Parke & The Estate of the Late A Parke
[2016] FamCAFC 248
•24 November 2016
FAMILY COURT OF AUSTRALIA
| PARKE & THE ESTATE OF THE LATE A PARKE | [2016] FamCAFC 248 |
| FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – COSTS – Where the trial judge set aside a financial agreement between the husband and wife – Where the husband appealed – Where husband’s health declined and the wife made an application to expedite the hearing of the appeal – Where the husband neither opposed nor consented to the application – Where the hearing of the appeal was expedited – Where the husband died and his second wife was appointed as his Legal Personal Representative – Where the Legal Personal Representative discontinued the Appeal – Where the wife filed an application for costs of a discontinued appeal on an indemnity basis – Where the wife alleged that the husband’s conduct in the trial should be taken into account as a relevant factor, and in particular his “dishonesty” and refusal to negotiate – Whether a filing of a Notice of Discontinuance can be regarded as attracting a costs order and if so, whether costs should be ordered on an indemnity basis – The extent to which the conduct of a party at the trial can be taken into account in considering whether orders should be made for costs of an appeal. Per MAY & RYAN JJ – Application allowed – A discontinued appeal is not wholly unsuccessful within the meaning of s 117(2A)(e) of the Family Law Act 1975 (Cth) (“the Act”) as it was never heard (per Bant & Clayton (Costs) [2016] FamCAFC 35) – The criteria in s 117(2A)(b) – (f) of the Act are limited to the appeal proceedings and matters from the trial cannot be taken into account under those sections (Dickson and Dickson (No 2) (1999) FLC 92-857 and Re JJT & Ors; exparte Victoria Legal Aid (1998) 195 CLR 184) – Matters of conduct during the trial may be taken into account under s 117(2A)(g) – A costs order should be made but where the circumstances do not justify costs on an indemnity basis. Per MURPHY J – Respondent to pay the costs of the wife fixed in the sum of $51,000. |
| Civil Procedure Act 2005 (NSW) s 98(4) Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) rr 19.18, 19.34(2), 22.42 |
| Bant & Clayton (Costs) [2016] FamCAFC 35 |
| APPLICANT: | Ms Parke |
| RESPONDENT: | The Estate of the Late A Parke |
| FILE NUMBER: | BRC | 6354 | of | 2014 |
| APPEAL NUMBER: | NA | 52 | of | 2015 |
| DATE DELIVERED: | 24 November 2016 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | May, Ryan & Murphy JJ |
| HEARING DATE: | 2 February 2016 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 19 June 2015 |
| LOWER COURT MNC: | [2015] FCCA 1692 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Kirk QC |
| SOLICITOR FOR THE APPLICANT: | Keating Lehn Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Page QC |
| SOLICITOR FOR THE RESPONDENT: | GLS – Global Legal Solutions |
Orders
The respondent pay to the applicant the costs of and incidental to Appeal NA52 of 2015 (to the date of filing of the Notice of Discontinuance being 15 January 2015) on a party/party basis, failing agreement such costs to be assessed by the Registrar.
The respondent pay to the applicant the costs of and incidental to the expedition hearing on 21 October 2015 on a party/party basis, failing agreement to be assessed by the Registrar.
The respondent pay to the applicant the costs of and incidental to the hearing of this Application, filed 21 January 2016, on a party/party basis, failing agreement such costs to be assessed by the Registrar.
The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Parke & The Estate of the Late A Parke has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)) or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 52 of 2015
File Number: BRC 6354 of 2014
| Ms Parke |
Applicant
And
| The Estate of the Late A Parke |
Respondent
REASONS FOR JUDGMENT
MAY & RYAN JJ
On 23 June 2015 Judge Howard ordered that a financial agreement between Ms Parke (“the wife”) and Mr A Parke (“the husband”) be set aside. A number of procedural orders were also made in preparation for a final hearing in relation to property settlement.
On 21 July 2015 the husband filed a Notice of Appeal from those orders. Each party filed documents in accordance with the procedural orders, including a Summary of Argument. On 21 October 2015, it was ordered that the appeal hearing be expedited and the costs of the wife’s application seeking expedition be reserved to be considered by the Full Court. This application was neither supported nor opposed by the husband.
Prior to the appeal being heard, the husband's health declined. On 15 December 2015 Ms B, the husband’s second wife, was appointed the husband's litigation guardian. On 1 January 2016 the husband died. On 14 January 2016 Registrar Kane substituted Ms B (“the Legal Personal Representative”) as a party in the appeal and granted her leave to continue the appeal proceedings.
On 15 January 2016 some two weeks after the death of the husband, the appeal was discontinued when a Notice of Discontinuance was filed. On 21 January 2016, the wife filed an Application in an Appeal seeking her costs of the appeal. An order for costs is sought on an indemnity basis.
A central issue in the appeal is whether the filing of a Notice of Discontinuance can be regarded, of itself as attracting a costs order and if so, whether that order should be on an indemnity basis. A second question is the extent to which the conduct of a party at the trial can be taken into account in considering whether orders should be made for costs of an appeal.
The Costs Application
There are three distinct parts to the application concerning costs. The first is the expedition application which was heard on 21 October 2015. The wife’s solicitor, Ms Keating explains the costs of that application, which includes Queen’s Counsel fees, to be approximately $14,000.
The second is in relation to the preparation of the substantive appeal which was discontinued. The third and final component is in relation to this application. In her affidavit, Ms Keating explains the total cost in preparation of the appeal comprises counsel fees of approximately $28,500 to date, and further fees of $20,500 expected. It also comprises Ms Keating’s own fees, which amount to $41,000. A further $15,000 in fees is expected. The total cost claimed by the wife in relation to the second and third aspects is approximately $105,500 with likely further fees to be rendered by counsel.
There would be further expense incurred in the preparation of a Bill of Costs should that be necessary.
Relevant Law pursuant to s 117 of the Act
The first question is whether costs should be ordered at all, and if so, on an indemnity basis or a party/party basis.
The presumption in the Family Law Act 1975 (Cth) (“the Act”) is contained in s 117(1), but subject to s 117(2) and a number of other sections, that each party to proceedings shall bear their own costs.
Section 117(2) provides that if, in proceedings under the Act, the Court is of the opinion that the circumstances justify a departure from this presumption, it may make such order as to costs as “the court considers just”.
In considering a costs order, there are a number of factors the court shall have regard to contained in s 117(2A). The following are relevant to these proceedings:
…
(a)the financial circumstances of each of the parties to the proceedings;
…
(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;
…
(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.
By reference to this section, it is argued that the filing of a Notice of Discontinuance means that the appeal was “wholly unsuccessful” and costs should follow. In addition it is argued that regard may be had to the reasons of the primary judge to determine whether the appeal was “doomed to fail” and that offers made during the trial process are relevant to a decision in relation to costs of this appeal.
Wholly unsuccessful appeal (s 117(2A)(e))
In Trask & Westlake (Costs) [2015] FamCAFC 214 the Full Court said:
4.While costs do not “follow the event” any more on an appeal than they do in any other proceedings (s 117(1)), it is often said that a party being wholly unsuccessful in an appeal, which by definition seeks to deny the other party the “fruits of their judgment”, can be of great significance. …
It is contended that even if the appeal had been heard, it would have been wholly unsuccessful.
The written submissions of the wife set out the basis of the argument seeking to demonstrate that the appeal had been “wholly unsuccessful”:
3.5As the Husband stated in his Outline of Argument in the now abandoned Appeal, the Wife had “four successes” in the Court below, namely:
(i)that the Agreement had been obtained by the Husband’s unconscionable conduct (Trial Judge’s Reasons – AB1 p75 #148);
(ii)that the Agreement was uncertain and therefore void (AB1 p87 #188);
(iii)that performance of the Agreement was impracticable by reason of the Wife’s superannuation entitlement being removed and the son’s refusal to accept a transfer of the properties (AB1 p89 #190)
(iv)that the Husband had breached an essential term of the Agreement by dealing with the Wife’s superannuation entitlement (to which she was entitled under the Agreement) and thereby repudiated the Agreement which the Wife accepted by her actions (including continuing these proceedings) thereby rescinding the Agreement (AB1 p91 #195)
Each of these “successes” was the subject of the Appeal as the Husband had to have each overturned to succeed.
Appeals that are ultimately discontinued are not necessarily “wholly unsuccessful” for the purposes of this section. As the Full Court explained in Bant & Clayton (Costs) [2016] FamCAFC 35:
21.The father submits that by filing a Notice of Discontinuance the mother has been wholly unsuccessful. The mother says that her application was never heard or determined, and thus it was not wholly unsuccessful.
22.There is an element of truth in both submissions, but it is apparent to us that this paragraph does not apply to the facts of this case; it is designed for cases where an application is heard and determined and the applicant is wholly unsuccessful.
Whilst it can be seen in that case, the appeal was not allowed (and may not have had merit) it was never heard. Thus, it is difficult to conclude that it was “wholly unsuccessful”. This appeal concluded because the Notice of Discontinuance was filed. Unfortunately, the wife had already been put to great expense. The step of filing a Notice of Discontinuance, whilst it saved further costs being incurred in the hearing of the appeal, is one of the many matters to be considered but does not automatically lead to a costs order being made. There are other reasons to which we will shortly refer, why the Legal Personal Representative should pay the costs of the wife.
Conduct of the Parties (s 117(2A)(c)), offers of settlement (s 117(2A)(f)) and other relevant matters (s 117(2A)(g))
It is convenient to address these factors together, as they are interconnected. The husband’s overall conduct during the trial and in the lead up to the appeal, counsel for the wife asserts, are relevant in determining that a costs order should be awarded.
Mr Kirk for the wife argues that the husband’s conduct in the proceedings below, including discovery, admission of facts and production of documents are all significant factors that should support a costs order in favour of the wife on appeal. A number of references were made to the credit findings made by the trial judge in relation to the husband, and it is appropriate to refer in the context of this argument to some of those in considering the husband’s failure to properly participate and truthfully assist the court in the proceedings below.
The evidence of the husband in relation to facts asserted by the wife was expressly rejected by his Honour at [14] – [16], [19], [21] – [22], [80] and [86] of the Reasons. The husband was also found to be untruthful about the verbal and physical abuse inflicted by him on the wife, and such findings are made at [12], [135] and [143] of the Reasons.
In particular, the trial judge concluded that the husband knew he had made a number of false representations to the wife, see [82], [88] and [89] of the Reasons.
It is clear that the husband failed to properly assist the hearing of the matter in a number of ways, but most particularly in his failure to provide full and frank disclosure about his financial affairs. Of significance, the husband’s grounds of appeal challenged the findings of the primary judge about his failure to disclose and his unconscionable conduct.
The submissions of the wife raise an interesting issue in connection with the husband’s “dishonesty”, which appears to go further than just the full and frank disclosure point. Mr Kirk submits that “[w]hilst this is a ‘conduct’ matter, it deserves separate treatment to demonstrate the extent of the Husband’s deplorable behaviour.” This reference is made specifically to the finding of the trial judge that the husband forged the wife’s signature in relation to their superannuation funds, the conclusions of the trial judge can be found at [107] – [108] and [189] – [190] of the Reasons.
In Weir and Weir (1993) FLC 92-338 at 79,593 the court said that “it is the duty of a party involved in property proceedings … to make a full disclosure of their financial affairs.” The Full Court commented that in circumstances of deliberate non-disclosure, future courts should not be “unduly cautious” about finding in favour of the innocent party, and in such circumstances “substantial justice will be done” if the innocent party receives costs (at 79,595). Of course, these remarks were in the context of trial proceedings.
Further, it is argued that we should take into account the husband’s conduct in refusing to negotiate. The solicitor for the wife explains in her affidavit filed in these proceedings on 21 January 2016 that letters were sent to the husband before the start of the trial asking to negotiate.
On 18 December 2014 the solicitor for the wife wrote to the solicitor for the husband enclosing information relevant to the property settlement and asking that there be negotiations. These overtures were rejected on 15 January 2015. On 13 February 2015 further relevant information including failure to disclose was drawn to the attention of the solicitors for the husband who again rejected a request to negotiate. This was in relation to the husband’s forgery of the wife’s signature and the husband’s failure to disclose the assets of their superannuation fund. The solicitor for the wife made it clear that the correspondence would be relied on to support an application for indemnity costs in the trial proceedings.
Reference has already been made to the very strong findings of the trial judge about the husband’s failure to make full and frank disclosure, and the forgery of the wife’s signature in relation to the superannuation funds. The potential for such findings was brought to the attention of the husband’s solicitors by the wife’s solicitors well before the trial commenced, in an attempt to resolve these trial issues and find a way to settle that dispute. Instead, the husband pressed on with his application. A number of adverse findings were made against him, and the financial agreement was set aside. Of course settlement of the trial would have also meant there was no appeal.
The husband was on notice that an application for indemnity costs would be made in respect of the trial. The trial was held over two days in March 2015, judgment delivered 19 June 2015 and final orders made 23 June 2015.
No offers to settle by either party were made after the Notice of Appeal was filed. The question therefore is whether offers to negotiate in the trial proceedings can be considered in a costs application for the appeal. Additionally, should the husband’s conduct during the trial (discussed in the paragraphs above), and his failure to make any offer to settle, be considered as relevant conduct for costs orders on appeal?
Mr Kirk for the wife referred to Dickson and Dickson (No 2) (1999) FLC 92-857. In that case, the Full Court was dealing with an appeal against a costs order made at a trial and in relation to the costs of a successful appeal heard by the court. It was necessary to re-consider the costs order at first instance because the Full Court had allowed the appeal and made a substantially different property order. It was submitted that the husband should pay the wife’s costs of the trial because the wife made an offer in writing during the trial process, which if accepted would have provided the husband with $100,000 more than he received from the Full Court. The wife asked that each party pay their own costs of the appeal.
The judges held different views in relation to a number of issues in that appeal. Kay J said:
14.Notwithstanding that the husband has been successful in respect of both appeals, they would have been rendered unnecessary had the husband accepted the wife’s offer in writing made on 3 June 1998. Whilst the meaning of “the proceedings” in s 117(2)(f) is capable of being read down to mean “the appeal”, it is equally capable of being more generously interpreted to include the whole of the proceedings for alteration of property interests. In any event, even if a narrow interpretation was adopted, there is ample scope within s 117(2)(g) for this Court to take into consideration the offer made at trial, which if accepted would have made this appeal unnecessary.
His Honour decided that the offer was relevant to the issue of costs of the trial and also the appeal.
It is important to note that Warnick J agreed that the offer made at the trial was a relevant matter which could be taken into account, but specifically disagreed with the interpretation of the term “proceedings”. His Honour commented:
3.I do not agree that, in considering the costs of the appeals, the term “the proceedings'', where that term is used in the sub-paragraphs of section 117(2A) of the Act, is capable of being interpreted to include proceedings outside the appeal proceedings. However, I agree that the question of the offer made by the wife at the trial is a relevant matter which can be taken into account pursuant to section 117(2A)(g).
In the opinion of Lindenmeyer J, the offer made during the trial was of no relevance to the costs of the appeal:
5.In my judgment, an appeal is a separate proceeding from the original proceeding which culminated in the orders against which the appeal is launched, the original proceeding being conducted by those orders. The words “the proceedings” where appearing twice in s 117(2A)(f) and once in s 117C (in the phrase “an offer… to settle the proceedings”) in my opinion means the proceedings in which costs are or may become an issue, i.e. in this instance, the appeal. Thus no relevant offer was made in this case.
6.As a matter of justice and fairness between the parties I consider that the wife should not now be permitted to rely upon her pre-trial settlement offer in answer to an application for the costs of the husband’s successful appeal. The wife, notwithstanding her earlier offer, obtained a favourable judgment in the Court below. Having done so, she then elected, in response to the husband’s appeal (which her own offer suggested was not without merit) to seek to uphold the judgment of the trial Judge, rather than to renew her offer to pay him a larger sum than he was entitled to under the orders appealed. It could be said that she decided to gamble on holding the trial judge’s orders (despite her own view, as evidenced by her offer, that they were over-generous to her) and lost. In those circumstances I would hold her pre-trial offer to have either no relevance to the issue of the costs of the appeal or, alternatively, to be a factor tending to support an order for costs in favour of the husband, rather than the wife.
We are of the opinion that so far as the criteria in s 117(2A)(b) – (f) are concerned, these are matters which are limited to the appeal proceedings because in each case, those sections refer to “the proceedings”. However, other matters, so long as they are relevant may be considered by reason of the provision of s 117(2A)(g) which does not contain the limitation of “the proceedings”. The latter could hardly be expressed in wider terms (Re JJT & Ors; exparte Victoria Legal Aid (1998) 195 CLR 184). It should not be read down to exclude matters which have arisen during or surrounding the trial.
It was submitted by counsel for the wife that the husband’s conduct, if not captured within s 117(2A)(c), could instead be covered by s 117(2A)(g). The following exchange during the hearing of the appeal expands upon this submission:
MURPHY J:Yes, but that’s the point. That’s the point with respect to offers is that it’s relevant to an appeal for the simple reason that had it been accepted there would be no appeal, because there would be no trial.
MR KIRK:Well, the same applies with regard to conduct, with respect, your Honour. The conduct was in relation to those matters that we’ve raised. If you didn’t bring it up – and I hope to be able to demonstrate to your Honours that those matters in relation to unconscientious behaviour or conduct by the husband was brought up for a determination by this court. When they bring it up here and then they abandon it, it’s, in my submission, that that conduct is not in this court, those matters, not all of them ‑ ‑ ‑
(Transcript 2 February 2016, p.8 l.28 – 38).
Further, in relation to conduct, Mr Kirk argued that the different views of Warnick and Kay JJ in the decision of Dickson was of no moment, because the husband’s conduct could still be brought to account under either of the subsections. We are of the view that this is not correct.
In addition to conduct of the trial proceedings and offers to negotiate made prior to the trial, there are a number of other matters to be considered which can be captured under s 117(2A)(g). It was effectively conceded by counsel for the Legal Personal Representative during the appeal hearing that there was a case for the husband to bear the costs of the appeal up to the point of the Legal Personal Representative being appointed (Transcript of appeal, 2 February 2016, p.30 l.9-13, p.31 l.13-27). This left the question of whether those costs should be on an indemnity basis. Why this concession was not made earlier was never explained.
There can be no doubt that in the unusual circumstances of this case, especially the husband’s conduct of the litigation, the Legal Personal Representative should pay the costs of the wife. By reference to s 117(2A)(g) the matters we consider most relevant are as follows:
a)As noted at [22] in these Reasons, the husband was found at trial to have been untruthful, made false representations, knowingly failed to make full and frank disclosure about his assets, knowingly withheld information and to be dishonest – in particular, the husband’s forgery of the wife’s signature in relation to a superannuation account to which the wife had no knowledge. As the appeal was discontinued these findings remain undisturbed;
b)This misconduct extends further to improper refusals to negotiate, with two letters being sent by the wife’s solicitors prior to the trial. At [29] of these Reasons, it was noted the husband was on notice for some time that his conduct, namely failure or refusal to disclose assets, and in particular the husband’s refusal to negotiate, would be used in an application for an indemnity costs order. In circumstances where there were substantial reasons to conclude that the husband had no prospect of success in enforcing the Financial Agreement, offers to negotiate were appropriate;
c)The wife has been put to substantial costs of the appeal, the Notice of Discontinuance being filed, after all the preparation was complete; and
d)Resisting an application for costs of the appeal.
These factors lead to very clear circumstances which justify a costs order being made in relation to the appellate proceedings.
The question remains whether the costs sought in relation to the application to expedite the appeal (expedition could have been conceded by the husband and orders made administratively without a hearing) and the appeal proceedings where ultimately a Notice of Discontinuance was filed; and the applications necessarily filed to seek costs of the appeal should be ordered on an indemnity basis?
Indemnity Costs
In the Family Court of Australia as with other jurisdictions, costs are usually ordered on a party and party basis. It is clear that the wife is entitled to a costs order, but the question whether it should be on an indemnity basis is one of significance in terms of the quantum sought.
The Explanatory Guide to the Family Law Rules 2004 (Cth) (“the Rules”) provides a useful (but somewhat curious) explanation of the meaning of indemnity costs as follows:
indemnity basis – an entitlement to costs, including costs under a costs agreement, for all costs incurred, other than costs that are unreasonable in amount or that have been incurred unreasonably.
The provisions of r 19.34(2) are important in appreciating the question of what is reasonable:
(2)If the court has ordered costs on an indemnity basis, the Registrar must allow all costs reasonably incurred and of a reasonable amount, having regard to, among other things:
(a) the scale of costs in Schedule 3;
(b)any costs agreement between the party to whom costs are payable and the party's lawyer; and
(c)charges ordinarily payable by a client to a lawyer for the work.
Thus, it can be seen that where an order is made for an assessment by a Registrar there is a level of supervision to ensure that the costs are reasonable.
The authorities in this court concerning the occasion when costs may be ordered on an indemnity basis are well known – see Kohan and Kohan (1993) FLC 92-340 and Yunghanns v Yunghanns (2000) FLC 93-029.
In Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive”), Sheppard J emphasised that there should be some “special or unusual feature in the case to justify the court in departing from the ordinary practice…” and provided examples of circumstances that might justify an award of indemnity costs.
In Munday v Bowman (1997) FLC 92-784 Holden CJ referred to the decision of Sheppard J in Colgate-Palmolive, and set out (at 84,660) a number of examples of circumstances which might attract indemnity costs (at 84,660):
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra).
(c)Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)).
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v Westpac Banking Corporation (unreported Federal Court, 5 March 1993)).
(e)An imprudent refusal of an offer to compromise.
As can immediately be seen, this matter, at least at the trial stage, had all those features adverse to the husband.
There are three parts to the application, first, the costs relating to the appeal which was discontinued, second, the application for expedition, and thirdly, the costs of this application. Although costs orders are highly discretionary in their nature, it should have been appreciated that such an order would mostly likely have been made – Mr Page QC virtually conceded this but resisted the order on an indemnity basis.
Of course, without a hearing of the appeal it is impossible to assess whether there was any merit in the appeal but the findings of the trial judge, based on expert evidence, demonstrated that the husband had been dishonest. Although the circumstances relating to the trial might attract an order on an indemnity basis, it could not be justified in the conduct of the appeal. Taking into account the timing of the filing of the Notice of Discontinuance we are of the view that costs should not be ordered on an indemnity basis.
Conclusion
The Legal Personal Representative should meet the costs of this application for costs on the same basis as the other costs order. The costs of the appeal up to the Notice of Discontinuance being filed should be met, on a party/party basis. This would include the application for expedition of the appeal.
MURPHY J
The background relevant to the instant Application has been set out by May and Ryan JJ whose Reasons in draft I have had the advantage of reading.
There are two distinct parts to the application for costs in respect of an appeal by the husband which was discontinued by the filing of a Notice of Discontinuance by his personal representative subsequent to his death. The wife deals separately with costs incurred up to the filing of the Notice of Discontinuance and those incurred subsequently, in particular those in respect of the hearing of the application for costs.
The wife had earlier successfully applied for an order expediting the appeal. The husband neither supported nor opposed that application. Costs were reserved to the appeal. The wife also pursues those reserved costs.
The trial of the property proceedings (now proceeding pursuant to s 79(8) consequent upon the death of the husband) remains outstanding before his Honour as does the wife’s application in respect of the costs of the trial.
Costs of the Appeal – Issues Arising From the Application
Section 117 of the Act
Costs do not follow as a consequence of filing a Notice of Discontinuance; rather the Family Law Rules 2004 (Cth) (“the Rules”) provide that a party may be ordered to pay costs upon the making of an application for same within 28 days of the filing of the Notice (r 22.42). The relevant terms of s 117 of the Act have been quoted by May and Ryan JJ.
The questions as to whether there should be an order made for the costs of the appeal and, in turn, how any such costs orders should be calculated, require the court to resolve two preliminary questions which arise from the arguments on behalf of the wife.
It will have been seen that each of sub-paragraphs (a) – (f) of s 117(2A) refer to a party or parties “to the proceedings”. The first question is whether “the proceedings” should be construed as pertaining to the whole of the proceedings so as to include the trial proceedings and the appeal proceedings or whether the sub-paragraphs should be construed so as to treat the appeal proceedings as distinct from the trial proceedings and the enumerated factors confined accordingly.
The second question pertains to s 117(2A)(g) and arises if matters relevant to sub-paragraphs (a) to (f) are confined to the particular proceedings in which costs are sought. The wide and general terms of s 117(2A)(g) are not confined to “the proceedings” but the question is, should that sub-paragraph nevertheless be read down so as to exclude matters relevant to the trial and confine the considerations to those affecting the appeal?
In the only Full Court authority to which we were referred, or which I could myself find, judicial views were divided on each of those questions.
Section 117(2A)(a) to (f) And “Proceedings”
In Dickson and Dickson (No 2) (1999) FLC 92-857 the trial judge had ordered the husband pay the wife’s costs of trial. On appeal, the Full Court re-exercised the s 79 discretion; awarded the husband significantly more than had the trial judge and called for written submissions on costs. It was submitted by the husband that the Full Court should set aside the order for costs made by the trial judge and re-exercise that discretion. Thus, it fell to the Full Court to determine the costs of both the trial and the appeal.
Potentially significant to each was the fact that the wife had, on the afternoon of the third day of trial, offered the husband $100,000 more than he received on the re-exercise by the Full Court. As has been seen, s 117(2A)(f) requires the court to take into account “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” (emphasis added). There is no suggestion in the report of the case that a separate offer had been made to settle the appeal proceedings.
Kay J held that the wife’s offer was “a most significant matter to be taken into account in determining the issue of costs at the trial and costs on appeal” (at 86,133, (emphasis added)). His Honour went on to acknowledge that while the expression “the proceedings” in s 117(2A)(f) was “capable of being read down to mean the appeal”, a “more generous” interpretation was to read it as referring to “the whole of the proceedings for alteration of property interests”.
In separate Reasons, Lindenmayer and Warnick JJ each disagreed. Lindenmayer J concluded that “an appeal is a separate proceeding from the original proceeding” (at 86,134). Warnick J held that the term “the proceedings” as used in s 117(2A) was not “capable of being interpreted to include proceedings outside the appeal proceedings” (at 86,135).
With all respect to Kay J, I consider the views of Lindenmayer and Warnick JJ to be correct. While I accept that the expression “the proceedings” as used in s 117(2A)(f) refers, as his Honour said, to “the whole of the proceedings for [in that case] alteration of property interests”, those proceedings came to an end when the orders pronounced by the trial court were entered. Here, the proceedings in respect of the binding financial agreement came to an end when his Honour made his orders. Thereafter, separate proceedings involving different principles were necessary if was said by a party that the orders were attended by error and should be set aside.
In my view, the question is not, respectfully, whether the expression should be given a “generous” or “narrow” interpretation, but rather what was intended by the legislature by reference to the ordinary and natural meaning of the expression within the context of the section and the Act as a whole.
Appeals are the subject of a separate conferral of jurisdiction to proceedings within the original jurisdiction of the court. “Proceedings” is defined in the Act to mean “a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding in the course of or in connexion with a proceeding”. The expression “the proceedings” is used in contrast to, for example, “the matter” or “the litigation”. Proceedings for an appeal can only be instituted after issues joined in original proceedings have been concluded with a “decree” which can be the subject of an appeal.
Section 117(2A)(g) – “Such Other Matters” Considered Relevant
The Full Court in Dickson was also divided on the question arising from the terms of s 117(2A)(g). However, in respect of this question, Kay and Warnick JJ were in agreement while Lindenmayer J’s view was to the contrary.
Lindenmayer J held that the sub-paragraph was confined to matters relevant to the appeal as distinct from the trial. Once it is accepted that the appeal proceedings are separate, a consequence is, in his Honour’s view, that (relevantly) offers should be tied to those separate proceedings. The fact that the wife in Dickson had not renewed her (ultimately generous) trial offer meant that, in respect of the (separate) appeal proceedings “[i]t could be said that she decided to gamble on holding the trial judge’s orders (despite her own view, as evidenced by her offer, that they were over-generous to her) and lost”. Consequently, his Honour found that “no relevant offer was made in this case” (at 86,134).
By way of contrast, Warnick J held that while the expression “the proceedings” as used in s 117(2A)(a) – (f) was confined to the appeal proceedings, “the question of the offer made by the wife at the trial is a relevant matter which can be taken into account pursuant to section 117(2A)(g)” (at 86,135). Kay J held that even if, contrary to his view, “a narrow interpretation” of (a) – (f) was adopted, “there is ample scope within s 117(2)(g) for this Court to take into consideration the offer made at trial”.
The decision by the High Court in Re JJT & Ors; exparte Victoria Legal Aid (1998) 195 CLR 184 involved a factual situation and issues very different from the instant circumstances. Nevertheless, it is important I think to refer to what Hayne J said:
97. Appearing, as it does, in the context of a provision enabling a court to make orders for costs, which is a provision remarkable only because it departs from the ordinary rule that costs follow the event in favour of a prima facie rule that each party abide his or her own costs, nothing in the context of s 117 supports the construction of s 117(2) upon which the impugned order must depend if it is authorised by that sub-section.
98. Indeed, the list of matters set out in sub-s (2A) to which the Family Court is directed to have regard in making orders under s 117(2) indicates clearly that the subject-matter of the orders to be made under s 117(2) is the costs which a person may be ordered to pay another as indemnity for that other's liability for professional fees and out of pocket expenses reasonably incurred in the litigation, that is, “costs” as that expression is ordinarily understood in the law.
Those statements sit conformably with the well-settled proposition that, subject to compliance with the terms of s 117, this Court has a wide discretion in awarding costs. (See, for example, Collins and Collins (1985) FLC 91-603, at 79,877). The broad discretion to award costs upon the finding of justifying circumstances is found in s 117(2). The considerations listed in s 117(2A), although mandatory as considerations, inform an otherwise unfettered discretion. The legislature must be presumed to have intended to not confine (g) in the same manner as (a) – (f) within the context of that broad discretion.
The fact that appeal proceedings are distinct from trial proceedings and that s 117(2A)(a) – (f) are confined to the proceedings to which they relate does not preclude an interpretation of sub-paragraph (g) that is not so confined. While the two proceedings are separate, factors relevant to the issue of costs of the appeal can plainly be seen to be relevant to the costs of an appeal where a broad discretion attends each. As but one example, as is evident from Dickson, acceptance of a trial offer may have obviated a trial and ipso facto an appeal. So, too, conduct in and about a trial can have a dramatic effect on the costs of both trial and appeal.
For those reasons, in respect of this issue I respectfully agree with the views of Warnick and Kay JJ in Dickson, and respectfully disagree with Lindenmayer J. In my respectful view, Lindenmayer J conflates the question of whether as a matter of principle considerations emerging from the trial may be taken into account in informing the discretion to award the costs of the appeal with the question of whether the particular circumstances justify any such order.
For those reasons, in my opinion:
a)The references to a party or parties to “the proceedings” in each of sub-paragraphs (a) – (f) of s 117(2A) confine a consideration of those matters to the specific proceedings the subject of the application for costs.
b)However, sub-paragraph (g) of s 117(2A) is not so confined and all matters relevant to the exercise of the discretion across the whole of the litigation might be taken into account in ordering costs, including specifically matters such as those enumerated within sub-paragraphs (a) – (f).
Costs of the Appeal – Justifying Circumstances?
“Wholly Unsuccessful”?
To the extent that it is argued that the filing of a Notice of Discontinuance means that the appeal was “wholly unsuccessful”, the argument must be rejected. (Bant & Clayton (Costs) [2016] FamCAFC 35, at [21] and [22]).
However, as I understood it, the argument on behalf of the wife had a different premise. The wife’s senior counsel, Mr Kirk, argues that the appeal should be seen as having been “wholly unsuccessful” by reason of it never having had any merit. It is argued that regard may be had to the Reasons of the primary judge to determine whether the appeal was “doomed to fail”. It is said that the wife had four specific “successes” at trial and, in addition, those “successes” were the product of numerous very serious adverse findings against the husband and his credit. Crucial among those findings, his Honour found that not only had the husband failed to comply with his duty of disclosure, he had actively sought to mislead the wife and her lawyers and that he had forged her signature.
In Bant, the Full Court held in respect of an application for costs flowing from the filing of a Notice of Discontinuance that s 117(2A((e) “does not apply to the facts of this case; it is designed for cases where an application is heard and determined and the applicant is wholly unsuccessful”.
To the extent that Mr Kirk’s argument relies upon the husband being “wholly unsuccessful” in the appeal within the meaning of s 117(2A)(e), it must also be rejected; the husband’s appeal was not “heard and determined”.
As a consequence, the arguments on behalf of the wife which suggest a role for s 117(2A)(a) – (f) of the Act in arriving at a conclusion of justifying circumstances within the meaning of s 117(2) should, in my view, be rejected.
Conduct
Although in my view it cannot be said that the husband has been “wholly unsuccessful” in the appeal within the meaning of that expression in s 117(2A)(e), I consider his conduct in pursuing an appeal in the circumstances of this case as a matter relevant to the issue of costs (within the meaning of s 117(2A)(g)). When the husband’s grounds of appeal and summary of argument are set against the trial judge’s findings and Reasons, the submission that the appeal never had reasonable prospects of success has real merit.
As the trial judge found, the husband’s conduct was egregious. It extended significantly beyond a failure to disclose; something which, in any event, well-settled authority demands be considered as fundamental and serious. The husband actively misled the wife. He forged her signature. The trial judge made it clear that he entirely rejected the husband’s evidence and credit generally. There can be little doubt that each and all of those findings were entirely open to his Honour. No sustainable appealable error is apparent from the grounds of appeal and the husband’s summary of argument.
Of course, the husband’s conduct at trial is likely to be highly relevant to the hearing of any application for the costs of that trial. We have no information before us in respect of any such proceedings. It might be said that the conduct is a more telling factor and of more direct relevance to any order for costs of the trial. Yet, as has earlier been explained, I consider that it is also a matter to which regard should be had in assessing the costs of the appeal; it is part of the husband’s conduct of the litigation as a whole and the conduct at trial had an impact upon the course of the appeal, including, for example, the wife’s desire to make an offer in writing in respect of the appeal and the potential terms of any such offer.
The Wife’s Attempts to Negotiate Before Trial
On at least two occasions prior to the trial, the solicitors for the wife wrote to the husband asking him to negotiate so as to avoid the expense of a trial. That correspondence referred to aspects of the husband’s conduct including significant issues in relation to his failure to disclose. Correspondence on 13 February 2015 made it clear that the issues raised would be relied upon in support of an application for indemnity costs of the trial. There is no evidence before this Court that the later letter was responded to.
Neither is there any evidence before this Court of any offer to settle the appeal proceedings by either party. (In that respect, what was said by the Full Court in Lenova & Lenova(Costs) [2011] FamCAFC 141, particularly at [10] and [11] is important).
It should also be observed that the nature of the misleading conduct engaged in by the husband, including the failure to disclose assets in his superannuation fund, must have had an impact upon the ability of the wife to make a proper assessment of the terms of any reasonable offer to settle by her and, indeed, whether any offer to settle could be made at all.
Conclusion as to Justifying Circumstances and the Costs of the Appeal
Each of the matters just referred to might be seen to justify an order for costs of the appeal. Taken together, in my view they make an order for costs irresistible. Ultimately, in the hearing before us, senior counsel for the personal representative effectively conceded as much.
I would order that the respondent personal representative cause to be paid to the wife her costs of and incidental to the appeal.
The Costs of the Application for Costs
As explained at the outset of these Reasons, the wife sought to distinguish the quantum of costs incurred in respect of the appeal from those incurred in respect of the application itself and the hearing of it.
Senior counsel for the personal representative Mr Page submitted, that the personal representative “has been appointed not only as the personal representative of the deceased [husband] but is also the executor and the sole beneficiary of his estate”. It is argued in seeking to resist an application for costs that the personal representative did not initiate the appeal and had no role in doing so. Further, it is said that subsequent to the husband’s death she “sought advice [for] herself [from senior counsel] and acted immediately after receiving that advice” in filing the Notice of Discontinuance.
The Notice of Appeal was filed on 21 July 2015. On 21 October 2015, an order for expedition was made. On 15 December 2015, the personal representative (who was the husband’s second wife) was appointed as his litigation guardian. Subsequent to that appointment and prior to the filing of the Notice of Discontinuance, the record reveals no communication by the personal representative or her lawyers suggesting that the appeal would not proceed. The husband died on 1 January 2016. On 14 January 2016, the Appeals Registrar substituted the personal representative as a party to the appeal and she was given leave to continue those proceedings. The following day, the Notice of Discontinuance was filed.
Mr Page’s submissions were, as I understood them, directed to a contention that there should be no order as to costs of the appeal or the application. I am not persuaded that any of those arguments militate against an order for costs prior to the appointment of the personal representative if it be accepted, as was submitted, that she had no role in the appeal until her appointment. To the extent that the submissions have weight in respect of the period subsequent to her appointment, I am of the view that the factors earlier outlined significantly outweigh any such considerations. As I will shortly explain, I am however of the view that the submissions just outlined are relevant to the basis upon which cost should be awarded.
Conclusion As to the Costs of the Application for Costs
I would order that the respondent cause to be paid to the wife her costs of and incidental to the application for costs, including the hearing of the application.
The Reserved Costs of the Expedition Hearing
The wife’s application for expedition was made because of the then serious ill health of the husband. As has been said, he neither supported nor opposed the application. It might be argued that those two factors support the application of s 117(1).
The application for expedition should be seen in the light of matters which apply to the appeal itself: the appeal was unmeritorious; his conduct was egregious; and no offer was made to bring the appeal to an end prior to his death.
Again, I am of the view that the circumstances justify an order for costs.
The Basis Upon Which Costs Should Be Calculated
The Amounts Claimed
The wife seeks an order for indemnity costs. The total costs of the appeal, application and reserved costs of the expedition application are estimated to be $119,500. That figure comprises: $14,000 in respect of the expedition application; approximately $56,500 in solicitors costs in respect of the appeal and application and $49,000 in counsel’s fees.
It should be emphasised that, at least in respect of a component of the latter totals, a bill hasn’t been rendered and the amounts are estimates. Those estimates, however, comprise the evidence as to the approximate quantum of an indemnity costs order before this Court.
The Method of Calculation of Costs
The court is given a wide power to determine the basis of an order for costs. Rule 19.18 provides:
(1) The court may order that a party is entitled to costs:
(a) of a specific amount;
(b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
(c)to be calculated in accordance with the method stated in the order; or
(d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.
Example: For paragraph (1)(c), the stated method may be in accordance with Schedule 3 but with an additional percentage for complexity.
(2)If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.
(3) In making an order under subrule (1), the court may consider:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party's behaviour in the case;
(c) the rates ordinarily payable to lawyers in comparable cases;
(d)whether a lawyer's conduct has been improper or unreasonable;
(e)the time properly spent on the case, or in complying with pre-action procedures; and
(f) expenses properly paid or payable.
A party applying for an indemnity costs order must inform the court of any costs agreement and its terms (r 19.08(3)). The evident purpose of the rule would appear to have the court scrutinise the terms of the costs agreement before any order for indemnity costs is made. That purpose would appear to be reinforced by, at least, sub-paragraphs (a) and (c) of r 19.18(3).
(a) Importance, Complexity and Difficulty
The quantum of the wife’s claimed costs was the subject of inquiry by members of the Bench during the course of the hearing before us. It was suggested that the sums seemed high in light of the relatively narrow ambit and lack of complexity of the appeal litigation to which it pertained.
In seeking to justify the sums involved as “a reasonable result in this case”, Mr Kirk envisaged the court undertaking an assessment of what was reasonable: “Your Honour[s] [have] the costs agreements that are there. They will be assessed by your Honours in terms of the assessment you make as to what the (sic) scale is the appropriate one” (Transcript of appeal, 2 February 2016, p 37). In dealing with specific questions as to the quantum, Mr Kirk earlier referred to his fees as a component of the total, and said that it was necessary for him to read “seven volumes of the appeal books”.
Be that as it may. The wife’s costs were incurred as a respondent to an appeal. The preparation for the appeal, including the breadth and depth of the necessary reading and the preparation of a written outline of argument should be measured against the fact Mr Kirk’s arguments are premised on the appeal being so lacking in merit that the appeal was “doomed to fail”. No appearance to argue the appeal was required because a Notice of Discontinuance was filed prior to the listed date for hearing.
It does no disrespect to the careful written submissions of Mr Kirk to say that the issues in this appeal were far from complex and not at all difficult. So, too, the issues in the application for costs.
The application for expedition was founded on the terminal illness of the husband and his then rapidly failing health and was neither supported nor opposed by the husband. Axiomatically, the application was anything but complex or difficult. The material necessary for its determination should be seen in that light as in my view should the briefing of (a different) senior counsel on the hearing of the application.
(b) The reasonableness of each party’s behaviour
There can be no suggestion that the behaviour of the wife is anything but reasonable. In my view the behaviour of the husband during the trial and subsequently in pursuing an unmeritorious appeal is a factor that should be taken into account in assessing the basis upon which costs should be awarded. Nothing needs to be added to the comments earlier made about that behaviour.
(c) The Rates Ordinary Payable and the Terms of the Costs Agreement
The estimated costs figures in the wife’s solicitor’s affidavit are arrived at by reference to costs agreements executed between the wife and each of her solicitors and counsel.
No evidence was placed before the Court as to how the rates provided for within the respective costs agreements of the solicitors and counsel compare to the “rates ordinarily payable to lawyers”. That said, this Court has extensive experience of those rates from dealing with applications of the present types in which costs agreements are in evidence. The rates in this case are comparable with the rates seen in those agreements.
That same judicial experience over many years allows judicial notice to be taken of the fact that costs agreements invariably provide for professional fees (and often disbursements) higher, sometimes significantly higher, than the scales of costs upon which party and party costs are awarded by reference to Schedules 3 and 4 of the Rules. These costs agreements are no different.
The wife’s costs agreement reveals an hourly charging rates of $495 (including GST) for an Accredited Family Law specialist and $412.50 per hour (including GST) for an associate, each of which is chargeable in six-minute units and for all work done for the client. By way of comparison, Schedule 3 of the Rules provides for a rate $237 per hour (including GST) for “time reasonably spent by a lawyer on work requiring the skill of a lawyer”. Similarly the costs agreement with senior counsel reveals “fees for appellate work” of $8250 per day (including GST) and $825 per hour (including GST) whereas Schedule 3 provides for $6531.14 and $783.70 (including GST) respectively.
The hourly and daily rates charged by the solicitors and counsel are by no means outside of the range of fees one might expect for lawyers of their qualifications and experience.
(d) The Time Spent Reasonably on the Case
As has been said, the time spent on the case is the foundation for the fees chargeable by the solicitors and, at least in part, the fees charged by counsel. There is no evidence by which I could conclude that the time in respect of each individual item or collection of items was spent “properly” but nothing suggests that it was not.
(e) Other Relevant Matters
I think there is merit in the submission that it was the husband and not his current wife / personal representative who initiated and pursued the appeal in the circumstances earlier outlined. It is true that she took steps to be substituted for him after his death and continued the appeal. Yet, she took advice as the representative of his estate and, it seems, acted on the advice with proper expedition notwithstanding that no offer to settle the appeal was, apparently, forthcoming.
Although not referred to by her counsel, it seems to me that the timing of her actions should also be seen in the light of her being the wife of a dying man who, subsequent to and despite his death, took proper steps to bring the appeal proceedings to an end. In addition, it is in my view significant that any costs order will need to be met from the estate thereby diminishing what is to be received by its beneficiary.
I am conscious of authorities in this Court that have applied the long-standing principles set out by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225. (See, for example, Kohan and Yunghanns cited above by May and Ryan JJ). The examples given by Shepherd J of conduct that may justify the required epithet of “special or unusual feature[s]” or “exceptional” or those examples cited by other judges (for example Holden CJ in Munday referred to above by May and Ryan JJ) are just that. Each case is dependent upon the exercise of discretion flowing from the circumstances of that case.
The fees reflected in the wife’s costs agreement are, unsurprisingly and unremarkably, significantly in excess of the Schedule 3 charges governing costs on a party and party basis. In her costs disclosure statement to the wife, the solicitor enumerated six steps up to and including the hearing of the appeal. The estimated total costs were $25,500. That figure represents about 45 per cent of the figure estimated as the total actual solicitor’s costs incurred for those steps.
In her affidavit, the solicitor explains the difference between that figure and the estimated actual total costs of $56,000 because of “the necessity of [the wife] making 2 applications in an appeal”. Those two applications were the application to expedite which was not opposed and which was made by reason of the facts earlier outlined and the Application by the personal representative to be substituted as a party. I am myself unable to see how any work that may have been involved in each those two entirely straightforward applications explains the disparity. Further, and not insignificantly, the first of those applications is, in any event, the subject of a separate calculation of claimed costs. Of course, the estimate was also given in respect of an appeal which proceeded to a hearing. This appeal did not.
The work agreed to be undertaken by instructions given by the wife to her solicitor and the rate of, and basis for, the amount charged in respect of that work is the subject of a costs agreement freely entered into between the solicitor and the client. The terms of that agreement, including the price for work undertaken and the scope of such work is determined, at least theoretically, by the market and the willingness of the client to pay a price freely agreed to lawyers of the wife’s choice. Such amounts, the total of such amounts and the work undertaken as dictated by that agreement and the client’s instructions, may well be reasonable as between those parties. However, that does not mean that an order requiring another party to litigation, who is not a party to the costs agreement, to pay for that work or at that price is “just” within the meaning of s 117(2).
Among other things, the consideration of what is a “just” order must also be determined by reference to the rates at which costs are charged and the work performed, but also whether the work is proportionate to the issues in the case and their complexity.
Conclusion As To the Method of Calculation of Costs and Amount
The factors earlier referred to, including in particular the egregious conduct of the husband, can be seen to support the wife’s argument in respect of indemnity costs or, alternatively, that an order for party and party costs by reference to the relevant Schedules to the Rules is an insufficient partial indemnity in this case.
That said, I remain unpersuaded that an order for indemnity costs in an amount in the region of $120,000 (even if subject to a later assessment pursuant to r 19.34) is just. Those total estimated fees are, it should be remembered, in respect of what was, despite the conduct of the husband at trial and the attendant need for the wife to prove the falsity of his evidence, in truth, an appeal which involved a straightforward defence of the trial judge’s strong findings measured against a pleaded appeal with negligible merit.
I would have thought that the estimated total figure given in the solicitor’s disclosure document to which I have earlier referred is much closer to a figure that it is “just” for the personal representative to pay when all of the matters to which I have earlier referred are taken into account.
The estimate of solicitor’s costs for all steps necessary for the conduct of the appeal is also a useful measuring stick for the costs of the expedition application. It will be appreciated that the indemnity costs claimed for that application are more than half the estimated total solicitor’s costs for the entire six steps involved in the appeal. The wife was, of course, perfectly entitled to be represented at the expedition hearing by whomsoever she chose, but I can’t see how it is just that the other party should pay the fees for a silk to appear at that hearing.
The partial indemnity offered by an order for assessed party/party costs involves the application of charging rates significantly lower than those charged to the wife. In my view, an order restricted to those amounts and which is also referenced in to the actions and steps to which those charges can be applied as per Schedule 3 is likely to produce a result that pays insufficient regard to the factors relevant to an order that is “just” in the circumstances of this case.
In addition, I am conscious that the very facts and conduct of which the applicant wife complains renders an assessment process likely to be attended by conflict and the potential for significant further costs. Further, an itemised bill of costs has not yet been prepared. Experience shows that the very preparation of such a bill can involve significant further costs, much more so the other costs associated with the assessment process.
I consider that an order for costs which is “just” within the meaning of s 117(2) of the Act is one which “specif[ies] the amount” of those costs.
The terms of r 19.18(1)(a) are analogous to, for example, s 98(4) of the Civil Procedure Act 2005 (NSW). That section was the subject of the decision In Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23. There, Einstein J referred to the principles applicable to a court fixing costs. I consider that those same principle apply analogously to r 19.18(1)(a).
If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court” (Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119, at [24] cited in Idaport at [9]). The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”. (Idaport at [9](v), citing Harrison v Schipp (2002) 54 NSWLR 738).
Obviously enough, the court must act judicially in fixing or specifying a sum of costs, but:
…the requirement that the power to award a gross sum should be exercised judicially does not mean that it must be exercised in any scientific or formulaic manner; At the heart of the judicial function is the responsibility to weigh up competing factors and considerations, many of which might conflict, to reach a determination. Acting judicially carries with it an obligation to apply the rules of natural justice, to act impartially and to apply the law to the facts. …
(Idaport, at [10] per Einstein J.)
I have earlier sought to weigh the factors I consider to be relevant. As I have said, the total costs of the appeal estimated by the solicitor for the wife seem to me to be reasonable. That sum represents about 45 per cent of the cost estimated as ultimately being incurred by the solicitors. If something like that figure is applied to both the costs of the appeal and application and to the reserved costs of the expedition application, the total sum arrived at seems to me to be just.
I see no reason to not take a similar approach to counsel’s fees. I am unable to see how an order that would see the wife paying $49,000 in counsel’s fees in respect of a straightforward appeal that didn’t in fact proceed and a straightforward application for costs can be described as just.
I would order that the costs of the appeal and application for costs be fixed in the sum of $45,000 in total. To similar effect, I would fix the costs of the application for expedition in the sum of $6,000. The effect is an order requiring the personal representative to cause to be paid to the wife a total sum of $51,000. I would allow 28 days to pay.
Proposed Orders
I would order that:
(1)The respondent cause to be paid to the applicant her costs of and incidental to the application for expedition reserved on 21 October 2015, fixed in the sum of $6,000;
(2)The respondent cause to be paid to the applicant her costs of and incidental to Appeal NA 52 of 2015 and her costs of and incidental to the Application in an Appeal filed 21 January 2016 seeking those costs, fixed in the total sum of $45,000; and
(3)The said sums, together totalling $51,000, shall be caused to be paid within 28 days of the date of these orders.
I certify that the preceding one hundred and thirty-five (135) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Ryan & Murphy JJ) delivered on 24 November 2016.
Associate:
Date: 24 November 2016
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