Creighton & Creighton (No 4)
[2023] FedCFamC1F 69
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Creighton & Creighton (No 4) [2023] FedCFamC1F 69
File number: MLC 6907 of 2019 Judgment of: JOHNS J Date of judgment: 6 March 2023 Catchwords: COSTS – where the wife seeks that the husband pay indemnity costs – where the husband filed no response to the wife’s submissions – consideration of s 117(2A) factors – where there are exceptional circumstances to award costs on an indemnity basis – order that the husband pay the wife’s costs on an indemnity basis Legislation: Family Law Act 1975 (Cth) ss 117
Federal Circuit and Family Court of Australia (Family Law) Rules (2021), Rules 12.13, 12.17
Cases cited: Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
Creighton & Creighton (No 3) [2022] FedCFamC1F 978
I and I (1995) FLC 92-625
Kohan & Kohan (1993) FLC 92-340 Munday v Bowman (1997) FLC 92-784
Prantage & Prantage [2013] FamCAFC 105
Division: Division 1 First Instance Number of paragraphs: 59 Date of last submission/s: 13 January 2023 Date of hearing: On the papers Place: Melbourne The Applicant: Self-Represented Litigant Solicitor for the Respondent: Taussig Cherrie Fildes Counsel for the Respondent: Ms Vohra SC ORDERS
MLC 6907 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS CREIGHTON
Applicant
AND: MR CREIGHTON
Respondent
order made by:
JOHNS J
DATE OF ORDER:
6 March 2023
THE COURT ORDERS THAT:
1.That within 28 days of the date of these orders the husband pay the wife’s costs of and incidental to these proceedings on an indemnity basis fixed in the sum of $176,010.00
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Creighton & Creighton has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
On 15 December 2022 I made final orders with respect to the parties’ competing parenting and property applications (“the Final Orders”). I did so for the reasons expressed in the Reasons for Judgment delivered that day.
As sought by the wife in her Amended Response to Initiating Application filed on 20 December 2019, the Final Orders dismissed the husband’s application for final property orders and also largely accorded with the relief sought by her in relation to the parenting dispute.
The wife now seeks orders that the husband pay her costs of and incidental to the proceedings as and from 20 December 2019, being the date upon which she filed her Amended Response to Initiating Application. The wife seeks that her costs be paid on an indemnity basis and fixed in the sum of $240,058.[1] In the alternative, she seeks that her costs be paid on a party/party basis fixed in the sum of $143,866.[2]
[1] Wife’s Costs Submissions filed 13 January 2023, [15].
[2] Ibid.
The Final Orders provided that any submission by the wife in support of a costs application be filed by 4.00pm on 14 January 2023. The wife’s submissions were filed on 13 January 2023 in accordance with that order.
The husband was to file and serve any submission upon which he seeks to rely in response to the wife’s costs application by 4.00pm on 3 February 2023. The husband has filed no submission with respect to the wife’s application for costs.
These are my Reasons for Judgment with respect to the wife’s costs application.
LEGAL PRINCIPLES
The question of costs is governed by s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) which provides:-
(1) Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
On that basis, the general rule in proceedings under the Act is that, subject to the provisions of s 117(2), the parties to a proceeding shall bear their own costs of that proceeding.
Section 117(2) of the Act provides that:-
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
Section 117(2A) of the Act provides that in determining what, if any, order should be made under subsection (2), the Court must have regard to the following:-
(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.
Should it be determined that it is just to make an order as to costs, costs are not awarded to punish the unsuccessful party, but rather are compensatory in the sense that they are awarded to ameliorate the expense of the successful party resulting from their having been required to participate in the proceedings.
The discretion afforded by s 117 of the Act is broad and the relevant factors contained in s 117(2A) are not to be read in a restrictive way; any one of those factors may found an order for costs, but all factors must be taken into account and balanced (I and I (1995) FLC 92-625).
The method of calculation of costs is prescribed by r 12.17(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules (2021) ("the Rules"), which provides:-
(1) The court may order that a party is entitled to costs:
(a) of a specific amount; or
(b) as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c) to be calculated in accordance with the method stated in the order; or
(d) for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
Rule 12.17(3) sets out matters that may be considered in the calculation of costs, providing that:-
(3) In making an order under subrule (1), the court may consider the following:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party's behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d) whether a lawyer's conduct has been improper, unfair, unreasonable or disproportionate;
(e) the time properly spent on the proceedings, or in complying with pre-action procedures;
(f) whether expenses (paid or payable) are fair, reasonable and proportionate.
Having regard to the above matters, I consider that I hold a broad discretion in respect of matters relating to any costs orders.
The wife’s application for costs principally relies upon the considerations identified at sections 117(2A)(a), (c), (e) and (f) of the Act. That is, the wife contends that the relevant considerations are:-
·The financial circumstances of each of the parties to the proceedings;
·The conduct of the parties to the proceedings in relation to the proceedings;
·Whether any party has been wholly unsuccessful in the proceedings; and
·Whether either party to the proceedings has made an offer in writing to the other party to settle the proceedings.
Section 117(2A)(a) - The financial circumstances of the parties
The wife is a health professional and conducts her own business. At trial, the wife admitted to holding assets and superannuation with a net value of $967,775.[3] The wife has responsibility for the care and support of the parties’ three children. The wife receives no child support from the husband.
[3] Creighton & Creighton (No 3) [2022] FedCFamC1F 978, [231], Annexure 1.
During the parties’ marriage, the husband was self-employed in the motor vehicle industry. His occupation at the time of trial was unknown, as the husband adduced no evidence regarding his current personal and financial circumstances.
The wife submits that the husband has the financial means to meet an order for costs and that he is in a “vastly superior financial position” to her.[4] In support of that submission, the wife relies upon the husband’s admissions as to his financial position, as contained in his Notice Disputing Fact or Document filed during the course of the final hearing (Exhibit F-3). That document discloses the husband’s assets as having a value in excess of $6 million.[5]
[4] Wife’s Costs Submissions filed 13 January 2023, [7.1].
[5] Creighton & Creighton (No 3) [2022] FedCFamC1F 978, [207].
Having regard to the admissions made by the husband in his Notice Disputing Fact or Document, I am satisfied that he has available to him substantial property and resources which are of significant value and which would enable him to meet an order for costs.
Section 117(2A)(b) – Whether either party is in receipt of Legal Aid
Neither the husband nor the wife is in receipt of legal aid.
Section 117(2A)(c) – The conduct of the parties in relation to the proceedings; and
Section 117(2A)(d) – Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
The wife submits that the husband’s conduct warrants an order for costs. In support of that submission she relies upon my findings that:-
·The proceedings had been prolonged due to the manner in which the husband had conducted the case[6];
·The husband failed to file documents in accordance with trial directions and, in particular, to file trial affidavit material in support of his application for final parenting and property orders;[7]
·The husband failed to particularise the property relief sought by him;[8]
·The husband failed to comply with Court orders in respect of discovery;[9]
·The husband did not attend the final day of hearing or comply with orders requiring him to produce medical evidence in relation to the circumstance of his non-attendance at Court that day.
[6] Ibid, [2].
[7] Creighton & Creighton (No 3) [2022] FedCFamC1F 978, [5], [28] and [29].
[8] Ibid, [6] and [36].
[9] Ibid, [195]-[216].
Having regard to my findings in relation to the husband’s failure to comply with orders and directions for the preparation of the hearing and to meet his obligations with respect to disclosure, I am satisfied that the manner in which the husband conducted the proceedings has resulted in the wife incurring additional costs in the preparation of the proceeding and that his non-compliance with orders has prolonged the duration of the litigation.
For example, the husband’s non-compliance with trial directions made in December 2021 necessitated the re-listing of the matter before me on 26 May 2022. That day I extended time for his compliance with orders and made further orders regarding arrangements for the preparation of the Family Report. The wife’s submissions indicate that she has incurred significant additional costs as a result of the husband’s non-compliance with Court orders; she cites numerous examples of occasions when correspondence was forwarded to the husband by her lawyer in an endeavour to seek his compliance with orders,[10] including that he:-
·File trial documents;
·Confirm the contents of the letter of instruction to the Family Report Writer;
·Co-operate in the appointment and instruction of valuers; and
·Meet his obligations with respect to disclosure.
[10] Wife’s Costs Submissions filed 13 January 2023, pages 1 to 5.
The wife submits, and I accept, that her legal costs were increased as a result of the husband’s failure to comply with orders or respond to such requests in a timely manner, or in some instances, at all.
Further, I am satisfied that the manner in which the husband conducted the final hearing extended its duration. In particular, the husband’s cross-examination of both the Family Report Writer and Dr D was lengthy, lacked focus, was ineffectual and did little to seriously challenge the evidence of those experts. Those issues were compounded as a result of the husband routinely ignoring my directions in relation to the conduct of his case during the course of the hearing. The impact of the husband’s conduct was to prolong the trial and thereby increase the costs to the other parties.
Having regard to all of the above matters, I am satisfied that the husband’s conduct is a matter relevant to the determination of the wife’s application for costs.
Section 117(2A)(e) – Whether a party to the proceedings was wholly unsuccessful
It was submitted on behalf of the wife, and I accept, that the husband has been wholly unsuccessful in relation to his application for final property orders. I granted the wife’s application that the husband’s property application be dismissed.
As to the parenting aspect of the dispute, the final orders made by me accord with the wife’s application that she have sole parental responsibility for the children, that they live with her and that the children’s time with the husband be subject to their wishes and limited as to duration and frequency.
Those orders were opposed by the husband, who sought orders for equal shared parental responsibility, specific time with the children each alternate weekend and permission to travel overseas with the children.[11] The husband was unsuccessful in his application for final parenting orders.
[11] Creighton & Creighton (No 3) [2022] FedCFamC1F 978, [34].
Having regard to the positions of the parties as articulated during the hearing and the Final Orders ultimately made at the conclusion of the trial, I am satisfied that the husband was wholly unsuccessful with respect to his property claims and many aspects of his parenting application.
Section 117(2A)(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 such offer
It is submitted on behalf of the wife that she made offers in respect of both the property and parenting matters.
As to the property proceedings, the wife relies upon an offer made by her dated 10 March 2021.[12] The wife’s property proposal is made on a without prejudice basis save as to costs and provides that the matter resolve on the basis that:-
·All previous orders be discharged.
·The husband’s Amended Initiating Application be dismissed.
·Within 90 days the wife pay the parties’ outstanding liability of $101,738.90 to O School.
·Within 14 days the husband do all acts and things as required to remove the wife as guarantor for the finance obligation in respect of Motor Vehicle 2 and the husband indemnify the wife and keep her indemnified in respect of that obligation.
·That otherwise each of the parties retain to the exclusion of the other the interests in their name.
[12] Wife’s Costs Submissions filed 13 January 2023, Annexure A.
The wife also proposed that the parties enter into a Financial Agreement that provides that each relinquish all rights to claim spousal maintenance from the other.
The wife made a further offer to resolve the property proceedings on 3 February 2022.[13] That proposal provided that the wife assume responsibility for the O School debt, that the husband retain the sum of $55,000 paid to him by the wife, that the husband assume responsibility for the Motor Vehicle 2 finance and indemnify the wife in relation to that debt and otherwise each party retain the assets and liabilities held by them.
[13] Ibid, Annexure C.
It was submitted by the wife that the husband has not bettered either of the property proposals made by the wife. Given that the wife was proposing that she discharge the liability to O School for which the husband and the wife are jointly and severally liable, and in her second offer, she proposed that the husband also retain the amount of $55,000 paid to him by the wife, I accept that submission.
The wife’s proposal in relation to parenting matters is contained in a separate letter to the husband dated 10 March 2021.[14] That offer was also made “without prejudice save as to costs”. The wife’s proposal provides that orders be made as follows:-
·All previous parenting orders be discharged.
·The wife have sole parental responsibility for the children.
·The children live with the wife.
·Subject to each child’s wishes, each child spend time with the husband:
(a)once per calendar month on a Sunday for a period of 4 hours at such date and time as proposed by the wife in writing;
(b)and
(c)at such further or other times as agreed.
[14] Ibid, Annexure B.
The wife’s proposal was that the husband’s time initially be supervised for six occasions at the husband’s expense and thereafter be unsupervised.
Given that the final orders made at the conclusion of the hearing provided for the wife to have sole parental responsibility for the children, for them to live with her and for their time with the husband to be in accordance with their wishes, albeit no more frequently than once every fortnight, it is submitted on behalf of the wife that little was gained on behalf of the husband in pursuing his parenting application.
There is much force in the submission made on behalf of the wife. Having regard to the above matters, I am satisfied that the wife’s offers of settlement are relevant considerations in the determination of her application for costs.
Section 117(2A)(g) – Any other matters the court considers relevant
There are no other relevant considerations.
Are there circumstances that justify an order for costs?
Having regard to the considerations addressed above, I am satisfied that an order for costs against the husband is warranted in the circumstances of this case. I am satisfied that the husband’s conduct throughout the proceedings, particularly his failure to comply with trial directions requiring him to particularise his claim and put evidence before the court, coupled with the fact that his property application has been wholly unsuccessful and that many aspects of his parenting application too have failed, are matters that justify an order for costs. That view is bolstered having regard to the offers of settlement made by the wife in respect of both the parenting and the property proceedings.
Should costs be paid on an Indemnity or Party/Party basis?
The wife seeks that her costs be paid on an indemnity basis fixed in the sum of $240,058.[15] In the alternative she seeks that the husband pay her costs on a party/party basis fixed in the sum of $143,866.[16]
[15] Wife’s Costs Submissions filed 13 January 2023, [15].
[16] Ibid.
As noted earlier in the Judgment, the court may make an order for costs on a number of different bases.
In support of her application for indemnity costs, the wife relies upon the legal services costs agreement between she and her lawyers dated 7 November 2019.[17] She also relies upon the Costs Agreement with her legal counsel dated 6 December 2019.[18] Having regard to Annexures D and E of the Wife’s Costs Submissions, I am satisfied that she has informed the Court of the costs agreements between she and her lawyers and the terms of those agreements in accordance with Rule 12.13(4).
[17] Ibid, Annexure D.
[18] Ibid, Annexure E.
The law with respect to indemnity costs is well settled; the Full Court observed in Kohan & Kohan (1993) FLC 92-340 that the Court should not depart lightly from the ordinary rules with respect to costs. In the decision of Prantage & Prantage [2013] FamCAFC 105, the Full Court confirmed that indemnity costs should only be awarded if the case has some special or unusual feature.
In Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225, Sheppard J identified circumstances that might constitute special or unusual features so as to justify an award of indemnity costs. Usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660 drew from the decision of Sheppard J the following 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 category of circumstances which enliven the discretion to award indemnity costs are not closed; the circumstances do not need to come precisely within the examples provided by Sheppard J.
It is submitted by the wife that her costs in the proceedings were not only increased by the husband’s delinquent conduct as a litigant but were incurred entirely unnecessarily.
The submission made is that the husband was the applicant in the property proceedings; it was he who sought a property adjustment and not the wife. However, upon the filing of his property application the husband took no steps to prosecute his claim. He did not particularise his claim, nor did he put any evidence before the court in support of that application.
From the outset, the wife sought that the application be dismissed. She was put to significant expense in responding to that application, particularly in circumstances where the husband failed to cooperate in the identification and valuation of the parties’ interests.
Similarly, in the parenting proceedings, it was the husband who was agitating for a change in the parties’ parenting arrangements and the wife who sought to maintain the parenting status quo. Ultimately, the final orders made at the conclusion of the final hearing confirmed the existing arrangements as between the parties.
In my view, the husband’s conduct in the proceedings not only justifies a departure from the usual position that each party should pay their own costs but satisfies me that the circumstances of this matter are so exceptional as to justify an order for indemnity costs, having regard to my findings as to:-
·The husband’s failure to articulate and prosecute his own property claim in the face of Court orders requiring that he do so, which resulted in delay and prolonging of the proceedings;
·The husband’s blatant disregard of court orders requiring him to articulate his claims and put evidence before the court to support them, which resulted in the wife being put to the expense of gathering evidence and information in order to meet those claims;
·The husband’s pursuit of his application absent evidence to support his contentions, which resulted in that application being doomed to fail. The wife was put to considerable and unnecessary expense to answer the husband’s claims which ultimately he did not press;
·The husband’s failure to accept the wife’s offers of settlement;
·The husband’s non-disclosure, particularly in relation to the recent sale by him of the property at AF Street, Suburb P, which was only discovered by the wife during the course of the hearing;[19] and
·The husband’s departure from the Court precincts at the mid-morning break on the third day of the hearing, without explanation, which necessitated the delay of the conclusion of the hearing to the following day.
[19] Krongold & Krongold (No 3) [2022] FedCFamC1F 978, [205].
I am satisfied that the manner in which the husband has elected to conduct the litigation resulted in a protracted trial, the effect of which was to cause the wife to incur unnecessary and substantial legal costs.
The wife seeks her costs on an indemnity basis as and from the date upon which she filed her Amended Response to Initiating Application on 20 December 2019, that being the date upon which she responded to the husband’s property application.
Whilst I am satisfied that the husband’s conduct has necessitated the wife incurring additional and significant costs to respond to that application and further, that the husband’s conduct has prolonged the proceedings, I am not persuaded that it is reasonable that the whole of the wife’s costs be sheeted home to the husband. In my view, it is appropriate that the husband bear the wife’s costs in the proceedings from one month after the husband was served with the wife’s original offers of settlement, being 11 April 2021.
Given the history of the dispute, in my view it is preferable that the wife’s costs be fixed so as to avoid the possibility of further Court events in relation to the quantification of her costs. That view is bolstered in circumstances where the husband has filed no submissions in opposition to the wife’s application for costs and has not challenged the quantum of costs sought by her.
Having regard to the wife’s Summary of Costs,[20] I propose to allow the following claims which relate to her legal costs for the period from 11 April 2021 to the conclusion of the proceeding:-
[20] Wife’s Costs Submissions filed 13 January 2023, Annexure F
Item 1.5 Attending Mention hearing before Justice Bennett 16 April 2021 $1,584.00
Item 1.6 Attending interim defended hearing before Justice Johns 10 December 2021 $1,463.00 Item 1.7 Other file attendances from 1 January 2020 to 26 April 2022 for preparation of case for trial and cases management (including correspondence with husband and ICL, reviewing disclosure and subpoenas) $53,000.00[21]
(being one-half of the $106,531.70 claimed for that period)Item 1.8 Preparation for and attending case management hearing on 26/5/2022 $4,455.00 Item 1.9 Preparation for August 2022 Final hearing including drafting trial affidavit and financial statement, reviewing disclosure, drafting case outline and instructing at trial $52,900.00 Item 1.10 Attendances in relation to cots application including reading judgement, letter of offer to husband and preparing schedule of fees $4,308.00 Item 2.5 Appearance at Mention hearing before Justice Bennett 16 April 2021 $2,000.00 Item 2.6 Appearance at interim defended hearing before Justice Johns 10 December 2021 $1,850.00 Item 2.7 Appearance at Trial and Preparation before Justice Bennett 1 September 2022 (for 5 days) $49,500 Item 2.8 Drafting and Preparation of Costs Submissions $4,950.00 Total professional Fees and Counsel Fees $176,010.00 [21] Allowing for the period from April 2021 to April 2022.
Accordingly, having regard to the above matters, I am satisfied that the husband ought pay the wife’s costs, calculated on an indemnity basis and fixed in the sum of $176,010.00.
I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johns. Associate:
Dated: 6 March 2023
0
3
0