Makri & Ricci
[2024] FedCFamC1F 533
•8 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Makri & Ricci [2024] FedCFamC1F 533
File number: SYC 3994 of 2022 Judgment of: MCCLELLAND DCJ Date of judgment: 8 August 2024 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Summary Dismissal – Where wife sought an order that the husband’s Initiating Application be summarily dismissed – Where the husband has not paid an outstanding costs order from November 2023 – Where directions were made in November 2023 for the husband to file his Points of Claim – Where the husband attempted to file his Points of Claim two days prior to hearing the wife’s summary dismissal application – Where husband contends he is impecunious – Leave granted for the husband to file his Points of Claim – Where the husband sought leave to rely on an affidavit filed the day before hearing the wife’s application for summary dismissal – Where leave is refused for the husband to rely on the affidavit in circumstances where inadequate reasons have been given for the lateness and the wife would be prejudiced – Indemnity costs awarded to the wife – Proceedings stayed until the husband pays outstanding costs order from November 2023 and of these proceedings – Final hearing dates vacated. Legislation: Family Law Act 1975 (Cth) ss 44, 79, 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 67
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.33, 1.34, 5.07, 10.26, 10.27, 12.13, 12.17
Federal Court Rules 2011 (Cth) r 5.23
Cases cited: Galaxing Pty Ltd v Terzioski [2019] FCA 2108
Lawson v NSW Minister for Land and Water Conservation [2007] FCA 8
Professional Administrative Service Centres Pty Limited v the Commissioner of Taxation (2012) 91 ATR 546; [2012] FCAFC 180
Ressel & Morath [2023] FedCFamC1A 145
Division: Division 1 First Instance Number of paragraphs: 31 Place: Sydney (via videolink) Date of hearing: 8 August 2024 Counsel for the Applicant: Ms Kennedy Solicitor for the Applicant: Diligence Lawyers & Migration Agents Counsel for the Respondent: Mr Allen Solicitor for the Respondent: Du and Associates ORDERS
SYC 3994 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MAKRI
Applicant
AND: MR RICCI
Respondent
ORDER MADE BY:
MCCLELLAND DCJ
DATE OF ORDER:
8 AUGUST 2024
THE COURT ORDERS THAT:
1.Leave is granted for the husband to file his Points of Claim dated 6 August 2024.
2.The proceedings are stayed until such time as the husband pays the wife’s costs in the sum of $15,000 as ordered by the Senior Judicial Registrar on 15 November 2023, together with such costs as may be ordered from today’s proceedings.
3.The wife has liberty to apply on 7 days’ notice to the Court and the other party for the matter to be relisted for further directions and/or orders in respect to the further progression of the matter.
4.The wife has liberty to file an Application in a Proceeding seeking the revocation of Orders 6 and 7 of Orders made on 28 October 2022 by a Senior Judicial Registrar, with those proceedings to be listed before me at a date mutually convenient to the Court and the parties.
5.Within 28 days of today’s date, the husband pay the costs of the wife, on an indemnity basis, in the sum of $17,000.
6.The matter is set down for mention before Deputy Chief Justice McClelland at 9.30 am on 14 March 2025.
7.The final hearing dates of this matter, being 9 – 13 December 2024, are vacated.
THE COURT NOTES THAT:
A.In the event of there being no further prosecution of the substantive application between now and 14 March 2025, the Court will consider on that day, an application to dismiss the substantive application for want of prosecution.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 the pseudonym Makri & Ricci has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
MCCLELLAND DCJ:
WHETHER LEAVE IS GRANTED FOR THE HUSBAND TO RELY ON HIS AFFIDAVIT
In this matter, the husband has sought to rely on an affidavit that he filed and served on 7 August 2024. That affidavit is said to go to three issues: firstly, establishing his impecuniosity, secondly, that he has an arguable case in respect of his substantive application for property adjustment orders under s 79 of the Family Law Act 1975 (Cth) (“the Act”), and thirdly, that he has not sat on his hands in respect to orders previously made for him to file Points of Claim, those orders were made on 16 November 2023.
Rule 5.07 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) provides that “[e]ach affidavit in support of or in opposition to an interlocutory application must be filed and served at least 2 business days before the date fixed for the hearing”. That has not been done.
Rule 1.33(1) states that if a step is taken after the time specified in a legislative provision or order, that step is of no effect. Rule 1.34, however, permits a party to apply for relief from rule 1.33 and sets out a number of factors that the court may consider, including:
(a) whether there is a good reason for the non-compliance;
(b)the extent to which the party has complied with orders, legislative provisions and pre-action procedures;
(c) whether the non-compliance was caused by the party or the party’s lawyer;
(d) the impact of the non-compliance on the management of the proceeding;
(e) the effect of the non-compliance on each other party;
(f) costs;
(g)whether the party should be stayed from taking any further steps in the proceeding until the costs are paid;
(h) whether all parties consent to the step being taken after the specified time.
In this matter, the primary reason that the husband contended for the late filing of his affidavit was the fact that he was impecunious, and his lawyers were without funds.
That is not the case. It is clear that in the period since 3 April 2024, the husband’s lawyers have been provided with funds totalling $40,000. The details of the payments are as follows:
·On 3 April 2024, there was a payment of $6,000
·On 11 April 2024, there was a cash deposit of $12,000
·On 30 May 2024, there was a bank transfer of $10,000
·On 25 July 2024, there was a bank transfer of $2,000
·On 2 August 2024, there was a bank transfer of $8,000
I decline the husband’s application for relief from the effect of rule 1.33 for the following reasons:
·I am satisfied that the husband’s lawyers have been with sufficient funds in that period to prepare his affidavit at a time prior to filing and serving the document yesterday.
·The husband has, since November 2023, failed to comply with orders that he file his Points of Claim. That is an important document that informs the wife and the Court of the nature of the relief he is seeking and the basis upon which he is seeking it.
·In respect to the impact of the non-compliance and the management of the proceedings, the husband’s late filing has been discourteous to the wife who has had insufficient time to properly respond to it.
Accordingly, for those reasons, I decline the husband’s application to rely on his affidavit filed 7 August 2024.
WHETHER LEAVE IS GRANTED FOR THE HUSBAND TO RELY ON POINTS OF CLAIM
I have granted leave for the husband to file his Points of Claim dated 6 August 2024.
In considering this issue, I note that r 10.26(1)(a), provides that a party is in default if they fail to comply with an order of the court. The husband has been in default of Order 4 of the orders made on 16 November 2023 for him to file and serve Points of Claim by 31 January 2024. The husband has only attempted to file Points of Claim in the last two days. Accordingly, there is a default.
Rule 10.27 sets out the powers of the court in the event of there being a default. These powers include the ability to stay or dismiss proceedings, either in whole or in part (r 10.27(1)(a) of the Rules). This sub-rule is not dissimilar to r 5.23(1)(b) of the Federal Court Rules 2011 (Cth), which gives the Federal Court a comparable power to stay or dismiss proceedings in the event of a party’s default. That power was considered in Professional Administrative Service Centres Pty Limited v the Commissioner of Taxation (2012) 91 ATR 546. In that case, the Full Court said at [43]–[44] that the overriding consideration to the exercise of the power is whether any injustice would flow from such an order and, under the umbrella of that overriding consideration, a number of matters may be considered, including:
(i) the nature of the default involved;
(ii) the duration of the default and whether it is continuing;
(iii) the circumstances in which the orders, in respect of which default has occurred, were made including whether the orders made accorded with the practice of the court in making orders of that kind;
(iv) the circumstances which occurred between the time of making the orders and the order for the dismissal of the proceeding, including whether any attempt was made by the defaulting party to amend or set aside the orders to accommodate or deal with these intervening circumstances;
(v) whether the continuing default is occasioning unnecessary delay, expense or other prejudice or unacceptable burden on the respondent;
(vi) the attitude of the applicant to the default and the court's judgment as to whether or not the applicant genuinely wishes the matter to go to trial within a reasonable period;
(vii) the stage that the proceeding has reached – whether they have only recently been commenced; whether it has been commenced for some time but not advanced due, in whole or in part, to the default; or whether the proceeding is in an advanced state ready or nearly ready for hearing;
(viii) the likely disruption to hearing dates or, if not fixed, to setting the matter down for hearing at an early date;
(ix) the consequences to the applicant of dismissing the proceeding.
In weighing up those respective factors, I have also had regard to Galaxing Pty Ltd v Terzioski [2019] FCA 2108, where at [24], by reference to Lawson v NSW Minister for Land and Water Conservation [2007] FCA 8 at [22], Steward J discusses how the power to make an order summarily dismissing a proceeding because of a party’s default should be exercised cautiously.
In this matter, those factors that favour the wife include:
·The duration of the time that the husband has been in default in filing Points of Claim has been unacceptable.
·The husband’s contention that his lawyers have had insufficient funds to prepare the Points of Claim at an earlier time, is without substance. They have been in funds since at least March 2024.
·These proceedings have reached a stage where the final hearing has been set down in December of this year. The disruption to the wife has been significant in that it has prevented her from properly engaging in forensic tasks associated with meeting the husband’s claim, including obtaining information regarding the husband’s financial circumstances where he has provided minimal disclosure.
I must, however, also consider the consequences for the defaulting party of dismissing the proceedings. Most relevantly, the consequence, is that the dismissal of the proceedings would effectively terminate the husband’s entitlement to seek property adjustment orders in this court. That is because he would require leave to recommence the proceedings pursuant to s 44 of the Act in circumstance where more than 12 months has lapsed since the parties were divorced.
It is also relevant that the husband has now rectified that default by preparing Points of Claim. I am satisfied that the parties are now in a position to identify the issues that will be traversed at the final hearing.
For those reasons, balancing the respective prejudice to the husband on the one hand and the prejudice to the wife on the other and, in taking a cautious approach, I will make an order granting the husband leave to file the Points of Claim dated 6 August.
I will, however, vacate the hearing date and stay the proceedings until the husband attends to payment of the outstanding costs from the November 2023 proceedings and also the costs from these proceedings. I have taken that course because the wife has incurred substantial costs in meeting a claim that the husband is failing to pursue with diligence and alacrity. She should not be required to incur further costs until the husband demonstrates a genuine intention to prosecute his claim.
THE WIFE’S APPLICATION FOR COSTS
In this matter, the wife has sought costs in respect to her Application in a Proceeding filed 8 March 2024 on an indemnity basis. That matter was originally listed on 4 June 2024 and was adjourned until today. In the context of that application, the wife’s instructing solicitors, Ren Hai Jiang, filed an affidavit on 8 March 2024, wherein he has set out the relevant costs anticipated in respect to the proceedings by reference to his firms costs agreement with the wife and also in respect to that firms costs agreement with counsel.
Counsel for the wife has sought costs on an indemnity basis for two primary reasons: firstly, that the proceedings have been necessitated by a failure to comply with orders of the court and, secondly, the conduct of the husband in respect to the proceedings.
The circumstances in which the court may order in indemnity costs were recently summarised by the Full Court in Ressel & Morath [2023] FedCFamCIA 145 at [80]–[84], as follows:
80An order for indemnity costs is a significant departure from the normal standard and requires something exceptional (Harris & Dewell (No 2) (2018) FLC 93-863), where the Full Court said at [23]–[25]:
23.In Kohan and Kohan, the Full Court held, in applying the principles expounded by Sheppard J in Colgate-Palmolive, that an order for indemnity costs represents a “very great departure from the normal standard”. In the later decision of the Full Court in Prantage & Prantage, Thackray and Ryan JJ referred to Kohan and other authorities in the Full Courts of both this Court and the Federal Court of Australia as well as the state appeal courts. Their Honours concluded (at [86]) that the “usual rule” continued to apply in respect of awards of costs in this Court notwithstanding the Full Court accepting that the difference between party/party costs and a party’s actual costs has continued to grow significantly.
24.That proposition also derives support from what Callinan J said in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation. His Honour said that an order for indemnity costs should “be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers”.
25.The rarity of an order for indemnity costs can also be seen illustrated by the comments of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 2), referred to by their Honours in Prantage (at [102] – [103]). Lindgren J said that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation.”
(Footnotes omitted)
81In the well-settled authority of Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, Shepherd J provided some examples of circumstances that might justify the awarding of indemnity costs, and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784, at 84,660, drew from his Honour’s decision those 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…
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud…
(c)Evidence of particular misconduct causing loss of time to the court and to other parties…
(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.
(Citations omitted)
82That said, the categories of circumstances which enliven the discretion to award indemnity costs are not closed (Yunghanns v Yunghanns (2000) FLC 93-029 at [31]).
83We consider that this is one of those exceptional cases where costs on an indemnity basis are appropriate. First, the appeal had no prospects of success. Second, the appellant sought to agitate that he had not sent more than 1,000 communications as the primary judge found, but rather only sent more than 200, many of which were truly awful. Given the abominable content of the many he was taken to at trial and conceded sending, debating quantum was therefore an undue prolongation of the case. Third, each time the appellant filed a document out of time, he put the respondent to the expense of considering the material.
84Pursuant to r 12.13(4) of the Rules, a party applying for costs on an indemnity basis must inform the Court if that party is bound by a costs agreement in relation to those costs and the terms of that agreement. The respondent has done so (Respondent’s Schedule of Costs filed 24 July 2023, p.4–26).
The authorities referred to above confirm that it is the exception rather than the rule for this court to order the payment of indemnity costs pursuant to s 117 of the Act. It is a rarity to make such and order. I am satisfied that this case falls into the category of those rare and exceptional cases for the following reasons.
Firstly, on 16 November 2023 the husband was ordered to particularise his case by filing and serving Points of Claim by 31 January 2024. That did not occur. This resulted in the wife filing her Application in a Proceeding on 8 March 2024. That matter was listed before me in June 2024 and subsequently adjourned to today.
At that hearing in June 2024, it was indicated to the husband that he would have significant difficulty in resisting an application for the proceedings to be dismissed if he did not, prior to the further listing of the matter, file Points of Claim. In that respect, I note that the husband did, in fact attempt to file Points of Claim, but he did not attempt to do so until two days prior to today’s hearing.
The extent of the non-compliance with the order to file Points of Claim is significant. The Points of Claim set the parameters of the case that the court is required to consider and, specifically, the case that the wife is required to meet. The requirement for that to occur was consistent with the overarching purpose set out in s 67 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), which requires the court to not only ensure that proceedings are adjudicated according to law but also “as quickly, inexpensively and efficiently as possible.”
The failure of the husband to file Points of Claim to clarify his case is inconsistent with his obligation to assist the court to act in accordance with the overarching purpose.
Additionally, as has earlier been noted, he only filed an affidavit in support of his application to late file the Points of Claim just one day prior to the listing of these proceedings and he was wholly unsuccessful in that application to rely on the affidavit.
In summary, I am satisfied that an order for indemnity costs is justified because of:
·The relevance of the Points of Claim as a document that would further the overarching purpose;
·The extent of the delay of the failure to comply with the November 2023 order to file Points of Claim; and
·The fact that the husband did not take steps to rectify his non-compliance until two days prior to the hearing.
In considering the amount of costs to be awarded, r 12.13(4) states that a party applying for indemnity costs is required to advise the court of the costs agreement of the solicitor and the barrister retained in the matter. That has been done by way of annexure to the affidavit of Ren Hai Jiang filed 8 March 2024 (p.60), to which I have earlier referred.
The agreement between the solicitor and the wife is that they would charge the wife $4,000 for attending an interlocutory application. I further note the agreement with counsel provides that the fees of counsel would be $7,000 per day for a hearing (plus GST). Based on those agreements, unless discounted, the total fees would be $22,000.
However, I discount that amount by the fact that the hearing that occurred in June 2024 was relatively brief.
Rule 12.17(1)(a) empowers the court to make an order for costs in a specific amount. Having regard to the substance of today’s proceedings, I accept, considerable preparation took place, and I am satisfied that a just, fair and equitable amount to award by way of indemnity costs is in the sum of $17,000 in respect to both todays proceedings and the proceedings listed on 4 June 2024.
In circumstances where the proceedings have been stayed, I will list the matter for further directions on 14 March 2025. The husband has been given notice that in the event he has not attended to payment of the wife’s costs and of there being no further prosecution of the substantive application between now and 14 March 2025, the Court will consider on that day, an application to dismiss the substantive application for want of prosecution.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Deputy Chief Justice McClelland. Associate:
Dated: 19 August 2024
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