HARPS & HARPS

[2009] FamCA 839

FAMILY COURT OF AUSTRALIA

HARPS & HARPS [2009] FamCA 839

FAMILY LAW – COSTS – where husband concedes that an order for costs is justified but opposes order for costs on indemnity basis – where husband seeks to challenge amount of costs claimed by the wife – where costs resulting from husband’s non-compliance with orders of the court – whether husband’s conduct amounts to a special or unusual feature to justify departure from ordering party-party costs.

FAMILY LAW – COSTS – quantum of costs - where wife has costs agreement with her solicitors – where husband challenges reasonableness of agreement – where no further evidence before the court – comparison of agreement with scale of costs – where Judge not satisfied that all the work identified was necessary for the purposes of dealing with the non-compliance of the husband

Family Law Act 1975 (Cth) s 117

Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225

LGM v CAM (2008) FLC 93-355

APPLICANT: Mr Harps

RESPONDENT: Ms Harps

FILE NUMBER: DNC 581 of 2007

DATE DELIVERED: 12 March 2009

PLACE DELIVERED: Adelaide

JUDGMENT OF: Strickland J

HEARING DATE: 12 March 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Giacomo

SOLICITOR FOR THE APPLICANT: Ward Keller Lawyers

COUNSEL FOR THE RESPONDENT: Mr Sochacki

SOLICITOR FOR THE RESPONDENT: Peter Sochacki & Associates

Orders

1. That the husband pay to the Trust Account of the wife’s solicitors on behalf of the wife the sum of FOURTEEN THOUSAND EIGHT HUNDRED AND FIFTY DOLLARS [$14,850.00] inclusive of GST, such sum to be paid within 2 months of the date hereof.

2. That the application for costs contained in the Application in a Case filed by the wife on 10 November 2008 be dismissed and that part of the application be removed from the active pending cases list.

IT IS NOTED that publication of this judgment under the pseudonym Harps & Harps is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: DNC 581 of 2007

MR HARPS

Applicant

And

MS HARPS

Respondent

EX TEMPORE REASONS

1. I have before me an application for costs by the wife against the husband.  That application is contained in an application in a case filed by the wife on 10 November 2008. 

2. On 23 December 2008 I adjourned the application to today on the basis that it was opposed, and I made orders for the filing and service of any affidavits on which the wife sought to rely. 

3. There are two affidavits relied on, namely an affidavit of the wife's solicitor filed on 19 January 2008 and a further affidavit sworn on 9 March 2009 and filed today.

4. In that same order of 23 December 2008 I made an order that the husband file and serve any affidavit in response as he may be advised. 

5. The husband has not filed any responding affidavit, and at the commencement of the hearing today Ms Giacomo indicated that her client was not opposing an order for costs being made and conceded that there were circumstances that justified an order for costs, but he was still opposing any order for costs on an indemnity basis, and in any event he wanted to challenge the amount of costs sought by the wife.

6. It was appropriate for the husband to make the concession that he has because in my view there are circumstances here that justify an order for costs, and I have made that quite clear on previous occasions.

7. However the wife does in fact seek an order for indemnity costs, and what she seeks is an order for payment of $24,812.15.  That is inclusive of GST with the principal amount being $22,556.50.  The detail of that amount is outlined in paragraph 5 of the affidavit filed by the wife's solicitor on 19 January 2009.

8. I am told by Mr Sochacki, counsel for the wife, that out of that total sum $15,262.50 relates specifically, on his case, to the costs of preparation and attending at hearings resulting from non-compliance by the husband with orders of this court, and the balance he termed as relating to work flowing from that non-compliance but not necessarily involving preparation for a hearing or attendance at a hearing and includes, for example, work done in briefing a single expert witness, Mr C.

9. The onus is on the wife to satisfy me that an order for indemnity costs is appropriate, and for my part, the primary decision in this area is the case of Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225, where Sheppard J set out examples of circumstances warranting the exercise of the discretion to award costs on an indemnity basis.

10. That decision has been referred to and applied in a number of cases in this court, both at first instance and on appeal.  For example, I mention an unreported decision of the Full Court of the Family Court of Australia delivered on 30 October 1997 of F v M. 

11. Although Sheppard J in Colgate-Palmolive (supra) set out, very helpfully, examples of circumstances warranting the exercise of the discretion to award costs on an indemnity basis, his Honour went on to say - and this has also been adopted and said on many occasions in this court - that the categories of circumstances in which indemnity costs can be ordered are not closed. Also, significantly, the mere existence of facts and circumstances capable of warranting an order for costs on an indemnity basis does not mean that the court is obliged to make such an order, as costs ultimately remain in the discretion of the court, having regard to the factors set out in s 117 and particularly s 117(2A).

12. Looking at the examples of circumstances set out in Colgate‑Palmolive (supra), this case does not fit within any of those examples and there is no case that I know of which is precisely on all fours with this.  In summary, the basis of the application is that the husband has failed to comply with orders of this court in relation to discovery, the payment of money, and the provision of information and documents to the single expert witness.  Those failures have necessitated further applications being made by the wife over a relatively significant period of time and that has involved a number of attendances in this court and obviously work in preparing documents for the purposes of those court appearances.

13. Of course, the issue of conduct is a relevant factor, under s 117(2A). In particular there is subparagraph (c) which provides:

    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.

14. Further, subparagraph (d), which provides:

    Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court.

15. Thus those factors which are present in this case and on which the wife relies are factors that are relevant under s 117(2A).

16. What then has to be established to satisfy the court that the costs should be ordered on an indemnity basis.  It is trite to say that it is left to the discretion of the court, but it seems that the exercise is to look at, for example, the seriousness of the alleged breaches and the conduct generally of the party against whom the costs order is sought and, on the other side of the coin, the impact of that upon the other party who is applying for costs. 

17. Indeed Sheppard J, referring back to Colgate‑Palmolive (supra) for a moment, said there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice of ordering costs on a party-party basis.

18. Thus, what is the special or unusual feature in this case to justify the court in departing from the ordinary practice?  It can only be the nature of the conduct of the husband in failing to comply with orders in relation to discovery and the like, as I identified a moment ago.

19. Ms Giacomo has made the submission that a finding of contempt does not automatically lead to the awarding of indemnity costs, and the authority that she relies on is the Full Court decision of LGM v CAM (2008) FLC 93-355. Thus, she says, even in the most serious of circumstances, namely, where there is a finding of contempt, that does not automatically lead to an award of indemnity costs. Accordingly, the circumstance of there being a finding of contempt here does not necessarily justify an indemnity costs order.

20. However, it is still a matter of discretion, and in my view there are special or unusual features in this case which justify departing from the ordinary practice.  I will not repeat all of the husband’s failures to comply with orders and the like, but there are a number of them.  That is the first issue.  The second issue is they extended over a lengthy period of time, and there were a number of opportunities during that period of time when the husband could have remedied his failure to comply, but he ignored those opportunities and indeed continued to breach orders until December 2008.  He also failed to comply with the Family Law Rules and with reasonable requests from the wife’s solicitor.

21. Importantly, Mr Sochacki on behalf of the wife is not seeking any costs after 2 December 2008, save and except in relation to the costs of the application itself. 

22. Although I have not been asked to make a finding of contempt in this case, I note that it was only a matter of days after I made an order for moneys to be paid from a particular account that the husband then withdrew $50,000 or thereabouts from that account and paid it into another account operated by his business.  Unfortunately, over the entire period of time that was typical of the husband's conduct and his response to perfectly legitimate applications being made by the wife and orders being made by me.  Thus to repeat, in my view there is evidence here of special or unusual features to justify this court in departing from the ordinary practice.

23. In looking at what precise order I should make, as I have said, the amount of costs sought by the wife is $22,556 plus GST.  However, in determining the amount of any indemnity costs to be awarded I need to have regard to any costs agreement, if there is one in existence.  Here there is a costs agreement between the wife and her solicitors and that costs agreement is annexed to the affidavit of Mr Sochacki sworn on 9 March 2009 and which I am treating as being filed today.  Ms Giacomo though has challenged the reasonableness of that costs agreement.

24. However, neither party chose to put any further evidence before me in relation to that issue.  All I have is the costs agreement itself.  There is no evidence of any comparable costs agreements, either in the particular area of practice or amongst a group of solicitors.  The only thing I can compare the agreement with is the scale of costs which is contained in the Family Court Rules.  Thus, for example, the hourly rate in the costs agreement is $350, and the hourly rate under the scale is $192 or thereabouts.  Mr Sochacki though has made a relevant point, namely that it is not necessarily appropriate to compare just those two items because it may be that other items are higher in the scale than in the costs agreement.  I accept that as a general proposition, but it still seems to me that the costs in the agreement are generally higher.

25. Mr Sochacki, of course, has submitted that his costs agreement is a reasonable one.  Indeed he suggests the amounts contained in the costs agreement are low on a comparative basis.  However, I do not know what I can do with that.  I have no evidence to compare it with.  All I have is the costs agreement and Mr Sochacki's submission from the bar table.

26. Equally, I have no evidence from Ms Giacomo, and she simply submits that the costs agreement is unreasonable.  Now, not unreasonable in its terms such that there is any issue about the validity of the costs agreement, but unreasonable as the basis for the indemnity costs.  In other words, if I made an order in terms of what the wife seeks, that calculation will be on the basis of the costs set out in the costs agreement, and that is what Ms Giacomo quibbles with.  She says, quite rightly that the husband cannot challenge that because he did not until now know what those costs were.  He should not have to pay costs on the basis of costs set out in a costs agreement where there is no evidence to indicate the reasonableness or otherwise of that costs agreement.

27. I consider that both sides' positions in that regard are reasonable.  I mean, this is a costs application, and it is not intended to be a lengthy hearing.  There is a limit to the evidence that each party can present, and I have to do the best I can with what I have before me.  As I say, all I have is the costs agreement.  Submissions have been made on it, I have been taken to various aspects of it, and comparisons made and issues raised by Ms Giacomo, particularly, with some of the items in paragraph 5 of the affidavit.  Ms Giacomo also challenges whether all the work claimed in paragraph 5 was necessary for the purposes of the proceedings the subject of this application. 

28. The difficulty I have with that claim is that, although there is a description of each item and an amount, it is frankly impossible for me to make an informed assessment of whether the work claimed is in fact related to the work that is the subject of the application for costs.  In other words, for example, whether it was required as a result of the noncompliance by the husband with the orders that I have referred to.

29. In some circumstances, given those difficulties, the judicial officer has little choice but to refer the matter off to taxation.  However, that is not my practice.  I prefer whenever I can to fix an amount of costs, if an order is justified, and that is the case here.

30. Indeed both parties have asked me not to send the matter off to taxation and to make a decision on the information that I have.  Although I am reluctant to do that, given as I say the difficulties that I have just referred to, I am prepared to do it and to do the best I can on the evidence that is before me. 

31. In my view then, I cannot be satisfied that all of the work identified was necessary for the purposes of dealing with the noncompliance by the husband that I have referred to and I am not necessarily satisfied that the husband should have to pay costs based on some of the amounts in the costs agreement.

32. Thus, I propose to fix the amount of costs and I fix it at $13,500 plus GST.

33. I have raised with counsel the question of time to pay.  Ms Giacomo is without instructions, but Mr Sochacki has suggested that it should be paid within 28 days.  He suggested that there are other issues that might be determined by how quickly or otherwise this amount is to be paid.  I do not know to what he is referring and frankly it does not strike me as being anything relevant to any time to pay that I should allow the husband.  In any event I propose to allow 2 months.

I certify that the preceding 33 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 12 March 2009.

Associate