Johnson and Cross-Ware

[2014] FamCA 928

FAMILY COURT OF AUSTRALIA

JOHNSON & CROSS-WARE [2014] FamCA 928

FAMILY LAW – COSTS – Circumstances justifying order – Adjournment of final hearing entirely attributable to applicant – Court of the opinion circumstances justify the making of an order for costs in the respondent’s favour as agreed or assessed on a party/party basis.

Family Law Act 1975 (Cth) s 79, 90UM, 117.
Family Law Rules 2004 (Cth)

Prantage v Prantage (2013) 49 Fam LR 197
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248

APPLICANT: Mr Johnson

RESPONDENT: Ms Cross-Ware

FILE NUMBER: MLC 10190 of 2013

DATE DELIVERED: 30 October 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Thornton J

HEARING DATE: 17 October 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr St John QC

SOLICITOR FOR THE APPLICANT: O’Farrell Robertson McMahon

COUNSEL FOR THE RESPONDENT: Mr North SC

SOLICITOR FOR THE RESPONDENT: Watts McCray Lawyers

Orders

1. The applicant pay the respondent’s costs of the hearing being the attendance of the instructing solicitor on the day of the hearing, the costs for counsel’s appearance, the hearing fee paid by the respondent and two-thirds of the preparation fees for the instructing solicitors and counsel, on a party/party basis on scale as agreed within 28 days.

2. In default of agreement under order (1), the costs be assessed on a party/party basis.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Johnson & Cross-Ware 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 MELBOURNE

FILE NUMBER: MLC 10190 of 2013

Mr Johnson

Applicant

And

Ms Cross-Ware

Respondent

REASONS FOR JUDGMENT

1. Registrar Field listed the respondent’s application seeking a declaration that a Cohabitation Agreement is a binding financial agreement pursuant to the Family Law Act 1975 (Cth) (“the Act”) for determination before me as a final one day hearing on 17 October 2014. The applicant sought and was granted an adjournment of the hearing to 10 February 2015.

2. This is an application by the respondent for the costs thrown away, on an indemnity basis, for the one day hearing.  The application is contested by the applicant.

Background

1. The applicant originally filed an Initiating Application in the Federal Circuit Court on 21 November 2013, which sought an adjustment of property between the parties under s 79 of the Act. The Response filed 12 March 2014 included an application seeking that the applicant’s Initiating Application be dismissed.

2. There is no dispute between the parties about the fact that they were never married and that the Court has no jurisdiction to make any order under s 79 of the Act.

3. On 14 March 2014, Judge Riley ordered that the proceedings be transferred to the Family Court.

4. The respondent filed an Amended Response in this Court on 15 May 2014 and, in accordance with the Family Law Rules 2004 (Cth) (“the Rules”), the Amended Response underlined the amendments made to the orders she had sought in her original Response. The Amended Response continued to refer to the dismissal of the applicant’s Initiating Application filed 21 November 2013.

5. However, as the applicant had deleted the references to his application for an adjustment of property under s 79 of the Act when he filed a Further Amended Initiating Application in this Court on 17 April 2014, the respondent’s application for dismissal of the applicant’s Initiating Application became otiose.

6. Upon hearing the applicant and respondent on 20 May 2014, Registrar Field made the following order:

   Determination of the final orders sought by the Respondent in her Amended Response filed 15 May 2014, in particular a declaration that the Cohabitation Agreement dated 24 February 1998 is a binding financial agreement pursuant to Family Law Act 1975, is listed for final hearing with an estimated hearing time of 1 day … on the 17 October 2014 at 10.00 am.

7. The respondent was ordered to file and serve a written summary of argument and list of authorities she intended to rely upon no later than 10 September 2014.  The respondent complied with that order.

8. The applicant was ordered to file and serve a written summary of argument and list of authorities he intended to rely upon no later than 3 October 2014.  The applicant did not comply with the order until 13 October 2014.

9. The applicant also filed a Reply on 9 October 2014 seeking:

   1.That the Amended Response to Initiating Application of the Respondent filed 15 May 2014 be dismissed.[1]

   2.In the event the Cohabitation Agreement between the parties dated 24 February 1998 is declared to be binding pursuant to Part VIIIAB of the Family Law Act (“the Act”), such Agreement be set aside pursuant to s 90UM of the Act.

   [1] The issue raised by the applicant for the setting aside of any binding financial agreement, if it were found to be such under the Act, was raised for the first time on 9 October 2014 in his Reply. However the application does not particularise which of the grounds under s 90UM of the Act are relied upon for this claim. When the applicant provides that information to the other party and the Response is filed, it may then be appropriate for the Registrar to consider any issues of disclosure which remain outstanding between the parties.

10. The respondent paid a hearing fee.

11. There was disagreement between the parties as to the nature of the proceedings before me on 17 October 2014.  Counsel for the applicant submitted that only the interlocutory applications of the parties were before the Court and that he was replying to the respondent’s application for dismissal of the applicant’s Initiating Application filed 21 November 2013.  Counsel for the respondent submitted that the application for dismissal was superseded by the applicant’s Further Amended Initiating Application filed 17 April 2014 and that the hearing before me was a final determination in precisely the terms ordered by Registrar Field on 20 May.  I determined that the matter before me was a final hearing based on the clear terms of the order made by Registrar Field.

12. The applicant sought an adjournment of the hearing on 17 October 2014.  The application was made partly on the basis that his solicitors had misunderstood the nature of the hearing, but principally because the applicant was not in a position to proceed, as he required further evidence from the solicitor who had advised him at the time when the Cohabitation Agreement was signed.

13. The applicant sought to obtain that evidence to support what he asserts is an apparent disparity of dates surrounding the circumstances of the respondent signing the Agreement.  Notwithstanding that the applicant had about six months to obtain this evidence, I acceded to his counsel’s request for an adjournment as a matter of natural justice because his counsel was not prepared to proceed with the hearing having regard to the state of the evidence for the applicant.  I considered that any prejudice to the respondent could be compensated by way of costs.

14. In responding to the costs application by the respondent, counsel for the applicant relied on letters exchanged between the instructing solicitors for the parties after the orders were made by the Registrar. These letters[2] were exchanged from 2 to 15 October 2014 and evidence confusion on the part of the solicitors for the applicant about the nature of the hearing fixed by the Registrar.

    [2] Exhibits A, B, C, D, E, F and G.

15. Unsurprisingly, the solicitors for the respondent referred the solicitors for the applicant to the clear terms of the order made.

16. Exhibit C is a letter from the instructing solicitors for the respondent dated

    
    

    3 October 2014, drawing the attention of the solicitors for the applicant to the wording of the order made by Registrar Field on 20 May 2014.  The letter states:

    We note that your client had previously sought an adjustment of property between the parties pursuant to section 79 of the Family Law Act, despite acknowledging that he was a party to a de facto relationship. Section 79 of the Family Law Act confers no power with respect to property of the parties to a de facto relationship. Accordingly, on that basis, we were seeking to have your client’s Application struck out as there was no reasonable prospect of him successfully prosecuting his sole claim for financial relief as pleaded. We note that your client has subsequently amended his Initiating Application to refer to the correct sections of the Act and rectified that defect.

    Further, there were lengthy discussions had on 14 April 2014 between the writer, your clients’ Counsel, Mr St John SC and Registrar Fields (sic) at the Telephone mention in this matter, during which your Mr St John agitated for the parties to file Submissions/Outline of Argument in respect of the threshold issue given it was largely technical in nature. We find it curious that you now appear to purport that the intention of the parties filing an Outline of Argument was to deal with interim issues, this simply was not the case.

    …

    Further, as you are well aware, at the directions hearing on 20 May 2014 your Ms McMahon sought a direction from Registrar Fields (sic) that our client file and serve a financial statement. The writer made submissions as to why same was not appropriate at this time, namely that the Court did not have jurisdiction to make directions relevant to any applications to alter the parties’ property interests in circumstances where the Court’s jurisdiction in that regard had not yet been enlivened, as the Court had not yet made a decision as to whether the Cohabitation Agreement is a Binding Financial Agreement under the Act. We referred your Ms McMahon to the full court’s decision in Norton & Locke in this regard. Registrar Field accepted the writer’s submissions on the issue and no such direction was made.

    If your client attempts to again agitate this issue at the final hearing on 17 October 2014 we put you on notice that we will bring this correspondence to the Court’s attention and rely upon same as to the issue of costs.

17. The correspondence reveals that the solicitors for the applicant did not read the order made by Registrar Field until 3 October 2014.  In Exhibit D, a letter addressed to the solicitors for the respondent dated 9 October 2014, the applicant’s solicitors wrote:

    We acknowledge that the form of the Order of Registrar Field dated 20 May 2014 provides for “A determination of the final orders sought by the Respondent in her Amended Response filed 15 May 2014”, etc. The form of that Order only became apparent to us following upon our letter to you of 3 October 2014.

18. Regardless of this misunderstanding by the solicitors, the applicant has been on notice since the Response was filed in the Federal Circuit Court, that the issue of the Cohabitation Agreement was raised by the respondent.

19. Counsel for the respondent submitted that his client’s costs resulting from the adjournment should be granted on an indemnity basis because of the admitted negligence on the part of the applicant’s lawyers in failing to appreciate the orders made by Registrar Field until 3 October 2014.

20. Counsel for the respondent submitted that the applicant should have been in no doubt about the orders made by Registrar Field and had sufficient opportunity to explore the issues of the execution of the Cohabitation Agreement with the solicitor who advised him in 1998.  Although not conceding that there should have been any confusion about what was listed by Registrar Field, he pointed out that no application had been made to this Court before the hearing date to clarify any matters or foreshadow the adjournment application.  Counsel for the respondent submitted that from the filing of the respondent’s outline of case on 10 September 2014, the applicant should have been in no doubt about the nature of the hearing.

21. Counsel for the respondent was not in a position to provide details of costs on scale, but sought costs in the sum of $22,933, comprising of the following:

    a)his preparation fee for the previous day, being $4,400;

    b)his appearance fee of $8,800;

    c)$4,330 for the attendance of his instructing solicitor as agent;

    d)$4,598 being comprised of $1,254 and $3,344 for two days of preparation for his instructing solicitors in Sydney; and

    e)the hearing fee of $805 paid by the respondent.  

22. Counsel for the applicant responded that this amount was excessive and greater than any scale of fees would allow.  Submitting that the question of costs should be reserved, he relied upon the fact that the financial position of the parties was unknown and therefore could not be considered in relation to any application for costs.  Counsel for the applicant submitted that if any order for costs were made in favour of the respondent, at most, she would be entitled to costs thrown away because the submissions prepared would remain the same and the outline of case should not change for the next hearing.

The Relevant Law

1. Under s 117(1) of the Act the general rule is that each party should bear his or her own costs of proceedings under the Act. However, the Court is empowered to make an order for costs if it is of the opinion that there are circumstances which justify such an order.[3]  It is entirely a matter for the discretion of the Court.

   [3] Family Law Act 1975 (Cth) s 117.

2. Section 117(2A) of the Act mandates the factors to which the Court must have regard in considering whether to make an order for costs.

3. In Prantage & Prantage (2013) 49 Fam LR 197 (“Prantage”), the Full Court of this Court referred to the settled law relating to indemnity costs, emphasising the well accepted proposition that indemnity costs orders are “a very great departure from the normal standard”.[4]

   [4] Prantage & Prantage (2013) 49 Fam LR 197, at [85].

4. Moreover, at paragraph 94 of Prantage, Thackray and Ryan JJ stated:

   We recognise that the Rules now expressly refer to orders for costs on an indemnity basis. We recognise also that the rules in this Court are not precisely the same as those in other courts; however, there is nothing in the Rules which indicates that the fundamental principle applied in other jurisdictions should not also be applied in this jurisdiction. Indeed rule 19.18 makes clear that the “default” position is that costs are awarded on a party/party basis.

Conclusion

1. In determining that the costs of the respondent should not be reserved, I have taken into account that there will be a delay in the hearing of about four months.  A consequence for the respondent occasioned by the delay in the hearing is that the applicant continues to reside in the property in Melbourne which is registered to the parties as tenants in common.  This property was previously tenanted and the respondent no longer has the benefit of the proceeds of any rental.

2. In considering whether to make an order for costs, I have taken into account the relevant factors in s 117(2A) of the Act.

3. There is no evidence about the financial circumstances of the parties to take into account and neither party is in receipt of legal aid.

4. However, the overriding factor here is the conduct of the parties in relation to the proceedings.  The respondent has complied with the procedural directions of the Registrar and was in a position to proceed with the hearing.  As for the applicant, I am satisfied that he has failed to avail himself of a reasonable opportunity to make enquiries about the evidence which might be forthcoming from the solicitor who advised him at the time of the execution of the Cohabitation Agreement in 1998.  The applicant was not prepared for the hearing.

5. I accept that there appears to have been some misunderstanding on the part of the applicant’s solicitors about the nature of the hearing, which was communicated to the solicitors for the respondent, but this was clarified by the latter in correspondence.  There is no explanation for why there was any confusion on the part of the solicitors for the applicant having regard to the unequivocally clear terms of the order made by Registrar Field.  There is also no explanation for why the order was not read and/or understood by the solicitors for the applicant until 3 October 2014.

6. Furthermore, in Exhibit D, the letter dated 9 October 2014, the solicitors for the applicant conceded that any confusion was only partly responsible for the delay in the filing of the documents for the applicant in accordance with the directions of Registrar Field.  That letter provided:

   We otherwise note that the confusion as to what case our client faces has contributed to some, but admittedly not all, of the delay in our client filing further documents and submissions. It is presently anticipated all such documents will be filed by the end of this week.

7. No party made submissions that any order for costs should be made against the solicitors for the applicant and the solicitors have not been given an opportunity to be heard on this point.  However, the reason for the adjournment was that the applicant was not ready to proceed because of a lack of evidence from a relevant witness in support of his case, rather than a misunderstanding about the listing.

8. In all the circumstances, I see no reason why the respondent should not be compensated by the applicant for her costs of the hearing by reason of the adjournment.  The adjournment is entirely attributable to the applicant’s failure to obtain sufficient evidence from the solicitor who advised him regarding the Cohabitation Agreement.

9. As noted above, the general rule is that when there are circumstances justifying the making of a costs order, costs should be ordered to be paid on a party/party basis.

10. In Prantage, Thackray and Ryan JJ referred, at paragraph 82, to that general rule and the principles enunciated in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248. Their Honours went on to state that, where there is some unusual or special feature and when the justice of the case requires, there may be a departure from this usual course depending upon the particular facts and circumstances of the case in question. Other cases where indemnity costs have been ordered may offer a guide, but I was not referred to any similar factual circumstances here.

11. In the circumstances of this particular case, I am not satisfied that it is appropriate to order that the applicant pay the respondent’s costs on an indemnity basis.  There are no unusual special features where the justice of the case requires that there be a departure from the usual course in this case.

12. Accordingly, I order that the respondent pay to the applicant the costs of the attendance of the instructing solicitor on the day of hearing, the costs for counsel’s appearance, the hearing fee paid by the respondent and two-thirds of the preparation fees for the instructing solicitors and counsel on a party/party basis as agreed, or in default of agreement to be assessed on a party/party basis.

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Thornton delivered on 30 October 2014.

Associate: 

Date:  30 October 2014