B and D - [2001] FMCAfam 206

FEDERAL MAGISTRATES COURT OF AUSTRALIA

B & D [2001] FMCAfam 206

COSTS – Indemnity or party/party costs – Family Law Act1975 (Cth) s117.

Kohan & Kohan (1993) FLC 92-340
Munday & Bowman (1997) FLC 92-784
Blueseas Investments Pty Ltd & Mitchell and McGillivray (1999) FLC 92-856
Yunghanns & Ors v Yunghanns & Ors & Yunghanns (2000) FLC 93-029.

Applicant:

T K B

Respondent:

D W D

File No:

ZB 3595 of 2000

Delivered on:

26 September 2001

Delivered at:

Brisbane

Hearing Date:

Hearing Date vacated

Written submission provided on costs

Judgment of:

Rimmer FM

REPRESENTATION

Counsel for the Applicant

Mr N McGregor

Solicitors for the Applicant:

Adamson Bernays Kyle & Jones

Solicitors for the Respondent:

Raeburn’s

ORDERS

That the APPLICANT pay the RESPONDENT’S costs of and incidental to the appeal on a party to party basis or failing agreement as taxed on a party to party basis pursuant to Order 38 of the Family Law Rules.
That the costs of the THIRD PARTY be paid by the APPLICANT in accordance with the costs order made on 9 March 2001 to the Managing Director, K R & Company; D S B of B & S Jewellers; and
A G J, such costs to be quantified on a party to party scale of costs under Order 38 of the Family Law Rules as agreed between the parties and those persons or as taxed.
That pursuant to Order 38 Rule 26 of the Family Law Rules this matter is one proper for the attendance of Counsel.
That the reasons for judgement in this matter be taken out.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE

ZB 3595 of 2000

T K B

Applicant

And

D W D

Respondent

REASONS FOR JUDGMENT

Proceedings

This is an application by the wife for an order to be made that the husband pay the costs of her application on an indemnity basis arising out of his discontinuing his appeal against the decision of the Child Support Registrar. Both parties provided detailed written submissions.

Background

By way of background, on 24 November 2000 the applicant father filed an appeal against the decision of the Child Support Registrar. The respondent instructed solicitors to deal with the matter on her behalf and counsel was briefed to appear. Counsel appeared on the first court date when directions were made by Federal Magistrate Baumann which included the allocation of a trial date for final hearing of the matter. At that time an issue was raised, it appears, as to the appropriateness of an appeal process as opposed to the departure application seeking a departure from assessment of child support.
Four subpoenas were issued by the applicant father. On the return date of those subpoenas argument was heard by myself on 9 March 2001. Three of those four subpoenas were struck out and a costs order made with such costs to be paid by the applicant with the quantum to be reserved to the trial.
On 21 March 2000 the applicant father filed a notice of discontinuance with respect to his appeal. Thereafter the parties agreed that the applicant father would pay the respondent mother's costs but agreement has not been reached on the basis upon which those costs are to be calculated; that is, should they be calculated on the ordinary basis of party/party or on the basis of indemnity costs. The respondent mother seek that costs be calculated to be paid by the applicant father on an indemnity basis. The applicant father is agreeable and prepared to pay costs of the respondent mother on a party/party basis.
The second issue is whether the applicant should pay the respondent's costs of the counsel's fees incurred. That, however, did appear to be somewhat agreed to upon reading the submissions of the respondent father. The third issue is the quantum of the respondent mother's costs or whether they should be, in fact, assessed after taxation.
The appeal proceedings finalised on 6 April 2001 when I granted leave to the father to withdraw his form 64 application and vacated the hearing date listed for 26 April 2001. The respondent mother thereafter was entitled to raise the issue with respect to costs and she did so both by correspondence and having the matter relisted.

The law

The relevant law is in a decision as to payment of indemnity costs in a decision of payment of indemnity costs as found in a number of decisions of the Full Court of the Family Court of Australia. In Kohan & Kohan (1993) FLC 92-340 at page 79614. The Full Court held the Court:
“ … should not depart lightly from the ordinary rules relating to costs between the party and the party and the circumstances justifying the departure should be of an exceptional kind.”
This was confirmed by Holden J in Munday & Bowman (1997) FLC 92-784 when he expressed the view that indemnity costs are an exception. In the decision of Yunghanns & Ors v Yunghanns & Ors v Yunghanns (2000) FLC 93-029, Lindenmayer and Holden JJ agreed that indemnity costs are unusual, but also, and I quote:
“The categories of circumstances which enliven the discretion to award indemnity costs are not closed and that it is not a condition precedent to the exercise of the discretion that some collateral purpose of species of fraud be established against the party against whom the order is sought.”
In the decision of Blueseas Investments Pty Ltd & Mitchell and McGillivray (1999) FLC 92-856, indemnity costs were awarded on the basis that the application was, and I quote:
“… entirely without substance and appears to have been pursued for tactical reasons.”
It is submitted by counsel for the respondent wife that reliance should, in this matter, be placed upon a passage cited by Holden J from the decision of Colgate-Palmolive Company and Others v Cussons Proprietary Limited (1993) 46 FCR 225 as cited by him in the decision of Munday (supra); namely that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such a case, the applicant would be presumed to have had some ulterior motive, or because of some wilful disregard of the facts.
It is submitted on behalf of the wife that framed as it was, the father's child support appeal was always doomed to failure. In support of it, that contention it is submitted that section 110 of the Child Support Assessment Act1989 (Cth) enables an aggrieved party to appeal but not unless the party has objected under section 98X to those particulars, and the Registrar has either disallowed the objection or allowed it in part. It is contended by counsel on behalf of the mother that as a matter of fact, at the time that the father lodged his appeal the father could have been said to have lodged an objection, but the Registrar had not determined that objection and therefore an appeal was without jurisdiction.
In response, it is submitted by the father that the Family Law Rules which apply to this application in order 31B, rule 43, provides that an appeal under section 110(1) of the Child Support Assessment Act 1989 is to be in accordance with the Form 64, which was the form filed by the husband. It was filed on 24 November 2000. The husband relies on the following matters in support of jurisdiction to bring his appeal. Firstly, that he lodged his objection to the decision of the Senior Case Officer Pickering, on 23 June 2000, which was heard in part by the Child Support Review Officer Ryan, on

19 September 2000 with a decision given on 20 December 2000.
Secondly, that in that decision, it is clear that the father had discussed with the Child Support Review Officer the process under part 6B, and it was indicated to him that in certain circumstances where cases are so complex the matter could be referred to a court having jurisdiction to deal with it in accordance with part 6A, and that he had been given a period of seven days to elect whether to: (a) proceed with his application; (b) withdraw his application; or (c) request that the application be referred to a court exercising the appropriate jurisdiction.
The husband then contends that he requested that the matter be referred to a court for judicial determination. He says he did so in a letter to the Child Support Agency dated 22 September 2000. It is submitted, therefore, that he had a notice of decision on the objection as at 20 September 2000, and that he had properly complied with section 110(1)(a) of the Child Support Assessment Act. In light of the matters set out above, I am satisfied that prima facie the husband had jurisdiction to bring his appeal.
I do not propose to, in effect, determine one of the issues in an application that was withdrawn now in the application of costs or determine the issue of whether such an appeal would have been successful. This issue, of course, has not been subject to the testing involved in the process of a hearing on the evidence of both parties as to the merits and the legal principles involved. In my view, for the Court to do so without such appropriate testing of the evidence, which is clearly in dispute between these parties, is not appropriate in an application for costs.
I am satisfied from the issues raised in the submissions of both parties that there was at least a prima facie issue for proper determination in the appeal filed by the husband. Whether such an appeal could have succeeded would require a greater examination of the facts and legal principles than is now possible or appropriate in this issue relating to costs. I am not satisfied, despite the submissions of the mother to the contrary, that the father's application would not or could not have succeeded, such that I can find that his action had been commenced or continued in circumstances where he, being properly advised, should have known that he had no chance of success.
I do not find it is open to the Court to establish clearly that the father would be presumed to have had some ulterior motive or that he had wilful disregard of the facts. I do not find that this is a case which is unusual, although the application was entirely without substance or pursued for technical reasons. This case does not, in my view, satisfy the Court ordering costs be paid other than in accordance with the ordinary rules relating to costs between party and party. It is not established, I find, that the matter is of an exceptional kind so as to justify an order for payment of costs on an indemnity basis. In effect, this was a fairly usual matter under the child support assessment provision.
Clearly, the mother was put to the cost of meeting the father's appeal, which was then withdrawn prior to the final hearing. She should be appropriately redressed with an order for costs. The father has agreed to pay her costs on a party party basis, which I have found is the appropriate manner in which such costs should be calculated in this matter. I will order the applicant pay the respondent's costs of an incidental to the appeal on a party party basis, or failing agreement, as taxed on a party party basis pursuant to order 38 of the Family Law Rules.
Despite the fact that the Federal Magistrates Rules in relation to costs have now come into operation as of 1 July 2001, this matter was a matter determined prior to the commencement of those rules and therefore should be determined in accordance with order 38 of the Family Law Rules. I do not find that this is a matter where the Court should, in effect, from the Bench undertake the exercise of a taxing officer in relation to assessing the quantum of those party party costs. With respect to counsel fees, as I have said the second issue for determination is whether this is a matter in which it was necessary to brief counsel or whether counsel fees should be excluded.
It is submitted by the mother that the Federal Magistrates Court operates a docket system and therefore it is advantageous to her in the conduct of her case that counsel be briefed to argue the matter from the beginning and it is appropriate to engage counsel in child support matters because they can become highly technical. It was further submitted that this case was more technical because of the inter-relationship of section 110 and section 117, the requirement to comply with section 98X order 31B rule 11(i) after receipt of the notice under section 98ZC(2), and that in assuming that the husband overcame the jurisdictional difficulties then the issues moved to an interpretation and application of section 117 of the Child Support Assessment Act.
In all of the circumstances it was appropriate to brief counsel in the matter where an applicant was seeking to reduce child support liability from $19,600 per annum to an amount based on an income of $43,000 with a history, it is contended by the mother, of the father underestimating his child support income. There appears, at least, some support for that in the findings of the child support review officers. In this matter the father submits that this was not a matter in which it was necessary or appropriate for the mother to brief counsel.
In this regard, the father submits that counsel has appeared for the respondent mother on every occasion the matter has been before the Court and that 9 March was the only occasion upon which certification for counsel was made pursuant to order 38 rule 26 and that no such certification was sought or granted on any other occasion. It is submitted that the respondent mother's solicitor is an Accredited Family Law Specialist who chose to brief counsel on each occasion and on 9 March instructed counsel.
It is submitted that the respondent mother's solicitor could certainly have appeared on all occasions when certification was not made by the Court or alternatively could have engaged a Brisbane agent, particularly at the first Court date which was where directions only were made on 15 February at a short mention. The husband's submissions indicate that it is not contended that it was not necessary to brief counsel but that that is a matter for the respondent mother in consultation with her solicitor, and that in the circumstances the husband should not be put to that cost.
This matter, in my view, clearly involves complex issues as outlined by the father to the child support agency himself in a letter dated

22 September 2000. The mother is, in my view, and I find entitled to instruct counsel in such a matter and I am not satisfied her so doing in the manner in which she did in this matter was an overuse of counsel as submitted by the father. I allow counsel’s fees and certify that for all appearances before the Court this was a matter in which it was appropriate for counsel to be briefed as he was by the mother at various stages of these proceedings.
The quantum of costs associated with the striking out of subpoena. In this regard costs have already been ordered by myself when the matter was before me in March 2001. It is the quantum of those costs which is in issue. These are costs clearly to be based upon party party costs at the scale under the Family Law Rules as they were the rules then applicable to matters in the Federal Magistrates Court. There is no evidence that the affected third parties are to be charged pursuant to any costs agreement that they have entered into with the solicitors who they engaged and happened to be the same solicitors engaged by the mother.
Failing such an agreement, I am satisfied that the quantum of these costs should be agreed upon on a party party basis or they should be taxed in accordance with the Family Law scale on a party party basis and not in accordance with an hourly rate of $250. The reasons for that is that I have no evidence before me as required of any cost agreement between the third parties and the solicitors. It appears from submissions of the father that counsel’s fees are conceded in relation to the arguing the issue of subpoenas. I concur that that is an appropriate concession in light of the orders that I have already made in that regard.
Therefore, in this matter I will order that the costs of the third parties be paid by the father in accordance with the costs order made on

9 March 2001 to the Managing Director, K R and Co; D S of B and S Jewellers; and A G J, such costs be quantified on a party/party scale of costs under order 38 of the Family Law Rules as agreed between the father and those persons or as taxed. I will further order that it is to be certified that it was appropriate for counsel to be briefed by the recipient of those subpoenas which I have already outlined and named above. I will direct that my reasons be taken out.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Rimmer FM

Associate:

Date: