to order costs on an interim basis – where the evidence has not been tested – costs reserved to trial.

Family Law Act 1975 (Cth) s 117

I & I (No.2) (1995) FLC 92-625
Penfold v Penfold (1980) FLC 90-800

APPLICANT: Ms Lawson

RESPONDENT: Mr Crawford

THIRD RESPONDENT: Ms A Crawford

FOURTH RESPONDENT: Mr B Crawford

FIFTH RESPONDENT: D Investments Pty Ltd (In Its Own Capacity And ATF D Investments Trust)

SIXTH RESPONDENT: E Developments Pty Ltd (In Its Own Capacity And ATF E Developments Trust)

SEVENTH RESPONDENT: F Investments Pty Ltd (In Its Own Capacity And ATF F Investments Trust)

FILE NUMBER: MLC 4101 of 2013

DATE DELIVERED: 23 March 2015

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: By way of written submissions

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL AND SOLICITOR FOR THE RESPONDENT: Mr Bartfeld QC and Taussig Cherrie Fildes

ORDERS

IT IS ORDERED THAT

1. The wife’s application for costs of and incidental to her Application in a Case filed 1 September 2014 be reserved to the trial.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lawson & Crawford and Ors 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 4101 of 2013

Ms Lawson

Applicant

And

Mr Crawford

Respondent

And

Ms A Crawford

Third Respondent

And

Mr B Crawford

Fourth Respondent

And

D Investments Pty Ltd (in its own capacity and ATF D Investments Trust)

Fifth Respondent

And

E DEVELOPMENTS PTY LTD (in its own capacity and ATF E Developments Trust)

Sixth Respondent

And

F Investments Pty Ltd (in its own capacity and ATF F Investments Trust)

Seventh Respondent

REASONS FOR JUDGMENT

1. On 14 November 2014 I made various orders, including orders sought by the wife restraining the husband and the third and fourth respondents in their capacities as directors of Crawford Developments Pty Ltd (“Crawford Developments”) from:

   1.1voting in favour of any resolution or taking any steps which would have the effect of issuing further shares in Crawford Developments;

   1.2appointing any other person as a director or office holder;

   1.3voting in favour of any resolution or taking any steps which would have the effect of distributing funds to the unit holders of Crawford Developments Unit Trust (of which Crawford Developments is trustee);

   save with the wife’s prior written consent, and provided further that transactions for which the wife’s consent is sought are documented in full to the wife and any reasonable queries made by the wife are addressed, not less than 14 days prior to any of the transactions proposed in paragraphs 1.1, 1.2 or 1.3 hereof.

2. I also made orders requiring the husband to provide the wife with an itemised schedule identifying the date and subject matter of all documents electronically discovered by him to date, except where the same had already been provided, and on an ongoing basis, and otherwise reserved the question of costs and set out a schedule for the parties to file written submissions in support of any applications for costs arising out of or incidental to the wife’s Application in a Case filed 1 September 2014.

3. The wife now seeks an order that the husband pay her costs of and incidental to that Application in a Case on a solicitor/client basis or, in the alternative, on a party/party basis and has filed written submissions in support of that application. The wife also submits that in the event that the Court determined that it would not make an order for costs, that those costs be reserved for determination at the trial. The husband opposes the wife’s application that he pay her costs and has filed a response to her written submissions. It is the husband’s case that the wife’s application for costs should be dismissed or that, in the alternative, it be reserved for determination at the conclusion of the substantive proceedings.

LEGAL PRINCIPLES

1. The general rule in proceedings in this Court, subject to the provisions of s 117(2) of the Family Law Act 1975 (Cth) (“the Act”), is that parties to those proceedings shall each bear their own costs of those proceedings (s 117(1)).

2. Section 117(2) of the Act provides as follows:

   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. As the High Court said in Penfold v Penfold (1980) FLC 90-800 at pp 75,053-75,054:

   It is an accurate description of s 117(1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s 117(2). As sub-s (1) is expressed to be subject to sub-s (2), the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   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.

4. Section 117(2A) of the Act sets out the matters to which the court must have regard when considering what, if any, order should be made for the payment of costs. As the Full Court said in I & I (No.2) (1995) FLC 92-625 at page 82,277, 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”.

THE PARTIES’ CASES

1. Counsel for the wife submitted that the circumstances in this case justify the Court departing from the usual rule that the parties should each bear their own costs of and incidental to the wife’s Application in a Case filed 1 September 2014 and that, having regard to the provisions of s 117(2A) of the Act and, in particular, what she says is the conduct of the husband with respect to the entities he and the third and fourth named respondents control, the husband’s conduct regarding discovery, and his superior financial position, the Court should require the husband to pay her costs either on a solicitor/client basis or, in the alternative, on a party/party basis.

2. Counsel for the husband submitted that the wife has not established that there are circumstances that would justify the Court making an order for costs. Counsel for the husband directed me to what he said were the issues the Court should take into account in determining whether an order for costs is justified, as follows:

   (a)the scope of the wife’s application;

   (b)the lack of success in relation to a major “plank” of that application; and

   (c)the absence of any explanation as to why an order for costs should be made in relation to proceedings for an interim injunction when the usual practice is to reserve costs until the conclusion of the trial.

3. Although s 117(2A)(e) requires the Court to have regard to whether any party has been wholly unsuccessful, it is not necessarily the case that the Court will decline to make an order for costs on the basis that a party was not wholly successful. The Court is also not precluded from making an order for costs with respect to an application for interim injunctions and, in fact, there may be cases in which it is proper for the Court to do so rather than, as submitted by counsel for the husband, reserving those costs for determination at the trial. However, in my view, this is not such a case.

4. The matters upon which the wife relied in support of her application for injunctive relief are issues that are germane to, and will be ventilated in detail at, the trial. The Court was not in a position to make and, as it is clear from my reasons, has not made findings of fact in respect of these issues. For example, whilst there is no dispute in this case that there have been changes made in the corporate structure or that the husband resigned as secretary of Crawford Developments, there is a dispute as to whether these changes occurred with the wife’s knowledge and/or in the normal course of business.

5. Although I determined that it was both just and convenient to make the injunctive orders sought by the wife, at least in part, I did so having regard to the wife’s case that she should be entitled to conduct the litigation on the basis of the status quo and weighing up the potentential prejudice to each of the parties, ultimately concluding that there was significant prejudice to the wife and no prejudice to either the husband or the third and fourth named respondents.

6. Ultimately, at the conclusion of the trial, the Court will be in a position to make findings  as to whether  the wife did or  did not have knowledge of the changes to the corporate structure or that they did or did not occur in the normal course of business, and it is at that point of time that the Court will be in a position to determine whether or not circumstances justify it from departing from the general rule that each party should bear their own costs of the wife’s application and whether an order should be made that the husband pay the wife’s costs of that application.

7. Counsel for the wife further submitted that the wife’s application with respect to discovery was justified and necessary to bring order to the discovery process and in making that process meaningful. Although I did make at least some of the orders the wife sought, I did not make any findings as to whether the husband intended to frustrate that process. That is another matter that is likely to be the subject of evidence at the trial.

8. It is for the same reasons that, in my view, it is not appropriate until the evidence can be tested for the wife’s application for costs to be dismissed. In all of the circumstances, I propose to reserve the wife’s application for costs to the conclusion of the trial.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered

23 March 2015.

Associate:

Date: 23 March 2015