Mercer & Mercer (No 2)
[2022] FedCFamC2F 62
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Mercer & Mercer (No 2) [2022] FedCFamC2F 62
File number: SYC 7021 of 2017 Judgment of: JUDGE KEMP Date of judgment: 28 January 2022 Catchwords: FAMILY LAW – costs – where offers were made but not accepted – costs awarded on a party-party basis – costs awarded for the costs application Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 214
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ch 12, sch 3, rr 12.03 &12.08
Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules2021 (Cth) r 4.01, sch 1
Cases cited: Braithwaite & Braithwaite [2007] FamCA 468
Brown v Brown [1998] FamCA 115
Browne v Green (2002) FLC 93-115
Cachia v Hanes [1994] 179 CLR 403
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
Collins & Collins (1985) FLC 91-603
Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] FCA 202; [1988] 81 ALR 397
In the Marriage of Harris (1987) FLC 91-822
In the Marriage of Marinko (1983) 8 FamLR 49
In the Marriage of Murray (1990) FLC 92-173
In the Marriage of Rouse (1981) FLC 91-073
Kohan & Kohan (1993) FLC 92-340
Latoudis v Casey(1990) 170 CLR 534
Lenova & Lenova (Costs) [2011] FamCAFC 141
Penfold v Penfold (1980) 144 CLR 311
Penfold & Penfold (1980) FLC 90-800
Ragatta Developments Pty. Ltd. v Westpac Banking Corporation (unreported Federal Court, 5 March 1993)
Robinson & Higginbotham (1991) FLC 92-209
Sfakianakis & Sfakianakis [2019] FamCAFC 54
Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)
Division: Division 2 Family Law Number of paragraphs: 99 Date of last submission/s: 25 October 2021 Date of hearing: In Chambers Place: Sydney Counsel for the Applicant: Ms Gillies SC Solicitor for the Applicant: Tebbutt Lawyers Counsel for the First Respondent: Mr Gould Solicitor for the First Respondent: Murphy Lyons Lawyers Solicitor for the Second Respondent: Sexton Family Law ORDERS
SYC 7021 of 2017 BETWEEN: MS MERCER
Applicant
AND: MR MERCER
First Respondent
MS JORDAIN
Second Respondent
order made by:
JUDGE KEMP
DATE OF ORDER:
28 January 2022
THE COURT ORDERS THAT:
1.Leave be granted for the husband to rely on his Response and Affidavit filed on 23 August 2021, with such time for filing extended to 23 August 2021.
2.Within 30 days of today’s date, the husband is to pay the wife the sum of $63,717.43.
3.Within 30 days of today’s date, the husband is to pay Ms Jordain the sum of $64,480.78.
4.The stay of orders 3 and 4 of 30 April 2021, made on 20 May 2021, is varied to effect the implementation of orders 2 and 3 above, and upon compliance with those orders, the stay orders are discharged.
5.All outstanding applications are, otherwise, dismissed.
6.The matter is, otherwise, removed from the active pending cases list.
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 a pseudonym Mercer & Mercer (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Judge Kemp
INTRODUCTION
The applicant wife (“the wife”) filed an application for parenting and property orders on 25 October 2017. The final property hearing had multiple hearing dates that were altered due to the incarceration of the respondent husband (“the husband”) and/or the effects of the Covid-19 pandemic. The final hearing was held over the following dates: 16 & 18 March 2020, 17 July 2020, 20 & 21 August 2020 and 6 November 2020. Judgment was delivered and declarations and orders were made in the property matter on 30 April 2021.
The parenting proceedings were stood over to 20 May 2021 for mention but were concluded on that day with orders made, as set out in paragraph 7, below.
The declarations and property orders made on 30 April 2021, were to the following effect:
THE COURT DECLARES THAT:
(1)The husband and the wife are indebted to the second respondent, Ms Jordain (“Ms Jordain”) for the following sums:
(a)The sum of $600,000.00 required to discharge registered mortgage number … being the mortgage on the title to the property known as B Street, Suburb C, being the whole of the land described in folio identifier … (“B Street, Suburb C”) (“the B Street, Suburb C mortgage”).
(b)The sum of $148,296.00 plus interest running from 6 July 2017 to the date of payment at 5% per annum to discharge the loan agreement dated 20 May 2016, being the sum of $176,608.14 as at 30 April 2021, with the daily accrual of interest thereon, being $20.31.
THE COURT ORDERS THAT:
(2)Within 7 days of the date of these orders, the husband and the wife do all acts and things necessary and sign all documents so as to authorise and direct E H Tebbutt & Sons to disburse the balance of the Controlled Monies Account known as E H Tebbutt & Sons CMA in the names of the husband and the wife with Bank D, Account No. …85 (“the CM account”) to Ms Jordain in the sum sufficient to discharge the liabilities determined by the Court in (1), above.
(3)Within 28 days of the date of these orders, the wife pay to Ms Jordain any outstanding sum required to discharge the husband and the wife’s indebtedness pursuant to order (1), above.
(4)Simultaneously with order 3, the wife pay to the husband the sum of $452,358.72.
(5)Paragraphs 5 to 10 of these orders are binding on the Trustee of Super Fund 1 (“the Fund”).
(6)Pursuant to s.90XT(1)(b) of the Family Law Act 1975 (Cth) (“the Act”), whenever a splittable payment becomes payable from the superannuation interest held by the wife in the Fund, the Trustee of the Fund (“the Trustee”) shall pay to the husband the basic sum of $125,878.18 effecting a 41.5% split and there shall be a corresponding reduction in the entitlement the wife would have had but for this order.
(7)In accordance with s.90XT(1)(b) of the Act:
(a)The husband is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001;
(b)The wife’s entitlement to payments out of her interest in the Fund, and the entitlement of such other person to whom the splittable payment may be payable, is correspondingly reduced by force of this order.
(8)The Trustee shall do all such acts and things and sign all such documents as may be necessary to:
(a)Calculate in accordance with the requirements of the Act and the Family Law (Superannuation) Regulations 2001, the entitlement created for the husband by paragraph 6 of these orders.
(b)Pay the entitlement whenever the Trustee makes a splittable payment out of the wife’s interest in the Fund.
(9)Having been accorded procedural fairness, these orders bind the Trustee to observe the requirements of the Act and the Family Law (Superannuation) Regulations 2001.
(10)The operative time for these orders is the beginning of the fourth business day after the day on which a sealed copy of these orders is served upon the Trustee.
(11)Unless otherwise specified in these orders, the husband and the wife shall retain and be solely entitled to and responsible for:
(a)Real estate, monies in all bank accounts or other financial institutions in his or her name alone;
(b)Superannuation benefits; and
(c)All other personal property in each of their possession.
(12)Unless otherwise specified in these orders, each party shall indemnify the other against any claim made against them with regard to any debts or liabilities in each parties’ sole name, including but not limited to loans, hire purchase, legal fees and car loans.
(13)The parties do all acts and things and sign all documents and give all consents reasonably necessary to implement these orders.
(14)Pursuant to s.81 of the Act, these orders are intended to finally determine the financial relationship between the husband and the wife.
(15)In the event that either of the parties refuse or neglect to sign any document required by them to be signed, the Registrar of the Court shall be and is hereby empowered to sign such document/s on behalf of that party pursuant to s.106A of the Act.
(16)The husband’s Application in a Case filed on 12 October 2020 made first returnable on 7 December 2020 is, otherwise, dismissed with no order as to costs.
(17)The wife’s application for lump sum child maintenance is, otherwise, dismissed.
(18)If any party seeks any other order as to costs, an appropriate written application may be made within 28 days of today’s date, (supported by any documentary material) to be filed and served within that time period and a copy forwarded to Chambers. The Court will then deal with that matter by way of written submissions, unless the parties wish to be heard orally. If no such application is made within the time period specified, there will be no order as to costs.
(19)Leave to the parties to restore the matter on 7 days’ written notice to seek any consequential orders so as to implement the above orders.
(20)Omitted.
On 19 May 2021, the wife filed an Application in a Case and affidavit in support seeking costs, with an Amended Application in a Case subsequently being filed on 18 June 2021 which sought the following orders:
(1)That the husband pay the wife’s cost in relation to her Further Amended Application filed on 13 September 2019 on an indemnity basis, such sum being $69,042.58.
(2)That the husband pay the wife’s costs of and incidental to this Application in a Case.
On 20 May 2021, Ms Jordain filed an Application in a Case, seeking orders as follows:
(1)That the husband pay her costs in relation to her Response filed on 8 October 2019 on an indemnity basis, such sum being $73,700.76.
(2)That the husband pay her costs in respect of this Application on an indemnity basis.
On the same day, she also filed another Application in a Case, seeking orders as follows:
(1)That orders 3 and 4 of … 30 April 2021 be stayed until such time as Ms Jordain’s Application for Costs is determined.
(2)That the Application for a Stay be listed on an urgent basis.
(3)That leave be granted for short service of this Application.
(4)That the husband pay the costs of this Application on an indemnity basis.
On 20 May 2021, when the matter returned before the Court in relation to parenting matters, the following orders were made:
(1)Leave was granted for the husband to withdraw and any of his responsive parenting documents filed were dismissed.
(2)The appointment of the Independent Children’s Lawyer was discharged.
(3)Orders 1 to 3 of the wife’s Application in a Case filed on 19 May 2021, be made as follows:
(a)Leave be granted for short service of this application.
(b)The application for a stay be listed on an urgent basis.
(c)Orders 3 and 4 of the orders of 30 April 2021 be stayed until such time as the application for costs filed by Ms Jordain is determined.
(4)Orders 1, 2, and 3 in the minute of parenting orders, as sought by the wife be made. The Court notes that these orders are as set out in paragraph 7, below.
(5)The issue of the wife’s costs in terms of the parenting application be stood over for further determination
(6)By consent, orders be made in accordance with the document initialled by me and placed with the papers as follows:
(a)That order 4 of the orders made on 30 April 2021 be varied as follows:
(i)Simultaneously with the wife’s compliance with order 3 of the orders of 30 April 2021, the wife pay the following:
(A)To the husband the sum of $275,358.72; and
(B)To the wife’s solicitor’s trust account, the sum of $177,000.00 to be held in trust pending the determination of the wife’s and Ms Jordain’s application for costs.
(7)The matter be adjourned to 11 August 2021 at 11.30am for first return for all pending Applications in a Case.
(8)Any Response and Affidavit in support to the applications filed to be filed and served 14 days prior to the adjourned date.
The parenting orders made on 20 May 2021, as referred to in paragraph 6, above, were to the following effect:
(1)That the wife has sole parental responsibility for the children of the marriage, namely X born in 2008 and Y born in 2011 (“the children”) including and not limited to:
(a)The current and future education of the children;
(b)The health of the children;
(c)Religious and cultural upbringing; and
(d)Any other welfare issue involving the child.
(2)That the children live with the wife.
(3)That the husband have no time with the children and shall not communicate with the children unless as agreed in writing between the parties.
On 6 August 2021, the parties forwarded a consent minute of order to Chambers and the following orders were made:
(1)That the wife’s Amended Application for Costs filed on 18 June 2021 and Ms Jordain’s Amended Application for Costs filed on 22 July 2021, be determined by the Court by way of written submissions in Chambers.
(2)That within 14 days of the date of this order, the wife and Ms Jordain each provide to the Court written submissions in support of their applications, not exceeding 10 pages.
(3)That within 28 days of the date of this order, the husband provide to the Court any written submissions in response, not exceeding 10 pages.
(4)That within a further 7 days of receipt of the husband’s response in accordance with order 3 herein, the wife and Ms Jordain provide any written submissions in reply not exceeding 2 pages.
(5)That the directions hearing listed on 11 August 2021 be, otherwise, vacated.
On 20 August 2021, the wife’s and Ms Jordain’s written submissions were received.
On 23 August 2021, the husband filed his Response and an Affidavit in support (affirmed on 6 August 2021), which sought orders as follows:
(1)That the Applications in a Case of both the wife and Ms Jordain be dismissed and that they pay the husband’s costs.
The Court notes that the documents relied upon by the husband, referred to in paragraph 10 above were filed late as they were due to be filed by 28 July 2021.
On 2 September 2021, the husband’s written submissions were received.
On 9 September 2021, the wife’s written submissions in reply were received. Those submissions commenced with an objection to the husband’s material, as referred to in paragraph 10 above, being relied on as that material had been served late. However, the Court accepts that the wife appeared to have suffered no prejudice by any late service of those documents and an explanation for the husband’s delay has been provided, as referred to below.
On 19 September 2021, the husband’s solicitor, Mr James Lyons, sent an email to Chambers enclosing an affidavit from himself affirmed on 17 September 2021 deposing as to the circumstances of the late service of the husband’s documents. That affidavit was, subsequently, filed on 25 October 2021 in support of the husband’s Application in a Case which had then been filed but not given a specific return date by the Registry. That Application in a Case, simply, sought an order that leave be granted to the husband to file his Response and submissions in reply to the cost applications of the wife and Ms Jordain, out of time. The Court is of the view that it will treat this application without the need for a formal return date and will deal with the same in terms of its decision, reserved as a result of the orders made on 6 August 2021.
WHETHER THE HUSBAND CAN RELY ON FILED RESPONSE AND AFFIDAVIT FILED 23 AUGUST 2021
The wife submitted that the husband’s affidavit material had been filed outside of the timetable provided by the Court and that she objected to his reliance upon the affidavit, as there was no submission or evidence that had been provided by the husband as to why his material was late and that he had not sought leave to rely on the late material so filed.
The Court notes that Ms Gillies SC, in her submission, was referring to order 8 of the orders dated 20 May 2021 (as set out in paragraph 6, above), where the husband was to file and serve his Response and Affidavit in support 14 days prior to the adjourned date, being, then, 11 August 2021, that is, by 28 July 2021, as referred to in paragraph 11, above.
The husband’s solicitor, Mr Lyons, provided an affidavit affirmed on 17 September 2021, as referred to in paragraph 14, above, which set out the following:
(a)He referred to his 2 emails to the wife’s solicitor dated 15 & 16 September 2021 which noted their objection to the husband’s material and to the difficulties he faced in working from home and he sought to discuss the late service of material by way of a telephone call. He advised that he had been hospitalised for surgery and that he would also seek to have the matter relisted to enable the affidavit and response to be relied upon.
(b)He stated that he had been working under extreme difficulties with regard to his client and personally.
(c)Due to the husband’s incarceration in 2020 and subsequent release from detention on in 2021, the husband’s mental health had been “brittle” and he had refused to read the Court’s judgment or provide instructions advising him that: “I just can’t deal with it at this time – do whatever you think need to be done.”
(d)That numerous phone calls and emails to the husband had been ignored.
(e)On 17 June 2021, he had attended with the husband in a conference with Counsel.
(f)On 5 August 2021, he had received a draft affidavit from Counsel which he then had the husband depose to.
(g)On 6 August 2021, he filed the husband’s Response and affidavit on the Court’s portal and served the same prior to going to hospital for surgery on 10 August 2021.
(h)On 9 August 2021, he was advised by the Court that the affidavit did not comply with the Court form and, consequently, both the affidavit and Response had been rejected.
(i)Due to his hospitalisation for surgery on 10 August 2021 and other outlined health issues, he was unable to remedy the issue in relation to the filing of the husband’s documents until 23 August 2021.
(j)Further, as he was a single practitioner of 75 years of age with no staff or assistance and describing himself as a “one finger typist”, the preparation of the documents took, he said, an inordinate amount of time.
Given the above information provided by Mr Lyons and no contest as to its accuracy, the Court accepts the explanations for delay and is of the view that leave should be granted to the husband for him to rely on his Response and affidavit filed on 23 August 2021 and for any submissions in respect of his opposition to the costs applications of the wife and Ms Jordain to rely on the same. Time will be extended until its actual filing date of 23 August 2021.
Dealing, then, with the substantive issue as to the wife’s and Ms Jordain’s costs applications and the husband’s application for costs, the Court notes as follows.
THE LAW
The notation contained in s.214 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) refers to the Court’s power to make a costs order in family law proceedings pursuant to s.117 of the Act. Pursuant to s.223 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), the rules of Court may make provision for costs orders. Chapter 12 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) sets out the relevant Rules in relation to costs including security for costs, costs disclosure obligations, the management of legal costs, orders for costs, calculation for costs, specific costs matters and claiming and disputing costs. Relevantly, pursuant to Rule 12.08 of the of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) legal costs are to be fair, reasonable and proportionate in the circumstances of the proceedings.
Pursuant to Rule 12.03 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), a costs application may be made at any stage during a proceeding and may be applied for on an indemnity basis.
Pursuant to Rule 4.01 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules2021 (Cth), the Court may, in applying Chapter 12, apply the scale of costs in Schedule 3 to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) or the scale of costs in Schedule 1 to the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 (Cth).
In relation to costs, s.117 of the Act states:
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 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), (4A) 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.
(3) To avoid doubt, in proceedings in which an independent children's lawyer for a child has been appointed, the court may make an order under subsection (2) as to costs or security for costs, whether by way of interlocutory order or otherwise, to the effect that each party to the proceedings bears, in such proportion as the court considers just, the costs of the independent children's lawyer in respect of the proceedings.
(4) However, in proceedings in which an independent children's lawyer for a child has been appointed, if:
(a)a party to the proceedings has received legal aid in respect of the proceedings; or
(b)the court considers that a party to the proceedings would suffer financial hardship if the party had to bear a proportion of the costs of the independent children's lawyer;
the court must not make an order under subsection (2) against that party in relation to the costs of the independent children's lawyer.
(4A) If:
(a)under section 91B, an officer intervenes in proceedings; and
(b)the officer acts in good faith in relation to the proceedings;
the court must not, because of the intervention, make an order under subsection (2) of this section against the officer, or against an entity (including the Commonwealth or a State or Territory) by or on behalf of whom the officer was engaged or employed.
(5) In considering what order (if any) should be made under subsection (2) in proceedings in which an independent children's lawyer has been appointed, the court must disregard the fact that the independent children's lawyer is funded under a legal aid scheme or service established under a Commonwealth, State or Territory law or approved by the Attorney-General.
Section 117 of the Act was considered by the High Court of Australia in Penfold v Penfold (1980) 144 CLR 311, where it was said:
“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”.
In Latoudis v Casey(1990) 170 CLR 534, the High Court of Australia stated as follows:
"in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings".
Section 117 of the Act, provides for a discretionary power in the Court. The Court must examine each of the factors, set out in the section, in turn, in relation to justifying a costs order. A costs order can be made on the basis of one or a combination of those factors; see Brown v Brown [1998] FamCA 115. The discretion to award costs is a broad discretion: see for example Collins & Collins (1985) FLC 91-603.
The issue of costs were outlined in Cachia v Hanes [1994] 179 CLR 403, at paragraph 98, as follows:
“Indeed, the list of matters set out in sub-s (2A) to which the Family Court is directed to have regard in making orders under s 117(2) indicates clearly that the subject-matter of the orders to be made under s 117(2) is the costs which a person may be ordered to pay another as indemnity for that other's liability for professional fees and out of pocket expenses reasonably incurred in the litigation, that is, "costs" as that expression is ordinarily understood in the law.”
EVIDENCE
The wife relied on the affidavit of her solicitor, Ms Jennifer Ann Gordon (“Ms Gordon”), affirmed and filed on 19 May 2021.
Ms Jordain relied on her affidavit sworn and filed on 19 May 2021 and her further affidavit sworn and filed on 22 July 2021 (which appeared to be an updated version of her earlier affidavit, including the costs of her stay application).
The husband relied on his affidavit affirmed on 6 August 2021 and filed on 23 August 2021.
Ms Gordon’s evidence was to the following effect:
(a)The final orders were that the wife pay the husband the sum of $452,358.72 and that the husband was to receive 41.5% of her superannuation (as at the date of final orders that sum was, approximately, $126,454.40). The Court notes that these amounts total $578,813.12.
(b)On 18 March 2020, the wife, through her Counsel, made a final offer of settlement that she pay the husband $600,000.00 within 56 days of the date of the orders, that he receive 30% of her superannuation and that the parties retain all other property standing in their name. As at 18 March 2020, the wife’s superannuation balance was around $328,960.00 and that offer would have given him $98,688.00 in superannuation and $600,000.00, totalling $698,688.00. The Court also notes that, at that time, the husband had received, by way of partial property settlement, the sum of $337,389.00.
(c)The husband, through his Counsel, rejected the offer contained in (b), above and the husband left the Court building at lunch time and did not return. The husband made no counter offer.
(d)The wife’s offer of settlement made on 18 March 2021 was $119,874.88 above what the Court ordered, taking into account both property and superannuation. As Ms Gordon submitted, the offer of settlement provided a sum of $147,641.28 greater than was ordered by the Court, having reliance only upon property and not the superannuation split.
(e)The husband’s conduct, throughout the proceedings, should not be ignored. The wife suffered severe domestic violence at the hands of the husband. The husband was abusive, violent and intimidating towards the wife and her legal representatives. On the last day of hearing, the husband was brought to the Court from prison and delayed the proceedings by refusing to leave the prison van and to appear in Court for the final day of the hearing, notwithstanding his Counsel attending upon him to seek his attendance. The husband’s evidence made a number of unsubstantiated allegations and he had failed to provide disclosure and information.
(f)On 18 May 2021, she wrote to the husband’s solicitor seeking a costs order on an indemnity basis for her costs incurred from 18 March 2020 to the end of the hearing. The Court notes from the wife’s solicitor’s cost disclosure letter that the wife’s actual costs were in the order of some $93,633.41 (as rendered and incurred but not yet rendered as at 10 March 2020). She advised the husband’s solicitor that the wife was then seeking costs of $86,382.58, made up of $38,257.58 in solicitor’s fees, $45,100.00 in Counsel’s fees and $3,025.00 in disbursements and made an offer of compromise to settle the costs dispute for $50,000.00.
(g)She set out the wife’s costs, as particularised at paragraph 83, below.
(h)She did not provide a cost figure for the wife’s application for indemnity costs in terms of her making her costs application, itself.
Ms Jordain’s evidence was to the following effect:
(a)She stated that the husband’s conduct towards her and her solicitors was aggressive and threatening. In one email dated 3 September 2018, to her previous solicitor, Mr E, the husband wrote: “You have an urgent response from me … regarding the recovery of $400,000.00 plus 5% interest. My response is are you kidding you fucking joker. The property B Street, Suburb C was stolen and sold from under my nose and your cruel client [Ms Jordain] thinks she [is] entitled to a share of my hard earnt profits and after putting me in gaol and forcing me to live on the street. I say no more you criminal fuckhead, there’s no more money to spend on lawyers so I suggest you back away before it gets ugly Mr E. Happy Monday you greedy fool.”
(b)On 2 October 2019, she was joined to the proceedings. She had on numerous occasions attempted to recover the monies loaned to the wife and the husband. She had filed a Response to final orders on 8 October 2019 seeking $150,749.00 be paid to her and the sum of $600,000.00 on the sale of B Street, Suburb C, or by 30 June 2025. The wife filed an amended application consistent with these orders while the husband’s response sought that her Response be dismissed with costs.
(c)She had expended a total of $88,570.76 in costs in these proceedings of which $49,060.76 related to her solicitor’s fees, $39,160.00 related to her Counsel’s fees and $350.00 related to disbursements.
(d)On 14 May 2021, she advised her solicitor to make an offer to the husband, as she had been wholly successful, that he pay $50,000.00 to her and that if he did not settle the costs application, she would seek a stay of the final orders and that he pay the costs of that stay application, with such offer being open until 19 May 2021.
(e)On 12 July 2021, after not receiving any response to the letter of 14 May 2021, she instructed her solicitor to write to the husband’s solicitor seeking to settle the costs matter and advising that she was now seeking a further $3,000.00 in relation to her Application in a Case with respect to the stay.
(f)She did not receive any response to the correspondence referred to in (d) and (e), above.
(g)The husband had conceded in correspondence that she had loaned the husband and the wife the sum of $400,000.00 on 9 May 2018 and that she ought to be repaid. However, he maintained, at trial, that she should not be repaid the outstanding sum of $135,000.00 plus interest when there was no justifiable basis for not paying the full sum.
(h)The husband’s Response filed on 14 February 2018 conceded that she ought to be repaid the full sum of $600,000.00, which was secured by mortgage over B Street, Suburb C.
(i)The husband’s behaviour since the parties’ separation resulted in an Apprehended Domestic Violence Order (“ADVO”) being taken out against the husband for her protection.
(j)Her application for costs and her stay application have exposed her to costs totalling $3,035.70.
(k)Accordingly, she seeks costs of $88,570.76 plus $3,035.70, totalling $91,606.46 (in lieu of the figure of $73,700.76, set out in paragraph 5, above).
The husband’s evidence was to the following effect:
(a)He opposed the application for costs by the wife and Ms Jordain.
(b)Since the final orders were made, an amount of $275,358.72 had been paid to his solicitor in relation to these proceedings.
(c)At the time of judgment in paragraph 112 of the Court’s reasons, the Court set out the liabilities owed by him, the more significant of which included: the Australian Taxation Office ($42,731.70); the loan from his mother ($38,170.00); fines/interest owing to the Australian Taxation Office ($25,220.90) and monies owing to Mr F, solicitor ($13,570.00), totalling $119,692.60 and, accordingly, he would be left with very little from the settlement sum, if costs were ordered to be paid.
(d)That he suffered from substance abuse and other issues noted in the Court’s reasons, including that: “[he] would have some ongoing financial expenses with respect to receiving treatment for the substance abuse issues, although that expense has not be suitably quantified” and that he is in a vulnerable position in relation to substance abuse issues as he was feeling depressed at the prospect of further orders being made against him which may impact his financial position as he wished to purchase a property with monies received pursuant to the Court’s orders.
(e)That the Court’s reasons, at paragraph 178, stated: “The husband submitted that given the history of advances made by members of the wife’s family, it could be considered that they are a financial resource available to her. The potential for that resource to be utilised may assist the wife in meeting the payout to the husband so that B Street, Suburb C may be preserved.”
(f)That the wife’s offers made in 2018 were without reference to the value of the parties’ assets at the time. In that regard, the Court notes that the wife had also made an offer on 18 March 2020 at which time, the Court accepts, the husband would have been aware of the quantum of the property pool and superannuation available for division between the parties, as referred to in paragraph 72, below. While the Court accepts that the handwritten note of Counsel stipulating that offer made no mention of the interests of Ms Jordain and whether the wife would indemnify the husband in respect of any claim made by her, the Court accepts that the husband would have been well aware of the asset pool available to the parties at the time of that offer and had available to him relevant legal advice to consider the terms of that offer, which the Court accepts was greater than that, ultimately, received by the husband.
(g)That the husband and the wife pay their own costs (although the Court notes that this appears inconsistent with the orders in his Response, as referred to in paragraph 10, above, although it may be that the husband was referring, in his Response, only to the wife’s and Ms Jordain’s various Applications in a Case.
(h)In relation to the claim by Ms Jordain, he repeated his submissions before the Court that any monies allegedly owing to her were resolved in the District Court of NSW proceedings. The Court notes that this was not accepted by it.
(i)That he remains in a vulnerable psychological condition and he does not see the children. He had been incarcerated and the prospect of further orders being made against him “fills him with dread”.
APPLICATION OF THE LAW
Section 117(2A)(a) The financial circumstances of the party
The wife submitted, and the Court accepts, that she has the full time care of the children of the parties’ relationship. She maintained that she wishes to have the children attend a private school. Further, she relies on receiving child support via the child support system. The husband’s work record in recent years has been erratic due to his ability to work being impacted upon by periods of incarceration and his drug use and he had given conflicting evidence about his earnings during the course of the proceedings.
Further, that the wife is likely to shoulder the vast, if not entire, financial responsibility for the children into the future.
The wife maintained that she also has the responsibility for paying any liability currently encumbering B Street, Suburb C, the home where she and the children reside.
The husband submitted that the Court should view the parties as being part of the child support system and that he has, consistently, paid child support, notwithstanding his difficulties, as described, above. The wife, in response, submitted that the husband was in arrears of child support at the time of hearing, noting that, in paragraph 194 of the Court’s reasons it was recorded that he was, then, $6,390.00 in arrears due to periods where he was incarcerated and/or not in employment.
The wife submitted that the husband had received sufficient funds to satisfy the proposed costs order and has a fund from which any payment could be sourced.
Ms Jordain submitted that, as the Court quarantined the sum of $177,000.00 pending the determination of the wife’s and her costs application, there was, therefore, a source of funds capable of being accessed in satisfaction of any costs order, including on an indemnity basis in relation to the substantive proceedings and any costs proceedings. Further, the respective financial positions of the parties or a party’s capacity to meet an order for costs, even if they are impecunious, are not determinative and do not preclude an order being made in respect of costs (Lenova & Lenova (Costs) [2011] FamCAFC 141). The Court accepts that submission.
Ms Jordain submitted that this is clearly a case where a costs order ought to be made as the husband’s position, in these proceedings, required her to intervene and to expend significant money on legal costs and that this, comfortably, justified an order for costs against the husband.
The husband submitted that the Court’s reasons set out that the wife would receive 72% of the assets available for distribution between the parties and that he would receive 28% and from that sum ($275,358.72) he had significant liabilities which he had incurred which he had to consider paying. The husband maintained that if there were costs ordered in relation to the applications of the wife and Ms Jordain he would then be unable to purchase accommodation for himself and that he would continue to have to deal with substance abuse issues and the ongoing financial exposure relevant to those matters.
The Court is of the view that the parties’ financial circumstances are, substantially, neutral in its assessment. From the property settlement orders, each of the husband and the wife will be required to meet any of their legal expenses.
Section 117(2A)(b) If any party is in receipt of legal aid
The parties submitted, and the Court accepts, that this factor is not applicable.
Section 117(2A)(c) The conduct of the parties in relation to the proceedings
The wife submitted that the husband’s conduct throughout the proceedings was obstructive and disruptive. There were extensive objections upheld in relation to the husband’s material and, at other times, evidence was permitted before the Court, subject to the husband providing substantiating material which, the wife submitted, never eventuated. One item, being the wife’s phone records, to substantiate the husband’s “scandalous allegation” that the wife squandered significant sums to purchase drugs, which was referred to in the husband’s trial affidavit was not pursued in terms of his evidence before the Court or in the husband’s submissions. Further, the wife maintained that, on almost every salient point, her evidence or that of Ms Jordain was preferred over that of the husband and, at times, his evidence was fanciful and amounted to a waste of the Court’s time.
The wife maintained that the husband’s conduct lengthened the hearing, if not the proceedings, including his denial of the simplest facts, such as the date the parties started cohabitating, which meant that the affidavit evidence was onerously long and multiple propositions had to be put to the husband in light of his denials. Further, rather than concede to straightforward propositions, such as the level of his wages at the date the parties’ commenced cohabitation, he gave incorrect evidence that required testing. His overall presentation was evasive and oppositional.
The wife submitted that the husband’s refusal to enter Court on the last day of the hearing and to remain in the basement of the Court building was significant, as the matter had then been stood over so that the husband could be re-examined, which did not occur. The wife maintained that his refusal was another obvious interruption caused by him, as final submissions could have occurred in a much more timely and cost effective manner.
The husband maintained that, in terms of the Act, it was the conduct of the parties in the proceedings and not in respect of their marital relationship or otherwise which the Court should consider and it did that in its Reasons by providing him with only 28% of the assets of the parties. The wife in her responsive submissions maintained that the husband’s submission did not reflect her submission in relation to this factor.
Ms Jordain submitted that the husband’s conduct should lead to a costs order being made in her favour. She maintained that the husband’s conduct resulted in an ADVO being taken out for her protection. Further, the husband adopted and maintained a position which, properly advised, he ought to have known had no chance of success. The Court can presume that the action taken by the husband was in wilful disregard of the known facts (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] FCA 202; [1988] 81 ALR 397).
The husband submitted that, in relation to Ms Jordain’s submission, some of the conduct she raised was whilst the husband was self-represented and did not take into account the litigation commenced in the District Court of NSW, in which she was successful. Further, the District Court proceedings were settled on a certain basis, which he understood to be complete in respect of the claim for $400,000.00, and, while ultimately acknowledging that the Court found against him, he submitted that his claim was, nevertheless, arguable.
Further, in relation to Ms Jordain’s submission, the conduct referred to, while relevant to the ADVO against him, was not the type of conduct anticipated by the terms of the Act and, therefore, should not be held against him.
The Court accepts that there is some force in the husband’s submission in relation to conduct matters being outside the conduct of litigation in this Court, noting that adjustments were made in terms of the Court’s reasons and noting, further, that the making of an ADVO, in the circumstances of this matter, would not, in itself, justify a costs order here.
Section 117(2A)(d) Proceedings necessitated by the failure of a party to comply with previous orders
The parties submitted, and the Court accepts, that this factor is not applicable.
Section 117(2A)(e) Whether any party wholly unsuccessful in the proceedings
The wife submitted that, while the husband was not wholly unsuccessful in the proceedings, he has been, largely, unsuccessful as he did not receive a result from the Court that was better than the offer made by her.
The husband submitted that he was not wholly unsuccessful against the wife as she did not obtain the orders sought by her and the Court should not have regard to matters which point to a degree of success or lack thereof in one direction or the other. It is whether a party has been wholly unsuccessful in the proceedings. The Court accepts that there is force in the husband’s submission, in that regard.
Ms Jordain submitted that, as against her, the husband was wholly unsuccessful in the proceedings and that, if he had not taken the position he did, she would not have been required to intervene in the proceedings and expend the legal costs she did.
Ms Jordain submitted that the wife’s Amended Initiating Application sought orders consistent with her application, while the husband sought that her application be dismissed, with costs. Following 6 days of hearing, the final orders were made that she receive certain amounts of money, to the effect that she was wholly successful in her application and the husband’s position, was unwarranted and without merit and, therefore, the principle of “costs following the event” should apply (Penfold & Penfold (1980) FLC 90-800). The Court accepts that submission
The husband submitted that, in relation to Ms Jordain’s claim, Ms Jordain had been wholly successful in her claim in the District Court and that this had finalised that matter and that he, therefore, had a reasonably arguable case to maintain in this Court, although he conceded that he was not successful, in that regard. The Court is of the view that that submission does not weigh against a costs order in favour of Ms Jordain.
The Court accepts that in the circumstances of this matter, the position adopted by the husband vis-à-vis Ms Jordain should weigh in favour of a costs order in her favour. Where the husband pursued an unsuccessful argument, the Court is entitled to make an order for costs against him (see In the Marriage of Rouse (1981) FLC 91-073), noting, however, that it is not the intention of the legislation to award costs against a party on each and every occasion that a party is wholly unsuccessful.
Section 117(2A)(f) Any offers in writing
The wife submitted that, during the course of the proceedings, she had made numerous offers to resolve the matter which the husband rejected.
The wife maintained that the husband sought a payment to him of $1,300,000.00 and the Court’s orders fell well short of that amount.
The wife summarised her offers as follows:
(a)1 June 2018: non-superannuation offer of $844,777.00 (plus $40,000.00 by way of partial property settlement), superannuation of $123,914.00 (overall difference of non-superannuation of $95,030.00 and $1,964.00 superannuation);
(b)20 June 2018: non-superannuation offer of $900,000.00 (plus $40,000.00 by way of partial property settlement), superannuation of nil (overall difference of non-superannuation of $150,253.00);
(c)24 October 2018: non-superannuation offer of $1,000,000.00 (plus $40,000.00 by way of partial property settlement), superannuation of nil (overall difference of non-superannuation of $250,253.00); and
(d)18 March 2020: non-superannuation offer of $600,000.00 (not including the sums received by way of partial property settlement payments, although the wife suggested that this would have been some $337,389.00, taking the total figure to $937,389.00. The Court notes, however, that, at the time this offer was made, the husband had only received partial property settlements in the order of some $287,389.00 and it was only at the time of the hearing that the husband had then received further sums, bringing the total of the partial property settlements he received to some $337,389.00), 30% of current balance of superannuation equating to $96,688.00 (overall difference of non-superannuation of approximately $147,642.00 and, approximately, $27,190.00 of superannuation).
The wife submitted that her first offer of settlement, made on 1 June 2018, would have seen the husband receive a cash adjustment of $844,777.00 (in addition to the $40,000.00 he had already received by way of interim property distribution), totalling $884,777.00 in non-superannuation assets, almost $100,000.00 more than he, ultimately, received, and, if he had accepted that offer at the time, he would not have had the expenses connected with the ongoing litigation. Also in that offer was a proposed superannuation adjustment of $123,914.00 and whilst he received more in the orders, it was not of sufficient moment to detract from a submission that if had he accepted this offer, he would have been, substantially, better off, noting that the wife’s superannuation, at that time, was $220,000.00 and at the time of hearing it had increased to $304,709.42.
The husband submitted that the wife’s offer in writing of 1 June 2018 did not provide a balance sheet or equivalent to enable him to determine, on a percentage basis or otherwise, whether that offer, as at that date, would have, if accepted, provided him with a better outcome than was provided for in the Court’s orders. Further, he maintained that it was unclear what amount would be payable to him if the wife did not pay the amount payable, i.e. what was 30% of the net matrimonial assets. The husband maintained that this letter was, therefore, not unambiguous and was so uncertain as not to be taken into account under this factor. He submitted that the wife’s offer, contained in the letter of 20 June 2018, suffered from the same defects.
The wife, in her responsive submissions, stated that the husband’s submission ignores the fact that the parties had agreed on a balance sheet on 28 March 2018 and that this balance sheet had been included in her tender bundle. Further, in relation to the letter dated 1 June 2018, the parties had attended a Conciliation Conference with real estate valuations having been obtained. At that point, there was a variation of $60,000.00 in the value of the parties’ gross asset positions and, although there remained issues in relation to the funds owed to Ms Jordain, the effect of the offer made was readily ascertainable by the husband. Further, using the husband’s own figures, he would have received 27.6% of the property pool (ignoring the $1,000,000.00 owing to Ms Jordain taking into account the debt found in both this Court and the District Court), and the wife’s offer would have constituted a 36% division in his favour. Further, the wife maintained that, in any event, given the substantive agreement on the value of assets, it was up to the husband to ascertain the appropriateness of the offer advanced by the wife. The husband’s rejection of these offers led to the parties incurring significant costs past the date of each offer. In relation to a payment of 30%, the wife maintained that it was not possible to have a dollar amount inserted, as the proposed orders contemplated a sale and she could not have known a sale amount. Further, the wife maintained that, in any event, the husband did not achieve an overall adjustment in his favour of 30% and her offer, in fact, increased the husband’s cash payment by $95,223.00, which impacted the percentage division in his favour.
The husband submitted that the wife’s offer of 24 October 2018 conflated the questions of property settlement and parenting and, in effect, the wife had offered to increase her offer on the basis that the husband would have no contact with the children and, in those circumstances, he submitted that the Court should not rely on that offer in respect of any justification for a costs order, noting also that the offer itself was withdrawn on 18 January 2019. The wife’s responsive submission acknowledged that the offer was made to conclude both financial and parenting matters but that there was no further reference to parenting and the husband failed to clarify that issue at the time with no evidence to indicate that he had sought to accept the offer, in any event.
Further, the husband submitted that the handwritten offer of 18 March 2020 made by the wife’s Counsel was deficient for the purposes of the Act as it made no mention as to what was to occur in respect of Ms Jordain’s claim and did not properly deal with the monies in the controlled monies account.
The wife, in her responsive submissions, maintained that, as contemporaneous offers were taking place between the parties and Ms Jordain, that both the husband and the wife knew, at all material times, that Ms Jordain was to be repaid the full amount of her claim and that, in those circumstances, it was clear what her position was with respect to Ms Jordain. She further maintained that the husband had received, by way of interim property distributions, the sum of $171,730.40 by October 2019. The Court accepts the wife’s submission, in this regard.
The Court accepts that a written offer of settlement is “highly relevant” to the question of costs. Such offers provide litigants with an incentive to settle and thereby avoid or reduce the costs of litigation (see Robinson & Higginbotham (1991) FLC 92-209).
As Justice Nygh stated in In the Marriage of Murray (1990) FLC 92-173, a party cannot reject or ignore a reasonable offer seriously made except at his or her peril as to costs:
“If one considers the issue as a matter of policy, that is, on the basis of what the Parliament's objective and purpose was in enacting the legislation, it is clear that the Parliament wished to encourage settlements thereby reducing the cost of litigation to the parties and to the community. That must mean that a party cannot reject or ignore a reasonable offer seriously made except at his or her peril as to costs. At the same time a party cannot sit tight and postpone a decision as to acceptance until a matter is at the door of the court. By that time an offer which might have been acceptable to the offeror because of savings in time and preparation costs, may have become unattractive. In this case the offer was left open for a reasonable period, was clear and capable of acceptance which would have saved the parties considerable costs....”
In Browne v Green (2002) FLC 93-115, the Full Court of the Family Court of Australia (Kay, Coleman and Warnick JJ) said:
““…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 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.”
The Court accepts that it is important for it to give proper consideration to written offers of settlement which have been made. These offers 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 enable proper consideration to be given to it is something to which “very significant weight” ought normally be given. See Browne v Green (2002) FLC 93-115.
The Court is of the opinion that:
(a)The wife’s offers prior to 18 March 2020 were not expressed with sufficient clarity or precision to enable them to be reasonably capable of acceptance so as to satisfy a justifying circumstance in terms of consideration under this factor. The Court notes that the wife submitted that her “indemnity” costs from 1 June 2018 (being the date of her first offer, as referred to in paragraph 61(a), above) was in the sum of $215,724.48. The wife has provided no breakdown as to how these costs were, specifically, made up.
(b)However, by at least 18 March 2020, the husband had adequate knowledge, at the time of the wife’s offer of that date, as communicated by her Counsel, particularly as to the quantum of the property pool and superannuation available for division between the parties, so as to give proper consideration to the terms of her offer.
(c)The terms of the wife’s offer of 18 March 2020 were not ambiguous or unclear and appeared to be expressed with sufficient precision and were, objectively, capable of being clearly understood. See In the Marriage of Harris (1987) FLC 91-822.
(d)The husband, at the time of the wife’s offer, had available to him legal advice to determine its reasonableness.
(e)While the Court’s orders represent the outcome of an exercise of discretion in respect of the facts ultimately found at hearing, the wife’s offer of 18 March 2020 would have seen the husband receive a greater sum than was ordered by the Court and should have been accepted by him. The Court does not accept the husband’s submission that the parties’ positions vis-à-vis Ms Jordain prevented him from giving appropriate consideration to the wife’s offer.
(f)The wife’s offer dated 18 March 2020, as referred to above, is a justifying circumstances weighing in favour of a costs order. The husband submitted that the non-acceptance of a relevant offer of settlement in writing could not be so exceptional as to warrant an indemnity costs order. The Court accepts the husband’s submission in the circumstances of this matter, in that regard.
Section 117(2A)(g) Such matters as the Court considers relevant
The husband submitted that he has, for some time, suffered from personal and psychological difficulties which have been to his cost, financially and otherwise. These, he submitted, have had an impact on his capacity to run the litigation on his own behalf, as was plain from his affidavit material. He considered, himself, to remain in a vulnerable psychological condition which, he said, would not be improved by the making of costs orders against him. The husband submitted that in In the Marriage of Marinko (1983) 8 FamLR 49, the Court considered that it was not confined to a consideration of the parties’ financial circumstances at the time of judgment and that it may be appropriate to look at the end result of the actual order before deciding whether to award costs. In his case, the husband submitted that this approach would lead the Court to have regard to his significant liabilities referred to in his evidence and take the view that an award of costs would lead to an unjust disparity in the financial circumstances of the parties as, while a disparity in financial circumstances may give rise to an order for costs in favour of a party, it can also be taken into account in the exercise of discretion not to award costs.
The wife’s responsive submissions stated that the husband’s submission, as set out in paragraph 73, above, did nothing to assist his case. Indeed, where he asked the Court to have regard to his financial state, including the monies he owed to third parties, those liabilities are directly attributable to the manner in which he sought to conduct his litigation and his affairs. Further, where money was borrowed to fund litigation at various points past the dates of the various offers made by the wife, it was submitted that those amounts should be excluded because, if the husband had accepted the offers, those liabilities would not have been incurred. Further, the husband’s criminal actions and drug addiction have, doubtlessly, also added to the liabilities that he has incurred. The wife, in those circumstances, submitted that it would be unfair to suggest that such matters should be considered when having regard to the liabilities the husband has said he has now incurred.
The Court is of the view that the wife’s submissions seek to conflate the impact of separate factors under s.117(2A) of the Act.
Accordingly, the Court is of the view that the husband should pay the wife’s costs as and from the date of her offer of settlement of 18 March 2020.
Accordingly, the Court is of the view that, given that the husband was wholly unsuccessful in respect of his defence of Ms Jordain’s claim for the repayment of all of the monies advanced by her to the parties, there is a sufficient justifying circumstance to ground a costs order against the husband in Ms Jordain’s favour.
INDEMNITY COSTS
The wife submitted that whilst the normal course is that, if the Court is persuaded to move from the general rule that each party pay their own costs, it generally considers an order that only party-party costs be payable. The wife sought indemnity costs as and from her first offer of 18 June 2018, although her initial position was for costs to be sought as and from the date of her offer of 18 March 2020, due to the husband’s conduct of these proceedings, referring to the decision in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 where some examples of an indemnity costs order being warranted included the following:
(a)Where it appears that 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 (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] FCA 202; [1988] 81 ALR 397). The Court does not accept the submission that the husband, at the relevant time, should have known he had “no chance” of success.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra). The Court accepts that this does not, generally, apply to the facts of this matter.
(c)Evidence of particular misconduct causing loss of time to the Court and to other parties (see Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)). The Court accepts that this does not, generally, apply to the facts of this matter.
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v Westpac Banking Corporation (unreported Federal Court, 5 March 1993)). The Court accepts that this does not, generally, apply to the facts of this matter.
(e)An imprudent refusal of an offer to compromise. The Court accepts that the wife’s offer of 18 March 2020 grounded a justifying circumstance in terms of the matters set out in paragraph 72, above.
The Court is, however, of the view that there are insufficient circumstances to justify the making of an indemnity costs order in the wife’s favour and that such costs, as she would otherwise be entitled to, should be determined on a party-party basis as and from the date of her last offer of 18 March 2020 for the reasons set out under factor (f), above.
Ms Jordain sought her costs on an indemnity basis. The husband submitted that, in the case of Ms Jordain, even if it was found that he was wholly unsuccessful, this alone would not warrant an order for indemnity costs. Counsel could not find any authority where this consideration of itself would give rise to that order. In the circumstances, the Court is also of the view that an indemnity costs order would not be justified in this matter.
The Court has had regard to the decision of Kohan & Kohan (1993) FLC 92-340 wherein the Full Court of the Family Court of Australia (Strauss, Lindenmayer and Bulley JJ) held:
“The power to order costs on an indemnity basis…
…that in an appropriate case, the Court has a discretion to order costs on an indemnity basis and that such costs may be ordered where they have been incurred under a costs agreement which departs from the usual scale of costs. However, it is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties.
This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstances of each of the parties to the proceedings under sec 117(2A)(a), or perhaps even more as a relevant matter under paragraph (g). The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.
The proper exercise of the discretion
The intent of sec 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… 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…
Indemnity costs orders are still an exception in this and other jurisdictions… Insofar as an unaccepted offer of compromise which exceeds a judgment may justify an order for costs, the general practice in this jurisdiction so far has been to order no more than costs on a party and party basis. Even in cases where there has been dishonest concealment of assets or income… no more than party and party costs have been awarded.
When considering what is just in this case, one must bear in mind that a party who enters into a costs agreement should be warned and must anticipate in this jurisdiction that each party might well have to bear his or her own costs, and that even if an order for party and party costs is made, the difference between party and party costs and costs payable under a costs agreement may consume all, or a substantial part, of the property order. In this particular case the wife changed her solicitors in August 1990. It must then have been apparent to her, or at least to her new solicitors that this might become drawn out litigation and that a rate of costs which amounted to three times the scale, exposed the wife to great risks. If she was willing to assume these risks, it does not seem just to saddle the husband with them.
While the wife submitted that, if the Court finds that her costs should be paid on Court scale costs, rather than by way of an assessment of her party-party costs, her solicitors could then provide a calculation on request of the Court. The Court is of the view that an assessment, as referred to below, can be made by it and, in the circumstances of this matter, costs do not need to be assessed further by the application of the Court’s own scale which would see the proceedings being, further, delayed by the provision of such calculations. The Court, in that regard, also relies on paragraphs 89, 90 and 91, below.
The wife’s costs were particularised (although no invoices were attached) as follows:
Tebbutt Lawyers
Invoice dated
Amount
Particulars
24.3.20
2,468.40
Legal costs and disbursements
6.5.20
2,828.83
Legal costs and disbursements
8.5.20
1,280.00
Legal costs and disbursements
1.9.20
21,740.42
Legal costs and disbursements
8.12.20
9,939.93
Legal costs and disbursements
38,257.58
Counsel’s Fees
25.8.20
18,700.00
27.11.20
7,700.00
15.12.20
18,700.00
45,100.00
Third Party Disbursements
8.4.20
55.00
FCC subpoena filing fee
8.4.20
25.00
Dr G production fee
8.5.20
640.00
FCC hearing fee
21.8.20
1,650.00
H Pty Ltd updated valuation fees
2.10.20
655.00
Hearing fee
3,025.00
TOTAL
86,382.58
The Court notes that the figures referred to in the above schedule exceed the sums referred to in paragraph 4, above, and appear to be based on the wife’s solicitor’s costs, as the wife was seeking indemnity costs. Given that the Court was not provided with invoices, it has been unable to determine what disbursements were included in the figures set out in the invoices as claimed by the wife’s solicitors, Tebbutt Lawyers. In those circumstances, the Court intends to apply a 35% discount to the total of those invoices so as to give an assessment of the party-party cost to which the husband would, otherwise, be obligated to pay. Accordingly, applying that discount, the wife’s costs in respect of her solicitor’s fees are assessed at $24,867.43.
While the Court has, similarly, not been provided with a breakdown of the Counsel’s fees, the Court is of the view that, on any assessment, those fees would, otherwise, be recoverable with the Court applying a discount of 25% to the total of those invoices. Accordingly, applying that discount, the wife’s costs in respect of her Counsel’s fees are assessed at $33,825.00.
Similarly, the disbursements referred to in the above schedule appear, on their face, to be reasonable and the Court will allow the same to be recovered on a party-party basis but without discount. In those circumstances, the Court will allow for the full sum of $3,025.00.
Accordingly, the Court will provide for the husband to pay the wife the costs assessed by it, being the total of the sums referred to in paragraphs 84, 85 and 86, above, being $61,717.43.
In relation to Ms Jordain, she also sought costs as against the husband on an indemnity basis, including the costs of her costs application, in the total sum of $92,977.21. Her costs were calculated as follows:
(a)Legal fees incurred of $88,550.76 which included:
(i)Solicitor’s Fees ($49,020.50);
(ii)Counsel’s Fees ($39,160.00); and
(iii)Disbursements ($370.26).
(b)Costs of the Costs Application of $4,426.45 which included:
(i)Solicitor’s fees to 30 June 2021 ($2,790.70); and
(ii)Solicitor’s fees incurred since filing of affidavit on 22 July 2021 ($1,635.75).
Ms Jordain submitted that, if the Court was of the opinion that a costs order on an indemnity basis was not warranted, then, in the alternative, the Court could make a special costs order in her favour. In that regard, she relied on the decision of the Full Court of the Family Court of Australia in Sfakianakis & Sfakianakis [2019] FamCAFC 54, where it was said at paragraph 10:
“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 falls 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 costs nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a “special costs order””.
The Full Court, went on at paragraph 12 to refer to the decision in Colgate, as well as other authorities, to make it clear that “the categories for making of special costs orders are not closed and may be made whenever the particular facts and circumstances warrant it. That position is reflected in s.117(2) of the Act”.
The Court is of the view that, similarly, it can apply its own assessment to the application of party-party costs to give rise to its assessment as a special costs order as referred to in paragraphs 89 and 90, above. In that regard, the Court has given consideration to the decision of the Full Court of the Family Court of Australia in Braithwaite & Braithwaite [2007] FamCA 468, (Kay, Warnick and Boland JJ ) where it was said:
“We accept the practicality of the submission that, in an appropriate case, a judicial officer should make an order in sum certain, rather than put the parties to the expense and stress of further proceedings to assess costs.”
In those circumstances, the Court assesses the costs recoverable by Ms Jordain as:
(a)Applying the same percentage as referred to in paragraph 84, above, to her solicitor’s costs, she would be entitled to recover $31,863.33.
(b)Applying the same percentage as referred to in paragraph 85, above, to her Counsel’s fees, she would be entitled to recover $29,370.00.
(c)Applying the same percentage as referred to in paragraph 86, above, to her disbursements, she would be entitled to recover $370.26.
Accordingly, the Court will provide for the husband to pay Ms Jordain costs assessed by it, being the total of the sums referred to in paragraph 92, above, being $61,603.59.
COSTS FOR THE COSTS APPLICATION
The Court notes that the wife made an offer of settlement in respect of her costs application in the sum of $50,000.00 on 18 May 2021. This would, in the circumstances, ground a costs order in her favour as the husband will be ordered to pay the wife $61,727.43, which is in excess of the sum offered by the wife and, accordingly, the husband should have accepted that offer. However, there was no quantification of the actual costs sought by the wife in terms of her costs application. In that regard, the Court will allow the sum of $2,000.00 to be paid to the wife, being the amount that the Court considers reasonable in terms of the wife’s preparation of the costs application, noting the hourly rate of her solicitors was $440.00 for a Partner (see Annexure “I” of the wife’s affidavit filed 18 June 2021) and the written costs submissions, noting that the wife’s submissions were prepared by Senior Counsel, given that, by doing so, the need for any further Court events will be obviated. Further, the Court notes that, while the wife received the benefit of a stay, she did so on the basis of material, substantially, maintained by Ms Jordain in terms of the costs referred to in paragraph 96, below.
The Court notes that Ms Jordain also made an offer of settlement in respect of her costs application in the sum of $50,000.00 on 14 May 2021, and repeated by her on 21 July 2021. There was no response by the husband to these offers. Her correspondence put the husband on notice that she had spent the approximate sum of $3,000.00 on her costs application and, if the matter proceeded and she was successful, she would seek a cost order, on an indemnity basis, in relation to any costs application.
This would, in the circumstances, ground a costs order in her favour as the husband will be ordered to pay Ms Jordain $61,603.59, which is in excess of the sum offered by Ms Jordain and, accordingly, the husband should have accepted that offer. Ms Jordain’s costs, in that regard, total $4,426.45. The Court is, however, of the view that those costs should, similarly, be paid on a party-party basis as assessed by it and, applying the same percentage as referred to in paragraph 92(a), above, the husband will be ordered to pay Ms Jordain the sum of $2,877.19.
CONCLUSION
On that basis, the husband will be ordered to pay the wife the sum of $63,717.43. The Court is of the view that this amount is appropriate, reasonable and just in all of the circumstances of this matter.
Further, the husband will be ordered to pay Ms Jordain the sum of $64,480.78. The Court is of the view that this amount is appropriate, reasonable and just in all of the circumstances of this matter.
Time to pay
There has been no time limit sought for any payment of costs. The husband opposed costs and did not submit anything contrary to that position. The Court accepts that there are funds held out of which costs can be paid. The Court is of the view that such costs can be paid within 30 days of the date of orders. Accordingly, the stay of orders 3 and 4 of 30 April 2021, made on 20 May 2021, may be varied to effect the implementation of orders 2 and 3, as set out at the commencement of these reasons and, upon compliance with those orders, the stay orders may, then, be discharged.
I certify that the preceding ninety-nine (99) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Kemp. Associate:
Dated: 28 January 2022
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