Edgar & Edgar (No 2)
[2024] FedCFamC1F 552
•20 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Edgar & Edgar (No 2) [2024] FedCFamC1F 552
File number: SYC 6432 of 2023 Judgment of: HARTNETT J Date of judgment: 20 August 2024 Catchwords: FAMILY LAW – COSTS – Where the wife filed an application for joinder of the proposed second respondent – Where the wife was wholly unsuccessful – Where previous orders were made for the wife to pay the proposed second respondent’s costs – Where the wife and the proposed second respondent were unable to agree on costs – Costs order in a fixed sum to be paid by the wife to the proposed second respondent. Legislation: Family Law Act 1975 (Cth) ss 117, 90AF
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Regulations 2021 Schedule 3
Cases cited: Collins & Collins (1985) FLC 91-603
Cross & Beaumont (2008) 39 Fam LR 389
Kohan & Kohan (1993) FLC 92–340
Pascoe & Larsen (No 2) [2022] FedCFamC1A 126
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123
Penfold v Penfold (1980) 144 CLR 311
Division: Division 1 First Instance Number of paragraphs: 25 Date of hearing: 2 August 2024 Place: Melbourne, via videolink Solicitor for the Applicant: Ramsden Family Law Counsel for the Respondent: Ms Edwards Solicitor for the Respondent: PW Lawyers Counsel for the Proposed Second Respondent: Mr Walsh Solicitor for the Proposed Second Respondent: Crompton + Walsh Pty Ltd ORDERS
SYC 6432 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR EDGAR
Applicant
AND: MS EDGAR
Respondent
B LTD
Proposed Second Respondent
ORDER MADE BY:
HARTNETT J
DATE OF ORDER:
20 AUGUST 2024
THE COURT ORDERS THAT:
1.The wife pay the costs of B Ltd fixed in the sum of $32,000, with such sum to be paid by the wife within 6 months of this date.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Edgar & Edgar has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARTNETT J
INTRODUCTION
The discrete issue for the Court to determine is the quantum of costs payable to the proposed second respondent B Ltd by the respondent wife (“the wife”) following Orders made by the Court on 17 May 2024. Those Orders were, relevantly, as follows:
2. The respondent wife pay the costs of the proposed second respondent [B Ltd] as agreed and failing agreement as determined by the Court.
3. If costs are not agreed within 7 days hereof then the parties are to file and serve written submissions of no longer than 5 pages with [B Ltd] to file and serve such submissions within 14 days of the date of these orders and the respondent wife to file and serve such submissions within 21 days of the date of these orders.
The parties could not agree on the quantum of costs. Accordingly, B Ltd filed and served written submissions in accordance with the Orders of 17 May 2024, those submissions being dated 31 May 2024. Thereafter, B Ltd sought to rely upon, and was granted leave to rely upon, further written submissions filed on 3 June 2024.
The wife did not file any written submissions in respect of costs in accordance with 17 May 2024 Orders, but she did provide to the other parties and to chambers undated written submissions with attachments which went to the issues in dispute. Additionally, on the hearing of the matter, counsel for the wife appeared on her behalf to make further oral submissions in response to the quantum as sought by B Ltd, it being in the not inconsiderable amount of $49,893.90. The wife had prior to the hearing, and on 9 June 2024, made a counter offer to B Ltd of approximately $24,746.95 payable in three equal instalments concluding on 15 December 2024. There had been no acknowledgement nor response to that offer.
LEGAL PRINCIPLES
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) sets out the general rule that each party shall bear their own costs. It provides:
(1)Subject to subsection (2), subsection 102QAB(6) and sections 117AA and 117AC, each party to proceedings under this Act must bear the party's own costs.
However, the Court, being satisfied that there are circumstances justifying it in doing so, has the power to make such order for costs as it considers just in accordance with the Court's discretion. Section 117(2) of the Act provides:
(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), (5) and (6) 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.
In considering what (if any) order for costs it should make, the Court shall have regard, relevantly, to the matters in s 117(2A) of the Act which are as follows:
(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;
(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.
Although the Court must have regard to all the matters in s 117(2A) of the Act, each matter’s particular relevance will depend upon the circumstances of the case.
In Collins & Collins (1985) FLC 91-603, the Full Court of the Family Court of Australia (Evatt CJ, Pawley & Barblett JJ), as it was then, said:
In deciding whether the circumstances justify an order for costs, there is a broad discretion to be exercised, having regard to the factors set out in subsection (2A) so far as relevant. Those factors…are not to be read in a restrictive way, the discretion remaining is a broad one: Penfold v Penfold (1980) FLC 90-800 at pp 75,053-75,054 (High Court); quoted in Mallet v Mallet (1984) FLC 91-507 at pp 79,123-79, 124 (by Wilson J).[1]
[1] Collins & Collins (1985) FLC 91-603 at 79,877.
In Penfold v Penfold (1980) 144 CLR 311, the High Court (Stephen, Mason, Aickin and Wilson JJ) held that:
It is an accurate description of s 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to s 117(2). As subsection (1) is expressed to be subject to subsection (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Subsection (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently…we do not agree with the suggestion…that an order can only be made under s 117(2) in a 'clear case'.[2]
[2] Penfold v Penfold (1980) 144 CLR 311 at 315.
It is well-settled law that no one factor in 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 at [130], 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 costs sought by B Ltd were on the more common party/party basis. The Full Court in Kohan & Kohan (1993) FLC 92–340 observed that a 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.[3]
[3] Kohan & Kohan (1993) FLC 92–340 at 79,614.
The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) and authorities make plain that I can fix an amount for costs. As McClelland DCJ observed in Pascoe & Larsen (No 2) [2022] FedCFamC1A 126:
27.Rule 12.17 of the Rules sets out the methods of calculating costs. These include the Court fixing a specific amount for costs (r 12.17(1)(a)) or an order for the costs to be assessed on a particular basis (r 12.17(1)(b)).
28.In Stoian v Fiening (Costs) [2014] FamCA 944 at [91], Kent J endorsed the principles for applying a rule equivalent to r 12.17 when referring to r 19.18 of the now repealed Family Law Rules 2004 (Cth) as adumbrated by Einstein J in Idoport Pty Limited v National Australia Bank Limited & Ors [2007] NSWSC 23 at [9]. Those principles include:
i.the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation;…
ii.the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable;…
iii.the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available;…
iv.a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place;…
iv.the gross sum “can only be fixed broadly having regard to the information before the Court”;…
(Citations omitted)
29.Consistent with those principles, it has been determined that where a Court orders a party to pay costs, it may be appropriate for the Court to fix a lump sum. By doing so, the Court can avoid further delay and inconvenience being occasioned by the requirement to tax a bill: Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432 at [51].
The financial circumstances of a party against whom a costs order is sought is a material consideration, albeit it may be outweighed by another or other considerations. I observe that impecuniosity is not a barrier to the making of a costs order where there are circumstances that justify the Court in doing so (Cross & Beaumont (2008) 39 Fam LR 389 at [60]).
CONSIDERATION
A costs order against the wife was a matter determined prior to this time. Its quantum was not. I propose to fix a lump sum which is a course open to me and one not opposed by the parties. Certainly, it will avoid further delay, inconvenience and cost to the parties.
A detailed chronology of this matter is outlined in my judgment delivered 17 May 2024 which contents I adopt.
For present purposes, I note the following matters.
On 1 January 2024, the wife filed an Amended Response to Initiating Application. The wife sought leave to join B Ltd as a party to the proceeding and otherwise sought, amongst other orders, injunctive relief pursuant to s 90AF of the Act to restrain B Ltd from continuing legal proceedings against her for repossession of real property owned by the wife and her husband as tenants in common in equal shares and situate at and known as D Street, Suburb E in the State of NSW. B Ltd is the registered mortgagee of three mortgages secured by the Certificate of Title to that property. Neither the husband nor the wife, both parties to the proceeding, have made the requisite repayments in respect of B Ltd’s secured interest over the property.
By Orders of the Court made on 17 May 2024, following an interim hearing, it was apparent that the wife’s application for joinder had been wholly unsuccessful. Orders were made for the wife to pay B Ltd’s costs of the proposed joinder application.
By virtue of the parties inability to agree costs, the matter was required to be re-listed to determine the quantum of the costs payable by the wife to B Ltd pursuant to Order 2 of the Orders made 17 May 2024.
On 2 August 2024, the matter proceeded before me with all parties in attendance. The husband played no active part in the costs dispute, it not being a matter which engaged him.
The question for the Court is one of quantum. What is an appropriate lump sum in the circumstances here?
The wife’s financial circumstances are not those of B Ltd. Further, she does not have surplus funds to meet any large costs order in a short time frame. The wife works as an educator and earns approximately $40,000 per annum. The wife, since separation, has received no support from the husband. She has incurred considerable legal fees. She will be entitled to a property adjustment between she and the husband which parameters are currently unknown. She resides in housing owned by her and the husband and is paying no or minimal mortgage in respect thereof. She and the husband own other real property however which is unencumbered and significant in value. The parties are in dispute with the husband’s former employer, B Ltd (he previously being the CEO), as to monies owed by the parties to B Ltd pursuant to secured mortgages and/or on the wife’s case, whether such monies are owed by her.
While B Ltd put before the Court extensive calculations as to work done to support the claim for costs made by that corporation, which were referrable to Schedule 3 of the Federal Circuit and Family Court of Australia (Family Law) Regulations 2021 scale costs, in my view, and as submitted by counsel for the wife, the amount claimed by B Ltd is excessive. The costs were not proportionate. There was little attempt made to contain costs across two directions hearings, and one interim hearing in the Court, to arrive at a reasonable sum for the work done.
B Ltd retained, on their own account and I accept and was much assisted by, experienced and knowledgeable solicitors and a specialist barrister, both familiar with the relevant area of law, and noting that there was some duplication between this proceeding and other proceedings. The lawyers representing B Ltd were also familiar with their client’s operations, and commercial lending and transfer of land matters more generally. That familiarity and skill base would have lessened the need for extensive research and made more efficient the preparation of the matter to an interim hearing stage.
Whilst the need for a significant costs payment is established in the wife being wholly unsuccessful, and the matter being one requiring some careful consideration by B Ltd’s lawyers, that payment need not be a sum of $26,242.10 to the solicitors acting for B Ltd and $23,651.80 to the barrister acting for B Ltd, both of whom act in the other proceedings. In the exercise of my discretion, I consider a total costs quantum of $32,000 to be a just order being a reasonable and appropriate sum in the circumstances of the case.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hartnett. Associate:
Dated: 20 August 2024
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