Novakovic and Novakovic

[2013] FamCA 448

FAMILY COURT OF AUSTRALIA

NOVAKOVIC & NOVAKOVIC [2013] FamCA 448

FAMILY LAW – COSTS – Whether a costs order should be made against the husband – Whether any costs order should be made on an indemnity basis as sought by the wife – Where the husband was wholly unsuccessful in proceedings – Where there was an offer of settlement but not responded to

Colgate-Palmolive Company & Anor v Cussons Pty Limited (1993) 46 FCR 225
Kohan & Kohan (1993) FLC 92-340
Latoudis & Casey (1990) 170 CLR 534
Marinko & Marinko (1983) FLC 91-307; (1983) 8 Fam LR 849
Munday & Bowman (1997) FLC 92-784; (1997) 22 Fam LR 321
Penfold v Penfold (1980) 144 CLR 311
White & White (1982) FLC 91-246

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

APPLICANT: Ms Novakovic

RESPONDENT: Mr Novakovic

FILE NUMBER: PAC 5234 of 2008

DATE DELIVERED: 3 April 2013

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Collier J

HEARING DATE: 3 April 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gardiner

SOLICITOR FOR THE APPLICANT:

Mr West

Cox West Lawyers

SOLICITOR FOR THE RESPONDENT:

Mr Low

Low Doherty & Stratford

Orders

1. That the husband shall pay the wife’s costs of and incidental to his application for release of monies, filed on 12 July 2012, on an indemnity basis.

2. That pursuant to Rule 19.50 I certify for junior counsel for the wife.

3. That such costs shall be as agreed or, failing agreement, assessed by a proper assessing officer.

4. That payment of any agreed amount shall be made within such time as may be agreed between the parties.  In the event that no such agreement is reached, or in the event of the matter proceeding to assessment, and the issue of a certificate of assessment, then payment shall be made within:

   a)     three (3) months of Judgment in the substantive issue being delivered; or

   b)     within six (6) weeks of the issue of a certificate of assessment;

whichever shall be the later.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Novakovic & Novakovic has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 5234 of 2008

Ms Novakovic

Applicant Wife

And

Mr Novakovic

Respondent Husband

REASONS FOR JUDGMENT

1. This matter comes before me today in respect of an application of the wife, that the husband pay her costs of and incidental to an application brought by the husband for moneys to be paid from a controlled money account to enable him to meet his legal fees.  That application was filed on 12 July 2012.  The application was supported by an affidavit of the husband affirmed 12 July 2012 and an affidavit of his solicitor of the same date.

2. The wife filed a Further Amended Initiating Application in the substantive proceedings on 17 July 2012 and the matter was before me on 25 July 2012 in respect of that and other matters.  The matter was adjourned, following directions being made, to 6 November 2012 for hearing.  Further material was filed shortly before the hearing date by the husband and the wife and various interveners.  On 6 November 2012, I heard the application and dismissed it.

3. However, it will be remembered that on each of those occasions to which I have made particular reference to - that is, 25 July 2012 and 6 November 2012 - there were matters other than the husband’s application before the Court.  For example, on that latter date, I did make an order for payment of a limited sum of money to be made to the Fourth Respondent in these proceedings.

4. At the outset of his submissions, counsel for the husband referred me to the reported cases of White & White[1] and Marinko & Marinko[2].  Those cases were relied upon as a proposition for the fact that I should adjourn the matter to before either myself or another judicial officer to await the final decision to be made by the trial Judge so that at the time of making an order for costs, I would be, or another Judge would be, fully aware of the relative financial circumstances of the parties.

   [1] (1982) FLC 91-246

   [2] (1983) FLC 91-307; (1983) 8 Fam LR 849

5. Whilst White (supra) seems to be more prescriptive in this respect, Marinko (supra), in my view, is not.  Marinko (supra) seems to indicate that, whilst having regard to White (supra), it is a matter for the Judge in the exercise of discretion as to whether or not costs applications should proceed prior to the making of final orders.  I am not satisfied that it is, on the basis of the submissions of counsel for the husband, therefore necessary that I should adjourn the matter to await the outcome of the substantive proceedings and therefore be aware of the precise financial position of the parties at the conclusion of the hearing. 

6. This is a costs application. Costs in the Family Court of Australia are governed by section 117 of the Family Law Act1975 (Cth). The primary position is that, as set out in subsection (1), each party should bear his or her own costs. However, section 117(2) provides that if there are reasons for justifying the making of an order for costs then the matter shall proceed and the application can be heard and determined. Their Honours of the High Court in Penfold v Penfold[3] made it clear that the circumstances need not be special or exceptional, but that they be such to justify an order for costs.

   [3] (1980) 144 CLR 311

7. I am then referred to subsection (2A). Before commencing with the matters set out in that subsection, let me say this:- the application before me is clearly promoted as an application for payment of costs on an indemnity basis. In my view, what I must do is look to the section 117(2A) factors as to whether or not an order should be made, and if, and only if, I am satisfied that an order should be made, should I then turn to the issue of whether or not costs should be ordered on an indemnity basis.

8. The first of the matters set out in subsection (2A) is the financial circumstances of each of the parties (subparagraph (a)).  I accept that their precise positions are unknown.  However, there is ample authority in the Court to indicate that, even if a party is impecunious, it is no bar to the making of an order for costs.  It may have effect, for example, in the question of time to pay.  It may even sound in the quantum of costs, and it may certainly be a factor to be taken into account in relation to enforcement.  However, impecuniosity is not, as I say, of itself, a bar.

9. There are properties in this matter that are sought to be “clawed back” into the pool of assets.  There is an amount of money presently held on investment, albeit quite moderate.  In the circumstances of this case, I am satisfied that each of the parties are in a financial position that would enable an order to be met if appropriate time was allowed for such an order to be paid.

10. Neither party is in receipt of legal aid (subparagraph (b)).

11. I am satisfied that I should have regard to conduct of the parties (subparagraph (c)), whether a party has been wholly unsuccessful (subparagraph (e)) and the making of an offer in writing (subparagraph (f)) as the principle matters of concern in this case.  The husband, it appears to me, on my rereading of the matter, brought his application in response to an application by the wife that she receive certain moneys.  He was perfectly entitled to do that.  However, it appears to me that, at a later stage, it became apparent that his application was likely to be unsuccessful.

12. The relevance of that is to be found in the offer in writing.  I have no doubt that an offer in writing was made to the husband’s lawyers that the husband discontinue his application.  I am satisfied that the letter, which is to be found as annexure C to the affidavit of the wife’s solicitor, Mr West, sworn on 25 March 2013, is a proper example of a letter of compromise.  It makes it clear the basis upon which the proposed course of action is founded.  It goes further and indicates that, if necessary, further preparation work will be done and an application for costs will be made if the husband’s application is not withdrawn.  It is of significance that no reply, I am informed and accept, was forwarded.

13. I am satisfied that I must have regard to subparagraph (e), as to whether either party has been wholly unsuccessful in the proceedings.  So far as the proceedings by the husband that he receive moneys from the fund of money are concerned, he was, indeed, wholly unsuccessful. 

14. I am satisfied that, as a matter of law, I need not find a combination of factors, but that one factor will suffice to ground an order for costs.  In this case, I am satisfied that I can look to subparagraphs (c), (e) and (f) to ground an order for costs.

15. I am therefore satisfied that an order for costs in the circumstances of this case is appropriate.  I turn then to the question of on what basis do I order those costs?  To my mind, I have, as it were, three alternatives:- I can order the costs paid on a party/party basis; I can order the costs paid on a solicitor/client basis; or I can make an order for costs, as pressed upon me by the wife, for costs on an indemnity basis.

16. The authority to which I turn in respect of indemnity costs is the decision of Munday & Bowman[4], a decision of Holden CJ, as he then was, of the Family Court of Western Australia.  His Honour discussed the issue, referring particularly to cases in the Family Court, such as Kohan & Kohan[5] and Latoudis & Casey[6], and His Honour then went on to look at the matters that were raised by Sheppard J in the Supreme Court of New South Wales in the matter of Colgate-Palmolive Company & Anor v Cussons Pty Limited[7].  Holden CJ, in effect, adopted that which Sheppard J had said, and I quote very briefly:-

    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.

    This has been a settled practice ...

    [4] (1997) FLC 92-784; (1997) 22 Fam LR 321

    [5] (1993) FLC 92-340

    [6] (1990) 170 CLR 534

    [7] (1993) 46 FCR 225

17. His Honour went on to quote further:-

    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.

18. His Honour then went on to quote a number of matters again appearing and categorised by Sheppard J in Colgate-Palmolive (supra):-

    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 ...

19. Sheppard J then made reference to making allegations of fraud, which has no application here.

20. It was put before me that the father had indeed prolonged these proceedings by his actions and I take no particular account of that in this present application.  The making of allegations, which ought never have been made is not a matter that, in my view, has bearing here, but an imprudent refusal for an offer of compromise is a matter identified by his Honour and clearly applicable here.  The relevance of my earlier comment that there was no reply to the offer of settlement assumes significant weight, in my view, in reaching a determination.

21. In Colgate-Palmolive (supra), Sheppard J then made a number of following statements:-

    There should be some special or unusual feature in the case to justify the court in departing from the ordinary practice.

22. His Honour went on to comment about 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.

23. In this case, I am satisfied that the father’s action, seeking moneys to be paid, was one that had very little prospect of success.  I am further satisfied that the husband totally disregarded an offer of settlement which, in my view, was in all the circumstances by no means unreasonable at the time it was made and in the terms in which it was made by the letter of the wife’s solicitors. 

24. I have come to the conclusion that, not only should there be and must be an order for costs, but that order should be on an indemnity basis.

25. I accept that there may be difficulties in allocating what proportion of days of hearing were directly applicable to the matter in dispute between the husband and the wife.  As I have said, on each of those occasions that the matter was before the Court, other matters involving parties other than the husband and the wife were dealt with.  However, I believe I can do nothing more than order that the wife’s costs of and incidental to the husband’s application filed on 12 July 2012 seeking release of moneys, be paid by the husband on an indemnity basis.

26. It was put to me with some force by counsel for the husband that the wife need not have had counsel appear. It was his submission that a competent solicitor could, indeed, have conducted the matter. It was put to me, as I understood the argument, that it was her choice to have counsel and therefore, she should herself bear the financial burden of that choice. I do not agree with that proposition. In my view, the wife was entitled to have counsel and in the circumstances of this case, junior counsel appeared for her. Pursuant to rule 19.50 of the Family Law Rules 2004 (Cth), I certify for junior counsel on each appropriate occasion.

27. I then turn to the question of time to pay.  Whilst I was not prepared to allow the matter to await the final hearing so far as the determination of a costs application is concerned, I am of the view that I should take into account, as to time to pay, the fact that these proceedings are to come on for hearing in June 2013 before Johnston J.  I am of the view that time for payment should, indeed, be in some way attached to the conclusion of that hearing.  Further, it occurs to me that the question of assessment is not something that can occur quickly, but will take some little period of time.

28. What I propose to do then is try and fashion an order that will give the husband some time after the making of the final orders, time to meet the order requiring payment of the wife’s costs.  I have determined that I should make an order that the husband make payment to the wife either within three months of the date of final judgment being delivered or within six weeks of a certificate of assessment issuing, whichever shall be the latter.

29. The orders that I then make are as set out at the commencement of these reasons for Judgment. 

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Collier delivered on 3 April 2013.

Legal Associate:      

Date:    14 June 2013