Vella and Buchanan & Ors (Costs)
[2012] FamCA 755
•31 August 2012
FAMILY COURT OF AUSTRALIA
| VELLA & BUCHANAN AND ORS (COSTS) | [2012] FamCA 755 |
| FAMILY LAW – COSTS – where wife sought an order discharging her liability under a loan with the second respondent bank – where that application was dismissed – where adverse findings were made with respect to the wife’s credit – where all respondents seek an order for costs against the wife – where wife seeks that no order for costs be made or, alternatively, that the costs of the application be reserved to trial – whether any order for costs should be made pursuant to s 117, Family Law Act 1975 (Cth) – where wife’s, husband’s and third and fourth respondents’ costs reserved to trial – where wife ordered to pay the second respondent’s costs of and incidental to the application. FAMILY LAW – COSTS – where the wife sought an order that the second respondent pay her costs of and incidental to an application for an interlocutory injunction which was granted by this Court on an earlier occasion – where those interlocutory proceedings formed part of the substantive application by the wife seeking to discharge her liability under the loan – where the wife wholly unsuccessful in that substantive proceeding – where the second respondent not ordered to pay the wife’s costs of the interlocutory application. |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) |
| Colgate-Palmolive Company and Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) 118 ALR 248 |
| APPLICANT: | Ms Vella |
| 1st RESPONDENT: | Mr Buchanan |
| 2nd RESPONDENT: | Bank 1 |
| 3rd & 4th RESPONDENTS:: | Mr Y & Ms Y |
| FILE NUMBER: | BRC | 281 | of | 2011 |
| DATE DELIVERED: | 31 August 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Chambers |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | By written submissions: 1st, 2nd, 3rd & 4th Respondents on 26 June 2012 Applicant on 3 August 2012 |
REPRESENTATION
| THE APPLICANT: | Direct Brief: Mr Rivett of Counsel |
| SOLICITOR FOR THE 1ST RESPONDENT: | Family Law Solutions |
| SOLICITOR FOR THE 2ND RESPONDENT: | Thynne & Macartney |
| SOLICITOR FOR THE 3RD & 4TH RESPONDENTS: | Mr Woods of Cogill Woods Legal Services |
Orders
The costs of the applicant wife, the respondent husband, and the third and fourth respondents be reserved to the trial of the action.
The wife pay to the trust account of the solicitors for the second respondent an amount in respect of its costs of and incidental to these proceedings in such amount as may be agreed in writing between the parties or, failing agreement, as may be assessed on a party and party basis.
The application of the wife that the second respondent pay the costs of and incidental to the application by her for an injunction be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Vella & Buchanan and Ors (Costs) 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 BRISBANE |
FILE NUMBER: BRC281 of 2011
| Ms Vella |
Applicant
And
| Mr Buchanan |
1st Respondent
And
| Bank 1 |
2nd Respondent
And
| Mr Y & Ms Y |
3rd & 4th Respondents
REASONS FOR JUDGMENT
COSTS
On 5 June 2012 I made orders and delivered reasons for judgment dismissing an application by the applicant wife seeking orders against the second respondent bank. At that time I made procedural orders in respect of any application for costs the effect of which was that written submissions be filed in support of any application or in response thereto.
A chambers order on 2 July 2012 provided for any response to those costs submissions within 21 days of that date. On 26 June 2012 submissions were received on behalf of the second respondent Bank 1 (“the bank”) seeking costs. The third and fourth respondents filed their submissions also seeking costs on 26 June 2012. On the same date the respondent husband also sought costs.
The wife’s responsive submissions were filed on 3 August 2012. She also seeks an order that the bank pay her costs in respect of her (successful) interim application for injunction.
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”):
…expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117(2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs. (Penfold v Penfold (1980) 144 CLR 311 at 315).
The plurality in Penfold held (at 315 - 316):
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs, there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised. … Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs. [Citations omitted]
The Court is given the power to award costs upon a finding that “there are circumstances that justify it in doing so” (s 117(2)). The matters that might justify a central finding are at large (s 117(2A)(g)) but regard must be had to a number of specified matters (s 117(2A)(a)-(f)).
It is plain that s 117(2A) does not prescribe that more than one factor must be present or that any one factor has more or less weight than any other. The statutory factors are each and all matters which inform the overall discretion inherent within the section (PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123.)
Of particular relevance here is the fact that modest, or even poor, financial circumstances, is not determinative of the issue. Were it otherwise, the discretion inherent in the section would be curtailed and one of the enumerated factors would preclude appropriate consideration being give to all factors relevant to the discretion. Moreover, an impecunious litigant could litigate with impunity – and, indeed, immunity.
The second respondent seeks as part of its order, an order that costs be paid on an indemnity basis. The principles in respect of the awarding of indemnity costs are often referenced to the well-known passage in Sheppard J’s judgment in Colgate-Palmolive Company and Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) 118 ALR 248 at 256. Those principles have been accepted as relevant to such an award under the Family Law Act 1975 (Cth) (“the Act”) (Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029).
The husband also seeks indemnity costs. The costs of the third and fourth respondents are sought on a party and party basis.
The thrust of the submissions made on behalf of each of the applicants for costs are largely the same. At their centre are findings made in respect of the wife’s credit during the course of the proceedings before me. In particular reference is made to paragraph [62] in which I found that “[t]he wife was a singularly unimpressive witness. Indeed, I am comfortably satisfied that her evidence was largely untruthful…”, together with paragraphs [66] and [101], in the latter of which I found:
This false evidence by the wife about a centrally important matter taints the wife’s evidence in significant ways. The non-attendance at that [8 October 2008] meeting is crucial to the overall assertion by her as to her lack of involvement in and about the negotiations that ultimately led to the transactions complained of and the alleged lack of information and representations allegedly made in and about those transactions.
Reference is also made to the specific finding made by me at [26] that many of the factual assertions by the wife ran contrary to sworn evidence given by bank officers. In that respect, the point is made that one of those two bank officers, who gave evidence corroborative of the other bank officer and the husband about a meeting, was not required for cross-examination. The crucial place of that meeting and the events which occurred at it in the context of the proceedings is referred to in the substantive reasons earlier delivered by me.
Counsel for the bank specifically refers in addition to the financial circumstances of the wife and to a number of other relevant matters (s 117(2A)(g)), which include reference to the fact that the bank is an “innocent third party” and a stranger to what would otherwise be matrimonial litigation. Moreover the point is made that the bank had a long history of doing business with the husband and wife. The loss of the bank is asserted to be significant and all the greater by reason of the proceedings for recovery pursuant to their security in a District Court action being stayed.
Reference is also made to the fact that the wife did not bring the instant proceedings, or “dispute the enforceability of [the bank’s] security until after the [bank] had commenced recovery proceedings in the District Court on 11 November 2010 and the first respondent commenced property proceedings in the Federal Magistrates Court on 17 November 2010.” Specific reference is also made to the credit findings made by me.
The written submissions, accurately in my view, refer to the financial circumstances of the parties (that is including the wife) as “modest”. Whilst written submissions on behalf of the bank refer to a number of matters relevant to the financial circumstances of the wife, I consider that the expression used in the submissions on behalf of the husband is an accurate description of those financial circumstances.
Similar themes emerge in the written submissions on behalf of the third and fourth respondents. Considerations specific to those parties apply and are referred to specifically in those written submissions. It is said that the issues live in the substantive proceedings before me “by and large did not directly involve the third and fourth respondents and … the third and fourth respondents had no direct knowledge [of them], [but] the wife’s case nonetheless did implicate the third and fourth respondents and certainly had the potential to impact significantly upon the financial situation of [them]”.
It is also noted there that the third and fourth respondents had been joined to the proceedings at the outset. The reasons for their involvement in what I might describe as the broader proceedings can be seen in the reasons for judgment given by me. In short, assertions are made by the wife as to intra-familial arrangements that involved amounts of money being paid by the husband to them without the knowledge of the wife, ostensibly in repayment of loans which the husband apparently asserts were made by them and of which the wife asserts she had no knowledge.
The wife seeks an order that the second respondent pay her costs of and incidental to the application for an injunction that was ordered by Mushin J on 24 June 2012. The wife submits that no order for costs should be made in respect to her application for orders discharging her liability to the second respondent or, alternatively, that any such costs should be reserved to the substantive property proceedings.
The Husband and Third and Fourth Respondents
The consideration of whether a costs order should be made contrary to the general rule prescribed in s 117(1) of the Act involves a holistic consideration of all of the circumstances that might be relevant to the exercise of the discretion.
The circumstances pertaining to the instant application are, in the case of the husband and the third and fourth respondents, part of a larger set of circumstances involving those parties. Obviously, in the case of the husband, that involves s 79 litigation and assertions and counter-assertions made by each of the parties in respect of those proceedings. So, too, while the third and fourth respondents can be seen as strangers to that litigation in the sense of not being parties to the marriage, matters central to the decision that has to be made between the husband and wife pursuant to s 79 can be seen to directly involve them.
Needless to say, specific factors such as the conduct of the respective parties within the course of the proceedings, the reasonableness of their respective positions, whether any evidence given by one or more of them is found to be false and whether any offer in writing to resolve the issues is made, are all potentially part and parcel of those broader circumstances.
Given those factors, it is in my view appropriate to reserve the question of the costs of all parties, other than the bank, to the trial.
The Bank’s Costs of the Substantive Proceedings
The bank falls into a different category to the other parties to the substantive proceedings. Their involvement in these proceedings is significantly more tangential to the s 79 proceedings as between the husband and the wife.
The central assertions on behalf of the wife founding the relief she pursued in these proceedings called in to question both the conduct and the integrity of bank officers, one of whom was not cross-examined. Ultimately, I did not accept the wife’s account of what occurred at the relevant meetings with one or both of those bank officers and, moreover, I felt constrained to make a finding that the wife’s evidence was, in those respects, likely to be untruthful. In my view this is an important matter in the exercise of the discretion in circumstances where the costs at issue involve a genuine third party who is a stranger to the substantive litigation between the parties.
I take into account that the wife’s financial circumstances are modest and that too is an important factor. However, modest financial circumstances (or even impecuniosity) cannot be determinative not only because the discretion is at large (s 117(2); s 117(2A)(g)) but also because, if it were, it would almost invariably be an answer to an application for costs, however unmeritorious the substantive claim or the pursuit of it. (See e.g. Lenova & Lenova (Costs) [2011] FamCAFC 141).
Reference to the principles applicable to the awarding of indemnity costs point to the claim by the bank for an order in those terms having foundation and, indeed, some merit.
However, on consideration of all of the facts and circumstances in this case, I am not persuaded that “the ordinary rule” that costs should be assessed on a party and party basis should be displaced in this particular case.
The Wife’s costs of the interlocutory injunction
I reject the wife’s application that the second respondent pay her costs of her application for an interlocutory injunction.
Obviously enough, the wife seeks to place emphasis upon the fact that she was successful in the relief she sought in that application (i.e., in s 117 terms, she argues that the bank was “wholly unsuccessful”). So much is true as far as the interlocutory proceedings are concerned.
However, the plurality held in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 that interlocutory proceedings of this type are “…a matter of practice and procedure”. Proceedings of that type ought not be distinguished from the substantive proceedings, in so far as the issue of costs is concerned, unless the “…interlocutory application was a discrete, separately identifiable aspect of the proceeding” in which the mother was wholly unsuccessful (Binetter v DCT (No 4) [2012] FCA 776 at [8] - [9]).
Here, the interlocutory proceedings sought to restrain the second respondent from exercising its rights under the “loan” secured over the former matrimonial home and from continuing proceedings in the District Court against the wife and the husband regarding that loan, relief which was afforded because the wife made out, at that interlocutory stage, that:
… [she had] made out a prima facie case in the sense that if the evidence remains as it is [there is] a probability that at the trial of the action [she] will be entitled to relief. (Australian Broadcasting Corporation v O’Neill [2006] HCA 46 at [65]. See, also, Waugh & Waugh (2000) FLC 93-052; Mullen v De Bry (2006) FLC 93-293).
Ultimately, the case for the wife that sustained that injunction did not succeed. Otherwise, the considerations discussed above productive of the bank having its costs of the substantive proceedings apply equally in denying the wife her costs of the interlocutory application.
Accordingly, I reject the wife’s submission that the second respondent should pay her costs of and incidental to the application for an interlocutory application.
Order accordingly.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 31 August 2012.
Associate:
Date: 31 August 2012
0
6
2