Gresham & Gresham (No 5)
[2024] FedCFamC1F 23
•2 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Gresham & Gresham (No 5) [2024] FedCFamC1F 23
File number(s): SYC 7914 of 2016 Judgment of: ALTOBELLI J Date of judgment: 2 February 2024 Catchwords: FAMILY LAW – COSTS – Where the both parties seek costs – Where the husband seeks indemnity costs – Where the wife was wholly unsuccessful – Where the wife is ordered to pay costs in a fixed sum. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17(1)
Cases cited: Bhatt & Acharya (Costs) [2017] FamCAFC 71
Cross & Beaumont (2008) 39 Fam LR 389
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish & Another (2005) 33 Fam LR 123; [2005] FamCA 158
Gresham & Gresham (No 4) [2023] FedCFamC1F 1090
In the Marriage of I & I (No. 2) (1995) FLC 92-625; [1995] FamCA 80
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Lenova & Lenova (Costs) [2011] FamCAFC 141
Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157
Parke & The Estate of the Late A Parke (2016) FLC 93-748; [2016] FamCAFC 248
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Phillips & Hansford (2020) FLC 93-941; [2020] FamCAFC 28
Division: Division 1 First Instance Number of paragraphs: 48 Date of last submission/s: 18 December 2023 Date of hearing: In Chambers Place: Sydney Solicitor for the Applicant: Watson & Watson Solicitors The Respondent: Litigant in person ORDERS
SYC 7914 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR GRESHAM
Applicant
AND: MS GRESHAM
Respondent
ORDER MADE BY:
ALTOBELLI J
DATE OF ORDER:
2 FEBRUARY 2024
THE COURT ORDERS THAT:
1.Within 56 days of these orders, the Respondent Wife is to pay the costs of the Applicant Husband fixed in the sum of $15,000.
2.Each party is to pay their own costs arising out of this costs application.
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 Gresham & Gresham has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALTOBELLI J:
INTRODUCTION
The applicant husband (“the husband”) seeks an order for costs against the respondent wife (“the wife”) in respect of his Application in a Proceeding filed 3 November 2023 (“the AIP”) and her Application – Enforcement filed 1 September 2023 and 22 November 2023. The order for costs is sought on an indemnity basis, with such costs to be paid within 21 days of these orders, or in the alternative costs in favour of the husband in a sum determined by the Court or in accordance with the scale of costs in Sch 3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) or otherwise as agreed or assessed. The precise orders sought are as follows:
Costs
9That the Respondent wife pay the Applicant husband's costs of this application and his costs of her enforcement application on an indemnity basis with such costs to be paid within 21 days of these Orders .
10In the alternative to the above, costs in favour of the Applicant husband any other sum as determined by the Court, or in accordance with the scale of costs in Schedule 3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) or otherwise as assessed or as agreed, with such costs to be paid within 21 days of these Orders arising from these proceedings and with such costs to be paid within 21 days of these Orders.
11Leave is granted to the parties to apply to relist the proceedings on 3 days' notice to deal with any interpretation, implementation and/or enforcemetn of these order.
(As per the original)
The wife opposes the husband’s application for costs and seeks that the husband pay her costs of and incidental to her enforcement applications in the sum of $7,500 to be paid within seven days of these orders.
BACKGROUND
This matter was listed for mention on 5 October 2023 regarding the wife’s Application – Enforcement filed 1 September 2023. Orders were made on that day for the husband to file an Application in a Proceeding and supporting affidavit in relation to the wife’s application, and for the wife to file a response and supporting affidavit in relation to the husband’s Application in a Proceeding.
The matter was then listed for mention on 27 November 2023 regarding the AIP and the Application – Enforcement filed 22 November 2023 (noting that the wife filed a second superseding enforcement application rather than a Response to the AIP). Orders were made on the same day dismissing the Application – Enforcement filed 22 November 2023 and implementing Orders 6–7 (by consent) and Order 8 of the AIP. Judgment regarding Orders 2‑5 of the AIP was reserved.
Orders were then made on 19 December 2023 implementing Orders 2–5 of the AIP: Gresham & Gresham (No 4) [2023] FedCFamC1F 1090 (“my reasons for judgment”). Judgment on the question of costs was reserved pending further submissions by the parties.
PRESENT APPLICATION
Orders were made on 27 November 2023 for the husband to file and serve a brief affidavit regarding the costs he asserts were thrown away, arising out of the dismissal of the wife’s enforcement applications, both on a party-party basis and an indemnity basis, and for the wife to provide written submissions in response.
In support of his case, the husband relies upon the following material:
(a)Application in a Proceeding filed 3 November 2023; and
(b)His affidavit filed 11 December 2023.
In support of her case, the wife relies upon the following material:
(a)Application – Enforcement filed 22 November 2023; and
(b)Her affidavit filed 18 December 2023.
LEGAL PRINCIPLES
The law relating to costs in family law proceedings is well settled and is set out in detail in the Full Court decision of Parke & The Estate of the Late A Parke (2016) FLC 93-748.
An application for costs is governed by s 117 of the Family Law Act 1975 (Cth) (“the Act”). Section 117(1) of the Act sets out the general presumption that each party to the proceedings shall bear their own costs. This is subject to s 117(2), which provides that:
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) and (5) and the applicable Rules of Court, make such order as the court may make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
Section 117(2A) sets out the matters that the Court is to have regard to:
(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.
Although the Court is required to consider each of the abovementioned factors, it is plain that their relevance to a particular matter will depend upon the circumstances of that case and they should be considered in that light. That is, no one factor prevails over another and it is a question of the weight that is to be afforded to each of the relevant factors depending on the circumstances of the matter (Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664 at [24]). There is also “nothing to prevent any factor being the sole foundation for an order for costs” (Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish & Another (2005) 33 Fam LR 123 at [41]).
Whilst the applicant in a costs application must establish the circumstances justifying the making of a costs order, the Court is not limited to making such an order only in what has been described as a “clear case” (Penfold v Penfold (1980) 144 CLR 311).
DISCUSSION
Costs orders are made at the Court’s discretion based on the factors listed in s 117(2A) of the Act. The Court must consider all the factors in s 117(2A), and no one factor takes precedence over another (In the Marriage of I & I (No. 2) (1995) FLC 92-625). A discussion of these considerations follows.
It is noted that neither party explicitly addressed the relevant legislative provisions in their affidavits, although it is acknowledged that the order made on 27 November 2023 to file and serve an affidavit as to costs was quite specific:
7.Within 14 days of the date of this order, the Respondent Husband file and serve a brief affidavit regarding the costs he asserts were thrown away, arising out of the dismissal of the Applicant Wife’s Application – Enforcement filed 22 November 2023, both on a party-party basis and an indemnity basis.
8.Within 14 days thereafter, the Applicant Wife provide written submissions, not exceeding 1000 words.
9. Thereafter, judgment on the question of costs is reserved.
Section 117(2A)(a): Financial circumstances of the parties
A party’s inability to pay costs is not a bar to a costs order being made if that party’s conduct is found to warrant such an order (Cross & Beaumont (2008) 39 Fam LR 389) and mere impecuniosity is not a reason per se for declining to make a costs order (see, e.g., Lenova & Lenova (Costs) [2011] FamCAFC 141; Bhatt & Acharya (Costs) [2017] FamCAFC 71).
Neither party specifically asserts that they are unable to meet an order for costs. However, the wife at paragraphs 23–26 of her affidavit states that she has delayed paying her children’s school fees for Term 4 in order to pay legal fees, and that she still owes $4,250 in legal fees.
Nevertheless, I am satisfied that there is no evidence before me to indicate that a costs order should not be made against either party due to their financial circumstances.
Section 117(2A)(b): Whether the parties are in receipt of legal aid
Neither party was in receipt of legal aid.
Section 117(2A)(c): The conduct of the parties
While neither party explicitly referred to s 117(2A)(c), it can be implied from the information contained in their affidavits that both parties took issue with the other’s conduct to some extent.
At paragraph 41 of his affidavit, the husband asserts that the most significant portion of his total costs were incurred in relation to the wife’s enforcement applications. He goes further to say that if the wife had not commenced the enforcement applications and he instead commenced proceedings himself, he “could have undertaken it in a timely manner which could have been prepared without the pressures of responding to an existing Application by the Wife” and that if he “was not under the time restraints the preparation could have been undertaken by [the husband] over an extended period without any need for urgent consideration of drafts and taking instructions” which would have been “significantly more cost effective preparation than the preparation under the pressure of the time limits”. He also asserts that he did not have the benefit of preparing documentation and providing it to his solicitors and senior counsel who had been involved in the matter for many years, who could have assisted in a cost-effective manner before filing the AIP.
The husband concedes that there is no exact basis of calculation as to the effect on costs of the wife filing enforcement applications to commence proceedings rather than himself filing an Application in a Proceeding, however maintains at paragraph 42 of his affidavit that “if the Husband needed to commence an application, he could have prepared his case as Applicant, there could be a response by the Wife and there would have been consideration as to whether any further evidence would be required by the Husband in reply”.
The wife asserts at paragraph 11 of her affidavit that she filed the enforcement application because Order 10 of the orders made on 10 February 2023 had not progressed. She refers to the fact that the time for compliance stated in Order 10 is 14 days, and that seven months had passed by the time she filed the Application – Enforcement on 1 September 2023.
The wife assets at paragraphs 28–33 of her affidavit that the husband continues to claim that Mr BR from O Company is no longer his legal advisor, and that there was no evidence before the Court until 7 October 2023 that he had engaged BQ Company for legal advice. She submits that Mr BR believes he is still the husband’s financial advisor and that the husband conceded Mr BR “might still be on a monthly retainer”. She also criticises the husband at paragraphs 12 and 28 of her affidavit for not giving his consent for Mr BR to progress the matter “with a workaround for separating the [Country Q] pension funds 30/70 to implement Order 10”. Finally, at paragraphs 8–10 of her affidavit the wife asserts that she contacted the husband’s solicitors and informed them that as the husband is aged 55 he can access 25 per cent of his Country Q pension as a lump sum without the need to be retired, and that she did not receive any response. She submits that the husband knew of this fact prior to the making of Order 10 on 10 February 2023 (referring to Annexure A to her affidavit filed 22 November 2023).
The Court finds unhelpful some of the husband’s submissions. He advances a hypothetical scenario in which he asserts he would have incurred less costs if he filed his own application rather than responding to the wife’s application but gives no indication as to if or when he was going to file this application or how his costs were ultimately affected. He cannot place blame on the wife for the costs he has incurred for this reason alone.
The Court does acknowledge, however, that had the wife agreed to follow the husband’s proposed steps to progress the matter (which are now contained in Orders 2–3 made 27 November 2023 and Orders 1–4 made 19 December 2023), the wife’s enforcement applications and the husband’s AIP would not have been necessary. Further, the orders the wife sought in her enforcement applications, as stated in my reasons for judgment at [35], sought in substance and effect to vary final orders made by this Court, and the Court lacked jurisdiction to make these orders without an extant application under s 79A of the Act. The Court notes that the husband did not raise these issues in his affidavit.
The wife’s submissions were similar to those traversed in her affidavits filed 1 September 2023 and 22 November 2023 in relation to her enforcement applications. Findings were made about her concerns at [36]–[38] of my reasons for judgment. The Court acknowledges the wife’s concerns and repeats its observations at [29]–[34] of my reasons for judgment that the differences in the expert advice purportedly given to each party is problematic and that the parties have been unable to collaborate to resolve these issues.
The conduct of both parties has not been ideal, however this factor alone would not lead the Court to make a costs order.
Section 117(2A)(d): Failure to comply with orders of the Court
While not explicitly stating that the husband failed to comply with orders of the Court, the wife asserts at paragraphs 20 and 27 of her affidavit that the reason the matter was listed again for mention on 27 November 2023 (which the Court assumes the wife infers led to further costs for both parties) was that the husband had not put on any material in response to her Application – Enforcement filed 1 September 2023 at the mention on 5 October 2023.
The Court notes that the matter was listed for mention only on 5 October 2023 and there were no orders at that time for the husband to file and serve any material in response to the wife’s Application – Enforcement filed 1 September 2023. When asked whether there are any documents the husband relies on, counsel for the husband responded:
Not at this stage your Honour…if the matter proceeds beyond today I’d be asking for an order to put material on, but I’d be interested to hear what your Honour is proposing to do with the application given the nature of it and what orders and how it’s framed, because we have a view as to what should happen with it.
The husband cannot be said to have failed to comply with any orders of the Court.
Section 117(2A)(e): Whether a party has been wholly unsuccessful in the proceedings
While neither party specifically addressed this issue, the Court notes that the wife has been wholly unsuccessful in these proceedings as her Application – Enforcement filed 22 November 2023 (which superseded her Application – Enforcement filed 1 September 2023) was dismissed on 27 November 2023. Further, Orders 6–8 in the AIP were made on 27 November 2023 (Orders 6–7 being made by consent) and Orders 2–5 in the AIP were made on 19 December 2023 (after judgment was reserved on that issue on 27 November 2023). These reasons for judgment relate to Orders 9–11 of the AIP relating to costs. The wife has been wholly unsuccessful in this aspect of the litigation. This factor weighs heavily in the Court’s decision to award costs in favour of the husband.
Section 117(2A)(f): Offers of settlement
Neither party contended this was a relevant consideration in determining whether a costs order should be made.
Section 117(2A)(g): Any other relevant matters
At paragraphs 17–19 of her affidavit the wife states that she is unclear as to the costs the husband claims he incurred at the mention on 5 October 2023. Firstly, regarding his solicitor’s costs, she asserts that there was no evidence put before the Court in response to her Application – Enforcement filed 1 September 2023 reviewed at that mention. Secondly, regarding his counsel’s costs, she asserts that counsel appeared not to be fully briefed about relevant matters and that counsel’s fees were “merged” for the mention on 5 October and 27 November 2023, so it is not clear what costs were incurred at each mention.
The Court finds that the husband clearly sets out his costs relating to his solicitor’s and counsel’s fees at Annexures A–D and G of his affidavit.
INDEMNITY COSTS
It is well settled that when costs are ordered by this Court, such costs are payable on a party‑party basis. It has been held that the Court should not lightly depart from the ordinary rule (Kohan and Kohan (1993) FLC 92-340).
The provision relating to the calculation of costs is governed by r 12.17(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) which is as follows:
12.17 Method of calculation of costs
(1) The court may order that a party is entitled to costs:
(a) of a specific amount; or
(b)as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c) to be calculated in accordance with the method stated in the order; or
(d)for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
The rule further provides that:
(3) In making an order under subrule (1), the court may consider the following:
(a) the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable cases;
(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e)the time properly spent on the proceeding, or in complying with pre‑action procedures; and
(f)whether expenses (paid or payable) are fair, reasonable and proportionate.
In relation to an award of indemnity costs, the Full Court decision of Phillips & Hansford (2020) FLC 93-941, helpfully summarises the position as follows:
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).
The husband seeks costs on an indemnity basis in the AIP, but makes no specific submissions in his affidavit other than to say at paragraph 46:
The Court may order the costs on a “indemnity basis”. Indemnity basis means all legal costs and disbursements that a party reasonably and properly incurred. On behalf of the Husband, I submit that all the costs incurred by the Husband was reasonable having regard to the attendances, the time for the attendances and the charge rate for the attendances.
Without any further evidence or submissions by the husband, the Court finds nothing in the material before the Court to warrant a costs order on an indemnity basis.
QUANTIFICATION OF COSTS
The husband submits that his costs for the period from 1 September 2023 to 27 November 2023, including both his solicitor’s and counsel’s fees, amount to $40,143 (see paragraphs 6‑8 and Annexures A–C of the husband’s affidavit). The Court finds that these costs were reasonably incurred.
The wife submits that her cost for the relevant period amount to $8,000, of which $4,250 remains to be paid.
Rule 12.17 of 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)).
The Full Court decision in Parke stated at [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”
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].
CONCLUSION
Doing the best the Court can on the evidence before it, the wife is to pay the costs of the husband fixed in the sum of $15,000. The wife will be given 56 days to pay.
Each party is to pay their own costs arising out of this costs application.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 2 February 2024
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