Sresbodan and Sresbodan and Ors (Costs)
[2012] FamCAFC 145
•6 September 2012
FAMILY COURT OF AUSTRALIA
| SRESBODAN & SRESBODAN AND ORS (COSTS) | [2012] FamCAFC 145 |
| FAMILY LAW ─ APPEAL ─ COSTS ─ Where the wife, and the third and fourth respondents were obliged to resist the husband’s application for leave to appeal, and incurred costs and expenses in doing so ─ Where the husband was wholly unsuccessful with his application for leave to appeal ─ Where the circumstances justified the making of an order in favour of the wife, and in favour of the third and fourth respondents for costs of and incidental to the husband’s application for leave to appeal. |
| Family Law Act 1975 (Cth) Part VIII; ss 117, 117(2), 117(2A)(e) |
| APPLICANT: | Mr Sresbodan |
| FIRST RESPONDENT: | Ms Sresbodan |
| SECOND RESPONDENT: | Trustees of the Bankrupt Estate of Mr Sresbodan |
| THIRD RESPONDENT: | Mr R |
| FOURTH RESPONDENT: | Mr O |
| FILE NUMBER: | SYF | 4345 | of | 2006 |
| APPEAL NUMBER: | EAA | 150 | of | 2010 |
| DATE DELIVERED: | 6 September 2012 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Coleman, Thackray & Young JJ |
| HEARING DATE: | By way of written submissions |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 7 June 2010 |
| LOWER COURT MNC: | [2010] FamCA 494 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Obradovic |
| SOLICITOR FOR THE APPLICANT: | Pagano Burlovich Lawyers |
| COUNSEL FOR THE 1ST RESPONDENT: | Ms Nash |
| SOLICITOR FOR THE 1ST RESPONDENT: | Adrian Twigg & Co Solicitors and Conveyancers |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Ash |
| SOLICITOR FOR THE 2ND RESPONDENT: | Watson & Watson Solicitors |
| COUNSEL FOR THE 3RD & 4TH RESPONDENT: | N/A |
| SOLICITOR FOR THE 3RD & 4TH RESPONDENT: | K Firm |
Orders
That the husband pay the wife’s costs of and incidental to the application for leave to appeal filed 24 November 2011 as agreed or assessed on a party and party basis.
That the husband pay the third and fourth respondents (“K Firm”) costs of and incidental to the application for leave to appeal filed 24 November 2011 as agreed or assessed on a party and party basis.
IT IS NOTED that publication of this judgment under the pseudonym Sresbodan & Sresbodan and Ors (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EAA 150 of 2010
File Number: SYF 4345 of 2006
| Mr Sresbodan |
Applicant
And
| Ms Sresbodan |
First Respondent
And
| Trustees of the Bankrupt Estate of Mr Sresbodan |
Second Respondent
And
| Mr R |
Third Respondent
And
| Mr O |
Fourth Respondent
REASONS FOR JUDGMENT
COSTS
introduction
On 16 December 2011, for reasons which the Court then published, the husband’s application for leave to appeal against interlocutory orders made by Watts J in proceedings for settlement of property was dismissed, and the costs of the application were reserved.
On 22 December 2011, the solicitors for Ms Sresbodan, the first respondent wife to the husband’s application for leave to appeal (“the wife”), filed submissions in support of her application for an order that the husband pay the wife’s costs of and incidental to the husband’s unsuccessful leave application.
On 18 January 2012 Mr R and Mr O (“K Firm”), the third and fourth respondents to the husband’s application, filed submissions in support of their application for an order that the husband pay their costs of and incidental to the husband’s unsuccessful application for leave to appeal.
On 20 April 2012 the husband filed submissions in opposition to the application for costs by K Firm, and in support of an application that the husband’s Trustees in Bankruptcy (“the Trustees”) who are the second respondents in the proceedings, “pay the costs of and incidental to the appeal proceedings” and that the “husband’s estate not be used to pay the costs ordered by this honourable Court”.
K Firm filed submissions in reply to those submissions of the husband on 28 May 2012.
The Trustees filed submissions on 20 June 2012, opposing any order being made against them in their personal capacity.
Regrettably, the delays in filing and serving submissions have delayed the Court determining the outstanding costs issues. For reasons which will become apparent, it is appropriate to first consider the wife’s claim for costs.
the wife’s claim for costs
As the wife’s solicitors indicated by their letter of 28 May 2012, neither the husband nor any other party has responded to, or disputed, anything raised by the wife in support of her claim for costs. The issue with respect to the wife’s costs is more one of against whom a costs order in her favour should be made than whether the wife is entitled to a costs order.
The wife was obliged to resist the husband’s application for leave to appeal, and incurred costs and expenses in doing so. As was submitted on the wife’s behalf, the husband was “wholly unsuccessful” in relation to his applications. We agree with the submission on her behalf that:
4.Whilst the issues ultimately pressed in these Appeals concerned the Husband and the 2nd, 3rd and 4th Respondents the Wife had an interest in the future conduct of the substantive proceedings and the impact on them of orders sought by the Husband in these Appeals.
We are of the opinion that, having had careful regard to s 117 of the Family Law Act1975 (Cth) (“the Act”) and in particular s 117(2A)(e), the circumstances do justify the making of an order in favour of the wife for costs of and incidental to the husband’s application for leave to appeal, including any costs reserved in that application.
the claim for costs against the trustees
Although not expressly so worded, it is apparent from the husband’s submissions that he seeks that he be indemnified by the Trustees personally with respect to any order made against him in favour of the wife.
The husband submitted in that regard that on 15 November 2011, the solicitors then acting for him wrote to the Trustees’ solicitors seeking confirmation from the Trustees, amongst other things:
(b)…
(i)That an undertaking be provided that the Trustee [sic] will not disburse any of the moneys which they hold;
(ii)That the substantive proceedings before the Family Court of Australia be stayed.
The husband further submitted that the Trustees refused to “provide an undertaking that it would not disburse any of the monies which they hold”.
The husband referred to his Amended Notice of Appeal and to the Undertaking of the Trustees to this Court of 1 December 2011 in the following terms:
...“Pending further Order of the Family Court or the Federal Court the Trustees undertake not to disperse any funds held by them on or on behalf of the husband”...
It was submitted, on behalf of the husband, that:
(f)Had the Trustee [sic] not provided the Undertaking as sought by this Honourable Court, this Honourable Court was minded to adjourn the Appeal to a future date.
(g)Had the Trustee [sic] agreed amongst other things to provide the undertaking as sought by Pagano Burlovich Lawyers on 25 November 2011, the costs incurred by each of the parties to the proceedings would have been substantially lower.
The submissions on behalf of the Trustees disputed that, had the Undertaking to which the husband referred not been provided by the Trustees, the Court would have been “minded” to adjourn the husband’s application.
It was submitted, on behalf of the Trustees, in that regard:
6.… The Court vigorously explored with all parties the competing cases for adjournment and dismissal and found the case for the former wanting. Dismissal was an outcome of common sense, an outcome which was manifestly correct and manifestly in the best interests of the Wife, the Husband’s creditors, and (of course) the Husband himself.
In relation to the Undertaking which the Trustees gave to this Court, it was submitted:
8.But the undertaking given – an undertaking to facilitate finality and to cut off costs – is not the undertaking sought in the Husband’s offer two weeks earlier, namely an undertaking coupled with an acknowledgement that inutile proceedings should merely be adjourned. The Trustees as officers of the Court, as parties, and as trustees owing fiduciary duties to the Husband’s creditors and to the Husband himself were justified in pressing for a dismissal and were justified in giving an undertaking to facilitate a dismissal. They were not justified in giving an undertaking to incur more costs and more delay.
In support of their contention that the Court could not properly form the opinion required under s 117(2) of the Act, it was submitted that, whilst the husband was entitled to pursue his application for leave to appeal, he did so in the face of opposition by the Trustees, and was wholly unsuccessful. It was accordingly submitted that in such circumstances there was no basis upon which the order sought by the husband should be made.
As the submissions of the Trustees assert, the offer made on behalf of the husband differed materially from the Undertaking ultimately given by the Trustees. Moreover, as the Court’s Reasons for Judgment of 16 December 2011 confirm, all parties to the proceedings, including the Trustees, were obliged to participate in the proceedings in which the husband was wholly unsuccessful. The husband persisted with an application for leave to appeal matters unrelated to the Undertaking, and was wholly unsuccessful in such application. The Undertaking given on behalf of the Trustees changed nothing in that regard.
We are not of the opinion that the Trustees should be ordered to pay the wife’s costs, either by way of order in her favour, or by way of an order indemnifying the husband. The order for costs in favour of the wife will accordingly be against the husband.
k firm claim for costs
In support of their application for costs, K Firm relied upon the husband having been “wholly unsuccessful”, as he undoubtedly was, in his application for leave to appeal.
Largely for the reasons submitted by K Firm, we would not be disinclined to order that the husband pay costs, notwithstanding that he is a bankrupt, in reliance upon his financial circumstances if we were otherwise of the opinion that the circumstances justified a costs order. Moreover, we do not understand the husband to seek to rely upon any alleged impecuniosity as a reason for not awarding costs against him.
Albeit despite K Firm having been removed from the proceedings as a result of the Court’s judgment of 16 December 2011 in EA 86 of 2011, K Firm were properly parties to the proceedings, for the reasons submitted by them, and particularly because, as K Firm submitted:
5.1 ...
(b)As creditors, [K Firm] were appropriate contravenors ─ if the entirety of the Husband’s share of the proceeds of the [K] property were found to be “protected property”, they would receive nothing from the Husband’s bankrupt estate. Clearly [K Firm] were parties adversely by the outcome of the appeal (actually or potentially).
...
(d)The Notice of Appeal as originally filed sought an annulment of the Husband’s bankruptcy [...]. Creditors are clearly entitled to be heard in relation to an application for an annulment of a bankruptcy. This right is given statutory recognition in Rule 26.23 of the Family Law Rules, which requires creditors to be given notice of an annulment application. The appeal as pressed did not seek an annulment of the Husband’s bankruptcy.
It was submitted, on behalf of the husband, in response that:
(j)It is disputed that [K Firm] were properly parties to the Appeal as alleged in the submission for costs:-
1.The Trustee’s had intervened in the pending property settlement proceedings before the Family Court of Australia to protect the interests of the Creditors of the Application Husband’s Estate, in accordance with their duties as detailed in section 19 of the Bankruptcy Act;
2.There was no evidence that the Trustees had failed, or was likely to fail to discharge their fiduciary and statutory duties to the Creditors of the Applicant Husband’s Estate;
...(Errors as in original)
Whilst there is some logical force in the submissions of the husband in the light of the Court’s judgment in EA 86 of 2011, they overlook the reality that the husband was successful in that application because the Court accepted that the trial Judge had erred in making the order of 18 July 2011. As a matter of law, the trial Judge’s order was presumed to be correct. Albeit unsuccessful, K Firm were entitled to resist the husband’s application for their removal. Moreover, the costs of that application have been determined.
We cannot accept that because of the fortuitous circumstance that a decision was made in EA 86 of 2011, that K Firm were not properly parties to the latter proceedings, that they should be denied the costs of an application in which they, and others, were wholly successful.
We are accordingly of the opinion that, having had careful regard to s 117 of the Act, the circumstances justify the making of an order, in favour of K Firm, for costs of and incidental to the husband’s unsuccessful application for leave to appeal.
I certify that the preceding twenty eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Coleman, Thackray and Young JJ) delivered on 6 September 2012.
Associate:
Date: 06.09.2012
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