Mutti and Mutti and Ors

[2020] FamCA 122

FAMILY COURT OF AUSTRALIA

MUTTI & MUTTI AND ORS [2020] FamCA 122

FAMILY LAW – COSTS – where disjoined persons and/or entities seek an order that the First Respondent pay their costs on an indemnity basis – where the Court is persuaded that the circumstances justify the making of an order for costs on a party/party basis but is not persuaded that it is just to make an order for costs on an indemnity basis

Family Law Act 1975 (Cth)

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
D & D (Costs) (No 2) (2010) FLC 93-435
In the Marriage of Kohan (1993) FLC 92-340
Limousin v Limousin (Costs) (2008)
Yunghanns v Yunghanns (2000) FLC 93-029

APPLICANT: Mr Mutti

FIRST RESPONDENT: Ms Mutti

SECOND RESPONDENT: Mr Perez

THIRD RESPONDENT: The Trustee for The B Trust

FOURTH RESPONDENT: C Pty Ltd (Registered Office)

FIFTH RESPONDENT: D Pty Ltd

SIXTH RESPONDENT: The Mutti Family Discretionary Trust And The Trustee For The Spitzer Family Trust

SEVENTH RESPONDENT: Mr Spitzer

EIGHTH RESPONDENT: Ms Spitzer

NINTH RESPONDENT: Ms Stillman

TENTH RESPONDENT: Mr Moore

ELEVENTH RESPONDENT: E Pty Ltd

FILE NUMBER: BRC 6049 of 2013

DATE DELIVERED: 28 February 2020

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: In Chambers on the papers following the receipt of written submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT: MBA Lawyers (by way of written submissions filed 27 June 2019 and 15 July 2019)

SOLICITOR FOR THE FIRST RESPONDENT: Ms Jeffries, Cornerstone Law Offices (by way of written submissions filed 12 July 2019)

SOLICITOR FOR THE SECOND AND THIRD RESPONDENT: Mr Perez, B Lawyers (by way of written submissions filed 28 June 2019)

THE FOURTH RESPONDENT: No appearance

FIFTH, SIXTH, SEVENTH AND EIGHTH RESPONDENTS: Mr Spitzer and Ms Spitzer (by way of jointly signed written submissions filed 24 July 2019)

NINTH RESPONDENT: Ms Stillman (by way of written submissions filed 24 July 2019)

SOLICITOR TENTH AND ELEVENTH RESPONDENTS: Mr Whieldon, Evolution Legal (by way of written submissions filed 24 July 2019)

Orders

IT IS ORDERED THAT

1. The First Respondent pay the Applicant’s costs of and incidental to:

   (a)the Application in a Case filed by the Second and Third Respondents on 16 November 2015; and

   (b)the Application in a Case filed by the Fifth, Sixth, Seventh and Eighth Respondents on 30 October 2015; and

   (c)the Application in a Case filed by the Ninth Respondent on 30 October 2015; and

   (d)the Application in a Case filed by the Tenth and Eleventh Respondents on 30 October 2015,

   with such costs to be paid on a party/party basis in such amount as may be agreed between the parties or, failing agreement, as assessed in accordance with Schedule 3 to the Family Law Rules 2004 (Cth) and to be paid within thirty (30) days of agreement or assessment.

2. The First Respondent pay the former Second and Third Respondents’ costs of and incidental to the proceedings, with such costs to be paid on a party/party basis as assessed in accordance with Schedule 3 to the Family Law Rules 2004 (Cth) and to be paid within thirty (30) days of such assessment or agreement as to the amount.

3. The First Respondent pay the former Fifth, Sixth, Seventh and Eighth Respondents’ costs of and incidental to the proceedings, with such costs to be paid on a party/party basis as assessed in accordance with Schedule 3 to the Family Law Rules 2004 (Cth) and to be paid within thirty (30) days of such assessment or agreement as to the amount.

4. The First Respondent pay the former Ninth Respondent’s costs of and incidental to the proceedings, with such costs to be paid on a party/party basis as assessed in accordance with Schedule 3 to the Family Law Rules 2004 (Cth) and to be paid within thirty (30) days of such assessment or agreement as to the amount.

5. The First Respondent pay the former Tenth and Eleventh Respondents’ costs of and incidental to the proceedings, with such costs to be paid on a party/party basis as assessed in accordance with Schedule 3 to the Family Law Rules 2004 (Cth) and to be paid within thirty (30) days of such assessment or agreement as to the amount.

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 Mutti & Mutti 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 BRISBANE

FILE NUMBER: BRC 6049 of 2013

Mr Mutti

Applicant

And

Ms Mutti

First Respondent

And

Mr Perez

Second Respondent

And

The Trustee for The B Trust

Third Respondent

And

C Pty Ltd (Registered Office)

Fourth Respondent

And

D Pty Ltd

Fifth Respondent

And

The Mutti Family Discretionary Trust and The Trustee for The Spitzer Family Trust

Sixth Respondent

And

Mr Spitzer

Seventh Respondent

And

Ms Spitzer

Eighth Respondent

And

Ms Stillman

Ninth Respondent

And

Mr Moore

Tenth Respondent

And

E Pty Ltd

Eleventh Respondent

REASONS FOR JUDGMENT

1. On 28 May 2019, I made orders removing various persons and entities as parties to the proceedings between Mr Mutti and Ms Mutti. I did so for the reasons then expressed. I also made an order to facilitate any application by any party for an order for costs. Each of the disjoined persons and/or entities, other than C Pty Ltd, subsequently applied for an order for costs against Ms Mutti (the Wife).

The Husband

1. The Husband seeks an order that the Wife pay his costs on an indemnity basis; the amount sought is $41,765.28 (being $22,515.28 in relation to professional fees charged by his solicitors and $19,250.00 being the amount paid to Counsel who appeared on his behalf). In addition, he also seeks an order that the Wife pay his costs associated with the preparation of the submissions seeking an order for costs.

2. It was submitted that the Husband incurred costs as a consequence of the Wife’s joinder of those persons and entities ultimately disjoined from the proceedings because her joinder of the same required the consideration of the material filed by each of the same in support of their respective applications to be removed as parties to the proceedings.

3. It was submitted that the Wife was given notice of the Husband’s intention to seek an order for costs in mid-November 2015; that as she did not seek any relief against those persons and entities ultimately disjoined, she should not properly have opposed their respective applications to be removed as parties to the proceedings and that, in doing so, she caused him to incur legal costs that he would not otherwise have incurred.

4. The Husband also submitted that it was relevant for the Court to consider that, on Friday 12 June 2019, pursuant to Rule 10.2 of the Family Law Rules 2004 (Cth), he made an open offer to the Wife in terms that he would accept payment of $20,000.00 in respect of the legal fees he had incurred in relation to the proceedings. Such offer was open until the close of business on Sunday,14 June 2019. It was also submitted that his financial circumstances were modest.

Mr Perez, The Trustee for the B Trust

1. The Second and Third Respondents seek costs against the First Respondent on a party/party basis, in the amount of $7,791.88, said to have been calculated in accordance with the appropriate schedule to the Family Law Rules 2004 (Cth). The amount is inclusive of Counsel’s fees and interest of $1,150.45. However, it was also submitted that, if the Court was persuaded to make an order for costs on an indemnity basis, an additional amount of $5,500.00 was sought (said to represent an additional 10 hours at $500.00/hour plus GST). It was submitted, in support of an order on an indemnity basis, that the Wife ought to have known that she had no prospects of successfully opposing the application for disjoinder; that their joinder to the proceedings was plainly unjustified; that no orders had been sought against them and that there was no evidence to support the contention that any orders made as between the Husband and Wife would have affected their rights or that they were necessary as parties in the proceedings.

C Pty Ltd and The Mutti Family Discretionary Trust

1. No separate submissions as to costs have been made on behalf of these previous parties.

D Pty Ltd, the Trustee for the Spitzer Family Trust, Mr Spitzer and Ms Spitzer

1. These people and entities seek an order that the Wife pay their costs on an indemnity basis. The amount sought is $16,698.16. It was submitted that the Court would be persuaded that the circumstances justify the making of an order for costs because, from 30 October 2015, they had sought to be disjoined from the proceedings on the basis that, as no order had been sought against them, their continued presence as parties was frivolous; they were forced to incur the costs of preparing affidavits to respond to the contentions made by the Wife; they made an open offer on 14 June 2019 to accept payment of $16,698.16 by way of costs.

2. There is no evidence before me in this application for costs as to the financial circumstances of these applicants for an order for costs.

Ms Stillman

1. Ms Stillman seeks an order for costs against the Wife; she does so on an indemnity basis and for the amount of $19, 876.98, particularised as comprising $14,926.98 for the professional fees and disbursements of Henry Family Lawyers and $4,950.00 for Counsel’s fees. It was submitted on her behalf that the following circumstances justify the making of an order pursuant to s 117(2) of the Act: the Wife sought no orders against her; she was not necessary as a party to the proceedings; on 12 October 2015 (before her affidavit was affirmed), her solicitors asked the Wife’s solicitors to amend the application to remove her as a party and foreshadowed an intention to seek an order for costs on an indemnity basis if this did not occur; on 18 June 2019, her solicitors wrote to the Wife’s solicitors to make an open offer to accept $9,938.49 in satisfaction of the claim for indemnity costs quantified in the amount now sought.

2. There is no evidence before me in this application for costs as to the financial circumstances of this applicant for an order for costs.

Mr Moore and E Pty Ltd

1. Mr Moore and this entity seek an order for costs against the Wife; they do so on an indemnity basis and for the amount of $23,382.39, particularised as comprising fees payable to solicitors and Counsel. It was submitted on their behalf that the following circumstances justify the making of an order pursuant to s 117(2) of the Act: the Wife sought no relief against them; they were not necessary as parties to the proceedings; the Wife was wholly unsuccessful in her position that they should be joined to the proceedings; they incurred legal costs they would not otherwise have incurred because of the Wife’s actions in joining them to the proceedings; on 27 October 2015 (prior to Mr Moore’s affidavit being filed), they made an offer that the Wife discontinue the proceedings against them or they would seek costs on a solicitor/client basis; on 30 October 2015, their solicitor filed an affidavit outlining the steps taken to attempt to dissuade the Wife from proceeding in their joinder to the proceedings; on 14 June 2019, their solicitor wrote to the Wife’s solicitors to make an open offer to accept $20,000.00 in satisfaction of the claim for costs.

2. There is no evidence before me in this application for costs as to the financial circumstances of this applicant for an order for costs.

The Wife

1. It was submitted on behalf of the Wife that the Court would not be persuaded to depart from the starting point for costs in proceedings under the Family Law Act1975 (Cth) – namely that parties to the same bear their own costs: s 117(1) of the Act. It was submitted that it would not be just to order the Wife to pay the costs sought against her and that the Court would not be persuaded that there are circumstances which justify a departure from this starting point. In particular, it was submitted that the Court would not be persuaded that there are circumstances that justly the making of an order that she pay the costs sought against her by the Husband because of the disparity in their financial circumstances. It was also submitted that the Court would not be persuaded that the circumstances justify the making of an order that she pay the costs sought by persons or entities other than the Husband because, in joining them, she simply acted as was prescribed by Rule 6.02 of the Family Law Rules 2004 (Cth).

2. It was submitted that, given the Husband’s alleged conduct following the separation, the Wife was, in essence, justified in joining those persons and entities other than the Husband to the proceedings because she had formed the view that their interests may have been affected by the relief she sought. It was also submitted, in essence, that the Court would not conclude that, in acting as she did, the Wife demonstrated a wilful disregard of known facts or established law or prolonged the matter through baseless contentions. However, it is clear –as was outlined in the Reasons delivered when the persons and entities other than the Husband were disjoined for the proceedings – that the Wife maintained that their presence was necessary despite seeking no orders against those particularised there. Whilst those who submitted on the Wife’s behalf maintained, in the submission prepared on her behalf, that, had she sought relief against those disjoined it is likely that such application would have been successful, such submission persuades only that they fail to appreciate fundamental principles.

3. It was also submitted that, if the Court is of the opinion that the circumstances justify the making of orders for costs adverse to the wife, the Court would not be persuaded that it was just to order the payment of the same on an indemnity basis and that the costs should properly be restricted to those, calculated on a party and party basis, associated with their responses to her joinder of them to the proceedings.

4. It was submitted that, whilst the Wife was wholly unsuccessful in her opposition to the disjoinder of the persons and entities (other than the Husband) which she had joined to the proceedings, the Court would not be persuaded that the circumstances are such that the making of an order for costs on an indemnity basis is just. This was said to be because the conduct was her failure to seek orders against these persons and/or entities rather than conduct which involved an ongoing series of actions; it was also submitted that the Court would not be persuaded that the “criteria” prescribed in Colgate Palmolive Co v Cussons Pty Ltd[1] as being required in order to justify the making of an order for costs on an indemnity basis are established in this case. It was also submitted, in essence, that it was particularly relevant in this respect to note that the total amount of costs sought by the Husband and those disjoined from the proceedings by order is $114, 924.69.

   [1] (1993) 118 ALR 248.

5. It was submitted on behalf of the Wife that the Court would not be of the opinion that the circumstances justify the making of orders for costs as sought because: her financial circumstances are such that she does not have the capacity pay the same; those seeking an order for costs are in a relatively superior financial position; her financial position is strained; and, in so far as the Husband is concerned – he retained control of the property of the relationship to her exclusion and she has the primary responsibility for the care of their child. In an overall sense, the submission was that the Wife’s financial position is such that it would not be just for there to be orders for costs made against her.

6. Further it was also submitted that, insofar as the offers to resolve the quantum of costs made by the Husband and the Fifth to Eleventh Respondents are concerned, the Court would not place weight upon the same because of: the limited timeframes during which each were said to have been open for acceptance; the timing of the making of the same; that the manner in which the offers were made did not afford the Wife’s legal representatives appropriate time to take instructions about the same (for example, the offer made by the former Ninth Respondent was said to have been received at 2.15 pm on 18 June 2019 with a nominated deadline of acceptance of close-of-business the same day); and that the same were made before applications for costs were made (and, obviously, therefore before any order for costs was made).

Principles

1. Section 117(1) of the Family Law Act 1975 (Cth) provides that each party to proceedings under the Act shall bear his or her own costs. However, if the Court is satisfied there are circumstances which justify it, the Court may make such order as to costs as it considers just.[2] In considering what order, if any, as to costs should be made, the Court must have regard to the matters set out in s 117(2A) of the Act.

   [2] Section 117(2) Family Law Act 1975 (Cth).

2. Whilst each of those seeking an order for costs was entirely successful on their respective applications, I accept that such success, of itself, is not necessarily productive of an order for costs because, otherwise, there may be an inappropriate distraction from the proper consideration of all of the other matters particularised in s 117(2A) of the Act, being matters to which the Court must give consideration in determining whether the circumstances in any case are such as to justify the making of an order that one party pay another’s costs.

3. No party was in receipt of Legal Aid. At the hearing, the Wife was represented by Counsel as was the Husband, the former Second and Third Respondents, and the former Ninth Respondent and the former Tenth and Eleventh Respondents; there was no appearance for the former Fourth Respondent and Mr Spitzer appeared in person on behalf of the Fifth to Eighth Respondents.

4. In the broad exercise of the discretion accorded to the Court in determining applications for costs, I have placed particular weight on the following matters:  the Wife continued to maintain her opposition to the ongoing joinder of those persons and entities disjoined from the same by the Order made despite seeking no relief against them; such opposition was maintained despite her having been afforded the opportunity by at least some of the former Respondents to discontinue their involvement in the proceedings prior to them bringing applications for such orders; the Wife was wholly unsuccessful in her opposition to the removal of the former Respondents from the proceedings.

5. I also accept that, whilst the Court must consider the financial circumstances of each party, impecuniosity on the part of a party opposing the making of an order for costs is, of itself, no bar to an order for costs being made where it is otherwise warranted.[3] Consequently, the Wife’s relatively strained financial position is not of itself a reason to persuade against the making of an order for costs where the Court is of the opinion that the circumstances justify the making of the same.

   [3] See, for example, D & D (Costs) (No 2) (2010) FLC 93-435.

6. In this case, I am of the opinion that the circumstances justify the making of an order that the Wife pay the Husband’s costs of and incidental to the applications for disjoinder made by those former Respondents removed from the proceedings by the order made on 28 May 2019. I am similarly of the opinion that the circumstances justify the making of an order that the Wife pay each of the former Respondents their costs of and incidental to the proceedings.

What are the just terms of the order for costs?

1. Authority makes clear that, unless there are exceptional circumstances, an order for costs should be made on a party and party basis.[4]  It also makes clear that to make an order for the payment of costs on an indemnity basis is a “very great departure” from the “normal standard” in this and other jurisdictions.[5] Such departure may well be regarded as being greater in this jurisdiction – where the starting point for costs is that each party bears their own – than in other jurisdictions where the starting point is that costs follow the event.

   [4] See D & D Costs (No. 2) (2010) FLC 93-435; Limousin v Limousin (Costs) (2008) 38 Fam LR 478; Yunghanns v Yunghanns (2000) FLC 93-029; In the Marriage of Kohan (1993) FLC 92-340; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 per Sheppard J.

   [5] D & D Costs (No. 2) (2010) FLC 93-435; Limousin v Limousin (Costs) (2008) 38 Fam LR 478; In the Marriage of Kohan (1993) FLC 92-340; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 per Sheppard J.

2. Further, in Kohan[6] the Full Court commented to the effect that the degree to which the costs, which would be payable if an indemnity costs order is made, depart from the established norm and the actual financial significance of the same may itself be a reason for not ordering costs on an indemnity basis.

   [6] (1993) FLC 92-340.

3. Save for in respect of the former Second and Third Respondents, the evidence before me does not permit me to know the degree to which the costs payable by the Wife, if calculated on an indemnity basis, would differ from the costs payable by the Wife if calculated on the party and party basis. In so far as the Second and Third Respondents are concerned, I am not persuaded that it is just simply to add an amount that is said to represent a further 10 hours of work at $500.00/hour if persuaded to make an order for costs on an indemnity basis.

4. Given that I do not know the degree to which the costs payable by the Wife, if calculated on an indemnity basis, would differ from the costs payable by the Wife if calculated on the party and party basis and noting the total quantum of costs sought against the Wife and despite her maintenance of her position vis-à-vis the now disjoined persons and entities, I am not persuaded that it is just that the Wife be ordered to pay costs on an indemnity basis; I am, though, persuaded that it is just that she be required to pay the Husband’s costs, on a party/party basis, of and incidental to the various applications by which the former Respondents sought to be disjoined from the proceedings and, in so far as the former Respondents are concerned, their costs, on a party/party basis, of and incidental to the proceedings.

5. For these reasons, I make orders in the terms outlined at the commencement of these Reasons.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 28 February 2020.

Associate: 

Date:              28 February 2020