Weng & Wah
[2022] FedCFamC2F 475
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Weng & Wah [2022] FedCFamC2F 475
File number(s): MLC 9718 of 2014 Judgment of: JUDGE MORLEY Date of judgment: 14 March 2022 Catchwords: FAMILY LAW – contravention hearing – where wife wilfully contravened property orders without reasonable excuse – consideration of penalty – consideration of indemnity costs Legislation: Family Law Act 1975 (Cth) ss 112AB, 112AC, 112AD, 112AF, 112AE, 112AG, 112AP, 117
Commonwealth Crimes Act 1914 (Cth) s4AA
Federal Circuit and Family Court of Australia Family Law Rules 2021 (Cth)
Cases cited: Bant & Clayton [2020] FamCAFC 183
COG15 & Child Support Registrar and Anor [2016] FamCAFC 272
Colgate-Palmolive Company and Anor v Cussons Pty Ltd (1993) 46 FCR 225
D & D (Costs) (No. 2) [2010] FamCAFC 64
JEL & DDF (No 2) [2001] FamCA 907
Keehan v Keehan [2019] FamCAFC 250
Kent & Kent (No. 4) [2017] FamCA 1053
Kohan & Kohan (1993) FLC 92–340
Latoudis & Casey (1990) 170 CLR 534
Limousin & Limousin (Costs) [2007] FamCA 505
McClintock v Levier (2009) 233 FLR 179
Munday v Bowman (1997) FLC 92-784
Orchide & Orchide [2018] FamCAFC 58
Phillips & Hansford [2020] FamCAFC 28
Sfakianakis & Sfakianakis [2019] FamCAFC 54
Trevi & Trevi (No 3) [2019] FamCAFC 58
Division: Division 2 Family Law Number of paragraphs: 96 Date of hearing: 14 March 2022 Place: Sydney Counsel for the Applicant: Mr Mort Solicitor for the Applicant: M And K Lawyers Group Pty Ltd Solicitor for the Respondent: Ms Ho of Ascent Lawyers ORDERS
MLC 9718 of 2014 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR WENG
Applicant
AND: MS WAH
Respondent
ORDER MADE BY:
JUDGE MORLEY
DATE OF ORDER:
14 MARCH 2022
THE COURT ORDERS THAT:
1.The Court is satisfied that the Respondent wife Ms Wah contravened order 3 of orders made by the Honourable Forrest J on 16 August 2019 and as amended on 9 September 2021, and such contravention was without reasonable excuse.
2.Pursuant to the Court's discretion in section 112AD(1) of the Family Law Act 1975 (Cth), the Court imposes no sanction for the contravention conviction.
3.The Respondent Wife pay the Applicant Husband's costs of these proceedings being:
(a)Enforcement proceedings; and
(b)These current proceedings in relation to the Applicant Husband's Application - Contravention,
in the sum of $30,216.00.
4.Costs awarded by order 3 made today are to be paid by the Respondent Wife to the Applicant Husband by no later than 4:00PM 18 May 2022.
THE COURT NOTES THAT:
5.The Respondent Wife admitted to the contravention charge as alleged by the Applicant Husband.
6.The Respondent Wife raised a defence of reasonable excuse in relation to the contravention charge.
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 a pseudonym Weng & Wah has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MORLEY
These are the Reasons for Judgment that were delivered verbally and ore tenus on 14 March 2022. They have been settled herein in written form. Grammatical errors and accidental errors in reference have been amended for ease of comprehension. Legal citations have been included in full and incorporated into these Reasons.
CONTRAVENTION
This is a contravention application filed by the Applicant Husband, Mr Weng, on 7 October 2021 in which he asserts that the Respondent Wife, Ms Wah, contravened order 3 of the final orders made by his Honour Forrest J in the Family Court of Australia on 16 August 2019 that at the time of making that order read:
[3]The husband and wife shall do all things necessary to authorise Bruce S Dulley to pay to the husband or to the husband's direction all the funds standing to the credit of the husband and the wife in the trust account of Bruce S Dulley Solicitors, including any interest that has been earned by those funds to this date.
It is the wife's evidence that she was aware that the order made by his Honour on 16 August 2019 carried with it a necessity that she assist or help the husband to get hold of those monies. It is her evidence that she was waiting to hear from the husband to have a discussion with him in Chinese about it. That is not what the order required, of course.
On 9 September 2021, the order was amended so as to now read:
[3]The husband and the wife shall do all things necessary to authorise Crouch & Lyndon Lawyers to pay to the husband or at the husband's direction all the funds standing to the credit of the husband and the wife in the trust account of Crouch & Lyndon Lawyers, including any interest that has been earned by those funds to this date.
On the face of the amended order, “to this date” is still confined to the 16 August 2019.
In support of the husband's contravention application, he relied upon his affidavit of 7 October 2021 filed with the contravention application, and his affidavit of 10 November 2021.
The wife filed an affidavit on 9 November 2021 prior to the contravention coming on for hearing, and also filed an affidavit the day before this hearing on 13 March 2022.
The 13 March 2022 affidavit was the subject of objections on behalf of the husband by Mr Mort as counsel who appeared for him. Quite a number of those objections were upheld on the basis of relevance, such that only paragraphs 24 to 30 of that affidavit were read in these contravention hearing proceedings.
The wife was represented in these proceedings by Ms Ho, solicitor-advocate, and the Court received from that solicitor-advocate a copy of a case outline document that was also served on counsel for the husband. That case outline document went to questions of costs, rather than to the contravention.
The contravention was under Part 13A of the Family Law Act 1975 (Cth) (“the Act”), dealing with sanctions for failure to comply with orders and other obligations that do not affect children. Section 112AB contains the meaning of contravening an order, and I incorporate that section into these Reasons:
(1)A person shall be taken for the purposes of this Part to have contravened an order under this Act if, and only if:
(a) where the person is bound by the order--he or she has:
(i) intentionally failed to comply with the order; or
(ii) made no reasonable attempt to comply with the order; or
(b) in any other case--he or she has:
(i)intentionally prevented compliance with the order by a person who is bound by it; or
(ii)aided or abetted a contravention with the order by a person who is bound by it.
Section 112AC goes to the meaning of reasonable excuse for contravening an order, and I incorporate that section into these Reasons.
(1)The circumstances in which a person may be taken to have had, for the purposes of this Part, a reasonable excuse for contravening an order under this Act include, but are not limited to, the circumstances set out in subsection (2).
(2)A person (in this subsection called the respondent) shall be taken to have had a reasonable excuse for contravening an order under this Act if:
(a)the respondent contravened the order because, or substantially because, he or she did not, at the time of the contravention, understand the obligations imposed by the order on the person who was bound by it; and
(b)the court is satisfied that the respondent ought to be excused in respect of the contravention.
Section 112AD sets out the sanctions that may be imposed by a Court if the Court is satisfied a person has, without reasonable excuse, contravened an order under the Act.
The following sub-sections set out the sanctions that may be imposed by a Court, if the Court is so satisfied the person has contravened an order of the Court without reasonable excuse:
·112AD (2)
·I12AD (2A)
·112AD (3)
·112AD (4)
In running these proceedings, the Court followed the procedures set down in Rule 11.69 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021. Rule 11.69 relates to the procedure at hearing of applications for enforcement of orders and on contravention of orders.
At the commencement of the proceedings, after identifying the material relied upon by the applicant and that he was pressing the contravention, the contravention was put to the respondent who, through her solicitor-advocate, indicated that she admitted the contravention but relied upon a defence of reasonable excuse.
If a person admits the contravention, what they are doing is saying, "yes. I agree that I was ordered to do something" (or ordered to refrain from doing something), and further that person admits, "I did not obey that order".
In this case, the respondent wife did not do all things necessary to authorise either Bruce S Dulley or Crouch & Lyndon Lawyers to pay to the husband or at the husband's direction all the funds standing to the credit of the husband and the wife in the trust account of originally Bruce S Dulley solicitors, and later Crouch & Lyndon Lawyers, including any interest that had been earned by those funds to the date of the original order.
If a person establishes that they have a reasonable excuse for contravening an order, then they are not guilty of the contravention and the contravention application is dismissed.
The meaning of reasonable excuse, as I have already adverted to, is defined in section 112AC(2). That section gives two examples of what is a reasonable excuse.
One ground is that they contravene the order because, or substantially because, the respondent did not at the time of the contravention, understand the obligation imposed by the order on the person who is bound by it.
This is the defence that is put forward on behalf of the respondent as a reasonable excuse. Going with that reasonable excuse, the question is whether the Court is satisfied the respondent ought to be excused in respect of the contravention.
Those definitions of reasonable excuse are not exclusive because section 112AC(1) says a person may be taken to have had, for the purposes of this part, a reasonable excuse for contravening an order under the Act including, but not limited to, the circumstances set out in section 112AC(2).
In the course of the hearing, it was indicated in response to questions by the Court that the applicant husband was not required for cross-examination.
Accordingly, the Court takes notice of the evidence contained in the two affidavits relied upon by the applicant husband on the basis that his evidence in those affidavits was not challenged. That does not mean to say that where there is conflict between evidence that may be contained in those affidavits and in the evidence given by the respondent, either in chief, in the admissible parts of her affidavits, or in her cross-examination, that the Court does not then have to make a decision as to whose evidence to accept. Nevertheless, the husband's evidence was not challenged.
The wife was required for cross-examination. After preliminaries in examination in chief, she was cross-examined by Mr Mort of counsel for the husband. In the course of cross-examination, I put some questions to the respondent, seeking clarification because to that point she had been non-responsive on a number of occasions to the questions put to her by learned counsel.
It had been indicated to her that some of her responses were non-responsive. Whilst I was putting some questions to her, on a number of occasions she was non-responsive to the question put. The wife, falling into what is often found in any cross-examination before the Court, fell into the error of skipping over and not giving the answer to the question, proceeding straight to the reason why the witness took the course or did not take the course, instead of the proper answer to the question. When brought back to the question and given an instruction to answer the question, and on the two occasions such instruction was given, the respondent did answer the question.
From the evidence that has been given in chief by the applicant, in chief by the respondent, and most particularly from the cross-examination of the respondent by Mr Mort, I am satisfied that the respondent was aware of the orders made by his Honour Forrest J on 16 August 2019 and further, that she was aware of the amendment to that order made on 9 September 2021, that amendment being the substitution of Crouch & Lyndon Lawyers for Bruce S Dulley Solicitors. That substitution was made because as it transpired, the money was not in the trust account of Bruce S Dulley Solicitors but was in the trust account of Crouch & Lyndon Lawyers.
It was very obvious from the evidence of the respondent during cross-examination that she was fully aware that the monies were in the trust account of Crouch & Lyndon Lawyers. It was very obvious from her answers given in cross-examination on at least two occasions that I clearly recall, that she was aware that she had to give the husband assistance to obtain the monies himself from Crouch & Lyndon Lawyers.
In response to direct questions put to the respondent wife by Mr Mort of counsel in the cross-examination and also in response to questions I put to her seeking clarifications, it was explicit in her answers that between the making of the original order on 16 August 2019 and the filing of the Application – Contravention on 7 October 2021, the respondent took no action whatsoever and did nothing whatsoever to authorise either Bruce S Dulley or Crouch & Lyndon Lawyers to pay out to the husband or at the husband's directions all funds standing to the credit of the husband and the wife in the trust account of first, Bruce S Dulley solicitors and later, Crouch & Lyndon Lawyers, including any interest that had been earned by those funds to the date of the original order.
In the course of cross-examination and also in the admissible parts of the affidavit of the wife of 13 March 2022, the wife attempted to go beyond a defence of not understanding an order and attempted to show that she did not comply with the order because she had determined herself that she would prefer the funds in the trust account of the named solicitors be preserved so as to be available for her to satisfy a costs order made in her favour by the City R Supreme Court in the People's Republic of China.
Nothing has been put to me in the course of these proceedings – and I can say that I am not aware, pursuant to the international convention – that orders made in relevant Courts of competent jurisdictions in the People’s Republic of China dealing with property settlement matters or any other matters, are to my knowledge enforceable in this Court.
Nothing has been put to me in the evidence that any order made in the Chinese Court, with great respect to the City R Supreme Court in the People's Republic of China, has been registered or formally entered in any Court in this land, let alone in this Court, the Federal Circuit Court of Australia which finds its way in a continuum into Division 2 of this Court, (whatever the High Court will make of that).
Therefore, the respondent deliberately failing to comply with an order about which I have found she was fully aware, for the purpose of leaving the funds secured to satisfy a costs order in her favour, is by no means a reasonable excuse. Further, the indications by the wife to the solicitors for the husband at various times – evidenced in exhibits A1 and A2 – that they ought to be careful to have the funds retained in the trust account of Crouch & Lyndon Lawyers to satisfy the legitimate costs of previous solicitors of the husband's, also forms absolutely no excuse or reasonable excuse for the wife failing to comply with the order made by his Honour Forrest J on 16 August 2019, as amended on 9 September 2021.
Any continuing failure by the wife beyond the filing of the Application – Contravention on 7 October 2021 and up to the making of an order by me on 24 January 2022 in dealing with the husband's enforcement application and the separate application in these proceedings, is not relevant to these proceedings. The consideration of the commission of the contravention without reasonable excuse is confined to time between the making of the order and the contravention application. In the terms in which the Application – Contravention is termed, the relevant period is 9 September 2019 to 7 October 2021.
I am satisfied on her own admission that the wife contravened the order of 16 August 2019, being order 3 thereof, as amended on 9 September 2021. I am further satisfied that such contravention by the wife was made without reasonable excuse.
I have found that the respondent wife contravened order 3 of the orders made by Forrest J on 16 August 2019 as amended on 9 September 2021. Such contravention was without reasonable excuse and I make an order to that affect at the conclusion of these proceedings.
PENALTY FOR CONTRAVENTION
The sanctions for failure to comply with an order, are set out in Part 13A of the Act and contained in section 112AD, and I incorporate the whole of that section into these Reasons:
(1)If a court having jurisdiction under this Act is satisfied that a person has, without reasonable excuse, contravened an order under this Act, the court may make an order for the imposing, in respect of the person, of one or more of the sanctions available to be imposed under subsection (2), being a sanction or sanctions that the court considers to be the most appropriate in the circumstances.
(1A)The power given to the court under subsection (1) in respect of a contravention of a maintenance order applies even if the order has been complied with before the matter of the contravention comes before the court.
(2) The sanctions that are available to be imposed by the court are:
(a)to require the person to enter into a bond in accordance with section 112AF; or
(b)to impose a sentence by order on the person, or make an order directed to the person, in accordance with section 112AG; or
(c)to fine the person not more than 60 penalty units; or
(d)subject to subsection (2A), to impose a sentence of imprisonment on the person in accordance with section 112AE.
(2A)The court must not impose a sentence of imprisonment on the person under paragraph (2)(d) in respect of a contravention of a maintenance order unless the court is satisfied that the contravention was intentional or fraudulent.
(3)An order under subsection (1) may be expressed to take effect immediately, or at the end of a specified period or on the occurrence of a specified event.
(4)Where a court makes an order under subsection (1), the court may make such other orders as the court considers necessary to ensure compliance with the order that was contravened.
These sanctions as Mr Mort indicated in his submissions are a requirement that the respondent enter into a bond in accordance with section 112AF, or to impose a sentence by order on the person, or make an order directed to the person in accordance with section 112AG. This sanction relates to matters under the law of participating States or participating Territories.
It is my understanding that at the moment for the purposes of section 112AG, there is nothing available to this Court by way of what used to be long ago available for community service orders, even weekend detentions and things of that nature. I understand they are not available.
A fine of not more than 60 penalty units. The current Commonwealth penalty unit, for the purpose of s112AD(c), as set in section 4AA of the Commonwealth Crimes Act 1914 (Cth) is $222, and has so risen up from $210 because of the indexing allowed.
To impose a sentence of imprisonment on the person in accordance with section 112AE. I hasten to say immediately that such a sanction as imprisonment under section 112AD(d) is not sought and would not be applicable in this circumstance whatsoever.
The consideration is whether either the bond or the fine should be imposed. Section 112AD(1) is couched in these terms:
If a Court having jurisdiction under this Act is satisfied that a person has, without reasonable excuse, contravened an order under this Act, the court may make an order for the imposing, in respect of the person, of one or more of the sanctions available to be imposed under section (2), being a sanction or sanctions that the court considers to be the most appropriate in the circumstances.
The use of the word "may" gives the Court a discretion in relation to dealing with the matter, a discretion as to whether or not one of the sanctions in section 112AD(2) is imposed or not. It was advocated on behalf of the husband by Mr Mort and reasonably so, that a bond would be an appropriate penalty or that a fine under section 112AD(2)(c) would be an appropriate penalty. Mr Mort indicated that in his submissions he was tending toward imposition of a fine.
Mr Mort indicated that he was not aware of any previous finding that the respondent had contravened an order without reasonable excuse. There is no such evidence before the Court that there has been any previous finding of contravention by the wife whatsoever. In relation to the imposition of a bond, the bond is, pure and simple, a bond imposed in line with section 112AF of the Act. Before a Court imposes a bond, the Court must comply with 112AF(5). That is, the Court must explain to the person, in language likely to be readily understood by the person, the purpose and effect of the proposed requirement and the consequences that may follow if the person fails to enter the bond or having entered the bond, to act in accordance with the bond.
It is usual in contravention proceedings where a bond is being imposed to be a bond of good behaviour in the nature of complying with all orders under the Act for a defined period of time, varying often from six months, 12 months, to two years.
In this case, there is nothing further to be done in relation to the orders under consideration. I am properly advised by Mr Mort that he is instructed by his instructors that the orders of 16 August 2019, as amended 9 September 2021, are now fully executed, including that the funds referred to in order 3 have been passed to the trust account of the husband’s solicitors, pursuant to the order made on 24 January 2022 and that subject to solicitors' lien, those funds are available or were at that time available to the husband.
I do not consider in these circumstances that a bond is going to be an efficacious penalty to impose upon the wife because a bond pure and simple – even a bond with surety or a bond with security – is not going to serve any reasonable purpose with surety or security. It is unlikely to be forfeited as there are no further orders to be complied with under the Act or proceedings under the Act at the moment.
In saying that, I am keeping in mind that I am already put very much on notice that there is a costs application to follow on in relation to this matter. In a costs application, if an order is made, the costs will be paid by one party to the other. There is a vast range of enforcement mechanisms available to the person in whose favour a costs order is made.
Going to a fine, I then go to a decided authority. The only one I will go to is a decision of the Full Court of the Family Court of Australia in Keehan v Keehan [2019] FamCAFC 250, a decision of his Honour Kent J with his Honour there sitting as Full Court of the Family Court of Australia, as I have said.
His Honour was there dealing with the relevant sentencing approach in relation to contraventions under Part VII of the Act, dealing with parenting orders, in particular Division 13A thereof. His Honour referred back to and quoted extensively from a previous decision of the Court in McClintock v Levier (2009) 233 FLR 179. That was a decision of Finn, Coleman and Cronin JJ. To my memory, separate judgment was given by Finn J and joint judgment was given by Coleman and Cronin JJ.
Going to paragraph 31 of Kent J’s decision in Keehan v Keehan:
In my judgment, the respective reasoning in Coleman and Cronin JJ is compelling and combines to produce the authoritative conclusion that division 13A reflects the legislative intention that division 13A is directed only to enforcing compliance with operative parenting orders by those individuals bound by the subject orders. Neither punishment of the individual concerned nor deterrence (either specific to the individual or general deterrence) have any legitimate role in proceedings under Division 13A and specifically the imposition of sanctions under the Division.[1]
[1] Keehan v Keehan (2019) 350 FLR 82, 31.
Their Honours in the previous case of McClintock v Levier analysed the legislation in Part VII and its history where it was taken out of section 112AD and placed in Part VII during amendments to the Act a long time ago, 2003 or around about there, I think.
Their Honours made particular point in that case and his Honour Kent J followed the reasoning that in Division 13A where penalties for contravention of the parenting orders are dealt with, that the words "punishment" or "punish" and so-forth is not used. They contrasted that with Part 13D of the Act, dealing with contempt of Court and particularly the use in section 112AP(2) of the word "punish" in the context of "in spite of any other law, a court having jurisdiction under this Act may punish a person for contempt of that court". The word "punish" is used again in section 112AP(4) and (5) and “punishment” is used twice in section 112AP (6).
Whilst as I say, Keehan v Keehan deals with contravention of parenting orders and not contravention of a property order or financial order which is under Part 13A of the Act, nevertheless, Part 13A in the relevant sections speak of sanctions that may be imposed.
To my reading of those sections, and I may have missed it but in my reading, the word "punish" is not used, even though one of the sanctions can be imprisonment for a period of up to 12 months. On that basis, I consider that any sanction to be imposed on the breach of order under Part 13A of the Act does not contain in the sentencing process an element of punishment of the individual. I will leave aside whether or not there is an element of general deterrence, my inclination being on the same reasoning as their Honours in the cases that I referred to, that it does not contain an element of general deterrence, as is definitely and undeniably found in those parts of the Act and Rules that deal with contempt of Court.
I consider that as this is a first offence, it is unlike parenting offences and does not fall into various categories, but I do find that this offence by the respondent is serious enough that there should be a sanction imposed, if such sanction will have the effect of ensuring compliance with the future orders of the Court.
I have already made my comments about the possibility of costs orders being made and the weaponry available to the beneficiary of a costs order for enforcement thereof. I consider that in circumstance once again where the orders are fully executed and there are no other proceedings before the Court, and it is only the cost elements of this matter to be argued and decided upon, that it is also not appropriate in these circumstances of a first conviction to impose a fine.
I will exercise the Court's discretion given under section 112AD(1) by the use of the word "may" and I will not impose any of the listed and stated sanctions in section 112AD(2) on the wife in relation to the conviction. Nevertheless, the conviction will stand and I will make an order accordingly. Accordingly, I make the following order.
COSTS APPLICATION
Regarding the costs application made by the applicant husband in relation to both the enforcement proceedings that concluded with orders made on 24 January 2022 by me and the contravention application that concluded this morning, the husband seeks that his costs be paid, as being costs in the sum of $30,215. This is a sum being costs on the indemnity basis.
Costs under the Act are governed by section 117 of the Act. Section 117(1) provides the general rule as they refer to it, that is that in proceedings under the Act, each party bear his and her own costs. In these proceedings of course, both husband and wife are parties. Section 117(2) provides that if the Court finds that there are circumstances that justify the Court in doing so, the Court may, subject to section 117(2A) and the applicable rules of Court, make such order for costs as the Court considers just.
In considering what order, if any, should be made under section 117(2) the Court must have regard to the matters set out in section 117(2A)(a) to (g), with section 117(2A)(a) to (f) being specific considerations and subsection (g) referring to such other matters as the Court considers relevant.
The first task of the Court is to consider whether there are circumstances that justify the Court in making a costs order. If the Court does consider there are circumstances justifying a costs order then the Court moves on to considering quantum. Quantum relates to the manner of calculation of any costs where such costs are on a party-party basis under the scale provided in the Rules, whether they are on a solicitor-client basis, or an indemnity basis. As I will go on to illuminate, they can be costs in a fixed sum or it can be costs on a certain basis to be agreed or assessed, or in the old scheme taxed.
The first consideration is of the financial circumstances of each of the parties to the proceedings and in this regard, I do not have a current statement of financial circumstances for each of the parties. I have some brief evidence in the affidavit of the wife going to her financial position as referred to by both counsel for the husband and solicitor-advocate for the wife in the course of submissions, but not sufficient evidence therein for me to make a reasonable judgment on the comparative financial circumstances of each of the parties.
Whilst financial circumstances are a consideration to which the Court must have regard, under the authorities, impecuniosity is not of itself a bar to the making of a costs order and under the authorities, any one or more of the factors under section 117(2A) can be the basis upon which the Court makes a costs order.
In relation to impecuniosity, I refer to the decision of Kent & Kent (No. 4) [2017] FamCA 1053, a decision of Hogan J. I refer also to Limousin & Limousin (Costs) [2007] FamCA 505; Orchide & Orchide [2018] FamCAFC 58, that being an appeal case, and also D & D (Costs) (No. 2) [2010] FamCAFC 64, also being an appeal case. Finally, COG15 & Child Support Registrar and Anor [2016] FamCAFC 272, also being an appeal matter, but the principle enunciated applies across the board in the consideration of costs under section 117 of the Act, which makes no distinction in its terms between proceedings at first instance and proceedings on appeal.
Neither party in this matter is, on the evidence, in receipt of assistance by way of Legal Aid.
Considering 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, inspection, directions to answer questions, admissions of fact, production of documents and similar matters. This is a relevant matter here.
There is evidence before the Court, brought forward by the husband, of an avoidance of the proceedings by the wife by seeking to avoid service of documents upon her. For example, an affidavit of service relied upon early in these proceedings by the husband, sworn by Mr ABB filed 10 November 2021, detailed a considerable number of attempts to serve documents personally on the wife on an almost daily basis throughout 9 October 2021 and 8 November 2021.
In relation to the conduct in the proceedings and the issues across two of the considerations to be found here, the proceedings are being pursued by the wife where she admitted the contravention. The wife then pleaded a reasonable excuse but there was no evidence put forward by the wife to found her argument of reasonable excuse and it was quite easily found that she had no reasonable excuse for her contravention. Indeed, on the evidence of the wife during her cross-examination, she was aware at all times of her obligation and she chose not to perform that obligation so as to try to preserve the sum of money in question under order 3 that was dealt with in the contravention to be applied for other purposes, if possible.
The next consideration is whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court. This is particularly on point in this matter, naturally as it usually is in contravention matters. The proceedings were brought by the husband both as to enforcement so as to secure the sum of money in the trust account of solicitors to which he was entitled and had been entitled since 16 August 2019, and the contravention application brought by him, both necessitated by the failure of the wife to comply with the clear terms of the order that had been made previously. Though that order was subsequently amended on 9 September 2021 so as to reflect the name of the appropriate legal firm that held the monies in trust for the parties, nevertheless it is the wife's clear evidence that at no time since the original order was made in August 2021 did she ever give instructions or give authority as required by that order for the monies to be released to the husband.
The next consideration is whether any party to the proceedings has been wholly unsuccessful in the proceedings. As is plain and obvious, the wife has been wholly unsuccessful in both the enforcement proceedings and in the contravention proceedings. The orders sought by the husband in the enforcement proceedings were made by the Court. It was through that order that had to be made in consequence of the wife's failure to comply with the order made on 16 August 2019 and amended on 9 September 2021, that the husband was able to secure the fruits of his judgment that had been made back in August 2019. He secured the fruits of that judgment two and a quarter years after the order was made.
The fault therein lies with the wife. She was wholly unsuccessful in both arms of these proceedings.
The next consideration is 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.
The wife gives evidence in her affidavit filed 13 March 2022 of an offer made to the husband to settle these proceedings on the basis that he received from the wife his costs in the sum of $3,000. That is referred to by the wife in paragraphs 31 and 32 of her affidavit of 13 March 2022. I consider that such offer made by the wife to the husband in circumstances where the offer was made on a date I am not informed (but was to expire at 4.01 pm on Saturday 12 March 2022), and given the sum proposed in that offer, was not an offer that was reasonably expected that the husband would accept.
An offer by the husband to the wife was put into evidence and was marked as exhibit A3. That offer by the husband basically was that the wife pay his costs in a sum as he has claimed at the conclusion of the proceedings now. In other words, it was not an offer to the wife to compromise the costs issue in these proceedings as it proposed a settlement on the basis of the full sum sought, but it was indicated to the wife the whole of the sum sought by the husband. The husband then made an offer to compromise the proceedings on the basis that he would take two-thirds of the sum he was to claim for costs in these proceedings and if that offer was accepted and that sum was agreed, then the contravention proceedings would not proceed.
Accordingly, an offer was made by the husband to the wife capable of acceptance by her which would have compromised these proceedings. That offer was made on 8 March 2022 and was open until Thursday 10 March 2022. There is no evidence of any response by the wife to that offer and in any case, inherently was not accepted by her.
I find that on the basis of a number of the considerations in section 117(2A), in particular subsections:
(c) Going to the conduct of the party in the proceedings;
(d)Going to the proceedings necessitated by the failure of the parties to comply with the previous order of the Court, being the wife;
(e)The wife having been wholly unsuccessful in both the enforcement and the contravention proceedings; and
(f)Where an offer to compromise the proceedings was made by the husband to the wife and not accepted by her,
There are circumstances to justify the Court departing from the general rule and making an order that the wife pay the husband's costs of these proceedings
I make this finding bearing in mind the evidence of the wife in her affidavit of 13 March 2022 in relation to financial circumstances and I have already referred to the cases in relation to cost orders made in circumstances where a party pleads or proves impecuniosity.
Passing therefore to consideration to the appropriate amount for such order, the costs sought by the husband are clearly on the indemnity basis as agreed by his counsel. The Court has a range of options open to it in relation to quantum of costs and in that regard, I note that costs are compensatory, not punitive, in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of legal proceedings as per the High Court in Latoudis & Casey (1990) 170 CLR 534. The Full Court of the Family Court of Australia summarised the basic law of costs under the Act in Sfakianakis & Sfakianakis [2019] FamCAFC 54, particularly at paragraphs 9 to 13 inclusive and paragraph 40. I incorporate paragraphs 9 to 13 and paragraph 40 into these Reasons:[2]
[9]The ordinary position in proceedings under the Family Law Act 1975 (Cth) (“the Act”) is that each party is to bear his or her own costs (s 117(1)). Where the Court is of the opinion that circumstances justify it in doing so, the Court may make such order as to costs as it considers just (s 117(2)). Thus, an order may be made for the payment of costs on an indemnity basis, although such orders are exceptional (Kohan and Kohan (1993) FLC 92-340 at 79,614; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; D & D (Costs) (No. 2) (2010) FLC 93-435).
[10]It is, however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words “such order as to costs … as the court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well-known example is assessment on a trustee basis, which is more generous than party and party costs, but falls short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party costs nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a “special costs order”.
[11]Decisions as to the appropriate basis for any costs order are, of course, guided by principle. In applications under s 117 of the Act for costs of whatever kind, the Court must have regard to the considerations set out in s 117(2A). Paragraph (g) requires the Court to take into account any relevant matter.
[12]As the decision in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233–234 (“Colgate-Palmolive”) and the extensive authorities referred to in it make clear, the categories for the making of special costs orders are not closed and may be made whenever the particular facts and circumstances warrant it. That position is reflected in s 117(2) of the Act.
[13]It is necessary to consider first whether there should be an order for costs before turning to whether the quantum of the costs should be left to the application of the scale contained within Sch 3 of the Rules or assessed or fixed on some other basis.
[40]As we have said, the Court is not bound only to make an order on a party and party basis or on an indemnity basis. It may take an intermediate course if that is the order that is just in all of the circumstances. A special costs order may be assessed by reference to a particular period of time or set of events. Alternatively, the Court may fix a sum for costs that exceeds party and party costs but falls short of an indemnity.
[2] Sfakianakis & Sfakianakis [2019] FamCAFC 54, 9-13 and 40.
Offers of settlement are an important consideration under section 117(2A) in determining the question of costs. I have found in this matter that the offer of settlement was a reasonable offer made to the wife and this is one of the reasons why I find the costs are payable.
In relation to the claim for indemnity costs, the guiding case right across the board in Australia has been for a long time, Colgate-Palmolive Company and Anor v Cussons Pty Ltd (1993) 46 FCR 225 per Sheppard J, a case referred to by counsel for the husband in submissions. In that case, his Honour provided some examples of circumstances that might warrant the exercise of discretion to award indemnity costs.
Then thereafter in Munday v Bowman (1997) FLC 92-784 at 84,660, another case specifically referred to by counsel for the husband in his submissions, Holden CJ in Western Australia drew from his Honour Sheppard J’s decision the following:[3]
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he or she had no chance of success in such case as 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: see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud: see Fountain Selected Meats (Sales) Pty Ltd.
(c)Evidence of particular misconduct causing a loss of time to the court and to other parties: see Tetijo Holdings Pty Ltd v Keeprite Australia Proprietary Limited, (French J, Fed C of A, 3 May 1991, unreported)
(d)Making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: see Ragatta Developments Proprietary Limited v Westpac Banking Corporation (Davies J, Fed C of A, 5 5 March 1993, unreported).
(e)An imprudent refusal of an offer of compromise.
[3] Munday v Bowman (1997) FLC 92-784, 84,660.
In relation to indemnity costs, in Phillips & Hansford [2020] FamCAFC 28, the Full Court said at paragraph 35:[4]
Indemnity costs orders are made only in exceptional cases (Kohan and Kohan (1993) FLC 92–340; Limousin v Limousin(Costs); D & D (Costs) (No 2) (2010) FLC 93–435).
[4] Phillips & Hansford [2020] FamCAFC 28, 35.
I pause there to note that of fairly recent time, the Full Court reaffirmed Kohan & Kohan (1993) FLC 92–340 when the finding in that case (or the ratio) was doubted by a judge sitting alone in the Family Court on the basis of some more recent authorities. In paragraph 36 of Phillips & Hansford:[5]
Whilst the categories of cases in which indemnity cost orders may be awarded are not closed, it is accepted that such costs may be ordered where a case was pursued with “wilful disregard of known facts or clearly established law” and where there has been “an imprudent refusal of an offer to compromise” (Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233).
[5] Phillips & Hansford [2020] FamCAFC 28, 36.
Further, at paragraph 37:[6]
In relation to the first category, it has been said that indemnity costs may be awarded where “the applicant, properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401) and where “a party persists in what should on proper consideration be seen to be a hopeless case” (J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers – Western Australian Branch & Anor [1993] FCA 70 per French J at 5).
[6] Phillips & Hansford [2020] FamCAFC 28, 37.
Specifically in relation to offers of settlement, in Trevi & Trevi (No 3) [2019] FamCAFC 58, the Full Court said at paragraph 15:
…failure to accept an offer which in retrospect should have been accepted does not necessarily justify an order for costs on an indemnity basis.
Comments of a similar nature were made by the Court, as counsel for the husband properly referred to, in JEL & DDF (No 2) [2001] FamCA 907, per Kaye, Holden and Guest JJ.
In relation to this case, the contravention was clear from the start. That the wife had no reasonable excuse is clear from the course of the hearing today. The wife knew her obligation, she simply chose not to perform it, hoping to turn the funds in that solicitor's trust account to other purposes in part.
The wife also deposed in her evidence today on affirmation that she considered the husband was not entitled to the whole sum - perhaps to part but not to the whole sum.
The basis of the proceedings being continued by the wife was her wilful disregard of known facts or clearly established law, in relation to her imprudent refusal of an offer of compromise made in recent days that would have done away with the necessity for the hearing today.
In relation to the wife persisting in what on proper consideration and after advice, should be seen to be a hopeless case, I find that it is a case appropriate to make an order for costs in excess of party-party costs.
In relation to finally establishing the question of quantum, I note what fell from the Full Court of the Family Court in Bant & Clayton [2020] FamCAFC 183, which finally found its way, I think, to the High Court for other matters. In Bant & Clayton on 30 July 2020, the Full Court, composed of Aldridge, Watts and Austin JJ found at paragraph 47:[7]
Under r 19.18(1) of the Rules,
That, of course, is a reference to the former Rules that applied in the Family Court of Australia,
the Court may order that a party is entitled to costs assessed in different ways, namely: of a specific amount (r 19.18(1)(a)); as assessed on a particular basis (r 19.18(1)(b)); in accordance with the method stated in the order (r 19.18(1)(c)); or as assessed under Sch 3 of the Rules (r 19.18(1)(d)). Rule 19.19 provides that where a Court orders costs to be paid and does not fix an amount, the maximum amount recoverable is an amount calculated in accordance with Sch 3 (solicitor and counsel fees) and Sch 4 (conduct money and witnesses fees). As we have indicated, the primary judge was not conducting an assessment of costs under Sch 3, rather his Honour was fixing an amount under r 19.18(1)(a) of the Rules and was entitled to take a broad brush approach.
[7] Bant & Clayton [2020] FamCAFC 183, 47.
The Court then went on to indicate that it has a range of options available to it in assessing quantum, ranging from party-party costs confined to scale through fixing a sum in the Court's discretion through to solicitor-client costs, and if they exceed solicitor-client costs to indemnity costs.
In this case, indemnity costs are sought by the husband in the sum of $30,216 in relation to the whole of these proceedings, encompassing contravention and enforcement.
I find it is a case appropriate to order indemnity costs. I find there is a case appropriate to order the indemnity costs as sought by the husband without reducing that amount by naming a lesser sum as a lump sum.
Accordingly, I make the orders at the start of these Reasons.
I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Morley. Associate:
Dated: 14 April 2022
0
17
0