Spinner & Bader (No. 2)
[2021] FamCA 453
•29 June 2021
FAMILY COURT OF AUSTRALIA
Spinner & Bader (No. 2) [2021] FamCA 453
File number(s): MLC 6810 of 2015 Judgment of: MACMILLAN J Date of judgment: 29 June 2021 Catchwords: FAMILY LAW – COSTS – where the husband seeks that the wife pay his costs on an indemnity basis – where the wife opposes the husband’s application – where the parties’ are each entitled to half of the net proceeds of sale of the former matrimonial home – where the wife was wholly unsuccessful – where the way in which the wife conducted her case lends weight to the husband’s case as to her lack of bona fides – where there are circumstances which justify an order for costs – where the wife continued to live in the property and deny the husband his entitlements for over four years – where the husband would not be adequately compensated by an order for party and party costs – where costs ordered are more generous than party and party but fall short of indemnity costs – where the wife is unlikely to accept the husband’s calculations as to the quantum of costs – where it is not appropriate for the husband to incur cost consultants fees – where the wife is ordered to pay the husband’s cost in a fixed sum incidental to the wife’s application pursuant to s79A. Legislation: Family Law Act 1975 (Cth) ss 79A, 117
Family Law Rules 2004 (Cth) rr 1.14, 19.18
Federal Circuit Court Rules 2001 (Cth) r 21.02
Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Eames & Eames [2018] FamCAFC 204
Fountain Selected Meats (Sales) v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Kohan & Kohan [1993] FLC 92-340
Munday v Bowman [1997] FLC 92-784
Sfankianakis & Sfankianakis [2019] FamCAFC 54
Yunghanns & Yunghanns [2000] FLC 93-029
Number of paragraphs: 44 Date of last submission/s: 16 February 2021 Date of hearing: Written Submissions Place: Melbourne ORDERS
MLC 6810 of 2015 BETWEEN: MS SPINNER
Applicant
AND: MR BADER
Respondent
ORDER MADE BY:
MACMILLAN J
DATE OF ORDER:
29 JUNE 2021
THE COURT ORDERS THAT:
1.That leave be granted to the husband to rely upon his written submissions filed 28 January 2021.
2.That the wife pay the husband’s costs of and incidental to her application pursuant to s 79A fixed in the sum of $107,200.
3.That the wife pay the husband’s costs of his application for costs fixed in the sum of $2,900.
4.That the total costs payable by the wife to the husband pursuant to paragraphs 3 and 4 of this order in the sum of $110,100 to be paid to the husband out of her share of the net proceeds of sale of the property known as and situate at Property A Suburb H at settlement of the said sale.
5.The husband’s application for costs be otherwise dismissed and removed from the list of cases awaiting hearing.
Note: The form of the order is subject to the entry in the Court’s records.
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 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Spinner & Bader has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MACMILLAN J
This matter has a lengthy and complicated history including the husband’s numerous applications for enforcement of the final property orders made 26 August 2016 and the wife’s various applications to set aside those final property orders, the last of those applications being her Further Amended Initiating Application filed 5 June 2020. On 24 December 2020 I made orders dismissing the wife’s application pursuant to s 79A of the Family Law Act 1975 (Cth) (“the Act”) and published my reasons (“the reasons”). I also made orders with respect to the parties filing submissions in support of any application for costs. The husband seeks an order that the wife pay his costs of and incidental to her application pursuant to s 79A. The wife opposes that husband’s application and it is her case that they should each bear their own costs.
BACKGROUND
The substantive background to this matter is outlined in detail in the reasons, including the proceedings brought by the husband to enforce the final orders, however for the purposes of this costs judgment a short history is necessary.
On 26 August 2016 final orders were made by consent (“the final orders”). The effect of these orders was to divide the matrimonial assets equally between the parties. The most significant asset was the former matrimonial home at Property A Suburb H (“Property A”). The Property A was valued at approximately $3,000,000 and was unencumbered. The second asset of any significance was the business known as P Business (“the business”) which had been valued by Mr F. In his valuation dated 11 March 2016, Mr F valued the business firstly on the basis of its net tangible assets in the event that the parties were unable to renew the lease for the business premises, a figure of $112,000, and between $286,000 and $357,000 being the net tangible assets and goodwill based upon the lease having been renewed. Both parties relied upon Mr F’s affidavit filed on 1 March 2019 for the purposes of the hearing before me. The parties also had some superannuation entitlements.
On 1 March 2019 the wife filed an Amended Application in a Case seeking leave pursuant to s 79A of the Act to vary paragraphs 2-3, 5-6, 9 and 12-14 of the final orders and upon leave being granted that the Property A be sold and the net proceeds of sale be divided as to 80/20 per centum in her favour instead of 50/50 as per the final property orders. On 21 October 2019 the wife’s Amended Application in a Case was dismissed and the wife was ordered to file and serve an Initiating Application in relation to any relief she sought pursuant to s 79A of the Act together with an affidavit setting out with particularity the evidence based upon which she said the final property orders should be set aside.
On 6 November 2019 the wife filed an Initiating Application and an Affidavit in support of that application as she was ordered to do. In that application the wife sought orders inter alia for the variation of paragraphs 5 and 9 of the final orders pursuant to s 79A(1)(b) and/or (c) of the Act her case being that the Property A be sold and that she be entitled to 80 per centum of the net proceeds of sale. The wife filed an Amended Initiating Application on 17 April 2020 in which she sought orders setting aside paragraphs 5 and 9 of the final orders, the sale of the Property A and that she be entitled to 75 per centum of the proceeds. In her Further Amended Initiating Application filed on 5 June 2019 the wife sought orders setting aside 9 and 12-15 of the final orders.
Husband’s Application to file his Written Submissions out of time
The husband filed his submissions on 28 January 2021 three days late due to an error on the part of his counsel. The wife filed her submissions in reply on 16 February 2021. In all of the circumstances I am satisfied as submitted by counsel for the husband that the wife having had the opportunity to respond to the submissions filed on behalf of the husband, and in fact doing so within the prescribed time, has not been prejudiced by the husband having filed his submissions a matter of days late. Given that the husband in his Amended Response to the wife’s Amended Initiating Application sought costs I do not accept as submitted by the wife that she is prejudiced in circumstances where she was entitled to assume when the husband did not file his submissions on the due date that he was not seeking costs. The husband would on the other hand be significantly prejudiced if leave were not granted for him to file his submission out of time and I propose to grant him leave to do so.
COSTS
The husband seeks that the wife pay his costs on the following alternative bases:
First and preferred position: Indemnity Costs - $126,457.50
That the wife pay the husband's costs arising out of or incidental to her Amended Application in a Case filed 5 June 2020 calculated on an indemnity basis calculated as solicitor’s fees billed in the sum of $63,607.50 (including GST) plus counsel's fees billed in the sum of $59,200.00 being a total of $122,807.50 and;
That the wife pay the husband's costs on an indemnity basis for solicitor's fees to be billed for briefing counsel and filing these submissions in the sum of $1,250.00 (including GST) and counsel's fees to be billed for the drafting of these submissions in the sum of $2,400.00 (including GST), being a total of $3,650.00.
Second and alternative position: "Special Costs" - $110,600.00
That the wife pay the husband's costs arising out of or incidental to her Amended Application in a Case filed 5 June 2020 calculated as solicitors fees estimated in accordance with Schedule 3 of the Rules ("scale") and fixed in the sum of $48,000 (including GST); plus counsel's fees as billed in the sum of $59,200 (including GST) being a total of $107,200 and;
That the wife pay the husband's costs for solicitor's fees to be billed for briefing counsel and filing these submissions as estimated on scale in the sum of $1,000 (including GST) and counsel's fees to be billed for the drafting of these submissions in the sum of $2,400 (including GST) being a total of $3,400.00.
In relation to the fixed sum of $48,000 the husband states that this is a fair and reasonable guess however that the husband's solicitor's file is extensive and consideration would be needed to be given to a costs consultant being appointed to properly assess fees on scale.
Third and alternative position: Family Law Scale - $89,321.42
That the wife pay the husband's costs arising out of or incidental to her Amended Application in a Case filed 5 June 2020 calculated as solicitors fees estimated in accordance with the scale and fixed in the sum of $48,000 (including GST); plus counsel's fees as billed in the sum of $38,674.02 (including GST) being a total of $86,674.02.
That the wife pay the husband's costs for solicitor's fees to be billed for briefing counsel and filing these submissions as estimated on scale in the sum of $1,000 (including GST) and counsel's fees to be billed for the drafting of these submissions in the sum of $1,647.40 (including GST) being a total of $2,647.40.
In relation to the quantum of costs sought the husband also relies upon Rule 21.02 of the Federal Circuit Court Rules 2001 (Cth) (“FCC Rules”). This rule states that a Federal Circuit Court judge is not confined to the Scale of Costs set out in Schedule 1 of the FCC Rules and the husband submits that in circumstances where the proceedings have been transferred from the Federal Circuit Court of Australia to the Family Court of Australia part of the way through the hearing process, the Family Court is not confined to assessing those parties heard before the Federal Circuit Court on that scale. I accept that submission.
LEGAL PRINCIPLES
Pursuant to s 117(1) of the Act the general rule in this Court is that each party to proceedings pursuant to the Act shall bear his or her own costs of those proceedings. However if the Court is satisfied that there are circumstances in the particular case which justify it doing so it can make such order as to costs as it considers just (s 117(2)).
In considering what if any order should be made the Court must have regard to the matters in s 117(2A) of the Act which are as follows:
(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, inspections, 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.
None of the matters the Court is required to consider takes precedence over any other and just one of these matters might be sufficient to satisfy the Court that it is justified to depart from the general rule and make an order for costs. Section 117(2A)(g) of the Act makes it clear that the Court can also have regard to other matters it considers relevant.
Rule 19.18 of the Rules sets out the various methods by which any costs that are ordered may 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. The general rule is that when the Court makes an order for costs those costs are calculated on a party and party basis.
Indemnity Costs
Although when costs are ordered they are ordinarily ordered to be paid on a party and party basis the Court does have a discretion to order indemnity costs. However in Kohan & Kohan [1993] FLC 92-340 (at page 79,614) ("Kohan") the Full Court of the Family Court of Australia (“Full Court”) makes it clear 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".
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 decision of Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 ("Colgate"). They included 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;
•Evidence of particular misconduct causing loss of time to the court and to other parties;
•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.
However, as the Full Court said in Yunghanns & Yunghanns [2000] FLC 93-029 the circumstances which might support an order being made on an indemnity basis are not closed.
In support of his application for indemnity costs the husband relied upon the recent decision of the Full Court in the decision of Eames & Eames [2018] FamCAFC 204 where Alstergren DCJ, Aldridge and Austin JJ cited with approval (at [103]): the following statement by Woodward J in Fountain Selected Meats (Sales) v International Produce Merchants Pty Ltd (1988) 81 ALR 397 (at 401):
…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. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion.
Pursuant to r. 19.08 of the Rules a party applying for costs on an indemnity basis must inform the Court if that party is bound by a costs agreement in relation to those costs and the terms of that agreement. In this matter the husband is seeking that his costs be paid on an indemnity basis. The husband has provided the Court with copies of the relevant costs agreements.
“Special Costs”
The husband further submitted in the alternative that there should be an award of "special costs".
In Sfankianakis & Sfankianakis [2019] FamCAFC 54 ("Sfankianakis") Aldridge, Watts and Austin JJ said as follows:(at [10]):
…It is, however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words "such order as to costs … as the court considers just" permit the Court to fashion an order that is apt to the circumstances. One such well-known example is assessment on a trustee basis, which is more generous than party and party costs, but falls short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party costs nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a "special costs order".
ARE THERE CIRCUMSTANCES JUSIFYING A COSTS ORDER
Financial Circumstances of the Parties
Although the wife submits that her financial circumstances are such that she is not in a position to meet an order for costs she will, as will the husband, receive 50 per centum of the net proceeds of sale of the unencumbered Property A which at the time of the hearing was valued at approximately $3 million. In these circumstances I am satisfied that whatever costs the wife has incurred or costs orders that have been made that she is required to pay she will be able to meet any order for costs made in the husband’s favour arising out of her s 79A application if that order provides for those costs to be paid out of her share of the proceeds of sale.
Although the evidence in the hearing before me did not suggest that the husband had a significant income or assets from which he might meet his costs he will like the wife be in a position to use his share of the proceeds of sale of the Property A to pay his costs. However this would significantly reduce what he would otherwise have been entitled to pursuant to the final orders.
In my view the party’s respective financial positions, their only asset being their share of the proceeds of sale of the Property A do support an order for costs being made in the husband’s favour.
Legal Aid:
This factor is not relevant as neither party to these proceedings is legally aided.
The Conduct of the Parties
It is the husband’s case that in particular it is the wife’s conduct in these proceeding which justifies the Court departing from the general rule and making an order for costs. The husband submitted as follows:
It is submitted that the wife’s conduct in these proceedings has been a deliberate campaign of obfuscation and unreasonableness designed to prevent the husband from receiving his share of the matrimonial pool.
She has been represented by a number of different solicitors and has been self-represented. This has added to the husband’s costs and difficulty in bringing this matter to a conclusion.
After orders were made on 19 April 2018 the wife received a payment of $36,500 from the business, an amount which would have been sufficient to enable her to rehouse herself upon the sale of the property. She did not do so. However, on each occasion the wife has come to court and she used as an excuse for her not complying with court orders to sell the property a claim that she has “no money” and therefore will have nowhere to live if the house is sold.
Notwithstanding the wife’s failure to comply with orders for the sale of the property, in her Application in a Case filed 1 March 2019 she sought orders for sale, albeit on the basis that she be appointed as trustee for sale. The orders for sale, but with the wife to be in control, were sought again by her in her Response to an Application in a Case filed 8 May 2019, her Amended Response to Initiating Application filed 18 October 2019 and also in her Initiating Application filed on 6 November 2019. At the hearing on 10 February 2020, while representing herself, the wife told the court that she now opposed the property being sold on any basis as she wants to retain it as she is seeking 100% equity in the property. While certain allowances might be made for a self-represented litigant, the proposal that the property be sold has been the wife’s position since 2016, her new position put during the enforcement hearing was disingenuous and demonstrates her attitude in refusing to co-operate or act reasonably in the resolution of these proceedings.
The orders sought by the wife in her Further Amended Initiating Application filed on 5 June 2020 state that in the event that her application made pursuant to Section 79A is successful the property should be sold. It is therefore evidence that the wife and her various lawyers have been aware at all times that the sale of the property is inevitable. It is submitted that the wife’s Section 79A application which was ill considered and prima facie unlikely to succeed was brought primarily to stall the sale of the property and delay the inevitable.
The wife rejected the husband’s submissions in relation to her conduct on the following basis:
•That the final orders made on 26 August 2016 provided for the sale of the business however due to a new lease not being obtained the business therefore could not be sold, as such she was entitled to apply to the Honourable Court to vary or set aside the relevant paragraphs of the final orders;
•Due to the business not being sold the wife did not receive the monies that were owing to her and on that basis she sought 75% of the net proceeds of the Property A; and
•That even if whilst self-represented submissions were made to retain the Property A, her pre-dominant position during the course of the proceedings was for the former matrimonial home to be sold.
Whilst the wife is of course entitled to apply to the Court to vary the final orders, the matters upon which she now relies in support of her case that an order for costs is not justified were dealt with as part of that hearing and most importantly her application based upon those matters was unsuccessful.
In the reasons I referred to a number of aspects of the way in which the wife conducted her case including the following matters:
· That the wife’s case changed on numerous occasions during the proceedings and the basis upon which she put her case was difficult to comprehend; and
· The wife was prone to making bald assertions without adducing evidence to back them up;
· The wife also had difficulty making concessions even when faced with documents or other evidence that clearly contradicted her assertions or her case generally;
· That her case was to a significant extent founded upon her narrative about the husband and the business rather than evidence or the legal principles to be applied; and
· That even if there had been grounds for setting aside or varying the orders it was difficult to understand the basis of the relief she sought and there was no evidence in support of her assertion as to the value of the business based upon which she ultimately at the conclusion of the case calculated her claim.
The way in which the wife put her case together with the fact that the wife has continued to occupy the former matrimonial home to the husband’s detriment lends some force to the husband’s submission that these proceedings were pursued by the wife to prevent the sale of the Property A and delay the husband receiving his entitlements. In my view although the proceedings were not strictly necessitated by the failure of a party to comply it is reasonable to infer that they were used by the wife as a means of avoiding compliance. The bona fides of her s 79A application was in these circumstances questionable.
Whether any Party has been wholly unsuccessful:
I accept as submitted by the husband that the wife was wholly unsuccessful. Although the wife concedes that she was wholly unsuccessful it is her submission, albeit the basis of that submission is not clear, that despite her lack of success she should not be required to pay the husband’s costs.
Offers in Writing
Neither party relies upon their being any offers in writing to settle the proceedings.
Other Relevant Matters
In my view it is significant that the final orders, which were made by consent, were made in August 2016. Notwithstanding those orders the wife has continued to occupy the Property A and in doing so has not only had benefit of living in the property but has also denied the husband of his entitlements. Whilst as she submits she was entitled to apply to set aside the orders, I note that she did not make that application for some years after the final orders were made. In fact it was only after the husband issued proceedings to enforce the orders that the wife first applied to set aside the final orders. The orders sought by the husband and made by the Court by way of enforcement included orders for the possession of the property for the purposes of its sale and a warrant to remove the wife from the property. The wife is an experienced litigant and as she refers to in her submissions already has outstanding orders for costs. I am satisfied that in these circumstances she would have been aware of the likelihood of there being an application for costs and an order being made. Notwithstanding that risk the wife pursued her application to set aside the final orders, an application based upon her assertions and narrative, not evidence. The husband’s only option was to oppose the wife’s application incurring substantial costs in doing so.
SHOULD COSTS BE ORDERED AND IF SO WHAT SHOULD THE QUANTUM BE?
I am satisfied that for the reasons discussed there are circumstances in this case which justify an order for costs. It is then a question of how those costs should be calculated. It is the husband’s primary position that the wife should pay his costs on an indemnity basis. In support of her submission that this is an exceptional case counsel relied upon the proceedings having been commenced for some ulterior motive or in wilful disregard of known facts or clearly established law or the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions. Whilst I found that the wife made assertions not supported by evidence and that the evidence to support the grounds upon which she relied lacked substance and there is some force in the submission that the wife simply wanted to delay the sale of the Property A I am not satisfied that the circumstances of this case are so exceptional as to warrant indemnity costs.
I am however satisfied that in circumstances where the husband has been denied his entitlements for over 4 years and has incurred substantial costs as a result of the wife’s application to set aside the final orders that he would not be adequately compensated by an order for party and party costs.
As referred to by the Full Court in Stafianakis the Court is permitted to fashion an order that is apt to the circumstances for example an order more generous than party and party costs albeit it falls short of indemnity costs.
On that basis I propose to make orders sought by the husband in accordance with his second alternative. This proposal is based upon an estimate of the solicitors costs in accordance with the Schedule 3 of the Rules and essentially what amounts to indemnity costs with respect to counsel’s fees. This has been a lengthy and protracted matter and counsel briefed for the purposes of the hearing before me has appeared on behalf of the husband for many years. In my view given that history and the complexity of the matter it was reasonable for the husband to brief the same counsel in relation to these proceedings. I am satisfied that he should in all of the circumstances of this case not be penalised for having done so.
Costs of This Application
The husband also seeks an order for the costs of his application for costs. The wife having opposed any order for costs has been wholly unsuccessful albeit the costs ordered are not indemnity costs. Whilst in my view the circumstances are not of the exceptional kind as to warrant an order for all of those costs on an indemnity basis it is in my view also reasonable, if not necessary, given the history of the matter that counsel who appeared at the hearing should be instructed to prepare the submissions in support of the application for costs. In these circumstances the cost of briefing counsel to prepare the submissions would in my view be minimal. In all of the circumstances I propose to allow counsel’s fees in the sum of $2,400 and a further amount of $500 on account of the solicitor’s costs, a total of $2,900.
CONCLUSION
I am satisfied that in this case, particularly given the way in which the wife has conducted the litigation even now repeating arguments the Court has rejected that I should fix the costs. I have no confidence that the wife would accept the husband’s calculations as to the quantum of his costs and that the assessment process would only add to the costs the husband has already incurred. Nor do I consider that in all of the circumstances of this case that the husband should be required to incur the costs of having the file assessed by a costs consultant and propose to accept the estimate of costs provided by the husband’s solicitor. In these circumstances I propose to make orders that the wife pay the husband’s cost of and incidental to the wife’s application pursuant to s 79A fixed in the sum of $107,200 and the costs of his application for costs fixed in the sum of $2,900. The costs will be paid to the husband out of the wife’s share of the net proceeds of sale of the Property A.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Macmillan. Associate:
Dated: 29 June 2021
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