Hurst & Hurst (No 2)
[2017] FamCA 770
•27 September 2017
FAMILY COURT OF AUSTRALIA
| HURST & HURST (NO. 2) | [2017] FamCA 770 |
| FAMILY LAW – COSTS – Where the husband makes an application for costs against the wife and the wife’s solicitor – Where the trial proceeded on the basis of a significant dispute as to the sale process – Where the entire trial took only a few hours – Where the court was not persuaded that a costs order against the wife should be made – Where the court was not persuaded that the wife’s solicitor’s conduct in lodging a caveat over the Suburb C property without notice was improper – Where the court was not taken to any evidence of prejudice suffered by the husband as a result of the presence of the caveat – Where the application for costs is dismissed. |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) |
| Cachia v Hanes (1994) 179 CLR 403 Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 FamLR 123 Oscar & Traynor [2008] FamCAFC 158 Penfold v Penfold [1980] HCA 4; (1980) 144 CLR 311 Stephens v Stephens [2010] FamCAFC 172; (2010) 44 FamLR 117 |
| APPLICANT: | Ms Hurst |
| RESPONDENT: | Mr Hurst |
| FILE NUMBER: | BRC | 6748 | of | 2016 |
| DATE DELIVERED: | 27 September 2017 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Carew J |
| HEARING DATE: | In chambers |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | D M Wright & Associates |
| FOR THE RESPONDENT: | Self-represented |
Order
The husband’s application for costs against the wife and the wife’s solicitor is dismissed.
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 Hurst & Hurst (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).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC 6748 of 2016
| Ms Hurst |
Applicant
And
| Mr Hurst |
Respondent
REASONS FOR JUDGMENT
This is an application for costs arising out of a trial heard by me on 22 May 2017 with judgment delivered on 7 July 2017.
Included in the order made on 7 July were the following provisions:
17. In the event that the parties are unable to agree in writing within 21 days of today what costs Order, if any, might be made regarding the costs of and incidental to the property proceedings:
(a) Each party file within a further 14 days written submissions in respect of that issue; and
(b) Unless either party otherwise therein contends to the contrary, that issue be determined in chambers without the necessity of further appearance by either party.
Each party has now filed written submissions and there is no objection taken to the matter being determined in chambers.
The husband seeks an order for costs in terms of the Minute attached to his written submissions as follows:
1. That the applicant’s solicitor, Diane Marie Wright, shall pay the respondent husband’s costs filed in the sum of $7,642.25 within 30 days of this order.
2. That the applicant wife shall pay to the respondent husband costs fixed in the sum of $26,400, by way of reduction in the amount to be paid to the wife in Order 9(i) of the Orders of 7 July 2017 from the proceeds of sale of the [Suburb C] property.
how costs applications are determined
In this jurisdiction parties are generally required to bear their own costs.[1] However, where justifying circumstances exist, s 117(2) of the Family Law Act 1975 (Cth) (“the Act”) empowers the Court to make such order for costs as the Court considers just.
[1] Section 117(1) Family Law Act 1975 (Cth)
In the exercise of that discretion regard must be had to the factors set out in s 117(2A) of the Act, so far as they are relevant.
Those factors are 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.
No one factor has more weight than any other nor is it necessary for more than one factor to be present.[2]
[2] see Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 FamLR 123 at 130
When discussing the subparagraphs in s 117 the High Court in Penfold v Penfold[3] said:
It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in “a clear case”.
[3] [1980] HCA 4; (1980) 144 CLR 311 at 315
When considering what specific order to make, Rule 19.18 of the Family Law Rules 2004 (Cth) (“the Rules”) empowers the Court to make an order:
a)of a specific amount;
b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
c)to be calculated in accordance with the method stated in the order; or
d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.
In considering what specific order should be made the same Rule provides that the Court may consider any of the following factors:
a)the importance, complexity or difficulty of the issues;
b)the reasonableness of each party's behaviour in the case;
c)the rates ordinarily payable to lawyers in comparable cases;
d)whether a lawyer's conduct has been improper or unreasonable;
e)the time properly spent on the case, or in complying with pre-action procedures; and
f)expenses properly paid or payable.
The term ‘costs’ is not defined in the Act but the Dictionary to the Rules provides that:
Costs means an amount paid or to be paid for work done by a lawyer, and includes expenses.
The term ‘expenses’ is also defined in the Dictionary to the Rules:
Expense mans an amount paid to a third party, other than a lawyer, for work done in a case or services provided for a party.
In Stephens v Stephens[4] the Full Court observed:
67. We also observe that in Re JJT; Ex parte Victoria Legal Aid[1998] HCA 44; (1998) 195 CLR 184 the majority of the High Court (Gaudron, Gummow, Hayne and Callinan JJ, Kirby J dissenting) held that s 117(2) of the Act referred to costs in the conventional sense and thus to the payment by one party to litigation of money by way of a partial indemnity for professional legal fees and expenses actually incurred by another party in the course of the litigation: see Hayne J at 219. An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature. Costs are not a penalty or damages: Latoudis v Casey[1990] HCA 59; (1990) 170 CLR 534 per Mason CJ at 543 and McHugh J at 567; Ruddock and Ors v Vadarlis and Ors(2001) 188 ALR 143 per Full Court of the Federal Court at [12] and Brott and Joachim [2006] FamCA 256; (2006) FLC 93-259 per Full Court (Holden, Warnick and Boland JJ) at 80,403-404.
[4][2010] FamCAFC 172; (2010) 44 Fam LR 117
A self-represented litigant may be able to recover certain out of pocket expenses incurred in relation to the conduct of the proceedings. The Full Court in Oscar & Traynor[5] reviewed a number of authorities and noted the following:
[5][2008] FamCAFC 158 and see also the High Court decision Cachia v Hanes (1994) 179 CLR 403
85. There has been considerable case law since Cachia v Hanes, much of which is unreported, dealing with claims for recovery of “expenses” as “costs”. Those expenses which have been found to be properly recoverable include:
a. court fees (see, for example, the discussion of the Full Court in B and P [2000] FamCA 392 at [50]; and also the Family Law Regulations 1984, reg 11(6)(b));
b. transcript costs, on the basis that they cannot also be claimed as costs in connection with the trial (see, for example, the discussion of the Full Court in W (deceased) and W and Ors [2004] FamCA 319 at [41]);
c. expenses for serving documents (see, for example, Winter v Fleeton[2002] WASCA 73 at [23]);
d. freedom of information fees (see, for example, Pittwater Council v Bolitho[2007] NSWLEC 355 at [159]);
e. fees for searching registers, such as an ASIC search fee (see, for example, Re Sullivan and Department of Industry, Science and Technology(1998) 51 ALD 767 at [45]);
f. appeal book binding (see, for example, Winter v Fleeton[2002] WASCA 73 at [23]);
g. disbursements incurred by a litigation guardian (see, for example, Step v Northern Territory [2007] NTCA 6; (2007) 20 NTLR 141); and
h. incidental expenses in relation to photocopying, postage and telephone and facsimile transmissions (see, for example, Shephard v Blueberry Farms of Australia (Corindi) Ltd [2001] FMCA 2; (2001) 162 FLR 339 at [66]; Cary v Owners of Strata Plan No. 7241[2002] FMCA 18).
86. There are, of course, also many cases in which a litigant has been awarded costs relating to the legal advice obtained in preparation for a hearing, although they did not have legal representation at the hearing itself.
87. Expenses which have been held not to be recoverable include:
a.travelling costs (see, for example, the discussion of the Full Court in W (deceased) and W and Ors (supra at [49]); and also Farquar and Farquar (No 2) [2008] FamCA 682; Cachia v Hanes (supra) at p 417);
b.parking costs (see, for example, H & H[2006] FamCA 257 at [9]); and
c.meals (see, for example, Maronis Holdings Ltd v Nippon Credit Australia Ltd[2002] NSWSC 838 at [14]).
husband’s submissions
The husband submits that conduct by the wife’s solicitor warrants a costs order against her personally in the sum of $7,642.25 (comprising counsel’s fees). The relevant conduct is said to be:
a)Commencing the proceedings in the Family Court of Australia rather than the Federal Circuit Court thereby adding to the costs;
b)Conducting the proceedings “in an egregious way” by lodging a caveat without notice against the husband’s Suburb C land and refusing to remove it when offered an undertaking by the husband;
c)Lodging the caveat in circumstances where the wife had no caveatable interest;
d)Commencing proceedings for equitable relief pursuant to s 78 for an improper purpose i.e. to maintain the caveat;
e)Providing the wife (after the hearing and contrary to the order made 30 March 2017) a costs disclosure notice estimating costs in the vicinity of $220,000-$245,000 plus GST and plus counsel’s fees of $29,600.
Matters submitted to be relevant to the husband’s application for costs against the wife include:
a)The rejection of mediation three weeks before the date of the trial;
b)The husband made an offer of settlement on 9 May 2017 in which he proposed inter alia:
i)He retain the former matrimonial home at Suburb G and the cars;
ii)The wife retain her car, jewellery, collectibles and personal items;
iii)Suburb C be sold by the husband by 18 September 2018 and if not sold be auctioned (and for the purpose of the sale process the husband be at liberty to further encumber the property by up to $120,000 to cover the costs of obtaining a Development Approval);
iv)There be an overall settlement in accordance with a formula so that each party received fifty percent of all property.
In support of his application the husband attaches a number of documents to his written submissions including invoices for counsel’s fees incurred in the sum of $7,642.25 (the sum claimed against the wife’s solicitor personally) and for work completed during the period 7 April to 23 May 2017 (including the trial) of $26,400.
wife’s submissions
The wife’s solicitor resists the claim for costs against her personally submitting that it was reasonable for her to lodge a caveat in circumstances where a significant asset relevant to the proceedings was registered in the sole name of the husband.
In relation to the costs sought against the wife it is submitted that no costs order should be made because of the parlous financial circumstances of the wife and in relation to the offer it is submitted:
a)The offer was ambiguous and did not clearly set out the value of what each party was to receive if the offer was accepted by the wife;
b)The offer did not set out what percentage of the net asset pool each party would receive if the offer was accepted by the wife;
c)It was unclear whether the share of the net asset pool to be allocated to the wife was more or less advantageous to the wife than the share of the net asset pool received by the wife pursuant to the final order made 7 July 2017.
As to the quantum sought in relation to the costs against the wife’s solicitor it is submitted that there is no explanation provided by the husband as to how the sum sought has been calculated but if any order for costs is made it should be assessed pursuant to schedule 3 of the Rules.
As to the quantum sought against the wife it is submitted that no sum should be recoverable for the period pre-dating the offer and that if a costs order is to be made at all it should be a sum to be assessed pursuant to schedule 3 of the Rules.
discussion
This is a most unfortunate case that has proceeded to trial in circumstances where one might have thought settlement before trial was inevitable. I am of course not privy to all of the circumstances as to why settlement evaded the parties.
Neither party is in a strong financial position although it must be observed that the husband is in a stronger position than the wife and lives in the former matrimonial home while the wife continues to rent.
The husband’s position at trial was that the wife should receive forty percent of the property owned by them jointly or solely, a result ultimately accepted by me at trial. On 7 May 2017 he made an offer to resolve the matter on the basis that they each receive an equal distribution.
Curiously it is submitted on behalf of the wife that the offer was ambiguous and unclear. I do not agree. I am in no doubt that the wife would have been better off (in terms of the percentage of property received) had she accepted the offer. The offer on its face specifies an equal division and the basis upon which that would be calculated. It was capable of acceptance.
However, the offer includes a provision that would have entitled the husband to borrow a further sum of up to $120,000 to enable him to obtain a development approval. The offer also provided for the husband to have until September 2018 to secure a sale and if that did not eventuate it was to go to auction.
At trial the parties disagreed about the process for sale of the Suburb C property with the husband wishing to borrow $120,000 to obtain the development approval and the wife opposing that course. Each party sought time to secure a sale by private treaty and each party proposed a default position for sale by auction. The latest time for auction being proposed was January 2018.
The issue about the sale process for Suburb C was an issue that occupied most of the time allocated to the short hearing and included cross-examination of the valuation expert. Ultimately I was not persuaded to make the order sought by the husband i.e. for him to be able to borrow money to obtain a development approval, and the default provision for sale by auction was provided for in the order to be 31 January 2018.
Accordingly I am of the view that as the trial proceeded on the basis of a significant dispute as to the sale process and the entire trial took only a few hours I am not persuaded that a costs order against the wife should be made.
Further, I am not persuaded that the wife’s solicitor’s conduct in lodging a caveat over the Suburb C property without notice was improper, although one might have thought it prudent, in circumstances where the husband is a practising solicitor, to have first sought an appropriate undertaking from him. Ultimately the issue about whether or not the wife had a caveatable interest was not pressed at trial and neither party made submissions about it. Importantly, I was not taken to any evidence of prejudice suffered by the husband as a result of the presence of the caveat. I was also not taken to any evidence as to any costs implication for the husband as a result of the proceedings being conducted in this Court. I propose to dismiss the husband’s application for costs against the wife’s solicitor.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carew delivered on 27 September 2017.
Associate:
Date: 27 September 2017
0
16
2