Rapino and Lagioia
[2020] FamCA 169
•20 March 2020
FAMILY COURT OF AUSTRALIA
| RAPINO & LAGIOIA | [2020] FamCA 169 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Costs – Refusal of leave to commence proceedings out of time – Failure to accept an offer more favourable than the judgment – Wholly unsuccessful - Indemnity costs not appropriate - Where an order is made for the Wife to pay the Husband’s costs on a party/party basis. |
| Family Law Act 1975 (Cth) s 117 |
| I & I (No 2) (1995) FLC 92 -625 In the Marriage of W P J Munday and H J Bowman (1997) 22 Fam LR 321 at 323 Kohan and Kohan (1993) FLC 92-340 |
| APPLICANT: | Mr Rapino |
| RESPONDENT: | Ms Lagioia |
| FILE NUMBER: | CAC | 1615 | of | 2008 |
| DATE DELIVERED: | 20 March 2020 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Gill J |
| HEARING DATE: | 12 March 2020 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Self-representing |
| SOLICITOR FOR THE RESPONDENT: | Self-representing |
Orders
The Wife pay the Husband’s costs in relation to her application seeking leave to commence property proceedings out of time on a party-party basis as agreed or as assessed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rapino & Lagioia has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT CANBERRA |
FILE NUMBER: CAC 1615 of 2008
| Mr Rapino |
Applicant
And
| Ms Lagioia |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to this matter are the Applicant Husband, Mr Rapino, and the Respondent Wife, Ms Lagioia. I refer to my previous judgment, where the Wife sought leave to institute property proceedings out of time and her application was dismissed. The Husband now seeks costs in relation to this matter.
Orders Sought
In his Application in a Case filed 14 February 2020, the Husband sought that the Wife pay the Husband’s costs relating to her application for leave on a party/party basis from 16 May 2017 to 9 October 2017 (in the sum of $4,089.18). The Husband also sought that the Wife pay his legal costs on an indemnity basis from 10 October 2017 to date (in the sum of $59,095.38).
The Wife sought that the Husband’s Application in a Case filed 14 February 2020 be dismissed and that the Husband pay the Wife’s costs in relation to this application, fixed at the sum of $2,000.
Material relied upon
The Husband relied upon the following:
a)Application in a Case filed 14 February 2020; and
b)Affidavit filed 14 February 2020.
The Wife relied upon the following:
a)Response to an Application in a Case filed 5 March 2020;
b)Affidavit filed 5 March 2020; and
c)Financial Statement filed 5 March 2020.
Principles in relation to costs
Costs are governed by the operation of s 117 of the Family Law Act 1975 (Cth) which provides a starting point that each party should bear his or her own costs, unless circumstances are established, pursuant to ss 117(2) and (2A) that justify the making of a costs order. In I & I (No 2), the Full Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs.”[1]
[1]I & I (No 2) (1995) FLC 92 -625.
Section 117(2A) is in the following terms:
(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.
As indicated in Medlon & Medlon (No 6) (Indemnity Costs), no single factor takes precedence over any other factor. The trial judge is to exercise his or her discretion with regard to the weight that is afforded each factor under s 117(2A).[2]
[2]Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 (Strickland J)
Section 117 was dealt with by the High Court in Penfold v Penfold[3] where the plurality said:
It is an accurate description of s 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s 117 (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. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s 117 (2) in “a clear case”.
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v. Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
[3] (1980) 144 CLR 311.
Indemnity costs
As noted above, the Husband seeks indemnity costs from 10 October 2017, being the point at which he made an offer in writing to the Wife to settle the proceedings, being an offer far more favourable than the outcome eventually obtained by the Wife in the proceedings.
The principles to be applied in relation to indemnity costs are neatly set out by the Full Court in Quickley & Pelissier[4]:
We then turn to consider whether costs should be awarded on a party/party or indemnity basis.
In Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 at 256, Sheppard J referred to the "settled practice" that where a court orders one party to pay another party's costs, the order is for costs to be paid on a party/party basis. His Honour also said "there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice" at 257.
In an appropriate case the court has a discretion to order costs on an indemnity basis. An order made in the exercise of that discretion is a very great departure from the normal approach and the circumstances justifying the departure should be of an exceptional kind (Kohan and Kohan (1993) FLC 92-340).
In the recent case of Madin & Palis (Costs) [2016] FamCAFC 25 this Court made reference to the increasing number of applications for indemnity costs and said at [23]:
Finally, we take the opportunity to observe that in so far as the appellant sought an order for indemnity costs, applications for such costs should only be made, and such costs will only be ordered, in the most extreme cases. This is particularly so having regard to the fact that the primary rule in this jurisdiction is that each party should pay their own costs.
[4] [2016] FamCAFC 124.
The principles in relation to indemnity costs are also discussed in the Federal Court in Colgate Palmolive Co and Another v Cussons Pty Ltd.[5] There a number of potential considerations were identified:
a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts: see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud: see Fountain Selected Meats (Sales) Pty Ltd .
c)Evidence of particular misconduct causing loss of time to the court and to other parties: see Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, Fed C of A, 3 May 1991, unreported).
d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: see Ragatta Developments Pty Ltd v Westpac Banking Corporation (Davies J, Fed C of A, 5 March 1993, unreported).
e)An imprudent refusal of an offer to compromise.
[5]Kohan and Kohan (1993) FLC 92-340 (‘Kohan’).
As to the final example of ‘imprudent refusal[s]’, the Full Court in Kohan noted that this factor predominantly arose on the basis of NSW authority, which itself was reliant upon particular provisions in the rules of the Supreme Court of New South Wales, which provide for indemnity costs where a plaintiff obtains judgment in terms no less favourable than those of an offer to compromise made by him and not accepted by the defendant.[6] In Kohan the distinction was then drawn between the practice in NSW in accordance with the Rules of the Supreme Court, and in this jurisdiction:
In so far as an unaccepted offer of compromise which exceeds a judgment may justify an order for costs, the general practice in this jurisdiction so far has been to order no more than costs on a party and party basis. Even in cases where there has been dishonest concealment of assets or income as in Penfold v Penfold (1980) 5 Fam LR 579 ; [1980] FLC 90-800 and Oriolo v Oriolo (1985) 10 Fam LR 665 ; [1985] FLC 91-653, no more than party and party costs have been awarded.
[6]In the Marriage of W P J Munday and H J Bowman (1997) 22 Fam LR 321 at 323.
The circumstances of this case
In relation to the financial circumstances of the parties, the Husband complained that the Wife had not made adequate disclosure of her circumstances, in particular in relation to properties transferred between herself and her father, and as revealed by the unexplained growth in her superannuation.
The Wife is currently in receipt of an income, as a result of her current inability to work, in excess of $100,000 per year. She asserts an incapacity to make ends meet, or to pay costs. However, she also accepted that there has been a stark increase in her superannuation, with her superannuation doubling over the last two and a half years from approximately $200,000 in May 2017 to $415,000 in March 2020. The Wife gave no sufficient explanation as to how, in her difficult financial circumstances, she was able to do this. It should also be observed that, as to her manner of giving evidence, the Wife gave no confidence as to the frankness or veracity of her answers. Rather, she appeared evasive.
Similarly, the Wife alleged that the Husband did not make proper disclosure, either in the costs proceedings or in the substantive proceedings. She complained that the Husband did not file a Financial Statement in the costs proceedings. The Husband was not under an obligation to file a Financial Statement, although the absence of such may leave him without adequate evidence of his financial circumstances to rely upon such as a consideration in the costs application. She said that there could be no proper idea of the Husband’s true financial position.
The upshot is that there can be no confidence as to either the Husband’s or the Wife’s financial circumstances. It may be observed that, in relation to financial circumstances, a lack of capacity, while a relevant consideration, is not a bar to the making of a costs order.[7]
[7]Tedja & Sony [2017] FamCAFC 121 at [57] per Strickland J.
In relation to the conduct of the proceedings, the Husband asserted that, at the trial, he had filed all that he had needed to and that the disclosure issues had been resolved in his favour at the trial. This was not the case. No finding was made in relation to that aspect of the case on the basis that it did not assist in the resolution of a case where the key factual matter was the absence of property to distribute. No positive finding was made that either party had provided adequate disclosure at the trial.
On the substantive trial, the Husband complained that the Wife had failed to adequately investigate her claim. He also noted that he was not cross-examined at the trial, despite various allegations being made against him. Hence, he said, the Wife had neither brought a case that could be established on her evidence, and nor had she prosecuted the case against him based on the allegations that she made against him that he held assets that he had not disclosed.
The substantive matter was determined on the basis of the failure of the Wife to identify a pool of assets available for distribution, and thereby failing to meet the first hurdle to property adjustment as identified in Stanford.[8]
[8]Stanford v Stanford (2012) 247 CLR 108 (‘Standard’).
That is, the Husband asserted, the Wife conducted proceedings where there was never a chance of success.
It may be seen that the Wife was wholly unsuccessful on the proceedings, being refused the leave that was the subject matter of the proceedings.
Further, the Husband made an open offer to the Wife on 10 October 2017, offering to pay her $100,000 in settlement of the matter, with the Wife to retain her interests in properties allegedly transferred to her father but for which she had not received payment.[9] This offer was never withdrawn by the Husband, remaining on foot until judgment was delivered. The Husband says that, in the light of the Wife’s inability to establish a pool of assets in the case, this was a case that should never have been brought and that the failure to settle on the Husband’s offer was imprudent.
[9] Exhibit H1.
The Wife sought that the Husband’s application be dismissed as a waste of the Court’s time. She also complained that she had no itemised account of the Husband’s legal fees, or of whether they contained work performed by him as a legal practitioner. The Husband asserted that the costs did not contain a portion referable to his work. It should be noted that the Husband would not be entitled on a costs award for the work that he performed. In any event, should an order for costs be made in the usual terms then the assessment process would require such an itemised account to be provided.
Discussion
The parties’ current financial circumstances are unknown. The Wife’s are uncertain, although it may be accepted, as was found in the judgment on the substantive matter, that she faces difficult circumstances. Given the absence of evidence by the Husband, the relative financial circumstances of the parties are not established in a manner favourable to the exercise of the discretion. However, even if it is assumed that the Wife’s position is inferior to that of the Husband this does not determine the exercise of the discretion in her favour.
The Husband concentrated upon both the pursuit of the matter when the Wife ought to have known that she had no chance of success, and the refusal of the offer by the Wife as justifying an award of costs on an indemnity basis, on the basis that the refusal of the offer was imprudent. The Wife was wholly unsuccessful.
These matters together justify the making of a costs order against the Wife, even on the basis that she faces more difficult financial circumstances than those faced by the Husband.
The remaining issue is whether a portion of his costs ought to be met on an indemnity basis. In support of this the Husband argues that the Wife ought not to have undertaken the litigation where she was unable to establish that there was a pool of property to be distributed, and that she conducted the proceedings in the face of an offer that she imprudently rejected.
Noting, in particular, the discussion in Kohan in relation to party-party costs being given as opposed to indemnity costs, even where there were unaccepted offers of compromise, and even where there was dishonest concealment of income or assets, the failure of the Wife to accept the offer of compromise, even given her failure to establish a pool of property, does not mean that this is a matter in which an order for indemnity costs ought to be made.
Conclusion
An order will be made for the Wife to pay the Husband’s costs on a party-party basis, as agreed or as assessed.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 20 March 2020.
Associate:
Date: 20 March 2020
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