LOTTA & LOTTA
[2017] FamCA 916
•14 November 2017
FAMILY COURT OF AUSTRALIA
| LOTTA & LOTTA | [2017] FamCA 916 |
| FAMILY LAW – PROPERTY – Enforcement of Orders – Where application for enforcement warrant to sell real property – Where husband in default of final property orders providing for payment to wife – Where appropriate to order warrant. FAMILY LAW – COSTS – Where application for costs of enforcement application – where consideration of applicable principles – Where application necessitated by husbands default – Where proper for costs order to be made. |
| Family Law Act 1975 (Cth) ss 105, 117, Family Law Rules 2004 (Cth) rr 19.08, 19.18, 20.05, 20.16 |
| Bele & Vaughan (Costs) [2012] FamCAFC 198 Hawkins & Roe [2012] FamCAFC 77 Kohan & Kohan (1993) FLC 92-340 Lotta & Lotta [2017] FamCA 50 Penfold v Penfold (1980) 144 CLR 311 Prantage & Prantage [2013] FamCAFC 105 Ramsey & Ramsey (1983) FLC 91-301 Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681 |
| APPLICANT: | Ms Lotta |
| RESPONDENT: | Mr Lotta |
| FILE NUMBER: | PAC | 3435 | of | 2013 |
| DATE DELIVERED: | 14 November 2017 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 5 September 2017 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Mr Hazim of Thurlows Family Lawyers |
| RESPONDENT – SELF-REPRESENTED LITIGANT: | No appearance |
Orders
That an Enforcement Warrant issue forthwith pursuant to Part 20.3 of the Family Law Rules directing the Marshal of the Family Court of Australia or his nominee, as enforcement officer, to do acts reasonably required to seize and sell the property at Y Street, Suburb B NSW being the land in Folio Identifier 12/DP1015402 with such assistance and force as is necessary and apply the proceeds of sale in the following order and priority:
(a)all fees and expenses of the Marshall associated with the seizure and sale;
(b)the reasonable costs of sale;
(c)discharge of the secured debt to Westpac Banking Corporation;
(d)discharge of the debt to the Chief Commissioner of State Revenue;
(e)in payment to the wife Ms Lotta the amount payable including interest under the order of this Court made at Parramatta on 6 February 2017;
(f)in satisfaction of any costs order due and payable by the husband;
(g)any remaining balance to the husband Mr Lotta.
That the husband vacate the said property within one month from the date of these orders and deliver up all keys and security pass words to the said property to the enforcement officer or his nominee and thereafter the husband is restrained from entering upon the said property by himself, his servants or agents save with the written consent of the enforcement officer or his nominee.
That the Marshall is appointed to sign all documents on behalf of Mr Lotta necessary to effect the seizure and sale.
That the wife or the enforcement officer have liberty to apply to the Court for further or other orders on short notice.
That the Marshall must report to the Registry manager in writing concerning the outcome of these enforcement orders.
These enforcement orders remain in force for 12 months from this date.
Costs
That the husband pay the wife’s costs of and incidental to these enforcement proceedings assessed in the sum of $7,500.00 within one month from this date.
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 Lotta & Lotta 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 3435 of 2013
| Ms Lotta |
Applicant
And
| Mr Lotta |
Respondent
REASONS FOR JUDGMENT
This is an application for enforcement of final property orders and costs of and incidental to the enforcement application.
On 4 May 2017 the wife filed an Application in a Case in respect to the husband’s default in the payment to her of $496,000.00 pursuant to final property orders made on 6 February 2017. In summary the wife sought orders:
a)that she be appointed trustee for sale of the husband’s property at Y Street, Suburb B;
b)that upon sale of the property after payment of costs of sale commissions and expenses she received $496,000.00 plus interest accrued, and any payment ordered as to costs with the balance then payable to the husband.
Subsequently, the wife sought alternate orders in her affidavit filed 25 August 2017 that, in summary, provided for an enforcement warrant to issue pursuant to Part 20.3 of the Family Law Rules directing the Marshal of the Family Court of Australia or his nominee, as enforcement officer to sell the property at Suburb B and apply the proceeds of sale in the following order and priority:
a)all fees and expenses associated with the enforcement including the wife’s legal fees;
b)the costs of sale;
c)discharge of the secured debt to Westpac Banking Corporation;
d)discharge of the secured debt to the Chief Commissioner of State Revenue;
e)in satisfaction of the monies owed pursuant to orders 6 February 2017 plus interest to the wife;
f)any remaining balancee to Thurlow Fisher lawyers trust account for the benefit of the wife in satisfaction of any moneys owed pursuant to any costs order made in the Family Court of Australia as agreed or assessed.
Otherwise the wife seeks orders:
a)that the husband vacate the said property by 12 September 2017 and deliver up all keys and security pass words to the property to her solicitors Thurlow Fisher lawyers and thereafter he be restrained from entering upon the said property by himself, his servants or agents;
b)that the wife or the enforcement officer have liberty to apply to the Court for further or other orders on short notice;
c)that the husband pay the wife’s costs of and incidental to the enforcement proceedings.
A copy of the wife’s affidavit was forwarded to the husband by ordinary prepaid post on 25 August 2017.
The husband has failed to respond to the wife’s Application in a Case and the application proceeded on an undefended basis on 5 September 2017.
The wife relied upon the following documents:
a)her Application in a Case filed 4 May 2017;
b)Affidavits of Service filed 20 June 2017, 23 August 2017 and 5 September 2017;
c)the affidavit of Hibah Hazim, her solicitor filed 4 May 2017;
d)her affidavit filed 25 August 2017.
Part XII of the Family Law Act 1975 (Cth) (“the Act”) provides for the enforcement of decrees. Within that Part, s 105(1) provides as follows:
Subject to this Part, the Regulations and to the applicable Rules of Court, all decrees made under this Act may be enforced by any Court having jurisdiction under this Act.
The use of the word “may” in s 105 establishes a judicial discretion to enforce or refuse to enforce the relevant order: Ramsey & Ramsey (1983) FLC 91-301.
Chapter 20 of the Family Law Rules 2004 (Cth) (“the Rules”) provides for the enforcement of financial orders and obligations.
Rule 20.05 provides that an obligation to pay money may be enforced by, amongst other things, an order for seizure and sale of real property under an Enforcement Warrant.
The wife’s application was personally served on the husband on 24 May 2017.
The wife’s application was first listed before a Registrar at 9.30 am on 27 June 2017. On that day there was no appearance by or on behalf of the respondent husband and orders were made as follows:
a)that the application be listed before a judge at 11.30 am 14 August 2017;
b)that the applicant advise the respondent husband of the listing and the possible consequences of his non-attendance on the adjourned date.
The wife’s solicitor duly notified the husband of the adjourned date by ordinary prepaid post to his residence at Y Street, Suburb B.
On 14 August 2017 there was no appearance by or on behalf of the respondent husband.
The wife’s application for enforcement proceeded to hearing on an undefended basis on 14 August 2017 and was adjourned part heard to 9.30 am on 5 September 2017. The wife was ordered to file and serve any further affidavit material to be relied upon by no later than 1 September 2017 with service on the respondent husband by ordinary prepaid post to his residence at Y Street, Suburb B. Such service was effected.
The primary sum payable to the wife pursuant to final property orders of $496,000.00 remains outstanding together with interest accrued pursuant to the Rules.
Rule 20.16 of the Family Law Rules relevantly provides:
Request for Enforcement Warrant
(1) A payee may, without notice to the payer, ask a Family Court to issue an Enforcement Warrant by filing:
(a)an affidavit; and
(b)the Enforcement Warrant sought and a copy of it for service.
(2)The affidavit must:
(a)comply with rule 20.06; and
(b)include the following details of the property owned by the payer:
(i)for any real property:
(A)evidence that the payer is the registered owner; and
(B)details of registered encumbrances and of any other person with an interest in the property;
In compliance with rule 20.16 the wife relied upon her affidavit filed 25 August 2017.
The final date for payment of $496,000.00 to the wife was 6 April 2017. There has been no payment. The husband had a conversation with the wife’s solicitor in early April 2017 where he was clearly aware of his obligation to the wife and was in the process of refinancing to meet the payment to her. There has been no communication from the husband thereafter.
There are no conditions to be fulfilled prior to the payment of monies by the husband.
There is no appeal of the final orders pending nor is the wife aware of any dispute the husband as payee may have in relation to the monies owed.
The wife’s current application for enforcement is the only application pending in relation to the husband’s obligation to pay.
The subject property is the whole of the land comprised in folio identifier 12/1015402. A title search of the property as at 21 August 2017 discloses that the registered proprietor of the property is the husband and that the property has encumbrances by way of a mortgage to the Westpac Banking Corporation, and a Caveat lodged by the Chief Commissioner of State Revenue relating to outstanding land tax, asserted by the wife to be about $21,500.00.
As at 24 August 2017 interest had accumulated on the due sum in the amount of $15,624.00.
The property was valued as at 27 September 2016 at $1.25 million.
The wife provides her undertaking to pay all reasonable fees and expenses associated with the enforcement if they are greater than the amount recovered on the enforcement.
In the circumstance of this matter it is appropriate that enforcement warrant issue. Orders will be made accordingly.
Costs
The wife makes application for an order that the husband pay her costs of and incidental to the application for enforcement.
Section 117 of the Act provides that each party to the proceedings shall bear his or her own costs.
That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), 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.
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.
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.
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.
(footnotes omitted)
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.
In this matter the husband’s default in meeting his obligations under final property orders has given rise to the present application. Such is sufficient to make it proper to make an order for costs.
There is no evidence as to the present financial circumstances of the parties save for findings and orders made as to final property settlement: Lotta & Lotta [2017] FamCA 50. There is significant equity in the husband’s property.
Indemnity Costs
The application by the wife is for an order for indemnity costs. It is usual for the Court to make an order for costs on a party/party basis.
Provisions of 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.
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.
Rule 19.08(3) of the Rules provides that 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. This Rule implicitly recognises that an order for costs on an indemnity basis is a very great departure from the norm and that the Court should know to what extent costs on an indemnity basis exceeds the parameters set by the generally applicable scale of costs.
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.
In Kohan & Kohan (1993) FLC 92-340 at 79,611: the Full Court recognised that there is nothing in the Act which inhibits the making of an order for indemnity costs. However, while acknowledging there is a discretion “in an appropriate case” to make an order for indemnity costs, the Full Court also said,
… 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. This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under s117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.
Then at 79,614 the Full Court said:
The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O.38 r. 2, the provisions of O.38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client.
O.38 r.7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, 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. See Degmam v Wright (No 2) [1983] 2 NSWLR 354; Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR 358 at 368 to 370.
…When considering what is just in this case, one must bear in mind that a party who enters into a costs agreement should be warned and must anticipate in this jurisdiction that each party might well have to bear his or her own costs, and that even if an order for party and party costs is made, the difference between party and party costs and costs payable under a costs agreement may consume all, or a substantial part, of the property order. In this particular case, the wife changed her solicitors in August 1990. It must then have been apparent to her, or at least to her new solicitors, that this might become drawn out litigation and that a rate of costs which amounted to three times the scale, exposed the wife to great risks. If she was willing to assume these risks, it does not seem just to saddle the husband with them. If they were not explained to her, she might have her own remedies.
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.
Strickland J in Bele & Vaughan (Costs) [2012] FamCAFC 198 at [26] to [28] on this issue encapsulated the relevant legal principles.
26. A useful recent discussion of the question of indemnity costs is to be found in the decision of the Full Court in D & D (Costs) (No 2) (2010) FLC 93-435. There the Full Court reviewed extensively earlier authorities including Limousin v Limousin (Costs) (2008) 38 Fam LR 478 and Kohan and Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co & Another v Cussons Pty Ltd (1993) 118 ALR 248.
27.The ordinary rule is that an order for costs is calculated on a party/party basis, and it emerges from the authorities referred to above that to depart from that rule exceptional circumstances need to be demonstrated.
28. As to what might constitute an exceptional circumstance, reference can be made to the oft-cited decision of Sheppard J in Colgate-Palmolive Co & Another v Cussons Pty Ltd where his Honour detailed circumstances that might qualify. Usefully, Holden J in Munday v Bowman (1997) FLC 92-784 at 84,660 drew from the decision of Sheppard J the following examples:
(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 the 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,
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 (see Ragatta Developments Pty. Ltd. v. Westpac Banking Corporation (unreported, Federal Court, 5 March 1993)).
(e)An imprudent refusal of an offer to compromise.
More recently the Full Court has affirmed the considerations above: Prantage & Prantage [2013] FamCAFC 105.
The wife has provided a copy of her costs agreement with her solicitors in compliance with Rule 19.08(3).
The wife’s application was adjourned to facilitate the wife recasting her application for enforcement. The wife seeks costs in the sum $12,581.00.
In circumstances where the application should have been able to be disposed of in a more summary way, it is considered that the wife’s costs should be allowed at a reduced figure.
The sum of $7,500.00 will be allowed.
An order will be made accordingly.
I certify that the preceding fifty one (51) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 14 November 2017.
Associate:
Date: 13 November 2017
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