Limousin v Limousin (Costs)
[2007] FamCA 1178
•28 September 2007
FAMILY COURT OF AUSTRALIA
| LIMOUSIN & LIMOUSIN (COSTS) | [2007] FamCA 1178 |
| FAMILY LAW - COSTS – Husband sought costs against the wife and/or her solicitor in relation to the wife’s discontinued appeal and her unsuccessful appeal against property orders – Although the appeals had been unsuccessful and arguably optimistic, there was no evidence of any improper conduct by the wife’s solicitor or that he had acted in a way other than on the wife’s instructions that would justify a costs order against him – The wife should pay the husband’s costs of the discontinued appeal but might consider looking to her solicitor for reimbursement – The wife’s bereft financial circumstances militate against a costs order against her in relation to the unsuccessful property appeal FAMILY LAW - DISQUALIFICATION – The solicitor made an informal application for the Full Court to disqualify itself and order a rehearing of the wife’s appeal asserting that the Full Court had relied heavily upon admissions made by the wife’s former counsel who had since died and about whom there were allegations of illicit drug use – Held there was no ability to enable the Full Court to reopen the concluded appeal nor was it appropriate to do so if such power existed |
| Family Law Act 1975 (Cth), s 117 Antoun v R (2006) 224 ALR 51 |
| APPELLANT: | Ms Limousin |
| FIRST RESPONDENT: | Mr Limousin |
| SECOND RESPONDENT: | Mr McV |
| FILE NUMBER: | MLF | 10522 | of | 1996 |
| APPEAL NUMBER: | SA | 36 | of | 2004 |
| DATE DELIVERED: | 28 September 2007 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Kay, Coleman and Boland JJ |
| HEARING DATE: | 11 September 2007 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 14 May 2003; 24 July 2003; 18 May 2004; 25 May 2004 |
| LOWER COURT MNC: | [2003] FamCA 769; [2003] FamCA 1449; |
REPRESENTATION
| ADVOCATE FOR THE APPELLANT: | In person |
| SOLICITOR FOR THE APPELLANT: | Issac Brott & Co |
| COUNSEL FOR THE FIRST AND SECOND RESPONDENTS: | Mr J St John SC with Mr A Strum |
| SOLICITOR FOR THE FIRST AND SECOND RESPONDENTS: | Meerkin & Apel |
| COUNSEL FOR MR ISSAC BROTT | Mr Sandbach |
ORDERS
The wife pay the husband’s costs of the discontinued appeal in respect of ground 3 of the Notice of Appeal filed 22 June 2004 as agreed, and failing agreement, as assessed under Chapter 19 of the Family Law Rules 2004 (Cth).
Each party pay their own costs of and incidental to the appeal (grounds 9 and 14) determined on 1 June 2007.
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SA 36 of 2004
File Number: MLF 10522 of 1996
| Ms Limousin |
Appellant
And
| Mr Limousin |
First Respondent
And
| Mr McV |
Second Respondent
COSTS JUDGMENT
On 1 June 2007 the Court dismissed the appeal of Ms Limousin (“the wife”) against orders made by Guest J in 2003 and 2004 in proceedings between herself, Mr Limousin (“the husband”) and Mr McV (“the second respondent”).
On 22 June 2007, in accordance with the Court’s directions, written submissions were filed on behalf of the husband in support of an application for costs. By that application the husband sought that the wife and/or her solicitor Mr Issac Brott (“Mr Brott”) pay the husband’s costs of the appeal on an indemnity basis.
On 20 August 2007, albeit out of time, submissions were filed on behalf of the wife and Mr Brott in opposition to the husband’s application for costs. On 7 September 2007 submissions in reply were filed on behalf of the husband.
On or about 20 August 2007 there was submitted to the Court on behalf of the wife, a document styled “Application for Disqualification of the Full Court of the Family Court”. Although so titled, the document was not an application in the sense or form contemplated by the Rules of the Court.
The matter came before the Court by arrangement with the parties on 11 September 2007. There was clearly before the Court at that time, the husband’s application for costs and, potentially, the wife’s Application for Disqualification of the Full Court of the Family Court. When the matter thus came before the Court, Mr Brott was represented by counsel.
Mr Levine, who represented the wife on the hearing of the appeal which this Court determined on 1 June 2007 appeared briefly to announce that he was unable to continue to represent the wife, for reasons which we do not fully comprehend, but which are not material for present purposes in any event. The wife was present in Court, and represented herself. Although not expressly saying so, it is apparent that the wife adopted the written submissions filed by Mr Brott on 20 August 2007. In addition, the wife made a brief statement or submission to the Court.
THE “APPLICATION FOR DISQUALIFICATION OF THE FULL COURT OF THE FAMILY COURT”
As the presiding judge observed during the course of discussion on 11 September 2007, there was formally no application before this Court for disqualification. Counsel for Mr Brott appeared to have been unaware of the intention to make any such application and initially intimated to the Court that any such application was not being pursued.
Later, and after the arrival in Court of Mr Brott, counsel for Mr Brott indicated that his instructions were that such application, presumably when formally made, be adjourned to be determined at a later date.
Somewhat surprisingly, Mr Brott’s counsel had not been provided with the “Application for Disqualification” document. The Court having advised Mr Brott’s counsel of the relief sought by this document, and of the thrust of its contents, sensibly in our view, he stated that he could think of little which could productively be further submitted in support of the relief sought in the document.
In the course of her statement to the Court, and inferentially in support of the “Application for Disqualification” sought to be advanced by Mr Brott, the wife referred to the late Mr Peter Hayes QC. We infer that the matters referred to in the “Application for Disqualification” document in relation to Mr Hayes QC were the matters to which the wife alluded.
Senior counsel for the husband made no specific submissions in relation to the approach which this Court should take to the “Application for Disqualification” document, save to urge this Court not to countenance further delays in the finalisation of this part of the appeals against the orders made by Guest J in 2003 and 2004.
The Court is reluctant to determine the costs issue prior to determining the fate of the “Application for Disqualification” document, lest determining the costs application becomes academic. Two issues are raised by the “disqualification” document. The first is whether the Court should, notwithstanding the formal defects in the document, treat it as an application for relief in the terms revealed by it. The second is whether, if so doing, the Court should determine the application on the basis of the submissions contained in the “Application for Disqualification” document, or, as counsel for Mr Brott was instructed to seek, adjourn that matter to another date.
Necessarily, acceding to the latter proposition would delay determination of the application for costs of successfully resisting the wife’s appeal which was determined on 1 June 2007.
In our view it is conducive to the interests of justice to treat the “Application for Disqualification” document to which we have referred as a formal application before the Court, notwithstanding that the document fails to comply with the Rules of Court. Our reasons for doing so can largely be inferred from the preceding observations, and are influenced by the reality that it was not submitted on behalf of the husband that the formal defects in the “Application for Disqualification” document caused prejudice to the husband.
We are not persuaded that the hearing of the “Application for Disqualification” should be adjourned. Our reasons are in part related to the relief sought in the application and to the reality that the application is in substance a detailed submission in support of the relief which it seeks.
The “Application for Disqualification” sought that the Full Court “set aside the orders made on 1 June 2007 and to [allow the appellant to] adduce further evidence on the hearing of the appeal”. In the “Application for Disqualification” the Court was referred to a number of authorities relevant to disqualification of judges and to exchanges between counsel for the wife and two members of this Bench during the course of the hearing of the appeal determined on 1 June 2007.
In reliance upon those matters it was submitted that the Full Court should “remit the entire matter to a differently constituted Full Court for a reconsideration” of the grounds argued before this Bench and which were determined and rejected by the Court in its judgment of 1 June 2007.
In our view this application is misguided. As the presiding judge observed during the course of discussion on 11 September 2007, this Court having delivered its judgment and made orders in relation to the appeal, is functus officio (see De L v Director General NSW Department of Community Services (No 2) (1997) 190 CLR 207; (1997) 143 ALR 171; (1997) FLC 92-744; (1997) 21 Fam LR 432; DJL v Central Authority (2000) 201 CLR 226; (2000) 170 ALR 659; (2000) FLC 93-015; (2000) 26 Fam LR 1; MacMillan Bloedel Ltd v Minister of Finance (1985) 60 BCLR 145). In the High Court decision of Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597; (2002) 187 ALR 117 Gleeson CJ said (citations omitted):
7.In Chandler v Alberta Association of Architects Sopinka J, speaking for the majority in the Supreme Court of Canada, pointed out that, as a general rule … a tribunal cannot revisit its own decision because it has changed its mind, or recognises that it has made an error within jurisdiction, or because there has been a change of circumstances …
8.The requirements of good administration, and the need for people affected directly or indirectly by decisions to know where they stand, mean that finality is a powerful consideration …
Nothing to which we have been referred establishes any basis upon which this Court could, in the present circumstances, set aside the orders of 1 June 2007. Quite simply, if the judgment of the Court of 1 June 2007, or the process which eventuated in that judgment, is asserted to be defective in law, the remedy lies by way of application to the High Court for a grant of special leave, albeit any such application is now out of time.
In our view, to adjourn the determination of the application that this Court “set aside the orders made on 1 June 2007” would be simply to forestall the inevitable, and unsuccessful, outcome of such application.
The other aspect of the application, also in reliance upon the matters advanced in support of the application that the Court “set aside” the orders of 1 June 2007, appears to be that this Court disqualify itself from hearing the husband’s costs application. We glean from the conclusion of the application that, for the reasons earlier advanced, the Court is suggested to be able to be seen as having prejudged that issue.
As counsel for Mr Brott fairly conceded, it would be surprising if, having determined a substantive appeal, as this Court did on 1 June 2007, any bench but the Court as currently constituted would be the appropriate bench for determination of the costs of such appeal. There may be cases where such a situation could arise, particularly, as counsel for Mr Brott suggested, if events subsequent to the delivery of the judgment in the substantive appeal rendered that necessary or conducive to the interests of justice. Nothing of that nature is suggested to have arisen since the determination of the appeal.
Although not expressly saying so, we infer that the wife supported the application that a different bench of this Court hear and determine the husband’s costs application. Such a course was clearly opposed by senior counsel for the husband.
Without referring in detail to the matters raised in support of the application, we reject the suggestion that this Court’s “admiration” for the late Mr Peter Hayes QC in any way impacted upon the Court’s decision of 1 June 2007. As a balanced reading of our reasons for judgment of that date would confirm, the indications, on instructions, from Mr Hayes QC to the Court as to the readiness of the matter for trial were but one of the factors upon which this Court relied.
We do not believe that the submissions of the late Mr Hayes QC were of major significance in the determination of the appeal. Significantly, it is not suggested that anything said by Mr Hayes QC to the Court was not on instructions from the wife. As our Reasons for Judgment of 1 June 2007 reveal, Mr Hayes’ approach was consistent with that of other Counsel, including Senior Counsel, and was the approach of the wife’s Counsel at trial.
Nothing relating to the late Mr Hayes QC could possibly, in our view, advance this application. Whilst not strictly necessary for the purpose of determining this application, we note with regret that the “Application for Disqualification”, drafted by a legal practitioner, makes an allegation, utterly unsupported by evidence, that a man who cannot possibly defend himself against such a claim, “had been under the influence of drugs for a long period of time”. We are unable to allow this shameful attack upon a deceased member of the senior Bar to pass without comment.
So far as the exchanges between Kay and Coleman JJ and counsel for the wife during the course of the hearing of the appeal are concerned, we do not accept that such exchanges fall outside the ambit of permissible, if vigorous, exchanges between the Bench and counsel during the hearing of an appeal. Not insignificantly, these exchanges have not resulted in any application to the High Court for a grant of special leave to appeal the Court’s decision of 1 June 2007.
The exchanges are conveniently taken out of context, and do not refer to the documentation to which the Court referred in a number of instances. Read in context, we do not accept that anything which passed between the Bench and counsel would give rise to a reasonable apprehension of lack of impartiality. As a balanced reading of the Court’s reasons for judgment of 1 June 2007 would confirm, each and every complaint agitated by counsel for the wife in the appeal which was determined on 1 June 2007 was considered by the Court, and rejected for reasons which the Court detailed.
The High Court in Vakauta v Kelly (1989) 167 CLR 568; (1989) 87 ALR 633 discussed the permissibility of a trial judge making comments in the course of a hearing. Brennan, Deane and Gaudron JJ suggested at CLR 571; ALR 635; that:
[T]he course of the dialogue between Bench and Bar … is so helpful in the identification of real issues and real problems in a particular case. … [A] trial judge who made necessary rulings but otherwise sat completely silent throughout a non-jury trial with the result that his or her views about the issues, problems and technical difficulties involved in the case remained unknown until they emerged as final conclusions in his or her judgment would not represent a model to be emulated.
The High Court, constituted by Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ approved the principles of Vakauta v Kelly (supra) in an appeal from the Full Court of the Family Court in Johnson v Johnson (2000) 201 CLR 488; (2000) 174 ALR 655; (2000) FLC 93-041; (2000) 26 Fam LR 627 and said at paragraph 13:
Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx.
Kirby J suggested in Antoun v R (2006) 224 ALR 51 at paragraph 32 (citations omitted):
[T]he approach of this court has now travelled beyond the apparent approbation of judicial silence expressed in R v Watson; Ex parte Armstrong. In the United States of America, such silence has been held, on occasion, to constitute a denial of due process. It deprives the party who will ultimately be affected by judicial conclusions of the “opportunity, before judgment, to be heard to correct and to persuade”. Just as the judge should, to a proper extent, listen, so the judge should, to a proper extent, express any tentative views.
Whilst this Court clearly, for reasons which it gave on 1 June 2007, rejected each of the grounds of appeal agitated before it on behalf of the wife, we do not accept that so doing would give rise to any basis for the Court declining to hear and determine the costs of the appeal. This is particularly so given the legislative framework within which costs are determined. The material differences between determining costs applications, arising from appeals, and determining proceedings at first instance involving disputed issues of fact, and credibility of witnesses is a further reason for not declining to determine costs applications in the present circumstances. As the authorities to which we have referred make clear, at trial vigorous agitation of “tentative views” based on incompletely tested material is permissible. The nature of the appeal process amply accommodates such exchanges as occurred in this Court in this appeal.
We perceive the only matter of relevance arising out of the appeal, for the purpose of determining the husband’s costs application, to be the reality that the appeal was “wholly unsuccessful”. We do not propose disqualifying ourselves from hearing and determining the husband’s costs application or adjourning the application that we do so to some other time. In our view, so doing would be no more than forestalling the inevitable rejection of that application.
THE HUSBAND’S COSTS APPLICATIONS
As the submissions of senior counsel for the husband filed 22 June 2007 confirm, costs of a number of proceedings were sought. Included were the costs of proceedings which have yet to be determined (such as the security for costs application to be determined by a differently constituted Full Court on 11 September 2007). We do not propose entertaining the application for costs of those proceedings.
The “First Appeal”
In what was described as “the first appeal”, senior counsel for the husband sought an order for the costs of a disqualification appeal which was listed to be heard on 7 October 2004.
The circumstances surrounding the discontinuation of that appeal need not be set out in detail. They appear in the written submissions of senior counsel for the husband (25 - 27), and do not appear to be controversial.
Rule 22.54 of the Family Law Rules2004 (Cth), deals with discontinuance of appeals by reference to Part 10.2. Rule 10.11 within Part 10.2 provides:
Discontinuing a case
(1)A party may discontinue a case by filing a Notice of Discontinuance.
(2)A party must apply to the court for permission to discontinue a case if:
(a)the case relates to property of the parties, or a party, and one of the parties dies before the case is determined; or
(b)in an application for divorce – there are less than 7 days before the date of the hearing.
Note Under subsection 79 (8) of the Act, a party may continue with an application for property even if one of the parties has died.
(3)Discontinuance of a case by a party does not discontinue any other party’s case.
Note If one or more joint applicants, but not all, discontinue a case, any discontinuing applicant becomes a respondent.
(4)If a party discontinues a case, another party may apply for costs within 28 days after the Notice of Discontinuance is filed.
(5) If:
(a)a party is required to pay the costs of another party because of the discontinuance of a case; and
(b)the party required to pay the costs starts another case on the same, or substantially the same, grounds before paying the costs;
the other party may apply for the case to be stayed until the costs are paid.
In our view, the husband is entitled to the costs of that discontinued appeal. The more vexed questions are whether the costs should be on an indemnity basis as sought on behalf of the husband or, as at least inferentially sought by the wife and Mr Brott, on a party/party basis, and against whom the order should be made.
Quite apart from the impact of the Rules in relation to the costs of discontinued proceedings, the circumstances surrounding the discontinuance on 7 October 2004 of the appeal against the refusal of Guest J to disqualify himself from the proceedings constitute circumstances justifying the Court being of the opinion that the husband should have his costs of that appeal.
So far as the husband seeks indemnity costs in reliance upon the reasons Guest J gave for rejecting the application for disqualification, we do not perceive that those matters advance the claim for indemnity costs.
The decision of the Full Court of the Family Court (Strauss, Lindenmayer and Bulley JJ) in Kohan and Kohan (1993) FLC 92-340; (1992) 16 Fam LR 245 held that nothing in s 117 or 123 of the Family Law Act1975 (“the Act”) prevents the Court making an order for costs on an indemnity basis. It was recorded at FLC 79,614; Fam LR 258 (citations omitted):
The intent of s 117(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. Order 38 rule 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); Wentworth v Rogers (No 5); Hobartville Stud v Union Insurance Co.
Indemnity costs orders are still an exception in this and other jurisdictions.
The principles underpinning indemnity costs were summarised by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 at 256:
(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 which 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 …
In the decision of Yunghanns v Yunghanns (2000) FLC 93-029; (2000) 26 Fam LR 331 the Full Court of the Family Court (Lindenmayer, Holden and Mullane JJ) acknowledged that the category of cases in which an indemnity costs order is appropriate is not closed. It was recorded in paragraph 31:
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.
On behalf of the wife and Mr Brott it was conceded that the appeal discontinued on 7 October 2004 was “problematic”. Without necessarily accepting in their entirety the submissions made on behalf of the wife and Mr Brott on 20 August 2007, we do not accept that the appeal against Guest J’s refusal of disqualification was, and should have been seen as so necessarily hopeless and ill-advised as to justify indemnity costs. To the extent that the appeal could be thus described, that probably militates against rather than in favour of awarding indemnity costs as those resisting the appeal would have needed to expend little effort in preparing to resist the appeal. The circumstances surrounding the appeal discontinued on 7 October 2004 were not in our view “exceptional”. It is relevant, and in the wife’s favour, that the appeal was discontinued when its “problematic” nature was recognised. We would not wish to encourage such appeals to be persisted with in order to attempt to improve a litigant’s position in relation to costs. We are not persuaded that indemnity costs are appropriate to be awarded.
In support of the application that seeks that costs be awarded against both the wife and Mr Brott, it was submitted that the circumstances surrounding the discontinuance of the appeal on 7 October 2004 indicated “a fundamental lack of belief” that the appeal against Guest J’s refusal of the disqualification application “could possibly succeed”.
Reliance was also placed upon “observations of Kay J in relation to the outcome of the appeal on 1 September 2004”. We do not have a transcript of Kay J’s observations of that date, and do not propose to rely upon what was submitted to have been the effect of any such observations.
It was submitted in support of the claim for indemnity costs that the combination of “… comments of the appellant’s counsel before Kay J, of the subsequent correspondence between solicitors … taken together with the circumstances of the discontinuance, are themselves highly indicative of an ulterior motive in the pursuit of the proceedings …”.
Reliance in that regard was placed upon the judgment of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (supra) in which His Honour said at 257 (citations omitted):
… 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 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); 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; Maitland Hospital v Fisher (No 2); Crisp v Kent) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records).
Alternatively it was submitted that the “behaviour is consistent with a foolish or reckless determination to proceed with an action which had no possible prospect of success”. It was further submitted with respect to Mr Brott that “his behaviour offends at the least Rule 19.01(1)(c) He was party to perpetuating proceedings brought with an ulterior motive and/or perpetuated and supported proceedings he knew had no prospect of success”.
On behalf of the husband it was submitted that:
From shortly following the lodging of the Appeal it has been clear to Mr Brott that orders for costs might be sought against him personally and on an indemnity basis. Indeed, that fact was sought to be relied upon when resisting the Respondent’s Application for security for costs …
Ultimately it was submitted:
Costs are sought not only against Mr Brott but also against the Wife and on a joint and several basis. However there appears little prospect that the Wife has assets or financial resources sufficient to meet, or even meaningfully contribute to, any order for payment of the Husband’s costs … An order for costs should however be made against the Wife as she has authorised and/or acquiesced in Mr Brott pursuing the action.
We have earlier indicated that the husband’s costs on a party/party basis of the appeal discontinued on 7 October 2004 should not fall upon him. We are not however persuaded by the matters relied upon by senior counsel for the husband that we are able to make the findings of fact which we perceive to be necessary to order that Mr Brott pay the husband’s costs. Nothing to which we have been referred, or are able to infer for ourselves, establishes that Mr Brott did other than act on instructions from the wife. Necessarily, we have no knowledge of what advice Mr Brott gave the wife with respect to the lodging of an appeal against Guest J’s refusal of the disqualification application or its conduct thereafter or its ultimate discontinuance.
In determining whether to make a personal costs order against a solicitor the Court must balance certain public interests. As was said in Ridehalgh v Horsfield [1994] 3 All ER 848 at 855 – 856:
… [L]awyers should not be deterred from pursuing their client’s interests by fear of incurring a personal liability to their client’s opponents; that they should not be penalised by orders to pay costs without a fair opportunity to defend themselves; that wasted costs order should not become a back-door means of recovering costs not otherwise recoverable by a legally-aided or impoverished litigant; and that the remedy should not grow unchecked to become more damaging than the disease. The other public interest, recently and clearly affirmed by Act of Parliament, is that litigants should not be financially prejudiced by the unjustifiable conduct of litigation by their or their opponent’s lawyers. The reconciliation of these public interests is our task in these appeals. Full weight must be given to the first of these public interests, but the wasted costs jurisdiction must not be emasculated.
Goldberg J said in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at 239 (approved by the Full Court of the Federal Court in Levick v Deputy Commissioner of Taxation (2000) 102 FCR 155):
This analysis of the cases makes it clear that the jurisdiction to order costs against an unsuccessful party’s solicitors is enlivened when they have unreasonably initiated or continued an action when it had no or substantially no prospects of success but such unreasonableness must relate to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the cause of and the proper administration of justice. Further, the cases establish the proposition that it is a relevant serious dereliction of duty or misconduct not to give reasonable or proper attention to the relevant law and facts in circumstances where if such attention had been given it would have been apparent that there were no worthwhile prospects of success.
In our view, it is appropriate that the costs order with respect to that appeal be made against the wife. If, for reasons which we cannot know, Mr Brott gave negligent advice, encouraged the appeal in the pursuit of some ulterior motive, or otherwise acted in a manner which led the wife to commence and pursue an appeal which she would not have, had she received competent and ethical advice, that is a matter between the wife and Mr Brott. Ultimately, it may be that the wife is entitled to be indemnified by Mr Brott with respect to this order, but that is not a matter about which we can or need speculate.
We are thus not satisfied in all the circumstances that an entitlement to a costs order against Mr Brott has been made out with respect to the appeal which was discontinued on 7 October 2004.
The “Second Appeal”
Under the heading “the second appeal” senior counsel for the husband made a number of submissions in support of an order for the costs of the appeal determined by this Court on 1 June 2007 against the wife and Mr Brott on an indemnity basis.
The primary position under s 117 of the Act is that each party to proceedings under the Family Law Act1975 (Cth) should bear his or her own costs. Section 117(2) enables the court to make an order for costs if it is of the opinion that there are circumstances justified in so doing. The matters that the court has to give consideration to are set out in s 117(2A).
The Court has broad discretion in determining this issue. The majority of the High Court (Stephen, Mason, Murphy, Aikin and Wilson JJ) in Penfold v Penfold (1980) 144 CLR 311; (1980) 28 ALR 213; (1980) FLC 90-800; (1980) 5 Fam LR 579 said at CLR 315; ALR 216; FLC 75-053 – 4; Fam LR 582:
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 sub-section is not paramount to s 117(2). As sub-s (1) is expressed to be subject to sub-s (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.
Sub-section (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, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s 117(2) in “a clear case”.
Sub-section (2) does not, in our view, as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v Kent (1970) 92 WN (NSW) 503 at 505). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
So far as the costs of the appeal which this Court determined on 1 June 2007 are concerned, the fact that the appeal was wholly unsuccessful looms as a significant matter within the context of s 117(2A) of the Act.
Whilst the wife has been wholly unsuccessful in the appeal that was argued before us, the relative financial circumstances of the parties militate against making any order for costs. The wife’s position is that she is devoid of any assets and is barely able to earn an income to support herself. The husband has formed a new relationship and is obtaining economic support from it. He appears to continue to enjoy a comfortable lifestyle. The proceedings have been difficult and complex. During the marriage the parties lived an affluent lifestyle. Upon its breakdown the wife found herself living in comparatively parlous circumstances whilst she sought to ascertain where the wealth of the family had disappeared to. The fact that she has so far been unsuccessful in that search, does not of itself in our view justify an order for costs to be made against her. Realistically, no other basis for a costs order against the wife can be suggested in the circumstances of this case. In all circumstances, we are not of the opinion that the wife should be ordered to pay the husband’s costs.
It remains to consider whether the costs claim against Mr Brott has been made out. We perceive that the authorities to which we have referred in relation to the circumstances in which costs orders will be made against legal practitioners are of greatest relevance for that purpose, and can be accommodated within the terms of s 117(2A)(g).
Nothing to which we have been referred persuades us that Mr Brott’s conduct should be seen as falling within the terms of the authorities to which senior counsel for the husband referred us or within the matters set out in r 19.10. Absent clear evidence to the contrary, and we do not perceive there to be such evidence, we infer that Mr Brott at all times acted on instructions from the wife and pursuant to a genuine, if unduly optimistic, appreciation of the merits of his client’s appeal.
In our view, the appropriate order with respect to the appeal which concluded on 1 June 2007 is thus that each party bear his or her own costs.
Proceedings on 11 September 2007
On conclusion of the proceedings on 11 September 2007, senior counsel for the husband sought an order for the costs of the proceedings before the Court on that day. As the presiding judge noted at that time, senior counsel for the husband was retained to appear for the husband in other proceedings before a differently constituted Full Court on the same day.
Without in any way trivialising senior counsel for the husband’s preparation with respect to the proceedings before this Court on 11 September 2007, we are not persuaded in the circumstances that any order for costs should be made. The extent, if any, to which the husband’s costs of 11 September 2007 would have been increased by reason of the matters which occupied this Full Court on that day could only be minor relative to the costs associated with his legal representation with respect to other matters before a differently constituted Full Court on that day.
We are not of the opinion that the circumstances of 11 September 2007 justify making an order for costs.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date: 27 September 2007
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