Abeles and Brott
[2007] FamCA 885
•13 July 2007
FAMILY COURT OF AUSTRALIA
| ABELES & BROTT | [2007] FamCA 885 |
| FAMILY LAW – Costs |
| Family Law Act 1975 (Cth) |
| APPLICANT: | Estate of the late Lady Katelin Abeles (Yvonne Muller as executrix) |
| RESPONDENT: | Issac Brott |
| SYF | 8204 | of | 1999 |
| DATE DELIVERED: | 13 July 2007 |
| PLACE DELIVERED: | Sydney Registry |
| JUDGMENT OF: | Moore J |
| WRITTEN SUBMISSIONS RECEIVED: | 11 May, 30 May & 4 June 2007 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Mr Mark Twigg |
| SOLICITOR FOR THE RESPONDENT: | Mr Issac Brott |
Orders
The respondent pay to the solicitors for the applicant costs fixed in the sum of $19,700 on or before one (1) month from this date.
FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF8204 of 1999
| Estate of the late Lady Katelin Abeles (Yvonne Muller as executrix) |
Applicant
And
| Issac Brott |
Respondent
REASONS
Proceedings
This is the determination of several costs claims related to certain proceedings between the parties.
Brief background
The substantive proceedings to which the claims relate have a long history which is set out more particularly elsewhere and for present purposes a potted version will suffice. A dispute arose between the respondent solicitor and a former client, now deceased, about costs and disbursements incurred during the month the solicitor acted for her. Ultimately the bill rendered to the client was reduced by the solicitor from over $240,000 [calculated according to a costs agreement which was set aside at one point by consent] to over $100,000 [calculated according to scale under the Rules of Court]. A Deputy Registrar conducted a taxation which proceeded over six days for a protracted period commencing April 2001. For taxation purposes an amended bill amounting to $100,885 was presented by the solicitor. On 24 April 2003 the Deputy Registrar issued a certificate of taxation in the sum of $35,276. This was followed by an application by the client for the costs of taxation and subsequently by the solicitor’s application for review of the taxation decision. The review was listed in due course for hearing before me and I made orders on 18 March 2005 dismissing it. On 14 April 2005 the applicant filed a fresh application seeking costs but it was adjourned at the time. That was because the solicitor had by then filed an appeal. Judgment was delivered by the Full Court [Faulks DCJ, Kay & Boland JJ] on 31 January 2007 and the appeal was allowed in part. The Full Court orders provide for the certificate of taxation to be amended by increasing the sum from $35,276 to $42,486, an increase of $7,210. That increase related to allowance for counsel’s fees for Ms Bryant QC [the Chief Justice of this Court] and Dr Ingleby, as well as part of the expense incurred by the solicitor for searches. The appeal determined, the question of costs was revived. For reasons I gave in a short judgment published on 27 April and will not now repeat, I vacated the date allocated for the hearing of the costs claims and made directions for submissions on those applications to be made in writing according to a timetable.
Submissions
The submissions form part of the court record and as they are relatively lengthy they will not be repeated here. In so far as it is necessary to refer to arguments, a summary account will be given of the point as far as possible.
Principles
Costs fall to be determined pursuant to s 117 of the Family Law Act 1975 and that applies also to the circumstances here. It is the general rule under ss 117(1) that each party is to bear their own costs but under ss 117(2) the court may make an order it considers just if it concludes there are justifying circumstances. In considering what order [if any] should be made, regard must be had to the factors referred to in ss 117(2A). The written submissions are in part directed to a number of those factors. In particular, Mr Twigg identifies paragraphs 117(2A)(c), (e) and (g) as relevant. They are:
(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;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(g)such other matters as the court considers relevant.
If justifying circumstances are found and the discretion exercised in the applicant’s favour, that will raise the question of the quantum of costs to be ordered. If that point is reached the form of the application will require consideration of decisions related to the circumstances which justify an award of costs on an indemnity basis rather than the more usual party/party basis.
What costs
The orders sought by the applicant are to be found in the application filed 14 April 2005 [a re-issue of earlier applications] where the applicant claims costs from the respondent solicitor in these terms:
‘1.…of and incidental to
a. the taxation proceedings before Registrar Cain.
b. the review proceedings before Moore J.
on an indemnity basis.
2.That in the event that they oppose these orders the Respondent’s (sic) pay the Applicant’s costs of and incidental to this application.’
As this makes apparent, three sets of costs are being claimed: the costs of the taxation conducted by the Deputy Registrar; the costs of the review hearing; and the costs of the costs claim. The solicitor opposes any order being made.
Argument makes it necessary to resolve whether the claim related to the costs of the taxation assessment conducted by the Deputy Registrar can now be the subject of determination. I shall return to that shortly.
Evidence
The applicant relies on affidavits of Mr Twigg sworn 12 April 2005 and 13 May 2003. The solicitor objects to reliance on Mr Twigg’s affidavit of 12 April 2005, arguing that rule 19.56(1) does not permit new evidence to be adduced in support of the costs application. Perhaps an error has occurred in identifying the rule; it is more likely the reference was meant to be to Rule 19.56(2)(a). In any event, either way the Rule has no application here because it is about the hearing of applications for review of costs assessments, long since passed here, and not about the consequential costs claim. The content of the affidavit was not the subject of any submission and I take it to accurately state the facts.
Costs of taxation assessment
Before the merit of the claim for the costs of the taxation assessment can be evaluated there is a preliminary dispute about whether it has been disposed of already. From my point of view the arguments are better assessed by putting events into their chronological context and as far as I can tell this is the relevant sequence:
24 April 2003 Certificate of Taxation issued by the Deputy Registrar.
14 May 2003 Application filed by applicant seeking costs of and incidental to the taxation on an indemnity basis and for the respondent solicitor to pay the costs of the costs application. [This is the first claim made by the applicant for costs of the taxation to be paid by the respondent solicitor]
28 May 2003 Review Application filed by solicitor seeking various orders, including the setting aside of the cost assessment of the Deputy Registrar on 24 April 2003 and for the taxation assessment to be referred to another Registrar.
26 June 2003 Return date of above application before Judicial Registrar Loughnan. The court record notes no appearance by the respondent solicitor. The Judicial Registrar referred the question of costs of the taxation to the Deputy Registrar. Later in the morning [Mr Twigg appearing] an order was made for the costs application to be referred to the Deputy Registrar for determination. At the same time the Deputy Registrar was requested to determine the question of costs on the basis of material and submissions filed by either party by 10 July 2003, to determine it on the basis of material and submissions solely in the event the Deputy Registrar is unable to hear oral argument prior to 24 July 2003, and to provide the parties if possible with her decision on or before 28 July 2003.
24 July 2003 The Deputy Registrar issued these ‘reasons’ related to the costs claim:
"I am unable to determine an amount payable on the basis of the material before me. On the basis of the filed material I cannot be sure that the respondent was informed of the directions made on 26 June 2003. I have been unable to list the matter for oral argument prior to today's date".
30 July 2003 Application in Form 44 [Review] filed by applicant seeking orders for the solicitor to pay the costs of the taxation on an indemnity basis or in the alternative an order that the question of whether a costs order should be made be remitted to the Deputy Registrar for a hearing on the merits, and the solicitor pay the costs of the review application. [This is the second claim made by the applicant for costs of the taxation to be paid by the respondent solicitor]
5 September 2003 Return date of above application before Chisholm J who stood the application over for hearing before me at the same time as the substantive costs application, granted leave to restore the matter for further mention that day, and reserved the costs of the Estate for that day’s appearance.
18 March 2005 Order made dismissing the review application filed by the solicitor on 28 May 2003.
14 April 2005 Application filed by the applicant seeking orders for costs to be paid by the solicitor as set out earlier. [This is the third claim made by the applicant for costs of the taxation to be paid by the respondent solicitor].
Turning to the arguments, Mr Twigg submits the question of costs of the taxation was not determined by the Deputy Registrar who did not deal with the application on the merits, as the ‘reasons’ given make clear, and [in effect] the attempt by the directions of the Judicial Registrar on 26 June 2003 to have the matter determined by the Deputy Registrar was unsuccessful in achieving that outcome. He further submits that even if the view is taken that the Deputy Registrar did determine the claim by what was said on 24 July 2003, then the filing of the review application on 30 July means the claim can be heard de novo and determined accordingly.
Contrary to this, the solicitor submits that the costs of the taxation were determined by the Registrar by reason of her refusal to make any order for costs in favour of the applicant. By declining to make an order, it is submitted, the Registrar exercised her discretion. The submission continues by noting there is a strong presumption in favour of the correctness of an order under appeal (per Kitto J at p 627 Australian Coal and Shale Employees' Federation v Commonwealth (1954 CLR 621) and the onus borne by the applicant is a heavy one (Lovell. v Lovell (1950) 81 CLR 513). This is followed by citation of a well-known passage from House v R (1936) 55 CLR 499 per Dixon, Evatt and McTiernain at p 504 — 505.
In my view this argument by the solicitor has no application to the circumstances here. That is because the presumption to which he refers relates to orders and House v R is about appellate principles surrounding the exercise of discretion which has resulted in the order/s under appeal. Here, no order has been identified as having been made by the Deputy Registrar or its terms referred to me. What the Deputy Registrar said on 24 July is not an order; it is merely an indication of the reservations she entertained at the time in proceeding with the application in the circumstances confronting her. As I find, the Deputy Registrar made no orders about the costs of taxation, at any point of any kind – not even on 24 July to adjourn the application, given her reservations about notice and material, to a later date for determination. Applications are determined by orders. Orders, not ‘reasons’, are what become the subject of review or appeal whichever applies. Without an order being made there has been no determination of the application.
Plainly a formal written application for the costs of the taxation was on foot at the time the matter was referred to the Deputy Registrar [filed 14 May 2003 – in the time permitted following the issue of the certificate of taxation] and there was an attempt to have that adjudicated through to a conclusion – whether that be by an order dismissing the application or allowing the claim in part or whole – to no avail. Unnecessarily, but perhaps prudently given the unusual course events were taking, the applicant filed a review application on 30 July, just a few days after the Deputy Registrar published a statement about her position.
In paragraph 8 of his April 2005 affidavit Mr Twigg says, I presume accurately since I have no recall of it now, that he proposed at the hearing of the solicitor’s review application that I hear the costs of taxation application but I indicated costs should await the determination of the review of the amount certified. Possibly the application having been made in a Review application Form 44 [prescribed for reviewing orders made by Registrars or Judicial Registrars] conveyed the impression there was an order. Had there been an order, the decision to defer consideration of costs would have been sound because while ever the figure to be allowed on taxation was unresolved there was little point addressing the claim about the costs of the taxation. But given that no order had been made in fact, remission back to the Deputy Registrar [again] for a determination and conclusion in the usual way would have been the preferable course. That is not available now because the Deputy Registrar is no longer with the Court.
To the point of hearing the solicitors review application, therefore, neither the application for costs of taxation filed on 14 May 2003 and asserted again in the review application filed 30 July 2003 had been determined by court order. After the order was made dismissing the solicitors review application the applicant filed yet another application seeking to have the solicitor pay the costs of the taxation costs, but the hearing of that application was then deferred pending the outcome of the solicitor’s appeal. It is clear from all this that the applicant has been seeking her costs of the taxation since shortly after the issue of the certificate by the Deputy Registrar, a position that could never have been in doubt. Finding, as I do, that no order was made by the Deputy Registrar and there has been no determination of the costs of taxation application, the question becomes whether the application can be and should be determined now. Mr Twigg’s answer is in the affirmative and I agree.
The solicitor submits that the Deputy Registrar was in a unique position to consider the conduct of the parties throughout the taxation process and apply that knowledge in the exercise of discretion on the question of responsibility for costs related to it. That is true. But that does not mean an application for costs cannot be determined by anyone other than the person who conducted the taxation assessment. Quite apart from the particular Deputy Registrar’s unavailability to do so now, there is no principle of law or Rule of Court [see Part 19.3 – Costs Orders] which precludes a judicial officer from hearing and determining a costs claim related to substantive proceedings heard by another, having regard to the evidence presented and submissions relevant to it. It can be done and obviously should be done here to dispose of the issue. Certainly it has been squarely on the table since 14 May 2003 and has been addressed by both parties in their submissions.
How much
As the application specifies, the claims related to the taxation proceedings and the review are on an indemnity basis. As Mr Twigg’s submissions also make clear, the costs related to the costs application is also sought on that basis.
Mr Twigg set out particulars of the costs charged so as to satisfy the requirement to provide information as to the basis of the charge to the client given the claim for indemnity costs. The first set of figures are derived from the costs agreement between his firm and the applicant:
1. Costs to certificate of taxation $31,463.14
2. Costs from certificate of taxation
(including application for review) $40,786.65
3. DISBURSEMENTS
Paid Wisewoulds attempted service fees
and service fees $148.50
Paid Service with Service service fees $51.70
4.Less Costs paid by Mr Brott pursuant to the Orders of the Family Court as follows:
2001 $154.00
13th August, 2002 $480.00
12th November, 2002 $2,233.00
23rd October, 2003 $500.00
17th December, 2003 $624.90
5. Amount therefore claimed (indemnity) $68,458.09
The figures when calculated on a party/party basis is as follows:
1. Costs to certificate of taxation $18,000.00
2. Costs from certificate of taxation
(including application for review) $24,000.00
3. DISBURSEMENTS
Paid Wisewoulds attempted service fees
and service fees $148.50
Paid Service with Service service fees $51.70
4.Less Costs paid by Mr Brott pursuant to the Orders of the Family Court as follows:
2001 $154.00
13th August, 2002 $480.00
12th November, 2002 $2,233.00
23rd October, 2003 $500.00
17th December, 2003 $624.90
5. Amount therefore claimed (party/party scale) $38,208.30
Costs of the costs application [drafting, typing submissions, and the appearance on 27 April when there was no appearance for or on behalf of the solicitor] are calculated at $1,847.50 plus GST ($184.75), totalling $2,032.25.
The solicitor puts in dispute
‘..the fairness and reasonableness of the of the costs agreement, the quantum of costs to be charged, that each item sought to be charged is reasonable and necessary, that the actual work was undertaken as no evidence thereof has been provided …
and adds that he is entitled to be given a proper opportunity to contest each item sought and therefore contends the quantum of costs must be referred to taxation if a costs order is made.
Costs – taxation assessment
The applicant relies first on conduct pursuant to paragraph 117 (2A)(c) and the submissions refer to a number of background matters relevant to that:
·initially the solicitor submitted a bill for taxation which resulted in a Notice of Objection by the client;
·the bill was substantially amended by the solicitor on the eve of the first day of the taxation so as to exclude a number of claims maintained up to that point;
·the taxation process took 6 hearing days over a period of 2 years to conclude;
·the applicant did not object to every item on the bill and there were a considerable number of items unchallenged [the estimate is about half in number];
·certain items included on the bill [examples are in the submissions] are described as ‘unsustainable’ and it is said it was ‘improper to have included them’ and rendered the bill ‘demonstrably false’;
·some costs orders were made against the solicitor in the course of the taxation process, demonstrating a course of conduct that had the effect of delaying the proceedings as much as possible, and there were a number of applications for adjournment by the solicitor to accommodate arrangements for someone with knowledge of the matter to be available.
It is submitted for the applicant that the conduct of the solicitor was of the type described by Nygh J in Jensen (1982) FLC 91-263. This passage at 77,472 was cited in the submissions:
‘…if as a result of non co-operation, obstructiveness or otherwise, one of the parties causes the conduct of the proceedings to be unduly prolonged or made unduly expensive to the other side clearly an order for costs would be warranted’.
Mr Twigg also cites Marriage of Fisher [1990] FLC 92-127, Penfold (1980) 144 CLR 31; (1980) FLC 90-800 and Rouse (1981) FLC 91-073; (1982) FLC 91-226 as supporting the proposition that as the solicitor conducted the proceedings in an unjustifiable way that is sufficient to justify an order that he pay the costs.
The solicitor rejects any of the criticisms related to his conduct, including the composition of the bill presented for taxation. It is said in any event there is no proper or admissible evidence of the conduct of the parties during the assessment hearing and there have been no findings by the Deputy Registrar about conduct. His failure to appear, it is submitted, was taken into account by the Registrar in making a number of costs orders against him along the way. The solicitor maintains there was no advantage to him in delaying the finalisation of the taxation; the money due to him for his professional costs was in his trust account and he wanted the taxation completed to he could be paid. The point is made that his practice in Victoria and to the ‘obvious logistical difficulties’ in appearing in the Sydney Registry of the Court. Even so, Mr Twigg makes the obvious point in reply to the latter that the distance did not prevent the solicitor briefing experienced practitioners to appear on his behalf at times.
For my part, I regard the weighing of these arguments about the solicitor’s conduct as rather problematic precisely because of the absence of any clear evidence in proper form about what occurred, but more particularly the absence of reasons underlying the various costs orders made against the solicitor, set out in Mr Twigg’s schedule. In the result, I propose disregarding the arguments about conduct and move on the assumption that the costs orders made along the way dealt with any issue related to non-appearance or adjournment or matters of that kind as the proceedings advanced.
But of course there are other matters to consider in deciding whether there are circumstances to justify an order for costs and the applicant’s submissions argue that the outcome of the taxation falls into that category. The solicitor having presented an amended bill of costs for taxation in an amount in excess of $100,000, the client did not object to or challenge many of the items and yet the certificate of taxation issued for markedly less than the amount claimed. In fact, as the appeal ultimately determined, the certificate can now be taken to be $42,486 rather than $35,276 but that nonetheless represents a considerable degree of success for the client and left the solicitor recovering only a much reduced proportion of the claimed amount.
In my view, that a bill can be reduced by something in the order of 58% of the amount rendered for taxation is not only a relevant consideration to the question of responsibility for the costs of the exercise but a consideration of some weight. Mr Twigg notes there is no 1/6th rule about taxation in the Rules of Court though he refers to a single judge decision [Baker J] which refers to the desirability of it - Budziszewski's & S's Bill of Costs (2) 1982 FLC 91-280 at page 77,599 where the reduction, according to the submission, was in the order of 48.5%. Whatever the case, there is no such rule. Nonetheless, the success or outcome of the proceedings is relevant to deciding costs.
It could hardly be doubted that where the outcome of a taxation is the other way around and the client is unsuccessful in having the bill rendered reduced by a significant amount, it could be expected the solicitor would look to the client to pay the costs of the exercise - and it would not be unreasonable to expect an order to that effect. Here it is argued for the solicitor that he was not ‘wholly unsuccessful’ [as expressed in para (e)] and the mere fact that there has been a reduction in his bill is insufficient to justify an order for costs against him. How the term ‘wholly unsuccessful’ is to be construed in the circumstances discussed might be the subject of discussion. But paragraph 117(2A)(e) is not the only factor to fit the situation; it could also fall within paragraph (g).
In my opinion, the proportion by which the bill was reduced on taxation is sufficient to justify an order for costs to be paid by the solicitor.
As for quantum, Mr Twigg argues for indemnity costs and cites the authorities relevant to that in his submissions [Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 [Shepherd J]; Kohan (1993)FLC 92-340; and Munday v Bowman (1997) FLC 92-784]. However, absent any consideration of conduct, I am not persuaded costs should be on anything other than the more usual party/party basis. I shall return shortly to the question of quantum.
Costs – review hearing
Arguing for costs of the review hearing, emphasis is placed on the success factor or the outcome of the review hearing proportionate to the claim asserted by the solicitor and while he was successful in having it increased by a small amount on appeal, Mr Twigg points out that his appeal was described by their Honours as ‘substantially unsuccessful’, a description that can be translated to the review hearing when the revised figure of $42,486 is substituted for the certified amount maintained on review.
Even considering the increased figure as the result of the review hearing, I agree that the solicitor’s case on review can be said to have been substantially unsuccessful. The client was put to the considerable expense of a review hearing which ultimately resulted in only a very small increase for the solicitor in the amount certified, translating to around 42% of the claim he had made on taxation. There is no reason why in those circumstances the applicant should be left with the whole of her costs of the review process.
In my assessment, to put her to that expense only to achieve that minimal gain [ultimately on appeal] is a justifying circumstance according to s 117(2) and the applicant should have her costs.
However, I also take the view that costs on an indemnity basis could not be seen as warranted despite Mr Twigg’s argument to the contrary. Costs will be ordered but on the more usual party/party basis.
Costs of the costs claims
The point made for the applicant in relation to the costs application itself is that there was no cogent explanation advanced for the solicitor’s absence on 27 April 2007 when he did not appear and directions were made for the matter to conclude by written submissions; therefore, the client should have her costs thrown away as a consequence of his failure to appear and the costs of making written submissions.
The solicitor, on the other hand, disputes there was no explanation and puts it this way:
‘…it was thought desirable to brief retained counsel Mr Jeffery Levine in the hearing of the application for costs and it was believed that the hearing on 30 April 2007 was a directions hearing and thus it would have been possible to have obtained replacement counsel at that hearing or for the solicitor to have appeared on his own behalf.’
The belief that it was a directions hearing, however, is difficult to accept given the advice to his office of the hearing date [see letter of Mr Twigg dated 30 March 2007 followed up by further letter dated 26 April 2007]. Even if there had been some defect in the notification of the hearing date and for some reason he believed it was a directions hearing, there was no appearance by or on his behalf at that event but instead he communicated directly with the court by correspondence the day before the hearing putting his position about the following day.
As I find, the failure to appear and have the matter disposed of on the allocated hearing date is sufficient to justify an order for costs of and incidental to that non-appearance, though I do not see any justification for extending the order to cover the whole of the costs related to the costs claim. There has been no success on the indemnity basis argued.
Quantum – fixed or taxed
Of course it is recognised that the party/party basis of the costs to be paid on the first two claims – as well as the bulk of the costs related to the costs claim itself - means the applicant will not be fully reimbursed for the outlay involved in the entire exercise and she will be out of pocket and required to pay to her solicitors some proportion of the whole costs incurred. Just what that will be depends on the quantum the solicitor is ordered to pay.
The solicitor argues for taxation if a costs order is made. I have considered that and reject it as wholly undesirable, having regard to nature of the matter now drawing to a close and its long and costly history. The alternative of fixing the costs here, it is recognised, must necessarily be imprecise and may be seen as involving a degree of arbitrariness, though it is an exercise informed to some extent by the details Mr Twigg provides about the basis of the costs charged to the client and the other figures provided. It is a judgment nonetheless that has to be made in the interests of concluding the issue and the quantum determined is what I regard as a just outcome in all the circumstances. Costs against the solicitor will be fixed as set out below. Those figures take into account that a number of costs orders have already been made against the solicitor on various dates set out in Mr Twigg’s submissions and proceed on the basis they have either already been paid or are enforceable:
(i) Costs of taxation before the Deputy Registrar over 6 days $9,000
(ii) Costs of the review application $10,000
(iii) Costs related to the costs claim $500
(iv) Disbursements related to service fees $200
$19,700
No submissions are made about time to pay. A month will be allowed.
For those reasons orders are made as set out earlier.
____________________________________________________________________
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Moore
Associate:
Date: 13 July 2007
Key Legal Topics
Areas of Law
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Civil Procedure
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Insolvency
Legal Concepts
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Appeal
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Jurisdiction
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Costs
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Stay of Proceedings
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