Burton & Tsai
[2022] FedCFamC1F 145
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Burton & Tsai [2022] FedCFamC1F 145
File number(s): MLC 6099 of 2018 Judgment of: MACMILLAN J Date of judgment: 18 March 2022 Catchwords: FAMILY LAW – COSTS – where the Applicant seeks an order that the Respondent pay the costs of and incidental to his application for a declaration pursuant to s 90RD of the Family Law Act 1975 (Cth) – where the Applicant seeks costs be paid on an indemnity basis – where in the alternative the Applicant seeks his costs paid on a solicitor-client basis or party-party basis as agreed by the parties – where the Applicant also seeks his costs of and incidental to the application for costs – where the Respondent seeks that the Applicant’s application for costs be dismissed or in the alternative an order that the costs be reserved pending the determination of the substantive proceedings – where the Respondent conceded on the eve of the final hearing that the parties had been in a de facto relationship for no less than two years – where there are circumstances justifying the Court departing from the general rule that the parties each bear their own costs – where an order for indemnity costs is justified – where the Respondent is ordered to pay $226,000 – where an order that the Respondent wife pay the husband’s costs of the Application in a Case fixed in the sum of $5,350 Legislation: Family Law Act 1975 (Cth) ss 117, 90RD, 44(5)(b).
Family Law Rules 2004 (Cth) (Repealed) r 11.02
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.33, 12.13, 12.17(3)
Cases cited: Ainson & Ainson (2019) FLC 93-908
Bolitho v Bankia Securities [2021] VSC 666
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Eames & Eames [2018] FamCAFC 204
Fountain Selected Meats (Sales) v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Kohan & Kohan [1993] FLC 92-340
Munday v Bowman [1997] FLC 92-784
Sfankianakis &Sfankianakis [2019] FamCAFC 54
Yunghanns & Yunghanns [2000] FLC 93-092
Division: Division 1 First Instance Number of paragraphs: 55 Date of hearing: 14 December 2021 Place: Melbourne Counsel for the Applicant: Mr Matta Solicitor for the Applicant: Sayer Jones Counsel for the Respondent: Ms Fisken Solicitor for the Respondent: Farrar Gesini Dunn ORDERS
MLC 6099 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR BURTON
Applicant
AND: MS TSAI
Respondent
ORDER MADE BY:
MACMILLAN J
DATE OF ORDER:
18 MARCH 2022
THE COURT ORDERS THAT:
1.By 4.00pm on 18 April 2022 the Respondent de facto wife pay the de facto husband’s costs of and incidental to his Further Amended Application filed 17 February 2020 fixed in the sum of $226,884.50 as follows:
(a)To Sayer Jones in the sum of $179,688.20; and
(b)To C Lawyers in the sum of $47,216.30
2.By 4.00pm on 18 April 2022 the Respondent de facto wife pay to the Applicant de facto husband’s solicitor his costs of and incidental to his Application in a Case filed 24 May 2021 fixed in the sum of $5,350.
3.The de facto husband’s Application in a Case filed 24 May 2021 be otherwise dismissed and removed from the list of cases awaiting hearing.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Burton & Tsai has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MACMILLAN J
This matter was listed for hearing before me as an 8 day matter commencing 23 November 2020 to determine the question of whether or not the parties had been in a de facto relationship for the requisite period of 2 years, the existence of that relationship founding the Court’s jurisdiction to make orders for a property settlement, and whether or not the de facto husband should be granted leave to file an application for property orders out of time. The de facto wife MS TSAI (the “wife)” conceding on the eve of the hearing that there has been a de facto relationship he matter did not proceed and on 23 November 2020 I made the following orders:
IT IS ORDERED THAT
1.Pursuant to Section 90RD(1) of the Family Law Act 1975 (Cth) it be declared that a de facto relationship between the parties existed.
IT IS FURTHER ORDERED BY CONSENT THAT
2.Pursuant to Section 44(5)(b) of the Family Law Act 1975 (Cth), leave be granted to the Applicant to proceed out of time.
3.The parties shall attend mediation with the Honourable [Mr B] on Thursday 26 November 2020 at the [D Mediation Centre] (or such other venue as agreed between the parties) with the cost of the mediator and mediation rooms to be shared equally between them.
4. The matter is adjourned before Justice Macmillan at 10.00 am on 27 November 2020.
5. That the Applicant’s costs be reserved.
IT IS NOTED THAT
A.The Respondent concedes that the parties were in a de facto relationship for a period of a sufficient duration to enliven the Court’s jurisdiction (i.e. not less than two years).
B.The Respondent does not otherwise make any concession as to the duration of de facto relationship.
BACKGROUND
On 1 June 2018, the de facto husband MR BURTON (“the husband”) filed an Initiating Application in the Federal Circuit Court of Australia seeking leave out of time to commence proceedings for property settlement. In her Response filed 5 December 2018 the wife sought orders dismissing the husband’s application and an order that he pay her costs. The parties attended a conciliation conference on 4 July 2019 during which the wife advised that she was challenging the Court’s jurisdiction to make property orders.
The estimate being that the matter would take more than 5 days it was transferred to the Family Court of Australia and on 15 October 2019 the husband filed an Amended Initiating Application seeking a declaration pursuant to s 90RD(1) of the Family Law Act 1975 (Cth) (“the Act”) that the parties had been in a de facto relationship from 1994 until 2016 and for leave pursuant to s 44(5)(b) of the Act to file an Application for property settlement out of time. The wife filed an Amended Response on 18 October 2019 seeking orders dismissing the husband’s Application for “want of jurisdiction” and an order that the husband pay her costs.
On 21 October 2019 I listed the matter for an 8 day hearing to commence on 16 March 2020 and made directions for the parties to file their trial material. On 12 February 2020 I made orders by consent to extend the filing dates. The husband was required to file the affidavits of evidence in chief upon which he proposed to rely by 17 February 2020. Although the husband filed his affidavit of evidence in chief by the due date the affidavits of his witnesses were filed between 18 February and 2 March 2020. On 17 February 2020 the husband also filed a Further Amended Initiating Application seeking orders in similar terms.
The wife initially had until 24 February 2020 to file the affidavits of evidence in chief upon which she proposed to rely. The orders made on 12 February 2020 extended that date to 2 March 2020. On 16 March 2020, the mother still not having filed her trial material as ordered, the matter was listed for a telephone mention on 20 March 2020. On that date I made orders vacating the hearing and extended the dates for the wife to file her trial material and the husband to file any response thereto. On 25 June 2020, the matter was once again listed for an 8 day hearing, commencing on 23 November 2020, on this occasion listed for a video hearing.
On 25 March 2021, I made the following orders by consent:
1.The matter be listed for mention before Justice Macmillan on 4 June 2021 at 10.00 am.
2.The Applicant file and serve his Application in a Case and supporting affidavit by 4.00 pm on 21 May 2021.
3.The Respondent file and serve her Response to an Application in a Case and supporting affidavit by 4.00 pm on 28 May 2021.
IT IS NOTED THAT
A.The parties are proposing to convene a mediation with the Honourable Mr B prior to the Adjourned Date at the [D Mediation Centre] (or such other venue as agreed between the parties) with the cost of the mediator and mediation rooms to be shared equally between them.
B.The Applicant will contact the Chambers of the Honourable Justice Macmillan following the conclusion of the mediation for the purpose of informing the Court of the outcome.
On 24 May 2021, the husband filed an Application in a Case seeking orders that the wife pay his costs of and incidental to his three applications on an indemnity basis. In the alternative he sought that costs be payable either on a solicitor-client basis or on a party-party basis with the quantum of the costs to be paid to be agreed between the parties within 14 days of any such order.
The wife in her Response sought orders dismissing the husband’s application on the basis that he had not filed that application by 21 May 2021 as he was required to do pursuant to paragraph 2 of the orders of 25 March 2021 and in the alternative that the question of costs be adjourned to the final hearing. The wife also sought an order that the husband pay her costs of and incidental to his application for costs.
At the commencement of the hearing on 14 December 2021 the husband sought leave to rely upon a further affidavit sworn on 10 December 2021. Although counsel for the wife initially opposed leave being granted to the husband to rely upon that affidavit she ultimately withdrew that objection in circumstances where she proposed to refer to it in the course of her own submissions.
Although it was the wife’s case that the husband’s application for costs should be dismissed for failing to comply with the timetable for filing documents, this submission was not pursued with any real force. Counsel for the wife did not point to any real prejudice that would be caused to the wife as a result of the husband filing his Application 3 days late, whereas I am satisfied that the prejudice to the husband of not being permitted to pursue his application for costs on that basis would be significant. In these circumstances I am not satisfied that the husband having filed his application 3 days late is a sufficient basis for dismissing that application.
LEGAL PRINCIPLES
The general rule in proceedings pursuant to the Act is that each party shall bear their own costs. However, the Court being satisfied that there are circumstances justifying it doing so, may make such order for costs as it considers just. In considering what (if any) order for costs it should make the Court shall have regard to the matters in s 117(2A) of the Act as follows:
(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.
Although the Court must have regard to all of these matters, and albeit their relevance will depend upon the particular circumstances of each case, it is not required to do so in any particular order, and no matter takes precedence over another. It is also not necessary for there to be more than one relevant consideration for the purposes of deciding that an order is justified.
ARE THERE CIRCUMSTANCES JUSTIFYING A COSTS ORDER
Financial circumstances of each of the Parties
Neither party filed a Financial Statement for the purposes of the application for costs. However the husband describes himself as retired and says he has no employment prospects. In his Financial Statement filed 17 February 2020 the husband deposed to having a weekly income of $307 per week and expenses of $997 per week. He further deposed to owning property valued at approximately $630,920.
The wife describes herself as semi-retired and her counsel described her as having as a “relatively modest income”. In her Financial Statement filed 18 November 2020 the wife deposed to owning property valued at $2,639,853 and having liabilities of $746,781, a net value of $1,893,072.
I am satisfied that the wife is in a superior financial position to the husband however in my view their respective financial circumstances neither preclude nor do they support an order for costs in the husband’s favour absent other considerations.
Legal Aid
Neither party is in receipt of legal aid.
The Conduct of the Parties to the Proceedings
The de facto wife’s conduct
Counsel for the husband submitted that the wife had unnecessarily prolonged the proceedings adding to the costs he has incurred and wasting Court resources and time. One example relied upon by the husband being the 8 day hearing listed to commence on 20 March 2020 which he submitted had to be adjourned because of the wife’s failure to file her affidavits of evidence in chief by 2 March 2020 as she was ordered to do. The wife’s explanation for not having filed her trial affidavits being that the husband had not filed his trial affidavits by the due date.
Counsel for the wife submitted with respect to the adjournment of the first hearing that ultimately the matter had not proceeded due to the impact of Covid-19 rather than any failure on the wife’s part to comply with the orders or her conduct generally. Although I accept that Covid-19 may have contributed to the matter not proceeding that does not explain why the wife had not filed her affidavits of evidence in chief as she was required to do. I also accept as submitted by counsel for the husband that there would have been no reason for a hearing on 20 March 2020 or for that matter any of the various hearings and mentions that followed the wife’s objection to the Court’s jurisdiction if the wife had not denied that she and the husband had ever been in a de facto relationship.
The wife sought to defend her opposition to the husband’s application generally on the basis that the existence of a de facto relationship was not in her words “crystal clear” and as submitted by counsel for the wife “there are a variety of juridical opinions as to what may and may not constitute” a de facto relationship. In my view this submission does not sit comfortably with the wife’s repeated denials and ultimately her last minute concession.
It also does not explain why it was not until the day before the relisted hearing was due to commence, some two years after the proceedings commenced, that the wife conceded that she and the husband had been in a de facto relationship for no less than two years. Although this relates to the overall conduct of the case rather than the mechanics of the proceedings there is some force in the husband’s submission and it is relevant to the question of whether there are circumstances which justify the Court making an order for costs.
The de facto husband’s conduct
Counsel for the wife further submitted, by way of reply to the husband’s case that she should pay his costs and his criticisms of her conduct, that the husband had failed to provide full and frank disclosure. The specifics of her complaint were referred to by the wife in her affidavit filed 1 June 2021. Although some of the documents the wife requested may have been relevant to the question of whether there was a de facto relationship or at least as to the duration of that relationship, that does not alter the fact that those documents would not have been required if the wife had not denied the existence of that relationship until the eve of the second hearing.
I accept as submitted by counsel for the wife that that the legal criteria the Court looks at in determining whether the parties have been in a de facto relationship may not always accord with the way in which a party views that relationship. The parties in this case, at times living in different countries, the relationship had some unusual aspects. However, although this could explain why there might be a dispute about the duration of the relationship, it was the wife’s case, albeit she now concedes that they were in a de facto relationship for not less than 2 years, that there was no de facto relationship. The facts were known to the wife and she was represented throughout the proceedings. It is difficult to accept in these circumstance that she would not have had some understanding of whether the circumstances of this relationship satisfied the relevant criteria.
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
This is not a relevant consideration in this case.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
It was the husband’s case that the parties had been in a de facto relationship between 1994 and 2016. On that basis the wife submitted, that her concession being limited to the parties having been in a relationship for “a period of sufficient duration to enliven the Court’s jurisdiction (ie not less than two years)” and there being otherwise no concession as to the duration of that relationship, she had not been wholly unsuccessful. The orders with the accompanying notations being made by consent and the Court not having made any findings, strictly speaking, the wife has not been wholly unsuccessful in terms of this provision of the Act. However the fact that the wife ultimately conceded the existence of a de facto relationship of not less than two years immediately before the commencement of the hearing, two years after the proceedings were commenced, is a matter the Court can and in my view should consider pursuant to s 117(2)(g) (As per Ainson & Ainson (2019) FLC 93-908 at [42]).
I also do not accept counsel for the wife’s submission that her concession was a limited concession. The threshold issue in this case was one of jurisdiction dependent upon whether or not the parties had been in a de facto relationship for the requisite period of two years. Once the wife conceded that there had been a de facto relationship for the requisite period there was no dispute that the Court has jurisdiction to hear the husband’s Application for property settlement, subject to him being granted leave out of time, which was also conceded by the wife. It is in my view irrelevant to the question of whether the Court has jurisdiction to hear the application that the parties may not have been in a relationship for the whole of the period between 1994 and 2016 as alleged by the husband or that the Court might not be satisfied that it is just and equitable to make orders adjusting their property interests.
It was always open to the wife to concede that the parties had been in a de facto relationship for the requisite period to enliven the Court’s jurisdiction and to put her case as to the duration of that relationship and the merits of the husband’s substantive application for property settlement. The costs sought by the husband are a direct result of the wife’s case that there had been no de facto relationship. It is also the case as submitted by the husband that the wife’s denial of a relationship, which on his case spanned some 20 years, added to the complexity and the expense of the threshold issue.
Whether any party to the proceedings has made an offer in writing to the other party to the proceedings to settle and the terms of any such offer
Counsel for the husband tendered a letter from his instructing solicitor to the wife’s solicitor dated 18 May 2020 which proposed, as had been suggested during an earlier hearing, that the parties attend a judicial mediation “with a view to finalising the matter, or at least limiting the issues in dispute between the parties.” The wife did not respond to this proposal. Although this is not an offer to settle the matter as such, it is in my view indicative of the approach taken by the wife to these proceedings up and until the hearing was due to commence in November 2020 and is a relevant consideration.
Are there circumstances justifying an order for costs
As counsel for the husband submitted the proceedings were necessitated by the wife, despite being legally represented, having denied for two years that she and the husband had been in a de facto relationship putting the husband “to the expense of hundreds of thousands of dollars only to play a game of chicken and see which party blinks first and to do so on effectively the eve of an eight day trial.” That is not a course a litigant can adopt without facing the very real risk of there being an order for costs. The wife took that chance. I have considered the matters in s 117(A) of the Act as I am required to do and I am satisfied that there are circumstances in this case which justify the court making an order for costs.
I do not accept as submitted by counsel for the wife that in circumstances where the Court might ultimately decide that it is not just and equitable to make any orders adjusting the parties property interests that the question of the costs of this threshold issue should be reserved pending the outcome of that hearing. In my view this is a discreet issue and the costs of this threshold issue could have been avoided or at the very least minimised had the wife conceded as she now has that the parties were in a de facto relationship for the requisite two year period.
QUANTUM OF COSTS
The general rule is that when the Court makes an order for costs those costs are payable on a party and party basis. The Court does however have a discretion to order costs on other terms, including indemnity costs.
In Kohan & Kohan [1993] FLC 92-340 (at page 79,614) the Full Court of the Family Court of Australia (“Full Court”) makes it clear that the Court "…should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind".
In Munday v Bowman [1997] FLC 92-784 at page 84,660, Holden CJ summarised the circumstances which might warrant an order for indemnity costs as identified by Shepherd J in the decision of Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225. They included the following:
•Where an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;
•The making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;
•Evidence of particular misconduct causing loss of time to the court and to other parties;
•The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;
•An imprudent refusal of an offer to compromise.
As the Full Court’s said in Yunghanns & Yunghanns [2000] FLC 93-029, the circumstances which might support an order being made on an indemnity basis are not closed.
Pursuant to r 12.13 of the Rules a party applying for costs on an indemnity basis must inform the Court if that party is bound by a costs agreement in relation to those costs and the terms of that agreement. The husband has provided the Court with copies of his cost agreements with C Lawyers and Sayer Jones and has produced counsel’s fee slips.
The Court may order that a party is entitled to costs of a specific amount, as assessed on a particular basis such as party and party, solicitor and client or indemnity, in accordance with a method specified in the order or for part of the proceedings or part of any amount as assessed in accordance with Schedule 3 of the Rules. In making an order the Court may consider the following matters:
(a) the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e)the time properly spent on the proceeding, or in complying with pre‑action procedures;
(f) whether expenses (paid or payable) are fair, reasonable and proportionate.
Counsel for the husband referred me to the decision of Woodward J in Fountain Selected Meats (Sales) v International Produce Merchants Pty Ltd (1988) 81 ALR 397 (at 401) (cited with approval by the Full Court in Eames & Eames [2018] FamCAFC 204 (at[103])) as follows:
…I believe that it is appropriate to consider awarding "solicitor and client" or "indemnity" costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion.
I am satisfied that the wife in this case continued these proceedings in circumstances where properly advised she should have known that she had no chance of success. Although the evidence has not been tested the wife now concedes that there was a de facto relationship of not less than two years. It was at all times open to the wife to dispute the duration of the relationship instead she chose to deny that there was a relationship. This gives rise to significant questions about the bona fides of her repeated denials of that relationship.
The wife was represented throughout the proceedings and the facts the husband’s case was based upon were known to the wife as was the evidence that might have contradicted his case. Those facts did not change nor did the wife suggest that she had not had proper legal advice as to the merits of the case. I do not accept that in these circumstances it was a question of the legal interpretation of the facts or that the wife somehow did not know until the eve of the second trial that she and the husband were in a de facto relationship for not less than the requisite two years. In my view it is reasonable to infer on this basis that the wife had an ulterior motive for continuing to oppose the father’s application. The most likely explanation in these circumstances being as submitted by Counsel for the husband being to drain the husband’s resources in order to prevent him prosecuting his case.
I am satisfied that there are exceptional circumstances in this case which justify the Court departing from the general practice of ordering that costs be payable on a party and party basis and that I should make an order for indemnity costs in the husband’s favour.
The husband seeks an order for costs in the total sum of $226,884.50 inclusive of counsel’s fees being $179,668.20 for Sayer Jones and $47,216.30 for C Lawyers.
Although counsel for the wife acknowledged that fixing the costs would avoid the delays and additional cost associated with an assessment it was the wife’s case that in the event that the court did make an order for costs on any basis those costs should be assessed. There were a number of matters which she said supported the need for any costs ordered to be assessed. They included the following matters:
·that the itemised bill of costs annexed to the husband’s affidavit in relation to the costs incurred with Sayer Jones did not distinguish between the costs of the threshold question and the husband’s substantive application;
·that the bills and invoices provided in relation to the costs incurred with C Lawyers, which were tendered by counsel for the husband, albeit not itemised, demonstrate that part of the work performed is referable to the husband’s substantive application; and
·that counsel’s fee slips which were similarly annexed to the husband’s affidavit were not sufficient to establish the work undertaken or prove the reasonableness of the charges claimed.
I am satisfied, as referred to by the husband in his affidavit, that preparation for the threshold proceedings would have required a clear understanding of the history of the relationship and the case generally including any proceedings in another jurisdiction that might impact on the case here and as he deposes required him to obtain evidence from multiple witnesses both in Australia and in Country E. The fact that the matter was listed for 8 days highlights its complexity.
In so far as Counsel for the wife was critical of particular costs as counsel for the husband submitted this is not an assessment and I cannot nor in my view should the costs be assessed on an ad hoc basis. The procedure when costs are to be assessed is set out in the Rules. However, I am not satisfied given the history of this litigation to date and the way in which it has been conducted by the wife that it would be appropriate to order an assessment. I am concerned that an assessment of the costs could be similarly protracted and expensive and I am satisfied that the husband should not be put to that expense or that the payment of his costs should be delayed by that process.
I am in any event not satisfied that the issues raised by the wife are sufficient to make it necessary for there to be an assessment. Counsel for the wife acknowledged that it might not be easy to isolate work undertaken solely in relation to the threshold proceedings and work that has a continued relevance to the substantive proceedings. However, it was her submission that where there was such overlap those costs should not form part of any order for costs arising out of the threshold proceedings. Although there may be some overlap and although that overlap may be relevant in determining any application for costs at the conclusion of the substantive proceedings it is not in my view a reason for not allowing the husband his costs of the threshold proceedings.
I note that in so far as counsel for the wife was critical of the fact that the fees charged by C Lawyers had not been professionally costed it is perhaps more notable that the accounts rendered by Sayer Jones had been costed both on a party and party basis and indemnity basis.
Indemnity costs are all of the costs incurred provided those costs are not unreasonably incurred and are not excessive. It follows that the purpose of an assessment of costs on an indemnity basis would be to safeguard against a party having to pay costs that have been unreasonably incurred or which are excessive. Whilst the costs incurred by the husband, which he says the wife should pay, may be substantial it does not follow that they were either unreasonably incurred or excessive.
Counsel for the wife urged caution by reference to the gap between party and party and indemnity costs. The difference is substantial however in my view that was the risk the wife took when she denied the existence of a de facto relationship. The husband was entitled to engage solicitors and counsel of his choice and to sign a costs agreement with respect to their charges and in my view given the circumstances in this case the husband should not be penalised because he did so. This case was protracted and involved preparation for two lengthy hearings and various procedural hearings. As referred to by the husband the wife’s denial of a de facto relationship which he said spanned over 20 years added to the burden placed upon him to prove the existence of that relationship. In my view the substantial costs incurred by the husband are a direct result of the decisions made by the wife in these proceedings.
In all of the circumstances I propose to accede to the husband’s application that the wife pay his costs fixed in the sum of $226,884.50.
Finally I wish to address the suggestion that counsel for the husband’s conduct can in any way be compared to the conduct of senior and junior counsel referred to in the decision of Digby J in Bolitho v Bankia Securities [2021] VSC 666 (“Bolitho”). His Honour said at [para 670 ] as follows:
I do not think that lazy was an apt description for Trimbos’s conduct. There is a wider issue, which causes me to pause and observe that, as egregious an example as it was, I am insufficiently naïve to accept that the conduct of O’Bryan and Symons in recording fees not referable to time spent is isolated to those two barristers. Traditional acceptance of fee documentation from counsel as negating the need for independent review is not, in my view, an assumption that should again be made by a costs lawyer in this court, whether it be in an expert report or in a matter before the Costs Court. The assumption lacks the imprimatur of the court. The court requires detailed and transparent disclosure of all assessment processes whenever it is being asked to approve, certify or assess legal costs.
Although a fee slip might in certain circumstances not be sufficient in this case unlike in Bolitho there is nothing to suggest that counsel for the husband has charged for work that he has not performed or that there is any basis at all for not accepting his fees. Courts must for practical reasons be able to accept the word of counsel absent some basis which would suggest that it is not safe to do so and arguably could not function efficiently if that was not the case. A kind interpretation of the suggestion made by the wife’s solicitors is that they misunderstood the basis of the comments made by Dickson J and in my view they should reflect upon the seriousness of questioning the integrity of counsel absent evidence to support the need to do so. To her credit counsel for the wife made it clear that she did not suggest that there was any impropriety on the part of counsel for the husband.
Cost of this application
The husband also seeks an order that the wife pay his costs of and incidental to his application for costs. Counsel advised that his brief was marked at $4800 including preparation and that his instructing solicitor had been in attendance for just under 2 hours and charges $550 per hour a total of $5,900.
I have already referred to the parties’ financial circumstances. The wife has chosen to oppose the husband’s application for costs in its entirety and has been wholly unsuccessful. There have been no offers in writing with respect to the costs. I am however satisfied that there are circumstances justifying the court departing from the general rule that parties should each bear their own costs.
Although the general rule is that costs should be payable on party and party basis as previously discussed the Court has the discretion to order that costs be payable on other terms including an order for indemnity costs.
In the recent decision of Sfankianakis & Sfankianakis [2019] FamCAFC 54 Aldridge, Watts and Austin JJ said at [10]) as follows:
…It is however, a mistake to think that if a costs order is made, that order can only be on a party and party basis of on an indemnity basis. The words ‘such order as to costs as the Court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well known example is assessment on a trustee basis, which is more generous than party and party costs, but fall short of an indemnity. Orders for a partial indemnity or for a particular period area obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party cots not an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a “special costs order”.
I am satisfied that the husband should not be penalised for engaging the counsel who has acted on his behalf throughout these proceedings. Proceedings which would not have been necessary if the wife had conceded that she and the husband had been in a de facto relationship as she has now done. In these circumstances I propose to allow counsel’s fee and I will otherwise order payment of the costs for his instructing solicitor in accordance with Schedule 3 in the sum of $518.44, a total of $5,318.44.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Macmillan. Associate:
Dated: 18 March 2022
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