Kostou & Paganotis (No 2)

Case [2023] FedCFamC1F 1121

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Kostou & Paganotis (No 2) [2023] FedCFamC1F 1121

File number(s): SYC 6803 of 2019
Judgment of: ALTOBELLI J
Date of judgment: 21 December 2023
Catchwords: FAMILY LAW – COSTS – Where the wife seeks indemnity costs – Where the wife made an offer more favourable to the husband than the final orders – It is ordered that the husband pay the wife a fixed sum.
Legislation:

Family Law Act 1975 (Cth) s 117

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17
Cases cited:

Beklar & Beklar (No 2) [2012] FamCA 953

Bhatt & Acharya (Costs) [2017] FamCAFC 71

Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432

Cross & Beaumont (2008) 39 Fam LR 389; [2008] FamCAFC 68

Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish & Another (2005) 33 Fam LR 123; [2005] FamCA 158

In the Marriage of I & I (No. 2) (1995) FLC 92-625; [1995] FamCA 80

Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116

Kostou & Paganotis [2023] FedCFamC1F 737

Lenova & Lenova (Costs) [2011] FamCAFC 141

Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157

Parke & The Estate of the Late A Parke (2016) FLC 93-748; [2016] FamCAFC 248

Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4

Phillips & Hansford (2020) FLC 93-941; [2020] FamCAFC 28

Division: Division 1 First Instance
Number of paragraphs: 46
Date of last submission/s: 8 November 2023
Date of hearing: In Chambers
Place: Sydney
Solicitor for the Applicant: Lexington Law Group
Counsel for the Respondent: Mr Livingstone
Solicitor for the Respondent: Taylor & Scott Lawyers

ORDERS

SYC 6803 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS PAGANOTIS

Applicant
AND:

MR KOSTOU

Respondent

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

21 DECEMBER 2023

THE COURT ORDERS THAT:

1.Within 28 days of the date of this order, the Respondent husband is to pay the costs of the Applicant wife fixed in the sum of $50,000.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Kostou & Paganotis has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

ALTOBELLI J:

INTRODUCTION

  1. The applicant wife (“the…

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Kostou & Paganotis (No 2) [2023] FedCFamC1F 1121
Case
[2023] FedCFamC1F 1121
Decision Date

CaseChat Overview and Summary

The case of Kostou & Paganotis (No 2) involved a dispute over costs between the husband and wife, both of whom were parties to a family law matter. The wife had applied for indemnity costs, arguing that the husband’s conduct had significantly increased her legal expenses. The husband, in turn, sought an order for the wife to pay his costs related to the proceedings.

The central legal issue before the court was whether the wife was entitled to indemnity costs due to the husband's conduct during the litigation. The court had to consider various factors, including the financial circumstances of both parties, the conduct of the parties during the proceedings, and whether there had been any offers to settle that were refused. The court also needed to determine if the husband's actions warranted an exceptional order for indemnity costs, as per established legal principles.

In its reasoning, the court found that the wife’s costs had indeed increased due to the husband’s conduct, such as the filing of an adversarial expert report and repeated requests for previously provided information. The court noted that indemnity costs are only awarded in exceptional circumstances, typically where there has been a wilful disregard of known facts or law, or an imprudent refusal to settle. Given the wife's offer that was more favourable to the husband than the final orders, the court deemed it appropriate to order the husband to pay the wife a fixed sum of $50,000 as indemnity costs.

The court concluded that the husband should pay the wife a fixed sum of $50,000 to cover the costs incurred due to his conduct during the litigation. This decision was based on the exceptional circumstances justifying an order for indemnity costs, reflecting the husband's actions that unnecessarily increased the wife’s legal expenses.

Orders

Orders of the court

SYC 6803 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS PAGANOTIS

Applicant

AND:

MR KOSTOU

Respondent

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

21 DECEMBER 2023

THE COURT ORDERS THAT:

1. Within 28 days of the date of this order, the Respondent husband is to pay the costs of the Applicant wife fixed in the sum of $50,000.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

The husband opposes the application for costs and seeks that the wife pay his costs incidental to these proceedings. The precise orders sought are as follows:1.That the Wife’s Application in a Proceeding, filed 28 September 2023 be dismissed.2.That the Wife shall pay the Husband’s costs of, and incidental to, these proceedings.BACKGROUND The matter was listed for final hearing between 24–26 July 2023 regarding property issues only. My reasons for judgment were provided on 31 August 2023: Kostou & Paganotis [2023] FedCFamC1F 737 (“my reasons for judgment”). The Court found that the wife was entitled to an order in her favour of 60 per cent and the husband was entitled to 40 per cent. In effect, the final orders provided for the wife to keep C Street, Suburb D NSW (“the Suburb D property”) and for the husband to keep H Street, Suburb J NSW (“the Suburb J property”). The husband was allocated $512,835 and the wife was allocated $130,000 out of joint funds with the intention that both parties would pay out the mortgages on their respective properties. The wife was also ordered to pay the husband the sum of $198,748. Where it is relevant, various passages from my reasons for judgment will be referred to or reproduced. PRESENT APPLICATION In support of her case, the wife relies upon the following material:(a)Application in a Proceeding filed 4 October 2023;(b)Her affidavit filed 4 October 2023;(c)Written submissions filed 18 October 2023; and(d)Written submissions in reply filed 8 November 2023. In support of his case, the husband relies upon the following material:(a)Response to Application in a Proceeding filed 31 October 2023;(b)His affidavit filed 31 October 2023; and(c)Written submissions filed 1 November 2023.LEGAL PRINCIPLES The law relating to costs in family law proceedings is well settled and is set out in detail in the Full Court decision of Parke & The Estate of the Late A Parke (2016) FLC 93-748. An application for costs is governed by s 117 of the Family Law Act 1975 (Cth) (“the Act”). Section 117(1) of the Act sets out the general presumption that each party to the proceedings shall bear their own costs. This is subject to s 117(2), which provides that: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 the court may make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just. Section 117(2A) sets out the matters that the Court is to have regard to: (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.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The wife’s solicitor submitted that she incurred significantly more costs as a result of the husband’s conduct. For example, responding to the husband’s application for an adversarial expert, the wife being required to file an application due to the husband’s failure to accept reasonable proposals for retrospective valuations, the husband’s repeated request for disclosure that had been previously provided, and the husband’s insistence that the Single Expert needed to be called at hearing. The Court finds this is a plausible explanation for the increase in the wife’s costs.CONCLUSION For these reasons, I am satisfied that it is in the interests of justice for an order for costs to be made in favour of the wife, from 13 April 2023 to the conclusion of the final hearing.INDEMNITY COSTS It is well settled that when costs are ordered by this Court, such costs are payable on a party‑party basis. It has been held that the Court should not lightly depart from the ordinary rule (Kohan and Kohan (1993) FLC 92-340). The provision relating to the calculation of costs is governed by r 12.17(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) which is as follows:12.17 Method of calculation of costs(1) The court may order that a party is entitled to costs:(a) of a specific amount; or(b)as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or(c) to be calculated in accordance with the method stated in the order; or(d)for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3. The rule further provides that:(3) In making an order under subrule (1), the court may consider the following:(a) the importance, complexity or difficulty of the issues;(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);(c) the rates ordinarily payable to lawyers in comparable cases;(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;(e)the time properly spent on the proceeding, or in complying with pre‑action procedures; and(f)whether expenses (paid or payable) are fair, reasonable and proportionate. In relation to an award of indemnity costs, the Full Court decision of Phillips & Hansford (2020) FLC 93-941, helpfully summarises the position as follows:35.Indemnity cost orders are made only in exceptional cases (Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; D & D (Costs) (No. 2) (2010) FLC 93-435).36.Whilst the categories of cases in which indemnity cost orders may be awarded are not closed, it is accepted that such costs may be ordered where a case was pursued with “wilful disregard of known facts or clearly established law” and where there has been “an imprudent refusal of an offer to compromise” (Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233).37.In relation to the first category, it has been said that indemnity costs may be awarded where “the applicant, properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401) and where “a party persists in what should on proper consideration be seen to be a hopeless case” (J Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers – Western Australian Branch & Anor [1993] FCA 70 per French J at 5).

Ratio Decidendi

Legal Principle Established

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