Easton and Easton (No.2)

[2017] FCCA 2131

FEDERAL CIRCUIT COURT OF AUSTRALIA

EASTON & EASTON (No.2) [2017] FCCA 2131

Catchwords:
FAMILY LAW – Costs – whether a wholly unsuccessful Applicant should pay the costs of the other party, and if so, whether those costs should be paid on an indemnity or a party/party basis.

Legislation:

Family Law Act 1975 (Cth), ss.117(1), 118, 117(2), 117(2A)

Kohan & Kohan(1993) FLC92-340
Colgate-Palmolive Co & Another v Cussons Pty Ltd (1993) ALR 248
Andrews v Barnes (1887) 39 Ch D 133

Applicant: MR EASTON

Respondent: MS EASTON

File Number: MLC 3768 of 2014

Judgment of: Judge Small

Hearing date: 31 August 2017

Date of Last Submission: 31 August 2017

Delivered at: Melbourne

Delivered on: 31 August 2017

REPRESENTATION

Counsel for the Applicant: Mr Easton in person

Counsel for the Respondent: Mr Hannan

Solicitors for the Respondent: Rockman & Rockman

ORDERS

1. The husband shall pay the costs of the wife of these proceedings on a party/party basis in the sum of $20,000, such sum to be paid to the wife’s solicitors within six months. 

2. Order 1 is stayed for 40 days. 

IT IS NOTED that publication of this judgment under the pseudonym Easton & Easton (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 3768 of 2014

MR EASTON

Applicant

And

MS EASTON

Respondent

REASONS FOR JUDGMENT

1. These reasons for judgment were delivered orally.  They have been corrected from the transcript.  Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.

2. The matter of Easton comes before me this afternoon in circumstances where I found, this morning, that the Application of the husband was misguided and misconceived and I summarily dismissed that application. 

3. An Application was then put before me for costs of the wife and she seeks costs on an indemnity basis. 

4. This is a situation where the parties were married and divorced twice and after the second separation, the parties effected a property settlement pursuant to orders that were made by consent in the Family Court of Australia in May of 1998. 

5. The question of costs is covered by section 117 of the Family Law Act and subsection (1) of that section states that subject to certain other things, each party to proceedings under this Act shall bear his or her own costs.

6. Most of the other things mentioned in that section are irrelevant to these proceedings, save that s.117(1) mentions s.118, which refers to frivolous or vexatious proceedings. Now, I am only mentioning that to put it out of the way because I do not find, on the evidence before me, that these proceedings were conducted in a frivolous or vexatious way.

7. I think the evidence shows that Mr Easton believes strongly and honestly that he is entitled to a further property settlement.  He was wrong in that.  That does not make the proceedings frivolous or vexatious. 

8. And then section 117(2) says:

   If, in proceedings under this Act, the Court is of opinion that there are circumstances that justify it in doing so, the Court may … make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the Court considers just.

9. So in other words, if the Court is of the opinion that there are circumstances that justifies it in making a costs order, the Court’s discretion is very wide indeed, requiring the Court only to make such orders as it considers just. 

10. Section 117(2A) then sets out the matters to which the Court must have regard in deciding whether it is just to make a costs order against a party.

11. The first of those things that I must take into account is the financial circumstances of each of the parties to the proceedings, and I do not think it is in dispute that the financial circumstances of the parties are, indeed, very disparate.

12. The wife owns considerable property; she has a (business omitted);  she is still working and she is reasonably comfortable in the world. 

13. The husband, on the other hand, does not work.  He receives an aged pension and it is his evidence that he cannot afford to pay costs.  I note, in that regard, that impecuniosity or the lack of ability to pay, in itself, is not a reason not to make a costs order.  There is clear authority for that proposition, but I do understand that what Mr Easton says is that he is not in a position to pay. 

14. The second thing that needs to be taken into account concerns issues of legal aid and there are none in this case.

15. The third thing is 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 or admission of facts, production of documents and similar matters. 

16. Now, I have found that these proceedings were misconceived.  I have found that they were not vexatious or frivolous.  What Mr Easton has done is prosecuted proceedings that I believe he believes were worthwhile.  There is no specific allegation in relation to his conduct during the proceedings that I think would enliven that matter.

17. The next matter I need to take into account is whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court.  That is not relevant in these proceedings. 

18. The next matter is whether any party to the proceedings has been wholly unsuccessful in the proceedings.  I think that is the matter on which any costs application in this matter should be hung.  Mr Easton has been entirely and utterly unsuccessful in these proceedings.  I have summarily dismissed his application and so I do take that into account as well.

19. The next issue is whether there is any written offer to settle the matter and there is no evidence before me that this matter had any written offer made to either party. 

20. And then the legislation finally says the other thing that the Court must take into account is “such other matters as the Court considers relevant.

21. It is an extremely wide discretion that the Court is given in relation to what it can take into account when considering whether to make a costs order. 

22. In addition, the Court has the power to make an order for indemnity costs where a party has incurred costs pursuant to a costs agreement which departs from the usual scale of costs -  and I have not really been given much evidence about that except to be given round sums of what the wife has incurred - and where the Court finds that there are exceptional circumstances. 

23. That is the finding in the matter of Kohan & Kohan (1993) FLC 92-340. So I do have the power to make an order for costs if I think it is just.

24. I have considered the matters - particularly the matter of Mr Easton’s assertion that he has no money, but also the fact that he has been wholly unsuccessful in the proceedings.  There is no need for all of those issues to be found or all of those matters to be in place.  One alone is enough for a Court to make a costs order.

25. Mr Easton has, indeed, been wholly unsuccessful in the proceedings, but he says he has no money to pay a costs order and, as I have said, that fact, on its own, is not a reason not to make one. 

26. I do think that the fact that he has brought these proceedings, which are misguided and misconceived, is something that I take into account under “such other matters as the Court considers relevant”. 

27. Whether to make indemnity or party/party costs, as Mr Hannan referred to in his submissions on behalf of the wife, the leading case on that issue is the case of Colgate-Palmolive Company & Anor & Cussons Proprietary Limited which was a 1993 case heard by Sheppard J in the Federal Court of Australia. 

28. And towards the end of his judgment, Sheppard J first sets out an extremely detailed history of the law in relation to indemnity costs, and then he sets out six principles that he thinks should underlie the decision of whether to grant indemnity costs. 

29. He says that the ordinary rule is that where the Court orders the costs of one party to litigation to be paid by the other party, the order is for payment of those costs on a party and party basis.  That has been the practice, he says, for centuries. And he says “in consequence of that settled practice”:

    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.

30. And he then refers to the Court of Appeal’s judgment in Andrews & Barnes(1887) 39 Ch D 133 where the Court said that:

    The Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require."

    However, he does say that he thinks:

    There should be some special or unusual feature in the case to justify the Court in departing from the usual practice.

    This case is an unusual case.  It is unusual on its facts. It is not unusual on its process - its process has been quite straightforward and, in many ways, it is not unusual in terms of the law.  It is only unusual in terms of the facts. 

31. Sheppard J then goes on to set out some of the things that have been taken into account by previous Courts in making indemnity costs orders and they are things like making allegations of fraud that you know to be false,  evidence of misconduct that causes loss of time to the Court.  I do not think those things are made out in these proceedings.  The fact the proceedings were commenced or continued for some ulterior motive is another factor and, as I have said, I do not think these are frivolous or vexatious proceedings. 

32. I think Mr Easton has been sincere in his prosecution of the proceedings, and other things in Sheppard J’s list are things like whether there is a wilful disregard of known facts or clearly established law.  Possibly that might occur in this case in the fact that the evidence is against Mr Easton’s belief that this was a relationship which would enliven the jurisdiction of this Court. 

33. When I look at all of those things - and what Sheppard J actually says at the end of his judgment is that, really, the Court needs to look at the facts of the case the circumstances of a particular case, as I have said, this is what I might call a sincerely believed misconception in terms of the law. 

34. It is a case that has been presented on a misconceived basis.  I have found it to be worthy of a summary dismissal, which is unusual.  Mr Easton tells me that he is going to appeal that decision and that, of course, is his right.  But in terms of the costs application, I am going to make an order for costs.  I think this case ought never to have been brought before the Court and I am going to make an order for costs but I do not think it is so egregious a matter  to invite an order for costs - or to make out a case for an order for costs on an indemnity basis. 

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Small.

Date: 7 September 2017