Bonnel & Jephson
[2023] FedCFamC1A 120
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Bonnel & Jephson [2023] FedCFamC1A 120
Appeal from: Bonnel & Jephson (No 3) [2023] FedCFamC1F 236 Appeal number: NAA 151 of 2023 File number: BRC 12366 of 2021 Judgment of: ALDRIDGE, HARPER & BRASCH JJ Date of judgment: 1 August 2023 Catchwords: FAMILY LAW – APPEAL – Appeal from costs order – Quantum of costs – Where the appellant joined the second respondent to the proceedings at first instance and sought orders against her – Where the second respondent was removed from the proceedings following a successful summary judgment application – Findings of fact – Adequacy of reasons – No error established – Appeal dismissed – By consent, the appellant is to pay the costs of the second respondent in a fixed sum. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Sch 3, rr 12.17, 13.23
Cases cited: Beach Petroleum NL v Johnson (1995) 57 FCR 119; [1995] FCA 350
Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67
Graham & Squibb (2019) FLC 93-892; [2019] FamCAFC 33
Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110
Stopford Malloy & Malloy (Costs) [2018] FamCAFC 6
Sun Alliance Insurance Ltd v Massoud [1989] VR 8
Wilmer & Golding (No 2) (2017) FLC 93-813; [2017] FamCAFC 213
Number of paragraphs: 51 Date of hearing: 1 August 2023 Place: Brisbane Counsel for the Appellant: Mr Tolton Solicitor for the Appellant: ABKJ Lawyers The First Respondent: Did not participate Counsel for the Second Respondent: Mr Blond Solicitor for the Second Respondent: Quinn Family Law ORDERS
NAA 151 of 2023
BRC 12366 of 2021FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS BONNEL
Appellant
AND: MR JEPHSON
First Respondent
MS FAIRBURN
Second Respondent
order made by:
ALDRIDGE, HARPER & BRASCH JJ
DATE OF ORDER:
1 august 2023
THE COURT ORDERS THAT:
1.The Application in an Appeal filed on 17 July 2023 is dismissed.
2.The appeal is dismissed.
IT IS FURTHER ORDERED BY CONSENT THAT:
3.The appellant will pay the second respondent’s costs fixed in the sum of $25,000 within 28 days.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bonnel & Jephson has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
ALDRIDGE J:
INTRODUCTION
This is an appeal from an order made by a judge of the Federal Circuit and Family Court of Australia (Division 1) on 4 May 2023 which required the appellant to pay to the second respondent costs fixed in the sum of $85,000.
Earlier in the proceedings between the appellant and the first respondent, the appellant had joined the second respondent to the proceedings and was seeking orders against her.
On 26 September 2022, the second respondent was removed from the proceedings as the result of a successful summary judgment application.
In the costs application before the primary judge, the second respondent sought her costs on an indemnity basis in the sum of $98,448 (Second Respondent’s Written Submissions filed on 30 September 2022, paragraph 48). In his written submissions to his Honour on behalf of the appellant, counsel accepted that costs should be ordered on a “party/party basis” (Appellant’s Written Submissions filed on 31 October 2022, p.9), but not on an indemnity basis. It is not entirely clear, but I am prepared to proceed on the assumption that, in making that submission, counsel intended that the party/party costs be assessed in accordance with the scale set out in Sch 3 to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
The question in issue before the primary judge was therefore the quantum of costs and not whether there should be a costs order. The primary judge found that the appropriate sum was $80,000, to which was added a further $5,000 as an allowance for the application for summary dismissal of the proceedings against the second respondent and the costs application then before his Honour. As to how the sum was arrived at, his Honour said:
6.Although the concession by the [appellant] may of itself mean the Court does not need to give any reasons to depart from s 117(1), it is proper I do so, albeit briefly, with an eye to the factors identified in s 117(2A), namely:
…
(d)the submissions of the Second Respondent detail various offers and counter-offers, including an acceptance by the [appellant] of the offer made by the Second Respondent, that the [appellant] pay costs fixed in the sum of $80,000. The [appellant’s] submissions in response confirm that the Second Respondent’s offer of 6 September 2022 “was accepted by the Applicant”. The Second Respondent contends “that agreement broke down on or about 8 September 2022”, for reasons unknown to the Court.
…
13.I will order that the [appellant] pay the costs of the Second Respondent, fixed in the sum of $85,000 – being the costs she agreed to pay, together with an allowance for the application for summary dismissal and this costs application.
(Emphasis added)
APPLICATION IN AN APPEAL
The appellant filed an Application in an Appeal on 17 July 2023 seeking to adduce further evidence in the appeal. There are two documents on which she seeks to rely.
The first is a report from a solicitor who is an expert costs consultant. That solicitor has assessed the costs claimed by the second respondent in accordance with the scale set out in Sch 3 and has formed the opinion that the party/party costs so assessed would range between $41,596.92–$44,066.64.
The purpose of adducing further evidence on appeal is to identify error on the part of the primary judge (CDJ v VAJ (1998) 197 CLR 172 at [109]).
The primary judge said:
8.It is not apparent what costs on a party/party basis would be assessed as being proper in this case, however I am satisfied that when accepting costs at a level of $80,000 (as the [appellant] says she did), she would have known the costs claimed exceeded a party/party calculation.
9.I am satisfied that exceptional circumstances do exist in this case to make an order for costs exceeding the likely party/party costs to be assessed. The submissions of the Second Respondent at paragraphs 39 to 44 refer to a number of relevant authorities, before submitting at paragraph 45, compellingly in my view, that:
45.Here it must be remembered that the [appellant’s] application was summarily dismissed. Properly advised, the [appellant] should never have brought proceedings against the non-parties to the marriage as it never had any prospect of success.
Thus it was that his Honour was well aware that in making the order that he did, that the amount was in excess of what would be obtained after an assessment at scale. His Honour clearly fixed the costs at somewhere between the costs at scale and indemnity costs, which was a course well open to him pursuant to r 12.17(1)(a) of the Rules. I am unable to see on what basis the costs assessment demonstrates error and I would not receive it into evidence.
The second document is a transcript of proceedings before the primary judge on 26 September 2022. Relevantly, it was on that day that the primary judge made orders that the second respondent’s costs application be the subject of written submissions which would be dealt with in chambers.
Again, I do not see how that could demonstrate error in the determination of the costs application. In my opinion, the Application in an Appeal should be dismissed.
THE APPEAL
The Amended Notice of Appeal filed on 17 July 2023 contains four grounds. For some reason, counsel for the appellant did not address those grounds in his Summary of Argument filed on 17 July 2023 as is required by r 13.23(2) of the Rules. Rather, he addressed the appeal by way of five complaints, which did not bear a close resemblance to the grounds in the Amended Notice of Appeal and two alleged over-arching failures being, a failure to give adequate reasons or to give clear reasons.
I proceed on the basis that the Summary of Argument sets out the challenges to the orders and the grounds that go beyond the complaints identified in that document are abandoned.
As many of the complaints raise the adequacy of reasons, it is well to commence by setting out the principles that apply. In Bennett and Bennett (1991) FLC 92-191 at 78,266–78,267, the Full Court of the Family Court of Australia adopted the principles expounded in Sun Alliance Insurance Ltd v Massoud [1989] VR 8, saying:
In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal. Gray J, who delivered the principal judgment, said, at 18:
“The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if: —
(a)the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b) justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.”
We think that the test propounded by Gray J is a particularly useful one, and one which also applies to discretionary judgments. In Maday and Maday (1985) FLC 91-636, Fogarty J, in a judgment with which the other members of the Court (Emery and Murray JJ) agreed, took the view that these principles clearly did apply to discretionary judgments and, in particular, judgments in custody matters.
In Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110, the New South Wales Court of Appeal said:
57.The giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes “a sense of grievance” and denies “both the fact and the appearance of justice having been done”, thus working a miscarriage of justice.
58.The extent and content of reasons will depend upon the particular case under consideration and the matters in issue. While a judge is not obliged to spell out every detail of the process of reasoning to a finding, it is essential to expose the reasons for resolving a point critical to the contest between the parties.
59.The reasons must do justice to the issues posed by the parties’ cases. Discharge of this obligation is necessary to enable the parties to identify the basis of the judge’s decision and the extent to which their arguments had been understood and accepted… it is necessary that the primary judge “ ‘enter into’ the issues canvassed and explain why one case is preferred over another”.
(Citations omitted)
It is emphasised in both the above cases, as well as many others, that “the extent and content of reasons will depend upon the particular case under consideration and the matters in issue”. Here the matter in issue was not the question of whether costs should be paid, but in what way the costs were to be assessed.
Complaint 1
The footnote to this complaint suggests that it is in relation to his Honour’s finding (at [6](b)), that the appellant “failed to comply with some directions, but her conduct in persisting… in the face of the factual matrix asserted by the second respondent… was either naïve, or at least ill advised”. This statement was in the course of the primary judge considering for himself whether or not there were reasons to depart from s 117(1) of the Act to make a costs order. As his Honour recognised, this was strictly unnecessary in light of the concession that there should be a costs order.
The complaint is that the primary judge failed to articulate the directions the appellant is said to have failed to comply with and should have heard direct evidence on this question. It is said that the appellant was thereby denied procedural fairness.
In her written submissions to the primary judge, which were prepared by counsel, the following appears:
It is accepted that the [appellant] did not comply with Orders (made by Judicial Registrar […] on 28 April 2022) requiring her to file and serve a statement of claim, Response to the Application in a Proceeding, and supporting affidavit.
(Appellant’s Written Submissions filed on 31 October 2022, paragraph 25)
Therefore, his Honour was entirely correct to say that the appellant failed to comply with some directions.
It was then submitted that it was unclear whether this was taken into account in determining whether exceptional circumstances existed to justify the costs order. However, at [9] of his Honour’s reasons makes clear that the exceptional circumstances relied upon was the bringing of a proceeding that never should have been brought. Counsel for the appellant accepted that if this was so, this was a complete answer to Complaints 1 and 2.
Complaint 2
This complaint is directed to the same paragraph as Complaint 1. This time the complaint is said to be that the primary judge failed to identify why the appellant’s conduct was naïve or ill advised. That complaint does no justice to his Honour’s reasons, which are apparent from the quotation above. It was the appellant’s conduct in persisting with the complaint against the second respondent without any basis – as is evident from its summary dismissal.
In any event, even if this was an error, it was entirely immaterial to the outcome because of the concession that there should be a costs order. This was not a factor in the quantification of the sum to be paid. Therefore, any error had no effect on the outcome at all and cannot lead to the appeal being successful.
Complaint 3
This complaint is that the primary judge fell into error by relying on the figure of $80,000 in circumstances where there was “no direct evidence of how the amount was calculated” (Appellant’s Summary of Argument filed on 17 July 2023, paragraph 20).
The primary judge relied upon correspondence between the parties in which the appellant agreed to pay the second respondent $80,000 in costs.
On 5 September 2022, the appellant wrote to the second respondent’s lawyers offering:
Your clients costs will be paid on an indemnity basis, if we can have payment made by no later than 12 months of signing consent orders.
(Second Respondent’s affidavit filed on 30 September 2022, Annexure “[MF]-13”) (As per the original)
The second respondent’s lawyers wrote the appellant with a counter proposal:
Our client is agreeable to your proposal save and except that her costs, fixed at $80,000, be paid within 21 days of signing the final consent orders.
(Second Respondent’s affidavit filed on 30 September 2022, Annexure “[MF]-13”)
On the same day the appellant replied, offering to pay “$15,000 upfront, and the balance within 6 months” (Second Respondent’s affidavit filed on 30 September 2022, Annexure “[MF]-13”).
That was met with a counter offer in the following terms:
1.That [the appellant] pay $60,000 within 21 days of signing final consent orders;
2.That [the appellant] pay $20,000 within 90 days of signing final consent orders or upon the sale of your investment property, whichever comes sooner; …
(Second Respondent’s affidavit filed on 30 September 2022, Annexure “[MF]-13”)
It seems clear from the above correspondence that there was an agreement to pay $80,000, although the terms as to how it was to be paid were the subject of offers and counter offers. In any event, the arrangement later broke down. I see no reason why the primary judge was not entitled to act upon the basis that the appellant considered that $80,000 was an appropriate amount to be paid for the costs of the second respondent.
It was then submitted that his Honour should have required evidence of the assessment of costs in accordance with Sch 3 of the Rules. There are two difficulties with this submission. The first is that it was not raised before the primary judge. If the appellant chose not to deal with the quantum of costs to be assessed before his Honour, it is too late to do so now. The second difficulty is that such a course would defeat the very purpose of summary assessment of costs.
Complaint 4
This is again a challenge to the reliance on the figure of $80,000. The complaint is that the primary judge had no idea what the party/party costs actually were and no basis for concluding that the appellant would have known that that sum exceeded a party/party calculation.
The appellant accepted in her written submissions to the primary judge that she had in fact made an offer in the sum of $80,000 (Appellant’s written submissions filed on 31 October 2022, paragraph 30).
Whilst it is true that the primary judge did not know what the precise figure for the party/party costs was, his Honour was an extremely experienced judge who would have a very good idea of what such costs were likely to be. More importantly however, his Honour was well aware that the costs order he made exceeded party/party costs as is apparent from the earlier quotation at [8].
As I have said at the outset, the appellant’s submissions to the primary judge simply opposed the order for indemnity costs and submitted an order should be made on a party/party basis. However, it could not properly be inferred that the appellant would have known that the sum of $80,000 exceeded the scale costs. Again, that is an error not material to the outcome. The point is that the appellant had agreed to that figure on whatever basis it was calculated.
Complaint 5
This complaint challenges the primary judge’s finding that his Honour was satisfied that exceptional circumstances existed so as to justify an order for costs exceeding the likely party/party costs. The submission is that it is not clear what the exceptional circumstances were found to be.
His Honour said:
11.…[the appellant] believed that the mortgage, in support of a loan made to [the first respondent] by [the second respondent] before the parties’ relationship commenced, was a complete sham. She was wrong.
It is submitted that there was no evidence that the appellant was wrong. The appellant mounted a claim against the second respondent that a mortgage in her favour registered over a property at Suburb AA was a sham and should be set aside. That claim was summarily dismissed on 26 September 2022. There was no appeal taken against that decision.
It follows that the allegations that the mortgage was a sham could not be established and that the appellant was wrong in asserting that it was. I do not see any error by the primary judge.
The written submissions of the appellant then proceeded to discuss in a discursive way what is said to be the principles in relation to the fixing of costs and indemnity costs. The authorities in relation to indemnity costs can be put to one side, because his Honour did not make such an order. His Honour did as he was entitled and fixed a specific sum for costs. The very purpose of r 12.17(1)(a) is to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation” (Beach Petroleum NL v Johnson (1995) 57 FCR 119 at 120).
In Wilmer & Golding (No 2) (2017) FLC 93-813 (“Wilmer”), Murphy J, with the agreement of Strickland and Ryan JJ, set out the principles to be applied in fixing a specific sum for costs as follows:
62.In my view, that sum exceeds that which I would be prepared to fix costs at. In that respect, the terms of r 19.18(1)(a) of the Family Law Rules 2004 (Cth) (“the Rules”) are analogous to, for example, s 98(4) of the Civil Procedure Act 2005 (NSW). That section was the subject of the decision in Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus.
63.There, Einstein J referred to the principles applicable to a court fixing costs. If the court is to fix a sum it “can only be fixed broadly having regard to the information before the Court”. 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.
64.Obviously enough, the court must act judicially in fixing or specifying a sum of costs, but:
… it is not an arbitrary exercise of power for the Court to weigh up competing factors and make a determination, even if, as is often the case, the task cannot be undertaken in a mathematical or precise manner. As the Court of Appeal found in Norris v Blake (by his Tutor Porter) [No (1997) 41 NSWLR 49 mathematical weightings of potential outcomes in loss of chance cases might be unsustainable and reliance rather should be placed on more intuitive methods to determine loss: (1997) 41 NSWLR 49 at 71–73. Similarly, the courts are frequently required to estimate damages that are not capable of precise quantification and require a degree of approximation and even guesswork. [Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83 and 138 and 153; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 at [37]–[38]].
The Court is no stranger to intuitive determinations, or determinations made without absolute precision, arrived at by acting judicially: cf Murray v Shillingsworth [2006] NSWCA 367 per Santow JA at [10]. It is misconceived to suggest that such determinations or approaches are arbitrary.
(Footnotes omitted)
In Graham & Squibb (2019) FLC 93-892, the Full Court endorsed that approach and at [93], also endorsed the principles outlined in Stopford Malloy & Malloy (Costs) [2018] FamCAFC 6 at [13]:
13.Importantly, the process that a court adopts in fixing costs in this way does not entail a process akin to how a taxing officer would undertake the task. As was said in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23, the court must act judicially on the information before it, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner” (at [10]).
I therefore do not accept that there should have been direct evidence of a party/party assessment before the specific costs were fixed because the very point of such an assessment is to avoid that task and the costs and aggravation associated with it.
Finally, I return to the adequacy of his Honour’s reasons. As the above makes clear, the reasoning path of the primary judge and how the parties’ various contentions were resolved can easily be discerned from them. It follows that the reasons are adequate.
CONCLUSION
In my opinion no error has been demonstrated and the appeal should be dismissed.
I propose the following orders:
(1)The Application in an Appeal filed on 17 July 2023 is dismissed;
(2)The appeal is dismissed.
HARPER J:
I agree.
BRASCH J:
I agree.
ALDRIDGE J:
They will be the orders of the court.
By consent the appellant will pay the second respondent’s costs fixed in the sum of $25,000 within 28 days.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justices Aldridge, Harper & Brasch. Associate:
Dated: 2 August 2023
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