Delwyn and Delwyn
[2016] FamCA 879
•14 October 2016
FAMILY COURT OF AUSTRALIA
| DELWYN & DELWYN | [2016] FamCA 879 |
| FAMILY LAW – COSTS – Application for indemnity costs in respect of the wife’s discontinued application to set aside consent orders as to property under s79A – Where discussion of general principles – Where there are justifying circumstances for a costs order to be made – Whether there are grounds for awarding indemnity costs – Costs order made on indemnity basis. |
Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536
|
| APPLICANT: | Ms Delwyn |
| RESPONDENT: | Mr Delwyn |
| FILE NUMBER: | PAC | 5121 | of | 2015 |
| DATE DELIVERED: | 14 October 2016 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 14 June 2016 |
REPRESENTATION
| APPLICANT – SELF-REPRESENTED LITIGANT: | Ms Delwyn |
| SOLICITOR FOR THE RESPONDENT: | Watts McCray Lawyers |
Orders
That the wife pay the husband’s costs of and incidental to the Application filed by the wife on 21 October 2015 on an indemnity basis as agreed within one (1) month from this date or otherwise as assessed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Delwyn & Delwyn has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 5121 of 2015
| Ms Delwyn |
Applicant
And
| Mr Delwyn |
Respondent
REASONS FOR JUDGMENT
The respondent husband applies for an order for costs against the applicant wife.
On 21 October 2015 the wife filed an application seeking to set aside final property orders made by this Court on 2 May 2014 pursuant to the provisions of section 79A of the Family Law Act 1975 (Cth) (“the Act).
On 14 January 2016 the husband filed a Response seeking a dismissal of the wife’s application.
The application was listed before a registrar for a case assessment conference on 18 January 2016 and on that date adjourned for further directions to 5 April 2016. On 5 April 2016 the matter was adjourned for further directions to 3 May 2016 on which date directions were made for the parties to file affidavit material to be relied upon and the matter was adjourned to 14 June 2016 for judicial case management and the allocation of trial dates if appropriate.
Prior to the adjourned date and on 10 June 2016 the applicant wife filed a Notice of Discontinuance of her application. Consequent upon that Notice of Discontinuance the respondent husband sought an order for costs against the wife.
On 14 June 2016 directions were made for the filing of written submissions as to costs and those written submissions were filed by the husband on 1 July 2016 and by the wife on 6 September 2016.
Costs
Section 117 of the Act provides that each party to the proceedings shall bear his or her own costs.
That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.
Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: see Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section as follows:
a)The financial circumstances of each of the parties to the proceedings;
b)Whether any party has legal aid and the terms of any grant of aid;
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 answers, 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.
The Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
18. The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:
… A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. 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 husband seeks an order for costs on an indemnity basis in the sum of $26,606.20.
The husband submits that by letter dated 10 September 2015 he was informed by the wife’s then solicitors that it was alleged there was a lack of financial disclosure by him in the context of consent orders being made on 2 May 2014. By email dated 14 October 2015 the husband informed the wife’s solicitors that in the event of proceedings being commenced by the wife he would seek an order that she pay his costs.
Subsequent to the wife commencing proceedings the husband’s solicitors wrote to the wife’s solicitors on 24 December 2014 providing detailed information in response to the wife’s professed concerns about nondisclosure and inviting a withdrawal of the wife’s application by no later than 4 January 2016.
The wife’s solicitors were put on notice that indemnity costs would be sought against the wife.
As to the relevant considerations:
a)The wife has funds at bank and a modest surplus of income over expenses. The husband is clearly in a stronger financial position than the wife.
b)Neither party has a grant of legal aid.
c)The conduct of the parties to the proceedings in relation to the proceedings is not a relevant consideration.
d)The proceedings were not necessitated by the failure of a party to the proceedings to comply with previous orders of the Court and this consideration is not a relevant matter.
e)The applicant wife has been wholly unsuccessful. She commenced proceedings to set aside orders made by this Court by consent thus occasioning the expenditure of legal costs by the husband in resisting her application. The proceedings were thereafter terminated by the wife filing a Notice of Discontinuance and the husband is entitled to make an application for costs by reason of Rule 10.11 (4).
f)By letter dated 24 December 2015 “in order to avoid the parties incurring further unnecessary legal costs and disbursements, and be embroiled yet again in protracted litigation,” the wife was invited to withdraw her application by no later than 4 January 2016. The tenor of the correspondence infers that if the application was withdrawn that would be the end of the matter and in In the event that it was not the husband that would seek indemnity costs. By letter dated 10 June 2016 to the wife’s solicitors the husband again invited the wife to withdraw her application and if not informed the wife’s solicitors that an order for indemnity costs would be sought.
g)There is no other relevant matter.
Indemnity Costs
The application before the Court is an application for the wife to pay the husband’s costs on an indemnity basis, or such other order as the Court thinks fit.
It is usual for the Court to make an order for costs on a party/party basis.
Provisions of the Family Law Rules 2004 (Cth) (“the Rules”), particularly rule 19.18, provides for the method of calculations of costs. That rule provides as follows:
(1)The court may order that a party is entitled to costs:
(a)of a specific amount;
(b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
(b)to be calculated in accordance with the method stated in the order; or
(c)for part of the case, or part of an amount, assessed in accordance with Schedule 3.
Rule 19.18 further provides that:
(3) In making an order under subrule (1), the court may consider:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party’s behaviour in the case;
(c) the rates ordinarily payable to lawyers in comparable cases;
(d) whether a lawyer’s conduct has been improper or unreasonable;
(e)the time properly spent on the case, or in complying with pre-action procedures; and
(f) expenses properly paid or payable.
The Court has jurisdiction in its discretion to make an order for costs on an indemnity basis and the purpose of such an award is to more fully or even wholly repay to a party all, or at least the majority, of their legal costs and disbursements and charges incurred in the proceedings.
The category of cases in which an award of an indemnity costs order may be appropriate are not closed and the Full Court of the Family Court observed in Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681 at [31]:
… 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 order is sought. …
More recently, the Full Court has considered indemnity costs in Joyce & Fante [2013] FamCAFC 141, Limousin & Limousin [2007] FamCAFC 1178, Fennessy & Gregorian [2009] FamCAFC 44 and D & D (Costs) (No. 2) [2010] FamCAFC 64.
Otherwise, the principles underlying an award for indemnity costs have been classically summarised by Sheppard J in Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536 where his Honour, in summary, said at [24]:
…
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 a party and party basis. …
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. …
4. In consequence of the settled practice which exists, the Court ought not usually make an order for 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. …
Sheppard J detailed some of the circumstances which may warrant the exercise of the discretion to award indemnity costs and they included:
a)false and irrelevant allegations of fraud;
b)misconduct that causes a loss of time to the Court and other parties;
c)where the proceedings were commenced or continued for an ulterior motive;
d)the undue prolongation of a case on groundless contentions; and
e)wilful disregard of known facts and clearly established law.
f)the imprudent refusal of an offer of settlement.
Having regard to the consideration of the background circumstances of this matter as discussed above the applicant wife has commenced proceedings, engaged the husband in a response thereto necessitating the expenditure by him of significant legal costs only to then discontinue her application by filing the requisite notice.
The husband has provided a copy of his costs agreement as between himself and his solicitors in compliance with rule 19.08 (3), together with an assessment of his costs asserted to be calculated pursuant to that costs agreement.
In the circumstances of this matter it is appropriate that there be an order that the wife pay the husband’s costs on an indemnity basis.
However it is appropriate to facilitate the wife should she wish having some input into the assessment of those costs and accordingly an order will be made for the husband’s costs on an indemnity basis to be as agreed between the parties or as assessed in the usual way.
Orders will be made accordingly.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 14 October 2016.
Associate:
Date: 14 October 2016
Key Legal Topics
Areas of Law
-
Family Law
-
Civil Procedure
Legal Concepts
-
Costs
-
Appeal
7
2