Guild & Stasiuk (No. 2)
[2020] FamCA 564
•17 July 2020
FAMILY COURT OF AUSTRALIA
| GUILD & STASIUK (NO. 2) | [2020] FamCA 564 |
| FAMILY LAW – INDEMNITY COSTS – whether an order on that basis should be made – review of authorities. |
| Evidence Act 1995 (Cth) s 128 Family Law Act 1975 (Cth) ss 90G, 90K, 117(1), 117(2), 117(2A) Family Law Rules 2004 (Cth) rr 19.5, 19.18 Statute of Gloucester 1278, 6 Edw 1 |
| Addison & Leahy [2008] FamCA 248 Andrews v Barnes (1888) 39 Ch D 133 Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 Brott v Grey [2000] FCA 1836 Cachia & Hanes (1994) 179 CLR 403 Christie v Christie (1873) LR 8 Ch App 499 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Commissioner of Australian Federal Police v Razzi (No 2) (1991) 30 FCR 64 Corporation of Burford v Lenthall [1743] 26 ER 731 Cummings v Lewis & Ors (1993) 41 FCR 559 Degman Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354 EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59 Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania) v Fish (2005) 33 Fam LR 123 Forester v Read (1870) LR 6 Ch App 40 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Garnet v Bradley [1878] 3 AC 944 Goodridge & Beadle (No 2) [2019] FamCA 786 Gordon & Gordon [2017] FCCA 2899 Gordon & Gordon(No 2) [2018] FCCA 1617 Harlen & Hellyar (No 2) [2020] FamCA 413 Hearl & Digby [2020] FamCA 474 Helljay v Investments Pty Ltd v Deputy Commissioner of Taxation (1999) 74 ALJR 68 Horne (in his capacity as trustee of the bankrupt estate of Narain) v Narain [2017] FCCA 1190 Howes v Barber (1852) 18 QB 588 Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 Huntsman Chemical Co Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 In the Marriage of Kohan (1992) 16 Fam LR 245 In the Marriage ofRobinson and Higginbotham (1991) 14 Fam LR 559 Jones v Coxeter [1742] 26 ER 642 Knight & FP Special Assets Ltd (1992) 174 CLR 178 Latoudis v Casey (1990) 170 CLR 534 Mansfield & Mansfield [2019] FamCAFC 186 McKewins Hairdressing & Beauty Supplies Pty Ltd (in liq) v Deputy Commissioner of Taxation (2000) 74 ALJR 1000 Medlon & Medlon (No 6) (2015) 54 Fam LR 1 Mordue v Palmer (1870) LR 6 Ch App 22 Nine Films and Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046 Northern Territory v Sangare (2019) 265 CLR 164 Norton v Morphett (1995) 83 A Crim R 90 NSW Medical Defence Union Ltd v Crawford & Bailey (1993) 31 NSWLR 469 PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24 Penfold v Penfold (1980) 144 CLR 311 Pirrotta v Citibank Ltd (1998) 72 SASR 259 Prantage & Prantage [2013] FamCAFC 105 Re JJT; ex parte Victoria Legal Aid (1998) 195 CLR 184 Re National Safety Council of Australia, Victorian Division (in liq) (No 2) [1992] 1 VR 485 Re Principal Strategic Options Pty Ltd; Coshott v Coshott [2001] FCA 664 Re Wilcox; ex parte Venture Industries Pty Ltd (1996) 72 FCR 151 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 Ruhani v Director of Police (2005) 222 CLR 489 Scherer v Counting Instruments Ltd [1986] 1 WLR 615 Stephens v Stephens (Enforcement) (Costs) (2010) 44 Fam LR 117 Stewart v Atco Controls Pty Ltd (in liq) (No 2) (2014) 252 CLR 331 Yeo & Rambaldi (as trustees of the bankrupt estate of Arifovic) v Arifovic & Anor (No.2) [2017] FCCA 1189 Yunghannsv Yunghanns (2000) 26 Fam LR 331 |
| APPLICANT: | Ms Guild |
| RESPONDENT: | Mr Stasiuk |
| FILE NUMBER: | MLC | 13949 | of | 2018 |
| DATE DELIVERED: | 17 July 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | On the papers |
| JUDGMENT OF: | The Honourable Justice Wilson |
| DATE OF FINAL WRITTEN SUBMISSIONS: | 8 July 2020 |
SUBMISSIONS RECEIVED FROM:
| COUNSEL FOR THE APPLICANT: | Mr P. D. Sweeney |
| SOLICITOR FOR THE APPLICANT: | Lander & Rogers |
| COUNSEL FOR THE RESPONDENT: | Dr R. Ingleby |
| SOLICITOR FOR THE RESPONDENT: | Berger Kordos Lawyers |
Orders
On or before 4pm on 14 August 2020 the parties are to agree upon the sum to be paid by the respondent to the applicant by way of costs on an indemnity basis.
In default of agreement indemnity costs are to be assessed by a registrar.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Guild & Stasiuk has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 13949 of 2018
| Ms Guild |
Applicant
And
| Mr Stasiuk |
Respondent
REASONS FOR JUDGMENT
Introduction
Since handing down judgment on 27 March 2020 the applicant has sought an order that her costs be paid by the respondent on an indemnity basis.
In essence, the applicant has contended that she was wholly successful in the application and therefore s 117(2A) was enlivened and she further argued that under r 19.5 and r 19.18, the court is empowered to order a particular amount by way of costs when assessed on a particular basis.
The applicant has sought an order in the alternative that her costs be paid on a party party basis.
The respondent submitted that no order for costs should be made.
Synopsis
For the reasons that follow, in my view the respondent should pay the applicant’s costs on an indemnity basis. Those indemnity costs must be assessed in default of agreement to be reached within 30 days.
Reasoning
In detailed reasons spanning 500 paragraphs over 161 pages I set out the grounds on which the so-called binding financial agreement the subject of this proceeding was to be set aside under s 90K of the Family Law Act. In my view, the applicant succeeded in demonstrating that the agreement was void for uncertainty, that it had been entered into in circumstances of unconscionability and that the agreement was procured by undue influence. An order was made setting aside the agreement.
The respondent has appealed my decision. That appeal is waiting in the queue of cases to be heard.
On 11 June 2020 I made orders for submissions on costs. On 24 June 2020 written submissions were filed on behalf of the applicant. On 8 July 2020 written submissions were filed on behalf of the respondent.
Counsel very helpfully drew to my attention all relevant submissions in support of their client’s positions.
On behalf of the applicant, Mr Sweeney proposed alternative bases for the imposition of costs and therefore different amounts. When assessed on an indemnity basis the applicant said she was entitled to costs that her solicitor Ms Todorovic set out in a table that was put in evidence. Those costs totalled $97,874.17 which, with GST, amounted to $107,661.58. To that were added disbursements for ASIC searches of $749.58, valuation fees of $4950, other separate valuation fees of $5289.99 and four days of court hearing fees of $3440.
When assessed on scale, Ms Todorovic said the applicant’s fees were $43,105.
Ms Todorovic exhibited the fees agreement between the applicant and the applicant’s firm of solicitors, Lander & Rogers made 17 August 2018. The charges for which the applicant sought a costs order commenced on 5 February 2019, well after the commencement of the costs agreement.
Not all amounts in the table produced by Ms Todorovic were easy to follow or substantiate. For example for the years 2019 and 2020 her charge-out rate was $630 per hour. That equated to $10.05 per minute. For 10 minutes, her fee was $105. Yet on 2 April 2019 she charged $120 for a 10 minute conversation by telephone with Mr G. Dickson QC. Further, for a two minute telephone conversation with Mr Dickson on 5 April 2019 she rendered a fee of $60 when two minutes at her hourly charge-out rate amounted to two by $10.05, $20.10 in total, not $60. Those were modest illustrations only. However they caused me to wonder at the accuracy of the table formulated on behalf of the applicant pursuant to which the figure of $97,874.17 was reached. That said, it is not appropriate for me to say more about that at this juncture, not having heard submissions on the matter.
One of the mainstays of the applicant’s contention that the respondent should pay her costs pursuant to s 117(2A) lay in the fact of her being wholly successful. In his written submissions Mr Sweeney argued that –
a)citing Penfold v Penfold[1] it is not necessary for the applicant to show the existence of “a clear case” under s 117(2) of the Family Law Act for the making of an order otherwise than an order under s 117(1);
b)citing Fitzgerald v Fish,[2] nowhere in s 117 is there a prescription that more than one factor in s 117(2A) must be present before a costs order may be made and so nothing prevents any factor being the sole foundation for an order for costs; and
c)citing Harlen & Hellyar (No. 2)[3] no narrow construction is to be given to s 117(1), s 117(2) or s 117(2A) of the Family Law Act;
[1] (1980) 144 CLR 311.
[2] (2005) 33 Fam LR 123.
[3] [2020] FamCA 413.
It was further contended on behalf of the applicant that several factors underpinned the applicant’s assertion that a costs order should be made against the respondent under s 117(2A). Those included –
a)the respondent’s maintaining of his position that the agreement was entered into freely without undue influence when findings to the contrary were made;
b)the respondent’s failure in his obligations to make full and frank disclosure; and
c)the findings made against the respondent that he gave untruthful evidence.
Mr Sweeney relied on all of the subsections to s 117(2A). So far as s 117(2A)(a) was concerned, Mr Sweeney argued that the respondent at all relevant times controlled the parties’ wealth whereas the applicant was financially dependent on the respondent and earned around $35,000 per annum.
Neither party received legal aid for the purposes of s 117(2A)(b).
So far as s 117(2A)(c) was concerned, conduct that attracted the application under the subsection fell into six categories, on Mr Sweeney’s submission. It was –
a)dereliction towards the respondent’s obligations concerning discovery and disclosure;
b)the respondent’s failure to reveal VV Pty Ltd until pressed in cross-examination;
c)the conclusions about the respondent’s less than frankness in his evidence;
d)the respondent’s failure to disclose the so-called “fake debt” of $548,000 until searching and forceful cross-examination;
e)the respondent’s endeavour to lay at the applicant’s feet the creation of the sum of $548,000 in the respondent’s financial accounting; and
f)the respondent’s vacillation and obdurate nature in his giving of his evidence thereby prolonging the trial of this proceeding.
For the purposes of s 117(2A)(e), the applicant said the respondent had resisted any and all arguments advanced by the applicant. Mr Sweeney submitted that “no quarter was given by him at any point”.
Mr Sweeney said that the agreement needed only to be set aside on one ground yet it was set aside on a variety of grounds.
On behalf of the respondent, Dr Richard Ingleby of counsel approached his submissions by going to each subsection of s 117(2A) especially whether the applicant had been wholly successful in the case (relevantly, the s 90K application) and then to contending that in this case no order as to costs should be made.
So far as the financial circumstances of the parties were concerned, Dr Ingleby accepted that the applicant’s circumstances are modest. However, Dr Ingleby challenged the contention that the respondent’s net worth was $10,000,000 or that the respondent had controlled wealth of several millions of dollars.
It seemed to me that the applicant’s financial circumstances were modest. However, in view of the difficulties encountered in ascertaining a reliable understanding of the respondent’s true financial circumstances, I was unable to place very much store in the respondent’s contention that in commercial reality, “the entire value of his controlled wealth is hardly more than the value of one suburban house”. In my view it was likely, on the balance of probabilities, to be substantially more than that.
It being an agreed position, Dr Ingleby made no submission about the parties’ receipt of legal aid, and quite properly so.
Dr Ingleby did devote considerable effort to addressing the applicant’s contentions concerning relevant conduct for the purposes of s 117(2A)(c). Dr Ingleby said the wife’s contentions –
a)were based on a selective interpretation of events and on an omission to consider key factors; and
b)failed to connect the costs incurred to the alleged basis of the order in her favour.
Dr Ingleby highlighted the applicant’s curious argument about estoppel, the failure to address s 90G and how the applicant’s case was “an omnibus”, a “smorgasbord” or a “machine gun”. Dr Ingleby said those matters fell within the rubric of relevant conduct. So far as the purported introduction of the s 128 certificates into the argument was concerned, Dr Ingleby said the s 128 certificates were not facts on which the applicant was entitled to rely and the certificates were required by reason of the allegations that were put on her behalf. In any event, Dr Ingleby said the applicant chose to raise allegations of criminality in circumstances where she was involved in the very behaviour about which she complained.
There is merit in Dr Ingleby’s contentions, it seemed to me especially in relation to s 117(2A)(c). However, it must not be overlooked that any one of the elements of s 117(2A) is a sufficient basis for making an order requiring a party to pay the costs of the other.
The wholly unsuccessful ground mentioned in s 117(2A)(e) of the Family Law Act formed the pitch for the most trenchant battle. In essence Dr Ingleby argued that the applicant was successful on some arguments and she was unsuccessful on others.
In view of the fact that an applicant for costs under s 117(2A) need only demonstrate that one of the subparagraphs of s 117(2A) has been met, in my view the applicant satisfied subsection (2A)(e) in that she was wholly successful on her contentions concerning undue influence, the agreement being void for uncertainty and her argument concerning unconscionable conduct. She is therefore entitled to an order under s 117(2A) that her costs be paid by the respondent.
The basis on which costs should be paid
The applicant advanced as her primary contention that costs should be paid on an indemnity basis.
In recent decisions I undertook an extensive examination of the law relating to indemnity costs including Goodridge & Beadle (No 2)[4], Harlen & Hellyar (No 2)[5] and Hearl & Digby.[6] In them I traced the history of equity’s early treatment of costs from Jones v Coxeter,[7] Corporation of Burford v Lenthall[8] and Andrews v Barnes[9] to the modern statements of principle in cases such as Re JJT; ex parte Victoria Legal Aid[10] and prior to that decision, Penfold v Penfold[11] and Knight v F.P. Special Assets Ltd.[12] Other statements of principle from the High Court have emerged on costs, although not necessarily in relation to indemnity costs, yet in the context of s 117(2A) of the Family Law Act. In Northern Territory v Sangare[13] the High Court addressed the issue of depriving a successful party of costs by reason of the impecuniosity of the unsuccessful party. In Helljay v Investments Pty Ltd v Deputy Commissioner of Taxation[14] Hayne J reviewed the Australian authorities on awarding indemnity costs to include Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd,[15] Colgate-Palmolive Co v Cussons Pty Ltd,[16] Re Wilcox; ex parte Venture Industries Pty Ltd,[17] Huntsman Chemical Co Australia Ltd v International Pools Australia Ltd,[18] Rosniak v Government Insurance Office,[19] Pirrotta v Citibank Ltd,[20] Re National Safety Council of Australia, Victorian Division (in liq) (No 2),[21] Norton v Morphett[22] and EMI Records Ltd v Ian Cameron Wallace Ltd.[23]
[4] [2019] FamCA 786.
[5] [2020] FamCA 413.
[6] [2020] FamCA 474.
[7] [1742] 26 ER 642.
[8] [1743] 26 ER 731.
[9] (1888) 39 Ch D 133.
[10] (1998) 195 CLR 184.
[11] (1980) 144 CLR 311.
[12] (1992) 174 CLR 178.
[13] (2019) 265 CLR 164.
[14] (1999) 74 ALJR 68.
[15] (1988) 81 ALR 397.
[16] (1993) 46 FCR 225.
[17] (1996) 72 FCR 151.
[18] (1995) 36 NSWLR 242.
[19] (1997) 41 NSWLR 608.
[20] (1998) 72 SASR 259.
[21] [1992] 1 VR 485.
[22] (1995) 83 A Crim R 90.
[23] [1983] Ch 59.
The decision of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd[24] has spawned an extremely large volume of decisions in this country in courts of all states and territories as well as in courts in the federal arena.
[24] (1993) 46 FCR 225.
In Cachia & Hanes[25] the plurality of the High Court held that it has not been doubted since 1278 when the Statute of Gloucester of the United Kingdom introduced the notion of costs to the common law that costs are awarded as a partial indemnity for professional legal costs actually incurred in the conduct of litigation. In Knight & FP Special Assets Ltd[26] the High Court contrasted the common law position with respect to costs with a position in equity.
[25] (1994) 179 CLR 403.
[26] (1992) 174 CLR 178.
Two early illustrations of equity’s treatment of costs warrant consideration. The first was Jones & Coxeter.[27] In that case the Lord Chancellor held that the award of costs was entirely discretionary and could be ordered at the time of the decree, unlike at common law where an order for costs had to await final judgment. The discretionary nature of costs in equity lay in its attachment to the conscience as Lord Hardwicke LC held in Corporation of Burford v Lenthall.[28] The second important early exposition of costs in equity was the decision in Andrews v Barnes.[29] There, the court held that equity’s power to order costs arose from the general and inherent power of the Lord Chancellor, the exercise of which carried with it a very wide discretion. Hence, in the Court of Chancery general orders for costs were made that included “full costs”, “good costs”, “double costs” and others.
[27] [1742] 26 ER 642.
[28] [1743] 26 ER 731.
[29] (1888) 39 Ch D 133.
Other more recent statements of principle at High Court level have been made on the question of indemnity costs including those of Gummow J in McKewins Hairdressing & Beauty Supplies Pty Ltd (in liq) v Deputy Commissioner of Taxation.[30] In Ruhani v Director of Police[31] Kirby J distilled a collection of principles to reveal the circumstances in which an indemnity costs order may be justified. Those included –
a)where the opponent’s conduct was “plainly unreasonable” and “pursued for an ulterior motive”, citing PCRZ Investments Pty Ltd v National Golf Holdings Ltd;[32]
b)where an opponent’s conduct was “undertaken in an unmeritorious, deliberate or highhanded” way, citing NSW Medical Defence Union Ltd v Crawford & Bailey;[33] and
c)where the opponent has been shown to be guilty of “unreasonable conduct, albeit that it need not rise as high as vexation”, citing Rosniak.[34]
[30] (2000) 74 ALJR 1000.
[31] (2005) 222 CLR 489.
[32] [2002] VSCA 24.
[33] (1993) 31 NSWLR 469.
[34] Op cit.
While not relevant to this case, the High Court in Stewart v Atco Controls Pty Ltd (in liq) (No 2)[35] held that indemnity costs are enlivened where one party has achieved a more favourable outcome than was recorded in that party’s Calderbank offer.
[35] (2014) 252 CLR 331.
A school of thought exists that an order for indemnity costs is exceptional (In the Marriage of Kohan,[36] Yunghanns v Yunghanns[37] and Prantage & Prantage[38]). In Goodridge & Beadle (No 2)[39] I extensively examined the relevant authorities.
[36] (1992) 16 Fam LR 245.
[37] (2000) 26 Fam LR 331.
[38] [2013] FamCAFC 105.
[39] [2019] FamCA 786.
In the family law jurisdiction, the phenomenon of costs being ordered on an indemnity basis is not new. The jurisprudential basis for the making of an indemnity costs order was examined by the Full Court in In the Marriage of Kohan.
Of course, the law concerning indemnity costs orders is of very considerable antiquity. Indemnity costs were altogether different to costs orders made by common law courts where almost without deviation, costs were awarded on a party/party basis whereas the courts of chancery took the view that costs could be awarded on a variety of bases and on an equally varied measure of estimation. The authorities demonstrating those propositions included Jones v Coxeter, Corporation of Burford v Lenthall,[40] Mordue v Palmer,[41] Howes v Barber,[42] Garnet v Bradley[43] and Andrews v Barnes. Indemnity costs were routinely ordered where a party made an allegation of fraud but failed to prove it, as was illustrated in Forester v Read[44] and Christie v Christie.[45]
[40] [1743] 26 ER 731.
[41] (1870) LR 6 Ch App 22.
[42] (1852) 18 QB 588.
[43] [1878] 3 AC 944.
[44] (1870) LR 6 Ch App 40.
[45] (1873) LR 8 Ch App 499.
In more recent times in Australia, and in state and federal jurisdictions beyond the family law jurisdiction, indemnity costs orders have attracted an array of extremely learned and deeply considered judgments of judges possessed of very great erudition and intellect. Those include the decision of Holland J in Degman Pty Ltd (in liq) v Wright (No 2),[46] the decision of Tadgell J in Australian Guarantee Corporation Ltd v De Jager,[47] and the decision of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd.[48]
[46] [1983] 2 NSWLR 354.
[47] [1984] VR 483.
[48] (1988) 81 ALR 397.
In In the Marriage of Kohan, the Full Court (Strauss, Lindermayer and Bulley JJ) held that a court in this jurisdiction should not depart from the ordinary rules in relation to costs “unless there are circumstances of an exceptional kind justifying such a departure”. That statement has been applied in such cases as Yunghanns, Addison & Leahy,[49] Medlon & Medlon (No 6)[50] and recently in Mansfield & Mansfield,[51] judgment in which was handed down on 25 October 2019. There, citing In the Marriage ofRobinson and Higginbotham[52] and Stephens v Stephens (Enforcement) (Costs)[53] the Full Court said it is well settled that the Full Court should be reluctant to interfere with the decisions of a trial judge relating to costs. When sitting as a member of the Federal Circuit Court of Australia prior to my elevation to this court I canvassed questions about indemnity costs in such cases as Yeo & Rambaldi (as trustees of the bankrupt estate of Arifovic) v Arifovic& Anor (No.2),[54] Gordon & Gordon[55] and Gordon & Gordon(No 2).[56] I adhere now to my observations in those decisions.
[49] [2008] FamCA 248.
[50] (2015) 54 Fam LR 1.
[51] [2019] FamCAFC 186.
[52](1991) 14 Fam LR 559.
[53] (2010) 44 Fam LR 117.
[54] [2017] FCCA 1189.
[55] [2017] FCCA 2899.
[56] [2018] FCCA 1617.
However, several things must be said of Kohan. First, judgment in it was handed down in 1992, almost 30 years ago. Since then, a huge amount of learning at High Court level has evolved on the subject of indemnity costs rendering of highly dubious utility the statement in that case that a court should not depart from ordinary costs rules unless there are circumstances of an exceptional kind justifying such a departure. The cases surveyed in these reasons, especially at High Court level demonstrate that no such statement is presently maintainable.
The second reason why in my view In the Marriage of Kohan is unsupportable when examined against the law on indemnity costs in the year 2020 relates to the way the decision of Sheppard J in Colgate-Palmolive has been embraced, seemingly universally, throughout state and federal courts in Australia since 1993. The distillation of principle to be extracted from the decision of Sheppard J may be stated in the following terms, as I did when sitting as a member of the Federal Circuit Court of Australia in Horne (in his capacity as trustee of the bankrupt estate of Narain) v Narain[57] –
[57] [2017] FCCA 1190.
16.The genesis of modern learning, at least in the Federal jurisdiction, in respect of indemnity costs is attributable to the decision of Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd[58] (“Colgate-Palmolive”). That was an intellectual property case. Sheppard J addressed an award of costs on an indemnity basis. Relevantly, his Honour said that costs on an indemnity basis could be awarded –
a)where a party made allegations of fraud knowing them to be false or where that party made irrelevant allegations of fraud;
b)where evidence of misconduct existed causing loss of time to the court and the other parties;
c)whether the proceeding was commenced for some ulterior motive;
d)whether the proceeding was commenced or continued with wilful disregard of known facts or clearly established law;
e)where allegations were made that ought never to have been made;
f)where the proceeding was unduly prolonged by groundless contentions; and
g)where there was an imprudent refusal of an offer of compromise.
[58] (1993) 46 FCR 225.
As for the illustration used by Wilcox J ordering half only of a party’s costs in Commissioner of Australian Federal Police v Razzi (No 2),[59] all aspects of costs have always been within the purview of the trial judge. That includes the imposition of costs, the basis of their imposition and whether some, all or none of them should be ordered. Judges possess a high degree of latitude in the making of costs orders. Costs can be ordered on one basis for all of the case save for the time and effort spent on one particular issue. Razzi’s case seems to be little more than one illustration of that matter.
[59] (1991) 30 FCR 64.
Underpinning any exercise of discretion about the making of any order for costs is the need for that discretion to be exercised judicially. The authorities on point are both English and Australian. I canvassed them in Yeo & Rambaldi v Arifovic in the following terms –
While possessing a discretion in relation to the award of costs, that discretion is not one to be exercised arbitrarily as the discretion must be exercised judicially in accordance with established principles and in relation to the facts of a case. One scarcely needs authority for that proposition, but authority on point dates back to the last century in the decision of Buckley LJ in Scherer v Counting Instruments Ltd.[60] More recently the proposition was stated by the Full Court of the Federal Court of Australia in Cummings v Lewis & Ors,[61] by Toohey J in Hughes v Western Australian Cricket Association Inc,[62] by Cooper J in Brott v Grey,[63] by Branson J in Re Principal Strategic Options Pty Ltd;Coshott v Coshott[64] and by Tamberlin J in Nine Filmsand Television Pty Ltd v Ninox Television Ltd[65].
…
A costs order does not serve to punish the party against whom the costs order is made. That much was held by the High Court in Latoudis v Casey[66] (“Latoudis”). There, McHugh J explained that the rationale for a costs order is that it is just and reasonable that the party who has caused the other to incur costs of litigation should reimburse the successful party for the liability incurred.
[60] [1986] 1 WLR 615, 621.
[61] (1993) 41 FCR 559.
[62] (1986) ATPR 40-748.
[63] [2000] FCA 1836.
[64] [2001] FCA 664.
[65] [2006] FCA 1046.
[66] (1990) 170 CLR 534.
Where an application should never have been brought in the first place, Medlon & Medlon (No 6) stands for the proposition that an order for indemnity costs might properly be made.
Of course, as an antecedent issue to be examined, well prior to considering on what basis any order for costs should be made, the provisions of s 117 of the Family Law Act are enlivened.
Since the enactment of the Family Law Act, a statutory regime has replaced equitable and common law concepts relating to costs in family law litigation. No narrow construction is to be applied to the provisions of s 117(1), 117(2) and 117(2A) of the Family Law Act, as was held in Re JJT; ex parte Victoria Legal Aid.[67] In that case Kirby J was of the view that whatever may have been the source of the court’s power to order costs, on and from the commencement of the Family Law Act the sole repository of the power to make a costs order has been the statute.
[67] (1998) 195 CLR 184, 201.
Ordinarily each party bears his or her (occasionally its) own costs in family law litigation. That is for the simple reason that s 117(1) of the Family Law Act makes provision for an order to that effect. Section 117(2) of the Family Law Act enables an order to be made pursuant to which one party is ordered to pay costs. Illustrations of costs orders under s 117(2) include indemnity costs orders or an order for costs to be paid on a particular basis or at a particular rate. Those orders are permissible yet in arriving at an order other than one to which s 117(1) applies, the court must undertake an examination and consideration of the elements in s 117(2A) of the Family Law Act.
In this case the applicant relied on the observations in Colgate-Palmolive to the effect that allegations were made that ought never to have been made. She also relied on the ground that the proceeding was unduly prolonged by groundless contentions. In my view the grounds on which the applicant succeeded, namely undue influence, unconscionable conduct and void for uncertainty were always destined to succeed. Put differently, the respondent ought not to have fought this case on those grounds.
In my view it is appropriate to make an order for indemnity costs.
That said, I agree with Dr Ingleby’s criticism about the sum sought by the applicant. He said that a striking disparity exists between the scale items and the costs sought by Ms Todorovic. Dr Ingleby said the point was demonstrated by the applicant’s attempt to recover the sum of $4660.67 as “administration fee”. In addition to the earlier expressions I raised, the total sum claimed is doubtful, in my view.
I will order the applicant’s costs to be paid on an indemnity basis. However, in default of agreement those indemnity costs must be assessed. I order 30 days for agreement to be reached for the proper sum to be paid. If no agreement is reached, a registrar must assess the amount properly answering the description “indemnity costs”.
I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 17 July 2020.
Associate:
Date: 17 July 2020
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