BLANCHE & EDGER
[2013] FamCA 829
•29 October 2013
FAMILY COURT OF AUSTRALIA
| BLANCHE & EDGER | [2013] FamCA 829 |
| FAMILY LAW – COSTS – application made by applicant seeking the respondent pay her legal costs associated with enforcement proceedings on an indemnity basis – whether costs should be ordered – on what basis should costs be ordered. |
| Colgate-Palmolive Company v Cussons Pty Limited (1993) 118 ALR 248 Kohan and Kohan (1993) FLC 92-340 | |
| Family Law Act 1975 (Cth): s 117 Family Law Rules 2004 (Cth): rr 19.08, 19.18, 19.19, 19.33, 19.34, Schedule 3 | |
| APPLICANT: | Ms Blanche |
| RESPONDENT: | Mr Edger |
| FILE NUMBER: | MLC | 3559 | of | 2010 |
| DATE DELIVERED: | 29 October 2013 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Thornton J |
| HEARING DATE: | 3 October 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Mimmo |
| SOLICITOR FOR THE APPLICANT: | Plaza Legal |
| THE RESPONDENT: | In person |
Orders
The father pay the mother’s costs on a party/party basis fixed in the sum of $5,206.00.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Blanche & Edger has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 3559 of 2010
| Ms Blanche |
Applicant
And
| Mr Edger |
Respondent
REASONS FOR JUDGMENT
Introduction
The mother in her Application in a Case sought to enforce an earlier indemnity costs order against the father. She also sought an order that the father pay her costs of that application on an indemnity basis.
This costs application was opposed by the father.
The father in his Application in a Case sought to pay the earlier costs by instalments.
I heard the applications on the papers and submissions from the solicitor for the mother, and the father in person. The mother relied upon her own affidavit sworn 29 May 2013 and the affidavit of her solicitor sworn 9 July 2013. The father relied upon his affidavits sworn 2 and 23 September 2013.
Both parties were provided by the Court with a copy of the decision in Prantage & Prantage [2013] FamCAFC 105 (“Prantage”). The Full Court of the Family Court in that case, in part, dealt with s 117AB of the Family Law Act1975 (Cth) (“the Act”). Although this section was repealed, the principles outlined in that case remain a useful guide.
Background
On 30 January 2013, Macmillan J made an order for indemnity costs in the sum of $7,936 to be paid by the father by 4.00 pm on 30 April 2013. The father was present and represented by counsel on that date.
The amount remained unpaid and the mother’s Application in a Case filed 31 May 2013 sought that the father pay the costs of $7,936 plus interest from 30 April 2013 within seven days, together with the costs of that application.
On 5 September 2013, her Honour Macmillan J ordered that the mother serve a sealed copy of her Application in a Case and affidavit filed 31 May 2013 upon the father’s wife, Ms Edger, with a letter setting out in detail the orders sought by the mother including an order for the sale of any property in which Ms Edger had an interest. The mother’s Application in a Case filed 31 May 2013 and the father’s Response to the mother’s Application in a Case filed 2 September 2013 were otherwise adjourned to the Judicial Duty List on 3 October 2013 and the parties’ costs were reserved.
On 25 September 2013, the father filed his Application in a Case seeking payment by instalments of the costs which had been ordered in the sum of $7,936. The father also sought that the mother pay the costs of his application and that the mother’s enforcement application be dismissed with no order as to costs.
The matter was before me in the Judicial Duty List on 3 October 2013. On that date I made orders by consent that the father pay the costs, which were ordered by Macmillan J, by instalments. The father withdrew his application for costs and his Response to the mother’s Application in a Case was dismissed.
The mother’s Application in a Case was adjourned to the Judicial Duty List on 18 December 2013 on the basis that the solicitor for the mother would notify the Court when the last instalment payment had been made by the father so that the application would then be dismissed without the need for further appearances or costs being incurred.
The Issues
There are two questions to be determined:
a)Firstly, whether any order should be made against the father for the payment of the costs incurred in the preparation and conduct of the enforcement proceedings for the original costs order; and
b)Secondly, if costs were ordered, whether those costs should be ordered on an indemnity basis.
The Relevant Law
The general rule is that each party should bear his or her own costs of proceedings under the Act. However, the Court is empowered to make an order for costs if it is of the opinion that there are circumstances which would justify such an order.[1]
[1] Section 117 of the Family Law Act 1975 (Cth).
Section 117(2A) of the Act mandates the factors to which the Court should have regard in considering whether to make an order for costs. They are:
(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, admissions 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 any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer 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.
Rule 19.08(3) of the Family Law Rules 2004 (Cth) (“the Rules”) provides that a party applying for an order for costs on an indemnity basis must inform the Court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.
The meaning of the expression “indemnity basis” was defined by Thackray and Ryan JJ in Prantage as:
an entitlement to costs, including costs under a costs agreement, for all costs incurred, other than costs that are unreasonable in amount or that have been incurred unreasonably.[2]
[2] Prantage & Prantage [2013] FamCAFC 105 at paragraph 17.
Rule 19.18(1) of the Rules provides that the court may make an order for costs on a number of different bases which include:
·a specific amount;
·as assessed on a particular basis (e.g. lawyer and client, party/party or indemnity);
·to be calculated in accordance with the method stated in the order; or
·for part of the case, or part of an amount, assessed in accordance with Schedule 3 of the Rules.
Rule 19.18(3) of the Rules provides that in making an order under this rule, the court may consider:
(a)the importance, complexity or difficulty of the issues;
(b)the reasonableness of each parties 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.
Schedule 3 of the Rules lists the costs that can be charged for specified work.
The Rules also provide for a procedure for the costs payable by a party to another party to be assessed by a Registrar who may determine whether costs are reasonably incurred, are of a reasonable amount and whether they are proportionate to the matters in issue.[3]
[3] Rules 19.33 and 19.34 of the Family Law Rules 2004 (Cth).
In Prantage, the Full Court referred to the settled law relating to indemnity costs and the Full Court decision of Kohan and Kohan (1993) FLC 92-340. The Court emphasised the well accepted proposition that indemnity costs orders are “a very great departure from the normal standard”.[4]
[4] Prantage & Prantage [2013] FamCAFC 105 at paragraph 85.
Thackray and Ryan JJ concluded, after some research, that the “usual rule” that costs are payable on a party/party basis applied in the Federal Court, the Family Court and the Supreme Courts of New South Wales, Victoria, Queensland, South Australia, Tasmania and Western Australia.
At paragraph 94 of Prantage, Thackray and Ryan JJ stated:
We recognise that the Rules now expressly refer to orders for costs on an indemnity basis. We recognise also that the rules in this Court are not precisely the same as those in other courts; however, there is nothing in the Rules which indicates that the fundamental principle applied in other jurisdictions should not also be applied in this jurisdiction. Indeed rule 19.18 makes clear that the “default” position is that costs are awarded on a party/party basis.
Conclusion
In considering an order for costs, I have taken into account the factors under
s 117(2A) of the Act.
The financial circumstances of each of the parties
The father has remarried and lives with his wife and their two children aged eight and four years.
The mother has re-partnered and lives with her partner, Mr E, and their three children aged seven, six and two years.
C, the 13 year old child of the relationship of the parties, lives with the mother.
It is the father’s evidence that he has been unemployed since 18 December 2012. The father states that after taking time off over Christmas, he started applying for jobs but has since been diagnosed with and treated for depression. He deposes that he is now in receipt of unemployment benefits and has the care of the two children of his new relationship. He states that he takes the children to kindergarten and school and spends about 40 per cent of the time with the child, C. He deposes that he is supported by his wife but does not provide any further information about his income.
The mother disputes the father’s evidence and alleges that he operates a human resources business with his wife; from which she estimates they earn $250,000 per annum. She also relies upon the fact that the father spent some seven days holidaying in Country B in February this year. It is not clear whether this holiday included C.
The father is listed by the Australian Securities and Investments Commission (“ASIC”) as a shareholder of D Pty Ltd. His wife is both a director and company secretary. The father and his wife are the joint proprietors of the property in which they now live. It is the father’s evidence that the property is subject to a mortgage.
It is not disputed by the father that he has not paid any child support for C for most of this year.
The mother’s evidence is that she is not in receipt of any income and is supported by her now husband. The mother is in the final phase of her treatment for breast cancer.
It is the father’s case that the mother has undeclared income of approximately $35,000 from working at home as a beauty therapist.
The father submits that he cannot afford to pay the mother’s costs and that he has had to seek assistance from his family to pay the instalments of the earlier costs he was ordered to pay. The father also submits that he cannot afford to pay the mother’s costs of this application because he has not yet paid his own legal costs for the earlier proceedings.
Although the father asserts that he is in receipt of unemployment benefits, I am not in a position to make any finding as to whether he is, is not or could not be working. There is otherwise only limited evidence as to the parties’ financial positions. However I am satisfied that without an order in the mother’s favour, she would be at a significant financial disadvantage, in circumstances where the father has limited his evidence of his unemployment to his own assertions.
Legal aid
Neither party is in receipt of legal aid.
The conduct of the parties in relation to the proceedings
The mother relied upon the various letters and emails to the father with respect to payment of the outstanding order for costs and alerting the father to the possibility of proceedings for enforcement. It is her case that notwithstanding the father sent a number of emails to her solicitor advising that he was unemployed and that he was prepared to pay the outstanding costs by instalments, it was not until after the hearing of the matter on 5 September 2013 that he actually made any offer of payment by instalments.
The father submits that he had made several attempts to contact the solicitors for the mother and relied upon the annexures to his affidavit wherein he repeatedly advised the solicitor for the mother that he was unemployed and could not make any payments but was prepared to enter into an instalment arrangement.
The father has not made an offer to pay the costs ordered by the Court until after the enforcement proceeding on 5 September 2013 before Macmillan J.
I am satisfied that the father was aware that the mother would have been incurring further costs in order to enforce the order made on her favour.
On the basis of the letter from the solicitors for the mother annexed to the father’s affidavit, I am satisfied that he was aware of the escalation of the legal costs which were explained.
I am satisfied that the solicitors for the mother have reasonably incurred expenses in preparing, investigating and attending the hearing of the application for enforcement of the costs order against the father. The investigations were justified having regard to the failure of the father to provide any evidence of his assertions that he was unemployed.
I am satisfied on the basis of the affidavit of the mother’s solicitor sworn 9 July 2013 that the father has added to the costs because of the six attendances at his home by the process server before service could be effected.
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
I am satisfied that the mother’s application for payment of the outstanding costs was necessitated by the father’s failure to comply with the costs order made by Macmillan J on 30 January 2013.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The mother has agreed to the payment of the order for costs by instalments in accordance with the father’s application so she cannot be said to have been wholly unsuccessful. The father, for his part, has withdrawn his application that the mother pay his costs and cannot be said to have been wholly unsuccessful.
Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer
The father has not made any offer in writing to settle the proceedings other than to suggest originally that he could pay the costs which had been ordered in January 2013 by instalments if he became employed. The father’s application to pay the costs by instalments was not made until 25 September 2013. No offer was made to pay the legal costs of the mother in enforcing payment of the costs order.
I am satisfied that there are circumstances in this case which justify an order for payment of the mother’s costs by the father. The mother is entitled to the benefit of the order made in her favour. The order for costs was made on 30 January 2013. The father had until 30 April 2013 to pay those costs. He did not do so, nor did he make any real offer to pay the costs in full or by instalments until well after the mother filed her Application in a Case. The mother should not be financially disadvantaged by the father’s failure to comply with the order for the payment of costs and in my view the father should be required to pay the costs which arise directly from his failure to do so.
The Basis of Costs
The mother sought payment of her costs on an indemnity basis. The solicitor for the mother submitted that the father’s failure to pay the costs by 30 April 2013 and his failure to make an offer of payment by instalments until after the mother had brought her application seeking the payment of those costs, would support an order for indemnity costs. She did not make any submissions with respect to the Prantage case.
The solicitor for the mother tendered to the Court an itemised tax invoice for the period 7 March 2013 to September 2013 amounting to $4,201.62 for professional fees and a tax invoice for the period September 2013 until
3 October 2013 for professional fees in the sum of $1,465.76 together with a tax invoice for counsel’s fees incurred at the appearance before Macmillan J on 5 September 2013 in the sum of $1,500.
The solicitor for the mother referred me to the costs agreement on the court file which was produced to the court on 30 January 2013.
The general rule is that when there are circumstances justifying the making of a costs order that those costs be ordered to be paid on a party/party basis.
In Prantage, Thackray and Ryan JJ at paragraph 82 referred to that general rule and the principles enunciated in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248. Their Honours went on to state that, where there is some unusual or special feature and when the justice of the case requires, there may be a departure from this usual course depending upon the particular facts and circumstances of the case in question. Other cases where indemnity costs have been ordered may offer a guide, but I was not referred to any similar factual circumstances.
In the circumstances of this particular case, I am not satisfied that it is appropriate to order that the father pay the costs on an indemnity basis. The approach by the father might be characterised as imprudent but does not enliven the power to award indemnity costs.
The earlier failure of the father to specify to the solicitor for the mother an amount for an instalment payment is not necessarily conduct of the father as a litigant here, which would warrant a departure from the usual party/party costs and the imposition of indemnity costs.[5]
[5] Prantage & Prantage [2013] FamCAFC 105 at paragraphs 102 and 103.
I do not consider that the conduct of the father is exceptional or conduct in relation to the litigation which would warrant a departure from the usual order that party/party costs apply.
I also take into account that although the solicitor for the mother was not obliged to discuss payment of the costs of enforcement with the father, her correspondence did not explain the nature of the costs sought or the fact that they were being charged under a costs agreement.
Amount of Costs
To avoid the escalation of further costs by referring this matter to the registrar for assessment of the costs, I consider it appropriate to fix an amount to be paid on a party/party basis.
I have taken into account the factors under rule 19.18(3) of the Rules including that the legal work undertaken was not complex, there was about 17 hours of work undertaken and the rates ordinarily payable to lawyers in comparable cases under the Schedule is about $218 per hour. I have exercised my discretion to fix an amount of $3,706.00 as reasonable in the circumstances having regard to the itemised account tendered. The mother is also entitled to have the costs of her counsel paid in the sum of $1,500 for the attendance at Court on 5 September 2013.
Accordingly I fix the total costs to be paid by the father to the mother at $5,206.
I certify that the preceding fifty-nine (59) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Thornton delivered on
29 October 2013.
Associate:
Date: 29 October 2013
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Appeal
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