Ibarra & Ibarra (No 2)
[2024] FedCFamC1F 389
•6 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Ibarra & Ibarra (No 2) [2024] FedCFamC1F 389
File number(s): CSC 794 of 2021 Judgment of: JARRETT J Date of judgment: 6 June 2024 Catchwords: FAMILY LAW – COSTS – Where applicant holds greater assets but lesser income than respondent – Where conduct of the proceedings justifies an order for costs – Order for costs in accordance with scale fixed in the sum of $10,000 Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 r 15.15
Cases cited: Bant & Clayton (Costs) [2016] FamCAFC 35
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 118 ALR 248
Ibarra & Ibarra [2023] FedCFamC1F 878
Penfold v Penfold (1980) 144 CLR 311
Division: Division 1 First Instance Number of paragraphs: 30 Date of last submission/s: 3 April 2024 Date of hearing: By written submission Place: Brisbane Solicitors for the Applicant: Keir Steele Waldon Lawyers Solicitors for the Respondent: Francis Family Law ORDERS
CSC 794 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS IBARRA
Applicant
AND: MR IBARRA
Respondent
ORDER MADE BY:
JARRETT J
DATE OF ORDER:
6 JUNE 2024
THE COURT ORDERS THAT:
1.The respondent pay the applicant’s costs of and incidental to the proceedings, including the Amended Application in a Proceeding filed 27 February, 2023, fixed in the sum of twelve thousand, five hundred dollars ($12,500).
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JARRETT J:
By her application in a proceeding filed on 17 October, 2023 Ms Ibarra seeks her costs of and incidental to the whole of the proceedings commenced by Mr Ibarra on 23 September, 2021. Ms Ibarra was the respondent to those proceedings. I finalised those proceedings on 19 September, 2023. Many issues were resolved by the parties by way of consent although I had to decide some matters for which I gave ex tempore reasons for judgment: Ibarra & Ibarra [2023] FedCFamC1F 878. Mr Ibarra opposes this costs application. Both parties seek their costs of the costs application.
In the course of these reasons I have had regard to the following documents:
·Amended Application in a Proceeding filed 27 February, 2023;
·affidavit of the applicant filed 17 October, 2023;
·affidavit of the applicant filed 27 February, 2024;
·the applicant’s financial statement filed 10 April, 2024;
·supplementary case outline document filed by the applicant on 27 February, 2024;
·the applicant’s written submissions filed 27 February, 2024;
·Amended Response to an Application in a Proceeding filed 4 March, 2024;
·affidavit of the respondent filed 14 November, 2023;
·affidavit of the respondent filed 4 March, 2024;
·the respondent’s financial statement filed 16 November, 2023;
·the respondent’s written submissions filed 3 April, 2024.
Costs are governed by s 117 of the Family Law Act 1975 (Cth). Section 117(1) provides that, subject to a number of exceptions, each party to proceedings under the Act must bear their own costs. The relevant exception for the present application is contained in s 117(2), which provides that the court may make such order as to costs as it considers just if it is of the opinion that there are circumstances that justify it in doing so. In considering what order (if any) should be made under subsection (2), the court must have regard to the matters set out in s 117(2A).
Making an order for costs under s 117(2) of the Act requires two determinations, namely
(a)a finding that there are circumstances that justify a costs order; and
(b)what order (if any) to make.
The first determination enlivens the discretionary power to make an order as to costs. The second determines how the discretion is exercised. Although it is not entirely clear, counsel for Ms Ibarra submits that the matters set out in s 117(2A) of the Act ought to be taken into account at both steps of the process. At first blush, the introductory words of s 117(2), “In considering what order (if any) should be made” might suggest that the matters therein are relevant only to the second step, although in Penfold v Penfold (1980) 144 CLR 311 at pp. 316–317 the plurality of the High Court seemed to take into account some of the matters so listed (then found in reg. 173 of the Family Law Regulations) in determining whether there were justifying circumstances within the meaning of s 117 (2) for a costs order in that case.
Whatever is the case, the matters set out in s 117(2A) are often likely relevant to a determination as to the existence of justifying circumstances. I will deal with each of the matters identified by the parties said to inform the question of justifying circumstances.
Respective financial positions
The applicant says that the financial circumstances of the parties justify a costs order.
The respondent deposes to having assets of $398,000, superannuation of $232,000, income of $2,476.33 per week, and expenses of $2,377.51 per week.
The applicant deposes to having estimated assets of $1,135,000, and apart from $398.55 received weekly from the respondent in child support payments, has no income. She deposes to expenses of $3,481.40 per week. The respondent disputes her financial position because, first, her financial statement refers to costs associated with the use of a motor vehicle that is not included as an asset on the financial statement, second, she was previously an employed professional and does not explain why she does not now seek paid employment and third, she provides nothing other than her own estimates of the value of her property which the respondent contends is grossly undervalued.
However, these contentions do no damage to the applicant’s case on this point because the applicant’s argument as to financial circumstances is clearly based on the difference in income between the parties rather than difference in the value of their assets. Taking the respondent’s argument that the applicant has not disclosed the benefit of a company owned vehicle (about which I make no finding) and an unvalued interest in that same company at its highest, the applicant has greater assets than the respondent while the respondent has greater income. Similarly, it is difficult to accept the imputation to which the respondent alludes, namely that the applicant is deliberately and inappropriately not seeking paid employment in circumstances where she otherwise receives no income There is very little evidence to support that inference and I refuse to draw it.
The financial circumstances of the parties, specifically the much greater income and lesser expenses of the respondent, go some way as to justifying an order for costs. They are, however, not sufficient on their own to justify such an order.
Conduct of the litigation
The applicant argues that the respondent’s conduct in relation to the proceedings is a matter suggesting that an order for costs is appropriate. The applicant primarily refers to the respondent’s sudden change of position on the eve of the trial.
By way of background, on 4 May, 2023 the matter was set down for trial to commence on 18 September, 2023. The parties were to file their affidavit material by 30 June, 2023. Neither party did so. On 1 August, 2023 I ordered that the parties file their trial material by no later than 8 August, 2023. The applicant did so. The respondent did not. On 9 August, 2023 I ordered the respondent to file his trial material by 16 August, 2023. He did not do so. He eventually filed his affidavit of evidence in chief on 11 September, 2023, one week prior to the trial. It became clear he had significantly changed his position on 14 September, 2023 when he filed his case outline setting out the orders that he sought. They were now substantially closer to the orders sought by the applicant.
I agree with the applicant’s submissions that the respondent’s conduct in filing his material late and in failing to make his true position known to her increased her costs and is a factor in favour of a costs order.
The applicant also referred to the respondent’s conduct in that he filed a review of a registrar’s decision that was ultimately dismissed, sought a recovery order which was not made and in relation to which costs were reserved, failed to attend all hearings as required by r 15.15, and failed to engage with the applicant in correspondence in a timely way.
I accept there was no appearance by or on behalf of the respondent on 1 August, 2023. The allegation that the respondent failed to engage in correspondence in a timely way is a bare assertion by the applicant and I do not accept it. While the applicant referred to the dismissal of the review application and the refusal to make a recovery order, no submissions were made about why those applications were unsuccessful so as to support the claim that the respondent’s conduct of them justifies a costs order.
In his written submissions, the respondent acknowledged the failure to file his material, but pointed to the applicant’s failure to file her material in accordance with the directions of 1 August, 2023 and her failure to file response material in time in accordance with orders made in November and December, 2021. I regard these circumstances as different. First, the orders of November and December, 2021 related to the applicant filing her response and supporting documents shortly after the proceedings had been commenced. That differs from circumstances where the matter had been on foot for years and the parties had been directed to file their material in a timely manner for the purposes of the final hearing. Second, the applicant’s position remained clear throughout the proceedings and was not substantially altered by the late filing of her material. The respondent’s material was filed much later and substantially altered his position such that it became clear the parties could reach consent on many issues. Why he had left his change of position until so late in the proceedings is not explained. It is that conduct which in my view, supports the making of a costs order.
Failure to comply with previous orders
The respondent contends that the proceedings were necessitated by the applicant’s failure to comply with orders made by Judge Middleton on 13 October, 2020. The respondent filed a contravention application to this effect but withdrew it on 3 February, 2022. Instead, it seems that the respondent decided to prosecute his principal proceedings without the benefit of the contravention procedure and the prospect of sanctions upon the applicant to secure her compliance with orders he said were not being observed. That was a path open to him, but a bold one given his capitulation at the conclusion of the principal proceedings. I do not accept his submission that the principal proceedings were necessitated by the applicant’s failure to comply with earlier orders. The applicant’s participation in the proceedings was necessitated by the choice made by the respondent to continue the principal proceedings rather than contravention proceedings designed to deal with what he alleged to be non-compliance with earlier orders.
Wholly unsuccessful
It is next appropriate to consider s 117(2A)(e) and whether either party has been wholly unsuccessful in the proceedings. The applicant in written submissions described the respondent as being wholly unsuccessful “by the standard of the case he ran for most of the 2 years of litigation” (written submissions of the applicant filed 27 February, 2024, [38]). This misunderstands the meaning of the phrase “wholly unsuccessful”. As put by the Full Court of the Family Court of Australia (as this Court then was) in Bant & Clayton (Costs) [2016] FamCAFC 35 at [22], s 117(2A)(e) is “designed for cases where an application is heard and determined and the applicant is wholly unsuccessful”. Such is the very nature of the word “wholly”, which requires more than for a party to simply be unsuccessful but for them to fail on the determination of all issues.
On 19 September, 2023, the vast majority of final orders made between the parties were made by consent. That consent represented a compromise in the parties’ respective positions. There were some minor issues which were determined by me following submissions by each of the parties. In the circumstances, it could not be said that the respondent was wholly unsuccessful.
Conclusion
In all the circumstances, I consider it appropriate to make an order for costs in favour of the applicant. The respondent’s conduct of the proceedings leading up to the final hearing means that the applicant has incurred costs that would otherwise have been avoided had the respondent acted in a timely way. The disparity in the parties’ income is also important and informs my determination that there are circumstances that justify the making of a costs order.
I turn to the question of what order, if any, should be made.
The applicant sought costs in relation to the whole of the proceedings. I do not agree it is appropriate to so order. The conduct of the respondent which I have found to justify a costs order relates most closely to costs thrown away by the applicant in the preparation of her case for the final hearing on 18 September, 2023. Costs should be limited accordingly.
In support of her application for costs to be on an indemnity basis, the applicant referred to Colgate-Palmolive Company v Cussons Pty Ltd (1993) 118 ALR 248, in which case Sheppard J set out circumstances warranting the award of indemnity costs:
It is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721at 724 (Court of Appeal); Crisp v Kent (SC(NSW) (CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
The applicant did not make submissions about why this case fell into any of the categories identified by Sheppard J, nor do I consider that it does. While the respondent’s conduct justifies an order for costs, there is no evidence that it was misconduct or that he had some ulterior motive for failing to conduct the proceedings expediently. The most likely explanation is either idleness or an inability or unwillingness to confront the reality that the relief he was seeking in the proceedings was unlikely to be given. It is appropriate for the applicant’s costs to be paid in accordance with the allowable scale pursuant to the rules.
The applicant filed a “Supplementary Case Outline Document” which included tables MSIB4 of the applicant’s costs in accordance with the relevant rules. Confusingly, these were all purportedly calculated at the scale of costs for the Federal Circuit and Family Court of Australia (Division 2) despite the matter being transferred to this Court on 17 March, 2023. The costs calculated to scale for counsel’s fees were all calculated at the scale contained in the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 for Division 1, despite purportedly being calculated in accordance with the Division 2 rules. It was also apparent that the applicant had claimed costs for her counsel at the rates allowable in the rules for Senior Counsel, despite her counsel not holding the title of Senior Counsel. These errors make it very difficult to have faith in the applicant’s schedule of costs.
Having regard to the matters I have already traversed when determining if there are justifying circumstances for a costs order, I consider that an order for costs in a fixed amount is appropriate. It should be limited to the costs incurred by the applicant towards the end of the case as I have indicated above. It should also be tempered by the applicant’s superior asset position.
Doing the best I can and having regard to the proper rates allowable for junior counsel’s appearance and for the applicant’s preparation for final hearing, I fix the applicant’s costs at $10,000. There will be an order that the respondent pay the applicant’s costs in that amount.
The applicant should also have her costs of this costs application which I fix at $2,500.
The order will be as set out at the commencement of these reasons.
I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jarrett. Associate:
Dated: 6 June 2024
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