Kaufman and Kaufman & Ors

[2010] FamCA 254

FAMILY COURT OF AUSTRALIA

KAUFMAN & KAUFMAN AND ORS [2010] FamCA 254

FAMILY LAW – PROPERTY – Interim proceedings – extension of time to file affidavit in chief – granted

FAMILY LAW – PROPERTY – Interim proceedings – application for costs thrown away by virtue of husband’s failure to file material – order for costs granted on party/party basis – order for costs on indemnity basis dismissed – stayed until next hearing date

FAMILY LAW – PROPERTY – Interim proceedings – conflict of interest – direct brief issue

Family Law Act 1975 (Cth) s 117(2A)
Family Law Rules 2005 (Cth)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic)

Arundle Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation (2001) HCA 26 (16 February 2001)
Brown & Brown (1998) FLC 92-822
In the Marriage of Kohn (1977) 30 FLR 175
LAC and TRF and LKL [2005] FamCA 158
R & Q [2005] FamCA 6

APPLICANT: Ms Kaufman

RESPONDENT:	Mr Kaufman
SECOND RESPONDENT:	C Pty Ltd
THIRD RESPONDENT	N Pty Ltd
FOURTH RESPONDENT	Mr S

FILE NUMBER: MLC 7188 of 2008

DATE DELIVERED: 10 March 2010

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 10 March 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr M. Wood

SOLICITOR FOR THE APPLICANT: Saxby Lawyers

THE RESPONDENT: In person

SOLICITOR FOR THE RESPONDENT:

COUNSEL FOR THE 2^ND AND 4^TH RESPONDENTS Mr Geddes QC with Mr Best

SOLICITOR FOR THE 2^ND AND 4^TH RESPONDENT Dov Silberman

Orders

1. That the time for compliance by the husband with paragraph 4 of the Orders made on 4 February 2010 be extended to 4.00 pm on 25 March 2010 and in the event that the husband fails to comply with that order the proceedings as between the husband and the wife proceed on an undefended basis with the husband being permitted to cross-examine witnesses but not to adduce evidence.

2. That the time for compliance by the husband with paragraph 5 of the Orders made on 4 February 2010 be extended to 4.00 pm on 25 March 2010. 

3. That my reasons for decision today be transcribed and when transcribed a copy be made available to the parties to the proceedings and a further copy be sent to the Chairman of the Ethics Committee of the Victorian Bar.

4. That this matter be listed before me for directions for trial on 30 April 2010 at 2.15 pm.

5. That in the event that an application for leave is made by the husband pursuant to paragraph 5 of the Orders made on 4 February 2010, that application for leave be set down for determination by me at 2.15 pm on Friday 30 April 2010.

IT IS NOTED BY THE COURT:

That C Pty Ltd have foreshadowed that, in the event that the husband has not obtained leave to file an application to seek further or alternative parties to the proceedings or further or alternative relief by 25 March 2010 an application will be sought to be made on the next mention date for the husband’s original statement of claim to be struck out for want of prosecution and/or dismissed summarily.

IT IS FURTHER ORDERED:

1. That C Pty Ltd is at liberty to provide a copy of reasons for decision this day to Z Firm of Melbourne.

2. That the husband pay the wife’s costs thrown away this day fixed in the sum of $2,160.00.

3. That the husband pay the costs of C Pty Ltd thrown away this day fixed in the sum of $7,209.00.

4. That the costs payable by the husband to the wife and to C Pty Ltd be stayed until 12.00 noon on 30 April 2010.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 7188 of 2008

MS KAUFMAN

Applicant

And

MR KAUFMAN

Respondent

And

C PTY LTD

Second Respondent

And

N PTY LTD

Third Respondent

And

MR S

Fourth Respondent

REASONS FOR JUDGMENT

ex tempore

1. This matter comes before me pursuant to orders made on 4 February 2010 to make directions in anticipation of a final hearing, which has been set down for 2 August 2010 and estimated to take five days.  The husband makes an application today seeking more time to file his affidavit of evidence in chief, which was to be filed by 4 pm on 4 March 2010 pursuant to orders made 4 February 2010.  The wife and C Pty Ltd seek an order for costs on an indemnity basis for costs thrown away by virtue of the husband’s failure to file the affidavit of evidence in chief.

2. In addition, there is an issue regarding a potential conflict of interest of the husband’s solicitors and a related ethical issue regarding counsel who purported to appear for the husband on 4 February 2010.

3. The husband appears in person.  He also appears on behalf of a company, N Pty Ltd.  There is another company, which is not yet a party to proceedings, called D Pty Ltd.  For all intents and purposes, he has control and ownership of those companies.

4. Mr Wood, of counsel, appears on behalf of the wife.

5. Mr Geddes, of counsel, appears with Mr Best for C Pty Ltd.  The wife and her brother, Mr S are the directors of C Pty Ltd.  That company is the trustee of the R Trust. 

The Husband’s Interim Application

1. On 4 February 2010, the husband indicated that he would seek to join further parties.  I made an order that any application for leave to join further parties be made by not later than 4 pm on 4 March 2010.  The purpose of today was to ensure that the husband’s case against C Pty Ltd was articulated to an extent that it could be responded to by C Pty Ltd.

2. The husband did not make any application for leave to add further or alternative parties to the proceedings, or for further or alternative relief.  For some reason, which belies the terms of paragraph 5 of the orders made on 4 February 2010, the husband thought that he could make that application today and do so orally.  That was clearly not what the order provided for.  Today he says that he still wishes to make application. 

3. Paragraph 4 of orders made on 4 February 2010 provided that the husband file and serve any amended response upon which he personally proposed to rely in relation to relief under section 79, and any evidence in support of that, together with his affidavit of evidence in chief.  Today he has confirmed that he will be the primary witness for his own case and for the entities N Pty Ltd and D Pty Ltd (if the latter ever becomes a party). 

4. The husband has had more than a month in which to comply with the order about filing his affidavit of evidence in chief.  He has not complied.  He says that he has prepared a draft with some 30 exhibits and needs another week to finalise that document.  After discussion, I have resolved to allow him a further two weeks.

5. Counsel for the wife does not oppose an extension of the time in which the husband can file his evidence, make an application to add further parties or seek alternative relief, providing that the husband be subject to an order that in the event that he does not comply with the order for filing his evidence the matter proceed on an undefended basis.  That is, that the husband can participate in the proceedings, but not adduce any evidence in support of his case.  He can challenge the case of the wife.  Counsel for the wife also foreshadows an application for costs of today. 

6. Counsel for C Pty Ltd indicates that any application for further parties or alternative relief will be opposed by the wife’s brother and C Pty Ltd.  He submits that his client has been provided with a statement of claim which he says is defective for a number of reasons.  Those proceedings were instituted in the Supreme Court of Victoria by statement of claim, filed in the name of N Pty Ltd, and subsequently transferred to this court pursuant to an order expressed to be made under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic). I will note in the order that the parties take no issue in relation to jurisdiction, and that, if this court is not seized of the matter appropriately by virtue of cross-vesting of corporate matters under the Corporations Act 2001 (Cth) or the like, the court has jurisdiction to hear this matter under its accrued jurisdiction.

7. Counsel for C Pty Ltd assert that the deficiencies in the original statement of claim have been the subject of a number of remedial orders of which the husband has failed or neglected to take advantage. 

8. On 15 December 2008, the matter came before Registrar Riddiford.  Mr Dickon, of counsel, appeared for the husband, and the wife was represented.  Mr Silberman appeared for C Pty Ltd.  An order was made which was directed to a deficiency in relation to the respondents named in the statement of claim.  On the 16 July 2009, Registrar Riddiford further ordered that N Pty Ltd file and serve any amended application or statement of claim setting out with precision the orders sought by 28 August 2009.  That order was never complied with.  On that day the husband was represented by Kenna Teasdale Lawyers and Mr Silberman represented C Pty Ltd.

9. It was noted in paragraph 18 of the directions made by Registrar Riddiford that a copy of the orders would be served on Madgwicks, being the solicitors for N Pty Ltd.  The previous order directed to the alleged defect in the statement of claim was discharged.

10. As indicated, when the matter came before me on 4 February 2010 the husband indicated that he wanted to add further parties or seek alternative relief.  That was in contrast to earlier correspondence he had sent to C Pty Ltd saying that he relied upon his original statement of claim.

11. I will grant the husband the indulgence that he seeks, that is a further two weeks.  I can indicate to the parties that I would not have been in the position to accommodate the matter any earlier, so I do not think they have lost any time.  It is appropriate in my view that in the event that the husband does not file his evidence then the matter will proceed on an undefended basis. 

12. Counsel for C Pty Ltd seeks an order that if the husband does not file an application for leave to add further or alternative parties or seek further or alternative relief, the original statement of claim relied upon by the husband in the Supreme Court should be struck out for want of prosecution.  I am not prepared to make that order at this time. 

13. I have not asked for submissions nor examined the competence of the statement of claim.  The reason that I have not done so is that the husband says he is going to replace it with another statement of claim.  That would seem to me to be a duplication of effort when the matter can be addressed at a later time in the event that the husband does not seek leave or obtain leave to amend.

14. I note that counsel for C Pty Ltd does not assert that his client would be unable to be compensated in relation to costs thrown today away by the husband’s failure to comply with orders.

Conflict of interest/ direct brief

1. The husband is one of many self-represented litigants in this court.  Self-representation is not always a matter of necessity, it is frequently a matter of choice. 

2. On 4 February 2010 the husband attended court and Mr Y of counsel purported to appear on behalf of the husband.  There was no notice of address for service filed by a firm of solicitors for the husband.  Mr Y confirmed that he did not hold a back sheet nor a brief to appear on this day, but merely had some documents in the proceedings and “understood” that he would receive a brief to appear, necessarily after the fact, from Z Firm of Melbourne.

3. On this date, counsel for C Pty Ltd informed the court that, in the event that Mr Y was to be retained by Z Firm, an application to restrain Z Firm from acting would likely be made on the basis that Z Firm had previously acted on the establishment of the R Trust (of which C Pty Ltd is trustee). 

4. The court informed Mr Y that it was not customary and indeed, as I understand, not permitted by the relevant professional body for a barrister to accept a direct brief in a family law matter.  It is true enough that part of the matter requiring determination is not between parties to a marriage, but what there is no dispute about is that the only relevant persons are indeed the parties to a marriage and the brother of the wife.

5. The proceedings on 4 February 2010 were conducted with Mr Y, barrister, sitting next to the husband.  He was not permitted to address the court.  The husband had conduct of his own case.

6. Counsel for C Pty Ltd informs the court that subsequent to the appearance on 4 February 2010, his instructing solicitor Mr Silberman obtained a verbal indication from Mr Z of Z Firm that they would not act on behalf of the husband.  I was informed from the bar table that the verbal advice was to be followed by a confirmatory letter in writing from Z Firm to Mr Silberman which has not been received. 

7. The husband and counsel for C Pty Ltd agree that Mr Z is currently out of the jurisdiction and not contactable.  He apparently returns from overseas tomorrow.  The issue of continued involvement of Z Firm may be determined without any need for court proceedings.  However, the matter of the involvement of Mr Y of counsel, who is instructed by Z Firm, is a matter which apparently remains unresolved.

8. Today the husband believes that Z Firm still act for him.  I note that:-

   a)The husband has confirmed that Mr Y, barrister, advises him in relation to the proceedings and does so on retainer from Z Firm. 

   b)Mr Geddes, counsel for C Pty Ltd, has an amended statement of claim or other document which purports to have been drawn by Mr Y. 

9. If Mr Y is retained by Z Firm then there is no longer an issue about whether acceptance by Mr Y of a brief directly from the husband is contrary to the rules of conduct for members of the Victorian Bar.  However, if Z Firm is conflicted then, whilst I have not heard submissions on the point, it is arguable that Mr Y is similarly conflicted.

10. It is unrealistic to expect the husband to question the propriety of Mr Y’s involvement.  I do not want to impose on members of counsel any obligation to report a fellow member of counsel to the Ethics Committee.  Whilst the wife, her brother and C Pty Ltd have lawyers who can make a complaint to the Victorian Bar Council, so too can the court refer matters for consideration by the ethical body.

11. It may be that there is nothing amiss or it may be that, if he is acting for the husband, Mr Y cannot continue to act.  I am merely concerned that no court time be wasted on an untimely application for injunctive relief based on conflict of interest.  On the one hand there is the husband who says Mr Y acts on his behalf and wants Mr Y to continue to act.  On the other hand, there are the solicitors for C Pty Ltd who are still awaiting written confirmation that Z Firm will no longer act for the husband.

12. I will direct that a Registrar of the Court send a copy of these reasons to the Chairman of the Victorian Bar Council with a request that Mr Y’s continued involvement be considered by the Ethics Committee.

Applications for costs

1. I have an application from the wife and by C Pty Ltd that the husband pay their costs thrown away by virtue of the husband having failed or neglected to comply, or to take advantage of paragraphs 4 and 5 of the orders made on 4 February 2010. 

2. The wife claims costs of $4400 on the basis of her counsel’s brief fee for today being $2200 and the solicitors’ costs being $2200.  The wife makes an application for indemnity costs significantly because the husband has “defiantly refused to engage a lawyer to conduct these proceedings” in a timely way. As indicated, self representation is often a matter of choice in this court. There is no compulsion to be legally represented so I am against Mr Wood on that point. Further, the counsel for the wife submits that his client ought not be out of costs because of defects in the husband’s case or the husband seeking and obtaining further extensions of time to file his evidence and amend any statement of claim. 

3. In the event that I am against the wife in relation to indemnity costs, counsel for the wife informed me that he is retained for the day and his instructing solicitor has been occupied in the matter since 9 am this morning.  This matter was listed originally between 9 and 10 am.  It will not conclude much before 12 noon.  The solicitor’s hourly rate is $375, which would make the time for this hearing $1125. 

4. I accept the submission of counsel for the wife that whereas the matter was listed for a mention at 9 o’clock and may have been considered to be able to be concluded by 10 o’clock, it has not been.  It was also everyone’s expectation that counsel, who had a thorough working knowledge of the matter, would appear.  The scale of costs for short matters for counsel taking less than three hours is $198 to $928.  However, in my view, the appropriate scale would be a matter taking at least three hours and that is between $677 and $1565.  Having regard to Mr Wood’s seniority and also his history of the matter, it is appropriate in my view that his costs be fixed in the sum of $1500. 

5. In relation to the solicitor’s fees, at scale they would be calculated at approximately $200 an hour or $600 in total. 

6. Turning to the issue of liability for payment, s 117 of the Family Law Act 1975 (Cth) (‘the Act’) contains the general rule that each party to proceedings under the Act shall bear his or her own costs. The object of the rule is to ensure that spouses are not deterred from bringing or maintaining legitimate applications for fear of incurring an intolerable financial burden if they lose.[1]  However, the court retains a discretion to make an order for costs if it is of the opinion there are circumstances that justify that course and it would be just to do so. 

   [1]          In the Marriage of Kohn (1977) 30 FLR 175 at 177.

7. In considering whether to make an order the court must have regard to the matters set out in s 117(2A). The weight to be attached to any of the considerations in s 117(2A) is wholly discretionary. However, while no single factor out-ranks any other, there is nothing to prevent one or other of them from being the sole foundation for a costs order.[2]  As Kay J observed in Brown & Brown: [3]

   In many cases there will be an outstanding feature . . . that makes an order for costs appropriate, a feature which so dominates the scene that it can outweigh any of the other s 117(2A) considerations.

   [2] LAC and TRF and LKL [2005] Fam CA 158 at [41].

   [3] (1998) FLC 92-822 at 85,347.

8. The husband has had an opportunity to address me on the matters set out in s 117(2A). The husband submits that he did not understand paragraph 5 of the orders made on 4 February or that he had to make an application by a certain time. I have already found that that is not a reasonable position. He otherwise says that his affidavit has taken longer to draw than he anticipated.

9. The husband does not point to having provided the other parties with any opportunity to minimise or avoid incurring costs today. 

10. I take into account the respective financial circumstances of the husband and the wife.  I note that the husband says he does not have cash available to meet an order for costs.  He submits that he does not have the financial wherewithal to meet an order for costs and that if I make such an order, he will not be able to pay it unless certain funds are released to him.

11. Impecuniosity is not a defence against an order for costs.  If that were the case, a litigant without funds could conduct proceedings in such a way that other parties to the proceedings unnecessarily incur costs.  The husband’s failure to file material warrants an order for costs against the husband in favour of the wife.  Both applicants for costs claim indemnity costs so I will turn to the basis upon which indemnity costs can be awarded later in these reasons.

12. Turning to the costs application made on behalf of C Pty Ltd, for the same reasons as I have expressed in relation to the wife, I am satisfied that C Pty Ltd have occasioned costs for today unnecessarily and arising out of the husband’s failure or neglect to take advantage of or comply with paragraphs 4 and 5 of the orders made on 4 February 2010.

1. The husband did not seek to address me on any of the matters in section 117(2A) other than to say that he does not have the financial means to meet an order for costs. Again, I take into account that the costs were incurred because of the husband’s failure to comply with orders and find that an order for costs is warranted.

2. C Pty Ltd is represented by junior and senior counsel today.  This is clearly a matter of some complexity.  The husband did not urge upon me that senior counsel was not required in the case and there is every indication, on what I have heard thus far, that senior counsel is required. 

3. Senior counsel for C Pty Ltd quantifies his costs on an indemnity basis and informs the court that his fee for today, for a half-day appearance, is $3300 and that there were two hours spent yesterday at $660 per hour; bringing his fees to a total of $4620.  In relation to junior counsel, the fees for yesterday’s conferences are $250 for each of two hours and four hours at an hourly rate of $250 from 8 am today.  That brings the fees for junior counsel, on an indemnity basis, to $1500.  The professional fees of Mr Silberman, solicitor, who has been in court, are $330 per hour.  He has been occupied for three and a half hours today and two hours yesterday at a total of $1815.

4. I am satisfied that the circumstances of this case justify both the wife and C Pty Ltd having an order that the husband pay their costs thrown away today.

Indemnity costs

1. The remaining issue is whether the costs ought to be payable on an indemnity basis.  Neither the wife nor C Pty Ltd directed submissions to a justification of costs calculated on a solicitor/client or indemnity basis rather than the usual party/party basis other than to say that they did not deserve to be out of pocket by reason of today’s adjournment. 

2. The relevant authorities are usefully set out in the decision of the Full Court of the Family Court of R & Q [2005] FamCA 6. At paragraph 37, the court comprising Holden, May and Strickland JJ commented:-.

   [37] The category of cases in which it would be appropriate to make an order for indemnity costs was recently discussed by the Full Court in JEL and DDF (No. 2) (2001) FLC 93-083 at 88,441-442, where the Full Court said:

   "… The category of cases in which it would be appropriate to make an order for indemnity costs does not appear to have been fully defined. The Full Court has, however, set out some general principles. In Kohan and Kohan (1993) FLC 92-340 the Court said at 79,614:

   “The Proper Exercise of the Discretion

   The intent of s117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O. 38 r. 2, the provisions of O. 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O. 38 r. 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind. See Degmam v Wright (No. 2) (supra); Wentworth v. Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v Union Insurance Co (1991) 25 NSWLR at 368 to 370.”

   63. The principles that emerge from the authorities were conveniently summarised by Sheppard J in Colgate-Palmolive Company & Anor v Cussons Pty Ltd (1993) 46 FCR 225. His Honour in that case summarised the position as follows:

   “…

   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 the party and party basis… .

   3.       This has been the settled practice for centuries in England.  It is a practice that 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 the 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… .”

   64.       His Honour then went on to note some of the circumstances which have been thought to warrant the exercise of the discretion to award costs on an indemnity basis.  His Honour said at 233:

   “Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.”

   65.       Insofar as an imprudent refusal of an offer to compromise is concerned, the authorities giving rise to this proposition are in the main New South Wales authorities.  The Full Court warned in Kohan (supra), that this is in part attributable to the amendment of the Supreme Court rules of that State which provide for indemnity costs where a plaintiff obtains judgment in terms no less favourable than those of an offer to compromise made by him and not accepted by the defendant.

   66. In Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 the Full Court specifically acknowledged the category of cases that may give rise to an indemnity order are not closed. The Court said at 87,471:

   “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 an order is sought. All that is required is that the Court asked to exercise the discretion be satisfied that some ‘particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis’: per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.”

   67.       In his written submissions, counsel primarily relies upon the assertion that the wife imprudently refused an offer to compromise.

   68.       We accept the proposition that the objective of the statutory provision in relation to written offers is to encourage settlements and to reduce the cost of litigation to the parties and the community.  That, however, does not mean that the failure to accept an offer will necessarily result in an order for indemnity costs.

   69.       As the Full Court said in Kohan (supra):

   “Insofar as an unaccepted offer of compromise which exceeds a judgment may justify an order for costs, the general practice in this jurisdiction so far has been to order no more than costs on a party and party basis. Even in cases where there has been dishonest concealment of assets or income as in Penfold v Penfold (1980) FLC 90-800 and Oriolo and Oriolo (1985) FLC 91-653, no more than party and party costs have been awarded.”

   70.       In our opinion, the failure to accept an offer which in retrospect, perhaps, should have been accepted is without more, insufficient to justify the making of a costs order on an indemnity basis.  The rejection of the offer must be at the very least imprudent.  We express no opinion as to when the rejection of an offer may be so classified.  It is clear to us in the circumstances of this case that the rejection of the offer, although unwise in retrospect was not imprudent."”

3. With respect, I adopt the above statement as an accurate statement of law and apply it in this case.  I am not satisfied that the conduct giving rise to the liability for costs is of the nature, or the circumstances of this case are of the nature to warrant an application for indemnity costs.

4. Indemnity costs were also the subject of comment in Arundle Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation (2001) HCA 26, delivered on 16 February 2001, in which Callinan J stated:

   I would not order indemnity costs as the occasion for an order for these should, in my opinion, 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.

5. In this case there is no suggestion that costs are claimed at an extravagant rate.  However, I do not regard this as a case where costs should be calculated on either a solicitor / client or an indemnity basis.

Costs to be fixed

1. As there has been no application to send the matter of costs for assessment, I am able to fix them now.  For the parties to incur costs of a costs assessment over a discrete and relatively insignificant interim proceeding such as this cannot be justified on the principle of proportionality or the main purpose of the Family Law Rules being ‘to ensure that each case is resolved in a timely manner at a cost to the parties and to the court that is reasonable in the circumstances of the case.’

2. I have detailed costs of the wife which I consider are allowable on scale. There will be an order in favour of the wife and against the husband for counsel’s fees in the sum of $1565 and solicitors fees in the sum of $595.

3. Counsel for C Pty Ltd has reasonably sought costs of half a day for himself and junior counsel.  Senior counsel in his application sought costs of $4620, which is comfortably within the relevant scale.  Accordingly, I will accede to that quantification of his costs.  In relation to junior counsel, $1500 was sought.  The appropriate scale is between $677 and $1565.  I will allow the $1500 fee.  In relation to the solicitor’s fees, I will calculate that in accordance with the scale of $192 an hour, which totals $1089.

Stay of payment of costs

1. The husband seeks a stay of payment until the conclusion of the proceedings.  That stay is opposed by the wife who points to previous funds having been disbursed to the husband.  She also submits that she has a liability to pay her costs as and when they are incurred.  Likewise, C Pty Ltd opposes any stay. 

2. At this point, I have not asked the husband to account for moneys which he has previously received although they amount to a significant sum.  His last statement of financial circumstances indicates that he has money jointly with the wife.  The husband informs me that he cannot access any of those monies and that he would have to make an application to get some of that money out in order to meet a liability for costs.  That may well be the case.  The husband has to order his affairs in these proceedings so that he can meet his commitments and I have decided that those commitments include costs orders in favour of the wife and C Pty Ltd.

3. It is not appropriate that payment be postponed until the end of the proceedings.  I will, in the circumstances, stay them until 30 April 2010 at 12 noon noting that the matter returns before me later in that afternoon. 

I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett

Associate: 

Date:  31 March 2010