Chtibi and Chtibi and Ors - [2018] FamCA 1095

FAMILY COURT OF AUSTRALIA

CHTIBI & CHTIBI AND ORS

[2018] FamCA 1095

FAMILY LAW – COSTS – Where additional respondents joined as parties by the wife – Where the wife failed to comply with directions as to filing an amended application setting out with particularity orders sought against the additional respondents – Where the additional respondents were consequently removed as parties – Where the additional respondents seek an order for costs against the wife – Where discussion of applicable principles – Where wife ordered to pay costs

Family Law Act 1975 (Cth) ss 106B, 117
Family Law Rules 2004 (Cth) r 6.03, 19.08, 19.10, 19.18

Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160
Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536
Collins & Collins (1985) FLC 91-603
D & D (Costs) (No 2) [2010] FamCAFC 64
Fennessy & Gregorian [2009] FamCAFC 44
Greedy & Greedy (1982) FLC 91-250
Harris & Dewell & Harris (Costs) [2018] FamCAFC 180
Hawkins & Roe [2012] FamCAFC 77
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
Joyce & Fante [2013] FamCAFC 141
Limousin & Limousin [2007] FamCAFC 1178
Luadaka & Luadaka (1998) FLC 92-830
Marny and Anor & Garnett and Anors [2014] FamCA 247
Parke & the Estate of the Late A Parke (2016) FLC 93-748
Penfold v Penfold (1980) 144 CLR 311
White Industries (Qld) Pty Ltd v Flower & Hart (a firm) [1998] FCA 806; (1998) 156 ALR 169
Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681

APPLICANT:

Ms A Chtibi

FIRST RESPONDENT:

Mr B Chtibi

SECOND RESPONDENT:

Mr C Chtibi

THIRD RESPONDENT:

Ms D Chtibi

FILE NUMBER:

PAC

3587

2015

DATE DELIVERED:

19 December 2018

PLACE DELIVERED:

Parramatta

PLACE HEARD:

Parramatta

JUDGMENT OF:

Foster J

HEARING DATE:

By way of written submissions last received on 5 October 2018

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Mr Barber of Barber Lawyers

SOLICITOR FOR THE FIRST RESPONDENT:

Mr Bond of Bond Lawyers

SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS:

Mr Bainbridge of Bainbridge Legal

Orders

That the wife pay the costs of the Second and Third Respondents in the sum of $5,959.25 within two months from this date.
That otherwise the application for costs be dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Chtibi & Chtibi and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 3587 of 2015

Ms A Chtibi

Applicant

And

Mr B Chtibi

First Respondent

And

Mr C Chtibi

Second Respondent

And

Ms D Chtibi

Third Respondent

REASONS FOR JUDGMENT

The discrete application for determination is an application for costs by the former second and third respondents in these proceedings against the wife.

Context

Proceedings as to final property adjustment between the husband and wife were adjourned part heard after two days of hearing on 5 and 6 February 2018.
On 6 February 2018 the proceedings were adjourned for further judicial case management to 26 March 2018, noting that it was the wife’s proposal to seek to join additional parties to the proceedings.
On 26 March 2018 orders were made that the wife file and serve any such amended application joining further or other parties by no later than 4 May 2018, with such application setting out, with particularity, the orders sought as against such other parties. Otherwise, it was ordered that the wife file and serve any Application in a Case seeking interim provision by way of property adjustment and costs by no later than 4 May 2018, and that such application be listed for judicial case management to 9.30 am on 18 May 2018.
On 18 May 2018, in the context of an application by the wife to reopen her evidence in chief, the wife was ordered to file and serve written submissions in support of such application by no later than 1 June 2018 with the husband to file and serve any submissions in response by no later than 15 June 2018, and upon completion of submissions judgment reserved to chambers.
Otherwise, on 18 May 2018 upon noting that the wife had joined the second and third respondents by reason of her Further Further Amended Application filed 4 May 2018 seeking, in substance, orders under s 106B of the Family Law Act 1975 (Cth) (“the Act”), it was ordered that the wife file a further amended application setting out, with particularity, the s 106B orders sought by her as against the second and third respondents by no later than 1 June 2018.
On 21 August 2018 the matter was again listed for judicial case management and orders were made as follows:
(1)Proceedings are adjourned for further judicial case management to 9.30 am 21 September 2018.
(2)The time proscribed by orders made 18 May 2018 for the wife to file and serve written submissions in support of her application to reopen evidence be extended to close of business on 20 September 2018 and in default the application to reopen shall stand dismissed.
(3)The time proscribed by orders made18 May 2018 for the wife to file a further amended application setting out with particularity the orders sought against the second and third respondents be extended to close of business on 20 September 2018 and in default the second and third respondents shall be discharged as parties to these proceedings.
(4)The time proscribed by orders made on 18 May 2018 for the second and third respondents to file a response to the wife’s amended application be extended to close of business on 28 September 2018 noting that any such response will simply seek a dismissal of the wife’s case as against the second and third respondents.
(5)The wife pay the husband’s costs thrown away by reason of the further adjournment with those costs to be a charge as against any property entitlement of the wife if any but otherwise not enforceable until final orders are made in these proceedings.
(6)The wife pay the second and third respondent’s costs thrown away by reason of the further adjournment with those costs to be a charge as against any property entitlement of the wife if any but otherwise not enforceable until final orders are made in these proceedings.
On 21 September 2018 the wife had not complied with her obligations under orders made 21 August 2018 and orders were made as follows:
(1)The wife’s application seeking leave to reopen her evidence in the trial stands dismissed.
(2)Upon noting that the wife filed a Further Amended Initiating Application after the close of business on 20 September 2018, the Second and Third Respondents are discharged as parties to these proceedings.
(3)Any application for costs by the former respondents, Mr C Chtibi and Ms D Chtibi be by way of written submissions file and serve by no later than 5 October 2018 and that any submissions in response by the Applicant wife be filed and served by no later than 19 October 2018, thereafter judgment reserved to chambers.
(4)The proceedings be adjourned part-heard to a date to be fixed for one day plus for further hearing.
(5)Costs of today are reserved
The second and third respondents have in accordance with the orders referred to on 5 October 2018 filed written submissions as to costs seeking their costs against the wife and her legal representative on an indemnity basis. No submissions were received from the wife or her legal representative.

Costs

Section 117 of the Act provides that each party to the proceedings shall bear his or her own costs.
That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.
Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They are as follows:
a)the financial circumstances of each of the parties to the proceedings;
b)whether any party has legal aid and the terms of any grant of aid;
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 answers, 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.
In Collins & Collins (1985) FLC 91-603 (at 79,877), the Full Court described the discretion conferred by s 117 as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way.
In Greedy & Greedy (1982) FLC 91-250 and Luadaka & Luadaka (1998) FLC 92-830, the Full Court made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.
The Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
17.With respect to the application of the section, in Penfold v Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a clear case".
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
(footnotes omitted)
18.The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:
… A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
The provision relating to the calculation of costs is set out in r 19.18(1) of the Family Law Rules 2004 (Cth) (“the Rules”) which states:
19.18Method of calculation of costs
(1)The Court may order that a party is entitled to costs:
(a)of a specific amount;
(b)as assessed on a particular basis (e.g. lawyer and client, party/party or indemnity);
(c)to be calculated in accordance with the method stated in the order; or
(d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.
It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162 that the purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”.
In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 the Court said at [10] that the Court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.
Murphy J observed in Parke & the Estate of the Late A Parke (2016) FLC 93‑748 at [130]:
If the court is to fix a sum it should 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”…

Indemnity Costs

The applications before the Court are applications for costs on an indemnity basis, or such other order as the Court thinks fit.
It is usual for the Court to make an order for costs on a party/party basis if an order for costs is made at all.
Rule 19.18(3) further provides that:
(3) In making an order under subrule (1), the court may consider:
(a)the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the case;
(c)the rates ordinarily payable to lawyers in comparable cases;
(d)whether a lawyer’s conduct has been improper or unreasonable;
(e)the time properly spent on the case, or in complying with pre-action procedures; and
(f)expenses properly paid or payable.
The Court has jurisdiction in its discretion to make an order for costs on an indemnity basis and the purpose of such an award is to more fully or even wholly repay to a party all, or at least the majority, of their legal costs and disbursements and charges incurred in the proceedings.
The category of cases in which an award of an indemnity costs order may be appropriate are not closed and as the Full Court of the Family Court observed in Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681 at [31]:
… It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such order is sought. …
More recently, the Full Court has considered indemnity costs in Joyce & Fante [2013] FamCAFC 141, Limousin & Limousin [2007] FamCAFC 1178, Fennessy & Gregorian [2009] FamCAFC 44 and D & D (Costs) (No 2) [2010] FamCAFC 64.
Otherwise, the principles underlying an award for indemnity costs have been classically summarised by Sheppard J in Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536 where his Honour, in summary, said at [24]:
…
1. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on a party and party basis. …
2. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. …
3 In consequence of the settled practice which exists, the Court ought not usually make an order for payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. …
Sheppard J made observations as to some of the circumstances which may warrant the exercise of the discretion to award indemnity costs and they included:
-   false and irrelevant allegations of fraud;
-   misconduct that causes a loss of time to the Court and other parties;
-   where the proceedings were commenced or continued for an ulterior motive;
-   the undue prolongation of a case on groundless contentions; and
-   wilful disregard of known facts and clearly established law.
In Harris & Dewell & Harris (Costs) [2018] FamCAFC 180 (20 September 2018) the Full Court said (footnotes omitted):
23.In Kohan and Kohan, the Full Court held, in applying the principles expounded by Sheppard J in Colgate-Palmolive, that an order for indemnity costs represents a “very great departure from the normal standard”. In the later decision of the Full Court in Prantage & Prantage, Thackray and Ryan JJ referred to Kohan and other authorities in the Full Courts of both this Court and the Federal Court of Australia as well as the state appeal courts. Their Honours concluded (at [86]) that the “usual rule” continued to apply in respect of awards of costs in this Court notwithstanding the Full Court accepting that the difference between party/party costs and a party’s actual costs has continued to grow significantly.
24.That proposition also derives support from what Callinan J said in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation. His Honour said that an order for indemnity costs should “be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers”.
25.The rarity of an order for indemnity costs can also be seen illustrated by the comments of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 2), referred to by their Honours in Prantage (at [102] – [103]). Lindgren J said that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation.”
26.Of course, in proceedings under the Act, an overriding “usual rule” is prescribed by s 117(1), namely that each party bears their own costs. The degree of departure between that “usual rule” and a result where one party bears the totality of the other party’s costs can be seen to be all the greater.
As to the more relevant considerations, the second respondent’s contend:
a)The wife is not in receipt of assistance by way of a grant of legal aid.
b)That the wife is conducting the proceedings improperly in that the second and third respondents have been joined in circumstances where the wife’s case against them failed to demonstrate a proper cause of action and indeed in joining the additional respondents the wife failed to comply with the provisions of Rule 6.03(3) that requires an affidavit setting out the facts relied upon supporting the addition of the second and third respondents and supporting the orders sought against them.
c)The second and third respondents have been required to appear before the Court on four occasions, on which occasions various orders were made and were not complied with.
d)The wife has been wholly unsuccessful in her case such as it was as against the second and third respondents.
e)That the wife was put on notice by letters to her solicitor dated 8 June 2018 and 18 July 2018 as to her default and inviting the wife to abandon her claim against the second and third respondents with no order as to costs. Such an offer was not accepted by the wife. Inherent in this submission is the contention that the wife’s conduct in all the circumstances was unreasonable.

The second and third respondents in compliance with rule 19.08 (3) have provided as required a copy of the costs agreement with their legal representative. Such is a necessary prerequisite to any order for indemnity costs.
This is not a matter that gives rise to indemnity costs.
It is from the matters set out above that in the circumstances of this matter it is appropriate that there be an order for costs as against the wife. The second and third respondents quantify costs claimed in the sum of $5,959.25 which in all circumstances appears most reasonable. It is appropriate that an order be made as against the wife in that sum. An order will be made accordingly.
Otherwise, the second and third respondents seek an order that would make the wife and her legal representative jointly and severally liable for any order for costs made.
Rule 19.10 of the Family Law Rules 2004 provides:
(1)A person may apply for an order under subrule (2) against a lawyer for costs thrown away during a case, for a reason including:
(a)the lawyer's failure to comply with these Rules or an order;
(b)the lawyer's failure to comply with a pre-action procedure;
(c)the lawyer's improper or unreasonable conduct; and
(d)undue delay or default by the lawyer.
(2)The court may make an order, including an order that the lawyer:
(a)not charge the client for work specified in the order;
(b)repay money that the client has already paid towards those costs;
(c)repay to the client any costs that the client has been ordered to pay to another party;
(d)pay the costs of a party; or
(e)repay another person's costs found to be incurred or wasted.
To enliven the jurisdiction it was said by Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) [1998] FCA 806; (1998) 156 ALR 169 at 239 there was required, proceedings:
Unreasonably initiated or continued...when it had no or substantially no prospects of success but such unreasonableness must relate to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the cause or and the proper administration of justice.
As was observed by Cronin J in Marny and Anor & Garnett and Anors [2014] FamCA 247:
39.In Burns & Caldwell & Anor (Costs) [2011] FamCAFC 84, Coleman J noted that in considering whether to make an order against a solicitor, the Court had to balance public interests. His Honour cited with approval Ridehalgh v Horsfield [1994] 3 All E R 848 at 855 where it was said:
[L]awyers should not be deterred from pursuing their client’s interests by fear of incurring a personal liability to their client’s opponents; that they should not be penalised by orders to pay costs without a fair opportunity to defend themselves; that wasted costs order should not become a back-door means of recovering costs not otherwise recoverable by a legally-aided or impoverished litigant; and that the remedy should not grow unchecked to become more damaging than the disease. The other public interest, recently and clearly affirmed by Act of Parliament, is that litigants should not be financially prejudiced by the unjustifiable conduct of litigation by their or their opponent’s lawyers. The reconciliation of these public interests is our task in these appeals. Full weight must be given to the first of these public interests, but the wasted costs jurisdiction must not be emasculated.
40.In proceedings involving these parties in an action in the Supreme Court of Victoria as late as 2013, (see Jane v Bob Jane Corporation Pty Ltd & Anor (No 2) (supra)) Sifris J made an observation which has some similar significance here. His Honour said:
(the husband) was entitled to run his case and endeavour to convince the Court that his explanation was valid and sufficient. The fact that I disagreed with him says nothing about his entitlement to make the argument. His case was that he did not disregard the known facts but disputed the accuracy and impact of those facts. His evidence fell short and he failed. The facts as found by the Court were only after a trial with evidence and cross-examination. The conclusion after a trial does not necessarily mean that at the outset it was inevitable that the claim would fail. The Court must avoid hindsight analysis, a point made by counsel for (the husband).
41.This Court has to also be cautious before drawing conclusions in hindsight against solicitors who act for litigants who do not convince courts particularly in relation to the exercise of discretion in their favour. I adopt with respect the same approach of Sifris J.
42.It has also been held in other jurisdictions that a legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim or a defence which is plainly doomed to fail (see Lemoto v Able Technical Pty Ltd & Ors [2005] NSWCA 153; (2005) 63 NSWLR 300 per McColl JA). Caution should also be taken where the person against whom the order is sought is a “non-party” (see Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178).
43.Nothing in the evidence satisfies me that Mr Garnett and G Lawyers acted improperly or even unreasonably when I consider the tests as articulated by other courts above. In my view, the submission must fail.
In this matter the orders giving rise to this consequent costs application were made in the context of interim interlocutory issues where there was no ability to find as disputed facts or indeed the merit of any claim asserted by the wife against the second and third respondents. There is no evidence that would bring the current application within the provisions of Rule 19.10(1). In such a circumstance, it is improper to seek to impugn her legal representative.
The application for costs against the wife’s legal representative will be dismissed.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 19 December 2018.

Associate:

Date: 19 December 2018