BLAKE& BLAKE (No2)

[2015] FCCA 3158

FEDERAL CIRCUIT COURT OF AUSTRALIA

BLAKE & BLAKE (No.2) [2015] FCCA 3158

Catchwords:
FAMILY LAW – Costs – application for costs – costs in family law proceedings – where applicant wholly successful – whether one party should pay costs as a result of inadmissible material in affidavit being struck out – party and party costs – indemnity costs – whether costs should be awarded on an indemnity basis – offer of settlement – refusal of offer of settlement – whether refusal of offer of settlement imprudent.

Legislation:

Family Law Act 1975 (Cth), s.117

Federal Circuit Court Rules 2001, r.15.29, Sch. 1, Part 1

Cases cited:
Blake & Blake [2015] FCCA 2710
Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248
In the Marriage of Kohan (1992) 16 Fam LR 245; (1993) FLC 92-340
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL [2005] FamCA 158; (2005) 33 Fam LR 109
Prantage & Prantage [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544

Applicant: MS BLAKE

Respondent: MR BLAKE

File Number: SYC 6614 of 2010

Judgment of: Judge Scarlett

Hearing date: Decided in Chambers

Date of Last Submission: 22 November 2015

Delivered at: Sydney

Delivered on: 30 November 2015

REPRESENTATION

Solicitor for the Applicant: Ms Leckie

Solicitors for the Applicant: Leckie Law

Solicitor for the Respondent: Ms Dalton

Solicitors for the Respondent: Carty & Cox

ORDERS

1. The Husband is to pay the Wife’s costs of this Application fixed in the amount of $6,000.00 within six (6) months of the date of this Order.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 6614 of 2010

MS BLAKE

Applicant

And

MR BLAKE

Respondent

REASONS FOR JUDGMENT

Application for Costs

1. This is an Application for costs arising out of an interim Application which was decided on 6^th October 2015 (Blake & Blake[1]). The Husband, who is the Respondent in the substantive proceeding, had brought an Application in a Case at the Coffs Harbour sittings of the Court in September 2015, seeking an order that he be released from an undertaking he gave to the Court on 14^th April this year not to withdraw any more than $2,400.00 each calendar month from a redraw until the matter resolved either by court order or by consent.

   [1] [2015] FCCA 2710

2. The Wife opposed the Application and sought that it should either be dismissed or that there should be an interim distribution to both parties and the Husband should be bound by an injunction in terms of his earlier undertaking. 

3. In her Response to an Application in a Case filed on 24^th September 2015 the Wife sought the following orders:

   1.  That the Husband’s application be dismissed.

   And or in the alternative

   2. That the sum of $8,000.00 be released to the Wife and $8,000.00 be released to the Husband from the redraw facility with such sums to be seen as an interim distribution to both parties.

   3. (Not pressed)

   4. That the Husband be restrained and an injunction issue restraining the Husband from withdrawing any more than $2,400.00 each calendar month until the matter resolves either by Court order or by consent. The Husband’s use of such funds to be considered at the final hearing of this matter.

   5. That the Husband pay the Wife’s costs of and incidental to these proceedings.

The Hearing

1. The hearing of the Application in a Case was conducted over the telephone in Sydney on 30^th September 2015. The decision was handed down on 6^th October.

2. The following Orders were made:

   UNTIL FURTHER ORDER

   (1)The Respondent husband is released from his undertaking given to the Court on 14 April 2015.

   (2)The parties are to do all things necessary to release from the (omitted) bank facility the sum of $8,000.00 to the Applicant wife and the sum of $8,000.00 to the Respondent husband within seven (7) days from the date of this Order, such sums to be by way of interim property distribution in respect of each party.

   (3)The sum of $8,000.00 payable to the Applicant wife referred to in Order (2) is to be paid into the Trust Account of her solicitors Leckie Law and the sum of $8,000.00 payable to the Respondent husband referred to in the said Order is to be paid into the Trust Account of his solicitors Carty & Cox.

   (4)The Respondent husband is restrained by injunction from withdrawing any further amounts from the redraw facility until 1 December 2015.

   (5)The matter is adjourned to the sittings of the Court at Coffs Harbour on 24 November 2015 for further mention at 11:30 am.

3. The Wife now seeks her costs. The Husband opposes an order for costs.

Submissions

1. The parties have made written submissions.

2. Ms Leckie, for the wife, referred the Court to the provisions of s.117 of the Family Law Act 1975 (Cth) and referred to the various paragraphs of s.117(2A) to which the Court shall have regard when considering whether to make an order for costs.

3. As to the parties’ financial circumstances, it was submitted that the husband controls the parties’ matrimonial asset pool. On the Husband’s version the asset pool totals $535,503.27 whilst the Wife contends that the asset pool totals $619,763.00. The principal asset is a property in Parramatta in the husband’s sole name valued at $565,000.00.

4. The Wife is unable to work and is on Centrelink benefits being a disability support pension of $500.00 per week. The Husband owns and operates a (omitted) business and has had the use of the parties’ assets, rental income and mortgage redraw facility since the parties separated on 6^th October 2009.

5. Neither party is legally aided.

6. The Wife’s submission is that the Husband’s Application in a Case was frivolous and without merit. He sought to be released from an injunction which he had already breached.

7. It was also contended that the Husband did not give the Wife adequate time to consider his application. The Wife also contends that the further mention of the proceedings on 30^th September could have been avoided if the Wife’s solicitor had agreed to the approach of allowing the Court to exercise its discretion as to the admissibility of evidence rather than formal submissions both oral and written being required.

8. It was further submitted that the proceeding arose from the Husband’s failure to comply with his undertaking to the Court which was noted on 14^th April 2015.

9. The Wife was wholly successful in her Application. The orders sought by the Wife in her Response are in accordance with the Orders ultimately made by the Court.

10. The Wife’s solicitor also advised that she had made a written offer of settlement (see Family Law Act 1975, s.117(2A)(f)). The letter is dated 6^th October 2015, the day the decision was handed down, and is a Calderbank letter, marked “Without prejudice save as to costs”. The letter says:

    I refer to the orders handed down in this matter today.

    I note that my client’s orders sought were wholly successful.

    I further note that at the first mention of this matter on 22/9/2015 when I was handed your client’s pleadings I proposed that orders were entered into by way of consent to the effect that the court has now ordered.

    Unfortunately your client did not agree with the proposal and hence my client was put to significant expense on responding to your client’s application.

    Attached is a copy of time recording in this matter, the items with a marking beside them relate to the interim application which was my client was caused to defend. Please note that it does not include the time for taking judgment. Total $7,507.50. In the interest of resolving the costs dispute my client will accept $5,000.00 in costs.

    My client would like to avoid making an application for costs and expending further unnecessary costs for that application and hence a further application for costs against your client.

    I would appreciate your client’s reply to the costs offer before close of business Friday 9/10/2015.

11. It appears that this offer was not accepted.

12. The Wife submits that she expended approximately $7,738.50 on litigating a defence to the husband’s Application in a Case and a further $1,347.50 on litigating the costs application.

13. In summary, it is submitted that:

    It is the Wife’s respectful opinion that if the Husband complied with the court’s orders/undertaking no proceedings would have been required.

    The Wife further states that if the Husband acted reasonably and accepted her offer to settle her pleadings would not have been required to be filed,, the subsequent court mentions and written submissions would not have been necessary and hence the costs of litigation[2] the issue would not have been incurred by her.

    The Wife seeks on an indemnity basis her costs of and incidental to defending the application in a case and the costs of and incidental (to) the costs submissions.[3]

    [2] Litigating?

    [3] Wife’s submissions 17.11.2015 page 4

14. The Husband’s solicitor, Ms Dalton, submitted that the Court should make an order for costs in favour of her client under the provisions of Rule 15.29, which empowers the Court or a Registrar to order that material may be struck out of an affidavit if the material:

    (a)is inadmissible, unnecessary, irrelevant, prolix, scandalous or argumentative;

15. Sub-rule (2) provides that any costs caused by the material struck out must be paid by the party who filed the affidavit.

16. It was further submitted that:

    (a)Both parties are living in difficult financial circumstances where they each have virtually no income other than Centrelink benefits;

    (b)Neither party is legally aided;

    (c)The Husband has not had the capacity to pay legal fees since 27^th August 2015 and currently owes his solicitors $11,693.16;

    (d)The Husband gave an undertaking in circumstances where he did not have adequate access to legal advice;

    (e)He applied to be released from this undertaking because it had become unsustainable;

    (f)The parties spent a significant amount of the Court’s time dealing with objectionable material;

    (g)The proceedings were commenced by the Husband because he recognised that “he had done the wrong thing and wanted to rectify the situation”;

    (h)The Wife was successful in the proceedings;

    (i)The parties spent time during the week negotiating to settle the substantive proceedings, but to no avail; and

    (j)The Husband has no income and no immediately realisable assets from which he can meet any order to pay the Wife’s costs.

The law to be applied

1. The question of costs in proceedings under the Family Law Act is governed by the provisions of s.117 of the Act. Subsection 117(1) contains a general statement that, subject to certain other considerations, each party to proceedings under the Act should bear his or her own costs. However, 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) provides that in considering what order (if any) should be made under subsection (2), the Court shall have regard to the matters set out in paragraphs (a) to (g) of the subsection.

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 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 1 to the Rules.

4. 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] FCA 536; (1993) 46 FCR 225; 118 ALR 248

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

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

Consideration

1. I am not persuaded by the Husband’s submission that costs should be awarded against the Wife for wasting time with irrelevant affidavit evidence under Rule 15.29. In the original decision I was critical of both parties, saying at [4]:

   The matter has been complicated by a considerable amount of evidence that the parties sought to lead in the proceedings about their daughter, who is the subject of Orders under the Children and Young Persons (Care and Protection ) Act 1998 (NSW). At the hearing of this Application in a Case I held that most of the evidence sought to be led was inadmissible because it was irrelevant.

2. I have considered the parties’ submissions and the matters to which the Court is required to have regard under s.117(2A) in deciding whether there are circumstances that justify the Court in making such order for costs as the Court would consider just.

3. It is unnecessary to specify the various paragraphs (a) to (g) of s.117(2A), as they have already been covered in the parties’ submissions, except to say that I have had regard to all of them, where relevant. It is settled law that there is nothing to prevent any one factor in s.117(2A) being the sole foundation for an order for costs (see PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL[7]).

   [7] [2005] FamCA 158; (2005) 33 Fam LR 109

4. The parties each appear to be in financially strained circumstances, and it would appear to me to be in their best interests to take steps to resolve the substantive proceedings without expending more of their resources on legal costs.

5. Neither party is in receipt of a grant of legal aid.

6. The matters that appear to me to be particularly relevant are:

   a)the fact that the Husband had brought his application because he had breached his undertaking given to the Court in April;

   b)the almost complete failure of the Husband’s application and the mother’s success in obtaining virtually all of the orders that she sought; and

   c)the fact that the Wife made offers of settlement prior to filing her Response to the Husband’s Application in a Case and immediately after the decision was handed down in respect of costs, both of which offers were not accepted by the husband.

7. This matter should not have gone nearly as far as it did. It should have been resolved in Coffs Harbour in the few days after the Application was filed on 22^nd September. It is regrettable that the matter had to be taken back to Sydney and a hearing had to be conducted over the telephone.

8. All of these factors persuade me that the Wife should be entitled to an order that the Husband pay her costs of his unsuccessful Application.

9. Further, it appears to me that the refusal by the Husband to accept the Wife’s offers of settlement was, to say the least, imprudent. An imprudent refusal of an offer of compromise was cited by Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd[8] at [24] as a circumstance that may warrant the Court in exercising the discretion to award costs on a solicitor-client basis rather than on the usual party and party basis.

   [8] supra

10. It is an old adage in litigation that parties should aim to win their cases or settle them, as “nobody goes to court to lose”.

11. The Wife submits that she has expended approximately $7,738.50 on litigating a (successful) defence to the Husband’s Application in a Case and a further approximate amount of $1,347.50 on litigating the costs application. This amounts to a total of $9,086.00.

12. If the Court were to allow costs on a party and party basis, according to the scale in Part 1 of Schedule 1 to the Rules, the Wife would be entitled to the lump sum of $1,706.00 in Item 3 plus the daily hearing fee in Item 13 for 22^nd September (short mention), 24^th September (short mention), 25^th September (short mention), 30^th September (half day) and 6^th October (delivery of judgment), a total of $3,842.00.

13. As for the costs application, the only documents filed were submissions and no further hearing time has been required.

14. Whilst I am of the view that the Court should allow a substantially greater amount than the party and party figure for the Wife’s successful defence of the Husband’s ill-starred Application in a Case, I am not prepared to go as far as $7,738.50, I am satisfied that a figure of $5,000.00 would be appropriate. I will allow a further $1,000.00 for the preparation of the costs submissions and attending on the telephone to take the judgment.  

15. Thus, I propose to order that the Husband should pay the Wife’s costs fixed in the total sum of $6,000.00.

16. I note the fact that the Husband appears to be under some straitened financial circumstances and I will allow six months to pay.

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Associate: 

Date: 30 November 2015