Dorsey & Mallon
[2018] FamCAFC 244
•15 November 2018
FAMILY COURT OF AUSTRALIA
| DORSEY & MALLON | [2018] FamCAFC 244 |
| FAMILY LAW – APPEAL – INDEMNITY COSTS – Where there was no appearance by the respondent husband – Where the primary judge made an order for indemnity costs against the husband – Where the primary judge erred in stating that there were no offers of settlement produced before the Court – Where the primary judge erred in stating that there was no breakdown of costs produced before the Court – Where those documents were available and not taken into account – Where appealable error was established – Appeal allowed. FAMILY LAW – APPEAL – RE-EXERCISE OR REMITTER – Where the offers of settlement could only properly be assessed upon a consideration of the entire history of the matter – Where the appellant wife conceded that the matter should be remitted to the same primary judge – Remitted for rehearing. |
| Family Law Act 1975 (Cth) ss 94AAA(3), 117 Family Law Rules 2004 (Cth) Federal Circuit Court Rules 2001 (Cth) rr 21.02, 21.03 |
| Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40 Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 D & D (Costs) (No. 2) (2010) FLC 93-435; [2010] FamCAFC 64 Harris & Dewell (No. 2) (2018) FLC 93-863; [2018] FamCAFC 180 Kohan and Kohan (1993) FLC 92-340 Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178 Prantage & Prantage (2013) FLC 93-544; [2013] FamCAFC 105 |
| APPELLANT: | Ms Dorsey |
| RESPONDENT: | Mr Mallon |
| FILE NUMBER: | BRC | 5284 | of | 2014 |
| APPEAL NUMBER: | NOA | 70 | of | 2018 |
| DATE DELIVERED: | 15 November 2018 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | 15 November 2018 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 4 July 2018 |
| LOWER COURT MNC: | [2018] FCCA 1639 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Linklater-Steele |
| SOLICITOR FOR THE APPELLANT: | Life Law Solutions |
| FOR THE RESPONDENT: | No appearance |
Orders
The appeal be allowed.
Paragraph 1 of the orders made by Judge L. Turner on 4 July 2018 be set aside.
The appellant’s application for indemnity costs be remitted for rehearing before Judge L. Turner on a date and at a time to be advised.
The appellant is granted a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
The Court grants to the appellant a cost certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of such part as the Attorney-General considers appropriate of any costs incurred by the appellant in relation to the rehearing of these proceedings.
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 Dorsey & Mallon 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 BRISBANE |
Appeal Number: NOA 70 of 2018
File Number: BRC 5284 of 2014
| Ms Dorsey |
Appellant
And
| Mr Mallon |
Respondent
EX TEMPORE REASONS FOR JUDGMENT[1]
[1] As was said would occur upon the oral delivery of these reasons, footnoted citations and references have been added to the settled reasons as have headings and sub-headings.
This is an appeal by the wife against orders for indemnity costs made by Judge L. Turner on 4 July 2018. Those orders provided for “the husband to pay to the wife … costs in the sum of $127,000”. That amount reflects costs incurred by the wife between April 2016 and October 2017 as a result of her pursuing an application for orders for settlement of property.
On 13 November 2018 the Chief Justice made a direction pursuant to s 94AAA(3) of the Family Law Act 1975 (Cth) (“the Act”) that it was appropriate for the jurisdiction of the Family Court in relation to the appeal to be exercised by a single judge and it is heard by me today on that basis.
Background to the proceedings
An application for parenting and property proceedings was filed by the wife in June 2014. In her Honour’s reasons for substantive property settlement, her Honour found that “the husband’s behavioural issues have resulted in the legal proceedings being protracted, time consuming and painful for the wife”.[2]
[2]Dorsey & Mallon [2018] FCCA 52 at [89].
The wife is represented by counsel before me today. The husband filed a Summary of Argument in respect of the appeal on 9 November 2018. On 14 November 2018, an email was forwarded from the Appeals Assistant in the Northern Appeals Registry to the husband in these terms:
Good afternoon
This appeal is listed for hearing tomorrow 15 November 2018.
I advise that the start time will be not before 11.30 am tomorrow.
Thank you
That communication was sent by email at 12.32 pm. At 12.11 am this morning, an email was received by the Appeals Assistant in the following terms:
Hi [Appeals Assistant],
I will be unable to attend the hearing tomorrow and am wondering if it heard on the papers?
Thanks [Mr Mallon]
(As per original)
The Appeals Assistant responded to that email at 7.38 am this morning in these terms:
Dear Mr. [Mallon]
The appeal is listed for a hearing today at not before 11.30 am.
The matter will be heard at the Family Law Courts in Brisbane in court 7 level 2.
Thank you
I had Mr Mallon’s name called three times at the commencement of the appeal this morning. There was no appearance by him.
The trial for both parenting and property matters was initially listed to April 2016. On the morning of the first day of trial, the parties entered into final parenting orders by consent which saw the parties’ only child living with the wife and spending no time with the husband unless otherwise agreed. The property proceedings were adjourned to August 2016 “due to the husband having retired from employment and having not provided the wife with full details surrounding the retirement” (see Reasons at [9](y)(ii)).
Numerous interlocutory skirmishes relating to the husband’s non-disclosure, his seeking to appoint a litigation guardian and his objection to subpoenae issued by the wife, resulted in the property proceedings not being heard until October 2017.
Final property orders were made ultimately on 24 January 2018 (which were amended on 15 March 2018). Those orders resulted in the wife receiving 35 per cent of the “property of the parties to the marriage or either of them”.[3] That property was comprised solely of superannuation with a net value of approximately $1.65 million. That amount is comprised of the following less liabilities of $27,800:
a)The husband’s K Super Fund which contained $240,933;
b)The wife’s K Super Fund which contained $191,907;
c)A separate K Super Fund of the husband containing a Total Permanent Disability payment received by him in September 2016 for $500,000; and
d)Another separate K super Fund of the husband also containing a Total Permanent Disability payment received by him in September 2017 in an amount of $750,000.
[3]Stanford v Stanford (2012) 247 CLR 108; Family Law Act 1975 (Cth) s 79.
The final orders made by her Honour included allocating a base amount to the wife in the husband’s superannuation fund of $387,357 (which was amended on 15 March 2018 to $287,357 “to reflect a part property settlement already received by the wife”).[4]
[4] Reasons at p 8 [9(tt)].
On 11 December 2017, an application was filed by the wife for indemnity costs. That application initially sought a fixed amount of about $190,000. However, at the proceedings before her Honour, leave was given to file an affidavit which provided an updated figure of $244,404.98 (see, [2] of her Honour’s reasons).[5] There was no appearance by the husband at the hearing, and his solicitor withdrew at its commencement due to her being unable to get instructions. In that respect, I note the non-attendance by the husband at the appeal before me.
[5] There appears to be a slight discrepancy both in the reasons and when compared with the updated amount provided in the affidavit.
Her Honour found at [21] – [22], that the circumstances justified a departure from the ordinary position contained in s 117(1) of the Act, and, moreover, that there existed circumstances “of such an ‘exceptional kind’ so as to warrant an order for indemnity costs” (at [37]). However, her Honour ordered that costs only be payable for the period between the first final hearing (in April 2016) and the first day of the second final hearing (in October 2017). Her Honour’s reasons for that conclusion are set out below:
39. In making this finding, explanation must be given as to what part of the proceedings are subject to an indemnity costs order.
40. In that regard I make the following findings:-
a) All costs incurred by the wife up until the first final hearing which resulted in final parenting orders in April 2016 are costs to be borne by the wife.
b) I make this finding based on the following:-
i) Whilst the husband may have been a little difficult surrounding the sale of the three parcels of real estate there is nothing untoward as to the husband’s conduct which justifies a costs order being made.
ii) The final parenting orders wholly favoured the wife and were agreed to promptly by the husband.
iii) The parties were in court for less than two hours on the first day of hearing.
iv) The material prepared by the wife for the final hearing was not in waste as that material in respect to property issues was able to be utilised for later affidavits.
v) Whilst the second day of the two day hearing in April 2016 could not be utilised, it is clear from the facts that the property matter could not proceed successfully to final hearing on that day because the husband had not received all of his entitlements for his disability.
vi) The husband should not be penalised in paying the wife’s costs of a second day of trial when a second day did not take place but where the wife incurred such counsel fees due to the terms of the costs agreement entered into by the wife.
c) The husband is responsible for costs on an indemnity basis incurred from April 2016 up until the first day of hearing in October 2017.
d) I make this finding based on the following:-
i) It is during this period of time that the husband’s misconduct resulted in baseless applications by the husband, delays and wasted court events.
ii) It is during this period that the wife was put to additional expense to try and ascertain the true financial position of the husband and gather the evidence necessary to bring this information to the courts attention.
iii) It is during this period that on three occasions costs were reserved in favour of the wife.
e) Any costs incurred by the wife for the actual two days of final hearing and the subsequent written submissions are costs to be borne by the wife.
f) I make this finding based on the following:-
i) The trial was contained well within the three day period nominated by the legal practitioners as to the length required for the final hearing.
ii) A final hearing was required to determine the property division.
iii) Neither party was wholly successful in the orders being sort for a property division with the final orders reflecting a division greater than that sought by the husband and less than that sought by the wife.
At [38], her Honour said:[6]
38. The circumstances of such an “exceptional kind” are based on the wilful misconduct of the husband in not being forthcoming in informing the wife as to his changing financial status or providing timely disclosure which then gave rise to lost events and delays.
[6] See also, Reasons for Judgment at page nine.
As to the amount of costs payable by the husband, her Honour’s reasons are brief:
41. Unfortunately the material supplied by the wife in support of her indemnity costs order is wanting as it does not provide full details as to how the sum of $224,404.98 is made up.
42. This is a shame.
43. It is not the job of this court to perform a forensic calculation exercise nor should either of these parties incur additional costs or delays in having costs taxed.
44. Therefore, taking into account the evidence before the court I find that pursuant to section 117(2) the husband is to pay to the wife by way of costs the sum of $125,000.
45. As to the cost application itself, I make an order for costs of $2,000 against the husband.
46. In total the husband is to pay $127,000 to the wife and give the husband fourteen days to organise payment.
The wife’s grounds of appeal
There are seven grounds of appeal. Ultimately, however, they can in my view be confined as follows:
a)Whether her Honour erred in making a finding at [23](b) that “sealed envelopes with offers of settlement were not produced to the Court”;
b)Whether her Honour erred in concluding that the applicant wife’s material failed to provide a breakdown of the costs incurred by her; and
c)Whether the wife was denied procedural fairness as a result of her Honour’s failure to address any conflict in the evidence being referred to in submissions, and that which was physically available to her Honour.
Counsel for the wife submits that the failure to make findings in accordance with the evidence has resulted in a miscarriage of justice.
The Legal Principles
As is well known, s 117(1) provides that parties ordinarily bear their own costs in relation to proceedings. However, s 117(2) allows the Court to depart from that ordinary position “where there are circumstances that justify it in doing so”. The matters which the Court must have regard to in that respect are set out in s 117(2A) of the Act.
Rule 21.02 of the Federal Circuit Court Rules 2001 (Cth) (“the FCC Rules”) states:
21.02(1) An application for an order for costs may be made:
(a) at any stage in a proceeding; or
(b)within 28 days after a final decree or order is made; or
(c) within any further time allowed by the Court.
21.02(2) In making an order for costs in a proceeding, the Court may:
(a)set the amount of the costs; or
(b)set the method by which the costs are to be calculated; or
(c)refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
(d)set a time for payment of the costs, which may be before the proceeding is concluded.
Rule 21.03 of the FCC Rules relates to the determination of maximum costs on a party and party basis and is therefore not relevant in this case.
There is no doubt that an award of indemnity costs is confined to “exceptional” cases.[7] In my view, that must be all the more so in a Court where the usual position is that each party should bear their own costs. Although referring to the Family Law Rules 2004 (Cth), I seek to repeat in that respect, what was said in Prantage & Prantage:[8]
151.…the Act, the Rules read as a whole, and existing authority each evidence a clear intention that a significant disparity between the level of costs provided for in Schedule 3 and the fees payable by a client to their legal practitioner militates against an award of indemnity costs or, if the circumstances otherwise warrant such an order, operates as a brake on the quantum that might otherwise be awarded.
152.Section 117(1) is important in that respect. Indemnity costs are confined to “an exceedingly rare situation” (Callinan J quoted by Thackray and Ryan JJ at [42]) in jurisdictions where “the usual rule” is that a successful party receives an order for costs (i.e. “costs follow the event”). They might, then, be seen to be more so in this jurisdiction where the “usual rule” is that “each party … shall bear his or her own costs” (s 117(1)). The comments by this Court in Kohan that indemnity costs are “a very great departure” from the “normal standard” should be seen in that context. That, it should be observed, is not a fetter on this Court’s discretion to award costs or indemnity costs if justice so requires it (see Oshlack v Richmond River Council (1998) 193 CLR 72, at 134 (particularly subpar [3]), per Kirby J). Rather it recognises that an order for indemnity costs, has a particular context in this jurisdiction.
153.In this Court, one of the two “seemingly irreconcilable objectives” of awards of costs referred to by Cooper and Merkel JJ in Re Wilcox quoted by Thackray and Ryan JJ can be expressed as “ … protecting access to justice in family law matters by not exposing an unsuccessful litigant in the usual course to an order for costs”. A litigant in this Court must establish that the justice of the case requires an order for costs by reference to (non-exhaustive) statutory considerations before any order for costs is made.
[7] Kohan and Kohan (1993) FLC 92-340 at 79,614; Limousin v Limousin (Costs) (2007) 38 Fam LR 478 and D & D (Costs) (No 2) (2010) FLC 93-435.
[8] (2013) FLC 93-544.
Reference has frequently been made in this Court to the judgment of Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd[9] and that often repeated statement need not be repeated here. I also refer in passing to what was said in Harris & Dewell (No. 2)[10] at [22] – [25]. In those passages, the Full Court sought to emphasise the rarity of indemnity costs orders in the usual course of events.
[9] (1993) 46 FCR 225.
[10] (2018) FLC 93-863.
Offers of settlement
At [23(b)] of the reasons, her Honour concluded that she did not take into account (in accordance with s 117(2A)(f)) the following:
Full details of any previous offers as such offers (although the affidavits refer to sealed envelopes containing such offers – such envelopes were never produced) were not forthcoming apart from a copy of the letter from the wife’s legal practitioners to husband’s legal practitioners dated 13 March 2018 offering to accept $150,000 by way of costs.
(As per original)
The offers for settlement were before the Court and were attached to an affidavit handed up and marked “Exhibit B” at the hearing before her Honour. Reference was made to those offers at paragraph nine of the wife’s written submissions before her Honour. It was submitted on her behalf that the husband’s position in refusing the offers was “unreasonable” and “grossly imprudent”.
Counsel also submits that had consideration been given to those offers, it would have been concluded that the “costs of the trial could have been avoided”, thus rendering the finding at [40(f)] of her Honour’s reasons erroneous.
It is not for me to comment on the reasonableness or otherwise of those offers or whether in fact refusing those offers was grossly imprudent. It seems to me that in order to arrive at such conclusions it would be necessary for me to understand those offers in terms of the entire proceedings litigated before her Honour, including what her Honour has otherwise referred to as to the husband’s non‑appearances and the like.
The offers are referred to expressly during the short hearing before her Honour as can be seen from the following transcription:[11]
MR LINKLATER-STEELE: Could I just seek to add to your Honour’s burden – there’s a further affidavit of … my instructing solicitor, which I need to file by leave. That simply annexes a number of pieces of communications passing between the parties, in particular efforts to try and settle the costs application and offers made, and also the efforts that have been made by my instructing solicitor to cause the [husband] to appear.
HER HONOUR: Yes. I’ll give you leave to file that. Thank you.
MR LINKLATER-STEELE: And, your Honour, the practice that we adopted in terms of the primary submissions is that we sealed offers as to costs and attached them to [the] affidavit [marked Exhibit B]. Your Honour would need to have a look at those.
HER HONOUR: Yes.
[11] Transcript, 1 May 2018, p 2 ln 43 to p 3 ln 10.
The husband says that the annexures attached to the affidavit provided to the Court were not served upon him. Only the affidavit, he says, was apparently provided. At paragraph 12 of his Summary of Argument, he says that he is yet to receive “any copies of the material contained within the sealed copies of any supposed offers of settlement, or any attachments, that were accepted as evidence by the learned trial judge”.
In that respect, it is, I think, important to note that the record reveals ongoing issues with respect to service of the husband:
a)An affidavit was filed on 24 September 2018 saying on behalf of the wife that her legal representative had been unable to serve the Notice of Appeal on the husband;
b)The husband’s solicitor at the hearing before her Honour also deposed to being unable to contact the husband prior to the hearing in order to obtain instructions; and
c)There was a previous occasion where the husband had failed to appear in August 2016, and again in the May 2018 proceedings.
Breakdown of Costs
As I have said, her Honour concluded that the material provided in relation to the breakdown of the wife’s costs was “wanting”.
Counsel submits that the breakdown of costs was deposed to in Exhibit B, which also attached a schedule as to the calculation of costs. So much is true. As previously noted, an updated amount was provided to the Court at the hearing before her Honour and attached to an affidavit filed by leave from the wife’s solicitors.
Further, the submissions before her Honour referred to the Costs Agreement and to evidence before her Honour from the affidavit marked Exhibit B.
Conclusion as to Error
The Exhibit contained on the Court file, and the affidavit filed by leave before her Honour and contained on the court file, each clearly annex the offers and the breakdown of costs. Her Honour was, with respect, plainly wrong in the conclusions to which I have just referred.
Moreover, a failure to take into account those matters, which, contrary to what her Honour asserts, were plainly before her, are central to the exercise of discretion to award costs, and specifically to award indemnity costs. In my view, appealable error is demonstrated.
The question then arises as to whether I should seek to re-exercise the discretion or to remit the matter to her Honour or another judge. It will, I hope, be plain, and in any event will be explained by the wife’s counsel to her, that appeal courts, whether comprised of a single judge or a Full Bench, always seek to re‑exercise if that is at all possible.
It is clear in this case, as it is in the vast majority of cases, that parties seek to avoid the further time, expense and stress of further litigation. So much is of course entirely understandable.
However, the decision as to whether this Court, whether comprised of a single judge or a Full Bench, should re-exercise the discretion, is mandated not by a desire to do so but by legal principle[12] and the necessity for this Court to be appraised of all circumstances relevant to the re-exercise at the time and the date of the hearing.
[12]Allesch v Maunz (2000) 203 CLR 172.
In this particular case, that is not so much the issue, as the fact that this matter, on any view of the record, has had a long and troubled history. The award of indemnity costs made by her Honour reflects in some part that troubled history and her Honour, having been seized of the matter for some considerable time, is cognizant of its history and the complexities of that history. Her Honour is in my view the person best placed to consider the application for indemnity costs having taken account of the error which, in my view, is made out in this case.
In that respect, Mr Linklater-Steele on behalf of the wife does not contend and in fact properly, in my view, concedes that the matter should go back to Judge L. Turner. That is the appropriate course for the reasons that I have indicated. In particular, a significant aspect of the error is her Honour’s erroneous statement that the written offers of settlement were not before her when they were. The terms of those written offers for settlement, can in my view only properly be assessed upon a consideration of the entire history of the matter and its relevance to the ultimate reasons for the orders for settlement of property made by her Honour.
It is primarily for that reason that, understandable though it is, the wife would want to bring an end to the relevant proceedings today, that I unfortunately consider it essential for the matter to be remitted.
In that respect, as I have said, Mr Linklater-Steele concedes properly that there is no reason why the matter should not be remitted before her Honour. Indeed there are good reasons why that should occur and I propose to so order.
Mr Linklater-Steele also concedes, properly as it respectfully seems to me, there should be no order as to costs of this appeal and that a costs certificate should issue to the wife in the usual form. That seems to be an entirely appropriate course. The error is that of her Honour and was not in any sense induced by the husband or any conduct by him or on his behalf.
In those circumstances, it seems to me that the provisions of s 117(1) of the Act should apply, notwithstanding what is in effect the wife being wholly successful in this appeal and I so order. I will also order that a costs certificate issue to the wife pursuant to the Federal Proceedings (Costs) Act 1989 (Cth) in the usual form.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 15 November 2018.
Associate:
Date: 11 December 2018
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