Rafter and Rafter (No 3)
[2012] FamCA 975
FAMILY COURT OF AUSTRALIA
| RAFTER & RAFTER (NO 3) | [2012] FamCA 975 |
| FAMILY LAW – COSTS – Application by wife for costs order against husband of and incidental to the proceedings including the wife's application for costs on indemnity basis or alternatively party and party basis – Order that husband pay 90 per cent of the wife’s costs of and incidental to the proceedings including her costs application on the party and party basis to be assessed if not agreed the payment to be made within 30 days from the date of agreement or assessment |
| Family Law Act 1975 (Cth) ss 117(1), 117(2), 117(2A) Family Law Rules 2004 rr 19.08, 19.18 |
| Colgate-Palmolive Company & Anor v Cussons Pty Ltd [1993] FCA 536 D & D (Costs) [2006] FamCA 846 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) No 2 (1993) 46 IR 301 Fennessy & Gregorian [2009] FamCAFC 44; (2009) FLC 93-399 Penfold and Penfold (1981) 44 CLR 311 Spehar & Spehar (unreported) NA51 of 2003, 9 January 2004 |
| APPLICANT: | Ms Rafter |
| RESPONDENT: | Mr Rafter |
| FILE NUMBER: | (P)BRC | 9414 | of | 2008 |
| DATE DELIVERED: | 20 November 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | O'Reilly J |
| HEARING DATE: | 14 August 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Galloway |
| SOLICITOR FOR THE APPLICANT: | Rostron Carlyle Solicitors |
| THE RESPONDENT: | In person |
Orders
IT IS ORDERED
The husband pay to the wife 90 per cent of her costs of and incidental to these proceedings including her costs application on the party and party basis, to be assessed if not agreed, the payment to be made within 30 days from the date of agreement or assessment.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rafter & Rafter (No 3) 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 BRISBANE |
FILE NUMBER: (P) BRC9414 of 2008
| Ms Rafter |
Applicant
And
| Mr Rafter |
Respondent
REASONS FOR JUDGMENT
Applications
The wife by application in a case filed 12 June 2012 sought:
1. That the husband pay the wife’s costs and incidental to these proceedings which were commenced by the wife on 8 February 2010 (including this application for costs) on a full indemnity basis in such amount as shall be agreed upon by the parties and failing agreement as assessed.
2.In the alternative that the husband pay the wife’s costs of and incidental to these proceedings (including this application for costs) on a party and party basis in such amount as shall be agreed upon between the parties and failing agreement as assessed.
3.Such further or other order as this Honourable Court shall deem meet.
In an affidavit by the wife’s solicitor filed 9 August 2012 (folio 60), the wife sought to add a further alternative (par 54 of that affidavit):
· In the alternative that the husband pay the wife’s costs of and incidental to the proceedings on a full indemnity basis fixed in the sum of $88,341.92 (as itemised in the itemised list of costs which is annexure A to the affidavit of [Mr K] filed on 5 July 2012) together with the costs of the wife of and incidental to her application for costs in such further amount at Schedule 3 Scale as is agreed between the parties or failing agreement as assessed by an approved costs assessor. (emphasis added)
The husband, by his response filed 9 August 2012 sought the dismissal of the wife’s costs application.
Background
On 4 June 2012 I gave judgment in this matter (the reasons for judgment) and ordered:
IT IS ORDERED
Consent property order
1. The husband’s application under s79A(1)(b) of the Family Law Act 1975 (Cth) to set aside or vary the consent property order made on 14 November 2008 is dismissed.
2. The husband perform paragraphs 3c and 3d of the consent property order made 14 November 2008 by payment to the wife of $23,000 within 30 days from the date of this order.
Spousal maintenance
3. The husband pay to the wife $500 per week spousal maintenance weekly in advance from the date of this order, until such time as the Court (or the Federal Magistrates Court) varies or discharges this order or the parties in writing agree for its variation or discharge.
Interim spousal maintenance – arrears
4. The husband pay to the wife $41,250 arrears of interim spousal maintenance for the period 31 March 2010 until 17 November 2011 (calculated at $500 per week x 85 weeks $42,500 less $1250 paid) such payment to be made within 30 days from the date of this order.
5. The husband pay to the wife $14,250 arrears of spousal maintenance for the period 18 November 2011 until 3 June 2012 (calculated at $500 per week x 28.5 weeks – 199 days) such payment to be made within 30 days from the date of this order.
Costs of [Mr C’s] report
6. The wife’s application that the husband pay for or contribute to the costs of the report by [V Consulting], as a single expert report, is dismissed.
AND IT IS FURTHER ORDERED
7. Any applications for costs by either party together with supporting affidavit material and written submissions including identifying the s 117(2A) grounds relied on be filed and served by 4.00pm on Tuesday 12 June 2012.
8. Any response/s to such application/s together with supporting affidavit material and written submissions be filed and served by 4.00pm on Tuesday 19 June 2012.
9. Any such applications be listed for hearing before the Honourable Justice O’Reilly at 9.30am Thursday 21 June 2012.
10. The parties and/or their legal advisers may appear by telephone for the hearing on that date.
On 21 June 2012, for reasons which I then gave, on application by the husband, I allowed the husband an adjournment of the hearing of the wife’s costs application, based upon medical grounds: See the reasons for judgment 21 June 2012.
On that date, accordingly, I ordered:
IT IS ORDERED
1. The wife’s application for costs filed 12 June 2012 is adjourned and be relisted for hearing at 10.00am on Tuesday 14 August 2012.
2. Any material to be relied upon by the husband must be filed and served by 4.00pm on Tuesday 7 August 2012.
3. Any material by the wife strictly in response to the husband’s material (if any) must be filed and served by 4.00pm on Thursday 9 August 2012.
AND IT IS ORDERED BY CONSENT
4. Any medical reports in relation to the husband may be annexed to an affidavit of the husband or his legal representative without the need for the preparing and filing of affidavits by any such medical practitioners.
On 14 August 2012, after argument, I ordered:
IT IS ORDERED
1. The wife’s application for costs filed 12 June 2012 is further adjourned and by consent be determined by the Honourable Justice O’Reilly on the papers, specifically the reasons for judgment 4 June 2012, written submissions of the parties and any evidence referred to in the written submissions.
2. The husband file and serve written submissions and any affidavit evidence on which he wishes to rely by 4:00pm on Friday 14 September 2012.
3. The wife file any written submissions strictly in reply on matters of law only by 4:00pm on Friday 21 September 2012.
4. Subject to the production by the husband of any medical report by [Dr TN] as to the husband’s inability to comply with order 2, if the husband should default in compliance with order 2 the wife’s application for costs be dealt with on the basis of the reasons for judgment 4 June 2012, the written submissions of the wife and any evidence referred to in the written submissions.
In the result, I now deal with the wife’s costs application on the papers in accordance with par 1 of the orders made on 14 August 2012, noting that the husband provided written submissions filed 13 September 2012 (folio 64) and that the wife filed brief submissions in reply 19 September 2012 (folio 65).
Family Law Act
The relevant provisions of the Family Law Act 1975 (Cth) are as follows.
Section 117 provides:
SECTION 117 COSTS
117(1) Subject to subsection (2), subsection 70NFB(1) and ss 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
117(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 subss (2A), (4) 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.
117(2A) In considering what order (if any) should be made under subs (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.
Principles
In Penfold and Penfold (1981) 44 CLR 311 the High Court said at 315:
It is an accurate description of s117(1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s117(2). As sub-s(1) is expressed to be subject to sub-s(2), the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
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…..(emphasis added)
Family Law Rules
Rule 19.08 provides:
RULE 19.08 ORDER FOR COSTS
19.08(1) A party may apply for an order that another person pay costs.
19.08(2) An application for costs may be made:
(a) at any stage during a case; or
(b) by filing an Application in a Case within 28 days after the final order is made.
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.
19.08(4) In making an order for costs, the court may set a time for payment of the costs that may be before the case is finished.
Rule 19.18 provides:
RULE 19.18 METHOD OF CALCULATION OF COSTS
19.18(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.
19.18(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.
19.18(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 submissions and materials
The wife relies upon written submissions 12 June 2012 (folio 51), the evidence referred to in those submissions and her submissions in reply filed 19 September 2012 (folio 65).
The husband relies upon written submissions filed 13 September 2012 (folio 64) and the evidence referred to in those submissions.
The wife’s grounds
In relation to the matters in s 117(2A) the wife relies on the following grounds as justifying circumstances for a costs order:
· S 117(2A)(a): The financial circumstances of the parties, the wife alleging a significant disparity between her financial circumstances and the husband’s financial circumstances
· S 117(2A)(c): Conduct of the husband justifying a costs order against him
· S 117(2A)(d): Failure of the husband to comply with Court orders, including a s 79 property order and an interim spousal maintenance order
· S 117(2A)(e): The husband in effect was wholly unsuccessful in the proceedings and the wife wholly successful
· S 117(2A)(f): The husband made an unacceptable offer to settle (although the wife made no offers)
· S 117(2A)(g): If there is not a costs order in the wife’s favour she will have no prospect of paying her legal fees.
I will deal with each of these matters in turn, including, where relevant, the husband’s submissions and any evidence relied upon by him.
The financial circumstances of the parties: s 117(2A)(a)
Both parties are impecunious.
In this regard, I would refer to the reasons for judgment [17] – [22]; [51]; [52]; [61]; [68]; [71]; [72]; [84]; [89]; [107] – [144]; [145] – [236]; [237] – [253].
In addition I would refer to, without setting out, the wife’s affidavit filed 12 June 2012, pars 3 – 5; her updated financial statement filed 12 June 2012; the husband’s written submissions at the trial (folio 44); and his affidavit filed 9 August 2012, par 8.
For the sake of completeness, I would refer more specifically to the husband’s affidavit filed 9 August 2012, pars 5 – 8, wherein he describes suffering and being treated for depression for over 18 months, that he has been seeking treatment from a psychologist and a psychiatrist, he has had feelings of “wanting to end it all” and has “gone so far as to devise how I would do so”, culminating then in par 8, which I will set out:
8. As stated, I am not in receipt of an income at present. Whilst I do try to attend work on some days, I am generally unable to stay for the full day and am unable to perform my duties adequately. This in itself is providing a further source of depression to me.
Further, it is implicit that I have had regard also to the submissions referred to above (12 June 2012, 13 September 2012 and 19 September 2012).
Conduct of the husband: s 117(2A)(c)
I accept that the wife was compelled to bring and continue the proceedings concerning spousal maintenance for the reasons set out in the wife’s written submissions 12 June 2012 (folio 51) including resistant conduct by the husband in relation to this subject matter; supported by the affidavit of her solicitor Mr K filed 12 June 2012, pars 7 – 28 and 29 – 74.
Further, I accept that the wife was compelled to defend the husband’s s 79A application, firmly determined against him: see the reasons for judgment at [6] – [7]; [12] – [74].
Failure by husband to comply with Court orders: s 117(2A)(d)
The wife’s case here for costs is related to the husband’s failure to comply with the order for interim spousal maintenance made on 31 March 2010; and further his failure to comply with two components of the parties’ s 79 consent property order, as detailed in the reasons for judgment.
Husband wholly unsuccessful in the proceedings?: s 117(2A)(e)
Section 79A
The husband was wholly unsuccessful in relation to his application that pars 3c and 3d of the s 79 consent property order be set aside and the wife was wholly successful in holding pars 3c and 3d.
This was a significant and discrete part of the proceedings.
Spousal maintenance
The husband was wholly unsuccessful in his application for discharge of the arrears of interim spousal maintenance.
In relation to the final order for ongoing/future spousal maintenance, whilst the wife at the hearing sought $1,000 per week, I allowed $500 per week. Further, to the extent that the wife sought backdating to 1 August 2009, I did not allow this, but only to 31 March 2010: reasons for judgment [3]; [125]; [254]; [260]; [271]; [287]. (The wife initially had sought $1,350 per week, but this was reduced by the time of the hearing to $1,000 per week: [75]; [287]).
Mr C’s report
The wife was wholly unsuccessful in relation to her claim that the husband pay to her the costs of a single expert report prepared by Mr C of V Consulting: reasons for judgment [8] – [10]; [288] – [303].
However, at [303] I made clear that the effect would be that if the wife should succeed in obtaining an order for her costs of the proceedings to be paid by the husband any assessment of her costs would include whether it was reasonable for her, in her own case, to incur the costs of obtaining Mr C’s report and affidavit as costs in her case to be assessed in the usual way if not agreed.
Proportionality of the wife’s success/lack of success/husband’s success/lack of success
As the trial judge, it is necessary for me to assess the relative extent or degree of the wife’s/husband’s success/lack of success.
Doing the best I can, I would assess that the husband’s s 79A proceedings occupied about 50 per cent of the entirety of the proceedings; the spousal maintenance proceedings as to arrears and ongoing/future spousal maintenance about 50 per cent; and the Mr C issue nominal.
The husband, as I have said, was wholly unsuccessful in relation to his s 79A proceedings; the wife was predominantly successful in relation to the spousal maintenance proceedings. In particular, she was wholly successful and the husband wholly unsuccessful in relation to her claim for the arrears and his claim for discharge of the arrears; and she was successful in obtaining a final order for her ongoing/future spousal maintenance, although unsuccessful as to the amount per week sought ($1,000/$500) and as to the period of backdating sought (1 August 2009/31 March 2010).
However, it seems to me that in relation to the quantum, because the wife’s need was conceded by the husband as $1,000 per week, and because the husband claimed he could not afford to pay “even one dollar” to the wife for weekly spousal maintenance, the principal issue at the trial, and the one which occupied most of the trial time, was the husband’s financial circumstances, and in my view as the trial judge this issue would have been the same in terms of evidence and trial time whether the wife had sought $1,000 per week or $500 per week.
The backdating matter was a minor issue.
I would assess, based upon these matters, that if I make a costs order in the wife’s favour it should be 90 per cent of her costs of and incidental to the proceedings, represented in effect as to 50 per cent the husband’s s 79A proceedings, and 40 per cent relating to all spousal maintenance matters and the nominal Mr C issue.
Offers to settle: s 117(2A)(f)
On 6 October 2011 the husband made an offer to settle. However, self evidently it sought all of the relief which he claimed, with the dismissal of all of the relief the wife claimed, with no concession at all to the wife’s claims upon which ultimately she succeeded: written submissions (folio 51) under this subheading.
The husband’s offer thus is not one which favourably can be taken into account for him, nor unfavourably taken into account for the wife.
The wife did not make any written offers of settlement.
Other matters: s 117(2A)(g)
The wife relies on the circumstance that, based upon her financial position, it is clear that if the husband is not ordered to pay the wife’s costs she will have no capacity to pay the costs due to be paid to her solicitors “either immediately or in the foreseeable future”.
Husband’s response filed 13 September 2012
The husband’s response filed 13 September 2012 (folio 64) does not address any relevant matters save that he is impecunious, and presently unable to work for medical health reasons: see also his affidavit filed 9 August 2012, especially at pars 5 – 8, par 8 of which already is set out. I would refer also to the circumstance of his being “hopelessly insolvent” referred to in the reasons for judgment, at the paragraphs already mentioned.
Conclusion
In order to determine, in the exercise of my discretion, that there should be a costs order in the wife’s favour, I am required to indentify a “justifying circumstance” as an “essential preliminary” to the making of such an order.
I am satisfied that the wife has shown a justifying circumstance for the making of a costs order in her favour.
The husband’s claim in relation to variation of the s 79 consent property order by the deletion of pars 3c and 3d of it on the basis of impracticability in my view was misconceived and hopeless from inception such that, properly advised, ought not have been made. This in my view amounts to a justifying circumstance for a costs order against the husband in relation to his s 79A proceedings. See again the reasons for judgment at [6] – [7]; [12] – [74].
As to the spousal maintenance proceedings, I have said already that I accept that the wife was compelled to bring and continue these proceedings to finalisation.
I would refer in particular to the history of the spousal maintenance proceedings set out in the reasons for judgment [75] – [87]; and Mr K’s affidavit at pars 7 – 28 and 29 – 74, esp at pars 19; 23; 27; 36 and 37.
In my view, the circumstance that the wife was compelled to come to Court to establish her spousal maintenance claim also amounts also to a justifying circumstance to award costs in her favour. In particular in my view, in relation to the husband’s conduct in the proceedings, he acted unreasonably in claiming that he could not pay “one dollar” for spousal maintenance for the wife: see the submission of Mr Galloway set out in the reasons for judgment at [228].
Further, the husband, unreasonably, considered that any order that he pay the wife maintenance would “simply create another creditor”, showing blatant misunderstanding of his obligation to support his former wife: reasons for judgment [285].
Further, the husband’s organisation of his financial affairs was “a pretty irregular arrangement”, with effect that, when unravelled, he had adequate capacity to pay the wife the interim spousal maintenance ordered: reasons for judgment [282] – [283].
The wife is impecunious and, I accept, has little or no prospect of paying her lawyers, absent a costs order.
The husband is also impecunious, and indeed “hopelessly insolvent”, as referred to in the reasons for judgment. However, he is not a bankrupt. Presently, for health reasons, he is “not in receipt of an income at present”: husband’s affidavit filed 9 August 2012, par 8, set out above.
Whilst I am required to take into account the parties’ respective financial circumstances, there is no principle that a costs order ought not or cannot be made against a party who is insolvent. That is to say, there is no “statutory prohibition” in exercise of the discretion to not make a costs order against an insolvent party, but rather a mandate that the parties’ respective financial circumstances be taken into account (“shall have regard to …”: s 117(2A)).
Whilst the Court will not make a futile order, there is no evidence that the husband is unemployable for the whole of his future, he being 57 years at the time of the trial. Thus, the husband’s present insolvency, which I analysed fully in the reasons for judgment, is not a reason mandatorily to negate the making of a costs order in the wife’s favour, when I have determined, as I have, that there are justifying circumstances to make such an order. Rather, the husband’s present insolvency is a matter which, mandatorily, I take into account.
I am fortified in my view by two case authorities.
The first is Spehar & Spehar (unreported) NA51 of 2003, 9 January 2004, per Warnick J. In that case, his Honour dismissed an appeal by the husband. The wife applied for costs. His Honour determined that the financial circumstances of the wife were “no better” than those of the husband who, he accepted, was in “poor financial circumstances”: [2]. His Honour said at [4]:
4. In deciding upon the just and equitable result however, I feel I cannot overlook the position of the wife … Her circumstances … and really I think in practice, are in the end to be regarded as no better than those of the husband. In those circumstances it seems to me that, having regard to the nature of the proceedings, then a challenge by way of appeal to the initial determination, which has failed, that the wife should have her costs. Accordingly, I order that the husband pay the wife’s costs of and incidental to the appeal as agreed and in default of agreement as taxed. (emphasis added)
I would pause to observe that in that case his Honour was dealing with costs of a failed appeal, and that in that case his Honour accepted that the husband was “in poor financial circumstances”, not “hopelessly insolvent”, as is the case here. His Honour nonetheless referred to the circumstance that, in comparison, the financial circumstances of the wife were to be regarded as “no better” than those of the husband.
In this case, whilst the husband is “hopelessly insolvent”, which I accept, and the wife is not, nonetheless the wife has no means to support herself, is unable to be gainfully employed, lives on a disability support pension, owns no real property and has no superannuation: reasons for judgment [105] – [123]. This is made worse by the circumstance that the husband defaulted in his obligation to pay her $23,000 pursuant to pars 3c and 3d of the s 79 consent property order; and defaulted in relation to the interim spousal maintenance order, with effect that arrears now exceed $55,000.
Further, according to Mr K’s affidavit, the wife is indebted to that firm in the considerable amount of about $88,341.92 (full indemnity basis).
Realistically, thus, I would consider, as Warnick J did in Spehar, that the wife’s financial circumstances are “really I think in practice”, “in the end to be regarded as no better than those of the husband”.
The second case is D & D (Costs) [2006] FamCA 846, per Warnick, May and Boland JJ. In that case, the Full Court considered a costs application by the wife against the husband, and a submission by Counsel for the wife that “the wife’s financial position was either inferior to or at least not superior to” that of the husband: [2]; whereas Counsel for the husband had argued that the husband had “no currently available assets from which he could pay the wife”: [3]; and that although there was “some disparity in earning capacity”, the disparity was “not as significant as it may appear from a comparison of the discrepancies between gross income”: also at [3]. The Full Court, after considering the result of the appeal, and the lack of merit found in any of the grounds as significant factors, said at [7]:
7. … Though also relevant, having regard to his income, the lack of available assets from which the husband might pay costs may go more strongly to the time within which the husband might pay any order. However, in the absence of any submission about that by either party, we do not think that we ought to make any provision for time to pay at this time. We consider the husband ought pay the wife’s costs.
Again, in that case there was no circumstance of the husband being “hopelessly insolvent”. Rather, it would appear, the costs case turned upon a consideration of both parties’ financial circumstances.
I turn now briefly to the Family Law Rules 2004, Rules 19.08 and 19.18, earlier set out, in particular r 19.18(3), to the extent relevant, which I note I “may” consider not “must” consider.
The matters decided at first instance were reasonably complex, at least in relation to the husband’s financial circumstances. I have dealt sufficiently with the matter of the reasonableness of each party’s “behaviour” in the case, in particular in relation to the wife’s necessity to apply for spousal maintenance; the husband’s inappropriate resistance to paying it; and the necessity for the wife to defend the husband’s misconceived and unsuccessful s 79A application.
The other matters in r 19.18(3) either are not relevant, or not raised in argument, or not the subject of any specific evidence.
I take into account that in Rafter & Rafter [2011] FamCAFC 46 (this case by pseudonym, in relation to an application by the husband to the Full Court to extend time to appeal the interim spousal maintenance order made on 31 March 2010, which application was dismissed, the reasons of May J of 10 March 2011 being relied upon by the husband) May J, in dismissing the husband’s application filed 22 November 2010 seeking leave to appeal out of time in relation to the interim spousal maintenance order made on 31 March 2010, said in relation to costs, at [40]:
40.Section 117 of the Act provides that there must be justifying circumstances for an order of costs to be made. In this case, the first of those would be that the application has not been successful. However, in my view, an order for costs should not be made in this case in view of the husband’s financial circumstances as he presents them to the Court, which is yet to be determined, together with the circumstances of his application. (emphasis added)
In deciding thus not to make a costs order, her Honour was not invoking any matter of principle, but merely observing that the husband’s financial circumstances “as he presents them to the Court” were “yet to be determined”, “together with the circumstances of his application”.
As the trial judge, subsequently I have determined the matter of the husband’s financial circumstances.
I am satisfied in all of the circumstances I am required to consider that in the exercise of my discretion it is proper to make a costs order in the wife’s favour.
Whether or not the husband can pay it, whilst the order subsists, is another matter.
I refer to my assessment above that if I should make a costs order in the wife’s favour it be for 90 per cent of her costs.
Accordingly, it is appropriate that I make the order that the husband pay to the wife 90 per cent of her costs of and relating to the proceedings including of her costs application to be assessed if not agreed.
Indemnity basis or party and party basis?
In Colgate-Palmolive Company & Anor v Cussons Pty Ltd [1993] FCA 536 it was held that justifying circumstances for indemnity costs included wilful disregard of known facts, the making of allegations which ought never have been made or the undue prolongation of a case by groundless contentions. Further, in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400-1 it was held that it is appropriate to consider awarding what was there described as solicitor and client or indemnity costs:
…whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. (emphasis added)
In J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) No 2 (1993) 46 IR 301 at 303 French J said in relation to indemnity costs:
It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case. (emphasis added)
In Fennessy & Gregorian [2009] FamCAFC 44; (2009) FLC 93-399, the Full Court of this Court at [60] referred to the following passage in Colgate-Palmolive at 257:
…it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors & Weekes); evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (Messiter v Hutchinson; Maitland Hospital v Fisher (No 2); Crisp & Kent) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). (citations omitted)
I have observed already that the husband’s s 79A application based on impracticability was misconceived and hopeless from inception and if properly advised the husband’s s 79A application ought not have been made.
In relation to the spousal maintenance proceedings, both in relation to the arrears order, and prospective order, the result was not so clear from the outset, until full examination of the husband’s financial circumstances had been undertaken, as was done at the trial.
Despite my observation and finding in relation to hopelessness of the husband’s s 79A application, my obligation is to “consider” the award of indemnity costs, not necessarily to make an order for indemnity costs.
In the exercise of my discretion, I will not order indemnity costs, largely because, although the s 79A issue and the spousal maintenance issues were discrete, I do not think that necessarily the evidence would have been less complex, nor the hearing necessarily shortened, if the husband’s s 79A application had not been brought.
Further, in the exercise of my discretion, it is proper to take into account here, as much as above, the parties’ respective financial circumstances. There is evidence by Mr K that on the indemnity basis the wife’s costs are or would be of the order of $88,341.92.
In all of the circumstances, I am not of the view that an award of indemnity costs is appropriate or should be made and accordingly in the exercise of my discretion will not grant such.
I therefore will make the order on the party and party basis.
The fixing of costs
In the wife’s material, as I have mentioned, Mr K invited that I fix the wife’s costs “on the full indemnity basis” in the amount of $88,342.91. I need not now deal with this aspect of the matter as I am not awarding indemnity costs.
Order
The order thus will be that the husband pay to the wife 90 per cent of her costs of and incidental to these proceedings including her costs application on the party and party basis, to be assessed if not agreed, the payment to be made within 30 days from the date of agreement or assessment.
I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Reilly delivered on 20 November 2012.
Associate:
Date: 23 November 2012
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