Field and Kingston (No. 4)
[2021] FamCA 357
FAMILY COURT OF AUSTRALIA
| FIELD & KINGSTON (NO. 4) | [2021] FamCA 357 |
| FAMILY LAW – COSTS – each party seeking indemnity costs – both parties behaving badly in the conduct of the litigation – no costs order made – costs to be borne by each party under s 117(1). |
| Family Law Act 1975 (Cth) ss 79, 117(1), 117(2), 117(2A) Family Law Rules 2004 (Cth) r 19.18 |
| Bacall & Zagar [2020] FamCA 350 Brewer & Brewer [2019] FamCA 247 Browne v Green (2002) 29 Fam LR 428 Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Field & Kingston (No. 4) [2019] FamCA 863 Fitzgerald v Fish (2005) 33 Fam LR 123 Guild & Stasiuk (No. 2) [2020] FamCA 564 Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 In the Marriage of Kohan (1992) 16 Fam LR 245 Kingston & Field [2020] FamCAFC 171 Kingston v Field [2020] HCASL 230 Kingston v Field [2021] HCASL 2 Medlon & Medlon (No. 6) (2015) 54 Fam LR 1 Ohn v Walton (1995) 36 NSWLR 77 Penfold v Penfold (1980) 144 CLR 311 Shelmerdine v Ringen Pty Ltd [1993] 1 VR 315 Simic & Norton [2017] FamCA 1007 Singleton v Macquarie Broadcasting Holdings Ltd (1991) 24 NSWLR 103 The Ampthill Peerage [1977] AC 547 Wentworth v Rogers [1999] NSWCA 403 |
| APPLICANT: | Ms Field |
| RESPONDENT: | Mr Kingston |
| FILE NUMBER: | PAC | 2095 | of | 2014 |
| DATE DELIVERED: | 1 June 2021 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 1 June 2021 |
| DATE OF FINAL SUBMISSION: | 1 June 2021 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Not applicable |
| SOLICITOR FOR THE APPLICANT: | Matthews Folbigg Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Mr R. Schonell SC |
| SOLICITOR FOR THE RESPONDENT: | Cathers Beaver & Kamiya |
Orders
Pursuant to s 117(1) each party must bear his and her own costs of this proceeding.
I dismiss the wife’s application for security for costs.
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 Field & Kingston 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).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: PAC 2095 of 2014
| Ms Field |
Applicant
And
| Mr Kingston |
Respondent
EX TEMPORE REASONS FOR JUDGMENT
Introduction
This litigation has been on foot since 2014. It is very far from being emblematic of the way litigation in this court should be conducted. By reason of the unusually large number of appearances on the hearing of interlocutory applications and appeals, the parties have incurred exceptionally large legal fees in the period 2014 to 2021.[1]
[1] In Simic & Norton [2017] FamCA 1007, Benjamin J made some extremely caustic observations about a case where the mother’s legal fees exceeded $352,000 and the father’s legal fees exceeded $506,000 in total amounting close to $860,000. The amounts may be different in this case. Yet the amounts are extremely high in this case. The enormity of costs is frequently attributable to the length of litigation. When alluding to the fictional case of Jarndyce v Jarndyce from the Charles Dickens novel Bleak House, Lord Simon of Glaisdale when sitting in the Committee for Privileges in The Ampthill Peerage [1977] AC 547 held as follows –
“The picture drawn by Charles Dickens in Bleak House of the long-drawn-out and ruinous lawsuit, Jarndyce v. Jarndyce, and poor Miss Flite, her wits overturned by the strain of litigation, was based on fact. The law itself is fully conscious of the evil of protracted litigation. Our forensic system, with its machinery of cross-examination of witnesses and forced disclosure of documents, is characterised by a ruthless investigation of truth. Nevertheless the law recognises that the process cannot go on indefinitely.”
While sitting in Sydney in February of this year, upon orders having been made by a registrar of this court on 19 February 2021, I heard a variety of applications on 23 February 2021.
The solicitors representing the parties diligently and earnestly applied their considerable skills towards the overall resolution of this litigation in the period between 23 February 2021 and 22 April 2021. In order to resolve the litigation a substantial parcel of real estate had to be sold. The mortgagee of that real estate presented complications. After six appearances before me, that property was duly sold and the proceeds quarantined pending determination of this applications for costs.
The wife sought costs on various alternative grounds. They were –
a)costs on an indemnity basis, either fixed in the sum of $442,058.01 plus disbursements of $143,010.76 (a total of $585,068.77[2]); or
b)indemnity costs to be assessed in default of agreement; or
c)on a party/party basis either fixed in the sum of $342,742.63 plus disbursements of $143,010.76 (a total of $485,753.39[3]); or
d)party/party costs to be assessed in default of agreement.
[2] This total was erroneously stated in the wife’s submissions as being $485,762.
[3] This total was erroneously stated in the wife’s submissions as being $585,068.
In his response dated 17 March 2021 to the wife’s application in a case, the husband sought costs on alternative grounds. He sought an order –
a)that the wife pay his costs of the proceeding on an indemnity basis; or
b)the wife pay the husband’s costs of the proceeding on a party/party basis to be assessed; and
c)an order dismissing the wife’s costs applications as well as her security for costs applications.
In support of these competing costs applications, the parties relied on a wide array of material including offers of compromise, transcript extracts, correspondence between solicitors, interlocutory orders since the proceeding commenced, valuations and other documents. The time and effort associated with preparing evidence and submissions just on this costs application has been astounding to say nothing of the likely costs expended to recover costs already spent.
Synopsis
For the reasons that follow, in my view each party must bear his and her own costs under s 117(1).
The applications in greater detail
On 21 November 2019 Foster J handed down reasons for judgment[4] following the trial of this proceeding for orders under s 79 of the Family Law Act and orders for spousal maintenance. Foster J ordered the respondent husband to pay the applicant wife the sum of $1,232,616 with interest within three months of 21 November 2019. Foster J ordered that in default of the husband paying the sum of $1,232,616 as ordered, the parties were to sell their property at S Street, Suburb B and then distribute the net proceeds of sale in the manner provided for in paragraph 3 of his Honour’s orders. Foster J’s reasons for judgment included a reference to various interlocutory orders having been made as well as an appeal to the Full Court.[5] Even at that juncture of this proceeding, Foster J said the following –
It is readily apparent that the parties are enthusiastic litigators and as such have incurred inordinately high legal costs.
[4]Field & Kingston (No. 4) [2019] FamCA 863.
[5]Field & Kingston (No. 4) [2019] FamCA 863 (at [3]).
No order for costs was made by Foster J.
That was an observation as at 21 November 2019. The parties’ costs expenditures increased substantially thereafter.
Submissions in support of the wife’s costs application before me were filed on 25 March 2021. Under a heading entitled “history of the litigation and costs”, the wife advanced a collection of propositions in support of her application for costs under s 117(2A) of the Family Law Act. In no special order the following arguments in support were raised –
a)subsequent to Foster J’s 21 November 2019 orders, the respondent husband applied to the Full Court for a stay of Foster J’s orders and was granted a stay conditional upon the respondent paying the wife $500,000 which he failed to do;
b)on 24 September 2020 the Full Court dismissed the husband’s appeal from the orders of Foster J making a costs order in the sum of $33,000 against the husband;
c)on 17 July 2020 a single judge sitting as the Full Court[6] dismissed the husband’s application to reinstate his appeal deemed abandoned and the appeal court ordered the husband to pay the applicant’s costs in the sum of $3,300;
[6]Kingston & Field [2020] FamCAFC 171.
d)the husband sought special leave to appeal[7] which leave was refused on 5 November 2020;
[7]Kingston v Field [2020] HCASL 230.
e)the husband sought special leave to appeal from the High Court of Australia against the orders made by the Full Court on 24 September 2020, such special leave being refused by the High Court[8] on 4 February 2021;
[8]Kingston v Field [2021] HCASL 2.
f)the husband refused on three separate occasions to execute letters of instructions to experts;
g)the husband caused the wife to incur costs in relation to his failure to obtain an arrest order for Ms RR;
h)he also caused the wife to incur costs in relation to his failure to obtain an arrest order for Ms TT;
i)he also caused the wife to incur costs in relation to his failure to obtain an order for the arrest of the wife’s solicitor;
j)he further caused the wife to incur costs by opposing the wife’s application to call her father to give evidence prior to his death;
k)the husband caused the wife to incur costs in relation to his failure to obtain permission to send documents to the Australian Taxation Office;
l)the husband caused the wife to incur costs in relation to his failed application to require a valuation to be obtained of the wife’s business that the husband had closed;
m)the husband caused the wife to incur costs in relation to his failed application to require the wife to execute a letter of authority in favour of the husband and his legal practitioners;
n)the husband caused the wife to incur costs when he endeavoured to preclude the wife from relying on certain material then he withdrew that application;
o)the husband caused the wife to incur costs to oppose his foreshadowed application for interim costs then he withdrew that application;
p)the husband caused the wife to incur costs to resist his application for orders enjoining the wife’s legal representatives from continuing to represent the wife then he discontinued that application;
q)the husband caused the wife to incur costs when he sought to refer the wife’s legal representatives to disciplinary bodies then he discontinued that application;
r)the husband caused the wife to incur costs when he sought to refer the wife’s legal representatives to the New South Wales Law Society and the Legal Services Commissioner then the husband did not pursue that application;
s)the husband caused the wife to incur costs in seeking orders that the wife meet his costs then the husband did not pursue that application;
t)the husband caused the wife to incur costs in unsuccessfully opposing two applications for orders restraining the husband from encumbering the Suburb B property pending trial;
u)the husband caused the wife to incur costs to oppose his application for litigation funding that he withdrew; and
v)the husband caused the wife to incur costs when she sought to enforce orders earlier made including the wife’s applications for a warrant for possession and her application for the appointment of the sheriff.
Offers of compromise
The wife relied on several offers of compromise that the husband rejected. She relied on correspondence from her legal representatives to the husband’s –
a)dated 9 May 2014 pursuant to which the wife offered to settle the entire litigation upon his paying the wife 50% of the net property, being the sum of $521,175;[9]
b)dated 7 October 2016 pursuant to which the wife offered to settle the entire litigation upon the husband paying the wife a sum equivalent to 50% of the value of the Suburb B property such offer corresponding to a payment of $842,449;[10]
c)dated 7 March 2019 pursuant to which the wife offered to settle the entire litigation on the basis that the husband paid her a sum equivalent to 45% of the value of the Suburb B property and 45% of the value of the husband’s real estate agency, he retaining his superannuation, such offer corresponding to a payment of $998,087, such offer being open until 19 March 2019;[11]
d)dated 24 June 2019 pursuant to which the wife offered to settle the entire litigation on the basis that the husband paid the wife 40% of the equity in the home and 40% of the value of the respondent’s real estate agency, with the respondent retaining his superannuation entitlements, such offer corresponding to a payment of $887,188;[12]
e)dated 8 July 2019 pursuant to which the wife offered to settle the entire litigation on the basis that the husband paid the wife a cash sum of $1m and the respondent retained his superannuation entitlements;[13] and
f)dated 24 December 2020 pursuant to which the wife offered to settle the entire litigation on the basis that the husband paid the wife the sum of $1,650,000 together with any monies due to the sheriff and the Crown Solicitor’s Office.[14]
[9] That offer was not limited by any date stipulation over which the offer was to remain open. The offer was not accepted in a reasonable time so it lapsed.
[10] The 7 October 2016 offer was expressed to be open for a period of 21 days. The offer lapsed.
[11] The husband did not accept that offer.
[12] That offer was expressed to be open to 4pm on 5 July 2019. It was not accepted within the stipulated time so it lapsed.
[13] That offer was expressed to remain open until 12 July 2019. It was not accepted in the prescribed period so it lapsed.
[14] That offer was not expressed to have been open for a particular period. A reasonable time has since expired from its making indicating that the offer lapsed.
On behalf of the wife it was submitted that at no stage did the husband put forward any or any meaningful offer over the whole of the currency of this litigation. The wife’s written submissions included the following –
The highwater mark of his offers to (sic) compromise was made on 9 July 2019 which proposed that the wife receive the sum of $365,375.
Elsewhere, it was submitted on behalf of the wife as follows –
The wife submits that there has been a failure by the husband to engage in the proper and efficient administration of justice as prescribed by the Rules of Court promoting and implementing the main purpose and objects of the Family law Rules; that is, a litigant, especially one with the benefit of experienced legal representatives, has an obligation to litigate responsibly.
The wife also relied on the decision in Browne v Green[15] for two statements of principle. The first was that it is very important for the court to give proper consideration to written offers of settlement that have been made. The second was that the failure to heed a reasonable offer in circumstances where there is adequate knowledge to the parties at the time the offer is made to give it proper consideration is something to which very significant weight ought normally to be given. The wife argued that on her behalf six written offers of compromise were made, each of which were advantageous to the husband. She submitted that at no time did the husband make any reasonable offer of compromise and that his offers (she described them as “offers” emphasising how they could not be properly so-called) “were not materially viable to be meaningfully considered”.
[15] (2002) 29 Fam LR 428.
More than 20 unsuccessful interim applications
The wife submitted that the husband made more than 20 interim applications in this litigation, each of which failed, where costs were reserved.
Other evidence from the wife’s affidavits
In support of this application for costs the wife filed three affidavits, the first on 4 March 2021, the second on 18 March 2021 and the third on 25 May 2021. One particular matter was raised in the wife’s affidavit made 4 March 2021. She swore that in May 2019 or thereabouts the husband applied to the court for an order that the wife’s solicitors be arrested. The making of such an application was highly unusual. It should only have been made upon grounds that were fully maintainable. It should not have been brought in order to engineer some tactical advantage. The wife deposed in paragraph 67 of her 4 March 2021 affidavit that an approach was made to the husband to dismiss the application with no order as to costs yet the husband refused that proposal.
The wife sought a costs order that was formulated either on an indemnity basis or on a party/party basis but she also sought to avoid incurring extra costs by having those costs assessed and accordingly she sought a specific sum by way of costs. Relying on the decision of the Supreme Court of New South Wales in Idoport Pty Ltd v National Australia Bank Ltd,[16] the wife argued that a protracted process in the assessment of costs was inevitable and that having regard to the length, cost and inconvenience of this litigation to date, more protraction should be avoided by adopting a method of fixing a specific sum for costs.
[16] [2007] NSWSC 23.
The husband’s costs application
As a threshold proposition, counsel for the husband Mr Richard Schonell SC submitted that the events subsequent to the orders of Foster J were irrelevant and had no bearing upon any determination of costs of this proceeding.
Counsel for the husband made a collection of further submissions in opposition to the wife’s application for costs and in support of his own application for an order for costs. Those submissions included the following –
a)the wife was cavalier in complying with her disclosure obligations throughout the proceeding, a matter observed by Foster J[17] and also a matter to which the wife herself admitted in her affidavit made 4 March 2021;[18]
b)the wife “gave blatantly false evidence”;[19]
c)the wife admitted that she permitted litigation before Hannam J to proceed knowing that the wife was relying on her own financial information that she knew was untrue;
d)the wife engaged in deception that was extensive,[20] deceiving the husband, the court and the Australian Taxation Office;
e)the wife exhibited no contrition and her conduct was “brazen, deliberate and calculated to deceive”;[21]
f)in Brewer & Brewer[22] it was held that a failure to observe obligations of disclosure undermines every stage of the judicial process;
g)had the wife more diligently discharged her obligations to make proper disclosure this litigation would have resolved earlier at lesser cost;
h)a costs order is justified where a party presents a false statement of financial circumstances putting the other party to the trouble and expense of disproving it, as was held in Penfold v Penfold;[23] and
i)indemnity costs are warranted in the circumstances of this case.
[17] At paragraphs 50, 51 and 52 of his Honour’s reasons for judgment.
[18] At paragraphs 4, 5 and 6.
[19] Paragraph 8(iv) of the husband’s submissions.
[20] Paragraphs 23 and 24 of the husband’s submissions.
[21] Paragraphs 27 and 28 of the husband’s submissions.
[22] [2019] FamCA 247.
[23] (1980) 144 CLR 311.
Making a costs order
The usual position that each party bears his or her own costs under s 117(1) may be countermanded by an order under s 117(2) if any one of the elements[24] of s 117(2A) is made out. Further, pursuant to Rule 19.18 of the Family Law Rules an order for costs may be made in a specific amount or on a particular basis of assessment. Both parties sought orders for costs to be assessed on an indemnity basis and each cited the ageing authority of In the Marriage of Kohan[25] to the effect that an order for indemnity costs is a departure from the normal standard. That said, in Medlon & Medlon (No. 6)[26] the appeal division of this court relied on the locus classicus for the making of an indemnity costs order, Colgate–Palmolive Co v Cussons Pty Ltd.[27] In Guild & Stasiuk (No. 2)[28] I reviewed the authorities on the making of an indemnity costs order and adhere to what I there held, whatever may be utterances at intermediate appellate level about the application of principle from Colgate–Palmolive Co v Cussons Pty Ltd. In this case counsel for the husband relied on authority outside of the family law jurisdiction, including Singleton v Macquarie Broadcasting Holdings Ltd,[29] Ohn v Walton[30] and Wentworth v Rogers,[31] in support of his contentions concerning costs.
[24]Fitzgerald v Fish (2005) 33 Fam LR 123.
[25] (1992) 16 Fam LR 245.
[26] (2015) 54 Fam LR 1.
[27] (1993) 46 FCR 225.
[28] [2020] FamCA 564.
[29] (1991) 24 NSWLR 103.
[30] (1995) 36 NSWLR 77.
[31] [1999] NSWCA 403.
Expressed most basically, the wife’s application for costs, whether on a party/party basis or on an indemnity basis was grounded principally on the husband’s refusal to engage in any consideration of the several offers of compromise that were served on his solicitors. Had he done so, so the wife argued, this litigation would have and should have ended a long time ago with a commensurate diminution in costs.
Expressed most basically, the husband’s application for costs, whether on a party/party basis or on an indemnity basis, was grounded principally in the wife’s dereliction in her obligations to make full and frank disclosure. Had she not been so derelict, so the husband argued, this litigation would have and should have ended a long time ago with a commensurate diminution in costs.
The wife cast her application for costs mainly in reliance upon s 117(2A)(c) and (f). The husband cast his application for costs mainly in reliance upon s 117(2A)(c).
The importance of properly addressing an offer of compromise was highlighted by the Full Court in Browne v Green.[32] Very significant weight should be attributed to any failure to heed a reasonable offer, especially in circumstances where the recipient of the offer is well represented by talented legal practitioners, as was the situation in this case. It must not be overlooked that the wife made six such offers in the period from May 2014 to December 2020. None was the subject of careful consideration by the husband. The husband maintained throughout this litigation that the wife had been derelict in complying with her disclosure obligations. The husband seemed to take the view that he was unable to make any sensible assessment of any proposal put on behalf of the wife having regard to the ongoing deficiencies in the disclosure she was willing to give. An array of letters were exhibited to the husband’s 12 March 2021 affidavit filed in support of his costs application in which repeat complaints were made on behalf of the husband to the wife’s solicitors about deficiencies in the wife’s disclosure. Orders were made on many occasions by judges and registrars of this court ordering the wife to disclose categories of documents. In Bacall & Zagar[33] I examined in considerable detail the importance of proper disclosure and the consequences of a party’s non-compliance with those disclosure obligations. To repeat what I said there would enlarge these reasons beyond an acceptable limit. Suffice it to say that a failure to diligently observe obligations of disclosure undermines every stage of the judicial process.
[32] (2002) 29 Fam LR 428.
[33] [2020] FamCA 350.
Counsel for the husband submitted that the making of a costs order in favour of the wife gave licence to “appallingly egregious conduct” that consisted of failing to comply with her obligations to make full and frank disclosure, swearing false financial statements, preparing false tax returns and giving false evidence in cross-examination.
On behalf of the wife it was put that the husband failed to engage in the proper and efficient administration of justice by promoting and implementing the main purpose of the Family Law Rules. She submitted that she has endured six years of litigation and a significant amount of time has elapsed since the making of the s 79 orders.
My views on these costs applications
In my view each party has behaved very badly in the conduct of this litigation, the husband for failing to embark upon a sensible consideration of any settlement proposal and the wife for failing to diligently address her disclosure obligations.
The starting point in any consideration of costs is s 117(1), namely, that each party bears his or her own costs. Of course, if persuaded that it is just to do so, a court is empowered by s 117(2) to make an order that deviates from an order under s 117(1) but if the court does in fact make an order different from one under s 117(1), the court must, as a mandatory requirement, take into account the various matters prescribed in s 117(2A).
In this case the parties chose to retain sophisticated and experienced family law legal representatives. That was their prerogative. Those legal representatives discharged their duty to their clients au pied de la lettre.[34] The parties fought very hard for a very long time. Their controversies seemed quelled by the decision of Foster J on 21 November 2019. But his Honour’s orders did not quell the parties’ controversies. The task of selling the Suburb B property should have been simple enough with cooperation. The court is entitled to expect reasonable cooperation from litigations. By the same token a party adversely affected by a judicial determination is entitled to invoke his, her or its rights by way of appeal. Meritorious circumstances applying, a party can take any such appeal as far as seeking special leave to appeal from the High Court of Australia. Here, the husband appealed against the orders of Foster J, his appeal was deemed abandoned, his application to reinstate his appeal was dismissed and at least one application for special leave was refused. There is insufficient evidence before me to enable me to reach a conclusion that the husband’s applications to the Full Court of this court or his applications for special leave to appeal to the High Court were so devoid of merit that he is to be taken to have engaged in the appeal process purely to vex the wife with additional costs and delays.
[34] This phrase is taken from the decision of Brooking J, then the presiding member of the Appeal Division of the Supreme Court of Victoria in Shelmerdine v Ringen Pty Ltd [1993] 1 VR 315.
In any event, costs orders were made on those appeal applications, save for on the special leave application where the usual practice in the High Court was followed for parties to bear their own costs.
The main platform on which each party sought costs on this application related to conduct during the lead up to trial. Mr Schonell SC put it stridently by contending that events subsequent to the orders of Foster J were irrelevant to and had no bearing upon a determination of the costs issue arising out of the proceeding. The parties cast their applications for costs by reference to the conduct of the other in the interlocutory phases of this litigation.
In my view both parties behaved very poorly in aspects of this litigation. The wife was far from diligent in her approach to disclosure. The husband was equally badly behaved in his stance to several offers of compromise. Had both parties addressed their obligation in a less adversarial manner this litigation may have consumed less in the way of costs. The proceeding may even have resolved.
In those circumstances I decline to make any costs order. Parties’ costs will be borne by each under s 117(1). I dismiss the wife’s application for security for costs. Once the sale price from the sale of the Suburb B property is disbursed in the manner provided for by Foster J, I hope the litigation between the parties comes to finality.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 1 June 2021.
Associate:
Date: 1 June 2021
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