MAKER & JETS - [2012] FamCAFC 103

FAMILY COURT OF AUSTRALIA

MAKER & JETS

[2012] FamCAFC 103

FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – EXTENSION OF TIME TO FILE – where the respondent discontinued a Notice of Appeal filed on 12 December 2011 – where the applicant filed the application for costs outside the 28 days provided for in the Rules – where the respondent did not oppose an order being made extending the time to file that application – time to file the amended application in an appeal extended nunc pro tunc.

FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – COSTS – where the applicant seeks costs on an indemnity basis in addition to the costs of the hearing on 12 July 2012 – where the respondent opposes any order for costs saying her financial circumstances are such that she cannot afford to pay any such order – where the applicant incurred legal fees as a result of the initial filing of the Notice of Appeal and pursuing that matter to a directions hearing stage – where the financial circumstances of the respondent are difficult but she has sought no Centrelink benefits, nor attempted to re-enter the workforce, nor presented any evidence in terms of medical reports which would indicate that she is unable to obtain employment – where the respondent appears to rely wholly on her mother for financial assistance – where there are circumstances which justify an order for costs being made on a party/party basis – where there are no exceptional circumstances demonstrated by the applicant which warrant the order for costs being calculated on an indemnity basis – respondent to pay the costs of the applicant as agreed or as assessed on a party/party basis.

Family Law Act 1975 (Cth) – s 117(1), (2), (2A)

Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Kohan & Kohan (1993) FLC 92-340
Limousin & Limousin (Costs) [2008] FamCA 315

APPLICANT:

MR MAKER

RESPONDENT:

MS JETS

FILE NUMBER:

MLC

493

2009

APPEAL NUMBER:

2011

DATE DELIVERED:

12 July 2012

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Strickland J

HEARING DATE:

12 July 2012

LOWER COURT JURISDICTION:

Federal Magistrates Court

LOWER COURT JUDGMENT DATE:

16 November 2011

LOWER COURT MNC:

[2011] FMCAfam 1473

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Meier

SOLICITOR FOR THE APPLICANT:

Meier Denison Guymer Pty Ltd

COUNSEL FOR THE RESPONDENT:

In person

Orders

The time to file the Amended Application in an Appeal filed on 10 July 2012 be extended nunc pro tunc to 10 July 2012.
The respondent pay the costs of the applicant, such costs to be assessed on a party/party basis in default of there being agreement as to the same.

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE

Appeal Number: SA 86 of 2011
File Number: MLC 493 of 2009

MR MAKER

Applicant

And

MS JETS

Respondent

EX TEMPORE REASONS FOR JUDGMENT

I have before me an amended application in an appeal filed on 10 July 2012 in which the applicant seeks an order for costs against the respondent either on an indemnity basis, a lawyer and client basis, or a party/party basis.
There was a second order sought in the amended application that is before me today, namely an extension of time to file the application. The need for that order is that the basis for seeking an order for costs arises as a result of the respondent filing a Notice of Discontinuance of a Notice of Appeal that she filed on 12 December 2011 and that Notice of Discontinuance was filed on 23 April 2012. The rules provide for any application for costs to be made within 28 days and, on my calculation, the application was in fact filed on 22 May 2012, which was certainly one day and maybe two days late. Thus there was a need to seek an extension of time.
I raised this matter at the commencement of the hearing today with Ms Jets who appears in person, and explained that she had the opportunity to oppose the extension of time. However, she determined not to do that and she preferred that the matter proceed and be finalised today. Thus I propose, as part of the orders that I make today, to formally extend the time for the filing of the application to 10 July 2012, which was in fact the date the amended application was filed.
Addressing then the order for costs. There is an affidavit filed by the applicant on 10 July 2012 in support of the application and in that affidavit the costs sought on an indemnity basis are set out. They total $2146.10 but in addition to that, there are the costs of today and Mr Meier tells me that he would propose that they be allowed at a rate of $396 per hour. Annexed to that affidavit is a one page document which Mr Meier tells me is taken from the costs agreement that his firm has with its clients, and in this instance, a costs agreement entered into with Mr Maker, the applicant.
That document sets out the rates charged by Mr Meier’s firm for family law matters and the schedule in the body of the affidavit is calculated from those rates set out in that annexure.
Any application for an order for costs in this court, whether it be in relation to an appeal or a first instance matter, is governed by s 117 of the Family Law Act 1975 (Cth) (“the Act”) which relevantly provides as follows:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 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) 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.
As I have explained to Ms Jets the primary position under that section is that each party is to bear their own costs. However, ss (2) provides, in effect, that if there are circumstances that justify it, then an order for costs can be made, and in

ss (2A), the factors which must be taken into account in determining that and what order there will be, if there is to be an order, are set out. In that regard,

Mr Meier submits that there are circumstances here that justify an order for costs and he relies on s 117(2A)(e), namely that the respondent to the application in an appeal has been wholly unsuccessful in the proceedings. The basis of that is that the respondent filed a Notice of Appeal on 12 December 2011 seeking to appeal against orders made by Walters FM on 16 November 2011. That appeal was then the subject of the usual process in this court, namely a directions hearing and ultimately listing for hearing but, as I have recorded earlier, on 23 April 2012 the respondent filed a Notice of Discontinuance of that appeal. Thus it is in that sense that Mr Meier says that the respondent has been wholly unsuccessful in the proceedings.
Ms Jets has indicated that she opposes the application for costs, and her sole reason for that is that she says that her financial circumstances are such that she cannot afford to pay any order for costs.
The point of me referring to this at this stage is that Ms Jets does not therefore raise or suggest that there is no basis for making an order. In other words, she does not suggest that there are, for example, no circumstances that might justify an order. She says, to repeat, that even if an order is justified, it should not be made because of her financial circumstances.
In my view, there is a circumstance here that justifies an order for costs and that is that the respondent has, in effect, been wholly unsuccessful in the proceedings. She discontinued them at a point at which Mr Maker had necessarily incurred legal costs as a result of the initial filing of the Notice of Appeal and the pursuing of that matter, at least, to the stage of a directions hearing.
In terms though of whether an order should be made, as I have said, the relevant factors are also those set out in s 117(2A) and Ms Jets relies on paragraph (a), namely the financial circumstances of each of the parties to the proceedings, and specifically her financial circumstances, in opposing an order for costs being made.
In terms of the financial circumstances of the parties, fortuitously the applicant, Mr Maker, had recently filed a Financial Statement in the Federal Magistrates Court proceedings, and Mr Meier has directed my attention to that. Mr Meier tells me that that was filed in the context of there being an application by

Mr Maker against Ms Jets for the costs of and incidental to the trial before the Federal Magistrate.
In any event, the Financial Statement tells me that Mr Maker is employed, he has a total income of $1772 per week and he has total expenses of $1940 per week. He has net assets of approximately $60,000 and a superannuation entitlement of $63,000. He resides with his partner and her three children and has his two children in that household as well. Thus his household comprises himself, his partner and five children. His partner contributes an amount of $250 per week to the family finances and as Mr Meier has pointed out to me, the total expenditure of $1940 is not just Mr Maker’s expenses, it is the entire family’s expenses.
In terms of the financial circumstances of Ms Jets, she has not filed anything, either in the proceedings that are before me or in the proceedings before the Federal Magistrate of recent date. However, I have allowed Ms Jets to tell me from the bar table what her financial circumstances are. I will not detail everything but, in short, she tells me that she has been unemployed since November last year. Prior to November 2011 she was employed as a settlement clerk. She has not been able to return to that work for various reasons associated with the proceedings and her health. She has not sought other work and she has not applied for any Centrelink benefits. She lives with her mother, who apparently works, and who supports her entirely.
In terms of assets, Ms Jets purchased a unit in August last year for approximately $440,000. She purchased it with the assistance of a mortgage of $400,000 and she rented out that property for $350 per week. The mortgage repayments were approximately $600 per week. It was obviously intended to be an investment property and to be negatively geared, however, the tenant has left, there is water damage, there are proceedings or proposed proceedings before the local administrative tribunal as to that damage, and Ms Jets tells me that is preventing her from selling the unit. If she tried to sell the unit, though, she would not expect to receive any more than she paid for it. Her mother is paying the mortgage as well as supporting Ms Jets generally.
As to other assets, Ms Jets tells me she has a two year old motor vehicle which she purchased for $23,000. There is no finance over that vehicle. She tells me she has no savings, but she has debts. She owes her previous lawyers $9000. Her mother has entered into an arrangement with those lawyers to pay off that debt over time.
Clearly her financial circumstances are difficult. What concerns me about that though is that she has not sought any Centrelink benefits, she has not yet attempted to re-enter the workforce and she presents no evidence in terms of any medical reports, for example, that would indicate that she is unable to obtain employment.
At this point I observe that s 117(2A) does not provide that any one of the factors set out therein has any priority over any of the others. As Mr Meier has correctly put it though, it is a matter of what weight I attach to those factors in reaching my decision. Clearly it is important, as I have said, that Ms Jets is in a difficult financial position but equally, I must, and do take into account, the fact that she has been wholly unsuccessful and the circumstances surrounding that. By that I mean she saw fit to file a Notice of Appeal. The respondent could not ignore that, and he had to deal with it. Ms Jets had a legal representative and it was also reasonable that Mr Maker instruct lawyers in relation to the Appeal. He has thereby incurred costs which have now been, in effect, thrown away, given that Ms Jets has determined to discontinue the appeal.
Weighing up the competing circumstances, the difficult financial position in which Ms Jets finds herself cannot prevent an order for costs being made.

Mr Maker has been left with legal costs to pay because Ms Jets has discontinued her Notice of Appeal, and he is entitled to have an order for those costs to be paid.
I turn now to the question of on what basis should the costs be assessed.

Mr Maker seeks primarily that that be on an indemnity basis. In support of that Mr Meier has referred me to the oft quoted authority of Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 and Sheppard J’s decision in that case. Specifically he has referred to the examples that Sheppard J set out in that case of circumstances warranting the exercise of the discretion to award costs on an indemnity basis and in particular, reading from Sheppard J’s judgment:
Where it appears that an action has been commenced or continued in circumstances where a properly advised litigant should have known that he had no chance of success.
Mr Meier says that applies here.
Now, Colgate-Palmolive has been followed in a number of cases in this court, for example, in Limousin & Limousin (Costs) [2008] FamCA 315 and Kohan & Kohan (1993) FLC 92-340. Yet what emerges from those authorities, as much as it does from Sheppard J’s decision in Colgate-Palmolive, is that there needs to be exceptional circumstances demonstrated before indemnity costs will be awarded, given that the usual basis of calculating costs is on a party/party basis. In my view, it has not been demonstrated that there are sufficiently exceptional circumstances here to warrant the order for costs being calculated on an indemnity basis.
In terms of the example that Mr Meier has referred me to from Sheppard J’s judgment, frankly it is not apparent, on the face of the Notice of Appeal filed by Ms Jets, that she should have known that she had no chance of success. Thus I do not consider that this case comes within that example from Sheppard J’s judgment.
In these circumstances costs should be calculated on a party/party basis.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 12 July 2012.

Associate:

Date: 20 July 2012