Hullet & Benton
[2022] FedCFamC1F 143
Federal Circuit and Family Court of Australia
(DIVISION 1)
Hullet & Benton [2022] FedCFamC1F 143
File number(s): MLC 13387 of 2020 Judgment of: MACMILLAN J Date of judgment: 18 March 2022 Catchwords: COSTS – Where the husband’s legal personal representative seeks an order that the wife pay the costs of his Application in a Case for a review of the orders made by a Registrar dismissing an Application for Consent Orders upon the death of the husband and of the wife’s application for a stay of orders made discharging the decision made by the Registrar – Where the wife properly advised should have known that she had no chance of success – Where a stay was granted and the appeal was dismissed – Where orders made for the wife to pay the husband’s Executor’s costs of his Application in a Case on an indemnity basis fixed in the sum of $27,276.30 - Where orders made for the wife to pay the husband’s Executor’s costs of and incidental to the wife’s stay application on a party and party basis fixed in the sum of $4,343.73. Legislation: Family Law Act 1975 (Cth) ss 117, 117(2A)
Family Law Rules 2004 (Cth) (Repealed) r 10.11
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.33, 10.02, 12.08, 12.13, 12.17, sch 3
Cases cited: Bolt v Williams (1996) FLC 92-662
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Gallieni & Gallieni [2013] FamCA 314
In the Marriage of I & I(No 2) (1995) FLC 92-625
Kohan & Kohan [1993] FLC 92-340
Munday v Bowman [1997] FLC 92-784
In the Marriage of Strelys (1987) 12 Fam LR 437
Yunghanns & Yunghanns [2000] FLC 93-029
Division: Division 1 First Instance Number of paragraphs: 42 Date of hearing: 28 February 2022 Date of last submission/s: 28 February 2022 Place: Melbourne Solicitor for the Applicant: Robinson Gill Solicitor for the Respondent: Kenna Teasdale ORDERS
MLC 13387 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS HULLET
Applicant
AND: MR BENTON AS LEGAL PERSONAL REPRESENTATIVE FOR MR D BENTON (DECEASED)
Respondent
order made by:
MACMILLAN J
DATE OF ORDER:
18 MARCH 2022
THE COURT ORDERS THAT:
1.Ms Hullet (“the wife”) pay Mr Benton’s (“the husband’s executor”) costs of his Application in a Case filed 8 February 2021 fixed in the sum of $27,276.30.
2.The wife pay the husband’s executor’s costs of an incidental to the wife’s stay application fixed in the sum of $4,343.73.
3.The husband’s executor’s applications for costs be otherwise dismissed and removed from the list of cases awaiting hearing.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Hullet & Benton has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MACMILLAN J
Although the background to this matter is set out in detail in the reasons delivered on 29 June 2021 some of that history needs to be repeated for the purposes of these applications for costs.
On 4 December 2020, Ms Hullet (the “wife”) filed an Application for Consent Orders. Mr D Benton (the “husband”) was diagnosed with an illness in mid-2020 and died in early 2021 before the orders agreed upon by the parties could be made. In early 2021, upon learning of the husband’s death the wife wrote to the Court as follows:
…
We are instructed that the respondent husband unexpectedly passed away today. This has brought about a material change in circumstances and as such our client no longer consents to orders being made in accordance with the application.
Pursuant to Rule 10.11 (2)(a) we seek permission from the court to discontinue the case.
On 18 January 2021, a Registrar dismissed the Application for Consent Orders. On 8 February 2021, Mr Benton (the “husband’s executor”) filed an Application in a Case seeking inter alia a review of the Registrar’s order dismissing the Application for Consent Orders and an order substituting him as the legal personal representative for the husband in the proceedings. The wife in her Response to that Application in a Case filed 16 March 2021 sought orders dismissing the executor’s Application in a Case and her costs on an indemnity basis.
The matter was listed for hearing before me on 22 March 2021. On 29 June 2021 I made the following orders:
1.The orders made by [the Registrar] on 18 January 2021 dismissing the Application for Consent Orders filed 4 December 2020 be discharged.
2.Pursuant to section 79(8) of the Family Law Act 1975 (Cth) that [Mr Benton] as Executor of the Respondent Husband’s, the late [Mr D Benton’s] estate be substituted as the legal representative for the Respondent Husband in these proceedings.
3.Within fourteen (14) days of these orders the Applicant Wife, file and serve an Initiating Application, Affidavit and Financial Statement.
4.Within fourteen (14) days of receipt of the Applicant Wife’s material referred to above in paragraph three (3), the Executor for the Respondent Husband file and serve a Response to Initiating Application, Affidavit and Financial Statement.
5.The Application in a Case filed 8 February 2021, save and except any application for costs, be otherwise dismissed.
6.That the question of costs be reserved for determination in Chambers.
7.By 4.00 pm on 14 July 2021 the parties file and serve any written submissions in support of any application for costs arising out of or incidental to the Application in a Case filed 8 February 2021.
8.By 4.00 pm on 28 July 2021 the parties file and serve any written submissions in reply to any applications for costs.
9.Any submissions as to costs should be limited to 10 pages.
On 14 July 2021 the husband’s executor, who was substituted in the proceedings for the husband pursuant to these orders, filed written submissions seeking an order that the wife pay the costs of an incidental to his Application in Case filed 8 February 2021 on an indemnity basis. The wife subsequently filed a Notice of Appeal and on 27 August 2021 I made orders granting a stay of the orders made 29 June 2021. The costs of both the Application in a Case and the wife’s application for a stay were reserved pending the outcome of the wife’s appeal. The wife’s appeal was dismissed on 11 February 2022 and on 25 February 2022 the husband’s executor filed further submissions seeking that the wife pay his costs of and incidental to the wife’s Stay Application. On 28 February 2022 the wife filed written submissions in relation to both applications. On 11 March 2022 the husband’s executor filed further written submissions in response to the wife’s submissions in relation to the costs of the stay application. The costs applications were determined on the written submissions.
Legal Principles
Pursuant to s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) the general rule in proceedings pursuant to the Act is that each party shall bear their own costs. However, the Court being satisfied that there are circumstances justifying it doing so, may make such order for costs as it considers just. In considering what (if any) order for costs it should make the Court shall have regard to the matters in s 117(2A) of the Act as follows:
(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.
Although the Court must consider all of the matters in s 117(2A) of the Act no one of these matters prevails over any other and it is not necessary for the purposes of making an order for costs that there be more than one of the relevant matters that justifies an order. All of the matters must be considered in so far as they may be relevant to the particular case (In the Marriage of I & I(No 2) (1995) FLC 92-625).
Counsel for the husband’s executor focused his case on the conduct of the wife in relation to the proceedings, that the wife had been wholly unsuccessful and an offer having been made in writing to settle the proceedings.
Costs of the Application in a Case filed 8 February 2021
Are there circumstances justifying a costs order
The financial circumstances of each of the parties
Neither the husband’s executor nor the wife filed a Financial Statement for the purposes of these applications however, when she filed the Application for Consent Orders the wife disclosed a gross weekly income of $4,061, net assets of $743,890 and superannuation of $975,380. According to that application the husband had net assets of $577,930. He did not disclose any superannuation entitlements. Although in my view the superior financial circumstances of the wife are not alone a reason for making an order for costs in favour of the husband’s executor I accept as submitted by counsel for the husband’s executor that there is also nothing in the financial circumstances of either party that would preclude the court making an order.
Legal Aid
Neither party in these proceedings is in receipt of legal aid.
The conduct of the parties to the proceedings
Counsel for the husband’s executor summarised the conduct of the wife which he submitted supported an order being made in the husband’s executor’s favour as follows:
(a)That the wife failed to comply with the Rules resulting in the court dismissing the proceedings when that should never have occurred and would not have occurred had the Wife complied with the Rules;
(b)that she ignored/rejected a request to resolve the matter (letter from Kenna Teasdale dated 17 March 2021) to avoid the need for a contested hearing; and
(c) that she persisted with a case that could never have succeeded when regard is had to:
i. the terms of s79(8) of the Family Law Act 1975; and
ii. settled law in Australia (i.e. Strelys and Bolt v Williams)
It is the wife’s case that having become aware of the husband’s death she sought the Court’s permission by letter emailed to the Court to discontinue the case as she was required pursuant to r 10.02(3)(b) (formerly 10.11(2)(a)) to do. Even if that had been what she was required to do an email to the Court is not an application.
More importantly the wife’s submission ignores the requirements of Rule 3.19 of the Rules which provides as follows:
3.19 Death of party
(1)This rule applies to a property proceeding or an application for the enforcement of a financial obligation.
(2)If a party dies, the other party or the legal personal representative of the deceased person must ask the court for procedural orders in relation to the future conduct of the proceeding.
(3)The court may order that the legal personal representative of the deceased person be substituted for the deceased person as a party.
Note 1:The court may make other procedural orders, including that a person has permission to intervene in the proceeding (see rules 1.31 and 3.04).
Note 2:For the effect of the death of a party in certain proceedings, see subsections 79(1A), 79(8), 79A(1C), 90SM(2), 90SM(8), 90SN(5), 90UM(8) and 105(3) of the Family Law Act.
As Simpson J said in In the Marriage of Strelys (1987) 12 Fam LR 437 (“Strelys”) :
…the notice of withdrawal was of no effect. Until the legal personal representative was substituted for the deceased husband as a party, or some other order made under O 14 r 6 of the Rules, for the continuance of the proceedings, the wife was not entitled to take a step in the proceedings.
The wife did not ask the Court for procedural orders and in circumstances where her solicitor had emailed the Court within hours of the husband’s death seeking permission to discontinue the proceeding and three days after the husband’s death the Registrar had dismissed the Application for Consent Orders the husband’s executor had no opportunity to do so. Albeit the Registrar erred in dismissing the application, I do not accept, as submitted by the wife, that she did all that she was required to do.
Nor do I accept as submitted by the wife that there was “a discrete and novel point of statutory interpretation” which was “reasonably arguable” on the Rules. In my view the Rules make clear what is required and as referred to in my reasons delivered on 29 June 2021 the wife’s case contradicted the principles in Strelys conflating the power exercised by the Court and its practices and procedures.
Counsel for the husband’s executor further submitted that the wife had persisted with a case that could never have succeeded rejecting the proposal put to her by the husband’s executor’s solicitor in relation to the Application for Review and the future conduct of the matter in his letter dated 17 March 2021. That letter said inter alia as follows:
… Having considered the matter, it is clear to us that the Court will make Orders as set out in our client’s Application in a Case. There is no basis to oppose the review of a decision made by the Registrar, which will be conducted as a hearing de novo. If you consider there to be a proper basis for opposing our client’s Application in a Case, please let us know urgently.
Accordingly, would you please confirm your client will consent to the Orders set out in our client’s Application in a Case filed 19 February 2021 to avoid the unnecessary appearance at Court on Monday, 22 March 2021.
…
It seems to us that the most appropriate way forward is for our client to be substituted for the husband as a party to this proceeding and for there to be the necessary Directions regarding the further conduct of the case so that the matter can proceed to a mediation with a view to resolving the matter without the necessity for any further Court hearings.
On the day prior to the husband’s death the Court would have made an Order had the husband not died. It is also clearly still appropriate for the court to make Orders in circumstances where the husband has made substantial contributions during the parties’ lengthy relationship which would not be properly acknowledged if no orders were made. This would lead to a result which is not just and equitable and which circumstance arose purely because of the death of a party to a proceeding.
It is settled law in Australia that a party to a proceeding in the Family Court should not profit by the fortuitous death of the other party prior to the determination of the proceeding.
The letter to the wife’s solicitor dated 17 March 2021, which she chose to disregard, in my view correctly summarises the steps that needed to be taken. I am satisfied that the way in which the wife conducted these proceedings supports an order for costs being made in favour of the husband’s executor.
Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
This is not a relevant consideration in this case.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
It is submitted by the husband’s executor and conceded by the wife that the she was wholly unsuccessful however it was further submitted on behalf of the wife that this alone would not justify an order for costs. Given all of the circumstances of this case I am satisfied that it is a significant matter. It is in any event in this case not the only relevant matter.
Whether any party to the proceedings has made an offer in writing to the other party to the proceedings to settle and the terms of any such offer
It was the wife’s case that there had not been any offers in writing for the purposes of s117(2A)(f) of the Act whereas the husband’s executor relied upon the letter sent by his solicitor to the wife’s solicitor on 17 March 2021. I am satisfied that, whether or not that letter is an offer in writing for the purposes of the Rules, the proposals made by the husband’s executor, if adopted, would have avoided the necessity for a hearing which is a matter I can take into account pursuant to s 117(2A)(g) of the Act.
Other considerations
It is the wife’s case that she was tricked into consenting to orders that she would not have consented to had she known that the husband had been diagnosed with an illness. Counsel for the wife submitted that in these circumstances it was not unreasonable for the wife to oppose the Application for Review and that this was a matter that the Court should weigh up in its determination of whether or not an order for costs is justified.
In my view this submission is misconceived and ignores the fact that the wife had withdrawn her consent and that the husband’s illness and death were matters that would be taken into account by the Court when determining what, if any, property orders it should make. The fact that the husband concealed his illness was not relevant to the determination of the Application for Review and is in my view similarly not relevant to the question of whether an order for costs is justified.
Finally it was the wife’s case that the letter from the solicitor for the husband’s executor dated 17 March 2021 having not referred to the decision of Wilczek J in Bolt v Williams (1996) FLC 92-662 (“Bolt’s case”), there having been no mention of the decision during the hearing and it being a “stand alone” decision of a single judge and not “conclusively determinative of the matter before the Court” should weigh against an order for costs. Although it is correct that there was no reference to Bolt’s case, either in the letter or in submissions during the hearing and it is the decision of a single judge, both parties did rely upon the decision of the Full Court in Strelys which was referred to both by Wilczek J’s in Bolt’s case and the reasons I delivered on 29 March 2021. The wife’s case failed not because no reference was made to Bolt’s case or because it was a “stand alone” decision of a single judge but because as referred to in my reasons the submissions made by the wife contradicted the principles enunciated in Strelys.
Conclusion
I am satisfied that there are circumstances in this case which justify the Court departing from the general rule that each party should bear their own costs. Not only was the wife wholly unsuccessful but as submitted by counsel for the husband’s executor she opposed his application in the face of the clear requirements of the Rules, the principles in Strelys and the letter from the husband’s executors solicitor.
Quantum of Costs
The methods for calculating costs when the Court is satisfied that there are circumstances which justify an order are set out in r 12.17 of the Rules. The Court may order that a party is entitled to a specific amount, as assessed on a particular basis such as party and party, solicitor and client or indemnity basis, in accordance with the method specified in the order, or for part of the proceeding, or part of an amount assessed in accordance with Schedule 3 of the Rules. Rule 12.17(3) sets out various matters the Court may consider when calculating the costs as follows:
(3) In making an order under subrule (1), the court may consider the following:
(a) the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e)the time properly spent on the proceeding, or in complying with pre‑action procedures;
(f)whether expenses (paid or payable) are fair, reasonable and proportionate.
The general rule when the Court makes an order for costs is that costs will be payable on a party and party basis. The Court does however have a discretion to order costs on other terms, including indemnity costs.
In Kohan & Kohan [1993] FLC 92-340 (at page 79,614) the Full Court of the Family Court of Australia (“Full Court”) makes it clear that the Court "…should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind".
In Munday v Bowman [1997] FLC 92-784 at page 84,660, Holden CJ summarised the circumstances which might warrant an order for indemnity costs as identified by Shepherd J in the decision of Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225. They included the following:
•Where an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;
•The making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;
•Evidence of particular misconduct causing loss of time to the court and to other parties;
•The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;
•An imprudent refusal of an offer to compromise.
The circumstances which might support an order being made on an indemnity basis are not closed (Yunghanns & Yunghanns [2000] FLC 93-029).
Pursuant to r 12.13(4) of the Rules a party applying for costs on an indemnity basis must inform the Court if that party is bound by a costs agreement in relation to those costs and the terms of that agreement. The executor of the husband’s estate has provided the Court with copies of his cost agreement with Kenna Teasdale. Prior to engaging Kenna Teasdale, the husband’s executor was represented by B Lawyers and incurred counsel’s fees in the sum of $4,400. I have also been provided with copies of counsel’s fee slips.
The basis of the executor for the husband’s case in support of an order for costs on an indemnity basis is that:
(a)the Wife has wilfully disregarded established law and the Rules, which the Court found to be “clear”;
(b)made submissions that “directly contradict the principles enunciated in Sterlys” when opposing the orders sought in the Application in a Case; and
(c)that in doing so sought to take advantage of the unfortunate death of the Husband, which is confirmed by the subsequent conduct of the Wife advising that she intends to appeal the Orders made 29 June 2021.
As previously discussed I do not accept as submitted by the wife that she did all that she was required to do either in relation to discontinuing the proceedings or more importantly what the Rules required of her upon the husband’s death. I also do not accept the wife’s submission that Bolt’s case being the decision of a single judge and not binding that the submission that she wilfully disregarded established law has no foundation. In my view her submission ignores the clear requirements of the Rules and the accepted authority of Nygh’s observations in Strelys. The wife’s submissions are in large part a repeat of the submissions she relied upon during the hearing which failed to distinguish between the proceedings and the application by which those proceedings were initiated. It is this distinction which lies at the heart of the case and was at best misunderstood or at worst, and in my view more likely, ignored by the wife.
There is some force in counsel for the husband’s executor’s submission that the wife properly advised should have known that she had no chance of success. And reasonable to infer on this basis that she adopted the course she did to take advantage of the husband’s death notwithstanding that she and the husband as evidenced by the Application for Consent Orders had agreed upon a division of their property interests.
I am satisfied, the wife having sought to take advantage of the husband’s death in the face of the requirements of the Act and the Rules and disregarding settled authority, that the husband’s estate should not be required to bear the expense of prosecuting these proceedings in the face of the wife’s opposition. These are circumstances which in my view justify a departure from the general rule that costs be payable on a party and party basis.
An order for indemnity costs is an order for all of the costs incurred by a party provided they have not been unreasonably incurred or are not unreasonable. Counsel for the wife submitted that the costs sought by the husband’s executor are manifestly excessive. The basis of the wife’s submission was as follows:
a. there had been no discovery or other procedural complexity;
b.save for the two brief affidavits of [Mr C] referred to above (the first containing misleading evidence and the second correcting the earlier misleading evidence), no material was filed by the Applicant,
c.the wife pragmatically took no issue with the absence of evidence before the Court of probate or the existence of the will appointing the husband’s legal personal representative (in circumstances where, via her lawyers she was satisfied that the relevant will existed and the grant had been made),
d.the two affidavits of the Respondent were extremely brief, less than 6 pages,
e.the hearing concluded in approximately one hour 10 minutes, between 2.34 pm and 3.44pm on the day it was first listed, and
f.according to the Estate’s case the determination of the matter depended on direct application of “established law”.
When the Court orders an assessment of the costs that is a process governed by the Rules. The wife’s submissions are in my view submissions that might be made in the course of an assessment rather than matters that I am in a position to determine. However, the history of this litigation suggests that an assessment would be an expensive and time consuming exercise and I am satisfied that this is a case in which I should fix the costs. This not being an assessment in accordance with the Rules there is no way that I could make an assessment of the particular items referred to by the wife in her submissions. In any event I am not satisfied based upon those submissions that the quantum of costs sought by the husband’s executor are manifestly excessive. In all of the circumstances I propose to make an order that the wife pay the costs of the husband’s executor fixed in the sum of $27,276.30.
Costs of Wife’s Application for a Stay
The husband’s executor also seeks an order that the wife pay his costs of and incidental to the wife’s application for a stay filed 28 July 2021 pending the determination of her appeal. The wife’s appeal was dismissed by the Full Court on 11 February 2022.
I have already addressed the relevant legal principles and apart from the fact that a stay was granted the issues are similar.
The crux of the husband’s executor’s case in support of his application that the wife pay his costs of the application for a stay is that although that application was successful the wife ultimately failed on appeal. I have found that there is some force in the submission made by counsel for the husband’s executor that the wife properly advised should have known that her opposition to the Application for Review was bound to fail. It follows in my view that properly advised she should also have known that her appeal was bound to fail. This is consistent with the observations of the Full Court where it said (at [26]) referring to the concessions made by the wife that “it was puzzling that [the Applicant] persisted in submitting the property settlement proceeding could not be validly continued and ultimately concluded by different orders from those originally proposed by the spouses consensually”.
I also accept as submitted by counsel for the husband’s executor that a stay application is “part and parcel of the appeal” (Gallieni & Gallieni [2013] FamCA 314 at [102]). Whilst the wife’s application for a stay was wholly successful it must be viewed in the context of her unsuccessful appeal. Although the husband’s executor could as submitted by the wife have consented to a stay I am satisfied that he was, particularly given the circumstances of this case, entitled to the benefit of the judgement and to presume that the decision was correct as it ultimately turned out to be.
Conclusion
I am satisfied that there are circumstances in this case which justify an order of costs in the husband’s executor’s favour. The husband’s executor seeks an order for party and party costs. Those costs have been itemised and I propose to make an order in the sum of $4,343.73 as sought by the husband’s executor.
I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Macmillan. Associate:
Dated: 18 March 2022
0
2
0