Tarok & Kardan

[2023] FedCFamC1F 476

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Tarok & Kardan [2023] FedCFamC1F 476

File number(s):

SYC 7133 of 2021

Judgment of:

SCHONELL J

Date of judgment:

14 June 2023

Catchwords:

FAMILY LAW – PRACTICE AND PROCEDURE – Compliance with orders – Where the wife relisted the matter because of the husband’s failure to comply with the orders – Where the husband’s solicitor informed the Court that there was no non-compliance – Where the representation made to Court was incorrect – Orders made extending the time for the husband’s compliance – Where the matter was listed for interim hearing as a consequence of representations made by the husband’s solicitor – Costs order made against the husband on an indemnity basis in a fixed sum.   

Legislation:

Family Law Act 1975 (Cth) s 117

Cases cited:

Bant & Clayton (Costs) (2016) 56 Fam LR 31; [2016] FamCAFC 35

Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 118 ALR 248; [1993] FCA 801

Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116

PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123; [2005] FamCA 158

Penfold and Penfold (1980) 144 CLR 311; [1980] HCA 4

Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029; [2000] FamCA 681

Division:

Division 1 First Instance

Number of paragraphs:

48

Date of hearing:

9 June 2023

Place:

Sydney

Solicitor for the Applicant:

Dorter Family Lawyers and Mediators

Solicitor for the Respondent:

Gorval Lynch

The Independent Children's Lawyer:

Did not participate

ORDERS

SYC 7133 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS TAROK

Applicant

AND:

MR KARDAN

Respondent

INDEPENDENT CHILDREN’S LAWYER

order made by:	SCHONELL J
DATE OF ORDER:	14 JUNE 2023

THE COURT ORDERS THAT:

1.By 4.00 pm on Thursday 22 June 2023, the respondent husband (“the husband”) provide to the single expert and the applicant wife (“the wife”) all particulars and documents requested by the single expert in her letters dated 21 April 2023 and 28 April 2023.

2.The husband pay the wife’s costs fixed in the sum of $6,821.34 within 28 days.

3.The Application in a Proceeding filed 17 May 2023 and the Response to Application in a Proceeding filed 26 May 2023 are otherwise dismissed.

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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Tarok & Kardan has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

SCHONELL J:

1. There are parenting and financial proceedings that have been transferred to this Court consequent upon orders made 9 September 2022 in Division 2. Notwithstanding proceedings first commencing on 30 September 2021, the parties nearly two years later have still not been able to progress the preparation of a single expert company valuation.

2. An issue arose as to the provision of documents to the single expert.

3. The applicant wife (“the wife”) relied upon the following documents:

   (1)Application in a Proceeding filed 17 May 2023; and

   (2)Affidavit of wife filed 17 May 2023.

4. The respondent husband (“the husband”) relied upon the following documents:

   (1)Response to Application in a Proceeding filed 26 May 2023; and

   (2)Affidavit of husband filed 26 May 2023.

5. On 9 September 2022, Judge Beckhouse made a series of orders to progress the preparation of the single expert valuation. Pertinent to this application are the following orders:

   8.The parties shall do all acts and things and/or provide to the Single Expert copies of all documents in his/her possession, custody or control within seven (7) days of being requested to do so by the Single Expert.

   …

   30.Within 48 hours of the Husband’s non-compliance with any obligation pursuant to these Orders, the Wife be at liberty to relist this matter before a Judge within 48 hours or the Wife have leave to file an Application in a Proceeding seeking that this matter proceed on an undefended basis.

   31.If the Husband fails to respond and sign any document within 48 hours of being presented with any such document to give effect to these Orders, by way of this Order the Wife shall be at liberty to sign on the Husband’s behalf (whether it be in his individual capacity or in his capacity as director of an entity).

6. Pursuant to the liberty to relist in Order 30, the wife’s solicitors contacted my associate on 9 May 2023 and sought a relisting of the matter. The matter came before the Court on 12 May 2023.

7. On the relisting, the wife’s solicitor informed the Court in the following terms:

   … This is the third time that I have been required to relist this matter before yourself in relation to non-compliance with the orders of September [2022] of Judge Beckhouse.

   (Transcript 12 May 2023, p.2 lines 21–23)

   The husband’s solicitor responded in the following terms:

   Yes, your Honour. There is no non-compliance by the husband whatsoever, and I reject that submission.

   (Transcript 12 May 2023, p.3 lines 26–27) 

   I then inquired of the husband’s solicitor in words to the following effect:

   So you say there is no outstanding request for documents from the single expert.

   (Transcript 12 May 2023, p.3 lines 37–38) 

   The husband’s solicitor responded as follows:

   SOLICITOR FOR THE HUSBAND: There are two requests

   HIS HONOUR: Well, therefore the order is necessary.

   SOLICITOR FOR THE HUSBAND: No, your Honour, because my client is preparing his response as we speak and has been since the request has been made. It’s an extensive request, your Honour. There are 28 paragraphs to the letter from the valuer. And might I remind – sorry, paragraphs, your Honour. And might I remind Ms Dorter that - - -

   HIS HONOUR: Well, Mr Lynch, it’s not a matter of reminding Ms Dorter. Your comments are directed to me.

   SOLICITOR FOR THE HUSBAND: Yes, your Honour. Well, I can inform the court that my client – there is no evidence whatsoever of what Ms Dorter says when she makes the serious allegation that my client is not complying with court orders.

   HIS HONOUR: All right. I need to - - -

   SOLICITOR FOR THE HUSBAND: There are - - -

   HIS HONOUR: [Solicitor for the wife], in light of this, I cannot resolve this matter in this list. I will direct your client to file an affidavit and an application, such affidavit and application to be filed by 4 pm, 19 May. [Solicitor for the husband], your client is to file a response and affidavit in reply by 26 May. And I will list the matter before myself at 9.30 am 20 on 9 June. In the event, contrary to the positions as asserted by either party, that there is an outstanding request, then I will contemplate making an order for indemnity costs. Is there anything else, [Solicitor for the wife]?

   (Transcript 12 May 2023, p.3 line 44 to p.4 line 23) 

8. Arising from the representations made by the solicitors, there was an issue as to whether there had been compliance with the 9 September 2022 orders by the husband, which included an absolute denial that the husband had not complied with earlier orders. Within the confines of the mention, in light of the factual dispute and in the absence of evidence, I was unable to resolve the issue. Accordingly, I made directions for the parties to file affidavits and applications, and listed the matter before me on 9 June 2023.

9. The only purpose of the listing on 9 June 2023 was due to the wife’s solicitor informing the Court that the husband had not complied with the orders and the husband’s solicitor informing the Court that there was not an issue of non-compliance.

10. At the subsequent hearing, the following become apparent from the affidavits of the parties and their submissions. The wife in her affidavit says that on 21 April 2023, the single expert requested business activity statements for various corporate entities for the quarters ending 31 December 2022 and 31 March 2023 as well as draft management accounts including detailed profit and loss statements and balance sheets. On 28 April 2023, the single expert provided a more detailed request. A proper reading of the letter of 28 April 2023 demonstrates that there is not just a request for documents but also a request for answers and/or information.

11. By letter dated 2 May 2023 forwarded to the solicitors for the husband, the wife prepared a draft letter to be provided to the single expert. The draft letter responded to both the letters dated 21 April 2023 and 28 April 2023. The letter called for input from the husband in relation to the documents and information requested by the single expert.

12. In relation to the letter dated 21 April 2023, the commentary in the letter made it plain that there were no documents in the wife’s possession that would answer the request contained in that letter.

13. In the wife’s affidavit, she records the following:

    11.… All of the documents requested by the Single Expert in the letter dated 21 April 2023 and 28 April 2023 remain outstanding.

    She further says:

    43. It has been 26 days since the first request on 21 April 2023. It has been 19 days since the second request on 28 April 2023 and all documents still remain outstanding. Order 8 of the Orders of Judge Beckhouse dated 9 September 2022 required the documents to be provided within 7 days of a request. 

    44. On 17 May 2023, I caused my solicitor to write to [B Pty Ltd] to enquire as to whether [the husband] had provided the outstanding documents, and if so, advise the date and time that the [husband] had provided the documents.

    45. On 17 May 2023, [B Pty Ltd] responded, saying words to the effect “We confirm we have not received any of the information requested in both letters of 21 and 28 April 2023.” 

14. In his affidavit, the husband acknowledges receiving the letters from the single expert. He says the following:

    15. The letter dated 21 April 2023 from the Single Expert requested Business Activity Statements for the period 31 December 2022 and 31 March 2023 and draft management accounts to date including detailed profit and loss statements and balance sheets. On 24 May 2023, these were provided to [the wife’s] solicitor but are yet to be provided to the Single Expert as the joint letter to the Single Expert requires [the wife’s] consent. I set out the timeline leading up to this below.

    …

    21. On 9 May 2023, [the wife’s] solicitor wrote to the Court seeking to re list the matter. The matter was relisted for an in-person mention on 12 May 2023. Before the in-person mention, my solicitor and [the wife’s] solicitor engaged in a series of correspondence:

    …

    b. On 11 May 2023, my solicitor sent proposed orders to the Court, requiring that I comply with the Single Expert request within 14 days. Annexed hereto and marked “AA-4” is a copy of the proposed orders my solicitor sent on my behalf.

    The annexure contained a proposed order to the following effect:

    1. That within 48 hours14 days, the Husband shall comply with his obligations pursuant to Order 8 of the Orders dated 9 September 2022, and instruct his solicitors to amend the draft letter provided by the Wife’s solicitor on 2 May 2023, and, provide all particulars to the best of his knowledge, and all documents, within his custody or control, requested by the Single Expert in her letters dated 21 April 2023 and 28 April 2023.

    (Husband’s affidavit, Annexure AA-4)

15. Notwithstanding that proposal, the husband’s affidavit goes on to record:

    21.      …

    f. On 12 May 2023 at 10: 17 am, my solicitor responded to [the wife’s] solicitor indicating that I would be responding to the Single Expert but required additional time. My solicitor again suggested that [the wife] agree to the position I put forward on 11 May 2023 to avoid costs. I also did not agree to pay [the wife] costs as I have been more than willing to comply, but [the wife] is being unreasonable by not giving me or my accountants additional time to deal with the extensive requests from the Single Expert.

16. Inquiries made with the parties indicate that the single expert still has not received all of the documents and information that has been requested.

17. The orders of Judge Beckhouse could not be clearer. Documents are to be sent to the single expert within seven days of a request. The orders were made on a contested basis and there has been no appeal from the orders nor any application to vary.

18. In the event that the husband contends that the orders are impractical or serve an injustice, then he should file an application and convince a court to vary the order. Until then, he remains bound by the orders.

19. I found the solicitor for the husband’s submissions at times inconsistent, circular and contradictory. It was clear, however, that he conceded, contrary to what the Court was informed on 12 May 2023, that the husband had not complied with the orders of 9 September 2022. It is quite clear from a reading of the transcript of 12 May 2023 and the husband’s affidavit that contrary to what the Court was informed, the husband had not as at 12 May 2023 complied with the orders.

20. The listing of this matter in a busy duty list arises entirely as a consequence of the husband’s failure to comply with orders and the Court being informed that there had been “no non-compliance by the husband whatsoever” (Transcript 12 May 2023, p.3 lines 26–27). Indeed, this proposition, albeit in a slightly different way, was advanced not once but twice.

21. This has wasted the Court’s time and the resources of the parties. The husband’s solicitor conceded that the husband needed further time to comply with the orders. I propose to make Order 1 in the wife’s application albeit in a revised form.

22. In the event that there is further non-compliance with the orders of Judge Beckhouse in relation to the preparation of the single expert report, then either party is at liberty to apply to the Court to seek such further remedies as are appropriate, including a dismissal of the other party’s relief and for the matter to proceed on an undefended basis.

    APPLICATION FOR COSTS

23. I indicated on the last occasion that I would consider making an order for indemnity costs in the event I was satisfied that contrary to what I had been told there was non-compliance with the orders. It is abundantly clear to me that this matter could have been resolved on 12 May 2023 but for what the Court was told.

24. Both parties initially sought orders for indemnity costs. In those circumstances, it would seem irresistible that someone should pay indemnity costs. That said, during the course of submissions, the husband sought that each party pay their own costs. It was unexplained why there was a departure from his earlier position that the wife should pay his costs on an indemnity basis.

25. That said, the authorities make it plain that an order for indemnity costs is not one that is made lightly and there should be exceptional circumstances that warrant departure from the usual form of order. In Kohan & Kohan (1993) FLC 92-340, their Honours in the Full Court observed at 79,614:

    The intent of s117(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 rates of charges. By O. 38 r. 2, the provisions of O. 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O. 38 r. 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. 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. See Degmam v. Wright (No.2) “(supra); Wentworth v. Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR at 368 to 370.

    Indemnity costs orders are still an exception in this and other jurisdictions. …

26. Justice Sheppard in Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 118 ALR 248 identified at 256–257 the category of cases which might attract an indemnity costs order. The category of cases in which a court may make an indemnity costs order are not however limited to those identified by Shepard J.

27. In Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 at 87,471, the Full Court said:

    … It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought. All that is required is that the Court asked to exercise the discretion be satisfied that some '”particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis”: per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.

28. I am satisfied that the husband’s conduct in this case of informing the Court that he had complied with an order in circumstances where he clearly had not, leading to a further unnecessary hearing today, is such as to warrant consideration of an order for indemnity costs. It is quite clear that what the Court was told on 12 May 2023 was not an accurate representation of the state of the husband’s compliance as at that date. The entirety of this application has come about as a consequence of that fact.

29. An application for costs is governed by the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”), which provides a general rule that each party to the proceedings should bear their own costs.

30. Section 117(2) reposes in the Court a discretion to make a costs order in circumstances where the Court determines that there are circumstances that justify it making an order and, if there are such circumstances, the Court may make such order as it considers just, having regard to the matters set out in s 117(2A).

31. In Penfold and Penfold (1980) 144 CLR 311, the plurality in the High Court determined that to make an order under s 117(2), the Court needs to make a finding of justifying circumstances as a preliminary prerequisite to the making of an order. Their Honours also observed that terms such as ‘an exceptional case’, ‘special circumstances’ or ‘a clear case’ are not necessary determiners of whether or not an order for costs should be made. All that is required or necessary is that there are justifying circumstances.

32. It is well-settled law that no one factor under s 117(2A) is determinative and the Court may give such weight as it considers relevant to any factor. In PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123, the Full Court observed:

    41. … Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs

1. Dealing now with the relative subsections in s 117(2A).

   (a)       The financial circumstances of each party to the proceedings

2. The financial position of the parties remains somewhat unclear. The wife in her evidence sets out that she has a weekly income of approximately $1,461 per week together with an order by way of spousal maintenance and child support. She indicates that she is entirely reliant on her salary and that the husband is in arrears with respect to his child support payments.

3. The wife indicates that she is borrowing money from her family and owes her mother approximately $300,000. She says in her affidavit that the husband has paid legal fees of approximately $175,000.

4. The husband does not directly put in issue the contentions referred to above from the wife’s affidavit save to say that he does not agree that he is in a better financial position than the wife and that he disagrees that he is in arrears for child support payments, contending that he is in fact on a payment plan and making payments for child support. While the husband’s affidavit asserted he was not in arrears as to child support that also appears to not be an accurate representation.

5. The husband elected to provide no current evidence as to his financial circumstances. He otherwise contends that he pays his legal fees from the income he receives from the companies.

6. Either way, impecuniosity does not prevent the making of a costs order.

   (b)      Whether the parties are in receipt of legal aid

7. Not relevant.

   (c)       The conduct of the parties to the proceedings

8. I am satisfied for the above reasons that the husband’s conduct in relation to this application is the reason for the incurring of the wife’s costs.

   (d)      Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court

9. The proceedings themselves have not been necessitated by the failure of a party to comply with an order and therefore this is not a relevant consideration.

   (e)       Whether any party to the proceedings has been wholly unsuccessful in the proceedings

10. The term “wholly unsuccessful” refers to a situation in which proceedings as a whole have been unsuccessful, rather than necessarily an application (see Bant & Clayton (Costs) (2016) 56 Fam LR 31). Neither party was wholly unsuccessful.

    (f)       Whether any party has made an offer in writing

11. The wife made an offer to resolve the matter. The husband elected not to accept it. An imprudent rejection of an offer is another basis in which to consider an indemnity costs order.

    CONCLUSION

12. I am satisfied that the conduct of the husband leading to the relisting and the offer of settlement made by the wife to resolve the matter are circumstances that are sufficient to warrant the making of a costs order on an indemnity basis.

13. The wife has incurred costs. She gives an estimate as to her costs on an indemnity basis in the sum of $6,821.34.  No submissions were put to me to contend that this amount was an incorrect calculation or an unreasonable amount.

14. The husband’s solicitor conceded that the husband needed further time to comply with the order. I will extend the time for compliance.

15. I propose to make an order that the husband pay the wife’s costs on an indemnity basis and fix that amount in the sum of $6,821.34. I will give the husband 28 days to comply with the order.

16. I will make orders accordingly.

I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell.

Associate:

Dated:       14 June 2023