Frazier and Valdez (Costs)
[2014] FamCAFC 71
•30 April 2014
FAMILY COURT OF AUSTRALIA
| FRAZIER & VALDEZ (COSTS) | [2014] FamCAFC 71 |
| FAMILY LAW – APPEAL – COSTS – Where the applicant seeks that the respondent pay her costs calculated on a lawyer/client basis - Where the respondent’s application for an extension of time to file a notice of appeal was wholly unsuccessful – Where there was nothing in the manner in which the respondent conducted his application which is persuasive of an order for lawyer/client costs – HELD – application dismissed. |
| Family Law Act 1975 (Cth): ss 117, 118, 117(2A) |
| Family Law Rules 2004 (Cth): rr 19:18 |
Kohan & Kohan
(1993) FLC 92-340
(2013) 49 Fam LR 197
Prantage & Prantage
| APPLICANT: | Ms Frazier |
| RESPONDENT: | Mr Valdez |
| FILE NUMBER: | SYC | 2226 | of | 2013 |
| APPEAL NUMBER: | EA | 166 | of | 2013 |
| DATE DELIVERED:: | 30 April 2014 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ryan J |
| HEARING DATE: | By way of written submissions filed by the applicant on 24 March 2014, the respondent filed on 7 April 2014 and the applicant filed on 9 April 2014 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 25 July 2013 |
| LOWER COURT MNC: | [2013] FCCA 1463 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Swaab Attorneys |
| FOR THE RESPONDENT: | In person |
Orders
The mother’s application that the father pay the costs incurred in relation to his application in an appeal filed 15 November 2013 be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Frazier & Valdez (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 166 of 2013
File Number: SYC 2226 of 2013
| Ms Frazier |
Applicant
And
| Mr Valdez |
Respondent
REASONS FOR JUDGMENT
This is an application by Ms Frazier (“the mother”) that Mr Valdez (“the father”) pay her costs, calculated on a lawyer/client basis, incurred in relation to his unsuccessful application for an extension of time within which to file a notice of appeal. It is the father’s position that the mother’s application for costs be dismissed.
The proposed appeal related to interim parenting orders made in the Federal Circuit Court on 25 July 2013 concerning the parties’ only child, L. It was ordered that pending further order, the child live with the mother and spend time with the father seven days in each 14.
It was and remains the father’s view that the interim orders failed to recognise that the child is primarily attached to him and denied the child his right to a meaningful relationship and substantial and significant time with him. Hence, four months after the interim orders, the father filed an application in an appeal seeking an extension of time within which to appeal.
On 6 February 2014 the father’s application was dismissed.
In her response to the father’s application, the mother applied for lawyer/client costs. In relation to that application, directions were made on 11 March 2014 that the parties file written submissions.
The mother’s submissions were filed on 24 March 2014, the father’s in reply on 7 April 2014 to which the mother responded by her written submissions filed on 9 April 2014.
Principles in relation to costs including lawyer/client costs
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) is the primary provision concerning costs and provides the general rule that subject to s 117(2), s 117AA and s 118, each party to proceedings under the Act shall bear his or her own costs.
If there are circumstances that justify it in so doing, the court may make an order for costs pursuant to s 117(2) as the court considers just. In considering what order, if any, should be made, the court is required to have regard to the provisions of s 117(2A) of the Act and balance the relevant matters.
The Family Law Rules 2004 (Cth) (“the rules”) provide that the court may make an order for costs on a number of different bases. Rule 19.18 addresses the method of calculation of costs and is set out below:
(1) The court may order that a party is entitled to costs:
(a) of a specific amount;
(b) as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
(c) to be calculated in accordance with the method stated in the order; or
(d) for part of the case, or part of an amount, assessed in accordance with Schedule 3.
(2) If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.
(3) In making an order under subrule (1), the court may consider:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party’s behaviour in the case;
(c) the rates ordinarily payable to lawyers in comparable cases;
(d) whether a lawyer’s conduct has been improper or unreasonable;
(e) the time properly spent on the case, or in complying with pre‑action procedures; and
(f) expenses properly paid or payable.
The law relating to indemnity (including lawyer/client costs) costs in this jurisdiction is well settled. In Kohan & Kohan (1993) FLC 92-340 this court recognised that there is nothing in the Act which inhibits the making of an order for indemnity costs. However, while acknowledging there is a discretion “in an appropriate case” to make an order for indemnity costs, the Full Court also said, at 79,611:
… it is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties. This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under s117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.
At 79,615, the Full Court in Kohan went on to say:
When considering what is just in this case, one must bear in mind that a party who enters into a costs agreement should be warned and must anticipate in this jurisdiction that each party might well have to bear his or her own costs, and that even if an order for party and party costs is made, the difference between party and party costs and costs payable under a costs agreement may consume all, or a substantial part, of the property order. In this particular case, the wife changed her solicitors in August 1990. It must then have been apparent to her, or at least to her new solicitors, that this might become drawn out litigation and that a rate of costs which amounted to three times the scale, exposed the wife to great risks. If she was willing to assume these risks, it does not seem just to saddle the husband with them. If they were not explained to her, she might have her own remedies.
Kohan has been routinely followed and represents the current law (Prantage & Prantage (2013) 49 Fam LR 197).
Discussion
The gravamen of the mother’s application for costs is captured by her submission:
The mother submits that the father, who was self-represented and therefore did not have to incur any legal costs had a wilful disregard of the known facts and had an ulterior motive of incurring unnecessary costs for the mother in circumstances whereby his Application to Appeal out of time was futile and never had a chance of success. (written submissions, filed 24 March 2014, p 4)
The argument that the father’s application was vexatious, was made:
… on the basis that it was more than likely to fail because there was no point to the said Application in view of the early hearing dates allocated by the court, which were 17, 18 and 19 March 2014. (written submissions, filed 24 March 2014, p 4)
It would seem that the mother invites the court to infer from the fact that the father has filed six applications, one of which was an unsuccessful contravention application, that he is ill-motivated and has embarked on a campaign to have her incur unnecessary costs.
The father rejects the imputation that he has acted other than with a desire to promote the best interests of the child and address what he says were interim orders replete with error. He was and remains of the view that his asserted errors needed to be addressed prior to the final hearing. It is his submission that the mother’s approach to these proceedings, in particular her initial application and refusal to compromise, has been vexatious and motivated by other than the best interests of the child.
It is appropriate to observe at this point that although each party is clearly vexed about the other’s approach to this litigation, neither has established for the purposes of this application that the other has filed an application that was frivolous or vexatious.
Nonetheless, that the father pursued an application for an extension of time to appeal interim parenting orders within close proximity to an expedited final hearing and in which he was entirely unsuccessful, constitutes circumstances that justify the making of an order for costs in favour of the mother. To determine what order, if any, should be made as a consequence of this finding, it is necessary to consider those matters set out in s 117(2A)(a) – (g) insofar as they are relevant.
Subsection (a) is concerned with the parties’ financial circumstances.
The mother filed a financial statement on 4 December 2013 in which she disclosed a weekly salary of $692. The mother receives $266 per week child support, benefits of $166 per week and $205 per week interest. She had $335,000 in savings, superannuation worth $58,000 and otherwise assets of little value. However, since then, from her savings the mother has paid legal costs as a consequence of which she now has about $250,000 cash in bank. She carries little debt.
The father filed a financial statement on 18 December 2013. He discloses a total average weekly income of $2,700 and assets worth $58,033. He has superannuation worth $181,953.51 plus liabilities of approximately $35,000. However, he does not have legal representation and as a contractor who is paid by the hour, he says that he has “… lost significant sums in wages foregone during the proceedings and in preparing for them …” (written submissions, filed 7 April 2014). How this affects his evidence concerning his average weekly income is not explained. Doing the best that I can with the father’s evidence, I am satisfied that he usually earns $2,700 per week although as a consequence of the time he devotes to these proceedings, there are periods where he earns less.
Although it is accepted that the father would need to borrow the $16,585 sought by the mother, this would appear to be within his capacity. Nonetheless, the application of the subsection is moot.
Neither party is in receipt of a grant of legal aid (subsection (b)).
In relation to subsection (c), as was earlier mentioned, it is the mother’s contention that the father commenced this application with little regard to its merits, utility and for an ulterior motive. Self-evidently his application failed. However, he presented evidence which provided an adequate explanation for his failure to file his Notice of Appeal within time or an application for an extension of time within approximately three months of the date of the interim orders. Where his application was deficient, was his inability to establish an adequate explanation for his failure to apply within a further five weeks. Nor did he give sufficient regard to the risk to the final hearing of him attempting to secure a further interim hearing on remitter.
As to the merits and utility of the proposed appeal, I determined:
39.Central to the father’s contention that there is utility and merit in his appeal, is his argument that her Honour made findings in relation to the child’s attachment and failed to acknowledge that the child is primarily attached to him. However, the parties were at issue about to whom (if anyone) the child was primarily attached. As her Honour explained, the circumscribed nature of the interim hearing meant that she was unable to determine contentious issues.
40.On a fair reading of her Honour’s reasons for judgment, it was accepted that prior to separation the father had been quite heavily involved in the child’s routines and that for a period post separation, by agreement, he came to the mother’s home and he put the child to bed. At [22], her Honour found:
…So it is very likely that the child has a close relationship with both parents, but probably, more likely than not at this point of time, the mother is the primary carer. Certainly this is reflected in the arrangements which have been implemented since January 2013.
41. At [23], her Honour went on to say:
However, this is something about which the court will be in a better position to make findings when there is some independent evidence available.
Ultimately, I formed the view that the father failed to establish that the approach adopted by the primary judge was not available to her.
Although the father’s application could be described as misguided and would thus weigh in favour of an order for costs on a party/party basis, there is nothing in the manner in which he conducted his application which is persuasive of an order for costs calculated on a lawyer/client basis.
Subsection (e) requires the court to consider whether any party to the proceedings has been wholly unsuccessful. The father was wholly unsuccessful, which factor weighs in favour of an order for costs. His lack of success simpliciter does not justify an order for lawyer/client costs.
Subsection (f) is concerned with offers to settle the proceedings and the terms of any such offer. No such offers have been brought to my attention.
Subsection (g) enables the court to take into account such other matters as the court considers relevant. Of particular relevance is correspondence sent by the mother’s solicitor to the father on 2, 4 and 9 December 2013. All three letters notify the father that in the event his application for an extension of time was dismissed, the mother sought that he pay her lawyer/client costs. The rationale for this position is found in the letter dated 2 December 2013, the salient portions of which are set out below:
…
We put you on notice that in view of the following our client considers your Application to be vexatious and an abuse of process:
1Your Application has been filed some 4 months after the abovementioned Orders were made, which is a substantial period of time;
2Judge Walker made it very clear in Court on 19 November 2013 that this case has been given expedition. This case has been listed for a final hearing on 17, 18 and 19 March 2014 and because it has already been expedited earlier hearing dates will not be granted;
3You have been advised that Dr [B] wishes to interview you, our client and [the child] on 23 January 2014 with a view to having his report finalised by 21 February 2014. It was Dr [B] who cancelled the appointment on 19 December 2013 because he has been subpoenaed to give evidence in Court in another case and that 23 January 2014 was his next available appointment. In spite of same, you have not bothered to confirm that appointment and therefore that appointment date may be lost.
4If your Application for leave to appeal out of time is granted, the hearing of the appeal is more than likely to take place after the abovementioned allocated trial dates.
We confirm that if our client is successful in having your abovementioned Application dismissed, she will be seeking costs on a lawyer/client basis and will be tendering to the Court a copy of this letter.
In view of the above, we request that you reconsider your abovementioned Application.
…
The father did not respond to this correspondence and, self-evidently, pursued his unsuccessful application. It follows that he did so knowing that he might face this application for costs. But, of course, to the extent that the knowledge of the law can be imputed to the parties, each of them would have understood that the order sought by the mother was a very great departure from the normal standard and, as was said in Kohan at [79, 615] both “must anticipate … that each party might well have to bear his or her own costs …”.
In my view, although the mother has established a basis upon which the court could properly order that the father pay her costs calculated on a party/party basis, she has failed to establish that the circumstances warrant an award for lawyer/client costs.
In the event that the mother’s application for lawyer/client costs failed, no application was made by her for the father to pay her costs calculated on a party/party basis. Of course, had she done so, it would have been necessary to reflect on the significance of each party having pursued an application that ultimately failed. Her application will therefore be dismissed.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 30 April 2014.
Associate:
Date: 30 April 2014
1
0
1