Rosington and Rosington (No. 2)
[2018] FamCA 425
•12 June 2018
FAMILY COURT OF AUSTRALIA
| ROSINGTON & ROSINGTON (NO. 2) | [2018] FamCA 425 |
| FAMILY LAW – CONTEMPT – Penalty – Where the wife was found to be in contempt of Court by the conduct described in each of seven allegations as to breaches of a financial injunction – Where neither party suggests that imprisonment is an appropriate penalty – Where the husband seeks that the wife should receive both a fine and enter into a bond for five years with a monetary term – Where the wife seeks that there be no penalty imposed – Consideration of case law and s 112AP of the Family Law Act 1975 (Cth) – Where the Court is satisfied that a fine of $50,000 is an appropriate penalty and will act as a deterrent in respect of the wife’s future compliance with court orders. FAMILY LAW – COSTS – Where the husband seeks that the wife pay his costs on an indemnity basis in the sum of $40,000 – Where the wife opposes this order – Consideration of s 117 of the Family Law Act 1975 (Cth) – Where the wife breached court orders on repeated occasions and ignored the husband’s enquiries as to the breaches – Where the wife has access to significant funds – Where the wife is ordered to pay the husband’s costs on an indemnity basis in the sum of $40,000. |
| Family Law Act 1975 (Cth) ss 112AD, 112AP, 117 |
| Bodilly & Hand (No. 2) [2012] FamCA 734 Cluny & Skinner (No 2) [2017] FamCA 547 Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 Hay v Hay (1998) FLC 92-819 Stephens v Stephens and Another (2010) 44 Fam LR 117 |
| APPLICANT: | Mr Rosington |
| RESPONDENT: | Ms Rosington |
| FILE NUMBER: | SYC | 6654 | of | 2015 |
| DATE DELIVERED: | 12 June 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Loughnan J |
| HEARING DATE: | 26 April 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Cummings SC |
| SOLICITOR FOR THE APPLICANT: | Barkus Doolan Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Hodgson |
| SOLICITOR FOR THE RESPONDENT: | Mills Oakley |
Orders
In respect of all of the contempt allegations found proved on 22 March 2018, the wife is hereby sentenced to a fine of $50,000 to be paid to the Registry Manager of the Sydney Registry of the Family Court of Australia within 21 days of the date of these Orders.
Forthwith upon the payment of the fine specified in Order 1 the wife is released in relation to the charges of which she was informed on 2 February 2018.
The wife pay the husband’s costs arising from the contempt application filed 21 September 2017 on an indemnity basis and assessed at $40,000 within 21 days of the date of these Orders or at such other time as the parties might agree upon in writing.
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 Rosington & Rosington 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 SYDNEY |
FILE NUMBER: SYC6654 of 2015
| Mr Rosington |
Applicant
And
| Ms Rosington |
Respondent
REASONS FOR JUDGMENT
Introduction
On 22 March 2018, in proceedings between Mr Rosington (“the husband”) and Ms Rosington (“the wife”) the Court found that the wife was in contempt of Court by contravening orders made on 25 November 2015 as alleged in that she withdrew from her account with the T Bank being account number …00 BSB …, $222,521 on 1 September 2016 and $30,000 on each of 27 October 2016, 31 October 2016, 1 November 2016, 3 November 2016, 4 November 2016 and 7 November 2016.
The proceedings were then adjourned for the consideration of questions of penalty and costs and 26 April 2018 was fixed for that purpose.
Each of the parties conceded that penalty is a matter for the Court. Neither party suggested that imprisonment is an appropriate penalty. It is submitted on behalf of the husband that the Court should fine the wife at least $100,000 and require her to enter into a bond for five years with a monetary term. The husband seeks that the wife pay his costs of the proceedings on an indemnity basis in the sum of $40,000.
It is submitted on behalf of the wife that this would be an appropriate case for the wife to be released without penalty. The wife opposes the costs order sought on behalf of the husband and in any event says that if there is to be a costs order it should be made on a party and party basis.
Background facts
I refer to the reasons for judgment published on 22 March 2018 in respect of the findings of contempt in these proceedings and will not repeat the background facts set out in those reasons.
In respect of the penalty hearing, the parties relied on further evidence as follows:
Husband’s documents:
·Application in a Case filed 13 April 2018; and
·husband’s affidavit sworn and filed 13 April 2018.
Wife’s documents:
·wife’s affidavit filed 13 April 2018;
·affidavit of Ms U (psychologist) sworn and filed 24 April 2018; and
·character references from Ms V and Mr W.
In addition, the parties’ counsel referred to other documents filed in the substantive proceedings between the parties.
Credit
There were problems with the wife’s evidence. Despite filing an affidavit in April 2018 there was no mention of any issues about her income in that affidavit. On 26 April 2018 the wife gave oral evidence by leave granted over the objections of the husband’s counsel, to the effect that all of the income from her business had ceased. No prior notice had been given to the husband about any changes to the wife’s financial circumstances. In her oral evidence she initially gave the impression that all three clients of D Pty Ltd cancelled their contracts on or about 11 April 2018. It then transpired that one customer was the source of 99 per cent of the income of the business and that it had cancelled its contract in February 2018 and not in April.
Initially the wife sought to explain why prior notice about the loss of all of the income of her business had not been given to the husband by saying that she had received no written confirmation of the cancellation of contracts. A few minutes later the wife said that she had received a letter from the major customer but she could not explain why the letter had not been revealed to the husband or his solicitors. As was observed by learned senior counsel for the husband, the wife’s conduct was unfair to the husband and left him with no ability to test the wife’s evidence.
The husband was briefly cross-examined but his evidence was not successfully challenged.
The Law
The legislation
The relevant legislation about contempt proceedings is found in s 112AP of the Family Law Act 1975 (Cth) (“the Act”) as follows:
(1)Subject to subsection (1A), this section applies to a contempt of a court that:
(a)does not constitute a contravention of an order under this Act; or
(b)constitutes a contravention of an order under this Act and involves a flagrant challenge to the authority of the court.
(1A)This section does not apply to a contempt that constitutes a contravention of a maintenance order if the order has been complied with before the matter of the contravention comes before the court.
(2)In spite of any other law, a court having jurisdiction under this Act may punish a person for contempt of that court.
(3)The applicable Rules of Court may provide for practice and procedure as to charging with contempt and the hearing of the charge.
(4)Where a natural person is in contempt, the court may punish the contempt by committal to prison or fine or both.
(5)Where a corporation is in contempt, the court may punish the contempt by sequestration or fine or both.
(6)The court may make an order for:
(a)punishment on terms;
(b)suspension of punishment; or
(c)the giving of security for good behaviour.
(7)Where a person is committed to prison for a term for contempt, the court may order the person’s discharge before the expiry of that term.
(8)To avoid doubt, the serving by a person of a period of imprisonment as a result of a contempt of a court arising out of a failure by the person to make a payment in respect of the maintenance of another person does not affect the first‑mentioned person’s liability to make the payment.
(Emphasis added)
In Abduramanoski & Abduramanoska (2005) FLC 93-215 (“Abduramanoski”) the Full Court stated at 79,582:
47. In Rutherford v Marshal of the Family Court of Australia (1999) FLC 92-866 at 86,241, the Full Court described s 112AP, then Part of Division 3 of Part XIIIA after the 1988 amendments, “a complete code for dealing with contempts of the Court”. The Full Court affirmed the decision in Schwarzkopff (supra), noting that contempt under the Act does not constitute “an offence against any laws of the Commonwealth”. The Court accepted a submission that s 112AP, as it then was, constituted a self contained code, and general sentencing legislation, whether State or Federal, had no application.
The Submissions
It was submitted on behalf of the husband that the Court should fine the wife and that she should also be required to enter into a bond to be of good behaviour for five years with a monetary term. As to the quantum of the fine it was submitted that the quantum should be at least $100,000.
Counsel for the husband submitted that the parties have substantial assets at their disposal and that the wife’s recent evidence in relation to her financial situation erodes her purported contrition. It was further submitted that there is a need for a significant penalty imposed against the wife to deter the wife from not complying with court orders in the future as parenting proceedings are still on foot. It was argued that a small fine of less than $100,000 would not be meaningful in this case.
In relation to costs, it was submitted that the husband has incurred substantial expense in the contempt proceedings and indemnity costs should be awarded. Counsel directed the Court to a number of case authorities, these will be discussed below.
It was submitted on behalf of the wife that this would be an appropriate case for the wife to be released without penalty and that in any event the Court cannot both fine the wife and require her to enter into a bond.
Counsel for the wife conceded that the wife does have the ability to pay the fine and costs sought by the husband however it was submitted that the wife should not have to pay these costs. It was submitted that the wife has apologised, she is contrite and that it was not the intention of the wife to diminish the asset pool. It was further submitted that the wife is of good character, she has never been convicted of a criminal offence and she has never contravened parenting orders.
In relation to costs, it was submitted on behalf of the wife that the wife should not be required to pay the husband’s costs as the husband had elected to bring a member of senior counsel and his solicitor on the day of the sentencing hearing in circumstances where he is not seeking rectification and the property proceedings have been resolved.
Discussion
In the reasons for judgment published on 22 March 2018 I set out the following:
The purpose of contempt proceedings
39.I note that the contempt proceedings have been prosecuted notwithstanding that the substantive property settlement proceedings out of which they arose, have been concluded. That raises the question of the purpose of contempt proceedings. In Myers & Myers (2006) FLC 93-291 and Abduramanoski the Full Court affirmed the position established in Tate & Tate (No. 3)(2003) FLC 93-138 where it was discussed at 78,299:
57. Normally, the purpose of contempt proceedings against a person for breach of such an order is to coerce them to comply with it. However, It is quite clear that another purpose of bringing proceedings for contempt against a person who has breached a non-monetary order of the court may be that of punishment. The purposes of imposing punishment would appear to reflect the need for individual and general deterrence and retribution for the party’s failure to comply with the order. Retribution is called for because it is essential to the proper working of the court system that court orders are obeyed. If they are defied or ignored, the whole system of dispute resolution by litigation breaks down. While there are other means of dispute resolution available, in the final analysis a citizen has the right to approach a court to determine a dispute and the court has a duty to do so.
40.In Abduramanoski the Full Court considered that the primary aim of contempt proceedings can be punitive at 79,583:
64. In this case, the primary aim of the proceedings is clearly punitive and it is clear from the authorities that this is an appropriate aim, at least in circumstances where there has been a flagrant defiance of court orders…
41.The Full Court in Kendling also considered further public policy implications of contempt proceedings. This was within the context of a case where the husband and wife had reached an agreement and the wife no longer pressed the contempt proceedings. It was stated at page 82,872:
In Louis Vuitton Malletier SA v Design Elegance Pty Ltd and Another (2006) 225 ALR 541, Merkel J….referred to the case of Attorney-General v Times Newspapers Ltd [1974] AC 273 at 307 in which Lord Diplock said there was “an element of public policy in punishing civil contempt, since the administration of justice would be undermined if the order of any court of law could be disregarded with impunity…” …
We perceive that avoiding the undermining of the administration of justice by condoning breaches of court’s orders, and the limit to the public interest which thus arises by virtue of the inter parties nature of the breaches needs to be balanced in the circumstances of the present appeal.
42.It was further stated at page 82,876:
We perceive that the public policy issues to which we have referred preclude us from concluding that determining the present appeal does not lack “utility” or involve this Court in providing “advisory opinions”.
In Cluny & Skinner (No 2) [2017] FamCA 547 (“Cluny & Skinner (No 2)”) Kent J summarised the sentencing principles as follows:
10.It is evident from the authorities that the following general principles or guidelines concerning the application of these provisions and the imposition of sanctions for contempt are applicable:
a.State and federal sentencing laws have no application (Abduramanoski and Abduramanoska [2005] FamCA 88; (2005) FLC 93-215 (“Abduramanski”)); s 112AP of the Act provides the code for dealing with sentencing under the Act (Myers and Myers [2006] FamCA 1182; (2006) FLC 93-291 (“Myers”));
b.Section 112AP affords a sentencing judge a wide discretion which is to be exercised transparently and in light of the individual facts and circumstances of the case (Abduramanski (supra) at [80]); (Australian Securities & Investments Commission v Michalik[2004] NSWSC 1259 (“ASIC v Michalik”) cited with approval in Myers (supra));
c.“...review of the punishments in other cases is of limited assistance, as each case really depends upon the Court’s assessment of the relevant facts”. (ASIC v Michalik (supra) at [49] cited with approval in Myers at [34]);
d.“This is particularly so where, as in the case of s 112AP of the Act, there is no provision for a maximum term of imprisonment. The difficulty which confronts courts exercising criminal jurisdiction in sentencing for offences for which maximum penalties are provided is thus even greater for courts exercising the sentencing powers conferred by s 112AP of the Act”. (Kendling and Anor & Kendling (Contempt) (2008) FLC 93-38f4 (“Kendling”));
e.Normally, the purpose of contempt proceedings is to coerce a person in breach of an order to comply with it. Another purpose may be punishment. The purpose of imposing punishment reflects the need for individual and general deterrence and retribution for the party’s failure to comply with the order. Retribution is called for because it is essential to the proper working of the court system that court orders are obeyed (Kendling (supra)). In Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd[1986] HCA 46; (1986) 161 CLR 98 at 107 Gibbs CJ, Mason, Wilson & Deane JA stated the purpose of proceedings for civil contempt of an injunction was as follows:
...Although the primary purpose in committing a defendant who disobeys an injunction is to enforce the injunction for the benefit of the plaintiff, another purpose is to protect the effective administration of justice by demonstrating that the court’s orders will be enforced...
As to comparable sentences, I was referred on behalf of the husband to a number of decisions. Only two involved the imposition of a fine and of those, in only one did the contempt relate to a breach of a money order. The first was a Full Court decision of Hay v Hay (1998) FLC 92-819 (“Hay”). The husband was restrained by injunction from inter alia encumbering a property. In breach of the injunction the husband obtained an advance of $400,000 and was found to be in contempt of Court. On appeal, the contempt finding was upheld but a six month sentence of imprisonment was set aside and upon a re-exercise of discretion, the Full Court imposed a fine of $15,000 payable within three months. The Full Court held at 85,315:
63. In the present case while his Honour reached the conclusion in his judgment of 6 March 1998 that the conduct of the husband in breaching the order involved a flagrant challenge to the authority of the court (Appeal Book p. 28) and that the breach was “wilful” and “substantial” (Appeal Book p. 29), and again in his judgment of 15 April 1998 that the breach of the order which had occurred involved “a flagrant challenge to the authority of the court”, nowhere did he make the actual finding that the husband had deliberately intended to breach the order. Indeed on the material before us there would seem to be no evidence on the basis of which his Honour could have made such a finding.
64. In the absence of such finding we consider that it was an error to impose a term of imprisonment upon the husband, particularly given his Honour’s other findings “that the ultimate effect of the breach did not result in significant detriment to the wife” (Appeal Book p. 14); that there was “no need to ensure future compliance with the order which had been breached” (Appeal Book p. 15); and that “the breach of the order did not involve violence towards or interference with any other party” (Appeal Book p. 15).
65. In our view the appropriate penalty given these findings was the imposition of a fine. Accordingly we propose to set aside his Honour’s order imposing the term of imprisonment, and in the exercise of our own discretion impose a fine of $15,000 to be paid to the Registrar of the Family Court of Western Australia within three months of the date of our order.
There are some similarities between the facts in Hay and in these proceedings. Similarities include the amount drawn (albeit that because of inflation the sum in Hay was of significantly greater value than the amount drawn by the wife before me), the fact that the drawing caused no detriment to the other party and the breach involved no violence towards or interference with the other party. However, in the proceedings before me there are ongoing parenting proceedings and therefore there will likely be orders requiring compliance in the future. There was a reference during submissions to the impact of inflation on the value of the fine imposed in Hay in 1998. I take judicial notice that according to the Australian Bureau of Statistics website $15,000 in June 1998 was worth $24,948.07 in December 2017.
The second decision referred to was Cluny & Skinner(No 2) in which Kent J determined proceedings for contempt and contravention. In relation to a finding of contempt the husband was fined $30,000. The husband was found to have acted wilfully, deliberately and intentionally in breaching an injunction not to apply for or retain a replacement passport. In his reasons for judgment the trial judge canvassed a proposal that the husband be sentenced to imprisonment for the contempt. The trial judge considered that a fine was appropriate and the following matters were found to be relevant in relation to sentencing:
(a)the husband had already been prosecuted for an indictable offence in relation to his conduct in applying for a replacement passport albeit that the trial judge observed that the punishment in the criminal proceedings seemed exceedingly modest;
(b)despite the intention of the order breached being to address the husband as a flight risk, he travelled on the passport but did not use it to permanently depart from Australia;
(c)the trial judge found no evidence that the husband had used his time away from Australia to cause financial damage to the wife;
(d)the husband was denied his passport from the time it was belatedly surrendered by him in early 2015 until the contempt proceedings were determined in 2017;
(e)the trial judge found that the contempt did not involve any element of violence, or threats to the personal safety of any person, or any other form of interference with the personal rights of others; and
(f)although the husband defended the contempt proceedings he did so without raising any dispute as to the facts and the trial judge found that a subsequent apology was indicative of real remorse on his part.
Here, the proceedings in the context of which the contemptuous behaviour occurred have been concluded by agreement. The conduct in question did not result in any damage to the husband’s property settlement entitlements or to the Court’s capacity to impose a just and equitable settlement. Albeit that she came to the realisation late in the piece, I accept that the wife is contrite in respect of her conduct and not just because she was caught out. There was no aggravating circumstance in the way in which the withdrawals were made. Within the general ambit of the examples to which I was taken, in my opinion an appropriate fine in the proceedings before me would be one in the sum of $50,000. There were seven charges of contempt found proved. I do not propose to make separate sentences in respect of each finding. The penalty in relation to all seven charges will be one fine of $50,000.
The husband seeks that in addition to paying a fine that the wife be required to enter into a bond for a term of five years the conditions of which would include that upon being found to have breached the bond she would forfeit to the Commonwealth a sum of money. The suggested sum was $500,000.
It was submitted on behalf of the wife that it is beyond the Court’s power to both fine a person and to require that the person enter into a bond. It was submitted on behalf of the husband that the Court had the power to impose both orders. No authority was cited by either counsel that would assist in relation to either contention. There is no doubt that the Court would have power to require a person to enter into a bond as a condition for a stay or suspension of some aspect of a fine or sentence of imprisonment imposed under s 112AP. Beyond that observation I have not been able to satisfy myself one way or the other in relation to the issue raised on behalf of the wife but in the circumstances of this case in my view it is not necessary to determine that issue.
In my view it is sufficient penalty that the wife be fined $50,000. I am satisfied that the fine is an appropriate punishment for the wife’s contempt and will act as a deterrent in respect of her future compliance with court orders. She should be aware, and in any event will no doubt be advised, that if she again comes before the Court and is found to be in contempt or to have contravened court orders without reasonable excuse pursuant to the provisions of s 112AD or Division 13A of Part VII of the Act, the fact of the fine imposed in these proceedings will be relevant to any consequential order made in those proceedings.
Conclusion
The wife has been found to have committed contempt of court as alleged in the seven charges brought against her. In my view an appropriate penalty is that the wife be fined $50,000. The fine is payable to the Commonwealth and must be paid to the Registry Manager of the Sydney Registry of this Court within 21 days from today’s date. Forthwith upon the payment of that fine the wife is released in relation to the charges of which she was informed on 2 February 2018.
Costs
The husband seeks that the wife pay his costs of the proceedings on an indemnity basis in the sum of $40,000. It was submitted that the parties’ property settlement has left the wife with significant funds. It was submitted that the background facts justify an award on a more generous basis than the usual party and party basis.
The wife opposes the costs order sought on behalf of the husband and in any event says that if there is to be a costs order it should be made on a party and party basis.
Costs applications are decided by reference to s 117 of the Act and by certain other specific costs provisions. In the context of this case s 117 relevantly provides:
(1) Subject to subsection (2) … each party to proceedings under this Act shall bear his or her own costs.
(2) If …the court is of opinion that there are circumstances that justify it in 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.
(2A) In considering what order (if any) should be made under subsection (2), 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) 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.
The section 117(2A) considerations
The property settlement arrived at by agreement between the parties on 16 January 2018 resulted in a division of a net pool of assets with a value of the order of $13 million. I was told, without complaint, that the division favoured the husband by a few percentage points. I gather that much if not all of the wife’s settlement came in the form of her interest in the company, D Pty Ltd. It was the unchallenged evidence of the husband that the balance sheet of D Pty Ltd as at November 2017 showed cash on hand of $6,819,922.55. I gather that at all relevant recent times D Pty Ltd is run by the wife and has been the vehicle for her income. As is referred to earlier in these reasons, on 26 April 2018 and for the first time, the wife gave evidence to the effect that all of the income from D Pty Ltd had ceased. Through no fault of his own and entirely because of the conduct of the wife, the husband was unable to test, verify or challenge that evidence.
The wife has offered no evidence about her weekly liabilities or about her other assets, her debts or any financial resources. When the husband was sworn in before cross-examination, he said that he is currently engaged in home duties. I have no other evidence about the financial circumstances of the parties and therefore no findings are possible about their income and outgoings, assets, liabilities or financial resources.
In respect of the wife’s financial circumstances I know that orders were made pursuant to which she would receive assets worth more than 40 per cent of $13 million. I also know that she will have a debt of $50,000 by way of a fine. In those circumstances there is nothing that would argue against an award of costs of the order of $40,000.
I was not told that either of the parties was in receipt of a grant of legal aid.
As to the conduct of the proceedings by the parties, save for the failure of the wife to include in her written evidence the details of the loss of all of the clients of her business, I was not taken to any circumstance related to the conduct of the proceedings. I take it from the submissions made in the wife’s case that she is critical of the husband for bringing these proceedings. There is no justification for that complaint on the known facts. I have found that the wife’s conduct was a flagrant challenge to the authority of the Court. Importantly, the wife ignored several letters from the husband’s solicitors before the husband filed the relevant application in September 2017. There was email correspondence from the solicitors for the husband to the solicitors for the wife in relation to drawings from the wife’s account. The emails were sent on 21 March 2017, 28 March 2017, 29 March 2017, 10 April 2017 and 9 May 2017. It is common ground that there was no adequate reply to any of those emails. Those emails started by drawing the wife’s attention to the fact that the husband was aware that the wife had drawn on the account in question and ended with an allegation in not dissimilar terms to that which was ultimately established.
The proceedings were necessitated by the failure of the wife to comply with court orders.
The wife was wholly unsuccessful in the proceedings.
I was provided with no evidence of settlement discussions in writing.
These are not the typical family law proceedings. In the normal course of parenting or property settlement proceedings, both parties are applicants in the sense that they both seek court orders. Here the husband was obliged to come to Court and incur costs because the wife contravened court orders. On the husband’s case, while the property settlement proceedings were on foot, virtually all of the family assets were under the wife’s control. The parties engaged in interlocutory proceedings to ensure that the subject matter of the proceedings was preserved and the wife acted in breach of the resultant order. Because of their nature, costs orders are often made in contravention and contempt proceedings. If the proceedings are successful there is often an order in favour of the applicant. If they fail, there is often an order in favour of the respondent.
Here the wife was wholly unsuccessful, the proceedings were necessitated by the wife’s breach of court orders and she has the wherewithal to meet a proper order for costs. The husband should be awarded his costs.
The husband’s application is for costs on an indemnity basis. As I understood the submissions made on behalf of the husband, in default he would seek his costs on a solicitor and own client basis. Costs are generally awarded on a party and party basis which provides a partial indemnity to the party who secures a costs order. Absent considerations such as the costs of a representative litigant such as a trustee, the authorities require that justification is given by the Court for awarding costs on any more generous basis than party and party costs. In Bodilly & Hand (No. 2) [2012] FamCA 734 I discussed the authorities in respect of the quantification of costs, including the decision of the Federal Court of Australia (Sheppard J) in Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 and the decision of the Full Court of this Court in Stephens v Stephens and Another (2010) 44 Fam LR 117 (Stephens) in the following terms:
220.…
I record that the Full Court in Stephens later turned to the question of indemnity costs as follows:
Indemnity Costs
72. The Family Court has jurisdiction to make orders for indemnity costs: McAlpin and McAlpin [1993] FamCA 71; (1993) FLC 92-411 per Full Court (Nicholson CJ and Maxwell J, Baker J dissenting); Kohan and Kohan (1993) FLC 92-340 per Full Court (Strauss, Lindenmayer and Bulley JJ); Munday v Bowman(1997) FLC 92-784 per Holden J; Yunghanns & Ors v Yunghanns & Ors and Yunghanns[2000] FamCA 681; (2000) FLC 93-029 per Full Court (Lindenmayer and Holden JJ, Mullane J dissenting) and Limousin v Limousin (Costs) [2007] FamCA 1178; (2007) 38 Fam LR 478 per Full Court (Kay, Coleman and Boland JJ).
73. An order for costs may be made on an indemnity basis, subject to a judicial determination capable of being made that there ought to be a departure from the usual basis that costs be payable on the party and party basis. For a discussion of the jurisdiction to order indemnity costs and its exercise see Colgate Palmolive Co and Another v Cussons Pty Ltd[1993] FCA 536; (1993) 118 ALR 248 per Sheppard J at 256-257 and NMFM Property Pty Ltd and Others v Citibank Ltd (No 2) (Court’s “NMFM” Judgment No 11) [2001] FCA 480; (2001) 109 FCR 77 per Lindgren J at [53] to [90].
221.In Colgate Palmolive Co and Another v Cussons Pty Ltd[1993] FCA 536; (1993) 46 FCR 225 Sheppard J reviewed the English and Australian authorities about costs generally and at paragraph 24 said:
24. It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:-
1. The problem arises in adversary litigation, i.e. litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg. a government agency or statutory authority.
2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this Court the provisions of Order 62, rules 12 and 19, and the Second Schedule to the Rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v. British Transport Commission and Handley JA in Cachia v. Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require.” Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, “The categories in which the discretion may be exercised are not closed”. Davies J expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
222.The approach to the quantification of costs is not the result of law made or developed under the Family Law Act, not even in this century nor in the last. In his book Taxation of Costs Between Parties,[13] A. G. Saddington discussed the process of the quantification of costs by taxing officers. He traced the development of the practice and law of awarding costs from the time in English courts when a person could first have a representative present his case. The author explained that every costs award is by way of indemnity and discussed the extent of the indemnity that had been approved. The author discussed various authorities in relation to the assessment of costs on different bases and gives examples of things that have been allowed and not allowed. In relation to an assessment of party and party costs he said:
The costs to be allowed on this class of taxation are all that are necessary to enable the litigation to be properly conducted, all charges incurred merely for conducting litigation more conveniently are considered luxuries, for which the party who incurred them must pay.
223.As to an assessment of party and party costs on a solicitor and client basis he said:[14]
It appears, therefore, that on a taxation between parties on a solicitor and client basis, the unsuccessful party has to pay all the costs incurred by his opponent excepting in respect of (1) costs and expenses incurred prior to the institution of the action; (2) journeys and expenses of which the party liable could have no knowledge, and which would not ordinarily be performed or incurred; (3) the employment of more counsel, or the payment to them of larger fees than the circumstances of the case warrant, including the giving of special retainers.
224.The examples may not still be apposite in the context of our world of costs agreements, pre-action procedures and video conferencing, but they give an indication of the margin that such a basis could have over a party and party award.
In my view there is an argument in these proceedings for the award of the husband’s costs being assessed on a more generous basis than party and party costs. As I have referred to above, there are aggravating factors in that the wife breached the orders on repeated occasions and that she then ignored repeated attempts made on behalf of the husband to have her explain, if not remedy, the breaches. In my view, the husband should not be significantly out of pocket as a result of these proceedings. I have found that the wife has access to significant funds.
As to the quantum of the claimed costs on 18 September 2015 the husband entered into a costs agreement with his solicitors.[1] Pursuant to that agreement the husband agreed to terms which included the payment of an hourly fee (inclusive of GST) of $660 for the work of a partner of the firm, $495 per hour for the work of a senior associate of the firm, and so on. There is provision among other terms for variations in the scale of fees charged under the agreement provided those variations do not occur more frequently than once each calendar year. It is the husband’s evidence that he has incurred costs under the agreement totalling $12,000 made up of $6,000 for each of the hearing dates in these proceedings being 2 February 2018 and 26 April 2018.[2]
[1] Exhibit 1.
[2] Husband’s affidavit filed 13 April 2018 at paragraph 11.
On a date not identified on the document the husband signed his name on a letter from Peter Cummings SC dated 5 October 2017 and thereby signified his consent to the terms of that senior counsel’s retainer. Pursuant to that agreement the husband agreed to terms which included the payment of a daily fee (inclusive of GST) of $8,800 and a rate for chamber work (inclusive of GST) of $935 per hour (inclusive of GST). On 5 February 2018 an invoice was issued to the husband’s solicitors by his counsel in respect of the preparation and attendance for the hearing on 2 February 2018 in the sum of $14,492.50. It is the husband’s evidence that he will incur further fees under the retainer of $14,000 in respect of the appearance on 26 April 2018.[3]
[3] Husband’s affidavit filed 13 April 2018 at paragraph 10.
There was no challenge to the husband’s evidence in respect of his costs agreements with his lawyers, the invoices issued or the estimates made in respect of the hearing of 26 April 2018. By his Application in a Case filed 13 April 2018 the husband seeks that his costs arising from these proceedings be assessed in the sum of $40,000 and that the wife pay these costs on an indemnity basis. There was no submission on behalf of the wife that the costs be assessed by taxing officer or fixed in some other way. Having had the involvement I have had in these proceedings I am not confident that the parties could efficiently manage the processes of either reaching agreement about the quantification of the husband’s costs or engaging in the taxation process. Although on the face of the evidence the figure claimed is something less than the costs that the husband has incurred in these proceedings and therefore falls short of a full indemnity, I will assess his costs at the figure he proposes, being $40,000.
There were no submissions in relation to the time within which any costs should be paid. I will provide for the wife to pay those costs within 21 days or such other time as the parties might agree upon in writing
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 12 June 2018.
Associate:
Date: 12 June 2018
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