Jeeves & Jeeves (No 4)

[2010] FamCA 651

FAMILY COURT OF AUSTRALIA

JEEVES & JEEVES (NO. 4) [2010] FamCA 651

FAMILY LAW – COSTS – Indemnity costs

Family Law Act 1975 (Cth)
Legal Profession Act 2004 (Vic)

Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
FitzGerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor [2005] FamCA 158
Kohan and Kohan (1993) FLC 92-340
Penfold v Penfold (1980) HCA 4
Strahan and Strahan (Appeal costs) [2009] FamCA 225
Yunghanns and Yunghanns (2000) FLC 93-029

APPLICANT: Ms Jeeves

RESPONDENT: Mr Jeeves

FILE NUMBER: MLF 10167 of 2000

DATE DELIVERED: 30 JULY 2010

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: BY WAY OF WRITTEN SUBMISSIONS

SUBMISSIONS RECEIVED FROM:

COUNSEL FOR THE APPLICANT: MS MOLYNEUX QC

SOLICITOR FOR THE APPLICANT: J A MIDDLEMIS

COUNSEL FOR THE RESPONDENT: MR SWEENEY

SOLICITOR FOR THE RESPONDENT: TAUSSIG CHERRIE & ASSOCIATES

Orders

1. That the wife pay the husband’s costs of and incidental to the proceedings on an indemnity basis.

2. That all proceedings be otherwise dismissed and removed from the list of cases awaiting a hearing.

IT IS NOTED that publication of this judgment under the pseudonym Jeeves & Jeeves is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 10167  of 2000

MS JEEVES

Applicant

And

MR JEEVES

Respondent

REASONS FOR COSTS JUDGMENT

1. On 18 June 2010 I made an order dismissing the wife’s application under s 69A and s 90K of the Family Law Act 1975 (Cth) (“the Act”).

2. The husband by submission filed 2 July 2010 now seeks an order for costs including on an indemnity basis.  He seeks that those costs include the period from April 2007 to 18 December 2008.  Subsequent to that period, the matter proceeded to trial.

3. The wife by submission filed 16 July 2010 opposes any order being made and says each party should pay their own costs.

4. Section 117(1) of the Act provides that each party shall bear their own costs in proceedings. There are circumstances where the Court can depart from that principle but it must first make a finding justifying circumstances to do so. (see Penfold v Penfold (1980) HCA 4).

5. The authorities also provide that the case does not have to be exceptional.  The fundamental principle is that there must be circumstances justifying an order for costs.

6. Should the Court determine that there are justifying circumstances, it must as a part of that process, consider the matters set out in s 117(2A) of the Act. In that provision, there are a number of factors that need to be contemplated but no particular factor has more weight than any of the others (see FitzGerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor [2005] FamCA 158).

7. The husband’s position was that because the wife’s case was unstructured and aimless, there were numerous problems not only in respect of the general conduct of the matter but also the day to day presentation of the trial.  He described her case as disorganised and disjointed. 

8. The husband alleged that during the trial, much time was wasted by repeated and pointless submissions by counsel for the wife which unduly prolonged the hearing.  He included as examples various applications of an interlocutory nature.  They included an application to exclude his solicitor who was also his witness because of impending cross-examination, an application to declare the wife’s own witness Mr B hostile, various assertions as to the way the case would be run which were not followed up and ultimately on 12 August 2009, an application that I disqualify myself.

9. The husband further submitted that during the trial, the wife failed to comply with the rules of the Court by relying upon several affidavits rather than one and the calling of witnesses without proofs of evidence.

10. The wife’s position was that the Court should look to the matters in s 117(2A) of the Act and that it was “indisputable” that the husband was in a far superior financial position to that of the wife. She pointed to the fact that she had been financially dependent upon the husband and required his ongoing financial support for her to meet living expenses. The submissions of the wife however thereafter (paragraphs 7-10) were largely irrelevant because they were either criticisms of the determination of the Court or alternatively, the way in which the husband conducted his case. Paragraphs 11-16 of the submissions were much the same and more appropriate for any appeal that the wife might mount. In my view they do counsel little credit.

11. In my reasons for judgment, I found that the wife’s case was such that she was not properly prepared and that was evident from the way in which her approach was changing constantly.  I pointed to the dilemma in which the wife placed her legal representatives and that fact that the wife’s own senior counsel pointed to the fact that there was no cold hard evidence upon which the wife was relying.  I found that the husband had not given misleading or false information to the wife’s advisers nor that the husband was dishonest. 

12. The wife’s case as set out in her outline dated 21 May 2009 upon which she gave evidence shortly after, altered significantly to the extent that an amended outline of case was filed in June 2009 making different assertions.  The wife called her expert who had also been the expert in the 2003 preparation for hearing but I found that his evidence was based upon wrong assumptions.  That must be seen as either inadequate instructions or poor preparation.

13. The wife did fail to comply with the requirements of the rules but I endeavoured as much as possible to give her latitude to enable her to have her case heard.  Unfortunately, I found the wife not to be a witness of the truth and that her assertions were either without foundation or untruthful.

14. At paragraph 115 of the judgment I said that the wife called witnesses who shed little light on what it was that the husband was supposed to have done to have given rise to the miscarriage of justice.

15. Cross-examination of Mr Shann was found to be unnecessary and much of the time was spent on repetitive issues which did not advance the wife’s case.  The case began with the wife’s assertion about the husband’s acquisition of a property known as R property but that was not the gravamen of her argument.  Significant time was wasted in respect of that issue.

16. This is clearly a case where there are circumstances justifying a departure from the principle that each party pays their own costs.  This was a case in which an enormous amount of time was spent unnecessarily and unfortunately, to the wife’s detriment.

17. Before making an order for costs however, s 117(2) requires a consideration of the matters set out in s 117(2A). For that purpose, the following paragraphs are relevant.

18. Although the wife says that the husband’s financial circumstances are far superior to hers, it is not just superiority or disparity that is relevant.  The wife clearly has financial resources and assets and was prepared to use them for the purposes of conducting this extraordinarily long hearing.  Nothing I heard indicated she was impecunious.

19. Neither party has been asserting throughout these proceedings nor in the submissions I have read that they have been assisted by way of a grant of legal aid.

20. Section 117(2A)(c) requires the Court to have regard to the conduct of the parties to the proceedings in relation to the proceedings themselves. The provision sets out a number of matters to be contemplated but it is the generality of the conduct that is relevant. I have set out above in a very superficial way my views about the paucity of evidence of the wife but also the ad hoc way in which the case was conducted. Discovery took place on the run and as I have already said, the case changed directions on a number of occasions.

21. I am entitled to take into account the question of whether the proceedings were necessitated by the failure of a party to comply with orders of the Court.  I do not find the wife failed to comply with orders.  Rather, she did comply when so ordered.  However, it must be said that she has been wholly unsuccessful in the proceedings. 

22. Each party in their submissions, addressed the question of offers in writing.  I do not need to rule on the question of whether or not an offer to withdraw is an offer at all.  In my view in this case, it matters little.  The husband adopted a position that he had the fruits of a judgment to which the wife had consented in 2003 and should she desire to alter that, she had to prove her case.  As I pointed out during the proceedings, there was nothing unusual about that and I certainly was not critical of the husband for so doing.  In my view, the wife was not disadvantaged by having to prove her case but rather the way in which she went about it.

23. In all the circumstances, I have no hesitation in saying that this was a case in which the wife should be ordered to pay costs.

24. The husband then proceeded by his submissions to seek an order that his costs be paid on an indemnity basis. The principles in relation to indemnity costs are not closed or finite. However, it is fair to say that a court should not lightly depart from the principles set out in s 117(1). (see Kohan and Kohan (1993) FLC 92-340 and Yunghanns and Yunghanns (2000) FLC 93-029). I do not lightly depart from the ordinary rule of s 117(1) in this case. Costs are not intended as a punishment but rather to compensate the party who has had to labour through the litigation as a result of the conduct of the other litigant.

25. In respect of indemnity costs, this Court has traditionally approved the statement of Sheppard J in Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 which said that there should be some special or unusual feature of the case to justify the Court departing from the principle that each party pays their own costs or in this case, that the wife should pay anything other than the costs determined by the scale. Sheppard J set out a number of circumstances which included the fact that the litigation had no chance of success where a party had been properly advised. Sheppard J also referred to a circumstance in which a party makes allegations of fraud knowing them to be false or making allegations of fraud which were irrelevant. In this case, I would not find that the wife made allegations of fraud knowing that they were false but rather making irrelevant allegations on the basis that she had no evidence to support them. Sheppard J also referred to conduct which wasted time including unduly prolonging a case with groundless contentions. It is hard to know exactly what the wife’s determination was in this case having regard to the fact that her case changed substantially after she completed her evidence. I would not find that she had made groundless contentions but rather that she did not properly prepare or have the evidence to support them.

26. In Strahan and Strahan (Appeal costs) [2009] FamCAFC 225, the Full Court considered the issue of indemnity costs and Boland, Thackray and O’Ryan JJ made the following observation:

    An order for costs may be made upon an indemnity basis subject to a judicial determination capable of being made that there ought to be a departure from the usual basis that costs be payable on the party/party basis. 

27. Chapter 19 of the Rules sets out the process by which parties can seek costs but that is always subject to the main purpose of the rules set out in Chapter 1.  The main purpose is to ensure that a case is resolved in a just and timely manner at a cost to the parties and the Court that is reasonable in the circumstances of the case.  Rule 1.06 requires that the Court must apply the rules to promote the main purpose and to actively manage the case by identifying issues and controlling the process of the case.  Rule 1.07 endeavours to achieve the main purpose by the Court applying the rules in such a way that is proportionate to the issues in the case, their complexity and the likely costs of the case.  It could hardly be said in this case that the wife has conducted a case proportionate to the issues in dispute.

28. Chapter 19 of the Rules also provides that where a party applies for costs on an indemnity basis, that party must inform the Court if they are bound by a costs agreement and if so, the terms of the cost agreement.  The wife’s submission was that the evidence in respect of that matter was deficient because of a number of matters required of practitioners under the Legal Profession Act 2004 (Vic). Those matters are all relevant as between solicitor and client and certainly the Court is not bound by those requirements when making an order for indemnity costs. All a court has to be concerned about is that the purpose of the rule is being fulfilled and that justice is done having regard to the matters set out in s 117(2A).

29. In this case, I have no hesitation in finding that it would not be just to make an order that the wife pay costs drawn on the scale having regard to the costs that the husband has incurred as a result of the way in which the wife conducted the proceedings.  To do so having regard to the disparity between the scale under the Rules and that for which the husband contracted with his own practitioner, would be unfair because he did not have the control of the litigation.  That step was entirely in the hands of the wife.  This is a case therefore where there should be an order for indemnity costs.

I certify that the preceding Twenty Nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  30 July 2010