Pandolous and Pandolous (No. 2)

[2007] FamCA 647

FAMILY COURT OF AUSTRALIA

PANDOLOUS & PANDOLOUS (No. 2) [2007] FamCA 647

FAMILY LAW - COSTS – Application by the wife for costs – Wife seeks indemnity costs rather than party-party costs – Order that husband pay wife’s costs on party-party basis from commencement of trial until the delivery of Judgment, such costs to be agreed or taxed

Family Law Act 1975 (Cth), Section 117

Pennisi v Pennisi (1997) FLC 92-774
Penfold v Penfold (1980) FLC 90-800
Yunghanns v Yunghanns (2000) FLC 93-029
Munday v Bowman (1997) FLC 92-784
Colgate-Palmolive Co v Cussons Pty Ltd (1993)46 FCR 225

Johnson and Johnson (No 2) (Costs) (2000) FLC 93-040

APPLICANT: MRS PANDOLOUS

RESPONDENT: MR L PANDOLOUS (otherwise known as MR R PANDOLOUS)

FILE NUMBER: ADF 2833 of 2003

DATE DELIVERED: 17 May 2007

PLACE DELIVERED: Adelaide

JUDGMENT OF: Dawe J

HEARING DATE: 17 May 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr B.W. McQuade

SOLICITOR FOR THE APPLICANT: Robinson and Mason

COUNSEL FOR THE RESPONDENT: N/A

SOLICITOR FOR THE RESPONDENT: Self-Represented

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Court delivered this day will for all publication and reporting purposes be referred to as PANDOLOUS & PANDOLOUS

Orders

1. That the husband pay the wife's costs on a party/party basis from the commencement of the trial on 3 October 2006 until the delivery of Judgment on 30 March 2007, such costs to be agreed or taxed. 

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADF 2833  of 2003

MRS PANDOLOUS

Applicant

And

MR L PANDOLOUS (otherwise known as MR R PANDOLOUS)

Respondent

REASONS FOR JUDGMENT

1. This is the application by the wife for costs, following upon the delivery of my judgment in this matter.  The background to the matter is that the proceedings between the parties have been on foot since late 2003.  Initially they involved children's issues which were resolved, by consent, in September 2006.

2. The property settlement proceedings continued.  I have received Exhibit 1, which is a letter from the husband's then solicitor, Mr McGinn, to the husband dated 16 March 2004.  That letter refers to the offer put by the husband’s solicitor to the wife's solicitors at that time, which represented an offer that the wife retain the former matrimonial home, refinance the mortgage of $160,000, that the husband discharge $40,000 on the sale of a property owned by him and that there would be a payment of a further $40,000.  This represents a payment, by the husband to the wife of some $80,000.  This was the offer made in March 2004. 

3. I have also received as part of the material before me in relation to costs, the affidavit of the wife's solicitor annexed to which is the offer to settle made by the wife to the husband in October 2005 and in which the wife proposed that she keep the former matrimonial home, that the husband discharge the $40,000 mortgage over the former matrimonial home and pay her $94,000.  The total of that offer therefore comes to $134,000 compared to the final orders made by me at the end of March 2006 of $129,268 and which included the wife discharging the mortgage of $40,000. 

4. There have therefore been two offers at considerably different times, neither of which is definitive in relation to the question of costs, taking into account the final orders made by me.

5. The authority of Pennisi v Pennisi (1997) FLC 92-774 certainly emphasises that the question of the offers having been made it is not necessary that one or other offer be decisive in relation to the final determination but that the offers having been made should be brought into account.

6. The husband opposes the making of any order for costs. 

7. The background to the matter needs to be considered.  In particular it is noted that there were numerous procedural and interim applications and orders made in these proceedings.  The material before the Court at the time the trial commenced in October 2006 exceeded 86 documents.  The affidavit of Mr A filed in support of the application for costs sets out some of the history, including the interim orders which were made with a view to attempting to prepare the matter for trial.  The findings that I have made in my judgment also refer to those interim proceedings. 

8. The trial itself commenced before me on 3 October and continued for 19 days, finalising on 14 February 2007.  I delivered Judgment on 30 March 2007.  The Orders provided, in general terms, that the wife keep the former matrimonial home, discharge the larger mortgage of approximately $160,000 and the $40,000 mortgage, and that the husband pay her $129,268.

9. The offer of October 2005 was in effect the same as an Order which would have provided that the husband pay the wife $134,000.  This is only slightly more than my final Judgment.  The husband's offer in Exhibit 1 was made a considerable time earlier, when there would have been issues about the value of the property, assets and liabilities at that time, but it was the equivalent of a payment to her of $80,000.

10. The matters that I have to bring into account are quite clearly set out in the Family Law Act in those sections which deal with the question of costs. In particular, Section 117 provides that subject to subsection (2) each party to proceedings under this Act shall bear his or her own costs. Subsection (2) sets out clearly that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to the other subsections and the rules of Court, make such order as to costs as the Court considers just.

11. The authorities, in particular the decision of the Full Court in Penfold v Penfold (1980) FLC 90-800, indicate that it is not necessary to find special circumstances or unusual circumstances, but that the Court needs to be satisfied that there are circumstances justifying the making of an order for costs.

12. The Court is required to give consideration to the matters set out in Section 117(2A). I propose to deal with each of those relevant matters.

13. The first consideration is the financial circumstances of each of the parties to the proceedings.  The financial circumstances of the wife are set out in my earlier Judgment in relation to her income earning capacity and the assets and liabilities which she retains. The findings that I have made in relation to the husband are, in particular, set out in paragraphs 212 and 213 of the Judgment.  There was unreliable evidence from the husband and insufficient evidence about his current financial circumstances and his business entities.  Nonetheless I take into account the financial circumstances of both of the parties to the extent that they were disclosed in the proceedings before me. 

14. Subsection (b) deals with legal aid, which is not relevant.

15. In subsection (c); it is asserted by the wife's counsel that the conduct of the husband in relation to the proceedings, including his conduct in relation to discovery and production of documents and similar matters, was a significant factor in these proceedings.  In my Judgment I deal with those matters together with the matters raised by subsection (d); namely, whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court.

16. I deal with those matters in some detail in sections of the Judgment, including paragraphs 165 through to 167 and 176 through to 179.  I refer in particular to the references in paragraph 165 that I accepted the submissions of counsel for the wife in relation to the husband’s failure to provide up-to-date information which therefore made the Court unable to determine, with appropriate satisfaction, issues concerning the financial circumstances of the husband.

17. In paragraph 179 I concluded:  "Due to the unsatisfactory nature of the evidence provided, I am not satisfied that the amounts claimed by the husband to represent the assets and liabilities of the various entities can be relied upon to establish the current net value of the various business entities."

18. Paragraph 207, 212 and 213 are also matters which I take into account.

19. In the Judgment I referred to the moneys that were owing by both parties to their legal representatives.  The husband has submitted that I have brought this into account and therefore should not make an order for costs.  It is correct that I took into account, as part of the financial circumstances of the parties, that there were significant moneys owing by the wife to her barrister and solicitors and that the husband also had sums due to his former legal representatives.  I took those matters into account but I do not accept that, by doing so, I have made an order for costs or that it would be unfair or unjust in the circumstances to make an order for costs, nor do I accept that it is taking matters into account twice.  The sums concerned were not part of the final calculations that I made in relation to the adjustment of assets and liabilities of the parties.

20. The matters which I have referred to in my Judgment clearly indicate, in particular, that the trial, which lasted for 19 days, was of considerable length due to the husband's failure to provide the appropriate information at the appropriate time.  The findings in my Judgment also indicate that I preferred the evidence of the wife's witnesses rather than the evidence of the husband and his witnesses.

21. The issue therefore of the conduct of the husband in preparation of the matter for trial and production of documents during the trial, in particular the production of some documents which were, on the face of it, inconsistent with other documents he produced, is a significant factor in determining whether an order for costs should be made.

22. Subsection (e) of 117(2A) says, "Whether any party to the proceedings has been wholly unsuccessful in the proceedings."  This is not a relevant factor in determining the issue of costs in these proceedings.

23. Subsection (f) is "Whether either party to the proceedings has made an offer in writing to the other party to settle the proceedings and the terms of such offer."  As I have indicated, the offer made by the husband in 2004 is set out in Exhibit 1 and the offer made by the wife in September 2005 is part of the material before me.  I take into account those offers and in particular the timing of those offers.  I take into account that, at the time when the offer was made by the husband to the wife, the various orders which the wife was seeking in relation to the valuation of the entities controlled by the husband and the clear identification of the assets and liabilities had not been possible.  I also take into account the offer made by the wife to the husband at a time when the proceedings had developed further.  I also take into account that she was seeking a sum which was in excess of the sum ordered by the Court, but following the authority of Pennisi(supra) and other authorities in relation to offers, I still consider this factor.

24. Subsection (g) is:  "Such other matters as the Court considers relevant."  There are no other  significant factors.  The issue raised by the husband, namely his state of mind at the time, is not significant enough in this matter.

25. The other matter which needs to be taken into account is that the wife seeks orders by way of indemnity costs rather than costs on a party-party basis.  In that regard I have been referred to the authorities of Yunghanns v Yunghanns (2000) FLC 93-029, Munday v Bowman (1997) FLC 92-784, Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 and Johnson and Johnson (No.2) (Costs) (2000) FLC 93-040. The significant case referred to most frequently in relation to the question of indemnity costs is the decision of Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd (supra), in particular the reference in that case to the ordinary rule that where costs are ordered it should be on a party-party basis.  However, it is possible to order costs on an indemnity basis where the circumstances of the case warrant departing from the usual order.

26. The factors which would warrant departing from the usual order are recited in the case of Colgate Palmolive Co v Cussons Pty Ltd (supra) and referred to again in the case of Yunghanns v Yunghanns (supra), where it is clear that the categories of circumstances have not been closed and that there is a discretion to award indemnity costs.  However, the particular facts of this matter have to be carefully considered.  Whilst I made findings that I prefer the evidence of the wife and her witnesses to the evidence of the husband and his witnesses, I also made a specific reference in my Judgment to not being able to be satisfied that the husband was being deliberately obstructive or reckless in relation to the matters referred to therein.  (See paragraph 166 of my earlier Judgment).

27. Taking into account all of the factors of the matter before the Court in these proceedings, I am satisfied that there are circumstances which justify the Court making an order for costs but I am not satisfied that there are particular circumstances in this matter which justify those costs being ordered on an indemnity basis rather than the usual party-party basis.  The significant factors, in my view, are the factors referred to in subsection (c), the conduct of the husband in relation to the proceedings, and the offer of the wife in September 2005.  In particular, in relation to the question of the amount of costs to be paid, I need also to take into account the financial circumstances of each of the parties to the proceedings when considering what order would be a just order in these circumstances.

28. Balancing all of those various factors, I consider it to be just that the husband be ordered to pay the wife's costs on a party-party basis, from the commencement of trial on 3 October 2006 until the delivery of my Judgment on 30 March 2007, such costs to be agreed or taxed. 

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for Judgment of the Honourable Justice Dawe

Associate: 

Date:  12 July 2007