Barron and Zebic (No.2)

[2016] FCCA 1695

FEDERAL CIRCUIT COURT OF AUSTRALIA

BARRON & ZEBIC (No.2) [2016] FCCA 1695

Catchwords:
COSTS – Application for costs – indemnity costs – whether costs should be awarded on an indemnity basis – Calderbank offer of settlement – costs to be calculated in accordance with Federal Circuit Court Rules 2001, Sch. 1, Part 1.

Legislation:

Family Law Act 1975 (Cth), ss.117, 117C

Federal Circuit Court Rules 2001, Sch. 1, Part 1

Cases cited:

Colan Products Pty Ltd v Luxon  (No.2) [2002] FMCA 90

Colgate Palmolive Co. v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248;

[1993] FCA 536

In the Marriage of Kohan (1992) 16 Fam LR 245; (1993) FLC 92-340

Maitland Hospital v Fisher (No.2) (1992) 27 NSWLR 721
Prantage & Prantage (2013) 49 Fam LR 197; FLC 93-544; [2013] FamCAFC 105
Zebic & Barron [2015] FCCA 3613

Applicant: MR BARRON

Respondent: MS ZEBIC

File Number: NCC 2955 of 2010

Judgment of: Judge Scarlett

Hearing date: 8 September 2015

Date of Last Submission: 8 September 2015

Delivered at: Sydney

Delivered on: 7 July 2016

REPRESENTATION

Solicitor for the Applicant: Ms Johnson

Solicitors for the Applicant: Flintoff Lawyers

Solicitor for the Respondent: Ms Tyrie

Solicitors for the Respondent: Paula Tyrie Law Practice

ORDERS

1. Within six (6) months of the date of these Orders the Mother is to pay the Father’s costs of the substantive parenting proceedings fixed in the sum of $14,951.00.

2. Within six (6) months of the date of these orders the Mother is to pay the Father’s costs of the Application in a Case filed on 29 July 2015 fixed in the sum of $2,262.00. 

3. All other outstanding Applications if any are dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Barron & Zebic (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

NCC 2955 of 2010

MR BARRON

Applicant

And

MS ZEBIC

Respondent

REASONS FOR JUDGMENT

Application in a Case

1. This is an Application for costs in respect of a decision in a parenting case brought by the Respondent Father. The Father seeks costs on an indemnity basis. The decision was handed down on 30^th June 2015 (Zebic & Barron[1]).

   [1] [2015] FCCA 3613

Orders sought

1. The Father, by his Application in a Case filed on 29^th July 2015 seeks this Order:

   That within 28 days the mother pay the husband’s costs of and incidental to the proceedings on an indemnity basis.

2. By her Response to an Application in a Case filed on 27^th August 2015 the Mother seeks that the Application should be dismissed with costs.   

Evidence and Submissions

1. The Application is supported by an affidavit of the Father affirmed on 27^th July 2015.

2. The Mother’s Response is supported by her affidavit sworn on 25^th August 2015.

3. The basis of the Father’s claim can be found in his affidavit:

   10.The final orders that were made by the Court in these proceedings are almost in line with my application with the exception of a restraint in relation to alcohol. The orders are also similar to the final orders made in March 2011 by consent.[2]

   [2] Affidavit of Mr Barron 27.7.2015

4. The Father went on to depose that:

   a)He was not in receipt of a grant of legal aid for the proceedings;

   b)His solicitor billed him for a total of $26,170.83 plus GST, made up as follows:

   i)Professional fees    $16,806.50;

   ii)Disbursements       $1,664.33

   iii)Barrister’s fees      $7,700.00.

   c)Of that amount, some $5,170.00 was in relation to the contravention proceedings.;

   d)He seeks that the mother pay the balance on an indemnity basis;

   e)Throughout the proceedings, he made numerous attempts to resolve the matter but was not successful.

5. The Father annexed to his affidavit a copy of an offer of settlement and copies of other correspondence.

6. The Father deposed that he paid the money for his legal expenses by:

   a)borrowing against his home loan;

   b)borrowing money from his mother; and

   c)using his savings of approximately $14,000.00.[3]

   [3] Affidavit of Mr Barron 27.7.2015 at paragraph [14]

7. The Father deposed that he is self-employed with a taxable income for the last financial year of approximately $55,000.00. He pays child support at the rate of $860.75 per month. He has remarried and he and his current wife have an 8 month old child. The mortgage on their home is $720,000.00 with repayments of $4,000.00 per month.

8. In her affidavit sworn on 25^th August 2015, the Mother deposed that the Father had consented to the Interim Orders of 12^th November 2013 and 6^th March 2014.

9. The Mother stated that the Father did not pay her child support at the rate of $860.75 any more but pays a reduced amount of $600.75. The reason for this is that the Orders of 30^th June 2015 increased the number of nights that the children spend with their father.

10. The Mother also deposed that although the Father had moved into a new home, he still retained his former home, which he was renting out. She also believed that the Father had recently purchased a new Toyota Hilux utility. She was not in receipt of a grant of legal aid and was paying her own legal costs by instalments. She did not disclose the amount of her legal costs either in her affidavit or her Financial Statement.

11. The Mother deposed that her taxable income for the year ended 30^th June 2014 was $34,396.00 and referred to her Financial Statement filed contemporaneously with her Response and affidavit.

12. No oral submissions were made and it was put to the Court that the matter could be dealt with on the papers.

Costs in Family Law Proceedings

1. The question of costs in proceedings under the Family Law Act 1975 (Cth) is governed by the provisions of s.117. Whilst s.117(1) of the Act contains the general policy that each party to proceedings under the Act “shall bear his or her own costs”, subsection 117(2)  provides that if the Court is of opinion that there are circumstances that justify it in doing so the Court may, subject to subsection (2A), relevantly and the applicable Rules of Court, make such order for costs as the Court considers just.

2. Subsection 117(2A) states that 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, admission 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 either party to the proceedings has been wholly unsuccessful in the proceedings;

   f)whether either party to the proceedings has made an order 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.

3. If the Court decides that there are circumstances that justify it in making an order for costs, what must then be decided is the quantum, or the amount of costs to be awarded. It is the usual case that where costs are awarded against a party they are awarded on a party and party basis. Costs would normally be awarded in accordance with the Court scale, which in this case is contained in Part 1 of Schedule to the Rules.

4. It is well established that costs will only be awarded on an indemnity basis (also known as a solicitor-client basis) where there are unusual or exceptional circumstances (see Colgate Palmolive Co v Cussons Pty Ltd[4]; In the Marriage of Kohan[5]; Prantage & Prantage[6]).

   [4] (1993) FCR 225; 118 ALR 248; [1993] FCA 536

   [5] (1992) 16 Fam LR 245; (1993) FLC 92-340

   [6] (2013) 49 Fam LR 197; FLC 93-544; [2013] FamCAFC 105

Conclusions

1. What must first be decided is whether the Father should receive an order for costs against the Mother at all.

2. The evidence shows that neither party is in a strong financial position. The Father used his savings and had to borrow money to pay his costs; the Mother deposes that she is paying off an unspecified amount of her own legal costs by instalments.

3. Neither party was in receipt of a grant of legal aid.

4. Whilst the parties, through their respective counsel and their solicitors, made a conscientious effort to bring the case to hearing without delay, it is regrettable that the matter took two hearing days for the evidence and submissions had to be made in writing. Against this, the parties’ written submissions were well-prepared and very helpful to the Court.

5. It may be argued that these proceedings were necessitated by the failure of a party to comply with previous Orders of the Court, in that the parenting hearing arose out of cross contravention Applications.

6. Neither party was wholly unsuccessful in the proceedings, although the final Orders made were far closer to the Father’s position than that of the mother. Nevertheless, the Father did not obtain the orders he sought about the child X starting school in 2015 or his costs of the contravention proceedings.

7. The Father did, however, make a written offer to settle the proceedings, a copy of which forms Annexure “A” to his affidavit. Interestingly, the proposed order about X starting school in 2015 did not form part of the proposed terms of settlement, although the Father still sought the costs of the earlier contravention proceedings. The offer was a Calderbank offer in writing under cover of a letter headed “Without Prejudice Save as to Costs”. It complied with s.117C of the Family Law Act.

8. In my view, the Father’s offer provided a realistic basis for settlement of the proceedings and it is unfortunate that the matter did not settle either before the hearing or on the first hearing day. This is a matter that realistically should have settled. Instead, it ran for two days and then required written submissions.

9. Accordingly, I am of the opinion that the circumstances justify making an order for costs in favour of the father.

10. What must be decided is whether costs should be awarded on the usual basis or on an indemnity basis. Whilst it was held in Colgate Palmolive v Cussons that an imprudent refusal of an offer of settlement may justify the award of costs on an indemnity basis, I am not satisfied that this is the case here. To my mind, an offer of settlement would have to be very close to the final decision for its refusal to be held to be imprudent as to justify indemnity costs (see Maitland Hospital v Fisher (No.2)[7]).     

    [7] (1992) 27 NSWLR 721

11. I am not satisfied that costs should be awarded on an indemnity basis. The costs will be calculated according to the scale set out in Part 1 of Schedule 1 of the Rules.

12. I have calculated the costs in this way:

    a)10 June 2014:    Item 1 – basic amount                   $2,048.00

    b)10 June 2014:    Item 13 – daily hearing fee          $$278.00

    c)Item 6:  Preparation for final hearing (two days)    $5,412.00

    d)17 October 2014:   Daily hearing fee  $2,048.00

    e)17 October 2014:   Advocacy loading  $1,024.00

    f)5 December 2014: Daily hearing fee  $2,048.00

    g)5 December 2014: Advocacy loading  $1,024.00

    h)30 June 2015:    Attendance to take judgment        $278.00

1. Disbursements:  $215.00

j)Item 16:     Travelling expenses  $576.00

TOTAL  $14,951.00

1. Counsel’s fees are not allowed as a separate disbursement where the advocacy loading applies (Colan Products Pty Ltd v Luxon (No.2)[8].

   [8] [2002] FMCA 90

2. I will allow the father’s costs of the Application as follows:

   a)Item 3: Costs application    $1,706.00

   b)8 September 2015 – daily hearing fee:                   $278.00

c)Item 9:Attending to take this judgment:                  $278.00

TOTAL  $2,262.00               

Orders

1. I propose to order that the mother is to pay the Father’s costs of the substantive proceedings in the sum of $14,951.00 and the Application for costs in the sum of $2,262.00.

2. Noting the evidence of the mother’s financial circumstances, I will allow six months to pay the costs.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Date: 7 July 2016