Irving and Irving

[2014] FamCA 324

FAMILY COURT OF AUSTRALIA

IRVING & IRVING [2014] FamCA 324

FAMILY LAW – COSTS – Application for indemnity costs in respect of the Respondent’s failed application to set aside Consent Orders as to property – Where the Respondent’s application was summarily dismissed – Whether there are justifying circumstances for a costs order to be made – Wholly unsuccessful – Offer of settlement – Whether there are grounds for awarding indemnity costs – Costs order made on party/party basis

Family Law Act 1975 (Cth) ss 79A, 117(1), (2) & (2A)
Family Law Rules 2004 (Cth) rr 19.18

Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536
D & D (Costs) (No. 2) [2010] FamCAFC 64
Fennessy & Gregorian [2009] FamCAFC 44

Irving & Irving [2013] FamCA 962
Joyce & Fante [2013] FamCAFC 141
Limousin & Limousin [2007] FamCAFC 1178
PBF as Child Representative for AF (Legal Aid Commissioner of Tasmania) & TRF & LKL (2005) 33 Fam LR 123
Penfold v Penfold (1980) 144 CLR 311
Yunghanns& Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681

APPLICANT: Ms Irving

RESPONDENT: Mr Irving

FILE NUMBER: SYC 909 of 2012

DATE DELIVERED: 20 May 2014

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 14 May 2014

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Matthews Folbigg Pty Ltd

SOLICITOR FOR THE RESPONDENT: Tilley Family Law & Mediation

Orders

1. That the husband pay the wife’s costs of and incidental to the s 79A and summary dismissal proceedings (including this application for costs) on a party/basis, with such costs, if agreed as to quantum within one (1) month from this date, to be paid within a further three (3) months, or otherwise as assessed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Irving & Irving 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 PARRAMATTA

FILE NUMBER: SYC 909 of 2012

Ms Irving

Applicant

And

Mr Irving

Respondent

REASONS FOR JUDGMENT

1. The husband’s application to set aside property Orders as between himself and the wife, which were made by consent on 20 March 2012 under s 79A of the Family Law Act 1975 (Cth) (“the Act”) was summarily dismissed on 10 December 2013 (Irving & Irving [2013] FamCA 962).

2. The present application is the wife’s application that the husband pay her costs by reason of those Orders.

Costs

1. Section 117 of the Act provides that each party to the proceedings shall bear his or her own costs.

2. That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.

3. Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: see Penfold v Penfold (1980) 144 CLR 311.

4. The matters relevant to determining what order, if any, should be made for costs are set out in s 117(2A). They relevantly, in these proceedings, relate to the following:

   (a) the financial circumstances of each of the parties to the proceedings;

   (b) whether any party has legal aid and the terms of any grant of aid;

   (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 answers, 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.

5. There is nothing to prevent any one factor being the sole determinant for an order for costs: see PBF as Child Representative for AF (Legal Aid Commissioner of Tasmania) & TRF & LKL (2005) 33 Fam LR 123.

Indemnity Costs

1. The application before the Court is an application for the husband to pay the wife’s costs on an indemnity basis, or such other order as the Court thinks fit.

2. It is usual for the Court to make an order for costs on a party/party basis.

3. Provisions of the Family Law Rules 2004 (Cth) (“the Rules”), particularly rule 19.18, provides for the method of calculations of costs. That rule provides as follows:

   (1)The court may order that a party is entitled to costs:

   (a)of a specific amount;

   (b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

   (b)to be calculated in accordance with the method stated in the order; or

   (c)for part of the case, or part of an amount, assessed in accordance with Schedule 3.

4. Rule 19.18 further provides that:

   (3)      In making an order under subrule (1), the court may consider:

   (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.

5. The Court has jurisdiction in its discretion to make an order for costs on an indemnity basis and the purpose of such an award is to more fully or even wholly repay to a party all, or at least the majority, of their legal costs and disbursements and charges incurred in the proceedings.

6. The category of cases in which an award of an indemnity costs order may be appropriate are not closed and the Full Court of the Family Court observed in Yunghanns& Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681 at [31]:

   … It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such order is sought. …

7. More recently, the Full Court has considered indemnity costs in Joyce & Fante [2013] FamCAFC 141, Limousin & Limousin [2007] FamCAFC 1178, Fennessy & Gregorian [2009] FamCAFC 44 and D & D (Costs) (No. 2) [2010] FamCAFC 64.

8. Otherwise, the principles underlying an award for indemnity costs have been classically summarised by Sheppard J in Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536 where his Honour, in summary, said at [24]:

   …

   2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on a party and party basis. …

   3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. …

   4. In consequence of the settled practice which exists, the Court ought not usually make an order for payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. …

9. Sheppard J made observations as to some of the circumstances which may warrant the exercise of the discretion to award indemnity costs and they included:

   a)false and irrelevant allegations of fraud;

   b)misconduct that causes a loss of time to the Court and other parties;

   c)where the proceedings were commenced or continued for an ulterior motive;

   d)the undue prolongation of a case on groundless contentions; and

   e)wilful disregard of known facts and clearly established law. 

Issue for Determination

1. The question for determination is whether circumstances are such that departure from the normal rule as to costs found in s 117 of the Act is justified.

2. The relevant considerations are:

   a)The parties’ financial circumstances:

   The wife received in terms of property a substantial settlement by reason of the Consent Orders made and is in employment as a professional. The wife has the care of the parties’ youngest child, aged 12 years, who has special medical needs that are met by the wife.

   The husband as at November 2013 represented to his bank that his income was about $85,000 per annum and that he had assets of over $200,000. He now asserts that his financial circumstances have significantly deteriorated. The husband is also a professional. 

   b)Whether either party has a grant of legal aid:

   Neither party had a grant of legal aid.

   c)The conduct of the parties to the proceedings:

   It is not contended by either party that this is a relevant factor in respect of the husband’s 79A application per se.

   d)Failure to comply with orders necessitating proceedings:

   It is not contended by either party that this is a relevant factor in respect of the husband’s s 79A application.

   e)Whether a party has been wholly unsuccessful:

   The husband has made application for a discretionary remedy following final property Orders made by consent. His application was to either succeed or fail. It failed for the reasons set out in the Judgment published 10 December 2013 and therefore was wholly unsuccessful.

   The wife expected to be able to rely on the final Orders made by consent and those Orders have been confirmed by reason of the summary dismissal of the husband’s application.

   On the husband’s own evidence, his application failed at a preliminary stage. This factor justifies a departure from the general rule.

   f)Offers of settlement:  

   The wife by letter dated 3 July 2013 made an offer to pay $20,000 towards the tax debt asserted by the husband on certain conditions, with all applications before the Court to be dismissed. The issue as to the husband’s tax debt was a factor in his failed s 79A application. The offer certainly would have placed the husband in a better position than he now is, yet it was not accepted by him. This is a relevant justifying circumstance as to costs.

   g)Any other relevant matter:

   There was no contention as to any other relevant matter.

3. In the circumstances, there are justifying circumstances such as to depart from the general rule. An order will be made for the husband to pay the wife’s costs of and incidental to the s 79A and summary dismissal application.

4. The wife has not adduced any evidence that would justify the Court even considering an order for indemnity costs. Her application for indemnity costs is dismissed. An order for costs will be made on a party/party basis.

5. The orders to be made are set out at the forefront of these reasons for Judgment.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 20 May 2014.

Legal Associate:        

Date:    20 May 2014