Odell & Odell (No 2)
[2023] FedCFamC1F 884
•20 October 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
FIRST INSTANCE
Odell & Odell (No 2) [2023] FedCFamC1F 884
File number(s): NCC 277 of 2021 Judgment of: CAREW J Date of judgment: 20 October 2023 Catchwords: FAMILY LAW – COSTS – Application brought against the husband by the second and third respondents – Where the substantive proceedings were ordered to proceed by way of pleadings – Where the husband failed to file Points of Claim despite having over a year to do so – Where several Court appearances could have been avoided with some co-operation from the Husband – Where the second and third respondent incurred substantial legal fees – Where the claims against the second and third respondents were dismissed and they were removed as parties – Where the appropriate quantum in the circumstances is $100,000 with payment to be stayed until 60 days after the finalisation of proceedings Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia Act2021 (Cth) ss 67, 68, 69
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.02, 12.08, 12.13, 12.17
Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Fitzgerald vFish sub nom PBF v TRF (FLR) (2005) 191 FLR 294
Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23
Kohan and Kohan (1993) FLC 92–340
Lenova & Lenova (Costs) [2011] FamCAFC 141
Nada & Nettle (Costs) (2014) FLC 93–612
Odell & Odell [2023] FedCFamC1F 717
Parke & the Estate of the Late A Parke (2016) FLC 93–748
Penfold v Penfold (1980) 144 CLR 311
Stopford Malloy & Malloy (Costs) [2018] FamCAFC 6
Number of paragraphs: 35 Date of last submission/s: 29 September 2023 Date of hearing: Determined in chambers Place: Brisbane Counsel for the Applicant: Mr Drysdale KC Solicitor for the Applicant: Nash Allen Williams & Wotton The First Respondent: Litigant in Person Counsel for the Second and Third Respondents: Ms Murphy Solicitor for the Second and Third Applicants: HopgoodGanim Laywers ORDER
NCC 277 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ODELL
Applicant
AND: MR ODELL
First RespondentMR B ODELL
Second RespondentMR C ODELL
Third Respondent
ORDER MADE BY:
CAREW J
DATE OF ORDER:
20 OCTOBER 2023
THE COURT ORDERS THAT:
1.The first respondent pay the costs of the second and third respondents in the fixed sum of $100,000 within 60 days of the finalisation of proceedings number NCC277/2021.
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 a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAREW J:
The substantive proceedings in this matter concern an application for property settlement by Ms Odell (“the wife”) against her ex-husband, Mr Odell (“the husband”).
On 12 May 2022, the two adult children of the relationship, Mr B Odell and Mr C Odell, were joined to the proceedings as a consequence of the husband’s Application in a Proceeding filed 28 February 2022. Consistent with the usual practice in such cases, the matter was to proceed by way of pleadings. Despite having over a year to do so, the husband failed to file Points of Claim, contending that he could not do so without legal assistance and that he is unable to afford legal assistance. The matter has been unable to progress.
On 25 August 2023, I made an order dismissing the husband’s claims for relief against Mr B Odell and Mr C Odell and entities and assets related to them and dismissing the husband’s Amended Application in a Proceeding filed 24 February 2023 in which he sought, among other things, the payment of monies between corporate entities (not parties to the proceedings), payment to him of monies from corporate entities (not parties to the proceedings), in default of payment, the winding up of corporate entities (not parties to the proceedings), and disclosure by Mr C Odell. Further, Mr B Odell and Mr C Odell were removed as parties in the proceedings.
The parties were afforded an opportunity to file written submissions in support of any costs application and Mr B Odell and Mr C Odell and the husband have done so. It was indicated in the order that any costs application would be considered in Chambers unless a party sought for the matter to be listed in open Court. No such request has been made.
Mr B Odell and Mr C Odell seek an order for the husband to pay their costs of and incidental to the proceedings on an indemnity basis in the sum of $286,224.98 or alternatively on a party and party basis in the sum of $157,447.91.
The husband opposes any order for costs against him but if an order is made, seeks that time to pay occur after the finalisation of ongoing property proceedings between him and the wife.
BACKGROUND
The relevant background to this matter is set out in my reasons for judgment dated 25 August 2023 (“the judgment”) at [5] – [16],[1] and should be read with these reasons. The husband was wholly unsuccessful in his application for interim orders for the reasons explained in the judgment at [28] – [41] and his claim for final relief as against Mr B Odell and Mr C Odell was dismissed for the reasons explained in the judgment at [46] – [52].
[1] Odell & Odell [2023] FedCFamC1F 717.
HOW COSTS APPLICATIONS ARE DETERMINED
In this Court, each party generally bears their own costs.[2] However, where there are circumstances that justify an order for costs, the Court can make such order as is considered just having regard to the matters contained in relevant subsections of s 117 of the Family Law Act 1975 (Cth) (“the Act”) and applicable Rules of Court (s 117(2)).
[2] Family Law Act1975 (Cth) s 117(1).
The list of matters to which the Court must have regard when determining a costs application are set out in s 117(2A) of the Act and since the commencement of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”) on 1 September 2021, there are additional matters to which the Court must have regard.[3]
[3] The notation to s 117(2) of the Act refers to s 69(4)(d) and (e) of the FCFCOA Act.
The matters set out in s 117(2A) of the Act are as follows:
(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.
When considering the factors set out in s 117(2A) of the Act, it is sufficient for one factor to be present.[4]
[4] Fitzgerald vFish sub nom PBF v TRF (FLR) (2005) 191 FLR 294 at 301, [41].
Impecuniosity, of itself, is not a bar to making a costs order.[5]
[5] Nada & Nettle (Costs) (2014) FLC 93–612 at 79,589, [11]; see also Lenova & Lenova (Costs) [2011] FamCAFC 141 at 3, [12].
An additional source of power to award costs in an appropriate matter is to be found in s 69(4)(d) and (e) of the FCFCOA Act, which empowers the Court to award costs against a party and the costs awarded are to be assessed on an indemnity basis or otherwise.
There is an additional mandatory requirement created by s 68(4) of the FCFCOA Act which requires the Court to take into account any failure to comply with the duty imposed by ss 68(1) or (2), which require the parties and the lawyers for the parties to conduct the proceedings in a way that is consistent with the overarching purpose of the family law practice and procedures provisions of the FCFCOA Act. The overarching purpose is set out in s 67 and requires, among other things, the proceedings to be conducted as “quickly, inexpensively and efficiently as possible”.
At the time the substantive proceedings commenced, the Rules applicable to costs applications were contained in the Family Law Rules 2004 (Cth), but those Rules were repealed on 1 September 2021 by the Family Law Repeal Rules 2021 (Cth) and replaced with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”), with effect from 1 September 2021. Note 1 to r 1.02(2) of the Rules states as follows:
… The new Rules apply to a proceeding that was commenced in accordance with the old Rules and was not determined before the repeal of the Rules.
Part 12.5 of the Rules deals with ‘orders for costs’ and, among other things, empowers the Court to set a time for payment.[6]
[6] Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.13(5).
Part 12.6 deals with ‘calculation of costs’ and provides as follows:
12.17 Method of calculation of costs
(1) The court may order that a party is entitled to costs:
(a) of a specific amount; or
(b)as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c) to be calculated in accordance with the method stated in the order; or
(d)for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
(2)If costs are payable under the Family Law 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 and party basis.
(3) In making an order under subrule (1), the court may consider the following:
(a) the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e)the time properly spent on the proceeding, or in complying with pre‑action procedures;
(f)whether expenses (paid or payable) are fair, reasonable and proportionate.
Rule 12.08(2) (referred to in r 12.17(3)(b)) provides as follows:
(2)In considering whether a party’s legal costs have been fairly, reasonably and proportionately incurred, regard must be had to all relevant matters including, but not limited to, whether a lawyer representing the party, a lawyer representing any other party, or any self‑represented litigant has:
(a)complied with all relevant rules and orders of the court, including requirements that documents be filed or provided to other parties by a given date; and
(b)acted reasonably in raising, pursuing or contesting a particular allegation or issue; and
(c)made reasonable efforts, subject to the client’s instructions, to resolve the dispute through negotiation, mediation or arbitration; and
(d) made reasonable efforts to narrow the issues in dispute; and
(e)filed no more interlocutory applications than are reasonably necessary in the circumstances of the proceeding; and
(f)filed no more affidavits or other documents than are reasonably necessary in the circumstances of the proceeding.
An applicant for costs bears no “additional or special onus” other than the establishment of “justifying circumstances”.[7]
[7] Penfold v Penfold (1980) 144 CLR 311 at 315.
As to the identification of such circumstances by the Court, the High Court of Australia in Penfold v Penfold[8] said the following:
Sub-section (2) [of s 117] does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised. Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
[Citation omitted]
[8] Ibid at 315–316.
The Court will not lightly make an order for costs to be paid on an indemnity basis. There needs to be some circumstance of an exceptional kind to justify that course.[9]
[9] Kohan and Kohan (1993) FLC 92–340 at 79,614; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive”) at 233.
The tensions created by the differing objectives sought to be addressed by a costs order awarded on a party and party basis as opposed to an indemnity basis were discussed in Re Wilcox, Ex parte Venture Industries Pty Ltd,[10] where the Full Court of the Federal Court said at 156:
The issue whether costs should be ordered on a party and party basis or on an indemnity basis has acquired increasingly greater significance as the gap between the two bases appears to have grown.
The gap has highlighted the conflict between two seemingly irreconcilable objectives. The first is protecting access to justice by only exposing an unsuccessful litigant in the usual course to an order for scale costs on a party and party basis. The second is relieving a successful litigant from the burden of costs which that litigant should not have been required to incur. These and other policy factors have been considered by the courts over a very long period in order to arrive at the principles which govern the undoubted discretion of courts to depart from ordering costs on a party and party basis and ordering costs on an indemnity basis. The principles were stated by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225.
[10] (1996) 72 FCR 151 at 156 (“Re Wilcox”).
The Full Court went on to restate the principles from Colgate-Palmolive Co v Cussons Pty Ltd (“Colgate-Palmolive”),[11] in the following terms:
(a)the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;
(b)the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course;
(c)whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis. [12]
[11] Colgate-Palmolive (fn 9).
[12] Re Wilcox (fn 10) at 156–157.
While there is no exhaustive list of what circumstances may warrant an order for costs to be paid on an indemnity basis, some circumstances that have been found to justify such an order were identified by Sheppard J in Colgate-Palmolive[13] as follows:
(a)Making allegations of fraud knowing them to be false;
(b)Making irrelevant allegations of fraud;
(c)Evidence of particular misconduct that causes loss of time to the Court and to the other parties;
(d)Commencing or continuing proceedings for some ulterior motive or in wilful disregard of known facts or clearly established law;
(e)Making allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; and
(f)An imprudent refusal of an offer to compromise.[14]
[13] Colgate-Palmolive (fn 9).
[14] Colgate-Palmolive (fn 9) at 233.
Not only does this Court have the power to order a specific amount for costs,[15] it is generally the preferred approach for a specific amount to be ordered rather than requiring an assessment of costs.[16] This is because the latter approach will inevitably involve the parties in yet further conflict, delay, and cost.[17]
[15] Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17(1)(a).
[16] Stopford Malloy & Malloy (Costs) [2018] FamCAFC 6 at [10]–[12].
[17] Ibid.
In Parke & the Estate of the Late A Parke,[18] Murphy J quoted with approval the observations made by Einstein J in Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus[19] when that court was considering an analogous provision to that contained in r 12.17(1)(a) of the Rules:
130.If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court” (Beach Petroleum NL v Johnson (No 2) [1995] FCA 1250; (1995) 57 FCR 119, at [24]cited in Idaport at [9]). The process does not “by its very nature ... envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”. (Idaport at [9](v), citing Harrison v Schipp[2002] NSWCA 213; (2002) 54 NSWLR 738).
131.Obviously enough, the court must act judicially in fixing or specifying a sum of costs, but:
...the requirement that the power to award a gross sum should be exercised judicially does not mean that it must be exercised in any scientific or formulaic manner. At the heart of the judicial function is the responsibility to weigh up competing factors and considerations, many of which might conflict, to reach a determination. Acting judicially carries with it an obligation to apply the rules of natural justice, to act impartially and to apply the law to the facts. ...
[18] (2016) FLC 93–748 at 81, 943–81,944, [122]–[134].
[19] [2007] NSWSC 23 at [9].
SUBMISSIONS BY THE SECOND AND THIRD RESPONDENT
Mr B Odell and Mr C Odell submit that costs should be awarded in their favour for several reasons, including the following:
(a)Since Mr B Odell and Mr C Odell were joined as parties to the proceedings, the husband has acted in an entirely unreasonable manner and was deliberately obstructive by not complying with orders of the Court. Namely, the husband failed to:
(i)file and serve a Points of Claim, as required by paragraph 3 of the order dated 12 May 2022; and
(ii)file and serve an Application in a Proceeding or supporting affidavit seeking interim orders for litigation funding as specifically provided for by the orders dated 18 August 2022 and 25 October 2022. Rather, he filed an Application in a Proceeding on 22 September 2022 seeking, inter alia, interim orders of a final nature. He elected to proceed with that Application despite being warned by a Judicial Registrar on 25 October 2022 and again by Justice Baumann on 6 April 2023 that his application, in its current form, was likely to be dismissed.
(b)The Court was unable to determine the husband’s Application on an interim basis in circumstances where the relief sought by him was of a final nature. In this regard, and as referred to above:
(i)The husband was initially informed of this difficulty by the Judicial Registrar at a directions hearing on 25 October 2022. He sought an adjournment upon the basis that he intended to amend his Application to cure this issue. He ultimately did not do this and on 13 December 2022, he informed the Court that he intended to proceed with his Application in a Proceeding filed 22 September 2022 as drafted;
(ii)On 24 February 2023, the husband filed an Amended Application in a Proceeding, whereby he sought, for the first time, interim orders pursuant to the Corporations Act 2001 (Cth). The interim defended hearing listed for 3 March 2023 was subsequently unable to proceed, due to the Senior Judicial Registrar’s absence of delegated power to make an order pursuant to the Corporations Act 2001 (Cth); and
(iii)On 6 April 2023, the husband was again warned that his Application could not succeed on an interim basis at the case management hearing before Justice Baumann. This was again ignored by the husband, and his Application proceeded to interim hearing before myself on 10 August 2023, where it was ultimately dismissed.
(c)The husband caused Mr B Odell and Mr C Odell to incur unnecessary legal costs following their joinder as parties to the proceedings. In this regard:
(i)Mr B Odell and Mr C Odell were put to substantial expense in respect of both solicitor’s fees and Junior Counsel and Senior Counsel fees in attending eight case management hearings between 12 May 2022 to 12 May 2023 and the most recent hearing on 10 August 2023;
(ii)The proceedings potentially involve complex questions of fact and law, by reason of the complex corporate structure, the husband’s conduct in respect of the funds held by the self managed superannuation fund (“SMSF”) and the husband’s broad allegations. It was appropriate for Mr B Odell and Mr C Odell to treat the husband’s application and allegations seriously, and as such, it is submitted that certification for Senior Counsel ought to be made pursuant to r 12.28 of the Rules;
(iii)The husband failed to file a Points of Claim setting out the basis for the relief sought against Mr B Odell and Mr C Odell. At the same time, in his Application in a Proceeding filed 22 September 2022 and in his amended Initiating Application field 24 February 2023, the husband requested the Court determine several complex, commercial claims against Mr B Odell and Mr C Odell on an interim basis. In these circumstances, Mr B Odell and Mr C Odell incurred costs in attempting to decipher and consider the potential basis of claims arising from the unstructured volumes of affidavit material filed by the husband;
(iv)The husband failed to authorise the transfer of funds owned by the SMSF (of which the members were Mr B Odell, Mr C Odell and the applicant wife) to the bank account held by its new trustee, even once all the required documentation had been supplied to his representatives to evidence the appointment of the new trustee and the applicant wife’s authorisation of the transfer. He then caused his new solicitors to make false representations with respect to the SMSF, and to persist in those representations and the withholding of those funds, even after he was shown the prior correspondence of his previous lawyers, conceding the ownership of the SMSF funds. It is submitted that his conduct can only be understood if the funds of his family’s SMSF were being used by him as a bargaining tool, notwithstanding the potentially serious consequences for the wife, Mr B Odell and Mr C Odell.
(v)The parties signed a Heads of Agreement for a final settlement on 10 July 2023 and Mr B Odell and Mr C Odell engaged Hopgood Ganim (“HG”) to draft the minute of order. Despite the hearing not proceeding on 10 July 2023 because of his avowal of settlement, and his signing the Heads of Agreement on 10 July 2023, the husband refused to engage in any discussion with HG as to the drafting of the settlement terms. On 9 August 2023, he wrote directly to the Court enclosing a statement repeating his various unparticularised allegations against Mr B Odell and Mr C Odell and asking the Court to “hear and decide [his] fate”. Counsel was accordingly required to prepare submissions for and attend the interim hearing on 10 August 2023;
(d)Mr B Odell and Mr C Odell would not have incurred these costs but for the husband seeking orders for their joinder to the proceedings, making various unparticularised allegations in both correspondence to the Court and his affidavit material and seeking a plethora of orders of a final nature in terms of their related entities; and
(e)The husband failed to advance any evidence in support of the various allegations of fraud and wrongdoing against Mr B Odell and Mr C Odell and he refused to cooperate with the entirely reasonable requests of Mr B Odell and Mr C Odell in respect of the bank balance of the SMSF of the other three parties.
In accordance with the factors listed in s 117(2A) (a)–(e) of the Act, Mr B Odell and Mr C Odell submit that:
(a)the husband has the capacity to meet an order for costs for the following reasons:
(i)In his financial statement filed 22 September 2022, the husband deposes to owning a real property in joint names with his current partner, with the estimated value of his interest being $1,000,000. The mortgage secured over this real property is negligible, with the respondent deposing to his half share as being $43,476;
(ii)There is no evidence of the husband’s financial position that mitigates an order for costs. Relevantly, the husband has failed to put forward any evidence showing that he is unable to draw down on the loan secured by mortgage against his real property.
(b)The husband’s conduct during proceedings resulted in Mr B Odell and Mr C Odell incurring excessive and unnecessary legal costs. The relief sought by the husband was extraordinarily broad, the allegations against the respondents serious but impossible to address (including complaints to police, demands for investigations and audits and accusations such as “both my sons have been forging my signature as and when they see fit for many years”);
(c)The husband failed to comply with orders since Mr B Odell and Mr C Odell were joined as parties, despite being provided ample opportunity to do so; and
(d)The husband’s Application was dismissed in its entirety and Mr B Odell and Mr C Odell removed as parties to the proceedings, by the order dated 25 August 2023.
THE HUSBAND’S SUBMISSIONS
The husband, in his written submissions filed on 29 September 2023, resists any order for costs on various grounds including the following:
(a)His application to join Mr B Odell and Mr C Odell as parties to the proceedings was justified given that, in their capacity as either sole or joint directors of various companies comprising the H Group, Mr B Odell and Mr C Odell control most of the matrimonial assets to which these proceedings relate. By joining Mr B Odell and Mr C Odell to proceedings, “[they] would be obliged as directors of the companies to give effect to the Court’s orders for a division of the present property of the marriage between [the wife] and me”;
(b)The husband’s affidavit filed 28 February 2022, which consists of 39 pages, “sets forth the various matters that could only be resolved if [Mr B Odell and Mr C Odell] were parties”. Neither Mr B Odell nor Mr C Odell have filed an affidavit contesting the truth of the matters deposed in this affidavit;
(c)Mr B Odell and Mr C Odell failed to file a Response to the husband’s Application in a Proceeding filed 28 February 2022 despite being requested to do so in a notation to the order dated 8 March 2022;
(d)By consenting to being joined as parties to the proceedings, and in the absence of any affidavit, the Court should draw the inference that Mr B Odell and Mr C Odell consented to being joined to the proceedings “because they were aware from no later than 15 March 2022 of the facts sufficient to establish a prima facie case that [the husband] was entitled to the relief sought against them”. In the alternative, the husband submits that Mr B Odell and Mr C Odell consented to being joined in an attempt to physically, mentally and financially exhaust the husband;
(e)Due to his financial circumstances resulting in the loss of/inability to retain legal representation, the husband was unable to comply with the Court’s direction to file a Points of Claim;
(f)Mr B Odell’s and Mr C Odell’s conduct in the pre-action stages of the proceedings resulted in the husband running out of funds;
(g)The husband thought that his Application in a Proceeding was an application for litigation funding; and
(h)Mr B Odell and Mr C Odell have failed to respond to the husband’s various allegations.
In accordance with the relevant s 117(2A) factors, it is submitted by the husband that:
(a)The husband has no income, as evidenced in his financial statement filed 22 September 2022;
(b)Whilst he possesses some equity in his home and the unit currently occupied by the wife, the husband has no capacity to service any borrowings and is unable to qualify for a loan at his age. As such, any costs order would impose significant hardship;
(c)Mr B Odell has previously made threats to bankrupt the husband and “brag[s]” that he will end up owning the husband’s home. It is the husband’s view that the costs order, if made, will force him into bankruptcy which will impede on his ability to participate in any further proceedings against the wife;
(d)Mr B Odell and Mr C Odell are “wealthy multi-millionaires comfortable able to bear their own costs”;
(e)If the Court is inclined to order that the husband pays costs to Mr B Odell and Mr C Odell, the husband requests that such costs not be enforced until final property adjustment orders have been made;
(f)By consenting to being joined as parties to these proceedings, the husband submits that Mr B Odell and Mr C Odell have been unreasonable in consistently failing to comply with the Court’s orders, including disclosure of their financial statements;
(g)The husband submits that he has made genuine and reasonable offers of settlement on 21 September 2020 and 16 November 2022 neither of which were accepted;
(h)During the settlement discussions which occurred on 7 July 2023, the husband, being unrepresented, was unable to meaningfully engage in, or consent to, the proposed minute of order;
(i)The husband submits that, given Mr B Odell’s and Mr C Odell’s limited involvement in these proceedings, the costs they incurred are disproportionate and excessive. Further, given that the husband was largely unrepresented during their involvement, the use of Senior Counsel was not warranted;
(j)Having regard to the principles warranting an indemnity costs order as discussed in Colgate-Palmolive Co v Cussons Pty Ltd,[20] the husband submits that:
(i)He has not made any allegations of fraud knowing them to be false;
(ii)His allegations of fraud are directly relevant to a true determination of the divisible pool;
(iii)His inability to plead a Points of Claim was an unavoidable consequence of being deprived of funds with which to do so;
(iv)His response to the applicant wife’s initiating application was not made for an ulterior motive or in wilful disregard of known facts;
(v)He has not made any allegations that ought never have been made nor made any groundless contentions; and
(vi)He has not imprudently refused any reasonable offer to compromise.
[20] (1993) 46 FCR 225.
DISPOSITION
It is common ground that the potential issues in this case, involving Mr B Odell and Mr C Odell, are complex. It is most unfortunate that that the husband incurred legal costs of over $400,000 without getting to the stage of properly articulating his claims against Mr B Odell and Mr C Odell. The allegations made by the husband are very serious indeed, but they are very general in nature and invite the effective auditing of various entities’ accounts over many years, and then factual findings about a range of financial decisions dating back years. The husband contends that his memory is poor, yet he makes various assertions about the motivations of others for decisions made in the past.
To properly understand the husband’s case, it was agreed by all parties that pleadings would be filed. The husband agreed to this course but even if he had not agreed (and I note there is some suggestion by the husband that he did not agree) that would have been the course adopted in a case such as this. While I am not without sympathy for the husband’s predicament, he had over a year to comply with the order to file Points of Claim. Mr B Odell and Mr C Odell were under no obligation to file material or disclose documents as parties until the issues had been identified by the pleadings.
Several of the Court appearances could have been avoided with some co-operation from the husband e.g., by seeking administrative adjournment. After the parties informed the Court that they had reached Heads of Agreement, the husband failed to engage in the process of finalising the agreement into a minute of order. The husband contends that he had concerns about his taxation exposure yet there is no evidence he engaged in discussions with the other parties to resolve his concerns and unfortunately the Heads of Agreement fell over.
It cannot be the case that parties who have incurred substantial legal fees when no proper legal claim has been articulated, should nevertheless have to bear those fees in part because they are the adult children of the husband and not some unrelated third parties. To date, the husband has been wholly unsuccessful against his sons and despite his financial circumstances being somewhat precarious currently that does not preclude an order for costs. The husband has substantial equity in his current residence.
However, I am not persuaded that an order for indemnity costs is warranted in this case. In my assessment an appropriate quantum in the circumstances of this case is $100,000 but payment should be stayed until 60 days after the finalisation of proceedings in NCC277 of 2021.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew. Associate:
Dated: 20 October 2023
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