Baldwin and Merrick and Ors (Costs)

[2014] FamCA 1029

FAMILY COURT OF AUSTRALIA

BALDWIN & MERRICK AND ORS (COSTS) [2014] FamCA 1029

FAMILY LAW – COSTS – application for costs thrown away – application for costs on an indemnity basis – application for costs of an incidental to Application in a Case thrown away by adjournment of trial – where costs ordered.

Family Law Act 1975 (Cth) s117

Colgate-Palmolive Co v Cussons Pty Ltd  (1993) 118 ALR 248
D & D (Costs) (No 2) (2010) FLC 93-435
Kohan and Kohan (1993) FLC 92-340
Limousin & Limousin (Costs) (2008) 38 Fam LR 478
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029

APPLICANT: Ms Baldwin

RESPONDENT:	Mr J Merrick
FIRST INTERVENER:	Ms Merrick
SECOND INTERVENER:	Mr P Merrick

INDEPENDENT CHILDREN’S LAWYER: Colville Johnstone Lawyers

FILE NUMBER: BRC 8035 of 2011

DATE DELIVERED: 17 November 2014

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: 14 July 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Linklater-Steele

SOLICITOR FOR THE APPLICANT: Biggs Fitzgerald Pike

SOLICITOR FOR THE RESPONDENT:	Toowong Legal
SOLICITOR FOR THE INTERVENERS:	Alex Mackay & Co

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Colville Johnstone Lawyers

Orders

1. That the Respondent pay the Applicant’s costs of and incidental to the Application in a Case filed 2 June 2014 and the Applicant’s costs thrown away by the adjournment of the trial listed to commence on 14 July 2014 and that:

   (a)such costs be paid on an indemnity basis in an amount as agreed between the parties or, failing agreement, as assessed on an indemnity basis; and

   (b)such costs, in the amount agreed or as assessed, be paid by the Respondent to the Applicant within 30 days of the making of a final order in the property settlement proceedings between the parties.

2. That save as is otherwise dealt with in this Order, the Applicant’s application for costs is adjourned to the trial Judge.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Baldwin & Merrick and Ors (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 8035 of 2011

Ms Baldwin

Applicant

And

Mr J Merrick

Respondent

And

Ms Merrick
First Intervener

And

Mr P Merrick
Second Intervener

And

Independent Children’s Lawyer

REASONS FOR JUDGMENT

1. On 13 June 2014, I made interim Orders in relation to the ongoing parenting arrangements for the parties’ two children. I also acceded to the father’s application to adjourn the final hearing of the matter which was listed for five days commencing 14 July 2014.

2. On 13 June 2014, Counsel for the mother made an oral application that the father pay the costs thrown away as a result of the adjournment of the final hearing.

3. Whilst initially encompassing only those costs, the mother’s application for an order for costs is now cast in far broader terms. The costs sought can be grouped within the following categories:

   a)her costs of and incidental to the Application in a Case filed 2 June 2014 which resulted in the Order made 13 June 2014; and

   b)her costs of and incidental to the interim hearing on 3 February 2014; and

   c)her costs thrown away as a result of the father’s asserted failure to cooperate with the valuation of disputed assets, including:          

   i)costs arising from an asserted failure to cooperate prior to the Conciliation Conference;

   ii)costs of and incidental to attendance at the Conciliation Conference convened by Registrar Sturgess on 26 April 2013;

   iii)costs of and incidental to attendance at the Compliance mention held by Registrar Coutts on 13 May 2013;

   iv)costs said to have been incurred as a consequence of an alleged failure to cooperate after an Order was made on 13 May 2013;

   v)costs of and incidental to attendance at the Compliance mention held by Registrar Coutts on 8 August 2013;

   vi)costs said to have been incurred as a consequence of an alleged failure to comply with the terms of a Consent Orders, made 23 August 2013, about the manner in which the cost of valuations of particular property was to be met.

4. The father takes issue with some of the matters contained in the affidavit material relied on by the mother in support of her application for a costs order. Thus, there remain matters factually in dispute between the parties. Such matters are incapable of resolution at an interim hearing.

5. For this reason, I have determined that it is just, proper and appropriate that, save for the applications specifically dealt with in the Orders made today, the mother’s remaining application for costs should be considered at the final hearing of the matter.

6. The context within which the current applications must be considered is set out in the Reasons for Judgment I delivered on 11 June 2014 (the June 2014 Reasons). I do not intend to repeat the matters outlined within the June 2014 Reasons but, rather, where relevant, adopt and rely on the same here.

Applicable Principles

1. Section 117(1) of the Family Law Act (1975)(Cth) (the Act) provides that each party to proceedings under the Act shall bear his or her own costs. However, if the Court is satisfied there are circumstances which justify it, the Court may make such order as to costs as it considers just.[1]

   [1] Section 117(2) Family Law Act (1975) (Cth).

2. In considering what order, if any, as to costs should be made, the Court must have regard to the matters set out in s 117(2A) of the Act.

3. The mother’s application for costs relies principally on the conduct of the father in relation to the proceedings.

4. It would appear from the evidence before me that each of the parties is in a not-dissimilar financial situation. Whilst the father is currently unemployed and the mother is in part-time paid employment, the fact of his unemployment means she bears the costs associated with financially supporting the children without his assistance.

5. Of course, even if it is the case that a party’s financial circumstances are poor, impecuniosity, of itself, is no bar to an order for costs being made where it is otherwise warranted.[2]

   [2]           See, for example, D & D (Costs) (No 2) (2010) FLC 93-435.

6. Neither party was in receipt of Legal Aid at the time the application was heard. It was not suggested that the proceedings here considered have been necessitated by any failure to comply with previous orders of the Court.

7. Neither party has the capacity to pay a lump sum for costs immediately. Consistent with this, the father’s solicitor indicated that, if a costs order was made, his client was unlikely to be able to pay the same until the conclusion of the proceedings and the finalisation of the property matters. 

Application in a Case filed 2 June 2014 and costs thrown away by adjournment of trial

1. The mother seeks an order that the father pay her costs thrown away by the adjournment of the trial and those of and incidental to the Application in a Case filed 2 June 2014.

2. The costs associated with the preparation of the Interim Application filed on 2 June 2014 are said to include[3]:

   a)those associated with the arrangement of, change to the date of, and subsequent cancellation of, the Legal Aid Parenting conferences the parties were obliged to attend as a consequence of the Order made 3 February 2014; and

   b)the receipt and perusal of Police Brief of Evidence in respect of the pending charges;

   c)obtaining urgent instructions from the mother as to the filing of the application and associated materials;

   d)the costs associated with briefing Mr Linklater-Steele of Counsel; and

   e)the costs associated with the appearances on 11 June 2014 and 13 June 2014.

   [3]           Affidavit of Helen Elizabeth Ruffles filed 4 July 2014.

3. The mother’s solicitor’s fees for this Application amount to $13,091.84[4] and the fees rendered by Counsel are $8,800.00.[5] The quantum of the mother’s solicitor’s costs asserted to be thrown away as a result of the adjournment of the trial is $16,756.93. There may also be costs associated with the engagement of Counsel which may also have been thrown away as a result of the adjourned trial.

   [4]          Annexure ‘HER2’, Affidavit of Helen Elizabeth Ruffles filed 4 July 2014.

   [5]           Annexure ‘HER3, Affidavit of Helen Elizabeth Ruffles filed 4 July 2014.

4. It is submitted that the father’s conduct throughout the proceedings justifies an order that he pay the mother’s costs of and incidental to the Application in a Case filed 2 June 2014, which was heard on 11 June 2014. Specifically, it is submitted that his failure to disclose:

   a)that police contacted him on 31 October 2013, at which time he was cautioned, advised of the complaint and arrangements made for him to speak with police on 1 November 2013; and

   b)that he was being investigated in relation to the matters summarised at paragraph 4 of the June 2014 Reasons; and

   c)that he had attended on the police on 1 November 2013 to decline formally to be interviewed in relation to the matters forming the foundation of criminal charges now pending against him; and

   d)anything about these matters to the Family Consultant during interview in January 2014; and

   e)that he was subsequently charged with criminal offences,

   resulted in the mother applying for interim parenting orders on an urgent basis once she became aware – on 23 May 2014 – of such matters.

5. Additionally, it is said, the omissions also resulted in the trial being adjourned pending further investigation and/or resolution of the charges, and further assessment by a Family Consultant (given the omission to mention the matters to her during the January 2014 interviews).

6. By way of broad summary, it was submitted that, had the father – the only party aware of the police involvement – disclosed such information, it is highly unlikely that the matter would have been listed for trial at the call-over on 2 December 2013: consequently, the mother would not have incurred the costs associated with preparing for trial at that time and would not have “lost” those thrown away by the subsequent adjournment of the trial.

7. In opposing the making of an order that he pay the mother’s costs of and incidental to the Application in a Case filed 2 June 2014, the father submits, in essence, that the mother acted precipitously by incurring such costs without first determining that his criminal matter had not yet been set down for committal. He further asserts that it was the action of his former solicitor, Mr T, in providing the mother with a copy of the relevant Police Brief outlining the details of the criminal charges (asserted to amount to no less than a breach of confidentiality) which was responsible for that which followed. Further, he asserts he sought legal advice about whether he had an obligation to disclose the fact he was being investigated by police, had been provided with a Notice to Appear in relation to the charges and had declined to be interviewed (and other associated matters) and, acting on this legal advice, decided not to make such information known to the mother and/or the Court.

8. Whatever the content of the legal advice received by the father, the reality is that the father’s omission to advise the mother about the information summarised in paragraph 17 as and when it became known to him resulted in the mother filing the Application in a Case on 2 June 2014.

9. As noted in the June 2014 Reasons, despite the matter being before the Court:

   a)at the compliance mention before a Registrar on 25 November 2013; and

   b)at the callover before Justice Kent on 2 December 2013; and

   c)for an interim hearing on 3 February 2014,

   the father did not raise the issues with the Court either.

10. Rather, he proceeded to allow the matter to be listed for final hearing knowing that the charges brought against him had not been finalised or determined.

11. I accept the thrust of the submissions made on behalf of the mother in support of the order sought. I consider that, had the father revealed the matters mentioned above as and when they became known to him, the interim hearing which proceeded on 3 February 2014 (at which Consent Orders were made) would have provided the forum for the agitation of orders in the terms sought in the Application in a Case filed 2 June 2014 and there would have been no necessity for that Application to have been filed nor for the matter to have proceeded on 11 June 2014 as it did.

12. As mentioned during the course of argument, the only person before the Court on each of the days, outlined in paragraph 22, with the knowledge about the police investigations and that which followed was the father himself.

13. In the circumstances, I am persuaded that the circumstances are such as to justify the making of an order that the father pay the mother’s costs of and incidental to the Application in a Case filed 2 June 2014 and her costs thrown away by the adjournment of the trial.

14. In so doing, I wish to emphasise that such order is not made to punish the father for his conduct but, rather, taking into account the consequences of that deliberate conduct on the costs incurred by the mother. As a result of his conduct, she incurred costs which would not otherwise have been incurred.

15. For the reasons outlined above, I consider it just that the father pay the mother’s costs of and incidental to the Application in a Case filed 2 June 2014 and those thrown away by the adjournment of the trial.

On what basis should the father be ordered to pay the costs?

1. As noted above, there is evidence about the mother’s actual costs and thus about the amount the father would be required to pay if an order for costs is made on an indemnity basis. Even if an order is made on an indemnity basis, the father’s liability for costs is limited to those which have been reasonably incurred or those which can be demonstrated to have been thrown away by the adjournment of the trial.

2. Unless there are exceptional circumstances, an order for costs should be made on a party and party basis: see D & D Costs (No. 2) (2010) FLC 93-435 in which the Full Court reviewed extensively earlier authorities, including Limousin & Limousin (Costs) (2008) 38 Fam LR 478 and Kohan and Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248.

3. In Colgate-Palmolive Co v Cussons Pty Ltd  Sheppard J summarised that:

   …

   2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis...

   3. This has been the settled practice for centuries in England.  It is a practice that is entrenched in Australia.  Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it...

   4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis.  The circumstances of the case must be such as to warrant the Court in departing from the usual course...

4. His Honour later noted some of the circumstances regarded as warranting the exercise of the discretion to award costs on an indemnity basis, saying at 233:

   Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)).  Other categories of cases are to be found in the reports.  Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis.  The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

5. In Yunghanns & Ors v Yunghanns & Ors and Yunghanns[6] the Full Court specifically acknowledged the “category” of cases that may give rise to an indemnity order is not closed:

   It will suffice to say that 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 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 the payment of costs other than on a party and party basis': per Shepherd J in Colgate- Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.

   [6] (2000) FLC ¶93-029 at 87,471.

6. In considering the submissions made in opposition to an order being made on an indemnity basis, I have – applying the appropriate adaptation to recognise the father’s nondisclosure of the information outlined above – taken into account that which was said in Kohan v Kohan (supra), at p 79,615:

   … even in cases where there has been some dishonest concealment of assets or income as in Penfold v Penfold (1980) FLC 90-800 and Oriolo v Oriolo (1985) FLC 91-653, no more than party and party costs have been awarded.

7. Even taking this into account, I am persuaded that the father’s deliberate decision to withhold the information outlined above in circumstances where it was known to him – and not capable of being known to the mother – before the interim hearing on 3 February 2014 and before the matter was listed for trial (2 December 2014) amounts to an exceptional circumstance which I regard as warranting the exercise of the discretion to award costs on a basis other than party and party costs.

8. I am, therefore, persuaded that it is just that the father pay the mother’s costs of and incidental to the Application in a Case filed 2 June 2014 and those thrown away by the adjournment of the trial on an indemnity basis.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 17 November 2014.

Associate:       

Date:              17 November 2014.