YOUNT & FORNEY
[2019] FCCA 3307
•19 November 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| YOUNT & FORNEY | [2019] FCCA 3307 |
| Catchwords: FAMILY LAW – COSTS – Application for costs on an indemnity basis – costs order made. |
| Legislation: Federal Circuit Court Rules 2001 (Cth), r.21.02 Family Law Act 1975 (Cth), s.117 |
| Cases cited: Cochrane & Cochrane [2012] FMCAfam 984 Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225 Collins & Collins (1985) FLC 91-603 Kohan & Kohan (1993) FLC 92-340 Latoudis v Casey (1990) 170 CLR 534 Penfold & Penfold (1980) 144 CLR 311 Sala & Habner (No.2) [2018] FCCA 2738 Wrensted & Eades [2016] FamCAFC 46 |
| Applicant: | MR YOUNT |
| Respondent: | MS FORNEY |
| File Number: | PAC 101 of 2017 |
| Judgment of: | Judge Obradovic |
| Hearing date: | 3 May 2019 |
| Date of Last Submission: | 6 June 2019 |
| Delivered at: | Parramatta |
| Delivered on: | 19 November 2019 |
REPRESENTATION
| Appearing for the Applicant: | Ms Parkes |
| Solicitors for the Applicant: | York Law |
| Appearing for the Respondent: | Mr Youssef |
| Solicitors for the Respondent: | Taylor & Scott Lawyers |
ORDERS
The husband, Mr Yount is to pay to the wife, Ms Forney the amount of $3,340 within 28 days.
IT IS NOTED that publication of this judgment under the pseudonym Yount & Forney is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 101 of 2017
| MR YOUNT |
Applicant
And
| MS FORNEY |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to these proceedings are the applicant husband, Mr Yount and the respondent wife, Ms Forney.
The wife seeks costs on an indemnity basis in respect of a limited period of time between 18 October 2018 and 3 May 2019 as against the husband due to his protraction of the proceedings in having his business interests valued.
On 18 October 2018 the Court made orders as sought by the respondent wife, inter alia as follows:
1. That the Husband shall forthwith do all acts and things and provide any and all documents reasonably requested by the parties' joint expert witness at B Accountants so as to enable such witness to complete their valuation of the Company A as at 30 June 2018.
As at 3 May 2019 the above valuation had not occurred. The wife subsequently made an application for costs in an estimated amount of $8,976 against the husband for the delay in the valuation occurring as ordered on 18 October 2018.
The Court granted leave to the parties to file and serve submissions and evidence with respect to the costs sought by the wife within 28 days, with such application to be determined in Chambers.
On 31 May 2019 the husband filed written submissions opposing the costs sought by the wife on 3 May 2019.
On 3 June 2019 the wife filed an Affidavit sworn by her on the same date in support of her application for costs and further filed written submissions in support of her application for costs on 6 June 2019.
The wife in her affidavit filed 3 June 2019 explains that the calculation of costs provided on 3 May 2019 was incorrect and the amount sought at that time was in fact $6,336.
On further revision of the costs sought by the wife the total costs she seeks is $7,919.
These are the Reasons for Judgment with respect to the costs sought by the wife in the amount of $7,919.
Relevant Facts
On 31 October 2017 the Court made orders by consent for the valuation of the husband’s business interests with the husband to pay the costs of same at first instance.
On 6 November 2017 a joint letter of instruction was provided to B Accountants to undertake the said valuation.
On 7 March 2018 B Accountants wrote to the parties outlining concerns with respect to the financial material provided by the husband for the financial year ending 30 June 2018.
The husband responded to B Accountants above letter on 10 July 2018.
B Accountants again wrote to the parties on 24 July 2018 to seek clarification about the outstanding issues which the husband had not addressed in his letter to them on 10 July 2018.
The husband responded to B Accountants request for further information on 3 August 2018.
On 7 August 2018 B Accountants again wrote to the parties indicating that the responses received by the husband in his letter dated 3 August 2018 did not adequately address the issues that had been raised by them.
It appears that communication between the husband, B Accountants and the wife’s solicitors had ceased between August 2018 and at least 18 October 2018 when the matter was next listed before the Court for directions.
On 18 October 2018 the Court made further orders in accordance with orders sought by the wife for the husband’s business interests to be valued as at 30 June 2018 noting the time that had lapsed since the first order made for valuations.
It was not until 15 February 2019 that B Accountants received the financial documents requested of the husband on at least three occasions since the18 October 2018 orders.
It became apparent to the experts from the provision of these documents that the husband had a 1/3 interest in four other companies which had not been disclosed to the wife. The husband asserted that these companies had no value and that if the wife wanted them to be valued she ought to pay for it.
On 18 February 2019 B Accountants requested the parties to provide answers to specific questions to enable the valuation of the other four companies.
Between 18 February 2019 and 11 April 2019 there had been no response by the husband to B Accountants nor had the husband’s solicitors responded to the correspondence sent by the wife’s solicitor requesting an update.
On 3 May 2019 the Court made orders directing the husband to provide the information requested in a timely manner and on 10 May 2019 the husband’s solicitor responded to B Accountants with the required information.
On 31 May 2019 B Accountants responded to the parties and advised that the four other companies ought to be included in the valuation.
Summary of Costs Sought by the Wife
In the wife’s affidavit filed 3 June 2019 she summarises the costs sought by her as a result of the husband’s alleged protraction of the proceedings from 18 October 2018 to 3 May 2019. The summary of costs that the wife seeks are as follows[1]:
(a) Solicitors appearance at the previous court event of 18 October 2018 that effectively ran as an impromptu interim hearing (50 units of professional time = $2,640 incl. GST);
(b) The work subsequently done since then related to the issue of the outstanding business valuation of Mr Yount’s interests in his (omitted) partnership (24 units of professional time = $1,267 incl. GST);
(c) The costs of that same day at court for our appearance on 3 May 2019 from 8.45am – 3.30pm (68 units of professional time = $3,590 incl. GST) plus preparation of 45 mins ahead of our appearance (8 units of professional time = $422 incl. GST), totalling on the day $4,012 incl. GST.
[1] Paragraph 8
Annexure ‘B’ to the wife’s affidavit evidences the tax invoice entries in respect of the costs sought.
The Law
The principles in respect of costs orders in family law proceedings are well known. The starting position with respect to costs, as set out in s117 of the Act is that, subject to subsection 117(2), each party to proceedings under the Act shall bear his or her own costs.
The discretion to award costs is a broad discretion.[2]
[2] see for example Collins & Collins (1985) FLC 91-603.
The High Court held in Penfold & Penfold[3] that it is necessary for the Court to make a finding of justifying circumstances as an essential preliminary to the making of an order for costs. The Court is not required to specify the circumstances which justify the making of such an order.
[3] (1980) 144 CLR 311
As long as there is an essential preliminary finding that there are justifying circumstances to make a costs order, there is no additional or special onus which the Applicant needs to establish for an order for costs. It is not the law that a costs order can only be made in what has been described as a ‘clear case’. [4]
[4] See in general the comments made by the Full Court in Wrensted & Eades [2016] FamCAFC 46 and in particular where the Full Court approved the comments of the judge below at [103]
In Latoudis v Casey[5] the High Court stated as follows:
… in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of an unsuccessful party. They are compensatory 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 the legal proceedings.”[6]
[5] (1990) 170 CLR 534
[6] Referred to in the context of family law proceedings by Judge Kemp in Cochrane & Cochrane [2012] FMCAfam 984 at [17]
In determining what order, if any, should be made under s117(2) the Court must have regard to the prescriptive but non-exhaustive list of considerations in sub-section (2A).
Rule 21.02(2) Federal Circuit Court Rules2001 provides that in making an order for costs the Court may set the amount of costs; or set the method by which the costs are to be calculated; or refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules.
Submissions as to Costs
The husband
The husband opposes the costs sought by the wife. He submits that it is not possible for there to be criticism of his conduct such that a costs order ought to be made against him.
The husband accepts that there have been delays in finalising the valuation of his business interests however does not accept that these delays are exclusively his fault. He submits that due to the wife’s request that communication about his business interests occur between the expert and the partnership accountant only, his hands were effectively tied.
The husband submits that the wife contributed to the valuation delays in the following ways:
a)Failing to declare to the husband her desire to value the nominating companies until 8 March 2019;
b)Failing to respond to correspondence from the husband regarding the nominating companies in the period from 11 April 2019 to 3 May 2019; and
c)Being unsuccessful in her application to have the nominating companies valued.
For the above reasons the husband submits that a costs order on an indemnity basis cannot be made and submits that a justifying circumstance cannot be found in the circumstances of these proceedings, particularly with respect to his actions or inactions.
The husband maintains that it has always been the wife’s position that she will not be in a position to progress the matter until the former matrimonial properties were sold in any event, with settlement of Property C not due to occur until 31 May 2019.
It is further submitted by the husband that since separation he has been meeting the mortgage payments for the two matrimonial properties, the costs of the business valuation, child support payments as assessed, lump sum payments to the wife and his legal costs.
The wife
The wife submits that the costs sought by her are not excessive and are likely on par with the husband’s solicitors own charge rates.
The wife submits that the husband’s explanations as to delay are without merit, particularly as he has not:
a)Provided evidence to the Court urging his business partners to provide material to the expert expeditiously;
b)Provided evidence to the Court urging his business accountants to provide material to the expert expeditiously;
c)Provided evidence to the Court of how he has incorporated four new companies with his business partners nor has he explained why this was not disclosed to the wife; or
d)Filed an Application in a Case seeking an extension of time to value his interests in the businesses.
In her written submissions, the wife urges the Court to exercise its discretion in making a costs order on an indemnity basis and submits that it is appropriate for the Court to do so on the following basis:
a)The husband’s financial circumstances are significant, earning approximately $250,000 per annum according to the evidence filed by him in these proceedings;
b)The husband is no longer responsible for meeting the mortgage repayments with respect to the two properties referred to in his written submissions noting that Property D sold for $2.6 million in December 2018 and Property C settling on 31 May 2019;
c)There is no evidence filed to indicating where the husband is currently residing and what those liabilities may be; and
d)Neither party is in receipt of legal aid.
Determination
The wife relied on an affidavit filed 3 June 2019 in support of the costs application. That evidence was not challenged. The husband did not file any evidence in respect of the costs application.
The Court accepts the evidence of the wife. Her submissions are supported by the evidence.
The husband’s primary objection to the application for costs appears to be grounded in that any delay in information being provided to the expert was not as a consequence of his conduct or within his control. That submission is not supported by the evidence.
The Court finds that the husband’s failure to comply with Court orders has resulted in a significant delay in the valuation being completed. It was also the reason for the wife incurring costs which otherwise would not have been incurred. Consequently, the Court is satisfied that there are circumstances justifying a costs order and having regard to the s117(2A) matters that a costs order ought to be made.
The Court has the power to order costs on an indemnity basis.[7] The principles in respect of indemnity costs orders are also well known[8], and in essence may be summarised as follows:
a. the application of the ordinary well-settled rule of costs being ordered on a party and party basis will usually result in the amount received by the successful party falling short of a complete indemnity;
b. some special or unusual feature of the case must, in the circumstances, warrant departure from the well-settled practice of awarding costs on a party and party basis including an imprudent refusal of an offer of compromise; and
c. even if facts exist to justify the making of an indemnity costs order, such an order need not necessarily be made because costs are always in the discretion of the court. [9]
[7] See for example: Kohan & Kohan (1993) FLC 92-340; Latoudis v Casey (1990) 170 CLR 534.
[8] See generally Sheppard J in Colgate Palmolive Co and Anor v Cussons Pty Ltd (1993) 46 FCR 225
[9] Sala & Habner (No. 2) [2018] FCCA 2738 at [3]
The Court is not satisfied that an indemnity costs order is in the circumstances appropriate.
The Court finds that costs incurred by the wife as a result of the husband’s lack of action in ensuring that the valuations were conducted in accordance with orders made are to be assessed in accordance with Schedule 1 of the Federal Circuit Court Rules 2001 as well as on party/party basis in respect of the work done by the wife’s solicitors. As such, the Court assesses the costs as follows:
a)Direction hearings (half day) on 18 October 2018: $1,120
b)Work subsequently done in respect of outstanding business valuation: $1,100
c)Directions hearing (half day) on 3 May 2018: $1,120
Costs are assessed at $3,340. Such costs are to be paid within 28 days.
I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Associate:
Date: 19 November 2019
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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