Gaber & Akhtar (No. 2)
[2021] FamCA 147
•24 March 2021
FAMILY COURT OF AUSTRALIA
Gaber & Akhtar (No. 2) [2021] FamCA 147
File number(s): PAC 3652 of 2013 Judgment of: FOSTER J Date of judgment: 24 March 2021 Catchwords: FAMILY LAW – COSTS – where application for costs made by the wife – where application for indemnity costs – where non-compliance with Rule 19.08(3) – where consideration of applicable principles – where appropriate to order husband to pay costs in fixed sum Legislation: Family Law Act 1975 (Cth) ss 117
Family Law Rules 2004 (Cth) rr 19.08, 19.18
Cases cited: Akhtar & Gaber [2020] FamCA 298
Akhtar & Gaber (No.2) [2021] FamCAFC 28
Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160
Bele & Vaughan (Costs) [2012] FamCAFC 198
Collins and Collins (1985) FLC 91-603
Greedy and Greedy (1982) FLC 91-250
Hawkins & Roe [2012] FamCAFC 77
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
Luadaka v Luadaka (1998) FLC 92-830
Parke & the Estate of the Late A Parke (2016) FLC 93 748
Penfold v Penfold (1980) 144 CLR 311
Phillips & Hansford [2020] FamCAFC 28; (2020) FLC 93-941
Number of paragraphs: 32 Date of last submission/s: 2 June 2020 Date of hearing: 30 April 2020 Place: Parramatta Solicitor for the Applicant: Mr Kouchoo of N J Papallo Lawyers Solicitor for the Respondent: The Respondent appeared in person l
ORDERS
PAC 3652 of 2013 BETWEEN: MS GABER
Applicant
AND: MR AKHTAR
Respondent
ORDER MADE BY:
FOSTER J
DATE OF ORDER:
24 MARCH 2021
THE COURT ORDERS THAT:
1.That the husband pay the wife’s costs of and incidental to his section 79A application in the sum of $15,014 within one month from this date.
Note: The form of the order is subject to the entry in the Court’s records.
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 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Akhtar & Gaber has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
FOSTER J:
The application for determination is the wife’s application for costs, arising from final orders made by the Court on 30 April 2020, in which the husband’s applications then before the Court were dismissed.
The background history of this matter is set out in reasons for judgment delivered 30 April 2020: Akhtar & Gaber [2020] FamCA 298, and these reasons assume familiarity with those reasons for judgment.
Subsequent to dismissal of the husband’s application for disqualification, and to set aside certain final property orders under s 79A of the Family Law Act 1975 (Cth) (“the Act”), the husband appealed those orders to the Full Court of the Family Court of Australia by way of Notice of Appeal filed 25 May 2020. On 26 February 2021, the husband’s appeal was dismissed: Akhtar & Gaber (No.2) [2021] FamCAFC 28.
On 30 April 2020 orders were made that any application for costs be made by way of written submissions, filed and served within 28 days, with any submissions in response to be filed and served within a further 14 days, and that upon completion of submissions, judgment as to costs to be reserved to chambers.
As a consequence of the husband’s appeal to the Full Court of the Family Court, the determination of the costs issue was deferred, subsequent to receipt of submissions from both parties, until after completion of the Full Court proceedings.
Regrettably, as evidenced by the reasons for judgment delivered in the primary proceedings on 30 April 2020, and the reasons for judgment of the Full Court delivered on 26 February 2021, the husband’s application before this Court was from the outset doomed to failure.
Costs
Section 117 of the Act provides that each party to the proceedings shall bear his or her own costs.
That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.
Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They relevantly, in these proceedings, relate to the following:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party has legal aid and the terms of any grant of aid;
(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 answers, 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.
In Collins and Collins (1985) FLC 91-603 (at 79,877), the Full Court described the discretion conferred by s 117 as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way.
In Greedy and Greedy (1982) FLC 91-250 and Luadaka v Luadaka (1998) FLC 92-830, the Full Court made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.
Later the Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
17.With respect to the application of the section, in Penfold and Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
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 interrelationship 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".
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 (Kent v Kent). 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.
18.The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters 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”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 FamLR 123 at paragraph 41:
… A number of factors are then listed in the subparagraphs. 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.
It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162, the purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”.
In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 the Court said at [10] that “the court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.
Murphy J observed in Parke & the Estate of the Late A Parke (2016) FLC 93‑748:
130.If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court”… The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”…
It is usual for the Court to make an order for costs on a party/party basis if costs are to be ordered.
The provision relating to the calculation of costs is set out in r 19.18(1) of the Family Law Rules 2004 (Cth) (“the Rules”) which states:
19.18 Method of calculation of costs
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.
The Rule further provides, in subparagraph (3), that:
(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 Court has jurisdiction in its discretion to make an order for costs on an indemnity basis and the purpose of such an award is to more fully or even wholly repay to a party all, or at least the majority, of their legal costs and disbursements and charges incurred in the proceedings.
As the Full Court again said in Phillips & Hansford [2020] FamCAFC 28; (2020) FLC 93-941:
35.Indemnity cost orders are made only in exceptional cases (Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; D & D (Costs) (No. 2) (2010) FLC 93-435).
36.Whilst the categories of cases in which indemnity cost orders may be awarded are not closed, it is accepted that such costs may be ordered where a case was pursued with “wilful disregard of known facts or clearly established law” and where there has been “an imprudent refusal of an offer to compromise” (Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233).
37.In relation to the first category, it has been said that indemnity costs may be awarded where “the applicant, properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401) and where “a party persists in what should on proper consideration be seen to be a hopeless case” (J‑Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers – Western Australian Branch & Anor [1993] FCA 70 per French J at 5).
Strickland J in Bele & Vaughan (Costs) [2012] FamCAFC 198 at [26] to [28] on this issue encapsulated the relevant legal principles:
26.A useful recent discussion of the question of indemnity costs is to be found in the decision of the Full Court in D & D (Costs) (No 2) (2010) FLC 93-435. There the Full Court reviewed extensively earlier authorities including Limousin v Limousin (Costs) (2008) 38 Fam LR 478 and Kohan and Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co & Another v Cussons Pty Ltd (1993) 118 ALR 248.
27.The ordinary rule is that an order for costs is calculated on a party/party basis, and it emerges from the authorities referred to above that to depart from that rule exceptional circumstances need to be demonstrated.
28. As to what might constitute an exceptional circumstance, reference can be made to the oft-cited decision of Sheppard J in Colgate-Palmolive Co & Another v Cussons Pty Ltd where his Honour detailed circumstances that might qualify. Usefully, Holden J in Munday v Bowman (1997) FLC 92-784 at 84,660 drew from the decision of Sheppard J the following examples:
(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 applicant has not informed the Court that she is bound by a costs agreement, nor provided a copy of her costs agreement or details as to its terms as between herself and her solicitors in compliance with Rule 19.08(3). Such omission is fatal to her application for indemnity costs.
As to the relevant considerations, firstly, there is no evidence as to the financial circumstances of the parties in the context of the present application. It can be inferred from the nature of the property orders made by consent on 17 August 2017, the wife has assets of some substance and that the corollary is likely that the husband is at worst not impecunious.
Neither party is in receipt of a grant of legal aid in relation to the proceedings.
The husband’s conduct during the course of the proceedings is such that on occasions costs were reserved; those being 9 October 2018, 4 September 2019 and 16 November 2019. However, having regard to the circumstance that the husband elected at all times to remain unrepresented in respect to the primary s 79A application, the matter proceeded to final hearing reasonably expeditiously.
The substance of the applicant’s submissions is, of course, that the husband has been wholly unsuccessful in the proceedings. His s 79A application was dismissed, as was his recusal application made during the course of the proceedings. Both of those orders were confirmed by the Full Court. The disposal of the husband’s application is, as referred to, in itself, sufficient to make it appropriate that there be a departure from the general rule that each party pay their own costs. The wife has been put to significant expense in resisting the husband’s application in respect to orders made by consent on 17 August 2017.
It is appropriate that there be an order that the husband pay the wife’s costs of the proceedings.
The wife makes application for an order for indemnity costs that she quantifies on an indemnity basis in the sum of $26,268. However, in default of compliance with Rule 19.08(3), it is not open to the Court to order costs in that quantum.
The applicant provides an assessment of costs in accordance with the costs scale as provided for in the Rules. That assessment is in the sum of $15,014.
It is appropriate that costs be assessed in the context of this application, so as to avoid the unnecessary expense of assessment and/or taxation of costs. Accordingly, there will be an order that the husband pay the wife’s costs of and incidental to the subject proceedings in the sum of $15,014, within one month from the date of orders.
Orders will be made accordingly.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Foster. Associate:
Dated: 24 March 2021
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