SKINNER & CLUNY

[2011] FamCA 429

FAMILY COURT OF AUSTRALIA

SKINNER & CLUNY [2011] FamCA 429

FAMILY LAW - ORDERS – Contravention – Where the husband brought contravention application and was unsuccessful – Where the alleged contraventions were dismissed

FAMILY LAW - COSTS – Application for indemnity costs by the respondent wife – Where the application for indemnity costs was refused - Circumstances justifying order for costs on a solicitor and client basis

Family Law Act 1975 (Cth), ss 70NAC, 70NAE, 70 NCA, 70 NCB, 117
Family Law Rules 2004 (Cth), r 19.18

Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225; (1993) 118 ALR 248, applied
Calderbank v Calderbank [1976] Fam 93, applied
Davida & Davida (Costs) [2011] FamCAFC 61, applied
Fennessy v Gregorian (2009) FLC 93-399, applied
Fountain Selected Meat (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202, discussed
In the Marriage of Vlug & Poulos (1997) 141 FLR 244, applied
Kohen & Kohen (1993) FLC 92-340, applied
Limousin v Limousin [2007] FamCA 1178, cited
Pickering & Pickering (No. 2) [2010] FamCA 981, cited
Ragata Developments Pty Limited v Westpac Banking Corporation, unreported, Federal Court of Australia, 5 March 1993
Stephens & Stephens & Anor (enforcement) (Costs) [2010] FamCAFC 172
Tasman & Tisdall [2008] FamCA 458, cited
Yates & Turner (No. 3) [2009] Fam CA 887, cited
Yunghanns v Yunghanns (2000) FLC 93-029, applied

APPLICANT:	Mr Skinner
RESPONDENT:	Ms Cluny

FILE NUMBER: BRC 812 of 2010

DATE DELIVERED: 10 June 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Brisbane

JUDGMENT OF: Young J

HEARING DATE: 3 June 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Cooper

SOLICITOR FOR THE APPLICANT: Barry Nilsson lawyers

COUNSEL FOR THE RESPONDENT: Mr Hackett

SOLICITOR FOR THE RESPONDENT: Hirst & Co

IT IS ORDERED:

1. That the husband’s Contravention Application filed 1 December 2010 be dismissed.

2. That the wife’s application for legal costs of and incidental to the hearing to be assessed on an indemnity costs basis be dismissed.

3. That otherwise the husband pay the wife’s legal costs of and incidental to the hearing on 3 June 2011 on a solicitor and client basis and such costs be fixed in the sum of $10,000 and be paid within 30 days of the delivery of these orders.

4. That if the payment of costs be in default then interest accrue on such sum as is in default at the rate prescribed in Rule 17.03 of the Family Law Rules 2004 (Cth) and be calculated and paid quarterly in arrears.

5. That subject to the discretion of Murphy J, all extant applications be otherwise adjourned for hearing before his Honour, for a one day hearing, on 14 June 2011 or on such other date as may be fixed by the Court.

IT IS CERTIFIED

1. That pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) this matter reasonably required the attendance of counsel for the wife and solicitor appearing for the husband.

IT IS NOTED

A.The husband advised the Court that he will be overseas (in Europe) on the adjourned hearing date of 14 June 2011 but that neither he nor his lawyers, nor counsel for the wife, had any objection to all extant applications being heard and determined on the papers filed, subject to the discretion of the trial judge.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Skinner & Cluny has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: BRC 812/2010

Mr Skinner

Applicant

And

Ms Cluny

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. The husband’s Contravention Application was filed on 1 December 2010 and it alleged that the wife had breached various paragraphs of interim consent orders pronounced by Federal Magistrate Burnett on 12 April 2010.

2. In particular it was alleged that the wife had:

   (a)on 30 September 2010 and in breach of order 2 of the orders of 12 April 2010 enrolled B (“the child”) born … August 2009 at “Program A” without informing the applicant, consulting with the applicant or making any effort to come to a joint decision with the applicant concerning the said enrolment;

   (b)on 27 August 2010 and in breach of order 13 of the orders of 12 April 2010 failed to attend upon Mr F for the preparation of a Family Report;

   (c)on 18 November 2010 and in breach of order 13 of the orders of 12 April 2010 failed to attend upon Mr F for the preparation of a Family Report;

   (d)in breach of order 16 of the orders of 12 April 2010 failed to sell jewellery the subject of the orders for the best price she had been offered; and

   (e)in breach of order 18 of the orders of 12 April 2010 failed to jointly engage Mr M to prepare valuations so that a mediation with Mr Michael Kent SC could occur.

3. The relevant orders of the interim consent orders of 12 April 2010 provided as follows:

   2. That the parties are to consult with each other about decisions to be            made in the exercise of their equal shared parental responsibility as   follows:-

   a)         they shall inform the other party of the decision to be made;

   b)         they shall consult with each other on terms that they agree; and

   c)         they shall make a genuine effort to come to a joint decision.

   .  .  .

   13. The parties shall attend upon [Mr F], family report writer, as soon as can be arranged, for the preparation of a family report such report to be made available to the parties, the Court, the parties’ legal representatives and such report is to be paid for in the first instance by the Father with the costs of same to be live issue (sic) in the proceedings between the parties. 

   .  .  .

   16. That the jewellery of the parties, currently in the possession of the Husband, namely: -

   (i)a [Company C] Engagement ring (4.8 carats) purchased for $125,000 by the Husband;

   (ii)the oval diamond earrings purchased from [Company C] for $50,000;

   (iii)2 x wedding bands purchased for $10,000;

   (iv)diamond drops for earrings purchased for $17,000;

   (v)the [Company D] tennis bracelet purchased for $28,000;

   (vi)the [Company D] diamond necklace purchased for $12,000;

   (vii)a [Company E] diamond wristwatch purchased for about $10,000; and

   (viii)[Company C] cufflinks platinum and diamond purchased for about $8,000;

   shall be sold at the direction and control of the Wife within such reasonable period of time as is necessary to obtain the best price for such items and the net proceeds of sale shall be paid to the Wife and the characterisation of such payment to the Wife shall be determined in the proceedings by agreement between the parties or as determined by the Court.

   .  .  .

   18. The parties shall, when in receipt of [Mr M’s] report into the valuation of the Husband’s various business interests, attend a mediation with Mr Michael Kent SC, at a date to be arranged.

4. In his evidence the husband relied upon his affidavit filed 1 December 2010 and the many documents annexed thereto. The contravention application constituted a further affidavit as the husband had there deposed to his personal knowledge and belief of facts relied upon. The husband was cross examined by counsel for the wife.

5. In the course of the hearing and after hearing submissions from counsel for each of the parties the contravention allegations identified in subparagraphs (b), (d) and (e) of paragraph 2 (that is counts 2, 4 and 5) were discharged.

6. The wife was asked to enter a plea as to the two remaining charges ((a) and (c) or counts 1 and 3) and she pleaded not guilty to each of those alleged contraventions.

Contravention of order 13 – On 27 August 2010 (Count 2)

1. The husband relied upon annexures “BVS-1” and “BVS-2” to his affidavit and these documents were items of correspondence that had passed between the office of his solicitor and the office of the wife’s previous solicitor.

2. Those documents all highlighted the intended appointment that was to be arranged with Mr F on 27 August 2010. That date was not finally agreed or confirmed and clearly by the email dated 25 August 2010 the wife’s previous solicitor advised of her unavailability to attend that interview.

3. In the following annexure “BVS-2” the husband’s hesitancy to cancel the appointment was emphasised as were the actions which he had taken to have his older daughter available for the interview process, and of course he had incurred legal costs. Nevertheless and notwithstanding any issues raised in the last paragraph of that letter, which was also written on 25 August 2010, there very clearly was no agreement or confirmed appointment scheduled for these parties to attend an interview with Mr F on 27 August 2010.

4. With that finding and given that the parties and their solicitors were then aware of that fact there is no basis whatsoever to support the alleged contravention on this date as particularised in the Contravention Application.

5. I concluded that the evidence cannot support this charge and I dismissed the complaint without requiring the wife to enter a plea.

Contravention of order 16 – Sale of jewellery (Count 4)

1. There are eight items of jewellery identified in order 16. Their total purchase price was $260,000, with the most valuable item being the engagement ring agreed to have been purchased for a sum of $125,000.

2. The order provided for the sale of all items of jewellery at the sole direction and control of the wife and to occur within a reasonable period of time as was necessary for her to obtain the best price. Of significance was that the whole of the net proceeds of the sale of the jewellery were to be paid to the wife pending characterisation of such payment as determined by the court or by agreement.

3. In paragraphs 21 to 23 of his affidavit the assertion of the husband is that the wife had possession of all of the jewellery and had failed to sell them, individually or collectively, when an offer had been made. The husband annexed no other valuation or documents as between solicitors being for the sale of the jewellery and concluded with the observation that the wife wears “some of the pieces”. He asserted that she had no intention of selling the jewellery.

4. That affidavit of the husband was sworn 19 November 2010 and wholly ignored the earlier information provided to his solicitors in paragraph 10 of the letter dated 8 September 2010 written by the wife’s present solicitors. That letter is annexure “BVS-4”.

5. In that paragraph the wife had denied any breach of order 16 and set out her efforts to comply and detailed her approach to various jewellers in Brisbane and Melbourne. Many jewellers declined to purchase any of the jewellery and there was one indication only of a potential purchaser who was prepared to offer $32,000 for the entire collection, which had cost $260,000 on initial purchase.

6. It was reasonable to have expected the husband to have referred to, and responded to, the disclosure of the wife of her efforts to sell the jewellery. I am satisfied that she did approach the various jewellers and outlets and endeavoured to obtain offers to purchase for a reasonable sum.

7. The husband’s solicitor emphasised the order required sale “for the best price” and he suggested that the offer made by Company G should have been accepted and that the wife was in breach of order 16 due to her failure to sell all of the jewellery for $32,000. When carefully read that final line of paragraph 10 of the wife’s solicitor’s letter does not confirm an offer but “an indication that they would be prepared to offer”.

8. It was in this regard that the wife’s counsel submitted that there was only an invitation to treat but not an offer available for acceptance by her and I accept that submission.

9. There was no overall offer to purchase the jewellery which the wife could have accepted and in any event it is reasonable that there be some discretion to sell for a price greater than the fire sale offers that were contemplated.

10. On all of the facts in evidence on this issue I find that there is insufficient evidence to found the contravention charge as alleged and particularised by the husband.

11. The order remains operative and the ongoing obligation of the wife is to use her best endeavours to obtain firm and reasonable offers for sale of one or all of the items of jewellery and, if so obtained to then effect such a sale.

12. I conclude that the evidence of the husband does not support this charge and I dismiss the complaint without requiring the wife to enter a plea.

13. Counsel for the wife foreshadowed an application to discharge order 16 of the interim consent orders of 12 April 2010 but I did not hear that oral application and have made no such order. That application may remain a live matter in the proceedings.

Contravention of order 18 – Mr M’s report and mediation (Count 5)

1. It was provided in paragraph 18 that the parties shall, when in receipt of Mr M’s report into the valuation of the various business interests of the husband, attend mediation with senior counsel at a date to be arranged.

2. There was no order for the parties to cooperate with, provide documents or confer with Mr M for the purposes of the preparation of a report. The orders did not direct their focus to the report but to the subsequent mediation to be arranged with senior counsel when that accounting report was made available.

3. The husband’s affidavit, at paragraphs 24 to 36 detail his evidence including the various annexures relied upon, which include annexures “BVS-6” to   “BVS-13”. I have carefully read that affidavit and all of those annexures.

4. As drafted the charge contained within this count of the Contravention Application is that the wife failed to jointly engage Mr M to prepare valuations so that a mediation with senior counsel could occur. That charge does not accord with order 18 and as drafted is both inaccurate and misconceived.

5. Nevertheless and having carefully read all of the annexures I would otherwise have been satisfied that there were appropriate reasons to accept the position adopted by the wife and her solicitor.

6. The husband’s solicitor largely conceded the difficulties with this particular contravention charge as drafted and sought to argue that the breach was the failure to attend mediation with senior counsel. I do not agree. The charge as particularised was clearly focused upon the wife’s failure to engage Mr M and that conduct was said to be the breach of order 18.

7. I do not venture into the issue of payment of the fee rendered by senior counsel though I do understand that the husband has paid his half share of a total account of $5,500 for the cancellation of the mediation on less than 7 days notice.

8. I conclude that the evidence of the husband does not support this charge as particularised and I dismiss the complaint without requiring the wife to enter a plea.

Remaining two alleged contraventions – Count 1 and Count 3

1. There then remained outstanding the alleged contraventions by the wife of order 2 of the orders of 12 April 2010 and the 18 November 2010 alleged breach of order 13.

2. I required the wife to stand forward and she pleaded not guilty to each of the alleged contraventions.

3. Counsel for the wife sought to cross examine the husband on his evidence as to each of these matters. The husband then entered the witness box, was affirmed and cross examined. Subsequently the wife was not required to give evidence and was not cross examined.

Contravention of order 2 – Program A (Count 1)

1. The husband alleged that the wife had enrolled their son at Program A without informing, consulting or making any effort to come to a joint decision with him in regard to that enrolment.

2. The husband’s evidence was contained within paragraphs 2 to 4 of his affidavit which I have read. The husband had “no intrinsic opposition to [Program A]” and his complaint is only as to consultation and the timing of the enrolment. My understanding was that he paid and continues to pay the fees charged for the child’s participation in program A.

3. I should first record that counsel for the wife, prior to her entering a plea of not guilty, had submitted that the alleged breach of order 2 should not be permitted to stand as it did not specify an accurate date of the alleged contravention and provided insufficient particulars of the charge. Whilst I considered that submission I concluded that there was sufficient particularity to require the wife to enter a plea to that charge.

4. The date provided in the Contravention Application was 30 September 2010 and counsel for the wife produced two emails which were admitted into evidence and marked as exhibits “W1” and “W2” respectively. I am satisfied that exhibit W1 dated 23 August 2010 and written by the husband to the wife fully established his knowledge of Program A as at that date, notwithstanding that he was not directly informed by the wife of this activity.

5. In his evidence under cross examination the husband largely conceded his knowledge of the child friendly activity and his agreement with the child’s participation in Program A.

6. I was left overwhelmingly with the impression that the drafting and filing of this alleged contravention was both long after the husband had knowledge of the activity and for the purposes of raising a frivolous complaint as a caution to the wife.

7. At that point in his cross examination of the husband the wife’s counsel submitted that the alleged contravention should be dismissed. I observed that in response to this submission there was some level of acquiescence on the part of both the husband and his solicitor who did not press the husband’s submissions in relation to this count after his cross examination.

8. I raised with the legal practitioners and it should be noted that in In the marriage of Vlug &Poulos (1997)141 FLR 244 at 255, the Full Court observed that:

   …the question of whether… parents must exercise parental responsibility independently of each other or whether they must do so jointly is not made clear by the amended legislation. In In the Marriage of B (1997) 140 FLR 11 at 68… the Full Court (Nicholson CJ, Fogarty and Lindenmayer JJ) made the following observations on this question (at 68):

   An important issue is whether parents may exercise this responsibility independently or whether they must do so jointly...

   .  .  .

   In the absence of a specific issues order, we think it unlikely that the parliament intended that separated parents could only exercise all or any of their powers or discharge all or any of their parenting responsibilities jointly in relation to all matters. This is never the case when parents are living together in relation to day-to-day matters, and the impracticability of such a requirement when they are living separately only has to be stated to be appreciated.

   As a matter of practical necessity either the resident parent or the contact parent will have to make individual decisions about such matters when they have the sole physical care of the children. On the other hand, consultation should obviously occur between the parents in relation to major issues affecting the children such as major surgery, place of education, religion and the like…

   Thus the Full court has indicated that it would be desirable and in accordance with the intention of the legislation for parents to consult in relation to major decisions concerning their child.

9. The husband contended in paragraph 3 of his affidavit that “Program A” is “in essence, early childhood education”. I do not agree. It is apparent Program A is an activity that constitutes early childhood development and does not constitute education as described in Vlug &Poulos. Education as discussed in that authority refers to decisions to be made between parents in the exercise of their shared parental responsibility as to where a child will attend primary and/or secondary education based on considerations relevant to a particular family including but not limited to religious and cultural considerations and costs that may be associated with the education.  

1. I concluded that the evidence of the husband and his knowledge of the enrolment of the child in Program A cannot support the charge and accordingly I dismissed the complaint.

Contravention of order 14 – 18 November 2010 (Count 3)

1. The husband alleged that a further follow up report date had been fixed by Mr F on 18 November 2010 and that the wife failed to attend upon that date.

2. The husband’s evidence is contained in paragraphs 11 to 20 of his affidavit which I have read. Likewise I have read annexure “BVS-5”.

3. By email dated Friday 12 November 2010 Mr F had advised both solicitors that he had not received a joint letter of instruction or material and that his preference was to review all such material prior to confirming appointment times.

4. Thereafter there was correspondence between solicitors as to the draft letter of instructions which was never concluded and jointly executed by each of them.

5. On 15 November 2010 the husband’s solicitor forwarded affidavits and other documents and an earlier family report dated 26 July 2010 to Mr F. That letter crossed with correspondence from the wife’s solicitors to the husband’s solicitors again objecting to the appointment date and to the identification of documents to be provided to the report writer.

6. That ongoing discussion or disagreement continued between solicitors by various emails over the following days and ultimately on 16 November 2010 Mr F wrote by email to both solicitors setting out the three conditions upon which he would interview the parties and prepare a report.

7. Subsequent emails on 16 November 2010 highlight the disagreement between solicitors and also the fact that the appointment with Mr F was not finally confirmed.

8. The wife’s plea of not guilty was entered into upon the basis that she held a reasonable excuse for not attending that appointment with Mr F and thereby for any contravention of the order.

9. It is important to read carefully order 13 of the orders of 12 April 2010 which required the parties to attend upon Mr F as soon as can be arranged for the purposes of a family report. I am not satisfied that any date was arranged, though the observation that I made to the parties was that this dispute of the event in and around mid November 2010, occurred some seven months after the Court order. That delay in itself may raise any number of issues which are not before me in evidence and which I do not intend to canvass.   

The law of contravention

1. The consequences of a failure to comply with orders that affect children are set out in Division 13A of Part VII, in section s 70NAC. A person is taken to have contravened an order where they have intentionally failed to comply with the order or made no reasonable attempt to so comply.

2. The meaning of reasonable excuse is provided for in s 70NAE(2):

   A person (the respondent) is taken to have had a reasonable excuse for contravening an order under this Act affecting children if:

   (a)the respondent contravened the order because, or substantially because, he or she did not, at the time of the contravention, understand the obligations imposed by the order on the person who was bound by it; and

   (b)the court is satisfied that the respondent ought to be excused in respect of the contravention.  .

3. I find that the wife held a reasonable excuse for her failure to attend upon Mr F on 18 November 2010 as that date had not been finally fixed and agreed to by both solicitors.

4. I conclude that the evidence of the husband does not support the charge and accordingly I dismiss the complaint.

The wife’s application for costs on an indemnity basis

1. Counsel for the wife sought costs on an indemnity basis. It was argued that costs awarded on an indemnity basis were appropriate as three of the five counts were dismissed summarily, and an additional count was dismissed after the husband had given evidence in relation to the count.

2. It was argued by the wife that the contravention application brought by the husband was trivial, was “ventilated in correspondence” and was brought mala fides.

3. Colgate Palmolive Co and Anor v Cussons Pty Ltd (1993) 118 ALR 248 was cited by counsel for the wife in submitting that indemnity costs should be awarded and reliance was placed on the Calderbank offer made without prejudice by way of a letter from the wife’s solicitors to the husband’s solicitors on 24 May 2010, tendered by the wife and marked as exhibit “W3”. The 24 May letter offered to dismiss the wife’s application for costs if the husband’s contravention application was similarly dismissed.

4. In terms of the quantum of costs sought by the wife, counsel submitted that the estimated sum was based on his daily fee of $4000 plus GST, his hourly rate of $450 plus GST and the instructing solicitor’s fees as set out in the client agreement between the wife and Hirst & Co Family Solicitors. The sum was estimated to be, on an indemnity basis, $18,000. On a party and party basis counsel for the wife submitted that the sum was $12,000.

5. The husband’s submissions in reply contended that indemnity costs “flew in the face” of the intention that each party should bear their own costs underlying s 117 of the Act. Additionally, the solicitor for the husband contended that if the wife were to assert mala fides on the part of the husband in bringing the Contravention Application then that assertion should have been put to the husband in cross examination if it was later sought to be relied on.

6. The husband opposed an award of costs on an indemnity basis and submitted that any costs order in favour of the wife should only take into account the costs of the court appearances for one day inclusive of preparation by the wife’s solicitor and the attendance at the hearing by counsel and the instructing solicitor.

7. The solicitor for the husband did not make any further submission in relation to the appropriate order as to costs in the event that indemnity costs were not granted by the Court.

Indemnity Costs

1. In considering whether an order for indemnity costs is appropriate in all the circumstances of this matter reference to the relevant sections of the Act and authorities of this Court is required.

2. In accordance with s 70NCA, Subdivision C of Division 13A applies to the contravention proceedings brought by the husband as:

   d)the primary orders of 12 April 2010 were made; and,

   e)the contravention proceedings in relation to the orders of 12 April 2010 were brought before this Court by the husband; and,

   f)the Contravention Application alleged that the respondent wife committed contraventions of the orders of 12 April 2010; and,

   g)the Court has not found that the respondent wife committed a contravention of those orders.

3. As a consequence s 70NCB in subdivision C applies and states, in relation to costs orders in contravention proceedings, that:

   (1)The court may make an order that the person who brought the proceedings (the applicant) pay some or all of the costs of another party, or other parties, to the proceedings.

   (2)The court must consider making an order under subsection (1) if:

   (a)the applicant has previously brought proceedings in relation to the primary order or another primary order in which the applicant alleged that the respondent committed a contravention of the primary order or that other primary order; and

   (b)on the most recent occasion on which the applicant brought proceedings of the kind referred to in paragraph (a), the court before  which the proceedings were brought:

   (i)was not satisfied that the respondent had committed a contravention of the primary order or that other primary order; or

   (ii)was satisfied that the respondent had committed a contravention of the primary order or that other order but did not make an order under section 70NBA, 70NDB, 70NDC, 70NEB or 70NFB in relation to the contravention. 

4. The applicant husband has not brought previous contravention proceedings in relation to the orders of 12 April 2010 or another primary order. However, on this Contravention Application the Court was not satisfied that the respondent had committed a contravention of any of the orders of 12 April 2010 as alleged in the application. Pursuant to s 70NCB the Court is not required to consider making a costs order that the applicant husband pay some or all of the costs of the respondent wife in relation to the contravention proceedings.

5. However, the court has the discretion to order that an applicant pay some or all of the other party’s costs where it is not satisfied that there has been a contravention of the orders and where the respondent established a reasonable excuse for the contravention: see ss 70NCB, s 70 NDC and 70NEB(7).

6. Section 117 provides for orders as to costs and states in subsection (1) that:

   Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB and 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.

7. The reference to s 70NFB(1) is not relevant to the consideration that this Court must undertake pursuant to s 70NCB in this matter.

8. Section 70NFB(1) applies only to serious contraventions that are found to be made without a reasonable excuse within the scope of subdivision F. Section 70NFB requires the court to make an order for costs in accordance with subsection (2)(g) on an indemnity basis, unless it is contrary to the best interests of the child.

9. In the current application for costs, after considering the provisions in s 70NCB, the Court has the discretion to determine whether costs should be awarded and if so on what basis per s 117: see Pickering & Pickering (No. 2) [2010] FamCA 981; Tasman & Tisdall [2008] FamCA 458; Yates & Turner (No. 3) [2009] FamCA 887.

10. Section 117(2) states that:

    If in proceedings under this Act, the court is of the opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) 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.

11. In making an order for costs the Court is required to consider the subsections set out in s 117(2A) and in this matter the following subsections are particularly relevant:

    (a)the financial circumstances of each of the parties to the proceedings;

    (c)the conduct of the parties to the proceedings in relation to such proceedings and including, without limiting the generality thereof, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of fact, 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.

12. The Court has the discretion to pronounce an order for costs on an indemnity basis and Yunghanns v Yunghanns (2000) FLC 93-029 provides that the category of cases in which an award of indemnity costs is appropriate are not closed.

13. The Full Court has considered the circumstances in which an award of indemnity costs is appropriate: see for example Limousin v Limousin [2007] FamCA 1178 at 41 to 49; Fennessy v Gregorian (2009) FLC 93-399 at 53 to 73; and the principles underscoring an award of indemnity costs are detailed in Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248. In Colgate Palmolive at 256 Sheppard J stated: 

    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…

    .  .  .

    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…

    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… 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; Maitland Hospital v Fisher (No 2); Crisp v Kent … 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…

14. In Fountain Selected Meat (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202, as cited in Colgate Palmolive, Woodward J noted at 21 that:

    I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, 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 or the clearly established law.

15. In Ragata Developments Pty Limited v Westpac Banking Corporation as cited in Colgate Palmolive, Davis J observed at 7 to 8 that:

    An award of costs on an indemnity basis may be made only in a special case, where the circumstances justify departure from the ordinary principle. The circumstances must be such as to justify an award indemnifying the successful party in respect of all of the costs incurred, save only as to those costs which are unreasonable in amount.

16. Importantly in Kohan & Kohan (1993) FLC 92-340 at 79,614 the Full Court noted that:

    The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rate of charges… Consequently, 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.

17. More recently, the Full Court in Stephens & Stephens & Anor (Enforcement) (Costs) [2010] FamCAFC 172 at 73 stated that:

    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…

18. However, in Davida & Davida (Costs) [2011] FamCAFC 61, the Full Court per Finn J confirmed at 16 to 17 that:

    It emerges from the discussion by the Full Court in the D & D (Costs) that there still needs to be exceptional circumstances to justify an order for indemnity costs in this jurisdiction. In my view, there are no such exceptional circumstances in this case.

19. The position in this Court per Kohen, Stephens and Davida, consistent with Colgate Palmolive and Fountain Selected Meats and Ragata, continues to be that indemnity costs should only be awarded in matters before the court where all of the circumstances justify a departure from costs on a party and party basis.

20. In this matter although the applicant husband has been unsuccessful in prosecuting the contraventions as alleged and did not accept the respondent wife’s without prejudice offer to settle the contravention proceedings prior to the hearing, his conduct was not so exceptional as to justify an award of indemnity costs.

21. The husband’s refusal of the wife’s offer of 24 May 2011 was likely short-sighted in view of the manner in which a number of the contravention allegations were particularised and the outcome of the contravention hearing, but it does not follow that the husband’s refusal to accept the wife’s without prejudice offer was so unreasonable as to constitute a basis for the award of indemnity costs per Calderbank v Calderbank [1976] Fam 93 at 103 to 104.

22. In view of all of the relevant factors outlined s 117(2A), and the conduct of both parties, and given that it was not established that the proceedings were commenced by the husband for an ulterior motive in all the circumstances of this matter the conduct of the husband was not so extraordinary or exceptional to warrant an award of costs on an indemnity basis.   

23. Accordingly I dismiss the wife’s application for costs on an indemnity basis.

Costs

1. Having concluded that indemnity costs are not warranted in all the circumstances of this matter, the question whether costs should be awarded on a party and party basis or a solicitor and client basis arises.

2. Rule 19.18(1)(a) to (d) of the Act provides that the Court has the discretion to make an order for costs in a specific amount, assessed on a particular basis, including on a solicitor and client basis.

3. In making an order pursuant to r 19.18(1) the Court may have regard to the factors set out in r 19.18(3) and in the circumstances of this matter the following factors are particularly relevant:

   (b)      the reasonableness of each party’s behaviour in the case;

   (c)      the rates ordinarily payable to lawyers in comparable cases;

   (d)      whether a lawyer’s conduct has been improper or unreasonable;

   (e) the time properly spent on the case, or in complying with pre-action procedures; and

   (f)       expenses properly paid or payable.

4. In Fennessy v Gregorian at 62 to 64 the Full Court stated:

   …Nor in our view does the father’s conduct constitute “extraordinary conduct” sufficient to justify the making of an order for indemnity costs (see Yunghanns (supra)).

   It remains however to consider whether it would be appropriate in the circumstances to make an order for costs on a lawyer and client basis.

   As is generally known, parties to litigation frequently, and reasonably, incur costs in excess of those which would be covered by an award of party and party costs. The evidence suggests that has been the case in this appeal. In the circumstances it would be regrettable if the mother’s legal advisors were to be limited to party and party costs. Rather than awarding party and party costs the court may order that a party is entitled to costs as assessed on a lawyer and client basis (Rule 19.18(1)(b)).

5. A consideration of the reasonableness of the husband’s conduct in continuing to prosecute the contravention application and the contraventions as alleged warrants an award of costs on a lawyer and client basis. This is particularly so in respect of the contravention in relation to count 1.  

6. It should be noted in determining the appropriate sum to be awarded I have considered the fees of counsel for the wife and the client agreement between the wife and her solicitors in view of the scale of costs in Schedule 3 of the Rules. Notwithstanding counsel for the wife’s submission that costs on a party and party basis would amount to $12,000 and that sum was not opposed by the husband’s solicitor. I conclude in the exercise of my discretion that it is appropriate to fix the costs to be awarded on a lawyer and client basis in the more modest sum of $10,000 to be paid within thirty days of delivery of these reasons. In default of payment within that period interest will then accrue on such sum as is from time to time outstanding at the rate prescribed in r 17.03 and such interest is to be calculated and paid quarterly in arrears.

I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Young delivered on 10 June 2011.

Legal Associate: 

Date:  10 June 2011