Vrebac & Vrebac

[2020] FamCA 1088

FAMILY COURT OF AUSTRALIA

Vrebac & Vrebac [2020] FamCA 1088  

File number(s):

MLC 2942 of 2018

Judgment of:

MACMILLAN J

Date of judgment:

24 December 2020

Catchwords:

FAMILY LAW – COSTS – where the wife seeks that the husband pay her costs on an indemnity basis – where the costs of the wife’s Application in a Case will be reserved for determination at trial.  

Legislation:

Family Law Act 1975 (Cth) s 117

Family Court Rules 2004 (Cth) r 19.18  

Cases cited:

Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801

Kohan & Kohan (1993) FLC 92-340

Munday v Bowman (1997) FLC 92-784

Number of paragraphs:

24

Date of hearing:

13 July 2020

Place:

Melbourne

Counsel for the Applicant:

Ms Metherell

Solicitor for the Applicant:

Sayer Jones

Solicitor for the First Respondent

Ms Spasovski

Solicitor for the First Respondent:

Bailey Timms Lawyers

Counsel for the Second Respondent:

Mr Levine

Solicitor for the Second Respondent:

Maciel Pizzorno & Co

Solicitor for the Intervener

Mr Petrovic

Solicitor for the Intervener

The Law Professionals

ORDERS

MLC 2942 of 2018

BETWEEN:

MS VREBAC

Applicant

AND:

MR VREBAC

First Respondent

H INVESTMENTS PTY LTD

Second Respondent

MS JAVOR

Intervener

ORDER MADE BY:	MACMILLAN J
DATE OF ORDER:	24 DECEMBER 2020

THE COURT ORDERS THAT:

1.That the costs of and incidental to the Wife’s Application in a Case filed 17 June 2020 be reserved for determination at trial.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

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

REASONS FOR JUDGMENT

MACMILLAN J

1. The wife in this case seeks an order that the husband pay her costs of and incidental to her Application in a Case filed 17 June 2020 (“Wife’s Application in a Case”). When the matter was listed for hearing before me on 13 July 2020 I reserved the wife’s application for costs against the husband to a date to be fixed for judgment and otherwise reserved the question of the payment of the costs of the second named respondent and the intervener.

   BACKGROUND

2. On 17 June 2020 the wife filed an Application in a Case seeking inter alia the following orders:

   (a)That paragraph 15(d) of the Interim Orders made on 28 June 2018 be discharged;

   (b)That paragraph 15(e) of the Interim Orders made on 28 June 2018 be varied as to read "finally, the remainder be held in trust for the parties in the Wife's solicitors' trust account pending further Court order or written argument."

   (c)That in compliance with paragraph 1 of the Orders made on 4 October 2020, the husband answer the wife's discovery request served on his lawyers on 18 October 2020 by provision of electronic copies of requested documents in his possession, power or control or within 7 days.

   (d)Within 7 days the husband produce for collection by the wife, at the office of the husband's solicitor the Toshiba black/red laptop and a small grey laptop.

   (e)That the husband pay the wife's costs of and incidental to this Application on an indemnity basis.

3. The orders of Judge O’Sullivan dated 28 June 2018 that the wife sought to discharge or vary provided as follows:

   15. Upon completion of the sale of the C Street property, the proceeds of sale shall be applied in the following priority:

   …

   (d)Fourthly, to pay each party the sum of $80,000.00 by way of interim property settlement; and

   (e)Finally, the remainder to be held in trust for the parties in the Husband’s solicitors’ trust account pending further Court order or written agreement.

4. The wife's Application in a Case was supported by an Affidavit and a cover letter seeking an urgent listing. The wife's reasons for that urgent listing were as follows:

   (1)The Interim Orders made on 28 June 2018 ("June Orders) currently provide for the parties to receive $80,000 each from the sale proceeds of the properties situate at Unit 1 and Unit 2 C Street, Suburb D;

   (2)Settlement of the sale of Unit 2 was effected on 8 November 2019 and the balance of the sale proceeds were applied to joint liabilities in accordance with the June Orders. Unit 1 is currently under a Contract of Sale. Settlement of the sale of Unit 1 is expected to take place within the month;

   (3)At the time the June Orders were made, the asset pool was far greater than it is at present. The Wife deposes to the current asset pool being approximately $737,777 at paragraph 8 of her Affidavit. Should the parties each receive $80,000 from Unit 2 sale proceeds in accordance with the June Orders, the Wife asserts she will not receive a just and equitable outcome at settlement. This is deposed to at paragraphs 18 and 19 of her Affidavit;

   (4)The Wife had not received any reply from the husband to her request that the Orders be discharged or varied and it is her case that the husband will dispose of or waste and funds that he receives; and  

   (5)The matter is currently listed for a Mention Hearing on 25 August 2020 on a parenting matters only and is otherwise in the pool of cases waiting allocation to a Judge for Final Hearing.

5. On 9 July 2020 the husband filed a Response to the wife's Application in a Case and an Affidavit in support. The husband sought an order that the Interim Orders made on 28 June 2018 be varied as to "pay the Respondent the sum of $100,000.00 by way of interim property settlement.' The husband also sought orders for substantial discovery against the applicant wife as well as an order that the wife pay his costs of and incidental to her Application in a Case on an indemnity basis.

6. When the matter was listed for hearing before me on 13 July 2020 I made orders inter alia by consent as follows:

   (a)That paragraph 15(d) of the orders made on 28 June 2018 is hereby discharged;

   (b)That paragraph 15(e) of the orders made on 28 June 2018 be varied to read "the balance to be held in trust for the parties in the Wife's solicitors' trust account pending further order or the written agreement of the Applicant, the Respondent, the Second named Respondent or the intervener;

   (c)Orders for the husband and wife to both exchange requested disclose by 20 July 2020;

   (d)Reserve the costs of the wife's application for costs to a date to be fixed for judgment; and

   (e)Reserve the costs of the second named respondent and the Intervener.

7. The wife seeks an order that the husband pay her costs calculated on an indemnity basis fixed in the sum of $6,071. In her Case Outline filed 13 July 2020 the wife summarised the basis of her claim for costs based upon the Costs Agreement she signed on 29 January 2019. The wife also made oral submissions in support of her application. Brief submissions were made on behalf of the husband in opposition to the wife’s application.

   LEGAL PRINCIPLES

8. Pursuant to s 117(1) of the Family Law Act 1975 (Cth) ("the Act") the general rule in this Court is that each party to proceedings pursuant to the Act shall bear his or her own costs of those proceedings. However if the court is satisfied that there are circumstances in the particular case which justify it doing it so can make such order as to costs as it considers just (s 117(2)).

9. In considering what if any order should be made the court must have regard to the matters in s 117(2A) which are as follows:

   (a)The financial circumstances of each of the parties to the proceedings;

   (b)Whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c)The conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspections, directions to answer questions, admissions of facts, production of documents and similar matters;

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

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

   (f)Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g)Such other matters as the court considers relevant.

10. Although the court is required to consider all of these factors clearly their relevance to a particular case will depend upon the circumstances of that case.

11. Rule 19.18 of the Family Court Rules 2004 (Cth) ("the Rules") sets out the various methods by which any costs that are ordered may be calculated. The court may order costs of a specific amount, as assessed on a particular basis such as party and party or indemnity costs, in accordance with the method specified in the order or for part of a case or part of an amount assessed in accordance with Schedule 3 of the Rules. The general rule is that when the court makes an order for costs those costs are calculated on a party and party basis.

    ARE THERE CIRCUMSTANCES JUSTIFYING AN ORDER FOR COSTS

    Financial Circumstances of the Parties

12. The wife’s evidence is that she is employed as an administrative assistant earning $90,000 per annum plus superannuation. The husband estimates her income at approximately $110,000 per annum. Although during the marriage the husband was a self-employed it is his case that he has been unable to work since suffering a brain injury in a car accident in May 2015. It is his evidence that prior to separation the wife acted as his financial administrator pursuant to an order made by VCAT in 2016. He further deposed that he has no capacity to borrow any money from family and/or friends and has outstanding legal costs of approximately $135,000.  It is the wife’s case, which is not surprising given the husband’s evidence about his financial circumstances, that she is solely responsible for the support of their daughter X who is almost 8 years of age.  

13. It appears to be common ground that the asset pool has diminished and it is essentially the wife’s case that the husband’s entitlements to property settlement on a final basis, if he has any entitlements at all to further funds, would be less than the $80,000 the orders provided for by way of partial property settlement.  

14. In my view the party’s respective financial positions are a significant aspect of this application for costs.

    Legal Aid

15. Neither party in this matter is in receipt of legal aid.

    The Conduct of the Parties to the Proceedings

16. The nub of the wife’s case is that the husband unreasonably withheld his consent to the discharge of the orders. In circumstances where the husband failed to respond to the wife’s request that the orders should be discharged this submission has some force. She further submits that the husband has failed to meet his obligation to provide full and frank discovery notwithstanding the various requests made in writing that he do so.

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

17. It is the wife’s case that her solicitor wrote to the husband’s solicitor on 3 occasions seeking his compliance with the orders made for discovery but that the husband did not comply and that as at the date of the hearing the husband had still not produced the requested documents.

    Whether any party to the proceedings has been wholly unsuccessful in the proceedings

18. In circumstances where the parties consented to the orders it is not strictly the case that the wife’s application was wholly successful or that the husband was wholly unsuccessful.  

    Whether any party to the proceedings has made an offer in writing to the other party to the proceedings to settle and the terms of any such offer

19. There is no evidence of any offer being made in writing to settle the matter.

    Other Matters

20. Whilst the wife was not strictly speaking wholly successful even if the orders were ultimately made by consent the proceedings could have been avoided had the husband agreed to the discharge of the orders as the wife proposed.

    INDEMNITY COSTS

21. The general rule is that when the court makes and order for the payment of costs by one party to the other those costs are payable on a party and party basis. The Full Court in Kohan & Kohan (1993) FLC 92-340 (at page 79,614) stated that 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".

22. Holden CJ in Munday v Bowman (1997) FLC 92-784 at page 84-660, summarised the circumstances which might warrant an order for indemnity costs identified by Shepherd J in the decision of Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 ("Colgate"). They include the following:

    ·Where an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;

    ·The making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;

    ·Evidence of particular misconduct causing loss of time to the court and to other parties;

    ·The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;

    ·An imprudent refusal of an offer to compromise.

23. Even if there were circumstances justifying an order for costs in the wife’s favour in my view the circumstances of this case are not exceptional and if an order for costs were to be made those costs should be payable on a party and party basis.

    CONCLUSION

24. In all of the circumstances although I am satisfied that there are some circumstances that might justify an order for costs I am not satisfied that I am able, given the uncertainty of the husband’s financial circumstances and the uncertainty with respect to the outcome of the proceedings, to determine whether it would be just to make such an order. In these circumstances I propose to reserve the question of the whether the husband should pay the costs of and incidental to the wife’s Application in a Case filed 17 June 2020 for determination at the conclusion of the proceedings. However I note that if the husband’s entitlements are as limited as the wife submits they may be he should in order to avoid further reducing those entitlements, consider carefully the way in which he conducts himself in these proceedings.

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Macmillan.

Associate:

Dated:       24 December 2020