Billingsly and Billingsly (No. 2)

[2017] FamCA 763

FAMILY COURT OF AUSTRALIA

BILLINGSLY & BILLINGSLY (NO. 2) [2017] FamCA 763

FAMILY LAW – COSTS

Family Law Act 1975 (Cth)

Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
Munday v Bowman (1997) FLC 92-784
Prantage & Prantage (2013) FLC 93-544

APPLICANT: Mr Billingsly

RESPONDENT: Ms Billingsly

FILE NUMBER: MLC 745 of 2014

DATE DELIVERED: 26 September 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By Way of Written Submissions

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT: David Joseph & Co Lawyers

SOLICITOR FOR THE RESPONDENT: Barry Nilsson Lawyers

Orders

1. That the husband pay the wife’s costs of $22,209.71.

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 Billingsly & Billingsly (No. 2) 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).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 745  of 2014

Mr Billingsly

Applicant

And

Ms Billingsly

Respondent

REASONS FOR COSTS JUDGMENT

1. By application in a written submission, Mr Billingsly (the wife) seeks an order for costs against Mr Billingsly (the husband). In his reply, the husband opposes the application and says each party should bear their own costs.

2. The application arises out of a hearing on 2 August 2017 after which formal orders and reasons for judgment were published on 8 August 2017. The relevant order was that the husband’s application based on s 79A of the Family Law Act 1975 (Cth) be summarily dismissed.

3. It is unnecessary for me to say anything about the nature of the husband’s application because in his solicitor’s written submission in reply, this was written:

   ·[5.4]           The (husband) submits that he accepts the judgment of His (sic) Honour Justice Cronin but believes he made reasonable attempts to settle the proceedings prior to the hearing on 2/8/17 and as evidenced in Annexure B.

4. Annexure B is a letter written by the husband’s then solicitor which set out a proposal relating to the husband’s obligations to pay the wife under their financial agreement and their child support agreement. At the end of the specific list of proposals, the letter said:

   These are hard decisions. At his current income levels (the husband’s) commitment exceeds his taxable income. The payment regime is not sustainable.

5. Of course, that may well have been correct but much would depend on what occurred when the original settlement had been concluded and what steps thereafter the husband took. I am not in a position to make specific findings about any of those but the list of significant liabilities of the husband included his (new) wife whom he married after the marriage to the wife ended and from whom he is now also separated. In that marriage, he borrowed significantly and secured that debt with his assets which have now been called up. Secondly, he altered his professional career pathway and that seems, on his own evidence, to have affected his income position.

6. Suffice to say that the written offer was open to the wife for 10 days and then withdrawn. Of that offer, the wife submitted that it included issues such as the parties’ child support agreement and school enrolment issues which were not part of the s 79A proceeding. Nor did the offer refer to the practical resolution of the formal proceedings that the husband had commenced. It was submitted that the wife “has obtained an outcome significantly more advantageous than the (husband’s) offer”. I am also not in a position to assess that fully and I do not consider that I need to here as the issue of offers of settlement is only one matter to which the costs submissions refer.

7. Each party acknowledged that the law relating to orders for costs is governed by s 117 of the Act. There must be some justifying circumstance for the court to depart from the statutory principle that each party bear their own costs.

8. The wife submitted that the husband:

   ·    did not adequately or properly identify his claim;

   ·    failed to make proper disclosure;

   ·    failed to comply with orders; and

   ·    acted in a way that prolonged the proceedings.

9. In my view, there is merit in each of those submissions.

10. It was further submitted by the wife that the husband’s “cavalier” conduct justified the exercise of discretion in favour of the wife.

11. Much of the husband’s endeavours to explain why all of this happened might be said to pass the responsibility to others. He submitted that:

    ·    He was assisted by family lawyers who he relied on to ensure his documents were prepared according to law;

    ·    He has cooperated with the respondent and her requests to the best of his ability;

    ·    He had a reasonable belief when attending a court hearing in June that he would be able to attend the hearing set for August;

    ·    The affidavit he filed was without legal advice but reasonably believed it was appropriate; and

    ·    He had not attended court on 2 August “because he was not able to afford representation and had been attempting to arrange a mediation with” the wife and “in the meantime” was required to work overseas and when the attempt to get the wife to go to mediation was unsuccessful, he instructed solicitors to seek an adjournment “naively (believing) that an adjournment would be granted”.

12. Each of these matters, and the matters in [8] above, requires consideration because of their relevance to s 117(2) of the Act.

13. I was critical of the inadequacy of the husband’s claim as pleaded and his approach to keeping the wife guessing. His assertion that he relied on his lawyers for that approach (if that is what is intended by the submission) is not a matter that I should take into account. He can take up any grievance with them because I should presume that he gave those instructions.

14. The disclosure issue is one to which no real response was made but it was clear that the wife was claiming that the husband was not comprehensively explaining his financial position. In any event, there is the perplexing and unresolvable issue of the arrangements he made with his then new wife.

15. The husband’s failure to comply with orders and his off-handed response that he thought his affidavit appropriate does not sit comfortably with his submission that he co-operated with the wife. Nor does his offer in writing. The wife would not have been able to be confident that it was a comprehensive conclusion of all matters.

16. Whilst mediation is always to be encouraged, the nature of the offer in writing would indicate that the wife was unlikely to accept mediation would assist. She already had the entitlement to the “fruits” of her judgment and the husband had effectively told her he had changed his employment and paid out his new wife so there was nothing for the wife to gain in pursuing that judgment. Mediation was unlikely to succeed.

17. His approach of saying that he thought he could attend the hearing is understandable except that the lateness with which he suggested an adjournment in the context of the lead-in time for the hearing must be seen in the context of an unlikely enthusiastic response from the wife where he was seeking an indulgence. For example, as will be seen in the reasons for judgment which he has accepted, he had (through his lawyers) declined to say what ground he was relying on and the wife was told she could wait until the registrar’s hearing. At that hearing, the wife’s concern had been borne out with orders. Subsequent to a further registrar’s hearing in which he was required to set out his evidence, he brushed off suggestions by the wife that his affidavit was inadequate.

18. Orders for costs are not intended as any form of punitive action for the way a litigant conducts a case but rather, to compensate a person who has had little or no choice other than to be involved. Here, the wife had obtained the “fruits” of her litigation and it was the husband who, having reorganised his financial affairs, sought an indulgence which I found had no merit. The law in relation to his application was not novel.

19. I find there is sufficient evidence here to justify a departure from the principle that each party pay their own costs. But that does not mean an order should automatically be made. The parties correctly identified that the court must consider the provisions in s 117(2A) of the Act.

20. I accept there is evidence now provided by the husband that his financial circumstances are difficult but impecuniosity alone is not a basis not to make an order. There are many years ahead of these parties in which they can again organise their affairs. It is certainly important to consider the affairs as set out but in my view, the circumstances here indicate that the husband sought assistance from his then partner and chose to arrange those affairs ahead of his primary obligation to the wife under the orders. I accept that his taxable income is as he presented it but there is not sufficient information to indicate what his true position is. For example, the gross earnings are reduced by expenses which seem to be undefined. How much of that (if any) relates to personal expenses or benefits, I do not know. I will therefore take into account that, at least at the moment, the husband has some financial difficulties.

21. As has been indicated by both parties, there are no legal aid considerations or conduct considerations here other than those to which I have referred.

22. It was vaguely argued that the wife had not been successful in respect of her application for security for costs. I am unsure how that could be seen as a sign of success having regard to the fact that it was her secondary position in circumstances where she was entirely successful on her most significant claim.

23. In some senses, the parties were to be commended for endeavouring to sort out things by an offer of settlement but as I have already said, it is hard to imagine why acceptance of that offer would have been anything other than a capitulation by the wife. In the circumstances, offers of settlement are of no assistance.

24. In my view, the two important factors here are that the husband was wholly unsuccessful and that he had persisted with an application that was flawed in what seems to be from the beginning.

25. The wife should have her costs.

26. The wife then sought costs on one of three bases. The first related to indemnity costs and she set out how that was calculated. An interesting submission was put by the husband’s practitioner that as the costs agreement was not filed with the submissions within time, somehow, the application was deficient. At best, that could only affect the quantum argument because the submission otherwise relates to an entitlement to an order for costs.

27. The absence of the costs agreement was later rectified by the solicitor for the wife but in any event, I do not intend to grant indemnity costs per se.

28. Counsel for the wife who drew the submission properly referred to all of the usual cases Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 and Munday v Bowman (1997) FLC 92-784 to which can be added Prantage & Prantage (2013) FLC 93-544. In Prantage, at [151]-[152] Murphy J who agreed with Thackray and Ryan JJ said:

    …the Act, the Rules read as a whole, and existing authority each evidence a clear intention that a significant disparity between the level of costs provided for in Schedule 3 and the fees payable by a client to their legal practitioner militates against an award of indemnity costs or, if the circumstances otherwise warrant such an order, operates as a brake on the quantum that might otherwise be awarded.

    Section 117(1) is important in that respect. Indemnity costs are confined to “an exceedingly rare situation” (Callinan J quoted by Thackray and Ryan JJ at [42]) in jurisdictions where “the usual rule” is that a successful party receives an order for costs (i.e. “costs follow the event”). They might, then, be seen to be more so in this jurisdiction where the “usual rule” is that “each party ... shall bear his or her own costs” (s 117(1)). The comments by this Court in Kohan that indemnity costs are “a very great departure” from the “normal standard” should be seen in that context. That, it should be observed, is not a fetter on this Court’s discretion to award costs or indemnity costs if justice so requires it (see Oshlack v Richmond River Council[1998] HCA 11; (1998) 193 CLR 72, at 134 (particularly subpar [3]), per Kirby J). Rather it recognises that an order for indemnity costs, has a particular context in this jurisdiction.

29. As Murphy J observed at [153], it is important to protect access to justice in family law matters by not exposing a litigant to the usual order for costs seen in other litigation. The husband here must have run a very close line to an order for indemnity costs having been warned twice that his application, and then his evidence, needed to be clear so that the wife could work out what his case was. Absent that clarity, the issue of access to justice from the wife’s perspective became problematic because she had to trot along behind him incurring significant legal fees without being able to tie him down with some certainty. As Murphy J said in Prantage:

    The trial Judge referred to r 1.08(1)(g), (h), (i) and (j) but other Rules also seek to underscore an intention to keep costs to a minimum. For example, r 1.05(1) makes it mandatory, in the usual course, to comply with the pre-action procedures. One of the Objects of those procedures is, in turn, to “limit costs” (para 1(5)(c) of Schedule 1 to the Rules). The Rules oblige the Court to apply them in a way that “promotes the saving of costs” (r 1.07(1)(d)).

30. Thus, where the husband declined to assist in setting out what his case was, he was doing anything but keeping costs to a minimum and as the costs incurred related to all of the proceedings, the wife had to participate to avoid being faced with a loss of the “fruits of the judgment” which she now has.

31. Sadly, I remain unconvinced that this was “an exceedingly rare event” and as such, it is hard to describe this as a case warranting indemnity costs. The wife chose to engage lawyers at a rate higher than the scale and as observed in Prantage, by Murphy J at [151], the court must not conflate the issues:

    of whether costs should be awarded on an indemnity basis with the issue of the quantum of indemnity costs if awarded.

32. Counsel for the wife submitted that if full indemnity costs were not awarded, there should be a hybrid order because otherwise, she would not have a return of all of the fees she incurred for such things as disbursements. In my view, there is sense in that. Counsel’s fees on scale were above the scale rate. The scale rate did not take into account the complexity of the issue here and the relevant amount of work undertaken including in conferences and settling documents. There was also the filing fee that should not have been necessary had the discussions and mediation about which the husband spoke, been offered earlier.

33. I find that the solicitors’ fees have been prepared on scale and I see no reason why the counsel and other disbursements should not be at the higher rate.

34. In my view, paragraph 3.8 of the wife’s submission is an appropriate and reasonable amount in all of the circumstances of this case and are justified. 

35. The husband is ordered to pay the wife’s costs of $22,209.71.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 26 September 2017.

Associate: 

Date:  26 September 2017