Cabb and Cabb (No 2)

[2013] FamCA 921

FAMILY COURT OF AUSTRALIA

CABB & CABB (NO 2) [2013] FamCA 921

FAMILY LAW – COSTS – BASES ON WHICH COSTS CAN BE ORDERED – Where the husband seeks an order for costs against the wife arising from an application for summary dismissal in which the husband was successful – Where the husband seeks indemnity costs – Consideration of factors set out in s 117(2A) of the Family Law Act 1975 (Cth) – Analysis of the case law with respect to the Court’s power to order costs on a party/party, solicitor/client or an indemnity basis – Where the Court determined to make an order for costs on a solicitor/client basis and to certify for Senior Counsel.

Family Law Act 1975 (Cth)

Family Law Rules 2004 (Cth)

Australian Transport Insurance Pty Ltd & Anor v Graeme Phillips Road Transport Insurance Pty Ltd& Ors (1986) 71 ALR 287

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd & Ors (1988) 81 ALR 397

Hand & Bodilly [2013] FamCAFC 98

Prantage & Prantage [2013] FamCAFC 105
Re WilCabb, Ex parte Venture Industries Pty Ltd (1996) 72 FCR 151

APPLICANT: Mr Cabb

RESPONDENT: Ms Cabb

FILE NUMBER: SYC 6670 of 2010

DATE DELIVERED: 27 November 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: REES J

HEARING DATE: In chambers – written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Grieve QC

SOLICITOR FOR THE APPLICANT: Turner Freeman Lawyers

COUNSEL FOR THE RESPONDENT: Ms Stenmark SC with Mr Grew of Counsel

SOLICITOR FOR THE RESPONDENT: Southern Legal

Orders

IT IS ORDERED

1. That the wife pay the husband’s costs of the application for summary dismissal filed 5 February 2013 on a solicitor/client basis as assessed or agreed.

2. Certify for Senior Counsel.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Cabb & Cabb (No 2) 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 SYDNEY

FILE NUMBER: SYC 6670 of 2010

Mr Cabb

Applicant

And

Ms Cabb

Respondent

REASONS FOR JUDGMENT

background

1. Before the Court is an application for costs by Mr Cabb (“the husband”) filed 3 September 2013. The respondent is Ms Cabb (“the wife”).  

2. The application arises from proceedings between the parties for property settlement which were commenced on 17 September 2010 and concluded in the National Court of Justice of Country B on 28 December 2011, and unsuccessfully appealed. The wife commenced proceedings for property settlement in Australia on 21 October 2010.

3. The husband filed an application to restrain the wife from proceedings in Australia, contending that the wife was estopped by the doctrine of res judicata. That application was successful and an order was made (“the anti-suit injunction”) restraining the wife from pursuing the Australian suit on 8 November 2010.  

4. The history of the proceedings in Country B and in Australia is set out in the judgment delivered on 7 August 2013.

5. The husband seeks indemnity costs. In support of his application he relies on an affidavit by his solicitor, Mr Stubbs. The wife in her response filed 3 October 2013 asks that the application for costs be dismissed and that the husband pay her costs of this application. She asks that there be no order as to costs of the substantive application or, in the alternative, that costs be taxed. Her response is supported by her affidavit sworn 1 October 2013.

6. Both parties filed written submissions.

7. The matters to be considered in an application for costs are set out in s 117(2A) of the Family law Act 1975 (Cth) (“the Act”), reproduced below:

   In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (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.

8. Neither of the parties filed a Financial Statement. By virtue of the judgment of the National Court of Country B, the wife received $A1 million in four instalments; a property at E Town; payment towards renovations; payment towards costs and spousal maintenance for three years. She does not assert that she does not have the capacity to pay costs.

9. The wife submits that the husband failed to comply with orders made in the Australian proceedings for the filing of a Statement of Financial Circumstances. Those orders were made after the anti-suit injunction restraining the wife from proceedings in Australia and, in those circumstances, I do not regard his failure to file financial material in Australia as relevant to this application.

10. Neither party is in receipt of legal aid.

11. The wife commenced the proceedings in circumstances where she was aware that proceedings for property settlement had been commenced in Country B in a court of competent jurisdiction in which she had filed an appearance. She continued these proceedings in the face of, and in breach of, an anti-suit injunction made on 8 November 2010 by the National Court of Country B, restraining her from continuing the proceedings in the Family Court of Australia. On behalf of the wife, it was submitted that the terms of the injunction did not require the wife to withdraw her Australian application, but restrained her from pursuing the application pending either further order of the Court in Country B or the completion of the proceedings in Country B.

12. On 29 October 2010, the husband’s solicitors wrote to the wife’s solicitors pointing out that the proper forum for the proceedings was Country B.

13. The anti-suit injunction was made on 8 November 2010.

14. On 11 November 2010, the wife’s solicitors wrote to a Registrar of the Family Court of Australia, Sydney Registry, asking for the matter to be listed ex parte in relation to service on the husband.

15. On 12 November 2010, four days after the anti-suit injunction was made, the wife’s solicitors wrote to the husband’s solicitors seeking the provision of financial information pursuant to Family Law Rules 2004 (Cth) (“the Rules”).

16. On the same day, a further letter was written to the husband’s solicitors confirming that the wife would proceed with her application on 16 November 2010.

17. On 16 November 2010 the husband’s solicitors wrote to the wife’s solicitors advising that, if the wife intended to proceed in Australia, then a response would be filed objecting to jurisdiction and seeking a stay of the Australian proceedings. Also on that day, Barry J made orders for the filing of material by both parties and, relevantly, for the filing by the husband of a Statement of Financial Circumstances and any affidavit material upon which he wished to rely.

18. On 17 November 2010 the wife’s solicitors wrote to the husband’s solicitors advising that they would be seeking to proceed with the application on the next court date. The matter was listed on 14 December 2010.

19. On 13 December 2010 the wife’s solicitors wrote to the husband’s solicitors indicating they were instructed to apply to have the Australian proceedings adjourned generally “pending determination by the National Court of Justice, [Country B] as to jurisdiction”. The husband’s solicitors agreed. The date was vacated in chambers and the matter stood over with liberty to apply.

20. On 11 February 2011, the matter was listed for a procedural hearing before a Registrar. Further procedural hearings were listed on 1 April 2011, 15 May 2011, 5 August 2011, 21 October 2011 and 9 December 2011.

21. The Country B proceedings were determined on 5 January 2012.

22. On 30 March 2012 the Court record shows that the husband’s solicitor appeared by telephone for a procedural mention and the wife’s solicitor advised he was unable to obtain instructions “given the outcome of the [Country B] orders”.

23. On 9 August 2012 there was a further procedural mention and the Registrar was advised that the proceedings in Country B were continuing on appeal.

24. On 3 December 2012, directions were made for the continuation of the Australian proceedings in circumstances where it was noted that the appeal in Country B had been dismissed.

25. Commencing on 12 February 2012, the solicitors for the husband wrote letters to the solicitors for the wife inviting her to withdraw her application in the Family Court. The letter dated 12 February 2012 sets out the basis on which it is suggested that the wife should discontinue, that is, that final orders had been made in another jurisdiction. There was no response to that letter. Annexed to the affidavit of Mr Stubbs are copies of further letters dated 28 February 2012 and 27 March 2012. By letter dated 7 February 2013, the solicitors for the husband foreshadowed an application for indemnity costs.

26. The wife has been wholly unsuccessful in the proceedings

27. The solicitors for the husband invited the wife to withdraw her application in February 2012 and gave the basis for their contention that the proceedings could not succeed. By letter dated 7 February 2013, the solicitors for the husband foreshadowed an application for indemnity costs.

28. In all of the circumstances set out above, the wife should pay the husband’s costs of the application for summary dismissal filed by the husband on 5 February 2013.

INDEMNITY COSTS

1. The Full Court has most recently considered the law in relation to indemnity costs in Prantage & Prantage [2013] FamCAFC 105 (“Prantage”). The majority (Thackray and Ryan JJ) set out the principles to be applied, holding that the principles enunciated by Sheppard J in  Colgate-Palmolive Co v Cussons Pty Limited (1993) 118 ALR 248 (“Colgate-Palmolive v Cussons”) should continue to be applied in the Family Court of Australia. The principles (as summarised by Cooper and Merkel JJ in Re WilCabb, Ex parte Venture Industries Pty Ltd (1996) 72 FCR 151 at 156-157) were reproduced in Prantage at [82]:

   82.      …

1.Section 43 of the FCA confers an absolute and unfettered discretion on the Court to make orders as to costs but the discretion must be exercised judicially.

2.In order to exercise the discretion judicially the following principles have been accepted by the Court as applicable:

(a)   the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;

(b)  the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course;

(c)  whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.

1. In Hand & Bodilly [2013] FamCAFC 98 (“Hand & Bodilly”) the Full Court (per Faulks DCJ, Ryan and Watts JJ) considered the appropriateness of an order for indemnity costs, where party/party costs or solicitor/client costs could be ordered. Rule 19.18 of the Rules provides:

   (1)That the court may order that a party is entitled to costs:

   (a) of a specific amount;

   (b) as assessed on a particular basis (eg lawyer and client, party/party or indemnity); …

2. In Hand & Bodilly, the difference between party/party costs and solicitor/client costs was accepted to be:

   91.…

   … that on a taxation between parties on a solicitor and client basis, the unsuccessful party has to pay all the costs incurred by his opponent excepting in respect of (1) costs and expenses incurred prior to the institution of the action; (2) journeys and expenses of which the party liable could have no knowledge, and which would not ordinarily be performed or incurred; (3) the employment of more counsel, or the payment to them of larger fees than the circumstances of the case warrant, including the giving of special retainers.

3. Their Honours went on to compare solicitor/client costs with indemnity costs in the following manner:

   102.… Sometimes that discussion equates “solicitor and client” costs with “indemnity” costs but as Santow JA said in Bouras v Grandelis (2005) 65 NSWLR 214:

   125. The weight of authority is that solicitor and client costs and indemnity costs are distinct, though the difference between them has been eroded by practice and by inconsistent amendments to the various legislative instruments that make up the costs assessment regime.

   126. An order for solicitor and client costs will allow all reasonable costs or all costs as fair justice to the other party will allow. The onus of proving that the costs are reasonable falls on the receiving party.

   127. Historically, solicitor and client costs were somewhat more generous than party/party costs. …

4. It follows that the distinction between indemnity costs and solicitor/client costs, is that the former order provides a complete indemnity for costs actually incurred, with no enquiry as to the reasonableness of the costs incurred. Whereas an order for solicitor/client costs requires an enquiry as to the reasonableness of the costs.

5. It is open to the Court to make a costs order on the basis of party/party costs, solicitor/client costs or indemnity costs.

6. When considering whether an order for indemnity or solicitor/client costs would be appropriate, it is instructive to revisit the decision of Sheppard J in Colgate-Palmolive v Cussons at 257 where his Honour reviewed the authorities and said:

   4. …The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require”. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo: “the categories in which the discretion may be exercised are not closed”. Davies J expressed (at 6) similar views in Ragata.

   5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 ay 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

   6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.

7. In Australian Transport Insurance Pty Ltd & Anor v Graeme Phillips Road Transport Insurance Pty Ltd& Ors (1986) 71 ALR 287 at 288 (“Australian Transport Insurance”), with respect to the Court’s discretion in the award of costs, Woodward J said:

   That discretion is “absolute and unfettered”, but must be exercised judicially (Trade Practices Commission v Nicholas Enterprises (1979) 28 ALR 201 at 207). Courts in both the United Kingdom and Australia have long accepted that solicitor and client costs can properly be awarded in appropriate cases where “there is some special or unusual feature in the case to justify the court exercising its discretion in that way” (Preston v Preston [1982] 1 All ER 41 at 58). It is sometimes said that such costs can be awarded where charges of fraud have been made and not sustained; but, in all the cases I have considered, there has been some further factor which has influenced the exercise of the court's discretion — for example, the allegations of fraud have been made knowing them to be false, or they have been irrelevant to the issues between the parties: see Andrews v Barnes (1888) 39 Ch D 133; Forester v Read (1870) 6 LR Ch App 40 Christie v Christie (1873) 8 LR Ch App 499; Degmam Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354.

   Another case cited in argument was Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 where (at 502) Tadgell J allowed solicitor and client costs because he found the pursuit of the action to have been “a high-handed presumption”.

8. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd & Ors (1988) 81 ALR 397 at 401 Woodward J, with respect to the award of costs, referred to what he said in Australian Transport Insurance and stated:

   No doubt the expression “high-handed presumption” was appropriate in the case Tadgell J [Australian Guarantee Corp Ltd v De Jager [1984] VR 483] had to decide, and he needed to go no further; but in order to establish a convenient principle in such cases it is necessary to be a little more prosaic. 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. (emphasis added).

1. The Court needs to be satisfied whether there are exceptional circumstances in this case which would enliven the discretion to depart from the general rule that each party pay his or her own costs, and make an order for costs on a solicitor/ client or indemnity basis.

2. In the present matter there are two factors which are sufficiently exceptional to consider departing from the rule.

3. The wife instituted proceedings for property settlement in circumstances where she was not only aware that proceedings had been commenced in a court of competent jurisdiction in Country B but she was actively engaged in those proceedings. At all relevant times she was legally represented. I consider that her commencement of proceedings in the Family Court of Australia could come into the category of cases referred to by Woodward J in Australian Transport Insurance which is emphasised at paragraph 37 above. Whether her conduct at the commencement of her application met the criteria set down by his Honour might be arguable but in my view, her conduct in continuing the Australian proceedings after the Country B proceedings had been finalised, and after her appeal to the Supreme Court of Country B had been dismissed, comes squarely within the category of proceedings commenced or continued with wilful disregard of the known facts or the clearly established law.

4. That alone would have been sufficient to justify departure from the norm, but the wife’s conduct is aggravated by the fact that she continued the Australian proceedings in disregard of the anti-suit injunction made on 8 November 2010 by the National Court of Country B.

5. The combination of those two factors leads me to find that it is appropriate to depart from the usual rule. I am not, however, persuaded that indemnity costs are appropriate. There should be some scrutiny of the reasonableness of the costs incurred by the husband, although I consider that this was an appropriate matter in which to brief Senior Counsel.

6. Therefore the wife will pay the husband’s costs of the application for summary dismissal filed on 5 February 2013 on a solicitor/client basis as assessed or agreed.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 27 November 2013.

Associate: 

Date:  27 November 2013