Benard and Eames & Anor - [2020] FamCAFC 47

FAMILY COURT OF AUSTRALIA

BENARD & EAMES AND ANOR

[2020] FamCAFC 47

FAMILY LAW – APPEAL – COSTS – Where an order for indemnity costs was made against the second respondent’s solicitor personally – Where the second respondent brought child support proceedings against the first respondent – Where the second respondent’s solicitor appeals from the making of the personal costs order – Where the appellant sought to argue there were competing authorities to justify the application being brought – Where a subsequent Full Court held there were no such competing authorities and the argument of the appellant was untenable and the application was an abuse of process – Where the appellant had brought similar applications on behalf of other parties with no success – Where the evidence revealed that the application was brought on the advice of the appellant in circumstances where the appellant would have well known that the application had no chance of success, and should have advised the second respondent accordingly – Where the appellant continued to run the case and did not withdraw – Appeal dismissed.

FAMILY LAW – APPEAL – COSTS – Where indemnity costs were sought against the appellant – Where the appellant ought to have known the appeal had no chance of success – Where it is not accepted the appellant had an arguable case – Costs ordered in a fixed sum on an indemnity basis.

Child Support (Assessment) Act 1989 (Cth) s 123
Family Law Act 1975 (Cth) ss 66M, 66N
Federal Circuit Court of Australia Act 1999 (Cth) s 17A

Carnell & Carnell (2006) 36 Fam LR 168; [2006] FMCAfam 476
Eames & Eames [2018] FCCA 315
Eames & Eames (2018) FLC 93-866; [2018] FamCAFC 204
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Levick v Deputy Commissioner of Taxation (2000) 102 FCR 155; [2000] FCA 674
Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178
Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66
Tilman & Baxter [2016] FamCA 141

APPELLANT:

Mr Benard

FIRST RESPONDENT:

Ms Eames

SECOND RESPONDENT:

Mr Eames

FILE NUMBER:

MLC

4509

2013

APPEAL NUMBER:

SOA

2019

DATE DELIVERED:

5 March 2020

PLACE DELIVERED:

Adelaide

PLACE HEARD:

Melbourne

JUDGMENT OF:

Alstergren CJ, Strickland & Kent JJ

HEARING DATE:

17 July 2019

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

19 December 2018

LOWER COURT MNC:

[2018] FCCA 3908

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Devries

SOLICITOR FOR THE APPELLANT:

Manby and Scott

COUNSEL FOR THE FIRST RESPONDENT:

Mr Glezakos

SOLICITOR FOR THE FIRST

RESPONDENT:

Northcote Lawyers

SECOND RESPONDENT:

In person

Orders

The appellant have leave to rely on the Amended Summary of Argument and List of Authorities filed on 28 June 2019.
The appeal be dismissed.
The appellant pay the costs of the first respondent of and incidental to the appeal fixed in the sum of $18,000.

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 Benard & Eames and Anor 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 FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE

Appeal Number: SOA 4 of 2019
File Number: MLC 4509 of 2013

Mr Benard

Appellant

And

Ms Eames

First Respondent

And

Mr Eames

Second Respondent

REASONS FOR JUDGMENT

Introduction

On 11 January 2019, Mr Benard (“the appellant”) filed a Notice of Appeal against a costs order made by a Federal Circuit Court Judge on 19 December 2018.
Ms Eames (“the first respondent”) opposes the appeal. Mr Eames (“the second respondent”) took no active part in the appeal, but did appear at the hearing, because of the prospect of him having to pay the costs order the subject of the appeal, if the appeal was allowed.
The order appealed required that the costs of the first respondent in relation to the child support proceedings initiated by the second respondent, be paid by the appellant, the second respondent’s solicitor, on an indemnity basis.

Brief Background

The first and second respondents were married in 2000 and separated in early 2013.
There are two children of the marriage, B and C, who were born in 2001 and 2004 respectively (“the children”).
Final parenting orders were made by consent on 13 October 2016. They provide for the first respondent to have sole parental responsibility for the children, that they live with her and spend time with the second respondent.
In 2015, the second respondent re-partnered. His partner has two children, K and L. Those children live primarily with the second respondent and his partner.
The second respondent filed an Initiating Application on 6 September 2017, seeking two substantive orders, namely:
1.From the date of these orders, in relation to [the children] any monies paid by the [second respondent] to third parties for purposes directly related the children’s transport, medical, education and living costs (up to $50 per week) be credited at an appropriate percentage against any child support otherwise payable by the [second respondent] to the [first respondent] regarding the said children.
2.The [second respondent] be declared to have had a lawful duty to maintain K and L [the step children who were aged 12 and eight respectively at the time of the hearing] from 1 July 2015 onwards and that duty be duly quantified.
(As per the original)
The first order was sought pursuant to s 123 of the Child Support (Assessment) Act1989 (Cth) (“the Assessment Act”) and the second under s 66M of the Family Law Act 1975 (Cth) (“the Act”).
On 13 February 2018, the primary judge delivered her reasons for judgment (Eames & Eames [2018] FCCA 315), and made an order summarily dismissing the second respondent’s Initiating Application.
Her Honour found that the second respondent did not have any reasonable prospects of success of obtaining either order, and dismissed the application under s 17A of the Federal Circuit Court of Australia Act1999 (Cth).
At [71] to [78], her Honour noted her concerns with respect to the conduct of the appellant in the proceedings. In summary, in those paragraphs her Honour points to the “striking similarities” between the application in this case, and applications filed by the appellant in previous cases, where those applications were either summarily dismissed or unsuccessful. As a result, her Honour adjourned the question of who was to pay the first respondent’s costs to enable the appellant to obtain appropriate advice.
On 5 March 2018, the second respondent filed a Notice of Appeal against the order summarily dismissing his application.
With the consent of all the parties, the question of the first respondent’s costs in relation to the application, was further adjourned until the determination of the second respondent’s appeal.
On 1 November 2018, the Full Court dismissed the appeal. The Court was of the view that the appeal was totally without merit, and ordered that the second respondent pay the first respondent’s costs on an indemnity basis (see Eames & Eames (2018) FLC 93-866 at [97] – [113]).
Following the orders of the Full Court, the matter was then listed before the primary judge to determine the question of the first respondent’s costs of the hearing before her Honour.

The Appeal

There is one ground of appeal asserted by the appellant, namely:
The trial Judge erred in the exercise of her discretion in finding the circumstances of this case warranted an indemnity costs order being made personally against [the second respondent’s] solicitor.
At the hearing of the appeal, the appellant explained that he was not challenging that an order for costs was made, nor that it was made on an indemnity basis, but he was challenging that he was required to pay those costs.
Her Honour, at [43] and [44], set out the two bases for requiring the appellant to pay the costs, namely:
43.Firstly, as an experienced solicitor practising almost solely in child support matters, it should have been apparent to [the appellant] that there was no prospect of success in the application being brought by the [second respondent], and he should have advised the [second respondent] accordingly and used his position to dissuade the commencement of this litigation.
44.The second major issue of concern was the discovery by me of previous cases in which applications of a similar type had been brought by [the appellant] on behalf of clients where those applications had also been unsuccessful, either resulting in summary dismissal or being found to be unsuccessful after the hearing of the evidence.
As to the first basis, the submission of the appellant is that at the time of the proceedings being filed there were two distinct lines of authority with respect to ss 66M and 66N of the Act, namely Tilman & Baxter [2016] FamCA 141 (“Tillman”), and Carnell & Carnell (2006) 36 Fam LR 168 (“Carnell”).
In short, Tilman, a decision of a judge of the Family Court of Australia said that the application filed here could not be brought, and Carnell, a decision of a Federal Magistrate, said the opposite. The argument of the appellant was that he was able to rely on the Carnell line of authority to bring the application, despite the Tilman line of authority.
Fortuitously, this argument of the appellant, namely that it was open for an application to be made based on the Carnell line of authority, cannot be maintained in light of the decision of the Full Court in dismissing the appeal taken by the second respondent against the order made by the primary judge.
Their Honours said this at [24]:
As we will explain, we do not agree that there are competing authorities on the point. The position has been settled by a number of first instance decisions of the Family Court of Australia. There are two decisions of judges of the then Federal Magistrates Court of Australia to the contrary.
Then the Full Court said this when recording the principles as to what decisions should be followed:
28.This does not mean that the decisions of the Family Court should not have been followed. Judicial comity required that those decisions be followed unless a judge was convinced that they were “plainly wrong”. …
Next, their Honours referred to what was said by the Federal Magistrate, as his Honour then was, in Carnell, as to the decisions of the Family Court of Australia, including Tilman:
43.In Carnell, after considering all of the authorities of the Family Court which we have discussed above, Jarrett FM said:
49.None of the abovementioned decisions is binding upon me, although they are all of considerable persuasive value. There are two decisions of this Court that appear at odds with each other.
44.We consider that this paragraph does not afford the weight that judicial comity obliged his Honour to give to the decisions of the judges of the Family Court.
45.The appellant’s submission that there was “a divergence of opinion on a point of law between two trial level judicial officers” misstates the position. The decisions were not of equal status. The Family Court is constituted as a superior court unlike either the Federal Magistrates Court or the Federal Circuit Court (see s 21(2) of the Family Law Act; compare with s 8(3) of the FCC Act and the Federal Magistrates Act 1999 (Cth)).
Their Honours then concluded as follows:
52.Given the abundant weight of authority and the obligation of a judge of the Federal Circuit Court of Australia to follow a decision of a single judge of the Family Court of Australia unless convinced that it is plainly wrong, we are of the view that the primary judge did not err in proceeding to find that the state of authority was such that there was no reasonable prospect of this aspect of the matter succeeding.
Having considered for themselves what was the proper operation of s 66M of the Act, and confirming that an application under that section can only be brought where there is an order for the payment of maintenance for the

step-children, relevant to this appeal, their Honours said this:
76.Absent such an order, the seeking of an order under s 66M is nothing more than an opportunistic attempt to reduce the amount of child support payable without a matching obligation to pay maintenance for the step-children.
77.It follows then that the seeking of a mere order under s 66M for the purpose of reducing child support payable to another person is a purpose that is collateral to the legislation and ought not be permitted.
Then finally, and again relevant to this appeal, when considering an application by the first respondent for indemnity costs to be paid to her by the second respondent, their Honours said this:
104.The Family Court authorities as to the construction of s 66M of the Family Law Act to which we have referred were well known to the [second respondent] or, at the least, his legal advisors, because they were discussed at length in the two Federal Magistrates Court decisions relied upon by him. Basic concepts of precedent and judicial comity thus applied to put a fundamental difficulty in the path of the [second respondent].
105.The [second respondent] did not directly challenge these authorities in this appeal by directly asserting that they had been wrongly decided. His point was more limited, namely that there was a sufficient conflict between these authorities and those of the Federal Magistrates Court to defeat the claim for summary judgment. As these reasons make plain, that position was untenable.
(Emphasis added)
Thus, her Honour was quite correct in finding at [43] that the appellant should have known that the application had no chance of success, and should have advised the second respondent accordingly. As a result, this aspect of the appeal has no merit.
In oral argument at the hearing of the appeal before this Court, the appellant focused on the submission that because the second respondent declined to waive his legal privilege when asked that by the primary judge, her Honour could not know what the instructions of the second respondent were, and more particularly, what advice the appellant gave to his client. Thus, he says it was not open to her Honour to require the costs to be paid by the solicitor, rather than the client.
Her Honour recognised that this rendered “[t]he determination of this issue … more complex” (at [40]), and that the appellant’s “capacity to respond fully to this aspect of the application is severely curtailed by the reality he is bound by his client’s legal privilege, and he was therefore limited in saying to the Court that at all times he was acting pursuant to his client’s instructions” (at [45]).
However, the second respondent had filed an affidavit on 29 May 2017 in support of his application, and which affidavit was prepared by the appellant, and at paragraph 19 the second respondent deposed that:
…Never once throughout my dealings with the Agency was I advised that I could make a “claim” for the support I provided to [my partner’s] children. The first time this was brought to my attention was in mid 2017 when my lawyers discussed this with me. I felt completely duped that the Agency had not specifically brought this matter to my attention. In any event, my lawyers advised me that I did not need to let this issue rest. I was advised that I could still seek permission from the court for the Agency to go back in time and thoroughly investigate my proper obligations to pay child support from
mid-2015 and then onwards based upon the support I have provided to [my partner’s] children. I note I have brought these proceedings as quickly as I could thereafter.
Further, in an exchange with her Honour, the second respondent said this:
[THE SECOND RESPONDENT]: Look. Your Honour, I – well, I did get advice, but I wouldn’t say it was entirely independent. If you would permit me to address you - - -
HER HONOUR: I will briefly, but again – have you understood anything that we’ve been discussing?
[THE SECOND RESPONDENT]: Look. Your Honour, I went to [the appellant] to seek advice - - -
HER HONOUR: Again I - - -
[THE SECOND RESPONDENT]: I followed the plan. I was told that the appeal would be a good appeal. …
(Transcript 19 December 2018, p.12 lines 36–41)
Thus, arguably the second respondent can be said to have waived the legal professional privilege that applied between he and his solicitor (Mann v Carnell (1999) 201 CLR 1). However, that argument was not taken up in the court below.
In any event, it is clear that the application was brought on the advice of the appellant in circumstances where the appellant would have well known that the application had no chance of success. Indeed, that was not only a finding by her Honour, but was also a finding by the Full Court as referred to in the reasons of the Full Court set out in [27] above. Importantly, the Full Court also found that the application was brought for a collateral purpose and was, thus, an abuse of process.
Further, the appellant continued to run the case on behalf of the second respondent, and he did not withdraw. The appellant continued to argue a position that, to use the words of the Full Court, was “untenable”, and was an abuse of process. That was plainly the circumstance that permitted her Honour to order that the appellant pay the costs of the first respondent. As was said by the Full Court of the Federal Court of Australia in Levick v Deputy Commissioner of Taxation (2000) 102 FCR 155, at [44]:
Having said that, it is equally important to uphold the right of a court to order a solicitor to pay costs wasted by the solicitor’s unreasonable conduct of a case. What constitutes unreasonable conduct must depend upon the circumstances of a case; no comprehensive definition is possible. In the context of instituting or maintaining a proceeding or defence, we agree with Goldberg J that unreasonable conduct must be more than acting on behalf of a client who has little or no prospect of success. There must be something akin to abuse of process; that is, using the proceeding for an ulterior purpose or without any, or any proper, consideration of the prospects of success.
This, coupled with the second basis relied on by her Honour to make the order, namely where previous applications filed by the appellant of a similar nature to the application filed below had been wholly unsuccessful, plainly justified the order her Honour made (see [49]).
Accordingly, we find no merit in the ground of appeal and the appeal must be dismissed.

Costs

At the conclusion of the hearing, we received submissions on the question of costs depending on the result of the appeal.
In the event the appeal was dismissed, the first respondent sought an order for costs on an indemnity basis. The amount ultimately sought was $18,000, and by way of comparison, we were told that costs on a party/party basis would be $16,000.
The appellant did not oppose an order for costs calculated on a party/party basis, but he did oppose paying costs calculated on an indemnity basis.
As has been established by the authorities, indemnity costs can only be awarded if there are exceptional circumstances (Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478).
The exceptional circumstances relied on by the first respondent here are that the appeal was brought in circumstances where the appellant properly advised ought to have known that it had no chance of success. As to that, the appellant submits that he had an arguable case based on him not being able to explain to her Honour his position vis à vis the continuation of the application.

We have found that, in effect, her Honour did not need to know what that position was, given for example, the contents of the affidavit filed by the second respondent, and the concession made during the hearing. What was in the affidavit was well-known to the appellant because he prepared it, settled it and took the second respondent’s signature. Further, during the hearing there was no alteration to the case as commenced, and the appellant did not withdraw. Thus, we do not accept that the appellant had an arguable case, and we consider that the circumstances are such as to warrant costs being calculated on an indemnity basis.
The appellant did seek to challenge the amount of the costs sought, and in response to the invitation by this Court to identify the items that he challenged, two items were referred to, and as a result the first respondent reduced the amount of the costs that she sought to $18,000.
Although there was still no agreement about the amount of the costs sought, the policy of this Court is to attempt to fix costs in order to save the parties (and the court) the time, trouble and expense of a taxation or an assessment. Thus, given there were no other items that were challenged by the appellant, we are content to fix the costs in the amount sought by the first respondent.

I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Alstergren CJ, Strickland and Kent JJ), delivered on 5 March 2020.

Associate:

Date: 5 March 2020