Wu & Leong (No 3)
[2024] FedCFamC2F 974
•1 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Wu & Leong (No 3) [2024] FedCFamC2F 974
File number(s): CAC 1783 of 2013 Judgment of: JUDGE MANSFIELD Date of judgment: 1 August 2024 Catchwords: FAMILY LAW – PROPERTY – Where final orders have not been complied with causing financial loss to the non-defaulting party – Orders made under s 80 of the Family Law Act 1975 to enable the implementation and enforcement of property settlement orders
COSTS – Where the applicant is entitled to a costs order – Indemnity costs sought but insufficient evidence to establish what the wife’s legal obligation as to costs is and the reasonableness of the amount sought on an indemnity basis.Legislation: Family Law Act 1975 (Cth), Part VIII, ss 79A, 80, 117, 117(2A)
Federal Circuit and Family Court of Australia Act 2021, ss 67
Federal Circuit and Family Court of Australia (Family Law) Rules 2021, Part 12.8, rr 1.31, 12.13(4), 12.17(3), 12.28, 12.47(2),
Cases cited: Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116
Marriage of Ravasini (1983) FLC 91–312
Moliere & Van Wyk (1980) FLC 90–911
Pera v Pera (2008) FLC 93–372
Roydon & Roydon [2024] FedCFamC1A 105
Shaw v Yarranova Pty Ltd & Anor [2011] VSCA 55
Vakauta v Kelly (1989) 167 CLR 568
Wentworth v Rogers [2006] NSWCA 145
Division: Division 2 Family Law Number of paragraphs: 39 Date of last submission/s: 17 June 2024 Date of hearing: 10 May and 17 June 2024 Place: Canberra Counsel for the Applicant: Dr S Leslie Solicitor for the Applicant: SCB Legal Respondent: Self-represented ORDERS
CAC 1783 of 2013 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS WU
ApplicantAND: MR LEONG
Respondent
ORDER MADE BY:
JUDGE MANSFIELD
DATE OF ORDER:
1 AUGUST 2024
THE COURT ORDERS THAT:
1.Within 28 days from the date of these Orders, the Husband is to pay the Wife $40,443.74.
2.Should the husband fail to comply with Order 1, he is to pay interest on any amount outstanding calculated in accordance with the interest rate prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 from the date of default until the date of payment in full.
3.The husband is to pay the wife’s costs of and pertaining to the application dated 21 March 2024, on a solicitor and client basis, as assessed pursuant to Part 12.8 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
4.Should the husband fail to comply with any costs assessment order arising out of Order 3, he is to pay interest on any amount outstanding calculated in accordance with the interest rate prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 from the date of default until the date of payment in full.
5.In the event the husband fails or neglects to pay to the wife the sums provided in Orders 1 and/or 3, or any interest that has accrued pursuant to Orders 2 and/or 4, within twenty-eight (28) days from the date of default, the Husband is to:
(a)do all such acts and things and shall execute all such deeds, documents and instruments as may be necessary to list the property situate at A Street, Suburb B in the Australian Capital Territory (“the Suburb B Property”) for sale;
(b)engage an Agent as agreed upon between the parties in writing to facilitate the sale of the property or, in the absence of such an agreement for more than fourteen (14) days, the Wife shall propose two agents and the Husband shall nominate one of those agents within seven (7) days of receiving the Wife’s proposal (“the Agreed Agent”);
(c)do all things necessary to list and sell the Suburb B Property for a price as agreed between the parties or failing agreement as recommended by the Agreed Agent;
(d)meet any upfront sale costs or costs of preparing the property for sale as required by or advised by the Agreed Agent.
6.In the event that the Suburb B Property has not sold within six (6) weeks of being listed for sale by private treaty in accordance with Order 5 above, the Husband shall do all such acts and things and sign all such deeds, documents and instruments as may be necessary to cause the Suburb B Property to be sold by the Agreed Agent by way of public auction on the following terms:
(a)that such auction take place within six (6) weeks from the date of placing the Suburb B Property for sale by public auction or as soon as practicable thereafter;
(b)that the reserve price for such auction shall be as agreed between the parties or failing agreement for more than seven (7) days, as determined by the Agreed Agent and the Husband shall pay all auction expenses as requested by the Agent as and when they fall due;
(c)that the Husband shall do all such acts and things as may be necessary or recommended by the Agreed Agent to properly present the Suburb B Property for sale and to make it available for inspection by prospective purchasers;
(d)that either party shall be at liberty to bid for the purchase of the Suburb B Property at auction;
(e)that the parties shall attend the auction and if necessary, negotiate with the highest bidder at auction if the reserve price is not reached.
7.Upon completion of the sale of the Suburb B Property in accordance with Orders 5 and/or 6 above the Husband shall distribute the sale proceeds in the following order and priority:
(a)In payment of legal costs, real estate agent’s commission, auction expenses and GST upon the said sale;
(b)In payment to the Wife as is then outstanding pursuant to Orders 1-4;
(c)In payment of the balance to the Husband.
8.In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders within seven (7) days, the Registrar of the Court be appointed pursuant to Section 106A of the Family Law Act 1975 to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MANSFIELD:
BACKGROUND
The final hearing of the dispute between the parties under Part VIII of the Family Law Act 1975 (“the Act”) concerning property of the parties or either of them occurred before me from 31 October 2022 until 2 November 2022. Final Orders were made by me on 28 April 2023. Amongst other things, the Final Orders provided for:
(a)The wife to obtain sole title to two real properties (the Suburb D property and the Suburb F property) and for the husband to obtain sole title to one real property (the Suburb B property).
(b)Pending transfer of the Suburb D and Suburb F properties the husband:
(i)Be restrained by injunction from increasing the loan amount secured by mortgage, and,
(ii)Be responsible for all mortgage payments, outgoings and expenses.
On 26 May 2023, the husband appealed the Final Orders. On 19 July 2023, some of the Final Orders were stayed pending the outcome of the appeal. On 6 November 2023, the appeal was dismissed. On 18 December 2023, the stay of the Final Orders was lifted. Of the orders referenced above, the transfer of properties was stayed but the husband’s obligations to make payments was not. Nevertheless, on 18 December 2023 the husband was again ordered to make the payments within 14 days (by 1 January 2024).
By application dated 21 March 2024, the wife alleged the husband contravened the Final Orders and the 18 December 2023 Orders and sought further orders for the husband to pay to the wife:
(a)The increased amounts she had to pay in order to refinance and transfer title to the Suburb D and Suburb F properties; and
(c)In the event of default, interest and a forced sale of the Suburb B property; and
(d)Costs.
Amongst other things, the husband says the wife’s application should be dismissed.
THE HEARING
The matter was heard before me over two days on 10 May 2024 and 17 June 2024 including cross-examination of the husband on 10 May 2024. The following material was received into evidence:
(a)Affidavit of Ms Wu filed 4 April 2024;
(b)Affidavit of Ms Wu filed 13 June 2024;
(c)Affidavit of Mr Leong filed 9 May 2024; and
(d)Affidavit of Mr Leong filed 13 June 2024.
I have also had regard to:
(a)Minute of Orders Sought by the Applicant Wife filed 13 June 2024;
(b)Written Submissions of the Respondent Husband filed 15 June 2024; and
(c)Case Outline Document of the Respondent Husband filed 15 June 2024.
FACTS
With respect to the Suburb D property, the wife’s unchallenged evidence at paragraphs 27-39 of her Affidavit filed 4 April 2024 included that:
(a)On 1 February 2024, title to the Suburb D property transferred into the wife’s sole name.
(b)No payments had been made towards the loan accounts since 17 July 2023.
(c)Between 31 July 2023 and January 2024, there were seven monthly interest charges totalling $12,288.22.
(d)The amount adjusted at settlement for rates and levies was $372.67.
(e)The husband had received and kept the rental income up to 14 February 2024.
With respect to the Suburb F property, the wife’s unchallenged evidence at paragraphs 24-31 of her Affidavit filed 13 June 2024 included that:
(a)No payments had been made towards the loan accounts since 3 April 2023.[1]
(b)The amount owing as at 17 May 2024 and the minimum amount the wife will be required to refinance was $27,782.85 higher than the balance as at 28 April 2023.[2]
(c)Since 10 May 2024, the wife had received from the husband sufficient documentation in order for her to take the steps required to refinance the property and she took those steps in June 2024.[3]
(d)The husband had received and kept the rental income up to 7 June 2024.[4]
[1] Paragraph 24.
[2] Paragraph 25 and Annexure H.
[3] Paragraphs 26-31.
[4] Paragraph 15 and Annexure D.
At hearing on 17 June 2024, counsel for the wife advised that she was instructed the process for conveyance of the Suburb F property had begun.
By “unchallenged” in the preceding paragraphs, I mean that the husband made no application to cross-examine the wife, nor did he adduce any evidence to the contrary, nor did he refute the wife’s evidence. Except perhaps for its possible inclusion in the husband’s unparticularised submission that there has been “numerous instances of false evidence and misrepresentations by the wife and her counsel.”[5]
[5] Written submissions of 15 June 2024 - Page 1.
Accordingly, I find the facts as set out above proven.
THE LAW
Order 1 as sought by the wife is wholly consequential to the husband’s non-compliance with Orders made under Part VIII of the Act on and from 31 October 2022. The Court is vested with power to make ancillary orders which enable the implementation and enforcement of property settlement orders (Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 342 and 351 –354; Pera v Pera (2008) FLC 93–372 at [58]–[62]; Marriage of Ravasini (1983) FLC 91–312; Moliere & Van Wyk (1980) FLC 90–911).
Section 80 of the Act relevantly provides:
1.The court, in exercising its powers under this Part, may do any or all of the following:
(a)order payment of a lump sum, whether in one amount or by instalments;
[…]
(k)make any other order … which it thinks it is necessary to make to do justice.
DETERMINATION
The husband’s position on this application has been clear and consistent. He contended:
(a)The orders that have been made to date are a miscarriage of justice and ought to be set aside pursuant to s 79A of the Act; and
(b)It is self-evident that the orders are unfair because the effect of them has rendered him unable to afford to comply with them.
To the extent that unaffordability may have been a reasonable excuse, the husband brought no objective evidence about that. It is also inconsistent with the wife’s unchallenged evidence that the husband received and kept the rent for the two properties in the meantime.
As a direct result of the husband’s non-compliance with orders made under Part VIII of the Act:
(a)The wife has had to pay $40,443.74; and
(b)The husband has had and retained the benefit of rent received.
The wife is entitled to the effect of the property settlement orders that were determined by the court to be just and equitable. The husband ought not be permitted to financial benefit by his non-compliance at the direct expense of the wife.
Order 1 is made accordingly. It is in the same terms as sought by the wife except the time for payment is 28 days which is an objectively more reasonable time instead of the 14 days sought.
OTHER ORDERS
Orders 2 and 4, 5-7 and 8 are made in the same terms as sought by the wife. They are made for the following reasons.
(a)There are reasonable grounds to believe that the husband may not comply with Orders 1 and 3 because:
(i)The husband has been found to have not complied with orders of the court without a reasonable excuse, and
(ii)Since the property settlement orders were made, the husband has been resolute in his attitude that they are unfair, ought to be set aside and therefore not complied with.
(c)They are consistent with the overarching purpose at section 67 of the Federal Circuit and Family Court of Australia Act 2021, to which I am required to have regard. Section 67 requires the court and the parties to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.
(d)They seek to provide motivation to the husband to comply with the orders, protect the wife against losing that to which she is entitled and to avoid further proceedings.
COSTS
The wife seeks an order that the husband pay a lump sum of $25,960 being the wife’s costs on an indemnity basis that she has incurred as a result of his contravention of orders.
Pursuant to section 117 of the Family Law Act 1975, each party is to bear their own costs of proceedings under the Act. Nevertheless, the Court may make such order as to costs as it considers just if there are circumstances that justify doing so, having regard to the matters prescribed by subsection 117(2A) of the Act. I have had regard to those matters and find as follows.
Firstly, as a consequence of the husband’s non-compliance with previous orders of the court, the proceedings were absolutely necessary in order for the property settlement orders to be given effect and for the wife to receive that to which she was entitled under those orders.
Secondly, the proceedings extended into a second day in order for the husband to disclose information that he had been required to disclose since the making of final orders.
Thirdly, the husband has been wholly unsuccessful in the proceedings.
I am satisfied that the circumstances justify a costs order in favour of the wife.
Method of calculation of costs
The authorities are longstanding and clear that an order for indemnity costs involves a very significant departure from the ordinary course and should only be made in exceptional circumstances. In the circumstances described above, there is a strong argument that the husband should pay the wife’s costs of this application on more than a party and party basis.
There are however impediments in proceeding to make the order sought by the wife.
The wife gives evidence (at paragraphs 32-35 of her affidavit filed 13 June 2024) that her anticipated solicitor costs are $12,100 and her anticipated costs of counsel are $13,860, totalling $25,960, of which she has paid $1,870. I am satisfied that it was reasonable for the wife to engage counsel.[6] The wife’s costs notice filed 13 June 2024 is consistent with her affidavit evidence. It also states that the “amounts are just estimates and may vary depending on the complexity of the matter and amount of work involved.”
[6] Family Law Rules 2021, r 12.28.
The requirement in rule 12.13(4) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 for a party applying for an order for costs on an indemnity basis to inform the court as to the terms of any costs agreement has not been met. It is expressed as a mandatory requirement – unless dispensed with pursuant to rule 1.31.
As such, the only evidence as to the costs incurred by the wife is the small amount paid and the much larger costs she anticipates being asked to pay. There is no itemisation or bill of costs nor estimate as to the wife’s party and party costs.
In Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116, the Full Court said that “the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges”. That is, the scale fees are the reference rate for assessing the reasonableness of costs, not whatever may be the fees charged by a particular practitioner. (Roydon & Roydon [2024] FedCFamC1A 105 [at 112]). This principle is reinforced by the requirements of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 at:
(a)Rule 12.17(3)(c) and (f) where in making a costs order the court may consider the rates ordinarily payable to lawyers in comparable proceedings and whether expenses are fair, reasonable and proportionate; and
(b)Rule 12.47(2) that when assessing costs ordered on “an indemnity basis” regard is had to the scale of costs set out in Schedule 3 to the rules.
Further, an award of costs is compensatory in nature and is not imposed for the purpose of punishing the losing party or providing a bonus to the successful party. This is known as the indemnity principle. (That principle should be distinguished from the expression ‘indemnity costs’.) In Wentworth v Rogers [2006] NSWCA 145 at [102], Basten JA stated:
The substantive issue at the heart of the appellants’ case was the principle that the fundamental purpose of an order that one party to litigation pay the legal expenses or ‘costs’ of another party is to provide an indemnity in relation to the whole, or usually part, of the legal obligation incurred by the other party to his or her lawyers. If that party is under no legal obligation to pay lawyers’ fees, no amount can be recovered from the unsuccessful party. [Bold emphasis added].
At this point, there is insufficient evidence to establish that the wife is liable to pay the amount of the costs that she seeks. However, in Shaw v Yarranova Pty Ltd & Anor [2011] VSCA 55 the court held at [19]:
Courts generally accept the existence of a contract of retainer when a solicitor has performed work on behalf of a person with his or her knowledge and assent, in circumstances which are consistent with that person being the solicitor’s client. The existence of a contract of retainer and the liability of the client for the solicitor’s costs will be presumed, and the party who challenges the existence of the retainer in such circumstances bears the onus of establishing the absence of it.
Accordingly, in the absence of a challenge to the existence of any retainer, I am prepared to accept that there is a contract of retainer under which the wife has a legal obligation to pay her lawyers’ fees.
However, there is insufficient evidence to establish the reasonableness of the amount sought on an indemnity basis for the wife’s costs.
At $25,960, it is not a modest amount. There is also an arguable question as to its proportionality for an application on a discrete issue and two half-days of defended hearing. On the state of the evidence, a costs order for a specific amount or on an indemnity basis is not available. Despite the Court’s broad discretion as to costs, such an order would be an appealable error.
As loathe as I am to make any orders that have the effect of extending these proceedings, the order must be that the wife is entitled to costs, on a solicitor and client basis, as assessed pursuant to Part 12.8 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
ALLEGATIONS OF BIAS AND JUDICIAL MISCONDUCT
By his written submissions, the husband alleges judicial misconduct. By his oral submissions, the husband alleges bias. Seemingly on the ground that I have not made orders in his favour.
At no point during the proceedings did the husband make an application for my disqualification, in which event the husband is taken to have waived any application he believed was available to him at the time (Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344, 357 and 360; Vakauta v Kelly (1989) 167 CLR 568 at 577–579 and 586–588).
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansfield. Associate:
Dated: 1 August 2024
0
8
3