Lotta and Lotta (No 3)

[2015] FamCA 695

FAMILY COURT OF AUSTRALIA

LOTTA & LOTTA (NO 3) [2015] FamCA 695

FAMILY LAW – COSTS – where the wife successful in her application for enforcement of interim spouse maintenance – where the wife substantially successful – where the wife seeks costs on an indemnity or party/party basis – where relevant factors under s 117 of the Family Law Act 1975 (Cth) considered – where principles underlying an award for indemnity costs considered – where order made for costs on a party/party basis.

Family Law Act 1975 (Cth) ss 117, 117AA, 117AC, 118
Family Law Rules 2004 (Cth) rr 19.08, 19.18

Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536
D & D (Costs) (No. 2) [2010] FamCAFC 64
Fennessy & Gregorian [2009] FamCAFC 44
Limousin & Limousin [2007] FamCAFC 1178
PBF as Child Representative for AF (Legal Aid Commissioner of Tasmania) & TRF & LKL (2005) 33 Fam LR 123
Penfold v Penfold (1980) 144 CLR 311.
Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681

APPLICANT: Ms Lotta

RESPONDENT: Mr Lotta

FILE NUMBER: PAC 3435 of 2013

DATE DELIVERED: 21 August 2015

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 12 June 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Beck

SOLICITOR FOR THE APPLICANT: Thurlow Fisher Lawyers & Consultants

SOLICITOR FOR THE RESPONDENT: Samuel Jones Legal Services

Orders

1. That the husband pay 80 per cent of the wife’s costs of and incidental to the Enforcement Application filed on 5 February 2015, including this costs application, on a party/party basis as agreed between the parties within one month of this order or as assessed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym  Lotta & Lotta (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 PARRAMATTA

FILE NUMBER: PAC 3435  of 2013

Ms Lotta

Applicant

And

Mr Lotta

Respondent

REASONS FOR JUDGMENT

1. On 17 July 2015 reasons for judgment were delivered in relation to the wife’s application for enforcement of an order for spousal maintenance made on 14 November 2013 (Lotta & Lotta (No 2) [2015] FamCA 551).

2. Orders were made in the following terms:

   (1)That the amount owing by the husband to the wife by way of spousal maintenance as ordered on the 14 November 2013 is $14,800.

   (2)That the husband pay $14,800 within 14 days from this date to the wife or as she may otherwise direct the husband in writing.

   (3)In default of the husband paying the sum provided for in Order 2 the wife is appointed trustee for sale of the whole of husband’s public company shareholdings in IAG and AMP at the best price reasonably obtainable and for the purposes of this order the said shares shall vest in the wife and the wife shall thereupon pay the proceeds of sale as follows:

   (a)      In payment of $14,800 to herself,

   (b)In payment of reasonably incurred selling costs and costs incurred in enforcing these orders if any,

   (c)       In payment of the balance then remaining to the husband.

   (4)That the husband do all necessary things and sign all necessary documents to give effect to these orders.

   (5)That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, the registrar of the Court is appointed pursuant to s 106A of the Act to execute such deed, document or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

   (6)That the wife file and serve submissions as to costs sought if any within 14 days from the date of these orders and the husband file and serve any submissions in response within a further 14 days.

   (7)Liberty to apply as to implementation or enforcement of these orders.

3. No submissions in response to the wife’s submissions as to costs were received from the husband.

4. The wife now seeks an order that the husband pay her costs of and incidental to that application on an indemnity basis or in the alternative on a party/party basis.

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 provisions of ss 117(2), 117AA, 117AC and 118 of the Act.

3. Relevantly for the present application, the discretion afforded to the trial judge in s 117(2) 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.

4. 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: see Penfold v Penfold (1980) 144 CLR 311.

5. The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. 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.

6. There is nothing to prevent any one factor being the sole determinant for an order for costs: see PBF as Child Representative for AF (Legal Aid Commissioner of Tasmania) & TRF & LKL (2005) 33 Fam LR 123.

7. Financial circumstances: Property issue between the parties are unresolved. The financial issues between the parties were canvassed in Lotta & Lotta [2015] FamCA 360. There is nothing in the financial circumstances of the parties that would contraindicate any order for costs.

8. Legal aid: This is not a relevant consideration.

9. The conduct of the parties to the proceedings in relation to the proceedings: This relates more to the interlocutory conduct of the parties and is not a relevant consideration.

10. The failure of a party to the proceedings to comply with previous orders of the Court: As is clear from the Reasons for Judgment delivered on 17 July 2015 the primary application was made as a consequence of the husband’s failure to meet his obligations for spousal maintenance under the interim order. His subsequent disregard of his obligations under the interim order necessitated the primary application for enforcement. The husband, a practicing solicitor, failed to make any timely application to discharge or vary the subject order in circumstances where he contended he should no longer be bound by the order.

11. Wholly unsuccessful: The husband initially opposed any order for enforcement although conceding in submissions an alternative that the order should be enforced as to part only, although a substantial part, of the arrears. On the other hand the wife was partly successful in her application with arrears being enforced to 4 September 2014 only.

12. An offer in writing: This is not a relevant consideration.

13. Any other relevant matter: It is not contended that there are no other relevant matters.

14. By reason of the considerations referred to above the wife is entitled to her costs of and incidental to her application for enforcement. It is usual practice for an order for costs to be made on a party/party basis.

Indemnity Costs

1. The application for costs is made seeking an order for indemnity costs or otherwise costs on a party/party basis.

2. Provisions of the Family Law Rules 2004 (Cth) (“the Rules”), particularly rule 19.18, provides for the method of calculations of costs. That rule provides as follows:

   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.

3. The rule further provides, in subparagraph (3), that:

   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.

4. 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.

5. 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.

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

7. 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 he, 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 costs. The circumstances of the case must be such as to warrant the Court in departing from the usual course. …

8. Sheppard J identified 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; and

   e)Wilful disregard of known facts and clearly established law. 

9. Rule 19.08 relevantly provides:

   Order for costs

   (1)A party may apply for an order that another person pay costs.

   (2)   An application for costs may be made:

   (a)  at any stage during a case; or

   (b)by filing an Application in a Case within 28 days after the final order is made.

   (3)A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement. (emphasis added)

10. Notwithstanding the application by the wife for indemnity costs the wife has failed to inform the Court if she is bound by a costs agreement in relation to those costs and, if so, the terms of her costs agreement with her solicitors.

11. Accordingly the application for indemnity costs must fail.

Conclusion

1. Having regard to the s 117 (2) considerations discussed above there will be an order that the husband pay 80 per cent of the wife’s costs of, and incidental to, the Enforcement Application filed on 5 February 2015 on a party/party basis as agreed between the parties or as assessed.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 21 August 2015.

Associate: 

Date:  21 August 2015