Jacobs and Jacobs and Ors (No 3)

[2015] FamCA 995

FAMILY COURT OF AUSTRALIA

JACOBS & JACOBS AND ORS (NO 3) [2015] FamCA 995

FAMILY LAW – COSTS APPLICATION – Indemnity costs ordered – to be determined in accordance with the Rules.

Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 r 19.18, r 19.33

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
D & D (Costs) (No 2) (2010) FLC 93-435
Kohan and Kohan (1993) FLC 92-340
Limousin v Limousin (Costs) (2007) 38 Fam LR 478
Prantage & Prantage (2013) FLC 93-544

Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029

APPLICANT: Ms Jacobs

1st RESPONDENT: Mr Jacobs

2nd RESPONDENT: Mr A Jacobs

3rd RESPONDENT: Mr B Jacobs

4th RESPONDENT: Mr Johns and Mr Chatham as trustees of the Bankrupt Estate of Mr Jacobs

5^TH RESPONDENT: Jacobs E Pty Ltd

6^TH RESPONDENT: P Pty Ltd

7^TH RESPONDENT: Jacobs SA Pty Ltd

8^TH RESPONDENT: N Pty Ltd

9^TH RESPONDENT: O Pty Ltd

FILE NUMBER: BRC 798 of 2013

DATE DELIVERED: 12 November 2015

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: 26 October 2015

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Ms Matthews Barry.Nilsson Lawyers

1^ST RESPONDENT: No appearance

2^ND RESPONDENT: No appearance

3^RD RESPONDENT: No appearance

SOLICITOR FOR THE 4TH RESPONDENT: Ms Smith, Allens

5^TH RESPONDENT: No appearance

6^TH RESPONDENT: No appearance

7^TH RESPONDENT: No appearance

8^TH RESPONDENT: No appearance

9^TH RESPONDENT: No appearance

Orders

IT IS ORDERED THAT

1. It is certified, pursuant to Rule 19.50 Family Law Rules (2004), that it was reasonable for the wife to engage Counsel to appear on her behalf at the hearing on 15 October 2015.

2. The First, Second and Third Respondents are jointly and severally liable to pay the wife’s costs of and incidental to the Application in a Case filed 28 August 2015 (as amended on 17 September 2015) and the Application in a Case filed 12 October 2015 on an indemnity basis in such amount:

   a)as is agreed in writing between the wife and the First, Second and Third Respondents; or, failing agreement as to amount,

   b)as is assessed on an indemnity basis.

3. Unless otherwise agreed between the parties, the First, Second and Third Respondents shall pay the amount agreed or assessed pursuant to the Clause (2) into the trust account of the wife’s solicitors within 21 days of the finalisation of the proceedings in which final orders have been sought, whether such finalisation occurs by way of agreement between the parties or is consequent upon the making of final orders by the Court.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Jacobs & Jacobs & Ors (No 2) 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 798 of 2013

Ms Jacobs

Applicant

And

Mr Jacobs

First Respondent

And

Mr A Jacobs

Second Respondent

And

Mr B Jacobs

Third Respondent

And

Mr Johns and Mr Chatham as trustees of the Bankrupt Estate of Mr Jacobs

Fourth Respondent

And

Jacobs E Pty Ltd

Fifth Respondent

And

P Pty Ltd

Sixth Respondent

And

Jacobs SA Pty Ltd

Seventh Respondent

And

N Pty Ltd

Eighth Respondent

And

O Pty Ltd

Ninth Respondent

REASONS FOR JUDGMENT

1. The wife[1] seeks an order that the First, Second and Third Respondents pay her costs of and incidental to an Application in a Case filed 28 August 2015 and an Application in a Case filed 12 October 2015, with such costs to be calculated on an indemnity basis and fixed in an amount of $110,458.70.

   [1]Who has complied with the requirement imposed by Rule 19.08(3) of the Rules: Annexure ‘RDJ-1”, affidavit of the wife filed 26 October 2015.

2. The wife incurred total legal fees in bringing the Application in a Case filed 28 August 2015[2] - which was heard on 21 September 2015 – in an amount of $40,525.24. She incurred further legal fees, totalling $69,933.46 in bringing the Application in a Case filed 12 October 2015. These latter legal fees are said to relate to the period until 19 October 2015 and to encompass the actions taken by her legal representatives to implement the Orders made on 16 October 2015.

   [2]           As amended on 17 September 2015.

3. The relevant circumstances are as set out in the Reasons for Judgment delivered by Kent J on 18 September 2015 and by me on 21 September 2015 and 16 October 2015. I adopt the findings outlined in those Reasons and record that I have taken them into account in determining this application.  

4. In addition to the circumstances described in those Reasons delivered by the Court, I accept and take into account that:

   a)the wife’s legal costs were increased as a consequence of the failure of the First, Second and Third Respondents to comply with terms of previous orders; and

   b)the wife is self-employed, generated a taxable income of $13,594.00 from her business during the 2014 – 2015 financial year, does not receive any Centrelink benefits and has no other source of personal income; and

   c)none of the relevant parties are in receipt of legal aid; and

   d)the First Respondent is bankrupt and the Second and Third Respondents are his adult children; and

   e)even if the financial circumstances of the relevant Respondents are poor, impecuniosity is no bar to an order for costs being made where it is otherwise warranted;[3] and

   f)the respective Applications in a Case were necessitated by the conduct of the relevant Respondents in failing to comply with previous Orders of the Court and in attempting to deal with property with an apparent intention to remove it from the proper purview of the Court in its consideration of the property settlement proceedings between the wife and First Respondent; and

   g)the wife was wholly successful in relation to the Application in a Case filed 12 October 2015 and the submissions made in support of it during the hearing on 15 October 2015 were almost entirely accepted.

   [3]           D & D (Costs) (No 2) (2010) FLC 93-435.

5. The circumstances as summarised in the Reasons delivered by the Court and  supplemented by the matters I have summarised above are such that I have little difficulty in concluding that the circumstances justify the making of an order that the First, Second and Third Respondents (jointly and severally) pay the wife’s costs of and incidental to the relevant Applications.

6. Of course, a conclusion that the circumstances justify the making of an order for costs - which, in this jurisdiction, is a departure from the statutorily enshrined starting point[4] that each party to proceedings bears his or her own costs – does not lead inexorably to the making of an order that such costs be paid on an indemnity basis. This is because authority[5] clearly establishes that an order for costs on an indemnity basis is a “very great departure” from the “normal standard” in this and other jurisdictions.

   [4] s 117(1) Family Law Act1975 (Cth).

   [5]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029; Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478, D & D (Costs) (No 2) (2010) FLC 93-435.

7. In Kohan[6] the Full Court acknowledged there is a discretion “in an appropriate case” to make an order for indemnity costs, but said, at 79,605:

   It is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties. This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under s 117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.

   [6]          Kohan & Kohan (1993) FLC 92-340

8. If a method for calculation of costs is not specified in the order made, costs are to be assessed on a party/party basis. However, the Court may make an order for costs on a number of different bases, included within which is on an indemnity basis.[7]

   [7] Rule 19.18 of the Family Law Rules 2004.

9. In Prantage & Prantage[8] the Full Court said, at par [17]:

   Although the Explanatory Guide to the Family Law Rules 2004 (“the Rules”) is not formally part of the Rules, we accept as accurate its definition of “indemnity basis” when applied to a costs order as being:

   an entitlement to costs, including costs under a costs agreement, for all costs incurred, other than costs that are unreasonable in amount or that have been incurred unreasonably.

   [8] (2013) FLC 93-544.

10. The Rules prescribe that costs payable by one party to another are to be assessed by a Registrar who is empowered to determine ‘whether costs were reasonably incurred, were of a reasonable amount and were proportionate to the matters in issue’.[9]

    [9] Rule 19.33(j) of the Family Law Rules 2004.

11. The principles to be applied in assessing costs are also prescribed by the Rules such that, absent another order or agreement between the parties, an order that one party pay another’s costs on an indemnity basis ‘enlivens’ (as it were):

    a)Rule 19.34(1), which provides that a Registrar must not allow costs that are not reasonably necessary for the attainment of justice and are not proportionate to the issues in the case; and

    b)Rule 19.34(2), which provides that the Registrar must allow all costs  ‘reasonably incurred’ and of ‘a reasonable amount’, having regard to, among other things, the scale of costs, any costs agreement between the wife and her lawyer and the charges ordinarily payable by a client to a lawyer for the work.

12. Having regard to the actions of the First, Second and Third Respondents as described in the Reasons delivered by the Court, I am persuaded that there are ‘exceptional’ circumstances in this case which justify the Court:

    a)in departing from the usual course that an order for costs be made on a party/party basis;  and

    b)in making an order that the wife’s cost be paid on an indemnity basis.

13. However, I decline to make an order specifying the amount of those costs as I consider it just and appropriate that this is determined by a Registrar in accordance with the applicable Rules if, as seems likely, this cannot be agreed between the wife and those relevant Respondents.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 12 November 2015.

Associate: 

Date:              12 November 2015