Abano & Abano (No 2)
[2024] FedCFamC1F 630
•18 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Abano & Abano (No 2) [2024] FedCFamC1F 630
File number(s): DUC 403 of 2021 Judgment of: HARPER J Date of judgment: 18 September 2024 Catchwords: FAMILY LAW – COSTS – Where leave was refused for the wife to join the father of the husband as second respondent in the substantive proceedings on the basis on equitable claims – Where the father seeks costs against the wife with respect to her equity suit – Where the wife made four attempts to plead a case against the father which increased his costs – Where the wife was wholly unsuccessful – Where the wife rejected an offer of settlement – Costs ordered in favour of the father to be paid as agreed or assessed – Indemnity costs not justified.
FAMILY LAW – JURISDICTION – The Court as one of law and equity, pursuant to s 9(1)(b) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) – Whether the equitable claims brought by the wife, not under the Family Law Act 1975 (Cth) (“the Act”) but in the accrued jurisdiction of the Court, lay outside the operation of s 117 of the Act and costs should follow the “event” – Authority of the Court to decide claim to equitable relief – Where an exercise of the Court’s accrued jurisdiction becomes a “matrimonial cause” within paragraph (f) of the definition in s 4 of the Act as other proceedings “in relation to” the s 79 proceedings between the spouse parties – Where the wife’s invocation of s 78 and s 90AE of the Act to declare property interests against the father has the appropriate nexus to the spousal matrimonial cause – Costs to be determined according to s 117 of the Act.
Legislation: Family Law Act 1975 (Cth) Pts VIII, VIIIAB, ss 4, 78, 79, 90AE, 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 9(1)(b), 43, 44
Civil Procedure Act2005 (NSW) s 98
Uniform Civil Procedure Rules 2005 (NSW) r 42.1
Cases cited: Abano & Abano [2024] FedCFamC1F 331
Akbar & Gandega [2023] FedCFamC1A 174
Atkins & Hunt [2017] FamCAFC 131
C Pty Ltd and ors & PGW As Liquidator of S Pty Limited (in liq) (2011) FLC 93-485; [2011] FamCAFC 231
D & D (Costs) (No 2) (2010) FLC 93-435; [2010] FamCAFC 64
Fencott v Muller (1983) 152 CLR 570; [1983] HCA 12
Hampton & Farley (No 3) (2013) 52 Fam LR 366; [2013] FamCA 890
Harris & Dewell and Anor (No. 2) (2018) FLC 93-863; [2018] FamCAFC 180
Higginbotham & Robinson (1991) FLC 92-209; [1991] FamCA 5
Jones & Markham [2010] FamCA 1026
Kennon v Spry (2008) 238 CLR 366; [2008] HCA 56
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178
Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157
Moorcroft & Moorcroft (2020) 60 Fam LR 361; [2020] FamCAFC 83
Muldoon & Carlyle (2012) FLC 93-513; [2012] FamCAFC 135
Parke & The Estate of the Late A Parke (2016) FLC 93-748; [2016] FamCAFC 248
PBF as child representative for AF (Legal Aid Commission of Tasmania)) & TRF & LKL (2005) 33 Fam LR 123; [2005] FamCA 158
Perlman v Perlman (1984) 155 CLR 474; [1984] HCA 4
Prantage & Prantage (Costs) [2014] FamCA 850
Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184; [1998] HCA 44
Reza & Sadir [2019] FamCA 404
Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23
Skinner & Alfonso-Skinner (Costs) [2010] FamCA 1108
Valceski v Valceski (2007) 70 NSWLR 36; [2007] NSWSC 440
Warby v Warby (2002) FLC 93-091; [2001] FamCA 1469
Division: Division 1 First Instance Number of paragraphs: 32 Date of last submission/s: 30 August 2024 Date of hearing: On the papers Place: Sydney Counsel for the Applicant: Mr Dalzell Solicitor for the Applicant: Blackwell Short Lawyers Solicitor for the Respondent: Did not participate Counsel for the Third Party: Mr Alexander Solicitor for the Third Party: Campbell Paton & Taylor ORDERS
DUC 403 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ABANO
Applicant
AND: MR C ABANO
Respondent
MR ABANO
Third Party
ORDER MADE BY:
HARPER J
DATE OF ORDER:
18 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.The Applicant Wife (“wife”) pay the Third Party’s (“father”) costs with respect to her claims against and application to join the father for the period from 21 September 2022 to 3 June 2024 excluding his costs of 19 and 20 November 2023 on a party and party basis as agreed or assessed.
2.The wife pay the father’s costs pursuant to cost orders of 20 November 2023 on a party and party basis as agreed or assessed.
3.The wife pay the father his costs of his application for costs determined by these orders on a party and party basis as agreed or assessed.
4.No assessment of costs in accordance with these orders shall take place earlier than 28 days after the determination of these proceedings by final orders.
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 the pseudonyms Abano & Abano has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
These are property proceedings under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”) between the wife Ms Abano (“wife”) who is the applicant in the substantive proceedings and the husband, Mr C Abano (“husband”) who is the respondent in the substantive proceedings.
On 17 May 2024, I delivered an interim judgment refusing leave to join the father of the husband, Mr Abano (“father”) as second respondent: Abano & Abano [2024] FedCFamC1F 331 (“joinder judgment”). The wife sought his joinder on the basis of a range of equitable claims said to be enjoyed by her, or her and the husband in respect of assets owned by trusts of which the father was trustee, or business controlled by the father. Coupled with these equitable claims was also relief invoking the Court’s powers pursuant to s 78 and s 90AE of the Act. I concluded the claims of the wife against the father lacked reasonable prospects of success and her points of claim in so far as they pleaded claims against him should be struck out.
The relevant procedural history and background to these proceedings are set out in that judgment, I will not repeat what I have set out in there unless necessary for this judgment.
The father has applied for costs orders in his favour against the wife.
ORDERS SOUGHT AS TO COSTS
By way of his Application in a Proceeding filed on 19 June 2024, the father seeks the following orders:
1.The Respondent wife pay the Applicant his costs with respect to her Equity Suit against the Applicant for the period from 21 September 2022 to 3 June 2024 excluding his costs of 19 and 20 November 2024 (sic) on an indemnity basis and to be assessed in the sum of $70,712.91.
2.The Respondent wife pay the Applicant his costs pursuant to Cost Orders of 20 November 2023 to be assessed in the sum of $28,568.15.
3.The Respondent wife pay the Applicant his costs with respect to this application to be assessed in the sum of $2,750.
The costs order dated 20 November 2023 is in the following terms:
Applicant Wife to pay the proposed Second Respondent’s costs of 19 and 20 November 2023.
In her Response filed on 26 August 2024, the wife seeks that each party pays their own costs, but if a costs order is to be made against her that it be not on an indemnity basis but as agreed or assessed.
In the father’s Response to the wife’s submissions filed 30 August 2024, he continues to seek indemnity costs in a fixed gross sum of $102,049 as set out in his Application in a Proceeding.
THE LAW
In proceedings to which the Act applies, the starting point is that each party shall bear his or her own costs (s 117(1)). If, however, “in proceedings under” the Act the Court is of the opinion that there are justifying circumstances, the Court may make such order as to costs and security for costs as the Court considers just (s 117(2)). In Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184, the majority of the High Court (Gaudron, Gummow, Hayne and Callinan JJ, Kirby J dissenting) held that s 117(2) referred to costs in the conventional sense, that is, as indemnity for another’s liability for professional fees and out of pocket expenses reasonably incurred in the litigation (see Hayne J at [98]).
The Court has a wide discretion, which is to be exercised judicially (Parke & The Estate of the Late A Parke (2016) FLC 93-748; Atkins & Hunt [2017] FamCAFC 131). When considering what, if any, order for costs should be made, the Court must have regard to the factors set out in s 117(2A):
(2A)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.
The father argued that the wife’s claims against him were purely equitable claims, brought not under the Act, but in the accrued or associated jurisdiction of this Court. Consequently, so he argued, they lay outside the operation of s 117 and costs should follow the “event” in accordance with the usual position in NSW courts exercising general law jurisdiction in equitable claims, such as pursuant to s 98 of the Civil Procedure Act2005 (NSW) and r 42.1 of the Uniform Civil Procedure Rules2005 (NSW). He referred to a number of authorities which give some support to this argument: Reza & Sadir [2019] FamCA 404 at [33]–[37] (Foster J); Jones & Markham [2010] FamCA 1026 at [15], [17] (Austin J); Skinner & Alfonso-Skinner (Costs) [2010] FamCA 1108 (Murphy J). For the following reasons I do not accept this argument.
This Court is a court of law and equity (s 9(1)(b) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”)) and has authority to decide the claim to equitable relief, if the claim both falls within a single justiciable controversy or “matter” in respect of which a matrimonial cause between the wife and the husband constitutes the substantial aspect and is not severable from the matrimonial cause (Warby v Warby (2002) FLC 93-091 at [90]–[92]; Valceski v Valceski (2007) 70 NSWLR 36 (“Valceski”) at [43], [50]; Akbar & Gandega [2023] FedCFamC1A 174; s 43 and s 44 of the FCFCOA Act). In such circumstances it is not necessary to rely upon a statutory power in the Act to give a remedy (Fencott v Muller (1983) 152 CLR 570 at 603–608; Valceski at [38]–[59]; Rizeq v Western Australia (2017) 262 CLR 1 at [49]–[57]).
There is also authority to the effect that, in proceedings under the Act where this Court has jurisdiction, an exercise of accrued jurisdiction becomes a “matrimonial cause” within paragraph (f) of the definition in s 4 as other proceedings “in relation to” the concurrent or pending proceedings under s 79 between the spouse parties (C Pty Ltd and ors & PGW as Liquidator of S Pty Limited (in liq) (2011) FLC 93-485 at [73]–[76]; Hampton & Farley (No 3) (2013) 52 Fam LR 366 at [166]). The expression “in relation to” in this definition of “matrimonial cause” is of wide and general import and connotes an appropriate nexus between two sets of proceedings (Perlman v Perlman (1984) 155 CLR 474; Kennon v Spry (2008) 238 CLR 366 at 440). Since the wife’s equitable claims against the father overlapped with her right to claim against the husband’s assets pursuant to s 79, I am satisfied they were relevantly “in relation to” the property adjustment claims between the spouse parties, and constituted a matrimonial cause within paragraph (f) of the definition. Also the wife’s claims against the father relied, in part at least, upon the statutory power to declare property interests found in s 78(1) of the Act, and upon s 90AE which falls within Pt VIIIAB. The invocation of s 78 and s 90AE by the wife in seeking relief against the father and his assets has the appropriate nexus to the matrimonial cause between the spouse parties. In my view, this means costs are to be determined according to s 117, not simply on the basis that they follow the event.
Having said that, it nonetheless seems to me appropriate, pursuant to s 117(2A)(g), to take account of the likelihood that costs would follow the event, if the wife had brought her equitable claims against the father in a court where costs follow the event in the ordinary course. It is otherwise necessary to consider the factors specified in s 117(2A).
It is well settled that no one factor in s 117(2A) has priority, nor must more than one factor be satisfied; rather, any one factor may be sufficient (Prantage & Prantage (Costs) [2014] FamCA 850 at [12]; PBF as child representative for AF (Legal Aid Commission of Tasmania)) & TRF & LKL (2005) 33 Fam LR 123 at [41]).
The Full Court in Moorcroft & Moorcroft (2020) 60 Fam LR 361 confirmed that indemnity costs are awarded only in exceptional circumstances (see also Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; D & D (Costs) (No 2) (2010) FLC 93-435).
The first question is whether the father has established any circumstances which justify departing from the position that each party pay their own costs, and the making of a costs order in his favour. The second question is whether, if there are circumstances justifying a costs order, the wife should pay the father’s costs on an indemnity basis, rather than as agreed or assessed on a party and party basis.
I have had regard to all the factors set forth in s 117(2A).
DISCUSSION
Section 117(2A)(a) – the financial circumstances of the parties
I note it was undisputed that the father owns or controls significantly more financial resources than the wife. She submitted that she has spent about $590,000 of a $600,000 litigation funding agreement, leaving her in a “precarious financial position”.
Section 117(2A)(c) and (e)– the conduct of the parties and whether either party has been wholly unsuccessful
As noted in the joinder judgment the wife made four attempts to plead a case with reasonable prospects of success against the father. These attempts ultimately failed. In my view, this conduct caused the father’s costs to be increased but in the result the wife was nonetheless wholly unsuccessful.
Section 117(2A)(d) – whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
The father purports the wife failed to comply with an order made by a judge of the Federal Circuit and Family Court of Australia (Division 2) on 10 August 2022 to “file and plead in a statement of claim any constructive or other trust she asserts” when the points of claim documents filed by her did not identify a cause of action.
Section 117(2A)(f) – offers in writing
Nygh J in Higginbotham & Robinson (1991) FLC 92-209 at 78,417 summarised the purpose and effect of s 117(2A)(f) as follows:
... when one looks at paragraph (f) it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition.
The father argued that he made an offer to settle on 10 October 2022, on the basis that the wife withdraw her claims against him, with notification that he would seek indemnity costs.
CONCLUSION ON JUSTIFYING CIRCUMSTANCES
I find that the conduct of the wife in attempting and failing to formulate a case over at least four iterations, which materially increased the father’s costs, the fact she was wholly unsuccessful in her joinder application because her claims lacked reasonable prospects of success, and her rejection of the offer of settlement are relevant factors. I am satisfied these factors justify an order for costs in the father’s favour. The question thus remains the basis on which costs should be awarded.
INDEMNITY COSTS
The father argues that the circumstances are such that the Court should award indemnity costs in his favour.
The award of indemnity costs in this Court has regularly been called a significant departure from the normal standard, rare, and requires something exceptional. In Harris & Dewell and Anor (No. 2) (2018) FLC 93-863, the Full Court said:
23. In Kohan and Kohan, the Full Court held, in applying the principles expounded by Sheppard J in Colgate-Palmolive, that an order for indemnity costs represents a “very great departure from the normal standard”. In the later decision of the Full Court in Prantage & Prantage, Thackray and Ryan JJ referred to Kohan and other authorities in the Full Courts of both this Court and the Federal Court of Australia as well as the state appeal courts. Their Honours concluded (at [86]) that the “usual rule” continued to apply in respect of awards of costs in this Court notwithstanding the Full Court accepting that the difference between party/party costs and a party’s actual costs has continued to grow significantly.
24. That proposition also derives support from what Callinan J said in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation. His Honour said that an order for indemnity costs should “be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers”.
25. The rarity of an order for indemnity costs can also be seen illustrated by the comments of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 2), referred to by their Honours in Prantage (at [102] – [103]). Lindgren J said that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation.”
(Footnotes omitted)
The father argues that indemnity costs are justified given the wife's joinder application had no reasonable prospects of success, was wholly unsuccessful and should not have been made. The father adverts to four additional reasons for indemnity costs:
(1)That the wife imprudently refused the father's offer to withdraw.
(2)That the wife unreasonably involved the father in the spousal property proceedings and did not provide coherent identification of the issues in dispute against the father.
(3)That the wife litigated in a manner that caused unnecessary cost, delay and wasted court time. The father specifically points to the wife's multiple iterations of her points of claim unreasonably extending his involvement in proceedings for almost two years and requiring further time and money to review.
(4)That the wife was provided multiple indulgences by the Court to frame her case and yet the ultimate result was dismissal of her application in its entirety.
The father relies on Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 (“Medlon (No 6)”) for the proposition that imprudent rejection of offers of settlement alone justify an order for costs on an indemnity basis. I do not accept that Medlon (No 6) stands for that proposition, but do accept that an imprudent rejection of a reasonable offer may in some circumstances justify an order for indemnity costs.
The father proposes that were a costs order to be made on an indemnity basis and assessed in a gross sum, a fair and reasonable gross sum would be $102,049. This sum would comprise $28,586.15 in relation to the costs order made on 20 November 2023, $70,712.91 in relation to costs of proceedings up to and including the hearing of 23 February 2024, and $2,750 in costs in relation to this application.
In response the wife submitted, with reliance on Muldoon & Carlyle (2012) FLC 93-513 at [115]–[116], that despite my ultimate finding a lack of merit in her joinder application, this was not an exceptional basis for an indemnity costs order, nor should she be punished for bringing the unsuccessful application. She additionally stated she does not possess the financial capacity to pay the costs sought by the father. I accept these submissions.
I am not satisfied the father has demonstrated a relevantly exceptional basis for an award of indemnity costs.
CONCLUSION
I find there should be a costs order in favour of the father. His costs are to be paid as agreed or assessed. The parties can agree the figure for costs at any time. However, if an assessment is required, it is appropriate to delay any assessment until the conclusion of the proceedings. Such delay does not prejudice the father, while immediate assessment of his costs, before the finalisation of the wife’s property adjustment claim, is likely to prejudice the wife.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 18 September 2024
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