T Group Pty Limited and Sitwell

[2013] FamCA 170

FAMILY COURT OF AUSTRALIA

T GROUP PTY LIMITED & SITWELL [2013] FamCA 170

FAMILY LAW – COSTS – Indemnity – Where the applicant seeks costs on an indemnity basis – Where the conduct of the respondent in making serious allegations against the applicant caused the applicant to seek legal advice and become a party in the proceedings – Where the respondent was given ample opportunity to formalise the allegations yet failed to do so other than in the most general of terms and where the respondent was entirely unsuccessful and put the applicant to very considerable cost  – Where a costs indemnity order is justified.

Family Law Act 1975 (Cth) – s 117, s 117(1), s 117(2), s 117(2A)

Colgate Palmolive Co and Another v Cussons Pty Limited (1993) 118 ALR 248

APPLICANT: T Group Pty Limited

RESPONDENT: Mr Sitwell

FILE NUMBER: PAC 5769 of 2010

DATE DELIVERED: 1 February 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Parramatta

JUDGMENT OF: Johnston J

HEARING DATE: 6 September 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Bradley

SOLICITOR FOR THE APPLICANT: Meyer Partners

FOR THE RESPONDENT: No appearance

Orders

1. That Mr Sitwell pay the costs of T Group Pty Limited of and incidental to these proceedings as agreed or assessed on an indemnity basis although counsel’s costs shall be assessed at a rate not exceeding $5000 per day. 

IT IS NOTED that publication of this judgment by this Court under the pseudonym T Group Pty Limited & Sitwell has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: PAC 5769 of 2010

T Group Pty Limited

Applicant

And

Mr Sitwell

Respondent

REASONS FOR JUDGMENT

1. On 24 July 2012 T Group Pty Limited (“T”) filed an application in a case seeking the following order:

   The husband, [Mr Sitwell], pay the costs of the [T Group Pty Limited] of, and incidental to, the Family Court proceedings, on an indemnity basis.

2. As I have indicated in other judgments in proceedings involving Mr Sitwell and Ms Sitwell, T was established by three of their sons.  For convenience I shall refer to Mr and Ms Sitwell respectively as “the husband” and “the wife”.

3. The primary purpose of establishing this corporation was to endeavour to purchase the business B Pty Ltd from the husband and the wife. That has not occurred.  I have referred previously to the relevant background and history about this matter.

4. The application in a case was made returnable on 27 August 2012.  There was no appearance by the husband on that occasion.  But a message was received by the Court to the effect that the husband asserted that he was too ill to attend court that day and that he would provide medical evidence later.

5. In those circumstances I adjourned the application to 6 September 2012 and noted that in the event that the husband failed to appear on that occasion, the other parties (including T) would be asking the Court to hear their respective applications as undefended proceedings.  Because of difficulties that the various parties had been having in their endeavours to serve the husband, I also made an order to the effect that the husband could be served by email.

6. On 6 September 2012, again there was no appearance by the husband.  The husband forwarded electronically what purported to be a medical certificate by Dr C to the effect that the husband was not well enough to attend court.  But in view of the history of the proceedings and the absence of evidence in proper form to explain the absence of the husband, I decided to grant leave to T to present its application as an undefended proceedings.

Background

1. T became involved in the proceedings in this Court in the following manner.

2. Mr Prentice, accountant, had been appointed under orders of this Court to act on behalf of the husband and the wife to sell their business, B Pty Ltd.  A dispute had arisen between the husband and Mr Prentice. As referred to in previous judgments in these proceedings, the husband commenced proceedings in the Supreme Court of New South Wales asserting that he had an agreement with Mr Prentice to purchase the B Pty Ltd business.  The husband sought an order for specific performance of the alleged agreement. The husband was unsuccessful in the Supreme Court proceedings.

3. During the course of the Supreme Court proceedings the husband made serious allegations of criminal fraud and misappropriation of funds against T. Justice Pemberton made directions for the husband to file formal process to enable such assertions to be ventilated and tested in that Court.  But the husband did not file any application. Instead, he made similar allegations in this Court on 4 May 2012.

4. On 4 May 2012 I ordered the husband to file and serve an amended response (which would include the orders he sought against T in the light of his assertions) and supporting material not later than 14 May 2012.  I adjourned the proceedings to 16 May 2012.

5. The husband did not file an appropriate response but he did file an affidavit in which he asserted that he was being defrauded by the directors of T and that he had received advice that some of the matters about which he was complaining probably amounted to criminal offences.  The affidavit did not contain any evidence to support the husband’s assertions.

6. T took the assertions very seriously because when the matter came before this Court on 16 May 2012, T was represented by Mr Robert Lethbridge of Senior Counsel.  Amongst the orders which I made on that occasion was an order to the effect that the husband be restrained without leave of the Court first having been obtained from filing any application naming as a party or seeking orders of this Court against T in relation to applications in this Court.

7. The proceedings were before the Registrar on 17 July 2012 on which occasion T’s solicitor, Mr Mc Cauley, informed the Registrar that his client wished to make an application for costs against the husband.  The Registrar directed that such an application would be made returnable on 27 August 2012.

8. As indicated above, T filed this costs application in July 2012.

Submissions on behalf of T

1. It was submitted that the husband made very serious allegations of criminal fraud and misappropriation of funds against T and its directors.  The allegations have never been substantiated and were of the most egregious nature.  Because of this conduct by the husband, T sought leave to intervene in the proceedings to protect its position and reputation.

2. The husband failed to avail himself of the Court’s offer to file an application seeking relief based on such allegations.  So to that extent he has been wholly unsuccessful in the proceedings.

3. T has been put to substantial cost in seeking legal advice, making application for leave to intervene in the proceedings and successfully applying for orders against the husband, all as a consequence of the husband’s allegations.

4. In all the circumstances, the Court should exercise its discretion to make an order that the husband pay its costs.

5. Moreover, the husband’s conduct has been such that the Court should order that the husband pay T’s costs on an indemnity basis.  The principles relevant to consideration of the making of an indemnity costs order were set out by Sheppard J in Colgate Palmolive Co and Another v Cussons Pty Limited (1993) 118 ALR 248. At page 255 his Honour noted some of the circumstances which have been thought to warrant the exercise of the discretion to make an indemnity costs order. These included evidence of particular misconduct which causes loss of time to the court and to the other parties and the making of allegations which ought never to have been made. This is what has occurred in the present case.

Conclusion

1. I accept the general thrust of the submissions on behalf of T.  The usual position in relation to costs in proceedings under the Family Law Act 1975 (Cth) (“the Act) is set out in s 117(1) namely, that each party shall pay their own costs.

2. The Court is empowered to make a costs order pursuant to s 117(2) of the Act if the Court considers it just to do so upon a consideration of the relevant matters in s 117(2A) of the Act.

3. In relation to financial circumstances of each of the parties, what the husband’s current financial circumstances are is not clear to me.  Nor are those of T. 

4. The application is really on the basis of the conduct of the husband in the proceedings.  In my view it is clear that the conduct of the husband in making serious allegations against T caused the company to seek legal advice and become a party in the proceedings.  This has had very serious consequences in terms of costs to T.  The husband was given ample opportunity to formalise his allegations yet he has failed to do so other than in the most general of terms.  In this sense he has been entirely unsuccessful and has put T to very considerable cost.

5. Accordingly, in my view, it is just that T be reimbursed for its reasonable costs in the proceedings.  I am persuaded that this is a case which falls within the principles which courts have considered justify a costs indemnity order.  Having said this, however, in my view it was not necessary for T to engage Senior Counsel.  I propose to make an order that the husband pay T’s costs on an indemnity basis but not for Senior Counsel.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johnston delivered on 1 February 2013.

Associate:     

Date:              1 February 2013