POWELL & BIGGS

[2015] FamCA 346

FAMILY COURT OF AUSTRALIA

POWELL & BIGGS [2015] FamCA 346

FAMILY LAW – COSTS - Where the mother seeks an order for costs on an indemnity basis – where the father seeks the mother’s application be dismissed – failure of the father to pay previous costs order - mother’s application for enforcement of costs order – mother seeks costs of application for enforcement – consideration of the factors in s 117(2A) – calculation of costs – costs order made on an indemnity basis in favour of the mother.

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

Kohan (1993) FLC 92-340
Prantage & Prantage [2013] FamCAFC 105
NMFM Property Pty Ltd v Citibank Ltd (No 11) (2001) 109 FCR 77

APPLICANT: Ms Powell

RESPONDENT: Mr Biggs

FILE NUMBER: MLC 8800 of 2012

DATE DELIVERED: 13 May 2015

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 6 May 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Matta

SOLICITOR FOR THE APPLICANT: Barbayannis Lawyers

THE RESPONDENT: In Person

ORDERS

IT IS ORDERED THAT

1. By 4.00pm on 5 August 2015 the father pay to Barbayannis Lawyers, the solicitors for the mother, the mother’s costs of and incidental to her application in a case filed 17 February 2015 fixed in the sum of $10,953.

2. The mother’s application filed 17 February 2015 and the father’s response to an application in a case filed 30 April 2015 be otherwise dismissed.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 8800 of 2012

Ms Powell

Applicant

And

Mr Biggs

Respondent

REASONS FOR JUDGMENT

1. On 3 December 2014 Cronin J made the following orders in this matter:

   1.  That the father have leave to withdraw his contravention application

   2.  That all outstanding applications are otherwise dismissed.

   3.  That the father pay the mother’s costs fixed in the sum of $3,000.

2. In his reasons for judgment Cronin J said that that “this is a case which was not well thought out, and whether or not the father had some legal advice about it is irrelevant.” He found that there was in that case a justifiable reason to depart from the general principle in s 117(1) of the Family Law Act 1975 (Cth) (‘the Act’) that each party should bear their own costs. He did not however accede to the mother’s application that the father should pay her costs on an indemnity basis.

3. On 17 February 2015 the mother filed an application in a case seeking to enforce payment of the order for costs made 3 December 2014, in the sum of $3,000, plus interest at the rate prescribed by the Family Law Rules 2004 (Cth) (‘the Rules’). That application which was electronically filed on 17 February 2015 was stamped by the Court on 19 February 2015. The father’s case is that he paid the amount owing on 16 February 2015. It is the mother’s case that he made that payment on 18 February 2015 after accessing the Commonwealth Courts Portal (‘the portal’) on 17 February 2015 and becoming aware of the mother’s application in a case. Although the father has now paid the amount outstanding pursuant to the order made by Cronin J on 3 December 2014 the mother now seeks an order that he pay her costs of and incidental to her application in a case filed 19 February 2015 on an indemnity basis.

Legal principles

1. The general rule is that each party to proceedings pursuant to the Act shall bear their own costs. Section 117(2) of the Act provides that if “the court is of the opinion that there are circumstances justifying it doing so, the court may, subject to subsections (2A), (4), (4A) and (5) 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.”

2. Section 117(2A) of the Act provides that in considering what, if any, order should be made for the payment of costs the court shall have regard to:

   (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)where 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.

Indemnity costs

1. The Full Court in Prantage & Prantage [2013] FamCAFC 105 (‘Prantage’) at paragraph 79 confirmed that the law relating to indemnity costs is well settled and that “this Court and trial Judges in this jurisdiction have routinely followed Kohan [(1993) FLC 92-340] in holding that indemnity costs orders are to be seen as “a very great departure from the normal standard”.”

2. The Full Court in Prantage, referring to the decision of Lindgren J in  NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77 also said at paragraphs 102 and 103 as follows:

   It is important in this context to recognise, as Lindgren J did in NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77 at [56], that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation”.

   Lindgren J went on to point out (original emphasis):

   Even in a proved case of fraud, for example, in my opinion the presumption is that a costs order against the fraudulent party will be on the party and party basis. The conduct of a party that is relevant to the issue of indemnity costs is the parties conduct as litigant. But … the knowledge that a party has, including knowledge of his or her past conduct, may be relevant to an assessment of his or her conduct as litigant.

DISCUSSION

1. It is the mother’s case that the costs ordered to be paid by Cronin J did not make any provision for payment by instalments but that notwithstanding that the costs were payable the mother did enter into some negotiations with the father with a view to allowing him some time for payment. Those negotiations were in summary as follows:

   ·On 15 December 2015 the father offered to pay the costs at the rate of $20 per month which counsel for the mother submitted would have taken him 12 years;

   ·On 16 December 2014 the mother’s solicitor rejected the father’s offer and made a counter offer that the father pay the costs at the rate of $300 per month and plus interest at the rate prescribed by the Rules;

   ·On 17 December 2014 the father rejected the mother’s counter offer;

   ·On 18 December 2014 the mother’s solicitor repeated the mother’s offer and put the father on notice that she would issue an application for enforcement in the absence of agreement as to payment;

   ·On 7 January 2015 the father increased his offer to $30 per month which counsel for the mother submitted would  have taken him eight and a half  years;

   ·On 13 January 2015 the mother’s solicitor repeated her offer and put the father on notice that if payment was not made within 21 days the mother would issue and application for enforcement;

   ·On 27 January 2015 the father repeated his offer of $30 per month and commenced making payments of that amount; and

   ·On 4 February 2015 the mother’s solicitor advised the father that the mother had not accepted his offer, repeated her offer and again put him on notice that the mother would issue an application for enforcement in the event that the father did not pay the costs, including that the mother would consider seeking an order for the sale of the father’s real property.

2. Although it appears that at least some of the correspondence was incorrectly addressed to 1 B Street not 2 B Street, C Town where the father lives, he acknowledged receipt of the various offers from the mother’s solicitor. He also annexed to his affidavit filed 30 April 2015 a letter received by email from the mother’s solicitor dated 24  February 2015 which confirmed receipt of the payment of the outstanding costs, referring to the issue of the proceeding on 17 February 2015, enclosing copies of the relevant application and supporting affidavit and requesting payment of the costs of and incidental to the application for enforcement of the costs order. That letter also advised that if the issue of costs of the enforcement application was not resolved the matter would proceed on 1 April 2015.

3. Notwithstanding that the father acknowledges receiving the letter from the mother’s solicitor dated 24 February 2015 he did not appear on 1 April 2015 and deposed that he received a telephone call from Mr McIvor of counsel who appeared on behalf of the mother that day asking him why he was not at Court. It was his evidence that “he was not aware that I was supposed to be in Court and that I had not been provided with any documentation notifying of such.” He also referred to the fact that the mother’s solicitors had used an incorrect address. I am satisfied that the father had received the letter dated 24 February 2015 and was aware that if the parties had not reached agreement in relation to the payment of the mother’s costs in relation to the application for enforcement the matter would be proceeding on 1 April 2015. Whether the letter was sent to 1 or 2 B Street, C Town is in those circumstances irrelevant.

4. It is the father’s evidence that the mother’s application in a case and her affidavit in support were filed at 2.01pm and 2.02pm on 17 February 2015 respectively. He also deposed to having accessed the portal at 1.15pm and 8.03pm that day. Needless to say if the father had accessed the portal at 8.03pm he would have seen that the mother had filed an application in a case. 

5. The father deposed in his affidavit filed 30 April 2015 that on 16 February 2015 he received money from the sale of farming equipment and that on 16 February 2015 he “immediately started the process of transferring the money into the trust account of the applicants (sic) lawyers”. The father annexed to his affidavit filed 30 April 2015 two documents which he submitted demonstrated that he had satisfied the order for costs on 16 February 2015, as soon as he had the funds to do so, and not in response to the mother’s application for enforcement. The documents annexed to the father’s application do not support that assertion and I am satisfied on the balance of probabilities that the father having accessed the portal after the mother’s application in a case was filed on 17 February 2015 was aware  of that application and thereafter paid the outstanding costs.

6. Although the father says he paid the mother’s outstanding costs as soon as he had the funds available to do so there was no mention in the correspondence sent by the father to the mother’s solicitor that he was proposing to sell the farm equipment or that upon doing so he would pay the outstanding costs. Although at the hearing on 6 May 2015 the father submitted that it had not been necessary for the mother to go to Court to enforce the order for costs made 3 December 2014 or for the matter to proceed after he had paid those costs, I do not agree. Although there were negotiations, the mother had the benefit of an order and was not obliged on that basis to accept the father’s offers of payment by instalments. Notwithstanding that she was not required to do so, the mother did offer to accept payment by instalments. I also note that it was the mother not the father that made an offer of settlement of the current dispute with respect to the payment of her costs in relation to this application.

7. The significant features of this case are as follows:

   ·the application is an application for the enforcement of a previous order for costs;

   ·the father having paid those costs has arguably been wholly unsuccessful;

   ·the mother has been put to the expense of having to issue proceedings in circumstances where she has done all that she might be expected to do including offering to let the father pay the costs ordered to be paid by Cronin J on 3 December 2014 in instalments when the order did not require her to do so; and

   ·the mother only issued proceedings in the face of the father’s failure to make what, in my view, could be considered to be a reasonable offer to the mother. 

8. The two children of the relationship live with the mother whose sole source of income is the government benefits she receives. The mother deposes that the father does not pay any child support.  The mother further deposed in her affidavit filed 17 February 2015 that the father owned at the time of the property proceedings and may still own the property in which he resides, two properties in D Town, a speed boat, a number of motor vehicles, shares, livestock and gold bullion. Although the father submitted during the hearing that he is in receipt of the Newstart Allowance he did not otherwise respond to the mother’s evidence with respect to his financial position. He did however submit that the mother’s purpose in pursuing her application for costs in this case is because she is intent on forcing him to sell his home. It is clear on that basis that at the very least he owns the property in C Town in which he still lives.  I am satisfied that the mother’s financial circumstances would add support to the Court making an order for costs in all of the circumstances of this case and that there is nothing about the father’s financial circumstances which would militate against that order.  

9. I am satisfied that there are circumstances in this case that would justify the Court making an order for costs in the mother’s favour. I am also satisfied that the costs should include both the hearing on 1 April 2015 and the hearing on 6 May 2015. The father was on the basis of his own evidence aware of the hearing on 1 April 2015 and that the mother would be seeking an order for the costs of her application in a case filed 17 February 2015 seeking to enforce the order of Cronin J made 3 December 2015.

10. The mother seeks an order that the father pay costs on an indemnity basis in the sum of $10,953 inclusive of counsel’s fees in the sum of $3,600 for both the hearing on 1 April 2015 and the hearing on 6 May 2015. It was submitted by counsel for the mother that there are in this case exceptional circumstances which justify a departure from the usual rule, that an order for costs be on a party/party basis. Counsel for the father submitted that it is the father’s conduct as a litigant that is relevant in this case but that as Lindren J said in NMFM Property Pty Ltd v Citibank Ltd (No 11) (2001) 109 FCR 77 at paragraph 56 “… the knowledge that a party has, including knowledge of his or her past conduct, may be relevant to an assessment of his or her conduct as litigant.”

11. In the proceedings before Cronin J the mother sought costs on an indemnity basis. Although His Honour did not accede to that application he did in his reasons refer to the fact that he did not consider the case before him to be an unusual case in the context of Prantage. That being said the father would not be unfamiliar with the concept of an application for costs being made on an indemnity basis and in fact was put on notice by the mother’s solicitors in their letter of 13 January 2015 that the mother would seek costs on an indemnity basis. In the face of that knowledge the father made offers which in my view were not tenable, were clearly rejected by the mother and rejected offers reasonably put by the mother to resolve the matter. The father has chosen to disregard the orders until faced with an application for enforcement and then similarly failed to respond to an offer made by the mother which might have avoided the necessity for both the hearings on 1 April 2015 and 6 May 2015. I am satisfied that in all of the circumstances the mother should not be left with legal costs that are directly referable to the father’s failure to comply with the order made 3 December 2014. I am satisfied that in all of the circumstances I should make an order for costs on an indemnity basis in the sum of $10,953.

1. The father asked for 90 days to satisfy any order for costs the Court might make and as that was not opposed by the mother I propose to allow the father 90 days in which to pay the sum he is ordered to pay.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered 13 May 2015.

Associate:

Date:  13 May 2015