Samuels and Shaw and Ors (No. 2)

[2007] FamCA 1722

FAMILY COURT OF AUSTRALIA

SAMUELS & SHAW AND ORS (NO. 2) [2007] FamCA 1722

COSTS – Oral application for costs on an indemnity basis –No jurisdiction in Family Court application to deal with – Applicant on notice that Court had no jurisdiction – Costs on an indemnity basis granted

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

Penfold v Penfold (1980) 144 CLR 311
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233

APPLICANT: Ms Samuels

FIRST RESPONDENT:	Mr Shaw
SECOND RESPONDENT:	Mr P
THIRD RESPONDENT:	L Pty Ltd
FOURTH RESPONDENT:	D Pty Ltd
FIFTH RESPONDENT:	Ms E
SIXTH RESPONDENT:	Mr G
SEVENTH RESPONDENT:	Mr A
EIGHTH RESPONDENT:	Ms J
NINTH RESPONDENT:	Ms S
TENTH RESPONDENT:	Ms T

FILE NUMBER: EA 5191 of 1993

DATE DELIVERED: 25 January 2007

PLACE DELIVERED: Sydney

JUDGMENT OF: Boland J

HEARING DATE: 25 January 2007

REPRESENTATION

THE APPLICANT:	Appeared on her own behalf
COUNSEL FOR MS GW & MR AH:	Ms Dawson
SOLICITOR FOR MS GW & MR AH	Mallesons Stephen Jaques

Orders

IT IS ORDERED BY CONSENT:

1. That the Application in a Case filed 25 January 2007 be adjourned to 2.15 pm on 1 March 2007 for mention only.

2. The wife file and serve any amended Application and Affidavit in support by 4.00 pm 15 February 2007.

3. Ms GW and Mr AH to file and serve any amended Response and Affidavit in support by 4.00 pm 22 February 2007.

THE COURT ORDERS THAT:

1. That the wife pay the costs of Ms GW and Mr AH of today thrown away on an indemnity basis.

IT IS NOTED that publication of this judgment under the pseudonym Samuels & Shaw and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: EA 5191  of 1993

Ms Samuels

Applicant

And

Mr Shaw

First Respondent

Mr P

Second Respondent

L Pty Ltd

Third Respondent

D Pty Ltd

Fourth Respondent

Ms E

Fifth Respondent

Mr G

Sixth Respondent

Mr A

Seventh Respondent

Ms J

Eighth Respondent

Ms S

Ninth Respondent

Ms T

Tenth Respondent

EX TEMPORE REASONS FOR JUDGMENT

Introduction

1. Before me is an oral application for costs which has been made on behalf of Ms GW and Mr AH who are represented by their counsel, Ms Dawson.  Ms Dawson seeks an order for indemnity costs in respect of costs thrown away today by the necessity for an adjournment of the proceedings. 

2. Mrs Samuels who, for the purposes of this judgment, I will refer to as “the wife” does not oppose, in fact would consent to an order for costs but will not consent to an order on an indemnity basis.  There is no doubt that this Court has the power to award costs and I refer to the decision of the High Court in Penfold v Penfold (1980) 144 CLR 311.

3. The power to award costs is set out in s 117 of the Family Law Act 1975 (Cth) (“the Act”). Section 117(2) provides if there are circumstances the Court can depart from the general rule that each party pay their own costs of and incidental to the proceedings. Section 117(2A) sets out the matters which the Court should consider in determining an application for costs.

4. Those matters firstly relate to the financial circumstances to each of the parties to the proceedings.  I have no evidence before me of the financial circumstances of Ms GW or Mr AH, but I accept that they are solicitors in practice and therefore likely to have reasonable financial circumstances.  The wife in these proceedings is in receipt of social security benefits and I have previously found her financial circumstances somewhat difficult.  However, Mrs Samuels asserts in these proceedings that her bankruptcy should be annulled on the basis that she would have sufficient funds from s 79 proceedings to pay her creditors, and so, on her own evidence, she submits she does have a financial entitlement. 

5. Neither party is in receipt of legal aid so that criteria in sub-paragraph (b) of s 117 is not relevant.

6. I must have regard to the conduct of the parties relating to the proceedings.  The wife submits that because of a consent order which was entered into between herself and the respondents to the s 79 proceedings, she is precluded from filing applications without first referring the nature of the proposed application to me.  The purpose of that consent order was to minimise applications before the Court so that the parties could focus their attention on the real issue in the proceedings; namely the property settlement between the husband and wife and to ensure that legal costs are not unnecessarily thrown away.  It was an order to which the wife consented.  I do not find that the wife’s conduct in listing an application before me is, per se, a relevant factor in relation to costs.

7. The next matter is whether or not proceedings were necessitated by the failure of the party to comply with previous orders of the Court.  That fact is not relevant. 

8. The next factor I must have regard is whether any party to the proceedings has been wholly unsuccessful in the proceedings.  So far as this factor is concerned Ms Dawson points out that the affidavit filed by the respondent in support of the response in this application refers to a letter of 18 January 2007 from Mallesons Stephen Jaques addressed to the wife.  That letter reads, inter-alia:

   We refer to your application in a case in the above proceedings which is listed before the Family Court on 25 January 2007. 

   Your application seeks, among other things, the Court's leave (pursuant to sections 35 and 153B of the Bankruptcy Act) for you to file a Form 27 application for an annulment of your bankruptcy in the Family Court and for the Family Court to fix a date for the hearing of that application. 

   Absent the circumstances set out in sections 35 and 35A of the Bankruptcy Act, the Family Court has no jurisdiction in bankruptcy.  None of those circumstances apply and accordingly, the Family Court has no jurisdiction to grant you leave to file an application for an annulment or to hear any such application. 

   We further note that the grounds upon which you apparently rely to seek an annulment of your bankruptcy (as outlined in your affidavit sworn 11  December 2007) are in summary that:

   (a)       you are not insolvent;

   (b)       your solvency cannot be determined until the determination                 of your section 79 proceedings in the Family Court;

   (c)our clients, the petitioning creditors, should have applied to be joined to the Family Court proceedings rather than issuing bankruptcy proceedings in the Federal Magistrates Court. 

   The above issues have already been agitated and determined against you in the bankruptcy proceedings in the Federal Magistrates Court (No. […]), your appeal from the sequestration order made against your estate in the Federal Court (No. […]) and, in respect of the joinder of our clients to the Family Court proceedings, by the Family Court.  In such circumstances and where there is no evidence that your bankruptcy ought be annulled on any other basis, your proposed application for an annulment constitutes, in our view, an abuse of the Court’s processes and will not succeed. 

   We therefore invite you to discontinue your application in a case as against our clients and to abandon the orders sought in paragraphs 2 and 3 of that application.  In the event that you do not do so, we reserve our clients’ rights to apply to the Court to have your application as against our clients dismissed and to rely on this letter in support of that application and in relation to the question of costs.

9. It appears to me from that letter that the wife was clearly put on notice as to the defects in her proposed application and the lack of jurisdiction in the Court to deal with the application.  That is a significant matter to be taken into account and one which, in the exercise of my discretion, I have regard to in respect of an order for costs. 

10. Subparagraph (f) refers to any other offer in writing which is irrelevant.

11. Subparagraph (g) refers to any other matters the Court considers relevant.  So far as any other matters are concerned I find that the principal matter is that the application as framed was without jurisdiction, the trustee in bankruptcy not having been joined as a party to the proceedings in this Court.

12. The question whether or not costs should be on an indemnity basis has been the subject of decided authority in a number of cases in both State Courts and in this Court. 

13. The power to make an indemnity costs order in an appropriate case is recognised (see Yunghanns & Ors v Yunghanns (2000) FLC 93-029 at paragraph 29). The principles which apply to the making of an indemnity costs order are not limited to cases where fraud or collateral purpose is established against one party. What is required is that some “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”: per Shephered J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233. Generally the departure from the ordinary rules relating to costs will require exceptional circumstances (see Munday and Bowman (1997-1998) 22 Fam LR 321).

14. It appears to me that this is an appropriate case to award indemnity costs.  The application as presently brought to the Court is one where there is no jurisdiction.  The wife was clearly put on notice of that fact by the solicitors, Ms GW and Mr AH.  Notwithstanding that notice, the application was sought to be filed in Court today and now an adjournment of the application is sought in order to amend it to cure the jurisdictional difficulty.  Ms Dawson is instructed to consent to an adjournment, and this fact alone affords the wife the opportunity to remedy what would otherwise be a completely fatal defect to the application.

15. In all of these circumstances I am satisfied there are extraordinary circumstances and it is an appropriate matter that the costs of Ms GW and Mr AH, who are not parties to the litigation in this Court, should be on an indemnity basis and I propose to so order.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Boland

Associate: 

Date:              25 January 2007