Murillo & Murillo (No 3)
[2022] FedCFamC1F 852
•2 November 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Murillo & Murillo (No 3) [2022] FedCFamC1F 852
File number(s): SYC 3325 of 2017 Judgment of: SCHONELL J Date of judgment: 2 November 2022 Catchwords: FAMILY LAW – COSTS – Where the matter was relisted following the husband’s failure to comply with an order – Where the parties reached an agreement – Where the wife and second respondent sought costs on an indemnity basis – Where there was nothing exceptional about the circumstances of the matter to warrant costs orders being made on an indemnity basis – Oral applications for costs dismissed. Legislation: Family Law Act 1975 (Cth) s 117 Cases cited: Colgate Palmolive Company and Another v Cussons Pty Ltd (1993) 118 ALR 248; [1993] FCA 801
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Division: Division 1 First Instance Number of paragraphs: 16 Date of hearing: 2 November 2022 Place: Sydney Solicitor for the Applicant: Mills Oakley Solicitor for the First Respondent: Sarah Bevan Family Lawyers Counsel for the Second Respondent: Mr Lo Schiavo Solicitor for the Second Respondent: Cruz Clowry Law Group ORDERS
SYC 3325 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MURILLO
Applicant
AND: MR MURILLO
First Respondent
MS B
Second Respondent
order made by:
SCHONELL J
DATE OF ORDER:
2 NOVEMBER 2022
THE COURT ORDERS THAT:
1.The applicant wife and the second respondent’s oral applications for costs are dismissed.
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 the pseudonym Murillo & Murillo has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
SCHONELL J:
In this matter, there was a listing at the request of the solicitors for the applicant wife (“the wife”) arising out of orders that I had made on 5 October 2022, where I heard competing applications brought by the parties.
It is contended before me today that the application arises in the context of the first respondent husband (“the husband”) not complying with an order that I made, namely that he pay the sum of $40,160.72 to FF Accounting Firm within seven days.
When the matter was called, the parties indicated that there was the possibility of reaching some agreement and I thereafter was handed terms of settlement, which provided for a sale of the property at Suburb N and various consequential orders dealing with payment to Ms C.
As a consequence of that application, the wife seeks a payment in the sum of $2,200 for her appearance today. Such sum is said to be on an indemnity basis. Likewise, counsel for the second respondent seeks his costs and the costs of his client in the sum of $1,500 also on an indemnity basis.
The submissions put on behalf of the wife are that the listing is entirely as a consequence of the failure by the husband to comply with an order and that the wife has incurred costs and that the husband has the capacity to meet the costs order. In relation to the husband, he says that in essence he does not have the capacity to meet an order and that the parties in effect compromised the proceedings by the entry into orders. Counsel for the second respondent contends that they have come along today and have been parties to orders and they seek a sum of $1,500 by way of indemnity costs. Counsel for the second respondent also submits that the husband has the capacity to meet the orders.
I do not propose to recite in these reasons the background history of this dispute and otherwise note the matters set out in my judgment delivered on 5 October 2022.
An application for costs is governed by the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”).
That provides that each party is otherwise to meet their own costs other than where there are circumstances such as to give rise to the proposition that one party should otherwise meet the costs of the other. Section 117(2) reposes in the Court a discretion to make a costs order in circumstances where the Court determines that there are circumstances that justify making such an order.
An application for indemnity costs, however, is of a very different kind.
There is ample authority as to the circumstances in which a court will make indemnity costs orders. The authorities make it plain that an order for indemnity costs is not one that is made lightly and there should be circumstances of an exceptional kind that warrant an order for costs on an indemnity basis.
In Kohan and Kohan (1993) FLC 92-340, their Honours in the Full Court observed at 79,614:
The intent of s117(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) “(supra); Wentworth v. Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR at 368 to 370.
Indemnity costs orders are still an exception in this and other jurisdictions. …
I also note that Sheppard J in Colgate Palmolive Company and Another v Cussons Pty Ltd (1993) 118 ALR 248 observed at 256–257:
1. The problem arises in adversary litigation, ie litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority.
2. The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this court the provisions of O 62, rr 12 and 19, and the Second Schedule to the rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v British Transport Commission and Handley JA in Cachia v Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4. In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require’’. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo: “the categories in which the discretion may be exercised are not closed’’.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
There is nothing exceptional about the circumstances of this matter, particularly when seen against the context of the proceedings before the Court and the conflict that arises as a consequence of the parties’ inability to reach an agreement.
There is nothing in my view that warrants an order for indemnity costs.
In circumstances where costs were not sought on any other basis, I dismiss both parties’ applications.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 2 November 2022
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