Graham and Graham and Ors

[2014] FamCA 270

FAMILY COURT OF AUSTRALIA

GRAHAM & GRAHAM AND ORS [2014] FamCA 270

FAMILY LAW – Costs of third party.  Indemnity costs refused.

Family Law Act 1975 (Cth)

APPLICANT: Ms Graham

RESPONDENT: Mr Graham

INTERVENOR: Mr C and B Pty Ltd

FILE NUMBER: MLC 6605 of 2013

DATE DELIVERED: 30 April 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By Way of Written Submissions

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT:	S Kourkoulis & Associates
SOLICITOR FOR THE INTERVENOR:	Meerkin & Apel

Orders

1. That the wife pay the costs of B Pty Ltd and Mr C by agreement and failing agreement as assessed according to the scale in the third schedule to the Family Law Rules 2004.

2. That the Court certifies the attendance of counsel was reasonable and proper for the hearings on 17 January 2014 and 14 March 2014 but those fees be determined according to items 201, 202 and 203 of the third schedule to the rules.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Graham & Graham has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 6605  of 2013

Ms Graham

Applicant

And

Mr Graham

Respondent

And

Mr C & B Pty Ltd

Intervernor

REASONS FOR COSTS JUDGMENT

1. On 14 March 2014 an order was made removing third parties who had been joined at a case assessment conference.  There then followed, an application for costs including costs on an indemnity basis in favour of the third parties. 

2. The matter could not then be resolved because the third parties had not provided sufficient information to enable the dispute to be determined.  The wife against whom the order was sought, asked for details and I made an order for submissions to be provided.  It seems that the submission of the third parties was provided to the Court on time but may have otherwise been served on the wife late.

3. The solicitor for the wife sent the Court a letter on 4 April 2014 complaining about the lateness but did not oppose the issue proceeding.  Rather, it was sought that the wife have an extension of time to file a submission and I have now seen that document.

4. The solicitor for the third parties charges his client more than double the scale rate provided under the Family Law Rules 2014.  In his submission, the solicitor said he had undertaken 34.6 hours of work up until 17 January 2014 and 22 hours thereafter which included the preparation of the submission.  In addition, the third parties had incurred disbursements of counsel’s fees for two appearances totalling $8490.  The solicitors then sought “approximately” $1000 for disbursements.  Thus, the solicitor for the third parties sought a total of $37,929.  In my view, that sounds extraordinarily excessive and absent some clear indication of what work was done, I have no choice but to have the matter assessed by the Registrar.

5. In this case, the proceedings only commenced in August 2013.  At a case assessment conference on 16 September 2013, the third parties were joined by an order.  It seems that they had been aware of the proceedings between the husband and wife but had not been a party to the joinder application.

6. There were hearings on 25 October 2013 before the Registrar at which the third parties attended and then there were the two hearings before me on 17 January 2014 and 14 March 2014 both of which the third parties were represented by counsel and solicitor.  Both hearings were brief.

7. It was submitted by the third parties that the proceeding was unusual because of three things:

   (a)Up until 14 March 2014, the issue was whether or not the proceedings which included the third parties should be heard in the Family Court of Australia or the Supreme Court of Victoria;

   (b)There were Supreme Court proceedings running concurrently with the Family Court proceedings; and

   (c)Almost all of the material filed by the husband and wife in this Court was “unclear, confusing and irrelevant” and “contained no cohesive outline of the matters really in dispute between the parties” and made almost no reference to the other proceedings in the Supreme Court of Victoria.

8. The solicitor for the third parties submitted that it was therefore necessary to prepare two detailed affidavits exhibiting all of the important documents that had been filed in the Supreme Court proceedings.  It was anticipated by the third parties that there would be a jurisdictional issue to be argued.

9. In his submission, the solicitor set out the various steps that he had taken associated with the hearing in January and that having regard to the position put by the third parties, the wife’s position was untenable at least from 17 January 2014 and accordingly, indemnity costs should be ordered.  That was so, it was submitted because had the wife resiled from her position of seeking orders against the third parties in January, the third parties would not have incurred any of the costs they did beyond that date.

10. In the submission in reply, the wife said she had not been in a position to explain anything to the Court or her husband because neither party had received any monies or benefit from the third parties.  That did not explain her lack of reference to the Supreme Court proceedings.

11. It was submitted that the amount of time spent by the solicitor for the third parties was unreasonable and there was no way that the wife could determine what work was done and whether it was reasonable in the circumstances.  It was also not shown in the submission whether the work was necessary in the circumstances. 

12. Because the work was not specified, no indication could be gleaned as to whether there was some justification for a loading that might give rise to any additional fee. 

13. Ultimately, the wife submitted that it was impossible on what had been provided to analyse the work done for the purposes of the claim and in the circumstances it was excessive. 

14. The solicitor for the wife submitted that the claim was a gross overcharging and bordering on professional misconduct but I am not in a position to determine that matter.  That may very well be a matter that the Registrar can decipher in the assessment I propose and if necessary, the matter can be taken to the relevant professional body.  In addition, the wife complained about the $1000 sought in respect of disbursements and with that submission I agree.

15. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that in proceedings in this Court, each party shall bear their own costs unless there are circumstances that justify a departure from that principle. If the Court is contemplating making an order, it must first take into account all of the matters set out in s 117(2A) of the Act.

16. It is clear on the submissions of the wife that for whatever reason, she joined the third parties at a point in the litigation in this Court unnecessarily and particularly as there were concurrent proceedings in the Supreme Court of Victoria.  The litigation in this Court seemed to flounder possibly, as submitted by the wife’s solicitor, on the basis of the absence of representation.  Representation in Australia is a privilege not a right and the joinder of the third parties exacerbated the problem.  Because the proceedings in the Supreme Court were concurrent, some action should have been taken or at least contemplated, to deal with that problem.  It seems on the submissions I have read that nothing was done by the wife.

17. In my view, the joinder of the third parties made them come into private proceedings at a time when they were inconvenienced unnecessarily.  Whilst the Family Law Rules require the joinder of any person who may have an interest that may be affected by an order, nothing here is apparent to indicate that that was the case.  Accordingly, in my view, there is a justification for an order departing from the principle that each party pay their own costs. 

18. Whilst the third parties seem to be affluent enough to afford solicitors who charge in excess of $500 per hour, I am not entirely sure about the financial position of the wife but it seems there is some property otherwise there would not have been any proceedings in this Court.  Nothing I read or heard suggested that the wife could not afford to pay costs. 

19. There is no suggestion in this case that any party is assisted by legal aid grants.

20. The Court is obliged to take into account the conduct of the parties to the proceedings generally and it is important to note that these proceedings floundered because the wife did not seek advice early enough and that increased the costs of the third parties.  There is no suggestion of any failure to comply with orders but there is a very clear indication that the wife has been wholly unsuccessful in that, having joined the third parties, she had to reluctantly or otherwise, agree to them being discharged.

21. I am not aware of any offers in writing to settle the issue of costs other than that set out in January 2014 at which point, a dispute arose.  In my view therefore, there is a basis to make an order for costs in favour of the third parties against the wife.

22. The third parties sought indemnity costs.  Having regard to the determination of the Full Court in Prantage and Prantage [2013] FamCAFC 105 the third party must show that there is something special or unusual about this case. Nothing I read indicted that that was the case. Whilst the wife may have been inept in what she was doing and had not sought legal advice or followed it appropriately, there was nothing about the wife’s conduct that indicated something unusual. In my view, this is not a case in which indemnity costs should be awarded.

23. Counsel’s fees totalled in excess of $8000 and whilst the Court is always grateful for the assistance received from counsel, there is no basis in this case for me to depart from the scale in respect of those disbursements either.  I propose to certify for counsel in respect of the two attendances but they should be assessed on items 201, 202 and 203 of the third schedule to the rules.  There will be orders accordingly.

I certify that the preceding Twenty Three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 30 April 2014.

Associate:

Date:  30 April 2014