Harrell & Nesland (No. 2)
[2021] FamCAFC 35
FAMILY COURT OF AUSTRALIA
| HARRELL & NESLAND (NO. 2) | [2021] FamCAFC 35 |
| FAMILY LAW – APPEAL – COSTS – SLIP RULE – Where the primary judge made a costs order in the respondent’s favour pursuant to r 21.02 of the Federal Circuit Court Rules 2001 (Cth) requiring costs to be assessed on a party and party basis without making an order referring the costs for taxation under Chapter 19 of the Family Law Rules 2004 (Cth) – Dispute over the scale which governed the assessment – Where the primary judge amended the order as to costs pursuant to the slip rule (r 16.05(2)(e) of the Federal Circuit Court Rules), to provide the costs order be referred to taxation under Chapter 19 of the Family Law Rules – Where the primary judge said it was his original intention to make that order – Where the amended order causes a disparity in excess of $250,000 – Where there is nothing on the face of the record, the reasons, the surrounding circumstances, the evidence or how the case was conducted to demonstrate that the primary judge had the intention to refer the costs for taxation under Chapter 19 of the Family Law Rules – Where the primary judge erred – Appeal allowed – Comments made about r 16.05(2)(h) of the Federal Circuit Court Rules which deals with the ability to make an order under the slip rule arising from a unilateral accidental slip or omission by the court or a legal practitioner – Costs certificate granted to the respondent. |
| Family Law Act 1975 (Cth) s 117(2A) Family Law Rules 2004 (Cth) ch 19, Sch 3, r 22.45 |
| Burrell v The Queen (2008) 238 CLR 218; [2008] HCA 34 Gould v Vaggelas (1985) 157 CLR 215; [1985] HCA 75 Harrell & Nesland (2020) FLC 93-940; [2020] FamCAFC 21 Harrell & Nesland (No.2) [2018] FCCA 961 L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590; [1982] HCA 59 Newmont Yandal Operations Pty Ltd v The J Aron Co and The Goldman Sachs Group Incand Ors (2007) 70 NSWLR 411; [2007] NSWCA 195 Owston Nominees No 2 Pty Ltd and Anor v Branir Pty Ltd and Ors (2003) 129 FCR 558; [2003] FCA 629 Ramsay Health Care Australia Pty Ltd v Compton (2016) 247 FCR 387; [2016] FCAFC 125 Storey & Keers Pty Ltd and Anor v Johnstone (1987) 9 NSWLR 446 Whitlock v Brew (1968) 118 CLR 445; [1968] HCA 71 |
| APPELLANT: | Ms Harrell |
| RESPONDENT: | Mr Nesland |
| FILE NUMBER: | BRC | 6489 | of | 2012 |
| APPEAL NUMBER: | NOA | 56 | of | 2019 |
| DATE DELIVERED: | 12 March 2021 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Brisbane (via video link) |
| JUDGMENT OF: | Strickland, Ainslie-Wallace & Watts JJ |
| HEARING DATE: | 22 September 2020 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 22 May 2019 |
| LOWER COURT MNC: | [2019] FCCA 1794 |
REPRESENTATION
| THE APPELLANT: | No appearance |
| COUNSEL FOR THE RESPONDENT: | Mr Hackett |
| SOLICITOR FOR THE RESPONDENT: | Hirst & Co |
Orders
The appeal be allowed.
Orders 1 and 2 made on 22 May 2019 be set aside.
The Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by him in relation to the appeal.
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 Harrell & Nesland (No 2) 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).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NOA 56 of 2019
File Number: BRC 6489 of 2012
| Ms Harrell |
Appellant
And
| Mr Nesland |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Harrell (“the de facto wife”) appeals against orders made under the slip rule by a judge of the Federal Circuit Court of Australia on 22 May 2019. This slip rule order varies costs orders made by the primary judge more than a year earlier, on 19 April 2018. The appeal is opposed by Mr Nesland (“the de facto husband”).
The effect of the variation is that the new costs order required an assessment of the de facto husband’s costs at the scale provided in Sch 3 of the Family Law Rules 2004 (Cth) (“the FLR”) rather than the scale provided in the Federal Circuit Court Rules 2001 (Cth) (“the FCC rules”) and allows the de facto husband to potentially seek an assessment under the FLR which was about $250,000 more than an assessment under the FCC rules.
This appeal proceeded in a somewhat unusual manner. The matter was listed on 22 September 2020 to consider whether or not the de facto wife’s appeal should be dismissed pursuant to r 22.45(2)(a)(i) of the FLR because she had failed to comply with an order made on 13 July 2020, requiring her to file a Summary of Argument by 17 July 2020. On 22 September 2020, the de facto wife did not appear. The de facto husband asked for the appeal to be dismissed. The Court indicated that it was probable that it would, of its own motion, adjourn the matter to attempt to make contact with the de facto wife, given the arguable case raised in the appeal and the significant sum that was at stake. In those circumstances, counsel for the de facto husband proposed that the appeal be heard notwithstanding that the de facto wife was neither present nor had filed a Summary of Argument.
The de facto husband had filed a Summary of Argument on 17 August 2020 and counsel for the de facto husband confirmed that he would expect the Court, where appropriate, to challenge his submissions in support of the orders that the primary judge made under the slip rule.
We accepted that invitation, having in mind that the central arguments arising in the appeal were rehearsed in Harrell & Nesland (2020) FLC 93-940 (“Harrell & Nesland”) where Kent J found that the de facto wife had established that there was an issue of substance raised by the appeal.
The financial proceedings
The litigation which led to the making of a final property settlement order on 10 January 2018 was in four parts:
a)First, there was an initial hearing before a judge of the Federal Circuit Court relating to whether a de facto relationship existed. On 26 August 2014 a declaration was made that a de facto relationship existed and on 13 May 2015 an order was made for costs against the de facto husband;
b)Secondly, there was the hearing of two days before a second judge of the Federal Circuit Court that resulted in the initial property settlement order;
c)Thirdly, the de facto wife successfully appealed that order and the Full Court ordered a rehearing and dismissed each of the parties’ application for costs of the appeal; and
d)Fourthly, there was a second hearing for two days before a third judge of the Federal Circuit Court and on 10 January 2018 a final property settlement order was made dividing the net assets of the parties of slightly more than $3 million, 72 per cent to the de facto husband and 28 per cent to the de facto wife, and the de facto wife’s spousal maintenance application was dismissed.
The costs proceedings
On 13 February 2018, the de facto husband filed an Application in a Case for costs of the financial proceedings which was in the following alternate terms:
2. That, pursuant to Rule 21.02 of [the FCC rules]:
(a)The [de facto wife] pay the [de facto husband’s] costs of the proceedings incurred on or after 27 August 2014 on an indemnity basis fixed in the amount of $345,803.81, or otherwise as agreed or assessed on an indemnity basis;
FAILING WHICH
(b)The [de facto wife] pay the [de facto husband’s] costs of the proceedings incurred on or after 27 August 2014 on a party-party basis fixed in an amount as determined by this Honourable Court or otherwise, as agreed between the parties in writing or as assessed on a party-party basis;
FAILING WHICH
(c)The [de facto wife] pay the [de facto husband’s] costs of the proceedings incurred on or after 27 August 2014 pursuant to Schedule 1 of [the FCC rules] fixed in an amount as determined by this Honourable Court or otherwise, as agreed between the parties in writing or failing agreement, as assessed.
(As per the original)
It can be observed that each of the three proposed alternatives internally contain a further three options of either: fixed costs; having the parties agree on quantum; or having the costs assessed.
Because the third judge was no longer a member of the Federal Circuit Court, the costs hearing on 18 April 2018 proceeded before a fourth judge (“the primary judge”) on the basis of written Outlines of Submissions. Neither party made any additional relevant oral submissions. The de facto husband’s written outline dated 18 April 2018 sought that an indemnity costs order be made in accordance with application 2(a) in a fixed sum or otherwise that costs be assessed on an indemnity basis. The proposed indemnity costs order was amended to a fixed sum of $265,187.48 and excluded work done in relation to the hearing before the first judge about whether the de facto relationship existed and the appeal to the Full Court. Whilst the de facto husband’s written Outline of Submissions acknowledged “the ordinary rule” is “in favour of party-party costs” (de facto husband’s Outline of Submissions dated 18 April 2018, p.6), the de facto husband made no submission, relevant to what order should be made in the event that an indemnity costs order was not made under application 2(a). Nor did the de facto husband make any reference to alternatives 2(b) and 2(c) before the primary judge at the costs hearing on 18 April 2018.
On 19 April 2018 the primary judge determined this application in favour of the de facto husband by making an order in the following terms:
1.That the [de facto wife] pay the [de facto husband’s] costs of and incidental to the proceedings – excluding the costs of appeal – on and from 27 August 2014 until 10 January 2018, to be assessed on a party-party basis.
2.That the [de facto wife] pay the [de facto husband’s] costs of and incidental to the [de facto husband’s] application in a case filed 13 February 2018, including the costs of appearance on 18 April 2018, such costs to be assessed on a party-party basis.
…
It can be seen that the substantive costs order (Order 1) is in the exact terms of the third of the alternatives in application 2(b).
The primary judge provided reasons for judgment (Harrell & Nesland (No.2) [2018] FCCA 961). Having considered relevant matters under s 117(2A) of the Family Law Act 1975 (Cth), the primary judge determined that a costs order should be made in favour of the de facto husband at [19] and concluded:
20.It has been submitted to me that in all of the circumstances I ought to make an order for indemnity costs in favour of the [de facto husband] in the amount of $265,187.48. Those costs represent the actual costs paid by the [de facto husband] subsequent to the making of the de facto declaration order by [a judge of the Federal Circuit Court]. They do not include the costs of the substantive appeal which are not claimed.
21.I am not satisfied that in all the circumstances the [de facto wife] ought to be penalised by the making of an indemnity costs order. It may be that there were other factors motivating her to take the course which she did. There was some uncertainty on her part concerning the extent of assets which might properly form part of the pool, and in my view the [de facto wife’s] insistence on extensive disclosure, though unnecessary in the main, was not motivated by spite. I accept, however, that the [de facto wife] was largely unsuccessful on most of the contested issues at trial. I consider that an award of costs to be assessed on a party-party basis is warranted. Any such assessment will necessarily take into account the fact that there were two trials essentially dealing with the same issues, and that there ought in such circumstances be no double-dipping.
22.I accordingly order that the [de facto wife] pay the [de facto husband’s] costs of and incidental to the proceedings – excluding the costs of appeal – on and from 27 August 2014 until 10 January 2018, to be assessed on a party-party basis.
These paragraphs contain the entirety of the reasons of the primary judge for making the costs order in the form that he did.
Subsequently, the de facto husband obtained, and, on 31 August 2018 served upon the de facto wife, a 251 page Itemised Costs Account claiming a $280,614.66 costs assessment based on ch 19 and Sch 3 of the FLR. On 27 September 2018 the de facto wife served a Notice Disputing Itemised Cost Account on the basis that the assessment should have been in the order of $23,000 calculated in accordance with Sch 1 of the FCC rules. As is explained below the de facto husband ultimately made an application under the slip rule for an order that the costs order be referred to taxation under ch 19 of the FLR. The de facto wife opposed that application.
Relevant costs rules
The applicable and relevant costs rules are contained in rr 21.02(2), 21.09(2), 21.10 and 21.11 of the FCC rules and are in the following terms:
21.02(2)
Order for costs
(2)In making an order for costs in a proceeding, the Court may:
(a) set the amount of the costs; or
(b) set the method by which the costs are to be calculated; or
(c)refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules…
21.09(2)
Application
(2)Subject to paragraphs 21.02(2)(c) and 21.11(2)(a), Chapter 19 of the Family Law Rules does not apply to a family law or child support proceeding in the Court.
21.10
Costs and Disbursements
Unless the court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
(a)costs in accordance with Parts 1 and 2 of Schedule 1;
(b)disbursements properly incurred.
…
21.11
Taxation of costs
(2)When taxing a statement of costs, a taxing office must apply:
(a)for a family law or child support proceedings – the scale of costs set in Schedule 3 of the Family Law Rules; and
(b)for a general federal law proceedings – the scale of costs set in Schedule 2 of the Federal Court Rules.
(3)In this rule:
taxing officer means a Registrar.
Legal principles – slip rule
As a general rule, once a judge has made an order, that judge is functus officio and cannot add to, amend or detract from it. In Burrell v The Queen (2008) 238 CLR 218, Gummow A-CJ; Hayne, Heydon, Crennan and Kiefel JJ said:
21.The power to correct the record so that it truly does represent what the court pronounced or intended to pronounce as its order [L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590 at 594-595] provides no substantial qualification to that rule. The power to correct an error arising from accidental slip or omission, whether under a specific rule of court or otherwise, directs attention to what the court whose record is to be corrected did or intended to do. It does not permit reconsideration, let alone alteration, of the substance of the result that was reached and recorded.
The court has implied jurisdiction to correct orders which do not reflect the court’s intention at the time the order was made or, in some circumstances, what the court would have decided apart from an accidental slip or omission.
This jurisdiction is encapsulated in r 16.05(2)(e) and (h) of the FCC rules which are as follows:
16.05
Setting aside or varying judgments or orders
(2)The Court or a Registrar may vary or set aside a judgment or order after it has been made if:
…
(e)it does not reflect the intention of the Court; or
…
(h)if there is an error arising in the judgment or order from an accidental slip or omission.
The overall purpose of the slip rule is to avoid injustice to litigants (Gould v Vaggelas (1985) 157 CLR 215 at 274–276).
An order which is the product of an intentional decision and correctly records that intention is not amenable to being amended under the slip rule even though it is based upon an erroneous assumption of law (Ramsay Health Care Australia Pty Ltd v Compton (2016) 247 FCR 387 at 392).
Intention rule: r 16.05(2)(e) of the FCC rules
The most common application of the slip rule involves an amendment to an order where it is plain that it does not reflect the judicial intention at the time the order was made.
In Harrell & Nesland, Kent J said at [36]:
… Hodges J, in Skinner v Australian and British Land Co Ltd (1889) 11 ALT 57, made an order that the defendant pay the plaintiff’s costs but did not specify on which scale they were to be paid. In that jurisdiction, without a specific order that costs be paid on the Supreme Court scale, they were presumed to be paid on the County Court scale. Hodges J amended his order under the slip rule stating that he did actually intend the costs to be paid on the Supreme Court scale. His Honour referred to Lawrie v Lees (1881) 7 AC 19 where Lord Penzance said that every Court has the power to vary its orders “in such a way as to carry out its own meaning, and where language has been used which is doubtful, to make it plain” (at 35)…
Although this case from the 19th century might seem to have a similar factual basis, care needs to be taken as to the circumstances in which a primary judge can simply assert that the actual intention of the court was to make an order different from that which was made.
When assessing that judicial intention, it is necessary to look at the surrounding circumstances including the reasons for judgment, the applications made and, if necessary, the evidence and how the case was conducted (Owston Nominees No. 2 Pty Ltd and Anor v Branir Pty Ltd and Ors (2003) 129 FCR 558 at [27]).
A retrospective recollection by a primary judge of the order the primary judge intended to make is not conclusive. In Newmont Yandal Operations Pty Ltd v The J Aron Co and The Goldman Sachs Group Incand Ors (2007) 70 NSWLR 411 Spigelman CJ said at [95]:
... the relevant question is what the Court intended to do and/or what the Court would have done, if the issue had arisen at the time the orders were made. Anything a judge, even the same judge, says about what s/he would do to correct the original orders is no more than evidentiary and may not even be admissible over objection...
Accidental mistake or omission rule: r 16.05(2)(h) of the FCC rules
Rule 16.05(2)(h) of the FCC rules allows the court to alter an order after it is made where the order does not reflect the intention the court would have had but for a failure caused by an accidental slip or omission by the court, or by a lawyer representing a party.
The seminal decision in respect of accidental slips or omissions is L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590 (“L Shaddock”). In that case there was an omission to claim interest on a judgment in both Notices of Appeal in the High Court and the intermediate appellate court. The High Court at 596 referred to comments made by Kitto J in an earlier decision of Whitlock v Brew (1968) 118 CLR 445 at 458 where his Honour had said that in circumstances where there had been no application for interest, a subsequent claim for interest was “plainly misconceived as the slip rule was inapplicable”. The High Court distinguished Kitto J’s comments on the basis that in L Shaddock there was evidence that the failure to apply for interest was the result of accident or inadvertence on the part of counsel.
In Storey & Keers Pty Ltd and Anor v Johnstone (1987) 9 NSWLR 446 at 449, McHugh JA said:
… [A]lthough the principle of the slip rule is clear enough in conception, its application in practice has often proved difficult. The dividing line between a mistake or error which is the result of an accidental slip or omission and a mistake or error which is the product of a deliberate decision has often been difficult to draw. The difficulty became much greater when it was decided that an error might be the result of an accidental slip or omission even though, because of the inadvertence of the party’s legal representative, the point was not raised at the hearing of the action…
(Citation omitted)
The slip rule proceedings
The de facto husband’s slip rule application went through three iterations. Whilst the first two are not included with the appeal papers, they can be identified from that which is struck through in the de facto husband’s Amended Application in a Case filed on 22 May 2019. An Application in a Case on 3 December 2018 sought an order:
That the [de facto wife] pay the [de facto husband’s] costs of and incidental to the proceedings excluding the costs of appeal on and from 27 August 2014 until 10 January 2018, to be assessed on a party party basis pursuant to Schedule 3 of [the FLR].
and an Amended Application in a Case filed on 7 May 2019 changed the order to seek:
The Respondent de facto Husband’s costs pursuant to the order of [the primary judge] dated 19 April 2018 be assessed pursuant to Schedule 3 of [the FLR].
Then, towards the end of the hearing, and in circumstances discussed below, the order sought was amended to read as follows:
Pursuant to Rule 16.05(2) of [the FCC rules], paragraph 1 of the order of [the primary judge] dated 19 April 2018 (amended on 20 April 2018) be varied to read that the costs ordered be referred to taxation under Chapter 19 of [the FLR].
The slip rule application was heard before the primary judge on 22 May 2019. It is of some relevance to set out how the issues in the hearing developed.
The following exchange took place between his Honour and the solicitor for the de facto husband:
HIS HONOUR: Well, you sought indemnity costs, didn’t you?
MR HIRST: We sought three things, your Honour. We sought a cascading series of orders.
HIS HONOUR: Failing which - - -
MR HIRST: Your Honour didn’t agree with paragraph (a).
HIS HONOUR: Yes.
MR HIRST: Your Honour did agree and make an order in terms of paragraph (b). But your Honour will see, critically, that my client also directly sought an order from your Honour in terms of paragraph (c) - - -
HIS HONOUR: Yes.
MR HIRST: - - - which was that the costs of the proceedings be paid pursuant to schedule 1 of [the FCC rules], fixed in an amount as agreed or assessed. Now, it’s crystal clear, in my submission, your Honour, that you did not make that order. And I now want to turn - - -
HIS HONOUR: Well, what’s crystal clear, Mr Hirst, is that you didn’t make reference to any proposed assessment in 2(b).
MR HIRST: Sorry, your Honour. Yes, I did.
HIS HONOUR: Yes.
MR HIRST: Because that’s the – as agreed between the parties or as assessed on a party-party basis.
HIS HONOUR: Yes, I know, but you didn’t say as assessed pursuant to schedule 3 of [the FLR].
MR HIRST: No, I didn’t. I accept that.
HIS HONOUR: And it would have been clearer had you done that.
MR HIRST: I agree. But my submission is that, from your Honour’s judgment, you did not intend to leave [the de facto husband] – bearing in mind that your Honour did not make the order sought in paragraph (c), that your Honour did not intend to make an order that [the de facto husband’s] costs be as contended for by Mr Love, and that is, now assessed on the basis of schedule 1 of [the FCC rules]. And, your Honour, look, the nub of the issue is, there’s a massive - - -
HIS HONOUR: Do you submit, Mr Hirst that it was an omission in 2(b) that you failed to include schedule 3 of the Family Court Rules?
MR HIRST: I do. But your Honour should also pay regard to rule 21.11 - - -
(Transcript 22 May 2019, p.6 line 4 to p.7 line 7)
At page 9 of the transcript, there is a discussion between the primary judge and the solicitor for the de facto husband about which subparagraph of the slip rule, r 16.05(2) of the FCC rules, the de facto husband relied upon:
HIS HONOUR: … the application doesn’t set out which subparagraph of - which subparagraph of subparagraph (2) you apply for the setting aside or varying of the judgment or order.
MR HIRST: Fair enough. We’re relying on subparagraph (e).
HIS HONOUR: (e).
MR HIRST: It does not reflect the intention of the court.
HIS HONOUR: In that it didn’t include reference to [the FLR].
MR HIRST: Indeed.
(Transcript 22 May 2019, p.9 lines 11–23)
A discussion then took place between the solicitor for the de facto wife and the primary judge in which the solicitor for the de facto wife pointed out that the de facto husband’s application filed in February 2018 did not seek an order in accordance with r 21.02(2)(c).
Subsequently the following exchange occurred between the primary judge and the solicitor for the de facto husband:
HIS HONOUR: All right. Just hold on. And your application is an application pursuant to section 16.05(2)(e).
MR HIRST: Yes.
HIS HONOUR: And your application is that the order be varied to read “assessed on a party/party basis pursuant to schedule 3”. Strictly, ought it not be - a matter for you, Mr Hirst, but ought it not be pursuant to twenty - rule 21.02(2)(c), that the question of costs be referred or be the subject of a reference for taxation under part 40 of the - - -
MR HIRST: Well - - -
HIS HONOUR: Sorry, under chapter 19 of [the FLR].
MR HIRST: If that’s what we want, your Honour.
HIS HONOUR: Well, I think you should amend. If you’re making that application, that application isn’t before the court.
MR HIRST: Well, then I will seek leave to amend.
HIS HONOUR: Well, if you - if you seek leave to amend, there’s no - I can see no prejudice to the [de facto wife] to the application in that regard. I will give you time to do that and come up with a new document, an amended application in a case. Mr Love, the issues are live. I can’t see any prejudice on your part to leave being granted to amend the application.
MR LOVE: It’s - - -
HIS HONOUR: And in - - -
MR LOVE: - - - really - - -
HIS HONOUR: - - - in the interests of expediting the hearing and determination of this matter, the proper application should be before the court.
MR LOVE: As it pleases the court, yes.
HIS HONOUR: Well, Mr Hirst, you come back when you’ve done that. And you will have to have an amend - a further amended application in a case prepared and I think, in terms of 21.02(2)(c).
MR HIRST: Thank you.
(Transcript 22 May 2019, p.11 line 18 to p.12 line 14) (Emphasis added)
The matter was stood down and on resumption the solicitor for the de facto husband provided the Court with an Amended Application in a Case which, as already indicated, was in the following terms:
Pursuant to Rule 16.05(2) of [the FCC rules], paragraph 1 of the order of [the primary judge] dated 19 April 2018 (amended on 20 April 2018) be varied to read that the costs ordered be referred to taxation under Chapter 19 of [the FLR].
Subsequently the solicitor for the de facto husband also announced to the Court that he was broadening his application under the slip rule. The following exchange took place between the primary judge and the solicitor for the de facto husband:
MR HIRST: … I was identifying that earlier today I advised the court that the sole basis under which this application is made is under subparagraph (e). It doesn’t reflect the intention of the court. However, I now seek to broaden the application to include subparagraph (h), namely that - - -
HIS HONOUR: As a slip rule?
MR HIRST: Yes.
HIS HONOUR: Well, either way, it’s the same effect that you seek.
MR HIRST: Indeed.
HIS HONOUR: You don’t - you rely on either of those, do you?
MR HIRST: I do…
(Transcript 22 May 2019, p.13, line 32 to p. 14 line 1) (Emphasis added)
There were no submissions made in support of an application under r 16.05(2)(h) apart from the general contention by the solicitor for the de facto husband that he had failed during the costs hearing to make an application pursuant to r 21.02(2)(c) of the FCC rules.
Faced with this amended application, the solicitor for the de facto wife was invited to make submissions and the following exchange took place between the primary judge and the solicitor for the de facto wife:
HIS HONOUR: And - yes. Mr Love, do you have any further submissions?
MR LOVE: No. I just make clear that the order that Mr Hirst is seeking - I need to address (h) now as well as (e) but the same principles apply, as your Honour has pointed out.
HIS HONOUR: Same principles, really.
MR LOVE: He didn’t apply for it. It wasn’t raised in submissions. It wasn’t raised on the bar table. Accordingly, your Honour didn’t – didn’t address it in your reasons. How can it possibly be a slip or an omission?
HIS HONOUR: Yes.
(Transcript 22 May 2019, p.14 lines 27–39) (Emphasis added)
On 22 May 2019 the primary judge varied orders 1 and 2 made 19 April 2018 in the de facto husband’s favour so that those orders now provided:
1.Pursuant to Rule 16.05(2) of [the FCC rules] paragraph 1 of the order of [the primary judge] dated 19 April 2018 (amended on 20 April 2018) be varied to read that the costs ordered be referred to taxation under Chapter 19 of [the FLR].
2.Pursuant to Rule 16.05(2) of [the FCC rules], paragraph 2 of the order of [the primary judge] dated 19 April 2018 (amended on 20 April 2018) be varied to read that the costs ordered be referred to taxation under Chapter 19 of [the FLR].
In the primary judge’s reasons for judgment of 22 May 2019, his Honour said:
4.In its terms, the application in a case filed on 3 December 2018 clearly sought an order that the de facto husband’s costs ordered to be paid be assessed pursuant to schedule 3 of [the FLR]…
5.The application in a case filed on 3 December 2018 was filed because it was asserted by the applicant de facto wife that the order made by the Court on 19 April 2018 correctly reflected an intention of the Court to order that costs be payable in accordance with parts 1 and 2 of schedule 1 of [the FCC rules]. That is in part based on the submission that rule 21.10 of the FCC Rules provides that unless the Court otherwise orders, a party is entitled to such costs in accordance with schedule 1 of the FCC Rules.
6.The question of costs, which was before the Court on the hearing of the matter on 18 April 2018, was an application for the payment of costs, firstly on an indemnity basis, secondly for costs to be assessed on a party/party basis, and thirdly, for costs to be assessed in accordance with schedule 1 of the FCC Rules. It is clear from the reasons of the Court handed down on 19 April 2018 that the Court was not minded to make an order for the payment of the [de facto husband’s] costs on an indemnity basis.
7.It is further clear that the Court was not persuaded to make an order that costs be paid in accordance with schedule 1 of the FCC Rules. The order as made reflected the order as sought in paragraph 2(b) of the application filed on 13 February 2018. The order as made, though it did not make an order for the assessment of costs pursuant to rule 21.11 of the FCC Rules, was nevertheless an order which clearly was intended to be so made pursuant to rule 21.11(2)(a) of the FCC Rules.
…
10.Mr Hirst, who appears on behalf of the [de facto] husband, makes that application for the variation of the order based upon either rule 16.05(2)(e) or (h) of that rule.
11.The Court did not have the intention of denying to the [de facto] husband the benefit of an order for the assessment of costs, as made in the application filed on 13 February 2018, pursuant to rule 21.02 of the FCC Rules, for the payment of costs under chapter 19 of [the FLR]. It was not the Court’s intention, by the omission of reference to taxation, pursuant to rule 21.11(2) (a) of the FCC Rules, to deny the [de facto] husband the benefit of such order.
12.The order, accordingly, is varied in accordance with the further amended application filed by leave today, in paragraphs 1, 2 and 3 thereof. [Paragraph 3 was an application by the de facto husband for the dismissal of an application by the de facto wife which is not relevant to this appeal].
Grounds of appeal
The Amended Notice of Appeal filed 13 January 2020 challenges orders 1 and 2 made by the primary judge on 22 May 2019 and seeks an order that “Orders 1 and 2 of the Orders of 22 May [2019] be discharged”.
Ground 1 was abandoned in proceedings before Kent J on 14 January 2020 (Harrell & Nesland at [31]).
Ground 2
Ground 2 is in the following terms:
The learned Judge of the Federal Circuit Court erred in that he failed to provide adequate reasons in his judgment handed down on 22 May 2019 for the application of 16.05(2)(e) of [the FCC rules].
The de facto husband argued that the primary judge adequately explained the order of 22 May 2019 in [4]–[12] of his reasons for judgment of that day.
The de facto husband’s primary submission at the slip rule hearing was that the order should be altered because it did not reflect the primary judge’s intention at the time the order was made. As an alternative and in the event that the primary judge did not accept this primary submission, the de facto husband argued that the matter should be dealt with on the basis that the proposed amended order would have been the order that his Honour would have made had it not been for the accidental mistake or omission of the lawyer for the de facto husband.
The gravamen of the primary judge’s reasons are set out in the second sentence of [7] and the two sentences of [11] to which we have just referred. The primary judge made it explicitly clear at [7] that his Honour was determining the matter on the basis that the order he was making under the slip rule was “an order which clearly was intended to be… made”. At [11] the primary judge refers to not having the intention of omitting to make an order for taxation pursuant to Sch 3 of the FLR.
The primary judge does not deal with the slip rule application on the basis that there was an accidental slip or omission on behalf of the lawyer for the de facto husband to make an application pursuant to r 21.02(c) and r 21.11(2)(a) of the FCC rules, and that his Honour would have made the order but for that failure.
The basis upon which the primary judge has made the slip rule order is clear and adequately explained by his Honour’s assertion that at the time the order was made his Honour had an intention to make a different order.
Accordingly, Ground 2 fails.
Grounds 3 and 4
Grounds 3 and 4 are in the following terms:
3.That the learned Judge of the Federal Circuit Court acted on [a] wrong principle in concluding that rule 16.05(2)(e) of [the FCC rules] could be relied upon in the circumstances to vary the Orders of 19 April 2018 (amended on 20 April 2018) in circumstances where the evidence was insufficient to support an inference that there was an “accidental slip or omission” on the part of the learned Judge in the first instance so as to enliven the power.
4.That even if the learned Judge of the Federal Circuit Court accidentally slipped or omitted in the first instance to consider his discretion pursuant to rule [21.02(2)(c)] of [the FCC rules] to refer the costs for taxation under Chapter 19 of [the FLR], the learned Judge acted on wrong principle in concluding that rule 16.05(2)(e) was available in circumstances where discretion could have been exercised in more than one way in the first instance.
These grounds can be said to challenge the finding by the primary judge that his Honour intended to make a different order at the time the order was made, given that they only refer to r 16.05(2)(e) of the FCC rules.
Rule 21.02(2)(b) and (c) allow for costs orders to set a method by which costs are to be calculated or to refer the costs for taxation under the FLR. Rule 21.09(2) provides that unless the court refers costs for taxation, ch 19 of the FLR does not apply to family law proceedings in the Federal Circuit Court.
The words in r 21.10 “[u]nless the court otherwise orders” creates a default position in favour of the Schedule in the FCC rules, namely, that costs are to be in accordance with Pt 1 and Pt 2 of Sch 1 of the FCC rules.
The order of 19 April 2018 is an order which attracts the provisions of r 21.10 of the FCC rules and on its face contains no other order. The slip rule order made by the primary judge is an order which “otherwise orders” and which clearly demonstrates the fact that the order in its original form did not.
It was the position of the de facto husband that a natural reading of the initial costs application would have the reader understand that the orders sought cascaded from indemnity costs, then to party/party costs under Sch 3 of the FLR and then to party/party costs under Sch 1 of the FCC rules.
Counsel for the de facto husband submitted that it would be absurd to suggest that the second and third alternate applications sought the same order. However, it would not be absurd to make that suggestion if in fact that was the legal effect of the two alternate orders which were sought and it would be particularly not absurd in the circumstances where the lawyer for the de facto husband conceded to the primary judge during the slip rule hearing that he had erred by omitting to seek an order to refer costs for taxation under ch 19 of the FLR.
Next, the de facto husband argued that the use of the word “assessed” in the costs order is a shorthand way of expressing the requirements of “taxing a statement of costs” as used in r 21.11(2)(a) (de facto husband’s Summary of Argument filed 17 August 2020, paragraph 14).
However, “assessment” is not limited to assessing costs under the FLR. The third alternate order as sought in April 2018 actually envisaged an assessment of costs pursuant to Sch 1 of the FCC rules and was an acknowledgement that an order made under r 21.10 may also need assessment. As counsel for the de facto husband conceded, that may arise in a circumstance where an order has been made under r 21.10(a) and there is a dispute about which of the 16 items in Sch 1 of the FCC rules should be included when calculating the amount of the costs awarded. Counsel for the de facto husband accepted that if there was a dispute about quantum to be paid on a party/party basis under Sch 1 of the FCC rules, that dispute could be determined by the process of an assessment.
Accordingly, the use of the word “assessed” is not necessarily a shorthand way of expressing a requirement to tax a statement of costs under the FLR.
At the costs hearing before the primary judge on 18 April 2018, neither ch 19 nor Sch 3 of the FLR was referred to in the de facto husband’s written Outline of Submissions dated 18 April 2018, during oral submissions on 18 April 2018, nor in the primary judge’s reasons or orders of 19 April 2018.
With respect to the primary judge, the order made had the legal effect of being an order under the FCC rules. It is an order made in the terms sought by the de facto husband. As earlier set out, there is nothing on the face of the record, the reasons, the surrounding circumstances, the evidence or how the case was conducted to demonstrate that the primary judge had the intention to refer the costs for taxation under ch 19 of the FLR.
The record indicates that the primary judge intended to make the order which he did. On the face of the record neither the primary judge nor the solicitor for the de facto husband had r 21.11(2)(a) of the FCC rules in mind when making or seeking the order.
In this case, r 16.05(2)(e) of the FCC rules does not provide a basis for the orders made 22 May 2019.
Accordingly, there is merit in Grounds 3 and 4.
The de facto husband’s application under r 16.05(2)(h)
Given that the primary judge found that he had the intention to make the order sought in the slip rule application and deal with the application under r 16.05(2)(e) of the FCC rules, his Honour did not deal with the application under r 16.05(2)(h). Given the history of this litigation, we think it expedient to make some comment about that application.
Unlike L Shaddock where the High Court said they had no doubt that if the matter had been adverted to it would have made the order, in this case the primary judge does not say that had it been argued on 18 April 2018 he would have made the order. Saying it was not his Honour’s intention to deny the de facto husband the benefit of an order is different from saying he had no doubt he would have made an order in circumstances where the wife was not provided the opportunity to ventilate arguments against that order being made because no such order was applied for.
Given the way this issue developed during the slip rule hearing, and apart from vague statements made by the solicitor for the de facto husband from the bar table, there is no evidence the de facto husband’s solicitor’s failure to make an application under r 21.02(2)(c) was the result of an accident or inadvertence.
The statement by the primary judge during submissions that r 16.05(2)(e) and (h) apply the same principle is incorrect given the statements of principle to which we have earlier referred.
No submissions were made during the slip rule hearing by the de facto husband in support of an application under r 16.05(2)(h), nor was any authority referred to.
The application of r 16.05(2)(h) involves an exercise of discretion. The court has to find and give reasons as to why an order should be altered on the basis that the court would have had an intention to make an order in the altered form but for the failure that was caused by an accidental slip or omission by the court or by a lawyer for a party.
By the time of the slip rule hearing the Court knew that the amount of the costs assessed at scale (including the costs of preparation of the bill of costs) was more than $265,187.48, being the fixed sum sought for indemnity costs rejected by the primary judge as being a just amount at the costs hearing. In determining an application under r 16.05(2)(h), the primary judge is entitled to take into account the proportionality of the costs now sought in the context of the nature of the litigation. In this case it is far from clear how the primary judge would have exercised his Honour’s discretion had the application that was eventually made before him been made initially.
Conclusion
Given the merit in Grounds 3 and 4, the appeal will be allowed and orders 1 and 2 made on 27 May 2019 will be set aside.
Costs
In the event that the appeal was allowed, the de facto husband sought a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth). The appeal has succeeded on a question of law and a costs certificate is granted.
I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ainslie-Wallace & Watts JJ) delivered on 12 March 2021.
Associate:
Date: 12 March 2021