Minn & Sayles
[2023] FedCFamC1F 71
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Minn & Sayles [2023] FedCFamC1F 71
File number(s): TVC 748 of 2019 Judgment of: BAUMANN J Date of judgment: 27 March 2023 Catchwords: FAMILY LAW – COSTS – Competing costs applications for costs thrown away of adjourned hearings – Costs to be agreed or assessed on a party and party basis Legislation: Family Law Act 1975 (Cth) ss 79, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 12.08, 12.13, 12.37
Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Kohan & Kohan (1993) FLC 92-340
Minn & Sayles and Ors [2020] FamCA 685
Munday v Bowman (1997) FLC 92-784
Division: Division 1 First Instance Number of paragraphs: 32 Date of last submission/s: 29 March 2022 Date of hearing: On the papers in chambers Place: Townsville Solicitor for the Applicant: Wallace & Wallace Lawyers Counsel for the First Respondent: Mr Fellows Solicitor for the First Respondent: Macrossan & Amiet Counsel for the Second Respondent: Mr Shoebridge Solicitor for the Second Respondent: Barton Family Lawyers Counsel for the Third Respondent: Mr Pack Solicitor for the Third Respondent: S B Wright & Wright and Condie Counsel for the Fourth and Fifth Respondents: Mr Forbes Solicitor for the Fourth and Fifth Respondents Taylors Solicitors Pty Ltd ORDERS
TVC 748 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MINN
Applicant
AND:
MR SAYLES
First Respondent
MR B SAYLES
Second Respondent
MR C SAYLES (DECEASED) (and others named in the Schedule)
Third Respondent
order made by:
BAUMANN J
DATE OF ORDER:
27 March 2023
THE COURT ORDERS:
1.That in respect of the competing applications for costs:
(a)the husband, Mr Sayles, shall pay the costs of Mr B Sayles from 17 February 2021 (save for the costs of Mr B Sayles “thrown away” as a result of the adjournment of the hearing set for 29 November 2021) as agreed and if not agreed, as assessed on a party and party basis;
(b)the husband, Mr Sayles, shall pay the costs of Mr C Sayles from 17 February 2021 (save for the costs of Mr C Sayles “thrown away” as a result of the adjournment of the hearing set for 29 November 2021) as agreed and if not agreed, as assessed on a party and party basis;
(c)the husband, Mr Sayles, shall pay the costs of Ms D Sayles from 17 February 2021 (save for the costs of Ms D Sayles “thrown away” as a result of the adjournment of the hearing set for 29 November 2021) as agreed and if not agreed, as assessed on a party and party basis.
2.That in respect of the application for costs by F Pty Ltd, the application is dismissed save for the recovery of expenses for Court experts and valuations paid by F Pty Ltd on behalf of Mr Sayles, Mr B Sayles, Mr C Sayles and Ms D Sayles where each of these parties shall contribute an equal share of those costs and pay same to F Pty Ltd.
3.That Mr B Sayles, Mr C Sayles and Ms D Sayles shall pay in equal shares the costs of Mr Sayles that were “thrown away” as a result of the adjournment of the hearing scheduled for 17 February 2021 as agreed and if not agreed, as assessed on a party and party basis.
4.That Ms D Sayles shall pay the costs of Mr Sayles and of Mr C Sayles “thrown away” as a result of the adjournment of the hearing scheduled for 29 November 2021, as agreed and if not agreed as assessed on a party and party basis (noting that Mr Sayles makes no application for costs in respect of this adjourned hearing).
5.That any Review Application of any decision made by a Judicial Registrar through the assessment process should, if possible, by listed for determination by the Honourable Justice Baumann.
6.That the parties have leave to re-list the proceedings before Justice Baumann in respect of any issues arising from the interpretation of these Orders.
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 has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
INTRODUCTION
In the midst of a family law property proceedings involving Mr Sayles (“the husband”) and the wife Ms Minn (“the wife”) commenced in June 2019 by the wife in the Federal Circuit Court of Australia (as it was then known) and in somewhat curious circumstances, a Judge of the Federal Circuit Court of Australia on 23 July 2019 ordered that:
[Mr C Sayles], [Ms D Sayles] and [Mr B Sayles] have leave to be joined as third parties to the proceedings.
I say “curious circumstances”, as it is not apparent any formal application to join was made by the third parties although they were represented by the same solicitor when the matter was before the Judge on 23 July 2019, so it is conceivable that an oral application to join the third parties was made by either the husband or wife or even an oral application to intervene was made by the third parties.
All three parties were related to the husband, being:
(a)Second Respondent Mr B Sayles, being the husband’s brother; and
(b)Third Respondent Mr C Sayles, being the husband’s father and
(c)Ms D Sayles, being the husband’s mother.
A family company, F Pty Ltd, was subsequently joined as a further party and named as the Fifth Respondent.
Before the matter was transferred to the Family Court of Australia (as it was then known) on 22 April 2020, the following events of relevance occurred, namely:
(a)On 11 November 2019 Mr B Sayles filed a Response seeking the husband and the wife “reimburse M Company their 1/5th share of the valuation frees paid to N Valuers and P Valuers”. For context, these Court experts were appointed, it seems, pursuant to Orders made by the Court on 23 July 2019;
(b)On 14 November 2019, Judge Demack ordered by consent (Mr O of Counsel appearing for Mr B Sayles, Ms D Sayles and Mr C Sayles) that Mr C Sayles pay to the husband $32,000 plus rates pursuant to a lease dated 31 January 2019; that various items of property be retained and, by Order 7, the husband was to provide “by way of disclosure” to make available a range of documents. It was increasingly apparent that there were existing tensions in the business operations of family companies between the husband and his family Mr B Sayles, Ms D Sayles and Mr C Sayles. It became apparent, in particular, that Mr B Sayles had concerns, reflected by his decision to file a Contravention Application on 28 January 2020, asserting the husband had failed to comply with Orders 7 and 8 of the Order made 14 November 2019, and the earlier Application by Mr B Sayles filed 23 January 2020 seeking the husband be restrained from “accessing the online banking account and withdrawing funds from the “[L Solicitors] Account” and the “Partnership Account”;
(c)On 18 March 2020, in the husband’s amended Response, he joined F Pty Ltd as a party and for the first time articulated in a precise way the basis of his claims against the other parties (see his statement of facts; contentions and claims, being Annexure B to the amended Response). In short, as a result of asserted representations including to the husband and Mr B Sayles that “one day this will all be yours”, and an allegation of an agreed financial and succession plan and common endeavour, the husband made a claim for (see paragraph 39):
[a]a declaration that he is the beneficiary of a constructive trust in respect of the assets and undertaking of [F Pty Ltd] as to one-half alternatively to such proportion as the court determines.
[b]an order that the parents, as shareholders and directors of [F Pty Ltd] issue shares to him in the proportion so determined.
[c]alternatively an order that he asserts and undertaking of [F Pty Ltd] be valued and that F Pty Ltd] and/or the parents be ordered to pay to the Respondent that proportion of the value as determined by the Court.
[d]costs.
(d)On 26 March 2020, Judge Demack made further consent orders that, inter alia, required the third parties to instruct their accountant to prepare updated financials “as best they can be without the information required from the” husband and for the valuer to prepare a valuation “of the entities at the cost of [M Company] in the first instance”. I note M Company was one of the family companies, but was not a party to the litigation;
(e)When the matter was transferred to this Court on 22 April 2020, a dispute arising from an objection filed by the third parties to a subpoena issued by the husband and directed to accountants and financial planners for the family entities remained unresolved. That became the first issue I needed to determine when the first Case Management Hearing before me on Circuit in City P took place finally on 6 August 2020. On that day I ordered the Respondents file defences/Responses to the husband’s pleadings, and gave him leave to file a reply. This occurred and when the matter was adjourned to the December sittings in City P, the Court was advised that all the parties intended to undertake a private mediation in an effort to resolve the matter. On 19 August 2020, I delivered short written Reasons relating to the subpoena objections, in effect indicating that the relevance of the material sought by subpoena would be better understood when the pleadings had been filed and the issues in dispute distilled. As I expressed at [12], my preliminary view to adjourn for further determination of subpoena objection, was shaped by the parties’ decision to:
(i)support the engagement of a single forensic accountant to value a number of entities. I was told a report dated 9 July 2020 had been prepared but not yet filed; and
(ii)Undertake a private mediation.
(see Minn & Sayles and Ors [2020] FamCA 685)
(f)My hope was that, heaving reached this stage of the litigation, all members of the husband’s family might find a way of resolving their essentially commercial differences. Not surprisingly, the wife supported the husband’s position – if for no other reason than a clarification of his legal (or equitable interests) in the family entities, would allow those interests to be included in the pool of interests available for alteration under s 79(4) of the Family Law Act 1975 (Cth) (“the Act”) as between the husband and the wife;
(g)To clear the air somewhat, on 21 September 2021 Mr B Sayles filed a Notice of Discontinuance in respect of his Contravention Application filed 28 January 2020 and his Application in a Case filed 23 January 2020;
(h)On 10 December 2020, the Court was informed all attempts to mediate a resolution had proved unsuccessful, and with the consent of the parties, the issue of the husband’s interest in the family group of entities was listed for a three day discrete hearing before me commencing 3 March 2021, and trial directions were made at that time;
(i)Although the Court on a number of occasions had raised its concern about having one Counsel and instructing firm acting for the Respondents (noting that Ms D Sayles had for some time decided to act on her own behalf), less than three weeks before the scheduled hearing was to commence, on 17 February 2020, the legal representative on the record for the Respondents were given leave to withdraw and it was, as a consequence, necessary for the trial dates to be vacated to allow separate representation to be secured. On 9 April 2021, I again listed the matter for trial commencing 14 July 2021, however again I was urged to vacate the hearing for reasons which I explain later in the these Reasons. On 12 August 2021 I listed the discrete hearing to commence on 29 November 2021;
(j)On 29 November 2021, I was ready to commence the hearing, however on the application of the husband the trial was adjourned on the basis that Ms D Sayles, having finally decided to engage legal representation, filed her material outside the directed trial timetable. Perhaps to again elevate the hopes of the matter resolving amongst the husband and his family, I was informed that mediation had been scheduled before a Senior Counsel for 27 January 2022. In an effort to grasp the opportunity to determine the complex yet important discrete issues, I still listed the matter for hearing commencing on 14 February 2022;
(k)To my surprise, whilst the matter was not resolved by consent at mediation, on the first morning of trial Mr Fellows of Counsel for the husband informed the Court that the husband discontinued his action against the third parties. Directions were made for the filing of written submissions as to costs, which I will detail next in these reasons. Sadly, the Court has also been informed that:
(i)Mr C Sayles and Ms D Sayles were now parties to their own family law dispute as a result of the breakdown of their long relationship; and
(ii)proceedings between the family members (including I understand the husband), are now being conducted in the Supreme Court of Queensland; and
(iii)in 2022, Mr C Sayles passed away. Orders made by the Supreme Court in late 2022 suggest a limited grant of administration has been made to solicitor Ms Q, and the terms of the orders indicate a dispute about the deceased’s Wills and his capacity may be arise.
As I now turn to the detailed submissions as to costs, I regrettably observe that my decision seems likely to be the least important of the unresolved disputes that have engulfed the Sayles family.
THE PARTIES’ POSITIONS IN SUMMARY
The Second Respondent Mr B Sayles
Mr B Sayles, by Application filed 28 February 2022, seeks an order in these terms:
1.Pursuant to section 117(2) of the Family Law Act 1975, the First Respondent pay the Second Respondent’s costs in these proceedings on an indemnity basis in the sum of $92,897.48.
2.The First Respondent pay the Second Respondent’s costs of this application fixed at $4,400.
In support of the Application I have read and considered:
(a)the affidavit of Mr B Sayles filed 28 February 2022;
(b)the affidavits of Mr B Sayles’s solicitor Ms R filed 28 February 2022 and 29 March 2022; and
(c)written submissions filed 1 March 2022 and written submissions in reply filed 29 March 2022.
Mr B Sayles contends and submits that:
(a)he seeks an order for costs as a combination of:
(i)the husband’s conduct in abandoning the Application on the first day of trial set for discrete hearing;
(ii)the husband’s rejection of “reasonable offers to settle that Application”; and
(iii)the lack of merit in the Application from the time it was initiated.
(b)for the reasons articulated at paragraphs 10 to 21, costs should be assessed on an indemnity basis;
(c)an analysis of the relevant s 117(2A) factors creates circumstances which justify an order for costs (paragraphs 32 to 46);
(d)for the reasons articulated at paragraphs 47 to 52, the costs order should be quantified at $92,896 and payable by way of a lump sum costs order, or in the alternative Mr B Sayles seeks an order for costs at the scale set out in the Rules of the Federal Circuit Court of Australia as it then was until 22 April 2020 and at the scale set out in the Rules of the Family Court of Australia from then on.
The Third Respondent Mr C Sayles
Mr C Sayles seeks the following orders:
1.That the First Respondent pay the Third Respondent’s costs on a standard basis from the [p]roceedings to 26 November 2021.
2.That the First Respondent pay the Third Respondent’s costs on an indemnity basis from 27 November 2021 to 14 February 2022.
3.Alternatively to [2]
(a)That the Fourth Respondent pay the Third Respondent’s costs thrown away on a standard basis for the hearing on 29 November 2021 (“the hearing”).
(b)That there be an account taken of the Third Respondent’s entitlements to indemnify costs for the hearing and the First Respondent shall pay the Third Respondent any shortfall between standard costs assessed in accordance with 3(a) and the quantum of indemnity costs for the hearing.
(c)That the First Respondent pay the Third Respondent’s costs on the indemnity basis from 27 November 2021 to 14 February 2022.
In support of the Application, I have read and considered:
(a)the affidavit of Mr C Sayles filed 18 August 2021;
(b)the affidavit of Mr C Sayles’ solicitor Mr S filed 28 February 2022; and
(c)the submissions filed 28 February 2022.
Mr C Sayles contends and submits that:
(a)he seeks an order for costs as a combination of:
(i)an offer to settle made 19 November 2021 not being accepted by the husband – an offer that the husband discontinue his claim with each party to bear their own costs; and
(ii)the decision by Mr Sayles to abandon his claim.
(b)an analysis of the relevant s 117(2A) factors creates circumstances which justify an order for costs (paragraphs 21 to 26);
(c)for the reasons articulated at paragraphs 18 to 20, costs should be calculated on an indemnity basis from 26 November 2021 (the date the offer expired); and
(d)from the evidence of Mr S, I should accept that:
(i)the firm T Solicitors represented all three parties (and engaged Mr O of Counsel) from the time of joiner until 17 February 2021;
(ii)from on or about 15 May 2021, Mr C Sayles engaged his current lawyers who retained Mr Pack of Counsel.
(iii)the discrete hearing listed to commence on 14 July 2021 was unable to proceed because Mr C Sayles “was experiencing numerous health concerns of a continuing nature”;
(iv)on the first day of the final hearing set to commence on 29 November 2021, Mr Sayles made an application for an adjournment because of the late filing of an affidavit by Ms D Sayles (comprising of 823 pages of annexures); her defence on 26 November 2021 and a large tender bundle). Costs were reserved;
(v)on the first day of the trial set to commence on 14 February 2022, Mr Sayles abandoned his claim against all three parties;
(vi)the fees and outlays (such as valuation fees and Counsel fees) incurred when the Respondents were represented by the same firm total $161,562 and were paid by F Pty Ltd;
(vii)additionally, when separately represented, Mr C Sayles has incurred fees totalling $76,424.
(viii)on 19 November 2021, Mr C Sayles made an offer in writing to the husband that if the husband discontinued the proceedings against his father, he would bear his own costs. The offer was not accepted and expired on 26 November 2021; and
(ix)the costs incurred by Mr C Sayles after the offer was made were $59,203 of which sum an amount of $25,760 “where thrown away” by reason of the adjournment on 29 November 2021.
Fourth Respondent Ms D Sayles and Fifth Respondent F Pty Ltd
These Respondents, by Application in a Proceeding filed 28 February 2022, seek the following orders:
1.Pursuant to section 117(2) of the Family Law Act 1974 (Cth), the First Respondent ([Mr Sayles]) pay the Fourth Respondent’s ([Ms D Sayles]) and Fifth Respondent’s ([F Pty Ltd]) costs in these proceedings on an indemnity basis fixed in the sum of $129,932 in the case of the fourth respondent and $173,224.31 in the case of the fifth respondent.
2.Alternatively the First Respondent ([Mr Sayles]) pay the Fourth Respondent’s ([Ms D Sayles]) and Fifth Respondent’s ([F Pty Ltd]) costs in these proceedings on an indemnity basis fixed in the sum of $181,221 in the case of the fourth respondent and $31,357 in the case of the fifth respondent.
3.Alternatively, pursuant to section 117(2) of the Family Law Act 1974 (Cth), the First Respondent ([Mr Sayles]) pay the Fourth Respondent’s ([Ms D Sayles]) and Fifth Respondent’s ([F Pty Ltd]) costs in these proceedings on a party to party basis, in an amount to be agreed, or failing agreement, an amount determined by way of assessment.
4.The first respondent pay the fourth respondents costs of this application fixed at $4,000.
5.Such other Orders as this Court shall deem necessary.
In support of that Application, I have read and considered:
(a)the affidavits of Ms D Sayles sworn 26 November 2021 and 28 February 2022;
(b)the affidavit of Mr U filed 28 March 2022; and
(c)the written submissions filed 28 February 2022.
These Respondents contend and submit that:
(a)Ms D Sayles engaged her current solicitors on 8 November 2021 and until some financial statements were filed on 24 November 2021 (in respect of V Pty Ltd and the partnership between the husband, Mr B Sayles and Mr C Sayles as trustees for their respective family trusts) “no party had filed any accounts going to the issues in dispute in the discrete hearing”;
(b)when the trial was due to commence on 29 November 2021, the husband’s case “was in disarray” and the husband “was still confused as to whether his case was one brought as a joint endeavour constructive trust or a trust based on promissory estoppel”, and it is relevant that the husband consented to an order made on 29 November 2021 that he file an amended statement of facts, which he did later than directed, on 7 February 2022. It is alleged that the husband’s amended statement of facts “was still inchoate” and criticisms are made of the husband’s case in the submissions at paragraphs 33 to 35 (statement of claim) and the husband’s evidence at paragraphs 36 to 43;
(c)I should infer that the husband’s case was “a bluff” and had little prospects of success, demonstrated by the husband discontinuing the case on the first day set for the trial of 14 February 2022;
(d)in terms of s 117, the husband was wholly unsuccessful in the proceeding and in addition his conduct in continuing the proceeding; failing to properly articulate his case in the statement of facts and when amended, doing so outside of the time directed, count against him;
(e)the husband’s case was brought in wilful disregard of known facts and clearly established law sufficient to attract the award of indemnity costs;
(f)as the wife supported the husband’s position and “having thrown in her lot with the first respondent against the rest of the family no consideration should be given to the potential effect on the Applicant” (wife) if the husband is ordered to pay costs;
(g)it is further contended that:
(i)the indemnity costs incurred by F Pty Ltd on behalf of the Respondents up to January 2020 was $47,798;
(ii)the quantum of costs incurred by F Pty Ltd on behalf of itself and the other Respondents after January 2020 was $125,426; and
(iii)Ms D Sayles incurred another $129,932 on her own account.
(h)if F Pty Ltd is awarded costs incurred of $173,224 on this “paid” basis then no costs should be awarded to the Second and Third Respondents on account of the costs paid on their behalf by F Pty Ltd. However, if Mr B Sayles and Mr C Sayles are awarded costs, then Ms D Sayles should be awarded indemnity costs fixed at $181,221 which represents one-third of the costs paid by the F Pty Ltd (i.e. $15,933) before it was joined; one quarter of the costs paid by F Pty Ltd after it was joined ($31,357) plus the party party estimate of $4,000 for this costs application; and
(i)on this scenario, F Pty Ltd should be awarded indemnity costs fixed at $31,357 being it’s one quarter share of the costs it paid after being joined.
MR SAYLES’ POSITION
As would be anticipated, Mr Sayles’ written submissions filed 22 March 2022 take issue with many of the assertions raised in the submissions of the other Respondents. I have read and considered those submissions which contend that:
(a)in challenging the need for separate representation for the Respondents, the first general submission as articulated at 1.1 of the written submissions is that there is “a commonality of approach throughout the material” of the Respondents. F Pty Ltd was paying the costs of Mr B Sayles (even though not a shareholder of F Pty Ltd) as well as the costs of Mr C Sayles and Ms D Sayles up to at least February 2021 (when a conflict is said to have arisen). Even when Mr C Sayles and Ms D Sayles determined to end their marriage, that led to no discernible real difference in approach they each took to the case. If parties with a commonality of interest chose to be separately represented, claims for legal costs, especially indemnity costs, should be carefully scrutinised;
(b)the trial was adjourned three times “through no fault of Mr Sayles” as follows:
(i)17 February 2021 because of the alleged conflict of interest;
(ii)9 July 2021 because of the ill health of Mr C Sayles; and
(iii)29 November 2021 because of the late entry by Ms D Sayles into the case.
(c)the lack of particularity in the various invoices supplied by Mr Sayles’ opponents makes it difficult to determine with any precision the costs that may have been incurred by those parties by the fact of those three adjournments, some examples of this asserted lack of particularity are set out at paragraphs 2.2; 2.3 and 2.4 of the submissions;
(d)Mr Sayles is entitled to his costs, thrown away, for the adjournment on 17 February 2021 (estimated on a party and party basis at $4,147) and for the adjournment on 29 November 2021 of $8,547), which amounts should be off-set against any order made for Mr Sayles to pay costs;
(e)whilst accepting sensibly that the husband “has an exposure to a standard order for costs” (paragraph 4.4), it is asserted at paragraph 4.8 that:
…there was nothing so unusual or controversial concerning [Mr Sayles’] commencement of his claim and the pursuit of it. It was a reality that, as pleaded, there was a long-standing cooperative arrangement between family members, that [Mr Sayles] had worked in the family business from his teenage years (apart from a period of apprenticeship) and joint endeavour occurred concerning the establishment of other assets including –
[a]the partnership of trusts referred to in the pleadings in which [Mr Sayles] (and [Ms Minn]) have a one-third interest as beneficiaries.
[b][V Pty Ltd] in which [Mr Sayles] had 10 out of 32 shares.
(f)by reference to the overarching principle expressed in Rule 12.08 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) for legal fees to be fair, reasonable and proportionate, the combined claim for legal costs (not valuation fees or the like) by Mr B Sayles, Mr C Sayles and Ms D Sayles of $291,000 for the period April 2021 to February 2022 is significantly greater than the claimed fees by the solicitors acting for all the Respondents from July 2019 to February 2021 of $173,224, and is therefore unreasonable;
(g)as valuations obtained have an “ongoing benefit to all parties”, those expenses should be excluded from any claim for costs;
(h)in respect of other matters concerning the costs of Mr B Sayles, it is submitted that:
(i)it was open for Mr B Sayles to apply to be removed from the proceedings on the basis that he had disclaimed any interest in F Pty Ltd or against his parents, and to continue as a witness; and
(ii)criticisms of the calculation of indemnity costs (particularly where Mr B Sayles engaged his solicitors on a fixed fee arrangement) are detailed at paragraphs 5.2 to 5.6 of the submissions.
(i)in respect of other matters concerning the costs of Mr C Sayles, it is submitted that without a disclosure of any costs agreement, any claim for indemnity costs must fail (r 12.13(4)). Because no calculation of costs on a standard basis to 26 November 2021 is made, it is not possible to compare the claim for indemnity costs from 26 November 2021 with a comparative base;
(j)in respect of other matters concerning the costs of Ms D Sayles, if the Court were to accept the quantification of $129,932 this, it is submitted, is an extraordinary level of legal fees in a short period of time and suggests an “enhanced costs”, because of the last-minute need by Ms D Sayles to “scramble” to be ready for trial. Similar criticisms are advanced in the written submissions at paragraphs 7.4 to 7.7, about lack of costs agreements and lack of particularisation;
(k)in respect of other matters concerning the costs of F Pty Ltd, it is contended that:
(i)excluding costs of valuations, the indemnity claim up until the prior lawyers withdrew amounts to about $117,988;
(ii)the evidence of invoices annexed to Ms D Sayles’s affidavit would suggest F Pty Ltd was never a client of the firm;
(iii)where no costs agreement for F Pty Ltd is offered in evidence, it should not be accepted as Ms D Sayles deposes, that when costs agreements were entered into in 2019 with the initial solicitors and thereafter with the current firm, that F Pty Ltd had some separate liability. F Pty Ltd was not a party to the proceedings when the original costs agreement was entered into; and
(iv)Ms D Sayles’s tender bundle (at paragraph 556) appears to suggest F Pty Ltd has claimed legal costs paid on behalf of Mr B Sayles, Mr C Sayles and Ms D Sayles as an express deductable against assessable income and no loans are revealed as owed by Mr B Sayles, Mr C Sayles and Ms D Sayles for payments made by the company on their behalf.
(l)In concluding submissions, Mr Sayles contends this case does not demonstrate a basis for making an indemnity costs order and it is not possible, if any indemnity costs order is made, how the quantum can be fairly and reasonably assessed on the evidence offered to the Court. The cessation of the prior representation (collectively) of Mr B Sayles, Mr C Sayles and Ms D Sayles by T Solicitors inevitably meant that some of their individual legal costs were a repetition of work that had been done before;
(m)Finally, at paragraph 9.6, Mr Sayles’s position is asserted as follows:
9.6 For all these reasons:
[a]There should be no order for costs on an indemnity basis made against [Mr Sayles].
[b]Any assessment of standard costs for [Mr B Sayles], [Mr C Sayles] and [Ms D Sayles] should be made specifically based on excluding costs:
(i)That are a repetition of work undertaken by [T Solicitors]; and
(ii)thrown away by trial adjournments.
[c][Mr Sayles] should be obligated to pay only 50% of resulting assessments.
[d]And such resulting assessment should be reduced by [Mr B Sayles], [Mr C Sayles] and [Ms D Sayles] offsetting an equal share of the amount $4,147 referred to in paragraph 3.2[a] and by [Ms D Sayles] being obliged to separately off-set the amount of $8,547 referred to in paragraph 3.2[b].
[e]Having regard to [Mr Sayles’] ownership of assets which are tied up in family business any order for costs should be made on the basis that it is to be paid by him or offset from the value of his share in [V Pty Ltd].
REPLY SUBMISSIONS
On 21 March 2022, Ms D Sayles filed submissions in reply to the submissions relied upon by her husband Mr C Sayles, and contended that:
(a)although Ms D Sayles conceded she filed on 26 November 2021 (that is the Friday before the trial was to begin on the following Monday) an affidavit with 823 pages of annexures, she says she did so “to close the yawning gap in the evidence before the Court”. A concession is made (at paragraph 5) that Ms D Sayles can be criticised for not doing so earlier but such criticism should also rest upon the husband. It is asserted that the husband’s “failure to do so meant that he was palpably unready to proceed on 29 November and for that reason he should pay the costs of the adjournment”;
(b)alternatively, all parties having contributed to the situation on 29 November 2021, the parties should bear their own costs thrown away by reason of the adjournment.
On 28 March 2022, Ms D Sayles and F Pty Ltd filed submissions in reply to the submissions relied upon by the husband and contended that:
(a)the reply submissions “are remarkable” for the failure to “rebut” submissions that Mr Sayles’ case was hopeless and bound to fail and to “acknowledge” it was Mr Sayles who called for the other Respondents to be separately represented;
(b)because Mr Sayles urged the other Respondents to obtain separate representation “on pain of adverse costs orders”, Mr Sayles cannot complain that they did so. It is alleged he is “estopped from doing so”. The fact that different offers were made at different times shows the Respondents were not ad idem in their approach (paragraph 6);
(c)Mr Sayles’ claim for costs thrown away should not include the item for Counsel drafting an amended statement of facts;
(d)Other submissions relate to criticisms made of quantifying costs, which for reasons explained below I do not need to deal with at this time;
(e)In response to the submission by Mr Sayles that F Pty Ltd has no costs agreement, at paragraph 13, it is submitted that as Mr C Sayles and Ms D Sayles could not agree (as the Directors and equal shareholders of F Pty Ltd it was “entirely proper for [Ms D Sayles]… to seek costs on behalf of [F Pty Ltd]”;
(f)It is submitted there is no evidence there was “any repetition of work done by [T Solicitors]”. It is also contended (at paragraph 14) that “[Ms D Sayles, Mr C Sayles and Mr B Sayles] should not be penalised for trying to keep costs down and then accepting [Mr Sayles’] requests for separate representation when a conflict of positions emerged”.
Reply submissions by Mr B Sayles filed 28 March 2022 broadly adopt the submissions in reply referred to above by Ms D Sayles and F Pty Ltd.
PRINCIPLES TO BE APPLIED
Whilst s 117(1) of the Act provides for parties to bear their own costs of proceedings, if the Court is satisfied that circumstances exist which justify an order for costs, then the Court may make such order as to costs, as the Court considers just (s 117(2)).
In considering what order (if any) should be made under s 117(2), the Court shall have regard to the factors set out in s 117(2A), as are relevant. I have referred to some of the evidence around those considerations above.
In respect of the proceedings relating to the preparation for and necessary representation in respect of the discrete hearing, which relate to the dispute between the husband and his family as detailed above, I am satisfied that circumstances do exist to justify an order for costs, in particular because, at least:
(a)the husband, by electing on 14 February 2022 to discontinue proceedings, should be deemed to have been wholly unsuccessful; and
(b)offers to settle the discrete issue were made by the third parties as set out above, and should have been accepted by 26 November 2021, in which case the costs of the mediation in January 2022 and the further preparation for trial and retention of Counsel (this incurring additional fees) would have been avoided.
As the submissions above demonstrate, the more complex issues that arises for determination include:
(a)should an order for indemnity costs be made;
(b)if an order for indemnity costs is to be made, for what period of the litigation (if not the whole period) should it be applied;
(c)how should the costs thrown away by the trial being adjourned in February 2021 and November 2021 be dealt with;
(d)is the husband “estopped” from now complaining or objecting to the fact of separate representation for each party, when he had raised the issue;
(e)how should the participation of F Pty Ltd in the proceedings, including as the financer for the costs of the parties for some of the proceedings, shape the claim for costs by F Pty Ltd;
(f)when all the “boundaries” are clarified in respect of the issues now identified, is the Court in a position, on the evidence at this time, able to make an assessment of costs, or should a process of assessment of costs (if agreement cannot be reached) be undertaken; and
(g)when should any costs liability be paid.
I discuss these multiple issues next.
DISCUSSION
Before dealing with the issues identified at paragraph 23 above, I am not satisfied from the submissions made, some which lack particularity, that the Court is able to make, nor should a judge make, a detailed quantification of the costs, so as to be able to decide that quantum or to assess a fixed amount.
As a result, regrettably, the process prescribed for assessment of costs in the Rules for each claim will have to be undertaken. I appreciate this will, of itself, involve further costs by providing an itemised cost account; then filing a Notice Disputing Itemised Costs Account under Rule 12.37(3); then having the various costs disputes determined after a Judicial Registrar fixes a first court date under Rule 12.39. I accept it is not possible for parties to have rights of review extinguished.
It means that these parties should, now that I have, by these Reasons, determined some of the parameters of the cost dispute, use every reasonable endeavour to settle the quantification of costs before engaging in the exercise available under the Rules.
I now make the following findings:
(a)Although the Respondents were joined into the property dispute between the husband and wife, some orders were made which related to the commercial relationship between the husband and his family – particularly the order made for Mr C Sayles to pay monies to the husband (14 November 2019) and orders relating to the husband’s engagement in the business – which, at one stage, Mr B Sayles decided was, through non‑compliance, a basis for a Contravention Application against the husband. This demonstrates to me that the dispute that all the family engaged in was much wider than the discrete issue of the husband’s interest in family entities;
(b)The issue of the parties considering separate representation was raised by the Court with their Counsel Mr O as early as the initial subpoena objection hearing which was, for reasons delivered, adjourned. It is, as a result, difficult to understand why it took the parties until February 2021 to accept there were potential conflicts in their respective positions. It was obvious, even before Mr C Sayles and Ms D Sayles commenced formal family law proceedings themselves. The husband was entitled to put the Respondents on notice, as he did, and their ultimate decision to seek separate representation creates no “estoppel” issue at all;
(c)Although F Pty Ltd was joined as a party, it seems that the only directors of that entity (Ms D Sayles and Mr C Sayles) were not always in agreement about the company’s position. I find, rather than a party taking an active and separate role in the proceedings, F Pty Ltd was the vehicle that had funds available to pay expenses for all the family (including the husband) for the valuation and expert opinions. In this sense, F Pty Ltd acted as a financier;
(d)Ms D Sayles, as one of the directors, took on the role of also representing the interests of F Pty Ltd, and in circumstances where she elected to remain unrepresented after the joint lawyers withdrew on 17 February 2021, I find F Pty Ltd was also effectively unrepresented between 14 February 2021 and 8 November 2021, when Ms D Sayles engaged her new lawyers. As a result, Ms D Sayles and F Pty Ltd has no claim for costs in that earlier period;
(e)Mr Forbes asserts strongly that the husband’s claims were effectively doomed to fail, and had never been precisely or adequately pleaded. He says that the confusion in the husband’s claim is also demonstrated by the husband filing an amended statement of facts and contentions in February 2022. However, whilst the “family” were engaging in securing valuations and attending at least two formal mediations; at no time was any application made by any of the Respondents to have the husband’s claim summarily dismissed – an option open to them. I am not satisfied that the husband’s case was doomed to fail or had no reasonable prospects. Since the litigation on this discrete issue in this Court ceased on 14 February 2022, the evidence is that the parties have moved their dispute to the Supreme Court of Queensland for resolution;
(f)I regard the offer made to the husband on 19 November 2021 as a significant issue. The husband ought to have accepted the offer and had until 26 November 2021 to do so. By discontinuing his application against the Respondents on 14 February 2022, it is apparent he should have accepted the offer. The offer would have ended proceedings against all Respondents, but his delay in doing so meant that all parties (including Ms D Sayles, who by that time had engaged lawyers to prepare for the hearing on 29 November 2021) had to continue to prepare for the hearing of both 29 November 2021 and then 14 February 2022. This decision of the husband not to accept the offer made is, of itself, a basis to justify costs being awarded against the husband, at least from that date (19 November 2021);
(g)The payment by F Pty Ltd of valuation and expert fees should be shared equally between the husband, M B Sayles, Mr C Sayles and Ms D Sayles. They have all benefited from that advice, and clearly the opinions were used during the unsuccessful mediations. I again find that F Pty Ltd acted as a financier for those expenses, and although the entity should be reimbursed by the four parties mentioned, I see no reason why F Pty Ltd should have to pay a share of the expenses in these circumstances;
(h)The ill-health of Mr C Sayles that caused the hearing set for 9 July 2021 to be adjourned no doubt caused the other parties to incur costs “thrown away”. However, I would not visit upon Mr C Sayles (now his estate) any obligation for the parties’ costs thrown away for that adjournment. However, I would allow the husband to seek costs on a party and party basis for the adjournment on 17 February 2021, when the other Respondents elected to fund alternate and different representation. The parties, Mr B Sayles, Mr C Sayles, and Ms D Sayles equally should bear that offset;
(i)The adjournment on 29 November 2021 was entirely due to the actions of Ms D Sayles in not seeking representation after 14 February 2021 until 8 November 2021. Although credit may be afforded her solicitors for the effort in distilling the issues for the purpose of Ms D Sayles’s material, the fact remains that it was filed late; raised some new issues; was somewhat oppressive in length, and it was reasonable for the husband to seek an adjournment. He seeks his costs of the adjournment “thrown away” and he should receive them on a party and party basis calculated under the appropriate scale. Mr C Sayles also seeks his costs “thrown away”. By this time, Mr C Sayles and Ms D Sayles were also in conflict, however, like Mr B Sayles (who seeks no award of costs against his mother Ms D Sayles for that event), I am not persuaded Mr C Sayles should get an offset of costs. As I have repeatedly observed, essentially Mr B Sayles, Mr C Sayles and Ms D Sayles were united in their position that the husband’s claims for a further interest in various family entities should be dismissed. It is trite, of course, to observe that any further interest in the family entities are awarded to the husband (noting he already held various interests in entities, including partnerships and trust) would diminish the interests of the other Respondents;
(j)Although, when a third party is ensnared in a family law dispute, it is not uncommon for the standard rule of s 117(1) of the Act (for each party to bear their own costs) to be challenged, I regard this case to be a little different. The engagement of the parties, Mr B Sayles, Mr C Sayles and Ms D Sayles and their participation and, in some ways, cross claims, gave the “discrete issue” some added context, such that, in my assessment I am not satisfied that in the period from their joinder to 17 February 2021, that circumstances exist that justify departure from the obligation imposed by s 117(1) of the Act. Thereafter, and for the following reasons, I am satisfied in some respects circumstances as already identify do justify an order for costs payable by the husband.
(k)I find that the husband should pay cost as follows:
(i)In respect of Mr B Sayles, from 17 February 2021, offset by one third of the costs thrown away for the adjourned hearing of 17 February 2021;
(ii)In respect of Mr C Sayles, from 17 February 2021, offset by one third of the costs thrown away for the adjourned hearing of 17 February 2021;
(iii)In respect of Ms D Sayles, from 17 February 2021 offset by:
(A)One third of the costs thrown away for the adjourned hearing of 17 February 2021; and
(B)the costs thrown away for the adjourned hearing of 29 November 2021.
(iv)In respect of F, for the reasons given, whilst reimbursement to that entity for costs for experts paid by it on behalf of all parties should occur, I am not satisfied on the material offered to the Court at this time that F Pty Ltd’s costs were incurred separately from those incurred by Ms D Sayles (as the director who was actively – from 8 November 2021 – effectively representing any separate interests of F Pty Ltd, if existing). I accept that if F Pty Ltd is able to demonstrate separate, definable interests existed that require legal costs in addition to those incurred by Ms D Sayles were actually and reasonably incurred, a claim for costs may exist. In an endeavour to ensure no “double dipping” with costs incurred by Ms D Sayles, F Pty Ltd, will need to assess its position before filing, an itemised costs account;
(v)I am invited, if the husband is found to have a liability for costs, that in part or whole, costs be assessed on an indemnity basis. The authorities in this jurisdiction relating to the circumstances when costs should be assessed on an indemnity basis following the oft quoted decision of Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 where it was necessary to identify some “special or unusual feature”, are well known (see Kohan & Kohan (1993) FLC 92-340; Munday v Bowman (1997) FLC 92-784 at 84,660). I am not satisfied that the circumstances in this case are so exceptional so as to order costs be assessed on an indemnity basis.
CONCLUSION
If I felt I was in a position, having determined the parameters of the costs orders, to properly assess and fix costs other than arbitrarily, I would have done so. The material currently does not allow me to do so.
I accept, even though it appears the parties are engaged in litigation in the Supreme Court of Queensland, they would prefer not to engage in more costs and delay in preparing an itemised cost account under the appropriate scale, however, it cannot be avoided unless the parties are able to reach a commercial resolution along that assessment pathway.
I make the orders which appear at the commencement of these Reasons.
So as to try and create efficiency, regretting my delay in publishing these Reasons to the parties, but anticipating, in view of the continuing Sayles family conflict, any review of a Registrar’s decision along the assessment pathway should ideally be listed for me, as a recognition of my understanding of the history of the dispute generally.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 27 March 2023
SCHEDULE OF PARTIES
TVC 748 of 2019 Respondents
Fourth Respondent
MS D SAYLES
Fifth Respondent:
F PTY LTD
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