Hirst and Hirst & Anor

[2016] FamCA 27

FAMILY COURT OF AUSTRALIA

HIRST & HIRST AND ANOR [2016] FamCA 27

FAMILY LAW – COSTS

Family Law Act 1975 (Cth) s 117

APPLICANT: Mr Hirst

FIRST RESPONDENT: Ms Hirst

SECOND RESPONDENT: Ms B Hirst

FILE NUMBER: BRC 8139 of 2014

DATE DELIVERED: 28 January 2016

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane: In Chambers by way of written submissions

JUDGMENT OF: Hogan J

HEARING DATE: In Chambers by way of written submissions

REPRESENTATION

SOLICITOR FOR THE APPLICANT: VC Catanzaro Solicitor

SOLICITOR FOR THE FIRST RESPONDENT: Best Wilson Buckley Family Law

SOLICITOR FOR THE SECOND RESPONDENT: VC Catanzaro Solicitor

Orders

1. The First Respondent, Ms Hirst, pay the costs of and incidental to the proceedings incurred by Ms B Hirst after 23 June 2015, with such costs:

   (a)to be paid on the standard party/party basis in an amount agreed between Ms Hirst and Ms B Hirst or, failing agreement, as assessed on the standard party/party basis; and

   (b)to be paid within 60 days of either:

   (i)the making of a final order in; or

   (ii)the final resolution of,

   the property settlement proceedings between Ms Hirst and Mr Hirst.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hirst & Hirst and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 8139 of 2014

Mr Hirst

Applicant

And

Ms Hirst

First Respondent

And

Ms B Hirst
Second Respondent

REASONS FOR JUDGMENT

1. The Applicant husband and First Respondent wife are currently involved in litigation in this Court. On 14 October 2015, I made orders which struck out paragraphs 1 and 2 of the Amended Response filed by the wife[1] (by which she sought orders against Ms B Hirst, the husband’s mother) and ordered that she (Ms B Hirst) be removed as a party to the proceedings.

   [1]           on 31 March 2015.

2. Ms B Hirst now seeks an order that the wife pay her costs of and incidental to the proceedings on an indemnity basis, either quantified in the amount of $22,408.86 or as determined following assessment on an indemnity basis.

3. The wife opposes the making of an order that she pay Ms B Hirst’s costs.

Applicable principles

1. Section 117(1) of the Family Law Act 1975 (Cth) (the Act) provides that each party to proceedings under the Act shall bear his or her own costs. However, if the Court is satisfied there are circumstances which justify it, the Court may make such order as to costs as it considers just.[2]  In considering what order, if any, as to costs should be made, the Court must have regard to the matters set out in s 117(2A) of the Act.

   [2] Section 117(2) Family Law Act (1975) (Cth).

2. It is accepted that none of the parties is in receipt of Legal Aid.

Submissions made on behalf of Ms Hirst

1. Counsel for Ms B Hirst submitted that the Court would be persuaded that the circumstances justify the making of an order that the wife pay her costs of and incidental to the proceedings because:

   a)she (Ms B Hirst) was wholly successful in her application that the wife’s claim against her should be dismissed on the basis that the Statement of Claim filed on behalf of the wife and the wife’s evidence (as contained in her affidavit material) failed to disclose a cause of action; and

   b)the wife rejected an invitation, conveyed to her in correspondence dated 19 June 2015, to withdraw her case against Ms B Hirst with the consequence that she (Ms B Hirst) incurred legal costs in respect of which she should be compensated; and

   c)her (Ms B Hirst’s) financial position is not strong in that the amount she has paid to her legal representatives equates to about half of her 2014 taxable income, is not an expense which is deductible to her, has been borrowed and is not recoverable from any other source whereas the wife is in paid employment and may well receive ‘a capital sum of significance’ from the property settlement proceedings in which she is engaged with the husband; and

   d)the wife was wholly unsuccessful in her claim against her; and

   e)the fact that the wife does not have an excess of income over expenditure does not mean that she is immune from an adverse costs order nor is it the law that a party seeking to share in the proceeds of a relatively small asset pool should not be ordered to pay the costs of a person - not a party to a marriage or relationship - who was joined to  property settlement proceedings; and

   f)the fact that an order for costs may not be able to be satisfied immediately does not mean that such an order should not be made; and

   g)Ms B Hirst’s financial circumstances are known in that they are described in the wife’s affidavit material – in so far as her legal interests in entities is concerned - and she could not be expected to incur the costs of having her property valued so as to support her applicant for costs; and

   h)irrespective of the source of the funds used by Ms B Hirst to pay her legal expenses associated with her involvement in the litigation as a consequence of the orders sought by the wife against property she owns, she should be compensated for the expenses she has incurred as a consequence.

Submissions made on behalf of the wife

1. In opposing the application that the wife pay Ms B Hirst’s costs of and incidental to the proceedings on an indemnity basis (or at all), the wife’s legal representatives made the following submissions:

   a)the wife’s financial circumstances[3] are that her average weekly income is $1,188.00 while her personal and child related expenditure is $1,533.50 per week and, in addition, she also owes her solicitors the sum of $73,605.81 (as at 1 November 2015) and the sum of $7,150.00 to Counsel; and

   b)given the value of the property of the husband and wife is about $403,956.00 (non-superannuation property) and $135,688.00 (superannuation assets), the wife’s ultimate entitlement – whatever it is - is not as significant as the submissions made on behalf of Ms B Hirst sought to convey; and

   c)the wife has no capacity to pay anything toward Ms B Hirst’s costs from income and has no capacity to pay any amount from capital or final resources until the conclusion of the ongoing property settlement proceedings; and

   d)the Court has no evidence as to Ms B Hirst’s financial circumstances, nor is there admissible evidence that she has borrowed funds in order to meet her own legal expenses, nor that any amounts borrowed must be repaid; and

   e)the wife has not delayed in prosecuting the proceedings; and

   f)Ms B Hirst was joined to the proceedings as a consequence of an order made by Judge Howard on 16 April 2015; and

   g)when Ms B Hirst’s solicitor wrote in June 2015 inviting the withdrawal of the proceedings against her, no disclosure of relevant documents had occurred; and

   h)on 7 July 2015, Counsel for Ms B Hirst unsuccessfully sought that a Registrar hear and determine the application in a Case seeking the orders that were ultimately made; and

   i)between 17 December 2014 and 3 August 2015, it was “entirely reasonable” for the wife to prosecute the proceedings against Ms B Hirst “to obtain documents by way of disclosure which were relevant to the issues in the proceedings”[4]; and

   j)whilst an offer to resolve proceedings between the wife and Ms B Hirst was made in correspondence dated 19 June 2015, that correspondence contained no offer in relation to the compromise of legal costs incurred by Ms B Hirst.

   [3]           as outlined in her Financial Statement filed 20 November 2014.

   [4]           Paragraph 5.10(h), written submissions on behalf of the wife filed 10 November 2015.

Relevant correspondence

1. I note the following:

   a)on 19 June 2015, Ms B Hirst’s solicitors advised the wife’s solicitors that they were unable to identify a cause of action arising from the Claim and Statement of Claim delivered by them under cover of correspondence dated 12 June 2015 and, with this in mind, invited the wife to withdraw her application against Ms B Hirst and advised that should this course not be followed they held instructions to bring an application to strike out the Claim and Statement of Claim as well as to make application for costs;

   b)on 23 June 2015, the wife’s solicitors conveyed her instructions that she did not agree to withdraw the action against Ms B Hirst;

   c)correspondence on behalf of Ms B Hirst dated 3 August 2015 reiterated the contention that the wife’s claims against her were not correct, repeated that there was no cause of action against her as suggested by the wife and contained a second invitation to withdraw the actions insofar as it related to Ms B Hirst.

Discussion

1. Having regard to the submissions made on behalf of both Ms B Hirst and the wife, I have concluded that the following circumstances justify the making of an order that the wife pay Ms B Hirst’s costs of and incidental to the proceedings after she determined to reject Ms B Hirst’s invitation to withdraw the proceedings against her:

   a)Ms B Hirst was successful in persuading the Court as to the orders made vis a vis herself and the wife; and

   b)the basis upon which the wife relied to join Ms B Hirst (a person not a party to the relationship) to the proceedings was not ultimately accepted by the court; and

   c)joinder of a person to property settlement proceedings is not the appropriate method by which to access documents said to be relevant to the issues in dispute between the husband and wife; and

   d)the wife imprudently refused two offers made by Ms B Hirst to discontinue the proceedings against her; and

   e)whatever the full extent of Ms B Hirst’s financial circumstances, she has incurred legal expenses as a consequence of the orders sought by the wife in respect of her property; and

   f)the wife will have the financial capacity – once the property settlement proceedings are finalised – to meet an order for costs.

On what basis should an order for costs be made?

1. It is submitted on behalf of Ms B Hirst that the Court would be persuaded to depart from the usual basis on which costs are ordered to be paid by one party for the other (namely, on a party/party basis) and to make an order that the wife pay Ms B Hirst’s costs on an indemnity basis because the wife either commenced or, at least, continued the proceedings against Ms B Hirst in wilful disregard of known facts or clearly established law and imprudently refused the offer made in the 19 June 2015 correspondence to withdraw the action against her.

2. In resisting this aspect of the application, the wife’s solicitors submitted that, if costs are ordered, the same should be calculated on a party/party basis because:

   a)there is no proper basis for the Court to be persuaded to depart from this usual approach, especially given that an award of costs on an indemnity basis is still an exception in this jurisdiction; and

   b)the Court would not be persuaded that the circumstances here are of an exceptional nature so as to warrant a departure from the awarding of costs on a party/party basis.

3. Authority makes clear that unless there are exceptional circumstances, an order for costs should be made on a party and party basis: see D & D Costs (No. 2) (2010) FLC 93-435 in which the Full Court reviewed extensively earlier authorities, including Limousin & Limousin (Costs) (2008) 38 Fam LR 478 and Kohan and Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248.

4. Having regard to the principles outlined in such authorities, I am not persuaded that the circumstances of this case are such as to warrant a departure from the usual course that an order for costs should be made on a party and party basis.

5. In opposing an order fixing the quantum of costs, the wife’s legal representatives submitted that the costs to be paid should be assessed, especially given that the Costs Agreement between Ms B Hirst and her solicitor is not in evidence, there is not admissible evidence to substantiate the quantum of the costs claimed, certain aspects of the itemised bill (as set out at paragraph 7.3 of the submissions) are the subject of challenge (as particularised in paragraph 7.3) and it was ‘unnecessary’ for Counsel to appear on behalf of Ms B Hirst before the Registrar on 7 July 2015 given that the matter was listed for Directions and the Registrar did not have power to hear and determine the application for strike out/summary disposal of the proceedings between the wife and Ms B Hirst.

6. Having regard to these matters, I am not persuaded that it is just to deprive the wife of the opportunity to be heard in respect of the quantum of costs which she will be required to pay to Ms B Hirst. Accordingly, I decline to fix the quantum of costs. In the event the parties are unable to agree the amount of costs to be paid, the usual process of assessment under the Rules will provide a determination.

Time for the payment of costs

1. Taking into account the evidence in relation to the wife’s incapacity immediately to satisfy an order for costs, I consider it just that she should have 6o days from the finalisation of the property settlement proceedings between her and the husband within which to pay the assessed or agreed sum to Ms B Hirst.

2. For the reasons expressed above, I make orders in terms outlined at the commencement of these short Reasons.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 28 January  2016.

Associate:     

Date:              28 January 2016