Hanas and Jolaha (No 5)
[2019] FamCA 1001
•18 December 2019
FAMILY COURT OF AUSTRALIA
| HANAS & JOLAHA (NO. 5) | [2019] FamCA 1001 |
| FAMILY LAW – COSTS – Where the husband appealed interim property orders and brought an Application in a case seeking a stay of those orders – Where the Application for a stay of those orders was wholly unsuccessful – Where the wife subsequently brought an Application for costs in respect to the Application for a stay – Orders made for the husband to pay the wife’s costs in respect to his Application for a stay and in respect to this Application for costs in the sum of $4,305.61 and $1,372 respectively. |
| Family Law Act 1975 (Cth) s. 117. Civil Procedure Act 2005 (NSW) ss. 98(4)(c). Family Law Rules 2004 r. 19.18. |
| Colgate-Palmolive Company and AnorvCussons Pty Limited (1993) 46 FCR 225 Fennessy & Gregorian (2009) FLC 93-399 Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 Idoport Pty Ltd v National Australia Bank Ltd Idoport Pty Ltd & Ors [2007] NSWSC 23 Johnson Tiles Pty Ltd v Esso Australia Ltd (2000)104 FCR 564 Kohan&Kohan (1993) FLC 92-340 Melville&Dent (No.2) [2009] FamCA 81 Parke & the Estate of the Late A Parke (2016) FLC 93-748 Stoian & Fiening (Costs) [2014] FamCA 944 Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 Yunghanns & Yunghanns (2000) FLC 93-029 |
| APPLICANT: | Ms Hanas |
| RESPONDENT: | Mr Jolaha |
| FILE NUMBER: | SYC | 113 | of | 2019 |
| DATE DELIVERED: | 18 December 2019 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland DCJ |
| HEARING DATE: | 10 December 2019 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Mr Wahab of York Law Family Law Specialists |
| SOLICITOR FOR THE RESPONDENT: | Mr Dowdle of Mills Oakley Lawyers |
Orders
That the husband pay the wife’s costs associated with the dismissal of his Application for a stay of interim property Orders filed 12 August 2019 in the amount of $4,305.61 together with costs associated with the wife’s costs Application filed 24 September 2019 in the amount of $1,372.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hanas & Jolaha has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC113 of 2019
| Ms Hanas |
Applicant
And
| Mr Jolaha |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns an Application by Ms Hanas (“the wife”) for costs in respect to an unsuccessful Application by Mr Jolaha(“the husband”) for a stay of interim property Orders pending the hearing of an Application for Leave to Appeal against those Orders.
the stay application
By Application filed on the 12 August 2019, the husband sought a stay of the Orders 1, 3 and 4 of the Orders that I made on 26 July 2019. Those orders (including order 2) are as follows:
1)That within 28 days, the husband pay to the wife the sum of $50,000 by way of interim property distribution, such sum to be retained by the wife's solicitors and applied to the wife's legal expenses related to these proceedings.
2)That by way of periodic spousal maintenance pursuant to s 74 of the Family Law Act 1975 (Cth), the husband pay to the wife cleared funds in the sum of $720 per week into an account nominated by the wife, the first payment to be made within seven (7) days of this order.
3)That the husband pay the wife's rent up to an amount of $650 per week from the date of commencement of her next residential lease by payment directly to the real estate agency managing the property, such payments are to be paid in advance if required by the agency.
4)That the husband pay the wife's rental bond up to the amount of $2,600 as required by the real estate agency, and be reimbursed the bond sum upon the termination of the rental lease.
While the husband did not seek a stay of Order 2 that Order was also subject to appeal.
Orders were made dismissing the husband’s Application for a stay of interim property Orders on 27 August 2019.
Legal principles
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) sets out the basis upon which the Court is empowered to award costs. That section relevantly provides:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) 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) and (5) 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.
(2A) In considering what order (if any) should be made under subsection (2), the Court shall have regard to:
(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.
(3) To avoid doubt, in proceedings in which an independent children’s lawyer for a child has been appointed, the Court may make an order under subsection (2) as to costs or security for costs, whether by way of interlocutory order or otherwise, to the effect that each party to the proceedings bears, in such proportion as the Court considers just, the costs of the independent children’s lawyer in respect of the proceedings.
(4) However, in proceedings in which an independent children’s lawyer for a child has been appointed, if:
(a) a party to the proceedings has received legal aid in respect of the proceedings; or
(b) the Court considers that a party to the proceedings would suffer financial hardship if the party had to bear a proportion of the costs of the independent children’s lawyer;
the Court must not make an order under subsection (2) against that party in relation to the costs of the independent children’s lawyer.
(4A) If:
(a) under section 91B, an officer intervenes in proceedings; and
(b) the officer acts in good faith in relation to the proceedings;
the Court must not, because of the intervention, make an order under subsection (2) of this section against the officer, or against an entity (including the Commonwealth or a State or Territory) by or on behalf of whom the officer was engaged or employed.
(5) In considering what order (if any) should be made under subsection (2) in proceedings in which an independent children’s lawyer has been appointed, the Court must disregard the fact that the independent children’s lawyer is funded under a legal aid scheme or service established under a Commonwealth, State or Territory law or approved by the Attorney‑General.
A litigant in the Family Court must establish that the justice of the case requires an order for costs to be made by reference to the non-exhaustive list of statutory considerations set out in s 117 the Act before any such order is made.[1] In Melville&Dent (No.2) [2009] FamCA 81, Cronin J discussed the basis upon which the question of indemnity costs arise and referred to, at [33], the decision of Sheppard J in Colgate-Palmolive Company and AnorvCussons Pty Limited (1993) 46 FCR 225 (“Colgate-Palmolive Co”) as providing a ‘pertinent observation’ of the ‘court-endorsed costs structure of litigation,’ where his Honour said:
For present purposes it is enough to say that the position is as it is because members of the profession, both solicitors and counsel, and also professional witnesses, have refused to accept as a proper or sufficient guide to their costs and fees the provisions of scales of costs and charges provided for in schedules … Taxing officers have been obliged to tax bills on the basis of the Rules and the Schedule. The fact that the scales themselves provided ranges of fees of charges for various items depending on degree of difficulty, levels of responsibility and time involved, has not overcome the practical problem which exists.
[1] See Laskari &Laskari and Ors [2015] FamCA 398 at [106] where reference is made to Prantage & Prantage (2013) FLC 93-544.
In Kohan&Kohan (1993) FLC 92-340 (“Kohan”) at [79 605], the Full Court noted that it was “an exceptional case” where the Court departed from the general rule that costs, if awarded, should be on a party/party basis and, instead, be on an indemnity basis. In Yunghanns & Yunghanns (2000) FLC 93-029 at [87 470] – [87 471], the Full Court applied Kohan (supra) and confirmed that an order for the payment of indemnity costs is “a very great departure from the normal standard.”
Nevertheless, as confirmed by the Full Court in Fennessy & Gregorian (2009) FLC 93-399 at [83 360] referring to the decision of Sheppard J in Colgate-Palmolive Co (supra), there are circumstances which may arise that “warrant the Court in departing from the usual course” of awarding party/party costs and, instead, awarding costs on an indemnity basis.
While the categories in which indemnity costs may be awarded are not closed, examples of situations which may justify that course of action are usefully set out by Harper J in Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 at [7] as including:
(i). The making of an allegation, known to be false, that the opposite party is guilty of fraud: Fountain Selected Meats (Sales) Pty Ltd. v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
(ii). The making of an irrelevant allegation of fraud: Thors v Weekes (1989) 92 ALR 131.
(iii). Conduct which causes loss of time to the Court and to other parties: Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, French J, 3 May 1991).
(iv). The commencement or continuation of proceedings for an ulterior motive: Ragata Developments Pty Ltd v Westpac Banking Corporation (unreported, Federal Court, Davies, J., 5 March 1993).
(v). Conduct which amounts to a contempt of Court: EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59.
(vi).The commencement or continuation of proceedings in wilful disregard of known facts or clearly established law: J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA) Branch (No 2) (1993) 46 IR 301.
(vii). The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial: National Australia Bank v Petit-Breuilh (No 2) (unreported, [1990] VSC 395, 18 October 1999).
A similar summary of the kinds of conduct justifying an order for indemnity costs can be found in Colgate-Palmolive Co (supra) at [233]-[234]. Those principles have generally been applied in this Court.[2]
[2] See for instance the useful analysis by the Full Court of the Family Court in Limousin v Limousin (Costs) (2008) 38 Fam LR 478; Watts J in Lambert and Jackson [2011] FamCA 275 and Mortimer J in Ryan v Primesafe [2015] FCA 8 at [110].
As I noted in my decision[3] rejecting the husband’s Application for a stay, the parties in this matter have engaged in quite an extraordinary amount of litigation in a very short period of time. The evidence was not, however, such that I was in a position to make a finding, according to the evidentiary standard of the balance of probabilities, that the husband had engaged in strategically oppressive litigation, as contended by the wife, including by the filing of two separate appeals against interim orders of this Court.
[3] [2019] FamCA 597.
Further, the focus of my decision in dismissing the husband’s Application for a stay was primarily upon the basis of, what I found to be, the husband’s difficulty in establishing hardship in the context of a trial judge’s ability to rectify any error that may have been found in my decision dated 26 July 2019. In other words, my decision dated 26 July 2019 did not focus upon the substantive merit of the husband’s appeal.
In those circumstances, the wife has not established grounds for the Court making an order for indemnity costs.
For the reasons set out below, however, I am satisfied that the husband should pay the costs associated with the dismissal of his Application for a stay in the amount of $4,305.61 together with costs associated with the wife’s costs Application for costs in the amount of $1,372.
Consideration
It is incumbent upon the Court, in the exercise of its discretion, to consider and apply those provisions set out in s 117(2A) of the Act. However, there is nothing to prevent any factor being the sole foundation for any order for costs being made: Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at [130].
I have considered each of those paragraphs and have determined that the factors most relevant to my decision are those set out at ss 117(2A)(a), (e) and (g) of the Act.
Section (2A)(a) of the Act– the financial circumstances of the parties
The wife earns $57,000 annually plus superannuation. From her annual income she is required to support herself and she has primary parental responsibility for the parties’ daughter. Pursuant to the interim property orders made on 26 July 2019,that gave rise to these proceedings, the wife is, however, receiving spousal maintenance by way of a weekly sum together with rental assistance. The wife is also receiving child support payments from the husband.
The solicitor for the husband acknowledged the disparity in income between the parties, however, in explaining the demands on that income, reference was made to paragraphs 20, 21 and 22 of the father’s Affidavit filed 6 December 2019 wherein it is stated:
20.In mid-February 2019 I commenced employment with a new employer, AA Company, whereby I received nett income after tax in the sum of $3781 per week or $196,612 nett per annum. I also received gross income around $250 a week in relation to rental properties I own with my siblings. This figure is based on my income Tax Returns for the 2018 Financial Year.
21.As per my Financial Statement filed 14 May 2019, my weekly expenses (excluding payment for credit card of $1000 per week) are $4860.00. Of this amount is a sum of $440.60 per week ($22,911 per annum) that I pay to [the wife] by way of child support as assessed by the child support agency. This amount also includes the Private Health insurance that I pay for our daughter, X, in the sum of $47 per week ($1,924 per annum).
22. Having regard to my needs as per my Financial Statement filed on 14 May 2019 (excluding the payment for credit cards) as well as my obligations pursuant to the Orders made on 26 July 2019 my annual expenses are as follows:
(a) my adjusted expenses – $250,359.00 pa
(b) spouse maintenance – $37,440.00 pa
(c) rent paid on wife’s behalf – $33,800.00 pa
Total $321,599.00 pa
Against my income (including my share of rent from investment properties) is $332,956.
I note my expenses above do not include the credit card debts that I have to pay both by way of interest and capital reduction.
In summary, the husband has a surplus of income over expenses of approximately $10,000 per annum, however, I accept from that he is required to pay instalments on his credit cards and currently he is living a relatively frugal life staying with his parents and he does not own a motor vehicle.
In summary, the solicitor for the husband contended that I should assess the parties’ financial circumstances to be approximately equal. While recognising the demands on the husband’s income, as set out in his Affidavit filed 6 December 2019, it is nonetheless the case that he earns a significantly greater income than the wife and his employment history shows that he has a much greater earning capacity.
Section (2A)(e) of the Act– whether a party was wholly unsuccessful
It is accepted that the husband was wholly unsuccessful in respect to his stay Application.
Section (2A)(g)– such other matters as the court considers relevant.
In considering whether to award costs in this matter, it is relevant that the Application for a stay of the interim property Orders to which I have earlier referred was in the context of an appeal against those interim property Orders.
A considerable amount of the Courts time is absorbed considering interim property applications. Those applications can concern a variety of matters that commonly include applications for orders to preserve the subject matter of the litigation, to assist the parties to narrow issues in dispute and, to the extent that it is reasonably possible and appropriate, to provide parties with a reasonable standard of living pending the final hearing. It is also not uncommon for a party to apply for a litigation funding order with a view to again, as far as is reasonably practicable and appropriate, attempt to even out the litigation playing field prior to the final hearing.
Those applications are often considered in the context of busy duty lists where the duty judge is required to consider a number of similar applications by other litigants. Judges, nonetheless, do their utmost to ensure that applications are properly considered and that any orders made are necessary, appropriate and just and equitable. The orders are usually interim orders that have effect until more detailed consideration can be given to the evidentiary material of each party at a final hearing. If appeals against interim orders become routine it will have the effect of significantly increasing the backlog of cases awaiting final hearing. This has the potential to adversely impact upon a significant number of Australians who, during a vulnerable time in their lives, are awaiting for their matters to be listed for final hearing.
The point was well made in the decision of of French J, as he then was, in Johnson Tiles Pty Ltd v Esso Australia Ltd (2000)104 FCR 564 where his Honour said at [42]:
The time and resources of the Court and the parties should not lightly be taken up with appeals about decisions in connection with proceedings which do not finally determine the rights of the parties.
Summary
Having regard to each of the matters to which I have referred, I am satisfied that the presumption set out in s 117(1) of the Act, that each party pay their own costs, is displaced and that there should be an order for costs in favour of the wife.
Should an order be made for lump sum costs?
Rule 19.18 of the Family Court Rules 2004 (“the Rules”) provides for the methods of calculating costs. These include, in r 19.18(1)(a) of the Rules, the Court fixing upon a specific amount for costs or, in r 19.18(1)(b) of the Rules, an order for the costs to be assessed on a particular basis: Stoian & Fiening (Costs) [2014] FamCA 944 (“Stoian (Costs)”) at [82].
In Stoian (Costs) (supra)at [91], Kent J endorsed the principles relevant to the application of s 98(4)(c) of the Civil Procedure Act 2005 (NSW), as adumbrated by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd Idoport Pty Ltd & Ors [2007] NSWSC 23, stating it was “similar” to r 19.18 of the Rules. Those principles are, as follows: i. the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation;
ii. the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable;
iii. the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available;
iv. a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place;
v. the gross sum “can only be fixed broadly having regard to the information before the Court”…
[References omitted].
In Parke & the Estate of the Late A Parke (2016) FLC 93-748 at [81,944], Murphy J, after referring to a number of authorities, held that “if the Court is to fix a sum [in respect to cost] it should be ‘fixed broadly having regard to the information before the Court” and, in that respect, the process does not “by its very nature – and usage that a process similar to that involved in a traditional taxation or assessment of costs should take place.”
In that regard, r 19.18(3) of the Rules provides that “in making an order under subrule (1) the court may consider a number of factors” including, as set out in r 19.18(3)(b) of the Rules, “the reasonableness of each party’s behaviour in the case.”
The wife’s solicitor has, in my view, acted reasonably in setting out the basis upon which the wife is seeking a lump sum amount in respect to the costs incurred in relation to the wife’s opposition to the husband’s stay application. I assess those fees as being fair and reasonable, particularly in circumstances where the wife’s solicitor advocate appeared against an experienced senior counsel. Those costs are itemised in a schedule that was included in a tender bundle that became ‘Exhibit A’ in the proceedings. I therefore make an Order for costs in favour of the wife in the amount of $4,305.61 in respect to the husband’s unsuccessful stay Application.
For similar reason, I make a further Order in respect to costs incurred by the wife in making her Application for costs as itemised in a schedule provided by the solicitor for the wife in the sum of $1,372.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice McClelland delivered on 18 December 2019.
Associate:
Date:
0
13
3