Kelby and Kelby

[2018] FamCA 849

FAMILY COURT OF AUSTRALIA

KELBY & KELBY [2018] FamCA 849

FAMILY LAW – COSTS – Costs of a single expert – Where a party sought to remove the single expert and refused to pay fees for same

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
Kohan and Kohan (1993) FLC 92-340

Yunghanns v Yunghanns 

APPLICANTS: Ms Kelby

RESPONDENT: Mr Kelby

FILE NUMBER: SYC 8071 of 2014

DATE DELIVERED: 28 September 2018

PLACE DELIVERED: Parramatta

PLACE HEARD: Sydney

JUDGMENT OF: Le Poer Trench J

HEARING DATE: In chambers, on the papers

REPRESENTATION

ADVOCATE FOR THE APPLICANT: Mr Amirbeaggi

SOLICITOR FOR THE APPLICANT: Yates Beaggi Lawyers

ADVOCATE FOR THE RESPONDENT: Mr McGirr

SOLICITOR FOR THE RESPONDENT: McGirr Lawyers Pty Ltd

Orders

1. Within seven days from the date hereof the husband pay to Company P, the amount of $7,977.75.

2. The payment of the said sum of $7,977.75 operate as a charge against the husband’s entitlement to any final property order of the court.

3. The husband pay the wife’s costs of the application in a case filed by the husband on 25 July 2016 and 22 August 2016 as determined by the order made on 30 June 2017. Further, the husband pay the wife’s costs of appearing in relation to the order sought by the single expert in a response filed by the single expert to the husband’s application on 30 September 2016.

4. The wife is to cause the Trial Judge, or the Judge or Registrar making any consent orders the parties may present as final property orders, to be advised of the state of any non-compliance by the husband with the orders made herein, to ensure that any final property order provides for the satisfaction of the order for payment of the single expert’s fees in the event the fees are still outstanding at that time.

5. I direct that the Docket Registrar ensure that the orders made today are brought to the attention of the trial judge within a reasonable time frame.     

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 Kelby & Kelby 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: SYC 8071 of 2014

Ms Kelby

Applicants

And

Mr Kelby

Respondent

REASONS FOR JUDGMENT

Introduction

1. Before the Court is an application for costs filed by Ms Kelby (“the wife”) arising out of interim proceedings between herself and Mr Kelby (“the husband”) in which the husband sought the discharge of the single expert, Mr R.

2. Mr R was appointed as single expert pursuant to orders made by consent between the husband and wife on 17 April 2015 in order to value the parties’ interest in the company J Pty Limited.

3. The husband filed two Applications in a Case on 25 July 2016 and 22 August 2016 to discharge Mr R as the single expert. The wife filed a Response to an Application in a Case on 22 September 2016 opposing the discharge of Mr R as single expert.

4. The matter came before me on 16 February 2017. I heard the parties’ applications and determined the issues of whether the husband could be heard on his applications notwithstanding he was in breach of orders to pay the wife $250,000 by way of interim property settlement made by Justice Rees on 28 August 2016, and whether the single expert should be discharged.

5. Judgment was delivered on 30 June 2017. I dismissed the wife’s application that the husband not be heard in the application and I dismissed the husband’s application to discharge the single expert. I made orders as follows:

   (1) The wife’s application that the husband not be heard on his application to discharge the single expert is dismissed.

   (2) The husband’s application seeking the discharge of the single expert is dismissed.

   (3) On or before the expiration of 14 days from the date hereof the single expert is to provide to the Court a statement of outstanding invoices which he requires to be paid by the husband of the wife.

   (4) Within 14 days the wife is to file and serve a minute of any order she seeks in relation to costs arising from the matters determined by these orders. If the wife seeks an order for costs she is to also serve any affidavit she seeks to rely upon together with her written submission at the time she files the said minute of order.

   (5) On or before the expiration of 28 days from the date hereof the husband is to file and serve any minute of order he seeks (including, if sought, a simple request that all costs application sought by the wife and the single expert be dismissed), together with any additional written submission he seeks to rely upon. The court notes the husband has already provided written submissions in relation to the sums the single expert has sought be paid by the husband.

6. In accordance with order 3 made on 30 June 2017, the single expert filed an affidavit on 14 July 2017 in which he deposed that the unpaid invoices total $7,977.75. In his affidavit Mr R deposed that there is one unpaid invoice for $742.50 being the husband’s half share of the amount charged for “reviewing a letter and preparation of a letter in response. The wife was presented with an invoice for the same amount and she has paid her share.

7. Mr R also deposed that there was an unpaid invoice for $7,235.25 dated 13 July 2017. He says that the invoice is addressed to the husband and is his cost for responding to the husband’s application to have him discharged as the single expert including the cost of attendance at court on 10 October 2016.

8. On 21 July 2017, the husband provided to my Associate a copy of a minute of orders sought and written submissions. The orders sought are as follows

   (1) That the Application of the Second Respondent ([Mr R] for costs and any Application of the Applicant for costs of the proceedings heard 16 February 2017 be dismissed.

   (2)Alternatively that such Application or Applications be adjourned to the final hearing of the substantive proceedings. Note that the issue of costs interim applications, where Judgment of McClelland J was delivered on 15 June 2017 has been stood over to the final hearing of this matter.

9. On 24 July 2017, the wife provided to my Associate a copy of written submissions and a minute of order seeking the following:

   (1) The Expert receive within 28 days of the Order from the parties any additional instruction to enable the Expert to properly determine the value of the assets of the Company described as [J] Pty Limited (Company).

   (2)The Expert to have regard in determining the value of the assets the historical accounts (receipts and payments) of the Company.

   (3) The Husband pay the costs of the Expert and Wife of the Application on an indemnity and forthwith basis.

10. The submissions of the husband were targeted towards the costs of the single expert. As the single expert has not sought costs other than his outstanding fees, those submissions are not relevant to this determination.

11. The case has moved now to a point where it is on the cusp of allocation of hearing dates before Watts J and the requirement for the evidence of Mr R is unclear. In any event that aspect of the preparation of the trial should be the province of the trial judge.

Determination of the issue of who should pay the costs of Mr R

1. The husband has failed in his application to have the single expert discharged. As such he is bound by the provisions of the appointment of the single expert.

2. The wife has met her obligations under the appointment of the single expert by paying her half of the invoices issued to her.

3. The remaining cost claimed by the single expert is for having to respond to the application filed by the husband for the discharge of the single expert. I find that it was entirely appropriate for the single expert to have responded to the application in the way in which he did and I find that it is appropriate in the circumstance where none of the husband’s complaints made against the single expert were accepted by the court, that the husband pay the costs incurred by the single expert in responding to the application.

4. The application by the husband was a direct challenge to the professional standing of the single expert and it is entirely appropriate that the single expert be able to be heard in such a challenge.

5. There is no reason why the husband should be excused from paying the outstanding invoices which were issued to him by Mr R and I will so order.

6. There is a matter of public importance and importance to the court and its ability to hear and determine complex property cases which is highlighted by this dispute.

7. The court relies upon the expertise available in the commercial world to inform it of complex matters including the value of corporations, trusts and such other entities which are the subject of proceedings for property division in the court. Single experts accept such appointments clearly with the knowledge that their appointments carry the imprimatur of the court’s authority and comforted by the knowledge that payment for their expert evidence will be attended to within a reasonable time frame or within the conditions of their engagement.

8. In this case the action of the husband in refusing to meet his bargain with the single expert (pay his half of the cost) puts at risk the prospect of the single expert deciding it is too difficult and unrewarding both professionally and financially to accept an appointment as a single expert in a family law property dispute. Such a consequence will reduce the pool of available experts and potentially mean that the court does not have the advantage of having evidence of excellence to assist in the determination of complex and challenging cases.

9. Following on from the matters set out above, it is important for the court to step in to aid the single expert recover fees when there has been a failing on the part of a party to meet the obligation of payment as stipulated in the contract of engagement entered into with the expert.

10. I propose to ensure the single expert’s fees payable pursuant to these orders are secured against the husband’s entitlement to the benefit of any property order the court might make in his favour. Further, I propose to order that the wife is to cause the trial judge, or the judge or registrar making any consent orders the parties may present, as final property orders, to be advised of the state of any non-compliance by the husband with the orders made herein, to ensure that any final property order provides for the satisfaction of the order for payment of the single expert’s fees in the event the fees are still outstanding at that time.

The relevant principles

1. The wife sought orders that she be entitled to costs on an indemnity basis.

2. I will firstly consider whether costs should be awarded pursuant to s 117(2) of the Family Law Act 1975 (Cth) and secondly I will consider what method should be utilised for the calculation of costs (rule 19.18(1)(b) of the Family Law Rules 2004 (Cth)).

3. The relevant provision with respect to the making of a costs order is s 117 of the Family Law Act 1975 (Cth). Section 117 provides:

   (1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.

   (2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   (2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (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 answer 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.

4. Rule 19.18 of the Family Law Rules 2004 (Cth) pertains to the method of the calculation of costs. It provides as follows:

   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 (eg 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.

   Example:    For paragraph (1)(c), the stated method may be in accordance with Schedule 3 but with an additional percentage for complexity.

   (2)If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.

   (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.

Consideration

1. In determining firstly whether a costs order should be made, I propose to have regard to each consideration contained in subsection 117(2A).

(a) the financial circumstances of each of the parties to the proceedings

1. Neither the husband nor the wife provided any evidence of their current financial circumstances. However, to the extent weight can be given, I know the proceeding includes competing orders for property division. I also know that Justice Rees has ordered the husband to pay the wife $250,000 as an interim property settlement on 28 August 2016. I also know the husband had not made that payment by 30 June 2017.

2. The court record now shows that the matter is now docketed to Justice Watts. The parties have participated in a “First Day” hearing event before Watts J and the court record now shows the matter will be before the court again on 17 December 2018 with the parties participating in a mediation before that day.

(b) whether any party to the proceedings is in receipt of assistance by way of legal aid, if so, the terms of the grant of that assistance to that party

1. This does not apply.

(c) the conduct of the parties to the proceedings

1. The wife submitted that the husband’s application was militated to cause unnecessary delay to the proceedings and to thwart the wife’s efforts to enquire into the affairs of J Pty Limited. She submitted that the husband’s conduct in pressing his application to discharge the single expert has escalated the costs owed to the expert by the parties.

2. The wife further submitted that she has expended further costs due to the husband’s opposition to her request to expand the scope of the inquiry by the single expert.

(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

1. The wife incurred further costs in the interim proceedings in order to establish her argument that the husband ought not be heard on the matter of discharging the single expert due to his breach of the orders made by Justice Rees on 28 August 2016. I dismissed that aspect of the wife’s case.

(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings

1. The wife submitted that the husband’s application to discharge the single expert was made without merit. In the judgment delivered in the matter on 30 June 2016 I dismissed the husband’s application to discharge Mr R.

2. On 30 June 2017 I also dismissed the wife’s application that the court refuse the husband the right to be heard on his application. I do not consider, however, that the dismissal of that application by the wife ought adversely impact upon her application for costs.

(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

1. There is no evidence of such an offer being made as between the husband and the wife.

(g) such other matters as the court considers relevant

1. I found in the determination made 30 June 2017 that there was no merit in the husband’s application to discharge the single expert because he failed to complete his report. I found such a circumstance was directly attributable to the husband’s own actions.

2. The husband failed in each and every ground upon which he sought to have the single expert discharged.

3. I conclude the cost application of the wife should be considered as one where the husband was wholly unsuccessful in the order he sought to discharge the single expert and that the hearing was only necessary because of that application.

4. In conclusion, I determine that the wife is entitled to a costs order in her favour as against the husband.

Indemnity costs

1. The Full Court in Kohan and Kohan (1993) FLC 92-340 held that the Court “should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying a departure should be of an exceptional kind” (see page 79,614). This was upheld by the Full Court in Yunghanns v Yunghanns  at pages 87,470 to 87,471.

2. In Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 at 233, Sheppard J held that there should be some “special or unusual feature in the case to justify the court in departing from the ordinary practice”.

3. In this matter the wife’s appearance was almost superfluous to the subject matter of the husband’s application. True it is that she was required to appear because she was opposing the discharge of the single expert, however, it was for the husband to establish his case. It happened that the husband did not satisfy the burden of establishing his case and therefore it failed.

4. The wife sought no order which could be said to be an additional benefit to herself. She already had the benefit of an appointment of the single expert. It was the husband’s complaint about the single expert which prompted his application.  It was clearly in the wife’s interests to maintain the appointment of the single expert, had it been otherwise she would not have opposed the application.  

5. I conclude that the husband should pay the wife’s costs on a solicitor client basis. That order would permit the wife to recover a larger portion of her costs than an order which required payment on a party and party basis. It would not have her completely reimbursed for the totality of her costs.

1. I will make the orders set out herein.

I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench delivered on 28 September 2018.

Associate: 

Date:  28 September 2018