Cosio & Cosio (No 5)
[2024] FedCFamC1A 205
•5 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Cosio & Cosio (No 5) [2024] FedCFamC1A 205
Appeal from: Cosio & Cosio (No 3) [2024] FedCFamC2F 260 Appeal number: NAA 71 of 2024 File number: SYC 6131 of 2019 Judgment of: SCHONELL J Date of judgment: 5 November 2024 Catchwords: FAMILY LAW – APPEAL – COSTS – Where the respondent sought a costs order against the appellant – Where the appellant was wholly unsuccessful – Where the respondent sought costs against the appellant on an indemnity basis or alternatively costs in accordance with scale – Consideration of factors under s 117(2A) of the Family Law Act 1975 (Cth) – Where the Court is not satisfied there are exceptional circumstances warranting indemnity costs – Costs ordered in a fixed sum of $17,000. Legislation: Evidence Act 1995 (Cth) s 131(2)(h)
Family Law Act 1975 (Cth) s 117
Cases cited: Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 118 ALR 248
Kohan and Kohan (1993) FLC 92-340
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123; [2005] FamCA 158
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Warbrick and Warbrick (No. 2) (2021) FLC 94-030; [2021] FamCAFC 101
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Number of paragraphs: 28 Date of last submissions: 22 October 2024 Date of hearing: In chambers Place: Sydney, in chambers The Appellant: Litigant in person Counsel for the Respondent: Ms McMahon Solicitor for the Respondent: Marsdens Law Group ORDERS
NAA 71 of 2024
SYC 6131 of 2019FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR COSIO
Appellant
AND: MS COSIO
Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
5 NOVEMBER 2024
THE COURT ORDERS THAT:
1.The appellant to pay the respondent’s costs fixed in the sum of $17,000 such sum to be paid within 42 days.
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 the pseudonym Cosio & Cosio has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
On 6 September 2024, the Full Court dismissed the appellant’s Further Amended Notice of Appeal filed 31 May 2024. As a consequence of the dismissal of the appeal, the respondent seeks the appellant pay her costs of the appeal on an indemnity basis in the sum of $59,245.30 or alternatively, her costs said to be calculated in accordance with the Schedule 3 Rates in the sum of $27,895.23.
The appellant opposed the making of an order for costs but in the event that the Court was satisfied that an order was justified he submitted the costs should be limited to $11,300.
The respondent’s application for costs needs to be seen in the context of the reasons for judgment delivered 6 September 2024 and published as Cosio & Cosio (No 4) [2024] FedCFamC1A 149.
For the purposes of determining this application, I have read the respondent’s submissions as to costs, including annexures, filed 25 September 2024 and the appellant’s submissions as to costs, including annexures, filed 22 October 2024.
An application for costs is governed by the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”), which provides a general rule that each party to the proceedings should bear their own costs.
Section 117(2) of the Act reposes in the Court a discretion to make a costs order if the Court determines there are circumstances that justify this and, if there are such circumstances, the Court may make such order as it considers just, having regard to the matters set out in s 117(2A) of the Act.
In Penfold v Penfold (1980) 144 CLR 311 at 315, the plurality in the High Court determined that to make an order under s 117(2) of the Act, the Court needs to make a finding of “justifying circumstances” as a preliminary prerequisite to the making of an order. Their Honours also observed that a term such as “a clear case” is not necessarily a determiner of whether an order for costs should be made. All that is required or necessary is that there are justifying circumstances.
It is well-settled law that no one factor in s 117(2A) is determinative, and the Court may give such weight as it considers relevant to any factor. In PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123 at 130, the Full Court observed:
41. … Nowhere in subsection 2(A) or elsewhere in section 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 subsection 2(A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
I propose to address only those sections of 117(2A) of the Act identified as relevant by the parties.
(a) The financial circumstances of each party to the proceedings
Each of the parties are in full-time employment. The respondent (according to the Notice of Assessment for the year ended 30 June 2023 annexed to the appellant’s submissions) has a taxable income of $171,299 or $3,294 per week. The appellant’s Financial Statement filed 3 August 2023 referred to in the respondent’s submissions identified that he had a gross income of $5,069 per week. Each of the parties have property as consequence of the orders of the primary judge. I am not satisfied that any matter arising out of the respective financial circumstances of the parties is such as to justify an order for costs.
(e) Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The appellant was wholly unsuccessful in the appeal. I am satisfied that this is a matter relevant to the consideration as to whether there are circumstances that justify an order for costs.
(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
The respondent refers to an offer of settlement made by the appellant on 5 April 2024, and one made by the respondent on 28 June 2024.
The appellant contends that the offer dated 5 April 2024 was not expressed as one “subject to costs” and consequentially remains “confidential” and is “inadmissible” and cannot be relied upon by the respondent (Appellant’s Submissions filed 22 October 2024, paragraphs 2 and 19(a)). I do not accept that submission in light of the provisions of s 131(2)(h) of the Evidence Act 1995 (Cth).
The appellant contends that the respondent’s offer constituted little more than a “demand to capitulate” (Appellant’s Submissions filed 22 October 2024, paragraph 20). When properly considered, the offer invited the appellant to withdraw his appeal. Had he done so, then the respondent’s costs would have been significantly less than they otherwise were. That said, I am not satisfied that any matter arising out of the respective offers is such as to justify an order for costs.
(g) Any other matter the court considers relevant
The respondent refers to the Central Practice Direction and to the 120 separate contentions as to error advanced by the appellant in the appeal. She contends that the appeal documents “were unstructured, made recurring contentions and on occasions were completely incomprehensible” (Respondent’s Submissions filed 25 September 2024, paragraph 21). While the Summary of Argument was dense, at times prolix and repetitive, the appeal was conducted efficiently.
I am not satisfied that any of the matters relied upon by the respondent under this subsection are matters relevant to the consideration as to whether there are circumstances that justify an order for costs.
I am however satisfied in circumstances where the appellant was wholly unsuccessful in the appeal that it is a circumstance that justifies the making of a cost order. The consequence of the appellant’s appeal is that the respondent was put to the cost of meeting an appeal that was without merit. An order will be made that the appellant pay the respondent’s costs.
I will now turn to consider whether the order should be made on an indemnity or a party/party basis and whether it should be made in a fixed amount or as agreed or assessed.
The authorities make plain that an order for indemnity costs is not one that is lightly made, and there should be circumstances of an exceptional kind that warrant orders for costs on an indemnity basis. In Kohan and Kohan (1993) FLC 92-340, their Honours in the Full Court observed at 79,614:
The intent of s117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O. 38 r. 2, the provisions of O. 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O. 38 r. 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, 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. See Degmam v. Wright (No.2) “(supra); Wentworth v. Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR at 368 to 370.
Indemnity costs orders are still an exception in this and other jurisdictions. …
Justice Sheppard in Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 118 ALR 248 observed at 256–257:
It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:
1. The problem arises in adversary litigation, ie litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority.
2. 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 the party and party basis. In this court the provisions of O 62, rr 12 and 19, and the Second Schedule to the rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. 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. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v British Transport Commission and Handley JA in Cachia v Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4.In consequence of the settled practice which exists, the court ought not usually make an order for the 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. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. 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 88as 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 at 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.
The category of cases in which a court may make an indemnity costs order are not closed and are not limited to those identified by Sheppard J.
In Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 at 87,471 the Full Court said:
… 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 an order is sought. All that is required is that the Court asked to exercise the discretion be satisfied that some “particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis”: per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.
I am not satisfied that there is anything exceptional about this appeal or the conduct of it by the appellant that would warrant the making of an indemnity costs order. I am however satisfied for the reasons given earlier that an order should be made on a party/party basis.
The respondent seeks an order in a fixed amount. The appellant contends that there are many entries in the respondent’s schedule that are not properly recoverable as party/party costs. In that respect, his contentions include but are not limited to assertions that some of the entries do not relate to costs of the appeal; others do not appear to be items requiring the skill of a solicitor; that entries in relation to research ought not to have been charged; and that there are other entries that point to what he describes as inefficiencies within the law firm.
I am satisfied that there is merit to some of the contentions advanced on behalf of the appellant. The appellant contends that in the event that a threshold for costs is met then the costs order should be limited to $11,300. The question therefore becomes whether costs should be fixed in a set sum or left to be fought out between the parties by way of agreement (which I consider given the history to be unlikely) or assessment.
I propose to adopt the approach taken by the Full Court in Warbrick and Warbrick (No. 2) (2021) FLC 94-030 (“Warbrick”) where the Full Court dealt with a similar situation where party/party costs were not properly quantified. The Full Court observed:
13.… We do not intend to permit the costs question to become, in effect, satellite litigation. It is appropriate that the wife’s costs are fixed and this issue is brought to a close.
I am satisfied that the observations of the Full Court in Warbrick are apposite here. These parties have already been engaged in two hearings in Division 2 and two appeals. There is more to come, given that the appellant has sought special leave to appeal to the High Court. I am more than comfortably satisfied that to leave the determination of the costs issue to one that was to be agreed or assessed would be to embroil these parties in further conflict and litigation. That, to an extent, is unavoidable in circumstances where the appellant has sought special leave. I do not, however, propose to permit it to extend any further than is necessary.
Having regard to the appeal, the itemised account which identifies work undertaken and the matters raised by the appellant, I am satisfied that the respondent’s party/party costs should be fixed in the amount of $17,000 and propose to make orders to that effect.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 5 November 2024
8
2