Nyles and Nyles

[2007] FamCA 1010

FAMILY COURT OF AUSTRALIA

NYLES & NYLES [2007] FamCA 1010

FAMILY LAW – costs of review application – discrepancy in parties’ financial circumstances – indemnity costs

Family Law Act 1975 (Cth), s 117(2), s 117(2A)(a), (c) and (e);
Family Law Rules 2004

Alfasi and The Alfasi Group of Companies (2006) FLC 93-271;
Ostasheen Pty. Ltd.  v  Deputy Registrar of Child Support (1998) FLC 98-001;
Kohan  and  Kohan (1993) FLC 92-340 at 79,614;
Yunghanns  and Yunghanns (2000) FLC 93-029 at 87,470-87,471

HUSBAND: Mr Nyles

WIFE: Mrs Nyles

FILE NUMBER: MLF 4247 of 2003

DATE DELIVERED: 31 August, 2007

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Brown J.

HEARING DATE: Submissions received

REPRESENTATION

COUNSEL FOR THE HUSBAND: Mr. North SC

SOLICITOR FOR THE HUSBAND: Lander & Rogers

COUNSEL FOR THE WIFE: Mr. St. John SC with Mr. Strum

SOLICITOR FOR THE WIFE: Taussig Cherrie & Associates

Orders

1. That the husband pay the wife’s costs of and incidental to the form 2 application filed by him on 11 October, 2005, and such costs include counsel’s fees (including senior counsel’s fees) as paid. 

1. That the quantum of costs be as agreed between the parties or, failing agreement, as assessed pursuant to the Family Law Rules 2004.

1. That payment of costs pursuant to this order be stayed pending determination of the husband’s application to set aside final orders and binding financial agreement herein.

1. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel, including senior counsel

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 4247  of 2003

Mr Nyles

Husband

And

Mrs Nyles

Wife

REASONS FOR JUDGMENT

1. On 11 October, 2005 the husband filed a form 2 application in which he sought to review a decision of Registrar FitzGibbon, delivered on 7 October, 2005.  The proceedings before the registrar related to discovery and questions of legal professional privilege.  The registrar granted the wife’s application for discovery and published reasons for judgment.  Sometime later he determined an application for costs and made an order in the wife’s favour, requiring the husband to pay her costs on a solicitor/client basis, incorporating and allowing disbursements including fees for Queen’s counsel.

1. The registrar stayed payment until the conclusion of the final hearing of the substantive matters in dispute between the parties. 

1. Insofar as it is relevant, the substantive proceedings involve an application filed by the husband on 2 July, 2004 in which he sought to set aside final property orders made, by consent, on 10 March, 2004 and a binding financial agreement signed by the parties.  While his case has been put in a number of ways (more than one amended application having been filed) it is his contention that he was induced to consent to the final orders and sign the binding financial agreement by the wife’s fraud or material non-disclosure. 

1. The husband was unsuccessful in his review application;  judgment was delivered by me on 30 June, 2006.  Orders provided for the filing of written submissions in support of any applications for costs. 

1. The wife filed written submissions seeking costs on 21 July, 2006 and the husband filed submissions in response on 13 October, 2006.  The wife’s reply to the husband’s costs  submission was filed on 27 November, 2006.  The delay in delivering judgment on those submissions is not attributable to the parties or their legal practitioners.

1. The power to make an order for costs is contained in s.117(2) of the Family Law Act 1975 which gives the court a discretion to grant costs if it is of the opinion that there are circumstances that justify it in so doing. The matters to be taken into account are set out in s.117(2A). The parties’ submissions referred to three sub-paragraphs of s.117(2A).

1. The husband submitted that the question of costs should be reserved to the trial judge who eventually hears the husband’s applications under s.79A and s.90K of the Family Law Act 1975. In the alternative, he sought that there be no order for costs. In the event costs were ordered, he sought that execution be stayed pending final determination of the husband’s applications. For her part the wife sought that the husband pay all of her costs reasonably incurred in seeking the production of the documents since the date of filing of the husband’s review application. In support of that proposition the wife submitted that there was a distinction between “costs reasonably incurred” and “reasonable costs” and the relevant enquiry in this case should be whether the costs of the wife were reasonably incurred, rather than whether the costs were reasonable.

1. It was conceded that this meant that the costs sought were in the nature of indemnity costs. 

1. On this point the wife relied on the decision of the Full Court in Ostasheen Pty. Ltd.  v.  Deputy Registrar of Child Support (1998) FamCA 68. In that case the Full Court considered what must be established by a party who incurs costs and expenses of producing documents in answer to a subpoena in order to obtain an order for the assessment and payment of such costs and expenses, pursuant to order 20 rule 17 of the then Family Law Rules. It is clear from the Full Court’s discussion (at paragraphs 57 to 65 of the judgment) that what was in issue was the interpretation of order 20 rule 17. The Full Court found that in dealing with an application under order 20 rule 17 the court must first be satisfied that costs and expenses have been incurred, and that they have been reasonably incurred. Only if satisfied that the costs have been reasonably incurred does the court have a discretion to allow the applicant such costs. If it exercised the discretion in the applicant’s favour, the court could then assess the costs itself or, possibly, direct that the matter go to taxation.

1. Costs are ordinarily ordered on a party and party basis and the ordering of indemnity costs is an exceptional order.  The Full Court has held that the court should not depart lightly from the ordinary rules relating to costs between party and party;  see Kohan  and  Kohan (1993) FLC 92-340 at 79,614 and Yunghanns  and Yunghanns (2000) FLC 93-029 at 87,470-87,471.

Section 117(2A)(a)  -  financial circumstances

1. For the purpose of the costs application the wife conceded that her financial position was superior to that of the husband and submitted that that concession was sufficient for the purposes of s.117(2A).  She relied on the decision of Guest J. in  Alfasi  and  The Alfasi Group of Companies (2006) FLC 93-271. While an interesting judgment, I do not find it can be relied on as representing a principle in the terms contended by the wife. The concession made by the wife in that case was about the superior financial position of the group of companies, in circumstances where the group was not a party to the substantive proceedings. His Honour found that it would be inappropriate in that case to suggest that the group place its financial position before the court, as submitted, and that the “forces of reality” required him to rely on the concession made by the wife as to the superior financial position of the group. As his Honour noted, the financial circumstances of the parties to an application for costs are but one of a number of factors to take into account.

1. In my judgment, if the wife seeks to rely simply on a concession of financial superiority, and adduces no evidence of the extent of the “superiority”, the court is entitled to take the view that what is conceded is a significant disparity between the parties’ financial positions.  If one party had assets of $1 million and the other party assets of $1.1 million, the latter party is in a superior financial position to the former.  In those circumstances one cannot imagine a submission, for the purposes of s.117(2A), which involved a concession of financial superiority.  The competing financial positions would be put before the court, for it to make what it would of the disparity.  While the court cannot quantify the wife’s present financial circumstances, it is entitled to take the view that there is a significant disparity between her present financial position and that of the husband. 

Section 117(2A)(c)

1. I do not find substance in the submission of the wife that the husband’s conduct is a relevant factor.  The issue before the court in the review application was the question of privilege, a privilege the husband sought to maintain in the face of an assertion of issue waiver and a further assertion of waiver by disclosure.  The court found for the wife on the question of issue waiver and the husband was unsuccessful in maintaining the privilege.  While there may have been earlier problems with discovery, they were not the substance of the review application.  The costs of the litigation before the registrar were the subject of a separate costs application. 

1. The wife made much of the filing by the husband of a further amended application for final orders when he filed his review application, calling it “a cynical endeavour to defeat the wife’s discovery application at the hearing de novo thereof upon the Review Application”.  I do not adopt that description, nor the submission that weight should be placed on that conduct.  The husband was ultimately unsuccessful in the review application;  that fact is of relevance.

Section 117(2A)(e)  -  whether a party wholly unsuccessful

1. The husband was unsuccessful in resisting the wife’s application for discovery.  It is not to the point for the husband to argue that the wife succeeded on only one of the two waiver points argued by her.  Although there was some variation to the orders initially made by Registrar FitzGibbon, I do find that the husband was wholly unsuccessful.

1. I do not find force in the submission costs should be reserved to the trial judge.  The review application was a discrete part of the proceedings and the judge who heard it is in the best position to determine the competing arguments as to costs.

1. I take into account the fact the husband was ordered to pay the wife’s costs of the proceedings before Registrar FitzGibbon, and that payment was stayed.

1. The factor that mitigates in favour of an order for costs is the husband’s lack of success.  The only factor which might balance that is the acknowledged superior financial position of the wife.  However, even assuming the disparity to be as significant as alleged by the husband, I cannot find force in the husband’s argument that it, with the other matters raised on his behalf, mean there should be no order for costs. 

1. I am satisfied the relevant costs are those of and incidental to the review application filed by the husband.  I do not find an order in the specific terms sought by the wife to be warranted. 

1. The categories of circumstances which justify the award of indemnity costs are not closed.  However, I am not satisfied the circumstances of this case justify such an order.  I am aware the wife signed a costs agreement, a copy of which was provided by her solicitor, but am not satisfied that alone, or together with other circumstances found, justifies an order for indemnity costs.  As both parties briefed senior counsel, I am satisfied counsel’s fees should paid as charged.  Otherwise, the quantum of the costs will be as agreed or, failing agreement, assessed.

1. I am satisfied payment should be stayed pending determination of the substantive issues.  While the court has found that the disparity between the parties’ financial positions does not make it inappropriate to order costs against the husband, a party’s financial position can also be considered when hearing a stay application of this sort.

I certify that the preceding
21 paragraphs
are a true copy of the reasons for
judgment herein of the
Honourable Justice Brown AM.

Dated the          day of           2007.

…………………………………………
Associate.