Vranic and Vranic and Ors (No 2)

The Family Court of Australia considered an application by Ms Vranic (the wife) for costs against Ms Muncic (the second respondent) and M Pty Ltd (the third respondent). The dispute arose from property settlement proceedings initiated by the wife against her former husband, Mr Vranic. The second and third respondents were joined as parties to the proceedings due to allegations that matrimonial assets had been transferred to them by the husband, and these transfers were being impugned in the property settlement proceedings. The second respondent was the sole director and shareholder of the third respondent.

The primary legal issues before the Court were whether to grant the wife's application for costs against the second and third respondents, and if so, on what basis. Specifically, the Court had to determine if the circumstances warranted an order for costs in the wife's favour, and whether those costs should be assessed on an ordinary party-and-party basis or on an indemnity basis as sought by the wife. The Court also considered the conduct of the parties, their financial circumstances, and whether the proceedings were necessitated by any party's failure to comply with previous court orders.

The Court reasoned that the general rule that parties bear their own costs, as stipulated in section 117(1) of the *Family Law Act 1975* (Cth), could be departed from under section 117(2) where justice required. The Court found that the conduct of the second and third respondents, including their unsuccessful applications to be removed as parties and for summary dismissal, and their alleged complicity with the husband in attempting to deceive the Court and the wife regarding asset transfers, constituted exceptional circumstances justifying an order for costs in the wife's favour. Furthermore, the Court determined that the conduct, coupled with the respondents being wholly unsuccessful in their applications, warranted an order for indemnity costs. The Court also dispensed with the wife's compliance with rule 19.08(3) of the *Family Law Rules 2004* regarding costs agreements, noting the exceptional nature of the case and the lack of objection from the respondents.

The Court ordered that Ms Muncic and M Pty Ltd jointly pay the wife's costs incurred in relation to specific applications made by the second and third respondents, as well as the wife's costs application. These costs were to be assessed and calculated on an indemnity basis. The second respondent was ordered to pay the assessed amount within 28 days of assessment, with the balance, if any, payable by the second and/or third respondent. Interest was also payable on the assessed amount.