Prantage & Prantage (Costs)
[2014] FamCA 850
•9 September 2014
FAMILY COURT OF AUSTRALIA
| PRANTAGE & PRANTAGE (COSTS) | [2014] FamCA 850 |
FAMILY LAW – COSTS – wife’s application for indemnity costs – where the husband’s case in the substantive proceedings was without merit – matters justifying departure from general proposition that each party shall bear his or her own costs – matters justifying an order for costs – matters justifying an assessment of costs on a basis which is a hybrid of practitioner/client and party/party costs – payment of costs, once assessed, from monies held in trust – husband to pay costs of this application for costs
| Prantage & Prantage (2013) 49 Fam LR 197 |
| APPLICANT: | Mr Prantage |
| RESPONDENT: | Ms Prantage |
| INTERVENOR: |
| INDEPENDENT CHILDREN’S LAWYER: |
| FILE NUMBER: | MLC | 11263 | of | 2008 |
| DATE DELIVERED: | 9 September 2014 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Bennett J |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | In person |
| SOLICITOR FOR THE APPLICANT: |
| COUNSEL FOR THE RESPONDENT: | Ms Smallwood |
| SOLICITOR FOR THE RESPONDENT: | Lampe Family Lawyers |
Orders
The husband pay the wife’s costs of and incidental to his application filed 27 December 2012 and the wife’s response filed 26 April 2013 calculated as follows:-
a)Without including the proceedings on 17 July 2014;
b)Without regard to the reasonable costs of Dr NZ attending court to give evidence;
c)With costs referrable to the perusing and copying the husband’s affidavits sworn on 27 December 2012 and 6 April 2013 and taking instructions for evidence in response and drawing, engrossing and filing any evidence in response thereto to be assessed on an indemnity basis;
d)With counsel’s fees to be assessed at the top of the scale for fees for counsel for work done as provided for in Schedule 3 to the Family Law Rules (“the Rules”);
e)As to the balance, to be assessed in accordance with Schedule 3 to the Rules;
f)For the avoidance of doubt, in respect of the costs referred to in 1(e), 1(d) and 4, the Registrar may make such allowance as he/she considers appropriate, in accordance with rule 19.35, in relation to matters not specified in Schedule 3 to the Rules.
The wife serve an itemised costs account on the husband within 21 days.
In the event that the husband disputes any item of the itemised costs account then within 28 days of service upon him of the wife’s itemised costs account, the husband serve a Notice Disputing Itemised Costs Account in accordance with rule 19.23 of the Rules.
In the event that the husband fails to comply with paragraph 3, the wife have liberty to apply to the Registrar for an order pursuant to rule 19.37 of the Rules.
The husband pay the wife’s costs of, and incidental to, this costs application, such costs to:-
a)Accompany but appear separately from the itemised costs for the purpose of paragraph 2 of this Order;
b)Be assessed in accordance with Schedule 3 to the Rules save that the work of counsel be assessed at the top of the scale for fees for counsel for work done as provided for in Schedule 3 to the Rules ;
c)Be assessed together with the costs payable pursuant to paragraph 1 of this Order.
Once the costs are assessed, the wife be, and is hereby, entitled to have paid to her from the monies held on trust for the parties by Gadens Lawyers funds not greater that the amount of the costs assessment order of the Registrar and for this purpose:-
a)The wife’s practitioners serve a sealed copy of the costs assessment order on the husband by sending same by pre-paid post to his address for service under cover of a letter specifying that the wife will require Gadens Lawyers to pay to her lawyers monies not exceeding the amount of the costs assessment order;
b)The wife’s practitioners send to Gadens Lawyers:-
i)a sealed copy of this Order; and
ii)the costs assessment order; and
iii)a copy of any letter sent pursuant to sub-paragraph 5(a) of this Order –
under cover of a letter requesting that an amount not greater than the amount of the costs assessment order be paid to her lawyers.
Any monies paid to the wife pursuant to paragraph 5 of this Order are hereby deemed to be funds paid for and on behalf of the husband.
Nothing in paragraph 5 of this Order prevents the wife from recovering part or all of the costs to which she is entitled pursuant to this Order from the husband direct without recourse to the funds held by Gadens Lawyers.
Pursuant to rule 19.50, I certify that it was reasonable to engage either counsel or a lawyer (whichever was the case) to attend for the wife to take judgement.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Prantage & Prantage (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 11263 of 2007
| Mr Prantage |
Applicant
And
| Ms Prantage |
Respondent
REASONS FOR JUDGMENT
Introduction
On 23 July 2014 I dismissed the husband’s application for parenting orders and acceded to the wife’s application that the husband not be entitled to institute further parenting proceedings without leave of the court. I also ordered that:-
(3)Any party wishing to make an application for costs in this proceeding do so by written submission filed and served not later than 14 days hence and any party against whom costs are sought file and serve any submissions in response in writing within 14 days of service upon them of the other party’s submissions.
(4)The submissions as to costs are to be not longer than four single sided pages of double spaced text in a font not smaller than 13 point.
The wife now seeks an order for costs.
The applications
The wife seeks[1] that the husband pay her costs of and incidental to the husband’s application filed on 27 December 2012, such costs to be calculated on an indemnity basis. The wife quantifies her costs on an indemnity basis, as at 1 August 2014, at $99,003.83. In the alternative, the wife seeks that the husband pay her costs on a party/party basis. In the wife’s amended response filed 26 April 2013 the wife seeks that any costs awarded be deducted from the monies held on trust for the parties by Gadens Lawyers.
[1] Wife’s submissions dated 6 August 2014 [1].
The husband seeks[2] that each party pay their own costs.
[2] Husband’s submissions dated 12 August 2014[1].
The law
Costs orders are governed by s 117 of the Family Law Act 1975 (Cth) (“the Act”). That section relevantly provides as follows:
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
Application of the law to the facts
The majority of the High Court in Penfold v Penfold (1980) 144 CLR 311 clarified that s 117(1) of the Act expresses a general rule, that each party bear their own costs, but that it is not paramount to s 117(2). Section 117(1) is expressed as subject to subsection (2) and will yield to it in a particular case if the court is satisfied that there are circumstances justifying an order that one party pay part or all of another party’s costs.
In order for the wife’s to succeed with her application, the court must be satisfied that:-
a)the principle contained in s 117(1), that each party should bear his or her own costs is displaced;
b)it is “just” to make a costs order; and
c)the assessment of costs on an indemnity basis is appropriate.
The wife bears the onus of persuading the court of each element. A positive finding in relation to (a) enlivens the court’s discretion to make a costs order. If the wife satisfies me of (a) and (b) but not (c), costs may be calculated on another basis. For instance, on a lawyer and client basis or a party/party basis or by a specified method or in accordance with Schedule 3 of the Family Law Rules. Neither party has asked me to fix the costs so I do not consider that it is open to me to order costs in a specific amount.
It is appropriate to identify the matters which justify a costs order being made prior to, and discretely from, a consideration of the specific factors which may affect what order (if any) is to be made. Conflating the two steps must be avoided, however the factors which can inform the exercise of the discretion may be the same or similar to the factors in s 117(2A) just differently applied (see Bevan and Bevan [2013] FamCAFC 116 [89]).
In the present case, the facts that support a departure from the principle that each party should bear their own costs are;
a)the husband was wholly unsuccessful in his application to reopen the parenting proceedings;
b)the husband conducted his case so as to require the wife to incur significant expense in responding to it;
c)the husband’s application was a discrete application insofar as the parties were not before the court for any other reason;
d)the husband failed or neglected to adduce evidence in support of his case, other than his own evidence which was largely his opinion and not probative;
e)the wife was successful in her application for the husband to be enjoined from issuing further parenting proceedings without first obtaining leave of the court to do so; and
f)the wife’s solicitors put the husband on notice that costs would be sought. They wrote to the husband on 21 January 2013 as follows:
We refer to your Application for parenting orders filed 27th December 2012.
We are of the opinion that your Application will fail in its entirety and should you proceed with the Application we submit that it should be dismissed with costs for the following reasons:
i.Your Affidavit has not demonstrated a material change in circumstances that would warrant the re-opening of the parenting proceedings; and
ii.The proceedings are frivolous or vexatious.
We invite you to file a Notice of Discontinuance of the proceedings in their entirety by close of business 22nd January 2013. Should you fail to do so our client will file and serve a Response and Affidavit in support.
Our client will seek to have the Application currently listed for hearing on the 1st February 2012 heard by Justice Cronin on that date or the first available date. She will seek to have the Application dismissed as outlined above and will seek an order pursuant to Section 118 of the Family Law Act that you not be entitled to institute proceedings seeking further parenting orders without leave of the Court.
In addition, our client will seek an order that you pay her costs of and occasioned by the Application on an indemnity basis or alternatively on scale. A copy of this letter will be produced to the Court in support of the Application.
I am comfortably satisfied that the circumstances of this case justify the making of an order for costs. This leads me to a consideration of the matters referred to in s 117(2A) for the purpose of deciding what (if any) order ought to be made.
My discretion in relation to costs is wide. The court is not bound to require an applicant for costs to satisfy me that every factor applies to her case. The Full Court in Brown v Brown (1998) FLC 92-822 and, in particular, the leading judgment of Kay J, held that the Court may consider just one, or more than one, of the factors under s 117(2A) when determining what (if any) order for costs ought to be made:
In many cases there will be an outstanding feature of the case that makes an order for costs appropriate, a feature which so dominates the scene it can outweigh any of the other s 117 (2A) considerations. In those cases the Court may readily infer that the trial Judge has given appropriate consideration to the aspects of s 117(2A) but in the shadow of each of the required aspects has appropriately determined that overwhelmingly the case demands an order for costs be made.
The decision in Fitzgerald (as Child Representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 FLR 123 reiterates that nowhere in s 117(2A) is there any requirement that more than one factor under that subsection must be present for a costs order to be made and that there is nothing to prevent just one factor being the sole basis for an order for costs.
From the respective written submissions of the parties, the following matters emerge as matters to which I should have regard in considering what (if any) that order should be:-
·the financial circumstances of each party (s 117(2A)(a));
·the conduct of the parties in relation to the proceedings (s 117(2A)(c)); and
·whether either party has been wholly unsuccessful in the proceedings (s 117(2A)(e)).
Sub-section 117(2A)(g), requires me to have regard to “such other matters as the court considers relevant”. This enables a variety of matters to be addressed provided, of course, that those matters are relevant. In this case, the husband has included in his submissions numerous matters which I do not consider are relevant to the issue of costs. I will distinguish between the “other matters” raised by the husband which are relevant to the question of costs and to which I will, therefore, have regard and the “other matters” which are not relevant to the question of costs and to the substance of which I will not have regard.
Financial circumstances of the parties
Both parties have concentrated on the detail of their respective financial position.
The wife submits that she has been unable to work since she has had the full-time care of the children since March 2012 and particularly due to the ‘special needs’ of the children. The wife submits that the husband did not commence paying child support until November 2013 and as at July 2014 was in arrears of $16,025.64. The wife submits that the husband earns approximately $120,000 per annum and currently pays child support of $443.50 per week.
The husband submits that the wife receives an income of $190 to $200 from her employment at Y School on Monday and Friday evenings. The husband submits that the wife additionally receives distributions from the OS Family Trust of approximately $42,000 per annum, child support in the sum of $493.50 per week and an unknown sum in social security payments. The husband submits that the wife receives an income of approximately $2,000 per week in contrast to the $750 per week he receives from his employment. The husband does not provide evidence to support his assertions in relation to the wife’s income.
For the purpose of s 117(2A)(a), my consideration of the parties’ financial situation cannot stop at a comparative analysis of their incomes. The parties’ applications for final property orders are yet to be determined. In my reasons for decision I discussed some financial aspects of the case, in particular at paragraphs 139 to 144 (inclusive) and paragraphs 211 to 215 (inclusive). I take those matters into account.
The parties have spent a fortune on legal costs since separation in 2008 including for proceedings in the Federal Magistrates Court (as it then was) in 2008, proceedings in this Court for financial orders and parenting orders over eleven days in 2010, interim parenting orders in June 2011, contravention proceedings in September 2011, parenting proceedings in March 2012, proceedings in relation to costs in August 2012 and the hearing before me in May 2013. There have also been two successful appeals to the Full Court being the husband’s appeal against Cronin J’s property order in July 2011 for which a decision was delivered June 2012 and the husband’s appeal against Cronin J’s costs order in June 2013 for which a decision was delivered July 2013. As well as legal fees, the parties have met the expense of psychologists’ assessments, being those from Mr O and Dr NZ, and of supervised time. By the time of the parties’ second appeal, but prior to these proceedings in which the wife seeks her costs, the Full Court referred to the proceedings as “protracted and ruinously expensive litigation”[3].
[3] Prantage & Prantage (2013) 49 Fam LR 197 [1].
The wife already has a costs order against the husband, for $175,000.
The wife estimates her costs of these proceedings, which extended over 7 days, at nearly $100,000. Prospectively, there is the re-hearing of the competing applications for final alteration of property interests on remittal from the Full Court.
Neither party can afford costs of the magnitude which have been incurred in this case. I am satisfied that the respective financial situations of the parties support an order being made which will relieve a party who has incurred costs unnecessarily from having to meet the burden of those costs. The wife is such a party.
Conduct of the parties in relation to the proceedings
The wife submits that the husband’s conduct in relation to the proceedings justifies an order for costs because “the husband made untrue representations to the Court by way of affidavit deposition, and submission from the bar table”. The wife relies on my finding at paragraph 78 of my reasons for judgment that, “The [husband] is an unreliable witness who is prepared to lie or misrepresent facts where he perceives that it is in his interests to do so”. I gave examples.
Insofar as the husband lied about matters such as the piano and the children’s possessions, that dishonesty was relevant to my findings in relation to the substantive application. Deception of that nature is not relevant to costs in this proceeding. Costs orders are restorative and not punitive in nature. However, insofar as the husband represented to the court that Department of Human Services were about to publish a report (when it was not)[4] and that it was necessary to hear from the Department in relation to the wife’s unsatisfactory care of the children (with which care the Department took no issues), those were representations by the husband which were incorrect and which prolonged the proceedings. It transpired that the Department were not intending to prepare a report but did, ultimately and after complaints by the husband, publish a letter. These inaccuracies in the representations by the husband are relevant to the question of costs because they necessitated a further hearing day in which to hear from the Department which, in turn, increased the costs of the wife of the proceedings.
[4] See paragraphs 25 to 28 (inclusive) of my reasons for decision in the substantive proceeding.
I take into account that the husband abandoned two very long affidavits, first in April 2013 and second on the second day of the final hearing. The affidavits and annexures were hundreds of pages long. I accept that this was the case and that the wife was put to considerable expense in having it read by her lawyers and in responding to the material as well. When the first affidavit was withdrawn, the counsel for the wife announced that the wife’s costs associated with the affidavit (withdrawn) were in the vicinity of $20,000. It could not then have escaped the husband’s contemplation that refiling a second affidavit of similar length would not put the wife to a comparable further expense. This is a factor which favours an order for costs being made against the husband.
The wife submits, correctly in my view, that the evidence which the husband ultimately relied upon in these proceedings was not even in existence at the time the husband filed his application to reopen the parenting proceedings on the basis that there had been a change of circumstance. The evidence relied upon by the husband was:-
a)the BS Contact Service reports of the supervised time between the husband and the children, which even the husband alleged did not accurately reflect the conversations he had with the children;
b)report of Dr NZ dated 10 May 2013; and
c)his cross-examination of Dr NZ.
The wife submits, and I accept, that the husband led no evidence which was relevant to establishing a change of circumstance at the time he instituted proceedings.
The wife submits that the husband knew or should have known that the “[an abbreviation of Dr NZ’s given name]” email which he alleged was written by Dr NZ and upon which he relied to support his application over much of the four days of hearing in May 2013, was false. The husband’s case was that he would be able to prove the provenance of the email as being Dr NZ, which the wife and Dr NZ have each consistently denied was the case. In an email to Dr NZ and Mr X sent by the husband on 10 October 2012, which was annexed to the report of Dr NZ dated 10 May 2013 upon which the husband relied,[5] he wrote the following in relation to the alleged email:
You see Ms. [NZ] and Mr. [X], it is not how one spells their name that is important, as one would be stupid to write such an email and spell their name correctly as one WOULD NOT want to incriminate oneself. However, it is the Social-linguistic analysis of one’s words that is important here and the consistency of one’s overall speech and flow of conversation. Something that has cost me an arm and a leg, literally sent me broke, to get analysed by the World’s leading Social-Linguistic analyst and compare it to known Ms. [NZ] articles, reports (like her report against me and my children) etc. for proof of consistency which came back TRUE, BEYOND ALL DOUBT. Therefore, this email was well and truly written by Ms. [NZ] and certain things found in my Gadens file will be used to confirm what every single collaborator has being (sic) denying in the Family Court of Australia all along. For this, Ms. [NZ] better start explaining her reasons why she obliterated my children’s and my life, otherwise she is looking at a looooong (sic) term behind bars. Putting it quite simply, both of you never imagined my daughter [M] to be so clever as to uncover your perjuring ways, and [the wife] to be so stupid as to hold on to such damning evidence. But LO and BEHOND, the TRUTH always has a way of surfacing no matter what attempts are made to keep it from surfacing.
This is now a BLATANT ALIENATION of my children from myself and my entire family and friends!!!!! So both of you seriously think it is fine for my children not to be able to see me for the past 18 MONTHS. Do you???? Do you???? Do you think this is a healthy situation???? Well, soon when you will front a criminal court to explain yourselves, the entire universe will see what you have to say against all the stuff I’ve found in my Gadens file. Therefore, some straight answers ASAP please!!!!!
Also, a reminder…yet again….. to everyone, that I am not stupid, I’m highly intelligent (in the top 1% of society, a Mensa Genius) and switched on and will not stop until my children are returned to me where they are very much loved and desire to be. I will not be silenced because now I have all the proof…. because we Greeks say that ….. “Nothing can hide for too long under the sun!”.
I trust you will all now comply appropriately with my demands. It would be in all your best interests to FINALLY start “Righting your Wrongs!!!”….You see….everyone under estimated my capability to prove my own and my children’s innocence……unless you all believe that Coronial Inquests into all this would be a better and more appropriate approach.
FINALLY, the RING OF TRUTH AND INNOCENCE is tightening around the perjurer’s (sic) and liar’s (sic) by the minute.
[5] Report of Dr NZ dated 10 May 2013 – Appendix F (Exhibit “H2”).
I accept the wife’s submission that the husband failed to adduce any evidence to prove that the email was from Dr NZ. It was a lynchpin of his case and yet he barely cross-examined Dr NZ about it and, in fact, my impression is that he only cross-examined her at all after being prompted by me that this was his opportunity to do so. I found at paragraph 74 of my reasons for judgment that there is “no cogent evidence” that Dr NZ wrote the email. I am satisfied that the husband’s bombastic expression and extravagant claims meant that the wife’s practitioners had no choice but to read all evidence that the husband submitted because, to ignore his voluminous documentation, would be to act at their peril or, more precisely, to the potential peril of their client.
For the purpose of the wife’s application for costs, I do not have regard to the fact that the husband required Dr NZ for cross-examination and that the cross- examination did not advance his case. This is because I have already ordered that the husband be responsible for payment of Dr NZ’s costs to attend court for the hearing and to be cross-examined by him.
The wife submits that the husband was abusive in his communications and correspondence with the wife’s solicitors during the proceedings. As an example, she relies upon an email sent to her solicitors by the husband on 21 January 2013, in response to the letter from Mr Lampe saying that the wife would seek indemnity costs unless the husband withdrew his further application (extracted at paragraph 9(f) of these reasons). The husband’s letter reads as follows[6] (original emphasis):
Dear Mr. Lampe,
I am not withdrawing anything!!!!! I have so much evidence against your client’s behaviours, and criminal activities by Dr. [NZ] and police violence reports against your client wrt (sic) to my children that the repercussions for your client will be disastrous. I suggest you come to the negotiating table fast. I will not be bullied by anybody!!!!!!!!!! This matter will turn into a serious criminal activity investigation and lawsuit against your client. All this evidence was uncovered by myself when I came into possession of my entire Gadens file. You see Gadens no longer represent me and are no longer on “mates rates” with you. Post 1 Feb 2013 hearing in the presence of Senior Registrar Fitzgibbon get set to defend your client on criminal charges. I mean business Mr. Lampe…. as I’ve been telling the ENTIRE TRUTH from day ONE!!!! This case will be heard on 1st February by Senior Registrar Fitzgibbon. It is obvious you and your client are running scared.
Yet another underhanded attempt by you and your firm to discredit me but this time you will fail because the evidence I now have is seriously stacked against your client. Off (sic) course you want Justice Cronin as he’s (sic) ruled 100% in your client’s favour by dismissing me completely but this time Mr. Lampe the evidence will speak for itself. Even Justice Cronin will not deny me after I present all the facts. Off (sic) course you would consider it vexatious as that is the only way you can silence me so the TRUTH and your underhanded ways are never exposed!!! If that happens Mr. Lampe, get set for a High Court battle of your life under a Prerogative Writ!!!! And….since this will no longer be a Family Court issue of sorts, I will alert the media and all hell will break loose as the entire case will be blown wide open based on the criminal activities that were going on that I have discovered.
Bring it on Mr. Lampe!!!!!!
Regard,
[The husband’s name]
[6] Annexure B of the wife’s affidavit sworn 30 January 2013. This was the husband’s response to the correspondence from the wife’s solicitors referred to in paragraph 9(f) of these reasons.
I agree that the husband’s letter was abusive but do not accept that the abusive nature of the letter is a matter which sounds in my consideration of the parties’ conduct in the context of s 117(2A)(2)(c). It is more relevant that the letter is of numerous folios, had to be read by the wife’s solicitors and copied to the wife but, in fact, says nothing of import or significance. It is relevant that the husband’s correspondence results in the wife incurring unnecessary costs rather than that the content of the correspondence is rude and discourteous. It is nothing more than the husband venting his spleen and, in that sense, it is a microcosm of the husband’s conduct in these proceedings in which the wife seeks costs.
The first four days of the hearing in this proceeding were spent on the husband’s grievances but without his case, in which he had to demonstrate a change of circumstance, being advanced. A further two days were occupied with the current involvement of Department of Human Services which, contrary to the husband’s representations, demonstrated that the husband had agitated continually for the Department to make interventions on the basis of notifications and complaints which the Department came to court and stated that it had found not to be substantiated and to lack any substance. A seventh day (17 July 2014) was devoted to securing the return of the children to the wife when they had allegedly run away to the home of their paternal grandparents. The husband’s behaviour on the seventh day is not a matter relevant for consideration on the wife’s current application for costs. I have already made a costs order about that day which was referrable to the husband not immediately returning the children to the wife as the then extant orders required him to do. The husband has filed a notice of appeal[7] in relation to my determination of 17 July 2014 so the costs aspect of that decision for the events of 17 July 2014 will be considered by the Full Court on appeal.
[7] (A)SOA 49/2014.
With the benefit of hindsight, it is easy to find, as I do, that the husband’s case was misconceived or amounted to nothing. However, it was necessary to deal comprehensively with the husband’s submissions and evidence because there was a possibility that he may adduce something which was probative or relevant which the interests of the children would require the court to take into account.
I am satisfied that the conduct of the husband in relation to the proceedings is supportive of the wife’s application for costs and is totally unsupportive of the husband’s proposition that each party should bear their own costs.
Whether a party has been wholly unsuccessful in the proceedings
The wife correctly submits that the husband was wholly unsuccessful in the proceedings.
Other relevant matters
I take into account that, to the extent that the wife sought relief from the court, for an order pursuant to s118(1)(c) (now repealed), that:-
a)she was wholly successful; and
b)she prosecuted the application efficiently and without prolonging the hearing.
I take into account that, by letter dated 21 January 2013 (discussed at paragraph 9(f) earlier in these reasons), the wife put the husband on notice that she would claim costs in the event that his application was dismissed because he failed to demonstrate the necessary change in circumstances required to re-open the parenting litigation and/or his application was considered frivolous and vexatious. Both issues there contemplated by the wife came to pass which, in my view, is relevant to the question of costs and is supportive of the wife succeeding with her application.
I will now turn to some of the “other matters” raised by the husband which I am satisfied are not relevant to the question of costs.
The husband is critical of my determination. However, there is a distinction between matters which are relevant on the question of costs and matters for which he can legitimately seek appellate intervention. I make this decision in relation to costs in the expectation that the husband’s appeal against this costs decision can be heard at the same time as his appeal against my decision on 23 July 2014[8] in the substantive proceedings. I am mindful that the husband’s appeals against Cronin J’s orders in the property proceedings and his appeal against the costs order for those proceedings were heard separately and that this added to the expense and inconvenience of both parties. Presumably, the appeal against my decision on 17 July 2014[9], filed on 12 August 2014, will be heard in the same sittings as the husband’s notice of appeal filed 15 August 2014.
[8] (A)SOA 50/2014.
[9] (A)SOA 49/2014.
Various complaints by the husband are not relevant to costs but may go to alleged bias. That is, that I am pre-disposed to favouring the wife and/or pre-disposed against him and, in any event, that an objective observer would doubt that I will bring an impartial mind to my determination of the case. Examples are:-
a)In his submissions the husband reiterates his allegation that the transcript of the hearing on 27 May 2013 had been altered and refers to the United Nations Convention on the Rights of the Child. I dealt with this at paragraphs 30 – 33 of my reasons for judgment.
b)The husband includes in his submissions allegations about a conversation between the wife and her solicitor which, he says, his children told him about when they ran away to him on 17 July 2014:
The Husband’s daughter told the Husband when the children ran away back to him on the 17th July 2014 that the Wife made a telephone call to her lawyer Mr. Lampe and had him on hands-free in her father’s backyard so her father could listen to the conversation. Mr Lampe was heard telling the wife that he knew that this Judge is on the Wife’s side as he felt as if something the judge said was a hidden message to him and the Wife that the Judge is on their side and will make a good decision for the Wife. Mr. Lampe said that he feels that the “Wife has the Judge”. Mr. Lampe told the Wife that when they got this Judge he knew it was good for the Wife because the Judge would rule against the Husband and has a “Great Reputation”.
I will hear the husband’s application for me to recuse myself after I have delivered this decision. I take the view, however, that having heard the substantive matter and determined it on 23 July 2014, I am best placed to hear the consequential costs application. In any event, both decisions can be scrutinised by the Full Court subsequently.
I do not consider that there are any other matters which are relevant on the issue of whether there ought to be an order for costs. I am satisfied that there should be an order in favour of the wife that the husband pay the wife’s costs of and incidental to the proceedings, with the exception of the proceedings on 17 July 2014 and the costs of Dr NZ to attend court to be cross-examined, both which costs are the subject of earlier orders by me. This leads me to consider the basis on which the costs ought to be calculated and the source from which the costs should be paid.
Indemnity costs
When considering an application for costs to be assessed on an indemnity basis, I am guided by principles emanating from the following relevant authorities, which were conveniently summarised in Muldoon & Carlyle (2012) FLC 93-513, where the Full Court said;
115.It is beyond doubt that in order to justify an award of indemnity costs, it must be demonstrated that there are exceptional circumstances, such that the usual order for party-party costs should be departed from (Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225; Kohan and Kohan (1993) FLC ¶92-340; Munday v Bowman (1997) FLC ¶92-784; Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC ¶93-029; Limousin & Limousin (Costs) (2007) 38 Fam LR 478; Fennessy & Gregorian (2009) FLC ¶93-399; D & D (Costs) (No 2) (2010) FLC ¶93-435, Stephens v Stephens and Anor (2010) 44 Fam LR 117). As was said by the Full Court in Stephens (at [67]):
An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature. Costs are not a penalty or damages...
116.In support of the application for indemnity costs, counsel pointed only to the fact that it was always apparent there was no merit in the appeal. This is in our view not an exceptional circumstance as would justify an order for indemnity costs.
Similar sentiments were echoed by the Full Court when it allowed an appeal against the indemnity costs order made by Cronin J in earlier proceedings between the husband and the wife in this case. That decision is reported, in anonymised form, as Prantage & Prantage (2013) FLC 93-544. There the Full Court emphasised that an indemnity costs order is an exception rather than the norm. However, the Full Court’s reasoning in Prantage does not preclude the possibility of an order being made on an indemnity basis, in an appropriate case.
In Kohan and Kohan (1993) FLC 92-340 the Full Court emphasised the need for the Court to be aware of the terms of any costs agreement in order to be able to assess the difference between party-party and indemnity costs. That requirement has now found its way into the Rules, at Rule 19.08.
In compliance with Rule 19.08 the wife has provided the relevant costs agreement dated 20 July 2009. I note that the rates of charges may be reviewed in June each year. However, as it stands, the charges under the costs agreement are significantly higher than the fees provides for in Schedule 3 to the Rules. For instance, the costs agreement provides for time reasonably spent by a legal practitioner to be charged at $350 per hour as opposed to the $224.50 provided for in Schedule 3.
The authorities set the bar at a fairly high level before indemnity costs will be ordered. However, the authorities do not prescribe that indemnity costs can never be ordered, and ultimately, it is a matter of an exercise of discretion in each case. Indeed, the Rules recognise the possibility of an order being made on an indemnity basis because of the requirements of Rule 19.08(3) and the provision of Rule 19.18(1)(b).
In Prantage & Prantage (2013) FLC 93-544, Thackray and Ryan JJ observed as follows;
100. His Honour's statement, at [50], that Sheppard J's emphasis in Colgate-Palmolive was “on parties who must have or should have known their approach was simply imprudent” does not, in our view, accurately reflect the law as explained in Colgate-Palmolive and other cases dealing with indemnity costs.
101. It is true, as the trial Judge noted, that Sheppard J included in the list of situations that might give rise to an order for indemnity costs “the imprudent refusal of an offer to compromise”. However, in our view, imprudence by a party in “their approach” is not sufficient to enliven the power to award indemnity costs.
102. It is important in this context to recognise, as Lindgren J did in NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77 at [56], that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation”.
103. Lindgren J went on to point out (original emphasis):
Even in a proved case of fraud, for example, in my opinion the presumption is that a costs order against the fraudulent party will be on the party and party basis. The conduct of a party that is relevant to the issue of indemnity costs is the party's conduct as litigant. But, as noted below, the knowledge that a party has, including knowledge of his or her past conduct, may be relevant to an assessment of his or her conduct as litigant.
The principle there enunciated has been picked up by s 117(2A)(c). It is the degree of the husband’s conduct which informs the exercise of discretion to order indemnity costs.
The outstanding feature which could justify an indemnity costs order in this case is that the husband’s application was, for all intents and purposes, a waste of time. The husband filed and served voluminous evidence in support of his case but then abandoned that evidence. The evidence upon which he did rely, did not support his contention that parenting arrangements should be re-litigated. It is one thing to prosecute a case based on probative evidence but fall short of persuading the court to grant the relief sought. It is another thing to make an application, require the other party to peruse hundreds of pages of affidavits and annexures (twice) and prepare evidence in response but then abandon that evidence and fail to adduce probative evidence on which the court could make the order.
The conclusion that there was no evidence to support the husband’s case is a conclusion which I could draw only after listening to the husband’s lengthy submissions and speeches and his cross-examination of Dr NZ.
I am satisfied that the husband’s conduct in these proceedings comes very close to justifying an indemnity costs order for all of the proceedings. However, very close is not close enough so I will not impose an assessment on an indemnity basis for all of the proceeding.
I am satisfied that a just and appropriate contribution by the husband to the wife’s costs will be effected if:-
a)The wife’s costs of and incidental to the two voluminous affidavits filed and served by the husband are assessed on an indemnity basis. In this regard, I am satisfied that wife’s lawyers were required to read the second affidavit notwithstanding that it was, in large part, repetitive of the first affidavit;
b)Ms Smallwood of counsel appeared for the wife. Her fees to appear are significantly greater than the scale of fees for work done by counsel. Ms Smallwood is a senior member of the family law bar. Her fees for work done should be assessed using the upper end of the range of fees provided for in Schedule 3; and
c)The balance of the wife’s costs are assessed in accordance with the itemised scale of costs in Schedule 3 to the Rules.
The wife seeks that the costs be paid, initially, from the funds held in trust. That appears to me to be perfectly sound providing that it is understood that any moneys released for that purpose are released to satisfy a liability of the husband (and not the wife) notwithstanding that the funds will end up in the hands of the wife’s lawyers and will reduce her liability to that firm. The payment of the funds from trust, initially, is merely a machinery provision. However, the opportunity for the wife to take the monies from the funds held in trust is, I am satisfied, an order as to costs which is “just” within the meaning of s 117(2) and entirely appropriate on the facts of this case.
In reaching my conclusion that the wife should be able to access funds in trust to pay some legal costs, I am mindful that the husband is already indebted to the wife for $170,000 or thereabouts for costs in earlier proceedings. That liability has not been cleared. My understanding is that it is agreed that the husband will pay those earlier costs at or on the final alteration of property interests. Accordingly, even if I am subsequently found at an appellate level to have erred in my order as to costs, including that the wife can take money from trust, no harm is done providing that the trust funds so accessed are less than the costs for which the husband is already indebted to the wife albeit that those costs are subject to an agreement that payment is postponed.
I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 9 September 2014.
Associate:
Date: 9 September 2014.
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