FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Haines & Rader (No 6) [2023] FedCFamC1F 255
File number: SYC 1641 of 2019 Judgment of: BRASCH J Date of judgment: 6 April 2023 Catchwords: FAMILY LAW – COSTS - Where wife seeks costs on an indemnity basis with respect to her application to enforce final orders and her response resisting the husband’s s 79A application – Where husband did not make submissions as provided for in orders – Where disparity in financial circumstances – Where husband wholly unsuccessful – Where husband ran his s 79A case on, inter alia, rank hearsay and speculation- Where quantum of costs considered reasonable, proper, fair and proportionate - Costs Order made on an indemnity basis Legislation: Family Law Act1975 (Cth) ss 79A, 117(1), 117(2), 117(2A)(a)-(g), 117(4), 117(4A),117(5), 117(6)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 10.13(1)(a), 12.13(4), 12.13(5)
Cases cited: Allesch v Maunz(2000) 203 CLR 172; [2000] HCA 40
Bant & Clayton (Costs) (2016) 56 Fam LR 31; [2016] FamCAFC 35
Bokin & Wild [2022] FedCFamC1A 209
Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225
Dongahey & Dongahey (Costs) (2012) 47 Fam LR 306; [2012] FamCA 231
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish (2005) 33 Fam LR 123; [2005] FamCA 158
Harris & Dewell (No 2) (2018) FLC 93-863; [2018] FamCAFC 180
Haines & Rader (No 2) [2022] FedCFamC1F 685
Haines & Rader (No 3) [2022] FedCFamC1F 1007
Haines & Rader (No 4) [2022] FedCFamC1F 1008
Haines & Rader (No 5) [2023] FedCFamC1F 132
Madden and Madden (1979) FLC 90-710; [1979] FamCA 72
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
Rankin and Rankin (No 3) [2019] FamCAFC 133
Sfakianakis& Sfakianakis (2019) 59 Fam LR 419; [2019] FamCAFC 54
Yunghanns v Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Division: Division 1 First Instance Number of paragraphs: 70 Date of last submissions: 17 March 2023 Date of hearing: 3 March 2023 Place: Sydney Solicitor for the Applicant: Dettmann Phair Lawyers Solicitor for the Respondent: Morson Law ORDERS
SYC 1641 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS HAINES
Applicant
AND: MR RADER
Respondent
order made by:
BRASCH J
DATE OF ORDER:
6 APRIL 2023
THE COURT ORDERS THAT:
1.The husband pay the wife’s costs on an indemnity basis in the amounts of:
(a)$21,921 (including GST) for the wife’s Application in a Proceeding filed 25 January 2023; and
(b)$17,503 (including GST) for her Response filed 27 February 2023 in relation to the husband’s Application in a Proceeding.
2.The husband is to make the above payments within 28 days of 6 April 2023.
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…
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- AGLC
- Haines & Rader (No 6) [2023] FedCFamC1F 255
- Case
- [2023] FedCFamC1F 255
- Decision Date
CaseChat Overview and Summary
The Federal Circuit Court was presented with a case involving a costs application arising from a section 79A, subpoena and enforcement hearing between Haines and Rader. The wife had applied for costs under section 117 of the Family Law Act 1975, seeking indemnity costs for her expenses related to the enforcement application and the response to the husband’s application. The husband, despite having ample opportunity, did not submit any arguments regarding the costs. The court was required to determine whether the wife had established circumstances justifying a costs order in her favour and, if so, on what basis the husband should pay these costs.
The court considered several factors to justify the making of a costs order in the wife's favour, including the disparity in the parties’ financial circumstances, the husband’s failure to comply with orders, his stance that the enforcement application should not be dismissed, and his overall lack of success in the proceedings. The court found these factors sufficient to justify a costs order in the wife’s favour. In determining the basis of the costs order, the court noted that indemnity costs represent a significant departure from the normal standard and require exceptional circumstances. The court found that while indemnity costs are rare and typically reserved for cases of wilful disregard of known facts, fraud, or significant misconduct, the circumstances of this case warranted a special costs order rather than full indemnity costs.
The court concluded that a special costs order, which falls short of indemnity but is more generous than party and party costs, was appropriate. The court ordered the husband to pay the wife $21,921 (including GST) for her application filed on 25 January 2023 and $17,503 (including GST) for her response filed on 27 February 2023. This decision reflects a nuanced approach to costs, balancing the wife’s need for financial relief against the rarity and exceptional nature of indemnity costs.
The court considered several factors to justify the making of a costs order in the wife's favour, including the disparity in the parties’ financial circumstances, the husband’s failure to comply with orders, his stance that the enforcement application should not be dismissed, and his overall lack of success in the proceedings. The court found these factors sufficient to justify a costs order in the wife’s favour. In determining the basis of the costs order, the court noted that indemnity costs represent a significant departure from the normal standard and require exceptional circumstances. The court found that while indemnity costs are rare and typically reserved for cases of wilful disregard of known facts, fraud, or significant misconduct, the circumstances of this case warranted a special costs order rather than full indemnity costs.
The court concluded that a special costs order, which falls short of indemnity but is more generous than party and party costs, was appropriate. The court ordered the husband to pay the wife $21,921 (including GST) for her application filed on 25 January 2023 and $17,503 (including GST) for her response filed on 27 February 2023. This decision reflects a nuanced approach to costs, balancing the wife’s need for financial relief against the rarity and exceptional nature of indemnity costs.
Orders
Orders of the court
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Background
Background to the litigation
The husband has had ample opportunity to make submissions about costs. He has not. I see no reason to delay delivering judgment in the wife’s costs application arising out of the s 79A, subpoena and enforcement hearing. If the husband is unhappy with my reasons and orders herein, he can no doubt take advice. Brief background Ms Haines, born 1970 (“the wife”), initiated the proceedings on 15 March 2019 by filing an Initiating Application for Final Orders in the Federal Circuit Court as it was then. Mr Rader, born 1968 (“the husband”) joined issue with the proceedings by filing a Response on 7 April 2019. The wife and the husband (“the parties”) commenced cohabitation in 2003. The parties married in 2009. I have previously found they separated in August 2017. Both parties agreed the divorce order was made in March 2020. The parties have two children; X, born 2005, and Y, born 2006 (“the children”). It is common ground the children have not spent time with the wife since mid-September 2018. Material - costs The wife relied upon the following material: ·Order 14 of her Application in a Proceeding filed 25 January 2023, and Order 3 of her Response filed 27 February 2023 with respect to the husband’s Application in a Proceeding;·Affidavit of Damian Grant Phair filed 2 March 2023 at 7.30 pm; ·Affidavit of Damian Grant Phair filed 2 March 2023 at 7.33 pm; and ·Written Submissions filed 17 March 2023. The husband did not favour the Court with submissions.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]. The first issue to address is 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. The second question is whether, if there are circumstances justifying a costs order, on what basis should the husband should pay the wife’s costs – for example as was said in Sfakianakis& Sfakianakis (2019) 59 Fam LR 419 at [10]:It is, however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words “such order as to costs ... as the court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well-known example is assessment on a trustee basis, which is more generous than party and party costs, but falls short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party costs nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a “special costs order”.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;
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Subsections 117(4) and (5) concern Independent Children’s Lawyers (“ICL’s”); this is irrelevant. Section 117(4A) is also irrelevant dealing as it does with s 91B interventions. Subsection 117(6) is about guardians ad litem. It is irrelevant.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 disparity in the parties’ financial circumstances; the husband’s failure to comply with orders; the husband’s stance in his response that the enforcement application not be dismissed; and, that he has been wholly unsuccessful in the proceedings as overall. On what basis should the husband should pay the wife’s costs The wife submits the Court ought award her indemnity costs and specifically:(a)$21,921 (including GST) for her Application in a Proceeding filed 25 January 2023 (to enforce the substantive order); and (b)$17,503 (including GST) for her Response filed 27 February 2023 to the husband’s Application in a Proceeding (the s 79A application). 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.
Ratio Decidendi
Legal Principle Established
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