Diglen and Keartley (No. 2)
[2019] FamCAFC 172
•9 October 2019
FAMILY COURT OF AUSTRALIA
| DIGLEN & KEARTLEY (NO. 2) | [2019] FamCAFC 172 |
| FAMILY LAW – APPEAL – COSTS – Where the respondent seeks her costs on an indemnity basis and in the alternative on a party and party basis – Where the appellant opposes any order for costs but submits that if this Court is minded to make such an order that it be on a party and party basis and only apply to costs incurred within a specific timeframe – Where the husband has the capacity to meet a costs order and the financial circumstances of the wife do not militate against such an order being made – Where the appeal was not dismissed on its merits but because the appellant chose to withdraw it – Where the failure to comply with an order of this Court, the finding that the one remaining challenge had no merit, and the withdrawal of the appeal by the appellant provide a constellation of circumstances justifying an order for costs being made – Where the circumstances are not of an exceptional nature so as to permit costs being awarded on an indemnity basis – Appellant to pay the respondent’s costs on a party and party basis fixed in the sum of $6,712.28. |
| Family Law Act 1975 (Cth) s 117 |
| Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Diglen & Keartley [2019] FamCAFC 114 Kohan and Kohan (1993) FLC 92-340 Limousin & Limousin (Costs) (2007) 38 FamLR 478 Munday v Bowman (1997) FLC 92-784 Yunghanns & Yunghanns (2000) FLC 93-029 |
| APPELLANT: | Mr Diglen |
| RESPONDENT: | Ms Keartley |
| FILE NUMBER: | PTW | 2140 | of | 2016 |
| APPEAL NUMBER: | WEA | 47 | of | 2018 |
| DATE DELIVERED: | 9 October 2019 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | Written Submissions |
| LOWER COURT JURISDICTION: | Magistrates Court of Western Australia |
| LOWER COURT ORDER DATE: | 23 November 2018 |
| LOWER COURT MNC: | [2018] FCWAM 173 |
REPRESENTATION
| THE APPELLANT: | In Person |
| COUNSEL FOR THE RESPONDENT: | Mr Carr |
| SOLICITOR FOR THE RESPONDENT: | Carr & Co |
Orders
The husband pay the costs of the wife of and incidental to the appeal fixed in the sum of SIX THOUSAND SEVEN HUNDRED AND TWELVE DOLLARS AND TWENTY-EIGHT CENTS [$6,712.28].
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 Diglen & Keartley (No. 2) 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).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WEA 47 of 2018
File Number: PTW 2140 of 2016
| Mr Diglen |
Appellant
And
| Ms Keartley |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
On 28 June 2019 this Court dismissed the Notice of Appeal filed by Mr Diglen (“the husband”) on 21 December 2018, following the husband informing the court that he wished to withdraw that appeal.
Ms Keartley (“the wife”) then indicated that she would be seeking an order for costs calculated on an indemnity basis, and she requested the opportunity to provide written submissions in support of such an application. Accordingly, I made orders providing for the wife to file and serve written submissions, for the husband to file and serve written submissions in response, and then for the wife to file and serve written submissions in reply, if so advised.
On 10 July 2019 the wife filed her written submissions, and on 29 July 2019 the husband filed his responding written submissions. The wife has not filed any written submission in reply.
The wife seeks the following orders in the alternative:
(a)within 28 days the husband pay to the wife indemnity costs fixed in the sum of $8,338.50 inclusive of disbursements; or
(b)within 28 days the husband pay the wife’s costs on a party and party basis fixed in the sum of $6,712.28
The husband opposed any order for costs, but submitted that if this Court is minded to make an order for costs, it should be on a party/party basis and only apply to costs incurred since 5 February 2019.
It is important to appreciate how it came about that the husband chose to withdraw his appeal, and for that purpose I refer to my ex tempore reasons for judgment delivered on 28 June 2019 (see Diglen & Keartley [2019] FamCAFC 114), and I do not need to repeat them here.
Discussion
The first issue is whether there should be an order for costs at all.
The question of costs is governed by s 117 of the Family Law Act 1975 (Cth) (“the Act”), and relevantly that section provides as follows:
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 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), (4A), 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;
(c)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.
As can be seen, the primary position is that each party is to bear their own costs (s 117(1)), but where there are circumstances that justify it, an order for costs can be made (s 117(2)), and the factors set out in s 117(2A) are to be taken into account in that process.
In submitting that there are circumstances here that justify an order for costs, the wife refers to paragraphs (a), (c), (e), and (f).
The financial circumstances of each of the parties
The wife is employed full-time in Western Australia earning $100,000 per annum, and two of the three children of the marriage live with her on a week and week about basis. The third child lives with the husband, and the other two children reside with him on the alternate weeks. The wife pays the husband child support of $619.10 per fortnight.
The husband, who is a lawyer by profession, says he is unemployed, but he intends to return to work once the repairs to the UK property have been completed. Indeed, in his written submissions he says that that was to occur in the week of him filing those submissions. He further says that he is in “negotiations that would lead to [him] being appointed CEO of a small company in the UK in the near future” (paragraph 26 of the husband’s written submissions filed on 29 July 2019).
Significantly, each party will share in the proceeds of sale of the UK property once the sale is achieved.
Plainly, the husband has the capacity to meet a costs order, and the financial circumstances of the wife do not militate against such an order being made where there is a circumstance justifying the same.
The conduct of the parties
The husband failed to comply with the orders of the court made on 15 April 2019 providing for him to file and serve a written summary of argument and list of authorities by 31 May 2019.
Nothing has been put by the husband to explain this failure, and it is a significant circumstance justifying an order for costs, but clearly not of all the costs incurred by the wife.
The husband, in his written submissions, suggests that the conduct of the wife is relevant here too. He suggests that at the hearing before the Magistrate on 23 November 2018, the wife’s failure to “agree” that there were “outstanding remedial works required at the [UK] property” led to the orders being made by her Honour that day, and necessitated in part the filing of the Notice of Appeal.
That submission is put in the context that the Magistrate erred in finding that there was no evidence that there were outstanding remedial works, and that was the subject of several of the husband’s grounds of appeal.
The facts are that both parties led evidence in their respective affidavits that were before her Honour as to the renovations that were required. In the reasons for judgment (at [9]-[13]) her Honour referred in detail to the evidence, and correctly found, that on the husband’s evidence the works would have been completed by about 20 August 2018, and the husband had not put any evidence before the court that that was not the case.
Plainly, that is no reflection on the wife, and nor has it been demonstrated that her Honour was in error in that finding.
Certainly, subsequently there was agreement between the parties that some repairs should still be attended to, and in fact a consent order was made on 5 February 2019 in the court below, providing for funds to be made available for that purpose. However, that does not demonstrate error by the Magistrate in the orders that she made on 23 November 2018, and does not take the issue of the wife’s conduct, vis a vis the filing and continuation of the appeal by the husband, any further. Indeed, I note that the husband did not seek to amend his Notice of Appeal following the order of 5 February 2019, and he maintained all of his grounds of appeal up to the hearing on 28 June 2019. Thus, the alleged conduct of the wife cannot be relied on by the husband to prevent an order for costs being made.
I also note that the husband’s default position is that any order for costs should only apply to costs incurred after the order of 5 February 2019. The problem with that position is, as the husband himself says, the issue of the repairs was only one aspect of his appeal, with the other being the orders relating to the legal title to the property, and the other ownership issues, and thus the wife was still required to incur costs in relation to the appeal from its inception, and those costs would not have been any less if she had, for example, conceded this one aspect of the appeal prior to 5 February 2019.
Whether any party has been wholly unsuccessful
It is true that the appeal has been dismissed, but it was not dismissed on its merits; it was dismissed because the husband chose to withdraw it.
I did of course find that the one challenge the husband wished to pursue, if the appeal was to proceed, had no merit, but that still was not why the appeal was dismissed. It is open though to take that circumstance into account under paragraph (g) of s 117(2A), and I propose to do so.
Whether either party made an offer in writing
The purpose of the wife in seeking to rely on this paragraph is unclear. The most that can be said is that she put the husband on notice that if he pursued the appeal, then she would seek indemnity costs. However, I am not told how that offer, its refusal, and the outcome of the appeal should be taken into account in relation to the question of costs.
For example, the outcome of the appeal will be a worse result for the husband than if he had accepted the offer, on the basis that costs will be awarded against him, but it is not sought that costs be paid only as on and from the date of the offer; costs are sought from the commencement of the appeal.
Further, the fact that in the letter of offer the husband was put on notice that if he proceeded with the appeal, indemnity costs would be sought, does not create a circumstance justifying an order for costs.
Thus, I do not propose to take the offer into account here.
In any event, the failure to comply with an order of the court, the finding that the one remaining challenge has no merit, and the withdrawal of the appeal by the husband, plainly provide a constellation of circumstances that alone justify an order for costs being made, and I so find.
The next question is on what basis those costs should be calculated. The usual basis is party/party, but the wife seeks that it be on an indemnity basis. The costs calculated on the former basis are $6,712.28 including disbursements, and $8,338.50 including disbursements on the latter basis.
I note that although the husband opposes any order for costs, he does not challenge either of the amounts sought.
The principles relevant to whether indemnity costs will be awarded are well settled, and it is well established that for indemnity costs to be awarded there must be exceptional circumstances as to why the usual rule of costs being calculated on a party/party basis should be departed from (Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Kohan and Kohan (1993) FLC 92-340; Munday v Bowman (1997) FLC 92-784; Yunghanns & Yunghanns (2000) FLC 93-029; and Limousin & Limousin (Costs) (2007) 38 FamLR 478).
As to what might constitute an exceptional circumstance, specific reference can be made to the decision of Sheppard J in Colgate-Palmolive Co, where his Honour detailed circumstances that might qualify. Usefully, Holden J in Munday v Bowman 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)
It is also important to note that the category of circumstances which enliven the discretion to award indemnity costs are not closed, and thus the circumstances do not need to come precisely within the examples provided by Sheppard J.
Here, the wife relies on the following as demonstrating the exceptional circumstances required for indemnity costs to be awarded:
(a)[the husband] (if properly advised) should have known that he had no chance of success;
(b)[the husband] made submissions that were wrong in law; and
(c)[the husband] filed grounds of appeal that contained groundless/argumentative contentions.
(paragraph 22 of the wife’s written costs submissions filed on 10 July 2019)
It is certainly arguable that those circumstances apply to that part of the appeal complaining of the orders of the Magistrate as to “legal title” and “ownership”, but it is not so obvious that they apply to the other part of the appeal relating to the issue of repairs to the property.
I am not persuaded that the circumstances are exceptional so as to permit costs to be awarded on an indemnity basis. Thus, I propose to order that the husband pay the wife’s costs fixed in the sum of $6,712.28, namely calculated on a party/party basis.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 9 October 2019.
Associate:
Date: 9 October 2019
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