Nada & Nettle (Costs)
[2014] FamCAFC 207
•28 October 2014
FAMILY COURT OF AUSTRALIA
| NADA & NETTLE (COSTS) | [2014] FamCAFC 207 |
| FAMILY LAW – APPEAL – COSTS – Where the appeal was wholly unsuccessful and dismissed – Where the respondent sought indemnity costs against the appellant – Where a Calderbank offer was rejected – Whether there are circumstances to warrant a departure from the usual rule of ordering party and party costs – Where there are no circumstances to warrant a departure from the usual rule. |
Family Law Act 1975 (Cth): ss 117
Calderbank v Calderbank [1975] 3 All ER 333
Colegate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Kohan and Kohan (1993) FLC 92-340
Lenova & Lenova (Costs) [2011] FamCAFC 141
U v U (2002) 211 CLR 238
Yunghanns v Yunghanns (2000) FLC 93-029
| APPELLANT: | Ms Nada |
| RESPONDENT: | Mr Nettle |
| FILE NUMBER: | CAC | 66 | of | 2011 |
| APPEAL NUMBER: | EA | 174 | of | 2013 |
| DATE DELIVERED: | 28 October 2014 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | May, Ainslie-Wallace & Austin JJ |
| HEARING DATE: | In chambers by submissions |
| LOWER COURT JURISDICTION: | Federal Circuit Court |
| LOWER COURT JUDGMENT DATE: | 31 October 2013 |
| LOWER COURT MNC: | [2013] FCCA 1677 |
REPRESENTATION
| SOLICITOR FOR THE APPELLANT: | Ogilvie Jennings |
| SOLICITOR FOR THE RESPONDENT: | Infinity Legal |
Orders
The appellant mother pay the respondent father’s costs of and incidental to the appeal as agreed and in default of agreement, as assessed. The appellant mother pay such costs within 42 days of agreement or assessment.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Nada & Nettle (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 174 of 2013
File Number: CAC 66 of 2011
| Ms Nada |
Appellant
and
| Mr Nettle |
Respondent
REASONS FOR JUDGMENT ON COSTS
On 16 July 2014 the Full Court dismissed the appeal of Ms Nada (“the mother”) against orders of Judge Neville whereby she was ordered to relocate the residence of her child with Mr Nettle (“the father”) from Tasmania to regional New South Wales.
His Honour’s orders came about because in July 2012 the mother, without notice to the father, took the child from the regional New South Wales where she had previously been living, to live in Tasmania. The mother’s actions remained undiscovered until March 2013. For a significant part of that time the mother maintained the appearance of living in regional New South Wales and afforded the father time with the child in that area. She accomplished this by flying with the child from Tasmania to Sydney airport where she was collected by her parents, driven to the area in regional New South Wales where they too lived and then to the place designated for the child to be collected by the father so that they could spend time together.
Although the proceedings initially brought by the father in the Federal Circuit Court were to have the mother dealt with for contravening the orders that the child spend time with the father, when the mother’s relocation was revealed, the issue agitated before his Honour principally concerned where the mother and the child would live.
The mother’s appeal was unsuccessful and dismissed. In the usual way, at the conclusion of the appeal hearing we sought the parties’ submissions on the costs of the appeal to save the parties the time, trouble and expense of making those submissions after judgment was delivered. It was then indicated that the father would prefer those submissions to abide the outcome of the Full Court’s decision. Thus when making the order dismissing the mother’s appeal, we further made orders for the filing and exchange of costs submissions between the parties. It was agreed that we would consider those submissions in chambers without the need for further appearances.
Although an Independent Children’s Lawyer was appointed in the matter and appeared at the hearing before the trial judge, there was no appearance for the Independent Children’s Lawyer on the appeal.
The costs application
The father sought an order that the mother pay his costs of and incidental to the appeal up to and including 11 March 2014 on the usual basis and, thereafter, that the mother pay his costs an indemnity basis. The mother opposes the application and submits that the Court should make no order as to costs.
The starting point for a discussion of costs is s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) and the guiding principle of that section is each party to proceedings under the Act should bear his or her own costs unless the Court is of the opinion that there are circumstances that justify the making of a costs order (s 117(2)). Where the Court is of the opinion that the circumstances justify the making of a costs order, s 117(2A) sets out matters to which the Court should have regard in determining what, if any, order should be made.
The matters relevant to a consideration of costs in this matter referred to in
s 117(2A) are; the financial circumstances of each of the parties (s 117(2A)(a)); whether a party to the proceedings has been wholly unsuccessful
(s 117(2A)(e)); and whether either party to the proceedings has made an offer in writing to settle the proceedings and the terms of that offer (s 117(2A)(f)).
The financial circumstance of each of the parties
The mother contends that her financial circumstances are such that, of themselves, there ought be no order for costs because she has no capacity to pay any costs ordered. She submits that she receives a combination of benefits amounting to $556 per week and the expenses for her and the child exceed that amount. The submissions do not reveal how the shortfall in income over expenditure is met. During the hearing before the trial judge, the mother’s contention was that she and the child should be permitted to remain living in Tasmania and, to that end, she would facilitate the child spending time with the father by flying with her to Sydney. This arrangement obtained before the father became aware that the child was not living in New South Wales. The mother told the Court that she had received financial assistance from her parents. It may be that she continues to receive assistance from her parents to meet her financial shortfall.
Further, the mother says she has “no assets of significance” but, again does not indicate what assets she does hold. Finally, on this point, it was submitted for the mother that an order that she pay the father’s costs would “have a consequential negative impact upon the child” although she does not say in what way.
That a party is impecunious, even indigent, is not a bar to the making of a costs order if the Court is otherwise of the opinion that such an order ought to be made.
Wholly unsuccessful
For the mother it was contended that while she was “wholly unsuccessful” in the appeal, in failing to make out error on each asserted ground, there was, nonetheless merit in the appeal. Support for this argument was said to reside in the Full Court’s findings that his Honour made two errors, neither of which was found to be material to his Honour’s ultimate determination.
However to submit that these two, non-material errors in some way demonstrated that there was merit in the appeal misapprehends the nature of appellate intervention.
In U v U (2002) 211 CLR 238, Kirby J said:
117.… courts in this country and overseas have long recognised the need for appellate courts to exhibit restraint in disturbing such conclusions. An appellate court will refuse to intervene unless a material error of principle is demonstrated. In considering suggestions that such an error has occurred, the appellate court will "avoid an overly critical, or pernickety, analysis of the primary judge's reasons, given the large element of judgment, discretion and intuition which is involved".
(citations omitted)
The appeal was wholly unsuccessful; the mother was not able to demonstrate a material error of principal in the trial judge’s determination.
Offer in writing
On 11 March 2014 the father’s solicitors wrote to the mother’s solicitors in the following terms and referred to the service on the mother’s solicitors of the summary of argument filed by the father in the appeal:
… …
We note that our client’s submissions [attached] make it clear that your client’s application to set aside the Orders of Judge Neville dated
31 October 2013 will fail.We note that we have briefed both junior and senior counsel for this matter, and that our client’s instructing solicitor and the client will be travelling from the ACT to Sydney for the hearing on 20 March 2014.
Given the above, and the likely costs that our client will incur if this matter proceeds to hearing, we are instructed to make an offer of settlement as follows:
1.Your client withdraw her appeal on or before 18 March 2014; and
2. Our client will not seek costs.
This offer is in the form of a Calderbank letter, and in the event that our client obtains a judgment equal to or exceeding this offer I will tender, and call for the original of, this letter in support of my client’s application for indemnity costs.
The letter was rejected by response from the mother’s solicitor on 14 March 2104.
While the father relied on the offer of compromise in support of the application that the mother pay his costs on an indemnity basis, it is nevertheless relevant to the overall consideration of costs.
The appeal in significant respect did not challenge the trial judge’s findings of fact but argued that his Honour failed to follow and apply “the legislative pathway” in considering and applying the provisions of the Act. As we pointed out, the context of the hearing before the trial judge was that each party sought an order for equal shared parental responsibility and that the child live with the mother. Further, neither party argued that the child should spend equal time or substantial and significant time with the father.
The offer of compromise was served on the mother with the father’s summary of argument on the appeal. She, and those advising her, were thus in possession of the arguments to be mounted in opposition to the appeal.
In Lenova & Lenova (Costs) [2011] FamCAFC 141 the Full Court, Bryant CJ, Coleman and Murphy JJ said :
10.In this jurisdiction, costs do not “follow the event”; the Act prescribes, relevantly, that “subject to subsection (2) ... each party to proceedings under this Act shall bear his or her own costs”
(s 117(1)). As a result, a litigant, or prospective litigant, cannot rely upon a costs order following upon success in the action as a means of dissuading the other party from pursuing unmeritorious litigation or as a means of seeking to persuade the other party from pursuing litigation.11.A timely offer in writing genuinely made might, then, be seen as an important part of a limited armoury available to prospective litigants seeking to avoid the costs of litigation. Conversely, where, consequent upon success in an action, a litigant can point to the making of a genuine and timely offer having been made, that offer might be seen as an important (albeit not the only) matter in the exercise of the discretion as to the ordering of costs.
12.That consideration must, of course, be balanced against a litigant having a limited capacity to meet a costs order, as well as any other relevant considerations. But, a limited financial capacity to meet an order cannot be determinative; if it were, a party would always be able to plead impecuniosity as a means of avoiding a costs order in circumstances where pursuit of the litigation has continued in the face of a reasonable offer to cease that litigation and the incurring of its attendant costs.
13.Whilst regard is had to the financial circumstances of the respondent wife, she was advised by legal practitioners at each stage of the proceedings. She can, in our view, be seen to have known the risks of refusing to compromise in the face of a written offer made before the appeal was filed. That factor, together with the husband’s success in the appeal, warrants an order for costs being made in favour of the husband.
The rejection of the father’s offer is, in our view, of sufficient weight to justify an order that the mother pay the father’s costs of the appeal. In combination with the other matters to which we have referred we are of the view that the mother should be ordered to pay the father’s costs of and incidental to the appeal.
Indemnity Costs
As we have indicated, the father’s application, in reliance on the mother’s rejection of the offer of compromise, seeks an order that the mother pay the father’s costs on an indemnity basis from the date of the letter in which the offer was contained.
In Kohan and Kohan (1993) FLC 92-340 at 79,614 the Full Court said:
The intent of s 117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O.38 r. 2, the provisions of O.38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client.
O.38 r.7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind. See Degmam v Wright (No 2) [1983] 2 NSWLR 354; Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR 358 at 368 to 370.Later decisions in this court and others have made clear that a departure from the “usual” costs order, that is an order for party and party costs is exceptional.
The mother’s submissions on this issue refer to the well accepted authorities on the making of an order for indemnity costs and which do not need to be repeated here. Suffice it to say that while the authorities, particularly Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 set out circumstances in which the discretion to make an order for indemnity costs may be considered, it is also clear that “categories of circumstances which enliven the discretion to award indemnity costs are not closed….” (see Yunghanns v Yunghanns (2000) FLC 93-029 at 87,471 [31]).
However, it is instructive to set out the following passage from the judgment of Sheppard J in Colgate-Palmolive (supra) at 257:
… it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records).
In this case, the basis for the order for indemnity costs was said to lie in the rejection of the offer of compromise where at the time of the offer, the mother had the father’s summary of argument on the appeal and which, it is implied ought to have informed the decision to accept the offer and which referred to relevant documents in the appeal books. Although as we have said, the refusal of the father’s offer of compromise is relevant and warrants an order for party and party costs, we are not persuaded that neither the mother’s failure to accept the offer nor any other aspect of the case falls within the circumstances to which Sheppard J referred in Colgate-Palmolive (supra) nor is there anything in the nature of this appeal that falls within the “exceptional” case in which indemnity costs may be ordered.
We will thus order the mother to pay the father’s costs of and incidental to the appeal on a party and party basis.
I certify that the preceding one twenty nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Ainslie-Wallace, Austin JJ) delivered on 28 October 2014.
Associate:
Date: 28 October 2014
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