Meldrum and Dodge
[2010] FMCAfam 449
•10 May 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MELDRUM & DODGE | [2010] FMCAfam 449 |
| FAMILY LAW – Costs – concluded property proceedings – husband offered to compromise proceedings in equivalent terms to orders made by the court following final hearing – whether just to make order for costs – financial circumstances of the parties – quantum of costs. |
| Family Law Act 1975 |
| See Browne v Green 29 Fam LR 428 In the marriage of I & I (No.2) 22 Fam LR 557 Penfold v Penfold (1980) 5 Fam LR 517 Steel and Steel (1992) FLC 92-306 Pennisi v Pennisi (1997) FLC 92-774 Kohan & Kohan (1993) FLC 93-340 Munday v Bowman (1997) FLC 92-784 Colgate Palmolive v Cussons (1993) 46 FCR 225 |
| Applicant: | MR MELDRUM |
| Respondent: | MS DODGE |
| File Number: | NCC 122 of 2008 |
| Judgment of: | Brown FM |
| Hearing date: | 30 April 2010 |
| Date of Last Submission: | 30 April 2010 |
| Delivered at: | Adelaide |
| Delivered on: | 10 May 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Duane |
| Solicitors for the Applicant: | Gianacas Argiris McDonald |
| Counsel for the Respondent: | Mr McQuade |
| Solicitors for the Respondent: | All Family Law |
ORDERS
The wife pay the husband’s costs fixed in the sum of $6,080.00.
Pursuant to rule 21.15 of the Federal Magistrates’ Court Rules it was reasonable that the husband employ an advocate for the final hearing of this matter.
The application for costs be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Meldrum & Dodge is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
NCC 122 of 2008
| MR MELDRUM |
Applicant
And
| MS DODGE |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings are concerned with whether it is just that the wife, in recently concluded property proceedings, should pay the cost of the husband and, if so, what should be the quantum of those costs.
The applicant in the proceedings is Mr Meldrum “the husband”. The respondent is Ms Dodge “the wife”.
On 19 February 2010, following a trial lasting one day and written submissions from the parties, I delivered judgment in the matter. The husband was largely successful in the sense that the court adopted the approach to the case, which he advocated.
It was common ground between the parties that their marriage had been one of about three years in duration, during which the husband had made the vast majority, if not all, of the relevant financial contributions concerned.
I found the parties’ net pool of assets to amount to a sum of $215,200.00 and their combined superannuation to amount to $75,800.00.
I determined that the parties’ non-superannuation assets should be divided 90/10 percent in the husband’s favour and that each party should retain the superannuation then standing in each of their respective names (in the husband’s case $47,000.00 and in the wife’s case $28,000.00).
In practical terms, this meant that the wife would retain a BMW motor vehicle, then in her possession and would receive a sum of $20,000.00 from the husband.
On 11 March 2010, the husband filed an application that the wife pay his costs in the proceedings from 9 March 2009 to date. In particular, the husband sought that the wife should pay his costs, on an indemnity basis, in an amount which he calculates to be $24,290.45.
In the alternative, he would seek to be paid party-party costs as calculated either by reference to the Federal Magistrates Court Rules or the Family Law Rules. The sum sought would be considerably less.
Given the quantum of the sum owed by him to the wife, pursuant to the orders of 19 February 2010, when compared to the amount of costs sought by him, the husband sought to stay the operation of the payment order to the wife, pending the outcome of his costs application.
This application was granted on 17 March, 2010. At that time, I was persuaded that, if the stay was not granted, there was a very real possibility that the husband’s application for costs would be rendered nugatory, which would be unfair to him.
Since the husband has made his application, the wife has lodged an appeal to the Full Court of the Family Court concerning the justice and equity of the orders made on 19 February 2010. It is her position that the husband’s application for costs should be deferred until such time as her appeal has been dealt with.
In the alternative, she would seek the dismissal of the husband’s application, particularly given that it is self apparent that she is not a person of strong financial means and, if the application for costs is successful, it will effectively mean that she gains little, if anything, from her application for matrimonial property settlement.
The parties have each filed affidavits in support of their respective positions. In the husband’s case, he relies on an affidavit of his solicitor, Mr McDonald.[1] In the wife’s case, she relies on an affidavit of herself.[2]
[1] See affidavit of Graeme Russell Wallace McDonald filed 11 March 2010
[2] See affidavit of Ms Dodge filed 20 April 2010
The relevant chronology extracted from those affidavits is as follows:
·On 9 March 2009, the husband’s solicitor wrote to the wife’s solicitors under the cover of a letter headed “without prejudice save as to costs” indicating that their client was prepared to offer the sum of $20,000.00 to the wife, plus that she retain the BMW motor vehicle, in full settlement of the wife’s claim for settlement of matrimonial property issues.
·The letter concerned also indicated that it (the letter) would be tendered to the court in the event that any application for costs was made.
·The hearing of the parties’ competing applications was scheduled for 2 September, 2009. The husband and his counsel travelled from New South Wales to South Australia for the hearing, which could not be completed in the time allotted, although all the relevant evidence was taken.
·In those circumstances, it was expedient that the matter be completed by way of written submissions. The husband’s written submissions were delivered on time. The wife’s were not.
·On 17 September 2009, the husband’s solicitors wrote a further letter to the wife’s solicitors, which was headed “without prejudice”. This letter indicated that an offer of settlement had been made to the wife on 2 September 2009, prior to the commencement of the trial, which envisaged the husband paying the wife the sum of $30,000.00, as well as she retaining the BMW motor vehicle.
·The letter in question indicated this remained open for a period of 28 days from the date of the letter. It also proposed that each party should bear his or her own costs.
·The wife commenced the proceedings for property settlement in October 2008. At that stage, she did not delineate a specific proposal for the division of the parties’ matrimonial estate. Rather, she sought that there be an “equitable division of property between the parties”. The wife did not subsequently amend this application.
·The husband’s position, as outlined in his response filed on 17 November 2008, was that an appropriate and equitable resolution of the property proceedings between the parties was that he should transfer his interest in the BMW motor vehicle to the wife, but that otherwise each party should retain the assets which were then his or her respective possession.
The husband has lived and worked overseas since the time of the wife’s application. As a consequence, it was necessary for him to return to Australia for the hearing of the matter.
In addition, the wife required the husband to make formal discovery on oath. The husband complains that these circumstances have put him to additional and unnecessary expense, given the overall extent of the parties’ pool of assets and the ultimate result.
However, the major thrust of his submission is that it was open to the wife to have compromised these proceedings approximately six months prior to the date scheduled for the trial which, had she done so, would have seen her receive the same quantum of settlement ultimately awarded to her by the court.
Obviously, if the wife had followed this course, it would have saved both parties a considerable amount of legal costs. In such circumstances, the husband contends that overall considerations of justice and fairness should dictate that the wife contribute significantly to his costs.
The parties attended a financial mediation conference on 26 November 2008. The matter did not resolve at this conference. The parties competing applications were fixed for final hearing, following this conference, on 2 March 2009. The date allocated for the final hearing was 2 September 2009.
Accordingly, when the husband’s first offer to settle was made, the matter was at an early stage of preparation. It was on 2 March 2009, that the husband was ordered to make discovery and the parties were jointly ordered to commission a valuation of a property owned by the husband in Whyalla.
The wife does not dispute that the husband made the formal offers to settle the proceedings, which are outlined above. It is her evidence that she instructed her solicitors to make her own offers to settle the proceedings. These were as follows:
·
On 27 February 2009, she proposed that she retain the BMW motor vehicle, her superannuation and savings and that
Mr Meldrum pay her the sum of $90,000.00 in order to resolve the proceedings.
·On 15 July 2009, this offer was modified on the basis that the wife indicated she was prepared to accept the sum of $150,000.00 plus the retention of the BMW motor vehicle and her superannuation, in order to resolve the matter.
Mr McDonald has deposed that he billed the husband for professional services in respect of these proceedings for the period between 11 November 2008 and 19 August 2009 in the sum of $7,468.22.
Mr McDonald has further deposed that he billed the husband a further sum of $17,956.63, in respect of professional services rendered in respect of this matter for the period between 19 August 2009 and 12 February 2010.
The legal principles applicable to cost’s applications
The making of a costs order is governed by section 117 of the Family Law Act which provides as follows:
Costs
(1)Subject to sub-section (2) and 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 sub-section (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 term of any such offer; and
(g) such other matters as the court considers relevant.”
Section 117 (1) abolishes, for the purposes of Family Law Act proceedings, the general rule that in civil proceedings costs follow the event. Section 117(2) then provides the court with a general discretion to make costs orders, if it is of the opinion that there are circumstances that justify it in so doing. Section 117(2A) sets out the matters that the court shall have regard to.[3]
[3] See Browne v Green 29 Fam LR 428 at 432
The discretion in respect of costs placed in the court pursuant to section 117 is a wide one, which must be exercised having regard to the matters set out in section 117 (2A), so far as they are relevant. In the case of In the marriage of I & I (No.2)[4], the Full Court said as follows:
“Section 117 confers upon the court a broad discretion in relation to costs. That discretion is one which the Court should not seek to fetter. As was pointed out by the High Court in Penfold v Penfold[5]:
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 subs (1) is expressed to be subject to subs (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.”
[4] In the marriage of I & I (No.2) 22 Fam LR 557 at 558
[5]Penfold v Penfold (1980) 5 Fam LR 517 at 582; FLC 90-800 at 75,053
Section 117C deals specifically with offers of settlement. Subsection (2) provides as follows:
If:
(a)a party to proceedings to which this section applies makes an offer to the other party to the proceedings to settle the proceedings; and
(b)the offer is made in accordance with any applicable Rules of Court;
the fact that the offer has been made, or the terms of the offer, must not be disclosed to the court in which the proceedings are being heard except for the purposes of the consideration by the court of whether it should make an order as to costs under subsection 117(2) and the terms of any such order.”
It is now appropriate to consider whether there are any circumstances which justify a departure from the general rule provided by section 117(1) by virtue of any of the considerations specified in section 117(2A).
a) The financial circumstances of the parties
The purpose of an inquiry under section 117(2A)(a) is to enable “the court to have some concept of the relative financial positions of the parties.”[6] As a result of the evidence led at final hearing, I am well aware of the parties’ respective financial situations.
[6] See Browne v Green (supra) at 432 at [20]
The husband is in secure and well paid employment. He owns real property both in Australia and Thailand. The wife is in modestly paid employment. She does not own any real property and has few, if any, assets of significant value, other than the motor vehicle, which she retains.
Accordingly, although the husband cannot be regarded as a wealthy person, as it is indicated by my findings in respect of his current level of asset backing, he is significantly more financially secure than is the wife, who must be regarded as a person of extremely limited assets and modest means.
In these circumstances, it appears axiomatic that any award of costs made against the wife is likely to engender great financial hardship to the wife. To all intents and purposes, it would mean that she would receive little, if any, financial benefit as a result of her institution of these proceedings.
On the other hand, the husband’s current liability for his own costs cannot be regarded as being of no moment to him, by virtue of his financial superiority over the wife. He is not a person of such wealth that the award of some costs in his favour will provide little material benefit to him.
On any view, the pool of assets available to be distributed between the parties was modest. I have no knowledge of the wife’s legal costs. The husband’s costs amount to a sum in excess of $25,000.00. This is equivalent to around twelve percent of the parties’ non-superannuation assets. This level of expenditure on legal fees is not reasonably proportionate to the issue extant before the court.
I have no reason to consider anything other than that similar issues of proportionality apply to the wife’s circumstances. Accordingly, in my view, it is not a sufficient answer to the husband’s claim for the wife to contend that an award of costs, against her, will have drastic consequences. Her own conduct (and the perils of it), not only for herself but also the husband, must also be a relevant consideration.
b) Receipt of legal aid
Neither party was in receipt of legal aid during these proceedings. Accordingly, this is not a relevant consideration.
c) Conduct of the parties
The proceedings were rigorously contested. The wife was on time in filing her trial material. The husband was not. But this was not a case of such complexity that this omission had any significant implication for the wife and the conduct of her case.
In my view, the issues in contention between the parties were well known to each of them at an early stage. It was also apparent that there was a gulf between their respective expectations of what was the likely outcome of the proceedings.
The wife was entitled to seek an adjudication of the competing applications from the court. However the efficient administration of judgement, particularly in Family Law matters, relies on the parties concerned and their legal representatives, making a bona fide attempt to resolve the matters in dispute between them. This is particularly so where the costs of the litigation involved grow to the point where they are out of proportion to the magnitude of the issues involved.[7]
[7] In this regard see “Best Practice Guidelines for Lawyers Doing Family Law Work” August 2004 published by the Public Affairs Unit, Australian Government Attorney-General’s Department Publication number 31/03. This document was produced by Family Law Section of the Law Council of Australia and the Family Law Council and provides guidelines for lawyers involved in family law practice as to what constitutes “best practice”. These guidelines do not create new duties for lawyers or override lawyer’s existing duties either to their clients or as officers of the court. The guidelines apply to proceedings in the Federal Magistrates Court. Guideline 1.2 in Part 7, which deals with Property/Spousal Maintenance reads as follows:
“In respect of matters relating to financial issues, the principles of proportionality should be borne in mind at all times. It is undesirable for the legal costs involved in any case to be disproportionate to separating couples’ financial position.”
I do not regard the current matter as being an inherently complicated one. It was not a case requiring protracted interlocutory proceedings or unusual directions. The husband provided discovery on oath, as directed. As such, I do not think that the conduct of the parties in the proceedings generally is relevant to the current issue before the court.
d) Failure to comply with previous orders
This is not a relevant consideration in this matter.
e) Party wholly unsuccessful
This is not a relevant consideration in this matter.
f) Offers to settle in writing
This, along with the respective financial circumstances of the parties, constitutes the most important consideration in this case. The import of section 117(2A)(f) is to ensure that, when offers to settle are made, they are seriously considered by the other party concerned.
Litigation is expensive and for that reason is not to be embarked upon lightly. Accordingly, courts such as this one should encourage the parties to litigation to seek a compromise of their proceedings and should discourage a party from cavalierly disregarding any reasonable offers to settle.
Generally speaking, negotiations between the parties and/or their legal advisers, to compromise proceedings under section 79 of the Family Law Act are privileged.[8]
[8] See Steel and Steel (1992) FLC 92-306
Section 117(2A)(f) does not specifically delineate how an offer to settle proceedings is to be made, other than it is to be made “in writing”. Section 117C is more specific. It authorises offers to settle in accordance with rules made by the court and stipulates that such offers are not be disclosed to the court itself, until such time as an application arises under section 117(2) of the Act.
Rule 10.02 of the Family Law Rules stipulates that an offer to settle is made without prejudice, unless the offer states that it is an open offer. Such offers need not be filed with the court. They may also be withdrawn. They remain privileged until an issue of costs arises following the completion of the matter.
Accordingly, sections 117(2A)(f) and section 117(C), together with the applicable rules, recognise the procedure known as a “Calderbank” letter or offer. This procedure was described in Cross on Evidence as follows:
“This procedure, known as the Calderbank letter or offer, was first used in matrimonial cases, but is now recognised to be of general application. The consequence of marking an offer “without prejudice save as to costs” is that the document and its contents are treated as being without prejudice for the determination of the substantial issues between the parties – they are privileged. But they may be used after these issues are determined, for the purpose of deciding the incidence of costs. Where the payment into court procedure is available, it is prudent that it be used.”[9]
[9] Cross on Evidence (1996 Australian Edition) at paragraph 25360
The section of the Family Law Rules dealing with offers to settle commences with the following notation:
“Each party is encouraged at all times to make an offer to settle to the other party in an effort to resolve a case.”
The Best Practice Guidelines, to which reference has already been made, reinforce that practitioners should ensure that their clients understand the ramifications of receiving both “without prejudice save as to costs” offers and offers of settlement under section 117C.[10]
[10] See Best Practice Guidelines (supra) at Part 3 Costs Guideline 2.4
In Brown v Green, the Full Court said as follows:
“We think that whilst s 117(2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement that have been made. The insertion of s 117C into the legislation is a clear indication of the desire of Parliament to enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given. It is clearly a circumstance that would justify the making of an order for costs in favour of the husband.”[11]
[11] See Browne v Green (supra) at 439 [paragraph 57]
On 9 March 2009, one week after the parties’ competing applications were fixed for trial and approximately a fortnight after the financial mediation conference between the parties had been completed, the husband made a written offer to settle the proceedings. The husband’s solicitor clearly put the wife and those advising her on notice of the potential costs implication of the offer.
As matters transpired, the position which the husband adopted at that stage, was subsequently vindicated by the order made after the trial. The offer mirrored the position which was openly adopted by the husband’s counsel throughout the trial.
It reflected the husband’s position that, as the marriage between the parties had been a short one, the starting point for the court would be that each party should end the marriage in a similar asset position to that which had prevailed at the commencement of their relationship.
In my view, the husband’s offer to settle was a closely calibrated one, on the basis of the evidence, which was available to him. It cannot be regarded as an empty or off hand gesture. To the contrary, it was closely considered and intended to place the wife on notice. That the husband believed the offer to be reasonable and by necessary implication, he was concerned about costs he unnecessarily concerned.
The husband and his solicitor are based in Newcastle. Originally, the husband had wanted the proceedings transferred from the Adelaide Registry of the court to its registry in Newcastle. However, he withdrew this aspect of his application. As a consequence, it was a more expensive exercise for the husband to pursue this matter, as it necessitated travel expenses and other disbursements.
The trial was scheduled for one day. Given the small extent of the pool of property involved, I was anxious to avoid the proceedings being unnecessarily prolonged. Although the evidence was completed on 2 September 2009, the submissions were not.
In all the circumstances, the conclusion of the case by way of written submissions seemed to provide the most cost efficient way of concluding the case. However, at the time of this direction, I was aware that there are still costs implications arising from such written submissions.
In this context, the husband reiterated the more generous offer to settle the proceedings, which he had made at the commencement of the hearing. This offer was made in writing on 17 September 2009 and again clearly contains proviso that it will remain relevant as to costs, if it is not accepted.
As matters transpired, the offer to settle made orally on 2 September 2009 and reiterated on 17 September 2009 was more generous than the judgment ultimately awarded in the wife’s favour. The offer was made by the husband in the hope that firstly the costs of the trial could be minimised and then the additional costs of written submissions be obviated.
In Pennisi v Pennisi[12] the Full Court of the Family Court said as follows:
“…it is not the law that an offer of greater or equivalent value to that which results from the Court will lead to an order for costs in favour of the offeror… We would also add that just because an offer is marginally less than the amount ordered by a Court does not mean that it is not a factor to be taken into account in determining whether costs should be awarded…
The plain words [of section 117(2A)(f)] do not limit a Court’s attention to offers which are greater than the amount awarded. Nor does the paragraph state what consequences flow from whether the offer is greater or lesser than the amount awarded, or how much that is the case. Words of limitation should not be imported into the provision and nor should it be read as though offers in proceedings under the Act carry the same consequences as payment into Court in common law matters.
We do however, consider that the closer the offer is to the award when the offer is under the amount awarded by the Court, the more weight should be given to this factor in considering the question of costs. The principle must not, however, be rigidly applied. Offers must be seen within the context of the case and the extent of the offeree’s knowledge of the parties’ financial circumstances while the offer is live. In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties’ financial arrangements, or the financial circumstances are so complex that if would be premature to accept an offer. There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination. These and other features of the context of offers must be taken into account when considering whether it was reasonable or not to accept an offer, no matter how close to the ultimate result the offer may be.”
[12] See Pennisi v Pennisi (1997) FLC 92-774 at p 84,547
Again, in the overall context of this case, the husband’s offer to resolve the proceedings must be regarded as considered and well calibrated. The central issues of the case were well known to the wife and those advising her. The marriage had been a short one and the pool of assets was small. This is not a case where there was a gross discrepancy in the parties’ grasp of the essential reality of the case.
The offers, made by the husband, to settle were reasonable ones. In my view, this was not a case where there was a gross discrepancy between either of the parties’ knowledge of their financial situation. It makes no sense of the applicable legislation and the principles underlying it, if parties are left free to litigate, in the face of such offers, and so incur significant costs for the other party involved, without the prospect of facing some penalty in the form of costs.
Conclusions
At the end of the day, it is the responsibility of the court to balance the various matters set out in section 117(2A) to arrive at a result, which it considers just. I am well aware of the serous consequences for the wife if an order for costs is made against her. However, in my view, it would result in an injustice to the husband, if the wife was able to escape the consequences of rejecting the husband’s carefully considered offers, with their explicit threat as to costs, by merely pleading tight financial circumstances now.
Accordingly, I have reached the conclusion that an award for costs should be made in the husband’s favour.
Quantum of Costs
The more difficult aspect of this case is assessing the quantum of those costs. The Court has a wide discretion as to the calculation of costs. Pursuant to Rule 21.02(2) of the Federal Magistrates Court Rules:
In making an order for costs in a proceeding, the Court may:
a) set the amount in costs; or
b) set the method by which the costs are to be calculated; or
c) refer the costs for taxation under order 62 of the Federal Court Rules or under order 38 of the Family Law Rules; or
d) set a time for payment of costs, which maybe before the proceeding is concluded.
However, pursuant to Rule 21.10:
Unless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
a) Costs in accordance to schedule 1; and
b) Disbursements properly incurred.
Pursuant to Rule 21.15:
The Court or a Registrar may certify that it was reasonable to employ an advocate, or more than 1 advocate, to appear for a party in a proceeding.
In this case, it was clearly appropriate that both parties should be represented by counsel, at the final hearing. Accordingly, I certify that it was appropriate for the husband and the wife to employ counsel in the proceedings.
Given the width of the discretion, provided to the court to make an award of costs, it is clearly open to the court to make an order for indemnity costs, although this is not the usual course.
In Kohan & Kohan[13] the Full Court of the Family Court has categorised indemnity costs, in the Family Law jurisdiction, as being made only in exceptional circumstances. In Munday v Bowman[14] Holden CJ set out some of the circumstances which might be regarded as being sufficiently exceptional to justify an award of indemnity costs. They were as follows:
·An action has been commenced or continued in circumstances where a party, properly advised, should have known that the action had no chance of success.
·If in these circumstances, in particular, the court is able to infer that the proceedings have been continued only for some ulterior motive or because of a wilful disregard of some salient fact.
·The proceedings have involved gratuitous allegations of fraud or either negligent or wilful allegations of fraud.
·There is evidence of misconduct, relating to the action, which has caused loss of time to the court or to the other party concerned.
·Allegations have been made, which should not have been made and which have led to the unnecessary prolongation of proceedings as such allegations are investigated.
·There has been an imprudent refusal of an offer to compromise.
[13] See Kohan & Kohan (1993) FLC93-340
[14] See Munday v Bowman (1997) FLC 92-784
Proceedings between former spouses, in this court, are frequently conducted against a background of heightened emotion and some heat. This is because they invariably deal with private and sensitive matters, arising between parties who would have no occasion to embark upon litigation, other than for the breakdown of the marriage or relationship between them. For this reason, they cannot be regarded as being analogous to commercial proceedings or other general civil litigation.
For this reason, in my view, this court must be particularly cautious, in family law proceedings, before deciding to depart from the rule, which is one arising from such conventional civil proceedings, but a successful suitor is usually only entitled to party/party costs.[15] This sensitivity, so far as family law proceedings are concerned, is heightened by the provisions of section 117(1), which provides that the norm, so far as family law proceedings are concerned, is that each party should bear his or her own costs, regardless of outcome.
[15] See Colgate Palmolive v Cussons (1993) 46FCR225 at 232
As the case has ultimately turned out, thus far, Ms Dodge was imprudent to reject the offer of settlement made by Mr Meldrum. However, in the overall circumstances of this case, I am not convinced that this provides sufficient justification to award indemnity costs against her, particularly given her own financial circumstances and the modest pool of property available to be distributed between the parties.
In section 3(2) of the Federal Magistrates Act, the legislature sets out the objects of the Federal Magistrates Court as follows:
to enable the Federal Magistrates Court to operate as informally as possible in the exercise of judicial power; and
to enable the Federal Magistrates Court to use streamlined procedures; and
to encourage the use of a range of appropriate dispute resolution processes.
No doubt, the intention of the legislature in this regard was to reduce the cost of court proceedings pursuant to Federal legislation and provide litigants with a cheap and cost effective means of accessing justice within the Federal jurisdictional sphere. Rule 21.10 creates a scale of costs by reference to the occurrence of fixed events. In my view, the creation of such a scale was designed to help achieve these objects.
In the husband’s case, I believe the appropriate means of assessing the wife’s costs is pursuant to Schedule 1 of the Federal Magistrates Court Rules. The adoption of this schedule will also avoid the need for a taxation, which is potentially time consuming and likely to lead to more expense for the parties.
Application of schedule 1, to the events which have arisen since the completion of the financial mediation conference, which was a precursor to the offer to settle of March 2009 provides the following items of cost.
Stage 5: Preparation for a one final hearing:
$3,750.00
Stage 6: final hearing costs being one day hearing plus advocacy loading of 50%
$2,640.00
Stage 6: Explain orders:
$240.00
Preparation of final submissions (allow half day hearing fee)
$880.00
Total
$7,510.00
Having considered the nature of the hearing between the parties and the various matters set out in section 117 of the Family Law Act, I have come to the conclusion that it would be just for the wife to pay the husband eighty percent of the sum, which I have assessed namely $6,080.00 by way of costs to the wife.
In reaching this conclusion, I have borne in mind the financial circumstances of both parties and the fact that the husband made an offer to compromise the proceedings at an early stage, which was subsequently vindicated by the outcome in the case. I have attempted to balance these factors against each other to reach an outcome which I consider just.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding eighty-two (82) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 10 May 2010
0
3
1