FAMILY COURT OF AUSTRALIA

STONEY & STONEY (No 2)	[2015] FamCA 148	

FAMILY LAW – COSTS	

Family Law Act 1975 (Cth)	

Cooper & Oakley (No. 2) [2012] FamCAFC 187 
I and I (No 2) (1995) FLC 92-625
Kohan and Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784
Prantage & Prantage (2013) 49 Fam LR 197	

APPLICANT:	Ms Stoney	

RESPONDENT:	Mr Stoney	

FILE NUMBER:	MLC	7569		of	2010	

DATE DELIVERED:	11 March 2015	

PLACE DELIVERED:	Melbourne	

PLACE HEARD:	Melbourne	

JUDGMENT OF:	Cronin J	

HEARING DATE:	By Way Of Written Submissions	

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT:	Adrian Abrahams	

THE RESPONDENT:	In Person	

Orders
(1)	That the husband pay the wife’s costs of the hearing on 22 January 2015 according to the scale set out in the Family Law Rules 2004 by agreement and failing agreement, as assessed.
(2)	That the wife’s application for the costs of the hearing before Bennett J on 3 December 2014 is dismissed.
(3)	That the wife’s application for indemnity costs is dismissed. 
IT IS NOTED that publication of this judgment by this Court under the pseudonym Stoney & Stoney has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Family Court of Australia at Melbourne	

FILE NUMBER: MLC 7569  of 2010

Ms Stoney 	
Applicant

And

Mr Stoney 	
Respondent

REASONS FOR COSTS JUDGMENT
1.	In the Judicial Duty List on 22 January 2015, I heard an interlocutory application by Ms Stoney (the wife) for the Court to make enforcement orders against Mr Stoney (the husband). These were orders of an enforcement nature.
2.	The substantive proceedings had commenced in 2010 and were ultimately heard and determined by Young J in April 2012. His Honour made detailed orders but for reasons which I set out, the dispute between the parties had never been finalised. There was clearly a sense of exasperation for both parties but particularly the wife.
3.	As a costs application had been foreshadowed, I made provisions for any application and response to be by written submission. Time limits were set in the orders. 
4.	The wife filed a written submission seeking costs on 18 February 2015. In what could only be described as a pleading letter dated 11 February 2015, the husband wrote that he had been waiting to be “issued” with documents from the wife’s lawyers about costs and (as can be seen from the filing date of the wife’s submission) he had not received anything. I have inferred that the husband has received the wife’s submission because it seeks an opportunity to respond to anything he might say. 
5.	The time limit for any response from the husband expired on 9 March but as that was a public holiday, I extended the time by a further day. Nothing had been received from the husband but I propose to take into account the matters set out in his letter as his position relating to why an order for costs should not be made.
6.	The starting point is to return to the matters about which I made findings and orders. In summary form, they are as follows:
•	Negotiations between the parties had broken down irretrievably.  
•	The husband filed a contravention application which came before Bennett J on 3 December 2014 and her Honour gave the husband leave to withdraw it.  Her Honour specifically reserved the costs of both parties of the entire day.
•	The wife was simply seeking that the orders of Young J made in 2012 be enforced.  Almost three years later, the parties were not able to agree on what was in the “pool”.  That problem has arisen in my view because the husband had not sold the unit that he was required to under the orders.  
•	The husband endeavoured to explain the delay inter alia by reference to the wife’s solicitor threatening to lodge a caveat. I described his argument as nonsense.  
•	Young J provided for liberty to apply about sale conditions and the wife had applied but the husband had done nothing.  
•	The issue of a reserve price was covered by Young J’s orders.  
7.	I then observed:
I have little confidence that the husband will fulfil his obligations having regard to his somewhat lax approach in the past.  
8.	The general rule about costs is prescribed in s 117(1) of the Act namely that each party should bear their own costs. However, the Court is empowered by s 117(2) of the Act to make an order for costs if it is of the opinion that there are “circumstances that justify it in doing so”. If the Court finds a justifying circumstance, it still has to have regard to the factors in s 117(2A) in considering what order, if any, should be made (see I and I (No 2) (1995) FLC 92-625). 
9.	The wife made an unusual submission that “the Court will accept that the unsuccessful party should pay the costs….and the more contentious question is whether those costs should be ordered on an indemnity or party-party basis.” In my view, to approach the matter on that basis would be wrong in law.
10.	The submissions of the wife may be summarised as follows:
•	The Court’s findings constituted conduct by the husband that amounted to a very great departure from the normal standard.
•	(addressing the indemnity costs issue) The wife should not have been required to incur costs and that outweighed the objective of protecting the husband’s access to justice by limiting costs to the scale.
•	The wife had signed a costs agreement with her lawyers.
11.	The submission then addressed the relevant factors in s 117(2A) and I shall turn to those where relevant.
12.	The husband’s position as I have indicated was set out in his letter. I summarise his position as follows:
•	Each party should pay their own “way”.
•	Based on his research, costs orders were rare due to “the emotional and stressful effects divorce has on both parties”.
•	An award of costs would have “emotional and scarring effects”.
•	Both parties had spent a significant amount of money because of “bitterness and hatred towards each other”.
13.	Prophetically, the husband said that Young J had stated “numerous times” that “this was not a complicated matter and was wondering why both parties were complicating the matter”. On the evidence and taking into account the withdrawn contravention application, the only person who was complicating things was the husband.
14.	The husband then said that he was unemployed and things did not look like they would improve but against that, he acknowledged the existence of rental property and his ultimate entitlement to money.
15.	I find that the reason why the wife brought the proceedings was because there was no action by the husband. The husband had managed to manipulate the orders to avoid paying out the parties’ mortgage obligations and had received indirect benefit. Whilst the wife too had the benefit of not having to pay out the husband until the terms were fulfilled, her position was that she wanted to end the stand-off. There is much to be said for her position after almost three years. She was entirely in the hands of the husband, absent issuing an application (as she did) about taking control of the sale. 
16.	Having then faced a contravention application that Bennett J permitted the husband to withdraw, the real issue of the finalising of the sale of the property as dictated by the orders of 2012 could proceed. Accordingly, the wife incurred costs to try and implement just what she was entitled to have. 
17.	The husband’s view that costs orders were rare due to “the emotional and stressful effects divorce has on both parties” is wrong. It is not the effect of a costs order that is relevant but rather whether there are justifiable circumstances (s 117(2)) to say that it would not be just to make a party pay their own costs because of the approach of the other litigant. There is little doubt that an award of costs may have “emotional and scarring effects” but the answer in this case was in the husband’s hands. The orders in 2012 gave him obligations and the machinery provisions to solve the matter expeditiously. He cannot approbate and reprobate. He described the bitterness and hatred he thought each had towards the other but the solution to that problem was to bring the litigation to an end. That should have happened in 2012 or shortly thereafter.
18.	Those matters would justify the Court considering departing from the principle that each party pay their own costs.
19.	Before making an order however, the Court must examine the matters in s 117(2A) of the Act.
The financial circumstances of the parties
20.	The wife had been unemployed and, in circumstances where she had an entitlement under the 2012 orders, she had to borrow money from family. The husband had the benefit of the orders and had not taken steps to enable the wife to close off ties.
21.	Even if both parties had employment problems and taking into account the husband’s argument about not being able to afford a lawyer, there were still entitlements that should have been finalised at a time when the husband was in control of the assets. I have little doubt that the capital will have to be used to survive, absent employment, and here, the capital sum is not huge. However, whilst a party’s financial circumstances are relevant to a determination pursuant to s 117(2A), neither that factor, nor any other factor, is determinative (Cooper & Oakley (No. 2) [2012] FamCAFC 187 at [14]). As the Full Court has observed:
[N]either impecuniosity, nor incapacity to meet an order for costs, can, per se, be determinative of whether an order for costs ought be made; …if either or both were, the impecunious litigant could litigate with impunity - and with immunity against a costs order.
Legal aid
22.	There is no evidence that anyone is in receipt of assistance by way of Legal Aid.
The conduct of the parties
23.	The husband had brought the contravention application and Bennett J reserved rather than dismissed any suggestion that costs should be paid. It was apparent that the wife was always going to seek those costs.
24.	The husband’s material in respect of the wife’s application did not seriously address the issues in dispute.
25.	Time and therefore costs, were wasted by the approach of the husband.
26.	I otherwise refer to and repeat the matters set out in paragraphs 15 and 16 above.
Failure to comply with orders
27.	The wife submitted that the husband had not taken all steps necessary to sell certain property but she too had been slow to bring the proceedings to a head.
Written settlement offers
28.	Written offers to resolve the dispute were made but only under the orders of Bennett J. It would seem that the approach of the wife was very close to the outcome before the Court. Again, it is difficult to know why the problem arose when the orders provided specific relief. The husband’s position did not seem to address the impasse. It is therefore understandable that there was little that could be negotiated. The wife’s position can be seen as one in which she wanted to take over the responsibilities otherwise previously given to the husband. Nothing has been suggested that any offer to contribute towards costs has since been made.
Wholly unsuccessful
29.	The wife pointed to the contravention proceedings before Bennett J where it seems that her Honour convinced the husband that he had no cause of action. 
30.	It is difficult for me to know just what the basis of reserving the costs before Bennett J was that day. I have no specific evidence that would enable me to find that the Court should say it was proper and just that the husband pay the wife’s costs for that abortive exercise. It seems an appropriate inference to find that the Bennett J orders focused the wife’s mind on doing something about the enforcement of the 2012 orders rather than negotiating some form of compromise. I would therefore decline to make an order for costs in relation to that hearing.
Conclusion
31.	I am satisfied that the circumstances of the hearing before me do justify the making of an order for costs in respect of that hearing.
Quantum of Costs
32.	The wife’s submission was that costs should be awarded on an indemnity basis. The submission referred to Munday v Bowman (1997) FLC 92-784 where examples were given that might justify an indemnity costs order. I accept the wife’s submission that the husband had not been diligent but neither had the wife. 
33.	It was submitted that the husband had an improper or inappropriate motive for his actions but the wife could have taken control earlier. The husband made irrelevant allegations against the wife’s lawyers but he was a disaffected and unrepresented litigant. That does not make those allegations acceptable but nor is it unusual. In this case, the husband’s views had nothing to do with the outcome of the case. 
34.	It was also submitted that the allegations of the husband prolonged the case thereby causing the wife to incur costs. That is hard to understand in the context of the wife’s position of also not taking up the clear terms of the orders.
35.	In Prantage & Prantage (2013) 49 Fam LR 197, the Full Court referred to the settled law relating to indemnity costs and the decision of Kohan and Kohan (1993) FLC 92-340. The Court emphasised the well accepted proposition that indemnity costs orders are “a very great departure from the normal standard” and that they should only be ordered in exceptional circumstances. Murphy J observed that because of s 117(1), indemnity costs were confined to “an exceedingly rare situation”.
36.	There must be something about this case such as to justify a very great departure from the normal standard that litigants pay their own costs in this jurisdiction. If there is a justification for departing from the principle that each litigant should pay his or her own costs, the circumstances pointing to a departure from the Rules have to be exceptional. 
37.	The husband failed to expeditiously carry out orders that would have brought the litigation to an end. That is unusual because the Court, the community and all litigants are entitled to presume that orders will be completed as obligations. The husband did not do that here.
38.	There is however nothing here which would enable me to say that the case fell into the “exceedingly rare” category as to justify the making of an order for costs on an indemnity basis. 
39.	An order will be made for costs on the basis of an agreement and failing agreement as assessed.
I certify that the preceding Thirty Nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 11 March 2015.

Associate: 

Date:  11 March 2015