Greyson & Maher (No 2)
[2023] FedCFamC1F 34
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Greyson & Maher (No 2) [2023] FedCFamC1F 34
File number(s): MLC 14284 of 2020 Judgment of: MCNAB J Date of judgment: 7 February 2023 Catchwords: FAMILY LAW – PROPERTY – Costs Application – Application for Indemnity Costs – Application for indemnity costs dismissed – Effect of Calderbank offers – Conduct of the applicant in denying the length of a de facto relationship until the day of trial – Failure to make timely disclosure of assets – Party-Party costs in a fixed sum ordered. Legislation: Family Law Act 1975 (Cth) s117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 4.2.2, 12.08, 12.13, 12.17
Cases cited: Bashour v Australia and New Zealand Banking Group Limited [2017] FCA 163
Bele & Vaughan (Costs) [2012] FamCAFC 198
Browne & Green [2002] FamCA 791
Calderbank v Calderbank [1975] 3 All ER 333
Fleming v Fleming (Review of Costs) [2009] FamCA 552
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435
I, In the Marriage of (No 2) (1995) FLC 92-625
Kannis v Kannis [2002] FamCA 1150
Magna Alloys & Research Pty Ltd v Coffey (No 2) [1982] VR 97
Medlon & Medlon (No 6) (2015) 54 Fam LR 1
Prantage & Prantage [2013] FamCAFC 105
Redmond & Redmond (Costs) [2014] FamCAFC 55
Taronite v Mabra (Costs) [2017] FCWA 72
Division: Division 1 First Instance Date of hearing: On the Papers Place: Melbourne Number of paragraphs: 38 Date of last submission/s: 23 December 2022 Counsel for the Applicant: Mr Puckey KC Solicitor for the Applicant: Taussig Cherrie Fildes Counsel for the Respondent: Dr Ingleby Solicitor for the Respondent: Sage family Lawyers ORDERS
MLC 14284 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR GREYSON
Applicant
AND: MS MAHER
Respondent
order made by:
MCNAB J
DATE OF ORDER:
7 FEBRUARY 2023
THE COURT ORDERS THAT:
1.Within one hundred and eighty (180) days of the date of this order, the respondent pay the applicant a lump sum of costs fixed at SEVENTY-FIVE THOUSAND DOLLARS ($75,000).
2.That the applicant’s application that the respondent pay costs on an indemnity basis is dismissed.
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 Greyson & Maher has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McNab J:
These reasons relate to an application for costs by the applicant de facto husband (“the applicant”), following final orders made on 1 December 2022. The applicant seeks costs on an indemnity basis. This application was dealt with on the papers, with written submissions filed by both parties. These reasons should be read in conjunction with the reasons for judgment delivered on 27 October 2022 and Final Orders made on 1 December 2022.
The orders reserved costs and made provision for the parties to file submissions regarding costs and for the matter to be determined on the papers.
JUDGMENT
The matter was listed for 27 October 2022 and ran for two days. Reasons for judgment was delivered on 28 November 2022 with the applicant to receive 50% of the B Street, Suburb C property, with the parties to draft a minute of orders with a mechanism giving effect to that order. Final orders were made on 1 December 2022. The respondent had the option of adhering to the order through:
(1)Paying the applicant a sum of $1,100,000, either through sale of the property or otherwise, which is equivalent to 50% of the value of that property; or
(2)Transfer the property to the de facto husband and he pay her $1,100,000.
These orders were made in circumstances where the applicant was seeking an equal division of the property from the outset of the matter, while the respondent initially sought no adjustment, with the affect that she retain the B Street property in her sole name, and at the time of trial the respondent sought a further payment of approximately $700,000 in her favour. The judgment determined and the final orders operated on the basis that the B Street property was the only property of the relationship.
On 23 December 2022, the respondent emailed the applicant and the court to notify that she had secured finance in order to pay the applicant $1,100,000 without selling the B Street property.
APPLICATION FOR COSTS
The applicant seeks an order that the respondent pay his costs of $368,761.59, being his actual costs incurred from 23 December 2020 to the conclusion of the trial, excluding costs relating to this application.
The applicant sets out the relevant principles relating to a cost application, stating that an award for indemnity costs may be made per s 117 (2) of the Family Law Act 1975 (Cth) (“the Act”), and Rule 12.17 (1)(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”).
The applicant does not include an itemised accounting of his costs, nor does he provide a copy of any cost agreement.
The applicant submits that the court ought to consider awarding costs on an indemnity basis on the following grounds:
(1)Both parties have substantial assets to use as a resource as a result of the court’s orders;
(2)The applicant’s position from the outset was for an equal division of B Street, and the respondent refused to seriously consider the proposal;
(3)The orders made reflect the orders sought by the applicant in his Initiating Application;
(4)The applicant submits that a number of offers of settlement were made, all of which proposed to the respondent a greater sum than the entitlement ordered by the court. These offers, set out in the applicant’s submissions (and annexed) are:
•In an email sent to the respondent on 4 November 2019 marked “without prejudice”, the applicant offered to sell the [B Street] property cooperatively and divide the proceeds equally.
•On 23 December 2020, the applicant filed his Initiating Application containing proposed orders to divide the proceeds of the sale of the [B Street] equally.
•In an email sent to the respondent on 1 December 2021 marked “without prejudice”, the applicant offered to underwrite a fixed cash settlement of $1.35m to the respondent (fixed at the request of the respondent, irrespective of the sale price of [B Street] with a reserve of $2.2m) equating to a little over 61% to the respondent. This offer was open for acceptance until 3 December 2021.
•In an email sent to the respondent on 23 December 2021 marked “without prejudice”, the applicant offered to “meet” the respondent’s request for a fixed cash settlement of $1.5m from [B Street]. That offer equated to a little over 68% of [B Street] to the respondent. The monies were to be paid with the first $500k within 30 days of court orders, with the property to be transferred once the monies were received, and a further 500k by 30 July 2022.
•In a letter sent to the respondent’s solicitors 9 February 2022 marked “without prejudice”, the applicant offered the respondent 55% of the value of [B Street], by either cash payment or division of sale proceeds. This letter was explicitly an offer of settlement under Division 4.2.2 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, and specified that:
•within 14 days of the offer, the property be made available for inspection;
•within 28 days, the applicant declare in writing whether he intends to acquire the property;
•within 60 days of exercising that option, the applicant pay the respondent the sum of $1,210,000 and the respondent transfer the property to the applicant;
•If the applicant does not exercise the option to acquire the property, it be sold with the proceeds to be divided 45:55 in favour of the respondent, net of fees and costs.
This offer specified that it was made in accordance with Calderbank v Calderbank [1975] 3 All ER 333 and Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435, and that if the offer is not accepted and the outcome is equal or more favourable to the applicant, he will seek costs on an indemnity basis from the date of rejection.
•In a letter sent to the respondent’s solicitors 24 May 2022 marked “without prejudice” and referring to division 4.2.2 of the rules, the applicant offered the respondent a sum certain of $1.275m (equivalent to approximately 58% of [B Street]) in respect of the [B Street] property. This letter referred to prior negotiations in which the respondent had agreed on the sum of $1.5m, but had then reneged and made the offer of $1.8m to be paid to her, then $1.675 at a later point. Both of these were rejected by the applicant, and as a consequence of increasing costs, he reduced his previous offer of $1.5m to $1.275m in exchange for the transfer of [B Street] to be paid as follows:
•$275,000 within 60 days;
•$500,000 within 120 days; and
•$500,000 by no later than 1 December 2022.
Failing the applicant making these payments, the respondent sell [B Street] and any outstanding payment be given to the respondent, with the balance to the applicant.
This offer repeated that it was made in accordance with Calderbank v Calderbank and Hazeldene’s Chicken Farm, and that if the offer is not accepted and the outcome is equal or more favourable to the applicant, he will seek costs on an indemnity basis from the date of rejection.
•In a letter sent to the respondent’s solicitors 15 July 2022 marked “without prejudice” and referring to division 4.2.2 of the rules, the applicant offered to sell the [B Street] property and divide the proceeds 52.5% in favour of the respondent.
This offer repeated that it was made in accordance with Calderbank v Calderbank and Hazeldene’s Chicken Farm, and that if the offer is not accepted and the outcome is equal or more favourable to the applicant, he will seek costs on an indemnity basis from the date of rejection.
(5)The applicant submits that given the timing of his offers of settlement (being made early in the proceedings) and the outcome of the trial, the whole of his costs should be subject to cost orders; and
(6)In the alternative, if indemnity costs are not awarded, he seeks party-party costs of $245,841.
In regards to indemnity costs, the applicant refers to a number of cases including Prantage & Prantage [2013] FamCAFC 105, Redmond & Redmond (Costs) [2014] FamCAFC 55, Bele & Vaughan (Costs) [2012] FamCAFC 198 and Taronite v Mabra (Costs) [2017] FCWA 72.
The respondent submits the application for costs should be dismissed, and in the alternative, the court should not make a costs order on an indemnity basis. She refers to s 117 (1) as the starting point, being that each party ordinarily bears their own costs. She emphasises via her submissions that awarding costs on an indemnity basis is not the default position, and the applicant must establish why indemnity costs are justified based on the circumstances of this case. She submits the court ought to reject the application for the following reasons:
(1)The applicant has not provided any explanation for the breakdown of costs he is seeking, other than stating they are costs up to and including the trial.
(2)The applicant’s submissions of the offers he made is not a fair representation of s 117 (2A) factors, and she submits the court must have regard to all relevant matters per I, In the Marriage of (No 2) (1995) FLC 92-625 and Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664.
(3)The application does not comply with rule 12.13(4) of the Rules in that it does not provide a cost agreement.
(4)The application is deficient as it does not provide an explanation of how the figures sought were calculated, and thus the respondent cannot fully respond as to quantum, and the court is not able to make findings as to whether the quantum is “just” as required under s 117.
(5)The application would cause significant hardship on the respondent if granted, given she is 60 with minimal prospects of substantial employment, and superannuation of less than $15,000, in circumstances where she is required by final orders to pay the applicant $1,100,000. She refers to the Full Court in Browne & Green [2002] FamCA 791 at [21]:
There are clearly cases where a costs order may cause great hardship to one party and little benefit to the other. There are cases where both parties are wealthy, although one is wealthier than the other.
(6)The applicant’s conduct should be seen as serious enough to disqualify him from entitlement to costs, including his refusal to make concessions about the length of the relationship until the first day of the final hearing, which left the respondent in the position of being put to proof about the length of the relationship. This caused the respondent to incur the cost of filing many affidavits about the nature and quality of the relationship which would have otherwise been unnecessary if the applicant had made this concession earlier. Secondly, she points to the failure to disclose the H Ltd shares until shortly before the trial. She refers to the case of Kannis v Kannis [2002] FamCA 1150, “Whether the nondisclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute.”
The respondent submits that if the court grants such an order as sought by the applicant, she would be required to immediately sell her home, and would have limited prospects of acquiring a primary place of residence. Her 2021 taxable income was $62,243 and she submits being required to pay indemnity costs as sought would put her at risk of being homeless.
CONSIDERATION
Under rule 12.13(4) of the Rules:
A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement or costs agreements in relation to those costs and, if so, the terms of the costs agreement or costs agreements.
The applicant has not provided a copy of any cost agreement, nor an itemised account. In these circumstances and for the reasons outlined below, I will not make an order that the respondent pay the applicant’s costs on an indemnity basis.
The applicant has not provided any summarised breakdown as to how the costs of about $370,000 have been incurred in relation to a two-day trial where it appears that there was never any dispute about the value of the principal asset. Further, there has not been substantial time taken up with interlocutory applications.
The court's power to award costs are subject to the operation of sections 117(1), (2) and (2A) of the Act. Those sections provide:
(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 starting point provided by s 117 (1) of the Act is that each party shall bear their own costs. Section 117 (2) provides that the court may make an order for costs which it considers just when the circumstances justifying doing so.
When considering whether to make an order for costs, the court shall have regard to each of the matters set out in s 117 (2A) with no factor prevailing over the other, and with the weight ascribed to each matter being a matter within the discretion of the court (Medlon & Medlon (No 6) (2015) 54 Fam LR 1).
Turning to each of the relevant considerations:
(1) The financial circumstances the parties to the proceedings
The respondent's principal asset is her interest in the B Street property. In addition, she has cash of about $370,000 and minimal superannuation of about $15,000. She has legal fees of $299,903.50 as per the costs notice, and presumably costs associated with funding the payment of the judgement sum to the applicant.
The applicant has assets presently available to him of about $4.4 million, and locked shares of about $1,440,000. He also has the benefit of the payment from the respondent of $1.1 million (in respect of the B Street property).
The respondent conducts a business and has done so over a considerable number of years - which has largely supported her, although there is no certainty about the level of income which might be available to her, and the details about her ongoing financial position are not clear given that the evidence before the court in relation to a taxable income was in respect of the financial year ended July 2021, which was in the sum of $62,243 (which was during the period of the Covid restrictions which significantly impacted on her business). Irrespective of how well her business is now performing, I accept that an order for costs in respect of party-party costs claimed is likely to have a substantial impact on her and may cause hardship. An order for costs in the sum sought on a party-party basis is likely to cause significant hardship to the respondent and provide a modest benefit to the applicant having regard to his overall financial position.
(2) The conduct of the parties to the proceedings
Rule 12.08 of the Rules provides:
(1) The legal costs incurred in a proceeding must be:
(a) fairly, reasonably and proportionately incurred; and
(b) fair, reasonable and proportionate in amount;
in the circumstances of the proceeding.
(2)In considering whether a party's legal costs have been fairly, reasonably and proportionately incurred, regard must be had to all relevant matters including, but not limited to, whether a lawyer representing the party, a lawyer representing any other party, or any self-represented litigant has:
(a)complied with all relevant rules and orders of the court, including requirements that documents be filed or provided to other parties by a given date; and
(b)acted reasonably in raising, pursuing or contesting a particular allegation or issue; and
(c)made reasonable efforts, subject to the client's instructions, to resolve the dispute through negotiation, mediation or arbitration; and
(d)made reasonable efforts to narrow the issues in dispute; and
(e)filed no more interlocutory applications than are reasonably necessary in the circumstances of the proceeding; and
(f)filed no more affidavits or other documents than are reasonably necessary in the circumstances of the proceeding.
(3)In considering whether a party's legal costs are fair, reasonable and proportionate in amount, regard must be had to all relevant matters including, but not limited to, whether the costs reasonably reflect:
(a)the level of skill, experience, specialisation and seniority of the lawyers concerned; and
(b)the level of complexity, novelty or difficulty of the issues involved, and the extent to which the proceeding involved a matter of public interest; and
(c)the labour and responsibility involved; and
(d)the circumstances in which lawyers acted, including any or all of the following:
(i) the urgency of the work;
(ii) the time spent on the work;
(iii) the time when work was required to be carried out;
(iv) the place where work was required to be carried out;
(v) the number and importance of any documents involved; and
(e) the quality of the work done; and
(f)the retainer and the instructions (express or implied) given in the matter.
(4)In considering whether a party's legal costs have been fairly, reasonably and proportionately incurred under subrule (2), or are fair, reasonable and proportionate in amount under subrule (3), regard must also be had to any applicable State or Territory law in relation to the regulation of legal practitioners in that State or Territory.
(5)In relation to an application for costs by one party against another, a cancellation fee levied by a barrister or solicitor advocate is taken not to be reasonable.
Plainly, any consideration of an assessment of costs and whether they will be paid involves an assessment of the conduct of the parties to the proceeding.
I accept the submissions made by the respondent that the applicant's failure to concede the length of the relationship, being a de facto relationship over 13 years, until the first day of the hearing has substantially contributed to his costs and the costs of the respondent.
An order for the full amount of party-party costs claimed would in effect have the respondent paying for legal costs directed at the question of the length of the de facto relationship, which is a point that could have been conceded earlier. The concession as to the length of the de facto relationship did not foreclose argument about the nature or quality of that relationship over that period and whether it changed.
The issue of the applicant's failure to disclose details in relation to the H Ltd shares in a timely way prior to trial has taken up court time and clearly resulted in the expenditure of legal fees, including legal fees by the applicant which he now seeks the respondent to pay.
(3)Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The respondent has been wholly unsuccessful in these proceedings in circumstances where the court has made orders in accordance with the orders sought by the applicant in his Initiating Application.
That of itself does not necessitate an order for costs or cause the court to adopt the position of making an order for cost because costs follow the event. The power to make an order for costs is conditional upon the operation of s 117 of the Act as discussed above.
(4)Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings in the terms of any such offer
In relation to Calderbank offers, the Court will ordinarily have regard to at least the following matters:
(1)the stage of the proceeding at which the offer was received;
(2)the time allowed to the offeree to consider the offer;
(3)the extent of the compromise offered;
(4)the offeree’s prospects of success, assessed as at the date of the offer;
(5)the clarity with which the terms of the offer were expressed; and
(6)whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it: see Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2).
As was stated by Tracey J in Bashour v Australia and New Zealand Banking Group Limited [2017] FCA 163 at [147]:
The costs consequences of a Calderbank offer lie in the discretion of the court. It will be exercised having regard to the particular circumstances of the case […]
The applicant has at an early point, even before legal practitioners were engaged, made a clear offer to resolve this proceeding, and those offers have been in terms more favourable to the respondent than the result achieved through the judgement.
I accept that a number of those offers were conditional; however, the settlement offers were all made in circumstances where the respondent has the capacity to require the sale of the B Street property in the event that settlement was not affected in accordance with the terms of the offers. In effect, there was an element of security underpinning the offers made by the applicant.
I do regard it as a significant matter that the applicant has throughout the proceeding made offers which were, having regard to the matters known to both parties, reasonable. I presume that the respondent has had the benefit of or had the capacity to receive legal advice in relation to each of the offers and she has elected to run the risk of pursuing the matter to final hearing in the face of those offers.
I also accept that the respondent's perception of the offers that were made may have been affected by the applicant's conduct in that he was denying the length of the de facto relationship and that denial may have been regarded by the respondent regarded as unreasonable; and that the quantum of the offers he made were based in what she considered was an unreasonable position.
Taking all of the relevant matters under s 117 (2A) into account, I think that this is a case where it is appropriate that there be some recognition of the offers made by the applicant in order to sensibly resolve the proceeding at an early stage, and his continued efforts to do so up until shortly before the commencement of the trial.
The court has not been provided with a breakdown of the party-party costs and how they have been incurred. I am not minded to make orders for the parties to file a bill of costs or a further itemised statement of costs as same will lead to the incurring of further substantial costs.
Taking all these matters into account, I order that the respondent pay the applicant's costs fixed in the sum of $75,000 and with the payment of such costs be stayed for 180 days.
I fix that sum noting that the trial ran for two days, the material was not voluminous, and no written closing submissions were filed. I also take into account the fees provided under the relevant court scale for Counsel. The brief fee to appear at trial will ordinarily include 10 hours of preparation (Magna Alloys & Research Pty Ltd v Coffey (No 2) [1982] VR 97 and Fleming v Fleming (Review of Costs) [2009] FamCA 552 at [84]), although a reading fee or a preparation fee may be appropriate where the case is of greater complexity or the material is voluminous.
I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McNab. Associate:
Dated: 7 February 2023
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