Guo & Zoric (No 2)

Case [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…

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AGLC
Guo & Zoric (No 2) [2023] FedCFamC1F 707
Case
[2023] FedCFamC1F 707
Decision Date

CaseChat Overview and Summary

The case of Guo & Zoric (No 2) involved the husband, who was the applicant, and the wife, who was the respondent. The dispute arose from an earlier set of orders made by a trial judge on November 10, 2022, which the husband sought to have stayed or suspended pending further proceedings. The husband's application was heard by a different judge on July 25, 2023, who dismissed the stay application and subsequently considered the issue of costs. The wife sought her costs on an indemnity basis, arguing that the husband's failure to comply with orders and his improper conduct warranted such an order. The husband and the solicitor, Mr R, did not make any submissions on the issue of costs despite being given the opportunity to do so.

The primary legal issues that the court had to address were whether the husband's application for a stay was competently drafted and supported by evidence, and whether the wife was entitled to her costs on an indemnity basis. The court also needed to determine the basis on which the husband and Mr R should pay the wife's costs if an indemnity order was granted. The court's reasoning focused on the husband's failure to comply with court orders, his lack of legal principle in conducting the application, and his overall lack of success. The court found that the husband's conduct warranted an order for indemnity costs, noting that such an order is rare and requires exceptional circumstances.

The court concluded that the husband's application for a stay was incompetently drafted and lacked evidentiary support, leading to its dismissal. The court found that the husband's failure to comply with orders and his improper conduct justified an order for indemnity costs in favor of the wife. The court noted that an order for indemnity costs is a significant departure from the norm and requires exceptional circumstances, as highlighted by various judicial authorities. The husband and Mr R made no submissions to counter the wife's application, and the court accepted the wife's submissions that they should be jointly and severally liable for her costs. The court further considered the wife's costs agreement with her legal representatives and found no impediment to awarding indemnity costs.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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)

Ratio Decidendi

Legal Principle Established

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 basisFurther, 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