Jeter and Jeter
[2019] FamCA 61
•14 February 2019
FAMILY COURT OF AUSTRALIA
| JETER & JETER | [2019] FamCA 61 |
| FAMILY LAW – COSTS – Costs arising from property application – Consideration of applicable principles – Where no circumstances justifying departure from the general rule that each party pay their own costs – Where application for costs dismissed. |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) r 19.08. 19.18 |
| Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 Brown and Green [2002] FamCA 791 Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited [1993] FCA 536 Collins & Collins (1985) FLC 91-603 D & D (Costs) (No. 2) [2010] FamCAFC 64 Fennessy & Gregorian [2009] FamCAFC 44 Greedy & Greedy (1982) FLC 91-250 Harris & Dewell & Harris (Costs) [2018] FamCAFC 180 Hawkins & Roe [2012] FamCAFC 77 Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 Jeter & Jeter [2018] FamCa 938 Joyce & Fante [2013] FamCAFC 141 Lenova & Lenova (Costs) [2011] FamCAFC 141 Limousin & Limousin [2007] FamCA 1178 Luadaka & Luadaka (1998) FLC 92-830 Parke & the Estate of the Late A Parke (2016) FLC 93-748 Penfold v Penfold (1980) 144 CLR 311 Yunghanns & Ors & Yunghanns & Ors & Yunghanns [2000] FamCA 681 |
| APPLICANT: | Mr Jeter |
| RESPONDENT: | Ms Jeter |
| FILE NUMBER: | PAC | 6007 | of | 2016 |
| DATE DELIVERED: | 14 February 2019 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | By way of written submissions last received on 21 December 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Jackson |
| SOLICITOR FOR THE APPLICANT: | Michael Vassili Barristers & Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Harper |
| SOLICITOR FOR THE RESPONDENT: | Warren & Warren Solicitors |
Orders
That the husband’s application for costs 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 Jeter & Jeter 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 PARRAMATTA |
FILE NUMBER: PAC 6007 of 2016
| Mr Jeter |
Applicant
And
| Ms Jeter |
Respondent
REASONS FOR JUDGMENT
The application for determination is the husband’s application for costs arising out of property orders made on 16 November 2018: Jeter & Jeter [2018] FamCA 938.
The orders as to property adjustment were as follows:
(1)That within three months from the date of these orders the wife pay to the husband the sum of $540,000.00.
(2)In consideration of such payment the husband do all things necessary to transfer to the wife his interest in the home at B Street, Suburb C, NSW being the land comprised in Folio Identifier … and that concurrently with such transfer the wife procure a discharge of any mortgage encumbrance presently secured over the said property so as to release the husband from any liability thereof.
(3)In default of the wife complying with Order (1) above, the parties do all things necessary to sell the property at Suburb C for the best price reasonably obtainable and after selling expenses and legal costs on sale divide the net proceeds of sale as to 60 per cent to the wife and 40 per cent to the husband.
(4)Liberty to apply as to implementation or enforcement of these orders.
(5)That any application for costs be made by way of written submissions filed and served within one month from this date with any submissions in response to be filed and served within a further 14 days and thereafter judgment reserved to chambers.
Submissions as to costs were received from the applicant husband with submissions in response received from the respondent wife.
Costs
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs.
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.
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: Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They are as follows:
(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.
In Collins & Collins (1985) FLC 91-603 (at 79,877), the Full Court described the discretion conferred by s 117 as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way.
The Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
17.With respect to the application of the section, in Penfold v Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
1.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".
2.Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
(footnotes omitted)
18.The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:
… A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
In Greedy & Greedy (1982) FLC 91-250 and Luadaka & Luadaka (1998) FLC 92-830, the Full Court made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.
The provision relating to the calculation of costs is set out in r 19.18(1) of the Family Law Rules 2004 (Cth) (“the Rules”) which states:
Method of calculation of costs
(1)The court may order that a party is entitled to costs:
(a)of a specific amount;
(b)as assessed on a particular basis (e.g. 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.
It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162 that the purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”.
In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 the Court said at [10] that the Court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.
Murphy J observed in Parke & the Estate of the Late A Parke (2016) FLC 93-748 at [130]:
If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court”… The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”…
Considerations
The financial circumstances of the parties are reflected in the reasons for judgment referred to above. Neither party contends that such circumstances are a disentitling circumstance as to an order for costs.
Neither party is in receipt of a grant of legal aid.
The husband makes complaint as to the wife’s failure to make of proper disclosure of documents relevant to her financial circumstances including personal exertion income, investment income and other details as to her superannuation and liabilities. Such disclosure was only made late in the proceedings and on the first day of the trial. The wife contends that some disclosure documents were provided by her in late 2017 and no further requests for disclosure was made until about two weeks before the hearing. This submission belies the obligation of ongoing disclosure on parties to financial proceedings in this Court.
The husband submits that the wife has been wholly unsuccessful in the proceedings and that her initial Response filed 11 April 2017 sought that the husband be entitled to no interest whatsoever in the former matrimonial home, this notwithstanding a relationship of some 20 years and the wife remaining in occupation of the home to the husband’s exclusion for some 18 years until trial.
The husband’s Initiating Application sought an order that he receive 80 per cent of the proceeds of sale of the former matrimonial home. In the circumstances found at trial such could be considered an ambit claim.
On 23 February 2018 the wife filed an Amended Response seeking orders that the husband be entitled to 15 per cent of the equity in the former matrimonial home. Her contention in this regard was maintained until final hearing.
The husband made an offer to settle on 22 November 2017 in consideration of the payment to him of the sum of $560,000.00 together with a superannuation splitting order in his favour of $100,000.00. This was in effect a sum of $120,000.00 more that he received at trial.
The husband further submits that the Court should have regard to an offer of settlement made by him on 5 October 2018 seeking the payment to him of $650,000.00 in settlement of the proceedings which represented a payment to him equivalent to 46 per cent of the value of the matrimonial home then valued at $1.4 million. Yet such offer was unclear and was only clarified by an email from his solicitors on the afternoon of 10 October 2018 only a few days before the commencement of the trial.
The wife did not respond to the husband’s offer and the matter proceeded to a two-day hearing on 17 and 18 October 2018. At trial the husband received 40 per cent of the home valued at trial at $1.285 million.
At trial an order was made that the wife pay to the husband sum of $540,000.00.
In Lenova & Lenova (Costs) [2011] FamCAFC 141 the Full Court, Bryant CJ, Coleman and Murphy JJ said :
In this jurisdiction, costs do not “follow the event”; the Act prescribes, relevantly, that “subject to subsection (2) ... each party to proceedings under this Act shall bear his or her own costs”
(s 117(1)). As a result, a litigant, or prospective litigant, cannot rely upon a costs order following upon success in the action as a means of dissuading the other party from pursuing unmeritorious litigation or as a means of seeking to persuade the other party from pursuing litigation.
A timely offer in writing genuinely made might, then, be seen as an important part of a limited armoury available to prospective litigants seeking to avoid the costs of litigation. Conversely, where, consequent upon success in an action, a litigant can point to the making of a genuine and timely offer having been made, that offer might be seen as an important (albeit not the only) matter in the exercise of the discretion as to the ordering of costs.
That consideration must, of course, be balanced against a litigant having a limited capacity to meet a costs order, as well as any other relevant considerations. But, a limited financial capacity to meet an order cannot be determinative; if it were, a party would always be able to plead impecuniosity as a means of avoiding a costs order in circumstances where pursuit of the litigation has continued in the face of a reasonable offer to cease that litigation and the incurring of its attendant costs.
Whilst regard is had to the financial circumstances of the respondent wife, she was advised by legal practitioners at each stage of the proceedings. She can, in our view, be seen to have known the risks of refusing to compromise in the face of a written offer made before the appeal was filed. That factor, together with the husband’s success in the appeal, warrants an order for costs being made in favour of the husband.
Earlier in Brown and Green [2002] FamCA 791 the Full Court said;
57.We think that whilst s 117(2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement that have been made. The insertion of s 117C into the legislation is a clear indication of the desire of Parliament to enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given. It is clearly a circumstance that would justify the making of an order for costs in favour of the husband.
The husband seeks an order for costs against the wife on an indemnity basis in the sum of $97,572.82 or in the alternative that the wife pay the husband’s costs from the date of her filing her Response to the husband’s Initiating Application as agreed or assessed and on an indemnity basis from 5 October 2018 being the date of the husband’s offer being only a week or so out from trial.
It is usual for the Court to make an order for costs on a party/party basis if an order for costs is made at all.
Rule 19.18(3) 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.
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.
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]:
24.… 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. …
More recently, the Full Court has considered indemnity costs in Joyce & Fante [2013] FamCAFC 141, Limousin & Limousin [2007] FamCA 1178, Fennessy & Gregorian [2009] FamCAFC 44 and D & D (Costs) (No. 2) [2010] FamCAFC 64.
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]:
1. 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. …
2. 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. …
3. 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. …
Sheppard J set out 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.
In Harris & Dewell & Harris (Costs) [2018] FamCAFC 180 (20 September 2018) the Full Court said (footnotes omitted):
23.In Kohan and Kohan, the Full Court held, in applying the principles expounded by Sheppard J in Colgate-Palmolive, that an order for indemnity costs represents a “very great departure from the normal standard”. In the later decision of the Full Court in Prantage & Prantage, Thackray and Ryan JJ referred to Kohan and other authorities in the Full Courts of both this Court and the Federal Court of Australia as well as the state appeal courts. Their Honours concluded (at [86]) that the “usual rule” continued to apply in respect of awards of costs in this Court notwithstanding the Full Court accepting that the difference between party/party costs and a party’s actual costs has continued to grow significantly.
24.That proposition also derives support from what Callinan J said in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation. His Honour said that an order for indemnity costs should “be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers”.
25.The rarity of an order for indemnity costs can also be seen illustrated by the comments of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 2), referred to by their Honours in Prantage (at [102] – [103]). Lindgren J said that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation.”
26.Of course, in proceedings under the Act, an overriding “usual rule” is prescribed by s 117(1), namely that each party bears their own costs. The degree of departure between that “usual rule” and a result where one party bears the totality of the other party’s costs can be seen to be all the greater.
Notwithstanding that the husband has provided to the Court an assessment of the quantum of his costs on an indemnity basis in the sum referred to above the provisions of Rule 19.08(3) are relevant:
Order for costs
(1)A party may apply for an order that another person pay costs.
(2)An application for costs may be made:
(a)at any stage during a case; or
(b)by filing an Application in a Case within 28 days after the final order is made.
(3)A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.
The obligation imposed by the Rule is to “inform” the Court if a party is bound by a costs agreement and, if so, to “inform” the Court of “the terms of the costs agreement”. There is no obligation cast by the Rule to put into evidence a copy of the relevant costs agreement, although in practice that is very frequently the means by which the Court is informed of its relevant terms. Regrettably no details of any costs agreement have been forthcoming and so the question of indemnity costs is not enlivened.
Having regard to the reasons for judgment, it is readily apparent that the wife’s position as to settlement as reflected in her pleadings to the date of trial had little regard to the reality of the likely order that will be made by the Court. Notwithstanding the husband’s offers of settlement, her reluctance to accept the reality of her position was only one of the causes for the matter to proceed to final hearing and judgment.
It is, otherwise, clear from the course of the trial that there were significant gaps in the evidence on both sides most likely the result of the absence of appropriate forensic preparation and or interlocutory applications.
In all of the circumstances, there is nothing to justify departure from the general rule that each party pay their own costs. The husband’s application for costs will be dismissed.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 14 February 2019.
Associate:
Date: 14 February 2019
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