SEARLE & PENCIOUS

[2020] FamCA 33

FAMILY COURT OF AUSTRALIA

SEARLE & PENCIOUS [2020] FamCA 33

FAMILY LAW – COSTS – indemnity costs – where costs are awarded on an indemnity basis in favour of the wife – where the indemnity costs are of a fixed amount – where the costs follow orders being made declaring the husband a vexatious litigant – where the wife’s vexatious litigant application came at a significant cost but was necessary to end the litigation – where the wife was wholly successful – where the way in which the husband conducted the proceedings is clear justification for departing from the general principles in relation to costs.

Family Law Act 1975 (Cth) ss 117, 102QB
Family Law Rules 2004 (Cth_) r 19.08

Brown & Brown (1998) FLC 92-822; 23 Fam LR 349
Colgate Palmolive Co v Cussens Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Kohan and Kohan (1993) FLC 92-340; 16 Fam LR 245
Munday v Bowman (1997) FLC 92-784; 22 Fam LR 321
Official Trustee for Bankruptcy v Gargan (No 2) [2009] FCA 398
Stephens & Stephens (2010) 44 Fam LR 117

APPLICANT: Ms Searle

RESPONDENT: Mr Pencious

FILE NUMBER: MLC 11069 of 2008

DATE DELIVERED: 24 January 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: Written Submissions in Chambers

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wood

SOLICITOR FOR THE APPLICANT: Tasiopoulos Lambros & Co

THE RESPONDENT: In person

Orders

1. The husband pay the wife’s costs of and incidental to the Application in a Case filed 24 April 2015 on an indemnity basis fixed in the sum of $64,977.32 to be paid from the funds held in trust by Tasiopoulos Lambros & Co and AT Lawyers.

2. The application for costs incidental to the wife’s Application filed 24 April 2015 be otherwise dismissed.

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 Searle & Pencious 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 MELBOURNE

FILE NUMBER: MLC 11069 of 2008

Ms Searle

Applicant

And

Mr Pencious

Respondent

REASONS FOR JUDGMENT

1. On 7 March 2016 I made orders pursuant to s102QB of the Family Law Act 1975 (Cth) (“the Act”) prohibiting the husband from instituting proceedings without first obtaining leave to do so. On that date I also made orders for the filing of written submissions in support of any application for costs.

2. The wife seeks an order that the husband pay her costs of and incidental to her application for a vexatious proceedings order and relies on her submissions filed 24 March 2016. The husband filed his submissions in reply to the wife’s application on 1 April 2016.

3. Although the parties did file submissions in accordance with my directions the husband also filed a Notice of Appeal. That appeal was dealt with by the Full Court and judgement was delivered on 11 October 2017.  The Full Court of the Family Court of Australia (“the Full Court”) found that there was no merit in the husband’s appeal save and except with respect to the form of the order which was varied by the Full Court.

4. The file was not returned to chambers for determination of the wife’s application for costs for some time and that application remains outstanding.

5. The case co-ordinator wrote to the wife with respect to the quantum of the costs claimed by the wife and in particular, the wife’s claim being for costs on an indemnity basis with respect to the requirement pursuant to Rule 19.08(3) of the Family Law Rules 2004 (Cth) (“the Rules”), that the court be informed if the party claiming costs is bound by a costs agreement and if so the terms of that agreement. The husband was copied in to that email. In response the wife forwarded a copy of a bill of costs she had received in relation to the vexatious proceedings order and a further bill of costs in relation to the husband’s subpoena. The husband was not copied in to the email from the wife to the case coordinator, however he did respond to the case co-ordinators email and although he objected to the wife filing any further submissions, which she did not do, he enclosed further submissions with respect to the wife’s application for costs (the “husband’s second submissions”). The wife was copied in to that email and neither objected to those further submissions nor replied to them. Although the orders I made did not provide for further submissions, I have for completeness considered the husband’s further submissions.

6. Although the wife was made aware of the requirements of Rule 19.08(3), she has not provided that information. The file having been outstanding for a significant period and the wife having been given the opportunity to satisfy the requirements of the Rules, I propose to determine the matter on the basis of the party’s respective written submissions.

7. The wife seeks an order that the husband pay her costs of and incidental to her application for a vexatious proceedings order on an indemnity basis and that the amount be specified as she submits that an assessment process would be prolonged and that the husband might, based upon the history of the matter, use the assessment process for ulterior motives. The wife relied upon as an example the indemnity costs order made by Cronin J on 5 April 2012, those costs to be as assessed and that process being ongoing as at the date she filed her cost submissions, almost four years later.

Legal Principles

1. The general rule in proceedings in this Court is that parties each bear their own costs (s 117(1) of the Act). It is a matter of the court’s discretion, and that discretion is broad, but there must be circumstances that would justify the court departing from that rule (ss 117(2) of the Act).

2. In determining if the court should make an order for costs, it must have regard to the following matters pursuant to ss 117(2A) of the Act:

   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.

3. The Court must consider all of the matters in s 117(2A), albeit some of those considerations may be of more or less relevance, however as Kay J said in Brown & Brown (1998) FLC 92-822 not one of the matters in ss 117(2A) takes precedence over another and one factor may be enough.

Discussion

1. In support of her application for costs the wife relied in particular upon the following matters:

   ·The financial circumstances of the parties; and the impact upon those circumstances of the husband’s lack of financial support since separation;

   ·The husband’s conduct throughout the proceedings, in particular his pursuit of unmeritorious litigation; and

   ·That in circumstances where the court has made a vexatious proceedings order, that order being opposed by the husband, he was in these circumstances wholly unsuccessful.

2. The husband’s first submissions were difficult to follow, did not address the relevant considerations or the wife’s submissions. The husband also repeated matters he had relied upon in his many unsuccessful applications and appeals. The husband in his submissions filed on 1 April 2016 rejected the notion that the wife “deserved” costs and asserted that the wife was seeking to deny him procedural fairness, a submission that is difficult to understand in circumstances where he has had the opportunity to make submissions with respect to the wife’s application for costs and has done so. The husband further submitted that throughout the proceedings the wife had “made spurious and false claims” against him and had been “less than truthful”. This is not consistent with my findings.  

3. The husband’s second submissions were similarly difficult to follow, however doing the best I can the husband submitted as follows:

   a)That the bill of costs submitted to the court by the wife was not in taxable form;

   b)That it includes amounts that have not been allowed by the Full Court;

   c)That it includes amounts not related to the wife’s applications for a vexatious proceedings order; and

   d)That he was not served with the copies of the further material the wife sent to the court albeit he acknowledges that the court sent him copies of the two bills of costs which were the only documents provided by the wife to the court.

4. The husband otherwise repeated many of the matters referred to in his first submissions and during the proceedings generally.

Section 117(2A)(a) of the Act: The financial circumstances of each of the parties to the proceedings

1. The wife in her submissions describes herself as a self-employed psychologist living at the time in what has been the matrimonial home with the two children of the marriage who were both over the age of 18. In my reasons delivered on 7 March 2016, I referred to the wife’s evidence with respect to the eldest child not having spent any time with the husband since May 2009 and the youngest child since March 2010 and her evidence that the husband stopped paying child support shortly after separation leaving her responsible for the children’s upbringing and financial support. The husband for his part asserts that he is on a disability pension.

2. A disparity in the financial circumstances of the parties may, depending on the circumstances of the case, be a reason that might justify the court making an order for costs or why it might not make an order and decide an order is not justified. I am not satisfied that in this case the parties’ respective financial circumstances would preclude or be of itself sufficient to justify an order. In this case there are in any event monies held in trust which could be used to meet an order for costs.

Section 117(2A)(b) of the Act: Whether any party to the proceedings is in receipt of assistance by way of legal aid

1. Neither the wife nor the husband was in receipt of Legal Aid.

Section 117(2A)(c) of the Act: The conduct of the parties to the proceedings in relation to the proceedings

1. The substantive proceedings were commenced in 2008. On 7 March 2016, I made an order pursuant to s102QB(2) of the Act prohibiting the husband from instituting proceeding without having been granted leave to do so. On appeal the Full Court found that there was no merit in the husband’s appeal save and except with respect to the form of the order, as a result of which the court varied the order.

2. At paragraph 120 of the my reasons as follows:

   [120]   What is clear from both the husband’s written and oral submissions is that the husband is, and has been, intent on demonstrating what he considers to be an injustice by any means available to him and with complete disregard to the merits of the particular application or its relevance to the matters that he seeks to prove. I am satisfied that the husband will do anything to prove his point whether or not there is a legal basis for doing so, irrespective of whether the particular application he makes has any merit or the futility of the relief he seeks.  I am also satisfied, as demonstrated by his written submissions in response to the wife’s objection to his subpoena and his oral submissions that make clear the possibility of proceedings in other venues, that he has instituted and conducted proceedings in this Court for purposes unrelated to those proceedings.

3. Although the husband in his submissions is critical of the wife’s conduct in the proceedings, I am satisfied that there is no basis for that criticism with respect to the proceedings before me.

4. The husband made various applications, both written and oral, during the hearing before me, adding significantly to the time and costs of the hearing. The way in which the husband conducted the proceedings is in my view a clear justification for departing from the general principle that each party should bear their own costs.

Section 117(2A)(d) of the Act: Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court and s117(2A)(g): such other matters as the court considers relevant;

1. Although the proceedings were not necessitated by the husband’s failure to comply with previous orders, the vexatious proceedings order was instituted by the wife so as to bring the ongoing litigation in relation to what was in effect a costs dispute to an end. I consider that in this case these are circumstances which are relevant to the decision I must make with respect to costs. 

Section 117(2A)(e) of the Act: Whether any party to the proceedings has been wholly unsuccessful in the proceedings;

1. The wife was wholly successful as orders were made declaring the husband a vexatious litigant. The husband opposed the wife’s application and was wholly unsuccessful.

Section 117(2A)(f) of the Act: 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;

1. This provision is not relevant to the facts of this case.

Is An Order For Costs Justified ?

1. Having considered the relevant factors in ss 117(2A) of the Act, I am satisfied that there are circumstances in this case that justify a departure from the general principle that each party bear their own costs. The wife’s application for a vexatious proceedings order was successful but came at a significant cost as a consequence of the husband’s conduct during the proceedings. In all of the circumstances, I propose to accede to the wife’s application for costs.

Indemnity Costs

1. Rule 19.18 of the Rules sets out various methods by which any costs are to be calculated. The court may order costs of a specific amount, as assessed on a particular basis such as party and party or indemnity costs, in accordance with the method specified in the order or for part of a case or part of an amount assessed in accordance with Schedule 3 of the Rules. In this case and given that a significant part of the litigation that lead up to the court making an order pursuant to s102Q of the Act was with respect to costs and in circumstances where there are no substantive proceedings on foot, I am satisfied that in order to conclude the proceedings it is appropriate for the court to make an order for a specified amount.

2. In this case the wife is seeking that her costs be paid on an indemnity basis those costs based upon the two bills she has provided to the Court being a total of $64,977.32

3. The general rule is that when the court makes an order for costs those costs are calculated on a party and party basis.

4. In Kohan & Kohan (1993) FLC 92-340 at page 79,614 (“Kohan”) the Full Court opined that the court “…should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind”.

5. In Munday v Bowman (1997) FLC 92-784 (“Munday”) at page 84-660, Holden CJ summarised the circumstances which might warrant an order for indemnity costs identified by Shepherd J in the seminal decision of Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate”). They include the following:

   ·Where 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;

   ·The making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;

   ·The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;

   ·An imprudent refusal of an offer to compromise.

6. In Official Trustee in Bankruptcy v Gargan (No 2) [2009] FCA 398 Perram J usefully outlined the characteristics of a vexatious litigant. At paragraph 8, he states, with respect to a vexatious litigant

   …the idea of constant repetition driven by habit and symptomatic of an inability not to engage in the behaviour may be more useful. Persistence, on the other hand, generally suggests stubborn determination but, in the context of the vexatious, carries with it the capacity to endure failure beyond the point at which a rational person would abandon the field.

7. The very nature of a litigant described as “vexatious” is in my view apposite when the court considers the matters it is required to consider that might warrant an order for indemnity costs. Having found that the husband “instituted and conducted proceedings in this Court for purposes unrelated to the proceedings” and disregarding the futility of the relief he sought, I am satisfied that there are circumstances of an exceptional kind in this case which justify an order for indemnity costs.  

8. The wife has not, despite a number of requests to do so, provided the court with a copy of any costs agreement she may have signed. I note that although the wife was legally represented, she was representing herself when those requests were made. Rule 1.12 permits the court to dispense with the Rules before or after the occasion for compliance arises. The purpose of an order for costs is to compensate a party for the expense they have incurred in the proceedings (see Stephens & Stephens (2010) 44 Fam LR 117 at [67]) and in circumstances where I am satisfied that the wife has incurred these costs as a direct consequence of the husband’s conduct of the proceedings generally and the way he conducted himself in these proceedings. In my view the wife is entitled to be compensated for the costs she has incurred. In these circumstances, I propose to dispense with the requirement that she inform the Court as to the terms of any costs agreement and make the order she seeks. This will include the costs she incurred with respect to the subpoena issue which was related and incidental to the wife’s application for a vexatious proceedings order.

9. In doing so I note that although I have not had the benefit of any costs agreement the wife may have signed the costs themselves are in my view reasonable having regard to the number of hearings, the complexity of the matter and the conduct of the husband throughout the proceedings which in my view would have added significantly to the wife’s costs.  

10. Finally I note that there are funds remaining in trust and I propose as requested by the wife to make an order for the costs to be paid to the wife out of the funds held in trust.  

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 24 January 2020.

Associate: 

Date:  22 January 2020