Ericsson and Jarrold (No. 3)
[2020] FamCAFC 300
•2 December 2020
FAMILY COURT OF AUSTRALIA
| ERICSSON & JARROLD (NO. 3) | [2020] FamCAFC 300 |
| FAMILY LAW – APPEAL – INDEMNITY COSTS – Where the respondent makes an oral application for her costs calculated on an indemnity basis – Where the appellant was wholly unsuccessful and his appeals and Applications in an Appeal were dismissed – Where the circumstances justify an order for costs – Where there are exceptional circumstances that warrant an order for indemnity costs – Where in the exercise of discretion, pursuant to r 19.18(1)(a) of the Family Law Rules 2004 (Cth), costs will not be ordered in the full amount as sought by the respondent - Indemnity costs ordered in favour of the respondent fixed in the sum of $25,000. |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) r 19.18(1)(a) |
| Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801 |
| APPELLANT: | Mr Ericsson |
| RESPONDENT: | Ms Jarrold |
| FILE NUMBER: | DGC | 1317 | of | 2013 |
| APPEAL NUMBERS: | SOA | 34 | of | 2020 |
| SOA | 96 | of | 2018 | |
| SOA | 73 | of | 2019 |
| DATE DELIVERED: | 2 December 2020 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide by video link |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 4 August 2020 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATES: | 12 November 2018 28 November 2018 |
| LOWER COURT MNC: | [2018] FCCA 3987 [2018] FCCA 3462 [2019] FCCA 3201 [2019] FCCA 3202 |
REPRESENTATION
| THE APPELLANT: | In Person |
| COUNSEL-ADVOCATE FOR THE RESPONDENT: | Mr Rockman |
| SOLICITOR FOR THE RESPONDENT: | Rockman & Rockman Lawyers |
Order
The appellant father pay the costs of the respondent mother of and incidental to the Notices of Appeal and the Applications in an Appeal, fixed in the sum of $25,000.
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 Ericsson & Jarrold (No. 3) 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 ADELAIDE |
Appeal Numbers: SOA 34 of 2020; SOA 96 of 2018; SOA 73 of 2019
File Number: DGC 1317 of 2013
| Mr Ericsson |
Appellant
And
| Ms Jarrold |
Respondent
REASONS FOR JUDGMENT
I have separately made orders dismissing the appeals and the Applications in an Appeal filed by Mr Ericsson (“the father”) in appeal nos. SOA 34 of 2020, SOA 96 of 2018 and SOA 73 of 2019.
Those appeals were heard together, and in the event that they were dismissed Ms Jarrold (“the mother”) made an oral application at the hearing of those appeals for an order that the father pay her costs of and incidental to those appeals, and the Applications in an Appeal, calculated on an indemnity basis and fixed in the sum of $36,755.50.
That application is opposed by the father.
In order to put these reasons for judgment in context, it is necessary to first read my reasons for judgment delivered earlier today in dismissing the appeals and the Applications in an Appeal.
The first question is whether there should be a costs order at all.
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) governs any application for costs whether it is in the context of an appeal or a first instance hearing, and relevantly provides as follows:
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, 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), (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.
(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;
(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.
…
As can be seen, the primary position is that each party is to bear their own costs, but a costs order can be made where there are circumstances that justify it, and in determining that, regard has to be had to the factors set out in s 117(2A).
There is no question that there are circumstances here that would justify an order for costs, given that the father has been “wholly unsuccessful in the proceedings” (s 117(2A)(e)).
It is necessary though to have regard to the financial circumstances of the parties in considering what order, if any, should be made (s 117(2A)(a)).
In that regard the mother’s solicitor-advocate informed the court that the mother is employed as a manager, and earns $120,000 gross per annum. Her current husband is unemployed and the mother fully supports the family, including the three children the subject of the proceedings. She does have a house property which is valued at approximately $800,000, but that is subject to a mortgage loan of $650,000 and there is a suggestion of the mortgagee foreclosing on that mortgage. Her financial position is said to be precarious, she having to refinance the mortgage to fund the litigation in the context of the father failing to meet a number of costs orders made against him.
The father is a professional but he has been unemployed since 2013 for health reasons, namely a depressive illness.
He receives Centrelink benefits. His only asset is a motor vehicle, and he lives in a house owned by his current wife. She is employed as a professional.
Plainly, the financial circumstances of both parties can be described as poor, even though the mother is able to earn a reasonable income.
The issue though arises most acutely with the father’s financial position. However, there is ample Full Court authority that in an appeal, impecuniosity is not a bar to a costs order being made, where there are circumstances which otherwise justify an order for costs (e.g. see D& D (Costs)(No 2) (2010) FLC 93-435), and that is the case here.
The plain fact of the matter is that the father chose to bring the appeals, and the mother was obliged to respond, and thereby incur significant legal costs. That expenditure has been justified given the outcome of the appeals, and the mother should not have to bear all of those costs herself.
Thus, there will be an order for costs, and the next question is how should those costs be calculated, namely on a party/party basis, or as sought by the mother, on an indemnity basis.
In relation to this claim, it is useful to record what the Full Court said in D & D (Costs) (No. 2):
26.In Limousin & Limousin (Costs) [2007] 38 FamLR 478, the Court reviewed the authorities in relation to indemnity costs. Reference was there made to the judgment of the Full Court in Kohan and Kohan (1993) FLC 92-340. It was recorded at 79,614 (citations omitted) in which it was said that:
The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the court may make such order as the court considers just. As we have pointed out, the court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O 38 r 2, the provisions of O 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O 38 r 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the 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. See Degmam v Wright (No 2) [1983] 2 NSWLR 354]; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534; Hobartville Stud v Union Insurance Co (1991) 25 NSWLR 358 at 368–70.
Indemnity costs orders are still an exception in this and other jurisdictions.
27.The Court in Limousin (supra) also referred to the judgment of Shephard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 upon which learned Counsel for the Wife relies in support of the present application. Shephard J said in Colgate-Palmolive (supra) (at 256):
“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 …
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 …
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 …”
…
In Colgate-Palmolive Co v Cussons Pty Limited (1993) 46 FCR 225, Sheppard J provided some examples of circumstances that might warrant the exercise of discretion to award indemnity costs, and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660, drew from his Honour’s decision the following:
(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 (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra).
(c)Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)).
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v Westpac Banking Corporation (unreported Federal Court, 5 March 1993)).
(e)An imprudent refusal of an offer to compromise.
The mother here submits that most of those examples are present in some form or another, but realistically it is the first and fourth examples which are most relevant.
As for the first example, in light of the findings that I made in dismissing the appeals and the Applications in an Appeal, there can be no doubt that the father “should have known that he had no chance of success”. He claims that it was reasonable for him to bring the appeals, but that can only be from his subjective viewpoint, and that does not bear scrutiny objectively.
With the fourth example, the father made allegations that Judge Small’s previous findings were “racist and unbalanced”, and that Judge Mercuri had no regard for the welfare of the children. These allegations were “groundless”, and they ought never to have been made. They resulted in “undue prolongation of the case”.
Thus, I find that there are exceptional circumstances here which justify a departure from the usual rule that costs be calculated on a party/party basis, and indemnity costs awarded.
However, in the exercise of my discretion, pursuant to r 19.18(1)(a) of the Family Law Rules 2004 (Cth), I am not prepared to make an order for costs in the full amount sought by the mother, and the order I propose to make is that the father pay the costs of the mother fixed in the sum of $25,000.
I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 2 December 2020.
Associate:
Date: 2 December 2020
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