Fevia and Carmel-Fevia (Costs)
[2010] FamCA 143
•2 March 2010
FAMILY COURT OF AUSTRALIA
| FEVIA & CARMEL-FEVIA (COSTS) | [2010] FamCA 143 |
| FAMILY LAW – COSTS—Indemnity Costs—Assessment—Between Parties—Where the Husband was wholly unsuccessful at trial—Where there is a considerable disparity in financial circumstances—Circumstances that would justify indemnity costs at s 117(2A)—Where claim lacks ‘exceptional circumstances’—Order for indemnity costs refused |
| Family Law Act 1975 (Cth), ss 4, 79, 117, 117(1), 117(2) Family Law Rules Chapter 19 |
| Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 David (No.2) Re Costs (1998) 23 FamLR 139 Fevia v Carmel –Fevia (2009) 42 Fam LR 50 Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 I & I (No.2) (1995) FLC 96-625 Latoudis v Casey (1990) 1706 CLR 534 McDonald (1994) FLC 92-508 Penfold & Penfold (1980) 144 CLR 311 Re Skeates-Udy and Skeates (1995) FLC 92-626 Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FLC 93-029 |
| APPLICANT: | Ms Carmel-Fevia |
| RESPONDENT: | Mr Fevia |
| FILE NUMBER: | MLC | 4389 | of | 2008 |
| DATE DELIVERED: | 2 March 2010 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Murphy J |
| SUBMISSION DATES: | Applicant: 23/09/2009 Respondent: 14/10/2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr M Bartfeld QC |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherie and Associates |
| COUNSEL FOR THE RESPONDENT: | Mr M Wheelahan SC and Mr GP Thompson |
| SOLICITOR FOR THE RESPONDENT: | Saxbys Lawyers |
Orders
IT IS ORDERED THAT:
The husband pay the wife’s costs of and incidental to the proceedings, including the costs of and incidental to the application for costs, in such amount as is agreed in writing between the parties or, failing agreement, to be taxed.
Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter is one proper for the attendance of Counsel including Senior Counsel both in respect of the proceedings and the application for costs.
IT IS NOTED that publication of this judgment under the pseudonym Fevia & Carmel-Fevia (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: MLC4389 of 2008
| MS CARMEL-FEVIA |
Applicant
And
| MR FEVIA |
Respondent
REASONS FOR JUDGMENT
(COSTS)
On 3 September 2009 I delivered Reasons for Judgment in respect of competing allegations by the husband and wife in and about a binding financial agreement (Fevia v Carmel –Fevia (2009) 42 Fam LR 50).
At the conclusion of my reasons in that matter I made orders in respect of Applications for Costs as follows:
(1)It be declared that:
(a)there is no “financial agreement” in existence between the Applicant and the Respondent within the meaning of the Family Law Act 1975 (Cth); and
(b)there is no financial agreement between the Applicant and the Respondent which is “binding” within the meaning of the Act.
(2)The application of the wife for settlement of property pursuant to s 79 of the Act be listed before a Registrar at a date and a time to be advised for the making of further directions for the progress of that application.
(3)In the event that either party seeks an order for costs in relation to these proceedings, they shall file, within 21 days of the date of these Orders, written submissions in support of any such order and, at the outset of those submissions, shall indicate whether they consent to the determination of any such application in chambers or require to supplement those submissions at an oral hearing.
(4)In the event that any application for costs is made by either party pursuant to paragraph 3 of these Orders, the other party shall, if seeking to oppose any such order, file within 21 days of the service of the submissions contemplated in that paragraph, written submissions responding to such application and shall, if not earlier having made application themselves pursuant to paragraph 3, indicate at the outset of those submissions whether they consent to the determination of any such application in chambers or require to supplement those submissions at an oral hearing.
(5)In the event that responding submissions are filed in accordance with paragraph 4 of these Orders, the other party shall, within 7 days of the service of such responding submissions, file any submissions in reply thereto.
(6)For the purposes of paragraphs, 3, 4 and 5 of these Orders, the parties are at liberty to file any such submissions by forwarding them by e-mail to [email protected] provided that any such e-mail and all attachments are sent contemporaneously to the solicitors for other party.
(7)In default of either party filing the submissions contemplated by paragraph 3 of these Orders, each party shall bear their own costs.
(8)In the event that one or both parties in making, or responding to, an application for costs, require to supplement their submissions orally, the issue of costs be listed for hearing before Murphy J at a time and date to be advised and, in the event that Murphy J is not sitting in Melbourne within a reasonable time of such request, any such hearing shall occur by videolink.
By documents filed pursuant to those orders on 24 September 2009, the wife applies for the following orders:
(1)That the husband pay to the wife costs of and incidental to these proceedings such costs to be assessed on an indemnity basis.
(2)In the event that the application for order 1 is unsuccessful, the husband pay the wife’s costs of and incidental to these proceedings with the quantum of costs to be assessed in the absence of agreement.
(3) Certify for counsel including senior counsel.
Those orders are opposed by the husband, who seeks an order that the application be dismissed and an order that there be no order for costs. In the alternative, the husband contends that “it is premature to determine the wife’s application, and that the determination should be deferred until the conclusion of the proceedings. In this circumstance, the costs should be reserved.”
In that respect, the husband described the proceedings which, in essence, related to the validity of the binding financial agreement, as “preliminary proceedings”. As a result of the findings and orders made by me in those earlier proceedings (which were to the effect that there was no binding financial agreement between the parties) proceedings for settlement of property (and spousal maintenance) are alive between the parties.
Should Costs Be Reserved?
In my judgment there is no sustainable basis for reserving costs until “the completion of the proceedings”.
Both the general rule contained in s 117(1) and the permissive subsection which succeeds it apply to “proceedings under this Act”. “Proceedings” is defined (s 4):
“Proceedings” means a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding in the course of, or in connection with a proceeding.
The application determined by me constitutes “proceedings” as defined and are “proceedings under this Act” as that expression is used in s 117. The future financial proceedings are separate proceedings.
There is, in my view, no basis for deferring any application for the costs of those proceedings until the hearing of any further proceedings (for financial relief) arising as a consequence of the decision made by me in those earlier proceedings.
Indeed, considerations relevant to whether the s 117(1) rule applies in those proceedings, or alternatively, whether s 117(2) enlivens the consideration of an order for costs might involve the analysis of factors which are, potentially, quite different.
As but one example, the conduct of the parties (in the relevant s 117 sense) in relation to the earlier proceedings might be quite distinct from the conduct of the parties relating to the subsequent proceedings.
I reject the submission that the costs of the proceedings before me ought be reserved.
Costs and the Family Law Act
The purpose of s 117(1) is to make it plain (contrary to many other forms of civil litigation), that in proceedings under the Family Law Act, costs should not follow the event. (See eg Penfold & Penfold (1980) 144 CLR 311).
The court is given the power to award costs upon a finding that “there are circumstances that justify it in doing so” (s 117(2)). The matters that might justify a central finding are at large (s 117(2A)(g)) but must include regard being had to a number of specified matters (s 117(2A)(a)-(f)).
Upon satisfaction that an order for costs ought be made, it is then necessary for the court to consider whether those costs ought be awarded on what is commonly known as a “party and party basis” (but, under the Act, perhaps more accurately described as costs pursuant to Chapter 19 of the Family Law Rules), or on some other basis including, as claimed here, on an indemnity basis.
The wife places particular emphasis on one of the factors to which the court must have regard in arriving at a finding of the justifying circumstances required by s 117(2), namely the “financial circumstances of each of the parties to the proceedings” (s 117(2A)(a)).
In written submission on behalf of the husband it is contended that:
The husband accepts that for the purposes of a costs application the court is entitled to proceed on the basis that he is a man of very considerable wealth, but without more this is not a matter justifying an award of indemnity costs. [emphasis added].
The emphasis has been added to distinguish the submission there made from that proposition being thought applicable to the finding required by s 117(2). Confined to the question of the basis upon which costs might be ordered, I agree with the statement there made.
As will emerge, the statement is not in my view true of financial circumstances above being a justification for, or basis for, overcoming the s 117(1) general rule.
What Factors Might Justify an Order for Costs
The Full Court said in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123, per Kay, Warnick and Boland JJ at paragraph [39] ff:
39.However, the references to financial capacity in [26] and [27], [of the trial judge’s reasons] contrary to argument on behalf of the mother and father, are in our view, clear expressions by the learned judge that, as a matter of law there “…must be more than the financial capacity of the parents or either of them to meet the costs of the child representative before the court may make a costs order”. It is our view, that in so expressing the law, the learned trial judge was in error.
40.The introductory words of subs (2A) of s 117 are:
In considering what order (if any) should be made under subsection (2) the court should have regard to:
41.A number of factors are then listed in the sub-paragraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. 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.
In my view, the husband has been “wholly unsuccessful” in the proceedings before me. Success in those proceedings for him would be measured by a finding that there was a binding financial agreement between the parties. The ultimate finding was that there was not.
Similarly, in my view, the wife can be described as having been “wholly successful”. To the extent that the word “wholly” qualifies the word “successful”, the expression is in my judgment satisfied here by reason of the fact just described, and, in addition, by reason of the fact that the factual assertions advanced on behalf of the husband in the proceedings were rejected in favour of those advanced by the wife, as were the legal arguments.
The wife was put to considerable expense in meeting a claim brought by the husband in respect of which he was wholly unsuccessful.
In respect of the reliance placed upon financial circumstances, as a factor, the arguments on behalf of the wife, are met by written submissions on behalf of the husband that argue:
Section 117(2A) of the Act requires the court to have regard to the parties’ financial circumstances in considering whether to make an order for costs. The tenor of the wife’s submissions is that the court should have regard to the disparity in the parties’ financial circumstances. [Emphasis in original]
Reference is then made to the decision of Mushin J in McDonald (1994) FLC 92-508 at p.81,271 and to the criticism of what his Honour there said by the Full Court in Re Skeates-Udy and Skeates (1995) FLC 92-626.
The husband’s submissions indicate that Mushin J’s approach was “criticised and disapproved by the Full Court” in Re Skeates-Udy and Skeates (1995) FLC 92-626. The reference to that case and the citation is an error. The passage cited by counsel, is in fact, a passage appearing in the decision of the Full Court in I & I (No.2) (1995) FLC 96-625 at 82,277. A preference for an approach other than that outlined by Mushin J can also be seen in other authorities, for example, David (No.2) Re Costs (1998) 23 FamLR 139.
It is thereafter submitted on behalf of the husband that:
To focus too much attention on the husband’s comparative wealth, as the wife wishes to do, distorts the exercise in discretion under s 117(2A). Appropriate weight may be placed on this factor, but it must be considered in the context of all the circumstances, as s 117(2A)(g) requires the court to take account of such other matters as the court considers relevant.
A passage from the later case is cited as follows:
With respect to Mushin J, we see nothing in the provisions of s 117 to justify the approach to the question of costs in custody or any other proceedings suggested by him. The matters to which he referred are matters which, in an appropriate case, would be taken into account in determining whether the circumstances justified the making of an order for costs in a particular case. However, whether such matters exist or not, the other relevant matters referred to in s 117(2A) must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs. The financial circumstances of the parties is but one of those matters and those circumstances must be taken in to account whether or not there is a very significant disparity in financial circumstances between the parties. [emphasis in submissions]
I have already indicated my view of subparagraph (g) of s 117(2A). It is by no means clear to me that the decision in Re I & I and the decision of the later Full Court in Fitzgerald earlier referred to are inconsistent. It seems to me that the Full Court in I & I, in criticising the earlier Judgment of Mushin J, were seeking to make plain that a “very significant disparity in financial circumstances” is not required as a pre-condition for an order for costs in circumstances where, on the facts of the particular case, there are no “factors of the type” enumerated in Mushin J’s original decision.
If there is, contrary to my view, an inconsistency between those two decisions of the Full Court (which I doubt), I respectfully prefer the later decision. It seems to me that the later decision is more consistent with the provisions of s 117 and, furthermore, more consistent with the decision of the High Court in Penfold and Penfold (1979) 144 CLR 311.
There, the majority Justices of the High Court said, for example:
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 sub-section is not paramount to s 117(2). As sub-section (1) is expressed to be subject to sub-section (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.
Sub-section (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 inter-relationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the Judgment under appeal that an order can only be made under s 117(2) in ‘a clear case’.
It is important, in my view, to note that the Justices of the High Court went on to say (at 315):
Sub-section (2) does not in our view as a matter of law require the Judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs, there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not, in itself, indicate that a Judge has erroneously exercised his discretion to award costs, though it will place an Appellate Court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised … Accordingly, in the absence of some positive legislative indication, we should not attribute to Parliament the requirement that a Judge must make particular findings in relation to an order for costs. [Citations omitted]
If the submission made on behalf of the husband is that Court ought not have regard to the disparity in the parties’ financial circumstances, then that submission is rejected.
In the context of an application for costs, the respective capacity for each of the parties to bear the financial risk of litigation is, in my view, directly relevant not only to their respective financial circumstances per se but also to the disparity in those financial circumstances.
That is all the more so, in my view, when the risk of litigation is, on the one hand, borne by a party of very considerable wealth and, on the other hand, by a party of modest means. The husband concedes the former and, in my view, it is clear that the wife meets the latter description.
I make it plain that the disparity in the financial circumstances of the parties and those financial circumstances per se are each matters taken into account by me as being important in the exercise of arriving at a finding as to whether there are circumstances justifying an order for costs and, if so, the order that should be made.
I have not been made aware of any “Offer in writing” within the meaning of sub-paragraph (f) of s 117(2A).
Similarly, I have no evidence before me that the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court.
Indemnity Costs—Principles
Submissions about ‘conduct’ (s 117(2A)(c)) are central to the claims for indemnity costs (as, indeed, are ‘financial circumstances’) and I propose to deal with those issues together. First, though, it is necessary to look at the principles applicable to an award for indemnity costs.
Various expressions have been used to describe generically the types of circumstances that might be seen as justifying an order for indemnity costs. Epithets such as “exceptional” or “out of the ordinary” and the like have been used.
In outlining a number of examples where a Court might properly consider an award of indemnity costs, Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 gave as an example “the making of allegations which ought never to have been made or the undue prolongation of the case by groundless contentions” [citation omitted].
It is important to note, however, that the categories of cases giving rise to an indemnity costs order are not closed (see Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FLC 93-029 at 87,471 where the Court said:
All that is required is that the Court asked to exercise the discretion be satisfied that some ‘particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis’) [citing Sheppard J].
A number of findings made by me in the original proceedings are referred to in the written submissions of the wife in support of the contention that an indemnity costs order should be made. Included among those references is a finding in respect of the sworn evidence of the husband’s then solicitor:
I consider that Ms A was an entirely unsatisfactory witness. I note that Ms A is a former officer of the Court. Sadly, I do not accept her evidence. I consider it highly likely that her evidence as to the hand-delivery of the file by her to the offices of the wife’s solicitors is completely false … I find on the balance of probabilities that no such delivery took place.
Similar adverse findings about the husband’s credit were made:
96.The husband gave oral evidence as to when he knew there was a version of the agreement different from the one he signed. I have significant doubts about the truthfulness of his evidence about that topic.
97.He asserted that despite swearing an affidavit on 29 May 2008 annexing the agreement with “the annexure” attached in response to the wife’s application, and despite the fact that Ms A had filed her affidavit on 17 June 2008, he could not recall reading it.
98.Further, he swore that, despite the fact that he was present in Court when Cronin J made orders on 1 September 2008 to the effect that the originally signed agreement be forensically examined, he only knew of the existence of two documents earlier this year.
99.I think that is extremely unlikely.
However, in those proceedings, I declined to make a finding that, relevantly, the husband had signed a document on an occasion different to that which he alleges:-
Despite my significant concerns about the credit of Ms A, and my concerns about the husband’s credibility arising from the evidence given orally by him, there is, in my view, no sufficient foundation for a finding that Ms A did not sign the agreement containing the annexure on 20 September 2001 or that the husband did not do so on about that date (as he deposes).
The written submissions on behalf of the wife assert that:
For the wife there has been considerable and unnecessary legal expense in meeting the conduct of the husband in him:
·Insisting from June 2008 that there was one agreement between the parties which is binding;
·Requiring the wife to engage a forensic expert, have [the wife’s solicitor] give evidence and give evidence herself that she signed a different document to him in 2001;
·Requiring the wife to counter evidence as to the alleged delivery of a copy of the agreement to the offices of [the wife’s solicitors] by [the husband’s solicitors];
·Giving evidence which was untrue;
·Relying on an untruthful witness [i.e. his solicitor] in circumstances when he should have known findings of credit were likely to be made given [his solicitor] had already had to recant her detailed evidence of a telephone call she had to concede was not made in her second affidavit.
The husband’s submissions in reply contend that:
27.At page 10 of the wife’s costs submissions, as a ground supporting an award of indemnity costs, the wife relies upon the Court’s finding that the husband gave untrue evidence as to when he became aware of the existence of two versions of the agreement.
28.The finding has no relevance to the question of costs. As the wife’s costs submissions acknowledge by reference to the reasons of Mason CJ in Latoudis v Casey (1990) 1706 CLR 534 at 543, costs are not awarded by way of punishment but they are compensatory in nature. It is not suggested that any costs were incurred by the wife in consequence of the husband’s evidence and nor could any suggestion be made.
It is true that costs are not awarded as a punishment. But, it seems to me relevant to take into account that a party to proceedings gave untrue evidence as a factor in determining whether the amount of costs ordered should be on an indemnity basis. Existing authority supports that proposition.
For example, reference has already been made to Sheppard J enumerating a number of factors by reference to earlier authority in the Colgate Palmolive case. They include (by reference to earlier decisions) a “wilful disregard of known facts”; “the making of allegations which ought never to have been made”; and “the undue prolongation of a case by groundless contentions”.
The wife contends that the husband pursued a case that there was one agreement in circumstances where, after a handwriting expert admitted a mistake had been made by him, “one of the pillars of [the husband’s] argument that he had signed the same agreement had collapsed”. The submission goes on to argue that, despite knowing the expert evidence did not support his case, and indeed, undermined his case, the husband persisted with running that case and put the wife to the considerable expense of refuting it.
In respect of the evidence of the husband’s then solicitor, the wife’s written submissions contend when she:
…was forced to admit her sworn detailed evidence of a telephone conversation with [the wife’s former solicitor] was false, it should have been apparent that she is not a witness of credit or truth and her evidence may well be considered by a Court as unreliable. She was available to the husband and his legal team and they should have made an assessment of her credibility.
26.Counsel’s duties do include assessing evidence and advising your client accordingly. If Counsel’s assessment is that a witness whose evidence is questionable should nevertheless be relied upon, then in the absence of mala fides (which is not suggested here) Counsel may be entitled or duty bound to call the evidence but his/her client bears the consequence of so doing, including costs consequences …
Plainly enough, adverse findings of credit against a crucial witness for the husband and, to a lesser extent, of the husband himself were vital factors in his case not succeeding. Indeed, they can be seen to be vital factors in his case being “wholly unsuccessful”.
Whilst “credit findings” adverse to the husband’s case were important to its ultimate failure, other elements of the case can be seen as justifying the pursuit of it. The existence of “the annexure” on the wife’s solicitor’s file is an important example; whilst that solicitor’s evidence was accepted, the annexure’s presence on the file founded an (understandable) basis for the pursuit of the case (albeit that it was ultimately unsuccessful). That very issue was a central part of the factual case run by the husband.
Ultimately, I do not consider that the husband’s then case had about it those attributes referred to by Sheppherd J or are such to take it “out of the ordinary” or make it “exceptional”.
I reject the claim for indemnity costs.
Conclusions
I am persuaded that the financial circumstances of each of the parties; the very significant disparity in those financial circumstances which result in very different degrees of financial risk associated with the pursuit of proceedings by the husband as compared with the wife; and the fact that the husband was wholly unsuccessful in the proceedings justify the making of an order for costs in favour of the wife.
I am not persuaded that the combination of those factors together with those matters referred to and asserted by the wife to be “conduct of the husband”, within the meaning of sub-para (c) of s 117(2A) justify the making of an order for indemnity costs.
I will accordingly order that the husband pay the wife’s costs of and incidental to the proceedings.
I consider that precisely the same consideration applies to the application for costs itself (they too, being separate “proceedings”). Whilst partial success in resisting costs on an indemnity basis might impact on describing the wife as having been “wholly successful” in this application, I consider the disparity in the parties’ financial circumstances, the wife’s success and the fact that the husband disputed not only the basis of any cost order, but also the making of any costs order, justify an order for costs of these proceedings.
Accordingly, I will include an order that the husband pay the wife’s costs of these costs proceedings.
I will certify for Counsel, including Senior Counsel, in respect of each.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy
Associate:
Date: 2 March 2010
2
3
2