Davida & Davida (Costs) - [2011] FamCAFC 61

FAMILY COURT OF AUSTRALIA

DAVIDA & DAVIDA (COSTS)

[2011] FamCAFC 61

FAMILY LAW - COSTS OF APPEAL – where appellant husband sought that the Full Court order that the respondent wife pay his costs of, and incidental to, his successful appeal against a property settlement order, as well as the costs of the first instance proceedings – where the husband further sought that such orders for costs should be assessed on an indemnity basis – where the Full Court determined that the leaving aside the issue of power, it would not as a matter of discretion make an order with respect to the costs of the first instance proceedings – where the Full Court determined that there were justifying circumstances to support an order that the respondent wife pay the appellant husband’s costs of, and incidental, to the appeal – where the Full Court determined there were no exceptional circumstances to justify an order for indemnity costs, but that such costs be assessed on a party-party basis in default of an agreement.

Family Law Act 1975 (Cth)

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
D & D Costs (No. 2) (2010) FLC 93-435
Kohan and Kohan (1993) FLC 92-340
Limousin & Limousin (Costs) (2008) 38 Fam LR 478

APPELLANT:

Mr Davida

RESPONDENT:

Ms Davida

FILE NUMBER:

BNC

2360

2009

APPEAL NUMBER:

2010

DATE DELIVERED:

10 March 2011

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Finn, O’Ryan and
Ainslie-Wallace JJ

HEARING DATE:

10 March 2011

LOWER COURT JURISDICTION:	Federal Magistrates Court of Australia
LOWER COURT JUDGMENT DATE:	12 February 2010

LOWER COURT MNC:

[2010] FMCAfam 102

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr T. Matthews

SOLICITOR FOR THE APPELLANT:

Berek & Associates

COUNSEL FOR THE RESPONDENT:

Ms J. Hogan

SOLICITOR FOR THE RESPONDENT:

Murdoch Lawyers

Orders

That the respondent wife pay the appellant husband’s costs of and incidental to the appeal, to be assessed on a party-party basis in default of agreement.

IT IS NOTED that publication of this judgment under the pseudonym Davida & Davida (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 32 of 2010
File Number: BNC 2360 of 2009

Mr Davida

Appellant

And

Ms Davida

Respondent

EX TEMPORE REASONS FOR JUDGMENT

Finn J

On 2 March this year (2011), this Court made orders in which we allowed an appeal against an order for property settlement made by Federal Magistrate Coates on 12 February 2010. We set aside that order and made a new order for property settlement. In our orders we also provided an opportunity for the parties to appear before us today to make any submissions which they would wish to make, in relation to the costs of the appeal. As a result, Counsel for both parties have appeared before us today.
On behalf of his client, Counsel for the appellant husband seeks that we order that the wife pay the husband’s costs, not only in relation to the appeal, but also in relation to the proceedings at first instance, and that she do so on an indemnity basis. Counsel for the wife opposes all aspects of that application and seeks that there be no order for costs in relation to the appeal, and that this Court not involve itself in the issue for costs at first instance.
The principles which govern an award of costs in proceedings under the Family Law Act 1975(Cth) (“the Act”) are set out in s 117(1), (2) and (2A) of the Act, which provide as follows:
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(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) and (5) 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.
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
Thus, the general rule is that each party should pay his or her own costs of proceedings under the Act. However, the Court is empowered to make an order for costs if it is of the opinion that there are circumstances which would justify such an order, and as set out above, subsection 117(2A) sets out a range of matters to which the Court should have regard in considering whether to make an order for costs.
So far as the application for the costs of the first instance proceedings are concerned, there well may be an issue concerning the power in the Full Court to make such an order, as Counsel for the respondent wife submitted. But leaving that issue to one side, I would not as a matter of discretion make an order in relation to the costs at first instance.
This is because it has been established here today that applications were, at least formally, made at first instance for costs orders, and those applications remain pending. Moreover, there is no evidence before this Court about most of the matters specified in section 117(2A), in so far as those matters might have application to the circumstances of the first instance proceedings.
Thus, I am not persuaded that this Court should involve itself in the matter of the costs of the first instance proceedings, but rather leave that matter to be pursued at first instance, if that is what either party wants to do.
I turn, then, to the costs of the appeal. The intended effect of the Federal Magistrate’s order was to divide the assets of the parties, which he found to have a net of $640,000.00, in the proportions of 60 per cent to the wife and 40 per cent to the husband. That division had been made on the basis of an assessment that the parties’ contributions were equal and that there should be a 10 per cent adjustment in favour of the wife on account of the section 75(2) matters.
In the reasons for judgment of this Court, and after we had found substance in most of the husband’s grounds of appeal, we re-determined the property settlement matter. We did so on the basis that we found that the parties’ property had a net value of $658,331.73. We then found that the contribution should be assessed at 60 per cent/40 per cent in favour of the husband, but we were prepared to make a five per cent adjustment in favour of the wife on account of the section 75(2) matters. We thus arrived at a division of 55/45 per cent in favour of the husband.
In support of the husband’s application for the costs of the appeal, his Counsel relies on the husband’s success. He also relies on the terms of an offer made on behalf of the husband on 30 March 2010 in a letter from his solicitors to the wife’s solicitors. That letter was written within a couple of weeks of the appeal having been filed. I will later make some reference to the terms of that offer.
Counsel for the wife, in seeking to oppose any order for costs in relation to the appeal, relies not only on the financial circumstances of the wife, but also on the fact that the wife could not be said to be wholly unsuccessful in that there were some matters raised by the husband in the appeal in relation to which he did not succeed. Counsel for the wife also seeks to draw some distinctions between the ultimate result of the appeal and the terms of the offer to settle the appeal which is relied on by the husband.
In my view, the circumstances which Counsel for the husband relies on, being the offer and also the overall success of the husband, do constitute justifying circumstances. At this point, I explain that in the letter of offer of 30 March 2010, the so-called “pool” on which the offer was based comprised a total sum of $620,491.00. There was then the following paragraph:
Our client is prepared to resolve the entire proceedings on the basis of a 50/50 split, which figure, we contend, takes into account His Honour’s glaring errors in relation to his assessment of, particularly, initial contributions. If the matter is to proceed, our client is of the view that the Full Court, in re-exercising the discretion in s79, will ultimately, on the basis of well-established authority, probably assess the overall financial position, including any adjustment for s75(2) factors, as 55% to our client.
It can easily be appreciated that that was the percentage result upon which we determined, as I have earlier explained, albeit with respect to a slightly larger pool. In my view, little is to be gained from seeking to differentiate the terms of the offer from what was said in our reasons for judgment, as Counsel for the respondent wife endeavoured to do. I also have regard to the matter relied on by Counsel for the husband, being that this was a reasoned offer.
The other justifying circumstance is the husband’s relative success. True it is that the relevant paragraph in section 117(2A) refers to a party being “wholly unsuccessful”, but I think it fair to say that the practice has been to look at what one might term the relative merits of success or lack of success between the parties, even if necessary doing that under the last matter mentioned in section 117(2A), being any “other” matter.
As I said before, in seeking to resist an order for costs, the wife, through her Counsel, has relied on her financial circumstances. It is true that the wife’s financial circumstances are not, to use the vernacular, great, but that having been said, there is little real difference between these parties when regard is had either to their capital positions following our decision, or to their income-earning situations and their various responsibilities. I, therefore, do not consider that the wife’s financial circumstances could be seen as defeating, so to speak, the justifying circumstances, to which I have referred, and which would support an order for costs in favour of the husband.
Finally, I turn to that aspect of the husband’s application which sought that any order for costs should be on an indemnity basis. As presently advised, the most recent consideration of the question of indemnity costs is to be found in a decision of the Full Court reported as D & D Costs (No. 2) (2010) FLC 93-435. In that decision, the Full Court reviewed extensively earlier authorities, including decisions to which we have been referred today or have discussed with Counsel today, including Limousin & Limousin (Costs) (2008) 38 Fam LR 478 and Kohan and Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248.
It emerges from the discussion by the Full Court in the D & D (Costs) that there still needs to be exceptional circumstances to justify an order for indemnity costs in this jurisdiction. In my view, there are no such exceptional circumstances in this case.
Accordingly, the order I would make is that the wife pay the husband’s costs of, and incidental to, the appeal, with such costs to be assessed on a party-party basis in default of agreement.

O’Ryan J

I agree with the reasons of Justice Finn and the outcome she proposes. I simply note that if allowance is made for the uncontroversial figures set out in the schedule which we were provided with by Counsel for the husband, I calculate that the wife would have assets of a net value of approximately $317,000.00. I have nothing further to add.

Ainslie-Wallace J

I agree with the reasons expressed by Justice Finn and the orders she proposed. I note the additional reasons expressed by Justice O’Ryan and I have nothing further to add.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, O’Ryan and Ainslie-Wallace JJ) delivered on 10 March 2011.

Associate:

Date: 23 March 2011