White and White (No 2)

[2016] FamCA 802

FAMILY COURT OF AUSTRALIA

WHITE & WHITE (NO 2) [2016] FamCA 802

FAMILY LAW – COSTS - Between parties

Family Law Act 1975 (Cth)

Munday v Bowman (1997) FLC 92-784 per Holden CJ
Penfold and Penfold (1980) 144 CLR 311
Quickley & Pelissier [2016] FamCAFC 124

APPLICANT: Mr White

RESPONDENT: Ms White

FILE NUMBER: CAC 1775 of 2015

DATE DELIVERED: 21 September 2016

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 25 August 2016

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Self-representing

COUNSEL FOR THE RESPONDENT: Mr Howard

SOLICITOR FOR THE RESPONDENT: Phelps Reid Lawyers

Orders

1. The applicant shall pay to the respondent seventy five percent of the respondent’s costs of and incidental to the hearing in relation to the application filed 7 April 2016 heard on 16 June 2016, on a party/party basis, in the sum agreed or assessed.

2. For the purposes of these Orders, and pursuant to Rule 19.50 of the Family Law Rules, the Court certifies that it was reasonable for the respondent to brief counsel to appear on her behalf in the proceedings.

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

Mr White

Applicant

And

Ms White

Respondent

REASONS FOR JUDGMENT

1. The parties have commenced property proceedings that are yet to have a final hearing date allocated.  On 7 April 2016 the husband applied for interim orders.  The interim orders primarily sought to modify the orders made by Watts J on 12 February 2016, by Registrar Payget on 3 March 2016, and also to provide for access to financial records.  The orders sought concerned the husband’s access to items located at the former matrimonial home, the management of the finances and properties under dispute, the husband’s ability to discharge his duties as Director of the family company and trust, and his ability to prepare the case whilst restrained from accessing the location where pertinent company trust documentation was located. 

2. The wife filed a Response on 26 April 2016 seeking the dismissal of all of the husband’s orders sought and seeking her costs in doing so. 

3. I heard the interim matters on 8 June 2016 and delivered judgment on 16 June 2016.  The husband was largely unsuccessful, particularly in relation to the matters that had only recently been the subject of orders made by the court.  This then left an outstanding question as to costs.  The wife filed written submissions and an affidavit in support of her application for costs on 23 June 2016.  The husband filed written submissions and an affidavit opposing an order for costs on 30 June 2016.

The proceedings

The husband’s application for orders 2.1-2.2.2

1. This part of the application dealt with access to the former matrimonial home and storage rooms in the parties’ rental properties to facilitate the collection of the items set out in annexure A of the Consent Orders of 3 March 2016 made by Registrar Payget. 

2. Those orders provided for the husband to collect items from the former matrimonial home.  The relevant time for collection of the items had passed under circumstances where the wife made offers to allow collection in compliance with the orders and subsequent offers after the expiry of the time, to continue to allow the husband the opportunity to collect items identified in the orders.  These offers can be seen in the annexures to the wife’s affidavit of 23 June 2016.  The husband had not availed himself of any of these offers and sought in his application to enable personal access within the former matrimonial home. 

3. The one disputed matter raised by the wife in respect of the orders was that she sought to supply the husband with a double bed rather than a queen sized bed subject to the orders.  The wife was unsuccessful in seeking this substitution.  The items pursuant to the orders to be provided by the wife included the queen sized bed.  The wife previously advised the husband that she would be providing a double bed.  To this extent she can be seen to have been non-compliant with the Consent Orders made by Registrar Payget. 

4. However, the issue of the bed was only a minor component within the above orders.  Other than in relation to that issue, the husband was unsuccessful.  He did not obtain the orders he sought regarding access. 

5. On the costs application the husband sought to demonstrate that since the judgment of 16 June 2016 the wife had been non-compliant, in that she had not provided the items per the list in Registrar Payget’s orders.  This is not a matter that I am prepared to take into account in determining costs for the proceedings pre dating the alleged non-compliance.

6. While an amendment to the orders was made to continue to facilitate the collection by the husband, this is in the context where the wife had continued to make offers to the husband which allowed him to collect items despite the ordered time having passed.

The husband’s application for order 2.3

1. This part of the application was for an order in relation to rental income, said to be justified on the part of the husband by the assertion that the wife had been non-compliant with the orders of Watts J.  The application was unsuccessful. 

The husband’s application for order 2.4

1. This part of the application was for arrears of maintenance.  The justification put forward was the assertion that the wife was non-compliant with her obligation to pay maintenance to the husband.  However, although at the time of the making of the application it can be seen that the wife was not up to date with the maintenance payments, these were brought up to date in advance of the hearing of the matter.  Accordingly, by the time of the hearing there was no justification for the application and it was unsuccessful. 

The husband’s application for order 2.5

1. These were machinery provisions to support the previous orders in relation to which the husband was unsuccessful and hence orders were not made in accordance with the application.

The husband’s application for order 2.6

1. This was an application for a variation of the orders made by Watts J in relation to the circumstances under which the husband was to be paid maintenance.  The husband was unsuccessful. 

The husband’s application for order 3

1. The husband sought a change to the orders previously made by Watts J in respect of the management of the rental properties.  He was unsuccessful. 

The husband’s application for order 4

1. Part of this matter was not pursued on the basis that it had been resolved prior to the hearing.  However, orders 4.2-4.5 sought a series of procedural orders.  These were not made and the husband was unsuccessful in his application.

The husband’s application for order 5

1. The husband sought particular orders in relation to a mechanism for disclosure in relation to the records of C Pty Limited and the C Family Trust.  These records were kept at the former matrimonial home and the husband sought access to them.  The specific access he sought was at the former matrimonial home.  In response the wife proposed a mechanism whereby she would provide copies of identified documents to the husband without him accessing the former matrimonial home.

2. Orders were not made in the terms ultimately sought by either of the parties to deal with this disclosure matter.  Instead, an alternate mechanism was put in place whereby the husband would have access to the documents at the wife’s solicitor’s premises and be able to there identify documents for copying. 

3. Although the husband did not obtain the orders that he sought, he could not be perceived to be wholly unsuccessful in relation to this point.

4. The wife sought an order for costs in respect of the application filed 7 April 2016 by the husband and sought these on an indemnity rather than party / party basis.  The husband opposed the making of any order for costs and in particular opposed an order for indemnity costs.  The parties supplemented their written submissions with oral submissions before me. 

Legal principles

1. Section 117 of the Act sets out the default position that each party bears their own costs, subject to circumstances justifying otherwise.  The precondition to making an order for costs is the finding that there are circumstances justifying the making of an order for costs.  Once these are found, the default position yields to the court’s discretion to award costs as it considers just.[1] The relevant considerations to assess the circumstances are set out at s 117(2A) as follows:

   [1]Penfold and Penfold (1980) 144 CLR 311 per Stephen, Mason, Wilson and Aicken JJ

   In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (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, inspection, 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.

2. As to the financial circumstances of the parties, each has access to funds by virtue of the orders of 12 February 2016 that provided for each to have access to $100,000.  I am limited in my understanding of their financial circumstances beyond this.  Neither party is in receipt of legal aid.

3. In apparent reliance upon s 117(2A)(c), the wife claimed that the husband’s behaviour in the case justified an order for costs.  In particular she claimed that some aspects of the husband’s application were “outrageous”.  The particular matter identified as outrageous was the pursuit of access to the former matrimonial home on an unlimited and unimpeded basis. The husband asserted that his applications were otherwise reasonable and that the application for access to the former matrimonial home was to be both in ordinary business hours and on 24 hours’ notice to the wife, rather than unlimited as claimed by the wife.  There is at least ambiguity in the orders sought that allow both the wife’s and husband’s constructions of his application to stand.  I am not prepared to categorise the application as “outrageous”.

4. Further, in reliance upon s 117(2A)(c) and (f), and also in support of the claim for indemnity costs, the wife claimed that the husband, properly advised, ought to have known that the application had no chance of success and that he had imprudently refused an offer to settle. 

5. The relevant offers to settle in writing related principally to the issue of the collection of items from the former matrimonial home.

6. Finally the wife asserted that the husband had been wholly unsuccessful. The husband pointed to success in relation to the issue involving the queen size bed and the making of orders for access to documents.  He noted that the application in relation to maintenance was justified at the time as the wife had missed payments. 

7. However, even if the husband is not to be characterised as wholly unsuccessful, the degree of success or lack thereof still has the capacity to be taken into account pursuant to paragraph g).  The degree of success is to be measured against three facts.  The first is that none of the orders sought by the husband were made.  The second is that while the wife was unsuccessful regarding an attempt to substitute a double bed for the queen sized bed, no further order was necessary as this was already the subject of an order by Registrar Payget.  At best the husband can be characterised as having successfully resisted this minor application on the part of the wife.  Thirdly, an alternative regime for the access to documents was made that substantially differed from the husband’s application, but also differed from the wife’s application.

8. A significant number of the orders unsuccessfully sought were in relation to matters only recently the subject of orders either by consent or otherwise on the part of Watts J and Registrar Payget.  That is, applications in respect of payment of sums, allocation of rent from properties against outgoings, and responsibility for the management of rental properties  That is, the lack of success is in the context of a re-litigation of matters only recently determined.  Further, the orders directed to his attendance at the former matrimonial home sat ill with the recently resolved sole occupancy issue.

9. The degree of lack of success, in the context of a large number of the matters being a re-litigation of issues, justifies an order for costs to be made against the father.  They do not, however, justify an order that he meets the wife’s complete costs of the day, as he cannot be characterised as wholly unsuccessful in the matters pursued.

10. The wife sought an order that the costs be paid on an indemnity basis and relied upon Munday v Bowman[2] in identifying examples of what may constitute a justification for indemnity costs.  The two particular examples identified by the wife were the continuing of an action with no chance of success and the imprudent refusal of an offer to compromise.  It ought, however, to be noted that in citing such examples, Holden CJ was dealing with extremes.  For example, in relation to the “no chance of success” example Holden CJ indicated that the conduct was to be such as to allow a finding of “ulterior motive” or “wilful disregard of known facts”.  That is, it is not sufficient to reflect that the application had a low chance of success, but rather that the prospective lack of success was so stark as to require the inference that the application was occasioned by an ulterior motive.

    [2]Munday v Bowman (1997) FLC 92-784 per Holden CJ

11. The husband correctly pointed out that exceptional circumstances are required before there is to be a departure from costs being awarded on a party-party basis.

12. The principles to be applied in relation to indemnity costs are neatly set out by the Full Court in Quickley & Pelissier:[3]

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

    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.

    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).

    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.

    [3] Quickley & Pelissier [2016] FamCAFC 124

13. While the applications by the husband could generally be described as ill conceived, and while he has been largely unsuccessful, the circumstances do not rise to a level to permit the great departure required to make costs on a basis other than party-party.  The applications are not of such an extreme case as to justify an order for indemnity costs.

14. Taking into account those matters where I have assessed the husband as having some success, the husband is to bear the responsibility for three quarters of the costs of the wife in relation to his application on a party-party basis.

15. Further, while the husband asserted that the matter was not of sufficient complexity to justify counsel, the broad ranging nature of the application, the detail required to answer the application, combined with its interaction with the previous orders, was sufficient to properly require counsel.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 21 September 2016.

Associate: 

Date:  21 September 2016