Giordano & Stone (No 2)
[2022] FedCFamC2F 1081
Federal Circuit and Family Court of Australia
(DIVISION 2)
Giordano & Stone (No 2) [2022] FedCFamC2F 1081
File number(s): PAC 3650 of 2021 Judgment of: DEPUTY CHIEF JUDGE MCCLELLAND Date of judgment: 16 August 2022 Catchwords: FAMILY LAW – COSTS – Application for indemnity costs – Where the father was wholly unsuccessful – Exceptional circumstances for indemnity costs not established – Costs ordered as assessed. Legislation: Family Law Act 1975 (Cth) ss 45A, 64(2)(g), 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17
Family Law Rules 2004 (Cth) r 19.18
Cases cited: Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432
Colgate-Palmolive Company and Anor v Cussons Pty Limited (1993) 46 FCR 225; [1993] FCA 801
Cross & Beaumont (2008) 39 Fam LR 389; [2008] FamCAFC 68
D & D (Costs)(No 2) (2010) FLC 93-435; [2010] FamCAFC 64
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123; [2005] FamCA 158
Giordano & Stone [2022] FedCFamC2F 398
Hitch & Hitch (2012) 47 Fam LR 603; [2012] FamCAFC 124
Idoport Pty Limited v National Australia Bank Limited & Ors [2007] NSWSC 23
Munday v Bowman (1997) FLC 92-784
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Prantage v Prantage (Costs) [2014] FamCA 850
Rice and Asplund (1979) FLC 90-725; [1978] FamCA 84
Robinson & Higginbotham (1991) FLC 92-209; [1991] FamCA 5
Rozenblit v Vainer (2018) 262 CLR 478; [2018] HCA 23
Stoian v Fiening (Costs) [2014] FamCA 944
Division: Division 2 Family Law Number of paragraphs: 29 Date of last submission/s: 27 April 2022 Date of hearing: On the papers Place: Sydney The Applicant: Litigant in person Solicitor for the Respondent: Johnson Vardanega Lawyers ORDERS
PAC 3650 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR GIORDANO
Applicant
AND: MS STONE
Respondent
order made by:
DEPUTY CHIEF JUDGE MCCLELLAND
DATE OF ORDER:
16 August 2022
THE COURT ORDERS THAT:
1.The applicant father pay the costs of the respondent mother of and incidental to the father’s Initiating Application filed on 6 July 2021 within 28 days of those costs being agreed or assessed.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Giordano & Stone has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
DEPUTY CHIEF JUDGE MCCLELLAND:
INTRODUCTION
This matter concerns an application for costs on an indemnity basis that has been made by the mother, Ms Stone (“the mother”), in circumstances where she was successful in obtaining orders made on 31 March 2022 and published in my primary reasons for judgment Giordano & Stone [2022] FedCFamC2F 398 dismissing an Initiating Application filed by the father, Mr Giordano (“the father”), on 6 July 2021. In addition to the order made pursuant to s 45A of the Family Law Act 1975 (Cth) (“the Act”), an order was made pursuant to s 64(2)(g) of the Act prohibiting the father from instituting further proceedings in relation to the parties’ child without first obtaining leave of the Court in circumstances where it would not be in the best interests of the child for ongoing litigation between the parties (at [105] in the primary reasons for judgment).
In the orders made on 31 March 2022, I made an order permitting the mother to file and serve written submissions, in the event that she seeks an order for costs to be filed, within 14 days of the date of the orders. The father was entitled to provide a response through written submissions within 14 days of the mother's submissions.
The mother filed her submissions on 14 April 2022 and the father filed his submissions in response on 27 April 2022. As noted above, the mother seeks an order for costs on an indemnity basis. The father seeks that no order for costs be made against him.
RELEVANT LEGAL PRINCIPLES
The issue of costs in respect to proceedings under the Act is to be determined in accordance with s 117 of the Act. That section relevantly provides that:
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
The general rule, as set out in s 117(1) of the Act, is that each party to the proceedings shall bear his or her own costs. This is, however, subject to s 117(2) of the Act which provides that, if the Court is satisfied that there are circumstances justifying it, the Court may make an order as to costs as it considers just. Beyond the “essential preliminary” consideration of those matters set out in s 117(2A) of the Act, there is no “additional or special onus” on the applicant for the Court to make an order for costs: Penfold v Penfold (1980) 144 CLR 311 at [13].
In considering whether it is appropriate and just to make an order for costs in favour of a party, it is unnecessary for the Court to be satisfied in respect to each and every factor set out in s 117(2A) of the Act,[1] nor does any factor set out in that section have priority over another: Prantage v Prantage (Costs) [2014] FamCA 850 at [12].
[1] Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at [41].
CONSIDERATIOn
It is convenient to address each of the matters set out in s 117(2A) to the extent that I have considered them relevant to the determination that I have made to award costs in favour of the mother.
The parties’ respective financial circumstances
The father contends that he has limited financial resources, in circumstances where he has incurred substantial legal fees relating to these family law proceedings.
There is no evidence before me that enables me to accurately determine the respective financial positions of the parties. I accept, however, that the father has had substantial periods of unemployment since the year 2000 and that a costs order against him would be a significant financial burden.
However, in Cross & Beaumont (2008) 39 Fam LR 389 at [60], the Full Court held that financial incapacity to pay a costs order is not a barrier to the making of such an order where the conduct of the party may warrant a costs order being made.
In this matter, I am satisfied that there are other conditions set out in s 117(2A), to which I refer, which justify an order for costs being made in favour of the mother.
Receipt of assistance by way of legal aid by either party
Neither party is in receipt of legal aid.
Conduct of the parties in relation to the proceedings
This section is focused on the conduct of the parties as litigants (Hitch & Hitch (2012) 47 Fam LR 603), rather than as separated parents generally.
In this matter, it is relevant that the father filed three affidavits, two of which were of considerable length. Those affidavits, however, lacked focus on the primary issue to be determined by the proceedings, which was whether there had been a material change in the circumstances of the parties such that there was justification in revisiting parenting orders previously made by the Court in terms of the principles adumbrated in Rice and Asplund (1979) FLC 90-725.
I accept that the mother incurred unnecessary costs in responding to the father’s voluminous evidentiary material which, as I have noted in the primary reasons for judgment, was properly characterised by the solicitors for the mother as being substantially “prolix, irrelevant and difficult to follow”.
Whether the proceedings were necessitated by a party’s failure to comply with previous orders
Neither party contended that this was a relevant consideration in determining whether a costs order should be made.
Whether any party has been wholly unsuccessful in the proceedings
In Robinson & Higginbotham (1991) FLC 92-209 at 78,417, Nygh J stated that the concept of being wholly unsuccessful is “a situation in which the proceedings as a whole have been unsuccessful. In other words, in which an application which was without merit has been dismissed.”
In this matter, the father was wholly unsuccessful in that his Initiating Application was dismissed and an order was made precluding him from commencing further parenting proceedings without leave of the Court.
Whether an offer has been made in writing to settle the proceedings
Neither party contended that this was a relevant consideration in this matter.
Such other matters as the Court considers relevant
It is relevant that these proceedings are but the latest in a protracted litigation history between the parties, most of which has been initiated by the father. The financial and emotional cost of litigation is well documented. As Keane J observed in Rozenblit v Vainer (2018) 262 CLR 478 at [42]:
Litigation is sufficiently stressful and expensive for all concerned without the unnecessary aggravations of additional cost, stress, distraction and delay occasioned by inefficiency, incompetence or sheer disregard of the rules. To the extent that the contention advanced on behalf of [the appellant] reflects an assumption that inefficiently or incompetently conducted litigation, and the waste in terms of time and money inflicted upon the other party or parties, is nevertheless consistent with the promotion of access to justice because the end may ultimately justify the means, that assumption must be rejected. Inefficient or incompetent conduct of litigation may cause injustice even if it is not intended to do so. Litigation that is conducted inefficiently, incompetently or in disregard of the rules by one party is no less oppressive to the other party because it is not intended to be oppressive...
(Footnote omitted)
Should costs be ordered on an indemnity basis?
The Full Court, in D & D (Costs)(No 2) (2010) FLC 93-435, conducted a useful review of authorities dealing with the issue of indemnity costs in the following terms at [26]–[28]:
In Limousin & Limousin (Costs) [2007] 38 FamLR 478, the Court reviewed the authorities in relation to indemnity costs. Reference was there made to the judgment of the Full Court in Kohan and Kohan (1993) FLC 92-340. It was recorded at 79,614 (citations omitted) in which it was said that:
“The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the court may make such order as the court considers just. As we have pointed out, the court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O 38 r 2, the provisions of O 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O 38 r 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind. See Degmam v Wright (No 2) [1983] 2 NSWLR 354]; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534; Hobartville Stud v Union Insurance Co (1991) 25 NSWLR 358 at 368–70.
Indemnity costs orders are still an exception in this and other jurisdictions.
The Court in Limousin (supra) also referred to the judgment of Shephard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 upon which learned Counsel for the Wife relies in support of the present application. Shephard J said in Colgate-Palmolive (supra) (at 256):
“2. The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis ...
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it ...
4. In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course ...”
Reference was made to the later decision of the Full Court of Yunghanns v Yunghanns (2000) FLC 93-029 in which is [sic] was said (at 87,471, par 31):
“It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought.”
In Munday v Bowman (1997) FLC 92-784 at 84,660, Holden CJ drew from the decision of Sheppard J in Colgate-Palmolive Company and Anor v Cussons Pty Limited (1993) 46 FCR 225 in providing some examples of circumstances that might warrant the exercise of discretion to award indemnity costs, including:
(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] FCA 202; [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 [Medlon No. 6 (supra)].
The circumstances of this case do not, in my view, fall within one of the exceptional categories referred to in those authorities that I cited.
Applicant father ordered to pay costs
In the exercise of my discretion, however, I determine that costs should be awarded in favour of the mother, albeit not on an indemnity basis. The question becomes whether those costs should be ordered in a fixed sum amount.
No basis established for awarding costs in a fixed sum amount
Rule 12.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) sets out the methods of calculating costs. These include the Court fixing a specific amount for costs (r 12.17(1)(a)) or an order for the costs to be assessed on a particular basis (r 12.17(1)(b)).
In Stoian v Fiening (Costs) [2014] FamCA 944 at [91], Kent J endorsed the principles for applying a rule equivalent to r 12.17 when referring to r 19.18 of the now repealed Family Law Rules 2004 (Cth) as adumbrated by Einstein J in Idoport Pty Limited v National Australia Bank Limited & Ors [2007] NSWSC 23 at [9]. Those principles include:
i.the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation;…
ii.the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable;…
iii.the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available;…
iv.a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place;…
iv.the gross sum “can only be fixed broadly having regard to the information before the Court”;…
(Citations omitted)
Consistent with those principles, it has been determined that where a Court orders a party to pay costs, it may be appropriate for the Court to fix a lump sum. By doing so, the Court can avoid further delay and inconvenience being occasioned by the requirement to tax a bill: Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432 at [51].
The difficulty in awarding costs in a fixed sum amount in this case is that the mother’s costs have been quantified on an indemnity basis, or at least at an hourly rate that significantly exceeds that which is provided for in the costs schedule to the Rules. In those circumstances, it is not possible to determine what is a logical, fair and reasonable fixed sum amount for costs as assessed on a party/party basis.
The order in this matter will therefore be for the applicant father to pay the costs of the respondent mother of and incidental to the father’s Initiating Application filed on 6 July 2021 within 28 days of those costs being agreed or assessed.
I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Judge McClelland. Associate:
Dated: 16 August 2022
0
12
0