Sholl and Bartlett

[2014] FCCA 283

FEDERAL CIRCUIT COURT OF AUSTRALIA

SHOLL & BARTLETT [2014] FCCA 283

Catchwords:
FAMILY LAW – Costs on an indemnity basis – consideration of s.117 – wife wholly unsuccessful – costs awarded.

Legislation:

Family Law Act 1975

Federal Court Rules 2001

JEL & DDF (No.2) (2001) FLC 93

Kohan & Kohan (1993) FLC 92-340
Mallet & Mallet (1984) FLC 91-507

Prantage & Prantage [2013] FamCAFC 105

Applicant: MR SHOLL

Respondent: MS BARTLETT

File Number: MLC 3487 of 2010

Judgment of: Judge McGuire

Hearing date: 19 February 2014

Date of Last Submission: 19 February 2014

Delivered at: Melbourne

Delivered on: 3 April 2014

REPRESENTATION

Counsel for the Applicant: Mr O'Neill

Solicitors for the Applicant: Best Wilson Family Lawyers

Solicitors for the Respondent: Unrepresented

ORDERS

1. That the wife Ms Bartlett pay the costs of the husband Mr Sholl of and incidental to proceedings commenced 20 July 2010 on an indemnity basis and referred for assessment to the Costs Assessment Registrar of the Family Court of Australia in accordance with Chapter 19 Family Law Rules2004 and that the matter be transferred to the Family Court accordingly.

2. That otherwise all extant applications be dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Sholl & Bartlett is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 3487 of 2010

MR SHOLL

Applicant

And

MS BARTLETT

Respondent

REASONS FOR JUDGMENT

1. The only application prosecuted before me today is that by the husband Mr Sholl seeking costs on an indemnity basis against the wife and in a quantum of $93, 000.

2. The husband appears represented by Mr O’Neil, solicitor, from Rockhampton. Both appear by telephone link.

3. The wife has not appeared by herself or by Counsel today. This matter was listed by my order of the 27 November 2013 for hearing in respect of the husband’s application and also various applications filed by the wife. A direction was made that the wife attend in person. The matter came on at 10:00am whereupon my associate called the matter outside the Court. There was no answer to the call. In the circumstances of the background of this matter which will become apparent in these reasons, I stood the matter down to 11:45 am in case of the wife simply being delayed. My associate informed me that there was no contact by the wife with my chambers. There has been no message relayed from the National Enquiry Centre. I returned to court at 10:55am and had the matter again called. There was no answer to the call. Consequently, I determined to proceed on the husband’s application on an undefended basis. I am asked by the husband’s advocate to dismiss the wife’s various applications for want of prosecution.

4. The relevant substantive proceedings between these parties was in respect of property matters. The wife has in fact been the applicant in those proceedings which were commenced as long ago as 20 July 2010.

5. The parties were in a relationship from 1995. They married in (omitted) 1998. They separated in June 2008 and were divorced in September 2012. They have one child, X, born (omitted) 2000.

6. Despite being the applicant, it is reasonable to observe that Ms Bartlett has not vigorously prosecuted her application or arguably at all.

7. The file discloses an early application for final orders together with a interlocutory hearing seeking injunctive orders to preserve property. Those orders were made by consent. It was alleged by the husband and I have since found that the wife proceeded to move and/or sell significant assets thereby substantially dismantling the property pool and effectively leaving only superannuation interests but giving the additional liabilities of substantial debt to the taxation office.

8. The file discloses that various adjournments were sought and some by the wife when the matter was then under the carriage of Federal Magistrate Walters (as he then was) in the Shepparton Circuit. The matter went to final hearing before Federal Magistrates Walters on 29 May 2012. The wife did not attend. The matter proceeded to undefended hearing and orders were made on material provided by the husband.

9. The wife then made application under rule 16 of the Federal Magistrates Court Rules (as they then were) to set aside the orders. That application was filed 29 June 2012. The wife argued that she had not had any or sufficient notice of the trial date. The application was opposed by the husband being represented by Counsel but the vigour of that opposition abated in light of the wife’s simple verbal submission in respect of notice. His Honour’s orders were set aside and directions were made for a further trial date. The evidence now of the husband which I accept, is that the wife did not comply with pre-trial directions as to disclosure.

10. The trial was listed to take place in Melbourne on 12 August 2013. Again, the wife did not attend at the trial. The matter again proceeded to final hearing on an undefended basis this time before me. My orders and reasons were handed down on the 29 August 2013and note in part that I was satisfied that the wife did not intend to participate in the proceedings and perhaps on the basis that she had dispersed assets in her favour.

11. There followed a flurry of applications from the wife and apparently communications with the husband’s solicitors on the record and with my chambers and this Court generally. The Court filed notes, applications by the wife since my orders of the 29 August 2013 as follows:

    a)An Initiating Application seeking an order that my orders of 28 August 2013 be set aside;

    b)An application filed 9 October 2013 seeking that the husband be dealt with for contempt;

    c)An enforcement warrant dated 13 November 2012 seeking the seizure and sale of the husband’s home at (omitted);

    d)An application in a case e-filed 20 November 2013 seeking orders in the following terms:

    i)That file number MLC3487/2010 be moved to the jurisdiction of the Magistrates Court in order for this complex matter to be resolved. This matter involves many aspects of the Law including, commercial, contract law, bankruptcy, taxation, defamation, damages and theft.

    ii)That the honourable court appoint a legal representative for the child of the marriage, X so he is able to pursue his compensation and damages entitled due to prolonged exposure to family violence toward his mother and his sisters.

    iii)Also, loss of quality of life by third party exposure to organophosphate insecticides whist in-utero and after birth as an infant. This has contributed to the child’s rare bone disorder. The respondent was responsible for and had control over spraying dangerous chemicals over the residence, and close proximity to, that of the applicant whilst pregnant with the child and whilst the child was an infant and toddler.

12. Each of the applications appears to be supported by an affidavit of the wife.

13. The matter came before me on 27 November 2013 in a busy duty list. When the matter was mentioned, the wife sought to speak to a duty lawyer. Despite the history of this matter, I acceded to her request. It then came to my notice (through the assistance of the duty lawyer) that the wife had left the Court due to some apparent illness with her son. I requested that the wife return at 2:15pm. She did not do so but I now understand that her son had in fact been hospitalised. Accordingly, the husband’s solicitors were contacted by telephone in Rockhampton. In all of the circumstances, those solicitors agreed that the applications be adjourned and listed for hearing. All matters were so listed on 19 February 2014 in Melbourne. In the circumstances of the history of this matter I made an order that the wife appear in person. Leave was granted for the husband and his solicitor to attend by telephone from Rockhampton. Orders in the terms were provided to the wife at her advised address for service.

14. My orders of the 27 November 2013 also stipulated that the wife personally serve the husband’s solicitors with all applications she intended to prosecute and affidavits in support. I am now told by the husband’s solicitors that the wife has not complied or not properly complied with this order.

15. The husband’s application for costs on an indemnity basis in a quantum of $93, 000 is supported by two affidavits by him filed 12 September 2013 and 20 September 2013. Those affidavits are read into evidence. I also had the benefit of lengthy and helpful submissions of the husband’s legal representative Mr O’Neil.

The relevant law

1. Matters of costs are dealt with under section 117 of the Family Law Act 1975 (“The Act”). That section provides that in proceedings in this Court, each party shall bear their own costs but subject to subsection (2). That subsection provides a discretion in the Court to make an order for costs if there are justifying circumstances in the opinion of the Court. Section 117(2A) then provides mandatory considerations for the Court to reference in determining what (if any) order for costs under subsection (2) should be made.

2. The Court has a wide discretion in determining an application for costs subject to making a finding of justifiable circumstance. There is, however, no particular onus on an applicant for a costs order requiring the Court to make any preliminary finding that special or exceptional circumstances exist[1].

   [1] Mallet & Mallet (1984) FLC 91-507 at [79,123]

3. It is well established that the Court has the discretion to make an order for costs on an indemnity basis[2]. However, for a court to move from the usual form of assessment for costs being on ‘party-party basis’ there must be some further justifying circumstances. In JEL & DDF (No.2)[3] the full court observed:

   the category of cases in which it would be appropriate to make an order for indemnity costs does not appear to have been fully defined.

   [2] Kohan & Kohan (1993) FLC 92-340

   [3] (2001) FLC 93 at [88, 441]

4. The authorities across various jurisdictions suggest that the Court must be satisfied that there are particular circumstances in relation to the factual platform before it which justify an order for costs on an indemnity basis rather than on a party-party basis. Such orders have generally been exceptional in these Courts and to be seen as ‘a very great departure from the normal standard’. It follows that the court should not depart from the normal practice in respect of party-party costs unless there are circumstances warranting it to do so. Such circumstances have been considered in detail by the Full Court recently in Prantage & Prantage[4] where the court emphasised the need for a party to show that the circumstances for an indemnity costs order were exceptional.

   [4] [2013] FamCAFC 105

Section 117 considerations

1. The wife in this matter has not properly prosecuted her applications. She has not complied properly with pre-trial procedure. The husband has endured the preparation of two trials and two undefended hearings. The wife has brought numerous applications which are of questionable merit on their face. The husband has been represented by solicitors and often by Counsel except for a period at the second undefended hearing and for which he instructed solicitors in the preparation of his trial material. My findings after the second undefended hearing in August 2013 indicate that the wife has dissipated the property pool substantially in her favour and/or caused assets and resources to move to her benefit. The evidence caused me to be satisfied that the husband has been left with substantial liabilities to the taxation office. I am satisfied that these are circumstances justifying a costs order in the husband’s favour.

2. The husband is employed as a (occupation omitted). The evidence before me suggests that he is now in a negative asset position albeit with some limited superannuation entitlements.

3. The wife is an undischarged bankrupt on her debtor’s position. The findings I have been made in my reasons of August 2013 suggests that she is in a superior financial position than the husband. I note that the wife has the care of the parties’ child.

4. Neither party is in receipt of legal aid.

5. I have referred to the conduct of the proceedings above. Suffice for me to say that the husband has pursued his entitlements in accordance with his application and substantially complied with court directions. The same cannot be said for the wife. She has not attended at trial listings. She has failed to comply with interlocutory and procedural orders. These factors have caused the husband’s prosecution of his own case to be more onerous and expensive.

6. The wife has frequently not complied with court orders.

7. Insofar as his applications have been limited by the wife’s non-compliance, the husband has been wholly successful in his applications at each of the trials both of which proceeded on an undefended basis. It follows that the wife has been wholly unsuccessful. She has been unsuccessful in her various interlocutory applications filed recently in that they are to be dismissed for want of prosecution.

8. The husband was for practical purposes unable to make any offers to compromise the proceedings given that the wife’s whereabouts were unknown for lengthy periods and by reason of her failure to participate in the proceedings despite, I emphasise, she being the applicant.

9. For all of these reasons I am satisfied that there should be an order that wife pay the husband’s costs of and incidental to these proceedings. I note her current bankrupt status. I understand, however, that my order may be pursued after the completion of her bankruptcy.

10. It remains for me to determine whether such costs be ordered no a party-party or on an indemnity basis? On consideration I am satisfied that there are such exceptional circumstances in this matter that the order for costs should be on an indemnity basis and noting the following:

    a)The wife has serially not attended at Court events and without reasonable explanation;

    b)This matter has proceeded to two undefended hearings in which the husband has been required to instruct lawyers for preparation and instruct Counsel on at least one occasion;

    c)The wife has not complied with pre-trial and interlocutory orders thereby on my findings dismantling the property pool and in her favour;

    d)It is open for me to infer and conclude that the wife has conducted these proceedings in a deliberate and destructive fashion aimed at incurring unnecessary legal costs for the husband and in effect sabotaging the proper and efficient administration of justice;

    e)Material such as it is filed by the wife makes unfounded and unprosecuted allegations of fraud and misconduct against the husband.

11. For all of these reasons I conclude that an award of costs on an indemnity basis is appropriate. I am not provided with an itemised bill of costs incurred by the husband. Such evidence is not usually forthcoming in costs applications. However, on the basis of that more than three years of litigation and the preparation and prosecution of two trials together with numerous interlocutory procedures (including the wife’s previous successful application to set aside orders), I would expect the costs to be substantial. I am not however in a position to quantify them as reasonable at $93, 000.00 or in any quantum. I will therefore order an assessment of costs by transfer to the Family Court for referral to the Costs Assessment Registrar pursuant to Division 19.6.2 of the Family Law Rules2004.

12. All extant applications will be otherwise dismissed.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Date:  3 April 2014