Delisle & Mannion (No 2)
[2023] FedCFamC1F 83
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Delisle & Mannion (No 2) [2023] FedCFamC1F 83
File number: SYC 5959 of 2019 Judgment of: SCHONELL J Date of judgment: 21 February 2023 Catchwords: FAMILY LAW – COSTS – Where the wife sought costs against the husband on an indemnity basis or alternatively costs in accordance with scale – Where the Court was not satisfied that there were circumstances justifying an indemnity costs order – Consideration of factors in s 117(2A) of the Family Law Act 1975 (Cth) – Where the wife sent the husband a letter of offer and the husband failed to engage with it – Costs ordered in accordance with the scale of costs prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). Legislation: Family Law Act 1975 (Cth) ss 102NA, 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 67
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Bant & Clayton (Costs) (2016) 56 FamLR 31; [2016] FamCAFC 35
Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 118 ALR 248; [1933] FCA 801
Delisle & Mannion [2022] FedCFamC1F 940
Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123; [2005] FamCA 158
Penfold and Penfold (1980) 144 CLR 311; [1980] HCA 4
Pennisi v Pennisi (1997) FLC 92-774; [1997] FamCA 39
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Division: Division 1 First Instance Number of paragraphs: 46 Date of last submissions: 17 February 2023 Date of hearing: Dealt with on the papers Place: Sydney Solicitor for the Applicant: Grover Law Solicitor for the Respondent: Grant & Co ORDERS
SYC 5959 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS DELISLE
Applicant
AND: MR MANNION
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
21 FEBRUARY 2023
THE COURT ORDERS THAT:
1.The father is to pay 50 per cent of the applicant mother’s legal costs and disbursements of the proceedings as and from 15 November 2022 in accordance with the scale of costs prescribed by the Federal Circuit and Family Court of Australia(Family Law) Rules 2021 (Cth).
2.The respondent father is to pay the mother’s costs of the Application in a Proceeding filed 20 December 2022.
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 Delisle & Mannion has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
By Application in a Proceeding filed 20 December 2022, the applicant mother (“the mother”) seeks an order for costs on an indemnity basis or alternatively costs in accordance with the scale of costs prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
The mother’s application for costs needs to be seen within the context of the judgment delivered by me on 1 December 2022 in relation to contested parenting proceedings involving the parties’ child, X, aged eight years at the time. That judgment has been published as Delisle & Mannion [2022] FedCFamC1F 940.
Her application is opposed by the respondent father (“the father”).
The mother relied upon the following documents:
(1)Reasons for Judgment and final orders delivered on 1 December 2022;
(2)Application in a Proceeding filed 20 December 2022;
(3)Affidavit of mother filed 20 December 2022;
(4)Financial Statement of mother filed 20 December 2022;
(5)Written submissions as to costs filed 22 January 2023; and
(6)Written submissions in reply filed 17 February 2023.
The father relied upon the following documents:
(1)Written submissions as to costs filed 29 January 2022.
I do not propose to address the factual history and findings arising out of my judgment, however, I have had regard to my findings in determining this application.
INDEMNITY COSTS
The authorities make it plain that an order for indemnity costs is not one that is made lightly and there should be circumstances of an exceptional kind that warrant orders for costs on an indemnity basis.
In Kohan & 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 as follows 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 Shepard 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.
The mother contends that the father imprudently disregarded an offer of settlement.
For the reasons that will become clear when dealing with the question of the offer of settlement, I do not consider the offer and its rejection warrants the making of an indemnity costs order. The offer is different to the outcome in a number of respects. The submission does not make it clear why the conduct of the father is such as to fall within the descriptor of exceptional.
The mother also asserts that as she has been the victim of family violence at the hands of the father; she seems to submit through her solicitor that is sufficient to make an order for indemnity costs. Beyond the bald assertions, she does not articulate any submission as to why
In relation to the matters of family violence, I do not doubt that there may be circumstances in which a court would make an order for indemnity costs where a party has been the victim of family violence. It is undoubtedly the case that in this matter the Court made findings that the mother and the children had been the victims of family violence. The proceedings, however, arose as a consequence of allegations made by the mother’s daughter which were reported to the Department of Family and Community Services and the police. The father was arrested and charged, to which he pleaded not guilty. It was that event and not the matters the subject of findings that led to the commencement of the proceedings and which for a significant time consumed the litigation.
I further note that the allegations raised by the mother’s daughter were not pursued at all by either party in the course of the proceedings before me. I made no findings in relation to the allegations raised by the mother’s daughter.
No submission was made as to why my findings of family violence should attract an indemnity costs order. In the absence of any submissions as to why the findings are such as to bring this case within the descriptor of the exceptional, I am not satisfied that the mother has established before me circumstances justifying the making of an indemnity costs order.
COSTS IN ACCORDANCE WITH SCALE
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) reposes in the Court a discretion to make a costs order in circumstances where the Court determines that there are circumstances that justify it making an order 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).
In Penfold and Penfold (1980) 144 CLR 311, the plurality in the High Court determined that to make an order under s 117(2), 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 terms such as an exceptional case, special circumstances or a clear case are not necessary determiners of whether or not 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 under 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, the Full Court observed:
41. … Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs
The mother’s written submissions dealt with what she contended were the sub-sections under s 117(2A) that were relevant to her application. I will deal with them in the order they are presented in the written submissions.
(a) The financial circumstances of each party to the proceedings
The mother has filed an affidavit and a Financial Statement. I accept the mother’s submissions that a large part of her property settlement has been expended in the payment of legal fees and that approximately $100,000 remains. I note that the mother has a significant number of liabilities and that the costs of the litigation has impacted considerably upon her. As much was apparent from the cost proceedings that were determined by me in the primary judgment. The father has elected not to file a Financial Statement. I am, therefore, not in a position to be able to determine whether or not his financial circumstances are inferior or superior to that of the mother.
He cannot be heard to complain if the Court does not take into account his financial position in determining a liability for costs.
(b) Whether the parties are in receipt of legal aid
The mother was not in receipt of a grant of legal aid. In my primary decision, I addressed the position in relation to the aid that was provided to the father pursuant to the provisions of s 102NA of the Act. The fact that the husband was represented pursuant to the provisions of s 102NA does not render him otherwise immune from an order for costs.
The consequence was, however, that the mother was privately represented and met her own fees while the father did not. That said, the provisions of s 102NA applied equally to the mother if she had sought such an order.
(c) The conduct of the parties to the proceedings
The mother contends that the father failed to particularise the orders he sought on a final basis until shortly prior to the hearing and that no attempt was made to narrow or resolve the issues prior to the first day of the trial. The mother also contends that she complied with all directions including the preparation of a draft chronology. It is contended by her that the preparation of that draft chronology was a futile exercise in circumstances where no response was received by the father to it. I do not accept that. There were directions made for the preparation of a draft chronology and the wife complied with it. All that can be inferred from that is that the father took no issue with the matters contained in the draft chronology.
The mother contends that the father has breached orders since 1 December 2022. I fail to see how that is relevant to costs that predate that event.
The only evidence before me that the father has breached orders is that contained in the mother’s affidavit. It would be a complete denial of procedural fairness to reach a conclusion based solely on the content of the mother’s affidavit in circumstances where there is no application before the Court seeking such an order.
(e) Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The mother contends that the majority of the orders sought by her were made by the Court on a final basis. The mother also contends that it should have been clear to the father that his application had no prospect of success having regard to the history of the matter. As I said in the judgment in relation to costs in the primary application, the term “wholly unsuccessful” refers to a situation which proceedings as a whole have been unsuccessful rather than necessarily an application (see Bant & Clayton (Costs) (2016) 56 FamLR 31) or for that matter a part of it. I am not satisfied that the father had been wholly unsuccessful in the proceedings.
(f) Whether any party has made an offer in writing
The mother made an offer of settlement on 10 November 2022 with the intent of resolving all outstanding matters before the Court. The mother contends that the offer of settlement was rejected and the only concession was that the child live with her. In the circumstances of the case it amounted to a concession of little consequence.
The father says that the offer included a provision that the mother be permitted to take the child from Sydney and, in the event that she moved more than three hours from her current address the orders would be discharged. He identifies correctly that this position was abandoned at the final hearing.
The father further says that the offer could not be characterised as a genuine attempt to settle but rather as an ultimatum for surrender. I do not accept the characterisation of the offer as described in that submission.
In relation to offers the Full Court in Pennisi v Pennisi (1997) FLC 92-774 at 84,547 observed:
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.
The offer outlined in the letter of 10 November 2022 from the mother’s solicitors is made some 13 days before the commencement of the proceedings.
In some respects, the offer of settlement contained in the letter of 10 November 2022 is on all fours with some of the orders made save that it includes the following:
21. The mother is permitted to relocate with [X] outside of Sydney provided she gives the father 30 days' notice of that intention and provided that time pursuant to the above Orders is able to continue notwithstanding her move. If the father moves more than 3 hours from the mother’s current address, these Orders will be discharged and the parties will do all things to attend a lawyer assisted mediation in an attempt to resolve new parenting arrangements.
(Affidavit of Ms Delisle filed 20 December 2022, Annexure G)
This position was abandoned by the mother at the hearing. It did not form part of any final order made by the Court nor was it something that was addressed by the parties in their evidence.
The letter, however, also contained the following paragraph:
In the event your client agrees with some, but not all of the terms of our client’s offer of settlement, please let us know by identifying those parts which may be agreed and those which are not agreed.
(Affidavit of Ms Delisle filed 20 December 2022, Annexure G)
That paragraph makes it plain that the mother was open to some discussion about narrowing issues. The father for reasons best known to him did not enter into any discussion other than agreeing to an order that the child live with the mother. In my view, such approach carries with it risks. One such risk is that an order for costs may be made. I am satisfied that the mother was making a bona fide attempt to resolve the matter and narrow issues. There is no evidence that the father was.
I also note s 67 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA”) is as follows:
67 Overarching purpose of family law practice and procedure provisions
(1) The overarching purpose of the family law practice and procedure provisions is to facilitate the just resolution of disputes:
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.
Note 1: See also paragraphs 5(a) and (b).
Note 2: The Federal Circuit and Family Court of Australia (Division 1) must give effect to principles in the Family Law Act 1975 when exercising jurisdiction in relation to proceedings under that Act.
(2) Without limiting subsection (1), the overarching purpose includes the following objectives:
(a) the just determination of all proceedings before the Federal Circuit and Family Court of Australia (Division 1);
(b) the efficient use of the judicial and administrative resources available for the purposes of the Court;
(c) the efficient disposal of the Court’s overall caseload;
(d) the disposal of all proceedings in a timely manner;
(e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
(3) The family law practice and procedure provisions must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose.
(4) The family law practice and procedure provisions are the following, so far as they apply in relation to civil proceedings:
(a) the Rules of Court;
(b) any other provision made by or under this Act, or any other Act, with respect to the practice and procedure of the Federal Circuit and Family Court of Australia (Division 1).
The overarching purpose is reinforced by the Rules and the Central Practice Direction – Family Law Case Management (CPD), especially the core principles, including that parties must conduct the proceedings (including negotiations for settlement of the dispute) in a way that is consistent with the overarching purpose. In that respect, Core Principle 8 could not be clearer.
I am not satisfied that the father’s response to the mother’s offer is consistent with the overarching purpose of family law practice and procedure or the CPD.
The mother engaged with the overarching purpose there is no evidence that the father did.
The mother’s written submissions contain the following:
33. In Warbrick & Warbrick (No 2) (2021) FLC 94-030 (“Warbrick”) at [9], the Full Court held:
That circumstances where a party makes an offer to settle “on terms consistent with the outcome” of, in that case, an appeal, may justify an order for costs on that party’s favour. Specifically, in that case, the Full Court held that “the compatibility of [the mother’s] offers of settlement and the outcome of the appeal justifies an order for costs in her favour”.
34. It is submitted that the applicant made an offer to settle on terms more favourable to the respondent than the outcome that was ultimately reached. Had the respondent accepted the applicant’s offer, he would have achieved a far more favourable outcome in the proceedings. The applicant’s proposal would have seen an end to supervision after 2 years, 3 months and 18 weeks from the date of the orders. The final orders that were made result in supervision remaining in place until 2027.
35. The respondent made no genuine attempt to resolve matters.
I accept those submissions as to the timeframes but note that the orders the Court made provide for the father to spend time from Term 2 2024 each alternate weekend while the mother’s proposal was only for time on the last weekend of each month.
CONCLUSION
I am satisfied, having regard to all of the circumstances in this case, that there are circumstances that justify I depart from the provisions of s 117(1) of the Act that each party pay their own costs. I am satisfied that the mother should have some of her cost paid but not all of them. Had the father engaged in a negotiations then a more favourable outcome may have been achieved. He did not even attempt to do so. In the exercise of my discretion, it is appropriate he contribute to some but not all of her costs and I assess his contribution to be 50 per cent of her costs. I will make an order that the father pay 50 per cent of the mother’s costs on a party/party basis from the date of rejection of her offer being 15 November 2022.
I will also order the father pay the mother’s costs of the Application in a Proceeding filed 20 December 2022 in which she has been successful.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 21 February 2023
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