White and White (No 2)

[2019] FamCA 481

FAMILY COURT OF AUSTRALIA

WHITE & WHITE (NO. 2) [2019] FamCA 481

FAMILY LAW – COSTS – Application for costs – where final orders were made in January 2019 – where the matter involved enforcement of said orders – where the matter required two court appearances – where the issues of contention were resolved by cooperation between the parties – where the Wife says that the Husband’s actions derailed compliance with the final orders – where the Husband’s actions sit within a context of the overall difficulties experienced by the parties in compliance – where the Husband is required to  pay half of the Wife’s costs.

Family Law Act 1975 (Cth) s 117

Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248
Quickley v Pelissier [2016] FamCAFC 124

APPLICANT: Ms White

RESPONDENT: Mr White

FILE NUMBER: CAC 1775 of 2015

DATE DELIVERED: 19 July 2019

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 12 July 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Howard

SOLICITOR FOR THE APPLICANT: Phelps Reid Foster Johnson Lawyers

SOLICITOR FOR THE RESPONDENT: Self-representing

Orders

1. The Husband pay half of the Wife’s costs of and related to her Application in a Case filed 17 April 2019 as agreed or as assessed. 

2. The Wife’s Application in a Case filed 17 April 2019 is transferred to the Registrar’s list pending finalisation of compliance and, absent further application to relist the matter, to be discharged on the parties’ advising of compliance or on the expiration of 56 days, whichever is the earlier.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

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 r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: CAC 1775 of 2015

Ms White

Applicant

And

Mr White

Respondent

REASONS FOR JUDGMENT

1. The parties to this dispute are Ms White, the Applicant Wife, and Mr White, the Respondent Husband.  The property dispute between the parties was resolved by judgment following final proceedings delivered on 18 January 2019.

2. Issues arose regarding the implementation of the orders. One such issue arose about the terms of the superannuation order and the trustee’s ability to carry it into effect. This was dealt with by consent by the parties pursuant to s 79A(1A) of the Family Law Act 1975 (Cth) (“the Act”).

3. The balance of the matters have required two appearances to resolve.  They were ultimately resolved by cooperation between the parties.  They involved, in large part, the payment of a sum of money, the transfer of a number of properties and the return of company property to the Husband.

4. However, that left the question as to whether the Husband should be required to pay the Wife’s costs as a result of her Application in a Case (filed 17 April 2019) to enforce the final orders of 18 January 2019.  The Wife sought that her costs be paid on an indemnity basis, or in the alternative, as assessed or agreed.  The Husband sought that each party bears their own costs.

5. In support of her position the Wife relied upon two actions by the Husband that she described as derailing compliance with the final orders.  The first of those was the Husband’s attempt to transfer a motor vehicle (the motor vehicle 1) into the name of the Wife without her consent.  The second was the Husband’s withdrawal of the sum of $15,000 from the parties’ NAB line of credit in direct breach of Order 2 of the final orders.

6. The Husband did not dispute that he had done each of these things.  However, he said that these actions did not justify a costs award in the Wife’s favour.

The incidents

1. The final orders provided that the Husband would receive the corporate entity C Pty Ltd (“the Company”) as part of the property settlement.  The Wife was required to transfer her shareholdings and resign as a director of the company within 28 days of the court orders, that is by 15 February 2019.  The effect of these orders was that the Husband would become entitled to the property of the company which included motor vehicle 1 and the company books and records.

2. On 1 February 2019, the Husband wrote to the Wife’s lawyers demanding the return of motor vehicle 1, company and trust documents, and chattels.  He set a deadline of close of business 4 February 2019 to inform him as to the arrangements for an immediate handover.

3. On 3 February 2019, the Husband advised the Wife that she was no longer a director or shareholder of the company and sought the immediate handing over of the company property.  This pre-empted the Wife’s transfer and resignation.

4. On 5 February 2019, the Husband removed part, but was prevented from removing the balance, of the company documents and records that were held by the Wife’s solicitor.

5. On 10 February 2019, the Wife sent to the Husband an email advising that her lawyers would contact him in relation to the collection of the motor vehicle 1 and other items.

6. On 12 February 2019, the Husband withdrew $15,000 from the parties’ NAB line of credit.  He says he did this to hold the funds in trust and as security for the Wife’s “misuse of Company and trust funds and retention of and use of company assets (e.g. the motor vehicle 1 vehicle and office equipment and resources).” Such an act was prohibited by the final orders.

7. On 13 February 2019, the Wife’s solicitors advised the Husband that the company items would be handed over on a date between 19 and 21 February 2019.

8. On 18 February 2019, the Husband emailed the Wife’s lawyers saying that he would attend their office to collect the company documents on 19 February 2019 at 2.30pm.  The Wife’s solicitors said that 19 February 2019 was not suitable and that the vehicle and other items would be available for collection on 21 February 2019.

9. On 19 February 2019, the Husband emailed the Wife stating that the motor vehicle 1 was hers. 

10. Sometime between 18 and 20 February 2019 the Wife became aware that the Husband had signed documentation with the ACT Revenue Office to transfer the motor vehicle 1 into her name.

11. On 20 February 2019, the Wife’s solicitors confirmed that the motor vehicle 1 and documents would be provided to the Husband on 21 February.  On that same day the Wife’s solicitors advised that they would no longer make the motor vehicle 1 available for collection, given the Husband’s purported transfer into the Wife’s name and any risks that might flow to the Wife with the car being in her name but in the possession of the Husband.

12. On 21 February 2019, the Husband advised the Wife’s solicitors that he could not attend to collect the items until 22 February 2019.  They agreed to his attendance to do so.

13. On 22 February 2019, the Husband attended the Wife’s solicitor’s premises to collect company documents.  Not all the documents were there as the Wife had some in her possession and placed them into the motor vehicle 1 for the Husband’s collection (which was then not available for collection due to the purported transfer).

14. The Wife subsequently reversed the transfer recorded by the ACT revenue office.

15. The Husband attended upon Access Canberra who advised him that a reversal of the transfer was not possible.

16. On 12 March 2019, the Wife’s solicitors wrote to the Husband advising that the motor vehicle 1 was ready for collection.  This was repeated on 14 March, to which the Husband responded that making the company and trust documents contingent upon his taking possession and delivery of the motor vehicle 1 “is absurd.”

17. The argument put by each party was that the other was obstructive in relation to the implementation of the orders.  The particular matters focussed upon by the Wife should be seen in the context of other difficulties the parties had in compliance. 

18. A series of property transfers had not been effected.  The payment of a cash amount (which was a precursor to the refinancing necessary for the property transfers) had also not occurred until after the matter came to Court.  This arose from an aborted attempt by the parties to come to a different arrangement about how the monies might be transferred.  While these were all matters that the parties were able to ultimately resolve, they form the background within which the remaining matters going to costs ought to be considered.  In the context of the costs application blame was not assigned to the Husband for the previous matters that had subsequently been resolved.

19. The withdrawal of the $15,000 from the line of credit was specifically prohibited.  The Husband sought to justify it as taking security for the company.  That does not detract from the specific prohibition from doing so.  Adding to that, the transfer, without the Wife’s consent, of the motor vehicle 1 into her name, and the Husband’s failure to reverse either of those steps made the commencement of enforcement proceedings almost inevitable.  The minor delay in handing over the motor vehicle 1 and the company documents, where the Husband had pre-empted the Wife’s transfer and resignation, did not justify his actions in respect of the motor vehicle 1 and the $15,000.

20. Costs are governed by s 117 of the Act. Section 117(1) provides that subject to an order of the Court each party will bear their own costs. Section 117(2A) sets out a series of considerations for the Court in determining whether to depart from that position. In seeking departure from that position the Wife relied upon the consideration set out at s 117(2A);

    whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

21. The parties did not identify any other of the considerations as relevant.

22. It is the two incidents that are relied upon by the Wife as failures to comply with orders that required her to commence proceedings and justify the making of a costs order.

23. The Husband’s withdrawal of the $15,000 is sufficient to justify a departure from the ordinary position.  It was non-compliant with the final orders.  It was causal in the Wife’s filing of an application.

24. The question then arises as to the terms of any costs order.

25. The Wife sought indemnity costs in relied upon the principles set out in Colgate Palmolive Co and Anor v Cussons Pty Ltd (“Colgate”):

    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.

    …

    4. … there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice.[1]

In applying Colgate it is important to remember what was set out by the Full Court of the Family Court in Quickley & Pelissier:

119.We then turn to consider whether costs should be awarded on a party/party or indemnity basis.

120.In Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 at 256, Sheppard J referred to the "settled practice" that where a court orders one party to pay another party's costs, the order is for costs to be paid on a party/party basis. His Honour also said "there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice" at 257.

121.In an appropriate case the court has a discretion to order costs on an indemnity basis. An order made in the exercise of that discretion is a very great departure from the normal approach and the circumstances justifying the departure should be of an exceptional kind (Kohan and Kohan (1993) FLC 92-340).

122.In the recent case of Madin & Palis (Costs) [2016] FamCAFC 25 this Court made reference to the increasing number of applications for indemnity costs and said at [23]:

Finally, we take the opportunity to observe that in so far as the appellant sought an order for indemnity costs, applications for such costs should only be made, and such costs will only be ordered, in the most extreme cases. This is particularly so having regard to the fact that the primary rule in this jurisdiction is that each party should pay their own costs.[2]

[1]Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248.

[2]Quickley v Pelissier [2016] FamCAFC 124, [119]-[122].

1. Such a departure is not apparent here.  While it is true that the Husband’s non-compliance was causal factor in the Wife’s Application in a Case, it occurred within the broader context of the parties struggling to effect the orders.  The Husband’s approach in breaching the injunction against the removal of money from the line of credit was an odd and inflammatory approach but, in the context of the overall difficulties the parties were encountering is not sufficient to justify an indemnity costs award.  Further, the context of the overall difficulties experienced by the parties in compliance means that the Husband’s acts in respect of the $15,000 and motor vehicle 1 were only a subset of the overall issues that were involved in the Application in a Case.

2. Accordingly, it will be ordered that the Husband will pay half of the Wife’s costs of and related to her Application in a Case as agreed or as assessed. 

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 19 July 2019.

Associate:

Date:  19 July 2019