Leeson & Gosley (No 2)
[2022] FedCFamC1F 998
Federal Circuit and Family Court of Australia
(DIVISION 1)
Leeson & Gosley (No 2) [2022] FedCFamC1F 998
File number: MLC 12653 of 2020 Judgment of: HARTNETT J Date of judgment: 15 December 2022 Catchwords: FAMILY LAW – COSTS – Where the husband sought costs on an indemnity basis or in the alternative on a party/party basis – Where the costs of the husband and Independent Children’s Lawyer were reserved – Where the Independent Children’s Lawyer no longer sought costs – Where the wife’s conduct has caused the husband to incur unnecessary legal costs – Costs order made in favour of the husband – Costs order in a fixed sum. Legislation: Family Law Act 1972 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules sch 3, r 12.13
Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Collins and Collins (1985) FLC 91-603
Kohan & Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784
Nada and Nettle (Costs) (2014) FLC 93-612
Penfold v Penfold (1980) 144 CLR 311
Sfankianakis & Sfankianakis [2019] FamCAFC 54
Yunghanns & Yunghanns (2000) FLC 93-029
Division: Division 1 First Instance Number of paragraphs: 28 Date of last submissions: 6 September 2022 Date of hearing: 6 September 2022 Place: Melbourne The Applicant: Litigant in person Counsel for the Respondent: Ms Byrnes Solicitor for the Respondent: Kennedy Partners Counsel for the Independent Children's Lawyer: Mr Taghdir Solicitor for the Independent Children's Lawyer: Creative Family Law Solutions ORDERS
MLC 12653 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS LEESON
Applicant
AND: MR GOSLEY
Respondent
INDEPENDENT CHILDREN'S LAWYER
order made by:
HARTNETT J
DATE OF ORDER:
15 December 2022
THE COURT ORDERS THAT:
1.The applicant pay the respondent’s costs of and incidental to the hearing on 22 July 2022 fixed in the sum of $17,000.00.
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 Leeson & Gosley has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARTNETT J
Introduction
On 22 July 2022, the Court reserved the costs of the husband and the Independent Children’s Lawyer (“ICL”) in relation to the hearing that day which pertained to the wife’s Amended Application in a Proceeding filed 20 July 2022, and on 24 August 2022 adjourned the matter of costs for hearing on 6 September 2022. Reasons in relation to the orders made on 22 July 2022 were delivered on 22 August 2022.
On 6 September 2022, the ICL no longer sought their costs of the hearing.
The husband sought his costs on an indemnity basis or in the alternative on a party/party basis in accordance with Schedule 3 of the Federal Circuit and Family Court of Australia (Family Law) Rules (“the Rules”).
Legal Principles
Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) sets out the general rule that each party shall bear their own costs. However, the Court being satisfied that there are circumstances justifying it doing so, may make such order for costs as it considers just in accordance with the Court’s discretion.[1] In considering what (if any) order for costs it should make, the Court shall have regard to the matters in s 117(2A) of the Act as follows:
(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.
[1] Family Law Act 1975 (Cth) s 117(2).
Although the Court must have regard to all of these matters, and their relevance will depend upon the particular circumstances of each case, it is not required to consider these matters in any particular order, and no matter takes precedence over another. It is also not necessary for there to be more than one relevant consideration for the purposes of deciding that an order is justified.
In Collins and Collins (1985) FLC 91-603 at page 79,877, the Full Court of the Family Court of Australia (Evatt CJ, Pawley & Barblett JJ), as it was then, said:
In deciding whether the circumstances justify an order for costs, there is a broad discretion to be exercised, having regard to the factors set out in subs. (2A) so far as relevant. Those factors…. are not to be read in a restrictive way, however, the discretion remaining is a broad one: Penfold v Penfold (1980) FLC 90-800 at pp 75,053-75,054 (High Court); quoted in Mallet v Mallet (1984) FLC 91-507 at pp 79,123-79, 124 (by Wilson J).
In Penfold v Penfold (1980) 144 CLR 311 at page 315, the High Court (Stephen, Mason, Aickin and Wilson JJ) held that:
It is an accurate description of s. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to s.117(2). As subsec (1) is expressed to be subject to subsec (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Subsection (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 …... we do not agree with the suggestion….... that an order can only be made under s.117(2) in a 'clear case'.
Are there circumstances justifying a costs order
I shall consider s 117 of the Act as applicable in respect of the Amended Application in a Proceeding which was heard on 22 July 2022 and in respect of which reasons were delivered on 22 August 2022. Otherwise the matters in s 117(2A) of the Act, whilst not containing the power to make an order for costs, shall be considered by me to inform the exercise of my discretion in determining a costs order where the normal course would be that costs follow the event.
In the circumstances of the case, not all of the matters set out in s 117(2A) of the Act are relevant. Accordingly, only those relevant matters are discussed hereafter.
Financial circumstances of each of the parties
The husband is employed full time as a healthcare professional. The husband in his updated Financial Statement filed 22 August 2022 asserts that he is earning approximately $3,883 per week, $201,916 net per annum.
The wife is unemployed and in receipt of Centrelink payments, although she is highly qualified and has a not insignificant earning capacity. In addition to those payments, the wife is in receipt of child support payments from Mr MM, the wife’s former partner, in the sum of $12 per week for the child X, the subject of extant parenting orders applications between the parties, and approximately $644 per week from the husband for the children, Y born 2013 and aged 9 years, and Z born 2014 and aged 8 years (“the children”).[2] At 22 August 2022, the husband asserted he was paying $613 per week in child support for the children. The wife submits that she is reliant upon her parents to meet her legal costs and the mortgage repayments on the former matrimonial home (“FMH”), which she intends to repay.
[2] Wife’s Financial Statement filed 1 April 2022, p.3.
The fact that the wife may be “impecunious, even indigent, is not a bar to the making of a costs order if the Court is otherwise of the opinion that an order ought to be made.”[3]
[3] Nada and Nettle (Costs) (2014) FLC 93-612.
Both parties have considerable debt associated with outstanding legal costs and loans obtained in respect of those costs. Additionally, both have a current inability to meet the various loans secured by the FMH.
Legal Aid
Neither party is in receipt of Legal Aid.
The conduct of the parties
As referred to in the reasons for judgment delivered 24 August 2022, the wife’s conduct has caused the husband to incur unnecessary legal costs. In the midst of the part-heard final hearing, the wife filed an Application in a Proceeding on 14 July 2022 seeking 24 orders in number. She subsequently filed an Amended Application in a Proceeding on 20 July 2022 and a Further Amended Application in a Proceeding on 21 July 2022 at 5.12pm. As referred to in [28]-[32] of the reasons for judgment, the wife failed to comply with the Central Practice Direction – Family Law Case Management and the Rules. Relevantly, at [30] of those reasons for judgment, I noted that:
There has been fairly constant litigation between the parties throughout the course of the proceeding and it shows no signs of abating. The wife’s filing of three affidavits and three applications between the 15 July 2022 and 21 July 2022 is an example of the unrestrained nature of this litigation. ….
Further, at [35] of those reasons for judgment I noted that:
The wife also sought to rely upon as further trial evidence the contents of her affidavits filed 14 and 20 July 2022. The wife filed her trial material prior to the commencement of the trial and in accordance with the trial directions. The trial commenced on 9 May 2022 and was adjourned on 13 May 2022. The wife remains in the witness box and has given extensive evidence both in her affidavit material, being her trial affidavit and affidavit in response to the husband’s affidavit, and in cross-examination of her during the course of the trial. The wife was represented by solicitors throughout, and until the part-heard adjournment of the proceeding had ample opportunity to put that evidence on which she relies before the Court. Most of the evidence in these affidavits pre dates the trial and was available to be used by her in her trial affidavit or affidavit in reply. Whilst there was some new evidence which the wife sought to adduce, it was not evidence relevant to the issues at trial. The filing of her material has occasioned considerable legal costs to the husband, and to allow an irrelevant escalation and/or repetition of evidence to be placed before the Court by the wife is highly prejudicial to the husband and vastly increases the legal costs incurred by him. In part the evidence on which the wife seeks to rely represents an attempt by her to re-argue matters and to adduce further evidence, but not new evidence, in relation to those matters that have already been dealt with by extensive cross-examination of her in the trial to date.
(Emphasis added)
In addition, the wife continued to pursue a further adjournment of the final hearing, which was opposed by the ICL and husband, without proper basis. It was her argument that she required an adjournment as a consequence of the s 102NA of the Act Order made on 6 July 2022 and for her to gain further valuations in relation to the FMH and Frankston Medical Trust. As summarised at [41] and [42] of those reasons for judgment:
These matters also did not result in the Court determining in a discretionary exercise that an adjournment of the part-heard trial should occur. That would be to unnecessarily delay the proceeding and be unfairly prejudicial to the husband. Further it would be an inefficient use of the Court, as a publicly funded resource, which weakens public confidence in the judicial system. This litigation is advanced, valuations have been obtained, and each of the parties have had ample opportunity to identify the issues that they have wished to agitate, and to agitate them.
I note also that the main purpose of the Rules is to ensure that each case is resolved in a just and timely manner. The Rules prescribe that the Court will apply the Rules in a way that among other things gives appropriate share of the Court resources to a case taking into account other cases.
(Citations omitted).
The wife submitted that she could see “how some of the material…indeed isn’t new evidence” but persisted that “there is also a lot of material in here which I believe is new evidence that I did want to bring forward to the Court”.[4] I did not find that to be the case.
[4] Transcript 6 September 2022, p.21 lines 25-26.
As summarised by counsel for the husband, the wife’s conduct in filing numerous applications and affidavits caused significant cost to the husband in responding to that material, and addressing same in submissions to the Court.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
As set out in the reasons for judgment delivered 24 August 2022, the wife was almost wholly unsuccessful in the various orders she sought on 22 July 2022.
Further, the wife was not granted leave to rely on the Further Amended Application in a Proceeding filed 21 July 2022. The wife was also not granted leave to rely on three affidavits filed between the 15 July 2022 and 21 July 2022 in support of her Amended Application in a Proceeding and final hearing.
The parties did, however, at the hearing resolve orders 19-21 as sought by the wife in her Application in a Proceeding filed 20 July 2020 by consent.
Conclusions as to costs
I am satisfied in the circumstances as described above that an order for costs in the husband’s favour is warranted. The costs sought by the husband are indemnity costs in the sum of $31,532.20 or in the alternative his costs in accordance with Schedule 3 in the sum of $12,344.70 be awarded. The wife sought that the Court exercise its discretion to dismiss the husband’s costs application in part as she was a litigant in person. She is so now, having previously engaged three different law firms. In the alternative, the wife sought that if a costs order were to be made, that it be at scale.
The general rule in this Court is that costs are payable on a party/party basis unless the Court decides to exercise its discretion to order costs on other terms, including indemnity costs. 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 an exceptional one”.[5]
[5] Kohan & Kohan (1993) FLC 92-340.
The circumstances justifying an order for indemnity costs are not closed.[6] The Court in exercising its discretion must be satisfied that the circumstance of the case “warrant the making of an order for the payment of costs other than on a party/party basis”.[7] Circumstances which may warrant such an order were summarised by Holden CJ in Munday v Bowman (1997) FLC 92-784 at page 84,660, as identified in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, as follows:
•Where an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;
•The making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;
•Evidence of particular misconduct causing loss of time to the court and to other parties;
•The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;
•An imprudent refusal of an offer to compromise.
[6] Yunghanns & Yunghanns (2000) FLC 93-029.
[7] Yunghanns & Yunghanns (2000) FLC 93-029.
In the more recent decision of Sfankianakis & Sfankianakis [2019] FamCAFC 54, the Full Court observed at [10] that:
…It is however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words “such order as to costs as the Court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well known example is assessment on a trustee basis, which is more generous than party and party costs, but fall short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party cost nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a “special costs order”.
Pursuant to r 12.13 of the Rules, a party applying for costs on an indemnity basis must inform the Court if that party is bound by a costs agreement in relation to those costs and the terms of that agreement. The husband entered a costs agreement with Kennedy Partners. The husband’s solicitors sent a letter dated 19 August 2022 to the wife setting out the costs sought and enclosing an itemised costs schedule and costs agreement signed by the husband. Counsel for the husband tendered that letter and itemised cost schedule.
I am satisfied that there are circumstances in this case which justify the Court departing from the general rule of each party pay their own costs and am satisfied that the costs should be fixed in a sum greater than that afforded under the schedule but lesser than indemnity in the circumstances. I am satisfied a costs order should be made against the wife in respect of the hearing on 22 July 2022 fixed in the sum of $17,000. In my view, such an order is apt in the circumstances.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hartnett. Associate:
Dated: 15 December 2022
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