Brown and Ortega

[2013] FCCA 845

FEDERAL CIRCUIT COURT OF AUSTRALIA

BROWN & ORTEGA [2013] FCCA 845

Catchwords:
FAMILY LAW – Costs – Application for costs – indemnity costs – party and party costs – security for costs – where hearing adjourned after admission of late-filed affidavit – Court expert fee.

Legislation:
Family Law Act 1975 (Cth), s.117

Federal Circuit Court Rules 2001 Rule 15.09, Schedule 1, Part 1

Cases cited:
Colgate Palmolive Pty Ltd v Cussons Limited (1993) 46 FCR 225
Jaeger & Jaeger (1994) 18 Fam LR 126; FLC 92-492
Kohan & Kohan (1993) FLC 92-340
Luadaka & Luadaka [1998] FamCA 1520; (1998) 24 Fam LR 340; FLC 92-830
Prantage & Prantage [2013] FamCAFC 105

Applicant: MR BROWN

Respondent: MS ORTEGA

File Number: SYC 1704 of 2011

Judgment of: Judge Scarlett

Hearing date: 12 July 2013

Date of Last Submission: 12 July 2013

Delivered at: Sydney

Delivered on: 16 July 2013

REPRESENTATION

Counsel for the Applicant: Ms Gillies

Solicitors for the Applicant: Paltos Briggs Family Lawyers

The Respondent: In person

Independent Children's Lawyer: Mr Christaki

Solicitors for the Independent Children's Lawyer: Legal Aid NSW

ORDERS

1. Order 4 made on 26 March 2012 is discharged.

2. The Respondent is to pay to the Applicant’s solicitors Paltos Briggs Family Lawyers on behalf of the Applicant the following amounts:

   (a)The sum of $4,500.00 on account of the Applicant’s costs thrown away in relation to the hearing on 3 July 2013; and

   (b)The sum of $2,750.00 being one half of the fees paid to Dr R as Court Expert.

3. The Respondent is to pay to the Applicant’s solicitors on behalf of the Applicant the sum of $2,500.00 being the costs of this Application.

4. The Application for an Order for the payment of a sum of $130,000.00 as security for the Applicant’s costs in these proceedings is dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Brown & Ortega is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYC 1704 0f 2011

MR BROWN

Applicant

And

MS ORTEGA

Respondent

REASONS FOR JUDGMENT

Applicant

1. This is an Application for costs and for security for costs brought by the Father, who is the Applicant in the substantive proceedings. The Applicant seeks:

   a)An order for costs on an indemnity basis in the sum of $6,765.00 for costs thrown away on 3^rd July, when a day’s hearing was adjourned as the result of the Court’s acceptance of an affidavit filed by the Respondent on the morning of the resumed hearing;

   b)Reimbursement in the sum of $2,750.00 being one half of the fees paid to the Court Expert, Dr R;

   c)An order for costs of this Application; and

   d)An amount of $130,000.00 as security for his costs in the proceedings.

2. The Respondent opposes these orders. In her Response to an Application in a Case filed 10^th July 2013, she seeks that:

   a)the Applicant should pay his own costs;

   b)the question of fees for Dr R be reserved until the conclusion of the final hearing;

   c)that the Applicant hold funds in trust pending a decision as to who is to pay for:

   i)witness expenses for a witness she seeks to call, who has been on stand-by on three previous occasions; and

   ii)witness expenses for Dr R;

   d)that the Application for security for costs be dismissed.

Background

1. The proceedings were listed for further hearing on 3^rd July, having been adjourned after three days concluding on 15^th March 2013. On the morning of 3^rd July the Respondent filed a lengthy affidavit sworn the day before. The affidavit began with the words:

   I am responding to the Applicant’s affidavit of 4.3.13, and provide a chronology of events that largely relate to the period May 07 until the present.[1]

   [1] Affidavit of Ms Ortega 2.7.2013 at paragraph [1]

2. The Applicant objected to the affidavit being read, because of its lateness. The Respondent submitted that it was relevant and told the Court that:

   a)the Applicant had previously filed an affidavit after the time specified in the Court’s directions; and

   b)she had spoken to the other parties about her desire for an adjournment but had been talked out of actually applying to the Court to adjourn the proceedings.

3. After some deliberation, and a consideration of the decision of the Full Court of the Family Court in Jaeger & Jaeger[2], I decided that the affidavit, whilst it contained a considerable amount of irrelevant material, contained sufficient evidence that went towards the best interests of the child that the affidavit should be admitted. However, both counsel for the Applicant and counsel for the Independent Children’s Lawyer sought an adjournment as the material was so voluminous that it would not have been possible to meet the affidavit in time.

   [2] (1994) 18 Fam LR 126; FLC 92-492

4. Ms Gillies, who appeared for the Applicant, submitted that her client would be seeking costs and I directed that:

   a)the Applicant should file an Application in a Case and a supporting affidavit by 5^th July 2013; and

   b)the Respondent should file a Response and a supporting affidavit by 9^th July.

5. The application for costs was listed for hearing on Friday 12^th July.

Evidence

1. The Applicant deposed in his affidavit sworn 5^th July 2013 that he had incurred legal costs, including counsel’s fees, amounting to $96,820.76 up to 30^th June 2013. There are two more hearing days required to finish the matter, on 12^th and 13^th September 2013.

2. The Applicant stated that he had incurred costs amounting to $6,765.00 for the hearing on 3^rd July, which was adjourned. He estimates that his future legal costs to complete the matter, including this application, will amount to approximately $20,000.00 plus GST.

3. He has also paid the entire fee of $5,500.00 required by Dr R, the Court Expert ordered under Rule 15.09.

4. The Applicant deposed that he anticipates that his total legal costs for these proceedings will amount to approximately $130,000.00. He believes that his costs have increased “significantly and unnecessarily”[3] due to the conduct of the Respondent in the hearing so far and he stated that his counsel had foreshadowed that a costs application would be made on his behalf after the receipt of judgment. He expresses a concern that if an order is not made for security for costs the Respondent will dissipate the funds that she is due to receive out of the proceeds of sale of the parties’ former home, which would defeat the operation of any costs order.

   [3] Affidavit of Mr Brown 5.7.2013 at [15]

5. The Applicant stated that he and the Respondent had been engaged in litigation in the Supreme Court of New South Wales, which resulted in an order being made that the property should be divided between the parties as to 35% to him and 65% to the Respondent. Although the Respondent was permitted by the order to buy out his share of the property, she did not do so within the time specified and the Supreme court made orders appointing Trustees for Sale.

6. The property was eventually sold although the proceeds have yet to be distributed. In a schedule annexed to his affidavit, the Applicant calculates that he will receive a sum of $262,312.74 as his share of the proceeds of sale, as well as an amount of $61,589.22, being an order for costs made in his favour by the Supreme Court.

7. Although there has been some dispute with the Trustees about fees, the Applicant estimates that the Respondent will receive an amount of $504,464.34. From this amount the following will be deducted:

   a)Amount owing to the Applicant under the costs order  $61,589.22

   b)The Respondent’s legal fees   $70,000.00

c)An amount to be paid to Legal Aid NSW  $   1,000.00

Subtotal   $132,589.22

1. After those amounts are deducted, the Respondent will be entitled to the sum of $371,875.12.

2. The Applicant also deposes that he has no source of income and is dependent on his wife for his support. He has no sufficient assets other than his entitlement to his share of the proceeds of sale.

3. The Applicant seeks that he should be reimbursed for one half of the fee for Dr R, who is the Court Expert. Dr R has provided a Report and will give evidence in September.

4. The Applicant states:

   48.Pursuant to Order 4 of Orders made 26 March 2012 I consented to meeting the fees of Dr R in relation to the preparation of his report as single expert in this matter in the first instance with Ms Ortega’s contribution to this amount to be determined at the final hearing. Ms Ortega did not consent to meeting one half of Dr R’s fees as she has at all times stated that she cannot afford the fees.

   49.    In July 2012 I paid $5,500.00 to Dr R in full payment of his fees to prepare the report.[4]

   [4] Affidavit of Mr Brown 5.7.2103 at [48]-[49]

5. The Respondent relies on her affidavit sworn or affirmed on 8^th or 9^th July 2013.[5] At paragraph 3 of her affidavit, she sets out the grounds upon which she relies in opposition to the Application:

   ·    A consideration of the prospects of success or merits of Mr Brown’s application taking into consideration Dr R’s[6] report. Also taking into consideration:

   ·    That the applicant’s lack of financial means was not caused by my conduct but the other way around,

   ·    That an order would be unfair without having heard the remainder of my case, including hearing from Psychologist Ms K, and due to my offer of 1 July not having been accepted to date;

   ·    That there is still a Supreme Court order for a second costs order against me,

   ·    That I have taken out a loan to payout the first order of costs, which needs to be repaid when I receive my funds

   ·    I have not delayed the proceedings through any intention and I have sought to recall the whole truth to the best of my ability.

   ·    My offer having been made by email to the parties on 1 July in the hope that agreement to negotiate could be reached to avoid an appearance by Ms K and Dr R and the return to court on 3^rd July 2013, and in September 2013.[7]

   [5] The affidavit bears two different dates

   [6] sic

   [7] Affidavit of Ms Ortega 8/9.7.2013 at [3]

Submissions

1. Counsel for the Applicant submitted that this was an appropriate case for an order for costs to be made on an indemnity basis rather than on the usual party and party basis. It is a case that there was no fault on the part of the Applicant and the matter had to be adjourned because of the late filing of the affidavit by the Respondent. The Applicant was claiming costs in the sum of $6,765.00, which is a sum that he can ill afford. The adjournment was caused by the failure of the Respondent to comply with previous orders of the Court.

2. The Applicant relies on the decision of the Full Court of the Family Court in Luadaka & Luadaka[8]. It was submitted that, as well as the usual matters that need to be considered under s.117(2A) of the Family Law Act 1975 (Cth), the Court should also have regard to the following:

   a)The history of the conduct of the litigation, where the mother has relied on seven different affidavits rather than just one trial affidavit;

   b)At no stage has the Respondent put up a Minute setting out the orders that she seeks;

   c)It is impossible for the Applicant’s legal advisers to assess the merits of the Respondent’s claim when they do not know what she is seeking;

   d)The financial position of the parties, noting the fact that the Applicant has no income and both parties are shortly to receive share of the proceeds of the sale of their former home;

   e)Steps should be taken to satisfy an order for costs made at the conclusion of the final hearing;

   f)There has been no delay by the Applicant in bringing the application;

   g)The Family Consultant Memorandum said that the Respondent would not agree to the children spending any amount of time with the Applicant.

   [8] [1998] FamCA 1520; (1998) 24 Fam LR 340; FLC 92-830

3. The Respondent submitted that the Applicant’s dispute with the Trustees about their fees was merely a strategy to delay her in getting her funds from the sale. She does not believe that she will in fact receive $371,875.12 from the sale, but considerably less.

4. She said that she had sought an adjournment on the last occasion and the Independent Children’s Lawyer had agreed. She noted that the Independent Children’s Lawyer had been late in filing documents on the last occasion, too. She said that she did not have the time to file the affidavit any earlier than she did because she was trying to respond to all the material coming in from the other parties.

5. The Respondent does not agree that she should be responsible for half of Dr R’s fee. She said that Dr R did not agree with the Applicant’s view that she suffered from a mental illness. She felt it was too early to go down the path of considering whether she should pay half the fee until the Court had heard Dr R’s evidence.

The Relevant Law

1. It is the usual rule that costs are payable on a party and party basis rather than on an indemnity basis (Prantage & Prantage[9]) unless there is a special or unusual feature in the case that would justify a departure from the usual practice (Colgate Palmolive Pty Ltd v Cussons Limited[10], see also Kohan & Kohan[11]).

   [9] [2013] FamCAFC 105

   [10] (1993) 46 FCR 225

   [11] (1993) FLC 92-340

2. When considering whether there are circumstances that would justify making an order for costs or security for costs under s.117(2) of the Act, the Court shall have regard to the matters set out in subsection 117(2A).

3. It has been held in Luadaka & Luadaka[12] that, apart from the provisions of s.117(2A), other matters that may be relevant for a court to take into account when exercising the discretion to order security for costs include:

   ·the means of the applicant to satisfy an order for costs if unsuccessful;

   ·the prospect of success of the application;

   ·whether the applicant’s claim is bona fide;

   ·whether an order for costs would be oppressive or stifle the litigation;

   ·whether the litigation involves a matter of public importance;

   ·whether there has been a delay in bringing the application for security;

   ·any difficulties in enforcing an order for costs; and

   ·the amount of costs to be incurred.

   [12] supra

Conclusions

1. There are six issues for the Court to consider:

   a)Whether there should be an order for costs against the Respondent arising from the adjournment brought about by the late filing of the Respondent’s affidavit;

   b)If so, whether those costs should be awarded on the usual party and party basis or on an indemnity basis;

   c)Whether the Respondent should reimburse the Applicant for half the cost of the fee for Dr R, the Court expert now or whether that decision should await the outcome of the final hearing;

   d)Whether an order should be made that the Respondent pay an amount as security for the Applicant’s costs;

   e)If so, whether the amount should be $130,000.00 or some other amount; and

   f)Whether, if the Applicant is successful in obtaining an order for costs, should there be an order for costs in respect of this application.

2. There is evidence of the financial circumstances of each of the parties. Whilst the Applicant has no income and relies on his wife for his support, there is evidence that he will receive 35% of the balance ordered in the Supreme Court, namely $262,312.74, less a significant amount that he drew against a mortgage together with substantial sums owed to his solicitors and counsel. In all, he will still be left with a shortfall of $66,476.79.[13]  

   [13] Affidavit of Mr Brown 5.7.2012 Annexure “G”

3. The Respondent is expected to receive a net amount of $371,875.12.[14] She disputed that figure at the hearing but led no cogent evidence to support that contention. I am aware that the Respondent apparently filed a further affidavit yesterday, but in my view the evidence had closed and no leave had been given for additional evidence. Accordingly, the affidavit was not considered.

   [14] ibid

4. Neither of the parties is in receipt of a grant of legal aid. The Independent Children’s Lawyer is a solicitor employed by Legal Aid NSW, but the Independent Children’s Lawyer is not seeking an order for costs.

5. The conduct of the parties to the proceedings in relation to the proceedings is a very relevant factor. It is true, as counsel for the Applicant submitted, that the adjournment was in no way due to any action or failure to act on his part.

6. The Respondent filed a 55 page affidavit on 3^rd July in which she sought to respond to matters that had arisen from the previous hearing on 13^th to 15^th March 2013. It is astonishing that she was not able to do so, as she claimed, until the morning of 3^rd July, the next hearing day. It would appear that there was ample time for this affidavit to be filed well before 3^rd July.

7. It is also astonishing that the Respondent would not have considered that a considerable amount of time would have been required by the other parties to absorb this material and obtain instructions to respond to it.

8. Whilst it would be open to conclude that the Respondent’s actions were malicious and designed to frustrate the proceedings by prolonging them further, it is difficult to see what advantage there could be to her in doing so. The Respondent is not legally represented and much of her written material has been prolix, unfocused and replete with irrelevant considerations. It may well be that, in filing this affidavit when she did, the Respondent gave no thought to the probable consequences of her actions.

9. If I were persuaded that the Respondent’s affidavit and the timing of its filing were frivolous or vexatious, or if her actions were motivated by a desire to frustrate and prolong the proceedings even more than they have been unnecessarily prolonger already, I would consider it appropriate to make an order for costs on an indemnity basis.

10. However, I am not so persuaded.

11. The Respondent’s affidavit was filed well outside the time table given by the Court for the filing of affidavits. It is not a defence for the Respondent to argue that the other parties were at times late in filing their material. If they were, the lateness was only a matter of days and nothing has been put before the Court to show that any delay of procedural unfairness arose as a result.

12. The Respondent appears not to have grasped the concept of filing one trial affidavit that contains all the material upon which she would rely at a final hearing. However, it should not be forgotten that she is not legally qualified. However, like many unrepresented litigants, the Respondent has formed the view that she can and should fire off an affidavit whenever the spirit moves her.

13. The affidavit of 2^nd July 2013, which has been the cause of the costs application, is replete with irrelevancies and inadmissible material, but it is not entirely valueless. It does appear to contain some material that, to put it at its highest, may be relevant to the Court in meeting its obligation to make a parenting order that places the best interests of the child as the paramount consideration, as required by s.60CA of the Family Law Act. The Respondent certainly thinks that the affidavit will serve this purpose.

14. The considerations in paragraphs (e) to (g) of s.117(2A) are not relevant in this particular case.

15. In my view, the Respondent’s actions in filing such a large affidavit on the morning of the resumed hearing, thoughtless and ill-considered though they have been, certainly call for an order for costs of the day. However, I am not persuaded that costs should be awarded on an indemnity basis.

16. The costs will be fixed on the usual party and party basis. It has been put to the Court that, in the circumstances, the costs provided by the scale in Part 1 of Schedule 1 of the Rules. That is as may be, but the Court is not limited to a strict adherence to the scale when assessing costs on a party and party basis. Costs are discretionary, it is always the case that the Court may make an order for costs on a party and party basis that is not restricted to the very amount that the scale provides.

1. The scale of costs is a guide but not a mandatory requirement when the Court is exercising its discretion to make an order for costs. In my view, having regard to the amount the scale provides and to the circumstances of this case, a proper amount for costs of the day, assessed on a party and party basis, is $4,500.00.

2. The next issue to be decided is whether the Court should make an order that the Respondent should pay the Applicant the sum of $2,750.00 to reimburse him for paying half the costs of the Court Expert, Dr R. When the Order was made on 26^th March 2012 that the Applicant should pay the full amount of $5,500.00 for Dr R’s fee and the Respondent’s contribution should be determined at the final hearing, this order was made in the context that the Respondent said that she had no funds to meet her share of the fee for the Report. Had the Applicant not paid the fee in full, there would have been no Court Expert Report from Dr R.

3. It is the usual practice that parties pay for Court Expert reports in equal shares. It cannot seriously be suggested that the question of the Respondent’s liability to pay her share of the fee, and I emphasise that phrase, should be delayed until the final hearing now that there is evidence that the Respondent will shortly receive a sum well in excess of $300,000.00 from the proceeds of sale of the parties’ former home.

4. Even less can it be the case that the Respondent’s liability to pay half the proper fee for the Court Expert should in some way be contingent on the evidence that Dr R is to give in his cross-examination in September.

5. The Respondent can no longer argue that she lacks the funds to pay half the fee for the Court Expert’s Report. She should pay the sum of $2,750.00, being one half of the fee that the Applicant has already paid in full.

6. The next issues to be decided are whether the Respondent should pay an amount as security for the Applicant’s costs and, if so, whether she should pay the sum of $130,000.00. It is clear that the Respondent will certainly have a sum well in excess of $300,000.00 available to her, but that alone is not the determining factor.

7. There has been no delay by the Applicant in bringing his application for security for costs. Until now, there has been no clear evidence as to when the funds would be available.

8. However, the Respondent is just that, a respondent. She is not the one who has the carriage of the matter, the Applicant does. It may well be argued that the Respondent has prolonged and delayed the proceedings by the way that she has conducted the case, and the Applicant’s counsel has already foreshadowed an application for costs when the matter has been finally determined. But the fact that the Respondent is grimly and stubbornly defending this matter, no matter how strong the Applicant’s case may appear to be, is not, to my mind, a reason to make an order for security for costs.

9. Accordingly, the application for security for costs will be dismissed.

10. That leaves the question of whether or not the Respondent should pay the costs of this Application. True it is that the Applicant has not been entirely successful in obtaining every order that he sought, nor has he the quantum of the orders that have been made in his favour been as much as he sought, but the fact remains that the Respondent has been unsuccessful. The outcome that she sought was that she should not have to pay anything, which is certainly not the result. The fact that an order was not made that Respondent pay an amount as security for the Applicant’s costs was not due to any argument that she put to the Court.

11. This is a clear case where the Respondent should pay the costs of this Application. The Court, in its discretion to award costs, is not bound to abide by the scale. An amount of $2,500.00 is, in my view, a proper amount to be awarded on a party and party basis in all the circumstances of this case.

12. I will order accordingly. 

I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Date:  17 July 2013