FEDERAL CIRCUIT COURT OF AUSTRALIA
| ELKIN & WEARNE | [2015] FCCA 1880 |
| Catchwords: FAMILY LAW – Considerations regarding costs in the light of filing of lengthy documents by Wife that were not able to be dealt with satisfactorily by the Husband – Husband sought order for indemnity costs – consideration of principle for such an order in the light of the Federal Court of Australia decision in Colgate-Palmolive Co v Cussons Pty Ltd – strike out application of Wife’s trial affidavit which comprised four folders (which included 101 unpaginated exhibits) in circumstances where she had previously advised the Court in August 2014 of the readiness of her trial affidavit – considerations of prejudice and trial management in the striking out of trial affidavit. |
| Legislation: Family Law Act 1975, ss.117(1), 117(2A) |
| AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Barrett Property Group Pty Ltd v Metricon Homes Pty Ltd (2008) 74 IPR 52 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 In the Marriage of Ensabella (1980) 6 Fam LR 174 Kennon & Kennon (1997) FLC ¶92-757 Latoudis v Casey (1990) 170 CLR 534 La Trobe Capital & Mortgage Corporation Ltd v Hay Property Consultants Pty Ltd (2011) 190 FCR 299 Penfold v Penfold (1980) 144 CLR 311 Sheehan & Sheehan (1983) FLC ¶91-352 Stephens v Stephens (2011) 44 Fam LR 117 |
| Applicant: | MR ELKIN |
| Respondent: | MS WEARNE |
| File Number: | AYC 11 of 2012 |
| Judgment of: | Judge Neville |
| Hearing date: | 4 March 2015 |
| Date of Last Submission: | 4 March 2015 |
| Delivered at: | Wagga Wagga |
| Delivered on: | 6 March 2015 (oral reasons) 22 July 2015 (written reasons: never requested by the parties) |
REPRESENTATION
| Counsel for the Applicant: | Mr J Levy |
| Solicitors for the Applicant: | Commins Hendriks, Wagga Wagga |
| Counsel for the Respondent: | Mr M Hogg |
| Solicitors for the Respondent: | Friedlieb Byrne, Wagga Wagga |
ORDERS
The Wife pay the Husband’s costs fixed in the sum of $12,000.00.
IT IS NOTED that publication of this judgment under the pseudonym Elkin & Wearne is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT AT WAGGA WAGGA |
AYC 11 of 2012
| MR ELKIN |
Applicant
And
| MS WEARNE |
Respondent
REASONS FOR JUDGMENT
The following reasons in relation to costs were delivered in an oral judgment delivered on 6th March 2015 in Wagga Wagga.
In the light of the reasons given and orders made on 4th March regarding the conduct of the trial (in particular the striking out of the Wife’s trial affidavit), the Husband sought an order for indemnity costs fixed in the sum of $22,880.00. For the reasons given on 6th March, the Court made an order that the Wife pay the Husband’s costs fixed in the sum of $12,000.00.[1] What follows are the reasons of 6th March revised from the transcript.
[1] There will issue an order, amended under the slip…
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- AGLC
- Elkin and Wearne [2015] FCCA 1880
- Case
- [2015] FCCA 1880
- Decision Date
CaseChat Overview and Summary
In the matter of Elkin and Wearne, the court was asked to determine the appropriate basis for awarding costs. The specific dispute concerned whether the wife should be ordered to pay the husband's costs on an indemnity basis or the usual party and party basis.
The central legal issue before the court was the application of the principles governing the award of indemnity costs, as distinct from the standard party and party costs. This required the court to consider the circumstances under which it is appropriate to depart from the ordinary rule of awarding costs on a party and party basis.
Judge Neville, in his reasoning, referred extensively to the principles outlined by Sheppard J in *Colgate-Palmolive Co v Cussons Pty Ltd*. These principles establish that the ordinary rule is for costs to be awarded on a party and party basis, which often falls short of a complete indemnity. Departure from this rule requires special or unusual features in the case that warrant such a departure. While the categories for exercising discretion are not closed, examples of conduct that might justify indemnity costs include making allegations of fraud known to be false, commencing proceedings for an ulterior motive, or wilful disregard of known facts or established law. Ultimately, the decision rests on whether the particular facts and circumstances of the case warrant an order for costs other than on a party and party basis, and the exercise of this discretion will not be found to have miscarried unless it involves a manifest error or injustice.
The court ordered that the Wife pay the Husband’s costs fixed in the sum of $12,000.00.
The central legal issue before the court was the application of the principles governing the award of indemnity costs, as distinct from the standard party and party costs. This required the court to consider the circumstances under which it is appropriate to depart from the ordinary rule of awarding costs on a party and party basis.
Judge Neville, in his reasoning, referred extensively to the principles outlined by Sheppard J in *Colgate-Palmolive Co v Cussons Pty Ltd*. These principles establish that the ordinary rule is for costs to be awarded on a party and party basis, which often falls short of a complete indemnity. Departure from this rule requires special or unusual features in the case that warrant such a departure. While the categories for exercising discretion are not closed, examples of conduct that might justify indemnity costs include making allegations of fraud known to be false, commencing proceedings for an ulterior motive, or wilful disregard of known facts or established law. Ultimately, the decision rests on whether the particular facts and circumstances of the case warrant an order for costs other than on a party and party basis, and the exercise of this discretion will not be found to have miscarried unless it involves a manifest error or injustice.
The court ordered that the Wife pay the Husband’s costs fixed in the sum of $12,000.00.
Orders
Orders of the court
1.
The Wife pay the Husband’s costs fixed in the sum of $12,000.00.
Background
Background to the litigation
The decision of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (noted by the Full Court) is a regularly cited authority for relevant principle regarding the awarding of indemnity costs.[3] In that judgment, his Honour outlined the following principles, at pp.232 – 234, which I set out in full (emphasis added):[3] Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:- 1. The problem arises in adversary litigation, i.e. litigation as between parties at arm's length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg. a government agency or statutory authority. 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 the party and party basis. In this Court the provisions of Order 62, rules 12 and 19, and the Second Schedule to the Rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity. 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. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v. British Transport Commission and Handley JA in Cachia v. Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to. 4. In consequence of the settled practice which exists, 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. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said 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." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata. 5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal)and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. 6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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