Mitford and Cilea (No. 2)

[2018] FamCA 587

FAMILY COURT OF AUSTRALIA

MITFORD & CILEA (NO. 2) [2018] FamCA 587

FAMILY LAW – COSTS – Where husband seeks an order for indemnity costs against the wife –Where the wife did not appear at the hearing – Where wife discontinued her claim for an enforcement warrant –  Where wife rejected prior offers – Where wife not wholly unsuccessful – Where wife to pay husband’s costs on a party/party basis - Costs certificate granted.

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

Yunghanns & Ors & Yunghanns (2000) FLC 93-029
Colgate-Palmolive Company & Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) FCR 225
Kohan & Kohan (1993) FLC 92-340
Muldoon & Carlyle (2012) FLC 93-513
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364
J Corp Pty Ltd v Australian Building Labourers Federation Union of Workers (WA Branch)(No 2) [1993] FCA 42
Z (A Solicitor) v Limousin (Costs) [2010] FLC 93-433

APPLICANT: Mr Mitford

RESPONDENT: Ms Cilea

FILE NUMBER: TVC 986 of 2016

DATE DELIVERED: 3 August 2018

PLACE DELIVERED: In Chambers

PLACE HEARD: In Chambers

JUDGMENT OF: Tree J

HEARING DATE: Last written submissions filed 19 July 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Pack

SOLICITORS FOR THE APPLICANT: P D Law

THE RESPONDENT: In person

Orders

1. It is certified that it was reasonable for the husband to engage counsel to appear for him on 22 June 2018.

2. The wife pay the husband’s costs on a party/party basis assessed in the sum of $4,967.04.

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 Mitford & Cilea (No. 2) 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 CAIRNS

FILE NUMBER: TVC986/2016

Mr Mitford

Applicant

And

Ms Cilea

Respondent

REASONS FOR JUDGMENT

INTRODUCTION  

1. On 22 June 2018, for reasons delivered on that day, I ordered that an Enforcement Warrant issued at the behest of Ms Cilea (“the wife”), be permanently stayed.  I did so because I was satisfied that Mr Mitford (“the husband”) had discharged his obligations under earlier orders made 23 September 2016 to pay $20,000.00 to the wife.

2. Also on 22 June, the husband made an application for a costs order against the wife, such order to be on an indemnity basis.  I made directions for the filing of written submissions in relation to that application, and reserved my decision from the time of the last submission.  This is that decision and the reasons for it.

THE FACTS

1. On 23 September 2016, a Registrar made orders by consent resolving the parties’ property proceedings.  Amongst the several obligations therein created, by Order 2(b) the husband was required to pay the wife the sum of $20,000.00.

2. In her Application for an Enforcement Warrant filed 13 October 2017, the wife claimed that $7,550.00 of that sum remained unpaid and, together with interests and costs, sought that an Enforcement Warrant issue for that sum.  That occurred, however by Application in a Case filed 6 November 2017, the husband sought that the warrant be stayed or set aside, and further sought an order for costs on an indemnity basis.  In the affidavit filed in support of that application, he asserted that the entire $20,000.00 had been paid, and detailed the particular payments made which he said totalled the $20,000.00.

3. The matter first came on before me on 21 November 2017, on which occasion I made an interim order staying the Enforcement Warrant, and set the matter down for hearing on Friday 22 June 2018 in Townsville, with the requirement that all parties personally attend.  A timetable was made for the filing of further material.

4. At the time the Enforcement Warrant issued, the wife was represented by a solicitor.  However she was not so represented when, on 11 January 2018, she filed a further affidavit in response to the husband’s affidavit.  By paragraph 4 of that affidavit the wife asserted that the agreement which underpinned the consent property orders was not binding, as it “was obtained by undue influence, deception and duress and in violation of the principles set out in the decision of the High Court in Thorne Verses (sic) Kennedy.”

5. Notwithstanding her assertion that the agreement was unenforceable, and hence the consent orders liable to be set aside, the wife did not seek to withdraw the Enforcement Warrant, or consent to it being stayed, nor did she commence proceedings to impugn the consent orders.

6. The matter was called on before me on 22 June 2018, but only the husband appeared by counsel.  There was no appearance by the wife.  However as I noted in my ex tempore reasons then delivered, there had been email communication from someone purporting to be the wife received by the court earlier that morning, in which she indicated that she wished to “withdraw my claim for an Enforcement Warrant.”  However that email had not been copied to the husband, and the first notice he had of the intention to withdraw the Enforcement Warrant was when I read the email to him and his counsel in court.

RELEVANT STATUTORY PROVISIONS AND LEGAL PRINCIPLES

Cost orders generally

1. The starting point for a consideration of these applications is s117 of the Family Law Act which relevantly provides as follows:

   117(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118 each party to proceedings under this Act shall bear his or her own costs.

   117(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   117(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (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 answer 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.

   …

2. Rule 19.08(3) imposes a mandatory obligation in the following terms:

   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.

3. Rule 19.18 deals with the method of calculation of costs in the following terms:

   19.18(1) 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.

   Example

   For paragraph (1)(c), the stated method may be in accordance with Schedule 3 but with an additional percentage for complexity.

   19.18(2) If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.

   19.18(3) 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.

Principles relating to indemnity costs

1. In order to justify the making of an order for costs on other than a party/party basis, all that is required are particular facts and circumstances of the case in question warranting the making of such an order.[1]  That said, such an order is a very great departure from the normal standard, and hence it is imperative that the court be aware of what the nature of the indemnity is, in the sense of what the costs agreement between the parties seeking the order and their solicitors is.[2]  That said, such an order remains wholly compensatory and not punitive.[3]

   [1]Yunghanns & Ors & Yunghanns (2000) FLC 93-029 adopting Sheppard J in Colgate-Palmolive Company & Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) FCR 225.

   [2]See Kohan & Kohan (1993) FLC 92-340 and FLR 19.08(3).

   [3]See Muldoon & Carlyle (2012) FLC 93-513 at [115].

2. It is well established that proceedings brought in wilful disregard of known facts or clearly established law are one of the established categories which justify indemnity costs.[4]  An instance of that in this court is the decision of Limousin[5] where the Full Court did not disturb a costs order against a solicitor who had failed to have any proper regard to the prospects of success of a claim.

SECTION 117(2A) FACTORS

[4]Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; J Corp Pty Ltd v Australian Building Labourers Federation Union of Workers (WA Branch)(No 2) [1993] FCA 42; Colgate-Palmolive (supra and Yunghanns (supra).

[5]Z (A Solicitor) v Limousin (Costs) [2010] FLC 93-433.

Financial circumstances of the parties

1. Neither party put on any evidence of their financial circumstances.  However both appear to be in employment in their professions, and I therefore assume that, at least from an income perspective they are not presently experiencing hardship.  That said, as counsel for the husband points out, even if the wife presently be impecunious, that is not a bar to a costs order being made.

Legal Aid

1. Neither party was in receipt of legal aid, at least on the evidence before me.

Conduct of the parties to the proceedings

1. The husband relies upon the wife’s assertion in her affidavit of 11 January 2018 that the consent orders were not enforceable, and yet nonetheless she did not discontinue the Enforcement Warrant, or seek to have it withdrawn, until the morning of 22 June 2018.  Moreover, the husband relied upon the lateness of that communication, and further, the fact that he was not forewarned of the wife’s intention to so act, nor even copied into the wife’s email to the court.

Proceedings necessitated by failure to comply

1. In her affidavit filed 13 October 2017, the wife claimed that the sum of $7,550.00 was still outstanding.  In his affidavit filed 6 November 2017, the husband asserted that all monies were paid.  Nonetheless, on 18 June 2018, he paid a further $1,439.71 to the wife.  He tendered evidence of that payment, which became exhibit 1 before me at the hearing on 22 June 2018.  The submissions of his counsel on that day did not seek to persuade me that created an overpayment situation, but rather that it was necessary for that payment to have been made to fully discharge the husband’s debt.  In a sense therefore, the issuance of the Enforcement Warrant is conceded by the husband to have been necessary, because of his failure to fully discharge the consent orders of 23 September 2016.  Further, it seems to me as though the application to set aside the Enforcement Warrant, whilst necessary in the face of the quantum which the wife asserted remained unpaid, was nonetheless brought on a partially false premise, namely that there was no money outstanding.

Party wholly unsuccessful in proceedings

1. The husband asserts that the wife was wholly unsuccessful in the proceedings, in that the Enforcement Warrant was permanently stayed.  However that does not fully reflect the situation, in that that stay would not have been ordered, at least on the submissions advanced on 22 June 2018, but for the payment on 18 June of $1,439.71 to the wife.  In that sense, the wife was not wholly unsuccessful in the proceedings.

Offers to settle

1. Strictly speaking s 117(2A)(f) relates to offers “to settle the proceedings,” and hence it is offers after the commencement of the claim which are captured by that provision. However I am satisfied that, if there were offers made prior to the commencement of the proceedings, they would nonetheless be another matter which I would consider relevant under s 117(2A)(g).

2. In this case, the husband relies upon two offers.  The first preceded these proceedings – and indeed the Enforcement Warrant – being made on 10 August 2017.  It offered to pay the wife a further $3,170.00 in full and final settlement of any claim she has in relation to property matters.  It imposed a deadline of Friday 18 August 2017 for acceptance, and although it is left unstated, I assume that it was expressly rejected or not accepted by that date.  Plainly, had the wife accepted that offer, she would have been in a better position than she was at the conclusion of these proceedings. 

3. The second offer relied upon by the husband was made on 19 June 2018, which is, of course, after the payment of $1,439.71 on 18 June.  In that he offered to pay a further $1,000.00 to the wife to resolve all issues in dispute to avoid a hearing.  It imposed a deadline for acceptance at 1:00pm on 21 June 2018.  This was rejected by the wife, albeit outside of that time frame, by email sent at 8:19pm on Thursday 21 June 2018.  Curiously, notwithstanding that email was sent then, it did not foreshadow that the wife was not intending to appear on the following day.

4. The wife asserts in her written submissions that the time for acceptance of the second offer “did not provide the wife with reasonable or sufficient time to consider the offer and take advice with respect to it.”  Counsel for the husband correctly points out that the wife was in fact able to respond, albeit not prior to the 1:00pm deadline, and given that she was self-represented, the nature of the advice that she was seeking is left unstated.  In any event, I note that the wife expressly rejected the offer a little more than seven hours after the expiry of the time for acceptance.

Evaluation

Costs

1. Notwithstanding the usual rule established by s 117(1) that each party bear their own costs, I am satisfied that there are circumstances in this case that justify an order for costs. Particularly I rely upon:

   ·The offer by the husband to the wife on 10 August 2017, which would have seen her do much better than ultimately she did;

   ·The fact that the husband’s Application in a Case was necessitated by the excessive claim advanced by the wife in the Enforcement Warrant;

   ·The failure of the wife to withdraw the Enforcement Warrant in consequence of her 11 January 2018 affidavit in which she claimed that the agreement underpinning the consent orders which the Enforcement Warrant operated in respect of, was unenforceable;

   ·The wife’s failure to advise the husband of her intention not to appear on 22 June, and to in fact seek to withdraw the Warrant;

   ·The wife’s failure to accept the husband’s offer of 19 June 2018. 

Indemnity costs

1. The husband asserts that there should be an order for indemnity costs because:

   ·The wife was wholly unsuccessful;

   ·The wife refused to accept either of the earlier offers;

   ·The wife was on notice of his intention to seek indemnity costs;

   ·The wife failed to advise the husband in a timely way that she was seeking to have the Enforcement Warrant withdrawn, or of her intention not to appear on 22 June 2018;

   ·That I should infer that the wife was not acting bone fide after 11 January, because she was at once seeking to enforce the consent orders, but on the other hand, also asserting that they were unenforceable;

   ·Significant costs have been incurred by the husband which could have been avoided if the wife had accepted the written offers to settle.

2. As has been seen, I am not persuaded that the wife was wholly unsuccessful in the proceedings, in that on 18 June the husband paid a further sum to her. 

3. Further, whilst it appears as though the sum claimed in the Enforcement Warrant was clearly excessive, the payment on 18 June implicitly concedes that the Enforcement Warrant was nonetheless properly issued.  Therefore the issuing of the warrant in the first instance cannot be said to have been inappropriate, nor, notwithstanding its excessive claim, brought in wilful disregard of known facts.  Whilst it is unfortunate that the wife refused to accept the offer of compromise prior to issuing the Enforcement Warrant, that is but one factor to be taken into account.

4. I am not persuaded that there should be an order for costs on an indemnity basis in this instance.

Quantification

1. Implicitly the husband seeks an order for a certificate for counsel, and I am satisfied that it was indeed reasonable to engage counsel to attend for the husband at the hearing on 22 June 2018.  I will therefore certify to that effect.

2. As to the quantification of the husband’s costs, on a party/party basis he claims the sum of $4,967.04, and itemised accounts were attached to his written submissions filed 29 June 2018.  I am satisfied that it is appropriate to assess the costs in that sum, as the sum claimed is reasonable, and the work undertaken according to the itemised accounts was appropriate.

3. I will therefore assess the husband’s costs on a party/party basis in the sum of $4,967.04.

CONCLUSION

1. For these reasons there will be an order that the wife pay the husband’s costs on a party/party basis assessed in the sum of $4,967.04.     

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 3 August 2018.

Associate:

Date: 3 August 2018