Luan & Luan
[2023] FedCFamC2F 870
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Luan & Luan [2023] FedCFamC2F 870
File number: PAC 5611 of 2022 Judgment of: JUDGE BLAKE Date of judgment: 20 July 2023 Catchwords: FAMILY LAW- Property – where wife filed an application seeking alteration of property interests – where wife discontinued the application - where the discontinuance did not comply with rule 10.02 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 - HELD that discontinuation of the proceedings not effective – order dismissing the application of the wife granted - costs ordered.
FAMILY LAW – Bankruptcy – where husband bankrupt – where trustee in bankruptcy sought orders that he be appointed trustee to sell the property of the parties under State law being the Conveyancing Act 1919 (NSW)- whether the Court can make the orders sought and whether section 79 of the Judiciary Act 1903 (Cth) applies and enables the Court to make the orders sought – HELD that section 79 of the Judiciary Act 1903 applies as the Court is exercising federal jurisdiction – HELD that the Court may make the orders sought under State law being the Conveyancing Act 1919 (NSW).
Legislation: Conveyancing Act 1919 (NSW) ss 66G(1), 66G(1A), 66G(2), 66G(3), 66G(4), 66G(5), 66G(6), 66G (7), 66G(8), 66G(9), Part 4, Division 6.
Family Law Act 1975 (Cth) ss 79, 117(1), 117(2A)(c), 117(2A)(d), 117(2A)(e).
Judiciary Act 1903 (Cth) ss 79(1), 79(1A), 79(2), 79(3), 79(4).
Federal Circuit and Family Court of Australia (Division 2)(Family Law) Rules 2021.
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 rr 1.33, 1.33(2), 1.34(1), 10.02(1), 10.02(2), 10.02 (3), 10.02 (4), 10.02(5), 10.26(1), 10.27(1), 10.27(2), 15.19(2).
Cases cited: Foundas v Arambatzis [2020] NSWCA 47. Division: Division 2 Family Law Number of paragraphs: 36 Date of hearing: 13 June 2023 Place: Parramatta The Applicant: No Appearance The First Respondent: No Appearance Counsel for the Second Respondent: Mr Horobin Solicitor for the Second Respondent: Chambers Russell Lawyers ORDERS
PAC 5611 of 2022 BETWEEN: MS LUAN
Applicant
AND: MR LUAN
First Respondent
A BANKRUPT THE TRUSTEE OF THE PROPERTY OF MR LUAN
Second Respondent
order made by:
JUDGE BLAKE
DATE OF ORDER:
20 July 2023
THE COURT ORDERS THAT:
1.The Application of the wife filed 12 October 2022 is dismissed.
2.Mr B of C Company, D Street, Suburb E, NSW and Mr F of G Company, H Street, Suburb J, NSW be appointed trustees (‘Trustees’) of the land situated at K Street, Suburb L, NSW in the state of New South Wales, being the whole of the land the subject of folio identifier … (’Property’) pursuant to the provisions of section 66G of the Conveyancing Act 1919 (NSW).
3.The Property be vested in the Trustees, as Joint Tenants, subject to any encumbrances affecting the entirety, but free from encumbrances affecting any undivided shares, to be held by them on the statutory trust for sale under Part 4, Division 6 of the Conveyancing Act 1919 (NSW).
4.The Property be subject to vacant possession.
5.The Trustees pay out the proceeds of the sale of land as follows:
(a)Council rates, water rates, strata levies and other statutory duties or charges (if any) in respect of the land;
(b)Real estate agent's commission and charges and any other costs of the sale of the land;
(c)Any amount owing to any person having a security interest in the land;
(d)The Trustees’ costs of acting as trustees; and
(e)Half of the Trustees’ costs of these proceedings.
6.The Trustees are to hold $65,000 on trust in relation to their costs in NSW Supreme Court Proceeding No. … subject to an application for their costs in those proceedings to be made within 28 days of the date of these Orders; and the Trustees’ entitlement to retain that amount, or any part of it, for their costs incurred in relation to NSW Supreme Court Proceeding No. … is to be determined by the Supreme Court of New South Wales.
7.The net proceeds of sale remaining after all such payments have been made, as set out in Order 5, be divided and distributed as follows:
(a)One half to the Applicant, after half of the Trustees’ costs of the proceedings have been paid; and
(b)One half to the bankrupt estate of Mr Luan.
8.The Trustees’ costs of this proceeding as referred to in Order 5(e) and Order 7(a) are to be paid by the Applicant, calculated in accordance with Schedule 1 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021.
9.The Applicant otherwise bear her own costs of these proceedings.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BLAKE:
On 12 October 2022, the wife commenced proceedings in this Court. Those proceedings were commenced against the husband (the First Respondent), the trustee in bankruptcy for the husband (‘Second Respondent’) and M Pty Ltd (‘Third Respondent’).
The Second Respondent opposed the application of the wife. The Second Respondent seeks orders pursuant to section 79 of the Judiciary Act 1903 (Cth) (‘Judiciary Act’) and section 66G of the Conveyancing Act1919 (NSW) (‘Conveyancing Act’).
For the reasons that follow, I have decided to dismiss the wife’s application and grant the orders sought by the Second Respondent under section 66G of the Conveyancing Act.
BACKGROUND
In her application, the wife sought orders that she pay the Third Respondent the sum of $35,000 and that on receipt of such payment, the Third Respondent and the Second Respondent do all things necessary to transfer to the wife the Second Respondent’s 50% interest in land situated at K Street, Suburb L NSW (‘Property’).
The wife commenced these proceedings by using the ‘Initiating Application (Family Law)’. In her supporting affidavit, she purported to seek orders pursuant to section 79 of the Family Law Act 1975 (Cth) (‘Act’). It is plain from the wife’s application and the content of her affidavit that in making the application, she sought orders for an alteration of property interests under section 79 of the Act.
Neither the husband, nor the Third Respondent filed any material responsive to the wife’s application. The Second Respondent, however, filed a Response using the form ‘Response to Initiating Application (Family Law)’ on 13 December 2022, and sought orders pursuant to section 79 of the Judiciary Act and section 66G of the Conveyancing Act.
Various pre-trial hearings took place. Relevantly, trial directions were made on 11 April 2023. The trial directions made, included that the Applicant obtain a valuation of the Property, and that both parties file and serve affidavits relevant to their case by 31 May 2023. The matter was listed before me for final hearing on 13 June 2023. Further, the Court noted on the orders it made that day that the Applicant and the First Respondent live in an intact marriage.
On 5 June 2023, the Wife filed a notice discontinuing the proceeding. Subsequently, the wife’s solicitors filed a Notice of Ceasing to Act.
The wife failed to appear when the matter was called on for final hearing. The Second Respondent, however, seeks the orders set out in the Response, with some minor amendments. The Second Respondent relied on the affidavit of Mr B filed on 31 May 2023 and its case outline filed prior to trial.
THE APPLICATION OF THE SECOND RESPONDENT
The Second Respondent seeks the following orders:
Pursuant to s.79 of the Judiciary Act 1903 (Cth) and s.66G of the Conveyancing Act 1919 (NSW):
1.That Mr B of C Company, D Street, Suburb E, NSW and Mr F of G Company, H Street, Suburb J, NSW be appointed trustees ("Trustees") of the land situated at K Street, Suburb L NSW in the state of New South Wales, being the whole of the land the subject of folio identifier … ("Property") pursuant to the provisions of section 66G of the Conveyancing Act 1919 (NSW).
2.That the Property be vested in the Trustees, as Joint Tenants, subject to any encumbrances affecting the entirety, but free from encumbrances affecting any undivided shares, to be held by them on the statutory trust for sale under Part 4, Division 6 of the Conveyancing Act 1919 (NSW).
3. That the Property be subject to vacant possession.
4. Order that the Trustees pay out the proceeds of the sale of land as follows:
a.Council rates, water rates, strata levies and other statutory duties or charges (if any) in respect of the land;
b.Real estate agent's commission and charges and any other costs of the sale of the land;
c.Any amount owing to any person having a security interest in the land;
d.The Trustees' costs of acting as trustees;
e.Half of the trustee’s costs of these proceedings;
f.The Trustees are to hold $65,000 on trust in relation to their costs in NSW Supreme Court Proceeding No. … subject to an application for their costs in those proceedings to be made within 28 days of the date of these orders; and the trustees' entitlement to retain that amount, or any part of it, for their costs incurred in relation to NSW Supreme Court Proceeding No. … is to be determined by the Supreme Court of New South Wales, such ;
g.Order that the net proceeds of sale remaining after all such payments have been made, be divided and distributed as follows:
i.One half to the Applicant after half of the Trustees’ costs of these proceedings have been paid; and
ii.One half to the bankrupt estate of Mr Luan with
5.That the Applicant bears her own costs of the Proceedings.
6.That the Applicant pay the Trustee's costs of the Proceedings in accordance with these orders.
The majority of the orders above are sought to be made under section 66G of the Conveyancing Act. That section provides as follows:
66G Statutory trusts for sale or partition of property held in co-ownership
(1)Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.
(1A)Subject to this section, on the death of a co-owner, any proceedings by or against the co-owner under subsection (1) (whether instituted before or after the commencement of this subsection) survive against or for the benefit of the estate of the deceased co-owner despite, in the case of a joint tenancy, the rule of survivorship.
(2)Where the entirety of the property is vested in trustees or personal representatives, those trustees or personal representatives shall, unless the court otherwise determines, be appointed trustees on either of such statutory trusts, but subject, in the case of personal representatives, to their rights and powers for the purposes of administration.
(3)
(a)Where the entirety of the property is vested at law in co-owners the court may appoint a trust corporation either alone or with one or two individuals (whether or not being co-owners), or two or more individuals, not exceeding four (whether or not including one or more of the co-owners), to be trustees of the property on either of such statutory trusts.
(b)On such appointment the property shall, subject to the provisions of section 78 of the Trustee Act 1925, vest in the trustees.
(4)If, on an application for the appointment of trustees on the statutory trust for sale, any of the co-owners satisfies the court that partition of the property would be more beneficial for the co-owners interested to the extent of upwards of a moiety in value than sale, the court may, with the consent of the incumbrancers of the entirety (if any), appoint trustees of the property on the statutory trust for partition, or as to part of the property on the statutory trust for sale, and as to part on the statutory trust for partition, but a purchaser shall not be concerned to see or inquire whether any such consent as aforesaid has been given.
(5)
(a)When such trustees for partition have prepared a scheme of partition they shall serve notice in writing thereof on all the co-owners of the age of eighteen years or upwards, and any of such co-owners dissatisfied with the scheme may, within one month after service upon him or her of such notice, apply to the court for a variation of the same.
(b)Where any of the co-owners is a person under mental disability, the notice shall be served on the person charged by law with the management and care of the property of the person under mental disability or, if there is no person so charged, on such officer of the court as may be prescribed by rules of court.
(c)Where any of the co-owners is a minor or a person who cannot be found or ascertained, or as to whom it is uncertain whether the co-owner is living or dead, the trustees may act on behalf of the minor or person, and retain land or other property to represent the co-owner’s share.
(6)In relation to the sale or partition of property held in co-ownership, the court may alter such statutory trusts, and the trust so altered shall be deemed to be the statutory trust in relation to that property.
(7) Where property becomes subject to such statutory trust for sale—
(a)in the case of joint tenancy, a sale under the trust shall not of itself effect a severance of that tenancy,
(b)in any case land shall be deemed to be converted upon the appointment of trustees for sale unless the court otherwise directs.
(8)This section applies to property held in co-ownership at the commencement of the Conveyancing (Amendment) Act 1930 and to property which becomes so held after such commencement.
(9)This section does not apply to property in respect of which a subsisting contract for sale (whether made under an order in a suit for partition, or by or on behalf of all the co-owners) is in force at the commencement of the Conveyancing (Amendment) Act 1930 if the contract is completed in due course, nor to land in respect of which a suit for partition is pending at such commencement if a decree for a partition or sale is subsequently made in such suit.
In asking this Court to make orders pursuant to section 66G of the Conveyancing Act, the Second Respondent relies on section 79 of the Judiciary Act. That section provides as follows:
79 State or Territory laws to govern where applicable
(1)The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
(1A)For the purposes of subsection (1), a Court exercising federal jurisdiction in a proceeding is taken to be exercising federal jurisdiction in:
(a)if the laws of a State or Territory apply to a part of the proceeding because of subsection 68C(5)—that State or Territory; or
(b) if paragraph (a) does not apply:
(i)if the proceeding is transferred or remitted—the State or Territory to which the proceeding is transferred or remitted; and
(ii)otherwise—the State or Territory in which the proceeding is commenced;
except as otherwise provided by the Constitution or the laws of the Commonwealth.
(2)A provision of this Act does not prevent a law of a State or Territory covered by subsection (3) from binding a court under this section in connection with a suit relating to the recovery of an amount paid in connection with a tax that a law of a State or Territory invalidly purported to impose.
(3)This subsection covers a law of a State or Territory that would be applicable to the suit if it did not involve federal jurisdiction, including, for example, a law doing any of the following:
(a)limiting the period for bringing the suit to recover the amount;
(b)requiring prior notice to be given to the person against whom the suit is brought;
(c)barring the suit on the grounds that the person bringing the suit has charged someone else for the amount.
(4)For the purposes of subsection (2), some examples of an amount paid in connection with a tax are as follows:
(a) an amount paid as the tax;
(b) an amount of penalty for failure to pay the tax on time;
(c) an amount of penalty for failure to pay enough of the tax;
(d)an amount that is paid to a taxpayer by a customer of the taxpayer and is directly referable to the taxpayer’s liability to the tax in connection with the taxpayer’s dealings with the customer.
Section 79 of the Judiciary Act has effect only to the extent, relevantly, that this Court is exercising federal jurisdiction. So much was accepted by the Second Respondent. The Second Respondent contended, in response to questions from the Bench, that this Court was exercising federal jurisdiction in two ways. First, the Second Respondent asked the Court to dismiss the proceedings. Second, the Second Respondent asked the Court to make an order for costs against the wife.
Is the Court exercising federal jurisdiction?
The Second Respondent contended that the Notice of Discontinuance filed by the wife had not been filed in accordance with rule 10.02 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (‘Rules’). Rule 10.02 provides as follows:
10.02 Discontinuance
(1)A party may discontinue an application or response by filing a notice of discontinuance in accordance with the approved form.
(2) A notice of discontinuance may be filed:
(a)at least 14 days before the day fixed for the final hearing of the application; or
(b) with the leave of the court, at a later time.
(3)However, a party must not file a notice of discontinuance in a proceeding under the Family Law Act without the leave of the court if:
(a) the proceeding relates to the property of a party; and
(b) one of the parties dies before the proceeding is decided.
(4)A party filing a notice of discontinuance must, as soon as practicable, serve a copy of the notice on each other party to the proceeding.
(5)Discontinuance of an application or response by a party does not discontinue any other party’s application or response.
The wife filed her Notice of Discontinuance on 5 June 2023. It had not been filed at least 14 days before the day fixed for final hearing. No leave of the Court has been sought by the wife to discontinue the proceedings within 14 days prior to trial. Accordingly, the requirements of rule 10.02(2) have not been satisfied.
In the circumstances above, the Second Respondent contends that the appropriate order is to dismiss the wife’s application. It is contended that an order to dismiss would constitute, among other things, the Court exercising federal jurisdiction.
Rule 1.33(2)(a) permits the Court to dismiss all or part of a proceeding if a party fails to comply with the Rules, the Family Law Regulations or a procedural order.
Applications for default are also dealt with under Part 10.6 of the Rules. Rule 10.27(1) permits the Court to, relevantly, dismiss the whole or any part of the relief claimed by an applicant if the applicant is in default as contemplated by rule 10.26(1).
Finally, rule 15.19(2) of the Rules provide that if a party is absent from a court event, the Court may make orders of the kind referred to in rules 10.27(1) or (2), or any other order, directions, or specify any consequences for non-compliance that the Court thinks is just.
In this matter, the wife has failed to obtain a valuation as ordered (Order one of the Orders of 11 April 2023). She has failed to file and serve any trial affidavit relevant to her case (Order two of the Orders of 11 April 2023). She has failed to provide disclosure as specified by Order three of the Orders of 11 April 2023. She has also failed to appear at the final hearing.
In all the circumstances of this matter, it is open to me to dismiss the Proceedings under rules 1.33(2)(a), 10.27(1)(a) and 15.19(2) of the Rules. I consider it appropriate to make an order dismissing the whole of the wife’s application under rule 1.33(2). Such an order is required because first, the wife’s discontinuance of her application has not taken effect in accordance with rule 10.02, and second, because the wife has failed to comply with the various orders I have identified. I note that the wife may apply for relief under rule 1.34(1) of the Rules in relation to any decision to proceed under rule 1.33.
The question that then arises, is whether an order dismissing the wife’s application is an exercise of federal jurisdiction in the state of New South Wales. In my view, it is. The application by the wife was brought under section 79 of the Act. Section 79 of the Act permits this Court to alter the property interests of the parties in accordance with the provisions of a Commonwealth Act of Parliament. Had the wife appeared and run her case, I would have been required to (among other things) determine whether to grant orders sought by the wife, or to dismiss her application. In my view, in those circumstances, there can be little doubt that an order dismissing the application of the wife is an order in which the Court is exercising federal jurisdiction.
I note that the second basis upon which the Second Respondent asserts there is an exercise of federal jurisdiction is the Second Respondent’s application for costs. That application is made by the Second Respondent under section 117 of the Act. For reasons which I will come to later, I have decided to grant the Second Respondent’s application for costs. In my view, the consideration and exercise of the power to award costs under section 117 of the Act is another illustration of this Court exercising federal jurisdiction.
In all the circumstances of this matter, I am satisfied that the Court is exercising federal jurisdiction in the state of New South Wales. I am therefore satisfied that the Court is able to consider whether to make the orders sought by the Second Respondent under section 66G of the Conveyancing Act by virtue of the operation of section 79 of the Judiciary Act.
Should the Court grant the application under section 66G of the Conveyancing Act 1919?
In Foundas v Arambatzis [2020] NSWCA 47 (‘Foundas’) at [62] – [63], the Court of Appeal (White JA, Bell P and Basten JA agreeing) had this to say about the principles pertaining to the exercise of power under section 66G of the Conveyancing Act:
[62]The primary judge observed that the grounds upon which a court may decline to make an order under s 66G are limited (citing Ferella v Official Trustee in Bankruptcy [2015] NSWCA 411 at [36] and Tory v Tory [2007] NSWSC 1078 at [42]).
[63]Although an order under s 66G is discretionary, such an order is almost as of right, unless on settled principles it would be inequitable to make the order. An order may be refused if the appointment of trustees for sale would be inconsistent with a proprietary right, or the applicant for the order is acting in breach of contract or fiduciary duty, or is estopped from seeking or obtaining the order (Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068 at 1068; Ngatoa v Ford (1990) 19 NSWLR 72 at 77; Williams v Legg (1993) 29 NSWLR 687 at 693; Hogan v Baseden (1997) 8 BPR 15,723 at 15,726-15,727; Tory v Tory at [42]). Hardship or general unfairness is not a sufficient ground for declining relief under s 66G (Hogan v Baseden (1997) 8 BPR 15,723 at 723; Ferella v Official Trustee in Bankruptcy at [36]-[40]).
In his affidavit, Mr B deposes to, among other things, the following:
(a)that he was appointed the trustee of the bankrupt estate of the husband pursuant to a Sequestration order issued 28 May 2021;
(b)that he is a trustee in bankruptcy, a registered liquidator and has been practising in the insolvency industry for more than 25 years;
(c)that during his time, he has been involved in the marketing and sale of many parcels of real estate as either a receiver, liquidator or a trustee in bankruptcy and furthermore on several occasions, he has been appointed to realise properties pursuant to Part 4, Division 6 of the Conveyancing Act;
(d)at the time of the Sequestration order, the Property was held by the wife and the husband as joint tenants. Upon the making of the Sequestration Order and his appointment as trustee of the bankrupt estate of the husband, the joint tenancy between the husband and the wife was severed with each party holding a 50% share in the Property as tenants-in-common;
(e)the husband’s share of the Property has vested in him as trustee of the bankrupt estate;
(f)from the time of his appointment as trustee of the bankrupt estate, he has sought to realise all assets of the estate;
(g)the debts owed by the bankrupt are estimated to be $1,357,318.52;
(h)the husband and the wife continue to reside at the Property;
(i)following correspondence with the wife in which he sought to realise a sale of the Property, he commenced proceedings in the Supreme Court of New South Wales for orders under section 66G of the Conveyancing Act in 2022;
(j)his estimate of the professional costs likely to be incurred for the sale of the Property and the basis upon which those professional costs will be incurred;
(k)on around 13 October 2022, the wife commenced her application in this Court;
(l)he is concerned that the proceedings in this Court may have been commenced in order to use this Court’s processes to defeat claims of the bankrupt estate’s creditors, particularly in circumstances where he understands from the wife’s affidavit filed in the Supreme Court proceedings that she is not separated from her husband; and
(m)that following the commencement of proceedings in this Court, the wife has failed to make disclosure and as a result of that, he has been put through the effort and expense of serving subpoenas on various third parties and reviewing documents produced under subpoena.
The wife failed to file any trial material. No challenge was made to the contents of the affidavit of Mr B. I therefore accept the evidence of Mr B as set out in his affidavit.
Having regard to the evidence and circumstances, I am satisfied that in this matter, I should exercise the discretion available to me to make orders under section 66G of the Conveyancing Act as sought by the Second Respondent. Subject to the orders on costs which I address further below, I will make orders 1, 2, 3, and 4(a)-(f) as sought by the Second Respondent under section 66G of the Conveyancing Act. Nothing before me in the evidence indicates it would be inequitable to make such an order, for the reasons referred to in paragraph [63] of the reasons in Foundas.
COSTS
In his case outline, the Second Respondent sought orders that:
(a)he be paid his costs of this proceeding from the proceeds of the sale of the Property (proposed order 4(e) of his Case outline);
(b)the wife bear her own costs of the proceedings (proposed order 5 of the Case outline); and
(c)the wife pay his costs of the proceedings (proposed order 6 from the Case outline). I observe this last order is not an order that was sought in the Response filed by the Second Respondent.
At the hearing, the Second Respondent altered its position slightly. He sought orders that:
(a)he be paid half of his costs of these proceedings (proposed order 4(e) from the minute handed to the Court);
(b)that any remaining proceeds of sale available to the parties after costs and expenses be distributed one half to the bankrupt estate of the husband and ‘one half to the Applicant after half of the trustees costs have been paid’ (proposed order 4(g)(i) from the minute handed to the Court);
(c)the wife bear her own costs of the proceeding (proposed order 5 from the minute handed to the Court); and
(d)the wife pay the trustee’s costs of the proceedings in accordance with these orders (proposed order 6 from the minute handed to the Court).
The present position of the Second Respondent may therefore be summarised as follows. He seeks half of his costs of this proceeding. Those costs are to be paid from whatever may be left available for the wife. Moreover, those costs are to be paid to Trustee by himself, prior to any distribution to the wife of any remaining funds after the sale of the Property.
The Second Respondent filed a Costs Notice on 9 June 2023 in respect of these proceedings. That notice reveals total costs incurred to date by the Second Respondent are $95,989.67. Total further estimated costs to completion of the final hearing are $9840.
The costs order sought by the Second Respondent does not identify the basis upon which the costs are to be calculated. I therefore asked the Second Respondent during the hearing whether what was sought was an order for indemnity costs. The Second Respondent indicated he was not pursuing an order for indemnity costs.
In this jurisdiction, an award of costs is governed by section 117 of the Act. The usual rule encapsulated in subsection (1) of section 117 is that each party shall bear his or her own costs. The Court may, however, award costs if there are circumstances that justify it doing so. I asked the Second Respondent to identify what the circumstances were in this case. The Second Respondent sought to rely on subsection (2A)(c) and (e) of section 117.
I am satisfied that subsections 117(2A)(c), (d) and (e) apply in this case. The Wife commenced these proceedings. She then failed to produce documents consistent with her obligations to provide disclosure. She also filed late a Notice of Discontinuance. These matters enliven subparagraph 2(c). The wife failed to comply with previous orders of the Court, including those to which I have referred earlier. This enlivens paragraph 2(d) of subsection (2A). Finally, the wife has been wholly unsuccessful in the proceedings. That enlivens subparagraph 2(e) of subsection (2A). These matters together provide justifying circumstances for departing from the usual rule in subsection (1) in making an order for costs.
Given the matters to which I have referred and the submissions of the Second Respondent, I will make an order that the wife pay half the costs of the Second Respondent, calculated in accordance with the scale set out in Schedule 1 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021. It is appropriate and just in all the circumstances of this case that the orders provide for the Second Respondent to pay himself the amount of the costs contemplated by this order, prior to making payment to the wife of any remaining proceeds of the sale of the Property.
I will issue orders giving effect to these reasons.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Blake. Associate:
Dated: 20 July 2023
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