Tarok & Kardan (No 3)
[2024] FedCFamC1F 511
•1 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Tarok & Kardan (No 3) [2024] FedCFamC1F 511
File number(s): SYC 7133 of 2021 Judgment of: SCHONELL J Date of judgment: 1 August 2024 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where the husband sought an urgent Application in a Proceeding for interim property settlement, joinder of a third party and consequential injunctions against that third party – Where the wife opposed the urgent relief sought by the husband – Where the putative second respondent opposed the urgent relief sought by the husband – Where leave was granted for the adjournment.
FAMILY LAW – COSTS – Where the wife and putative second respondent sought costs on an indemnity basis – Consideration of factors in s 117(2A) of the Family Law Act 1975 (Cth) – Where the husband’s solicitor sought that the costs be assessed – Where the Court is satisfied there are exceptional circumstances warranting indemnity costs – Costs ordered on an indemnity basis to both wife and putative second respondent.
Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 119 CLR 118; [1993] FCA 801
Cross & Beaumont (2008) 39 Fam LR 389; [2008] FamCAFC 68
Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116
Pascoe & Larsen (No 2) [2022] FedCFamC1A 126
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: 28 Date of hearing: 30 July 2024 Place: Sydney Counsel for the Applicant: Mr Somerville Counsel for the First Respondent: Mr Stapleton Solicitor for the First Respondent: Dorter Family Lawyers and Mediators Counsel for the Putative Second Respondent: Mr Foley ORDERS
SYC 7133 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR KARDAN
Applicant
AND: MS TAROK
First Respondent
H BANK LIMITED
Putative Second Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
1 AUGUST 2024
THE COURT ORDERS THAT:
1.The husband pay the costs of the wife assessed in the sum of $8,800; such sum to be paid within 28 days.
2.The husband pay the costs of the putative second respondent assessed in the sum of $4,290; such sum to be paid within 28 days.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
On 30 July 2024 there was listed for hearing what the husband contended was an urgent Application in a Proceeding for interim property settlement, joinder of a third party and consequential injunctions against that third party.
Notwithstanding the assertion as to urgency that gave rise to the listing, the husband then sought an adjournment. The application for adjournment was opposed by the wife and the putative second respondent. I granted the husband’s application, and the matter was adjourned to 12 August 2024.
Each of the respondents made an application for their costs which was opposed by the husband. I advised the parties that I would in due course deliver reasons for the adjournment and in relation to the question of costs. These are those reasons.
The husband and wife are involved in contested financial and parenting proceedings which are listed for a final hearing for five days commencing 16 September 2024. The extant applications have involved a number of interlocutory skirmishes, some of which have been resolved by consent and others which have been the subject of orders following a hearing.
On 17 July 2024 the husband’s solicitors wrote to the Court requesting an urgent listing in relation to an application for financial relief. The letter identified that the husband sought to join to the proceedings H Bank. The letter contained the following proposition:
“It is essential that [H Bank] be joined to the proceedings so that they can instruct [J Company] to refrain from calling, collecting and selling the [Suburb L] property and be restrained from taking any further action, pending the determination of the final hearing, which is scheduled in less than a month. If [H Bank] is not restrained both our client and the respondent will be prejudiced.”
The letter went on to identify that the husband lacked funds to retain counsel which impeded his ability to obtain effective representation and sought a release of $100,000 from funds held on deposit so that he could engage counsel to appear at the final hearing.
On 19 July 2024 my Associate advised the parties that in view of the asserted urgency the matter would be listed at 9.30 am on Tuesday, 23 July 2024 for mention.
The Application in a Proceeding sought the following orders:
1.That leave be granted to serve the application on short notice.
2.That the matter be listed on an urgent basis.
3.That the sum of $100,000 be paid to each of the Applicant and Respondent by way of partial property settlement from the funds in the Controlled Monies Account held on behalf of the parties’ and care of their respective solicitor’s trust accounts.
4.That [H Bank] be joined as a party to the proceedings.
5.That [H Bank] do all acts and things and sign all documents necessary to instruct [J Company] to refrain from calling in, collecting and selling any secured assets that form part of the matrimonial property until judgment is delivered after the final hearing, including but not limited to:
(a)The property located at [K Street], [Suburb L] NSW […], which is held jointly by the respective parties; and (b) [M] Pty Limited […].
6.That [H Bank] be restrained by way of injunction from further instructing [J Company] to take any action required by way of enforcement pending the determination of the final hearing.
On 23 July 2024 the applicant appeared through his solicitor. The wife also appeared through her solicitor as did the Independent Children’s Lawyer (“the ICL”). Despite the urgency of the application, neither the wife nor H Bank had been served with the application and affidavit.
Given the contended urgency, directions were made for the husband to file and serve H Bank and the wife by 4.00 pm that day and the matter was listed on Tuesday, 30 July 2024 for an in-person interim hearing.
On 29 July 2024 an affidavit was filed by Mr N, a professional from O Lawyers, who are the solicitors for H Bank. The putative second respondent H Bank also filed a Case Outline which recorded that they opposed joinder and sought a dismissal of the application. The wife also filed an affidavit and a Response. Likewise, the wife sought dismissal of the application.
On the return, the husband was represented by a solicitor who advised the Court that senior counsel had previously been retained by the husband but that he was not available to appear. The solicitor indicated that the husband sought an adjournment of the proceedings and sought initially an urgent re-listing to another date or on the first date available to the Court. The solicitor advised he was not prepared or able to run the application. Notwithstanding the asserted urgency the solicitor for the husband did not press any of the asserted “urgent” relief.
The application for adjournment was opposed by the wife and the putative second respondent. Whilst I am not satisfied that the Court has been adequately informed as to why the matter could not proceed where a practitioner has advised the Court on now a number of occasions that an application is urgent and given the matter is shortly to be listed for a final hearing, I wish to avoid jeopardising the final hearing dates.
That said, the wife and putative respondent have been put to unnecessary cost by the application of the husband. In the case of the putative second respondent, their costs were quantified in the sum of $4,290 whilst in the case of the wife the costs were estimated in the sum of $8,800.
Each of the parties made some brief submissions in relation to the question of costs; the husband contending that a costs order should not be made and alternatively that if there is a costs order then it should be met out of the husband’s ultimate property settlement.
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.
Section 117(2) of the Act reposes in the Court a discretion to make a costs order if the Court determines there are circumstances that justify this 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) of the Act.
In Penfold and Penfold (1980) 144 CLR 311 at [315], the plurality in the High Court determined that to make an order under s 117(2) of the Act, 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 a term such as “a clear case” is not necessarily a determiner of whether an order for costs should be made. All that is required, or necessary, is that there are justifying circumstances.
It is well-settled law that no one factor in 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 at [130], 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.
I am satisfied that the only matter that is relevant to the determination of the application as to s 117(2A) of the Act is the conduct of the husband in relation to the proceedings. In that respect I am satisfied that the husband has been less than diligent in prosecuting his application. He sought that Court deal with his application urgently and when given the opportunity declined to do so instead seeking an adjournment. The consequence of acting in such a fashion is to put the wife and the putative second respondent to significant cost. The costs orders are sought on an indemnity basis.
The authorities make plain that an order for indemnity costs is not one that is lightly made, and there should be circumstances of an exceptional kind that warrant orders for costs on an indemnity basis. 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. …
Justice Sheppard in Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 119 CLR 118 observed at [24]:
24.It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:
1. The problem arises in adversary litigation, ie litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority.
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. In this court the provisions of O 62, rr 12 and 19, and the Second Schedule to the rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v British Transport Commission and Handley JA in Cachia v Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
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. The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client 88as and when the justice of the case might so require’’. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo: the categories in which the discretion may be exercised are not closed’’. Davies J expressed (at 6) similar views in Ragata.
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. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); 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 (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). 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. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
The category of cases in which a Court may make an indemnity costs order are not closed and are not limited to those identified by Sheppard J.
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.
I am satisfied that there are exceptional circumstances that warrant an order for costs on an indemnity basis. Where a party, as is the case here, requests the Court deal with their application on an urgent basis and then elect not to prosecute it instead seeking an adjournment is conduct that in my view falls in the exceptional category to warrant an order for costs other than on a party/party basis.
The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) and authorities make plain that I can fix an amount for costs. As McClelland DCJ observed in Pascoe & Larsen (No 2) [2022] FedCFamC1A 126:
27.Rule 12.17 of the Rules sets out the methods of calculating costs. These include the Court fixing a specific amount for costs (r 12.17(1)(a)) or an order for the costs to be assessed on a particular basis (r 12.17(1)(b)).
28.In Stoian v Fiening (Costs) [2014] FamCA 944 at [91], Kent J endorsed the principles for applying a rule equivalent to r 12.17 when referring to r 19.18 of the now repealed Family Law Rules 2004 (Cth) as adumbrated by Einstein J in Idoport Pty Limited v National Australia Bank Limited & Ors [2007] NSWSC 23 at [9]. Those principles include:
i.the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation;…
ii.the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable;…
iii.the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available;…
iv.a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place;…
iv.the gross sum “can only be fixed broadly having regard to the information before the Court”;…
(Citations omitted)
29.Consistent with those principles, it has been determined that where a Court orders a party to pay costs, it may be appropriate for the Court to fix a lump sum. By doing so, the Court can avoid further delay and inconvenience being occasioned by the requirement to tax a bill: Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432 at [51].
The husband’s solicitor sought that the costs be assessed. I decline to do so. Having regard to the amount sought and the authorities to which I have referred earlier, I am satisfied that it is appropriate to fix costs in a lump sum. Doing so avoids further delay, inconvenience, and costs to the parties.
I am satisfied that an order should be made for the husband to pay the costs of the putative second respondent in the sum of $4,290 and the wife in the sum of $8,800. I have had regard to the husband’s Financial Statement but in doing so observe that impecuniosity is not a barrier to the making of a costs order where there are circumstances that justify the Court in doing so (Cross & Beaumont (2008) 39 Fam LR 389 at [60]). I am satisfied that such circumstances exist.
I am satisfied that an order should be made for the husband to pay the putative second respondent’s and wife’s costs. I intend to order the husband to pay the costs of the wife and the putative second respondent within 28 days.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 1 August 2024
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