Anton and Rigoli Lawyers

[2009] FamCA 129

FAMILY COURT OF AUSTRALIA

ARMAN & RIGOLI LAWYERS [2009] FamCA 129

FAMILY LAW – COSTS – Indemnity costs sought and denied

Family Law Act 1975 (Cth)

Penfold v Penfold  (1980) FLC  90-800
Kelly and Kelly (No.2) (1981) FLC 91-108
Fitzgerald (as Child Representative for A (Legal Aid Commissioner of Tasmania)) v Fish (2005) 33 Fam LR 123
Kohan (1993) FLC  92-340
Colgate-Palmolive Company & Anor v Cussons Pty Ltd (1993) 46 FCR 225
Yunghanns (2000) FLC 93-029

APPLICANT: Mr Arman

RESPONDENT: Rigoli Lawyers

FILE NUMBER: MLC 3450 of 2007

DATE DELIVERED: 25 February 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE  JUSTICE CRONIN

HEARING DATE: BY WAY OF WRITTEN SUBMISSIONS

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT: GOLDSMITHS, BARRISTERS & SOLICITORS

SOLICITOR FOR THE RESPONDENT: RIGOLI LAWYERS

Orders

1. That Rigoli Lawyers pay to the solicitor for the husband the sum of $2,600 towards the husband’s costs.

IT IS NOTED that publication of this judgment under the pseudonym Arman & Rigoli Lawyers is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 3450  of 2007

MR ARMAN

Applicant

And

RIGOLI LAWYERS 

Respondent

REASONS FOR JUDGMENT

1. On 3 February 2009, I made orders and delivered reasons for judgment in a dispute between the husband and his former lawyers. The dispute concerned both the question of the extent of the lawyers’ lien over their file and its retention and the question of the husband’s request for an extension of time to seek itemised accounts from the lawyers.

2. I provided for each party to make any application for costs by written submission.

3. The husband made an application for costs on 12 February 2009 by way of written submission signed by his solicitor.

4. The lawyers responded by filing a submission on 23 February 2009.

5. In my reasons, I decided that the issue of the court ordering the release of a file is a discretionary matter and in this case, it should be released. In respect of the extension of time question, I “erred on the side of caution” and granted the husband an indulgence.

6. The husband now seeks costs against the lawyers up until 23 December 2008 and on an indemnity basis ($7,500) or in the alternative, on a “party and party” basis ($5,207).

7. The lawyers’ response is that apart from the costs being excessive, this is not a case in which it is appropriate to make an order.

8. The argument for the husband in relation to costs can be encapsulated as follows:

   (a)The lawyers have been unsuccessful;

   (b)The husband made a demand in writing before commencing the proceeding;

   (c)Despite a suggestion from me during the early part of the proceedings about the extension of time, the lawyers’ maintained their position of denial;

   (d)The lawyers had acted unreasonably in refusing to hand over the file.

9. The husband further submitted that I should take into account that the file had still not been handed over by the lawyers. I do not propose to take that into account as it is a matter related to enforcement of my orders.

10. The argument for the lawyers in relation to costs can be encapsulated as follows:

    (a)costs do not automatically follow the event;

    (b)the lawyers could not comply with the time frame because they had to comply with a subpoena from the wife;

    (c)The lawyers were not provided with any information which might suggest a litigation catastrophe would occur;

    (d)The judgment was a discretionary exercise;

    (e)The lawyers had relied upon standards normally held to be the law and that my reasons had created a new standard for family law matters.

11. The lawyers also submitted that if costs were awarded, they should not exceed half party/party costs and that payment should be stayed until the settlement of the sale of a property which was the subject of the property proceedings.

12. Section 117 of the Family Law Act 1975 (“the Act”) is the relevant statutory provision. It provides that each party shall bear his or her own costs. However, pursuant to sub-s (2), the Court may make such order as to costs as it considers just if it is of the opinion that there are circumstances to justify doing so. It is to be noted that the Act refers to a “party” and not to a “party to a marriage”. The section therefore does not distinguish between types of litigants. As such, the normal civil proceeding understanding of costs following the cause, do not apply here.

13. In considering what order (if any) should be made the Court is required (inter alia) to have regard to the matters referred to in s 117(2A). They are:

    (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.”

14. In Penfold v Penfold [1] High Court of Australia said that the general rule expressed by s 117(1) was not paramount to s 117(2). That is, when a court finds circumstances justifying an order for costs, the principle that each party should bear their own costs should give way.

    i)[1] (1980) FLC ¶ 90-800

15. Thus, s 117(2) requires a finding of justifying circumstances as an essential preliminary to the making of an order.

16. To determine whether or not there is a justifying factor to depart from the principle that each party should bear their own costs, one needs to look at all of the matters set out in s 117(2A) as well.

17. At the same time, it is important to look at s 117(2A) (g) which provides that the Court should consider any “other matters” it considers relevant. Those additional words make clear that the discretion is extremely wide.

18. In Fitzgerald (as Child Representative for A (Legal Aid Commissioner of Tasmania)) v Fish (2005) 33 Fam LR 123 the Full Court observed that, nowhere in s 117(2A) or elsewhere in s 117 is there any prescription that more than one factor must be present before an order for costs is made, nor any indication as to the comparative weight of the factors set out in sub-s (2A). As a consequence, that there is nothing to prevent any factor being the sole foundation for an order for costs.

19. Neither party argued that their respective financial circumstances were such that I should not make an order on that basis.

20. It would be self-evident that there is not any legal aid issue here.

21. Nothing of significance needs to be said about the conduct of the parties here in relation to the proceedings. I accept that the lawyers adopted a position which has often been maintained in courts that the lien over the file entitles them to withhold the documents. I have much more difficulty in relation to refusing to accept the husband’s position is respect of the second issue which is the granting of the indulgence concerning the costs dispute.

22. The lawyers argued that the husband had not been entirely successful but then again, they had not been successful either. In respect of that consideration, the question is whether they were entitled to adopt of position which might in all of the circumstances be seen as unreasonable. I accept that they had adopted the “norm” in respect of the file and the lien but there was an offer to resolve the matter without litigation and that was rejected. I also take into account of the fact that the lawyers would have known all of the factors that affect a court granting an indulgence relating to the filing of requests out of time and they were not justified in adopting the position that they did. That consideration justifies a departure from the rule that each party pays their own costs.

23. As a result of what I have just found, it would be an inappropriate exercise of discretion to order the lawyers to pay all of the husband’s costs but in my view, the resorting by the parties to the Court for determination was largely as a result of the position adopted by the lawyers. In my view, the lawyers should pay one half of the husband’s costs on the basis that even though I find that the lawyers adopted an unreasonable position, the husband still required an indulgence.

24. The matter of what those costs should be however is still a disputed issue because it is sought that those costs should be awarded on an indemnity basis.

25. Costs being ordered on an indemnity basis is an exception in this Court rather than the rule (see Kohan[2] and Colgate-Palmolive Company & Anor v Cussons Pty Ltd[3]).

    ii)[2] (1993) FLC ¶ 92-340

    iii)[3] (1993) 46 FCR 225

26. In Yunghanns[4] the Full Court said that the categories of circumstances that might give rise to an indemnity order are not closed.  The Court said at 87,471:

    …and it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought.  All that is required is that the Court asked to exercise the discretion be satisfied that some ‘particular facts and circumstances of the case in question warrant the making of an order for repayment of costs other than on a party/party basis’.

    iv)[4] (2000) FLC ¶ 93-029

27. There is nothing in the position adopted by the lawyers that would warrant me making an indemnity costs order. I cannot find that there are any special or indeed unusual matters or facts in this case that would give rise to a finding that there were exceptional features of the case that would in turn justify a departure from the ordinary practice in relation to the payment of costs.

28. The husband has quantified his costs as $5,207.00. Half of that is rounded off to $2,600.00.

29. I order the lawyers to pay the husband’s costs fixed at $2,600.

30. It was submitted that those costs should not be paid until the husband’s sale of property is completed. If the parties can reach agreement about that, it may be appropriate. However, I do not feel I am in a position to make such an order on the material because I am dealing with different law firms and different considerations.

I certify that the preceding Thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  25 February 2009