Cornish & Cornish (No 4)
[2024] FedCFamC1F 451
•5 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Cornish & Cornish (No 4) [2024] FedCFamC1F 451
File number: MLC 12589 of 2019 Judgment of: CARTER J Date of judgment: 5 July 2024 Catchwords: FAMILY LAW – COSTS – Application and cross application for costs on an indemnity basis – where indemnity costs are not appropriate – whether costs should be taxed – whether the court should fix costs – Costs order made against the husband in an amount fixed. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17
Cases cited: Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432
Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 46 FCR 225
Cross v Beaumont (2008) 39 Fam LR 389
Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23
Kohan & Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784
Raymond & Raymond (No 2) [2024] FedCFamC1A 92
Stoian v Fiening (Costs) [2014] FamCA 944
Vang & Chung [2024] FedCFamC1A 25
Yunghanns v Yunghanns (2000) FLC 93-029
Division: Division 1 First Instance Number of paragraphs: 75 Date of last submission/s: 3 July 2024 Date of hearing: 18 March 2024 Place: Melbourne Solicitor for the Applicant: Marsdens Law Group Solicitor for the Respondent: Taussig Cherie Fildes ORDERS
MLC 12589 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR CORNISH
Applicant
AND: MS PEARCE AS PERSONAL LEGAL REPRESENTATIVE OF MS CORNISH
Respondent
ORDER MADE BY:
CARTER J
DATE OF ORDER:
5 JULY 2024
THE COURT ORDERS THAT:
1.The husband pay the respondent’s costs fixed in the sum of $75,000.
2.All extant applications are otherwise dismissed.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUSTICE CARTER
INTRODUCTION
I made orders on a final basis on 1 February 2024, which were amended pursuant to the slip rule on 4 March 2024.
The background of this matter is extensive and is set out in my reasons for judgment delivered on 1 February 2024.
The husband’s cost application
The husband filed an Application in a Proceeding on 29 February 2024 and affidavit in support seeking that the respondent (being Ms Pearce as the personal legal representative of Ms Cornish) pay his costs of and incidental to the final hearing on an indemnity basis, calculated at four alternative dates following the making of various offers to settle. Taken at its highest, he sought costs of and incidental to the final hearing to the date of judgment delivery on an indemnity basis, which he said amounted to $426,096.94 in total. At the lower end, he sought indemnity costs from the fourth offer to settle made on 1 February 2023 to the date of judgment, which he said amounted to $207,092.60 in total. Alternatively, he sought costs calculated in accordance with the scale.
The matter was mentioned before me on 18 March 2024. Orders were made requiring:
(a)the respondent to file and serve a Response to the Application in a Proceeding and a supporting affidavit by 2 April 2024;
(b)the husband to file and serve written submissions by 16 April 2024; and
(c)the respondent to file and serve written submissions by 30 April 2024.
The respondent’s cross application for costs
In the respondent’s response filed on 3 April 2024, the estate sought, inter alia, that the husband pay the costs and disbursements incurred by the respondent on an indemnity basis of in excess of $300,000 together with all disbursements relating to the engagement of AG Pty Ltd in the sum of $71,803.
The husband opposed the respondent having leave to seek a costs order against him. He said that application was made out of time, and in circumstances where:
(a)the respondent was well aware of the requirement that any costs application be brought within 28 days of the finalisation of the proceedings; and
(b)the respondent conceded no application for costs would have been made on behalf of the respondent against the husband had the husband not sought costs against it;
it would be an abuse of process to allow the respondent to make a ‘retaliatory’ costs application.
On 7 May 2023 I granted leave to the respondent to make that application out of time and required the applicant to file any further submissions within 14 days of the date of those orders. Those submissions were filed on 23 May 2023.
I further indicated I would provide my reasons for granting leave when I dealt with the substantive costs applications.
Having considered the matter further I do not regard it as necessary to have granted leave to the respondent. The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) make it plain that an application for costs may be made by filing an Application in a Proceeding within 28 days after the final order is made – as the husband has done. Rule 12.13(3)(a) also provides that an application for costs can be made “at any stage during a proceeding”. That is, the respondent is permitted to make such application for costs at any time whilst the husband’s Application in a Proceeding is on foot.
If I am wrong about that, at any rate, I consider it is appropriate to grant the respondent leave out of time. As will be plain from these reasons, and from my reasons for judgment delivered on 1 February 2024 the husband’s conduct as a litigant was highly problematic. To refuse the respondent leave to cross apply for costs would, in my view, work an injustice against the respondent. There is no real prejudice to the husband in leave being granted. He filed his costs application on the very last day he could, and he has been afforded the opportunity to respond to the respondent’s cross application.
Submissions in the event costs are fixed
The matter was mentioned again on 3 July 2024 at which time the parties were invited to make submissions as to whether in the event a costs order was made it was preferable to fix the costs rather than require the parties to participate in the taxation process. Both parties supported costs being fixed by the Court and made submissions as to an appropriate quantum of costs in that event.
The husband asserted that the total amount of party/party costs at scale from the commencement of the proceedings to the delivery of judgment was $280,345.88.
On behalf of the respondent in response to the husband’s submissions it was asserted as follows:
(a)the husband’s costs as articulated made no attempt to delineate between costs incurred in the parenting aspect of the dispute and costs incurred in the property aspects; and
(b)the husband’s figures included legal fees for proceedings against the estate in the state court, and included disbursements, in relation to some of which the estate had already paid half, and some of which the husband had paid from company (and effectively joint) monies and accordingly it would be inappropriate to reimburse.
In support of her application for costs to be fixed it was further submitted on behalf of the respondent:
(a)costs of approximately $323,000 were incurred by the wife prior to her death, which included parenting and property applications;
(b)costs of approximately $326,000 were incurred by the estate in relation to property only;
(c)taking a broad brush, the wife’s costs could be discounted at 50 per cent (to take into account that those costs were in relation to both parenting and property applications), so that the total costs incurred by the wife and then the estate relating to property only would be approximately $488,472;
(d)the options available to the Court in making any costs order are not limited to indemnity costs or party/party costs, and there are circumstances in this matter that make it appropriate that a costs order more generous than party/party be awarded in the event that it is determined that the circumstances fall short of an indemnity; and
(e)in the circumstances it would be appropriate to fix the respondent’s costs at $376,124.97, being about 77 per cent of the total costs relating to property.
THE EVIDENCE
The husband relied on his:
(a)Application in a Proceeding filed 29 February 2024;
(b)affidavit filed on 29 February 2024;
(c)cost notice filed 15 March 2024;
(d)written submissions filed on 17 April 2024; and
(e)affidavit-in-reply filed on 23 May 2024.
A table of costs calculated at scale on a party/party basis was also provided to the Court and the respondent on 3 July 2024.
The husband’s material is unnecessarily extensive. It is at times combative and argumentative – and substantially overlooks the criticisms that were made of him as a litigant, and the findings I made against him in my reasons for judgment. It also contains substantial amounts of material that are irrelevant to the discrete costs applications that are currently before me.
The respondent relied on the following documents:
(a)costs notice filed 15 March 2024;
(b)Response to an Application in a Proceeding filed 3 April 2024;
(c)affidavit filed 3 April 2024; and
(d)written submissions filed 1 May 2024.
THE LAW IN RELATION TO COSTS
The general rule in relation to costs is that each party will bear their own costs. That is set out in s 117(1) of the Family Law 1975 (Cth). However, that rule is subject to the provisions of s 117(2). That subsection provides that a court may make such order for costs as it considers just if “…the court is of opinion that there are circumstances that justify it in doing so…”
Subsections 117(2A)(a)-(g) of the Act set out the matters the Court must consider in determining whether to exercise its discretion and make an order as to costs. No one factor must be present, and no particular factor is to be given more or less weight than any other. The factors to which the Court must have regard are 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.
DISCUSSION
Financial circumstances of each of the parties to the proceedings
According to the final orders I made in this matter on 1 February 2024, the pool as I found it was to be divided equally between the respondent and the husband. The husband deposed that in accordance with those orders he had made the payment of $821,473 to the estate.
As set out in my reasons for judgment, the husband is in employment and has historically been able to derive a significant income.
The husband has set out what he asserts are his current financial circumstances in his voluminous affidavit filed 29 February 2024 and his affidavit-in-reply subsequently filed on 23 May 2024. He said he has a number of liabilities, which have increased since the making of the final orders. Indeed he said his liabilities now exceed the value of the assets he is retaining. The husband again referred to asserted liabilities to a Mr BA and Mr AZ. As I set out in my reasons for judgment, the husband did not produce any loan agreements between himself and Mr BA or Mr AZ and I found the assertion that those persons were owed funds vague and uncertain, and that there was no evidence that the loans, if funds were even advanced, were likely to be enforced. The husband’s affidavit filed 23 May 2024 appears to attach a loan agreement between him and Mr AZ dated 23 October 2023. This was not adduced at trial (noting that closing submissions were made on 30 October 2023) and in the circumstances I put no weight on it.
At any rate, the case law makes it clear that impecuniosity is not a bar to the making of a costs order if the conduct of a party otherwise warrants that a cost order be made: Cross v Beaumont (2008) 39 Fam LR 389 at [60].
Both parties have incurred significant legal fees throughout these proceedings.
Legal assistance by way of legal aid
Neither party had legal assistance from legal aid.
Conduct of the parties to the proceedings
The case law makes it clear that conduct of the parties to the proceedings includes factors such as uncooperative behaviour, prolonging of litigation, filing unreasonable or unmeritorious applications, non-disclosure or some other conduct that leads to an increase in costs by the other party.
I do not accept the husband’s characterisation that the respondent’s conduct in these proceedings has been intimidating, hostile, antagonistic, aggressive, or harassing, nor that the conduct of the respondent caused confusion or chaos as he asserts.
Conversely, I am satisfied that the husband’s conduct as a litigant caused the respondent to be understandably suspicious of the husband and has had the effect of delaying proceedings and significantly increasing both parties’ legal fees.
The husband’s belligerent and inappropriate interference with the single expert appointed in 2020 to value the business ultimately caused the single expert to withdraw. There were several hearings regarding this issue, with orders ultimately being made for the respondent to appoint its own expert. That expert then struggled to obtain documents and information from the husband. It was the husband’s assertion throughout the bulk of the years of litigation that the business had “shut down” and had no value and accordingly did not need to be valued – an assertion rejected by me at trial.
The husband’s tardiness in providing disclosure required multiple enquiries being made by the respondent including the bringing of several Applications in a Proceeding by the respondent, and the issuing of multiple subpoenas.
Some of the husband’s assertions as to the pool were abandoned only at the outset of the trial. For instance, until the trial commenced the husband had asserted he owed the fourth respondent over $300,000, and he sought this liability be included in the pool of assets. That position was abandoned only at the commencement of the hearing. By that time, of course, the respondent had incurred legal fees investigating this assertion.
At trial the husband was an unimpressive witness. He struggled to make a number of appropriate concessions even in the face of the production of documents that contradicted his assertions. He struggled to answer questions directly. This resulted in additional Court time being taken.
As observed in my reasons for judgment, at times the husband’s evidence was misleading, inconsistent, confusing, implausible, unconvincing and demonstrably wrong. I opined:
50.… there were demonstrable inaccuracies in the husband’s sworn material, which were difficult to reconcile with the precise manner in which he gave other parts of his evidence and could not, in my view, be readily explained as genuine error or oversight.
51.It was apparent that the husband sought to frame the assets and liabilities in a way that would reduce any entitlements the estate may have. Sensibly, some of the liabilities he initially sought to include were not pressed at the conclusion of the trial, as they were clearly unsustainable. However, the husband should have known those liabilities were not appropriate to include, and Court time was wasted on some of these points.
…
58.Similarly, the husband’s evidence regarding contributions appeared to be exaggerated in his favour.
…
59.I formed the impression that the husband sought to formulate the pool, and the evidence, very much to his advantage.
I also observed that the respondent sought to formulate the pool in a manner that advantaged the estate. That is not surprising given the husband’s behaviour fuelled distrust and suspicion. As observed in my reasons for judgment:
60.… [The applicant’s] distrust was fuelled by what at times has clearly been poor behaviour by the husband in the context of the separation and as a litigant. That included his apparently tactless communications with the wife towards the end of her life, his belligerent engagement with the single expert in 2020, and the husband’s tardiness, and failure at times to meet his disclosure obligations.
Importantly the respondent properly resiled from a number of assertions regarding her characterisation of the asset pool when provided at trial, or very shortly before trial, with reasonable explanations for various concerns. Had documents and explanations been provided by the husband to the respondent in a timely manner many of the respondent’s concerns and suspicions could have been more promptly addressed.
In my reasons for judgment, I referred to a number of documents being disclosed for the first time in the husband’s trial material. Additionally, the Australian Tax Office portal documents regarding the various entities were disclosed by the husband only in the running of the trial. The husband has entirely overlooked these criticisms in the material filed by him in support of his application for costs.
Whilst I determined that the husband had not failed in his duty to provide full and frank disclosure to an extent that enabled any adverse inferences to be drawn against him regarding his financial circumstances, I was certainly critical of the husband’s tardiness in producing documents, and his delays and, at times, failure to provide particulars in relation to requests for information. I also referred to the necessity for the respondent to subpoena documents that were not produced by the husband in a timely manner.
I am satisfied that the husband’s conduct increased the legal fees of the respondent. At a pre-trial stage that included:
(a)increased correspondence requesting documents and explanations – that were then not produced or answered in a timely fashion;
(b)the issuing of multiple subpoenas in the face of the husband’s tardy production of documents; and
(c)additional interim hearings, including aspects of the appointment of and communication with the single expert, objections to subpoenas, issues with discovery and the husband’s failure to comply with orders to prepare and provide updated financial material.
At the final hearing, that included the husband refusing to make appropriate concessions and allowing questions to be put to the respondent knowing that the questions were inaccurately put.
The husband’s complaints in relation to the number of subpoenas issued by the respondent’s solicitors and the allegations of non-disclosure were addressed in my reasons for judgment. I am satisfied that while the respondent’s solicitors filed a significant number of subpoenas, these were done so with care and consideration and I take no issues with the respondent’s conduct in doing so.
I similarly reject the husband’s assertions that:
(a)the solicitors for the respondent bombarded him with correspondence in an effort to overwhelm, oppress, intimidate, bully or take advantage of him;
(b)excessive demands for disclosure were made, and
(c)many of the Applications in a Proceeding initiated by the respondent were unnecessary.
Rather, I am satisfied that correspondence was sent, and interim applications were made in an effort to combat the husband’s lack of candour. Had the husband been more cooperative and forthcoming regarding discovery and providing information, the respondent would not have been so suspicious of the husband nor felt so compelled to ‘chase every rabbit down every burrow’.
The husband’s allegations that Ms Pearce personally – or her solicitors – threatened, attacked, defamed and stalked him and complained about the husband to his family members, friends and professional colleagues, even if it occurred, is not relevant. The case law makes it plain that my consideration of this factor is limited to the conduct of the parties as litigants.
Similarly, any assertion that counsel acting on behalf of the respondent’s brother behaved in an inappropriate manner towards the husband or his then lawyer are not relevant.
I note further the husband’s complaints that the respondent was unreasonable in not consenting to his application to adduce his own expert valuation. Of course, had the husband not interfered unreasonably with the appointment of the single expert earlier in the proceedings, the Court would not have had to entertain any such application.
I also reject the submissions made by the husband that the respondent has at any time sought to mislead the Court, or engaged in conduct described by the husband as “strategic, desperate, manipulative and doomed to fail”.
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
The husband referred in his written submissions to an Application in a Case filed 16 November 2020 in which he sought enforcement of orders made on 22 July 2020 providing for the sale of properties, asserting that the respondent sought to change her position and retain the properties. This is only partly true. The husband also changed his position. That is, by consent, the orders of 22 July 2020 provided for the sale of the properties at BB Street, Town V, 4 U Street, Town V and 2 U Street, Town V. The husband then changed his position and did not want to sell the properties at BB Street, Town V and 4 U Street, Town V. The orders for the sale of those properties was not formally discharged, but it is common ground that both parties sought to retain those properties at the final hearing.
Additionally, the husband’s Application in a Case included orders sought by him to discharge the earlier spousal maintenance orders and that he receive litigation funding and a part property settlement.
There were a number of matters ventilated at the hearing of that Application in a Case on 14 December 2020. The husband’s applications for a single expert to report on the wife’s medical condition was dismissed, as was his application to discharge the orders for spousal maintenance. No orders were made for him to receive part property or litigation funding. To the extent that the husband could be taken to assert that his Application in a Case filed 16 November 2020 was necessitated by the failure of the respondent to comply with previous Court orders it fails.
Whether any party to the proceedings has been wholly unsuccessful
As was made clear in my final judgment, neither party was wholly unsuccessful. A number of the arguments advanced by the respondent as to the asset pool were accepted, including the notional addback of funds paid by the husband to his brother; the refusal to notionally addback into the pool the superannuation paid to the estate; and the exclusion of a number of liabilities contended by the husband.
Whether the other party to the proceedings has made an offer in writing to the other party to settle the proceedings
The husband relied on a series of offers he made throughout the course of these proceedings to the wife and then to the respondent. He said the wife and then the respondent should have accepted the offers made which – at least in relation to those made on or before 18 January 2023 – would have resulted in a more favourable outcome for the respondent than ultimately determined at the final hearing.
The orders I made on 1 February 2024 provided for the respondent to receive a greater share of the assets than was offered by the husband in his offers made 1 February 2023 and 29 August 2023.
As observed by Austin J in Raymond & Raymond (No 2) [2024] FedCFamC1A 92 at [11] – [12]:
11.The Act does not specify that offers must be better than the result achieved before they become relevant as a consideration (s 117(2A)(f)). In Pennisi & Pennisi (1997) FLC 92-774, the Full Court said (at 84,547):
… The plain words of the paragraph do not limit a Court’s attention to offers which are greater than the amount awarded. Nor does the paragraph state what consequences flow from whether the offer is greater or lesser than the amount awarded, or how much that is the case. Words of limitation should not be imported into the provision and nor should it be read as though offers in proceedings under the Act carry the same consequences as payments into Court in common law matters.
We do, however, consider that the closer the offer is to the award when the offer is under the amount awarded by the Court, the more weight that should be given to this factor in considering the question of costs. This principle must not, however, be rigidly applied. Offers must be seen in the context of the case and the extent of the offeree’s knowledge of the parties’ financial circumstances while the offer is live. In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties’ financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer. There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination. These and other features of the context of offers must be taken into account when considering whether it was reasonable or not to accept an offer, no matter how close to the ultimate result the offer may be. …
12.The Full Court has since embraced those propositions (Conrad & Conrad (2020) 61 Fam LR 301 at [25]–[30]).
In light of the husband’s conduct as already outlined in these reasons, it could not be said that, at the times the offers were made, the wife and then subsequently the respondent were in circumstances where there was adequate knowledge of the true financial affairs of the husband such that proper consideration could be given to the offers for settlement. In those circumstances no real weight can be put on the making of offers to settle. The husband’s own obfuscation and late provision of discoverable documents and financial statements for the business made it impossible for the respondent to properly consider the offers made. All but the last offer were made prior to the completion of the expert evidence concerning the value of the business – and I am satisfied it was substantially the husband’s failure to fully cooperate with the valuer and complete financial records in a timely manner that resulted in the valuation of the business being completed only shortly before the final hearing.
Accordingly, I accept the submission made by counsel for the respondent that at the time the offers were made “there was plainly an entirely inadequate and inaccurate picture of [the husband’s] financial circumstances”. Accordingly, neither the wife, nor subsequently the respondent could give proper consideration to the offers made.
Other matters relevant
The husband is not currently making any financial provision towards his daughter, Z. The estate is held for the sole benefit of that child. The husband’s application would reduce the funds available in that estate. I put little weight on the husband’s assertion that he would intend to use a portion of any costs order made “for the benefit of his daughter (including by investing for her)” – as such intention is entirely unenforceable.
The estate is holding funds on trust for the benefit of the parties’ only child and it must preserve what it can for the benefit of the child.
DETERMINATION
In the exercise of what has been described as a wide discretion, and taking all of the factors into account, I am satisfied that there are circumstances that justify making a costs order against the husband. I am not satisfied that there are circumstances that justify making a costs order against the respondent.
Indemnity costs
The authorities make it clear that an order for costs on an indemnity basis ought not be made lightly and is generally considered a departure from the usual course, see Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 46 FCR 225 observed by Sheppard J at 233.
In Colgate-Palmolive Company, Sheppard J provided some examples of circumstances that might justify the awarding of indemnity costs, and Holden CJ in Munday v Bowman (1997) FLC 92-784, at 84,660, drew from his Honour’s decision these examples:
(a) Where it appears that 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…
(b) Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud…
(c) Evidence of particular misconduct causing loss of time to the court and to other parties…
(d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions…
(e) An imprudent refusal of an offer to compromise.
(Citations omitted)
The categories of circumstances which enliven the discretion to award indemnity costs are not closed: see e.g. Yunghanns v Yunghanns (2000) FLC 93-029. However, the case law makes it clear that making an order for indemnity costs represents a very significant departure from the usual standard and should only be made where there are circumstances justifying that the “departure should be of an exceptional kind”, as observed by their Honours in the Full Court in Kohan & Kohan (1993) FLC 92-340 at 79,614.
Of particular relevance to my consideration is the husband’s making of a number of contentions as to the asset pool that were found to be baseless and which resulted in the solicitors for the estate expending time and resources investigating, and in additional Court time both at a pre-trial stage, and during the substantive hearing. However, I am ultimately not satisfied that there are exceptional circumstances that warrant an order for costs on an indemnity basis.
Quantum of costs
If indemnity costs are not ordered, the respondent in her response sought an order that the husband pay the respondent’s costs on a party/party basis as assessed by a Registrar. I am mindful that taxation takes time.
Rule 12.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), sets out the methods for calculating costs. That includes that I am able to fix an amount for costs. This enables the parties to avoid the expense, delay and inconvenience involved in taxation; Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432 at [51] approved by the Full Court in Vang & Chung [2024] FedCFamC1A 25.
As already set out, the parties were given the opportunity to make submissions in relation to whether costs could be fixed. This was a course supported by both parties, who were able to articulate what they each asserted would be an appropriate quantum of costs in their favour.
I note the observations of the Full Court in the matter of Sfakianakis and Sfakianakis [2019] FamCAFC 54 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 or 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 falls short of an indemnity. Orders for a partial indemnity or for a particular period are 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 costs nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a “special costs order”.
I am also mindful that whilst I have in these reasons been critical of the husband’s conduct, not all of his behaviour as a litigant has been problematic. Had both parties behaved in an exemplary manner no doubt their legal fees would have been reduced, but they still would have had legal fees to pay.
In essence, it seems to me that the costs the husband should meet are those that reflect the additional work that was required to be undertaken by the respondent as a result of the manner in which the husband pursued these proceedings – and taking into account that the proceedings involved both parenting and property at the outset, and then only property proceedings.
As observed by Einstein J in the case of Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23, the principles which inform the exercise of the Court’s discretion to fix costs pursuant to the Civil Procedure Act2005 (NSW) are as follows:
i.the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum NL v Johnson (1995) 57 FCR 119, Von Doussa J page 265: [following Purchase J in Leary v Leary [1987] 1 All ER 261 who described the purpose of the rule allowing the fixing of a gross sum as “the avoidance of expense, delay and aggravation involved in protracted litigation arising out of taxation” (All ER page 265)];
ii.the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable: Beach Petroleum at [16];
iii.the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available: Harrison v Schipp (2002) 54 NSWLR 738, per Giles JA at [22]; [following (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA) and adopted in Sony Entertainment v Smith (2005) 215 ALR 788];
iv.a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place: Harrison v Schipp at [22];
v.the gross sum “can only be fixed broadly having regard to the information before the Court”: Beach Petroleum at 124;
[in Hadid v Lenfest Communications Inc [2000] FCA 628 at [35] it was said that the evidence enables fixing a gross sum “only if I apply a much broader brush than would be applied on taxation, but that … is what the rule contemplates”.]
vi.nevertheless the power to award a gross sum must be exercised judicially, and after giving the parties an adequate opportunity to make submissions on the matter: Leary v Leary [1987] 1 WLR 72 at 76, and Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119 at 120;
vii.in terms of the necessity for the approach taken to be logical, fair and reasonable, Von Doussa J in Beach Petroleum NL & Anor v Johnson & Ors (No. 2) (1995) 57 FCR 119, put the matter as follows, at paras [16]:
“On the one hand the Court must be astute to prevent prejudice to the respondents by overestimating the costs, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary “fail safe” discount on the cost estimates submitted to the Court: Leary v Leary at 265…”
Justice Kent in Stoian v Fiening (Costs) [2014] FamCA 944 noted that these principles were applicable to what was then the operative rules with regard to the fixing of costs. These observations were referred to with approval in the very recent Full Court decision of Vang & Chung.
Accordingly, I am not required to undertake a traditional assessment of costs, and can use a ‘much broader brush’.
Additionally, in making an order under rule 12.17(1), I may consider:
(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 sub-rule 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.
I am satisfied it is appropriate for these parties, who have been engaged already in expensive, protracted and distressing litigation to avoid the further expense, delay and aggravation that would be attracted by an order for taxation.
In the exercise of my very broad discretion, I am satisfied it is just, logical, fair and reasonable to fix the respondent’s costs in the sum of $75,000. That is about 15 per cent of the costs incurred by the wife and then the respondent attributable to the property dispute. In my view that appropriately reflects the degree of complexity in the matter, and the conduct of the husband to which I have already referred which I am satisfied resulted in the costs incurred by the respondent being increased.
I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carter. Associate:
Dated: 5 July 2024
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