Bebbington and Bebbington (Costs) - [2017] FamCAFC 72

FAMILY COURT OF AUSTRALIA

BEBBINGTON & BEBBINGTON (COSTS)

[2017] FamCAFC 72

FAMILY LAW – APPEAL – COSTS – application by the respondent for costs of the appeal on an indemnity basis – where the appeal was futile – where some costs incurred were excessive or incurred in pursuit of a misconceived approach – where costs awarded in a fixed-sum.

Civil Procedure Act 2005 (NSW)
Trust Accounts Act 1973 (Qld)
Family Law Rules 2004 (Cth)

Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
Harrison v Schipp (2002) 54 NSWLR 738
Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23
Kohan and Kohan (1993) FLC 92-340
Lenova & Lenova (Costs) [2011] FamCAFC 141
Munday v Bowman (1997) FLC 92-784
Prantage & Prantage (2013) FLC 93-544
Yunghanns & Yunghanns (2000) FLC 93-029

APPELLANT:

Mr Bebbington

RESPONDENT:

Ms Bebbington

FILE NUMBER:

BRC

10953

2015

APPEAL NUMBER:

2016

DATE DELIVERED:

26 April 2017

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane (in Chambers)

JUDGMENT OF:

Kent J

HEARING DATE:

By way of written submissions

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

29 September 2016

LOWER COURT MNC:

[2016] FCCA 2513

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Shoebridge

SOLICITOR FOR THE APPELLANT:

Browns Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Bunning

SOLICITOR FOR THE RESPONDENT:

Wiltshire Family Law

Orders

The husband pay to the wife within 45 (forty-five) days of the date of these orders the amount of $20,250 for the wife’s costs of and incidental to the appeal proceedings.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 75 of 2016
File Number: BRC 10953 of 2015

Mr Bebbington

Appellant

And

Ms Bebbington

Respondent

REASONS FOR JUDGMENT

The issues for determination are:
a)First, whether the costs of Ms Bebbington (“the wife”) of and incidental to the failed application of Mr Bebbington (“the husband”) for leave to appeal orders made on 29 September 2016, ought be ordered against the husband on the usual party and party basis (as the husband contends) or on an indemnity basis (as the wife seeks); and
b)Second, if costs are ordered on an indemnity basis, whether the amount be in a fixed sum (as the wife seeks) or whether ordered costs ought be assessed (as the husband seeks);
c)Third, whether as an alternative source of payment of any ordered costs an order should be made for the husband’s solicitors to pay the costs order in the sum sought by the wife from their general account.
On 8 March 2017, exercising the jurisdiction of the Full Court as a single judge and for the reasons then delivered, I ordered that the husband’s application for leave to appeal the orders made by Judge Purdon-Sully on 29 September 2016 be dismissed. I incorporate those reasons for judgment into these reasons to avoid unnecessary restatement of them. I also made orders on 8 March 2017 for the wife’s application for indemnity costs of the appeal proceedings to proceed by way of written submissions and without an oral hearing. Submissions have been filed by each party.

Costs on an indemnity basis?

Recognising that an order for costs on an indemnity basis represents “a very great departure from the normal standard”[1] I am satisfied that such an order is appropriate in this case for the following reasons:
a)Not only was the husband wholly unsuccessful in the proceedings within the meaning of s 117(2A)(e) but the husband’s pursuit of his application for leave was an exercise in futility – it would be unjust to the wife for her to be left out of pocket in defending such an exercise (s 117(2A)(g));
b)The wife, by her lawyers, invited on 28 November 2016 the husband to withdraw his appeal in which event she would not seek her costs in relation to the notice of appeal which had been filed on 21 October 2016. The husband’s refusal of that offer was imprudent. Likewise, again on 25 January 2017 the wife made an offer on terms that if the husband then discontinued his appeal the wife would not seek an order for costs. Again, the husband’s refusal of that offer was imprudent. In my judgment particularly in the context of this case such offers within the meaning of subsection (f) of s 117(2A) are powerful factors in favour of an indemnity costs order, and the circumstances of the case highlights the husband’s imprudence in not accepting those offers. By making such offers the wife did what she could to avoid incurring what were unnecessary costs of resisting a futile application;[2]
c)Nothing in the evidence or submissions before me concerning any of the s 117(2A) considerations displaces the determinative significance of the above considerations.
[1] Kohan and Kohan (1993) FLC 92-340; Prantage & Prantage (2013) FLC 93-544 (“Prantage”); Munday v Bowman (1997) FLC 92-784 and Yunghanns & Yunghanns (2000) FLC 93-029.
[2] Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248; Lenova & Lenova (Costs) [2011] FamCAFC 141.

Amount of costs ordered

Rule 19.18 of the Family Law Rules 2004 (Cth) (“the Rules”) provides:
19.18 Method of calculation of costs
(1)      The court may order that a party is entitled to costs:
(a)      of a specific amount;
(b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
(c)to be calculated in accordance with the method stated in the order; or
(d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.
(2)If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.
(3)      In making an order under subrule (1), the court may consider:
(a)      the importance, complexity or difficulty of the issues;
(b)      the reasonableness of each party’s behaviour in the case;
(c)      the rates ordinarily payable to lawyers in comparable cases;
(d)whether a lawyer’s conduct has been improper or unreasonable;
(e)the time properly spent on the case, or in complying with pre-action procedures; and
(f)       expenses properly paid or payable.
The wife has complied with r 19.08(3) in providing to the Court a copy of the relevant costs agreement and its terms governing her costs arrangements with her lawyers.
It is obviously desirable in the interests of avoiding yet further costs involved in the assessment process being incurred if the amount of the wife’s indemnity costs can appropriately be fixed in accordance with r 19.18(1)(a).
In Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23 (“Idoport”) Einstein J considered s 98(4) of the Civil Procedure Act 2005 (NSW) a statutory provision analogous to r 19.18(1)(a). There, Einstein J referred to the desirability of fixing costs and to the principles applicable to a court fixing costs.
Einstein J observed that if the court is to fix a sum it should be “fixed broadly having regard to the information before the Court”[3] and the process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”.[4]
[3] Citing Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119.
[4] Citing Harrison v Schipp (2002) 54 NSWLR 738.
Importantly at [10] Einstein J observed:
… the requirement that the power to award a gross sum should be exercised judicially does not mean that it must be exercised in the scientific or formulaic manner.; [sic] At the heart of the judicial function is the responsibility to weigh up competing factors and considerations, many of which might conflict, to reach a determination. Acting judicially carries with it an obligation to apply the rules of natural justice, to act impartially and to apply the law to the facts…
The wife, relying upon the evidence as to the accounts she has historically received from her solicitors and her solicitors’ analysis of those accounts relating specific items to the appeal proceedings, claims the sum of $23,827.74 as the fixed sum on an indemnity basis.
In his written submissions the husband contends that in the event that it is determined that an indemnity costs order should be made, that the Court would not be satisfied that the affidavit of the wife’s solicitor “containing copies of lump sum bills of costs accurately sets out the indemnity legal costs incurred by the Respondent in the appeal.” That bare assertion is not accompanied by any particulars of asserted inaccuracies in the evidence provided on behalf of the wife. Thus, no cogent basis is identified by the husband for the Court not to proceed to fix costs by reference to the detailed evidence in support of the wife’s application.
As was noted by the plurality in Prantage at [17] although the Explanatory Guide to the Rules is not formally part of the Rules, the definition of “indemnity basis” when applied to a costs order includes costs under a costs agreement for all costs incurred other than costs “that are unreasonable in amount or that have been incurred unreasonably”.
Whilst consistent with the approach of Einstein J in Idoport it is unnecessary to purport to undertake some quasi taxation or assessment of the claimed costs, some observations can be made with respect to the amount claimed by the wife.
At paragraph 15 of his affidavit filed on 22 March 2017 the wife’s lawyer refers to various invoices and schedules annexed purporting to itemise items within the invoices as referable to the appeal proceedings. However, with respect to the invoice dated 16 December 2016, it can be seen that the first three items specified, although of modest amounts, pre-date the date of filing of the husband’s notice of appeal. Those items cannot feasibly relate to the appeal proceedings.
Next, with respect to the invoice dated 20 March 2017, there appears to be an extraordinary number of units attributed to the preparation of a brief to the wife’s counsel for the appeal. By my reckoning some 57 “units” of six minutes or the equivalent of 5.7 hours in total was occupied in the task of preparing counsel’s brief. That appears excessive.
Further, and most significantly, part of the wife’s affidavit evidence and her counsel’s submissions in support of this application are directed to the contention that notice was given to the husband’s solicitors pursuant to s 12 of the Trust Accounts Act 1973 (Qld) (“Trust Accounts Act”) purporting to be a notice in accordance with subsection (4) of that section where ownership of moneys held in trust is in dispute. In my judgment that is a misconceived approach. There was and never could be a dispute about ownership of the $33,000 paid into the husband’s solicitors’ trust account representing the husband’s property entitlement pursuant to orders. That the wife or her solicitors might have thought it convenient to attempt to secure that sum, if and when the wife might in future obtain a costs order in her favour of the primary proceedings, misses the point that ownership of the funds could never have been in contest. To this extent it seems that correspondence (for which costs are claimed) as well as affidavit material and counsel’s submissions (for which costs are claimed), were costs not reasonably incurred or which ought not be payable by the husband even on an indemnity basis.
For the same reason, the alternative order sought by the wife that the husband’s solicitors in effect pay the ordered costs is entirely misconceived. I repeat, ownership of the moneys held in trust upon payment of the sum of $33,000 to which the husband was entitled under the property orders, could never be legitimately in dispute and the giving of notice under the Trust Accounts Act was misconceived. That it might have been convenient to the wife to attempt to secure any costs order she might obtain in her favour, in future, by reference to the funds in trust, does not alter the status of the funds in terms of their ownership. They were at all material times the husband’s funds and even if the wife had succeeded in obtaining such an order, it would be funds “owned” by the husband being paid in satisfaction of a costs order in the wife’s favour.
Given that at least part of the items claimed in making up the total sum claimed by the wife, including counsel’s fees for preparation of the submissions; correspondence and affidavit material; is attributable to this misconceived notion, there ought be some reduction of the claim advanced by the wife.
In my judgment, balancing the competing considerations referred to and having regard to the otherwise reasonable items claimed by the wife in conformity with the subject costs agreement, it is reasonable to reduce the wife’s claim by about 15 per cent and, in rounded off terms, to allow the amount of $20,250 by way of indemnity costs.
For these reasons I order that the husband pay to the wife within 45 days of the date of these orders the amount of $20,250 for the wife’s costs of and incidental to the appeal proceedings.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 26 April 2017.

Associate:

Date: 26 April 2017