Bant & Clayton (Costs)
[2016] FamCAFC 35
•9 March 2016
FAMILY COURT OF AUSTRALIA
| BANT & CLAYTON (COSTS) | [2016] FamCAFC 35 |
| FAMILY LAW – APPEAL – AMENDED APPLICATION IN AN APPEAL – COSTS – Where the applicant seeks costs on an indemnity basis as a result of the respondent discontinuing an Amended Application in an Appeal – Where the applicant’s superior financial situation should not stand in the way of a costs order being made if otherwise appropriate – Where the respondent claims that the application was discontinued because a controversy had arisen and she was not in a financial position to continue with the litigation – Where the respondent’s conduct in discontinuing the proceedings in the circumstances that she did provides the necessary justification for an order for costs to be made – Where a costs order should be made in favour of the applicant – Where there are no exceptional circumstances demonstrated by the applicant which would justify an order for costs being made on an indemnity basis – Where the costs should be assessed in default of agreement to provide the respondent with the opportunity to challenge the items claimed – Costs ordered in favour of the applicant to be assessed on a party/party basis in default of agreement.
REPRESENTATION
Orders (1) The mother pay the father’s costs of and incidental to the Amended Application in an Appeal filed on 9 July 2015, the Response thereto filed on 17 August 2015, the Notice of Discontinuance filed on 20 August 2015, and the Amended Application in an Appeal filed on 19 November 2015, such costs to be assessed in default of agreement on a party/party basis. IT IS NOTED that publication of this judgment by this Court under the pseudonym Bant & Clayton (Costs) 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 |
Applicant
And
| Ms Clayton |
Respondent
REASONS FOR JUDGMENT
Introduction
By Amended Application in an Appeal filed on 19 November 2015, Mr Bant (“the father”) seeks the following orders:
1.That pursuant to Rule 22.42 of the Family Law Rules 2004, the Respondent Mother shall pay the costs of the Applicant Father on an indemnity basis in relation to the appeal proceedings arising from the Application in an Appeal filed 1 July 2015, and Amended Application in an Appeal filed 9 July 2015 and discontinued by the Respondent Mother on 20 August 2015.
2.That the Court assess the costs of the Applicant Father pursuant to paragraph 1 herein, in the amount of $30,197.95.
3.That the Respondent Mother pay these costs to the Applicant Father or as he directs within fourteen (14) days of the date of these Orders.
4.That the Respondent Mother shall pay the costs of the Applicant Father of and incidental to this Application, and that the Court assess the costs of this Application in the amount of $4,392.60.
That application is supported by an affidavit filed by the father on 3 September 2015 and by written submissions filed on 19 November 2015.
The application is opposed by Ms Clayton (“the mother”) and on 30 October 2015 she filed a Response subsequently supported by two affidavits filed respectively on 16 November 2015 and 24 November 2015, and by written submissions filed on 24 November 2015.
On 9 July 2015 the mother filed an Amended Application in an Appeal seeking that the “hearing of the appeal be reopened and that she have leave to adduce further evidence” comprised in four affidavits. However, on 20 August 2015 the mother filed a Notice of Discontinuance of the application.
The appeal which the mother sought to reopen was heard by this Full Court on 4 December 2014 and judgment was reserved. That judgment was delivered on 25 November 2015.
The relevant legislation
As with any issue of costs this application is 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.
Discussion
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).
The father seeks costs be calculated on an indemnity basis, but the first question is whether there should be an order for costs at all.
The father relies on paragraphs (c) and (e) of s 117(2A) as establishing the necessary basis for there to be an order for costs.
Apart from paragraph (a), the other paragraphs plainly have no relevance.
We now turn to the relevant paragraphs.
(a) The financial circumstances of the parties
The father submits that the mother has sufficient financial resources available to her to meet the order for costs sought by him. However, the mother submits that that is not the case, and, in any event, despite not filing a Financial Statement the father’s financial circumstances are such that the amount of costs sought would be insignificant to him.
There is no doubt that the father is a person of substantial wealth; the father does not say otherwise, and that has been his position throughout the proceedings at first instance and on appeal. Accordingly, it is open for this court to proceed on that basis, and thus it is not necessarily of concern that the father has not filed a Financial Statement.
As far as the mother is concerned, this court does have a Financial Statement of hers sworn on 3 August 2015. It reveals that although her expenses exceed her income, she has substantial property, as well as funds in a bank account. However, in her written submissions the mother refers to her affidavit filed on 16 November 2015, wherein she has updated her financial position. She asserts that since 3 August 2015 she has “expended a further $119,800 in costs” and her “capital funds have been significantly depleted”.
Despite these changes, the mother plainly has funds and resources available to meet an order for costs; indeed, she has been able to meet her own substantial costs. We are also not persuaded that the father’s superior financial position should stand in the way of a costs order being made if otherwise appropriate.
(c) The conduct of the parties
We accept that the conduct of the mother is particularly relevant here. In simple terms, the mother filed an application, the father was required to respond (which he did), but the mother then discontinued the proceedings. It is that act of discontinuance after the father has incurred legal costs in responding to the application which provides a basis for an order for costs against the mother.
The father submits that the mother’s application “was misconceived and that the evidence she sought to adduce lacked probative value”, and that was why she “ultimately” discontinued the proceedings. The mother challenges those assertions, but we are not in a position to definitively resolve that dispute. Plainly, the mother’s reasons for discontinuing the proceedings are relevant to the exercise of discretion whether to order costs or not, but the crucial issue is the discontinuance itself.
As to the mother’s reasons, she says that she discontinued the proceedings because “a controversy had arisen and she was not in a [financial] position to continue litigation.” However, it is apparent to us that it was not only as a result of the responding documents filed by the father on 17 August 2015 that the controversy arose. The mother had filed an Application in an Appeal on 6 November 2014, namely before the hearing of the appeal, seeking to adduce further evidence in relation to proceedings the father had instituted on 28 October 2014 in Dubai. That application was responded to by the father, and it was not proceeded with at that time. The mother says further information about those proceedings came to her knowledge in 2015, and ultimately issues surrounding those proceedings were the genesis of the mother’s application to reopen the hearing of the appeal. Thus, we consider that although the father’s response on 17 August 2015 may have crystallised the issues in dispute, the mother was well aware for some time before that that what she was raising was controversial, and litigation would ensue entailing the incurring of legal costs. Accordingly, the mother’s claimed reasons do not provide a basis for her peremptory discontinuance of the proceedings leaving the father with legal costs incurred in responding to the application.
We also observe that the impact of the mother’s conduct in discontinuing the proceedings was exacerbated by her solicitors ignoring the legitimate and reasonable request for particulars following the filing of the mother’s Amended Application in an Appeal.
In all the circumstances, we find that the mother’s conduct in discontinuing the proceedings provides the necessary justification for an order for costs to be made.
(e) The mother was wholly unsuccessful in the proceedings.
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.
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.
Thus, this paragraph does not provide a circumstance justifying an order for costs.
Conclusion
As we have found, the conduct of the mother in discontinuing the proceedings provides the circumstance justifying an order for costs. Albeit only one of the paragraphs of s 117(2A) is enlivened, that is sufficient (PBF v TRF and Anor (2005) 191 FLR 294) and there should be an order for costs in favour of the father.
We now turn to how those costs should be calculated.
Indemnity costs
The father seeks that the costs be calculated on an indemnity basis, and he has provided a schedule setting out what that amount would be, using the terms of the costs agreement entered into between the father and his solicitors. The total amount, including the costs of the application, and all disbursements such as counsel fees, is $34,590.55.
By way of comparison, the father says that the costs on a party/party basis using the Family Law Scale is $18,709.47.
If costs are to be awarded, the mother opposes calculating the costs on an indemnity basis, and says that in any event “much of the costs incurred were unnecessary or unreasonable”.
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.
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 is 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.
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.
Addressing these principles in this case, there is no basis established to order indemnity costs. Not only are there no submissions by the father identifying exceptional circumstances, it is not apparent to us on a consideration of the material before this court, that such circumstances are present. Thus, we propose to order that costs be calculated on a party/party basis in accordance with the Family Law Scale (including for counsel).
The father seeks that this court “quantify/assess” the costs rather than refer the matter to “the taxation/assessment process”, but that is opposed by the mother because it does not give her the opportunity to challenge the items claimed.
We accept the mother’s submission, and consider that at least on a prima facie basis, there are items claimed, both as to solicitor fees and counsel fees, which are unnecessary and unreasonable. Just one example of this is, we agree with the mother’s submission that it was unnecessary for the father, when initially responding to the application, to have prepared and filed written submissions. Further, by way of general comment, we consider that there was unnecessary doubling-up of work as between solicitor, junior counsel and senior counsel.
Accordingly, if the father continues to seek the costs that he does on the Family Law Scale, then it is essential that those costs be properly assessed.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Strickland & Tree JJ) delivered on 9 March 2016.
Associate:
Date:
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