Peak & Peak
[2025] FedCFamC1F 295
•5 May 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Peak & Peak [2025] FedCFamC1F 295
File number(s): MLC 4458 of 2024 Judgment of: JOHNS J Date of judgment: 5 May 2025 Catchwords: COSTS – where the wife seeks an order for costs on an indemnity basis – where the husband filed no response to the wife’s submissions – where the husband has not complied with previous court orders – where the husband’s conduct has delayed court proceedings – where the husband has been wholly unsuccessful in the proceedings – consideration of s 117(2A) factors – costs ordered on an indemnity basis in the wife’s favour Legislation: Family Law Act 1975 (Cth) Pts I, XV, ss 4AB, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 6.35, 11.10, 12.13, 12.17
Cases cited: Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
I and I (1995) FLC 92-625
Kohan & Kohan (1993) FLC 92-340
Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664
Munday v Bowman (1997) FLC 92-784
Nada & Nettle (Costs) (2014) FLC 93-612
Prantage & Prantage (2013) 49 Fam LR 197
Division: Division 1 First Instance Date of hearing: Determined on the papers Number of paragraphs: 59 Place: Melbourne Counsel for the Applicant: Ms Borger Solicitor for the Applicant: Lander & Rogers Solicitor for the Respondent: Litigant in Person ORDERS
MLC 4458 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS PEAK
Applicant
AND: MR PEAK
Respondent
ORDER MADE BY:
JOHNS J
DATE OF ORDER:
8 MAY 2025
THE COURT ORDERS THAT:
1.Within 28 days the husband do all such acts and things as may be required to pay or cause to be paid to the wife via her lawyers, Lander & Rogers, the sum of $30,000 in respect of the wife’s costs of her Application – Enforcement filed 18 November 2024.
2.The question of the husband’s payment of fees charged by his accountant, G Financial Services, in relation to their compliance with the Subpoena to Produce Documents filed 6 November 2024 be reserved to the final hearing.
3.That paragraph 13 of the wife’s Application – Enforcement filed 18 November 2024 be otherwise 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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Peak & Peak
has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).REASONS FOR JUDGMENT
On 17 February 2025 I made orders by consent (“the Enforcement Orders”) finalising the Application – Enforcement filed on behalf of the applicant wife on 18 November 2024 (“the Enforcement Application”). The Enforcement Orders addressed the husband’s non-compliance with orders previously made on 20 August 2024 and 15 October 2024 in relation to a range of matters, including production of documents, valuation of the parties’ interests, the sale of a property held by the parties in Suburb C, Queensland, the payment of a dollar-for-dollar costs order in respect of the wife’s legal costs and disbursements, and payment of the husband’s partial property entitlements.
The only issue unresolved upon the making of the Enforcement Orders was the question of the wife’s costs incurred in respect of the Enforcement Application. With respect to that issue, I made orders as follows:-
7.Within seven days the Applicant Wife file and serve a copy of written submissions in support of her application for costs in respect of her Enforcement Application by email to the Associate to the Honourable Justice Johns.
8.Within 21 days of receipt of the Applicant Wife's written submissions, the Respondent Husband file and serve a copy of written submissions in response to the Applicant Wife's written submissions by email to the Associate to the Honourable Justice Johns.
9.The Wife's Application with respect to costs of her Enforcement Application filed 18 November 2024 be determined on the papers filed pursuant to paragraphs 6 and 7 herein.
In compliance with Order 7 of the Enforcement Orders, on 24 February 2025 the wife caused written submissions to be filed in support of her Application for Costs arising from the Enforcement Application. The wife seeks orders that the husband pay her costs on an indemnity basis fixed in the sum of $59,161.13. Alternatively, she seeks an order that the husband pay her costs fixed in the sum of $30,849.36, which sum includes costs arising with respect to a subpoena for production of documents filed on her behalf. Finally, in the alternative, the wife seeks that the husband pay her costs calculated in accordance with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) fixed in the sum of $20,752.18.
Pursuant to Order 8 of the Enforcement Orders, the husband was to file and serve his written submissions by 10 March 2025, being 21 days after the receipt of the wife’s written submissions. The husband has filed no submission in compliance with that Order.
These are my Reasons for Judgment with respect to the wife’s costs application.
LEGAL PRINCIPLES
The question of costs is governed by s 117 of the Family Law Act 1975 (Cth) (“the Act”). Each party to proceedings is to bear their own costs unless there are circumstances which in the opinion of the Court justify the making of a costs order.
Section 117(2) of the Act provides that:-
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
Section 117(2A) of the Act provides that in determining what, if any, order should be made under subsection (2), the Court must have regard to the following:-
(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.
Should it be determined that it is just to make an order as to costs, costs are not awarded to punish the unsuccessful party, but rather, are compensatory in the sense that they are awarded to ameliorate the expense of the successful party resulting from their having been required to participate in the proceedings.
The discretion afforded by s 117 of the Act is broad and the relevant factors contained in s 117(2A) are not to be read in a restrictive way; any one of those factors may found an order for costs, but all factors must be taken into account and balanced (I and I (1995) FLC 92-625).
The Court has a broad discretion as to the weight to be attributed to the factors set out in s 117(2A) (Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664 at [24]).
The method of calculation of costs is prescribed by r 12.17(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ("the Rules"), which provides:-
(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.
Rule 12.17(3) sets out matters that may be considered in the calculation of costs, providing that:-
(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 proceedings, or in complying with pre-action procedures;
(f) whether expenses (paid or payable) are fair, reasonable and proportionate.
Having regard to the above matters, I consider that I hold a broad discretion in respect of matters relating to any costs orders.
The law with respect to indemnity costs is well settled; the Full Court observed in Kohan & Kohan (1993) FLC 92-340 that the Court should not depart lightly from the ordinary rules with respect to costs. In the decision of Prantage & Prantage (2013) 49 Fam LR 197, the Full Court confirmed that indemnity costs should only be awarded if the case has some special or unusual feature.
In Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225, Sheppard J identified circumstances that might constitute special or unusual features so as to justify an award of indemnity costs. Usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660 drew from the decision of Sheppard J the following examples:-
(a)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.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud.
(c)Evidence of particular misconduct causing loss of time to the court and to other parties.
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.
(e)An imprudent refusal of an offer to compromise.
(Citations omitted)
The category of circumstances which enliven the discretion to award indemnity costs are not closed; the circumstances do not need to come precisely within the examples provided by Sheppard J.
BACKGROUND
The proceedings before the Court relate to the parties’ competing property applications. The proceedings were commenced by the wife by her Initiating Application filed 18 April 2024. At the time the wife filed that application, the husband had failed to provide disclosure or a response to the wife’s Notice of Intention to commence proceedings. Further, the wife contends that the husband had sold a property without prior notice to her.[1]
[1] The wife’s affidavit filed 3 February 2025, paragraph 40
Since the filing of the wife’s Initiating Application, there have been numerous Court events, occasioned in part due to the husband’s non-compliance with orders and directions for him to file Court documents. For example, the first Court event, being an Interim Defended Hearing held on 17 May 2024, was adjourned due to the husband’s failure to appear at the hearing.
The second Court event, being a Directions Hearing conducted on 27 May 2024 was similarly compromised due to the husband’s failure to file documents in response to the wife’s Initiating Application, notwithstanding the orders made by the Court on 17 May 2024 requiring him to do so.
The matter was then listed for an Interim Defended Hearing on 23 July 2024. Again, the husband did not file documents as required by the orders made on 27 May 2024. On that day, orders were made by consent that the husband pay the wife’s costs fixed in the sum of $7,678.
On 20 August 2024, following an Interim Defended Hearing, orders were made with respect to the valuation of real property interests held by the parties, or entities controlled by them. That Order was the subject of the wife’s Enforcement Application, it being her contention that the husband had failed to execute the letter of instruction to the nominated valuer.
The matter was listed for an Interim Defended Hearing on 15 October 2024. That day, orders were made pursuant to s 117(2) of the Act that for every dollar that the husband pays towards his legal costs and disbursements in respect of these proceedings, an equivalent dollar amount be paid towards the wife’s legal costs and disbursements. The wife contended that the husband had also failed to comply with that Order.
The Enforcement Application was listed for hearing before me on 17 February 2025. That day the wife was represented by Counsel and the husband appeared in person. The husband filed no material in response to that application, which was ultimately resolved by consent in the terms of the orders made that day. It was conceded by the husband at that hearing that he had failed to comply with the orders the subject of the Enforcement Application.
It is against that backdrop that the wife now seeks that the husband meet her costs in respect of that application on an indemnity basis.
I now turn to the considerations set out at s 117(2A) of the Act.
Section 117(2A)(a) – the financial circumstances of the parties
The wife does not work and is engaged in home duties, caring for the parties’ two children, aged 10 and eight. The parties’ child X, aged 10, has Level 3 autism and the wife deposes that he has complex special needs, including a severe intellectual disability. X receives NDIS funding to support his language and communication. The mother deposes that X is non-verbal and requires continence aids at all times.[2]
[2] The wife’s affidavit filed 3 February 2025, paragraph 13
The wife deposes that she has been almost solely responsible for the children’s care since the parties’ separation, the husband having spent only one night with the children since separation in December 2023.
The wife deposes that she is reliant upon government benefits and the generosity of her family for financial support and to meet the needs of the parties’ children. The wife contends that the husband failed to comply with orders made 29 October 2024 that he provide interim support to the wife and the children by way of payment of rates and utilities for her home. Further, the wife deposes that whilst the husband is assessed to pay child support in the sum of $1,048 per month, he has failed to comply with that assessment and as at 3 February 2025 when she swore her affidavit, the husband had accrued arrears of $3,512.74.[3]
[3] Ibid paragraphs 38 and 39
In circumstances where the husband has filed no material in response to the Enforcement Application or in respect of the wife’s costs application, and has failed to file a Financial Statement in accordance with the orders of 3 February 2025 (which required that that document be filed by 10 February 2025), there is no evidence before the Court as to the husband’s current financial circumstances. That this is so is a problem of his own making.
The wife submits that the husband enjoys unfettered use of the parties’ business bank accounts for his personal benefit. She contends that he has been meeting his expenses, including his legal costs, from the business bank accounts. In support of that submission the wife notes that the husband has been represented in previous hearings, including by Counsel at the Interim Defended Hearings on 23 July 2024, 20 August 2024, and 15 October 2024, and by Senior Counsel at the hearing on 25 October 2024. Further, the wife contends that the husband continues to be legally represented in intervention order proceedings currently on foot in the Melbourne Magistrates’ Court.
The husband is self-employed and is a director of a number of entities. The business conducted by him is a wholesale business. In circumstances where the husband has engaged legal representation, including on one occasion Senior Counsel, to represent him in these proceedings, conducts a business and has interests in property (which are yet to be valued), I am satisfied that he does have available to him property and resources with which he could meet an order for costs.
Even were that not the case, it is well settled that impecuniosity is not a bar to the making of a costs order (Nada & Nettle (Costs) (2014) FLC 93-612 at [11]).
Section 117(2A)(b) – whether either party is in receipt of legal aid
Neither the husband nor the wife is in receipt of legal aid.
Section 117(2A)(c) – the conduct of the parties in relation to the proceedings; and
Section 117(2A)(d) – whether the proceedings were necessitated by the failure of a party in the proceedings to comply with the previous orders of the Court
It is submitted on behalf of the wife that the husband’s conduct justifies an order for costs. In support of that submission, she relies upon the following matters:-
·The Enforcement Application was necessitated by the husband’s conduct in failing to produce documents to enable the single expert valuer to conduct valuations in respect of real properties, as required by Order 3 of the orders dated 20 August 2024. In particular, the husband did not produce lease agreements in respect of properties in B Street, Melbourne and D Street, Melbourne. The husband conceded his non-compliance with that Order at the hearing on 17 February 2025;
·The husband failed to comply with the “dollar-for-dollar” costs order made on 15 October 2024 (Order 8). This too was conceded by the husband at the hearing before me.
The wife also relies upon the husband’s non-compliance with earlier orders and his disregard of his obligations pursuant to the Rules of Court. In particular, she relies upon the husband’s failure to:-
·Attend the first Court event listed on 17 May 2024;
·Comply with orders requiring him to file responding material made on 17 May 2024, 27 May 2024 and 23 July 2024;
·Comply with orders made by consent on 3 February 2025 which required the husband to file and serve a Financial Statement and provide financial disclosure by 4.00pm on 10 February 2025. That Order was made pursuant to Rule 11.10 of the Rules. Notwithstanding that Order, the husband has failed to file a Financial Statement.
It was submitted on behalf of the wife and I accept that the husband’s refusal or failure to comply with Court orders has frustrated her ability to progress the proceedings and necessitated applications for enforcement of those orders. The effect of the husband’s non-compliance has been to prolong the proceedings, resulting in additional Court events to secure compliance with Court orders, with the resultant and inevitable increase in the legal costs incurred by the wife.
Given the concessions made by the husband during the hearing on 17 February 2025 and having regard to the orders made by consent that day which have the effect of rectifying and addressing the husband’s non-compliance, I am satisfied that he has failed to comply with the orders made 20 August 2024 and 15 October 2024. I am also satisfied that husband’s non-compliance with those orders necessitated the wife’s Enforcement Application. I also accept that as a result of the husband’s non-compliance with Court orders, the wife’s legal costs have been unnecessarily increased. Accordingly, I am satisfied that the husband’s conduct is a matter relevant to the determination of the wife’s Application for Costs.
Section 117(2A)(e) – whether a party to the proceedings was wholly unsuccessful
It was submitted on behalf of the wife, and I accept, that the husband has been wholly unsuccessful in relation to the wife’s Enforcement Application.
Section 117(2A)(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 such offer.
The wife deposes that she caused a letter to be sent to the husband’s then-lawyers, E Lawyers, on 29 November 2024. That letter proposed to resolve the Enforcement Application on the basis that the husband comply with his outstanding obligations and further that he irrevocably authorise the wife to receive copies of communications between he and F Bank, his accountants and his mortgage broker. The husband did not respond to that settlement proposal.[4]
[4] Ibid paragraph 72
It is submitted on behalf of the wife that had the husband accepted that proposal, the hearing in relation to her Enforcement Application could have been avoided. Further, it was submitted that the basis upon which the application was resolved pursuant to the orders of 17 February 2025 was in accordance with the wife’s proposal, save that the question of her costs was to be determined upon the filing of written submissions.
I am satisfied that the wife’s proposal as contained in the letter dated 29 November 2024 is a relevant consideration in the determination of her Application for Costs.
Section 117(2A)(g) – any other matters the Court considers relevant
The wife submits that the husband has relied upon false or misleading evidence in support of his contentions in respect of earlier hearings. Those matters are not relevant to the current Application for Costs arising from her Enforcement Application.
The wife also contends that the husband’s conduct has caused financial hardship to her and the children. She contends that that conduct is financial abuse within the definition of family violence as contained in s 4AB(2)(h) of the Act. In particular, she relies upon the husband’s failure to comply with the dollar-for-dollar costs order, the orders for valuation of the parties’ corporate entities and his non-payment of expenses ordered to be paid in relation to the former matrimonial home and the children. She also relies upon the husband’s failure to meet his child support obligations referred to earlier.
I have no doubt that the husband’s failure to comply with orders, in particular orders for the filing of court documents, the production of documents, and the payment of costs, has occasioned delay in the progress of the proceedings and ultimately resulted in an increase in the wife’s legal costs. As to whether that conduct is family violence is unclear; until such time as there has been a testing of the parties’ evidence, the Court is not able to make findings as to whether the husband’s non-compliance with Court orders satisfies the definition under s4AB of the Act.
Nonetheless, I am satisfied that the failure of the husband to comply with Court orders has adversely affected the wife and the children; they have been without financial support that they would otherwise have been entitled to, and further the wife has incurred additional costs in these proceedings as a result of the husband’s non-compliance with Court orders. Inevitably such conduct has had a deleterious effect on the wife and the children, as funds that would otherwise have been available to them have, of necessity, been applied by the wife to the costs of these proceedings. In the event these matters do not resolve, the husband is on notice as to the wife’s contentions in relation to that conduct.
In my view, an order for costs against the husband is justified in circumstances where I am satisfied that:-
·The husband has not complied with orders of the Court;
·The husband’s failure to comply with Court orders has prolonged the proceedings and caused the wife to incur additional costs;
·The husband has been wholly unsuccessful with respect to the Enforcement Application;
·The matter could have resolved prior to the hearing of the Enforcement Application had the husband responded to the wife’s settlement proposal contained in the offer made on her behalf by her lawyers by letter dated 29 November 2024.
Should costs be paid on an indemnity or party/party basis?
As noted earlier, the wife seeks that her costs be paid on an indemnity basis fixed in the sum of $59,161.13. In the alternative, she seeks that the husband pay her costs on a party/party basis in accordance with the Rules, fixed in the sum of $20,752.18. In addition, she seeks an order that the husband meet the costs of his accountant in producing documents pursuant to a subpoena issued on behalf of the wife on 26 November 2024 (being the sum of $10,097.18).
The husband has made no submissions with respect to the costs application or the quantum of costs sought by the wife.
In support of her application, the wife relies upon the Costs Agreement entered into by her with her lawyers which is annexed to the affidavit of her lawyer filed 18 April 2024 (annexure SP-01). Having regard to that affidavit, I am satisfied that the wife has informed the Court of the Costs Agreement between she and her lawyers as well as the terms of that agreement in accordance with Rule 12.13(4) of the Rules.
The wife submits that the husband’s conduct throughout the proceedings has been so egregious as to justify an order for indemnity costs. The wife contends that her legal costs have been increased as a result of the husband’s delinquent conduct in failing to attend hearings, to produce documents and to comply with Court orders. Such conduct was a feature of the first Court event on 17 May 2024 (which the husband failed to attend) and has continued. Notwithstanding orders requiring him to file documents, the husband did not file responding material until after the third Court event.
The wife submits that she has been put to significant expense as a result of the husband’s persistent non-compliance with Court orders. I accept that this is the case.
The litigation history and the chronology of the husband’s non-compliance with Court orders is particularised at paragraph 5 of the written submissions filed on behalf of the wife. Having regard to that history, I am satisfied that the husband’s non-compliance with Court orders is persistent and of such an exceptional nature as to justify an order for indemnity costs.
The impact of the husband’s conduct has protracted the litigation and resulted in the wife incurring unnecessary and substantial legal costs. The progress of the matter has been frustrated and delayed; additional Court events have been necessitated as a result of that conduct. Such conduct has already resulted in a costs order against the husband (made 23 July 2024) which seemingly has had little effect upon the husband’s attitude and conduct towards these proceedings. On the face of the material before the Court, the husband has simply disregarded his obligations towards the Court with respect to these proceedings; that approach has visited significant financial and emotional hardship upon the wife and the children. It is also conduct that inevitably has had a deleterious impact upon other litigants and the operation of the Court.
The wife has endeavoured to resolve the issue of the husband’s non-compliance at an early stage by letter forwarded by her lawyers on 29 November 2024. The husband did not respond to that communication. Again, I am satisfied that the husband’s failure to engage with the wife’s lawyers appears to be an attempt by him to frustrate the progress of the wife’s application.
As to quantum, the wife relies upon the schedule of costs annexed to the written submissions relied upon by her. A careful analysis of that schedule discloses that it includes items not related to the wife’s Enforcement Application; for example, it includes costs claimed by the husband’s accountant in relation to the production of documents by them pursuant to a subpoena issued by the wife.
The claim made by that accountant is an issue not currently before the Court. Further, that claim is made by the accountant in circumstances where they have not given prior notice to the wife of their proposed costs claim in accordance with Rule 6.35 of the Rules. As a result, it would appear the calculation of the accountant’s entitlements is a live issue. The amount claimed by those accountants is substantial and I hold significant reservations as to their entitlement to the amounts claimed.
Given the question of the husband’s compliance with his ongoing disclosure obligations is in issue, and I hold significant concern as to the quantum of costs claimed by his accountants, I am satisfied that the resolution of those matters is more appropriately addressed at trial. Accordingly, I will reserve the resolution of that issue to the final hearing.
Doing the best I can, and excluding those items contained in the costs schedule which clearly do not relate to the Enforcement Application, I consider it appropriate that I make an order fixing the wife’s costs of and incidental to her Enforcement Application in the sum of $30,000. That sum is calculated having regard to the amounts billed (or to be billed) to the wife pursuant to the Costs Agreement as identified in the Schedule, but excluding items related to subpoena compliance, the hearing on 3 February 2025 and communications regarding the sale of the Suburb C property. Given the quantum of costs to be paid by the husband I will order that payment occur within 28 days.
I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johns. Associate:
Dated: 8 May 2025
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