Guo & Zoric (No 2)
[2023] FedCFamC1F 707
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Guo & Zoric (No 2) [2023] FedCFamC1F 707
File number: PAC 4845 of 2021 Judgment of: BRASCH J Date of judgment: 21 August 2023 Catchwords: FAMILY LAW – COSTS – Where wife sought orders that the husband and his solicitor be jointly and severally liable for the wife’s costs – Where wife seeks indemnity costs – Where husband failed to comply with orders and was wholly unsuccessful – Where solicitor failed to comply with rules and orders – Where solicitor’s conduct improper and unreasonable – Indemnity costs order made in favour of the wife against husband and solicitor Legislation: Family Law Act 1975 (Cth) ss 79A, 79A(1)(a), 117(1), 117(2), 117(2A), 117(1), 117(2A)(g), 117(2A)(a)-(f), 117(2A)(c), 117(2A)(d)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 12.06, 12.13(4), 12.13(5),12.15, 12.15(4)(a)-(c)
Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 r 27
Cases cited: Bokin & Wild [2022] FedCFamC1A 209
Cassidy v Murray (1995) FLC 92-633; [1995] FamCA 91
Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225
Dongahey & Dongahey (Costs) (2012) 47 Fam LR 306; [2012] FamCA 231
Ex Christmas Islanders Association Inc v Attorney-General (Cth) (No 2) (2006) 233 ALR 97; [2006] FCA 671
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish (2005) 33 Fam LR 123; [2005] FamCA 158
Guo & Zoric [2023] FedCFamC1F 628
Harris & Dewell (No 2) (2018) FLC 93-863; [2018] FamCAFC 180
Lenova & Lenova (Costs) [2011] FamCAFC 141
McAlpin & McAplin (1993) FLC 92-411
Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157
Munday v Bowman (1997) FLC 92-784
Prantage & Prantage (Costs) [2014] FamCA 850
Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184; [1998] HCA 44
Ridehalgh v Horsefield [1994] 3 All ER 848
White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169; [1998] FCA 806
Yunghanns v Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Division: Division 1 First Instance Number of paragraphs: 75 Date of last submissions: 4 August 2023 Date of hearing: 25 July 2023 Place: Sydney Counsel for the Applicant: Ms Hamilton Solicitor for the Applicant: Family Focus Legal Pty Ltd Solicitor for the Respondent: S Legal Services ORDERS
PAC 4845 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GUO
Applicant
AND: MR ZORIC
Respondent
ORDER MADE BY:
BRASCH J
DATE OF ORDER:
21 AUGUST 2023
THE COURT ORDERS THAT:
1.The husband and the solicitor, Mr R, of S Legal Services, are jointly and severally liable for meeting the wife’s costs in the sum of $44,978, with such payment to be made to the wife’s solicitor’s Trust Account/controlled monies account within 28 days of this order.
2.A Registrar of this Court is requested to provide a copy of these Reasons and Order directly to the husband (that is, not through Mr R), and if possible, by 4.00 pm Friday 25 August 2023.
3.By 4.00 pm Friday 8 September 2023, the husband is to file and serve written submissions of no more than five (5) pages in the event he seeks orders pursuant to Rule 12.15(4)(a),(b) and/or (c) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
4.In the event the husband does file submissions pursuant to order 3, Mr R is to file a reply by way of submissions of no more than five (5) pages by 4.00 pm Friday 22 September.
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 a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BRASCH J:
INTRODUCTION
This is the wife’s application that the husband and his solicitor, Mr R, be jointly and severally liable for the wife’s costs, on an indemnity basis (Wife’s Written Submissions filed August 2023, paragraph 13). The costs application arises out of the husband’s interim application to stay final property orders made by a Division 2 Judge on 10 November 2022. The husband seeks a final order pursuant to s 79A(1)(a) of the Family Law Act 1975 (Cth) (“the Act”) to set aside those orders.
I have previously observed in Guo & Zoric [2023] FedCFamC1F 628 at [19]–[20]:
The husband filed his first Initiating Application to set aside the final November 2022 orders in January 2023. That document was not before me. I am told, and it was common ground, that that that Initiating Application did not seek a stay in the terms currently sought, or at all. The husband was ordered to file a competent Amended Initiating Application by 13 February 2023, but he did not file until the following day. That is when the order for a stay was first raised.
That Amended Initiating Application contained 12 “proposed interim property orders”, nine of which were heard and determined by Justice Rees on 11 April 2023. Her Honour also struck out three of the final orders sought in that Amended Initiating Application and removed the second respondent as a respondent. What is before me are the remaining interim orders sought by the husband.
One of the remaining orders fell away during the hearing before me. What remained was in the following terms:
Stay or Suspension of the Operation of Orders 1, 2 and 8 of the Orders made by Her Honour [trial Judge] on 10 November 2022.
That, until further Order, the operation of Orders 1, 2 and 8 of the Final Orders made by Her Honour [trial Judge] on 10 November 2022 be stayed or suspended and therefore cease to have any validity or effect for the period of the stay or suspension up until the making of a further Order.
(emphasis in original)
This order is not a stay pending appeal; there is no appeal on foot. It is not even a stay pending the determination of the s 79A order the husband seeks on a final basis. It is simply a stay “up until the making of a further Order”.
On 25 July 2023 I heard the application and on the following day, I dismissed the husband’s stay application and gave ex tempore reasons for doing so, including at [49] – [51]:
An incompetently drawn order
I will dismiss Order 4 on the basis that it is incompetent; I do not know what a stay “up until a further order” means. I do not know what the further order would be? For example, if I granted the stay, and then made an order, say for costs, would that be a further order that terminated the stay? I do not know of and was not provided with any authorities to support such an order in the form it is drafted. I was also not provided with any assistance on what principles I ought apply when considering the order in the form it is sought.
Orders need certainty. The order lacks that.
An order sought without any evidential basis
Further, or in the alternative, I will dismiss Order 4 because it is not supported by any sworn/affirmed evidence from the applicant husband whatsoever. The currency of this Court is evidence. The husband, despite being given the opportunity to file an affidavit, did not do so. The lack of evidential support is fatal to his application. I indulged [Mr R] in giving more than two hours of evidence from the bar table, but that attracts little, if any weight.
For completeness, I also examined the principles relevant to a stay pending an appeal as Mr R invited me to, but even on that basis, I found the husband failed to meet the onus that is cast upon him if I use the principles analogous to a stay pending an appeal – not that there is an appeal.
The wife sought her costs on an indemnity basis and as between the husband and Mr R. Accordingly, the parties agreed to the following orders also made on 26 July 2023:
1.The wife is to file written submissions of no more than five (5) pages with respect to her application for costs by 4.00 pm on Friday 4 August 2023.
2. By no later than 4.00 pm on Friday 18 August 2023
(a) The husband is to file any costs submissions in reply of no more than (5) pages; and
(b) [Mr R], if costs are sough against him personally, is to file submissions in reply of no more than five (5) pages.
3.In the event submissions are not received by either party or [Mr R] by the due time, the application for costs will be determined on the submission/s that have been filed on time.
AND IT IS NOTED:
A. The parties and [Mr R] have consented to the application for costs being determined on the papers in chambers.
(Orders made on 26 July 2023)
Background
As said in my Reasons of 26 July 2023 at [3]–[4]:
The applicant is [Mr Zoric], who was born [in] 1961. The respondent is [Ms Guo], born [in] 1958. The parties commenced cohabitation in 1995, were married [in] 2002 and separated in April 2016. They have one adult child, being [Mr C] born […] 1998.
The wife instituted property proceedings on 7 October 2021. The matter worked its way through Division 2 and ended up in the trial judge’s docket. Ultimately, on 10 November 2022 the trial judge gave ex tempore reasons and made final orders with respect to the parties’ property proceedings. The reasons, as said, were published on 15 November 2022.
Material
In compliance with my orders about costs, the wife filed her written submissions, and an affidavit in support, on 4 August 2023.
That affidavit largely went to the history of the matter and in particular the husband’s non‑compliance with many orders and directions made on the way to trial in November 2022. I will not take those historical matters into account. The Division 2 Judge made an indemnity costs order in the wife’s favour for various reasons including, that the husband’s “actions in not complying with various orders and directions of this court is almost contemptuous.” Considering those factors, would be, essentially, a double-dip on the husband’s past conduct. I will focus my attention on the application for interim orders and lead up thereto that was run before me on 25 July 2023.
By no later than 4.00 pm on Friday 18 August 2023, the husband was to file any costs submissions in reply of no more than five pages.
The husband did not.
If costs were sought against Mr R personally (which they were), he too was to file submissions in reply of no more than five pages by 4.00 pm on Friday 18 August 2023.
Mr R did not.
Costs
Section 117(1) of the Act provides that each party will bear their own costs. That general rule is subject to s 117(2), which provides that a court may make such order for costs as it considers just if “…the court is of opinion that there are circumstances that justify it in doing so…”.
The factors that are to be considered when contemplating the making of a costs order are those set out in s 117(2A) of the Act; albeit the court may give such weight as it considers appropriate to any relevant factor (Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664 at [24]).
It is well settled that no single factor in s 117(2A) has priority, nor must more than one factor be satisfied; rather, any one factor may be sufficient; Prantage & Prantage (Costs) [2014] FamCA 850 at [12]; Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish (2005) 33 Fam LR 123 at [41].
I now turn to the s 117(2A) factors that are to be considered when contemplating whether there are justifying circumstances to make a costs order as between the husband and wife.
Mr R is not a party to the proceedings; thus s 117(1) does not apply to him. However, s 117(2) does. It has been held that “on a natural reading of s 117(2) of the Family Law Act, this court’s jurisdiction to order costs is unlimited” (McAlpin & McAplin (1993) FLC 92-411, at 80,215 per Nicholson CJ and Maxwell J).
Further, whilst s 117(2A)(a)-(f) refers to parties to the proceedings, s 117(2A)(g) refers to “such other matters as the court considers relevant”. Section 117(2A)(g) is “expressed in the most ample terms. It permits the court to have regard to ‘such other matters as the court considers relevant’” (Re JJT; Ex parte Victoria Legal Aid [1998] HCA 44 at [37] per Kirby J).
Thus, per s 117(2A)(g), I consider r 12.15 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) as further relevant matters when considering Mr R’s position.
Has the wife established any circumstances which justify departing from the position that each party pay their own costs, and the making of a costs order in her favour
(a) the financial circumstances of each of the parties to the proceedings;
The Division 2 Judge found the wife was reliant on government benefits and receives payment of $342 per week. The Division 2 Judge also accepted the wife’s evidence and found, that the wife is unlikely to return to the workforce full-time. Pursuant to the orders made by the Division 2 Judge, the wife will receive property totalling $1,423,736 of the non-superannuation and superannuation property and the husband $949,158. As part of this, the Judge’s reasons see each party receiving real property.
The husband has never filed an affidavit or sworn/affirmed a financial statement.
I am satisfied the parties’ financial circumstances is a factor to be given some weight. It could hardly be said on the strength of the Judge’s orders that the husband is impecunious. Even if he is, that is no bar to a costs order being made against him (Lenova & Lenova (Costs) [2011] FamCAFC 141).
(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;
There is no suggestion that either party is in receipt of legal aid.
(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;
Cases such as Dongahey & Dongahey (Costs) (2012) 47 Fam LR 306 (“Dongahey”) at [41] indicate conduct such as non-compliance with orders is relevant to s 117(2A)(c). I will group these two subsections together as both direct my attention to matters of conduct.
Looking at the Application for interim orders that was before me, the husband failed to:
·Comply with Central Practice Direction paragraph 5.18 - the husband did not file a Case Outline seven days prior to the interim hearing. Indeed, he did not file a Case Outline at all;
·Comply with the order of Rees J that “the husband file and serve any material upon which he seeks to rely in support of his application for a stay not later than 4:00 pm on 8 May 2023” (emphasis in original) (Order 5 of the orders made 11 April 2023). The husband did not file an affidavit by that time, or at all;
·Comply with the requirements in r 12.06 for the filing of a Costs Notice. As I said in my 26 July 2023 Reasons at [34]:
…[Mr R] was unable to give any reason why that had not been complied with. It was something that was well within his power to do – [Mr R] as the solicitor on the record for the husband. I drew [Mr R’s] attention to r 12.06(7) and will require him to comply with that within three days of yesterday when I brought it [the rule] to his attention.
I give further consideration to non-compliance when I consider Mr R’s position below.
It cannot be disputed that the husband failed to comply with the matters above. As was said in Dongahey at [41]:
.. the integrity of this system depends on compliance with the Orders made by the Court. This is no more or less true for parenting proceedings than it is for property proceedings, or in general litigation. The rule of law central to the healthy functioning of a democracy has no less application in this Court or in family law more generally
The husband also took up precious court time and time for the wife in hearing Mr R trying to justify how he could rely upon an affidavit he had deposed to, which Justice Rees had already ruled he could not. As will become evident when I consider Mr R’s position under s 117(2A)(g), significant time was taken up with evidence from the bar table and a concomitant inability to engage with many relevant legal principles. I accept the wife’s written submissions in this regard.
I accept the wife’s submissions. The husband’s conduct on the application for interim orders does not help him resist a costs order. They are weighty matters in favour of the wife.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
Plainly, the husband has been wholly unsuccessful. The application for a stay was incompetently brought. It was doomed to fail.
(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
This does not arise, other than the husband has been on notice of the wife’s application to dismiss his proceedings and seek indemnity costs via her response filed 13 March 2023. Nothing turns on this.
(g) such other matters as the court considers relevant.
I see no other relevant matters as between the husband and wife. However, I now turn to Mr R.
Rule 12.15 of the Rules provides:
Costs order against lawyer
(1) The court may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs to be incurred by a party or another person, or to be thrown away, because of:
(a) a failure to comply with these Rules or an order; or
(b) a failure to comply with a pre‑action procedure; or
(c) improper or unreasonable conduct; or
(d) undue delay or default.
…
(3) An order under subrule (1) may be made on the initiative of the court, or on application by a party to the proceeding or by another person who has incurred the costs or costs thrown away.
(4) An order under subrule (1) may include an order that the lawyer:
(a) not charge the lawyer’s client for work specified in the order; or
(b) repay money that the client has already paid towards those costs; or
(c) repay to the client any costs that the client has been ordered to pay to another party or another person; or
(d) pay the costs of a party; or
(e) repay another person’s costs found to be incurred or wasted.
(Emphasis added)
The wife referred me to the decision of Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at 237, but the quote she provided is from 239:
…the jurisdiction to orders costs against an unsuccessful party’s solicitors is enlivened when they have unreasonably initiated or continued an action when it had no or substantially no prospects of success but such unreasonableness must relate to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the cause of and the proper administration of justice…
(Emphasis added)
At 236 Goldberg J also said:
The authorities do not support the proposition that simply instituting or maintaining a proceeding on behalf of a client which has no or substantially no prospect of success will invoke the jurisdiction. There must be something more namely, carrying on that conduct unreasonably. It is not clear what is encompassed by ‘unreasonably’ initiating or continuing proceedings if they have no or substantially no chance of success. It seems to me that it involves some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success with either a recognition that there is no chance of success but an intention to use the proceeding for an ulterior purpose or with a disregard of any proper consideration of the prospects of success.
(Emphasis added)
In Cassidy v Murray (1995) FLC 92-633, the Full Court of this Court considered the “serious dereliction of duty” requirement. It approved the decision of Sir Thomas Bingham MR in Ridehalgh v Horsefield [1994] 3 All ER 848 which set out the principles relevant to an award of costs against a solicitor at 82,364-82,365, namely:
Whereas some of the cases say that there must be “a serious dereliction of duty” by the solicitor before a costs order can be made against that solicitor, in our view the matters identified by the Master of the Rolls in Ridehalgh v Horsefield accurately reflect the law, which, in its application to this jurisdiction, can be set out as follows:
1. Pursuant to s. 117(2) Family Law Act, the Court has jurisdiction to make an order for costs against a solicitor or a non-party.
2. The [C]ourt should not make such an order without giving the person to be affected by the order an opportunity to be heard.
3. The Court may make an order for costs against a solicitor without the necessity to establish that the solicitor has been guilty of serious professional misconduct.
4. The solicitor has a duty to the Court to promote the interests of justice whilst at the same time attending to the needs of the solicitor’s client.
5. A mistake or error of judgment would not justify an order for costs against a solicitor. However, misconduct, default or negligence, any of which are found by a Court to be of a serious nature, may be sufficient to justify an order.
6. The jurisdiction is compensatory.
(Emphasis added)
The wife submitted that:
... where there has been a re-enlivening of proceedings by the solicitor who was on the record at the time of the undefended hearing with the apparent purpose of frustrating the bringing and expeditious disposition of a legitimate claim, being the Wife’s claim for the fruits of the litigation already concluded. [Mr R] has, in initiating and continuing these proceedings, which had to be systematically dealt with by a series of judicial officers and dismissed at every turn, breached his duty to the Court to conduct proceedings with propriety, has participated in an abuse of process and has obstructed the administration of justice.
...
As was the case in Cansdall & Cansdall [2021] FamCAFC 162, [Mr R] has pursued this litigation in a serious dereliction of duty and serious misconduct and it is open to the Court to make any of the above orders accordingly. In particular, the Wife seeks that [Mr R] and the Husband be ordered to be jointly and severally liable for her costs on an indemnity basis following the Division 2 Orders made on 10 November 2022 as itemised in Ms Gates’ Affidavit.
(Wife’s Written Submissions filed 4 August 2023, paragraphs 11 and 13)
That case law is informative in helping understanding r 12.15. Thus when I am considering whether there has been a failure to comply (r 12.15(1)(a)) or improper or unreasonable conduct (r 12.15(1)(c)), I am to consider non-compliance and conduct that is serious, as opposed to something trifling or inadvertent.
I repeat the following from my 26 July 2023 reasons at [22]–[24]:
The first interim order sought by the husband was in the following terms. It was dismissed by Justice Rees:
1.Leave sought to Rely upon the Supporting Affidavit of solicitor [Mr R] sworn on 9 January 2023 and filed on 13 January 2023.
That leave be granted to rely upon the Supporting Affidavit of solicitor [Mr R] sworn on 9 January 2023 and filed on 13 January 2023 in support of the Orders sought in this Initiating Application, notwithstanding the size limitations contained in Rule 5.08(2) and (3) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (the Family Law Rules 2021).
(emphasis in original)
Despite the fact that Justice Rees dismissed that order, the husband’s solicitor wanted to rely on that same affidavit in the hearing before me. [Mr R], for the husband, was unable to give me any authority, rule, or section of the Act that would allow me to, frankly, ignore Justice Rees’ order of 11 April 2023.
For the reasons given by me yesterday morning, I did not accept [Mr R’s] argument that that dismissal only related to the hearing before Justice Rees. Plainly that is not so. On the terms of the order drafted by [Mr R], he sought leave to rely upon his own affidavit “in support of the orders sought in this Initiating Application”. In other words, he sought to file the affidavit in support of the entirety of his client’s case, not just that which was before Justice Rees on 11 April 2023.
(Guo & Zoric [2023] FedCFamC1F 628 at [22] and [24]).
It beggars belief that an officer of the court would seek to rely upon an affidavit that had already been the subject of the order by Justice Rees. I consider Mr R’s submissions that Rees J’s order only applied to the hearing before her Honour to be disingenuous, a serious failure to comply with an order, and, improper and unreasonable conduct of a serious nature.
It also beggars belief that Mr R initiated the s 79A proceedings as the only witness in his client’s case and at the same time, the husband’s legal representative. When I asked Mr R about this conflict, he told me that he was uniquely possessed of knowledge about aspects of the matter. However, if that is so, then Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, r 27 provides:
Solicitor as material witness in client’s case
27.1 In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court, the solicitor may not appear as advocate for the client in the hearing.
27.2 In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court the solicitor, an associate of the solicitor or a law practice of which the solicitor is a member must not continue to act for the client if doing so would prejudice the administration of justice.
(Emphasis added)
That Mr R proposed he continue to wear two hats (and be the only witness in his client’s case) speaks again to his improper and unreasonable conduct of a serious nature.
I have already set out the husband’s non-compliance with orders, rules and the Central Practice Direction under my consideration of s 117(2A)(c) and (d) above. I find Mr R is plainly complicit in his client’s non-compliance. For example, drafting a Costs Notice is required by the rules. That was something well within Mr R’s purview to do, but he did not and had no explanation why not. Even when I ordered the husband file a Costs Notice by 4.00 pm on Friday 28 July 2023, Mr R did not file it until 5.18 pm on Saturday 29 July 2023.
The same is to be said about the Case Outline. The Central Practice Direction requires it and Mr R had no explanation why he had not complied. Failure to file required documents, without a scintilla of an excuse, is improper and unreasonable conduct of a serious nature.
In what I consider to be a further improper and unreasonable conduct of a serious nature, Mr Kerrsion was also unable to help me with the following questions I posed at the hearing (see Guo & Zoric [2023] FedCFamC1F 628 at [43]–[45]):
…
(1) What jurisdiction or power did I have to stay an order that was made in Division 2?
(2) What power do I have to make a stay in the terms sought in the interim orders?
(3) Did he need leave?
Unfortunately, [Mr R] was unable to give me any assistance with respect to these three questions. He confirmed he had turned his mind to such basic issues when he drafted the application. However, he said he did that back in January and could not recall upon what he landed. Yet, I listed the matter on 3 July 2023 for hearing yesterday, being 25 July 2023. That gave him 22 days to refresh his mind on what principles he ought invite me to invoke with respect to his stay order.
[Mr R] relied on two Full Court decisions from 2009 (Gull & Gull (Stay Application) [2009] FamCAFC 104 and Jackson & Balen [2009] FamCAFC 131), which he said concerned stays pending appeal. However, there is no appeal on foot here. I asked [Mr R] about applicability of the well-known authority of Medlow & Medlow (2016) FLC 93-692 (“Medlow”), which also concerned a stay pending appeal, but he was unable to assist me with any submissions on that decision either. Similarly, in the earlier oral application for an adjournment, he was unable to make any submissions on the High Court authority of Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175.
In Ex Christmas Islanders Association Inc v Attorney-General (Cth) (No 2) (2006) 233 ALR 97, French J (as he was then) said at [2] the “preparation and presentation of the application ... was done at such a poor level of competence as to amount to a significant breach of duty” by the applicant’s solicitor. Further, his Honour said this at [21]:
21. In the present case the way in which the application was formulated and the argument presented indicated not merely the presentation of an unarguable case, it indicated a failure to discharge the practitioner’s basic duty to consider the legal issues which should have been considered before the application was prepared and filed and before argument on it was presented to the court.
(Emphasis Added)
Mr R, by his own admissions, was unable to articulate the legal issues he had considered before the application was prepared and “and before argument on it was presented to the court” before me. Mr R’s preparation and presentation was at such a poor level of competence to amount to a significant breach of his duty as an officer of the court – that is, improper and unreasonable conduct of a serious nature.
I accept the wife’s submissions that the husband’s tender (Exhibit 1) was irrelevant and unhelpful. Mr R mistook his own personal views and his own calculations about the husband’s purported entitlement in an estate matter as irrefutable evidence.
Mr R’s oral application to cross-examine the wife was brought on wrong-headed grounds, including but not limited to, “to see what she [the wife] thought of the trial judge’s orders”. As I said in my Reasons, I was not the slightest bit interested in the wife’s views of the Division 2 Judge’s orders.
Similarly:
(a)The stay order was incompetently drafted and its prosecution was continued by Mr R with disregard for any proper consideration of the prospects of success. I find that because if he had properly considered the prospects of success he would not have pursued the stay order in the form he did;
(b)Mr R also gave considerable evidence from the bar table, including his own personal opinions about calculations of his client’s entitlement to an estate (the grant of probate was in 2011), and contended that his own “understanding” about the estate, and how things “appeared” to him, were proof positive the wife “had lied” about the estate to the Division 2 Judge;
(c)He also made outrageous submissions that the Division 2 Judge had committed a miscarriage of justice, but when asked about such a serious allegations, “refined this to mean the wife caused the judge to commit a miscarriage of justice because she allowed the judge to proceed on matters that were false” (Guo & Zoric [2023] FedCFamC1F 628 at [69]);
(d)He also challenged findings (again evidence from the bar table) of the trial judge, but that is in circumstances where neither he nor his client appeared at the trial, nor put on any evidence; and
(e)Submissions were also made that the husband’s brother may “take steps” to protect his apparent interest in the estate (even though the brother was aware of the proceedings last year and did not so do) and this submission was made in circumstances where Mr R admitted he had never met or even spoken to the brother.
None of this promoted the proper administration of justice. All of these matters set out at [50] to [52], when taken together, also paint Mr R in the light of improper and unreasonable conduct of a serious nature.
Neither Mr R nor the husband made any submissions on the issue of costs, despite my order.
Conclusion on justifying circumstances
In the exercise of my discretion, I conclude that the following factors justify an order for costs in the wife’s favour: the husband’s failure to comply with orders; how the husband conducted the application for interim orders largely devoid of legal principle or the ability to identify same; and, that he has been wholly unsuccessful.
I also consider the many instances given above of Mr R’s: failures to comply with rules and orders; and, his improper and unreasonable conduct of a serious nature, warrant the making of a costs order in the wife’s favour.
As such, I accept the wife’s written submissions that the husband and Mr R be jointly and severally liable for the wife’s costs. The husband and Mr R made no submissions to the contrary; indeed, they did not make any submissions at all.
On what basis should the husband and Mr R should pay the wife’s costs
The wife submits the Court ought award her indemnity costs. Neither the husband nor Mr R made any submissions at all, let alone any submissions to the contrary.
Pursuant to r 12.13(4) of the Rules a party applying for costs on anindemnity basis must inform the Court if that party is bound by a costs agreement in relation to those costs and the terms of that agreement. The wife entered into a costs agreement with her current solicitors on 10 March 2020. On the same date the wife signed the costs agreement which is annexed to her solicitor’s affidavit filed on 4 August 2023 in support of the wife’s application for costs. It sets out the firm’s hourly rates for the various members of the firm (Annexure NN to the Affidavit of Rebekah Gates filed 4 August 2023, p 201- 212). The wife’s costs agreement with Counsel is also annexed to the solicitor’s affidavit (Annexure LL to the Affidavit of Rebekah Gates filed 4 August 2023, p 188 – 193) which is dated 3 November 2022. Counsel’s costs agreement lists hourly rate the rate for appearing in short matter and daily rate.
An order for indemnity costsis a significant departure from the normal standard and requires something exceptional: Harris & Dewell (No 2) (2018) FLC 93-863, where the Full Court said at [23]-[25]:
In Kohan and Kohan, the Full Court held, in applying the principles expounded by Sheppard J in Colgate-Palmolive, that an order for indemnity costs represents a “very great departure from the normal standard”. In the later decision of the Full Court in Prantage & Prantage, Thackray and Ryan JJ referred to Kohan and other authorities in the Full Courts of both this Court and the Federal Court of Australia as well as the state appeal courts. Their Honours concluded (at [86]) that the “usual rule” continued to apply in respect of awards of costs in this Court notwithstanding the Full Court accepting that the difference between party/party costs and a party’s actual costs has continued to grow significantly.
That proposition also derives support from what Callinan J said in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation. His Honour said that an order for indemnity costs should “be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers”.
The rarity of an order for indemnity costs can also be seen illustrated by the comments of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 2), referred to by their Honours in Prantage (at [102] – [103]). Lindgren J said that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation.”
(Footnotes omitted)
In the well-settled authority of Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (“Colgate-Palmolive”) Shepherd J provided some examples of circumstances that might justify the awarding of indemnity costs, and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784, at 84,660, drew from his Honour’s decision those examples:
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts…
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud…
(c)Evidence of particular misconduct causing loss of time to the court and to other parties…
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions…
(e) An imprudent refusal of an offer to compromise.
That said, the categories of circumstances which enliven the discretion to award indemnity costs are not closed (Yunghanns v Yunghanns (2000) FLC 93-029 at [31]).
By reference to the considerations set out in Munday, above, the wife submitted:
·with respect to Munday’s (a), the husband developed no legal argument and filed no evidence of himself, despite previous directions of the court to do so;
·with respect to (b):
the husband made confusing, unfounded allegations of “false evidence” having been produced. Her honour Brasch J gave [Mr R] an open opportunity to explain what he meant and [Mr R] accused Judge [x] of perpetrating a miscarriage of justice and accuse the wife of conveying to the court false evidence at an undefended hearing which he simply failed to attend. The scurrilously and without basis sought that the wife’s solicitors be referred to the OLSC, the registrar-general, the New South Wales police Commissioner and the New South Wales DPP
·Justice Rees struck out the orders with respect to the OLSC, the registrar-general, police and the DPP. They were incompetent. The wife’s solicitor was removed as a second respondent. The orders the husband sought in that regard were absolutely ill-conceived and some went well beyond the jurisdiction of this court.
·With respect to (c), the wife submitted the husband has never complied with the Court’s directions to file evidence either before the Division 2 Judge or in the current proceedings. I have already said, and say again, I will not take account that which occurred before the Division 2 Judge, as a costs order has already been made in that regard. The wife further submitted that the proceedings before me constituted a waste of the Court’s time, the wife’s time, as well as further stress and anxiety for the wife. It was said Mr R had been instrumental in this and been unable or unwilling to assist his client to comply with orders and uphold the overarching principles;
·with respect to (d), the wife referred to the submissions of the husband’s solicitor before me that the wife had, essentially, perjured herself “by allegedly knowing of some unspecified interest that the husband’s brother had in proceeds of sale but had no evidence to prove her knowledge.”
Neither the husband nor Mr R made any submissions.
For a number of reasons, I consider that this is one of those exceptional cases where costs on an indemnity basis are appropriate. This was incompetent litigation with, incompetently drafted orders with no actual evidential basis.
Further, it is really quite stunning to think that the husband and Mr R would again put on no affidavit evidence for the hearing before me, when that had not turned out so well for him when he did the same before the Division 2 Judge. But nevertheless the husband and Mr R persisted in presenting a case without any evidential basis. They also persisted in presenting a case devoid of a legal basis for the order sought.
Similarly, the Application for interim orders was commenced and continued in circumstances where the husband properly advised, should have known that the husband had no chance of success. Further, it was baseless and had absolutely no merit (Colgate-Palmolive per Shepherd J at 256).
The wife’s solicitor deposed:
[Ms Guo’s] costs with our office from 13 January 2023 until the date of filing this Affidavit total $44,978.10.
(Affidavit of Rebekah Gates filed 4 August 2023, paragraph 62).
I consider the $44,978 to be reasonable, proper, fair and proportionate. No submissions were made to the contrary.
Disposition
For all of the reasons given, I will therefore make an order that the husband and Mr R be jointly and severally liable for the wife's costs of $44,978.
No one suggested a time frame for payment of costs. Pursuant to r 12.13(5) of the Rules I will order the costs be paid within 28 days of the date of this order. I do so because (a) a time frame is necessary to avoid further disputes between the parties (Bokin & Wild [2022] FedCFamC1A 209); and, (b) 28 days is the timeframe in the rules referred to for filing costs application. It is simply consistent with that. In circumstances where no one proposed a time frame, I can only do the best I can.
I have no confidence that the husband would be aware of rule 12.15(4)(a), (b) and (c):
Costs order against lawyer
(4) An order under subrule (1) may include an order that the lawyer:
(a) not charge the lawyer's client for work specified in the order; or
(b) repay money that the client has already paid towards those costs; or
(c) repay to the client any costs that the client has been ordered to pay to another party or another person; or
...
I will request a Registrar of this Court to send a copy of these Reasons and my orders to the husband, and not through Mr R.
I will further request that be done by close of business this week. I will then give the husband 14 days to file and serve written submissions of no more than five pages in the event he seeks such orders. I will give Mr R 14 days to reply – again by way of submissions of no more than five pages.
It will be a matter for the wife should she wish to take up Mr R’s conduct with the Legal Services Commission or the Law Society of New South Wales. Plainly, neither entity is the public or a section of the public per s 121 of the Act. But even if they were, s 121(9)(b)(i) and (ii) provide:
(9) The preceding provisions of this section do not apply to or in relation to:
…
(b)the communication of any pleading, transcript of evidence or other document to:
(i)a body that is responsible for disciplining members of the legal profession in a State or Territory; or
(ii)persons concerned in disciplinary proceedings against a member of the legal profession of a State or Territory, being proceedings before a body that is responsible for disciplining members of the legal profession in that State or Territory...
I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Brasch. Associate:
Dated: 21 August 2023
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