Balodis & Balodis
[2022] FedCFamC1F 437
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Balodis & Balodis [2022] FedCFamC1F 437
File number: SYC 4140 of 2019 Judgment of: GILL J Date of judgment: 21 June 2022 Catchwords: FAMILY LAW – COSTS – Consideration of s 117 of the Family Law Act 1975 (Cth) – Wholly unsuccessful – Wife seeks indemnity costs – Costs awarded on a party-party basis in a fixed amount. Legislation: Family Law Act 1975 (Cth) s 117 Cases cited: Anison & Anison [2019] FamCAFC 108
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Kohan & Kohan (1993) FLC 92-340
Penfold & Penfold (1980) 144 CLR 311
Robinson and Higginbotham (1991) FLC 92-209
Division: Division 1 First Instance Number of paragraphs: 22 Date of hearing: 17 December 2021 Place: Canberra Counsel for the Applicant: Ms Spain Solicitor for the Applicant: Watts McCray Counsel for the Respondent: Mr Lethbridge, SC Solicitor for the Respondent: Edwards Family Lawyers ORDERS
SYC 4140 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BALODIS
Applicant
AND: MR BALODIS
Respondent
ORDER MADE BY:
GILL J
DATE OF ORDER:
21 JUNE 2022
THE COURT ORDERS THAT:
1.Within 21 days of the date of these orders, the husband pay by way of costs, the sum of $35,918.28 to the wife to an account as advised by her to the husband in writing.
2.The wife’s application that the husband pay her costs of this application is refused.
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 Balodis & Balodis is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
GILL J:
INTRODUCTION
This judgment concerns an application for costs made by the wife against the husband following the wife receiving judgment in her favour in their substantive dispute, being a dispute concerned with the application, scope and validity of a binding financial agreement (“BFA”) entered into by the parties. The factual background is set out in the judgment that disposed of that dispute.
The wife pursues costs, firstly on an indemnity basis and, in the alternative, on a party-party basis, either in a fixed sum or, in the alternative as agreed or as assessed.
The husband resists any costs award and seeks, if successful, that his costs on this application be granted on an indemnity basis.
Legal framework
As identified by the High Court in Penfold & Penfold,[1] costs are governed by s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) which “expresses a general rule” that each party should bear that party’s own costs. That general rule is subject to the operation of s 117(2) of the Act which provides that where there are justifying circumstances, that starting point or general rule is displaced. The court is further required by s 117(2A):
[1] (1980) 144 CLR 311.
(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.
As to whether costs should be awarded on an indemnity basis, Kohan & Kohan,[2] expressed that exceptional circumstances are required in order to justify such an order. Those exceptional circumstances have been variously described as a “very great departure from the normal standard”[3] or as a “special or unusual feature in the case to justify the Court in departing from the ordinary practice”.[4]
[2] (1993) FLC 92-340.
[3] Kohan & Kohan (1993) FLC 92-340 at 79,605.
[4] Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.
This case
Each party addressed the issue of their financial circumstances (s 117(2A)(a)). Each has significant capital resources at their disposal.
Neither party was in receipt of legal aid (s 117(2A)(b)).
It should be understood that the provision, s 117(2A)(c), regarding conduct of parties to the proceeding, is directed to the conduct of the parties in relation to the proceedings, as opposed to their conduct as a precursor to the proceedings.
The wife identified the inconsistent manner in which the husband conducted the proceedings, initially seeking the setting aside of the BFA and side agreement, before changing tack and pursuing orders that the parties be bound by them or if not, that the BFA then be set aside.
Further, the husband’s conduct of the proceedings involved the pursuit of a number of unmeritorious contentions, wherein he sought relief based on the side agreement, despite non-compliance with the Act, alternatively sought the setting aside of the agreement, sought to prevent the wife from reliance on the BFA without the side agreement, and asserted misrepresentation by the wife.
Similarly, the wife pursued an unmeritorious claim against the husband, asserting that the husband engaged in unconscionable conduct toward her in taking an unconscientious advantage of a special disadvantage on the part of the wife. No special disadvantage was established by her in support of such an argument.
Drawing upon s 117(2A)(d), the wife also asserted that she was forced to commence the proceedings due to the husband’s non-compliance. To the extent that the non-compliance was in relation to the BFA, it does not appear to constitute non-compliance with an order of the court as described at s 117(2A)(d). Non-compliance with the BFA however is, if adequately supported, a matter that can fall within s 117(2A)(g).
The evidence, however, as to concrete non-compliance by the husband as to interfere with the wife’s rights in respect of the occupation of the C Street, London property (which was the locus of the dispute) was scant.
Similarly, focussing on the reason for the proceedings, the husband argued that each party had entered into the side agreement (and it may be observed that the wife’s contention was that she hoped that it would be complied with). The husband argues that despite the side agreement not being found to be binding, that the wife should bear some responsibility for the circumstances which led to the dispute. Given the findings in this matter that neither party considered that they were bound by the side agreement, there is no substance in this contention.
In respect of s 117(2A)(e) of the Act which calls for attention to be given as to whether any party (my emphasis) has been wholly unsuccessful, it is argued that the husband has been wholly unsuccessful in the proceedings. The issue of what this means has received attention in cases such as Anison & Anison,[5] where Kent J described at [37]–[38]:
[5] [2019] FamCAFC 108.
37. It is well settled that paragraph (e) refers to a situation where proceedings as a whole have been unsuccessful. For example, where an application without merit has been dismissed. In the oft-cited authority in this area of Robinson and Higginbotham earlier referred to, Nygh J (with whom Simpson & Smithers JJ agreed) said:
Her Honour then makes a reference to the question of which party was wholly successful but, of course, as counsel for the wife rightly submitted, paragraph (e) deals with a situation in which the proceedings as a whole have been unsuccessful. In other words, in which an application which was without merit has been dismissed.
38. More recently, in Bant & Clayton (Costs) (“Bant”) the Full Court (May, Strickland & Tree JJ) stated:
(e) The mother was wholly unsuccessful in the proceedings.
21.The father submits that by filing a Notice of Discontinuance the mother has been wholly unsuccessful. The mother says that her application was never heard or determined, and thus it was not wholly unsuccessful.
22.There is an element of truth in both submissions, but it is apparent to us that this paragraph does not apply to the facts of this case; it is designed for cases where an application is heard and determined and the applicant is wholly unsuccessful.
23.Thus, this paragraph does not provide a circumstance justifying an order for costs.
(Citations omitted)
Each of these cases focuses on the overall result, which in this case points to the conclusion that the husband, who was refused his relief, while the wife received the relief that he opposed, has been wholly unsuccessful. It should however further be observed that in Robinson and Higginbotham,[6] Nygh J went on to consider that there is a spectrum of matters where a party is wholly unsuccessful that will impact the weight to be accorded to this consideration, the apex of which is where a proceeding is brought totally without merit and summarily dismissed. This was not an example of such an apex case.
[6] (1991) FLC 92-209.
No evidence was given to call for consideration pursuant to s 117(2A)(f) of offers made by a party.
DISCUSSION
The starting point is that each party bear their own costs. There is in this case sufficient justification to depart from that starting point, primarily reliant upon the conduct of the proceedings and the wholly unsuccessful nature of the husband’s litigation. Although it may be observed that in her pursuit of relief a significant aspect of the wife’s case was without merit, being the unconscionable conduct argument, this is outweighed by the husband’s pursuit of the unmeritorious claims and his complete lack of success.
The case, however, does not contain exceptionality so as to warrant an order for indemnity costs. Considering the matters identified by the wife in support of such, that the husband’s case was misconceived, that the husband was in breach of the BFA as causal of the litigation, the assertion of the propriety of the wife’s conduct of the litigation, that the husband has been on notice of the costs application and has been wholly unsuccessful, this suite of matters does not go so far, in terms of exceptionality, as to warrant indemnity costs. This is particularly so where firstly the uncontentious fact was that both parties executed the side agreement, and that each called on the other to comply with it in various respects, creating a real question to be answered in the litigation, and where secondly, a significant aspect of the litigation was the pursuit by the wife of the unconscionability case.
The costs will be ordered on a party-party basis. The quantum should be set as established by Annexure B to the submissions by the wife that set out the relevant costs in terms of the scale. The circumstances do not warrant some general discounting as urged for the husband.
Absent a basis to suggest that the table is inadequate to establish the relevant costs, the amount appearing at face value reasonable given the issues traversed, and considered in the light of the costs actually incurred by both the husband and the wife, there is no sufficient warrant to prolong the hostilities between the parties through a costs assessment process. Costs will be awarded adopting the Annexure B amount save for the last entry which is described as in relation to the costs proceedings, which results in an amount of $35,918.28.
Costs in respect of costs application
Costs were sought in respect of the costs application. Again s 117 applies to such an application. The starting point that each party should bear his or her own costs should not be departed from. In distinction from the costs in respect of the primary matter, the conduct of the costs proceedings by either party does not act as a feature in support of a costs award, and nor can it be asserted that either party has been wholly unsuccessful, given the success of the wife in respect of costs, and the success of the husband in resisting the indemnity aspect of the application by the wife.
I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gill. Associate:
Dated: 21 June 2022
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