Prosser & Prosser (No. 3)
[2021] FamCA 386
•22 June 2021
FAMILY COURT OF AUSTRALIA
Prosser & Prosser (No. 3) [2021] FamCA 386
File number(s): BRC 1320 of 2015 Judgment of: BAUMANN J Date of judgment: 22 June 2021 Catchwords: FAMILY LAW – COSTS – application for costs sought by the Applicant against the Respondent where the Respondent was wholly unsuccessful in her claim against the Applicant – where the Court is satisfied circumstances exist to justify an order for costs – Order made for the Respondent to pay a contribution of $12,000 to the costs of the Applicant. Legislation: Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) r 19.08
Cases cited: Kohan & Kohan (1993) FLC 92-340
Mansfield and Ors & Mansfield and Anor (2019) FLC 93-920
Prosser & Prosser and Anor [2020] FamCA 378
Prosser & Prosser and Anor (No. 2) [2020] FamCA 500
Prosser & Prosser and Anor [2018] FamCA 1077
Rigby & Kingston and Ors [2020] FamCA 415
Smith & Fields (third party costs) [2013] FamCA 505
Stasiuk & Guild [2021] FamCAFC 62
Yunghanns & Yunghanns (2000) FLC 93-029
Number of paragraphs: 32 Date of last submission: 23 October 2020 Date of hearing: In chambers on the papers Place: Brisbane ORDERS
BRC 1320 of 2015 BETWEEN: MR B PROSSER
ApplicantAND: MS PROSSER
Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
22 JUNE 2021
THE COURT ORDERS:
1.That within sixty (60) days of the date of this Order the Respondent, Ms Prosser, pay the sum of $12,000 to the Applicant, Mr B Prosser, as a contribution to the costs paid by him.
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 Prosser & Prosser has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
INTRODUCTION
On 22 May 2020, Reasons for Judgment were delivered in respect of the substantive property proceedings between the Applicant wife, Ms Prosser, the First Respondent husband, Mr A Prosser, and the Second Respondent, Mr J (the Applicant wife’s son from a previous marriage) and Orders were made for the parties to confer and reach an agreement as to a form of orders consistent with those Reasons (see Prosser & Prosser and Anor [2020] FamCA 378).
The parties negotiated but did not agree on the form of orders and, on 12 June 2020, the parties provided to the Court minutes of order and written submissions as to why their draft was to be preferred.
On 19 June 2020, brief Reasons for Judgment were delivered and final property Orders were made (see Prosser & Prosser and Anor (No 2) [2020] FamCA 500).
On 10 July 2020, Mr B Prosser filed an Application in a Case seeking:
1. That the Applicant be granted leave to bring an application for costs.
2.That the Respondent pay the Applicant’s costs of these proceedings in accordance with the Court scale up to and including 25 July 2016 and on an indemnity basis from 26 July 2016 to 9 November 2018.
3.In the alternative to Order 2, that the Respondent pay the Applicant’s costs of and incidental to the Application in a Case filed on 12 February 2018 and heard on 20 April 2018 on an indemnity basis.
The wife had previously joined Mr B Prosser (Mr A Prosser’s son from a previous marriage) to the substantive property proceedings, claiming he held interests in property on behalf of the husband. This was the subject of a successful application for summary dismissal, after which Mr B Prosser was removed as a party (see Prosser & Prosser and Anor [2018] FamCA 1077).
Ms Prosser filed a Response to the Application in a Case on 18 September 2020 in which she seeks that the Application in a Case be dismissed.
The Application in a Case and Response to the Application in a Case came before a Registrar on 22 September 2020, at which time Orders were made by consent for the parties to file and serve written submissions, as well as any submissions in reply, and thereafter the matter was to be determined by me in the absence of the parties.
Both the Applicant and Respondent filed written submissions on 16 October 2020 and the Applicant also filed written submissions in reply on 23 October 2020.
ISSUE OF LEAVE
As mentioned above, on 27 November 2018 an Order was made removing Mr B Prosser as a party to these proceedings. That same Order granted “leave … to [Mr B Prosser] to make an application for costs in accordance with the Family Law Rules 2004”.
The Respondent, in her written submissions, submits that that leave has since been lost and should not be granted for the following reasons:
(a)There appears to be a “tacit admission by the [Applicant] that the leave granted in November 2018 has been lost, for it is sought again”;
(b)The Applicant “had every opportunity to bring a costs application in a timely fashion as an interlocutory proceeding prior to final orders”;
(c)The Applicant was actively involved in the trial of the proceedings;
(d)At all material times, the Applicant was represented by the same lawyers who represented the husband; and
(e)“it must therefore have been obvious to the [Applicant] … that any successful application for costs he would bring after final judgement [sic - judgment] and orders would necessarily distort the financial position as between the [h]usband and [w]ife. The financial position must be, axiomatically, just and equitable, as neither party has sought to appeal the final orders. This is especially so as he seeks orders for costs on an indemnity basis” (emphasis removed).
The Applicant in his reply submissions submits that the relevant principles with respect to the issue of leave are the same that apply in respect of leave to extend time to appeal and, further, that:
(a)while the explanation for delay is an important factor, it is not always the determinative factor;
(b)the Respondent points to no prejudice;
(c)the Applicant put the Respondent on notice that he intended to bring an application for costs once the substantive proceedings had been finalised, the Respondent made no complaint and, the Applicant submits, this was the most appropriate course of action; and
(d)the application for costs “has significant merit and the granting of leave will allow for the Court to do justice between the parties”.
With respect to the issue of leave to bring the costs application, r 19.08(1) of the Family Law Rules 2004 (Cth) (“the Rules”) provides that a “party may apply for an order that another person pay costs” and, as such, the Applicant is entitled to bring a costs application. I further note that the Order made on 27 November 2020 granting leave to Mr B Prosser to bring an application for costs was not time specific and, therefore, there is no basis upon which this application should not be considered.
COMPLIANCE WITH THE RULES
The Respondent, in her written submissions, further submitted that the Applicant’s application for costs was not compliant with the Rules. She submitted:
(a)as per r 19.08(3), “a party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement”. The Respondent submits that the Applicant has neither informed the Court as to whether he is bound by a costs agreement and, if he is, what the terms of that cost agreement are; and
(b)order 2 as sought is “meaningless” and seems to seek costs in accordance with r 19.18(1)(d) and so pursuant to sch 3 for a period of time. The Respondent submits “there is no evidence as to what those costs might be, whether they are to be assessed according to the Rules, or some other method”.
The Respondent submits that, on the basis of these failures, leave should not be granted and the Application should be dismissed or, alternatively, that the application be dismissed for a failure to comply with the Rules.
In his reply submissions, the Applicant conceded “the allegation of a fatal flaw in respect of indemnity costs” and at the conclusion of his submissions he argued that “the costs incurred by the Applicant from the date that that affidavit was provided [(referring to the voluntary step taken by the Applicant to explain to the Respondent why her claim had no basis)] were all incurred by the unreasonable and unsupportable conduct of the Respondent” and “[a]s a minimum…costs, as agreed or assessed, on a party-party basis from that date until the conclusion of the summary judgment application should be granted”.
Because the Court determines the quantification of costs, it must first consider whether the circumstances justify an order for costs. I will return to the quantification of costs later in these Reasons.
RELEVANT PRINCIPLES
The general rule in s 117(1) of the Family Law Act 1975 (Cth) is that each party shall pay their own costs of the proceedings, however, if the Court is satisfied, following a consideration of the factors set out in s 117(2A), that circumstances exist which justify an order for costs, then such order as is proper may be made.
If the Court considers an order for costs is justified, then the Court may consider costs assessed on an indemnity basis being ordered but generally only in exceptional circumstances.
The Respondent, in her written submissions, contends that “[t]here is some controversy as to whether [s] 117(1) applies in circumstances where an applicant or respondent to a costs application is a non-party” and identifies the cases of Rigby & Kingston and Ors [2020] FamCA 415 and Smith & Fields (third party costs) [2013] FamCA 505 in which the prima facie rule was applied. The Respondent does, however, submit that “[t]here is no doubt that [s] 117(2) applies to costs applications involving non-parties” but the “difficulty that arises is that any order made pursuant to [s] 117(2) must have been made having considered the factors in [s] 117(2A), and those factors for the most part relate to a “party” or “parties””. Finally, the Respondent considers that s 117(2A)(g), which provides that the Court shall have regard to “such other matters as the court considers relevant” when considering what Order if any should be made for costs, permits the Court to apply the other considerations in s 117(2A) as if they apply to non-parties.
With respect to the Respondent’s submissions on this point, in my view, there is no basis to suggest that s 117 does not apply as the Applicant was a party to these proceedings, albeit not at the time of bringing his application for costs.
SHOULD AN ORDER FOR COSTS BE MADE?
I make the following findings in respect of the s 117(2A) factors, namely:
(c)there is little evidence about the financial circumstances of the Respondent, save for the fruits of the property adjustment Order. For the Applicant, he owns the commercial property at F Street. Current other financial circumstances (such as income; expenses or liabilities) are unknown;
(d)neither party is in receipt of legal aid;
(e)the litigation about the existence of a trust was a core issue in dispute – considered not only by this Court but also by the Supreme Court of New South Wales. Whilst I accept some non-compliance of orders occurred, and that the Respondent was clearly alerted and aware of the Applicant’s evidence disputing any trust existed, the Respondent maintained her right to test the evidence – which ultimately did not occur with the Order for summary dismissal made. The Respondent maintained her position at her peril;
(f)the Respondent’s claim against the Applicant was summarily dismissed, resulting in the Applicant being removed as a party to the proceedings. As such, the Respondent was wholly unsuccessful in her claim as against the Applicant. The Respondent, in her written submissions, contends with respect to this that “it could not be seriously contended that either the [h]usband or the [w]ife were wholly successful, or wholly unsuccessful. The final order ultimately made fell within the outcomes sought by both parties in their pleadings and in their case outlines”. This submission appears to relate to the substantive proceedings, rather than the proceedings to the extent that they involved the Applicant and, as such, is not relevant to the current application. In respect of the application for summary dismissal, the Respondent submits that “it may be legitimately argued that the [w]ife was wholly unsuccessful in that application. That, of course, does not detract from the [w]ife’s earlier submission that the [Applicant’s] failure to comply with [r] 19.08(3) does not fatally infect the application with respect to Order sought number 3”. I have already dealt with that aspect of the Respondent’s submissions above;
(g)I find, as against the Applicant, the Respondent was wholly unsuccessful;
(h)three offers of settlement were made during the course of the substantive proceedings:
(i)the first dated 3 June 2017 from the Respondent’s then lawyers proposed that the proceedings be dismissed with each party to bear their own costs. The Respondent submits that that offer sought to remove Mr B Prosser from the proceedings eight months prior to the successful application for summary dismissal;
(ii)the counter-offer dated 7 June 2017; and
(iii)the third dated 13 September 2020 from the Respondent’s lawyers which again proposed that the proceedings be dismissed with each party to bear their own costs.
(i)In circumstances where the husband asserted an interest in the Suburb G property (and the ultimate findings and Orders determined that to be the case), although a proposal that all proceedings be dismissed would have effectively removed Mr B Prosser from the dispute, it would also have extinguished the husband’s claim. He was, in those circumstances, right to reject the proposal;
(j)as to other relevant factors the Court should consider, the Respondent points to the fact that the Applicant was joined to the proceedings by consent by the Orders of Judge Turner. The Respondent argues that the Applicant, at that point, could have objected to being joined and the Respondent would have had to justify the joinder. Further, the Respondent submits that the Applicant “took no formal steps for him to be removed” and that “[h]e could have brought an application pursuant to [r] 6.08 of the … Rules at any time”. Further, the Respondent submits that although the Applicant sought particulars of the claim against him, if he had the factual basis upon which no claim could be made, doing nothing was “wholly inappropriate”. The Respondent also submits that there were four Court events at which the Applicant did not appear, notwithstanding the joinder.
On the findings set out above, I am satisfied that the circumstances of this case justify an order for costs in favour of the Applicant but I am not persuaded that the circumstances justify the assessment of costs on an indemnity basis.
QUANTUM OF COSTS
Well-known and established line of authority make it clear that although the categories of circumstances which enliven the discretion to award indemnity costs are not closed, the making of an indemnity costs order is “a very great departure” from the “normal standard” (Yunghanns & Yunghanns (2000) FLC 93-029).
More recently in Stasiuk & Guild [2021] FamCAFC 62, the Full Court (Strickland, Ryan and Kent JJ) confirmed that Kohan & Kohan (1993) FLC 92-340 “is precedential authority”, and at [20] when seeking to demonstrate that Kohan remains good law, referred to Mansfield and Ors & Mansfield and Anor (2019) FLC 93-920 at [7] where the Full Court said:
7.The Full Court noted in Prantage & Prantage (2013) FLC 93-544 (“Prantage”) at [42], that even in jurisdictions where the usual rule is that costs follow the event, it is well settled that indemnity costs “should only occur in an extremely rare situation” (see Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] 179 ALR 406). We agree with Murphy J in Prantage at [152] that in proceedings under the Act, where the usual rule is that each party shall bear his or her own costs, an order for indemnity costs is even more exceptional.
CONCLUSION
Having decided circumstances exist to justify a costs order payable by the Respondent, Ms Prosser, in favour of the Applicant, Mr B Prosser, the issue is what order is just.
As explained, the circumstances are not so exceptional as to enliven costs on an indemnity basis.
It is in the interests of both parties that costs be fixed, so as to award the further costs associated with taxation or other assessment. I do accept that the husband and the wife consented to Mr B Prosser being joined, but that does not mean Mr B Prosser agreed. The Court’s recollection is, certainly after the Supreme Court proceedings were the subject of findings, and when I began to case manage these proceedings the issue of any application of summary dismissal was raised by the Court.
In the assessment of costs, I take into account the delay after Mr B Prosser was joined (on 15 April 2015). He could have agitated that relief for summary dismissal more quickly however ultimately he was successful in his application and the Respondent was “wholly unsuccessful”.
Of course “costs issues” relating to the proceedings in the Supreme Court of New South Wales are not a matter for this Court. Some attention needs to be given to avoid “double counting”.
Doing the best I can on the evidence offered, and with a view to achieving some finality and avoid taxation or assessment, I have decided to fix costs in the sum of $12,000.
In my view, this assessment of costs is just; arises from the legal costs incurred by the Applicant from 18 March 2018 (adopting the proper and sensible alternate submission of Counsel at paragraph 42). I take into account the material relied upon by the parties for the summary dismissal application filed (by way of amended Response) on 28 March 2018. The Application was heard “on the papers” without cross-examination on 20 April 2018. Both parties were represented by Counsel.
I will order that Ms Prosser pay the sum of $12,000 to Mr B Prosser as a contribution to the costs paid by him, such sum to be paid within 60 days.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 22 June 2021
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