Artinos & Artinos (No 4)
[2023] FedCFamC1F 314
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Artinos & Artinos (No 4) [2023] FedCFamC1F 314
File number(s): MLC 4132 of 2020 Judgment of: STRUM J Date of judgment: 26 April 2023 Catchwords: FAMILY LAW – COSTS – Where the wife sought costs thrown away in relation to an interim application – Where the interim application was premature and not ready to proceed – Where appearances would have been required in any event – Costs application dismissed.
FAMILY LAW – COSTS – Costs initially sought otherwise than at scale – Scale costs to be particularised to enable comparison – No basis for costs other than at scale.
Legislation: Family Law Act 1975 (Cth) s 117(1), (2), (2A)
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 67
Federal Circuit and Family Court (Family Law) Rules 2021 rr 30.1, 7.25, 7.26,
Federal Circuit and Family Court of Australia, Central Practice Direction – Family Law Case Management, 28 November 2022 para 5.18(b)
Cases cited: Artinos & Artinos (No 2) [2023] FedCFamC1F 37
Collins&Collins (1985) FLC 91-603; [1985] FamCA 15
KohanvKohan (1993) FLC 92-340; [1992] FamCA 116
Luadaka v Luadaka (1998) FLC 92-830; [1998] FamCA 1520
Munday v Bowman (1997) FLC 92-784
Parke&TheEstateoftheLateAParke (2016) FLC 93-748; [2016] FamCAFC 248
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Prantage & Prantage (2013) FLC 93-544; [2013] FamCAFC 105
Division: Division 1 First Instance Number of paragraphs: 47 Date of last submission/s: 28 March 2023 Date of hearing Determined on the papers in Chambers Place: Melbourne Solicitor for the Applicant: Blackwood Family Law Solicitor for the Respondent: Belleli King & Associates ORDERS
MLC 4132 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ARTINOS
Applicant
AND: MR ARTINOS
Respondent
order made by:
STRUM J
DATE OF ORDER:
26 April 2023
THE COURT ORDERS THAT:
1.The applicant’s application for costs of and incidental to the hearing on 1 February 2023 be dismissed.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 pseudonym Artinos & Artinos has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
STRUM J:
INTRODUCTION
This is an application by the applicant wife, Ms Artinos, for costs to be payable by the first respondent husband, Mr Artinos, in a fixed sum, of and incidental to the hearing on 1 February 2023 of his Application in a Proceeding filed 19 December 2022.
BACKGROUND
The trial of these proceedings was listed to commence on 1 February 2023. Orders were made by consent on 14 June 2022 in relation to valuations, as follows:
1.Forthwith, the First Respondent (the husband) do all things necessary and sign all documents required to instruct the accountants for [F Pty Ltd] to prepare financial statements and taxation returns for the financial year ending 30 June 2022.
2.Forthwith, the husband do all things necessary and sign all documents required to instruct the accountants to prepare financial statements and taxation returns for the financial year ending 30 June 2022 for the following entities:
2.1[C Pty Ltd];
2.2[G Pty Ltd];
2.3[V Pty Ltd];
2.4[Artinos Family Investment Trust];
2.5[Artinos Family Trust];
2.6[GG Trust];
2.7[E Trust];
2.8[HH Trust];
2.9[Z Trust];
2.10[JJ Trust]; and [KK Trust]. (the [C Group] entities)
3.On or before 30 August 2022, the husband provide to the single expert, [Mr H] of [T Accountants] (the single expert):
3.1Copies of taxation returns and financial statements for [F Pty Ltd].
3.2Copies of taxation returns and financial statements for the [C Group] entities.
4.The husband, in a timely manner, comply with all requests by the single expert for the supply of documentation to enable him to complete his report.
On 19 December 2022, the husband filed an Application in a Proceeding seeking leave to adduce adversarial expert evidence from Mr CC, an accountant with DD Accountants, who prepared a report dated 13 December 2022, and from Mr EE, a valuer with FF Services, whose report is dated 8 December 2022.
The husband lodged for filing on 21 December 2022 a second Application in a Proceeding, inter alia, seeking that further respondents be added to the proceedings and the final hearing be vacated. That application was sealed by the Court on 13 January 2023.
The court vacation commenced on 24 December 2022 and concluded on 6 January 2023.
The wife filed a single Response to an Application in a Proceeding on 27 January 2023, responding to both of the husband’s applications and seeking various other orders, including for a further partial property settlement.
As this matter was in my docket and listed for trial before me, it was appropriate that these interlocutory issues be heard and determined by me. I was on leave until 31 January 2023. Accordingly, the applications and response were listed for hearing on the first day of the scheduled trial, being the day after I returned from leave.
It became apparent that day that the trial would be unable to commence, including by reason of the relevant single expert’s final report only having been released to the parties on 17 January 2023 and the application for joinder of third parties. Further, neither party had filed trial affidavits. In relation to that report, a notation in the orders made by consent on 14 June 2022 stated that the parties expected the final report to be available to them in October 2022, in time for a mediation. Clearly, that was overly optimistic on their part.
The wife’s Response was adjourned to 7 February 2023; the husband’s Application in a Proceeding in relation to adversarial expert evidence was adjourned to 21 May 2023; and the trial was vacated and relisted on 16–27 October 2023 for 10 days. I delivered ex tempore reasons that day: Artinos&Artinos (No 2) [2023] FedCFamC1F 37. Those reasons should be read in conjunction with this judgment. However, in summary, I accepted, consequent upon a concession made by the husband’s Senior Counsel during the hearing, that his application for leave to adduce adversarial expert evidence was premature. This was in circumstances where he had not availed himself of the avenues provided in Div 7.1.6 of the Federal Circuit and Family Court (Family Law) Rules 2021 (“Rules”) for the clarification of the single expert witness’ report, namely, by a conference with that expert pursuant to r 7.25 and/or written questions to him pursuant to r 7.26. Accordingly, the husband’s application was adjourned to 2 May 2023, for either or both of those avenues to be pursued.
Order 14 of the orders I made on 7 February 2023 provided that:
Any party wishing to make a costs application in respect of the Husband’s Application in a Proceeding dated 19 December 2022 (adverse expert evidence application), or 13 January 2023 (joinder of the third and fourth respondents), or the Wife’s Response to an Application in a Proceeding dated 27 January 2023 shall do so by filing written submissions by 4 pm on 6 March 2023.
On 6 March 2023, the wife filed written submissions seeking costs in the sum of $26,283.25. Although she did not particularise the basis upon which those costs were calculated, it appeared that they were not party/party costs at the scale prescribed by the Rules, nor was any basis for departure from the scale addressed. I address this issue further, below.
On 7 March 2023, I made further orders that:
1.By not later than 4.00 pm on 14 March 2023 the Wife specify in the writing, the costs she seeks on a party/party basis in accordance with the scale prescribed in the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
2.In the event the Husband opposes the wife’s application for costs, he file and serve any Submissions in Reply by not later than 4.00 pm on 21 March 2023.
On 14 March 2023, the wife filed further written submissions, particularising her costs, at scale, in the sum of $21,558.03.
On 21 March 2023, the husband filed written submissions in response, opposing any costs order.
On 21 March 2023, the wife filed written submissions in reply.
For the reasons that follow, I shall dismiss the wife’s costs application.
LEGISLATION AND PRINCIPLES
The wife’s application falls to be determined within the framework of s 117 of the Family Law Act 1975 (Cth) (“the Act”), in particular, subsections (1), (2) and (2A) thereof, which relevantly provide as follows:
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(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 relevant principles with respect to costs are well settled, and are set out in detail in the decision of the Full Court in Parke&TheEstateoftheLateAParke (2016) FLC 93-748.
In Collins&Collins (1985) FLC 91-603 at 79,877, the Full Court said:
There is no doubt that sec. 117 of the Family Law Act confers a broad discretion on the Court in regard to costs. The discretion is to be exercised having regard to the primary rule that each party bears his or her own costs. This rule negates any principle that costs should follow the event or that the husband should bear the costs of the wife in matrimonial proceedings. Under the Act, costs will, in general, lie where they fall. Nevertheless, in deciding whether the circumstances justify an order for costs, there is a broad discretion to be exercised, having regard to the factors set out in subsec. (2A) so far as relevant. Those factors which were inserted into the Act in 1983 are not to be read in a restrictive way, however, the discretion remaining a broad one: Penfold v. Penfold (1980) FLC ¶90-800 at pp. 75,053-75,054; quoted in Mallet v. Mallet (1984) FLC ¶91-507 at pp. 79,123-79,124 (by Wilson J.).
In Luadaka v Luadaka (1998) FLC 92-830 the Full Court made it clear that it is unnecessary to spell out detailed reasons for decisions in cost matters.
While the general position established by s 117(1) of the Act is that each party should bear his/her own costs, s 117(2) allows the Court to make such costs order as it considers just if there are circumstances that justify doing so.
WIFE’S APPLICATION
The gravamen of the wife’s costs application is that, when it was pointed that the husband had failed to exhaust the avenues available to him in Div 7.1.6 of the Rules to clarify the single expert’s report, his Senior Counsel sought an adjournment for those steps to be undertaken, such that his “change in position in this regard can only be understood as an acknowledgment that the application he brought was not ready”.
Further, she refers to the fact that the proposed adversarial expert’s report failed to comply with Rules, in that it did not have attached to it a summary of instructions or a list of documents provided to the expert, submitting:
This deficiency too was impliedly conceded by the Husband during oral address, when it was suggested that it could be dealt with later or remedied later, or something similar. Again, this concession can only be understood as an acknowledgement that the application that was brought was not ready, and could not be granted in the form that it was in.
(Footnotes omitted)
Accordingly, the wife submits that these concessions and his “pivot” to an application for an adjournment justify an order “compensating the wife for the costs of opposing an application that was effectively abandoned (or transformed)”. In my view, that is an inaccurate description; the husband’s application was neither abandoned nor transformed; it was adjourned and remains extant.
The wife also submits that, had I acceded to her submission on the day, and dismissed the husband’s application simpliciter, reserving leave to him thereafter to make a fresh application, she would have had strong grounds for seeking costs. Alternatively, she boldly submits that “the only way the Husband could plausibly have had an adverse [sic] expert evidence application dismissed and then brought a second application would have been on payment of the Wife’s costs thrown away”. That is not necessarily so. Accordingly, she submits that the husband has, “in effect won the opportunity to have a second attempt, but without the conclusive decision of a dismissed application (with the very likely, in the circumstances, attendant costs order)”.
That further submission ignores my finding, at [22] of my reasons for judgment delivered on the day, that to do as she urged would be inconsistent with s 67 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), with the Rules and with the Central Practice Direction of the Court. It will be recalled that s 67(1) of that Act provides that the overarching purpose of the family law practice and procedure provisions (as defined in sub-section (4)) is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.
HUSBAND’S RESPONSE
The gravamen of the husband’s opposition to a costs order is that the starting point for any costs application is that set out in s 117(1) of the Act; that there are no circumstances justifying a costs order under sub-section (2); and that it would not be just to make such an order against him. He refers to Penfold v Penfold (1980) 144 CLR 311, in which the High Court said (at [12]):
It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
The husband submits that, having regard to the whole of the circumstances, he acted reasonably in filing his Application in a Proceeding on 19 December 2022. In particular, he refers to the fact that the single expert’s report was not released, in final form, until 17 January 2023 and that, in the circumstances, it was prudent to bring the application when he did. Further, he submits that it was reasonably conceded that there were technical deficiencies in his application but that those deficiencies did not detract from the substance of his application. Whether or not that application has substance must await the adjourned hearing thereof on 2 May 2023.
SECTION 117(2A)
In considering what order (if any) should be made under sub-section (2), I turn to consider the requisite matters set out in sub-section (2A).
Paragraph (a) – The financial circumstances of each of the parties
The only submission made by the wife in this regard is that the parties are not equally resourced and that delays, adjournments and additional hearing days have been more difficult for her to bear than the husband. However, buried in a footnote, she “recognises that order 8 of the Court’s orders dated 7 February 2023 goes some way to ameliorating this inequality going forward”. That is a reference to a partial property settlement in her favour of $420,000, but it ignores the other monies received by her since separation, to which I refer in the following paragraph.
The husband submits that each of the parties has the capacity and financial resources to meet their respective litigation expenses. At this interlocutory stage, it is difficult to make findings in relation to the parties’ respective financial circumstances, which are somewhat opaque and must await a testing of the evidence at trial. However, in addition to the recent partial property settlement of $420,000, the husband points to the admission on behalf of the wife, by her Senior Counsel in open Court, (which is not disputed) that, since separation, she has also received a total of $980,000 from the husband, albeit that she disputes the characterisation thereof. Further, he points to his ongoing payment of the mortgage instalments due with respect to the former matrimonial home (in which the wife and the parties’ children live), expenses relating to the children’s private school education and the parties’ respective taxation obligations relating to income received from certain of their corporate entities.
Paragraph (b) – Whether any party is in receipt of assistance by way of legal aid
Neither party is in receipt of legal aid.
Paragraph (c) – The conduct of the parties in relation to the proceedings
This is the primary ground upon which the wife founds her costs application, other than the matters to which I have referred in [30], above. I refer to the matters in support of this primary ground in [22]–[25], above.
The husband submits that it is not by reason of any action (or inaction) on his part that the matter came before me on 1 February 2023 and that the parties, of necessity, would have incurred costs of preparing for and appearing that day. There is merit in this submission.
While the husband’s application for leave to adduce adversarial expert evidence was conceded by him and found by me to be premature, I agree with his submission that the requirement for the parties to appear on 1 February 2023 was not solely, or even principally, due to the husband’s Application in a Proceeding, such that the wife’s costs of that day were not thrown away by reason the adjournment of his application.
No trial material had been filed. On 19 December 2022, when the application was filed, there remained 43 days until the first day of trial, including public holidays and the court’s summer break. There was no certainty that the processes under rr 7.25 and/or 7.26, even if undertaken, would have been concluded by 1 February 2023, especially in circumstances where the single expert’s report was not released, in final form, until 17 January 2023. Further, the husband’s application also sought an adjournment of the trial, in addition to leave to adduce adversarial evidence.
In addition to the husband’s Application in a Proceeding filed 19 December 2023, his Application in a Proceeding, lodged for filing on 21 December 2022 and sealed on 13 January 2023, as well as the wife’s consolidated Response (which included a cross-application) filed 27 January 2023 (being two business days prior to 1 February 2023), were all listed on 1 February 2023. For that reason, the parties were required to attend Court on 1 February 2023 in any event. Further, I note that it was not until 1 February 2023 that the wife’s attitude to the joinder application was made clear. Although that application was also late-filed, given the way the wife’s case had been run, it was not unreasonable for the husband to have anticipated that the wife would attend to joinder, rather than him; the proposed third parties were necessary parties within the meaning of r 3.01 of the Rules.
Insofar as the wife complains about costs thrown away with respect to the written submissions prepared by her Senior Counsel and junior counsel, whilst they were of assistance to the Court (and I do not in any way discourage written submissions, especially in interlocutory matters), there was no order therefor. All that para 5.18(b) of the Central Practice Direction relevantly requires is “a Case Outline document … setting out the party’s major contentions in relation to the issues to be determined at the Interim Hearing”. Further, as the husband correctly points out, in KohanvKohan (1993) FLC 92-340 at 79,615, the Full Court said:
When considering what is just in this case, one must bear in mind that a party who enters into a costs agreement should be warned and must anticipate in this jurisdiction that each party might well have to bear his or her own costs, and that even if an order for party and party costs is made, the difference between party and party costs and costs payable under a costs agreement may consume all, or a substantial part, of the property order. In this particular case, the wife changed her solicitors in August 1990. It must then have been apparent to her, or at least to her new solicitors, that this might become drawn out litigation and that a rate of costs which amounted to three times the scale, exposed the wife to great risks. If she was willing to assume these risks, it does not seem just to saddle the husband with them. If they were not explained to her, she might have her own remedies.
In any event, the cost of those written submissions presumably has not been wholly, or even largely, thrown away; they may well remain relevant, and of assistance, on the adjourned date for the further hearing of that application.
Paragraph (d) – Whether the proceedings were necessitated by the failure of a party to comply with previous orders of the court
Neither party makes any submissions in this regard.
Paragraph (e) – Whether any party has been wholly unsuccessful in the proceedings
It cannot be said that either party was wholly unsuccessful on 1 February. The husband correctly submits that, his Application in a Proceeding filed 19 December 2023 not having yet been determined, s 117(2A)(e) is not applicable. In this sense, the wife’s costs application is similarly premature.
Paragraph (g) – Such other matters as the Court considers relevant
Neither party raises any other matters as being relevant for my consideration.
CONCLUSION
The costs sought by the wife are in respect of the appearances on 1 February 2023 of Senior Counsel and junior counsel, as well as the preparation of submissions and the attendance of their instructing solicitor. As I have observed above, attendances would have been required in any event. True it is that, but for husband’s the application for leave to adduce adversarial evidence, she might have elected to retain only junior counsel to appear that day. However, I refer to and repeat the observations of the Full Court in Kohan v Kohan set out at [38], above. Further, as I have observed above, the submissions may yet prove relevant on the adjourned date.
Taking all the matters above into account, I am of the opinion that there are no sufficient circumstances that would justify me departing from s 117(1) and making an order for costs under s 117(2). Accordingly, the wife’s costs application shall be dismissed.
However, there is one further matter which requires comment. For reasons which are not readily apparent, the wife’s first costs submissions, filed 6 March 2023, did not explicitly specify the basis upon which the costs sought were calculated. A scale of costs is prescribed by the Rules from time to time. The law recognises three bases of costs orders: party/party, solicitor/client and indemnity costs (although the distinction between the latter two bases appears to have become increasingly opaque over time). As the Full Court further said in Kohan v Kohan at 79,611:
We are of the opinion that in an appropriate case, the Court has a discretion to order costs on an indemnity basis and that such costs may be ordered, where they have been incurred under a costs agreement which departs from the usual scale of costs. However, it is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties. This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under s117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.
The wife, at the outset, should have specified the basis upon which the costs she sought were calculated and, if not at scale, provided a comparison between the costs sought by her and those costs at scale on a party/party basis. However, this was only done when required by me upon receipt of her submissions filed 6 March 2023.
Further, no matter how critical the wife may have been of the husband’s conduct (and, although unsuccessful, I have not found her costs application to be devoid of merit), this is not a case where, in my opinion, indemnity costs should have been reasonably sought or could properly have been ordered. See Munday v Bowman (1997) FLC 92-784 and Prantage & Prantage (2013) FLC 93-544.
I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Strum. Associate:
Dated: 26 April 2023
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