NORRIS & DENIS (No.4)

[2020] FCCA 2192

FEDERAL CIRCUIT COURT OF AUSTRALIA

NORRIS & DENIS (No.4) [2020] FCCA 2192

Catchwords:
FAMILY LAW – Costs – application for alteration of property interests – matter proceeded on an undefended basis – where findings made against both parties.

Legislation:

Family Law Act 1975 (Cth), ss.90SM, 102NA, 117

Federal Circuit Court Rules 2001 (Cth) r.21.02, sch.1

Cases cited:

Colgate-Palmolive Co & Cussons Pty Ltd (1993) 46 FCR 225

Kohan & Kohan (1993) FLC 92-340

Norris & Denis (No.3) [2020] FCCA 1374

Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029

Applicant: MS NORRIS

Respondent: MR DENIS

File Number: WOC 376 of 2017

Judgment of: Judge Altobelli

Hearing date:

25 May 2020

Costs application determined in Chambers on the papers.

Date of Last Submission: 28 July 2020

Delivered at: Wollongong

Delivered on: 20 August 2020

REPRESENTATION

Counsel for the Applicant: Mr Moutasallem

Solicitors for the Applicant: DGB Lawyers

Counsel for the Respondent: Mr Ford

Solicitors for the Respondent: Kells The Lawyers

ORDERS

1. The Husband is to pay the Wife’s costs in the sum of $12,612 within 28 days.

2. All outstanding applications otherwise be dismissed and the matter removed from the list of cases awaiting finalisation.

IT IS NOTED that publication of this judgment under the pseudonym Norris & Denis (No.4) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT WOLLONGONG

WOC 376 of 2017

MS NORRIS

Applicant

And

MR DENIS

Respondent

REASONS FOR JUDGMENT

Introduction

1. These Reasons for Judgment explain why the Court has ordered the Respondent Husband in these proceedings to pay some of the costs of the Applicant Wife.

Background

1. On 16 June 2020, the Court delivered a written Judgment in what will be described as the substantive proceedings between the parties.  The Judgment was reported as Norris & Denis (No.3) [2020] FCCA 1374. The substantive issue related to a de facto alteration of property interests. The matter proceeded on an undefended basis. An Order was made for the Respondent de facto Husband to pay to the Applicant de facto Wife the sum of $3,597.40 failing which the property at H Street, Suburb J would need to be sold.

2. The substantive Judgment speaks for itself.  There are a few paragraphs that need to be referred to as they are relevant to the present costs application.  Thus, for example, the procedural history of the litigation is set out at paragraphs 30-38 of the Judgment which, itself, refers to the procedural chronology which became exhibit A4.  At paragraph 37, the Court noted with concern the anger that was manifest in the Husband’s correspondence and foreshadowed his possible defiance of Court orders in a context where he had not complied with many orders and procedural directions.

3. Moreover, at paragraph 83, in the context of whether or not there should be an adjustment under section 90SM of the Family Law Act 1975 (Cth) (hereafter referred to as the ‘Family Law Act’) because of the findings made by the Court in relation to the Husband’s non-disclosure, the Court expressed caution about treating matters of the conduct of the litigation as a 90SM consideration, rather than in the context of costs. At paragraph 84, the Court acknowledged that the Wife was entitled to express concern that the Husband did not make disclosure in accordance with the Federal Circuit Court Rules 2001 (Cth) (hereafter referred to as the ‘Federal Circuit Court Rules’), and thus made her task of preparing for the Hearing, and the Court’s task of deciding it, significantly more arduous.

4. As the Court observed, however, that did not necessarily mean that there should be a further adjustment in her favour as part of the alteration of property interests.  At paragraph 85, the Court concluded that it was safer to revisit the issue of the Husband’s conduct in the litigation, including failure to comply with orders, directions and rules of the Court, by way of a costs order. 

5. Order 10 made 16 June 2020 provided the framework for the present costs application as follows:

   10. Any application for costs be provided by way of written submissions and evidence in support as follows:

   a. The Applicant file and serve within 21 days short written submissions; and

   b. The Respondent within a further 21 days file and serve short written submissions;

   c. The Applicant file and serve within a further 7 days short written submissions in reply.

6. Pursuant to those Orders, the Applicant filed detailed submissions in relation to costs on 7 July 2020.  The Respondent Husband’s submissions were received on 28 July 2020. No submissions in reply were made.

The applicable law

1. For present purposes, the applicable law is primarily found in section 117 of the Family Law Act, and specifically section 117(1)-(2A):

   Costs

   (1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, 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), (5) and (6) 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.

2. The Federal Circuit Court Rules also deals with orders for costs and, for present purposes, the relevant rule is Rule 21.02:

   Order for costs

   (1)  An application for an order for costs may be made:

   (a)  at any stage in a proceeding; or

   (b)  within 28 days after a final decree or order is made; or

   (c)  within any further time allowed by the Court.

   (2)  In making an order for costs in a proceeding, the Court may:

   (a)  set the amount of the costs; or

   (b)  set the method by which the costs are to be calculated; or

   (c)  refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or

   (d)  set a time for payment of the costs, which may be before the proceeding is concluded.

3. The Court also notes that Schedule 1 to the Rules sets out some event based lump sum fees.

4. The Applicant’s submissions indicate that she seeks an order for indemnity costs.  The Full Court of the Federal Court in Colgate-Palmolive Co & Cussons Pty Ltd (1993) 46 FCR 225 at paragraph 24 set out some of the categories in which an order for indemnity costs might be considered:

   [24] It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:-

   1. The problem arises in adversary litigation, i.e. litigation as between parties at arm's length.  Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg. a government agency or statutory authority.

   2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis.  In this Court the provisions of Order 62, rules 12 and 19, and the Second Schedule to the Rules will apply to the taxation.  In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.

   3. This has been the settled practice for centuries in England.  It is a practice which is entrenched in Australia.  Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate Court of appeal or of the High Court would be required to alter it.  No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry & British Transport Commission and Handley JA in Cachia & Hanes on the one hand and by Rogers J in Qantas on the other.  The relevant passages from the respective judgments have been earlier referred to.

   4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis.  The circumstances of the case must be such as to warrant the Court in departing from the usual course.  That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England.  The tests have been variously put.  The Court of Appeal in Andrews & Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston & Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice.  Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule.  But as French J said (at 8) in Tetijo, "The categories in which the discretion may be exercised are not closed".  Davies J expressed (at 6) similar views in Ragata.

   5. Notwithstanding the fact that that is so, 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 & 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 & Hutchinson (1987) 10 NSWLR 525, Maitland Hospital & Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp & Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports.  Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis.  The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

   6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge.  Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.

5. Having said that, however, the Full Court of the Family Court in cases such as Kohan& Kohan (1993) FLC 92-340 and Yunghanns & Ors & Yunghanns & Ors & Yunghanns (2000) FLC 93-029 has indicated that it is only in exceptional circumstances that a Court should depart from the ordinary rules relating to costs between party and party.  The Applicant contends, however, that in this case there are exceptional circumstances.

The basis of the Applicant’s cost application and the Respondent’s submissions

1. The Applicant seeks an indemnity costs order quantified in the sum of $25,224.01.  Her detailed written submissions filed 7 July 2020 set out how this amount is quantified.  If the Court decides to make an order for indemnity costs, it is satisfied from the material filed that the amount claimed is justified.  Indeed, the Court observes that, based on its own experience, it is by no means an excessive amount to claim in a case like this which has had a long and difficult litigation history.

2. In his submissions the Respondent did take issue with some of the specific amounts claimed as costs thrown away as a result of the Respondent’s application pursuant to section 102NA of the Family Law Act. He contends that no challenge could be made to the integrity of his section 102NA application, though even he conceded that he could be criticised for not taking up the Legal Aid funding. The Court remains comfortable with both the quantum of costs sought, and the fact that these costs were incurred as a result of the Respondent’s conduct.

3. The Applicant’s claim for costs has many facets.  She contends that her financial circumstances have been adversely affected by the unnecessarily high amount of costs that she has had to incur in these proceedings.  The Court accepts this, but notes that the Applicant Wife’s financial circumstances do not indicate any particular need on her behalf, or that her financial circumstances were dire.  This consideration is not considered to be determinative by the Court.

4. The Applicant Wife was not legally aided. The Respondent Husband was legally aided, pursuant to the provisions of section 102NA of the Family Law Act. Notwithstanding this, the Respondent Husband’s legal representation, such as it was, played no role in the proceedings. Regrettably, the distinct impression formed from the totality of the evidence including the litigation history is that the Respondent always intended to conduct this matter himself, and the section 102NA application that he made was simply intended to delay the Hearing. Thus, even though technically the Respondent Husband was in receipt of assistance by way of Legal Aid, it is not a consideration that the Court is prepared to find contraindicates making a costs order against him, if one is otherwise justified by reference to the relevant legal principles.

5. The main basis of the Applicant Wife’s application for indemnity costs focuses on the conduct of the Husband. Indeed, section 117(2A)(c) of the Family Law Act is quite expansive in describing the context of the relevant conduct that might justify a costs order. Paragraph (c) bears reproduction:

   (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;

6. The Applicant Wife submits, in short, that the litigation history manifests a litany of conduct by the Respondent Husband that caused her to incur significant costs and, inferentially, much more than she would have had to if there had been a reasonable measure of compliance and cooperation by the Respondent Husband. 

7. The Court recorded the following finding at paragraph 37 of its previous Judgment: “The underlying attitude of the Husband seems to be that this litigation should be conducted to his timetable, and no one else’s.”

8. The written submissions of the Applicant Wife contain a detailed exposition of the Respondent’s non-compliance with rules, directions and orders commencing from 1 August 2017 and concluding with Orders made 9 March 2020.  The Court accepts the submission made on behalf of the Applicant at paragraph 9(a)-(e).  The Court accepts the Applicant Wife’s submission that the Respondent’s conduct throughout these proceedings has caused significant delays, adjournments, and resulted in her costs being thrown away. 

9. The Applicant’s submissions then focus on the Respondent Husband’s failure to make disclosure, particularly, in his financial circumstances.  The Judgment sets out the Court’s findings in this regard.  The Applicant contends and the Court’s file manifests the efforts she had to go to, to try to reconstruct some semblance of the Respondent’s financial affairs so that the Court might be able to make an informed attempt at alteration of property interests.  The cost in question is not just the expense of drafting, filing and serving subpoena, but all the consequential effort of inspecting these records, and trying to make sense of them.  The Court is satisfied the Applicant then had to file at least two Applications in a Case in the context of the Respondent’s conduct.

10. In his submissions the Respondent quite properly conceded that the Court’s findings gave a foundation to award costs due to his conduct.

11. The Applicant submits that the Respondent made five different adjournment applications during the course of the litigation, including of Hearing dates.  The adjournment applications spanned the period 12 December 2018 to 13 February 2020.  The reasons included so that the Respondent might obtain legal representation, and for health reasons.  Each of the applications made by the Respondent were granted and, ultimately, at the final and as it turned out undefended Hearing, no application for adjournment was made.  Even considering the litigation history, the Court must acknowledge that a further adjournment application would not have been likely successful.  In any event, the Applicant contends, and the Court accepts, that she needlessly incurred costs which were thrown away, each time the matter was adjourned.

12. The Applicant in her written submissions acknowledged that the Court would consider the fact that she was not entirely successful in her application.  Indeed, the reality is that she received a mere fraction of what she sought.  Moreover, the reality is that the Court made a finding of non-disclosure against the Applicant herself, even in the context of an undefended Hearing.  The Applicant Wife frankly acknowledged that it could not be said that either party was wholly unsuccessful in the proceedings.  The Court accepts this but notes that this factor does not necessarily, and of itself, contraindicate the making of a costs order.

13. The Applicant Wife, in her submissions, points out that neither party made a relevant offer which needs to be considered in the context of the costs application. 

1. Subsection (g) of section 117(2A) empowers the Court to take into account “such other matters as the Court considers relevant.” Whilst the Applicant Wife’s submissions only refer to the Husband’s conduct outside the parameters of section 117(2A)(c) inferentially, the Court believes that it is another relevant factor to be taken into account in a costs application. At paragraphs 37 and 38 of the Judgment the Court records its concern about the tone of correspondence which was contained in Exhibit A1, as well as the correspondence annexed to the wife’s trial Affidavit. This correspondence was described by the Court as containing a series of emails from the Husband to his wife’s lawyer, most of which are disrespectful and some of which are abusive and threatening.

2. The Court acknowledges that this sort of conduct is probably not the conduct which was contemplated by section 117(2A)(c), but it is conduct that the Court can take into account pursuant to section 117(2A)(g). It is hard to imagine that the conduct of this litigation would not have been rendered more arduous by the fact of the Applicant, and the Applicant’s solicitor, having to deal with the Respondent Husband’s behaviour. This, in the Court’s view, is another consideration informing the Court’s discretion about whether a costs order should be made.

3. When all of the above matters are considered, the Court concludes that the general rule articulated in section 117(1) does not apply to this case, and an order for costs should be made in the Wife’s favour because of the additional costs that she incurred as a result of the Husband’s conduct of the litigation.

Quantification of costs

1. The application for costs by the Wife is framed as an indemnity costs order, but it was not clear to the Court whether the amount sought represented the totality of her costs.  It is possible that the Wife’s approach was to identify the specific events, and the specific conduct of the Respondent that has led her to incur costs.  For example her submission quantifies the costs implications to her of the Husband’s non-compliance on 1 August 2017, 21 August 2019, and the consequences of adjournment applications granted to the Husband in circumstances where he did not take advantage of the legal representation offered to him and, in any event, continued to fail to make disclosure.  The Wife seeks to quantify the costs incurred, for example, in having to file 13 subpoenas to obtain financial information relating to the Respondent, that he was obliged to provide to the Court.  All of this is amply quantified and evidenced in her written submissions, and the Court is satisfied that it does, indeed, amount to $25,224.01.

2. The question is, should an indemnity costs order be made on the facts of this case?  To pick up the words of the Full Court in Colgate-Palmolive & Cussons (supra), the question must be whether the particular facts and circumstances of this case warrant the making of an order for payment of costs other than on a party and party basis?  The Respondent submitted, in effect, that the circumstances did not warrant an indemnity costs order. When the Wife’s own conduct in the litigation is taken into account, namely her own financial non-disclosure, there was no longer any basis for an indemnity costs order.

3. This Court concludes, having regard to all the evidence before it, the submissions made and the lengthy litigation history, that the Husband’s conduct in the proceedings, both in the strict sense referred to in 117(2A)(c), and the more general sense referred to in 117(2A)(g), does warrant the imposition of an indemnity costs order, particularly one framed as the present one is. However, the Wife’s own conduct cannot be ignored. It was not just her non-disclosure but the quasi-ambit claim that she made that mitigates against her receiving the full benefit of an indemnity costs order. Whether this is expressed as a 50% discount of what would otherwise be an indemnity costs orders, or whether this should be characterised as a lump sum order by the Court, the Court believes that an Order for costs in the Wife’s favour quantified in the sum of $12,612 is justified in the circumstances. Such amount should be paid within 28 days.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge Altobelli

Associate: 

Date: 20 August 2020