Pirelli and Pirelli and Anor (No. 2)

[2018] FamCA 758

.FAMILY COURT OF AUSTRALIA

PIRELLI & PIRELLI & ANOR (NO. 2) [2018] FamCA 758

FAMILY LAW – COSTS – where the Applicant seeks the costs of her successful application for an order for departure from the administrative assessment of child support on an interim basis and that, on an interim basis, the First Respondent pay specified payments by way of non-periodic child support – where the Court is persuaded that the circumstances justify the making of an order for costs on a party/party basis but not persuaded that the circumstances are such as to warrant the making of an order for costs on an indemnity basis or on any basis other than on a party/party basis – where the First Respondent asserts financial incapacity to pay an order for costs – where costs to be paid within 30 days of the making of final orders or the final resolution of the proceedings.

Child Support (Assessment) Act 1989 (Cth)
Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

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

APPLICANT: Ms Pirelli

FIRST RESPONDENT: Mr Pirelli

SECOND RESPONDENT: Pirelli Pty Ltd as Trustee for the Pirelli Trust

FILE NUMBER: BRC 778 of 2017

DATE DELIVERED:  25 September 2018

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

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

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Ramsden Lawyers by way of written submissions filed 20 June 2018

THE RESPONDENTS: Self-represented by way of written submissions in response filed 4 July 2018

Orders

IT IS ORDERED THAT

1. The First Respondent pay the Applicant’s costs of and incidental to the Application in a Case filed 23 March 2018 with such costs:

   (a)to be paid on a party/party basis in such amount as may be agreed between the parties or, failing agreement, as assessed in accordance with the Scale in Schedule 3 to the Family Law Rules 2004 (Cth); and

   (b)       to be paid within 30 days of either:

   (i)the making of a final order in the property settlement proceedings between the parties;  or

   (ii)the final resolution, by other means, of the property settlement proceedings between the parties.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pirelli & Pirelli and Anor (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 778 of 2017

Ms Pirelli

Applicant

And

Mr Pirelli

First Respondent

And

Pirelli Pty Ltd as Trustee for the Pirelli Trust

Second Respondent

REASONS FOR JUDGMENT

1. On 6 June 2018, I made orders determining the Application in a Case filed on 23 March 2018 by the Applicant. The order afforded the parties the opportunity to be heard, by way of the provision of written submissions, in relation to any application for costs. 

2. The Applicant took up such opportunity. She seeks an order that the First Respondent pay her costs of and incidental to the interim application determined on 6 June 2018: her primary position is that he should be ordered to pay her costs on an indemnity basis, fixed in the amount of $56,967.74;[1] or, alternatively, that he pay the costs of Counsel who appeared on her behalf on 11 May 2018 on an indemnity basis (fixed in the amount of $6,600.00 inclusive of GST) and the costs of her solicitors on a party/party basis (fixed in the amount of $23,433.36), such that the total amount sought is $30,033.36.

   [1] Comprising the amounts of $41,749.50 payable to her solicitors and $6,600.00 (inclusive of GST) payable to Counsel who appeared on her behalf at the hearing on 11 May 2018.

3. The First Respondent opposes the making of any order for costs: he advances, in essence, that the Court would not be persuaded that the circumstances justify the making of an order for costs; instead, the general starting point that each party should bear their own costs, as is provided by s 117(1) of the Family Law Act 1975 (Cth), should apply and each party should be left to bear their own costs.

4. Appreciation of the context within which the Applicant’s application was determined may be gained from reference to the Reasons for Judgement published on 6 June 2018. To the extent that is necessary to understand the determination of this application for costs, I incorporate the discussion contained therein into these Reasons.

Do the circumstances justify the making of an order as to costs?

1. Section 117(1) of the Family Law Act1975 (Cth) provides that each party to proceedings under the Act shall bear his or her own costs. However, if the Court is satisfied there are circumstances which justify it, the Court may make such order as to costs as it considers just.[2] In considering what order, if any, as to costs should be made, the Court must have regard to the matters set out in s 117(2A) of the Act.

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

2. I accept that, whilst the Court must consider the financial circumstances of each party, impecuniosity on the part of a party opposing the making of an order for costs is, of itself, no bar to an order for costs being made where it is otherwise warranted.[3] Whilst the First Respondent contends that his current financial circumstances are restricted, I accept that the Applicant’s current financial circumstances are significantly more strained than those in which he finds himself.  Whilst the First Respondent continues to have the benefit of access to the income generated through the business in which he is involved, the Applicant is required to attempt to re-join the paid workforce after being fully engaged in the parenting of their child and, consequently, being financially dependent on the First Respondent for a period of about 10 years.

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

3. There is no evidence before the Court about the amount spent by the First Respondent to date on the legal proceedings between the parties.  However, I note that the Applicant’s evidence is that she has already spent $172,284.33 (that is, of her own property,[4] as it were) on the same.

   [4] In the sense that funds expended by either party on legal expenses will be taken into account in some way during the determination of their property settlement proceedings.

4. Neither party was in receipt of Legal Aid. The Applicant was represented by Counsel, whilst the First Respondent appeared on his own behalf.

5. At present, there is allegation and counter-allegation about the asserted conduct of the parties. In such a circumstance – and noting the particular assertions of intent ascribed to the First Respondent by the Applicant – I consider that I am not now in a position to conclude whether, in fact, there is anything in the conduct of the parties to the proceedings in relation to the proceedings to persuade that this consideration favours the conclusion that the circumstances justify the making of an order departing from the starting point established by s 117(1) of the Act.

6. Further, to this extent that it was submitted on behalf of the Applicant that the Court should be persuaded to make an order for costs so that the First Respondent will, in the future conduct of the proceedings, understand the consequences of his actions, I note that an order for costs is not a punishment; rather, it is made to compensate a party for the costs to which that party has been put.

7. The First Respondent sought to explain his opposition to the orders sought by the Applicant on the basis that, in essence, he was simply following the thrust of comments and/or findings made by Forrest J in his Honour’s determination of an earlier application; it was submitted, in essence, that the First Respondent opposed the Application in a Case determined by orders made on 6 June 2018 on the basis of the terms of s 66E of the Act.  I do not accept either proposition.  The relief sought by the Applicant in the Application in a Case filed 23 March 2018 did not rest upon the application of the Act but, rather, on the application of the Child Support (Assessment) Act 1989 (Cth) and it is pursuant to the relevant provisions of the same that orders were made on 6 June 2018.

8. I accept that, on 5 May 2017, the parties entered into consent orders which, amongst other things, reflected the First Respondent’s agreement to pay the child’s school and co-curricular fees capped in an amount of $400.00 per week.  Whilst these orders were the subject of Forrest J’s comments about the application of s 66E of the Act (during the course of the determination of an earlier application), the relevance of the same to the current application is that they capture the First Respondent’s then acceptance of a capacity to pay such amount.

9. I also accept that the Applicant made a number of proposals to the First Respondent in an attempt to resolve the issue of responsibility for payment of the school fees and other costs which were the subject of her application for an order departing from the administrative assessment of child support. For example, on 18 January 2018, she proposed that the parties use funds (in an amount of $121,596.73) held by her solicitors in a stakeholder account on behalf of both of them to pay the child’s school fees for the balance of 2018.  This proposal was rejected by the First Respondent. The Applicant reiterated her proposal on 25 January 2018 when she responded to the First Respondent’s suggestion that the parties use these funds to pay each of them an interim distribution for legal fees.  Again the First Respondent rejected this suggestion; he reiterated his position that he had no obligation to pay those expenses sought by the Applicant when he was already paying child support.

10. I accept that, on 27 February 2018, the Applicant sought the First Respondent’s agreement to a departure order on the basis that he agree to pay child support as administratively assessed and also pay the child’s school fees.  I accept that this proposal, if accepted, would have resulted in the First Respondent’s liability being less than that which is imposed upon him by the terms of the order made on 5 June 2018 – those orders also require that, in addition to paying child support as administratively assessed and paying the school fees, he also pay certain specified extracurricular costs by way of non-periodic child support.

11. The Applicant was entirely successful on her application: she obtained all of the orders she sought on an interim basis. However, I accept that such success, of itself, is not necessarily productive of an order for costs because otherwise, there may be an inappropriate distraction from the proper consideration of all of the other matters particularised in s 117(2A) of the Act, being matters to which the Court must give consideration in determining whether the circumstances in any case are such as to justify the making of an order that one party pay another’s costs.

12. On balance, in the circumstances of this case and in the broad exercise of discretion accorded to the Court in determining applications for costs – and placing particular weight on the fact that the First Respondent refused the Applicant’s proposal that funds held in a stakeholder account on behalf of both of them be used to pay the 2018 school fees, that she obtained more via the order made on 6 June 2018 than she was prepared to accept on 27 February 2018 and that she was wholly successful on her application – I am persuaded that the circumstances justify the making of an order that the First Respondent pay the Applicant’s costs of and incidental to the Application in a Case filed 23 March 2018.

What are the just terms of the order for costs?

1. Authority makes clear that, unless there are exceptional circumstances, an order for costs should be made on a party and party basis.[5] 

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

2. I am not persuaded that the circumstances of this case justify the making of an order that costs be paid on an indemnity basis; I am not persuaded that the circumstances here are such as to warrant the making of such an order which, as has been said in well-known authority, is a “very great departure” from the “normal standard” in this and other jurisdictions.[6] I am not persuaded that the circumstances here are exceptional or such as to warrant departing from “the usual course” or such as to warrant the making of an order for the payment of costs other than on a party and party basis.

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

3. In arriving at this conclusion I am also mindful of the comments of the Full Court in Kohan[7] to the effect that the degree to which the costs, which would be payable if an indemnity costs order is made, depart from the established norm and the actual financial significance of the same may itself be a reason for not ordering costs on an indemnity basis.  Such comments are particularly apposite given that it appears that the Applicant has expended nearly $57,000.00 to obtain an order that the First Respondent pay an additional amount of about $15,000.00 - $20,000.00 per year towards the support of their child.

   [7] (1993) FLC 92-340.

4. The Applicant also sought that the First Respondent be required to pay any amount ordered by way of costs within thirty (30) days of the making of an order. Whilst this proposition was not the subject of specific reference in the submissions provided by the First Respondent, I have proceeded on the basis that he would oppose such an order on the basis of his contention that his current financial circumstances are not such as to permit of payment of the same.

5. Whilst others may disagree, I consider that the just order in the circumstances is one which requires the First Respondent to pay the Applicant’s costs, to be assessed on a party/party basis, in an amount agreed between the parties or, failing agreement, as assessed, within thirty (30) days of either the making of a final order in the property settlement proceedings between the parties or the final resolution, by other means, of the property settlement proceedings between the parties.

6. That is not to say that the process of attempting to reach agreement about the quantum of the costs payable or that, in the event of an absence of agreement about the same, an assessment of the quantum in the manner provided for by the Family Law Rules 2004 (Cth) should await such resolution. Consequently, I think it appropriate to record that I consider it just that the parties be afforded a period of twenty-eight (28) days within which to agree the quantum of the costs which the First Respondent is to pay to the Applicant, after which, in the event that no agreement is reached, she should be at liberty to commence the assessment process if she so chooses.

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

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 25 September 2018.

Associate:     

Date:              25 September 2018