Peterson & Davis
[2021] FamCA 115
•12 March 2021
FAMILY COURT OF AUSTRALIA
Peterson & Davis [2021] FamCA 115
File number(s): PAC 1208 of 2016 Judgment of: FOSTER J Date of judgment: 12 March 2021 Catchwords: FAMILY LAW – COSTS – Where application for costs arising from dismissal of application for the appointment of a case guardian – Where discussion of applicable principles – Where order for costs made. Legislation: Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) r 19.18
Cases cited: Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160
Bele & Vaughan (Costs) [2012] FamCAFC 198
Collins and Collins (1985) FLC 91-603
Greedy and Greedy (1982) FLC 91-250
Hawkins & Roe [2012] FamCAFC 77
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
Luadaka v Luadaka (1998) FLC 92-830
Parke & the Estate of the Late A Parke (2016) FLC 93 748
Penfold v Penfold (1980) 144 CLR 311
Peterson & Davis and Ors [2020] FamCA 723
Phillips & Hansford [2020] FamCAFC 28; (2020) FLC 93-941
Number of paragraphs: 32 Date of last submission/s: 3 December 2020 Date of hearing: 17 November 2020 Place: Parramatta Counsel for the Applicant: Mr George Solicitor for the Applicant: Williamson & Learmonth Solicitors Solicitor for the First Respondent: Adams & Partners Lawyers Counsel for the Second Respondent: Mr Eardley Solicitor for the Second Respondent: Mercantile Legal Services Counsel for the Third and Fourth Respondents: Mr Allen Solicitor for the Third and Fourth Respondents: McEvoy Legal ORDERS
PAC 1208 of 2016 BETWEEN: MS PETERSON
Applicant
AND: MR DAVIS
First Respondent
MR CUSSON
Second Respondent
MR B DAVIS (and other named in the Schedule)
Third Respondent
ORDER MADE BY:
FOSTER J
DATE OF ORDER:
12 MARCH 2021
THE COURT ORDERS THAT:
1.The first respondent pay the second respondent’s costs of and incidental to the Application in a Case filed by the first respondent on 16 September 2020 in the sum of $7,500.
2.Such costs be a charge as against the first respondent’s interest in the proceeds of sale of the property situate at C Street, Suburb B, New South Wales.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Peterson & Davis has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
FOSTER J:
In long-standing proceedings relating to both final property and parenting, trial directions to proceed those issues to final hearing were made on 24 May 2018.
Proceedings were initially listed for a compliance check before a registrar on 26 July 2018 on which date the parties had not complied with trial directions and proceedings were adjourned for further compliance listing to 23 August 2018.
On 23 August 2018, in the event of foreshadowed applications for further interim orders and/or contravention applications, proceedings were adjourned for judicial case management to 19 October 2018. On that date leave was granted to the parties to approach the list clerk for allocation of trial dates as to both parenting and property.
Proceedings as to parenting were listed for hearing for three days commencing 23 April 2019. On 24 April 2019 final parenting orders were made by consent in relation to the two children of the parties’ relationship, then aged nearly 15 and 13.
Subsequently, final property proceedings were listed for hearing commencing 6 April 2020. By reason of the then COVID-19 concerns those trial dates were vacated and further trial dates commencing 10 August 2020 were allocated. On 6 August 2020 an order was made for the first respondent to appear at the hearing by telemetry link as he was then in custody at the F correctional centre. Circumstances relating to the adjournment of those proceedings were dealt with in reasons for judgement delivered 1 September 2020: Peterson & Davis and Ors [2020] FamCA 723.
Subsequently, on 16 September 2020 an Application in a Case was filed on behalf of the first respondent Mr Davis seeking the appointment of one Ms G as his case guardian for the purposes of the proceedings. The Application in a Case was listed for judicial case management on 2 October 2020. The application was supported by an affidavit by the solicitor for the first respondent, annexing a medical report from the first respondent’s general practitioner. That medical report provided no evidence that the first respondent came within the definition of a person with a disability as provided for in the Dictionary to the Family Law Rules. A person with a disability is a person who “because of a physical or mental disability does not understand the nature and possible consequences of the case or is not capable of adequately conducting, or giving adequate instructions for the conduct of the case.”
It is incumbent upon the applicant for the appointment of a case guardian to adduce relevant evidence as to the relevant circumstances of the person in respect of whom the application is made, that brings that person within the definition of a person with a disability.
The Application in a Case was listed before the Court on 2 October 2020 and it was ordered that the husband file and serve any further affidavit material to be relied upon, including an affidavit by his treating mental health practitioner such as to provide a foundation for the proposed appointment of a case guardian, with those affidavits to be filed and served by no later than Friday, 30 October 2020. It was further ordered that in default of the husband filing and serving further affidavit material, his Application in a Case will stand dismissed. Costs of the wife, the trustee in bankruptcy and the paternal grandparents, being the third and fourth respondents, were reserved. The Application in a Case was adjourned to 17 November 2020.
As a consequence of the first respondent’s default in compliance with orders made 2 October 2020, the Application in a Case was dismissed. On 17 November 2020 it was ordered that any application for costs arising from the dismissed Application in a Case be made by way of short written submission filed and served by 26 November 2020, with any submissions in response to be filed and served by 3 December 2020.
Subsequently on 26 November 2020 the second respondent (the first respondent’s trustee in bankruptcy) filed submissions as to costs.
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs.
That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.
Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They relevantly, in these proceedings, relate to the following:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party has legal aid and the terms of any grant of aid;
(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 answers, 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.
In Collins and Collins (1985) FLC 91-603 (at 79,877), the Full Court described the discretion conferred by s 117 as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way.
In Greedy and Greedy (1982) FLC 91-250 and Luadaka v Luadaka (1998) FLC 92-830, the Full Court made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.
Later the Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
17.With respect to the application of the section, in Penfold and Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a clear case".
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
(footnotes omitted)
18.The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:
… A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162, the purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”.
In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 the Court said at [10] that “the court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.
Murphy J observed in Parke & the Estate of the Late A Parke (2016) FLC 93‑748:
130.If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court”… 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”…
The application for costs by the second respondent is for an order for costs on an indemnity basis, quantified in the sum of $10,602, with such costs to be deducted from the first respondent’s share of the proceeds of sale of the real estate property at C Street, Suburb B.
It is usual for the Court to make an order for costs on a party/party basis if costs are to be ordered.
Provisions of the Family Law Rules 2004 (Cth) (“the Rules”), particularly rule 19.18:
19.18 Method of calculation of costs
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.
The Rule further provides, in subparagraph (3), that:
(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.
The Court has jurisdiction in its discretion to make an order for costs on an indemnity basis and the purpose of such an award is to more fully or even wholly repay to a party all, or at least the majority, of their legal costs and disbursements and charges incurred in the proceedings.
As the Full Court again said in Phillips & Hansford [2020] FamCAFC 28; (2020) FLC 93-941:
35.Indemnity cost orders are made only in exceptional cases (Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478; D & D (Costs) (No. 2) (2010) FLC 93-435).
36.Whilst the categories of cases in which indemnity cost orders may be awarded are not closed, it is accepted that such costs may be ordered where a case was pursued with “wilful disregard of known facts or clearly established law” and where there has been “an imprudent refusal of an offer to compromise” (Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233).
37.In relation to the first category, it has been said that indemnity costs may be awarded where “the applicant, properly advised, should have known that he had no chance of success” (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401) and where “a party persists in what should on proper consideration be seen to be a hopeless case” (J‑Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers – Western Australian Branch & Anor [1993] FCA 70 per French J at 5).
Strickland J in Bele & Vaughan (Costs) [2012] FamCAFC 198 at [26] to [28] on this issue encapsulated the relevant legal principles:
26.A useful recent discussion of the question of indemnity costs is to be found in the decision of the Full Court in D & D (Costs) (No 2) (2010) FLC 93-435. There the Full Court reviewed extensively earlier authorities including Limousin v Limousin (Costs) (2008) 38 Fam LR 478 and Kohan and Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co & Another v Cussons Pty Ltd (1993) 118 ALR 248.
27.The ordinary rule is that an order for costs is calculated on a party/party basis, and it emerges from the authorities referred to above that to depart from that rule exceptional circumstances need to be demonstrated.
28. As to what might constitute an exceptional circumstance, reference can be made to the oft-cited decision of Sheppard J in Colgate-Palmolive Co & Another v Cussons Pty Ltd where his Honour detailed circumstances that might qualify. Usefully, Holden J in Munday v Bowman (1997) FLC 92-784 at 84,660 drew from the decision of Sheppard J the following examples:
(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.
It is the reality that in respect of the application for the appointment of a case guardian that the application was fundamentally flawed by the absence of appropriate evidence as to the health circumstances of the first respondent. That fundamental issue was brought to the attention of the solicitors for the first respondent on the first return date and was not remedied with the consequent dismissal of the application.
The second respondent has not informed the Court that he is bound by a costs agreement nor provided a copy of his costs agreement or details as to its terms as between himself and his solicitors in compliance with Rule 19.08(3). Such omission is fatal to an application for indemnity costs.
However, in all of the circumstances it is appropriate that the second respondent acting as trustee of the bankrupt estate of the first respondent, be entitled to its costs as against the first respondent of the failed application.
The second respondent asserts that its costs incurred total $10,602. Doing the best that can be done on the evidence before the Court, the second respondent’s costs will be assessed on a party/party basis in the sum of $7,500.
It is appropriate that the first respondent be ordered to pay those costs. Orders will be made accordingly.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Foster. Associate:
Dated: 12 March 2021
SCHEDULE OF PARTIES
PAC 1208 of 2016 Respondents
Fourth Respondent:
MS DAVIS
0
11
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