Badawi & Badawi (costs)
[2017] FamCAFC 196
•18 September 2017
FAMILY COURT OF AUSTRALIA
| BADAWI & BADAWI (COSTS) | [2017] FamCAFC 196 |
| FAMILY LAW – APPEAL – COSTS – Where the wife seeks her costs of the husband’s unsuccessful appeal – Financial circumstances of the parties – Conduct of the proceedings – Where the inclusion of irrelevant documents in the appeal books may be a relevant consideration as to whether to make an order for costs – Where the appeal was wholly unsuccessful – Where the wife made two offers of settlement prior to the hearing of the appeal – Where it is appropriate that the husband pay the wife’s costs of the appeal – Whether those costs should be assessed on an indemnity basis – Where the circumstances do not justify an order for indemnity costs – Husband to pay the wife’s costs of the appeal as agreed or as assessed on a party and party basis. |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) r 22.19(1) |
| Colgate-Palmolive Company v Cussons Pty Limited (1993) 118 ALR 248 |
| APPELLANT: | Mr Badawi |
| RESPONDENT: | Ms Badawi |
| FILE NUMBER: | SYC | 3146 | of | 2008 |
| APPEAL NUMBER: | EA | 175 | of | 2016 |
| DATE DELIVERED: | 18 September 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | In chambers |
| JUDGMENT OF: | Bryant CJ, Aldridge & Johnston JJ |
| HEARING DATE: | Heard by way of written submissions filed by the respondent on 10 August 2017 and the appellant on 6 September 2017 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 21 September 2016 |
| LOWER COURT MNC: | [2016] FamCA 804 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Reid |
| SOLICITOR FOR THE APPELLANT: | M Duncan & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Paterson |
| SOLICITOR FOR THE RESPONDENT: | P Williams and Company Lawyers |
Orders
The appellant is to pay the respondent’s costs of the appeal as agreed or in default of agreement as assessed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Badawi & Badawi (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 175 of 2016
File Number: SYC 3146 of 2008
| Mr Badawi |
Appellant
And
| Ms Badawi |
Respondent
REASONS FOR JUDGMENT
Introduction
On 14 July 2017 the Full Court dismissed the appeal of Mr Badawi (“the husband”) against orders made by McClelland J on 21 September 2016. The respondent to that appeal, Ms Badawi (“the wife”), now seeks an order that the husband pay her costs of the appeal and that those costs be assessed on an indemnity basis from 23 March 2017.
Ordinarily in proceedings under the Family Law Act 1975 (Cth) each party is to bear his or her own costs (s 117(1)), but if the Court is of the opinion that circumstances justify it in doing so, the Court may make such an order as it considers just (s 117(2)). In considering whether to make an order for costs the Court is obliged to have regard to the matters set out in s 117(2A).
The wife raises for consideration the financial circumstances of the parties (s 117(2A)(a)), the conduct of the husband in relation to the appeal in that he insisted on including unnecessary documents in the appeal books, (s 117(2A)(c)), that the appeal was wholly unsuccessful (s 117(2A)(e)) and the offers made by the wife to settle the appeal (s 117(2A)(f)).
For his part the husband also relied on the financial circumstances of the parties, his mental health difficulties and the general injustice of the circumstances in which he now finds himself.
Before turning to the parties’ submissions it is important to note that at all times the husband has been represented by a case guardian. Both the proceedings before the primary judge and the appeal were commenced by that guardian.
The parties’ financial circumstances
Both parties are in receipt of Centrelink benefits.
The husband’s submissions assert that he has dissipated his savings, partly on legal costs and disbursements and partly in ways unknown to his case guardian.
The husband has a one-fifth interest in a property at W Street, Suburb U. His brothers are the other co-owners.
Pursuant to consent property orders made in the Federal Circuit Court on 4 November 2009, which were central to the application before McClelland J, the parties each have a half interest in a property at A Street, Suburb U. Those orders also provided for the wife to have the benefit of a life estate in that property so that she has the exclusive use of it. Her interest in the property is to pass to the husband on her death to be held by him along with his interest in trust for the parties’ children and to be received by them upon his death. Under the terms of the consent orders, the property can be sold at the initiative of the wife but not the husband. If the wife decides to sell the property, then each party will receive one half of the net sale proceeds.
Thus the parties each have significant interests in real estate but they are not readily realisable. The income of each is low.
Thus neither party can easily bear the costs of the proceedings. It is important to note, however, that impecuniosity is not of itself a bar to a costs order: Lenova & Lenova (Costs) [2011] FamCAFC 141 at [12].
The conduct of the proceedings
The wife submits that the costs of the proceedings were unnecessarily increased because the husband insisted on including in the appeal books, without discrimination, all of the documents relied on in the proceedings before the primary judge.
On 28 November 2016 the wife’s lawyers wrote to the husband’s seeking to have the documents to be included in the appeal books substantially limited. The husband’s lawyers refused and insisted that all documents be included.
Rule 22.19 of the Family Law Rules 2004 (Cth) governs what must be contained in the appeal books and provides as follows:
22.19Contents of appeal books
(1)Unless otherwise ordered under paragraph 22.17(2)(a), the appeal books must contain only the following documents:
(a)documents put in evidence at the hearing or trial to which the appeal relates and which are relevant to the grounds of appeal and necessary to enable the court hearing the appeal to reach its decision;
(b)if the appeal involves a challenge to the exclusion of evidence, the document:
(i)that is the subject of the challenge; and
(ii)that was tendered, but not admitted as evidence, at the hearing or trial to which the appeal relates.
As can be seen, the touchstone is that the appeal books are to contain the documents that are relevant to the determination of the appeal. In relation to the application of this test, the Court of Appeal in New South Wales has recently observed in Insurance Australia Ltd t/a NRMA Insurance v Milton (No 2) [2016] NSWCA 173 at [7] (“Milton”):
The proposition that experienced legal practitioners have difficulty with the application of such a test defies comprehension. By analogy of s 55 of the Evidence Act 1995 (NSW), the universe of relevant material is limited to that which could rationally effect determination of the issues raised on appeal. Within that broad ambit, a cull of those which are not “necessary” for the purposes of the proposed arguments is required.
We agree with this statement. The automatic inclusion in appeal books of all of the documents that were before the trial judge without a consideration as to whether they are necessary for the disposition of the appeal is to be greatly deprecated. It is essential that the parties bring a rational mind to what is to be included in the appeal books. All too often voluminous appeal books are produced and then not referred to at all during the hearing of the appeal. It must be borne in mind also that if a document necessary to the argument of one of the parties has been omitted from the appeal books, copies of it can always be handed to the court during the appeal hearing.
Parties and their lawyers should understand that even if successful they cannot assume that any costs order would extend to cover the preparation of unnecessary appeal books. In appropriate cases, the lawyers may be deprived of their opportunity to charge their clients for that preparation, as happened in Milton.
In the present case the appeal books were referred to infrequently during the hearing of the appeal.
The impact, however, of the unnecessary inclusion of documents in the appeal books fell mainly upon the husband whose task it was to prepare them. Whilst the inclusion of irrelevant documents likely increased the wife’s costs of the appeal, there is no suggestion that those costs were extensive. Thus whilst this is a relevant consideration that in this case favours the wife, it is not of great significance when regard is had to the other matters to be considered.
The husband has been wholly unsuccessful
This is clearly so and supports an order for costs.
The offers of settlement
The wife relies on two offers made by her prior to the hearing of the appeal.
On 23 March 2017 in a letter headed “Without prejudice save as to costs”, the wife’s lawyers proposed that there be orders dismissing the appeal and that there be no order as to costs. On 24 March 2017 that offer was rejected in writing.
The parties then prepared and served the written submissions to be relied upon by them in the appeal. Then, on 27 April 2017, the wife repeated her earlier offer and noted:
We also note that since the offer was previously made, our client has incurred considerable further costs including the costs of drawing submissions and the like. Accordingly the offer made in this letter is even more of a concession to your client than the offer previously made.
There is force in the wife’s submissions and we consider that the offers made were reasonable in all of the circumstances. This consideration favours the making of the costs orders sought.
Taking all these matters into account we are satisfied that there should be an order that the husband pay the wife’s costs.
Should those costs be assessed on an indemnity basis?
The wife submits that her costs should be assessed on an indemnity basis from 23 March 2017 or alternatively, we infer, 27 April 2017 because the offers made were reasonable and the outcome proposed under those orders was more favourable to the husband than the outcome that was ultimately achieved.
Costs on an indemnity basis are awarded only in exceptional cases: Kohan and Kohan (1993) FLC 92-340 at 79,614, cited with approval in Limousin v Limousin (Costs) (2007) 38 Fam LR 478 at 485 and D & D (Costs) (No. 2) (2010) FLC 93-435 at 84,767.
An “imprudent refusal of an offer to compromise”, has been held to be a category that would justify the Court departing from the ordinary practice and awarding indemnity costs (see Colgate-Palmolive Company v Cussons Pty Limited (1993) 118 ALR 248 at 257 and the authorities there cited).
The offer made by the wife was reasonable and, in all of the circumstances, ought to have been accepted. We are, however, reluctant to describe the failure to accept its refusal as imprudent.
This matter is marked by the severe difficulties faced by the husband and his advisors as a consequence of the husband’s mental health and by the unusual nature of the consent orders that were made on 4 November 2009. Taking those matters into account we are not satisfied that the refusal to accept the wife’s offers warrants an order for indemnity costs.
It follows that there will be an order that the husband pay the wife’s costs of the appeal assessed on a party and party basis.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, Aldridge & Johnston JJ) delivered on 18 September 2017.
Legal associate:
Date: 18 September 2017
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