Bant and Clayton (Costs) (No 2)

[2016] FamCAFC 66

FAMILY COURT OF AUSTRALIA

BANT & CLAYTON (COSTS) (NO. 2) [2016] FamCAFC 66

FAMILY LAW – APPLICATION IN AN APPEAL – COSTS – Where there was an adequate explanation for the father’s failure to file a Notice of Appeal within time – Where the father’s grounds of appeal were not devoid of merit – Where there is no justification for either party to be awarded costs on the basis of the conduct of the other of them – Where the mother was justified in opposing the application – Where the father was seeking an indulgence from the court – Where the financial circumstances of the parties do not justify an order for costs in favour of either of them – Each party to bear their own costs

FAMILY LAW – APPLICATION IN AN APPEAL – COSTS –  Where it is apparent that the father could not have incurred any costs as a result of the mother’s discontinued application for an adjournment –Where it cannot be said that the mother’s discontinued application was wholly unsuccessful – No order for costs.

FAMILY LAW – APPEAL – COSTS – Where the father’s principal or primary grounds were not successful – Where success in two grounds cannot translate into an entitlement for all of the father’s costs to be paid – Where conduct justifying an order of costs has to be conduct in the appeal – Where the parties’ respective financial circumstances neither prevents nor justifies an order for costs in favour of either party – Where the father should receive 20 per cent of his costs and the mother should receive 80 per cent of her costs – Where the mother seeks her costs on an indemnity basis – Where the mother has not established any basis for indemnity costs to be ordered – Where the mother’s claim for costs on an indemnity basis is completely unfounded – Where costs certificates should ordered in relation to the discrete rehearing.

Family Law Act 1975 (Cth) – s 117
Federal Proceedings (Costs) Act 1981 (Cth) – s 8
Family Law Rules 2004 (Cth) – rr 19.08(3), 22.03 and 22.53(2)(b)

D & D (Costs) (No 2) (2010) FLC 93-435
Madin & Palis(Costs) [2016] FamCAFC 25

APPELLANT: Mr Bant

RESPONDENT: Ms Clayton

FILE NUMBER: LEC 310 of 2013

APPEAL NUMBER: NA 12 of 2014

DATE DELIVERED:: 3 May 2016

PLACE DELIVERED: Adelaide

PLACE HEARD: Brisbane

JUDGMENT OF: May, Strickland & Tree JJ

HEARING DATE: By way of written submissions

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 19 November 2013

LOWER COURT MNC: [2013] FamCA 898

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Richardson SC with Mr Williams

SOLICITOR FOR THE APPELLANT: Watts McCray Lawyers

COUNSEL FOR THE RESPONDENT: Mr Lloyd SC with Ms McDiarmid

SOLICITOR FOR THE RESPONDENT: GJ Legal Solicitors

Orders

1. Each party bear their own costs in relation to the appellant father’s application in an appeal filed on 7 March 2014 seeking an extension of time to file his Notice of Appeal.

2. There be no order as to the costs of the respondent mother’s application in an appeal filed on 3 October 2014 and/or the discontinuance thereof.

3. The respondent mother pay to the appellant father 20 per cent of his costs of and incidental to the appeal, such costs to be assessed in default of agreement on a party/party basis.

4. The appellant father pay to the respondent mother 80 per cent of her costs of and incidental to the appeal, such costs to be assessed in default of agreement on a party/party basis.

5. Each party be granted a certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of the parties in respect of the costs incurred by each of them in relation to the rehearing confined by the terms of order (5) made in these proceedings on 25 November 2015.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bant & Clayton (Costs) (No 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 12 of 2014
File Number: LEC 310 of 2013

Mr Bant

Appellant

And

Ms Clayton

Respondent

REASONS FOR JUDGMENT

May & Strickland JJ

Introduction

1. On 25 November 2015 this court delivered reasons for judgment and made orders in relation to this appeal.

2. Orders (6), (7) and (8) provided as follows:

   (6)Within 28 days of the date hereof the appellant father file and serve written submissions as to costs in relation to the following:

   (a)The costs of the appeal.

   (b)The costs of the application in an appeal filed by the appellant father on 7 March 2014.

   (c)The costs of the discontinued application in an appeal filed by the respondent mother on 3 October 2014.

   (7)Within 14 days of receipt of the submissions of the appellant father the respondent mother file and serve written submissions in response.

   (8)Within 14 days of receipt of the submissions in response of the respondent mother the appellant father file and serve written submissions in reply, if any.

3. Pursuant to those orders, on 21 December 2015 Mr Bant (“the father”) filed his written submissions, on 20 January 2016 Ms Clayton (“the mother”) filed her written submissions together with an affidavit, and on 12 February 2016 the father filed written submissions in reply.

4. The father seeks the following orders:

   1.That the respondent mother pay the appellant father’s cost of and incidental to the appeal in a sum agreed and in absence of agreement within 28 days then as assessed.

   2.(If the respondent mother consents to an order in the following terms only)

   That the costs of each party in the application in an appeal filed by the appellant on 7 March 2014 be costs of the appeal.

   3.(In the event that the respondent mother does not consent to an order in terms of paragraph 2)

   Order that the respondent mother pay the appellant father’s costs and disbursements in respect of the application in an appeal filed by him on 7 March 2014 in such sum as is agreed within 28 days and in absence of agreement as assessed.

   4.That the respondent mother pay the appellant father’s costs and disbursements incurred arising from her discontinued application in an appeal filed on 3 October 2014, such costs to be assessed on an indemnity basis in such sum as is agreed or in absence of agreement within 28 days then as assessed.

   5.In the event that order 1 is refused then order that the appellant father be granted a certificate pursuant to the provisions of Section 9 Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney General to authorise a payment under that Act to the appellant in respect of his costs incurred in relation to the appeal.

   6.Order that the appellant father be granted a certificate pursuant to the provisions of Section 8 Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in relation to the re-hearing confined by the terms of order 5 made in these proceedings on 25 November 2015.

5. The mother opposes those orders and seeks the following orders:

   1.That within 28 days the Appellant pay the Respondent’s costs of and incidental to the appeal on an indemnity basis fixed in the sum of $135,977; or in the alternative

   2.That within 28 days the Appellant pay the Respondent’s costs of and incidental to the appeal on a party and party basis, fixed in the sum of $104,502.

   3.That in the alternative to Orders 1 or 2, that the Respondent be granted a certificate pursuant to the provisions of Section 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney General to authorize a payment under that Act to the Respondent in respect of:

   a)the costs incurred by the Respondent in relation to the appeal; and

   b)any costs incurred by the Appellant in relation to the appeal that have been, or are required to be, paid by the Respondent to the Appellant in pursuance of an order of the court.

   4.That the Respondent be granted a certificate pursuant to the provisions of Section 8 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney General to authorize a payment under that Act to the Respondent in respect of the costs incurred by her in relation to the re-hearing confined by the terms of Order 5 of the Order of this Court of 25 November 2015.

6. In reply to the orders sought by the mother the father makes the extraordinary submission that the mother is out of time, in that “she now stands outside the permitted time limit prescribed by Rule 19.08(2)(b) Family Law Rules”, and thus her application should be dismissed in limine.

7. Putting aside the fact that in this submission the mother is incorrectly referred to as the “appellant”, and the fact that the relevant rule would be r 22.53(2)(b) of the Family Law Rules 2004 (Cth) (“the Rules”), we reject this “proposition”.

8. The clear purpose of our orders made on 25 November 2015 was to allow each party to make any application for costs that they wished to make of and incidental to the appeal, and also in relation to the issues of costs referred to the Full Court for determination. Indeed, it is this Court’s usual practice to address the question of costs at the conclusion of the hearing of the appeal, but in this instance we were specifically asked by both senior counsel to allow costs to be dealt with by written submissions, and we acceded to that request. Accordingly, we will proceed to determine each party’s application.

The relevant legislation

1. As with any issue of costs these applications are governed by s 117 of the Family Law Act 1975 (Cth) (“the Act”). That section provides as follows, insofar as is relevant:

   (1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, 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), and (5) 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.

2. As can be seen, an order for costs can be made if there are circumstances that justify such an order. In determining that question, consideration needs to be given to the factors set out in s 117(2A).

3. It is then only if there is to be an order for costs that how those costs are to be calculated needs to be addressed. Here, of course, the father seeks that the costs of the discontinued application in an appeal be calculated on an indemnity basis, and the mother seeks that all of her costs be assessed on that basis. We will return to that issue if necessary.

The costs of the father’s application for an extension of time to file his Notice of Appeal

1. It is convenient to address this issue first because there is no agreement that the costs of that application be costs in the appeal, and of course, May J referred the question of those costs to this Full Court for determination.

2. Kent J delivered his reasons for judgment on the substantive issues, and made his orders on 19 November 2013. Under the Rules the father had 28 days to file a Notice of Appeal (r 22.03) but he failed to do so, and on 7 March 2014 he filed an application in an appeal seeking an extension of time, together with a number of affidavits in support, and a draft Notice of Appeal. The application was opposed by the mother.

3. The application was heard by May J on 6 May 2014, and on 23 June 2014 her Honour delivered her reasons for judgment and granted the father an extension of time until 30 June 2014 to file his Notice of Appeal.

4. As recorded by her Honour at [10], there were three issues in play:

   ·An adequate explanation for the delay;

   ·The proposed grounds of appeal having some merit; and

   ·That any prejudice to the respondent can be compensated by an order for costs. 

5. As to the first issue, which was hotly contested between the parties, her Honour found that “the husband has sufficiently explained the delay in the unusual circumstances of this case” (at [56]).

6. As to the second issue, her Honour said this:

   61.Although it is difficult to assess the prospects of proposed grounds of appeal at this stage, it cannot be said that the appeal is devoid of merit. The notice of appeal asserts grounds which appear arguable. Where the husband has established a reasonable explanation for delay, subject to considering the prejudice to the wife, this is sufficient.

7. As to the third issue her Honour said this:

   63.It is unfortunate that the granting of this application will prolong the litigation between the parties. It cannot be said that the husband’s application to file a notice of appeal out of time caught the wife off guard – the record of text messages exchanged between the parties demonstrates that the wife was on notice of the husband’s intent to pursue further litigation once the proposed reconciliation failed. It must be seen that on balance, the hardship to the husband in being unable to appeal final parenting orders outweighs the prejudice to the wife where there has been a delay of 2 months and 18 days.

8. Her Honour then concluded as follows:

   65.Without considering the merits of the appeal in detail, it can be seen that to deprive the husband of an opportunity to appeal final parenting orders which have the effect of restricting his relationship with his young daughter after a relatively short and reasonably explained delay may work an injustice against him. The extension of time should be allowed.

9. In relation to the issue of costs, it is necessary to record that the father provided a signed undertaking to the court, the terms of which were as follows:

   1.In the event leave is granted for an extension of time to file the Notice of Appeal, and I am subsequently unsuccessful at the hearing of the Appeal, I undertake to consent to an Order that I will pay the Respondent’s costs of the Appeal on an indemnity basis.

   2.Further, I am willing to consent to the costs of the present application forming part of the costs of the Appeal.

10. Regardless of this undertaking, before her Honour the mother sought that if the application was successful, then an indemnity costs order should be made against the father. In this regard her Honour considered that “[t]he better course, given the husband’s undertaking, [was] to reserve the issue of the costs of [the] application to the hearing of the appeal” (at [68]).

11. It is common ground that because the father was not “unsuccessful at the hearing of the appeal” the first paragraph of the undertaking no longer applies, and given the lack of agreement in relation to the second paragraph of the undertaking, that does not apply either.

12. As identified above, for there to be an order for costs in relation to this application, circumstances justifying an order need to be demonstrated by reference to the relevant factors in s 117(2A) of the Act.

13. The father relies primarily on the success of the application, and on the conduct of the mother in allegedly “lying” in an affidavit as to whether sexual relations took place between the parties subsequent to the trial judge’s orders being made. The father also seeks that we take into account the mother’s financial circumstances.

14. For the mother’s part, she relies on the fact that costs were only incurred because of the failure by the father to lodge a Notice of Appeal in time, the primary grounds of appeal relied on by the father were not ultimately successful, it was necessary to file extensive material since much of the material filed by the father was disputed, and there were “gaps in time” in the father’s explanation for the delay. The mother also refers to the financial circumstances of the parties.

15. A primary reason put forward by the father for not filing a Notice of Appeal in time, and the delay in pursuing the matter thereafter, was that the parties were contemplating reconciliation, but this claim was disputed by the mother, and voluminous material was put before May J in relation to that dispute. Her Honour understandably was not able to make findings as to whose evidence was to be preferred, and said this:

    52.In proceedings such as these, it is not necessary nor appropriate to make findings about whether the evidence of either party is to be preferred. There was no suggestion that the recording and transcription of their personal conversations were not accurate. It may be that each party had different perceptions and held entirely different views on whether reconciliation was achievable.

16. Plainly that is also the position in relation to the alleged conduct of the mother referred to above.

17. This court is in no better position than her Honour to make findings in relation to these issues. All this court can do is note her Honour’s conclusions at [52] which we have set out above.

18. Thus, there is no justification for either party to be awarded costs on the basis of the conduct of the other of them. Further, although it is true that costs would not have been incurred at all if the father had filed a Notice of Appeal in time, her Honour found that there was an adequate explanation. That said, clearly the mother was justified in opposing the application given the caveats that her Honour expressed in relation to the father’s explanation, and with hindsight, the fact that the father’s primary grounds of appeal have not been successful. On that basis, and given that the father was seeking an indulgence from the court, the success of the application also cannot justify an order for costs in the father’s favour.

19. As to the financial circumstances of the parties, the mother relies on the uncontroverted fact that the father is a person of substantial wealth, and that there is a “vast disparity” between their respective financial positions. She says that her financial circumstances have “deteriorated principally due to the cost of litigation”, and she has no funds “readily available to meet any order for costs”. However, her material reveals that although her expenses exceed her income, she has substantial property as well as funds in the bank, and it is to this that the father points in his submissions.

1. In these circumstances, we do not consider that the financial circumstances of the parties justifies an order for costs in favour of either party here.

2. Thus, there being no justification for an order for costs being made, the primary rule in s 117(1) of the Act applies, and each party will bear their own costs.

The discontinued application

1. On 3 October 2014 the mother filed an application in an appeal seeking an order adjourning the hearing of the appeal listed for 4 and 5 December 2014. However, on 13 October 2014 that application was discontinued.

2. The mother submits that the costs of the application should be costs in the appeal, but the father seeks that he have his costs assessed on an indemnity basis.

3. As with the other applications for costs, the first question is whether there are circumstances here that justify an order for costs being made, having regard to the relevant factors in ss 117(2A) of the Act.

4. The father in effect relies on two factors; first, the conduct of the mother in bringing the application and then a short time later discontinuing it, and, secondly, by filing a Notice of Discontinuance the mother was wholly unsuccessful in the application. The father says that “work was undertaken by solicitors and senior counsel in preparing a response to the application”.

5. In normal circumstances, the act of discontinuing proceedings can result in an order for costs against the party filing the Notice of Discontinuance, but understandably, only when costs have in fact been incurred by the other party. Here we are not satisfied that any costs have been incurred.

6. The mother points out in her submission that although the application was filed on 3 October 2014, the service copies had not been returned to her by the time of the discontinuance. However, at 5.23 pm on Friday 10 October 2014, unsealed copies of the application and the supporting affidavit were sent to the father’s solicitors. Then, at 10.40 am on Monday 13 October 2014 the Notice of Discontinuance was sent to the appeal registry, and the father’s solicitors were copied into the covering email. On that basis the mother submits that it was “difficult to see how the [father] could have incurred any costs in relation to the application.” We agree with that submission, and we note that no evidence was presented on behalf of the father when seeking the order, detailing the work allegedly done, and significantly, none of what the mother put in her written submissions as to this issue were challenged by the father in his reply.

7. For completeness, we indicate that it cannot be said that the mother’s application was “wholly unsuccessful”. Section 117(2A)(e) is designed for cases when an application is heard and determined, and it is dismissed.

8. In the circumstances we propose to make no order for costs in relation to the mother’s application or its discontinuance.

Costs of the appeal

1. As can be seen, each party seeks an order for the costs of and incidental to the appeal to be paid, the father on the usual party/party basis, but the mother on an indemnity basis.

2. Again, the first question is whether there should be an order for costs made in favour of either party.

3. In justifying an order the father relies on the fact that he was successful in relation to two of the 11 grounds of appeal ultimately pursued, and there is to be a rehearing as to the time the child the subject of the proceedings is to spend with him, and the conditions of the same, including whether there is to be supervision or not. The father says that “the costs of the appeal would not have been materially less expensive had the appeal been confined to the grounds upon which the appellant succeeded”. Thus, he seeks all of his costs, but in the alternative, 80 per cent of them.

4. As for the mother, we first note that she seeks a discrete order for costs on an indemnity basis in relation to an application in an appeal filed by the father on 12 September 2014, seeking leave to adduce further evidence in the appeal. The mother opposed the application, and it was dismissed by this court as part of the orders made in relation to the appeal.

5. There is no basis for that application to be considered discretely, and the costs in relation to it will be costs in the appeal. Likewise, the costs of the application in an appeal filed by the mother on 6 November 2014, seeking leave to adduce further evidence in the appeal will be costs in the appeal.

6. In justifying an order for all of her costs of and incidental to the appeal to be paid, the mother relies on the fact that the father abandoned one ground of appeal (in fact two were abandoned, namely Grounds 9 and 13), and submits that the two grounds of appeal that succeeded (Grounds 10 and 11), were “narrow grounds”, with the “focus of the appeal” being “largely on Ground 1 and Grounds 2-5”, all of which “failed”.

7. The mother also points out that no evidence was presented, and no analysis of the costs was undertaken by the father in support of his claim that “the appeal would not have been materially less expensive had the appeal been confined to the two successful grounds”. That omission is significant because we consider that the successful grounds were not the principal or primary grounds run on appeal by the father, and it is fanciful to suggest that the father’s success can be translated into either an entitlement to all of his costs being paid, or even 80 per cent thereof.

8. The mother of course submits that she should have all of her costs, but that too is not justified given it ignores the success of Grounds 10 and 11. However, in the alternative, the mother suggests that she should have 80 per cent of her costs, and we are attracted to that outcome as reflecting an appropriate division of the work required in the appeal, taking into account which grounds were successful, and which were unsuccessful.

9. The relevant factor here from s 117(2A) of the Act is to be found in paragraph (g), given that paragraph (e) only applies when one party has been wholly unsuccessful, and that is not the case here.

10. In support of the order the mother seeks, she also relies on s 117(2A)(c) of the Act, namely the conduct of the father. In particular, the mother points to the fact that at trial the findings of the trial judge as to the crucial issues, for example, whether the father was a flight risk, were based on his Honour’s “assessment of the father’s lack of credibility and reliability as a witness (and his threats)”. Then it is said that because the father sought unsuccessfully to challenge those findings and the use the trial judge made of them, on appeal, that is relevant conduct that justifies an order for costs in the mother’s favour. However, that submission is misconceived. The conduct has to be conduct in the appeal that attracts criticism, and for an appellant to merely challenge findings of the trial judge does not come within that description. What is relevant though, and this is what we have addressed above, is the success or otherwise of the grounds of appeal, and to repeat, that is a factor within paragraph (g).

11. To complete the picture, it is still relevant to consider the financial circumstances of the parties, but as discussed above, the respective financial circumstances of the parties neither prevents nor justifies per se an order for costs in favour of either party.

12. Thus, we consider that there are circumstances that justify an order that the mother have 80 per cent of her costs, and the father have 20 per cent of his costs.

13. We now turn to how those costs should be calculated.

14. With the father’s costs, there is no issue; he seeks that they be assessed on the usual party/party basis, and that is what should happen, in default of agreement as to the same.

15. The mother though seeks that her costs be calculated on an indemnity basis, and she has provided a schedule setting out what that amount would be, allegedly using the terms of the costs agreement entered into between the mother and her solicitors ($135,977).

16. In that same schedule the mother also allegedly sets out what her costs would be on a party/party basis using the Family Law Scale ($104,502).

17. We say allegedly in relation to the costs agreement, because although there is a short costs agreement annexed to the mother’s affidavit filed on 20 January 2016, as is required under r 19.08(3), it does not include any information as to the rates at which costs are charged. Thus, it is of no assistance whatsoever, and does not permit us to properly assess the amount claimed.

18. We also say allegedly in relation to the costs sought pursuant to the Family Law Scale, because the lack of detail in the schedule means that it is impossible for this court to determine what costs were necessary and reasonable.

19. The principles as to the basis on which costs should be calculated are well settled, and in particular the principles as to when indemnity costs should be ordered.

20. A useful discussion of the question of indemnity costs, including a review of the relevant earlier authorities, can be found in the decision of the Full Court in D & D (Costs) (No. 2) (2010) FLC 93-435. The Full Court said this:

    26.In Limousin & Limousin (Costs) [2007] 38 FamLR 478, the Court reviewed the authorities in relation to indemnity costs. Reference was there made to the judgment of the Full Court in Kohan and Kohan (1993) FLC 92-340. It was recorded at 79,614 (citations omitted) in which it was said that:

    The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the court may make such order as the court considers just. As we have pointed out, the court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O 38 r 2, the provisions of O 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O 38 r 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind.  See Degmam v Wright (No 2) [[1983] 2 NSWLR 354]; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534; Hobartville Stud v Union Insurance Co (1991) 25 NSWLR 358 at 368-70.

    Indemnity costs orders are still an exception in this and other jurisdictions.

    27.The Court in Limousin (supra) also referred to the judgment of Shephard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 upon which learned Counsel for the Wife relies in support of the present application. Shephard J said in Colgate-Palmolive (supra) (at 256):

    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 which 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 …

    28.Reference was made to the later decision of the Full Court of Yunghanns v Yunghanns (2000) FLC 93‑029 in which it was said (at 87,471, par 31):

    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.

21. Thus, in summary, to depart from the ordinary rule of calculating costs on a party/party basis, exceptional circumstances need to be demonstrated. Of course, for completeness, it must not be overlooked that costs are always in the discretion of the court, and the existence of exceptional circumstances does not oblige the court to make an order for indemnity costs.

22. Addressing these principles in this case, the mother has not established any basis for indemnity costs to be awarded.  The “justifying circumstances” relied on are expressed as, “the difference between indemnity costs and costs at scale is not vast, there is a massive imbalance in the respective financial positions of the parties, and the conduct of the appellant in respect of the litigation is of relevance”. How the first two reasons can ever be described as “exceptional circumstances” is not explained by the mother, and it is difficult to see how they ever could be. With the third reason, there is no detail provided by the mother, but if it is intended to refer to the conduct discussed above, then that too is entirely misguided.

23. We consider the mother’s claim for costs to be assessed on an indemnity basis to be completely unfounded, and it has been a waste of time and resources for this court to be asked to consider it. Recently, another Full Court had this to say about claims for indemnity costs (see Madin & Palis (Costs) [2016] FamCAFC 25):

    23.Finally, we take the opportunity to observe that in so far as the appellant sought an order for indemnity costs, applications for such costs should only be made, and such costs will only be ordered, in the most extreme cases. This is particularly so having regard to the fact that the primary rule in this jurisdiction is that each party should pay their own costs. Unfortunately, however, applications for indemnity costs are increasingly being made in this jurisdiction, thereby imposing further burdens on the court’s limited resources and causing further unnecessary expense for litigants.  

24. That plainly applies here, and we propose to order that the mother’s costs be calculated on a party/party basis. However, as will be apparent from our earlier comments, we are not prepared to do what the mother asks and fix the amount of costs. Not only is there insufficient detail for that, but the father has to have the opportunity to challenge the items claimed.

25. Finally, as can be seen from the orders sought, each party seeks an order for a costs certificate pursuant to s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”) to be granted in relation to the rehearing confined by the terms of order (5) of the orders made by this court on 25 November 2015.

26. Grounds 10 and 11 of the father’s appeal succeeded on questions of law and we consider it appropriate that each party should have a costs certificate as sought pursuant to s 8 of the Costs Act.

Tree J

1. I have had the benefit of reading the draft reasons of May and Strickland JJ in this matter. Having determined to allow the appeal on an additional ground to that upheld by their Honours, I am not able to join with them in making the costs orders proposed. However, had I been of the same view as their Honours in relation to the appeal, I consider the proposed costs orders to be appropriate.

I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 3 May 2016.

Associate: 

Date:  3 May 2016