Hahnel & Strecker (No 2)
[2024] FedCFamC2F 1783
•12 December 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Hahnel & Strecker (No 2) [2024] FedCFamC2F 1783
File number(s): NCC 2033 of 2021 Judgment of: JUDGE CARTY Date of judgment: 12 December 2024 Catchwords: FAMILY LAW – COSTS – Application for costs following conclusion of defended parenting proceeding – Applicant wife seeks indemnity costs – In the alternative costs order sought on a party and party basis calculated at Scale – Consideration of general rule that each party bear their own costs in proceedings under the Act – Consideration of whether there are circumstances which justify an order for costs – Consideration of what, if any, order for costs is appropriate.
FAMILY LAW – INDEMNITY COSTS – Solicitor and client cost – Settled practice to order costs on a party and party basis – Consideration of whether there is a circumstance which justifies a departure from settled practice.
FAMILY LAW – HELD no exceptional, unusual or extreme circumstance.
FAMILY LAW – PARTY AND PARTY COSTS – Costs awarded in a fixed amount calculated in accordance with Scale
Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia Act 2021 s 190
Federal Circuit and Family Court of Australia (Family Law) Rules 2021, 12.17, sch 1, sch 3
Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 sch 1
Cases cited: Bant & Clayton (Costs) [2016] FamCAFC 35; (2016) 56 Fam LR 31
Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 118 ALR 248
Fitzgerald & Fish [2005] FamCA 158
Hawkins & Roe [2012] FamCAFC 77
In the Marriage of Kohan (1992) 16 FamLR 245; (1993) FLC 92-340
In the Marriage of Munday & Bowman (1997) 22 Fam LR 321
Medlon & Medlon (No.6) Indemnity Costs [2015] FamCAFC 157
[2024] FedCFamC2F 656 (unreported)
Pascoe & Larson (No 2) [2022] FedCFamC1A 126
Penfold and Penfold [1980] HCA 4; (1980) 144 CLR 311
Division: Division 2 Family Law Number of paragraphs: 69 Date of last submission/s: 15 July 2024 Date of hearing: On the papers Place: Newcastle Solicitor for the Applicant: Delaney Roberts Family Lawyers Solicitor for the Respondent: Rankin Ellison Lawyers ORDERS
NCC 2033 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS HAHNEL
Applicant
AND: MR STRECKER
Respondent
ORDER MADE BY:
JUDGE CARTY
DATE OF ORDER:
12 DECEMBER 2024
THE COURT ORDERS THAT:
1.The respondent will pay the applicant’s costs on a party and party basis fixed in the sum of twenty-five thousand, eight hundred and eighty-one dollars ($25,881.00) with payment to be made by no later than 11 June 2025.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE CARTY
INTRODUCTION
On 12 April 2024, after a final defended hearing lasting three days, I delivered oral reasons for judgment[1] pursuant to which I ordered that the applicant wife Ms Hahnel (“the applicant”) have sole parental responsibility for the three children of the marriage, and that the children live with the applicant wife and spend time with the respondent husband Mr Strecker (“the respondent”) from 9.30am to 2.30pm each alternate Sunday supervised by either one of the paternal grandparents.
[1] [2024] FedCFamC2F 656 (unreported)
On 10 April 2024 the applicant filed an application in a proceeding seeking an order that the respondent pay her costs of and incidental to the parenting proceeding.
The respondent opposes the application for costs and seeks that the application be dismissed.
For the reasons provided herein, I am of the view that there are circumstances which justify the court making an order that the respondent pay the costs of the applicant on a party and party basis fixed in the sum of $25,881, with time allowed for payment.
BACKGROUND
The applicant is employed as a customer service representative and lives in Town B with the three children of the marriage, who at the date of trial were 14 years old, 12 years old, and 9 years old respectively.
The respondent operates his own business and lives in Town B.
The parties commenced cohabitation in 2008 and were married in 2009. They finally separated in March 2021 and are divorced.
The three children have lived with the applicant since separation. The children have spent limited time with the respondent, due to concerns relating to his chronic excessive alcohol consumption, poor supervision, overcrowding in his home, and anti-social and violent conduct involving certain members of the respondent’s family and friends.
On 18 June 2021 the applicant filed an Initiating Application in which she sought final property and parenting orders. On the same date, the applicant filed a Notice of Risk in which she identified the following relevant risk:
(a)The father has a history of alcohol abuse.
(b)The father has been prescribed medication for his alcohol abuse and failed to take this medication in accordance with his prescription.
(c)The father has been involved in multiple accidents, requiring hospitalisation, because of operating machinery under the influence. The children have witnessed this and on one occasion the father had the child X riding on the machinery while he was drunk.
(d)The father has a history of driving while under the influence, the mother is concerned that the father has done this with the children in the car.
(e)When intoxicated, the father becomes verbally abusive towards the mother, and the children have witnessed this.
On 30 June 2021 an order was made that the respondent submit to hair testing in respect of alcohol use over a three to six months period.
In mid-2021 the respondent submitted a hair sample for testing. The results of the testing confirmed that he had engaged in excessive alcohol consumption over the relevant period.
On 6 August 2021 the respondent filed a Response in which he sought final property and parenting orders.
On 12 August 2021 family consultant Ms C prepared a Child Inclusive Memorandum to the Court and noted the applicant’s allegation about the respondent’s serious alcohol abuse issues. The respondent denied that he had alcohol abuse problems. The applicant agreed that the paternal grandmother would be an adequate supervisor for the children. The respondent agreed to spend time with the children under any conditions, including supervision, if it was considered necessary by the Court. The family consultant identified that issues relating to the father’s alcohol abuse and mental health were the primary concern. She suggested that it was appropriate that the children’s time with the father is supervised until further assessment, and recommended that the father actively engage his General Practitioner (“GP”) and therapist to undertake thorough assessment, and any recommended treatment, for his dual diagnostic issues of alcohol abuse and depression.
On 14 July 2022 a Family Report was prepared by Regulation 7 family consultant Ms D. Ms D reported that the respondent’s excessive alcohol consumption was identified by the applicant as a key issue in the matter. The evidence of Ms D is discussed later in these reasons.
On 5 July 2023 the parties attended a Conciliation Conference with a Deputy Registrar and reached agreement to finalise their property dispute. Final property orders were made by consent on 5 July 2023.
On 31 July 2023 the parenting matter was listed for final defended hearing on 6 November 2023 allocating 3 days but was not reached and was adjourned to 8 April 2024.
The final defended hearing proceeded over the course of three days on 8, 9 and 10 April 2024. Judgment was delivered ex tempore on 12 April 2024 and final parenting orders were made which were consistent with the orders sought by the applicant and with the recommendations of Ms D, who was also cross examined at the trial.
DOCUMENTS READ
In support of her application for costs the applicant relies upon:
(a)Application in a Proceeding filed 10 May 2024.
(b)Her Affidavit filed 10 May 2024.
(c)Her written submissions filed 24 June 2024.
(d)Her written submissions in Reply filed 15 July 2024.
The respondent relies upon:
(a)His Response to an Application in a Proceeding filed 31 May 2024.
(b)His Affidavit filed 31 May 2024.
(c)His Tender Bundle filed 8 July 2024.
(d)His written submissions filed 8 July 2024.
Orders sought
In her written Submissions, the applicant proposes that the respondent pay her costs pursuant to Rule 12.17(1)(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”) on a solicitor/client basis in the sum of $116,047.90. In the alternative, the applicant seeks an order for costs pursuant to Rule 12.17(2) of the Rules on a party and party basis assessed or fixed in the sum of $58,808.18.[2]
[2] Calculated in accordance with the Scale of Costs set out in Schedule 1 Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021
The respondent seeks that the application for costs be dismissed. He submits that if the court is of the opinion there are circumstances which justify an order for costs in favour of the applicant, there are no exceptional circumstances which would give rise to an order for indemnity costs and that the only proper order is costs on a party and party basis calculated in accordance with Schedule 1 of the Federal Circuit and Family Court of Australia (Division 2)(Family Law) Rules 2021 as agreed or assessed, or fixed by the court in the sum of $25,881.
The costs application has been determined on the papers, with no appearances required by or on behalf of either party.
LEGAL PRINCIPLES
In the exercise of the Court’s discretion whether to make an order for costs, the relevant starting position is Section 117(1) of the Act which provides:
(1) Subject to subsection (2)…each party to proceedings under this Act shall bear his or her own costs.
Section 117(2) of the Act provides:
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.
In a joint judgment of Stephen, Mason, Murphy, Aiken and Wilson JJ in the High Court of Australia in Penfold and Penfold [1980] HCA 4; (1980) 144 CLR 311 at p 315-316 their Honours observed:
It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a clear case"
The Court is required to consider whether there are justifying circumstances to make an order as to costs. Section 117(2A) of the Act provides that when considering what order, if any, should be made under subsection (2) the court shall have regard to the following matters:
(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.
No one factor in s.117(2A) of the Act prevails over any other factor in that section. The weight to be attributed to the relevant factors is a matter for the Court in the exercise of discretion.[3] There is nothing to prevent any factor in s.117(2) from being the sole foundation for a costs order.[4]
[3] Medlon & Medlon (No. 6) (Indemnity Costs) [2015] FamCAFC 157 at [24]; (2015) FLC 93-664.
[4] Fitzgerald v Fish [2005] FamCA158
WHAT ORDER IF ANY WILL BE MADE UNDER S.117(2) OF THE ACT
The applicant bases her claim for costs on the respondent’s approach to the parenting proceedings, which was much further from the outcome ordered than the applicant’s approach.
I accept the respondent’s submission that Section 117(1) of the Act expresses a general rule that each party bears their own costs in a proceeding under the Act. I also accept his submission that it is proper that in a parenting proceeding a parent can put their case in seeking orders which they believe are in the best interests of their children.[5]
[5] Hawkins & Roe [2012] FamCAFC 77 at [14]
I am mindful that the court has a discretion to award costs in appropriate circumstances, including in a parenting proceeding. Sub-section (2) of s.117 requires a finding of justifying circumstances as an essential preliminary to the making of an order for costs. Section 117(2A) is expressed in mandatory terms and requires that, when a court is considering what order (if any) should be made under s.117(2) the court must have regard to the seven matters set out in s.117(2A).
Financial circumstances of each party to the proceedings
The applicant is employed on a permanent part-time basis as a Customer Service Representative. She deposes that she earns approximately $967.00 per week gross from her employment and that she receives family assistance from Centrelink of approximately $248.00 per week. The applicant is receiving child support payments from the respondent in the sum of $461 per week.[6] The applicant’s weekly income therefore amounts to approximately $1,676 gross, or $86,892 gross annually. The children live with the applicant, and she is responsible for meeting their day-to-day needs, albeit with the assistance of the child support from the father.[7]
[6] Applicant’s affidavit [15]. The applicant says that she is receiving less than the assessed amount of $2,172 per month.
[7] Except the older child’s phone bill which the respondent pays
The applicant received a cash settlement in the sum of $125,000 pursuant to the final property orders. That sum has been exhausted, and some was applied to part payment of the applicant’s legal fees. The applicant owes her parents approximately $95,000, which she borrowed from them to pay her legal fees.
The applicant has the benefit of living in a home which is situated on a property owned by her parents. The applicant must otherwise maintain the children from her income and the amount she receives from the respondent by way of child support. The child support that the respondent pays is undoubtedly a critically important contribution by him to the costs of maintaining the children, however I accept the applicant’s evidence that such sum does not cover most of the costs for the children, which includes feeding, clothing, supervising, educating, transporting and entertaining the three children who are in the applicant’s full-time care.
The respondent deposes that his financial circumstances are very modest, and that he cannot afford to pay the applicant’s costs. The respondent manages and operates a business through a proprietary company in which he is the sole director and shareholder. His individual taxable income for FY22 is $78,869.[8] He claims deductions for work related expenses such as his motor vehicle and phone.
[8] Affidavit of Respondent filed 31 May 2024 Annexure B
The respondent deposes that he pays child support for the three children in the sum of $499.57 per week[9] and in addition pays $65 per fortnight for the eldest child’s phone. He is attending psychology sessions fortnightly for which he pays $130.00. He is left with $424 per week to pay his discretionary expenses such as food for himself, his pets, and utilities. He has modest assets. He has paid $33,544 in respect of his legal fees to date, and he still owes $38,538. He owes his mother $12,000 in respect of a loan from her which assisted him to pay his legal fees.
[9] $499.57 per week appears to be the assessed amount, noting that the applicant deposes that she receives a lesser amount of $461 per week.
Neither party is in a strong financial position. The respondent has a similar level of income to the applicant, and he contributes about one third of his income towards the support of the three children. The respondent can negotiate with his landlord to pay less than the nominated rental in exchange for maintenance work. The respondent has the benefit of his business paying his car and phone expenses.
The respondent has modest equity in his business of about $81,000 and owes $38,534 in legal fees.
I consider that the respondent is in a superior financial position to the applicant.
Whether the parties are in receipt of legal aid
It appears that neither party was in receipt of a grant of Legal Aid for the proceedings.
Conduct of the parties to the proceedings in relation to the proceedings
There was no submission advanced to the effect that the respondent’s conduct in relation to the proceedings is significant. This subsection is not enlivened.
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
There is no evidence that the proceedings were necessitated by the failure of either party to comply with previous orders of the court. This subsection is not enlivened.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The concept of costs following an event in litigation in common law courts has no application under the Family Law Act 1975, where the power to award costs is entirely statutory. The term “wholly unsuccessful” refers to a situation in which proceedings have been unsuccessful rather than an application.[10]
[10] Bant & Clayton (Costs) [2016] FamCAFC 35; (2016) 56 Fam LR 31.
The applicant submits that the respondent was wholly unsuccessful in the proceedings. The respondent sensibly concedes that he cannot reasonably submit otherwise. In his Amended Response to Initiating Application filed on 29 September 2023 he sought an order that the parents have equal shared parental responsibility for the children, and that the children spend time with him on alternate weekends unsupervised, provided that he undertakes a breathalyser test to demonstrate that he has a zero-alcohol reading. He sought that, in due course, provided there were no failures in respect of his breathalyser testing and subject to compliance with a regime of hair follicle testing to demonstrate that his alcohol consumption was in the low range, the children would spend time with him during school holiday periods.
While the respondent was wholly unsuccessful in obtaining the orders he sought in the proceedings, I accept the submission made on his behalf that this alone does not warrant a costs order. In a parenting case the fact that a party failed in obtaining the orders sought by them does not mean necessarily that their position was wholly without merit.
The key issue in the proceeding was the assessment of the risks posed to the children by the respondent’s alcohol consumption. There is no dispute that the children have a good relationship with the respondent, and they want to spend more time with him. Over the course of two years the respondent demonstrated his ability to abstain from consuming alcohol prior to and during periods of time he spent with the children, and he proposed an ongoing testing regime and progression of the children’s time with him, predicated upon his compliance.
When he was interviewed for the family report in June 2022, the respondent told Ms D that he did not have a problem with excessive alcohol consumption. The respondent had provided two hair follicle samples, nine months apart, which produced results consistent with consumption of excessive amounts of alcohol. Ms D reported that the “cavalier” comments made by the respondent about his alcohol consumption during his interview with her suggested that he is in complete denial of a serious problem. She strongly suggested that he undergo alcohol reduction under the care of his GP and that he attends an alcohol and drug counsellor to address his alcohol dependence. She recommended that until the respondent can demonstrate reduced alcohol consumption in the low range on two consecutive hair follicle tests, the children’s time with him remain strictly supervised by the paternal grandmother.
After his interview with Ms D, the respondent provided further samples for hair follicle testing on two separate occasions, some months apart, which again produced results consistent with excessive alcohol consumption. At the trial there was no evidence that the respondent had attended upon an alcohol and drug counsellor to address his alcohol dependence, and in 2021 and 2022 he did not avail himself of the opportunity to complete a course of counselling with a clinical psychologist under a GP mental health plan in place for him at that time.
The respondent also had access to the expert evidence of Ms C in the Child Inclusive Memorandum to the Court prepared on 12 August 2021 which raised similar concerns and made similar recommendations.
Notwithstanding the evidence of the experts, at the trial the respondent continued to deny that he has a serious issue with alcohol abuse and depression. Sadly, he failed to grapple with the weight of the evidence, and he was still consuming alcohol at a level which was excessive, and which posed a risk to the children. The respondent appeared to labour under his mistaken belief that his chronic excessive alcohol consumption did not pose a risk to the children provided he was not under the influence of alcohol while the children were with him. He had made only tokenistic efforts to address his serious addiction. The evidence of the expert, even prior to her cross-examination at the trial, was that the applicant’s reports that the respondent had a serious problem with alcohol were supported by collateral material, and that the respondent’s attitude in response to the concerns raised indicated a significant level of denial on his part and a stubborn non-acceptance of his alcohol dependence. The expert made it quite plain in her report that unsupervised time with the children depended on the respondent reducing his alcohol readings to at least the low range. The respondent did not do this, even though he had more than eighteen months’ notice of that evidence leading up to the trial. I consider that the respondent demonstrated his “complete absence of preparedness to compromise in the face of unambiguous expert evidence”[11] and that this feature of his attitude to the litigation justifies an order for costs.
[11] Hawkins & Roe [2012] FamCACF 77 at 147
While I accept that the respondent’s lack of success alone is not sufficient to justify a departure from the usual rule that each party pay their own costs, I consider that it is a matter which I can take into account in circumstances where the respondent was on notice of the concerns and the recommendations made to address those concerns, and on notice that the applicant was seeking an order that the respondent pay her costs in the parenting proceeding, and was not prepared to compromise.
Whether any party has made an offer in writing
The respondent acknowledges that the applicant made an offer to settle on 25 May 2023 which, had the respondent accepted the offer, would have resulted in the children spending time with him from 9am until 5pm each alternate Sunday, supervised by a paternal grandparent, which was more time than was ultimately ordered by the Court on 12 April 2024.
Such other matters as the court considers relevant
There are no other matters that I consider relevant.
CONCLUSION AS TO COSTS
In my opinion, there are circumstances which justify the court making an order for costs, because the respondent’s financial circumstances are superior to the applicant’s financial circumstances and because the respondent was not prepared to compromise in the face of unambiguous expert evidence.
What order for costs is appropriate?
The applicant’s position is that an order for costs ought to be made on a solicitor/client basis in the sum of $116,047.90 or in the alternative on a party and party basis in the sum of $58,808.18.
The applicant has paid $116,047.90 in legal fees between 25 May 2023[12] and 22 April 2024, including Counsel’s fees and other disbursements. I accept the respondent’s submission that part of that total sum appears to include work done in preparation for the conciliation conference, and that any costs order ought to relate to exclusively to costs incurred in the parenting matter.
[12] The applicant made an offer to settle the parenting proceedings on 25 May 2023, discussed further in the reasons.
I also accept the respondent’s submission that the principles which apply to the consideration of whether to order costs on an indemnity basis apply equally to an application for costs on a solicitor/client basis, and that an order for indemnity costs is rare and should only be made in exceptional circumstances.
The applicant provided no submission directly addressing the issue of why an indemnity costs order is justified, other than referring to Rule 12.17 of the Rules which sets out the method of calculation of costs, reproduced below:
(1) The court may order that a party is entitled to costs:
(a) of a specific amount; or
(b) as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c) to be calculated in accordance with the method stated in the order; or
(d) for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
(2) If costs are payable under the Family Law Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party and party basis.
(3) In making an order under subrule (1), the court may consider the following:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d) whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e) the time properly spent on the proceeding, or in complying with pre‑action procedures;
(f) whether expenses (paid or payable) are fair, reasonable and proportionate.
In Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 118 ALR 248 at 256-257 Justice Shepherd distilled the principles relating to an award of indemnity costs. His Honour stated the settled practice of the court when awarding costs is as follows:
The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on a party and party basis…In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court departing from the usual course…The tests have been variously put…The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis…It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for the payment of costs, for instance, on an indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge.
Sheppard J went on to note some of the circumstances which have led to the exercise of discretion to award costs on an indemnity basis. His Honour’s non-exhaustive list of circumstances are:
(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 (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397.
(b) Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra).
(c) Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v. Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)).
(d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v. Westpac Banking Corporation (unreported, Federal Court, 5 March 1993)).
(e) An imprudent refusal of an offer to compromise.[13]
[13] In the Marriage of Munday v Bowman (1997) 22 Fam LR 321, 322.
In the Marriage of W P J Munday and H J Bowman [1997] 22 Fam LR 321 Holden CJ considered principles which apply to an order for indemnity costs in a case which arose out of proceedings to bring property proceedings out of time pursuant to s.79 of the Act. His Honour referred to the Full Court in In the Marriage of Kohan (1992) 16 FamLR 245; (1993) FLC 92-340 and quoted the following paragraphs from the Full Court’s decision:
The intent of s 117 (1) and 117 (2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the court may make such order as the court considers just. As we have pointed out the court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges…[Order 38 r 7][14]….makes provision for the allowance of additional amounts for complexity, difficulty, or novelty and special skill, knowledge or responsibility. Consequently, the court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind…Indemnity costs orders are still an exception in this and other jurisdictions.
…However it is fundamental to the exercise to that discretion in the Family Court that the judge should not only understand that such an order is a very great departure from the normal standard, but also the judge should know what the terms of the agreement are, to what extend it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties. This impact is a relevant matter to which the trial judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under s 117 (2A) (a) , or perhaps even more, as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for no ordering costs on an indemnity basis.
[14] Relevantly for the purpose of the present proceeding Schedule 3 Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
I am not persuaded that this case where there are unusual, exceptional, or extreme circumstances which would give rise to an order for indemnity costs.
The applicant and respondent agree that the appropriate scale for the calculation of costs on a party and party basis is contained in Schedule 1 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021.
On a party and party basis the applicant claims entitlement to costs in the sum of $58,808.18.[15] The total professional fees are claimed at $19,423.58. The claim includes Full Day hearing fee for solicitor for 3 days. The applicant’s disbursements, including Counsel’s fees, are claimed in an amount of $39,384.18.
[15] Applicant’s written submissions Schedule 2
The respondent calculates that on a party and party basis the applicant is entitled to costs in the sum of $25,880.66. The respondent submits that Day 2 and Day 3 of the hearing concluded at 1.00pm and 1.30pm respectively, and therefore the Solicitor and Counsel hearing fees for those two days should be allowed at a half day rate. I accept the accuracy of the respondent’s submission as to the time that the hearing concluded on each of those two days. I accept his submission that the solicitor is therefore entitled to claim a half day rate in respect of the two half days and a full day rate in respect of Day 1 of the hearing.
The respondent argues that Counsel’s fees ought not be included as a disbursement but rather at the daily hearing rate with the appropriate advocacy loading. I accept that submission. The respondent argues that, similarly to the solicitors daily hearing fees, Counsel’s daily hearing fee ought to be calculated on the basis that Day 2 and Day 3 were half day attendances. I agree.
I wish to make it plain that I am not at all critical of the daily hearing fee actually charged by Learned Counsel for the applicant in this matter, which I consider is reasonable and commensurate with Counsel’s considerable level of experience and high standing and which takes into consideration the work involved in a matter which dealt with important and difficult issues. Counsel’s actual fees are entirely reasonable in my view. I have determined, however, that an order for costs will not be made on an indemnity or solicitor and client basis, but rather will be made on a party and party basis, calculated in accordance with the relevant scale, which sets the fee for Counsel’s daily appearances, and therefore Counsel’s fees will be allowed for present purposes according to the scale.
The rules and authorities make plain that the court can fix an amount for costs[16]. To fix costs avoids further costs and delay, consistent with the overarching purpose of family law practice and procedure as set out in s.190 of the Federal Circuit and Family Court of Australia Act 2021.
[16] Pascoe & Larsen (No 2) [2022] FedCFamC1A 126 at [27] – [28]
I consider it just to make an order that the respondent pay the costs of the applicant on a party and party basis fixed in the sum of $25,881, which in my view is an appropriate calculation according to the relevant scale.
To satisfy the costs order in favour of the applicant, the respondent will likely require time to pay, and I consider that a period of six months is an appropriate period.
I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Carty. Associate:
Dated: 12 December 2024
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